# Marshall Motor Holdings Resilient performance in a challenging environment (+Interview)

- Link: https://www.directorstalkinterviews.com/marshall-motor-holdings-resilient-performance-in-a-challenging-environment-interview/412966753
- Published: 2021-03-09T07:09:50+00:00
- Author: Giles

**Marshall Motor Holdings plc** ([LON:MMH](https://www.directorstalkinterviews.com/company/marshall-motor-holdings/mmh.l)),
one of the UK’s leading automotive retail groups, has announced today its results
for the Year ended 31 December 2020.

CEO Daksh Gupta and CFO Richard Blumberger join DirectorsTalk to discuss todays 
results. Daksh talks us through some of the highlights, explains how Marshall continually
outperforms the overall market while Richard talks us through the financials and
with a strong cash position shares his thoughts on the balance sheet strength. Finishing
up Daksh discusses further acquisitive growth opportunities.

**Financial summary**

|   |   |   |   |   | 
|   | 2020 | 2019 |   | Var % | 
| Underlying: |   |   |   |   | 
| 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%) | 
|   |   |   |   |   | 
| Reported: |   |   |   |   | 
| Revenue (£m) | 2,154.4 | 2,276.1 |   | (5.3%) | 
| 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 | 2.85^(1) |   |   | 
|   |   |   |   |   | 
| 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

**2020 ****Highlights:**

|    • | 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.

Chairman’s Statement

Introduction

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.

Strategy

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.

Results

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.

Dividend

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.

AGM

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.

Summary

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

Chairman

8 March 2021

Operating Review

Overview

2020 was dominated by COVID-19 and the impact of measures put in place to control
the spread of the virus, both in the UK and globally. In common with many other 
businesses, there were prolonged periods during the Year when our physical retail
businesses were required to close, in full or in part, which clearly had a significant
impact on trading.

Nevertheless, 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 (2019: £22.1m).  Our financial
position also remains strong, with adjusted net cash at 31 December 2020 of £28.8m(
2019: adjusted net debt of £30.6m).

Our priority in responding to the COVID-19 pandemic was and remains the safety and
wellbeing of our colleagues and customers. As well as ensuring our businesses were
COVID-19 secure in line with Government guidelines, we worked hard to support colleagues,
both financially and through wider wellbeing initiatives, further details of which
are set out later in this report.

In recognition of the vital role our aftersales operations play in supporting essential
vehicle mobility, we continued to provide essential vehicle aftersales services 
during periods of national and local lockdown to support the emergency services,
commercial vehicle operators, vulnerable customers and key workers. The Board believed
it was appropriate for the Company to continue to offer these services, notwithstanding
they operated at a small loss, to support the country, particularly in light of 
the various Government support schemes provided to businesses through this period.

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.

Whilst the impact of COVID-19 will continue to dominate the social and economic 
environment in 2021, our success in meeting these challenges to date, coupled with
the demonstrable resilience and flexibility of our business model, gives us confidence
in our ability to successfully navigate the coming months.

**Financial Highlights****:**

|    • | Reported revenue of £2.2 billion, 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 national lockdowns; | 
|    • | Underlying profit before tax of £20.9m (2019: £22.1m), reported profit before tax of £20.4m (2019: £19.6m); | 
|    • | Total new vehicle unit sales down 9.2%, with like-for-like total new vehicle unit sales down 19.4%, heavily impacted by COVID-19 but a strong double-digit outperformance against a UK market registration decline of 29.4%; | 
|   | • | Total new vehicle unit sales to retail customers down 4.6% with like-for-like down 16.9%, an outperformance against a UK retail market registration decline of 26.6%; | 
|   | • | Total new vehicle unit sales to fleet customers down 16.8% with like-for-like down 23.2%, an outperformance against a UK fleet market registration decline of 31.7%; | 
|    • | 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; | 
|    • | Reduced impact in aftersales with total revenue down 6.7% and like-for-like revenue down 13.5%; | 
|    • | Total overheads of £207.1m, down by 9.5% (2019: £228.8m), reflecting Government and partner support combined with strong management actions; | 
|    • | 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; | 
|    • | Positive cash position enabled voluntary repayment, 18 months early, of £10.9m being all amounts due under the VAT Payment Deferral Scheme; | 
|    • | £120m revolving credit facility extended in July until 2023; COVID-19-related covenant amendments agreed; | 
|    • | No final dividend for Full Year 2020 proposed |

Strategic and Operational Highlights:

|    • | The Group added three further locations with the acquisition of Aylesbury Volkswagen and start-ups of Oxford Seat and King’s Lynn Ford Commercial Vehicles; | 
|    • | 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 and continuation of our award-winning social media activities; | 
|    • | Ongoing portfolio management with the closure of four sub-scale, loss making businesses. |

COVID-19: impact and timeline

As stated above, 2020 was dominated by the impact of COVID-19 and the Year was characterised
by four distinct trading periods:

1.   Pre-COVID-19: strong trading _(Jan to late March 2020)_

In our 2019 results announcement on 10 March 2020, we reported that our order-book
for the important March 2020 plate-change month had been encouraging.  As the month
progressed, the Group continued to perform strongly and was confident of achieving
an excellent operational and financial performance in the first quarter of the Year.

Notwithstanding the temporary closure of our physical sites in what is traditionally
the busiest week of the year, we were able to significantly outperform the wider
UK new car market in the first quarter:

| • | Like-for-like new unit sales for the three months to 31 March 2020 were down 10.6% compared to the 31.0% decline in new vehicle registrations reported by the Society of Motor Manufacturers and Traders (SMMT) over that period.  This outperformance reflected both strong order-take throughout the first quarter of the Year and a focus on completing customer handovers in anticipation of the potential closure of our operations given the emerging situation with COVID-19; | 
| • | Like-for-like used unit sales were down 9.7%, a pleasing result given the fact that our showrooms were closed in the busiest week of the year; | 
| • | Like-for-like aftersales revenues were down just 3.1% despite the loss of seven trading days at the end of March; | 
| • | Total like-for-like revenue was down 6.9% in the first quarter of the Year. |

**_2.   _****Safeguarding our business through the closure period _(Late March to
June 2020)_**

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 2020, prior to Government restrictions requiring car showrooms and all
non-essential businesses to close, impacting the busiest week of the year.

In recognition of the vital role our services 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.  The Board believed 
it was appropriate for the Company to continue to offer these services, notwithstanding
they operated at a small loss, to support the country, particularly in light of 
the various COVID-19 Government support schemes provided to businesses through this
period.

We continued to operate online and on the telephone to manage customer enquiries
for sales. During the closure period from late March to June 2020, 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.

During this period, the Group furloughed around 90% of its 4,300 colleagues.  The
Group acknowledges the support provided by Government through the Coronavirus Jobs
Retention Scheme (CJRS) which enabled the Group to support colleagues and protect
their employment.

Further details of how the Group supported colleagues during their period of furlough
are set out in the ‘People Centric’ section below. These included the additional
financial support we provided to supplement CJRS, through regular video communications
and a focus on supporting colleagues’ mental wellbeing.

3.   Re-opening under COVID-19 secure operating procedures _(June to October 2020)_

The Group reopened all its 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.

Through its close connections with the National Franchised Dealers Association (
NFDA) and working alongside the SMMT, the Group was pleased to contribute to the
COVID-19 safety guidelines issued by the Government for motor retailers.  The Group
carried out detailed risk assessments, mandatory colleague training ahead of return
to the business (with a required pass mark of 100%) and implemented robust auditing
by our Health & Safety team to provide assurance that our COVID-19 secure procedures
were being implemented and followed.

Trading from June to October was strong, benefitting from a number of sector tailwinds
including a release of pent-up demand (including the delivery of outstanding vehicle
orders not completed prior to the closure period and those taken during that period),
extended vehicle financing agreements coming to an end and a shift from use of public
transport towards vehicle ownership with an increase in first-time car purchasers.
Resilient consumer demand was augmented by strong margin retention and robust used
car valuations as a result of supply constraints in new cars following the prolonged
closure of many manufacturers’ factories during the first lockdown period.

In addition to these sector tailwinds, the Group’s outperformance of the wider market
during this period was significant. As announced in October 2020, the Group’s outperformance
of the market in the important plate-change month of September was particularly 
strong. Against the SMMT-reported decline in total new vehicle registrations in 
September 2020 of 4.4%, the Group’s like-for-like total new vehicle sales were up
18.4%.  Across the third quarter of the Year as a whole, the Group’s total new unit
sales were up 11.8% on a like-for-like basis compared with SMMT-reported new vehicle
registrations down 0.5%.

This strong period of trading enabled the Group to eliminate losses from the first
lockdown period and gave the Board the confidence to target a significant upgrade
to our adjusted profit before tax for the Year.

4.   Second National Lockdown and Geographical Tiers _(November to December 2020)_

The second national lockdown in November 2020 and the subsequent introduction of
Tier 4 restrictions during December 2020 and the closure of all non-essential retail(
including vehicle showrooms), again impacted trading during the last two months 
of the Year.

With the Group’s strong presence in the south and east of the country which were
first to be impacted by the tier system during December 2020, around 90% of our 
dealerships were required to close during the last month of the Year.  The Group
was, however, able to continue to operate ‘click and collect’ retailing of new and
used vehicles during this period. 

The work and investment made in ensuring we could operate effectively on a ‘click
and collect’ basis mitigated the impact of the closure of our physical showrooms
to customers. We were encouraged by the level of order-take and deliveries utilising
telephone, online and ‘click and collect’ services. 

This trading environment has continued into 2021 and whilst it has resulted in reduced
order-take, the impact has been markedly less than that experienced during the first
lockdown period.

Strategy

The Group’s strategic vision to be the UK’s premier automotive group remains central
to everything we do. The five strategic pillars, which underpin our 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

Although the past Year has been challenging, the Group has delivered a resilient
performance by continuing to focus on the basics of customer service combined with
margin, stock and cost control. The Group continues to focus on market outperformance.
In addition, the Group continues to drive sales of used vehicles and aftersales,
thereby mitigating the effects of a decline in the new vehicle market. 

The Group’s strategy, of building a balanced brand portfolio with the right brand
partners in the right geographic locations, helps allow for the cyclical nature 
of individual brands as well as regional variations in performance resulting from
local economic issues.

In the medium to longer-term, continued growth with our brand partners will enable
the Group to access additional benefits of scale across a number of areas of the
business, supported by the use of the Marshall brand across the entire portfolio.
The Group has a robust platform which is scalable for further future growth and 
is well placed to take advantage of a consolidating market.  The has been most recently
demonstrated by the successful integration of the twenty new business units acquired
in 2019.  The Board anticipates further rationalisation of manufacturer dealer networks
over the coming years and given the Group’s strong balance sheet and manufacturer
relationships, is confident of continued future acquisitive growth.

Customer First

Customer satisfaction is an important element of the Group’s strategy, driving repeat
business and loyalty to the Marshall brand.

Our in-house developed management information system, Phoenix 2, provides daily 
customer satisfaction information by dealership, which allows management to proactively
respond to customer needs. The Group centrally monitors customer satisfaction for
both sales and aftersales across all locations and brand partners on a weekly basis.
This ensures we remain focused on delivering on our brand partners’ key measures
whilst ensuring consistency of internal performance monitoring.

The Group’s continued expansion and scale provides customers with a wider choice
of location, stock and products, increasing both customer satisfaction and sales.

The Group’s ability to adapt effectively to changing consumer preferences was demonstrated
during the Year as we responded to the various restrictions imposed as a result 
of COVID-19.  By utilising existing customer interaction capabilities (including
through our website, our award-winning social media channels, online chat and use
of video) we were able to respond effectively to the challenges presented by the
closure of our physical showrooms.

We also accelerated plans already in place to further improve our website enabling
online vehicle reservations and aftersales bookings. Further development of our 
online capabilities are underway, including the functionality to enable customers
to complete the entire vehicle purchase and part exchange process online. Whilst
fully online sales remain low across the sector as a whole, we recognise it is a
growing area of interest for certain consumer groups and we are investing significantly
in further improving our digital capabilities to enhance customer experience, improve
our operational efficiencies and ensure consistent compliance.

Compliance

The Group operates in a regulated environment and takes its commitment to compliance
seriously as well as recognising the benefit it can bring our customers. The Group
recognises that compliance is an ongoing process and adopts a culture of continual
improvement focused on training and awareness, system and process development, compliance
monitoring and internal audit. Key compliance areas for the Group include environmental,
health and safety, data protection and financial services. The Group has established
compliance committees attended by cross functional colleagues from both compliance
and internal audit and from operations and members of the senior management team.

Supported by the Group’s experienced team of compliance professionals, the Group
made detailed preparations for the introduction of the Financial Conduct Authority’s‘
Senior Managers and Certification Regime’ (SMCR).  These include clear statements
of responsibility for the Group’s Approved Persons, the identification and certification
of the Group’s ‘Certification Employees’ and group-wide training on SMCR and related
conduct rules. 

Retailing Excellence

The Marshall brand is synonymous with good customer service and the Group continues
to leverage the use of the ‘Marshall’ brand consistently across all of its franchises.
This brand consistency is unique amongst the large multi-brand motor retail groups
in the UK.

A single brand approach allows the Group to have a single online point of entry 
for users with an instantly recognisable brand name.  The Group’s recently relaunched
website, marshall.co.uk accommodates all of the Group’s brand partners and stock,
allowing for much wider customer choice in one place.

The Group has continued to leverage the Marshall brand during 2020 in a number nationwide
marketing campaigns, including advertising at televised premier league and EFL football
matches, England’s Six Nations rugby matches and England cricket matches.  These
campaigns have reached a combined live audience of over 100 million and enjoyed 
over 300 million page impressions online.  In addition, the Group has recently announced
the sponsorship of a trio of leading professional darts players for the 2021 season.
The sponsorship includes shirt branding and the Group will be running competitions,
personal appearances and online game challenges over the next 12 months.

Another key differentiator for the Group in achieving retailing excellence, is a
focus on technology and data to drive performance.  Phoenix 2, the Group’s bespoke
MI system, supports local decision-making combined with central oversight to ensure
consistency of performance and a focus on what makes a difference.  One of the key
benefits of Phoenix 2 is the integration of third party external used car pricing
and transaction data.  This enables visibility of pricing comparison to the market,
including regional and market desirability variations, all of which leads to greater
customer transparency and optimal pricing.  The Group continues to see Phoenix 2
as one of the key drivers behind its market outperformance.

People Centric

The Group is proud of its people-centric culture and this has been reflected in 
the level of support provided to our colleagues during these challenging times. 
One of our main priorities during the COVID-19 pandemic has been the safety and 
wellbeing of our colleagues.  During the first lockdown period the Group furloughed
around 90% of our 4,300 colleagues. Throughout this 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.  Whilst they continued to work throughout, the Board and other
senior members of the management team voluntarily reduced their pay in line with
the reductions for furloughed colleagues in April and May, and also forfeited holiday
accrued. The Group has also provided additional financial support, including salary
advances through our ‘Pay it Forward’ initiative.

In addition to providing financial support to colleagues and recognising the importance
of ongoing communication, regular management briefings have been issued to all colleagues
via video message from members of the Executive Committee and other members of the
senior management team. This enabled the Company to stay in touch with everyone 
and provide updates on the actions the Company has been taking during the closure
period.  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.

Feedback from colleagues throughout the Year has been extremely positive, demonstrating
why, for the eleventh consecutive year, the Group has been recognised by Great Place
to Work UK as a ‘great place to work’ based on colleagues surveyed during 2020. 
At 79%, this continues to be significantly ahead of the 65% threshold score required
to be considered a Great Place to Work®.  We also enjoyed an exceptionally high 
participation rate of 84%, which compares to 70% nationally, and demonstrates the
high degree of trust and engagement in the organisation. This result is also particularly
pleasing given the number of new businesses the Group has integrated over recent
years.

Based on the results of the 2019 survey and an extensive audit of people policies,
procedures and programmes, the Group was ranked 12^(th) in the super large category
of the 2020 Best UK Workplaces programme, which included employers such as Admiral,
CISCO, MARS UK, Deloitte and EY. 2020 was the sixth year running that the Group 
was ranked amongst the best employers in the UK.

**Strategic**** ****Growth**

As set out at the time of the Group’s IPO and demonstrated since then, the Group’s
strategy is to grow scale with existing brand partners in new geographical territories.
As evidenced recently, there continues to be considerable consolidation in the UK
motor retail market with both Ford and Vauxhall rationalising their network and 
Mitsubishi announcing its exit from the European market.  The Group, with its scalable
platform, is very well positioned to take advantage of the opportunities arising
given its strong balance sheet and excellent manufacturer relationships. The Group
continually seeks to maximise return on capital employed and closely monitors and
reviews its portfolio to ensure optimal returns.

Acquisitions and Disposals

During 2019, 20 new business units were added to our portfolio through eight acquisitions
or start-ups. These additions significantly expanded our representation with a number
of our key brand partners including ŠKODA, Honda, Volkswagen and Volvo and were 
in line with our strategy to grow with key brand partners.  Although trading in 
these businesses during the Year was impacted by COVID-19 related lockdowns, we 
have been very encouraged with the progress made and anticipate that these businesses
will make positive contributions to the Group’s future profitability.

On 10 July 2020, the Group completed the acquisition of Aylesbury Volkswagen.  The
Aylesbury business formed part of the strategic acquisition announced in December
2019 with its completion being deferred pending resolution of certain property issues.
All deferred consideration has now been paid to the seller, Jardine Motor Group 
UK Limited.

The Group announced in October 2020 that it had secured the opportunity to represent
Ford Commercial Vehicles in King’s Lynn, which will operate from our existing Ford
freehold site. We also agreed to represent SEAT at an open point in Oxford, which
will operate from a leasehold site adjacent to the Group’s existing Jaguar Land 
Rover and Volkswagen businesses.  These new businesses commenced trading in early
2021 following completion of associated corporate identity upgrades. 

The Group has continued to focus on driving operational efficiencies and responding
to a number of its brand partners’ network rationalisation strategies and the ongoing
impact of COVID-19. As a result of a review of its portfolio, and with the full 
support and approval of its brand partners, during the Year the Group announced 
the closure of four sub-scale franchised dealerships: Cambridge Hyundai, Bury St
Edmunds Ford, Knebworth Vauxhall and Poole Mercedes-Benz Commercial Vehicles.  In
the year ended 31 December 2019, these dealerships made a combined revenue contribution
of £47.3m and a loss of £0.1m.

The Group now consists of 113 franchises representing 22 brand partners trading 
in 28 counties nationwide. In addition, the Group operates six trade parts specialists,
two used car centres, six standalone body shops and a pre-delivery inspection (PDI)
centre. The Group operates a balanced portfolio of volume, premium and alternate
premium brands including all of the top five premium brands.

The Group’s scale and diversified spread of representation helps mitigate the effect
of the cyclical nature of individual brand performance. The Group’s strategy is 
to develop strong relationships with its brand partners, targeting a 5% share or
more of UK sales for each brand partner.  We now exceed that threshold with nine
of our key brand partners and our strategy is to increase that scale further.

Investment in New Retail Locations and Major Developments

As part of our cash preservation actions, 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 £11.7m, a reduction of £7.7m 
versus 2019. 

The Group will continue to review investment requirements closely and will reinstate
the investment programme at the appropriate time.

Projects undertaken or commenced in the Year include:

•  **Newbury Audi** – showroom corporate identity and building refurbishment;

•  **Wimbledon Audi** – completion of Audi’s “city concept”, the first of its type
in the UK;

•  **Derby Volvo **– site refurbishment to Volvo VRE standards following purchase
in 2019;

•  **Welwyn Volvo** – purchase of freehold;

•  **Oxford Seat **– preparation for opening of new franchise opportunity;

•  **King’s Lynn Ford CV **– preparation for opening of new franchise opportunity
on current freehold site;

•  **South London TPS **–** **Relocation from Old Kent Road to new premises in Deptford
in-line with Volkswagen TPS hub and spoke strategy;

•  **Newbury ŠKODA **– Relocation of aftersales business to new premises

In addition to large scale redevelopments, the Group continues to invest in upgrading
existing businesses to enhance the customer experience, satisfy brand requirements,
electrification and increase sales and aftersales capacities.

Since IPO in 2015, the Group has invested over £110m in its property estate, including
corporate identity upgrades, freehold and long-leasehold acquisitions and ongoing
maintenance capital expenditure.

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