Slide 1: Transformational acquisition and robust first half trading performance
Marshalls plc 2022 Half Year Results Review and Outlook Transformational acquisition and robust first half trading performance 1
Slide 2: Agenda
Agenda ▪ Highlights ▪ Divisions ▪ Financial Performance ▪ The Market Find out more online ▪ 5 year Strategy www.marshalls.co.uk ▪ ESG Leadership Find us on Facebook MarshallsGroup ▪ Summary and Outlook Follow us on Twitter ▪ Questions and Answers @MarshallsGroup Find us on LinkedIn Marshalls Find us
Slide 3: Highlights
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Highlights Strong growth with record results reported Change 2022 2021 % Revenue £348.4m £298.1m 17% Adjusted EBITDA £64.2m £56.4m 14% Adjusted operating profit £48.0m £41.6m 15% Adjusted profit before tax £44.6m £39.5m 13% Adjus
Slide 4: Acquisition of Marley
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Acquisition of Marley ▪ Further diversifies enlarged Group's coverage of construction market subsectors ▪ Business performing positively in post-acquisition period – RMI business less discretionary ▪ Integration tracking in line
Slide 5: Divisions
Divisions 5
Slide 6: Updated segmental reporting structure
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Updated segmental reporting structure Previous reporting structures Reporting structures post acquisition of Marley X% June 22 LTM revenues by reporting segment X% Group revenue FY21 Domestic end market 51% 24% 25% 30% Marshalls
Slide 7: June 2022 LTM revenues by reporting segment and end-market
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE June 2022 LTM revenues by reporting segment and end-market Revenue by reporting segment Revenue by end-market 25% 23% 40% 51% 24% 37% Marshalls Landscape Products Marshalls Building Products Marley Roofing Products New build hous
Slide 8: June 2022 LTM and 2013 revenues by end market
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE June 2022 LTM and 2013 revenues by end market Xxx 8% Other xxx 8% 15% Domestic 31% 30% landscape 15% 40% 37% 39% New build housing Commercial, infrastructure, industrial Private housing RMI New build housing Commercial, infrastru
Slide 9: Financial Performance
Financial Performance 9
Slide 10: Group revenue
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Group revenue Record revenues – 17 per cent higher than 2021 benefitting from two months contribution from Marley ▪ Group revenue 17 per cent higher than 2021 including the benefit of Marley’s revenues following the acquisition ▪
Slide 11: Group adjusted operating profit
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Group adjusted operating profit Growth of 15 per cent – driven by Marshalls Building Products and Marley Adjusted operating profit 50 8.6 48.0 48 -0.7 46 44 42 41.6 4.0 £'m 40 38 36 - 5.5 34 32 30 2021 adjusted Marshalls Marshall
Slide 12: Marshalls Landscape Products
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Marshalls Landscape Products Weak RMI market adversely impacts revenue and profitability 2022 2021 Change £’m £’m % Revenue 216.9 218.8 -1 Segment operating profit 30.0 35.5 -15 Segment operating margin % 13.8% 16.2% -2.4ppts ▪ C
Slide 13: Marshalls Building Products
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Marshalls Building Products Strong revenue and profitability growth 2022 2021 Change £’m £’m % Revenue 95.9 79.3 +21% Segment operating profit 13.0 9.0 +44% Segment operating margin % 13.6% 11.3% 2.3ppts ▪ Comprises Civils and Dr
Slide 14: Marley Roofing Products
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Marley Roofing Products Traded positively in the post-acquisition period 2022 2021 Change £’m £’m % Revenue 35.6 — — Segment profit 8.6 — — Segment operating margin % 24.2% — ▪ Comprises concrete and clay roof tiles, timber batte
Slide 15: Adjusted profit before taxation and earnings per share
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Adjusted profit before taxation and earnings per share Continuing growth in profit – profit before tax up 13 per cent and earnings per share up 5 per cent 2022 2021 Change £’m £’m % Adjusted operating profit 48.0 41.6 +15 Adjuste
Slide 16: Cash flow
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Cash flow Increase in net debt due to Marley acquisition £’m 2022 2021 Adjusted operating profit 48.0 41.6 Working capital and non-cash items (20.4) 2.7 Finance costs and income tax paid (10.8) (8.9) Cash flow from operating acti
Slide 17: Funding and liquidity
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Funding and liquidity Significant facility and covenant headroom ▪ Conservative capital structure to fund the Marley acquisition with over 60 per cent of consideration funded by equity issuance ▪ Balance of funding from new four-
Slide 18: Balance sheet
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Balance sheet Robust balance sheet: conservative capital structure used to fund Marley deal £’m Jun 2022 Dec 2021 Change Intangible assets 550.9 95.0 450.5 Property, plant and equipment 324.3 210.4 118.4 Net working capital 140.5
Slide 19: Capital allocation policy
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Capital allocation policy Clear, consistent and unchanged policy 1 2 3 4 5 Organic R&D Ordinary Selective Supplementary 3 5 4 growth New product dividends acquisitions dividends development Capital investment Continued focus on R
Slide 20: Dividends
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Dividends Progressive dividend policy ▪ The Board has declared an interim dividend of 5.7 pence per share – a 21 per cent increase compared to 2021 ▪ Policy remains to maintain a progressive dividend policy ▪ Objective to target
Slide 21: The Market
The Market 21
Slide 22: CPA total construction output – summer 2022
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE CPA total construction output – summer 2022 Chain linked volume – 2018 prices (forecast: CPA % growth on ONS construction output values) Marshalls plc 2022 Half Year Results Review and Outlook 22
Slide 23: CPA cumulative growth forecasts – summer 2022
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE CPA cumulative growth forecasts – summer 2022 Chain linked volume – 2018 prices (forecast: CPA % growth on ONS construction output values) Marshalls plc 2022 Half Year Results Review and Outlook 23
Slide 24: ONS – construction jobs and vacancies
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE ONS – construction jobs and vacancies Marshalls plc 2022 Half Year Results Review and Outlook 24
Slide 25: Registered installer order books
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Registered installer order books Marshalls plc 2022 Half Year Results Review and Outlook 25
Slide 26: Cost of living and our top twelve domestic consumer groups
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Cost of living and our top twelve domestic consumer groups National picture July 2022: 520k households <£30/month spending power July 2023: 2.2 million will have <£30/month (1.7million will have <£0/month) Our core consumers July
Slide 27: Disposable income and household savings ratio
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Disposable income and household savings ratio Source: ONS UKEA – Data Code RPQL Marshalls plc 2022 Half Year Results Review and Outlook 27
Slide 28: Barbour ABI contract awarded value by sector – lagged
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Barbour ABI contract awarded value by sector – lagged Marshalls plc 2022 Half Year Results Review and Outlook 28
Slide 29: CPA total number of housing completions forecast – summer 2022
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE CPA total number of housing completions forecast – summer 2022 Marshalls plc 2022 Half Year Results Review and Outlook 29
Slide 30: NHBC – share of registrations by dwelling type
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE NHBC – share of registrations by dwelling type Marshalls plc 2022 Half Year Results Review and Outlook 30
Slide 31: ONS – new housing orders and output – MAT growth
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE ONS – new housing orders and output – MAT growth Marshalls plc 2022 Half Year Results Review and Outlook 31
Slide 32: 5 year Strategy
5 year Strategy 32
Slide 33: TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Marshalls plc 2022 Half Year Results Review and Outlook 33
Slide 34: Operational excellence
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Operational excellence Dual block plant on target Flexible capability – providing 60 per cent more material options Cement free capable – can be applied to a series of product ranges Can be powered by renewable energy Controlled
Slide 35: Monetising digital
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Monetising digital Dropship Marketplace Content for Industry 4.0 customers Extend range for customers Use our brand wider Use our investment in Drainage and flood sensors Free up their yard space Extend our range digital Temperat
Slide 36: M&A strategy
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE M&A strategy Focus on sectors with long-term growth underpinned by strong acquisition criteria Marshalls plc 2022 Half Year Results Review and Outlook 36
Slide 37: ESG Leadership
ESG Leadership Marshalls
Slide 38: Purpose: Creating better net positive futures for everyone
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Purpose: Creating better net positive futures for everyone Marshalls plc 2022 Half Year Results Review and Outlook 38
Slide 39: Climate leader
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Climate leader Making progress on our carbon reduction journey ▪ Updated science-based targets to align with a 1.5°C pathway and in line with the Paris Agreement, approved by the Science Based Targets initiative ▪ Named one of Eu
Slide 40: Mitigation and adaptation
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Mitigation and adaptation Making progress on our carbon reduction journey Marshalls plc 2022 Half Year Results Review and Outlook 40
Slide 41: Product carbon footprints
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Product carbon footprints Making progress on our carbon reduction journey Marshalls plc 2022 Half Year Results Review and Outlook 41
Slide 42: Accreditations and validations
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Accreditations and validations ▪ Approved carbon reduction targets from Science Based Targets initiative ▪ Active participant of UN Global Compact ▪ Accredited to BES 6001 (responsible sourcing) and BES 6002 (ethical labour sourc
Slide 43: Summary and outlook
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Summary and outlook ▪ Successful integration of Marley, with strong growth in HY1 ▪ Marley revenue up 18 per cent in two-month post-acquisition period and 23 per cent in six months to 30 June 2022 (like-for-like basis) ▪ Slight w
Slide 44: Appendices
Appendices £233 Marshalls
Slide 45: Construction Products Association
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Construction Products Association 2019 2020 2021 2022 2023 Actual Actual Estimate Forecast Projection Housing (£’m) 36,422 42,038 42,508 42,508 43,862 -21.2% 15.4% 1.1% ― 3.0% Other new work (£’m) 59,517 64,719 68,675 71,841 73,9
Slide 46: Results summary
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Results summary Strong growth with record results reported Change 2022 2021 % Revenue 17% £348.4m £298.1m Adjusted results Adjusted EBITDA £64.2m £56.4m 14% Adjusted operating profit £48.0m £41.6m 15% Adjusted profit before tax £
Slide 47: Adjusted profit before taxation and earnings per share
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Adjusted profit before taxation and earnings per share Bridge of reported result to adjusted result 2022 2022 2022 2021 2021 2021 £’m Reported Adjusting Adjusted Reported Adjusting Adjusted Operating profit 27.3 20.7 48.0 41.0 0.
Slide 48: Adjusted operating profit and margins
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Adjusted operating profit and margins Revenue Operating profit Margin impact £’m £’m % 2021 298.1 41.6 14.0 Landscape Products (1.9) (5.5) (1.8) Building Products 16.6 4.0 0.6 Roofing Products 35.6 8.6 1.2 Central costs ― (0.7) (
Slide 49: Historic segmental information
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Historic segmental information 2021 2020 2019 £’m HY1 Year HY1 Year HY1 Year Marshalls Landscape Products Revenue 218.8 424.8 152.6 340.6 199.9 384.5 Segment operating profit 35.5 62.4 7.2 27.8 32.1 60.5 Segment operating profit
Slide 50: Disclosure of adjusted items
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Disclosure of adjusted items HY 2022 HY 2021 Operating profit Operating profit £’m £’m Statutory performance 27.3 41.0 One-off items: 1. Acquisition costs relating to the acquisition of Marley 14.6 ― 2. Amortisation of acquired i
Slide 51: Ongoing capital discipline
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Ongoing capital discipline Good control of working capital and recovery of returns; flexible capital structure to support growth HY 2022 HY 2021 HY 2020 Debtor days 54 52 62 Creditor days 59 56 51 Inventory turn (times per annum)
Slide 52: Pensions
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Pensions Balance Sheet ▪ Agreed funding valuation at 5 April 2021 – surplus of £24.3 million on a technical provisions basis ▪ Company contributions to defined benefit scheme reduced to zero under agreed recovery plan ▪ IAS 19 su
Slide 53: Net assets
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE Net assets £’m 2021 YE net assets 344.3 Impact of movements in the period: Profit for the financial period 17.4 Actuarial movement on pensions (after tax) 13.5 Hedging reserve 1.4 Issue of shares (net of costs) 330.2 Share-based
Slide 54: ESG ratings overview
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE ESG ratings overview Strong performance Agency Current score MSCI Leadership FTSE4Good Constituent since 2005 CDP (Carbon Disclosure Project) B score (Management) ISS Governance Quality Score Sustainalytics Strong management and
Slide 55: Disclaimer
TRANSFORMATIONAL ACQUISITION AND ROBUST FIRST HALF TRADING PERFORMANCE 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 writt