Half Yearly Report

RNS Number : 0715N

Marshalls PLC

26 August 2011

 



Interim results for the half year ended 30 June 2011

Marshalls plc, the specialist Landscape Products Group, announces its half year trading performance

Performing in line with market expectations

 

Financial Highlights

	Half year ended 30 June 2011	Half year ended 30 June 2010 *
Continuing operations:
Revenue	£177.2m	£162.6m
EBITDA	£22.9m	£18.6m
Operating profit	£13.7m	£9.4m
Profit before tax	£12.2m	£8.1m
Basic EPS	5.47p	3.29p
Interim dividend per share	1.75p	1.75p
Net debt	£70.4m	£66.7m

 

Total operations:
Basic EPS	2.96p	3.07p

* The comparatives have been restated in respect of discontinued operations.

Highlights:

·      Revenue from continuing operations up 9%

·      Operating profit from continuing operations up 26% excluding the net gain on asset and property disposals of £2m

·      Operating margin improved to 6.6% (2010: 5.7%) excluding the net gain on asset and property disposals

·      Basic EPS from continuing operations up 66%

·      Sale of surplus property realised cash proceeds of £5m

·      Net debt stable at £70m (2010: £67m)

Commenting on these results, Graham Holden, Chief Executive, said:

"First half trading was encouraging.  Marshalls benefited from a stronger first quarter following the poor weather conditions in 2010 and continued to show positive progress in the second quarter.  Targeted marketing and product innovation in the Public Sector and Commercial end market has delivered positive results.  In the Domestic end market the Group's installer initiatives have increased sales and there has been positive progress in overseas markets.

Looking forward, there is continuing strength in Commercial to offset the anticipated weakness in Public Sector demand.  The Domestic outlook is softening although installer order books have remained consistent at around 7 weeks.  Overall, market volume is expected to be slightly lower in the second half of the year against strong comparatives.

Despite the challenging macroeconomic background, the solid foundations of the business, the Group's strong market position, its sales and marketing initiatives and growing overseas sales mean that Marshalls is well positioned to deliver sales outperformance."

Enquiries:

Graham Holden	Chief Executive	Marshalls plc	01484 438900
Ian Burrell	Finance Director
Jon Coles		Brunswick Group LLP	0207 404 5959
Kate Miller

Group Results

Continuing revenue for the half year ended 30 June 2011 increased by 9 per cent to £177.2 million (2010: £162.6 million).  Sales to the Public Sector and Commercial end market, which represent 60 per cent of Group sales, were up 10 per cent and sales to the Domestic end market, on a continuing basis, were up 8 per cent compared with the prior year period.

Reported operating profit from continuing operations was £13.7 million (2010: £9.4 million) including a net gain of £2 million on asset and property disposals.  Operating profit, excluding the net gain on asset and property disposals, was up 26 per cent at £11.7 million (2010:  £9.3 million).  EBITDA from continuing operations was £22.9 million (2010: £18.6 million).  

Net financial expenses were £1.4 million (2010: £1.3 million) and interest was strongly covered 9.5 times (2010: 7.4 times) by earnings on a continuing basis.  The effective tax rate was 12.4 per cent (2010: 20.7 per cent) and benefited from the reduction in the rate of corporation tax and the utilisation of brought forward capital losses being applied against the capital gain on the disposal of the surplus property.

Basic EPS, for the continuing operations, was up 66 per cent at 5.47 pence (2010: 3.29 pence) per share.  The interim dividend will be 1.75 pence (2010: 1.75 pence) per share.

Operating Performance

The underlying market during the first half was flat which is consistent with the most recent Construction Products Association ("CPA") full year forecast for 2011.  Marshalls' sales growth during this period results from the positive actions taken to drive revenues through sales initiatives delivering increased volume. 

In the Public Sector and Commercial end market the Group has continued to develop innovative products and services to meet customer requirements.  In particular it has been targeting growth areas such as rail, education, home and retail using our precision marketing.  The experienced technical and sales teams provide a full range of integrated products and sustainable solutions to customers, architects and contractors, and the specialist integrated product directories have proved extremely successful.  The Group has continued to deliver more products to the Olympic sites, which have now reached the main landscaping phase.  Order intake for the Olympics now exceeds £8 million and is on target to achieve the upper end of management's expectations. 

In the Domestic end market the Group has continued its initiatives to drive more sales through quality installers and remains committed to developing the installer base and the Marshalls Register through increased training, marketing materials and sales support.  This initiative has enabled the number of Register member teams to grow by 17 per cent since the beginning of 2010.  Installer order books were 7.0 weeks as at June 2011, similar to the 7.1 weeks at April 2011 and June 2009, although lower than the equivalent point in June 2010 of 9.1 weeks.

First half sales also benefited from the better working conditions compared with the weather disruption experienced in 2010.  In addition, the Group has increased its selling prices to recover cost inflation and the additional fuel costs experienced during the first half. 

Operationally, production levels in the first half continued to trend upwards in support of the first half sales volumes, logistics benefited from optimisation initiatives and customer service remained at a high level.  Reported operating profit margin on continuing operations increased to 7.7 per cent (6.6 per cent excluding the net gain on asset and property disposals) from 5.7 per cent in the prior year period.

The Group announced in June 2011 the proposed closure of its non-core garage and greenhouse manufacturing operations.  Agreement was subsequently reached to sell, separately, the Compton garage brand and the Alton and Robinson greenhouse brands.  The Group's sales of garages and greenhouses were £5.9 million in the half year ended 30 June 2011 (2010: £7.3 million), while in the year ended 31 December 2010 sales were £14.3 million with an operating loss of £1.2 million.  The operations have been treated as discontinued in these half-yearly results.  The post tax loss from discontinued operations in the half year ended 30 June 2011 is £4.9 million after writing off intangible assets, providing for closure costs and net of the sale of brands.   It is estimated that ultimately these transactions will generate positive net cash of approximately £2 million.

Marshalls was the first business in its Sector to become a member of the Ethical Trading Initiative.  The Company has also become the UK's first heavy side materials manufacturer to be accepted into the prestigious UN Global Compact.  It is based on ten core social and ethical principles and is the world's largest and most visible leadership platform for corporate responsibility and sustainability increasingly supported by governments around the world as the "International Standard" for corporate social responsibility.  Marshalls has been consistently rated in the top 10 per cent of companies in the Group's first three years of membership.

Looking forward to the second half the Group continues to develop organic sales initiatives.  In Commercial, Marshalls has expanded its capacity to process stone walling in the Cotswolds and stone paving in South Wales.  In addition, more resources have been devoted to expanding sales in overseas markets and particularly in specialist paving, street furniture, water management and ethically sourced natural stone products.  Marshalls has acquired assets in Belgium via a newly-formed Belgian subsidiary to enable the manufacture of landscape products locally and to provide a physical stock location in mainland Europe from which to supply the wider Group specialist product portfolio.  Investment in these assets is expected to be around £6 million including the required working capital.  The Group is also well advanced in establishing a subsidiary in China to improve the scale and efficiency of product sourcing and the working relationship with the Group's business partner in India has also been strengthened for the same reason.  These initiatives are designed to provide a wider product range and to provide greater scale of capability in all the Group's end markets.

Balance Sheet and Cash Flow

Net assets at 30 June 2011 were £199.0 million (June 2010: £186.0 million).  At 30 June 2011 net debt was stable at £70.4 million (June 2010: £66.7 million) resulting in gearing of 35.4 per cent (June 2010: 35.9 per cent).

The Group continues to focus on working capital and capital expenditure management.  Cash management continues to be a high priority area and the Group remains committed to realising value from the sale of surplus properties.  A surplus site located on the South Coast of England was sold in June 2011 for cash proceeds of £5 million.   The net gain on asset and property transactions was £2 million.  The site closure programme has now released £18 million of gross cash compared with the cash cost of £14 million, with £9 million being released from inventory and a further £9 million from the disposal of surplus properties.

The Group has recently renewed its short term working capital facilities with RBS and has replaced maturing facility lines with new committed facilities totalling £50 million with LloydsTSB Bank plc and Barclays Bank PLC, the latter as an additional banking partner.  The introduction of a fourth banking relationship is designed to create additional financial flexibility and mitigate potential risk within the banking sector.  The Group continues its policy of having significant committed facilities in place with a good spread of medium term maturities.

The balance sheet includes the defined benefit pension obligation of £3.6 million at 30 June 2011 (December 2010: £4.1 million; June 2010: £27.0 million).  This balance is calculated on the basis of the present value of the Scheme's obligations of £214.4 million (December 2010: £212.4 million) less the fair value of the Scheme assets of £210.8 million (December 2010: £208.3 million).  These figures have been determined by the Scheme Actuary using assumptions that are considered to be prudent and in line with market levels at the balance sheet date.  The assumptions that have changed in the last six months are a movement in the AA corporate bond rate from 5.5 per cent to 5.6 per cent, in line with market movements, and an increase in the expected rate of CPI inflation from 2.7 per cent to 2.8 per cent.  

Dividend

The Board has declared an unchanged interim dividend of 1.75 pence (June 2010: 1.75 pence) per share.  This dividend will be paid on 2 December 2011 to shareholders on the register at the close of business on 28 October 2011.  The ex-dividend date will be 26 October 2011.

Outlook

First half trading was encouraging.  Marshalls benefited from a stronger first quarter following the poor weather conditions in 2010 and continued to show positive progress in the second quarter.  Targeted marketing and product innovation in the Public Sector and Commercial end market has delivered positive results.  In the Domestic end market the Group's installer initiatives have increased sales and there has been positive progress in overseas markets.

Looking forward, there is continuing strength in Commercial to offset the anticipated weakness in Public Sector demand.  The Domestic outlook is softening although installer order books have remained consistent at around 7 weeks.  Overall, market volume is expected to be slightly lower in the second half of the year against strong comparatives.

Despite the challenging macroeconomic background, the solid foundations of the business, the Group's strong market position, its sales and marketing initiatives and growing overseas sales mean that Marshalls is well positioned to deliver sales outperformance.

Graham Holden

Chief Executive

Condensed Consolidated Half-yearly Income Statement

for the half year ended 30 June 2011

	Half year ended June 2011		Half year ended June 2010*	Year ended December 2010*
	Notes	£'000	£'000	£'000
Revenue	2	177,174	162,558	308,843
Net operating costs	3	(163,510)	(153,167)	(295,862)
Operating profit	2	13,664	9,391	12,981
Financial expenses	4	(7,443)	(7,297)	(14,479)
Financial income	4	6,000	6,026	11,921
Profit before tax	2	12,221	8,120	10,423
Income tax expense	5	(1,511)	(1,679)	(2,202)
Profit for the financial period   before post tax loss of discontinued   operations		10,710	6,441	8,221
Post tax loss of discontinued   operations	6	(4,912)	(434)	(871)
Profit for the financial period		5,798	6,007	7,350
Profit for the period
attributable to:
Equity shareholders of the parent		5,776	6,007	7,350
Non-controlling interests		22	-	-
		5,798	6,007	7,350
Earnings per share (total   operations):
Basic	7	2.96p	3.07p	3.76p
Diluted	7	2.90p	3.01p	3.69p
Earnings per share (continuing   operations):
Basic	7	5.47p	3.29p	4.21p
Diluted	7	5.36p	3.23p	4.13p
Dividend:
Pence per share	8	3.50p	3.50p	5.25p
Dividends declared	8	6,863	6,863	10,294

* The comparatives have been restated in respect of discontinued operations (Note 6).

Condensed Consolidated Half-yearly Statement of Comprehensive Income

for the half year ended 30 June 2011

		Half year ended June 2011 £'000		Half year ended June 2010* £'000	Year ended December 2010* £'000
Profit for the period		5,798		6,007	7,350
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges		(366)		(194)	(505)
Fair value of cash flow hedges transferred to the Income Statement		212		31	262
Deferred tax arising		40		46	66
Defined benefit plan actuarial (losses)/gains		(3,029)		8,091	27,640
Deferred tax arising		787		(2,265)	(7,463)
Impact of the change in rate of deferred taxation		(68)		-	(123)
Foreign currency translation differences - foreign operations		179		-	-
Foreign currency translation differences - non-controlling interests		116		-	-
Other comprehensive (expense)/ income for period, net of income tax		(2,129)		5,709	19,877
Total comprehensive income for the period		3,669		11,716	27,227
Attributable to:
Equity shareholders of the parent		3,531		11,716	27,227
Non-controlling interests		138		-	-
		3,669		11,716	27,227

 

* The comparatives have been restated in respect of discontinued operations (Note 6).

 

Condensed Consolidated Half-yearly Balance Sheet

as at 30 June 2011

			June		December
	Notes		2011 £'000	2010 £'000	2010 £'000
Assets
Non-current assets
Property, plant and equipment			193,722	195,313	190,627
Intangible assets			42,046	42,149	42,945
Investments in associates			2,149	2,180	2,163
Deferred taxation assets			943	7,638	1,171
			238,860	247,280	236,906
Current assets
Inventories			83,776	82,348	81,626
Trade and other receivables			63,962	54,896	27,925
Cash and cash equivalents			26,275	19,168	4,059
			174,013	156,412	113,610
Total assets			412,873	403,692	350,516
Liabilities
Current liabilities
Trade and other payables			85,736	74,902	48,552
Corporation tax			6,618	5,110	5,164
Interest bearing loans and borrowings			46,663	20,017	40,900
			139,017	100,029	94,616
Non-current liabilities
Interest bearing loans and borrowings			50,000	65,900	30,000
Employee benefits	9		3,628	26,975	4,092
Deferred taxation liabilities			21,234	24,753	23,568
			74,862	117,628	57,660
Total liabilities			213,879	217,657	152,276
Net assets			198,994	186,035	198,240
Equity
Capital and reserves attributable to equity shareholders of the parent
Share capital			49,845	49,845	49,845
Share premium account			22,695	22,695	22,695
Own shares			(9,514)	(9,514)	(9,514)
Capital redemption reserve			75,394	75,394	75,394
Consolidation reserve			(213,067)	(213,067)	(213,067)
Hedging reserve			(293)	(119)	(179)
Retained earnings			270,212	260,801	273,066
Equity attributable to equity shareholders of the parent			195,272	186,035	198,240
Non-controlling interests			3,722	-	-
Total equity			198,994	186,035	198,240

 

Condensed Consolidated Half-yearly Cash Flow Statement

for the half year ended 30 June 2011	Half year ended June					Year ended December
	2011 £'000			2010 £'000		2010 £'000
Cash flows from operating activities
Profit for the financial period	5,798			6,007		7,350
Income tax expense on continuing operations	1,511			1,679		2,202
Income tax credit on discontinued operations	(756)			(169)		(339)
Loss on disposal and closure of discontinued operations		4,949		-		-
Profit before tax on total operations	11,502			7,517		9,213
Adjustments for:
Depreciation	8,751			8,876		17,771
Amortisation	679			500		1,554
Share of results of associates	14			33		63
Gain on sale of property, plant and equipment	(2,140)			(295)		(746)
Equity settled share based expenses	362			125		250
Financial income and expenses (net)	1,443			1,271		2,558
Operating cash flow before changes in working capital and pension scheme contributions	20,611			18,027		30,663
(Increase)/decrease in trade and other receivables	(36,376)			(23,629)		3,342
(Increase)/decrease in inventories	(1,846)			(161)		561
Increase/(decrease) in trade and other payables	20,602			15,455		(3,436)
Works closure costs paid	-			(878)		(1,447)
Pension scheme contributions	(3,300)			(3,300)		(6,600)
Cash (absorbed by)/generated from the operations	(309)			5,514		23,083
Financial expenses paid	(1,656)			(920)		(2,177)
Income tax (paid)/received	(650)			211		(129)
Net cash flow from operating activities	(2,615)			4,805		20,777
Cash flows from investing activities
Proceeds from sale of property, plant and equipment	5,263			3,215		3,936
Financial income received	20			59		4
Disposal of discontinued operation	550			-		-
Acquisition of subsidiaries and investment in associates	(1,104)			-		(108)
Acquisition of property, plant and equipment	(5,017)			(4,539)		(9,018)
Acquisition of intangible assets	(644)			(1,091)		(2,940)
Net cash flow from investing activities	(932)			(2,356)		(8,126)
Cash flows from financing activities
Payments to acquire own shares	-			(42)		(42)
Net decrease in other debt and finance leases	152			(22)		(39)
Increase/(decrease) in borrowings	25,611			7,500		(7,500)
Equity dividends paid	-			-		(10,294)
Net cash flow from financing activities	25,763			7,436		(17,875)
Net increase/(decrease) in cash and cash equivalents	22,216			9,885		(5,224)
Cash and cash equivalents at beginning of the period	4,059			9,283		9,283
Cash and cash equivalents at end of the period	26,275			19,168		4,059

Condensed Consolidated Half-yearly Statement of Changes in Equity

for the half year ended 30 June 2011

	Attributable to equity holders of the Company								Non-cont-rolling interests	Total equity
	Share capital	Share premium account	Own shares	Capital redemption reserve	Consolid-ation reserve	Hedging reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Current half- year
At 1 January 2011	49,845	22,695	(9,514)	75,394	(213,067)	(179)	273,066	198,240	-	198,240
Total comprehensive   income for the period
Profit for the financial   period attributable to   equity shareholders   of the parent	-	-	-	-	-	-	5,776	5,776	22	5,798
Other comprehensive   income
Foreign currency   translation differences	-	-	-	-	-	-	179	179	116	295
Effective portion of   changes in fair value   of cash flow hedges	-	-	-	-	-	(366)	-	(366)	-	(366)
Net change in fair value   of cash flow hedges   transferred to the   Income Statement	-	-	-	-	-	212	-	212	-	212
Deferred tax arising	-	-	-	-	-	40	-	40	-	40
Defined benefit plan   actuarial gains	-	-	-	-	-	-	(3,029)	(3,029)	-	(3,029)
Deferred tax arising	-	-	-	-	-	-	787	787	-	787
Impact of the change in   rate of deferred   taxation	-	-	-	-	-	-	(68)	(68)	-	(68)
Total other   comprehensive   income	-	-	-	-	-	(114)	(2,131)	(245)	116	(2,129)
Total   comprehensive   income for the   period	-	-	-	-	-	(114)	3,645	3,531	138	3,669
Transactions with   owners, recorded   directly in equity
Contributions by   and distributions to   owners
Share based expenses	-	-	-	-	-	-	362	362	-	362
Dividend to equity   shareholders	-	-	-	-	-	-	(6,861)	(6,861)	-	(6,861)
Total contributions  by and distributions  to owners	-	-	-	-	-	-	(6,499)	(6,499)	-	(6,499)
Changes in ownership   interests in   subsidiaries
Acquisition of non-  controlling interests	-	-	-	-	-	-	-	-	3,584	3,584
Total transactions   with owners of the   company	-	-	-	-	-	(114)	(2,854)	(2,968)	3,722	754
At 30 June 2011	49,845	22,695	(9,514)	75,394	(213,067)	(293)	270,212	195,272	3,722	198,994

	Share capital	Share premium account	Own shares	Capital redemption reserve	Consolid-ation reserve	Hedging reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Prior half- year
At 1 January 2010	49,845	22,695	(9,472)	75,394	(213,067)	(2)	255,706	181,099
Total comprehensive   income for the period
Profit for the financial period   attributable to equity   shareholders of the parent	-	-	-	-	-	-	6,007	6,007
Other comprehensive income
Effective portion of changes in  fair value of cash flow hedges	-	-	-	-	-	(194)	-	(194)
Net change in fair value of   cash flow hedges   transferred to the   Income Statement	-	-	-	-	-	31	-	31
Deferred tax arising	-	-	-	-	-	46	-	46
Defined benefit plan actuarial   gains	-	-	-	-	-	-	8,091	8,091
Deferred tax arising	-	-	-	-	-	-	(2,265)	(2,265)
Total other   comprehensive   income	-	-	-	-	-	(117)	5,826	5,709
Total comprehensive   income for the period	-	-	-	-	-	(117)	11,833	11,716
Transactions with owners,   recorded directly in   equity
Contributions by and   distributions to owners
Share based expenses	-	-	-	-	-	-	125	125
Dividends to equity   shareholders	-	-	-	-	-	-	(6,863)	(6,863)
Purchase of own shares	-	-	(42)	-	-	-	-	(42)
Total contributions by and   distributions to owners	-	-	-	-	-	-	(6,738)	(6,780)
At 30 June 2010	49,845	22,695	(9,514)	75,394	(213,067)	(119)	260,801	186,035

	Share capital	Share premium account	Own shares	Capital redemption reserve	Consolid-ation reserve	Hedging reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Prior year
At 1 January 2010	49,845	22,695	(9,472)	75,394	(213,067)	(2)	255,706	181,099
Total comprehensive   income for the period
Profit for the financial   period attributable to   equity shareholders of   the parent	-	-	-	-	-	-	7,350	7,350
Other comprehensive   income
Effective portion of   changes in fair value of   cash flow hedges	-	-	-	-	-	(505)	-	(505)
Net change in fair value   of cash flow hedges   transferred to the   Income Statement	-	-	-	-	-	262	-	262
Deferred tax arising	-	-	-	-	-	66	-	66
Defined benefit plan   actuarial gains	-	-	-	-	-	-	27,640	27,640
Deferred tax arising	-	-	-	-	-	-	(7,463)	(7,463)
Impact of the change in rate of deferred taxation	-	-	-	-	-	-	(123)	(123)
Total other   comprehensive   income	-	-	-	-	-	(177)	20,054	19,877
Total comprehensive   income for the period	-	-	-	-	-	(177)	27,404	27,227
Transactions with   owners, recorded   directly in equity
Contributions by and   distributions to   owners
Share based expenses	-	-	-	-	-	-	250	250
Dividends to equity   shareholders	-	-	-	-	-	-	(10,294)	(10,294)
Purchase of own shares	-	-	(42)	-	-	-	-	(42)
Total contributions by   and distributions to   owners	-	-	(42)	-	-	-	(10,044)	(10,086)
At 30 June 2010	49,845	22,695	(9,514)	75,394	(213,067)	(179)	273,066	198,240

Notes to the Condensed Consolidated Half-yearly Financial Statements

1.   Basis of preparation

Marshalls plc (the "Company") is a company domiciled in the United Kingdom. The Condensed Consolidated Half-yearly Financial Statements of the Company for the half year ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the "Group").

The Condensed Consolidated Half-yearly Financial Statements have been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority and the requirements of IAS 34 "Interim Financial Reporting" as adopted by the European Union ("EU").

The Condensed Consolidated Half-yearly Financial Statements do not constitute financial statements and do not include all the information and disclosures required for full annual financial statements.  The Condensed Consolidated Half-yearly Financial Statements were approved by the Board on 26 August 2011.

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the Condensed Consolidated Half-yearly Financial Statements have 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 2010.

The comparative figures for the financial year ended 31 December 2010 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified; (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Condensed Consolidated Half-yearly Financial Statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments and liabilities for cash-settled share-based payments.

The accounting policies have been applied consistently throughout the Group for the purposes of these Condensed Consolidated Half-yearly Financial Statements and are also set out on the Company's website (www.marshalls.co.uk).  The Condensed Consolidated Half-yearly Financial Statements are presented in sterling, rounded to the nearest thousand.

The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.  The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.  In preparing these Condensed Consolidated Half-yearly 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 2010.

The estimates and underlying assumptions are reviewed on an ongoing basis.  Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Details of the Group's funding position are set out in Note 12 and are subject to normal covenant arrangements.  The Group's on-demand overdraft facility is reviewed on an annual basis and the current arrangements were renewed and signed in August 2011. The Group's performance is dependent on economic and market conditions, the outlook for which is uncertain and difficult to predict.  The Group has taken decisive action to align its operational capacity with expected market conditions.  Markets appear to be easing and stabilising and, based on current expectations, the Group's cash forecasts continue to meet half-year and year end bank covenants and there is adequate headroom which is not dependent on facility renewals.  The Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.  Accordingly, they continue to adopt the going concern basis in preparing the Condensed Consolidated Half-yearly Financial Statements.

2.  Segmental analysis

	Revenue				Operating Profit
		Half year       ended June		Year ended December	Half year                ended June		Year ended December
	2011		2010*	2010*	2011	2010*	2010*
	£'000		£'000	£'000	£'000	£'000	£'000
Continuing operations	177,174		162,558	308,843	13,664	9,391	12,981
Financial income and expenses (net)					(1,443)	(1,271)	(2,558)
Profit before tax					12,221	8,120	10,423

Geographical destination of revenue:
	Half year              ended June		Year ended December
	2011	2010*	2010*
	£'000	£'000	£'000
United Kingdom	171,253	160,642	306,042
Rest of the World	5,921	1,916	2,801
	177,174	162,558	308,843

* The comparatives have been restated in respect of discontinued operations (Note 6).

The Group's revenue is subject to seasonal fluctuations resulting from demand from customers.  In particular, demand is higher in the summer months.  The Group manages the seasonal impact through the use of a seasonal working capital facility to build up inventories to meet demand and at the half year end this typically leads to higher inventory and trade receivable levels.

3.   Net operating costs

	Half year ended June	Half year ended June	Year ended December
	2011	2010*	2010*
	£'000	£'000	£'000
Raw materials and consumables	61,833	54,313	108,021
Changes in inventories of finished   goods and work in progress	(1,894)	1,085	830
Personnel costs	44,253	39,900	80,854
Depreciation         - owned	8,597	8,733	17,422
- leased	41	18	101
Amortisation of intangible assets	628	439	1,433
Own work capitalised	(862)	(1,024)	(2,194)
Other operating costs	54,181	50,586	91,500
Negative goodwill (Note 10)	(1,772)	-	-
Acquisition costs	482	-	-
Overseas "start-up" costs	745	-	-
Share of results of associates	14	33	63
Operating costs	166,246	154,083	298,030
Other operating income	(771)	(780)	(1,747)
Net gain on asset and property   disposals	(1,965)	(136)	(421)
Net operating costs	163,510	153,167	295,862

* The comparatives have been restated in respect of discontinued operations (Note 6).

As set out in Note 10, on 4 March 2011 the Group obtained control of a newly formed company in Belgium engaged in the manufacture and supply of landscape products.  The Group acquired 66.7 per cent of the ordinary share capital and voting interests in Marshalls NV and the new business was established following the acquisition of certain business assets and the injection of new working capital.  The Group incurred acquisition-related costs of £482,000 relating to external legal fees and due diligence costs.  The legal fees and due diligence costs have been included in net operating costs.

The initial acquisition of these assets, principally land, buildings, plant and machinery, has given rise to negative goodwill.  The first months of trading have necessitated the commissioning of the plant and the manufacture and sourcing of the Company's operational inventory and working capital.  A new management team has been established and investment has been made in systems and procedures in this "start-up" phase.  To assist the user of these Condensed Consolidated Half-yearly Financial Statements these "start up" costs have been separately disclosed.

4.   Financial expenses and income

	Half year ended June	Half year ended June	Year ended December
	2011	2010*	2010*
	£'000	£'000	£'000
(a)  Financial expenses
Interest expense on bank loans,   overdrafts and loan notes	1,651	916	2,180
Interest on obligations under the defined   benefit Pension Scheme	5,787	6,377	12,293
Finance lease interest expense	5	4	6
	7,443	7,297	14,479
(b) Financial income
Expected return on Scheme assets under   the defined benefit Pension Scheme	5,980	5,967	11,917
Interest receivable and similar income	20	59	4
	6,000	6,026	11,921

* The comparatives have been restated in respect of discontinued operations (Note 6).

5.   Income tax expense

	Half year ended June	Half year ended June	Year ended December
	2011	2010*	2010*
	£'000	£'000	£'000
Current tax expense
Current year	2,765	1,684	2,228
Adjustments for prior years	-	(506)	(506)
	2,765	1,178	1,722
Deferred tax expense
Origination and reversal of temporary   differences:
Current year	(829)	501	1,047
Adjustments for prior years	(425)	-	(567)
Income tax expense in the   Consolidated Income   Statement (excluding tax on   discontinued operations)	1,511	1,679	2,202
Tax on discontinued operations   (excluding loss on sale)	(194)	(169)	(339)
Income tax credit on disposal and closure  of discontinued operations	(562)	-	-
Total tax expense	755	1,510	1,863

 

	Half year ended June 2011		Half year ended June 2010*		Year ended December 2010*
	%	£'000	%	£'000	%	£'000
Reconciliation of effective tax rate
Profit before tax:
Continuing operations	100	12,221	100.0	8,120	100.0	10,423
Tax using domestic corporation tax rate	27.0	3,300	28.0	2,274	28.0	2,918
Disallowed amortisation of intangible assets	0.5	55	0.6	46	4.1	435
Net income/expenditure not taxable	(5.2)	(639)	(1.7)	(135)	7.2	747
Adjustments for prior years	(3.5)	(425)	(6.2)	(506)	(10.3)	(1,073)
Impact of the change in the rate of   corporation tax on deferred taxation	(6.4)	(780)	-	-	(7.9)	(825)
	12.4	1,511	20.7	1,679	21.1	2,202

 

* The comparatives have been restated in respect of discontinued operations (Note 6).

6.   Discontinued operations

On 14 June 2011 the Group announced the proposed closure of its non-core garage and greenhouse manufacturing operations.  Later in June 2011, agreement was reached to sell, separately, the Compton garage brand and the Alton and Robinson greenhouse brands, and the Compton manufacturing site has been closed.  The operation has been treated as discontinued.

The results of the discontinued operations which have been included in the Condensed Consolidated Half-yearly Income Statement were as follows:

	Half year ended June 2011	Half year ended June 2010	Year ended December 2010
	£'000	£'000	£'000
Revenue	5,856	7,253	14,261
Net operating costs	(6,575)	(7,856)	(15,471)
Loss before tax	(719)	(603)	(1,210)
Income tax credit	194	169	339
Loss after tax	(525)	(434)	(871)
Loss on disposal and closure of   discontinued operations	(4,949)	-	-
Income tax credit on disposal and closure of   discontinued operations	562	-	-
Net loss attributable to discontinued   operations	(4,912)	(434)	(871)
Basic loss per share (pence)	(2.51)p	(0.22)p	(0.45)p
Diluted earnings per share (pence)	(2.46)p	(0.22)p	(0.44)p

Effect of disposal and closure on the financial position of the Group

			£'000
Property, plant and equipment			266
Intangible assets			1,359
Assets disposed of			1,625
Consideration received, satisfied in cash			550
Consideration receivable			450
Professional fees accrued			(93)
Net consideration received			907
Loss on disposal			718
Closure costs			4,231
Loss on disposal and closure of   discontinued operations			(4,949)

During the half year ended June 2011 Compton contributed an outflow of £808,000 to the Group's net operating cash flows (half year ended June 2010: £1,486,000; December 2010: £895,000), received £550,000 in respect of investing activities (half year ended June 2010: paid £27,000; year ended December 2010: paid £39,000) and paid £nil in respect of financing activities (half year ended June 2010: £nil; year ended December 2010: £nil).

A pre tax loss of £718,000 arose on the disposal of the Compton garage and the Alton and Robinson greenhouse brands, being the proceeds of disposal less the carrying amount of the relevant net assets.  In addition the estimated net cost of the closure of the Compton site is £4,231,000.  The total net loss on disposal and closure of discontinued operations is £4,949,000.

Basic loss per share from discontinued operations of 2.51 pence (30 June 2010: 0.22 pence; 31 December 2010: 0.45 pence) per share is calculated by dividing the loss attributable to ordinary shareholders from discontinued operations of £4,912,000 (30 June 2010: £434,000; 31 December 2010: 871,000) by the weighted average number of shares in issue during the period of 195,381,014 (30 June 2010: 195,503,776; 31 December 2010: 195,462,449).

The ordinary shares are considered to be anti-dilutive to the loss per share from the discontinued operations calculation.

7.   Earnings per share

Basic earnings per share of 2.96 pence (30 June 2010: 3.07 pence; 31 December 2010: 3.76 pence) per share is calculated by dividing the profit attributable to ordinary shareholders from total operations, and after deducting non-controlling interests, of £5,776,000 (30 June 2010: £6,007,000; 31 December 2010: 7,350,000) by the weighted average number of shares in issue during the period of 195,381,014 (30 June 2010: 195,503,776; 31 December 2010: 195,462,449).

Basic earnings per share from continuing operations of 5.47 pence (30 June 2010: 3.29 pence; 31 December 2010: 4.21 pence) per share is calculated by dividing the profit from continuing operations and after deducting non-controlling interests of £10,688,000 (30 June 2010: £6,441,000; 31 December 2010: £8,221,000) by the weighted average number of shares in issue during the year of 195,381,014 (30 June 2010: 195,503,776; 31 December 2010: 195,462,449).

Attributable profit

	Half year               ended June		Year ended December
	2011 £'000	2010 £'000	2010 £'000
Profit from continuing operations	10,710	6,441	8,221
Loss from discontinued operations	(4,912)	(434)	(871)
Profit attributable to ordinary shareholders	5,798	6,007	7,350
Profit attributable to non-controlling interests	(22)	-	-
	5,776	6,007	7,350

Weighted average number of ordinary shares

		Half year     ended June		Year ended December
		2011	2010	2010
		Number	Number	Number
Number of issued ordinary shares (at beginning of the period)		199,378,755	199,378,755	199,378,755
Effect of shares transferred into employee benefit trust		(1,572,741)	(1,449,979)	(1,491,306)
Effect of treasury shares acquired		(2,425,000)	(2,425,000)	(2,425,000)
Weighted average number of ordinary shares at end of the period		195,381,014	195,503,776	195,462,449

Diluted earnings per share of 2.90 pence (30 June 2010: 3.01 pence; 31 December 2010: 3.69 pence) per share is calculated by dividing the profit attributable to ordinary shares and potentially dilutive ordinary shares from total operations and after deducting non-controlling interests of £5,776,000 (30 June 2010: £6,007,000; 31 December 2010: £7,350,000) by the weighted average number of shares in issue during the period of 195,381,014 (30 June 2010: 195,503,776; 31 December 2010: 195,462,449) plus potentially dilutive shares of 3,997,741 (30 June 2010: 3,874,979; 31 December 2010: 3,916,306) which totals 199,378,755 (30 June 2010: 199,378,755; 31 December 2010: 199,378,755).

Diluted earnings per share from continuing operations of 5.36 pence (30 June 2010: 3.23 pence; 31 December 2010: 4.13 pence) per share is calculated by dividing the profit attributable to ordinary shares and potentially dilutive ordinary shares from continuing operations and after deducting non-controlling interests of £10,688,000 (30 June 2010: £6,441,000; 31 December 2010: £8,221,000) by the weighted average number of shares in issue during the period of 195,381,014 (30 June 2010: 195,503,776; 31 December 2010: 195,462,449) plus potentially dilutive shares of 3,997,741 (30 June 2010: 3,874,979; 31 December 2010: 3,916,306) which totals 199,378,755 (30 June 2010: 199,378,755; 31 December 2010: 199,378,755).

Weighted average number of ordinary shares (diluted)

		Half year       ended June		Year ended December
		2011	2010	2010
		£'000	£'00	£'000
Weighted average number of ordinary shares		195,381,014	195,503,776	195,462,449
Effect of shares transferred into employee benefit trust		1,572,741	1,449,979	1,491,306
Effect of treasury shares acquired		2,425,000	2,425,000	2,425,000
Weighted average number of ordinary shares (diluted)		199,378,755	199,378,755	199,378,755

8.   Dividends

After the balance sheet date, the following dividends were proposed by the Directors.  The dividends have not been provided and there were no income tax consequences.

		Pence per qualifying share	Half year       ended June		Year ended December
			2011	2010	2010
			£'000	£'000	£'000
2011 interim		1.75	3,431	-	-
2010 final		3.50	-	-	6,863
2010 interim		1.75	-	3,431	3,431
			3,431	3,431	10,294

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

		Pence per qualifying share	Half year       ended June		Year ended December
			2011	2010	2010
			£'000	£'000	£'000
2010 final		3.50	6,863	-	-
2010 interim		1.75	-	-	3,431
2009 final		3.50	-	6,863	6,863
			6,863	6,863	10,294

The 2010 final dividend of 3.50 pence per qualifying ordinary share, total value £6,863,000 was paid on 8 July 2011 to shareholders registered at the close of business on 10 June 2011.

9.   Employee benefits

The Group operates the Marshalls plc Pension Scheme (the "Scheme") which has both a defined benefit and a defined contribution section.  The assets of the Scheme are held in separately managed funds which are independent of the Group's finances.  The defined benefit section of the Scheme is closed to new members and future service accrual. Pension contributions, for both the employer and the employee, are made into the defined contribution section of the Scheme.

		June			December
		2011		2010	2010
		£'000		£'000	£'000
Present value of funded obligations		(214,466)		(220,204)	(212,394)
Fair value of Scheme assets		210,838		193,229	208,302
Net liability in the Scheme for defined benefit obligations (see below)			(3,628)	(26,975)	(4,092)
Experience adjustments on Scheme liabilities		(200)		4,104	14,332
Experience adjustments on Scheme assets		(2,829)		3,987	13,658

Movements in the net liability for defined benefit obligations recognised in the balance sheet

		Half year ended June		Year ended December
		2011	2010	2010
		£'000	£'000	£'000
Net liability for defined benefit obligations at beginning of the period		(4,092)	(37,956)	(37,956)
Contributions received		3,300	3,300	6,600
Profit/(loss) recognised in the Consolidated Income Statement		193	(410)	(376)
Actuarial (losses)/gains recognised in the Consolidated Statement of   Comprehensive Income		(3,029)	8,091	27,640
Net liability in the Scheme for the defined benefit obligations at   period end		(3,628)	(26,975)	(4,092)

The actuarial loss of £3,029,000 in the half year ended 30 June 2011 is due to the net effect of the movement in the fair value of the Scheme assets, the increase in the AA corporate bond rate from 5.5 per cent to 5.6 per cent and the increase in the inflation assumption. 

Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):

			June		December
			2011	2010	2010
Discount rate (AA corporate bond rate)		5.6%		5.5%	5.5%
Inflation (RPI)		3.5%		3.3%	3.4%
Inflation (CPI)		2.8%		n/a	2.7%
Future pension increases		2.8%		3.3%	2.7%
Expected return on Scheme assets		5.8%		6.5%	5.8%
Future expected lifetime of pensioner at age 65 (years):
Male:		20.7		20.5	20.6
Female:		23.8		23.5	23.8

10.  Acquisition of subsidiary and non-controlling interests

On 4 March 2011 the Group obtained control of a newly formed company located and registered in Belgium called Marshalls NV.  The Group acquired 66.7 per cent of the ordinary share capital and voting interests of Marshalls NV and the remaining 33.3 per cent non-controlling interest is owned by an unrelated party.  Marshalls NV manufactures and supplies landscape, driveway and garden products from a range of materials, but principally concrete and natural stone.

In the period to 30 June 2011 Marshalls NV contributed revenue of £4,291,000 and operating profit of £65,000 to the Group's results.

The following summarises the major classes of consideration transferred and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Consideration transferred

			£'000
Cash			3,250
Deferred consideration			2,143
			5,393
Identified assets acquired and liabilities assumed, recorded at fair value on a provisional basis
			£'000
Property, plant and equipment			7,899
Inventories			1,104
Cash and cash equivalents			2,146
Trade and other debtors			742
Trade and other payables			(1,142)
Total net identifiable assets			10,749

Net cash outflow on acquisition of subsidiaries

			£'000
Consideration paid in cash			3,250
less: cash and cash equivalents acquired			(2,146)
Net cash outflow			1,104

Negative goodwill has been recognised as a result of the acquisition as follows:

			£'000
Total consideration transferred			5,393
Non-controlling interests, based on their proportionate interest in the   recognised amounts of the assets and liabilities of the acquiree			3,584
Fair value of identifiable assets			(10,749)
Negative goodwill (Note 3)			(1,772)

The transaction meets the definition of a bargain purchase and, in accordance with IFRS3, the recognised gain has been reported in the Consolidated Half-yearly Income Statement as negative goodwill.  The situation has arisen due to the majority of the assets being acquired through a Belgium Court process as a consequence of the major part of the former trading business falling into severe financial difficulties.

11.  Analysis of net debt

	1 January 2011	Cash flow	30 June 2011
	£'000	£'000	£'000
Cash at bank and in hand	4,059	22,216	26,275
Debt due within one year	(40,900)	(5,763)	(46,663)
Debt due after one year	(30,000)	(20,000)	(50,000)
	(66,841)	(3,547)	(70,388)

Reconciliation of Net Cash Flow to Movement in Net Debt

		Half year ended June			Year ended December
		2011 £'000		2010 £'000	2010 £'000
Net increase/(decrease) in cash and cash equivalents		22,216		9,885	(5,224)
Cash (inflow)/outflow from increase/(decrease) in debt and   lease financing		(25,763)		(7,478)	7,539
Movement in net debt in the period		(3,547)		2,407	2,315
Net debt at beginning of the period		(66,841)		(69,156)	(69,156)
Net debt at the end of the period		(70,388)		(66,749)	(66,841)

12.  Borrowing facilities

The total borrowing facilities at 30 June 2011 amounted to £188.4 million (30 June 2010: £188.4 million; 31 December 2010: £168.4 million) of which £91.7 million (30 June 2010: £102.5 million; 31 December 2010: £97.5 million) remained unutilised. 

These figures include an additional seasonal bank working capital facility of £20.0 million available between 1 February and 31 August each year.

The undrawn facilities available at 30 June 2011 in respect of which all conditions precedent had been met were as follows:

	June		December
	2011 £'000	2010 £'000	2010 £'000
Committed
- Expiring in one year or less	1,737	-	7,500
- Expiring in more than two years but not more than five years	45,000	57,500	65,000
Uncommitted
- Expiring in one year or less	45,000	45,000	25,000
	91,737	102,500	97,500

The maturity profile of borrowing facilities is structured to provide balanced, committed and phased medium term debt and following the renewal of certain bank facilities in August 2011, is set out as follows:

		Facility		Cumulative Facility
		£'000		£'000
Committed facilities:
Q3: 2016		25,000		25,000
Q3: 2015		25,000		50,000
Q3: 2014		20,000		70,000
Q1: 2013		50,000		120,000
Q4: 2012		25,000		145,000
On demand facilities:
Available all year		25,000		170,000
Seasonal (February to August inclusive)		20,000		190,000

13.  Principal risks and uncertainties

The principal risks and uncertainties which could impact the Group for the remainder of the current financial year are those detailed on pages 21 to 24 of the 2010 Annual Report.  These cover the Strategic, Financial and Operational Risks and have not changed during the period.

Strategic risks include those relating to general economic conditions, Government policy, the actions of customers, suppliers and competitors and also weather conditions.  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.  Operational risks include those relating to business integration, employees and key relationships. 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-yearly Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union; and

·      the Half-yearly management report includes a fair review of the information required by:

 

            (a)        DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the half year ended 30 June 2011 and their impact on the Condensed Consolidated Half-yearly 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 and Transparency Rules, being related party transactions that have taken place in the half year ended 30 June 2011 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 2011 were as follows:

Andrew Allner                Chairman

Graham Holden              Chief Executive

Ian Burrell                      Finance Director

David Sarti                     Chief Operating Officer

Alan Coppin                   Non-Executive Director

Mark Edwards                Non-Executive Director

Tim Pile                         Non-Executive Director

The responsibilities of the Directors during their period of service were as set out on pages 25 and 26 of the 2010 Annual Report.

By order of the Board

Cathy Baxandall

Company Secretary

26 August 2011

Cautionary Statement

This Half-yearly 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-yearly 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-yearly Report except to the extent that such liability could arise under English law.  Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A of the Financial Services and Markets Act 2000.

Independent Review Report to Marshalls plc

Introduction

We have been engaged by the Company to review the condensed set of Financial Statements in the Half-yearly Financial Report for the six months ended 30 June 2011 which comprises the Condensed Consolidated Half-yearly Income Statement, the Condensed Consolidated Half-yearly Statement of Comprehensive Income, the Condensed Consolidated Half-yearly Balance Sheet, the Condensed Consolidated Half-yearly Cash Flow Statement, the Condensed Consolidated Half-yearly Statement of Changes in Equity and the related explanatory notes. We have read the other information contained in the Half-yearly 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 the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 reached.

Directors' responsibilities

The Half-yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half-yearly Financial Report in accordance with the DTR of the UK FSA.

As disclosed in Note 1, the annual Financial Statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of Financial Statements included in this Half-yearly Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of Financial Statements in the Half-yearly 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 Auditing Practices Board for use in the UK. A review of Half-yearly Financial Information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of Financial Statements in the Half-yearly Financial Report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Chris Hearld

for and on behalf of KPMG Audit Plc
Chartered Accountants
1 The Embankment

Neville Street
Leeds
LS1 4DW
26 August 2011

 

END

 

 

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