2021 Interim Results Presentation - Daksh Gupta Chief Executive Officer - Marshall Motor Holdings plc
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RECOGNISING THAT PEOPLE ARE
AT THE HEART OF OUR SUCCESS
2021 Interim Daksh Gupta
Chief Executive Officer
Results Presentation Richard Blumberger
10th August 2021 Chief Financial Officer
PUTTING OUR CUSTOMERS
ABOVE ALL ELSE SINCE 1909
Professor
Richard Parry-Jones CBE
1951 - 2021
2
Agenda
• H1 key operational and financial metrics, market overview, business initiatives and strategic growth
– Daksh Gupta
• Financial review
– Richard Blumberger
• Current trading and outlook, and summary
– Daksh Gupta
• Q&A
3
RECOGNISING THAT PEOPLE ARE
AT THE HEART OF OUR SUCCESS
PUTTING OUR CUSTOMERS
ABOVE ALL ELSE SINCE 1909
H1 key operational and
financial metrics, market
overview, business initiatives
and strategic growth
Daksh Gupta
Chief Executive Officer
Exceptional market dynamics, strong outperformance and dividend restored
REPORTED GROSS PROFIT/(LOSS) ADJUSTED
NET DIVIDEND
NET LEVERAGE
REVENUE P R O F I T % (1) B E F O R E TA X ( 1 ) C A S H (2) ASSETS
£1,334.1m 11.8% £38.4m £57.2m Nil £239.3m 8.86p
H1 20: £895.3m 49% H1 20: 10.6% H1 20: (£11.8m) H1 20: £27.4m H1 20: Nil H1 20: £190.5m H1 20: Nil
H1 19: £1,183.3m 13% H1 19: 11.4% H1 19: £15.2m H1 19: £5.8m H1 19: Nil H1 19: £200.7m H1 19: 2.85p
LFL
L F L T O TA L LFL NEW LFL FLEET LFL USED
AFTERSALES
N E W U N I T S (3) R E TA I L U N I T S ( 3 ) U N I T S (3) U N I T S (3)
R E V E N U E (3)
+46.1% +36.0% +64.5% +51.7% +34.8%
vs market +39.2%(4) vs market +30.6%(4) vs market +47.3%(4) vs market +31.1%(5)
(1) Reported underlying; (2) Non GAAP measure that excludes IFRS 16-related lease liabilities; (3) Like-for-like (includes group businesses or activities
that have been active or trading for a period of 12 consecutive months and excludes businesses or activities that do not have 12 months trading activity);
(4) SMMT registrations which includes impact of dealer self-registration activity; (5) Auto Trader ‘Proxy Sold’ used car transactions which estimates 5
number of cars sold on their platform based on timing of when adverts are removed
New vehicle market: supply outlook uncertain
• 910k new cars registered in H1, up +39.2% (MMH: +46.1%)
• Retail up +30.6% (MMH: +36.0%)
• Fleet / Business up +47.3% (MMH: +64.5%)
• July -29.5%, YTD +24.7%
• Latest SMMT forecast for FY21 +11.7% to 1.8m
• Outlook on supply is well documented due to production challenges and semiconductor shortages
• H1 result partly mitigated as a result of certain OEMs stockpiling pre-Brexit
• Expecting significant impact in H2, however impact varied across brands
• OEM commentary varies with some stating normalisation will not return until 2023
• OEMs making complex decisions around production allocation
• New car shortages will potentially impact supply of used cars
• LCV market up +75.9% in H1 to 192k registrations
Source: SMMT 6
Used vehicle market: unprecedented sector tailwinds
• According to Auto Trader, used proxy sold transactions in H1 were up +31.1% (MMH +51.7%)*
• SMMT Q1 transactions -8.9% (includes private sales and write-offs)**
Monthly Percentage Movements in Live Valuations (3-years, 60k miles)***
• Sector experienced exceptional tailwinds in Q2
8%
• Since reopening, pent-up demand and 6.7%
supply shortages have driven values up 6%
4.8%
+17.6% (2019: -9.4%), driving 4% 3.1%
unprecedented margin increases 2.0%
2%
0.1%
• New car supply constraints may impact supply 0%
of used cars
-2% -1.4% -1.4% -1.5%
• PCP renewals, part exchanges, OEM sales,
-4%
fleet returns, demonstrator and courtesy car Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
de-fleets 2019 2020 2021
• MMH outperformance driven by strong management actions to capitalise on market tailwinds
• Procurement, presentation and pricing
• Further investments in resource and systems
• Builds on solid platform previously implemented
* Auto Trader ‘Proxy Sold’ estimated used car transactions; ** SMMT transactions includes private sales and write-offs, so not
as comparable as Auto Trader data; *** Source: CAP HPI
7
Market share growth fuelled by MMH’s unique positioning
Marshall well placed to capitalise from omni-channel retailing due to strong digital and physical assets
Continual strengthening of our digital assets Competitive advantage from existing physical infrastructure
• Marshall.co.uk – 5.3m visitors (FY 20: 6m), with 17.3m • Nationwide presence – 29 counties, with over 83% of the
page views (FY 20: 24.3m) country within an hour of a Marshall business
• Increased functionality and usability supported by • 116 brand centres representing 22 key partners
24/7 Live Chat
• Access to new car sales, which generate used car stock
• Click and collect services and contributes 27.2% of gross profit
• Reserve online for only £99 • c.16,000 vehicles in stock, competitively priced as a result
• Nationwide delivery or collect from brand centre of M Control in Phoenix, our in-house developed system
• Contactless experience and purchase • Manufacturer approved used cars
• Enhanced photo imaging and video presentation • Genuine parts fitted by manufacturer trained technicians
• Online service booking facilities • Minimum 12 month warranty and breakdown cover
• Service plan buy-online feature • Marshall 24/7 accident aftercare
• Marshall.co.uk/Buy-Your-Car • Fixed-rate, haggle-free finance options, often sub-vented
by Brand partners
• Strong social media presence
• PCPs effectively act as a subscription model
• Strength of the Marshall brand – 111 years of trading
• Many with free service plans enabling aftersales retention
• 14 Day Money Back Guarantee – enhanced customer
experience, trust and transparency • Aftersales accounts for 40.1% of gross profit
New website will provide full omni-channel experience as well as customer personalisation
8
Continual investment in our brand Marshall.co.uk
30 Premier
League matches
on Sky TV (feat.
top 6 clubs)
12 cup games
on ITV and BBC
Every home
game for 11
selected
Championship
clubs
Minimum 86 live
televised
matches
Investment continues in premiership football, EFL, FA cup, darts, with an expected viewing audience of over 100m+ people
9
UK used car market – MMH’s unique positioning
• Number of new entrants
• Marketplace worth over £100bn* with c.8m transactions per year**
• MMH already has a strong platform in place
• Strong online digital assets
• Existing well-invested physical infrastructure to support our online proposition
• Nationwide presence and brand awareness
• Excellent reputation for customer service
• OEM relationships key
• MMH continues to increase market share; from 2017 to 2020 MMH has outperformed the used car
market on a like-for-like basis by 17.2%** and 20.6%*** in the first half of 2021
• Margin performance enhanced by our unique in-house system capability
• Data and technology at the heart of MMH business
• Confidence for the future
* OC&C estimate for UK retail used car market in 2019; ** SMMT used car transaction data; *** Auto Trader market data 10Long track record of successful M&A in the core business
2 2 2 2 2 3 1 1 1 5 1 2
TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTIONS TRANSACTION TRANSACTION TRANSACTION TRANSACTIONS TRANSACTION TRANSACTIONS
& 4 START-UPS & 1 START-UP & 1 START-UP & 1 START-UP & 3 START-UPS & 2 START-UPS
* *
*
* * *
ACQUISITIONS / STARTUPS
*
*
Ridgeway integration
* *
£75m capex investment
*
Leasing disposal
Balance sheet strengthened
1ST 2ND 3RD 4TH
STRATEGIC
CORPORATE
EXIT FROM
GERMAN
GERMAN GERMAN GERMAN MARSHALL
BRAND
BRAND BRAND BRAND LEASING
ADDED
ADDED ADDED ADDED
MERCEDES
VOLKSWAGEN AUDI BMW MMH LISTS
-BENZ
ON THE LSE
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
EXITS
EXIT OF 46 NON-CORE, SUBSCALE OR LOSS MAKING OPERATIONS
*Start-up 11Strategic growth: Jaguar Land Rover acquisition
• Completed acquisition of Cheltenham & Gloucester
Jaguar Land Rover at the end of May
• Opportunity sponsored by the brand
• In line with stated strategy to grow scale with existing brand
partners and extend geographic footprint
Lincoln
• Acquisition extends MMH national coverage to 29 counties
Melton
• MMH strong relationship and track record with Jaguar Land
Rover. In 2020 ranked number 1 and 2 retailer for Jaguar
Peterborough
and Land Rover respectively
Cambridge
Bedford • Now representing 9 Land Rover and 7 Jaguar retail centres
Ipswich
Cheltenham
• MMH top 3 volume for Jaguar Land Rover
Oxford
& Gloucester
• Historically very significantly loss making
Newbury
• New site will undergo redevelopment to a new ‘arch’
concept facility in due course
• Currently located in leasehold premises in Cheltenham
• Freehold land purchased for £4.5m
• Entire Jaguar Land Rover portfolio is owned on freehold /
long leasehold basis
12Strategic growth: Nissan Leicester acquisition
• Completed acquisition of Nissan Leicester at
the end of June
Lincoln
• Opportunity sponsored by the brand
• In line with stated strategy to grow scale with
existing brand partners and extend
geographic footprint
• Now representing 3 Nissan retail centres
Grantham
• Contiguous to existing dealerships in
Grantham and Lincoln
• A territory we know very well as already
represented there
• Historically significantly loss making
• Group performs strongly with brand, Marshall
ranked top 3 dealer group
Leicester
• The acquisition includes the purchase of a
three-acre freehold site for £3m
13Strategic growth: Further portfolio investment
South East London Audi consolidation
• 3 sites currently covering territory
• New sales in Beckenham, used sales in Sydenham, aftersales in Bromley
• Off-market transaction to acquire former Vauxhall freehold site for £4.7m
• Combination unlocks significant operational efficiencies, increases
capacity, drives synergies and enhances customer experience
• Will dispose of 2 freeholds in prime South East London territories
Other investments
• Acquired freehold bodyshop in Swavesey, north of Cambridge, for
£1.8m, to combine existing operations in Cambridge and Peterborough
Sydenham Audi • New freehold replaces two leasehold properties and removes existing lease
Approved used cars
liabilities of £105k per annum
• Combination will unlock significant operational efficiencies, increase
Bromley Audi
service centre capacity and drive synergies
Beckenham Audi
• Protects prime land in Cambridge for future retail operations
• Exchanged to acquire freehold for South Lakes Mercedes Benz for
New site location purchase price of £1.3m
• Removes existing lease liability of £96k per annum
14Business initiatives: investment in LCV strategy
• LCV market up +75.9% in H1 to 192k
registrations
• MMH represents 12 standalone CV franchises
• 6 Volkswagen, 4 Mercedes Benz, 2 Ford
• MMH also sells CV from 7 passenger car
operations
• 3 Peugeot, 2 Nissan, 2 Vauxhall
• Combined market share of MMH’s 6 CV
brands is 73.8%
• A number of key appointments made including
Group CV Director
• Whilst strategy still early, focus has driven
positive year-on-year growth
• Opportunity to leverage existing infrastructure
157th year running ranked as a UK best workplace
11th consecutive year of Great Place to Work status
12th 11 Years 7 Years 7th year running ranked as a UK best workplace
Running ranked
Best UK Running
UK best Strong culture of doing the right thing
workplace GPTW status
workplaces
Commitment to voluntarily paying back CJRS and retail
grants (c.£4m)
Awarded backdated pay increases of up to 4% in the lower
earning brackets
No.1 MMH score ‘Thank you’ bonuses paid to all colleagues except Directors
Automotive 79% Board and Executive Committee took pay cuts through
employer and vs benchmark 2020
retailer employer
across all sectors 65% Executive Committee declined 2020 bonuses
Strong focus on health and safety and ESG (see appendix)
Over £1m invested in PPE since start of pandemic. COVID-
19 secure guidelines to remain in place in order to protect
our people and customers
Update on strategic initiatives
Our in-house recruitment team has received 30,936
applications and generated over £1m saving in recruitment
fees
16RECOGNISING THAT PEOPLE ARE
AT THE HEART OF OUR SUCCESS
PUTTING OUR CUSTOMERS
ABOVE ALL ELSE SINCE 1909
Financial review
Richard Blumberger
Chief Financial OfficerRecord H1 2021
• Reported revenue of £1.3bn, up +49.0%. Strong management actions and investment into ‘click
and collect’ mitigating the impact of COVID-related closures in 2021, along with strong market
tailwinds in used
• Strong like-for-like outperformance against the market for new retail, fleet and used units
• Gross margin up +117bps to 11.8%, driven by unprecedented used car value increases
• Operating costs down on 2019 despite significant business acquisitions
• Benefitted from £4.7m business rates relief
• Adjusted net cash £57.2m
• Mix of stock reduced stock funding percentage to 94.0%
• Working capital inflow of £6m after £21m stock funding outflow
• Acquisitive in the period, £10.7m spent to acquire:
• Cheltenham and Gloucester Jaguar Land Rover
• Leicester Nissan
• Continued portfolio investment
• £4.7m purchase of freehold property in South East London to combine 3 separate Audi sites
• £1.8m purchase of freehold property for bodyshop on the outskirts of Cambridge
• Net assets of £239.3m, £3.06 per share
18H1 2021 financial summary
£'m H1 21 H1 20 Var % • Reported revenue benefitted
from strong management
Revenue 1,334.1 895.3 49.0% actions and investment into ‘click
and collect’
Gross profit 157.4 95.2 65.3%
• Record GP% 11.8% (H1 20:
Operating expenses* (114.5) (101.6) (12.7%) 10.6%)
Operating profit / (loss)* 42.9 (6.4) 767.5% • Finance costs, which relates to
stock funding and bank charges,
Net finance costs (4.5) (5.3) 16.7% down £0.8m, benefitting from
strong cash position and lower
stock holding
Profit / (loss) before tax* 38.4 (11.8) 426.6%
Non-underlying items 1.0 1.0 • EPS at 38.8p (H1 20: LPS
(14.8p))
Reported profit / (loss) before tax 39.5 (10.7) 467.8%
• Strengthened net assets, now
£3.06 per share (H1 20: £2.44)
Underlying EPS (p) 38.8 (14.8)
Net assets 239.3 190.5 25.6%
* Underlying 19Market outperformance
Like-for-like • Strong market tailwinds, but
H1 21 mix * H1 20 mix * Var
revenue (£m) new retail unit sales not
returned to 2019 levels
New 604.8 45% 410.2 46% 47.4%
• Market outperformance in both
Used 607.3 45% 388.4 43% 56.3%
new and used vehicle sales
AFS 130.6 10% 96.9 11% 34.8%
• Increased used to new retail
Other (27.3) (17.9) car ratio of 1.8 (H1 20: 1.6)
Total 1,315.3 877.6 49.9%
Like-for-like
H1 21 H1 20 Var Market YoY var Outperformance
unit sales
New retail 15,315 11,262 36.0% New retail 30.6% 5.4%
Fleet 10,225 6,214 64.5% New fleet 47.3% 17.2%
New 25,540 17,476 46.1% New total 39.2% 6.9%
Used 27,467 18,106 51.7% Used 31.1% 20.6%
Total 53,007 35,582 49.0%
* Excludes internal sales 20Record margins
Like-for-like
H1 21 mix * H1 20 mix * Var • New margins year on year
gross profit (£m) benefiting from reduced
manufacturer bonuses in
New 41.6 27% 25.2 27% 64.8%
2020 due to lockdown
Used 52.4 34% 24.1 26% 117.8%
• Record used car margins
AFS 61.0 39% 43.9 47% 38.9% benefitting from strong
market tailwinds
Other 0.2 0.5
• Aftersales increased mix of
Total 155.3 93.7 65.7%
service revenue
Gross profit
H1 21 H1 20 Var
%
New 6.9% 6.0% 85 bps
Used 8.6% 6.1% 246 bps
AFS 46.8% 45.0% 171 bps
Total 11.8% 10.6% 116 bps
* Excludes internal sales 21H1 benefitted from large one-off items
22Continued strengthening balance sheet
£m H1 21 FY 20 H1 20 £m H1 21 FY 20 H1 20
Goodwill and intangibles 120.3 119.5 119.2 New stock 116.3 205.5 264.8
Used stock 176.0 153.5 128.8
Freehold land and buildings 139.2 125.8 123.9
Right-of-use assets 93.1 98.8 104.2
Other 32.2 35.3 38.8 • Continued investment resulting in strong
freehold and building of £139.6m
Fixed assets 384.9 379.5 386.1
Inventory 310.2 362.9 401.2 • Total inventory down £91.0m versus H1 20
Trade / other receivables 98.7 65.8 96.8
• Good used car stock availability
Cash & equivalents 61.9 33.8 32.7
• Used inventory up £23.7m versus
Other assets - 1.0 0.3
H1 20 on like-for-like basis
Current assets 470.8 463.5 531.0
• Total vehicle funding £291.5m (stock funding
Vehicle funding (291.5) (364.9) (398.6)
at 94.0%), of which £129.9m relates to used
Trade / other payables (189.5) (132.4) (193.5) cars
Lease liabilities (92.4) (99.3) (104.8)
• Continued improvement of used car stock
Bank / other debt (4.7) (5.0) (5.3) turn 9.6* (H1 20: 9.3)
Other liabilities (38.3) (25.4) (24.3)
• Net assets of £239.3m, £3.06 per share
Total liabilities (616.4) (627.1) (726.6)
Net assets 239.3 215.9 190.5
* Stock turn calculated based on cost of sales 23Adjusted net cash of £57.2m, an increase of £28.4m
Net cash inflow from Investing and
operating activities financing activities
* Excluding IFRS 16; Reported underlying EBITDA is £53.8m 24Full year 2021 guidance items
• Expecting full year 2021 underlying profit before tax will be no less than £40.0m, after repaying
c.£4m of CJRS payments and retail grants
• Continued new car supply disruption expected for the remainder of the year and at least into 2022,
which could impact used car supply
• Used car margins expected to normalise during Q4
• Interim dividend 8.86p
• Full year dividend split 2/3rd interim and 1/3rd final, recognising heavily biased first half profit
• Dividend policy has been progressive since IPO, however disrupted by the pandemic. The
Board intends to reset and reinstate the policy from 2022
• Dividend cover will remain between 2.5 to 3.5 underlying earnings
• 2021 finance costs, principally relating to stock funding and bank charges £9m - £11m
• 2021 capital expenditure (excluding freehold purchases at H1) £15m - £17m
• 2021 effective tax rate around 21 - 22%
• Rates benefit capped at £2.0m for H2 (H1 2021: £4.7m)
25RECOGNISING THAT PEOPLE ARE
AT THE HEART OF OUR SUCCESS
PUTTING OUR CUSTOMERS
ABOVE ALL ELSE SINCE 1909
Current trading and
outlook, and summary
Daksh Gupta
Chief Executive OfficerCurrent trading and outlook
• 2021 new car market forecast to grow +11.7% to 1.82m*, down -21.2% versus 2019
• 2021 used car market forecast to grow 0.2%**, down -14.7% versus 2019
• Continued new car supply disruption expected for the remainder of the year and at least into 2022,
which could impact used car supply:
• September market expected to be significantly down
• H2 will see decline in like-for-like volumes
• Potential realignment of used vehicle values
• A range of possible outcomes, however expecting full year 2021 underlying profit before tax will be
not less than £40.0m, after repaying c.£4m of CJRS payments and retail grants
* Source: SMMT, ** Source: Cox Automotive 27Summary
• Exceptionally strong H1 performance
• Benefited from pent-up demand and unprecedented market dynamics
• Strong market outperformance across all key operational metrics
• Strong balance sheet with £239.3m of net assets, equating to £3.06 per share
• Cash position* strong, £57.2m
• Reinstatement of dividends with an interim payment of 8.86p
• Expecting full year 2021 underlying profit before tax will be not less than £40.0m, after repaying
c.£4m of CJRS payments and retail grants
• Strong platform in place with significant firepower to take advantage of future opportunities,
pipeline busy
* Adjusted net cash excludes IFRS 16 lease liabilities 28RECOGNISING THAT PEOPLE ARE
AT THE HEART OF OUR SUCCESS
PUTTING OUR CUSTOMERS
ABOVE ALL ELSE SINCE 1909
AppendixESG: The journey so far
• ESG committee sponsored by Executive Committee with oversight by main PLC Board
• Corporate environmental strategy roadmap and targets being finalised by Q4
• Leading on the Carbon Literacy Project workshop, with a bottom up approach
• Increase MI and visibility
• New MI portal with strategic partner being implemented by the end of Q3: full visibility on
energy usage across our portfolio, with alerts if there is any abnormal activity. Targets to be set
per building by the end of the year
• Energy usage league tables by location to enhance focus
• Supporting the Woodland project to support the government’s 11m tree planting target by 2022
• Supply chain sustainability is a key part of our RFP’s and supplier selection
• Long-standing culture towards diversity
• CEO patron of the Automotive 30% Club, as well as patron of Menable (men’s mental health)
• MMH is also part of the IMI’s diversity taskforce
• Excellent engagement from top down
• Industry award winning female talent
• Sponsoring Automotive inspiring women day in November
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