Marshall Motor Holdings plc Interim Report & Accounts Six months ended 30 th June Daksh Gupta CEO Mark Raban CFO

Transcription

1 Marshall Motor Holdings plc Interim Report & Accounts Six months ended 30 th June 2018 Daksh Gupta CEO Mark Raban CFO

2 INTRODUCTION DAKSH GUPTA CHIEF EXECUTIVE OFFICER

3 AGENDA Highlights Financial review Operational review Outlook Summary 3

4 HIGHLIGHTS * Continuing underlying PBT of 16.4m marginally up on previous record result (H1 2017: 16.2m) Like-for-like retail unit sales down 5.9% Like-for-like used unit sales broadly flat, revenue up 5.2%, gross margin up 37bp to 7.2% Like-for-like aftersales revenue up 3.2% Continuing gross margin maintained at 11.5% (H1 2017: 11.5%) Net underlying operating expenses down 0.3% Net cash 0.9m following Leasing disposal (30 June 2017: Net debt 101.1m) Net assets of 201.2m, 2.58 per share (30 June 2017: 158.0m, 2.04) Strong balance sheet, 121.1m of freehold / long leasehold property (30 June 2017: 112.5m), 120m RCF extended to June 2021 Interim dividend maintained at 2.15p per share (2017: 2.15p) * All comparatives relate to H

5 FINANCIAL REVIEW MARK RABAN CHIEF FINANCIAL OFFICER

6 FINANCIAL SUMMARY H H Total Variance % Continuing operations Revenue ( m) 1, ,187.4 (2.1%) (0.4%) Gross profit % 11.5% 11.6% -13bps +1bp Underlying operating profit ( m) (12.2%) (0.6%) (%) 1.7% 1.9% -19bps 0bp Finance costs ( m) % 8.5% Underlying PBT ( m) (11.7%) 1.2% Non-underlying items ( m) Reported PBT ( m) Reported effective tax rate (%) 21.0% 22.2% Dividend per share (p) 2.15p 2.15p Reported net cash / (debt) ( m) 0.9 (101.1) 6

7 NON-UNDERLYING ITEMS ( m) H H Var % Continuing underlying PBT % Profit on disposal of subsidiary Profit on disposal of assets classified as held for sale Continuing reported PBT % Discontinued PBT Total reported PBT % 7

8 Class Leading Returns REVENUE AND VOLUMES * Revenue ( m) H H Var % LFL var % New (4.4%) (4.6%) Used % 5.2% Aftersales % 3.2% Internal (22.7) (24.8) Total 1, ,167.9 (0.4%) 0.1% Unit sales H H Var % LFL var % New Retail 15,803 16,902 (6.5%) (5.9%) Fleet 9,396 11,026 (14.8%) (14.5%) New 25,199 27,928 (9.8%) (9.3%) Used 22,659 23,716 (4.5%) (0.3%) Total 47,858 51,644 (7.3%) (5.2%) * Continuing operations 8

9 Class Leading Returns GROSS PROFIT Gross profit ( m) GP% m NEW % m USED % m AFTERSALES / OTHER % H H H H H H Mix % H H Revenue 51.3% 49.3% Gross profit 33.7% 30.6% Mix % H H Revenue 38.4% 40.0% Gross profit 23.4% 25.6% Mix % H H Revenue 10.3% 10.7% Gross profit 42.9% 43.8% 9

10 PROFIT BRIDGE: PBT m Gross profit (0.4) Opex 0.3 m * Underlying PBT on continuing basis 10

11 BALANCE SHEET m H H Intangible Property, plant & equipment Other Fixed assets Inventory Trade / other receivables Cash & equivalents Current assets Trade / other payables (501.6) (521.1) Leasing debt - (65.9) Bank / other debt (6.8) (43.5) Other liabilities (35.6) (28.1) Total liabilities (544.0) (658.6) Shareholders equity Property, plant & equipment H H Freehold/long leasehold Other retail assets Contract rental assets Total Trade / other payables H H Vehicle funding Other Total Reported net cash / (debt) ( m) 0.9 (101.1) 11

12 Class Leading Returns CASHFLOW m H H EBIT Depreciation: retail Depreciation: leasing Share based payments Profit on disposals (0.9) (0.0) Adjusted EBIT Working capital (4.2) 14.7 Operating cashflow Tax / interest (6.1) (8.6) Gross cashflow Capital expenditure: retail (8.8) (12.3) Capital expenditure: leasing - (17.2) Sale of business / disposal proceeds Free cashflow Acquisitions (net of cash acquired) (0.1) (0.1) Dividends (3.3) (2.9) Net borrowings (0.3) (9.7) Other (1.0) - Cashflow Working capital H H Inventory Trade and other receivables (22.0) (5.5) Trade and other payables (inc stock funding) (31.5) 16.2 Other (0.7) (3.2) Total (4.2)

13 Class Leading Returns 2018 FINANCIAL GUIDANCE ITEMS Retail capex 2018 c. 26.0m UNCHANGED Interest charge c. 7.0m 7.5m UNCHANGED Full year reported ETR c.21% UNCHANGED 13

14 OPERATIONAL REVIEW DAKSH GUPTA CHIEF EXECUTIVE OFFICER

15 NEW CARS H1 MARKET UK NEW CAR REGISTRATIONS (m) 1.31m new cars registered in H1, down 6.3% Retail down 4.9%, fleet / business down 7.3% Q1 down 12.4%, Q2 up 2.4% VED F FALLING MARKET SHARE OF DIESEL 50% 45% 40% 35% 30% 25% Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Diesel share Sales by fuel type: Diesel down 30.2% (32.6% share) Petrol up 11.4% (61.9% share) AFVs up 24.2% (5.5% share) Premium brands under pressure due to higher historic diesel content, OEMs rebalancing mix SMMT FY 2018 forecasts: Previous: -5.8% (January 2018) Latest: -4.1% (August 2018) Indicates decline of -1.9% for August onwards Note: July +1.2%, YTD -5.5% Expect market distortions in H2 due to WLTP 2019 forecast: -1.9% Source: SMMT 15

16 NEW CARS MMH PERFORMANCE LFL new unit retail sales down -5.9%, with LFL new unit fleet sales down -14.5%, total new LFL sales down -9.3% Exit of certain low margin fleet business announced in 2017 (daily rental), excluding impact of this total new unit LFL sales down -3.5% Gross margin 7%, down 40 bps, driven by more challenging new market PCP continues to be popular: 80% of new car finance cases (H1 17: 83%, FY 17: 83%) 66,540 Live PCPs (H1 17: 66,450) 16

17 NEW CARS WLTP Worldwide Light Vehicle Test Procedure (WLTP) replaces the outgoing New European Driving Cycle (NEDC) Effective from 1 st September 2018 with the objective of deriving real-world emissions and fuel economy figures After this date only WLTP compliant vehicles can be registered. All outgoing NEDC approved cars must therefore be registered by 31 st August 2018 OEMs can apply for derogation (12 month extension) of existing NEDC stock built before 1 st June but only 10% of total annual sales volume New rules require many model derivatives to be tested to account for options that affect weight Expect to see: Significant amount of non derogated cars being registered in August (some OEMs already actioned) Distortions from historical norms, in sales and registrations, for the remainder of the year and possibly into 2019, notably August and September 2018, resulting from testing backlog Certain brands affected more than others 17

18 USED CARS UK USED CAR MARKET (m) LFL used unit sales broadly flat LFL revenue up 5.2% Gross profit up 9.2% Strong focus on profitability, margin up 37bp at 7.2%, driven by robust operating controls: Prudent 56 day stocking policy Stock profiling Unique digital initiative in Phoenix 2 Continued online focus Continued PCP growth in used, now 63% of finance cases (H1 17: 62%) Source: SMMT 18

19 AFTERSALES Continued growth in aftersales revenues, 2.5% total, 3.2% LFL Total aftersales gross profit up 1.7%, despite a margin decline to 46.1% (H1 2017: 46.5%), driven by: Increased parts sales mix lower margin Reduced internal work due sales rate charged at retail rate Lower warranty work in certain brands Service plans key to aftersales retention. Over 78,000 live at 30 June

20 PEOPLE CENTRIC 8 Years Running GPTW status 4 Years Running ranked Top st Best UK workplace No.1 Automotive employer 78% Trust index 76% participation rate 20

21 DIGITAL Sector Leading Social Media 39,155 Followers +4.3% 93,351 Likes +7.8% 8,089 Followers +67.2% >3.2m visits Winner - Most Influential Dealer on Social Media +16.3% >11.8m page views +11.8% >8,355 Live chats +50.1% Highly Commended - Best Social Media Strategy Shortlisted - Social Media Award Source: Google analytics, internal management information 21

22 CAPEX INVESTMENT 2016 to m capex programme nearing completion 10.0m incurred in H with completed CI upgrades at 13 sites, including significant refurbishments at Bedford Land Rover, Cambridge Volvo, Salisbury BMW / Mini, Reading Volkswagen CV and Reading Skoda Purchase of long leasehold and commenced development of Ford Store Cambridge Commencement of combined JLR facility in Lincoln 4.2m investment to date 22

23 OUTLOOK Positive first half performance Continued general economic uncertainty Ongoing consumer confusion around diesel product affecting some premium brands in the short term WLTP will cause market distortions for remainder of this year and possibly into 2019 Board remains cautious on second half 23

24 SUMMARY Financial performance from our continuing businesses marginally ahead of last year s record result Challenging new vehicle market continues Strong used vehicle profitability performance Continued growth in aftersales revenues and gross profit Maintained interim dividend at 2.15p Strong balance sheet with 201.2m of net assets, equating to 2.58 per share Well positioned to take advantage of future opportunities Despite market uncertainties, full year guidance unchanged at upper end of previous expectations 24