Marshall Motor Holdings plc Interim Report & Accounts Six months - PowerPoint PPT Presentation

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

INTRODUCTION DAKSH GUPTA CHIEF EXECUTIVE OFFICER

AGENDA • Highlights • Financial review • Operational review • Outlook • Summary 3

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 H1 2017 4

FINANCIAL REVIEW MARK RABAN CHIEF FINANCIAL OFFICER

FINANCIAL SUMMARY Variance % Continuing H1 2018 H1 2017 Total operations Revenue (£m) 1,162.9 1,187.4 (2.1%) (0.4%) Gross profit % 11.5% 11.6% -13bps +1bp Underlying operating profit (£m) 19.7 22.4 (12.2%) (0.6%) (%) 1.7% 1.9% -19bps 0bp Finance costs (£m) 3.3 3.9 14.4% 8.5% Underlying PBT (£m) 16.4 18.6 (11.7%) 1.2% Non-underlying items (£m) 0.9 - Reported PBT (£m) 17.2 18.6 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

NON-UNDERLYING ITEMS (£m) H1 2018 H1 2017 Var % Continuing underlying PBT 16.4 16.2 +1.2% Profit on disposal of subsidiary 0.6 - - Profit on disposal of assets classified as held for sale 0.3 - - Continuing reported PBT 17.2 16.2 +6.5% Discontinued PBT - 2.4 - Total reported PBT 17.2 18.6 -7.1% 7

Class Leading Returns REVENUE AND VOLUMES * Revenue (£m) H1 2018 H1 2017 Var % LFL var % New 584.6 611.2 (4.4%) (4.6%) Used 474.6 458.2 3.6% 5.2% Aftersales 126.4 123.3 2.5% 3.2% Internal (22.7) (24.8) Total 1,162.9 1,167.9 (0.4%) 0.1% Unit sales H1 2018 H1 2017 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

Class Leading Returns GROSS PROFIT Gross profit (£m) GP% £m NEW £m USED £m AFTERSALES / OTHER % % % 60 16 60 16 60 52 58.3 55 55 55 57.3 14 14 50 50 50 50 12 12 48 45 45 45 45.1 10 10 46 40 40 40 40.8 35 8 35 8 35 44 30 30 30 34.1 31.2 6 6 42 25 25 25 4 4 40 20 20 20 2 2 38 15 15 15 10 0 10 0 10 36 H1 2017 H1 2018 H1 2017 H1 2018 H1 2017 H1 2018 Mix % H1 2017 H1 2018 Mix % H1 2017 H1 2018 Mix % H1 2017 H1 2018 Revenue 51.3% 49.3% Revenue 38.4% 40.0% Revenue 10.3% 10.7% Gross profit 33.7% 30.6% Gross profit 23.4% 25.6% Gross profit 42.9% 43.8% 9

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

BALANCE SHEET £m H1 2018 H1 2017 Property, plant & equipment Intangible 121.5 122.0 H1 2018 H1 2017 Property, plant & equipment 147.9 210.2 Freehold/long leasehold 121.1 112.5 Other 2.6 2.7 Other retail assets 26.8 25.5 Fixed assets 272.1 334.9 Contract rental assets 0 72.2 Inventory 351.4 372.9 Total 147.9 210.2 Trade / other receivables 114.0 100.5 Cash & equivalents 7.7 8.3 Current assets 473.1 481.7 Trade / other payables (501.6) (521.1) Trade / other payables Leasing debt - (65.9) Bank / other debt (6.8) (43.5) H1 2018 H1 2017 Other liabilities (35.6) (28.1) Vehicle funding 324.3 353.0 Total liabilities (544.0) (658.6) Other 177.3 168.1 Shareholders’ equity 201.2 158.0 Total 501.6 521.1 Reported net cash / (debt) (£m) 0.9 (101.1) 11

Class Leading Returns CASHFLOW £m H1 2018 H1 2017 EBIT 20.5 22.4 Working capital Depreciation: retail 4.5 5.0 H1 2018 H1 2017 Depreciation: leasing - 9.1 Inventory 49.8 7.2 Share based payments 0.7 0.7 Trade and other receivables (22.0) (5.5) Profit on disposals (0.9) (0.0) Trade and other payables (inc stock funding) (31.5) 16.2 Adjusted EBIT 24.9 37.3 Other (0.7) (3.2) Working capital (4.2) 14.7 Total (4.2) 14.7 Operating cashflow 20.6 52.0 Tax / interest (6.1) (8.6) Gross cashflow 14.5 43.4 Capital expenditure: retail (8.8) (12.3) Capital expenditure: leasing - (17.2) Sale of business / disposal proceeds 1.8 7.0 Free cashflow 7.5 20.9 Acquisitions (net of cash acquired) (0.1) (0.1) Dividends (3.3) (2.9) Net borrowings (0.3) (9.7) Other (1.0) - Cashflow 2.8 8.2 12

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

OPERATIONAL REVIEW DAKSH GUPTA CHIEF EXECUTIVE OFFICER

NEW CARS – H1 MARKET • 1.31m new cars registered in H1, down 6.3% UK NEW CAR REGISTRATIONS (m) 3.5 • Retail down 4.9%, fleet / business down 7.3% 3.0 • Q1 down 12.4%, Q2 up 2.4% - 2017 VED 2.5 2.0 • Sales by fuel type: 1.5 • Diesel down 30.2% (32.6% share) 1.0 • Petrol up 11.4% (61.9% share) 0.5 • AFVs up 24.2% (5.5% share) 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F • Premium brands under pressure due to higher historic diesel content, OEMs rebalancing mix FALLING MARKET SHARE OF DIESEL 50% • SMMT FY 2018 forecasts: 45% • Previous: -5.8% (January 2018) 40% • Latest: -4.1% (August 2018) 35% • Indicates decline of -1.9% for August onwards 30% • Note: July +1.2%, YTD -5.5% 25% • Expect market distortions in H2 due to WLTP Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jan-17 May-18 • 2019 forecast: -1.9% Diesel share 15 Source: SMMT

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

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

USED CARS • LFL used unit sales broadly flat UK USED CAR MARKET (m) 9.0 8.0 • LFL revenue up 5.2% 7.0 6.0 • Gross profit up 9.2% 5.0 • Strong focus on profitability, margin up 4.0 3.0 37bp at 7.2%, driven by robust operating 2.0 controls: 1.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 • 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%) 18 Source: SMMT

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 2018 19

PEOPLE CENTRIC 78% 21 st 8 Years No.1 4 Years Trust index Running ranked Running Best UK Automotive 76% Top 30 GPTW status workplace employer participation rate 20

DIGITAL www.marshall.co.uk 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% Highly Commended - “Best Social Media Strategy” >11.8m page views +11.8% Shortlisted - “Social Media Award” >8,355 Live chats --------- ---------- ---------- +50.1% Source: Google analytics, internal management information 21