Marshall Motor Holdings plc (LON:MMH), one of the UK’s leading automotive retail groups, has today announced its results for the Year ended 31 December 2019.
|Continuing Operations||2019||2018(restated)*||Var %|
|Like-for-like** revenue (£m)||2,209.6||2,161.5||2.2%|
|Like-for-like operating profit (£m)||33.1||34.5||(4.1%)|
|Underlying profit before tax*** (‘PBT’) (£m)||22.1||24.7||(10.8%)|
|Basic Underlying Earnings per share (p)||22.9||26.3||(12.9%)|
|Operating profit (£m)||32.0||34.3||(6.7%)|
|Profit before tax (£m)||19.6||18.0||8.9%|
|Earnings per share (p)||19.9||17.2||15.7%|
|Dividend per share (p)||8.54||8.54||–|
|Adjusted Net debt (£m)****||30.6||5.1|
|Reported Net debt (£m)||138.6||92.8|
• Significant strategic growth with 20 new businesses;
• Record reported revenue and a fifth year of like-for-like revenue growth since IPO;
• Despite market challenges, like-for-like operating profit of £33.1m, down only 4.1% against last year’s record result and underlying profit before tax was £22.1m, down 10.8%;
• Like-for-like total new vehicle unit sales up 0.3% (market registrations down 2.4%), with both retail and fleet delivering a strong market outperformance;
• Like-for-like used car unit sales up 6.1% (market volumes decline 0.1%);
• Further growth in aftersales like-for-like revenue, up 3.2%;
• Disciplined cost management; like-for-like operating expense increased 1.5% despite cost headwinds;
• Strong operational cash generation supporting £46.8m of acquisitions and capital investment;
• Recommended final dividend of 5.69p giving a full Year dividend of 8.54p per share (2018: 8.54p);
• 10th consecutive year of Great Place to Work status and fifth consecutive year ranked in the best UK work places.
Daksh Gupta, Chief Executive Officer, said:
“The Group continued to perform well in 2019 and despite a sustained period of market decline, has grown market share by outperforming in all of its key segments. The Group delivered record total reported revenue and achieved like-for-like revenue growth. Despite market conditions, the business performed well, with like-for-like operating profit down 4.1% to £33.1m against last year’s record result.
“The Group has taken advantage of continued market consolidation, completing a number of strategic acquisitions in 2019, adding 20 new businesses. We are particularly proud to have become Volkswagen Group’s largest partner in the UK.
“The Board notes the latest forecast by the Society of Motor Manufacturers and Traders (‘SMMT’) for a further decline in the UK new car market in 2020 of 2.6%. It is also cognisant of the potential impact that uncertainty over the outcome of future trade agreement negotiations between the UK and the European Union may have on the automotive sector. Although we have not seen an impact to date, the Board is monitoring the potential impact of COVID-19 and is considering contingency plans in the event it starts to impact our dealerships. The Board therefore remains cautious but our order book for the important March plate-change period is encouraging and our outlook for the full Year is unchanged.
“The UK motor retail landscape may change over the years and decades ahead. The Group’s long standing strategy of partnering with the right brands in the right locations has positioned it well to remain a relevant and important part of that future landscape.
“I would like to take this opportunity, on behalf of the Chairman and the Board, to thank our entire team, our brand partners and suppliers for their continued support.”
* The comparative figures have been restated on adoption of IFRS 16 Leases. Full details of the impact of adoption are included in Note 2.
** 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 debt is presented excluding the impact of IFRS16 Leases.
I am delighted to present our annual results for the Year ended 31 December 2019 (the “Year).
Whilst market conditions in 2019 continued to be challenging with further declines in the new car market, the Group continued its track record of market out-performance in new and used car sales and further growth in aftersales revenues.
I am also pleased to welcome Nicky Dulieu to the Board. Nicky joined the Board in January 2020 as a Non-Executive Director and Chair of the Remuneration Committee following Sarah Dickins’ retirement from the Board in June 2019. I would like to once again thank Sarah for her contribution to the Group since its IPO in 2015.
The Group’s strategy of close partnership with major global automotive brands has served it well over many years. We are delighted to have extended and strengthened those partnerships during the Year with the acquisition of an additional 20 business. These included the addition of seven ŠKODA, six Volkswagen passenger car, two Volkswagen commercial vehicles, two Honda and a Volvo business. As a result, in the UK we are now the largest partner for Volkswagen Group, the largest partner for Volvo and the second largest partner for Honda.
The automotive sector is undergoing a period of evolution, driven by a combination of environmental, technological and social change factors. The progression towards battery electric vehicles over the coming years, for example, presents both challenges and opportunities for automotive retailers. Along with our manufacturer partners, we continue to believe that a strong retail franchise network will be a crucial component of that development. We also believe that those automotive retailers with both scale and a diverse portfolio will be best placed to succeed in a changing market.
The Group has delivered a strong financial performance in what was a very challenging year for the sector. The Group achieved record reported revenue of £2.3 billion with a fifth consecutive year of like-for-like revenue growth since IPO, up 2.2% to £2.2 billion. This revenue growth helped to mitigate the impact of significant margin pressure across all main revenue streams (new, used and aftersales) and the impact of loss-making businesses acquired during the Year. Given these factors, the Board considers underlying PBT during the Year of £22.1m (2018 restated: £24.7m) to be a strong result.
The Group’s balance sheet also remains strong, underpinned by £124.9m of freehold land and buildings.
The Group’s revised dividend policy adopted last year is that, subject to the Group’s trading prospects being satisfactory and taking into account potential investments, dividends will be covered by between 2.5 to 3.5 times underlying earnings and paid in an approximate one-third (interim dividend) and two-thirds (final dividend) split. The Board believes this policy is appropriate and sustainable, balancing the Group’s strong financial position and cash generation with its stated strategy of further investment and growth in its business.
The Board is therefore recommending a final dividend for 2019 of 5.69p per share which, if approved by shareholders at our AGM on 21 May 2020, will be paid on 22 May 2020 to shareholders who are on the Company’s register at close of business on 24 April 2020. If approved, this will result in a full year dividend of 8.54p per share (2018: 8.54p) and dividend cover of 2.7x (2018: 3.2x).
Our annual general meeting will be held on 21 May 2020 and I look forward to meeting all shareholders who are able to attend.
The Board notes the latest forecast by the Society of Motor Manufacturers and Traders (‘SMMT’) for a further decline in the UK new car market in 2020 of 2.6%. It is also cognisant of the potential impact that uncertainty over the outcome of future trade agreement negotiations between the UK and the European Union may have on the automotive sector. Although we have not seen an impact to date, the Board is monitoring the potential impact of COVID-19 and is considering contingency plans in the event it starts to impact our dealerships. The Board therefore remains cautious but our order book for the important March plate-change period is encouraging and our outlook for the full Year is unchanged.
The UK motor retail landscape may change over the years and decades ahead. The Group’s long standing strategy of partnering with the right brands in the right locations has positioned it well to remain a relevant and important part of that future landscape.
I would like to thank the leadership team, our brand partners, business suppliers, shareholders and colleagues throughout the Group for their continued support during another successful year.
I would also like to thank all of our customers throughout the UK who choose Marshall for their mobility products and services. We continue to put our customers at the heart of everything we do and recognise that our success as a business is dependent on meeting and exceeding their expectations.
Professor Richard Parry-Jones CBE
9 March 2020
I am pleased to announce a strong performance against the backdrop of another challenging Year for the UK automotive retail sector, with a third year of both new and used car market decline.
The Society of Motor Manufacturers and Traders (“SMMT”) reported a total market of 2.31m registrations in 2019, a decline of 2.4% versus 2018. This included a 3.2% decline in registrations to new retail customers and a 1.7% decline in registrations to fleet customers. The used car market also declined by 0.1%.
Despite these continued challenging market conditions, the Group continued to grow its market share both organically and by acquisition. The Group’s like-for-like vehicle unit sales outperformed the market in all of its key vehicle segments: total new unit sales, new retail sales, new fleet sales and used vehicle sales. Aftersales revenue also continued to grow on a like-for-like basis, despite the further reduction in the UK vehicle parc as a result of falling new vehicle sales since 2016.
Reflecting the difficult market, underlying profit before tax (“PBT”) of £22.1m (which included the impact of loss-making acquisitions and the first time adoption of IFRS16) was down by 10.8% (2018 (restated: £24.7m). The Board considers this to be a strong result in the context of the challenging market conditions described above.
I am also pleased that the Group completed a number of strategic acquisitions in the Year, adding 20 new businesses through 8 transactions or start-ups, demonstrating the Group’s commitment to grow scale with our existing brand partners in new geographical territories. Whilst these acquisitions will be earnings dilutive in the short-term, we are confident in their medium to long-term potential as we work to improve their operational performance. The Group has a track-record of acquiring underperforming business and creating long term value for its shareholders through its well-established business model and scalable platform. We therefore believe these acquisitions will be excellent additions to the Group.
Financial Highlights of the Year:
• Record reported revenue of £2.3 billion (2018: £2.2bn) with a fifth consecutive year of like-for-like revenue growth since IPO of 2.2% to £2.2 billion;
• Despite market challenges, like-for-like operating profit of £33.1m, down only 4.1% against last year’s record result;
• Total new vehicle sales up 2.4% with like-for-like total new vehicle unit sales up 0.3%, a strong outperformance against a UK market registration decline of 2.4% (including the impact of dealer self-registrations);
• Total new vehicle sales to retail customers up 1.3% with like-for-like down 2.2%, an outperformance against retail market registration decline of 3.2% (including the impact of dealer self-registrations);
• Total new vehicle sales to fleet customers up 4.1% with like-for-like up 4.5%, an outperformance against fleet market registration decline of 1.7% (including the impact of dealer self-registrations);
• Excellent used car performance against strong prior year comparisons: total unit sales up 8.5% with like-for-like volumes up 6.1%, significantly outperforming the wider UK market which saw volumes decline by 0.1%;
• Further growth in aftersales like-for-like revenue, up 3.2%;
• Continued disciplined cost management; like-for-like operating expense increase contained to 1.5%;
• Continued investment in the Group’s property portfolio; £15.2m invested in upgrading facilities and acquiring freehold sites (excluding freehold property purchased in connection with acquisitions);
• Property portfolio revaluation as at 31 December 2019 confirmed a c£15m surplus to net book value (not recognised in the accounts);
• Adjusted net debt at 31 December 2019 of £30.6m, up £25.5m from 31 December 2018 as a result of acquisitions made through the Year and strong fleet volumes in December 2019;
• Recommended final dividend of 5.69p giving a full Year dividend of 8.54p per share, in line with the prior Year.
Strategic and Operational Highlights of the Year;
|•||The Group became the largest partner for Volkswagen Group in the UK, adding six Volkswagen passenger car franchises, two Volkswagen commercial franchises and seven ŠKODA franchises. The Group is also now the largest partner for each of these brands by number of locations;|
|•||The acquisition of two Honda franchises in Reading and Newbury, taking our representation to eight locations and reinforcing our No.2 position with the Honda brand in the UK;|
|•||Extending our relationship with Volvo by adding our ninth Volvo franchise, confirming our No.1 position with the Volvo brand in the UK;|
|•||Tenth consecutive year of Great Place to Work status and fifth consecutive year ranked in the best UK work places, recognised with a laureate award;|
|•||Further technological advancements in the Group’s bespoke management information system, ‘Phoenix 2’, including unique third party data integration of vehicle market pricing; and|
|•||First national TV marketing promoting the Marshall brand.|
The Group’s strategic vision to be the UK’s premier automotive group remains central to everything we do. The five strategic pillars, of equal importance, 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.
This strategy has enabled a transformation of the Group since its IPO in 2015. Selective, value enhancing acquisitions, combined with strategic portfolio management and organic growth, have led to annual revenues more than doubling to £2.3bn with continuing underlying profit before tax growing at a faster rate to £22.1m. Since IPO, we have invested more than £100m in our property portfolio and, with the final dividend for 2019 announced today, will have returned nearly £25m to shareholders through dividends. This has been achieved with a constant focus on our customers, excellent relationships with our business partners and, as demonstrated by our consistent ranking as one of the UK’s Best Workplaces, our colleagues.
The Group’s strong track record of delivery against its strategy since IPO has provided a solid platform for further future growth.
Class Leading Returns
The Group continues to focus on organic growth through market outperformance, demonstrated by our strong volume performance in the Year. 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. This resulted in a 6.1% like-for-like increase in used unit sales and a 3.2% like-for-like increase in aftersales revenue, whilst also containing like-for-like expense increase to 1.5% despite continued cost headwinds.
In recognition of our market leading performance in the first half of the Year, the Group was awarded the Outstanding Achievement Award by Car Dealer Magazine. In addition, the Group was runner up for the Best Dealer Group Award at the 2020 Automotive Management Awards.
The Group’s strategy of building a balanced brand portfolio with the right brand partners in attractive geographic locations, allows for the cyclical nature of individual brands as well as regional variations in performance resulting from local economic issues.
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 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 satisfaction is an important element of the Group’s strategy, driving repeat business and loyalty to the Marshall brand.
In 2019, 45.2% (2018: 45.6%) of the 72,530 customers surveyed who visited our showrooms indicated that they were either previous customers or were recommended to us. We believe this to be strong for the sector.
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 operates in a regulated environment and takes its commitment to compliance, and the benefit it brings our customers, seriously. 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.
In April 2019, the Financial Conduct Authority (‘FCA’) published the findings of its thematic review of general insurance distributions chains and in October 2019 it published its final findings following its review of the motor finance sector. As part of its findings, the FCA has proposed a number of changes, including to commission arrangements between finance and insurance providers and credit brokers and insurance intermediaries such as the Group. The Group is supportive of the changes proposed by the FCA and the benefits they will bring to our customers and is working with its finance and insurance provider partners to implement them.
The Group’s use of the ‘Marshall’ brand consistently across all of its franchises is unique amongst the large UK multi-brand motor retail groups. As the Group grows and leverages its existing platform, new businesses are re-branded and quickly benefit from wider recognition of the Marshall brand.
The Group believes there are a number of benefits of this consistent brand:
|•||The Marshall brand is synonymous with good customer service;|
|•||The Group’s website, marshall.co.uk accommodates all of the Group’s brand partners and stock, allowing for much wider customer choice in one place;|
|•||One Marshall brand gives the ability to market nationwide in single campaigns, for example, recent marketing campaigns on Sky Sports during the cricket world cup in December 2019 and ITV1 during the England v Kosovo football match November 2019. These two campaigns reached a combined audience of c20 million viewers and were the first time the Group has carried out any form of national TV marketing.|
As the Group grows, we intend to continue national marketing, where economic, in order to leverage the reputation and recognition of the Marshall brand on a national scale as part of our omni-channel marketing strategy.
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.
Targeted use of online channels and social media continue to be utilised to increase lead conversion, Marshall is viewed as an industry leader in this area as evidenced by two further awards in the Year; “Best Use of Social Media”, Automotive Management Awards and winner of the Social Media category at the Motor Trader Awards.
During 2019, the Group began development work on a new website which will contain a number of new customer-centric features including being fully transactional. The new website will go live in the first half of 2020. The Group believes it is well-placed grow market share further given its unique investment in its online platform, unique use of data through Phoenix 2 and ability to leverage the Marshall brand through its national marketing and social media channels.
For the tenth consecutive year, the Group has been recognised by the Great Place to Work Institute as a ‘great place to work’ based on colleagues surveyed during 2019. We are particularly pleased that the proportion of colleagues stating that Marshall is a ‘great place to work’ has increased for the tenth consecutive year. At 80%, this is significantly ahead of the UK average score of 52% and well ahead of the 65% 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, the Group was ranked 11th in the super large category in the UK which included employers such as Admiral, Cisco, Deloitte, EY, Hilton, and Mars. 2019 was the fifth year running that the Group was ranked amongst the best employers in the UK, as a result of which the Group received a Laureate award which has only been awarded to a handful of companies in the history of the Great Place to Work Institute.
The Group continues to be committed to diversity, both in Marshall and the wider industry. The Group is a member of the Automotive 30% Club, the aim of which is to work towards having women in at least 30% of management positions in the sector by 2030. The Group has made great strides towards this target with over 24% of our management positions in our like-for-like businesses filled by females. This is up from 15% in 2015. In recognition of this commitment, I am proud to have been asked to become a patron of the Automotive 30% Club.
The Group announced a number of new strategic people initiatives during the Year and we are pleased to report we have seen significant progress in these areas:
|•||Future leaders programme: This programme is for high potential colleagues to prepare for their first line management position. The Group is now in the third year of the programme with 25 colleagues currently participating in the programme.|
|•||In-house recruitment team: Our new in-house recruitment team gives us more control over recruitment quality and cost. Since its inception in September 2019, the team has recruited over 300 colleagues, saving both significant cost and time in the recruitment process and also providing recruiting managers far more control over the process, leading to better and quicker recruitment decisions.|
|•||Learning management system; over 4000 employees have been through on-line training since the release of the system in 2019.|
The Group is proud of its longstanding commitment to offering apprenticeship programmes. In 2020, the Group celebrates 100 years of offering apprenticeship programmes and we currently employ 115 apprentices in the Group. The Group also partners with Drive My Career, a platform which connects prospective apprentices with career opportunities. During the Year, the Group took part in the Drive My Career Apprentice Takeover which was run throughout National Apprentice Week. Drive My Career members were encouraged to promote across their social media channels the most successful stories about their apprentices or hand over their social media accounts directly to their apprentices. We were delighted that one of our second year apprentice technicians was the overall winner of the event
In keeping with our social agenda and aim to support local communities, we have also implemented a new work experience programme to attract new talent for the future alongside our current apprentice programme.
Finally, the Group is pleased that during the year it also announced the appointed of Jo Moxon as Human Resources Director. Jo has extensive experience across a diverse range of industries including, financial services, property, online and retail. More latterly, Jo was Group Human Resources Director for Pendragon PLC. Her experience in these sectors will be invaluable to the Group as we continue with our current growth strategy. I would also like to take this opportunity to thank Helen Burrows for her contribution to the success of the Group since 2013. We wish her well for the future.
As demonstrated since IPO, the Group’s strategy is to grow scale with existing brand partners in new geographical territories. There continues to be considerable consolidation in the UK motor retail market and 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 the Year, 20 new business units were added to our portfolio through eight acquisitions or start-ups. We are pleased that, in line with our historical practice, all of these transactions were off-market and completed with the full support of our brand partners.
The Group completed five trade and asset acquisitions during the Year as follows:
|•||In March 2019 the Group announced two transactions which further extended its relationship with ŠKODA from 5 locations to 11, making it the largest retailer in the UK for the brand. The Group acquired Leicester and Nottingham ŠKODA from Sandicliffe Limited and subsequently acquired the Bedford, Harlow, Letchworth and Northampton ŠKODA businesses from Progress Bedford Limited. We are very pleased with the progress of integrating these businesses which are already showing strong signs of improvement and are benefiting from the Group’s scale and operating model.|
|•||In September 2019, the Group acquired two Honda businesses in Reading and Newbury from Jardine Motor Group UK Limited, reinforcing the Group’s position as the second largest Honda partner in the UK. The acquisitions were completed with the full support of Honda UK and the Group now represents the Honda brand in eight excellent locations in the UK. Again, the early signs are encouraging in terms of the integration of these businesses.|
|•||In December 2019, the Group was delighted to announce the acquisition of the business and assets of a portfolio of Volkswagen and ŠKODA passenger and commercial vehicle franchises from Jardine Motor Group UK Limited. The businesses acquired comprise six Volkswagen passenger car franchises in Aylesbury, Harlow, Letchworth, Loughton, Milton Keynes and St Albans, making the Group Volkswagen passenger car’s biggest partner in the UK, together with a Volkswagen commercial vehicle franchise and bodyshop in Loughton and a ŠKODA passenger car franchise in Milton Keynes. Aggregate revenue for these businesses was £196.1m in the year ended 31 December 2017 and £212.8m for the year ended 31 December 2018 with a loss before tax in these years of £3.3m and £2.8m respectively. As a result, the acquisition is expected to be earnings dilutive in 2020 and 2021 while the Group improves the operational performance of the businesses. We expect the acquisition to be earnings enhancing from 2022 onwards. Completion of Aylesbury Volkswagen has been deferred pending completion of the legal process to sub-divide the site. It is expected that this process and the transfer of the Aylesbury Volkswagen business will be completed in 2020. We are proud of the development of our relationship with Volkswagen Group, from acquiring our first Volkswagen Group franchise in 2012 to now becoming its largest partner in the UK with 53 operations. The Volkswagen Group is one of the world’s leading automobile manufacturers and the largest carmaker in Europe. The Group partners with all of the Volkswagen Group’s core brands: Volkswagen Passenger Cars, Audi, SEAT, ŠKODA and Volkswagen Commercial Vehicles. Volkswagen Group’s core passenger car brands account for around 20% of all new vehicles sold in the UK and 11.5% for commercial vehicles. It is also investing €60bn in e-mobility, hybridisation and digitisation between 2020 and 2024, with the much anticipated Volkswagen ID.3 model scheduled for release in the UK in 2020.|
|•||Finally, in December 2019, the Group completed the acquisition of Volvo Derby from Vertu Motors plc. The franchise was relocated to a new freehold facility in Derby which was also acquired during December 2019. This addition takes the Group’s Volvo representation to nine sites, the largest representation in the UK for the brand.|
During 2019 the Group also announced the following portfolio additions:
|•||Volkswagen Commercial Vehicles in Lincoln. The Group was awarded an open point and commenced trading in October 2019, occupying one of the Group’s existing freehold facilities. This addition, along with the operation in Loughton, made the Group Volkswagen Commercial Vehicle’s largest partner in the UK;|
|•||Commencement of a new partnership with LEVC, the manufacturer of electric London taxis owned by Geely Automotive Holdings, which also owns the Volvo brand. The Group now represents the LEVC brand in Nottingham, sharing facilities with the Group’s Volvo franchise;|
|•||The Group now also represents Ford in the Cambridge region for the supply of genuine Ford parts to third party repairers through its Ford Parts Plus franchise.|
Following a review of the Group’s portfolio, the Board took the decision to close its Halesworth Land Rover used car centre. During 2016 the Group relocated the Halesworth Land Rover franchise to a state of the art ‘dual arch’ site in Ipswich. The Board has also, with the agreement of the brand partner, taken the decision to exit the Maserati franchise in Peterborough. The business will continue trading until June 2020 to ensure a smooth transition.
The Group now consists of 117 franchises representing 24 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 our 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 grow that scale further.
Investment in New Retail Locations and Major Developments
The Group continues to invest in its retail sites and has invested a total of £19.4m into its asset base during the Year. Investment in relocations and major rebuilds included:
|•||Nursling Mercedes Benz Commercial Vehicles – Substantial new build of aftersales and used vehicle facility;|
|•||Wimbledon Audi – major refurbishment of leasehold Audi site in-line with new manufacturer “city concept”, first of its type in the UK;|
|•||Completion of the relocation of Lincoln Jaguar Land Rover, historically two separate leasehold sites into one purpose built freehold site;|
|•||Relocation of Lincoln Nissan to larger premises (utilising ex-Lincoln Land Rover leasehold facility) compliant with Nissan brand standards;|
|•||Purchase of freehold land to extend Grimsby BMW used vehicle display space.|
|•||Acquire the freehold land of Northampton ŠKODA;|
|•||Purchase of freehold land and buildings to accommodate recently acquired Derby Volvo franchise;|
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 £100m into its estate including corporate identity upgrades, freehold and long-leasehold acquisitions and ongoing maintenance capital expenditure. Following this unprecedented level of investment, the Group expects to see its free cashflow benefit from 2021.