Slide 1: Marshalls plc 2015 Results Review and Outlook
Creating better spaces Marshalls plc 2015 Results Review and Outlook
Slide 2: Agenda
Driving Growth 2015 Results Presentation Agenda • Highlights • Financial Performance • Market Trends • Driving Growth – Commercial – Domestic – Smaller Businesses • Acquisition Strategy • Self Help Investment • 2020 Strategy • Outlook • Summary • Questions Marshalls plc
Slide 3: Highlights
Driving Growth Highlights 2015 2014 Increase % Revenue £386.2m £358.5m 8 EBITDA £51.8m £38.5m 35 Operating profit £37.5m £25.3m 48 Profit before tax £35.3m £22.4m 57 Basic EPS 14.32p 10.13p 41 Total dividends – ordinary and supplementary 9.00p 6.00p Final dividend – recommended 4.75p 4.00p 19 Supple
Slide 4: Revenue Growth
Driving Growth Revenue Growth 400 8.7 386.2 20.0 -1.0 358.5 350 £'m 300 250 2014 Landscape Products Smaller UK businesses International 2015 Marshalls plc 2
Slide 5: Revenue Analysis
Driving Growth Revenue Analysis ↑3% in local currency 5% 5% Public Sector & Commercial Landscape Products ↑4% UK Domestic 17% Smaller UK 29% businesses International International 66% ↑11% 78% ↑11% Marshalls plc 3
Slide 6: Profit for the Financial Period
Driving Growth Profit for the Financial Period 2015 2014 Increase £m £m % EBITDA 51.8 38.5 35 Depreciation / amortisation (14.3) (13.2) Operating profit 37.5 25.3 48 Financial income and expense (net) (2.2) (2.9) Profit before tax 35.3 22.4 57 Marshalls plc 4
Slide 7: Margin Reconciliation
Driving Growth Margin Reconciliation Revenue Operating profit Impact on margin £m £m % 2014 – reported 358.5 25.3 7.1 Restructuring costs – Belgium – 2.0 0.5 2014 – underlying 358.5 27.3 7.6 Landscape Products 20.0 5.5 1.0 Smaller UK businesses 8.7 2.4 0.4 International (1.0) 2.3 0.7 2015 386.2 37.5
Slide 8: Cash Flow from Operating Activities
Driving Growth Cash Flow from Operating Activities 2015 2014 £m £m Cash inflow arising from: Operating profit 37.5 25.3 Depreciation and amortisation 14.3 13.2 EBITDA 51.8 38.5 Net financial expenses paid (1.8) (2.8) Taxation paid (7.0) (4.0) Pensions paid (4.3) (4.6) Net gain on sale of property, p
Slide 9: Cash Flow
Driving Growth Cash Flow 2015 2014 £m £m Net cash flow from operating activities 49.7 29.1 Capital expenditure (14.9) (12.0) Net proceeds from sale of surplus assets 1.1 3.1 Dividends paid (12.3) (10.8) Payments to acquire own shares (4.6) (4.3) Movement in net debt 19.0 5.1 Net debt at 1 January (3
Slide 10: Significant Borrowing Facilities
Driving Growth Significant Borrowing Facilities Facility Cumulative Facility £m £m Bank Facility Headroom Expiry Date 200 180 Committed facilities: 160 140 Q3 2020 20 20 120 100 Q3 2019 20 40 80 60 Q3 2018 20 60 40 20 Q3 2017 20 80 0 Dec 11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Com
Slide 11: Bank Debt Capacity
Driving Growth Bank Debt Capacity • Strong free cash flow • 2015 YE net debt – £11.5 million (2014: £30.5 million) • Net debt: EBITDA – 0.2 times (2014: 0.8 times) • Gearing – 6.0% (2014: 16.8%) • Bank debt capacity of £115 million • Significant capacity for organic investment and acquisition Marsha
Slide 12: Pensions
Driving Growth Pensions Balance Sheet 20 • Company contributions to DB Scheme 10 reduced to zero under new agreed Recovery Plan. Annual future cash saving of £4.6m 0 • 2015 surplus £3.4m (2014: surplus £3.4m) -10 -20 Income Statement • Net service cost: £0.4m debit -30 (2014: £0.1m debit) -40 -50 =
Slide 13: Dividends
Driving Growth Dividends • Progressive ordinary dividend policy 10.00 (interim and final) 9.00 • 2015 dividends 8.00 2.00 – Interim and final 7.00p (17% ↑) 7.00 – Supplementary 2.00p 6.00 – Total 9.00p 5.00 Supplementary Final • Supplementary dividend: discretionary and 4.00 4.00 4.75 Interim non-re
Slide 14: Market Trends
Market Trends Marshalls plc 12
Slide 15: CPA forecasts
Driving Growth CPA forecasts CPA Total Construction Output Forecasts (% Growth) 7.5% 3.9% 4.1% 4.2% 4.0% 3.6% 1.6% -7.5% 2012 2013 2014 2015 2016 2017 2018 2019 Marshalls plc 13
Slide 16: Driving Growth – Commercial
Driving Growth – Commercial Marshalls plc 14
Slide 17: ABI Contracts Awarded: Hard Landscaping
Driving Growth ABI Contracts Awarded: Hard Landscaping Contract Awarded (12 Month Rolling Basis) Average of Hard Landscape Value (ABI with 12 Month Lag) £350,000,000 £330,000,000 £310,000,000 £290,000,000 £270,000,000 £250,000,000 £230,000,000 £210,000,000 £190,000,000 £170,000,000 £150,000,000 Mars
Slide 18: Continuing Growth: Commercial Market Confidence
Driving Growth Continuing Growth: Commercial Market Confidence Markit PMI's 65 60 55 50 45 40 Construction Growth/Contraction Line 35 Marshalls plc 16
Slide 19: Major Rail Transport Projects
Driving Growth Major Rail Transport Projects Western Section - Vinci Eastern Section – Costain Contractor Costain Contractor Specifier Costain JMP / WSP Bond Street Specifier Paddington Ealing Broadway Maryland / Seven Kings / Harold Wood / Paddington Romford JMP / WSP Southall Contractor Whitechape
Slide 20: Marshalls Rail Offer
Driving Growth Marshalls Rail Offer Station Interface Station Concourse Station Platform Marshalls plc 18
Slide 21: Water Management
Driving Growth Water Management Marshalls plc 19
Slide 22: New Build Housing
Driving Growth New Build Housing UK Government land released Sites now released for future housing Potential for 103,000 homes Gov depts: • Ministry of Defence – enough land for 38,661 homes, released ahead of schedule • Homes and Communities Agency – enough land for 18,307 homes • Department of Hea
Slide 23: Driving Growth - Domestic
Driving Growth - Domestic Marshalls plc 21
Slide 24: Domestic Markets benefitting from Pension Release
Driving Growth Domestic Markets benefitting from Pension Release • £3.53bn released from UK pensions in 2015 • 32% spent on Home Improvement Marshalls plc 22
Slide 25: Domestic Markets – Home Improvement Intentions
Driving Growth Domestic Markets – Home Improvement Intentions 20 18 Bathroom Drive Garden Kitchen 16 % of those Questioned by Gfk 14 12 10 8 6 4 2 0 Marshalls plc 23
Slide 26: Installer Order Book
Driving Growth Installer Order Book 14.0 13.0 12.0 11.0 10.0 Weeks 9.0 8.0 7.0 6.0 5.0 Marshalls plc 24
Slide 27: Increasing Installer Capacity
Driving Growth Increasing Installer Capacity The number of installers on the Marshalls Register is increasing 52% Planning to Expand Marshalls plc 25
Slide 28: New Products in the Domestic Range
Driving Growth New Products in the Domestic Range Marshalls plc 26
Slide 29: Driving Growth - Smaller UK businesses
Driving Growth - Smaller UK businesses Marshalls plc 27
Slide 30: Smaller UK businesses
Driving Growth Smaller UK businesses 80 67.8 • Comprises Street Furniture, Cladding 70 59.1 60 and Mineral Products 48.7 50 2013 40 2014 • 2015 profit growth: £2.4m (170%) 30 2015 20 • Target operational gearing of 30% 10 0 5 • Market share increasing – considerable 4 3.8 potential remains 3 2 1.4 2
Slide 31: Focused Street Furniture Propositions
Driving Growth Focused Street Furniture Propositions Marshalls plc 29
Slide 32: Malta Airport
Driving Growth Malta Airport • Embracing our concept of “inner strength-outer beauty”, including PAS 68 Igneo seating, RhinoBlok 72/40, Litter Bins as well as bollards Marshalls plc 30
Slide 33: Marshalls Cladding & Facades
Driving Growth Marshalls Cladding & Facades Marshalls plc 31
Slide 34: New Housebuilding: Marshalls Premier Mortars & Screeds
Driving Growth New Housebuilding : Marshalls Premier Mortars & Screeds Marshalls Premier Mortar Sites MPM Sites MPM 25min DT Layer selection M90 M9 Falkirk M80 M9 A74(M) Gateshead M22 Eaglescliffe M1 M6 A1(M) A1(M) Howley Park M61 Maltby Salford Ellesmere Port M53 M1 Ilkeston Wolve
Slide 35: Natural Stone and Reconstituted Concrete Walling
Driving Growth New Housebuilding : Natural Stone and Reconstituted Concrete Walling Marshalls plc 33
Slide 36: Marshalls NV: Market Leadership in Ceramics
Driving Growth Marshalls NV : Market Leadership in Ceramics Marshalls plc 34
Slide 37: Acquisition Strategy
Acquisition Strategy • Focused on Water Management, Street Furniture and Minerals markets • Good progress made during the last year – 12 companies analysed and longer term pipeline established – 1 sales partnership agreed – 4 discounted for value and/or product – 5 seeds sown for future – 2 ongoing
Slide 38: Self Help Investment
Self Help Investment • £15m of additional investment in next 3 years beyond normal capital expenditure programme • Significantly reduce processing costs for domestic natural stone • Accelerate investment in block paving to reduce material input costs • Improve efficiencies through more automated mat
Slide 39: 2020 Strategy
2020 Strategy • Phase 1 return to pre-recession profitability – achieved • A supportive market environment through to 2020 • Achieve price increases to cover cost increases • Additional capital investment programme of £15m to deliver cost savings of £5m per year • Achieve sales growth for the smalle
Slide 40: Outlook
Outlook • The successes of 2015 give the Group a strong platform from which to build • 2016 has started well – order intake up 6% versus strong comparators Marshalls plc 38
Slide 41: Summary
Summary • Good revenue growth – up 8% • Improving operating margins – up 260 basis points • Strong PBT growth – up 57% • Continued improvement in ROCE – up 650 basis points to 19.0% • Strong cash flow performance • Strong ordinary dividend growth + 19% plus a supplementary dividend of 2p • Acquisiti
Slide 42: Appendices
Appendices Marshalls plc 40
Slide 43: Additional Information and ratios
Additional Information and ratios 2015 2014 Interest: Charge £2.2m £2.9m Cover 17.2 times 8.8 times EPS 14.32p 10.13p Dividend: 2015 interim and final recommended 7.00p 6.00p Cover (ordinary) 2.0 times 1.7 times Supplementary dividend recommended 2.00p – Cover (total) 1.6 times 1.7 times Weighted av
Slide 44: Construction Products Association
Driving Growth Construction Products Association 2014 2015 2016 2017 2018 2019 £m/% change Actual Estimate Forecast Forecast Forecast Forecast Housing 27,591 28,555 29,420 30,602 31,119 31,646 25.5% 3.5% 3.0% 4.0% 1.7% 1.7% Other New Work 51,160 55,418 58,402 61,951 66,420 70,988 1.5% 8.3% 5.4% 6.1%
Slide 45: Financial Flexibility
Driving Growth Financial Flexibility 2015 Actual EBITA: Interest charge 26.5 times Net Debt: EBITDA 0.2 times • EBITA to interest charge must be greater than 2.5 times • Net debt to EBITDA must be less than 3.0 times • Net assets must be greater than £100 million Marshalls plc 43
Slide 46: Net Assets
Driving Growth Net Assets £m 2014 Net Assets 181.9 Impact of movements in the year: Profit for the financial year 28.1 Ordinary dividends (12.3) Actuarial movement on pensions (after tax) (3.1) Hedging reserve 0.8 Share-based payments (after tax) 2.3 Purchase of own shares (4.6) Foreign currency tra
Slide 47: Disclaimer
Disclaimer • For the purposes of the following disclaimer, references to this “presentation” shall be deemed to include references to the presenters’ speeches, the question and answer session and any other related verbal or written communications. • This presentation, which is personal to the recipi