MMH.L Regulatory News (MMH)

11 January 2018

MARSHALL MOTOR HOLDINGS PLC

("MMH" or the "Group")

Pre-close Statement

'2017 Performance Ahead of Previously Upgraded Expectations'

Marshall Motor Holdings plc, one of the UK's leading automotive retail groups, issues its pre-close statement ahead of the release on 14 March 2018 of its full year results for the year ended 31 December 2017 ("FY17").

In the second half of FY17 ("H2"), the Group continued to build on the record financial performance reported during the first half of FY17 ("H1") and performed well against the background of a more challenging UK new vehicle market.

As a result, the financial performance of the Group during FY17 is expected to be ahead of our previously upgraded pre and post-tax expectations.

Retail Segment

The SMMT has reported that the overall UK new car market in FY17 decreased by 5.7%, with retail sales declining by 6.8% and fleet sales declining by 4.7%.

During H1, total UK new vehicle registrations to retail customers decreased by 4.8%. In H1 the Group outperformed the UK market reporting a marginal 0.4% decline in like-for-like* unit sales to retail customers.

In H2, the UK new vehicle market declined further with total new vehicle registrations to retail customers decreasing by 9.2%. The Group maintained its outperformance of the market given its brand portfolio, locations and people. As anticipated, during H2 the Group also experienced some margin pressure on sales of new vehicles to retail customers. Consistent with H1, the Group experienced a like-for-like decline in new unit sales to fleet customers in H2 following a commercial decision to withdraw from some low margin business.

During H2, as the market returned to more normalised levels, many of our brand partners reacted accordingly with a number of positive actions. We value our brand partner relationships and will continue to work in partnership with them in delivering our shared objectives.

In H1, the Group reported a 5.8% increase in like-for-like used unit sales. In H2, the Group continued to perform well, supported by a disciplined stocking policy.

The Group's aftersales revenues remained stable with like-for-like revenue growth in H2 broadly consistent with the 2.3% growth reported in H1.

Discontinued Leasing Segment

On 21 September 2017 we announced the strategic disposal of the Group's wholly-owned leasing segment, Marshall Leasing Limited ("MLL") to N.I.I.B Group Limited, a wholly owned subsidiary of Bank of Ireland (UK) plc for a gross consideration of £42.5m. As previously announced this transaction completed on 24 November 2017.

Unallocated Segment and exceptional items

Unallocated central costs in FY17 are expected to be in line with expectations. It is anticipated that the Group will recognise a net exceptional gain of approximately £37m on the disposal of MLL, partly offset by approximately £6m of closure costs and provisions in respect of certain business closures as announced on 21 November 2017.

Financial position

During FY17, management actions significantly strengthened the Group's balance sheet. At 30 June 2017 the Group had total net debt of £101.1m. Following the disposal of MLL, this has been effectively eliminated with the Group having a small net debt position at 31 December 2017. Together with the Group's committed £120m revolving credit facility, the Group remains in a very strong financial position and well positioned to exploit future growth opportunities.

Outlook

The Group reported a record financial performance during H1 and continued to build on that in H2 despite the challenging market backdrop. The Group has a strong brand mix, attractive geographic territories and excellent brand partner relationships as a result of which the financial performance of the Group in FY17 is expected to be ahead of our previously upgraded expectations.

The Board notes the latest SMMT UK new car market forecasts for a decline of 5.4% in 2018, driven by political and economic uncertainty. The Board therefore remains cautious about the UK car market in 2018 as it returns to a more normalised level. During the first quarter of 2017, the market benefitted from the impact of one-off changes to vehicle excise duties which led to some consumers accelerating purchase decisions to avoid higher excise duties and this will not be repeated in the first quarter of 2018.

The strategic disposal of MLL allows the Group to focus on its core motor retail business and is well placed to continue to outperform the UK new car market.

Full Year Results

The Group will publish its full year results for the twelve months ended 31 December 2017 on 14 March 2018.

Daksh Gupta, Chief Executive Officer commented:

"I am delighted to report that the financial performance of the Group during 2017 is expected to be ahead of our previously upgraded expectations despite the market backdrop. Following the disposal of MLL we are now focused exclusively on our motor retail business and our balance sheet has been further enhanced. We therefore approach 2018 from a position of increased financial strength and with the ongoing support of our brand partners."

* Like-for-like businesses are defined as those which traded under the Group's ownership throughout both the entire period under review and the corresponding comparative period.

Ends

For further information and enquiries please contact:

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 through Marshall Motor Group. The Group's businesses have a total of 99 franchises covering 23 brands, operating from 84 locations across 26 counties in England. In addition, the Group operates five trade parts specialists, four used car centres, five standalone body shops and one pre delivery inspection centre. 

In May 2017 the Group was recognised by the Great Place to Work Institute, being ranked the 22nd 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.