Vertu Motors Plc · LSE:VTU
Vertu Motors — FY2020 Earnings Presentation
32 slides from Vertu Motors's earnings presentation, Jun 3, 2020
Slide 1: Analyst & Investor Presentation
Interim results for the 6 months ended 31 August 2019 Analyst & Investor 9 October 2019 Presentation Full year results for the 12 months ended 29 February 2020 3 June 2020
Slide 2: Strategic highlights
Strategic highlights • Adjusted profit before tax of £23.5m (2019: £23.7m) in line with expectations, despite absorbing costs and losses of £0.7m in relation to recent acquisitions • 12 Sales outlets in the year added including 3 new franchise partners • Strong management supported by scalable, sect
Slide 3: Financial highlights
Financial highlights £82.3m (2.8%) growth in revenues to £3.1bn, with like-for-like revenue growth of 1.2% Excellent aftersales performance with like-for-like revenue growth of 4.6%, delivering a 5.9% growth in like-for-like gross profit Stable used vehicle volume and margins delivered despite
Slide 4: COVID-19 - Lockdown
COVID-19 - Lockdown 7 May 18 May 24 March Covenant waiver and •Online retailing ‘Lockdown’ extended facilities enhanced Sales showrooms agreed – RNS •Deliveries commence close – RNS released released in England 30 March 10 May 1 June Aftersales reopens on Phase 1 ease of •England sales skeleton basi
Slide 5: COVID-19 and Outlook
COVID-19 and Outlook • March activity was curtailed due to the lockdown but remained profitable at £5.9m Adjusted PBT • April and May combined saw significant losses before tax of approximately £20m (after Government support) • Meticulous planning for reopening showrooms executed: • Customer and col
Slide 6: Group strategy
Group strategy Growth – scale and brand • To grow as a major scaled franchised dealership group and to develop our portfolio of Manufacturer partners, whilst being mindful of industry development trends, to maximise returns Digitalisation • To be at the forefront of omni-channel retailing and digita
Slide 7: Growth – scale and brand
Growth – scale and brand UK sector • Continued long-term role for franchise retailers as key element in distribution for Manufacturers • Network changes accelerating: • Further reduction in sales outlets in UK likely • Manufacturers seeking reduced number of partners • Physical locations • Remain pi
Slide 8: Portfolio development
Portfolio development • 12 sales outlets added in year, operating 133 sales outlets • Acquisitions and growth • Volkswagen – Leeds, Harrogate, Skipton, Huddersfield (January 2020) • Kia/Suzuki/Mitsubishi – Edinburgh (January 2020) • Honda/Kia – Bradford (February 2020) • Peugeot - Derby (February 20
Slide 9: Digitalisation Generating revenues and productivity benefits
Digitalisation Generating revenues and productivity benefits • Acceleration in transition to omni- • Increasing system integration to channel retailing drive efficiency across Group • Online sales now available on all • Leo service chatbot now Group websites with enhanced integrated into service dia
Slide 10: Colleague and Customer focus inherent in Group culture
Colleague and Customer focus inherent in Group culture Colleague satisfaction survey (August 2019) Customer satisfaction (April 2020) 83% Used car 82% of sales 57% of service 84% would 90% believe 81% of Net Promoter departments departments recommend the 97% know the directors colleagues Score on ab
Slide 11: Ancillary Businesses Enhancing revenues and returns
Ancillary Businesses Enhancing revenues and returns • Online sale of parts via • Wheelchair accessible vehicle • Sale of Group sourced new Marketplaces conversion and supply vehicles to Taxi drivers • Growing revenues of £7m per • Fifth largest in UK • Over 600 vehicles sold per annum • Over 450 veh
Slide 12: Financial performance
Financial performance FY2020 FY2019 Pre IFRS % Change FY2020 % Change 16 • Profit before tax impacted by £14.4m impairment charge Revenue £2,982.2m £3,064.5m +2.8% £3,064.5m +2.8% • Rise in new vehicle stocking finance Gross profit £322.1m £334.1m +3.7% £334.1m +3.7% costs of £1.7m Gross margin 10.8
Slide 13: Strong balance sheet Flexibility and resilience
Strong balance sheet Flexibility and resilience 28 Feb 2019 29 Feb 2020 29 Feb 2020 • Strong balance sheet underpinned by Pre IFRS 16 property with low borrowings £’m £’m £’m Intangible assets 114.9 101.4 101.4 • Pension surplus on funding basis: no Retirement benefit asset 6.4 8.9 8.9 contributions
Slide 14: Movement in net debt
Movement in net debt FY2019 FY2020 FY2020 pre IFRS 16 £’m £’m £’m Movement in working capital FY2020 £’m Adjusted EBITDA 38.1 40.3 57.4 New funded vehicle inventory 7.0 Working capital movement 18.9 (23.4) (23.6) New fully paid vehicle inventory (11.9) Capital expenditure [1] (25.3) (14.5) (14.5) Cr
Slide 15: Cash and borrowing facilities
Cash and borrowing facilities Facilities Drawn Facilities Drawn at 29 Feb 20 at 29 Feb 20 at 22 May 20 at 22 May 20 £’m £’m £’m £’m 5 year acquisition facility (from February 2019) 62.0 43.6 62.0 53.7 1 year working capital facility (from April 2020) 68.0 - 68.0 - Total committed facilities 130.0 43
Slide 16: Profit bridge 12 months ended 29 February 2020
Profit bridge 12 months ended 29 February 2020 Movement in Core Group gross profit +£7.0m £'m 37.0 32.0 7.3 (3.9) [1] (1.9) [1] 27.0 2.2 (0.3) (0.6) (0.8) 23.7 (2.2) 23.5 (3.6) 3.1 23.0 22.0 17.0 12.0 7.0 2.0 [1] Adjusted profit before tax, adjusted for share based payments charge, amortisation of i
Slide 17: Operating expenses 12 months ended 29 February 2020
Operating expenses 12 months ended 29 February 2020 £’m Core Group increase - £3.9m 310.0 1.4 (1.9) 2.1 305.0 3.1 305.0 2.3 7.9 301.9 300.0 294.7 (1.5) 295.0 290.0 285.0 Operating Closed sites Acquisitions Employment Marketing Occupancy Other Operating IFRS 16 Operating expenses and salary operating
Slide 18: Revenue and margin analysis Total Group
Revenue and margin analysis Total Group Revenue mix – FY2019 Revenue mix – FY2020 Gross margin % 50.0% 46.9% 9% 9% 43.9% 45.0% 21% 23% 40.0% 41% 40% 35.0% 29% 28% 30.0% 25.0% Gross profit mix – FY2019 Gross profit mix – FY2020 20.0% 15.0% 6% 8% 10.0% 8.4% 8.3% 7.4% 7.3% 20% 19% 42% 43% 5.0% 3.1% 3.6
Slide 19: Servicing Recurring high margin income: strong execution
Servicing Recurring high margin income: strong execution Impact of Service excluding internal rate impact of internal • Growth in service revenue driven by: Core Group Service change rate change • Increased customer retention £’000 £’000 £’000 Revenue[1] 124,692 +3,883 120,809 • 102,000 Group servic
Slide 20: Used vehicles Robust execution in volatile period
Used vehicles Robust execution in volatile period Average selling prices and gross profit per unit • Used car market stable in volume 1,246 1,278 1,244 16,000 1,176 1,153 1,222 1,197 1,233 1,182 1,172 terms in year mirrored by Group, 1,200 14,000 1,000 with like-for-like volumes flat 12,000 10,000 •
Slide 21: New retail vehicles Declining volumes as market softened
New retail vehicles Declining volumes as market softened Average selling prices and gross profit per unit 1,524 • UK new retail registrations fell 4.8% 20,000 1,382 1,447 1,418 1,600 1,359 1,370 1,365 18,000 1,116 1,202 1,211 1,400 • Group saw like-for-like retail 16,000 14,000 1,200 volumes decline
Slide 22: Fleet & commercial vehicles Market share gains in fleet car sector
Fleet & commercial vehicles Market share gains in fleet car sector Average selling prices and gross margin % 4.00% 30,000 3.40% 3.20% 3.40% 3.20% 3.20% 3.50% 3.40% 4.00% • Significant success in growing 25,000 2.80% fleet car volumes and Gross Margin % 2.60% 3.00% 20,000 profitability Per Unit 15,00
Slide 23: Summary
Summary • Values driven business with strong systems and experienced leadership team executing well • Acceleration of deployment of omni-channel retailing functionality and technology to drive efficiencies and reduce costs • Strong balance sheet position with low debt levels results in significant l
Slide 24: List of appendices
List of appendices 1. Definitions of key terminology 2. Used vehicle trends 3. New retail vehicle trends 4. Fleet & commercial vehicle trends 5. Vehicle volumes sold 6. Dealership portfolio 7. Group Vision Analyst & Investor Presentation | 23
Slide 25: Definitions of key terminology
Appendix 1 Definitions of key terminology Core: Dealerships that have traded for two full consecutive financial years and comparatives are restated each year, this definition is used for the profit bridge Like-for-like: Dealerships that have comparable trading periods in two consecutive financial ye
Slide 26: Used vehicle trends
Appendix 2 Used vehicle trends H1 H2 H1 H2 H1 H2 H1 H2 FY2017 FY2017 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 Selling price per unit (£) 12,524 12,905 13,146 13,658 14,069 14,797 14,517 14,637 Gross profit per unit (£) 1,246 1,222 1,197 1,278 1,233 1,182 1,172 1,244 Margin (Group) 9.9% 9.5% 9.1% 9.
Slide 27: New retail vehicle trends
Appendix 3 New retail vehicle trends H1 H2 H1 H2 H1 H2 H1 H2 FY2017 FY2017 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 Selling price per unit [1] (£) 15,515 15,913 16,571 16,490 16,829 17,864 18,355 18,726 Gross profit per unit [1] (£) 1,211 1,359 1,370 1,382 1,365 1,447 1,418 1,524 Margin (Group) [1]
Slide 28: Fleet & commercial vehicles trends
Appendix 4 Fleet & commercial vehicles trends H1 H2 H1 H2 H1 H2 H1 H2 FY2017 FY2017 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 Selling price per unit (£) 17,188 17,713 18,549 19,032 19,901 20,544 20,662 20,518 Gross profit per unit (£) 536 585 576 588 528 695 603 683 Margin (Group) 3.2% 3.4% 3.2% 3.2
Slide 29: Vehicle volumes sold
Appendix 5 Vehicle volumes sold Total units sold Like-for-like units sold 84,771 83,382 Used Retail +0.4% Used Retail (0.1%) 84,444 83,465 New Fleet & 22,559 New Fleet & 22,357 +17.8% Agency Car 19,146 +16.8% SMMT +0.9% Agency Car 19,154 17,794 15,783 New Commercial +9.0% New Commercial (3.3%) SMMT
Slide 30: Dealership portfolio
Appendix 6 Dealership portfolio Bristol Street Macklin Outlets Motors Vertu Motors Farnell 12 Ford 22 19 3 Vauxhall 14 14 Nissan 11 9 2 Hyundai 10 8 2 Renault 6 6 Peugeot 6 5 1 Volume SEAT 4 4 Citroen 4 4 Skoda 4 4 Mazda 2 1 1 Kia 2 1 1 36 Mitsubishi Suzuki 1 1 1 1 Total Volume 87 74 1 12 Honda 13 1
Slide 31: Group Vision
Appendix 7 Group Vision Analyst & Investor Presentation | 30
Slide 32: Disclaimer
Disclaimer 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. The G