Cambridge based multi-franchise dealer group, Marshall Motor Holdings plc have released their interim results for the period up to June 30th 2016. The group which operates 103 franchises, representing 24 brands, from 89 sites, revealed first half revenues were up 30.7% and profits before tax up 33.6% thanks largely to the acquisition of the Ridgeway and SG Smith groups.
Marshall CEO Daksh Gupta and CFO Mark Raban have spoken to Motor Trade News revealing some exclusive insights into the dynamics that are driving the business and it’s current growth strategy.
Financial highlights
• Revenue increased by 30.7% to £826.4m (H1 2015: £632.5m).
• Adjusted profit before tax up 33.6% to £14.0m (H1 2015: £10.5m).
• Record results from both retail & leasing segments: PBT growth of 27.0% and 5.8%, respectively.
• Interim dividend of 1.80p per share (Pro rata interim dividend 2015; 0.58p).
• Adjusted net debt (excluding leasing loans) at 30 June £32.4m. Proforma adjusted net debt / EBITDA
0.8x.
• Significant balance sheet capacity – new 3 year committed, unsecured £120m revolving credit facility.
• Net assets of £137.4m (2015: £126.2m) equating to £1.78 per share (2015: £1.63 per share).
Operational & Strategic highlights
• New car unit sales up by 20.3% (like-for-like up by 3.2%).
• Used car unit sales up by 15.8% (like-for-like up by 0.9%).
• Aftersales revenues up by 36.6% (like-for-like up by 6.3%).
• Gross profit margin up by 20bp to 11.9% (H1 2015: 11.7%).
• Strategic acquisition of Ridgeway Garages (Newbury) Limited (“Ridgeway”) for £106.9m
Quizzed if Marshall’s strategy of acquiring businesses like SG Smith and Ridgeway group was set to continue, Gupta told Motor Trade News, “Part of our success is taking on things when we know we can handle it. There is a lot of opportunity in the market place, we are operating in a market that is very much consolidating, but we only do these deals when we are happy with the due diligence (Ridgeway took seven months), we only do these deals when we are happy it fits into our strategy, which is growth with existing brand partners and geographic footprint and when we know we can manage it.”
On the subject of acquisition strategy, Marshall’s CFO Mark Raban adds, “When at you look at the deals we have done, all of them bar one have been off market transactions and one of the benefits of that is we think we can get good pricing. If you look at the Ridgeway deal, we did that on a very attractive multiple (£106.9m paid for a business turning over £647 million) which stands up both pre and post Brexit.”
Away from acquisitions, asked about what was driving Marshall’s eye-catching 6.3% like for like increase in Aftersales revenues, CEO Gupta told Motor Trade News, “That’s the highlight of the period from a trading perspective, 6.3% is stellar. The guys have done a brilliant job and what’s driven that is our strategy around service plans and PCP sales. For last year 71% of our sales were on PCP, for the first half of 2016 that rose to 81%. All of that then ties those customers back into the franchise centre of our business for aftersales which is brilliant.”
Over the past 12 months, Marshall are on record as having made investments in new websites and enquiry management systems, asked about the effect of these moves, Gupta says, “We launched a new website in the third week of March with the strategic rationale to enhance the customer experience. It has increased the quality of leads coming through and has enabled us to make a six figure reduction in our PPC (Pay Per Click advertising) spend.”
Commenting on their first half 2016 results Daksh Gupta, the Group’s Chief Executive, said, “The Board is pleased to announce another period of strong trading, underpinned by like-for-like organic growth in both revenue and gross profit together with contributions from recent acquisitions. We were delighted to complete the strategic acquisition of Ridgeway which has extended the Group’s geographical reach and strengthened relationships with key brand partners. The enlarged group remains well positioned to execute its growth strategy moving forward.”
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