Slide 1: 2013 Results Review and Outlook
2013 RESULTS REVIEW AND OUTLOOK
Slide 2: 2013 Results Presentation: Preparing for Growth
2013 Results Presentation Preparing for Growth AGENDA ● First Impressions ● Time for Growth ● Financial Performance ● UK Strategy ● International Strategy ● Summary ● Questions & Answers 1
Slide 3: First Impressions
First Impressions ● Market leading brand in Landscape in the UK ● Stands for: Trust / Leadership / Excellence / Sustainable ● All natural stone ethically sourced ● Only Company within our Sector operating within the UN Global Compact ● FTSE4Good ● Pride in the Brand / Company 2
Slide 4: 2013 Time for Growth
2013 Time for Growth Economic Change 1st half 2013 difficult – weather / economy 2nd half 2013 growth in economy / growth in Marshalls CEO Change Positive handover / seamless Cost reduction / internal focus / strategic survival Growth strategy / expansion Forward looking / external focus Simplify st
Slide 5: Highlights
Highlights 2013 2012*† % Continuing operations Revenue £307.4m £300.9m +2 EBITDA £30.2m £28.1m +8 Operating profit £16.1m £12.9m + 25 Profit before tax £13.0m £9.3m + 40 Basic EPS 6.94p 5.52p + 26 Dividends declared 5.25p 5.25p Final dividend recommended 3.50p 3.50p Net debt £35.6m £63.5m Net debt t
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Slide 7: Revenue Growth
Revenue Growth £m Revenue £307.4m 2009 2010 2011 2012 2013 Revenue Growth Revenue £m % 2012* 300.9 UK 3.4 +1.1 International 3.1 +1.0 2013 307.4 +2.1 *The comparative figures have been restated in respect of discontinued operations 6
Slide 8: Revenue Analysis
Revenue Analysis Public Sector and Commercial Revenue l 63% of Group l Revenue up 1% l Price up 3% l Volume and mix down 2% Domestic UK Revenue l 32% of Group l Revenue up 2% l Price up 3%, product repositioning down 2% l Volume up 1% International Revenue l 5% of Group l International sal
Slide 9: Profit for the Financial Period
Profit for the Financial Period 2013 2012*† £m £m Operating profit: Continuing operations EBITDA 30.2 28.1 Depreciation / amortisation (14.1) (15.2) Operating profit 16.1 12.9 Post tax profit of discontinued operations 0.5 0.7 Net gain on property disposals included in operating profits: ● 2012: £1.
Slide 10: Margin Reconciliation
Margin Reconciliation Movement in: Impact on Revenue Operating Margin Profit £m £m % Continuing operations 2012* † 300.9 12.9 4.3 Net gain on property disposals - (1.8) (0.6) 300.9 11.1 3.7 Price increases to recover costs 6.3 2.4 0.7 Volume and mix – UK (2.9) (0.9) (0.3) Profit improvement from res
Slide 11: Cash Flow from Operating Activities
Cash Flow from Operating Activities Cash inflow arising from: 2013 2012 £m £m Operating profit 16.1 12.9 Depreciation and amortisation 14.1 15.2 EBITDA (continuing operations) 30.2 28.1 Discontinued operations 0.5 0.7 EBITDA (total operations) 30.7 28.8 Net financial expenses paid (3.6) (4.3) Taxati
Slide 12: Cash Flow
Cash Flow 2013 2012 £m £m Net cash flow from operating activities 27.1 24.7 Investment: l Capital expenditure (6.1) (9.5) l Proceeds from sale of surplus assets 0.2 8.6 l Net proceeds from disposal of discontinued operations 17.0 0.2 Dividends paid (10.3) (10.3) Sub-total 27.9 13.7 Finance leases
Slide 13: Additional Information and Ratios
Additional Information and Ratios 2013 2012* † Interest charge: Charge £3.1m £3.6 m Cover 5.3 times 3.6 times Tax rate 0.5% (16.3)% EPS: Adjusted 6.94p 5.52p Total operations 7.20p (2.91)p Dividend: 2013 interim and final announced 5.25p 5.25p Cover (continuing operations) 1.3 times 1.1 times Weight
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Slide 15: UK Strategy
if Marshalls UK Strategy
Slide 16: CPA Winter 2013/2014 Forecasts by Sector
CPA Winter 2013 / 2014 Forecasts by Sector 10.0% 5.0% 0.0% -5.0% Private New Housing Private Housing RMI (proxy for Domestic) -10.0% Other New Work Excl Housing (proxy for PS&C) Total All Work -15.0% 2012 2013 2014 2015 ● Recovery is seen across all Sectors but led by Private New Housing ● Non Housi
Slide 17: Domestic Consumer Confidence Major Purchases
Domestic Consumer Confidence Major Purchases 32 30 28 26 24 22 20 18 16 14 12 10 8 6 4 2 0 -2 Feb Feb Feb April Feb April Feb April Feb April Feb April Feb April August Dec-11 Feb April August Feb August Jun Jun June June June June June June June June Apr Oct Apr Oct Oct Oct Oct Oct Oct Oct Oct Apr
Slide 18: Domestic Installer Order Books
Domestic Installer Order Books All Installer Order Book Annual Comparison 12.00 11.00 2013 10.00 2014 9.00 2012 2010 8.00 2011 7.00 6.00 5.00 4.00 Feb April June August October ● Domestic Installer Order Books are healthy at 9.3 weeks in February 2014, compared with 7.8 weeks in February 2013 17
Slide 19: Key Achievements 2013 Commercial New Products
Key Achievements 2013 Commercial New Products ● Significant upgrading to our New Product Development pipeline ● Largest single set of commercial product launches in our history across all Group product areas 18
Slide 20: The Rail Sector
The Rail Sector Significant levels of NPD are driving strong growth ● Focus is on 2 key customers ● Network Rail, who are responsible for over 2,500 stations in Britain and own 17 of Britain’s biggest and busiest stations ● Crossrail, Europe’s largest construction project including 39 Stations, 92,0
Slide 21: Water Management
3 Marshalls Water Management Rainwater falls onto the Marshalls Priora deals with surface... water Quantity issues by eliminating pooling Where it seeps immediately through the specially created voids between the blocks... Into the specially designed sub-base... The system improves Where it is store
Slide 22: Key Achievements 2013 Domestic New Products
Key Achievements 2013 Domestic New Products ● Similar upgrading to our Domestic product range ● Utilising the patented product technology gained from the Marshalls NV acquisition 21
Slide 23: Smaller Businesses Growth Potential
Smaller Businesses Growth Potential ● Street Furniture / Aggregates / Cladding / Marshalls NV ● 2013: Combined revenue = 20% of Group ● 2013: Combined performance is not contributing to operating profit ● 2013: 21% of inventory of the Group ● 2014: Increased focus on results ● Opportunity to grow ma
Slide 24: Mineral Products
Mineral Products ● Aggregates Sales in 2012 = £18.4m ● £8.8m sales disposed; £9.6m retained ● Therefore disposed of 48% of aggregates sales (by value) ● Representing 21% of aggregates reserves ● Marshalls’ aggregates used internally = 10% (of retained aggregates sales) ● All aggregates retained are
Slide 25: International Strategy
Marshalls International Strategy
Slide 26: Destination and Source of International Sales: 2013
International Strategy Destination and Source of International Sales: 2013 2013 International Sales by Destination 2013 International Sales by Country of Origin 25
Slide 27: International Strategy
International Strategy Europe North Middle Far East America East Domestic Natural Paving Stone ü ü ü ü Imported Natural Stone ü ü ü ü Natural Stone Cladding ü ü ü ü Street Furniture ü ü ü ü Concrete Products ü 26
Slide 28: Imported Natural Stone
Imported Natural Stone ● Potential increase in sales domestically through market recovery ● First partner in USA – Unilock $1m of sales orders ● International markets available through ethical sourcing ● Local investments made in India in new innovative finishing machines has expanded capability 27
Slide 29: Summary: Time for Growth
Summary Time for Growth ● Sales up 9% in H2 of 2013 ● CPA forecast – 2014: 3.4%, 2015: 5.2%, 2016: 4.4% ● 2014: good start to the year ● Economic indicators positive ● Well placed for market growth ● Strong operational gearing ● Growth opportunities in smaller businesses ● International opportunity
Slide 30: Appendices
if Marshalls Appendices
Slide 31: Construction Products Association
Construction Products Association 2012 2013 2014 2015 2016 2017 £m/% change Actual Actual Forecast Forecast Forecast Forecast Housing 20,025 21,617 23,343 25,372 26,595 27,221 -5.5% 8.0% 8.0% 8.7% 4.8% 2.4% Other New Work 48,410 48,121 49,696 52,667 55,842 58,772 -12.9% -0.6% 3.3% 6.0% 6.0% 5.2% Rep
Slide 32: Construction Products Association Forecasts
Construction Products Association Forecasts Construction Output (% Growth) Cumulative Growth (2012: = Index of 100) 4.4% 3.8% 5.2% 3.4% 1.0% -7.5% 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Source: ONS: Construction Products Association 31
Slide 33: Significant Borrowing Facilities
Significant Borrowing Facilities 220 200 Expiry Date Facility Cumulative 180 Facility 160 £m £m 140 Committed facilities: 120 Q3 2016 50 50 100 Q3 2015 50 100 80 Q3 2014 20 120 60 40 On demand facilities: 20 Available all year 25 145 0 Seasonal Dec 2013 Dec 2014* (February to August inclusive) 20 16
Slide 34: Financial Flexibility
Financial Flexibility 2013 Actual EBITA: Interest charge 5.3 times Net Debt: EBITDA 1.2 times l EBITA to interest charge must be greater than 2.5 times l Net debt to EBITDA must be less than 3.0 times l Net assets must be greater than £100 million 33
Slide 35: Pensions
Pensions 20 Risk Management 10 2000 closed to new members 2006 closed to future service accrual 0 2007 investment strategy -10 Investment Strategy -20 Moved from equities to LDIs Closer matching to liability profile -30 Balance Sheet Values -40 YE 2013 deficit £4.3m -50 Movements AA Co
Slide 36: Net Assets
Net Assets £m £m 2012 Year End Net Assets 183.6 Impact of movements in year: Profit for the financial period 14.1 Ordinary dividends (10.3) Actuarial movement on pensions (after tax) (15.0) Hedging reserve 1.1 Share based expenses 2.2 Non-controlling interest (0.6) Other 0.3 (8.2) 2013 Year End Net
Slide 37: Internal Natural Stone
Internal Natural Stone ● Range formally launched with the Society of British Interior Designers ● Sales levels above target
Slide 38: Natural Stone Cladding
Natural Stone Cladding ● The Marshalls range of Stancliffe Stones has been chosen to clad the new Bloomberg Building 37
Slide 39: Street Furniture
Street Furniture ● Focus on integrated ranges ● Intelligent use of materials
Slide 40: International Strategy
International Strategy ● Natural Stone builds upon our strong international brand and our award winning ethical supply chains ● Underpinned by our United Nations Global Compact commitments and work with UNICEF 39
Slide 41: 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