Slide 1: Marshalls plc 2016 Results Review and Outlook
Marshalls plc 2016 Results Review and Outlook Delivering the 2020 Strategy
Slide 2: Agenda
Agenda Delivering the 2020 Strategy • Highlights • Financial Performance • The Market • Delivering the 2020 Strategy Find out more online www.marshalls.co.uk • Public Sector and Commercial • Domestic • Smaller UK Businesses Find us on Facebook MarshallsGroup • 2020 Strategy Update • New Product Deve
Slide 3: Highlights
Delivering the 2020 Strategy Highlights Increase 2016 2015 % Revenue £396.9m £386.2m 3 EBITDA £60.8m £51.8m 17 Operating profit £47.6m £37.5m 27 Profit before tax £46.0m £35.3m 31 Basic EPS 18.95p 14.32p 32 Total dividends – ordinary and supplementary 11.70p 9.00p 30 Final ordinary dividend – recomm
Slide 4: Highlights
Delivering the 2020 Strategy Highlights 2016 2015 2014 2013 Revenue £396.9m £386.2m £358.5m £307.4m EBITDA £60.8m £51.8m £38.5m £30.2m Operating profit £47.6m £37.5m £25.3m £16.1m Profit before tax £46.0m £35.3m £22.4m £13.0m Basic EPS 18.95p 14.32p 10.13p 6.94p Total dividends – ordinary and supple
Slide 5: Financial Performance Full Year 2016 Results
Financial Performance Full Year 2016 Results
Slide 6: Revenue Growth
Delivering the 2020 Strategy Revenue Growth 450 396.9 11.0 0.3 400 386.2 (0.6) £'m 350 300 2015 Revenue Landscape Smaller UK International 2016 Revenue Products Businesses 6 Marshalls plc 2016 Results Review and Outlook
Slide 7: Revenue Analysis
Delivering the 2020 Strategy Revenue Analysis Revenue analysis: end market Revenue analysis: business area ↑2% ↑2% 5% ↓1% 5% Public Sector & Commercial 17% Landscape Products 31% UK Domestic ↑10% Smaller UK Businesses International International 64% 78% ↑4% No change Domestic revenue has grown from
Slide 8: Margin Reconciliation
Delivering the 2020 Strategy Margin Reconciliation Revenue Operating profit Impact on margin £m £m % 2015 386.2 37.5 9.7 Landscape Products 11.0 9.0 2.0 Smaller UK Businesses (0.6) 0.5 0.1 International 0.3 0.6 0.2 2016 396.9 47.6 12.0 8 Marshalls plc 2016 Results Review and Outlook
Slide 9: Return on Capital Employed
Delivering the 2020 Strategy Return on Capital Employed 25.0% 23.0% 20.0% 19.0% 15.0% 12.5% 10.0% 8.1% 5.0% 0.0% 2013 2014 2015 2016 ROCE : CAGR of 42% over 3 years 9 Marshalls plc 2016 Results Review and Outlook
Slide 10: Cash Flow from Operating Activities
Delivering the 2020 Strategy Cash Flow from Operating Activities 2016 2015 £m £m Cash inflow arising from: Operating profit 47.6 37.5 Depreciation and amortisation 13.2 14.3 EBITDA 60.8 51.8 Net financial expenses paid (1.0) (1.8) Taxation paid (7.1) (7.0) Pensions paid - (4.3) Net gain on sale of p
Slide 11: Cash Flow
Delivering the 2020 Strategy Cash Flow 2016 2015 £m £m Net cash flow from operating activities 49.4 49.7 Capital expenditure (13.9) (14.9) Net proceeds from sale of surplus assets 3.8 1.1 Dividends paid (19.0) (12.3) Payments to acquire own shares / other (1.1) (5.6) Movement in net debt 19.2 18.0 F
Slide 12: Significant Borrowing Facilities and Bank Facility Headroom
Delivering the 2020 Strategy Significant Borrowing Facilities Bank Facility Headroom Cumulative Facility Facility £m £m 180 Expiry date 160 Committed facilities: 140 120 Q3 2021 20 20 100 Q3 2020 20 40 80 60 Q3 2019 20 60 40 Q3 2018 20 80 20 0 On demand facilities: -20 -20 Available all year 15 95 C
Slide 13: Capital Allocation Policy
Delivering the 2020 Strategy Capital Allocation Policy 1 2 3 4 5 R&D Organic Ordinary Selective Supplementary growth NPD dividends acquisitions dividends Capital investment in Increase research Maintain dividend Target selective Supplementary growth projects. and development and cover of 2 times bol
Slide 14: Bank Debt Capacity
Delivering the 2020 Strategy Bank Debt Capacity • Continued strong operating cash flow • Cash balance of £5.4 million at 31 December 2016 (2015: £11.5 million net debt) • Bank debt capacity of £105 million • Significant capacity to fund organic investment and selective acquisitions 14 Marshalls plc
Slide 15: Strong Track Record of Capital Discipline
Delivering the 2020 Strategy Strong Track Record of Capital Discipline 2016 2015 2014 2013 ROCE 23.0% 19.0% 12.5% 8.1% Debtor days 39 39 38 43 Creditor days 56 53 59 69 Inventory turn (times per annum) 3.3 3.2 3.0 2.1 Liquidity ratio 1.6 1.6 1.6 1.6 (current assets: current liabilities) Gearing N/A
Slide 16: Pensions
Delivering the 2020 Strategy Pensions Balance Sheet • Company contributions to DB Scheme reduced to zero under agreed Recovery Plan • 31 December 2016 surplus of £4.3 million (31 December 2015: surplus of £3.4 million) Income Statement • Net service cost: £0.4 million debit (2015: £0.4 million debit
Slide 17: Dividends
Delivering the 2020 Strategy Dividends • Progressive ordinary dividend policy 14.00 • 2016 dividends 12.00 • Interim and final 8.70p (24% up) 10.00 3.00 • Supplementary 3.00p 8.00 2.00 • Total 11.70p (30% up) 6.00 5.80 • Supplementary dividend: discretionary and 4.75 non-recurring 4.00 4.00 3.50 • D
Slide 18: The Market Full Year 2016 Results
The Market New photo to be provided Full Year 2016 Results
Slide 19: CPA Total Construction Output Forecasts
Delivering the 2020 Strategy CPA Total Construction Output Forecasts (% growth) 7.5% 4.9% 2.2% 1.6% 1.6% 0.8% 0.7% 2013 2014 2015 2016 2017 2018 2019 19 Marshalls plc 2016 Results Review and Outlook
Slide 20: ABI Lead Indicator Hard Landscaping - January 2017
Delivering the 2020 Strategy ABI Lead Indicator Hard Landscaping - January 2017 Contract Award (12 Month Rolling Basis) Average of Hard Landscaping Value and Number of Projects 20 Marshalls plc 2016 Results Review and Outlook
Slide 21: RIBA Architects' Futures Index
Delivering the 2020 Strategy RIBA ‘Architects’ Futures Index 21 Marshalls plc 2016 Results Review and Outlook
Slide 22: Public Sector & Commercial Full Year 2016 Results
Public Sector & Commercial Full Year 2016 Results
Slide 23: Commercial Market Confidence
Delivering the 2020 Strategy Commercial Market Confidence 23 Marshalls plc 2016 Results Review and Outlook
Slide 24: A Supportive Market Environment Through To 2020
Delivering the 2020 Strategy A Supportive Market Environment Through To 2020 24 Marshalls plc 2016 Results Review and Outlook
Slide 25: Housing – The Marshalls Offering
Delivering the 2020 Strategy Housing – The Marshalls Offering 25 Marshalls plc 2016 Results Review and Outlook
Slide 26: Infrastructure: Marshalls Water Management
Delivering the 2020 Strategy Infrastructure : Marshalls Water Management 26 Marshalls plc 2016 Results Review and Outlook
Slide 27: Infrastructure: Rail
Delivering the 2020 Strategy Infrastructure: Rail Product Specifications Product Orders Product Sales Crossrail as a % of Marshalls Rail Crossrail as a % of Marshalls Rail Crossrail as a % of Marshalls Rail 27 Marshalls plc 2016 Results Review and Outlook
Slide 28: Domestic Full Year 2016 Results
Domestic Full Year 2016 Results
Slide 29: Consumer Confidence
Delivering the 2020 Strategy Consumer Confidence GFK Consumer Confidence Index 29 Marshalls plc 2016 Results Review and Outlook
Slide 30: Consumer Intentions
Delivering the 2020 Strategy Consumer Intentions GFK Consumer Confidence £50k+ “Which of the following improvements are you likely to make to your home over the next 12 months?” 30 Marshalls plc 2016 Results Review and Outlook
Slide 31: Landscape Installer Order Books
Delivering the 2020 Strategy Landscape Installer Order Books Domestic Installer Order Books 31 Marshalls plc 2016 Results Review and Outlook
Slide 32: Private Housing RMI: Consumers
Delivering the 2020 Strategy Private Housing RMI: Consumers 32 Marshalls plc 2016 Results Review and Outlook
Slide 33: The Marshalls Register Approved Teams
Delivering the 2020 Strategy The Marshalls Register Approved Teams 33 Marshalls plc 2016 Results Review and Outlook
Slide 34: Smaller UK Businesses Full Year 2016 Results
Smaller UK Businesses Full Year 2016 Results
Slide 35: Profit Growth in Smaller UK Businesses > 10% per annum
Delivering the 2020 Strategy Profit Growth in Smaller UK Businesses > 10% per annum 35 Marshalls plc 2016 Results Review and Outlook
Slide 36: Landscape Protection
Delivering the 2020 Strategy Landscape Protection 36 Marshalls plc 2016 Results Review and Outlook
Slide 37: 2020 Strategy Full Year 2016 Results
2020 Strategy Full Year 2016 Results
Slide 38: Marshalls 2020 Strategy
Delivering the 2020 Strategy Marshalls 2020 Strategy Our To Create Better Spaces for Everyone; Socially, Environmentally and Our Purpose Economically. Values Our To Deliver Sustainable Growth through a Brand that Drives Customer Leadership Mission Specification of Innovative Product Solutions for th
Slide 39: 2020 Strategy Update
Delivering the 2020 Strategy 2020 Strategy Update • 2016 PBT +31% • 2016 EBITDA of £60.8m – CAGR of 26% over 3 years • Self help programme underway – savings of £5 million • Smaller UK Businesses profit +13% • NPD continuing strongly • Digital strategy is making an impact • Acquisition strategy maki
Slide 40: Our 2020 Strategy Will Drive Long Term Growth and Shareholder Returns
Delivering the 2020 Strategy Our 2020 Strategy Will Drive Long Term Growth and Shareholder Returns 40 Marshalls plc 2016 Results Review and Outlook
Slide 41: New Product Development to Accelerate Annually
Delivering the 2020 Strategy New Product Development to Accelerate Annually • Revenue from new products increased by 10% in 2016 41 Marshalls plc 2016 Results Review and Outlook
Slide 42: New Product Development to Accelerate Annually
Delivering the 2020 Strategy New Product Development to Accelerate Annually 42 Marshalls plc 2016 Results Review and Outlook
Slide 43: Additional Capital Investment Programme of £15m to Deliver Cost Savings
Delivering the 2020 Strategy Additional Capital Investment Programme of £15m to Deliver Cost Savings of £5m per year Self Help Programme £m 43 Marshalls plc 2016 Results Review and Outlook
Slide 44: Increased Investment in Digital Strategy
Delivering the 2020 Strategy Increased Investment in Digital Strategy Domestic Commercial Traffic Traffic 33% since 2015 15% since 2015 1 Ranking Ranking 2 75% of Key Words 80% of Key Words 3 on Page 1 on Page 1 44 Marshalls plc 2016 Results Review and Outlook
Slide 45: Digital Strategy Principles
Delivering the 2020 Strategy Digital Strategy Principles Customer Value People Process Technology Digital Principles Design for Collaboration Data Driven Promote Agility Open and Robust customer Transparent Governance 45 Marshalls plc 2016 Results Review and Outlook
Slide 46: Digital Tools Enable Consumer Choice
Delivering the 2020 Strategy Digital Tools Enable Consumer Choice +36% +12% +167% +35% 46 Marshalls plc 2016 Results Review and Outlook
Slide 47: Acquisition Strategy to Enhance Organic Growth
Delivering the 2020 Strategy Acquisition Strategy to Enhance Organic Growth Water Management Security Products Mineral Products 47 Marshalls plc 2016 Results Review and Outlook
Slide 48: Summary
Delivering the 2020 Strategy Summary • Revenue growth – up 3% (2013-16: +29%, CAGR: 9%) • Strong PBT growth – up 31% (2013-16: +254%, CAGR: 52%) • Improving operating margins – up 230 basis points to 12.0% • Continued improvement in ROCE – up 400 basis points to 23.0% (2013-16: +1,490 basis points,
Slide 49: Appendices Full Year 2016 Results
Appendices Full Year 2016 Results
Slide 50: Total Construction Output and CPA Forecasts
Delivering the 2020 Strategy Total Construction Output and CPA Forecasts Total Construction Value £(m) 2013 Prices £m base forecast upper and lower forecasts 50 Marshalls plc 2016 Results Review and Outlook
Slide 51: Construction Products Association
Delivering the 2020 Strategy Construction Products Association 2015 2016 2017 2018 2019 £m / % change Actual Estimate Forecast Forecast Forecast Housing 28,657 30,694 31,138 31,616 32,324 3.3% 7.1% 1.4% 1.5% 2.2% Other New Work 57,730 58,221 59,153 60,264 62,805 11.4% 0.8% 1.6% 1.9% 4.2% Repair, Mai
Slide 52: Profit for the Financial Year
Delivering the 2020 Strategy Profit for the Financial Year 2016 2015 Increase £m £m % EBITDA 60.8 51.8 17 Depreciation / amortisation (13.2) (14.3) Operating profit 47.6 37.5 27 Financial income and expense (net) (1.6) (2.2) Profit before tax 46.0 35.3 31 52 Marshalls plc 2016 Results Review and Out
Slide 53: Additional Information and Ratios
Delivering the 2020 Strategy Additional Information and Ratios 2016 2015 Interest: Charge £1.6m £2.2m Cover 29.9 times 17.2 times EPS 18.95p 14.32p Dividend: 2016 interim and final recommended 8.70p 7.00p Cover (ordinary) 2.2 times 2.0 times Supplementary dividend recommended 3.00p 2.00p Cover (tota
Slide 54: 2016 Net Debt Cycle
Delivering the 2020 Strategy 2016 Net Debt Cycle (40.00) 40.00 35.00 (35.00) 30.00 (30.00) (25.00) 25.00 (20.00) 20.00 £m (15.00) 15.00 (10.00) 10.00 (5.00) 5.00 (0.00) 0.00 5.0 (5.0) 10.0 (10.0) Month 54 Marshalls plc 2016 Results Review and Outlook
Slide 55: Financial Flexibility
Delivering the 2020 Strategy Financial Flexibility 2016 Actual EBITA: Interest charge 54.9 times Net Debt: EBITDA N/A • 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 55 Marshalls plc 2016 Result
Slide 56: Net Assets
Delivering the 2020 Strategy Net Assets £m 2015 Net Assets 192.7 Impact of movements in the year: Profit for the financial year 37.4 Dividends (19.0) Actuarial movement on pensions (after tax) 1.2 Hedging reserve 2.2 Share-based payments (after tax) 3.4 Purchase of own shares (1.2) Foreign currency
Slide 57: Disclaimer
Delivering the 2020 Strategy 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, wh
Slide 58: We Support
WE SUPPORT. Marshalls Creating QRerter Spaces Ethical Trading Initiative Fair Tax fyatiess K COMMUNITY MADE IN