Marshalls
Investor
Investment case

Investment case

Capital allocation policy

Marshalls paving laid in Warrington time square

Group positioned to outperform the construction market

Attractive, diversified portfolio of businesses exposed to scale markets with long-term growth drivers and near‑term structural market tailwinds. Significant headroom for growth in our addressable markets through innovation and ‘bolt-on’ acquisitions.

Profit growth delivered through operational leverage

Group expected to benefit from material profit improvement due to operational leverage and optimising manufacturing network.

Marshalls Mayfair Vintage bricks used on a set of modern houses

Highly cash generative business model

Strategy execution expected to deliver material increase in operating cash flow. Normalisation of capital expenditure to underpin plan in medium term.

Free cash flow de-levers balance sheet

Increase in free cash flow expected to de-lever the balance sheet and provide capital for bolt-on acquisitions or return to shareholders.

A housing estate of modern houses with driveways

Profitable growth increases shareholder returns

Expected earnings growth will drive dividend growth. Increased returns expected without material increase in capital employed. Strategy execution increases cyclical resilience.

Organic Growth

Strategic plan requires capital investment of £20–30 million pa
Comprises growth capex in water management and bricks together with maintenance Capex and investment in IT

Investment to enhance competitive advantage

Market leading brands and solutions that are consistently recognised for their quality, range and service
Best-in-class technical and design support
Carbon leadership

Dividends

Maintain dividend cover of two times adjusted earnings
Earnings growth expected to drive increase in cash shareholder returns in medium-term

Balance sheet deleveraging

Strong conversion of profit into operating cash flow and capital expenditure normalised
Balance sheet deleveraging to continue in medium-term
Target leverage range of 0.5–1.5x EBITDA optimal to provide flexibility

Selective acquisitions

Selective bolt-on M&A to support growth strategy
Focus on roofing, water management and energy transition
Create optionality for scale acquisition in longer-term

Strong business fundamentals

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 intergrated solar, water management products and lower-carbon concrete bricks
Excellent manufacturing footprint across the UK with a well invested asset base

Focused growth strategy

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 with demand generation strategy for project specificatios, 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

ESG market leadership

Sector leader in sustainability for over 20 years
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 validated by the Science Based Targets ("SBTi) initiative.

Robust risk management

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

Well positioned for a recovery in our markets

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

Focus on driving shareholder value

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