Marshalls paves way for return of £75m to investors

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The Independent Online

The building materials company Marshalls yesterday announced it would return £75m of cash to shareholders as it reported a rise in profits.

The company, whose paving stones can be found in London's Trafalgar Square and in the Somerset House courtyard, is returning the cash - equivalent to about 45p a share - through so-called "redeemable B shares".

For it to do that, it has to create a holding company, also called Marshalls, through which it will distribute those shares and then purchase them at a later date. Shares in the existing Marshalls company, which will, for the purpose of the cash return, become a division of the new holding company, will be delisted.

Graham Holden, the chief executive, said this method, rather than a share buyback programme or a special dividend, would give shareholders "certainty". "Firstly, if you go for a buyback you can never be absolutely sure that you can get hold of enough shares," he said. "Secondly, as far as individual shareholders are concerned, it's treated as a capital gain rather than revenue and so they can use their capital gains tax allowance."

The plan was unveiled as Marshalls reported a pre-tax profit of £50.4m in 2003, up slightly from a profit of £49.4m a year before. Sales rose just over 2 per cent to £349.5m. The company has benefited from the buoyant property market which, combined with low interest rates, has seen homeowners splash out on home improvements.

Sales of landscape products rose 6.8 per cent to £289m, clay products were up 6.2 per cent ahead at £32m and sales of natural stone were 14 per cent higher at £28.5m. The chairman, Christopher Burnett, who plans to step down, said the company continued to see "good trading conditions" in the domestic, commercial and public sectors. "The new financial year has begun in line with our expectations," he said.

Marshalls said the return of cash is subject to getting both shareholder approval, which will be sought at a special meeting on 10 June, and court approval. Shares closed up 2 per cent at 285p.