Ron Marsh


I am delighted to present the Polypipe 2016 Annual Report and Accounts following a record year for the Group. Despite the economic and political uncertainty in the weeks and months following the EU Referendum in June 2016, our end markets continued to perform well, with the Group growing UK revenue considerably ahead of the UK construction market and delivering significantly improved profits. As well as managing this growth, the Group has also completed a number of key projects in the period, most notably successfully commissioning our new £3.6m manufacturing plant in the Middle East, and completing the integration of our newly acquired Nuaire business into the Polypipe Group. Martin Payne joined the Board as Chief Financial Officer in May 2016, with a seamless transition following Peter Shepherd’s retirement. The Group achieved a further notable milestone in the year with promotion to the FTSE 250 index on 29 January 2016.


Performance throughout 2016 has been very strong with a 23.8% increase in revenue or 9.1% on a like for like basis excluding acquisitions and at constant currency. UK like for like revenue growth of 10.5% was significantly ahead of the market and resulted from strong growth in the UK Commercial and Infrastructure sector and improving performance in the UK Residential sector in the second half of the year. This like for like growth together with a full year contribution from our Nuaire acquisition which continues to perform to expectations, resulted in UK revenue growth of 25.3% overall. Underlying operating margins improved further to a record 15.9% and underlying diluted earnings per share increased by 28.9% to 25.0p. Another year of strong cash generation saw the Group beat its net debt target, delivering on our commitment to deleverage after the Nuaire acquisition in August 2015.


We have again maintained our dividend policy and I am pleased to recommend a final dividend of 7.0 pence per share making 10.1 pence per share for the year ended 31 December 2016, a 29.5% increase on the prior year.


During 2016 the key objectives of the Board were:

  • Developing our ventilation business while realising synergies in our integration of Nuaire into the Group
  • Commencing manufacturing in the Middle East region
  • Prioritising selected development and acquisition opportunities, whilst the Group rapidly reduces leverage
  • Launch a long-term incentive programme (LTIP) for senior managers to align their interests with those of shareholders

Excellent progress was made against these objectives during 2016.

In addition to our ongoing initiatives, in 2017 our attention will be focussed upon:

  • Targeting investment to support the continued growth of our main businesses
  • Continued investigation of acquisition opportunities
  • Investigation and development of new export markets


The outstanding effort and commitment of our employees continues to be the primary driver of the Company’s success and their hard work has resulted in our record performance during 2016. I have been able to spend time visiting sites and meeting employees at our UK and European production facilities and continue to be impressed by the knowledge and enthusiasm of our people across the Group. Managing those facilities effectively is critical to the success of the Group, and it is clear to me that the strength in depth of our senior management is a key differentiator, with each business unit being managed by enthusiastic, focussed and experienced management teams. Our track record of filling a good balance of our vacancies from within is evidence of our investment into the development of our employees at all levels and this breadth and depth of expertise and experience leave us well placed to support business growth for the longer term.

Peter Shepherd retired at the 2016 AGM having been Group Chief Financial Officer during its prior ownership and transformation into a public company.

I would like to record both the Board’s and my own personal thanks to Peter for his significant contribution to making Polypipe the successful Group that it is today, and wish him well in his retirement. Martin Payne was appointed Group CFO following Peter’s retirement and both I and my Board colleagues have been impressed and encouraged by the significant impact he has made in a relatively short period of time, at the Board table, within the Group businesses, and with advisers and shareholders. His personal qualities and extensive experience in manufacturing and building materials together with his plc experience give me confidence that he can contribute significantly to the continued growth and success of Polypipe in the future.

The Group issued invitations to join a second SAYE scheme during the year which was well received, resulting in 38% of our employees investing in the Company through the scheme. I was particularly pleased to note the excellent take up within Nuaire of 37%, which is a good indicator of the strength of commitment from the employees within this newly acquired company, suggesting to me that there is already a good level of understanding and support of the Group’s overall objectives.


Once again, the Group has made significant progress during 2016 on all fronts. The excellent revenue performance in the year is testament to the strength of the growth drivers on which the Group’s strategy is based, namely legacy material substitution, tailwinds from both water management and carbon reduction legislation, and development of selective export markets. With a focus on investment into engineered solutions to meet those needs, a strong and dedicated senior management team, committed workforce, and a clear strategy, I am confident that the Group will continue to thrive during 2017.

Ron Marsh