Marshall Motor Holdings Exceptional performance due to unprecedented market conditions

Marshall Motor Holdings plc (LON:MMH), one of the UK’s leading automotive retail groups, announced this morning its unaudited interim results for the six months ended 30 June 2021.

CEO Daksh Gupta and CFO Richard Blumberger join DirectorsTalk Interviews to discuss half year results for the period ended 30th June 2021. Daksh talks us through the highlights, a growing portfolio, supply issues and the outlook. Richard provides more detail around the numbers, talks us through an exceptionally strong balance sheet and dividend payouts.

Financial Summary

 H1 2021H1 2020 (restated1)Variance
Revenue (£m)1,334.1895.3+49.0%
Gross profit (£m)157.495.2+65.3%
Underlying operating expenses (£m)(114.5)(101.6)(12.7%)
Underlying operating profit / (loss) (£m)42.9(6.4)+767.5%
Net finance costs (£m)(4.5)(5.3)+16.7%
Underlying profit / (loss)  before tax2  (£m)38.4(11.8)+426.6%
Non-underlying items (£m)1.01.0(3.6%)
Reported profit / (loss)  (£m)39.5(10.7)+467.8%
Dividend per share (p)8.86pNil
Net assets (£m)239.3190.5+25.6%
Basic Underlying EPS / (LPS) (p)38.8(14.9)+360.4%
Basic EPS / (LPS) (p)30.6(15.8)+293.7%
Adjusted net cash (£m)357.227.4+109.2%
Reported net (debt)4 (£m)(35.1)(77.5)+54.7%

Financial Highlights

·     Record first half revenue and margin driven by unprecedented market conditions, our strong market outperformance and robust operational controls;

·     Record underlying profit before tax of £38.4m (H1 2020: underlying loss before tax of £(11.8m); H1 2019: underlying profit before tax of £15.2m);

·     Strong cash generation with adjusted net cash at 30 June 2021 of £57.2m (30 June 2020: £27.4m) after £17.2m of freehold and acquisition expenditure; commitment to repay £4.0m of 2021 Government support;

·     Balance sheet strengthened further; net assets at 30 June 2021 of £239.3m (30 June 2020: £190.5m) equivalent to 305.9p per share; underpinned by freehold/long leasehold property of £139.6m;

·     Restoration of dividends; H1 interim dividend of 8.86p per share reflecting exceptional first half performance;

·     Continuing underlying profit before tax for the full financial year expected to be not less than £40.0m.

Other Highlights

·       Strong like-for-like5 market outperformance across new vehicles (both retail and fleet) and used vehicles:

o  new vehicle unit sales up 46.1% versus overall market registrations6 up 39.2%;

o  used unit sales up 51.7% versus overall used market unit sales7 up 31.1%;

o  aftersales revenue up 34.8%;

·       Acquisitions of Cheltenham and Gloucester Jaguar Land Rover and Leicester Nissan;

·      Commitment to voluntarily repay all CJRS and non-essential retail sector government grants received in the Period (c.£4.0m);

·       One-off ‘thank you’ bonus paid to all colleagues (excluding directors);

·    Eleventh year of being a ‘Great Place to Work’® and seventh year running of being ranked in the UK’s Best Workplaces.

Daksh Gupta, Marshall Motor Holdings Chief Executive Officer, said:

“The Group’s record performance in the first half of the year was exceptional. Whilst we acknowledge that this has been largely driven by unprecedented market conditions, particularly the used car market, we are proud of the contribution of our operational teams across the country for another period of strong market outperformance. On behalf of the Board, I would like to thank all our colleagues, as well as our brand and business partners, for their continued support.

There remains a high level of uncertainty over the second half of 2021 and into 2022 given well documented vehicle supply issues, an expected realignment of used vehicle values (the timing of which is uncertain) and the continuing impact of the COVID-19 pandemic.  Given these uncertainties, there remains a range of possible outcomes for the year, however, the Board expects that continuing underlying profit before tax for 2021 will be not less than £40 million.”

1      H1 2020 restated to include COVID-related costs in the underlying trading result (see Note 6)

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 debt includes the impact of the recognition of lease liabilities under IFRS16 (see the Net Debt Reconciliation)

5      “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

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

7      Auto Trader analysis of used vehicle sales between 1 January 2021 and 30 June 2021

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