Marshalls plc 2019 Half Year Results Review and Outlook Delivering sustainable growth
Agenda Delivering sustainable growth • Highlights • Financial Performance • The Market • Public Sector and Commercial Find out more online www.marshalls.co.uk • Domestic • Business Strategy Find us on Facebook • Specification MarshallsGroup • New Product Development • Logistics Follow us on Twitter • Operations @MarshallsGroup • Sustainable Materials • Digital Follow us on LinkedIn Marshalls • Customer Centricity • Emerging Businesses Follow us on YouTube • Summary MarshallsTV • Questions Marshalls plc 2019 Half Year Results Review and Outlook 2
Delivering sustainable growth Highlights Pre IFRS 16 Pre IFRS 16 Increase HY 2019 HY 2018 % Revenue £280.1m £244.3m 15 EBITDA £47.3m £41.6m 14 Operating profit £38.4m £33.5m 15 Profit before tax £37.2m £32.5m 14 Basic EPS 15.22p 13.24p 15 Interim dividend 4.70p 4.00p 18 ROCE 21.4% 20.0% Net debt £55.6m £48.9m Note: (1) The impact on the Income Statement of transitioning to IFRS 16 was marginal, with reported profit before tax of £37.1 million being only £0.1 million lower than the pre IFRS 16 figure of £37.2 million. (2) The application of IFRS 16 resulted in a decrease in other operating expenses of £7.6 million and an increase in depreciation of £7.0 million for the 6 months ended 30 June 2019. The interest expense increased by £0.7 million due to additional IFRS 16 interest. Marshalls plc 2019 Half Year Results Review and Outlook 3
Delivering sustainable growth Highlights HY1 HY2 Marshalls plc 2019 Half Year Results Review and Outlook 4
Financial Performance Half Year 2019 Results
Delivering sustainable growth Revenue growth 300 280.1 20.6 15.2 250 244.3 £'m 200 150 2018 Revenue Landscape Products Other 2019 Revenue Marshalls plc 2019 Half Year Results Review and Outlook 6
Delivering sustainable growth Revenue analysis Revenue analysis: end market Revenue analysis: business area ↑14% ↑14% 5% 5% ↑55% Public Sector & 19% Commercial Landscape Products 27% UK Domestic ↑3% Emerging UK Businesses International International 68% 76% ↑ 8% ↑21% Marshalls plc 2019 Half Year Results Review and Outlook 7
Delivering sustainable growth Margin reconciliation Revenue Operating profit Impact on margin £m £m % HY 2018 244.3 33.5 13.7 Landscape Products 15.2 2.7 0.2 Other 20.6 2.2 (0.2) HY 2019 – pre IFRS 16 280.1 38.4 13.7 HY 2019 – as reported 280.1 39.0 13.9 Marshalls plc 2019 Half Year Results Review and Outlook 8
Delivering sustainable growth Cash flow from operating activities Pre IFRS 16 HY 2019 HY 2018 £m £m Cash inflow arising from: Operating profit 38.4 33.5 Depreciation and amortisation 8.9 8.1 EBITDA 47.3 41.6 Net financial expenses paid (0.7) (0.7) Taxation paid (5.2) (6.1) Net gain on sale of property, plant and equipment (0.1) (1.0) Receivables / payables (16.7) (11.9) Inventory (8.9) (7.0) Acquisition / restructuring costs (0.4) (1.5) Equity settled share-based payments and other items 1.3 0.6 Net cash flow from operating activities 16.6 14.0 Note: (1) The impact on the Cash Flow Statement of transferring to IFRS 16 was to increase net cash flow from operating activities by £7.7 million. Reported net cash flow from operating activities for the 6 months ended 30 June 2019 was £24.3 million. Marshalls plc 2019 Half Year Results Review and Outlook 9
Delivering sustainable growth Cash flow Pre IFRS 16 HY 2019 HY 2018 £m £m Net cash flow from operating activities 16.6 14.0 Capital expenditure (10.0) (14.1) Net proceeds from sale of surplus assets 0.1 1.6 Dividends paid (23.8) (21.3) Proceeds from issue of share capital 0.2 - Payments to acquire own shares (1.4) (1.2) Payments in respect of share-based awards - (3.7) Sub-total (18.3) (24.7) Finance leases / exchange differences 0.1 0.1 Movement in net debt (18.2) (24.6) Net debt at 1 January (37.4) (24.3) Net debt at 30 June (pre IFRS 16) (55.6) (48.9) Lease liabilities (under IFRS 16) (42.1) - Reported net debt (97.7) (48.9) Marshalls plc 2019 Half Year Results Review and Outlook 10
Delivering sustainable growth Bank debt capacity • Continued strong cash generation (OCF : EBITDA = 90%) • Pre IFRS 16 net debt of £55.6 million at 30 June 2019 (31 December 2018: £37.4 million net debt) following acquisition of Edenhall • Reported net debt of £97.7 million at 30 June 2019 following inclusion of £42.1 million of additional IFRS 16 lease liabilities • Final and supplementary dividends of £23.8 million paid on 28 June 2019 • Bank debt capacity increased to £165 million • Significant capacity to fund organic investment and selective acquisitions Marshalls plc 2019 Half Year Results Review and Outlook 11
Delivering sustainable growth Significant borrowing facilities available Cumulative Facility Facility £m £m Expiry date Bank Facility Headroom 180 Committed facilities: 160 Q3 2024 25 25 140 120 Q3 2023 55 80 100 £’m 80 Q3 2022 20 100 60 40 Q3 2021 20 120 20 0 Q3 2020 20 140 Dec 2012 Jun 2013 Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Jun 2018 Dec 2018 Jun 2019 -20 On demand facilities: Committed On demand Seasonal Net debt Available all year 15 155 • Bank facilities actively managed to maintain Seasonal (February to August inclusive) 10 165 flexibility • Balance of committed and uncommitted facilities • Increase in committed facilities during the period • Facilities comfortable against headroom • Good comfort against covenants Marshalls plc 2019 Half Year Results Review and Outlook 12
Delivering sustainable growth Capital allocation policy 1 2 3 4 5 Organic R&D 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 bolt-on acquisition dividends when new product earnings over the opportunities in New appropriate. Plan £23m in 2019 development business cycle Build Housing, Discretionary and Water Management, non-recurring Landscape Protection and Minerals Marshalls plc 2019 Half Year Results Review and Outlook 13
Delivering sustainable growth Strong track record of capital discipline HY HY HY HY HY 2019 2018 2017 2016 2015 Debtor days 35 33 34 34 36 Creditor days 56 53 52 51 51 3.1 Inventory turn (times per annum) 3.2 3.3 3.2 3.0 Liquidity ratio (pre IFRS16) 1.5 1.6 1.6 1.5 1.6 (current assets: current liabilities) ROCE (pre IFRS 16) 21.4% 20.0% 23.7% 19.9% 15.2% ROCE (reported) 19.3% 20.0% 23.7% 19.9% 15.2% Gearing (pre IFRS 16) 19.8% 20.0% N/A 4.3% 17.9% Gearing (reported) 35.1% 20.0% n/a 4.3% 17.9% Net (debt) / cash (pre IFRS 16) £(55.6)m £(48.9)m £1.2m £(8.8)m £(32.9)m Net (debt) / cash (reported) £(97.7)m £(48.9)m £1.2m £(8.8)m £(32.9)m Net assets £278.2m £244.6m £222.6m £204.9m £184.0m Marshalls plc 2019 Half Year Results Review and Outlook 14
Delivering sustainable growth Pensions Balance Sheet • Company contributions to Defined Benefit Scheme reduced to zero under agreed Recovery Plan • Surplus of £20.6 million at 30 June 2019 (31 December 2018: surplus of £13.5 million) Income Statement • Scheme closed since 2006 to future accrual • Net service cost: £0.4 million debit (2018: £0.3 million debit) • Looking to “transfer out” long ter m 30 20 10 0 -10 Accounting valuation Actuarial valuation: Formal -20 £m -30 -40 -50 Marshalls plc 2019 Half Year Results Review and Outlook 15
Delivering sustainable growth Dividends • Progressive ordinary dividend policy 18.00 16.00 • 2019 interim dividend 4.70p (up 18%) 14.00 4.00 • Target of 2x cover 4.00 12.00 3.00 10.00 • Supplementary dividend: 8.00 2.00 8.00 discretionary and non-recurring 6.80 6.00 5.80 • CAGR growth of 18.6% over 5 years 4.75 4.00 4.00 4.70 • Board will continue to adhere to the 2.00 4.00 3.40 2.90 2.25 2.00 Group’s capital allocation policy 0.00 2014 2015 2016 2017 2018 2019 Interim Final Supplementary Marshalls plc 2019 Half Year Results Review and Outlook 16
The Market Half Year 2019 Results
Delivering sustainable growth CPA construction output forecasts – Summer 2019 Note: Historic numbers are the latest ONS adjusted figures Marshalls plc 2019 Half Year Results Review and Outlook 18
Delivering sustainable growth CPA 2019 to 2021 cumulative sector forecasts Key sectors for Marshalls Marshalls plc 2019 Half Year Results Review and Outlook 19
Public Sector & Commercial Half Year 2019 Results
Delivering sustainable growth ABI lead indicator Projects under £100m – Est hard landscaping value Marshalls plc 2019 Half Year Results Review and Outlook 21
Delivering sustainable growth Private and public housing statistics and CPA forecasts Marshalls plc 2019 Half Year Results Review and Outlook 22
Delivering sustainable growth Update on Cross Rail specs, orders and sales Marshalls share increasing Quoted £14,556,731 Quoted on project and delivered Despatched Quoted on project £4,202,410 Marshalls plc 2019 Half Year Results Review and Outlook 23 Not Despatched No activity as yet £65,676
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