17 November 2015
MARSHALL MOTOR HOLDINGS
PLC
("MMH" or the "Group")
Acquisition of S.G. Smith
Marshall Motor Holdings plc, one of
the UK's leading automotive retail and leasing groups, is pleased
to announce the acquisition of SG Smith Holdings Limited ("SGS")
for a cash consideration of approximately £24.4m (the
"Acquisition"). The acquisition agreement provides for a
retention of £1.7m, the release of which is subject to certain
performance conditions, the completion of certain property
developments and finalisation of the completion
accounts.
SGS, which has been family owned and
operated since it was founded in the 1930s, is a new and used car
dealer group operating from locations across Kent, Surrey and
London. SGS brand partners are Audi in the Wimbledon, Coulsdon,
Bexley and Beckenham market areas; Skoda in Croydon; and Mercedes
Benz commercial (after sales only) in Croydon.
The Acquisition is in line with
MMH's growth strategy and enables the Group to grow with its
existing brand partners, including a major expansion of the Group's
relationship with Audi; Audi's future growth prospects are expected
to benefit from an exciting new product pipeline over the coming
years. The Acquisition also extends the Group's footprint into new
and attractive geographic territories, being the Kent, Surrey and
London markets.
The Acquisition has been funded from
the existing cash resources of the Group. The Acquisition is
expected to be materially earnings enhancing for the year ending 31
December 2016 and to generate a return on investment in excess of
the Group's cost of capital* in the following year. Given the
timing of the Acquisition after the important September plate
change period, the Acquisition is expected to be marginally
dilutive for the financial year ending 31 December 2015. In
addition, the Group has incurred transaction fees and expenses in
connection with the Acquisition of approximately £0.5m.
The Group has acquired the entire
issued share capital of SGS from Robert Smith (the son of the
founder and SGS Managing Director) and certain other family and
non-family individual investors. Robert Smith will remain with the
Group for some months to assist with the integration
process.
Daksh Gupta, Group Chief Executive,
commented:
"We are delighted to have acquired
this long established, family run business and I am particularly
pleased to welcome our new colleagues to the Group. The Acquisition
is in line with our stated strategy to grow scale with existing
brand partners and expand our geographic footprint. The business is
a good cultural fit for the Group and we are delighted to be
significantly growing our relationship with Audi, strengthening our
Skoda representation and extending our partnership with Mercedes
Benz in commercial vehicles."
Robert Smith, SGS Managing Director,
commented:
"After over 70 years, it was
important to our family to find a good home for our business and
our people. The Acquisition brings together two long standing
organisations with a rich history in automotive retail. I would
like to thank the entire SGS team and wish them well with Marshall
Motors over the coming years."
For further information and
enquiries please contact:
Marshall Motor Holdings
plc
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c/o Hudson Sandler Tel: +44 (0) 20
7796 4133
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Daksh Gupta, Group Chief
Executive
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Mark Raban, CFO
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Investec Bank plc (NOMAD &
Broker)
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Tel: +44 (0) 20 7597 4000
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Christopher Baird
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David Flin
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David Anderson
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Hudson Sandler
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Tel: +44 (0) 20 7796 4133
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Nick Lyon
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Alex Brennan
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Notes to Editors
1. About Marshall Motor Holdings
plc (www.mmhplc.com)
The Group's principal activities are
the sale and repair of new and used vehicles through Marshall
Motors and the leasing of vehicles through Marshall Leasing. The
Group's businesses are integrated and prior to the Acquisition,
included a total of 71 franchises covering 24 brands, operating
from 63 sites across 16 counties in England.
MMH is the only franchised dealer
group in the UK to represent all of the top 5 premium vehicle
manufacturer brands (being Audi, BMW,
Mercedes-Benz, Land Rover and Jaguar) and
all of the top 10 volume vehicle manufacturer brands
(being Ford, Vauxhall, Volkswagen, Nissan,
Peugeot, Toyota, Citroen, Hyundai, Kia and
Skoda). Its diverse portfolio means
it represents manufacturer brands accounting for around 88% of all
new vehicle sales in the UK, the highest market coverage of any UK
dealer group.
With revenues of £1.1bn in 2014, the
Group is the tenth largest dealer group in the UK.
In May 2015 the Group was recognised
by the Great Place to Work Institute, being ranked the
26th best place to work in the UK (in the large company
category).
2. About SG
Smith
The statutory audited consolidated
accounts for S G Smith Automotive Limited (a wholly owned
subsidiary of SGS) for the year ended 31 December 2014 reported
revenue of £177.4m, profit before tax of £3.0m and total net assets
of £12.2m. Unaudited management accounts covering the 9 month
period to 30 September 2015 show profit before tax of c£2.9m.
Prior to the Acquisition, certain trading and investment freehold
properties were transferred out of SGS to a company controlled by
the Sellers and will not be acquired as part of the Acquisition.
SGS has, therefore, entered into leasehold arrangements for the
continued occupation of two of the transferred properties at an
annual rent expense of approximately £0.28m.
The Acquisition consideration
includes c£9.3m in respect of the estimated consolidated net assets
of SGS, subject to a completion accounts process, which included
c£4.1m of freehold property and c£1.4m of net cash.
*The 'return on investment' is a
simplified calculation comprising net operating profit after tax
divided by invested capital. We consider this a useful criteria to
assess acquisitions, though alternative calculations could also be
applied.
Cautionary statement
This announcement contains unaudited
information based on management accounts or forward-looking
statements that are based on current expectations or beliefs, as
well as assumptions about future events. These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts and undue reliance should not
be placed on any such statements because they speak only as at the
date of this announcement and are subject to known and unknown
risks and uncertainties and can be affected by other factors that
could cause actual results, and MMH's plans and objectives, to
differ materially from those expressed or implied in the
forward-looking statements. MMH undertakes no obligation to
revise or update any forward-looking statement contained within
this announcement, regardless of whether those statements are
affected as a result of new information, future events or
otherwise, save as required by law and regulations. Nothing in this
announcement should be construed as a profit forecast