2019 Full Year Results Presentation 10th March 2020 Daksh Gupta Chief Executive Officer Richard Blumberger Chief Financial Officer
New Audi RS Q8 2
Agenda • 2019 and 5 year key highlights, and market overview – Daksh Gupta • Financial review – Richard Blumberger • Update on business initiatives, strategy, 2020 outlook and summary – Daksh Gupta • Q&A 3 2
2019 and 5 year key highlights, and market overview Daksh Gupta Chief Executive Officer
Strong track record since IPO provides solid platform for growth Continual Strong M&A Strong organic Continual focus National investment in track record growth and on portfolio footprint retailing consistent £160m+ invested management excellence, 28 counties (2015: 16) market SG Smith, Ridgeway Leasing, non-core and 132 operating units technology and outperformance and 20 additions in sub-scale exits (2015: 76) online presence 2019 £24.9m Revenue Continuing 5 years ranked returned to Over £100m growth of underlying PBT in UK’s best shareholders invested into 217% to up 246% to workplaces in dividends * £2.3bn the portfolio £22.1m Driving customer Equating to 31.96p per satisfaction 16.7% CAGR 19.8% CAGR share * 2019 dividend to be approved by shareholders at 2020 AGM 4 5 5
Another year of strong like-for-like outperformance against the market A D J U S T E D GROSS OPERATING TOTAL PBT ** REVENUE * N E T PROFIT % * PROFIT* L E V E R A G E D E B T * * * £2,209.6m +2.2% 11.4% -17bps £33.1m -4.1% £22.1m -10.8% £30.6m 0.72x 2018: £2,161.5m 2018: 11.6% 2018: £34.5m 2018: £24.7m 2018: £5.1m 2018: 0.12x NEW RETAIL AFTERSALES DIVIDEND FLEET UNITS * USED UNITS * REVENUE * MAINTAINED UNITS * -2.2% +4.5% +6.1% +3.2% Final FYR 5.69p 8.54p market -3.2% **** market -1.7% **** market -0.1% **** * Like-for-like (includes group businesses or activities that have been active or trading for a period of 12 consecutive months and excludes businesses or activities that do not have 12 months trading activity); ** Continuing operations underlying; *** Throughout the presentation adjusted net debt is 5 6 a non GAAP measure that excludes IFRS 16-related lease liabilities; **** SMMT registrations which includes impact of dealer self-registration activity
2019 key highlights • Record revenue of £2.3bn, with fifth successive year of like-for-like growth since IPO of 2.2% to £2.2bn • Strong like-for-like outperformance against the market for total new units, new retail units, new fleet units and used units • £31.6m invested in 20 new businesses through 8 acquisitions or start-ups • Marshall is now the largest partner for Volkswagen Group in the UK, adding 5 Volkswagen passenger car franchises, 2 Volkswagen commercial vehicle franchises and 7 ŠKODA franchises. The Group is now the largest partner for each of these brands by number of sites • Acquired 2 Honda franchises in Reading and Newbury, taking our representation to 8 locations and reinforcing our number 2 position with the brand Extended our relationship with Volvo by adding 9 th franchise, cementing our number 1 position with the • brand • Continued investment in our portfolio – £15.2m in the year * • Full year dividend maintained at 8.54p per share • Ranked as one of the UK’s best workplaces for the 5th consecutive year – recognised with coveted laureate award * Excluding freeholds from acquisitions 7 6 5
New car market update BMW Concept 4 Series Coupé 8
Despite new car market decline, MMH grew like-for-like volumes UK Market UK NEW CAR REGISTRATIONS (m) • 2.31m new cars registered in 2019, down 2.4% • Retail down 3.2%, fleet / business down 1.7% • Registrations by fuel type: 2.5 • Diesel down 21.8% (25.2% share) • Petrol up 2.2% (64.8% share) • AFVs up 20.6% (7.4% share) 2.0 • BEVs up 144.0% (1.6% share) • Fines introduced under CAFE regulations in 2020 1.5 • As a result, December 2019 experienced some pull-forward • Latest SMMT forecast for full year 2020 -2.6% to 2.25m • Increased VED and company car tax from April 2020 1.0 MMH 0.5 • Despite declining markets, MMH outperformed the total new car market, as well as new retail and fleet units, an excellent result • Like-for-like total new unit sales up 0.3% 0.0 • Like-for-like new retail unit sales down 2.2% • Like-for-like fleet unit sales up 4.5% • Strong like-for-like margin growth to 7.4%, +27bps AFV Petrol Diesel • PCP remains popular with 80% of new car finance cases (2018: 81%), 83,268 Live PCPs (2018: 69,429) Source: SMMT 9 7 6
Used car market update New Ford Mustang Mach-E 10
Market outperformance delivering record result UK USED CAR MARKET (m) UK Market • 2019 used car transactions down -0.1% to 7.9m 9.0 • Q2 saw residual value pressures driven by a 8.0 combination of factors • H2 residual value stabilisation 7.0 • 2020 full year forecast down -1.4% 6.0 MMH 5.0 • Record used unit sales performance • Like-for-like used unit sales up 6.1% 4.0 • Like-for-like revenue up 5.3% 3.0 • Like-for-like margin down 47bps to 6.7% • Continued 56 day stocking policy and use of data / 2.0 technology through ‘Phoenix 2’ remain key differentiators 1.0 • PCP penetration of used finance cases stable at 63% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (2018: 63%) Source: SMMT and Cox Automotive 11 8 7
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Aftersales continues to remain resilient UK Market • 34.3m passenger vehicles in UK * UK PASSENGER VEHICLE PARC (m) 35 • 40.1m including commercial vehicles 34 33 • 2019 new car market down -14.2% on 2016 peak 32 • Decline in segment 1 (vehicles 0 - 3 years old) 31 30 • Lower new car sales volumes resulted in less pre 29 delivery inspection work 28 27 • Lower warranty work in certain brands 26 MMH 25 14 15 16 17 18 19* • Like-for-like aftersales revenues up 3.2% • Further investment in resource to drive aftersales • New Aftersales Director joined Operating Board 34.3m 1.6% • Increase in new and used car PCP increasing segment 2 and 3 penetration Passenger CAGR 6 year vehicles in UK * growth * Source: Department for Transport Q3 2019 13 9
Financial review Richard Blumberger Chief Financial Officer
2019 key financials • Record revenue of £2.3bn, with fifth successive year of like-for-like growth since IPO up 2.2% to £2.2bn • Strong like-for-like outperformance against the market for total new, new retail, new fleet and used units • Gross margin remains strong at 11.4%, marginally down • Continued disciplined cost management, like-for-like operating expenses up 1.5%, or 1.8% excluding lease disposal • Reported underlying PBT of £22.1m, down by 10.8% against last year’s record result, reflecting difficult market conditions and after absorbing losses of recent acquisitions • Strong balance sheet with £202.3m of net assets, £2.59 per share • £124.9m of freehold land and buildings • Adjusted net debt £30.6m, driven by acquisitions, capital expenditure and the working capital impact of strong fleet volumes at the end of the year • £31.6m on acquisitions, including 7 ŠKODA retail centres, 5 Volkswagen passenger cars, 2 Honda, 1 Volvo • £15.2m capital expenditure • Full year dividend 8.54p per share, in line with prior year 15 11 5
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Strong organic and acquisitive revenue growth Reported (£m) 2019 2018 Var • Revenue benefitted from acquisitions and strong organic growth Revenue 2,276.1 2,186.9 4.1% Underlying PBT 22.1 24.7 (10.8%) • EPS down due to lower profit and higher effective tax rate Reported PBT 19.6 18.0 8.9% • Return on capital employed Underlying EPS 22.9 26.3 (12.9%) impacted by loss making acquisitions (184 bps) ROCE 10.9% 12.8% Like-for-like (£m) 2019 2018 Var Revenue 2,209.6 2,161.5 2.2% • Pleasing organic like-for-like growth in revenue Gross profit 252.3 250.4 0.8% • Gross profit increase by 0.8% Gross profit % 11.4% 11.6% (17bps) • Gross profit % marginally down Operating expenses (219.3) (215.9) (1.5%) Operating profit 33.1 34.5 (4.1%) ROS 1.5% 1.6% (10bps) 12 17 11
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Like-for-like outperformance in all segments Like-for-like 2019 2018 Var mix * mix * • New retail turnover per unit revenue (£m) impacted by fleet mix 46.8% 1,060.2 New 1,056.7 (0.3%) 48.1% • Increased used to new retail car Used 951.0 903.4 5.3% 42.1% 40.9% ratio, 1.60:1 (2018: 1.47:1) AFS 250.1 242.3 3.2% 11.1% 11.0% • Growth in both service and parts drive 3.2% increase in aftersales Other (48.2) (44.4) revenue Total 2,209.6 2,161.5 2.2% Like-for-like 2019 2018 Var SMMT 2019 unit sales New retail 28,047 28,666 (2.2%) New retail (3.2%) Fleet 17,994 17,217 4.5% New fleet (1.7%) New 46,041 45,883 0.3% New total (2.4%) Used 44,752 42,177 6.1% Used (0.1%) Total 90,793 88,060 3.1% * Excludes internal sales 13 19 12
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