Marshall Motor Holdings plc (LON:MMH), one of the UK’s leading automotive retail groups, has announced its results for the Year ended 31 December 2020.
|Like for like revenue (£m) *||1,866.4||2,157.2||(13.5%)|
|Underlying profit before tax (£m) **||20.9||22.1||(5.4%)|
|Basic underlying earnings per share (p)||21.1||22.9||(7.9%)|
|Profit before tax (£m)||20.4||19.6||3.7%|
|Earnings per share (p)||17.8||19.9||(10.6%)|
|Dividend per share (p)||nil||2.851|
|Adjusted net cash / (debt) (£m) ***||28.8||(30.6)|
|Reported net debt (£m)||(70.5)||(138.6)|
1 Final dividend cancelled due to COVID-19 impact, 2.85p represents interim dividend only which would typically represent one third of full year dividend
• Underlying profit before tax £20.9m (2019: £22.1m), reported profit before tax of £20.4m (2019: £19.6m);
• Reported revenue of £2.2 bn, down 5.3% (2019: £2.3bn) with like-for-like revenue of £1.9 billion, down 13.5% (2019: £2.2bn), despite significant market decline as a result of COVID-19;
• Total new vehicle unit sales down 9.2% with like-for-like total new vehicle unit sales down 19.4%, a strong double-digit outperformance against a UK new vehicle registration decline of 29.4%;
• Total used vehicle unit sales down 5.3% with like-for-like unit sales down 14.6%, compared with used vehicle transactions down 14.9%, a pleasing result given showroom closures;
• A resilient aftersales performance with total revenue down 5.2% and like-for-like revenue down 13.5%;
• Adjusted net cash at 31 December 2020 of £28.8m, an increase of £59.4m from 31 December 2019 as a result of a combination of Government COVID-19 support measures, working capital control and management cash preservation actions taken during 2020;
• £120m revolving credit facility extended in July until 2023;
• Eleventh consecutive year of Great Place to Work status and sixth consecutive year of being ranked as one of the UK’s best workplaces;
• Further development of the Group’s digital strategy, including the introduction of ‘click and collect’ and online reservation services;
• Continued promotion of the Marshall brand with a number of national TV marketing campaigns;
• No final dividend for 2020 proposed; the Board is mindful of the significant financial support received from Government measures and other stakeholders.
Daksh Gupta, Chief Executive Officer, said:
“The unprecedented political, economic and social impact of the COVID-19 pandemic in 2020 challenged governments, businesses and individuals across the world.
“The response of colleagues across our businesses during the Year was outstanding. Despite significant uncertainty, our colleagues went above and beyond, rising to the challenges we collectively faced. Their contribution to our financial result cannot be underestimated and we thank them all for their dedication and commitment during the Year. Our priority in responding to the COVID-19 pandemic was the safety and wellbeing of our colleagues and customers. As well as ensuring our businesses were safe environments in line with COVID-19 secure guidelines, we worked hard to support colleagues, both financially and through wider wellbeing initiatives.
“Through a combination of support received from both the Government and our business partners, a number of one-off sector tailwinds and our continued and significant outperformance of the wider market, we are pleased to report an underlying profit before tax for the Year of £20.9m. Our financial position also remains strong, with adjusted net cash at 31 December 2020 of £28.8m.
“Our resilient business model, ability to adapt to changing consumer behaviours, such as those enforced by showroom closures, together with our exceptionally strong relationships with our brand partners, gives us confidence in the Group’s future prospects and success.
“I would like to take this opportunity, on behalf of the Board, to thank our fantastic colleagues, our brand partners and suppliers for their continued support.”
* results on a ‘like-for-like’ basis include only the Group’s businesses that have been active and trading for a period of 12 consecutive months. Business that are excluded from the definition of ‘like-for-like’ are those sites that have recently commenced operation, therefore do not have a 12-month trading history, as well as any businesses that were closed and market segments or activities that were ceased during the current or previous Year.
** underlying profit before tax is presented excluding non-underlying items as set out in Note 5.
*** adjusted net cash / (debt) is presented excluding the impact of IFRS16 Leases.
I am pleased to present our annual results for the year ended 31 December 2020 (the “Year).
The Year was, inevitably, dominated by the impact of COVID-19 and the measures put in place to control the spread of the virus. As a result, there were prolonged periods of the Year during which all, or some elements, of our physical retail business were required to close. Whilst this clearly affected trading during those periods, we recognise and are grateful for, the fact that our sector was not as negatively impacted as others.
As a sector, we benefited from a number of tailwinds following the reopening of our businesses after the initial national lockdown: we were permitted to open our retail businesses earlier than other retailers on 1 June 2020 and we benefited from the release of pent-up demand in both sales and aftersales, an increased preference for private mobility and robust used car valuations as a result of supply constraints for new cars.
We also benefitted significantly from Government support measures; including business rates relief, retail grants and the Coronavirus Job Retention Scheme (CJRS). We are grateful that these measures enabled us to protect the vast majority of jobs within the Group as well as our liquidity.
Our brand partners and suppliers have been extremely supportive during this challenging period and we are thankful for this support. In challenging times such as those experienced during the Year, the importance of the symbiotic relationship with each of our strong, global franchise partners was clearly demonstrated.
I am incredibly proud of how our management team and colleagues across the Group responded to the challenges with which we were presented during the Year. Our priority in responding to the COVID-19 pandemic has been safety and wellbeing of our colleagues and customers and doing our duty to the broader society to which we belong. As well as ensuring our businesses were safe environments in line with COVID-19 secure guidelines, we worked hard to support colleagues, both financially and through wider wellbeing initiatives.
From a trading perspective, our continued outperformance of the wider market was significant and (in combination with the support measures and sector tailwinds referred to above) enabled us to achieve a strong financial result for the Year despite the challenges we faced.
The Group’s strategy of close partnership with major global automotive brands has served us well over many years, none more so than in 2020 when the strength and depth of our partnerships was clearly demonstrated. Whilst completed corporate activity during the Year was more limited as a result of COVID-19, our clear strategy, strong financial position and support of our key brand partners will enable us to take further growth opportunities as they arise. We also believe that those automotive retailers with both scale and a diverse portfolio will be best placed to succeed in a changing market and continue to explore ways to increase our scale with high quality, financially attractive acquisitions.
The automotive sector was already undergoing a period of evolution, driven by a combination of environmental, technological and social change factors. COVID-19 has accelerated a number of these developments, in particular, the progression towards a more flexible, consumer-centric retail model incorporating remote sales utilising technology such as video consultations, online purchases with vehicle delivery and ‘click and collect’ services. We have embraced these developments and the operational efficiencies and improved customer choice of experience they offer.
Nevertheless, COVID-19 has also demonstrated the importance of our physical presence. Despite widespread use of remote sales channels throughout the pandemic, vehicle sales during the Year were significantly impacted by the closure of showrooms for prolonged periods with research consistently showing that the majority of consumers continue to opt for a showroom experience as part of the car buying process.
Along with our manufacturer partners, we continue to believe that a strong retail franchise network will be a crucial component of the future automotive sector. This perfectly complements our increasingly strong online presence and is positioning us to provide the ‘best of both worlds’ to our customers, offering a bespoke customer experience with warm human relationships at its heart.
The Group delivered a strong financial performance in what was a very challenging year.
The Group achieved reported revenue (including 2019 acquisitions) of £2.2 billion (2019: £2.3 billion). Underlying profit before tax* (‘PBT)’ for Year was £20.9m (2019: £22.1m). The Board considers this to be a strong result given the circumstances and, as stated above, was achieved as a result of a combination of continued market outperformance, sector tailwinds and significant Government support.
The Group’s balance sheet is also strong, with adjusted net cash** of £28.8m at 31 December 2020 (2019: adjusted net debt of £30.6m). Net assets rose to £215.9m, underpinned by £125.8m of freehold land and buildings.
The Board has considered the position in relation to dividends extremely carefully. The Board is cognisant of the fact that, in light of the uncertainty caused by COVID-19, it suspended and subsequently cancelled the previously announced final dividend for 2019 and did not declare an interim dividend for 2020. The Board continues to believe this was the right action to take to maximise the Group’s financial resilience in the face of an extremely unpredictable trading environment.
In relation to 2020, whilst the Group has performed well and its financial position is strong, the Board is mindful of the significant support the Group has received both from Government measures such as business rates relief and CJRS and from other stakeholders.
As a result, the Board feels it would be inappropriate to recommend the payment of a final dividend for 2020.
The Board understands the importance of dividends to 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 interim results in August 2021. Our approach to management bonuses supports this position: while we value management’s efforts and commitment enormously, the Board and management have collectively agreed that no executive management bonuses should be paid until to the Group can restore dividends.
Our annual general meeting will be held on 20 May 2021. The Board would prefer to hold a physical meeting at which shareholders are able to attend in person, but that may not be possible.
The impact of COVID-19 continues to dominate the social and economic environment in 2021. Our experience of meeting these challenges during the Year, coupled with the demonstrable resilience and flexibility of our business model, leads to our belief in being able to navigate through the headwinds that may arise in the short term.
Our strategic focus and tried and tested business model, together with our exceptionally strong relationships with our brand partners, gives us confidence in the Group’s future prospects and success. The Group’s balance sheet remains strong and we continue to be well positioned to take advantage of further growth and consolidation opportunities as they arise.
I would like to thank the leadership team, our brand partners, business suppliers, shareholders and colleagues throughout the Group for their wholehearted support during a very challenging year.
Finally, I would also like to thank all of our customers throughout the UK who continue to choose Marshall for their mobility products and services. We believe in putting our customers at the heart of everything we do and we never lose sight of the fact that our sustained success as a business is dependent on meeting and exceeding their expectations.
Professor Richard Parry-Jones CBE
8 March 2021