Marshall Motor Holdings plc 2017 Full year results presentation - - PowerPoint PPT Presentation

Marshall Motor Holdings plc

2017 Full year results presentation March 2018

INTRODUCTION

2

AGENDA

• Full year Highlights
• Financial Overview
• Operating and Strategic Review
• Current Trading and Outlook
• Summary

3

2017 HIGHLIGHTS – ANOTHER RECORD TRADING RESULT

• Record results at both Revenue and PBT level
• Revenues +19.5% (LFL +3.5%), Underlying PBT £29.1m +14.4%
• Final dividend 4.25p per share, full year 6.40p (+16.4%)
• Net debt £2.2m, (2016: £119.0m)
• Net assets of £191.2m (2016: £145.7m), £2.47 per share (2016: £1.88)

FINANCIAL SUMMARY

• LFL Revenues: New +1.0%, Used +7.0%, Aftersales +2.3%
• Retail LFL new units down 2.6% versus market down 6.8%
• Used LFL units excellent performance +5.2% versus market down 1.1%
• Retail underlying PBT of £34.9m +20.8%

OPERATIONAL OVERVIEW

• Strategic disposal of Marshall Leasing for gross consideration of £42.5m
• Q4 closure programme
• Portfolio investment on track, £116.3m of freehold property (2016: £106.5m)

STRATEGIC DEVELOPMENTS

• Board remains cautious given continued economic and political uncertainty
• Q1 trading in line with our expectations
• Our outlook for the full year remains unchanged

TRADING UPDATE

4

FINANCIAL OVERVIEW

5

FIVE YEAR TRACK RECORD OF STRONG GROWTH

Class Leading Returns

250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2013 2014 2015 2016 2017

REVENUE (£m)

1,085.9 1,232.8 1,899.4 2,268.9

5 10 15 20 25 30 2013 2014 2015 2016 2017

UNDERLYING PBT (£m)

Discontinued Continuing

3.8 3.9 4.9 4.9 3.7 6.4 9.2 10.9 20.5 25.4

25 50 75 100 125 150 175 200 2013 2014 2015 2016 2017

NET ASSETS (£m)

60.7 66.2 145.7 129.9 191.2

CAGR 24.6% Total CAGR 29.9%

940.5

6

FINANCIAL SUMMARY

Variance % FY 2017 FY 2016 Total Continuing Operations Revenue (£m) 2,268.9 1,899.4 19.5% 20.0% Gross Profit % 11.7% 11.6% +8bps +17bps Underlying Operating Profit (£m) 37.2 32.3 15.1% 23.4% (%) 1.6% 1.7%

• 6bps

+4bps Finance Costs (8.1) (6.9) 17.3% 22.2% Underlying PBT (£m) 29.1 25.4 14.4% 23.7% Non underlying items 24.1 (3.2) Reported PBT (£m) 53.1 22.2 Underlying Effective Tax Rate % 18.1% 20.3% Underlying EPS 30.8p 26.2p Dividend Per Share 6.40p 5.50p Reported Net Debt (£m) 2.2 119.0

Class Leading Returns

7

NON UNDERLYING ITEMS

8

Class Leading Returns

(£m) FY 2017 FY 2016 (Profit) on disposal of subsidiary (36.9)

• Post retirement benefits charge

6.0

• Acquisition costs
• 2.2

(Profit) on disposal of business assets

• (0.3)

Amortisation of acquired order book

• 0.8

(Gain) on interest swap termination

• (0.3)

Restructuring costs 6.8 1.6 Investment property fair value

• (0.7)

Total Non Underlying items (24.1) 3.2

SEGMENTAL RESULTS

Segmental Revenue (£m) FY 2017 FY 2016 Var Retail 2,231.7 1,859.7 20.0% Leasing (discontinued) 37.0 39.3 (6.0%) Unallocated 0.3 0.3 (12.1%) Total 2,268.9 1,899.4 19.5% Segmental Underlying PBT (£m) FY 2017 FY 2016 Var Retail 34.9 28.9 20.8% Leasing (discontinued) 3.7 4.9 (24.4%) Unallocated (9.5) (8.4) (13.6%) Total 29.1 25.4 14.4%

Continuing operations* 25.4 20.5 23.7%

Class Leading Returns

9

* Continuing operations excludes Leasing segment which was disposed in November 2017

RETAIL: REVENUE AND VOLUMES

Revenue (£m) FY 2017 FY 2016 Var % LFL Var% New 1,166.5 983.3 18.6% 1.0% Used 869.7 718.3 21.1% 7.0% Aftersales 243.1 202.6 20.0% 2.3% Internal (47.6) (44.5)

• Total

2,231.7 1,859.7 20.0% 3.5% Unit Sales FY 2017 FY 2016 Var % LFL Var % New 31,801 28,321 12.3% (2.6%) Fleet 21,507 20,563 4.6% (13.9%) Total New 53,308 48,884 9.0% (7.5%) Used 44,237 37,787 17.1% 5.2% Total 97,545 86,671 12.5% (2.2%)

Class Leading Returns

10

RETAIL: GROSS PROFIT

Class Leading Returns

68.9 84.1 2 4 6 8 10 12 14 16 10 20 30 40 50 60 70 80 90 100 2016 2017

NEW

2016 2017 Mix Gross Profit % 32.5% 32.6% 2016 2017 Mix Gross Profit % 23.9% 23.2% 2016 2017 Mix Gross Profit % 43.6% 44.2%

50.7 59.9 2 4 6 8 10 12 14 16 10 20 30 40 50 60 70 80 90 100 2016 2017

USED

92.3 114.0 36 38 40 42 44 46 48 50 52 5 15 25 35 45 55 65 75 85 95 105 115 2016 2017

AFTERSALES / OTHER

Gross Profit (£m) Gross Profit (%)

11 % % % £m £m £m

BALANCE SHEET

(£m) 2017 2016 Intangible 121.6 122.0 Property, Plant & Equipment 142.4 201.8 Other 2.6 2.6 Total non current assets 266.7 326.5 Inventory 401.3 380.0 Trade / Other Receivables 92.1 95.1 Assets held for sale 0.8

• Cash & Equivalents

4.9 0.1 Current Assets 499.0 475.2 Trade / Other Payables (531.9) (504.8) Leasing Debt (discontinued)

• (64.5)

Bank / Other Debt (7.1) (54.6) Other Liabilities (35.5) (32.0) Total Liabilities (574.5) (656.0) Shareholders’ Equity 191.2 145.7 Reported Net Debt (£m) 2.2 119.0

Class Leading Returns

12

Trade / Other Payables 2017 2016 Vehicle and other funding 380.6 364.7 Other Payables 151.3 140.1 Total 531.9 504.8 Property, Plant & Equipment 2017 2016 Freehold Land and Buildings 116.3 106.5 Leasehold Improvement 12.6 11.6 Plant and Equipment 13.6 13.4 Total continuing 142.4 132.1 Leasing (discontinued)

• 69.7

Total 142.4 201.8

CASHFLOW

(£m) 2017 2016

EBIT 61.2 29.1 Depreciation: Retail 8.9 5.8 Depreciation: Leasing* 16.0 17.3 Amortisation 0.3 1.1 Other movements (35.9) 0.3 Adjusted EBIT 50.5 53.6 Working Capital 19.1 38.3 Operating Cashflow 69.6 91.9 Tax / interest (15.5) (11.6) Gross Cashflow 54.1 80.3 Capital Expenditure: Retail (22.8) (26.4) Capital Expenditure: Leasing* (34.7) (35.5) Sale of business / disposal proceeds 56.7 14.6 Free Cashflow 53.2 33.0 Acquisitions (net of cash acquired) (0.1) (94.5) Dividends (4.5) (3.3) Net Borrowings (43.8) 40.8 Cashflow 4.8 (24.0)

13

Class Leading Returns

Working Capital

2017 2016

Inventory (21.2) (14.8) Trade and other receivables 0.5 (0.3) Trade and other payables (inc stock funding) 33.7 56.3 Other 6.1 (2.9) Total 19.1 38.3 Other non cash movements

2017 2016

Share based payments 0.7 1.3 Loss / (profit) on disposal of Property Plant and Equipment 1.1

• Impairment of Property Plant and Equipment

1.0

• Profit on disposal of Subsidiary

(38.7)

• Increase in fair value on Investment Properties
• (0.7)

Profit on disposal of Dealership

• (0.3)

Total (35.9) 0.3

* discontinued

FINANCIAL GUIDANCE: 2018

• Single segment disclosure following Leasing disposal
• Continued New, Used and Aftersales disclosure
• Continuing PBT- H1 reduced weighting v 2017
• Retail capex 2018 c.£26m
• £75m 2016-2018 programme completes
• Interest charge reducing to c.£7.0 - £7.5m following leasing disposal
• Full year effective tax rate 20-21%

14

Class Leading Returns

OPERATING & STRATEGIC REVIEW

15

UK MARKET BACKDROP

Source: New vehicles SMMT; Used vehicles – Experian 2010-2014; SMMT 2015-2017

16

• 2.54m new units registered in 2017 -5.7%
• Retail -6.8%, Fleet / Business -4.7%
• Q1 2017 +6.2%, driven by VED pull forward, declined thereafter
• 3rd largest market on record
• Premium brands continue to grow market share: c.35%
• Sales by fuel type:
• Petrol +2.7%, 53.3% share
• Alternate Fuel Vehicles +34.8%, 4.7% share
• Diesel -17.1%, 42.0% share
• 2018 SMMT forecast -5.8%
• February YTD -5.1%,
• 2017 VED impact - March +8.4%, April -19.8%
• Used market robust - 3.2x new market
• PCP continues to remain popular
• 83% of new car finance cases (FY‘16 84%)
• 58% of used car finance cases (FY‘16 55%)
• 67,458 live PCPs (FY16 58,000)

0.0 0.5 1.0 1.5 2.0 2.5 3.0

'10 '11 '12 '13 '14 '15 '16 '17 '18FC

UK NEW CAR REGISTRATIONS (m)

1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

'10 '11 '12 '13 '14 '15 '16 '17

UK USED CAR MARKET (m)

• 1.7
• 1.2
• 0.7
• 0.2

0.3 0.8

STRENGTH OF MMH BALANCED PORTFOLIO

17

Not current MMH Brand partner MMH Brand partner

Dec 2017**

9 8 3

• 2

9 8 2 1

• 5

4 5 6 8 1 4 6

• 3
• 4

4 Mercedes- Benz VW Passenger SEAT Toyota Kia Audi Land Rover Nissan Hyundai Suzuki SKODA Mini BMW Jaguar Volvo Maserati Smart Honda Mazda DS Jeep Citroen Peugeot Renault Fiat Ford Vauxhall

*Manufacturers shown for all MMH current or past partners or those with market share >1 ** excludes commercial vehicle sites.

Market share Growth (%)

• Total brands shown represent 95.9% of the UK market
• MMH current UK Brand coverage: 81.7% (2016: 80.6%)
• The Group intends to maintain its balance of Volume, Alternate Premium and Premium Brands

Market Share Growth by Brand 2017 Vs 2016*

MMH GEOGRAPHIC FOOTPRINT 2008

16.3% Prestige 18.6% Alt Premium 65.1% Volume

• East Anglian centric – 6 counties
• No OEM relationships with scale
• No German brands

0.0% Specialist 18

MMH GEOGRAPHIC FOOTPRINT 2018

1.0% Specialist 49.5% Prestige 25.7% Alt Premium 23.8% Volume

• 101 Franchises across 26 counties
• 16 other standalone operating units
• Headroom for further growth

19

20 RESIDUAL VALUE OWNERSHIP CYCLE AFTERSALES OPPORTUNITY

• 83% of financed cases PCP
• Service plan retention
• High renewal rates
• 58% of financed cases PCP
• Retention of customers who

historically went to independents

• Good renewal rate
• pportunity
• 3rd opportunity; continued

retention of customer

• Anticipated HP agreement
• Retention through warranty
• RV exposure mitigated

SEGMENT 1 (0-3 YEARS) SEGMENT 2 (3-6 YEARS) SEGMENT 3 (6-9 YEARS)

Customer 1 Customer 2 Customer 3

83% 58%

AGE 100% 50% 0%

MARKET BACKDROP – RETENTION BENEFITS OF PCP MODEL

Source: Internal Management Information

MARKET BACKDROP - UK VEHICLE PARC

21 25.0 27.0 29.0 31.0 33.0 35.0

'13 '14 '15 '16 '17*

UK PASSENGER VEHICLE PARC (m)

• 34.5m passenger vehicles in UK
• >39m including commercial vehicles
• Continued levels of growth due to strength of new

car market in recent years

• MMH portfolio well positioned due to brand partner

performance

• Aftersales opportunity
• High customer retention rates
• Increased segment 2 and 3 opportunity due to PCP
• Over 77,000 live service plans

34.5m

Passenger vehicles in UK

7.8

Years old on average

2.0%

CAGR 5 year growth

Source: SMMT *2017 SMMT estimate

TO BE THE UK’S PREMIER AUTOMOTIVE RETAIL GROUP

VISION

Class Leading Returns Customer First Retailing Excellence People Centric Strategic Growth

22

Customer First

CONTINUED HIGH LEVELS OF CUSTOMER ADVOCACY

17,807

respondents in 2017

155,608

customers surveyed

90%

showroom satisfaction

42.0%

customers returning

• r recommended

Source: Internal Management Information

23 25 30 35 40 45 50

Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Returning/ recommended customers (Rolling 12 months)

RETAILING EXCELLENCE ONLINE

24

Retailing Excellence

Source: Google analytics, internal management information *Hitwise December 2017 franchised dealers

www.marshall.co.uk

• 5th most visited dealer group website in the UK*
• December 2017 - 641,000 visits
• Group reaping rewards of enlarged scale
• Over 57,000 valuation requests online
• 10.1% conversion
• 5,838 sales – 3:1 Used to New ratio

>6.13m visits

+46.5%

>21.0m page views

+18.4%

11,707 Live chats

+25.1%

>6,000 vehicles

Available to view online

SECTOR LEADING SOCIAL MEDIA

25

Retailing Excellence

• Strong growth across all key platforms
• Key benefits of social media presence
• Online reputational management
• Significantly increased outreach of website
• Extend customer trust online

Sector Leading Social Media

• Winner - “Best use of social media”
• Winner – “Best digital initiative”
• Highly commended – “Social media award”
• Winner – “Highest climber in the social media top 200”
• Winner – “Social media user of the year”
• Winner – “Best social media campaign of 2017”
• Winner – “Social media user of the year”

39,503 Followers

+16.3%

104,017 Likes

+29.4%

6,703 Followers

+51.1%

PEOPLE CENTRIC CULTURE

People Centric

78%

Trust Index

76%

participation rate

22nd

Best UK workplace

8 Years

Running GPTW status

Ridgeway

1st Score

76% SG Smith 2nd

Score 77% (+19%)

No.1

Automotive employer

• Sales Executive recruitment scheme update:
• Industry leading initiative launched May 2016
• Designed to reduce turnover and attract new

talent to the sector

• £25k guaranteed earnings in first year
• Residential course
• Retention bonuses in years 1-3
• Significant reduction to sales executive turnover
• Significant increase in new talent to the industry
• Increase in female sales executives
• 342 attendees through 29 new starter courses with

Marshall Academy

26

MMG PORTFOLIO DEVELOPMENT

EXITS

EXIT OF 36 NON-CORE, SUBSCALE OR LOSS MAKING OPERATIONS

1ST

GERMAN BRAND ADDED MERCEDES

• BENZ

2ND

GERMAN BRAND ADDED VOLKSWAGEN

3RD

GERMAN BRAND ADDED AUDI

4TH

GERMAN BRAND ADDED BMW MMH LISTS ON THE LSE

1 TRANSACTION 2 TRANSACTIONS 2 TRANSACTIONS 2 TRANSACTIONS & 1 START-UP * 2 TRANSACTIONS RIDGEWAY 3 TRANSACTIONS & 1 START-UP * 1 TRANSACTION & 1 START-UP

*Start-up

2010 2011 2012 2013 2014 2015 2016 2017

CORPORATE ACQUISITIONS / STARTUPS

2 TRANSACTIONS & 4 START-UPS * * *

2009

STRATEGIC EXIT FROM MARSHALL LEASING

Strategic Growth

27

STRATEGIC GROWTH – DEVELOPMENTS / CAPEX

Strategic Growth

28

• Upgrade and refurbishment across 14 sites
• 2 major relocations in H2
• Exeter Audi - £7.8m total investment
• Newbury Jaguar Land Rover - £10.9m investment
• All developments completed on time and on budget
• Investment across every Brand Partner in last 24 months
• Capex program significantly reduces after 2018
• £116.3m of freehold / long leasehold property

Cambridge Volvo Newbury Jaguar Land Rover Reading Skoda Exeter Audi Salisbury BMW

CURRENT TRADING AND OUTLOOK

• Whilst early, March new car order bank building as anticipated
• Given political and economic uncertainty, Board continues to remain cautious
• Q1 trading to date in line with our expectations
• Our outlook for the full year remains unchanged

29

SUMMARY

• Another market outperforming set of record results
• Strong LFL performance with all revenue streams growing
• Full year dividend 6.40p +16.4%
• Strategic disposal of Leasing
• Debt effectively eliminated
• Balance Sheet very strong – net assets per share £2.47 (2016: £1.88)
• Right strategy, right brands and right markets
• Well positioned to take advantage of future opportunities and market

developments

30

Marshall Motor Holdings plc

2017 Full year results presentation

INVESTMENT HIGHLIGHTS

81.7%

brand coverage

Strong

balance sheet position essentially debt free

£116.3m

freehold and long leasehold assets

Sector Leading

Social media strategy

Balanced

brand portfolio

7th

largest UK dealer group with £2.3bn revenue

Excellent

financial track record

Diverse

geographic footprint

• No. 1

Automotive employer in UK*

A1

* Based on the Great Place To Work Institute 2017 rankings

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 2013 2014 2015 2016 2017

Underlying EBITDAR ROS %

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 2013 2014 2015 2016 2017

Underlying Operating Costs %

APPENDIX: 5 YEAR TRACK RECORD

0.0% 0.3% 0.6% 0.9% 1.2% 1.5% 1.8% 2013 2014 2015 2016 2017

Underlying EBIT ROS %

0.0% 2.5% 5.0% 7.5% 10.0% 12.5% 15.0% 2013 2014 2015 2016 2017

Gross Margin %

A2

2.4 2.4 2.4 2.6 2.6 1.5 1.4 1.3 1.7 1.6 11.8 11.6 12.1 11.6 11.7 10.3 10.2 10.8 9.9 10.0

APPENDIX: 5 YEAR TRACK RECORD (cont)

Gross Profit % Gross Profit (£m)

32.9 39.3 45.7 68.9 84.1 6.0% 6.5% 7.0% 7.5% 8.0% 20 30 40 50 60 70 80 90 2013 2014 2015 2016 2017

NEW

24.1 27.7 33.3 50.7 59.9 6.0% 6.5% 7.0% 7.5% 5 15 25 35 45 55 65 2013 2014 2015 2016 2017

USED

48.7 50.5 56.9 92.3 114.0 37% 39% 41% 43% 45% 47% 49% 30 40 50 60 70 80 90 100 110 120 2013 2014 2015 2016 2017

AFTERSALES

£ £ A3

APPENDIX: MARKET BACKDROP

Source: SMMT/ Experian

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 3.0 08 09 10 11 12 13 14 15 16 17

NEW CAR MARKET (MILLION VEHICLES)

0.0 0.6 1.2 1.8 2.4 3.0 3.6 4.2 4.8 5.4 6.0 6.6 7.2 7.8 8.4 9.0 08 09 10 11 12 13 14 15 16 17

USED CAR MARKET (MILLION VEHICLES)

A4

1.9 2.0 1.9 2.1 2.7 2.6 2.5 2.3 2.0 6.5 6.6 6.7 6.7 7.1 8.1 8.2 7.6 7.0 6.7 2.5

5K 10K 15K 20K 25K 30K 35K 40K 45K 50K 55K 08 09 10 11 12 13 14 15 16 17 NEW VEHICLES 0K 3K 6K 9K 12K 15K 18K 21K 24K 27K 30K 33K 36K 39K 42K 45K 08 09 10 11 12 13 14 15 16 17 USED VEHICLES

APPENDIX: MMH VOLUMES

CAGR 17.8% CAGR 15.0%

Source: Management information

A5

27 25 20 16 13 53 49 35 31 23 19 17 14 13 44 28 26 38 12 17

DISCLAIMER

• This document comprises the written materials/slides for a presentation concerning Marshall Motor Holdings plc (the “Company”)

and its results for the period ended 31 December 2017 (the “2017 Results”).

• By reviewing this presentation you agree to be bound by the conditions set out below.
• No reliance may be placed for any purposes whatsoever on the information in this document or on its completeness. The

presentation is intended to provide a general overview of the Company’s business and does not purport to deal with all aspects and details regarding the Company. Accordingly, neither the Company nor any of its respective directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance may be placed

• n, the fairness, accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither

the Company nor any of its respective directors, officers, employees or advisers nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith.

• Certain statements in this presentation regarding the Company are or may be forward-looking statements. These forward-looking

statements are neither historical facts or guarantees of future performance. Such statements are based on current expectations and belief and, by their nature, are subject to a number of known and unknown risks and uncertainties which may cause the actual results, prospects and developments of the Company to differ materially from those expressed or implied by these forward-looking statements.

• The information contained in this presentation is for background purposes only. The subject matter of the presentation may be

subject to change and the Company does not take any responsibility for updating or amending the contents to reflect such changes. The material contained in this presentation reflects current legislation and the business and financial affairs of the Company which are subject to change without notice and audit, and is subject to the provisions contained within legislation.

• This presentation summarises information contained in the 2017 Results. Without prejudice to the generality of these conditions, this

summary information, including any views given or implied, or any statement made, in relation to such information should not be relied upon, nor should it be treated as accurate or complete. This presentation and all such information contained herein should be read subject to the 2017 Interim Results.

• The information contained in this presentation has been obtained from Company sources and from sources which the Company

believes to be reliable but it has not independently verified such information and does not guarantee that it is accurate or complete.

• No statement in this presentation is intended to be a profit forecast and no statement in this presentation should be interpreted to

mean that earnings per Company share for current or future financial years would necessarily match or exceed the historical published earnings per Company share.