Vertu Motors Plc · LSE:VTU
Vertu Motors — H1 FY22 Earnings Presentation
32 slides from Vertu Motors's earnings presentation, October 2021
Slide 1: Analyst and Investor Presentation Interim Results
Analyst and Investor Presentation Interim Results
Slide 2: Agenda
Agenda 2 First Half Highlights – Robert Forrester CEO H1 Financial Results – Karen Anderson CFO Strategic Update and Outlook – Robert Forrester CEO Interim Results FY22
Slide 3: At a Glance
At a Glance 3 a x 1 = Cia 60 i 300 -(@) £50,000 [Fr 4,000 Every hour the hour = C) C) car sold vehicles repaired of parts sold website visits Group is open Hi FY22 19 Ht FY20 16 Group HI FY18 1.4 Revenues (£'bn) HI FY16 12 k j | 39.2p ‘August 2021 Sales Outlets Tangible Tangible net assets 154 netas
Slide 4: H1 FY22 Highlights – Tailwinds with delivery of operational excellence
H1 FY22 Highlights – Tailwinds with delivery of operational excellence 4 Technological Innovation Portfolio Management Capital Allocation Discipline Colleague Focus Convergence in sales process via Development of strong consumer brands Net cash £57.3m 84% of colleagues consider the Group a technolog
Slide 5: H1 FY22 Financial KPI's
H1 FY22 Financial KPI’s 5 Revenue Profitability Cash Shareholders Revenue Gross Margin Free Cash Flow EPS £1.9bn 11.6% £63.6m 10.4p 59.6% £51.1m £57.3m 61.5p Like-for-like1 Profit Before Tax Net Cash Tangible Net growth Assets per share 1 Like-for-like comparison is based on H1 FY22 vs H1 FY21 Inter
Slide 6: Financial Results
Financial Results 6 Karen Anderson CFO
Slide 7: Income Statement
Income Statement 7 6 months ended 31 August 2021 v 2019 £’m (unless otherwise stated) 2021 2020 2019 % Change Revenue 1,924.1 1,119.3 1,647.1 +16.8 Gross profit 223.1 129.5 172.7 +29.2 Gross margin % 11.6% 11.6% 10.5% +1.1 Government support (rates and CJRS) 5.6 27.1 - n/a Operating expenses (173.3)
Slide 8: Profit Bridge – H1 FY22 v H1 FY20 (Pre-Pandemic)
Profit Bridge – H1 FY22 v H1 FY20 (Pre-Pandemic) 8 Non-Core operating Core Group gross profit +£28.4m vs FY20 profit +£2.7m vs FY20 3.0 (0.3) 51.8 5.6 0.6 22.3 1.2 (2.4) Business Rates £5.2m 4.2 16.9 0.7 Adjusted PBT 6 New vehicle Fleet & Used vehicle Aftersales gross Operating Government Finance co
Slide 9: Strong Free Cash Flow
Strong Free Cash Flow 9 Net cash flow from operating activities: £77m 16 (9) Other: 7 Leases: 2 (5) (8) 15 Other: 7 64 (2) 62 Leases: 8 55 Operating Profit Depreciation & Working Capital Interest & Net Sustaining Lease Lease Principle Principles Free Cash Flow Net M&A Reduction Increase in Net Amort
Slide 10: Capital Allocation Discipline
Capital Allocation Discipline 10 Portfolio Management and Growth Core Group Investment Target EV/EBITDA ratios by year 3 on acquisitions Capital expenditure Investment in ancillary businesses Increasing Manufacturer flexibility over formats and Property portfolio optimisation representation Strong B
Slide 11: Balance Sheet
Balance Sheet 11 31 Aug 2021 31 Aug 2020 £’m £’m Current Assets: Decline due to reduced Intangible assets 101.5 101.2 availability of new vehicle inventory Retirement benefit asset 7.9 8.4 Vehicle Inventory Right of use assets 81.2 81.4 Tangible assets 246.9 230.3 31 Aug 2021 31 Aug 2020 £’m £’m Non
Slide 12: Strategic Update
Strategic Update Robert Forrester CEO Full Year Results FY21
Slide 13: Consistent Group Strategy
Consistent Group Strategy Mission & Values 13 To deliver an outstanding customer motoring Vertu Motors to be the most admired and To aim for every dealership to be the best respected dealer group in the automotive retailer in their respective town or city experience through honesty and trust industr
Slide 14: New vehicle market trends impacting performance
New vehicle market trends impacting performance 14 UK Market Group Like-for-Like New Vehicle Volumes New Vehicles Used Vehicles H1 FY2022 H1 FY2020 Units Units %Change UK vehicle registration Average value 3-year, forecast 2021 Reduced 60k mile vehicle Retail 15,287 18,024 (15.2) supply 20.4% in H
Slide 15: Aftersales: Inbuilt Resilience Generating 37% of Group Gross Profit
Aftersales: Inbuilt Resilience Generating 37% of Group Gross Profit 15 Established retention strategies • Monthly and prepaid service plans Average invoice value • Significant Aftersales Customer Experience Centre with 280 colleagues in Gateshead H1 FY20 H1 FY22 £244 £278 Conquest customers • New di
Slide 16: Digitalisation: Customers choose how to interact: bricks and clicks paramount
Digitalisation: Customers choose how to interact: bricks and clicks paramount 16 Customers who want to Customers who would like to Customers who want to Customers who prefer to complete a transaction be guided through their purchase on their terms, transact in person physically entirely online onlin
Slide 17: Comprehensive Market Offering
Comprehensive Market Offering 17 Vertu Motorpoint Cazoo Cinch H1 Revenues £1.9bn £0.6bn £0.2bn - Market Capitalisation (Oct ‘21) £190m £320m $5.3bn - Vehicles available for sale on web (Oct ‘21) Over 8,000 Approx. 3,000 Approx. 3,000 Approx. 5,000 1 Pure eCom, omni-channel or physical retail x x Con
Slide 18: Evolving Trends – Electrification quickens
Evolving Trends – Electrification quickens 18 UK vehicle Registrations (Jan-Aug)1 UK vehicle Parc1 0% 1% 34% 2021 Electric & Hybrid % of 7% 2021 58% total UK registrations: 42% 2020 20% 8% 35 million 2030 Vehicles on forecast the road ICE still majority 8.6 years of Vehicle Parc +19% average age 18%
Slide 19: Colleagues
Colleagues 19 Recruitment and Retention Training and Development • UK labour shortages impacting Group, • Pace of sector change drives need for currently approx. 500 vacancies enhanced training and skills development • Full review and implementation of revised • Degree & Technician apprentice scheme
Slide 20: Current Trading and Outlook
Current Trading and Outlook Robert Forrester CEO Full Year Results FY21
Slide 21: Current Trading – Strong outperformance
Current Trading – Strong outperformance 21 Like-for-like September Performance Total Like-for-like variance3 SMMT (2021 v 2020) % Var % Var to market % Var Group Revenues (0.1%) (8.9%) Service Revenues1 (0.9%) (6.8%) Volumes Used Retail Vehicles (1.9%) (7.4%) New Retail Vehicles (11.6%) (18.2%) +7.1
Slide 22: Outlook
Outlook 22 Near-term outlook Strategic focus • Impact of supply constraints likely to continue well into • Focus on operational execution and delivery of 2022 strategic goals • Vehicle sales margins likely to remain robust • Group digital developments accelerating • Colleague reward enhancements to
Slide 23: Definitions of key terminology
Definitions of key terminology 23 Core: Comparison against H1 FY2020 Dealerships that have traded for the full period of March to August 2019 and March to August 2021 Comparison against H1 FY2021 Dealerships that have traded for the full period of March to August 2020 and March to August 2021 Like-f
Slide 24: New Retail Vehicle Trends
New Retail Vehicle Trends 24 H1 H2 H1 H2 H1 H2 H1 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 Selling price per unit [1] (£) 16,829 17,864 18,355 18,726 19,789 19,980 21,423 Gross profit per unit [1] (£) 1,365 1,447 1,418 1,524 1,436 1,714 1,688 Margin (Group) [1] 7.4% 7.4% 7.1% 7.4% 6.7% 7.9%
Slide 25: Fleet and Commercial Vehicle Trends
Fleet and Commercial Vehicle Trends 25 H1 H2 H1 H2 H1 H2 H1 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 Selling price per unit (£) 19,901 20,544 20,662 20,518 21,494 23,494 23,850 Gross profit per unit (£) 528 695 603 683 679 834 878 Margin (Group) 2.8% 3.5% 3.4% 4.0% 3.8% 4.1% 4.2% Like-for-li
Slide 26: Used Vehicle Trends
Used Vehicle Trends 26 H1 H2 H1 H2 H1 H2 H1 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 Selling price per unit (£) 14,069 14,797 14,517 14,637 15,141 15,454 16,194 Gross profit per unit (£) 1,233 1,182 1,172 1,244 1,386 1,458 1,657 Margin (Group) 8.8% 8.0% 8.1% 8.5% 9.2% 9.4% 10.2% Margin (Core
Slide 27: Aftersales Trends
Aftersales Trends 27 Service revenue mix – Core Group FY22 H1 vs FY20 H1 Parts and Core Group Service Accident Repair Total H1 FY2022 H1 FY2020 £’000 £’000 £’000 £'m £'m %Change Revenue[1] 67,099 85,849 152,948 Retail 31.2 30.4 2.6 Revenue[1] change (15) 1,320 1,305 Internal 14.9 14.8 0.7 Warranty 8
Slide 28: Vehicle Volumes Sold
Vehicle Volumes Sold 28 Total units sold H1 FY22 vs H1 FY20 Like-for-like units sold H1 FY22 vs H1 FY20 +/- % +/- % 49,697 44,158 +10.3% Used Retail Used Retail 45,036 43,923 +0.5% 29,713 11,413 9,179 New Fleet & Agency Car (2.6%) New Fleet & Agency Car (21.6%) 11,716 11,707 6,315 SMMT (26.8%) 9,917
Slide 29: Net Debt
Net Debt 29 Facilities Drawn Facilities Drawn at 31 Aug 21 at 31 Aug 21 at 28 Feb 21 at 28 Feb 21 £’m £’m £’m £’m 5 year acquisition facility (from February 2019) 62.0 43.9 62.0 53.8 20 year mortgage facility (from December 2020) 12.7 12.3 12.7 12.6 1 year working capital facility (from May 2021) 48
Slide 30: Digitalisation: Effortless Customer Journeys
Digitalisation: Effortless Customer Journeys 30 Total enquiries and like-for- Awareness Consideration Purchase Retention like change H1 FY22 v H1 FY20 80% of customers agree they would use Customer Prospecting Group again Offer High standard Franchise when they want 14-day money Free delivery 90 day
Slide 31: Dealership Portfolio
Bristol Street Macklin Dealership Portfolio Ford Outlets 21 Motors 19 Motors 2 Vertu 31 Vauxhall 15 15 Nissan 11 9 2 154 sales outlets Hyundai Renault 11 8 9 8 2 Peugeot 7 5 2 Volume Citroen 6 6 SEAT 4 4 Skoda 4 4 84 Kia 3 1 2 Mazda 2 1 1 MG 2 2 Suzuki 1 1 Total Volume 95 82 11 2 Honda 14 14 58 Volk
Slide 32: Disclaimer
Disclaimer 32 This presentation contains forward looking statements. Although the Group believes that the estimates and assumptions on which such statements are based are reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond the Group’s control. Th