Strategic Report
Creating
better places
Annual Report and Accounts 2023
We create better places
by putting people,
communities and the
environment first
The Group is a leading
manufacturer of sustainable
solutions for the built
environment. We are
committed to quality
in everything we do,
including environmental and
ethical best practice.
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Contents
Strategic Report
Highlights
1
Our Purpose Framework
2
At a Glance
4
Business Model
6
8
Investment Case
10 Chair’s Statement
12 Chief Executive’s Statement
14 Chief Executive’s Q&A
16 Our Markets
18 Summary of Group
Performance
19 Segmental Review
22 Our Strategy
24 Strategic Objective:
Innovate and optimise
product and solutions
26 Key Performance Indicators
28 Stakeholder Engagement
34 Sustainability
44 Task Force on
Climate‑related
Financial Disclosures
48 Financial Review
52 Risk Management
and Principal Risks
and Uncertainties
62 Our Section 172(1)
Statement
Governance
64 Board of Directors
66 Corporate
Financial Statements
115 Consolidated Income
Statement
Governance Statement
116 Consolidated Statement
80 Nomination
Committee Report
84 Audit Committee Report
88 Remuneration
Committee Report
91 At a glance
92 Annual Remuneration
Report
99 Remuneration Policy
103 Directors’ Report – Other
Regulatory Information
106 Statement of Directors’
Responsibilities
107 Independent
Auditor’s Report
of Comprehensive Income
117 Consolidated
Balance Sheet
118 Consolidated Cash
Flow Statement
119 Consolidated Statement
of Changes in Equity
121 Notes to the Consolidated
Financial Statements
153 Company Balance Sheet
154 Company Statement
of Changes in Equity
155 Notes to the Company
Financial Statements
161 Financial History –
Consolidated Group
162 Glossary
164 Shareholder Information
Strategic Report
Highlights
Revenue (£’m)
£671.2m
(down 7%)
Adjusted operating profit(1) (£’m)
£70.7m
(down 30%)
Adjusted EBITDA(1) (£’m)
£103.6m
(down 24%)
4
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.
7
5
0
2
0
2
Adjusted profit(1)
before tax (£’m)
Reported profit
before tax
Adjusted return on(1)
capital employed (%)
Adjusted(1)
basic EPS (p)
£53.3m £22.2m 8.4%
16.7p
Reported
EPS (p)
7.4p
Full year dividend
recommended (p)
8.3p
Strategic highlights
• Group well positioned for when
markets recover
• Reduction in capacity whilst maintaining
ability to supply a stronger market in the
medium term
• Improved agility and reduced cost base
with annualised net cost reduction of
around £11 million
• Managing cash and deleveraging balance
sheet. Programme of surplus site sales
generating £6.9 million in 2023
Financial highlights
• Revenue of £671.2 million which
represents like‑for‑like reduction of 13%
• Adjusted operating profit of £70.7 million,
a reduction of 30% on 2022
• Reported operating profit of £41.0 million
(2022: £47.9 million)
ESG highlights
• Established Board ESG Committee with
oversight of our ESG strategy
• Revision of our carbon reduction targets
in a Group‑wide re‑baselining exercise
• New digital system for health, safety
and environment compliance
• Adjusted profit before tax of £53.3 million,
a decrease of 41% on 2022
• Solar array installed at fifth location
• Living Wage employer status and Fair Tax
• Adjusted EBITDA of £103.6 million,
Mark maintained
a decrease of 24% on 2022
• Launch of our new Code of Conduct
• Profit before tax on a statutory basis
to colleagues and suppliers
was £22.2 million
• Adjusted earnings per share were down
47% at 16.7 pence
• Net debt of £172.9 million (2022: £190.7
million) (on a pre‑IFRS 16 basis) and
leverage of 1.9 times adjusted EBITDA
Notes
1. Alternative performance measures are used consistently
throughout this Annual Report. These relate to EBITDA,
operating profit, return on capital employed (“ROCE”),
net debt and operating cash flow. These APMs are then
presented both on a pre and post IFRS 16 basis and
like‑for‑like with Marley. For further details of their purpose,
definition and reconciliation to the equivalent statutory
measures, see Note 33.
The results for the year ended 31 December 2023 have
been included after adding back adjusting items. These are
set out in Note 4.
Stay up to date with the
latest investor news at:
www.marshalls.co.uk
Marshalls plc | Annual Report and Accounts 2023
1
Strategic Report
Our Purpose Framework
Our purpose is to
create better places
Our strategic goal is to be the UK’s leading
manufacturer of sustainable solutions for the
built environment
Group key strategic objectives
Read more about our strategy on page 22
Obtain and deliver
Obtain and deliver
specification
specification
for our products and systems
for our products and systems
to grow revenue and profitability
to grow revenue and profitability
Easy
Easy
to work with
to work with
Innovate
Innovate
and optimise products
and optimise products
and solutions
and solutions
Improve
Improve
our cost effectiveness, our
our cost effectiveness, our
efficiency and our flexibility
efficiency and our flexibility
Operate
Operate
in an environment where safety
in an environment where safety
and people are a key priority
and people are a key priority
The Marshalls Way
Read more about The Marshalls Way on page 28
Do the right things
For the right reasons
In the right way
• We have high standards
• We deliver market leading quality
to our customers
• We strive to meet the needs and
expectations of our customers
• We are continually developing the
business and our people
• We consider the long-term impact
of every decision we make
• We are guided by strong principles
• We operate in the most ethical
and sustainable way
• We take responsibility for
every action
• We set clear expectations
• We anticipate and embrace change
• We put people, communities and
the environment first
• We work as a team to proactively
propose solutions
Our values
Act with courage
Win together
Shape the future
Inspire with clear purpose
• We take
responsibility for
every action
• We get things
done
• We learn from
experiences
• We challenge
and feed back
• We work as one
Marshalls team
• We respect
everyone
• We propose
solutions
• We value
development
• We champion
our customers
• We initiate and
embrace change
• We consider
the long-term
impact of our
decisions
• We develop
diverse teams
• We are proud
and passionate
• We share
and celebrate
success
• We continuously
improve
• We create clarity
of expectations
2
Marshalls plc | Annual Report and Accounts 2023
What ESG means to Marshalls
BETTER
Product
BETTER
Workplace
BETTER
World
Climate
action
Respecting
people
Made
to last
Sustainability at Marshalls
Our three pillars – Better Product, Better
Workplace, Better World – highlight our focus
areas towards our purpose of creating better
places, whilst maintaining The Marshalls Way
of doing the right things, for the right reasons,
in the right way.
Read more about Better Product on page 36
Read more about Better Workplace on page 38
Read more about Better World on page 41
Find out about our commitment
to apprenticeships and engaging
young talent
Find out about our newly launched
EPD Library for Environmental
Product Declarations
Read more on page 39
Read more on page 37
Find out about our carbon
reduction journey and our new
solar array
Read more on page 43
Find out about our
award-winning solar
safety product, ArcBox
Read more on page 36
Marshalls plc | Annual Report and Accounts 2023
3
Strategic Report At a Glance
A leading manufacturer
of sustainable solutions
for the built environment
Our objective is to deliver sustainable growth while maintaining a strong balance
sheet with a flexible capital structure and a clear capital allocation policy.
What we do
The Group is diversified and operates across three
divisions in the UK construction market, and offers
a broad product range with specialist and innovative
products and solutions.
Our markets
The Group’s three main end market areas are
New Build Housing, Commercial and Infrastructure,
and Private Housing, repair maintenance and
improvement (“RMI”).
Our divisions
Landscape Products
Comprises the Group’s Commercial
and Domestic landscaping business,
Landscape Protection.
• Paving
• Kerb
• Edgings
• Walling
• Protective street furniture
Building Products
Comprises the Group’s Civils and Drainage,
Bricks and Masonry, Mortars and Screeds,
and Aggregates businesses.
• Drainage and water management solutions
• Concrete bricks
• Masonry
• Mortar
• Screeds
• Aggregates
Roofing Products
Comprises the Marley Roofing Products
business and Viridian Solar, offering a
comprehensive roofing system.
• Concrete tiles
• Clay tiles
• Timber battens
• Roof integrated solar panels
Landscape Products revenue
Building Products revenue
Roofing Products revenue
48%
(2022: 55%)
25%
(2022: 27%)
27%
(2022: 18%)
Read more about our
landscape projects on page 19
Read more about our
building projects on page 20
Read more about our
roofing projects on page 21
4
Marshalls plc | Annual Report and Accounts 2023
Where we operate
We operate from strategically located manufacturing
and distribution sites across the UK.
Supportive long-term market fundamentals
Structural deficit in new build housing.
Landscape Products
Building Products
Roofing Products
Ageing housing stock that requires RMI activity.
The need to continue improving UK infrastructure.
Strong outlook for the integrated solar panel business,
supported by regulatory changes.
Strongly positioned for
when markets recover
• Reduction in capacity mainly temporary. Mothballed units can be
recommissioned to meet demand
• Manufacturing sites are well invested and drop‑through margins
that adversely impacted profitability in 2023 are expected to
reverse with higher volumes
• Recovery in volumes would have a significant positive impact
on profitability
• Reduction in pre-IFRS 16 net debt driven by strong management
of cash in 2023, further reductions in net debt expected
Track record of delivering shareholder value – 2023 downturn adversely impacts PBT
Adjusted PBT and CPA total construction output forecast
90
80
70
60
50
40
30
20
10
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200,000
180,000
160,000
140,000
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Marshalls plc | Annual Report and Accounts 2023
5
Strategic Report
Business Model
Our business model
underpins our strategic
goal and purpose
Innovation
Agility
S a f e t y and people
a s y t o work with
d s c ape Products
E
n
a
L
M
a
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a
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Customers
urcing
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Distribu t
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P
r
o
d
u
cts
R
h
t
Easy to wo r k w i
Safety and p e o p l e
Agility
Innovation
6
Marshalls plc | Annual Report and Accounts 2023
Our resources
Strong leadership
Clear direction and focused
resource allocation to deliver
our strategic vision
Our business
Customers
Our customers range from
domestic homeowners to public
bodies. Product and service
innovation, combined with
demand generation strategy
for project specifications, drive
customers to Marshalls and
Marley solutions
Outcomes
Shareholders
Cumulative dividends paid of
£217 million in ten years between
2014 and 2023
Proposed full year dividend
per share
8.3p
Our resources
Our business
Outcomes
Footprint
National coverage and
sustainable operations
across a national network
of manufacturing sites
People
With over 130 years’
experience, we have a
reputation built on transparency
and long standing core values
Relationships
Strong supply chain
relationships support
ethical sourcing
Stakeholder relationships
We have strong stakeholder
relationships through
constructive dialogue with
local authorities, industry
bodies and regulators. Our
stakeholder relationships
are underpinned by a focus
on responsible business
which is a key part of the
Marshalls culture
Products
The Group has a wide
product range across
hard landscaping, roofing,
water management and
concrete bricks
Easy to work with
Improving the
customer experience
by simplification and
reducing touchpoints
Safety and people
The Marshalls Way of
doing the right things, for
the right reasons, in the
right way underpins our
model. We put people,
communities, and the
environment first
Agility
We take actions to
reduce costs, improve
agility and manage cash
without compromising
medium-term capacity
Innovation
We are committed
to innovation and
continuous improvement
to deliver innovative
product solutions for
our customers through
continued investment
in our facilities and
product range
Customers
We aim to provide an
outstanding customer
experience at every step
of the journey
Suppliers
Playing a leading role in
upholding human rights at
home and overseas in our
supply chain
Communities and
environment
Collaborative approach to
capturing carbon by using
CarbonCure technology
Employees
Operating in an
environment where
safety and people
are a key priority
Government and
regulatory bodies
Responsible business
commitments
(e.g. Living Wage)
Shifting transactions
to EDI, ordering apps
and dropship
Awarded Innovation Award
at the Unseen Business
Awards 2023 for our long-
term efforts identifying and
addressing modern slavery
in supply chains
Engagement with UN
Global Compact UK
working groups on modern
slavery, diversity and
climate change
Progressed new digital
compliance system
and delivering our health
and wellbeing strategy
Ten years of being Fair
Tax Mark certified
Marshalls plc | Annual Report and Accounts 2023
7
Strategic Report Investment Case
Group positioned well for
when markets recover
Cash generative business model with a well‑defined capital allocation policy.
Why invest in Marshalls plc?
Strong business
fundamentals
Focused growth
strategy
ESG market
leadership
• Diversified product offering with
exposure to strong, long-term
growth markets across varied
construction sectors
• Reputable brand proposition across
hard landscaping, roofing, water
drainage and concrete walling products
• Market leading positions in
landscaping and roofing; significant
growth opportunities in integrated
solar, water management products
and lower‑carbon concrete bricks
• Excellent manufacturing footprint
across the UK with a well invested
asset base
• Credible strategic goal to become
the UK’s leading manufacturer of
sustainable solutions for the built
environment
• Delivered PBT CAGR of 24 per cent
between 2013 and 2022, before 2023
market downturn
• Product and service innovation,
combined with demand generation
strategy for project specifications,
drive customers to Marshalls and
Marley solutions
• Continued investment in facilities
and technology to improve efficiencies
and broaden the product range
• Combination of organic growth
supplemented by complementary
transactions to deliver sustained
through-cycle growth
• Sector leader in sustainability
for over 20 years
• Amongst the first in the UK
construction materials sector to
obtain approved science‑based
targets for carbon reduction
• Creating better places through the
core pillars of “better product, better
workplace and better world”
• Trend towards increased ESG,
weighting in customer procurement
decision making
• Commitment to net zero and new carbon
reduction targets for enlarged Marshalls
Group submitted to the Science Based
Targets (“SBTi”) initiative for validation
Find out more online
About us
Our divisions
Our products
https://www.marshalls.co.uk/about-us
https://www.marshalls.co.uk/
about-us/operations
https://www.marshalls.co.uk/
8
Marshalls plc | Annual Report and Accounts 2023
Capital Allocation Policy
Clear and unchanged policy
1
2
3
4
5
Organic growth
R&D and new product
development
Ordinary
dividends
Balance sheet
deleveraging
Selective
acquisitions
Capital investment
remains core to
strategic growth
Continued focus on
R&D and NPD
Maintaining dividend
cover of two times
adjusted earnings
Target to reduce net
debt to around one times
adjusted EBITDA
Target selective bolt-on
acquisition opportunities
Robust risk
management
Well positioned for a
recovery in our markets
Focus on driving
shareholder value
• Formal process to identify, analyse
and assess current and emerging
risks with active engagement from
the Executive Team and Board
• Mitigating controls continually
monitored by management
• Controls periodically audited
by external parties
• Detailed active plans developed
for identified risks
• Flexible cost base and manufacturing
sites provide management with
optionality to right-size the business
• Significant operational capacity to
satisfy increased demand
• Operating margins expected to
benefit from high operational leverage
when volumes improve with market
recovery, with a medium-term target
of 15 per cent
• Long-term track record of generating
shareholder returns – total of £217
million dividends paid in ten years
between 2014 and 2023
• Opportunity to deliver progressive
earnings growth and adjusted ROCE
of 15 per cent over the medium term
• Cash generative business model with a
strong balance sheet with a well‑defined
capital allocation policy
• Focus on driving organic growth,
supplemented by periodic,
complementary bolt‑on acquisitions
• Sustainable, through-cycle dividend
policy, targeting 2x cover by
adjusted earnings
Our share price
Financial performance
Sustainability at Marshalls
https://www.marshalls.co.uk/investor/
share-price-centre
https://www.marshalls.co.uk/investor/
financial‑performance
https://www.marshalls.co.uk/sustainability
Marshalls plc | Annual Report and Accounts 2023
9
Strategic Report Chair’s Statement
Whilst taking action to manage through the
downturn, the Board has remained focused
on its strategic aims and well-managed
leadership change
Importantly, we
balanced the need
to reduce capacity
and the cost base in
the short term while
retaining flexibility to
increase production
volumes when
demand recovers.
Vanda Murray OBE
Chair
Summary
• Revenue contracted by 13 per cent
on a like‑for‑like basis to £671.2 million
• Adjusted profit before tax of
£53.3 million, reflecting weak end
markets (reported profit before tax:
£22.2 million)
• Decisive actions taken to reduce
capacity and the cost base whilst
retaining ability to increase output
when demand recovers
• Full year proposed dividend of
8.3 pence per share
• Refreshed strategy now being
embedded in the business
• CEO transition well managed
• Continued focus on health, safety
and employee wellbeing
Results
Group revenue for the year ended 31 December 2023 was £671.2 million
(2022: £719.4 million), which includes an additional four months of
Marley. On a like‑for‑like basis, Group revenue contracted by 13 per cent
due to reduced demand in our key end markets.
The Group’s adjusted profit before tax was £53.3 million (2022: £90.4
million), with the year on year reduction resulting from the impact
that weak market activity levels had on profitability. Statutory profit
before tax was £22.2 million (2022: £37.2 million) after accounting for
adjusting items (details of which can be found on page 18). Adjusted
earnings per share was 16.7 pence (2022: 31.3 pence), and earnings
per share on a statutory basis was 7.4 pence (2022: 11.4 pence).
Further detail on the results is set out on pages 12 and 14 of the Chief
Executive’s Review and on pages 48 to 51 in the Financial Review.
The Group’s Balance Sheet remains robust, with net debt, on a pre-IFRS
16 basis, reducing by £17.8 million to £172.9 million (2022: £190.7
million) due to the actions taken to manage cash and capital given
market conditions. Net debt reduced to £217.6 million (2022: £236.6
million) on a reported basis after including IFRS 16 lease liabilities.
Marshalls continues to be strongly cash generative and we maintain
good headroom against our bank facility and covenants.
Overview
Whilst 2023 was a challenging year for the Group, your Board acted
quickly in response to reduced demand by implementing actions to
improve agility and right-size the business through reducing capacity
and costs, alongside maintaining a disciplined approach to cash
and capital management. These actions are expected to reduce net
operating costs by approximately £11 million per annum, around 40
per cent of which was realised in 2023. Notwithstanding the benefit
of these actions, weak activity levels in our key end markets reduced
demand for the Group’s products and this led to significantly reduced
volumes and an adverse impact on profitability.
Importantly, we balanced the need to reduce capacity and the cost
base in the short term, while retaining flexibility to increase production
volumes when market demand recovers. The Group’s manufacturing
network is able to produce significantly higher volumes than is currently
demanded by the market with limited investment. The Board expects
higher sales and production volumes, when the market recovers, to
have a materially positive impact on profitability.
We are pleased to have completed the work to review our Scope 1,
2 and 3 carbon reduction targets for the enlarged Group and have
submitted them to the SBTi for validation. We have also continued
to evolve our governance structure with additional oversight of ESG
matters through the creation of an ESG Board Committee.
2024 will see a significant change in the Group’s leadership with
Martyn Coffey having stepped down as Chief Executive after ten
years and Matt Pullen being appointed his successor after a rigorous
selection process.
10
Marshalls plc | Annual Report and Accounts 2023
Dividends
The Group maintains a dividend policy of distributions covered twice
by adjusted earnings. The Board has proposed a final dividend of
5.7 pence per share, which, taken together with the interim dividend
of 2.6 pence per share, would result in a pay-out in respect of 2023 of
8.3 pence (2022: 15.6 pence). This is in-line with the Group policy and
would represents a year-on-year reduction of 47 per cent driven by
weaker profitability, increase in weighted average shares in issue and a
higher effective taxation rate. The dividend will be paid on 1 July 2024
to shareholders on the register at the close of business on 7 June 2023.
The shares will be marked ex-dividend on 6 June 2024.
Strategy
The Group’s strategy was refreshed by the Board and the Executive
Team during the period. Our updated strategic goal is to be the UK’s
leading manufacturer of sustainable solutions for the built environment.
The Board has defined the following key strategic objectives: obtaining
and delivering specifications; innovation; improved cost effectiveness,
capital efficiency and flexibility; operating in an environment where
safety and people are a key priority; and being easy to work with.
Management have developed aligned operating strategies in each of our
businesses that support the delivery of these objectives and is using a
structured process to embed them throughout the organisation. Further
details of the refreshed strategy can be found on pages 22 to 23.
ESG strategy
The Group is committed to the promotion of strong environmental,
social and governance objectives (“ESG”). Our ESG strategy has three
pillars: “Better Product”, “Better Workplace” and “Better World”. These
pillars all stem from our purpose – to create better places – and are
embedded into our overall strategy. Our approach to ESG continues to
generate organic growth opportunities which, going forward, will be a
source of competitive advantage in the future. The Board will continue
to focus on culture and people engagement. Our priorities include
work on employee wellbeing and safety, succession and development
planning, diversity, equity, respect and inclusion. Angela Bromfield
leads the Board’s engagement with the Employee Voice Group (“EVG”),
which includes employees elected from all parts of the Group. Further
details of the EVG’s activities during the last year can be found on pages
38 to 40.
Environmental
Our current commitment for the Marshalls businesses (excluding Marley)
is to reduce Scope 1 and 2 greenhouse gas emissions by 59.4 per cent
per tonne of production by 2030 from a 2018 base year, which is
equivalent to a 50.5 per cent reduction in absolute greenhouse gas
emissions. These targets have been approved by the SBTi as consistent
with a 1.5°C trajectory. We continue to track ahead of these targets.
We reported last year that our acquisition of Marley meant that we
would need to recalculate the carbon footprint of the Group and review
our targets, and that 2030 may not be a realistic target for the enlarged
Group to achieve net zero. This work is now complete, and we have near
and long-term net zero targets for Scopes 1, 2 and 3 for the enlarged
Group. Our calculations and targets have been submitted to the SBTi,
and we are awaiting validation before we communicate our revised
ambitions to our stakeholders.
Social
We are proud to support the United Nations Sustainable Development
Goals (“UN SDGs”) and continue to be an active participant of the
UN Global Compact. Our approach to being a responsible business
and good employer is based on upholding human rights, at home
and overseas, in our supply chain, and putting the health, safety and
wellbeing of our people at the top of our priorities. We are a Living Wage
employer and have the Fair Tax Mark, which demonstrates transparency
in our tax affairs. In what has been a challenging year for the business
and the construction industry, we have continued to support the
development of our people and recruited twelve engineering apprentices
as part of our commitment to maintaining our talent pipeline.
Governance
Our Corporate Governance Statement on pages 66 to 79 outlines
our continued commitment to the highest standards of corporate
governance, including compliance with all the provisions of the
UK Corporate Governance Code. 2023 saw the creation of a new
governance structure for ESG – with oversight from the ESG Committee
at Board level, continued direction from our ESG Steering Committee
at Executive Team level and management of the ESG strategy by
the ESG Delivery Team. To ensure a strong alignment between the
interests of management and our shareholders, a large proportion of
management’s remuneration continues to be in shares which must be
retained for up to five years. Further details of how the Board engaged
with stakeholders can be found in our Stakeholder Engagement section
on pages 28 to 33.
Board changes
Martyn Coffey stepped down from the Board and as Chief Executive on
29 February 2024. Under Martyn’s outstanding leadership, the Group
has been transformed into a diversified building products manufacturer,
with leading positions in its key markets, whilst retaining its culture and
core values. During Martyn’s tenure, Marshalls has grown organically
and through acquisitions, achieving its key strategic ambitions, and
the Group is well positioned for when markets recover. Martyn will
leave behind a significant legacy, and I would like to thank him for his
leadership over the last ten years. Following a rigorous process to
identify a successor, supported by an executive search firm, the Board
were pleased to appoint Matt Pullen as Martyn’s successor. Matt is
an accomplished executive leader with extensive experience in the
construction and FMCG sectors.
Diana Houghton was appointed as a Non‑Executive Director with
effect from 1 January 2023 and joined the Audit, Remuneration and
Nomination Committees. Tim Pile retired as a Non‑Executive Director
in May 2023, and I would like to thank him for sharing his wealth of
knowledge and experience and for his long service on the Board.
Our people
I am privileged to serve as your Chair and continue to regard our
people as being a major strength of the business. 2023 has been a
challenging year for our people due to the difficult market conditions
and restructuring activity that has been necessary during this period.
It is a testament to all of our colleagues that they have continued to
focus on our customers and on delivering for the Group. I would like
to thank every member of our team for their commitment, hard work
and continuing dedication to Marshalls.
Outlook
Revenue in the first two months of the year was lower than 2023 and
reflects the continued weakness seen in the second half of last year.
In line with recent sentiment of UK economic and industry forecasts,
the Board expects activity levels to remain subdued in the first half
of the year followed by a modest recovery in the second half as the
macro-economic environment progressively improves. The start of
this recovery is now expected to be slower and more modest than
previously assumed. Therefore, the Board believes that revenues in
2024 will be lower than previously expected and that profit will now
be at a similar level to 2023.
The Board remains confident that actions taken to improve efficiency
and flexibility, together with a more diversified and resilient portfolio has
strengthened the Group. With clear long-term structural growth drivers
and attractive market growth opportunities, the Group is well positioned
for relative outperformance in the medium-term, and this will underpin
a material improvement in profitability as end markets recover.
Vanda Murray OBE
Chair
18 March 2024
Marshalls plc | Annual Report and Accounts 2023
11
Strategic Report Chief Executive’s Statement
Taking decisive action has
positioned the Group well for
when markets recover
Management has
taken decisive
action to align
costs and capacity
with lower market
demand and is
well positioned
for when markets
recover.
Matt Pullen
Chief Executive
• Revenue contracted by 13 per cent on a
like-for-like base to £671.2 million (2022:
£719.4 million) due to weak end markets.
• Adjusted profit before tax of £53.3 million,
reflecting lower volumes and the adverse
impact of operational leverage.
• Decisive action taken to align costs and
capacity with reduced demand levels.
• Focus on deleveraging resulted in a £17.8
million reduction in pre-IFRS16 net debt
to £172.9 million (2022: £190.7 million) –
robust balance sheet with pre-IFRS 16 net
debt to EBITDA of 1.9 times.
• Continued improvements in health and
safety performance.
• Clear long-term structural growth drivers,
attractive market growth opportunities
and significant retained manufacturing
capacity mean the Group is well
positioned for relative outperformance in
the medium term, as end markets recover.
Overview
Marshalls has executed a successful strategy over the last decade
under Martyn Coffey’s leadership to become a leading manufacturer of
products for the built environment through a combination of self-help
investment and targeted acquisitions. A core element of this strategy
has been to broaden its portfolio of products, building a strong brand
presence in landscaping, roofing (including the growth area of solar PV),
water management and bricks & walling through acquisition and organic
growth. This has led to the diversification of sector exposure across new
build housing, infrastructure, commercial projects and refurbishment
in both the private and public housing sectors. The strategy has also
enabled the Group’s portfolio to provide solutions at all levels of the build
programme from groundworks to the roof. I am delighted to have joined
a Group with strong reputation and a market leadership position in the
sector and feel privileged to lead Marshalls through its next stage of
development, building on Martyn’s significant achievements.
Market conditions were challenging in 2023 with macro‑economic
pressures and uncertainty continuing to impact the construction industry,
with significant cost inflation in the UK economy, progressive base
rate increases by the Bank of England, leading to falling real wages.
These factors put unprecedented pressure on household budgets and,
subsequently, lower short‑term demand in the housing sector together
with a significant headwind in discretionary RMI. The impacts have been
exaggerated by house price deflation and economic uncertainties, which
have curtailed investment in the non-housing and infrastructure sectors
although these remained more resilient in 2023. The CPA estimates that
the output of the UK construction industry contracted by 6 per cent in
2023, with reductions of 17 per cent and 11 per cent in new build housing
and private housing RMI, respectively, which are key end markets for the
Group. These factors resulted in a reduction in demand for the Group’s
products, which had a significant impact on its profitability.
12
Marshalls plc | Annual Report and Accounts 2023
2023 Group performance
Group revenue for the year ended 31 December 2023 was £671.2 million
(2022: £719.4 million), which is a contraction of 13 per cent on a like-for-like
basis. This performance reflects lower demand from house builders and
continued subdued activity in private housing RMI, which impacted all
the Group’s reporting segments.
The Group’s adjusted operating profit was £70.7 million (2022: £101.1 million)
and the resulting adjusted operating profit margin was 10.5 per cent for the
year ended 31 December 2023 (2022: 14.1 per cent). Weaker end markets
resulted in reduced levels of demand which reduced both gross profit and
manufacturing efficiency and made it progressively more difficult to recover
input cost inflation with price increases. Management took decisive actions
to improve agility and right-size the business through reducing capacity and
costs. This included the closure or mothballing of factories, a reduction in
shifts and capacity in other facilities, and a reorganisation of commercial
and support functions. These actions are expected to deliver net annualised
savings of around £11 million, of which around 40 per cent was delivered in
2023. In addition, management reviewed and reprioritised capital expenditure
plans, executed a programme of surplus land disposals that generated
around £7 million, and focused on efficient working capital and cash
management to reduce the Group’s net debt.
Importantly, management balanced the need to reduce capacity and
the cost base in the short term while retaining the flexibility to increase
production when demand recovers. The Group has significant latent
capacity across all its businesses to satisfy materially higher demand
than current levels.
Details of the performance of the Group’s reporting segments is set out
on pages 19 to 21.
The reported operating profit for the year was £41.0 million including
adjusting items that totalled £29.7 million expense (2022: £53.2 million).
These adjusting items comprise £10.4 million of amortisation of intangible
assets arising on acquisitions, £18.3 million of impairment charges,
restructuring and similar costs, a £1.6 million increase in contingent
consideration estimated to be payable in respect of Viridian Solar, and a
£0.6 million profit arising on the disposal of Marshalls NV. Further details
on these items are set out on page 49.
Adjusted profit before taxation for the year was £53.3 million (2022:
£90.4 million) after accounting for a finance charge of £17.4 million
(2022: £10.7 million). Reported profit before tax was £22.2 million
including adjusting items totalling £31.1 million expense (£53.2 million),
which comprises the adjusting items impacting on operating profit and
a £1.4 million adjusting item in finance costs associated with a pension
benefit rectification exercise (details are set out on page 50).
The Group amended its capital allocation policy in 2022 to prioritise
reducing net debt over any significant M&A activity, and management
have made good progress during the year. The actions taken to manage
cash in the weaker economic environment resulted in a reduction in pre-
IFRS 16 debt of £17.8 million to £172.9 million (2022: £190.7 million). The
Group’s balance sheet continues to be robust, with pre-IFRS 16 net debt to
adjusted EBITDA being 1.9 times at 31 December 2023 (2022: 1.4 times),
with the year on year increase due to lower profitability in 2023.
The opportunity for Marshalls
During 2023, the business was necessarily focused on controlling and
improving the efficiency and agility of its cost base, leveraging its strength
in operations, as well as rigorous management of operating cashflow. All of
the actions taken demonstrate the business is well managed and in control.
Marshalls has a real strength in its operations, its drive towards ever more
sustainable solutions, and its brands and products are well regarded in
the market by our customers. Over the coming months, management’s
focus will be on evolving the existing strategy, with a focus on the medium
and longer-term market opportunities related to climate management and
adaptation and the structural drivers that will fuel demand for the Group’s
products and solutions. Understanding and analysing these market trends
and listening to what the Group’s customers are calling for, where its brands
and solutions can solve problems, is key. Investing in having a sharp focus
on the parts of the market where the Group can add real value, through
great insight, clear articulation of its brand propositions to customers and
innovating in these areas will be of paramount importance. Ensuring the
Group is a trusted and preferred partner for our customers to work with,
realise greater value, accelerate growth and expand margins as the markets
recover through the next cycle.
The Group expects to benefit from a recovery in the UK construction
market driven by the structural deficit in new build housing, the ageing
housing stock which needs investment in RMI and the continued need
to improve infrastructure. In addition to this, there are specific market
sector opportunities that are expected to outperform the overall UK
construction market and the management team are focused on capturing
this potential. The demand for roof-integrated solar solutions is expected
to increase significantly in the next 12 to 24 months. Changes to building
regulations (Part L) on energy efficiency took effect in mid‑2023 and
represent the first part of the plan to improve the energy efficiency of
new homes. Roof-integrated solar is being adopted by housebuilders
as part of their solution to improve energy efficiency. The Group’s solar
business, Viridian Solar with its innovative patented design, is the market
leader and is expected to deliver strong profitable growth as a result.
The second part of the plan aims to mandate low carbon heating and
world‑leading energy efficiency through the Future Homes Standard, and
this could present further opportunities for the growth of roof-integrated
solar. The consultation on these changes is expected to conclude in 2024.
Additionally, the government’s Social Housing Decarbonisation Fund
is driving the low energy refurbishment of homes by local authorities
and social landlords. A requirement of the funding is a switch to electric
heating coupled to a reduction in energy bills for residents and solar PV is
incorporated into many of the successful schemes. With a strong position
in the social housing sector, Marley is increasingly securing specifications
including solar PV as part of its roof system for this RMI work.
The Group also expects growing demand for its water management
products and solutions. This is underpinned by water utility companies’
proposals to significantly increase their expenditure on water and
sewerage infrastructure projects, to £96 billion for 2025 to 2030, to
modernise infrastructure and reduce system leakage. In the shorter-
term, additional investment of £1.6 billion has been approved following a
request by DEFRA to accelerate investments in water quality and storm
overflow discharges by 2025. The Group’s drainage management and
flood mitigation product range is well placed to provide solutions to
help water companies to meet these challenges. This comprises a full
underground drainage range together with the ability to design and supply
wet cast tanks and attenuation systems for improved water storage.
Management has continued to innovate to develop its products and
solutions and following around £25 million of investment, the dual
block plant at St Ives is now operational and able to manufacture a new
range of innovative paving products using exclusive colour blending
technology, which creates a granite appearance. The products are
being launched in a wide range of colours and finishes that have a
significantly lower carbon footprint than imported products. Viridian
Solar has introduced a new range of more powerful solar panels, EV
chargers and inverters that have helped to underpin revenue growth
alongside launching ArcBox, an award‑winning fire safety enclosure and
mounting bracket for use with pitched and flat roof solar systems.
The Group’s product innovation is further underpinned by developments
of products that have a lower embodied carbon: utilising cement
replacement and carbon sequestration techniques. The Group was the
first pre‑cast concrete manufacturer in the UK to adopt CarbonCure
technologies’ carbon mineralisation technology that uses waste CO2
from other industrial processes to accelerate the carbonation of
concrete, effectively reducing the embodied carbon.
In addition, the Group is focused on opportunities to improve the efficiency
of its operations and, building on the existing relationship between Marley
and Wincanton, it announced the outsourcing of its logistics function
to Wincanton in January 2024. The transition will take place during the
first half of 2024 and will see up to 300 Marshalls employees joining
Wincanton. This outsourcing is expected to support the Group’s drive
for continuous improvement for its customers and to deliver operating
efficiencies. Placing this important function in the hands of specialists
will enable the Group to take advantage of their programme to invest in
diesel-alternative fuel options, contributing to its sustainability goals.
Management continues to focus on executing the digital strategy, which
aims to provide an end-to-end digital offering and to pioneer digital standards
for the industry. This includes shifting transactions onto electronic trading
including its ordering app, EDI and dropship. Dropship is being used to extend
the availability of product ranges to customers across the board. The Group
successfully completed the disposal of its former Belgian subsidiary in April
2023, which leaves the Group focused on the UK construction market.
A recovery in the UK construction sector, a focus on attractive market
segments and continued innovation are expected to drive future volume growth
and the Group is well positioned with its market leading brands, products and
sustainable solutions for relative outperformance in the medium-term
Health and safety
The Group continues to operate in an environment where safety
and people are a key priority though the use of strong governance
procedures. During 2023, we have finalised the integration of the health
and safety functions of Marshalls and Marley, and we now have direct
reporting lines through to the Group SHE Director. The Group has also
implemented a new digital compliance tool which enables us to better
manage our incident reporting and the related corrective actions, and
to provide clarity and insights on trends. Our key measure of health
and safety performance is the “lost time injury frequency rate” and the
result for 2023 was an improvement on each of the last three years.
Matt Pullen
Chief Executive
18 March 2024
Marshalls plc | Annual Report and Accounts 2023
13
Strategic Report Chief Executive’s Q&A
Martyn Coffey
Former Chief Executive
Matt Pullen
Chief Executive
Q&A with Martyn Coffey (former Chief Executive)
and Matt Pullen (Chief Executive)
Q1
Q2
What actions has the business taken
to respond to challenging market
conditions in 2023?
The challenging market conditions necessitated decisive action
to improve agility, reduce capacity, take cost out of the business,
and managing cash. We closed a factory, mothballed lines at other
facilities and reduced shifts in order to reduce capacity across the
manufacturing network. In addition, we have reorganised commercial
and support functions to simplify the business and improve efficiency.
Regrettably, these changes resulted in a reduction of approximately
330 roles that will deliver annualised net savings of around £11 million,
with around 40 per cent of the benefit being realised in 2023 and the
balance will flow in 2024. These changes were structured to allow
the Group to bring capacity back online without significant capital
investment when market demand recovers.
Leading Marshalls for ten years has
been the greatest privilege and pleasure
of my professional life. To have grown
the Company with its amazing people
to the position it is today, has been an
exciting and rewarding adventure.
Martyn Coffey
Former Chief Executive
14
Marshalls plc | Annual Report and Accounts 2023
Whilst market conditions have been tough
in 2023, what gives you confidence that
markets will normalise over time?
The UK construction industry is cyclical and there have been lower
levels of activity during 2023, particularly in the Group’s key end markets
of new build housing and private housing repair, maintenance and
improvement (“RMI”). We believe that these end markets continue to
be attractive because there is a structural shortage of housing that
will require significantly more new houses to be built to meet market
demand when affordability normalises. In addition, the ageing nature of
the UK’s housing stock is expected to underpin growing levels of private
housing RMI activity when consumer confidence recovers.
Q3
Why do you believe that the business will
be well positioned when markets recover?
Whilst in the near term the markets remain challenging the medium-
term outlook for the UK construction market and the Group is positive
with clear structural growth drivers and attractive long-term market
growth opportunities, where our strong and more diversified portfolio
of market leading brands, products, and sustainable solutions is
increasingly relevant to the challenges of climate change and creating a
more sustainable built environment. The Group has retained significant
capacity in our manufacturing network to supply materially higher
volumes than 2023 and coupled with improved operational efficiency
and leverage the Group is well positioned for relative outperformance
as markets recover.
Marshalls is a business with a great
heritage, strong reputation and market
leadership position in the sector. I feel
privileged to have the opportunity to
build on that heritage and on Martyn’s
significant achievements.
Matt Pullen
Chief Executive
Q7
Has Marley now been fully integrated
into the enlarged Group?
Marley was acquired in April 2022, and we have progressively integrated
the business into the Group. Responsibility for operations was transferred
to the Group’s Chief Operating Officer in 2022 and all related support
functions were integrated into the Marshalls framework. In 2023
the Group’s commercial functions have been consolidated under
the leadership of the former Marley commercial director and we are
leveraging the benefits of Marley’s outstanding commercial strategy
for the Marshalls businesses.
Q8
What progress has been made integrating
Marley into your net zero science-based targets?
Last year, we outlined our plans for incorporating Marley into our
climate strategy. We began in early 2023 by working with the Carbon
Trust to undertake a re‑baselining exercise and recalculating Marshalls’
overall footprint. This included Marley and from this work, we have been
able to revise our carbon reduction targets. These targets are for our
own Scope 1 and 2 emissions as well as supplier Scope 3 emissions,
and include a revised net zero target for the Marshalls Group. The work
is now complete and our targets have been submitted to the SBTi
for validation.
Q4
How is the Group’s sustainability strategy
embedded in the overall strategic priorities?
Marshalls has been a sector‑leader in sustainability for over 20 years.
Our goal is to continue on this journey and unlock commercial value
from our leadership. We aim to do this through our sustainability
strategy which is fully aligned to our goal of being the UK’s leading
manufacturer of sustainable solutions for the built environment. This
is further supported by our purpose of creating better places and
our core pillars: Better Product, Better Workplace and Better World.
Under the leadership of Simon Bourne, our Chief Operating Officer,
our sustainability agenda is underpinned by an updated governance
structure which includes the creation of an ESG Committee at Board
level to provide oversight.
Q5
What is the scale of the opportunity for
solar PV and why do you have confidence
in the Group’s ability to capture a significant
share of it?
The demand for roof-integrated solar solutions is expected to
increase significantly in the next 12 to 24 months. Changes to building
regulations (Part L) on energy efficiency took effect in mid‑2023 and
represent first part of plan to improve the energy efficiency of new
homes. Roof-integrated solar is being adopted by housebuilders of
part of their solution to improve energy efficiency.
The Group’s solar business, Viridian Solar with its innovative patented
design, is the market leader and is expected to deliver strong profitable
growth as a result. The second part of the plan aims to mandate
low carbon heating and world‑leading energy efficiency through the
Future Homes Standard, and this could present further opportunities
for growth. The consultation on these changes is expected to
conclude in 2024.
Additionally, the government’s Social Housing Decarbonisation Fund
is driving the low energy refurbishment of homes by local authorities
and social landlords. A requirement of the funding is a switch to electric
heating coupled to a reduction in energy bills for residents and solar
PV is incorporated into many of the successful schemes. With a strong
position in the social housing sector, Marley is securing solar PV as part
of its roof system for this RMI work.
Q6
When do you expect net debt to reduce
to around one times EBITDA?
We have made good progress in reducing pre-IFRS 16 net debt by
£17.8 million during 2023 in line reflecting the prioritisation that it has
in our capital allocation policy. This has been delivered through strong
management of cash and facilitated by the cash generative nature of
the Group’s businesses. We expect the Group to continue generating
cash and that net debt will reduce to around one times EBITDA by
the end of 2025, although this will be dependent on the pace of
market recovery.
Marshalls plc | Annual Report and Accounts 2023
15
Strategic Report Our Markets
Industry forecasts point towards a
subdued construction market in 2024,
with growth returning in the second half
of the year and a positive medium-term
outlook
Overview
A core element of the Group’s strategy over recent years has been
to broaden its product range, building a strong brand presence
in landscaping, roofing, water management and bricks & walling
through acquisition and organic growth. This has led to the
diversification of sector exposure across new build housing,
infrastructure, commercial projects and refurbishment in both the
private and public housing sectors. The strategy has also enabled
the Group’s portfolio to provide solutions at all levels of the build
programme from groundworks to the roof. We estimate that
around 40 per cent of the enlarged Group’s revenues are derived
from the new build housing sector, with another 40 per cent
from commercial & infrastructure end markets. The remaining
revenues of around 20 per cent are focused on private housing
RMI and, importantly, this is split between sales to the domestic
landscaping market, and roof refurbishment, which is far less
discretionary as a purchase decision. The strategy of sector
diversification provides an element of protection against market
sector fluctuations, and enables the Group to capitalise on
sector opportunities presented by demand growth, investment
or regulations.
Macro‑economic pressures and uncertainty have continued to
impact the construction industry in 2023, with significant cost
inflation in the UK economy and progressive base rate increases
by the Bank of England, leading to falling real wages, which
has put unprecedented pressure on household budgets and
resulted in reduced demand in the housing sector. The impacts
have been exaggerated by economic uncertainties and weak
consumer confidence, which also saw reduced investment in the
non-housing and infrastructure sectors although these remained
more resilient in 2023. The CPA estimates that the output of the
UK construction industry contracted by 6.4 per cent in 2023, with
reductions of 17 per cent and 11 per cent in new build housing
and private housing RMI, respectively, which are key end markets
for the Group. These factors resulted in a reduction in demand
for the Group’s products, which had a significant impact on
its profitability.
The expectation is that many of these factors will begin to reverse
during 2024, and that the UK economy, together with general
construction activity will start to recover in the second half of the
year. This is reflected in the Construction Products Association’s
Winter forecast, which anticipates a contraction in construction
output of 2.1 per cent in 2024, with a flat outlook for infrastructure
and further contraction in housing. The CPA forecast that the
construction industry will grow by 2.0 per cent in 2025 as the
macro-economic environment improves during the course of
next year.
16
Marshalls plc | Annual Report and Accounts 2023
CPA total construction output forecast
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-6.4%
2017
2018
2019
2020
2021
2022
2023
2024
2025
-14.3%
Total Construction Output Growth Total Construction Output
New build housing
The new build housing sector experienced decline of 19 per
cent in 2023 and the CPA’s Winter forecast estimates output
in the sector to continue to decline by 5 per cent in 2024, with
an improving H2. This forecast is driven by an expectation that
interest rates will remain high until H2 2024 with continued house
price deflation and the current low level of reservation rates and
forward sales among the private housebuilders.
However, the Group has experienced pockets of out‑performance
in the sector and expects these to continue into 2024 and beyond.
Demand for lower carbon concrete bricks has seen Marshalls’
bricks grow share within new build housing.
Changes to the Building Regulations on energy efficiency, which
took effect after a period of grace in mid-2023, is resulting in a
significant growth in the construction of roof‑integrated solar
roofs. The Group’s Marley branded roof system, including the
market leading solar offer, continues to grow despite the weaker
sector conditions.
CPA total new build housing output forecast
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4.1%
-4.8%
‑20.7%
‑17.1%
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total New Housing Output Growth Total New Housing Output
Private housing RMI
Private housing RMI activity has continued to contract throughout
2023, having experienced an historical post‑COVID peak in
2021/22. Following an 11 per cent decline in 2023, with basic
repairs and maintenance remaining stable and discretionary
improvements declining more steeply, the CPA is forecasting
this sector to experience a further fall of 4 per cent in 2024
off the back of subdued property transactions and household
disposable incomes.
In landscaping, installer order books in February 2024 increased to
18.8 weeks compared to 14.7 weeks in February 2023. However,
there is reduced installation capacity compared to prior years
and DIY activity levels have contracted markedly compared to the
elevated activity levels in 2021.
Activity on energy efficient retrofit projects is expected to remain
strong, and this includes solar photovoltaic work and, particularly,
a growing share of roof-integrated solar solutions such as those in
the Marley roofing product portfolio.
Commercial and infrastructure
The commercial and infrastructure market (incorporating other
new work and public housing RMI) were better performing sectors
in 2023 with a composite forecast of 0.5 per cent output decline.
Output in these end markets is forecast to contract in 2024 by
0.6 per cent with weakness in commercial and infrastructure
partially offset by continued growth in public housing RMI
output. This is a particularly strong sector for the Marley roofing
division, which supplies full roof systems to planned maintenance
re‑roofing schemes across the UK and, increasingly, includes a
solar roof system.
The Group also envisages opportunities from key infrastructure
investment programmes from water companies and the
Highways Agency that have a more direct impact on water
management and drainage product demand.
CPA private housing RM&I output
CPA composite commercial and infrastructure
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3.0%
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‑11.1%
‑11.0%
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9.1%
3.3% -0.5% ‑0.6% 1.0%
‑12.3%
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2024
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2017
2018
2019
2020
2021
2022
2023
2024
2025
Total New Housing Output Growth Total New Housing Output
Total New Housing Output Growth Total New Housing Output
Longer-term structural growth drivers
The Board believes that the UK construction market continues to have attractive medium and long-term growth potential driven by the
structural deficit in new housebuilding, an ageing housing stock that requires increased repair and maintenance and the need to continue
improving UK infrastructure. The Group’s strategy is underpinned by our strong market positions, established brands and focused investment
plans to drive ongoing operational improvement. Notwithstanding the undoubted challenges that we will face in the short term, the Board
remains confident that the Group is well placed to deliver profitable long‑term growth when market conditions improve.
Historical Government statistics – dwellings completed MAT – output significantly lower than government targets
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Private Enterprise MAT Housing Association MAT Local Authorities MAT — Target ’07 — Target ’17 — NHF ’18
Marshalls plc | Annual Report and Accounts 2023
17
350,000 300,000 250,000 200,000 150,000 100,000 50,000 —Strategic Report
Summary of Group Performance
The Group’s financial performance
was adversely impacted by weak
market demand
The Group’s adjusted results are set out in the following table.
Landscape Products
Building Products
Roofing Products
Central costs
Adjusted operating profit
2023
£’m
21.3
12.2
44.9
(7.7)
70.7
2022
£’m
45.3
26.8
34.4
(5.4)
101.1
Change
%
(53%)
(54%)
31%
(43%)
(30%)
Revenue
Adjusted net operating costs
Adjusted operating profit
Adjusting financial expenses
Adjusted profit before taxation
Adjusted taxation
Adjusted profit after taxation
Adjusted EPS – pence
Proposed full year dividend – pence
Adjusted operating profit
Adjusting items
Operating profit
Finance costs
Profit before taxation
EPS – pence
2023
£’m
2022
£’m
Change
%
671.2
(600.5)
719.4
(618.3)
(7%)
(3%)
(30%)
63%
(41%)
(35%)
(43%)
(47%)
(47%)
101.1
(10.7)
90.4
(17.1)
73.3
31.3
15.6
2022
£’m
Change
%
101.1
(53.2)
47.9
(10.7)
(30%)
(44%)
(14%)
76%
70.7
(17.4)
53.3
(11.2)
42.1
16.7
8.3
2023
£’m
70.7
(29.7)
41.0
(18.8)
22.2
37.2
(40%)
7.4p
11.4p
(35%)
Group revenue for the year ended December 2023 was £671.2 million
(2022: £719.4 million) which is seven per cent lower than 2022 and
includes the contribution of four additional months of revenue from
Marley. On a like‑for‑like basis, Group revenue contracted by 13 per cent,
with lower revenues in all reporting segments. The strongest relative
performance was in Roofing Products, demonstrating the additional
resilience that the Marley acquisition has brought to the Group due to
its exposure to less discretionary RMI activity.
Group adjusted operating profit was £70.7 million, which is 30 per cent
lower than 2022 reflecting the benefit of an additional four‑month
contribution from Marley offset by reduction in profitability in the
Group’s other reporting segments. Group adjusted operating margin
reduced by 3.6 percentage points to 10.5 per cent (2022: 14.1 per cent)
and reflects the benefit of Marley’s structurally higher margins, offset
by margin compression due to weaker volumes and the consequent
impact on operational leverage. Management took decisive action
to improve our agility, reduce capacity and lower Group overheads,
with a strong focus on cash management. This included the closure
or mothballing of factories, a reduction in shifts and capacity in other
facilities, and a reorganisation of commercial and support functions.
These changes resulted in a reduction of approximately 330 roles
and will deliver annualised net savings of around £11 million, with
around 40 per cent of this benefit being delivered in 2023. The Board
reprioritised its capital expenditure plans, executed a programme
of surplus land disposals that generated around £7 million, and has
focused on efficient working capital management including reducing
inventories by around £16 million in the second half of the year, in order
to reduce the Group’s net debt.
18
Marshalls plc | Annual Report and Accounts 2023
The statutory operating profit is stated after adjusting items totalling
£29.7 million as summarised in the following table, further details are
set out at Note 4.
Amortisation of intangible assets arising on acquisitions
Impairment charges, restructuring and similar costs
Contingent consideration
Disposal of Marshalls NV
Transaction related costs
Fair value adjustment to inventory
Adjusting items within operating profit
Adjusting items within financial expenses
Adjusting items within profit before taxation
2023
£’m
10.4
18.3
1.6
(0.6)
—
—
29.7
1.4
31.1
2022
£’m
7.3
13.0
3.9
10.2
14.9
3.9
53.2
—
53.2
Adjusting items in 2023 principally comprise the amortisation of
intangible assets arising on the acquisition of subsidiary undertakings
of £10.4 million (2022: £7.3 million) and impairment charges,
restructuring and similar costs of £18.3 million (2022: £13.0 million).
The restructuring costs comprise redundancy costs, impairment
charges and other expenses arising from the decisive action taken
during the year in response to the challenging market conditions and
comprises £8.3 million of non-cash charges and £10.0 million of cash
costs. The contingent consideration charge reflects an increase in the
expected payments in respect of the acquisition of Viridian Solar based
on the strong performance of that business. The disposal of Marshalls
NV on 13 April 2023 resulted in a profit on disposal of £0.6 million.
Details of the adjusting items arising in 2022 are set out at Note 4.
Net financial expenses were £18.8 million (2022: £10.7 million) and
£17.4 million after adding back adjusting items (2022: £10.7 million).
These expenses comprised financing costs associated with the
Group’s bank borrowings of £14.7 million (2022: £8.2 million), IFRS 16
lease interest of £2.5 million (2022: £2.4 million) and a pension related
expense of £1.6 million (2022: £0.1 million). The pensions related
expense includes a non-cash, one-off accounting charge of £1.4 million
arising from the Board’s decision to augment the benefits of certain
pensioners who would have otherwise suffered hardship due to a
reduction in pension payments following a review to correct historical
benefit issues (see Note 4 for further details). The increase in financial
expenses after adding back adjusting items in the period reflects the
impact of a full year of the additional debt financing used to part‑fund
the acquisition of Marley and the increase in base rates, partially offset
by a reduction in net debt.
Adjusted profit before tax was £53.3 million (2022: £90.4 million).
Statutory profit before tax was £31.1 million lower than the adjusted
result at £22.2 million (2022: £37.2 million), reflecting the impact of the
adjusting items. The adjusted effective tax rate was 21 per cent (2022:
18.9 per cent), which is slightly lower than the headline corporation
tax rate for 2023. On a reported basis, the effective tax rate is 17.1 per
cent. Adjusted earnings per share was 16.7 pence (2022: 31.3 pence),
which is a 47 per cent reduction year on year reflecting the weaker
profitability and the increase in the headline rate of corporation tax.
Reported earnings per share was 7.4 pence (2022: 11.4 pence), which
is lower than the adjusted number due to the adjusting items and their
tax effect.
Strategic Report
Segmental Review
Landscape
Products
Review of the year
Marshalls Landscape Products comprises the
Group’s Commercial and Domestic landscape
business, Landscape Protection and the
international businesses. The segment delivered
revenue of £321.5 million (2022: £394.1 million),
which represents a contraction of 18 per cent
compared to 2022. On a like‑for‑like basis,
adjusting for the disposal of Marshalls NV
which was sold in April 2023, revenue
contracted by 16 per cent.
Revenue
Segment
operating profit
Segment
operating
margin %
2023
£’m
2022
£’m
Change
%
321.5
394.1
(18%)
21.3
45.3
(53%)
6.6%
11.5% (4.9 ppts)
This reporting segment derives around
45 per cent of its revenues from commercial
& infrastructure, 30 per cent from new build
housing and 25 per cent from private housing
RMI. Whilst commercial & infrastructure
remains robust, the business has been
impacted by lower new build housing and
continued weakness in private housing RMI
activity driven by the discretionary nature of the
segment’s domestic products, weak consumer
confidence, product price inflation and lower
real incomes. These factors resulted in UK
domestic revenues being down by around 25
per cent year on year, which is a continuation
of the trends reported since the second quarter
of 2022. Revenues of commercially focused
products were more robust with a contraction
of 10 per cent where a robust commercial
& infrastructure performance was offset by
weakness in new build housing.
Coverage of construction
end markets
25%
30%
45%
New Build Housing
Commercial & Infrastructure
Private Housing RMI
Segment operating profit reduced by
£24.0 million to £21.3 million. This was
driven by the combined effect of lower
volumes on gross profit, weaker realisation
of price increases in the second half of the
year which meant input cost increases were
not fully recovered, and a reduction in the
operational efficiency of the manufacturing
network due to reduced production volumes.
In addition, margins were adversely impacted
by a reduction in the market price of Indian
sandstone in the first half of the year and a
tougher pricing environment in the second
half. Management took further decisive
action to reduce capacity to align to market
demand, simplify operating structures and
reduce the cost base. Taken together, these
actions reduced net operating costs by around
£7.6 million on an annualised basis, of which
around £3.2 million was realised in 2023. The
costs associated with this action have been
presented as an adjusting item (see Note 4).
The fall in volumes together with the impact of
weaker margins resulted in segment operating
margins reducing by 4.9 ppts to 6.6 ppts
for the year.
Marshalls plc | Annual Report and Accounts 2023
19
Strategic Report Segmental Review continued
Building
Products
Review of the year
Marshalls Building Products comprises
the Group’s Civils and Drainage, Bricks and
Masonry, Mortars and Screeds and Aggregates
businesses. Revenue in this reporting segment
reduced by 12 per cent year on year to
£170.1 million.
Coverage of construction
end markets
10%
2023
£’m
2022
£’m
Change
%
30%
60%
New Build Housing
Commercial & Infrastructure
Private Housing RMI
Revenue
Segment
operating profit
Segment
operating
margin %
170.1
193.1
(12%)
12.2
26.8
(54%)
7.2%
13.9% (6.7 ppts)
This reporting segment generates around
60 per cent of its revenues from new build
housing, around 30 per cent from commercial
& infrastructure, with the balance being derived
from private housing RMI. The exposure of this
reporting segment to new build housing had an
impact on its performance during the year. All
business units within this reporting segment
were affected by weak demand during the year,
with the slowdown in activity impacting Bricks
and Masonry and Mortars and Screeds in the
second half of the year as new build housing
volumes progressively slowed.
Segment operating profit contracted by
£14.6 million to £12.2 million. This was driven
by the impact of lower volumes on both
gross margins and the operational efficiency
of the factories and quarries due to reduced
production volumes. In addition, in the second
half of the year management took action to
reduce manufacturing output further than
sales volumes in order to reduce inventory
levels, which adversely affected operational
recoveries and profitability. Management also
took action to reduce manufacturing capacity
to align it with lower market activity levels
by mothballing capacity and reducing shifts.
These actions removed around £4 million
from the cost base, of which £1.1 million
was realised in 2023. The restructuring
costs associated with these actions has
been accounted for as an adjusting item
(see Note 4). Segment operating margin
reduced by 6.7 ppts to 7.2 per cent reflecting
the impact of lower volumes on profitability.
20
Marshalls plc | Annual Report and Accounts 2023
Market sector opportunities –
water management products
Management expects growing demand for
the Group’s water management products
and solutions. This is underpinned by water
utility companies’ proposals to significantly
increase their expenditure on water and
sewerage infrastructure projects, to £96
billion for 2025 to 2030, to modernise
infrastructure and reduce system leakage.
In the shorter term, additional investment
of £1.6 billion has been approved following
the request from DEFRA to accelerate
investments in water quality and storm
overflow discharges between now and
2025. The Group’s drainage management
and flood mitigation product range is well
placed to provide solutions to help water
companies meet these challenges. This
comprises a full underground drainage
range together with the ability to design
and supply wet cast tanks and attenuation
systems for improved water storage.
Roofing
Products
Review of the year
Marley Roofing Products comprises pitched
roofing products and accessories and roof
integrated solar. Revenue for the reporting
segment increased by £47.4 million including the
four additional months that were consolidated
in 2023, however, on a like‑for‑like basis Marley’s
revenues were 9 per cent lower than 2022.
2023
£’m
2022
£’m
Change
%
179.6
132.2
44.9
34.4
36
31
Revenue
Segment
operating profit
Segment
operating
margin %
Coverage of construction
end markets
20%
40%
40%
25.0%
26.0% (1.0 ppts)
New Build Housing
Commercial & Infrastructure
Private Housing RMI
Approximately 40 per cent of Marley’s revenues
are generated from new build housing and
40 per cent from commercial & infrastructure
(including public housing RMI) with the balance
of around 20 per cent from private housing
RMI. The challenging market backdrop resulted
in a reduction in like-for-like revenues of 9 per
cent, with weaker volumes of traditional roofing
products partially offset by revenue growth
from Viridian Solar, which benefited from the
trend towards energy efficient solutions and
the start of the impact of changes to building
regulations in England and Wales. The rate of
contraction in revenues was more modest than
the Group’s other reporting segments due to
the less discretionary nature of the RMI activity
that uses its products.
Segment operating profit in the period was
£44.9 million, which was £10.5 million higher
than the £33.4 million included in the Group
results in 2022. However, this represents a
reduction of 12 per cent compared to 2022 on a
like‑for‑like basis. This decline in profitability was
driven by weaker volumes of traditional roofing
products which impacted both gross profits and
operational efficiency, partially offset by growing
profitability from Viridian Solar. In the second
half of the year, management took action to
reduce costs and capacity by mothballing certain
assets to manage working capital levels. The
impact of this action has been accounted for
as an adjusting item (see Note 4). Segment
operating margin remained strong at 25 per
cent, representing a year on year reduction
of 1.0 ppts.
Market sector opportunities –
roof integrated solar
The demand for roof-integrated solar
solutions is expected to increase
significantly in the next 12 to 24 months.
Changes to building regulations (Part L)
on energy efficiency took effect in mid‑
2023 and represent the first part of the
plan to improve the energy efficiency of
new homes. Roof-integrated solar is being
adopted by housebuilders as part of their
solution to improve energy efficiency.
The Group’s solar business, Viridian Solar,
with its innovative patented design, is the
market leader and is expected to deliver
strong profitable growth as a result. The
second part of the plan aims to mandate
low carbon heating and world-leading
energy efficiency through the Future Homes
Standard, and this could present further
opportunities for growth. The consultation
on these changes is expected to conclude in
2024. Additionally, the government’s Social
Housing Decarbonisation Fund is driving
the low energy refurbishment of homes
by local authorities and social landlords.
A requirement of the funding is a switch to
electric heating coupled with a reduction
in energy bills for residents, and solar PV is
incorporated into many of the successful
schemes. With a strong position in the social
housing sector, Marley is securing solar PV
as part of its roof system for this RMI work.
Marshalls plc | Annual Report and Accounts 2023
21
Strategic Report Our Strategy
Our strategic goal is to become
the UK’s leading manufacturer
of sustainable solutions for
the built environment
Group key strategic
objectives
Progress to date
Future focus
Obtain and deliver
Obtain and deliver
specification
specification
for our products and systems
for our products and systems
to grow revenue and profitability
to grow revenue and profitability
Easy
Easy
to work with
to work with
Secure specifications to create
demand for our products and systems
to optimise market share
• Building Products seeks to generate
Improve the customer experience by
simplifying process and touchpoints,
particularly through technology
• Shifting transactions to EDI, ordering apps
demand for its solutions through established
partnerships underpinned by design.
It also seeks to generate demand from
UK house builders
• Roofing Products leverages the breadth of
its products range to provide full roof system
specifications supported by a 15‑year
warranty. Viridian Solar provides site layout
and solar design services for house builders
• Landscape Products secures pull demand
from commercial specifiers at the contract
design phase and domestic specifications
through the Marshalls Register and
investment in visualisation software
and dropship
• Migrating Marshalls’ business systems to
the cloud whilst simplifying and digitising
processes to improve efficiency
• In roofing, a MyAccount digital portal allows
channel partners to view live quotes, orders,
delivery schedules, project lead times and
sales leads
• Rolling out visualisation software and paving
installer technology, so customers can
better visualise products in domestic and
commercial projects
We will continue to optimise our market
share in different product markets,
whilst growing our contribution margin.
To underpin our strategies, we have
developed business unit-specific plans,
that include market insight and
differentiated value propositions.
We are aiming to improve the customer
experience by simplifying processes and
touchpoints, particularly utilising digital
technologies. The programme will make
Marshalls easier to do business with by
removing complexity from purchase and
enquiry activity. This will be supported
by the work we are undertaking with
our products and solutions, providing
a competitive advantage in the market.
Links to corporate pillars
and The Marshalls Way
22
Marshalls plc | Annual Report and Accounts 2023
Six corporate pillars
Shareholder
value
Sustainable
profitability
Relationship
building
The Marshalls Way
Doing the right things, for the right
reasons, in the right way
ESG pillars
Organic
expansion
Brand
development
Effective capital
structure and
control framework
Better
Product
Better
Workplace
Better
World
Innovate
Innovate
and optimise products
and optimise products
and solutions
and solutions
Improve
Improve
our cost effectiveness, our
our cost effectiveness, our
efficiency and our flexibility
efficiency and our flexibility
Operate
Operate
in an environment where safety
in an environment where safety
and people are a key priority
and people are a key priority
New product development (“NPD”) to
improve our product mix and generate
competitive advantage through
innovation, with an emphasis on
reducing embodied carbon
• Commercialised ESG credentials –
environment performance declarations
available for c.80 per cent of Group’s
product range
To deliver cost base optimisation
and flexibility, maximise returns
from efficiency and strategic capital
expenditure and optimise investment
in working capital
• Restructuring removed an annualised
c.£11 million from the cost base
Options to build more flexibility in
labour under discussion
• Dual block plant will manufacture wide range
of innovative paving products with lower
carbon footprint than imported products
• Capacity reduced but capability exists to
increase shift patterns and recommission
assets as demand improves
• CarbonCure technology being used to
sequester carbon at a concrete brick
factory. Rollout of lower cement content
mix running to plan
• Viridian Solar has launched its most powerful
solar panel and ArcBox, an innovative fire
safety enclosure for solar roof systems
• Capital expenditure plans focus on,
efficiency capital expenditure and
maintaining existing capital base
• Working capital activity managed with
lower output in second half to reduce
inventory by around £16 million
We will continue to effectively manage
our NPD programmes, introducing
new and/or improved products and
solutions to market. Our focus will be
on customer-led innovation, tailored
specifically to each business. This will
be supported by simplification and
optimisation of our range to reduce
complexity, complementing our focus
on being “easy to do work with”.
We will continue to deliver cost
optimisation in our business, alongside
delivering a more flexible and agile
operation. This will give us further
leverage on our recoveries, and therefore
overall operational efficiency. To help
enable this, we will continue to invest
in the business, ensuring we focus on
maximum returns through efficiency
and strategic capital expenditure.
We will continue to ensure the work
environment is safe and foster a culture
and environment of diversity, equity,
respect, inclusion and engagement
• Clear roadmap for keeping colleagues safe
with focus on continuous improvement
• EVG provides strong channel for
engagement and feedback
• Group-wide employee engagement
surveys create priorities for further
improvement activities
• Group Code of Conduct refreshed
and being rolled out with training
• Continued investment in apprenticeships
and learning and development
Marshalls continues to foster a culture
and environment of diversity, equity,
respect and inclusion. During periods of
change, these values remain consistent.
Our people plans are driven through
EVG and Engagement Survey feedback;
this ensures the right balance between
both business and people needs. To
complement our people agenda, we have
robust “safety roadmaps”, aligned to
the Mineral Products Association’s high
impact themes. These drive not only
compliance, but improvement.
Marshalls plc | Annual Report and Accounts 2023
23
Strategic Report Strategic Objective: Innovate and optimise products and solutions
New product development
to enhance our
competitive advantage
Dual block plant
In 2021 we reported our intention to invest
around £25 million in a state of the art dual
block plant, the first of its kind in the UK. Two
years on and we are now producing a wide
range of value‑add products off the DBP line
at our facility in St Ives, Cambridgeshire.
Customer focus
The objective from the outset was clear,
we wanted to increase our customer choice,
drive range simplification and improve
product differentiation at a competitive price.
To achieve this objective, we set ourselves
a number of priorities that align with our
strategic pillars:
• Align our value added concrete paving
product offers across the business
• Rationalise and simplify ranges, to
maximise manufacturing efficiency
• Build core paving ranges that drive
specification and sales within the market
• Deliver customer choice and product
innovation for all key customer segments
• Drive sustainable product development
and solutions
Product summary
Between 2023 and 2025, we aim to launch
a variety of value-add paving SKUs, across
three product ranges, aimed at both residential
and commercial markets. There will be 18
new colours with six unique surface finishes
achieved through a combination of colour
blend technology, and in line secondary
processing equipment, to which the Group
has UK exclusivity.
Equipment design
The dual block plant is a more cost efficient
design for a number of reasons. We are able
to support, what is essentially two block
machines built side by side, from carefully
designed batching, packaging and curing
systems, significantly reducing our investment
costs. The line itself operates with reduced
labour profiles and runs at high speeds,
which delivers further efficiencies.
Flexible batching system
Our batching system is designed to meet the
challenges of mass production whilst being
flexible enough to batch small runs of bespoke
high value products. The system is capable
of holding a large variety of aggregates and
concrete mixes through a combination of
different size bins, silos and mixers to deliver
a diverse range of new products either with
enhanced aesthetics or reduced carbon
material technologies. The majority of the bulk
storage is self-contained and designed to have
minimal effect on the wider environment.
Colour blending system
The design incorporates two types of colour
blend systems to provide extensive colour
combinations. The first system is designed
with a series of hoppers to each hold a
different coloured concrete mix. These mixes
are then fed into the block machine in varying
quantities, positions and sequences to create
a multitude of random or repeating blends,
whether mimicking subtle natural aesthetics
or trend inspired contrasts.
The second system is a patented technology
that Marshalls is able to use in the UK on
an exclusive basis, which disperses three
different concrete mixes in multiple layers
across the face of the paving. This creates a
natural granite appearance but with the added
advantage of shorter delivery lead times
and a lower carbon footprint than imported
natural products.
Secondary processing
Secondary processing can take many forms;
texturing, polishing, distressing, scoring to
alter the aesthetic and function of the paving.
These finishes are normally achieved with
multiple, individual secondary processing
machines. Working closely with a specialist
secondary processing machine supplier, we
have overcome these obstacles by designing
a single, in line, unique secondary processing
machine which is capable of producing a
variety of traditional and new secondary
processing finishes with minimal changeovers.
Sustainable future
In order to align with our sustainability
goals and specifically, the decarbonisation
of concrete, it is important that the design
of the DBP takes advantage of any new
technologies and opportunities in the future.
We have future proofed the design to allow
“bolt on” technologies, allowing us to build on
our commitment to reducing carbon, either
through the manufacturing process or the
products we produce. We have also installed
a solar array system that will contribute over
17 per cent of the site’s current usage from
a renewable source, which will reduce costs
and emissions.
Read more about our Innovation
strategy on pages 24 and 25
24
Marshalls plc | Annual Report and Accounts 2023
Product range key
Permeable
Steps
Kerbs
Renewable energy
Recyclable
MaxiMix
New Products
Modal X
Modal X is a premium, contemporary range
offering a mix of different paving formats.
Modal X Core is a “made to stock” offer
and Modal X Pro is a “made to order” offer.
• 15 versatile plan sizes
• Eight colours and two finishes
• Inspired by high‑quality natural granite
• Higher levels of design flexibility
• Manufactured in Britain using Marshalls’
Stoneface
Like Modal X, Stoneface is also a premium,
contemporary range that offers a mix of
different paving formats.
• 15 versatile plan sizes
• Six colours and three finishes
• Inspired by high‑quality natural sandstones
• Higher levels of design flexibility
• Manufactured in Britain using Marshalls’
maxi mix concrete technology
maxi mix concrete technology
• Opportunity for C3 and Priora 2 options
• Complementary ancillaries coming soon
• Opportunity for C3 and Priora 2 options
• Complementary ancillaries coming soon
Lunar
Lunar is an innovative, contemporary addition
to our established concrete paving portfolio,
available in a carefully curated range of four
colours and five sizes.
• Manufactured using Marshalls’ MaxiMix
Technology for looks that last
• Unique aesthetic and colour palette
creates endless design opportunities
• The chamfered edge ensures product
integrity during installation process
and minimal waste
• Cost effective solution without
compromising on function or aesthetic
Case study
Viridian Solar
The Viridian Solar business has a strong
pedigree of new product development with
94 per cent of its 2023 sales being made
up of products introduced within the last
five years.
New products launched in 2023 included a
new addition to the range of Clearline fusion
roof-integrated photovoltaic panels. The new
M10 model has a panel power of 405Wp, and
comes with a complete set of new roofing
kits to suit the new format. The M10 has
quickly grown to represent more than 30
per cent of the business’ panel sales by the
end of the year. In late 2023 the Company
also added a family of solar inverters to
its product range. These electrical devices
convert the DC electricity produced by solar
panels into AC ready for use in the building or
for export to the grid. Housebuilders clearly
see value in being able to specify the entire
solar system from a single supplier and
several have already signed group supply
agreements that include the new inverter
alongside Clearline fusion solar panels.
In 2022 Viridian Solar unveiled an invention
that created an entirely new product
category for the solar industry. The ArcBox
solar connector enclosure is a snap‑fit
safety product that helps prevent solar
electrical faults turning into a serious fire by
containing an electrical arc inside and away
from surrounding combustible materials.
In 2023, new mounting brackets were
launched to enable its use with popular flat
roof and pitched roof mounting rails, and
sales have continued to grow. Revenue on
this product line increased by more than
450 per cent compared to prior year. This
multi-award winning product is winning
customers across the entire solar industry,
for installations on both commercial and
domestic buildings.
Marshalls plc | Annual Report and Accounts 2023
25
Strategic Report Key Performance Indicators
Measuring our performance
The Group’s KPIs monitor progress towards the achievement of our objectives.
Revenue (£’m)
£671.2m
(down 7%)
4
.
9
1
7
2
.
1
7
6
3
.
9
8
5
1
2
0
2
2
2
0
2
3
2
0
2
8
.
1
4
5
9
1
0
2
5
.
9
6
4
0
2
0
2
Why is this KPI important?
Delivering sustainable growth is key
to the Group’s strategy. The aim is
to outperform the market and grow
market share.
Performance
Market conditions have been
challenging during 2023, which has
resulted in a 13 per cent reduction
in movement on a like‑for‑like basis.
Adjusted profit
before tax (£’m)
£53.3m
(down 41%)
Statutory PBT (£’m)
£22.2m
4
.
0
9
3
.
3
7
.
7
3
2
0
2
0
2
1
2
0
2
2
2
0
2
3
.
3
5
3
2
0
2
1
.
1
7
9
1
0
2
Adjusted EPS
16.7 pence
Statutory EPS
7.4 pence
0
.
0
3
9
1
0
2
3
.
1
3
2
.
9
2
2
.
9
0
2
0
2
1
2
0
2
2
2
0
2
7
.
6
1
3
2
0
2
Adjusted return on capital
employed (“ROCE”) (%)
8.4%
4
.
1
2
9
1
0
2
6
.
0
2
1
2
0
2
2
.
8
0
2
0
2
3
.
3
1
2
2
0
2
4
.
8
3
2
0
2
Why is this KPI important?
Sustainable improvement in
profitability is a strategic priority.
Why is this KPI important?
A sustainable improvement in
earnings per share (EPS) is a
strategic priority.
Why is this KPI important?
ROCE is an important indicator
of sustainable shareholder value.
Performance
Profit adversely impacted by weak
market demand and lower volumes.
Performance
EPS had been adversely impacted
by weaker profitability and an increase
in the UK government tax rate.
Performance
Adjusted ROCE for 2023 is 8.4
per cent (2022: 13.3 per cent) due
to weaker profitability. ROCE is
defined as EBITA/shareholders’
funds plus net debt.
Links to corporate pillars
Links to corporate pillars
Links to corporate pillars
Links to corporate pillars
Principal risks
• Security of raw material supply /
raw material and labour shortages
Principal risks
• Cyber security risks
• Security of raw material supply /
Principal risks
• Cyber security risks
• Security of raw material supply /
Principal risks
• Threat from new technologies
and business models
• Macro‑economic and political
• Threat from new technologies
and business models
• Competitor activity
Risk mitigation
• Close monitoring of trends
and lead indicators
• Diversity of business
• Customer centricity
• Digital strategy
raw material and labour shortages
raw material and labour shortages
• Macro‑economic and political
• Long term impacts of
climate change
• Long term impacts of
climate change
• Macro‑economic and political
• Competitor activity
• Macro‑economic and political
• Competitor activity
Risk mitigation
• Innovation and new
product development
• Focus on cyber
security controls
• Proactive supply
chain management
Risk mitigation
• Innovation and new
product development
• Focus on cyber security controls
• Proactive supply
chain management
Risk mitigation
• Digital transformation
• Operational excellence
• Flexible capital structure
• Capital allocation policy
• Active working capital
management
Links to remuneration
Links to remuneration
Links to remuneration
Links to remuneration
AI
LTIP
AI
LTIP
AI
LTIP
AI
LTIP
Stakeholder linkage
• Customers
• Suppliers
• Employees
• Communities
Stakeholder linkage
• Shareholders
• Employees
Stakeholder linkage
• Shareholders
• Government
Stakeholder linkage
• Shareholders
• Employees
26
Marshalls plc | Annual Report and Accounts 2023
Links to strategic corporate objectives
Shareholder value
Sustainable profitability
Relationship building
Organic expansion
Brand development
Effective capital structure and control framework
Links to remuneration
LTIP
Long‑term Incentive Plan
AI
Annual incentive award
Read more about our
strategy on pages 22 to 25
Pre-IFRS 16
net debt (£’m)
£172.9m
7
.
0
9
1
9
.
2
7
1
9
.
6
2
0
2
0
2
0
.
0
1
9
1
0
2
0
1
2
0
2
2
2
0
2
3
2
0
2
Why is this KPI important?
Marshalls continues to support
a prudent capital structure, and is
focused on reducing net debt.
Performance
Pre‑IFRS 16 net debt was
£172.9 million, a reduction of
£17.8 million reflecting cash
generation and management focus
on cash management. Gearing
remains low at 33.9 per cent.
Adjusted operating
cash flow
conversion (“OCF”)
106%
OCF:EBITDA (proforma rolling
annual basis)
6
9
9
1
0
2
9
4
0
2
0
2
6
0
1
1
9
0
8
1
2
0
2
2
2
0
2
3
2
0
2
6
Why is this KPI important?
The conversion of profit to cash
is key to our growth strategy
and for delivering increased
shareholder value.
Performance
Adjusted operating cash flow
was 106 per cent of EBITDA,
on an annual basis.
Climate change
(excluding Marley)
10%
decrease in absolute carbon
emissions in 2023
Health and safety (lost
time incident frequency
rate) (excluding Marley)
0.78
compared with the target
benchmark of 2.28
7
7
5
2
5
,
9
1
0
2
9
6
9
7
3
,
0
2
0
2
2
7
5
7
3
,
1
2
0
2
5
9
2
6
3
,
2
2
0
2
5
2
6
2
3
,
3
2
0
2
8
6
.
2
1
2
0
2
9
2
.
2
9
1
0
2
3
7
.
1
0
2
0
2
2
7
.
1
2
2
0
2
8
7
0
.
3
2
0
2
Why is this KPI important?
The Group’s continued commitment
to our sustainability strategy is that
our annual carbon reduction targets
must be achieved.
Why is this KPI important?
Marshalls is committed to
meeting the highest health
and safety standards.
Performance
Our absolute Scope 1 and 2
emissions have decreased by
10% in 2023.
Both our absolute and relative
emissions remain well within our
current science-based target pathway.
Performance
In 2023 the lost time incident
frequency rate per million hours
worked was 0.78 (target <2.10
average over three years).
Links to corporate pillars
Links to corporate pillars
Links to corporate pillars
Links to corporate pillars
Principal risks
• Macro‑economic and political
• Security of raw material supply /
raw material and labour shortages
Principal risks
• Macro‑economic and political
• Security of raw material supply /
raw material and labour shortage
Principal risks
• Long term impacts of
climate change
Principal risks
• Health and safety
• People risks
Risk mitigation
• Close monitoring of trends
and lead indicators
• Diversity of business
• Customer centricity
• Digital strategy
• Efficient cash and
capital management
Risk mitigation
• Excellent customer
service and quality
• Customer relationships
and brand value
• Working capital management
Risk mitigation
• Climate site risk analysis
• Market price increases
• Mitigation and adaptation strategy
Risk mitigation
• Embedded culture –
The Marshalls Way
• Compliance procedures
and policies
• Employee training
Links to remuneration
Links to remuneration
Links to remuneration
Links to remuneration
AI
LTIP
AI
LTIP
AI
LTIP
AI
LTIP
Stakeholder linkage
• Shareholders
• Employees
• Customers
• Suppliers
Stakeholder linkage
• Shareholders
• Customers
• Suppliers
Stakeholder linkage
• Shareholders
• Employees
• Customers
• Suppliers
• Environment
• Regulators
Stakeholder linkage
• Employees
• Customers
• Communities
• Environment
Marshalls plc | Annual Report and Accounts 2023
27
Strategic Report
Stakeholder Engagement
Our stakeholders:
Who they are, what we do
and how we benefit
The Marshalls Way
Shareholders
Communication and dialogue
build confidence in our purpose,
and strategy with investors
Customers
Engaging with our customers drives
specification of our innovative product
solutions for the built environment
Colleagues
Our two‑way dialogue helps Marshalls attract,
develop and retain talented people who will
help us achieve our purpose and strategy
We generate
value through
sustainable
growth
Investment,
strategic guidance
and stewardship
We deliver
valuable
product solutions
Customer
loyalty, brand
preference and
profitable sales
A stretching,
exciting,
supportive and
inclusive working
environment
Diverse, talented,
engaged and
productive
colleagues
Our purpose: To create better places
Our strategic goal: To be the UK’s leading manufacturer
of sustainable solutions for the built environment
We treat suppliers
fairly, building
long-term
relationships
High‑quality
goods and
services resulting
in products our
customers love
and specify
We act in
support of the
commitments
we make to
doing business
responsibly
We see the
business through
the lenses
of others
We share
knowledge and
sector‑specific
expertise
Government
policy, regulatory
frameworks and
recognition
Suppliers
Dynamic dialogue has built a strong
supportive supplier base which supports
our purpose and which shares in
our success
Communities and
the environment
We have open and honest dialogue,
sharing our goals and progress in creating
better futures for everyone
Government and
regulatory bodies
We engage to build confidence
in how we operate and to support
our continuous improvement
We do the right things, for the right reasons, in the right way
Key
What we do
How we benefit
28
Marshalls plc | Annual Report and Accounts 2023
2023 in focus
The Directors fulfil their duty by ensuring that
there is a strong governance structure at Board
level and throughout the Group, supporting
the delivery of our refreshed strategy and our
ability to respond to strategic and performance
challenges in the short to medium term.
2023 presented us with very challenging
conditions in our underlying markets driven
by macro-economic factors, with prolonged
inflation and higher interest rates. The
decisions we’ve taken required careful
management of short-term performance
issues, whilst not losing sight of the Group’s
longer-term strategic goals.
Section 172(1) of the Act sits at the top of the
Board’s agenda and is considered as part of
the Board decision-making process. The Board
prioritises the health and wellbeing of our
colleagues and the safety of our operations.
Our sustainability and ESG commitments
(pages 34 to 43), which are relevant and
important to all our stakeholders, underpin
our business and our success. Our reputation,
brand and ability to attract and retain talented
people all depend on the responsible operation
of our business.
Although the Board made some difficult
decisions during 2023 that have impacted
our people and challenged our culture, these
position the Group well for when markets
recover and demonstrate the Group’s
ability to dynamically respond to market
conditions. The Board remains confident
that the decisions made had regard to the
interests of all relevant stakeholders and
The Marshalls Way.
The fulfilment of the Board’s duty under
Section 172(1) sits alongside its consideration
of the Group’s capital structure and capital
allocation policy and its resilience to existing
and emerging risks (pages 52 to 61), which
have all been reviewed in light of the Group’s
performance during the year and our
future priorities.
The Board has continued to engage
collaboratively with the senior management
team, providing the challenge and support
that only comes where there is transparency
of information and open communication. The
business has benefited from the Board’s sector
and market specific knowledge, together with
its experience of strategy development and
deployment, health and safety, performance
and cost management, and from its diverse
knowledge and skills.
We’ve set out further details of how we engage
with our key stakeholders on pages 28 to
33 and the stakeholder considerations and
outcomes for some of the key decisions made
by the Board during 2023.
Marshalls plc | Annual Report and Accounts 2023
29
Strategic Report Stakeholder Engagement continued
Our stakeholders:
How we engaged
Marshalls’ purpose to create better places and future aspirations are best served
through active engagement with all our key stakeholders.
Marshalls’ stakeholder relationships
The way we run the business and make decisions in support of our
purpose and our strategic goal and objectives can have an impact
on our people, and the people, communities, businesses and other
organisations we deal with, or which are otherwise interested in what
we do and how we do it. It is through constant reflection on the impact
of our business and the decisions we make that we have identified
our key stakeholders.
How we engage with and consider stakeholder interests is guided by
The Marshalls Way. Doing “the right things, for the right reasons, in
the right way.” This means our relationships with them involve open
and transparent two-way communication over a long period of time.
This builds trust and confidence which, in the long term, strengthens
our brand, drives loyalty and generates value for all stakeholders,
whether it be by operating in a more sustainable way, reducing our
impact on the environment or supporting the business with long-term
capital investment that drives our growth and shareholder value.
Marshalls engages with stakeholders in many different ways and
these interactions influence how we run the business and manage
our way through challenging market conditions in a way that does not
compromise our future plans. In refreshing our strategy in 2023, we
looked inwards and outwards to make sure that our business choices,
operations, products and solutions consider the interests of the
relevant stakeholders.
How we engaged
Shareholders
Business engagement
Suppliers
Business engagement
• AGM, Annual Report, trading updates and presentations
• Regular phone and video calls, face to face meetings, site visits
and investor roadshows
• Investor relations website
• Chief Operating Officer engages on ESG and sustainability
Board engagement
• The Chair, Senior Independent Director and Chief operating Officer held meetings
with the corporate governance teams of shareholders in January 2024
• The Remuneration Committee Chair engaged with shareholders before the
approval of our Directors’ Remuneration Policy and after the significant vote
against our Annual Remuneration Report
• Centralised Group procurement (with an integrated team across Marshalls
and Marley) enabling optimal buying power and attention from suppliers
• Effective, regular and honest communication with suppliers – underpinned
by Code of Conduct and other core Marshalls’ policies
• Payment of invoices made consistently in accordance with agreed payment terms
• Transparent formal and proportionate tenders and robust negotiations
• Contracts agreed on mutually beneficial terms
• Focus on total end-to-end supply chain including inbound and outbound
logistics, materials, manufacturing processes and efficiency, network design,
packaging, indirect costs, etc.
• Supply chain risk mapping processes and regular audits of the highest supply
risks based on the ETI Base Code
• Through regular feedback to the Board by the Chief Executive, CFO, brokers
• Supplier Relationship Management system as a single source of all supplier data
and PR advisers
• Investor site visits
• Regular dialogue and correspondence (e.g in relation to policy matters)
• At the Company’s AGM
Links to corporate pillars
30
Marshalls plc | Annual Report and Accounts 2023
increasing supply chain transparency
• Strategic partnerships with NGOs, governmental institutions, ethical regulators
and charities
Board engagement
• Chief Operating Officer reports to the Board on our engagement and
relationships with key suppliers
• Board approval of material new or renewed agreements with suppliers
e.g. the outsourcing of logistics requirements key to Wincanton
• Board participation in our strategic review
• Feedback reports on supply chain compliance
• Supply chain and business continuity internal audit reviews
• Annual consideration and approval of our Modern Slavery Act statement
• Reports on ethical sourcing and ETI Base Code
Links to corporate pillars
Links to corporate pillars
Shareholder value
Sustainable profitability
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
Customers
Business engagement
• Dedicated customer experience team and improvement plan supported
by external advisers
• Customer journey mapping produced for all business units to highlight customer
“pain points” and “moments of truth”
• Transactional/live time feedback opportunities for customers post-transaction
on quotes, orders and deliveries, with development of additional feedback such as
on issue resolution
• Deep dive customer surveys and visits to focus on identified customer pain points
and drive continuous improvement
• Development of a customer metrics dashboard to report on all customer
impacting performance
• Structured customer experience improvement process based upon the
customer feedback
• Service‑level agreements and quality standards in customer agreements
• Development of our websites and digital solutions focused on the customer
to make it easier to do business with us
• Consumer support to find an installer and find a stockist
• Customer surveys, customer visits and a commitment to deliver on feedback
• Sustainability awareness training educating customers on our commitments
and products
• Awards ceremonies for professional installers and design competitions
for commercial specifiers
• Design and engineering support for specifying customers
• Continuous professional development for architects
• Training sessions for professional installers and resellers
• Research sessions and focus groups to help with product development
• On‑site discovery to watch how our products are used to help us develop
new solutions
• Significant and constant research on our brand preference
Board engagement
• Board presentations on customer and commercial matters
• Participation in our strategic review
• Customer visits and meetings with sales teams
• Receiving updates on and engaging with our customer experience programme
• Installer and site visits seeing practical application of our products
Links to corporate pillars
Colleagues
Business engagement
• Employee Voice Group (“EVG”) represents all business areas and levels
• Regular communication across channels – supporting those employees
working remotely and those without access to Company email
• Senior management team site visits and engagement through our Leadership
Connected Group (which meets at our annual management conference as well
as for monthly business briefings)
• Development, training and apprenticeship programmes (including recognition
of study completion)
• People and culture strategy continues, with developing our talent being key
• Participation in the Your Voice engagement surveys
• Leaders are able to connect with the elected representatives of our recognised
Trade Unions and, via this, the constituents that they represent
Board engagement
• Board participation in the EVG via Angela Bromfield, our designated Director
for Employee Engagement, chaired by the Chief People Officer, with other Board
and senior management team members attending regularly
• Board site visits
• Board attended strategy review
• Annual reviews of People and Group reward strategies
• Review of senior management team performance, succession planning
and wider talent development initiatives
• Regular health and safety Board reviews
• Active engagement in workforce diversity, reward and recruitment
• Reporting to Audit Committee on “whistleblowing” reported through the
Serious Concerns policy and our external independent partner, Safecall
Links to corporate pillars
Communities and the environment
Government and regulatory bodies
Business engagement
Business engagement
• Collaborative approach to capturing carbon by using CarbonCure technology
• Engagement with UN Global Compact UK working groups on modern slavery,
• Regular dialogue with Government, regulators and industry groups
• Active membership of the Construction Products Association and Mineral
diversity and climate disclosures
• Working with suppliers on health and safety improvements
• Social value partnerships with Rotherham College
Products Association
• Effective and clear policies against bribery and the elimination of modern slavery
with training for staff and business partners
Board engagement
Board engagement
• Board is actively engaged with the Group’s ESG and sustainability strategy,
• Board provides direction to the support of the UN Global Compact’s principles,
including the setting of science-based targets
and policies relating to modern slavery and anti-bribery
• Board receives regular updates on our ESG programme and commitments
• Board ESG Committee established in the year
• ESG measures included within Executive Director incentives
Links to corporate pillars
Links to corporate pillars
Marshalls plc | Annual Report and Accounts 2023
31
Strategic Report Stakeholder Engagement continued
Our stakeholders:
Key Board decisions and
stakeholder considerations
Matter for Board consideration
Stakeholder considerations
Outcome
Product deliveries are a key service measurement for customers
who are often working on time sensitive construction projects
where the scheduling and timeliness of deliveries are critical
to their own efficiency. Specialist logistics firms manage this
challenge for a large number and diverse range of customers
with investment in the latest vehicles and transport planning
and management technology. Part of our tender was to assess
whether outsourcing this element of our business would make
us easier to deal with, another one of our strategic objectives.
We considered the impact of any change on colleagues who
would transfer to any outsourced provider, including our
significant driver population. The process and communication
of these changes were critical parts of our planning to ensure
we handled this sensitively and compassionately.
For any incoming supplier, the tender presented an opportunity
to win new business from an established brand and sector
leader, which was factored into our discussions and negotiations
with potential partners.
The challenge presented by climate change is leading to an
evolution in how businesses think about their own impact. In
logistics, specialist businesses have the scale, knowledge and
resources to manage the transition to more energy efficient
and climate-friendly logistics solutions and by partnering with
Wincanton, we not only benefit from this, but it enables us to
focus on the sustainability of our manufacturing operations.
Shareholders were supportive of Martyn’s leadership of the
Group and, in selecting a successor, it was critical to appoint an
individual with relevant experience, who has the knowledge and
skill to lead the business following a period of significant change.
Developing our key customer and supplier relationships is
vital to the Group’s long-term sustainability. Customers and
suppliers need to be confident that our leader understands their
businesses and how partnering with Marshalls is value accretive
for their businesses.
The Chief Executive’s role is critical for colleagues across the
Group and appointing an individual who understands their hopes
and fears for the business, irrespective of the roles they perform,
was vital. Finding a leader who would be able to galvanise our
people behind our refreshed strategy, following a challenging
year, was important.
The long-term sustainability of our business is dependent on a
leader that believes in our commitment to operate responsibly.
Appointing Wincanton as the Group’s
outsourced logistics partner
Following a comprehensive and thorough tender
process, which started at the beginning of 2023,
the Board approved the proposal to agree a five‑
year partnership with Wincanton, one of the UK’s
leading specialist logistics services providers,
to outsource the vast majority of our logistics
requirements.
Wincanton’s proposal was the most competitive
and the Group will benefit from their established
relationship with Marley, with whom they have
partnered for a number of years.
This constitutes a significant change in our
operating model and is supported by a series
of contractual commitments that give us
confidence regarding service delivery and
efficiency. The changes will be supported by
a transition plan that reflects the complexity
in managing the initial transfer of this part
of our operation, including our people and
the vehicles that support the delivery of this
important service.
Both Wincanton and Marshalls are incentivised
to successfully deliver the transition and the
partnership is supported by a series of KPIs and
a relationship management framework that will
ensure there is a continual dialogue between us.
The Board will receive updates on progress with
the transition and on Wincanton’s performance.
Matt Pullen appointed Chief Executive
Following an extensive search and selection
process, supported by Russell Reynolds
Associates, Matt Pullen was appointed to
the Board, initially as Chief Executive Designate,
then taking over from Martyn Coffey on
1 March 2024.
Matt is an accomplished executive leader
with extensive experience across a number
of sectors.
A comprehensive induction programme
was put in place for Matt, including the
core elements of our induction programme
on page 83.
Outsourcing a significant part
of our logistics requirements
Marshalls has maintained its own
logistics capability since it acquired
its first vehicle more than 100
years ago. However, as a specialist
manufacturing business, and to
support our strategic objective, to
improve our cost effectiveness,
efficiency and flexibility, we
conducted a tender for the
outsourcing of the majority of our
logistics requirements to a specialist
partner. As part of the process, our
own logistics team participated in the
tender as a prospective supplier to
ensure we took a holistic view before
any decision was presented to the
Board for consideration and approval.
Succession of our
Chief Executive
Our people are our priority and
managing the succession of the
Board and senior leadership team is
critical to the long-term sustainability
of our business.
Under Martyn Coffey’s outstanding
leadership, Marshalls has been
transformed into a diversified
building products manufacturer.
Having served the business for more
than ten years, including navigating
it through impact the COVID‑19
pandemic, the Board (through the
Nomination Committee) carefully
planned his succession, with the
support of an experienced external
search firm.
Given Martyn’s leadership, the
Board recognised the importance
of conducting a robust search for
a successor who could support
the implementation of the Group’s
refreshed strategy and lead it through
its next phase of development.
32
Marshalls plc | Annual Report and Accounts 2023
Links to stakeholders
Shareholders (S)
Customers (Cu)
Colleagues (Co)
Suppliers (Su)
Communities and the environment (Ce)
Government and regulatory bodies (G)
Matter for Board consideration
Stakeholder considerations
Outcome
Consideration of our
evolved strategy
The Board and senior management
team annually reflect on the Group’s
strategy to ensure it continues to
supports the long-term sustainability
of the Group.
Given the acquisition of Marley in
2022 and the challenging market
conditions we’ve faced since then,
the senior management team took
the opportunity, over the last 18
months, to undertake a “root and
branch” review of the Group’s strategy
ensuring it not only reflected our
medium and longer-term ambitions
but also the need for greater
flexibility in the face of short‑term
performance issues, in what can be
a cyclical business.
The Board were engaged in the
process as it developed and there
was a focus on the method by which
the refreshed strategy would be
deployed throughout the business.
Reducing costs, improving
agility and managing cash
Challenging market conditions and
business performance during 2023
required the senior management
team to propose actions that ensured
our capacity was aligned with
demand and that the Group is well
positioned for when markets recover.
Approval of our refreshed strategy
and approach to engaging our people
in delivery
The need to retain the agility required in volatile
markets without sacrificing the opportunities
presented by the significant growth drivers in
the Group’s key end markets, has culminated
in the Board approving the Group’s refreshed
strategy, that will ultimately make us a more
flexible and efficient business without sacrificing
the customer focus and product and service
innovation that are the foundations upon which
the Group has been built.
The refreshed strategy is being deployed
throughout the business using the OGSM
method (objectives, goals, strategies and
measures) which supports complete business
and functional alignment in delivery. The Board’s
agenda will include the opportunity for it to
review specific strategic topics in depth and
KPIs are being developed to ensure we can
measure our progress.
Giving shareholders and prospective investors confidence in the
Marshalls’ investment case, and our ability to deliver sustainable
long-term shareholder value, was at the heart of the evolution of
our strategy.
Ensuring our products, solutions and services meet the needs of
our customers is fundamental to our success in an increasingly
competitive market. Maintaining our brand reputation for
quality and innovation will drive profitable growth across our
diverse product ranges. Listening to customers and measuring
our performance is critical to meeting our commitment to
continuously improve all aspects of how we do business.
We engaged with our senior leaders to understand their views
on our purpose, strategic goal and proposed strategic objectives.
We used their insights to refine the strategy and to consider the
most effective way to meaningfully deploy the refreshed strategy
throughout the business, so our colleagues understand the part
they have to play and feel connected to it.
Careful management of our supplier relationships, and
understanding where we could benefit from working with
partners to outsource non-core elements of our operations,
were important considerations within the strategic review.
Our commitment to operating responsibly and in “The Marshalls
Way” were the backdrop to considering every element of our
strategy. This includes our commitments to ethical trading and
to reducing our carbon footprint as detailed on pages 41 to 43.
Diversifying and developing our product ranges to help our
customers meet changing regulatory requirements e.g. with
Viridian’s solar products, is part of our commitment to innovate
and find new solutions for customers. Legal and regulatory
compliance are fundamental in how we operate.
Board support for actions to
reduce cash, improve agility and
manage cash
Delivering long‑term shareholder value required us to act in the
face of a prolonged period of weaker demand.
The Board supported management actions during
2023 which, amongst other things, have resulted in:
In a cyclical business with a high fixed costs base, we needed
to ensure the actions we took were proportionate and gave
us the ability to respond quickly to customer demand when
markets recover.
Managing our cost base would necessarily involve putting
jobs at risk and our focus was on handling this sensitively and
compassionately, with both exiting and retained colleagues in
mind. Clear communication and management of this process
were our priorities.
In the face of high inflation throughout our cost base, we looked
to leverage our long-term supplier relationships to mitigate input
cost inflation.
Complying with our legal obligations during these changes
is fundamental to how the business operates.
• a c.15 per cent reduction in the Group’s workforce
(including colleagues that left in Q4 2022);
• the sale of surplus property assets generating
c.£7m during 2023;
• the closure of our Carluke manufacturing
site and the mothballing of all or parts of a
number of our other manufacturing sites;
• a reduction of c£5m in planned capital
expenditure for the 2023; and
• a significant reduction in our inventories,
preserving cash.
These actions position the Group well for when
markets recover.
Board engagement, particularly through our EVG,
ensured we understood how this impacted our
culture and the communication and support
colleagues received.
Marshalls plc | Annual Report and Accounts 2023
33
Strategic Report Strategic Report
Sustainability
Creating better places
Dear stakeholder
During what has undoubtedly been a challenging year in our industry,
I am really pleased to see the progress we have achieved in the ESG
space. Last year, we were clear about our plans for 2023, and true to
our word we have done what we said we would do – from revising our
carbon reduction targets and publishing more Environmental Product
Declarations (“EPDs”), to our new dual block plant and approach to
climate disclosures. We have kept our focus and we are now in a strong
position to seize the opportunities that lie ahead in 2024.
2023 highlights
• Board ESG Committee with oversight of our ESG strategy,
supported by our ESG Steering Committee
• Revision of our carbon reduction targets to incorporate our
Marley division and develop our net zero pathway, with targets
currently awaiting Science Based Targets initiative (“SBTi”)
final validation
• New digital system for health, safety and environmental compliance
• Solar arrays in five locations
• Additional 16 EPDs published
• Two award wins for ArcBox, our innovative solar panel fire
prevention product
• Continued Living Wage employer status and Fair Tax Mark
• Launch of our refreshed Code of Conduct to colleagues
and suppliers
• Recruitment of twelve engineering apprentices as part of our
drive to support young talent
• Full review of our ESG materiality assessment
Vanda Murray OBE
Chair
Find out more about ESG materiality in our Sustainability Report:
https://www.marshalls.co.uk/sustainability/document-library
ESG governance framework
The Board
ESG Board Committee
Supported by
Board-level oversight of ESG strategy and ESG risk management,
including climate-related risks and opportunities
Executive Team
ESG Steering Committee
• The Chief Executive is accountable for
the delivery of the ESG strategy, including
climate-related issues
• The Executive Team members are individually
responsible for reviewing and confirming risks in
their own areas, including climate-related risks
• Attended by the Chief Executive, CFO, COO and
General Counsel and Company Secretary
• Responsible for ensuring the ESG strategy remains
fit for purpose, plans are in place and progress is
measured and reported
• Advises the Board on ESG-related risks
and opportunities
• ESG metrics
• ESG Board updates
• Shareholder engagement
• TCFD reporting
Group Risk Management
ESG Delivery Team
• Responsible for implementing the Group risk
management framework and Risk Register
• Responsible for driving progress along our plans,
including science-based targets
• See risk management framework and governance
• Updates the ESG Steering Committee on progress
on pages 52 and 53
against targets
Operational teams
• Responsible for managing and resourcing approved activities
• Advise on operational feasibility of projects
• Collaborate on ESG and sustainability projects
34
Marshalls plc | Annual Report and Accounts 2023
• Risk Register
• Climate-related risks
and opportunities
• Climate Disclosures
Working Group
• Sustainability Report
• Science-based targets
• Metrics and targets
Our ESG strategy is underpinned by the United
Nations Global Compact’s principles in the key
areas of human rights, labour, environment and
anti-corruption. These principles, alongside the
UN’s Sustainable Development Goals (“SDGs”),
continue to guide us.
Our three pillars – Better Product, Better Workplace,
Better World – highlight our focus areas towards
our purpose of creating better places, whilst
maintaining The Marshalls Way of doing the right
things, for the right reasons, in the right way.
Find out more about our approach to the UN SDGs:
https://www.marshalls.co.uk/sustainability
T
h
e
M
a
r
s
h
a
ll
s
W
a
y
r a t e g ic objectives
S t
Better
Product
Creating
Better
Places
Better
Workplace
Better
World
U
t
c
a
p
m
o
N Global C
Non-financial and Sustainability Information Statement
As required by the Companies Act 2006, the table below sets out where the key content requirements of the Non‑financial and Sustainability
Information Statement can be found within this document (or required by Sections 414CA and 414CB of the Companies Act 2006).
Reporting requirements
Relevant policies
Section within Annual Report
Approach to climate change
TCFD and CFD disclosures
TCFD and CFD (pages 46 and 47)
Environmental matters
Social
Governance
Employees
Principal risks
Business model
Non-financial KPIs
Environmental Policy Statement*
Energy and Climate Change Policy*
Timber and Paper Policy
Transport Policy
Code of Conduct*
Corporate Responsibility and Social Value Policy*
Tax Policy*
Human Rights Policy
Modern Slavery Statement*
Children’s Rights Policy
Anti‑Bribery Code*
Tax Policy*
Trading Policy*
Schedule of matters reserved for the Board*
Board Committee Terms of Reference*
Health and Safety Policy
Serious Concerns Policy
Diversity and Inclusion Policy
Drug and Alcohol Policy
Mental Health and Wellbeing Policy
ESG strategy (pages 34 and 35)
Sustainability commitments relating
to the environment (page 47)
Responsible business (page 41)
Charitable donations (page 38)
Health and safety (page 40)
Stakeholder engagement (pages 28 and 29)
Audit Committee Report (page 87)
Corporate Governance Statement (pages 66 and 79)
Corporate Governance Statement (pages 66 and 79)
Headcount (page 38)
People engagement (pages 38 to 40)
Board diversity (page 103)
Gender diversity (page 38)
Stakeholder engagement (pages 28 and 32)
Description of risk process (page 52 to 54)
Risk framework (page 53)
Principal risks and uncertainties (pages 55 to 61)
Our business model (pages 6 and 7)
Key performance indicators (pages 26 and 27)
Strategy (pages 22 and 23)
Full versions of the policies referred to above form part of the Group’s Policy Framework that supports the Marshalls Code of Conduct.
These can be found on the Group’s website at marshalls.co.uk/about-us/policies.
* Key policies referred to in this Annual Report.
Marshalls plc | Annual Report and Accounts 2023
35
Strategic Report
Case study
Improving fire safety
Our solar safety product, ArcBox, has won Best Health & Safety
Product at the 2023 Housebuilder Product Awards and the
Platinum Award at the Build Back Better Awards 2023 – for
improving solar safety and reducing fire risks in solar PV
installations. Simple errors in installation can cause an arc
fault to develop and the ArcBox enclosure snaps around a DC
connector to ensure that if an arc occurs, it is safely contained
and does not spread to combustible materials in and around
the solar installation. The effectiveness of the product has
been independently verified by the KIWA fire test laboratory
and Loughborough University.
Sustainability continued
Better product
Solar
Roof integrated solar panels from Viridian Solar offer a clear opportunity
for Marshalls as part of our strategic goal to be the UK’s leading
manufacturer of sustainable solutions for the built environment.
Viridian Solar’s Clearline Fusion roof integrated solar PV products bring
high‑quality installations to both new build and retrofit applications on
pitched roofs. Solar roofing reduces the energy demand of the building
and offers a viable solution to Building Regulations Part L changes
which look at the conservation of fuel and power in the building of new
homes in England, and establish how energy‑efficient new and existing
homes should be. Solar is a key part of our adaptation strategy by
providing our customers with products that promote more sustainable
living in response to environmental challenges. Having now launched
two EPDs for both the Clearline Fusion range of in‑roof solar PV
modules and its mounting kits, we are providing our customers with
the environmental footprint information they need to make an informed
buying decision.
Concrete bricks
Concrete bricks offer significant advantages over clay bricks in
achieving Scope 3 net zero targets required in the construction industry.
The production of our concrete bricks emits fewer greenhouse gases
compared to clay brick manufacturing. This reduces the carbon
footprint by 28 per cent in product stage, and a saving of 45 per cent
in total lifetime due to sequestration where the concrete absorbs CO2
from the atmosphere. We have continued our commitment to reducing
this further by introducing CarbonCure technologies at our Grove
manufacturing facility where waste carbon is captured and injected
into our concrete bricks to lock CO2 away.
36
Marshalls plc | Annual Report and Accounts 2023
Water management systems
In light of the UK Government’s dedication to implementing Schedule
3 of the Flood and Water Management Act 2010, Marshalls is poised
to address the ongoing impact of weather events on infrastructure,
businesses and residences. Through strategic investment in acquisitions
and new product development, we stand prepared to provide enduring
solutions aimed at reducing the overall burden on combined sewers and
managing surface water through periods of flood and drought.
Marshalls delivers a comprehensive portfolio of water management
and flood mitigation solutions, encompassing a full spectrum of
above-ground and underground drainage systems. We specialise in the
design and supply of permeable paving and subbases, wet cast tanks
and attenuation systems, optimising water storage capabilities for
enhanced performance.
Environmental Product Declarations (“EPDs”)
We have published 16 EPDs in 2023, covering the majority of our
product range. EPDs are detailed reports of a product’s sustainability
performance, including carbon footprints. Our EPDs are externally
verified and they give our customers the comparable information they
need. In 2024, we will be publishing more EPDs covering our natural
stone and roof tile product ranges.
Case study
Innovative design
The latest addition to our product portfolio is EDENKERB®, an inlet
kerb for raingardens, developed to make the design and installation
of these features quicker and easier, and helping customers meet
the incoming legislation and regulatory requirements for Schedule
3. Raingardens also offer a way to help customers meet their
Biodiversity Net Gain requirements.
The EDENKERB® is designed to intercept, direct and diffuse surface
water into raingardens. Raingardens use plants and soil to collect
water from roofs, carriage ways and other hard landscaped surfaces
when it rains. Holding the water temporarily, raingardens allow it to
soak into the ground and into a storage area below surface. This
prevents water from entering the sewer system too quickly, with a
fraction kept at surface level to support plant life.
Read our case studies:
https://www.marshalls.co.uk/commercial/case-studies
Find out more about our Environmental Product Declarations (“EPDs”):
https://www.marshalls.co.uk/commercial/epd-library
Marshalls plc | Annual Report and Accounts 2023
37
Strategic Report Sustainability continued
Better workplace
Building a diverse workforce
We have built the Marshalls DERI (Diversity, Equity, Respect, Inclusion)
strategy with the aim of influencing the culture, behaviour and awareness
of our employees and leaders. In 2023, 93 per cent* of our employee
base voluntarily shared details about their gender identity, sexual
orientation, ethnicity, religious beliefs, generation, caring responsibilities
and disabilities. Although the majority of our workforce is white and
male, we do have representation from diverse minority communities.
Although we have not made as much progress on DERI in 2023 as
we would have liked, we continue with our focus on diversity at the
point of hiring. We look to ways in which we can broaden our selection
pools and target different cohorts of recruits. An example here is our
continued investment in apprenticeship programmes which we rolled
out further in 2023 – for more details, see our case studies on page 39.
The long-running Women’s Network has re-launched and will play an
important role in supporting further employee resource groups to
establish themselves. Our planned line manager training programme
will include topics and skills that are highly relevant to fostering
inclusion across the organisation.
Data reporting
Our integration of Marley into the Marshalls Group continues and
in terms of data reporting, we are clearly stating where Marley is
included in our ESG disclosures. For data relating to our people,
all figures reported relate to the enlarged Marshalls Group, unless
otherwise stated by *. Where Marley is not included in reporting,
it is because data is not currently collected at granular level yet.
Gender split**
Male
Female
** 2023: male (2,285), female (441)
Disability*
No disability
Disability
No disclosure
Ethnicity*
White British/White other
No disclosure
Minority ethnic group (Asian, Black, mixed/
multiple heritage or other minority ethnic groups)
Generational representation
Aged under 30
Aged 31-40
Aged 41-50
Aged 51-60
Aged 61+
2023
84%
16%
2022
84%
16%
2023
50%
3%
47%
2023
80%
18%
2%
2023
13%
27%
22%
27%
11%
2022
52%
3%
45%
2022
80%
17%
3%
2022
16%
23%
24%
28%
9%
38
Marshalls plc | Annual Report and Accounts 2023
2,726
employees (2022: 3,112)
9 years
as a Living Wage employer
184
colleagues in apprenticeship
programmes (2022: 142)
93%
of colleagues disclosing diversity
data (2022: 95%)*
39%
of women in leadership roles
(2022: 31%)
£82,054
charitable and product donations
(2022: £33,901)
16%
women colleagues (2022: 16%)
6.7
engagement score (2022: 7.6)
Listening to our people
Employee Voice Group (“EVG”)
The EVG meets every two months and is made up of 15 elected
colleagues from different parts of the business, along with invited
colleagues from the Operations and Logistics teams.
Angela Bromfield is the designated Non‑Executive Director who
represents the employee voice at Board meetings, with other members
of the Board and Executive Team who rotate throughout the year to
engage in meaningful conversations with the EVG.
In 2023, five meetings were held with discussions ranging from
Executive pay and Environmental Product Declarations (“EPDs”),
through to learning and development consultations. The EVG
also helped us with the collective consultation side of our change
programmes. Members of the EVG contribute to decision‑making
processes and are encouraged to cascade meeting minutes to
their teams.
Case study
Continuous Improvement
Ambassador programme
Concluding at the end of 2023, the Continuous Improvement
Ambassador programme was a cornerstone in our commitment
to enhancing safety and production methodologies. The bespoke
in-house training, delivered in collaboration between our Continuous
Improvement and Learning and Development teams, continues in
the workplace with personalised projects, ensuring individuals have
the necessary tools for driving business improvements.
The programme not only imparted crucial leadership skills, but also
encouraged ambassadors to model and guide others in adopting
innovative ideas. In the course of the programme, we trained 160
ambassadors across 19 sites. Going beyond their roles as advocates
for continuous improvement, our ambassadors have become
a dedicated force of autonomous problem solvers, significantly
influencing business outcomes.
The initiative not only equips sites with vital skills for key projects
but also enhances the continuous improvement culture at Marshalls,
providing more development opportunities and strengthening
succession planning. The ambassador programme, a testament
to our commitment to learning, is driving a positive transformation
in both skills and culture across the organisation.
Case study
Early careers engineering apprenticeships
It is vital to our success to have the skills within the business to
run our operations efficiently. In 2023, we made a commitment
to recruit 50 engineering apprentices over four years. This is part
of our planning strategy as well as our goal to bring new talent
into the Marshalls Group. Our first intake of twelve apprentices,
selected from over 300 applicants, will spend the majority of their
first year with their apprenticeship training provider and on‑site
learning about the business and the skills they need to succeed
in their role.
Supporting change
Adapting to the demand of the market and future proofing success in
2023, Marshalls has had to adjust how it is set up from an operating
model perspective. This brought inevitable people changes in the
immediate short term, while making sure that the business remains
able to respond when the market comes back.
People change is always sensitive and we made sure that we applied
The Marshalls Way in how we approached it; we treated everyone with
respect, we were transparent and upfront, and collaborated across the
business in the right way.
Our goal was to minimise impact on individuals as much as we could.
So we worked with the voluntary attrition, offered voluntary redundancy
where possible, and successfully redeployed a number of colleagues
across the business. Our professional in‑house outplacement support
included CV writing, interview preparation and practice, and has been
praised by our departing colleagues.
Training and development
At Marshalls, we know it is our people who take our business from
strength to strength, and investing in them is a priority. To this effect
Marshalls has a clear Learning and Development Policy to support
colleague development, so that our people can be at their best.
The policy ensures the principles and processes of development
are consistent, fair and efficient. We ensure all colleagues receive
induction and regular refresher training on critical compliance subjects.
Colleagues in Production and Customer Services use skills‑based
competency frameworks, which offer structured development
opportunities and progression.
We have a clear apprenticeship strategy and, in 2023, we focused
on launching the Early Careers provision in addition to providing
development and creating career opportunities. The programmes
are open to all employees and provide for a range of qualifications
to deliver skills strategically required by the business.
• The Leadership Academy provides development opportunity
for aspiring leaders through to senior leaders and helps develop
a consistent leadership approach across the business while
embedding The Marshalls Way. Throughout the year, 78 leaders
developed their skills in the Academy, 23 of whom successfully
graduated in 2023. Participants demonstrated improved knowledge,
skills and behaviours in decision making, agility, inclusivity, project
management and finance.
• Data Academy – 29 apprentices, at three different levels, through
whom we are already seeing the benefits of having data available
in an efficient way.
• 21 Engineering apprentices, seven IT-related apprentices and
another 15 apprentices in other functional areas.
• The Marshalls Early Careers provision launched in 2023 with
twelve aspiring engineers ‑ see our case study for more details.
Find out more about learning and development:
https://www.marshalls.co.uk/careers
Marshalls plc | Annual Report and Accounts 2023
39
Strategic Report Sustainability continued
Better workplace continued
Case study
Digital compliance system
With safety as a key priority, it is important for us to use our systems
effectively. In 2023, we introduced a new digital compliance
management tool as a centralised system to enable us to better
manage health, safety and environmental reporting across the
Marshalls Group. The new system is also helping to provide clarity
and transparency for our people, as well as improving internal
controls and generating full visibility of health and safety trends
and performance. Following a full rollout, the system is now live
across 39 locations, for the SHEQ (safety, health, environment
and quality) concerns and incident reporting modules.
Employee health, safety and wellbeing
Marshalls continues to operate in an environment where safety and
people are a key priority through the use of strong governance and
procedures. Our Health and Safety Policy is approved by the Board
and reviewed annually, and our COO is the Board Director responsible
for the health and safety performance of the Group.
2021
2022
2023
Manufacturing/quarry sites with ISO 45001
for health and safety management
SHE training hours
81%
82% *
18,061 26,969
82% *
19,259
* Restatement of information further to review (previously 85%).
Note: Marley is excluded from reporting until three years from purchase.
Marshalls is fully committed to the health, safety and wellbeing of
colleagues and we have clear objectives in place to demonstrate the
progress we are making. The headline target for 2023 was to maintain
lost time injuries resulting from workplace incidents at a figure no
higher than the average over three years (2020–2022). This excludes
the impact of acquisitions within a period of three years from purchase,
therefore Marley Roofing Products is not yet included. The achievement
of annual health and safety improvement targets is directly linked to the
remuneration of the Executive Directors and senior management, as
explained in the Remuneration Report on pages 92 to 99.
Lost time injury frequency rate (per million hours worked)
3.0
2.5
2.0
1.5
1.0
0.5
0
2.68
1.73
1.72
0.78
0
2020
0
2021
0
2022
0
2023
Lost time injury frequency rate Fatalities
Find out more about our approach to health, safety and wellbeing:
https://www.marshalls.co.uk/sustainability/document-library
Note: the above data covers employees and contractors.
Though Marley figures are not yet incorporated into our Group reporting,
we have focused on integrating the health and safety functions of
Marshalls and Marley in 2023. The result is a set of aligned health and
safety KPIs, integrated processes for internal recruitment and training
of Mental Health First Aiders and direct health and safety reporting lines
to our Group SHE Director.
We have also made good progress on implementing our new digital
compliance system and on delivering our health and wellbeing strategy.
Our Supporting Healthy Minds Group focused on ensuring we had
sufficient coverage of Mental Health First Aiders across the whole
Group and enabling our colleagues to cope with ongoing change.
We also introduced a new approach to better understanding unsafe
behaviour and incidents in the workplace. Following a successful trial
in 2022, we have implemented a new Fair & Just Approach across
our sites during the year.
Case study
Mental health and wellbeing
In 2023, our Supporting Healthy Minds Group continued to support
our Mental Health and Wellbeing strategy by ensuring sufficient
coverage of Mental Health First Aiders (“MHFAs”) across the
business and helping colleagues to cope with change. Managers
have been the focus for change resilience, specifically equipping
them with the tools they need to maintain their own mental health
through change, guide their team through change, and identify
and react to signs from those who may be struggling with change.
Our managers are also supported by our dedicated team of internal
Mental Health First Aiders, with assistance from our employee
assistance service when further specialist advice is needed.
Mental Health First Aiders
2021
53
2022
62
2023
62
40
Marshalls plc | Annual Report and Accounts 2023
Better world
Human rights due diligence
Although 85 per cent of our spend is with first tier suppliers in the UK,
our human rights due diligence strategy focuses on the regions and
sectors most at risk from forced labour and other human rights abuses.
The last two years have seen particular focus on our Indian and Chinese
suppliers, where we have mapped out parts of our supply chain back
to raw materials. This is informing our ethical strategy for 2024.
Marshalls has been a signatory of the UN Global Compact since 2009.
We take a multi‑strand approach to aligning with the objectives of
the UNGC framework, working in-house and with external partners to
better understand the human rights risks in our operations and supply
chains at home and abroad. We also work with the UK and overseas
governments, NGOs and industry groups to promote sustainable
and ethical working practices across our own and other industries.
Due diligence, transparency and stakeholder engagement
Our roof integrated solar business, Viridian Solar, has been carrying
out enhanced due diligence work on its supply chains this year.
Regular visits to tier one and two manufacturers in China were
expanded to include upstream manufacturing processes, including
component production.
Having established that all suppliers in the first five tiers of its supply
chain, from panel assembly to polysilicon purification, are outside of
the Xinjiang Uyghur Autonomous Region (“XUAR”), Viridian has reached
agreements with suppliers that they can only source through these
nominated factories.
Our due diligence framework
Breakdown of annual spend across Marshalls Group
by country
2023
UK
Germany
India
85%
2%
2%
China
Other
3%
8%
Onboarding filter
for high-risk
regions/sector
Global supply chain
risk mapping
Tracing supply
chains back to
raw materials
Live monitoring
with Everyone’s
Business
Second and
third-party audits
Special projects
with agencies
and partners
Employee and
supplier training
Case study
Case study
Code of Conduct
In 2023, we launched our refreshed Code of Conduct. To make the
Code more straightforward, we separated it into three sections –
looking after our people, looking after our business, looking after
our world. We introduced “did you know” sections and a decision‑
making tool, as well as a Code on a Page which gives a good
overview of the key points. Aimed at colleagues, suppliers and
other stakeholders, the Code sets out our expectations and makes
it clear that we do business The Marshalls Way. Our refreshed
code was rolled out to our people via the Marshalls Learning Zone
and roadshows to our sites, and to suppliers through our supplier
engagement platform. During the training, one of our colleagues
said: “It’s good to know Marshalls’ Code of Conduct is showing how
business should be done the right way.”
Innovation
Marshalls was awarded the Innovation Award at the Unseen
Business Awards 2023 for our long-term efforts identifying and
addressing modern slavery in supply chains. Unseen runs the
UK Modern Slavery & Exploitation Helpline, provides safehouses
and support in the community for survivors of trafficking and
modern slavery, as well as working with business, governments
and statutory agencies. Of the award, the judging panel said:
“… adoption of third-party analytical risk tools, engagement with
social auditors, and use of assessment tools during supplier visits
show an innovative approach to identifying and addressing supply
chain risks.”
Read our Modern Slavery Statement:
https://www.marshalls.co.uk/sustainability/modern-slavery
Marshalls plc | Annual Report and Accounts 2023
41
Strategic Report Sustainability continued
Better world continued
Sustainability reporting
As a manufacturer, we understand the role we play in reducing our
business and product carbon footprint. We continue to take climate
change and carbon reduction seriously, and this is underpinned by our
Energy and Climate Change Policy Statement. We remain committed
to achieving net zero, and as we reported last year, our goal in 2023
was to recalculate our entire carbon footprint and submit our revised
carbon reduction targets to the SBTi for approval. Having worked with
the Carbon Trust, we have completed this comprehensive exercise
and are awaiting SBTi approval.
Marshalls has a mandatory duty to report annual greenhouse gas
(“GHG”) emissions under the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013. We use The Greenhouse
Gas Protocol: A Corporate Accounting and Reporting Standard
(revised edition) and the Department for Energy Security and Net Zero
published conversion factors (June 2023) to measure GHG emissions.
74 per cent of the electricity we consume as a Group is sourced from
renewable sources.
Our approach to the Energy Savings Opportunity Scheme (“ESOS”)
legislation was to define our energy management in compliance
with the international standard for energy management, ISO 50001,
gaining re‑accreditation in 2023 for Marshalls. Our Marley roofing
division is implementing the ESOS assessment route in phase 3,
with a view to looking into ISO 50001 accreditation moving forward.
For clarity and consistency, we are reporting Marshalls and Marley carbon
and energy consumption and performance separately because Marley
is not yet included in our approved science-based targets. Following an
internal review, we also changed to an annual stocktake reconciliation
approach for liquid fuels in order to identify in‑year consumption more
accurately. We stopped operating our Belgium facility in April 2023,
so although Belgium is included in historical data and target lines, it is
excluded in 2023. To reflect the size and negligible impact of the Belgium
operation, 2022 absolute Scope 1 and 2 emissions were 431 tonnes CO2e
and energy consumption was 1.975 mkWh.
Progress against targets over a five‑year period is reflected in the bar
charts below. More information on our targets can be found on page 47.
Group absolute Scope 1 and 2 emissions (excluding Marley)
e
2
O
C
s
e
n
n
o
T
60,000
50,000
40,000
30,000
20,000
10,000
0
2019
2020
2021
2022
2023
Scope 1
Target
Scope 2 (market based)
Scope 2 (pre‑market based approach)
Using the same methodology, Marley absolute emissions in tonnes CO2e: Scope 1
(2023: 19,228, 2022: 22,603), Scope 2 market based (2023: 2,555, 2022: 6), Scope 2
location based (2023: 3,689, 2022: 3,809).
2019
2020
2021
2022
2023
Target (Scope 1 and 2)
Scope 1
Scope 2 (market based)
Total
Reduction against target
Scope 2 (location based)
53,011
55,442
35,072
42,147
2,897
—
— 37,969
— 15,042
7,565
10,430
50,580
37,540
32
37,572
13,008
8,232
63
48,150
45,719
36,232 32,590
35
36,295 32,625
11,855 13,094
6,243
6,664
Group relative Scope 1 and 2 emissions (excluding Marley)
We use an intensity ratio in order to define emissions data in relation to
our business: kg CO2e per tonne of production for Marshalls and tonnes
of CO2e per £m of turnover for Marley, which we will look to align.
Measuring carbon emissions
• Scope 1 refers to our fuel usage, including diesel, petrol, liquefied
petroleum gas, kerosene and natural gas. We measure this through
invoices and site tank meter readings.
• Scope 2 refers to our indirect emissions which is the electricity
we have purchased. We continue to report our Scope 2 emissions
as market based (using supplier emission factors) and location
based (using Government emissions factors) for information only.
Our Scope 2 market based performance has been very low since
2020 as this was the year we switched to green electricity.
• Scope 3 refers to supplier emissions and the approximate
Group breakdown of categories is detailed below:
t
u
p
t
u
o
n
o
i
t
c
u
d
o
r
p
e
n
n
o
t
r
e
p
e
2
O
C
g
k
12.00
10.00
8.00
6.00
4.00
2.00
0.00
1
2
.
9
5
6
.
8
0
7
.
7
8
8
.
7
4
8
.
7
6
9
.
5 8
6
.
6
3
5
.
7
6
4
.
6
2019
2020
2021
2022
2023
2023
Purchased goods
and services
78%
Upstream transportation
15%
and distribution
Fuel and energy related
activities
End of life treatment
of sold products
Capital goods
Other
2%
2%
2%
1%
Scopes 1 and 2 (location based)
Scopes 1 and 2 (market based)
Marley’s relative emissions in tonnes CO2e: Scope 1 and 2 market based (2023: 0.12,
2022: 0.11), Scope 1 and 2 location based (2023: 0.12, 2022: 0.13).
The relationship between energy used and volume of product
manufactured is not exactly linear. Whilst reduction in production activity
does lead to a broadly commensurate drop in energy consumption, a
combination of individual fuel type mixes and fixed baseloads may skew
this. 2023 data is in line with our expectations and both absolute and
relative emissions remain well within the approved 1.5°C science-based
target pathway for Marshalls (excluding Marley until we have revised
and approved science-based carbon reduction targets).
42
Marshalls plc | Annual Report and Accounts 2023
Energy reduction
Throughout 2023, we have been continuing in our efforts to reduce
the energy that we use as a business wherever we can. We have also
identified and begun the installation of an innovative technology that
is looking to reduce our use of compressed air across our sites. Whilst
compressed air is vital to many aspects of our production processes,
we also know that it impacts greatly on our overall consumption so
targeting this area for energy saving is a priority.
At our St Ives site in Cambridgeshire, we have recently completed
the installation of a 740KW solar array on the factory roof and we
estimate this will reduce our mains grid electricity consumption by
approximately 17 per cent per annum. We have also undertaken an
extensive exercise throughout our Marley sites in 2023, focusing
specifically on optimisation of operational controls which resulted in
identifying energy saving opportunities of nearly 20,000 kWh per week.
Case study
Transition plans
Having re‑calculated our carbon footprint for the whole Group,
we will publish our carbon reduction targets (including a revised
net zero target) in our next Annual Report once they have been
validated by the SBTi. In the meantime, we have put in place
processes to deliver on our environmental roadmap. This includes
continuing to engineer high emission fuels out of the business,
analysing climate change risk at site level, and investigating sources
of renewable energy. We also plan to increase engagement with
our supply chain to improve collaboration with key supply chain
partners to identify areas where we can reduce carbon impacts
along the value chain. We will continue to develop innovative
products that support climate change adaptation (see pages 36-
37), with support from publication of more product EPDs.
Streamlined Energy and Carbon
Reporting (“SECR”)
In accordance with the SECR framework, we are reporting our annual
Scope 1 and 2 GHG emissions, our energy use (including self‑generated
energy from renewables), a five‑year trend disclosure of data, intensity
ratios for both emissions and energy, details of methodology used
(same protocols for Marshalls and Marley) and information on energy
reduction activities. Marley data is excluded from overall consumption
but noted for reference.
Group energy consumption (excluding Marley)
250
200
215.836
)
s
n
o
i
l
l
i
m
(
h
W
k
150
100
50
0
178.682
199.016
190.578
171.177
2019
2020
2021
2022
2023
Marley’s energy use for 2023 was 116.60 mkWh (2022: 135.05 mkWh).
Group relative energy consumption (excluding Marley)
e
n
n
o
t
r
e
p
h
W
k
40
30
20
10
0
37.82
36.25
34.24
34.69
39.49
2019
2020
2021
2022
2023
Marley’s relative energy use for 2023 was 558.74 kWh per £m of turnover
(2022: 717.53 kWh per £m of turnover).
Group self-generated energy from renewables
(excluding Marley)
This chart shows self-generated energy from the solar arrays at three
sites. We have an additional two small Marley sites with solar arrays
which we aim to include in our reporting next year.
600,000
500,000
400,000
h
W
300,000
k
200,000
100,000
0
583,959
413,449
421,975
199,453
209,551
Read our Sustainability Report:
https://www.marshalls.co.uk/sustainability
2019
2020
2021
2022
2023
Marshalls plc | Annual Report and Accounts 2023
43
Strategic Report
Task Force on Climate-related Financial Disclosures
Marshalls plc has complied with the requirements of LR 9.8.6R(8) by including climate‑related financial disclosures consistent with the TCFD
recommendations and recommended disclosures except for the matters marked with a *. For these sections, we have explained why we feel our
activity does not fully comply, the steps we are taking to enable future disclosure and the relevant timeframes for disclosure. The climate-related
financial disclosures made by Marshalls plc comply with the requirements of the Companies Act 2006 as amended by the Companies (Strategic
Report) (Climate-related Financial Disclosure) Regulations 2022.
Outlined on the following pages is our 2023 TCFD disclosure. We continue to evolve our disclosures in a phased approach and this year, we comply
with nine out of the eleven recommended TCFD disclosures (in comparison with six out of eleven in 2022) and all the CFD expected disclosures.
This is a journey and our work in this area will remain a priority. Recommendations where we feel we are not yet fully compliant are marked with a *
and have additional disclosure on future plans and targets.
Recommendation
Governance
Recommended disclosures
2023 progress: Set up of ESG Board Committee, creation of Climate Disclosures Working Group, preparation of
Carbon Reduction Plan and planning to report according to the TPT framework
a. Describe the Board’s
oversight of climate-related
risks and opportunities
b. Describe management’s
role in assessing and
managing climate-related
risks and opportunities
The Board has ultimate responsibility for climate-related risks and opportunities. The Board monitors and oversees
progress against goals and targets, including science-based targets for carbon reduction with direct links to
remuneration (see Remuneration Report on page 92) and external verification and assurance of carbon data. In 2023,
there was Board-level oversight on integration of climate issues into budgets and strategy.
Board oversight is through the newly created ESG Board Committee, with support from the ESG Steering Committee
(see diagram on page 35). The ESG Board Committee met once in 2023, when it was set up in October 2023.
The Committee is due to meet three times in 2024 and will be briefed by the COO on climate‑related matters at
every meeting.
In assessing and managing climate-related issues, climate-related responsibilities are assigned as follows:
• ESG Steering Committee: climate-related issues form part of the agenda and this committee is tasked with
assessing climate‑related issues. Attended by our CEO, COO, CFO, Company Secretary and General Counsel,
Group Trading Director and the ESG Delivery Team, the ESG Steering Committee held seven meetings in 2023.
• ESG Delivery Team: this cross-functional team attends and reports directly to the ESG Steering Committee and
is responsible for the delivery of the ESG strategy, including working on climate-related issues in terms of best
practice, regulation, compliance and horizon scanning.
• Group Risk Register: managed by the CFO and with input from senior leaders, the Risk Register includes climate
change. Meetings are held twice a year and key points are fed back to the Board via the CFO.
• Climate Disclosures Working Group (“CDWG”): this cross‑functional group identifies and examines climate‑related
issues. Outputs from the group are fed back to the CFO and ESG Steering Committee. This group is attended
by senior colleagues from Legal, Operations, Sustainability, Procurement, Marketing and Finance teams.
• Sustainability Team: this team has the overall responsibility to manage and monitor climate-related issues
operationally including incorporating Marley into the environmental roadmap, delivering on science‑based targets
for carbon reduction and energy performance at site level.
2024 focus: Embedding of Board-level oversight through the newly created ESG Board Committee and ESG
reporting processes
Strategy
2023 progress: Re-calculation of our carbon reduction targets for the enlarged Group, publication of additional
EPDs and initial scenario analysis
a. Describe the
climate-related risks
and opportunities the
organisation has identified
over the short, medium
and long term
b. Describe the impact
of climate-related risks
and opportunities
on the organisation’s
businesses, strategy and
financial planning
c. Describe the resilience of
the organisation’s strategy,
taking into consideration
different climate-related
scenarios, including a 2°C
or lower scenario*
Although we have previously been aware of our risks and opportunities, 2023 saw the set up of an internal process to
assess climate‑related risks and opportunities in terms of financial materiality to the business. Leading this process
is the CDWG which met three times in 2023. A workshop was held to explore and discuss climate-related risks
and opportunities, attended by senior management colleagues from Sustainability, Operations, Legal, Marketing,
Procurement and Finance teams. This process will be repeated on an annual basis.
Further to the financial assessment of climate‑related risks and opportunities, the CDWG looked at the impact of
the identified risks and opportunities on the business, strategy and financial planning. This process is due to be
followed up in 2024 by a review of our risks in light of the work undertaken by the Carbon Trust to re-calculate our
Group footprint. This process has brought up considerations that need further exploration, particularly relating to
our Scope 3 emissions.
Our current approved science‑based targets are aligned to a 1.5°C trajectory and we have a roadmap of carbon
reduction projects planned for the Marshalls business. This roadmap is subject to transitional challenges and will be
refined in 2024 to reflect the Marley acquisition. We have conducted basic scenario analysis on physical risk of key
sites, using scenarios from Verisk Maplecroft data (see page 45). Further to this initial data analysis and discussions
held in conjunction with the Risk Register process, we assess that our business model and strategy are resilient
against all scenarios assessed.
2024 focus: Review risks and opportunities, and further refine assessment of impact on business,
strategy and how to embed net zero commitment into wider financial and strategic planning
44
Marshalls plc | Annual Report and Accounts 2023
Recommendation
Recommended disclosures
Risk
2023 progress: Financial quantification of risks and opportunities and formalising processes for assessing
and managing climate-related risk
a. Describe the
organisation’s processes
for identifying and assessing
climate-related risks
b. Describe the organisation’s
processes for managing
climate-related risks
c. Describe how processes
for identifying, assessing and
managing climate-related
risks are integrated into the
organisation’s overall risk
management
We have formal ongoing processes to identify, assess and analyse risks and these are integrated into the Group Risk
Register. Climate change is also part of the risk heatmap (see page 53) where it is ranked alongside other risks and
therefore its significance in relation to other risks is determined. Existing and emerging regulatory requirements are
considered here.
Having identified our climate‑related risks, our process for managing these risks forms part of the Risk Register and
different teams within the business. More information on our identified climate‑related risks can be found on page 46.
We do not currently use an internal carbon price, however setting one is very much part of our ESG strategy moving
forward. We plan to develop a proposal for an internal carbon price in 2024.
Having identified acute and chronic physical risks which could affect our sites and applied climate scenarios, our focus
will now turn to using a similar approach to climate-related risks which may impact on other areas of our activities.
Another area of activity will be to review our risks further to the carbon footprint re-calculation exercise we undertook
in 2023 to incorporate Marley into our carbon reduction targets.
2024 focus: Development of internal carbon price proposal and review of risks in light of overall carbon
footprint assessment
Metrics and targets
2023 progress: Re-calculation of carbon reduction targets, measurement of Scope 3 footprint and strengthened
internal processes for data collection and reporting
a. Disclose the metrics
used by the organisation
to assess climate-related
risks and opportunities in
line with its strategy and risk
management process
b. Disclose Scope 1, Scope
2 and, if appropriate,
Scope 3 greenhouse gas
(“GHG”) emissions and the
related risks*
c. Describe the targets
used by the organisation
to manage climate-related
risks and opportunities and
performance against targets
The metrics we use to assess climate-related risks and opportunities are detailed on pages 46-47. As our climate
adaptation strategy centres on achieving our science-based targets, we also use metrics to measure absolute and
relative emissions (see pages 42-43), which are linked to Executive remuneration.
We disclose Scope 1 and 2 GHG emissions. For Scope 3, we have a science‑based target which is based on suppliers
having their own science‑based target. As part of our re‑calculation project to incorporate Marley into Group carbon
emissions targets, we have completed our analysis of our Scope 3 emissions. Our plan for 2024 is to set an absolute
Scope 3 target which we will communicate once our targets have been approved by the SBTi.
Our current approved science‑based targets are aligned to 1.5°C and they are supported by a roadmap. The current
roadmap is for Marshalls only and includes targets that are dependent on new technologies – for example vehicle fuel
technology. However this roadmap is being amended to include our Marley acquisition. Having calculated the overall
Scope 1, 2 and 3 footprint for the whole Marshalls Group, our revised targets have now been submitted to the SBTi for
validation. The way we run our operations will be impacted by our new targets as reaching net zero will require new
technology – for example, potential use of hydrogen and lower‑emission fuel for our forklift trucks.
2024 focus: Review of targets for risks and opportunities and progress transition plan roadmap
Scenario analysis
Our approach to scenario analysis has been to firstly identify our key climate‑related risks and discuss their financial materiality and impact on the
business. It was decided to take a phased approach to scenario analysis. Our starting point was to apply different climate scenarios to our physical
site risk for qualitative assessment. Moving forward, it is our intention to refine our use of scenarios for site risk and use scenario analysis more
widely for our other key climate-related risks and opportunities. Although we have a number of sites in the Group, we thought it appropriate to
focus our analysis on key operational sites which were identified by production tonnage.
Using data from Verisk Maplecroft, we identified relevant indices and used scenarios SSP1 (Sustainable Future) and SSP5 (Fossil‑Fuelled
Development). These scenarios were chosen as they give an indication of how key risk may change along different trajectories, from below 2°C
(SSP1) to over 4°C (SSP5). More specifically to Marshalls, SSP1 was selected to assess the potential impact of our current environmental roadmap
and the likelihood of increased transition risks, and SSP5 to look at potential impact of increased physical risks.
Initial analysis of the data shows that our sites are at low to medium risk, depending on the scenario used. We plan to use this work as a base
in 2024, when we look to refine our approach further and look into new indices that provide a more granular view of physical risk.
Impact on Financial Statements
Climate-related risks outlined in the ESG section have been considered and assessed in preparation of the Consolidated Financial Statements
for the year ended 31 December 2023. Based on this assessment, no material impact has been identified at this stage. However, we are
mindful of the changing nature of the risks and the likelihood of impact in the future. Having re‑calculated our carbon reduction targets to
include Marley and with a view to putting in place a revised transition plan in 2024, there is no short‑term impact on financial planning or
forecasting. Changing regulation in our sector may, in the future, have an impact on impairment and any climate-related matters we may
assess as material as part of our site-based physical risk analysis may impact on assumptions regarding insurance.
Marshalls plc | Annual Report and Accounts 2023
45
Strategic Report Task Force on Climate-related Financial Disclosures continued
Climate-related risks
Transition to a low carbon economy will bring challenges. Identifying and quantifying these transition risks will enable us to better prepare the
business for the impact of climate change. We have identified climate‑related risks and opportunities over estimated short‑term (0‑1 year),
medium‑term (1‑5 years) and long‑term (5‑30 years) time horizons. These time horizons have been chosen as they reflect the dynamics of
our industry and our internal processes. They are different to the ones used for financial reporting due to the nature of the risks.
Qualitative scenario analysis is subjective and may be subject to change as we mature and evolve our processes and analysis. We have made assumptions
in our qualitative scenario analysis, which we outline here.
SSP1: increased carbon pricing, faster regulatory activity, transition risks, decreased physical risks
SSP5: slower regulatory activity, need for transformation, increased physical risks
We track relevant externally generated metrics and are putting in place internally generated metrics as explained below. We have not reported progress against
these metrics but will consider doing so in future disclosures as our TCFD reporting processes further develop.
Risk
Type and category
Timeframe
Explanation, mitigation and metric
Availability of
materials
Transition risk
Market
Medium to
long term
Legislative landscape
and policy
Transition risk
Policy and legal
Medium to
long term
Reputation
Shift to low carbon
product solutions
Transition risk
Medium term
Market
Reputation
Changing
weather patterns
Physical risk
Acute and chronic
Medium to
long term
Technological
advancement
Transition risk
Long term
Technology
Price and availability of materials is a risk as cement companies decarbonise
and we continue to feel the impact of the macro environment. Reliance on
cement is an increased risk under SSP1 in a transition phase but may become
lower risk under SSP5.
We mitigate this risk by having a diverse business and end markets. We have
a focus on supplier relationships, flexible contracts and long‑term supply
agreements, and the use of flexible freight forwarding options. There is also a
cement replacement programme for concrete products.
Metric: Supplier engagement targets (internal)
As governments accelerate decarbonisation, there will be impact on
regulation and changes in legislation. This is an increased risk under SSP1 as
decarbonisation accelerates, for example carbon taxes for materials such as
imported cement or steel. Under SSP5, regulatory action will be slower but there
will be more physical risk.
We mitigate this risk by having centralised legal and other specialist functions
and advisers. There are regular policy reviews as well as independent audit
processes which seek to ensure that local, national and international regulatory
and compliance procedures are fully complied with. We also mitigate through
horizon scanning and close collaboration between the Legal and Finance teams.
Metric: Carbon prices and levies (external)
There is continued pressure to give our customers products that lower the
carbon footprint of their projects. There is increased risk under SSP1 as we
transition to a lower carbon economy and the risk increases further under SSP5
as adaptation becomes key.
We mitigate this risk by having a continuing focus on mix design for current
products, new product development and EPD (Environmental Product
Declarations) development. This is supported by an internal training programme
for our sales teams on low carbon solutions and specialist design and
engineering capability.
Metric: Product sales (internal)
Acute physical risk of extreme weather events, such as flooding, and chronic
physical risk of longer-term changes in weather patterns that may cause heat
or water stress may impact our sites. This is a longer-term risk which decreases
under SSP1 but increases under SSP5.
We mitigate this risk by analysing climate risk at site level, engaging with
stakeholders and looking at short to medium-term solutions.
Metric: Cost of lost production days due to weather events (internal)
Aspects of our operations, distribution and transport will need technology to
transition to a net zero world and there is a risk that we don’t adapt quickly
enough. This is a longer‑term risk with elements of high uncertainty. Our
qualitative scenario analysis assesses this as decreased risk under SSP1
as we decarbonise along our science-based targets pathway and increases
under SSP5.
We mitigate this risk through the development of our environmental roadmap
and carbon reduction plan, supported by our commitment to carbon reduction
via science-based targets.
Metric: Science-based targets for Scopes 1, 2 and 3 (internal)
46
Marshalls plc | Annual Report and Accounts 2023
Identifying, assessing and managing climate-related risks
Identify
Climate-related risks are
identified by ESG Delivery
Team, Finance, Operations
and Climate Disclosures
Working Group
Assess
Significant risks are
discussed by the
Climate Disclosures
Working Group and
assessed by the ESG
Steering Committee
Manage
Agreed risks are managed
by the relevant teams, with
CFO and COO oversight
Integrate
Risks that have been
identified and assessed to
be significant to the overall
risk process are added to
the Risk Register
Climate-related opportunities
Transitioning to a net zero world will bring opportunities as well as risks. We are well placed to maximise on these opportunities as part of our
strategic goal to be the UK’s leading manufacturer of sustainable solutions for the built environment.
Opportunity
Type
Impact
Meeting our carbon
reduction targets
Resource efficiency
Energy source
Achieving our carbon reduction targets is an opportunity for Marshalls to transition to a
net zero world. As we strive to be more energy efficient, we are looking at different ways to
reduce our carbon footprint across the value chain.
Potential impact: brand preference, opportunities across the value chain, reduced costs from
efficiencies, reputation
Sustainable
construction products
Products and services
Resilience
Building and planning regulations encourage the use of water management solutions and
sustainable urban drainage solutions (“SuDS”) as well as the use of products that promote
energy efficiency, such as solar panels and concrete bricks.
Potential impact: increased product sales, brand preference
Brand proposition
Markets
The Marshalls brand is strongly based on ESG and sustainability credentials. The opportunity
is in strengthening our position in order to be an attractive investment proposition.
Potential impact: investment proposition, reputation
Targets
Our current targets (excluding Marley) are outlined here in order to give an overview of the metrics and targets we track to measure our
environmental performance. In 2024, these targets will be reviewed as part of the integration of Marley into our environmental roadmap and the
validation by the SBTi of our revised carbon reduction targets.
Target
59.4 per cent reduction of relative Scope 1 and 2 emissions
against a 2018 baseline (kg CO2/tonne)
Target year
2030
Status
On target – 2023 target achieved
2025 target: 29 per cent reduction
50.5 per cent reduction of absolute Scope 1 and 2 emissions
against a 2018 baseline (tonnes CO2e)
2030
On target – 2023 target achieved
2025 target: 36 per cent reduction
Linked to MIP/BSP
73 per cent of suppliers by emissions have science-based targets 2024
2.7 per cent energy reduction year on year
33 per cent reduction in mains water usage per tonne of product
from a 2021 baseline
Zero waste to landfill
Ongoing
2030
2030
On target – 2023 progress: 68 per cent (internal estimate)
Achieved for 2023 – 2023 progress: 10 per cent reduction
On target – 2023 progress: 18 per cent decrease
On target – 2023 progress: 0.27 per cent
The quantification and reporting of Marshalls’ environmental data has been independently verified by BSI against Marshalls’ criteria of 5 per cent
accuracy. The verification activity has been carried out in accordance with ISO 14016:2020. Marley’s data has also been third‑party verified by
Stuart Jackson Associates.
Read the full BSI verification report:
https://www.marshalls.co.uk/sustainability/document-library
Marshalls plc | Annual Report and Accounts 2023
47
Strategic Report Strategic Report
Financial Review
In response to the challenging market
environment, the Board took action to
reduce costs and net debt through the tight
management of cash
Trading performance
Revenue
Group revenue in 2023 was £671.2 million (2022: £719.4 million),
which represents a year on year reduction of seven per cent including
the benefit of an additional four months of Marley revenues. Revenue
contracted on a like-for-like basis by 13 per cent. Group revenue by
reporting segment is summarised below.
Analysis of revenue by segment
Marshalls Landscape Products
Marshalls Building Products
Marley Roofing Products
Group revenue
2023
£’m
321.5
170.1
179.6
671.2
2022
£’m
394.1
193.1
132.2
719.4
Change
%
(18%)
(12%)
36%
(7%)
Adjusted operating profit and margins
Adjusted operating profit reduced by 30 per cent to £70.7 million (2022:
£101.1 million) driven by lower demand in our key end markets which
resulted in lower gross profit and a reduction in the efficiency of the
Group’s manufacturing and distribution operations. A summary of
adjusted operating profit by segment is set out in the following table
and commentary of each segment is set out on pages 19 to 21.
Analysis of operating profit by segment
Marshalls Landscape Products
Marshalls Building Products
Marley Roofing Products
Central costs
Adjusted operating profit
2023
£’m
21.3
12.2
44.9
(7.7)
70.7
2022
£’m
45.3
26.8
34.4
(5.4)
101.1
Change
%
(53%)
(54%)
31%
(43%)
(30%)
The Group’s adjusted operating margin contracted by 3.6 percentage
points to 10.5 per cent (2022: 14.1 per cent), which reflects the weaker
performance of Marshalls Landscape and Building Products during the
year, partially offset by the structurally higher margins generated by
Marley. This reduction is summarised as follows.
Analysis of revenue by segment
2022
Marshalls Landscape Products
Marshalls Building Products
Marley Roofing Products
Central costs
Revenue
£’m
Adjusted
operating profit
£’m
719.4
(72.6)
(23.0)
47.4
—
101.1
(24.0)
(14.6)
10.5
(2.3)
Margin
impact
%
14.1%
(2.1%)
(1.6%)
0.5%
(0.4%)
2023
671.2
70.7
10.5%
Justin Lockwood
Chief Financial Officer
Introduction
2023 was a challenging year for the Group with reduced activity
levels in its key end markets resulting in a significant reduction in
demand for the Group’s products. In response, the Board took decisive
action to ensure that our manufacturing capacity was aligned with
the market demand, to reduce the cost base and to reduce net debt
through tight management of cash. The weakness in the Group’s end
markets resulted in a significant deterioration in the Group’s financial
performance with adjusted profit before tax reducing by 41 per cent
to £53.3 million due to lower operating profits and a higher finance
charge. The reported profit before tax includes adjusting items totalling
£31.1 million and £18.3 million of this arises from the restructuring
exercises that were conducted during the year. Our focus on managing
cash and capital efficiently resulted in pre‑IFRS 16 net debt reducing by
£17.8 million to £172.9 million and allowed us to repay £30 million of
the Group’s term loan in January 2024.
Alternative performance measures and adjusting items
The Group uses alternative performance measures (“APMs”) which
are not defined or specified under IFRS. The Group believes that these
APMs, which are not considered to be a substitute for IFRS measures,
provide additional helpful information. APMs are consistent with how
business performance is planned, reported and assessed internally
by management and the Board and provide additional comparative
information. Adjusting items are items that are unusual because of
their size, nature or incidence and which the Directors consider should
be disclosed separately to enable a full understanding of the Group’s
results and to demonstrate the Group’s capacity to deliver dividends
to shareholders.
48
Marshalls plc | Annual Report and Accounts 2023
2023 Revenue analysis by segment
Analysis of change in revenue
2022–2023
800.0
700.0
600.0
500.0
719.4
(72.6)
(23.0)
47.4
671.2
Marshalls Landscape
Products (48%)
Marshalls Building
Products (25%)
Marley Roofing
Products (27%)
Adjusting items
Adjusted operating profit is stated after adding back adjusting items
totalling £29.7 million (2022: £53.2 million) in accordance with the
Group’s accounting policy, as summarised in the following table.
Amortisation of intangible assets arising
on acquisitions
Impairment charges, restructuring and
similar costs
Additional contingent consideration
Disposal of Marshalls NV
Transaction related costs
Fair value adjustment to inventory
Adjusting items within operating profit
Adjusting items within financial expenses
Adjusting items within profit before tax
2023
£’m
10.4
18.3
1.6
(0.6)
—
—
29.7
1.4
31.1
2022
£’m
7.3
13.0
3.9
10.2
14.9
3.9
53.2
—
53.2
m
£
’
400.0
300.0
200.0
100.0
0.0
2022
revenue
Marshalls
Landscape
Products
Marshalls
Building
Products
Marley
Roofing
Products
2023
revenue
Adjusting items in 2023 principally comprise restructuring and similar
costs of £18.3 million (2022: £13.0 million) and the amortisation of
intangible assets arising on the acquisition of subsidiary undertakings
of £10.4 million (2022: £7.3 million). The restructuring costs comprise
redundancy costs, impairment charges and other expenses arising
from the decisive action taken during the year in response to the
challenging market conditions. This includes £8.3 million of non-cash
charges and £10.0 million of cash costs. The contingent consideration
charge reflects an increase in the expected payments in respect of
the acquisition of Viridian Solar based on the strong performance of
that business. The disposal of Marshalls NV on 13 April 2023 resulted
in a profit on disposal of £0.6 million (2022: impairment charge of
£10.2 million). In 2022, adjusting items included transaction related
costs and a fair value adjustment to inventory, both of which were
associated with the Marley acquisition.
Profit and loss account
The Group’s profit and loss account from reported operating profit through to profit after taxation on both an adjusted and reported basis is set out
in the following table.
Operating profit
Net finance costs
Profit before taxation
Taxation
Profit after taxation
Earnings per share – pence
Adjusted
2023
£’m
Reported
2023
£’m
Adjusted
2022
£’m
Reported
2022
£’m
Adjusted
change
%
Reported
change
%
70.7
(17.4)
53.3
(11.2)
42.1
16.7p
41.0
(18.8)
22.2
(3.8)
18.4
7.4p
101.1
(10.7)
90.4
(17.1)
73.3
31.3p
47.9
(10.7)
37.2
(10.7)
26.5
11.4p
(30%)
—
(41%)
—
(43%)
(47%)
(14%)
—
(40%)
—
(31%)
(35%)
Net finance costs
Adjusted net finance costs were £17.4 million (2022: £10.7 million) and
£18.8 million on a reported basis. The expense comprises financing costs
associated with the Group’s bank borrowings of £14.7 million (2022: £8.2
million), IFRS 16 lease interest of £2.5 million (2022: £2.4 million) and a
pension related expense of £0.2 million (2022: £0.1 million). The increase
in adjusted financial costs in the period reflects the impact of a full twelve
months of the additional debt financing used to part‑fund the acquisition
of Marley and the increase in base rates. The reported interest charge
includes a non-cash, one-off accounting charge of £1.4 million arising
from the Board’s decision to augment the benefits of certain pensioners
who would have otherwise suffered hardship due to a reduction in
pension payments following a review to correct historical benefit issues
(see page 128 for further details).
Taxation
The adjusted effective tax rate was 21.0 per cent (2022: 18.9 per cent),
which is lower than the average UK headline rate of corporation tax
of 23.5 per cent. On a reported basis the effective tax rate was 17.1
per cent. The Group has paid £10.4 million (2022: £11.6 million) of
corporation tax during the year.
For the tenth year running, Marshalls has been awarded the Fair Tax Mark,
which recognises social responsibility and transparency in a company’s tax
affairs. The Group’s tax approach has long been closely aligned with the
Fair Tax Mark’s objectives and this is supported by the Group’s tax strategy
and fully transparent tax disclosures. Considering not only corporation tax
but also PAYE and NI paid on our employee wages, aggregate levy, VAT, fuel
duty and business rates, the Group has contributed taxation of £101 million
(2022: £108 million) to the UK government.
Marshalls plc | Annual Report and Accounts 2023
49
Strategic Report
Financial Review continued
Trading performance continued
Earnings per share
Adjusted earnings per share was 16.7 pence in 2023 (2022: 31.3 pence),
which represents a reduction of 47 per cent compared to 2022. Reported
earnings per share was 7.4 pence (2022: 11.4 pence), which is lower
than the adjusted performance due to the impact of the adjusting items
and their tax effect.
Cash flow
As part of its response to weaker end market activity levels, the Board
has focused on cash and capital efficiency with the aim of reducing the
Group’s net debt. This has principally been focused on aligning working
capital levels with market demand, at the expense of the efficiency
of the Group’s factories, reprioritising capital expenditure plans, and
selling surplus land. As a result of this, reported net debt reduced by
£19.0 million as set out in the following table.
Adjusted operating profit
Depreciation and amortisation
Working capital and other movements
Adjusting items paid
Adjusted cash generated from operations
Finance costs
Taxation
Adjusted cash flow from operating activities
Acquisition cash flows
Dividends
Net capital expenditure
Principal portion of lease payments
Other items
Change in net debt
Opening net debt
Closing net debt
2023
£’m
70.7
43.3
(3.9)
(5.5)
104.6
(16.5)
(10.4)
77.7
(4.4)
(31.6)
(13.9)
(9.6)
0.8
19.0
(236.6)
2022
£’m
101.1
42.2
(19.1)
(17.4)
106.8
(9.9)
(11.6)
85.3
(195.5)
(38.7)
(28.7)
(11.1)
(6.8)
(195.5)
(41.1)
(217.6)
(236.6)
The Group reported a net cash inflow from working capital and other
movements during the period, which reflects decisions taken to align
inventory levels with market demand alongside tight management of
trade accounts receivable. The Group reported strong cash conversion
with adjusted operating cash flow (before adjusting items paid) of
106 per cent of adjusted EBITDA.
Finance cash flows increased in line with the Group’s higher finance
costs whilst taxation cash flows reduced due to lower profitability.
Acquisition cash flows comprised a contingent consideration payment
in respect of the acquisition of Viridian Solar alongside the impact of
the disposal of Marshalls NV on cash balances. Dividend payments
reduced compared to 2022 due to lower profitability with no change to
the Group’s dividend policy of maintaining two times cover of adjusted
earnings per share. Net capital expenditure of £13.9 million comprised
capital expenditure of £20.8 million partially offset by receipts from
asset disposals totalling £6.9 million. Adjusting items paid during
the year were in respect of restructuring charges.
Balance sheet
Total capital employed reduced by £38.8 million due to the amortisation
of intangible assets arising on acquisitions, a reduction in the carrying
value of property, plant and equipment, lower net working capital and a
reduction in the balance sheet valuation of the net pension asset. Our
key medium‑term financing priority is to utilise the cash generated by
the enlarged Group to reduce leverage. We will continue to invest in
organic capital investment opportunities and new product development
where these actions support our strategic goals.
Goodwill
Intangible assets
Property, plant and equipment and
right‑of‑use assets
Net working capital
Net pension asset
Deferred tax
Other net balances
Total capital employed
Reported net debt
Net assets
2023
£’m
324.4
227.5
291.1
91.0
11.0
(84.1)
(2.0)
858.9
(217.6)
2022
£’m
322.6
237.1
303.5
109.7
22.4
(89.4)
(8.2)
897.7
(236.6)
641.3
661.1
Goodwill and intangible assets
Goodwill is not amortised and subject to an impairment review on at
least an annual basis. The latest review was conducted at December
2023 and this did not indicate an impairment of the asset. Details of
this review are set out on page 124 within the Financial Statements.
Intangible assets principally comprise assets that arose on the
acquisition of subsidiaries and software and are amortised over their
useful lives. The amortisation charge in 2023 totalled £12.1 million,
and of this £10.4 million related to the amortisation of assets arising
on acquisitions of subsidiaries which are accounted for as an
adjusting item.
Pensions
The balance sheet value of the Group’s defined benefit pension scheme
(‘the Scheme’) was a surplus of £11.0 million (2022: £22.4 million).
The amount has been determined by the Scheme’s pension adviser
using appropriate assumptions which are in line with current market
expectations. The fair value of the scheme assets at 31 December 2023
was £250.4 million (2022: £254.9 million) and the present value of the
scheme liabilities is £239.4 million (2022: £232.5 million). The total loss
recorded in the Statement of Comprehensive Income net of deferred
taxation was £7.4 million (2022: £2.3 million loss). The principal driver
of the actuarial loss was a 0.3ppt reduction in AA corporate bond rate
used to discount the scheme’s liabilities at December 2023, which
increased the current value of the liabilities, partially offset by an
actuarial gain (net of deferred taxation) of £2.4 million arising from
the resolution of certain historical benefit issues. This resolution
also resulted in a past service cost of £1.4 million, which has been
included in the Income Statement and accounted for as an adjusting
item (see note 4). The last formal actuarial valuation of the defined
benefit pension scheme was undertaken on 5 April 2021 and resulted
in a surplus of approximately £24.3 million, on a technical provisions
basis, which was a funding level of 107 per cent. The Company has
agreed with the Trustee that no cash contributions are payable under
the current funding and recovery plan. The next actuarial valuation is
scheduled for 5 April 2024.
50
Marshalls plc | Annual Report and Accounts 2023
Debt funding
Debt funding is summarised in the following table.
Net borrowings on a pre-IFRS 16 basis
Leases
Reported net debt
2023
£’m
(172.9)
(44.7)
2022
£’m
(190.7)
(45.9)
(217.6)
(236.6)
Reported net debt was £217.6 million at 31 December 2023 (2022:
£236.6 million), including £44.7 million (2022: £45.9 million) of IFRS
16 lease liabilities. On a pre‑IFRS 16 basis, net debt was £172.9 million
(2022: £190.7 million). The total facility at December 2023 was £370
million comprising a £210 million term loan and £160 million revolving
credit facility. The Board repaid £30 million of the £210 million term
loan in January 2024 in order to ensure the efficient management of
borrowings and finance costs. The Group’s revolving credit facility of
£160 million was undrawn at the year end (2022: £120.1 million), which,
together with the reduced term loan, provides the Group with significant
liquidity to fund its strategic and operational plans going forward.
Following the £30 million reduction in the term loan, the syndicated debt
facility totals £340 million with the majority of it maturing in April 2027.
The facility is charged at variable rates based on SONIA plus a margin
and interest rate hedging is in place at a rate of around three per cent
for £120 million of nominal borrowings for various durations out to
June 2026. The Group’s bank facilities continue to be aligned with the
strategy to ensure that headroom against available facilities remains
at appropriate levels and are structured to provide balanced and
committed medium-term debt.
At December 2023, on an adjusted, pre‑IFRS 16 proforma covenant test
basis, and after adding back the impact of adjusting items the relevant
ratios were achieved comfortably and were as follows:
• EBITA: interest charge – 5.2 times (covenant test requirement – to be
greater than 3.0 times).
• Net debt: EBITDA – 1.9 times (covenant test requirement – to be less
than 3.0 times).
Return on capital employed
Adjusted EBITA
Capital employed
Adjusted ROCE
2023
£’m
72.4
858.9
2022
£’m
119.3
897.7
8.4%
13.3%
Adjusted ROCE was 8.4 per cent (2022: 13.3 per cent) with the year
on year reduction arising from the impact that weak demand had
on business volumes and profitability. We expect adjusted ROCE to
increase progressively in the medium term to around 15 per cent as
volumes normalise and we benefit from operational leverage.
Capital allocation policy
Marshalls continues to recognise the three guiding principles of
security, flexibility and efficiency in the determination of its capital
structure. The Group’s optimal capital structure supports the Group’s
current strategic objectives, but also reflects the economic background
and the cyclical nature of the construction sector. The Group’s capital
allocation policy is to maintain a strong balance sheet and flexible
capital structure. There have been no changes to the capital allocation
policy during 2023 and the elements are:
1.
2.
To invest in organic growth opportunities – the Board expects to
invest around £15 to £20 million in capital expenditure in 2024 with
a focus on efficiency and maintenance expenditure given the latent
capacity that is available across the manufacturing network.
To continue to invest in research and development and new product
development – this will be focused on low carbon and energy
efficiency products and the Board expects to maintain expenditure
at similar levels to previous years.
3.
4.
5.
To maintain dividend cover of two times adjusted earnings –
the proposed total dividend for the year of 8.3 pence per share
(2022: 15.6 pence) is in line with this policy.
To focus on deleveraging the balance sheet – the Board will utilise
cash generated by the Group to prioritise deleveraging over any
significant M&A activity until leverage has been reduced to around
one times EBITDA (2023: 1.9 times).
To consider bolt‑on M&A opportunities where we see good
businesses in attractive markets that will add value to the Group’s
product offer and shareholders.
Going concern
In assessing the appropriateness of adopting the going concern basis
in the preparation of the Annual Report, the Board has considered the
Group’s financial forecasts and its principal risks for a period of at least
twelve months from the date of this report. The forecasts included
projected profit and loss, balance sheet, cash flows, headroom against
debt facilities and covenant compliance. The financial forecasts have
been stress tested in downside scenarios to assess the impact on
future profitability, cash flows, funding requirements and covenant
compliance. The scenarios comprise a more severe economic
downturn (which represents the Group’s most significant risk) than that
included in the base case forecast, and a reverse stress test on our
financial forecasts to assess the extent to which an economic downturn
would need to impact on revenues in order to breach a covenant. This
showed that revenue would need to deteriorate significantly from the
financial forecast and the Directors have a reasonable expectation that
it is unlikely to deteriorate to this extent (see page 54 for further details).
Details of the Group’s funding position are set out in Note 20. At
31 December 2023, £160 million of the facility was undrawn. There
are two financial covenants in the bank facility that are tested on a
semi-annual basis and the Group maintains good cover against these
with pre-IFRS 16 net debt to EBITDA of 1.9 times (covenant maximum
of three times) and interest cover of 5.2 times (covenant minimum of
three times).
Taking these factors into account, the Board has the reasonable
expectation that the Group has adequate resources to continue in
operation for the foreseeable future and for this reason, the Board has
adopted the going concern basis in preparing this Annual Report.
Justin Lockwood
Chief Financial Officer
18 March 2024
Marshalls plc | Annual Report and Accounts 2023
51
Strategic Report Risk Management and Principal Risks and Uncertainties
Managing risk is a key factor
in the delivery of the Group’s
strategic objectives
The Board plays a central role in the Group’s risk management process which covers
all forms of strategic, operational and financial risk and incorporates scenario planning
and detailed stress testing.
Achievements in 2023
There continue to be external risks and significant volatility in UK and
world markets driven by conflicts around the world, the impact to
inflation and increases in interest rates. In an addition to the macro‑
economic environment, the key risks for the Group continue to be cyber
security, climate change and other ESG related issues. All these areas
are considered in more detail on pages 55 to 61. In all these cases,
specific risk assessments continue to be reviewed and certain new
operating procedures developed, such as ensuring clear responsibilities
for monitoring legislative changes in the TCFD requirements. Mitigating
controls continue to be reviewed as appropriate. The Group’s risk
function has placed particular emphasis on the following areas
during the year:
• The Group’s resilience and flexibility in response to macro‑economic
uncertainty has been a major focus during the year, as we continue
to transition to a more flexible cost base and structure across the
organisation and removing complexity.
• The Group’s process and internal financial controls review resulted
in the development of a Risk and Control Matrix (“RACM”) for all
identified in‑scope processes, in order to record the key controls
and associated metadata of the end‑to‑end process and to identify
and remedy any control gaps identified. KPMG has provided support
to this project and during 2023 registers have been developed
and resolutions developed where improvements can be made.
• Cyber risk has continued to be a major focus in light of increasing
external threats. Ongoing reviews, with additional resource,
continue to be undertaken using both internal and external
specialists. Practical support and guidance, together with additional
cyber security training, are provided to facilitate home working
and this continues to be a priority. The Group has also taken
cyber insurance cover for part of the business for the first time.
The Group completed a number of targeted internal audit projects
during 2023 covering the following areas:
• Microsoft Dynamics 365 implementation;
• continued support on the project to review the Group’s financial
control environment;
• cyber security; and
• ESG reporting.
The internal audits include “risk‑based” audits, identified as a result
of assessing the Group’s key risks. They also include audits identified
to cover key operational, financial, IT and regulatory areas subject
to routine cyclical coverage.
Priorities for 2024
The priorities for the Group’s risk function in 2024 include the
following areas:
• the completion of a number of targeted projects will again be
a major focus for the Group. In 2024, projects will cover health
and safety and lease accounting; and
• continuing to support the Group’s reform project to review
the internal control environment.
Approach to risk management
Risk management is the responsibility of the Board and is a key factor
in the delivery of the Group’s strategic objectives. The Board establishes
the culture of effective risk management and is responsible for
maintaining appropriate systems and controls.
The Board sets the risk appetite and determines the policies and
procedures that are put in place to mitigate exposure to risks. The
Board plays a central role in the Group’s risk review process, which
covers emerging risks and incorporates scenario planning and detailed
stress testing.
52
Marshalls plc | Annual Report and Accounts 2023
Risk management framework
Risk heatmap (net risk scores)
The Board:
• determines the Group’s approach to risk, its policies
and the procedures that are put in place to mitigate
exposure to risk.
10
m
5
£
>
7
1
2
9
The Audit Committee:
• has delegated responsibility from the Board to oversee
risk management and internal controls;
• reviews the effectiveness of the Group’s risk
management and internal control procedures; and
• monitors the effectiveness of the internal audit function
and the independence of the external audit.
Executive Directors:
• are responsible for the
effective maintenance
of the Group’s
Risk Register;
• oversee the
management of risk;
• monitor risk mitigation
and controls; and
• monitor the effective
implementation of
action plans.
Internal audit:
• independently reviews
the effectiveness
of internal control
procedures;
• reports on effectiveness
of management
actions; and
• provides assurance to
the Audit Committee.
Operational managers:
• are responsible for the identification of operational and
strategic risks;
• are responsible for the ownership and control of
specific risks;
• are responsible for establishing and managing the
implementation of appropriate action plans; and
• are responsible for the impact of controls (net basis).
t
c
a
p
m
I
m
5
£
–
m
2
£
m
2
£
<
3
6
8
11
5
12
4
Low
Medium
Likelihood
High
1 Macro‑economic and political
2 Cyber security risks
3 Security of raw material supply
4 Long-term impacts of climate change
5 Human rights considerations
6 Short-term impacts of weather events
7 Threat from new technologies and business models/
increased pace of digital change
8 Corporate, legal and regulatory
9 Competitor activity
10 Project delivery of major strategic business projects
and change management
11 Health and safety
12 People risk
Process
There is a formal ongoing process to identify, assess and analyse risks,
and those of a potentially significant nature are included in the Group
Risk Register.
The Group Risk Register is updated by the Executive Management
team at least every six months and the overall process is the subject
of regular review by the Board. Risks are recorded with a full analysis,
and risk owners are nominated who have authority and responsibility
for assessing and managing the risk. KPMG LLP, as the Group’s internal
auditor, attends the risk review meetings alongside Deloitte LLP,
the Group’s external auditor. The process continues to be a robust
mechanism for monitoring and controlling the Group’s principal risks,
and for challenging the potential impact of new emerging risks. All risks
are aligned with the Group’s strategic objectives, each risk is analysed
in terms of likelihood and impact to the business and the determination
of a “gross risk score” enables risk exposure to be prioritised.
The Group seeks to mitigate exposure to all forms of strategic, financial
and operational risk, both external and internal. The effectiveness and
impact of key controls are evaluated and this is used to determine a
“net risk score“ for each risk. The process is used to develop detailed
action plans that are used to manage, or respond to, the risks, and
these are monitored and reviewed on a regular basis by the Group’s
Audit Committee and the Board.
The Group has a formal framework for the ongoing assessment of
operational, financial and IT‑based controls. The overriding objective
is to gain assurance that the control framework is complete and that
the individual controls are operating effectively. This assurance will be
enhanced in response to the FRC’s change to the Corporate Code that
becomes effective from January 2026.
Marshalls plc | Annual Report and Accounts 2023
53
Strategic Report Risk Management and Principal Risks and Uncertainties continued
Approach to risk management continued
Risk appetite
The Group is prepared to accept a certain level of risk to remain
competitive, but continues to adopt a conservative approach to risk
management. In assessing risk appetite, the aim is to ensure that
internal controls and risk mitigation measures are designed to reduce
the net risk score to a point that aligns with the identified risk appetite.
The aim is to ensure that we continue to channel resources to those
mitigation measures and controls that specifically reduce risk to
areas where we have a net risk score that lies outside our acceptable
risk appetite. The risk framework is robust and provides clarity in
determining the risks faced and the level of risk that we are prepared
to accept. Marshalls’ strategies are designed to either treat, transfer
or terminate the source of the identified risk.
Viability Statement
After considering the principal risks on pages 55 to 61, the Directors
have assessed the prospects of the Group over a longer period than the
period of at least twelve months required by the ‘going concern’ basis of
accounting. The Directors consider that the Group’s risk management
process satisfies the requirements of provision 31 of the UK Corporate
Governance Code.
The Board considers annually, and on a rolling basis, a strategic plan,
which is assessed with reference to the Group’s current position and
prospects, the strategic objectives and the operation of the procedures
and policies to manage the principal risks that might threaten the
business model, future performance and target capital structure. In
making this assessment, the Board considers emerging risks and
longer-term risks and opportunities. The aim is to ensure that the
business model is continually reviewed to ensure it is sustainable over
the long term. Security, flexibility and efficiency continue to be the
guiding principles that underpin the Group’s capital structure objectives.
The Group’s funding strategy is to ensure that headroom remains at
comfortable levels under all reasonable planning scenarios.
For the purposes of the Viability Statement, the Board continues to
believe that three years is an appropriate period of assessment as
this aligns with the current planning horizon. Although our central
forecasting models cover a five‑year period, it remains the case that
there is less visibility beyond three years. The Construction Products
Association’s (‘CPA’) forecasts currently go out to 2025. This remains
compatible with the five‑year Strategy and the longer‑term objectives for
our strategic growth pillars over a five‑year period. The Group’s financial
forecast includes an integrated model that incorporates the Income
Statement, balance sheet and cash flow projections. The detailed
stress testing reflects the principal risks that could impact the Group
and could conceivably threaten the Group’s ability to continue operating
as a going concern. The assessment concluded that the deteriorating
macro-economic environment is the key risk for this purpose and, in
response to this, two scenarios have been run, namely a ‘reasonable
worst-case scenario’ and a ‘reverse stress test’.
The reasonable worst‑case scenario comprises a significant stress test
sensitivity run against the base case model. This sensitivity reflects
a scenario that incorporates twice the downside assumed between
the CPA’s central case and lower scenario from its 2023/2024 Winter
forecast. This scenario results in a cumulative revenue reduction of
five per cent during 2024 and 2025 against the base case forecast. An
operating ‘drop-through’ rate has been applied based on the operational
gearing of each business unit. Under the downside model, net debt
reduces to £198 million (£155 million on a pre-IFRS 16 basis) by the
end of 2024, and bank covenants are still comfortably met throughout
the viability period, to December 2026. The net effect of reduced
operating profit is mitigated by reduced tax and dividend cash flows.
There remains comfortable headroom against bank facilities and
bank covenants are comfortably met with the pre-IFRS 16 net debt to
adjusted EBITDA covenant peaking at 1.9 in June 2024. In practice,
under such a downside scenario the Group could instigate certain
mitigation measures to reduce costs and capacity and to manage cash.
For the purposes of Going Concern assessment, we have applied a
reverse stress test scenario to identify a deeper downside trading
position that would give rise to a covenant breach. Against the base
budget revenue, a reduction of 20 per cent alongside an operating profit
‘drop through’ of around 40 per cent would be required during 2024
to breach a covenant at 31 December 2024. This is after assuming
the benefit of £10 million of cost savings, a reduction in capital
expenditure and pausing dividend payments. This scenario equates
to over nine times the volume downside assumed between the CPA’s
central case and lower scenario from its 2023/2024 Winter forecast.
This reverse stress test scenario reduces revenue by approximately
£135 million during 2024. There remains reasonable headroom against
bank facilities, but the EBITA: finance costs bank covenant marginally
breaches three times at 31 December 2024.
In undertaking its review, the Board has considered the appropriateness
of the key assumptions, considering the external environment and
the Group’s strategy and risks. Based on this assessment, and
taking account of the Group’s principal risks and uncertainties, the
Directors confirm that they have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as
they fall due for the next three years. The reverse stress test scenario
provides an indication of the scale of downturn that could be absorbed
by the Group. The analysis provides the required evidence for the
Directors’ assessment that the going concern assumption remains
appropriate and supports a positive conclusion for the longer-term
Viability Statement.
54
Marshalls plc | Annual Report and Accounts 2023
Links to corporate pillars
Impact on business model
Shareholder value
Organic expansion
Sustainable profitability
Brand development
Relationship building
Effective capital structure
and control framework
Sourcing
Manufacturing
Distribution
Customers
Read more about our strategy on pages 22 to 25
Read more about our business model on pages 6 and 7
Principal risks and uncertainties
The Directors have undertaken a robust, systematic assessment of the Group’s emerging and principal risks. These have been considered within
the timeframe of three years, which aligns with our Viability Statement on page 54. The risk process has increasingly allocated greater focus on
emerging risks and risk outlook. The reporting includes more detailed assessments of proximity (how far away in time the risk will occur) and
velocity (the time that elapses between an event occurring and the point at which the effects are felt).
1. Macro-economic and political
Nature of risk and potential impact
The Group is dependent on the level of
activity in its end markets. Accordingly, it
is susceptible to economic downturn, the
impact of Government policy, volatility in
UK and world markets and supply chain
and labour market issues. During 2023,
higher interest rates and significant cost
inflation have created a cost of living crisis
for large elements of the UK population.
This uncertainty has impacted market
sentiment and this has been exacerbated
by the increasing impact of wider geo-
political factors (including the conflict
in Ukraine and the Middle East) and
the impact of unprecedented levels of
Government borrowing. These factors led to
a significant reduction in new house building
and lower private housing RMI activity.
Potential impact
The potential longer-term impact of macro-
economic uncertainty and continued cost
inflation and higher interest rates could
further reduce consumer confidence and
demand and lead to lower activity levels.
This could have an adverse effect on the
Group’s financial results. There continues
to be volatility in world markets and global
economic uncertainty continues to be a risk.
A continuation of high interest rates and
inflation could lead to disrupted markets
over a more extended period.
Key risk indicators
• Increasing
inflation, gilt rates
and interest rates.
• An escalation of
the war in Ukraine
and the Middle
East and other
increased global
uncertainty.
• Reductions
in consumer
confidence and
order pipeline.
Mitigating factors
• The Group closely monitors trends and
lead indicators, invests in market research
and is an active member of the CPA.
• The Group benefits from the diversity
of its business and end markets.
• The proactive development of the product
range also continues to offer protection.
• The Group undertakes scenario planning
to support improved business resilience.
• The Group continues to focus on those
market areas where growth prospects
are greatest.
• Restructuring activities have reduced
the Group’s cost base.
• Focus on innovation, new product
development and the ESG-driven
opportunities to drive competitive
advantage.
Change
No change in risk
The UK Government’s stated
objective is to support construction
and significant investment support
for infrastructure and housing is
expected over the medium term;
however, the short-term outlook
for construction continues to be
weak. The economic slowdown
has resulted in a loss of business
and consumer confidence
in 2023, leading to delays in
investment decisions. It appears
increasingly likely that the current
interest rate cycle has peaked
leading to lower borrowing cost
expectations which should support
increasing activity levels in the
Group’s key end markets.
Priorities
• Regular scenario planning
to assess various market risks
and disruptive events.
• Strategic reviews focusing
on business resilience
and diversification.
• Increase operational efficiency
and maintain flexibility in the
manufacturing network.
Links to corporate pillars
Impact on business model
Marshalls plc | Annual Report and Accounts 2023
55
Strategic Report
Risk Management and Principal Risks and Uncertainties continued
Principal risks and uncertainties continued
2. Cyber security risks
Nature of risk and potential impact
Constantly evolving and indiscriminate risk
of cyber-attack.
Inadequate controls and procedures to
protect intellectual property, sensitive
employee information and market
influencing data.
The failure to improve controls against
cyber security risk quickly enough, given the
rapid pace of change and the continuing
threat of ransomware and denial of service
attacks, as well as any new cyber threats.
Heightened risk as IT is increasingly
integrated into all business processes
including the industrial network
and equipment.
The introduction of AI-led attacks which
make it harder to identify, prevent and
mitigate due to the increased sophistication.
Potential impact
Operational disruption and financial loss
due to the increased dependence on IT
from the Group’s industrial and corporate
networks and equipment. As well as data
loss, fraud and fines causing financial
and reputational risk.
Key risk indicators
• Emergence of new
and evolving cyber
security risks.
• Increased
examples of data
loss and security
breaches in the
wider market,
with specific focus
on manufacturing
and construction.
Mitigating factors
• IT security policies and procedures aligned
to internationally recognised standards.
• Regular external cyber security risk
audits undertaken by specialists and
the use of industry recognised controls
and procedures.
• Annual penetration and vulnerability
tests of external and internal systems
and networks.
• A continuous programme of awareness,
training, and phishing simulation for staff.
• Appropriate tools and training procedures
are in place to protect sensitive data when
stored and transmitted between parties.
• Industry-recognised cyber security tools
and software.
• Cyber insurance to cover business
interruption, loss of earnings and response
services for the majority of the Group.
• Deployment of additional controls
to help prevent and respond to a
ransomware attack.
• Improvements and testing of our incident
response process including business-wide
simulations and playbooks.
Change
No change in risk
The Group’s cyber maturity
assessment continues to
improve but cyber remains a
high‑profile area. We are witnessing
more incidents, especially
in the construction industry.
Improvements have been made
to the cyber control environment
in Marley to bring it in line with
that of Marshalls; however, this
continues to be an area of focus.
Considerable effort continues to
be given to promoting awareness
of cyber security threats and
our own IT security policies.
The risk of data loss through new
(or unknown) security threats
continues to increase.
Priorities
• Bolster our controls of our
industrial network and equipment.
• Continue to develop cyber
risk strategy.
• Alignment of controls in Marley.
• Improve our cyber security
response plans and identify
and rectify any gaps.
Links to corporate pillars
Impact on business model
3. Security of raw material supply/raw material and labour shortages
Nature of risk and potential impact
Globally, the impact of the ongoing
Ukrainian and Middle East conflicts coupled
with general energy supply continues to
impact material availability and has resulted
in significant cost inflation.
There continues to be availability issues
with imported materials and longer term
there is a risk of “carbon taxation”.
Potential impact
Cost inflation or interruption of supply
could lead to customer dissatisfaction
and reduce demand and margins.
Change
Reduced risk
Continued weak demand has led to
reduced availability issues, although
cost inflation has continued.
The risk of temporary shortages
is mitigated by proactive supply
chain management and the use
of alternative suppliers.
Priorities
• Increase productivity and
manufacturing efficiency.
• Continue to develop supply chain
strategies to reduce risk.
Key risk indicators
• Temporary
Mitigating factors
• The Group benefits from the diversity
shortages and
cost inflation,
impacting
materials
and labour.
• Decreases
in labour
availability and
skills shortages,
particularly in
engineering.
of its business and end markets.
• The acquisition of Marley has increased
diversification and created additional
procurement opportunities.
• Maintaining adequate, but not
excessive, stocks.
• Collaboration with all EU-based tier one
and tier two suppliers to ensure any supply
risks are minimised.
• The digitalisation of the supply chain
through the implementation of a
best-in-class Supply Relationship
Management System.
• The Group focuses on its supplier
relationships, flexible contracts and
long-term supply agreements, the use of
hedging instruments and the use of flexible
freight forwarding options.
• The Group utilises sales pricing and
purchasing policies designed to mitigate
the risks.
• Consideration of alternative technologies,
including the reduction of cement content.
Links to corporate pillars
Impact on business model
56
Marshalls plc | Annual Report and Accounts 2023
Links to corporate pillars
Impact on business model
Shareholder value
Organic expansion
Sustainable profitability
Brand development
Relationship building
Effective capital structure
and control framework
Sourcing
Manufacturing
Distribution
Customers
Read more about our strategy on pages 22 to 25
Read more about our business model on pages 6 and 7
4. Long-term impacts of climate change
Nature of risk and potential impact
Increasing focus on ESG and the heightened
awareness of environmental challenges,
with increased operational and reporting
requirements, hardening targets and greater
scrutiny by investor and stakeholder groups.
The acquisition of Marley means we are
having to review and revise our targets
and environmental roadmap to reflect the
change in energy consumption profile.
Risk of allocating insufficient resource and
investment to support our environmental
roadmap and product innovation
towards adaptation.
A summary of more specific environmental
risks is included in the ESG section on
pages 46 and 47.
Potential impact
Risk that investors and customers could
reduce support if the Group failed to
improve performance against targets or did
not report appropriately. Risk of customers
switching products away from those with
a higher carbon footprint.
Cost impact of the “Environmental Protocol”
and mitigation programmes could lead to
increasingly expensive processes.
Key risk indicators
• Negative feedback
from stakeholders
– loss of business
and investment.
• Failure to meet
internal targets.
Mitigating factors
• The Group utilises experienced, specialist
staff to support the Group’s focus in
this area.
• Clear governance structure and reporting
processes in place. ESG Board Committee
meetings supported by an experienced
ESG Steering Committee with Executive
and Board level representation. This is
further supported by an ESG Delivery
Team with responsibility for delivering
the ESG strategy.
• Specialist third parties including the
Carbon Trust and Verisk Maplecroft
(see further details on pages 44 and 45).
• Climate risk analysis.
• Agreed carbon reduction plan and a set
of KPIs established.
• The Group is committed to the SBTi and a
new Group plan is now being developed to
include the impact of the Marley business
on our Group carbon footprint.
• Working groups established in all focus
areas and controls being progressively
embedded across the business, including
the Climate Disclosures Working Group.
Change
No change in risk
Significantly heightened focus
from stakeholders, Government,
customers and investors.
Expectation of clarity over financial
impact of strategic plans and
transition risk. TCFD and CFD
disclosure requirements.
Priorities
• Integration of Marley into
the Group’s ESG policies
and procedures.
• Re-calculation of carbon
reduction targets and net zero
timeline to include Marley.
• Ongoing assessment of
climate change and risks for
production, facilities, products
and distribution.
• Monitor progress on strategy
covering targets, products
and business processes.
• Review of opportunities to
improve ESG reporting.
Links to corporate pillars
Impact on business model
5. Human rights
Nature of risk and potential impact
Lack of visibility of human rights within the
supply chain.
Increased global attention on modern
slavery and diversity reporting.
The continuing requirement to identify risk
across the whole supply chain and the need
to maintain reliable and consistent internal
systems, processes and procedures.
A summary of more specific social risks
is included in the Sustainability section on
pages 38 to 43.
Potential impact
Risk that stakeholders could reduce support
if the Group failed to address issues around
modern slavery and diversity appropriately.
Key risk indicators
• Negative feedback
from stakeholders
– loss of business
and investment.
• Inadequate data to
support systems
and procedures.
• Increase in general
level of disclosure
required and
administrative
compliance.
• Failure to make
tender lists if
basic due diligence
requirements are
not met.
Mitigating factors
• Human rights strategy oversight by the
ESG Steering Committee and revised
ESG governance framework.
• The Group utilises experienced,
specialist staff to support the Group’s
focus in this area and the development
of a comprehensive strategy.
• Regular internal cross-functional
meetings to discuss progress, issues
and focus areas.
• Specific supply chain human rights
training for entire procurement team.
• Annual analysis of sourcing country risk.
• Focus on ethical sourcing processes
with BES 6001.
• Working groups established in all
focus areas.
Change
Reduced in risk
Focus from stakeholders,
Government, customers and
investors and increased operational
and reporting requirements.
Disposal of the business in Belgium
reduces this risk for the Group.
Priorities
• Strategic partnership working
with stakeholders including UK
and overseas governments,
NGOs and industry groups.
• Increase focus on the
development of the Group’s
comprehensive strategy.
• Develop robust IT platform for
data collection and analysis.
• Use of independent third-party
audits to cover more regions
and product lines.
Links to corporate pillars
Impact on business model
Marshalls plc | Annual Report and Accounts 2023
57
Strategic Report
Risk Management and Principal Risks and Uncertainties continued
Principal risks and uncertainties continued
6. Impact of weather events
Nature of risk and potential impact
Increasingly unpredictable weather
conditions and extreme weather events.
Increased incidence of flooding and
droughts across the country.
The longer-term implications of climate
change give rise to the transition risk of not
addressing the challenges quickly enough.
Potential impact
Disruption to supply chain and operations
that might reduce short-term activity levels.
Operational difficulties at manufacturing
sites due to flooding and droughts.
Financial risk caused by adverse impact
on margins and cash flows as well as sales
and production volumes.
Key risk indicators
• Prolonged periods
of bad weather
(e.g. snow, ice
and floods) which
make ground
working difficult
or impossible.
• Changing public
perceptions of
the longer-term
implications of
climate change.
Mitigating factors
• Diversity of the business.
• The Group utilises centralised specialist
functions to support mitigation plans
and the management of relationships
on commercial contracts.
• Climate change risk analysis in place.
• Commitment to water harvesting and
recycling schemes.
• The development of resilience strategies
for climate change is a key element of
the Group’s Climate Change Policy.
• The development of the Group’s Water
Management business and the continuing
focus on new product development.
Change
Reduced in risk
Weather conditions continue
to be closely monitored but are
beyond the Group’s control.
Significant increase in public
awareness of climate change.
Priorities
• Continue to develop
resilience strategies.
• Development of Civils
and Drainage business.
Links to corporate pillars
Impact on business model
7. Threat from new technologies and business models, and the increased pace of digital change in the market
Nature of risk and potential impact
Reduction in demand for traditional
products. Risk of new competitors and new
substitute products appearing although
this risk is set against a challenging
2024 outlook.
Failure to react to market developments,
including digital and technological advances.
Competitor application of AI to add value
to customer offer.
Potential impact
The increased competition could
reduce volumes and margins on
traditional products.
Increased costs and production capacity
tied up in redundant technologies.
There is also the risk that a disruptor could
use emerging digital technology to enter
the market through non-traditional routes
to market.
Loss of business to competitors who
deliver advantage through AI.
Key risk indicators
• Less demand
for traditional
products and
routes to market.
• Emergence of
new competitors
and new digital
business models.
• More widespread
availability of
artificial intelligence
technology.
Mitigating factors
• Good market intelligence and ongoing
monitoring of competitive threats.
• Flexible business strategy able to embrace
new technologies.
• Significant focus on research and
development and new products.
• A focus on the ease of doing business
with the Group.
• Specification strategy to keep us close
to customers.
• Use of AI in quotation process.
Change
No change in risk
The ongoing diversification of
the business, the continued
development of the Group’s brands
and the focus on new products and
greater manufacturing efficiency
continue to mitigate the risk.
The pace of digital change in the
market continues to increase
although this is balanced by a
challenging outlook.
Priorities
• Increase pace of digital change
and technological solutions
(e.g. Dropship).
• Focus on cost reduction and
projects that improve business
flexibility and agility.
Links to corporate pillars
Impact on business model
58
Marshalls plc | Annual Report and Accounts 2023
Links to corporate pillars
Impact on business model
Shareholder value
Organic expansion
Sustainable profitability
Brand development
Relationship building
Effective capital structure
and control framework
Sourcing
Manufacturing
Distribution
Customers
Read more about our strategy on pages 22 to 25
Read more about our business model on pages 6 and 7
8. Corporate, legal and regulatory
Nature of risk and potential impact
Inadvertent failure to comply with elements
of a significantly increased governance,
legislative and regulatory business
environment. The Group may be adversely
affected by an unexpected reputational
event, e.g. an issue in its supply chain or due
to a health and safety incident, media, NGO
exposé on a sector, region or supplier.
Potential impact
Significant increases in the penalty regime
across all areas of business (e.g. health and
safety, competition law, the Bribery Act and
GDPR) could lead to significant fines and/or
prosecution in the event of a breach.
A health and safety or environmental
incident could lead to a disruption to
production and the supply of products for
customers. Such incidents could lead to
prosecutions, increased costs and have a
negative impact on the Group’s reputation.
Key risk indicators
• Increased
Mitigating factors
• Centralised legal and other specialist
regulatory and
compliance
requirements.
functions, the use of specialist advisers
and ongoing monitoring and mandatory
compliance training programmes.
• Integration
• Centralisation of certain Marley functions
requirements for
new acquisitions.
into the central legal team.
• Regular reviews of policies
• Significant
and procedures.
increases in the
penalty regime for
health and safety
and environmental
incidents. Penalty
regimes becoming
generally more
punitive.
• Regular compulsory data protection
training.
• The Group has a formal Group ESG
strategy focusing on impact reduction.
• The Group employs compliance
procedures, policies, ISO standards and
independent audit processes which
seek to ensure that local, national and
international regulatory and compliance
procedures are fully complied with.
• The Group uses professional specialists
covering carbon reduction, water
management and biodiversity.
Change
No change in risk
The significant increase in
governance requirements and
regulation continues to require
additional management focus and
robust compliance procedures
within all areas of the business.
Priorities
• Continue to review and,
where appropriate, renew all
compliance processes and
control effectiveness.
• Develop stress tests and crisis
planning procedures.
Links to corporate pillars
Impact on business model
9. Competitor activity
Nature of risk and potential impact
The Group has a number of existing
competitors which compete on range,
price, quality and service. Potential low
price competitors may be attracted
into the market despite the challenging
outlook in 2024.
Competitive risk increases if we fail
to achieve a sustainable competitive
advantage through our approach to
customer service and innovation.
Potential impact
Increased competition could reduce
volumes and margins on manufactured
and traded products.
Erosion of brand equity if the Group loses
competitive advantage.
Key risk indicators
• Threat from
new low-cost
competitors and
new technologies.
• Less demand for
traditional products
and the increased
emergence of new
digital business
models and
product solutions.
• Gross margins
under pressure.
Mitigating factors
• The Group has unique selling points that
differentiate the Marshalls branded offer.
• The Group focuses on quality, service,
reliability and ethical standards
that differentiate Marshalls from
competitor products.
• The Group has a continuing focus on new
product development.
• The continued development of the Group’s
digital strategy and its focus on customers
and all stakeholders.
• Restructuring programme implemented
in 2023 will reduce cost base to support
market competitiveness.
Change
Increase in risk
Risk that competitors accept lower
margins putting pressure on the
Group to reduce pricing.
Priorities
• New product development.
• Research into green
technologies.
• Review marketing and
communications.
• Continue to review all elements
of customer service, including
the continuing development
of KPIs.
• Develop low-cost supply
chain routes.
Links to corporate pillars
Impact on business model
Marshalls plc | Annual Report and Accounts 2023
59
Strategic Report
Risk Management and Principal Risks and Uncertainties continued
Principal risks and uncertainties continued
10. Project delivery
Nature of risk and potential impact
Ineffective management of major
development projects, from initial scoping
to final delivery and benefits management,
due to constraints that might impact
the Group’s ability to absorb change.
During 2023 such projects included the
implementation of the D365 ERP system in
the Marshalls businesses, the construction
and commissioning of the dual block plant at
St Ives and the successful implementation of
a series of major restructuring programmes.
Potential impact
The extent and complexity of projects may
cause delays and inefficiency.
Potential failure to realise expected benefits
from strategic business projects.
Reputational damage, service under-delivery
and staff retention risks.
11. Health and safety
Nature of risk and potential impact
Unexpected health and safety incident,
possibly caused by human error or the
actions of a subcontractor.
Ongoing risks in relation to maintaining
safe working environments and ensuring
compliance with health and safety
legislation.
Ongoing welfare and mental health
of employees.
Potential impact
Risk of harm to all stakeholders, including
on-site employees and subcontractors.
Significant increases in penalty regime could
lead to significant fines and prosecution.
A major incident could lead to a disruption
to production and a negative impact on the
Group’s reputation.
Key risk indicators
• Delays to project
Mitigating factors
• Robust and standardised project
delivery.
appraisal process.
• Inefficiencies in
• Change management framework
resource utilisation.
and process in place.
• Programmes are continually reviewed
with strong governance and Executive
oversight, including project‑specific
steering committees where appropriate.
Change
No change in risk
Although the underlying risk
continues, effective control and
the ongoing development of
an appropriate management
framework continue to
mitigate the risk.
Priorities
• Develop strategies to
manage growth.
• Ongoing reviews of acquisition
strategy and the business model.
Links to corporate pillars
Impact on business model
Key risk indicators
• Significant
Mitigating factors
• Centralised specialist functions (including
increases in the
penalty regime.
• Increase in HSE
contravention
notices.
Marley) and clear policies in place.
• Regular communication and support
for employees, including those working
from home.
• Mental Health First Aiders.
• Group-wide health and safety strategy
recognised through OGSM framework.
• Ongoing monitoring, training and health
and safety audits.
• Introduction of a digital management
system for enhanced data collection
and analysis.
• All senior managers receive the Marshalls
Health and Safety and Environmental
stage 3 training.
Change
No change in risk
Health and safety continues to be
a high profile risk area.
Increased visits from HSE to our
factories over the last two years.
Continuing risks include mental
health and employee welfare.
Priorities
• Ensure health and safety
embedded in the “day‑to‑day”
culture.
• Improve reporting structures.
• Implementation of High Risk
Activity (“HRA”) programmes.
• Implement Group health and
safety management system
into Marley.
Links to corporate pillars
Impact on business model
60
Marshalls plc | Annual Report and Accounts 2023
Links to corporate pillars
Impact on business model
Shareholder value
Organic expansion
Sustainable profitability
Brand development
Relationship building
Effective capital structure
and control framework
Sourcing
Manufacturing
Distribution
Customers
Read more about our strategy on pages 22 to 25
Read more about our business model on pages 6 and 7
12. People risks
Nature of risk and potential impact
Being unable to attract and retain people
with the right skills to deliver the business
strategy. This risk increases in a competitive
market and where there are continuing skills
shortages in certain areas.
Ongoing risks and requirements concerned
with training, development and succession
planning. Implications of technological
change and automation.
Potential impact
Inability to recruit people with required skills,
calibre and potential and insufficient training
and development could lead to reduced
productivity and efficiency.
Implications for employee health and
wellbeing and overall workforce morale.
Potential risk to the Marshalls
employer brand.
Key risk indicators
• Reduced
Mitigating factors
• Focused human resources department
productivity and
efficiency due to
skills gap.
• Increased levels
of voluntary staff
turnover.
• Increased stress
levels within
workforce and
potentially
absenteeism.
• Employee
relations becomes
increasingly key as
we drive change.
with experienced staff and specialist skills.
• Group People and Organisational Plan
with focused plans in each area.
• Strong employee and trade union
relationships.
• Strong communication channels and
employee feedback through the EVG.
• Regularly seeking employee feedback
via surveys and through the EVG.
• Ongoing focus on training,
apprenticeships and staff development
and leadership potential.
Change
Increase in risk
People continue to be a priority
focus for the Group including
development, health and safety and
wellbeing, especially against the
backdrop of business challenges
seen throughout 2023. This
includes multiple restructuring
exercises which have adversely
impacted engagement levels.
The labour market continues
to be competitive with people
increasingly seeking roles and
organisations which offer a wider
proposition including development.
Priorities
• Focused people plans across
the Group building on retention
and recruitment strategies.
• Focus on succession planning,
development and diversity in
the leadership teams.
• Continued effective
communications.
Links to corporate pillars
Impact on business model
Marshalls plc | Annual Report and Accounts 2023
61
Strategic Report
Our Section 172(1) Statement
Our Section 172(1) Statement
The Board of Directors of the Company consider that they, both
individually and collectively, have acted in a way that would be most
likely to promote the success of the Company for the benefit of its
members as a whole in the key decisions they have taken during the
year ended 31 December 2023.
Pages 28 and 29 provide details of who our stakeholders are, and how
the Board and the business engage with them, and examples of the
influence this has on our strategy, day‑to‑day business management
and the way the Board makes decisions.
The Board directly engages with our employees and shareholders
throughout the year. This is through well-established mechanisms for
engagement, details of which are set out on pages 30 to 33. The Board
occasionally engages directly with customers on site visits but, in
general, its engagement with our other stakeholders is mainly indirect.
The Executive Directors ensure the Board is kept fully informed of any
material issues with other stakeholders and how we consider their
interests in our operation of the business and in the decisions we make.
The Board also receives presentations and reports from senior
management as part of updates on how the business is progressing
with its strategic priorities and these include stakeholder
considerations. Further details of how we engage with our stakeholders
are set out on pages 30 to 33.
It is through this combination of direct and indirect engagement
that the Board is able to fulfil its Section 172(1) duties and ensures
decision making is driven by a balanced consideration of what makes
us successful and resilient in the short term and sustainable in the
long term.
Although there are established parameters for decisions that are
reserved for the Board, the business engages openly and transparently
with the Board, to ensure that key decisions that are technically outside
these established parameters have the benefit of the Board’s knowledge
and experience.
In taking key decisions, the Directors of the Company considered
the factors specified in Section 172(1) of the Companies Act 2006
(the “Act”) including:
S172
Relevant disclosure
Reference
The likely
long-term impact
of any decisions
The interests of the
Company’s employees
The Board sets the Group’s purpose and strategy and ensures they are aligned with our culture and
look to the future “to create better places” by putting people, communities and the environment first.
Page 2
The annual strategic review conducted by the Board and senior management team (the most
recent being in November 2023) and the evolution of our strategic objectives, demonstrate the need
to ensure we have flexibility in our strategy that allows us to balance long‑term goals with more
immediate challenges driven by challenging market conditions. The agility this enables underpins the
Group’s future success, given the cyclical nature of the sector but does not detract from the Board
assessing the stakeholder impact of the decisions it takes.
The Board’s risk management procedures identify the potential consequences of decisions in the
short, medium and long term so that mitigation plans can be put in place to prevent, reduce or
eliminate risks to our business and wider stakeholders. Consideration of risk is integral to, and not
separate from, all business decisions.
Pages 22 and 23
Pages 52 to 61
The Board has adopted a clear capital allocation policy, that recognises the guiding principles of
security, flexibility and efficiency. Organic investment, including new product development and
research and development , underpin the long-term sustainability of the Group. Whilst we will always
consider acquisition opportunities that help us achieve our strategic goals, our near‑term focus is to
use the cash the Group generates to reduce leverage, demonstrating the importance of agility and
flexibility in the Board’s decision making.
Page 51
Our business is underpinned by people and talent development and is committed to diversity, equity,
respect and inclusion. These are central to The Marshalls Way. Challenging market conditions during
2023, and the Board’s focus on overseeing business performance, mean that this remains a key
opportunity area for the Board to which it is committed to continuously improve, having focused less
on this during 2023 than planned.
Health, safety and wellbeing within our operations is our top priority, with this being a standing item
on the agenda at every scheduled Board meeting, in addition to an annual review being undertaken.
Our goal is continuous improvement with the achievement of annual health and safety targets being
linked to the remuneration of our Executive Directors and our senior management team.
The Board monitors culture through our engagement mechanisms, including our EVG which, in
addition to being attended by our designated Director for employee engagement, Angela Bromfield,
is regularly attended by other Board and senior management team members. 2023 was extremely
challenging, but this group is becoming a barometer for the mood of the organisation and provides
the opportunity for meaningful action to be taken to support the long‑term interests of our colleagues.
Pages 39 and 39
Page 40
Page 38
Relevant members of our senior management team present the results of our employee engagement
survey to the Board, together with details of the actions being taken to address the feedback received.
Page 38
Angela Bromfield (our designated Director for employee engagement) and other members
of the Board and senior management team, engage with employees on a variety of subjects
through our EVG.
Pages 34 and 35
62
Marshalls plc | Annual Report and Accounts 2023
S172
Relevant disclosure
The need to foster the
Company’s business
relationships with
suppliers, customers
and others
Obtaining and delivering customer specifications for our products and solutions is one of our
strategic goals. Nurturing customer relationships by understanding what drives choice requires
purposeful relationship management that is a feature of our success to date. Our ability to innovate
and optimise our product solutions in a cost‑effective way requires strong supplier relationships
that have been built over a number of years, but also the flexibility to introduce new relationships,
like Wincanton, to whom we’ve outsourced a large part of our logistics requirements and with whom
we hope to build a long‑term partnership.
Reference
Pages 22 to 25
The impact of the
Company’s operations
on the communities in
which it operates and
the environment
Sustaining our business against the very challenging market and economic backdrop of 2023,
required regular engagement with our customers and suppliers. High inflation, in particular,
presented us with obstacles on both the buy and sell side that required regular dialogue to ensure
we could effectively perform in the short term without damaging long‑term relationships.
Pages 30 and 31
The Group’s strategic goal is to be the UK’s leading manufacturer of sustainable solutions for the built
environment. Operating sustainably and ethically, showing sector leadership, are key to achieving this.
Pages 6 and 7
Our sustainability journey began more than 20 years ago and continues to evolve. Our ESG strategy
pillars, “Better Product, Better Workplace and Better World” drive our choices and decisions.
Pages 34 to 43
In October 2023, we established an ESG Board Committee to oversee the implementation of our
ESG strategy, which is driven by our ESG Steering Committee. Prior to this, the Board received regular
ESG updates from the senior management team. The Chair, with other Board members, engages
annually with shareholders through meetings with shareholder governance teams, most recently in
early 2024. Our COO has management responsibility for ESG on a day‑to‑day basis, with the Board
committed to providing challenge and support.
Pages 34 to 43
Further details of how our ESG strategy and its implementation are governed, measured and
controlled are set out on pages 34 and 35.
Pages 34 and 35
We have an established materiality matrix based on stakeholder engagement, the SASB Standards
for Construction and the UN SDGs. This supports prioritisation within our ESG programme and was
reviewed during 2023.
See the Group’s
Sustainability Report
at www.marshalls.
co.uk/sustainability/
document-library
The regulatory
implications of
any decisions
Board decisions are taken with the benefit of prior consideration by experienced, well‑established, specialist
functional teams and with the guidance of the Group’s General Counsel and Company Secretary.
Page 78
Where more specialist advice is required, the Board seeks guidance from its professional advisers,
as was the case with the outsourcing of a significant part of our logistics requirements to Wincanton.
The importance of the
Company maintaining
a reputation for
high standards of
business conduct
The need to act fairly
as between members
of the Company
The Marshalls Way defines our culture and our brand and all business decisions are driven by this.
Page 28
Our prioritisation of the health, safety and wellbeing of our colleagues, and our clear ESG
commitments, underpin our goal of creating better places, by putting people, communities
and the environment first: Better Product, Better Workplace, Better World.
Our strategic objectives underpin our purpose and strategy.
The Executive Directors engage with shareholders following the publication of our interim and final
results (and periodically throughout the year) and the Board receives detailed, real-time investor
and market feedback from the Executive Directors, our brokers and our PR advisers.
The Chair, the Senior Independent Director (who is also Chair of the Audit Committee) and the
Chief Operating Officer met with some of our key shareholders in early 2024, as part of our annual
programme of meetings with shareholder governance teams to ensure their views are reflected
in how we make decisions, operate our business and evolve our strategy.
Pages 34 to 46
Pages 22 to 25
Pages 30 to 33
Pages 73 and 74
Our 2023 AGM provided shareholders the opportunity to ask questions and vote in real time to
ensure maximum engagement opportunity. We also consulted with certain shareholders in response
to the significant vote (25 per cent) against our Annual Remuneration Report at the 2023 AGM.
Page 106
Equality of rights attaching to members ensures we meet the obligation to act fairly between them.
Page 106
Marshalls plc | Annual Report and Accounts 2023
63
Strategic Report Governance
Board of Directors
An experienced, well-balanced and multi-skilled Board.
The Board is committed and agile and determined “to do
the right things, for the right reasons, in the right way”.
Overview
The Board has strong ethical values,
combined with great depth of
experience and skill covering leadership,
strategy, manufacturing, operations,
marketing, finance, M&A and business
transformation and digital technologies.
The Board acts responsively and
dynamically applying its experience,
skill and knowledge whilst bringing
constructive challenge to the table,
ensuring the long-term sustainability of
the Group. This benefits all of the Group’s
key stakeholders.
Driving the Group’s refreshed strategic
plan in The Marshalls Way, whilst
demonstrating its ability to be agile and
alive to continuing and current geo-
political instability and to face into the
prolonged macro-economic instability
being experienced, are key in maintaining
the Group’s market leading position.
Committee membership
Audit Committee
Nomination Committee
Remuneration Committee
ESG Committee
Chair of the Committee
Independent Director
Board key skills
Leadership
Strategy
Manufacturing
Operations
Marketing
Finance
M&A
Business transformation
Digital technology
Links to corporate pillars
Shareholder value
Sustainable profitability
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
Vanda Murray OBE
Chair
Date of appointment
9 May 2018 Re‑elected in May 2023
Experience
Fellow of the Chartered Institute of Marketing with
extensive experience in both executive and non-executive
roles with a wide range of domestic and international
businesses. Previous executive roles include Chief Executive
of Blick plc from 2001 until its successful sale to
Stanley Works Inc in 2004 and Managing Director
of Ultraframe plc between 2004 and 2006.
Key skills
Alignment with corporate pillars
External appointments
Senior Independent Non-Executive Director and
Chair of the Remuneration Committee of Bunzl plc,
Non-Executive Director and Chair of the Remuneration
and CSR Committees of Manchester Airports Group,
Non‑Executive Director of Howden Joinery Group plc
and Chair of Yorkshire Water.
Matt Pullen
Chief Executive
Date of appointment
8 January 2024
Experience
Experienced executive leader in the construction and
FMCG sectors. Previously Chief Operating Officer of Genuit
Group plc, one of the UK’s largest providers of sustainable
water, climate, and ventilation products. Previously, Matt
was Managing Director of British Gypsum, part of the
Saint‑Gobain Group, where he led several significant
business transformations. Prior to that, he worked
for AkzoNobel for eight years in various commercial
and leadership in the UK, Ireland and Northern Europe
including as Managing Director, UK & Ireland. Earlier in his
career, he also held various operational roles within the
FMCG sector. He is a Trustee of the Construction Industry
charity CRASH and an Industrial Cadets Ambassador.
Key skills
Alignment with corporate pillars
External appointments
Trustee Director of CRASH.
Angela Bromfield
Non-Executive Director
Avis Darzins
Non-Executive Director
Date of appointment
1 October 2019 Re‑elected in May 2023
Designated Non-Executive Director for
employee engagement.
Experience
Broad-based international career in manufacturing,
distribution and construction. Formerly, Strategic
Marketing and Communications Director at Morgan
Sindall plc until 2013 and prior to that held senior roles
at the Tarmac Group, Premier Farnell plc and ICI plc.
Key skills
Alignment with corporate pillars
External appointments
Senior Independent Non-Executive Director and
Chair of the Remuneration and ESG Committees
of Harworth Group PLC.
Date of appointment
1 June 2021 Re‑elected in May 2023
Experience
A management consultant and formerly a Partner
at Accenture focusing on the retail and consumer
products sector. Delivered successful profitable growth
engagements with many well-known national and
international brands. Previously worked as Director of
Business Transformation at Sky in addition to leadership
roles at Arcadia, BHS, Mothercare and Littlewoods. Most
recently served as a Non‑Executive Director at Moss Bros
Group PLC. Currently providing independent management
consultancy on transformational change strategy and
execution support.
Key skills
Alignment with corporate pillars
External appointments
Co-chair of the Ambassadors Group of retailTRUST,
Senior Independent Non-Executive Director of
Barnardo’s, Non-Executive Director for Grafton
Group PLC and Safestore Holdings plc. Director
of Avis Business Consulting.
64
Marshalls plc | Annual Report and Accounts 2023
Justin Lockwood
Chief Financial Officer
Simon Bourne
Chief Operating Officer
Graham Prothero
Senior Independent Non-Executive Director
Date of appointment
26 July 2021 Re‑elected in May 2023
Date of appointment
1 April 2022 Elected in May 2023
Date of appointment
10 May 2017 Re‑elected in May 2023
Experience
Previously Chief Financial Officer of International Personal
Finance plc. Justin spent four years at Associated British
Ports in a senior financial role and worked in a variety of
business and head office roles for Marshalls between
2002 and 2006. Chartered accountant having qualified and
worked for PWC during the first ten years of his career.
Key skills
Experience
Experienced manufacturing, supply chain and operations
director. Simon joined Marshalls in 2015 as Manufacturing
Director and was appointed as Group Operations Director
in 2017. Prior to joining the Company, Simon held senior
operational and supply chain roles across various sectors.
Before his appointment at Marshalls, Simon spent six
years at Burtons Biscuits as Manufacturing Director and
three years at Betts Group Holdings as Group Director
of Manufacturing.
Alignment with corporate pillars
Key skills
External appointments
None
Alignment with corporate pillars
External appointments
Chair of MPA British Precast.
Diana Houghton
Non-Executive Director
Date of appointment
1 January 2023 Elected May 2023
Experience
Group Head of Strategy at Smiths Group plc. Previous
roles include Corporate Development Director of Allied
Domecq plc and Strategy Director roles with Bass plc.
Extensive cross-sector experience from retail, leisure
retail, consumer goods and industrial manufacturing
industries covering M&A, turnarounds, organic business
improvement and strategy. Diana was Senior Adviser to
the National Audit Office between 2010 and 2015 and
spent seven years on the board of Thornton’s plc as Chair
of Audit Committee and Senior Independent Director.
Key skills
Alignment with corporate pillars
External appointments
None
Shiv Sibal
Group General Counsel
and Company Secretary
Date of appointment
26 May 2020
Experience
Experienced corporate finance lawyer with 20 years’
experience, the last nine of which have been in industry
at FTSE 250 businesses. Extensive leadership and legal
experience. Formerly a corporate partner with international
law firm Womble Bond Dickinson LLP, focused on
supporting public companies. Also spent eight years
working for international law firm Pinsent Masons LLP
and qualified with international law firm CMS.
Key skills
Alignment with corporate pillars
External appointments
None
Experience
Chartered Accountant and Chief Executive Officer of
MJ Gleeson plc. Previous roles include Chief Operating
Officer of Vistry Group PLC and Chief Executive of Galliford
Try plc. Also on the board of The Jigsaw Trust, a charitable
trust committed to autism awareness. Extensive senior
management experience in the sector, including with
leading property developer Development Securities plc
(now part of Land Securities plc), Taylor Woodrow, the
listed contractor/developer, and Blue Circle Industries plc.
Spent seven years as a partner in the Real Estate,
Hospitality and Construction Group of Ernst & Young LLP.
Key skills
Alignment with corporate pillars
External appointments
Chief Executive Officer of MJ Gleeson plc. Board Member
of The Jigsaw Trust.
Board Composition
Gender composition
Female – 4*
Male – 4
Ethnic diversity
White – 7
Mixed Asian
and white – 1
Length of service
0–2 years – 5
3–4 years – 0
5+ years – 3
*
Female Chair and Remuneration
Committee Chair.
Marshalls plc | Annual Report and Accounts 2023
65
Governance
Corporate Governance Statement
A challenging year in which our
commitment to responsible governance
required us to make difficult decisions to
ensure our capacity and cost base were
aligned with demand, underpinning the
long-term resilience of the business.
Open and
transparent
communication
and decisive action
underpinned
our agility in
challenging
market conditions
and position us
well for when
markets recover.
Vanda Murray OBE
Chair
Dear shareholder
During 2023, the Board supported management actions addressing the
challenges created by prolonged market weakness, driven predominantly
by macro-economic conditions. Whilst these actions position the Group
well for when markets recover, we recognise the impact they have had
on our people and how they test our culture. We thank those colleagues
who left us during the last year for their hard work and commitment
during their time with the business and wish them well for the future.
Board engagement, particularly through our Employee Voice Group
(“EVG”), ensured we understood how this has impacted our culture
and the communication and support colleagues have received.
In addition to carefully navigating the Group through “choppy” economic
waters, the Board has overseen the development of the Group’s strategy,
details of which are set out on pages 22 and 23. The need to retain the
agility required in volatile markets without sacrificing the opportunity
presented by the significant growth drivers in the Group’s key end
markets, has culminated in an evolution of the Group’s strategy that
will ultimately make us a more flexible and efficient business, without
sacrificing the customer focus and product and service innovation
that are the foundations upon which the Group has been built.
The end of 2023 also saw the appointment of Matt Pullen as the
successor to Martyn Coffey as Chief Executive. Under Martyn’s
outstanding leadership, Marshalls has been transformed into a diversified
building products manufacturer, with leading positions in its key markets,
whilst retaining its culture and core values. During Martyn’s tenure,
Marshalls has grown organically and through acquisitions, achieving its
key strategic ambitions. Martyn leaves behind a significant legacy and
we would like to thank him for his leadership over the last ten years.
Diana Houghton has completed her comprehensive induction with
the business and is now well-established as a member of the Board
team. Notwithstanding recent changes as at Balance Sheet date, the
composition of the Board continues to comply with the Listing Rules
that require UK listed companies to disclose on a “comply or explain”
basis against set diversity targets. Details of the current composition
of the Board by gender, ethnic diversity and length of service are
on page 65.
We have entered 2024 with continued political and economic uncertainty,
but the actions we have taken during the last year, including our strategic
review, give us confidence that we can capitalise when growth returns.
Balanced decision making and open communication, reflective of our
culture and purpose, is what “good governance” means to Marshalls.
This is central to our application of the UK Corporate Governance Code.
This Corporate Governance Statement explains how Marshalls’
governance framework supports the principles of integrity, strong
ethical values and professionalism which are integral to our business.
The Group’s ability to dynamically respond to opportunities and threats,
requires decisiveness and a determination “to do the right things for the
right reasons, the right way”. Our commitment to responsible governance
and The Marshalls Way creates strong alignment at Board level and
throughout the business.
The Board recognises that we are accountable to shareholders for good
corporate governance. This report, together with the Reports of the
Nomination, Audit and Remuneration Committees on pages 80 to 102,
seek to demonstrate our commitment to high standards of governance
that are recognised and understood by all.
66
Marshalls plc | Annual Report and Accounts 2023
Our governance framework
Programme of activities
Board
• Board meetings
• AGM
• Annual strategy day
• Business and stakeholder engagement
• Designated NED for employee engagement
• Shareholder engagement
Audit
Committee
Read more on
pages 84 to 87
Nomination
Committee
Read more on
pages 80 to 83
Remuneration
Committee
Read more on
pages 88 to 102
ESG
Committee
Read more on
pages 34 to 43
• Committee meetings
• AGM
• Remuneration Policy consultation
Executive Committee
• Monthly meetings
• Weekly update calls
• Annual strategy review
Diversity
and Equity
Taskforce
ESG
Steering
Committee
Business
Management
Teams
Employee
Voice
Group
Read more on
page 38
• Monthly business reviews
• Bi‑monthly ESG Steering Committee meetings
• Regular EVG meetings
Governance at Marshalls
Our culture is at the heart of everything
we do: The Marshalls Way. Our purpose
drives our strategy. These operate as
a virtuous circle with regular reflection
by the Board and the business. The
operation of our business and the
decisions we make have regard to
the interests of our stakeholders.
This approach to governance
enables dynamic decision making
but ensures we never lose sight of
the elements within that drive our
long‑term sustainability.
D y n a m i c decision making
S t a keholders
e
s
( d rives) strate
g
y
Purp o
Culture:
The Marshalls
Way
Dynamic decisio n m a k i n
g
Marshalls plc | Annual Report and Accounts 2023
67
Governance Corporate Governance Statement continued
Activities in 2023
• We have acted with agility to address the business impact of challenging
market conditions which have persisted throughout 2023. The weakness
in volumes that impacted our financial results for the year has required
us to act to reduce costs and manage cash without compromising our
ability to respond when markets recover. The decisions we’ve taken, whilst
undoubtedly difficult, reflect our commitment to responsible governance
that has regard to the interests of all stakeholders.
• The Group has completed a number of restructurings during the year,
resulting in a significant reduction in our workforce, particularly in
operations. We have closed our site in Carluke and significantly reduced
operations in other sites ensuring our manufacturing capacity is
aligned with current demand. We have also sold a number of non-core,
predominantly property, assets to generate cash and support our
commitment to deleverage.
• The Board, working closely with the senior management team, has
approved the outsourcing of the vast majority of the Group’s logistics
requirements to Wincanton. This represents a significant change in the
Group’s operating model and is expected to deliver both operational
efficiencies and improved service to customers. Wincanton have significant
sector experience and are an experienced outsourced logistics partner.
They were selected following a comprehensive tender exercise led by our
procurement team. The agreement with Wincanton is the culmination of
more than a year’s work and is expected to go live in April 2024.
• Where these support our strategic ambitions or are part of our
commitment to continuous improvement, we’ve continued to support
investments in the business. For example, our dual block plant at our
St Ives site is now operational. We’ve also approved investment in
additional silos at our St Ives, Eaglescliffe and Newport sites that will
enable the use of cement alternatives in our production, lowering the
embodied carbon in our products, and more efficient production.
• The senior management team and the Board have undertaken a
comprehensive strategic review resulting in a refresh of our strategy, as
set out on pages 22 to 25. Whilst this constitutes evolution rather than
revolution, more detailed consideration has been given to how we will
ensure the strategy is embedded within all areas of the businesses and
how performance against our strategic objectives will be measured. We
have agreed that we will apply the OGSM methodology (objectives, goals,
strategies and measures), that has been used successfully for a number
of years to drive operational improvements in the business, to implement
and measure our progress against our strategic goals.
• Working with the Nomination Committee, we have managed the
succession of our Chief Executive, with Matt Pullen having now taken
over from former Chief Executive Martyn Coffey, who stepped down
from the Board at the end of February 2024.
• We completed the disposal of our loss-making Belgian business,
Marshalls NV, to our joint venture partner, refocusing our business
almost entirely on the UK market.
• Following a comprehensive review by the current administrators and actuaries
of the Marshalls plc Defined Benefit Pension Scheme of how member benefits
have historically been administered, the Board decided to augment the
benefits of certain pensioners who would have otherwise suffered hardship
due to a reduction in pension payments following this review, re‑affirming our
commitment to responsible governance (see page 128 for further details).
• Following her appointment as a successor to Tim Pile, we have supported
Diana Houghton through a comprehensive induction plan arranged by our
General Counsel and Company Secretary.
• Strong cash generation during 2023 supported the Board’s approval of
a £30 million reduction in the Group’s term loan to £180 million in early
January 2024, ensuring efficient management of borrowings and finance
costs. The Board approved this with the knowledge that the Group’s
remaining facilities provide it with significant liquidity to fund its strategic
and operational plans going forward.
• In accordance with our obligations under the UK Corporate Governance
Code, we consulted with shareholders following the significant vote
(25 per cent) against our Annual Remuneration Report to ensure we
understood their concerns and take these into account in future decisions
on remuneration matters. Further details are set out on page 90.
• We have continued to reflect on the Board’s performance. Our internal
evaluation concluded that the Board has been supportive, agile and
decisive as it has navigated challenging macro-economic and market
conditions, ensuring we are resilient in the short term. It has balanced
this with managing succession and completing a strategic review,
ensuring our medium to long‑term strategic ambition is reflected.
• The Board and Audit Committee have continued to consider the impact
of proposed changes to the Code, which have been significantly pared
back in recent months in response to stakeholder feedback. Given that the
work we have been undertaking is in readiness for the changes originally
anticipated in the initial consultation on the Code, and particularly those
relating to our internal control environment, we are confident of being
able to demonstrate compliance when the new Code comes into effect.
(See page 86 for further details.)
• We’ve built on our ESG commitments and enhanced our governance by
establishing an ESG Committee that will challenge and support the work
of our ESG Steering Committee, which is leading the charge on ensuring
our sustainability credentials are continuously improved and deliver
measurable commercial benefit, in addition to supporting our commitment
to reducing our environmental impact. We are in the process of submitting
the Group’s data (including Marley’s) to the SBTi for re‑approval, paving the
way for an approved, Group-wide, carbon reduction target. (See page 42
for further details.)
• There has been Board representation at each of the EVG meetings, with
Angela Bromfield continuing as our designated Director for employee
engagement. The EVG has evolved, with broader representation, but we
acknowledge the need for more representation from our manufacturing sites,
which are the “beating heart” of our business. (See page 38 for further details.)
Priorities in 2024
• To welcome and support our new Chief Executive, Matt Pullen, to the
Board and the business. To play an active role in his induction with the
support of Martyn Coffey, in his advisory role.
• Monitoring how the Group’s refreshed strategy is communicated and
operationalised within the business, ensuring all colleagues understand
the part they play in achieving the Group’s strategic ambitions. Allocating
more time to considering strategic priorities and to structured reviews
of our progress against key strategic priorities. This will be critical to the
long-term sustainability of the Group.
• Working closely with the senior management team to carefully monitor
short-term business performance given that market and macro-economic
conditions remain very challenging. Retaining flexibility in our strategy in
the event of prolonged market weakness and our agility in responding to
this. Improving our cost effectiveness, capital efficiency and flexibility is
one of our strategic pillars.
• Given the criticality of optimising our market share and our price positioning,
monitoring how the business serves the needs of our customers. Simplifying
the Group’s product and service offerings are an important part of this, as
is building a greater understanding of what is driving customer choice and
brand preference.
term sustainability of the business. Monitoring succession planning and
“bench strength” beyond the Board is critical, as is the need to ensure
our high potential colleagues are given opportunities to develop in what
remains an extremely competitive, and candidate-driven, talent market.
• Monitoring the impact of the difficult decisions taken during 2023 on
the Group’s people and its culture. The Board acknowledges that our
colleagues will have been affected by the structural changes we’ve made
during the year, their co-workers leaving the business and the uncertainty
this creates. Given that we believe the Group is well positioned for when
markets recover and the growth drivers in our end markets, there is an
opportunity, through the execution of our refreshed strategy, to galvanise
our people around our strategic ambitions.
• Embedding the role of our ESG Committee that will monitor progress
against the Group’s commitments and support the senior management
team in ensuring our sustainability credentials translate into commercial
success, particularly in relation to our solar and concrete brick offerings.
• Monitoring the implementation and impact of the pared‑down audit
and corporate governance reforms proposed by the Government and
in the code, which will come into force during 2025 and 2026 and will
have implications for the operation and expectations of the Board.
• Reviewing progress against the Group’s People strategy, and the actions
we take to support, attract, motivate, develop, progress and retain
diverse talent across all levels of the business, are critical to the long-
• To continue to ensure we do everything in The Marshalls Way: “the right
things, for the right reasons, in the right way”, and at all times with our
stakeholders in mind.
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Marshalls plc | Annual Report and Accounts 2023
ESG priorities
Our strategic goal is to be the UK’s leading manufacturer of
sustainable solutions for the built environment. Our approach to ESG
is at the heart of this and the long-term sustainability of the business.
Whether it be through our product offering, our people strategy or how
we operate the business more generally, we recognise the importance
of understanding and managing our impact in these areas to build a
business that is resilient in the long term and which understands the
concerns of our key stakeholders.
Following our strategic review during 2023, governance of ESG is now
the responsibility of the newly formed ESG Committee that will work
closely with and provide challenge to our ESG Steering Committee.
Our ESG Governance framework is set out on page 34.
Operating responsibly has been a foundation of our business from
the outset. Current global challenges, whether political, economic, or
environmental, demand transparent corporate citizens who have the
trust of their stakeholders. Our ESG commitments and credentials
demonstrate this clearly.
• Environmental — we take our environmental impact seriously.
We’ve begun the process of recalibrating our commitment to net
zero following the acquisition of Marley, but this remains our goal.
This will take some time as we want to ensure our carbon-related
data is independently validated and accredited.
• Social — we respect and value the dignity, wellbeing and rights
of employees, their families and the wider communities in which
we operate, as well as their safety.
• Governance — strong, responsible governance supported by
effective leadership helps nurture our healthy corporate culture
and our processes and controls enable us to operate ethically
and responsibly.
For further details see pages 34 to 43
ESG oversight
The Board
ESG Board Committee
Supported by
Board-level oversight of ESG strategy and ESG risk management,
including climate-related risks and opportunities
Executive Team
ESG Steering Committee
• The Chief Executive is accountable for
the delivery of the ESG strategy, including
climate-related issues
• The Executive Team members are
individually responsible for reviewing
and confirming risks in their own areas,
including climate-related risks
• Attended by Chief Executive, CFO, COO and
General Counsel and Company Secretary
• Responsible for ensuring the ESG strategy
remains fit for purpose, plans are in place
and progress is measured and reported
• Advises the Board on ESG-related risks
and opportunities
• ESG metrics
• ESG Board updates
• Shareholder engagement
• TCFD reporting
Group Risk Management
ESG Delivery Team
• Responsible for implementing the
Group risk management framework and
Risk Register
• See risk management framework and
governance on pages 52 and 53
• Responsible for driving progress along our
plans, including science-based targets
• Updates the ESG Steering Committee
and the ESG Committee on progress
against targets
Operational teams
• Responsible for managing and resourcing approved activities
• Advise on operational feasibility of projects
• Collaborate on ESG and sustainability projects
• Risk Register
• Climate-related risks
and opportunities
• Climate Disclosures
Working Group
• Sustainability Report
• Science-based targets
• Metrics and targets
Marshalls plc | Annual Report and Accounts 2023
69
Governance
Board evaluation
I conducted, with the support of the Company Secretary, an internal
evaluation of the Board and its Committees using a tailored online
questionnaire that considered both performance during the year,
including a reflection on the Board’s achievement of the objectives
identified in the externally facilitated review carried out with the support
of Lintstock in 2022, and future priorities for the Board.
The review measured both Board behaviours and processes. It was
prepared on a consistent basis with the redesigned internal evaluation
used in 2020 and 2021, adjusted to reflect the findings of the last
externally facilitated review. This allows the Board to reflect on its year on
year performance. As required by the Code, the Board will next conduct
an externally facilitated evaluation during 2025. Page 78 of this report
gives more detail on the most recent evaluation and the extent to which
the objectives from 2022 were achieved.
Responsibility Statement
In the opinion of the Directors, these Annual Financial Statements present
a fair, balanced and understandable assessment of the Group’s position
and prospects and provide the information necessary for shareholders
to assess the Group’s position and performance, business model
and strategy. The respective responsibilities of the Directors and the
auditor in connection with the Financial Statements are explained in
the Statement of Directors’ Responsibilities and the Auditor’s Report
on pages 106 and 107 and 114 respectively.
The strategic report was approved by the Board and signed on behalf
of the Board.
Vanda Murray OBE
Chair
18 March 2024
Corporate Governance Statement continued
Continuing to leverage benefits of new and more efficient
ways of working
Ensuring all colleagues can work safely remains our top priority and
our safety record evidences the positive progress we have made.
(read more on page 40).
Ways of working have fundamentally changed over the last few years
and retaining this flexibility where feasible enables us to attract talent
in a competitive recruitment market. Whilst technology adoption
increases agility, saves costs and helps us reduce our carbon footprint,
we recognise this should not be at the expense of our culture and
we’ve invested throughout the year in getting our teams together more
frequently, which supports the induction and development of new
colleagues joining the business. For example, in April 2023, we held our
management conference (Leadership Connected Live) at St George’s
Park in Burton‑upon‑Trent, bringing together leaders from across the
Group, including Marley, to ensure we captured their views on our
performance and the development of our strategy and also to celebrate
their contributions throughout a very challenging period for the Group.
The Board and Committees hold all scheduled meetings “in person”,
facilitating more engaged, inclusive and challenging discussions
regarding the development and execution of our strategic objectives
and business performance. The Board continues to leverage technology
when greater agility is required, for example in managing the succession
of our Chief Executive or when discussing trading updates.
Many of the good practices we’ve introduced over the last few years
continue to serve the business well and improve our control environment
and dynamic decision making remains central to the way the Board
and senior management team manage the business. The Board
sets the culture for effective risk management and, together with the
senior management team, ensures that we’re having regard to our key
stakeholders when making decisions.
Diversity
Introducing greater diversity represents a major opportunity for the
business. The Board and the senior management team’s focus on
addressing business critical issues throughout much of 2023, meant
that the business did not make the investment or progress in improving
diversity that we had hoped to. Whilst we are clearly disappointed
with this, we continue to actively promote diversity, equity, respect and
inclusion (‘DERI’) and have a zero-tolerance approach to discrimination.
The sector remains challenged, particularly when trying to improve
diversity in operational and site-based roles and we acknowledge this
is aspirational. Greater collaboration within the industry is needed to
address this structural challenge.
Page 38 sets out details of how we promote DERI across the Group.
We apply our policies to ensure there is equality of opportunity for every
role we recruit. Our commitment is supported by our Code of Conduct
and central to our People Strategy.
Making our business accessible is critical to its long‑term sustainability
and our hope is that more stable market conditions will afford us the
time and investment required to improve. The Board has approved the
Group‑wide Diversity and Inclusion Policy and continues to support the
senior management team in the execution of the Group’s longer-term
DERI strategy.
At Board level, we have improved our gender diversity during 2023.
Including myself, a female Chair, we have 50 per cent female
representation on our Board overall and one Director from an ethnic
minority background. Before Tim Pile retired from the Board in May
2023, our female representation was 44 per cent, by virtue of the
Board’s desire to ensure that Tim’s successor, Diana Houghton,
had sufficient time for her induction and to build her knowledge
of the business.
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Marshalls plc | Annual Report and Accounts 2023
Compliance Statement
This Corporate Governance Statement has been prepared in accordance
with the principles of the UK Corporate Governance Code dated July
2018 (the “UK Code”) which applies to the financial year 2023. We have
complied with the principles and provisions of the UK Code throughout
2023. The UK Corporate Governance code is available at www.frc.org.uk.
Our Governance sections over the following pages explain how the
Group has applied the principles throughout the year and up to the date
of this Annual Report.
1
Board leadership and Company purpose
Read more on pages 73 and 74
• Strong leadership from an experienced female Chair who drives
• 2023 focus on agility, cost and cash management, strategic
strategic focus, inclusive and robust debate and dynamic
decision making.
development and Chief Executive succession.
• Our culture, The Marshalls Way, and purpose, “to create better
• Dynamic Board with a good balance of technical and sector
places”, are at the heart of all decision making.
knowledge and experience and a demonstrable ability to address
both the critical issues facing the Group in the near term and its
long-term sustainability.
2
Division of responsibilities
Read more on pages 75 and 76
• Open and transparent communication and information drive trust
• Robust challenge and support provided and well received
and support dynamic decision making.
by management.
• Relationship between Board and senior management team
supported by regular engagement. Will evolve given recent
changes to the team.
• Clear, proportionate decision-making parameters balance
Board control and operational flexibility, with clear and timely
information supporting the effective and efficient functioning
of the Board.
3
Composition, succession and evaluation
Read more on pages 77 and 78
• Diverse Board with breadth of experience, knowledge and skills.
• Majority of independent Directors and experienced
Committee Chairs.
• Well-executed succession plan with rigorous procedure for
appointments supported by experienced external search
consultants.
• Internal evaluation reflecting on findings of the 2022 externally
facilitated review and highlighting our actions relating to
strategy deployment and monitoring, our people and culture,
our customers and leveraging the commercial benefit of
our sustainability credentials and key areas of focus for the
Board in 2024.
• Engagement with shareholders, both as part of our ongoing
commitment to ensuring the Board evolves to reflect their
priorities and additionally to enable them to share their views in
relation to the significant vote against our Annual Remuneration
Report at the 2023 AGM.
4
Audit, risk and internal control
Read more on page 79
• Clear oversight of external and internal audit functions and
• Ensuring adequacy of the Group’s risk management framework
planning, in a challenging year.
participating in the risk review process.
• Effective oversight of internal control environment, and the
• Maintaining the improvement in the processes by which we
programme of work to review the design, completeness and
effectiveness of the Group’s control environment that supports
compliance with prospective governance changes.
• Detailed consideration of development in reporting under TCFD
and prospective requirements under other emerging standards.
ensure we act upon recommendations and monitor outcomes,
allowing us to continuously improve.
• Oversight of financial reporting, including judgements made
in preparing this Annual Report and Accounts and notably those
relating to our goodwill impairment review and disclosure of
adjusting items.
5
Remuneration
Read more on page 79
• Implementing our revised Remuneration Policy following its
approval by 88.35 per cent of shareholders at our 2023 AGM.
• Engagement with shareholders following the significant vote
against our Annual Remuneration Report at our 2023 AGM.
• Reviewing incentives scheme targets. Ensuring they support
attraction and retention of talent, drive good behaviours and
create alignment with stakeholder interests.
• Appropriate and proportionate consideration of performance
and reward outcomes.
Marshalls plc | Annual Report and Accounts 2023
71
Governance Corporate Governance Statement continued
Role of the Board
The Board currently comprises an Independent Non-Executive Chair,
four independent Non-Executive Directors and three Executive Directors.
Their biographical details are on pages 64 and 65.
Our Schedule of Matters Reserved for the Board (summarised below) is
reviewed annually and is available on our website. It ensures we retain
the right balance between Board oversight and operational flexibility.
Culture, governance
and remuneration
Designated Director for
employee engagement,
internal Board evaluation,
Remuneration Policy
implementation
Group strategy
and budgets
Strategy refresh,
logistics outsourcing
to Wincanton, disposal
of Belgian business,
budget approval
Approving major
transactions
Logistics outsourcing
with Wincanton, disposal
of Belgian business
Terms of Reference
and key policies
Embedded in Board
agenda cycle
Group operations
and management
and control structure
Further adjustments to
manufacturing capacity,
reflecting demand
Changes to capital
or corporate structure
or constitution
Cost control and cash
management, partial
prepayment of term loan
Board composition
and succession
Appointing Matt Pullen to
succeed Martyn Coffey as
Chief Executive
Approving
financial reports,
internal control and
risk management
Half and full year
results, preparation for
governance reforms,
standalone risk reviews
Delegation to Board Committees
Audit Committee Report on pages 84 to 87 provides details of the
Board’s application of Code principles in relation to financial reporting,
audit, risk management and internal controls.
Nomination Committee Report on pages 80 to 83 reports how Board
and senior management composition (including diversity), succession
and development are managed to reflect Code principles.
The Remuneration Report on pages 88 to 102 explains how the Group’s
Remuneration Policy has been implemented and shows Directors’
remuneration for 2023. The Remuneration Report also provides gender
pay and balance information.
An ESG Committee was also established in October 2023 to provide
oversight and support for the Group’s ESG strategy and the ESG
Steering Committee (which comprises members of the senior
management and ESG delivery teams).
Ad hoc Board Committees are established for specific purposes: for
example, during 2023, Board Committees were established to finally
approve the preliminary and half year results.
Delegation to the Executive and management
The day-to-day management of the business and the execution of the
Group’s strategy are delegated to the Executive Directors.
The Group’s reporting and governance structure (see page 67) and
controls below Board level are designed so that decisions are made
by the most appropriate people in an effective and timely manner.
In deciding what is “appropriate” for these purposes, we consider the
scale and complexity of our business and reflect how this has grown
over time.
Management teams report to members of the Executive Committee,
which is comprised of the senior management team, including the
three Executive Directors. The Executive Directors and other Executive
Committee members give regular briefings to the Board in relation to
strategic progress and specific business issues and developments.
Clear and measurable KPIs are in place to enable the Board to monitor
progress. This structure, our controls and open and transparent
information and communication enable the Board to make informed
decisions on key issues. These include our strategy, capital structure,
internal control and risk frameworks and our risk appetite whilst having
regard to the interests of all of our key stakeholders.
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Marshalls plc | Annual Report and Accounts 2023
1
Board leadership and Company purpose
Leadership and purpose
Challenging market conditions during the last year have tested our
culture and leadership, at Board level and throughout the business. The
Marshalls Way has guided our approach to governance throughout the
year. Whilst this has positioned us well for when markets recover, the
Board acknowledges that some of the decisions we have made have
been difficult and have impacted our people, but it has been necessary
to carefully monitor performance of the business, reducing costs,
improving our agility and managing our cash. We have communicated
with our colleagues throughout the year, providing support through
some of the changes we’ve initiated. Whilst significant growth drivers
remain, that are expected to result in a recovery in the Group’s key end
markets, the Board remains mindful of its duty to continue to ensure
that the Company’s purpose, values and strategy are aligned with our
culture. The Board will do this through our well-established engagement
channels, including the EVG, site visits and our leadership conference,
as well as receiving relevant updates at Board and Committee meetings
throughout the year.
In addition to addressing the challenges we’ve faced, the Board has
undertaken a strategic review ensuring that our strategy continues to
evolve, that all colleagues understand how they support its delivery
and that the Board can measure our performance against the goals
we’ve set.
Although a great deal of focus during the year has been on monitoring
performance, the Board recognises the importance of continuing to
build on their understanding of how the business operates and our
culture, particularly following the acquisition of Marley. The Board’s
continuing engagement with the business through the forum of Board
meetings and in the business itself (e.g. through attendance at the
Group’s management conference, the EVG and at site visits), has
informed its contributions to the Group’s strategic review and has
enabled the Board to monitor the Group’s culture.
In addition, the Board has continued to engage regularly with our
shareholders, which this year included engaging to understand the
reasons for certain shareholders voting against our Annual Remuneration
Report at our 2023 AGM. As part of our annual programme of meetings
with shareholders’ governance and compliance teams, we’ve covered
business performance, our proposed approach to corporate governance
reforms (particularly those relating to internal controls) and ESG.
Understanding their concerns ensures we challenge management
on things we know shareholders are concerned about and make
balanced decisions.
Our Strategic Report on pages 1 to 63 explains how we seek to fulfil
our purpose, how this is supported by our policies and procedures, and
how we identify and manage our key risks. Transparency and openness
between management and the Board have built trust and confidence
in how the business is operated and controlled on a day‑to‑day basis.
This trust and confidence has supported the agility with which action
has been taken to address the challenges we’ve faced during the last
year. Those actions, and the strategic review undertaken alongside them,
underpin business sustainability in the medium term. They reflect the
Board’s willingness to take immediate action to address performance
without sacrificing our ability to respond when markets recover.
The reports of our Board Committees give further detail on how our
policies and processes, and the principles of the Code, have been
applied during the year in particular areas and how this relates to our
culture and strategy.
Dynamic decision making enabled us to align our capacity with demand
and dispose of our interests in underperforming or redundant assets,
generating cash for the business in support of our commitment to
deleverage. In the longer term, our refreshed strategy recognises the
need to build greater flexibility into our cost base so that we are better
equipped where there is market volatility.
Our well‑established ESG programme is driven by our commitment
to operate the business responsibly, having regard to the interests of
our stakeholders. We have established an ESG Committee to oversee,
support and challenge the development and execution of the Group’s
ESG strategy. As part of this, and as we’re required to, we’re resetting
our SBTi approved net zero commitments to ensure our whole business,
including Marley, has clear, measurable commitments in this regard.
We’re also sharing product and manufacturing knowledge to optimise
production processes and have developed Environmental Product
Declarations (“EPDs”) for most of our ranges, providing customers
clear, independently reviewed, information on the carbon impact of
our products.
We continue support investment in the business, with the focus
during the year being the completion of our multi-million-investment
in our dual block plant at our St Ives site, which is now operational,
providing significant additional capacity for both existing and new
ranges. Consistent with our commitment to sustainability, we’ve also
invested in additional silos at three sites that support the production
of cement reduced and cement free products. We’ve also invested
in improving existing sites, demonstrating our commitment to
continuous improvement.
We reviewed the Group’s refreshed strategy in November, following
the senior management team’s comprehensive review over the year,
focusing on its execution and measurement of performance against
strategic objectives. Reflecting on the challenges we’ve faced during
the year, our strategic plan balances our desire for long-term growth
with the need to operate flexibly, balancing capacity and demand, and
cost effectively. At its heart are our people and customers, recognising
that growth is unattainable unless colleagues can work safely and
in an environment that values and supports their development
and progression.
The Board receives regular updates from the Executive Directors on the
agreed KPIs set out on pages 26 and 27. We’ve continued to focus on
enhancing the quality of information provided to the Board to ensure
it can clearly track performance against the Group’s objectives and to
provide additional challenge and support where necessary.
Continued market weakness, driven by macro-economic factors, saw
our people face a number of change projects during 2023. Whilst the
need to balance capacity and demand has led to a significant number of
colleagues leaving the business, we’ve tried to manage this sensitively
and support colleagues in finding other roles. Executing our people
strategy against this backdrop has been challenging, but we have
supported positive changes to benefits and seen some of our senior
leaders participate in leadership programmes with Cranfield University.
Keeping our colleagues appraised of changes throughout the year has
been important, together with ensuring we have appropriate support
mechanisms in place for those impacted. We used the EVG and our
Leadership Connected forum to ensure our internal stakeholders and
leaders understood the reasons for the changes and had the tools
to cascade the information throughout the business. We used our
management conference to introduce our senior colleagues to our
refreshed strategic pillars (as set out on pages 22 to 25) and to get their
views on what these mean for the Group. These insights then informed
the development of our strategic plan. Inclusive engagement is critical
to ensuring colleagues feel connected to our strategic objectives
and the colleague roadshows we delivered throughout January and
February 2024 have further supported this.
Marshalls plc | Annual Report and Accounts 2023
73
Governance Conflicts and concerns
The Board maintains a conflicts register that identifies situations in
which conflicts may arise, which is reviewed regularly. In situations
where an actual conflict is identified, the affected Director may be
excluded from participating in relevant Board meetings or voting
on decisions. There is no shareholder with a holding of sufficient
significance to exercise undue influence over the Board or compromise
independent judgement.
Concerns about the running of the Company or proposed action would
be recorded in the Board minutes. On resignation, if a Non‑Executive
Director did have any such concerns, the Chair would invite the Non-
Executive Director to provide a written statement for circulation to
the Board.
Whistleblowing
The Group’s Serious Concerns Policy sets out the principles under
which employees can raise concerns in confidence. This is supported
by an independent whistleblowing telephone and online reporting
service, through which concerns may be reported anonymously if
preferred. The Audit Committee receives reports on matters raised
under this policy and the outcome of investigations. Any concerns
raised are investigated appropriately by individuals whose judgement is
independent and who are not directly involved with the matters raised.
Corporate Governance Statement continued
1. Board leadership and Company purpose
continued
Leadership and purpose continued
The development of our EVG as an effective and representative
colleague engagement forum has continued, with its new members
now having been in place for nearly twelve months. During 2023, the
EVG received regular updates on the various change programmes
undertaken, including details of the communication plans and the
support put in place for affected colleagues. Members were forthright
about the impact these were having on morale and stretched resources
and regularly voiced their concerns regarding the risk to staff retention.
Attendance by our designated Director for employee engagement,
Angela Bromfield, and other members of the Board and senior
management team, ensures the Board understands how the actions
we’ve taken are impacting colleagues and our culture. In addition to
the change programmes, the EVG has covered the development of our
Group strategy, our health and safety activities and strategy, our life as
a PLC, an update on the market and EPDs. Encouraging our operational
colleagues to put themselves forward for the EVG remains key to
making it truly representative of our business, but the EVG remains a
useful barometer for whether the Group’s purpose, values and strategy
remain aligned with our culture. Further details of how we engage with
employees are set out on pages 38 to 40.
Whilst we remain committed to our DERI strategy, the Board
acknowledges that the challenges experienced during the year have
unfortunately limited our opportunities to invest, and our progress.
Our commitment to operating an inclusive business remains, as does
our desire to introduce greater diversity to our manufacturing and
production roles. Our DERI strategy remains an important component of
our long-term success and we aim to make more progress during 2024.
Good governance is supported at Marshalls by robust systems and
processes and a good understanding of risk and risk appetite. The
Group’s control and risk management frameworks are reviewed
annually and have been critically reviewed during the year. We review
our Risk Register at least twice a year and our internal audit plan factors
in the results of these reviews. The Board and the Audit Committee
receive periodic reports from the internal auditor on a range of topics
each year that are given careful consideration by the Audit Committee.
Further details of our approach to risk identification and management
are set out in the Strategic Report on pages 52 to 61.
The Board remains confident the Group’s application of the UK Code
principles during 2023 will drive its long-term sustainable success by
providing a platform to achieve its strategic goals.
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Marshalls plc | Annual Report and Accounts 2023
2
Division of responsibilities
Roles and division of responsibilities
There is a clear division between Executive leadership and leadership of the Board expressed in the written Terms of Reference of the Chair and Chief Executive.
Chair
Chief
Executive
Senior
Independent
Director
NED
independence
Evaluating
performance
The Chair leads the Board and is responsible for its overall effectiveness. She was independent on appointment in 2018 and
brings her judgement, experience and skills to the role. Our internal Board evaluation assessed all aspects of Board performance
including Board dynamics, strategic and risk oversight, composition and succession and the support the Board receives from
the business and the Company Secretary. The evaluation concluded that during 2023, the Board has been agile and decisive in
difficult situations and supportive as it has navigated challenging macro-economic and market/sector conditions.
The Chief Executive has responsibility for all operational matters which include the implementation of strategy and decisions
approved by the Board.
The Senior Independent Director provides a sounding board for the Chair and also acts as an intermediary for other Directors
and shareholders.
The Board has determined each of the Non-Executive Directors to be independent in accordance with Section 2, Provision 10 of
the UK Code.
At least once a year the Chair meets the Non-Executive Directors without the Executive Directors being present. The Senior
Independent Director meets the other Non-Executive Directors annually without the Chair to appraise the Chair’s performance.
No over-
boarding
On appointment, the expected time commitment for Board members is made clear. The Chair and other Non-Executive Directors
disclosed their other commitments prior to appointment and agreed to allocate sufficient time to the Company to discharge their
duties effectively and ensure that these other commitments do not affect their contribution. The current commitments of the
Chair and other Directors are shown on pages 64 and 65.
Board meetings and attendance*
Key = Present
Board
Vanda Murray OBE (Non‑Executive Chair)
Martyn Coffey
Justin Lockwood
Simon Bourne
Graham Prothero (Non‑Executive)
Tim Pile (Non‑Executive)
Angela Bromfield (Non-Executive)
Avis Darzins (Non-Executive)
Diana Houghton (Non‑Executive)
Audit
Committee
Remuneration
Committee
Nomination
Committee
–
–
–
–
–
–
–
–
–
–
*
The Board held seven scheduled meetings during the year. Additional Board meetings were held to conditionally approve the appointment of Matt Pullen and the
publication of trading statements in May and October 2023.
The Chair, Chief Executive, Chief Financial Officer and Chief Operating Officer are not members of the Audit Committee but normally attend Audit Committee meetings
by invitation. The Non‑Executive Directors, excluding Tim Pile, also meet the external auditor in private.
The Chief Executive attends Remuneration and Nomination Committee meetings by invitation. The Company Secretary attends Board and Committee meetings as
Secretary. Board members also participate in the Group’s annual strategy review with the senior management team, which during 2023 was held over two days in
November. In addition, the Board participates in site visits, training sessions, the EVG and other business activities where they have relevant expertise and experience.
Members of the Board also attended the Group’s annual management conference on 2023.
Tim Pile retired as a Non‑Executive Director and Board Member at the Company’s 2023 AGM in May.
Marshalls plc | Annual Report and Accounts 2023
75
Governance
Corporate Governance Statement continued
2. Division of responsibilities continued
In addition to the standing items on the Board’s agenda, the principal
areas of focus considered by the Board in 2023 were:
Board meetings
There is an established format and programme for scheduled Board
meetings, which were all held in person last year.
This programme is supported by a forward-looking planner that focuses
on Board business for the year ahead and ensures an appropriate
balance between the Board’s consideration of strategy, performance
and governance. The Board’s agenda is flexible and this has supported
the Board devoting more time to the Group’s performance during
the year given challenging market conditions. This enabled dynamic
consideration of the issues we’ve faced throughout the year. The Board
has convened, outside of scheduled meetings, to consider urgent
matters such as monitoring and reporting on business performance
and the appointment of Matt Pullen.
The Chief Executive, the Chief Financial Officer and the Chief Operating
Officer report on strategic, financial and operational performance
respectively at each Board meeting. The Chief Executive also updates
the Board, at each meeting, on wider industry, sector and competitor
considerations that are relevant to ensuring that decision making has
regard to all stakeholder interests.
The Chief Operating Officer reports to the Board on health and safety,
including the development and implementation of our health and safety
strategy. Health and safety remains a key priority and is reported on and
considered on a standalone basis at every scheduled Board meeting.
The safe operation of our sites and our safety culture are constantly
monitored to ensure they are aligned with The Marshalls Way, i.e. “we
are doing the right things, for the right reasons, in the right way”.
The Board participated fully in the Group’s annual strategy review
which was held across two days in November 2023. This involved
engagement with key members of the senior management team in
considering the Group’s refreshed strategy and our plans for embedding
it within the business.
Strategy
• Group-wide strategic review and restatement
• Divestment of interest in Marshalls NV
• Group restructuring programmes
• Outsourcing of logistics to Wincanton
• IT/Digital: digital strategic pillars, electronic and frictionless
trading, customer experience, ERP implementation, cyber
security and insurance and data literacy
• Divisional strategy: Marshalls Landscape and Building Products
• People and culture, including succession, talent
development and DERI
• Divisional strategy: Marley Roofing Products incorporating
Viridian Solar
• Commercial update: marketing, new product development
• 2024 budget
• Capital investments: tri‑blend silos, fleet replacement
• Capital structure and dividends
• Market, sector and competitor updates and outlook
• ESG
Operations
• Health and safety (including Marley)
• Marley integration
• Supply chain, procurement and logistics
• Technical innovation project updates
• People: culture, engagement and morale
Governance and risk
• Interim and final results and dividends
• Group-wide restructuring proposals
• Board composition: succession of Martyn Coffey
and appointment of Matt Pullen as CEO
• Shareholder consultation on Remuneration Policy
and pay proposals
• Internal Board and Committee performance evaluation
• Annual shareholder governance meetings
• Shareholder consultation following significant vote against
2022 Annual Remuneration Report
• EVG feedback
• Policy reviews in accordance with matters reserved
for the Board
• Whistleblowing
• Cyber security and data protection
• Stakeholder engagement
• AGM voting and guidance
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3
Composition, succession and evaluation
There is a transparent and formal process for appointments led by the
Nomination Committee and supported by external specialist recruiters.
Board succession planning is reviewed at least annually by the
Nomination Committee, while succession planning at Executive level
is reviewed by the Board.
The Board also reviews succession planning for senior management
and is able to consider and challenge, as appropriate, the Group’s
recruitment policies and how they promote diversity and inclusion.
During 2023, alongside its regular review of the Group’s people strategy,
the Board received a detailed update on the Group’s wider talent
identification and development programmes, with an acknowledgement
that the change programmes undertaken during the year have limited
progress with these. The policies and process are commented on
further in the Nomination Committee Report on pages 80 to 83.
The Board recognises that organic development of future leaders is
key to our people strategy and the long‑term sustainability of the Group
and acknowledges that this is an area for further development.
Our Board is diverse with great depth of skills, experience and
knowledge. Our internal Board evaluation has found that our committees
are well led by suitably experienced Chairs with recent and relevant
expertise. During the year, Matt Pullen was appointed as Martyn Coffey’s
successor as Chief Executive and Tim Pile retired from the Board in May
following the Company’s 2023 AGM.
Matt Pullen’s appointment followed an extensive search to find a
successor to Martyn Coffey, who has led the Group in exemplary
fashion for more than ten years. Matt is an experienced leader with
cross-sector experience and is supported by an experienced senior
management team. The Board looks forward to working closely with
Matt to help the Group achieve its strategic ambitions.
The Board is currently 50 per cent female, with a female Chair and one
Director from an ethnic minority background. Board composition is
reviewed annually, and we assess whether the current skills, experience
and knowledge are aligned with the Group’s refreshed strategy and
expected future leadership needs, and the benefit greater Board
diversity could bring to the Group. Further details of the Board and
their skills are set out on pages 64 and 65.
Our succession plan is designed to ensure that Board members’ terms
expire or they retire over clearly defined periods, normally not exceeding
nine years. All Directors stand for election or re-election (as appropriate)
at every Annual General Meeting, and all current Directors will stand
for re‑election or election at the 2024 Annual General Meeting. The
Directors’ biographical details on pages 64 and 65 show their roles,
date of appointment and length of service on the Board.
During 2023, we conducted an internal Board performance review led by
the Chair and the Company Secretary. See page 70 for further details.
Directors have access to the advice and services of the Company
Secretary who is responsible for ensuring that Board procedures are
complied with and, through the Chair, advises the Board on governance
matters. The appointment or removal of the Company Secretary are
matters for the whole Board.
Succession planning
• Whilst we’ve managed the succession of our Chief Executive and
Chief People Officer, succession planning, in the broader sense,
remains critical. Our progress in improving representation and
diversity, particularly in operational roles, has slowed while we’ve
focused on immediate business priorities. Creating opportunities
for development for our talent group remains a key priority in the
short term.
How Board priorities were addressed during the year
Focusing on the most critical issues
• The Board has supported the business through challenging market
conditions during 2022 and 2023. The restructurings undertaken
have ensured our capacity and cost base are aligned with demand.
Overseeing strategy and monitoring execution
• Whilst the focus in the year has been on more short-term strategic
decisions underpinning our resilience, a detailed strategic review
has also been undertaken to ensure we have the right focus for
when markets recover and in the longer term. The successful
deployment of our new strategy and how we measure progress
against strategic objectives are key themes for 2024 and beyond.
Supporting management in a challenging
external environment
• The actions we have taken throughout the year evidence the
Board’s progress in this regard. There is an acknowledgement that
the focus on business performance and cost base control in 2023
has, to an extent, impacted other priorities (for example our People
Strategy), but this reflects the Board addressing those issues most
critical at the time.
Marshalls plc | Annual Report and Accounts 2023
77
Governance Corporate Governance Statement continued
3. Composition, succession and evaluation continued
Focus areas and actions to enhance effectiveness in 2023
The 2023 internal Board performance review was conducted by
the Chair and Company Secretary. The process followed was
consistent with our last internal review and reflected on the findings
of the externally facilitated review in 2022 and on our performance
against the priorities for 2023. It was carried out immediately after
the Board’s annual strategy review in November, so the Board could
reflect this in their feedback. A detailed summary of the 2023 review
is set out below.
Dynamic decision making remains critical to the effectiveness of
our Board. Our focus on managing performance, costs and cash
during 2023 was driven by market conditions and the need to
align capacity with demand without compromising our ability to
respond when markets recover. We recognise however that agility
in addressing short to medium-term strategic challenges should
not be at the expense of reflecting on, developing and executing our
strategic plans.
As we have set out above, whilst we made progress against
the priorities for 2023, we acknowledge that 2024 presents an
opportunity to accelerate progress with our people strategy, which is
key to the Group’s long-term sustainability.
Board engagement and support have yet again been critical during
the last year and remain key strengths of our Board, which has strong
leadership and is focused on responsibly governing to ensure the
long-term sustainability of the business.
2023 Board performance review
The 2023 Board performance review was conducted internally by
the Chair and Company Secretary using a comprehensive tailored
questionnaire that evaluated Board behaviour and processes as
well as providing the Board an opportunity to reflect openly on its,
and the Group’s, strengths, weaknesses, opportunities, threats and
strategic priorities.
Having redesigned the internal evaluation with the Company
Secretary’s support, the Chair conducted this year’s evaluation on
a consistent basis with the last internal review carried out in 2021
to enable the Board to reflect on its year on year performance. The
review questionnaire incorporated the findings of the externally
facilitated review supported by Lintstock in 2022 and also asked the
Board to assess its achievement against the priorities set last year.
This year’s review was carried out immediately after the Group’s
annual strategy review in November 2023.
The findings of the evaluation were discussed at the January 2024
Board meeting. The review concluded that during 2023 the Board
was agile and decisive in difficult situations and supportive as it
has navigated challenging macro-economic and market conditions.
The Board has managed the succession of our Chief Executive and
completed a strategic review, to ensure our priorities make us resilient
in the short term and reflect our medium to long‑term strategic
ambitions. The Board and Committees are well led, with great depth
of knowledge, skills and relevant experience and are supported by a
strong senior management team. Progress against the Board’s 2023
priorities is summarised above and the specific areas identified for
focus during 2024 are:
• People: The actions we take to support, attract, motivate, develop,
progress and retain diverse talent across all levels of the business
are critical, as is identifying areas of the business where we are
dependent on certain colleagues. Succession planning at the
senior management team level also requires focus. After two
tough years, our people need to experience winning, both from a
business perspective and personally.
• Customer centricity: Given the criticality of maintaining our market
share and our price positioning, a reinvigorated focus on the
customer is required. Simplifying our product and service offerings
are critical, as is building a greater understanding of what is driving
customer choices. Leveraging our sustainability credentials is a key
part of this.
• Commercialising ESG: Converting our sustainability credentials
into commercial success, particularly in relation to our solar
and concrete brick offerings, is key. Whilst our organisational
credentials are clear, we need to ensure our investment in
sustainability initiatives translates into sales and profits.
• Strategy: Embedding the refreshed strategy using the OGSM
methodology, and the Board allocating more time to considering
strategic priorities and to structured reviews of our progress
against key strategic priorities, are key for 2024 and beyond. This
includes the flexibility of our strategy in the event of prolonged
market weakness and our agility in responding to this.
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Marshalls plc | Annual Report and Accounts 2023
5
Remuneration
Our current Remuneration Policy was approved by shareholders in
2023 and is summarised in the Directors’ Remuneration Report on
pages 88 to 102. Our Policy addresses the relevant requirements
of the Code and was prepared in consultation with Company
shareholders and external voting agencies.
The Remuneration Committee Report describes how the current
Remuneration Policy has been implemented during 2023 and
the outcomes achieved. It also describes how the Remuneration
Committee has carried out its responsibilities during the year.
The Remuneration Committee continues to effectively discharge
the duties delegated to it by the Board under the leadership of the
Committee Chair, ensuring outcomes reflect performance and
taking a holistic view of remuneration across the Group, having
consulted employees appropriately, the importance of which is
recognised by the Board.
Read the Remuneration Committee Report on pages 88 to 102
Vanda Murray OBE
Chair
18 March 2024
4
Audit, risk and internal control
The Board has established written policies and procedures for
external and internal audit functions designed to ensure that they
remain independent and effective and these are regularly reviewed.
Annual questionnaire‑based evaluations are conducted of both our
internal and external audit partners with the Board and members of
the senior management team participating. The Board scrutinises
financial and narrative statements in accordance with best practice,
supported by the advice of our auditor.
The Board has a well-established procedure to identify, monitor
and manage risk, and has carried out reviews of the Group’s risk
management and internal control systems and the effectiveness of
all material controls, including financial, operational and compliance
controls and the mitigation of material risks. These reviews considered
the Group’s actions in response to anticipated changes to the Code.
The Strategic Report comments in detail (pages 55 to 61) on the
principal risks facing the Group, in particular those that would
threaten our business model, future performance, solvency or
liquidity, and, where possible, how these are mitigated. The Board
conducts a rigorous assessment of these risks, particularly
operational risks that might affect the Group’s viability in the
short term and emerging risks that might impact the medium
to longer term.
The Board’s risk and viability review incorporates stress testing,
by envisaging scenarios that might arise during the financial year
and/or the planning cycle, and considering, with financial impact
modelling where appropriate, the likely effect on the business
and its prospects. Additionally, the outcomes of our risk reviews
drive our internal audit planning, ensuring our resources are being
directed at the most appropriate areas.
The Audit Committee (on behalf of the Board) reviews the
effectiveness of the Group’s risk management system and the
system of internal control annually. The Group’s Risk Register and
our risk disclosures in this report were reviewed by the Board and
Audit Committee in December 2023 and March 2024 respectively.
The Chair and Non-Executive Directors carried out a standalone
risk review in December 2023, the outcome of which has been
incorporated into the Risk Register. In addition, our internal and
external auditors are invited to all risk review meetings and
participated in our most recent meeting in November 2023.
Our approach underpins our commitment to transparency in
managing risk and internal controls and lends additional efficacy
to our procedures.
The Audit Committee Report on pages 84 to 87 describes the
Group’s internal control system, how the Board assures itself
of the independence and effectiveness of internal and external
audit functions and how they are managed and monitored.
With the Committee’s support and oversight, we continued our
programme of work to address anticipated changes to the UK
corporate governance regime, as they relate to our internal control
environment. We remain confident this will support the assurances
the Board will be required to provide in this regard. The Board
acknowledges that such systems are designed to manage, rather
than eliminate, the risk of failure to achieve business objectives.
Read the Audit Committee Report on pages 84 to 87
Marshalls plc | Annual Report and Accounts 2023
79
Governance Nomination Committee Report
Supporting the development
of our diverse Board, ensuring
we are equipped to support
the implementation of the
Group’s refreshed strategy
Our stable, and
well-balanced Board
has been critical
in challenging
and supporting
management actions
during a tough year,
ensuring the Group
is well positioned for
when markets recover.
Vanda Murray OBE
Chair of the Nomination Committee
Meetings
Members and attendance
Vanda Murray OBE – Chair
Graham Prothero – SID
Tim Pile*
Angela Bromfield
Avis Darzins
Diana Houghton
* Tim Pile retired from the Board in May 2023.
Find our Terms of Reference and Nominations Policy at:
www.marshalls.co.uk/about-us/corporate-governance
Dear shareholder
I am pleased to report to shareholders on
the main activities of the Committee and
how it has performed its duties during
2023. I chair Nomination Committee
meetings but would not do so where the
Committee was dealing with my own
reappointment or replacement as Chair.
2023 highlights
• We recommended that the Board appoint Matt Pullen to succeed
Martyn Coffey as Chief Executive. We worked closely with our search
partner, Russell Reynolds Associates (which is an independent
executive search firm with no other connection to the Company
or the Company’s individual directors), conducting a robust and
objective search and selection process to identify a successor to
Martyn. A comprehensive induction plan was arranged for Matt when
he joined the Group as Chief Executive Designate in January 2024.
• We have continued to support our Chief Operating Officer, Simon
Bourne, in his transition to the Board following his promotion in 2022.
• Diana Houghton has completed our comprehensive Director induction
programme with the support of colleagues throughout the business,
demonstrating our commitment to open and “unfiltered” engagement
with all Directors.
• Following Tim Pile’s retirement and the appointment of Diana Houghton,
we’ve reviewed Board performance and succession, recognising
that stability through a challenging year was critical. We have not
lost sight of the need to ensure that Board composition, succession
and performance in the medium to long term must continue to
support the Group’s strategic ambitions, whilst ensuring we retain
the diversity we currently have within the Board and reflect on the
tenure of current Board members.
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Marshalls plc | Annual Report and Accounts 2023
• With the support of our then the Chief People and ESG Officer,
Louise Furness, we conducted a comprehensive review of our
Diversity, Equity, Respect and Inclusion (“DERI”) strategy. Although
progress and investment in our DERI strategy has been slower,
largely due to other priorities during another very challenging period,
the Board recognises the importance of this to the long-term
sustainability of the business and the challenge it presents to the
sector. A key goal for Marshalls is to improve female representation
in senior management roles within the business (see page 103).
• Performance, succession, development and progression below
Board level were reviewed in detail by the Committee. There is an
acknowledgement that, following two years of relative stagnation due
to challenging market conditions, a re-shaping of the management
and leadership development curriculum is critical to ensuring
internal senior management succession candidates are retained
and supported by the business. We also need to ensure early talent
programmes, including apprenticeships, support the development
of a diverse pipeline of future management candidates.
• The Committee has supported a restructuring of the senior
management team with Paul Reed, formerly Chief Operating Officer
of Marley, being appointed as Divisional Managing Director of
Marshalls Landscape and Building Products divisions. After more
than 20 years with the business, Chris Harrop, Group ESG Strategy
Director, retired from the Group at the end of December 2023 and we
thank him for his incredible service and commitment to the Group,
particularly as the driving force behind our early engagement with
sustainability challenges and initiatives.
• In support of their re‑election at the 2024 AGM, we reviewed
individual Director performance and also completed an internal
performance review, which concluded the Committee continues to
operate effectively and under strong leadership and is sensitive to the
challenges the Group has faced during the last two years and their
impact on progress with the Group’s people strategy, including its
DERI strategy.
• We reviewed and approved the Group’s Nominations Policy and
reflected on how we implemented it.
2024 priorities
• Continuing to support Matt Pullen during his induction and transition
into the Chief Executive role.
• Focusing on the retention and development of the Group’s senior
management team.
• Board succession, particularly as it relates to our Senior Independent
Director and Audit Committee Chair, Graham Prothero, and the
Executive Directors.
• Following a challenging start, to continue to support the Group’s
progress with its DERI strategy and the Group’s participation
in sector-wide initiatives to improve diversity. The Committee
recognises the challenges presented by the sector profile and market
conditions but is committed to supporting the internal education
and mentoring programmes which will underpin, in particular, the
development and progression of future female leaders.
Greater gender, cultural and cognitive diversity are huge opportunities
the Group with the lack of these being externally acknowledged as an
“existential threat” to an industry with an ageing workforce. The Board
currently comprises 50 per cent women. We have a female Chair and
one Board member from a non-white ethnic minority background and
comply with the Listing Rules that require us to publish an annual
“comply or explain” statement regarding the achievement of the
targets on Board diversity.
• Overseeing the continued implementation of the Group’s wider people
strategy, which underpins and acts as an enabler to the Group’s
refreshed strategy and includes the development and support of
colleagues in our high-performing category, as well as our approach
to recruitment for senior leadership positions, which will prioritise
promoting colleagues from within.
• Focusing on retention, succession, development and progression
below Board level, particularly given the importance of developing
and building the leadership capabilities of those working directly
for the Executive Directors and other members of the senior
management team.
Marshalls’ Nominations Policy
The table below summarises the key features of our Nominations Policy and how it is applied.
Policy principle
Supporting measures
How implemented in 2023
• Recruitment
and succession
reflect the
strategic needs of
the business.
• Recruitment
• Nomination Committee
conducts an annual
skills review aligned
with three to five‑year
strategic plans.
• New Directors agree
• Following her appointment to the Board at the beginning of the year, providing
Diana Houghton a comprehensive induction to the Group, and given experience,
engaging her in the development and communication of our refreshed strategy.
• Paul Reed appointed Divisional Managing Director for Marshalls Landscape and
Building Products, reflecting his success as Chief Operating Officer of Marley
and transferability of his skills.
contributes to
desired values
and culture.
commitment to
strategic direction
and Group policies.
• Recruitment to
achieve diversity
in widest sense.
• Policy sets direction
and gives leadership.
• Brief for search
consultants for new Board
and senior management
appointments.
• Diversity initiatives/
succession plans at
Executive level reviewed
and targets monitored.
• Succession priorities for coming years established, following a review of current
performance and skills against our refreshed strategy.
• Following appointment of Diana Houghton and Tim Pile’s retirement, 50 per cent of
the Board are female, with a female Chair and one Director with a non-white ethnic
minority background.
• All future search briefs for Board and senior management roles will emphasise the
importance of diversity in the broadest sense.
• Detailed review of the execution of the Group’s wider DERI strategy. Disappointing
progress in the business during the last year, stifled by other business priorities
and challenges.
• Clear recognition of the sector-wide challenge and the threat this poses to long-term
sustainability. Engagement with sector initiatives and members of the Employers
Network for Equality and Inclusion, which provides access to resources and materials
to support our DERI programme.
Marshalls plc | Annual Report and Accounts 2023
81
Governance
Nomination Committee Report continued
Marshalls’ Nominations Policy continued
Policy principle
Supporting measures
How implemented in 2023
• There should be
a clear formal
Board succession
plan based on
objective criteria.
• Annual review of terms
• Succession under continuous review. Diana Houghton appointed in January 2023 as
of office.
successor to Tim Pile, who stood down at the 2023 AGM.
• Annual individual
evaluation.
• Use of independent
• Terms of office are reviewed, annually supported by individual Director evaluations
that were last conducted in November 2023. Chair held additional one-to-ones with
Directors during the year.
external search advisers.
• We select external search advisers for Board appointments based on relevant
expertise. Russell Reynolds Associates were retained for the recruitment of Diana
Houghton and Matt Pullen. Norman Broadbent are retained for senior management
team recruitment and were appointed following a formal tender process.
• Beneath Board level, we have monitored senior management team performance and
succession. We are carefully assessing any internal candidates and ensuring that, in
the longer term, development opportunities for our high performers are identified and
supported with investment.
• Recruitment process addresses existing commitments and risk of “over boarding”.
• Time commitment referenced in letters of appointment.
• New Director induction process well established and well received by incoming
Directors. The induction process is regularly reviewed and refreshed. See page 83.
• Board training is included as part of Director induction together with site visits.
All Directors are supported by the Company Secretary, who also arranges additional
training on relevant topics.
• Directors continuously engage: on risk; through site visits; attendance at EVG
meetings; with functional team on specific strategic objective; through attendance
at Lunch and Learn sessions; and by participating in our annual strategy review.
Engagement has been both in person and virtually.
• Reviews in June and December 2023.
• All Directors stood for election/re‑election in May 2023.
• Directors must
• Limit on other Board
devote sufficient
time to perform
effectively and
familiarise
themselves with
the business.
appointments.
• Detailed induction,
site visits, training and
employee engagement
programme.
• Compliance/
• Conflicts policy and
good governance.
register reviewed no less
than six-monthly.
• Annual re-election of
Directors.
The performance of the Committee was reviewed as part of our internal
Board performance review, described on page 78. This review reflected
on the outcome of the externally facilitated review in 2022 and any
specific objectives identified. The Committee Terms of Reference were
reviewed in December 2023. No material changes were made, and the
terms continue to reflect the requirements of the Code.
During the year, the Nomination Committee held two scheduled
meetings and, one additional meeting, in December 2023, to approve
a recommendation to the Board that Matt Pullen be appointed as
Chief Executive Designate. There were additional ad hoc meetings
and discussions between Committee members in connection with
succession planning and recruitment.
Evaluation and reappointment of Directors
Each Non‑Executive Director was, on joining, provided with a detailed
description of their role and responsibilities, and received a detailed
business induction, which is managed by our Company Secretary. All
Directors have biannual one-to-one review meetings with the Chair
to appraise the composition and performance of the Board and their
individual contributions, behaviours and participation, both at Board
and Committee meetings and through their wider engagement with
the business. In addition, these meetings provide an opportunity for
the Directors to give their views on the topics the Board is currently
focusing on and on the broader strategic, macro-economic and market
considerations and risks that should be factored into setting the Board’s
future agenda. This demonstrates the Chair’s commitment to regular
reflection on Board and individual Director performance.
Before any Director is proposed for re-election, or has their appointment
renewed, the Committee considers the outcome of the reviews to ensure
that the Director continues to be effective and demonstrates commitment
to the role. The Chair provides an explanation to shareholders as to
why the Director should be re‑elected and confirming that a formal
performance evaluation has taken place when the Resolution to re-elect
is circulated.
It is the Company’s policy that Executive Directors can only hold one
external listed company non-executive directorship. Voluntary service
on the governing board of a social, trade or charitable organisation
is also permitted. Details of the external appointments held by the
Executive Directors are included in the biographical notes on pages
64 and 65.
Governance
The Committee has acted throughout 2023 in accordance with the
principles of the Code. In addition, the Committee’s performance against
the Code was reviewed as part of our internal Board performance review
for 2023. The evaluation concluded that the Committee has effectively
managed Board composition and succession, with a well-balanced,
stable and multi-skilled Board that has acted with agility during another
challenging year and ensured we are well positioned for when markets
recover. The framework for the refreshment of skills, experience and
diversity to support the needs of the business and its stakeholders in the
future is transparent and well understood.
Vanda Murray OBE
Chair of the Nomination Committee
18 March 2024
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Marshalls plc | Annual Report and Accounts 2023
Director induction
Our induction process focuses on informing, engaging and supporting new Directors when they join the business to ensure they
understand the Group’s culture, business, strategy and stakeholders.
We feel this knowledge, combined with their skills and experience, provides the right foundation for them to make an effective
contribution to the Group and to fulfil their statutory duties as Directors. This induction process is a key building block of
effective governance and reflects The Marshalls Way – “we do the right things, for the right reasons, in the right way”.
Our Director induction
The Marshalls Way
We do the right things, for the right reasons, in the right way
Inform
Engage
Support
• Summary of the
Group’s history
• Introduction to the
Group’s Strategy
• Biographies of the senior
management team
• Employee Engagement Survey
• Sustainability Report
• ESG update
• Latest Board evaluation
• Access to key corporate
documents
• Market research, including
indicators and drivers
• Board one‑to‑ones
• Executive management
one‑to‑ones
• Site visit programme
• Customer visits
• Introduction to our markets
• Introduction to
investor relations
• Introduction to
Remuneration Policy
• EVG attendance
• Core compliance and
additional topical training
• Appointment
documentation support
• Company Secretary support
• Organograms
• Key contacts
• Details of key advisers
• Payroll and administration
support
Marshalls plc | Annual Report and Accounts 2023
83
Governance Audit Committee Report
Marshalls continues to
maintain a strong focus on
control, risk management
and governance
During 2023, the
Committee oversaw
a continuing project
to review the design,
completeness and
effectiveness of
the Group’s control
environment to ensure
that it continues to be
robust and suitably
documented.
Graham Prothero
Chair of the Audit Committee
Members and attendance
Graham Prothero – Chair
Meetings
Angela Bromfield
Avis Darzins
Diana Houghton
Tim Pile
Find our Terms of Reference at:
www.marshalls.co.uk/about-us/corporate-governance
The Audit Committee has addressed
its key responsibilities throughout
2023. It has focused on the integrity
of the Group’s external reporting and
challenged judgements made by
management alongside seeking
input from the external auditor
on key matters.
It has also assessed whether the 2023 Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and, having
concluded that it is, the Committee made a recommendation on
this basis to the Board. It performed an effectiveness review of the
2022 audit process and ensured that an effective external audit was
conducted in 2023 by critically assessing the scope of work undertaken
and the results of the audit work. It has continued to oversee the
project to enhance the Group’s control environment ahead of expected
changes in reporting obligations on internal controls and it monitored
and reviewed the effectiveness of the existing control environment.
The scope of work of the internal audit function was approved by the
Committee, the reports were reviewed and the completion of actions
was monitored.
The principal areas of focus for 2024 are to continue to discharge the
key responsibilities under its Terms of Reference, as set out in this
report. The Committee will also continue to oversee the project to
improve both the effectiveness and assurance of the internal control
environment with the aim of being ready for the changes that will
become effective from January 2026. In addition, the Committee will
oversee an external audit tender process that will appoint the external
auditor for the year ending 31 December 2025.
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Role and composition
The Committee consists of independent Non-Executive Directors
and met four times during the year. Members and their attendance
at meetings are set out above. Diana Houghton was appointed to
the Committee on 1 January 2023. The Chair of the Committee is a
Chartered Accountant, and the Board is satisfied he is independent and
has recent and relevant financial experience as required by the Code.
Other members also have relevant sectoral and financial experience.
Their biographical details are on pages 64 and 65.
The Chief Executive Officer, Chief Financial Officer and Chief Operating
Officer together with the external auditor (Deloitte LLP) and internal
auditor (KPMG LLP) are all invited to attend the meetings of the
Committee. In addition, the Company Chair attended all meetings
during 2023. The Committee Chair meets with the Chief Financial
Officer and both the external and internal auditors on a regular basis
outside the formal meetings. The external auditor met with the
Committee without the Executive Directors being present at both the
March and August meetings.
The Committee acknowledges and embraces its role of protecting
the interests of shareholders as regards the integrity of the financial
information published by the Company and the effectiveness
of the audit. The Committee’s responsibilities are outlined in its
Terms of Reference which are available on the Group’s website
(www.marshalls.co.uk). The Committee’s main responsibilities are to:
• Review the integrity of formal announcements relating to the Group’s
financial performance, and specifically consider the significant
financial reporting judgements contained within them.
• Provide advice to the Board on whether the Annual Report and
Accounts, taken as a whole, are fair, balanced and understandable,
and provide the information necessary for shareholders to assess
the Group’s financial position and performance, business model
and strategy.
• Review and monitor the independence and objectivity of the external
auditor and effectiveness of the external audit process.
• Make recommendations to the Board, for the Board to put to
shareholders in general meeting, on the appointment, reappointment
and removal of the external auditor and to approve the terms of
that appointment.
• Monitor the Group’s systems of internal control including financial,
operational and compliance and risk management systems, and to
perform an annual review of their effectiveness.
• On behalf of the Board, review and monitor the Group’s risk
management process, in particular the assessment of principal
risks and the associated mitigating actions included in the Group
Risk Register.
• Review and approve the internal audit programme, monitor its
delivery during the year. Review the effectiveness of KPMG, as
internal auditor, and the internal audit programme.
The Committee reviewed its responsibilities in the context of the FRC’s
Minimum Standards for Audit Committees and concluded that they
are aligned although certain processes, including the granularity of the
external audit effectiveness review, have been enhanced in response.
Performance evaluation
During the year, as part of the internal evaluation of Board and
Committee effectiveness, an evaluation of the Committee’s performance
was also undertaken. A summary of the internal evaluation is set out
in the Corporate Governance Statement on pages 66 to 79. The review
found the Committee to be effective and well led by an appropriately
experienced Chair, with clear Terms of Reference. The review found that
Committee strikes an appropriate balance between being supportive
and providing robust challenge. No areas of concern were highlighted
during this review although a number of items will be kept under review,
including the time allocated to key review topics in light of forthcoming
governance reforms.
Significant issues related to the Financial Statements
In preparing the Financial Statements, the Committee has been mindful
of potential issues arising from high inflation and interest rates and the
uncertainty over a range of macro‑economic factors. The significant
judgements considered by the Committee are set out below.
Goodwill impairment review
The Group’s balance sheet includes goodwill totalling £324.4 million
that is required to be subject to an annual impairment review under
‘IAS 36 “Impairment of Assets”. The key areas of judgement in this
review are the reasonableness of the future cash flows that are forecast
to be generated by the Group’s cash generating units (“CGUs”), the
rate used to discount the cash flows into their current value and the
long-term growth rate.
The Committee received and challenged a detailed paper from
management that summarised the work performed to prepare the
forecast cash flows, the calculation of the market‑based discount rate,
the long-term growth rate and a series of sensitivities that illustrated the
impact of key judgements being different to the assumptions included
in the modelling. The Committee also benefited from its members’
industry experience when considering the cash flow projections. The
external auditor performed detailed audit work on all aspects of the
impairment modelling and reported its findings to the Committee.
The Committee concluded that management’s assessment that
no impairment charge was required was appropriate. In addition, it
reviewed the disclosures included in the Annual Report and Accounts,
received feedback from the external auditor on their adequacy and
concluded that the disclosures were appropriate.
Disclosure of adjusting items
The Group’s Annual Report and Accounts highlights both statutory
results and results stated after adding back adjusting items. The
Group has an accounting policy for adjusting items see page 128,
which states that they are items that are unusual because of their size,
nature or incidence and which Directors consider should be disclosed
separately to enable a full understanding of the Group’s results and to
demonstrate the Group’s capacity to deliver dividends to shareholders.
The Committee received a paper from management setting out details
of those items that were assessed to meet the criteria of the policy.
The Committee challenged the paper and received feedback from the
external auditor and concluded that the proposed items met the criteria
of the policy. The Committee also considered the use of adjusting
items in the Group’s financial reporting and concluded that there
was no undue prominence given to adjusted results compared to the
statutory results.
Fair, balanced and understandable
The Committee has considered whether, in its opinion, the 2023
Annual Report and Accounts is, taken as a whole, fair, balanced and
understandable, and whether it provides the information necessary for
shareholders to assess the Group’s position, performance, business
model and strategy. As part of its review, the Committee considered
the disclosures in the Strategic Report together with the enhanced
disclosures relating to the Group’s ESG objectives, sustainability and
climate-related risks and opportunities and targets. The Committee
also considered the adequacy of the disclosures made in relation to
the measures undertaken by the Group to mitigate risk. In making
this assessment, the Committee has advised the Board in relation to
the statement required by the UK Corporate Governance Code. The
Committee has concluded that the disclosures, and the process and
controls underlying their production, were appropriate to enable it to
determine that the 2023 Annual Report and Financial Statements is fair,
balanced and understandable.
Marshalls plc | Annual Report and Accounts 2023
85
Governance Audit Committee Report continued
FRC Corporate Reporting Review (“CRR”)
The FRC’s CRR team carried out a limited scope review of the Group’s
2022 TCFD disclosures of metrics and targets, and the adequacy
of net zero commitment disclosures as part of its thematic review
of climate‑related disclosures. The CRR did not raise any questions
or queries that required a response, but it did highlight a number of
potential improvements. The Committee welcomed the FRC CRR’s
review and management has made changes to the TCFD disclosures
included in this Annual Report based on this feedback.
External audit
Deloitte LLP tenure and audit partner
Deloitte LLP was appointed as the external auditor in May 2015, for
the audit of year ended 2015, following a competitive tender process.
Deloitte LLP has processes in place designed to maintain independence,
including regular rotation of the audit partner. The current audit partner
is Bashir Bahaj and the 2023 audit is the first year of his rotation. For
the financial year under review, the Company has complied with the
Competition and Markets Authority’s Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive Tender
Processes and Audit Committee Responsibilities) Order 2014.
Audit tender process for the 2025 financial year
The financial year ending 2024 will be the tenth year of Deloitte LLP’s
tenure as external auditor and, in accordance with its obligations under
the Companies Act 2006, the Committee plans to run an audit tender
process during 2024 to appoint the external auditor. The Committee
intends to invite Deloitte LLP and other appropriately qualified audit
firms, including “challenger” auditors, to present proposals for this role.
The tender process will be conducted in accordance with the guidelines
included in the FRC’s “Minimum Standards for Audit Committees” that
was published in May 2023, the guidance issued by the Investment
Association, FRC and the EU Audit Regulation (Regulation 537/2014)
as it applies under UK law). The outcome of the process will be put to
members for approval at the 2025 AGM.
Audit fee and provision of non‑audit services
The Committee reviewed the auditor’s fee proposal and made a
recommendation to the Board that it be accepted. In addition the
Committee has adopted policies to safeguard the independence of its
external auditor, Deloitte LLP. Any non‑audit services require the specific
approval of the Committee. Where the Committee perceives that the
independence of the auditor could be compromised, the work will not be
awarded to the external auditor. Details of amounts paid to the external
auditor, and its entire network, for audit and non-audit services in 2023
are analysed in Note 3 on page 127. Other than the half yearly review of
Marshalls plc, for which a fee of £40,000 was charged (2022: £35,000),
no amounts were paid for non-audit work during 2023.
FRC Audit Quality Review Team (“AQRT”)
The FRC’s AQRT reviewed Deloitte LLP’s audit of the 2022 Annual
Report and Accounts. This review concluded the audit was compliant
and identified an area of best practice that was associated with the
audit of the Marley Group Limited acquisition accounting along with
a proposed enhancement to the revenue analytics component of the
audit. Deloitte enhanced their audit approach to the 2023 external audit
to address this matter.
External audit effectiveness
An effectiveness review of the 2022 external audit process was
conducted with reference to guidance set out in the FRC’s Minimum
Standards for Audit Committees. While satisfied with the robustness
of the audit in 2022, the Committee felt that the audit process required
attention and in particular had concerns regarding timing of matters
being highlighted during the 2022 audit. Both management and Deloitte
have responded to the Committee’s feedback and Deloitte introduced a
new lead partner for the 2023 audit. The Committee are satisfied with
the induction process the new partner undertook and are satisfied that
its previous concerns have now been addressed by management and
by Deloitte. The Committee have also considered the effectiveness
of the 2023 audit by critically assessing the scope of work and the
results of the audit work undertaken and concluded that the audit was
effective and the process was better managed by both management
and Deloitte.
Risk management and internal control
Risk management process
The Committee, along with the Board, reviewed and assessed the
Group’s risk management framework and the output of the bi-annual
risk reviews. The action plans developed by management to improve
risk management, compliance and governance are monitored by the
Committee and the Board.
Internal controls
The Committee is responsible for monitoring the Group’s systems of
internal control, including financial, operational and compliance‑related
controls, and risk management systems, and to perform an annual
review of their effectiveness. It performed the following work in respect
of this responsibility:
• Reviewed and challenged a detailed paper presented to the Committee
covering the Group’s internal control framework and the underlying
control environment across financial, operational and compliance
functions, including controls over their reporting.
• Received a report from management on the output of the internal
controls self-assessment process.
• Considered those areas where management applies judgement
in determining the appropriate accounting and discussed this with
the external auditor.
• Considered the findings identified from the external audit.
The Committee concluded that the internal control systems were
working effectively.
Internal control improvement process
During 2023, the Committee oversaw a continuing project to review
the design, completeness and effectiveness of the Group’s control
environment to ensure that it continues to be robust and suitably
documented with any improvements identified and addressed. This
was established in support of the objectives of the Government’s
consultation on “Restoring trust in audit and corporate governance”.
KPMG was engaged to support the process and to provide assurance
to the Committee and to facilitate the monitoring of progress during
the year. Following a review of the material risks, we have created
risk and control matrices (“RACMs”) for all financial and IT General
Control processes, to capture the relevant key controls. Work has
also begun on our non‑financial controls, with a scoping exercise
completed towards the end of the year and RACMs to be created
for the appropriate process areas. The FRC published changes to
the Corporate Governance Code in January 2024 and management
and the Committee will evaluate the implications for this project
during the coming year.
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Marshalls plc | Annual Report and Accounts 2023
Internal audit
Internal audit function and plan
The internal audit function is undertaken by KPMG LLP, and the
annual internal audit programme uses a risk-based assessment that
considers the Risk Register and management input. KPMG LLP attends
the Group’s Risk Register review meetings on a regular basis. This
risk-based assessment is reviewed, challenged and approved by the
Audit Committee, and the process is overseen by the Chief Financial
Officer. KPMG LLP is independent from the Company’s external auditor
and has no other connection with the Group.
The Company is committed to a zero-tolerance position with regard
to bribery, made explicit through its Anti-Bribery Code and supporting
guidance on hospitality and gifts. The policy and procedures are
published on the Company’s website and displayed on operating site
noticeboards. The Board reviews and approves any changes to the
Anti‑Bribery Code annually. Online training is available to all employees
to reinforce the Anti-Bribery Code and procedures and is part of our
core compliance training programme for relevant colleagues. There is a
maintained record of gifts and hospitality with a requirement for these
to be reported quarterly.
I would like to thank our shareholders for their continued support during
the year. I will be available at the Company’s 2024 AGM to answer any
questions in relation to this report.
The Audit Committee Report has been approved by the Board and
signed on its behalf by:
Graham Prothero
Chair of the Audit Committee
18 March 2024
The internal audit programme includes both regular audit checks
and assignments to look at areas of critical importance. Control
weaknesses that are identified through this process prompt a detailed
action plan and a follow‑up review to confirm that agreed actions
have been completed. Instances of fraud or attempted fraud (if any)
and preventative action plans are also reported to the Committee and
recorded in a fraud register.
2023 internal audit projects comprised a review of the adequacy of
IT general controls (which is part of the Group’s response to the BEIS
proposals on internal controls), a review of the Marley cyber security
control environment, ESG reporting and the D365 ERP implementation
project together with support on the Group’s project to enhance
its internal control environment in line with the BEIS proposals on
internal controls.
Internal audit effectiveness
An annual review of internal audit effectiveness and of the performance
of KPMG LLP as independent internal auditor was undertaken by the
Committee in 2023. This included feedback from colleagues who
engaged with KPMG directly on the audits and the conclusion was
that the current internal audit process continues to be an efficient
and effective means of fulfilling the internal audit function.
Whistleblowing and anti-bribery
The Audit Committee monitors, on behalf of the Board, reported
incidents under the Serious Concerns Policy (our Whistleblowing
Policy), which is available to all colleagues. A third‑party organisation,
Safecall, provides an independent and confidential channel on behalf
of the Group for any concerns to be reported.
These procedures are embedded into the Group’s Code of Conduct
and are relevant to all stakeholders including suppliers, partners and
colleagues. The policy and the Safecall process are displayed on
operating site noticeboards and on the Company’s intranet and set out
the procedure for employees to raise legitimate concerns about any
wrongdoing without fear of criticism, discrimination or reprisal.
The Committee, on behalf of the Board, receives regular updates from
the Company Secretary regarding any matters of material concern and
an annual summary of matters raised throughout the relevant year
including the nature of matters reported, the outcome of any material
investigations and details of any actions taken to address concerns
raised. The Committee is satisfied that arrangements are in place
for the proportionate and independent investigation of such matters
and for appropriate follow-up action.
Marshalls plc | Annual Report and Accounts 2023
87
Governance Governance
Remuneration Committee Report
Continuing with a
Remuneration Policy which
aligns to the strategic goals
Remuneration
arrangements for
Executive Directors
provide an appropriate
balance of fixed and
variable remuneration
with a focus on
long-term growth.
Members and attendance
Angela Bromfield – Chair
Meetings
Vanda Murray OBE
Tim Pile*
Graham Prothero
Avis Darzins
Diana Houghton
*
Tim Pile stepped down from the Board and the
Remuneration Committee on 10 May 2023.
The CEO and CFO may attend the Committee meetings
by invitation but may not participate in discussions about
their own remuneration. The Company Secretary acts
as Secretary to the Committee and attends Committee
meetings, along with the Chief People Officer.
Angela Bromfield
Chair of the Remuneration Committee
Find our Terms of Reference at:
www.marshalls.co.uk/about-us/corporate-governance
2023 highlights
• We are pleased that the refreshed Policy was approved by
shareholders at the 2023 AGM. Before the AGM, we actively engaged
with shareholders. Following the AGM result, in relation to Resolution
14 (“Annual Remuneration Report”), we re‑engaged with shareholders
to understand views and published a statement in line with the
requirement under the UK Corporate Governance Code.
• Agreed that the 2024 annual salary review for Executive Directors
be deferred until mid‑2024, in line with all Marshalls colleagues,
reflecting the focus on costs at the current time.
• Agreed the incentive plan outcomes for 2023, taking into account
change. Board and Executive Team members rotate attendance
during the year to listen to and understand colleague viewpoints.
Angela Bromfield is the Company’s designated Non‑Executive
Director for employee engagement and attended all the EVG
meetings during 2023.
• Reviewed remuneration report disclosures to make the report
more streamlined.
2024 priorities
• Monitor developments in corporate governance and
reporting requirements.
the formulaic outturn and the wider stakeholder experience.
• Consider the deferred pay rise decision for all colleagues and
• Agreed incentive plan targets for 2024, continuing to use the same
robust financial and non‑financial measures designed to align with
strategic objectives and stakeholder interests. These measures
take into account current expectations and the continuing market
uncertainty.
• Reviewed the approach to setting underpins under the MIP to ensure
that they remain appropriate.
• Agreed the leaver arrangements for Martyn Coffey and the
remuneration for Matt Pullen as Chief Executive.
• Continued engagement with the EVG, which operates as a forum for
feedback and consultation on employee matters and wider business
88
Marshalls plc | Annual Report and Accounts 2023
the salary review approach for the Executive Directors.
• Continue to focus on wider workforce reward for all colleagues
in the context of a continuously competitive market for talent.
• Continue to engage with employees, shareholders and other
stakeholders on remuneration to ensure it remains effective.
• Ensure the measures and targets for 2024 are appropriate in the
context of Company structures and forecasts.
Dear shareholder
I am pleased to set out in this report how
the Committee has carried out its objectives
and responsibilities during 2023.
The content consists of:
• my Annual Statement as Chair of the Committee;
• an “At a glance” summary of how incentives operate and
remuneration outcomes for 2023;
• the Annual Report on Remuneration which sets out additional
detail on the remuneration outcomes for the Executive Directors,
disclosures required by the remuneration reporting regulations,
and considerations in respect of pay for colleagues; and
• a summary of the Directors’ Remuneration Policy (the “Policy”)
which was approved at the 2023 AGM.
Business performance
As noted in the Strategic Review, 2023 was a challenging year due
to market conditions which resulted in a reduction in volumes.
The weakness in volumes meant that the financial performance of the
Group was impacted negatively. Management took decisive actions to
reduce costs, improve agility and manage cash without compromising
medium-term capacity in the face of unexpected headwinds including
rising interest rates, high inflation and energy costs.
The Group’s key strategic KPIs are shown on pages 26 and 27 of the
Strategic Report.
Board changes
As announced on 6 December 2023, Martyn Coffey stepped down
as Chief Executive on 29 February 2024 and was succeeded by
Matt Pullen. Martyn will remain with the Company to support Matt’s
induction and transition during 2024. His termination date will be
6 December 2024 and his salary and contractual benefits will continue
to be paid as normal until that date. Reflecting Martyn’s long service
and his excellent contribution to Marshalls, he will be treated as a good
leaver for the purposes of the Management Incentive Plan (“MIP”).
Having worked for the full FY23 year, he will receive a MIP A contribution
for 2023 and a pro rata MIP A contribution for the proportion of 2024
worked on the same terms as other participants. Outstanding MIP B
awards will continue to run on their original terms and will vest subject
to time prorating and the achievement of their respective performance
underpins. He will not be granted any MIP B options in relation to
performance outcomes for 2023 or 2024 and will not be eligible for
any salary increases.
Matt Pullen joined the Board as a Director on 8 January 2024 and
took over as Chief Executive on 1 March 2024. His base salary on
appointment was set at £580,000, which is 14 per cent lower than
Martyn’s current salary. His pension allowance is aligned to the majority
of the workforce at 5 per cent of salary and his total maximum variable
remuneration under the MIP is in line with the approved Policy at
250 per cent of salary.
Incentive outcomes
The Company operates a single long‑term incentive plan, the MIP,
which focuses directly and indirectly on aligning the reward of
Executive Directors and senior management through delivery of some
of the Group’s KPIs being EPS, a ratio of operating cash flow (“OCF”)
to EBITDA, carbon reduction and health and safety.
2023 MIP performance conditions
Performance targets were set at the beginning of 2023 taking into
account both internal budgets and external factors such as analyst
consensus for the full year 2023 at that time.
As with the previous year, the measures were consciously focused on
financial metrics, being EPS (75 per cent weighting) and OCF to EBITDA
ratio (25 per cent weighting). There are two ESG objectives relating to
carbon reduction and health and safety and if these are not achieved,
there is a reduction of award value of 10 per cent each.
The final 2023 adjusted EPS was 16.7 pence which was below the
threshold of the target range, resulting in a zero pay-out for that element
of the MIP.
The OCF to EBITDA ratio element was 106 per cent, which was above
the maximum and therefore resulted in a formulaic outturn of 25 per
cent for this element of the MIP. More details of the financial measures
targets and outturn are shown on page 93.
The EPS and OCF to EBITDA metrics resulted in a potential MIP
outcome of 25 per cent of maximum for 2023 which is subject to two
ESG moderators. For 2023, these were:
• a carbon reduction target, which was linked to the Company’s
sustainability strategy, was based on carbon emissions of below
45,719 tonnes. This was achieved; and
• a health and safety measure which was based on the lost time
accident frequency rate for 2023 being no worse than the average of
the last three years. This was also achieved.
As a result of achieving both of these objectives, there was no
moderation applied to the MIP financial outcome of 25 per cent
of maximum.
The Committee also considered whether downward discretion was
required to adjust the MIP formulaic outcomes given the profit that was
delivered against the backdrop of challenging market conditions. The
Committee was mindful of the operational and financial performance
of the Group in the difficult market conditions as well as the experience
of a range of stakeholders including our customers, shareholders
and colleagues. In the round, and in particular acknowledging
management’s actions to reduce leverage and manage cash effectively
over the year, by improving agility, aligning capacity with demand and
reducing costs whilst ensuring that capacity could be brought back
when markets recover, the Committee therefore believes that the
outcome is a fair representation of overall performance and therefore
no discretion has been applied. More detail is included on page 93.
MIP A: As a result of the Company’s performance during the year, the
performance conditions for MIP A were achieved in part and as such
a contribution to MIP A plan account will be made in respect of 2023,
equivalent to 25 per cent of the maximum available.
MIP B: The performance conditions that determine the allocation of
MIP B awards are the same as the performance conditions for MIP A.
As a result of the Company’s performance, there will be an allocation
of awards under MIP B in respect of 2023, equivalent to 25 per cent
of the maximum available.
Expiry of MIP A cycle 3
The MIP A part of the incentive plan runs on four‑year cycles. 2023
marked the final year and expiry of the third MIP A cycle. Contributions
were made to the Plan Accounts in respect of performance in financial
years 2022 and 2021 but not for 2020, reflecting the performance
achievement in each of those years. Financial year 2023 was the
holding period year before value within the Plan Account is released to
participants. The release of the closing balances in the MIP A account
is subject to an EPS underpin. The average EPS for the three‑year period
ending 31 December 2023 was above the plan underpin of 21.5 pence
and therefore the MIP Account balances will be released to participants
in March 2024.
Marshalls plc | Annual Report and Accounts 2023
89
Governance Responding to 2023 AGM result
At the 2023 AGM, the Remuneration Policy, Resolution 13, was
approved by 88.4 per cent of shareholders (11.6 per cent against,
with 22,816 votes withheld). 75.0 per cent of votes were received in
favour of Resolution 14, the advisory vote to approve the Directors’
Remuneration Report (25 per cent against, with 6,662,460 votes
withheld). In accordance with the UK Corporate Governance Code
the Committee engaged extensively with the Company’s major
shareholders, both before and after the AGM to understand the advisory
voting outcome. As Committee Chair, I wrote to major shareholders
before the AGM, setting out details of the remuneration review and
the rationale for adjustments to Executive Director salaries. I also had
meetings with shareholders who wished to discuss the arrangement,
ensuring the Company fully understood their views and any concerns.
The Committee acknowledges that several shareholders questioned the
quantum and timing of Executive Director salary increases.
Following the AGM, I engaged again with those major shareholders
who voted against the Remuneration Report to ensure they had another
opportunity to share and discuss their views and concerns. Having
reflected on the feedback, the Committee continues to believe that
it acted fairly and proportionately with regard to Executive Director
salary increases, with balanced consideration given to the increased
responsibilities of the relevant Executive Directors and market data.
The Committee understands the sensitivity of Executive salary
increases, particularly given the economic climate at the time and
believes its decisions were robust, based on sound principles and
focused on ensuring remuneration is fair and appropriate. Regular
shareholder engagement is a foundation of Marshalls’ approach to
investor relations and the Committee is committed to open dialogue
on remuneration matters, to ensure decision making considers
shareholders’ views.
In conclusion
2023 has been a difficult year for the Group with challenging and
changing market conditions and a second consecutive year of low
incentive outcomes reflect this. Against these market conditions, we
continued to deliver our service to customers throughout 2023 and
we are well positioned to take advantage of opportunities in 2024 and
beyond. The reward strategy for all colleagues will continue to be a
focus, with the goals of attracting and retaining the talent to help us
drive the business forward.
I would like to thank our shareholders for their support during the year.
I will be available at the Company’s 2024 AGM to answer any questions
in relation to this Remuneration Report.
Angela Bromfield
Chair of the Remuneration Committee
18 March 2024
Remuneration Committee Report continued
Implementation of policy for 2024
The Committee has determined that in light of the business challenges
the pay review for Executive Directors will be deferred to mid-2024
in line with all Marshalls employees. If any increases to Executive
Directors’ base salaries are made during 2024, these will be disclosed
in next year’s Remuneration Report. The salary for Matt Pullen on
appointment was set at £580,000 which is less than his predecessor
and will not be increased as part of any mid year 2024 review.
For 2024, the MIP A and B incentives will continue to be based on the
same measures as last year, being EPS (75 per cent weighting) and
OCF to EBITDA ratio (25 per cent weighting). ESG objectives based
around carbon reduction and health and safety performance will
continue to act as downward moderators (up to 10 per cent each)
to the financial performance outcomes. The Committee believes it
remains appropriate to have a firm focus on financial performance in
the current circumstances, but the moderators ensure this is achieved
in an appropriate manner. Martyn Coffey’s MIP A contribution and
Matt Pullen’s MIP A and MIP B contributions will be prorated for the
period of service rendered.
For 2024, the Committee reviewed the process for setting the
underpins to ensure that the process and the underpins are appropriate.
Setting of underpins:
• The MIP A underpin in respect of the brought forward Plan Account
balance will be set at the start of the relevant performance year
and be assessed based on performance for that year.
• The MIP B underpin for the grant in 2024 will be set just prior to the
date of grant and will be assessed based on the average performance
over the three-year vesting period.
The underpins therefore remain relevant and are aligned to the
respective assessment periods.
Group-wide considerations
Marshalls is committed to creating an inclusive working environment
and to continue to reward its colleagues in a fair way. In making
decisions on Executive pay, the Remuneration Committee considers
remuneration and terms and conditions for colleagues across the
Group. The Committee’s role in monitoring and reporting on these
matters is key to the promotion and development of our values
and culture.
For 2023, the majority of Marshalls colleagues received a pay rise
awarded in two parts: a first pay rise of 4 per cent effective from
1 January 2023 and a further increase of 4 per cent effective from
1 July 2023. Senior management within Marshalls received a pay
rise from a budget of 5 per cent, effective from 1 January 2023. In
Marley the majority of employees received a pay rise of 4 per cent
effective 1 January 2023. For 2024, given the market conditions,
Marshalls will delay the normal pay review until later into 2024, as
mentioned above. Marley will continue with their separate pay review
arrangements for 2024.
Marshalls and Marley continue to be Living Wage employers and
will implement increases announced by the Living Wage Foundation
requirement within the implementation window.
Our Remuneration Report has been prepared in accordance
with the Companies Act 2006 and Schedule 8 of the Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013. It meets the requirements of the
2018 UK Corporate Governance Code (the “UK Code”) and is also
prepared in accordance with the UK Listing Authority’s Listing
Rules and Disclosure and Transparency Rules.
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At a glance
Link to Company strategy
The following table sets out the Group’s KPIs and how they are reflected in the operation of the MIP:
Strategic KPI
Revenue
Profit
MIP Measure
EPS/OCF
EPS/OCF
ROCE
EPS/OCF
Net debt
OCF
Carbon reduction
Health and safety
Target KPI
Target KPI
The use of EPS as the main MIP performance condition ensures that the Executive Directors are focused on driving profitable growth in
accordance with the Company strategy. The OCF to EBITDA ratio ensures that this growth in profit is not at the expense of its quality and
sustainability. The carbon reduction and health and safety performance conditions are ways we incorporate environmental, social and governance
(“ESG”) measures into our incentive framework and reflect our commitment to our sustainability strategy and employee wellbeing. This ensures
that growth and profitability are not achieved in a way that is detrimental to the Company’s environmental commitments or employees nor in a way
that promotes short-term, high-risk behaviour.
Full details of the Company’s strategy are set out in the Strategic Report on pages 22 to 25.
Illustration of operation of MIP A and MIP B
MIP A
2023
Cycle 4
Year 1
2024
Year 2
2025
Year 3
2026
Year 4
Balance carried forward
Balance carried forward
Balance carried forward
Share price movement
and dividend equivalents
Share price movement
and dividend equivalents
Share price movement
and dividend equivalents
Application of underpin
(to brought forward balance)
Application of underpin
(to brought forward balance)
Application of underpin
(to brought forward balance)
Plan year contribution
Plan year contribution
Plan year contribution
Plan account balance
50% cash paid
50% cash paid
50% cash paid
50% rolled forward
50% rolled forward
50% rolled forward
Balance paid in shares
MIP B
2023
2024
2025
2026
2027
Measurement period
Awards granted
(underpin agreed)
Awards vest subject to
underpin. Resulting shares
subject to 2 year holding period
2023 single figure
The following charts summarise the single figure of remuneration for 2023 in comparison with 2022.
2023 pay outcomes
Martyn Coffey
(CEO)
2023 Actual
2023 Max
2022 Actual
Justin
Lockwood
(CFO)
2023 Actual
2023 Max
2022 Actual
Simon Bourne
(COO)
2023 Actual
2023 Max
61%
38%
75%
10%
29%
£1,246
26%
17%
19%
£1,964
7% 9% 9%
£1,010
60%
39%
80%
62%
40%
10% 7%
23%
£801
27%
18%
16%
£1,216
9%11%
£556
11% 7% 20%
£681
28%
19%
13%
£1,045
2022 Actual
73%
£405
0
9% 12% 6%
500
1,000
£’000
1,500
2,000
Total fixed remuneration MIP A MIP B (granted) MIP A cycle 3 released MIP B (vesting)
Marshalls plc | Annual Report and Accounts 2023
91
Governance Remuneration Committee Report continued
Annual report on remuneration
Implementation of the Policy in 2024
Element of pay
How we will implement the Policy in 2024
Salary
Executive Director salary increases for the CFO and COO will be reviewed later in 2024. Therefore, effective 1 January 2024,
annual salaries remain unchanged at:
• Former CEO, Martyn Coffey – £676,200
• Chief Executive, Matt Pullen – £580,000
• CFO, Justin Lockwood – £442,050
• COO, Simon Bourne – £388,500
Benefits and pension
The Executive Director’s pension contribution is 5% of salary, which is aligned with the majority of the wider workforce.
MIP A
Maximum opportunity of 150% of salary with target set at 50% of opportunity and threshold at 0%.
The performance measures are:
• EPS (75%); and
• ratio of OCF to EBITDA (25%).
Non‑financial performance conditions to reflect our focus on ESG commitments and our colleagues will apply as follows:
• annual carbon reduction targets must be achieved. The 2024 target is that carbon consumption must be below 43,289
tonnes in the year; and
• health and safety: the lost time accident frequency rate for the year to be below 2.99 for the whole Group.
If they are not met, there is a reduction of award value earned by 10% in relation to each of these additional conditions.
The EPS underpin used to assess the MIP A carried forward balance has been set for 2024 and will be disclosed on a
retrospective basis, alongside the 2024 financial targets.
MIP B
The 2024 performance measures are the same as for MIP A above (EPS and OCF to EBITDA ratio). The maximum
opportunity is 100% of salary. To the extent that the measures are achieved, a MIP B option will be granted in March 2025.
Non-Executive
Directors’ fees
For the 2023 performance year, the grant value is based on the 2023 performance outcome (25 per cent of maximum).
The awards will be granted in March 2024. Awards will vest after three years, and up to half of the awards will be subject
to the achievement of an underpin. The underpin for the 2024 grant will be 13.8p and will be assessed based on the
average EPS over the three‑year period (2024 ‑ 2026). Vested shares are subject to a two‑year holding period.
Chair and Non-Executive Director fees will also be reviewed later in 2024. Therefore, effective 1 January 2024, they remain as:
• Chair fee – £231,500
• Non‑Executive Director base fee – £57,600
• Chair of a committee fee – £10,000
• Senior Independent Director fee – £10,000
• Employee Engagement Director fee – £10,000
As mentioned on page 89 the Committee agreed the remuneration package for Matt Pullen on his appointment as Chief Executive, within the
approved Policy. When agreeing the base salary, the Committee took into consideration Matt’s experience in the sector, external benchmarking
and the relativity of the salary to Martyn Coffey and the other Executive Directors.
Single total figure of remuneration in 2023 – Executive Directors (audited)
Fixed
Salary
Other benefits
Salary
supplement
in lieu of pension
Performance related
Annual bonus
Long‑term
incentives
MIP A
MIP B
MIP A and B
Total
Total fixed
Total variable
Martyn Coffey
Justin Lockwood
Simon Bourne (e)
2023
£’000
676
442
389
2022
£’000
621
414
276
Total
1,507 1,311
Notes:
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
43
12
12
67
44
11
8
63
34
22
19
75
93
21
14
127
83
73
70
47
35
—
55
49
94
63
49
2023
£’000
366
187
139
2022
£’000
2023
£’000
2022
£’000
88 1,246 1,010
556
801
—
405
681
23
2023
£’000
753
476
420
2022
£’000
758
446
298
2023
£’000
493
325
260
2022
£’000
252
110
107
128
283
152
104
206
692
111 2,728 1,971 1,649 1,502 1,078
469
Note a
Note b
Note c
Note d
a) The value of benefits includes car/car allowance, fuel/fuel allowance, private medical insurance and travel and accommodation expenses. For Martyn Coffey, for 2022,
the number includes an additional £8,000 of expenses than was reported last year which relates to travel and accommodation expenses. Martyn Coffey’s pension
allowance was reduced from 15 per cent to 5 per cent of salary from 1 January 2023.
b) The Executive Directors each received a salary supplement in lieu of contributions into the Group’s pension scheme throughout the year. No Director had any entitlement
under the defined benefit section of the pension scheme and no additional benefit was received as a result of early retirement.
c) The outcome of the 2023 MIP was 25% of maximum. MIP A reflects the amount released in cash at the start of 2024 in relation to 2023 performance (50% of the
2023 award was paid in cash and 50% of the award was deferred into the Plan Account and converted into notional shares). MIP B reflects the 50% of the MIP B granted
at the start of 2024 in relation to 2023 performance which is not subject to an underpin.
d) The long‑term incentives column shows the aggregate value of sums released from MIP Plan Account balances from earlier years that are no longer subject to deferral
and forfeiture risk. There were no MIP B awards due to vest in relation to 2023 and therefore this relates solely to the MIP A Plan Account closing balance. The value is
based on a share price of 256.6 pence.
e) Simon Bourne joined the Board as Chief Operating Officer on 1 April 2022 and his fixed remuneration elements reflect his time on the Board since the date of appointment.
92
Marshalls plc | Annual Report and Accounts 2023
Single total figure of remuneration in 2023: Non-Executive Directors (audited)
Non‑Executive Directors do not participate in any of the Company’s incentive arrangements. The Chair’s fees are set by the Committee; other
Non-Executive Directors’ fees are set by the Board as a whole. The Non-Executive Directors reclaim travel and accommodation expenses incurred
in the performance of their duties, and where this is a taxable benefit it is shown below as a grossed‑up taxable amount.
Vanda Murray OBE
Chair and Chair of Nomination Committee and member of
Remuneration Committee
Graham Prothero
Senior Independent Director, Chair of Audit Committee and
member of Remuneration and Nomination Committees
Angela Bromfield
Chair of the Remuneration Committee and member of
Audit and Nomination Committees and designated NED for
employee engagement
Tim Pile (b)
Member of Audit, Remuneration and Nomination Committees
Avis Darzins
Member of Audit, Remuneration and Nomination Committees
Diana Houghton (c)
Member of Audit, Remuneration and Nomination Committees
Total
Notes:
Board fee
Committee fees
Expenses (a)
Total
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
232
219
10
5
58
55
20
18
58
21
58
54
54
54
58
485
0
436
20
16
0
0
0
0
0
0
50
39
3
0
0
0
0
0
3
2
0
0
0
0
0
2
245
226
78
73
78
21
58
58
538
70
54
54
0
477
a) Relates to travel and accommodation expenses.
b) Tim Pile stepped down from the Board and all Board Committees on 10 May 2023.
c) Diana Houghton joined the Board on 1 January 2023.
Outcomes of incentive schemes in 2023 (audited)
2023 MIP Performance Conditions
EPS (75% of maximum)
OCF to EBITDA ratio (25% of maximum)
Non-financial targets (carbon reduction/health and safety)
Aggregated total
Threshold
(0% payable)
Maximum
(100% payable)
Actual
(2023)
Outcome
(% total award)
23.06p
70%
—
27.05p
83%
—
16.7p
106%
Achieved
0%
25%
—
25%
Non-financial targets
The carbon reduction target aligns incentive measures to the Company’s commitment to our sustainability strategy. For 2023, the target
performance was that carbon consumption should be below 45,719 tonnes CO2e. The outcome was 32,624 tonnes CO2e.
The Group continued to make good progress against its stated health and safety objective of keeping the number of days lost to accidents to a
minimum. The measurement for the 2023 incentive schemes required the lost time accident frequency rate for the year to be no worse than the
average of the last three years. The outcome was 0.78 against the three-year average of 2.10.
The non‑financial targets did not include Marley for 2023 as management were continuing to incorporate the business into the Group reporting
on a fair and consistent basis during the year.
Overall assessment of performance over 2023
The Committee considered whether downward discretion was required to adjust the MIP formulaic outcomes to reflect underlying business
performance. The Committee was mindful of the operational and financial performance of the Group in difficult market conditions as well as the
experience of a range of stakeholders including our colleagues, customers, suppliers and shareholders. In making this assessment, the Committee
took the following detailed points into account.
2023 was a challenging year for the Group due to weak activity levels in its key end markets which adversely impacted customer demand and
profitability, in both Marshalls and across the wider sector. Management acted decisively in response to the challenges that the weaker market
presented and took action to improve agility, align capacity with demand, and reduce costs alongside ensuring that capacity could be brought back
online when markets recovered. Importantly, management also took action to focus on the priority of reducing leverage which is a key component
of the Group’s Capital Allocation Policy. The key steps taken by management in order to reduce leverage comprised:
1. Working capital management - the management team were focused on working capital management during the year and particularly on
managing inventory levels to align with reduced customer demand. This involved taking decisions to reduce manufacturing volumes in order
to reduce the amount of cash tied up in stock, which in itself had an adverse impact on profitability. The credit control team managed cash
collection effectively and management continued to pay trade creditors in accordance with agreed terms. Therefore, the positive outcome
delivered by management was not at the expense of other stakeholders.
2. Capital expenditure – the management team proactively managed capital expenditure commitments and reduced spend in the year compared
to the original plan whilst still delivering key programmes.
3. Site disposals – management focused on realising capital that was tied up in assets that were not delivering a commercial return through an
asset disposal programme. This delivered asset sales which generated £6.9 million of cash in 2023.
Marshalls plc | Annual Report and Accounts 2023
93
Governance
Remuneration Committee Report continued
Annual report on remuneration continued
Overall assessment of performance over 2023 continued
4. Cash management – the finance team consolidated the banking arrangements of the Marshalls and Marley businesses, which improve the
efficiency of our cash management operations through the use of a ‘netting’ arrangement. This reduced the quantum of our drawn borrowings,
which reduced the Group’s financing costs.
These efforts delivered a positive outcome for the business with closing pre-IFRS16 net debt reducing by £17.8 million during the year, which is
fully aligned with the Group’s Capital Allocation Policy, despite profit being lower than the Board’s expectation at the start of the year.
Our colleagues remained a priority, evidenced by the 2023 pay rises received by the majority of Marshalls colleagues being four per cent from 1 January
2023 and a further four per cent from 1 July 2023; the ongoing development of the employee benefits and wellbeing offering; a continued commitment
to treating colleagues in the right way where they are impacted by change programmes; and a successful campaign to improve health and safety.
After taking these factors into account, the Committee concluded that the formulaic outcome of the MIP calculation is a fair representation of
overall management performance and therefore no downward discretion has been applied.
MIP awards relating to 2023 performance
MIP A
First year of MIP A cycle 4
Brought forward balance
MIP A contribution in respect of 2023 performance (% of maximum opportunity earned)
Value of contribution (£)
Cash element released at the start of 2024 in relation to 2023 (a) – included in the Single Total Figure
Closing balance at 31 December 2023 (b)
Number of notional shares represented by closing balance (b)
n/a
25%
£253,575
£126,788
£126,787
49,410
n/a
25%
£165,769
£82,884
£82,884
32,301
n/a
25%
£145,688
£72,844
£72,844
28,388
Martyn Coffey
Justin Lockwood
Simon Bourne
Notes:
a) 50 per cent of the earned MIP A award is released to the participant on an annual basis, the remaining 50 per cent is deferred into the participant’s MIP Plan
account and converted into notional shares.
b) The carried-forward balance is converted into shares by reference to the mid-market average value for the 30-day period ended 31 December 2023 (256.6 pence).
An underpin has been set for 2024 which applies to the 2024 opening balance and will be disclosed retrospectively in next year’s Annual Report; if the actual EPS
for 2024 falls below the underpin, 50 per cent of the MIP A Plan Account balance is forfeited.
MIP B (2024 award to be granted in respect of 2023 performance)
Total number of shares to be awarded
Percentage of maximum
Face Value at 30‑day average share price at the performance year end – not subject to any
further conditions – included in the Single Total Figure (a)
Face Value at 30‑day average share price at the performance year end – subject to EPS
forfeiture conditions
30-day average share price at the performance year end
EPS underpin ‑ 2024‑2026 (b)
Notes:
Martyn Coffey
Justin Lockwood
Simon Bourne
n/a
n/a
n/a
n/a
n/a
n/a
43,068
25%
37,850
25%
£55,256
£48,563
£55,256
£2.566
13.8p
£48,563
£2.566
13.8p
a) In accordance with the regulations, 50 per cent of the MIP B award which is not subject to the underpin is included in the single figure table on grant. The remaining
50 per cent plus any dividends accrued are included on vesting and will feature in the 2026 single figure.
b) The EPS underpin has been set at 13.8 pence which will be assessed at vesting based on average EPS over financial years 2024‑2026. In line with normal practice
the Committee will monitor the outcomes at vesting to ensure they are appropriate. If the underpin is not met, up to 50 per cent of the MIP B options are forfeited.
c) MIP B awards vest after 3 years and vested shares must normally be held for a further two years. MIP B awards lapse on cessation of employment except in
“good leaver” circumstances, in which case they vest on the normal vesting date or cessation of employment if determined by the Committee.
d) MIP B options are nil‑cost options and the exercise price is £nil.
Closure of MIP A cycle 3 Plan Account (end of holding period)
For MIP A, 2023 is both the final (holding) year of cycle 3 and the first year of cycle 4. At the end of a cycle, after the final holding year, the balances
in the plan accounts are released (subject to the achievement of the underpin).
For cycle 3, the residual balance was subject to the achievement of an EPS underpin of 21.52 pence. The Committee determined that the underpin
had been met based on the three‑year average EPS performance to 2023 of 25.7 pence.
Value of deferred notional shares in plan account at 31 December 2022
(end of cycle 3) (a)
Dividend equivalents
Share price movement
Closing balance at 31 December 2023
Number of shares represented by closing balance and to be released (b)
Notes:
Martyn Coffey
Justin Lockwood
Simon Bourne
£379,064
£17,020
(£29,682)
£366,401
142,791
£192,979
£8,665
(£15,111)
£186,532
72,694
£143,404
£6,439
(£11,229)
£138,613
54,019
a) Brought forward balance from 2022. Dividends paid during the year are also added to the carried‑forward plan account and an adjustment applied for share
price movement.
b) Number of shares equals closing balance at 31 December 2023 divided by mid‑market average value for the 30‑day period ended 31 December 2023 (256.6 pence).
This being the final year of MIP A Cycle 3, and the underpin having been met, the shares will be released in full to participants.
94
Marshalls plc | Annual Report and Accounts 2023
MIP B award (2021 award in respect of 2020 performance)
There was no MIP contribution in respect of financial year 2020 and therefore no MIP B options were granted in 2021 that were capable of
vesting in 2024.
Directors’ outstanding share interests in MIP B awards
The following table sets out Executive Directors’ MIP B awards.
Martyn Coffey (a)
Justin Lockwood
Simon Bourne (b)
Notes:
Grant date
March 2020
March 2022
March 2023
March 2022
March 2023
March 2020
March 2021
March 2022
March 2023
Interest at
31 December 2022
Awards granted
during the year
Awards vested
during the year
Awards lapsed
during the year
Interest at
31 December 2023
60,625
82,920
0
25,835
0
16,144
13,676
28,469
0
0
0
70,358
0
46,873
0
0
0
36,842
60,625
0
0
0
0
16,144
0
0
0
0
0
0
0
0
0
0
0
0
0
82,920
70,358
25,835
46,873
0
13,676
28,469
36,842
Date of vesting
March 2023
March 2025
March 2026
March 2025
March 2026
March 2023
March 2024
March 2025
March 2026
a) Martyn Coffey’s March 2022 and March 2023 options will be pro‑rated on his termination date in line with good leaver treatment.
b) The options granted to Simon Bourne in March 2021 were awards made to him prior to joining the Board. These vest subject to continued employment only and are not
subject to an underpin assessment.
c) Up to half of the awards in the table above are subject to underpins which were set before grant and will be tested at vesting. The March 2022 and March 2023 awards
have underpins of 21.42p and 22.39p respectively, to be assessed based on the three‑year average EPS over the relevant periods.
d) There is a two‑year holding period following the vesting of all MIP B options.
Directors’ shareholdings and share interests
The following table sets out, in respect of each of the Directors:
• the number of shares the Director holds unconditionally; and
• the number of shares subject to unvested incentive awards as at 31 December 2023.
Shareholding requirement
(Note a)
% of
salary
200
200
200
—
—
—
—
—
—
Number of
shares
required
527,046
344,544
302,806
—
—
—
—
—
—
Beneficially
owned
(Note b)
Number of
shares
455,852
49,931
65,753
39,891
47,118
2,602
6,738
9,091
—
Deferred
shares
(Note c)
Number of
shares
148,035
72,702
73,342
—
—
—
—
—
—
Deferred and
contingent
share interests
(Note d)
Number of
shares
148,034
72,700
59,664
—
—
—
—
—
—
Total interests
in shares
(including
contingent
interests)
Number of
shares
751,921
195,333
198,759
39,891
47,118
2,602
6,738
9,091
—
Director
Executive
Martyn Coffey
Justin Lockwood
Simon Bourne
Non-Executive
Vanda Murray OBE
Tim Pile
Graham Prothero
Avis Darzins
Angela Bromfield
Diana Houghton
Notes:
a) The number of shares required has been calculated using the mid‑market average value for the 30‑day period ended 31 December 2023 (256.6 pence).
b) As at the date of this report the number of shares beneficially owned by Martyn Coffey was 455,852, by Justin Lockwood was 49,931 and by Simon Bourne was 65,753.
c) This column includes the 50 per cent proportion of share interests awarded in 2022 and 2023 under Element B of the MIP in the form of nil‑cost options that may be
exercised after the three-year deferral period but where vesting is only dependent on continuing employment throughout the three-year deferral period with no other
performance conditions. For Simon Bourne, this includes options granted in March 2021, before he was appointed to the Board.
d) This column comprises share interests awarded under MIP A and MIP B that remain subject to financial performance conditions as well as to continued employment
over the relevant deferral period. 50 per cent of MIP A awards and up to 50 per cent of MIP B awards shown in this column may be forfeited if the financial condition is
not satisfied.
e) Share interests under MIP A and MIP B of the MIP are calculated by reference to the mid‑market average value for the 30‑day period ended 31 December 2023
(256.6 pence).
f) The table above includes the interests of “persons closely associated” as defined under the Financial Services and Markets Act (Market Abuse) Regulations 2016.
g) There are no vested unexercised options.
Martyn Coffey’s shareholding is 173% of salary, based on the 256.6 pence share price, which is lower than the requirement. He has previously
been above the 200 per cent guideline and, based on the share price at the date of signing off this report, he would be above the guideline. Justin
Lockwood and Simon Bourne are building their shareholdings after their appointments to the Board in July 2021 and April 2022 respectively.
There have been no changes to the share interests of the Directors between 31 December 2023 and the date of this report.
Marshalls plc | Annual Report and Accounts 2023
95
Governance
Remuneration Committee Report continued
Annual report on remuneration continued
Payments to past Directors/payments for loss of office
There were no payments to Directors or former Directors for loss of office.
As announced on 6 December 2023, Martyn Coffey stepped down from the Board and the role of Chief Executive Officer with effect from
29 February 2024.
• Martyn will remain with the Company until the expiry of his twelve‑month notice period (the “Leaving Date”) to ensure a smooth and orderly
handover. In accordance with his Service Agreement, Martyn Coffey will receive salary, pension, car allowance and other contractual benefits
until the Leaving Date, 6 December 2024.
• Martyn will, for the purposes of the MIP, be treated as a “good leaver” on the Leaving Date. Any outstanding MIP Element B share awards under
the MIP will be prorated to the Leaving Date and will only vest to the extent that the underpin conditions are satisfied. Malus and clawback
provisions will continue to apply. Any vesting shares will remain subject to the two‑year holding requirement. Martyn is also required to maintain
a shareholding equivalent to 200 per cent of his leaving salary for the first year after the termination date and 100 per cent of salary for the year
after that.
• Martyn will be entitled to receive a MIP Element A award for the financial year ending 31 December 2023 and for the prorated period 1 January
2024 to the Leaving Date to the extent that the applicable performance conditions are satisfied. He will not be entitled to receive a MIP Element
B award in respect of performance in 2023 or 2024.
• In accordance with the scheme rules, Martyn will be treated as a “good leaver” for the purpose of the Group’s Sharesave Scheme and Share
Purchase Plan.
• The Company paid £1,500 in legal fees incurred by, and other payments due to, Martyn.
• Other than the above, no other remuneration payment, including for “loss of office” has been or will be paid to Martyn Coffey after the
termination date.
Setting pay in context
The following graphs illustrate the relationship between total expenditure on remuneration and other disbursements from profit over the past
three years.
The four elements represent the most significant outgoings for the Company during the financial year. In addition to colleague pay and shareholder
distributions, capital investment and taxation are shown for the following reasons:
• investment – the Company’s strategy is to invest in organic growth opportunities in order to ensure that the business grows in a sustainable
manner with a corresponding long‑term benefit for all stakeholders; and
• tax – the Company is a UK taxpayer and feels that it is beneficial to demonstrate to all its stakeholders its total UK tax contribution. The most
significant elements of the Company’s UK tax contribution are VAT, employer’s NI, corporation tax, fuel duty and aggregates levy. As profitability
increases, corporation tax will also increase. In 2023 the Group was re‑accredited with the Fair Tax Mark.
Relative importance of spend on pay (percentage change)
Staff pay
(£’m)
£125.5m
‑1%
Distributions to
shareholders (£’m)
£31.6m
‑18%
Capital investment
(£’m)
£20.8m
‑31%
127.4
125.5
38.7
30.1
109.1
31.6
23.5
20.8
17.9
Tax
(£’m)
£101.1m
‑7%
108.6
101.1
96.5
2021
2022
2023
2021
2022
2023
2021
2022
2023
2021
2022
2023
96
Marshalls plc | Annual Report and Accounts 2023
Pay comparisons
CEO ratio
The ratio of CEO pay (based on the single total figure of remuneration) to that of UK employees for the five years is shown in the table below.
The calculation has been performed using the methodology in Option A of the Large and Medium‑sized Companies and Groups (Accounts and
Reports) Regulations 2008 (as amended) in line with best practice and is based on the total single figure of remuneration.
CEO pay ratio
Employee salary
Financial year
25th
percentile
50th
percentile
75th
percentile
2023
2022
2021
2020
2019
40.2:1
31.9:1
35.4:1
55.0:1
70.6:1
77.6:1
27.2:1
42.6:1
46.3:1
60.6:1
27.7:1
21.7:1
35.5:1
38.2:1
51.0:1
CEO
salary
£’000
676
621
532
485
460
25th
percentile
50th
percentile
75th
percentile
31
31
29
23
22
39
40
40
35
36
44
51
45
42
40
CEO total
pay and
benefits
£’000
1,246
1,002
1,685
1,695
2,213
Employee total pay and benefits
25th
percentile
50th
percentile
75th
percentile
31
33
31
24
28
39
43
40
37
36
45
53
45
44
43
The 25th, 50th and 75th percentiles have been calculated using actual pay for the year ended 31 December 2023, increased where appropriate
to give full time equivalent remuneration for part time workers or those working only part of the year.
• Our CEO pay is made up of a higher proportion of performance related incentives than that of our employees, in line with the expectations of our
shareholders. This introduces a higher degree of variability in CEO pay each year which affects the ratio. The ratio is lower in the last two years
which reflects lower levels of MIP outcomes.
• The value of long‑term incentives which measure performance over three years is disclosed in pay in the financial year directly prior to vesting.
• Long-term incentives are provided in shares, and therefore a change in price during any deferral or vesting period impacts the value of a
long-term incentive award in the year in which it vests.
• We recognise that the ratio is mainly driven by the different structure of the pay of our CEO versus that of our employees, as well as the make‑up
of our workforce.
• Where the base structure of remuneration is similar, for example on comparison between the Executive Committee pay and that of the CEO,
the ratio is much more stable over time.
Percentage change in Directors’ remuneration
In accordance with The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the table below shows
the percentage change in Executive Director and Non-Executive Director total remuneration compared to the change for the average of UK-based
employees of the Group excluding Executive Directors and Non-Executive Directors.
Salary/fees
Taxable benefits
Short-term variable pay
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
Martyn Coffey (CEO)
Justin Lockwood (CFO)
Simon Bourne (COO)
Vanda Murray OBE (Chair)
Angela Bromfield (NED)
Tim Pile (NED)
Graham Prothero (NED)
Avis Darzins (NED)
Diana Houghton (NED)
Employees
Notes:
8.9% 16.8%
8.1%
6.8%
n/a
40.8%
8.0% 26.3%
11.4% 25.0%
5.9%
6.8% 14.1%
7.4% 80.0%
n/a
—
(61.1)%
6.0%
n/a
n/a
5.4% 3.30% (2.3)%
9.1%
n/a
n/a
50%
n/a
n/a
—
1.4% (0.7)% 3.30%
—
1.4% (0.7)%
n/a
—
1.4% (0.7)% 3.30%
—
1.4% (0.7)% 3.30%
—
n/a
n/a
1.4%
—
n/a
n/a
n/a
6.3%
0.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0% 3.10% (22.7)% (75.3)%
25.6% (47.2)%
n/a
n/a
44.5%
n/a
n/a
—
n/a
n/a
—
n/a
n/a
—
n/a
n/a
—
n/a
n/a
—
n/a
n/a
—
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
6.2%
3.6%
0.3%
5.4% 3.30% (87.0%) (26.4)%
7.3% (8.8)% 23.80% 18.1% 27.1% 81.0% (85.1)% 22.20%
a) For employees, the change is based on total pay and the average number of employees during the year. We have included all UK employees from all employing entities,
including Marshalls plc, in order to provide fair reflection across the Group.
b) The bonus is the non‑deferred amount earned for the relevant year taken from the single figure remuneration table on page 93.
c) The majority of Marshalls colleagues received a pay award for 2023 which consisted of two parts, a pay rise of 4 per cent effective 1 January 2023 and a further
increase of 4 per cent effective 1 July 2023.
d) During 2023, the healthcare cash plan available to all Marshalls colleagues became a taxable benefit and is now, therefore, included in the calculations of average taxable
benefits above.
e) The average bonus for employees in 2023 is higher compared to the average for 2022 because fewer employees received a bonus in 2023 which increased the average calculation.
f) UK employees have been used as the number of overseas employees is not significant (25) and pay conditions in the non‑UK locations (Belgium – business was sold
during 2023, China and USA) are different from those prevailing in the UK. These numbers include Marley colleagues and are on a full‑time equivalent basis.
g) Simon Bourne was appointed to the Board as Chief Operating Officer on 1 April 2022.
h) Diana Houghton joined the Board in January 2023. Tim Pile stepped down from the Board on 10 May 2023. Avis Darzins joined the Board in June 2021 and therefore
her single figure for 2021 (£29,000) reflected part of the year. During 2022, fees were paid to Vanda Murray OBE in relation to her role as the Chair of the Nomination
Committee and to Angela Bromfield in relation to her role as the designated employee engagement NED and her role as Chair of the Remuneration Committee.
CEO pay in the last ten years
This table shows how pay for the CEO role has changed in the last ten years:
Single figure remuneration
% of maximum annual bonus earned
% of maximum LTIP/MIP awards vesting
2014
£’000
2015
£’000
2016
£’000
2017
£’000
1,101
2,064
99.3% 100.0%
1,913
2,383
96.9% 100.0%
— 100.0% 100.0% 100.0%
2018
£’000
1,602
98.0%
98.0%
2019
£’000
2,213
99.6%
99.6%
2020
£’000
2021
£’000
2022
£’000
1,695
1,010
1,685
30.2%
0% 100.0%
0% 100.0% 100.0%
Marshalls plc | Annual Report and Accounts 2023
2023
£’000
1,246
25%
n/a
97
Governance Remuneration Committee Report continued
Annual report on remuneration continued
Total shareholder return
This chart shows the Group’s total shareholder return (“TSR”) performance compared to the FTSE 250 Index. This index has been chosen
as Marshalls is a constituent of the FTSE 250. TSR is defined as share price growth plus reinvested dividends. This chart shows the value
at 31 December 2023 of £100 invested in Marshalls plc on 31 December 2013 compared with the value of £100 invested in the FTSE 250.
The other plotted points are the intervening financial year ends.
700
600
500
400
300
200
100
0
Dec
2013
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2020
Dec
2021
Dec
2022
Dec
2023
Marshalls plc FTSE 250 Index
Source: Datastream (a LSEG product)
External advisers
The Remuneration Committee was advised during the year by external remuneration adviser PricewaterhouseCoopers LLP (“PwC”) until August
2023 and following a competitive tender process, by FIT Remuneration Consultants LLP (“FIT”). PwC and FIT attended meetings of the Committee
by invitation.
Advisers’ fees are agreed by the Remuneration Committee according to the work performed and terms of engagement are available on request
from the Company Secretary. The Committee is satisfied that the remuneration advice from FIT is objective and independent as they provide no
other services to the Group. The Committee was also satisfied that there is no connection between the advisers and the company or individual
Directors. PwC was considered objective and independent based on the separation of the team advising the Committee from any other work
undertaken by PwC for the Group. Both PwC and FIT are signatories to the Remuneration Consultants Group’s Code of Conduct.
The amount paid to PwC in respect of remuneration advice received during 2023 was £12,750 (2022: £104,610). The amount paid to FIT in respect
of remuneration advice during 2023 was £36,232.
Wider workforce considerations
The Committee carries out an annual review of the wider workforce remuneration, incentives and policies to inform the approach applied to the
remuneration of the Executive Directors and senior management. In particular, the Committee is focused on whether the approach is consistent
with that applied to the wider workforce. The Committee also receives feedback from regular employee surveys and from site visits made by the
Executive Directors and senior management.
Marley colleagues continue to participate in their relevant remuneration arrangements which are currently separate to the Marshalls arrangements.
Work is in progress to understand all remuneration arrangements, and whilst no changes have been made at the time of writing this report, Marley
colleagues will be invited to join the Share Purchase Plan and any new Sharesave Scheme to be launched, enabling all colleagues to acquire shares
in the Marshalls Group (see below for more information).
The 2023 review highlighted the continued commitment to colleague wellbeing through comprehensive and established benefits and wellbeing
programmes. Management continue to review the benefits offering, with a focus on improving where possible and continuing the successful
communications and engagement approach. For example, a new improved employee assistance programme was successfully launched for
Marshalls colleagues (using the provider already used in Marley). The focus on communication and engagement campaigns has led to successful
increased participation in available benefits and offerings.
As discussed on page 89, 2023 saw a number of change programmes where colleagues left the business through redundancy. We applied The
Marshalls Way in how we approached these, treating everyone with respect, and seeking to mitigate the impact by offering voluntary redundancy
where possible, and successfully redeploying a number of colleagues across the business. For key roles, in areas where the recruitment market
is particularly challenging, there has been a focus on reviewing remuneration. A highlight has been the engineering apprenticeship intake, as
described on page 39.
As Chair of the Remuneration Committee and designated Non‑Executive Director for employee engagement, Angela Bromfield attends the
Employee Voice Group (“EVG”). The EVG meets six times a year and, amongst other things, provides valuable input into a range of topics including
reward and Remuneration Policy. The meetings are chaired by the Chief People Officer and attended by a mixed group of colleagues from across
the different parts of the Group. We are pleased to confirm that from February 2023, colleagues from Marley have joined the EVG. The attendees
of the meeting are elected by their colleagues to be their representatives. Other Non‑Executive Directors and members of the Marshalls Executive
Team also attend EVG meetings on a rotational basis. A summary of the EVG’s activities is set out in the Strategic Report on page 38.
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Marshalls plc | Annual Report and Accounts 2023
Incentive schemes
Dependent on role and level of seniority, colleagues are able to share in the success of the Company through incentive compensation. The incentive
approach applied to the Executive Directors aligns with the wider Company policy on incentives, which is to apply a higher percentage of at-risk
performance pay for more senior roles, and also to increase the amount of the incentive that is deferred, provided in equity and/or measured over
the longer term for roles with greater seniority. The key incentive schemes are the MIP and the Bonus Share Plan (“BSP”). Participation in the MIP
and BSP schemes extends to senior management. Sales bonuses apply to those in relevant roles. All employees have the opportunity to join the
Sharesave and the Share Purchase Plan as noted below.
Widening employee share ownership
Employees can become shareholders through employee share plans including:
Sharesave Scheme
The Sharesave Scheme was launched in 2021 to encourage wider ownership of Marshalls plc shares, so that colleagues were able to participate in the
Group’s success in a way that aligns their interests with those of shareholders. A new Sharesave Scheme is being considered to be launched in 2024.
Share Purchase Plan
The Share Purchase Plan is open to all colleagues and provides the opportunity to purchase shares in the market on a monthly basis out of gross salary.
Living Wage employer
The Group is proud to be a Living Wage employer, underscoring its commitment to its colleagues. Marshalls achieved Living Wage accreditation
in 2018, with Marley achieving accreditation in 2022, and we have both maintained status throughout 2023.
Summary
In summary, the Committee is satisfied that the approach to remuneration across the wider workforce is consistent with the Company’s
Remuneration Policy and the wider principles of fairness and sustainability that are fundamental to the Group’s culture. Further, in the
Committee’s opinion the approach to Executive remuneration aligns with the approach taken in the wider Company pay policy.
Remuneration Policy
Introduction
Our current Remuneration Policy was approved by shareholders at the 2023 AGM held on 10 May 2023. A summary of the policy is provided below.
The full policy can be viewed in last year’s Annual Report.
2023 Remuneration Policy table
Fixed remuneration
Salary
Purpose and how it
supports the strategy
Base salary recognises the market value of the Executive’s role, skills, responsibilities, performance
and experience.
Operation
An Executive Director’s base salary is set on appointment and reviewed annually or when there is a change
in position or responsibility. When determining an appropriate level of salary, the Committee considers:
Maximum
• general salary rises for employees;
• remuneration practices within the Group;
• any change in scope, role and responsibilities;
• the general performance of the Group;
• the experience of the relevant Director;
• the economic environment; and
• whether a benchmarking exercise is appropriate (using salaries within the ranges paid by the companies
in the comparator groups for remuneration benchmarking).
Individuals who are recruited or promoted to the Board may, on occasion, have their salaries set below the
targeted policy level until they become established in their role. In such cases subsequent increases in salary
may be higher than the general rises for employees until the target positioning is achieved.
Typically, the base salaries of Executive Directors in post at the start of the Policy period and who remain in
the same role throughout the Policy period will be increased by a similar percentage to the average annual
percentage increase in salaries of other UK employees in the Group. The exceptions to this rule may be where:
• an individual’s package is below market level and a decision is taken to increase base pay to reflect proven
competence in the role; or
• there is a material increase in scope or responsibility in the individual’s role.
The Committee ensures that maximum salary levels are positioned in line with companies of a similar size
and validated against industry/sector peers, so that they are competitive.
The Committee intends to review the comparators periodically and may add or remove companies as
it considers appropriate. Any changes to the comparator groups will be explained in the report on the
implementation of the Remuneration Policy in the following financial year.
Marshalls plc | Annual Report and Accounts 2023
99
Governance Remuneration Committee Report continued
Remuneration Policy continued
2023 Remuneration Policy table continued
Fixed remuneration continued
Pension
Purpose and how it
supports the strategy
Operation
Maximum
Benefits
To enable Executive Directors to make appropriate provision for retirement.
Executive Directors are entitled to join the defined contribution scheme operated by Marshalls. The Company
contributes at an agreed percentage of basic salary.
Executive Directors may take a pension allowance in place of the Company’s contribution to the Scheme.
Pension allowances are excluded for the purposes of calculating any other element of remuneration based
on a percentage of salary.
The maximum Company contribution or pension allowance for all Executive Directors is in line with that
provided to the majority of employees, which is currently 5% of salary.
For any new Executive Director appointments, the maximum employer pension contribution or allowance
will be in line with that provided to the majority of employees.
Purpose and how it
supports the strategy
The Company is required to provide benefits in order to be competitive and to ensure it is able to recruit and
retain Executive Directors.
Operation
Benefits include car or car allowance, health insurance, life assurance and membership of the Group’s
employee share plans (the Executive Directors will also be eligible to participate in any other all-employee plan
operated by the Company from time to time).
The Committee recognises the need to maintain suitable flexibility in the benefits provided to ensure it is able
to support the objective of attracting and retaining personnel in order to deliver the Group strategy. Additional
benefits may therefore be offered such as relocation allowances on recruitment.
Maximum
The maximum is the cost of providing the relevant benefits as described.
Variable performance‑based remuneration
MIP A
Purpose and how it
supports the strategy
Enabling the successful implementation of Group strategy through setting relevant targets to measure
Executive Director performance. Aligns the interests of Executives with shareholders and contributes to the
retention of key individuals by ensuring that Executives take part of their annual bonus in shares or share-linked
units rather than cash.
Operation
Annual performance conditions and targets are set at the beginning of the Plan year by reference to financial,
strategic and operational objectives by the Remuneration Committee.
As well as determining the performance conditions, targets and relative weighting, the Committee will
also determine, within the approved range, the level of target bonus at the beginning of the Plan year.
Upon assessment of performance by the Committee, a contribution will be made by the Company into the
participant’s Plan Account; up to 50 per cent of the cumulative balance will be paid in cash for the first three
years of the Plan. Any remaining balance will be converted into shares or share‑linked units.
100 per cent of the balance in the final year (the fourth year) of the Plan will normally be settled in the form
of shares transferred or allotted to the participant. During the Plan period, 50 per cent of the retained balance
is at risk of forfeiture based on a minimum performance measure determined annually by the Committee
(the underpin).
Full details of the relevant targets and their weighting, and how they have been measured, will be reported
in the Remuneration Report for the relevant financial year.
The Committee may award dividend equivalents on shares or share‑linked units held under the Plan to the
extent that they vest.
Maximum
Maximum 150 per cent of salary.
• Threshold 0 per cent of maximum
• Target 50 per cent of maximum
• Maximum 100 per cent of maximum
100
Marshalls plc | Annual Report and Accounts 2023
Performance conditions
An award under the Plan is subject to satisfying relevant performance conditions and targets determined annually
by the Remuneration Committee by reference to financial and non‑financial objectives that are closely linked to the
strategy of the business and may also contain individual performance objectives, measured over a period of one
financial year. A minimum of 50 per cent of the bonus is based on financial performance measures.
The Committee is of the opinion that given the commercial sensitivity arising in relation to the detailed financial
targets used for the bonus, disclosing precise targets for the Plan in advance would not be in shareholder
interests. Targets, performance achieved and awards made will be published at the end of the performance
period so shareholders can fully assess the basis for any pay‑outs under the Plan.
The Committee retains the discretion to:
• change the performance measures and targets and the weighting attached to the performance measures
and targets part‑way through a performance year if there is a significant and material event which causes
the Committee to believe the original measures, weightings and targets are no longer appropriate; and
• make downward or upward adjustments to the amount of bonus contribution earned resulting from the
application of the performance measures, if the Committee believes that the bonus outcomes are not a fair
and accurate reflection of business performance.
Any adjustments or discretion applied by the Committee will be fully disclosed in the following year’s
Remuneration Report.
The Plan contains malus and clawback provisions.
MIP B
Purpose and how it
supports the strategy
To link variable pay to achievement of annual financial and business objectives.
To promote long‑term shareholding in the Company and strengthen alignment between interests of Executive
Directors and senior managers and those of shareholders.
Operation
Annual performance conditions and targets are set by reference to financial, strategic and operational
objectives by the Remuneration Committee.
Awards are granted retrospectively in shares based on the achievement of performance targets for the relevant
year. Awards vest (subject to continued employment) three years from grant.
Sale restrictions apply to awards that have vested: normally vested awards may not be sold for a further two
years after vesting or post-cessation of employment.
There is a financial underpin which, if not achieved over the three‑year vesting period, results in the loss of up to
50 per cent of unvested awards.
Details of the performance conditions, targets and their level of satisfaction for the year being reported on will
be set out in the Remuneration Report for the relevant financial year.
The Committee may award dividend equivalents on shares or share‑linked units held under the Plan to the
extent that they vest.
Maximum
Maximum 100 per cent of salary.
• Threshold 0 per cent of maximum
• Target 50 per cent of maximum
• Maximum 100 per cent of maximum
Performance conditions
An award under the Plan is subject to satisfying relevant performance conditions and targets determined
annually by the Remuneration Committee by reference to financial and non‑financial objectives that are closely
linked to the strategy of the business and may also contain individual performance objectives, measured over
a period of one financial year.
The Committee takes the same view on commercial sensitivity as for Element A of the MIP.
The discretions set out above for Element A also apply to Element B. Any adjustments or discretion applied
by the Committee will be fully disclosed in the following year’s Remuneration Report.
The Plan contains malus and clawback provisions.
Minimum shareholding requirement
The minimum shareholding requirements for Executive Directors, is 200 per cent of base salary. Executive Directors are required to retain
50 per cent of the post‑tax number of vested shares from the Company incentive plans until the minimum shareholding requirement is met
and maintained. Adherence to these guidelines is a condition of continued participation in the incentive arrangements. This policy ensures that
the interests of Executive Directors and those of shareholders are closely aligned.
The Committee retains the discretion to increase the minimum shareholding requirements.
On cessation of employment, Executive Directors are required to retain the minimum shareholding requirement of 200 per cent of base salary for
one year post-cessation and 100 per cent of base salary for a further year. Where their actual shareholding at departure is below the minimum
shareholding requirement, the Executive Director’s actual shareholding is required to be retained on the same terms and for the same periods.
Marshalls plc | Annual Report and Accounts 2023
101
Governance Remuneration Committee Report continued
Remuneration Policy continued
Chair and Non-Executive Directors’ Remuneration Policy
Fees
Purpose and how it supports
the strategy
Annual fee to attract and retain experienced and skilled Non-Executive Directors with the necessary experience
and expertise to advise and assist with establishing and monitoring the strategic objectives of the Company.
Fees reflect the time commitment and responsibilities of the roles.
Operation
The Board is responsible for setting the remuneration of the Non-Executive Directors.
The Remuneration Committee is responsible for setting the Chair’s fees. Non-Executive Directors are paid
an annual fee. There are additional fees for the SID role, chairing Committees and the designated employee
engagement Non‑Executive Director. The Company retains the flexibility to pay fees for the membership of
Committees. The Chair does not receive any additional fees for membership of Committees.
Fees are reviewed annually based on equivalent roles in the comparator group used to review salaries paid to
the Executive Directors.
Non‑Executive Directors and the Chair do not participate in any variable remuneration or benefits arrangements.
Maximum
The fees for Non-Executive Directors and the Chair are broadly set at a competitive level against the
comparator group.
In general, the level of fee increase for the Non-Executive Directors and the Chair will be set taking account
of any change in responsibility and salary increases for UK employees generally.
The Company will pay reasonable expenses incurred by the Non-Executive Directors and Chair in the
performance of their duties and may settle any tax incurred in relation to these.
Directors’ service contracts
Martyn Coffey
Matt Pullen
Justin Lockwood
Simon Bourne
Vanda Murray OBE
Graham Prothero
Angela Bromfield
Avis Darzins
Diana Houghton
Date of appointment
September 2013
8 January 2024
July 2021
April 2022
May 2018
May 2017
October 2019
June 2021
January 2023
Service contracts are kept at the Company’s registered office.
Angela Bromfield
Chair of the Remuneration Committee
18 March 2024
Notice by Company
Notice of Director
12 months
12 months
12 months
12 months
6 months
6 months
6 months
6 months
6 months
6 months
12 months
12 months
12 months
6 months
6 months
6 months
6 months
6 months
102
Marshalls plc | Annual Report and Accounts 2023
Directors’ Report – Other Regulatory Information
The information required by the Disclosure Guidance and Transparency Rules (“DTRs”) 4.1.8R is contained in the Strategic Report and the
Directors’ Report.
Marshalls plc is registered with company number 5100353.
Directors and Board composition: The Directors of the Company are listed on pages 64 and 65.
As at 31 December 2023, the Company had met the targets on Board diversity set out in LR 9.8.6 R(9). Board and executive management
composition at that date was as follows:
Gender identity or sex
Men
Women
Not specified or preferred not to say
Ethnic background
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board (CEO,
CFO, SID and Chair)
4
4
N/A
50
50
N/A
3
1
N/A
Number in
executive
management
Percentage of
executive
management
6
1
N/A
86
14
N/A
Number of
Board members
Percentage
of the Board
Number of
senior positions
on the Board (CEO,
CFO, SID and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White (including minority-white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified or preferred not to say
7
1
0
0
0
N/A
87.5
12.5
0
0
0
N/A
4
0
0
0
0
N/A
5
0
2
0
0
N/A
71
0
29
0
0
N/A
Between 31 December 2023 and the date of this report, Matt Pullen was appointed to the Board, initially as Chief Executive Designate and
successor to Martyn Coffey. Until Martyn Coffey stepped down from the Board on 29 February 2024, there were nine Board members but this did
not the affect the Company’s ability to meet the targets under LR 9.8.6 R(9).
For the purposes of the disclosures set out above, made pursuant to LR 9.8.6 R(9) and (10), the Company collected the relevant data from the
Board directly and, in the case of executive management, the data is contained within the Group’s human resources management system,
Marshalls Connect. The data is provided with the consent of the relevant individuals.
Political donations: The Group made no donations during the year to any political party or political organisation or to any independent election
candidate, whether in the UK or elsewhere (2022: £nil).
Risk management: The Group’s risk management objectives, its approach to managing risk generally and its use of financial instruments are
described in the Strategic Report on pages 52 to 61. Further details of the Group’s risk management in relation to financial risks and its use of
financial instruments to mitigate such risks are set out in Note 20on pages 138 to 141.
Greenhouse gas emissions: The Group’s disclosure in respect of the SECR requirements can be found in the Strategic Report on page 43.
Employees: Details of how the Directors have engaged with employees are set out on page 31. Further information is provided in relation to the
engagement channels used and the outcomes from the engagement. The Company’s policies in relation to diversity and inclusion and employee
involvement and communication are explained in the Strategic Report on pages 38 to 41.
Stakeholders: Details of how the senior management team and the Directors have engaged with shareholders, customers, suppliers and other
stakeholder groups are set out on pages 30 to 33, along with engagement channels used. Details of the Group’s stakeholder engagement strategy
are explained on pages 28 to 33. The statement by the Directors in relation to their statutory duties under S172(1) Companies Act 2006 is found on
pages 62 and 63.
Corporate governance: Details of how the Group complies with and applies the UK Corporate Governance Code are set out on pages 66 and 79.
Post-balance sheet events of importance since 31 December 2023: New Chief Executive appointed 8 January 2024 and during January 2024
the Group announced a new partnership with Wincanton plc.
Research and development: Activity and likely future developments for the business are described in the Strategic Report on pages 24 and 25.
Dividends
The Board is recommending a final dividend of 5.7 pence (2022: 9.9 pence) per share, which, together with the interim dividend of 2.6 pence
(2022: 5.7 pence) per share, makes a combined dividend of 8.3 pence (2022: 15.6 pence) per share. Payment of the final dividend, if approved
at the Annual General Meeting, will be made on 1 July 2024 to shareholders registered at the close of business on 7 June 2024. The ex‑dividend
date will be 6 June 2024.
The dividend paid in the year to 31 December 2023 and disclosed in the Consolidated Income Statement was 12.5 pence (2023: 15.3 pence)
per share, being the previous year’s final dividend of 9.9 pence and the interim dividend of 2.6 pence per share in respect of the year ended
31 December 2023.
Marshalls plc | Annual Report and Accounts 2023
103
Governance Directors’ Report – Other Regulatory Information continued
Share capital and authority to purchase shares
The Company’s share capital at 31 December 2023 was 252,968,728 Ordinary Shares of 25 pence each. No new Ordinary Shares were issued
during the year ended 31 December 2023. Details of the share capital are set out in Note 24 on pages 147 and 148.
The Ordinary Shares of the Company carry equal rights to dividends, voting and return of capital on the winding up of the Company, as set out in
the Company’s Articles of Association. There are no restrictions on the transfer of securities in the Company and there are no restrictions on any
voting rights or deadlines, other than those prescribed by law, nor is the Company aware of any arrangement between holders of its shares which
may result in restrictions on the transfer of securities or voting rights, nor any arrangement whereby a shareholder has waived or agreed to waive
dividends (other than the EBT – see below).
The Marshalls plc Employee Benefit Trust (“EBT”) generally holds shares for the purposes of satisfying future awards that may vest under the
Company’s share-based incentive schemes. The EBT may purchase shares in the Company from time to time to satisfy awards granted to Directors
and senior Executives (subject to the achievement of performance targets under the Company’s incentive schemes) or to facilitate the satisfaction
by employees of their tax liabilities arising from any rewards. Details of outstanding incentive awards are set out in Note 21 on pages 142 to 145.
In addition to its general purpose, as part of the acquisition of Marley in April 2022 the manager sellers agreed to the legal title to their
consideration shares being held on trust by the EBT for a period of twelve months following completion of the acquisition. Arrangements were put
in place as part of the acquisition to enable the EBT to support this arrangement. These shares were released to the manager sellers in April 2023.
Where shares are acquired by the EBT, these are accounted for by the Company as a purchase of own shares. During the year ended 31 December
2023 the EBT acquired 75,000 shares for a total consideration of £226,792.
At 31 December 2023 the EBT held 100,238 Ordinary Shares in the Company (2022: 2,501,511 shares) in respect of future incentive awards under
the Company’s employee share schemes.
The EBT has waived its right to receive dividends on shares that it holds beneficially in respect of future awards. The Trustee of the EBT exercises
any voting rights on such shares in accordance with the Directors’ recommendations.
UK‑based employees of the Group with more than six months’ service may participate in the Marshalls plc Share Purchase Plan during any offer
period. Employees purchase Ordinary Shares in the Company with their pre‑tax salary. The shares are purchased in the market and then held in
trust by Computershare Investor Services plc. Employees receive dividends on these shares and may give voting instructions to the Trustee.
At the Annual General Meeting in May 2023 shareholders gave authority to the Directors to purchase up to 37,920,012 shares, representing
approximately 14.99 per cent of the Company’s issued share capital in the Company, in the market during the period expiring at the next Annual
General Meeting at a price to be determined within certain limits. No Ordinary Shares in the Company were purchased during the year or between
31 December 2023 and 18 March 2024 under this authority, which will expire at the 2024 Annual General Meeting. The Directors will seek to renew
the authority at that meeting.
Contracts of significance and related parties
There were no contracts of significance between any member of the Group and (a) any undertaking in which a Director has a material interest,
or (b) a controlling shareholder (other than between members of the Group). There have been no related party transactions between any member
of the Group and a related party since the publication of the last Annual Report.
There are a number of agreements that take effect, alter or terminate upon a change of control of the Group. None of these are considered to be
significant in terms of their likely impact on the business of the Group as a whole.
Articles of Association
The Company’s Articles of Association give powers to the Board to appoint Directors. Newly appointed Directors are required to retire and submit
themselves for re‑election by shareholders at the first Annual General Meeting following their appointment.
The Board of Directors may exercise all the powers of the Company, subject to the provisions of relevant laws and the Company’s Memorandum
and Articles of Association. These include specific provisions and restrictions regarding the Company’s power to borrow money. Powers relating to
the issuing and buying back of shares are included in the Articles of Association and such authorities are renewed by shareholders each year at the
Annual General Meeting.
The Articles of Association may be amended by Special Resolution of the shareholders.
The Group has granted indemnities to its Directors to the extent permitted by law (which are qualifying indemnity provisions under Section 236
of the Companies Act 2006) and these remained in force during the year in relation to certain losses and liabilities that the Directors may incur to
third parties in the course of action as Directors or employees of the Company, any subsidiary or associated company, or a Director of the pension
scheme trustee board. Neither the liability insurance nor the indemnities provide cover in the event of proven fraudulent or dishonest activity.
The Group has not indemnified any Director under the indemnities currently in place.
Directors’ interests
Details of Directors’ remuneration, their interests in the share capital of the Company and the share-based payment awards are contained in the
Remuneration Committee Report on pages 88 to 102.
Listing Rule requirements
The applicable requirements of Listing Rule 9.8.4R in respect of long‑term incentive schemes and contracts of significance are included in this
Annual Report.
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Marshalls plc | Annual Report and Accounts 2023
Substantial shareholdings
The Company has no controlling shareholder. As at 15 March 2024, the Company had been notified, in accordance with DTR 5, of the following
disclosable interests of 3 per cent or more in its voting rights:
Inflexion Private Equity Partners
Montanaro Asset Management
abrdn
BlackRock
Royal London Asset Management
AXA Framlington Investment Managers
Vanguard Group
Columbia Threadneedle Investments
Janus Henderson Investors
Legal & General Investment Management
Jupiter Asset Management
As at
29 February
2024
%
As at
31 December
2023
%
8.72
7.24
6.68
5.06
4.88
4.59
4.58
4.01
3.98
3.38
3.13
8.72
6.90
6.67
5.34
5.06
4.49
4.55
3.41
3.94
3.26
2.46
The Directors’ Report, comprising the Strategic Report, the Corporate Governance Statement and the Reports of the Audit, Remuneration and
Nomination Committees, has been approved by the Board and signed on its behalf by:
Shiv Sibal
Group Company Secretary
18 March 2024
Marshalls plc | Annual Report and Accounts 2023
105
Governance Statement of Directors’ Responsibilities
in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the
Group and Parent Company Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Parent
Company Financial Statements for each financial year. Under that
law they are required to prepare the Group Financial Statements in
accordance with United Kingdom adopted International Accounting
Standards and International Financial Reporting Standards (“IFRSs”)
as issued by the International Accounting Standards Board (“IASB”).
The Directors have elected to prepare the Parent Company Financial
Statements in accordance with UK Accounting Standards, including
FRS 101 “Reduced Disclosure Framework”.
Under company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Parent Company and of their
profit or loss for that period. In preparing each of the Group and Parent
Company Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable
and prudent;
• for the Group Financial Statements, state whether they have been
prepared in accordance with IFRSs as adopted by the EU;
• for the Parent Company Financial Statements, state whether
applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the Parent
Company Financial Statements; and
• prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Group and the Parent
Company will continue in business.
In preparing the Group Financial Statements, IAS 1 requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
• provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand
the impact of particular transactions, other events and conditions on
the entity’s financial position and financial performance; and
• make an assessment of the Company’s ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent Company’s
transactions and disclose with reasonable accuracy, at any time, the
financial position of the Parent Company and enable them to ensure
that its Financial Statements comply with the Companies Act 2006.
They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible
for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that
comply with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors on the Annual Report
and Accounts
The Directors who held office at the date of approval of this Directors’
Report and whose names and functions are listed on pages 64 and 65
confirm that, to the best of each of their knowledge:
• the Financial Statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
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Marshalls plc | Annual Report and Accounts 2023
liabilities, financial position and profit of the Company and the
undertakings included in the consolidation taken as a whole;
• the Strategic Report contained in this Annual Report includes a fair
review of the development and performance of the business and the
position of the Company and the Group taken as a whole, together
with a description of the principal risks and uncertainties that
they face; and
• the Annual Report and Financial Statements, taken as a whole,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
Disclosure of information to the auditor
The Directors who held office at the date of approval of this Directors’
Report confirm that, so far as they are each aware, there is no relevant
audit information of which the Company’s auditor is unaware, and
each Director has taken all the steps that he/she ought to have taken
as a Director to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditor is aware
of that information.
Going concern
The Directors have adopted the going concern basis in preparing
these Financial Statements in accordance with the Financial Reporting
Council’s “Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting”, issued in September 2014.
The Directors considered that it was appropriate to do so, having
reviewed any uncertainties that may affect the Company’s ability
to continue as a going concern for at least the next twelve months from
the date these Financial Statements were approved.
Cautionary statement and Directors’ liability
This Annual Report 2023 has been prepared for, and only for, the
members of the Company, as a body, and no other persons. Neither
the Company nor the Directors accept or assume any liability to any
person to whom this Annual Report is shown or into whose hands it
may come except to the extent that such liability arises and may not be
excluded under English law. Accordingly, any liability to a person who
has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with Section 90A of the
Financial Services and Markets Act 2000.
This Annual Report contains certain forward-looking statements with
respect to the Group’s financial condition, results, strategy, plans and
objectives. These statements are not forecasts or guarantees of future
performance and involve risk and uncertainty because they relate
to events and depend upon circumstances that will occur in the future.
There are a number of factors that could cause actual results or
developments to differ materially from those expressed, implied or
forecast by these forward-looking statements. All forward-looking
statements in this Annual Report are based on information known to
the Group as at the date of this Annual Report and the Group has no
obligation publicly to update or revise any forward-looking statements,
whether as a result of new information or future events. Nothing in this
Annual Report should be construed as a profit forecast.
Annual General Meeting
The Notice convening the Annual General Meeting to be held at the
offices of Walker Morris, 33 Wellington Street, Leeds, West Yorkshire
LS1 4DL, together with explanatory notes on the Resolutions to be
proposed, is contained in a circular to be sent to shareholders with
this Annual Report.
By Order of the Board:
Shiv Sibal
Group Company Secretary
18 March 2024
Independent Auditor’s Report
to the members of Marshalls plc
Report on the audit of the Financial Statements
1. Opinion
In our opinion:
• the Financial Statements of Marshalls plc (the “Parent Company”) and its subsidiaries (the “Group”) give a true and fair view of the state of the
Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the year then ended;
• the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted international accounting standards
and International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”);
The Parent Company Financial Statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework” and the Financial Statements have been prepared in
accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements which comprise:
• the Consolidated Income Statement;
• the Consolidated Statement of Comprehensive Income;
• the Consolidated and Parent Company Balance Sheets;
• the Consolidated and Parent Company Statements of Changes in Equity;
• the Consolidated Cash Flow Statement;
• the material accounting policy information; and
• the related Notes 1 to 46.
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law, United Kingdom adopted
international accounting standards and IFRSs as issued by the IASB. The financial reporting framework that has been applied in the preparation of the
Parent Company Financial Statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework”.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) “(ISAs (UK)”) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities for the audit of the Financial Statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the
Financial Statements in the UK, including the Financial Reporting Council’s (the “FRC’s”) Ethical Standard as applied to listed public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non‑audit services provided to the Group and
Parent Company for the year are disclosed in Note 3 to the Financial Statements. We confirm that we have not provided any non‑audit services
prohibited by the FRC’s Ethical Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matter that we identified in the current year was:
• Impairment of Marley CGU goodwill
• Within this report, key audit matters are identified as follows:
Newly identified
Materiality
Scoping
Significant changes
in our approach
The materiality that we used for the Group Financial Statements was £2.5 million (2022: £4.3 million) which was
determined on the basis of 5 per cent of adjusted profit before tax.
Full scope audits were performed on all UK components. This accounts for 98 per cent of Group revenue, 100 per cent
of Group net assets and 100 per cent of profit before tax.
We have identified a key audit matter for the current year relating to the impairment of goodwill, specifically the Roofing
Products Cash Generating Unit (“CGU”), given the recency of the acquisition and the sensitivity in the assumptions. The
key audit matter, in relation to the impairment of Marley goodwill, has been pinpointed to the revenue growth in the solar
market, being the most subjective element of the growth assumptions in management’s value in use (“VIU”) model.
We no longer have a key audit matter in relation to the acquisition accounting for Marley Group Ltd, given there are no
material adjustments recognised to the fair value accounting in the current period.
There have been no other significant changes to our approach since the prior year.
4. Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the
Financial Statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going concern basis of accounting included:
• evaluating the availability of adequate funding through assessment of repayment terms and recalculation of year end covenants;
• assessing the historical accuracy of forecasts prepared by management and key assumptions underpinning the forecasts;
• checking the mathematical accuracy of the model used to prepare the forecasts;
• challenging the assumptions used in the forecasts, including performing sensitivity analyses in relation to assumptions for future market growth;
• evaluating the amount of headroom over liquidity, through review of cash flows, and covenants through recalculation of covenant ratios;
• assessing whether the Directors have considered and reflected the Group’s principal risks, including the impact of climate risks and
opportunities and the downturn in the construction industry, in the Group’s going concern assessment; and
• evaluating the appropriateness of the going concern disclosures in the Financial Statements.
Marshalls plc | Annual Report and Accounts 2023
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Governance Independent Auditor’s Report continued
to the members of Marshalls plc
Report on the audit of the Financial Statements continued
4. Conclusions relating to going concern continued
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern for a period of at least twelve
months from when the Financial Statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to
in relation to the Directors’ statement in the Financial Statements about whether the Directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
5.1. Impairment of Marley CGU Goodwill
Key audit matter
description
In the prior year the group acquired the Marley group for an enterprise value of £535m, resulting in £245.9m of goodwill.
We note since the acquisition there has been a general downturn in the construction industry, making assessment of future
cash flows inherently more uncertain.
How the scope
of our audit
responded to the
key audit matter
Under the requirement of IAS 36 Impairment of Assets (“IAS 36”), management have determined the Marley business to be
a separate CGU for Roofing Products and have performed their annual impairment assessment based on these CGUs.
The recoverable amount of the group’s goodwill and intangible assets were assessed by reference to value in use
calculations which require estimates, including significant assumptions regarding future cash flows and discount rates.
The cash flow forecasts are derived from the group’s business plan which considers variables such as margins, supply
volumes and inflation.
The key audit matter has been pinpointed to the revenue growth within the cashflows associated with growth in the UK
solar market. The cashflows include judgement made by management on assessment of the future growth in the market,
driven by legislation prioritising efficiency in new build housing. As described in Note 12 to the financial statements, the
goodwill associated with the Roofing Products CGU is £245.9m (2022: £244.1m), which supports headroom of £39m
based on the value in use of the component. This matter is discussed in the Report of the Audit Committee on page 85.
To address the risk of impairment within the Marley CGU goodwill our procedures were as follows:
We obtained an understanding of relevant controls related to the impairment review of goodwill.
We assessed the mathematical accuracy of the impairment models and whether the impairment methodology including
the duration of the cash flows applied by management was acceptable under IAS 36.
We evaluated the key assumptions including sales volumes, solar adoption rates and new housing growth, and assessed
retrospectively whether prior year assumptions were appropriate. We have compared management’s assumptions to
externally available industry metrics including new house building forecasts and impact assessments of new building
regulations.
With the assistance of our valuation specialists, we evaluated the methodology applied and considered the implied
valuation multiple to peer companies.
We evaluated all changes to key assumptions between the prior year forecasts and the current year’s forecasts, and
challenged whether market conditions in the current year had been appropriately considered in the assumptions.
We assessed the accuracy of management’s cash flow forecasts by comparing historical forecasts with actual cash flows,
external industry benchmarks and the impact of any climate change risks. We checked whether projected cash flows were
consistent with Board approved forecasts. We also assessed whether management’s impairment forecasts are consistent
with other forecasts used by management, including the going concern model. Furthermore, we performed sensitivity
analyses, including considerations of climate change, as part of our overall evaluation of the forecasts.
We also assessed the completeness and accuracy of the financial statements’ disclosures and compliance with the
requirements of IAS36, in relation to the impairment assessments performed.
Key observations
Based on our procedures we concur that the judgements made by management in performing their impairment review
are reasonable and the associated disclosures are appropriate.
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6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic decisions of
a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Group Financial Statements
Parent Company Financial Statements
Materiality
£2.5 million (2022: £4.3 million).
£1.3 million (2022: £2.2 million).
Basis for determining
materiality
5 per cent of adjusted pre‑tax profit (2022: 5 per cent of
adjusted pre‑tax profit).
Rationale for the
benchmark applied
The reconciliation of adjusted pre‑tax profit has been
presented within Note 4.
In our professional judgement, adjusted profit before tax is
the principal benchmark within the Financial Statements
that is relevant to the users of the Financial Statements
when assessing the performance of the Group.
Parent Company materiality has been capped at 50 per cent
of the Group materiality. This represents 0.2 per cent of net
assets (2022: 0.3 per cent of net assets).
As a holding company, net assets are considered to be the
primary benchmark.
Adjusted PBT
£53.3m
Adjusted PBT
Group materiality
Group materiality
£2.5m
Component materiality range
£0.4m to £2.0m
Audit Committee reporting threshold
£0.13m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the Financial Statements as a whole.
Group Financial Statements
Parent Company Financial Statements
Performance materiality
70 per cent (2022: 70 per cent) of Group materiality.
70 per cent (2022: 70 per cent) of Parent Company
materiality.
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the following factors:
a. our risk assessment, including our assessment of the quality of the control environment and that we were able
to rely on controls in Marshalls UK over the general IT environment, rebates and revenue;
b. the impact of the current macro-economic environment and climate change on the business and its operating
environment; and
c. the history of there being no quantitatively or qualitatively significant corrected or uncorrected misstatements
in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £125,000 (2022: £215,000),
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee
on disclosure matters that we identified when assessing the overall presentation of the Financial Statements.
Marshalls plc | Annual Report and Accounts 2023
109
Governance Independent Auditor’s Report continued
to the members of Marshalls plc
Report on the audit of the Financial Statements continued
7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and it’s its environment, including Group‑wide controls, and assessing
the risks of material misstatement both at the Group and component level.
Full scope audits were performed on all UK components, including the Marley Group. This accounts for 98 per cent (2022: 97 per cent) of Group
revenue, 100 per cent (2022: 100 per cent) of Group net assets and 100 per cent (2022: 100 per cent) of profit before tax generated by profit
making entities.
This results in two full scope components that are both tested by the Group engagement team: “Marshalls UK”, which compromises the
Landscape Products and Building Supplies business, and “Marley Group”, which reflects the Roofing division. The Group audit team performed
the audit of the full scope components of the Group.
At the Group level we also tested the consolidation process.
The Group audit team carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement
of the aggregated financial information of the remaining components not subject to audit.
Revenue
Profit before tax
Net assets
Full audit scope
Review at Group level
98%
2%
Full audit scope
Review at Group level
100%
0%
Full audit scope
Review at Group level
100%
0%
7.2. Our consideration of the control environment
To support the audit testing performed we have involved our IT specialists to consider the relevant IT systems used by the Group to generate
information which supports the amounts recognised in the Financial Statements. In order to evaluate the IT environment of the Group we have
obtained an understanding of relevant IT systems and the automated controls within these systems.
In evaluating the Marshalls UK component IT environment, we have:
• understood the IT system within the finance IT environment, Microsoft AX. This system is used for the entity’s financial reporting process
and covers all finance, payroll and HR modules;
• tested the Data Warehouse system which houses the inventory database;
• tested the following General IT Controls for Microsoft AX and Data Warehouse: Access Security (Joiners, Movers, Leavers (“JML”), Passwords,
Privileged Access and User Access Reviews (“UARs”)), Change Management (Change Process and Segregation of Duties) and Batch Jobs
(Access to Amend, and Monitoring of Batch Jobs);
• performed sample testing, where applicable, in order to determine operating effectiveness of key automated controls (JML, UARs, Change
Management and Batch Job Monitoring); and
• taken reliance on relevant IT controls associated with these systems.
In evaluating the Marley Group IT environment, we have:
• understood the key IT systems within the finance IT environment, being SAP, Sage and Microsoft D365. These systems are used for the
component’s financial reporting process for monitoring their individual entities and reporting to Marshalls plc Group and evaluated the key
general IT controls.
Controls reliance
During our audit we obtained an understanding and tested the relevant controls within the key business cycles for the group. We performed testing
over the operating effectiveness over the revenue and customer rebates business cycles within Marshalls UK, as these are key accounts that
impact the group’s profits.
We did not plan to rely on the controls over the Marley Group component.
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7. An overview of the scope of our audit continued
7.3. Our consideration of climate‑related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its Financial Statements.
The Group is focused on responding to the threats and opportunities presented by climate change with a developed strategy in how this is to be
achieved. The Directors have considered transition and physical risks when factoring in climate change as part of their risk assessment process
when considering the principal risks and uncertainties facing the Company. This is set out in the Strategic Report on pages 1 to 63, the principal
risks set out on pages 52 to 61. The Directors have concluded that the key risk of climate change for the business is the reduced business from
customers choosing lower carbon products. Furthermore, they have acknowledged the increasing risk of climate change and as such have put
more focus into climate risk assessment and developing appropriate strategies to respond to those risks, both on a short-term basis and on
consideration of the longer-term outlook.
We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances and classes of
transaction and did not identify any reasonably possible risks of material misstatement. Our procedures were performed with the involvement
of climate change and sustainability specialists and included:
• assessing and challenging management’s assessment of the key Financial Statement line items and estimates which are more likely to be
materially impacted by climate change risks given the more notable impacts of climate change on the business are expected to arise in the
medium to long term;
• challenging how the Directors considered climate change in their assessment of going concern and viability based on our understanding of the
business environment and by benchmarking relevant assumptions with market data;
• involving our Environmental Social and Governance (ESG) specialist in challenging the group’s climate considerations. The ESG specialists were
also involved in reviewing the Group’s ESG and climate‑related financial disclosures on pages 44 to 47 against the recommendations of the
TCFD framework and considered if any of the information disclosed was inconsistent with the information we obtained through our audit;
• assessing whether climate risk assumptions underpinning specific account balances were appropriately disclosed; and
• reading the climate risk disclosures included in the Strategic Report section of the Annual Report for consistency with the Financial Statements
and our knowledge of the business environment.
8. Other information
The other information comprises the information included in the Annual Report, other than the Financial Statements and our Auditor’s Report
thereon. The directors are responsible for the other information contained within the Annual Report.
Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the Financial Statements
and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a
going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an Auditor’s Report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.
Marshalls plc | Annual Report and Accounts 2023
111
Governance Independent Auditor’s Report continued
to the members of Marshalls plc
Report on the audit of the Financial Statements continued
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies,
key drivers for Directors’ remuneration, bonus levels and performance targets;
• any matters we identified having obtained and reviewed the Group’s documentation of its policies and procedures relating to:
• identifying, evaluating and complying with laws and regulations and whether it was aware of any instances of non‑compliance;
• detecting and responding to the risks of fraud and whether it has knowledge of any actual, suspected or alleged fraud; and
• the internal controls established to mitigate risks of fraud or non‑compliance with laws and regulations; and
• the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations, pensions and IT, regarding
how and where fraud might occur in the Financial Statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the
greatest potential for fraud in the following areas: impairment of goodwill, in Roofing Products CGU, and the key assumptions within the VIU model,
in particular the revenue growth within the cash flows associated with growth in the UK solar market.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws and
regulations that had a direct effect on the determination of material amounts and disclosures in the Financial Statements. The key laws and
regulations we considered in this context included the UK Companies Act, Listing Rules, pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial Statements but compliance
with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included the Group’s environmental
regulations and health and safety regulations.
11.2. Audit response to risks identified
As a result of performing the above, we identified impairment of goodwill as a key audit matter related to the potential risk of fraud. The key audit
matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key
audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the Financial Statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the Financial Statements;
• enquiring of management, the Audit Committee and in‑house legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with HMRC; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments;
assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal
specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
112
Marshalls plc | Annual Report and Accounts 2023
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the Financial Statements are prepared
is consistent with the Financial Statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the course of the audit,
we have not identified any material misstatements in the Strategic Report or the Directors’ Report.
13. Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer‑term viability and that part of the Corporate
Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:
• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 106;
• the Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate
set out on page 106;
• the Directors’ statement on fair, balanced and understandable set out on page 85;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 55;
• the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on
page 86; and
• the section describing the work of the Audit Committee set out on pages 84-87.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the Parent Company Financial Statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not been made
or the part of the Directors’ Remuneration Report to be audited is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Marshalls plc | Annual Report and Accounts 2023
113
Governance Independent Auditor’s Report continued
to the members of Marshalls plc
Report on other legal and regulatory requirements continued
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the shareholders on 20 May 2015 to audit the Financial Statements
for the year ended 31 December 2015 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals
and reappointments of the firm is nine years, covering the years ended 31 December 2015 to 31 December 2023.
15.2. Consistency of the Audit Report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these Financial
Statements form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the FCA in accordance with
DTR 4.1.15R – DTR 4.1.18R. This Auditor’s Report provides no assurance over whether the Electronic Format Annual Financial Report has been
prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Bashir Bahaj BSc FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
18 March 2024
114
Marshalls plc | Annual Report and Accounts 2023
Financial Statements
Financial Statements
Consolidated Income Statement
for the year ended 31 December 2023
Revenue
Net operating costs
Operating profit
Net financial expenses
Profit before tax
Income tax expense
Profit for the financial year
Profit for the year
Attributable to:
Equity shareholders of the Parent
Non-controlling interests
Profit for the financial year
Earnings per share
Basic
Diluted
Dividend
Pence per share
Dividends declared in the period
All results relate to continuing operations.
Adjusted profit measures
Operating profit
Adjusting items
Adjusted operating profit
Profit before tax
Adjusting items
Adjusted profit before tax
Profit for the financial year
Adjusting items (net of tax)
Adjusted profit after tax
Adjusted earnings per share
Basic
Diluted
Notes
2
3
2
6
2
7
8
8
9
9
Notes
4
4
4
8
8
2023
£’m
671.2
(630.2)
41.0
(18.8)
22.2
(3.8)
18.4
18.6
(0.2)
18.4
7.4p
7.3p
8.3p
21.0
2023
£’m
41.0
29.7
70.7
22.2
31.1
53.3
18.4
23.7
42.1
16.7p
16.7p
2022
£’m
719.4
(671.5)
47.9
(10.7)
37.2
(10.7)
26.5
26.8
(0.3)
26.5
11.4p
11.3p
15.6p
39.4
2022
£’m
47.9
53.2
101.1
37.2
53.2
90.4
26.5
46.8
73.3
31.3p
31.1p
Marshalls plc | Annual Report and Accounts 2023
115
Financial Statements
Financial Statements continued
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Profit for the financial year
Other comprehensive (expense)/income
Items that will not be reclassified to the Income Statement:
Remeasurements of the net defined benefit surplus
Deferred tax arising
Total items that will not be reclassified to the Income Statement
Items that are or may in the future be reclassified to the Income Statement:
Effective portion of changes in fair value of cash flow hedges
Fair value of cash flow hedges transferred to the Income Statement
Deferred tax arising
Reclassification of Sale of Subsidiary
Exchange difference on retranslation of foreign currency net investment
Exchange movements associated with borrowings designated as a hedge against
net investment
Total items that are or may be reclassified to the Income Statement
Other comprehensive (expense)/income for the year, net of income tax
Total comprehensive income for the year
Attributable to:
Equity shareholders of the Parent
Non-controlling interests
Notes
21
23
23
25
2023
£’m
18.4
(9.8)
2.4
(7.4)
(0.6)
(1.1)
0.8
(0.6)
0.1
(0.2)
(1.6)
(9.0)
9.4
10.2
(0.8)
9.4
2022
£’m
26.5
(3.1)
0.8
(2.3)
5.7
(2.8)
(0.7)
—
0.6
(0.2)
2.6
0.3
26.8
27.0
(0.2)
26.8
116
Marshalls plc | Annual Report and Accounts 2023
Consolidated Balance Sheet
at 31 December 2023
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill
Intangible assets
Employee benefits
Deferred taxation assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Derivative financial instruments
Corporate tax
Total assets
Liabilities
Current liabilities
Trade and other payables
Corporation tax
Lease liabilities
Provisions
Non-current liabilities
Lease liabilities
Interest-bearing loans and borrowings
Provisions
Deferred taxation liabilities
Total liabilities
Net assets
Equity
Capital and reserves attributable to equity shareholders of the Parent
Called-up share capital
Share premium account
Merger reserve
Own shares
Capital redemption reserve
Consolidation reserve
Hedging reserve
Foreign exchange reserve
Retained earnings
Equity attributable to equity shareholders of the Parent
Non-controlling interests
Total equity
Approved at a Directors’ meeting on 18 March 2024.
On behalf of the Board:
Matt Pullen
Chief Executive
Justin Lockwood
Chief Financial Officer
The Notes on pages 121 to 152 form part of these Consolidated Financial Statements.
Notes
10
11
12
13
21
23
14
15
16
10
20
17
19
22
19
18
22
23
24
24
24
25
2023
£’m
249.4
41.7
324.4
227.5
11.0
1.1
855.1
125.1
93.4
34.5
2.4
1.9
1.7
259.0
2022
£’m
266.5
37.0
322.6
237.1
22.4
1.3
886.9
138.8
123.3
56.3
—
3.6
—
322.0
1,114.1
1,208.9
127.5
—
8.0
3.0
138.5
36.7
207.4
5.0
85.2
334.3
472.8
641.3
63.2
200.0
141.6
(1.5)
75.4
(213.1)
2.1
0.5
373.1
641.3
—
641.3
152.4
2.1
9.8
3.0
167.3
36.1
247.0
6.7
90.7
380.5
547.8
661.1
63.2
200.0
141.6
(1.3)
75.4
(213.1)
3.0
0.3
391.2
660.3
0.8
661.1
Marshalls plc | Annual Report and Accounts 2023
117
Financial Statements
Notes
7
10
11
6
2023
£’m
18.4
3.8
22.2
21.4
7.3
9.8
12.1
(0.6)
(1.4)
2.8
18.8
92.4
25.8
10.1
(23.7)
104.6
(16.5)
(10.4)
77.7
6.9
0.1
(3.0)
(18.3)
(2.5)
(1.4)
(18.2)
—
(0.3)
—
(84.4)
44.8
(9.6)
(31.6)
(81.1)
(21.6)
56.3
(0.2)
34.5
2022
£’m
26.5
10.7
37.2
21.8
14.0
11.3
9.1
—
(1.2)
1.2
10.7
104.1
22.9
(4.1)
(16.1)
106.8
(9.9)
(11.6)
85.3
1.4
—
(86.2)
(27.8)
(2.3)
—
(114.9)
182.7
(1.1)
(1.2)
(389.7)
303.5
(11.1)
(38.7)
44.4
14.8
41.2
0.3
56.3
Financial Statements continued
Consolidated Cash Flow Statement
for the year ended 31 December 2023
Profit for the financial year
Income tax expense
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Asset impairments
Depreciation of right-of-use assets
Amortisation
Gain on disposal of subsidiaries
Gain on sale of property, plant and equipment
Equity settled share‑based payments
Financial income and expenses (net)
Operating cash flow before changes in working capital
Decrease in trade and other receivables
Decrease/(increase) in inventories
Decrease in trade and other payables
Cash generated from operations
Financial expenses paid
Income tax paid
Net cash flow from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Financial income received
Acquisition of subsidiary undertaking
Acquisition of property, plant and equipment
Acquisition of intangible assets
Cash outflow on disposal of subsidiaries
Net cash flow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Payments to acquire own shares
Payment in respect of share‑based payment award
Repayment of borrowings
Drawdown of borrowings
Cash payment for the principal portion of lease liabilities
Equity dividends paid
Net cash flow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate fluctuations
Cash and cash equivalents at the end of the year
118
Marshalls plc | Annual Report and Accounts 2023
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Attributable to equity holders of the Company
Share
capital
£’m
Share
premium
account
£’m
Merger
reserve
£’m
Capital
Own redemption Consolidation
reserve
£’m
reserve
£’m
shares
£’m
Hedging
reserve
£’m
Foreign
exchange
reserve
£’m
Retained
earnings
£’m
Non-
controlling
interests
£’m
Total
£’m
Total
equity
£’m
Current year
At 1 January 2023
Total
comprehensive
income/(expense)
for the year
Profit for the
financial year
Other
comprehensive
(expense)/income
Foreign currency
translation
differences
Reclassification on
Sale of Subsidiary
Effective portion
of changes in fair
value of cash
flow hedges
Net change in fair
value of cash flow
hedges transferred
to the Income
Statement
Deferred tax arising
Defined benefit
plan actuarial loss
Deferred tax arising
Total other
comprehensive
(expense)/income
Total
comprehensive
(expense)/income
for the year
Share-based
payments
Deferred tax
on share‑based
payments
Corporation tax
on share‑based
payments
Dividends to equity
shareholders
Purchase of
own shares
Own shares issued
under share
scheme
Total contributions
by and
distributions to
owners
Total transactions
with owners of
the Company
At 31 December
2023
63.2
200.0
141.6
(1.3)
75.4
(213.1)
3.0
0.3
391.2
660.3
0.8
661.1
—
—
—
—
—
—
—
—
18.6
18.6
(0.2)
18.4
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.3)
0.1
—
(0.2)
—
(0.2)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.1)
—
(0.1)
—
(0.1)
0.3
(0.3)
—
(0.6)
(0.6)
—
(0.6)
—
—
(0.6)
—
(0.6)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1.1)
0.8
—
—
—
—
—
—
—
—
(9.8)
2.4
(1.1)
0.8
(9.8)
2.4
—
—
—
—
(1.1)
0.8
(9.8)
2.4
(0.9)
0.2
(7.7)
(8.4)
(0.6)
(9.0)
(0.9)
0.2
10.9
10.2
(0.8)
9.4
—
—
—
—
—
—
—
—
—
—
—
—
—
2.8
2.8
(0.1)
(0.1)
—
—
(31.6)
(31.6)
—
(0.3)
(0.1)
—
—
—
—
—
—
—
2.8
(0.1)
—
(31.6)
(0.3)
—
—
(29.0)
(29.2)
—
(29.2)
(0.9)
0.2
(18.1)
(19.0)
(0.8)
(19.8)
63.2
200.0
141.6
(1.5)
75.4
(213.1)
2.1
0.5
373.1
641.3
—
641.3
Marshalls plc | Annual Report and Accounts 2023
119
Financial Statements Financial Statements continued
Consolidated Statement of Changes in Equity continued
for the year ended 31 December 2022
Attributable to equity holders of the Company
Share
capital
£’m
Share
premium
account
£’m
Merger
reserve
£’m
Capital
Own redemption Consolidation
reserve
£’m
reserve
£’m
shares
£’m
Hedging
reserve
£’m
Foreign
exchange
reserve
£’m
Retained
earnings
£’m
Non-
controlling
interests
£’m
Total
£’m
Total
equity
£’m
50.0
24.5
—
(0.6)
75.4
(213.1)
0.8
—
406.3
343.3
1.0
344.3
—
—
—
—
—
—
—
—
26.8
26.8
(0.3)
26.5
—
—
—
—
—
—
—
—
13.2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1.1)
0.4
180.2
(4.7)
141.6
—
—
—
—
—
—
—
—
—
—
—
—
—
13.2
175.5
141.6
(0.7)
13.2
175.5
141.6
(0.7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
0.3
5.7
—
(2.8)
(0.7)
—
—
—
—
—
—
—
—
—
—
(3.1)
0.8
0.3
0.1
0.4
5.7
—
5.7
(2.8)
(0.7)
(3.1)
0.8
—
—
—
—
(2.8)
(0.7)
(3.1)
0.8
2.2
0.3
(2.3)
0.2
0.1
0.3
2.2
0.3
24.5
27.0
(0.2)
26.8
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
335.0
(4.7)
—
(0.6)
(0.6)
0.1
0.1
(38.7)
(38.7)
—
(1.1)
(0.4)
—
—
—
—
—
—
—
—
—
335.0
(4.7)
—
(0.6)
0.1
(38.7)
(1.1)
—
—
(39.6)
290.0
—
290.0
2.2
0.3
(15.1)
317.0
(0.2)
316.8
63.2
200.0
141.6
(1.3)
75.4
(213.1)
3.0
0.3
391.2
660.3
0.8
661.1
Current year
At 1 January 2022
Total
comprehensive
income/(expense)
for the year
Profit for the
financial year
Other
comprehensive
income/(expense)
Foreign currency
translation
differences
Effective portion
of changes in fair
value of cash
flow hedges
Net change in fair
value of cash flow
hedges transferred
to the Income
Statement
Deferred tax arising
Defined benefit
plan actuarial loss
Deferred tax arising
Total other
comprehensive
income/(expense)
Total
comprehensive
income/(expense)
for the year
Shares issued
Share issue costs
Share-based
payments
Deferred tax on
share-based
payments
Corporation tax
on share‑based
payments
Dividends to equity
shareholders
Purchase of
own shares
Own shares issued
under share
scheme
Total contributions
by and
distributions
to owners
Total transactions
with owners of
the Company
At 31 December
2022
120
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements
1 Accounting policies
Significant accounting policies
General Information
Marshalls plc (the “Company”) is a public company limited by shares, incorporated in the United Kingdom under the Companies Act 2006,
and is registered in England and Wales. The Consolidated Financial Statements of the Company for the year ended 31 December 2023
comprise the Company and its subsidiaries (together referred to as the “Group”).
The Consolidated Financial Statements were authorised for issue by the Directors on 18 March 2024.
The Company’s registered address is Landscape House, Premier Way, Lowfields Business Park, Elland HX5 9HT.
The Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in
the Strategic Report on pages 1 to 63. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are also
set out in the Strategic Report. In addition, Note 20 includes the Group’s policies and procedures for managing its capital; its financial risk
management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.
Basis of preparation
The Group Consolidated Financial Statements have been prepared and approved by the Directors in accordance with International
Accounting Standards and International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board
(“IASB”)”. The Parent Company has elected to prepare its Financial Statements in accordance with FRS 101 ”Reduced Disclosure Framework”
and these are presented on pages 153 to 164.
The Consolidated Financial Statements are prepared on the historical cost basis except that the following assets and liabilities are stated at
their fair value: employee benefits, derivative financial instruments and liabilities for cash settled share‑based payments. The Consolidated
Financial Statements are presented in Sterling, rounded to the nearest million. Sterling is the currency of the primary economic environment
in which the Group operates. The material accounting policies, which have been applied consistently, are set out later in the section.
In assessing the appropriateness of adopting the going concern basis in the preparation of the Annual Report, the Board has considered the
Group’s financial forecasts and its principal risks for a period of at least twelve months from the date of this report. The forecasts included
projected profit and loss, balance sheet, cash flows, headroom against debt facilities and covenant compliance. The financial forecasts
have been stress tested in downside scenarios to assess the impact on future profitability, cash flows, funding requirements and covenant
compliance. The scenarios comprise a more severe economic downturn (which represents the Group’s most significant risk) than that
included in the base case forecast, and a reverse stress test on our financial forecasts to assess the extent to which an economic downturn
would need to impact on revenues in order to breach a covenant. This showed that revenue would need to deteriorate by 20 per cent from
the financial forecast and the Directors have a reasonable expectation that it is unlikely to deteriorate to this extent.
Details of the Group’s funding position are set out in Note 20. At 31 December 2023, £160 million of the facility was undrawn. There are
two financial covenants in the bank facility that are tested on a semi‑annual basis and the Group maintains good cover against these with
pre-IFRS 16 net debt to EBITDA of 1.9 times (covenant maximum of three times) and interest cover of 5.1 times (covenant minimum of
three times).
Taking these factors into account, the Board has the reasonable expectation that the Group has adequate resources to continue in operation
for the foreseeable future and for this reason, the Board has adopted the going concern basis in preparing this Annual Report.
In the current year, the Group has applied a number of amendments to IFRSs issued by the International Accounting Standards Board
(“IASB”) that are mandatorily effective for an accounting period that begins on or after 1 January 2023. Their adoption has not had any
material impact on the disclosure or on the amounts reported in these Consolidated Financial Statements.
• Amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2 “Making Materiality Judgements – Disclosure
of Accounting Policies”
• Amendments to IAS 12 “Income Taxes – Deferred Tax related to Assets and Liabilities arising from a Single Transaction”
• Amendments to IAS 12 “Income Taxes – International Tax Reform – Pillar Two Model Rules”
• Amendments to IAS 8 “Accounting Polices, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates”
At the date of authorisation of these Consolidated Financial Statements, the Group has not applied the following new and revised IFRS
Standards that have been issued but are not yet effective:
• Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an investor and its Associates or Joint Venture”
• Amendments to IAS 1 “Clarification of Liabilities as Current or Non-current”
• Amendments to IAS 1 “Non-current Liabilities with Covenants”
• Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements”
• Amendment to IFRS 16 “Lease Liability in a Sale and Leaseback”
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the Consolidated Financial
Statements of the Group in future periods.
Alternative performance measures and adjusting items
The Group uses alternative performance measures (“APMs”) which are not defined or specified under IFRS. The Group believes that these
APMs, which are not considered to be a substitute for IFRS measures, provide additional helpful information. APMs are consistent with
how business performance is planned, reported and assessed internally by management and the Board and provide additional comparative
information. A glossary setting out the APMs that the Board use, how they are used, an explanation of how they are calculated, and a
reconciliation of the APMs to the statutory results, where relevant, is set out at Note 33.
Adjusting items are items that are unusual because of their size, nature or incidence and which the Directors consider should be disclosed
separately to enable a full understanding of the Group’s results and to demonstrate the Group’s capacity to deliver dividends to shareholders.
Details of the adjusting items are disclosed in Note 4 and Note 33.
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Financial Statements 1 Accounting policies continued
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Consolidated Financial Statements requires the Group to make estimates and judgements that affect the application of
policies and reported accounts. Critical judgements represent key decisions made by the Board in the application of the Group accounting
policies. Where a significant risk of materially different outcomes exists due to the Board’s assumptions or sources of estimation uncertainty,
this will represent a critical accounting estimate. Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may
differ from these estimates. The estimates and judgements which have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities are discussed below.
Critical accounting judgements
The following critical accounting judgements has been made in the preparation of the Consolidated Financial Statements:
• As noted, adjusting items have been highlighted separately due to their size, nature or incidence to provide a full understanding of the
Group’s results and to demonstrate the Group’s capacity to deliver dividends to shareholders. The determination of whether items merit
treatment as an adjusting item is a matter of judgement. Note 4 sets out details of the adjusting items.
Sources of estimation uncertainty
The Directors consider the following to be key sources of estimation uncertainty:
• In arriving at the accounting value of the Group’s defined benefit pension scheme, key assumptions have to be made in respect of
factors including discount rates and inflation rates. These are determined on the basis of advice received from a qualified actuary.
These estimates may be different to the actual outcomes. See further information in Note 21.
• The carrying value of goodwill is reviewed on an annual basis in accordance with IAS 36. This review requires the use of cash flow
projections based on a financial forecast that are discounted at an appropriate market‑based discount rate. The assumption on the
market‑based discount rate is determined based on the advice of a third‑party adviser. The actual cash flows generated by the business
may be different to the estimates included in the forecasts. See further information in Note 12.
Material accounting policy information
Basis of consolidation
The Consolidated Financial Statements incorporate the Financial Statements of the Company and the entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is achieved when the Company has power over the investee; is exposed, or
has rights, to variable returns from its involvement with the investee; and has the ability to use its power to affect its returns.
All intra‑Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between Group companies are
eliminated on consolidation. The accounting policies of the subsidiaries are consistent with the accounting policies of the Group.
Revenue
Revenue from the sale of goods is recognised in the Consolidated Income Statement when the performance obligations to customers have
been satisfied. Revenue represents the invoiced value of sales to customers less returns, allowances, rebates and value added tax.
Revenue is recorded typically on despatch of the Group’s products, when performance obligations to customers are satisfied. Products
are usually delivered on the same day. Amounts due from customers are payable by customers on standard credit terms and there is no
significant financing component or variable consideration within amounts due from customers. There are no significant obligations arising
in relation to returns, refunds, warranties or similar obligations. Revenue earned from any contractually distinct installation process is
recognised when the Group has fulfilled all its obligations under the installation contract.
Segmental reporting
IFRS 8 “Operating Segments” requires operating segments to be identified on the basis of discrete financial information about components
of the Group that are regularly reviewed by the Group’s Chief Operating Decision Maker (“CODM”) to allocate resources to the segments
and to assess their trading performance. As far as Marshalls is concerned, the CODM is regarded as being the Board. The Group has three
reporting segments: Landscape Products; Building Products; and Roofing Products.
Share-based payments
The Group enters into equity settled share‑based payment transactions with its employees. In particular, annual awards are made to
employees under the Company’s Management Incentive Plan (“MIP”).
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured
at grant date and spread over the period during which the employees become unconditionally entitled to the options. Where appropriate,
the fair value of the options granted is measured using the Black-Scholes option valuation model, considering the terms and conditions
upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of awards for which
the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and non-market performance conditions at the vesting date.
Current tax relief is available as shares vest based on the value at the date of vesting. A deferred tax asset is recognised at grant date
based on the number of shares expected to be issued, at the value at which they are expected to be issued, proportioned in line with the
vesting period.
Financial expenses
Net financial expenses comprise interest on obligations under the defined benefit pension scheme, the expected return on scheme assets
under the defined benefit pension scheme, interest payable on borrowings calculated using the effective interest rate method, interest
expense arising on leases in accordance with IFRS 16, interest receivable on funds invested, foreign exchange gains and losses and gains
and losses on hedging instruments that are recognised in the Consolidated Income Statement.
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Notes to the Consolidated Financial Statements continued 1 Accounting policies continued
Material accounting policy information continued
Foreign currency translation
Transactions in foreign currencies are translated to Sterling at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the foreign exchange rate
ruling at that date. Foreign exchange differences arising on translation are recognised in the Consolidated Income Statement. Non-monetary
assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of
the transaction and are not retranslated.
For the purposes of presenting Consolidated Financial Statements, the assets and liabilities of the Group’s foreign operations are translated
at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of transactions
are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a foreign exchange
translation reserve (attributed to non-controlling interests as appropriate).
Income tax
Income tax on the profit or loss for the year comprises current and deferred taxation. Income tax is recognised in the Consolidated Income
Statement except to the extent that it relates to items recognised directly in other comprehensive income or in equity, in which case it is
recognised accordingly. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxation is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences
are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable
profit, other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not
reverse in the foreseeable future. The amount of deferred taxation provided is based on the expected manner of realisation or settlement of
the carrying amount of assets and liabilities, using tax rates that are expected to apply when the temporary difference reverses, based on
rates that have been enacted or substantively enacted at the balance sheet date. A deferred taxation asset is recognised only to the extent
that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred taxation assets are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost comprises
the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable
to making the asset capable of operating as intended (including appropriate elements of internal costs). Where parts of an item of property,
plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The Group
recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost
is incurred if it is probable that the future economic benefits embodied within the item will flow to the Group and the cost of the item can
be measured reliably. All other costs are recognised in the Consolidated Income Statement as an expense as incurred.
Depreciation is charged to the Consolidated Income Statement on a straight line basis over the estimated useful lives of each part of an
item of property, plant and equipment as follows:
Freehold buildings
20 to 40 years;
Fixed plant and equipment
4 to 30 years;
Mobile plant and equipment 3 to 7 years; and
Quarries are based on the rate of extraction.
Freehold land is not depreciated. The residual values, useful economic lives and depreciation methods are reassessed annually. Estimated
costs associated with the restoration of quarries are charged in accordance with IAS 37 when costs can be measured with an appropriate
degree of precision.
Right-of-use assets and leases
IFRS 16 distinguishes leases and service contracts on the basis of whether an identified asset is controlled by a customer. A right‑of‑use
asset and a corresponding liability are recognised for all leases except for short-term leases and leases of low-value assets. The right-of-use
asset is initially measured at cost and subsequently measured at cost less accumulated depreciation and impairment losses, adjusted for
any remeasurement of the lease liability. Right-of-use assets are depreciated on a straight line basis over the duration of the lease, which
excluding property leases, is typically between 4 to 8 years. The Group’s leases principally comprise commercial vehicles and trailers,
forklift trucks, motor vehicles, certain property assets and fixed plant.
The lease liability is initially measured at the present value of the lease payments that are not paid at that date. Subsequently, the lease
liability is adjusted for interest and lease payments, as well as for the impact of lease modifications, amongst others. Lease liabilities are
discounted at an incremental borrowing rate calculated as the rate of interest which the Group would have been able to borrow for a similar
term with a similar security of funds necessary to obtain a similar asset in a similar market.
Short-term leases, with a duration of less than twelve months, are accounted for in accordance with the recognition exemption in IFRS 16
and hence related payments are expensed as incurred. The Group also utilises the option to apply the recognition exemption for low-value
assets (with a value of less than the equivalent of £5,000), which means that related payments have been expensed as incurred.
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123
Financial Statements
1 Accounting policies continued
Material accounting policy information continued
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the identifiable net assets of the acquired subsidiary at the
date of acquisition. Goodwill is recognised initially as an asset at cost, allocated to cash generating units and is measured subsequently at
cost less impairment losses.
Goodwill is not amortised but is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
Impairment is tested by comparing the recoverable amount of the CGU with the carrying value of certain net assets of the CGUs with any
impairment charge being allocated initially to goodwill. The recoverable amount of assets of CGUs is the greater of their fair value less
costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre‑
tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Any impairment
arising is recognised immediately in the Income Statement and subsequent reversals of impairment losses for goodwill are not recognised.
Details of the December 2023 impairment review are set out at Note 12.
Intangible assets
Intangible assets acquired separately are initially measured at cost. Intangible assets arising on business combinations are initially
measured at fair value. Following initial recognition, intangible assets are carried at cost or fair value less accumulated amortisation and
accumulated impairment losses, if any. Internally generated intangible assets, excluding software development and capitalised development
costs, are not capitalised and expenditure is reflected in the Income Statement in the year in which the expenditure is incurred.
All current intangible assets have finite lives and are amortised on a straight line basis over their expected useful life and are assessed for
impairment whenever there is an indication that the intangible asset may be impaired. Amortisation of intangible assets is provided over
the following expected useful economic lives: Brand names 20 to 25 years; Customer and supplier relationships 5 to 20 years; Patents,
trademarks and know‑how 2 to 20 years; Development costs 10 to 20 years; and Software 5 to 10 years.
Post-retirement benefits
Any net obligation in respect of the Group’s defined benefit pension scheme is calculated by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value
and the fair value of any scheme assets is deducted. The discount rate is the yield at the balance sheet date on AA credit-rated corporate
bonds that have maturity dates approximating to the terms of the Group’s obligations. The calculation is performed by a qualified actuary
using the projected unit credit method. Net interest is calculated by applying a discount rate to the net defined benefit liability or asset.
If the calculation results in a surplus, the resulting asset is measured at the present value of any economic benefits available in the form
of refunds from the plan, or reductions in future contributions to the plan. The present value of these economic benefits is discounted by
reference to market yields at the balance sheet date on high‑quality corporate bonds. When the benefits of the scheme are improved, the
portion of the increased benefit relating to past service by employees is recognised as an expense in the Income Statement in the period
of the scheme amendment. Actuarial gains and losses that arise in calculating the Group’s obligation in respect of a plan are recognised
immediately within the Consolidated Statement of Comprehensive Income.
Obligations for contributions to defined contribution schemes are recognised as an expense in the Income Statement as incurred.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business, less the estimated costs to completion and of selling expenses. The cost of inventories is based on the first‑in, first‑out principle
and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of
manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity,
which were incurred in bringing the inventories to their present location and condition.
Trade and other receivables
Trade and other receivables are stated at initial recognition, at their transaction price (as defined in IFRS 15) if the trade receivables do not
contain a significant financial component in accordance with IFRS 15 (or when the entity applies the practical expedient in accordance
with paragraph 63 of IFRS 15). Subsequent to initial recognition they are accounted for at amortised cost. Trade receivables are stated
gross of a provision for expected credit losses. This provision has been determined using a lifetime expected credit loss calculation.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the Consolidated Cash
Flow Statement. For the purposes of the statement of cash flows, cash and cash equivalents as defined above, net of outstanding bank
overdrafts which are repayable and form an integral part of the Group’s cash management. Such overdrafts are presented as short-term
borrowings in the statement of financial position to the extent the Group does not have the right and intention to settle net.
Assets classified as held for sale
Assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Assets are classified as held
for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded
as met only when the sale is highly probable and expected to be completed within one year from the date of classification, and the asset is
available for immediate sale in its present condition.
Trade and other payables
Trade and other payables are stated at initial recognition, at their fair value and subsequently at amortised cost.
Interest-bearing loans and borrowings
Interest‑bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective interest rate method.
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Notes to the Consolidated Financial Statements continued 1 Accounting policies continued
Material accounting policy information continued
Provisions
A provision is recognised in the Consolidated Balance Sheet when the Group has a present legal or constructive obligation as a result of
a past event, it can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If
the effect is material, provisions are determined by discounting the expected future cash flows at a pre‑tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. A provision for restructuring is recognised when the Group
has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. Future
operating costs are not provided for.
Derivative financial instruments
The Group uses derivative financial instruments to hedge its exposure to interest rate, foreign exchange and fuel pricing risks arising from
operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial
instruments for speculative purposes. Derivative financial instruments are recognised at fair value and transaction costs are recognised
in the Income Statement when incurred. The gain or loss on remeasurement to fair value is recognised immediately in the Consolidated
Income Statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature
of the item being hedged (see below).
Classification and measurement
The classification of financial assets is based both on the business model within which the asset is held and the contractual cash flow
characteristics of the asset. There are three principal classification categories for financial assets that are debt instruments: (i) amortised
cost; (ii) fair value through other comprehensive income (“FVTOCI”); and (iii) fair value through profit or loss (“FVTPL”). Under IFRS 9,
derivatives embedded in financial assets are not bifurcated but instead the whole hybrid contract is assessed for classification.
Impairment
Credit losses and expected credit losses are recognised in accordance with IFRS 9. The amount of expected credit losses is updated at
each reporting date. The IFRS 9 impairment model has been applied to the Group’s financial assets that are debt instruments measured
at amortised cost or FVTOCI. The Group has applied the simplified approach to recognise lifetime expected credit losses for its trade
receivables, as required or permitted by IFRS 9.
Hedging
The Group has elected to apply the IFRS 9 hedge accounting requirements because they align more closely with the Group’s risk
management policies. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset
or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised
directly in the Consolidated Statement of Comprehensive Income. When the forecast transaction subsequently results in the recognition of
a non‑financial asset or non‑financial liability, the associated cumulative gain or loss is removed from equity and included in the initial cost
or other carrying amount of the non‑financial asset. For cash flow hedges, other than those covered by the preceding policy statement, the
associated cumulative gain or loss is removed from equity and recognised in the Consolidated Income Statement in the same period or
periods during which the hedged forecast transaction affects the income or expense. The ineffective part of any gain or loss is recognised
immediately in the Consolidated Income Statement.
When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship, but the
hedged forecast transaction is still expected to occur, it no longer meets the criteria for hedge accounting. The cumulative gain or loss at
that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is
no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the Consolidated
Income Statement and cash flow hedge accounting is discontinued prospectively.
Share capital
Marshalls plc has only Ordinary Share capital. These shares, with a nominal value of 25 pence per share, are classified as equity.
Transactions of the Group‑sponsored Employee Benefit Trust are included in the Group Financial Statements. The Trust’s purchases of
shares in the Company are debited directly to equity and disclosed separately in the balance sheet as “own shares”.
The following paragraphs summarise the significant accounting policies of the Group, which have been applied in dealing with items which
are considered material in relation to the Group’s Consolidated Financial Statements.
The Group has applied all accounting standards and interpretations issued by the IASB and International Financial Reporting Committee
relevant to its operations and which are effective in respect of these Financial Statements.
Impairment
The carrying amounts of the Group’s assets, other than inventories and goodwill, are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss
is reversed if there has been a change in the estimates used to determine the recoverable amount. Any impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
Marshalls plc | Annual Report and Accounts 2023
125
Financial Statements 2 Segmental analysis
Segment revenues and operating profit
Revenue
Landscape Products
Building Products
Roofing Products
Revenue
Operating profit
Landscape Products
Building Products
Roofing Products
Central costs
Adjusted operating profit
Adjusting items (see Note 4)
Reported operating profit
Net finance charges (Note 6)
Profit before tax
Taxation (Note 7)
Profit after tax
2023
£’m
321.5
170.1
179.6
671.2
21.3
12.2
44.9
(7.7)
70.7
(29.7)
41.0
(18.8)
22.2
(3.8)
18.4
2022
£’m
394.1
193.1
132.2
719.4
45.3
26.8
34.4
(5.4)
101.1
(53.2)
47.9
(10.7)
37.2
(10.7)
26.5
The Group has two customers which each contributed more than 10 per cent of total revenue in the current and prior year.
The accounting policies of the three operating segments are the same as the Group’s accounting policies. Segment profit represents the
profit earned without allocation of certain central administration costs that are not capable of allocation. Centrally administered overhead
costs that relate directly to the reportable segment are included within the segment’s results.
Geographical destination of revenue
The geographical destination of revenue is the United Kingdom £662.8 million (2022: £687.9 million) and Rest of the World £8.4 million
(2022: £31.5 million).
Segment assets
Property, plant and equipment, right‑of‑use assets, intangible assets and inventory:
Landscape Products
Building Products
Roofing Products
Total segment property, plant and equipment, right‑of‑use assets, intangible assets and inventory
Unallocated assets
Consolidated total assets
2023
£’m
240.8
142.0
587.7
970.5
143.6
1,114.1
2022
£’m
260.5
148.4
593.1
1,002.0
206.9
1,208.9
For the purpose of monitoring segment performance and allocating resources between segments, the Group’s CODM monitors the property,
plant and equipment, right‑of‑use assets, intangible assets and inventory. Assets used jointly by reportable segments are not allocated to
individual reportable segments.
Other segment information
Landscape Products
Building Products
Roofing Products
Included in adjusting items (Note 4)
Depreciation
and amortisation
Property, plant and equipment, right‑of‑use
asset and intangible asset additions
2023
£’m
19.5
8.0
5.4
32.9
10.4
43.3
2022
£’m
22.3
8.8
3.8
34.9
7.3
42.2
2023
£’m
23.1
4.9
5.9
33.9
—
33.9
2022
£’m
37.0
4.6
2.0
43.6
—
43.6
Depreciation and amortisation includes £10.4 million (2022: £7.3 million) of amortisation of intangible assets arising from the purchase
price allocation exercises comprising £0.1 million (2022: £0.1 million) in Landscape Products, £1.1 million (2022: £1.1 million) in Building
Products and £9.2 million (2022: £6.1 million) in Roofing Products. The amortisation has been treated as an adjusting item (Note 4).
Impairments of £7.3 million (2022: £9.9 million) within property, plant and equipment comprise £1.8 million (2022: £8.2 million) in
Landscape Products, £4.3 million (2022: £1.7 million) in Building Products and £1.2 million (2022: £nil) in Roofing Products.
126
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
3 Net operating costs
Raw materials and consumables
Changes in inventories of finished goods and work in progress
Personnel costs (Note 5)
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Asset impairments
Own work capitalised
Other operating costs
Redundancy and other costs
Operating costs
Other operating income
Net gain on asset and property disposals
Net gain on disposal of subsidiary
Net operating costs
Adjusting items (Note 4)
Adjusted net operating costs
Net operating costs include:
Auditor’s remuneration (see below)
Short-term and low-value lease costs
Research and development costs
In respect of the year under review, Deloitte LLP carried out work in relation to:
Audit of Financial Statements of Marshalls plc
Audit of Financial Statements of subsidiaries of the Company
2023
£’m
235.4
12.9
151.6
21.4
9.8
12.1
7.3
(2.5)
177.5
9.3
634.8
(2.6)
(1.4)
(0.6)
630.2
(29.7)
600.5
2023
£’m
0.8
7.1
3.6
2023
£’m
0.1
0.7
0.8
2022
£’m
267.3
6.6
155.5
21.8
11.3
9.1
14.0
(3.1)
189.3
2.9
674.7
(2.0)
(1.2)
—
671.5
(53.2)
618.3
2022
£’m
0.9
7.0
3.5
2022
£’m
0.1
0.8
0.9
These fees include a cost of £40 thousand associated with Deloitte LLP’s review of the Group’s Half Year Report (2022: £35 thousand).
Marshalls plc | Annual Report and Accounts 2023
127
Financial Statements
4 Adjusting items
Amortisation of intangible assets arising on acquisition (i)
Redundancy and similar costs (ii)
Impairment of property, plant and equipment (ii)
Contingent consideration (iii)
Disposal of/impairment of assets in the Belgian subsidiary (iv)
Transaction related costs (v)
Fair Value adjustment to inventory (vi)
Adjusting items within operating profit (Note 3)
Adjusting items within financial expenses (vii) (Note 6)
Adjusting items before taxation
Current tax on adjusting items (Note 7)
Deferred tax on adjusting items (Note 7)
Adjusting items after taxation
Notes:
2023
£’m
10.4
11.3
7.0
1.6
(0.6)
—
—
29.7
1.4
31.1
(2.7)
(4.7)
23.7
2022
£’m
7.3
4.2
8.8
3.9
10.2
14.9
3.9
53.2
—
53.2
(1.6)
(4.8)
46.8
(i)
(ii)
Amortisation of intangible assets arising on acquisitions is principally in respect of values recognised for the Marley brand and its
customer relationships.
Impairment charges, restructuring and similar costs arose during major restructuring exercises conducted in 2023 and the second half
of 2022 when the Group took steps to reduce manufacturing capacity and the cost base in response to a reduction in market demand.
(iii)
The additional contingent consideration relates to the reassessment of the amounts that will become payable to vendors arising in
relation to Marley’s acquisition of Viridian Solar Limited in 2021.
(iv)
On 14 April 2023, the Group’s interest in the former Belgian subsidiary was sold for a nominal consideration. This consideration was
higher than the net carrying value on this date which resulted in a non‑recurring profit of £0.6 million. In 2022 following a downturn
in the business’ performance, the assets were impaired to fair value which was lower than the value in use. This was based on the
Directors’ assessment and consideration of observable market information. The impairment charge comprised property, plant and
equipment (£1.1 million), intangible assets (£0.7 million), right‑of‑use assets (£3.4 million) and inventory (£5.0 million).
(v)
In 2022, transaction related costs relating to the acquisition of Marley Group plc. These comprise the fees charged by
professional advisers.
(vi)
In 2022, the unwind of the inventory fair value adjustment relates to the fair value uplift of the inventory as part of the Marley acquisition
that has subsequently been sold. This item has been shown as an adjusting item to align with the internal reporting and to present a
margin consistent with that which would have been reported in the absence of a recent acquisition transaction.
(vii) The adjusting item in interest expense of £1.4 million is a non‑cash technical accounting charge arising from the resolution of certain
historical benefit issues. An allowance of £6.5 million was included in the net pension scheme asset at December 2022 and following
the resolution of the benefit issues, this has been reduced to £5.5 million. This net reduction of £1.0 million comprised a profit and loss
account charge of £1.4 million arising from the decision by the Board to not reduce pensions to payment to certain pensioners who
were receiving payments that are too high and £2.4 million credit to the condensed statement of comprehensive income relating to
adjustments to estimates. Further information on the accounting for the retirement benefit asset is set out at Note 21.
128
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
5 Personnel costs
Personnel costs (including amounts charged in the year in relation to Directors):
Wages and salaries
Social security costs
Share-based payments
Contributions to defined contribution pension scheme
Included in net operating costs (Note 3)
Personnel costs relating to redundancy and other costs (Note 3)
Total personnel costs
Remuneration of Directors:
Salary
Other benefits
MIP Element A bonus
MIP Element B bonus
Amounts receivable under MIP A and MIP B that are no longer subject to forfeiture risk
Amounts receivable under the MIP at the end of cycle 3
Salary supplement in lieu of pension
Non-Executive Directors’ fees and fixed allowances
2023
£’m
122.7
13.5
2.8
12.6
151.6
9.3
160.9
2023
£’m
1.5
0.1
0.3
0.1
—
0.7
0.1
0.5
3.3
2022
£’m
126.2
15.1
1.2
13.0
155.5
2.9
158.4
2022
£’m
1.3
0.1
0.1
0.2
0.1
—
0.1
0.5
2.4
The aggregate of emoluments and amounts receivable under the Management Investment Plan (“MIP”) of the highest paid Director was
£0.1 million (2022: £1.0 million), including a salary supplement in lieu of pension of £nil million (2022: £0.1 million).
There are no Directors to whom retirement benefits are accruing in respect of qualifying services. As set out in the Annual Remuneration
Report on page 92, the Executive Directors receive a salary supplement in lieu of pension equal to their contractual entitlements.
Further details of Directors’ remuneration, share options, Long‑term Incentive Plans (“LTIPs”) and Directors’ pension entitlements are
disclosed in the Remuneration Committee Report on pages 88 to 102.
The average monthly number of persons employed by the Group during the year was:
Continuing operations
6 Financial expenses and income
(a) Financial expenses
Interest expense on bank loans
Interest expense on lease liabilities
Net interest expense on defined benefit pension scheme
(b) Adjusting items
Adjusting interest expense on defined benefit pension scheme (Note 4)
(c) Financial income
Interest receivable and similar income
Net financial expenses
2023
Number
2,934
2022
Number
3,293
2023
£’m
14.7
2.5
0.2
17.4
1.4
(0.1)
18.8
2022
£’m
8.2
2.4
0.1
10.7
—
—
10.7
Net interest expense on the defined benefit pension scheme is disclosed net of Company recharges for scheme administration (Note 21).
Marshalls plc | Annual Report and Accounts 2023
129
Financial Statements
7 Income tax expense
Current tax expense
Current year
Adjustments for prior years
Deferred taxation expense
Origination and reversal of temporary differences:
Current year
Adjustments for prior years
Total tax expense
Current tax on adjusting items (Note 4)
Deferred tax on adjusting items (Note 4)
Total adjusted tax expense
Reconciliation of effective tax rate
Profit before tax
Tax using domestic corporation tax rate
Impact of capital allowances in excess of depreciation
Short-term timing differences
Adjustment to tax charge in prior year
Expenses not deductible for tax purposes
Corporation tax charge for the year
Impact of capital allowances in excess of depreciation
Short-term timing differences
Pension scheme movements
Transaction related costs
Other items
Adjustment to tax charge in prior year
Impact of the change in the rate of corporation tax on deferred taxation
Total tax charge for the year
2023
%
100.0
23.5
10.4
2.7
(6.3)
3.1
33.4
(10.4)
(0.5)
(1.8)
—
—
(2.7)
(0.9)
17.1
2023
£’m
22.2
5.2
2.3
0.6
(1.4)
0.7
7.4
(2.3)
(0.1)
(0.4)
—
—
(0.6)
(0.2)
3.8
2023
£’m
8.8
(1.4)
7.4
(3.0)
(0.6)
3.8
2.7
4.7
11.2
2022
%
100.0
19.0
(13.9)
2.5
(1.5)
23.5
29.6
13.7
—
(0.1)
(12.9)
0.4
(2.9)
0.9
28.7
2022
£’m
11.6
(0.6)
11.0
0.8
(1.1)
10.7
1.6
4.8
17.1
2022
£’m
37.2
7.1
(5.1)
0.9
(0.6)
8.7
11.0
5.1
—
—
(4.8)
0.2
(1.1)
0.3
10.7
The net amount of deferred taxation debited to the Consolidated Statement of Comprehensive Income in the year was £3.2 million
(2022: debited £0.1 million).
The Group operates in the United Kingdom which has enacted new legislation to implement the global minimum top-up tax. The Group
does not expect to be subject to the top‑up tax in relation to its operations in these jurisdictions as both the statutory tax rates and adjusted
effective tax rates are expected to continue to be above 15 per cent. The newly enacted legislation is only effective from 1 January 2024 so
there is no current tax impact for the year ended 31 December 2023.
The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and will account for it
as current tax when it is incurred. If top‑up tax had been applied in 2023 the Group would not expect that any top‑up tax would have arisen.
The majority of the Group’s profits are earned in the UK with an average rate of corporation tax being 23.5 per cent for the year to
31 December 2023. The UK corporate tax rate increased to 25 per cent from April 2023 and the deferred taxation liability at 31 December
2023 has been calculated at 25 per cent, which is the rate at which the deferred tax is expected to unwind in the future.
Capital allowances are tax reliefs provided in law for the expenditure the Group makes on fixed assets. The rates are determined by
Parliament annually, and spread the tax relief due over a number of years. This contrasts with the accounting treatment for such spending,
where the expenditure on fixed assets is treated as an investment with the cost then being spread over the anticipated useful life of the
asset, and/or impaired if the value of such assets is considered to have reduced materially.
The different accounting treatment of fixed assets for tax and accounting purposes is one reason why the taxable income of the Group is
not the same as its accounting profit.
Some expenses incurred may be entirely appropriate charges for inclusion in the Financial Statements but are not allowed as a deduction against
taxable income when calculating the Group’s tax liability for the same accounting period. Examples of such disallowable expenditure include
business entertainment costs and some legal expenses.
The Group’s overseas operations comprise a manufacturing operation in Belgium up until its disposal on 13 April 2023 and sales and
administration offices in the USA and China. The sales of these units, in total, were under 5 per cent of the Group’s turnover in the year ended
31 December 2023. In total, the trading profits were not material and a minimal amount of tax is due to be paid overseas.
130
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
8 Earnings per share
Basic earnings per share from total operations of 7.4 pence (2022: 11.4 pence) per share is calculated by dividing the profit attributable
to Ordinary Shareholders for the financial year, after adjusting for non‑controlling interests, of £18.6 million (2022: £26.8 million) by the
weighted average number of shares in issue during the period of 252,824,077 (2022: 235,388,001).
Basic earnings per share after adding back adjusting items of 16.7 pence (2022: 31.3 pence) per share is calculated by dividing the
adjusted profit attributable to Ordinary Shareholders for the financial year, after adjusting for non‑controlling interests, of £42.3 million
(2022: £73.6 million) by the weighted average number of shares in issue during the period of 252,824,077 (2022: 235,388,001).
Profit attributable to Ordinary Shareholders
Profit before adding back adjusting items
Adjusting items
Profit for the financial year
Profit attributable to non‑controlling interests
Profit attributable to Ordinary Shareholders
Weighted average number of Ordinary Shares
Number of issued Ordinary Shares
Effect of shares issued during the period
Effect of shares transferred into Employee Benefit Trust
Weighted average number of Ordinary Shares at the end of the year
2023
£’m
42.1
(23.7)
18.4
0.2
18.6
2022
£’m
73.3
(46.8)
26.5
0.3
26.8
2023
Number
2022
Number
252,968,728
—
(144,651)
252,968,728
(17,299,649)
(281,078)
252,824,077
235,388,001
Diluted earnings per share from total operations of 7.3 pence (2022: 11.3 pence) per share is calculated by dividing the profit for the financial year, after
adjusting for non‑controlling interests, of £18.6 million (2022: £26.8 million) by the weighted average number of shares in issue during the period of
252,824,077 (2022: 235,388,001) plus potentially dilutive shares of 1,026,468 (2022: 1,213,042), which totals 253,850,545 (2022: 236,601,043).
Diluted earnings per share after adding back adjusting items of 16.7 pence (2022: 31.1 pence) per share is calculated by dividing the
adjusted profit for the financial year, after adjusting for non‑controlling interests, of £42.3 million (2022: £73.6 million) by the weighted
average number of shares in issue during the period of 252,824,077 (2022: 235,388,001) plus potentially dilutive shares of 1,026,468
(2022: 1,213,042), which totals 253,850,545 (2022: 236,601,043).
Weighted average number of Ordinary Shares (diluted)
Weighted average number of Ordinary Shares
Potentially dilutive shares
Weighted average number of Ordinary Shares (diluted)
2023
Number
2022
Number
252,824,077
1,026,468
235,388,001
1,213,042
253,850,545
236,601,043
9 Dividends
After the balance sheet date, a final dividend of 5.7 pence was proposed by the Directors. This dividend has not been provided for and there
are no income tax consequences.
2023 final
2023 interim
2022 final
2022 interim
Pence per
qualifying share
5.7
2.6
8.3
9.9
5.7
15.6
The following dividends were approved by the shareholders and recognised in the Financial Statements:
2023 interim
2022 final
2022 interim
2021 final
Pence per
qualifying share
2.6
9.9
12.5
5.7
9.6
15.3
2023
£’m
14.4
6.6
21.0
2023
£’m
6.6
25.0
31.6
2022
£’m
25.0
14.4
39.4
2022
£’m
14.4
24.3
38.7
The Board recommends a dividend for 2023 of 5.7 pence per qualifying Ordinary Share amounting to £14.4 million, to be paid on 1 July 2024
to shareholders registered at the close of business on 7 June 2024. The shares will be marked ex-dividend on 6 June 2024.
Marshalls plc | Annual Report and Accounts 2023
131
Financial Statements
10 Property, plant and equipment
Cost
At 1 January 2022
Exchange differences
Additions
Acquisition of subsidiary
Reclassifications
Disposals
At 31 December 2022
At 1 January 2023
Additions
Reclassified as held for sale
Disposals
At 31 December 2023
Depreciation and impairment losses
At 1 January 2022
Depreciation charge for the year
Exchange differences
Impairments
Disposals
At 31 December 2022
At 1 January 2023
Depreciation charge for the year
Reclassified as held for sale
Impairments
Disposals
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Land and
buildings
£’m
Quarries
£’m
Plant, machinery
and vehicles
£’m
91.4
—
1.3
66.3
(0.4)
—
158.6
158.6
0.4
(3.7)
(1.9)
153.4
43.9
2.0
—
0.4
—
46.3
46.3
3.0
(1.8)
—
(0.2)
47.3
112.3
106.1
27.1
—
—
—
0.4
(1.3)
26.2
26.2
—
(0.7)
(0.7)
24.8
9.6
0.5
—
1.4
(1.2)
10.3
10.3
0.4
(0.2)
2.3
—
12.8
15.9
12.0
387.5
0.4
27.1
29.9
—
(3.6)
441.3
441.3
16.1
(9.0)
(7.5)
440.9
278.6
19.3
0.3
8.1
(3.3)
303.0
303.0
18.0
(9.0)
5.0
(7.4)
309.6
138.3
131.3
Total
£’m
506.0
0.4
28.4
96.2
—
(4.9)
626.1
626.1
16.5
(13.4)
(10.1)
619.1
332.1
21.8
0.3
9.9
(4.5)
359.6
359.6
21.4
(11.0)
7.3
(7.6)
369.7
266.5
249.4
Mineral reserves and associated land have been separately disclosed under the heading of “Quarries”.
The impairments in 2023, totalling £7.3 million, represent the assets being written down to recoverable value by £7.0 million in relation to
major restructuring exercises when the Group took steps to reduce manufacturing capacity and the cost base in response to a reduction in
market demand. Along with £0.3 million of other impairments to land and buildings to as part of a review prior to sale.
Impairments in 2022 totalled £9.9 million, of which £8.8 million related to assets being written down to fair value less costs to sell due to a
restructuring exercise, along with £1.1 million associated with the write down of assets in the Belgian subsidiary.
During the year ended 31 December 2023 Property, Plant and Equipment with a book value of £2.4 million (2022: £nil) have been reclassified
as held for sale in accordance with IFRS 5 (“non-current assets held for sale and discontinued operations”).
Group cost of land and buildings and plant and machinery includes £1.0 million (2022: £0.7 million) and £32.3 million (2022: £22.1 million)
respectively for assets in the course of construction.
Capital commitments
Capital expenditure that has been contracted for but for which no provision has been made in the
Consolidated Financial Statements
Depreciation charge
The depreciation charge is recognised in the following line items in the Consolidated Income Statement:
Net operating costs (Note 3)
2023
£’m
1.3
2023
£’m
21.4
2022
£’m
4.7
2022
£’m
21.8
132
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
11 Right-of-use assets
Cost
At 1 January 2022
Additions
Acquisition of subsidiary
Disposals
Modifications
At 31 December 2022
At 1 January 2023
Additions
Disposals
Modifications
At 31 December 2023
Depreciation and impairment losses
At 1 January 2022
Depreciation charge for the year
Impairments
Disposals
At 31 December 2022
At 1 January 2023
Depreciation charge for the year
Disposals
At 31 December 2023
Net book value
At 31 December 2022
At 31 December 2023
Land and
buildings
£’m
Plant and
equipment
£’m
21.5
1.8
0.4
(4.0)
0.2
19.9
19.9
3.7
(4.1)
(0.3)
19.2
3.6
2.5
3.2
(4.0)
5.3
5.3
2.0
(4.1)
3.2
14.6
16.0
40.7
11.2
1.0
(8.4)
0.7
45.2
45.2
11.2
(4.0)
—
52.4
22.2
8.8
0.2
(8.4)
22.8
22.8
7.8
(3.9)
26.7
22.4
25.7
Total
£’m
62.2
13.0
1.4
(12.4)
0.9
65.1
65.1
14.9
(8.1)
(0.3)
71.6
25.8
11.3
3.4
(12.4)
28.1
28.1
9.8
(8.0)
29.9
37.0
41.7
The impairment of £3.4 million in 2022 represents the assets being written down to fair value less cost to sell in relation to the Group’s
Belgium subsidiary (Note 4).
Depreciation charge
The depreciation charge is recognised in the following line items in the Consolidated Income Statement:
Net operating costs (Note 3)
Lease commitments
Lease commitments that have been contracted for but have not yet commenced
2023
£’m
9.8
2023
£’m
6.6
2022
£’m
11.3
2022
£’m
22.9
Marshalls plc | Annual Report and Accounts 2023
133
Financial Statements
12 Goodwill
Cost
At 1 January 2022
Recognised on acquisition of subsidiary
At 31 December 2022
At 1 January 2023
Recognised on acquisition of subsidiary
At 31 December 2023
Amortisation and impairment losses
At 1 January and 31 December 2022
At 1 January and 31 December 2023
Carrying amounts
At 1 January 2022
At 31 December 2022
At 31 December 2023
Goodwill
£’m
87.4
244.1
331.5
331.5
1.8
333.3
8.9
8.9
78.5
322.6
324.4
All goodwill has arisen from business combinations. The carrying amount of goodwill is allocated across cash generating units (“CGUs”)
which represent the lowest level within the Group at which the associated goodwill is monitored for management purposes and is consistent
with the operating segments set out in Note 2. The Group has three material CGUs, Landscape Products, Building Products and Roofing
Products. The carrying amount of goodwill has been allocated to CGUs as follows:
Landscape Products
Building Products
Roofing Products
2023
£’m
34.8
43.7
245.9
324.4
2022
£’m
34.8
43.7
244.1
322.6
Building Products and Landscape Products
The recoverable amounts of the Building Products and Landscaping Products segments as CGUs are determined based on value in use
calculations which use cash flow projections based on financial budgets approved by the Directors covering a five‑year period and a post‑tax
discount rate of 10.4 per cent per annum (2022: 8.9 per cent per annum). Cash flows beyond that five‑year period have been extrapolated
using a 2.4 per cent (2022: 2.4 per cent) per annum growth rate. This growth rate reflects the long‑term average growth rate for the
UK economy.
Roofing Products
The recoverable amount of the Roofing Products segment as a CGU is determined based on a value in use calculation which uses cash flow
projections based on financial budgets approved by the Directors covering a five‑year period and a post‑tax discount rate of 10.4 per cent
per annum (2022: 8.9 per cent per annum). Cash flows beyond that five‑year period have been extrapolated using a 2.4 per cent
(2022: 2.4 per cent) per annum growth rate. This growth rate reflects the long‑term average growth rate for the UK economy.
The compound annual growth rate (“CAGR”) assumed within the Roofing Products CGU five‑year forecast is 10.9 per cent which reflects
industry consensus with respect to the future recovery in the construction materials market together with management’s expectations of
future growth in residential solar PV as a consequence of amendments made to building regulations in England and Wales.
Sensitivity analysis
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the
recoverable amount for each of the group of CGUs to which goodwill is allocated. The Directors believe that any reasonably possible change
in the key assumptions on which the recoverable amounts of Landscape Products and Building Products are based would not cause the
aggregate carrying amounts to exceed the aggregate recoverable amounts of those CGUs.
134
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
12 Goodwill continued
Sensitivity analysis continued
At the end of the financial year, the recoverable amount of the Roofing Products CGU exceeds the carrying amount by £39 million, which
is significantly lower than the other CGUs given the recency of the acquisition, and consequently the impairment review is more sensitive
to changes in assumptions. The CAGR in the Roofing Products CGU is particularly sensitive to future political and regulatory decisions and
the industry’s interpretation of the most effective solution to building regulation requirements regarding the use of roof‑integrated solar in
new homes. These factors could affect growth rates within the residential solar PV market, and may have a corresponding impact on profit
margins. Changes in regulations regarding both the UK’s ambitions for the energy efficiency of residential properties and the specificity on
how they should be achieved represent reasonably possible downside risks that could give rise to a future impairment charge. A CAGR of
9 per cent would reduce the headroom in the Roofing Products CGU to nil.
The impairment review is also sensitive to changes in discount rate with an increase of 60 basis points in the post‑tax rate required to
reduce headroom in the Roofing Products CGU to nil, giving a breakeven point for the post‑tax rate of 11.0 per cent.
13 Intangible assets
Cost
At 1 January 2022
Additions
Recognised on acquisition of subsidiary
At 31 December 2022
At 1 January 2023
Additions
At 31 December 2023
Amortisation and impairment losses
At 1 January 2022
Amortisation for the year
Impairments
At 31 December 2022
At 1 January 2023
Amortisation for the year
At 31 December 2023
Carrying amounts
At 1 January 2022
At 31 December 2022
At 31 December 2023
Brand
£’m
Customer
relationships
£’m
Supplier
relationships
£’m
—
—
82.8
82.8
82.8
—
82.8
—
2.4
—
2.4
2.4
2.4
4.8
—
80.4
78.0
12.8
—
145.4
158.2
158.2
—
158.2
6.2
4.8
—
11.0
11.0
7.9
18.9
6.6
147.2
139.3
1.6
—
—
1.6
1.6
—
1.6
1.3
0.1
—
1.4
1.4
0.1
1.5
0.3
0.2
0.1
Patents,
trademarks
and Development
costs
£’m
know-how
£’m
1.7
—
—
1.7
1.7
—
1.7
1.6
—
—
1.6
1.6
—
1.6
0.1
0.1
0.1
0.7
—
—
0.7
0.7
—
0.7
0.4
0.1
—
0.5
0.5
0.1
0.6
0.3
0.2
0.1
Software
£’m
Total
£’m
23.7
2.2
—
25.9
25.9
2.5
28.4
14.5
1.7
0.7
16.9
16.9
1.6
18.5
9.2
9.0
9.9
40.5
2.2
228.2
270.9
270.9
2.5
273.4
24.0
9.1
0.7
33.8
33.8
12.1
45.9
16.5
237.1
227.5
The impairment in 2022 represents the assets being written down to the recoverable value of £0.7 million in relation to the Belgian
subsidiary (Note 4).
Included in software additions is £1.6 million (2022: £1.5 million) of own work capitalised.
Group cost of software includes £4.0 million (2022: £2.3 million) in respect of assets in the course of construction.
There is no capital expenditure that has been contracted for, but for which no provision has been made in the Consolidated Financial
Statements.
Amortisation charge
The amortisation charge is recognised in the following line items in the Consolidated Income Statement:
Net operating costs (Note 3)
2023
£’m
12.1
2022
£’m
9.1
Marshalls plc | Annual Report and Accounts 2023
135
Financial Statements
Financial Statements
14 Inventories
Raw materials and consumables
Finished goods and goods for resale
2023
£’m
29.4
95.7
125.1
2022
£’m
30.1
108.7
138.8
Inventories stated at a net realisable value less than cost at 31 December 2023 amounted to £13.4 million (2022: £6.6 million). The write
down of inventories made during the year amounted to £4.2 million (2022: £9.4 million). There were £1.4 million of reversals of inventory
write downs made in previous years in 2023 (2022: £1.4 million).
15 Trade and other receivables
Trade receivables
Other receivables
Prepayments and accrued income
Ageing of trade receivables
Not past due
Overdue by less than 30 days
Overdue by between 30 and 60 days
Overdue by more than 60 days
2023
£’m
83.6
3.9
5.9
93.4
2023
£’m
56.7
24.7
2.1
1.1
84.6
2022
£’m
103.7
9.8
9.8
123.3
2022
£’m
57.1
41.0
1.6
5.3
105.0
There were no net receivables due after more than one year (2022: £nil). All amounts disclosed above are considered recoverable and are
disclosed gross of a provision for expected credit losses of £1.0 million (2022: £1.3 million). This provision has been determined using a
lifetime expected credit loss calculation. Assumptions made regarding the recoverability of balances have been determined with reference
to past default experiences in line with our policies and understanding. Balances are only written off if deemed irrecoverable after all credit
control procedures have been exhausted.
16 Cash and cash equivalents
Cash and cash equivalents
17 Trade and other payables
Current liabilities
Trade payables
Taxation and social security
Other payables
Accruals
2023
£’m
34.5
2023
£’m
59.3
10.6
20.7
36.9
2022
£’m
56.3
2022
£’m
82.6
16.2
21.2
32.4
127.5
152.4
All trade payables are due in six months or less.
Included within Accruals is £1.9 million (2022: £1.4 million) in relation to outstanding insurance claim liabilities, and £4.1 million
(2022: £0.1 million) in relation to an accrual for redundancy costs.
136
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
18 Interest-bearing loans and borrowings
Analysed as:
Current liabilities
Non-current liabilities
Bank loans
The bank loans are subject to intra‑Group guarantees by certain subsidiary undertakings.
19 Lease liabilities
Analysed as:
Amounts due for settlement within twelve months (shown under current liabilities)
Amounts due for settlement after twelve months
Less than 1 year
1 to 2 years
2 to 5 years
In more than 5 years
Minimum
lease
payments
£’m
10.1
8.4
16.2
25.0
59.7
2023
Interest
£’m
2.1
1.8
4.1
7.0
15.0
Principal
£’m
8.0
6.6
12.1
18.0
44.7
Minimum
lease
payments
£’m
11.0
8.2
14.6
22.2
56.0
2023
£’m
—
207.4
207.4
2023
£’m
8.0
36.7
44.7
2022
Interest
£’m
1.2
1.1
2.4
5.4
10.1
2022
£’m
—
247.0
247.0
2022
£’m
9.8
36.1
45.9
Principal
£’m
9.8
7.1
12.2
16.8
45.9
As at 31 December 2023, the total minimum lease payments (above) comprised property of £23.1 million (2022: £30.7 million) and plant,
machinery and vehicles of £36.6 million (2022: £25.3 million).
Certain leased properties have been sublet by the Group. Sublease payments of £0.1 million (2022: £0.2 million) are expected to be received
during the following financial year. An amount of £0.2 million (2022: £0.2 million) was recognised as income in the Consolidated Income
Statement within net operating costs in respect of subleases.
The Group does not face a significant liquidity risk with regard to its lease liabilities. For the year ended 31 December 2023, the interest
expense on lease liabilities amounted to £2.5 million (2022: £2.4 million). Lease liabilities are calculated at the present value of the lease
payments that are not paid at the commencement date.
For the year ended 31 December 2023, the average effective borrowing rate was 4.2 per cent. Interest rates are fixed at the contract date.
All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The vast majority of lease obligations are denominated in Sterling.
For the year ended 31 December 2023, the total cash outflow in relation to leases amounts to £11.6 million (2022: £13.5 million). The total
cash outflow in relation to short‑term and low‑value leases was £7.1 million (2022: £7.0 million).
Marshalls plc | Annual Report and Accounts 2023
137
Financial Statements
20 Financial instruments
The Group holds and uses financial instruments to finance its operations and to manage its interest rate, liquidity and currency risks.
The Group primarily finances its operations using share capital, retained profits and borrowings. The Group’s bank loans are non‑equity
funding instruments, further details of which are set out on page 140.
As directed by the Board, the Group does not engage in speculative activities using derivative financial instruments. Group cash reserves
are held centrally to take advantage of the most rewarding short‑term investment opportunities. Forward foreign currency contracts are
used in the management of currency risk.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and pricing risk.
The Board reviews and agrees the policies for managing each of these risks and they have remained unchanged since 2022.
Capital management
The Group defines the capital that it manages as its total equity and net debt balances. The Group manages its capital structure in light of
current economic conditions and its strategic objectives to ensure that it is able to continue as a going concern whilst maximising the return
to stakeholders through the optimisation of debt and equity balances.
The Group manages its medium‑term bank debt to ensure continuity of funding and the policy is to arrange funding ahead of requirements
and to maintain sufficient undrawn committed facilities. A key objective is to ensure compliance with the covenants set out in the Group’s
bank facility agreements.
From time to time the Group purchases its own shares on the market; the timing of these purchases depends on market prices. Primarily
the shares are intended to be used for issuing shares under the Group’s incentive schemes. Buy and sell decisions are made on a specific
transaction basis by the Board.
There has been no change in the objectives, policies or processes with regard to capital management during the years ended 31 December
2023 and 31 December 2022.
Financial risks
The Group has exposure to a number of financial risks through the conduct of its operations. Risk management is governed by the Group’s
operational policies, guidelines and authorisation procedures, which are outlined in the Strategic Report on pages 52 to 61. The key financial
risks resulting from financial instruments are liquidity risk, interest rate risk, credit risk, foreign currency risk and pricing risk.
In managing interest rate and currency risks the Group aims to reduce the impact of short‑term fluctuations on the Group’s earnings.
Over the longer term, however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.
For instance, a weakening of Pound Sterling on the foreign currency market would increase the cost of certain raw materials, whereas a
strengthening would have the opposite effect.
(a) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Board is responsible for ensuring
that the Group has sufficient liquidity to meet its financial liabilities as they fall due and does so by monitoring cash flow forecasts and
budgets. Cash resources are largely and normally generated through operations and short‑term flexibility is achieved by bank facilities.
Bank debt is raised centrally and the Group aims to maintain a balance between flexibility and continuity of funding by having a range of
maturities on its borrowings. Details of the Group borrowing facility are provided on page 140.
(b) Interest rate risk
The Group has a single syndicated debt facility comprising a term loan of £210 million (reduced to £180 million in January 2024) and
revolving credit facility of £160 million. The Group borrows at floating rates of interest and, where appropriate, uses interest rate swaps
and interest rate caps to generate the desired interest rate profile, thereby managing the Group’s exposure to interest rate fluctuations.
Approximately two thirds of the reduced £180 million term loan is covered by interest rate swaps and caps of varying maturities up until
2026, which reflects the maturity date of the related loans and medium‑term requirements, in accordance with Group policy. The Group
classifies its interest rate swaps as cash flow hedges and states them at fair value. The fair value of interest rate swaps is £1.8 million asset
(2022: £3.5 million asset) and is recognised within the hedge reserve where effective on an ongoing basis. The period that the swaps cover
is matched against the debt maturity in order to fix the impact on the Income Statement. During the year £0.7 million (2022: £3.3 million)
has been recognised in Other Comprehensive Income for the year with £0.9 million (2022: £0.3 million) being reclassified from equity to the
Income Statement. The interest rate swaps have been fully effective in the period.
Sensitivity analysis
A change of 100 basis points in interest rates at the balance sheet date would have decreased equity and profit by the amounts shown
below. The sensitivity analysis has been undertaken before the effect of tax. The sensitivity analysis of the Group’s exposure to interest
rate risk has been determined based on the change taking place at the beginning of the financial year and held constant throughout the
reporting period.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of financial
instruments with variable interest rates, financial instruments at fair value through profit or loss or available for sale with fixed interest rates
and the fixed rate element of interest rate swaps. The analysis was performed on the same basis for 2022.
Increase of 100 basis points
Decrease of 100 basis points
138
Marshalls plc | Annual Report and Accounts 2023
2023
£’m
(0.9)
0.9
2022
£’m
(1.1)
1.1
Notes to the Consolidated Financial Statements continued
20 Financial instruments continued
Financial risks continued
(c) Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed
on all customers requiring credit over a certain amount and, where appropriate, credit insurance cover is obtained. This provides excellent
intelligence to minimise the number and value of bad debts and ultimately provides compensation if bad debts are incurred. An ageing of
trade receivables is shown in Note 15 on page 136.
Cash and cash equivalents of £34.5 million (2022: £56.3 million) are held with financial institutions that have an A+ credit rating.
Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group.
Transactions involving derivative financial instruments are with counterparties with which the Group has a signed netting agreement as well
as sound credit ratings. Derivative financial instruments of £1.9 million (2022: £3.6 million) are all held with financial institutions that have
an A+ credit rating. Given their high credit ratings, management does not expect any counterparty to fail to meet its obligations.
At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the
carrying amount of each financial asset, including derivative financial instruments, in the balance sheet.
(d) Foreign currency risk
The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than Sterling. The currencies
giving rise to this risk are primarily Euros and US Dollars.
The Group’s policy is to cover all significant foreign currency commitments in respect of trade receivables and trade payables by using
forward foreign currency contracts. All the forward exchange contracts have maturities of less than one year after the balance sheet date.
Where necessary, the forward exchange contracts are rolled over at maturity.
The Group classifies its forward exchange contracts as cash flow hedges and states them at fair value. The fair value of forward exchange
contracts is a £nil asset (2022: £0.2 million liability) and is adjusted against the hedging reserve on an ongoing basis. During the year
£0.1 million (2022: £0.4 million) has been recognised in other comprehensive income for the year with £nil (2022: £nil) being reclassified
from equity to the Income Statement. At 31 December 2023 all outstanding forward exchange contracts had a maturity date within
twelve months.
The foreign currency profile of monetary items was:
Cash and cash equivalents
Trade receivables
Secured bank loans
Lease liabilities
Trade payables
Derivative financial
instruments
Sterling
£’m
30.2
83.6
(207.4)
(44.7)
(56.6)
Euro
£’m
0.9
—
—
—
(2.1)
1.8
—
Balance sheet exposure
(193.1)
(1.2)
2023
US Dollar
£’m
AED
£’m
3.4
—
—
—
(0.6)
0.1
2.9
—
—
—
—
—
—
—
Total
£’m
34.5
83.6
(207.4)
(44.7)
(59.3)
Sterling
£’m
51.2
103.0
(240.1)
(40.4)
(74.6)
Euro
£’m
2.8
1.0
(6.9)
(5.5)
(6.8)
1.9
3.8
(0.1)
(191.4)
(197.1)
(15.5)
2022
US Dollar
£’m
2.3
(0.2)
—
—
(1.2)
(0.1)
0.8
AED
£’m
—
(0.1)
—
—
—
Total
£’m
56.3
103.7
(247.0)
(45.9)
(82.6)
—
3.6
(0.1)
(211.9)
A 10 per cent strengthening and weakening of the following currencies against the Pound Sterling at 31 December 2023 would have
increased/(decreased) equity and profit or loss by the amounts shown below. This calculation assumes that the change occurred at the
balance sheet date and had been applied to risk exposures existing at that date.
This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis was
performed on the same basis for 2022:
10% strengthening of £ against €
10% weakening of £ against €
10% strengthening of £ against $
10% weakening of £ against $
2023
£’m
0.1
(0.1)
(0.3)
0.2
2022
£’m
1.4
(1.1)
(0.1)
0.1
(e) Pricing risks
Where appropriate the Group uses hedging instruments to mitigate the risks of significant forward price rises of fuel in relation to expected
consumption. The current hedges held are in place until 31 August 2024. The Group classifies its fuel hedges as cash flow hedges and states
them at fair value. The fair value of the fuel hedges is a £0.1 million asset (2022: £0.3 million asset) and is adjusted against the hedging
reserve on an ongoing basis. The period that the fuel hedges cover is matched against future expected purchases in order to fix the impact
on the Income Statement. During the year £nil (2022: £2.8 million) has been recognised in other comprehensive income, with £0.2 million
(2022: £3.1 million) being reclassified from equity to the Income Statement. The fuel hedges have been fully effective in the period.
When combining interest rate swaps, fuel hedges and forward contracts, this gives a total of £0.6 million debit (2022: £5.7 million credit)
recognised in other comprehensive income for the year with £1.1 million debit (2022: £2.8 million debit) being reclassified from equity to the
Income Statement.
Marshalls plc | Annual Report and Accounts 2023
139
Financial Statements
20 Financial instruments continued
Financial risks continued
(f) Other risks
Further information about the Group’s strategic and financial risks is contained in the Strategic Report on pages 52 to 61.
Effective interest rates and maturity of liabilities
At 31 December 2023 there were £44.7 million (2022: £45.9 million) of Group borrowings on a fixed rate. The interest rate profile of the
financial liabilities is set out below. The tables also disclose cash and cash equivalents in order to reconcile to net debt (Note 28).
Fixed or
variable
rate
Effective
interest rate
%
Total
£’m
6 months
or less
£’m
6–12
months
£’m
31 December 2023
Cash and cash equivalents (Note 16)
Interest-bearing loans and borrowings
(Note 18)
Lease liabilities (Note 19)
Variable
Variable
Fixed
6.7
6.7
4.2
(34.5)
(34.5)
207.4
44.7
217.6
—
3.8
(30.7)
—
—
4.2
4.2
Fixed or
variable
rate
Effective
interest rate
%
Total
£’m
6 months
or less
£’m
6–12
months
£’m
31 December 2022
Cash and cash equivalents (Note 16)
Interest-bearing loans and borrowings
(Note 18)
Lease liabilities (Note 19)
Variable
Variable
Fixed
3.8
3.8
3.4
(56.3)
(56.3)
247.0
45.9
236.6
—
5.8
(50.5)
—
—
4.0
4.0
1–2
years
£’m
—
—
6.6
6.6
1–2
years
£’m
—
—
7.1
7.1
2–5
years
£’m
More than
5 years
£’m
—
207.4
12.1
219.5
—
—
18.0
18.0
2–5
years
£’m
More than
5 years
£’m
—
247.0
12.2
259.2
—
—
16.8
16.8
At 31 December the undiscounted outstanding contractual payments (including interest) of financial liabilities were as follows:
Fixed or
variable
rate
Carrying
value
£’m
Total
£’m
6 months
or less
£’m
6–12
months
£’m
31 December 2023
Interest-bearing loans and borrowings
Trade and other payables
Lease liabilities
Derivative financial assets
Variable
Variable
Fixed
Fixed
207.4
116.8
44.7
(1.9)
254.3
116.8
59.7
(1.9)
367.0
428.9
7.3
116.8
4.9
0.2
129.2
7.2
—
5.2
(0.1)
12.3
Fixed or
variable
rate
Carrying
value
£’m
Total
£’m
6 months
or less
£’m
6–12
months
£’m
31 December 2022
Interest-bearing loans and borrowings
Trade and other payables
Lease liabilities
Derivative financial assets
Variable
Variable
Fixed
Fixed
247.0
136.5
45.9
(3.6)
425.8
288.4
136.5
56.0
(3.6)
477.3
6.2
136.5
6.5
—
149.2
6.2
—
4.5
(0.2)
10.5
1–2
years
£’m
14.5
—
8.4
—
22.9
1–2
years
£’m
12.4
—
8.2
—
20.6
2–5
years
£’m
More than
5 years
£’m
225.3
—
16.2
(2.0)
239.5
—
—
25.0
—
25.0
2–5
years
£’m
More than
5 years
£’m
263.6
—
14.6
(3.4)
274.8
—
—
22.2
—
22.2
Borrowing facilities
The total bank borrowing facility at 31 December 2023 amounted to £370.0 million (2022: £370.0 million), of which £160.0 million (2022:
£120.1 million) remained unutilised. The undrawn facility available at 31 December 2023, in respect of which all conditions precedent had
been met, was as follows:
Committed:
Expiring in more than 5 years
Expiring in more than 2 years but not more than 5 years
Expiring in 1 year or less
Uncommitted:
Expiring in 1 year or less
2023
£’m
—
160.0
—
—
—
160.0
2022
£’m
—
120.1
—
—
120.1
£18.4 million of the reduced facility of £340 million matures in April 2026 and the remaining £321.6 million matures one year later in April
2027. The Group’s committed bank facilities are charged at variable rates based on SONIA plus a margin. The Group’s bank facility continues
to be aligned with the current strategy to ensure that headroom against the available facility remains at appropriate levels and are structured
to provide committed medium-term debt.
140
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
20 Financial instruments continued
Borrowing facilities continued
Marshalls is party to a reverse factoring finance arrangement between a third‑party UK bank and one of the Group’s key customers.
The principal relationship is between the customer and its partner bank. The agreement enables Marshalls to benefit from additional
credit against approved invoices and, in practice, this provides a facility of up to £15.0 million which the Group utilises periodically in order
to help manage its short‑term funding requirements. The credit risk is retained by the customer and Marshalls pays a finance charge
upon utilisation. There was no impact on the 2023 Financial Statements as a consequence of these arrangements.
Fair values of financial assets and financial liabilities
A comparison by category of the book values and fair values of the financial assets and liabilities of the Group at 31 December 2023 is
shown below:
Trade and other receivables
Cash and cash equivalents
Bank loans
Trade payables, other payables and provisions
Interest rate swaps, forward contracts and fuel hedges
Contingent consideration
Financial instrument assets and liabilities – net
Non‑financial instrument assets and liabilities – net
2023
2022
Book amount
£’m
Fair value
£’m
Book amount
£’m
87.5
34.5
(207.4)
(116.8)
1.9
(8.0)
(208.3)
849.6
641.3
87.5
34.5
(202.2)
(116.8)
1.9
(8.0)
113.5
56.3
(247.0)
(136.5)
3.6
(8.9)
(219.0)
880.1
661.1
Fair value
£’m
113.5
56.3
(259.1)
(136.5)
3.6
(8.9)
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the
table. Other than contingent consideration, which uses a level 3 basis, all use level 2 valuation techniques.
(a) Derivatives
Derivative contracts are either marked to market using listed market prices or by discounting the contractual forward price at the relevant
rate and deducting the current spot rate. For interest rate swaps, broker quotes are used.
(b) Interest-bearing loans and borrowings
Fair value is calculated based on the expected future principal and interest cash flows discounted at the market rate of interest at the
balance sheet date.
(c) Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. All other
receivables/payables are discounted to determine the fair value.
(d) Contingent consideration
The basis of calculating contingent consideration is set out in Note 22 on page 146.
(e) Fair value hierarchy
The table below analyses financial instruments, measured at fair value, into a fair value hierarchy based on the valuation techniques used
to determine fair value.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
31 December 2023
Derivative financial assets
Contingent consideration (Note 22)
31 December 2022
Derivative financial assets
Contingent consideration (Note 22)
Level 1
£’m
Level 2
£’m
Level 3
£’m
—
—
—
—
—
—
1.9
—
1.9
3.6
—
3.6
—
(8.0)
(8.0)
—
(8.8)
(8.8)
Total
£’m
1.9
(8.0)
(6.1)
3.6
(8.8)
(5.2)
Marshalls plc | Annual Report and Accounts 2023
141
Financial Statements
21 Employee benefits
The Company sponsors a funded defined benefit pension scheme in the UK (the “Scheme”). The Scheme is administered within a trust
which is legally separate from the Company. The Trustee Board is appointed by both the Company and the Scheme’s membership and acts
in the interest of the Scheme and all relevant stakeholders, including the members and the Company. The Trustee is also responsible for the
investment of the Scheme’s assets.
The defined benefit section of the Scheme provides pension and lump sums to members on retirement and to dependants on death. The
defined benefit section closed to future accrual of benefits on 30 June 2006 with the active members becoming entitled to a deferred
pension. Members no longer pay contributions to the defined benefit section. Company contributions to the defined benefit section after
this date are used to fund any deficit in the Scheme and the expenses associated with administering the Scheme, as determined by regular
actuarial valuations.
The Trustee is required to use prudent assumptions to value the liabilities and costs of the Scheme whereas the accounting assumptions
must be best estimates.
The defined benefit section of the Scheme poses a number of risks to the Company, for example longevity risk, investment risk, interest
rate risk, inflation risk and salary risk. The Trustee is aware of these risks and uses various techniques to control them. The Trustee has
a number of internal control policies, including a Risk Register, which are in place to manage and monitor the various risks it faces. The
Trustee’s investment strategy incorporates the use of liability‑driven investments (“LDIs”) to minimise sensitivity of the actuarial funding
position to movements in interest rates and inflation rates.
The defined benefit section of the Scheme is subject to regular actuarial valuations, which are usually carried out every three years. The
next actuarial valuation is being carried out with an effective date of 5 April 2024. These actuarial valuations are carried out in accordance
with the requirements of the Pensions Act 2004 and so include deliberate margins for prudence. This contrasts with these accounting
disclosures which are determined using best estimate assumptions. A formal actuarial valuation was carried out as at 5 April 2021.
The results of that valuation have been projected to 31 December 2023 by a qualified independent actuary. The figures in the following
disclosure were measured using the projected unit method.
The amounts recognised in the Consolidated Balance Sheet were as follows:
Present value of Scheme liabilities
Fair value of Scheme assets
Net amount recognised at the year end (before any adjustments for deferred tax)
2023
£’m
(239.4)
250.4
11.0
2022
£’m
(232.5)
254.9
22.4
2021
£’m
(366.3)
392.1
25.8
The current and past service costs, settlements and curtailments, together with the net interest expense for the year, are included in the
employee benefits expense in the Consolidated Statement of Comprehensive Income. Remeasurements of the net defined benefit surplus
are included in other comprehensive income.
Net interest expense before adjusting items
Adjusting interest expense (Note 4)
Net interest expense recognised in the Consolidated Income Statement
Remeasurements of the net liability:
Return on Scheme assets (excluding amount included in interest expense)
Gain arising from changes in financial assumptions
Gain arising from changes in demographic assumptions
Experience loss
Debit recorded in other comprehensive income
Total defined benefit debit/(credit)
2023
£’m
0.2
1.4
1.6
1.4
10.8
(3.6)
1.2
9.8
11.4
2022
£’m
0.2
—
0.2
130.1
(134.5)
(0.9)
8.4
3.1
3.3
142
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
21 Employee benefits continued
The principal actuarial assumptions used were:
Liability discount rate
Inflation assumption – RPI
Inflation assumption – CPI
Rate of increase in salaries
Revaluation of deferred pensions
Increases for pensions in payment:
CPI pension increases (maximum 5% p.a.)
CPI pension increases (maximum 5% p.a., minimum 3% p.a.)
CPI pension increases (maximum 3% p.a.)
Proportion of employees opting for early retirement
Proportion of employees commuting pension for cash
Mortality assumption – before retirement
Mortality assumption – after retirement (males)
Loading
Projection basis
Mortality assumption – after retirement (females)
Loading
Projection basis
Future expected lifetime of current pensioner at age 65:
Male aged 65 at year end
Female aged 65 at year end
Future expected lifetime of future pensioner at age 65:
Male aged 45 at year end
Female aged 45 at year end
Changes in the present value of assets over the year
Fair value of assets at the start of the year
Interest income
Return on assets (excluding amount included in net interest expense)
Benefits paid
Administration expenses
Fair value of assets at the end of the year
Actual return on assets over the year
Changes in the present value of liabilities over the year
Liabilities at the start of the year
Past service cost
Interest cost
Remeasurement:
Actuarial gains arising from changes in financial assumptions
Actuarial gains arising from changes in demographic assumptions
Experience loss
Benefits paid
Liabilities at the end of the year
2023
4.6%
3.1%
2.6%
n/a
2.6%
2022
4.9%
3.2%
2.6%
n/a
2.6%
2.55%
3.5%
2.05%
0%
80%
Same as post-
retirement
S2PXA tables
110%
Year of birth
CMI_2022
1.0%
S2PXA tables
110%
Year of birth
CMI_2022
1.0%
2.55%
3.6%
1.95%
0%
80%
Same as post-
retirement
S2PXA tables
110%
Year of birth
CMI_2021
1.0%
S2PXA tables
110%
Year of birth
CMI_2021
1.0%
84.9
87.1
85.8
88.2
2023
£’m
254.9
12.4
(1.4)
(14.1)
(1.4)
250.4
11.0
2023
£’m
232.5
1.4
11.2
10.8
(3.6)
1.2
(14.1)
239.4
85.3
87.5
86.3
88.7
2022
£’m
392.1
7.3
(130.1)
(13.8)
(0.6)
254.9
(122.8)
2022
£’m
366.4
—
6.8
(134.4)
(0.9)
8.4
(13.8)
232.5
Marshalls plc | Annual Report and Accounts 2023
143
Financial Statements
21 Employee benefits continued
The split of the Scheme’s liabilities by category of membership is as follows:
Deferred pensioners
Pensioners in payment
Average duration of the Scheme’s liabilities at the end of the year (in years)
The major categories of Scheme assets are as follows:
Return-seeking assets
UK equities
Overseas equities
Other equity type investments
Total return-seeking assets
Other
Insured pensioners
Cash
Property
Liability-driven investments and bonds
Total matching assets
Total market value of assets
2023
£’m
105.6
133.8
239.4
14
2023
£’m
0.8
24.1
26.7
51.6
0.4
5.7
28.9
163.8
198.8
250.4
2022
£’m
96.1
136.4
232.5
14
2022
£’m
0.9
22.5
31.1
54.5
0.4
3.1
32.8
164.1
200.4
254.9
The return‑seeking assets and LDI assets have quoted prices in active markets. The valuation of the insured pensions has been taken as the
value of the corresponding liabilities assessed using the assumptions set out above.
The Scheme has no investments in the Company or in property occupied by the Company.
The Company expects to pay no contributions to the defined benefit section of the Scheme during the year ended 31 December 2024.
Sensitivity of the liability value to changes in the principal assumptions
If the discount rate were 0.5 per cent higher/(lower), the defined benefit section Scheme liabilities would decrease by approximately
£15.0 million (increase by £15.0 million) if all the other assumptions remained unchanged.
If the inflation assumption were 0.5 per cent higher/(lower), the Scheme liabilities would increase by £5.7 million (decrease by £5.7 million).
In this calculation all assumptions related to the inflation assumption have been appropriately adjusted, that is salary, the deferred pension
and pension in payment increases. The other assumptions remain unchanged.
If life expectancies were to increase/(decrease) by one year, the Scheme liabilities would increase by £8.6 million (decrease by £8.6 million)
if all the other assumptions remained unchanged.
144
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
21 Employee benefits continued
Sensitivity of the liability value to changes in the principal assumptions continued
Management Incentive Plan (“MIP”)
Share‑based payment awards have been made during the year in accordance with the rules of the MIP. Full details of the performance
criteria and the basis of operation of the MIP are set out in the Remuneration Committee Report on pages 88 to 102.
Equity settled awards are settled by physical delivery of shares. The following equity settled awards have been granted:
Equity settled awards granted to other employees
Equity settled awards granted to Directors of Marshalls plc
Equity settled awards granted to other employees
Equity settled awards granted to Directors of Marshalls plc
Equity settled awards granted to other employees
Equity settled awards granted to Directors of Marshalls plc
Equity settle awards granted to other employees
Number of
instruments
21,928
135,816
113,691
152,493
129,842
191,018
221,369
966,157
Plan years 2019 to 2022 vest at the end of Cycle 3 which is March 2024. Plan year 2023 vests March 2027.
Analysis of closing balance (deferred into shares):
Equity settled awards granted to Directors of Marshalls plc
Equity settled awards granted to other employees
Outstanding at 1 January
Granted
Change in value of notional shares
Lapsed
Element released
Outstanding at 31 December
£’m
2.6
1.2
3.8
Value
£’m
5.3
1.1
(0.3)
—
(2.3)
3.8
2023
Shares
479,327
486,830
966,157
Number of
options
1,139,229
412,387
(47,345)
—
(538,114)
966,157
The total expenses recognised for the period arising from share-based payments were as follows:
Awards granted and total expense recognised as employee costs
£’m
0.2
0.9
0.8
0.4
0.4
0.3
0.8
3.8
£’m
2.3
3.0
5.3
2022
Value
£’m
6.4
1.9
(0.5)
(0.3)
(2.2)
5.3
2023
£’m
2.9
Plan year
2019
2021
2021
2022
2022
2023
2023
Shares
508,969
630,260
1,139,229
Number of
options
997,919
694,397
—
(42,585)
(510,502)
1,139,229
2022
£’m
2.0
2023
2022
Further details in relation to the Directors are set out in the Remuneration Committee Report on pages 88 to 102. Included in the total
expense of £2.9 million (2022: £2.0 million) is an amount of £0.6 million (2022: £1.3 million) settled as interim cash payments under the
terms of the Scheme and which has been included within wages and salaries in Note 5.
Employee Bonus Share Plan
A Bonus Share Plan was approved by shareholders in May 2015 under which a number of senior management employees were granted
performance related bonuses with an element of this bonus being in the form of shares. The bonus performance criteria are the same as
those applicable to the MIP awards. The bonus shares take the form of nil‑cost options to acquire shares at the end of a three‑year vesting
period from the date of grant, and vesting is conditional on continued employment at the end of the vesting period. Awards are made to
participants following publication of the Group’s year-end results. In addition, certain discretionary Share Awards have been granted to
certain employees in the form of nil‑cost options to acquire Ordinary Shares in Marshalls plc at the end of a three‑year period. The total
awards outstanding at 31 December 2023 were over 210,832 shares (31 December 2022: 279,431). The total expenses recognised for the
year arising from share-based payments were £0.5 million (2022: £0.3 million).
Employee profit sharing scheme
At 31 December 2023 the scheme held 42,245 (2022: 42,287) Ordinary Shares in the Company.
Marshalls plc | Annual Report and Accounts 2023
145
Financial Statements
22 Provisions
At 1 January 2022
On acquisition of subsidiary undertakings
Increase in the provision in the period (Note 4)
At 31 December 2022
At 1 January 2023
Payments made
Increase in the provision in the period (Note 4)
Recognised on acquisition of subsidiary
Release/utilisation of provisions made in the period
At 31 December 2023
Analysed as:
Current liabilities
Non-current liabilities
Contingent
consideration
£’m
—
4.9
3.9
8.8
8.8
(3.0)
1.6
0.6
—
8.0
Other
£’m
0.9
—
—
0.9
0.9
—
—
—
(0.9)
—
2023
£’m
3.0
5.0
8.0
Total
£’m
0.9
4.9
3.9
9.7
9.7
(3.0)
1.6
0.6
(0.9)
8.0
2022
£’m
3.0
6.7
9.7
As part of the acquisition of Marley, there is an obligation to pay the vendors of Viridian Solar Limited deferred consideration which is
contingent on the achievement of certain performance targets in the period post‑acquisition. These performance periods are annually
up to and including 31 December 2024 and will be settled in cash on their payment date on achieving the relevant targets. The range of
additional consideration is estimated to be between £nil and £12.0 million. The Group has included £8.0 million (2022: £8.8 million) as a
contingent consideration which represents £5.5 million for the fair value at acquisition date and a further charge in the period of £1.6 million
(2022: £3.9 million), which has been included in adjusting items (Note 4). Payments of £3.0 million were paid to the Vendors during 2023.
Contingent consideration has been calculated based on the Group’s expectation of what it will pay in relation to the post‑acquisition
performance of the acquired entities.
Other provisions comprised of the estimated cost of settlement of certain legal and regulatory matters which have now been released
or utilised.
23 Deferred taxation
Recognised deferred taxation assets and liabilities
Property, plant and equipment
Intangible assets
Inventories
Employee benefits
Equity settled share‑based payments
Other items
Tax assets/(liabilities)
Assets
Liabilities
2023
£’m
—
—
—
—
0.5
0.6
1.1
2022
£’m
—
—
0.5
—
0.4
0.4
1.3
2023
£’m
(23.3)
(56.1)
(0.5)
(2.7)
—
(2.6)
(85.2)
2022
£’m
(24.6)
(57.5)
—
(5.6)
—
(2.9)
(90.7)
The deferred taxation liability at 31 December 2023 has been calculated at 25 per cent based on the rate at which the deferred tax is
expected to unwind in the future using rates enacted at the balance sheet date.
The deferred taxation liability of £2.7 million (2022: £5.6 million) in relation to employee benefits is in respect of the net surplus for the
defined benefit obligations of £11.0 million (2022: £22.4 million) (Note 21) calculated at 25 per cent (2022: 25 per cent).
Deferred taxation liabilities represent sums that might become payable as tax in future years as a result of transactions that have occurred
in the current year. The explanation as to why such liabilities may arise is included in the notes to the tax reconciliation (Note 7).
The deferred tax liabilities disclosed in the year ended 31 December 2023 include the deferred tax relating to the Group’s pension scheme
assets. Deferred tax assets on capital losses and overseas trading losses have not been recognised due to uncertainty around the future
use of the losses.
146
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
23 Deferred taxation continued
Movement in temporary differences
Year ended 31 December 2023
Property, plant and equipment
Intangible assets
Inventories
Employee benefits
Equity settled share‑based
payments
Other items
Year ended 31 December 2022
Property, plant and equipment
Intangible assets
Inventories
Employee benefits
Equity settled share‑based
payments
Other items
1 January
2023
£’m
Recognised
in income
£’m
Prior year
adjustment
£’m
Recognised
in other
comprehensive
income
£’m
Recognised
in statement
of changes
in equity
£’m
On
acquisition of
subsidiary
undertaking
£’m
31 December
2023
£’m
(24.6)
(56.8)
(0.2)
(5.6)
0.4
(2.6)
(89.4)
(0.2)
2.6
—
0.5
0.4
(0.6)
2.7
1.5
(0.8)
(0.3)
—
(0.2)
0.4
0.6
—
—
—
2.4
—
0.8
3.2
—
—
—
—
(0.1)
—
(0.1)
—
(1.1)
—
—
—
—
(1.1)
(23.3)
(56.1)
(0.5)
(2.7)
0.5
(2.0)
(84.1)
1 January
2022
£’m
Recognised
in income
£’m
Prior year
adjustment
£’m
Recognised
in other
comprehensive
income
£’m
Recognised
in statement
of changes
in equity
£’m
On
acquisition of
subsidiary
undertaking
£’m
31 December
2022
£’m
(17.1)
(1.5)
(0.5)
(6.4)
1.2
(2.2)
(26.5)
(2.1)
1.6
0.8
—
(0.2)
0.2
0.3
—
—
—
—
—
—
—
—
—
—
0.8
—
(0.7)
0.1
—
—
—
—
(0.6)
—
(0.6)
(5.4)
(56.9)
(0.5)
—
—
0.1
(62.7)
(24.6)
(56.8)
(0.2)
(5.6)
0.4
(2.6)
(89.4)
The deferred tax balances on short-term timing differences are expected to reverse within one to three years.
Based on the current investment programme of the Group and assuming that current rates of capital allowances on fixed asset expenditure
continue into the future, there is little prospect of any significant part of the deferred taxation liability of the Company becoming payable over
the next three years. It is not realistic to make any projection after a three‑year period.
24 Called-up share capital
The authorised, issued and fully paid up Ordinary Share capital was as follows:
Ordinary Shares (25 pence nominal)
At 1 January and 31 December 2023
Share premium account and merger reserve
At 1 January
Shares issued in relation to the placing and open offer
Consideration shares issued
Costs associated with the share issue
At 31 December
Authorised
Issued and paid up
Number
Value
£’m
Number
300,000,000
75.0
252,968,728
Share premium account
Merger reserve
2023
£’m
200.0
—
—
—
200.0
2022
£’m
24.5
180.2
—
(4.7)
200.0
2023
£’m
141.6
—
—
—
141.6
Value
£’m
63.2
2022
£’m
—
—
141.6
—
141.6
During the year ended 31 December 2022, 28,824,114 new Ordinary Shares were issued at £6.50 per share in relation to a placing and a
placing and open offer. An amount of £180.2 million was credited to the share premium account in relation to the issue of these shares.
A further 24,092,457 new Ordinary Shares were issued at £6.80 per share as consideration for the acquisition of Marley Group Limited.
An amount of £141.6 million has been credited to a merger reserve in relation to the issue of these shares and reflects the fair value of the
shares at the date of the acquisition.
Own shares reserve
Transactions of the Group‑sponsored Employee Benefit Trust are included in the Group Financial Statements. The Trust’s purchases of shares in
the Company are debited directly to equity and disclosed separately in the balance sheet as “own shares”. Further details are included on page 104.
Capital redemption reserve
The capital redemption reserve records the nominal value of shares repurchased by the Company.
Marshalls plc | Annual Report and Accounts 2023
147
Financial Statements
24 Called-up share capital continued
Consolidation reserve
On 8 July 2004 Marshalls plc was introduced as the new holding company of the Group by way of a court‑approved Scheme of Arrangement
under Section 425 of the Companies Act 1985. The restructuring was accounted for as a capital reorganisation and accounting principles
were applied as if the Company had always been the holding company of the Group. The difference between the aggregate nominal value
of the new shares issued by the Company and the called‑up share capital, capital redemption reserve and share premium account of
Marshalls Group plc (the previous holding company) was transferred to a consolidation reserve.
Hedging reserve
This represents the gains and losses arising on derivatives used for cash flow hedging, principally from the Group’s interest rate swaps,
energy price contracts and forward exchange contracts.
Dividends
After the balance sheet date, the following dividends were proposed by the Directors. The dividends have not been provided for and there
were no income tax consequences.
5.7 pence final dividend (2022: 9.9 pence) per Ordinary Share
25 Non-controlling interests
At 1 January
Share of loss for the year
Foreign currency transaction differences
Sale of subsidiary
At 31 December
2023
£’m
14.4
2023
£’m
0.8
(0.2)
—
(0.6)
—
2022
£’m
25.0
2022
£’m
1.0
(0.3)
0.1
—
0.8
26 Acquisition of subsidiary
On 29 April 2022 Marshalls Group Limited acquired 100 per cent of the issued share capital of Marley Group plc, a leader in the manufacture and
supply of pitched roofing systems to the UK construction market. Marley Group plc operates within the UK and is registered in England and Wales.
The Group concluded its review of the fair value of assets and liabilities acquired, and final adjustments were made to the provision
assessment that was disclosed in the 2022 Annual Report in Note 25 on page 182. These increased the provisions for deferred tax and
contingent consideration together with an increase in goodwill of £1.8 million.
27 Disposal of subsidiary
On 13 April 2023, the Group sold its interest in Marshalls NV, its former Belgian subsidiary, for a nominal sum. The sale resulted in a profit on
disposal of £0.6 million, which has been accounted for as an adjusting item (Note 4). This business contributed revenue of £21.3 million and
a loss before taxation of £1.1 million in 2022. In the period until the disposal on 13 April 2023, the business generated revenue of £5.0 million
and a loss before taxation of £0.6 million.
28 Analysis of net debt
Cash at bank and in hand
Debt due after 1 year
Lease liabilities
1 January
2022
£’m
56.3
(247.0)
(45.9)
(236.6)
Cash flow
£’m
(20.3)
39.8
9.6
29.1
Movement
in leases
£’m
On disposal
of subsidiary
£’m
Other
changes (i)
£’m
31 December
2023
£’m
—
—
(13.7)
(13.7)
(1.4)
—
5.3
3.9
(0.1)
(0.2)
—
(0.3)
34.5
(207.4)
(44.7)
(217.6)
(i) Other changes include foreign currency movements on cash and loan balances.
Movement in the net debt is shown net of bank arrangement fees. The amounts above exclude an impact of derivative instruments.
Reconciliation of net cash flow to movement in net debt
Net decrease in cash equivalents
Cash outflow from decrease in bank borrowings
On acquisition of subsidiary undertakings
On disposal of subsidiary undertakings
Cash outflow from principle lease repayments
New leases entered into
Lease liability terminated on disposal of subsidiary undertaking
Effect of exchange rate fluctuations
Movement in net debt in the year
Net debt at 1 January
Net debt at 31 December
148
Marshalls plc | Annual Report and Accounts 2023
2023
£’m
(20.3)
39.8
—
(1.4)
9.6
(13.7)
5.3
(0.3)
19.0
(236.6)
(217.6)
2022
£’m
(19.3)
86.2
(259.5)
—
11.1
(14.0)
—
—
(195.5)
(41.1)
(236.6)
Notes to the Consolidated Financial Statements continued
29 Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non‑cash changes.
Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s
Consolidated Cash Flow Statement as cash flows from financing activities.
Interest-bearing loans and borrowings (Note 18)
Lease liabilities (Note 19)
Total liabilities from financing activities
Interest-bearing loans and borrowings (Note 18)
Lease liabilities (Note 19)
Total liabilities from financing activities
1 January
2023
£’m
(247.0)
(45.9)
(292.9)
1 January
2022
£’m
(41.0)
(41.4)
(82.4)
Non-cash changes
Financing
Disposal of
cash flows * Subsidiary (Note 27)
£’m
£’m
Other
changes **
£’m
31 December
2023
£’m
39.8
9.6
49.4
—
5.3
5.3
(0.2)
(13.7)
(13.9)
(207.4)
(44.7)
(252.1)
Non-cash changes
Financing
Acquisition of
cash flows * Subsidiary (Note 26)
£’m
£’m
Other
changes **
£’m
31 December
2022
£’m
86.2
11.1
97.3
(291.9)
(1.6)
(293.5)
(0.3)
(14.0)
(14.3)
(247.0)
(45.9)
(292.9)
*
The cash flows from bank loans, overdrafts and other borrowings make up the net amount of proceeds from borrowings and repayments of borrowings in the Consolidated Cash
Flow Statement.
** New leases and foreign currency movements.
30 Contingent liabilities
National Westminster Bank plc has issued, on behalf of Marshalls plc, the following irrevocable letters of credit relating to the Group’s cap
on self‑insurance for employer’s liability and vehicle insurance:
Beneficiary
M S Amlin Limited
HDI Global SE — UK
AIOI Nissay Dowa Insurance UK Limited
Aviva Insurance Limited
M S Amlin Limited
Amount
£0.7 million
£0.5 million
£0.6 million
£0.4 million
£0.8 million
Period
Purpose
23 Dec 2011 to 30 Oct 2024
8 Dec 2020 to 30 Oct 2024
8 Dec 2020 to 30 Oct 2024
19 Mar 2014 to 30 Oct 2024
30 Oct 2016 to 9 Feb 2025
Employer’s liability
Employer’s liability
Vehicle insurance
Vehicle insurance
Vehicle insurance
Marshalls plc has provided a statutory Parent Company guarantee to those subsidiaries listed below in order that they are exempt from the
requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue of S479A of the Act.
Marley Group Limited
Monty Bidco Limited
Monty Midco 1 Limited
Monty Midco 2 Limited
Monty Topco Limited
Marshalls Building Products Limited
Marshalls Properties Limited
Marshalls EBT Limited
CPM Group Limited
PD Edenhall Limited
Edenhall Holdings Limited
Edenhall Limited
Edenhall Concrete Limited
Edenhall Concrete Products Limited
Edenhall Building Products Limited
PD Edenhall Holdings Limited
Registered
number
13596495
12144582
12144469
12144529
12144396
00113882
04349470
05472428
01005164
03635485
10367730
03326387
00698870
03495356
02638967
08911209
31 Related parties
Identity of related parties
The Group has a related party relationship with its Directors.
Transactions with key management personnel
Other than the Directors, there are no senior managers in the Group who are relevant for establishing that Marshalls plc has the appropriate
expertise and experience for the management of its business.
The Directors of the Company and their immediate relatives control 0.2489 per cent (2022: 0.2182 per cent) of the voting shares of
the Company.
In addition to their salaries and pension allowances, the Group also provides non‑cash benefits to Directors. Further details in relation to
Directors are disclosed in the Remuneration Committee Report on pages 88 to 102.
Marshalls plc | Annual Report and Accounts 2023
149
Financial Statements
32 Post-balance Sheet event
During January 2024 the Group announced a new partnership with Wincanton plc to manage and run some of the Logistics Services
across the Marshalls Group. This will result in the entire in‑house fleet moving to Wincanton, and up to 300 colleagues transferring under
TUPE regulations.
33 Alternative performance measures
The APMs set out by the group are made‑up of earnings‑based measures and ratio measures with a selection of these measures being
stated after adjusting items.
APM
Definition and/or purpose
Adjusted operating profit, adjusted profit
before tax, adjusted profit after tax,
adjusted earnings per share, adjusted
EBITA, adjusted EBITDA and adjusted
operating cash flow
Adjusted return on capital employed
The Directors assess the performance of the Group using these measures including when
considering dividend payments.
Adjusted return on capital employed is calculated as adjusted EBITA (on annualised basis) divided
by shareholders’ funds plus net debt at the period end. It is designed to give further information
about the returns being generated by the Group as a proportion of capital employed.
Adjusted operating cash flow conversion Operating cash flow conversion is calculated by dividing adjusted operating cash flow by adjusted
EBITDA (both on an annualised basis). Adjusted operating cash flow is calculated by adding back
adjusting items paid, net financial expenses paid, and taxation paid. It illustrates the rate of
conversion of profitability into cash flow.
Pre‑IFRS 16 measures
The Group’s banking covenants are assessed on a pre-IFRS 16 basis. In order to provide transparency and clarity regarding how the Group’s
compliance with banking covenants, the following performance measures and their calculations have been presented:
APM
Definition and purpose
Pre‑IFRS16 adjusted EBITDA
Pre‑IFRS16 adjusted EBITDA is adjusted EBITDA excluding right‑of‑use asset depreciation
and profit or losses on the sale of property, plant and equipment.
Pre‑IFRS16 net debt
Pre‑IFRS 16 net debt comprises cash at bank and in hand and bank loans but excludes lease
liabilities. It shows the overall net indebtedness of the Group on a pre-IFRS 16 basis.
Pre‑IFRS16 net debt leverage
This is calculated by dividing pre‑IFRS16 net debt by adjusted pre‑IFRS16 EBITDA (on an
annualised basis) to provide a measure of leverage.
Like‑for‑like
A number of the APMs are stated on a like‑for‑like basis in 2022 to include the relevant information for Marley for the period between
1 January 2022 and 28 April 2022 in order to show the measure as if the business had been owned by the Group for the whole of 2022.
APM
Definition and purpose
Like-for-like revenue growth
Like-for-like revenue growth is revenue growth generated by the Group that includes revenue
for acquired businesses and excludes revenue for businesses that have been sold for the
corresponding periods in the prior year. This provides users of the financial statements with
an understanding about revenue growth that is not impacted by acquisitions or disposals.
Other definitions
APM
EBITDA
EBITA
Definition and purpose
EBITDA is earnings before interest, taxation, depreciation, and amortisation and provides users
with further information about the profitability of the business before financing costs, taxation,
and non-cash charges.
EBITA is earnings before interest, taxation and amortisation and provides users with
further information about the profitability of the business before financing costs, taxation,
and amortisation.
150
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued 33 Alternative performance measures continued
Reconciliations of IFRS reported income statement measures to income statement APMs is set out in the following three tables.
A reconciliation of operating profit to like‑for‑like pre‑IFRS16 adjusted EBITDA is set out below:
Operating profit
Adjusting items (Note 4)
Adjusted operating profit
Amortisation (excluding amortisation of intangible assets arising on acquisitions)
Adjusted EBITA
Depreciation
Adjusted EBITDA
Marley pre‑acquisition EBITDA
Profit on sale of property, plant and equipment
Right-of-use asset principle payments
Like‑for‑like pre‑IFRS16 adjusted EBITDA
Adjusted EBITA
Marley pre‑acquisition EBITA
Adjusted like‑for‑like EBITA
2023
£’m
41.0
29.7
70.7
1.7
72.4
31.2
103.6
—
(1.4)
(9.6)
92.6
2023
£’m
72.4
—
72.4
2022
£’m
47.9
53.2
101.1
1.8
102.9
33.1
136.0
18.1
(1.2)
(11.1)
141.8
2022
£’m
102.9
16.4
119.3
Disclosures required under IFRS are referred to as on a reported basis. Disclosures referred after adding back adjusting items basis are
restated and are used to provide additional information and a more detailed understanding of the Group’s results. Certain measures are
reported on an annualised basis to show the preceding 12-month period where seasonality can impact on the measure.
Like‑for‑like revenue growth
Landscape Products
Building Products
Roofing Products
Like-for-like revenue
2023
£’m
321.5
170.1
179.6
671.2
2022
£’m
381.9
193.1
196.5
771.5
Change
%
(16)
(12)
(9)
(13)
The Group sold its Belgian subsidiary on 13 April 2023 and therefore Landscape Products 2022 revenue has been restated to exclude
£12.2 million of revenue generated by that subsidiary between 14 April and 31 December 2022. Marley revenue in 2022 has been restated
to include £64.3 million of revenue for the pre‑acquisition period from 1 January 2022 to 28 April 2022. No adjustments have been to
Building Products revenue.
Pre‑IFRS 16 net debt and pre‑IFRS16 net debt leverage
Net debt comprises cash at bank and in hand, bank loans and leasing liabilities. An analysis of net debt is provided in Note 28. Net debt
on a pre‑IFRS 16 basis has been disclosed to provide additional information and to align with reporting required for the Group’s banking
covenants. Pre‑IFRS16 net debt leverage is defined as pre‑IFRS16 net debt divided by like‑for‑like adjusted pre‑IFRS16 EBITDA. Net debt as
reported in Note 28 is reconciled to pre-IFRS 16 net debt and pre-IFRS 16 net debt leverage below:
Net debt
IFRS 16 leases
Net debt on a pre-IFRS 16 basis
Like‑for‑like adjusted pre‑IFRS16 EBITDA
Pre‑IFRS16 net debt leverage
2023
£’m
217.6
(44.7)
172.9
92.6
1.9
2022
£’m
236.6
(45.9)
190.7
141.8
1.4
Marshalls plc | Annual Report and Accounts 2023
151
Financial Statements
33 Alternative performance measures continued
Return on capital employed (“ROCE”)
ROCE is defined as adjusted EBITA divided by shareholders’ funds plus net debt.
Like‑for‑like adjusted EBITA
Shareholders’ funds
Net debt
Capital employed
ROCE
2023
£’m
72.4
641.3
217.6
858.9
8.4%
2022
£’m
119.3
661.1
236.6
897.7
13.3%
Adjusted operating cash flow conversion
Adjusted operating cash flow conversion is the ratio of adjusted operating cash flow to adjusted EBITDA (on an annualised basis) and is
calculated as set out below:
Net cash flow from operating activities
Adjusting items paid
Net financial expenses paid
Taxation paid
Adjusted operating cash flow
Adjusted EBITDA
Operating cash flow conversion
2023
£’m
77.7
5.5
16.5
10.4
110.1
103.6
106%
2022
£’m
85.3
17.4
9.9
11.6
124.2
136.0
91%
152
Marshalls plc | Annual Report and Accounts 2023
Notes to the Consolidated Financial Statements continued
Company Financial Statements
Company Balance Sheet
at 31 December 2023
Non-current assets
Investments
Deferred taxation assets
Loans to Group undertakings
Net current assets
Total assets
Current liabilities
Trade and other payables
Net current liabilities
Net assets
Capital and reserves
Called-up share capital
Share premium account
Merger reserve
Own shares
Capital redemption reserve
Equity reserve
Retained earnings
Equity shareholders’ funds
Notes
37
38
39
40
41
41
41
2023
£’m
355.0
0.2
395.7
750.9
—
750.9
(4.8)
(4.8)
746.1
63.2
200.0
141.6
(1.5)
75.4
16.4
251.0
746.1
2022
£’m
353.7
0.2
407.5
761.4
—
761.4
(0.5)
(0.5)
760.9
63.2
200.0
141.6
(1.3)
75.4
15.1
266.9
760.9
The Company reported a profit for the financial year ended 31 December 2023 of £14.3 million (2022: profit of £137.8 million).
The Financial Statements of Marshalls plc (registered number 05100353) were approved by the Board of Directors and authorised for issue
on 18 March 2024. They were signed on its behalf by:
Matt Pullen
Chief Executive
Justin Lockwood
Chief Financial Officer
The Notes on pages 155 to 160 form part of these Company Financial Statements.
Marshalls plc | Annual Report and Accounts 2023
153
Financial Statements
Company Financial Statements continued
Company Statement of Changes in Equity
for the year ended 31 December 2023
Current year
At 1 January 2023
Total comprehensive income for the year
Profit for the financial year
Total comprehensive income for the year
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Share-based payments
Deferred tax on share-based payments
Dividends to equity shareholders
Purchase of own shares
Own shares issued under share schemes
Total contributions by and distributions
to owners
Total transactions with owners of
the Company
Share
capital
£’m
Share
premium
account
£’m
Merger
reserve
£’m
Own
shares
£’m
Capital
redemption
reserve
£’m
Equity
reserve
£’m
Retained
earnings
£’m
Total
equity
£’m
63.2
200.0
141.6
(1.3)
75.4
15.1
266.9
760.9
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.3)
0.1
(0.2)
(0.2)
(1.5)
—
—
—
—
—
—
—
—
—
75.4
—
—
14.3
14.3
14.3
14.3
1.3
—
—
—
—
1.3
1.5
—
(31.6)
—
(0.1)
2.8
—
(31.6)
(0.3)
—
(30.2)
(29.1)
1.3
16.4
(15.9)
(14.8)
251.0
746.1
At 31 December 2023
63.2
200.0
141.6
There were no items of other comprehensive income in the year other than the profit for the financial year recorded above.
Share
capital
£’m
Share
premium
account
£’m
Merger
reserve
£’m
Own
shares
£’m
Capital
redemption
reserve
£’m
Equity
reserve
£’m
Retained
earnings
£’m
Total
equity
£’m
(0.6)
75.4
14.6
167.6
331.5
Current year
At 1 January 2022
Total comprehensive income for the year
Profit for the financial year
Total comprehensive income for the year
Transactions with owners,
recorded directly in equity
Contributions by and distributions
to owners
Shares issued
Share issue costs
Share-based payments
Deferred tax on share-based payments
Dividends to equity shareholders
Purchase of own shares
Own shares issued under share schemes
Total contributions by and distributions
to owners
Total transactions with owners of
the Company
At 31 December 2022
50.0
24.5
—
—
—
—
—
—
—
13.2
—
—
—
—
—
—
180.2
(4.7)
—
—
—
—
—
141.6
—
—
—
—
—
—
—
—
—
—
—
—
—
(1.1)
0.4
13.2
175.5
141.6
(0.7)
13.2
63.2
175.5
200.0
141.6
141.6
(0.7)
(1.3)
—
—
—
—
—
—
—
—
—
—
—
75.4
—
—
137.8
137.8
137.8
137.8
—
—
0.7
(0.2)
—
—
—
—
—
0.6
—
(38.7)
—
(0.4)
335.0
(4.7)
1.3
(0.2)
(38.7)
(1.1)
—
0.5
(38.5)
291.6
0.5
15.1
99.3
266.9
429.4
760.9
There were no items of other comprehensive expense in the year other than the loss for the financial year recorded above.
154
Marshalls plc | Annual Report and Accounts 2023
Notes to the Company Financial Statements
34 Accounting policies
The following paragraphs summarise the main accounting policies of the Company, which have been applied consistently in dealing with
items which are considered material in relation to the Company’s Financial Statements.
Authorisation of Financial Statements and Statement of Compliance with FRS 101
The Parent Company Financial Statements of Marshalls plc for the year ended 31 December 2023 were authorised for issue by the Board
of Directors on 18 March 2024. Marshalls plc is a public limited company that is incorporated and domiciled and has its registered office in
England and Wales. The Company’s Ordinary Shares are publicly traded on the London Stock Exchange and the Company is not under the
control of any single shareholder.
These Financial Statements were prepared in accordance with the historical cost basis of accounting and Financial Reporting Standard 101
“Reduced Disclosure Framework” (“FRS 101”).
No profit and loss account is presented by the Company as permitted by Section 408 of the Companies Act 2006.
Basis of preparation
The Company has adopted FRS 101 from the UK Generally Accepted Accounting Practice for all periods presented.
The accounting policies which follow set out those policies which apply in preparing the Financial Statements for the year ended
31 December 2023.
The Company meets the definition of a qualifying entity under FRS 100, application of financial reporting requirements issued by the FRC.
In these Financial Statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• the requirements of paragraphs 45(b) and 46 – 52 of IFRS 2 “Share-based Payments”;
• the requirements of IFRS 7 “Financial Instruments: Disclosures”;
• the requirements of paragraphs 91 – 99 of IFRS 13 “Fair Value Measurement”;
• the requirement in paragraph 38 of IAS 1 “Presentation of Financial Statements” to present comparative information in respect of
paragraph 79(a)(iv) of IAS 1;
• the requirements of paragraphs 10(d), 10(f), 16, 39(c), 40A, 40B, 40C, 40D, 111 and 134 – 136 of IAS 1 “Presentation of
Financial Statements”;
• the requirements of IAS 7 “Statement of Cash Flows”;
• the requirements of paragraphs 30 and 31 of IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”;
• the requirements of paragraph 17 of IAS 24 “Related Party Disclosures”;
• the requirements in IAS 24 “Related Party Disclosures” to disclose related party transactions entered into between two or more members
of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member; and
• the requirements of paragraphs 134(d) – 134(f) and 135(c) – 135(e) of IAS 36 “Impairment of Assets”.
The Company also intends to take advantage of these exemptions in the Financial Statements to be issued in the following year. Objections
may be served on the Company by shareholders holding in aggregate 5 per cent or more of the total allocated shares in the Company.
Where required, additional disclosures are given in the Consolidated Financial Statements.
Investments
Fixed asset investments in subsidiaries and associates are shown at cost less provision for impairment. The Directors consider annually
whether a provision against the value of investments on an individual basis is required.
Share capital
(i) Share capital
Share capital is classified as equity if it is non‑redeemable and any dividends are discretionary, or if it is redeemable but only at the
Company’s option. Dividends on share capital classified as equity are recognised as distributions within equity. Non‑equity share capital is
classified as a liability if it is redeemable on a specific date or at the option of the shareholders or if dividend payments are not discretionary.
Dividends thereon are recognised in the profit and loss account as a financial expense.
(ii) Dividends
Dividends on non‑equity shares are recognised as a liability and accounted for on an accruals basis. Equity dividends are recognised as a
liability in the period in which they are declared (appropriately authorised and no longer at the discretion of the Company).
Pension schemes
(i) Defined benefit scheme
The Company participates in a Group‑wide pension scheme providing benefits based on final pensionable pay. The defined benefit section
of the Scheme was closed to future service accrual in July 2006.
The assets of the Scheme are held separately from those of the Company. The defined benefit cost and contributions payable are borne by
Marshalls Group Limited and, therefore, the defined benefit surplus or deficit is recorded in Marshalls Group Limited. Full details are provided
in Note 21 on pages 142 to 144.
(ii) Defined contribution scheme
Obligations for contributions to defined contribution schemes are recognised as an expense as incurred.
Marshalls plc | Annual Report and Accounts 2023
155
Financial Statements 34 Accounting policies continued
Share‑based payment transactions
The Company enters into equity settled share‑based payment transactions with its employees. In particular, annual awards are made to
employees under the Company’s MIP and the Employee Bonus Share Plan (“BSP”).
Recognition/policy is in line with the Group policy which is set out on page 122 of the consolidated accounts.
Own shares held by the Employee Benefit Trust
Transactions of the Company‑sponsored Employee Benefit Trust are included in the Group Financial Statements. In particular, the Trust’s
purchases of shares in the Company are debited directly to equity and disclosed separately in the balance sheet as “own shares”.
Trade and other payables
Trade and other payables are stated at nominal amount (discounted if material).
Income tax
Income tax on the profit or loss for the year, current tax, deferred taxation, deferred taxation assets and additional income taxes are
recognised is in line with the Group policy which is set out on page 123 of the consolidated accounts.
Accounting estimates and judgements
The preparation of the Financial Statements requires management to make judgements, estimates and assumptions. Although these
judgements and estimates are based on management’s best knowledge, actual results ultimately may differ from these estimates.
The key sources of estimation uncertainty that have a significant risk of causing material adjustments to the carrying value of assets and
liabilities within the next financial year are disclosed below.
The carrying value of investments is reviewed on an annual basis. This review requires the use of cash flow projections based on a financial
forecast that is discounted at an appropriate market based discount rate. The assumption on the market based discount rate is determined
based on the advice of a third party adviser.
35 Operating costs
The audit fee for the Company was £0.1 million (2022: £0.1 million). This is in respect of the audit of the Financial Statements. Fees paid to
the Company’s auditor for services other than the statutory audit of the Company are not disclosed in the Notes to the Company Financial
Statements since the consolidated accounts of the Group are required to disclose non‑audit fees on a consolidated basis.
Details of Directors’ remuneration, share options, LTIPs and Directors’ pension entitlements are disclosed on pages 88 to 102 of the
Remuneration Committee Report.
The average monthly number of employees of Marshalls plc (including Executive Directors) in the year ended 31 December 2023 was 200
(2022: 203). The personnel costs for the majority of these employees are borne by Marshalls Group Limited. The personnel costs charged
to Marshalls plc in the year were £4.5 million (2022: £3.9 million) in relation to 21 employees (2022: 21), including the Directors.
36 Ordinary dividends: equity shares
2023 interim: paid 1 December 2023
2022 final: paid 1 July 2023
2023
Pence per share
2.6
9.9
12.5
£’m
6.6
25.0
31.6
2022
Pence per share
5.7
9.6
15.3
£’m
14.4
24.3
38.7
After the balance sheet date the following dividends were proposed by the Directors. The dividends have not been provided and there were
no income tax consequences.
2023 final: 5.7 pence (2022: 9.9 pence) per Ordinary Share
2023
£’m
14.4
2022
£’m
25.0
156
Marshalls plc | Annual Report and Accounts 2023
Notes to the Company Financial Statements continued
37 Investments
At 1 January 2023
Additions
At 31 December 2023
£’m
353.7
1.3
355.0
Investments comprise shares in the subsidiary undertaking, Marshalls Group Limited. The Directors have considered the carrying value of
the Company’s investments and are satisfied that no provision is required.
The increase in the year of £1.3 million represents adjustments to the number of shares expected to vest in respect of share‑based payment
awards granted to employees of Marshalls Group Limited.
Pursuant to Sections 409 and 410(2) of the Companies Act 2006, the subsidiary undertakings of Marshalls plc at 31 December 2023 are set
out below.
Subsidiaries
Acraman (418) Limited
Alton Glasshouses Limited
Bollards Direct Limited
Capability Brown Garden Centres Limited
Capability Brown Landscaping Limited
Classical Flagstones Limited
CPM Group Limited** (01005164)
Dalestone Concrete Products Limited
Edenhall Limited** (03326387)
Edenhall Building Products Limited** (02638967)
Edenhall Concrete Limited** (00698870)
Edenhall Concrete Products Limited** (03495356)
Edenhall Holdings Limited** (10367730)
Edenhall Technologies Limited
Locharbriggs Sandstone Limited
Lloyds Quarries Limited
Marley Limited
Marley Group Limited** (13596495)
Marshalls Building Materials Limited
Marshalls Building Products Limited** (00113882)
Marshalls Concrete Products Limited
Marshalls Directors Limited
Marshalls Dormant No. 30 Limited
Marshalls Dormant No. 31 Limited
Marshalls Dormant No. 32 Limited
Marshalls EBT Limited*/** (05472428)
Marshalls Estates Limited
Marshalls Group Limited*
Marshalls Landscape Products Limited
Marshalls Landscape Products (North America) Inc.
Marshalls Mono Limited
Marshalls Natural Stone Limited
Marshalls Profit Sharing Scheme Limited
Marshalls Properties Limited** (04349470)
Marshalls Register Limited
Marshalls Stone Products Limited
Marshalls Street Furniture Limited
Monty Bidco Limited** (12144582)
Monty Midco 1 Limited** (12144469)
Monty Midco 2 Limited** (12144529)
Monty Topco Limited** (12144396)
Ollerton Limited
Panablok (UK) Limited
Paver Systems (Carluke) Limited
Paver Systems Limited
Principal activities
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Manufacturer of roofing products and solutions
Non-trading
Non-trading
Property management
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Intermediate holding company
Non-trading
Landscape Products supplier
Landscape Products manufacturer and supplier and
quarry owner supplying a wide variety of paving, street
furniture and natural stone products
Non-trading
Non-trading
Property management
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Class of share
% ownership
Ordinary/
preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary/
preference
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Marshalls plc | Annual Report and Accounts 2023
157
Financial Statements
37 Investments continued
Subsidiaries
PD Edenhall Limited** (03635485)
PD Edenhall Holdings Limited** (08911209)
Premier Mortars Limited
Quarryfill Limited
Rhino Protec Limited
Robinson Associates Stone Consultants Limited
Robinsons Greenhouses Limited
Rockrite Limited
S Marshall & Sons Limited
Scenic Blue Limited
Scenic Blue Landscape Franchise Limited
Scenic Blue (UK) Limited
Stancliffe Stone Company Limited
Stone Shippers Limited
Stonemarket (Concrete) Limited
Stonemarket Limited
The Great British Bollard Company Limited
The Stancliffe Group Limited
The Yorkshire Brick Co. Limited
Town & Country Paving Limited
Urban Engineering Limited
Viridian Solar Limited
Viridian Solar BV
Woodhouse Group Limited
Woodhouse UK Limited
Xiamen Marshalls Import Export Company Limited
* Held by Marshalls plc. All others held by subsidiary undertakings.
Principal activities
Class of share
% ownership
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Non-trading
Manufacturer of roof integrated solar products
Manufacturer of roof integrated solar products
Non-trading
Non-trading
Sourcing and distribution of natural stone products
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
** These subsidiaries are exempt from the requirement of the Companies Act 2006 relating to the audit of individual accounts by virtue of S479A of the Act. Marshalls plc has provided
a statutory Parent Company guarantee in relation to these subsidiaries. In each case the registered number is disclosed.
All the other companies excluding the ones below operate within the United Kingdom and are registered in England and Wales at the
following address: Landscape House, Premier Way, Lowfields Business Park, Elland HX5 9HT. Viridian Solar BV is registered in the
Netherlands, Xiamen Marshalls Import Export Company Limited is registered in China and Marshalls Landscape Products (North America)
Inc. is registered in the USA. Paver Systems Limited, Paver Systems (Carluke) Limited and Locharbriggs Sandstone Limited are registered
in Scotland. The respective registered offices are:
Paver Systems Limited and Paver Systems (Carluke) Limited
Roadmeetings, Carluke, Lanarkshire ML8 4QG
Locharbriggs Sandstone Limited
Locharbriggs, Dumfries, Dumfriesshire DG1 1QS
Marshalls Landscape Products (North America) Inc.
1209 Orange Street, Wilmington, County of New Castle, Delaware 19801, USA
Viridian Solar BV
Van Bylandtachterstraat 24, unit 6 5046 MB Tilburg, The Netherlands
Xiamen Marshalls Import Export Company Limited
12 A4, Xiangyu Building, No. 22, 4th Xiangxing Road,
Xiangyu Free Trade Zone, Xiamen, China
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Marshalls plc | Annual Report and Accounts 2023
Notes to the Company Financial Statements continued 38 Deferred taxation
Recognised deferred taxation assets and liabilities
Equity settled share‑based payments
Movement in temporary differences
Equity settled share‑based payments
Equity settled share‑based payments
39 Loans to Group undertakings
Amounts owed from subsidiary undertakings
Assets
Liabilities
2023
£’m
0.2
1 January
2023
£’m
0.2
1 January
2022
£’m
0.7
2022
£’m
0.2
2023
£’m
—
2022
£’m
—
Recognised
in income
£’m
—
Recognised
in income
£’m
Recognised
in statement
of changes in
equity
£’m
—
Recognised
in statement
of changes
equity
£’m
31 December
2023
£’m
0.2
31 December
2022
£’m
(0.3)
(0.2)
0.2
2023
£’m
395.7
2022
£’m
407.5
An on‑demand facility is in place between Marshalls plc and Marshalls Group Limited. The loan is unsecured and, together with accrued
interest and any other amounts accrued, is repayable in full on demand. Interest is accrued on a daily basis on the outstanding balance at a
rate equivalent to SONIA plus 1.65 per cent. The loan, however, is expected to be recovered after more than one year and has been reported
as a non-current asset. There are no expected credit losses associated with these amounts.
40 Creditors
Corporation tax
No creditors were due after more than one year.
41 Capital and reserves
Called‑up share capital
The authorised, issued and fully paid up Ordinary Share capital was as follows:
2023
£’m
4.8
2022
£’m
0.5
Ordinary Shares (25 pence nominal)
At 1 January and 31 December 2023
Share premium account and merger reserve
At 1 January
Shares issued in relation to the placing and open offer
Consideration shares issued
Costs associated with the share issue
At 31 December
Authorised
Issued and paid up
Number
Value
£’m
Number
300,000,000
75.0
252,968,728
Share premium account
Merger reserve
2023
£’m
200.0
—
—
—
200.0
2022
£’m
24.5
180.2
—
(4.7)
200.0
2023
£’m
141.6
—
—
—
141.6
Value
£’m
63.2
2022
£’m
—
—
141.6
—
141.6
During the year ended 31 December 2022, 28,824,114 new Ordinary Shares were issued at £6.50 per share. An amount of £180.2 million has
been credited to the share premium account in relation to the issue of these shares. A further 24,092,457 new Ordinary Shares were issued
at £6.80 per share as consideration for the acquisition of Marley Group Limited. An amount of £141.6 million has been credited to a merger
reserve in relation to the issue of these shares and reflects the fair value of the shares at the date of the acquisition.
Marshalls plc | Annual Report and Accounts 2023
159
Financial Statements
41 Capital and reserves continued
Own shares reserve
Transactions of the Group‑sponsored Employee Benefit Trust are included in the Group Financial Statements. The Trust’s purchases of
shares in the Company are debited directly to equity and disclosed separately in the balance sheet as “own shares”. Further details are
included on page 104.
Capital redemption reserve
The capital redemption reserve records the nominal value of shares repurchased by the Company.
Distributable reserves
The Company’s distributable reserves amount to £251.0 million (2022: £266.9 million) at the end of the period.
Equity reserve
The equity reserve represents the number of shares expected to vest in respect of share‑based payment awards granted to employees of
the Company.
Retained earnings
The retained earnings were £251 million at the end of the period.
42 Capital and leasing commitments
The Company had no capital or leasing commitments at 31 December 2023 or 31 December 2022.
43 Bank facilities
The Group’s banking arrangements are in respect of Marshalls plc, Marshalls Group Limited, Marshalls Mono Limited, Marley Limited and
Viridian Solar Limited with each company being nominated borrowers. The operational banking activities of the Group are undertaken by
Marshalls Group Limited and the Group’s bank debt is largely included in Marshalls Group Limited’s balance sheet.
44 Contingent liabilities
National Westminster Bank plc has issued, on behalf of Marshalls plc, the following irrevocable letters of credit relating to the Group’s cap
on self‑insurance for employer’s liability and vehicle insurance:
Beneficiary
M S Amlin Limited
HDI Global SE — UK
AIOI Nissay Dowa Insurance UK Limited
Aviva Insurance Limited
M S Amlin Limited
Amount
£0.7 million
£0.5 million
£0.6 million
£0.4 million
£0.8 million
Period
Purpose
23 Dec 2012 to 30 Oct 2024
8 Dec 2021 to 30 Oct 2024
8 Dec 2021 to 30 Oct 2024
19 Mar 2015 to 30 Oct 2024
30 Oct 2017 to 9 Feb 2025
Employer’s liability
Employer’s liability
Vehicle insurance
Vehicle insurance
Vehicle insurance
45 Pension scheme
The Company is the sponsoring employer of the Marshalls plc pension scheme (the “Scheme”) which is primarily a closed defined benefit
scheme with a small defined contribution element (mainly AVCs). The assets of the Scheme are held in separately managed funds which
are independent of the Group’s finances.
Full details of the Scheme are provided in Note 21. The Company is unable to identify its share of the Scheme assets and liabilities on
a consistent and reasonable basis.
The latest funding valuation of the defined benefit section of the Scheme was carried out as at 5 April 2021 and was updated for the
purposes of the 31 December 2023 Financial Statements by a qualified independent actuary.
46 Related parties
Related party relationships exist with other members of the Group. All operating costs are borne by Marshalls Group Limited and are
recharged to Marshalls plc in respect of specifically attributable costs. All related party transactions were made on terms equivalent
to those that prevail in arm’s length transactions.
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Marshalls plc | Annual Report and Accounts 2023
Notes to the Company Financial Statements continued Financial History – Consolidated Group
Consolidated Income Statement
Revenue
Net operating costs (after adding back
adjusting items)
Adjusted operating profit
Adjusting items
Operating profit
Financial income and expenses (net)
Adjusted profit before tax
Profit before tax
Income tax expense
Profit for the financial year
Profit for the year attributable to:
Equity shareholders of the Parent
Non-controlling interests
EBITA*
Adjusted EBITA**
EBITDA*
Adjusted EBITDA**
Basic earnings per share (pence)
Adjusted basic earnings per share**
Dividends per share (pence)
Year-end share price (pence)
Tax rate (%)
Consolidated Balance Sheet
Non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Net assets
Net borrowings
Net borrowings (pre-IFRS 16)
Gearing ratio
Year ended
31 December 2019
£’m
Year ended
31 December 2020
£’m
Year ended
31 December 2021
£’m
Year ended
31 December 2022
£’m
Year ended
31 December 2023
£’m
541.8
(466.9)
74.9
(1.2)
73.7
(3.8)
71.1
69.8
(11.9)
57.9
58.2
(0.3)
57.9
76.1
76.1
103.9
103.9
29.4
30.0
4.7
860.0
17.1
2019
£’m
350.0
212.5
562.5
(162.3)
(104.4)
295.8
(60.0)
(10.0)
20.3%
469.5
(441.1)
28.4
(19.0)
9.4
(4.7)
23.7
4.7
(2.1)
2.6
2.4
0.2
2.6
12.1
29.9
45.3
57.6
1.2
9.2
4.3
748.5
45.0
2020
£’m
324.4
290.0
614.4
(157.2)
(169.4)
287.8
(75.6)
(26.9)
26.3%
589.3
(511.9)
77.4
(1.2)
76.2
(6.9)
73.3
69.3
(14.4)
54.9
54.8
0.1
54.9
79.4
79.3
107.1
107.1
27.5
29.2
14.3
699.5
20.8
2021
£’m
332.7
263.2
595.9
(150.6)
(101.0)
344.3
(41.1)
—
11.9%
719.4
(618.3)
101.1
(53.2)
47.9
(10.7)
90.4
37.2
(10.7)
26.5
26.8
(0.3)
26.5
57.1
102.9
90.2
136.0
11.4
31.3
15.6
273.2
28.7
2022
£’m
886.9
322.0
1,208.9
(167.3)
(380.5)
661.1
(236.6)
(190.7)
35.8%
671.2
(600.5)
70.7
(29.7)
41.0
(18.8)
53.3
22.2
(3.8)
18.4
18.6
(0.2)
18.4
53.1
72.4
84.3
103.6
7.4
16.7
8.3
279.4
17.1
2023
£’m
855.1
259.0
1,114.1
(138.5)
(334.3)
641.3
(217.6)
(172.9)
33.9%
*
EBITA is defined as earnings before interest, tax and amortisation of intangibles. EBITDA is defined as earnings before interest, tax, amortisation of intangibles and depreciation.
** After adding back adjusting items.
Marshalls plc | Annual Report and Accounts 2023
161
Financial Statements
Glossary
ABI
Barbour ABI – a provider of construction intelligence data
ERP system
Enterprise Resource Planning software system
APM
Adjusted performance measure
BEIS
Business, Energy & Industry Strategy
BES 6001
BRE accreditation for responsible sourcing
ESOS
Energy Savings Opportunity Scheme
ETI
Ethical Trading Initiative
EVG
Employee Voice Group
BRE
Independent organisation offering expertise in the built
environment sector
FSC certified
Forest Stewardship Council certified from responsibly
managed forests
CCO
Corporate Criminal Offence – legislation which can hold companies
accountable for tax fraud
FTSE4Good
An index of companies scoring highly in corporate social
responsibility measures
CDP
Carbon Disclosure Project
GDPR
General Data Protection Regulation
Circular economy
Production model recycling and reusing as much as possible
GfK
Company providing data and analytics on consumer goods
CO2, CO2e and greenhouse gas emissions
Carbon dioxide emissions. Carbon dioxide (CO2) is the primary
greenhouse gas emitted through human activities.
GHG
Greenhouse gases
While CO2 emissions come from a variety of natural sources, human
related emissions are responsible for the increase that has occurred
in the atmosphere since the Industrial Revolution.
“Carbon dioxide equivalent” or “CO2e” is a term for describing
different greenhouse gases in a common unit. For any quantity and
type of greenhouse gas, CO2e signifies the amount of CO2 which
would have the equivalent global warming impact.
Carbon sequestration
Carbon sequestration is the long‑term removal, capture or
sequestration of CO2 from the atmosphere to slow or reverse
atmospheric CO2 pollution and to mitigate or reverse climate change.
Carbon dioxide is captured from the atmosphere through biological,
chemical and physical processes. Concrete building products
naturally absorb CO2. Calculations show that concrete absorbs
roughly 30 per cent of the amount of CO2 that cement production
emits over its life.
ILO
International Labour Organization
ISO
International Organization for Standardization
LDI asset portfolio
Liability Driven Investment asset portfolio – investment needed
to fund future liabilities
Marshalls NOW
An internal news, employee benefits and wellbeing platform
MHFAs
Mental Health First Aiders
MIP
Management Incentive Plan
CPA
Construction Products Association
D365
Microsoft cloud ERP software system
DERI
Diversity, Equity, Respect and Inclusion
EDI
Electronic Data Interchange
Mitigation vs adaptation
The difference between climate change mitigation strategies and
climate change adaptation is that mitigation is aimed at tackling
the causes and minimising the possible impacts of climate change.
Adaptation looks at how to reduce the negative effects it has and
how to take advantage of any opportunities that arise.
Net zero
A net zero company will set and pursue a 1.5°C aligned
science-based target for its full value chain emissions.
Any remaining hard‑to‑decarbonise emissions must be
compensated using certified greenhouse gas removal.
eNPS
Employee Net Promoter Score – how likely employees are
to recommend an organisation as a good place to work
EPDs
Environmental Product Declarations
NGO
Non‑Governmental Organisation
NHBC
National House Building Council
162
Marshalls plc | Annual Report and Accounts 2023
OGSM
Objectives, Goals, Strategies and Measures
PAS 2050
PAS 2050 is the first consensus‑based and internationally applicable
standard on product carbon footprinting that has been used as the basis
for the development of other standards internationally. From creation
to disposal; throughout the lifecycle. The term is used in a number of
business contexts, but most typically in a company’s responsibility for
dealing with hazardous waste and product performance.
Product carbon footprints
A lifecycle product carbon footprint measures the total greenhouse
gas emissions generated by a product, from extraction of raw
materials, to end of life. It is measured in carbon dioxide equivalent
(CO2e). Product carbon footprints should be associated with a scope
or boundary, the most common being:
Cradle to gate: This measures the total greenhouse gas emissions
from the extraction of raw materials through to product manufacture
up to the factory gate.
Scope 1, 2 and 3 emissions
Scope 1 – all direct emissions
Emissions derived from the activities of an organisation or under
their control. This includes fuel combustion on site, from owned
vehicles and fugitive emissions. Examples include fleet vehicles,
gas emissions from boilers and air‑conditioning refrigerant leaks.
Scope 2 – indirect emissions
Emissions derived from electricity purchased and used by the
organisation. Emissions will be created during the production of
the energy and eventually used by the organisation. This includes
electricity from energy suppliers to power computers, heating
and cooling.
Scope 3 – all other indirect emissions
Emissions derived from activities of the organisation, but occur from
sources that they do not own or control. This is usually the largest
share of the carbon footprint, especially for office‑based companies,
covering emissions associated with business travel, procurement,
waste and water. Examples include plane travel, shipping of goods
and waste disposal.
Cradle to grave: This measures the total greenhouse gas emissions
from the extraction of raw materials through to the product’s
manufacture, distribution, use and eventual disposal.
SDGs
Sustainable Development Goals
QR technologies
Quick Response technology, a type of barcode
RIDDOR
Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations
Risk Register
A document used to table risks and responses to those risks
RM&I
Repair, Maintenance & Improvement
SASB
Sustainability Accounting Standards Board
SECR
Streamlined Energy and Carbon Reporting
SIP
Share Investment Plan
SLAM
Stop, Look, Assess, Manage
SuDS
Sustainable Drainage Systems
TCFD
Task Force on Climate-related Financial Disclosures
The Group
All of Marshalls’ UK and overseas operations
Science-based targets
Science-based targets are a set of goals developed by a business
to provide it with a clear route to reduce greenhouse gas emissions.
An emissions reduction target is defined as “science‑based” if it
is developed in line with the scale of reductions that are required
to keep global warming below 1.5°C from pre‑industrial levels.
Science Based Targets initiative (“SBTi”)
The Science Based Targets initiative (“SBTi”) defines and promotes
best practice in emissions reductions and net zero targets in line
with climate science. It provides technical assistance and expert
resources to companies which set science-based targets in line
with the latest climate science. The SBTi is a partnership between
CDP, the United Nations Global Compact, the World Resources
Institute (“WRI”) and the World Wide Fund for Nature (“WWF”).
The SBTi is considered the gold standard in carbon reduction
commitment setting.
ULEZ
Ultra Low Emission Zone
UNGC
United Nations Global Compact
Verisk Maplecroft
A company providing risk analytics
WDI
Workforce Disclosure Initiative
WEPs
Women’s Empowerment Principles
Marshalls plc | Annual Report and Accounts 2023
163
Shareholder Information
Shareholder analysis at 31 December 2023
Size of shareholding
1 to 500
501 to 1,000
1,001 to 2,500
2,501 to 5,000
5,001 to 10,000
10,001 to 25,000
25,001 to 100,000
100,001 to 250,000
250,001 to 500,000
500,001 and above
Number of
shareholders
1,930
402
459
250
191
131
123
59
30
93
3,668
%
52.62
10.96
12.51
6.82
5.21
3.57
3.35
1.61
0.82
2.53
Number of
Ordinary Shares
256,940
298,276
789,121
887,940
1,326,061
2,097,180
6,605,308
9,472,173
10,655,876
220,579,853
%
0.10
0.12
0.31
0.35
0.52
0.83
2.61
3.74
4.21
87.21
100.00
252,968,728
100.00
Financial calendar
Preliminary announcement of results for the year ended 31 December 2023
Final dividend for the year ended 31 December 2023
Half yearly results for the year ending 31 December 2024
Half yearly dividend for the year ending 31 December 2024
Results for the year ending 31 December 2024
Announced
18 March 2024
Payable
1 July 2024
Announcement
Early August 2024
Payable
2 December 2024
Announcement
Early March 2025
Advisers
Stockbrokers
Numis Securities Limited (trading as Deutsche Numis)
Peel Hunt
Auditor
Deloitte LLP
Legal advisers
Slaughter and May
Walker Morris LLP
Financial adviser
N M Rothschild & Sons Limited
Bankers
National Westminster Bank plc
HSBC Bank plc
Lloyds Bank plc
Santander UK plc
Caixabank SA
Bank of Ireland
Clydesdale Bank plc
Citibank NA
KBC Bank NV
Credit Industriel et Commercial
National Bank of Kuwait
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Shareholders’ enquiries should be addressed to the Registrars
at the above address (tel: 0870 707 1134)
Registered office
Landscape House
Premier Way
Lowfields Business Park, Elland
Halifax HX5 9HT
West Yorkshire
Telephone: 01422 312000
Website: www.marshalls.co.uk
Registered in England and Wales: No. 5100353
164
Marshalls plc | Annual Report and Accounts 2023
Financial Statements
CBP024095
Marshalls’ commitment to environmental issues is reflected in this Annual
Report, which has been printed on Magno Satin, an FSC® certified material.
This document was printed by Park Communications using its environmental
print technology, which minimises the impact of printing on the environment,
with 99% of dry waste diverted from landfill. Both the printer and the paper mill
are registered to ISO 14001.
Marshalls plc, Landscape House,
Premier Way, Lowfields Business Park,
Elland HX5 9HT