Interim Results
Marshalls PLC
6 September 2001
Press Release Information
6th September 2001
Embargoed: 0700 hrs: Thursday 6 September 2001
INTERIM RESULTS FOR SIX MONTHS TO 30 JUNE 2001
Marshalls Plc, the specialist Landscape, Clay and Stone Products Group, today
announces results for the 6 months to 30 June 2001.
Six months to Six months to %
30 June 2001 30 June 2000
(£m) (£m)
Turnover 168.9 159.9 5.6
Operating profit (pre 27.4 27.7 -1.2
exceptionals/goodwill)
Profit before tax 24.3 26.1 -6.8
Adjusted basic EPS 10.96p 11.31p -3.1
Dividend per share 3.15p 3.00p 5.0
* Half year profits down as outlined in July trading statement, reflecting
weak first quarter
* Second quarter performance was strong and current trade is positive
* Marshalls brand of block paving and garden and patio products continues to
gain market share
* Full year operating profit improvement expected provided that current
trading conditions continue and having regard to the weaker second half
lastyear
* Dividends increased by 5.0% to 3.15 p per share (2000: 3.00p per share)
* Balance sheet gearing at 10.3% (2000: 4.1%)
Commenting on these results, Christopher Burnett, Chairman said:
'Following a weak first quarter, activity picked up significantly in the
second three months particularly in the Landscape Products Division where
second quarter sales increased by 11.4 per cent compared with 2000. Provided
that current trading conditions continue and having regard to the weaker
second half last year, we expect to improve operating profit in the full year
compared with 2000.'
Enquiries:
Christopher Burnett Chairman Marshalls Plc (020 7404 5959 today
Ian Burrell Finance Director Marshalls Plc (01422 306 400
thereafter
Jon Coles Brunswick Group 020 7404 5959
William Cullum Brunswick Group 020 7404 5959
CHAIRMAN'S STATEMENT
Following a weak first quarter, activity picked up significantly in the
second three months, particularly in the Landscape Products Division where
second quarter sales increased by 11.4 per cent compared with 2000. As a
result, Group turnover in the six months to 30 June 2001 at £168.9 million
(2000: £159.9 million) was 5.6 per cent ahead of the same period last year.
However, due to the poor start to the year, Group operating profit for the
half year, before reorganisation and other exceptional costs and goodwill
amortisation, at £27.4 million (2000: £27.7 million) was 1.2 per cent below
the same period last year. Profit before tax was 6.8 per cent lower than last
year after taking into account reorganisation and other exceptional costs of
£1.3 million (2000: £0.6 million), slightly increased goodwill amortisation,
and reduced profit on property disposals of £0.3 million (2000: £0.8
million). Adjusted basic earnings per share are 10.96p (2000: 11.31p).
Compared with the weaker second six months last year, trading activity this
year has so far been strong, and therefore, as previously indicated, the
anticipated improvement in operating profit in 2001 is expected to be biased
towards the second half.
Following acquisitions and increased capital expenditure in the period, net
borrowings at the end of June 2001 amounted to £20.8 million (2000: £7.7
million), a gearing ratio of 10.3 per cent (2000: 4.1 per cent).
The Board has decided to declare an interim dividend of 3.15p (2000: 3.00p)
per ordinary share, an increase of 5.0 per cent. The dividend will be paid on
3 December 2001 to shareholders on the register on 2 November 2001.
LANDSCAPE PRODUCTS DIVISION
The Division achieved sales of £129.9 million (2000: £123.3 million), 5.3 per
cent ahead of the first half last year. Operating profit before
reorganisation and other exceptional costs and goodwill amortisation at £21.3
million (2000: £21.0 million) was 1.2 per cent ahead of the same period last
year. The loss of margin on the increased sales was due almost entirely to
the lower sales in the first quarter adversely affecting production and
distribution efficiencies. Better weather in April and over the Easter Bank
Holiday saw volumes lift substantially and this trend continued for the rest
of the first half.
The sales growth achieved in the six months clearly demonstrates that the
Marshalls brand of block paving and garden and patio products continues to
gain market share. Our marketing programme and register of approved product
installers, together with the expansion of our national network of Service
Centres that provide excellent product availability and delivery service to
our builders merchant customers, are the main factors driving sales growth.
Eight of these centres are now fully operational and a further four will be
on stream in 2002.
Stonemarket, which continues to build its own separate brand identity for its
garden and patio products, was also affected by the very slow start to the
year by its garden centre customers, but then accelerated ahead to record
sales 10.5 per cent above 2000 in the half year.
CLAY PRODUCTS DIVISION
The Division increased sales by 2.1 per cent to £15.2 million (2000: £14.8
million) in the first six months, against the background of a 6.3 per cent
decline in Industry brick volumes in the half year.
Our sales mix in this first half, however, was weighted towards the lower
value engineering bricks and this together with general price pressure had an
impact on margin. The adverse mix and lower production in the period,
combined to neutralise the benefits achieved from the overhead reduction and
efficiency improvement programme. Operating profit before reorganisation and
other exceptional costs was therefore the same as last year at £2.7 million
(2000: £2.7 million).
EMERGING BUSINESSES DIVISION
This Division, made up of smaller but important Group businesses, achieved
sales of £23.8 milllion (2000: £21.8 million), an increase of 9.4 per cent.
More than half this increase was due to the inclusion of two new business
activities in street furniture and natural stone which were not part of the
Group last year.
Operating profit, before reorganisation and other exceptional costs and
goodwill amortisation, at £3.4 million (2000: £4.0 million) was, however,
15.0 per cent below last year. Two of the existing businesses, Natural Stone
and Drainage Products, were responsible for the reduction. Natural Stone was
unable to match the volume of business achieved last year associated with the
completion of millennium projects. Drainage Products that rely to a large
extent on the Government's road programme were held back by a lack of
activity.
OUTLOOK
The Landscape Products Division has seen the sales momentum in the second
quarter maintained into the second half of the year. There is no doubt that
pent up demand exists, especially in the domestic sector of the market. The
developments we have communicated to shareholders, including the roll out of
the Service Centre concept, are showing benefits to us and our customers, and
this gives us considerable confidence in our ability to improve still further
customer service and operating efficiency.
The Clay Products Division, which specialises in the commercial sector of the
brick market, will continue to experience price pressure as our competitors
that service new house building seek to move surplus brick production through
the commercial sector. This is because the level of new house building is
still not encouraging. We anticipate that this margin impact will again
offset to some extent the benefits from our profit improvement programme.
The Emerging Businesses Division will include a second half contribution from
Stancliffe Stone, our recently announced acquisition and, despite the fact
that our existing Natural Stone business will be below last year, the total
turnover for the Division will be ahead of last year.
In summary, provided that current trading conditions continue, and having
regard to the weaker second half last year, we expect to improve operating
profit in the full year compared with 2000.
CHRISTOPHER BURNETT
CHAIRMAN
6 SEPTEMBER 2001
Marshalls plc
Consolidated profit and loss account
for the half year ended 30 June 2001
Unaudited Audited
Half year ended Year ended
June December
2001 2000 2000
Notes £'000 £'000 £'000
Turnover 1 168,852 159,919 298,179
Operating
costs 143,221 133,209 256,271
_________ __________ _________
Operating
Profit
Before
reorganisation
and other
exceptional
costs
and goodwill
amortisation 27,351 27,694 43,782
Reorganisation 3
and other
exceptional
costs (1,304) (611) (1,106)
Goodwill
amortisation (416) (373) (768)
________ ________ ________
1 25,631 26,710 41,908
Gain on
disposal of
property 321 824 2,720
________ _________ ________
Profit on
ordinary
activities
before
interest 25,952 27,534 44,628
Interest - net 1,642 1,447 2,772
_______ ________ _______
Profit on 1
ordinary
activities
before
taxation 24,310 26,087 41,856
Taxation on
profit on
ordinary
activities 7,073 7,500 11,700
_______ _______ ________
Profit for the
financial
period 17,237 18,587 30,156
Preference
dividends -
non equity
shares 87 1,544 2,359
________ ________ ________
Profit
attributable
to ordinary
shareholders 17,150 17,043 27,797
________ ________ ________
Earnings per
share :
Basic 4 10.29p 12.80p 19.67p
Diluted 4 10.27p 11.11p 19.65p
Adjusted Basic 4 10.96p 11.31p 17.86p
________ ________ _________
Dividends
declared :
Pence per
share 3.15p 3.00p 9.00p
Cost (£'000) 5,246 3,987 13,964
_______ _______ ________
Consolidated balance sheet
as at 30 June 2001
Unaudited Audited
June December
2001 2000 2000
Notes £'000 £'000 £'000
Fixed assets
Intangible 20,823 13,773 15,126
Tangible 160,818 141,888 149,785
_________ _________ _________
181,641 155,661 164,911
Current assets
Stocks 51,774 51,927 57,342
Debtors - due
within one
year 66,541 64,321 31,976
- due after
more than
one year 2,171 - 2,171
Cash at bank and in hand 6,929 12,494 12,529
_______ ________ ________
127,415 128,742 104,018
Creditors : amounts falling due
within one year 78,533 73,857 56,764
________ ________ ________
Net current assets 48,882 54,885 47,254
________ ________ ________
Total assets less current
liabilities 230,523 210,546 212,165
Creditors : amounts falling due after more
than one year 27,751 22,118 21,344
________ ________ ________
Net assets 2 202,772 188,428 190,821
________ ________ _________
Capital and reserves
Called up share capital 42,919 43,505 42,911
Share premium 18,492 15,057 18,453
Revaluation reserve 5,166 5,166 5,166
Other reserves 10,274 10,274 10,274
Profit and loss account 125,921 114,426 114,017
_________ _________ _________
Shareholders' funds 202,772 188,428 190,821
_________ _________ _________
Analysis of shareholders' funds
Equity 200,649 141,467 188,698
Non equity 2,123 46,961 2,123
_________ _________ _________
Shareholders' funds 202,772 188,428 190,821
_________ _________ _________
Consolidated cash flow statement
for the half year ended 30 June 2001
Unaudited Audited
Half year ended Year
June ended
December
2001 2000 2000
Notes £'000 £'000 £'000
Cash flow from operating 5
activities 19,710 14,723 48,254
Returns on investments and
servicing of finance (1,616) (4,120) (5,836)
Taxation (4,144) (3,265) (12,773)
Capital expenditure (15,755) (8,623) (20,325)
Acquisitions and
disposals (3,826) - (680)
Equity dividends paid - - (11,070)
_________ _________ ____________
Cash outflow before use of
liquid resources and
financing (5,631) (1,285) (2,430)
Management of liquid
resources - 2,650 2,650
Financing 31 (119) 1,061
(Decrease)/increase in _______ _______ _______
cash in the period (5,600) 1,246 1,281
Reconciliation of net cash flow to
movement in net debt
(Decrease)/increase in
cash in the period (5,600) 1,246 1,281
Cash outflow from decrease
in debt and lease
financing 16 159 596
Cash inflow from decrease
in liquid resources - (2,650) (2,650)
_________ _________ __________
Change in net debt
resulting from cash flows (5,584) (1,245) (773)
New finance leases and
loans on acquisition of
businesses - - (279)
Loans issued on
acquisition of businesses (6,408) - (1,327)
Translation
differences - (12) (12)
_________ _________ _________
Movement in net debt in
the period (11,992) (1,257) (2,391)
Net debt at beginning
of period (8,842) (6,451) (6,451)
________ _________ __________
Net debt at end of
period (20,834) (7,708) (8,842)
________ _________ __________
Net gearing 10.3% 4.1% 4.6%
Other primary statements
for the half year ended 30 June 2001
Unaudited Audited
Half year ended Year. Ended
June December
2001 2000 2000
£'000 £'000 £'000
Consolidated statement
of total recognised
gains and losses
Profit for the
financial period 17,237 18,587 30,156
Exchange differences on
foreign currency loan - (12) (12)
________ ________ ________
Total recognised gains
and losses relating to
the period 17,237 18,575 30,144
________ _________ ________
Reconciliation of movements in
consolidated shareholders' funds
Profit for the
financial period 17,237 18,587 30,156
Dividends (5,333) (5,531) (16,323)
Other recognised gains
and losses - (12) (12)
New share capital
issued 47 41 2,853
Write off on issue of
shares to QUEST - - (1,186)
Share issue costs - - (10)
________ ________ ________
Net addition to
shareholders' funds 11,951 13,085 15,478
Shareholders' funds at
beginning of period 190,821 175,343 175,343
_________ _________ _________
Shareholders' funds at
end of period 202,772 188,428 190,821
_________ _________ _________
Notes to the interim statements
1. Analysis of turnover and
operating profit
Unaudited Audited
Half year ended Year ended
June December
2001 2000 2000
(a) Turnover £'000 £'000 £'000
Landscape 129,894 123,318 226,431
Clay 15,155 14,840 28,093
Emerging Businesses 23,803 21,761 43,655
_________ ________ _________
168,852 159,919 298,179
(b) Operating profit
Operating profit before reorganisation and other
exceptional costs and goodwill amortisation
Unaudited Audited
Half year ended Year ended
June December
2001 2000 2000
£'000 £'000 £'000
Landscape 21,263 21,015 32,219
Clay 2,704 2,700 4,679
Emerging 3,384 3,979 6,884
Businesses
________ ________ ________
27,351 27,694 43,782
________ ________ ________
Operating Profit Con't
Operating Profit
Unaudited Audited
Half year ended Year ended
June December
2001 2000 2000
£'000 £'000 £'000
Landscape 20,018 20,448 31,442
Clay 2,505 2,370 4,153
Emerging Businesses 3,108 3,892 6,313
_________ _________ ________
25,631 26,710 41,908
_________ _________ ________
Property 321 824 2,720
Interest (1,642) (1,447) (2,772)
________ ________ ________
Profit before tax 24,310 26,087 41,856
________ ________ ________
2. Analysis of net assets
Landscape 145,029 135,626 130,311
Clay 45,076 44,047 45,102
Emerging Businesses 28,020 23,013 20,122
_________ _________ _________
218,125 202,686 195,535
Unallocated net liabilities (15,353) (14,258) (4,714)
__________ __________ _________
202,772 188,428 190,821
__________ __________ _________
Unallocated net liabilities comprise non-operating assets and liabilities
of a financing nature, principally net borrowings, corporation tax,
dividends payable and capitalised goodwill. There is no material inter-
segmental turnover.
3. Reorganisation and other exceptional costs
Reorganisation and other exceptional costs include £1.1million
(2000:£0.6million) in respect of reorganisation costs and £0.2million
(2000: Nil) in respect of known irrecoverable non-compulsory insurance
prepayments and cliams relating to Independent Insurance. Further one-off
costs of up to £0.7million (2000: Nil) may potentially arise in the
second half in the event that employers liability insurance costs become
irrecoverable.
4. Earnings per share
Unaudited Audited
Half year ended Year ended
June December
2001 2000 2000
£'000 £'000 £'000
Profit for the financial period 17,150 17,043 27,797
________ ________ ________
Profit for the financial period
attributable to ordinary
shares and potentially ordinary
dilutive shares 17,150 18,537 27,797
________ ________ ________
Adjusted basic earnings per
share reconciliation:
Profit for the
financial period 17,150 17,043 27,797
Reorganisation
and other
exceptional
costs 1,304 611 1,106
Goodwill
amortisation 416 373 768
Gain on disposal
of property (321) (824) (2,720)
Taxation (286) 61 451
Cumulative
redeemable
preference
dividend - 1,457 2,185
________ ________ ________
18,263 18,721 29,587
________ ________ ________
Weighted average number of
shares 166,706,938 133,185,177 141,334,404
____________ ____________ ____________
Weighted average number of
shares 166,706,938 133,185,177 141,334,404
Dilutive
shares 250,174 33,723,471 171,396
____________ ___________ ___________
166,957,112 166,908,648 141,505,800
____________ ___________ ___________
Weigthed average number
of shares 166,706,938 133,185,177 141,334,404
Conversion of
cumulative
redeemable
preference
shares - 32,283,622 24,345,026
___________ ___________ ___________
166,706,938 165,468,799 165,679,430
___________ ___________ ___________
Basic earnings per share 10.29p 12.80p 19.67p
_______ _______ _______
Diluted earnings per share 10.27p 11.11p 19.65p
_______ _______ _______
Adjusted basic earnings per
share 10.96p 11.31p 17.86p
_______ _______ _______
An adjusted basic earnings per share has been prepared in order to show
the underlying performance of the business. The adjusted basic earnings
per share is adjusted for reorganisation and other exceptional costs,
goodwill amortisation, gain on disposal property and the associated
taxation. It is also adjusted for the conversion of redeemable convertible
preference shares of 20p each on 1 October 2000 and the associated
preference dividend as though converted on the first day of the period.
5. Reconciliation of operating profit to cash flow
from operating activities
£'000 £'000 £'000
Operating profit 25,631 26,710 41,908
Amortisation charges 416 373 768
Depreciation charges 6,860 6,393 12,825
Loss/(profit) on sale of
tangible fixed assets 3 (35) 36
Decrease/(increase) in
stocks 6,134 (7,631) (12,896)
(Increase)/decrease in
debtors (32,796) (25,750) 6,899
Increase/(decrease) in
creditors 13,462 14,663 (1,286)
_________ _________ _________
19,710 14,723 48,254
_________ _________ _________
6. Other
The above financial information does not constitute statutory accounts.
The financial information for the year ended 31 December 2000 has been
extracted from the statutory accounts for that period which have been
delivered to the Registrar of Companies and contain an unqualified audit
report. An interim dividend of 3.15p per ordinary share will be paid on 3
December 2001 to shareholders on the register at the close of business on
2 November 2001.
A copy of this report is being sent to the holders of listed securities of
the Company and further copies are available for members of the public,
on application to the Company Secretary, Marshalls Plc, Birkby Grange,
Birkby Hall Road, Huddersfield HD2 2YA.
END
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