TIDMMMH
RNS Number : 6276H
Marshall Motor Holdings PLC
14 March 2018
14 March 2018
MARSHALL MOTOR HOLDINGS PLC
("MMH" or the "Group")
Annual results for the year ended 31 December 2017
Marshall outperforms the UK market and delivers another record
trading result
Marshall Motor Holdings plc, one of the UK's leading automotive
retail groups, announces its results for the year ended 31 December
2017.
Financial summary
FYR FYR Var
2017 2016 %
-------- -------- -------
Revenue GBPm 2,268.9 1,899.4 19.5%
Gross profit (%) 11.7% 11.6% +8bps
Reported profit
before tax GBPm 53.1 22.2 139.9%
Underlying profit
before tax* GBPm 29.1 25.4 14.4%
Continuing operations
GBPm 25.4 20.5 23.7%
Discontinued operations
GBPm 3.7 4.9 -24.4%
-------- -------- -------
Basic earnings
per share (p) 63.8 23.0 177.4%
Underlying earnings
per share (p) 30.8 26.2 17.6%
Underlying continuing
earnings per share
(p) 26.9 21.3 26.3%
Dividend per share
(p) 6.4 5.5 16.4%
Net Debt GBPm 2.2 119.0 -98.1%
Highlights
-- Good like-for-like** revenue growth of 3.5% with all revenue
streams showing positive growth.
-- Like-for-like new revenue +1.0%, used +7.0%, aftersales +2.3%.
-- New car retail unit sales up 12.3% (like-for-like down 2.6%
versus UK new retail market*** down 6.8%).
-- Used car unit sales up 17.1% (like-for-like up 5.2% versus UK used market*** down 1.1%).
-- Strong performance from aftersales, revenues up 20.0%
(like-for-like up 2.3%) and further margin improvements.
-- Strategic disposal of Marshall Leasing for a gross
consideration of GBP42.5m before costs and expenses.
-- Management action drives a material reduction in net debt at
31 December 2017 GBP2.2m (2016: GBP119.0m).
-- Balance sheet further strengthened with net assets per share
of GBP2.47 (2016: GBP1.88). Freehold / Long leasehold property
GBP116.3m. GBP120m committed revolving credit facility undrawn at
31 December 2017.
-- Full year dividend up 16.4% at 6.4p per share (2016: 5.5p).
Daksh Gupta, Group Chief Executive, said:
"Despite the more challenging market backdrop, the Board is
pleased to announce another record financial performance which was
ahead of our previously upgraded expectations. During 2017 we took
a number steps, including the strategic disposal of Marshall
Leasing, to prepare the Group for the future. We are now focused
exclusively on our motor retail business and with a significantly
strengthened balance sheet remain ideally positioned to exploit
future opportunities.
"The Board notes the latest Society of Motor Manufacturers and
Traders ('SMMT') UK new car market forecasts for a decline of 5.6%
in 2018. As a consequence the Board therefore remains cautious
about the UK car market in 2018 as it returns to a more normalised
level. Our trading performance in the current financial year to
date is in line with our expectations and our outlook for the full
year remains unchanged.
"I would like to take this opportunity on behalf of the Board to
thank our entire team and our brand partners for their continued
support."
*underlying profit before tax is presented excluding
non-underlying items as set out in Note 4.
**like-for-like businesses are defined as those which traded
under the Group's ownership throughout both the entire year under
review and the corresponding comparative year.
***as reported by The Society of Motor Manufacturers and
Traders.
For further information and enquiries please contact:
Marshall Motor Holdings plc c/o Hudson Sandler
Daksh Gupta, Chief Executive Tel: +44 (0) 20
Officer 7796 4133
Mark Raban, Chief Financial
Officer
Investec Bank plc (Financial Tel: +44 (0) 20
Adviser, NOMAD & Broker) 7597 5970
Christopher Baird
David Flin
David Anderson
Hudson Sandler Tel: +44 (0) 20
7796 4133
Nick Lyon
Bertie Berger
Notes to Editors
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 Motor Group. The Group's
businesses have a total of 101 franchises covering 23 brands,
operating from 84 locations across 26 counties in England. In
addition, the Group operates five trade parts specialists, three
used car centres, five standalone body shops and one pre delivery
inspection centre.
In May 2017 the Group was recognised by the Great Place to Work
Institute, being ranked the 22nd best place to work in the UK
(large company category). This was the eighth year in succession
that the Group has achieved Great Place to Work status.
Cautionary statement
This announcement contains unaudited information based on
management accounts and 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 document
and are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results,
and the Group'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.
Marshall Motor Holdings plc
Annual results for the year ended 31 December 2017
Chairman's Statement
Introduction
I am delighted to present our Annual Report and Accounts for the
year ended 31 December 2017 (the "Year"). Whilst the market
backdrop for the Year was a more challenging one, the Group has
strongly outperformed the UK car market and we are pleased to be
reporting another record set of results at both revenue and
underlying profit before tax ('underlying PBT')*. We have also
taken significant steps to prepare the Group for the future.
Strategy
Since our IPO three years ago, the Group has, in line with its
stated strategy, delivered material growth both organically and
through the acquisitions of SG Smith in November 2015 and Ridgeway
in May 2016.
In 2017 we focused on preparing for the next stage of the
Group's development and growth. The strategic disposal of our
leasing business Marshall Leasing Limited ('Marshall Leasing') in
November 2017, for gross consideration of GBP42.5m (before costs
and expenses), combined with ongoing portfolio management and the
closure of a number of sub-scale, loss-making sites, has reduced
our cost base, significantly strengthened our balance sheet and
enabled us to focus exclusively on our retail businesses. As a
result, we are well positioned to continue to deliver our future
growth aspirations.
Results
The Group has enjoyed another record year, delivering 19.5%
revenue growth and 14.4% underlying PBT growth.
Our net debt was effectively eliminated following the disposal
of Marshall Leasing and was GBP2.2m at 31 December 2017 (2016:
GBP119.0m). The Group's significantly strengthened balance sheet
remains underpinned by GBP116.3m of freehold/long leasehold
property.
Dividend
The Group's stated dividend policy is to maintain a progressive
dividend policy where dividends are covered between 4 to 5 times by
underlying earnings. The Board is, therefore, pleased to recommend
a final dividend of 4.25p per share which, with the interim
dividend of 2.15p per share, gives a total dividend for the Year of
6.40p per share (2016: 5.50p, up 16.4%).
If approved by shareholders at our AGM on 22 May 2018, the final
dividend will be paid on 25 May 2018 to shareholders who are on the
Company's register at close of business on 27 April 2018.
AGM
Our annual general meeting will be held on 22 May 2018 and I
look forward to meeting all shareholders who are able to
attend.
Outlook
The Board notes the latest Society of Motor Manufacturers and
Traders ('SMMT') UK new car market forecasts for a decline of 5.6%
in 2018. As a consequence the Board therefore remains cautious
about the UK car market in 2018 as it returns to a more normalised
level. Our trading performance in the current financial year to
date is in line with our expectations and our outlook for the full
year remains unchanged.
The Group has a strong brand mix, attractive geographic
territories and excellent brand partner relationships and is well
placed to continue to outperform the UK new car market. The
strategic disposal of Marshall Leasing allows the Group to focus on
its core motor retail business.
Finally, I would like to thank the Board, the executive team,
our brand partners, business suppliers and colleagues throughout
the Group for their support during another successful year.
Peter Johnson
Chairman
13 March 2018
Operating Review
Overview
Since our IPO in April 2015, the Group has delivered material
and sustained improvements in its financial and operational
performance. Our 2017 results continue this excellent track record,
benefitting from both continued organic growth and the first full
year contribution from the Ridgeway acquisition which is now fully
integrated.
During the Year, the Group also continued being proactive in
portfolio management, announcing the acquisition of Leeds Volvo in
June 2017, the disposal of Marshall Leasing Limited in September
2017 and the closure of six sub-scale, loss-making businesses in
November 2017.
2017 was another successful year for the Group:
-- Revenue up 19.5% to GBP2.3bn (2016: GBP1.9bn) with the Group
also achieving like-for-like** revenue growth of 3.5%.
-- Underlying PBT up 14.4% to GBP29.1m (2016: GBP25.4m).
-- Significant growth in underlying PBT in our retail segment,
up 20.8% to GBP34.9m (2016: GBP28.9m), driven by a combination of
contribution from the Ridgeway acquisition and continued organic
growth.
o Like-for-like new unit vehicle sales to retail customers
outperformed the UK market.
o Excellent performance in used unit vehicle sales with
like-for-like unit sales outperforming the UK market.
o Aftersales like-for-like revenue continued to grow, up
2.3%.
-- The disposal of Marshall Leasing has enabled us to focus
exclusively on our UK motor retail operations as well as further
strengthening the Group's balance sheet.
Our continued outperformance of the UK new car retail market in
the Year was particularly pleasing. In 2017 UK new car
registrations were 2.54m (including dealer and self-registrations),
5.7% lower than in 2016. Registrations to retail customers in 2017
were 6.8% lower than in 2016. Against this market backdrop, we have
continued to outperform the retail market with our like-for-like
unit sales to new retail customers in the Year 2.6% lower than in
2016.
The SMMT reported a used vehicle market decline of 1.1% in the
Year, however, at 8.11m units this was still the second highest
market on record. Despite this overall decline, the Group recorded
a like-for-like growth in used unit sales of 5.2%.
Strategy
The Group's strategic vision is to become the UK's premier
automotive Group and this remains central to everything we do. Our
five strategic pillars which underpin that vision are: class
leading returns; putting our customers first; delivering retailing
excellence for the benefit of our customers; being people-centric
by focusing on employee engagement; and pursuing strategic growth
both organically and through targeted acquisitions in line with the
Group's strategy.
Class leading returns
The Group's strategy of building a balanced brand portfolio, in
attractive geographic locations and with an increased premium
franchise mix, has assisted the continuation of our strong track
record in the face of a more challenging market. Total new vehicle
revenue grew by 18.6% (1.0% like-for-like) and total used vehicle
revenue grew 21.1% (7.0% like-for-like).
The completion of the integration of Ridgeway has also enabled
the Group to access further benefits of scale across a number of
areas of the business including improved commercial terms with
suppliers and vehicle stock management.
An important element of the Group's success continues to be our
strong and growing relationships with our brand partners, many of
which are reacting to a more challenging market with a number of
positive actions.
Aftersales continues to be a key focus of the Group and our
strong performance in recent years continued during the Year, with
total revenue growth of 20.0% (2.3% like-for-like). We continue to
focus on maintaining high levels of customer retention and repeat
business through the use of service plans as well as investing in
technical and product training for our technicians.
Customer first
The Group continues to enjoy high levels of customer advocacy.
In 2017, 42% of customers surveyed who visited our showrooms
indicated that they were either previous customers or were
recommended to us.
The launch of the domain marshall.co.uk enabled us to market all
Group stock, including those of SG Smith and Ridgeway, on one
website for the first time, giving customers increased choice with
c.6,000 used vehicles available online. In 2017, visits to our
website increased materially and in December 2017 marshall.co.uk
was the fifth most visited franchised dealer group website in the
UK (Source: Hitwise).
Retailing excellence
We continue to recognise the ever increasing importance of
investment in technology, aimed towards expanding the Group's
customer base and improving our own internal operating
efficiencies. We have continued to invest in these areas during the
Year.
In addition to our website presence, we continue to drive social
media as a means of connecting with our customers. As a result of
this, I am delighted that during the Year we received six awards
including Most Influential Franchised Dealer (Car Dealer Awards),
Best Digital Initiative (Automotive Management) and Best use of
Social Media (Automotive Management).
Our tablet-based enquiry management system has now been
successfully implemented across all sites and provides both a
seamless customer experience as well as assisting compliance in the
marketing and sale of regulated ancillary products.
Development of our internal systems also continued, with
extensive upgrades to our financial reporting system which is now
fully implemented across every site. This has provided a number of
enhanced features which have improved the speed and quality of
management information.
People-centric
The Group was pleased to have been ranked 22(nd) of the Top 30
large employers based on The Great Place to Work Institute's 2016
survey. We are also proud that during the Year we have, for the
eighth consecutive year, been recognised by the Great Place to Work
Institute as a 'great place to work' based on colleagues surveyed
during 2017. This is particularly pleasing as the 2017 survey
included over 1,200 colleagues from the former Ridgeway businesses
for the first time and as such reinforces the importance of our
structured approach to the integration of new businesses as part of
our acquisition strategy. We look forward to receiving our final
ranking for this survey.
We are now in the second year of our initiative to attract new
talent to the industry and improve the retention of sales
executives. As previously reported, this initiative includes
providing a guarantee of earnings during the first year of
employment, alongside retention bonuses and ongoing training and
support. Whilst we have further work to do in this area, the
results of this initiative have exceeded our expectations with a
significant reduction in sales executive colleague turnover. We are
also pleased that it has attracted talent from a wide variety of
industry backgrounds, not just the automotive industry, which we
expect to add strength and depth to our teams as well as improving
our overall customer service.
Following the success of this programme, we are expanding it to
other job roles and these initiatives will assist us in identifying
the future leaders of our business.
Strategic growth
The Group's strategy is to grow scale with existing brand
partners in new geographical territories, as demonstrated by the
acquisitions of both SG Smith in 2015 and Ridgeway in 2016.
During the Year we added three new franchises to our portfolio
in two locations. In June 2017 we completed the purchase of Leeds
Volvo followed by the opening in December 2017 of a new Jaguar Land
Rover dealership in Newbury, a previously unrepresented territory
for these brands.
Retail segment
Twelve months ending Revenue Gross Profit
31 December 2017
GBPm mix* GBPm mix
New Car 1,166.5 51.2% 84.1 32.6%
Used Car 869.7 38.2% 59.9 23.2%
Aftersales 243.1 10.6% 114.0 44.2%
Internal (47.6)
------- ------ ------ ------
Total 2,231.7 100.0% 258.0 100.0%
======= ====== ====== ======
Twelve months ending Revenue Gross Profit
31 December 2016
GBPm mix* GBPm mix
New Car 983.3 51.6% 68.9 32.5%
Used Car 718.3 37.7% 50.7 23.9%
Aftersales 202.6 10.7% 92.3 43.6%
Internal (44.5)
------- ------ ------ ------
Total 1,859.7 100.0% 211.9 100.0%
======= ====== ====== ======
* mix calculation excludes internal revenue
Overview
During the Year, the retail segment contributed an underlying
PBT before unallocated costs of GBP34.9m, a growth of 20.8% from
2016.
Following the acquisition of Leeds Volvo, the opening of Newbury
Jaguar Land Rover and the recently announced closures, the retail
segment now consists of 101 franchises representing 23 brand
partners trading in 26 counties. In addition, the Group operates 5
trade parts specialists, 3 used car centres, 5 standalone body
shops and 1 pre-delivery inspection (PDI) centre. The Group
operates a balanced portfolio of volume, premium and alternate
premium brands including all of the top 5 premium brands.
The Group's diverse portfolio means it represents manufacturer
brands accounting for 81.7% of all new vehicle sales in the UK.
This scale and diversified spread of representation helps mitigate
the effect of the cyclical nature of individual brand
performance.
Acquisitions and disposals
During the Year, the Group acquired the business and assets of
Leeds Volvo for GBP0.1m. This acquisition further strengthened the
Group's position as the largest franchise partner of Volvo Car UK
by number of sites and was in line with our stated strategy to grow
scale with existing brand partners and extend our geographic
footprint into new regions. Our focus will remain on ensuring a
strong strategic and financial case for any opportunity. We have
further headroom to grow with all brand partners in what we
believe, with market uncertainty ahead, will continue to be a
consolidating market.
In November 2017 the Board made the decision to close five
sub-scale, loss-making franchise dealerships and one used car
centre. Three of the franchise dealerships were within close
proximity to existing Group dealerships of the same franchise which
has enabled the Group to retain some of the existing customer base,
these were Honda Mountsorrel, Nissan Boston and Vauxhall Welwyn
Garden City.
Two of the impacted businesses shared a sub-scale site in Oxford
with a high fixed cost base which was not sustainable in the longer
term. These were the Maserati franchise and one of the Group's used
car centres. The final closure announced was Citroen Cambridge,
being the Group's only representation point with this particular
brand partner.
In addition to the removal of these loss-making franchises and
the cash realisation of associated working capital, the closures
will allow management to give greater focus to our remaining
franchises.
Investment in new retail locations
During the Year, the Group continued its significant investment
in new retail locations with two key site openings:
-- In August 2017, we completed and opened a new Audi dealership
in Marsh Barton, Exeter, one of Europe's largest motor retail
parks. This investment has significantly increased both used car
and aftersales capacity with 70 used vehicle display spaces and 14
aftersales bays. Total investment (including freehold land) was
GBP7.8m.
-- In December 2017, we opened our Newbury Jaguar Land Rover
dealership in a previously unrepresented territory. Total
investment (including long leasehold land) was GBP10.9m.
Investment in existing businesses
The Group continues to invest in upgrading existing businesses
to enhance the customer experience, satisfy brand requirements and
increase sales and aftersales capacities. Upgrade and refurbishment
investment during the Year included:
-- Salisbury BMW/MINI: customer experience refurbishment and used vehicle sales extension.
-- Bedford Land Rover: commencement of redevelopment.
-- Mercedes-Benz Bolton and Portsmouth: customer experience upgrade, sales and aftersales.
-- Grantham Nissan: customer experience upgrade.
-- Peugeot - all sites: customer experience upgrades.
-- Cambridge Volvo: relocation to long leasehold premises and
upgrade to new Volvo standards.
-- Seat - all sites: customer experience upgrade.
-- Newbury SKODA: relocation to an existing freehold site.
New vehicles
Growth
2017 2016 Total LFL
Retail Units 31,801 28,321 12.3% (2.6%)
Fleet Units 21,507 20,563 4.6% (13.9%)
------ ------ -------- ---------
Total Units 53,308 48,884 9.0% (7.5%)
====== ====== ======== =========
During the Year, the Group's retail new car unit sales increased
by 12.3%, benefitting from the full year impact of the Ridgeway
acquisition. Like-for-like new retail units declined by 2.6% which
was a strong performance against an overall UK new retail market
decline of 6.8%.
Like-for-like unit sales to fleet customers declined by 13.9%
versus an overall market decline of 4.7%. This performance was, as
expected, largely driven by a commercial decision we took during
the Year to withdraw from certain low margin fleet business.
As has been widely reported, sales of diesel vehicles have been
adversely impacted by consumer reaction around emissions and
uncertain future government policy. Diesel registrations fell 17.1%
during the Year (including manufacturer registrations) across the
UK market with diesel registrations accounting for 42.0% of new car
registrations during the Year, down from 47.7% in 2016.
One of the Group's key strengths is its balanced portfolio of
volume, alternate premium and premium brands. This balance is
important due to the cyclical nature of individual brands. This has
helped the Group outperform the overall new car market in 2017 with
premium and alternate premium brands (which now account for over
three quarters of the Group's franchise portfolio) performing more
strongly than the overall market.
The choice and availability of finance products for consumers,
including personal contract purchase ("PCP"), continues to play an
important role in the new car market. PCPs remain a popular method
of financing new vehicle purchases providing the certainty of a
guaranteed future value for the vehicle at the end of the contract.
During the Year, c.83% of customers purchasing new cars from the
Group on finance chose to do so using a PCP product. At 31 December
2017 the Group had 67,458 active PCP customers. PCPs are also
beneficial to the Group as they create a defined point of
renewal/purchase/replacement and we actively manage the renewal
process to ensure customers are retained with the Group.
Used vehicles
Growth
2017 2016 Total LFL
------ ------ ----- ----
Total Units 44,237 37,787 17.1% 5.2%
====== ====== ===== ====
During the Year, the Group's used car unit sales increased by
17.1% (like-for-like 5.2%). This is a particularly pleasing
performance when compared to an overall market decline of 1.1% as
reported by the SMMT.
The Group continues to focus on improving its online presence to
drive used vehicle sales. This objective has been particularly
successful as a result of the Group's increased geographic
footprint and enlarged stock pool following the acquisitions of SG
Smith and Ridgeway.
Used car revenues showed growth of 21.1% (like-for-like 7.0%)
driven by a strengthening premium brand mix with higher average
selling prices. Gross margin at 6.9% was marginally below 2016.
We continue to control our stock appropriately to meet demand
and our 56 day stocking policy encourages accelerated stock turn,
leading to a higher sales volumes and reduced residual value
risk.
As we have seen over recent years in the new car market, PCP as
a method of financing a vehicle purchase has increased in the used
car market. During the Year, c.58.0% of the Group's used vehicles
purchased on finance were purchased using a PCP product versus
c.55.0% in 2016, frequently with service plans included. This also
provides further aftersales opportunities.
Aftersales
Growth
2016 2015 Total LFL
----- ----- ----- ----
Revenue (GBPm) 243.1 202.6 20.0% 2.3%
===== ===== ===== ====
During the Year, the Group's aftersales revenues increased by
20.0% (like-for-like 2.3%).
In addition to our retail centre based aftersales facilities,
the Group now operates five standalone bodyshops, five trade parts
centres and one PDI centre. Aftersales contributes 44.2% of total
retail gross profit and therefore makes a significant financial
contribution to the Group which is important in the context of a
more cyclical new car market.
Aftersales business is driven by the Group in a variety of
ways:
-- strong growth in new and used vehicle sales over recent years
has increased the Group's customer-base, many of whom return to our
dealerships for the ongoing care and maintenance of their
vehicles;
-- used vehicle sales, and in particular those purchased on PCPs
with service plans, also drive future aftersales business with used
vehicles requiring additional aftersales services (e.g. MOT
tests);
-- we offer service plans to customers of both new and used
vehicles which allow customers to plan and budget for service costs
and also drives repeat visits to our dealerships and helps us
develops longer term customer relationships. At 31 December 2017
the Group had over 77,000 live service plans;
-- customer service is crucial in ensuring customer retention
and we monitor customer feedback throughout the business on a
weekly basis and customer satisfaction is built into all of our
operational pay plans.
As a result of these factors, gross margin at 46.9% improved in
the Year, up from 45.6% in 2016.
Leasing segment
On 21 September 2017 the Group announced the strategic disposal
of Marshall Leasing to N.I.I.B. Group Limited (trading as
Northridge Finance) for gross cash consideration of GBP42.5m. The
disposal completed on 24 November 2017.
The leasing and fleet management market continues to consolidate
and the Board considered that scale was becoming increasingly
important to underpin the capital intensive nature of the business
model. The disposal allows the Group to focus exclusively on its UK
motor retail operations, a segment which the Board believes
continues to offer attractive opportunities for future growth.
As part of the transaction, the Group entered into an operating
agreement with Northridge Finance for the ongoing supply of new
vehicles. We are pleased to have this opportunity as we anticipate
that under new ownership, Marshall Leasing will continue to grow
its leasing fleet, providing an increased opportunity to the
Group.
Summary
The Group has produced another record set of results at both
revenue and underlying PBT, building on our strong historical
performance. In the face of a more challenging new car market, the
Group has continued to show progress in like-for-like performance,
has integrated recent acquisitions, restructured the balance sheet
following the disposal of Marshall Leasing and closed six subscale,
loss making businesses. This leaves the Group well positioned for
the future.
In what is now my 10(th) year with the Group, I would like to
take this opportunity to thank our colleagues, Board members, brand
and business partners for their hard work and support and I look
forward to continuing to work together in 2018.
Daksh Gupta
Chief Executive Officer
13 March 2018
Financial Review
Group results
Revenue GBP2.3bn
2016 GBP1.9bn
Group revenue increased by 19.5% to GBP2,268.9m (2016:
GBP1,899.4m) benefiting from the first full year contribution from
Ridgeway which was acquired in May 2016. In addition to
contributions from acquisitions, I am delighted to report that
like-for-like retail revenue also showed growth of 3.5%.
Like-for-like revenues in new vehicle sales to retail customers,
used vehicle sales and aftersales all recorded growth during the
Year.
Total gross margin at 11.7% was 8 basis points above the same
period last year (2016: 11.6%). The Group experienced underlying
margin pressure in the discontinued leasing segment but this was
more than offset by margin growth in the continuing retail segment.
Against the background of a more challenging market, I am pleased
to report further margin growth in both new vehicles and
aftersales.
Total operating expenses of GBP240.7m were 25.8% higher than the
same period last year, primarily driven by the impact of
acquisitions and non-underlying items. As anticipated, our retail
segment operating overheads on a like-for-like basis grew by 5.4%
as the Group faced incremental structural cost pressures in a
number of areas such as business rates and transaction processing
costs.
Total underlying PBT at GBP29.1m (2016: GBP25.4m) was 14.4%
ahead of the previous year.
The Group's continuing operations showed an underlying PBT
growth of 23.7% which represented another record year. The
discontinued leasing segment delivered a PBT of GBP3.7m in the 11
month period to completion of the disposal in November 2017 (full
year 2016: GBP4.9m).
The unallocated segment consists principally of administrative
and asset management functions. Underlying central operating costs
of GBP9.6m (including interest) were, as expected, GBP1.1m higher
than in 2016. This was largely driven by additional infrastructure
investment and the full year impact of increased finance / interest
costs following the acquisition of Ridgeway (see finance costs
section below).
Non-underlying items
GBP24.1m
2016 (GBP3.2m)
The disposal of the leasing segment generated a one-off gain of
GBP36.9m after all transaction costs and provision for the
settlement of certain historic pension liabilities.
In addition, the Group incurred net non-underlying costs of
GBP12.8m (2016: GBP3.2m). These included a GBP6.8m charge related
to the closure of five franchised dealerships and one used car
centre announced in November 2017 (including GBP2.1m non-cash asset
impairment charges). Also included in non-underlying items is a
GBP6.0m post-retirement benefits charge, representing an estimate
of the Group's costs to cease participation in a defined benefit
pension scheme; one of several outcomes being considered by the
Group as part of a wider strategic review of pension arrangements
in the light of the disposal of Marshall Leasing. See Note 11
'Pensions' for further details.
These non-underlying items are presented separately on the face
of the income statement and are excluded from underlying PBT.
Finance costs
GBP8.1m
2016 GBP6.9m
Finance costs of GBP8.1m were, as expected, GBP1.2m higher than
in 2016, driven by increased full year costs associated with
drawings under the Group's revolving credit facility ("RCF") (in
connection with the Ridgeway acquisition) and increased stock
funding charges. These additional costs include amortisation of
arrangement fees and non-utilisation charges. We expect finance
costs to reduce in 2018 following the disposal of Marshall
Leasing.
Taxation
Underlying ETR 18.1%
2016 20.3%
Being sensitive to the impact of gains and charges associated
with acquisitions, disposals and restructuring, at 7.1% (2016:
19.9%), the effective tax rate (ETR) on total reported earnings
benefited materially from the one-off, non-taxable gain relating to
the disposal of Marshall Leasing.
The underlying ETR was 18.1% (2016: 20.3%). The rate benefited
from non-recurring, prior year adjustments. In 2018 in the
underlying ETR is expected to return to historical levels.
Full details of the Group's tax governance framework can be
found in the Group's tax strategy which is available on the Group's
website at:
http://www.mmhplc.com/investors/corporate-governance.
Acquisitions
Total spend GBP0.1m
2016 GBP94.5m
Continuing the Group's strategy of expansion with existing brand
partners in new geographic territories, during the Year the Group
completed the acquisition of Leeds Volvo for GBP0.1m, further
strengthening its position as the largest franchise partner of
Volvo Car UK by number of sites.
Disposal of discontinued operation
Gross proceeds GBP42.5m
2016 nil
On 21 September 2017 the Group announced the strategic disposal
of Marshall Leasing to N.I.I.B. Group Limited (which trades as
Northridge Finance), a wholly owned subsidiary of Bank of Ireland
(UK) plc. Following regulatory approval from the Financial Conduct
Authority, the transaction completed on 24 November 2017.
As well as further strengthening the Group's balance sheet, the
disposal allows the Group to focus on its core motor retail
business and to continue the Group's successful strategy of driving
both organic growth and increasing its UK geographic footprint
through targeted acquisitions with existing brand partners.
The gross cash consideration for the disposal was GBP42.5m
before costs and expenses which has been used initially to reduce
levels of indebtedness. The net assets of Marshall Leasing on
disposal were GBP2.3m.
The Group incurred GBP1.8m of transaction costs in relation to
the disposal, including the settlement of long term management
incentives for certain senior employees of Marshall Leasing.
Net debt
GBP2.2m
2016 GBP119.0m
The Group's balance sheet is strong and has significant capacity
to support continued growth. The Group had total net assets of
GBP191.2m (2016: GBP145.7m) which equates to 247p per share as at
31 December 2017 (2016: 188p per share).
The Group incurred GBP24.4m of retail capital expenditure during
the Year (2016: GBP28.8m). I am pleased to report that two major
freehold/long leasehold developments opened on time and on budget
during the second half of the Year. These were Audi Exeter and a
new Jaguar Land Rover dealership at a new franchise point in
Newbury. 2018 will be the final year of our three-year GBP75m
retail capital expenditure programme.
Total inventory at 31 December 2017 was GBP401.3m (2016:
GBP380.0m) of which GBP380.6m was subject to vehicle funding
arrangements (2016: GBP364.7m).
At 31 December 2017, the Group had net debt of GBP2.2m (2016:
GBP119.0m). In addition to the significant positive cash flow from
the disposal of Marshall Leasing, the Group continued to focus on
all aspects of working capital control, driving a positive cash
flow from reduced levels of working capital during the Year. The
significant reduction in net debt leaves the Group well positioned
to pursue further growth opportunities and to respond appropriately
to more challenging market conditions.
Importantly, the disposal of Marshall Leasing has materially
reduced the Group's exposure to vehicle residual value risks during
a period of more challenging market conditions.
Our GBP120m three year banking facility was put in place during
May 2016 for general corporate purposes including acquisitions and
working capital requirements. This facility was undrawn at 31
December 2017. During the Year, the Group exercised an option to
extend the facility for a further year to 2020. The Group has a
further option in May 2018 to extend the facility for a further
twelve months.
Dividends
6.40p per share
2016 5.50p per share
The Board is delighted to recommend a final dividend of 4.25p
(2016: 3.70p) per share which, together with the interim dividend
of 2.15p (2016: 1.80p) per share, gives a total dividend for the
Year of 6.40p (2016: 5.50p).
If approved by shareholders, the dividend will be paid on 25 May
2018 to shareholders who are on the Company's register at close of
business on 27 April 2018.
The Board intends to maintain a progressive dividend policy
whereby dividends are covered between 4 to 5 times underlying
earnings and paid in an approximate one-third (interim dividend)
and two-thirds (final dividend) split. The retained earnings of the
Company at 31 December 2017 of GBP70.1m (2016: GBP19.7m) are
considered sufficient for the payment of future dividends in line
with the Group's dividend policy.
Mark Raban
Chief Financial Officer
13 March 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017
Continuing Discontinued Continuing Discontinued
Note operations operations Total operations operations Total
2017 2017 2017 2016 2016 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 2,231,979 36,969 2,268,948 1,860,056 39,349 1,899,405
Cost of sales (1,973,678) (30,159) (2,003,837) (1,647,957) (30,992) (1,678,949)
----------- ------------ ----------- ----------- ------------ -----------
Gross profit 258,301 6,810 265,111 212,099 8,357 220,456
Net operating
expenses 3/4 (238,204) (2,524) (240,728) (188,698) (2,704) (191,402)
Group operating
profit 20,097 4,286 24,383 23,401 5,653 29,054
----------- ------------ ----------- ----------- ------------ -----------
Other income
- gain on disposal
of subsidiary 4/5 - 36,851 36,851 - - -
Net finance
costs 6 (7,519) (580) (8,099) (6,154) (749) (6,903)
Profit before
taxation 12,578 40,557 53,135 17,247 4,904 22,151
----------- ------------ ----------- ----------- ------------ -----------
Analysed as:
Underlying profit
before tax 25,361 3,706 29,067 20,496 4,904 25,400
Non-underlying
items 4 (12,783) 36,851 24,068 (3,249) - (3,249)
-------------------- ---- ----------- ------------ ----------- ----------- ------------ -----------
Taxation 7 (3,080) (716) (3,796) (3,214) (1,183) (4,397)
----------- -----------
Profit for the
year 9,498 39,841 49,339 14,033 3,721 17,754
=========== ============ =========== =========== ============ ===========
Attributable
to:
Owners of the
parent 9,519 39,841 49,360 14,041 3,721 17,762
Non-controlling
interests (21) - (21) (8) - (8)
-----------
9,498 39,841 49,339 14,033 3,721 17,754
=========== ============ =========== =========== ============ ===========
Total comprehensive
income for the
year net of
tax 9,498 39,841 49,339 14,033 3,721 17,754
=========== ============ =========== =========== ============ ===========
Attributable
to:
Owners of the
parent 9,519 39,841 49,360 14,041 3,721 17,762
Non-controlling
interests (21) - (21) (8) - (8)
9,498 39,841 49,339 14,033 3,721 17,754
=========== ============ =========== =========== ============ ===========
Earnings per
share (expressed
in pence per
share)
Basic earnings
per share 8 12.3 51.5 63.8 18.1 4.9 23.0
----------- ------------ ----------- ----------- ------------ -----------
Diluted earnings
per share 8 11.9 49.8 61.7 17.6 4.7 22.3
----------- ------------ ----------- ----------- ------------ -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity
attributable
to owners Non-
Share Share Retained of controlling Total
Note capital premium earnings the parent interests equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 49,431 19,672 60,781 129,884 29 129,913
======== ======== ========= ============= ============ =========
Profit for the year - - 17,762 17,762 (8) 17,754
Total comprehensive
income - - 17,762 17,762 (8) 17,754
-------- -------- --------- ------------- ------------ ---------
Transactions with
owners
Dividends paid - - (3,251) (3,251) - (3,251)
Issue of share capital 100 - (100) - - -
Share-based payments
charge - - 1,313 1,313 - 1,313
Deferred tax on
share based payments - - (70) (70) - (70)
Balance at 31 December
2016 49,531 19,672 76,435 145,638 21 145,659
======== ======== ========= ============= ============ =========
Profit for the year - - 49,360 49,360 (21) 49,339
Total comprehensive
income - - 49,360 49,360 (21) 49,339
-------- -------- --------- ------------- ------------ ---------
Transactions with
owners
Dividends paid 9 - - (4,527) (4,527) - (4,527)
Share based payments
charge - - 739 739 - 739
Balance at 31 December
2017 49,531 19,672 122,007 191,210 - 191,210
======== ======== ========= ============= ============ =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2017
Note 2017 2016
GBP'000 GBP'000
Assets
Non-current assets
Goodwill and other intangible
assets 121,596 122,033
Property, plant and equipment 10 142,428 201,811
Investment property 2,590 2,590
Investments - 10
Deferred tax asset 39 36
Total non-current assets 266,653 326,480
-------- --------
Current assets
Inventories 401,260 380,016
Trade and other receivables 92,141 95,073
Cash and cash equivalents 4,867 83
Assets classified as held 750 -
for sale
Total current assets 499,018 475,172
-------- --------
Total assets 765,671 801,652
======== ========
Shareholders' equity
Share capital 49,531 49,531
Share premium 19,672 19,672
Retained earnings 122,007 76,435
-------- --------
Equity attributable to owners
of the parent 191,210 145,638
Share of equity attributable
to non-controlling interests - 21
Total equity 191,210 145,659
-------- --------
Non-current liabilities
Loans and borrowings 6,466 41,364
Trade and other payables 4,281 7,462
Provisions 4,015 1,450
Deferred tax liabilities 20,448 20,803
Total non-current liabilities 35,210 71,079
-------- --------
Current liabilities
Loans and borrowings 642 77,730
Trade and other payables 527,614 497,340
Provisions 8,815 5,242
Current tax liabilities 2,180 4,602
Total current liabilities 539,251 584,914
-------- --------
Total liabilities 574,461 655,993
-------- --------
Total equity and liabilities 765,671 801,652
======== ========
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2017
Note 2017 2016
GBP'000 GBP'000
Cash flows from operating activities
Profit before taxation 53,135 22,151
Adjustments for:
Depreciation and amortisation 25,183 24,233
Finance costs 6 8,099 6,903
Share-based payments charge 739 1,313
Loss / (profit) on disposal of
property, plant and equipment 3 1,085 (38)
Impairment of property, plant
and equipment 3 945 -
Impairment of investment 10 -
Profit on disposal of dealerships 3/4 - (285)
Profit on disposal of subsidiary 5 (38,664) -
Increase in fair value of investment
properties 4 - (670)
----------
50,532 53,607
--------- ----------
Changes in working capital:
Increase in inventories (21,223) (14,814)
Decrease / (increase) in trade
and other receivables 450 (271)
Increase in trade and other payables 33,703 56,299
Increase / (decrease) in provisions 6,138 (2,940)
----------
19,068 38,274
--------- ----------
Tax paid (7,443) (4,669)
Interest paid (8,099) (6,903)
----------
Net cash inflow from operating
activities 54,058 80,309
--------- ----------
Cash flows from investing activities
Purchase of property, plant,
equipment, leased vehicles and
software (57,549) (61,927)
Acquisition of businesses, net
of cash acquired (77) (94,495)
Net cash flow from sale of businesses - 3,145
Net cash flow from sale of discontinued
operation 5 44,695 -
Proceeds from disposal of property,
plant and equipment 11,985 11,418
Net cash outflow from investing
activities (946) (141,859)
--------- ----------
Cash flows from financing activities
Proceeds from borrowings 41,778 85,444
Repayment of borrowings (85,579) (44,690)
Dividends paid 9 (4,527) (3,251)
----------
Net cash (outflow) / inflow from
financing activities (48,328) 37,503
--------- ----------
Net increase / (decrease) in
cash and cash equivalents 4,784 (24,047)
Cash and cash equivalents at
1 January 83 24,130
Cash and cash equivalents at
year end 4,867 83
========= ==========
NET DEBT RECONCILIATION
For the year ended 31 December 2017
Note 2017 2016
GBP'000 GBP'000
Reconciliation of net cash flow
to movement in net debt
Net increase / (decrease) in
net cash and cash equivalents 4,784 (24,047)
Proceeds from drawdown of RCF (10,000) (35,000)
Repayment of drawdown of RCF 45,000 -
Proceeds of asset backed borrowings (31,778) (50,444)
Repayment of asset backed borrowings 68,185 37,308
Repayment of other borrowings 2,791 7,382
Repayment of bank overdraft 10,825 -
Repayment of / (acquired) debt
with acquisitions 25,705 (25,705)
Repayment of / (acquired) derivatives
with acquisitions 1,258 (1,258)
Decrease / (increase) in net
debt 116,770 (91,764)
Opening net debt (119,011) (27,247)
Net debt at year end (2,241) (119,011)
========== ==========
Net debt at year end consists
of:
Cash and cash equivalents 4,867 83
Loans and borrowings (7,108) (119,094)
(2,241) (119,011)
========== ==========
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
1. General information
Marshall Motor Holdings Plc (the "Company") is incorporated and
domiciled in the United Kingdom. The Company is a public limited
company, limited by shares, whose shares are listed on the
Alternative Investment Market (AIM) of the London Stock Exchange.
The Company is registered in England under the Companies Act 2006
(registration number 02051461) with the address of the registered
office being; Airport House, The Airport, Cambridge, CB5 8RY,
United Kingdom.
The Company is the holding company of a group of companies whose
activities consist principally of car and commercial vehicle sales,
distribution, service and associated activities (the "Group").
Until the disposal of Marshall Leasing Limited in November 2017,
the Group was engaged in the business of leasing vehicles.
The condensed consolidated financial information for the year
ended 31 December 2017 has been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union and in accordance with the requirements of the
Companies Act 2006 applicable to entities reporting under IFRS. The
accounting policies applied are consistent with those set out in
the Marshall Motor Holdings Plc Annual Report and Accounts 2016
published on 20 March 2017.
The financial information contained within this preliminary
announcement for the years ended 31 December 2017 and 31 December
2016 does not comprise statutory financial statements within the
meaning of section 434 of the Companies Act 2006. Statutory
financial statements for the year to 31 December 2016 have been
prepared in accordance with UK GAAP and have been filed with the
Registrar of Companies. Financial statements for the year ended 31
December 2017 will be filed following the Company's Annual General
Meeting. The Auditors' Reports on the statutory financial
statements for the years ended 31 December 2017 and 31 December
2016 are unqualified, do not draw attention to any matters by way
of emphasis, and do not contain any statement under section 498 of
the Companies Act 2006.
A copy of the full Group financial statements for the period
ended 31 December 2017 that comply with IFRSs will be made
available at www.mmhplc.com.
'Like for like' businesses are defined as those which traded
under the Group's ownership throughout both the period under review
and the whole of the corresponding comparative period.
Going concern
The consolidated financial statements are prepared on the going
concern basis. After making appropriate enquiries, the Directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future and
for at least one year from the date that these consolidated
financial statements are signed. For these reasons they continue to
adopt the going concern basis in preparing the Group's financial
statements.
In preparing the preliminary announcement, the Directors have
also made reasonable and prudent judgements and estimates and
prepared the preliminary announcement on the going concern basis.
The preliminary announcement and management report contained herein
give a true and fair view of the assets, liabilities, financial
position and profit and loss of the Group.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
2. Segmental information
Operating segments are reported in a manner consistent with the
internal management reporting provided to the Chief Operating
Decision Makers who are responsible for allocating resources and
assessing the performance of the operating segments. Management
have identified the Chief Executive Officer as being the Chief
Operating Decision Maker in accordance with the requirements of
IFRS 8 Operating Segments.
Management has determined the operating segments based on the
operating reports reviewed by the Chief Executive Officer that are
used to assess both performance and strategic decisions. These
results have been determined using accounting policies consistent
with those used in the consolidated financial statements.
The Group's business is split into two main revenue-generating
operating segments and a third support segment. No significant
judgements have been made in determining the reporting
segments.
Retail
This segment includes sales of new and used vehicles, together
with the associated ancillary aftersales services of; servicing,
body shop repairs and parts sales.
Leasing
This segment includes the leasing of vehicles to end consumers
and fleet customers.
Unallocated
This segment includes the Group's head office and central
management functions including; the Board, group finance functions,
the human resources department and all governance and compliance
related functions in support of the wider business. Also included
is rental income arising from investment properties.
From 1 January 2018, the Group is organised into one business
segment being the retail segment. The leasing segment was
discontinued on the sale of Marshall Leasing Limited on 24 November
2017 (see Note 5 'Discontinued Operations').
Depreciation presented in the segmental note is restricted to
assets other than assets held for contract rental, on the basis
that depreciation on our leasing fleet is presented within cost of
sales.
All segment revenue, profit before taxation, assets and
liabilities are attributable to the principal activity of the Group
being the provision of car and commercial vehicle sales, leasing,
vehicle service and other related services.
Geographical information
Revenue earned from sales is disclosed by origin and is not
materially different from revenue by destination. All of the
Group's revenue is generated in the UK.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
2. Segmental information (continued)
Retail
(note Leasing
2b) (Discontinued) Unallocated Total
For the year ended 31 GBP'000 GBP'000 GBP'000 GBP'000
December 2017
Total revenue from external
customers 2,231,696 36,969 283 2,268,948
========= =============== =========== =========
Depreciation and amortisation (9,190) (4) (27) (9,221)
========= =============== =========== =========
Segment operating profit 34,714 4,286 (14,617) 24,383
Other income - gain
on disposal of subsidiary - 36,851 - 36,851
Net finance costs (6,586) (580) (933) (8,099)
Underlying profit /
(loss) before tax 34,911 3,706 (9,550) 29,067
Non-underlying items (6,783) 36,851 (6,000) 24,068
------------------------------ --------- --------------- ----------- ---------
Profit before taxation 28,128 40,557 (15,550) 53,135
========= =============== =========== =========
Total assets 762,304 - 3,367 765,671
========= =============== =========== =========
Total liabilities 537,064 - 37,397 574,461
========= =============== =========== =========
Additions in the period
Property, plant, equipment
and software assets 24,365 34,700 - 59,065
========= =============== =========== =========
Retail
(note Leasing
2b) (Discontinued) Unallocated Total
For the year ended 31
December 2016 GBP'000 GBP'000 GBP'000 GBP'000
Total revenue from external
customers 1,859,734 39,349 322 1,899,405
========= =============== =========== =========
Depreciation and amortisation (6,862) (6) (22) (6,890)
========= =============== =========== =========
Segment operating profit/(loss) 32,637 5,653 (9,236) 29,054
Net finance costs (5,319) (749) (835) (6,903)
Underlying profit /
(loss) before tax 28,900 4,904 (8,404) 25,400
Non-underlying items (1,582) - (1,667) (3,249)
-------------------------------- --------- --------------- ----------- ---------
Profit / (loss) before
taxation 27,318 4,904 (10,071) 22,151
========= =============== =========== =========
Total assets 620,365 91,512 89,775 801,652
========= =============== =========== =========
Total liabilities 417,622 73,454 164,917 655,993
========= =============== =========== =========
Additions in the period
Property, plant, equipment
and software assets 94,344 35,537 - 129,881
========= =============== =========== =========
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
2. Segmental information (continued)
Retail revenue is derived from a number of service lines,
principally being new vehicle sales and aftersales, as set out
below.
For the year ended 31
December 2017 Revenue Gross Profit
GBP'000 mix* GBP'000 mix
New Car 1,166,471 51.2% 84,086 32.6%
Used Car 869,733 38.2% 59,918 23.2%
Aftersales 243,064 10.6% 113,975 44.2%
Internal (47,572) - - -
Total 2,231,696 100% 257,979 100%
========== ====== =========== ========
For the year ended 31
December 2016 Revenue Gross Profit
GBP'000 mix* GBP'000 mix
New Car 983,314 51.6% 68,885 32.5%
Used Car 718,329 37.7% 50,667 23.9%
Aftersales 202,568 10.7% 92,294 43.6%
Internal (44,477) - - -
Total 1,859,734 100% 211,846 100%
========== ====== =========== ========
*mix calculation excludes internal sales
3. Profit before taxation
Profit before taxation is arrived at after charging /
(crediting):
2017 2016
GBP'000 GBP'000
Depreciation of assets held for
contract rental (note 10) 15,962 17,343
Depreciation of property, plant
and equipment (note 10) 8,917 5,838
Amortisation of other intangibles 304 1,052
Profit on disposal of business
units - (285)
Loss / (profit) on disposal of
property, plant and equipment 1,085 (38)
Impairment of property, plant and
equipment (note 10) 945 -
Operating lease rentals - property 11,698 10,324
======= =======
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
4. Non-underlying items
2017 2016
GBP'000 GBP'000
Profit on disposal of subsidiary (36,851) -
Post-retirement benefits charge 6,000 -
Acquisition costs - 2,163
Profit on disposal of business
units - (285)
Amortisation of acquired order
book - 769
Gain on interest rate swap termination - (294)
Restructuring costs 6,783 1,566
Investment property fair value
movements - (670)
Non-underlying Items (24,068) 3,249
======== =======
Profit on disposal of subsidiary
See Note 5 'Discontinued Operations' for further details of the
transaction giving rise to the profit on disposal of
subsidiary.
Post-retirement benefits charge
See Note 11 'Pensions' for further details of the transaction
giving rise to this post-retirement benefits charge.
Acquisition costs
Acquisition costs were incurred in connection with the
acquisition of Ridgeway Garages (Newbury) Limited in 2016.
Profit on disposal of business units
During 2016, the Group disposed of two Toyota dealerships and
one Nissan dealership realising a profit of GBP285,000.
Amortisation of acquired order book
Amortisation of acquired order book is considered exceptional by
virtue of its nature, having been recognised as an intangible asset
on acquisition and realised immediately afterwards as the orders
were fulfilled.
Gain on interest rate swap termination
At the point of the acquisition, Ridgeway had a claim in
progress in respect of the mis-selling of certain historic interest
rate swap products. These claims, settled in 2016, gave rise to a
gain on termination of GBP294,000.
Restructuring costs
Restructuring costs during the current year represent the costs
incurred as a result of the closure of five franchised dealerships
and one used car centre. Three of the franchised dealerships
impacted were in relatively small markets and within close
proximity of other existing Group dealerships of the same
franchise. Two of the impacted businesses shared a subscale site in
Oxford with a high fixed cost base which was not sustainable in the
longer term. The final closure was the Citroën Cambridge new car
sales franchise which was the last remaining representation point
with this particular brand partner. Restructuring costs include
vacant property related costs of GBP4,309,000, redundancy costs of
GBP344,000 and GBP2,130,000 of tangible and intangible asset
impairment losses and write offs.
Restructuring and reorganisation costs in the prior period
relate to one-off costs of integration and reorganisation
(following the acquisitions of Ridgeway and the SG Smith).
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
5. Discontinued operations
On 24 November 2017 the Group disposed of Marshall Leasing
Limited and its subsidiary (Gates Contract Hire Limited). Marshall
Leasing Limited operated the Group's leasing segment.
A profit after tax of GBP36,851,000 on the sale, being the
difference between sale proceeds and the carrying value of the net
assets, less settlement of pension liability, transaction costs and
taxation. This profit is disclosed within non-underlying items
(Note 4 'Non-Underlying Items'). The results of the discontinued
operation are disclosed in the Consolidated Statement of
Comprehensive Income.
The carrying value of the assets and net cash generated on
disposal are detailed below.
2017
GBP'000
Gross disposal consideration in
cash 42,500
Pension retention (1,500)
--------
Net disposal consideration in cash 41,000
Less carrying value of net assets
sold at 24 November 2017:
- Property, plant and equipment 78,959
- Deferred tax 1,547
- Trade and other receivables 2,510
- Bank overdraft (3,695)
- Trade and other payables (8,120)
- Asset backed borrowings (68,185)
- Corporation tax (680)
--------
2,336
Gain on sale of subsidiary before
income tax 38,664
Transaction costs (1,813)
--------
Net gain on sale of subsidiary
before income tax 36,851
Income tax expense on gain -
Gain on sale of subsidiary after
income tax 36,851
========
Cash inflow on disposal of subsidiary:
Net disposal consideration in cash 41,000
Disposal of bank overdraft 3,695
Net cash flow from sale of discontinued
operation 44,695
========
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
6. Net finance costs
2017 2016
GBP'000 GBP'000
Interest income on short term bank
deposits (11) (40)
Net interest payable on asset backed
finance (Discontinued) 580 749
Stock financing charges and other
interest 5,385 3,958
Interest payable on bank borrowings 2,145 2,236
Net finance costs 8,099 6,903
======= =======
7. Taxation
2017 2016
GBP'000 GBP'000
Current tax
Current tax on profits for the
year 5,651 5,598
Adjustments in respect of prior
years 50 316
Total current tax charge 5,701 5,914
------- -------
Deferred tax
Origination and reversal of temporary
differences (2,015) (18)
Impact of change in tax rates - (1,334)
Adjustments in respect of prior
years 110 (165)
Total deferred tax credit (1,905) (1,517)
------- -------
Total taxation charge 3,796 4,397
======= =======
Income tax expense is attributable
to:
Profit from continuing operations 3,080 3,214
Profit from discontinued operation 716 1,183
Total taxation charge 3,796 4,397
======= =======
The tax charge on discontinued operations amounting to
GBP716,000 (2016: GBP1,183,000 all relates to tax payable on profit
from operations.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
8. Earnings per share
Basic and diluted earnings per share are calculated by dividing
the earnings attributable to equity shareholders by the weighted
average number of ordinary shares during the year and the diluted
weighted average number of ordinary shares in issue in the year
after taking account of the dilutive impact of shares under option
of 2,866,231 at 31 December 2017 (2016: 2,380,040).
Underlying earnings per share are based on basic earnings per
share adjusted for the impact of non-underlying items.
Diluted earnings per share are based on the weighted average
number of shares.
2017 2017 2017 2016 2016 2016
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit for the
year 9,519 39,841 49,360 14,041 3,721 17,762
Non-controlling
interests (21) - (21) (8) - (8)
Basic earnings 9,498 39,841 49,339 14,033 3,721 17,754
=========== ============ ========== =========== ============ ==========
Weighted average
number of ordinary
shares in issue
for the basic
earnings per share 77,392,862 77,392,862 77,392,862 77,326,970 77,326,970 77,326,970
Diluted weighted
average number
of shares in issue
for diluted earnings
per share 79,929,238 79,929,238 79,929,238 79,500,548 79,500,548 79,500,548
Basic earnings
per share (in
pence per share) 12.3 51.5 63.8 18.1 4.9 23.0
=========== ============ ========== =========== ============ ==========
Diluted earnings
per share (in
pence per share) 11.9 49.8 61.7 17.6 4.7 22.3
=========== ============ ========== =========== ============ ==========
Underlying earnings
per share (non
GAAP measure) 26.9 3.9 30.8 21.3 4.9 26.2
=========== ============ ========== =========== ============ ==========
9. Dividends
A final dividend of GBP2,864,000 for the year ended 31 December
2016 was paid in May 2017. This represented a payment of 3.70p per
ordinary share in issue at that time.
An interim dividend in respect of the year ended 31 December
2017 of GBP1,663,000 (GBP1,393,000), representing a payment of
2.15p per ordinary share in issue at that time, was paid in
September 2017.
A final dividend of 4.25p per share in respect of the year ended
31 December 2017 is to be proposed at the annual general meeting on
22 May 2018. The ex-dividend date will be 26 April 2018 and the
associated record date will be 27 April 2018. This dividend will be
paid subject to shareholder approval on 25 May 2018 and these
financial statements do not reflect this final dividend
payable.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
10. Property, plant and equipment
Freehold
and
long Assets
leasehold held
land Plant for Assets
and Leasehold and contract under
buildings improvement equipment rental construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January
2016 37,381 12,372 27,177 96,890 - 173,820
Additions at
cost 1,370 236 3,545 35,537 23,633 64,321
Additions on
acquisition 53,276 2,872 5,007 - 3,899 65,054
Disposals (1,397) (278) (3,443) (30,483) - (35,601)
Transfers 17,857 (187) 2,840 - (20,510) -
At 31 December
2016 108,487 15,015 35,126 101,944 7,022 267,594
---------- ------------ ---------- --------- ------------- ---------
Additions at
cost 47 829 5,206 34,700 18,016 58,798
Additions on
acquisition - - 32 - - 32
Disposals (2,485) (673) (2,734) (23,148) - (29,040)
Disposal of subsidiary - (42) (45) (113,496) - (113,583)
Transfers 16,052 2,555 1,308 - (19,915) -
Transfers to
Software - - (349) - - (349)
Transfers to
Assets held for
sale (750) - - - - (750)
At 31 December
2017 121,351 17,684 38,544 - 5,123 182,702
---------- ------------ ---------- --------- ------------- ---------
Accumulated depreciation
At 1 January
2016 9,121 2,540 20,445 34,429 - 66,535
Charges for the
year 934 1,146 3,758 17,343 - 23,181
Disposals (1,103) (259) (3,057) (19,514) - (23,933)
Transfers 44 (44) - - - -
At 31 December
2016 8,996 3,383 21,146 32,258 - 65,783
---------- ------------ ---------- --------- ------------- ---------
Charges for the
year 1,434 1,913 5,570 15,962 - 24,879
Disposals (53) (608) (2,083) (13,673) - (16,417)
Disposal of subsidiary - (42) (35) (34,547) - (34,624)
Impairment 194 332 419 - - 945
Transfers (405) 138 267 - - -
Transfers to
Software - - (292) - - (292)
At 31 December
2017 10,166 5,116 24,992 - - 40,274
---------- ------------ ---------- --------- ------------- ---------
Net book value
At 31 December
2016 99,491 11,632 13,980 69,686 7,022 201,811
---------- ------------ ---------- --------- ------------- ---------
At 31 December
2017 111,185 12,568 13,552 - 5,123 142,428
========== ============ ========== ========= ============= =========
As at 31 December 2017, the Group had capital commitments
totalling GBP7.7m (2016: GBP11.7m) relating to ongoing construction
projects.
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2017
11. Pensions
Provision for Section 75 Employer Debt - Defined Benefit Pension
Scheme
As a result of the sale of Marshall Leasing Limited during the
year, the Group no longer has any current employees who are members
of the defined benefit section of the Marshall Group Executive
Pension Plan. This fact, combined with the current triennial
valuation process, led the Group to commence a strategic review of
its existing pension arrangements. Based on the status of
discussions to date, current expectations are that it is reasonably
probable that this review will result in the Group ceasing
participation in this pension scheme.
Ceasing to participate in the defined benefit section of the
Plan would trigger a debt for the Group under Section 75 of the
Pensions Act 1995 ("Employer Debt"). Based on initial actuarial
estimates, the estimated Employer Debt would be approximately GBP6
million. In light of the current status of the Group's discussions
with the Trustees of the Plan and the principal employer, it is
considered appropriate to recognise a provision for this estimated
Employer Debt.
If the Group were to cease to participate in the defined benefit
section of the Plan and on settlement of the Employer Debt, the
Group would have no further commitments or participation in any
defined benefit pension plans.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SFUFUDFASEED
(END) Dow Jones Newswires
March 14, 2018 03:00 ET (07:00 GMT)
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