Preliminary Results

Marshalls PLC 8 March 2001 PRELIMINARY RESULTS FOR THE YEAR TO 31 DECEMBER 2000 Marshalls Plc, the specialist Landscape, Concrete and Clay Products Group, today announces results for the year to 31 December 2000. Year to Year to Increase 31 December 31 December per cent 2000 1999 (£'000) (£'000) Turnover 298,179 278,547 7 Profit before interest 44,628 42,754 4 Profit before tax 41,856 40,644 3 Earnings per share (diluted) 19.65p 17.60p 12 Dividend per share 9.00p 8.00p 13 * Second half performance impacted by weather and fuel costs * Landscape Products matched last year's record result * Clay Products and Emerging Businesses Divisions ahead of 1999 * Strong initiatives in place to continue growth in all Divisions * Balance sheet remains strong with gearing of 5 per cent * Dividends increased by 13 per cent to 9p per share Commenting on these results, Christopher Burnett, Chairman said: 'The impact of the appalling weather in the second half, and transport cost increases arising from the 'fuel crisis' meant that we could not maintain the rate of sales and profit growth achieved in the first half. However, we still finished the year with record profits, albeit not as far ahead of last year as we would have liked. 'The business is in excellent shape with strong initiatives in place throughout the Group. If weather conditions treat us and the construction industry more kindly than in 2000, we look to the outcome of the new financial year with confidence. The first two months are in line with Plan.' Enquiries: Christopher Burnett, Chairman Marshalls Plc 020 7404 5959 today Graham Holden, Chief Executive, Landscape Products 01422 306 400 thereafter Group Finance Director Jon Coles Brunswick Group 020 7404 5959 William Cullum CHAIRMAN'S STATEMENT Turnover for the year at £298.2 million was 7 per cent ahead of last year. Profit before interest improved by 4 per cent to £44.6 million. At the time of the half year results we explained in my statement how poor April weather and other special industry events had impacted the results. Little could we have imagined then what was to follow in the second half when truly appalling weather conditions again held back sales in every part of the country, as they did for the whole building materials industry. For extended periods it was simply not possible to lay our products with the ground so waterlogged, and therefore both private and commercial work had to be delayed until the ground recovered. While it is not possible to be precise, we would estimate that the 'weather factor' reduced second half sales of landscape products alone by £5 million with the consequent loss of margin. These difficulties were compounded by an increase in distribution costs of £2.5 million due to the impact of the 'fuel crisis' on our hauliers. We also decided to take this financial year a cost approaching £1 million in setting up Service Centres which meant that the rate of profit growth achieved in the first half was not sustained. In the circumstances, however, we are satisfied, though slightly disappointed, with this year's result. Clearly, because of the curtailed selling season, we also did not gain the full benefit from the additional marketing investment though there is no doubt that the range of Marshalls products are today better appreciated by consumers. We incurred re-organisation costs of £1.1 million as part of the previously announced efficiency improvement programme. These costs were more than off- set by a profit of £2.7 million on the disposal of 11.4 acres of land near Leeds for housebuilding. Profit before tax therefore increased from £40.6 million in 1999 to £41.9 million, a rise of 3 per cent. Landscape Products Division The Landscape Products Division maintained its operating profit of £32.2 million before re-organisation costs. When the trade were able to work there was strong consumer demand for our products, with block paving sales up 17 per cent in the first half, but only 9 per cent for the year as a whole. More evidence emerged of the effectiveness of our marketing campaign and the confidence home owners gained from the Marshalls Register which lists our approved layers for driveway and garden landscape work. This bodes well for the future. In contrast the commercial sector remained subdued throughout the year with Industry demand unchanged compared with 1999. The expected public sector investment simply did not materialise, and industrial and retail new build reflected the poor economic conditions in those sectors. The other main focus of management was on the changes necessary to complete the transition of as many of our sites as possible into Service Centres in time for Spring 2001 deliveries. Once established the Service Centres will be able to deliver, or have available for collection, mixed loads of our products, even if not manufactured locally. It is a great credit to the management team that all but four of the planned sites will have converted to Service Centres by this Spring. The Service Centre concept will be a major competitive advantage for Marshalls and ensure that we both provide customers with improved service levels in 2001, and limit the impact of higher distribution costs. Stonemarket, our other garden and patio products brand, again produced encouraging growth in sales and profit despite the adverse weather. Land adjacent to its main site has been acquired which will enable us to expand both capacity and the product range. Clay Products Division The Clay Products Division increased its operating profit, before reorganisation costs, to £4.7 million, up 8 per cent on 1999. Sales fell by 4 per cent to £28.1 million. Trading conditions in the clay products industry, a declining sector for the past couple of decades, remain challenging with Industry volume falling by a further 4 per cent in 2000. The efficiency improvements and overhead reductions that formed the cornerstone of management's commitment to substantially improve the profitability of the Division have again shown through in the results. Further recent changes in structure and working patterns have resulted in more efficiencies. The Division will also benefit from the creation of Service Centres. It is our intention to offer customers a selection of bricks and clay pavers alongside our concrete products. This will be a competitive advantage that others in the Industry will find difficult to match. Emerging Businesses Division The Emerging Businesses Division improved its operating profit by an impressive 11 per cent to £6.9 million. The creation of the Division has been a real success story. It is the stable in which we house the smaller Group businesses that we hope will grow into sizable divisions for tomorrow. The individual management teams with responsibility for these businesses have risen to the challenge and overcome difficult market conditions to produce this outstanding result. We continue to look for acquisitions to increase the size of these business units and their contribution to Group profits. Balance Sheet The Group balance sheet remains exceptionally strong. One side effect of the poor trading conditions has been an increase in stocks of £13 million over last year which, naturally, has a temporary impact on borrowings. Despite this and capital expenditure of £22.5 million borrowings only increased to £8.8 million, up from £6.5 million at the end of the 1999 financial year. This was achieved due to the exceptionally strong cash generative nature of the business. Dividend The Board has decided to declare a final dividend of 6p per ordinary share making a total of 9p for the year, in line with our previously declared dividend policy that Preference shareholders would not suffer any dilution on conversion. The conversion took place in October, when holders of 98 per cent of Preference shares exercised their right to convert into Ordinary shares. Outlook The Group continues to build on its market leadership position in its core landscape products business. The customer service and marketing development initiatives are designed to ensure that this momentum continues. We also have clear plans to deliver further profit growth in the Clay Products and Emerging Businesses Divisions. If weather conditions treat us and the construction industry more kindly than in 2000, we look to the outcome of the new financial year in all three divisions with confidence. Christopher Burnett Chairman LANDSCAPE PRODUCTS DIVISION An operating profit of £32.2 million, almost matched the record performance of £32.4 million in 1999. Sales were 8 per cent ahead at £226.4 million (£210.4 million in 1999). The domestic market was again the highlight this year with Marshalls landscape products and the Stonemarket brand of garden and patio products performing exceptionally well. Commercial sales on the other hand showed a marginal improvement against flat Industry demand. The extensive consumer advertising campaign conducted during 2000 provided substantial sales increases for the products featured. However, the poor Autumn weather brought the domestic season to a premature end. Further benefit is, however, expected from this initiative in 2001 given the momentum that has been created. Marshalls Sales growth came almost entirely from the domestic market for driveway and patio products with increased demand for higher quality value added products. Investment is being made in additional capacity to keep ahead of demand. The conversion of eight of our sales depots into Service Centres capable of supplying customers with a comprehensive range of Marshalls products in full mixed loads is now complete. A further four sites will be converted in time for the 2002 selling season. This will enable us to provide better product availability to our customers and a major competitive advantage in distribution, where our Industry faces ever increasing cost and regulation. Stonemarket The business manufactures a unique range of concrete and natural stone products for the domestic market. Stonemarket's customers are principally garden centres, garden landscapers and independent builders' merchants. Sales continued to show excellent growth. Additional capacity has been installed to meet this increasing demand. Further investment will take place during 2001 to increase the production of existing products and a number of exciting new products. Outlook Despite a much curtailed selling season this year, an unplanned increase in transport charges that could not be passed on, and absorbing the set-up costs of the Service Centres, the Division almost matched last year's record profit. With better trading conditions and the benefits of capacity increases and efficiency improvements we expect further profit growth in 2001. Graham Holden Chief Executive Landscape Products Division CLAY PRODUCTS DIVISION Despite a 4 per cent reduction in sales to £28.1 million, in line with the fall in Industry demand, the Division increased its operating profit by 8 per cent to £4.7 million taking margins to 16.7 per cent (14.8 per cent in 1999). We remain on course to deliver a £3 million increase in profits over a period of three years in accordance with the profit improvement plan announced in 1999. That plan anticipated that overhead reduction and operating efficiency gains would more than compensate for the continuing decline in Industry demand. The Division has this year made the capital investment to meet the requirements of the Emissions Control Regulations. In 2001 it will have to pay the Climate Change Levy along with hefty increases in gas prices. Like the rest of the Industry it has been necessary to reflect these increased costs in selling prices. We are now in the next phase of implementing our 1999 profit improvement plan. Through a combination of changes in working practices and shift patterns we have achieved a total reduction of 20 per cent in the numbers employed with no loss in output. Outlook The lower level of housing output predicted for 2001 will present a great challenge in the coming year. However, the Division's main focus on commercial construction, further efficiency gains in 2001 and the plan to offer a selection of our products through Marshalls Service Centres, gives us confidence we shall achieve our profit improvement target. Blair Illingworth Chief Executive Clay Products Division EMERGING BUSINESSES DIVISION This is the first year since the Division was established in 1999 that we are able to show comparative figures. These reveal that sales increased in 2000 by 12 per cent to £43.7 million, and that operating profit improved by an encouraging 11 per cent from £6.2 million to £6.9 million. Natural Stone The Natural Stone business now includes many types of stone products for the domestic and commercial markets, including granite as well our traditional Yorkstone. Sales were 15 per cent ahead of last year. The business has a good order book. Most products are made to order which places a premium on efficient production planning and control as well as flexible production equipment. This is an area where management effort and investment is being particularly focused. Flooring On the back of a previous record year, the business increased sales by a further 10 per cent. The product mix also improved, with encouraging orders for the new Jetfloor Super System, thereby increasing margins. The business is now concentrating on efficiency improvements within manufacturing requiring modest further investment in 2001. Drainage Products The Drainage business supplies linear drainage for use in road building, as well as for commercial and domestic landscaping schemes. Activity in road building was once again depressed, which held back sales. However, greater focus on commercial landscaping schemes saw second half sales recover considerably. It is expected that this trend will continue into 2001. Street Furniture The Street Furniture business consists of our own manufactured concrete products supplemented by a wide range of bought-in items. Sales were similar to 1999 though product mix helped improve profits. A new business which has considerable scope for growth was added in October 2000. It manufactures and sells a range of mainly telescopic bollards used for security purposes in both commercial and domestic markets. Classical Flagstones The main development in the business during 2000 was the installation of automated manufacturing equipment. This was commissioned in the second half of the year and has increased capacity enabling us to grow sales. This aspirational high quality product range is sold mainly to the internal flooring market. We continue to develop the tremendous potential in both domestic and commercial applications. Outlook The Division made a substantial contribution to Group profits. There is no doubt further benefits will be gained by making use of Marshalls buying power and Industry contacts, but at the same time giving the businesses individual management focus. It remains a key objective to grow the businesses both organically and through acquisition to the point where each can become a division in its own right. Blair Illingworth Chief Executive Emerging Businesses Division MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2000 Notes 2000 1999 £'000 £'000 Turnover 1 298,179 278,547 Operating costs 256,271 236,308 __________________________________________ _____ _______ _______ Operating profit before reorganisation and goodwill amortisation 43,782 42,868 Reorganisation (1,106) - Goodwill amortisation (768) (629) __________________________________________ _____ _______ _______ 41,908 42,239 Gain on disposal of property 2,720 515 _______ _______ Profit on ordinary activities before interest 1 44,628 42,754 Interest - net 2,772 2,110 _______ _______ Profit on ordinary activities before taxation 41,856 40,644 Taxation on profit on ordinary activities 11,700 11,700 _______ _______ Profit for the financial year 30,156 28,944 Preference dividends - non equity shares 2,359 3,596 _______ _______ Profit attributable to ordinary shareholders 27,797 25,348 ======= ======= Earnings per share: Diluted 19.65p 17.60p ======= ======= Basic 19.67p 19.90p ======= ======= MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2000 Notes 2000 1999 £'000 £'000 Fixed assets Intangible 15,126 14,146 Tangible 149,785 139,910 _______ _________ 164,911 154,056 Current assets Stocks 57,342 44,296 Debtors 34,147 39,412 Cash at bank and in hand 12,529 13,898 _______ _________ 104,018 97,606 Creditors - due within one year 56,764 56,292 _______ _________ Net current assets 47,254 41,314 _______ _________ Total assets less current liabilities 212,165 195,370 Creditors - due after more than one year 21,344 20,027 _______ _________ Net assets 2 190,821 175,343 ======= ========= Capital and reserves Called up share capital 42,911 43,498 Share premium 18,453 15,023 Revaluation reserve 5,166 5,166 Other reserves 10,274 10,274 Profit and loss account 114,017 101,382 _______ _________ Shareholders funds 190,821 175,343 ======= ========= Analysis of shareholders' funds Equity 188,698 128,382 Non equity 2,123 46,961 _______ _________ 190,821 175,343 ======= ========= MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2000 Notes 2000 1999 £'000 £'000 Cash flow from operating activities 3 48,254 46,884 Returns on investments and servicing of finance (5,836) (4,779) Taxation (12,773) (11,785) Capital expenditure (20,325) (17,779) Acquisitions and disposals (680) (3,508) Equity dividends paid (11,070) (9,198) ________ _________ Cash outflow before use of liquid resources and financing (2,430) (165) Management of liquid resources 2,650 4,650 Financing 1,061 (165) ________ _________ Increase in cash in the year 1,281 4,320 ======== ========= Reconciliation of net cash flow to movement in net debt Increase in cash in the year 1,281 4,320 Cash outflow from decrease in debt and lease financing 596 474 Cash inflow from decrease in liquid resources (2,650) (4,650) ________ _________ Change in net debt resulting from cash flows (773) 144 New finance leases and loans on acquisition of businesses (279) (251) Loans issued on acquisition of businesses (1,327) - Translation differences (12) (13) ________ _________ Movement in net debt in the year (2,391) (120) Net debt at beginning of year (6,451) (6,331) ________ _________ Net debt at end of year (8,842) (6,451) ======== ========= MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED PRIMARY STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2000 2000 1999 £'000 £'000 Consolidated statement of total recognised gains and losses Profit for the financial year 30,156 28,944 Exchange differences on foreign currency loan (12) (13) _______ _________ Total recognised gains and losses 30,144 28,931 ======= ========= MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED NOTES FOR THE YEAR ENDED 31 DECEMBER 2000 2000 1999 £'000 £'000 1. Analysis of turnover, operating profit and profit on ordinary activities before interest Turnover Landscape 226,431 210,426 Clay 28,093 29,209 Emerging Businesses 43,655 38,912 _______ _________ 298,179 278,547 ======= ========= Operating profit and profit on ordinary activities before interest Landscape 32,219 32,357 Clay 4,679 4,316 Emerging Businesses 6,884 6,195 _______ ________ 43,782 42,868 Reorganisation (1,106) - Goodwill amortisation (768) (629) _______ _________ 41,908 42,239 Gain on disposal of property 2,720 515 _______ _________ Profit on ordinary activities before interest 44,628 42,754 ======= ========= All turnover and profits are derived from continuing operations. 2. Analysis of net assets Landscape 130,311 119,572 Clay 45,102 43,522 Emerging Businesses 20,122 20,476 _______ _________ 195,535 183,570 Unallocated net liabilities (4,714) (8,227) _______ _________ 190,821 175,343 ======= ========= Unallocated net liabilities comprise non-operating assets and liabilities of a financing nature, principally net borrowings, corporation tax, dividends payable and capitalised goodwill. MARSHALLS PLC PRELIMINARY ANNOUNCEMENT OF RESULTS AUDITED CONSOLIDATED NOTES FOR THE YEAR ENDED 31 DECEMBER 2000 2000 1999 £'000 £'000 3. Reconciliation of operating profit to cash flow from operating activities Operating profit 41,908 42,239 Amortisation charges 768 629 Depreciation charges 12,825 12,002 Loss/(profit) on sale of tangible fixed assets 36 (110) Increase in stocks (12,896) (3,509) Decrease/(increase) in debtors 6,899 (9,403) (Decrease)/increase in creditors (1,286) 5,036 ________ _________ 48,254 46,884 ======== ========= 4. Other The above financial information does not constitute statutory accounts for the year ended 31 December 2000 or for the year ended 31 December 1999 but is derived from those accounts. Statutory accounts for the year ended 31 December 1999 have been delivered to the Registrar of Companies. The auditors have reported on the year ended 31 December 1999 accounts: their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2000 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The proposed final dividend is 6.00p per ordinary share, an increase of 12.5 per cent over 1999, making a full year dividend of 9.00p per ordinary share (1999 - 8.00p). The dividend is payable on 2 July 2001 to shareholders on the register on 8 June 2001. The ex-dividend date is 6 June 2001. The Annual General Meeting will be held at the Forte Posthouse Hotel, Brighouse at 2.30pm on Wednesday 23 May 2001. The annual report will be posted on 18 April 2001.

Companies

Marshalls (MSLH)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today