Marshall Motor Holdings plc 2017 Full year results presentation March 2018

Transcription

1 Marshall Motor Holdings plc 2017 Full year results presentation March 2018

2 INTRODUCTION 2

3 AGENDA Full year Highlights Financial Overview Operating and Strategic Review Current Trading and Outlook Summary 3

4 2017 HIGHLIGHTS ANOTHER RECORD TRADING RESULT FINANCIAL SUMMARY OPERATIONAL OVERVIEW STRATEGIC DEVELOPMENTS 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) 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% 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) TRADING UPDATE Board remains cautious given continued economic and political uncertainty Q1 trading in line with our expectations Our outlook for the full year remains unchanged 4

5 FINANCIAL OVERVIEW 5

6 , , , , Class Leading Returns FIVE YEAR TRACK RECORD OF STRONG GROWTH REVENUE ( m) UNDERLYING PBT ( m) NET ASSETS ( m) 2,500 2,250 2,000 1,750 1,500 CAGR 24.6% Total CAGR 29.9% Discontinued Continuing , ,

7 Class Leading Returns FINANCIAL SUMMARY FY 2017 FY 2016 Total Variance % Continuing Operations Revenue ( m) 2, , % 20.0% Gross Profit % 11.7% 11.6% +8bps +17bps Underlying Operating Profit ( m) % 23.4% (%) 1.6% 1.7% -6bps +4bps Finance Costs (8.1) (6.9) 17.3% 22.2% Underlying PBT ( m) % 23.7% Non underlying items 24.1 (3.2) Reported PBT ( m) 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)

8 Class Leading Returns NON UNDERLYING ITEMS ( m) FY 2017 FY 2016 (Profit) on disposal of subsidiary (36.9) - Post retirement benefits charge Acquisition costs (Profit) on disposal of business assets - (0.3) Amortisation of acquired order book (Gain) on interest swap termination - (0.3) Restructuring costs Investment property fair value - (0.7) Total Non Underlying items (24.1) 3.2 8

9 Class Leading Returns SEGMENTAL RESULTS Segmental Revenue ( m) FY 2017 FY 2016 Var Retail 2, , % Leasing (discontinued) (6.0%) Unallocated (12.1%) Total 2, , % Segmental Underlying PBT ( m) FY 2017 FY 2016 Var Retail % Leasing (discontinued) (24.4%) Unallocated (9.5) (8.4) (13.6%) Total % Continuing operations* % * Continuing operations excludes Leasing segment which was disposed in November

10 Class Leading Returns RETAIL: REVENUE AND VOLUMES Revenue ( m) FY 2017 FY 2016 Var % LFL Var% New 1, % 1.0% Used % 7.0% Aftersales % 2.3% Internal (47.6) (44.5) - - Total 2, , % 3.5% Unit Sales FY 2017 FY 2016 Var % LFL Var % New 31,801 28, % (2.6%) Fleet 21,507 20, % (13.9%) Total New 53,308 48, % (7.5%) Used 44,237 37, % 5.2% Total 97,545 86, % (2.2%) 10

11 Class Leading Returns RETAIL: GROSS PROFIT Gross Profit ( m) Gross Profit (%) m NEW % m USED % m AFTERSALES / OTHER % Mix Gross Profit % 32.5% 32.6% Mix Gross Profit % 23.9% 23.2% Mix Gross Profit % 43.6% 44.2% 11

12 Class Leading Returns BALANCE SHEET ( m) Intangible Property, Plant & Equipment Other Total non current assets Inventory Trade / Other Receivables Assets held for sale Property, Plant & Equipment Freehold Land and Buildings Leasehold Improvement Plant and Equipment Total continuing Leasing (discontinued) Total Cash & Equivalents Current Assets Trade / Other Payables (531.9) (504.8) Trade / Other Payables 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 Vehicle and other funding Other Payables Total Reported Net Debt ( m)

13 Class Leading Returns CASHFLOW ( m) EBIT Depreciation: Retail Depreciation: Leasing* Amortisation Other movements (35.9) 0.3 Adjusted EBIT Working Capital Operating Cashflow Other non cash movements Share based payments Loss / (profit) on disposal of Property Plant and Equipment Impairment of Property Plant and Equipment 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 Tax / interest (15.5) (11.6) Gross Cashflow Capital Expenditure: Retail (22.8) (26.4) Capital Expenditure: Leasing* (34.7) (35.5) Working Capital Sale of business / disposal proceeds Free Cashflow Acquisitions (net of cash acquired) (0.1) (94.5) Dividends (4.5) (3.3) Net Borrowings (43.8) 40.8 Inventory (21.2) (14.8) Trade and other receivables 0.5 (0.3) Trade and other payables (inc stock funding) Other 6.1 (2.9) Total Cashflow 4.8 (24.0) * discontinued 13

14 Class Leading Returns 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 programme completes Interest charge reducing to c m following leasing disposal Full year effective tax rate 20-21% 14

15 OPERATING & STRATEGIC REVIEW 15

16 UK MARKET BACKDROP UK NEW CAR REGISTRATIONS (m) '10 '11 '12 '13 '14 '15 '16 '17 '18FC UK USED CAR MARKET (m) '10 '11 '12 '13 '14 '15 '16 ' m new units registered in % Retail -6.8%, Fleet / Business -4.7% Q %, driven by VED pull forward, declined thereafter 3 rd 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) Source: New vehicles SMMT; Used vehicles Experian ; SMMT

17 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 Market share Growth (%) STRENGTH OF MMH BALANCED PORTFOLIO 0.8 Market Share Growth by Brand 2017 Vs 2016* MMH Brand partner Not current MMH Brand partner -1.7 Dec 2017** 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 *Manufacturers shown for all MMH current or past partners or those with market share >1 ** excludes commercial vehicle sites. 17

18 MMH GEOGRAPHIC FOOTPRINT % Specialist 16.3% Prestige 18.6% Alt Premium 65.1% Volume East Anglian centric 6 counties No OEM relationships with scale No German brands 18

19 MMH GEOGRAPHIC FOOTPRINT % 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 MARKET BACKDROP RETENTION BENEFITS OF PCP MODEL AGE 100% SEGMENT 1 (0-3 YEARS) SEGMENT 2 (3-6 YEARS) SEGMENT 3 (6-9 YEARS) RESIDUAL VALUE 50% 0% OWNERSHIP CYCLE 83% 58% Customer 1 Customer 2 Customer 3 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 opportunity 3 rd opportunity; continued retention of customer Anticipated HP agreement Retention through warranty RV exposure mitigated Source: Internal Management Information 20

21 MARKET BACKDROP - UK VEHICLE PARC UK PASSENGER VEHICLE PARC (m) '13 '14 '15 '16 '17* 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 7.8 Years old on average 34.5m Passenger vehicles in UK 2.0% CAGR 5 year growth Over 77,000 live service plans Source: SMMT *2017 SMMT estimate 21

22 TO BE THE UK S PREMIER AUTOMOTIVE RETAIL GROUP VISION Class Leading Returns Customer First Retailing Excellence People Centric Strategic Growth 22

23 Customer First CONTINUED HIGH LEVELS OF CUSTOMER ADVOCACY 50 Returning/ recommended customers (Rolling 12 months) Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec ,608 customers surveyed 17,807 respondents in % showroom satisfaction 42.0% customers returning or recommended Source: Internal Management Information 23

24 Retailing Excellence RETAILING EXCELLENCE ONLINE >6.13m visits +46.5% >21.0m page views +18.4% ,707 Live chats +25.1% >6,000 vehicles Available to view online 5 th most visited dealer group website in the UK* December ,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 Source: Google analytics, internal management information *Hitwise December 2017 franchised dealers 24

25 Retailing Excellence SECTOR LEADING SOCIAL MEDIA Sector Leading Social Media 39,503 Followers +16.3% Winner - Best use of social media Winner Best digital initiative 104,017 Likes +29.4% Highly commended Social media award 6,703 Followers +51.1% Strong growth across all key platforms Key benefits of social media presence Online reputational management Significantly increased outreach of website Extend customer trust online 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 25

26 People Centric PEOPLE CENTRIC CULTURE 8 Years Running GPTW status 22 nd Best UK workplace 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 78% Trust Index 76% participation rate Ridgeway 1 st Score 76% SG Smith 2 nd Score 77% (+19%) 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

27 EXITS CORPORATE ACQUISITIONS / STARTUPS Strategic Growth MMG PORTFOLIO DEVELOPMENT 2 TRANSACTIONS & 4 START-UPS 2 TRANSACTIONS & 1 START-UP 2 TRANSACTIONS 2 TRANSACTIONS 2 TRANSACTIONS 3 TRANSACTIONS 1 RIDGEWAY & 1 START-UP TRANSACTION 1 TRANSACTION & 1 START-UP * * * * * 1 ST GERMAN BRAND ADDED 2 ND GERMAN BRAND ADDED 3 RD GERMAN BRAND ADDED 4 TH GERMAN BRAND ADDED STRATEGIC EXIT FROM MARSHALL LEASING MERCEDES -BENZ VOLKSWAGEN AUDI BMW MMH LISTS ON THE LSE EXIT OF 36 NON-CORE, SUBSCALE OR LOSS MAKING OPERATIONS *Start-up 27

28 Strategic Growth STRATEGIC GROWTH DEVELOPMENTS / CAPEX Cambridge Volvo Newbury Jaguar Land Rover Reading Skoda Upgrade and refurbishment across 14 sites 2 major relocations in H2 Exeter Audi - 7.8m total investment Newbury Jaguar Land Rover m investment Exeter Audi All developments completed on time and on budget Salisbury BMW Investment across every Brand Partner in last 24 months Capex program significantly reduces after m of freehold / long leasehold property 28

29 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

30 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

31 Marshall Motor Holdings plc 2017 Full year results presentation

32 INVESTMENT HIGHLIGHTS 7 th largest UK dealer group with 2.3bn revenue Balanced brand portfolio Excellent financial track record Diverse geographic footprint No. 1 Automotive employer in UK* Strong balance sheet position essentially debt free 81.7% brand coverage 116.3m freehold and long leasehold assets Sector Leading Social media strategy * Based on the Great Place To Work Institute 2017 rankings A1

33 APPENDIX: 5 YEAR TRACK RECORD 1.8% Underlying EBIT ROS % 15.0% Gross Margin % 1.5% 12.5% 1.2% 10.0% 0.9% 7.5% 0.6% 5.0% 0.3% 2.5% 0.0% 0.0% % Underlying EBITDAR ROS % 12.0% Underlying Operating Costs % 2.5% 10.0% 2.0% 8.0% 1.5% 6.0% 1.0% 4.0% 0.5% 2.0% 0.0% 0.0% A2

34 APPENDIX: 5 YEAR TRACK RECORD (cont) 90 NEW 8.0% 65 USED 7.5% % 7.0% 6.5% 6.0% % 6.5% 6.0% AFTERSALES % 47% 45% 43% 41% 39% 37% Gross Profit ( m) Gross Profit % A3

35 APPENDIX: MARKET BACKDROP NEW CAR MARKET (MILLION VEHICLES) USED CAR MARKET (MILLION VEHICLES) Source: SMMT/ Experian A4

36 APPENDIX: MMH VOLUMES NEW VEHICLES USED VEHICLES 55K 50K CAGR 17.8% 45K 42K 39K CAGR 15.0% 45K 36K 40K 33K 30K 35K 27K 30K 24K 21K 25K 18K 20K 15K 12K 15K 9K 10K 6K 3K 5K 0K Source: Management information A5

37 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 on, 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.