Annual Financial Report

RNS Number : 5773E

Marshalls PLC

10 April 2014

 



10 April 2014

Marshalls plc

Annual Report 2013 and Notice of 2014 Annual General Meeting

The Company announces that it has published its full Annual Report for the year ended 31 December 2013 and Notice of 2014 Annual General Meeting which is to be held at 11.00am on Wednesday 14 May 2014 at Birkby Grange, Birkby Hall Road, Huddersfield HD2 2XB. 

Copies of the documents listed below have been posted to shareholders:

1.  Annual Report 2013

2.  Notice of 2014 Annual General Meeting

3.  Form of Proxy for the 2014 Annual General Meeting

A copy of each of these documents has also been submitted to the UK Listing Authority via the National Storage Mechanism and is available for inspection at www.morningstar.co.uk/uk/NSM.

These documents are also accessible via the Company's website at www.marshalls.co.uk.

Reference is made to RNS announcement number 1747D published on 26 March 2014 (Final Results).  In addition to the information in that announcement, in accordance with DTR 6.3.5(2)(b), we also set out below the following extracts from the Annual Report 2013 in full text form:-

=  Directors' Responsibility Statement;

=  Principal Risks

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Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the Group and Parent Company Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and Parent Company Financial Statements for each financial year. Under that law they are required to prepare the Group Financial Statements in accordance with IFRSs as adopted by the European Union ("EU") and applicable law, and they have elected to prepare the Parent Company Financial Statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company Financial Statements, the Directors are required to:

·  select suitable accounting policies and then apply them consistently;

·  make judgements and estimates that are reasonable and prudent;

·  for the Group Financial Statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;

·  for the Parent Company Financial Statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Parent Company Financial Statements; and

·  prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Parent Company and enable them to ensure that its Financial Statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement each of which complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 

The Directors who held office at the date of approval of the Directors' Report and whose names and functions are listed on pages 48 and 49 of the Annual Report confirm that, to the best of each of their knowledge:

(a)    the Group Financial Statements in the Annual Report, which have been prepared in accordance with International Financial Reporting Standards ("IFRS's") as adopted by the EU, IFRIC interpretation and those parts of the Companies Act 2006 applicable to companies reporting under IFRS, give a true and fair view of the assets, liabilities, financial position and profit of the Group taken as a whole;

(b)    the Parent Company's Financial Statements in the Annual Report, which have been prepared in accordance with United Kingdom Accounting Standards (United Kingdom GAAP) and applicable law give a true and fair view of the assets, liabilities, financial position and profit of the Parent Company; and

(c)    the Strategic Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face.

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Principal Risks (extracted from Strategic Review)

The Group's Risk Committee determines the Group's approach to risk, its policies and the procedures that are put in place to mitigate exposure to risk.

Process

There is a formal ongoing process to identify, assess and analyse risks and those of a more material nature are included in the Group Risk Register. The Group Risk Register is reviewed and updated at least every six months and the overall process is the subject of regular review.  Risks are recorded with a full analysis and risk owners are nominated who have authority and responsibility for assessing and managing the risk. All risks are analysed for impact and probability to determine exposure and impact to the business and the determination of a "gross risk score" enables risk exposure to be prioritised. External risks include the weather, political and economic conditions, the effect of legislation or other regulatory actions, the actions of competitors, foreign exchange, raw material prices and pension funding.  Internal risks include investment in new products, new business strategies and acquisitions.

The Group seeks to mitigate exposure to all forms of strategic, financial and operational risk both external and internal.  The effectiveness of key mitigating controls is continually monitored and such controls are subjected to internal audit and periodic testing in order to provide independent verification where this is deemed appropriate. The effectiveness and impact of key controls are evaluated and this is used to determine a "net risk score" for each risk. The process is used to develop action plans that are used to manage, or respond to, the risks and these are monitored and reviewed on a regular basis by the Group's Risk Committee.

Nature of risk	Potential impact	Mitigating factors
Macro-economic and political The Group is dependent on the level of activity in its end markets.  Accordingly, it is susceptible to economic downturn and Government policy that impacts the level of Public Sector investment.	The lower activity levels could reduce sales and production volumes which may have an adverse effect on the Group's financial results.	·   The Group closely monitors trends and lead indicators, invests in market research and is an active member of the CPA. ·   The Group benefits from the diversity of its business and end markets. ·   The Group focuses on sales opportunities and strategic growth initiatives, together with quality, service and its supply chain. ·   The Group undertakes ongoing reviews of trading policies and relationships and maintains constant communication with customers.
Weather The Group is exposed to the impact of prolonged periods of bad weather.	The lower activity levels could reduce sales and production volumes which could have an adverse effect on the Group's financial results.	·   The Group has a continuing focus on new product development including landscape water management. ·   The Group is developing its internal flooring offer and widening its International offer in order to diversify its activities and therefore reduce its reliance on potentially weather-affected product areas.
Competitor activity The Group has a number of existing competitors who compete on range, price, quality and service.  Potential new low cost competitors may be attracted into the market through increased demand particularly for imported natural stone products.	The increased competition could reduce volumes and margins on manufactured and traded products.	·   The Group has unique selling points that differentiate the Marshalls branded offer. ·   The Group focuses on quality, service, reliability and ethical standards that differentiate Marshalls from competitor products. ·   The Group continues to have the lowest cost to market. ·   The Group has a continuing focus on new product development.
Costs The Group is susceptible to significant increases in the price of raw materials, utilities, fuel oil, haulage costs and vehicle availability.	The increased costs could reduce margins and may be further impacted in the event of imbalances in the mix of regional activity.	·   The Group benefits from the diversity of its business and end markets. ·   The Group focuses on its supplier relationships, flexible contracts and the use of hedging instruments. ·   The Group utilises sales pricing and purchasing policies designed to mitigate the risks. ·   The Group owns its fleet and uses specialist delivery vehicles.
Business Integration The Group continues to target strategic business acquisitions and the integration of any acquisition could act as a diversion of management's attention.	Such acquisitions might have an impact on the risk profile of the Group and could have an impact on the retention of key personnel within the acquired business.	·   The Group uses specialist advisers and undertakes extensive due diligence. ·   Each acquisition is supported by a detailed integration plan covering all key areas of activity and involving employees from the wider Group with the appropriate skills required.
Pension The Defined Benefit Pension Scheme may be impacted by volatility in financial markets and the longevity of members.	These risks could increase pension scheme liabilities or reduce assets, putting pressure on accounting notional interest and therefore downward pressure on PBT and EPS. This could also result in the need for additional cash injections.	·   The Group Pension Scheme is closed to new members and future service accrual. ·   The Group uses liability driven investments to hedge interest rate and inflation risks. ·   De-risking strategies continue to be pursued and risk management is a key control used by the Trustee. ·   Professional advisers are consulted to minimise risk.
International Continued lack of market activity and market growth in Western Europe.	The lower activity levels could lead to lower sales and production volumes and therefore the need for increased funding support.	·   The Group closely monitors trends and lead indicators. ·   The Group benefits from the diversity of its business and end markets. ·   The Group focuses on sales opportunities and strategic growth initiatives, together with quality, service and its supply chain. ·   The Group undertakes ongoing reviews of trading policies and relationships and maintains constant communication with customers.
Environmental The risk in an environmental contamination event is that it may lead to a prosecution and to reputational loss.	An incident could lead to disruption to production and to financial penalties as well as a potential negative impact on the Group's reputation.	·   The Group uses professional specialists covering carbon reduction, water management and biodiversity. ·   The Group focuses on the implementation of ISO standards. ·   The Group has a formal Group sustainability strategy focusing on impact reduction.
Corporate, Legal and Regulatory The Group may be adversely affect by an unexpected reputational event, for example, in its ethical supply chain.	An incident could lead to a disruption to the supply of products for customers and to increased costs as well as a potential negative impact on the Group's reputation.	·   Group employs compliance procedures and policies which seek to ensure that local, national and international regulatory and compliance procedures are fully complied with. ·   The Group's emphasis is on high environmental, ethical and health & safety standards and it undertakes independent audit processes for its overseas supply chain, particularly India and China.
Access to Funding The Group continues to require debt funding in order to meet its trading obligations and to grow the business.	Insufficient access to funding could limit the Group's ability to achieve the desired levels of growth.	·   The Group has significant committed facilities in place with a good spread of medium term maturities and significant headroom. ·   The Group's policy continues to be to arrange funding ahead of requirements and to maintain sufficient undrawn committed bank facilities. ·   Relationships are maintained with several potential banking partners.
Financial Instruments The main risks arising from the Group's financial instruments are liquidity risk, interest rate risk, credit risk, pricing risk and foreign currency risk.	Ineffective procedures could lead to an adverse effect on the Group's financial results.	·  The Board reviews and agrees policies for managing each of these risks. ·  The Group undertakes no speculative trading in financial instruments. ·  The Group manages its insurance risk by continuous review and maintaining a balance between capped self-insurance and third party cover against major catastrophes.
IT Infrastructure Disruption to the IT environment could affect the Group's ability to conduct its ongoing operations.	Ineffective procedures could lead to an adverse effect on the Group's financial results.	·   All IT system development projects are actively and carefully planned with defined governance and control procedures. ·   To support and enable future growth the Group has upgraded its IT systems to ensure a common platform across all business units. ·   Regular independent risk and project management audits are undertaken. ·   The Group ensures that industry standards are adopted and disaster recovery plans and procedures exist and are regularly tested.
Recruitment and Retention of Key Personnel The Group needs to ensure that it continues to be able to attract, develop, motivate and retain good quality employees and leaders.	Ineffective procedures could lead to poor decision making, an inability to meet business objectives and a lack of innovation and enterprise within the Group.	·   The Board reviews and agrees HR policies covering all relevant areas. ·   Formal recruitment processes are maintained. ·   The Group has a formal appraisal process and ensures there is scope for progression in the Group. ·   The Group aims to have competitive remuneration packages and bonus schemes. ·   The Remuneration Committee reviews all key issues relating to Executive Remuneration.

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Cautionary Statement and Directors' Liability

The Annual Report 2013 has been prepared for, and only for, the members of the Company, as a body, and no other persons. Neither the Company nor the Directors accept or assume any liability to any person to whom the Annual Report is shown or into whose hands it may come except to the extent that such liability arises and may not be excluded 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.

The Annual Report contains certain forward looking statements with respect to the Group's financial condition, results, strategy, plans and objectives. These statements are not forecasts or guarantees of future performance and 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, implied or forecast by these forward looking statements. All forward-looking statements in the Annual Report are based on information known to the Group as at the date of the Annual Report and the Group has no obligation publicly to update or revise any forward looking statements, whether as a result of new information or future events. Nothing in the Annual Report should be construed as a profit forecast.

Enquiries:

C E Baxandall, Group Company Secretary, Marshalls plc

Tel: [phone]

 

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