Marshall Motor Holdings resilient H1 performance, outperforming the market

Marshall Motor Holdings plc (LON:MMH), one of the UK’s leading automotive retail groups, has announced its unaudited interim results for the six months ended 30 June 2020.

Financial Summary

 H1 2020H1 2019
Revenue (£m)895.31,183.3
Gross profit (£m)95.2135.0
Underlying operating expenses (£m)(98.8)(114.9)
Underlying operating loss / profit (£m)(3.6)20.2
Net finance costs (£m)(5.3)(5.0)
Underlying loss / profit before tax  (£m)(8.9)15.2
Non-underlying items (£m)(1.8)(0.4)
Reported loss / profit before tax (£m)(10.7)14.8
Net assets (£m)190.5200.7
Basic Underlying EPS (p)(11.2)15.0
Adjusted net cash (£m)27.45.8
Reported net debt (£m)(77.5)(82.2)

Responding to COVID-19

• Closure of all businesses from 23 March to 1 June other than 62 strategic aftersales operations which remained open to support emergency services, commercial vehicle operators and key workers;

• Maintained retail presence online and by telephone to support customers;

• Continued disciplined cost mitigation and cash preservation actions taken;

• Coronavirus Job Retention Scheme (CJRS) utilised to protect employment of furloughed colleagues on Company-enhanced terms; 88% of colleagues now returned to work;

• Detailed reactivation plan implemented to reopen businesses under revised, COVID-19 secure operating procedures;

• Encouraging sales performance since 1 June.

Operational and Financial Performance

• Trading significantly ahead of the market in period prior to COVID-19 closure;

• Like-for-like new vehicle unit sales down 37.7%, a strong outperformance versus market registrations, down 48.5%;

• Like-for-like used unit sales down 31.8%, a pleasing result given the impact of lockdown on franchised retailers;

• Like-for-like aftersales revenue down 28.5%, a strong performance in the current environment;

• Adjusted net cash at 30 June: £27.4m (30 June 2019: adjusted net cash of £5.8m; 31 December 2019: adjusted net debt of £30.6); benefiting primarily from significant working capital inflows and also VAT Payment Deferral Scheme;

• £120m revolving credit facility extended in July until 2023; covenant amendments agreed;

• No interim dividend declared;

• Tenth year of being a ‘Great Place to Work’ and sixth year of being ranked in the UK’s Best Workplaces.

Daksh Gupta, Chief Executive Officer, said:

“Despite the significant challenges presented by COVID-19, the Group has delivered a resilient first half performance and once again outperformed the market.  Since full reopening under COVID-19 secure guidelines on the 1st of June, trading has been robust and our important Q3 order take is encouraging.

This has been achieved as a result of our highly engaged and professional colleagues who have gone above and beyond during this difficult period and I am incredibly proud of their commitment and dedication.  On behalf of the Board I would like to take this opportunity to sincerely thank them for their passion, hard work and support.  I would also like to take the opportunity to thank our brand and business partners who have been exceptionally supportive throughout.

The impact of COVID-19 will accelerate the rationalisation and consolidation of the UK franchise dealer network.  With the Group’s excellent brand partner relationships, strong balance sheet, recently renewed £120m revolving credit facility, depth of management team and highly engaged colleagues, the Group believes it is well placed to capitalise on value accretive growth opportunities and is therefore well placed to deliver long-term shareholder value.”

1      “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

2      Underlying profit before tax is presented excluding non-underlying items (see Note 6)

3      Adjusted net cash is presented excluding the impact of the recognition of lease liabilities under IFRS16 (see the Net Debt Reconciliation)

4      Reported net cash includes the impact of the recognition of lease liabilities under IFRS16 (see the Net Debt Reconciliation)

5      Registrations as reported by the Society of Motor Manufacturers and Traders

Operating Review


Our unaudited interim results for the six months ended 30 June 2020 (“H1” or the “Period“) reflect the unprecedented impact of COVID-19 and the resultant closure of our businesses for a large proportion of the Period. 

As a result, H1 2020 is characterised by three distinct periods: the period prior to the temporary closure of our showrooms; the lockdown closure period from 23 March until 1 June; and finally the period following the reopening of our businesses on 1 June until 30 June.

Trading prior to closure period

As previously reported, the Group performed strongly during the first quarter of 2020, significantly outperforming the wider UK new car market together with strong used car and aftersales performances.

Safeguarding our business through the closure period

Our priority in responding to the COVID-19 pandemic was the safety and wellbeing of our colleagues and customers and we announced the temporary closure of our dealerships on 23 March, prior to the Government requiring car showrooms and all non-essential businesses to close, impacting the busiest week of the year.

In recognition of the vital role our aftersales operations play in supporting essential vehicle mobility, the Group kept 62 of its aftersales operations open across the country to support the emergency services, commercial vehicle operators, vulnerable customers and key workers throughout the COVID-19 national emergency.  Whilst these operations were run at a small loss, the Board believed it was appropriate for the Company to continue to offer these services to support the country, particularly in light of the various COVID-19 Government support schemes provided to businesses through this period.

We also remained open online and on the telephone to receive and manage customer enquiries. During the closure period the Group took orders for over 3,700 new and used vehicles. This was, inevitably, significantly down on the comparable prior year period during which c.19,000 new and used vehicle orders were taken.

The Group furloughed around 90% of its 4,300 colleagues during the closure period.  The Group acknowledges the support provided by Government through the Coronavirus Jobs Retention Scheme (CJRS) which has enabled the Group to support its furloughed colleagues and protect their employment.  We have since welcomed back 88% of our colleagues and continue to transition more staff safely back into the business as consumer activity levels return.

Management estimate the impact of closure was c.£26m.

Re-opening under COVID-19 secure operating procedures

Following the Government announcement on the 26 May 2020, the Group reopened all showrooms and other operating units from the 1 June 2020.  Detailed preparations were made to ensure our business reopened under revised, COVID-19 secure, operating procedures to safeguard our colleagues, customers and all other visitors to our businesses.

Trading in the final month of the Period was strong, benefitting, as anticipated, from a combination of a release of pent-up demand, extensions to vehicle financing agreements coming to an end, a shift from use of public transport towards vehicle ownership and the delivery of outstanding vehicle orders not completed prior to the closure period.

We have been encouraged by our ability to operate effectively and successfully under our revised operating procedures. 

New Vehicles

As reported by the Society of Motor Manufacturers and Traders (‘SMMT’), sales of new vehicles have been significantly impacted by COVID-19.  During the Period, new car registrations to retail and fleet customers declined by 44.6% and 51.7% respectively with total registrations of new vehicles in the UK (including the impact of dealer self-registration activity) declining by 48.5% in the Period.  These declines were predominantly experienced during April and May when total new registrations were down 97.3% and 89.0% respectively. 

These unprecedented market declines significantly impacted the Group’s sales performance over the Period but the Group still outperformed the overall market, with a like-for-like decline in unit sales to new retail customers of 37.7% and 37.7% to fleet customers.  This outperformance was driven by a strong performance in the first quarter with like-for-like new unit sales down 10.6%, significantly ahead of the market which was down 31.0% and a similarly positive performance in June with like-for-like new unit sales down 10.8%, ahead of the market which was down 34.9%.

Total new car revenue in the Period was £417.4m (H1 2019: £569.1m) with like-for-like revenue of £377.6m (H1 2019: £559.7m), down 32.5%.

Gross profit in new vehicles was down £18.4m, impacted by a combination of the decline in sold units as well as a reduction in gross margin of 162bps, down from 7.7% in H1 2019 to 6.0% in H1 2020.  The main driver behind the margin decline being a reduction in volume-related income, including manufacturer bonuses, as a result of significantly lower new vehicle sales.

Used Vehicles

Used vehicle sales were also significantly impacted by COVID-19 during the Period. 

The SMMT reported a decline of 168,000 used car transactions in Q1 2020 versus Q1 2019, an 8.3% decline. In the first quarter of the year, the Group experienced a like-for-like decline of 9.7%, broadly in line with the overall market.   In Q2 the overall market was more heavily impacted due to showroom closures and registered a decline of 995,000 units, a reduction of 48.9%.  This leaves the overall market in H1 down by 28.7% versus 2019.  During H1 the Group recorded a decline of 31.8% on a like-for-like basis broadly in line with the market.  This was a pleasing result given the impact of lockdown on franchised sector.

Used car sales performance following the reopening of our businesses has been very encouraging, benefiting from significant pent-up demand and a shift from use of public transport towards car ownership, with both order take and sales increasing versus the respective period in the prior year.

Total used car revenue in the Period was £395.6m (H1 2019: £509.6m), with like-for-like revenue of £348.4m (H1 2019: £495.1m), down 29.6%.

Used vehicle residual values have remained robust to date, with values increasing as a result of demand.  It is anticipated that this initial spike in demand will level off during the latter part of 2020.  The Group continues to monitor this situation very closely, utilising robust operating controls.

Gross profit in used vehicles reduced from £33.5m in H1 2019 to £24.3m in H1 2020.  Gross margin declined by 43bps, down from 6.6% in H1 2019 to 6.1% in H1 2020, largely driven by management actions taken to reduce stock levels at the outset of the crisis and a lower proportion of vehicle sales during the closure period being sold with financing.  


The Group kept 62 of its aftersales operations open throughout the closure of its retail showrooms to support essential vehicle mobility including for emergency and key workers.  These operations were run at a small loss, however the Board believed it was appropriate for the Company to continue to offer these services to support the country.  The Group is very grateful to those colleagues who put themselves forward to ensure these operations could continue.

Total aftersales revenue in the Period was £100.3m (H1 2019: £129.5m) with like-for-like aftersales revenue down 28.5%.

As a result of MOT and servicing deferrals, the post lockdown period has been encouraging with a marginal increase in revenue over the respective period last year.  Service plans have consistently been a key part of the Group’s retention strategy and this resilient model will continue to provide a greater level of certainty over future aftersales profits.

Despite the small loss made during the lockdown period, overall aftersales gross margin improved by 45bps to 45.0% (H1 2019: 44.6%).  Since full re-opening on 1 June, our aftersales facilities have predominantly been carrying out delayed scheduled service and maintenance work which typically have higher margins.

Portfolio Management

During the Period, the Group closed its single Maserati dealership in Peterborough with all colleagues being redeployed within the Group. This business, which operated from freehold premises, has been loss making in recent years.

On 10 July the Group completed the acquisition of Aylesbury Volkswagen.  The Aylesbury business formed part of the strategic acquisition announced in December 2019. As a result of the completion, all deferred consideration has now been paid to Jardine Motor Group UK Limited.

During 2019 the Group added 20 businesses through 8 acquisitions or start-ups.  The integration of these businesses is ongoing and is progressing as planned and we are encouraged with the progress made.  Prior to the lockdown period these businesses were trading ahead of our expectations.

The Group continues to review its portfolio to ensure it is operating with the right brands, in the right locations with appropriate scale of operation.

The Board believes that the current trading and economic environment is likely to accelerate further network rationalisation and consolidation within the automotive retail sector.  The Group’s stated strategy is to grow scale with key brand partners and extend our geographic footprint into new regions across the UK. Whilst our focus has been on navigating our business through the COVID-19 crisis, we remain committed to our long-term growth ambitions. We have further headroom to grow with all brand partners in what we believe, with continuing market uncertainty, will continue to be a consolidating market in which larger dealer groups with diversified franchise portfolios will be better placed. The Board continues to believe that the Group’s strong balance sheet and excellent manufacturer relationships means it is well positioned to capitalise on these opportunities as they arise.

Capital Investment

As part of cash preservation, the Group’s capital expenditure programme was reviewed and, in collaboration with our brand partners where necessary, a number of planned projects have been deferred. As a result, capital expenditure in the Period was £4.7m, comprising principally of completion of the refurbishments of Newbury Audi and Wimbledon Audi.

People Centric – Response to COVID-19

As a result of the temporary closure of its businesses, the Group furloughed around 90% of its 4,300 employees.  At today’s date, 12% of our colleagues remain furloughed however we continue to monitor business activity and customer demand patterns which will inform the rate at which we take colleagues off of furlough and welcome them back into the business.

The Group acknowledges, and is grateful for, the welcome support provided by Government through the Coronavirus Jobs Retention Scheme (CJRS) which has enabled the Company to support its furloughed colleagues and protect employment.  

The Group worked hard to support its colleagues during this period of uncertainty.  During the furlough period, the Group supplemented the support provided by the CJRS, enhancing colleague pay during the closure period to 100% for March, 90% for April and 85% for May and not imposing the CJRS cap of £2,500 per month.  The Group has also provided additional financial support, including salary advances, to colleagues where this has been requested.

Whilst they continued to work throughout the closure period, the Board and other senior members of the management team voluntarily reduced their pay in line with the reductions for furloughed colleagues.

In addition to providing financial support to colleagues and in recognition of the importance of ongoing communication, over 26 bi-weekly management briefings were issued to all furloughed colleagues via video message from members of the executive committee and other members of the senior management team.  This enabled the Group to stay in touch with furloughed colleagues and provide updates on the actions taken during the closure period.  Weekly video messages and other communications have continued for remaining furloughed colleagues.

The ‘Stay Marshall Colleague Hub’, our bespoke internal employee platform, was regularly updated with key Company updates as well as less formal, engaging material including recognition of individual COVID-19 support initiatives, activity suggestions for children during lockdown, cooking recipes, TV series reviews etc. We recognised early on the importance of regular two-way communication with our colleagues during the lockdown for their health and wellbeing and actively encouraged all of our people to contribute material to the Stay Marshall Colleague Hub.

All furloughed colleagues were encouraged to complete modules of the Company’s bespoke training programme via its online learning platform. As well as ‘business as usual’ training programmes relating to financial services and data protection compliance, all colleagues completed a mandatory formal training and assessment programme on our revised operating procedures and social distancing guidelines before returning to the workplace.

The feedback from colleagues on our communications during this period has been extremely positive, demonstrating why, in May 2020, the Company was once again confirmed as being a ‘Great Place to Work’ by the Great Place to Work Institute. This was the tenth consecutive year that the Company has been so recognised and the sixth consecutive year that it has been ranked.

Financial Review


Reported revenue declined by 24.3% to £895.3m (H1 2019: £1,183.3m) with like-for-like revenue decreasing by 30.9%.  As a result of COVID-19 and the resultant closure of our businesses for a large proportion of the Period, all of the Group’s revenues streams, new vehicles, used vehicles and aftersales, declined against the comparable period last year.

Loss Before Tax

As anticipated, despite a strong trading performance in the first quarter of the year and encouraging trading levels in the period after reopening on 1 June, as a result of the closure of our businesses for a large proportion of the Period, the Group’s reported loss before tax was £10.7m, with an underlying loss before tax of £8.9m during the Period.


Gross margin in the Period was 10.6%, a decline of 78bps versus the comparable period last year.  Both overall gross profit and margin were impacted by a reduction in volume-related income, including manufacturer bonuses, as a result of significantly lower vehicle sales during the Period.  As a result, new vehicle margin declined by 162bps to 6.0% and used vehicle margin declined by 43bps to 6.1%.

Aftersales gross margin at 45.0% (H1 2019: 44.6%) improved as a result of a greater mix of higher margin scheduled service and maintenance work.


Underlying operating costs during the Period were £98.8m, which included £10.7m relating to acquired businesses. After adjusting for these, costs were £26.8m lower than in the comparable period last year.  Lower operating costs were driven by a combination of management actions taken to control costs throughout the Period and the benefit of various Government support programmes.

In particular, during the Period:

the employment cost of furloughed colleagues of £18.2m was a major driver of this variance, this was largely offset by the £16.4m claimed by the Group under the CJRS over the Period. The difference of £1.8m was an investment to enhance furlough payments to colleagues as referred to above which is shown in non-underlying expenses;
the Group benefited from the Government’s business rates holiday scheme with net savings of £2.3m during the Period. Ongoing savings will continue until March 2021;
the Group reduced marketing costs, vehicle-related running costs, transportation costs, property-related costs and the Board and other senior management took voluntary pay reductions.

The Group acknowledges the vital support of the Government, along with many of our brand partners and suppliers through this challenging period.

Total finance costs of £5.3m during the Period were £0.3m higher than the same period last year.  This was driven by a combination of increased vehicle stocking charges as a result of higher levels of consignment stock (including stock attributable to our newly acquired sites) and a precautionary drawdown from our revolving credit facility.

Non-Underlying Items

During the Period, the Group incurred net £1.8m of non-underlying costs, principally related to costs directly attributable to the COVID-19 pandemic (£2.8m), integration costs relating to 2019 acquisitions and the closure of Peterborough Maserati (£0.5m), partially offset by a profit on disposal of a vacant Leicester Vauxhall freehold asset held for resale of £1.6m. The costs directly attributable to the COVID-19 pandemic includes £1.8m to “top-up” colleagues’ salaries above the 80% furlough scheme after utilising the CJRS to support the employment costs of its furloughed colleagues.


The reported effective tax rate for the Period was -15.0% (H1 2019: 22.8%).  The underlying effective tax rate for the Period was 1.6% (H1 2019: 22.6%).

Capital Expenditure

Capital expenditure during the Period was £4.7m. This was lower than forecast as a result of the deferral of certain planned property investments agreed, where necessary, with the support of our brand partners.  Key expenditure items were the refurbishment of Newbury Audi and Wimbledon Audi. 

At 30 June 2020, the Group had £123.9m of freehold property and assets under construction (30 June 2019: £120.9m), equivalent to £1.58 per share.

Financial Position

The Group’s adjusted net cash position at 30 June 2020 was £27.4m compared to an adjusted net cash position of £5.8m at 30 June 2019 and adjusted net debt of £30.6m at 31 December 2019. 

There are a number of drivers behind this strong cash position, including:

·      working capital benefits of revised vehicle stocking payment periods implemented by our brand partners and other funding providers to support dealer networks (£24.3m);

·     the benefit of the Government’s VAT Payment Deferral Scheme (£10.0m);

·     other VAT payment timing benefits (£9.9m);

·     cancellation of the 2019 final divided (£4.5m);

·     the benefit of an historic VAT reclaim (£2.8m);

·     proceeds from the sale of a freehold property in Leicester (£2.8m including VAT);

·    support and agreement with a number of the Group’s landlords regarding rent holidays, reduced rents or revised rental payment terms (£1.5m);

·     capital expenditure savings (c.£5m);

These measures effectively protected the Group’s cash position over the closure period.  It is anticipated that a number of these cash benefits (including VAT deferrals, working capital benefits of revised vehicle stocking payment periods and rent deferrals) will reverse as the Group returns to a more normalised trading environment.

It is also noted that, unless otherwise agreed in advance, the Group continued to pay all suppliers in line with its usual payment terms during the Period.

Funding Position

The Group’s £120m revolving credit facility (RCF) with Barclays and HSBC was due to expire in June 2021. The RCF banks remain extremely supportive of the Group and, subsequent to the Period end, the RCF has been extended to January 2023.  

The Group also agreed revised financial covenants for the remainder of current financial year which, if necessary, will be reviewed in 2021 in light of prevailing trading conditions at that time.  In line with current market conditions, the interest rate on drawings under the extended RCF has increased.

Given the Group’s positive cash position, the RCF was undrawn at the 30 June 2020 and remains undrawn at the date of these interim results. 

The Board is satisfied that, in combination with its committed stock funding facilities, the RCF provides sufficient liquidity to enable the Group to withstand even its most extreme downside scenarios (including the possibility of further, extensive localised lockdown periods). Further details of the Board’s downside scenario planning are set out in the notes to these interims results.

Interim Dividend

As announced at the start of the COVID-19 crisis, in order to maximise the Group’s financial resilience, the Board made the decision to cancel the final dividend in respect of 2019, preserving £4.5m of cash. 

Due to the ongoing uncertainty regarding the potential future impact of COVID-19 and resultant impact on the UK economy, the Board is not declaring an interim dividend.  The Board is also mindful of the support provided by the Government through initiatives such as CJRS and business rates relief from which the Group has benefited and therefore the Group’s immediate priority is to maintain its financial resilience to enable future investment, growth and job retention.

The Board is very mindful of the importance of dividends to its shareholders and intends to resume the payment of dividends as soon as conditions allow and will consider the position next at the time of release of its full year results in March 2021.

Summary and Outlook

The COVID-19 pandemic significantly impacted the Group’s financial performance during the Period and its effects are likely to continue to be felt for at least the remainder of the year.  It has also reinforced the strength and resilience of the Group’s business model, its balance sheet and its operational focus.  With the support of our brand partners, funders and other business partners, together with careful management of costs and cash, combined with our people-centric approach to our colleagues and with the support provided by Government, we have been able to successfully navigate the initial challenges presented by this crisis. 

The period following the reopening of showrooms in June has been encouraging with an improvement in like-for-like order take throughout June, July and the early part of August.  Our key September order bank is also building well. 

The business has performed strongly since reopening and is currently targeting a break even underlying profit before tax performance for the financial year.  Given the significant economic uncertainties caused by COVID-19, including the possibility of future nationwide or localised lockdowns, the Board believes there is a range of possible outcomes and it is right to remain cautious regarding the outlook for the remainder of the year.

Finally, on behalf of the Marshall Motor Holdings Board, I would like to thank all of our brand partners, funders and other business partners for their support during this period.  I would also like to give special thanks to colleagues across our business for their tireless work, resilience in the face of such challenging circumstances and for their support and encouragement throughout the Period.

Daksh Gupta

Chief Executive Officer

18 August 2020

Click to view all articles for the EPIC:
Or click to view the full company profile:
Share on facebook
Share on twitter
Share on linkedin
Marshall Motor Holdings Plc

More articles like this

Marshall Motor Holdings Plc

Marshall fully open effective today

In accordance with the latest Government guidance, I am delighted to announce that all sales, service, parts and bodyshop departments across Marshall Motor Group retailers will FULLY REOPEN effective Monday 12 April 2021. As always, the safety of our customers,

Marshall Motor Holdings Plc

Marshall Motor Holdings: Well positioned for the road ahead

Edison’s investment case for Marshall Motor Holdings (MMH) is rooted in the strong performance demonstrated in FY20. PBT for FY20 came in 9% ahead of our expectations. Management emphasised the group’s performance as resilient. We would highlight an