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Key Performance Indicators

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Measuring our performance

Key Performance Indicators

The Group's KPIs monitor progress towards the achievement of its objectives.

Revenue/Profit

Revenue (£'m)

£469.5m

2020 469.5

2019 541.8

2018 491

2017 430.2

2016 396.9

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Revenue/Operating Profit
Why is this KPI important?

Delivering sustainable growth is key to the Group’s strategy. The aim is to outperform the market and grow market share.

Sustainable improvement in profitability is a strategic priority.

2020 performance
Sales have recovered well in HY2 particularly in Domestic and International. Whilst Group revenue for the full year is down 13 per cent on the prior period, the decrease in total revenue in HY2 had improved to be only 1 per cent behind the 2019 comparative.

Profit before tax (before operational restructuring costs and asset impairments) was £22.5 million which was ahead of expectations. Trading in 2021 has started strongly.

Principal risks
• Further COVID-19 impact in 2021
• Macro-economic and political
• Customers
• Increased rate of digital change

• Cyber security risks
• Competitor activity
• Security of raw material supply
• Climate change
• Further COVID-19 disruption

Risk mitigation
• Close monitoring of trends
and lead indicators
• Diversity of business
• Customer centricity
• Digital Strategy

• Innovation and new
product development
• Focus on cyber
security controls
• Proactive supply
chain management

Stakeholder linkage
• Customers
• Suppliers
• Employees
• Communities

• Shareholders
• Employees

Profit before tax (£'m)

before operational restructuring costs and asset impairments

£22.5

2020 22.5

2019 69.9

2018 62.9

2017 52.1

2016 46

EPS/ROCE

EPS (p)

before operational restructuring costs and asset impairments

8.60p

2020 8.6

2019 29.36

2018 26.29

2017 21.52

2016 18.95

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EPS / ROCE
Why is this KPI important?
EPS growth is a strategic target.

ROCE is an important indicator of sustainable shareholder value.

2020 Performance

Group EPS (before operational restructuring costs and asset impairments) was 8.60 pence.

Group ROCE for 2020 is 8.2 per cent (2019: 21.4 per cent). ROCE is defined as EBITA / shareholders’ funds plus net debt (before operational restructuring costs and asset impairments).

Principal risks

• Cost inflation and strength
of supply chain
• Competitor activity
• Brand leadership

• Threat from new technologies
and business models
• Increased pace of
digital change
• Capital structure

Risk mitigation
• Supply chain management
• Logistics excellence

• Digital transformation
• Operational excellence
• Flexible capital structure
• Capital allocation policy

Stakeholder linkage
• Shareholders
• Employees

Return of capital employed (%)

before operational restructuring costs and asset impairments

8.2%

2020 8.2

2019 21.4

2018 21.9

2017 20.8

2016 23

Net Debt/Dividend Per Share

Net debt (£'m)

Pre-IFRS 16

£26.9m

Reported basis

£75.6m

2020 (26.9)

2019 (18.7)

2018 (37.4)

2017 (24.3)

2016 5.4

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Net debt / dividend per share
Why is this KPI important?
Marshalls continues to support a prudent capital structure. The strategic target is for the ratio of net debt to EBITDA to be between 0.5 and 1.5 times over the business cycle, on a reported basis.

A progressive dividend policy remains a key objective. The strategy is to maintain up to two times cover over the business cycle.

2020 performance
Net debt was £75.6 million at 31 December 2020 (£26.9 million on a pre-IFRS 16 basis). Gearing remains low at 26.3 per cent (9.3 per cent on a pre-IFRS 16 basis).

The Board is recommending the reinstatement of a full final dividend of 4.30 pence for the year ended 31 December 2020.

Principal risks
• Funding strategy
• Overpaying for acquisitions
• Cost inflation

• Macro-economic environment
• Reduction in revenue
and profitability

Risk mitigation
• Flexible capital structure
• Conservative financial profile

• Clear corporate strategy
• Capital allocation policy

Stakeholder linkage

• Shareholders
• Employees
• Customers
• Suppliers

Dividend per share (recommended, p)

4.30p

2020 4.3

2019 4.7

2018 12

2017 10.2

2016 8.7

Customer Service/Health and Safety

Customer service index

94%

2020 94

2019 98

2018 98

2017 98

2016 98

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Customer service / health & safety
Why is this KPI important?
Customer centricity is a key strategic priority. Customer service lies at the heart of the Marshalls brand.

Marshalls is committed to meeting the highest health and safety standards.

Performance
Despite the impact of COVID-19, the combined customer service measure averaged 94 per cent throughout 2020.

In 2020 there was a 12.2 per cent reduction in days lost from workplace incidents compared with the target benchmark.

Principal risks
• Quality, service and reliability
• Brand reputation
• Further COVID-19 disruption

• Consistency of standards
• Regulatory controls
• Investment in operation network
• Extended COVID-19 restrictions
• Mental health and
employee wellbeing

Risk mitigation
• Customer centricity strategy
• Digital trading

• Embedded culture –
The Marshalls Way
• Compliance procedures
and policies
• Employee training

Stakeholder linkage
• Customers
• Communities
• Environment
• Employees

Health and safety (reduction in working days lost, %)

12.2%

2020 12.2

2019 14

2018 17

2017 46

2016 20

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