2016 Half-yearly Results Review and Outlook
Driving Growth Half-Yearly Presentation 2016 Agenda • Highlights • Financial Performance • Market Trends • Driving Growth – Commercial – Domestic – Smaller Businesses • Self Help Investment • Acquisition Strategy • 2020 Update • Outlook • Summary • Questions Marshalls plc
Driving Growth Highlights HY 2016 HY 2015 Increase % Revenue £202.4m £199.1m 2 EBITDA £32.4m £29.7m 9 Operating profit £26.0m £22.0m 18 Profit before tax £25.1m £20.8m 21 Basic EPS 10.36p 8.50p 22 Interim dividend 2.90p 2.25p 29 ROCE 19.9% 15.2% ↑470 basis points Net debt to EBITDA 0.2 times 0.7 times Marshalls plc 1
Driving Growth Revenue Growth 215 2.5 202.4 205 2.0 199.1 (1.2) £'m 195 185 175 2015 Landscape Products Smaller UK Businesses International 2016 Marshalls plc 2
Driving Growth Revenue Analysis Revenue analysis: end market Revenue analysis: business area ↓10.8% ↓10.8% 5% ↑7.8% 5% Public Sector Landscape & Commercial Products ↑7.1% 18% UK Domestic Smaller UK 32% Businesses International 63% International 77% ↑11% ↑0.3% ↑1.3% Marshalls plc 3
Driving Growth Profit for the Financial Period HY 2016 HY 2015 Increase £m £m % EBITDA 32.4 29.7 9 Depreciation / amortisation (6.4) (7.7) Operating profit 26.0 22.0 18 Financial income and expense (net) (0.9) (1.2) Profit before tax 25.1 20.8 21 Marshalls plc 4
Driving Growth Margin Reconciliation Revenue Operating profit Impact on margin £m £m % HY 2015 199.1 22.0 11.1 Landscape Products 2.0 3.2 1.3 Smaller UK Businesses 2.5 0.7 0.3 International (1.2) 0.1 0.1 HY 2016 202.4 26.0 12.8 Marshalls plc 5
Driving Growth Trading Growth Operating profit • Operating profit for 2016 is 50,000 outperforming both 2015 and 2014 45,000 40,000 35,000 30,000 £'000 25,000 2014 20,000 2015 15,000 2016 10,000 5,000 0 April May June July Month Marshalls plc 6
Driving Growth Cash Flow from Operating Activities HY 2016 HY 2015 £m £m Cash inflow arising from: Operating profit 26.0 22.0 Depreciation and amortisation 6.4 7.7 EBITDA 32.4 29.7 Net financial expenses paid (0.6) (1.1) Taxation paid (3.7) (3.7) Pensions paid - (4.3) Net (gain) / loss on sale of property, plant and equipment (0.1) 0.1 Receivables / payables (18.0) (12.7) Inventory (1.3) (3.6) Restructuring costs paid - (0.2) Equity settled share-based payments and other items 0.6 1.0 Net cash flow from operating activities 9.3 5.2 Marshalls plc 7
Driving Growth Cash Flow 9 HY 2016 HY 2015 £m £m Net cash flow from operating activities 9.3 5.2 Capital expenditure (6.1) (6.0) Net proceeds from sale of surplus assets 0.5 0.1 Payments to acquire own shares (1.2) (3.4) Sub-total 2.5 (4.1) Finance leases / exchange differences 0.2 1.7 Movement in net debt 2.7 (2.4) Net debt at 1 January (11.5) (30.5) Net debt at 30 June (8.8) (32.9) Gearing (%) 4.3% 17.9% Marshalls plc 8
Driving Growth Strong Track Record of Capital Discipline 2016 2015 2014 2013 Debtor days 34 36 42 40 Creditor days 51 51 53 64 Inventory turn (times per annum) 3.4 3.0 2.9 2.0 Liquidity ratio 1.5 1.6 1.5 1.5 (Current assets: Current liabilities) ROCE 19.9% 15.2% 10.1% 6.3% Gearing 4.3% 17.9% 28.8% 29.0% Net debt 8.8 32.9 50.9 53.0 Net assets 204.9 184.0 177.0 182.7 Marshalls plc 9
Driving Growth Significant Borrowing Facilities Facility Cumulative Facility £m £m Bank Facility Headroom Expiry Date 200 Committed facilities: 180 Q3 2021 20 20 160 140 Q3 2020 20 40 120 100 Q3 2019 20 60 80 Q3 2018 20 80 60 40 20 On demand facilities: 0 Available all year 15 95 Dec 11 Jun‐12 Dec‐12 Jun‐13 Dec‐13 Jun‐14 Dec‐14 Jun‐15 Dec‐15 Jun‐16 Dec‐16 Seasonal (February to August inclusive) 10 105 Committed On demand Seasonal Net debt • Bank facilities actively managed • Comfortable facilities and headroom • Balance of committed and uncommitted • Comfort around covenants Marshalls plc 1 0
Driving Growth Bank Debt Capacity • Continued strong operating cash flow • OCF : EBITDA * - 99% (2015: 94%) • 2016 HYE net debt – £8.8 million (2015: £32.9 million) • Net debt: EBITDA – 0.2 times (2015: 0.7 times) • Gearing (net debt / net assets) – 4.3% (2015: 17.9%) • Bank debt capacity of £105 million • Significant capacity for organic investment and acquisition * annualised Marshalls plc 1 1
Driving Growth Pensions Balance Sheet 20 • Company contributions to DB Scheme 10 reduced to zero under agreed Recovery Plan. Annual cash saving of £4.6m. 0 -10 • HYE 2016 surplus £7.9m (YE 2015: surplus £3.4m) -20 Income Statement -30 • Net service cost: £0.2m debit -40 (2015: £0.1m debit) -50 = Accounting valuation = Actuarial valuation: Formal Marshalls plc 1 2
Driving Growth Dividends • Progressive ordinary dividend policy (interim and final) 10.00 9.00 • 2016 Interim dividend 2.90p (29% ↑) 2.00 8.00 • 2x cover 7.00 • 2016 Interim dividend is 66% higher 6.00 than 2013 Supplementary 5.00 Final 4.75 4.00 Interim 4.00 3.50 3.00 2.00 2.90 2.25 2.00 1.00 1.75 0.00 2013 2014 2015 2016 Marshalls plc 1 3
Market Trends Marshalls plc 1 4
Driving Growth CPA Forecasts (% Growth) 8.1% 4.2% 4.1% 4.0% 3.7% 3.0% 1.5% This data is CPA Spring forecast - pre EU referendum vote (2015 and prior ONS adjusted) ‐6.9% 2012 2013 2014 2015 2016 2017 2018 2019 Marshalls plc 1 5
Commercial Marshalls plc 1 6
Driving Growth ABI Contracts Awarded: Hard Landscaping Contract Awarded (12 Month Rolling Basis) Average of Hard Landscaping 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 Marshalls plc 1 7
Driving Growth Continuing Growth: Commercial Market Confidence Markit PMI's 65 60 55 50 45 Construction Growth/Contraction Line 40 35 Marshalls plc 1 8
Driving Growth Rail Market Product Opportunities Platform Concourse Crossrail in Numbers Delivered – to date: • 73 live Projects Interface • £5.6m Quotes • £3.4m Specs • £1.2m Orders • £1.1m Sales Marshalls plc 19
Driving Growth Crossrail in Numbers £5.6 73 140+ £3.4 £1.2 £1.1 m live projects Contracts m m m quotes specs orders sales Marshalls plc 20
Driving Growth Building a Water Management Offer for 2020 Marshalls plc 21
Driving Growth Building a Water Management Offer for 2020 • A variety of top aesthetics offered on a single low capacity channel DREXUS XL New Product Development • Concrete linear drainage to complement • A patented range of super high capacity block paving channels suitable for any loading application Marshalls plc 22
Driving Growth Commercial: New Product Development Rivero Paving Myriad Priora La Linia Priora Kerigg Paving Organa Paving Paving Design Tool Cambrian Sandstone Colour Top Technology Drivesys Marshalls plc 23
Domestic Marshalls plc 24
Driving Growth Domestic Market Stability Installer Order Books (Actual Survey Result & 6 Month Moving Average) 13 12 Average number of weeks Work (Order Books) 11 10 9 8 7 6 The number of Marshalls register members has increased in H1 All Installers Actual 5 Trend 4 Marshalls plc 25
Driving Growth Current Forecasts for UK Private Housing RMI Construction Private Housing RMI % Growth on LY Forecast Comparisons 15% 10% % Change in Value from Last Year 5% 0% ‐5% ‐10% CPA ‐15% Year Marshalls plc 26
Driving Growth Domestic New Product Development Sawn Versuro Jumbo King Size Symphony Vitrified (New Colours) Symphony Vitrified Planks Pavesys Heritage Paving (New Colour) Stoneface Sawn Walling Lazaro Marble Scoutmoor Sandstone Paving Stoneface Drystack Walling Drivesys Roundtop Driveway Edging Drivesett Argent Driveway Edging Drivesys Riven Stone (New Colour) Drivesett Argent (New Colour) Marshalls plc 27
Driving Growth Domestic Market Stability Housing Equity Withdrawal (HEW) 15,000 10,000 5,000 HEW (£ Millions) ‐ ‐5,000 ‐10,000 ‐15,000 Marshalls plc 28
Driving Growth Domestic Market Stability HMRC Pension Release Data HMRC Pension Release Data Q2 2016 – Compulsory Reporting Starts (April 2016) £2,000 300,000 £1,800 250,000 £1,600 Number of Payments & Number of Individuals £1,400 Total Value of Payments (£millions) 200,000 £1,200 £1,000 150,000 £800 100,000 £600 £400 50,000 £200 £0 ‐ Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Number of payments Number of Individuals Total Value of Payments (£m) Marshalls plc 29
Smaller UK Businesses Marshalls plc 30
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