Marshall Motor Holdings CEO Daksh Gupta has told AM “I can hold my head high” after the AM100 car retailer vowed to repay £4m in Government COVID support – and still match its 2019 financial performance in 2021.
In an AGM statement issued this morning (May 20), Marshall committed to repaying all Coronavirus Job Retention Scheme (CJRS) grants received for 2021 (£2.6m) and all non-essential retail sector grants (£1.4m).
It acted on the target, first announced back in March, as it revealed an 11.1% market outperformance on new retail car sales and 7.2% in used in the four month period to April 30 and forecast a 2021 year-end profit before tax of £21.1m – matching its 2019 performance.
And while Gupta and his fellow company leaders had not been handed performance bonuses, and dividend payments continued to be paused, he told AM that Marshall employees would be given “immediate” pay reviews after a pause on pay rises in 2020.
“I can hold my head up very high with the cations that we have announced today,” said Gupta.
“We entered 2021 saying that we would not take any Government support this year, but the virus hit hard in January and February and we had to furlough staff to protect them and our customers.
“Now, after a strong March and April, I’m really proud to say that we can pay back £4m to the Government.
“A strong moral compass is part of our company DNA. We take our moral responsibilities very seriously.”
Commenting on the decision not to pay management bonuses, Gupta added: “Our view is ‘sorry, if you’re taking government support you shouldn’t get management bonuses even if you hit your numbers'.”
Yesterday shareholders at Pendragon’s AGM voted strongly against motions to approve a director remuneration report which would see chief executive Bill Berman which would take his annual package to £3.2 million.
All 17 motions put forward at the Pendragon AGM were approved, despite assertions from leading shareholders Hedin Group and Legal and General Investment Management that they would oppose several motions.
Marshall today revealed that it would resume the payment of dividends to its shareholders “as soon as possible”.
It will consider the position next at the time of the release of its interim results for the six months ending June 30, on 10 August 2021.
“We’re confident we’ve done the right thing by our shareholders and Marshall colleagues,” Gupta said.
Marshall’s outperformance of the market in the first four months of 2021 brought a 20.4% year-on-year increase in new unit sales – comfortably ahead of the 16.2% market increase as measured by the SMMT – with a 19.5% increase in new retail sales.
Used car unit sales were up 42% on a LFL basis, meanwhile, as aftersales, revenues increased by 22.1% on a like-for-like basis.
Overall group revenues rose 33.3% like-for-like, despite the major disruption of COVID-prompted showroom closures.
Strong cash generation was also delivered in the period, with net cash of £28.9m at February 28.
The Marshall board highlighted the continuing impact of COVID-19 and the global semi-conductor shortage as headwinds for the sector in the remainder of 2021, despite the company’s forecasted matching of 2019’s trading performance.
Gupta said new vehicle supply issues would vary from brand to brand. He said: “It’s more complicated for us as we have 17 car brands, some of which say they don’t expect and impact, others suggesting it may be 40%, and some saying the issues will extend into 2022.
“It’s a difficult issue to get a handle on.
“The fundamental thing is that the manufacturers want their franchise partners to continue to be viable.”
In its analysis of Marshall Motor Holding’s latest trading update, Zeus Capital said that the car retail group “remains a highly reliable platform that is positioned to emerge as a sector winner, as the effects of COVID-19 accelerate consolidation across the industry”.