Marshalls Regulatory News (MSLH)

Trading Update: 5 July 2011

Current trading for continuing business in line with expectations

Trading Performance

Revenue from total operations for the six months ended 30 June 2011 was £183 million (2010: £170 million). Marshalls' continuing revenue for the six months ended 30 June 2011 increased by 9 per cent to £177 million (2010: £163 million).

Sales to the Public Sector and Commercial end market, which represent approximately 60 per cent of Marshalls' sales, were up 10 per cent and sales to the Domestic end market, on a continuing basis, were up by 8 per cent compared to the prior year.

Cash continues to be controlled tightly with continued focus on stock control and capital expenditure. Net debt at 30 June 2011 was £71 million (2010: £67 million) with the higher level of sales increasing receivables through the working capital cycle.

Disposals

The Group's site closure programme, which commenced in 2008, created a number of surplus sites, and one of these, located on the South Coast of England, was sold in June 2011 for cash proceeds of £5 million. It is estimated that the net gain from this property disposal will be £2 million. The site closure programme has now released £18 million of cash with £9 million being released from inventory and a further £9 million from the disposal of surplus properties. These inflows have been used to reinforce the Group's balance sheet.

The Group announced in June 2011 the proposed closure of its non-core garage and greenhouse manufacturing operations. Agreement has recently been reached to sell, separately, the Compton garage brand and the Alton and Robinsons greenhouse brands. These businesses had sales of £6 million in the first half (2010: £7 million) and in 2010 had full year sales of £14 million and an operating loss of £1 million. The operation has been treated as discontinued. The Group anticipates a one-off charge of approximately £4 million after writing off intangible assets, providing for the closure costs and net of the sale of the brands. It is estimated that ultimately these transactions will generate positive net cash of approximately £2 million.

Dividend

The 2010 final dividend of 3.50 pence per share will be paid on 8 July 2011 to shareholders on the register at the close of business on 10 June 2011.

Outlook

The Group's marketing and sales initiatives continue to deliver positive results and, although market uncertainty remains, sales have maintained their positive trend. Based on our forward indicators the outlook for the Public Sector and Commercial end market remains mildly positive. The Domestic end market is more subdued following the positive start to the year. The survey of domestic installers at the end of June 2011 revealed order books of 7.0 weeks being similar to the 7.1 weeks at the end of April 2011 (2010: 9.1 weeks; 2009: 7.1 weeks). 

The Group continues to develop, innovate and improve its sourcing, manufacturing, distribution and sales capabilities, reducing costs wherever possible. Marshalls has strong operational and financial flexibility and, in order to identify new growth opportunities, is seeking to expand the geographical reach of existing value added products, to acquire new innovative products and to extend and expand its routes to market.

Marshalls will be announcing its results for the half year ended 30 June 2011 on 26 August 2011.

Enquiries:

5 July 2011

Note to the Editor:

About Marshalls:

Established in the late 1880s, Marshalls is the UK's leading manufacturer of superior natural stone and innovative concrete hard landscaping products, supplying the construction, home improvement and landscape markets. Marshalls provides the product ranges, design services, technical expertise, innovative ideas and inspiration to transform gardens, drives and public and commercial landscapes.

Marshalls operates its own quarries and manufacturing sites, including a national network of manufacturing and distribution sites, throughout the UK. As a major plc, Marshalls is committed to quality in everything it does, including the achievement of environmental and ethical best practice and continual improvement in health and safety performance.

Forward-Looking Statements:

Any statements in this release, to the extent that they are forward-looking, are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the markets in which Marshalls operates. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. More information about the factors that may affect Marshalls' performance is contained in the Annual Report to shareholders for the year ended 31 December 2010.