Annual Report and Accounts 2022
Transformation,
resilience and
innovation
Annual Report and Accounts 2022
Strategic Report
1 Highlights
2 Our Purpose Roadmap
4 At a Glance
6 Investment Case
8 Chair’s Statement
10 Chief Executive’s
Statement
12 Q&A with the Chief
Executive
14 Our Markets
16 Summary of Group
Performance
18 Segmental Review
24 Business Model
26 Our Section 172(1)
Statement
28 Stakeholder Engagement
36 Strategy
40 Key Performance Indicators
42 What ESG Means to
Marshalls
60 Financial Review
66 Risk Management
and Principal Risks
Governance
76 Board of Directors
78 Corporate
Governance Statement
92 Nomination
Committee Report
96 Audit Committee Report
100 Remuneration
Committee Report
104 At a glance
108 Remuneration Policy
120 Annual Remuneration
Report
124 Fairness, diversity
and wider workforce
considerations
131 Directors’ Report – Other
133 Statement of Directors’
Responsibilities
135 Independent
Auditor’s Report
Financial Statements
143 Consolidated Income
Statement
144 Consolidated Statement of
Comprehensive Income
145 Consolidated
Balance Sheet
146 Consolidated Cash
Flow Statement
147 Consolidated Statement of
149 Notes to the Consolidated
Financial Statements
186 Company Statement of
187 Company Balance Sheet
188 Notes to the Company
194 Financial History –
Consolidated Group
195 Glossary
197 Shareholder Information
MarshallsGroup
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We create better
spaces by putting people,
communities and the
Front cover (bottom right)
Highlights
Strategic highlights
• Transformational acquisition of Marley Group plc
(“Marley”) completed on 29 April 2022
•
offering providing increased resilience through the
cycle
• Traded robustly ahead of plan during the post
acquisition period
• Integration tracking in line with plan and management
improvements
• Conservative capital structure maintained - increased
priority to deleveraging in capital allocation policy
• Ongoing investment in leading edge technology to
half of 2023 with exciting new product development
opportunities
• New digital trading platform “Dropship” developed which
extends the range of products offered by merchants
•
Products resulted in decisive action taken to reduce
• Good progress made on ESG priorities - carbon
sequestration to be trialled in a factory environment and
cement reduction plan being executed
Financial highlights
•
•
•
•
•
•
•
Notes
Revenue (£’m)
£719.4m
(up 22%)
Transformational acquisition, record adjusted results
and well positioned for when markets improve
before tax (£’m)
£90.4m
(after adding back adjusting items)
(up 23%)
£37.2m
(on a reported basis)
Adjusted proforma return on
capital employed (%), after
adding back adjusting items
13.3%
Adjusted basic EPS (p)
31.3p
(before adjusting items)
Reported EPS(p)
11.4p
Full year dividend
recommended (p)
15.6p
£101.1m
Adjusted EBITDA (£’m)
£136.0m
Stay up to date with the
latest investor news at:
www.marshalls.co.uk
2018 491.0
2019 541.8
2020 469.5
2021 589.3
2022 719.4
2018 65.7
2019 74.9
2020
2022 101.1
2018 80.8
2019 103.9
2020 57.6
2021 107.1
2022 136.0
2021 77.4
1
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
28.4
Our Purpose Roadmap
Doing the right things, for the
right reasons, in the right way
Our mission is to deliver
sustainable growth through
a brand that drives customer
product solutions for the
built environment
Our strategic goal
is to
manufacturer of products
for the built environment
Our purpose is to create
better spaces and futures
environmentally and
economically
Read more about our strategic goal on pages 36 to 39
Read more about our purpose on page 4
Read more about our mission on page 7
Case study
Training begins ahead
of dual block plant opening
Read more on page 18
Case study
Acquisition of Marley
Read more on page 34
Marshalls plc | Strategic Report
2
Case study
Reducing our carbon footprint
is providing innovation and
growth opportunities
Read more on pages 48 and 49
Case study
The Marshalls Academy
Read more on page 55
The Marshalls Way
For the right reasons
In the right way
• We set clear expectations
• We anticipate and embrace change
•
•
What ESG means to Marshalls
Do the right things
• We consider the long-term impact of every
• We are guided by strong principles
• We operate in the most ethical and
sustainable way
• We take responsibility for every action
• We have high standards
•
• We strive to meet the needs and expectations
• We are continually developing the business and
Read more about The Marshalls Way on page 95
Case study
Carbon sequestration
Read more on page 49
Read more about our purpose on page 4
BETTER
Workplace
BETTER
World
BETTER
Product
Respecting
People
Made
to Last
Climate
action
3
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
At a Glance
A leading manufacturer of products
for the built environment
whilst maintaining a strong balance sheet with
a transformational step for the business and
Marshalls is the sector market leader in ESG
way on human rights matters in its supply
has unlocked cost and carbon reduction
Read more about our
landscape projects on pages 18 and 19
Read more about our
building projects on pages 20 and 21
Read more about our
pages 22 and 23
Marshalls plc | Strategic Report
4
Landscape Products
Comprises the Group’s Commercial and Domestic
landscaping business, Landscape Protection and
the International businesses.
• Paving
• Kerb
• Edgings
• Walling
• Protective
street furniture
Landscape Products revenue
55%
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
Building Products revenue
27%
• Concrete tiles
• Clay tiles
• Timber battens
• Roof integrated
solar panels
18%
What we do
and offers a broad product range with specialist
Where we operate
We are well placed to unlock value from the
expanded geographical footprint we have gained
Group now has a range of options to extract value from
the geographical network and an extended network review
Marley acquisition
In April 2022, we acquired Marley. A leader in the manufacture and
for Marshalls. The deal was transformational for the Group, further
diversifying Marshalls coverage of the construction market sub-sectors.
Like Marshalls, Marley has a rich history and depth of expertise. The
Company was founded in 1924. Marley has a similar commercial
strategy to Marshalls, focusing on generating pull demand from the
Read more about the Marley acquisition on pages 34 and 35
30%
housing RMI
39%
39%
31%
37%
24%
Concrete production
facilities across the UK
22
Clay tile
production facility
1
Track record of
delivering shareholder value
Supportive long-term market
fundamentals
•
• Ageing housing stock underpins longer-term demand for
• Strong growth in infrastructure forecast over the medium term
•
• Positive outlook for water management and drainage systems
•
discretionary improvement sector
•
regulatory changes
2013 2022
5
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Distinct regions across
East & South West
4
90
30
20
0
PBT - £’m
0
Value £’m at 2019 constant prices
2022
2020
Marshalls plc | Strategic Report
6
Investment Case
Marshalls has executed a successful strategy to become a leading manufacturer of products
2014
Capital investment – well-invested factories
generate growth
2015
Continuing development of operations
2016
ESG leadership journey – carbon reduction
commitments and reduced carbon footprint
Sustainability embedded in the strategy for almost
two decades
Digital transformation
improve customer experience
2017
Investment in logistics
Acquisition of CPM
comprehensive range of technical and innovative
water management solutions
2018
Sustainable supply chain
Centralised procurement to optimise buying power
and co-ordinate innovation
2019
Acquisition of Edenhall
of sustainable concrete brick products
2021
Dual block plant investment
2022
Establishment of three operating segments
Read more on pages 18 to 23
Acquisition of Marley
manufacture and supply of pitched roof systems
2013
Product range evolution
The continued focus on innovation and new product
development ensures the focus on manufacturing
and material technology capabilities
Carbon reduction plan approved by
Science Based Targets initiative
2020
7
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Managing risk
Risk management process
remains robust with Marley
now integrated
Risk process
• Formal process to identify, assess and
analyse current and emerging risks
• Robust Risk Register process which now
includes Marley
• Mitigating controls constantly monitored
• Controls subject to internal audit
• Detailed action plans developed for
Attitude to risk
• We adopt a conservative approach to risk
management
• We are prepared to accept a certain level
of risk to remain competitive
• We seek to mitigate exposure to all forms
• We aim to ensure that all controls are
operating effectively
• We aim to ensure that any residual
risk appetite
Read more on pages 66 to 75
Focused growth strategy
Brand preference for product
•
•
relationships
• Early involvement in any project
Customer centricity
• Aim to have the best customer
experience
• Provide excellent customer service
• Support the Group’s brand leadership
Growth in the
emerging business
• Expand into new growth areas
• Achieve sustainable growth
•
market share
Logistics excellence
• Deliver logistics excellence
• Provide outstanding customer
satisfaction
• Latest technology combined with
low emissions
Operational excellence
• Well-invested manufacturing facilities
•
and systems
•
respond to market
Sustainable supply
• Sourcing sustainable materials,
products and solutions
• Sustainable and ethical supply chain
• Reducing embedded carbon
New product development
(“NPD”)
• Delivering market leading product
innovation
• Developing best-in-class facilities
• Innovative solutions to deliver growth
Digital transformation
• Investing in digital and forward-
thinking technology
• Digital standard for the industry
• Extending B2B digital trading
Key risks
• Macro-economic and political
• Cyber security
• Supply chain
• Climate change
•
• Extreme weather
• New technologies
•
• Competition
• Project delivery
•
• People
Strong track record
• Record revenue and adjusted
• Strong cumulative annual growth rates
across all metrics
• Consistent dividend growth
Supportive UK construction market
• Strong long-term outlook for Infrastructure
• Shortage of housing stock and latent
• Increasing requirement for water
management and drainage solutions
• Transformational acquisition of Marley
•
•
• Increased network (post-Marley) with
distribution sites across the UK
• Unique national network ensures
logistics footprint
• Well-invested sites with expansion and
rationalisation opportunities
and sustainable supply chain
•
• Centralised procurement ensures optimal
buying power and focus on sustainability
• Majority of raw materials sourced in the UK
ESG market leadership
• Sustainability and carbon reduction
commitments embedded in strategy
• 33 per cent reduction in carbon in the last
four years
•
products now fully recyclable
Strong balance sheet
and cash generation
•
•
•
Clear capital allocation policy
• Priority given to organic capital investment
planned for 2023)
•
and on reducing the carbon intensity
• Dividend policy of two times dividend cover
(based on adjusted earnings) over the
business cycle
• New deleveraging objective added this year
Focused growth strategy
•
manufacturer of products for the built
environment
• Underpinned by eight strategic
growth pillars
• Enabled by people and talent development
Read more on pages 36 to 39
Chair’s Statement
in a challenging year and
The acquisition of Marley is a major
step in delivering our strategic goal to
Summary
• Revenue up 22% compared with 2021,
1% on a like-for-like basis
•
before tax: £37.2 million)
• Actions taken to reduce capacity
expected in Marshalls Landscape
Products to reduce cost base by
• Final dividend proposed
• Clear strategy with sustainability
embedded – innovation in
reduction opportunities
•
the built environment
• Continued focus on health,
in December 2022 and are expected to reduce operating costs by
These have been delivered because we have a strong culture and
culture is all about teamwork and we have continued to support
during the second half of 2022 and we have continued to do “the
Results
generation and we maintain good headroom against our bank facility
Overview
Marshalls plc | Strategic Report
8
Dividends
Marshalls’ strategy
The acquisition of Marley is a major step in delivering our strategic
ESG strategy
ESG strategy continues to generate organic growth opportunities
Voice Group which includes employees elected from all parts
contributed to the establishment of a number of positive initiatives
Environmental
Our investment in concrete technology has unlocked cost and
generated carbon reduction opportunities through our investment in
Tri-blend powder technology and the production of lower embodied
mineralisation technology that reduces and removes carbon dioxide
Our commitment for the Marshalls businesses (excluding Marley) is to
Targets initiative as consistent with levels required to meet our net-zero
Social
We continue to take the lead in supporting and upholding human
ensure that all our products and services are ethically sourced
supply chain mapping via Verisk Maplecroft and this information is
supplemented with knowledge gained from our extensive networks
Governance
We are committed to the highest standards of corporate governance
and we comply with all the provisions of the UK Corporate Governance
Code as outlined in our Corporate Governance Statement on pages
Board changes
his wealth of knowledge and experience and for his long service
Our people
I am privileged to serve as your Chair and continue to regard our
been many achievements in 2022 that we can be proud of and the
Outlook
challenging and assuming a progressive improvement in our end
to be challenging and are planning for an overall reduction
in volumes in 2023 in-line with the Construction Products
economic conditions with some improvement expected in the
brick business is expected to build market share due to its low
Vanda Murray OBE
Chair
9
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
The Group delivered record sales and
during 2022
The integration of Marley into the Group
Summary
• Record trading performance
•
tax: £37.2 million)
•
• Robust balance sheet with pre-IFRS
•
nearing completion
• Marshalls continues to be the
Introduction
Marshalls has executed a successful strategy over the last eight
years to become a leading manufacturer of products for the built
has been transformational for the Group given its scale and
performance for Marshalls in terms of both revenue and adjusted
Well-publicised macro-economic and geopolitical factors have
Cost increases continue to be largely recovered through price
increases and our centralised procurement team is actively
growth experienced by our other recent acquisitions in building
materials and water management has meant that the Group now
2022 trading summary
Marshalls plc | Strategic Report
10
lower levels of demand is expected to reduce operating costs by
strong demand for bricks from housebuilders and the lower carbon
traded ahead of our original expectations with segment operating
of the Marley business has progressed in line with plan and is
now well embedded and we have a clear focus on value extraction
2022 results
to certain non-cash adjustments arising as a consequence of the
purchase price allocation (“PPA”) exercise required to recognise the
assets of Marley on acquisition at fair value and the amortisation
re-assessment of the amounts that will become payable to vendors
generation has continued with the aim being to repay the term loan
Operational initiatives and strategy
project facilitates the launch of a new range of face-mix products
that have aesthetic characteristics that are like natural stone and will
investment projects that will drive future organic growth and we are
There continues to be a focus on innovation and new product
pipeline continues to be strong and the Group is committed to
sustainability agenda and we are making good progress in carbon
An example of sustainable product development is the introduction
of Tri-blend powder technology into our site at Ramsbottom during
of embodied CO
Our overall strategy continues to focus on the maintenance of a
Health and safety
We have continued to prioritise health and safety and we have
maintained robust health and safety procedures throughout our
have focused on integrating the health and safety functions of
of our employees and other stakeholders to the highest possible
level and have introduced our new mental health and wellbeing
as possible and to provide the best support that we can using our
Martyn Coffey
Chief Executive
The development pipeline
continues to be strong and
the Group is committed to
providing high performance
product solutions that will
11
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Marshalls plc | Strategic Report
12
Q
What impact have the acquisitions made in the last
few years had on the organisation?
A
These acquisitions have increased the scale and breadth
improvement opportunities and enhancing manufacturing
Q
How does the acquisition of Marley align with
Marshalls’ culture?
A
market leader in the manufacture and supply of pitched roof
systems to the UK construction market and has a strong
successful implementation of the integration plan over the
Q
What is Marshalls’ overall strategic goal and how
does the acquisition and re-positioning of the
operating segments help to achieve this?
A
acquisition of Marley accelerates this strategy by broadening
complementary sales channels and strategically located sites
management reporting framework and will provide greater
Q
How has the acquisition strengthened Marshalls’
business model and made the Group more resilient?
A
discretionary and more cyclically resilient sector of the UK
acquisition is transformational for the Group in terms of scale
towards
achieving our strategic goal
The acquisition of Marley accelerates
our progress towards becoming the
13
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Case study
Marley roof system
authorities in the UK to pilot a new type of solar pitched roof
Roof refurbishment is an important part of Denbighshire
biggest challenges is to bring the roofs up to modern standards
As well as requiring a like-for-like replacement for the old clay
repairs and incorporate solar technology to help tenants cut
www.marshalls.co.uk/about-us
Q
strategy following the acquisition of Marley and
A
There will be no change in the sustainability strategy following
committed to our carbon reduction journey and the process to
Each business segment has a programme of carbon reduction
projects that will also generate significant commercial
Q
What is Marshalls’ approach to diversity and inclusion
and health and safety following the integration of the
Marley business into the Group?
A
is underway to ensure alignment of policies and working
policies and procedures are embedded into the “day-to-day”
Q
Will the acquisition and increased debt alter the
Group’s capital allocation policy?
A
generated by the combined businesses to repay the bank
continue to fund organic capital investment opportunities
deleveraging objective has now been included ahead of
Our Markets
The CPA forecast that the Construction
Industry will return to growth in 2024 as
UK construction market forecast to contract in 2023 but longer-term structural
New build housing
The new build housing sector was very resilient in 2022 and the
employment market and house price growth exceeding build cost
CPA total new build housing output forecast
Overview
product range in order to complement its strong market position in
derived from each of the new build housing and commercial &
per cent are focused on private housing RMI and around two-thirds
of this comes from driveway and patio products that are supplied
to the UK market with the balance being less discretionary products
economies and supply chains that were recovering from the
environment for major purchases and the expectation that the
UK economy will contract before starting to recover in the second
the output of the construction sector and therefore customer
CPA total construction output forecast
% growth on previous year
200,000
180,000
140,000
120,000
100,000
80,000
2017 2018 2019 2020 2021 2022 2023 2024
Years
10.0
0.0
-10.0
Private housing RMI
with pre-COVID levels and demonstrates continued demand for
4.1%
0.0%
2.0%
12.9%
-4.7%
% growth on previous year
40,000
30,000
20,000
10,000
0
2017 2018 2019 2020 2021 2022 2023 2024
Years
20.0
10.0
0.0
-10.0
-20.0
10.1%
9.3%
4.3%
-20.8%
2.4%
-10.9%
-1.1%
Marshalls plc | Strategic Report
14
Commercial and infrastructure
Commercial & infrastructure end markets (incorporating other new
work and non-private housing RMI) were also supportive in 2022
with weakness in commercial and other RMI activity partially offset
Longer-term structural growth drivers
attractive medium and long-term growth potential driven by the
that requires increased repair and maintenance and the need to
Notwithstanding the undoubted challenges that we will face in
House building volumes compared to government targets
CPA composite commercial and infrastructure
output forecast
% growth on previous year
110,000
100,000
90,000
2017 2018 2019 2020 2021 2022 2023 2024
Years
10.0
0.0
-10.0
Marshalls Register installer order books
UK’s housing stock is ageing
next few years
1900-1918 1919-1944 1981-1990 1991-2001 2002-2011 Post 2012
18%
1,873 3,739 3,222 1,382 1,384 1,717
13%
10%
7%
3%
8% 8%
1.8%
4.8%
-12.4%
9.3%
2.7%
-1.1%
1.1%
Moving Annual Total number of Dwelling Completions
—
—
—
350,000
300,000
250,000
200,000
150,000
100,000
50,000
—
24
22
20
18
14
12
10
8
0
Mar 2020
Apr 2020
May 2020
Aug 2020
Sep2020
Oct 2020
Nov 2020
Dec 2020
Mar 2022
Apr 2022
May 2022
Aug 2022
Sep2022
Oct 2022
Feb 2018
13.6
Feb 2019
12.0
Feb 2020
14.7
Feb 2021
19.4
Feb 2023
14.7
Average number of Weeks
Feb 2022
17.4
Survey Month
15
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Marshalls plc | Strategic Report
16
Year ended
31 December
2022
(as restated)
£’m
Transaction related costs 14.9 —
Amortisation of acquired intangible assets 7.3
3.9 —
Additional contingent consideration 3.9 —
Restructuring costs 13.0
10.2 —
Other —
Adjusting items 53.2
which is lower than the adjusted number due to the adjusting items
Good headroom is maintained against the new bank facility and its
business arising from a weak market backdrop particularly in private
Marley from 29 April 2022 together with a strong performance from
Year ended
31 December
2022
(as restated)
Change
£’m %
45.3
26.8
Marley Roofing Products 34.4 — —
Central costs (5.4)
Adjusted operating profit 101.1
Overview of
Year ended
31 December
2022
(as restated)
Change
£’m %
Revenue 719.4 22
Net operating costs (618.3)
Adjusted operating profit 101.1
Adjusting items (53.2)
Statutory operating profit 47.9
(10.7)
Profit before taxation 37.2
Taxation (10.7)
Profit after taxation 26.5
Adjusted EPS - pence 31.3
Statutory EPS - pence 11.4
15.6 9
Net debt 236.6
190.8
Summary of Group Performance
17
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Case study
demand from these customers for low carbon products that
will help them to reduce the carbon impact of construction
and propose a lower-carbon pavement structure for their client
www.marshalls.co.uk/about-us
Segmental Review
Review of the year
2022
£’m %
Revenue 394.1
Segment operating profit 45.3
Segment operating margin % 11.5%
from Commercial and Infrastructure and approximately 30 per cent
in-line with pre-COVID levels and demonstrates continued demand
with a weaker performance in the second half of the year partially
driven by merchants adjusting stocking levels to align with reduced
Key priorities
Dual block plant and new product development
be unique in the UK and will support the launch of new
ranges of innovative value-added products that have the
aesthetic appeal of natural stone at a lower price point
and is already making its way into landscape designs
Our Shine customer centricity programme continues to focus
the overall customer journey and an example of this is the
of our inbound emails which enables service and process
offset by price increases that were implemented to offset the
performance and reduced manufacturing output to manage
costs within our manufacturing network and trading function
to ensure alignment with lower levels of customer demand and
the launch of a new range of face-mix products that have
aesthetic characteristics that are like natural stone and allows
2023 outlook
We expect this reporting segment to experience relatively
tough market conditions in 2023 due to its exposure to Private
focused on developing the business and will capitalise on
the new product development opportunities arising from our
improve customer service and ensure that operating costs are
Marshalls plc | Strategic Report
18
Digitalisation
We continue to focus on executing our
an end-to-end digital offering and to
pioneer the digital standards for the
a new digital trading platform that will
allow us to offer an extended range of
without requiring the merchant to stock
to place orders with the merchants
offers a win-win outcome where the
merchant generates incremental sales
due to an extended product range
without incurring the costs associated
with regular orders and Marshalls
live or in testing with two national
merchants and at an advanced stage
with three other customers and will
Carbon reduction
where we work with partners in the
work on relate to taking carbon out
mean that we are in a strong position
to support partners with our extensive
range and our deep insight in this
Industrial
Coverage of construction end markets
40%
30%
30%
19
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Segmental Review
continued
Industrial
Coverage of construction end markets
60%
10%
30%
Merlin Rise – Mayfair Vintage Stock facing brick
Marshalls plc | Strategic Report
20
Review of the year
2022
£’m %
Revenue 193.1
Segment operating profit 26.8
Segment operating margin % 13.9%
construction sites and housebuilders opening new sites at a
driven by escalating energy and commodity prices and was
successful in recovering these through sales price increases during
2023 outlook
We expect the market backdrop for this reporting segment to be
challenging in 2023 due to forecast reductions in activity in New
the relatively low carbon footprint of our products compared with
produce concrete bricks and therefore negligible investment is
Key priorities
Growth in brick volumes
content of a clay brick when measured using the “gold
our range of facing bricks in 2022 and increased our
manufacturing capacity through the conversion of an
that we are well positioned to build market share in 2023
and offset the impact from the expected weakening of UK
Leverage low carbon credentials
Our ESG strategy continues to generate organic growth
carbon products and as part of this programme we are
accelerating our development of technologies to materially
reduce the carbon intensity of our products using carbon
reduces and removes carbon dioxide across the concrete
other industrial processes to accelerate the carbonation of
This is being trialled during quarter one of 2023 in one of
investing in a number of our sites to support the rollout of
an innovative concrete mix design that will reduce both raw
New product development
The Civils and Drainage range is being extended to include
a more complete technical solution with Marshalls
21
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Segmental Review
continued
Review of the year
Marley was acquired by the Group on 29 April 2022 and
the results therefore include approximately eight months
the post-acquisition period were six per cent higher than
2022
£’m %
Revenue 132.2 — —
Segment operating profit 34.4 — —
Segment operating margin % 26.0% — —
RMI) with the balance of around 20 per cent from
reporting segment was positive in 2022 and the Private
weighting of repair and maintenance activity rather
principally driven by a strong performance by our roof-
an increasing proportion of total revenues being
2023 outlook
We expect the market environment for this reporting
segment to be more challenging in 2023 due to its
growth in roof-integrated solar panels due to increased
penetration in RMI projects and changes in building
regulations that require new build houses to achieve
Key priorities
Deliver demand generation for roof
Marley is unique in being able to offer a full roof
strategy is centred around generating demand
Conversion of these opportunities is
experience and invest in being “easier to work
We are applying a key focus on marketing
investment and commercial messaging for
changes to the building regulations for energy
performance in new housing now include a
contractors to become accredited for solar
Marshalls plc | Strategic Report
22
Further develop a brand that
the opportunity to further leverage brand equity
sustainability and the extension of lower carbon
Deliver operational improvements
transitioned to the Group team in the second half
reduced vacancy rates using the Marshalls in-
rates and implemented a targeted refurbishment
review of our combined logistics footprint and
Industrial
Coverage of construction end markets
40%
20%
40%
23
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Marshalls plc | Strategic Report
24
Manufacturing
We have well-invested sites and
manufacture landscape, driveway and
garden products from a range of materials,
principally concrete and natural stone.
Related risks
• Competitive
activity
• Threat from new
technologies and
business models
• IT infrastructure
• Legal and
regulatory
Business Model
Creating better futures for everyone
Our capital
Financial
Strong balance sheet and a
conservative capital structure.
facilities, with extended maturities,
provides prudent headroom
Business
National coverage and sustainable
of manufacturing sites
Long-standing relationships with
customers and suppliers and
Intellectual
With over 130 years’ experience,
we have a reputation built
core values. We focus on innovation
and strong R&D and NPD
Natural resources
Marshalls has extensive reserves
of UK natural stone. Strong supply
chain relationships ensure the
from India, China and Vietnam
Our business Our business
Customers
Our customers range from Domestic
homeowners to Public Sector and
expectations of customers in all our
Related risks
• Macro-economic
• Weather
• Cyber security
• Competitive
activity
• Legal and
regulatory
Sourcing
Our main raw materials are cement, sand,
aggregates and pigments – the majority
of which are UK sourced.
Related risks
• Macro-economic
• Security of raw
material supply
• Cyber security
• Environmental
• Ethical
• Climate change
Distribution
Our operations are part of a national
are less than two hours away. We have
Related risks
• Macro-economic
• Road
infrastructure
• Labour
availability
•
• Environmental
• Climate change
Doing things The Marshalls Way
Read more on page 28
Outcomes Outcomes
Stakeholder outcomes
Shareholders
Cumulative growth of dividends of
12.7% (pre-supplementary) over the
last eight years
Dividend per share
15.6p
Suppliers
Active membership of Supply Chain
Sustainability School – leading role in
upholding human rights at home and
overseas in our supply chains
100%
Modern slavery country
risk mapping
Customers
We aim to provide an outstanding
customer experience at every step
in the customer journey
Automated live customer
experience dashboard in
development, to improve
existing metrics
Positive impact, with direct
investment in the community.
Plastic consumption down by over
30% since 2013
Proportion of concrete and
natural stone products now
fully recyclable
100%
on pages 66 to 75
Read more about what ESG means
to Marshalls on pages 42 to 59
Read more about our
segments on pages 18 to 23
engagement on pages 28 to 35
Doing things The Marshalls Way
Read more on page 28
Customers
S
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25
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Our capital Our capital
Human
The Group has an experienced
level of engagement
Technology
We are accelerating the
development of our digital strategy
overall customer experience, and
and communication
Social and relationships
Our business Our business
Landscape Products
Commercial and Domestic landscaping
business, Landscape Protection and the
International businesses
Related risks
• Macro-economic
• Security of raw
material supply
• Cyber security
• Environmental
• Ethical
Building Products
Mortars and Screeds and Aggregates
businesses
Related risks
• Macro-economic
• Security of raw
material supply
• Cyber security
• Environmental
• Ethical
Related risks
• Macro-economic
• Security of raw
material supply
• Cyber security
• Environmental
• Ethical
Sustainability
Sustainability at Marshalls is at the heart
of what we do – you can see it in our
products, in our commitments and in
our actions. The UN Global Compact’s
principles continue to guide us and
The Marshalls Way of doing the right
things, for the right reasons, in the
right way underpins our sustainability
model. Our three pillars of Respecting
People, Climate Action and Made to
Last demonstrate our areas of focus
through becoming a Better Workplace,
contributing to a Better World and giving
our customers a Better Product
Related risks
• Security of raw
material supply
•
• Ethical
• Climate change
Digital transformation
Our customer focused investment in
digital technology is transforming the
customer experience and advancing the
business model.
Related risks
• Macro-economic
• Cyber security
• IT infrastructure
• Legal and
regulatory
Innovation
We are committed to the development
of innovative processes and
equipment and to
the delivery of innovative
Related risks
• Competitive
•
• Security of
raw materials
supply
• Climate change
Outcomes Outcomes
Employees
DERI strategy and employee
engagement measurement
Active apprenticeships
in 2022
142
Government and
regulatory bodies
Responsible business commitments
(e.g. Living Wage)
9 years
of being Fair Tax
• Shareholder value
•
• Relationship building
• Organic expansion
• Brand development
• Effective capital structure
Strategic corporate objective outcomes
Incorporating Marley
The acquisition of Marley was a transformational step in delivering the Group’s
strategic goal of becoming the UK’s leading manufacturer of products for the built
system with highly recognised and market leading brands.
Read more about the Marley acquisition on pages 34 and 35
Read more about our strategy on pages 36 to 39
Doing things The Marshalls Way
Read more on page 28
Marshalls plc | Strategic Report
26
Our Section 172(1) Statement
S172 Relevant disclosure Reference
The likely long-term
impact of any decisions
The Board sets the Group’s purpose, mission and strategy and ensures they
and futures for everyone: socially, environmentally and economically”.
The annual strategic reviews conducted by the Board (the most recent being
in November 2022), and the consideration of at least one of our strategic
growth pillars at each Board meeting, focus on the long-term sustainable
issues we face in the short to medium term.
consequences of decisions in the short, medium and long term so that
not separate from, all business decisions.
The Board has adopted a clear capital allocation policy, with good organic
and acquisition investment opportunities that help us achieve our strategic
goals. This demonstrates its commitment to the development of the
business over the medium to longer term, and the acquisition of Marley
Page 2
Pages 36 to 39
Pages 66 to 75
Page 64
The interests of the
Company’s employees
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. Whilst we have made good progress with these during 2022,
they remain areas which we are committed to continuously improve.
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. Our
goal is continuous improvement with the achievement of annual health and
our senior management team.
The Board monitors culture through our engagement mechanisms, namely
our Employee Voice Group which, in addition to being attended by our
attended by other Board and senior management team members.
engagement survey to the Board, together with details of the actions being
other members of the Board and senior management team, engage with
employees on a variety of subjects through our Employee Voice Group.
Pages 54 to 57
Pages 58 to 59
Page 55
Page 55
Pages 54 to 55
Our Section 172(1) Statement
31 December 2022.
The Board directly engages with our employees and shareholders throughout the year. This is through well-established mechanisms for
The Board also receives presentations and reports from senior management as part of updates on how the business is progressing with
Although there are established parameters for decisions that are reserved for the Board, the business engages openly and transparently with
and experience.
27
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
S172 Relevant disclosure Reference
The need to foster the
Company’s business
relationships with
suppliers, customers
and others
Customer centricity and sustainable materials supply are both strategic
growth pillars of the business.
Our performance during 2022 was supported by regular engagement with
on both the buy and sell side.
We are committed to operating sustainably and ethically and, within our
Pages 37 to 39
Pages 30 and 31
Pages 42 to 59
The impact of the
Company’s operations
on the communities in
which it operates and
the environment
Our sustainability journey began more than 20 years ago and is at the heart
of how we operate our business.
The Board receives updates on our ESG programme from the Chief People
annual programme of meetings with shareholder governance teams.
including the role of the ESG Steering Committee established during 2022.
engagement, the SASB Standards for Construction and the UN Sustainable
Development Goals. This supports prioritisation within our ESG programme.
we are integrating Marley into these.
Pages 42 to 45
Pages 42 to 59
Page 46
Pages 46 and 47
The regulatory
implications of
any decisions
experienced, well-established, specialist functional teams and with the
guidance of the Group’s General Counsel and Company Secretary.
from its professional advisers, as was the case with our acquisition of
Marley and the associated debt and equity fundraisings, which required
shareholder approval.
Page 89
The importance of the
Company maintaining
a reputation for
high standards of
business conduct
decisions are driven by this.
Our prioritisation of the health, safety and wellbeing of our colleagues and
our clear ESG commitments underpin our goal of creating better spaces,
better world, better product.
Our strategic growth pillars underpin our purpose, mission and strategy.
Page 28
Pages 58 and 59
Pages 36 to 39
The need to act fairly
The Executive Directors engage with shareholders following the publication
The Chair and the Remuneration Committee Chair meet annually with the
We consulted with and sought the approval of shareholders ahead of
completing the acquisition of Marley.
time to ensure maximum engagement opportunity.
Equality of rights attaching to members’ ensures we meet the obligation
Pages 30 to 35
Pages 100 to103
Pages 34 and 35
Pages 133 and 134
Pages133 and 134
Marshalls plc | Strategic Report
28
Our stakeholders:
Stakeholder Engagement
Generate value
by sustainable
growth
Investment,
strategic guidance
and stewardship
leading product
innovation
Customer
loyalty, brand
preference and
A stretching,
exciting,
supportive and
environment
Diverse, talented,
engaged and
productive
colleagues
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
doing business
responsibly
We see the
business through
the lenses
of others
We share
expertise
Government
policy, regulatory
recognition
Shareholders
Communication and dialogue build
strategy from investors
Customers
Engaging with our customers drives
solutions for the built environment
Employees
Our two-way dialogue helps Marshalls attract,
develop and retain talented people who will
help us achieve our purpose and mission
Suppliers
Dynamic dialogue has built a strong
supportive supplier base which supports
our purpose and which shares in
our success
Communities and
We have open and honest dialogue,
sharing our goals and progress in creating
better futures for everyone
Government and
The Marshalls Way
We do the right things, for the right reasons, in the right way
Key
What we do
Our purpose
To create better spaces and futures for everyone: socially, environmentally and economically
29
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
2022 in focus
governance structure at Board level and throughout the Group,
supporting the delivery and culture of our longer-term strategy
and our ability to respond to strategic challenges in the short
During 2022, the business operated against the macro-economic
to manage the short-term impact, whilst not losing sight of the
Group’s longer-term strategic goals and acting on the opportunity
Section 172(1) of the Act sits at the top of each Board agenda
prioritises the health and wellbeing of our colleagues and the safety
of our operations. Our sustainability and ESG commitments (pages
business and our success, and we are integrating Marley into these
important programmes. The Board recognises that our brand
and ability to attract and retain talented people depend on our
responsible operation of the business.
the year ahead, the Board will continue to dynamically manage our
strategy to ensure we capture the opportunities and manage the
issues we are presented with. In addition, the Board will conduct
its annual strategic review to ensure we balance our consideration
The performance of the Group during 2022 validates the, at times,
economic uncertainty, including the reduction in manufacturing
capacity to ensure it is aligned with expected demand in the
year ahead.
its consideration of the Group’s capital structure and capital
performance during the year and its future growth aspirations.
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
Marshalls plc | Strategic Report
30
Our stakeholders:
How and why we engaged
Stakeholder Engagement continued
Marshalls’ purpose, to create better
spaces and futures for everyone: socially,
environmentally and economically, can
only be achieved if we consider and
Marshalls’ stakeholder relationships
purpose and strategy can have an impact on people, both inside
and outside the business. They can affect the communities,
companies and other organisations we deal with or which
are otherwise interested in what we do and how we do it. It is
The way in which we engage with and consider the interests
right things, for the right reasons, in the right way” means our
relationships with them involve open and transparent two-way
communication over a long period of time. This builds trust and
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.
them and an example of how we have considered their interests
engagement mechanisms to ensure Marley is integrated
within them.
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
• Group Sustainability Director engages regularly on ESG and sustainability
•
• General Meeting approving Marley acquisition in April 2022
Board engagement
• The Chair and Remuneration Committee Chair held meetings with
shareholders in November 2022
•
PR advisers
• Investor site visits and written consultations (e.g. in relation to policy)
• At the Company’s AGM
Links to strategic corporate objectives
Shareholders
Business engagement
• Centralised procurement for the entire Group enabling optimal buying power
and attention from suppliers
• Commencement of integration of Marley expenditure into Group-wide deals
• 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 tenders and negotiations
•
•
•
• Implementation of a new Supplier Relationship Management system as
• Strategic partnerships with NGOs, governmental institutions, ethical
regulators and charities
Board engagement
• Board presentations on growth pillars dependent on our engagement and
• Board participation in our strategic review
•
• Regular 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 strategic corporate objectives
Suppliers
How we engaged
Links to strategic corporate objectives
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
31
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Business engagement
• Dedicated customer experience team and improvement plan supported
• Customer journey mapping completed and regularly updated across all
through the end-to-end customer journey
•
transaction on quotes, orders and deliveries
• Development of a customer metrics dashboard to report on all customer
impacting performance
• Structured customer experience improvement projects process to create
• Service-level agreements and quality standards in customer agreements
•
customer to aid ease of purchase
•
• Customer surveys, customer visits and a commitment to deliver
• Sustainability awareness training educating customers on our commitments
and products
• Awards ceremonies for professional installers and design competitions for
• Design and engineering support for Domestic and Commercial customers
•
• 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
•
Board engagement
• Board presentations on customer centricity and brand preference
• 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 strategic corporate objectives
Customers
Business engagement
• Employee Voice Group represents all business areas and levels
•
colleagues
• Regular communication across channels – supporting those employees
• Senior management team site visits and engagement through our
Leadership Connected Group (which meets at our annual management
• Development, training and apprenticeship programmes (including
recognition of study completion)
•
• Participation in the Your Voice survey (one survey completed in Spring 2022)
• With the recognition of two Trade Unions within the Group there
are numerous opportunities for leaders to connect with the elected
representatives and, via this, the constituents that they represent
Board engagement
•
designated Director for employee engagement, chaired by Chief People
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
• Monthly health and safety Board reviews
•
• Reporting to Audit Committee the trends reported through the Serious
Concerns policy and our external third party partner, Safecall
Links to strategic corporate objectives
Employees
Business engagement
• Regular dialogue with Government, regulators and industry groups
• Active membership of the Construction Products Association and Mineral
Products Association
• Effective and clear policies against bribery and the elimination of modern
slavery with training for staff and business partners
Board engagement
• Board provides direction to the support of the UN Global Compact’s
principles, and policies relating to modern slavery and anti-bribery
Links to strategic corporate objectives
Government and regulatory bodies
Business engagement
• Collaborative approach to capturing carbon by using CarbonCure technology
•
slavery, diversity and climate disclosures
•
• Social value partnerships with Rotherham College and Barnardo’s
Board engagement
• Board is actively engaged with the Group’s ESG and sustainability strategy,
including the setting of science-based targets
• Board receives regular updates on our ESG programme and commitments
• Chair, with our Group Sustainability Director, engaged with shareholders
• ESG measures included within Executive Director incentives
Links to strategic corporate objectives
Communities and the environment
Marshalls plc | Strategic Report
32
Effect
•
over time.
• It ensures our customers understand that a relentless pursuit
of achieving the highest possible customer satisfaction is
• Our ESG principles and responsible business practices are
central to the achievement of our strategic objectives and
provide the foundation for long-term sustainable growth
Outcome
• Whilst the acquisition of Marley has triggered a re-baselining
of our carbon reduction targets in accordance with guidance
from the Science Based Targets initiative and the Carbon
Trust, we remain committed to achieving our goal of
becoming net zero.
•
mineralisation technology, injecting waste CO directly into
into the concrete.
•
performance during 2022 in spite of the macro-economic
conditions.
•
their disappointment at times regarding availability and
price rises.
•
the Board oversees our ESG programme. Our ESG Report
sharing details of our progress with our ESG objectives.
Strategy
Effect
•
required a balanced consideration of our strategic growth
pillars, the long-term sustainable growth of our business
• Whilst a number of these decisions have been driven by
those matters which are formally reserved for the Board, the
Executive Directors, exercising their judgement, and in the
spirit of transparency, engage the Board on other business
critical decisions. This is consistent with The Marshalls Way
and we feel this ensures we are operating with the highest
standards of governance at all times.
Outcome
• The Board approved the payment of an interim dividend
•
capital requirements of the Group in line with the Group’s
capital allocation policy.
• The Board recommended (subject, at the time, to shareholder
approval) the Group’s acquisition of Marley, which
accelerates the Group’s strategy to become the UK’s leading
• In November 2022, the Board approved a reduction in our
we anticipate will be a challenging year ahead.
Board decision making
Our stakeholders:
How and why we engaged
Stakeholder Engagement continued
33
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Effect
• During 2022, regular engagement with our customers
through our customer experience programme has given us
areas of importance to customers.
• Ensuring all colleagues have a voice is critical to the
achievement of our purpose and to the preservation
•
pressure on our cost base. The quality and availability of
materials are critical to ensuring our products meet the high
relationships with them, to secure materials that meet the
high standards and ethical sourcing requirements that have
become synonymous with the Marshalls brand. Diligence and
have been maintained and we are integrating Marley into
these processes.
Outcome
•
record performance during the year despite the challenging
environment.
•
of technology solutions that support better engagement
how order values are calculated.
• The Board continues to support our approach of establishing
long-term relationships with trusted suppliers where
there is a balanced consideration of quality, availability,
price and sustainable supply. As part of the integration
of Marley, we are leveraging our increased buying power
given the commonality of materials. We have adjusted our
compromising our relationships with suppliers. Security of
supply of high quality, ethically sourced materials underpins
the long-term sustainability of our business.
•
Dynamic business management
Marshalls plc | Strategic Report
34
Background
have enhanced its product offering as part of its strategic goal
to become the UK’s leading manufacturer of products for the
built environment.
respected brand with around 100 years of heritage, represented
product portfolio with the introduction of Marley’s pitched
offering. Marley’s people and performance were central to
consideration of this transformational acquisition.
Board role
The Board approved the acquisition of Marley in April 2022 and
then gave its recommendation for approval by shareholders.
including its alignment with Marshalls’ purpose, mission and
recommending that shareholders approve the acquisition, the
of the Marley brand. Throughout, the Board challenged and
supported the senior management team’s assessment of
the opportunity and the structuring of the transaction, which
with the support of the Group’s professional advisers.
Stakeholder considerations and impacts
In assessing and executing the transaction, the Board had
the acquisition would promote the success of the Group for the
Customers – Consistent with Marshalls, Marley’s commercial
Marley share a number of common customers, the acquisition
enables the enlarged Group to offer customers a broader
range of products and create deeper relationships, accelerating
manufacturer of products for the built environment.
Suppliers
an opportunity to leverage the increased buying power of
the announcement of the acquisition, to ensure continuity of
supply and service. As our integration programme progresses,
there will be opportunities to develop deeper relationships with
Shareholders – The acquisition, which constituted a Class 1
transaction under the Listing Rules and was conditional upon
debt and equity fundraisings. In recommending shareholders
approve the deal, the Board presented its detailed assessment
Ultimately, our shareholders supported the transaction.
Board decision:
Acquisition of Marley Group
Stakeholder Engagement continued
35
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Lenders – We consulted with our lenders to secure the
to the impact on the Group’s capital structure.
Colleagues – Our people are central to our culture and the
achievement of our long-term strategy. The Board, together with
the senior management team, considered the impact of the
deal on our existing colleagues and on those joining us from
Marley. The Board recognised that the acquisition not only gives
support the development and growth of both the Marshalls and
Marley businesses and has already created new opportunities
for colleagues in both businesses.
Outcomes and decisions
The Board considered the acquisition to be in the best interests
of shareholders and Marshalls as a whole, and our shareholders
approved the acquisition in April 2022.
Links to strategic corporate objectives
Read more about our strategy on pages 36 to 39
Impact on business model
Read more about our business model on pages 24 and 25
Marshalls plc | Strategic Report
36
Strategy
sustainable growth
Our strategic goal is to become the UK’s leading manufacturer
Eight growth pillars
Brand preference
for product
Logistics excellence
Sustainable
materials supply
Customer centricity
Operational excellence
Innovation and new
product development
Growth in the
emerging business
Digital transformation
Six corporate pillars
Shareholder value
Sustainable
Relationship building
Organic expansion
Brand development
Effective capital
structure and
Enablers
People Digital Governance
Focus on innovation
Our strategic goal
To become the UK’s leading
manufacturer of products
for the built environment
The Marshalls Way
Doing the right things, for the right reasons, in the right way
Respecting People Made to Last
Integration of Marley
Climate Action
37
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Links to strategic corporate objectives
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
Links to ESG pillars
Respecting People
Made to Last
Climate Action
Our objectives
•
by building relationships with
consumers, developers, builders
and architects
• To increase the project pipeline and
conversion through our leading
service and solutions offer
• To develop the brand to support our
• To build brand preference through
What we have achieved
• Strong relationships with
• Internal restructuring, and our
development programme has
strengthened opportunities with
architects and designers
• Improved process mapping
• Process improvements using
How Marley integrates and
provides more opportunity
• Leveraging lead generation
• Marley is the preferred
• Opportunities to leverage
Marshalls’ ESG credentials across
the Marley brand
• Wider utilisation of Marshalls’
for cement replacement
Future priorities
• To increase our range
of innovative and
sustainable products
• To target greater penetration
•
• To develop KPIs to ensure
consistent measures and to drive
performance
• To launch apps to help
customers better visualise their
landscaping projects
Links to ESG pillars
Links to strategic corporate objectives
Customer centricity
Our objectives
• To grow the business by providing
outstanding customer service
• To improve the customer
experience and the ease of
doing business
• To support the Group’s brand
leadership
• To increase the use of digital
communication
What we have achieved
• KPI dashboard developed and
driving improvement activity
• Development of email automation
• Customer centricity embedded in
the logistics operation
• Reduction in quality complaints
• Launched digital survey tools to
better understand our customer
order experiences
How Marley integrates and
provides more opportunity
• Opportunity to align processes
reduce cost
• Potential to widen the use of
digitalisation
• Opportunity to align and simplify
price and quotation processes
• Opportunity to streamline
complaint handling across both
businesses
Future priorities
•
centric” culture
• To improve our customer
experience dashboard and
streamline KPIs
• To use further automation
to improve order processing
• To launch a fully integrated
manage queues
Links to ESG pillars
Links to strategic corporate objectives
Growth in the emerging businesses
Our objectives
• To ensure all businesses are set up
to achieve sustainable growth
• To expand into further growth areas
• To deliver margin growth
• To develop the product ranges and
What we have achieved
• Improved business processes in
Civils and Drainage
•
greater leverage from the
Marshalls brand
• Building Products incorporated
into the new segmental
reporting structure
How Marley integrates and
provides more opportunity
•
• Sharing of best practice
and process improvement
opportunities
Future priorities
•
growth plans
• To develop of service offer
•
Links to ESG pillars
Links to strategic corporate objectives
Marshalls plc | Strategic Report
38
Strategy continued
Logistics excellence
Our objectives
• To deliver logistics excellence and
provide outstanding customer
satisfaction
• To use lower emission vehicles
and new technologies across the
•
What we have achieved
• New Group Transport
Management System now live
•
• MPA award for safer transport
and logistics
How Marley integrates and
provides more opportunity
• Opportunity to share best practice
in systems and processes
•
opportunity to improve utilisation
across the enlarged Group
Future priorities
• To optimise our delivery systems
and processes
• To ensure we continue to attract
and retain HGV drivers
• To reduce transportation costs
Links to ESG pillars
Links to strategic corporate objectives
Operational excellence
Our objectives
• To effectively manage our cost base
and add value
•
products and services
• To improve competitive advantage
•
system implementation
What we have achieved
•
plant at St. Ives nearing completion
• Continual development of
•
utilising Marshalls’ Enterprise
• Quality improvement programme
and ongoing reduction in waste
How Marley integrates and
provides more opportunity
•
• Standardisation of policies and
procedures to improve health and
Future priorities
• To improve asset utilisation
enlarged Group
•
attract and retain the best people
•
maintain quality standards
Links to ESG pillars
Links to strategic corporate objectives
Sustainable supply
Our objectives
• To create a sustainable and ethical
supply chain
• To meet our ESG commitments
• To ensure consistent availability
What we have achieved
•
our cement-free mix design
development
• Alternative sourcing now
embedded in the supply chain
• Centralised procurement team
• Embedded ethics, human rights
and environmental commitments
How Marley integrates and
provides more opportunity
• Synergy opportunities in
procurement to reduce cost and
consistency of supply
• Opportunities for leverage on
Future priorities
• To establish new sources
• To prioritise carbon reduction
programmes and cost reduction
• To reduce the reliance on cement
• To strengthen reliance on UK
materials sourcing
Links to ESG pillars
Links to strategic corporate objectives
39
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Links to strategic corporate objectives
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
Links to ESG pillars
Respecting People
Made to Last
Climate Action
New product development
Our objectives
• To develop new innovative products
that will deliver growth
• To deliver new products that help
• To focus on ESG
opportunities in NPD
• To develop best-in-class facilities,
processes and products
What we have achieved
•
will add additional face mix
lines and advanced secondary
processing
• Launch of Lunar product range
• New Civils and Drainage products
developed for 2023 production
•
products launched
How Marley integrates and
provides more opportunity
• Opportunity to align systems and
• Opportunity to share resources
and expertise
Future priorities
• To complete Landscape Products
range review
• To focus on opportunities that
reduce embedded carbon
• To investigate embedding
technology/sensors into
selective products
Links to ESG pillars
Links to strategic corporate objectives
Digital transformation
Our objectives
• To provide an end-to-end
digital offering
• To pioneer the digital standard
• To move to B2B digital trading
wherever possible
• To move ERP system to the cloud –
What we have achieved
• Progressed electronic trading
project with chosen EDI partner
• Mobile app developed for Mortars
and Screeds business
•
major customer
•
• Launched data literacy
programmes across all
business functions
How Marley integrates and
provides more opportunity
• Opportunity to align processes
•
by enhancing focus on
cyber controls
Future priorities
• To continue to increase orders via
digital channels
•
• To launch multi-channel
communication and
customer portal
•
focusing on cyber controls
Links to ESG pillars Links to strategic corporate objectives
Marshalls plc | Strategic Report
40
The Group’s KPIs monitor progress towards the achievement of its objectives.
£719.4m
(up 22%)
2018 491.0
2019 541.8
2020 469.5
2021 589.3
2022 719.4
Stakeholder linkage
• Customers
• Suppliers
• Employees
• Communities
£90.4m
(up 23%)
Why is this KPI important?
Delivering sustainable growth is
Performance
challenging during 2022. We
areas where demand is expected
to be greatest.
Links to strategic
corporate objectives
Principal risks
•
impacts demand
• Macro-economic and political
• Raw material and
labour shortages
• Increased rate of digital change
Risk mitigation
• Close monitoring of trends
and lead indicators
• Diversity of business
• Customer centricity
• Digital strategy
Links to remuneration
Why is this KPI important?
Sustainable improvement in
Performance
million, including the impact
Links to strategic
corporate objectives
Principal risks
•
•
• Security of raw material supply
• Climate change
Risk mitigation
• Innovation and new
product development
•
security controls
• Proactive supply
chain management
Stakeholder linkage
• Shareholders
• Employees
Links to remuneration
adjusting items)
13.3%
2018 20.9
2019 21.4
2020 8.2
2021 20.6
2022 13.3
Why is this KPI important?
ROCE is an important indicator
Performance
Proforma adjusted ROCE for 2022
shareholders’ funds plus net debt.
The 2022 ROCE includes the pre-
acquisition trading of Marley.
Links to strategic
corporate objectives
Principal risks
• Threat from new technologies
and business models
• Increased pace of
digital change
• Capital structure
Risk mitigation
• Digital transformation
• Operational excellence
•
• Capital allocation policy
Links to remuneration
Stakeholder linkage
• Shareholders
• Employees
£190.8m
Reported basis
£236.6m
Stakeholder linkage
• Shareholders
• Employees
• Customers
• Suppliers
Why is this KPI important?
Marshalls continues to support
Performance
post-fund acquisition of Marley.
Links to strategic
corporate objectives
Principal risks
•
• Overpaying for acquisitions
•
Risk mitigation
• Close monitoring of trends
and lead indicators
• Diversity of business
• Customer centricity
• Digital strategy
Links to remuneration
2018 63.8
2019 71.1
2022 90.4
2021 72.3
2020 23.7
Key Performance Indicators
Measuring our performance
Revenue (£’m) ROCE (%) Net debt (£’m)
LTIPAI LTIPAI LTIPAI LTIPAI
2022 (236.6)
2021 (41.1)
2020 (75.6)
2019 (60.0)
2018 (37.4)
41
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
2018 99
2019 96
2020 49
2021 80
2022 91
Adjusted operating
Stakeholder linkage
• Shareholders
• Customers
• Suppliers
Why is this KPI important?
and for delivering increased
shareholder value.
Performance
proforma rolling annual basis.
Links to strategic
Principal risks
• Supply shortages requiring
increased investment in
•
Risk mitigation
• Excellent customer service
and quality
• Customer relationships and
brand value
Links to remuneration
97%
customer service index
2018 98
2019 98
2020 94
2021 98
2022 97
Customer service
(excluding Marley)
Stakeholder linkage
• Customers
• Communities
• Environment
Why is this KPI important?
strategic priority. Customer
service lies at the heart of the
Marshalls brand.
Performance
The Group’s manufacturing
operations are responding to
trading patterns. The focus
remains on quality, on-time delivery
and order accuracy.
Links to strategic
Principal risks
• Quality, service and reliability
• Brand reputation
•
Risk mitigation
• Customer centricity strategy
• Digital strategy
3%
carbon increase per tonne
2018 9.92
2019 9.21
2020 7.70
2021 6.46
2022 6.65
Climate change
(excluding Marley)
Stakeholder linkage
• Shareholders
• Employees
• Customers
• Suppliers
• Environment
• Regulators
Why is this KPI important?
The Group’s continued
commitment to our sustainability
strategy is that our annual carbon
reduction targets must be achieved.
Performance
Whilst our relative Scope 1 and 2
emissions have increased slightly
in 2022, our absolute Scope 1 and
2 emissions have decreased. Both
absolute and relative emissions
remain well within our science
-based target pathway.
Links to strategic
Principal risks
•
change, such as wind and water
• Rising energy prices and
carbon taxes
• Changing product requirements
in the built environment
Risk mitigation
•
•
• Mitigation and
adaptation strategy
Links to remuneration
1.7
compared with the target
incident frequency rate)
(excluding Marley)
Why is this KPI important?
Marshalls is committed to
Performance
In 2022 the lost time incident
frequency rate per million hours
average over three years).
Links to strategic
Principal risks
• Consistency of standards
• Regulatory controls
•
•
restrictions
• Mental health and
employee wellbeing
Risk mitigation
• Embedded culture –
The Marshalls Way
• Compliance procedures
and policies
• Employee training
Links to remuneration
Stakeholder linkage
• Employees
• Customers
• Communities
• Environment
Links to remuneration
Links to remuneration
Long-term Incentive Plan
Annual incentive award
91%
annual basis)
2018 2.07
2019 2.29
2020 1.73
2021 2.68
2022 1.70
Links to strategic corporate objectives
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
LTIP
AI
LTIPAI
AI
LTIPAI LTIPAI
Read more about our strategy on pages 36 to 39
Marshalls plc | Strategic Report
42
What ESG Means to Marshalls
Our ESG
journey continues
Dear stakeholder
The Marshalls Way says that we do “the right things, for the right
reasons, in the right way”. We believe a business should be responsible
and transparent – that’s why we are a Living Wage employer and have
the Fair Tax Mark accreditation.
Being a responsible business is how we’ve operated for over 130 years
and as we face current global challenges, it’s never been so important
Following our acquisition of Marley in 2022, we put in place a
programme of work to integrate our businesses. The Science Based
Targets initiative (“SBTi”) dictates that such an acquisition triggers
a re-baselining of our carbon footprint and therefore our reduction
will work with the Carbon Trust to re-baseline for the Marshalls
Group, including Marley. We will bring together the monitoring and
measuring of our carbon emissions and validate our roadmap for
the Group.
Going through this process doesn’t mean we’re slowing down our
carbon reduction activities. The historical data shown on page 48
shows the steady decrease of our carbon footprint over time and we
continue to forge ahead with some really exciting projects. For more
information on our plans, turn to page 49.
We made some great strides in 2022. We have been recognised by
the Financial Times and Statista as one of Europe’s Climate Leaders
for the second consecutive year and one of our safety improvement
projects won an award at this year’s MPA Health & Safety Awards. We
I’m especially proud to be recognised for the approach we’ve taken to
supporting employee wellbeing.
As we move forward in 2023, our focus will very much be on
continuing to integrate what is now the entire Marshalls Group and
actively demonstrating our ESG credentials.
When standing still is effectively going backwards in this fast-
moving ESG space, it’s important that we communicate clearly and
consistently – we take the environmental, social and governance
responsibilities of our business seriously. We steer clear of greenwash.
We are transparent in our dealings with our stakeholders. We stand for
responsible business.
Vanda Murray OBE
Chair
15 March 2023
• Our acquisition of Marley has triggered a re-baselining of our carbon reduction targets. Our newly integrated
•
•
•
•
•
•
•
onwards
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Our sustainability strategy is underpinned by the UN Global Compact’s principles in the key areas of human rights, labour, the
environment and anti-corruption. These principles, alongside the UN’s Sustainable Development Goals (“SDGs”), continue to guide us.
The evolution of our three pillars – Better Workplace, Better World, Better Product – highlight our focus areas towards creating
better net positive futures, whilst maintaining The Marshalls Way of “doing the right things, for the right reasons, in the right way”.
found within this document (or required by Sections 414CA and 414CB of the Companies Act 2006).
Reporting requirements Relevant policies Section within Annual Report
Environmental Policy Statement*
Climate Change Policy*
Timber and Paper Policy
Transport Policy
Sustainability strategy (pages 46 to 53)
Sustainability commitments relating to the
environment (page 46)
Social
Code of Conduct*
Social Community Investment Policy
Corporate Responsibility Policy*
Tax Policy*
Human Rights Policy
Modern Slavery and Anti-Human
Children’s Rights Policy
Responsible business (page 42)
Charitable donations (page 54)
Health and safety (page 58 and 59)
Stakeholder engagement (pages 28 to 35)
Governance
Anti-Bribery Code*
Tax Policy*
Trading Policy*
Schedule of matters reserved for the Board*
Board Committee Terms of Reference*
Governance and compliance (pages 78 to 91)
Corporate Governance Statement (pages 78 to 91)
Corporate Governance Statement (pages 78 to 91)
Corporate Governance Statement (pages 78 to 91)
Health and Safety Policy
Serious Concerns Policy
Diversity and Inclusion Policy
Drug and Alcohol Policy
Mental Health and Wellbeing Policy
Headcount (page 58 and 59)
People engagement (pages 54 to 57)
Board diversity (pages 76 and 77)
Gender diversity (page 55)
Stakeholder engagement (pages 28 to 35)
Description of risk process (page 66 and 67)
Risk framework (page 67)
Principal risks and uncertainties (pages 69 to 75)
Our business model (pages 24 and 25)
Key performance indicators (pages 40 and 41)
Strategy (pages 36 to 39)
Full versions of the policies referred to above form part of the Group’s Policy Framework that supports Marshalls’ Code of Conduct.
marshalls.co.uk/about-us/policies.
The above policies refer to Marshalls only. The integration of policies with Marley is starting in 2023.
* Key policies referred to in this Annual Report.
Marshalls plc | Strategic Report
44
What ESG Means to Marshalls continued
in 2022
Member of the index
series since 2005
wellbeing
Winner of the Best
Strategy for Supporting
Employee Wellbeing and
Grand Prix awards at the
Engagement Excellence
Awards 2022
B score for
disclosure
We continue to disclose
our approach to climate
change to CDP (Carbon
Disclosure Project)
Living
As a Living Wage employer
since 2014, all our people earn
a real living wage
We’ve held the Fair Tax Mark for
seven years, demonstrating our
commitment to paying our fair
share of tax
chain ethics
Commendation for
Disruption of Supply
at the Data to Disrupt
sourcing
Our Marley clay and
products are rated
“excellent” by BES
6001 accreditation for
responsible sourcing
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Sustainability School
Gold member of the Supply
Our Code of Conduct
has been revised and the
communications and training
rollout will start in 2023
Made in Britain
Committed to UK manufacturing
since our story began
in the 1890s
leader
Named one of Europe’s
climate leaders for two
consecutive years
status
Marshalls has been
recognised as a
Superbrand for 13
consecutive years
MPA Award
winners
Winner of the Safer
Transport and
Logistics Award
for our Crane
Improvement Project
at the MPA Health
sequestration
First UK concrete
manufacturer to use
CarbonCure technology
to sequester carbon in
concrete bricks
Marshalls plc | Strategic Report
46
What ESG Means to Marshalls continued
Impact on business
Stakeholder interest
Moderate Major
Low
Energy management
Water management
Circular economy
Biodiversity impacts
Natural capital
Health and safety
Product innovation
Impact of climate change
Carbon reduction
Employee wellbeing
Supply chain resilience
Sustainable procurement
Community relations
Human rights
and environmental
due diligence
Anti-corruption
Diversity and equity
Talent and development
Regulatory environment
2
4
6
4
2
6
This is our third materiality matrix for ESG and sustainability. In
to develop it. The following year, the matrix was further updated
following a comprehensive review. Our 2022 materiality matrix
continues to be based on the SASB Standards for Construction and
the UN Sustainable Development Goals, and it’s aligned to our risk
The materiality review process takes into consideration the issues
that matter most to our stakeholders and have impact on our
business, whilst linking back to our strategic objectives. Using
a combination of desk research, analysis of industry issues and
stakeholder feedback, the matrix is then analysed and reviewed.
The newly formed ESG Steering Committee has conducted the
2022 review. They concluded that key material issues continue to
be relevant and still broadly fall in the categories of ,
and . Due to increased attention
on DERI (diversity, equity, respect, inclusion), the one issue that
has moved is 16: Diversity and equity. We see this area as having
increased stakeholder interest.
Next review
With the acquisition of Marley into the Marshalls Group, the ESG
Steering Committee concluded that the 2023 materiality review
In 2020, an ESG Committee was formed to share knowledge
internally and drive our sustainability agenda. With increased focus
and scrutiny on ESG, the Committee has evolved and in 2022
became the ESG Steering Committee.
Reporting through the CEO to the Board, the ESG Steering
made up of Executive Team and Board members, including our
CEO, CFO and COO. The ESG Steering Committee’s remit is to drive
our sustainability and ESG priorities by working collaboratively with
teams in ESG, Finance, Operations, Legal, HR and Procurement.
Governance
Further to 2021’s ESG audit by KPMG, a set of action points were
put in place focusing on formalising processes, looking at skill
assessments and aligning ESG metrics and reporting. This formed
part of the remit of the newly formed ESG Steering Committee and
will be further progressed in 2023.
Risk
ESG risk is included in the Group Risk Register and another area
of focus for the ESG Steering Committee is to look at risk and
will be looking further at identifying, managing and mitigating ESG
risks, reviewing ESG risk management, and internal controls.
Case study
Marshalls continues to make great progress on carbon
reduction by meeting science-based targets. Now
Marley has joined the Marshalls Group, the ESG Steering
Committee has approved the decision to review our overall
carbon reduction targets. In 2023, teams in Sustainability,
Operations and ESG will work on the re-baselining activity
and seek formal approval of targets from the Science
Based Targets initiative.
Link to strategic objective:
Operational excellence
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Over the last two years, we have reviewed our impact on
each of the Sustainable Development Goals (“SDGs”) that
are material to Marshalls. We have also taken a more
granular view and reviewed each goal’s associated targets.
Our process is detailed in the diagram and sets
out our activity plan. We have completed Step 1 by
understanding each SDG and its associated targets,
prioritising and relating to our strategic objectives and
analysing our contribution at target level.
Before we move on to Step 2 to measure and analyse,
we will be undertaking a review to include Marley in this
process. Whilst the review is taking place, we will be
starting the process of collecting and analysing relevant
data – linking back to our material SDGs.
1.1
Understand the
SDGs and
their targets
1.2
SDGs & relate to
strategic objectives
1.3
Analyse contribution
to targets at
granular level
2.1
Set objectives
2.2
disclosures
2.3
analyse data
3.1
features of
on the SDGs
3.2
3.3
Step 1
SDG targets
Step 2
Measure & analyse
Step 3
integrate & review
Case study
Goal 8.5: By 2030, achieve full and productive employment
and decent work for all women and men, including for young
people and persons with disabilities, and equal pay for work
Social value plays an important part in the built environment
and construction industry. It’s a term used for the value an
organisation provides to society – through helping local people
into employment, supporting local businesses or working with
young people on improving their employability skills.
In 2022, we started a partnership with RNN Group and
Rotherham College to create the Marshalls Academy. This
partnership enables us to engage with brickwork students
on a range of activities including curriculum planning, mock
interviews and employability skills workshops, and site visits.
Here we are able to provide employability skills to young people
in local communities, share construction expertise in order
to inform the curriculum, help young people understand the
requirements of employers, and showcase Marshalls as an
employer of choice.
Marshalls has also started working with Barnardo’s in 2022 to
support their Gap Homes project, offering bespoke supported
living for young people leaving care. As part of this project,
Marshalls is providing landscape design for outdoor spaces
Link to strategic objective:
Read our Sustainability Report:
Marshalls plc | Strategic Report
Case study
Marshalls was a pioneer in carbon footprinting, having worked
with the Carbon Trust to generate independently calculated
product footprints since 2008. However, consistency and
standardisation in product sustainability reporting are
paramount, and it has become clear that the construction
Declarations (“EPDs”) - detailed reports of a product’s
sustainability performance including product carbon footprints.
EPDs give our customers the defendable, comparable evidence
they need, so in 2022 we engaged with OneClick LCA to
generate EPDs for our products. We already have EPDs for our
concrete bricks and solar PV modules, and our latest EPD for
through-mix concrete block paving shows that we’re 40 per cent
lower in carbon than our only published competitor’s equivalent
on a cradle to grave basis. This represents a saving of over 8kg
of CO
2
per m². More EPDs will follow in 2023.
Link to strategic objective:
Read more about our products:
What ESG Means to Marshalls continued
Carbon reduction
Reducing our carbon emissions has long been a priority for Marshalls. We started reporting our emissions data back in 2004. Between 2008
and 2020, we reduced our carbon footprint by 50 per cent. Every year, we allocate capital for carbon reduction and energy saving projects. In
2022, this consisted of lighting upgrades, removal of diesel heating and operational control improvements. We also approved the installation
of a 740kW solar array at a third manufacturing site. Though our acquisition of Marley means we are re-baselining our carbon reduction
targets, Marshalls is still well on track to achieving its approved science-based targets.
Scope 1 and 2 GHG emissions (tonnes CO
2
e)
54229
52577
37969
37572
36295
Current baseline for our
SBTi approved targets
First submission to SBTi for
approval of science-based targets
50% reduction in carbon
footprint since 2008
Voluntary disclosure according
to TCFD recommendations
Note: All data in this table excludes Marley.
Note: 2004-2019 data is location based; 2020 onwards data is market based.
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
As we continue along our carbon reduction journey, we also move forward with a range of different projects that will contribute to our
carbon reduction targets. These projects are collaborative and encourage innovative thinking for the concrete industry.
Case study
Over its life, concrete absorbs carbon. Over the past three years,
we’ve been exploring different technologies which can either
increase or accelerate absorption. Ultimately, having the ability
to absorb and lock away waste carbon is a really important step
forward for our industry.
We have committed to several projects to further investigate
carbon sequestration, at small and large scale. As a result, we
manufacturer to install CarbonCure Technologies’ mineralisation
technology. The way this works is by injecting waste CO
2
directly
into concrete as it is being mixed. The carbon immediately reacts
with cement in the mix and mineralises. Once mineralised, the
carbon is permanently locked into the concrete for millennia —
never to be released into the atmosphere, even if the concrete is
demolished. We are applying this technology at our concrete brick
manufacturing site in Grove, using waste carbon from the fertiliser
industry as the carbon source. It is estimated that the pilot project
will permanently remove approximately 30,000kg of carbon every
year. This isn’t a huge amount, but it’s the start of a journey which
enables us to tackle climate change through product innovation.
Case study
In traditional concrete, cement accounts for about 80 per cent of the total carbon
long been our goal. In recent years, we have been working on a technical development
programme across our concrete block paving (“CBP”) sites in order to substitute an
element of the cement with Ground Granulated Blast Furnace Slag (“GGBS”) which is a
low carbon by-product of the steel industry. As a result, we have been able to replace a
minimum of 40 per cent of the cement with GGBS across all of our CBP sites.
In 2022, we took cement substitution technology a stage further when we introduced
additional cement substitute into our mix designs, limestone powder, which has an
even lower carbon embodiment than GGBS. Whilst technically it’s not been easy to
achieve, this combination of GGBS and limestone powder has enabled us to replace
60 per cent of the cement at Ramsbottom, cutting the embodied CO
2
by approximately 50 per cent (versus traditional concrete containing 100 per cent
cement binder). We have a clear two-year plan of investment to allow us to roll out this
technology across our CBP production network.
Case study
Our current approved science-based
target is to have 73 per cent of
our suppliers, by emissions, with
a science-based target of their
own by 2024.
We’re keen to report our carbon
footprint in a more detailed way
for Scope 3 supplier emissions. So
we’ve put a plan in place to review
supplier emissions with a view
to submitting new targets to the
Science Based Targets initiative.
Marshalls plc | Strategic Report
What ESG Means to Marshalls continued
Marshalls has publicly committed to being a supporter of the TCFD. We have made TCFD-aligned disclosures according to the requirements
of Listing Rule 9.8.6R in this Annual Report and in our Sustainability Report 2022. We believe we are partly compliant in our disclosure.
For those pillars where we feel we are not yet fully compliant (marked with a *), we have given an explanation and the reasons behind
Location
Governance
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
2022 Progress: Approved science-based targets aligned to 1.5°C and set up of new ESG
Steering Committee
The Board has ultimate responsibility for climate-related risks and opportunities. Board oversight is
through the ESG Steering Committee (attended by our CEO, CFO and COO). In 2022, we introduced
Executive remuneration linked to carbon reduction science-based targets. 2023 will see the
creation of a Climate Disclosures Working Group, involving teams from ESG, Finance, Legal and
Operations, reporting to the ESG Steering Committee.
The Group Risk Register, which includes climate change, is updated by the Executive 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. The Climate Disclosures Working Group will work more
closely with sites and other teams to better assess and manage these risks and opportunities.
2023 focus: Set up of Climate Disclosures Working Group, publication of our Carbon Reduction
Plan and preparing to report according to the TPT framework
Corporate
Governance
Statement
(pages 78 to 91)
Sustainability
Report
2022 (page 14)
Strategy
a. Describe the climate-
related risks and
opportunities the
organisation has
medium and long term *
b. Describe the impact of
climate-related risks
and opportunities
on the organisation’s
businesses, strategy and
c. Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario*
2022 Progress: Climate risk analysis for all Marshalls Group sites including Marley
looked at risks and opportunities in terms of low, medium and high impact, though this requires
of the focus areas of our 2023-25 plan.
Our main transition risk is the inability to deliver on our mitigation strategy, which focuses on
opportunities are focused on our adaptation strategy and the products we can offer to adapt to the
Although we have assessed impact on our business and strategy, we intend to interrogate our
through the work of the Climate Disclosures Working Group and will ensure we are fully compliant
by end 2023.
Our current approved science-based targets are aligned to a 1.5°C trajectory and we have a roadmap
of carbon reduction projects planned to 2030 for the Marshalls business. This roadmap is subject
analysis, we commissioned research that looked at four different scenarios impacting our overseas
stone supply chain. Although these were not climate-related scenarios, we plan to engage in climate-
related scenario analysis as part of our 2023-25 plan.
2023 focus: Re-baselining of our carbon reduction targets for the whole Marshalls Group,
publication of Environmental Product Declarations and scenario analysis planning
Sustainability
Report 2022
(pages 16-19)
As we continue to develop our process for alignment to TCFD
recommendations, we have also begun to include other frameworks
into our planning. The Transition Plan Taskforce (TPT) and the ISSB
standards have now been incorporated into our climate disclosures
plan to 2025, which includes:
•
reduction targets;
• setting up a Climate Disclosures Working Group to bring together
teams from ESG, Finance, Legal and Operations;
• publication of our Carbon Reduction Plan;
• taking a closer look at Scope 3 supplier emissions in terms of
supplier engagement and disclosure;
•
• more detailed climate-related scenario analysis; and
• reporting on progress.
Case study
Scenario analysis
We have begun the process of using scenario analysis
through a project which set out to build a set of contrasting,
plausible future contexts through which to understand how
sustainability could impact the supply and demand for natural
stone. The project developed a set of four challenging, relevant
and plausible scenario stories to describe four possible
future worlds in 2040. The scenarios examine how the supply
and demand for natural stone in hard landscaping could be
impacted by factors related to sustainability and potential
different responses to mitigate and adapt to climate change.
Future scenario analysis will focus on resilience testing our
overall strategy, using contrasting climate-related scenarios.
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Location
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*
Climate change is a principal risk. We have formal ongoing processes to identify, assess and
analyse risks and these form part of our Group Risk Register. Climate-related risks are explained
fully in our risk section (pages 66 to 75), including our risk heatmap featuring climate change in
impact for our business (see page 46).
We have started analysing physical risk at all our sites, using Verisk Maplecroft data, and in 2022
added Marley sites and our Belgium site to the analysis. Looking forward, we intend to look more
closely at which areas of climate change each site is more likely to face – initial analysis shows
this to be water stress, heat stress and high winds.
focusing on climate change-related risks which may impact on other areas of our activities. Key
we are looking to investigate further through the work of the Climate Disclosures Working Group
in 2023/24.
assessing and managing climate-related risk
Sustainability
Report 2022
(page 15)
Metrics and targets
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
2022 Progress: Decision to re-baseline and review Scopes 1, 2 and 3 science-based targets
We have described our climate-related risks and opportunities according to TCFD guidelines in
our Sustainability Report. As one of our risks centres on achieving our science-based targets, we
use metrics to measure absolute and relative emissions (see page 52). These metrics are linked
to Executive remuneration. We also use metrics relating to physical risk by analysing changes
and trends, as well as analysing weather data in order to monitor impact to production and site
operation.
We disclose Scope 1 and 2 GHG emissions. For Scope 3, we have a science-based target however
as part of our re-baselining project (to incorporate Marley into Group carbon emissions targets),
we are looking to analyse Scope 3 emissions more closely by ensuring we are measuring for each
material section of Scope 3. This work is due to take place in 2023. We don’t disclose externally
about any related risks.
Our approved science-based targets are aligned to 1.5°C (see page 42). We are committed to
alignment and robustness of data.
2023 focus: ESG data alignment project and Scope 3 supplier engagement
Annual
Report 2022
(pages 52-53)
Sustainability
Report 2022
(page 14)
Metrics and targets
Our approach to reporting focuses on being transparent and adhering to mandatory requirements and best practice. We have approved
science-based targets aligned to 1.5°C for Scope 1 and 2, along with a Scope 3 target for supplier emissions. Our base year is 2018.
Our metrics and targets relate to Marshalls only. Marley has its own carbon and energy reduction targets however we will not be reporting
as a Group until our carbon reduction targets have been re-baselined and approved by the Science Based Targets initiative. We have a plan
in place and will update our reporting in due course.
Metric Unit
Absolute Scope 1 Tonnes CO
2
e Scope 1: fuel usage including diesel, petrol, gas oil, LPG,
Base year emissions: 44,090 tonnes CO
2
e
Absolute Scope 2 (location and
Tonnes CO
2
e Scope 2: electricity usage.
Base year emissions (location based): 13,782 tonnes CO
2
e
Base year emissions (market based): 10,896 tonnes CO
2
e
Intensity
Scope 1 and 2
Kg CO
2
e/
tonne of production
Relative emissions as a proportion of production.
Base year emissions (location based): 10.44 kg CO
2
e/tonne
Base year emissions (market based): 9.92 kg CO
2
e/tonne
Energy kWh Energy performance reported as absolute and intensity (per
Renewable energy kWh Self-generated energy from solar arrays at site.
Read our Sustainability Report
Marshalls plc | Strategic Report
What ESG Means to Marshalls continued
Carbon reporting
2
This chart illustrates UK and Belgium absolute CO
2
e emissions
in tonnes, including transport activities, for Marshalls
(excluding Marley).
Marley’s absolute Scope 1 and 2 emissions for 2022 were 22,610
tonnes CO
2
e (market based).
2
e
42,147
43,559
35,072
37,540
36,232
2
This chart illustrates UK and Belgium CO
2
e intensity emissions
relation to our business – for Marshalls, this is kg CO
2
e per tonne
to stakeholders and allows for business growth.
6
4
2
2
9.92
9.21
8.65
7.70
7.88
6.46
7.84
6.65
The relationship between the energy used and volume of
product manufactured is not linear. Whilst our relative Scope 1
and 2 emissions have increased slightly in 2022, our absolute
Scope 1 and 2 emissions have decreased. This 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).
commitment to reducing the energy and carbon impact of the
our carbon reduction targets. This means that we will be integrating
our carbon data, recalculating our carbon footprint and submitting
our revised targets to the Science Based Targets initiative (“SBTi”)
for approval.
Our current goals:
• reduce our relative Scope 1 and 2 emissions by 59.4 per cent by
2030 against a 2018 baseline, which is equivalent to absolute
Scope 1 and 2 emissions reduction of 50.5 per cent;
• 73 per cent of suppliers by emissions have science-based
targets by 2024; and
• start re-baselining our targets to include our Marley acquisition
and submit to SBTi.
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 June 2018 Department for Business,
Energy and Industrial Strategy (“BEIS”) published CO
2
e conversion
factors to measure GHG emissions.
This year, in line with mandatory requirements, we have reported
according to recommendations from TCFD, which can be found
Our approach to the Energy Savings Opportunity Scheme (“ESOS”)
with the international standard for energy management, ISO 50001,
gaining re-accreditation in 2022. In 2022, we also began the process
of incorporating Marley into our ISO 50001 accreditation.
We measure carbon emissions by monitoring Scopes 1 and 2.
Scope 1 refers to our fuel usage, including diesel, petrol, gas oil,
Scope 2 refers to our indirect emissions and for us, it’s the
electricity that we’ve purchased. We continue to report our Scope 2
emissions as location based (using Government emissions factors)
and market based (using supplier emissions factors). Our Scope 2
market based performance has been very low since 2020 as this
was the year we switched to green electricity which comes from
renewable sources.
Both Marshalls and Marley carbon and energy data has been
this year’s reporting as Marley is not yet included in our approved
science-based targets.
Progress against targets
Our absolute target for 2022 was 48,150 tonnes CO
2
e and our
relative target was 8.34kg CO
2
e per tonne.
For 2023, our targets are 45,719 tonnes CO
2
e and 7.76kg CO
2
e per
tonne of production.
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Marshalls continues to report global Scope 1 and 2 GHG emissions
in tonnes of carbon dioxide equivalent. In accordance with the SECR
framework, we are also reporting underlying energy use, which
includes self-generated energy from renewables. Unless otherwise
stated, the information below excludes Marley.
The chart below shows underlying UK energy use for Marshalls.
Belgium’s energy use for 2022 was 1.975 mkWh (2021: 1.936
mkWh). Marley’s energy use for 2022 was 135.05 mkWh.
215.836
178.682
217.868
199.016
190.578
This chart shows energy use for Marshalls in the UK in relation
to product.
37.82
36.25
42.40
34.24
34.69
Note: The intensity ratio is calculated by dividing our kWh (energy) usage
by our production output (tonnes).
This chart shows self-generated energy from the solar arrays at our
Marshalls manufacturing sites.
kWh
199,453
209,551
201,635
413,449
421,975
Energy reduction
We continue to engineer high emission fuels like gas oil out of the
business and in 2022, we removed diesel heating at our Buxton site.
Operational controls and building management systems are also
areas of focus, with improvements made at our Grove site. Lighting
upgrades also continue, with our Brookfoot and West Lane sites
updated. We have approved the installation of a 740kW solar array
at our St. Ives dual block plant and carried out feasibility studies
on wind energy. Marley has joined us by having 100 per cent of its
electricity coming from renewable sources, as well as adding more
electric car charging points at Keele and Glasgow sites.
Case study
Renewables
We have installed solar panels at two sites, with the third
due for completion in 2023, and all our sites are powered by
electricity from renewable sources. But this is not the only
way we’re looking at renewable energy. In 2022, we set up
a Renewables Working Group comprising colleagues from
Legal, Property, Operations and Procurement.
energy savings as well as reduced reliance on the grid.
Link to strategic objective:
Operational excellence
Marshalls plc | Strategic Report
Making Marshalls
At Marshalls, our people are the key differentiator. We designed a
People Strategy built around the modernisation of the colleague
experience; building a diverse and engaged workforce that supports the
performance of the business.
Listening to the colleague voice is a fundamental part of how Marshalls
operates and it’s been a privilege to continue to work as the Board
sponsor of the democratically elected Employee Voice Group (“EVG”) in
2022. The group has been working to make sure that we “do the right
things, for the right reasons, in the right way”. The Marshalls Way.
Representatives of all levels have created an environment of trust where
they take part in decision making, share feedback and have honest
conversations with leaders. We’ve made strides in 2022 with the EVG
playing a key role in a number of different projects and programmes
we’re sharing in this report.
I’m looking forward to continuing to work with the EVG to make
Marshalls a great place to work and deliver on our purpose to create
better spaces and futures for everyone.
15 March 2023
What ESG Means to Marshalls continued
14239
10143
7.6
colleagues in apprenticeship
programmes (2021: 102)
training courses completed*
(2021: 8,287)
engagement score* – 0.2 above
industry benchmark (2021: 7.6)
3112
employees (2021: 2,700)
as a Living Wage employer
£33,901
charitable donations
(2021: £103,500)
31%
(2021: 35%)
95%
of colleagues disclosing
diversity data*
16%
women colleagues (2021: 17.8%)
2022 saw the continuation of our digital transformation
programme, with the introduction of our new core people system,
Marshalls Connect.
We launched Marshalls Connect to modernise our HR capability
and achieve greater organisational agility and resilience. Our people
data and analytics now have a solid foundation and inform better
decision making. In 2022, we also concluded our standardisation
programme of legacy terms across the business which created
greater transparency for our colleagues.
To do the right thing for our people, it was important that we
brought colleagues on the change journey from the start, so they
understood why the transformation was happening and they had
time to learn about Marshalls Connect. We showed colleagues how
easy the system was to use and demonstrated how their data*
was safe and secure. The change management programme further
reinforced our collaborative culture.
We’ll be moving into the next phase of digital modernisation by
consolidating and integrating other technology (learning, performance
management as standout examples) into this core system.
As at 16 December 2022, a total of 2,500 colleagues engaged with Marshalls
Connect. That means over 98 per cent of the workforce* have control of their data
at the touch of a button.
* This data excludes Marley.
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Case study
The Marshalls Data Academy was launched in 2022 with
the clear objective of building capability for data insight, and
supporting better data-driven decisions to shape the sustainable
future of Marshalls. 28 applicants* have successfully been
accepted to three different programmes of the Academy.
and also form strong peer networks for learning and mentoring.
Link to strategic objective:
Our programme of understanding what drives engagement among
colleagues continued throughout 2022, with a comprehensive survey
carried out in May. We included a range of questions in the survey to help
us measure and understand colleague engagement across key topics
such as wellbeing and Company strategy.
The culture of transparency and openness we’ve been building through
our People Strategy has started to pay back; we’ve built trust and
recent survey gave us an engagement score of 7.6 (eNPS 27), which is
0.2 above the benchmark for our industry. This data excludes Marley
and our aim for 2023 is to include our Marley colleague voice as part
In 2022, the EVG continued to represent colleagues across the business
with Executive Team member Louise Furness and Board member
for all. In 2023, Marley colleagues joined the EVG.
The EVG held six meetings during 2022 and was invited to steer the
business across a number of areas, including our Reward Strategy
They’ve all played a key role when discussing topics and shared
suggestions like the creation of a company car newsletter, corporate
charity partner selection and representation on the Pensions Governance
Committee. They’ve provided deep insight into the core focus areas
from the employee surveys – personal growth and development and
employee wellbeing – and helped the business build a tangible action
plan that will make a difference to all colleagues.
Personal growth and development have been highlighted, through our
employee surveys, as a key area of focus. Based on colleague feedback,
we now have an accelerated strategy in place to enhance this further.
This will be delivered from 2023 onwards.
A key core element of building capability, for now and the future, is
apprenticeships and 2022 has been another successful year. We have
seen 142 colleagues engaging in apprenticeship programmes (levels
3 to 7), with 37 of those colleagues successfully graduating in 2022.
These graduates have excelled in their learning, not just compared to the
Marshalls standard, but also when compared to their peers nationally.
Our apprenticeship development programme focused on engineering,
digital and technology solutions, digital marketing, leadership and
management, LGV drivers, and human resources. This development
strategy has helped us bring new talent into the business while growing
existing talent and creating internal mobility. Our ambition for 2023
is to continue growing our own talent through increasing the number
Gender split
24%
Generational representation
Black, mixed/multiple heritage
or other minority ethnic groups)
Ethnicity
2%
Disability
Our new HR system, Marshalls Connect, has given us an
opportunity to collect up-to-date diversity data from colleagues
to better understand our workforce and what we need to do to
be better.
Colleagues disclosing some or all of their diversity data has
increased to 95 per cent in 2022*. This demonstrates the
progress we’ve made on our DERI (Diversity, Equity, Respect,
Inclusion) journey.
* The data below excludes Marley.
Future key focus areas
Since our DERI strategy launched in 2019, we’ve built solid foundations.
We know there’s more to do and our plans for 2023 will continue to move
us forward to make Marshalls a place where everyone wants to work.
We’re taking the approach of delivering small changes as these will have
a greater impact in changing our overall demographics. We’ll be setting
change. The Board supports the creation of targets and KPIs to monitor,
track and hold our leadership accountable. It’s our intention, once
Marshalls plc | Strategic Report
What ESG Means to Marshalls continued
Established a cross functional approach involving procurement,
commercial and ESG teams, to support our human rights and
environmental due diligence systems and processes
• Leadership and dynamic decision making at Board level
Expanded our business and human rights team to increase
capacity for in-house risk assessment, supplier visits and
engagement for both domestic operations and our international
supply chains
• Increased capacity for human rights due diligence and
responsiveness to issues
Refreshed our Code of Conduct for Marshalls employees and
suppliers, with added emphasis on whistleblowing and human
rights due diligence
• Reinforcing our values with employees and supply chain partners
Implemented an independent Modern Slavery Risk Assessment
and training programme at 32 of our Marshalls manufacturing
sites in the UK
• High levels of awareness of modern slavery and appropriate
systems and processes
Introduced a two-stage desk analysis process to understand
ethical labour and environmental risks in our global supply chains.
country level, and then mapped against geolocations of suppliers
• Integration of human rights and environmental analysis, preparing
for mandatory reporting requirements
Trialled the Everyone’s Business supplier monitoring app in China,
for wider rollout in 2023
• Live monitoring and real time information allowing for faster
Engaged with local experts to map out our South Indian supply
chain back to raw materials and to analyse current and evolving
human rights risks
• Further deepening local knowledge to inform ongoing strategy
and engagement with the region
Completed Modern Slavery Country Risk Mapping for 100% of our
Marshalls Group business operations and supply chains, making
this publicly available online
• Transparency to enable our customers to make informed choices
Continued to engage with UK Government, overseas
governments, international business associations and bodies on
the issues of modern slavery
• Strategic working at UK and international level to bring an end to
modern slavery
Marshalls has been a signatory of the UN Global Compact (“UNGC”)
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 UK and overseas governments, NGOs and industry groups to
promote sustainable and ethical working practices across our own
and other industries.
Our CEO signs our annual Modern Slavery Statement and has
overall Board responsibility for human rights.
Marshalls supports human rights as laid out in the Universal
Declaration of Human Rights and we work diligently in all respects
to support and uphold the UN Guiding Principles on Business and
Human Rights. Our Human Rights and Children’s Rights policies
support our work and are reviewed every year by the Board.
Case study
In 2022, we embarked on the most detailed mapping process of
our natural stone supply chain in China to date, identifying tiers
one to three, from factories to quarries. Our local China-based
team, Marshalls Xiamen, provided geoco-ordinates for each
premises. We then used risk analysis tools supplied by Verisk
Maplecroft to map out the environmental, social and human
academic reports on the region. We are using this research to
inform our next steps for engaging with suppliers and workers,
including the introduction of monitoring tools and the rollout
Link to strategic objective:
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Case study
Marshalls has been an active member of the International
2015 and co-chairs the ILO Child Labour Platform India
Working Group, as part of a cross-sectoral initiative.
This dynamic platform gives us the opportunity to join
other global brands and organisations committed to
eliminating child labour in supply chains. We convene to
share experience, knowledge and challenges in order to gain
new perspective and recommit to doing all that we can as
businesses to accelerate progress and take action.
This year we co-chaired the ILO Child Labour Platform
India Working Group developing a cross sectoral,
multilateral approach in South India. Working in concert
with other engaged brands, the ILO, state governments
and local communities, we will continue to pursue the
decent work agenda.
Link to strategic objective:
Case study
At the end of 2022, Marshalls was part of a successful
Fund, together with UN Global Compact UK Network and
Trilateral Research. The Modern Slavery Innovation Fund aims
to decrease the prevalence of victims of modern slavery in the
UK and overseas.
The two-year project will focus upon strengthening
partnerships between local businesses, UK business,
investors, and local public authorities to prevent and remedy
modern slavery in supply chains. Learnings will also inform
UK and international policy on modern slavery and human
Link to strategic objective:
Case study
As part of our commitment to training colleagues on modern
slavery, we deliver a mix of online and onsite training. Online
training is available on our Marshalls Learning Zone. In 2022,
we also delivered a programme of modern slavery training
awareness to colleagues at 32 of our manufacturing sites.
Starting with director and manager interviews, training was
followed with toolbox talks and tailored training materials.
improvement will form part of our 2023 training plan which
includes engaging with more colleagues at different sites and
bespoke training for our procurement team.
Link to strategic objective:
Operational excellence
Case study
for Migration (“IOM”) to promote fair and ethical labour practices
in the Vietnamese natural stone sector since 2019. This year
we continued the collaboration with a mixed method study to
understand how suppliers in the region have been impacted
by the COVID-19 pandemic, and to assess obstacles and
enabling factors in implementing responsible recruitment and
employment practices. The project is in line with the IOM’s
and is informing our future engagement with the region.
Link to strategic objective:
Marshalls due diligence
Read our Modern Slavery Statement:
Marshalls plc | Strategic Report
What ESG Means to Marshalls continued
Marshalls’ CEO, Martyn Coffey, is the Board Director responsible
Our Health and Safety Policy is approved by the Board and reviewed
aligned with the business strategy with set objectives, and clearly
demonstrates the commitment of the business to take the safety
and wellbeing of its people to the highest level. The Board is fully
committed to the continuous development and improvement of the
business’ safety processes and the importance of engaging and
developing a competent workforce.
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 100 to 130.
The headline target for 2022 was to maintain lost time incidents
This excludes the impact of acquisitions within a period of three
years from purchase, therefore our Bricks & Masonry division
is now included in our data reporting but our Marley acquisition
is excluded.
In 2022, it was decided by the Executive Team to start reporting
our lost time incident frequency rate, instead of lost days injury
frequency rate. This decision was taken because reporting lost time
instead of lost days enables us to give a more rounded view of our
health and safety performance over time. It also brings us in line
with the most widely used measure in our industry.
Case study
In 2022, we reviewed processes for operating vehicle
cranes further to two site incidents. A project team was
set up in order to review current risk assessments and
standard operating procedures (“SOPs”). The SOPs were
made easier to follow and understand, with emphasis on
pictorial instructions, and communicated to our Logistics
colleagues. The team then started working in collaboration
with our crane supplier, resulting in a new system which
means that each crane has an independent key welded to
the same keyring as the vehicle ignition key. This means
the vehicle ignition key must be removed before and whilst
the crane is in operation. This is also a fail-safe system
as the crane must be stowed away correctly before the
vehicle can be started and driven away. We have started
of our colleagues, it also minimises risk to production.
This system is not proprietary to Marshalls and we are
encouraging others in our industry to adopt it for their
Link to strategic objective:
Logistics excellence
• Reduction in lost time incident frequency rate
• 62 Mental Health First Aiders (“MHFAs”)
• Alignment of Marshalls and Marley health and safety function
• Award wins for employee wellbeing strategy and crane safety
improvement project
• 26,969 training hours on health, safety and environment
•
• Introduction of Safety Excellence Model and management
programmes to manage high risk activities
• Continuing rollout of root cause analysis training and incident
investigation
• Internal recruitment and training of MHFAs at Marley sites
• Focus on a positive safety culture by reinforcing recognition
of good behaviours and continuing rollout of the Fair and
Just Approach
2020 2021 2022
Lost time incident frequency rate
1.73 2.68 1.7
Fatalities 0 0 0
Note: The above data covers employees and contractors.
Note: All data in this table excludes Marley.
1.7
lost time incident frequency rate per million hours worked
(target: <2.28 average over 3 years)
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
In 2022, we continued our focus on employee wellbeing by
delivering our three-year strategy. Since colleagues helped us
shape our programme and Simon Bourne, our Chief Operating
strength to strength.
Through our intranet, Marshalls NOW, all Marshalls colleagues
have access to a dedicated area for wellbeing, providing
education and support. This one-stop-shop is accessible by
all colleagues at any time, on any device. Here, colleagues can
support their wellbeing.
Marshalls was awarded the “Best Strategy for Employee
Wellbeing” Award at the Engagement Excellence Awards 2022.
The judges commended our collaborative working across
functions as well as consideration for the employee voice.
Comments from the judges included: “Fantastic
to see senior sponsorship of the strategy and
that its three years demonstrates the buy-in into
this” and “The wellbeing strategy is clearly built
on collaboration and creativity… Marshalls should
be really proud of what they’ve achieved on their
wellbeing journey”.
Case study
Marshalls has a strong network of 62 trained Mental Health
First Aiders (“MHFAs”). We continue to support our MHFAs
by providing supervised sessions with clinical therapists
through CiC, our employee assistance programme. We
also have a programme of refresher training on mental
health and wellbeing, as well as a Supporting Healthy
Minds Working Group which collaborates with unions.
health and managing change. We will also be integrating
our processes with Marley in order to share our wellbeing
resources and promoting access to our MHFA network.
Link to strategic objective:
Operational excellence
Case study
Road safety training
to building sites, merchants yards and to the public. As such,
we are keen to engage with local communities on road safety.
primary schools in West Yorkshire and Cambridgeshire to
deliver training to groups of primary schoolchildren. Covering
session was interactive with a vehicle demonstration in the
playground to explain and show blind spots to the children.
We’re looking to do further training with schools located near
our manufacturing sites in 2023.
Link to strategic objective:
Logistics excellence
Marley integration
A key focus for 2023 will be the continued integration of the
Marley and Marshalls health and safety teams, by aligning
common processes, management systems, policies
and documentation as well as introducing a new data
management system into the Group.
• Winner: Safer Transport and Logistics Award
for Crane Improvement Project
• Finalist: Safer Transport and Logistics Award
for School Awareness Project
• Finalist: Supporting Healthier Minds and
Employee Wellbeing Award
• Finalist: Young Persons in Safety Award for
Sam Wood at West Lane
• Highly Commended: Safer Handling of
Inbound and Outbound Materials Award
for Concrete Block Board Exchange at
Ramsbottom site
• Highly Commended: Safer Together Award
for “See it, Sort it & Go and See” Gas Walks
• Highly Commended: Safer Transport and
Logistics Award for SLAM (Stop, Look,
Assess, Manage)
62
Mental Health First Aiders
(2021: 53)
Marshalls plc | Strategic Report
The Group is strongly cash
generative and has good
facility and covenants
which now includes a deleveraging
objective in order to pay down the new
bank loan over the medium term.
Summary
•
22% increase on 2021, including eight
•
•
•
•
• Strong cash generation
•
•
•
•
Revenue
Group revenue for the year ended 31 December 2022 was £719.4
million (2021: £589.3 million), which is 22 per cent higher than 2021
On a like-for-like basis, Group revenue growth was one per cent.
2022 2021 22/21
Analysis of sales by segment £’m £’m %
Marshalls Landscape Products 394.1 424.8 (7)
Marshalls Building Products 193.1 164.5 17
Marley Roofing Products 132.2 — —
719.4 589.3 22
2022 2021
Analysis of sales by segment % %
Marshalls Landscape Products 55 72
Marshalls Building Products 27 28
Marley Roofing Products 18 —
Following the acquisition of Marley, the Group has reviewed
its reporting segments and now reports under three separate
segments, being Marshalls Landscape Products, Marshalls Building
performance reporting and management responsibility framework.
Marshalls Landscape Products (55%)
Marshalls Building Products (27%)
Financial Review
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
2022 2021 22/21
£’m £’m %
Marshalls Landscape Products 45.3 62.4 (27)
Marshalls Building Products 26.8 19.6 37
Marley Roofing Products 34.4 — —
Central costs (4.6) (17)
2022 101.1 7 7.4 31
2022 together with a strong performance from Marshalls Building
Products. This has been partially offset by Marshalls Landscape
Products, where the impact of a softer Private Housing RMI
market compared to the elevated levels reported in 2021 and
reduced commercial sales resulted in sharply lower volumes and
segment is set out pages 18 to 23.
totalling £53.2 million as summarised in the following table. Further
details are set out in Note 4.
Year ended
31 December
2022
Year ended
31 December
2021
(as restated)
Group cash flow £’m £’m
Transaction related costs 14.9 —
Amortisation of acquired intangible assets 7.3 1.2
Fair value adjustment to inventory 3.9 —
Additional contingent consideration 3.9 —
Restructuring costs 13.0 2.8
Impairment of assets in Belgian subsidiary 10.2 —
Other — (2.8)
Adjusting items 53.2 1.2
Transaction related costs totalling £14.9 million were incurred
in respect of the acquisition of Marley and principally comprised
adviser fees. A purchase price allocation (“PPA”) exercise was
undertaken to recognise the assets of Marley on acquisition at
fair value and this resulted in the creation of intangible assets
and a non-cash adjustment to increase inventory to its fair value.
The acquired intangible assets are being amortised over a period
of between 15 and 25 years and therefore the associated charge
account. Additional contingent consideration of £3.9 million has
been charged as an adjusting item following a re-assessment of the
amounts that will become payable to vendors arising in relation to
Marley’s acquisition and of Viridian Solar Limited in 2021.
In response to lower levels of customer demand, we undertook
and this resulted in a charge of £13.0 million, which comprises
non-cash impairment charges.
The impairment of assets in the Group’s subsidiary in Belgium
arose from an impairment review carried out in response to a
downturn in the business performance during 2022.
The Group’s accounting policy is that adjusting items are disclosed
additional information in order to enable a full understanding of
the Group’s results. The policy to exclude amortisation of acquired
intangible assets has required a modest restatement of Marshalls’
2021 alternative performance measures. The disclosure of results
before adjusting items represents an alternative performance
measure, in order to demonstrate the Group’s capacity to deliver
dividends to shareholders. Further details of the adjusting items
Revenue
Adjusted
operating
profit
Margin
impact
Margin analysis £’m £’m %
2021 589.3 7 7.4 13.1
Marshalls Landscape Products (30.7) (17.1) (2.3)
Marshalls Building Products 28.6 7.2 0.7
Marley Roofing Products 132.2 34.4 2.7
Central costs — (0.8) (0.1)
2022 719.4 101.1 14.1
The Group’s adjusted operating margin increased by one percentage
compression in margins within Marshalls Landscape Products
largely offset by an improved performance by Marshalls Building
Adjusted EBITDA was £136.0 million (2021: £107.1 million).
EBITDA on a statutory basis was £90.2 million (2021: £107.1
Change
2022 2021 22/21
£’m £’m %
Adjusted EBITDA 136.0 107.1 27
Depreciation/amortisation (29.7)
Adjusted operating profit 101.1 7 7.4 31
Adjusting items (1.2)
Statutory operating profit 47.9 76.2
Analysis of revenue growth
2021–2022
revenue
Marshalls
Products
Marshalls
Building
Products
Marley
Products
revenue
28.6
589.3
719.4
132.2
Marshalls plc | Strategic Report
62
Financial Review continued
charge of £2.8 million).
On a rolling annual basis, interest after adding back the impact
Including scheme administration costs, there was a normal IAS
19 notional interest charge of £0.1 million (2021: £0.4 million) in
relation to the Group’s pension scheme. The IAS 19 notional interest
of the Marshalls plc pension scheme, net of the expected return
on scheme assets. The pension related interest cost in 2021 included
a non-cash charge of £2.8 million, which was accounted for as an
adjusted item.
The adjusted effective tax rate was 18.9 per cent (2021: 20.5 per cent),
which is broadly in line with the UK headline corporation tax rate.
The UK corporation tax rate increases to 25 per cent in 2023, and the
deferred tax liability at 31 December 2022 has been calculated at 25
per cent, being the rate at which the deferred tax is expected to unwind.
On a reported basis the effective tax rate was 28.7 per cent due
to certain transaction related costs not being eligible for a tax
deduction and there being no tax relief available for the asset
impairment in the Belgian subsidiary.
The Group has paid £11.6 million (2021: £13.5 million) of
corporation tax during the year. A deferred tax charge of £0.8 million
pension scheme in the year has been taken to the Consolidated
Statement of Comprehensive Income.
For the ninth 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. Taking
into account not only corporation tax but also PAYE and NI paid on our
employee wages, aggregate levy, VAT, fuel duty and business rates,
Marshalls has funded total taxation to the UK economy of £108 million.
Dividends
The Group’s stated dividend policy is to maintain two times cover,
through the cycle, of adjusted earnings per share. A progressive
dividend policy remains a key objective.
paid for 2022. This will be payable on 3 July 2023. When combined
with the interim dividend of 5.7 pence, this results in a full year
dividend of 15.6 pence per share. Dividend payments will continue
our stated strategy and capital allocation policy.
Net debt
Reported net debt was £236.6 million at 31 December 2022
of IFRS 16 lease liabilities. On a pre-IFRS 16 basis, net debt was
£190.8 million (2021: £0.1 million net cash).
On 3 May 2022, the Group drew down the new four-year term loan
of £210 million to support the funding of the acquisition of Marley.
In addition to the term loan, the Group has entered into a new
committed revolving credit facility of £160 million with a maturity
date of four years. Good headroom is maintained against the new
bank facility and its covenants, which will support investment
priorities going forward, were comfortably met.
Borrowing facilities
The total bank borrowing facilities at 31 December 2022 amounted
to £370 million, of which £120.1 million remained unutilised. The
facility matures in April 2026. The bank facilities are unsecured.
The Group’s committed bank facilities are charged at variable rates
based on SONIA plus a margin. The Group’s bank facilities continue
to be aligned with the current strategy to ensure that headroom
against available facilities remains at appropriate levels and are
structured to provide balanced and committed medium-term debt.
At 31 December 2022, on an adjusted, pre-IFRS 16 proforma
of adjusting items the relevant ratios were achieved comfortably
and were as follows:
• EBITA: interest charge – 16 times (covenant test requirement –
to be greater than 3.0 times); and
• net debt: EBITDA – 1.35 times (covenant test requirement –
continued
Adjusted Reported
Adjusted
(as restated) Reported
Adjusted
charge
2022 2022 2021 2021 22/21
£'m £'m £'m £'m %
Operating profit 47.9 47.9 76.2 76.2
Adjusting items 53.2 — 1.2 —
Adjusted operating profit 101.1 47.9 77.4 76.2 31
Net finance costs (4.1) (6.9)
Adjusted profit before taxation 90.4 37. 2 73.3 69.3 25
Taxation (15.0) (14.4)
Adjusted profit after taxation 73.4 26.5 58.3 54.9
Earnings per share – pence 31.3 11.4 29.2 27.5 7
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Cash generation remains strong, and cash generated from
operations were £106.8 million. After adding back the cash cost
of adjusting items totalling £17.4 million paid, net operating cash
which demonstrates the cash generative nature of the Group’s
businesses. The Marley business is cash generative and is expected
allocation priorities going forward, including continued investment
in organic growth opportunities, new product development, dividend
payments and progressive deleveraging. The ratio of net debt to
EBITDA at 31 December 2022 on an adjusted pre-IFRS 16 proforma
basis was 1.35 times. The ratio was 2.6 times on a reported basis.
Both are comfortably within our target ranges, and well below
covenant levels.
The Group continues to prioritise the close control of inventory
and the effective management of working capital. Debtor days
remain industry leading due to continued close control of credit
management procedures. The Group maintains credit insurance
which provides excellent intelligence to minimise the number and
value of bad debts and ultimately provides compensation if bad
customers. This provides an additional short-term facility that can be
utilised to facilitate the management of mid-month cycles. The Group
complies with prompt payment guidelines and best practice, and
with all major suppliers.
2022 2021
Group cash flow £’m £’m
Net cash from operating activities 102.8 68.3
Net cash from investing activities (7.0)
Net cash from financing activities (31.6)
Adjusting items (2.8)
Change in IFRS 16 lease liabilities
and other 7.6
Movement in net debt in the year 34.5
Net debt at beginning of year (75.6)
Net debt at end of year (41.1)
(2021: £21.9 million).
The table below summaries the Group’s cash utilisation on a pre-
IFRS 16 basis both for the current and prior year and cumulatively
over the last seven years.
Last 7 years
(pre-IFRS 16
Analysis of cash utilisation 2022 2021 basis)
(pre IFRS 16 basis) £’m £’m £’m
Net cash from
(i)
74.4 55.5 373.1
Capital expenditure (21.9) (153.4)
Proceeds from the sale
1.4 14.9 37.5
Acquisition of subsidiary
undertakings
(ii)
— (439.1)
Payments to acquire own
shares/share issues 180.3 (3.6) 167.4
Dividends (17.9) (162.1)
Movement in net debt
27.0 (176.6)
(i) after the cash cost of adjusting items.
(ii) includes the repayment of debt on acquisition of subsidiaries.
The summary provides a medium-term seven-year analysis of the
cash generation capacity of the Group and how cash has been
invested to grow the business and also to show the cash returned
the business to generate growth, improve productivity and provide
industry leading manufacturing facilities. The Group has also
invested £439.1 million in the targeted acquisitions of Marley, CPM
and Edenhall. Dividends to shareholders over the last seven years
have totalled £162.1 million, which equates to 43 per cent of net
Adjusted proforma ROCE was 13.3 per cent (2021: 20.6 per
cent) with the year-on-year reduction arising from an increase in
capital employed following the Marley acquisition and the weaker
performance from Marshalls Landscape Products. We expect
operational leverage.
Balance sheet
conservative with over 60 per cent of the consideration funded by
Group to reduce leverage. We will continue to invest in organic
capital investment opportunities and new product development
where these support our strategic goals.
A PPA exercise has been undertaken to establish the constituent
parts of the Marley balance sheet at fair value on acquisition. As
part of the ongoing review of the fair value of assets and liabilities,
adjustments have been made to certain balances during the
period. Further details are set out at Note 25 to the Condensed
Consolidated Financial Statements and is summarised below.
Provisional
fair values
acquired
£’m
Tangible assets 97.6
Intangible assets 228.2
Net working capital 26.2
Net debt (259.5)
Provisions (4.9)
Tax (including deferred tax) (63.8)
23.8
Goodwill 24 4.1
267.9
Consideration:
Cash consideration 120.3
Equity consideration 147.6
267.9
Marshalls plc | Strategic Report
64
Financial Review continued
continued
Balance sheet continued
Net assets have increased to £661.1 million compared with £344.3
million at 31 December 2021. This is largely due to the equity
issuance of £330.3 million to part fund the acquisition of Marley.
Intangible assets have increased by £464.7 million, which includes
Marley balance sheet at the acquisition date. This comprises
principally of customer relationships of £145.4 million and the
values attributable to the Marley and Viridian brands of £82.8
million. Residual goodwill of £244.1 million has been recognised.
million, net working capital by £26.2 million and tax balances
(mainly deferred tax) by £63.8 million. A term loan of £210 million
was introduced to partially fund the acquisition. As is customary
in these circumstances, we have kept this under review in the
second half of the year and made some more changes to the
initial assessment performed at the half year. This assessment will
remain under review and subject to change during the twelve-month
hindsight period which ends in April 2023. Further details of this are
set out in Note 25 on page 182.
2022 2021
Group balance sheet £’m £’m
Non-current assets 886.9 332.7
Current assets 322.0 263.2
Current liabilities (150.6)
Non-current liabilities (101.0)
Net assets 661.1 344.3
Net cash/(debt) (pre-IFRS 16) 0.1
Net debt (reported) (41.1)
Net debt: EBITDA (pre-IFRS 16)* 1.35 —
Net debt: EBITDA (reported) 2.6 0.4
Gearing (reported) 35.8% 11.9%
* Calculated on per-IFRS 16 net debt to adjusted proforma EBITDA basis.
Pension
scheme was a surplus of £22.4 million (2021: £25.8 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
(2021: £366.3 million).
The volatility in gilt markets since the half year has had a
to the scheme’s strategy of using liability driven investments
also had consequences for the Marshalls’ scheme. Despite the
unprecedented levels of market volatility, the scheme’s LDI asset
portfolio continues to hedge protection against volatility in interest
high proportion of “liquid” investments in the portfolio and this has
helped the scheme respond to the recent market volatility and the
short-notice collateral calls. However, during the last year the AA
to 4.90 per cent. This has led to a reduction in liabilities but due to
the high level of hedging in the investment strategy the scheme
assets have also decreased in value. The expected rate of CPI
These changes have resulted in an actuarial loss, net of deferred
taxation, of £2.3 million (2021: £19.8 million actuarial gain)
and this has been recorded in the Consolidated Statement of
Comprehensive Income. The last formal actuarial valuation of
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 scheme remains in a healthy position and the Company
has agreed with the Trustee that no cash contributions will be
payable under the funding and recovery plan.
The Group’s capital allocation policy was reviewed by the Board
in the second half of the year in the context of increased balance
sheet leverage following the acquisition of Marley. Whilst the
Board is comfortable operating with the Group’s post- transaction
leverage, in the light of the macro-environment, the policy has been
revised to focus on accelerating the repayment of borrowings,
one times EBITDA (December 2022: 1.35 times). Supplementary
dividends have temporarily been removed from the policy. The
Board is targeting net debt to reduce to around one times adjusted
addition, the Group is undertaking a review of its manufacturing
and property network with the potential to dispose of non-core
sites, which would accelerate deleveraging whilst improving
determination of its capital structure. The Group’s optimal capital
structure supports the Group’s current strategic objectives, but also
construction sector.
The Group’s capital allocation policy is to maintain a strong balance
strategy are:
• to prioritise organic capital investment (£25 million investment
planned for 2023), supported by an increase in new product
development and research and development expenditure;
• to continue the payment of dividends on the basis of a dividend
cover of two times adjusted earnings;
• to maintain a capital structure that recognises cyclical risk
and volatility by continuing to maintain an appropriate level
• targeting to reduce the net debt:EBITDA ratio to around 1.0 times
• to continue to target selective bolt-on acquisition opportunities
Organic growth
2
Ordinary dividends
4
Selective acquisitions
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Organic investment remains the priority for capital allocation and
with good paybacks. Capital expenditure of £25 million is planned
for 2023. This includes the dual block plant at the Group’s site
in St. Ives, Cambridgeshire which is now in its commissioning
will support the launch of new ranges of innovative value-added
products that have the aesthetic appeal of natural stone at a lower
and has received positive feedback.
The Marshalls and Marley businesses employ a similar commercial
strategy that focuses on generating pull demand from key
was transferred to the Group team in the second half of the
operational improvements focused on people, plant and process.
We have reduced vacancy rates using the Marshalls in-house
recruitment team, assessed plant failure rates, and implemented
a targeted refurbishment programme and introduced a structured
performance management system. This has resulted in increased
per cent in recent months. In addition, we have integrated our
procurement functions and embarked on a review of our combined
logistics footprint and are evaluating how we leverage Marshalls’
ESG credentials within the business.
Our ESG strategy continues to generate organic growth
competitive advantage. We are continuing to focus our new product
development activity on lower carbon products, and as part of this
programme, we are accelerating our development of technologies
to materially reduce the carbon intensity of our products using
cement replacement and carbon sequestration techniques. As
CarbonCure Technologies’ carbon mineralisation technology that
uses waste CO
carbonisation of concrete, which effectively reduces the embodied
carbon.
our concrete brick manufacturing sites. In addition, we are investing
in several sites to support the roll out of a new concrete mix design
that will reduce both raw material costs and embodied carbon.
We continue to focus on executing our digital strategy, which
aims to provide an end-to-end digital offering and to pioneer the
digital standards for the industry. We have developed a new digital
trading platform, using dropship technology, that will allow us to
offer an extended range of products on our customers’ websites
without requiring the merchant to stock the ranges. Customers
using Marshalls’ distribution capability. The model offers a win-win
outcome, where the merchant generates incremental sales due to
an extended product range without incurring the costs associated
via the merchant channel. We are currently live or in testing with
two national merchants and at an advanced stage with three other
2022. This was delivered despite challenging market conditions
which adversely impacted our Landscape Products business, and
in recent years that now form the core of our building
Products segment.
evolving market conditions and execute self-help initiatives.
Justin Lockwood
15 March 2023
Marshalls plc | Strategic Report
66
The Board plays a central role in the Group’s risk management process
which covers emerging risks and incorporates scenario planning and
detailed stress testing.
Managing risk is a key factor
outlook. In an addition to the macro-economic environment, the key
risks for the Group continue to be cyber security and information
technology, the security of raw materials supply and supply chain
risks and climate change and other ESG related issues. All these
areas are considered in more detail on pages 69 to 75. In all
certain new operating procedures have been developed. Mitigating
controls continue to be reviewed as appropriate. The Group’s risk
function has placed particular emphasis on the following areas
during the year:
•
economic uncertainty has been a major focus during the year.
The acquisition of Marley has been an important transaction for
and its underlying resilience by broadening the range of markets
we sell into. The integration of Marley into the Group across all
business areas has been a key priority and this is covered in
more detail in the case study on page 67. Marley has now been
fully integrated into Marshalls’ risk management process and
procedures. There is a close correlation between the key risks
•
This is in progress and was commissioned at the end of 2021
in response to the BEIS White Paper. The primary goal is to
in-scope processes, in order to record the key controls and
associated metadata of the end-to-end process and to identify
Marshalls businesses.
• 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
KPMG completed a number of targeted internal audit projects
during 2022 covering the following areas:
• tendering;
• project delivery;
• inventory (both Marshalls and Marley); and
• cyber security (both Marshalls and Marley).
result of assessing the Group’s key risks. They also include audits
subject to routine cyclical coverage.
The priorities for the Group’s risk function in 2023 include the
following areas:
• the integration of Marley into the Group’s ESG development and
governance framework;
• the completion of a number of targeted projects will again be a
major focus for KPMG. In 2023, projects will cover ESG reporting,
cyber security and IT general controls will be completed; and
• continuing to support the Group’s project to review the Group’s
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
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.
Process
There is a formal ongoing process to identify, assess and analyse
Group Risk Register.
The Group Risk Register is updated by the full 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
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Auditor, regularly attends the risk review meetings. 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 Marley business
has historically utilised a similar risk management process, and
this has been mapped across and embedded in the Marshalls risk
management process.
The Group seeks to mitigate exposure to all forms of strategic,
effectiveness of key mitigating controls is continually monitored,
and such controls are subject to internal audit and periodic testing
appropriate. 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.
The Group has a formal framework for the ongoing assessment
objective is to gain assurance that the control framework is
complete and that the individual controls are operating effectively.
reconciliations is undertaken on a rolling basis. Such testing
includes key controls over access to, and changing permissions
1 Macro-economic and political
2 Cyber risks
3 Security of raw material supply
4 Long-term impacts of climate change
5 Human rights consideration
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
Impact
Likelihood
Low
Case study
Nature of risk Potential impact Mitigating factors
Ineffective
integration of
Marley into the
wider Group (in
any of a number
of functional areas
and on a wider
basis), due to a lack
of planning, control,
effort, focus,
resource, leadership
and execution.
A potential
“people”-perceived
“change” risk.
A lack of planning
could lead to
distractions and
“eye off the ball”
in respect of the
existing Marshalls’
operations. This
could lead to
utilisation of
unplanned resource
away from the
existing business.
Non-delivery of
strategy, goals
and performance
objectives.
Additional costs,
and non-delivery
of plan. Negative
perception from
stakeholders and
a risk of reducing
shareholder value.
Detailed integration
plan, which has
been subject
to third party
scrutiny during the
acquisition process.
Detailed delivery
plans for each part
of the business,
Executive
Management focus.
Steering Committee,
formal reporting
and responsibility
framework and
structure.
Active engagement
with Marley
personnel during
this process.
Monthly reporting
to Marshalls’
Executive.
Integration of KPIs.
2
4
6
Marshalls plc | Strategic Report
continued
continued
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
appetite. The aim is to ensure that we continue to channel resources
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,
After considering the principal risks on pages 69 to 75, 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
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,
underpin the Group’s capital structure objectives. The Group’s
funding strategy is to ensure that headroom remains at comfortable
levels under all planning scenarios.
For the purposes of the Viability Statement, the Board continues to
believe that three years is an appropriate period of assessment as
that there is less visibility beyond three years. The Construction
Products Association’s (“CPA”) forecasts currently go out to 2024.
that incorporates the income statement, balance sheet and cash
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
test sensitivity run against the base case model. This sensitivity
lower scenario from the 2022/2023 Winter forecast. This scenario
results in a cumulative revenue reduction of eleven per cent during
2023 and 2024 against the base case forecast. A contribution
“drop-through” rate has been applied based on the operational
gearing of each business unit and an allowance has been made for
reduces to £234 million by the end of 2023, and bank covenants
and increased interest is mitigated by reduced tax and dividend
and there remains comfortable headroom against bank facilities
net debt to adjusted EBITDA covenant peaking at 1.9 in December
2023. In this scenario, we would have £27 million headroom against
EBITDA and £96 million against net debt.
In practice, such a downside scenario would see the Group instigate
to further reduce capacity, for example reducing shifts, production
lines and potentially mothballing or closing sites.
The reverse stress test scenario aims to identify a deeper
Against the base budget revenue reductions of 18 per cent would
be required across 2023 and 2024 (all other things remaining
unchanged) to increase the pre-IFRS 16 net debt: adjusted EBITDA
covenant to three times at 31 December 2023. This scenario
equates to around 1.7 times the reduction assumed in the CPA’s
lower scenario from the 2022/2023 Winter forecast.
This reverse stress test scenario reduces revenue by approximately
£300 million over 2023 and 2024. Under this scenario, gearing
peaks at 41 per cent at the end of 2023. There remains reasonable
headroom against bank facilities, but the net debt: EBITDA bank
covenant marginally breaches three times at 31 December 2023.
The model assumes no further cash mitigation (e.g. reduced capital
expenditure). Dividends have been reduced in line with the two
times cover policy but the Board would retain the ability to further
reduce or cancel dividends in order to maintain liquidity.
In undertaking its review, the Board has considered the
appropriateness of any key assumptions, taking into account the
external environments and the Group’s strategy and risks. Based on
this assessment, and taking account of the Group’s principal risks
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 without
undertake more severe restructuring. The analysis provides the
required evidence that the Directors’ assessment that the going
concern assumption remains appropriate and supports a positive
conclusion for the longer-term Viability Statement.
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Sourcing
Manufacturing
Distribution
Customers
Scenario
case scenario
leading to reduced
consequent reduction
Stress test modelling uses severe downside
assumptions against the base model. These include:
• Cumulative revenue reduction of eleven per cent across
2023 and 2024;
• PBT falls by £70 million across 2023 and 2024; and
• No further reduction in interest rates – with SONIA assumed
to increase to 4.5 per cent by mid-2023 in the base model.
Outcomes
• Operating margin reduces to 9.5 per cent in 2023;
• Reported net debt to reduce to around £234
million (which is lower than the base case rate of
deleveraging); and
• Bank covenants continue to be met - pre-IFRS 16
net debt to adjusted EBITDA peaks at 1.9 times in
December 2023.
2. Reverse
stress test
scenario is a deeper
The main elements of the reverse stress test model are:
• Cumulative revenue reduction of 17 per cent; and
• Operating margin falls to 6.7 per cent at
Outcomes
• Under this scenario the net debt : adjusted EBITDA
bank covenant (pre-IFRS 16 basis) is marginally
breached at 31 December 2023;
• The model assumes that no additional cash mitigation
measures (e.g. reducing capital expenditure) would be
made. In practice a series of cash mitigation measures
would be taken under this scenario.
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 68. 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).
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 2022, higher interest rates and
relation to energy costs) 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
the impact of unprecedented levels of
Government borrowing.
Potential impact
The potential longer-term impact of
macro-economic uncertainty and
interest rates could reduce consumer
lower activity levels. This could have an
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
over a more extended period.
Key risk indicators
• Government policy
failing to contain
• An escalation
of the war in
Ukraine and other
increased global
uncertainty.
• Reductions
in consumer
order pipeline.
• Further COVID-19
uncertainty and
the emergence of
new virus variants.
Mitigating factors
• The Group closely monitors trends and
lead indicators, invests in market research
and is an active member of the CPA.
•
business and end markets. The acquisition
resilient.
• 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.
• Focus on innovation, new product
development and the ESG driven
opportunities to drive competitive
advantage.
Change
Increase in risk
The UK Government’s stated
objective is to support
investment support for
infrastructure and housing is
expected over the medium
term however, the short-term
outlook for construction has
weakened. The economic
slowdown has resulted in a
loss of business and consumer
delays in investment decisions.
Priorities
• Regular scenario planning to
assess various market risks
and disruptive events.
• Strategic reviews focusing
on business resilience and
• Increase operational
manufacturing network.
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
Read more about our strategy on Read more about our business model on
Marshalls plc | Strategic Report
continued
continued
Nature of risk and potential impact
Fast growing and indiscriminate risk
of cyber attack. Inadequate controls
and procedures over the protection of
intellectual property, sensitive employee
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 and new cyber
threats. IT is increasingly integrated into
all business processes.
Potential impact
loss. The Group’s industrial network is
becoming more IT dependent and the
and reputational risk.
Key risk indicators
• Emergence
of new cyber
• Increased
examples of data
loss and security
breaches in the
wider market.
Mitigating factors
• Use of IT security policies.
• Regular cyber security risk audits undertaken
by specialists and the use of mitigation
controls and other recommended procedure
updates. Annual penetration tests are
undertaken on external facing systems
and during 2022 cyber internal audits were
undertaken by KPMG in respect of the
Group’s cyber controls in relation to both
Marshalls and Marley. The Group’s “cyber
maturity assessment” score has continued
to increase.
• Restriction of sensitive data to selected
senior and experienced employees who
• Appropriate tools and training procedures
are in place to protect sensitive data when
stored and transmitted between parties
(e.g. encryption of hard drives, restricted
USB devices, secure data transmission
mechanisms and third party security audits).
• A continuous programme of awareness
campaigns and training for staff.
Change
No change in risk
Cyber risk has increased after the
COVID-19 pandemic and remains
witnessing more incidents,
especially in the construction
industry, and increasingly in
relation to ransomware. The cyber
control environment in Marley is
not as mature as that in Marshalls
and is an area of focus.
Considerable focus continues to
be given to promoting awareness
of IT security policies. The
perception is that the risk of data
loss through new (or as yet
unseen) security threats continues
to increase.
Priorities
• Constant review and ongoing
challenge to procedures – use
of external experts.
• Continue to develop cyber risk
strategy.
• Improve our cyber security
response plans and identify
and rectify any gaps.
• Alignment of controls
Nature of risk and potential impact
Globally, the impact of the ongoing
supply continues to impact material
availability and has resulted in
There continues to be market capacity
stresses for sand, cement and other raw
materials. Longer term there is a risk of
“carbon taxation.”
Potential impact
dissatisfaction and reduce demand
and margins.
Key risk indicators
• Temporary
shortages and
impacting
materials and
labour.
• Decreases in
labour availability
and skills
shortages.
Mitigating factors
•
business and end markets.
• The acquisition of Marley has increased
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
supply agreements, the use of hedging
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.
Change
Reduced risk
Weakening demand has led
to reduced availability issues,
continued.
The risk of temporary shortages
is mitigated by proactive supply
chain management and the use
of alternative suppliers.
Priorities
• Increase productivity and
• Continue to develop
supply chain strategies
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Nature of risk and potential impact
Increasing focus on ESG and the
heightened awareness of the
environmental challenge, with increased
operational and reporting requirements,
hardening targets and greater scrutiny
by investor and stakeholder groups.
The acquisition of Marley may impact
our publicly stated ESG commitment
the science-based targets and other
environmental protocols.
environmental risks is included in the
Sustainability section on pages 42 to 59.
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
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
• An ESG Steering Committee with Executive
and Board level representation.
• Specialist third parties including the Carbon
Trust and Verisk Maplecroft (see further
details on pages 42 to 59.
• Climate risk analysis.
• Agreed carbon reduction plan and a set
• The Group is committed to the Science
Based Targets initiative and a new Group
plan is now being developed to include the
impact of the Marley business.
• Working groups established in all focus
areas and controls being progressively
embedded across the business.
Change
No change in risk
from stakeholders, Government,
customers and investors.
Increased expectation of
of strategic plans and
transition risk. TCFD disclosure
requirements.
Priorities
• Integration of Marley into
the Group’s ESG policies
•
to include Marley – in
conjunction with the Carbon
Trust.
• Ongoing assessment of
climate change and risks
for production, facilities,
products and distribution.
• Develop comprehensive
strategy covering targets,
products and business
processes.
• Review of opportunities
Nature of risk and potential impact
Mandatory human rights disclosure
from 2022 and increased focus on
modern slavery and diversity reporting.
Lack of visibility of human rights within
the supply chain.
The continuing requirement to identify
risk across the whole supply chain
and the need to maintain reliable and
consistent internal systems, processes
and procedures.
is included in the Sustainability section
on pages 42 to 59.
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.
Mitigating factors
• The Group utilises experienced, specialist
staff to support the Group’s focus
• Regular internal cross-functional meetings
to discuss progress, issues and focus areas.
•
for entire procurement team.
• Introduction of Safecall overseas.
• Annual analysis of sourcing country risk.
• Strategic partnerships with external
agencies – UNGC framework.
• Focus on ethical sourcing processes
• Working groups established in all
Change
No change in risk
from stakeholders, Government,
customers and investors and
increased operational and
reporting requirements.
Priorities
• Develop strategic
partnerships. These include
the UN Global Compact
(“UNGC”) together with 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.
Sourcing
Manufacturing
Distribution
Customers
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
Read more about our strategy on Read more about our business model on
Marshalls plc | Strategic Report
continued
Nature of risk and potential impact
Increasingly unpredictable weather
conditions and extreme weather events.
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.
Financial risk caused by adverse impact
sales and production volumes.
Key risk indicators
• Prolonged periods
of bad weather
(e.g. snow, ice
make ground
• 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
• 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
No change in risk
Weather conditions continue
to be closely monitored but are
beyond the Group’s control.
awareness of climate change.
Priorities
• Continue to develop resilience
strategies.
• Development of Civils and
Drainage business.
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 2023 outlook.
Failure to react to market
developments, including digital and
technological advances.
Potential impact
The increased competition could
reduce volumes and margins on
traditional products.
Increased costs and production
capacity tied up in redundant
technologies.
made by the Group in this area in recent
years, there remains a risk that a new
third party could use emerging digital
technology to enter the market and
transition more quickly and effectively.
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
technology.
Mitigating factors
• Good market intelligence and ongoing
monitoring of competitive threats.
• Flexible business strategy able to embrace
new technologies.
•
development and new products.
• Development of the Group’s e-commerce
platform and digital strategy.
Change
Reduced risk
the business, the continued
development of the Marshalls
brand and the focus on
new products and greater
continue to mitigate the risk.
The pace of digital change
to increase although
this is balanced by a
challenging outlook.
Priorities
• Collaboration with universities
to develop new products
• Increase pace of digital
change and technological
solutions (e.g. Dropship).
• Focus on cost reduction
and projects that improve
continued
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Nature of risk and potential impact
Inadvertent failure to comply with
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.
Potential impact
regime across all areas of business
(e.g. health and safety, competition law,
the Bribery Act and GDPR) could lead
A health and safety or environmental
incident could lead to a disruption to
production and the supply of products
for customers. Such incidents could
and have a negative impact on the
Group’s reputation.
Key risk indicators
• Increased
regulatory and
compliance
requirements.
• Integration
requirements for
new acquisitions.
•
increases in the
penalty regime for
health and safety
and environmental
incidents.
Mitigating factors
• Centralised legal and other specialist
functions, the use of specialist advisers
and ongoing monitoring and mandatory
compliance training programmes.
• Centralisation of certain Marley functions
into the central legal team.
• Regular reviews of policies and procedures.
• Regular compulsory data protection training
implemented.
• The Group has a formal Group sustainability
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
governance requirements
and regulation continues to
require additional management
focus and robust compliance
procedures within all areas
Priorities
• Continue to renew all
compliance processes and
control effectiveness.
• Develop stress tests and
crisis planning procedures.
Nature of risk and potential impact
The Group has a number of existing
competitors which compete on range,
price, quality and service. Potential
new low cost competitors may be
attracted into the market although the
2023 outlook is challenging. In addition,
are now impacting all suppliers and
consumers.
Competitive risk increases if we
fail to maintain high levels of
customer service.
Potential impact
Increased competition could reduce
volumes and margins on manufactured
and traded products.
Reputational damage 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.
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
• The Group has a continuing focus on new
product development.
• The continued development of the Group’s
digital strategy and its focus for customers
and all stakeholders.
• Restructuring programme implemented
in Q4 2022 will reduce cost base by
approximately £10 million.
Change
Increased risk
potentially changes competitive
pressure in certain areas.
Priorities
• New product development.
• Research into green
technologies.
• Review marketing and
communications.
• Continue to review all
elements of customer
service, including the
continuing development
Sourcing
Manufacturing
Distribution
Customers
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
Read more about our strategy on Read more about our business model on
Marshalls plc | Strategic Report
continued
continued
Nature of risk and potential impact
Ineffective management of major
development projects, from initial
management, due to constraints that
might impact the Group’s ability to
absorb change. During 2022 such
projects included the integration
of Marley, the construction of the
dual block plant at St. Ives and the
successful implementation of a
restructuring programme, which has
included the mothballing of the Sandy
manufacturing site.
Potential impact
The extent and complexity of projects
Potential failure to realise
business projects.
Reputational damage, service under-
delivery and staff retention risks.
Key risk indicators
• Delays to project
delivery.
•
resource utilisation.
Mitigating factors
• Robust and standardised project
• Change management framework and
process in place.
• Programmes are continually reviewed
with strong governance and executive
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
• Ongoing reviews of
acquisition strategy and the
business model.
Nature of risk and potential impact
Unexpected health and safety incident,
possibly caused by human error or the
actions of a subcontractor. Additional
risks introduced in relation to the
acquisition of Marley.
Ongoing risks in relation to COVID-19
and the need to maintain safe working
environments.
Ongoing welfare and mental health
Potential impact
Risk of harm to all stakeholders,
including on-site employees and
subcontractors.
Negative impact of working from home
for certain employees.
prosecution.
A major incident could lead to a
disruption to production and a negative
impact on the Group’s reputation.
Key risk indicators
• Integration
requirements for
new acquisitions.
•
increases in the
penalty regime.
Mitigating factors
• Centralised specialist functions and clear
policies in place.
• Detailed central review of Marley health
and safety risks, controls, systems
• Regular communication and support for
employees, including those working from
• Group-wide health and safety strategy.
• Ongoing monitoring, training and health
and safety audits.
• Introduction of a digital management
system for enhanced data collection
• All senior managers receive the Marshalls
Health and Safety and Environmental
stage 3 training.
Change
No change in risk
Health and safety continues
Continuing risks arising from
COVID-19, including mental
health and employee welfare.
procedures leading to improved
root cause analysis.
Priorities
• Ensure health and
“day-to-day” culture.
• Improve reporting structures.
• Full integration of Marley into
the Group’s health and safety
and employee wellbeing
protocols.
Marshalls plc | Annual Report and Accounts 2022
Strategic Report
Nature of risk and potential impact
Availability of labour – with risks around
core skills, demographics, capability
and changing working patterns. This
has become a key differentiator in
the market. The “War for Talent” has
increased with skill 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.
Risk of reduced skills and inadequate
training potentially leading to reduced
Companies are changing their
“employment position” and creating
Implications for employee health and
wellbeing and overall workforce morale.
Potential risk to the Marshalls brand.
Key risk indicators
• Skill shortages
and lack of
diversity within
• Increased stress
levels within
workforce leading
to employee
absenteeism.
• Increased levels
Mitigating factors
• Focused human resources department
with experienced staff and specialist skills.
• Group People and Organisational Plan.
• Strong employee and trade union
relationships.
• Strong communication channels and
employee feedback through the “Employee
Voice Group”.
• Regular feedback questionnaires
supported by a third party provider.
• Independent “Safecall” employee helpline.
• Ongoing focus on training, apprenticeships
and staff development and leadership
potential.
Change
No change in risk
Increasingly competitive
labour market.
The emergence of challenges
for employees caused by new
working requirements, health
and safety regulations and
operational working practices.
These include issues that
could give rise to heightened
employee wellbeing issues
Priorities
• Develop retention and
recruitment strategies.
• Effective marketing and
communications.
• Focus on succession
planning, internal
development and
leadership teams.
• Integration of Marley into
all of the Group’s “People”
strategies, policies and
procedures.
Sourcing
Manufacturing
Distribution
Customers
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
Read more about our strategy on Read more about our business model on
Marshalls plc | Governance
76
Board of Directors
A diverse, decisive
Date of appointment
9 May 2018. Re-elected in May 2022
Experience
Fellow of the Chartered Institute of Marketing
with extensive experience of corporate leadership,
strategy and manufacturing in both executive and
non-executive roles with a wide range of UK 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.
Alignment with strategic corporate objectives
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 and
Non-Executive Director and Chair of Yorkshire Water.
Vanda Murray OBE
Chair
Date of appointment
9 September 2013. Re-elected in May 2022
Experience
Thermea Group BV, a leading manufacturer and
distributor of domestic and industrial heating and
hot water systems operating in 70 countries with
a turnover of €1.8 billion, formed in 2009 from the
merger of Baxi and De Dietrich Remeha. Prior to the
merger, Martyn was Chief Executive of the private
equity-owned Baxi Group. He also held the position
Holds a BSc in Mathematics.
Alignment with strategic corporate objectives
External appointments
Director of the Mineral Products Association. Non-
Executive Director and Chair of the Remuneration
Committee of Eurocell plc.
Martyn Coffey
Chief Executive
Date of appointment
5 October 2010. Re-elected in May 2022
Experience
Leadership roles in a number of different industries
such as banking, retail, marketing and consumer
goods, as well as in the charity and public sectors
of Greater Birmingham and Solihull LEP, Chair of
Cogent (the leading independent marketing agency),
President of the Greater Birmingham Chambers of
Commerce, CEO of Sainsbury’s Bank and a member
of the operating board and Non-Executive Director
Alignment with strategic corporate objectives
External appointments
Chair of the Royal Orthopaedic Hospital.
* Tim Pile will retire as a Non-Executive Director and
Board member at the Company’s 2023 AGM.
Tim Pile
Non-Executive Director*
Date of appointment
1 October 2019. Re-elected in May 2022
Designated Non-Executive Director for
Experience
Broad based international career in manufacturing,
distribution and construction and extensive
commercial strategy, marketing and communications
executive experience. 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.
Alignment with strategic corporate objectives
External appointments
Senior Independent Non-Executive Director and
Non-Executive Director
The Board is cohesive, well-balanced,
agile and determined “to do the right
things, for the right reasons, in the
right way”.
The Board has strong ethical
values, combined with great depth
of experience and skill covering
leadership, strategy, manufacturing,
and business change.
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. Driving the strategic
plan in The Marshalls Way, whilst
demonstrating its ability to be agile
and alive to geo-political instability
and face into short and medium term
macro-economic challenges are key
in maintaining the Group’s market
Committee membership
Audit Committee
Nomination Committee
Remuneration Committee
Chair of the Committee
Independent Director
Links to strategic
corporate objectives
Shareholder value
Relationship building
Organic expansion
Brand development
Effective capital structure
and control framework
77
Marshalls plc | Annual Report and Accounts 2022
Governance
Date of appointment
26 July 2021. Re-elected in May 2022
Experience
roles for seven years prior to his appointment as
CFO in 2017. Justin spent four years at Associated
between 2002 and 2006. Chartered accountant
ten years of his career.
Alignment with strategic corporate objectives
External appointments
None.
Justin Lockwood
Date of appointment
10 May 2017. Re-elected in May 2022
Experience
of MJ Gleeson plc. Previous roles include 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
Alignment with strategic corporate objectives
External appointments
Graham Prothero
Senior Independent Non-Executive Director
Date of appointment
1 June 2021. Re-elected in May 2022
Experience
A management consultant with expertise in retail
business change, digital channel expansions and
transformation. Formerly a Partner at Accenture
focusing on the retail and consumer products sector.
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.
Alignment with strategic corporate objectives
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 Director of Avis Business Consulting, a
provider of transformational change strategy and
execution support.
Date of appointment
1 April 2022
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 strategic corporate objectives
External appointments
Chair of MPA British Precast.
Avis Darzins
Non-Executive Director
Simon Bourne
Date of appointment
1 January 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
and strategy. Diana was Senior Adviser to the
spent seven years on the board of Thornton’s plc as
Chair of Audit Committee and Senior Independent
Director.
Alignment with strategic corporate objectives
External appointments
None
Diana Houghton
Non-Executive Director
Date of appointment
26 May 2020
Experience
years’ experience, the last eight of which have been
in industry at FTSE businesses. Extensive leadership
and legal experience. Responsible for transforming
the legal team’s role in the business. Formerly a
Bond Dickinson LLP, focused on supporting public
companies. Also spent more than eight years
Alignment with strategic corporate objectives
External appointments
None
Shiv Sibal
Group General Counsel
Gender composition
Female – 4
Male – 5
Ethnic diversity
White – 8
Mixed Asian and white – 1
Length of service
0–2 years – 4
3–4 years – 1
5+ years –4
Marshalls plc | Governance
78
Our commitment to responsible
creates strong alignment at Board level
A transformational year, diversifying
record
Dear shareholder
Responsible governance is critical at all times, but is put to test when
operating in volatile market conditions. Geo-political instability and
macro-economic uncertainty make business planning extremely
challenging. Against this backdrop, the Group has emerged from a
transformational but challenging year, in a strong and stable position.
acquisition of Marley. Marley is a leading manufacturer and
strong addition to the Group, with a highly skilled and experienced
management team. Throughout the acquisition process, the Board
and senior management team worked closely together in evaluating
the opportunity and engaged with relevant stakeholders, at all times
respecting our legal obligations and the sensitive nature of the deal.
A responsive, cohesive but forthright Board led our assessment and
the time, we received strong shareholder support for the transaction,
but, in volatile market conditions, we recognise the importance of
keeping an open dialogue with all our stakeholders. To this end, I met
with shareholders towards the end of the year and, as a Board, we have
this as we progress through the current year.
Political and economic uncertainty characterised the second half
challenges. Having completed a transformational acquisition, the
Board’s attention necessarily moved to more pressing short to
medium-term strategic challenges, and in particular, managing our
anticipate will be a challenging year ahead, based on market indicators.
This ability to respond dynamically to opportunities and threats, requires
decisiveness and a determination “to do the right things for the rights
reasons, the right way”. Our commitment to responsible governance
and The Marshalls Way creates strong alignment at Board level and
throughout the business. Our resilience, and impact of the Marley
acquisition, ultimately resulted in another record year for the Group
but we recognise the danger of complacency and the importance of
continuous improvement.
During the year, we welcomed Simon Bourne to the Board, with his
transformation of our operations since joining the business. Simon
and his team are now working closely with the Marley team to help
As planned, Tim Pile will retire from the Board at the end of our
2023 AGM. I would like to thank Tim for his incredible contribution
to the Marshalls’ Board over the last twelve years. He has
challenged and supported in equal measure but always with the
goal of helping Marshalls achieve its strategic ambitions in a way
that balances the interests of all our stakeholders. I am delighted
that Diana Houghton has joined the Board as Tim’s successor.
We provide further detail on them in our Nomination Committee
Report on pages 92 to 95, but these appointments mean the
composition of our Board complies 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 77.
culture and purpose, is what “good governance” means to Marshalls.
This is central to our application of the UK Corporate Governance
Code. Our commitment to The Marshalls Way – “to do the right things,
for the right reasons, in the right way” – underpins everything we do.
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 Board recognises that we are accountable to shareholders for
good corporate governance. This report, together with the Reports
of the Audit, Nomination and Remuneration Committees on pages
92 to 130, seeks to demonstrate our commitment to high standards
79
Marshalls plc | Annual Report and Accounts 2022
Governance
Board
• Board meetings
• AGM and GM
• Annual strategy day
• Business and stakeholder engagement
• Designated NED for employee engagement
• Shareholder engagement
Audit
Committee
Read more on
Nomination
Committee
Read more on
Executive Committee
• Committee meetings
• AGM
• Remuneration policy consultation
• Monthly meetings
• Weekly update calls
• Annual strategy review
• Monthly business reviews
• Bi-monthly ESG Steering Committee meetings
• Regular EVG meetings
Our governance framework
Remuneration
Committee
Read more on
Programme of activities
Diversity
and Equity
Taskforce
ESG
Steering
Committee
Read more on
Business
Unit
Management
Teams
Employee
Voice
Group
Read more on
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Governance at Marshalls
Our Culture is at the heart of everything
we do: The Marshalls Way. Our Purpose
drives our Mission, which in turn
drives our Strategy. These operate as
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.
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Marshalls plc | Governance
80
• We’ve supported the business in another record year of
performance, against a challenging macro-economic and geo-
Ukraine crisis challenging us to ensure the business continues
Group’s commitment to continuous improvement drives resilience
and demonstrates its commitment to embracing change.
• The acquisition of Marley represents a transformational step in the
delivery of our long-term strategy. At the outset, and throughout,
the Board challenged and supported the senior management
team’s assessment of the opportunity and the structural aspects
of the transaction. This included detailed due diligence and
advisory support from a team of experienced professional
advisers, culminating in overwhelming support for the deal from
Group, well-positioned to achieve its strategic goal of becoming the
UK’s leading manufacturer of products for the built environment.
• We welcomed Simon Bourne to the Board as Chief Operating
over a number of years, in driving so many of our growth pillars,
including operational and logistics excellence, sustainable supply
and new product innovation. Simon’s promotion is richly deserved
and has been supported by a comprehensive induction plan
arranged by our General Counsel and Company Secretary.
• We’ve managed the succession of Tim Pile, who retires at
this year’s AGM, with the appointment of Diana Houghton
to the Board as a Non-Executive Director. Tim is our most
experienced Board member and has, on two occasions,
agreed to extend his term to support the business through the
unprecedented challenges of the last three years. We thank Tim
for his contribution and commitment to the business. Diana’s
appointment further strengthens the Board by introducing new
skills, experience and diversity, particularly in the development
and execution of organisational strategy.
• Following the completion of the acquisition of Marley, we held a
Capital Markets Day, setting out our vision for the Group in the
short to medium term and, in particular, showcasing the Marley
business model and operations and the opportunity these
present to the Group.
•
team, particularly in light of Marley joining the Group. Against
challenging macro-economic and geo-political conditions,
we also considered the short to medium-term resilience of
the Group and the opportunities we have to maximise the
particularly on our purpose, to create better spaces and futures
for everyone: socially, environmentally and economically.
•
adopted during the pandemic, to combine in person and virtual
engagement with the business and stakeholders. Making the
Board accessible to all stakeholders is an important element of
meeting our obligations under Section 172 of the Companies Act.
• With the support of Lintstock, we completed an externally
objectives we set during our last internal evaluation. The Board’s
composition, stakeholder and strategic oversight and the
support the Board receives, were all rated extremely highly. The
Board is collegiate and supportive but provides robust challenge
to the senior management team on strategy, performance and
governance. (See page 79 for further details.)
• We’ve built on our ESG commitments, whilst ensuring we’re
complying with our reporting obligations against the TCFD
recommendations. We’ve listened to our stakeholders and
See page 81 for further details. The Board have focused on
ensuring our commitments drive competitive advantage and
brand loyalty. These will make our business sustainable in the
our progress and incorporated some of these in our incentive
schemes. (See page 102 for further details.)
• The Board and Audit Committee have considered the impact
of proposed changes to the UK Corporate Governance Code
and the measures being taken to ensure the Group is able
to demonstrate compliance with these ahead of their formal
adoption. (See page 91 for further details.)
• There has been Board representation at each of the Employee
as our designated Director for employee engagement. The EVG
has broad representation and continues to evolve, with new
representatives from across the business elected to a two-year
term earlier this year. (See page 55 for further details.)
• In response to tough trading conditions and a marked softening of
demand for Private Housing RMI in both the UK and International
markets and destocking in the distribution channel, we approved a
reduction in our manufacturing output to manage inventory levels.
These actions reduced capacity and costs within our manufacturing
network and trading function to ensure alignment with lower levels
of demand. This is expected to reduce operating costs by around
£10 million per annum from the start of 2023.
• Supporting the senior management team in navigating the
business through the key strategic issues and challenges we
face, particularly in the short to medium term, including those
driven by challenging macro-economic conditions. Ensuring
• Overseeing and measuring progress against the Group’s strategic
plan following the transformational acquisition of Marley, with an
will be critical to the long-term sustainability of the Group and will
include reviewing progress against the commitments made at our
annual strategy review in November 2022.
• Giving additional focus and time to understanding our stakeholders
and how we engage with them, particularly customers, suppliers
management, performance and long-term strategy. Maintaining our
customer focus is key to maintaining our strong brand preference,
which is a key differentiator for the Group.
• Building a deeper understanding of the Group’s culture and
to cultural integration with the Marley.
• Seeking opportunities to learn from the experience of other
sectors as regards our cultural, people, technology and
transformation journeys.
• Overseeing effective succession planning and talent retention,
that are critical to ensuring the long-term success of the
business.
• Effectively overseeing our ESG programme, ensuring
this supports our commitment to operating the business
sustainably and drives commercial and competitive advantage.
• Carefully monitoring the implementation and impact of the
fundamental audit and corporate governance reforms proposed
by the Government, which will have implications for the
operation and expectations of the Board.
• To continue to ensure we do everything in The Marshalls Way:
“the right things, for the right reasons, in the right way”, and
continued
81
Marshalls plc | Annual Report and Accounts 2022
Governance
ESG priorities
The Board views our approach to ESG as central to the
achievement of our strategic objectives and the long-term
sustainability of the business. Being a responsible business is
how we’ve operated for over 130 years and, as we face current
global challenges, it’s never been so important to be a transparent
corporate citizen. Our ESG commitments and credentials
demonstrate this clearly.
• Environmental — we take our environmental impact seriously.
We’re recalibrating our commitment to net zero following the
acquisition of Marley but this remains our goal.
• Social — we respect and value the dignity, well-being and rights
of employees, their families and the wider community, 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 our ESG report on
Board
• ESG metrics
• ESG Board updates
• Shareholder engagement
• TCFD reporting
• Risk register
• Risks and opportunities
• Sustainability Report
• Science-based targets
• Metrics and targets
ESG oversight
• The CEO is accountable for the delivery of
the ESG strategy, including climate change
• The Executive Team members are
individually responsible for reviewing
including climate risks
• Attended by CEO, CFO, COO, Chief People
Company Secretary
• Responsible for ensuring the ESG strategy
and progress is measured and reported
• Advises the Board on ESG-related risks
and opportunities
• Responsible for implementing the Group risk management framework and Risk Register
• See risk management framework and governance on pages 66 and 67
• Responsible for managing and resourcing
approved activities
• Advise on operational feasibility
of projects
• Collaborate on ESG projects
• Responsible for driving progress along our
plans, including science-based targets
• Updates the ESG Steering Committee on
progress against targets
• Ensures ESG strategy considerations are
Ultimate responsibility for risk management and ESG, including climate
Marshalls plc | Governance
As Government guidance changed, the Group removed the
restrictions we put in place, which were to protect the health and
safety of our colleagues and other stakeholders, our number priority
at all times.
Colleagues are now able to work from any of our facilities, although
buildings so that we can monitor attendance levels and ensure
the facilities can safely support those attending. The scale of our
manufacturing and operational sites has meant that we can operate
them safely without this additional process.
The COVID-19 pandemic fundamentally changed ways of working
continue to make use of technology, particularly for large meetings,
where attendees are in many different locations. This not only saves
on travel costs and reduces our carbon footprint but also makes
us more agile when circumstances demand. We see this as a real
important element in attracting talent, in a candidate driven market.
Scheduled Board meetings during the year were all “in person”,
marking a welcome return, given that this generally facilitates more
engaged and inclusive discussions of business opportunities and
challenges. The Board have also continued to take advantage of
technology, with virtual meetings supplementing their engagement
with colleagues and shareholders in particular.
We remain vigilant given the emergence of new COVID-19 strains
and the re-introduction of entry restrictions from certain countries.
or restrictions re-introduced by the Government in response to any
resurgence of the virus.
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.
Improving diversity is an opportunity for the business but remains
challenging in our sector, particularly in operational and site-based
roles. As a Group, we actively promote diversity, equity, respect
and inclusion (“DERI”) and have a zero-tolerance approach to
discrimination. See page 55 for details of how we promote DERI.
We apply our policies to ensure there is equality of opportunity for
every role we recruit. Our commitment is supported by our Code
At Board level, we have maintained our gender and ethnic diversity
during 2022. In addition to myself, a female Chair, we have 44
per cent female representation on our Board overall and one
Director from an ethnic minority background. On Simon Bourne’s
our female representation dropped to 38 per cent, by virtue of the
Board’s growth. Upon Tim Pile’s retirement at this year’s AGM, 50
per cent of the Board will be female.
Although we have a diverse Board, and have improved overall
gender diversity in the business, our continuous improvement
mindset and application of The Marshalls Way, are driving us to
improve diversity at management levels and in our operations,
We acknowledge that, although we’ve seen some improvement,
this will take longer than we originally anticipated, particularly
given the challenges in our sector, but we are now working more
closely with others in the sector to address what is a structural
challenge. Making our business accessible is critical to its long-term
sustainability. 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.
Our Diversity and Equity Taskforce, which has broad colleague
representation from across the Group, including our General
Counsel and Company Secretary, continues to “lead the charge”
As required by the UK Corporate Governance Code, the Chair
and the Company Secretary conducted an externally facilitated
evaluation during 2022 with the support of Lintstock. Pages 88 to
90 of this report give more detail on the conclusions of the review.
The evaluation covered the Board and its Committees, as well as
my performance as Chair. The review also considered the Board’s
performance against the objectives it set itself during its last
internal evaluation in 2021.
In conducting the evaluation, we used Lintstock’s evaluation tools,
but these were reviewed by myself and the Company Secretary
Board. The evaluation considered all critical aspects of the Board’s
performance against the principles and provisions of the Code.
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 133
and 134 and 135 to 142 respectively.
Chair
15 March 2023
continued
Marshalls plc | Annual Report and Accounts 2022
Governance
Read more on
Read more on pages 86 to 88
Read more on pages 88 to 90
Read more on page 91
Read more on page 91
This Corporate Governance Statement has been prepared in
accordance with the principles of the UK Corporate Governance Code
2022. We have complied with the principles and provisions of the UK
Code throughout 2022.
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.
• Effective, transparent communication and information drive
trust and support dynamic decision making
• Well-established relationship between Board and senior
management team supported by regular engagement
• Robust challenge and support provided and well-received by
management
• Clear, proportionate decision-making parameters balance Board
• Diverse Board with breadth of experience, knowledge and skills
• Majority of independent Directors and experienced
Committee Chairs
• Well-executed succession plan, with additional growth in the
Board rewarding performance
• Externally facilitated review highlighting Board cohesion
and effectiveness, achievement of previous objectives and
opportunities for development
• Engagement with shareholders ensuring the Board evolves to
• Clear oversight of external and internal audit functions and
planning, in a transformational year
• Effective oversight of internal control environment, and the
programme of work supporting compliance with prospective
governance changes
• Detailed consideration of development in reporting under TCFD
• Ensuring adequacy of the Group’s risk management framework
and process and participating in risk reviews
• Strengthening processes to ensure we act upon
recommendations and monitor outcomes, allowing us
•
4
• Overseeing the Remuneration Policy review and engagement
with stakeholders, including our EVG
• Early engagement with shareholders on approach to
transformational nature of the year
• 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
• Led by an experienced female Chair who drives strategic focus
and inclusive, robust debate
• Diverse, well-balanced Board with strong mix of knowledge and
experience and a clear focus on long-term sustainability
• 2022 focus on strategic transformation, resilience and succession
• Our culture, The Marshalls Way, and purpose, “creating better
spaces and futures for everyone: socially, environmentally and
economically”, are at the heart of all decision making
1
Marshalls plc | Governance
84
continued
Adjusting manufacturing
economic conditions
Embedded in Board
agenda cycle
Approving
Half and full year
results, preparation for
governance reforms,
standalone risk reviews
Marley acquisition, annual
strategy review, enlarged
Group budget approval
transactions
Marley acquisition and
associated debt and
equity fundraising
Appointing Simon
Bourne (COO) and Diana
Houghton (NED), enhancing
Board diversity
Acquisition related debt
and equity fundraising
Designated Director
for employee
engagement, Board
evaluation, remuneration
policy review
The Board currently comprises an Independent Non-Executive
Directors. Their biographical details are on pages 76 and 77.
Our Schedule of Matters Reserved for the Board (set out below)
Audit Committee Report on pages 96 to 99 provides details of the
reporting, audit, risk management and internal controls.
Nomination Committee Report on pages 92 to 95 reports how
Board and senior management composition (including diversity),
Remuneration Report on pages 100 to 130 sets out our proposed
Remuneration Policy to be tabled with shareholders at this year’s
AGM. It shows how our current policy has been implemented for
2022, including details of Directors’ remuneration. The Remuneration
Report also provides gender pay and balance information.
Ad hoc Board Committees are established for particular purposes:
for example, during 2022, Board Committees were established
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 79) 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
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
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
Board evaluation, supported this view of how our governance model
operates in practice.
Marshalls plc | Annual Report and Accounts 2022
Governance
Our culture and leadership, at Board and senior management team
level, drive our approach to governance at Marshalls and underpinned
the Group’s resilient performance during the year and the successful
completion of the transformational acquisition of Marley.
The Board invests time in understanding our business model
and how the long-term success and viability of the business
is dependent on implementing and evolving our strategy. This
understanding comes from working collaboratively with the senior
management team, engaging with the business and applying the
Board’s skills and experience to provide the robust challenge that
helps shape that strategic evolution.
The Board has continued to engage regularly with shareholders and
employees. Although all COVID-19 restrictions were removed by the
Government during the year, the technology we used throughout the
pandemic has continued to support and enhance engagement, making
the Board even more responsive and agile, and providing additional
visibility of our culture and how the business is managed and controlled.
our purpose, how this is supported by our policies and procedures, and
how we identify and manage our key risks. Transparency and openness
how the business is operated and controlled on a day-to-day basis. This
has enabled the Board to steer our strategy and business model towards
a sustainable future, as evidenced by the transformational acquisition of
Marley and the Group’s resilience in delivering record performance in an
incredibly challenging macro-economic environment.
The reports of our Board Committees give further detail on how
our policies and processes, and the principles of the UK Corporate
Governance 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 take the opportunity to bring
Marley into the Group and also respond to the extremely challenging
market conditions later in the year by reducing our manufacturing
capacity and our cost base. This ability to address not only longer-term
strategic priorities but to respond to market conditions and focus on
the more immediate short to medium-term issues, demonstrates the
both business transformation and resilience can be prioritised together.
Our well-established sustainability programme is driven by our
commitment to operate the business responsibly, having regard to
the interests of our stakeholders. We’re integrating Marley into our
sustainability programme and, although this will take some time,
such as minimising our environmental impact, respecting human
rights and promoting diversity and inclusivity.
the multi-million-investment in the installation of a dual block plant
new plant means we can switch production between ranges quickly
providing additional manufacturing agility in our network.
Our strategy review in November addressed some of the strategic
challenges we’re facing in the short to medium term, in responding
the opportunities it presents and the impetus this gives to our
longer-term strategic vision for the Group.
That strategic plan remains well-balanced and considers the
interests of all of our key stakeholders. Driving brand preference
and customer loyalty, through innovation and responsible operation
of the business, are core to all our commercial objectives. The
environmental and social reports on pages 42 to 59 provide further
information of our progress and commitments in operating the
business responsibly.
The Board receives regular updates from the Executive Directors on
the agreed KPIs set out on pages 40 and 41. The Group’s CFO has
receives, making it easier to establish whether the Group’s objectives
are being met and to provide additional challenge and support where
necessary.
2022 saw the introduction of a new HR system that underpins our
ability to support and manage our people, who are the key to our
the year, both planned and unplanned, that have impacted our
people. We’ve continued to implement our Group people strategy
our new colleagues and to understand how we can integrate
Marley into our Group-wide programmes. This, inclusive approach,
epitomises our commitment to The Marshalls Way, albeit we
acknowledge that this will take some time.
Effective communication with colleagues was critical during 2022
in market conditions.
A real focus was the communication of our acquisition of Marley and
ensuring we welcomed our new colleagues into the Group and the
communication forums we use. This remains a work-in-progress as
we look to harmonise the methods we use for communicating with
our people across the business. Towards the end of the year, our focus
moved to managing and communicating the impact of the capacity
we felt this was managed sensitively and compassionately.
Our Employee Voice Group, as an effective and representative
colleague engagement forum, has continued to mature and we
have recently completed elections for new EVG members as
two-year terms came to an end. Making the EVG as representative
as possible was a key priority, with a particular desire for more
colleagues in operations to put themselves forward. During 2022,
the EVG covered many topics including performance and talent
management, pensions governance, learning and personal growth
and our manufacturing capacity reduction project. Discussions are
challenging and, on the whole, constructive with members growing
of this forum, particularly given the regular attendance by our
and other members of the Board and senior management team.
The EVG serves as a useful gauge by which the Board can assess
whether that 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 28 to 35.
We’re continuing our work on culture and diversity, with the
implementation of diversity and inclusion strategy remaining a priority.
Giving the recruitment challenges in our sector, this is a long-term
project. At its core is ensuring we’re operating an inclusive business
for those currently working for us, and we have this year gathered
much better-quality information about representation across the
business that highlights the challenge we have. Greater diversity in
challenge but we’re now working with our sector peers to create a
construction industry Inclusivity Pledge, as we all face the same issue.
Our CEO and Talent Director are representing the Group in this initiative.
We have established a calendar of DERI based events supported
by internal communications campaign to drive awareness. Our
Diversity and Equity Taskforce is a major step. Greater diversity and
becoming representative of the communities in which we operate
are important components of our long-term success.
Marshalls plc | Governance
86
continued
continued
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, with
Marley now integrated into these processes. 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
management are set out in the Strategic Report on pages 1 to 75.
Code principles during 2022 will drive its long-term sustainable
success by providing a platform to achieve its strategic goals.
Read more about diversity on
be excluded from participating in relevant Board meetings or
voting on decisions. There is no shareholder with a holding of
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.
The Group’s Serious Concerns Policy sets out the principles under
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.
Read more about sustainability, ethics and climate change on
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.
continued
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 externally facilitated 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 the Board
continues to operate very effectively and cohesively with an appropriate balance of robust challenge and support.
The Chief Executive has responsibility for all operational matters which include the implementation of strategy and
policies 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
remain independent until he steps down, even though he has more than twelve years’ service on the Board. Further details
of why we believe this to be the case are set out on page 87.
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.
On appointment, the expected time commitment for Board members is made clear. The Chair and other Non-Executive
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 76 and 77.
boarding
NED
independence
Senior
Director
CEO
87
Marshalls plc | Annual Report and Accounts 2022
Governance
We continue to consider Tim Pile to be independent even though
Tim originally intended to step down during 2021 but agreed to
continue to support us through the pandemic and then further
extended his term to 2023, when his successor, Philip Rogerson,
stepped down for health reasons shortly after his appointment.
knowledge and experience of the Group. Further details of these
We are mindful that the UK Code directs that this length of service
is likely to impair or could appear to impair his judgement, but we
strongly believe this not to be the case given Tim’s track record with
to the business whilst, together with the Chair and the other Non-
Executive Directors, effectively holding the Executive Directors and
senior management team to account on behalf of shareholders.
He remains independent in thought and judgement and provides
unique insight and challenge given his experience of how the business
has evolved. He is a great advocate for the business but constantly
challenges us across all areas of our operations with a particular
focus on our brand, our customers and how we manage risk and
communicate externally.
Aside from his length of service, there are no other relevant
factors (as set out in UK Code Provision 10) that would affect
his independence. He has no associations with management
or otherwise that might compromise his ability to exercise
independent judgement or act in the best interests of the Group.
As it committed to, the Nomination Committee planned for Tim’s
succession during 2022 and Diana Houghton was appointed to the
the Company’s 2023 AGM.
The Chair conducted an individual performance evaluation
of all the Directors, including Tim, and concluded that Tim’s
contribution remained extremely valuable, particularly given
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,
dynamic consideration of any urgent matters. The Board remains
committed to ensuring it is always available to convene if urgent
matters need to be addressed as evidenced by their meeting to
conditionally approve the Marley acquisition and the reduction
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.
safety, which remains a top 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”. Marley’s health and safety reporting has now been
integrated into the updates the Board receives and this will be
Absent Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
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) – – – –
* The Board held seven scheduled meetings during the year. Additional Board meetings were held to conditionally approve the acquisition of Marley and to approve
a reduction in the Group’s manufacturing capacity.
by invitation. The Non-Executive Directors, excluding Tim Pile, also meet the 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 2022 was held over two
days in November. In addition, the Board participates in site visits, training sessions, the Employee Voice Group and other business activities where they have
relevant expertise and experience. The Board also attended the Group’s annual management conference on 2022.
Marshalls plc | Governance
88
continued
continued
The Board participated fully in the Group’s annual strategy review
which was held across two days in November 2022. This involved
engagement with key members of the senior management team
in considering the continuing relevance and appropriateness of the
Group’s strategy, particularly in light of the acquisition of Marley and
some of the short to medium-term issues the Group is facing as a
result of current macro-economic conditions.
In addition to the standing items on the Board’s agenda, the
principal areas of focus considered by the Board in 2022 were:
Strategy
• Group strategy
• People and culture, including succession, talent
development and DERI
• Acquisition of Marley and Marley strategy
• “Right-sizing” manufacturing capacity
•
and marketing
• ESG
• 2023 budget
• Capital structure and dividends
• Operations: dual block plant investment review
• IT/Digital: electronic trading, D365, cyber security and
IT roadmap
• Market, sector and competitor updates and outlook
• Macro-economic update (HSBC)
• Market (Numis and Peel Hunt) and sector
(Rothschild) updates
Operations
• Health and safety (including Marley)
• Marley integration
• Supply chain, procurement and logistics
• Technical innovation project updates
• Adoption of new people system, engagement and morale
Governance and risk
• Class 1 Marley acquisition: recommendation to shareholders
• Board composition: succession of Tim Pile and appointment
of Simon Bourne and Diana Houghton
• Approval of changes to NED remuneration
• Externally facilitated Board and Committee performance
evaluation
• Annual shareholder governance meetings
• Employee Voice Group feedback
• Policy review project
• Whistleblowing
• Cyber security and data protection
• Stakeholder engagement
• AGM voting and guidance
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 2022, the Board received a detailed update
programmes. The policies and process are commented on further
in the Nomination Committee Report on pages 92 to 95.
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
Our Board is increasingly diverse and has a strong combination
of skills, experience and knowledge with our Committees being
chaired by suitably experienced colleagues with relevant expertise.
Houghton (Non-Executive Director) were appointed to the Board.
Tim Pile will retire from the Board at the end of the Company’s
2023 AGM.
These appointments recognise and reward Simon for the
operational transformation he has led and, in the case of
Diana’s appointment, demonstrates the Board’s commitment to
continuously assess its skills base and supplement these as part
was a key area in our search criteria for the role.
The Board is currently 44 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 strategy and expected future leadership needs, and the
Our succession plan is designed to ensure that Board members’
exceeding nine years. All Directors stand for election or re-election
(as appropriate) at every Annual General Meeting, and all current
Directors, except Tim Pile, will stand for re-election or election at the
2023 Annual General Meeting. The Directors’ biographical details on
pages 76 and 77 show their roles, date of appointment and length
During 2022, we conducted an externally facilitated Board
effectiveness review led by the Chair and the Company Secretary,
with the support of Lintstock. See page 90 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.
continued
89
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Governance
• We acquired Marley, taking a major step towards our strategic
goal of becoming the UK’s leading manufacturer of products
• Given macro-economic conditions, our annual strategic review
considered short to medium-term strategic issues, building
these into the Board’s agenda for 2023.
• We re-assessed our manufacturing capacity, taking action
medium term.
•
shareholders during our annual compliance meetings.
ESG
• We’ve restructured and also invested in our ESG team, which is
• Although we’ve decided not to create a separate ESG Board
Committee, the Board has oversight on ESG matters, receives
regular updates and considers ESG as part of all major strategic
decisions. See pages 42 to 59 for further details.
• Details of the Group’s progress on our ESG journey are set out
on pages 42 to 59.
• We consulted with shareholders on our ESG programme as part
of our annual shareholder compliance meetings.
• The Board received updates on our commercial strategy,
including the implementation of our Commercial Excellence
framework and the restructuring of our customer teams,
• We’ve begun a programme of work to digitalise trading and
make us easier to deal with.
• Our marketing team has been restructured and we’ve created
a new Group Marketing Director role with the aim of optimising
our marketing activities across the Group and driving brand
preference and premium.
•
(Non-Executive Director) were appointed to the Board. Diana
• Executive succession is actively managed by the CEO and
• Recruitment and retention in a candidate led market remain
extremely challenging and have highlighted the importance
• Although some progress has been made, particularly in improving
opportunity for development remains a key priority in the
short term.
The 2022 externally facilitated Board evaluation was conducted
Following engagement with key stakeholders to set the context
for the review, Lintstock’s evaluation tools and questionnaires
part of last year’s internal evaluation. As in 2021, we carried out
the review immediately after the Board’s annual strategy review in
We also widened participation in the review to those members
meetings by invitation to ensure their views were captured.
As set out above, we made good progress against the priorities
realising our overall strategical goal of become UK’s leading
manufacturer of products for the built environment. Our progress
review is set out below,
Dynamic decision making remains critical to the effectiveness of
our Board. Taking the opportunity to accelerate the achievement
of our strategic goal in acquiring Marley is evidence of this.
Responding to volatile market conditions later in the year and
anticipated market demand for 2023, by responsibly managing
our manufacturing capacity, is further evidence of the Board’s
agility in addressing short to medium-term strategic challenges
of diversifying our business.
Board engagement and support have 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
Marshalls plc | Governance
90
continued
continued
Marshalls engaged Lintstock to facilitate a review of Board and
Committee performance during 2022. Lintstock is an independent
existing connections with Marshalls.
key stakeholders to set the context for the review, and to tailor
and Committee members, and certain members of the senior
management team who regularly attend Committee meetings by
invitation, then completed a tailored online survey addressing the
performance of the Board, its Committees and the Chair.
As well as addressing core aspects of Board and Committee
performance, the exercise had a particular focus on the
following areas:
• Marley acquisition: the Board’s oversight of the Marley
acquisition, including the business case put forward and the
quality of the Board’s input during the process;
• Strategy: the clarity and achievability of the Company’s
strategy, the quality of the most recent Board strategy review
meeting, and the key strategic issues facing the business
• Culture: the key ways in which Marshalls’ corporate culture
should evolve, in order to better support the execution of the
Company’s strategic goals;
• Stakeholder engagement: the Board’s understanding of key
stakeholder groups, and how best to evolve the mechanisms
through which the Board engages with stakeholders and
is informed of their views. There was a particular focus on
customers and how we differentiate ourselves from competitors;
• Technology: the Board’s grasp of technological opportunities
and threats, and the effectiveness with which developments
• ESG integration: the integration of environmental, social and
governance factors into the Group’s strategy and operations.
Lintstock’s report was discussed at the January 2023
Board meeting. The review concluded that the Board and
Committees are diverse, with great depth of knowledge, skills
and relevant experience and are supported by a strong senior
management team.
its time, the quality of strategic discussions, and the mechanisms
in place for succession planning, all of which will be considered in
building the Board and Committee’s forward agenda. There was
a recognition that the Board is constantly evolving and therefore
address the strategic challenges the Group faces, both in the
short to medium and longer term.
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Marshalls plc | Annual Report and Accounts 2022
Governance
4
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
supported by the advice of the 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:
controls; and the mitigation of material risks.
The Strategic Report comments in detail (pages 66 to 75) on the
principal risks facing the Group, in particular those that would
threaten our business model, future performance, solvency or
liquidity, and the controls in place to mitigate them. 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
The Board’s risk and viability review incorporates stress testing,
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 Risk Register and our risk
disclosures in this report were reviewed by the Audit Committee
The Non-Executive Directors carried out a standalone risk review
in December 2022, the outcome of which has been incorporated
into the Risk Register. In addition, our internal and external auditors
participated in our most recent risk review meeting in November
2022. Our approach underpins our commitment to transparency
to our procedures.
The Audit Committee Report on pages 96 to 99 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.
Addressing the requirements set out in proposed changes to the UK
corporate governance regime, as they relate to our internal control
environment, is the subject of a major programme of work being
assurances the Board needs to provide in this regard.
The Board acknowledges that such systems are designed
business objectives.
Read the Audit Committee Report on pages 96 to 99
The current Remuneration Policy was last approved by
shareholders in 2020 and a revised Policy, which is set out in
the Directors’ Remuneration Report on pages 100 to 130, will be
submitted to shareholders for approval at this year’s AGM. The
revised Policy addresses the relevant requirements of the UK Code
and was prepared in consultation with Company shareholders with
a holding carrying at least 2 per cent of the Company’s voting rights
and external voting agencies.
The Remuneration Committee Report describes how the current
Remuneration Policy has been implemented during 2022 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
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
Chair
15 March 2023
Marshalls plc | Governance
Developing and growing our diverse Board
Meetings
Vanda Murray OBE – Chair
Graham Prothero – SID
Tim Pile
Angela Bromfield
Avis Darzins
Diana Houghton* —
* Diana Houghton joined the Board in January 2023.
I am pleased to report to shareholders on
the main activities of the Committee and
how it has performed its duties during
2022. I chair Nomination Committee
meetings but would not do so where the
Committee was dealing with my own
reappointment or replacement as Chair.
• In recognition of his contribution towards the development and
achievement of the Group’s strategy and for his transformation
of our operations since joining the business, we recommended
the promotion of Simon Bourne to the Board as Chief Operating
independent assessment of Simon’s suitability for this role and
have subsequently supported him with his transition. Simon
completed our Board induction programme with the support
• As planned, and in anticipation of Tim Pile stepping down from
the Board at the 2023 AGM after more than twelve years’ service,
the Committee conducted a comprehensive search for Tim’s
Reynolds Associates (which is an independent executive search
in the listed company environment that would increase the
cognitive and experiential diversity of the Board. The core search
criteria included experience of transformational mergers and
acquisitions, of formulating and implementing enterprise-wide
Find our Terms of Reference and Nominations Policy at:
The focus during 2022 has been on evolving
and strengthening the Board, supporting
progression and diversifying our skill base.
Marshalls plc | Annual Report and Accounts 2022
Governance
• Following the completion of our search and interviews
appointed to the Board as a Non-Executive Director with effect
appointment further strengthens the Board by introducing new
skills, experience and diversity, particularly in the development
and execution of organisational strategy.
• We reviewed the roles, performance and succession planning,
both for the Board and senior management team. In addition
to the appointment of Simon Bourne and Diana Houghton to
the Board, the Committee supported the promotion of Louise
Managing Director of Marshalls Landscaping and Building
Products Division. Louise’s promotion, and the expansion of
her role to include responsibility for ESG, are recognition of her
tireless work in developing and driving the implementation of
our Group-wide people strategy and her commitment to the
Marshalls Way, which is at the heart of our culture. Ian Dean
succeeds Peter Hallitt, who retired at the end of 2022. Ian joined
Marshalls in 2020, as Managing Director for what was then our
Emerging Businesses division and his promotion is recognition
for the change Ian is driving that will establish a foundation
• We reviewed and approved the Group’s Nominations Policy and
commitment to introduce even greater diversity, at both a Board
and senior management team level, which is something we
acknowledge we must continuously work on as diversity remains
a sector-wide challenge.
• In support of their re-election at the 2023 AGM, we reviewed
individual Director performance identifying areas for
development. We also completed an externally facilitated
evaluation, which concluded the Committee was operating
effectively and under strong leadership.
• We have reviewed the Group’s DERI strategy, which was formally
adopted this year, and the initial progress in implementing
this. This remains a key area of focus for the Committee, but
we recognise the challenge the Group faces given the relative
lack of diversity in the sector, particularly in operational and
manufacturing roles. The Committee is supporting the Group’s
participation in sector-wide initiatives to improve diversity.
• Continue to actively manage our Board succession plan,
particularly as it relates to the Executive Directors.
• Supporting the Group’s people strategy which underpins and
acts as an enabler to the Group’s long-term strategy and includes
the development of colleagues in our high-performing category,
as well as our approach to recruitment for new, strategically
from within.
• Focus on 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.
• Supporting the Group’s initiatives that are seeking to improve
diversity, particularly in management and operational roles.
Greater gender, cultural and cognitive diversity are key
opportunities the Group. The Board currently comprises 44
per cent women, which will rise to 50 per cent on Tim Pile’s
retirement. We have a female Chair and one Board member from
a non-white ethnic minority background and comply with the
revised Listing Rules that require us to publish an annual “comply
or explain” statement regarding the achievement of the targets
The table below summarises the key features of our Nominations Policy and how it is applied.
Policy principle Supporting measures
• Recruitment
and succession
strategic needs
• Recruitment
contributes to
desired values
and culture.
• Nomination Committee
conducts an annual
skills review aligned
strategic plans.
• New Directors agree
commitment to
strategic direction
• Appointment of Diana Houghton to the Board, as a Non-Executive Director
bringing extensive listed company and strategic experience to the Board, the
latter being critical to ensuring our strategy remains dynamic and relevant.
•
Simon’s contribution and performance, over several years, in driving so many
of our growth pillars, including operational and logistics excellence, sustainable
supply and new product innovation.
•
her creation of and contribution to our people agenda, which supports our
strategic goals and underpins the long-term sustainability of the business.
• Ian Dean promoted to the role of Managing Director of our Landscaping and
Building Products Division.
• 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.
• Reviewed progress with the development and execution of the Group’s diversity
and inclusion strategy including our approach to recruitment, development and
progression. Becoming a founding signatory to a sector-wide diversity initiative.
• Brief to Russell Reynolds Associates for our search for Tim Pile’s successor
emphasised the importance of increasing cognitive and experiential diversity.
• Introduction of our new HR system facilitated the gathering of more granular
• Carefully monitoring senior management team performance and succession.
Carefully assessing any internal candidates and ensuring that, in the longer term,
with investment.
Marshalls plc | Governance
94
Policy principle Supporting measures
• There should be
a clear formal
Board succession
plan based on
objective criteria.
• Annual review of terms
• Annual individual
evaluation.
• Use of independent
external search advisers.
• Succession under continuous review. There were two Board changes
during 2022.
• Individual Director evaluations were conducted in January 2023.
• We select external search advisers for Board appointments based on relevant
expertise. Russell Reynolds Associates were retained the recruitment of Diana
Houghton. Norman Broadbent are retained for senior management team
recruitment and were appointed following a formal tender process.
• Directors must
time to perform
effectively and
familiarise
themselves with
the business.
• Limit on other Board
appointments.
• Detailed induction,
site visits, training and
employee engagement
programme.
• Recruitment process addresses existing commitments and risk of
• Included in letters of appointment.
• New director induction process now well-established and well-received
• Board training is included as part of Director induction together with site visits.
• The Directors continued to engage: on risk; through attendance at Employee
Voice Group and People Steering Group meetings; with our marketing team;
through attendance at Lunch and Learn sessions; and by participating in our
annual strategy review. Engagement has been through a combination of in-
person and virtual meetings.
• Compliance/
good governance.
•
register reviewed no less
than six-monthly.
• Annual re-election of
Directors.
• Reviews in June and December 2022.
• All Directors stood for election/re-election in May 2022, except for
The performance of the Committee was evaluated as part of the
externally facilitated Board evaluation process in 2022, described
on page 90. The Committee Terms of Reference were reviewed
in December 2022. No material changes were made, and the
Governance Code published in July 2018 (the “UK Code”),
meetings, and there were additional ad hoc meetings and
discussions between Committee members in connection
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 an annual one-to-one development
review meeting with the Chair to appraise performance, set
personal objectives and discuss any development and training
needs to enable them to continue to add value to the Board. The
performance and holds additional meetings with Directors on
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
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 76 and 77.
Governance
The Committee has acted throughout 2022 in accordance
effectiveness was assessed in 2022, with the support of an
external facilitator, Lintstock, against the UK Code as part of the
Board evaluation process. The evaluation concluded that the
Committee has been successful in managing Board composition
and succession, with a diverse range of skills and experience in
the current Board. 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.
Chair of the Nomination Committee
15 March 2023
continued
continued
Marshalls plc | Annual Report and Accounts 2022
Governance
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
The Marshalls Way
We do the right things, for the right reasons, in the right way
• 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 Indicators and
Drivers Report
• Core compliance training
• Appointment
documentation support
• Company Secretary support
• Organograms
• Key contacts
• Details of key advisers
• Payroll and
administration support
• 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
• Employee Voice Group
attendance
Engage
Marshalls plc | Governance
96
Marshalls maintained a strong focus on
control, risk management and governance
throughout the year. The Group’s Process and
Internal Financial Controls review, established
in response to the BEIS White Paper, is a
major project and good progress has been
made during 2022.
Marshalls continues to maintain
Meetings
Graham Prothero – Chair
Angela Bromfield
Avis Darzins
Diana Houghton* —
* Diana Houghton joined the Audit Committee on
Find our Terms of Reference at:
This report, which is part of the
Directors’ Report, explains how the
Audit Committee has discharged its
responsibilities during 2022 and
provided focus and governance in
report I also set out the Audit
Committee’s objectives for 2023.
• Provided a recommendation to the Board on whether the 2022
Annual Report and Financial Statements, taken as a whole, is
fair, balanced and understandable. In addition, assessed the
relation to ESG matters, including the reporting of the Task Force
on Climate-related Financial Disclosures.
•
•
acquisition of Marley and the adequacy of relevant disclosures
in the 2022 Annual Report. Further consideration of the
accounting disclosures in relation to operating segments and
adjusting items.
• Reviewed the new capital structure, following the additional
debt introduced to part-fund the acquisition of Marley, and the
headroom against bank facilities and covenants.
•
sensitivity analyses, including the scenario planning and
assumptions used, to conclude on the Group’s going concern
assessment and Viability Statement.
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Marshalls plc | Annual Report and Accounts 2022
Governance
• Reviewed and assessed the Group’s risk management
process and provided assurance to the Board in relation to
procedures. During 2022 this has included the alignment of
risk management procedures and a review and upgrade of
• During 2022, the Committee oversaw a continuing project
the Group’s control environment to ensure that it continues
the objectives of the BEIS White Paper. KPMG was engaged to
support the process and to provide assurance to the Committee
and to facilitate the monitoring of progress during the year. The
aim is to produce risk and control matrices (“RACMs”) for all
the Purchase-to-Pay and Inventory processes and the remainder
will be developed during 2023.
• Continued to monitor progress with the implementation of key
projects for the Group, including the integration of Marley and
the implementation of the D365 systems update, to ensure that
the control environment surrounding these projects remains
appropriate.
• Carried out a detailed review of the outcomes of cyber
security audits undertaken by KPMG LLP in order to improve
cyber security controls and to ensure that IT controls remain
appropriate and robust. During 2022, the work programme
included a cyber security audit of Marley.
• Commissioned a number of other internal audit reviews by
(both Marshalls and Marley).
• To focus on transparency, the clarity of reporting and the
consistency of messaging across all communication and
regulatory channels and over all areas of the business.
• To review the delivery of the external and internal audit, to
monitor progress and changes in external regulatory environment
and best practice. The Committee will continue to oversee
management.
• To maintain our continual assessment and improvement of cyber
security controls and ensure that IT controls remain appropriate
and robust. This will involve further cyber security reviews.
•
undertaken by KPMG LLP and monitor the implementation
actions from previous reviews. There are additional internal
audit reviews planned for 2023, including projects covering
•
review that was established in response to the BEIS White Paper.
This review process will be extended to the newly acquired
Marley business during the project.
• To review and consider the process and the matters to be
considered in order to set an Audit and Assurance Policy. The
Committee will consider appropriate areas once the project to
review the Group’s control environment has been completed.
During the year, the Audit Committee held four formal meetings and
there were also meetings between the Audit Committee Chair, the
The Committee meets both the external and internal auditor
independently of management, ensuring it has full visibility of
matters that have been the subject of particular discussions.
The Committee also reports to the Board in relation to the going
concern statement and the Viability Statement and whether the
accounts are fair, balanced and understandable
During the year, an external evaluation of the Committee’s
performance was undertaken as part of the Board evaluation
process. This is explained in detail in the Corporate Governance
Statement on pages 78 to 91. The review found the Committee to
be well-composed, effective and well-run. No areas of concern were
highlighted during this review although a number of agreed actions
The Chair of the Committee is a Chartered Accountant and the
details are on pages 76 and 77.
Deloitte LLP was appointed in May 2015 as statutory auditor,
following a tender process. The Committee has adopted policies
to safeguard the independence of its external auditor, Deloitte LLP.
It is the policy of the Company that the external auditor should not
provide non-audit services, other than those that are “de minimis“
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
2022 are analysed in Note 3 on page 162. Other than the half-yearly
review of Marshalls plc, for which a fee of £35,000 was charged
(2021: £35,000), no amounts were paid for non-audit work during
for non-audit services in the same period was £2,225,000 (2021:
£236,000).
An annual review of external audit effectiveness was undertaken
the external auditor had conducted a comprehensive, appropriate
and effective audit. Communication, at all levels, had been open and
constructive and areas where the external auditor could work more
The internal audit process is carried out by KPMG LLP, and the
annual internal audit programme uses a risk-based assessment
that takes into account the Risk Register and management input.
KPMG attends the Group’s Risk Register review meeting on a
regular basis. This risk-based assessment is reviewed and approved
by the Audit Committee, and the process is overseen by the Chief
external auditor and has no other connection with the Group.
The Company undertook a review and updated its internal self-
throughout the year. This review included the establishment of
a similar procedure for the Marley business. The internal audit
programme includes both regular audit checks and assignments
to look at areas of critical importance. Any areas of weakness
plan and a follow-up audit check to establish that actions have
been completed. Instances of fraud or attempted fraud (if any)
and preventative action plans are also reported to the Committee
Marshalls plc | Governance
98
continued
During the year, in addition to the regular internal control process, KPMG
is pleased to report that, although the wider risk of cyber fraud continues
security measures and systems have improved its maturity in this
area. Following the review, plans are now being formulated that will
Responsibility area Primary responsibilities
• To review, with both management and
judgements made and the quality
and appropriateness of the Group’s
accounting policies.
• To review the assumptions and
disclosures made in the Financial
Statements.
• To assess the clarity of disclosures
and regulatory requirements.
• To provide assurance to support the
long-term Viability Statement and the
procedures for evaluating the Group’s
going concern assessment.
• To review the integrity of formal
announcements relating to the Group’s
year and full year Financial Statements.
• Monitored the integrity of the full year and half year Financial Statements
and assessed critical accounting policies and practices, and compliance
with accounting standards.
•
to the Financial Statements. The main areas of judgement were:
• the acquisition accounting in relation to the acquisition of Marley;
including the procedures adopted in relation to the PPA exercise;
• key judgements made in relation to goodwill impairment testing;
• key judgements made in assessing the carrying value of inventory
• disclosure of adjusting items in the Financial Statements.
•
considered the assessments and conclusions made by management
• Reviewed the trading updates issued during the year which provided
performance and the acquisition of Marley.
• Approved the Viability Statement – and reviewed the assumptions
adequacy of scenario planning.
• Reviewed the Group’s capital structure together with both the capital
allocation and dividend policies.
• Approved the going concern statement – and advised the Board that the
Group is able to continue in operation and meet its liabilities as they fall
due for at least the next twelve months.
• Reviewed ESG disclosures, including the Group’s climate change strategy
and objectives, commitment to science-based targets and Task Force
• To assess and review the effectiveness
of the Group’s risk management
framework and procedures.
• To advise the Board on current
• Reviewed the operation of the Group’s Risk Committee, which comprises the
Executive Directors and members of senior management. The Risk Register
process is set out in more detail on pages 66 to 75, and during 2022 the
Marley business has been included and fully mapped into the Group process.
• Played a central role in the Group’s risk reviews during 2022.
• Provided oversight into the risk process. Actions have been reported
and detailed plans have been formulated to improve risk management,
compliance and governance.
• To review the internal control framework
to ensure that the checks and balances
in the processes effectively reduce
risk and the likelihood of material
error or fraud.
• To review the effectiveness of the
Group’s internal control systems,
compliance controls.
• Reviewed the underlying policies and procedures.
• Assessed the risk of management override of controls including
authorisation controls and segregation of duties. The Committee considered
those areas where management applies judgement in determining the
appropriate accounting and discussed this with the external auditor. The
• Reviewed a detailed paper presented to the Committee covering
the Group’s internal control framework and the underlying controls
• Reviewed the Group’s processes for the ongoing assessment of
of independent checking is undertaken focusing on key controls,
reconciliations and access to, and changing permissions on, base data.
•
controls review – and, with KPMG providing independent assurance, reviewed
the RACMs prepared in relation to the purchase-to-pay and inventory cycles.
• To make recommendations to the Board
on the appointment, reappointment and
removal of the external auditor.
• To consider the independence and
objectivity of the external auditor – and
to approve the external auditor’s fees.
• To agree the nature and scope of the
audit with Deloitte LLP.
•
and its key focus areas.
• The Group’s current auditor, Deloitte LLP, has processes in place
designed to maintain independence, including regular rotation of the
audit partner. The Company has complied with the Competition and
• Provided focus and challenge in relation to materiality and effectiveness
appropriateness of audit evidence.
• The Group’s policy on the independence, selection and rotation of
legal requirements.
further improve our cyber response procedures and controls. Cyber
security controls around Marley’s IT environment are less mature than
internal audit review. A plan of work is being put in place to address these
rolling programme of cyber security awareness training is undertaken.
business during 2022.
continued
99
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Governance
Responsibility area Primary responsibilities
• To review the effectiveness of the
internal audit function and the work
of KPMG, as internal auditor, and the
internal audit programme.
• To review the recommendations of
KPMG and the responses and action
plans of management.
• Reported on actions and detailed plans that have been formulated to
• KPMG reported on actions to support management and provide update
processes.
To oversee and review the effectiveness
• Serious Concerns Policy and
whistleblowing procedure;
• Anti-Bribery Policy; and
• Cyber Security Policy.
• Reviewed the Committee’s Terms of Reference.
• Ensured that the procedures in place in relation to each of these policies
are appropriate.
• Reviewed the effectiveness of procedures underlying the Serious
Concerns helpline and for handling allegations from whistleblowers.
and other accounting judgements relating to the Group’s Financial
Statements. The Committee also provided oversight over the external
and internal audit functions as well as reviewing the Group’s risk
management and internal control systems and procedures.
An annual review of internal audit effectiveness and of the
performance of KPMG LLP as independent internal auditor
The conclusion was very positive and was that the current internal
managing the internal audit function. The Committee has considered,
with KPMG LLP, how this process can be developed further and
The proposed reforms set out how the Government plans to
include a range of new proposals in relation to Directors, auditors
of consultation has been extended by the UK Government, but
the Audit Committee remains supportive of the objectives of the
controls framework. The Committee is overseeing a project to
review the adequacy, completeness and effectiveness of the
Group’s control environment to ensure that it continues to be
addressed. KPMG has been engaged to work with management
framework, to ensure this is properly and consistently structured
but also the evidence and visibility available to management and
to the Committee in evaluating and reporting on the effectiveness
of the control structure. The review process will be extended to the
Marley business. The aim will be to ensure that the Group has a
better understanding of its control risks and will be well-placed to
simplify, improve and automate controls and to align effectiveness
with the IT D365 implementation project.
The Committee has considered whether, in its opinion, the 2022
Annual Report and Financial Statements 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
change 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 Committee has concluded that the disclosures, and the
process and controls underlying their production, were appropriate
to enable it to determine that the 2022 Annual Report and Financial
Statements is fair, balanced and understandable.
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
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
arrangements are in place for the proportionate and independent
investigation of such matters and for appropriate follow-up action.
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.
The Company is currently undertaking a review of all of Marley’s
I would like to thank our shareholders for their continued support
during the year. I will be available at the Company’s 2023 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:
Chair of the Audit Committee
15 March 2023
Marshalls plc | Governance
100
Remuneration Committee Report
Remuneration arrangements for
with a focus on long-term growth.
which aligns to the strategic goals
www.marshalls.co.uk/about-us/corporate-governance
•
•
•
•
2023 priorities
•
•
•
•
•
•
2022 highlights
•
•
•
•
Members and attendance
Meetings
Angela Bromfield – Chair
Vanda Murray OBE
Tim Pile
Graham Prothero
Avis Darzins
Diana Houghton* —
* Diana Houghton was appointed to the Remuneration
Committee on 1 January 2023.
The CEO attends the Committee meetings by invitation
but may not participate in discussions about his own
remuneration. The Company Secretary acts as Secretary to
the Committee and attends Committee meetings, along with
101
Marshalls plc | Annual Report and Accounts 2022
Governance
Dear shareholder
• Annual statement from me as the Committee Chair;
•
•
•
Application of the policy in 2022 and 2023
Remuneration Policy review
Business performance and MIP outcomes for 2022
MIP A outcomes for 2022
MIP B awards allocated in respect of 2022
2022 MIP performance conditions
2022 MIP Performance Conditions
Initial targets
Actual
£ £ £
Marshalls plc | Governance
102
Business performance and MIP outcomes for 2022 continued
2022 MIP performance conditions continued
EPS
OCF/EBITDA
Executive Director changes
Element of remuneration
Base salary
Benefits and pension
MIP Element A
MIP Element B
Shareholding
requirement
Executive Director salary increases
Remuneration Committee Report
103
Marshalls plc | Annual Report and Accounts 2022
Governance
Chair and Non-Executive fees
•
•
•
•
Group-wide considerations
colleagues.
•
•
•
•
Shareholders
Shareholder engagement
In conclusion
Chair of the Remuneration Committee
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.
Remuneration Policy
(2020 AGM)
Remuneration Report
(2022 AGM)
Marshalls plc | Governance
104
At a glance
Link to Company strategy
Revenue
2022 remuneration outcomes
Long-term performance
———
Remuneration Committee Report
35
Martyn Coffey
Justin Lockwood
Simon Bourne
—
171 83124
386
8
1,685
80565 266399 373
2
1,002
93657 94
70
234
555
425 63
21
405
284 49
14
62
-146
39
47
105
Marshalls plc | Annual Report and Accounts 2022
Governance
Comparison to peers
Shareholding requirement
Impact of share price change
Martyn Coffey
Justin Lockwood
Simon Bourne
Martyn Coffey
Justin Lockwood
200%
200%
126%
322%
Simon Bourne
200%
147%
Martyn Coffey
Justin Lockwood
444 1,381
1,148
2,166
1,338
1,002
555
405
Simon Bourne
523
555
539
5,546
Marshalls plc | Governance
106
At a glance
Implementation of the Policy in 2022 and the proposed Policy for 2023 for Executive Directors
•
•
•
Salary
•
•
•
•
•
•
•
•
•
•
•
•
•
Benefits and
pension
of colleagues across the
Remuneration Committee Report
107
Marshalls plc | Annual Report and Accounts 2022
Governance
MIP Element A
the Committee.
•
•
•
•
•
•
•
be no worse than the average
•
•
•
•
be no worse than the average
management to agree a timeline
Marshalls plc | Governance
108
MIP Element B
•
•
•
were the same as for
Element A.
the same as for Element A.
Minimum
shareholding
requirement
Implementation of Non-Executive Directors’ fees
Chair fee
Chair of a committee fee
Remuneration Policy
Introduction
Committee process to determine new Remuneration Policy
At a glance
Implementation of the Policy in 2022 and the proposed Policy for 2023 for Executive Directors continued
Remuneration Committee Report
109
Marshalls plc | Annual Report and Accounts 2022
Governance
Factor How our new Remuneration Policy aligns
Clarity •
•
Simplicity •
•
Risk
•
•
•
•
•
•
•
•
•
•
•
Predictability •
•
Proportionality •
Alignment to culture •
•
Marshalls plc | Governance
110
Remuneration Policy
Changes to the Policy
Compliance with the Code
Key remuneration element of the 2018 UK Corporate Governance Code Alignment with 2023 Remuneration Policy
through the annual rolling vesting
2023 Remuneration Policy table
Fixed Remuneration
Salary
Purpose and how it supports
Operation
•
•
•
•
•
•
•
Maximum
•
•
Change
Remuneration Committee Report
111
Marshalls plc | Annual Report and Accounts 2022
Governance
Pension
Purpose and how it supports
the strategy
Operation
Maximum
Change
Purpose and how it supports
the strategy
Operation
Maximum
Change
Marshalls plc | Governance
112
Remuneration Policy
2023 Remuneration Policy table continued
Variable performance-based remuneration
Management Incentive Plan (“MIP”) Element A
Purpose and how it supports
the strategy
Operation
Maximum
•
•
•
Performance Conditions
•
•
Change
Remuneration Committee Report
113
Marshalls plc | Annual Report and Accounts 2022
Governance
MIP Element B
Purpose and how it supports
the strategy
Operation
Maximum
•
•
•
Performance Conditions
Change
Minimum Shareholding Requirement
Malus and Clawback
Marshalls plc | Governance
114
Remuneration Policy
Malus and Clawback continued
•
•
•
•
•
•
•
Element A Element B
Total Remuneration Opportunity
Element of package Assumptions used
Fixed pay
MIP Element A
MIP Element B
Share price appreciation
Dividend equivalents
Remuneration Committee Report
Martyn Coffey
37%
42%
32%
24%
28%
21%
12%
2,775
27% 31%
47% 100%
2,437
1,591
746
Justin Lockwood
36%
42%
32%
22%
26%
30%
47% 100%
1,028
475
12%
1,801
1,580
Simon Bourne
37%
42%
32%
21%
26%
30%
46%
100%
905
419
12%
1,584
1,390
28%
25%
28%
25%
115
Marshalls plc | Annual Report and Accounts 2022
Governance
Pay at Risk
•
•
•
Consideration of remuneration policy for other employees
Recruitment Policy
Remuneration element Recruitment policy
and pension
Maximum variable
remuneration
“Buyout” of incentives
forfeited on cessation
of employment
•
•
•
Relocation policies
Martyn Coffey
Justin Lockwood
Simon Bourne
Marshalls plc | Governance
116
Remuneration Policy
Directors’ Service Contracts
Date of appointment Notice by Company Notice of Director
Policy on Termination Payments
Recruitment element Treatment on cessation of employment
General
Salary, benefits and pension
lieu.
Incentive schemes Good leaver reasons
1
Other reason Discretion
MIP Element A For the year of cessation
at the normal measurement
•
•
Remuneration Committee Report
117
Marshalls plc | Annual Report and Accounts 2022
Governance
Incentive schemes Good leaver reasons
1
Other reason Discretion
MIP Element A Deferred Balances in participant’s Element A Plan Account
•
•
MIP Element B For the year of cessation
Remuneration Committee
•
•
MIP Element B Subsisting Awards
•
•
•
Other contractual
obligations
Marshalls plc | Governance
118
Remuneration Policy
Change of Control
Impact Discretion
Element A of the MIP
the change of control.
Element A of the MIP
change of control.
•
•
circumstances of change of control.
Element B of the MIP
of control.
•
•
Element B of the MIP
of control
•
•
Remuneration Committee Report
119
Marshalls plc | Annual Report and Accounts 2022
Governance
Discretion
Consideration of shareholder views
Chair and Non-Executive Directors’ Remuneration Policy
Fees
Purpose and how it supports
the strategy
Operation
arrangements.
Maximum
Change
Marshalls plc | Governance
120
Annual Remuneration Report
Salary
supplement
in lieu of
pension
Annual bonus
Long-term
incentives
Salary
Other benefits MIP Element A MIP Element B
MIP Element
A and B Total Total fixed Total variable
2022
£’000
2022
£’000
2022
£’000
2022
£’000
2022
£’000
2022
£’000
2022
£’000
2022
£’000
2022
£’000
621 532 36 33 93 80 70 399 94 266 88 375 1,002 1,685 750 645 252 1,040
414 166 11 5 21 8 47 124 63 83 – – 555 386 446 179 109 207
Simon
276 – 8 – 14 – 35 – 49 – 23 – 405 – 298 – 107 –
1,311 698 55 38 128 88 152 523 206 349 111 375 1,963 2,071 1,494 824 468 1,247
Note a Note b Note c Note d
Setting pay in context
•
•
Relative importance of spend on pay (percentage change)
Remuneration Committee Report
14.7
69.2
Staff pay
£127.4m
+16.8%
Distributions to
shareholders
£38.7m
+115.7%
Capital investment
£28.4m
+20.9%
Tax
£108.6m
+12.5%
106.9
0.0
23.5
96.5
109.1
17.9
127.4
38.7
28.4
108.6
121
Marshalls plc | Annual Report and Accounts 2022
Governance
Outcomes of incentive schemes in 2022 (audited)
MIP awards 2022
Element A
Element B (2020 award in respect of 2019 performance)
— —
— —
— —
— —
Element B (2022 award in respect of 2021 performance)
—
—
—
—
Element B (2023 award in respect of 2022 performance)
Marshalls plc | Governance
122
Annual Remuneration Report
Board fee Committee fees Expenses
(a)
Total
£’000 £’000 £’000 £’000
2022 2022 2022 2022
Vanda Murray
Remuneration Committee
219 5 – 2 226
Graham Prothero
55 18 – 73
Tim Pile
Committees
54 – – – 54
Angela Bromfield
54 16 – 70
Avis Darzins
Committees
54 – – – 54
436 39 2 477
Directors’ shareholdings and share interests
•
•
Shares
that will vest
following
shares
contingent
share
interests
interests
in shares
contingent
shares
shares
shares
shares
shares
shares
Executive
—
Non-Executive
— — — — —
— — — — —
— — — — —
— — — — —
— — — — —
Remuneration Committee Report
123
Marshalls plc | Annual Report and Accounts 2022
Governance
Annual Remuneration Report
Element Reference
Marshalls plc | Governance
124
Fairness, diversity and wider workforce considerations
Introduction
•
remuneration;
•
•
•
•
Process
•
•
•
•
•
•
•
•
•
management.
•
•
•
•
•
•
Remuneration Committee Report
125
Marshalls plc | Annual Report and Accounts 2022
Governance
•
colleagues.
•
•
•
•
•
•
Summary of incentive schemes
•
•
in Element A
other bonus or
Yes
Yes
Yes
Yes
Sales bonuses Yes
Widening employee share ownership
Bonus Share Plan (“BSP”)
Sharesave Scheme/Share Purchase Plan
Living Wage employer
Marshalls plc | Governance
126
Fairness, diversity and wider workforce considerations
Pay comparisons
CEO ratio
benefits
2022 35.4:1 27.2:1 21.7:1 621 31 40 51 1,002 33 43 53
2022
Ratio of single figure total
remuneration to
20.6x
•
•
•
•
•
CEO/average pay against TSR
———
Remuneration Committee Report
127
Marshalls plc | Annual Report and Accounts 2022
Governance
Percentage change in Directors’ remuneration
2022 2022 2022
16.8% 6.3% (75.3)%
8.1% 0.0% (47.2)%
n/a n/a n/a
26.3% n/a n/a
25.0% n/a n/a
5.9% n/a n/a
14.1% n/a n/a
80.0% n/a n/a
3.6% (26.4)% 27.1%
CEO pay in the last ten years
2022
Year £’000
Single figure remuneration 1,002
30.2%
— 100.0%
Total shareholder return
———
Marshalls plc | Governance
128
Remuneration Committee Report
Fairness, diversity and wider workforce considerations
Gender pay gap
•
•
Gender balance and pay
Female
2022 results
2021 results
2020 results
2019 results
2018 results
129
Marshalls plc | Annual Report and Accounts 2022
Governance
Bonus gender pay gap
Female
Percentage receiving bonus
Upper quartile
Upper middle quartile
Lower middle quartile
Lower quartile
Marshalls plc | Governance
130
Remuneration Committee Report
Fairness, diversity and wider workforce considerations
Equity and diversity initiatives
External advisers
Chair of the Remuneration Committee
131
Marshalls plc | Annual Report and Accounts 2022
Governance
Political donations:
Risk management:
Greenhouse gas emissions:
Employees:
Stakeholders:
Corporate governance:
Post-balance sheet events of importance since 31 December 2022:
Research and development:
Dividends
Share capital and authority to purchase shares
Marshalls plc | Governance
132
Share capital and authority to purchase shares continued
Articles of Association
Directors’ interests
Listing Rule requirements
Substantial shareholdings
As at As at
28 February
2023
%
16.06
8.72
6.29
5.01
4.66
4.39
4.04
3.69
2.86
2.42
Shiv Sibal
Group Company Secretary
133
Marshalls plc | Annual Report and Accounts 2022
Governance
Statement of Directors’ Responsibilities
in respect of the Annual Report and the Financial Statements
“Reduced Disclosure Framework”.
•
•
•
•
•
•
•
•
•
Responsibility statement of the Directors on the Annual Report and Accounts
•
•
•
Disclosure of information to the auditor
Marshalls plc | Governance
134
Statement of Directors’ Responsibilities
in respect of the Annual Report and the Financial Statements
Going concern
Cautionary statement and Directors’ liability
Annual General Meeting
Shiv Sibal
Group Company Secretary
135
Marshalls plc | Annual Report and Accounts 2022
Governance
Independent Auditor’s Report
to the members of Marshalls plc
Report on the audit of the Financial Statements
1. Opinion
•
•
•
“Reduced Disclosure Framework”
•
•
•
•
•
•
•
“Reduced Disclosure Framework”
2. Basis for opinion
3. Summary of our audit approach
Key audit matters
•
Materiality
Scoping
Marshalls plc | Governance
136
Independent Auditor’s Report
to the members of Marshalls plc
Report on the audit of the Financial Statements
4. Conclusions relating to going concern
•
•
•
•
•
the going concern basis of accounting.
5. Key audit matters
the efforts of the engagement team.
5.1. Acquisition Accounting
Key audit matter
description
“Business Combinations”
How the scope
•
valuation of intangible assets;
•
•
•
•
•
•
•
•
•
•
Key observations
137
Marshalls plc | Annual Report and Accounts 2022
Governance
Report on the audit of the Financial Statements
6. Our application of materiality
6.1. Materiality
Group Financial Statements Parent Company Financial Statements
Materiality
Basis for determining
materiality
relevant for users of the Financial Statements.
Rationale for the
benchmark applied
Statements that is relevant to the users of the Financial
Group materiality
£4.3m
Component materiality range
£1.8m to £2.4m
Audit Committee reporting threshold
£0.22m
Adjusted PBT
£90.4m
Marshalls plc | Governance
138
Independent Auditor’s Report
to the members of Marshalls plc
Report on the audit of the Financial Statements
6. Our application of materiality continued
6.2. Performance materiality
Group Financial Statements Parent Company Financial Statements
Performance materiality
Basis and rationale for
determining performance
materiality
6.3. Error reporting threshold
7. An overview of the scope of our audit
97%
3%
Revenue
100%
0%
100%
0%
Net assets
139
Marshalls plc | Annual Report and Accounts 2022
Governance
Report on the audit of the Financial Statements
7. An overview of the scope of our audit continued
7.2. Our consideration of the control environment
IT systems
•
•
•
•
•
•
Controls reliance
7.3. Our consideration of climate-related risks
8. Other information
9. Responsibilities of Directors
Marshalls plc | Governance
140
Independent Auditor’s Report
to the members of Marshalls plc
Report on the audit of the Financial Statements
10. Auditor’s responsibilities for the audit of the Financial Statements
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
11.1. Identifying and assessing potential risks related to irregularities
•
•
•
•
•
•
•
•
•
•
•
•
141
Marshalls plc | Annual Report and Accounts 2022
Governance
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
•
•
13. Corporate Governance Statement
•
•
•
•
•
•
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
•
•
•
14.2. Directors’ remuneration
Marshalls plc | Governance
142
Independent Auditor’s Report
to the members of Marshalls plc
Report on other legal and regulatory requirements
15. Other matters which we are required to address
15.1. Auditor tenure
15.2. Consistency of the Audit Report with the additional report to the Audit Committee
16. Use of our report
David Johnson FCA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
Financial Statements
Consolidated Income Statement
for the year ended 31 December 2022
2022 2021
Notes £’000 £’000
Revenue 2 719,373 589,264
Net operating costs 3 (671,461 ) (513,041 )
Operating profit 2 47,912 76,223
Financial expenses 6 (10,716 ) (6,903 )
Financial income 6 1 2
Profit before tax 2 37,197 69,322
Income tax expense 7 (10,656 ) (14,424 )
Profit for the financial year 26,541 54,898
Profit for the year
Attributable to:
Equity shareholders of the Parent 26,791 54,806
Non-controlling interests (250 ) 92
Profit for the financial year 26,541 54,898
Earnings per share
Basic 8 11.4 p 27.5 p
Diluted 8 11.3 p 27.4 p
Dividend
Pence per share 9 15.6 p 14.3 p
Dividends declared in the period 9 39,427 28,484
All results relate to continuing operations.
2021
2022 (as restated)
Notes £’000 £’000
Operating profit before adjusting items
Operating profit 47,912 76,223
Adjusting items 4 53,220 1,148
Adjusted operating profit 101,132 77,371
Profit before tax and adjusting items
Profit before tax 37,197 69,322
Adjusting items 4 53,220 3,961
Adjusted profit before tax 90,417 73,283
Profit after tax and adjusting items
Profit for the financial year 26,541 54,898
Adjusting items (net of tax) 4 46,815 3,355
Adjusted profit after tax 73,356 58,253
Earnings per share after adding back adjusting items
Basic 8 31.3 p 29.2 p
Diluted 8 31.1 p 29.0 p
143
Marshalls plc | Annual Report and Accounts 2022
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
2021
2022 (as restated)
Notes £’000 £’000
Profit for the financial year 26,541 54,898
Other comprehensive income/(expense)
Items that will not be reclassified to the Income Statement:
Remeasurements of the net defined benefit surplus 20 (3,126 ) 26,383
Deferred tax arising 22 781 (6,600 )
Impact of the change in rate of deferred tax on defined benefit plan actuarial gain — 17
Total items that will not be reclassified to the Income Statement (2,345 ) 19,800
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 5,660 1,403
Fair value of cash flow hedges transferred to the Income Statement (2,847 ) (922 )
Deferred tax arising 22 (680 ) 36
Exchange difference on retranslation of foreign currency net investment 610 (232 )
Exchange movements associated with borrowings designated as a hedge against
(282 ) 640
Foreign currency translation differences – non-controlling interests 45 (55 )
Total items that are or may be reclassified to the Income Statement 2,506 870
Other comprehensive income for the year, net of income tax 161 20,670
Total comprehensive income for the year 26,702 75,568
Attributable to:
Equity shareholders of the Parent 26,907 75,531
Non-controlling interests 24 (205 ) 37
Marshalls plc | Financial Statements
144
Financial Statements
Consolidated Balance Sheet
at 31 December 2022
2022 2021
Notes £’000 £’000
Assets
Non-current assets
Property, plant and equipment 10 266,451 173,931
Right-of-use assets 11 36,997 36,445
Intangible assets 12 559,743 95,004
Employee benefits 20 22,434 25,757
Deferred taxation assets 22 1,270 1,605
Current assets
Inventories 13 138,765 107,436
Trade and other receivables 14 123,281 111,909
Cash and cash equivalents 15 56,264 41,212
Assets classified as held for sale 10 — 1,860
Derivative financial instruments 19 3,661 813
Total assets 1,208,866 595,972
Liabilities
Current liabilities
Trade and other payables 16 152,440 138,218
Corporation tax 2,128 2,198
Lease liabilities 18 9,764 8,545
Interest-bearing loans and borrowings 17 — 1,673
Provisions 21 3,000 —
Non-current liabilities
Lease liabilities 18 36,070 32,776
Interest-bearing loans and borrowings 17 247,035 39,341
Provisions 21 6,699 839
Deferred taxation liabilities 22 90,661 28,065
Total liabilities 547,797 251,655
Net assets 661,069 344,317
Equity
Capital and reserves attributable to equity shareholders of the Parent
Called-up share capital 23 63,242 50,013
Share premium account 23 199,927 24,482
Merger reserve 23 141,605 —
Own shares (1,325 ) (646 )
Capital redemption reserve 75,394 75,394
Consolidation reserve (213,067 ) (213,067 )
Hedging reserve 2,963 830
Foreign exchange reserve 375 47
Retained earnings 391,173 406,277
Equity attributable to equity shareholders of the Parent 660,287 343,330
Non-controlling interests 24 782 987
Total equity 661,069 344,317
Approved at a Directors’ meeting on 15 March 2023.
On behalf of the Board:
Martyn Coffey Justin Lockwood
The Notes on pages 149 to 185 form part of these Consolidated Financial Statements.
145
Marshalls plc | Annual Report and Accounts 2022
Consolidated Cash Flow Statement
for the year ended 31 December 2022
2021
2022 (as restated)
Notes £’000 £’000
Profit for the financial year 26,541 54,898
Income tax expense on continuing operations 7 17,061 15,030
Income tax credit on adjusting items 7 (6,405 ) (606 )
Profit before tax 37,197 69,322
Adjustments for:
Depreciation of property, plant and equipment 10 21,817 16,423
Asset impairments 14,042 233
Depreciation of right-of-use assets 11 11,328 11,315
Amortisation 12 1,765 1,965
Adjusting items 39,177 1,213
Gain on sale of property, plant and equipment (1,207 ) (9,194 )
Equity settled share-based payments 1,254 2,303
Financial income and expenses (net) 6 10,715 6,901
Operating cash flow before changes in working capital 136,088 100,481
Decrease/(increase) in trade and other receivables 22,900 (16,696 )
Increase in inventories (13,997 ) (18,108 )
(Decrease)/increase in trade and other payables (20,737 ) 19,740
Adjusting items paid (17,410 ) (2,820 )
Cash generated from operations 106,844 82,597
Financial expenses paid (9,909 ) (3,534 )
Income tax paid (11,592 ) (13,527 )
Net cash flow from operating activities 85,343 65,536
Cash flows from investing activities
Proceeds from sale of property, plant and equipment 1,408 14,892
Financial income received 1 2
Acquisition of subsidiary undertaking (86,193 ) —
Acquisition of property, plant and equipment (27,840 ) (19,037 )
Acquisition of intangible assets (2,310 ) (2,885 )
Net cash flow from investing activities (114,934 ) (7,028 )
Cash flows from financing activities
Net proceeds from issue of share capital 182,651 —
Payments to acquire own shares (1,075 ) (3,567 )
Payment in respect of share-based payment award (1,252 ) —
Repayment of debt on acquisition of subsidiaries (291,956 ) —
Repayment of borrowings (97,729 ) (121,286 )
New loans 303,467 32,658
Cash payment for the principal portion of lease liabilities (11,090 ) (10,828 )
Equity dividends paid (38,669 ) (17,924 )
Net cash flow from financing activities 44,347 (120,947 )
Net increase/(decrease) in cash and cash equivalents 14,756 (62,439 )
Cash and cash equivalents at the beginning of the year 41,212 103,707
Effect of exchange rate fluctuations 296 (56 )
Cash and cash equivalents at the end of the year 56,264 41,212
Marshalls plc | Financial Statements
146
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Attributable to equity holders of the Company
Share Capital Foreign Non-
Share premium Merger Own redemption Consolidation Hedging exchange Retained controlling Total
capital account reserve shares reserve reserve reserve reserve earnings Total interests equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current year
At 1 January 2022 5 0 , 0 13 24,4 82 — (6 4 6 ) 75 , 39 4 (21 3,067 ) 830 47 406, 277 34 3,330 987 3 4 4 , 317
Total
comprehensive
income/(expense)
for the year
Profit for the
financial year — — — — — — — — 2 6,791 2 6,7 91 (2 50 ) 26,54 1
Other
comprehensive
income/(expense)
Foreign currency
translation
differences — — — — — — — 328 — 328 45 373
Effective portion of
changes in fair
value of cash flow
hedges — — — — — — 5,660 — — 5,6 60 — 5,660
Net change in fair
value of cash flow
hedges transferred
to the Income
Statement — — — — — — (2 , 8 4 7 ) — — (2 , 8 47 ) — (2 , 8 4 7 )
Deferred tax arising — — — — — — (6 8 0 ) — — (6 8 0 ) — (6 8 0 )
Defined benefit
plan actuarial loss — — — — — — — — (3 ,1 2 6 ) (3 ,1 2 6 ) — (3 ,12 6 )
Deferred tax arising — — — — — — — — 781 781 — 781
Total other
comprehensive
income/(expense) — — — — — — 2 ,13 3 328 (2 , 3 4 5 ) 116 45 161
Total
comprehensive
income/(expense)
for the year — — — — — — 2 ,13 3 328 24,446 26,9 07 (205 ) 26 ,70 2
Shares issued 13 , 2 2 9 18 0 ,1 5 1 141, 6 0 5 — — — — — — 33 4 ,98 5 — 3 34 ,9 85
Share issue costs — (4 , 70 6 ) — — — — — — — (4 ,7 0 6 ) — (4 ,7 0 6 )
Share-based
payments — — — — — — — — 2 2 — 2
Deferred tax on
share-based
payments — — — — — — — — (6 0 8 ) (6 0 8 ) — (6 0 8 )
Corporation tax on
share-based
payments — — — — — — — — 12 1 12 1 — 121
Dividends to equity
shareholders — — — — — — — — (38,669 ) (38,669 ) — (3 8,669 )
Purchase of own
shares — — — (1, 07 5 ) — — — — — (1, 0 7 5 ) — (1, 0 75 )
Own shares issued
under share
scheme — — — 396 — — — — (3 9 6 ) — — —
Total contributions
by and
distributions to
owners 13 , 2 2 9 17 5 , 4 4 5 14 1, 6 0 5 (679 ) — — — — (3 9,5 50 ) 290,050 — 290,050
Total transactions
with owners of the
Company 13 , 2 2 9 17 5 , 4 4 5 141 , 6 0 5 (67 9 ) — — 2 ,1 3 3 328 (15 ,10 4 ) 3 16 ,9 5 7 (205 ) 316,752
At 31 December
2022 63 ,242 19 9 , 9 2 7 141, 6 0 5 (1, 3 2 5 ) 75, 3 94 (2 1 3,0 6 7 ) 2 ,9 6 3 3 75 391 , 173 6 60, 287 782 6 61, 0 6 9
147
Marshalls plc | Annual Report and Accounts 2022
Consolidated Statement of Changes in Equity continued
for the year ended 31 December 2022
Attributable to equity holders of the Company
Share Capital Foreign Non-
Share premium Own redemption Consolidation Hedging exchange Retained controlling Total
capital account shares reserve reserve reserve reserve earnings Total interests equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current year
At 1 January 2021 5 0 , 0 13 24,482 (8 0 6 ) 75 , 39 4 (2 13 , 0 67 ) 3 13 (3 61 ) 3 5 0 ,9 3 0 286, 898
Total comprehensive
income/(expense) for
the year
Profit for the financial
year — — — — — — — 54,8 06 54,806 92 54, 898
Other comprehensive
income/(expense)
Foreign currency
translation differences — — — — — — 408 — 408 (5 5 ) 35 3
Effective portion of
changes in fair value of
cash flow hedges — — — — — 1, 4 0 3 — — 1, 4 0 3 — 1, 4 0 3
Net change in fair value
of cash flow hedges
transferred to the
Income Statement — — — — — (9 2 2 ) — — (9 2 2 ) — (9 2 2 )
Deferred tax arising — — — — — 36 — — 36 — 36
Defined benefit plan
actuarial gain — — — — — — — 26, 3 8 3 26 ,3 8 3 — 26 , 38 3
Deferred tax arising — — — — — — — (6 , 6 0 0 ) (6 , 6 0 0 ) — (6, 6 0 0 )
Impact of the change in
rate of deferred tax on
defined benefit plan
actuarial gain — — — — — — — 17 17 — 17
Total other
comprehensive income/
(expense) — — — — — 5 17 408 19 , 8 0 0 20 ,725 (5 5 ) 20 ,670
Total comprehensive
income/(expense) for
the year — — — — — 5 17 408 7 4,606 75 , 5 31 37 75, 568
Share-based payments — — — — — — — 2,303 2, 303 — 2,303
Deferred tax on
share-based payments — — — — — — — (25 6 ) (2 5 6 ) — (25 6 )
Corporation tax on
share-based payments — — — — — — — 345 345 — 345
Dividends to equity
shareholders — — — — — — — (1 7, 9 2 4 ) (17, 9 2 4 ) — (1 7, 9 2 4 )
Purchase of own shares — — (3,56 7 ) — — — — — (3, 56 7 ) — (3 ,56 7 )
Own shares issued
under share scheme — — 3,7 27 — — — — (3,7 27 ) — — —
Total contributions by
and distributions to
owners — — 16 0 — — — — (19 , 2 5 9 ) (19 , 0 9 9 ) — (19 , 0 9 9 )
Total transactions with
owners of the Company — — 16 0 — — 5 17 408 5 5, 3 47 56,4 32 37 5 6,4 69
At 31 December 2021 5 0 , 0 13 2 4,482 (6 4 6 ) 75 , 39 4 (2 13 , 0 6 7 ) 830 47 4 0 6, 277 3 4 3,330 987 3 4 4 , 3 17
Marshalls plc | Financial Statements
148
Financial Statements
149
Marshalls plc | Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
150
Financial Statements
151
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Notes to the Consolidated Financial Statements continued
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152
Financial Statements
153
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Notes to the Consolidated Financial Statements continued
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154
Financial Statements
155
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Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
156
Financial Statements
157
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Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
158
Financial Statements
159
Marshalls plc | Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
160
Financial Statements
2 Segmental analysis continued
161
Marshalls plc | Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
162
Financial Statements
163
Marshalls plc | Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
164
Financial Statements
165
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Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
166
Financial Statements
167
Marshalls plc | Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
168
Financial Statements
169
Marshalls plc | Annual Report and Accounts 2022
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
170
171
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
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172
173
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
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175
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
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177
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
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179
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
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181
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
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183
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Consolidated Financial Statements continued
Marshalls plc | Financial Statements
184
185
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Company Statement of Changes in Equity
for the year ended 31 December 2022
Share Capital
Share premium Merger Own redemption Equity Retained Total
capital account reserve shares reserve reserve earnings equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Current year
50,013 24,482 — (646) 75,394 14,560 167,702 331,505
Total comprehensive income for the year
Profit for the financial year — — — — — — 137,785 137,785
Total comprehensive income for the year — — — — — — 137,785 137,785
Transactions with owners, recorded
directly in equity
Contributions by and distributions to
owners
Shares issued 13,229 180,151 141,605 — — — — 334,985
Share issue costs — (4,706) — — — — — (4,706)
Share-based payments — — — — — 725 529 1,254
Deferred tax on share-based payments — — — — — (219) — (219)
Dividends to equity shareholders — — — — — — (38,669) (38,669)
Purchase of own shares — — — (1,075) — — — (1,075)
Own shares issued under share schemes — — — 396 — — (396) —
Total contributions by and distributions
to owners 13,229 175,445 141,605 (679) — 506 (38,536) 291,570
Total transactions with owners of the
Company 13,229 175,445 141,605 (679) — 506 99,249 429,355
At 31 December 2022 63,242 199,927 141,605 (1,325) 75,394 15,066 266,951 760,860
Share Capital
Share premium Own redemption Equity Retained Total
capital account shares reserve reserve earnings equity
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Current year
50,013 24,482 (806) 75,394 13,010 195,034 35 7,127
Total comprehensive expense for the year
Loss for the financial year — — — — — (6,362) (6,362)
Total comprehensive expense for the year — — — — — (6,362) (6,362)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Share-based payments — — — — 1,622 681 2,303
Deferred tax on share-based payments — — — — (72) — (72)
Dividends to equity shareholders — — — — — (17,924) (17,9 24)
Purchase of own shares — — (3,567) — — — (3,567)
Own shares issued under share schemes — — 3,727 — — (3,727) —
Total contributions by and distributions to owners — — 160 — 1,550 (20,970) (19,260)
Total transactions with owners of the Company — — 160 — 1,550 (27, 332) (25,622)
At 31 December 2021 50,013 24,482 (646) 75,394 14,560 167,702 331,505
Marshalls plc | Financial Statements
186
2022 2021
Notes £’000 £’000
Non-current assets
Investments 34 353,699 352,974
Deferred taxation assets 35 156 673
Loans to Group undertakings 36 407,497 —
761,352 353,647
Current assets
Debtors 37 — 964
Net current assets — 964
Total assets 761,352 354,611
Current liabilities
Creditors 38 (492) (23,106)
Net current liabilities (492) (23,106)
Net assets 760,860 331,505
Capital and reserves
Called-up share capital 39 63,242 50,013
Share premium account 39 199,927 24,482
Merger reserve 39 141,605 —
Own shares (1,325) (646)
Capital redemption reserve 75,394 75,394
Equity reserve 15,066 14,560
Profit and loss account 266,951 167,702
Equity shareholders’ funds 760,860 331,505
Approved at a Directors’ meeting on 15 March 2023.
On behalf of the Board:
Martyn Coffey Justin Lockwood
The Notes on pages 188 to 193 form part of these Company Financial Statements.
Company Balance Sheet
at 31 December 2022
187
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Company Financial Statements
31 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.
(a) 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 2022 were authorised for issue by the Board
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”
(b) Basis of preparation
The accounting policies which follow set out those policies which apply in preparing the Financial Statements for the year ended
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 in 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.
(c) 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.
(d) Share capital
(i) Share capital
(ii) Dividends
Dividends on non-equity shares are recognised as a liability and accounted for on an accruals basis. Equity dividends are recognised
(e) Pension schemes
in Note 20 on pages 176 to 179.
Marshalls plc | Financial Statements
188
31 Accounting policies continued
(f) Share-based payment transactions
The Company enters into equity settled share-based payment transactions with its employees. In particular, annual awards are made
These schemes allow employees to acquire shares in Marshalls plc. 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, taking into account the terms and conditions upon which the options were granted. The amount recognised as an
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.
(h) Trade and other payables
Trade and other payables are stated at nominal amount (discounted if material).
(i) Income tax
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
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
are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable
reverse in the foreseeable future. The amount of deferred taxation provided is based on the expected manner of realisation or settlement
realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the
related dividend.
32 Operating costs
The audit fee for the Company was £60,000 (2021: £50,000). 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, long-term incentive plans and Directors’ pension entitlements are disclosed on pages 100
The average monthly number of employees of Marshalls plc (including Executive Directors) in the year ended 31 December 2022 was 203
(2021: 183). The personnel costs for the majority of these employees are borne by Marshalls Group Limited. The personnel costs charged
33 Ordinary dividends: equity shares
2022 2021
Pence per share £’000 Pence per share £’000
2022 interim: paid 1 December 2022 5.7 24,263 4.7 9,362
9.6 14,406 4.3 8,562
15.3 38,669 9.0 17,924
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.
2022 2021
£’000 £’000
2022 final: 9.9 pence (2021: 9.6 pence) per Ordinary Share 25,021 19,122
189
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Company Financial Statements continued
34 Investments
£’000
352,974
Additions 725
At 31 December 2022 353,699
Investments comprise shares in the subsidiary undertaking, Marshalls Group Limited. The Directors have considered the carrying value of
The increase in the year of £725,000 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 2022 are set
out below.
Subsidiaries Principal activities Class of share % ownership
Acraman (418) Limited Non-trading Ordinary/
preference
100
Alton Glasshouses Limited Non-trading Ordinary 100
Bollards Direct Limited Non-trading Ordinary 100
Capability Brown Garden Centres Limited Non-trading Ordinary 100
Capability Brown Landscaping Limited Non-trading Ordinary 100
Classical Flagstones Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Dalestone Concrete Products Limited Non-trading Ordinary 100
Edenhall Limited Non-trading Ordinary 100
Edenhall Building Products Limited Non-trading Ordinary 100
Edenhall Concrete Limited Non-trading Ordinary 100
Edenhall Concrete Products Limited Non-trading Ordinary 100
Non-trading Ordinary/
preference
100
Edenhall Technologies Limited Non-trading Ordinary 100
Locharbriggs Sandstone Limited Non-trading Ordinary 100
Lloyds Quarries Limited Non-trading Ordinary 100
Marley Limited Manufacturer of roofing products and solutions Ordinary 100
Non-trading Ordinary 100
Marshalls Building Materials Limited Non-trading Ordinary 100
Property management Ordinary 100
Marshalls Concrete Products Limited Non-trading Ordinary 100
Marshalls Directors Limited Non-trading Ordinary 100
Marshalls Dormant No. 30 Limited Non-trading Ordinary 100
Marshalls Dormant No. 31 Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Marshalls Estates Limited Non-trading Ordinary 100
Intermediate holding company Ordinary 100
Marshalls Landscape Products Limited Non-trading Ordinary 100
Marshalls Landscape Products (North America) Inc. Landscape Products supplier Ordinary 100
Marshalls Mono Limited Landscape Products manufacturer and supplier and
quarry owner supplying a wide variety of paving, street
furniture and natural stone products
Ordinary 100
Marshalls Natural Stone Limited Non-trading Ordinary 100
Marshalls NV Landscape Products manufacturer and supplier Ordinary 66.7
Marshalls Profit Sharing Scheme Limited Non-trading Ordinary 100
Property management Ordinary 100
Marshalls Register Limited Non-trading Ordinary 100
Marshalls Stone Products Limited Non-trading Ordinary 100
Marshalls Street Furniture Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Non-trading Ordinary 100
Non-trading Ordinary 100
Non-trading Ordinary 100
Ollerton Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Paver Systems (Carluke) Limited Non-trading Ordinary 100
Paver Systems Limited Non-trading Ordinary 100
PD Edenhall Holdings Limited Intermediate holding company Ordinary 100
Marshalls plc | Financial Statements
190
Subsidiaries Principal activities Class of share % ownership
Non-trading Ordinary 100
Non-trading Ordinary 100
Premier Mortars Limited Non-trading Ordinary 100
Quarryfill Limited Non-trading Ordinary 100
Rhino Protec Limited Non-trading Ordinary 100
Robinson Associates Stone Consultants Limited Non-trading Ordinary 100
Robinsons Greenhouses Limited Non-trading Ordinary 100
Rockrite Limited Non-trading Ordinary 100
S Marshall & Sons Limited Non-trading Ordinary 100
Scenic Blue Limited Non-trading Ordinary 100
Scenic Blue Landscape Franchise Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Stancliffe Stone Company Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Stone Shippers Limited Non-trading Ordinary 100
Stonemarket (Concrete) Limited Non-trading Ordinary 100
Stonemarket Limited Non-trading Ordinary 100
The Great British Bollard Company Limited Non-trading Ordinary 100
The Stancliffe Group Limited Non-trading Ordinary 100
The Yorkshire Brick Co. Limited Non-trading Ordinary 100
Town & Country Paving Limited Non-trading Ordinary 100
Urban Engineering Limited Non-trading Ordinary 100
Viridian Solar Limited Manufacturer of roof interpreted solar products Ordinary 100
Viridian Solar BV Manufacturer of roof interpreted solar products Ordinary 100
Woodhouse Group Limited Non-trading Ordinary 100
Non-trading Ordinary 100
Xiamen Marshalls Import Export Company Limited Sourcing and distribution of natural stone products Ordinary 100
Viridian Solar B.V. 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
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
Marshalls NV
Nieuwstraat 4, 2840 Rumst, Belgium
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
34 Investments continued
191
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Notes to the Company Financial Statements continued
35 Deferred taxation
Recognised deferred taxation assets and liabilities
Assets Liabilities
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Equity settled share-based payments 156 673 — —
Movement in temporary differences
Recognised
in statement
Recognised of changes in 31 December
2022 in income equity 2022
£’000 £’000 £’000 £’000
Equity settled share-based payments 673 (298) (219) 156
Recognised
in statement
Recognised of changes 31 December
2021 in income equity 2021
£’000 £’000 £’000 £’000
Equity settled share-based payments 1,058 (313) (72) 673
36 Loans to Group undertakings
2022 2021
£’000 £’000
Amounts owed from subsidiary undertakings 407,497 —
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.
37 Debtors
2022 2021
£’000 £’000
Corporation tax — 964
38 Creditors
2022 2021
£’000 £’000
Corporation tax 492 —
Amounts owed to subsidiary undertakings — 23,106
492 23,106
No creditors were due after more than one year.
39 Capital and reserves
Called-up share capital
The authorised, issued and full paid up Ordinary Share Capital was as follows:
Authorised Issued and paid up
Value Value
Ordinary Shares (25 pence nominal) Number £’000 Number £’000
At 31 December 2021 300,000,000 75,000 200,052,157 50,013
Shares issued in the year — — 52,916,571 13,229
At 31 December 2022 300,000,000 75,000 252,968,728 63,242
52,916,571 new Ordinary Shares with a nominal value of £0.25 per share were issued during the year fully paid in connection with the Group’s
Share premium account and merger reserve
Share premium account Merger reserve
2022 2021 2022 2021
£’000 £’000 £’000 £’000
24,482 24,482 — —
Shares issued in relation to the placing and open offer 180,151 — — —
Consideration shares issued — — 141,605 —
Costs associated with the share issue (4,706) — — —
At 31 December 199,927 24,482 141,605 —
Marshalls plc | Financial Statements
192
39 Capital and reserves continued
Share premium account and merger reserve continued
During the year ended 31 December 2022, 28,824,114 new Ordinary Shares were issued at £6.50 per share. An amount of £180,151,000 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 £141,605,000 has been credited to a merger
Own shares reserve
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 £266 million (2021: £168 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
40 Capital and leasing commitments
The Company had no capital or leasing commitments at 31 December 2022 or 31 December 2021.
41 Bank facilities
The Group’s banking arrangements are in respect of Marshalls plc, Marshalls Group Limited and Marshalls Mono 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.
42 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
Beneficiary Amount Period Purpose
M S Amlin Limited £675,000 23 Dec 2011 to 30 Oct 2023 Employer’s liability
£500,000 8 Dec 2020 to 30 Oct 2023 Employer’s liability
£575,000 8 Dec 2020 to 30 Oct 2023 Vehicle insurance
Aviva Insurance Limited £350,000 19 Mar 2014 to 30 Oct 2023 Vehicle insurance
M S Amlin Limited £750,000 30 Oct 2016 to 30 Oct 2023 Vehicle insurance
43 Pension scheme
Full details of the Scheme are provided in Note 20. The Company is unable to identify its share of the Scheme assets and liabilities on
44 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.
There are no critical accounting judgements or key sources of estimation uncertainty.
45 Related parties
Related party relationships exist with other members of the Group. All operating costs are borne by Marshalls Group Limited and are
193
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
Financial History – Consolidated Group
Year ended
31 December 2018
31 December 2019
31 December 2020
31 December 2021
Year ended
31 December 2022
£’000 £’000 £’000 £’000 £’000
Consolidated Income Statement
Revenue 490,988 541,832 469,454 589,264 719,373
Net operating costs (after adding back adjusting
items) (425,331) (466,938) (441,059) (511,893) (618,241)
Operating profit (after adding back adjusting items) 65,657 74,894 28,395 77,371 101,132
(823) (1,213) (19,022) (1,148) (53,220)
Operating profit 64,834 73,681 9,373 76,223 47,912
Financial income and expenses (net) (1,899) (3,828) (4,720) (6,901) (10,715)
Profit before tax (after adding back adjusting
items) 63,758 71,066 23,675 73,283 90,417
Profit before tax 62,935 69,853 4,653 69,322 37,197
Income tax expense (11,307) (11,942) (2,095) (14,424) (10,656)
Profit for the financial year 51,628 57,911 2,558 54,898 26,541
Profit for the year attributable to:
Equity shareholders of the Parent 51,958 58,240 2,370 54,806 26,791
Non-controlling interests (330) (329) 188 92 (250)
51,628 57,911 2,558 54,898 26,541
66,593 76,104 12,092 79,401 57,031
66,593 76,104 29,901 79,336 102,897
80,792 103,875 45,298 107,139 90,176
80,792 103,875 57,618 107,074 136,042
Basic earnings per share (pence) 26.3 29.4 1.2 27.5 11.4
Basic earnings per share (after adding back
26.7 30.0 9.2 29.2 31.3
Dividends per share (pence) – IFRS 14.8 16.7 — 9.0 15.3
Dividends per share (pence) – traditional 12.0 4.7 4.3 14.3 15.6
Dividends per share (pence) – supplementary 4.0 — — — —
Year-end share price (pence) 464.8 860.0 748.5 699.5 273.2
Tax rate (%) 18.0 17.1 45.0 20.8 28.7
2021 2022
£’000 £’000 £’000 £’000 £’000
Consolidated Balance Sheet
Non-current assets 302,785 350,035 324,416 332,742 886,895
Current assets 210,776 212,534 290,013 263,230 321,971
Total assets 513,561 562,569 614,429 595,972 1,208,866
Current liabilities (141,190) (162,349) (157,158) (150,634) (167,332)
Non-current liabilities (105,656) (104,454) (169,423) (101,021) (380,465)
Net assets 266,715 295,766 287,848 344,317 661,069
Net borrowings (37,433) (59,976) (75,566) (41,121) (236,605)
Gearing ratio 14.0% 20.3% 26.3% 11.9% 35.8%
“Leases”
Marshalls plc | Financial Statements
194
ABI
Barbour ABI – a provider of construction intelligence data
BEIS
Business, Energy & Industry Strategy
BES 6001
BRE accreditation for responsible sourcing
BRE
Independent organisation offering expertise in the built
environment sector
CCO
Corporate Criminal Offence – legislation which can hold companies
accountable for tax fraud
CDP
Carbon Disclosure Project
Circular economy
Production model recycling and reusing as much as possible
CO
2
, CO
2
e and greenhouse gas emissions
Carbon dioxide emissions. Carbon dioxide (CO
2
) is the primary
greenhouse gas emitted through human activities.
While CO
2
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.
2
different greenhouse gases in a common unit. For any quantity and
type of greenhouse gas, CO
2
2
which
would have the equivalent global warming impact.
Carbon sequestration
Carbon sequestration is the long-term removal, capture or
sequestration of CO
2
from the atmosphere to slow or reverse
atmospheric CO
2
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 CO
2
. Calculations show that concrete
absorbs roughly 30 per cent of the amount of CO
2
that cement
production emits over its life.
CPA
Construction Products Association
D365
Microsoft cloud ERP software system
DERI
Diversity, equity, respect and inclusion
eNPS
Employee Net Promoter Score – how likely employees are
EPDs
Environmental Product Declarations
ERP system
Enterprise Resource Planning software system
ESOS
Energy Savings Opportunity Scheme
ETI
Ethical Trading Initiative
EVG
Employee Voice Group
managed forests
FTSE4Good
An index of companies scoring highly in corporate social
responsibility measures
GDPR
General Data Protection Regulation
GfK
Company providing data and analytics on consumer goods
GHG
Greenhouse gases
ILO
International Labour Organization
ISO
International Organisation for Standardisation
LDI asset portfolio
Liability Driven Investment asset portfolio – investment needed
Marshalls NOW
MHFAs
Mental Health First Aiders
MIP
Management Incentive Plan
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-
greenhouse gas removal.
NGO
Non-Governmental Organisation
NHBC
National House Building Council
PAS 2050
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.
Glossary
195
Marshalls plc | Annual Report and Accounts 2022
Financial Statements
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
(CO
2
e). 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.
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.
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
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.
is developed in line with the scale of reductions that are required
Science Based Targets initiative (“SBTi”)
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
The SBTi is considered the gold standard in carbon reduction
commitment setting.
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
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
covering emissions associated with business travel, procurement,
waste and water. Examples include plane travel, shipping of goods
and waste disposal.
SDGs
Sustainable Development Goals
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
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
Glossary continued
Marshalls plc | Financial Statements
196
Shareholder Information
Shareholder analysis at 31 December 2022
Number of Number of
Size of shareholding shareholders % Ordinary Shares %
2.75
97
Financial calendar
print technology, which minimises the impact of printing on the environment,
Advisers
Stockbrokers
Numis Securities Limited
Peel Hunt
Auditor
Legal advisers
Slaughter and May
Pinsent Masons LLP
Financial adviser
N M Rothschild & Sons Limited
Bankers
Registrars
The Pavilions
Landscape House
Premier Way
Marshalls plc | Annual Report and Accounts 2022
197
Financial Statements
Marshalls plc, Landscape House,
Elland HX5 9HT
Annual Report and Accounts 2022