238947 MMH AR FC_ISC 17/03/2016 14:28 Page 1
Annual Report & Accounts 2015
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www.mmhplc.com
Marshall Motor Holdings plc
Airport House, The Airport,
Cambridge, CB5 8RY
© 2015 Marshall Motor Holdings plc
106 years of putting
our customers
above all else
238947 MMH AR Inner Cover Singles 18/03/2016 07:28 Page 2
Historical Financial Trends
The Group has delivered a record trading
performance for the year ended
31 December 2015
Revenue £m
Gross Profit £m
£1,232.8m
£1,085.9m
£940.5m
£794.4m
£145.3m
£126.2m
£113.8m
£93.3m
2012
2013
2014
2015
2012
2013
2014
2015
CAGR 15.8%
CAGR 15.9%
Adjusted Profit Before Tax* £m
Net Assets £m
£15.8m
£13.1m
£129.9m
£10.2m
£4.6m
£60.7m
£56.0m
£66.2m
2012
2013
2014
2015
2012
2013
2014
2015
CAGR 51.5%
* Profit before tax and acquisition costs
CAGR 32.4%
22
Pg 4
Chairman’s
Statement
Pg 16
Financial
Review
Pg 6
Operating
Review
238947 MMH AR pp03-pp13 16/03/2016 17:12 Page 3
Contents
STRATEGIC REPORT
Chairman’s Statement 4
Operating Review 6
Financial Review 16
Principal Risks and Uncertainties 20
GOVERNANCE
Board of Directors 22
Directors’ Report 24
Corporate and Social Responsibility 26
Corporate Governance Report 28
Audit Committee Report 31
Remuneration Committee Report 33
Directors’ Remuneration Report 34
Statement of Directors’ Responsibilities 41
FINANCIAL STATEMENTS
Independent Auditors’ Report 42
Consolidated Statements
Consolidated Statement of Comprehensive Income 44
Consolidated Statement of Changes in Equity 45
Consolidated Statement of Financial Position 46
Consolidated Cash Flow Statement 47
Notes to the Consolidated Financial Statements 48
Parent Company Statements
Parent Company Statement of Financial Position 81
Parent Company Statement of Changes in Equity 82
Notes to the Parent Company Financial Statements 83
SHAREHOLDER INFORMATION
Notice of Annual General Meeting 89
Explanatory Notes 90
Company Information 91
3
238947 MMH AR pp03-pp13 16/03/2016 17:12 Page 4
STRATEGIC REPORT
Chairman’s Statement
Peter Johnson
Chairman
In April 2015 we
successfully
completed our listing
on the AIM market of
the London Stock
Exchange, raising
gross proceeds
of £40m.
In November 2015 we
completed the
acquisition of
SG Smith
The Group has a
strong balance sheet
and is well positioned
to drive further organic
and acquisitive
growth.
Introduction
I am delighted to present our first Annual
Report & Accounts as an independent
public company for the year ended
31 December 2015 (the “Year”). In April
2015 we successfully completed our
listing on the AIM market of the London
Stock Exchange (“Admission”), raising
gross proceeds of £40m. This major
milestone in the Company’s 106 year
history leaves us well positioned to
exploit further growth opportunities in the
future.
Strategy
Our vision to become the UK’s premier
automotive retail and leasing group
remains and I am pleased to report
considerable progress in each of the
strategic pillars which underpin this
vision. In particular, on 16 November
2015 we completed the acquisition of the
entire issued share capital of SG Smith
Holdings Limited (“SG Smith”) for a cash
consideration of approximately £24.0m.
We are particularly pleased to have
acquired this long established, family run
business and we welcome our new
colleagues
the Marshall Motor
Holdings plc group of companies (the
“Group”). The acquisition is in line with
our stated strategy to grow scale with
existing brand partners and extend our
geographic footprint into new regions.
The business is a good cultural fit for the
Group and we are delighted to have
significantly grown our relationship with
our Skoda
Audi,
strengthened
our
representation and extended
in
partnership with Mercedes-Benz
commercial vehicles.
to
Results
The Group has enjoyed another record
year, delivering 13.5% revenue growth
and 21.4% adjusted PBT growth despite
absorbing significant additional costs as
a result of our new public company
status. Net cash at 31 December 2015 of
£24.1m continues
the
balance sheet and, together with its
unutilised £75m debt facility, leaves the
Group well positioned to drive further
organic and acquisitive growth.
to underpin
4
is,
pleased
Dividend
As stated at Admission, the Board intends
to maintain a progressive dividend policy
where dividends are covered between 4
to 5 times by underlying earnings. The
Board
to
therefore,
recommend a final dividend of 2.40p per
share which, with the pro-rata interim
dividend of 0.58p per share, gives a total
dividend for the Year ended 31 December
2015 of 2.98p per share. If approved by
shareholders at our AGM on 24 May
2016, the final dividend will be paid by 27
May 2016 to shareholders who are on the
Company’s register at close of business
on 22 April 2016.
People and Partnerships
I have been able to visit over sixty of our
dealerships since Admission and have
been immensely impressed with the
energy and
the
colleagues I have met.
commitment of
We have excellent relationships with our
brand partners which we value highly.
Working in partnership with them we will
drive further organic and acquisition
related growth.
AGM
Our first annual general meeting as a
public company will be held on 24 May
2016 and I look forward to meeting all
shareholders who are able to attend.
Outlook
Trading in the current financial year has
started in line with our expectations.
Based on current market conditions and
visibility of the important March plate
change month, we continue to have
confidence in delivering further material
growth in 2016 in line with current
expectations.
Finally, I would like to thank the Board,
the executive team, our brand partners,
business suppliers and colleagues
throughout the Group for their support in
what was an historic year for the Group.
Peter Johnson
Chairman
16 March 2016
238947 MMH AR pp03-pp13 16/03/2016 17:12 Page 5
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Coulsdon Audi acquired
as part of the SG Smith acquisition
5
Audi A4
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 6
STRATEGIC REPORT
Operating Review
The Group also made significant progress
within its leasing segment with profitability
up 24.0%. At 31 December 2015, the
leasing
fleet was 6,029 vehicles
(31 December 2014: 6,031).
Customer first
The Group continues to enjoy high levels
of customer advocacy. In 2015 43.1% of
28,755 customers surveyed who visited
our showrooms indicated that they were
either previous customers or were
recommended to us. Plans are well
advanced to launch our new website in the
first half of 2016 which will provide
additional content and functionality to
support the customer journey.
Retailing excellence
We recognise the importance of the
opportunities that exist from the use of
technology to both attract customers and
provide them with an enhanced retail
experience. In particular, during the
second half of the Year we commenced
the implementation across the Group of
a tablet-based enquiry management
system which facilitates a seamless
customer experience and assists
compliance in the marketing and sale of
ancillary products.
bespoke
We have now completed the second
iteration and roll out of “Phoenix”, the
management
Group’s
information system. This
in-house
developed system provides real-time
management
all
operational and financial aspects of the
business and is a valuable tool in driving
returns and competitive performance.
information
on
People centric
The Group has continued to focus on all
aspects of colleague engagement and we
were delighted that this was recognised by
The Great Place to Work Institute in April
2015 with the Group being ranked
amongst the best companies in the UK,
including Capital One, Microsoft, Cisco
Systems and the Hyatt Group.
Overview
I am delighted to report that the Group has
delivered a record trading performance
during the Year. Revenue of £1,232.8m
was ahead of last year by 13.5% and
adjusted PBT was up 21.4%. Both our
retail and leasing segments have reported
significant growth in profit before tax, up
29.0% and 24.0% respectively.
The UK economic and market backdrop
remained generally positive,
has
providing a stable platform for further
growth and development. Following three
consecutive years of strong growth in the
the rate of
UK new car market,
underlying growth has returned to more
normalised
levels. UK new car
registrations in 2015 were 6.3% ahead of
2014 including self/dealer registrations.
The strength of sterling in 2015 and
slower growth rates in some overseas
markets made the UK an attractive
market for many of our brand partners.
through: class
Our strategy to become the UK’s premier
automotive and leasing group remains
central to everything we do. We measure
and monitor performance against our five
strategic pillars of creating value for our
leading
shareholders
returns; putting our customers
first;
delivering retailing excellence for the
benefit of our customers particularly with
the use of technology; being people centric
by focusing on employee engagement;
and pursuing strategic growth both
targeted
organically
acquisitions.
through
and
Class leading returns
During the Year the Group recorded new
vehicle revenue growth of 17.1% (10.5%
like-for-like*) and used vehicle revenue
growth of 11.2% (3.1% like-for-like).
The Group’s retail segment showed
strong growth in aftersales. Revenue grew
by 8.5% aligned to a 12.8% improvement
in margin. We benefitted from a growing
UK vehicle parc (particularly in vehicles
aged between 1-3 years old where
customers typically return to franchised
dealerships for aftersales services) and a
number of continuing management
initiatives.
6
Daksh Gupta
Chief Executive Officer
The Group has
delivered a record
trading performance
during the Year.
Both our retail and
leasing segments
have reported
significant growth in
profit before tax, up
29.0% and 24.0%
respectively.
*like-for-like businesses are defined as
those which traded under the Group’s
ownership throughout both the entire year
under
the corresponding
comparative year
review and
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 7
Every January the Group holds
the MAVTAs (Marshall
Achievement Values and
Teamwork Awards) at King’s
College, Cambridge.
We recognise colleagues from
across the Group who have
demonstrated their commitment
to living our company values.
Recognising that people are
at the heart of our success.
Twice a year the Group runs incentive programs where high performers and colleagues who live our company values go on an overseas
trip. These pictures are from Abu Dhabi and Las Vegas where 70 colleagues were winners. (Pictured below - left and middle)
Every year we recognise colleagues who have had long service with the Group with a weekend away with their partners. In June 2015
around 150 colleagues and their partners were invited to the annual loyalty event at the Belfry. (Pictured below - right)
7
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 8
STRATEGIC REPORT
Strategic growth
We will continue to grow scale with our
existing brand partners and our strong
balance sheet will facilitate further
organic and acquisition related growth in
new regions. Our acquisitive growth
agenda has always been conducted by
working in partnership with all of our
brand partners.
I would like to take this opportunity to
thank our brand partners for their
continued support, particularly in respect
of our Admission in 2015.
Retail Segment
Overview
During the Year the retail segment
achieved a record profit before tax of
£18.8m, a growth of 29.0% versus the
same period last year.
During the Year the Group operated 76
franchise dealerships representing 24
manufacturer brands as well as a number
of after sales and used car operations. The
Group operates a well-balanced portfolio
of volume, prestige and alternate premium
brands giving it
the highest market
coverage of any UK dealer group. The
Board believes this diversified spread of
representation helps mitigate the effect of
the cyclical nature of individual brand
performance. In addition, the Group has
significant headroom with a number of its
manufacturer partners to achieve further
scale in representation through future
acquisitions in line with the Group’s
strategy.
Integration of acquisitions
made in 2014
We have now successfully completed the
integration of the three acquisitions made
in 2014 all of which have made a positive
contribution in 2015 and are performing
in line with expectations.
Acquisition of SG Smith
In November 2015 we completed the
acquisition of SG Smith, our first
acquisition as a public company. This
acquisition was in line with our stated
strategy of growth with existing brand
partners in new geographic territories.
This acquisition has significantly grown
our relationship with Audi with four
franchised dealerships in the attractive
markets of Wimbledon, Coulsdon,
Twelve months ended 31 December 2015
New Car
Used Car
Aftersales
Internal
Total
Twelve months ended 31 December 2014
New Car
Used Car
Aftersales
Internal
Total
* mix calculation excludes internal revenue
Bexley and Beckenham along with an
Audi approved used car centre in
Sydenham. We have also strengthened
our Skoda representation with
the
addition of Croydon Skoda and extended
our partnership with Mercedes Benz in
Commercial vehicles with an authorised
repair facility in Croydon. In addition, the
acquisition included two Volkswagen
Group Trade Parts Specialist businesses
in the South London area.
We expect
materially earnings enhancing in 2016.
this acquisition
to be
Investment in existing businesses
In addition to the acquisition of SG
Smith, we have undertaken significant
investment in our existing portfolio with
facility improvements at our Cambridge
Ford Commercial Vehicles, Cambridge
Peugeot, Milton Keynes Volvo, Taunton
VW, Plymouth Audi and a number of our
North West Mercedes-Benz sites.
Investment in new retail locations
Further material investment projects
were progressed during the Year. In
particular:
•
•
In March 2015, we purchased the
interest of our
long-leasehold
Jaguar/Land Rover
in
Cambridge in preparation for the
re-development of the site.
facility
In December 2015, we completed the
purchase of land for development in
Ipswich to support the establishment of
Revenue
£m
mix*
Gross Profit
£m
mix
637.8
52.1%
45.7
33.6%
459.2
37.5%
33.3
24.5%
127.8
10.4%
56.9
41.9%
(29.3)
1,195.5 100.0% 135.9 100.0%
Revenue
£m
mix*
Gross Profit
mix
£m
544.8
50.6% 39.3
33.4%
413.1
38.4% 27.7
23.6%
117.9
11.0% 50.5
43.0%
(25.3)
1,050.5
100.0% 117.5 100.0%
is
of
part
a new Jaguar/Land Rover facility. This
the
development
reorganisation of the Jaguar/Land
Rover Suffolk market area and will see
the relocation of the Group’s existing
Halesworth Land Rover and Ipswich
Jaguar dealerships to the new site.
2016
• We exchanged contracts for (and in
March
subsequently
completed) the purchase of land for
development in Exeter to support the
relocation of our Audi facility.
Each of these new facilities is expected
to commence trading in the latter part of
2016. Whilst a period of disruption to
these businesses is likely they are all
expected to generate additional revenue
and profitability over the medium to
longer term.
Acquisitions
We continue to review a number of
potential acquisition opportunities in line
with our stated strategy to grow scale
with existing brand partners and extend
our geographic footprint into new regions.
Our focus remains on ensuring a strong
strategic and financial case for any
transaction we seek to make working
alongside our brand partners.
8
BMW 7 series
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 9
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Artist’s impression of the new JLR ‘Arch concept’ which we will be opening in Cambridge and Ipswich
Taunton Volkswagen Dealership
Artist’s impression of Exeter Audi
9
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 10
STRATEGIC REPORT
New Vehicles
2015
2014
Total
LFL
Growth
Total New Units
35,103
31,951
9.9%
7.2%
During the Year, the Group increased its
new car unit sales by 9.9% (like-for-like
7.2%). This strong performance was
delivered against an overall year-on-year
increase of 6.3% in new car registrations
including self/dealer registrations, of
which the private registration element of
the UK market increased by 2.5% with
fleet growing at 11.8%.
have
payments
Market growth in new vehicle sales
continues to be driven by the availability
of low interest finance. Personal contract
purchase (“PCP”) with minimal or zero
deposit requirements and affordable
monthly
been
instrumental in driving the new retail
market. In addition, a weaker than
expected economic recovery in the
Eurozone and the strength of sterling in
2015, coupled with slower demand in
certain overseas markets, have resulted
in additional new vehicle supplies being
drawn to the UK market.
Recent reductions in fuel costs, the
introduction of more fuel efficient vehicles
and a stable used car market have also
played their part in driving new retail
sales as consumers seek to access the
benefits of new car ownership.
Total gross profit from new vehicles
increased by 16.3%.
Scunthorpe BMW Dealership
Range Rover Evoque Convertible
Scarborough Honda Dealership
BMW 7 series
10
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 11
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Used Vehicles
2015
2014
Total
LFL
Growth
Total Used Units
27,699
25,598
8.2%
1.5%
During the Year, the Group increased its
used car unit sales by 8.2% (like-for-like
1.5%).
The Group continues to operate a
prudent 56 day stocking policy and
continues to account for used car
refurbishment and preparation costs at
full retail rates. Whilst these policies
impact the Group’s reported margin in
used cars, we consider these combined
policies promote improved stock turnover,
reduce residual value stock holding risk
and ensure rigour in appraising and
valuing part exchange vehicles acquired
by the Group.
Used car gross margin at 7.2% was
0.5% up against the same period last
year (2014: 6.7%) and remains a key
area of opportunity moving forward. This
improved F&I
was driven by both
performance and other point of sale
initiatives. The Group continues
to
implement a number of incremental
including a
margin-driving
greater focus on used vehicles aged
between three to five years. These
initiatives
Aftersales
Revenue (£m)
During the Year, the Group increased
aftersales revenue by 8.5% (like-for-like
2.4%).
involves
the servicing,
Aftersales
maintenance and repair of vehicles. The
Group operates two standalone body
shops and one standalone petrol
forecourt. Aftersales makes a significant
financial contribution to the Group which
is important in the context of a more
cyclical new car market.
The aftersales market
is highly
dependent on the UK vehicle parc. The
latest estimate from the Society of Motor
2015
2014
Total
LFL
Growth
127.8
117.9
8.5%
2.4%
Manufacturers and Traders is that the
UK car parc currently stands at 31.9m
vehicles, increasing over recent years as
a result of the strong new car market.
In addition, increased penetration of
service plans has supported market
growth allowing customers to plan and
budget for service costs with a higher
level of certainty and ensuring repeat
visits to the dealership. In addition to
offering brand partner service plans, the
Group operates its own-brand service
plan covering both new and used
vehicles. This represents a key area of
focus for the Group moving forward.
vehicles have a lower average selling
price whilst maintaining similar levels of
gross profit per unit and are attractive to
consumers seeking reassurance and
warranty protection from a franchised
dealer.
Total gross profit from used vehicles
increased by 19.8%.
The policy of charging full retail for
preparation costs means our aftersales
performance is strong which we believe
acts as a defensive driver against any
downturn. This strategy ensures the
Group enjoys a significantly higher
overhead absorption compared to the
UK average.
Gross margin at 44.5% has also seen a
significant improvement, up from 42.8%
in the same period last year partly
due to workshop efficiency, productivity
improvements
and management
initiatives.
11
Volvo Milton Keynes workshop
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 12
STRATEGIC REPORT
Leasing Segment
Additions
Disposals
Fleet
During the Year the leasing segment
achieved a record profit before tax of
£4.9m, a growth of 24.0% versus the
same period last year.
a
service-led
The leasing segment continues to focus
on its business-to-business strategy,
fleet
providing
management offering high added value
service to clients. During the Year the
Group successfully recruited a number
of new clients and converted a number
of existing clients to exclusive supply
arrangements. The segment is fully
integrated within
the Group and
wherever possible, sources new vehicles
and de-fleets end of lease vehicles via
the Group’s retail segment. Of the 1,771
additions to the fleet, 1,335 were
sourced via the Group’s retail operation.
FYR
2015
1,771
1,773
6,029
FYR
2014
1,712
1,291
6,031
more than 11.0% of the fleet and with
the top 10 customers accounting for
44.0% of the fleet.
the
Robust risk management and control is
a core discipline of
leasing
segment’s business model and the
sophisticated
segment
employs
techniques
to monitor and control
residual value risk. The used car market
remained stable during the Year and
management continues to monitor
residual values closely.
model for the business. The leasing
segment will therefore remain focused
on recruiting and retaining clients
through its service-driven offering.
Summary
2015 was an historic year for the Group.
Our Admission in April 2015 facilitated our
largest acquisition to date in November
2015. During the Year we also achieved
record results in both our retail and
leasing agreements. We look forward to
building on this success in 2016.
The leasing fleet continues to be
financed by asset-backed loans secured
against the vehicles. The net book value
of the fleet at 31 December 2015 was
£62.5m against £51.4m of loans (2014:
£58.3m against £47.0m of loans).
I would therefore like to join the Chairman
in thanking our brand partners, business
suppliers and my colleagues through the
Group for their hard work and support
and I look forward to continuing to work
with them in the coming year.
The client base of the leasing segment
remains well diversified and balanced
with no single customer representing
We believe that a prudent approach to
residual value setting in the leasing fleet
provides a sustainable and resilient
Daksh Gupta
Chief Executive Officer
16 March 2016
Our driver services app in our leasing business
12
12
238947 MMH AR pp03-pp13 16/03/2016 17:13 Page 13
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Volvo XC90
Mercedes Benz E-Class
Volkswagen Tiguan
13
Highest brand
coverage of
any dealer
group
238947 MMH AR pp14-pp15 new 16/03/2016 17:35 Page 14
%
2015
Manufacturer
Market
Share
Franchised Dealerships
6.33
6.36
3.04
12.73
2.03
3.35
0.91
2.98
2.53
0.05
5.52
2.41
5.85
3.96
1.81
2.84
0.32
3.75
10.24
8.50
1.65
MOTORRAD
Vans
Beckenham & Bromley, Bexley,
Coulsdon, Exeter, Plymouth, Taunton
and Wimbledon
Grimsby and Scunthorpe
Cambridge
Bury St Edmunds, Cambridge
and Kings Lynn
Harrogate, Hull, Leicester North,
Leicester South, Peterborough,
Scarborough and York
Cambridge
Cambridge, Peterborough,
Lincoln and Ipswich
Ipswich, Scunthorpe
Bedford, Cambridge, Halesworth,
Lincoln, Melton Mowbray and
Peterborough
Peterborough
Blackburn, Blackpool, Bolton,
Preston and South Lakes
Grimsby
Boston, Bury St Edmunds,
Grantham and Lincoln
Cambridge, Peterborough and
St Neots
Cambridge, Leicester
and Braintree
Barnstaple and Croydon
Blackpool and Bolton
Kings Lynn and Peterborough
Ipswich, Knebworth, Leicester,
Peterborough and Welwyn
Garden City
Barnstaple, Taunton,
Scunthorpe and Grimsby
Bishops Stortford, Cambridge, Grantham,
Peterborough, Nottingham, Milton Keynes
and Welwyn Garden City
Commercial
Vehicles
Commercial
Vehicles
Other stand-alone Operating Units
TPS
Trade Parts
Specialist
TPS
Trade Parts
Specialist
TPS
Trade Parts
Specialist
Bodyshop
Bodyshop
Exeter, Mitcham
and Old Kent Road / Dartford
Cambridge and Peterborough
Forecourt
Leasing
Approved
Centre
Used Car
Centre
Commercial
Vehicles
DAS WELT
Cambridge
Huntingdon
Sydenham
Cambridge
Croydon
Bridgwater
14
238947 MMH AR pp14-pp15 new 16/03/2016 17:35 Page 15
1
South Lakes
2
1
1
Harrogate
Blackpool
Preston
Blackburn
2
Bolton
1
1
Scarborough
1
York
1
4
Hull
4
Scunthorpe
Grimsby
3
KEY
Number of sites
in each market
1
Halesworth
3
1
2
Lincoln
1
Nottingham
Grantham
1
Boston
9
2
4
Melton
Mowbray
Leicester
1 1
Bedford
Milton Keynes
1
King’s
Lynn
12
2
Peterborough
1
Huntingdon
Bury
St. Edmunds
1
St. Neots
Cambridge
2
1
1
Ipswich
Knebworth
Welwyn Bishop’s
Stortford
9
Braintree
Wimbledon
Mitcham
Old Kent Rd
Bexley
Bromley
Sydenham
Beckenham
Croydon
Coulsdon
2
2
Bridgwater
Taunton
2
Barnstaple
2
1
Exeter
Plymouth
Marshall Motor Holdings is a top 10 UK motor dealer
group. Since 2008 the Group has restructured its
dealership portfolio, operating 76 full
franchise
dealerships and representing 24 brand partners. In
addition, the Group operates a number of aftersales and
used car operations.
76Franchised Dealerships
at 31 December 2015
15
238947 MMH AR pp16-pp19 16/03/2016 17:38 Page 16
STRATEGIC REPORT
Financial Review
Mark Raban
Chief Financial Officer
Like-for-like revenues
showed pleasing
growth of 6.5%.
Revenues in new,
used and aftersales
all recorded growth
against the same
period last year.
A new £75m three
year banking facility
was put in place in
March 2015.
Group results
Turnover £1,232.8m
2014: £1,085.9m
Group turnover increased by 13.5% to
£1,232.8m
£1,085.9m).
(2014:
Like-for-like revenues showed pleasing
growth of 6.5%. Revenues in new, used
recorded growth
and aftersales all
against the same period last year.
Gross margin at 11.8% is 0.2% up on the
prior year (2014: 11.6%). An increase in
the mix of lower margin new vehicles
(particularly fleet) has been more than
offset by margin improvement in used
vehicles and aftersales.
Operating expenses of £127.1m were
14.5% higher than in the same period last
year principally driven by the growth of
the business through acquisitions but
allied to the anticipated increase in the
unallocated segment costs as a result of
our new public company status. Within
our retail segment operating overheads
on a like-for-like basis grew by 5.8%.
Adjusted profit before tax* at £15.8m
was 21.4% ahead of last year. This
was achieved through a combination
of organic performance improvement,
full year contributions from acquisitions
and portfolio management undertaken
in 2014.
The retail and leasing segments showed
PBT growth of 29.0% and 24.0%
respectively which represented record
results for each segment.
The unallocated segment consists
principally of administrative and asset
management functions which are not
directly attributable to the Group’s retail or
leasing segment. The unallocated
segment recorded a loss of £7.8m which
was, as previously highlighted at the time
of our interim results, £2.4m higher than
the same period last year. This was driven
in part by the first time occurrence of on
going costs to support our new public
company status and a one-off cost relating
to the settlement of historic, pre-Admission
long term incentive plan liabilities.
During the period, the Directors reassesed
the economic life of freehold buildings to
50 years. This change in estimate resulted
in a reduction in the depreciation charge
for the year of £0.5m.
Finance costs and
taxation
Finance costs £2.9m
2014: £2.4m
credit
Finance costs of £2.9m were £0.5m
higher than the same period last year,
reflecting increased costs associated
the Group’s unutilised £75m
with
revolving
including
facility,
amortisation of arrangement fees and
non-utilisation charges. The Group has
also incurred higher stock funding costs
driven by additional working capital
requirements in line with the significant
revenue growth of the Group.
At 23.8%, the effective tax rate is above
last year (2014: 22.9%) partly as a result
of the impact of disallowable acquisition
expenses.
Acquisitions
Spend (net of cash acquired) £21.5m
2014: £15.8m
On 16 November 2015 the Group
acquired the entire issued share capital
of SG Smith for approximately £24.0m.
The consideration included approximately
£9.1m in respect of the total net assets
and £15.8m in respect of goodwill (after
adjusting for deferred tax arising on IFRS
conversion).
The net assets included approximately
£6.8m of property, plant and equipment
and £2.5m of cash. The net assets are
subject to finalisation of completion
accounts.
The Group incurred £0.5m of transaction
costs in relation to this acquisition. These
costs are presented separately on the
face of the income statement and are
excluded from adjusted profit before tax.
* Adjusted profit before tax is presented
excluding acquisition costs
16
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Vauxhall Astra
Skoda Octavia
Ford Focus
17
238947 MMH AR pp16-pp19 16/03/2016 17:38 Page 18
STRATEGIC REPORT
Cash Flow
Net increase in cash £22.3m
2014: £0.1m
Total cash inflow in the Year was £22.3m
(2014: £0.1m).
The Group received net proceeds from
the Admission of £36.9m after charging
certain fees and expenses in relation to
the Admission to the share premium
account. As part of the Admission
process the Group separated from its
former parent’s treasury arrangements
through a number of related transactions
which were described in the Admission
document (available on the Company’s
website at www.mmhplc.com).
Excluding the impact of all Admission
related transactions and the acquisition
of SG Smith, the underlying total cash
inflow of the Group in the Year was
£8.3m, after retail capital expenditure of
£9.8m. The Group has planned for a
significant increase in retail capital
expenditure during 2016 to support
facility developments, particularly in
Jaguar/Land Rover and Audi. As at
31 December 2015, the Group had
capital commitments totalling £10.8m.
Total inventory at 31 December 2015 was
£240.6m (2014: £163.0m) including
£29.2m relating to SG Smith. As reported
at the time of the Group’s interim results,
increases to inventory are primarily being
driven by increases in new consignment
stock to support new products. At the
period end the Group had £186.2m of
arrangements
vehicle
(2014: £110.5m)
its
total inventory holding. At 31 December
2015, the Group had £49.4m of fully paid
and unencumbered inventory providing
further balance sheet strength.
in relation
financing
to
Net cash
£24.1m
2014: £1.8m
Net cash at 31 December 2015 was
£24.1m. Including the £51.4m asset-
backed loans within the leasing segment,
total net debt was £27.2m.
Retail PBT
£14.5m
£11.1m
£18.8m
£4.4m
2012 2013 2014 2015
Leasing PBT
£4.9m
£3.9m
£3.8m
£3.0m
2012
2013
2014
2015
A new £75m three year banking facility
was put in place in March 2015 for
general corporate purposes including
acquisitions and working
capital
remains
facility
requirements. The
undrawn providing significant resources
to fund organic and acquisitive growth
opportunities. The facility agreement
contains a £25m extension option which
is available by agreement with the two
lending banks. The Group is also able to
extend the term of the facility by up to
12 months.
net
target
(excluding
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
bank
continues
to
indebtedness
leasing
segment loans) of not more than 1.25x
net debt/EBITDA. 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 and provided a clear
plan exists to achieve reduction in the
target over the investment cycle.
Dividends
The Board is pleased to recommend a
final dividend of 2.40p per share which,
with the pro-rata interim dividend of
0.58p per share, gives a total dividend for
the Year of 2.98p per share. If approved
by shareholders, the dividend will be paid
by 27 May 2016 to shareholders who are
on the company’s register at close of
business on 22 April 2016. As set out in
our Admission document, the Board
to maintain a progressive
intends
dividend policy where dividends are
covered between 4 to 5 times underlying
earnings.
Mark Raban
Chief Financial Officer
16 March 2016
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Honda Civic Type R
Kia Sportage
Nissan Qashqai
19
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STRATEGIC REPORT
Principal Risks and Uncertainties
The Group faces a range of risks and uncertainties. The
processes that the Board has established to safeguard both
shareholder value and the assets of the Group are described
in the Corporate Governance report. Set out below are the
principal risks and uncertainties the Directors believe could
have the most significant adverse impact on the Group’s
business. The risks and uncertainties described below are not
intended to be an exhaustive list.
ECONOMIC CONDITIONS
The Group’s results of operations are affected by overall
economic conditions and the level of consumer confidence and
spending in the UK.
A significant number of vehicles are sold with financing and, as
such, a deterioration of the economic conditions in the UK or a
rise in interest rates could lead to a reduction in such finance
offers and increased difficulty for customers to obtain such
financing.
A deterioration in the economic conditions in the UK could also
result in reduced consumer confidence and spending, reduced
demand for products and limitations on the Group’s ability to
increase or maintain its pricing. In addition, governments may
impose taxes and implement other measures to manage the
economic conditions in ways that adversely affect the Group’s
business. Any of the foregoing could have a material adverse
effect on the Group’s prospects, results of operations and
referendum on
financial condition. The outcome of
23 June 2016 regarding the UK's ongoing membership of the
European Union may give rise to a period of economic
uncertainty and could adversely impact the market for the
supply of motor vehicles in the UK in which the Group operates.
VEHICLE MANUFACTURERS
The Group depends on the successful performance of its
vehicle manufacturer partners and its continuing relationships
with them. In particular, it relies on the availability of stock
finance facilities extended by such manufacturers and other
external finance providers. It also benefits from bonuses paid
upon meeting sales targets and marketing incentives
established by such manufacturers and external finance
providers.
Manufacturers’ performance can be affected by factors such
as general economic conditions, disruptions to their business
and reputational risks.
The Group’s retail business operates through franchise
agreements with vehicle manufacturers. These franchise
agreements are typically for a length of between two and five
years. At any point in time, therefore, the Group will be in the
process of renewing such agreements, in common with other
franchise businesses and
industry.
Manufacturers may refuse to renew or terminate their franchise
agreements with the Group.
the wider motor
The loss of a major franchise could result in a significant
reduction in profits due to the inability to source new product or
vehicles to sell, earn the manufacturer volume bonuses
associated with the targets set by each manufacturer, perform
warranty repairs or carry out warranty repairs.
FLUCTUATIONS IN PRICES IN THE USED CAR MARKET
The Group’s financial performance may be affected by
fluctuations in prices in the used car market. Such price
fluctuations could impact its retail business as, due to the
nature of its operations, the Group maintains a significant
inventory of used vehicles. Such price fluctuations could also
impact the Group’s leasing business, as it could affect the
residual value of the vehicles at the end of leasing
agreements. The Group operates a robust independent
analysis tool to monitor this area and seek to manage any
exposure should the trend analysis predict it.
FUNDING STRUCTURE
Liquidity and Credit – One of the Group’s main sources of cash
flows is debt financing. Although credit availability has recovered
from tighter access conditions during the past global credit
crunch, a withdrawal of financing facilities or a failure to renew
them as they expire could still lead to a significant reduction in
the trading ability of the Group or the need to dispose of assets.
The other main source of funding for the Group’s operations is
manufacturers’ trade credit, which could also be withdrawn or
its conditions tightened. Should such manufacturer trade credit
be withdrawn management believe the Group would be able to
access alternative sources of funding, however, there can be
no guarantee that any alternative sources of funding could be
obtained on similar terms, therefore this may have an adverse
effect on the Group’s financial performance.
Interest rates – Fluctuations in interest rates could increase the
cost of borrowing for the Group and have a negative impact on
its financial performance. The majority of the Group’s funding
including the revolving credit facilities (“RCF”), asset backed
finance and vehicle financing, are linked to LIBOR.
Covenants – The Group’s funding agreements contain
covenants, the breach of which may trigger default provisions
and acceleration of the Group’s obligations. For example,
covenants may be breached due to higher debt servicing costs
caused by an increase in interest rates. Covenants may also
restrict the Group’s business and funding decisions.
Working capital – The nature of the Group’s business creates an
inherent liquidity risk. A sudden drop in demand, either within the
wider motor industry or more locally, could impact the Group’s
ability to maintain sufficient cash reserves required to meet the
Group’s working capital requirements. This could impact the
Group’s ability to meet its financial obligations as they fall due.
Operating margins – In line with other businesses in the motor
industry, the Group’s operating margins may be considered to
be low compared to other industries. A significant portion of the
Group’s operating costs are fixed, including the costs associated
with the running of its national dealer network. These fixed costs
20
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
need to be carefully controlled in order to ensure the profitability
of the Group and the Directors believe they have adequate
procedures in place to monitor the Group’s on going profitability.
Were the Group to experience a downturn in sales, these high
fixed costs could put pressure on the Group’s financial resources
and could have an adverse effect on the Group’s business,
prospects, results of operations and financial condition.
RISKS RELATING TO THE GROUP’S STRATEGY
The Group’s strategy focuses on a combination of organic and
acquisitive growth. The Group’s acquisition strategy of
acquiring premium and prestige brand franchises faces risks
in terms of the availability, quality and price of such brands and
the ability to fund this acquisitive growth.
Acquisitions involve numerous risks including potential
disruption of the Group’s on going business and distraction of
management, difficulty integrating the acquired business and
exposure to unknown and/or contingent or other liabilities
arising in connection with the acquisition. In addition, the
financing of any significant acquisition may result in changes
in the Group’s capital structure, including the incurrence of
additional indebtedness. The Group may not be successful in
addressing these risks or any other problems encountered in
connection with any acquisitions.
REGULATORY COMPLIANCE
The Group is subject to a regulatory compliance risk which can
arise from a failure to comply fully with the laws, regulations or
codes applicable, for example, those set out by the Financial
Conduct Authority, Trading Standards, Vehicle Operators and
Services Agency (VOSA), local authorities and the manufacturers
we represent. Non-compliance can lead to fines, enforced
suspension from sales of general insurance products or public
reprimand or, in the extreme, closure of parts of the business.
HEALTH AND SAFETY
The Group’s operations include the maintenance and servicing
of motor vehicles which involves both manual work and the use
of industrial equipment. The Group must therefore comply with
laws and regulations concerning risk assessment, the
management and control of health and safety risks, the safety
of premises, physical locations, equipment, processes and
systems of work. To mitigate the risk of breach, and in addition
to its own health and safety assessments, the Group engages
third parties to undertake regular inspections of its plant and
equipment in accordance with statutory obligations and to
assess the safety of the Group’s working environments.
ENVIRONMENTAL
The Group must comply with environmental laws and
regulations concerning emissions, waste and waste waters
(including trade effluent), vehicle movements, industrial noise,
energy efficiency, the storage of oil and the control of other
hazardous substances. Any breach of such laws and
regulations could lead to fines, penalties and/or compensation
and could lead to the temporary cessation of business activities
In addition to its own internal
at the Group’s premises.
assessments, the Group engages third parties to undertake
inspections of its premises to assess the risk of breach of
environmental laws and regulations.
require
remediation under environmental
In addition, some of the Group’s premises and former premises
are located on land that, because of contaminants present,
may
law.
Investigation or remediation may be necessary in the event of
the discovery of contamination in on or under such premises
or in the event of leaks or discharges of hazardous substances
or other environmental incidents. Such investigation or
remediation could give rise to unexpected liabilities and costs
for the Group.
COMPETITION
The ‘block exemption’ regulations under EC law suspend
normal competition rules to allow motor manufacturers and
distributors to operate specialised distribution and repair
outlets. Any significant change to this position could have an
adverse impact on the Group’s motor franchise operations.
INFORMATION RISK
The Group is dependent on the efficient and uninterrupted
operation of its information technology and computer systems,
which are vulnerable to damage or interruption from power
loss, telecommunications failures, sabotage, vandalism or
similar misconduct. Whilst the Group has put in place insurance
cover, and also contingency and disaster recovery plans, in
order to mitigate the impact of such failures, it can never be
certain that these plans could cover every eventuality or
situation or fully recompense every loss.
CYBER SECURITY
Whilst the Group does not complete vehicle sales to customers
via the internet or its websites, it does utilise the internet and
its websites significantly in the marketing of its products and
services, particularly used cars. In common with other
businesses, the Group is therefore at risk of ‘denial of service’
attacks on its websites which could impact the Group’s trading
performance if its websites are affected for a prolonged period.
In addition, the Group stores certain customer information
electronically and therefore faces risks associated with
unauthorised access to that data which could have reputational
and/or regulatory consequences for the Group. The Group
monitors its security policies and processes in order to mitigate
(but not eliminate) the risks associated with cyber security.
STAFF RETENTION
The Group relies on a number of key employees, both in its
management and its operations, with specialised skills and
extensive experience in their respective fields. Any failure by
the Group to recruit, replace, retain or motivate suitably
qualified and experienced employees could impact its growth
or its sales performance, increase its wage costs and adversely
affect its business, results of operations and financial condition.
This Strategic Report was approved on behalf of the Board on
16 March 2016.
Mark Raban
Chief Financial Officer
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GOVERNANCE
Board of Directors
1
2
3
4
1. Peter Johnson
Non-Executive Chairman and Chair of the Nominations Committee
Peter has over 40 years’ experience in the automotive sector, spending 30 years in senior roles in retail and distribution
with the Rover group, Marshall and Inchcape plc where he was Chief Executive between 1999 and 2005. Peter served
on the Bunzl plc board from 2006 to 2015 as its senior independent director and chairman of its remuneration committee.
He also chaired Rank plc from 2007 to 2012 and served on the Wates Group Limited board from 2003 to 2013. Peter
was a non-executive Director of Marshall of Cambridge (Holdings) Limited until Admission.
2. Daksh Gupta
Chief Executive Officer
Daksh has over 20 years’ experience in the automotive retail sector and joined the Company in 2008 as its Chief Executive
Officer. Daksh was a franchise director for Inchcape for seven years where he was responsible for the Volkswagen, Audi
and Mercedes-Benz brands. Daksh also served as chief operating officer of Accident Exchange Group plc and prior to
joining the Group was group managing director for Ridgeway Group. Daksh was a director of Marshall of Cambridge
(Holdings) Limited until Admission.
3. Mark Raban
Chief Financial Officer
Mark has 25 years’ of general retail experience, including three as the finance director of Inchcape Retail Limited. He
spent three years as chief financial officer for the UK and Ireland at Borders Group and was the interim financial director
at Selfridges Retail Limited. Mark has also held senior finance roles at public companies such as Safeway and Burton.
Mark was appointed as Chief Financial Officer of the Company at Admission.
4. Alan Ferguson
Senior Independent Director and Chair of the Audit Committee
Alan is a non-executive director of Johnson Matthey PLC, Croda International Plc and The Weir Group Plc. He chairs the
audit committees of each of these companies and is the senior independent director of Johnson Matthey. Alan was chief
financial officer and a director of Lonmin Plc until December 2010, prior to which he was group finance director of the
BOC Group plc. Alan spent 22 years in a variety of roles at Inchcape plc, including six years as its group finance director
from 1999. Alan is a chartered accountant and sits on the Business Policy Committee of the Institute of Chartered
Accountants of Scotland.
22
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
5. Sarah Dickins
Non-Executive Director and Chair of the Remuneration Committee
Sarah has over 20 years’ HR experience across a broad range of sectors including retail, utilities and financial services.
She spent 16 years at Asda, five of those years as an operating board member responsible for people operations and
customer service for 150,000 colleagues. Sarah joined Provident Financial Group in 2012 as Executive People Director
before becoming Group People Director at Bourne Leisure Limited in 2015.
6. Christopher Sawyer
Non-Executive Director
From 1991 to 2006, Christopher led Deltron Electronics plc which was quoted in 1996 and sold to ABACUS Electronics
Plc in 2006. In 2007, Christopher became chairman of the Lorien Limited group. Between 2006 and 2013, he was
chairman of the parent of Bearmach Limited, a global distributor of Land Rover parts. Christopher has been a non-
executive director of Marshall of Cambridge (Holdings) Limited since 2008 and currently chairs its audit committee.
Christopher joined the Company at Admission as a nominated director of Marshall of Cambridge (Holdings) Limited.
7. Francesca Ecsery
Non-Executive Director
Francesca has 19 years’ directorship experience in both blue chip companies and start-ups in the digital, retail, fast-
moving consumer goods (FMCG) and leisure industries. She is a Harvard MBA, fluent in five languages and has special
expertise in multi-platform consumer marketing, branding and commercial strategies. Francesca is also non-executive
director of Foreign & Colonial Investment Trust plc, Share plc and Good Energy Group plc, (all of which are listed on AIM
or FTSE) and of VISTA Limited. Her previous executive experience includes McKinsey, PepsiCo, ThornEMI, Thomas
Cook, STA Travel and many other consumer brands. Francesca joined the Company at Admission.
8. Stephen Jones
Company Secretary
Stephen is a practising Solicitor and spent eight years as a corporate lawyer at Eversheds LLP. He also spent eight years
as group counsel and company secretary at Automotive and Insurance Solutions Group Plc. Stephen joined the Company
shortly before Admission.
5
6
7
8
23
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GOVERNANCE
Directors’ Report
The Directors present their annual report on the affairs of the Group, together with the financial statements and independent
auditor’s report, for the year ended 31 December 2015 (the “Year”).
Principal activities
The principal activity of the Company is that of a holding company. The principal activity of its subsidiary undertakings is car and
commercial vehicle sales, leasing, servicing of vehicles and associated activities.
Results and dividends
The results for the Year are set out in the Group income statement. The Directors recommend the payment of a final dividend of
2.40p per ordinary share to be paid on 27 May 2016 to shareholders who are on the Company’s register at close of business on
22 April 2016.
Business Review and Future Developments
The review of the business and likely future developments is included within the Strategic Report. This also includes details of
acquisitions and growth plans for the future.
Going concern
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 of these financial statements.
For these reasons, they continue to adopt the going concern basis in the preparation of these financial statements.
Directors
Details of the current directors are set out on pages 22 to 23. The directors who served during the Year and subsequently are
detailed below.
Current Directors
Non-Executive Directors
Peter Johnson
Alan Ferguson
Sarah Dickins
Francesca Ecsery
Christopher Sawyer
Executive Directors
Daksh Gupta
Mark Raban
(Appointed 11 March 2015)
(Appointed 11 March 2015)
(Appointed 25 March 2015)
(Appointed 2 April 2015)
(Appointed 2 April 2015)
Other Directors who held office during the year
Sir Michael Marshall
Robert Marshall
William Dastur
Francis Laud
Christopher Walkinshaw
Peter Cakebread
(Resigned 25 March 2015)
(Resigned 25 March 2015)
(Resigned 25 March 2015)
(Resigned 25 March 2015)
(Resigned 25 March 2015)
(Resigned 2 April 2015)
In accordance with the Articles of Association of the Company adopted on 12 March 2015 (the “Articles”), having been
appointed since the date of the last annual general meeting of the Company, Alan Ferguson, Sarah Dickins, Francesca Ecsery,
Christopher Sawyer and Mark Raban will each retire by rotation and offer themselves for reappointment at the annual general
meeting to be held on 24 May 2016 (the “AGM”).
The interests of the Directors and their immediate families in the share capital of the Company, along with details of Directors
share options and awards, are contained in the Directors’ Remuneration Report on pages 33 to 40.
Share Capital
The authorised and issued share capital of the Company, together with the details of shares issued during the Year are shown
in Note 25 to the financial statements. The issued share capital of the Company at 31 December 2015 was 77,236,263 ordinary
shares of 64p each.
Substantial Shareholdings
As at 14 March 2016, the Company had been notified of interests in excess of 3 per cent in the Company’s share capital by the
following shareholders:
Name
Number of Ordinary Shares
Marshall of Cambridge (Holdings) Limited
Union Investments and Development Limited
FIL Limited
Schroders plc
Polar Capital LLP
50,390,625
6,375,839
5,300,000
3,907,275
3,087,900
24
Percentage of Existing
Ordinary Shares Held
65.24%
8.25%
6.86%
5.06%
4.00%
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Share Option Schemes
Details of employee share option schemes are set out in Note 25 to the consolidated financial statements.
Charitable and Political Donations
During the Year, the Group made the following charitable donations during the year: £49,000 (2014: £12,000).
No political contributions were made during the year (2014: £nil).
Disabled Employees
The Group gives full consideration to applications for employment from disabled persons where the candidate’s particular aptitude
and abilities are consistent with adequately meeting the requirements of the job. Opportunities are available to disabled employees
for training, career development and promotion. Where existing employees become disabled, it is the Group’s policy to provide
continuing employment wherever practicable in the same or an alternative position and to provide appropriate training to achieve
this aim.
Employee Involvement
During the Year the policy of providing employees with information about the Group has been continued through the newsletter
‘Marshall Matters’, team briefings and through our global email network. Regular meetings are held between local management
and employees to allow a free flow of information and ideas. We also participate in the Great Place to Work Institute’s employee
engagement programme. Further details are set out in the Corporate Social Responsibility Section of this Annual Report.
Disclosure of Information to Auditor
In so far as each of the persons who were Directors at the date of approving these financial statements is aware:
•
•
There is no relevant audit information of which the company’s auditor is unaware; and
Each director has taken all steps that they ought to have taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that.
Auditor
A resolution to re-appoint Ernst & Young LLP as auditors will be put to the shareholders at the AGM.
AGM
Notice of the AGM to be held on 24 May 2016 is set out at the end of this Annual Report. The Resolutions proposed at the AGM
are summarised as follows:
•
Resolution 1 – Receiving the annual report and accounts for the year ending 31 December 2015
All quoted companies are required by law to lay their annual accounts before a general meeting of the Company, together
with the directors’ reports and auditors’ report on the accounts. At the AGM, the directors will present these documents to
the shareholders for the financial year ended 31 December 2015.
•
Resolution 2 – Declaration of dividend
This resolution concerns the Company’s final dividend payment. The directors are recommending a final dividend of 2.40p
per ordinary share in respect of the year ended 31 December 2015 which, if approved, will be payable on 27 May 2016 to
the shareholders on the register of members on 22 April 2016.
•
Resolutions 3 to 7 (inclusive) – Re-appointment of Directors
Having been appointed since the date of the last annual general meeting of the Company, Alan Ferguson, Sarah Dickins,
Francesca Ecsery, Christopher Sawyer and Mark Raban will each retire by rotation and offer themselves for reappointment
at the AGM in accordance with the Articles.
Resolution 8 – Re-appointment of Auditors
This resolution concerns the re-appointment of Ernst & Young LLP as auditors until the conclusion of the next general
meeting at which accounts are laid.
Resolution 9 – Auditors’ remuneration
This resolution authorises the Directors to fix the auditors’ remuneration
•
•
By order of the Board
Stephen Jones
Company Secretary
16 March 2016
25
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GOVERNANCE
Corporate and Social Responsibility
Colleagues
Committed to attracting, developing and
retaining the best talent to help drive our
business forward in line with our values
marital
philosophical beliefs, age or disability.
religion or other
status,
We expect all our colleagues to act with
integrity and behave ethically
in
everything they do. To reinforce this we
have the Marshall Code of Conduct
which
is supported by an online
programme which forms part of every
new colleague’s induction.
Engaging our people
We strive to ensure our employment
policies and practices are consistent with
our values and culture as well as helping
us to achieve our business objectives
through engaged people and we use an
external measure to help validate this.
Since 2008 we have used the Great Place
engagement
Institute’s
to Work
programme. This has given us the
opportunity to seek feedback from our
colleagues each year to ensure high levels
of engagement. Our scores continue to
build year on year; in 2015 not only did we
increase our own previous scores but we
out-performed the external benchmark in
each category. As a result we were proud
to be ranked 26 in the Best Workplace
2015, Large company category.
MARSHALL PEOPLE
Our Values
Everything we do is underpinned by our
values which are woven in to the fabric
of our business, and are upheld by
colleagues.
Recruiting, retaining and
developing our people
We have a clear Colleague Value
Proposition to attract the best talent and
support our strategy to be an employment
destination of choice. We use a range of
tools and assessment methods to ensure
we recruit people who can deliver their
objectives in line with our values.
Every new colleague experiences a
thorough induction programme which
incorporates our history, values, aims
and objectives as well as a structured
programme of training and coaching
relevant to their role, the brand and the
team.
Our dedicated team of HR professionals
support the business, aided by policies
and practices to ensure we provide the
best support, benefits and opportunities
to our colleagues.
Our bespoke Marshall Learning &
provides
Development Academy
People
Innovation
Recognising that
people are at the
heart of our success.
Maintaining competitive
edge through innovation
and creativity.
opportunities for our colleagues to
realise their potential and support their
development to ensure they have a
fulfilling career with us.
Recognising our people
recognition programmes are
Our
designed to support our colleague
engagement
These
programmes include overseas incentive
trips, long service awards and awards
for demonstrating our values.
agenda.
Our MAVTA programme
(Marshall
Achievement, Values and Teamwork
Awards) recognises colleagues who
demonstrate outstanding achievements in
Customer
Teamwork,
Service,
Innovation, Leadership, Services in the
Community, Business Excellence and
Environmental.
to maintaining
Communicating with our people
We believe that communication is the
colleague
key
engagement and our employment brand.
We have an ethos of transparency and
sharing news on a regular basis
including CEO communications, weekly
bulletins, our Colleague magazine,
intranet and regular team meetings.
Diversity and our people
We are committed to encouraging diversity
and ensuring that discrimination has no
place in our business. We want every
colleague to feel respected and able to
perform to the best of their ability. We do
not make assumptions about a person’s
ability to carry out his or her duties based
on ethnic origin, gender, sexual orientation,
Integrity
Customers
Upholding the
highest standards of
integrity and fairness.
Putting our
customers
above all else.
Great Place to Work – 2015 UK Best
Trust Index Scores MMH 2015 MMH 2014 Workplaces, Large
Credibility 84% 82% 80%
Respect 82% 80% 79%
Fairness 83% 79% 78%
Pride 84% 82% 81%
Camaraderie 86% 83% 83%
Overall Trust Index Score 83% 81% 80%
26
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MARSHALL MAKING A
DIFFERENCE
As
business,
a
encouraging our colleagues to make a
difference is important to us and our
culture.
values
based
We focus on creating an environment
where colleagues enjoy coming to work
and contribute to meeting our business
objectives. We believe that highly engaged
colleagues deliver enhanced performance
and that it is important to give back to our
communities and good causes.
Group Giving
We are actively involved in supporting and
raising awareness for BEN – Motor and
Allied Trades Benevolent Fund. BEN is
the UK’s dedicated charity for those who
work, or have worked, in the automotive
and related industries, as well as their
dependants. Our CEO is a trustee and
current Vice President of BEN.
the past 16 years we have
For
supported
the Macmillan Coffee
Mornings which enables our businesses
to get involved at a local level, bringing
colleagues and customers together.
We also support national initiatives such
as Red Nose Day, Children in Need and
Wear it Pink for Breast Cancer.
Local Giving
We encourage our colleagues to get
involved with local causes which support
the communities in which they work.
By way of example:
•
Our team at Grimsby BMW Bikes
recently took part in a local Motorbike
Run to raise money for their local
children’s hospice, St Andrews,
• Our Blackpool Mercedes-Benz
team sponsored their local fun run
in aid of their local RNLI at Lytham,
• Our Bedford Land Rover team
organised a football match with
Cambridge Land Rover for their
local Sue Ryder St John’s Hospice.
MARSHALL EMBRACING SAFETY
We seek to adopt a consistent approach
to health and safety for all work activities
across our business.
Our Health and Safety policy gives clear
lines of responsibility and is reviewed
regularly to promote high standards of
health, safety and welfare to meet our
legal responsibilities.
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Community
Striving to have a positive impact on the
communities in which we serve
Health & Safety
Making Health & Safety an integral part of
Marshall’s day to day operation
A Health & Safety newsletter
is
published monthly highlighting relevant
information
to
communicate and bring to their attention
any issues or concerns that relate to
their health, safety and welfare.
to our colleagues
Our Health, Safety & Environmental
Department aims to provide support and
direction to all sites by reviewing the
policies and procedures, supporting and
advising
fulfil
managers
responsibilities. They coordinate training
for first aiders; fire marshall’s and risk
assessors as required, as well as
monitoring, reporting and investigating
of all incidents.
to
Health and Safety Statistics in 2015
Number of fatalities 0
Major injuries reported
under RIDDOR* 14
Dangerous occurrences reported
under RIDDOR* 0
Number of enforcement notices
issued by HSE 0
Number of prohibition notices
issued by HSE 0
*Reporting of Injuries, Dangerous
Occurrences Regulations 2013
Environmental
Embracing our environmental responsibilities
MARSHALL GOING GREEN
introduced
We
LEAF
Marshall
(Lowering Energy
to Aid the Future)
in the Year, as part
of our aim to lower the impact we have
on the environment.
In line with Energy Saving Opportunity
Scheme (ESOS), we are currently
undertaking an audit of our energy usage
energy saving
to
measures. Our objective is to reduce our
energy usage by 10%.
identify
future
In line with our regulatory responsibilities,
arrangements are in place for the safe
disposal of displaced fluids, scrap metal,
parts and related waste products.
All dealerships which required a permit for
the operation of a vehicle refinishing
installation under the Environmental
Permitting
& Wales)
(England
Regulations 2007 have achieved this. On-
going monitoring is in place to ensure we
remain compliant with the permit issued.
We also have recycling initiatives in every
site for more general waste such as ink
cartridges, batteries and paper.
27
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GOVERNANCE
Corporate Governance
PRINCIPLES OF CORPORATE GOVERNANCE
The Board recognises that applying sound governance principles in the running of the Group is essential. The Company is listed
on AIM and is therefore not required to comply with the UK Corporate Governance Code. However, in recognising the value and
importance of high standards of corporate governance the Company has, since Admission, adopted the QCA Corporate
Governance Code for Small and Mid-Size Quoted Companies so far as it is practicable having regard for the size and nature of
the Group.
An explanation of how these principles have been applied since Admission is set out below.
THE BOARD
The table below sets out details of all directors who have served since Admission and their membership of Board Committees.
This includes details of each member’s attendance at the seven board meetings during the Year since Admission. There are
separate attendance statements in respect of the Audit and Remuneration Committees on pages 32 and 34.
Director
Date appointed
Role
Committees
(C = current chair)
Board
attendance
Peter Johnson
27 June 2014
Non-Executive Chairman
Nomination Committee (C)
Alan Ferguson
11 March 2015
Senior Independent Director
Francesca Ecsery
25 March 2015
Independent Non-Executive
Sarah Dickins
11 March 2015
Independent Non-Executive
Christopher Sawyer* 2 April 2015
Non-Executive
Audit Committee (C)
Remuneration Committee
Nomination Committee
Audit Committee
Remuneration Committee
Nomination Committee
Audit Committee
Remuneration Committee (C)
Nominations Committee
Audit Committee
Remuneration Committee
Nomination Committee
Daksh Gupta
1 October 2008
Chief Executive Officer
Mark Raban
2 April 2015
Chief Financial Officer
n/a
n/a
*Christopher Sawyer is a nominated director of Marshall of Cambridge (Holdings) Limited.
7/7
7/7
7/7
7/7
7/7
7/7
7/7
Board decisions are generally on matters of strategy (including acquisitions), policy, people, performance, budgets and significant
capital expenditure. Each director receives information on matters to be discussed (including Board reports from the Chief
Executive, Chief Financial Officer and Company Secretary) in advance of each Board meeting to ensure that there is a full debate
at Board level and in particular so that the non-executive directors can contribute fully.
The Board has formally reserved specific matters for its determination and has approved terms of reference for all Board
Committees.
All directors have access to independent professional advice, if they have the need to seek it. There is an induction process for
new directors and training is available when required.
28
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Chairman, Chief Executive Officer and Senior Independent Director
Peter Johnson is Non-Executive Chairman and the Chief Executive Officer is Daksh Gupta. There is a formal division of
responsibilities between the Chairman and the Chief Executive Officer. The Senior Independent Director is Alan Ferguson.
Board balance
The Company currently has seven directors, of which three are independent non-executives.
Under the terms of a Relationship Agreement with Marshall of Cambridge (Holdings) Limited (“MCHL”) (details of which are set
out below), MCHL is entitled to appoint two of its nominated directors to the Board, so long as it holds 30% or more of the
Company’s ordinary shares. Since Admission, MCHL has appointed one of its nominated directors, being Christopher Sawyer.
Performance evaluation
The Board and its Committees have not conducted a formal internal performance evaluation since Admission but intends to do
so in 2016. In addition the non-executive directors intend to meet without the presence of executive directors, during which the
performance of executive directors will be assessed and without the presence of the Chairman (to assess the performance of
the Chairman).
Re-election
In accordance with the Company’s Articles, having been appointed since the date of the last annual general meeting of the
Company, Alan Ferguson, Sarah Dickins, Francesca Ecsery, Christopher Sawyer and Mark Raban will each retire by rotation
and offer themselves for reappointment at the AGM.
BOARD COMMITTEES
Nomination Committee
The Company has established a Nomination Committee which comprises Peter Johnson (Chair of the Committee), Alan Ferguson,
Sarah Dickins, Francesca Ecsery and Christopher Sawyer.
The Nomination Committee is responsible for reviewing the structure, size and composition of the Board, preparing a description
of the role and capabilities required for a particular appointment and identifying and nominating candidates to fill Board positions
as and when they arise.
The Nomination Committee will meet annually or at such other times as may be necessary. In light of the board appointments
made in connection with Admission, the Nomination Committee did not meet during the Year since Admission.
Remuneration Committee
The Company has established a Remuneration Committee which comprises Sarah Dickins (Chair of the Committee)
Alan Ferguson, Francesca Ecsery and Christopher Sawyer.
Further information on the Remuneration Committee is set out on pages 33 to 40.
Audit Committee
The Company has established an Audit Committee, which comprises Alan Ferguson (Chair of the Committee), Sarah Dickins,
Francesca Ecsery and Christopher Sawyer.
Further information on the Audit Committee is set out on pages 31 to 32.
29
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GOVERNANCE
RELATIONS WITH SHAREHOLDERS
The Group is committed to maintaining good relations with all its shareholders through the provision of Interim and Annual Reports,
other trading statements and the Annual General Meeting. The Company also meets with its institutional shareholders regularly.
In light of MCHL’s aggregate shareholding in the Company, on Admission the Company entered into the Relationship Agreement
with MCHL in order to regulate the relationship between MCHL and the Company and enable the Company to act independently
of MCHL and its affiliates. Under the terms of this agreement MCHL has the right, for so long as it owns 30% or more of the
Ordinary Shares in the capital of the Company, to appoint two directors to the Board and one director to each of the committees
of the Board, including the Audit, Remuneration and Nomination Committee. The Relationship Agreement will terminate in the
event that MCHL ceases to own 30% or more of the ordinary shares in the capital of the Company.
Further details of the Relationship Agreement can be found in the Company’s AIM Admission Document which is available on
the Company’s website at www.mmhplc.com.
ANNUAL GENERAL MEETING
The Annual General Meeting provides an opportunity for all shareholders to be updated on the Group’s progress and ask
questions of the Board.
FINANCIAL REPORTING
The Board has ultimate responsibility for both the preparation of accounts and the monitoring of systems of internal financial
control. The Board seeks to present a fair, balanced and understandable assessment of the Group’s position and its prospects
and present price-sensitive information in an appropriate way.
INTERNAL CONTROL
The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. However, any
such system of internal control can provide only reasonable but not absolute, assurance against material misstatement or loss.
The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group.
The principal elements of the Group’s internal control system include:
• management of the day to day activities of the Group by the executive directors, aided by the Group’s bespoke management
information system, Phoenix;
an organisational structure with defined levels of responsibility;
a forecasting process at each quarter end;
an annual budgeting process which is approved by the Board;
detailed weekly and monthly reporting of performance against budget and the prior year using Cognos;
central control over key areas such as capital expenditure authorisation, contracts and financing facilities;
formal accounting policies and procedures which are regularly reviewed and publicised in the business; and
an internal audit department which monitors compliance of Company processes and procedures and whose programme of
work is overseen by the Audit Committee.
•
•
•
•
•
•
•
The Group continues to review its system of internal control to ensure compliance with best practice, whilst also having regard
to its size and the resources available.
The principal risks and uncertainties identified by the Board are set out on pages 20 to 21.
By order of the Board
Stephen Jones
Company Secretary
16 March 2016
30
238947 MMH AR pp22-pp33 16/03/2016 17:45 Page 31
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Audit Committee Report
•
review arrangements for employees
to raise concerns, in confidence,
about possible wrongdoing
in
financial reporting or other matters;
• monitor
and
review
the
effectiveness of the internal audit
function, review and approve the
internal audit function’s planned
work and meet privately with the
head of internal audit without the
presence of management; and
• make recommendations
to
the
Board in relation to the appointment
of the external auditor and oversee
the relationship with the external
auditor
including audit quality,
effectiveness and fees.
The Audit Committee’s responsibilities,
its procedures and its authority are set
terms of reference
formal
out
approved by the Board.
in
Audit Committee Meetings
The Audit Committee has an annual
agenda of matters to be considered and
is scheduled to meet four times each
year and at any other time when it is
appropriate to consider and discuss
audit and accounting related issues.
Audit Committee meetings are attended
(at the discretion and invitation of the
Committee’s Chair), by the Chairman,
executive directors, head of internal audit
and representatives of the Company’s
external auditor.
Alan Ferguson
Senior Independent Director
and Chair of the Audit Committee
Audit Committee Members
The Company’s Audit Committee was
established
and
comprises Alan Ferguson (Chair of the
Committee), Sarah Dickins, Francesca
Ecsery and Christopher Sawyer.
on Admission
the exception of Christopher
With
Sawyer
(given his position as a
nominated director of MCHL), all
members of the Audit Committee are
considered to be independent.
It is considered that the Audit Committee
possesses the necessary skills and
experience to fulfil its responsibilities
effectively with its members, through
their other business activities, having a
wide range of financial and commercial
expertise. In particular, as set out on
pages 22 and 23, the Chair of the Audit
Committee, Alan Ferguson, was an
experienced Finance Director who has
served on the boards of a number of
large
throughout his
executive career. He is the current chair
of the audit committees of Johnson
Matthey Plc, Croda International Plc and
The Weir Group Plc.
companies
Audit Committee Responsibilities
The Audit Committee’s principal
responsibilities are to:
• monitor the integrity of the financial
statements (including its annual and
interim reports, interim management
statements preliminary
results’
announcements and any other
formal announcement relating to its
financial performance);
•
•
review significant financial reporting
issues and judgments;
keep under review the effectiveness
risk
internal controls and
of
management systems;
31
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GOVERNANCE
During the Year since Admission, the
Audit Committee met formally three
times, each member’s attendance at
those meetings being set out below:
Committee
Member
Role
Attendance
record
Alan
Ferguson
Chair of the
Committee
Sarah
Dickins
Non-Executive
Director
Francesca
Ecsery
Non-Executive
Director
Christopher Non-Executive
Sawyer
Director
3/3
3/3
3/3
3/3
Between the end of the Year and the
date of this report there was a further
meeting of the Audit Committee which
was attended by all members.
Activities during the period
During the period since Admission to the
date of this report, the Audit Committee
has:
•
•
•
•
reviewed its terms of reference and
adopted an annual agenda of
matters to be considered by it;
reviewed the public announcements
relating to its financial position
including the accounting issues, key
accounting judgments and going
concern assessment in connection
with the preliminary and interim
results announcements;
approved
and
to
an
reviewed
the Company’s
amendment
policy with
the
depreciation of freehold buildings,
and with regard to intangible assets;
regard
to
for 2015,
reviewed and after challenge,
approved the external auditor’s audit
plan
their
proposed fee and statement of
Audit
independence.
Committee also reviewed the quality
the external audit and
of
including
The
•
•
•
•
recommended the re-appointment
of the external auditor.
agreed a plan to appoint a new
external audit partner for 2016 and
monitored progress against that
plan;
approved the programme of work
for the internal audit department in
2015 and considered the output of
that work. In addition, it approved
the internal audit plan for 2016;
considered the risk management
process and set a timetable for the
on going review of its effectiveness;
and
reviewed
Company’s
the
arrangements to enable employees
to raise concerns about possible
improprieties confidentially including
independent
the use of an
organisation
a
provide
to
confidential ‘whistleblowers’ hotline.
The Committee receives reports from
executive directors and also receives
reports from, and periodically meets with
the external auditor and the head of
internal audit
the absence of
management. In addition, the chair of
the Audit Committee also meets with the
external and internal auditor outside of
the formal meetings.
in
Alan Ferguson
Chair of the Audit Committee
16 March 2016
32
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Remuneration Committee Report
Sarah Dickins
Non-Executive Director
and Chair of the
Remuneration Committee
ANNUAL STATEMENT FROM THE
CHAIR OF THE REMUNERATION
COMMITTEE
I am pleased to present, on behalf of the
Board, the Remuneration Committee’s
(the “Committee”) first Remuneration
Report following Admission providing
details of the remuneration of the
Directors for the financial year ending
31 December 2015 and of our
remuneration policy and principles.
full
review of
Remuneration policy
A
the Company’s
remuneration policy and principles was
undertaken prior to Admission. A key
objective of this review was to ensure that
an appropriate remuneration policy was
in place for an AIM listed company, taking
into account current regulation and best
practice in main market listed companies.
Remuneration outcomes for the
period to 31 December 2015
For the year under review base salaries,
annual bonus targets and Performance
Share Plan (“PSP”) opportunities for both
Daksh Gupta and Mark Raban were set
on Admission.
Annual bonus opportunities are based
on the achievement of profit after tax
(“PAT”) targets. Following a successful
year with revenue growth of 13.5% and
adjusted profit before tax growth of
21.4% bonuses of 125% of basic salary
and 100% of basic salary have been
awarded to the Chief Executive and
Chief Financial Officer respectively
respect of profit-related bonus for the
twelve
ended
31 December 2015.
month
period
(“EPS”)
The Executive Directors received an IPO
Award under the Company's new PSP,
which was adopted on Admission. The
majority of the IPO Awards are subject
to demanding three year earnings per
(the “IPO
share
Performance Awards”), with 50% of the
IPO Performance Awards vesting on the
third anniversary of Admission and the
remaining 50% vesting on the fourth
anniversary of Admission. In addition,
IPO Awards without performance
targets
33
conditions
(“IPO Restricted Share
Awards”) were granted to the Executive
Directors subject only to continuing
employment. These awards vest in three
equal tranches on the first, second and
third anniversaries of Admission.
Key remuneration decisions for the
year to 31 December 2016
The Committee has considered carefully
the remuneration packages for the Chief
Executive Officer and Chief Financial
Officer.
The Committee reviewed salaries in the
year and concluded that the salaries set
at Admission remain appropriate. The
maximum annual bonus potential will be
125% of salary for the CEO and 100%
of salary for the CFO. The bonus plan
will continue to be based on PAT targets
set in line with the financial plan.
The Committee intends to make awards
in the year under the PSP subject to a
maximum of 125% of salary in respect
of the Chief Executive Officer and 100%
of salary in respect of the Chief
Financial Officer. Vesting will be subject
to the achievement of demanding three-
year EPS targets. Any shares awarded
this year to Executive Directors that vest
under the PSP must be retained for a
further year before they can be sold.
Conclusion
The directors’ remuneration policy which
follows this annual statement sets out the
Committee’s principles on remuneration
for the future and the annual report on
remuneration provides details of
remuneration for the period ended
31 December 2015. The Committee will
continue to be mindful of shareholder
views and interests, and we believe that
the Directors’ remuneration policy is
aligned with the achievement of the
Company’s business objectives.
By order of the Board
Sarah Dickins
Chair of Remuneration Committee
16 March 2016
238947 MMH AR pp34-pp41 16/03/2016 17:47 Page 34
GOVERNANCE
Directors’ Remuneration Report
REMUNERATION GOVERNANCE
Throughout the period from Admission to 31 December 2015, the Committee comprised three independent Non-Executive
Directors: Sarah Dickins (Chair of the Committee), Alan Ferguson, Francesca Ecsery alongside Christopher Sawyer who is
an appointed representative of MCHL.
The table below sets out each member’s attendance record at Committee meetings during the financial year.
Committee member Role Attendance record
Sarah Dickins Chair of the Committee 2/2
Alan Ferguson Non-Executive Director 2/2
Francesca Ecsery Non-Executive Director 2/2
Christopher Sawyer Non-Executive Director 2/2
Between the end of the Year and the date of this report there have been a further two meetings of the committee which was
attended by all members of the Remuneration Committee:
The Chair, members of the management team, as well as the Committee’s advisers, are invited to attend meetings as appropriate,
unless there is any potential conflict of interest.
The Remuneration Committee: responsibilities
The terms of reference of the Committee cover such issues as: committee membership; frequency of meetings; quorum
requirements; and the right to attend meetings. In addition, the Committee has responsibility for, amongst other things:
• making recommendations to the Board on the Company’s policy on remuneration for the Group;
•
•
•
determining and monitoring specific remuneration packages for the Chairman, each of the Executive Directors and certain
senior management in the Group, including pension rights and any compensation payments;
recommending and monitoring the level and structure of remuneration for senior management; and
recommending and overseeing the implementation of share related schemes, including scheme grants.
The Board remains responsible for the approval and implementation of any recommendations made by the Committee. The
remuneration of Non-Executive Directors other than the Chairman is determined by the Chairman of the Board and the
Executive Directors.
The Committee’s advisers
The Committee has engaged the external advisers listed below to assist it in meeting its responsibilities:
•
•
New Bridge Street (“NBS”), part of Aon plc, has been appointed as independent advisers to the Committee and provided
advice encompassing all elements of our remuneration packages. NBS are a signatory to the Remuneration Consultants’
Code of Conduct, and the Committee is satisfied that the advice that it receives is objective and independent.
During the year, the Company also received advice relating to remuneration from Dentons UKMEA LLP on tax and legal
matters respectively, in connection with the Admission.
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
REMUNERATION POLICY
The overall aim of our remuneration policy is to provide appropriate incentives that reflect the Group’s performance culture and
values, through a number of specific remuneration components (detailed in the table on the following pages). In summary, we
aim to:
•
•
•
•
attract, retain and motivate high calibre senior management and to focus them on the delivery of the Group’s strategic and
business objectives;
set base pay having had due regard to appropriate mid-market benchmarks with incentive pay structured so that top quartile
pay can be achieved for top quartile performance;
be simple and understandable, both externally and to colleagues; and
achieve consistency of approach across the senior management population to the extent appropriate.
In determining the practical application of the policy, the Committee considers a range of internal and external factors, including
pay and conditions for employees generally, shareholder feedback, and appropriate market comparisons with remuneration
practices in FTSE-listed, AIM-listed and other automotive-based companies.
The Committee is satisfied that this policy successfully aligns the interests of Executive Directors, senior managers, and other
employees with the long-term interests of shareholders, by ensuring that an appropriate proportion of total remuneration is directly
linked to the Group’s performance over both the short and the long term.
35
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GOVERNANCE
Future policy table
The main elements of the remuneration package of Executive Directors are set out below:
Purpose and link to
strategy
BASIC SALARY
Operation
Maximum opportunity
Performance metrics
Attract and retain high calibre
Executive Directors to deliver
strategy
Paid in 12 equal monthly
instalments during the year
None
Reviewed annually to reflect role,
responsibility and performance
of the individual and the Group,
and to take into account rates of
pay for comparable roles in
companies. When
similar
the
selecting comparators,
Committee has regard to, inter
alia,
revenue,
profitability, market worth and
business sector. There is no
prescribed maximum increase.
Annual rates are set out in the
annual report on remuneration
for the current year and the
following year
the Group’s
ANNUAL BONUS
Incentivises achievement of
by
business
providing
for
performance against annual
financial targets
objectives
reward
Paid in cash after the end of
the financial year to which it
relates.
Recovery and withholding
provisions apply
is
the policy of
It
the
committee to cap maximum
annual bonuses. The levels of
such caps are
reviewed
annually and are set at an
appropriate percentage of
annual salary. Currently the
maximum bonus is 125% of
base salary in respect of the
Chief Executive Officer and
100% in respect of the Chief
Financial Officer
LONG-TERM INCENTIVES – MMH PERFORMANCE SHARE PLAN
Alignment of interests with
shareholders by providing
long-term incentives designed
to incentivise and recognise
execution of the business
strategy over the longer-term
Grant of £nil cost options
under
the PSP. Options
normally vest 3 years from
grant
the
achievement of performance
and continued employment
subject
to
A 12 months post-vesting
holding period applies
for
awards made from 2016
150% of base salary (up to
200% of base salary
in
exceptional circumstances) in
any financial year
Current award levels are set in
the Annual Report on
Remuneration
Performance
is normally
measured over one year,
based solely on
financial
targets (e.g. profit after tax)
The Committee sets threshold
and maximum targets on an
annual basis
threshold
A sliding scale operates
between
and
maximum performance. No
bonus
is payable where
performance is below the
threshold
Payment of any bonus is
subject to overriding discretion
of the Committee
Vesting is subject to continuous
employment and targets linked
to the strategy of the business.
Current targets are based on
in
achievement of growth
earnings per share, but the
Committee may vary
the
targets, 25% vests for achieving
threshold performance, 100%
vests for achieving maximum
performance
36
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Purpose and link to
strategy
Operation
Maximum opportunity
Performance metrics
LONG-TERM INCENTIVES – MMH PERFORMANCE SHARE PLAN (CONTINUED)
dividend
A
provision applies
equivalent
Recovery and withholding
provisions apply at
the
discretion of the Committee
within three years of vesting
Currently these consist of
holiday entitlement, health
insurance,
life assurance
premiums, income protection
insurance. The Committee
reviews the level of benefit
provision from time to time
and has the flexibility to add or
remove benefits to reflect
changes in market practices
or the operational needs of
the Group
All Executive Directors are
entitled to participate in the
Company’s defined contribution
pension scheme or to receive a
cash allowance in lieu of
pension contributions. Only
base salary is pensionable
BENEFITS
Provide benefits consistent
with role and in support of the
personal health and wellbeing
of employees
PENSION
Attract and retain Executive
Directors for the long term by
providing
for
retirement
funding
The cost of providing benefits
is borne by the Company and
varies from time to time
None
None
of
base
The
The Chief Executive receives a
salary
16%
contribution.
Chief
Financial Officer participates in
defined
the Company’s
contribution pension scheme
whereby the Company makes
an 8% of base salary
contribution, conditional upon
the Chief Financial Officer
making a matched contribution
of 8%
SHARE OWNERSHIP GUIDELINES
Increase alignment between
the Executive Directors and
shareholders
Executive Directors
are
expected to retain 50% of the
net of tax vested PSP shares
until the guideline level is met.
NON-EXECUTIVE DIRECTOR FEES (“NED”)
At least 100% of base salary
for Executive Directors
None
To attract NEDs who have a
broad range of experience
and skills to oversee the
implementation
our
strategy
of
NED fees are determined by
the Board (excluding NEDs)
within the limits set out in the
Articles of Association and
are paid in 12 equal monthly
instalments during the year
report
Annual rate set out in the
annual
on
remuneration for the current
year and the following year. No
prescribed maximum annual
increase
None
37
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GOVERNANCE
Directors’ service contracts, notice periods and termination payments
Provision
Details
Notice periods in Executive Directors’
service contracts
Maximum of 12 months by Company or Executive Director.
Executive Directors may be required to work during the notice period.
Compensation for loss of office
In the event of termination, service contracts provide for payments of base salary,
pension and benefits only over the notice period.
Treatment of annual bonus on
termination
Treatment of unvested PSP awards
Outside appointments
There is no contractual right to any bonus payment in the event of termination
although in certain "good leaver" circumstances the Remuneration Committee
may exercise its discretion to pay a bonus for the period of employment and
based on performance assessed after the end of the financial year.
The default treatment for any Ordinary Share-based entitlements under the PSP
is that any outstanding awards lapse on cessation of employment. However, in
certain prescribed circumstances, or at the discretion of the Committee “good
leaver” status can be applied. In these circumstances a participant’s awards vest
subject to the satisfaction of the relevant performance criteria and, ordinarily, on a
time pro-rata basis, with the balance of the awards lapsing.
Other directorships are permitted with prior agreement
Daksh Gupta is a director of BEN - Motor and Allied Trades Benevolent Fund.
Mark Raban is a director of Precise Finance Limited. Precise Finance Limited is
the company owned by Mr Raban and used to provide consultancy services
prior to his appointment to Marshall Motor Holdings plc.
Non-executive directors
All Non-Executives are subject to re-election every three years. No compensation
payable if required to stand down
In the event of the negotiation of a compromise or settlement agreement between the Company and a departing Director, the
Committee may make payments it considers reasonable in settlement of potential legal claims. Such payments may also include
reasonable reimbursement of professional fees in connection with such agreements.
The Committee may also include the reimbursement of fees for professional or outplacement advice in the termination package,
if it considers it reasonable to do so. It may also allow the continuation of benefits for a limited period.
Dates of appointment
DIRECTOR
Peter Johnson
Daksh Gupta
Mark Raban
Alan Ferguson
Sarah Dickins
Francesca Ecsery
Date of appointment
27 June 2014
1 October 2008
2 April 2015
11 March 2015
11 March 2015
25 March 2015
Christopher Sawyer
2 April 2015
Copies of Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office.
38
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Annual Report on Remuneration
Prior to Admission, the cost of Directors services was met by a management charge to the parent company, Marshall of
Cambridge (Holdings) Limited. The management charge in 2015 was £1,127,000 inclusive of £656,000 in respect of historic
LTIP liabilities for the highest paid director which crystallised when the Company’s shares were admitted to AIM (2014: £1,818,000).
The remuneration of the Directors for the period from Admission to 31 December 2015 is as follows:
Basic
salary
£’000
298
187
485
-
-
-
-
-
-
Executive Directors
Daksh Gupta
Mark Raban
Total
Non-Executive Directors
Peter Johnson
Alan Ferguson
Sarah Dickins
Francesca Ecsery
Christopher Sawyer
Total
Aggregate directors
emoluments
485
Fees
£’000
Benefits
£’000
Pension
£’000
Annual
bonuses*
£’000
Long term
incentives
£’000
-
-
-
97
37
34
30
30
228
228
14
3
17
-
-
-
-
-
-
50
14
64
-
-
-
-
-
-
500
250
750
-
-
-
-
-
-
17
64
750
-
-
-
-
-
-
-
-
-
-
Total
£’000
862
454
1,316
97
37
34
30
30
228
1,544
The benefits above include items such as medical cover, life assurance premiums and income protection insurance.
* As described on page 33 annual bonuses are presented for the year as a whole and have been awarded in respect of the 12 month period ended
31 December 2015.
Directors’ IPO Awards
The aggregate awards made on Admission are set out below:
Daksh Gupta
Mark Raban
Number at
1 January 2015
Lapsed
in Year
-
-
-
-
Granted
in Year
1,073,824
335,570
Number at
31 December 2015
1,073,824
335,570
Details of the IPO Awards granted during the year are as follows:
Scheme
Date of
grant
Earliest
exercise
date
Exercise
price
(pence)
Daksh Gupta
IPO Performance Award
2 April 2015
2 April 2018
IPO Restricted Share Award
2 April 2015
2 April 2016
Mark Raban
IPO Performance Award
2 April 2015
2 April 2018
IPO Restricted Share Award
2 April 2015
2 April 2016
Nil
Nil
Nil
Nil
Market
value on
date of
grant
(pence)
149.0
149.0
149.0
149.0
Number of
options
granted
671,140
402,684
268,456
67,114
The performance condition applying to each IPO Performance Award is explained in Note 25 to the Consolidated
Financial Statements.
39
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GOVERNANCE
Statement of directors’ shareholding
Our Executive Directors are expected to build up and maintain a 100% of salary shareholding in the Company and are expected
to retain 50% of the net of tax vested PSP shares until the guideline level is met. The Directors who held office at 31 December
2015 and their connected persons had interests in the issued share capital of the Company as at 31 December 2015 as follows:
Peter Johnson
Daksh Gupta
Mark Raban
Alan Ferguson
Sarah Dickins
Francesca Ecsery
Christopher Sawyer
Number of
ordinary shares
beneficially held
on admission Acquisitions
/disposals
(02/04/15)
134,228
671,140
33,557
33,557
6,711
2,013
16,100
22,370
5,798
-
-
-
Number of
ordinary
shares
beneficially
held as at
31/12/15
150,328
693,510
39,355
33,557
6,711
2,013
134,228
80,270
214,498
Outstanding
PSP awards
-
1,073,824
335,570
-
-
-
-
No share options were vested but unexercised as at 31 December 2015.
The middle market price of the shares as at 31 December 2015 was 184.5p and the range during the financial period since
flotation was 161.5p to 192.0p.
Implementation of remuneration policy for the year ending 31 December 2016
The annual salaries and fees to be paid to directors in the year ending 31 December 2016 are set out below, together with any
increase expressed as a percentage.
Peter Johnson
Daksh Gupta
Mark Raban
Alan Ferguson
Sarah Dickins
Francesca Ecsery
Christopher Sawyer
31 December 2016 31 December 2015
£’000
£’000
Increase
%
130
400
250
55
45
40
40
130
400
250
50
45
40
40
-
-
-
10%
-
-
-
Following a review of Non-Executive Director fees it was decided to increase the fee paid to Alan Ferguson from £50,000 to
£55,000 (which is inclusive of all committee roles), the increase reflects his significant breadth of industry experience and
outstanding contribution. All other fees remain unchanged.
The figures shown in respect of 31 December 2015 have been annualised from those actually paid for the period from Admission
to that date.
The maximum annual bonus for the year ending 31 December 2016 will be 125% of salary for the CEO and 100% of salary for
the CFO. Awards are determined based on PAT targets. Recovery and withholding provisions will apply.
The Committee intends to grant options under the PSP in 2016. These options will be £nil cost options over a value of shares
subject to a maximum of 125% of salary in respect of the Chief Executive Officer and 100% of salary in respect of the
Chief Financial Officer where the vesting is subject to targets based on the achievement of earnings per share targets.
By order of the Board
Sarah Dickins
Chair of the Remuneration Committee
16 March 2016
40
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
The Directors are required to prepare Consolidated financial statements for each financial year in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The Directors have elected to prepare the parent
company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the Group and Company and of the profit and loss of the Group for that
period. In preparing those Consolidated financial statements, the Directors are required to:
•
•
•
•
select and apply accounting policies in accordance with IAS 8;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial
performance;
state that the group has complied with IFRS, subject to any material departures disclosed and explained in the financial
statements.
In preparing the Company financial statements, the Directors are required to:
•
select suitable accounting policies and apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
•
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
prepared the financial statements on a going concern basis unless it is inappropriate to presume that the company will not
continue in business.
The Directors are responsible for keeping adequate accounting records which are sufficient to disclose with reasonable accuracy
at any time the financial position of the Company and enable them to ensure that the financial statements comply with the
Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible
for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
41
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FINANCIAL STATEMENTS
Independent Auditors’ Report to the members
of Marshall Motor Holdings plc
Report on the Financial Statements
We have audited the financial statements of Marshall Motor Holdings plc for the year ended 31 December 2015 which comprise
the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated
Statement of Financial Position, the Consolidated Cash Flow Statement, the Parent Company Statement of Financial Position,
the Parent Company Statement of Changes in Equity and the related notes 1 to 29 for the group financial statements and
notes 1 to 11 for the parent company financial statements. The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company
financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice), including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Statement of Directors’ Responsibilities on page 41, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the group’s and the parent company’s circumstances and
have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information
in the annual report and financial statements to identify material inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we
consider the implications for our report.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31
December 2015 and of the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of
Ireland”; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
42
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Independent Auditors’ Report to the members
of Marshall Motor Holdings plc
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our
opinion:
•
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Bob Forsyth (Senior Statutory Auditor)
For and on behalf of
Ernst & Young LLP
Cambridge
16 March 2016
43
238947 MMH AR pp44-pp65 FN 16/03/2016 17:52 Page 44
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
Revenue
Cost of Sales
Gross Profit
Operating expenses
Group operating profit
Finance costs
Profit before tax and acquisition costs
Acquisition costs
Profit before taxation
Taxation
Profit for the year
Attributable to:
Owners of the parent
Non-controlling interests
Note
3
4
7
11
8
2015
£’000
2014
£’000
1,232,761
1,085,883
(1,087,452)
(959,712)
145,309
126,171
(127,063)
(110,928)
18,246
15,243
(2,883)
15,838
(475)
15,363
(3,649)
11,714
11,721
(7)
11,714
(2,350)
13,050
(157)
12,893
(2,957)
9,936
9,939
(3)
9,936
Total comprehensive income for the year net of tax
11,714
9,936
Attributable to:
Owners of the parent
Non-controlling interests
Earnings per share (expressed in pence per share)
Basic earnings per share
Diluted earnings per share
9
9
11,721
(7)
11,714
19.7
19.2
9,939
(3)
9,936
282.6
282.6
44
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Consolidated Statement of Changes in Equity
Note
Share
capital
£’000
2,250
Equity
attributable
to
Share
Non-
Retained owners of controlling
interests
£’000
premium earnings the parent
£’000
£’000
£’000
58,431
60,681
9,939
9,939
39
(3)
Total
equity
£’000
60,720
9,936
Balance at 1 January 2014
Profit for the year
Total comprehensive income
Transactions with owners
Dividends paid
10
Balance at 31 December 2014
Profit for the year
Issue of share capital
-
-
-
2,250
-
25
47,181
19,672
-
-
-
-
-
-
9,939
9,939
(3)
9,936
(4,500)
(4,500)
-
(4,500)
63,870
66,120
36
66,156
11,721
-
11,721
66,853
(7)
-
11,714
66,853
Total comprehensive income
47,181
19,672
11,721
78,574
(7)
78,567
Transactions with owners
Dividends paid
Share based payments charge
Deferred tax on share based
payments
10
25
23
-
-
-
-
-
-
(15,448)
(15,448)
556
82
556
82
-
-
-
(15,448)
556
82
Balance at 31 December 2015
49,431
19,672
60,781
129,884
29
129,913
45
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FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
At 31 December 2015
Note
2015
£’000
2014
£’000
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment property
Investments
Deferred tax asset
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Shareholders’ equity
Share capital
Share premium
Retained earnings
Equity attributable to owners of the parent
Share of equity attributable to non-controlling interests
Total equity
Non-current liabilities
Loans and borrowings
Trade and other payables
Provisions
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Loans and borrowings
Trade and other payables
Provisions
Current tax liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
11
11
12
13
14
23
17
18
19
25
25
21
20
22
23
21
20
22
37,791
453
107,285
1,920
10
58
22,055
-
91,037
1,920
10
94
147,517
115,116
240,632
42,724
24,130
307,486
455,003
49,431
19,672
60,781
129,884
29
129,913
24,677
8,269
289
1,885
35,120
26,700
260,217
762
2,291
289,970
325,090
455,003
163,011
73,181
1,826
238,018
353,134
2,250
-
63,870
66,120
36
66,156
25,205
8,579
-
1,783
35,567
28,342
221,442
-
1,627
251,411
286,978
353,134
The financial statements on pages 44 to 80 were approved for issue by the Board of Directors on 16 March 2016:
Daksh Gupta
Chief Executive Officer
Mark Raban
Chief Financial Officer
46
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Consolidated Cash Flow Statement
For the year ended 31 December 2015
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation and amortisation
Finance costs
Share based payment charge
(Profit)/Loss on disposal of property, plant & equipment
Changes in working capital:
(Increase)/decrease in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Note
11/12
7
25
Increase/(decrease) in provisions
22
Tax paid
Interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investment property
Acquisition of subsidiary, net of cash acquired
Proceeds from disposal of property, plant and equipment
Net cash outflow from investing activities
Cash flows from financing activities
Proceed from borrowings
Repayment of borrowings
Dividends paid
Issue of share capital net of costs
Net cash (outflow)/ inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at period end
Reconciliation of net cash flow to movement in net debt
Increase in net cash
Repayment of borrowings
Proceeds of borrowings
Movement in net debt
Opening net debt
Net debt at period end
47
11/12
13
11
21
21
10
25
21
21
2015
£’000
2014
£’000
15,363
12,893
21,087
2,883
556
(61)
20,995
2,350
-
(55)
39,828
36,183
(77,621)
(13,816)
30,457
38,465
1,051
(7,648)
(3,804)
(2,883)
25,493
5,646
22,202
-
14,032
(4,145)
(2,350)
43,720
(39,573)
(33,059)
-
(21,498)
8,646
(52,425)
28,642
(30,811)
(15,448)
66,853
49,236
22,304
1,826
24,130
22,304
30,811
(28,642)
24,473
(51,720)
(27,247)
(100)
(15,788)
8,382
(40,565)
25,263
(23,851)
(4,500)
-
(3,088)
67
1,759
1,826
67
23,851
(25,263)
(1,345)
(50,375)
(51,720)
238947 MMH AR pp44-pp65 FN 16/03/2016 17:52 Page 48
FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
1. Accounting policies
Basis of preparation
Marshall Motor Holdings plc is a Public Limited Company which is listed on the Alternative Investment Market (“AIM”) and is
incorporated and domiciled in the United Kingdom. The address of the registered office is Airport House, The Airport, Cambridge,
CB5 8RY. The registered number of the Company is 2051461. The consolidated financial statements of Marshall Motor Holdings
plc have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs
as adopted by the EU), International Financial Reporting Standards Interpretations Committee (“IFRICs”) interpretations and the
Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared
on the going concern basis under the historical cost convention as modified by the revaluation of investments and investment
properties. The consolidated financial statements include the results of all subsidiaries wholly owned by Marshall Motor Holdings
plc as listed on page 87 of the annual report.
The Group’s first financial statements under IFRS were those for the year ended 31 December 2014 as disclosed in the document
prepared for the Group’s Admission. The comparative information for 2014 in these financial statements is as reported in the
Admission document and the transition adjustments on conversion are disclosed in our Admission document which is available on
our website: www.mmhplc.com
IFRS 1 allows certain exemptions in the application of particular standards to prior periods in order to assist companies with the
transition process. The Group has elected:
•
•
not to restate its business combinations made prior to 1 January 2012 to comply with IFRS 3 Business Combinations;
to retain previous UK GAAP carryng values of property, plant and equipment, treating any historic revelations as deemed cost
at 1 January 2012.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Group’s accounting policies. The estimates and
judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are set
out in note 2. The Directors consider that the accounting policies set out below are the most appropriate and have been consistently
applied.
Standards and interpretations adopted by the Group in the year ended 31 December 2015
The following standards, amendments and interpretations were in issue, but were not yet effective at the balance sheet date. These
standards have not been early adopted by the Group.
•
•
•
IFRS 9 “Financial Instruments”
IFRS 15 “Revenue from Contracts with Customers”
IFRS 16 “Leasing”
Amendments to IFRS 9 are due to take effect from accounting periods commencing from 1 January 2018. The Directors do not
anticipate that the adoption of IFRS 9, where relevant in future periods, will have a material impact on the Company’s financial
statements. IFRS9 has not yet been adopted by the EU.
IFRS 15 is due to take effect from accounting periods commencing from 1 January 2018. This new revenue standard may lead to
new treatments resulting from considerations of transfer of control, variable consideration, the time value of money, and allocation
of transaction prices based on relative stand-alone selling prices. The Directors are currently assessing the impact of these changes
on the accounting policies of the Group. IFRS 15 has not yet been adopted by the EU.
IFRS 16 is due to take effect from accounting periods commencing from 1 January 2019 and makes substantial changes to how
lease arrangements are accounted for. The Directors are currently assessing the impact of these changes on the accounting
policies of the Group.
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
Going concern
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 financial statements are signed.
For these reasons they continue to adopt the going concern basis in preparing the Group’s financial statements.
Basis of consolidation
(i)
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control potential voting rights
that presently are exercisable or convertible are taken into account. Control is generally accompanied by a shareholding of more
than one half of the voting rights. The financial information of subsidiaries is included in the consolidated financial information from
the date that control commences until the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition
of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity
interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree
on an acquisition by acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised
amounts of acquiree’s identifiable net assets.
Acquisition related costs are expensed as incurred and are not reported within adjusted profit before tax.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39
either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not
re-measured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date
fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as
goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less
than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised
directly in the income statement.
(ii) Transactions eliminated on consolidation
Intragroup balances and any gains and losses or income and expenses arising from intragroup transactions, are eliminated in
preparing the consolidated financial information. Losses are eliminated in the same way as gains but only to the extent that there
is no evidence of impairment.
(iii) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control
is lost. The change in carrying amount is recognised in profit or loss. The fair value is the initial carrying amount for the purposes
of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts
previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income
are reclassified to profit or loss.
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
Segmental reporting
Operating segments are reported in a manner consistent with the internal management reporting provided to the chief operating
decision makers. The chief operating decision maker who is responsible for allocating resources and assessing performance of
the operating segments has been identified as the Chief Executive Officer.
Property, plant and equipment
Investment properties
Land and buildings are shown at fair value based on formal valuations by external independent valuers performed at least every
three years and updated each year for the Directors’ estimate of value. Valuations are performed with sufficient regularity to ensure
that the fair value of a revalued asset does not differ materially from its carrying amount. Investment property is not depreciated.
Any surplus or deficit on revaluation is taken to profit or loss.
Owned assets
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes the
original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
When parts of an item of property, plant and equipment have different useful lives those components are accounted for as separate
items of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the
income statement.
Leased assets
Leases under which the Group assumes substantially all the risks and rewards of ownership of an asset are classified as finance
leases. Property, plant and equipment acquired under finance leases is recorded at fair value or, if lower, the present value of
minimum lease payments at inception of the lease, less depreciation and any impairment.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance
charges, are included in the other long-term payables. The interest element of the finance cost is charged to the income statement
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The property, plant and equipment under finance leases is depreciated over the shorter of the useful life of the asset and lease
term.
Depreciation
Depreciation is charged to profit or loss on a straight line basis over the estimated useful lives of each part of an item of property,
plant and equipment. Estimated residual values are included in the calculation of depreciation.
The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset
and the lease term. The estimated useful lives of property, plant and equipment are set out below.
•
•
•
•
•
Leasehold improvements – depreciated over shorter of term of lease or 10 years
Fixture and fittings – 4 years
Computer equipment – 2-5 years
Freehold buildings – 50 years
Freehold land is not depreciated
The residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the
fair value of the identifiable net assets acquired.
Goodwill is not subject to amortisation but is assessed for impairment. For the purpose of impairment testing, goodwill acquired in
a business combination is allocated to each of the cash generating units (“CGUs”), or groups of CGUs, that are expected to benefit
from the synergies of the combination. The group of CGUs to which the goodwill is allocated (being groups of dealerships
connected by manufacturer brand) represents the lowest level within the entity at which the goodwill is monitored for internal
management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of goodwill is compared to the recoverable amount which is the higher of value in
use or fair value less costs of disposal. Value in use calculations are performed using cash flow projections, discounted at a
pre-tax rate which represents the time value of money and asset specific risks.
Other intangible assets
Other intangible assets are stated at cost less accumulated amortisation and any impairment losses. Other intangible assets
include computer software and licences. Costs comprise purchase price from third parties and amortisation is calculated on a
straight line basis over the assets’ expected economic lives, which varies depending on the nature of the asset. Licences are
amortised over the length of the licence and software is amortised between 3-5 years. Amortisation is included within administrative
expenses in the Statement of Comprehensive Income.
Measurement period adjustment
The Group assesses the fair value of assets acquired and finalises purchase price allocation within the measurement period
following acquisition and in accordance with IFRS 3. This includes an exercise to evaluate for other material separately identifiable
intangible assets such as brand value, supplier agreements, franchise relationships and customer relationships.
The finalisation of the purchase price allocation may result in a change in the fair value of assets acquired.
In accordance with IFRS 3 measurement period adjustments are reflected in the financial statements as if the final purchase price
allocation had been completed at the acquisition date.
Impairment of non-financial assets
Assets not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets
other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets
Classification
The Group classifies its financial assets as loans and receivables. Management determines the classification of its financial assets
at initial recognition.
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that arise principally through the
provision of services to customers. They are initially recognised at fair value and are subsequently stated at amortised cost using
the effective interest method. They are included in current assets except for maturities greater than 12 months after the end of the
reporting period. Loans and receivables comprise mainly cash and cash equivalents and trade and other receivables.
Impairment of financial assets
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the
counterparty, or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the
terms receivable. The amount of such a provision is the difference between the net carrying amount and the present value of the
future expected cash flows associated with the impaired receivable.
For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss
being recognised within other operating costs in the income statement. On confirmation that the trade receivable will not
be collectable the gross carrying value of the asset is written off against the associated provision.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right
to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability
simultaneously.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location
and condition are included and cost is based on price including delivery costs less specific trade discounts. Net realisable value is
based on estimated selling price less further costs to be incurred to disposal. Provision is made for obsolete, slow-moving or
defective items where appropriate.
Inventories held on consignment are recognised on the balance sheet with a corresponding liability when the terms of a
consignment agreement and industry practice indicate that the principal benefit of owning the inventory (the ability to sell it) and
principal risks of ownership (stockholding cost, responsibility for safekeeping and some risk of obsolescence) rest with the Group.
Cash, cash equivalents and net debt
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank
overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component
of cash and cash equivalents for the purpose of the statement of cash flows and are presented in current liabilities.
Net debt as presented in the cash flow statement comprises asset backed finance and bank borrowings net of cash balances.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. These are
classified as current liabilities if payment is due in one year or less. If payment is due at a later date they are presented as non-
current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
method.
Trade payables include the liability for vehicles held on consignment with the corresponding asset included within inventories.
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income
statement over the period of the borrowings using the effective interest method.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past
event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material provisions
are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the
time value of money and, when appropriate, the risks specific to the liability. The increase in the provision due to passage of time
is recognised in finance costs.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in share
premium as a deduction from the proceeds.
Share based payments
The Group allows employees to acquire shares in the Company through share option schemes. The fair value of share options
granted is recognised as an employee expense with a corresponding increase in equity. The Group operates a number of equity
settled, share based compensation plans. The total amount to be expensed over the vesting year is determined by reference to
the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales
growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest.
At each balance sheet date the entity revises its estimates of the number of options that are expected to vest. It recognises the
impact of the revision to original estimates, if any, in the income statement with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share
premium when the options are exercised.
Revenue
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods
supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue
can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have
been met for each of the Group’s activities, as described below.
Revenue comprises sales and charges for vehicles sold and services rendered during the year including sales to other Marshall
of Cambridge (Holdings) Limited group companies but excluding inter-company sales within the Group. Revenue from the sale of
new and used vehicles is recognised at the point at which a customer takes possession of a vehicle. Revenue in respect of other
services is recognised once the service has been provided.
The income received in respect of warranty policies sold and administered by the Group is recognised over the period of the policy
on a straight line basis. Revenue also comprises commissions receivable for arranging vehicle financing and related insurance
products. Commissions are based on agreed rates and the income is recognised when the vehicle is recognised as sold. The
Group acts as agent on behalf of principals and the commission earned is also recorded at an agreed rate when the transaction
has occurred.
Vehicles leased out under finance leases, which are leases where substantially all the risks and rewards of ownership of the assets
are passed to the lessee and hire purchase contracts, are both shown as debtors in the balance sheet at the amount of the net
investment in the lease. The interest elements of the rental obligations are credited to the profit and loss over the period of the
lease and are apportioned based on a pattern reflecting a constant periodic rate of return. Finance lease income is presented in
revenue.
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
Vehicles leased out under operating leases are held within “Property, plant and equipment” at their cost to the Group and are
depreciated to their residual values over the terms of the leases.
Rental income from finance leases is recognised in revenue on a straight line basis over the period of the lease. These assets are
transferred into inventory at their carrying amount when they cease to be rented and they become available for sale as part of the
Groups ordinary course of business
Deferred income
Where the Group receives an amount in advance of future income streams the value of the receipt is amortised over the period
of the contract as the services are delivered. The unexpired element is disclosed in other liabilities as deferred revenue.
Rebate income
The Group receives income in the form of rebates from suppliers and other partners. These are generally based on achieving
certain objectives such as specific volumes. Rebate income is recognised as a credit to cost of sales at the point when it is
reasonably certain that the targets have been achieved and when the income can be measured reliably based on the terms of the
contract.
Dividend distribution
Final dividends to the Company’s shareholders are recognised as a liability in the Group’s financial statements in the period in
which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when they are paid.
Leases
The costs associated with operating leases are taken to the income statement on an accruals basis over the period of the lease.
Where the Group enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset the lease
is treated as a “finance lease”. The accounting policy for leased assets is disclosed in Property, Plant and Equipment above.
Rental payable under operating leases is charged to profit and loss on a straight line basis over the lease term.
Net finance costs
Finance costs
Finance costs comprise interest payable on borrowings, stock financing charges and other interest.
Finance income
Finance income comprises interest receivable on funds invested. Interest income is recognised in the income statement as it
accrues using the effective interest method.
Income tax
Income tax for the years presented comprises current and deferred tax. Income tax is recognised in profit or loss except to the
extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
1. Accounting policies (continued)
The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of other assets or
liabilities that affect neither accounting nor taxable profit; nor differences relating to investments in subsidiaries to the extent that
they are unlikely to reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the
balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be
realised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred
income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the
related dividend.
Employee benefits: Pension obligations
Employees of the Group are members of two pension schemes; the Marshall Group Executive Pension Plan, (‘the Plan’) which is
operated by Marshall of Cambridge (Holdings) Limited; and has two sections, one of which, operates on a defined benefit basis
and one of which operates on a defined contribution basis. The second is a defined contribution scheme.
For the defined contribution arrangements the Group charges contributions to the Income Statement as they become payable in
accordance with the rules of the scheme. For the defined benefit section of the Plan the Group accounts for its contributions as if
it were a defined contribution scheme. There is no contractual agreement or stated policy for charging the net defined benefit cost
between the individual companies within the Marshall of Cambridge (Holdings) Limited Group.
Exceptional items
Items which are both material and non-recurring are presented as exceptional items within their relevant consolidated income
statement category. The separate reporting of exceptional items helps provide additional useful information regarding the Group’s
underlying business performance. Examples of events which may give rise to the classification of items as exceptional include
material transaction costs, closure costs, assets impairment, one-off tax items and pensions. Exceptional items are not included
within adjusted profit before tax.
2. Critical accounting judgements and estimates
The Group makes estimates and judgements concerning the future. The estimates and judgements that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities are discussed below:
Valuation and impairment of goodwill and other indefinite life assets
The Group reviews the goodwill arising on the acquisition of subsidiaries or businesses and any other indefinite life assets with an
indefinite life for impairment annually or more frequently if events or changes in circumstances indicate a potential impairment.
The impairment review is performed by projecting the future cash flows, excluding finance and tax, based upon budgets and plans
and making appropriate judgements about rates of growth and discounting these using a rate that takes into account the time
value of money and the risk inherent in the business. If the present value of the projected cash flows is less than the carrying
value of the underlying net assets and related goodwill an impairment charge would be taken to the profit or loss in the Income
Statement unless the fair value less cost of disposal of the related asset is higher than the carrying value.
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
2. Critical accounting judgements and estimates (continued)
Estimated useful life of intangibles, property, plant and equipment and impairment testing
The Group estimates the useful life and residual values of intangible assets, property, plant and equipment and reviews these
estimates at each financial year end. The Group also tests for impairment when a trigger event occurs or annually as appropriate.
Pension benefits
As described in notes 1 and 28 the Group accounts for any contributions payable to the Plan and the Marshall Motor Holdings
Defined Contribution Pension Scheme as defined contribution schemes. The Group has paid all of its contributions due under the
current recovery plan to remove the funding deficit on a technical provisions basis in the defined benefit section of the Plan revealed
by the actuarial valuation as at 31 December 2013. The next actuarial valuation of the Plan is expected as at 31 December 2016
and the extent of any future cash contributions by the Group will be considered then.
Inventory valuation
Motor vehicle inventories are stated at the lower of cost and net realisable value (fair value less costs to sell). Fair values are
assessed using reputable industry valuation data which is based upon recent industry activity and forecasts. Whilst this data is
deemed representative of current value it is possible that ultimate sales values can vary from those applied.
Assets held for contract hire
Vehicles are depreciated on a straight line basis to residual values which mirror those utilised in the creation of the original client
contract. Care is taken to minimise the risk of an exposure to losses at contract end, and the entire portfolio is reassessed utilising
an independent valuation tool throughout the life of the underlying contracts.
3. Segmental information
Management has determined the operating segments based on the operating reports reviewed by the Chief Executive Officer that
are used to assess both performance and strategic decisions. These results have been determined using consistent accounting
policies as the overall financial statements. Management has identified that the Chief Executive Officer is the chief operating
decision maker in accordance with the requirements of IFRS 8 ‘Operating Segments’.
The business is split into two main operating segments generating revenue and a third support segment. No significant judgements
have been made in determining the reporting segments.
•
•
•
Retail – sales and servicing of motor vehicles and ancillary services
Leasing – leasing of vehicles to end consumers and fleet customers
Unallocated – administrative and asset management functions in support of the wider business
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, leasing, vehicle service and other related services. All revenue is generated in the
UK. Depreciation presented in the segmental note is restricted to assets other than assets held for contract rental, on the basis
that depreciation on our leasing fleet is presented within cost of sales.
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
3. Segmental information (continued)
For the year ended 31 December 2015
Revenue
Total revenue
Total revenue from external customers
Depreciation and amortisation
Segment operating profit/(loss)
Finance cost
Profit before tax and acquisition costs
Acquisition costs
Profit/(loss) before taxation
Total assets
Total liabilities
Additions in the period
Retail
(see below)
£’000
Leasing
£’000
Unallocated
£’000
Total
£’000
1,195,506
1,195,506
(3,801)
20,258
(1,498)
18,760
-
18,760
294,652
223,029
37,022
37,022
(8)
6,001
(1,125)
4,876
-
4,876
74,691
60,356
233
233
(18)
(8,013)
(260)
(7,798)
(475)
1,232,761
1,232,761
(3,827)
18,246
(2,883)
15,838
(475)
(8,273)
15,363
85,660
455,003
41,705
325,090
Property, plant,equipment and software assets
16,585
29,738
-
46,323
For the year ended 31 December 2014
Revenue
Total revenue
Total revenue from external customers
Depreciation and amortisation
Segment operating profit/(loss)
Finance cost
Profit before tax and acquisition costs
Acquisition costs
1,050,473
1,050,473
(3,657)
15,748
(1,210)
14,538
-
35,179
35,179
(9)
5,073
(1,140)
3,933
-
231
231
(16)
(5,578)
-
(5,421)
(157)
1,085,883
1,085,883
(3,682)
15,243
(2,350)
13,050
(157)
Profit/(loss) before taxation
14,538
3,933
(5,578)
12,893
Total assets
Total liabilities
Additions in the period
Property, plant and equipment
243,571
70,407
39,156
353,134
185,791
57,405
43,782
286,978
11,221
27,265
-
38,486
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
3. Segmental information (continued)
Retail revenue is derived from a number of service lines, principally being new vehicle sales and aftersales, as set out below,
New
Used
Aftersales & other
Internal
Total
4. Operating expenses
Employee costs (note 6)
Depreciation on property, plant and equipment
Amortisation on other intangibles
Profit on disposal of property plant and equipment
Operating lease rentals - property
Management charges from Marshall of Cambridge (Holdings) Limited
Auditors’ remuneration (note 5)
Legal and professional charges
Other expenses
2015
£’000
637,774
459,235
127,840
2014
£’000
544,835
413,066
117,857
(29,343)
(25,285)
1,195,506
1,050,473
2015
£’000
64,562
3,600
227
(61)
6,907
1,127
355
1,100
2014
£’000
56,564
3,010
-
(55)
6,608
1,818
235
1,843
49,246
127,063
40,905
110,928
£982,000 of the management charges from Marshall of Cambridge (Holdings) Limited in 2015 are related to pre-admission costs.
5. Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of the parent Company and
consolidated financial statements
Fees payable to the Company’s auditors and its associates for other services
- audit of Group’s subsidiaries
2015
£’000
2014
£’000
245
110
355
175
60
235
In addition, fees of £560,000 were payable to the Company’s auditors for reporting accountant services provided as part of the
Admission to AIM.
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Notes to the Consolidated Financial Statements
6. Employees and Directors
a)
Employee costs for the Group during the year:
Wages and salaries
Social security costs
Other pension costs
Employee staff costs are included in:
Cost of Sales
Operating expenses
Average monthly number of people (including Executive Directors) employed:
Retail
Leasing
Unallocated
b) Directors’ emoluments
The Directors’ aggregate emoluments in respect of qualifying services were:
Aggregate emoluments
Pension contribution
Highest paid Director
Aggregate emoluments including pension contribution
Following Admission the highest paid director is different in 2015 compared to 2014.
2015
£’000
67,219
7,051
1,229
75,499
2015
£’000
10,937
64,562
75,499
2015
2,115
40
214
2,369
2015
£’000
1,480
64
1,544
2015
£’000
862
2014
£’000
59,149
6,104
881
66,134
2014
£’000
9,570
56,564
66,134
2014
1,929
38
193
2,160
2014
£’000
262
32
294
2014
£’000
294
Prior to Admission, the cost of Directors services was met by a management charge to the parent company, Marshall of Cambridge
(Holdings) Limited. The management charge in 2015 was £1,127,000 inclusive of £656,000 in respect of historic LTIP liabilities for
the highest paid director which crystallised when the Company’s shares were admitted to AIM (2014: £1,818,000). The Directors
emoluments set out above include Directors’ salaries since the Admission.
59
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
6. Employees and Directors (continued)
c) Key management compensation
The following table details the aggregate compensation paid in respect of key management personnel – which comprises both
senior management who sit on the operational board and statutory directors.
2015
£’000
2,855
311
290
3,456
2015
£’000
(33)
1,418
1,498
2,883
2015
£’000
4,258
210
4,468
(840)
(223)
244
-
(819)
3,649
2014
£’000
2,110
163
30
2,303
2014
£’000
-
1,140
1,210
2,350
2014
£’000
3,490
122
3,612
(377)
-
-
(278)
(655)
2,957
Wages and salaries
Post-employment benefits
Compensation for loss of office
Details of the share option schemes are provided in note 25.
7. Finance costs
Interest income on short term bank deposits
Interest payable on bank borrowings and asset backed finance
Stock financing charges and other interest
Net finance costs
8. Taxation
Current tax
Current tax on profits for the year
Adjustments in respect of prior years
Total current tax
Deferred tax
Origination and reversal of temporary differences
Impact of change in tax rates
Adjustments in respect of prior years
Other timing differences
Total deferred tax (note 23)
Total taxation charge
60
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
8. Taxation (continued)
The tax charge for the year differs from the standard rate of corporation tax in the UK of 20.25% (2014: 21.5%). The differences
are explained below.
Profit before tax
Profit multiplied by the rate of corporation tax of 20.25% (2014: 21.5%)
Effects of:
Other expenses not deductible
Exceptional disallowable in respect of acquisition costs
Non-taxable income
Adjustments in respect of prior years
Utilisation of brought forward losses
Impact of change in tax rate
Total taxation charge
2015
£’000
15,362
3,111
239
96
-
454
(51)
(200)
3,649
2014
£’000
12,893
2,772
520
-
(203)
(156)
-
24
2,957
The applicable tax rate for the current year is 20.25% (2014: 21.50%) following the reduction in the main rate of UK corporation
tax from 21% to 20% with effect from 1 April 2015.
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and to 20% (effective from 1 April 2015)
were substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective from
1 April 2020) were substantively enacted on 26 October 2015.
These changes will reduce the Group’s future current tax charge accordingly and reduce the deferred tax asset at 31 December
2015 (which has been calculated based on the expected long term rate of 18% substantively enacted at the balance sheet date).
9. Earnings per share
Basic and diluted earnings per share are calculated by dividing the earnings attributable to equity shareholders by the weighted
average number of ordinary shares during the year or the diluted weighted average number of ordinary shares in issue in the year.
The diluted earnings per share are based on the weighted average number of shares after taking account of the dilutive impact of
shares under option of 1,929,528 at 31 December 2015 (2014: nil). (See note 25).
Profit for the year
Non-controlling interests
Basic earnings
2015
£’000
11,721
(7)
11,714
2014
£’000
9,939
(3)
9,936
Weighted average number of ordinary shares in issue for the basic earnings
per share
Basic earnings per share (in pence per share)
Diluted earnings per share (in pence per share)
59,425,171
3,515,625
19.7
19.2
282.6
282.6
For the year ended 31 December 2014 the weighted average number of ordinary shares in issue for the basic and diluted earnings
per share has been adjusted to reflect the impact of the sub-division of shares in 2015 described in Note 25.
61
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
10. Dividends
A final dividend of £15,000,000 for the year ended 31 December 2014 was paid in March 2015 before Admission. This represented
a payment of 666.67p per share in issue at that time and 426.67p per share after adjustment to reflect the impact of the sub-
division of shares described in note 25.
An interim dividend in respect of the year ended 31 December 2015 of £448,000 was paid on 25 September 2015.
A final dividend of 2.40p per share in respect of the year ended 31 December 2015 is to be proposed at the annual general meeting
to be held on 24 May 2016. The ex-dividend date will be 21 April 2016 and the associated record date will be 22 April 2016. This
dividend will be paid subject shareholder approval on 27 May 2016 and these financial statements do not reflect this final dividend
payable.
11. Intangible assets
Goodwill
Cost
Balance at 1 January 2015
Additions
Adjustments
Balance at 31 December 2015
2015
£’000
22,055
15,786
(50)
37,791
2014
£’000
9,587
12,468
-
22,055
Acquisitions made in the year ended 31 December 2015
On 16 November 2015 the Company acquired the entire share capital of SG Smith Holdings Limited (‘SGS’). SGS itself is the
holding company of 9 wholly owned subsidiary companies, SG Smith Automotive Limited, SG Smith (Motors) Limited, SG Smith
(Motors) Beckenham Limited, SG Smith (Motors) Forest Hill Limited, SG Smith (Motors) Crown Point Limited, SG Smith (Motors)
Sydenham Limited, SG Smith (Motors) Croydon Limited, SG Smith Trade Parts Limited and Prep-Point Limited. The companies
acquired operate Audi, Skoda and Mercedes-Benz Commercial dealerships and service centres in Kent, Surrey and London.
The estimated net assets at the date of acquisition are stated at their provisional fair value as set out below.
Property, plant & equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Net assets acquired
Deferred tax liability arising on transition to IFRS (note 23)
Goodwill
Total cash consideration
62
SG Smith
Holdings
Limited
£’000
6,750
24,195
5,548
2,477
(29,878)
9,092
(903)
15,786
23,975
238947 MMH AR pp44-pp65 FN 16/03/2016 17:52 Page 63
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
11. Intangible assets (continued)
The estimated net assets above have been estimated by the directors at the point of preparing these financial statements and are
subject to the completion of the fair value exercise.
The table below summarises the amount of revenue and profit or loss of the acquiree since the acquisition date included in the
consolidated income statement for the period since acquisition:
SG Smith Holdings Limited
Revenue
£’000
17,394
Profit/(Loss)
before tax
£’000
(379)
Acquisition costs of £475,000 (2014: £157,000) have been charged to the consolidated income statement for the year ended
31 December 2015.
The table below summarises the amount of the revenue and profit or loss of the combined entity for the current reporting period
as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the
annual reporting period.
Marshall Motor Holdings plc
Acquisitions made in the year ended 31 December 2014
Revenue
£’000
1,398,454
Profit/(Loss)
before tax
£’000
18,077
On 30 June 2014, Marshall Motor Group Limited acquired the trade and assets of Volvo Bishops Stortford from Regent Automotive
Group. The net assets at the date of acquisition are stated at fair value as set out below.
Property, plant & equipment
Inventories
Trade and other payables
Net assets acquired
Goodwill
Total cash consideration
Volvo Bishops
Stortford
£’000
438
229
(143)
524
75
599
On 1 July 2014, Marshall Motor Group Limited acquired the trade and assets of Halesworth Landrover from Hammond Landrover
Limited. The net assets at the date of acquisition are stated at fair value as set out below.
Property, plant & equipment
Inventories
Trade and other payables
Net assets acquired
Goodwill
Total cash consideration
63
Halesworth
Landrover
£’000
129
1,690
(214)
1,605
2,060
3,665
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
11. Intangible assets (continued)
On 8 August 2014, the Company acquired the entire share capital of CMG 2007 Limited (‘CMG’). CMG itself is the holding company
of 2 wholly owned subsidiary companies, Astle Limited and Crystal Motor Group Limited.
Astle Limited comprises BMW Scunthorpe and BMW/MINI/BMW Bikes Grimsby, whilst Crystal Motor Group Limited comprises
Boston Nissan, Grantham Nissan and Lincoln Nissan. The net assets at the date of acquisition are stated at fair value as set out
below.
Property, plant & equipment
Inventories
Cash and cash equivalents
Trade and other receivables
Deferred tax liability
Trade and other payables
Net assets acquired
Goodwill
Total cash consideration
Impairment testing
CMG 2007
Limited
£’000
4,860
12,318
(30)
2,127
(717)
(17,397)
1,161
10,333
11,494
For the purpose of impairment testing goodwill acquired in a business combination is allocated to each cash generating unit (CGU),
or groups of CGUs, that are expected to benefit from the synergies of the combination. CGUs are groups of dealerships connected
by manufacturer brand. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity
at which the goodwill is monitored for management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. Impairment reviews have been performed for all CGU groups for the years ending 31 December 2015 and 2014.
The recoverable amounts of all CGUs have been determined based on value-in-use calculations. These calculations use projections
based on financial budgets approved by the management which are extrapolated using the estimated long term growth rates. The
budgets were prepared to 31 December 2016 and then projected for a further 4 years. A discounted cash flow model was prepared
taking into account management’s assumptions for growth in EBITDA and the long term growth rate for the industry. These
assumptions are based on past experience of growth rates in both existing and new markets. The discount rate used is 10% and
the perpetual EBITDA growth rate beyond 5 years is assumed as 2% to arrive at a terminal value.
Management has prepared separate sensitivity analyses on the basis that the discount rate increases to 15% and that EBITDA
decreases by 50% and has concluded that there is no impairment.
Goodwill arising on acquisitions is attributable to the anticipated profitability of the distribution of the Group’s products through the
acquired dealerships.
64
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
11. Intangible assets (continued)
Other intangible assets
Cost
Balance as at 1 January 2015
Additions
Disposals
Transfers
Balance as at 31 December 2015
Amortisation
Balance as at 1 January 2015
Charge for the year
Disposals
Balance as at 31 December 2015
Net book value
As at 31 December 2014
As at 31 December 2015
Software assets
£’000
-
159
(58)
522
623
-
227
(57)
170
-
453
65
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
12. Property, plant and equipment
Freehold land
and buildings
£’000
Leasehold
land and
buildings
£’000
Plant and
equipment
£’000
Assets held
for contract
rental
£’000
Cost
At 1 January 2014
Additions at cost
Disposals
At 31 December 2014
Additions at cost
Additions on acquisition
Disposals
Transfers
At 31 December 2015
Accumulated Depreciation
At 1 January 2014
Charges for the year
Disposals
At 31 December 2014
Charges for the year
Disposals
Transfers
At 31 December 2015
Net book amount
At 31 December 2014
At 31 December 2015
27,470
5,835
(288)
33,017
2,670
4,137
-
(2,443)
37,381
8,622
893
(154)
9,361
313
-
(553)
9,121
2,780
900
(35)
3,645
4,609
1,636
(19)
2,501
12,372
1,030
181
(1)
1,210
701
-
629
27,387
4,496
(6,020)
25,863
2,403
977
(648)
(1,418)
27,177
21,592
2,608
(5,019)
19,181
2,586
(408)
(914)
89,563
27,255
(21,182)
95,636
29,732
-
(28,478)
-
96,890
34,086
17,313
37,372
17,210
(20,153)
-
2,540
20,445
34,429
23,656
28,260
2,435
9,832
6,682
6,732
58,264
62,461
91,037
107,285
(14,027)
(19,201)
Total
£’000
147,200
38,486
(27,525)
158,161
39,414
6,750
(29,145)
(1,360)
173,820
65,330
20,995
67,124
20,810
(20,561)
(838)
66,535
As detailed in note 11, within additions there are amounts relating to acquisitions of £6,750,000 in 2015 (2014: £5,427,000).
During the year ended 31 December 2015 the Directors reassessed the depreciable life of freehold buildings to 50 years (previously
25 years). This change in estimate resulted in a reduction in the depreciation charge for the year of £530,000.
As at 31 December 2015, the Group had capital commitments totalling £10.8m relating to new retail sites at Cambridge Jaguar
Land Rover and Ipswich Jaguar Land Rover. After the year end, the Group made further capital commitments of £6.9m (inclusive
of land purchase) relating to a new retail site at Exeter Audi.
13. Investment property
Fair value at 1 January
Additions at cost
Fair value at 31 December
2015
£’000
1,920
-
1,920
2014
£’000
1820
100
1,920
66
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
13. Investment property (continued)
Investment properties are stated at fair value. The Group’s leasehold investment properties were valued on a fair value basis by
the Directors as at 31 December 2015 at £530,000 and the Group’s freehold investment properties on a fair value basis by the
Directors as at 31 December 2015 at £1,390,000. A revaluation surplus of £264,874 has been taken to the Income Statement in
2013. The last formal valuations were undertaken at 31 December 2013 by Rapleys, Chartered Surveyors on a market value
basis.
The Group policies in relation to investment property are included in note 1. The properties are rented out to third parties. Rental
income of £233,000 was recognised in 2015 (2014: £231,000). There are no restrictions on the Group’s ability to dispose of the
investment property or use any funds arising on disposal. There are no contractual commitments for further development of the
investment properties.
14. Investments
A list of all subsidiary undertakings as at 31 December 2015 and 31 December 2014 is given in note 3 of the Marshall Motor
Holdings plc company only financial statements (page 87).
15. Finance leases – Group as lessor
Lease agreements in which the other party, as lessee, is to be regarded as the economic owner of the leased assets give rise to
accounts receivable in the amount of the discounted future lease payments. At 31 December 2015 these receivables amounted
to £572,000 (2014: £699,000) and will bear interest income until their maturity dates.
Within 1 year
Between 1 and 5 years
After 5 years
Within 1 year
Between 1 and 5 years
After 5 years
Total future
payments
£’000
214
411
-
625
Total future
payments
£’000
220
544
10
774
2015
Unearned
interest
income
£’000
11
42
-
53
2014
Unearned
interest
income
£’000
2
71
2
75
Present
value
£’000
202
370
-
572
Present
value
£’000
218
473
8
699
The Group leases out vehicles under finance leases mainly through one of its subsidiaries Marshall Leasing Limited.
The majority of the leases typically run for a non-cancellable period of two to nine years. Under the contracts, title either passes to
the lessee at the conclusion of the lease period, or the arrangements include an option to purchase the leased equipment after
that period.
67
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
16. Operating leases – Group as lessor
The Group has entered into non-cancellable operating leases, as lessor, on a number of its assets held for contract rental included
in property, plant and equipment and property included in investment property. The terms of these leases vary.
Future minimum lease payments receivable for assets held for contract rental under non-cancellable operating leases are as set
out below.
Within 1 year
Between 1 and 5 years
2015
£’000
23,105
63,142
86,247
Future minimum lease payments receivable for property under non-cancellable operating leases are as set out below.
2014
£’000
23,170
59,808
82,978
2014
£’000
233
850
1,308
2,391
2015
£’000
233
825
1,108
2,166
2015
£’000
424
244,074
(3,866)
240,632
2014
£’000
185
166,513
(3,687)
163,011
Within 1 year
Between 1 and 5 years
After 5 years
17. Inventories
Work in progress
Finished goods
Less: Provisions
Inventory (Net)
Finished goods include new and used vehicles held for resale, vehicle parts and other inventory. As at 31 December 2015
£185,898,000 (2014: £110,490,000) of finished goods are held under vehicle financing arrangements (see note 20).
18. Trade and other receivables
Amounts falling due within one year:
Trade receivables due but not past due
Trade receivables past due
Trade receivables past due but impaired
Trade receivables – net
Other receivables
Amounts due from related undertakings
Prepayments
68
2015
£’000
18,202
4,091
(839)
21,454
16,428
311
4,531
42,724
2014
£’000
16,625
3,237
(444)
19,418
11,122
39,761
2,880
73,181
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
18. Trade and other receivables (continued)
Trade and other receivables are all current and any fair value difference is not material. Trade receivables are considered to be
past due once they have passed their contracted due date and are reviewed for impairment if they are past due beyond 30 days.
Other receivables include finance lease and hire purchase receivables of £572,000 (2014: £699,000). Of these £396,000 (2014:
£505,000) are amounts due in more than one year. Fair value of these items is deemed to be equal to their carrying value.
Movements on the provision for impairment of trade receivables were as below.
At 1 January
Additional provision for receivables impairment
Receivables written off during the year as uncollectable
At 31 December
2015
£’000
444
1,014
(619)
839
2014
£’000
256
443
(255)
444
The creation and release of provision for impaired receivables have been included in ‘Other expenses’ (note 4). Amounts charged
to the allowance account are generally written off when there is no expectation of recovering the amount due.
19. Cash and cash equivalents
Cash at bank and in hand
20. Trade and other payables
Trade payables:
– vehicle financing arrangements
– other trade payables
Amounts owed to related undertakings
Other tax and social security payable
Other payables
Accruals and deferred income
Trade and other payables due within 1 year
Trade and other payables due after 1 year
2015
£’000
24,130
2014
£’000
1,826
2015
£’000
2014
£’000
186,185
34,490
654
2,472
10,840
33,845
268,486
260,217
8,269
268,486
110,490
35,642
56,077
2,169
8,113
17,530
230,021
221,442
8,579
230,021
Trade and other payables, excluding social security and other taxes, are designated as financial liabilities carried at amortised cost.
Their fair value is deemed to be equal to their carrying value. Financial liabilities are denominated in pounds sterling.
69
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
20. Trade and other payables (continued)
The Group finance the purchases of new and used vehicle inventories using vehicle funding facilities provided by various lenders
including the captive finance companies associated with brand partners. These finance arrangements generally have a maturity
of 90 days or less and the Group is normally required to repay amounts outstanding on the earlier of the sale of the vehicles that
have been funded under the facilities or the stated maturity date.
Amounts due to finance companies in respect of vehicle funding are included within trade payables and disclosed under vehicle
financing arrangements. Related cash flows are reported within cash flows from operating activities within the Consolidated
Statement of Cash Flows
Vehicle financing facilities are subject to LIBOR-based (or similar) interest rates. The interest incurred under these arrangements
is included within finance costs and classified as stock holding interest.
The comparative for vehicle financing arrangements (previously £30,788,000) has been restated from that disclosed in the
Admission document as the Directors consider that certain amounts previously disclosed as trade payables are better presented
as vehicle financing arrangements.
Management considers the carrying amount of trade and other payables to approximate to their fair value. Long-term payables
have been discounted where the time value of money is considered to be material.
21. Borrowings
Non-current
Asset backed financing
Current
Asset backed financing
Bank borrowings
Total borrowings
2015
Nominal and
book value
£’000
2014
Nominal and
book value
£’000
24,677
25,205
26,700
-
26,700
51,377
21,842
6,500
28,342
53,547
Total borrowings include bank borrowings, which are unsecured and asset backed financing, which is secured by a fixed charge
over specific vehicles held for leasing.
Asset backed finance in respect of the assets held for contract rental are secured by fixed charges over specific vehicles. The
related finance comprises chattel mortgages.
Interest rate profile of interest bearing borrowings
Fixed rate borrowings
Asset backed financing
Bank borrowings
Weighted average cost of drawn borrowings
2015
Debt
£’000
51,377
-
51,377
Average
effective
interest rate
2.39
0.00
2.39
2014
Debt
£’000
47,047
6,500
53,547
Average
effective
interest rate
2.69
0.00
2.36
70
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
21. Borrowings (continued)
The carrying amounts and fair value of the non-current borrowings are as below.
Asset backed financing
2015
Carrying
amount
£’000
24,677
Fair
value
£’000
23,030
2014
Carrying
amount
£’000
25,205
The fair values are based on cash flows discounted using the prevailing rates.
Borrowings have the following maturity profile:
6 months or less
6 - 12 months
1 - 5 years
2015
£’000
13,770
12,930
24,677
51,377
Fair
value
£’000
22,548
2014
£’000
17,402
10,940
25,205
53,547
The Group has access to additional banking facilities amounting to £75,000,000 represented by a revolving credit facility of
£50,000,000 and an overdraft facility of £25,000,000. Subject to bank approval the revolving credit facility has an option to be
extended by a further £25,000,000. These facilities are available for general corporate purposes including acquisitions or working
capital requirements. Interest is chargeable on the amounts drawn under the facilities at between 1.2% and 2.0% above LIBOR.
The facilities are secured by cross guarantees granted by the certain members of the Group. No amounts had been drawn under
the facilities as at 31 December 2015. The facility is available until 27 June 2018. The Group is also able to extend the term of the
facility by up to 12 months.
22. Provisions
Closed sites Dilapidations
£’000
£’000
Onerous
leases
£’000
As at 1 January 2015
Reclassified from trade and other payables
Charged to income statement in the year
Utilised during the year
As at 31 December 2015
-
124
-
(2)
122
-
200
449
-
649
Provisions have been allocated between current and non-current as below.
Current
Non-current
Closed sites
-
-
280
-
280
2015
£’000
762
289
1,051
Total
£’000
-
324
729
(2)
1,051
2014
£’000
-
-
-
The Group manages its portfolio carefully and either closes or sells sites which no longer fit with the Group’s strategy. When sites
are closed or sold provisions are made for any residual costs or commitments.
71
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
22. Provisions (continued)
Dilapidations and onerous leases
The Group operates from a number of leasehold premises under full repairing leases. The provision recognises that repairs are
required to put the buildings back into the state of repair required under the leases.
Where property commitments exist at sites which are closed or closing the Group provides for the unavoidable cost of those leases
post closure.
In prior periods provisions were presented within other payables.
23. Deferred tax
The analysis of deferred tax assets and deferred tax liabilities is as below.
Deferred tax assets:
– Deferred tax asset to be recovered within 12 months
58
94
2015
£’000
2014
£’000
Deferred tax liabilities:
– Deferred tax liability to be recovered after more than 12 months
Deferred tax liabilities (net)
The gross movement on the deferred income tax account is as below.
At 1 January
Deferred tax arising on IFRS conversion of acquisition (note 11)
Deferred tax acquired
Income statement charge (note 8)
Credited directly to equity
At 31 December
(1,885)
(1,827)
(1,783)
(1,689)
2015
£’000
(1,689)
(903)
(136)
819
82
2014
£’000
(1,567)
(717)
(60)
655
-
(1,827)
(1,689)
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of
balances within the same tax jurisdiction, is as below.
Deferred tax liabilities
At 1 January 2014
Charged to the income statement
Acquisition of subsidiaries (note 11)
At 31 December 2014
Charged/(credited) to the income statement
Impact of corporation tax rate reduction
Acquisition of subsidiaries (note 11)
At 31 December 2015
Fair
value
gains
£’000
53
-
-
53
(53)
-
-
-
Other
£’000
1,972
45
717
2,734
735
(271)
903
4,101
Total
£’000
2,025
45
717
2,787
682
(271)
903
4,101
Accelerated
tax
depreciation
£’000
-
-
-
-
-
-
-
-
72
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
23. Deferred tax (continued)
Deferred tax assets
At 1 January 2014
Credited/(charged) to the income statement
Acquisition of subsidiaries
At 31 December 2014
Credited/(charged) to the income statement
Impact of corporation tax rate reduction
Credited directly to equity
Acquisition of subsidiaries
At 31 December 2015
Accelerated
tax
depreciation
£’000
15
890
(60)
845
837
(36)
-
(136)
1,510
Fair
value
gains
£’000
313
(219)
-
94
(31)
(5)
-
-
58
Other
£’000
130
29
-
159
473
(8)
82
-
706
Total
£’000
458
700
(60)
1,098
1,279
(49)
82
(136)
2,274
Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax benefit
through future taxable profits is probable. The Group did not recognise deferred income tax assets of £359,000 (2014: £275,000)
in respect of losses amounting to £1,887,000 (2014: £1,380,000) that can be carried forward against future taxable income. The
losses amounting do not have an expiry date.
24. Financial instruments – risk management
The Group’s activities expose it to a variety of financial risks, including the effects of changes in debt market prices and interest
rates. The Group’s treasury management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the Group.
The Board adopts an on-going process for identifying, evaluating and managing the significant risks faced by the Group.
Market risk – cash flow interest rate risk
The Group’s interest rate risk arises from long-term borrowings, which are issued at various rates that expose the Group to cash
flow interest rate risk. The Group’s borrowings are denominated in sterling.
The interest rate exposure of the Group is managed within the constraints of the Group’s business plan and the financial covenants
under its facilities.
Credit risk
Credit risk arises from cash and deposits with banks as well as credit exposures to customers. Individual customer risk limits are
set based on external credit reference agency ratings and the utilisation of these credit limits is regularly monitored. Further
disclosure on credit exposure is given in note 21.
Liquidity risk
Ultimate responsibility for liquidity risk rests with the Board of Directors, which has built an appropriate liquidity risk management
framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The
Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Disclosed within
note 21 are the undrawn banking facilities that the Group has at its disposal in order to further reduce liquidity risk.
73
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
24. Financial instruments – risk management (continued)
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
balance sheet date to contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
All borrowings are denominated in sterling.
Borrowings (note 21)
Trade and other payables
(excluding other taxes and social security)
At 31 December 2015
Borrowings (note 21)
Trade and other payables
(excluding other taxes and social security)
At 31 December 2014
Capital risk management
Less than Between one
one year and five years
£’000
£’000
26,700
24,677
Total
£’000
51,377
257,745
284,445
8,269
32,946
266,014
317,391
Less than Between one
one year and five years
£’000
£’000
28,342
25,205
Total
£’000
53,547
219,273
247,615
8,579
33,784
227,852
281,399
The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders.
The Group must ensure that sufficient capital resources are available for working capital requirements and meeting principal and
interest payment obligations as they fall due.
Consistent with others in this industry, the Group monitors capital on the basis of the gearing ratio, which is calculated as net debt
divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the
consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as total shareholders’ equity.
The Group had net debt of £27,247,000 at 31 December 2015 as disclosed in the Consolidated Cash Flow Statement (2014: Net
debt of £51,720,000).
74
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
24. Financial instruments – risk management (continued)
Financial instruments by category
The table below analyses financial instruments by type. All such financial assets and liabilities are carried at amortised cost. For
all financial assets and liabilities fair value equals carrying value except for long term borrowings as disclosed in note 21.
Group assets
Assets as per the balance sheet
Trade and other receivables excluding pre-payments (note 18)
Cash and cash equivalents
Total
Group liabilities
Liabilities as per the balance sheet
Borrowings (note 21)
Trade and other payables excluding non-financial liabilities (note 20)
Total
Credit quality of financial assets
Counterparties without external credit rating:
Group 1
Group 2
Total unimpaired trade receivables
Cash at bank and short-term bank deposits
A (Negative)*
* Standard & Poor’s rating (long term)
Group 1 – new customers/related parties (less than 6 months).
Group 2 – existing customers/related parties (more than 6 months) with no defaults in the past.
2015
£’000
2014
£’000
38,193
24,130
62,323
70,301
1,826
72,127
51,377
268,486
319,863
53,547
230,021
283,568
2015
£’000
133
38,060
38,193
2014
£’000
540
69,761
70,301
24,130
1,826
75
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
25. Called up share capital and share premium
At 1 January 2014
At 31 December 2014
Issued 27 March 2015
Subdivision
Issued 2 April 2015
At 31 December 2015
Number
of shares
2,250,000
2,250,000
30,000,000
18,140,625
26,845,638
77,236,263
Ordinary
shares
£’000
Share
premium
£’000
2,250
2,250
30,000
-
17,181
49,431
-
-
-
-
19,672
19,672
Total
£’000
2,250
2,250
30,000
-
36,853
69,103
On 27 March 2015 30 million ordinary shares of 100p each were issued at par and subsequently the entire share capital of the
Company was subdivided into 50,390,625 ordinary shares of 64p each.
On 2 April 2015 26,845,638 new ordinary shares of 64p each were issued at 149p each. The premium arising on issue is shown
net of transaction costs amounting to £3.1 million.
All shares issued are fully paid.
Share option schemes
Under the Company’s equity settled share option scheme, share options may be granted to executive Directors and to selected
employees and grants were made on admission of the Company to AIM. Share options comprise IPO Performance Awards and
IPO Restricted Share Awards. The extent of vesting of awards granted to executive Directors of the Company (other than an IPO
Restricted Share Award) will be subject to performance conditions set by the Remuneration Committee. The extent of vesting of
awards granted to other participants may be subject to performance conditions set by the Remuneration Committee.
As at 31 December 2015, outstanding share options under the IPO Performance Award were as below.
Award date
2 April 2015
No of shares
over which
options are
outstanding
1,459,730
Exercise
price
Date from
which
exercisable
Expiry
date
Nil
2 April 2018
2 April 2025
The performance condition applying to the IPO Performance Award will be based on the growth in the Company’s adjusted basic
earnings per share from 2014 to 2017. 25% of each IPO Performance Award will vest for achieving growth in adjusted earnings
per share of CPI plus 4% per annum increasing on a straight line basis up to 100% vesting for achieving growth in adjusted earnings
per share of CPI of plus 10% per annum. 50% of the IPO Performance Awards vest on the third anniversary of Admission and
the remaining 50% vest on the fourth anniversary subject to continued employment. The contractual life of the option is 10 years
and there are no cash settlement alternatives.
As at 31 December 2015, outstanding share options under the IPO Restricted Share Awards were as below.
Award date
2 April 2015
No of shares
over which
options are
outstanding
Exercise
price
Date from
which
exercisable
Expiry
date
469,798
Nil
2 April 2016
2 April 2025
The IPO Restricted Share Award vests in three equal tranches on the first, second and third anniversaries of Admission.
The fair value of options granted during the year was £1.49 (2014; N/A). The fair value of equity settled share options granted was
based on the offer price at the IPO on 2 April 2015 when the share options were granted.
A share based payment charge of £556,000 has been recognised during the period.
76
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
26. Commitments and contingencies
Operating lease commitments
The Group, as lessee, has non-cancellable operating lease agreements. The lease terms are various and the majority of lease
agreements are renewable at the end of the lease period at market rate.
The lease expenditure charged to the income statement during the year is disclosed in note 4.
The future aggregate minimum lease payments under non-cancellable operating leases are set out below.
Within 1 year
Later than 1 year and less than 5 years
After 5 years
2015
£’000
7,804
29,206
62,031
99,041
2014
£’000
4,731
18,160
40,436
63,327
At Admission the Group entered formal lease arrangements with Marshall Group Properties Limited for certain properties, previously
occupied under informal arrangements.
27. Related party transactions
Key management compensation is given in note 6.
Details of Directors interests in shares of the Company are set out in the Directors Remuneration report.
During 2014 and 2015 the Directors were members of a car purchase loan scheme under which the following transactions were
made in the year. The Directors purchased 15 cars in 2015 (2014: 22) at a price of £1,043,000 (2014: £1,108,000) and sold back
13 (2014: 20) at a price of £899,000 (2014: £1,008,000).
The following table shows the aggregate transactions with companies within Marshall of Cambridge (Holdings) Limited other than
those of Marshall Motor Holdings plc.
2015
Marshall of Cambridge (Holdings) Limited
Marshall of Cambridge Aerospace Limited
Marshall Thermo King Limited
Marshall Fleet Solutions Limited
Marshall Group Properties Limited
Aeropeople Limited
Marshall Land Systems Limited
Marshall Specialist Vehicles Limited
MGPH Limited
Sales
£’000
Purchases
£’000
Year-end
balance
£’000
70
112
538
-
402
14
42
18
10
1,206
1,127
490
3
19
1,700
-
-
-
158
3,497
(110)
(59)
34
(8)
(147)
-
-
-
(55)
(345)
77
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
27. Related party transactions (continued)
2014
Marshall of Cambridge (Holdings) Limited
Marshall of Cambridge Aerospace Limited
MGPH Limited
Marshall Thermo King Limited
Marshall Fleet Solutions Limited
Marshall of Cambridge (Airport Properties) Limited
Aeropeople Limited
Marshall Land Systems Limited
28. Pensions
Post-employment benefits
Sales
£’000
114
197
-
1,071
-
(4)
2
15
Purchases
£’000
1,818
495
79
-
2
1,323
-
-
Year-end
balance
£’000
(16,222)
(157)
(4)
67
-
-
-
-
1,395
3,717
(16,316)
As detailed in accounting policy note 1, the Group accounts for all of its pension contributions as if they were part of a defined
contribution scheme.
The actuarial valuation for the defined benefit section of the Marshall Group Executive Pension Plan revealed a deficit on a technical
provisions basis of c£1.5 million as at 31 December 2013. Marshall of Cambridge (Holdings) Limited has paid all of its contributions
(£0.93 million) due under the current recovery plan to remove this deficit. Of the £0.93 million, £0.62 million was paid in FY15 and
this included a contribution of £125k made by the Group. The contributions by Marshall Motor Holdings plc. to this plan during
2015 were £41,000 (in addition to the above) (2014: £32,000).
The next actuarial valuation of the Marshall Group Executive Plan is expected as at 31 December 2016. The extent of any future
cash contributions by the Group will then be considered.
In line with the disclosure requirements of IAS19, for group schemes where there is no contractual agreement for charging the net
defined benefit cost between individual companies the information below details information about the defined benefit section of
the Marshall Group Executive Plan. The 2015 information will be included in the 2015 Annual Report of Marshall of Cambridge
(Holdings) Limited. These are disclosure items only and are not reflected in the Statement of Financial Position of Marshall Motor
Holdings plc.
Balance sheet obligations
– For fair value assets at end of year
– For present value obligations at end of year
Defined pension benefits
– Related deferred tax asset
Liability in the balance sheet
Income statement charge included in operating profit
– For defined pension benefits
78
2015
£’000
2014
£’000
34,546
(46,062)
(11,516)
2,073
(9,443)
34,119
(46,968)
(12,849)
2,570
(10,279)
(858)
(858)
(741)
(741)
238947 MMH AR pp66-pp80 FN 16/03/2016 17:54 Page 79
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Consolidated Financial Statements
28. Pensions (continued)
Marshall of Cambridge (Holdings) Limited operates the Plan which has a section which provides defined benefits to members in
the form of a guaranteed level of pension payable for life. The level of benefits provided depends on members’ length of service
and their salary in the final years leading up to retirement. In the Plan, pensions in payment are generally updated in line with the
retail price index. The board of trustees must be composed of representatives of the Marshall of Cambridge (Holdings) Limited
and plan participants in accordance with the Trust Deed and Rules and legislation.
The significant actuarial assumptions were as set out below.
Discount Rate
RPI Inflation
CPI Inflation
Salary Growth Rate
Pension Growth Rate – RPI min 0%, max 5%
Pension Growth Rate – RPI min 3%
Pension Growth Rate – RPI min 2.7%, max 5%
Pension Growth Rate – RPI min 0%, max 8.5%
Post retirement mortality
Post retirement improvements
Plan assets are comprised as follows:
2015
3.60%
3.00%
2.00%
2.60%
3.00%
3.35%
3.21%
3.00%
2014
3.50%
3.16%
1.96%
2.90%
3.16%
3.29%
3.21%
3.16%
73%S1PXA
73%S1PXA
CMI 2013 table with 1.25% p.a.
CMI 2013 table with 1.25% p.a.
and 1.0% p.a. long term improvement
and 1.0% p.a. long term improvement
trend for males and females
trend for males and females
respectively (rebased to 2008)
respectively (rebased to 2008)
2015
UK Equities
Overseas Equities
Property
Liability Driven Investments
Dynamic Asset Allocation
Cash and Net Current Assets
Insured Pensions
Total
2014
UK Equities
Overseas Equities
Property
Liability Driven Investments
Dynamic Asset Allocation
Cash and Net Current Assets
Insured Pensions
Total
Total
£’000
4,737
10,165
7,159
4,280
5,895
129
2,181
%
14%
30%
21%
12%
17%
0%
6%
34,546
100%
Total
£’000
9,871
5,041
6,543
4,223
5,997
155
2,289
%
30%
15%
19%
12%
17%
0%
7%
34,119
100%
Quoted
£’000
4,737
10,165
7,159
4,280
5,895
129
-
32,365
Unquoted
£’000
-
-
-
-
-
-
2,181
2,181
Quoted
£’000
Unquoted
£’000
-
-
-
-
-
-
2,289
2,289
9,871
5,041
6,543
4,223
5,997
155
-
31,830
79
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FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
28. Pensions (continued)
Through the defined benefit pension plan, the Group is exposed to a number of risks, the most significant of which are detailed
below:
Asset volatility
The Plan assets holds 80 per cent growth assets and these will not provide a match to the movement in the
discount rate. Consequently the difference in the values of the assets and liabilities will be quite volatile.
Returns on scheme assets will also be affected by changes in fixed income yields.
Inflation risk
The majority of benefits are linked to inflation and so increases in inflation will lead to higher liabilities (although
in most cases there are caps in place which protect against extreme inflation).
Life expectancy
Increases in life expectancy will increase plan liabilities, the inflation linkage of the benefits also means that
inflationary increases result in a higher sensitivity to increases in life expectancy.
29. Ultimate parent company
The parent undertaking of the largest group of undertakings for which group financial statements are drawn up and of which the
company is a member is Marshall of Cambridge (Holdings) Limited. This is both the immediate parent undertaking and the ultimate
parent undertaking. In light of its aggregate shareholding in the capital of the Company, Marshall of Cambridge (Holdings) Limited
has entered into a relationship agreement in order to regulate the relationship between it and the Company and enable the Company
to act independently of Marshall of Cambridge (Holdings) Limited and its affiliates.
Copies of the group financial statements for Marshall of Cambridge (Holdings) Limited can be obtained from Airport House, The
Airport, Cambridge, CB5 8RY.
80
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Marshall Motor Holdings plc. | Annual Report & Accounts 2015
Company Financial Statements
Statement of Financial Position
As at 31 December 2015
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
Net current assets/(liabilities)
Net assets
Capital and reserves
Called-up equity share capital
Share premium
Profit and loss account
Shareholders’ funds
Note
2015
£’000
2014
£’000
3
4
6
7
54,084
29,635
18,543
19,638
38,181
(7,992)
30,189
84,273
49,431
19,672
15,170
84,273
8,360
-
8,360
(27,634)
(19,274)
10,361
2,250
-
8,111
10,361
The financial statements were approved for issue by the Board of Directors and authorised for issue on 16 March 2016
M.D. Raban
Director
16 March 2016
81
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FINANCIAL STATEMENTS
Company Financial Statements
Statement of Changes in Equity
At 1 January 2014
Loss for the financial year
Dividends received
Other comprehensive income
Total comprehensive income for the year
Equity dividends paid
At 31 December 2014
Loss for the financial year
Dividends received
Other comprehensive income
Total comprehensive income for the year
Equity dividends paid
New shares issued
Share based payment charge
At 31 December 2015
Note
9
9
8
Total
£’000
11,522
(1,161)
4,500
-
3,339
(4,500)
10,361
(3,049)
25,000
-
21,951
(15,448)
66,853
556
84,273
Share
capital
£’000
2,250
-
-
-
-
-
2,250
-
-
-
-
-
Share
premium
£’000
Profit
and loss
account
£’000
-
-
-
-
-
-
-
-
-
-
-
-
9,272
(1,161)
4,500
-
3,339
(4,500)
8,111
(3,049)
25,000
-
21,951
(15,448)
-
556
47,181
19,672
-
-
49,431
19,672
15,170
82
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Company Financial Statements
1. Basis of preparation & statement of compliance
Marshall Motor Holdings plc is a Public Limited Company incorporated in England. The registered office is Airport House, The
Airport, Cambridge, CB5 8RY. The parent company financial statements have been prepared in compliance with FRS 102, the
Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland. The Company transitioned from
previously extant UK GAAP to FRS 102 as at 1 January 2014. An explanation of how transition to FRS 102 has affected the
reported financial position and financial performance is given in note 11.
The financial statements are prepared in sterling which is the functional currency of the company and rounded to the nearest
£’000.
The company accounts have also adopted the following disclosure exemptions as permitted by FRS 102:
•
•
•
Presentation of a cash-flow statement and related notes
Financial instrument-related disclosures
Key management personnel compensation disclosures
These exemptions have been applied as the Company is a qualifying entity and the shareholders of the Company have been
notified in writing and no objection has been made to the use of the exemptions. The Company is part of the consolidated financial
statements of Marshall Motor Holdings plc.
No profit and loss account is presented by the Company, as permitted under section 408 of the Companies Act 2006. The profit
of the Company for the year ended 31 December 2015 was £21,951,000 (2014: £3,339,000).
The auditors’ remuneration for audit and other services was £3,000 (2014: £3,000).
2. Accounting policies
Investments
Investments in subsidiaries are recognised at cost less any impairment. Impairments are recognised directly through profit and
loss.
3.
Investments
Cost
At 1 January 2015
Additions
At 31 December 2015
Subsidiary
undertakings
£’000
Joint
ventures
£’000
24,729
24,449
49,178
4,906
-
4,906
Total
£’000
29,635
24,449
54,084
83
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FINANCIAL STATEMENTS
Notes to the Company Financial Statements
3.
Investments (continued)
Subsidiaries
Name of Undertaking
Marshall Motor Group Limited
Marshall of Cambridge (Garage Properties)
Limited
Marshall Leasing Limited
Gates Contract Hire Limited
Tim Brinton Cars Limited
Marshall of Ipswich Limited1
Marshall of Peterborough Limited1
S.G. Smith Holdings Limited
S.G. Smith Automotive Limited
S.G. Smith (Motors) Limited
S.G. Smith (Motors) Beckenham Limited
S.G. Smith (Motors) Forest Hill Limited
S.G. Smith (Motors) Crown Point Limited
S.G. Smith (Motors) Sydenham Limited
S.G. Smith (Motors) Croydon Limited
S.G. Smith Trade Parts Limited
Prep-Point Limited
Marshall of Stevenage Limited1
Marshall Commercial Vehicles Limited
Marshall North West Limited
Marshall of Scunthorpe Limited
Silver Street Automotive Limited
Exeter Trade Parts LLP
Audi South West Limited
Hanjo Russell Limited
CMG 2007 Limited
Astle Limited
Country of
incorporation
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Principal activity
Franchised motor dealership
Property holding
Motor vehicle leasing
Dormant
Property holding
Franchised motor dealership
Franchised motor dealership
Holding company
Holding company
Property holding
Franchised motor dealership
Franchised motor dealership
Franchised motor dealership
Franchised motor dealership
Dormant
Motor parts sales
Maintenance and repair of motor vehicles
Franchised motor dealership
Dormant
Franchised motor dealership
Franchised motor dealership
Franchised motor dealership
Motor parts sales
Dormant
Dormant
Holding company
Franchised motor dealership
Crystal Motor Group Limited
England and Wales
Franchised motor dealership
1 These subsidiaries are 99% directly owned
4. Debtors
Amounts owed by Group undertakings
Other debtors
VAT
Prepayments and accrued income
Deferred tax asset (note 5)
2015
£’000
17,470
700
54
197
122
2014
£’000
7,600
756
-
4
-
18,543
8,360
Amounts owed by Group undertakings are unsecured, bear no interest and have no fixed repayment date.
84
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Company Financial Statements
5. Deferred taxation
Deferred tax
At 1 January
Changes in provision
At 31 December
The balance of the deferred tax asset consists of the tax effect of the timing differences in respect of:
Other timing differences
Total deferred tax
6. Creditors: Amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Corporation tax
Other taxes and social security
Other creditors
Accruals and deferred income
7. Share capital
77,236,263 ordinary shares of 64p (2014: £1) each
Ordinary shares
At 1 January
Issued on 27 March 2015
Issued on 2 April 2015
2015
£'000
-
122
122
2015
£'000
122
122
2015
£’000
24
2,478
1,965
58
2,517
950
7,992
2015
£’000
49,431
2015
£’000
2,250
30,000
17,181
49,431
2014
£'000
-
-
-
2014
£'000
-
-
2014
£’000
284
26,097
-
-
-
1,253
27,634
2014
£’000
2,250
2014
£’000
2,250
-
-
2,250
On 27 March 2015 30 million ordinary shares of 100p each were issued at par and subsequently the entire share capital of the
Company was subdivided into 50,390,625 ordinary shares of 64p each.
On 2 April 2015 26,845,638 new ordinary shares of 64p each were issued at 149p each. The premium arising on issue is shown
net of transaction costs amounting to £3.1 million.
85
238947 MMH AR pp81-pp88 FN 16/03/2016 17:57 Page 86
FINANCIAL STATEMENTS
Notes to the Company Financial Statements
8. Share-based payments
Under the Company’s equity settled share option scheme, share options are granted to executive Directors and to selected
employees and were granted on admission of the Company to AIM. The extent of vesting awards granted to executive Directors
of the Company (other than the IPO Restricted Share Award) will be subject to performance conditions set by the remuneration
committee. The extent of vesting of awards granted to other participants may be subject to performance conditions set by the
Remuneration Committee.
IPO Performance Award
The performance condition applied to the IPO Performance Award will be based on the growth in the Company’s adjusted basic
earnings per share from 2014 to 2017. 25% of each IPO Performance Award will vest for achieving growth in adjusted earnings
per share of CPI plus 4% per annum increasing on a straight-line basis up to 100% vesting for achieving growth in adjusted
earnings per share of CPI plus 10% per annum. 50% of the IPO Performance Award vest on the third anniversary of Admission
and the remaining 50% vest on the fourth anniversary subject to continued employment. The contractual life of the option is 10 years
and there are no cash settlement alternatives.
IPO Restricted Share Award
The IPO Restricted Share Award vests in three equal tranches on the first, second and third anniversaries of Admission.
The expense recognised for share-based payments in respect of employee services received during the year to 31 December
2015 is £556,000 (2014: £nil).
The following tables illustrate the number and weighted average exercise price (WAEP) of, and movements in, share options during
the year.
IPO Performance Award
Outstanding as at 1 January
Granted during the year
Forfeited during the year
Exercised
Expired during the year
2015
No.
-
1,486,575
(26,845)
-
-
Outstanding as at 31 December
1,459,730
Exercisable as at 31 December
IPO Restricted Share Award
Outstanding as at 1 January
Granted during the year
Forfeited during the year
Exercised
Expired during the year
Outstanding as at 31 December
Exercisable as at 31 December
-
2015
No.
-
469,798
-
-
-
469,798
-
2015
WAEP
2014
No.
2014
WAEP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2015
WAEP
2014
No.
2014
WAEP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The fair value of options granted during the year was £1.49 (2014: N/A). The fair value of equity settled share options granted was
based on the offer price at Admission on 2 April 2015 when the share options were granted.
86
238947 MMH AR pp81-pp88 FN 16/03/2016 17:57 Page 87
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notes to the Company Financial Statements
9. Dividends
Paid during the year
Final dividend for 2013
Final dividend for 2014
Interim dividend for 2015
2015
£’000
-
15,000
448
2014
£’000
4,500
-
-
A final dividend of £15,000,000 for the year ended 31 December 2014 was paid in March 2015 before Admission. This represented
a payment of 666.67p per ordinary share in issue at that time and 426.67p per share after adjustment to reflect the impact of the
sub-division of shares described in note 7. A final dividend of £4,500,000 for the year ended 31 December 2013 was paid in 2014
representing a payment of 200p per ordinary share in issue and 128p per share after adjustment to reflect the impact of the sub-
division of shares described in note 7.
An interim dividend in respect of the year ended 31 December 2015 of £448,000 was paid on 25 September 2015.
A final dividend of 2.40p per share in respect of the year ended 31 December 2015 is to be proposed at the annual general
meeting on 24 May 2016. The ex-dividend date will be 21 April 2016 and the associated record date will be 22 April 2016. This
dividend will be paid subject shareholder approval on 27 May 2016 and these financial statements do not reflect this final dividend
payable.
10. Transactions with related parties
The Company has taken advantage of exemption, under the terms of Section 33 of FRS 102, not to disclose related party
transactions with wholly owned subsidiaries within the Group
The parent undertaking of the largest group of undertakings for which group financial statements are drawn up and of which the
Company is a member is Marshall of Cambridge (Holdings) Limited and is therefore considered to be the ultimate parent company.
The parent company of the smallest such group is Marshall Motor Holdings plc and this is also the immediate parent undertaking.
Copies of the group financial statements for Marshall of Cambridge (Holdings) Limited can be obtained from Airport House, The
Airport, Cambridge, CB5 8RY.
87
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FINANCIAL STATEMENTS
Notes to the Company Financial Statements
11. Transition to FRS 102
The Company has adopted FRS 102 for the year ended 31 December 2015. Whilst the transition to FRS 102 from old UK GAAP
has had no effect on the Company’s reported financial position or financial performance as at 1 January 2014 or 31 December
2014, there have been several presentational differences which are reflected in these financial statements. No transitional provisions
on conversion to FRS 102 have been applied.
88
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Marshall Motor Holdings plc | Annual Report & Accounts 2015
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting (the “AGM”) Marshall Motor Holdings Plc (the “Company”) will be held at
Airport House, the Airport, Cambridge CB5 8RY on 24 May 2016 at 11.00 a.m. for the following purposes of considering and, if
thought fit, passing the following resolutions which will all be proposed as ordinary resolutions:
1. Report and accounts
To receive the audited annual accounts of the Company for the year ended 31 December 2015 together with the directors’ reports
and the auditors’ report on those annual accounts.
2. Declaration of dividend
To declare a final dividend of 2.40p per ordinary share for the year ended 31 December 2015 payable on 27 May 2016 to
shareholders who are on the register of members of the Company on 22 April 2016.
3. Re-appointment of director
To re-appoint Alan Ferguson as a director, who, having been appointed since the last annual general meeting of the Company,
retires in accordance with the Company’s articles of association and offers himself for reappointment.
4. Re-appointment of director
To re-appoint Sarah Dickins as a director, who, having been appointed since the last annual general meeting of the Company,
retires in accordance with the Company’s articles of association and offers herself for reappointment.
5. Re-appointment of director
To re-appoint Francesca Ecsery as a director, who, having been appointed since the last annual general meeting of the Company,
retires in accordance with the Company’s articles of association and offers herself for reappointment.
6. Re-appointment of director
To re-appoint Christopher Sawyer as a director, who, having been appointed since the last annual general meeting of the Company,
retires in accordance with the Company’s articles of association and offers himself for reappointment.
7. Re-appointment of director
To re-appoint Mark Raban as a director, who, having been appointed since the last annual general meeting of the Company, retires
in accordance with the Company’s articles of association and offers himself for reappointment.
8. Re-appointment of auditors
To re-appoint Ernst & Young LLP as auditors of the Company to hold office from the conclusion of this Annual General Meeting
until the conclusion of the next general meeting at which accounts are laid before the Company.
9. Auditors’ remuneration
To authorise the directors to determine the remuneration of the auditors.
Dated 21 March 2016
By Order of the Board
Stephen Jones
Company Secretary
Registered Office:
Airport House
The Airport
Cambridge
CB5 8RY
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SHAREHOLDER INFORMATION
Notice of Annual General Meeting (continued)
Notes
1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), only those members registered
in the register of members of the Company at 11.00 a.m. on 20 May 2016 (or if the AGM is adjourned, 48 hours before the
time fixed for the adjourned AGM) shall be entitled to attend and vote at the AGM in respect of the number of shares registered
in their name at that time. Any changes to the register of members after such time shall be disregarded in determining the
rights of any person to attend or vote at the AGM.
2.
3.
If you wish to attend the AGM in person, you should make sure that you arrive at the venue for the AGM in good time before
the commencement of the meeting. You may be asked to prove your identity in order to gain admission.
In the case of joint holders of shares, the vote of the first named in the register of members who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the votes of other joint holders.
4. A member that is a company or other organisation not having a physical presence cannot attend in person but can appoint
someone to represent it. This can be done in one of two ways: Either by the appointment of a proxy (described in Note 6
below) or of a corporate representative. Members considering the appointment of a corporate representative should check
their own legal position, the Company’s articles of association and the relevant provision of the Companies Act 2006.
5. The following documents are available for inspection at the registered office of the Company during the usual business hours
on any weekday (Saturday, Sunday or public holidays excluded) from the date of this notice until the conclusion of the AGM
and will also be available for inspection at the place of the AGM from 9 a.m. on the day of the AGM until its conclusion:
(a) Copies of the executive directors’ service contracts with the Company and any of its subsidiary undertakings.
6. CREST members who wish to appoint a proxy or proxies through the CREST proxy appointment service may do so for the
Meeting (and any adjournment thereof) by following the procedures described in the CREST Manual. CREST personal
members or other CREST sponsored members (and those CREST members who have appointed a voting service provider)
should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message
(a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (“Euroclear”)
specifications and must contain the information required for such instructions, as described in the CREST Manual.
The message (regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a
previously appointed proxy) must, in order to be valid, be transmitted so as to be received by Capita Registrars, RA10, by
11.00 a.m. on 20 May 2016. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp
applied to the message by the CREST Applications Host) from which Capita Registrars is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through
CREST should be communicated to the appointee through other means.
CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that Euroclear does
not make available special procedures in CREST for any particular messages. Normal system timings and limitations will
therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned
to take (or if the CREST member is a CREST personal member or sponsored member or has appointed a voting service
provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that
a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members (and,
where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST
Manual (available at www.euroclear.com/CREST) concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001 (as amended).
90
238947 MMH AR Inner Cover Pages 17/03/2016 14:37 Page 2
Marshall Motor Holdings plc | Annual Report & Accounts 2015
Company Information
Registered Office:
Company websites:
Nominated Adviser and Broker:
Auditors:
Joint Bankers:
Legal Advisers to the Company:
Registrar:
Airport House
The Airport
Cambridge CB5 8RY
www.mmhplc.com
www.marshallweb.co.uk
www.marshall-leasing.co.uk
Investec Bank plc
2 Gresham Street
London EC2V 7QP
Ernst & Young LLP
One Cambridge Business Park
Cambridge CW4 0WZ
Barclays Bank plc
1 Churchill Place
London E14 5HP
HSBC Bank plc
8 Canada Square
London E14 5HQ
Dentons UKMEA LLP
One Fleet Place
London EC4M 7WS
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
91
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238947 MMH AR FC_ISC 17/03/2016 14:28 Page 1
Annual Report & Accounts 2015
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Marshall Motor Holdings plc
Airport House, The Airport,
Cambridge, CB5 8RY
© 2015 Marshall Motor Holdings plc
106 years of putting
our customers
above all else