TIDMMMH
RNS Number : 6733X
Marshall Motor Holdings PLC
14 August 2018
14 August 2018
MARSHALL MOTOR HOLDINGS PLC
("MMH" or the "Group")
Unaudited interim results for the six months ended 30 June
2018
Marshall delivers robust H1 and further profit growth
Marshall Motor Holdings plc, one of the UK's leading automotive
retail groups, announces its unaudited interim results for the six
months ended 30 June 2018 ("H1" or the "Period").
Financial Summary
H1 H1 Var FY
2018 2017 % 2017
-------- -------- ------- --------
Continuing Operations
Revenue (GBPm) 1,162.9 1,167.9 -0.4% 2,232.0
Underlying profit before
tax(1) (GBPm) 16.4 16.2 +1.2% 25.4
Reported profit before
tax (GBPm) 17.2 16.2 +6.5% 12.6
Total Operations(2)
Revenue (GBPm) 1,162.9 1,187.4 -2.1% 2,268.9
Underlying profit before
tax (GBPm) 16.4 18.6 -11.7% 29.1
Reported profit before
tax (GBPm) 17.2 18.6 -7.1% 53.1
Dividend per share
(p) 2.15 2.15 - 6.40
Net Cash / (Debt) (GBPm) 0.9 (101.1) - (2.2)
Highlights
-- Robust financial performance in our continuing business;
continuing underlying profit before tax of GBP16.4m, up 1.2% on
previous record result (H1 2017: GBP16.2m).
-- Like-for-like(3) new unit sales to retail customers down 5.9%.
-- Like-for-like used unit sales down 0.3%; like-for-like used
revenues up 5.2% with strong gross margin improvement, up 37bp to
7.2%.
-- Like-for-like aftersales revenue up 3.2%.
-- Continuing gross margin maintained at 11.5% (H1 2017: 11.5%).
-- Net operating expenses lower than H1 2017 despite significant
cost headwinds; driven by strong management actions on
discretionary costs and site closures.
-- Net cash at 30 June 2018: GBP0.9m following the disposal of
Marshall Leasing Limited (30 June 2017: Net debt GBP101.1m).
-- Net assets at 30 June 2018: GBP201.2m, GBP2.58 per share (30
June 2017: GBP158.0m, GBP2.04 per share).
-- Strong balance sheet underpinned by GBP121.1m of freehold /
long leasehold property (30 June 2017: GBP112.5m); GBP120m
revolving credit facility extended to June 2021.
-- Continued investment in the Group's property portfolio;
GBP10.0m capital expenditure during the Period.
-- Interim dividend maintained at 2.15p per share (2017: 2.15p).
Daksh Gupta, Chief Executive Officer, said:
"The Board is pleased to announce further profit growth in our
continuing retail business in the Period against an ongoing
background of a challenging UK new car market. This has been
achieved by a combination of robust operating disciplines, strong
management actions on cost control and the benefit of site closures
in 2017. With our excellent portfolio, robust operating
disciplines, strong balance sheet and the support of our brand
partners, I am confident the Group remains very well positioned for
the future. The Board's current outlook for the full year remains
unchanged".
1 Underlying profit before tax is presented excluding non-underlying items (see Note 6)
2 Includes discontinued operations
3 "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
For further information and enquiries please contact:
Marshall Motor Holdings plc c/o Hudson Sandler Tel: +44 (0)
20 7796 4133
Daksh Gupta, Chief Executive Officer
Mark Raban, Chief Financial Officer
Investec Bank plc (NOMAD & Broker) Tel: +44 (0) 20 7597 4000
Christopher Baird
David Flin
David Anderson
Hudson Sandler Tel: +44 (0) 20 7796 4133
Nick Lyon
Bertie Berger
Notes to Editors
About Marshall Motor Holdings plc (www.mmhplc.com)
The Group's principal activities are the sale and repair of new
and used vehicles. The Group's businesses comprise a total of 101
franchises covering 23 brands, operating from 84 locations across
26 counties in England. In addition, the Group operates five trade
parts specialists, three used car centres, five standalone body
shops and one pre delivery inspection centre.
In April 2018 the Group was recognised by the Great Place to
Work Institute, being ranked the 21st best place to work in the UK
(large company category). This was the eighth year in succession
that the Group has achieved Great Place to Work status.
Cautionary statement
This announcement contains unaudited information based on
management accounts and forward-looking statements that are based
on current expectations or beliefs, as well as assumptions about
future events. These forward-looking statements can be identified
by the fact that they do not relate only to historical or current
facts and undue reliance should not be placed on any such
statements because they speak only as at the date of this document
and are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results,
and the Group's plans and objectives, to differ materially from
those expressed or implied in the forward-looking statements. MMH
undertakes no obligation to revise or update any forward-looking
statement contained within this announcement, regardless of whether
those statements are affected as a result of new information,
future events or otherwise, save as required by law and
regulations.
Operating Review
Introduction
Our unaudited interim results for the six months ended 30 June
2018 ("H1" or the "Period") reflect a robust performance in the
context of a challenging market. The Group has delivered underlying
profit before tax from continuing operations of GBP16.4m, 1.2%
ahead of the record result reported last year. I am pleased to
report that our gross margin in the Period was maintained at
11.5%.This result has been underpinned by robust trading
disciplines, tight control of discretionary costs despite
significant cost headwinds and the positive impact of the
previously announced closure of six loss making sites.
The strategic disposal of our leasing business, Marshall Leasing
Limited ("MLL"), in November 2017 has enabled us to focus
exclusively on our retail businesses. At 30 June 2018 the Group
consisted of 101 franchises representing 23 brand partners trading
in 26 counties in England. In addition, the Group operates five
trade parts specialists, three used car centres, five standalone
body shops and one pre-delivery inspection (PDI) centre. The Group
closed five franchised dealerships and one used car centre in
November 2017 and the Group's financial performance in the Period
has benefited from these actions.
The Group operates a well balanced portfolio of volume, premium
and alternative premium brands which at 30 June 2018 accounted for
24%, 50% and 26% respectively of the Group's total franchises. The
Group's diverse portfolio means it represents manufacturer brands
accounting for over 80% of all new vehicle sales in the UK. The
Board continues to believe that this scale and diversified spread
of representation helps protect the Group from the effect of the
cyclical nature of individual brand performance.
Six months ended 30 June 2018
Revenue Gross Profit
GBPm mix* GBPm mix*
----------- -------- ----------- -------------
New Car 584.6 49.3% 40.8 30.6%
Used Car 474.6 40.0% 34.1 25.6%
Aftersales 126.4 10.7% 58.3 43.8%
Internal Sales / Other (22.7) - 0.1 -
Total 1,162.9 100.0% 133.3 100.0%
=========== ======== =========== =============
Six months ended 30 June 2017
Revenue Gross Profit
GBPm mix* GBPm mix*
----------- -------- ----------- -------------
New Car 611.2 51.3% 45.1 33.7%
Used Car 458.2 38.4% 31.2 23.4%
Aftersales 123.3 10.3% 57.3 42.9%
Internal Sales / Other (24.8) - 0.1 -
Total 1,167.9 100.0% 133.7 100.0%
=========== ======== =========== =============
*Revenue and gross profit mix calculated excluding internal
sales / other
New Vehicles
H1 H1 Variance
2018 2017 Total LFL
New Retail Units 15,803 16,902 -6.5% -5.9%
Fleet Units 9,396 11,026 -14.8% -14.5%
------ ------ ---------- ---------
Total New Units 25,199 27,928 -9.8% -9.3%
====== ====== ========== =========
Total new car revenue in the Period was GBP584.6m (H1 2017:
GBP611.2m).
As widely forecast, the UK new car market continued to decline
during the Period. The Society of Motor Manufacturers and Traders
('SMMT') has reported that during the Period, total registrations
of new vehicles, including the impact of dealer self-registration
activity, declined by 6.3%. The first quarter of the Period
declined by 12.4%, being particularly impacted by the changes to
vehicle excise duty in the corresponding period last year which
caused some consumers to pull forward purchasing decisions to avoid
higher vehicle excise duties. The SMMT has reported that during the
Period, UK new car registrations to retail and fleet customers
declined by 4.9% and 7.3% respectively.
Over the same period, the Group's like-for-like sales of new
units to retail customers declined by 5.9%. New retail unit sales
were impacted by the Group's mix of premium brands which, due in
part to their historic weighting towards diesel models, experienced
the greatest levels of retail decline over the Period. Premium
brands are now increasing the proportion of petrol derivatives
being produced to address current consumer demand.
As previously disclosed, in 2017 the Group took a commercial
decision to withdraw from certain low margin fleet business which
has impacted comparative sales volumes in the Period. Excluding
this, the Group's overall new car unit sales in the Period were
down 3.5%. This action has improved the Group's fleet business
profitability and the fleet sector remains a market to which the
Group is fully committed as it seeks to grow its corporate customer
base profitably.
New car gross margin during the Period was 7.0%, down 40bp on
the same period last year (H1 2017: 7.4%). This margin pressure
across the new car segment was driven by the challenging and more
competitive new car market.
Sales of new vehicles on Personal Contract Purchase agreements
("PCPs") continue to remain popular, accounting for 80% of the
Group's financed new retail vehicle sales in the Period (H1 2017:
83%). PCPs remain an important driver behind the attraction and
retention of customers, particularly into the premium market. As at
30 June 2018 the Group had 66,540 active PCP customers (H1 2017:
66,450).
Used Vehicles
H1 H1 Variance
2018 2017 Total LFL
------ ------ --------- --------
Total Used Units 22,659 23,716 -4.5% -0.3%
====== ====== ========= ========
Total used car revenue in the Period was GBP474.6m (H1 2017:
GBP458.2m).
Like-for-like sales of used units during the Period were down
0.3% versus the corresponding period last year. In H1 2018, the
Group focused its used vehicle strategy on improving gross margin
retention and despite the marginal volume decrease, delivered a
9.2% improvement in total gross profit. Used vehicle margin at 7.2%
during the Period was 37bp ahead of the comparable period last
year.
The significant improvement in used vehicle unit profitability
has been achieved by robust operating controls supported by the
further development of the Group's management information system
Phoenix 2. During the Period, the system has been enhanced to
include wider external market data to support optimum pricing and
enhance visibility of the Group's overall competitive price
position.
In addition to these developments, the Group continues its
commitment to its prudent 56-day used vehicle stocking policy which
has supported a reduction in used and demonstrator inventory
levels.
PCPs have continued to grow in the used vehicle sector
increasing customer retention and helping to support residual
values which during the Period have remained relatively stable.
PCP's accounted for 63% of used vehicles purchased on finance in
the Period (H1 2017: 62%).
Aftersales
H1 H1 Variance
2018 2017 Total LFL
----- ----- ----- ----
Revenue (GBPm) 126.4 123.3 2.5% 3.2%
===== ===== ===== ====
Total aftersales revenue in the Period was GBP126.4m (H1 2017:
GBP123.3m).
In addition to the servicing, maintenance and repair of vehicles
in our franchised retail centres, the Group also operates five
standalone bodyshops, five Trade Parts Centres and one standalone
central PDI facility.
During the Period, the Group has continued to deliver consistent
like-for-like growth in aftersales revenues, up 3.2%.
At 46.1%, aftersales margin remained strong, albeit 37bp below
the comparable period last year. This was driven by an increased
mix of lower margin parts revenue, reduced internal PDI work as a
result of lower new vehicle sales and reduced levels of warranty
work in a number of brands.
At 30 June 2018, the Group had over 78,000 customers in live
service plans. Service plans continue to form a key part of the
Group's retention strategy, allowing customers to spread the
maintenance cost of their vehicle whilst providing a greater level
of certainty over future aftersales profits.
Total aftersales gross profit was up 1.7% to GBP58.3m (H1 2017:
GBP57.3m) and accounted for 43.8% of the Group's total gross profit
(H1 2017: 42.9%).
Operating Costs
In anticipation of the challenging UK new vehicle market and as
part of the Group's ongoing commitment to control costs and
maximise efficiency, during the latter part of 2017 the Group
implemented a number of cost reduction initiatives. These
initiatives mainly focused on managing discretionary costs more
efficiently and have enabled the Group to partly offset significant
structural and inflationary cost pressures.
During the Period, like-for-like costs within the Group's retail
dealerships increased by 1.3% versus the comparable period last
year.
Portfolio Management
As announced on 21 November 2017, the Group closed six loss
making and sub-scale sites at an estimated cost of GBP6.8m. During
H1 2017, these sites contributed combined revenue of GBP21.1m and a
pre-tax loss of GBP0.7m.
During the Period, the Group successfully completed the disposal
of a surplus freehold property in relation to one of the closures
giving rise to a non-underlying profit of GBP0.3m. The Group is
making positive progress on dealing with the remaining surplus
property and further updates will be provided in due course.
Capital Investment
The Group's 2016-2018, GBP75m capital expenditure programme is
nearing completion with GBP10.0m incurred in H1 2018. During the
Period, the Group has focused on the following developments:
-- Completion of a significant redevelopment of Bedford Land
Rover, an existing freehold site with a total additional investment
of GBP2.4m to achieve the new JLR 'Arch' concept.
-- The purchase of freehold land and the commencement of the
development of a new combined Jaguar Land Rover facility in
Lincoln.
-- The purchase of a long leasehold site in Cambridge and the
commencement of development of a new Ford Store which will allow
the Group to sell the full range of Ford products and exit from its
current leasehold premises.
-- Commencement of significant customer experience upgrades in Grantham and Leeds Volvo.
-- Customer experience refurbishment in Salisbury BMW.
-- Reading Skoda relocation and refurbishment.
-- Reading VWCV relocation and refurbishment.
People Centric
The Group was delighted to be ranked as a great place to work
for the eighth consecutive year. Marshall Motor Holdings plc was
ranked amongst the Top 30 large employers based on The Great Place
to Work Institute's 2017 survey for a fourth year, being ranked
21(st) . The Group was also the number one ranked automotive
company for the second year running.
Technology and Online
The Group continues to leverage its strength in technology,
online and social media to drive both increased customer engagement
levels and support the optimal efficiency of the day-to-day
operation of the business.
Despite the more challenging new vehicle market in H1 2018, the
Group recorded 3.2m visits to the Group's website
www.marshall.co.uk, an increase of 16% on the comparable period
last year.
The Group remains committed to active participation in relevant
social media channels which supports further customer engagement
and additional online visibility and profile. In recognition of the
Group's innovative work in this important area, we were awarded
'Most Influential Dealer on Social Media' by Car Dealer Expo and
were highly commended for 'Best Social Media Strategy' at the 2018
Automotive Management Awards.
The Group's management information system, Phoenix 2, remains an
essential ingredient of our operational effectiveness. The system
has been further enhanced during the Period. Working with third
parties, the Group has been able to improve the quality of its used
vehicle data-set which we believe provides competitive advantage,
facilitating a more dynamic approach to vehicle pricing and margin
retention.
Worldwide Harmonised Light Vehicle Test Procedure
From 1 September 2018 all new vehicles sold in the UK are
required to have been tested and certified under the new Worldwide
Harmonised Light Vehicle Test Procedure ("WLTP"). The new testing
regime replaces the outgoing New European Driving Cycle ("NEDC")
test first introduced in the 1980s and is based on more accurate,
real-driving data.
This is a significant change for automotive manufacturers and it
is anticipated that it will have an impact on the new car retail
market over the remainder of the year and possibly into 2019. The
extent of this impact is not yet known and it will vary by
manufacturer and by vehicle model. Industry forecasts suggest there
is likely to be some impact on vehicle supply and longer lead times
for some models and brands of new vehicles. In addition, because
implementation of the new regime coincides with the key September
plate-change, it is anticipated that the spread of vehicle
registrations and sales throughout Q3 and Q4 2018 will deviate from
historical norms.
Financial Review
On 24 November 2017 the Group completed the strategic disposal
of MLL. In the first half of 2017, MLL contributed GBP19.5m of
revenue and GBP2.4m of underlying profit before tax to the overall
Group results. Unless otherwise stated, the commentary below
(including comparisons versus the comparable period last year),
relates to the continuing Retail operation only and therefore
excludes the contribution from MLL.
Group revenue declined by 0.4% to GBP1,162.9m (H1 2017:
GBP1,167.9m). As announced on 21 November 2017, the Group closed
six sites which contributed combined revenue of GBP21.1m during the
first half of 2017. Like-for-like revenues grew 0.1% with revenues
in used and aftersales showing growth against the same period last
year. Like-for-like revenue from the sale of new vehicles declined
in the Period as a result of the declining UK new car market and
the Group's decision to withdraw from certain low margin fleet
business.
Gross margin at 11.5% was flat against the same period last
year. As expected, the challenging new car retail market resulted
in margin pressure on new retail vehicle sales. This was offset by
a favourable mix impact resulting from the withdrawal from certain
low margin new car fleet business together with improved used car
margins.
Used vehicles gross margin at 7.2% was 37bp above the same
period last year. During the Period, the Group remained focused on
robust used vehicle trading disciplines which have enabled the
Group to deliver strong improvements in used vehicle
profitability.
Aftersales gross margin at 46.1% was 37bp below the same period
last year. This has been driven by an increased mix of lower margin
parts revenues together with lower levels of new car preparation,
used car refurbishment and warranty activity in certain brands.
Underlying operating expenses of GBP113.6m were 0.3% lower than
in the same period last year, primarily driven by the impact of six
site closures. Like-for-like costs in the Group's retail
dealerships increased by 1.3% during the Period. The Group
continues to face a number of structural and inflationary cost
head-winds which have been contained by ongoing tight control of
discretionary costs.
Total finance costs of GBP3.3m were GBP0.6m lower than the same
period last year. As expected, the Group has benefitted from lower
structural debt levels following the disposal of MLL which has been
partly offset by increased costs relating to the Group's various
stock funding lines following the increase in the bank base rate in
November 2017.
During the Period, the Group generated GBP0.6m of non-underlying
other income primarily related to additional profit on the disposal
of MLL following the agreement and settlement of certain historic
pension liabilities. In addition, the Group made a GBP0.3m profit
on the disposal of surplus freehold property.
The reported effective tax rate for the Period was 21.0% (H1
2017: 22.2%).
The Group's balance sheet remains strong. At 30 June 2018 the
Group had a net cash position of GBP0.9m compared to a net debt
position of GBP101.1m at 30 June 2017. During the Period, the Group
exercised its option to extend its GBP120m revolving credit
facility for a further 12 months until 3 June 2021, to provide it
with increased financial flexibility to take advantage of
opportunities if and when they arise.
Capital expenditure during the Period was GBP10.0m, in line with
expectations including further spend on freehold property
development. This year marks the completion of the Groups three
year, GBP75m capital expenditure programme. At 30 June 2018 the
Group had GBP121.1m of freehold / long-leasehold property
representing GBP1.56 per share.
Over the longer term, the Board continues to believe it is in
the best interests of all stakeholders that the Group maintains a
sound financial position. In this respect, the Board targets net
bank indebtedness of not more than 1.25x net debt/EBITDA within its
future results. This leverage may rise for a period of time towards
the Group's banking facility limit of not more than 3.0x should an
exceptional investment opportunity arise.
Interim Dividend
In line with the Group's dividend policy, the Board is pleased
to announce an interim dividend of 2.15p per share (2017 interim
dividend: 2.15p). The dividend will be paid by 21 September 2018 to
shareholders who are on the Company's register at close of business
on 24 August 2018. The Board intends to maintain a progressive
dividend policy whereby dividends are covered between 4 to 5 times
underlying earnings and paid in an approximate one-third (interim
dividend) and two-thirds (final dividend) split.
Summary and Outlook
The Group has delivered a positive performance in the Period
with a record profit performance from our continuing retail
business. The challenges presented by a decline in the new vehicle
market have been mitigated by strong operational disciplines and
the benefits of the decisive action taken in 2017 to proactively
manage costs and the Group's dealership portfolio.
In light of continued economic uncertainty and ongoing consumer
confusion around diesel vehicles, together with the anticipated
impact of WLTP on new vehicle supply and the phasing of vehicle
registrations and sales around the key September plate-change
month, the Board believes it is right to remain cautious for the UK
car market for the remainder of the year and possibly into
2019.
Nevertheless, with the support of the Group's brand partners,
excellent portfolio, robust operating disciplines and strong
balance sheet, the Board continues to believe that the Group
remains very well positioned for the future. The Board's current
outlook for the full year remains unchanged.
Daksh Gupta
Chief Executive Officer
13 August 2018
Marshall Motor Holdings plc
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2018
Six months ended 30 Year ended 31 December
June 2017 2017
Six months
ended
30 June Continuing Discontinued Total Continuing Discontinued Total
2018 operations operations operations operations operations operations
Note (unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 4 1,162,904 1,167,937 19,508 1,187,445 2,231,979 36,969 2,268,948
Cost of sales (1,029,604) (1,034,202) (15,611) (1,049,813) (1,973,678) (30,159) (2,003,837)
------------ ------------ ------------- ------------ ------------ ------------- ------------
Gross profit 133,300 133,735 3,897 137,632 258,301 6,810 265,111
Net operating
expenses (113,352) (113,938) (1,289) (115,227) (238,204) (2,524) (240,728)
------------
Group operating
profit 19,948 19,797 2,608 22,405 20,097 4,286 24,383
------------ ------------ ------------- ------------ ------------ ------------- ------------
Other income
- profit on
disposal of
subsidiary 6 589 - - - - 36,851 36,851
Net finance
costs 7 (3,300) (3,606) (248) (3,854) (7,519) (580) (8,099)
Profit before
taxation 5 17,237 16,191 2,360 18,551 12,578 40,557 53,135
Analysed as:
Underlying
profit before
tax 16,380 16,191 2,360 18,551 25,361 3,706 29,067
Non-underlying
items 6 857 - - - (12,783) 36,851 24,068
----------------- ----- ------------ ------------ ------------- ------------ ------------ ------------- ------------
Taxation 8 (3,620) (3,595) (524) (4,119) (3,080) (716) (3,796)
------------
Profit for
the period 13,617 12,596 1,836 14,432 9,498 39,841 49,339
============ ============ ============= ============ ============ ============= ============
Attributable
to:
Owners of the
parent 13,617 12,596 1,836 14,432 9,519 39,841 49,360
Non-controlling
interests - - - - (21) - (21)
------------
13,617 12,596 1,836 14,432 9,498 39,841 49,339
============ ============ ============= ============ ============ ============= ============
Total
comprehensive
income for
the period
net of tax 13,617 12,596 1,836 14,432 9,498 39,841 49,339
============ ============ ============= ============ ============ ============= ============
Attributable
to:
Owners of the
parent 13,617 12,596 1,836 14,432 9,519 39,841 49,360
Non-controlling
interests - - - - (21) - (21)
13,617 12,596 1,836 14,432 9,498 39,841 49,339
============ ============ ============= ============ ============ ============= ============
Earnings per
share (expressed
in pence per
share)
Basic earnings
per share 9 17.5 16.2 2.4 18.6 12.3 51.5 63.8
------------ ------------ ------------- ------------ ------------ ------------- ------------
Diluted earnings
per share 9 17.1 15.8 2.3 18.1 11.9 49.8 61.7
------------ ------------ ------------- ------------ ------------ ------------- ------------
All activities of the Group in the current period are
continuing.
The above Condensed Consolidated Statement of Comprehensive
Income should be read in conjunction with the accompanying
notes.
Marshall Motor Holdings plc
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2018
Note Share Share Retained Equity Non- Total
capital premium earnings attributable controlling equity
to owners interests
of
the parent
For the half year ended GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2018 (unaudited)
Balance at 31 December
2017 as originally presented 49,531 19,672 122,007 191,210 - 191,210
======== ======== ========= ============= ============ =======
Change in accounting
policy 3 - - (91) (91) - (91)
Restated balance at 1
January 2018 49,531 19,672 121,916 191,119 - 191,119
======== ======== ========= ============= ============ =======
Total comprehensive income - - 13,617 13,617 - 13,617
- - 13,617 13,617 - 13,617
-------- -------- --------- ------------- ------------ -------
Transactions with owners
Dividends paid 10 - - (3,309) (3,309) - (3,309)
Issue of share capital 11 303 - (303) - - -
Exercise of share options 11 (760) (760) - (760)
Share based payments
charge - - 540 540 - 540
Acquisition of non-controlling
interest in subsidiaries 12 - - (50) (50) - (50)
Balance at 30 June 2018 49,834 19,672 131,651 201,157 - 201,157
======== ======== ========= ============= ============ =======
Note Share Share Retained Equity Non- Total
capital premium earnings attributable controlling equity
to owners interests
of
the parent
For the half year ended GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
30 June 2017 (unaudited)
Balance at 1 January
2017 49,531 19,672 76,435 145,638 21 145,659
======== ======== ========= ============= ============ =======
Total comprehensive income - - 14,432 14,432 - 14,432
- - 14,432 14,432 - 14,432
-------- -------- --------- ------------- ------------ -------
Transactions with owners
Dividends paid 10 - - (2,864) (2,864) - (2,864)
Share based payments
charge - - 749 749 - 749
Balance at 30 June 2017 49,531 19,672 88,752 157,955 21 157,976
======== ======== ========= ============= ============ =======
Note Share Share Retained Equity Non- Total
capital premium earnings attributable controlling equity
to owners interests
of
the parent
For the year ended 31 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
December 2017 (audited)
Balance at 1 January
2017 49,531 19,672 76,435 145,638 21 145,659
======== ======== ========= ============= ============ =======
Total comprehensive income - - 49,360 49,360 (21) 49,339
- - 49,360 49,360 (21) 49,339
-------- -------- --------- ------------- ------------ -------
Transactions with owners
Dividends paid 10 - - (4,527) (4,527) - (4,527)
Share based payments
charge - - 739 739 - 739
Balance at 31 December
2017 49,531 19,672 122,007 191,210 - 191,210
======== ======== ========= ============= ============ =======
Marshall Motor Holdings plc
Condensed Consolidated Statement of Financial Position
At 30 June 2018
30 June 30 June 31 December
2018 2017 2017
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill and other intangible
assets 13 121,545 122,013 121,596
Property, plant and equipment 14 147,878 210,247 142,428
Investment property 2,590 2,590 2,590
Investments - 10 -
Deferred tax asset 39 36 39
Total non-current assets 272,052 334,896 266,653
------------ ------------ ------------
Current assets
Inventories 351,412 372,850 401,260
Trade and other receivables 114,005 100,551 92,141
Cash and cash equivalents 7,687 8,327 4,867
Assets classified as held
for sale - - 750
Total current assets 473,104 481,728 499,018
------------ ------------ ------------
Total assets 745,156 816,624 765,671
============ ============ ============
Shareholders' equity
Share capital 11 49,834 49,531 49,531
Share premium 19,672 19,672 19,672
Retained earnings 131,651 88,752 122,007
------------ ------------ ------------
Equity attributable to owners
of the parent 201,157 157,955 191,210
Share of equity attributable - 21 -
to non-controlling interests
Total equity 201,157 157,976 191,210
------------ ------------ ------------
Non-current liabilities
Loans and borrowings 6,145 40,428 6,466
Trade and other payables 4,970 8,382 4,281
Provisions 3,688 1,323 4,015
Deferred tax liabilities 20,591 20,803 20,448
Total non-current liabilities 35,394 70,936 35,210
------------ ------------ ------------
Current liabilities
Loans and borrowings 642 68,956 642
Trade and other payables 496,621 512,681 527,614
Provisions 8,459 2,119 8,815
Current tax liabilities 2,883 3,956 2,180
Total current liabilities 508,605 587,712 539,251
------------ ------------ ------------
Total liabilities 543,999 658,648 574,461
------------ ------------ ------------
Total equity and liabilities 745,156 816,624 765,671
============ ============ ============
Marshall Motor Holdings plc
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2018
Six months Six months Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit before taxation 17,237 18,551 53,135
Adjustments for:
Depreciation and amortisation 13/14 4,510 14,172 25,183
Net finance costs 7 3,300 3,854 8,099
Share-based payments charge 715 749 739
Profit on disposal of assets
classified as held for sale 6 (268) - -
(Profit) / loss on disposal
of property plant and equipment (25) (67) 1,085
(Reversal of) / loss on
impairment of property,
plant and equipment (14) - 945
Impairment of investment - - 10
Profit on disposal of subsidiary 6 (589) - (38,664)
-------------
24,866 37,259 50,532
-------------- -------------- -------------
Changes in working capital:
Decrease / (increase) in
inventories 49,848 7,187 (21,223)
(Increase) / decrease in
trade and other receivables (21,955) (5,450) 450
(Decrease) / increase in
trade and other payables (31,456) 16,235 33,703
(Decrease) / increase in
provisions (683) (3,250) 6,138
-------------
(4,246) 14,722 19,068
-------------- -------------- -------------
Tax paid (2,774) (4,765) (7,443)
Interest paid (3,300) (3,854) (8,099)
-------------
Net cash inflow from operating
activities 14,546 43,362 54,058
-------------- -------------- -------------
Cash flows from investing
activities
Purchase of property, plant,
equipment and software and
leased vehicles (8,838) (29,486) (57,549)
Acquisition of business,
net of cash acquired - (77) (77)
Acquisition of non-controlling
interest in subsidiaries 12 (50) - -
Net cash flow from sale
of discontinued operation 589 - 44,695
Proceeds from disposal of
property, plant and equipment
and software and leased
vehicles 153 7,019 11,985
Proceeds from disposal of 1,018 - -
assets classified as held
for sale
-------------
Net cash outflow from investing
activities (7,128) (22,544) (946)
-------------- -------------- -------------
Cash flows from financing
activities
Proceeds from borrowings 15,000 22,783 41,778
Repayment of borrowings (15,321) (32,493) (85,579)
Dividends paid (3,309) (2,864) (4,527)
Settlement of exercised (968) - -
share awards
Net cash outflow from financing
activities (4,598) (12,574) (48,328)
-------------- -------------- -------------
Net increase in cash and
cash equivalents 2,820 8,244 4,784
Cash and cash equivalents
at 1 January 4,867 83 83
Cash and cash equivalents
at period end 7,687 8,327 4,867
============== ============== =============
Marshall Motor Holdings plc
Net Debt Reconciliation
For the six months ended 30 June 2018
Six months Six months Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Reconciliation of net cash
flow to movement in cash
/ (debt)
Net increase in net cash
and cash equivalents 2,820 8,244 4,784
Proceeds from drawdown of
RCF (15,000) - (10,000)
Repayment of drawdown of
RCF 15,000 - 45,000
Proceeds of asset backed
borrowings - (22,783) (31,778)
Repayment of asset backed
borrowings - 21,347 68,185
Repayment of other borrowings 321 321 2,791
Repayment of bank overdraft - 10,825 10,825
Repayment of acquired debt
with acquisitions - - 25,705
Repayment of acquired derivatives
with acquisitions - - 1,258
Decrease in net debt 3,141 17,954 116,770
Opening net debt (2,241) (119,011) (119,011)
Net cash / (debt) at period
end 900 (101,057) (2,241)
============== ============== =============
Net cash / (debt) at period
end consists of:
Cash and cash equivalents 7,687 8,327 4,867
Loans and borrowings (6,787) (109,384) (7,108)
900 (101,057) (2,241)
============== ============== =============
Marshall Motor Holdings plc
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2018
1. General information
Marshall Motor Holdings Plc (the Company) is incorporated and
domiciled in the United Kingdom. The Company is a public limited
company, limited by shares, whose shares are listed on the
Alternative Investment Market (AIM) of the London Stock Exchange.
The Company is registered in England under the Companies Act 2006
(registration number 02051461) with the address of the registered
office being: Airport House, The Airport, Cambridge, CB5 8RY,
United Kingdom.
These interim condensed consolidated financial statements were
authorised for issue by the Board of Directors on 13 August
2018.
Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2018 have been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the European
Union. They do not include all the information and disclosures
required for full annual financial statements and should be read in
conjunction with the Group's consolidated financial statements for
the year ended 31 December 2017. A copy of the full Annual Report
and Accounts for the year ended 31 December 2017 can be found on
the Marshall Motor Holdings Plc website at: www.mmhplc.com.
The interim condensed consolidated financial statements for the
six months ended 30 June 2018, and for the comparative six months
ended 30 June 2017, are unaudited but have been reviewed by the
Auditor. A copy of their Review Report is set out at the end of
these financial statements. The financial information for the year
ended 31 December 2017 does not constitute the Group's statutory
financial statements for that period as defined in section 434 of
the Companies Act 2006, but is instead an extract from those
financial statements. The Group's financial statements for the year
ended 31 December 2017 were authorised for issue by the Board of
Directors on 13 March 2018 and have been delivered to the Registrar
of Companies. The Auditor's Report on those financial statements
contained an unqualified opinion, did not draw attention to any
matters by way of emphasis and did not contain any statement under
section 498 of the Companies Act 2006.
The interim condensed consolidated financial statements are
prepared in Sterling which is both the functional and
presentational currency of the Group and all values are rounded to
the nearest thousand pounds (GBP'000) except where otherwise
indicated.
Principal risks and uncertainties
The principal risks and uncertainties for the six months ended
30 June 2018 are consistent with those set out in the Marshall
Motor Holdings Plc Annual Report and Accounts 2017 dated 13 March
2018. These principal risks and uncertainties are expected to be
consistent for the year ending 31 December 2018.
Going concern
The interim condensed consolidated financial statements are
prepared on the going concern basis. After making appropriate
enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future and for at least one year from the date
that these interim condensed consolidated financial statements are
signed. For these reasons they continue to adopt the going concern
basis in preparing the interim condensed consolidated financial
statements.
2. Accounting policies
Except where disclosed otherwise in Note 3 'Changes in
Accounting Policies and Disclosures', the accounting policies as
well as the critical accounting judgements, estimates and
assumptions applied are consistent with those set out in the
Marshall Motor Holdings Plc Annual Report and Accounts 2017 dated
13 March 2018, and these accounting policies and critical
accounting judgements, estimates and assumptions are expected to
apply for the year ending 31 December 2018.
3. Changes in accounting policies and disclosures
New standards, amendments and interpretations adopted by the
Group
A number of new or amended standards became effective on 1
January 2018 for the current reporting period. The Group had to
change its accounting policies and make adjustments as a result of
adopting the following standards:
-- IFRS 9 Financial Instruments, and
-- IFRS 15 Revenue from Contracts with Customers
The impact of the adoption of these standards and the new
accounting policies are disclosed below.
Other standards, amendments and interpretations apply for the
first time with effect from 1 January 2018, however, they do not
have an impact on the interim condensed consolidated financial
statements of the Group.
Impact on current period of the adoption of new standards,
amendments and interpretations
a) IFRS 9 Financial Instruments - impact of adoption
The Group has adopted IFRS 9 Financial Instruments issued in
July 2014 with a date of initial application of 1 January 2018. The
requirements of IFRS 9 represent a significant change from IAS 39
Financial Instruments: Recognition and Measurement. The nature and
effects of the key changes to the Group's accounting policies
resulting from its adoption of IFRS 9 are summarised below.
Additionally, the Group adopted consequential amendments to IFRS
9 Financial Instruments: Disclosures that are applied to
disclosures about 2018 but generally have not been applied to
comparative information in compliance with IFRS 9.
Classification of financial assets and financial liabilities
IFRS 9 contains three principal classification categories for
financial assets: measured at amortised cost, fair value reported
in other comprehensive income (FVOCI) and fair value reported in
profit and loss (FVPL). The classification of financial assets
under IFRS 9 is generally based on the business model in which a
financial asset is managed based on its contractual cash flow
characteristics. IFRS 9 eliminates the previous IAS 39 categories
of held to maturity, loans and receivables and available for sale.
For an explanation of how the Group classifies and measures
financial assets and accounts for related gains and losses under
IFRS 9, see the 'Financial Assets' accounting policy.
The adoption of IFRS 9 has not had a significant effect on the
Group's accounting policies for financial liabilities.
Impairment of financial assets
IFRS 9 replaces the 'incurred loss' model in IAS 39 with an
'expected credit loss' (ECL) model. The new impairment model
applies to financial assets measured at amortised cost. Under IFRS
9, credit losses are recognised earlier than under IAS 39.
Hedge accounting
IFRS 9 introduces a new general hedge accounting model. The
Group has not previously applied hedge accounting under IAS 39, and
has not commenced hedge accounting under IFRS 9; therefore, this
change has had no impact on the Group's financial statements.
Transition
Changes in accounting policies resulting from the adoption of
IFRS 9 have been applied retrospectively, except as described
below:
-- Comparative figures have not been restated. Differences in
the carrying amounts of financial assets resulting from the
adoption of IFRS 9 have been recognised in opening retained
earnings and reserves as at 1 January 2018 in accordance with IFRS
9. Accordingly, the information presented for the six months ended
30 June 2017 and for the year ended 31 December 2017 does not
generally reflect the requirements of IFRS 9 and, therefore, is not
comparable to the information presented for the six months ended 30
June 2018 under IFRS 9.
-- The assessment of the determination of the business model
within which a financial asset is held has been made on the basis
of the facts and circumstances that existed at 1 January 2018, the
date of initial application.
The following table summarises the impact, net of tax, of
transition to IFRS 9 on reserves and retained earnings at 1 January
2018.
Retained earnings
GBP'000
Closing balance as at 31 December 2017 - IAS 39 122,007
Recognition of expected credit losses from adoption
of IFRS 9 on 1 January 2018 (91)
Opening balance as at 1 January 2018 - IFRS 9 121,916
=================
Classification and measurement of financial assets and financial
liabilities on the date of initial application of IFRS 9
The following table shows the original measurement categories
under IAS 39 and the new measurement categories under IFRS 9 for
each class of the Group's financial assets as at 1 January
2018.
Original carrying New carrying
amount amount
New classification under IAS under IFRS
Original classification under IFRS 39 9
under IAS 39 9 GBP'000 GBP'000
Amortised
Trade and other receivables Loans and receivables cost 92,141 92,050
Amortised
Cash and cash equivalents Loans and receivables cost 4,867 4,867
Trade and other receivables that were classified as loans and
receivables under IAS 39 are now classified as at amortised cost.
An increase of GBP91,000 in the allowance for impairment was
recognised in opening retained earnings as at 1 January 2018 on
transition to IFRS 9.
There has been no change in the classification and measurement
of financial liabilities on the transition to IFRS 9.
b) IFRS 9 Financial Instruments - accounting policies applied from 1 January 2018
Financial assets
Recognition and initial measurement
Trade receivables are initially recognised when they originated.
All other financial assets are initially recognised when the Group
becomes a party to the contractual provisions of the
instrument.
On initial recognition, a financial asset (unless it is a trade
receivable without a significant financing component) is initially
measured at fair value plus, for a financial asset not at fair
value reported in profit or loss, transaction costs that are
directly attributable to its acquisition or issue. A trade
receivable without a significant financing component is initially
measured at the transaction price.
Classification and subsequent measurement
A financial asset is classified either as being; measured
subsequently at fair value (either through other comprehensive
income or through profit or loss), or measured at amortised cost.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows.
All financial assets of the Group are classified as measured at
amortised cost.
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business model for
managing financial assets in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at fair value
reported in profit or loss:
-- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured at
amortised cost using the effective interest method. The amortised
cost is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairments are recognised in profit
or loss. Any gain or loss on de-recognition is recognised in profit
or loss.
Impairment of financial assets
The Group recognises loss allowances for expected credit losses
(ECL) on financial assets measured at amortised cost. Loss
allowances for trade receivables are always measured at an amount
equal to lifetime ECL. ECL are a probability-weighted estimate of
credit losses. Credit losses are measured as the present value of
all cash shortfalls (i.e. the difference between the cash flows due
to the Group in accordance with the contract and the cash flows
that the Group expects to receive). An assessment of the ECL is
calculated using a provision matrix model to estimate the loss
rates to be applied to each trade receivable category. ECL are
discounted at the effective interest rate of the financial asset.
Loss allowances for financial assets measured at amortised cost are
deducted from the gross carrying amount of the assets.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no
realistic prospect of recovery. This is generally the case when the
Group determines that the debtor does not have assets or sources of
income that could generate sufficient cash flows to repay the
amounts subject to the write-off. However, financial assets that
are written off could still be subject to enforcement activities in
order to comply with the Group's procedures for recovery of amounts
due.
c) IFRS 15 Revenue from Contracts with Customers - impact of adoption
The Group has adopted IFRS 15 Revenue from Contracts with
Customers issued in May 2014 with a date of initial application of
1 January 2018. As a result, the Group has changed its accounting
policy for revenue recognition as detailed below.
The Group has applied IFRS 15 using the cumulative effect method
(i.e. by recognising the cumulative effect of initially applying
IFRS 15 as an adjustment to the opening balance of retained
earnings as at 1 January 2018). Therefore, the comparative
information has not been restated in accordance with the transition
exemptions available under IFRS 15.
Following the disposal of Marshall Leasing Limited, no changes
to the timing and measurement of revenue across the Group's revenue
streams have been identified on transition to IFRS 15.
d) IFRS 15 Revenue from Contracts with Customers - accounting
policies applied from 1 January 2018
The Group has applied IFRS 15 using the cumulative effect
method, therefore, the comparative information has not been
restated in accordance with the transition exemptions available
under IFRS 15. The following reflect the new revenue recognition
policy adopted for the current reporting period onwards.
Revenue recognition
Revenue is measured based on the consideration received or
receivable as specified in a contract with a customer and
represents amounts receivable for goods supplied, stated net of
discounts, returns and value added taxes. Revenue excludes amounts
collected on behalf of third parties. Revenue comprises sales and
charges for vehicles sold and services rendered during the period,
including sales to other Marshall of Cambridge (Holdings) Limited
group companies but excluding inter-company sales within the
Group.
The Group recognises revenue when it transfers control over a
product or service to a customer, as described below.
Sale of motor vehicles, parts and aftersales services
The Group generates revenue through the sale of new and used
motor vehicles and through the provision of aftersales services in
the form of vehicle servicing, maintenance and repairs. The Group
recognises revenue from the sale of new and used motor vehicles
when a customer takes possession of the vehicle, at which point
they have an obligation to pay in full and as such control is
considered to transfer at this point. The Group recognises revenue
from the provision of aftersales services when the service has been
completed, at which point customers have an obligation to pay in
full.
Sale of warranty products
Income received in respect of warranty policies sold and
administered by the Group is recognised over the period during
which a customer can exercise their rights under the warranty; as
such, revenue is recognised over the period of the policy on a
straight line basis.
Commission income
The Group receives commissions when it arranges vehicle
financing and related insurance products for its customers to
purchase its products and services, acting as agent on behalf of
various finance and insurance companies. Commissions are based on
agreed rates.
Where the Group acts as an agent on behalf of a principal, the
associated income is recognised within revenue on completion of the
arranging of the various products (i.e. at the point at which
control passes to the customer).
Contract liabilities
Where the Group receives an amount of consideration in advance
of completion of performance obligations under a contract with a
customer, the value of the advance consideration is initially
recognised as a contact liability in liabilities. Revenue is
subsequently recognised as the performance obligations are
completed over the period of the contract (i.e. as control is
passed to the customer). Contract liabilities are presented within
trade and other payables in the Consolidated Statement of Financial
Position.
Disaggregation of revenue
Revenue recognised from contracts with customers has been
disaggregated into categories that depict how the nature, amount,
timing and uncertainty of revenue and cash flows are affected by
economic factors. This disclosure, as well as the reconciliation
between the disaggregated revenue disclosures and the revenue
figures disclosed for each of the Group's reportable segments, is
made in Note 4 'Segmental Information'.
New standards, amendments and interpretations not yet adopted by
the Group
The following standards, amendments and interpretations were in
issue, but were not yet effective at the balance sheet date. These
standards have not been applied when preparing the interim
condensed consolidated financial statements for the period ended 30
June 2018.
Effective for accounting
periods beginning on
Date issued or after
IFRS 16 Leases January 2016 1 January 2019
Impact on future periods of the adoption of new standards,
amendments and interpretations
IFRS 16 Leases
The Group continues to assess the impact of adopting IFRS 16.
The Group will adopt the new standard in 2019 and will apply IFRS
16 for the first time in the interim report for the six months
ending 30 June 2019 and the annual report for the year ending 31
December 2019. The Group currently expects to adopt the standard
using the retrospective method, therefore, in the 2019 financial
statements, comparatives for 2018 will be restated and the
cumulative impact of adoption will be recognised in opening
retained earnings as of 1 January 2018.
Lessee accounting
Based on analysis of the Group's lease portfolio held at the
transition date, initial assessments indicate that the adoption of
IFRS 16 will have a significant impact on key metrics and
profitability measures used by the Group. In addition, a material
adjustment to reserves is expected as is the recognition of
significant right-of-use assets in non-current assets and
significant lease liabilities in financial liabilities.
Lessor accounting
With the exception of where the Group is an intermediate lessor,
the adoption of IFRS 16 does not significantly change the Group's
lessor accounting. Initial impact assessments based on analysis of
the Group's lease portfolio held at the transition date indicate
that the majority of properties for which the Group is an
intermediate lessor are expected to meet the definition of a
finance lease. As a result, it is anticipated that new finance
lease receivables will be recognised on adoption of IFRS 16.
4. Segmental information
a) Operating segments - 2018 onwards
IFRS 8 Operating Segments requires operating segments to be
consistent with the internal management reporting provided to the
Chief Operating Decision Makers who are responsible for allocating
resources and assessing the performance of the operating segments.
The Group considers the Chief Executive Officer to be the Chief
Operating Decision Maker.
The Group has identified its key product and service lines as
being its operating segments because both performance and strategic
decisions are analysed at this level. The IFRS 8 aggregation
criteria have been met as a result of the Group's key product and
service lines sharing common characteristics such as; similar types
of customer for the products and services, similar nature of the
product and service offerings, similar methods used to distribute
the products and provide the services and similar regulatory and
economic environment. As a result of these criteria being
satisfied, the Group's operating segments constitute one reportable
segment (retail) and all segmental information has been disclosed
as such. The retail segment includes sales of new and used
vehicles, together with the associated ancillary aftersales
services of; servicing, body shop repairs and parts sales.
The Group has concluded that rental income arising from
investment properties does not meet the quantitative thresholds
required to constitute a reportable segment as defined in IFRS 8.
Due to the non-material nature of these amounts, they are combined
with the retail segment rather than being disclosed separately. As
a result, all of the Group's activities are disclosed within the
one reportable segment - the retail segment.
Geographical information
Revenue earned from sales is disclosed by origin and is not
materially different from revenue by destination. All of the
Group's revenue is generated in the United Kingdom.
Information about reportable segment
All segment revenue, profit before taxation, assets and
liabilities are attributable to the principal activity of the Group
being the provision of car and commercial vehicle sales, vehicle
service and other related services.
The following tables show the disaggregation of revenue by major
product/service lines for continuing operations:
Revenue Gross Profit
For the half year ended 30 June
2018 (unaudited) GBP'000 mix* GBP'000 mix*
New Car 584,555 49.3% 40,775 30.6%
Used Car 474,569 40.0% 34,095 25.6%
Aftersales 126,440 10.7% 58,304 43.8%
Internal / Other (22,660) - 126 -
Total 1,162,904 100.0% 133,300 100.0%
============ ======== ============== ===========
*mix calculation excludes internal / other sales
Revenue Gross Profit
For the year ended 31 December
2017 (audited) GBP'000 mix* GBP'000 mix*
New Car 1,166,471 51.2% 84,086 32.6%
Used Car 869,733 38.2% 59,918 23.2%
Aftersales 243,064 10.6% 114,014 44.2%
Internal / Other (47,289) - 283 -
Total 2,231,979 100.0% 258,301 100.0%
============ ======== ============== ============
Revenue Gross Profit
For the half year ended 30 June
2017 (unaudited) GBP'000 mix* GBP'000 mix*
New Car 611,221 51.3% 45,059 33.7%
Used Car 458,164 38.4% 31,211 23.4%
Aftersales 123,314 10.3% 57,323 42.9%
Internal / Other (24,762) - 142 -
Total 1,167,937 100.0% 133,735 100.0%
============ ======== ============== ============
*mix calculation excludes internal / other sales
b) Operating segments - prior periods
Prior to the disposal Marshall Leasing Limited, the Group's
business was split into two main revenue-generating operating
segments and a third support segment. No significant judgements
were made in determining the reporting segments.
Retail
The retail segment included sales of new and used vehicles,
together with the associated ancillary aftersales services of;
servicing, body shop repairs and parts sales.
Leasing
The leasing segment included the leasing of vehicles to end
consumers and fleet customers.
Unallocated
The unallocated segment included the Group's head office and
central management functions including; the Board, group finance
functions, the human resources department, the IT department and
all governance and compliance related functions in support of the
wider business. Also included was rental income arising from
investment properties.
All segment revenue, profit before taxation, assets and
liabilities were attributable to the principal activity of the
Group being the provision of car and commercial vehicle sales,
leasing, vehicle service and other related services.
Geographical information
Revenue earned from sales was disclosed by origin and was not
materially different from revenue by destination. All of the
Group's revenue was generated in the United Kingdom.
Information about reportable segments
Information related to each reportable segment is set out
below.
Retail Leasing Unallocated Total
For the half year ended 30 June GBP'000 GBP'000 GBP'000 GBP'000
2017 (unaudited)
--------- ------- ----------- ---------
Total revenue from external
customers 1,167,795 19,508 142 1,187,445
========= ======= =========== =========
Depreciation and amortisation (5,007) (2) (14) (5,023)
========= ======= =========== =========
Segment operating profit/(loss) 24,151 2,608 (4,354) 22,405
Net finance costs (3,067) (248) (539) (3,854)
Underlying profit before tax 21,084 2,360 (4,893) 18,551
Non-underlying items - - - -
------------------------------------ --------- ------- ----------- ---------
Profit/(loss) before taxation 21,084 2,360 (4,893) 18,551
========= ======= =========== =========
Total assets 637,106 94,956 84,562 816,624
========= ======= =========== =========
Total liabilities 418,935 75,117 164,596 658,648
========= ======= =========== =========
Additions in the period (including
acquisitions)
Property, plant, equipment and
software assets 12,324 17,194 - 29,518
========= ======= =========== =========
Information related to each reportable segment is set out
below.
Retail Leasing Unallocated Total
For the year ended 31 December
2017 (audited) GBP'000 GBP'000 GBP'000 GBP'000
--------- ------- ----------- ---------
Total revenue from external
customers 2,231,696 36,969 283 2,268,948
========= ======= =========== =========
Depreciation and amortisation (9,190) (4) (27) (9,221)
========= ======= =========== =========
Segment operating profit/(loss) 34,714 4,286 (14,617) 24,383
Other income - gain on disposal
of subsidiary - 36,851 - 36,851
Net finance costs (6,586) (580) (933) (8,099)
Underlying profit before tax 34,911 3,706 (9,550) 29,067
Non-underlying items (6,783) 36,851 (6,000) 24,068
----------------------------------- --------- ------- ----------- ---------
Profit/(loss) before taxation 28,128 40,557 (15,550) 53,135
========= ======= =========== =========
Total assets 762,304 - 3,367 765,671
========= ======= =========== =========
Total liabilities 537,064 - 37,397 574,461
========= ======= =========== =========
Additions in the period (including
acquisitions)
Property, plant, equipment
and software assets 24,365 34,700 - 59,065
========= ======= =========== =========
5. Profit before taxation
Profit before taxation is arrived at after charging /
(crediting):
Six months Six months Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Depreciation of assets held for
contract rental (note 14) - 9,149 15,962
Depreciation on property, plant
and equipment (note 14) 4,342 4,769 8,917
Amortisation of other intangibles
(note 13) 168 254 304
Profit on disposal of assets classified
as held for sale (note 6) (268) - -
(Profit) / loss on disposal of
property plant and equipment (25) (67) 1,085
(Reversal of) / loss on impairment
of property, plant and equipment
(note 14) (14) - 945
Operating lease rentals - property 5,849 5,748 11,698
============= ============= ============
6. Non-underlying items
Six months Six months Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit on disposal of subsidiary (589) - (36,851)
Post-retirement benefits charge - - 6,000
Restructuring costs - - 6,783
Profit on disposal of assets classified
as held for sale (268) - -
(857) - (24,068)
============= ============= ============
Profit on disposal of subsidiary
In November 2017 the Group disposed of Marshall Leasing Limited
and its subsidiary (Gates Contract Hire Limited) for gross
consideration of GBP42,500,000 generating a profit on disposal of
GBP36,851,000. A retention of GBP1,500,000 was withheld in respect
of anticipated settlement of legacy defined benefit pension
obligations triggered by the change in ownership of Marshall
Leasing Limited. In April 2018, the surplus retention withheld was
calculated and returned to the Group, generating an additional
GBP589,000 profit on disposal of Marshall Leasing Limited and its
subsidiary.
Profit on disposal of assets classified as held for sale
In May 2018, the Group sold the freehold property classified as
held for sale for a profit of GBP268,000.
Other non-underlying items
More information about the non-underlying items in the year
ended 31 December 2017 are available in the consolidated financial
statements for the year ended 31 December 2017 which are available
at www.mmhplc.com.
7. Net finance costs
Six months Six months Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Interest income on short term
bank deposits (11) (8) (11)
Net interest payable on asset
backed finance (Discontinued) - 248 580
Stock financing charges and other
interest 2,857 2,470 5,385
Interest payable on bank borrowings 454 1,144 2,145
Net finance costs 3,300 3,854 8,099
============= ============= ============
8. Taxation
The tax charge for the six months ended 30 June 2018 is
recognised based on best estimates of the average annual effective
tax rate expected for the full financial year, adjusted for the tax
impact of any discrete items arising in the period. The estimated
average annual effective tax rate used for the six months to 30
June 2018 is 21.72% (six months ended 30 June 2017: 22.20%).
The reported effective tax rate for the six months ended 30 June
2018 is 21.00% (six months ended 30 June 2017: 22.20%). The
underlying effective tax rate for the six months ended 30 June 2018
is 21.84% (six months ended 30 June 2017: 22.10%). The reported
effective tax rate in the current period is lower than in the
previous period due to the non-taxable gain on disposal of
subsidiary.
9. Earnings per share
Basic and diluted earnings per share are calculated by dividing
the earnings attributed to equity shareholders by the weighted
average number of ordinary shares during the year and the diluted
weighted average number of ordinary shares in issue in the year
after taking account of the dilutive impact of shares under option
of 2,757,186 (June 2017: 2,380,040, December 2017: 2,866,231).
Underlying earnings per share are based on basic earnings per
share adjusted for the impact of non-underlying items.
Six months Six months Six months Six months Year ended
ended ended ended ended Year ended Year ended 31 December
30 June 30 June 30 June 30 June 31 December 31 December 2017
2018 2017 2017 2017 2017 2017
Total Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
(unaudited) (unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Profit for the period 13,617 12,596 1,836 14,432 9,519 39,841 49,360
Non-controlling
interests - - - - (21) - (21)
Basic earnings 13,617 12,596 1,836 14,432 9,498 39,841 49,339
=========== =========== ============ =========== ============ ============ ============
Weighted average number
of ordinary shares in
issue for the basic
earnings per share 77,604,442 77,392,862 77,392,862 77,392,862 77,392,862 77,392,862 77,392,862
Diluted weighted
average
number of ordinary
shares
in issue for diluted
earnings per share 79,845,094 79,772,902 79,772,902 79,772,902 79,929,238 79,929,238 79,929,238
Basic earnings per
share
(in pence per share) 17.5 16.2 2.4 18.6 12.3 51.5 63.8
=========== =========== ============ =========== ============ ============ ============
Diluted earnings per
share (in pence per
share) 17.1 15.8 2.3 18.1 11.9 49.8 61.7
=========== =========== ============ =========== ============ ============ ============
Underlying earnings
per share (non GAAP
measure) 16.4 16.2 2.4 18.6 26.9 3.9 30.8
=========== =========== ============ =========== ============ ============ ============
10. Dividends
An interim dividend of 2.15p per share will be paid by 21
September 2018 to shareholders who are on the Company's register at
close of business on 24 August 2018.
An interim dividend of GBP1,663,000 in respect of the year ended
31 December 2017 was paid in September 2017. This represented a
payment of 2.15p per share in issue. A final dividend of
GBP3,309,000 for the year ended 31 December 2017 was paid in May
2018. This represented a payment of 4.25p per share in issue.
11. Share-based payments
In April 2018, the third tranche of the IPO Restricted Share
Awards as well as the first tranche of the IPO Performance Awards
vested and became exercisable. On 11 April 2018, all option holders
exercised these options as well as the second tranche of the IPO
Restricted Awards which had previously vested and become
exercisable in the prior period. As such, 472,791 ordinary shares
of 64p were issued. During the period, the decision was made for a
portion of the share options being exercised to be settled in cash
rather than being equity-settled. The total value of cash-settled
transactions is GBP968,000.
12. Acquisition of non-controlling interest in subsidiaries
On 22 February 2018 the Group acquired the remaining 1% of the
share capital of the following subsidiary undertakings; Marshall of
Peterborough Limited, Marshall of Ipswich Limited and Marshall of
Stevenage Limited, taking the Group's shareholdings in these
entities up to 100%. Total consideration for these shares amounted
to GBP49,553; the value of consideration in excess the carrying
value of the non-controlling interest acquired has been recognised
in retained earnings.
13. Goodwill and other intangible assets
Six months Six months Year ended
ended ended 31 December
30 June 2018 30 June 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net book value
At the beginning of the period 121,596 122,033 122,033
Net additions / (disposals) 117 234 (133)
Amortisation charge for the period (168) (254) (304)
At the end of the period 121,545 122,013 121,596
============= ============= ============
The carrying value of goodwill and other intangible assets
principally consists of goodwill and franchise agreements of
GBP120.8m (June 2017: GBP121.2m, December 2017: GBP120.8m).
14. Property, plant and equipment
Freehold
and long
leasehold
land and Leasehold Plant and Assets under
buildings improvements equipment construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the half year ended 30
June 2018 (unaudited)
Cost
At 1 January 2018 121,351 17,684 38,544 5,123 182,702
Additions at cost 1,676 110 1,375 6,745 9,906
Disposals - (837) (1,991) - (2,828)
Transfers 2,831 1,515 1,243 (5,589) -
At 30 June 2018 125,858 18,472 39,171 6,279 189,780
---------- ------------- ---------- ------------- -------
Accumulated depreciation
At 1 January 2018 10,166 5,116 24,992 - 40,274
Charge for the period 838 881 2,623 - 4,342
Disposals - (829) (1,871) - (2,700)
Reversal of impairment - - (14) - (14)
Transfers - 324 (324) - -
At 30 June 2018 11,004 5,492 25,406 - 41,902
---------- ------------- ---------- ------------- -------
Net book value
At 30 June 2018 114,854 12,980 13,765 6,279 147,878
========== ============= ========== ============= =======
At 30 June 2018, the Group had capital commitments totalling
GBP17.6m relating to ongoing construction projects.
Freehold Leasehold Plant and Assets Assets under Total
and long improvements equipment held construction
leasehold for contract
land and rental
buildings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the half year
ended 30 June 2017
(unaudited)
Cost
At 1 January 2017 108,487 15,015 35,126 101,944 7,022 267,594
Additions at cost 6 410 2,260 17,194 9,565 29,435
Additions on acquisition - - 32 - - 32
Disposals (1,361) (248) (3,292) (13,790) - (18,691)
Transfers (143) 402 113 - (721) (349)
At 30 June 2017 106,989 15,579 34,239 105,348 15,866 278,021
----------- -------------- ----------- -------------- -------------- --------
Accumulated depreciation
At 1 January 2017 8,996 3,383 21,146 32,258 - 65,783
Charge for the period 851 830 3,088 9,149 - 13,918
Disposals (200) - (3,260) (8,279) - (11,739)
Transfers (357) 357 (188) - - (188)
At 30 June 2017 9,290 4,570 20,786 33,128 - 67,774
----------- -------------- ----------- -------------- -------------- --------
Net book value
At 30 June 2017 97,699 11,009 13,453 72,220 15,866 210,247
=========== ============== =========== ============== ============== ========
At 30 June 2017, the Group had capital commitments totalling
GBP11.7m relating to ongoing construction projects.
Freehold
and long Assets
leasehold Plant held
land and Leasehold and for contract Assets under
buildings improvements equipment rental construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the year ended
31 December 2017 (audited)
Cost
At 1 January 2017 108,487 15,015 35,126 101,944 7,022 267,594
Additions at cost 47 829 5,206 34,700 18,016 58,798
Additions on acquisition - - 32 - - 32
Disposals (2,485) (673) (2,734) (23,148) - (29,040)
Disposal of subsidiary - (42) (45) (113,496) - (113,583)
Transfers 16,052 2,555 1,308 - (19,915) -
Transfers to Software - - (349) - - (349)
Transfers to Assets
held for sale (750) - - - - (750)
At 31 December 2017 121,351 17,684 38,544 - 5,123 182,702
---------- ------------- ---------- ------------- ------------- ---------
Accumulated depreciation
At 1 January 2017 8,996 3,383 21,146 32,258 - 65,783
Charge for the year 1,434 1,913 5,570 15,962 - 24,879
Disposals (53) (608) (2,083) (13,673) - (16,417)
Disposal of subsidiary - (42) (35) (34,547) - (34,624)
Impairment 194 332 419 - - 945
Transfers (405) 138 267 - - -
Transfers to Software - - (292) - - (292)
At 31 December 2017 10,166 5,116 24,992 - - 40,274
---------- ------------- ---------- ------------- ------------- ---------
Net book value
At 31 December 2017 111,185 12,568 13,552 - 5,123 142,428
========== ============= ========== ============= ============= =========
At 31 December 2017, the Group had capital commitments totalling
GBP7.7m relating to ongoing construction projects.
More information about the transfers to software, transfers to
assets held for sale and the impairment are available in the
consolidated financial statements for the year ended 31 December
2017 which are available at www.mmhplc.com.
15. Fair value measurement
The carrying amounts and fair values of non-current financial
assets and financial liabilities are as below. The fair values are
based on cash flows discounted using the prevailing rates.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
(unaudited) (unaudited) (audited)
Carrying Fair value Carrying Fair value Carrying Fair value
amount amount amount
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets:
Investment properties 2,590 2,590 2,590 2,590 2,590 2,590
Assets held for
sale - - - - 750 750
Financial liabilities:
Mortgages 6,145 4,668 6,627 4,959 6,466 4,917
Asset backed financing
(leasing - discontinued) - - 33,801 32,029 - -
6,145 4,668 40,428 36,988 6,466 4,917
======== ========== ======== ========== ======== ==========
All financial assets and liabilities shown in the table above
are Level 2 and there have been no transfers between levels during
2018 or 2017.
16. Commitments and contingencies
Operating lease commitments - Group as lessee
The Group, as lessee, has non-cancellable operating lease
agreements. The lease terms vary and the majority of lease
agreements are renewable at the end of the lease period at market
rate.
The lease expenditure charged to the Consolidated Income
Statement during the year is disclosed in Note 5 'Profit before
Taxation'.
The future aggregate minimum lease payments under
non-cancellable operating leases are set out below.
Six months ended Six months ended Year ended
30 June 2018 30 June 2017 31 December 2017
(unaudited) (unaudited) (audited)
Vehicles Vehicles Vehicles
Property and equipment Property and equipment Property and equipment
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Within 1 year 11,247 578 11,545 408 11,560 362
Later than 1 year
and less than 5
years 40,220 133 42,040 184 41,739 38
After 5 years 71,028 - 73,825 - 69,906 -
122,495 711 127,410 592 123,205 400
======== ============== ======== ============== ======== ==============
Independent review report to Marshall Motor Holdings plc
Introduction
We have been engaged by the Company to review the condensed
consolidated set of financial statements in the interim financial
report for the six months ended 30 June 2018 which comprises the
condensed consolidated statement of comprehensive income, condensed
consolidated statement of changes in equity, condensed consolidated
statement of financial position, condensed consolidated cash flow
statement and the related notes 1 to 16. We have read the other
information contained in the interim financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed
consolidated set of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with
International Accounting Standards 34, "Interim Financial
Reporting," as adopted by the European Union.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed consolidated set of financial
statements included in this half-yearly financial report have been
prepared in accordance with International Accounting Standards 34,
"Interim Financial Reporting," as adopted by the European
Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated set of financial statements in the
interim financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated set of
financial statements in the interim financial report for the six
months ended 30 June 2018 is not prepared, in all material
respects, in accordance with International Accounting Standard 34
as adopted by the European Union.
Ernst & Young LLP
Cambridge
13 August 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DXLFFVVFEBBZ
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