INTERIM FINANCIAL STATEMENTS Six months ended 30th ......Market conditions, however, have continued...
Transcript of INTERIM FINANCIAL STATEMENTS Six months ended 30th ......Market conditions, however, have continued...
Marshall of Cambridge (Holdings) Ltd
INTERIM FINANCIAL STATEMENTSSix months ended 30th June 2016
Marshall of Cambridge
Marshall Group Finance
Marshall Motor Holdings plcMarshall Fleet Solutions
Martlet and Marquity
Military AerospaceCivil Aerospace
Aviation ServicesLand Systems
Advanced CompositesAerostructuresMajor Projects
ORGANISATIONAL STRUCTURE
Marshall Aerospace and Defence Group
QuorumWing and North Works
Land North of Cherry HintonAirfield and Airside Properties
Marshall Group Properties
The business is a serviceprovider to a range ofcustomers in military andcommercial markets in theair, land and sea domains.There are seven primarybusiness streams,supported by centralfunctional supportdepartments andCambridge Airport.
The property businessholds and rents out bothinvestment properties andproperties used in thebusiness of other Groupcompanies, sited inCambridge. The propertybusiness is alsoprogressing two majordevelopment projects:Wing and Land North ofCherry Hinton.
As an operating entitywithin the company,Marshall Group Finance(MGF) aims to be profitand cash generative,through the activemanagement of its assetsand investments. Underthe new structure, MGFwill control the treasuryfunctions for the Group.
n Turnover up 23.7%n UK GAAP operating profit just above break evenn Adjusted operating profit up 34.4% (see note 3)n Maintained interim dividend at 1.00p for ordinary shares and 3.00p for NVPO sharesn Marshall Motor Holdings plc acquires Ridgeway for £109mn Marshall Aerospace and Defence Group receives Queen’s Award for Enterprise:
International Traden Local authorities approve resolution to grant planning permission on Wingn Increased NVPO share pricen Sir Michael Marshall confirmed as President from 1st October 2016 and
Alex Dorrian CBE appointed as Chairman
HEADLINES For six months ended 30th June 2016
Integrity | Customers | People | Innovation
Chairman’s Statement 3
Operational and Financial Performance 4
Risks and Uncertainties 6
Consolidated Income Statement 8
Consolidated Statement of Cash Flows 9
Net Debt Reconciliation 10
Balance Sheet 11
Notes to the Interim Financial Statements 12
CONTENTS
3
CHAIRMAN’S STATEMENT
I am immensely proud to have taken on the role of Chairman ofthe Marshall Group, which is so highly respected across theglobe in all of its business segments. I look forward to leadingthe continued growth and development of the Group, whilstremaining committed to the values which have beenembedded in the business for so long.
I would like to take thisopportunity of thanking SirMichael for the commitmentand leadership that he showedduring his 27 years asChairman. In his new role asPresident he will, I am sure,continue to be an outstandingambassador for Marshall locally,nationally and internationally.
Whilst there is a great deal to beupbeat and excited aboutacross the Group, there aresome challenges with some ofour projects and business unitswhich will have an impact onour profitability in 2016.
Marshall Aerospace andDefence Group (MADG) hasseen good progress in the LandSystems and Aerostructuresbusiness units and there hasbeen rapid growth in the re-established civil aircraftbusiness. Our successfulMilitary Aircraft division iscurrently working with tenseparate national air forces insupport of their C-130 Herculesaircraft. This year we havecelebrated the 50th anniversaryof the important C-130relationship between Marshall,the Royal Air Force andLockheed Martin. MADG is alsodelighted to have received asecond Queen’s Award, thistime in the International Trade
section. Regrettably however,we have seen some slippage inone of our largest and mostcomplex programmes, resultingin the recognition of a £7m lossprovision against the project.
Marshall Group Properties wasdelighted with the news in Aprilthat the Joint DevelopmentControl Committee had passeda resolution to grant planningpermission for the proposedWing development on land weown to the north of NewmarketRoad in Cambridge. Thisexciting development willeventually deliver around 1,300much needed homes, togetherwith a primary school, businessand retail units, and leisurefacilities. We are now workingclosely with the variousstakeholders to finalise the legaldetailed agreements linked tothe grant of planningpermission.
Marshall Motor Holdings plc(MMH) has had a strong firsthalf of 2016 and in Mayannounced the acquisition ofRidgeway, a large privately-owned group with 31dealerships across the south ofEngland. MMH is now the 7thlargest dealer group in the UK,with 103 franchised dealershipsand over 4,000 employees.
The Group’s net debt position at30th June 2016 was £19.2m,which compares with a net cashbalance at 31st December 2015of £53.1m. The change is dueto the significant acquisition ofRidgeway by MMH and, inMADG, the effect of advancepayments from the customer ona major contract reducingduring the period and the newterms of the MoD C-130contract.
Although the reported profit forthis year will be below the levelachieved in the prior period,next year we expect profitabilityin MADG to recover and insubsequent years income willbegin to flow from our propertydevelopment initiatives.Therefore, we will maintain theinterim dividend at 1.00p pershare for both Ordinary andNVPO shares, and pay thepriority dividend of 2.00p on theNVPO shares. This will be paidon 16th December 2016 to allshareholders on the register at25th November 2016.
Alex Dorrian CBE25th October, 2016
OPERATIONAL AND FINANCIAL PERFORMANCE
Group turnover was up 23.7% to just under£1.0bn with good underlying organic growth,assisted by the benefit of the MMH acquisitionsof S.G. Smith in November 2015 and Ridgewayin May 2016. FRS102 reported results show abreak even position; adjusted for separatelydisclosed items, as highlighted in note 3,operating profit was £11.8m for the first sixmonths of 2016, compared with £8.7m for thesame period in 2015. As a result of funding theRidgeway acquisition in MMH, the Groupended the half year with a consolidatedadjusted net debt of £19.2m.
Aerospace and Defence (MADG)The 2016 reported operating losshas increased compared with the2015 half year position. The coreC-130 business continues toperform strongly, meeting thechallenges of the new pricingperiod agreed with the UK MoDand growing with overseascustomers.
Similarly, the Land Systems andAerostructures businesses havealso performed aboveexpectations in the first half year,whilst the Civil business hasachieved sales growth of 28.9%as the strategy to balance the mixof civil and military business isimplemented.
Market conditions, however, havecontinued to worsen for AviationServices, and operational issuesat Advanced Composites and in
one major programme have had amaterially negative impact onresults. MADG will, therefore,report further losses in thesecond half of 2016, the quantumbeing dependent upon a numberof sensitivities, particularly inthese areas.
Order intake for the year is in linewith the Board’s expectationswhilst longer term opportunitiesarising from the Strategic DefenceSpending Review, published in2015, are much improved.
PropertyFollowing the resolution to grantplanning permission for the Wingproject, received in April 2016,work continues to negotiate thefinal agreement and achieve anoutline planning approval beforethe end of the year.
Marshall of Cambridge (Holdings) Ltd Interim Financial Statements 2016
Adjusted (net debt) / cash
Key Performance Indicators
4
Turnover
£805.6m
£8.7m
H1 2016 H1 2015
£996.5m
AdjustedOperating Profit
£11.8m
H1 2016 H1 2015
H1 2016 H1 2015
£(19.2)m
£66.6m
“It is a great honour to have won a 2016Queen’s Award for Enterprise in InternationalTrade and to be recognised for our role in theexport of the UK’s engineering capabilities, inthe commercial and military aerospace sector.”
Steve Fitz-Gerald
CEO – Marshall Aerospace and Defence Group
Integrity | Customers | People | Innovation
5
6
In addition to the Wingdevelopment, collaborationagreements have beennegotiated with a local landowner to apply for planningpermission to develop land to thenorth of Cherry Hinton (LNCH).An outline planning application isdue to be submitted in 2017 forthe development ofapproximately 1,200 new homes,of which around 700 will be onMarshall land.
The former Peugeot dealershipand associated petrol fillingstation in Cambridge weredemolished during the first half of2016. A lease has been signedwith BP, and construction hascommenced of a new facility,including an M&S Simply Foodoutlet. These new facilities onNewmarket Road are likely toopen before the year end.
Group FinanceMMH interim results reported arevenue increase of 30.7% to£826.4m and record profitabilityfrom both retail and leasingsegments. As well as growththrough acquisition, like-for-likevolumes of new vehicles (3.2%),used vehicles (0.9%) andaftersales revenues (6.3%) wereall up on 2015. The strategicacquisition of Ridgeway,completed in May 2016 for£109m, extended thegeographical spread of MMH andstrengthened relationships withkey brand partners. A new threeyear committed, unsecured£120m revolving credit facility hasbeen signed, which means theenlarged MMH remains wellpositioned to execute its growthstrategy moving forward.
Marshall Fleet Solutions (MFS)has had a difficult start to 2016 asexchange rate movements andlower volumes reduced grossprofits. As the year progresses,market conditions remain difficult,therefore MFS will report furtherdeterioration in the second half.
The Martlet early stage financeportfolio realised a positive returnfrom the sale of its investment inCambridge CMOS SensorsLimited and made three newinvestments in the first half of2016.
OutlookIt remains too early to assess theextent of any long term impact ofthe UK’s decision on 23rd June,2016 to leave the EuropeanUnion. The Board, however,continues to monitor the positionclosely.
MADG has a number of short-term operational challenges toresolve, especially the delivery ofthe critical phases of one majorproject. Excluding the MOD longterm contract for the C-130 fleet,the order book stood at £188.8m,an increase of 3.3% from the yearend position and is furthersupported by a number ofpipeline opportunities across thebusiness. Progress is beingmade on securing theopportunities made available bythe 2015 Strategic DefenceSpending Review.
Within MMH, the strategicacquisitions of Ridgeway andS.G. Smith leave the businesswell positioned for further longterm growth. Whilst it is right toremain cautious given wider
economic uncertainties, thebusiness remains well positionedto execute its growth strategymoving forward and the outlookfor the full year remainsunchanged.
The Board remains committed toincreasing shareholder value,through operationalimprovements and selectiveacquisitions, which are in line withthe Group’s strategic growthaspirations. Near term, however,reported profit for the current yearwill be materially lower than theprior year.
RISKS AND UNCERTAINTIES
The Group’s performance overthe remaining six months of thefinancial year may be impactedmaterially by a number ofpotential risks and uncertaintieswhich could have an effect on theactual results. These include: adecline in the general economicenvironment, budgetarypressures on UK and overseasmilitary customers which mightlead to a reduction in orders, andprogress on one majorprogramme.
Other than the inclusion of theunknown impact of the UK’sdecision to leave the EuropeanUnion, the Directors do notconsider that the underlyingprincipal risks and uncertaintieshave materially changed sincethe publication of the annualreport for the year ended 31stDecember, 2015.
Marshall of Cambridge (Holdings) Ltd Interim Financial Statements 2016
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Integrity | Customers | People | Innovation
Marshall Motor Groupn 24 brandsn 103 locations
Pictured: Ridgeway Volkswagen, Oxford
CONSOLIDATED INCOME STATEMENT
for the six months ended 30th June 2016
GROUP TURNOVER: continuing operations
Cost of sales
GROSS PROFIT
Administrative expenses and other operating income
GROUP OPERATING PROFIT
Profit on disposal of tangible fixed assets, investments and subsidiaries
Fair value adjustments on investment properties
Fair value (loss) / gain on investments less amounts provided against investments
Income from investments
Interest receivable
Interest payable and similar charges
Other finance costs
(LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
Tax on (loss) / profit on ordinary activities
(LOSS) / PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION
Equity minority interests
(LOSS) / PROFIT FOR THE PERIOD
Net costs included in operating profit that are separately disclosed in note 3
BASIC AND DILUTED (LOSS) / EARNINGS PER ORDINARY SHARE
UNDERLYING EARNINGS PER ORDINARY SHARE
Six months ended
30th June 2016
(unaudited)
£000
996,514
(841,715)
154,799
(154,680)
119
476
-
(229)
7
214
(2,456)
(175)
(2,044)
413
(1,631)
(2,940)
(4,571)
(11,631)
(8.4)p
8.5p
Note
2
3
Year ended
31st Dec 2015
(audited)
£000
1,585,732
(1,314,531)
271,201
(248,504)
22,697
1,602
791
211
25
341
(3,003)
(433)
22,231
(6,863)
15,368
(1,542)
13,826
(3,626)
22.3p
26.2p
Six months ended
30th June 2015
(unaudited)
£000
805,583
(669,652)
135,931
(128,953)
6,978
728
-
(92)
7
322
(1,414)
(225)
6,304
(1,603)
4,701
(343)
4,358
(1,762)
6.8p
9.8p
8
Marshall of Cambridge (Holdings) Ltd Interim Financial Statements 2016
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30th June 2016
NET CASH INFLOW FROM OPERATING ACTIVITIES
INVESTING ACTIVITIES
Income from investments
Interest received
Payments to acquire tangible fixed assets and investments
Receipts from sales of tangible fixed assets and investments
Acquisition of businesses
Net cash acquired on acquisitions
Net cash outflow from investing activities
FINANCING ACTIVITIES
Bank and stock finance interest paid
Equity dividends paid
Dividends paid to non-controlling interests
Proceeds from borrowings
Repayment of borrowings
Issue of share capital net of costs
Net cash inflow from financing activities
(DECREASE) / INCREASE IN CASH AT BANK AND IN HAND
CASH BALANCE AT START OF PERIOD
Effect of exchange rates on cash and cash resources
(Decrease) / increase in cash and cash equivalents
CASH BALANCE AT CLOSE OF PERIOD
Six months ended
30th June 2016
(unaudited)
£000
72,727
7
38
(36,104)
9,711
(109,110)
12,664
(122,794)
(2,415)
(2,144)
(649)
76,163
(34,148)
663
37,470
(12,597)
54,317
-
(12,597)
41,720
Year ended
31st Dec 2015
(audited)
£000
39,809
25
341
(64,769)
10,891
(24,450)
2,477
(75,485)
(3,003)
(6,758)
(155)
28,642
(30,812)
36,203
24,117
(11,559)
65,471
405
(11,559)
54,317
Six months ended
30th June 2015
(unaudited)
£000
396
7
322
(31,552)
5,771
-
-
(25,452)
(1,414)
(1,978)
-
13,172
(13,942)
36,853
32,691
7,635
65,471
-
7,635
73,106
9
10
Marshall of Cambridge (Holdings) Ltd Interim Financial Statements 2016
NET DEBT RECONCILIATION
for the six months ended 30th June 2016
Cash at bank and in hand
Bank loans and overdrafts due in less than one year
Bank loans and overdrafts due in more than one year
Derivative financial instruments
Net (debt) / cash at end of period
Six months ended
30th June 2016
(unaudited)
£000
41,720
(51,225)
(8,435)
(1,224)
(19,164)
Year ended
31st Dec 2015
(audited)
£000
54,317
(1,219)
-
-
53,098
Six months ended
30th June 2015
(unaudited)
£000
73,106
(6,500)
-
-
66,606
11
BALANCE SHEET
as at 30th June 2016
FIXED ASSETS
Intangible assets
Tangible assets
Investments
TOTAL FIXED ASSETS
CURRENT ASSETS
Stocks
Debtors
Cash at bank and in hand
CREDITORS: amounts falling due within one year
Bank loans and overdrafts
Asset backed financing - leasing
Other creditors
NET CURRENT (LIABILITIES) / ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: amounts falling due after more than one year
Bank loans and overdrafts
Asset backed financing - leasing
Derivative financial instruments
Other creditors
PROVISION FOR LIABILITIES
NET ASSETS BEFORE PENSION LIABILITY
PENSION LIABILITY
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Capital redemption reserve
Cashflow hedge reserve
Non-distributable reserve
Profit and loss account
SHAREHOLDERS' FUNDS
Non-controlling interests
TOTAL CAPITAL EMPLOYED
Year ended 31st Dec 2015
(audited) £000
35,279
194,542
4,543
234,364
264,949
129,665
54,317
448,931
(1,219)
(26,700)
(382,712)
(410,631)
38,300
272,664
-
(24,677)
-
(10,195)
(34,872)
(3,953)
233,839
(11,516)
222,323
15,733
-
130
263
6,917
155,009
178,052
44,271
222,323
30th June 2016
(unaudited) £000
115,693
272,397
4,789
392,879
380,189
174,994
41,720
596,903
(51,225)
(27,341)
(606,893)
(685,459)
(88,556)
304,323
(8,435)
(33,349)
(1,224)
(6,491)
(49,499)
(24,747)
230,077
(11,516)
218,561
15,785
611
130
263
6,917
148,294
172,000
46,561
218,561
As reported in the interim financial statements for 2015, a balance sheet at 30th June 2015 was excluded due to the implementation ofFRS102, the UK’s new Financial Reporting Standard.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
2. Segmental analysis Year ended
31st December 2015
(audited)
£000
1,232,761
311,823
41,148
1,585,732
Six months ended
30th June 2015
(unaudited)
£000
632,477
152,027
21,079
805,583
Six months ended
30th June 2016
(unaudited)
£000
826,401
145,040
25,073
996,514
Revenue
Motor retail and leasing
Aerospace and defence
Other
Total
18,775
10,958
4,491
369
11,865
(715)
2,362
(86)
16,321
(1,429)
1,942
(459)
Operating profit / (loss)
Motor retail and leasing
Aerospace and defence
Property
Other
34,593
(8,270)
26,323
(3,626)
22,697
13,426
(4,686)
8,740
(1,762)
6,978
16,375
(4,625)
11,750
(11,631)
119
Operating profit before central overheads
and separately disclosed items
Central overheads
Operating profit before separately disclosed items
Separately disclosed items (note 3)
Reported operating profit
12
Marshall of Cambridge (Holdings) Ltd Interim Financial Statements 2016
1. Basis of preparationThe Group transitioned from the previously extant UK GAAP to FRS102 as at 1st January 2014. An
explanation of how the transition to FRS102 affected the reported financial position and financial
performance was included in the report and accounts for the year ended 31st December 2015. These
unaudited statements have been prepared in compliance with applicable UK accounting standards.
13
NOTES TO THE INTERIM FINANCIAL STATEMENTS
3. Detailed consolidated income statement
Year ended
31st December 2015
(unaudited)
£000
26,323
(3,626)
22,697
Six months ended
30th June 2015
(unaudited)
£000
8,740
(1,762)
6,978
Six months ended
30th June 2016
(unaudited)
£000
11,750
(11,631)
119
Operating profit
Before separately disclosed items
Separately disclosed items
Reported operating profit
(2,843)
(467)
-
(316)
-
(3,626)
(1,446)
-
-
(316)
-
(1,762)
(3,229)
-
(7,000)
-
(1,402)
(11,631)
Details of separately disclosed items
Amortisation of acquired intangible assets
Impairment of tangible fixed assets
Provision for losses on complex programme
Non directly attributable IPO costs
Restructuring costs
Separately disclosed items
The Group has incurred a number of material items, whose significance is sufficient to warrant separate
disclosure. The key elements included within separately disclosed items are:n Charges for amortisation of acquired intangible assets and impairment of tangible assets;n Provision for losses incurred anticipated on the completion of a complex project within MADG; andn Other costs relating to organisational restructuring and the raising of capital.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
14
Fair value
adjustments
£000
(2,600)
59,504
(10,728)
-
(724)
-
-
(10,060)
-
(5,086)
-
30,306
Book
value
£000
2,600
-
-
65,414
124,124
51,627
12,664
(174,964)
(25,705)
(954)
(1,258)
53,548
Goodwill
Intangible assets
Deferred tax on intangible assets
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Debt
Deferred tax
Derivatives
Net assets acquired
Goodwill
Acquisition costs
Cash consideration
Marshall of Cambridge (Holdings) Ltd Interim Financial Statements 2016
Fair
value
£000
-
59,504
(10,728)
65,414
123,400
51,627
12,664
(185,024)
(25,705)
(6,040)
(1,258)
83,854
23,093
2,163
109,110
4. AcquisitionOn 26th May 2016 Marshall Motor Holdings plc acquired the entire share capital of Ridgeway Garages
(Newbury) Limited. The estimated net assets at the date of acquisition are stated at their provisional fair
value as set out below:
NOTES TO THE INTERIM FINANCIAL STATEMENTS
15
5. Interim dividendThe Board has approved the payment of a maintained dividend of 1.00p per share on both Ordinary and
NVPO shares to be paid on 16th December, 2016, together with priority dividends of 2.00p per share on
the NVPO shares. These dividends will be payable to all shareholders who are on the register of
shareholders at 25th November, 2016.
6. Share pricesThe market prices of the Group’s shares were:
Marshall of Cambridge (Holdings) Ltd
Non-voting priority ordinary shares of 12.5p each – 335p (31st December, 2015 – 290p)
Marshall Motor Holdings plc
Ordinary shares of 64p each – 163.5p – (31st December, 2015 – 184.5p)
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Marshall of Cambridge (Holdings) LtdThe Airport Cambridge CB5 8RY England+44 (0)1223 373737
marshallgroup.co.uk