Interest in Corporate Behaviour BU50F8

Running Head : ETHICS WITH COOPEARTE GORVENANCE 1
Ethics with Cooperate Governance
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Affiliation
Date
CORPO …

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Running Head : ETHICS WITH COOPEARTE GORVENANCE 1
Ethics with Cooperate Governance
Name
Affiliation
Date
CORPORATE GOVERNANCE AND ETHICS 2
Corporate governance and ethics
A. PORTIFOLIO OF A RESEARCH
MARSHALLS PLC
Cover pages of the Annual reports and Accounts fo r the previous five years for
Marshalls plc
2017 2018 2019 2020
2021
Details about the shareholders
SIZE OF
SHAREHOLDING
NUMBER OF
SHAREHOLDERS
%
1-500 1,866 47.76
501 -1000 476 12.18
1001 -2500 537 13.74
2501 -5000 333 8.52
5001 -10,000 228 5.84
10,001 -25,000 151 3.86
25,001 -100,000 131 3.35
100,001 -250,000 62 1.59
CORPORATE GOVERNANCE AND ETHICS 3
2500,001 -500,000 30 0.77
500,001 and above 93 2.39
TOTAL 3,907 100.00
The Details of the Board over the last Five years showing the Chair, Executive and Non –
executive
Stakeholders
Regulatory bodies and Government
Environment and communities
Suppliers
Employees
Stakeholders
Customers
Analysis of the Board
Marshalls Plc Board
Analysis
2017 2018 2019 2020 2021
Executives Andrew
Allner
Chair
Vanda
Murray
OBE
Chair Chair Chair Chair
Martyn
Coffey
Chief
Executive
Chief
Executive
Chief
Executive
Chief
Executive
Chief
Executive
Jack
Clarke
CFO CFO CFO CFO
Justin
Lockwood
CFO
Cathy
Baxandall
Group
company
Secretary
Shiv Sibal Group
General
Counsel &
Company
secretary.
Independent
non –
executives
Graham
Prothero
Senior
Ind. Non –
Exec Dir
Senior
Ind. Non –
Exec Dir
Senior
Ind. Non –
Exec Dir
Senior Ind.
Non -Exec
Dir
Senior Ind.
Non -Exec
Dir
Non -Execs Tim Pile
Angela
Bromfield
Avis
Darzins
CORPORATE GOVERNANCE AND ETHICS 4
Total board size at the
exact end of year
3 4 5 6 8
(AR&A, 2021 P. 70 -71)
Business Model
Business unit 1 – Dual block plant investment
Business unit 2 – Investment in new vehicles
CORPORATE GOVERNANCE AND ETHICS 5
REVENUE, OPERATING AND NET PROFIT TABLE FOR THE LAST FIVE
YEARS
YEAR REVENUE OPERATING
PROFIT
NET PROFIT
2021 £589.3m £76.2m £54.9 m
2020 £469.5m £27.2m £2.5m
2019 £541.8m £72.6m £57.9
2018 £491.0m £64.8m £51.6m
2017 £430.2m £53.4m £42.1
Key Risks
CORPORATE GOVERNANCE AND ETHICS 6
(AR&A, 2021, P. 41)
STATEMENT OF COMPLIANCE
As per the 2018 July UK corporate Governance code, it is clear that the corporate
Governance statement was prepared basing on (the “UK Code”). The UK corporate
Governance code is applicable to the 2021 financial year . Throughout the 2021 financial
year, UK code provisions and principles have effectively complied with (AR&A, 2021, p. 76) .
Hence this work is linked to the UK coopera te Governance code of 2018 July and has been
applicable to the 2021 financial year.
NOMINATION COMMITTEE’S REPORT
CORPORATE GOVERNANCE AND ETHICS 7
(AR&A, 2021, p. 84)
REMUNERATION COMMITTEE‟S REPORT
(AR&A, 2021, p. 92)
Audit Committee Report
CORPORATE GOVERNANCE AND ETHICS 8
EXTERNAL AUDITOR
(AR&A, 2021, p. 124)
Consolidated income statement
CORPORATE GOVERNANCE AND ETHICS 9
(AR&A, 2021, P. 125)
Consolidated balance sheet
(AR&A, 2021, P. 127)
Consolidated cash flow statement
CORPORATE GOVERNANCE AND ETHICS 10
(AR&A, 2021, P. 129)
CORPORATE GOVERNANCE AND ETHICS 11
CEO’S REMUNERATION REPORT FOR THE LAST FIVE YEARS
YEAR (£) SALARY (£) BONUS
(£)
PENSION
AND
OTHER
BENEFITS
(£)
LTIPS AND
OTHER SIMILAR
LONGTERM
SHARE
INCENTIVE
SCHEMES (£)
TOTAL
(AR&A, 2021,
p. 108) (£)
2021 £532,000 665,000 113,000 375,000 1,685,000
2020 48 5,000 – 118,000 1,092,000 1,695,000
2019 460 ,000 1,039,000 125,000 589,000 2,213,000
2018 445,000 715,000 121,000 321,000 1,602,000
2017 430 ,000 538,000 112,000 1,303,000 2,383,000
The data is obtained from the annual remuneration reports in the A nnual Reports and A ccounts for the respective years 2021,
2020 &2019, 2018 and 2017 pages 101, 79,71,60 respectively.
B CRITICAL REFLECTION
Introduction
This module analyses issues that are presented in Marshalls Plc landscaping manufacturing
company which is based in United Kingdom. The issues considered are; a critical explanation
of Marshall‟s performance for the past five years, a critical explanation of the company‟s
strategy, shareh older wealth creation and CEO remun eration . A critical reflection will be
made upon these issues presented above . Furthermore, some of the critical information or
parts in this paper will be linked to the 2018 July UK corporate Governance code, as it is in
the statement of compliance above.
Issue 1: Shareholder wealth creation
The total change in equity for 2017 is £237,627 (Marshalls plc AR&A, 2017 P. 75).
According to (Marshalls plc AR&A, 2018 P. 103), the total change in equity for 2018 is
£266,715. The total change in equity for 2019 is £295,766 (Marshalls plc AR&A, 2019 P.
102). According to the 2020 Equity changes consolidated stateme nt, the total change in
equity for 2020 is £287,848. The total change in equity for 2021 is £344,317 (Marshalls plc
AR&A, 2021 P. 129). From the above data, there has been a gradual increase in the total
CORPORATE GOVERNANCE AND ETHICS 12
change of equity from 2017 to 2019. However, there was a decrease in the year of 2020. This
was due to the impact of the out -break of COVID -19 that interrupted the oper ation of the
company. After the year 2020, the total change in equity increased from £287,848 to
£344,317. The strategy that was set by the company in 2019 helped the company to fulfil its
goal due to the equity it obtained in 2021 that was higher than tha t of the past four years.
In my critical opinion, this is an example of the Governance 2018 UK code Compliance . The
report presents very well the key stakeholders and the consolidated total change in equity for
the past five years.
The strategy put up in the company for the last five years focus on the UK 2018 code which
allows following of the principles. It gives a company a chance of coming up with a
statement attached to how principles were used in that way which would of cour se enable
some share holders in evaluating principles used to achive seucccess. It is because tha ability
for the different investors to fully evaluate those principles is vital.
Issue ll CEO ’s remuneration
As the table above, CEO salaries have generally declined over the last five years. Its among
the policies of a company not to allow the CEO to discuss compensation. According to
(Marshalls plc AR & A, 2021 p96), in 2020 Martin Coffey received salaries and 518 other
benefits in place of 85 employee pensions and 1,207 long -term incentives. In 2021, he
received salaries and other allowances and salary supplements for 565 instead of the 85
employee pension. MIP item A is 399, MIP item B is 266, and long -term incentive is 373.
Th e number above shows a single digit reward, indicating that the number in 2021 is higher
than the number in 2020 (AR & A, 2021 p.96). Basic salary, benefits and pensions are single
digit salaries. The goal is to pay 50% of the annual bonus under MIP. A min imum of requires
CORPORATE GOVERNANCE AND ETHICS 13
performance below the thresholds for Factors A and B and a level at which MIP does not
receive variable compensation. The maximum represents the entire 250% of the potential
salary at MIP. If the stock price of the MIPB Award rises by 50%, the potential salary at MIP
will be up to + 50%. In my critical opinion, this issue is governed by UK corporate
governance law. The Board of Directors have put up a Committee for compensation
characterized by independent directors who are non executive (UK Corporate Governance
Code, 2018). Executive Director’s policy is that the CEO cannot discuss his compensation
Issue ll fin ancial performance and strategy
Performance
2017 2018 2019 2020 2021
Revenue (£‟m) 430.2 491.0 541.8 469.5 589.3
Profit (£‟m) 52.1 62.9 69.9 22.5 72.1
ROCE (%) 20.8 20.9 21.4 8.2 20.6
Net debt (£‟m) 24.3 37.4 60.0 75.6 41.1
Operating cash flow (“OCF”) (%) 103 94 96 49 80
Customer service (%) 98 98 98 94 98
Climate change (%) 10.24 9.92 9.21 7.70 16
Health and safety (lost time accident rate) (%) 46 17 14 12 16.9
According to (Marshals AR & A, 2017, p. 1819), the company’s sales revenue increased by
8% and domestic sales increased by 12%. Operating profit increased 12% from £ 47.6m to £
53.4m. Due to the company’s high operating leverage, th e reports on operating margins
increased on a range of 12.0% up to 12.4%. The company’s EPS rose 14%. The company’s
ROCE for the fiscal year e nded December 31, 2017 was 24. Out of 100 on a same, minus the
effects attached to CPM . Net liabilities increased £ to £ 24.3mn, exclud ing the £ 5.4m
acquiring of the CPM. Gearing remained at 10%. The regular dividend on a share increased
17% from 8.70p to 10.20p. “On an IFRS basis, dividends are 12.20p, an increase of 26%.”
Overall, they are consistently above 98% of the Customer Service Index. Compared to the
target benchmark, the number of days lost was red uced by 46%.
CORPORATE GOVERNANCE AND ETHICS 14
According to (Marshalls AR&A, 2018 P. 20 -21 ) the revenue increased by 14 %. Operational
profit s raised by “21 % ”. This was due to the strong operational gearing of the group that led
to the increase compared to that of 2017. The EPS increased by 22 per cent from 21.52% to
26.29% . However, there was a decrease in the percentage of ROCE from 24.8% to 23.3%.
The ne t debts increased by 14 % by the end of financial year of 2018. “there was increase in
the ordinary kind of dividend that are per share just by 18 % up to 12.00 kind of pence.
Having to base on IFRS, dividends which were declared throughout the year and were done
on December , 31 2018 equaled 14.80 of pence, which is just an increase of just21 % ”.
There was a constant excess of a combination of services that attract customers which
measured up to 98 % throughout the year 2018. The worki ng days lost reduced by 61% as
compared with a targeted benchmark. CPM kind of sites which were integrated just into a
group‟s programs attached to health and safety.
According to (Marshalls AR&A, 2019 P. 22 -23), the revenue of the group increased by 10
per cent for the year 2019. The strength of commercial revenue and public sector growth was
at 15 per cent. The operating prof it increased from £64.8m to £72.6m (pre -IFRS 16) and the
operating kind of margin had to increase from 13.2 % to 13. 4 % . The EPS of the company
increased by 12 per cent from 26.29 pence to 29.48 kind of pence on the pre -IFRS 16 kind of
basis. The ROCE incr eased from 23.3 to 23.7 % but after the effects of the “IFRS 16 ”, it
reduced to 21.4 % . “ a the net debt occurred on 31 December 2019 ranged £60.0m, £18.7m
just on the „ pre -IFRS 16 basis) ‟. Gearing was kept as low as at 20.3% (6.3 % on the “ pre –
IFRS 16 basis ”). There was a 20 per cent increase in the ordinary dividend per share from
12.00 pence to 14.35 pence. Dividends for the year 2019 on an IF RS basis equivalent to 16.7
%, with increases of 13% .There was a constant excess of customer service measure of 98 per
cent throughout the year 2019. The percentage of the working days lost reduced by 14%
com pared to the targeted benchmark.
CORPORATE GOVERNANCE AND ETHICS 15
According to (Marshalls Plc AR& A, 2020), the revenue of the company reduced by 13 per
cent. This was due to the outbreak of COVID -19 Pandemic. The profit of the company
reduced from £69.9m to £22.5m and it was just before reconstructions of operations form of
costs and the assets kind o f impairments. . The EPS of the company equaled 8.60 before
taxation. The ROCE of the company reduced from 21.4% to 8.2%. By 31 December, 2020
the n et debt was £75.6m on a basis that was reported and on a “pre -IFRS ” that 16 based , it is
£26.9. “The gearing remained low at 26.3 per cent with a percentage of 9.3 on a pre -IFRS 16
basis” . A board recommended a reinstatement kind of the full dividend of the full outcome
dividend of 30% for the whole year 2020. The average of customer service index was at 94%.
despite of the outbreak of the COVID -19 pandemic, there was no great reduction in the
customer service measure. Considering the targeted benchmark, there was a reduction of 12.2
per cent in the working days lost.
According to (Marshalls Plc AR&A, 2021 , P. 32 -34), there was a constant strength in the
sales of the company and continued support in the market conditions. The company revenue
increased from £469.5m to £589.3m. The company put great emphasis at markets with high
demand. The profits increased greatly from £22.5m to £72.1m . The ROCE attached to the of
the company that increased straight from 8.2 % to 20.6 % . The net debt was £41.1 million by
31 December 2021 with £0. 1 million net positive cash on kind of “ pre -IFRS 16 basis ”. The
gearing remained very low just at 12.1 % . “The operating statement of flows of cash was at
80 % attached to the “EBITDA ”.” However, this was lower than the usual because of an
increase in imported inventory investment due to significant increase in s hipping costs. The
customer service index returned to 98 per cent due to the despondence of the company‟s
manufacturing operations to market demands as well as changing trading patterns. There was
CORPORATE GOVERNANCE AND ETHICS 16
an increase in the percentage of the reduction of working d ays lost in 2021 by 16.9 per cent
compared with the targeted benchmark.
In my critical opinion, this is an example of compliance s by codes attached to UK Corporate
Governance . The board presents very well the performance of the company and its
connection with the strategy of the company. The performance is evaluated according to the
strategy that was set by the board. The board provides the income statements, balance sheet
of the performan ce of the company for each year.
CORPORATE GOVERNANCE AND ETHICS 17
STRATEGY
Basing on the strategy set by the company in 2017, it majorly focused on the growth which it
had set for five years through technology, digitalization and product innovation. From my
critical point of view, there rose the following questions.
CORPORATE GOVERNANCE AND ETHICS 18
Deliver ing a sustainable kind of shareholder s values through having to improve all long term
kind of operations and performance of any business. Could this increase the amount of profits
for the company gained for the year?
M aintai ning a bigger and great market kind of position and help grow a profitability and even
growth of a business in groups and even markets. won‟t the company turn into being
monopolistic?
Develop ing relationships with key stakeholders, customers and installers: will this increase
productivity of the company or it is for the benefit of stakeholders?
Invest ing in the organic kind of expansion in the existing and also related kind of markets
even categories of products in expanding the business : is it only an advantage to the company
resource or something else ?
To fully strengthen and also extend a Marshall kind of brand through having to focus on the
innovation, servicing and the development of some new products. Could it impact the
preferences of the customers as some do not want to change their brands?
To keep an effective and even efficient kind of controls in the business world and makes
sure that capital structures are kept while being aliened with a growth o f a company‟s
growth: could it lead stakeholders to be on tension and considering it as an interference in
the already established capital structure?
In 2018, the company continued with its strategy of long -term sustainable growth . However,
they did not c ontinue with this strategy for the next years as they had planned it to be for five
years. These were to end in 2020, they changed the strategy in 2019. The company changed
the priorities of future. These had the following objectives.
CORPORATE GOVERNANCE AND ETHICS 19
Building of relationships and ensuring product specification by developers, builders and
architects.
Providing an end -to-end kind of offerings and hence became a pioneers of the digital standard
for the industry.
Delivering excellence for logistics with the greener ki nd of vehicles together with brand new
forms of technology all over the full feet of the company
To do responsible and ethical conduction of the business , handling risks attached to climate
changes and protection on the environment .
To deliver a customer service that is leading in the market and exceeding customer
expectations.
To grow the company‟s emerging businesses and helping the company expand into key
growth areas.
These eight priorities of the company‟s strategy have been followed for the past thre e years in
order to fulfill the company‟s aim of being a leader in manufacturing in built environment
products located in the United Kingdom. However, in the strategy the company did not
anticipate the outbreak of COVID -19 pandemic and when this occurred i n 2020, there was no
provision to cater for the adjustments caused by the pandemic and this caused a great impact
to the company in terms of revenue, profits and production. Both the company and the
stakeholders were affected. The company had just introduc ed a new strategy that had not
operated for a short term.
In my critical opinion, this is an example of non -compliance by a code of governance of the
United Kingdom. Anon -compliance is critically understandable by the way the strategy was
CORPORATE GOVERNANCE AND ETHICS 20
changed in 2019 b efore the end of 5 years that were to end in 2020 in which the company
was expecting to fulfil its goal.
Critical explanation of how the financial performance, strategy and shareholder wealth
creation is linked with CEO remuneration.
According to financial performance, the company revenue increased while the CEO
remuneration decreased per year. By this, the financial performance is not linked with the
CEO remuneration because it would be expected to increase as revenue increases becaus e it
is the extra time that is given by the CEO that leads to higher profits.
Considering the strategy, it is linked with the CEO remuneration because the goal of the
company if for growth and in order to achieve it, it has to put incentives for the CEO to work
extra hours. That is why in the year of 2019 it had to change its strategy in order to meet its
set goal s of being the highest and key manufactures of the best products for a set built kind of
environment. Furthermore, shareholder wealth creation, fo r the past four years it has been
decreasing and when compared with the CEO remuneration, it is linked with the CEO
remuneration because it is proportional to the decrease in equity. The lower the equity, the
lower the CEO remuneration. As total change in equity decreases, the CEO remuneration also
decreases which indicates a link between the shareholder wealt h creation and CEO
remuneration .
Conclusion
In a nutshell, the portfolio presents Marshalls Plc as the company used for this module. The
screenshots t aken are for the past five years report of the company. The company is a UK
based whose best goal is being the key of UK as a manufacturer of different products of built
environment. The board presented consists of executives, independent non -executives an d
non -executives. This board conducts the work of preparing the reports of the company each
CORPORATE GOVERNANCE AND ETHICS 21
year which contain the company performance, strategy, income statements and balance sheets
of the company for each year. The stakeholders of the company benefit fro m the company
and the company also benefit from them.
Four issues of the company have been discussed and critical reflections about these issues
have been given. Some of the issues discussed are examples of compliance on the governance
code of UK which is cooperating . These are based upon the UK Corporate Government Code
2018. The Shareholder wealth creation is obtained from consolidated statements of changes
in equity for each year for five years. The CEO remuneration that was considered is for 2020
and 20 21. This shows the salary, and other incentives that are given to the CEO. The
financial performance of the company is obtained from the annual reports and accounts for
the years from 2017 to 2021. The financial performance is linked to the strategy apart from
the strategy that was made for 2020 because there was a breakout of COVID -19 pandemic
which interrupted the operation of the company. The company set the first strategy for five
years and it worked for three years and they changed in 2019 to another s trategy in order to
fulfil their goal. This coursework has been obtained from the past five year annual reports and
accounts that were prepared by the board of the company.
CORPORATE GOVERNANCE AND ETHICS 22
References
Marshalls Plc. (20 17). Annual Report and Accounts
Marshalls Plc. (20 18). Annual Report and Accounts
Marshalls Plc. (20 19). Annual Report and Accounts
Marshalls Plc. (20 20). Annual Report and Accounts
Marshalls Plc. (2021). Annual Report and Accounts

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