Marshall Motor Holdings plc 2016 Full year results presentation - PowerPoint PPT Presentation

Marshall Motor Holdings plc 2016 Full year results presentation

INTRODUCTION 2

AGENDA  Highlights of a Transformational Year  Financial Overview  Operating and Strategic Highlights  Outlook  Summary 3

HIGHLIGHTS OF A TRANSFORMATIONAL YEAR  Record financial results at both revenue and PBT  Revenues up 54.1% (LFL +10.7%), underlying PBT* £25.4 m (+60.4%) FINANCIAL  Final dividend 3.7p per share, full year 5.5p (+84.6%) SUMMARY  Adjusted net debt £54.5m**, 1.2x pro-forma EBITDA***  Net assets of £145.7m - £1.88 per share  Excellent LFL revenue growth - New +13.1%, Used +8.3% OPERATIONAL  Strong LFL growth in Aftersales revenue +5.7% and margins OVERVIEW  Leasing: continued strong profitability  Completed £106.9m strategic acquisition of Ridgeway  SG Smith integration complete STRATEGIC  DEVELOPMENTS A number of freehold site developments completed, freehold now £106.5m  Disposal of 3 non-core franchises  Board remains cautious post Brexit  FULL YEAR March order bank building as anticipated  OUTLOOK Q1 trading in line with expectations  Full Year outlook remains unchanged * Underlying profit before tax is presented excluding non-underlying items ** Excludes £64.5m asset backed finance relating to leasing segment 4 ***includes 12 month pro-forma results of businesses acquired during the Year

FINANCIAL OVERVIEW 5

Class Leading Returns FIVE YEAR TRACK RECORD OF STRONG GROWTH REVENUE (£m) UNDERLYING PBT (£m) NET ASSETS (£m) 2,000 30 150 1,899.4 145.7 CAGR CAGR 1,750 24.3% 53.7% 25 125 129.9 25.4 1,500 20 100 1,250 1,232.8 1,085.9 15.8 1,000 15 75 940.5 66.2 13.1 60.7 750 794.4 56.0 10 50 10.2 500 5 25 250 4.6 0 0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 6

Class Leading Returns FINANCIAL SUMMARY FY 2016 FY 2015 Var Revenue (£m) 1,899.4 1,232.8 54.1% Gross Profit % 11.6% 11.8% (18bps) Underlying Operating Profit (£m) 32.3 18.7 72.5% (%) 1.7% 1.5% 18bps Finance Costs (£m) (6.9) (2.9) (139.4.%) Underlying PBT* (£m) 25.4 15.8 60.4% Exceptional items (£m) (3.2) (0.5) Reported PBT (£m) 22.2 15.4 Underlying Effective Tax Rate % 20.3% 23.0% Underlying Basic EPS** 26.2p 15.8p Dividend Per Share 5.50p 2.98p Reported Net (Debt)/ cash (£m) (119.0) (27.2) Adjusted Net (Debt)/ cash (£m) *** (54.5) 24.1 *Underlying profit before tax is presented excluding non-underlying items **2015 calculated using 2016 weighted average number of shares in issue 7 *** Excludes £64.5m asset backed finance relating to leasing segment

Class Leading Returns SEGMENTAL RESULTS Segmental Revenue (£m) FY 2016 FY 2015 Var Retail 1,859.7 1,195.5 55.6% Leasing 39.3 37.0 6.3% Unallocated 0.3 0.2 38.1% Total 1,899.4 1,232.8 54.1% Underlying Segmental PBT (£m) FY 2016 FY 2015 Var Retail 28.9 18.8 54.0% Leasing 4.9 4.9 0.6% Unallocated (8.4) (7.8) (7.8%) Total 25.4 15.8 60.4% 8

Class Leading Returns RETAIL: REVENUE AND VOLUMES Revenue (£m) FY 2016 FY 2015 Var % LFL Var % New 983.3 637.8 54.2% 13.1% Used 718.3 459.2 56.4% 8.3% Aftersales 202.6 127.8 58.4% 5.7% Internal (44.5) (29.3) Total 1,859.7 1,195.5 55.6% 10.8% Unit Sales FY 2016 FY 2015 Var % LFL Var % New 48,884 35,103 39.3% 5.5% Used 37,787 27,699 36.4% 0.4% Total 86,671 62,802 38.0% 3.3% 9

Class Leading Returns RETAIL: GROSS PROFIT Gross Profit (£m) Gross Profit % NEW USED AFTERSALES / OTHER £m % £m % £m % 100 16 100 16 100 52 92.3 90 90 90 14 14 50 80 80 80 12 12 68.9 70 70 70 48 10 10 56.9 60 60 60 50.7 50 45.7 8 50 8 50 46 33.3 40 40 40 6 6 44 30 30 30 4 4 20 20 20 42 2 2 10 10 10 0 0 0 0 0 40 FY 2015 FY 2016 FY 2015 FY 2016 FY 2015 FY 2016 Mix % FY 2015 FY 2016 Mix % FY 2015 FY 2016 Mix % FY 2015 FY 2016 Revenue 52.1% 51.6% Revenue 37.5% 37.7% Revenue 10.4% 10.7% Gross Profit 33.6% 32.5% Gross Profit 24.5% 23.9% Gross Profit 41.9% 43.6% 10

Class Leading Returns LEASING SUMMARY FLEET (NO. VEHICLES) DISPOSAL PROFIT PER UNIT (£) LEASING EQUITY (£M) 6,400 2,500 70.0 5.1 2,330 64.5 2,250 11.1 6,200 60.0 6,192 11.3 2,000 2,010 9.9 11.3 6,031 6,029 1,867 6,000 51.4 50.0 1,791 47.0 45.6 1,500 42.1 5,800 40.0 5,600 5,610 30.0 1,000 5,400 20.0 500 5,200 10.0 5,212 5,000 0 0.0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Funded Equity 11

Class Leading Returns BALANCE SHEET (£m) FY 2016 FY 2015 Trade / Other Receivables Intangible 122.0 40.8 FY 2016 FY 2015 Property, Plant & Equipment 201.8 107.3 Trade receivables 71.0 28.9 Other 2.6 2.0 Other receivables 13.6 9.0 Fixed Assets 326.5 150.1 Amounts due from related undertakings - 0.3 Inventory 380.0 240.6 Prepayments 10.4 4.5 Trade / Other Receivables 95.1 42.7 Total 95.1 42.7 Cash & Equivalents 0.1 24.1 Current Assets 475.2 307.5 Trade / Other Payables (504.8) (268.6) Trade / Other Payables Leasing Debt (64.5) (51.4) FY 2016 FY 2015 Bank / Other Debt (54.6) - Vehicle and other funding 364.7 186.2 Other Liabilities (32.0) (7.7) Other Payables 140.1 82.4 Total Liabilities (656.0) (327.6) Total 504.8 268.6 Shareholders’ Equity 145.7 129.9 Reported Net Debt (£m) (119.0) (27.2) Adjusted Net Debt (£m) (54.5) 24.1 12 * Excludes £64.5m asset backed finance relating to leasing segment **includes pro-forma results of businesses acquired during the Year

Class Leading Returns CASHFLOW (£m) FY 2016 FY 2015 EBIT 29.1 18.2 Depreciation: Retail 5.8 3.8 Working Capital Depreciation: Leasing 17.3 17.2 FY 2016 Amortisation 1.1 - Inventory (14.8) Share based payments 1.3 0.6 Trade and other receivables (0.3) Other movements (1.0) (0.1) Trade and other payables (inc stock funding) 56.3 Adjusted EBIT 53.6 39.8 Other (2.9) Working Capital 38.3 (7.6) Total 38.3 Operating Cashflow 91.9 32.2 Tax / interest (11.6) (6.7) Gross Cashflow 80.3 25.5 Capital Expenditure: Retail (26.4) (9.8) Capital Expenditure: Leasing (35.5) (29.8) Sale of business / disposal proceeds 14.6 8.6 Free Cashflow 33.0 (5.5) Acquisitions (net of cash acquired) (94.5) (21.5) Dividends (3.3) (15.4) Net Borrowings 40.8 (2.2) Investments - 30.0 Net IPO Proceeds - 36.9 Cashflow (24.0) 22.3 13

Class Leading Returns NON UNDERLYING ITEMS (£m) FY 2016 FY 2015 Acquisition costs 2.2 0.5 Profit on disposal of business assets (0.3) - Amortisation of acquired order book 0.8 - Gain on interest swap termination (0.3) - Restructuring costs 1.6 - Investment property fair value (0.7) - Total Non Underlying items 3.2 0.5 14

Class Leading Returns FINANCIAL GUIDANCE: 2017  PBT – Slight H1 weighting  Central cost - investment continues £9.0m - £9.5m  Further exceptional cash integration costs for Ridgeway  Retail capex 2017 c.£26m  £75m investment over 2016-2018  Interest to reflect full year of Ridgeway ownership c.£9.0m  Ridgeway film tax planning scheme settled £4.2m  Full year effective tax rate c22-23% 15

OPERATING & STRATEGIC REVIEW 16

MARKET BACKDROP UK NEW CAR REGISTRATIONS (m) 3.5  2.69m new units registered in 2016, up 2.3% 3.0  FY Fleet / business up 4.3%, retail down 0.2%  Market post Brexit cooled 2.5  H2 Growth +1.2% vs H1 +3.2% 2.0  2017 SMMT forecast -5.0% 1.5  Feb YTD +1.8% 1.0  Expect some “pull forward” into Q1 due to VED 0.5  Used car market c.7.6m 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017F  Market dynamics: UK USED CAR REGISTRATIONS (m)  UK 2 nd largest market in Europe 9.0  8.0 84% of new car finance cases PCP, used 55%*  7.0 Over 58,000 live PCPs* 6.0  Increased vehicle parc and retention strategy through 5.0 service plans positive for aftersales growth 4.0  Over 72,000 live service plans 3.0  Franchised sector winning share from independents 2.0 1.0 2009 2010 2011 2012 2013 2014 2015 2016 17 Source: SMMT, Experian and Internal Management Information *Marshall Group statistics

CUSTOMER SALES AND AFTERSALES RETENTION STRATEGY THROUGH PCP AGE SEGMENT 1 (0-3 YEARS) SEGMENT 2 (3-6 YEARS) SEGMENT 3 (6-9 YEARS) 100% RESIDUAL 50% VALUE 0% 84% 55% OWNERSHIP Customer 1 Customer 2 Customer 3 CYCLE AFTERSALES OPPORTUNITY    “3 rd bite of cherry” due to 84% of financed cases PCP 55% of financed cases PCP   Service plan retention Retention of customers who control of customer   High renewal rates historically went to Anticipated HP agreement  independents Retention through warranty   Good renewal rate RV exposure mitigated opportunity 18

TO BE THE UK’S PREMIER AUTOMOTIVE RETAIL AND LEASING GROUP VISION Class Leading Customer Retailing People Strategic Returns First Excellence Centric Growth 19

Customer First CONTINUED HIGH LEVELS OF CUSTOMER ADVOCACY Returning/ recommended customers (Rolling 12 months ) 46 44 42 40 38 36 34 32 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 41,928 7,231 96% 43.4% customers respondents showroom customers returning surveyed in 2016 satisfaction or recommended 20 Source: Internal Management Information