Marshall delivers record results and raises dividend
Marshall Motor Holdings plc, one of the UK's leading automotive retail groups, announces its results for the year ended 31 December 2018.
Financial summary
|
Continuing Operations
|
2018
|
2017
|
Var %
|
|
Underlying: |
|
|
|
|
Like-for-like* revenue (£m) |
2,134.6 |
2,108.9 |
1.2% |
|
Underlying profit before tax** ('PBT') (£m) |
25.7 |
25.4 |
1.2% |
|
Basic Underlying Earnings per share (p) |
27.4 |
26.9 |
1.9% |
|
|
|
|
|
|
Reported: |
|
|
|
|
Revenue (£m) |
2,186.9 |
2,232.0 |
(2.0%) |
|
Profit before tax (£m) |
18.7 |
12.6 |
48.4% |
|
Earnings per share (p) |
17.9 |
12.3 |
46.0% |
|
|
|
|
|
|
Dividend per share (p) |
8.54 |
6.40 |
33.4% |
|
|
|
|
|
|
Net debt (£m) |
5.1 |
2.2 |
|
2018 Highlights
• Like-for-like revenue growth of 1.2%, despite challenging new and used car markets
• Gross margin remained strong at 11.7%
• Record continuing underlying PBT, up 1.2% to £25.7m
• Like-for-like total new vehicle unit sales down 8.2% due to impact of WLTP and diesel challenges
• Strong used car performance: like-for-like unit sales up 2.3% and margin up 32bps
• Further like-for-like aftersales revenue growth, up 2.3%, with overall margin impacted by mix of lower margin parts sales
• Management initiatives in the year mitigated ongoing cost headwinds
• Strong balance sheet with an increase in net assets to £200.4m (£2.57 per share) after £9.3m goodwill impairment; underpinned by £125.3m of freehold / long leasehold property and minimal net debt
• Another year of strong operational cash generation supporting further capital investment of £23.8m
• Revised dividend policy (2.5-3.5x, from 4-5x) given Group's strong financial position and confidence in its long-term prospects; 33.4% increase in full year dividend to 8.54p per share
Chairman's Statement
Introduction
I am delighted to present our annual results for the year ended 31 December 2018 (the “Year”), my first since becoming Chairman of the Group on 1 January 2019.
Whilst the market backdrop in 2018 remained challenging, the Group performed strongly. We are pleased to report a record continuing underlying profit before tax performance during the Year.
I am excited to have joined the Group at this time in its development. The global automotive industry is undergoing unprecedented change, driven in large part by exciting new technologies, some of which I have been heavily involved with during my career.
I have visited a number of our dealerships and met with many of our colleagues since I joined the Group and I have been very impressed with how the Group operates.
Strategy
The Group's strategy of close partnership with major global automotive brands has served it well over many years, enabling it to grow significantly and become a leading UK automotive retailer. This strategy has positioned the Group well to continue its success and I very much look forward to being part of the leadership team to help deliver its future potential. We remain committed to our strategy of growing the Group further, both organically and through targeted acquisitions. We continue to believe that those automotive retailers with both scale and a diverse portfolio will be best placed to succeed in a changing market.
Results
The Group has enjoyed another record year, delivering like-for-like revenue growth of 1.2% and continuing underlying profit before tax growth of 1.2% to £25.7m. The Group's balance sheet also remains strong, underpinned by £125.3m of freehold/long leasehold property.
Dividend
The Group's stated dividend policy since 2015 has been to maintain a progressive dividend policy where dividends were covered between 4 to 5 times by underlying earnings. The Board has recently reviewed its dividend policy and, in light of the Group's strong financial position and confidence in its long-term prospects, is pleased to announce a change to this policy.
The Group's revised dividend policy 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 the revised dividend 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 2018 of 6.39p per share which, if approved by shareholders at our AGM on 21 May 2019, will be paid on 24 May 2019 to shareholders who are on the Company's register at close of business on 26 April 2019. If approved, this will result in a full year dividend of 8.54p per share, an increase of 33.4% on the prior year (2017: 6.40p) and dividend cover of 3.2x (2017: 4.2x).
AGM
Our annual general meeting will be held on 21 May 2019 and I look forward to meeting all shareholders who are able to attend.
Outlook
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 2019 of 2.3%. The Board is also cognisant of the potential impact that Brexit may have on both the UK economy generally and the automotive sector in particular. At the date of this statement, the terms of the UK's departure from the European Union are not certain and the Board therefore remains cautious about the economic outlook for 2019. We are, however, confident in our brand partners' commitment to the UK automotive retail market (the second largest in Europe) and their collective ability to respond effectively to the potential challenges that Brexit may bring.
Our order book for the important March plate-change period is, however, encouraging and our outlook for the full year remains unchanged.
The Group has the benefit of a strong balance sheet and a low level of net debt. This, together with an exceptional management team, leaves it well placed to respond to market changes and challenges and to take advantage of opportunities when they arise.
On behalf of the Board, I would once again like to thank Peter Johnson who retired as Chairman on 31 December 2018. His leadership since the Group's IPO in 2015 oversaw its transformation, including through the acquisitions of SG Smith in 2015, Ridgeway in 2016 and the disposal of Marshall Leasing in 2017. I would also like to thank Mark Raban, who stepped down from his position as Chief Financial Officer on 2 January 2019, for his valuable contribution to the Group over the same period. I am very pleased to welcome Richard Blumberger to the Board as our new Chief Financial Officer.
I would also 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.
Finally, I would like to thank all of our customers throughout the UK who choose Marshall as their preferred source of mobility products and services – delighting and satisfying you is the ultimate goal of everything we do.
Professor Richard Parry-Jones CBE
Chairman
12 March 2019