REG - Marshalls PLC - Half-year Report
19/08/2021 07:00
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RNS Number : 0995J Marshalls PLC 19 August 2021
Embargoed until 7.00am on Thursday 19 August 2021
Marshalls plc
(the "Company" or the "Group")
Strong growth in first half - positive trading outlook
Marshalls plc, the specialist Landscape Products group, announces its interim
results for the half year ended 30 June 2021.
Financial Highlights Half year ended Half year Half year ended Increase % 2021 - 2019
30 June 2021
ended 30 June 2019
30 June 2020
Results before operational restructuring costs and asset impairments(1)
Revenue £298.1m £210.5m £280.1m 6
EBITDA £56.4m £18.2m £54.9m 3
Adjusted operating profit £41.0m £3.5m £39.0m 5
Profit before tax £38.9m £1.6m £37.1m 5
Basic EPS 15.30p 0.12p 15.18p 1
ROCE 18.1% 10.9% 19.3%
Net debt £52.4m £98.9m £97.7m
Net debt - pre-IFRS 16 £7.6m £53.9m £55.6m
Adjusted operating profit £41.0m £3.5m £39.0m
Operational restructuring costs and asset
impairments - £(17.6)m -
Statutory operating profit £41.0m £(14.1)m £39.0m
Statutory results
Statutory operating profit £41.0m £(14.1)m £39.0m
£(16.0)m
Profit before tax £38.9m
£37.1m
(7.25)p
Basic EPS 15.30p
15.18p
-
Interim dividend 4.70p 4.70p
Operational highlights
· Priority continues to be given to health and safety
· Strong trading and healthy order books
o Continued focus on customer service and satisfying increased demand
o National manufacturing network and logistics efficiency continuing to
enable operational flexibility
o Proactive supply chain management to mitigate material shortages
o Ongoing focus on ESG leadership and priorities
o Sustained emphasis on innovation and sustainable growth over the medium
term
o Capital investment of £30 million planned for 2021 - St Ives dual block
plant build has commenced
Financial highlights
· Half year revenue of £298.1 million (2020: £210.5 million) - up 42%
against 2020 and up 6% against 2019
o Continued strong growth in Domestic - up 54% against 2020 and up 17%
against 2019
o Public Sector and Commercial sales growth up 40% against 2020 and up 1%
against 2019 (3% on a like-for-like basis)
o International sales growth of 11% against 2020 and 27% against 2019
· Profit before tax up 5% against 2019
o Operating margin in line with 2019 at 13.8% (2019: 13.9%)
· Strong balance sheet, with a flexible capital structure and a clear
capital allocation policy
o Reported net debt of £52.4 million (2020: £98.9 million; 2019: £97.7
million)
o Net debt of £7.6 million on a pre-IFRS 16 basis (2020: £53.9 million;
2019: £55.6 million)
o Operating cash flow ("OCF") to EBITDA at 93% for the twelve months ended
30 June 2021
· Interim dividend of 4.70 pence
Commenting on these results, Martyn Coffey, Chief Executive, said:
"Trading continues to improve and recent order intake has been good. The
Construction Products Association's recent summer forecast predicts year on
year increases in UK market volumes of 13.7 per cent in 2021 and 6.3 per cent
in 2022 and the Group expects to meet or outperform the market. Market
conditions remain supportive, despite certain supply chain challenges, which
are leading to inflationary pressures across the sector. The underlying
indicators in our main growth markets, including New Build Housing, Road, Rail
and Water Management, remain positive. As a result, we remain confident that
our strategy will deliver long-term profitable growth and that we are well
positioned to cope with the temporary challenges associated with cost and
material supply issues.
Encouraged by the continuing strength in demand and the positive trading
environment, the Board is confident of making further progress and is
accordingly raising its expectations for 2021 and 2022."
Notes:
1. Alternative performance measures are used consistently throughout this
Interim Report. These relate to like-for-like, EBITA, EBITDA, return on
capital employed ("ROCE"), net debt and, for the half year ended 30 June 2020,
results before operational restructuring costs and asset impairments.
Following the transition to IFRS 16, reference has been made to "pre-IFRS 16",
"pre-IFRS 16 net debt" and "reported basis," the latter referring to amounts
required under IFRS 16. For further details of their purpose, definition and
reconciliation to the equivalent statutory measures, see Note 3.
2. In order to provide a more relevant performance commentary, comparison in
this statement has been made to the corresponding six month period in both
2020 and 2019, the latter considered to represent a more meaningful
pre-COVID-19 baseline for performance comparisons.
There will be a video webcast for analysts and investors today at 9:00am. The
presentation will be available for analysts and investors who are unable to
view the webcast live and can be viewed on the Marshalls' website. Users can
register to access the webcast using the following link:
https://webcasting.brrmedia.co.uk/broadcast/60cc64dc5b7397619f827b26
(https://webcasting.brrmedia.co.uk/broadcast/60cc64dc5b7397619f827b26) . There
will also be a telephone dial in facility available Tel: +44 (0)330 336 9434 -
Access Code: 6299561.
Enquiries:
Martyn Coffey Chief Executive Marshalls plc +44 (0)1422 314777
Justin Lockwood Chief Financial Officer Marshalls plc +44 (0)1422 314777
Andrew Jaques MHP Communications +44 (0)20 3128 8540
Charlie Barker
Group results
Group revenue for the six months ended 30 June 2021 was £298.1 million (2020:
£210.5 million; 2019: £280.1 million), which is 42 per cent ahead of the
2020 comparative. This represents an increase of 6 per cent compared with the
same period in 2019, being the last comparative period which was unaffected by
COVID-19.
Sales in the Domestic end market, which represented approximately 30 per cent
of Group sales, were £89.3 million. This represents an increase of 54 per
cent compared with the prior year and is up 17 per cent compared with the same
period in 2019. The survey of domestic installers at the end of June 2021
revealed a healthy order book of 21.4 weeks (2020: 16.8 weeks). This compares
with 17.2 weeks at the end of April 2021. Private Housing "repair, maintenance
and improvement" continues to be strong and has been the quickest construction
sector to recover over the last twelve months. There continues to be strong
demand for DIY projects with consumers spending more time at home and choosing
to invest in home and garden projects. Many households have benefited from
higher disposable incomes due to lower commuting costs and lower cash outflows
on other things, including holidays. The GfK consumer confidence index has
been improving steadily during 2021 and has now returned to pre-COVID-19
levels. Our Domestic strategy is to develop the customer experience by
digitalisation, including the use of visualisation tools, and to promote and
invest in innovation. We continue to drive more sales through the Marshalls
Register of approved domestic installers.
Sales in the Public Sector and Commercial end market were £189.3 million and
represented 64 per cent of Group sales. This represents an increase of 40 per
cent compared with the prior year and is up 1 per cent compared with the same
period in 2019. The comparison with 2019 increases to 3 per cent after
adjusting for the impact on sales caused by the planned reduction in Marshalls
Mortars and Screed sites in the second quarter of 2020. The Group continues to
focus on those market areas where future demand is expected to be greatest
including New Build Housing, Road, Rail and Water Management. Infrastructure
is expected to be a key element of construction growth in 2021 and 2022,
driven by larger projects such as HS2 and additional focus on medium-term
investment programmes. We increasingly use digital technology to communicate
new concepts and designs and to facilitate the selection and specification of
our ranges.
Sales in the International business, supported by strong growth from Marshalls
NV in Belgium, were up 11 per cent compared with the prior period and 27 per
cent compared with 2019. International sales represented 6 per cent of Group
sales in the period. The Group continues to develop its global supply chains
to ensure that international operations are sustainable and aligned with
market risks and opportunities.
EBITDA was £56.4 million (2020: £18.2 million, before operational
restructuring costs and asset impairments of £17.6 million), which represents
an increase of 3 per cent compared with 2019. Operating profit increased to
£41.0 million (2020: £3.5 million, before operational restructuring costs
and asset impairments). The operating profit margin was 13.8 per cent in the
six months to 30 June 2021, which compares with 13.9 per cent for the same
period in 2019. This result was despite the additional cost of overtime, which
has been required to cover COVID-19 related absenteeism, and despite the
well-publicised supply chain issues, which have caused certain raw materials
to be on allocation. Proactive management is mitigating the impact of material
shortages.
Basic earnings per share was 15.30 pence (2020: 0.12 pence, before operational
operating costs and asset impairments), which compares with 15.18 pence in the
same six-month period in 2019. Group return on capital employed ("ROCE") was
18.1 per cent for the twelve months ended 30 June 2021 (2020: 10.9 per cent;
2019: 19.3 per cent).
Net financial expenses were £2.1 million (2020: £1.9 million), including
£0.9 million (2020: £0.7 million) of IFRS 16 lease interest. On a rolling
annual basis interest was covered 13.5 times (2020: 10.7 times, before
operational restructuring costs and asset impairments). Interest charges on
bank loans totalled £1.1 million (2020: £1.1 million) and, including scheme
administration costs, there was an IAS 19 notional interest charge of £0.1
million (2020: £0.1 million) in relation to the Group's Pension Scheme. The
IAS 19 notional interest includes interest on obligations under the defined
benefit section of the Marshalls plc Pension Scheme, net of the expected
return on Scheme assets.
The effective tax rate was 21.3 per cent (2020: 72.7 per cent, before
operational restructuring costs and asset impairments). The 2021 Budget
announced that the UK corporation tax rate would increase to 25 per cent from
2023, and this rate change was substantively enacted on 24 March 2021.
Consequently, the deferred tax liability at 30 June 2021 has been calculated
at the rate at which the deferred tax is expected to unwind in the future,
using rates enacted at the balance sheet date. This rate change has given rise
to an increase in the deferred tax charge of £2.9 million for the half year
and an expected increase for the full year of approximately £5.2 million. The
impact of this on the tax charge has been mitigated, to some extent, by the
temporary increases in capital allowances in the year arising from the
announcement of a 130 per cent first year allowance for plant and machinery.
Operating performance and initiatives
The Group continues to prioritise health and safety, and we have maintained
our established COVID-19 workplace protocols, notwithstanding the recent
changes to Government guidelines. We continue to ensure that our procedures go
beyond the recommended guidelines.
We have seen strong order books and, consistent with the rest of the
construction sector, have experienced the heightened operational challenge
brought upon with increased demand for Marshalls products. The Group's
national network of concrete manufacturing sites and quarries has continued to
support a flexible operating framework, which has enabled us to manage supply
and demand across the network and to control lead times as far as possible.
There have been periods when cement has been on supply allocation and reduced
raw material availability has required proactive management to ensure the
continued supply of packaging, steel, timber and aggregates. The short supply
of sea freight containers has also caused transport costs to increase
significantly.
Our objective continues to be to mitigate inflation by using dynamic and
alternative solutions to ensure operational continuity and cost control.
However, raw material shortages across the construction sector and reduced
numbers of HGV drivers within the third party haulage market are causing costs
to increase which we are recovering successfully through price increases. We
continue to benefit from having our own vehicle fleet, which covers a
substantial proportion of deliveries, and our aim is to increase logistics
efficiency and vehicle utilisation.
Marshalls' 5 year Strategy
The overall Group strategy continues to focus on the maintenance of a strong
balance sheet, a flexible capital structure and a clear capital allocation
policy. At the heart of the strategy are the following eight priority areas
for investment and business focus. These objectives drive both long-term
sustainable growth and shareholder returns.
· Brand preference for product specification
· Logistics excellence
· Sustainable materials supply
· Customer centricity
· Operational excellence
· New product development
· Digital transformation
· Growth in emerging businesses
The Group's long-term strategy focuses on organic investment to drive growth,
and capital expenditure projects totalling around £30 million are planned for
2021. We have a good pipeline of projects that will drive future organic
growth, including the flagship dual block plant project at our St Ives site,
which has recently commenced. This will be the first facility of this nature
in the UK and the planned investment over the next three years will be around
£20 million. This project will significantly increase capacity, improve
efficiency, enable multiple secondary finishing and facilitate the launch of
new products.
There continues to be a strong focus on innovation and new product development
across all parts of the Group. Research and development expenditure of £5
million is planned for 2021. The development pipeline continues to be strong
and the Group is committed to providing sustainable, high performance product
solutions. These include investment in technologies to enhance the development
of cement-free product solutions. We are already using up to 60 per cent
cement replacement in our paving.
Organic growth will continue to be supported by targeted acquisitions. We will
continue to focus on bolt-on acquisitions
in our key growth areas of Water Management and New Build Housing and are
developing a good pipeline of opportunities.
Marshalls' environmental, social and governance ("ESG") agenda
The Group's long-term strategy continues to include an increasingly strong ESG
agenda, which is fully integrated into business operations, and our central
sustainability objective is to create better futures for everyone, socially,
environmentally and economically. Our ESG strategy continues to generate
opportunities, which are a source of competitive advantage. The objective is
that these will drive both long-term sustainable growth and shareholder
returns.
Marshalls aims to give full consideration to the long-term impact of all
business operations, which means that all our products and services need to be
ethically sourced and sustainable. We see sustainable sourcing as an essential
part of our business model. The Group continues to support the United Nations
Global Compact and the UN Sustainable Development Goals and we maintain a
detailed framework of comprehensive policies covering the environment, human
rights, labour, anti-corruption and governance. This year is the International
Year for the Elimination of Child Labour and Marshalls has renewed its pledge
to support this initiative.
The Group is committed to decarbonisation and we have aligned all greenhouse
gas emissions reduction targets, across all relevant scopes, to 1.5 degrees
centigrade emissions scenarios. We are the first company in our sector to have
emission reduction targets approved by the Science Based Targets initiative as
being consistent with levels required to meet the goals of the Paris
Agreement. Marshalls has committed to reduce Scope 1 and 2 greenhouse gas
emissions by 40 per cent per tonne of production by 2030 from a 2018 base
year. For Scope 3, we have also committed that 73 per cent of our suppliers by
emissions, covering purchased goods and services and upstream transport and
distribution, will have science-based targets by 2024.
We are the only manufacturer in the industry to publish our product carbon
footprint. This information is verified by the Carbon Trust and by BRE, in
line with the PAS 2050 requirements. This benefits our customers who are able
to compare the carbon footprint of our products against other products or
substitute materials. We continue to use product innovation to develop and
bring to market new products which are less carbon intensive to produce or
made from recycled materials.
The Group has updated all its vehicle fleet to Euro 6 European emission
standards and all our plants now use 100 per cent certified renewable energy.
We continue to reduce our water and timber usage and have a target of reducing
plastic usage by 85 per cent by the end of 2021.
We are committed to making our ESG data transparent so our stakeholders can
trust the Marshalls brand, and we fully support the Task Force on
Climate-Related Financial Disclosures ("TCFD"). Diversity, Equality, Respect
and Inclusion ("DERI") is a key part of our people agenda and talent
development programmes.
Balance sheet, net debt and cash flow
Net assets at 30 June 2021 were £320.1 million (2020: £275.8 million).
Reported net debt was £52.4 million at 30 June 2021 (31 December 2020: £75.6
million; 30 June 2020: £98.9 million). Net debt, on a pre-IFRS 16 basis, was
£7.6 million at 30 June 2021 (31 December 2020: £26.9 million; 30 June 2020:
£53.9 million). The strong cash generation in the first half of 2021 reflects
the continuing focus given to capital discipline. Operating cash flow for the
twelve months to 30 June 2021 represented 93 per cent of EBITDA which
illustrates the strong conversion of profit into cash. Strong cash management
continues to be a high priority area.
The continuing strategy is to ensure that facility and covenant headroom
remains at comfortable levels and that we have a range of competitively priced
funding lines in place, with different banks, at all times and with different
maturity dates. The Group has total bank facilities of £165 million, of which
£140 million are committed. The committed bank facilities have a spread of
medium-term maturities that now extends to 2025.
The balance sheet value of the Group's defined benefit Pension Scheme was a
surplus of £9.5 million at 30 June 2021 (December 2020: £2.7 million
surplus; June 2020: £10.4 million surplus). The surplus was determined by the
Scheme actuary using appropriate assumptions which are in line with current
market expectations. During the last six months the AA corporate bond rate has
increased from 1.40 per cent to 1.90 per cent and this is the primary driver
of the increased surplus. The expected rate of CPI inflation has increased
from 2.20 per cent to 2.55 per cent.
Dividend
Due to the impact of COVID-19, the Board did not declare an interim dividend
in 2020. However, the payment of dividends continues to be a key priority for
capital allocation and a final dividend of 4.30 pence per share for the year
ended 31 December 2020 was paid to shareholders of the Company on 1 July 2021.
The Group maintains a progressive dividend policy with the objective of
achieving a dividend cover of two times earnings over the business cycle. The
intention is to increase dividends in line with earnings.
The Group has declared an interim dividend of 4.70 pence per share, which
reflects the recovery in profitability and the strong cash generation in the
six months ended 30 June 2021. The dividend will be paid on 1 December 2021
to shareholders on the register at the close of business on 22 October 2021.
Principal 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 six months of
the financial year and could cause actual results to differ materially from
expected and historical results.
The ongoing impact of the COVID-19 pandemic on the business and the return
process to "business as usual" are being continually assessed. The growth in
market demand and external challenges in the wider supply chain have increased
the risk of raw material shortages, product availability and a shortfall in
haulage capacity. We are managing these issues proactively and maintaining our
focus on cyber security risk. Further details of how the Group is mitigating
these risks are set out in Note 16.
A detailed explanation of the Group's risk environment and how the Group seeks
to mitigate its risks can be found on pages 24 to 31 of the 2020 Annual
Report.
Going concern
As stated in Note 1 of the 2021 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 twelve months from the date of
this report. Accordingly, the Directors continue to adopt the going concern
basis in preparing the Half Year Report.
Appointment of Non-Executive Director
Marshalls plc today announces the appointment of Philip Rogerson as a
Non-Executive Director with effect from 1 September 2021. Philip will also
join the Audit, Remuneration and Nomination Committees.
Vanda Murray OBE, Chair of the Board, commented: "Philip is an experienced
public company director and the Board is delighted that he will be joining
Marshalls plc as a Non-Executive Director. Philip's cross-sector and financial
experience will be extremely valuable to the Board and were at the heart of
our rigorous recruitment process."
Outlook
Trading continues to improve and recent order intake has been good. The
Construction Products Association's recent summer forecast predicts year on
year increases in UK market volumes of 13.7 per cent in 2021 and 6.3 per cent
in 2022 and the Group expects to meet or outperform the market. Market
conditions remain supportive, despite certain supply chain challenges, which
are leading to inflationary pressures across the sector. The underlying
indicators in our main growth markets, including New Build Housing, Road, Rail
and Water Management, remain positive. As a result, we remain confident that
our strategy will deliver long-term profitable growth and that we are well
positioned to cope with the temporary challenges associated with cost and
material supply issues.
Encouraged by the continuing strength in demand and the positive trading
environment, the Board is confident of making further progress and is
accordingly raising its expectations for 2021 and 2022.
Martyn Coffey
Chief Executive
Philip Rogerson Biographical Notes
Philip's experience spans a wide variety of sectors including construction,
technology and engineering, telecoms, printing and power generation, as well
as financial services.
Philip was an Executive Director of BG Group plc (formerly British Gas plc)
from 1992 to 1998, latterly as Deputy Chairman. He was formerly Chairman of
Bunzl plc, De La Rue plc has also been both a Non-Executive Director and
Chairman of a number of public companies. He is currently a Non-Executive
Director of Blancco Technology Group plc. Philip qualified as a Chartered
Accountant.
Philip Rogerson is independent for the purposes of the UK Corporate
Governance Code. His recruitment follows a formal, rigorous and objective
selection process led by the Nomination Committee with the help of external
consultants Warren Partners. This announcement includes the information
required by Listing Rules 9.6.11 to 9.6.13, and there is no information to
report under Listing Rule 9.6.13R (2) - (6) inclusive.
Condensed Consolidated Income Statement
for the half year ended 30 June 2021
Total Before operational Operational Total Before operational Operational Total
restructuring restructuring restructuring restructuring
costs and asset costs and asset costs and asset costs and asset
impairments impairments impairments impairments
Half year ended June Half year ended June Year ended December
2021 2020 2020 2020 2020 2020 2020
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 4 298,141 210,473 - 210,473 469,454 - 469,454
Net operating costs 5 (257,115) (206,933) (17,609) (224,542) (442,272) (17,809) (460,081)
Operating profit/(loss) 4 41,026 3,540 (17,609) (14,069) 27,182 (17,809) 9,373
Financial expenses 7 (2,177) (1,914) - (1,914) (4,730) - (4,730)
Financial income 1 6 - 6 10 - 10
Profit/(loss) before tax 4 38,850 1,632 (17,609) (15,977) 22,462 (17,809) 4,653
Income tax (expense)/credit 8 (8,275) (1,186) 2,985 1,799 (5,196) 3,101 (2,095)
Profit/(loss) for the financial period 30,575 446 (14,624) (14,178) 17,266 (14,708) 2,558
Profit/(loss) for the financial period
Attributable to:
Equity shareholders of the Parent 30,438 233 (14,624) (14,391) 17,078 (14,708) 2,370
Non-controlling interests 137 213 - 213 188 - 188
30,575 446 (14,624) (14,178) 17,266 (14,708) 2,558
Earnings per share
Basic 9 15.30p 0.12p (7.25)p 8.60p 1.19p
Diluted 9 15.23p 0.12p - 8.53p 1.18p
Dividend
Pence per share 10 4.30p - -
Dividends declared in the period 10 8,542 - -
All results relate to continuing operations.
Condensed Consolidated Statement of Comprehensive Income
for the half year ended 30 June 2021
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Profit for the financial period before operational restructuring costs and 30,575 446 17,266
asset impairments
Operational restructuring costs and asset impairments - (14,624) (14,708)
Profit/(loss) for the financial period 30,575 (14,178) 2,558
Other comprehensive income/(expense)
Items that will not be reclassified to the Income Statement:
Remeasurement of the net defined benefit asset 6,936 (5,205) (12,741)
Deferred tax arising (1,734) 989 2,421
Impact of the change in rate of deferred tax on defined benefit plan actuarial 17 (314) (314)
gain/(loss)
Total items that will not be reclassified to the Income Statement 5,219 (4,530) (10,634)
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 (956) (1,273) (1,526)
Fair value of cash flow hedges transferred to the Income Statement (231) 619 1,238
Deferred tax arising (222) 111 42
Exchange difference on retranslation of foreign currency net investment 436 1,243 (1,117)
Exchange movements associated with borrowings (126) (1,169) 922
Foreign currency translation differences - non-controlling interests (34) 48 39
Total items that are or may be reclassified subsequently to the Income (1,133) (421) (402)
Statement
Other comprehensive income/(expense) for the period, net of income tax 4,086 (4,951) (11,036)
Total comprehensive income/(expense) for the period 34,661 (19,129) (8,478)
Attributable to:
Equity shareholders of the Parent 34,558 (19,390) (8,705)
Non-controlling interests 103 261 227
34,661 (19,129) (8,478)
Condensed Consolidated Balance Sheet
as at 30 June 2021
June
December
2021 2020 2020
Notes £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 176,208 194,794 179,401
Right-of-use assets 41,191 43,622 44,990
Intangible assets 93,815 95,598 94,679
Employee benefits 12 9,473 10,393 2,726
Deferred taxation assets 2,673 2,084 2,620
323,360 346,491 324,416
Current assets
Inventories 101,032 82,490 89,782
Trade and other receivables 118,985 95,233 95,742
Cash and cash equivalents 52,265 86,609 103,707
Assets classified as held for sale - - 450
Derivative financial instruments - - 332
272,282 264,332 290,013
Total assets 595,642 610,823 614,429
Liabilities
Current liabilities
Trade and other payables 141,195 125,269 119,816
Corporation tax 4,360 4,610 7,277
Short-term lease liabilities 11 9,201 10,213 10,065
Interest-bearing loans and borrowings 20,000 - 20,000
Derivative financial instruments 855 34 -
175,611 140,126 157,158
Non-current liabilities
Long-term lease liabilities 11 35,881 35,404 38,926
Interest-bearing loans and borrowings 39,605 139,860 110,282
Provisions 1,449 2,649 3,149
Deferred taxation liabilities 22,990 17,005 17,066
99,925 194,918 169,423
Total liabilities 275,536 335,044 326,581
Net assets 320,106 275,779 287,848
Equity
Capital and reserves attributable to equity shareholders of the Parent
Share capital 50,013 50,013 50,013
Share premium account 24,482 24,482 24,482
Own shares (632) (1,075) (806)
Capital redemption reserve 75,394 75,394 75,394
Consolidation reserve (213,067) (213,067) (213,067)
Hedging reserve (1,096) 16 313
Retained earnings 383,959 339,032 350,569
Equity attributable to equity shareholders of the Parent 319,053 274,795 286,898
Non-controlling interests 1,053 984 950
Total equity 320,106 275,779 287,848
Condensed Consolidated Cash Flow Statement
for the half year ended 30 June 2021
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Profit before operational restructuring costs and asset impairments 30,575 446 17,266
Operational restructuring costs and asset impairments - (14,624) (14,708)
Profit/(loss) for the financial period 30,575 (14,178) 2,558
Income tax expense on continuing operations 8,275 1,186 5,196
Income tax credit on operational restructuring costs and asset impairments - (2,985) (3,101)
Profit/(loss) before tax 38,850 (15,977) 4,653
Adjustments for:
Depreciation of property, plant and equipment 8,206 7,687 15,657
Asset impairments - - 5,489
Depreciation of right-of-use assets 5,692 5,653 12,060
Amortisation 1,447 1,295 2,719
Net loss/(gain) on sale of property, plant and equipment 132 (37) (1,103)
Share-based payment expense 999 1,244 2,998
Financial income and expenses (net) 2,176 1,908 4,720
Operating cash flow before changes in working capital 57,502 1,773 47,193
Increase in trade and other receivables (22,907) (25,207) (26,031)
(Increase)/decrease in inventories (11,545) 7,184 (180)
Increase in trade and other payables 21,125 7,772 7,442
Operational restructuring costs paid (1,255) (3,522) (6,946)
Cash generated from/(absorbed by) operations 42,920 (12,000) 21,478
Financial expenses paid (1,988) (1,791) (4,475)
Income tax paid (6,877) (4,631) (4,631)
Net cash flow from operating activities 34,055 (18,422) 12,372
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 982 73 11,450
Financial income received 1 6 10
Purchase of property, plant and equipment (6,409) (6,405) (13,158)
Purchase of intangible assets (583) (1,094) (1,599)
Net cash flow from investing activities (6,009) (7,420) (3,297)
Cash flows from financing activities
Payments to acquire own shares (3,542) (2,035) (2,705)
Repayment of borrowings (72,900) (483) (10,009)
New loans 2,659 67,900 67,900
Cash payments in respect of the principal portion of lease liabilities (5,640) (6,411) (13,780)
Net cash flow from financing activities (79,423) 58,971 41,406
Net (decrease)/increase in cash and cash equivalents (51,377) 33,129 50,481
Cash and cash equivalents at the beginning of the period 103,707 53,258 53,258
Effect of exchange rate fluctuations (65) 222 (32)
Cash and cash equivalents at the end of the period 52,265 86,609 103,707
Condensed Consolidated Statement of Changes in Equity
for the half year ended 30 June 2021
Attributable to equity holders of the Company
Share Capital Non-
Share premium Own redemption Consolidation Hedging Retained controlling Total
capital account shares reserve reserve reserve earnings Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Current half year
At 1 January 2021 50,013 24,482 (806) 75,394 (213,067) 313 350,569 286,898 950 287,848
Total comprehensive income/(expense) for the period
Profit - - - - - - 30,438 30,438 137 30,575
for the financial period attributable to equity shareholders of the Parent
Other comprehensive
income/(expense)
Foreign currency translation differences - - - - - - 310 310 (34) 276
Effective portion of changes in fair value of cash flow hedges - - - - - (956) - (956) - (956)
Net change in fair value of cash flow hedges transferred to the Income - - - - - (231) - (231) - (231)
Statement
Deferred tax arising - - - - - (222) - (222) - (222)
Defined benefit plan actuarial gain - - - - - - 6,936 6,936 - 6,936
Deferred tax arising - - - - - - (1,734) (1,734) - (1,734)
Impact of the change in rate of deferred tax on defined benefit plan actuarial - - - - - - 17 17 - 17
gain
Total other comprehensive - - - - - (1,409) 5,529 4,120 (34) 4,086
income/(expense)
Total comprehensive income/(expense) for the period - - - - - (1,409) 35,967 34,558 103 34,661
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share-based payments - - - - - - 999 999 - 999
Deferred tax on share-based payments - - - - - - (52) (52) - (52)
Corporation tax on share-based payments - - - - - - 192 192 - 192
Purchase of own shares - - (3,542) - - - - (3,542) - (3,542)
Disposal of own shares - - 3,716 - - - (3,716) - - -
Total contributions by and distributions to owners - - 174 - - - (2,577) (2,403) - (2,403)
Total transactions with owners of the Company - - 174 - - (1,409) 33,390 32,155 103 32,258
At 30 June 2021 50,013 24,482 (632) 75,394 (213,067) (1,096) 383,959 319,053 1,053 320,106
Attributable to equity holders of the Company
Share Capital Non-
Share premium Own redemption Consolidation Hedging Retained controlling Total
capital account shares reserve reserve reserve earnings Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Prior half year
At 1 January 2020 50,013 24,482 (1,391) 75,394 (213,067) 559 359,053 295,043 723 295,766
Total comprehensive (expense)/income for the period
(Loss)/profit - - - - - - (14,391) (14,391) 213 (14,178)
for the financial period attributable to equity shareholders of the Parent
Other comprehensive
(expense)/income
Foreign currency translation differences - - - - - - 74 74 48 122
Effective portion of changes in fair value of cash flow hedges - - - - - (1,273) - (1,273) - (1,273)
Net change in fair value of cash flow hedges transferred to the Income - - - - - 619 - 619 - 619
Statement
Deferred tax arising - - - - - 111 - 111 - 111
Defined benefit plan actuarial loss - - - - - - (5,205) (5,205) - (5,205)
Deferred tax arising - - - - - - 989 989 - 989
Impact of the change in rate of deferred tax on defined benefit plan actuarial - - - - - - (314) (314) - (314)
loss
Total other comprehensive - - - - - (543) (4,456) (4,999) 48 (4,951)
(expense)/income
Total comprehensive (expense)/income for the period - - - - - (543) (18,847) (19,390) 261 (19,129)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share-based payments - - - - - - 1,244 1,244 - 1,244
Deferred tax on share-based payments - - - - - - (253) (253) - (253)
Corporation tax on share-based payments - - - - - - 186 186 - 186
Purchase of own shares - - (2,035) - - - - (2,035) - (2,035)
Disposal of own shares - - 2,351 - - - (2,351) - - -
Total contributions by and distributions to owners - - 316 - - - (1,174) (858) - (858)
Total transactions with owners of the Company - - 316 - - (543) (20,021) (20,248) 261 (19,987)
At 30 June 2020 50,013 24,482 (1,075) 75,394 (213,067) 16 339,032 274,795 984 275,779
Attributable to equity holders of the Company
Share Capital Non-
Share premium Own redemption Consolidation Hedging Retained controlling Total
capital account shares reserve reserve reserve earnings Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Prior year
At 1 January 2020 50,013 24,482 (1,391) 75,394 (213,067) 559 359,053 295,043 723 295,766
Total comprehensive (expense)/income for the year
Profit for the financial year attributable to equity shareholders of the - - - - - - 2,370 2,370 188 2,558
Parent
Other comprehensive (expense)/income
Foreign currency translation differences - - - - - - (195) (195) 39 (156)
Effective portion of changes in fair value of cash flow hedges - - - - - (1,526) - (1,526) - (1,526)
Net change in fair value of cash flow hedges transferred to the Income - - - - - 1,238 - 1,238 - 1,238
Statement
Deferred tax arising - - - - - 42 - 42 - 42
Defined benefit plan actuarial loss - - - - - - (12,741) (12,741) - (12,741)
Deferred tax arising - - - - - - 2,421 2,421 - 2,421
Impact of the change in rate of deferred tax on defined benefit plan actuarial - - - - - - (314) (314) - (314)
loss
Total other comprehensive - - - - - (246) (10,829) (11,075) 39 (11,036)
(expense)/income
Total comprehensive (expense)/income for the year - - - - - (246) (8,459) (8,705) 227 (8,478)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share-based payments - - - - - - 2,998 2,998 - 2,998
Deferred tax on share-based payments - - - - - - (104) (104) - (104)
Corporation tax on share-based payments - - - - - - 371 371 - 371
Purchase of own shares - - (2,705) - - - - (2,705) - (2,705)
Disposal of own shares - - 3,290 - - - (3,290) - - -
Total contributions by and distributions to owners - - 585 - - - (25) 560 - 560
Total transactions with owners of the Company - - 585 - - (246) (8,484) (8,145) 227 (7,918)
At 31 December 2020 50,013 24,482 (806) 75,394 (213,067) 313 350,569 286,898 950 287,848
Notes to the Condensed Consolidated Financial Statements
for the half year ended 30 June 2021
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 2021 comprise the Company and its subsidiaries (together
referred to as the "Group").
The Annual Financial Statements will be prepared in accordance with United
Kingdom adopted International Financial Reporting Standards. 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
contained in UK adopted IFRS.
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 19 August 2021. The
Condensed Consolidated Half Year Financial Statements are not statutory
accounts as defined by Section 434 of the Companies Act 2006.
The financial information for the year ended 31 December 2020 has been
extracted from the Annual Financial Statements, included in the Annual Report
2020, 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 Condensed Consolidated Financial Statements for the half year ended 30
June 2021 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 below.
The Annual Financial Statements of the Group were prepared in accordance with
International Reporting Standards ("IFRSs") adopted pursuant to
Regulation(EC) No 1606/2002 as it applies in the European Union. As required
by the Disclosure Guidance and Transparency Rules of the UK Financial Conduct
Authority, the condensed set of Financial Statements has been prepared
applying the accounting policies and presentation that were applied in the
preparation of the Company's published Consolidated Financial Statements for
the year ended 31 December 2020.
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 2020.
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.
Going concern
Details of the Group's funding position are set out in Note 14. The additional
short-term bank facilities of £90 million established in May 2020 were not
utilised and have now reached maturity. In addition, the COVID Corporate
Financing Facility ("CCFF") that was put in place at the same time was also
not required and expired in April 2021. Bank facilities have returned to
pre-COVID-19 levels and total £165 million, of which £140 million are
committed. Trading has improved steadily from the second half of 2020 and cash
generation has been strong. This trend has continued in the first half of 2021
and as at 30 June 2021 net debt, on a pre-IFRS 16 basis, was £7.6 million.
This compares with £26.9 million at 31 December 2020 and £53.9 million at 30
June 2020. Consequently, the Group has significant headroom of £105.4 million
at 30 June 2021 against its bank facilities.
In assessing the appropriateness of adopting the going concern basis in the
Condensed Consolidated Half Year Financial Statements, the Board continues to
review, on a rolling basis, a range of severe downside scenario stress tests
to assess the potential impact of emerging and longer-term risks. The aim is
to ensure that the business model is reviewed regularly to ensure that it is
sustainable over the long term.
The stress testing reflects the principal risks that could conceivably
threaten the Group's ability to continue operating as a going concern and
focuses on scenarios that might give rise to sales volume reductions,
deteriorating operating margins and increases in interest rates. The impact of
continuing COVID-19, uncertainty and a general background of macro-economic
and political uncertainty all remain and combine to be the key risk areas and
all of the Group's other principal risks are covered within the same downside
stress tests.
The Group's performance is dependent on economic and market conditions, the
outlook for which is difficult to predict. However, based on current
expectations and as consequence of significantly improved trading, the Group's
latest cash forecasts continue to meet half year and year-end bank covenants
and there is adequate headroom that is not dependent on facility renewals. At
30 June 2021, on a covenant test basis (pre-IFRS 16), the relevant ratios were
achieved comfortably and were as follows:
EBITA:interest charge - 25.4 times (covenant test requirement - to be greater than 2.5 times).
Net debt:EBITDA - 0.1 times (covenant test requirement - to be less than 3.0 times).
Net debt:EBITDA on a reported basis is 0.6 times at 30 June 2021, with a
continuing objective to be below 1.0 times. After considering the risks
associated with COVID-19, the wider economy and other relevant uncertainties,
the Directors believe that the Group is well placed to manage its business
risks successfully. The Board considers that the Group has sufficient
unutilised facilities which mature after 12 months. Accordingly, they continue
to adopt the going concern basis in preparing the Condensed Consolidated Half
Year Financial Statements.
2. Accounting policies
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
(http://www.marshalls.co.uk) ). The same accounting policies, methods of
computation and disclosure are followed in the Condensed Consolidated Half
Year Financial Statements as compared to the most recent Annual Financial
Statements. New standards, revisions to standards or new interpretations
becoming effective during the 2021 financial year are not expected to have a
material impact on the Financial Statements for the Group. For the comparative
periods, operational restructuring costs and asset impairments have been
disclosed separately on the face of the Income Statement due to their scale
and exceptional nature and to provide a better understanding of the Group's
results. Further details have been included in Note 6. The Condensed
Consolidated Half Year Financial Statements are presented in Sterling, rounded
to the nearest thousand.
3. Alternative performance measures
The Group uses alternative performance measures ("APMs") which are not defined
or specified under IFRS. The Group believes that its 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.
Results before operational restructuring costs and asset impairments
Operational restructuring costs and asset impairments have been disclosed
separately on the face of the Income Statement due to their scale and
exceptional nature and to provide a better understanding of the Group's
results. Further details have been included in Note 6.
Pre-IFRS 16 basis
Disclosures required under IFRS are referred to as either on a post-IFRS 16
basis or on a reported basis. Disclosures referred to on a pre-IFRS 16 basis
are restated to those that applied before the adoption of IFRS 16 and are used
to provide additional information and a more detailed understanding of the
Group results. A summarised Income Statement on both a reported basis and a
pre-IFRS 16 basis is set out below. Both are before operational restructuring
costs and asset impairments.
Pre-IFRS 16 As reported Pre-IFRS 16 As reported Pre-IFRS 16 As reported
June 2021 June 2021 June 2020 June 2020 December 2020 December 2020
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 298,141 298,141 210,473 210,473 469,454 469,454
Net operating costs (256,922) (257,115) (207,690) (206,933) (443,992) (442,272)
Operating profit 41,219 41,026 2,783 3,540 25,462 27,182
Finance charges (net) (1,263) (2,176) (1,241) (1,908) (3,116) (4,720)
Profit before tax 39,956 38,850 1,542 1,632 22,346 22,462
Income tax (8,275) (8,275) (1,186) (1,186) (5,196) (5,196)
Profit after tax 31,681 30,575 356 446 17,150 17,266
The financial metrics are presented on both a reported basis and a pre-IFRS 16
basis. Both are before operational restructuring costs and asset impairments
and are as follows:
Pre-IFRS 16 As reported Pre-IFRS 16 As reported Pre-IFRS 16 As reported
June 2021 June 2021 June 2020 June 2020 December 2020 December 2020
Profit before tax (£'000) 39,956 38,850 1,542 1,632 22,346 22,462
EBITDA (£'000) 50,872 56,371 11,765 18,176 43,838 57,618
EPS (pence) 15.85 15.30 0.07 0.12 8.54 8.60
Net debt (£'000) 7,597 52,421 53,858 98,868 26,945 75,566
ROCE (%) 20.2 18.1 11.9 10.9 8.9 8.2
Net debt:EBITDA 0.1 0.6 1.0 1.5 0.6 1.3
Gearing (%) 2.3 16.4 19.4 35.9 9.3 26.3
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. Both EBITA and EBITDA are disclosed
before operational restructuring costs and asset impairments.
Pre-IFRS 16 As reported Pre-IFRS 16 As reported Pre-IFRS 16 As reported
June 2021 June 2021 June 2020 June 2020 December 2020 December 2020
£'000 £'000 £'000 £'000 £'000 £'000
EBITDA 50,872 56,371 11,765 18,176 43,838 57,618
Depreciation (8,206) (13,898) (7,687) (13,341) (15,657) (27,717)
EBITA 42,666 42,473 4,078 4,835 28,181 29,901
Amortisation of intangible assets (1,447) (1,447) (1,295) (1,295) (2,719) (2,719)
Operating profit 41,219 41,026 2,783 3,540 25,462 27,182
ROCE
Reported ROCE is defined as EBITA divided by shareholders' funds plus net
debt. ROCE is disclosed before operational restructuring costs and asset
impairments.
Pre-IFRS 16 As reported Pre-IFRS 16 As reported Pre-IFRS 16 As reported
June 2021 June 2021 June 2020 June 2020 December 2020 December 2020
£'000 £'000 £'000 £'000 £'000 £'000
EBITA - half year ended 30 June 42,666 42,473 4,078 4,835 4,078 4,835
EBITA - half year ended 31 December 24,103 25,066 35,386 35,899 24,103 25,066
EBITA - year ended 30 June 66,769 67,539 39,464 40,734 28,181 29,901
Shareholders' funds 323,296 320,106 277,773 275,779 289,816 287,848
Net debt 7,597 52,421 53,858 98,868 26,945 75,566
330,893 372,527 331,631 374,647 316,761 363,414
Reported ROCE 20.2% 18.1% 11.9% 10.9% 8.9% 8.2%
Net debt
Net debt comprises cash at bank and in hand, bank loans and leasing
liabilities. An analysis of net debt is provided in Note 13.
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 Board. The
Board has 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 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.
Included in "Other" are the Group's Landscape Protection, Mineral Products,
Mortars and Screeds 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 2021 Half year ended June 2020 Year ended December 2020
Landscape Landscape Landscape
Products Other Total Products* Other* Total Products* Other* Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
External revenue 250,122 50,200 300,322 168,496 43,283 211,779 388,420 83,787 472,207
Inter-segment revenue (179) (2,002) (2,181) (14) (1,292) (1,306) (314) (2,439) (2,753)
Total revenue 249,943 48,198 298,141 168,482 41,991 210,473 388,106 81,348 469,454
Segment operating profit 40,283 3,600 43,883 8,430 (538) 7,892 32,864 1,066 33,930
Operational restructuring costs and asset impairments - (17,609) (17,809)
Unallocated administration costs (2,857) (4,352) (6,748)
Operating profit/(loss) 41,026 (14,069) 9,373
Finance charges (net) (2,176) (1,908) (4,720)
Profit/(loss) before tax 38,850 (15,977) 4,653
Taxation (8,275) 1,799 (2,095)
Profit/(loss) after tax 30,575 (14,178) 2,558
* Following a change to the way in which information is reported internally,
the comparative figures are being restated to ensure consistent classification
with the analysis reported for the half year ended 30 June 2021.
Segment assets
June December
2021 2020* 2020*
£'000 £'000 £'000
Fixed assets, right-of-use assets and inventory:
Landscape Products 258,451 250,153 249,842
Other 59,980 70,753 64,331
Total segment fixed assets, right-of-use assets and inventory 318,431 320,906 314,173
Unallocated assets 277,211 289,917 300,256
Consolidated total assets 595,642 610,823 614,429
* Following a change to the way in which information is reported internally,
the comparative figures are being restated to ensure consistent classification
with the analysis reported for the half year ended 30 June 2021.
For the purpose of monitoring segment performance and allocating performance
between segments, the Group's CODM monitors the tangible fixed assets,
right-of-use assets and inventory. Assets used jointly by reportable segments
are not allocated to individual reportable segments.
Other segment information
Depreciation and amortisation Fixed asset and right-of-use asset additions
Half year ended June Year ended Half year ended June Year ended
2021 2020* December 2020* 2021 2020 December 2020
£'000 £'000 £'000 £'000 £'000 £'000
Landscape Products 12,022 12,663 23,852 7,273 14,698 24,723
Other 3,323 1,972 6,584 3,140 969 6,528
15,345 14,635 30,436 10,413 15,667 31,251
* Following a change to the way in which information is reported internally,
the comparative figures are being restated to ensure consistent classification
with the analysis reported for the half year ended 30 June 2021.
Geographical destination of revenue
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
United Kingdom 278,611 192,833 438,173
Rest of the World 19,530 17,640 31,281
298,141 210,473 469,454
5. Net operating costs
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Raw materials and consumables 116,644 87,110 182,983
Personnel costs 63,997 52,108 122,260
Depreciation of property, plant and equipment 8,206 7,687 15,657
Depreciation of right-of-use assets 5,692 5,653 12,060
Amortisation of intangible assets 1,447 1,295 2,719
Own work capitalised (1,585) (967) (2,991)
Other operating costs 63,719 54,602 112,603
Redundancy and other restructuring costs - - 356
Operating costs 258,120 207,488 445,647
Other operating income (1,137) (518) (2,272)
Net loss/(gain) on asset and property disposals 132 (37) (1,103)
Net operating costs before operational restructuring costs and asset 257,115 206,933 442,272
impairments
Operational restructuring costs and asset impairments (Note 6) - 17,609 17,809
Net operating costs 257,115 224,542 460,081
6. Operational restructuring costs and asset impairments
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Works closure costs - 3,257 4,502
Redundancy - 7,657 7,818
Asset impairments - 6,695 5,489
- 17,609 17,809
The Board determined that certain charges to the Condensed Consolidated Half
Year Report should be separately identified for better understanding of the
Group's results for the half year ended 30 June 2020
7. Financial expenses
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Financial expenses
Net interest expense on defined benefit pension scheme 139 73 154
Interest expense on bank loans, overdrafts and loan notes 1,125 1,174 2,972
Interest expense on lease liabilities 913 667 1,604
2,177 1,914 4,730
Net interest expense on the defined benefit pension scheme is disclosed net of
Company recharges.
8. Income tax expense
Total Before operational Operational Total Before operational Operational Total
restructuring restructuring restructuring restructuring
costs and asset costs and asset costs and asset costs and asset
impairments impairments impairments impairments
Half year ended June Half year ended June Year ended December
2021 2020 2020 2020 2020 2020 2020
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Current tax expense
Current year 5,006 940 (2,225) (1,285) 5,072 (2,341) 2,731
Adjustments for prior years (612) (595) - (595) (1,768) - (1,768)
4,394 345 (2,225) (1,880) 3,304 (2,341) 963
Deferred taxation expense
Origination and reversal of temporary differences:
Current year 4,698 267 (760) (493) 918 (760) 158
Adjustment for prior years (817) 574 - 574 974 - 974
Total tax expense 8,275 1,186 (2,985) (1,799) 5,196 (3,101) 2,095
Half year ended June Half year ended June Year ended December
2021 2020 2020
% £'000 % £'000 % £'000
Reconciliation of effective tax rate
Profit/(loss) before tax 100.0 38,850 100.0 (15,977) 100.0 4,653
Tax using domestic corporation tax rate 19.0 7,382 19.0 (3,036) 19.0 884
Impact of deprecation in excess of capital allowances (6.8) (2,651) (0.8) 131 3.7 173
Short-term timing differences 0.7 285 (4.0) 645 13.9 645
Adjustment to tax charge in prior period (1.6) (612) 3.7 (595) (38.0) (1,768)
Expenses not deductible for tax purposes - (9) (6.1) 975 22.1 1,029
Corporation tax charge/(credit) for the period 11.3 4,395 11.8 (1,880) 20.7 963
Impact of capital allowances in excess of depreciation 5.6 2,171 17.5 (2,795) (34.1) (1,585)
Short-term timing differences - (11) (5.1) 815 1.1 52
Pension scheme movements 0.1 49 0.5 (76) (2.7) (124)
Other items (0.1) (52) (0.1) 9 0.4 18
Adjustment to tax charge in prior period (2.1) (817) (3.6) 574 20.9 974
Impact of the change in the rate of corporation tax on deferred taxation 6.5 2,540 (9.7) 1,554 38.7 1,797
Total tax charge/(credit) for the period 21.3 8,275 11.3 (1,799) 45.0 2,095
The effective tax rate was 21.3 per cent (2020: 72.7 per cent, before
operational restructuring costs and asset impairments).
The net amount of deferred taxation debited to the Consolidated Statement of
Comprehensive Income in the period was £1,939,000 (30 June 2020: £786,000
credit; 31 December 2020: £2,149,000 credit).
An increase in the UK corporation tax rate to 25 per cent was announced in the
period, to be effective from April 2023. The rate change was substantively
enacted on 24 May 2021 and therefore the deferred taxation liability at 30
June 2021 has been calculated using the 25 per cent rate, which is the rate at
which most of the deferred tax is expected to unwind in the future. This rate
change has given rise to an increase to the deferred tax charge of £2.9
million in the half year.
The effective tax rate in the prior year period was impacted by a deferred tax
charge of £1,554,000 arising from the impact of a change in the rate of
corporation tax.
9. Earnings per share
Basic earnings per share from total operations of 15.30 pence (30 June 2020:
7.25 pence loss; 31 December 2020: 1.19 pence earnings) per share is
calculated by dividing the profit attributable to Ordinary Shareholders for
the financial period after adjusting for non-controlling interests of
£30,438,000 (30 June 2020: £14,391,000 loss; 31 December 2020: £2,370,000
profit) by the weighted average number of shares in issue during the period of
198,998,315 (30 June 2020: 198,559,008; 31 December 2020: 198,642,224).
Basic earnings per share before operational restructuring costs and asset
impairments of 15.30 pence (30 June 2020: 0.12 pence; 31 December 2020: 8.60
pence) per share is calculated by dividing the profit attributable to Ordinary
Shareholders for the financial period after adjusting for non-controlling
interests of £30,438,000 (30 June 2020: £233,000; 31 December 2020:
£17,078,000) by the weighted average number of shares in issue during the
period of 198,998,315 (30 June 2020: 198,559,008; 31 December 2020:
198,642,224).
Profit attributable to Ordinary Shareholders
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Profit before operational restructuring costs and asset impairments 30,575 446 17,266
Operational restructuring costs and asset impairments - (14,624) (14,708)
Profit/(loss) for the financial period 30,575 (14,178) 2,558
Result attributable to non-controlling interests (137) (213) (188)
Profit/(loss) attributable to Ordinary Shareholders 30,438 (14,391) 2,370
Weighted average number of Ordinary Shares
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Number of issued Ordinary Shares 200,052,157 200,052,157 200,052,157
Effect of shares transferred into employee benefit trust (1,063,842) (1,493,149) (1,409,933)
Weighted average number of Ordinary Shares 198,988,315 198,559,008 198,642,224
Diluted earnings per share before operational restructuring costs and asset
impairments of 15.23 pence (31 December 2020: 1.18 pence) per share is
calculated by dividing the profit for the financial period, after adjusting
for non-controlling interests of £30,438,000 (31 December 2020: £2,370,000),
by the weighted average number of shares in issue during the period of
198,988,315 (31 December 2020: 198,642,224), plus potentially dilutive shares
of 825,665 (31 December 2020: 1,614,132), which totals 199,813,980 (31
December 2020: 200,256,356).
For the half year ended 30 June 2020, the potential Ordinary Shares were
considered to be anti-dilutive to the total earnings per share calculation.
Diluted earnings per share before operational restructuring costs and asset
impairments of 15.23 pence (30 June 2020: 0.12 pence; 31 December 2020: 8.53
pence) per share is calculated by dividing the profit for the financial
period, after adjusting for non-controlling interests of £30,438,000 (30 June
2020: £233,000; 31 December 2020: £17,078,000), by the weighted average
number of shares in issue during the period of 198,988,315 (30 June 2020:
198,559,008; 31 December 2020: 198,642,224), plus potentially dilutive shares
of 825,665 (30 June 2020: 1,508,427; 31 December 2020: 1,614,132), which
totals 199,813,980 (30 June 2020: 200,067,435; 31 December 2020: 200,256,356).
Weighted average number of Ordinary Shares (diluted)
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Weighted average number of Ordinary Shares 198,988,315 198,559,008 198,642,224
Dilutive shares 825,665 1,508,427 1,614,132
Weighted average number of Ordinary Shares (diluted) 199,813,980 200,067,435 200,256,356
10. Dividends
After the balance sheet date, the following dividends were proposed by the
Directors.
Half year ended June Year ended
December
Pence per 2021 2020 2020
qualifying share £'000 £'000 £'000
2021 interim 4.70 9,359 - -
2020 final 4.30 - - 8,542
9,359 - 8,542
The following dividends were approved by the shareholders in the period:
Half year ended June Year ended
December
Pence per 2021 2020 2020
qualifying share £'000 £'000
£'000
2020 final 4.30 8,542 - -
11. Lease liabilities
June December
2021 2020 2020
£'000 £'000 £'000
Analysed as:
Amounts due for settlement within 12 months (shown under current liabilities) 9,201 10,213 10,065
Amounts due for settlement after 12 months 35,881 35,404 38,926
45,082 45,617 48,991
The Group does not face a significant liquidity risk with regard to its lease
liabilities. The interest expense on lease liabilities amounted to £913,000
for the half year ended 30 June 2021 (June 2020: £667,000; December 2020:
£1,604,000). Lease liabilities are calculated at the present value of the
lease payments that are not paid at the commencement date.
For the half year ended 30 June 2021, the average effective borrowing rate was
2.9 per cent (June 2020: 2.7 per cent; December 2020: 2.8 per cent). Interest
rates are fixed at the contract date. All leases are on a fixed repayment
basis and no arrangements have been entered into for contingent rental
payments.
The vast majority of lease obligations are denominated in Sterling.
12. Employee benefits
The Company sponsors a funded defined benefit 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 being carried out with an effective date of 5 April 2021. 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 2018. The results
of that valuation have been projected to 30 June 2021 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
2021 2020 2020
£'000 £'000 £'000
Present value of Scheme liabilities (370,104) (388,391) (399,938)
Fair value of Scheme assets 379,577 398,784 402,664
Net amount recognised (before any adjustment for deferred tax) 9,473 10,393 2,726
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
2021 2020 2020
£'000 £'000 £'000
Service cost:
Net interest expense recognised in the Consolidated Income Statement 189 123 254
Remeasurements of the net liability:
Return on Scheme assets (excluding amount included in interest expense) 20,249 (32,494) (40,151)
(Gain)/loss arising from changes in financial assumptions (23,929) 36,287 52,491
(Gain)/loss arising from changes in demographic assumptions (3,256) 1,412 1,209
Experience gain - - (808)
(Credit)/debit recorded in other comprehensive income (6,936) 5,205 12,741
Total defined benefit (credit)/debit (6,747) 5,328 12,995
The principal actuarial assumptions used were:
June December
2021 2020 2020
Liability discount rate 1.90% 1.55% 1.40%
Inflation assumption - RPI 3.20% 2.75% 2.85%
Inflation assumption - CPI 2.55% 2.05% 2.20%
Rate of increase in salaries n/a n/a n/a
Revaluation of deferred pensions 2.55% 2.10% 2.20%
Increases for pensions in payment:
CPI pension increases (maximum 5% per annum) 2.55% 2.10% 2.20%
CPI pension increases (maximum 5% per annum, minimum 3% per annum) 3.35% 3.20% 3.25%
CPI pension increases (maximum 3% per annum) 2.20% 1.90% 1.95%
Proportion of employees opting for early retirement 0% 0% 0%
Proportion of employees commuting pension for cash 80% 80% 80%
Mortality assumption - before retirement Same as post Same as post Same as post- retirement
retirement retirement
Mortality assumption - after retirement (males) S2PXA tables S2PXA tables S2PXA tables
Loading 110% 110% 110%
Projection basis Year of birth Year of birth Year of birth
CMI_2020 CMI_2019 CMI_2019 1.0%
1.0% 1.0%
Mortality assumption - after retirement (females) S2PXA tables S2PXA tables S2PXA tables
Loading 110% 110% 110%
Projection basis Year of birth Year of birth Year of birth
CMI_2020 CMI_2019 CMI_2019
1.0% 1.0% 1.0%
Future expected lifetime of current pensioner at age 65:
Male aged 65 at year end 85.5 85.7 85.7
Female aged 65 at year end 87.6 87.7 87.7
Future expected lifetime of future pensioner at age 65:
Male aged 45 at year end 86.5 86.7 86.7
Female aged 45 at year end 88.8 88.9 88.9
13. Analysis of net debt
1 January Cash New Other 30 June
2021 flow leases changes(i) 2021
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 103,707 (51,377) - (65) 52,265
Debt due within 1 year (20,000) - - - (20,000)
Debt due after 1 year (110,282) 70,241 - 436 (39,605)
Lease liabilities (48,991) 5,640 (1,731) - (45,082)
(75,566) 24,504 (1,731) 371 (52,422)
(i) Other changes include foreign currency movements
on cash and loan balances.
The cash flow of £24,504,000 in the period included the impact of transfers
between bank borrowings and cash and cash equivalents and reflects a
normalisation of the Group's management of liquidity as business conditions
improved following the COVID-19 pandemic.
Reconciliation of net cash flow to movement in net debt
Half year ended June Year ended
December
2021 2020 2020
£'000 £'000 £'000
Net (decrease)/increase in cash and cash equivalents (51,377) 33,129 50,481
Cash outflow/(inflow) from decrease/(increase) in bank borrowings 70,241 (67,417) (57,891)
Cash outflow from lease repayments 5,640 6,411 13,780
New leases entered into (1,731) (10,068) (20,811)
Effect of exchange rate fluctuations 371 (947) (1,149)
Movement in net debt in the period 23,144 (38,892) (15,590)
Net debt at the beginning of the period (75,566) (59,976) (59,976)
Net debt at the end of the period (52,422) (98,868) (75,566)
14. Borrowing facilities
The total bank borrowing facilities at 30 June 2021 amounted to £165.0
million (30 June 2020: £255.0 million; 31 December 2020: £255.0 million), of
which £105.4 million (30 June 2020: £115.1 million; 31 December 2020:
£124.7 million) remained unutilised.
The undrawn facilities available at 30 June 2021, in respect of which all
conditions precedent had been met, were as follows:
June December
2021 2020 2020
£'000 £'000 £'000
Committed:
Expiring in more than 2 years but not more than 5 years 80,395 140 9,718
Expiring in 1 year or less - 90,000 90,000
Uncommitted:
Expiring in 1 year or less 25,000 25,000 25,000
105,395 115,140 124,718
The additional short-term bank facilities of £90 million established in May
2020 were not utilised and have now reached maturity. In addition, the COVID
Corporate Financing Facility ("CCFF") that was put in place at the same time
was also not required. Bank facilities have returned to pre-COVID-19 levels
and total £165 million, of which £140 million are committed.
On 13 August 2021, the Group entered into a new £20 million revolving credit
facility with HSBC and, the Group has also renewed its short-term working
capital facilities of £25.0 million with NatWest.
Amendment agreements have also been entered into with all our partner banks
following the announcement that LIBOR will cease at the end of 2021. The
Group's committed bank facilities are all revolving credit facilities with
interest now charged at variable rates based on SONIA. 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 signing of new bank facilities, the current facilities are set
out as follows:
Facility Cumulative
facility
£'000 £'000
Committed facilities:
Q3: 2025 20,000 20,000
Q3: 2024 35,000 55,000
Q1: 2024 25,000 80,000
Q3: 2023 20,000 100,000
Q2: 2023 20,000 120,000
Q4: 2022 20,000 140,000
On-demand facilities:
Available all year 15,000 155,000
Seasonal (February to August inclusive) 10,000 165,000
15. 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 2021 is shown below:
June June December
2021 2020 2020
Book Fair Book Fair Book Fair
amount value amount value amount value
£'000 £'000 £'000 £'000 £'000 £'000
Trade and other receivables 107,809 107,809 86,527 86,527 86,699 86,699
Cash and cash equivalents 52,265 52,265 86,609 86,609 103,707 103,707
Bank loans (59,605) (57,348) (139,860) (133,859) (130,282) (126,010)
Trade and other payables (125,422) (125,422) (100,700) (100,700) (110,039) (110,039)
Interest rate swaps, forward contracts and fuel hedges (855) (855) (34) (34) 332 332
Contingent consideration (1,800) (1,800) (2,420) (2,420) (1,800) (1,800)
Financial instrument assets and liabilities - net (27,608) (69,878) (51,383)
Non-financial instrument assets and liabilities - net 347,714 345,657 339,231
320,106 275,779 287,848
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. Other than
contingent consideration, which uses a level 3 basis, all use level 2
valuation techniques. There have been no movements between levels 1,2 and 3
during the period for any financial instruments.
(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) 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.
(d) Contingent consideration
Contingent consideration has been calculated based on the Group's expectation
of what it will pay in relation to the post-acquisition performance of the
acquired entities.
(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 2021
Derivative financial liabilities - (855) - -
30 June 2020
Derivative financial liabilities - (34) - (34)
31 December 2020
Derivative financial assets - 332 - 332
16. Principal risks and uncertainties
Risk management is the responsibility of the Board and is a key factor in the
delivery of the Group's strategic objectives. The Board establishes the
culture of effective risk management and is responsible for maintaining
appropriate systems and controls. The Board sets the risk appetite and
determines the policies and procedures that mitigate exposure to risks. The
Board plays a central role in the Group's Risk Review process, which covers
emerging risks and incorporates scenario planning and detailed stress testing.
The COVID-19 pandemic continues to have implications for the business and the
nature and extent of its ongoing impact remains under constant review. The
following bullet points summarise the key current risks for the Group. In
each case, detailed, dynamic plans have been introduced which involve specific
risk assessments and carefully designed new operating procedures. Mitigating
controls continue to be reviewed as appropriate and additional scenario
planning is regularly undertaken.
· Health and safety - to ensure the safety and wellbeing of all
employees and other stakeholders. The Group has used frequent and consistent
messaging with mental and physical health prioritised for all employees and
stakeholders. The Group has maintained its established COVID-19 workplace
protocols, despite the recent changes in Government guidelines.
· Information technology and cyber security - to ensure the continuity
of business during the COVID-19 restrictions. Cyber risk has increased during
the COVID-19 period and we continue to use external specialists to undertake
detailed reviews in order to support our ongoing monitoring. Practical support
and guidance together with additional cyber security training have been
provided to facilitate home working and this has remained a priority as the
focus has shifted to the planning for a return to a more "business as usual"
environment.
· Security of raw materials supply and other procurement risks - to
ensure that production and distribution can continue to meet the increased
levels of demand. Reduced raw material availability has led to increased
costs but the aim has been to build in flexibility so that the business can
respond to increasing demand and changing external circumstances. Despite a
shortage of HGV drivers in the sector, the Group continues to ensure that the
vehicle fleet can continue to operate safely and effectively.
· Climate change and other ESG issues - to ensure the effective
management of all relevant risks and opportunities. The Group remains
committed to full transparency for all stakeholders and Group's sustainability
objectives remain core to the Group's business model and strategy. The Group
employs experienced, dedicated staff to support our ESG agenda and the
detailed project planning that will be required to meet the emission reduction
targets approved by the Science Based Targets initiative.
The other principal risks and uncertainties that could impact the business for
the remainder of the current financial year are those detailed on pages 24 to
31 of the 2020 Annual Report. These cover the strategic, financial and
operational risks and have not changed significantly during the period. As
trading has progressively improved, the risk profile of certain risks, such as
bank funding and liquidity, has reduced.
Strategic risks include those relating to the ongoing Government policy in
relation to COVID-19, general economic conditions, the actions of customers,
suppliers and competitors, and weather conditions. Cyber security risk within
the wider market is also an increasing risk for the Group and continues to be
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 other than COVID-19 include the effect of
legislation or other regulatory actions, the actions of competitors, raw
material prices and threats from cyber security and new business strategies.
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 contained
in UK adopted IFRS; 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 2021 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 2021 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 2021 were as follows:
Vanda Murray OBE Chair of the Board
Janet Ashdown Senior Non-Executive Director (retired 12 May 2021)
Angela Bromfield Non-Executive Director
Jack Clarke Group Finance Director (retired 1 April 2021)
Martyn Coffey Chief Executive
Avis Darzins Non-Executive Director (appointed 1 June 2021)
Justin Lockwood Chief Financial Officer (appointed 26 July 2021)
Tim Pile Non-Executive Director
Graham Prothero Senior Non-Executive Director
The responsibilities of the Directors during their period of service were as
set out on pages 92 and 93 of the 2020 Annual Report
(https://www.marshalls.co.uk/investor/results-reports-and-presentations) .
By order of the Board
Shiv Sibal
Group Company Secretary
19 August 2021
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
We have been engaged by the Company to review the condensed set of Financial
Statements in the Half Year Financial Report for the six months ended 30 June
2021 which comprises the Income Statement, the Balance Sheet, the Statement of
Changes in Equity, the Cash Flow Statement and the related Notes 1 to 16. 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 Financial Reporting Council. 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 will be prepared in
accordance with IFRSs as adopted by the UK. 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 contained in UK adopted IFRS.
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 interim 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 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 six months ended 30 June 2021 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
contained in UK adopted IFRS and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
19 August 2021
Shareholder Information
Financial calendar
Half year results for the year ending December 2021 Announced 19 August 2021
Results for the year ending December 2021 Announcement March 2022
Report and accounts for the year ending December 2021 April 2022
Annual General Meeting May 2022
Final dividend for the year ending December 2021 Payable July 2022
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 Registrars 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 (http://www.marshalls.co.uk) .
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