Vertu Motors Plc · LSE:VTU
Vertu Motors — H1 FY24 Earnings Presentation
34 slides from Vertu Motors's earnings presentation, October 2023
Slide 1: Vertu Motors plc Interim Results
Vertu Motors plc Interim Results For the six month period ended 31 August 2023
Slide 2: Vertu Advantages: our investment case
Vertu Advantages: our investment case 2 Growth Focus Disciplined Capital Allocation Disciplined Capital Scale Benefits Customer Lifecycle Cost Optimisation Allocation • Stable, experienced • Full sales and aftersales • In-house systems to improve • Active portfolio management management with capacit
Slide 3: At A Glance
At A Glance 3 1 1 Excluding lease liabilities Interim Results FY24
Slide 4: Agenda
Agenda 4 Financial Performance Karen Anderson Operational Performance and Strategic update Robert Forrester Q&A Interim Results FY24
Slide 5: Financial Performance
Financial Performance Robert Forrester Karen Anderson CEO CFO
Slide 6: H1 FY24 Financial KPIs
H1 FY20 1.6 H1 FY21 1.1 H1 FY22 1.9 H1 FY23 2.0 Revenue £’bn H1 FY24 2.4 H1 FY20 10.5 H1 FY24 Financial KPI’s H1 FY21 11.6 H1 FY22 11.6 H1 FY23 11.2 Gross Margin % H1 FY24 11.0 H1 FY20 17 H1 FY21 5 H1 FY22 52 H1 FY23 28 H1 FY24 Adjusted PBT £’m 32 H1 FY20 170 H1 FY21 171 H1 FY22 223 Assets £’m H1 FY
Slide 7: Income Statement
Income Statement 7 Revenue: Grew by £0.4bn, with an increase of Six Months Ended 31 August £159.9m (8.1%) delivered in the Core Group, aided by new and used average vehicle sales prices. £’m (unless otherwise stated) 2023 2022 % Change The remaining increase arose from acquisitions Revenue 2,422.5 1
Slide 8: Profit Bridge – Adjusted PBT
Profit Bridge – Adjusted PBT 8 • Strong new car, fleet and commercial margins increased gross profit • Used vehicle volume declined 5.7% L4L due to lack of 0% interest events: Gross profit per unit up on H2 FY23 • Growth in gross profit in all aftersales channels • Cost pressures evident with inflat
Slide 9: Management of cost headwinds
Management of cost headwinds 9 6 months ended 31 August 2023 2022 Variance Variance Energy Salary Marketing £’m Costs Costs Costs £’m £’m £’m % Salary cost 110.6 109.2 1.4 1% Costs up over 100% as Salary Costs exclude £0.7m (4%) reduction in Vehicle and valeting costs 21.4 18.6 2.8 15% fixed electri
Slide 10: Balance Sheet
Balance Sheet 10 31 August 31 August 28 Feb 2023 2022 2023 • Defined benefit pension remains in surplus and fully £’m £’m £’m funded on actuarial basis: no cash contributions Intangible assets 129.6 107.5 129.9 • Property portfolio at depreciated historic cost with disposals expected at above book v
Slide 11: Cash Flow
Cash Flow 11 Cash Flow 6 Months Ended Facilities Drawn 31 August 2023 £’m £’m Net Debt at 31 August 2023 £’m £’m Adjusted operating profit1 41.4 5 year acquisition facility (from December 2022) 93.0 43.4 Depreciation, amortisation and impairment 16.4 20 year mortgage facility (from December 2020) 11
Slide 12: Capital Allocation Discipline
Capital Allocation Discipline 12 Tangible Net 2 FY24 Capital Interim Repurchased Net Debt1 Gearing Assets Expenditure Dividend Shares £238.6m £90.7m 25.5% £27.8m 21.4% increase £5.0m Investment in growth Return to Shareholders Acquisitions and Growth Reinvest in Operations Dividends Share Buyback •
Slide 13: Active Portfolio Management - Pruning
Active Portfolio Management - Pruning 13 • £2.2m of cash generated from disposal of assets held for resale in the Period • Disposals were above net book value by £0.5m • Further proceeds of £7.3m anticipated over next nine months not included in current year net capex forecast • Highest value of the
Slide 14: Operational Trends
Operational Trends Robert Forrester CEO
Slide 15: Group Vehicle Sales Performance
Group Vehicle Sales Performance 15 Like-for-Like Vehicle Volume Six months to 31 August 2023 Gross Profit Per Unit £ 2,170 H1 FY24 Group Like-for- UK % Change Group Like-for- 2 1 Volume like % Change (SMMT) like v SMMT % New retail car and bikes3 20,027 1.1% 1.4% (0.3%) 1,418 Motability 8,626 78.0%
Slide 16: Group Aftersales Performance – Gross profit up in all channels (L4L)
Group Aftersales Performance – Gross profit up in all channels (L4L) 16 Like-for-like Accident & Service Parts Fuel Forecourt Total H1FY24 v H1FY23 Smart Repair 1 Revenue (£’m) 85.5 106.4 11.9 6.0 209.8 1 Revenue Change % 5.7% 11.8% 23.5% (11.3%) 9.0% Gross profit (£’m) 62.7 24.0 7.0 0.5 94.2 Gross
Slide 17: Group Aftersales Performance – Technicians
Group Aftersales Performance – Technicians 17 • Each service technician generates an average £115,000 of service and parts gross profit for the Group annually • Vacancy levels result in lost gross profit generation • Decisive pay action taken in July to increase basic pay levels to aid retention and
Slide 18: Strategic update
Strategic update Full Year Results FY21
Slide 19: Electrification
Electrification 19 Ban of ICE sales ZEV Mandate now from 2035 Rules of Origin (which stays) • Internal Combustion Engine vehicle • Manufacturers to ensure 22% of new • Applies January 2024 sales ban (excluding certain hybrids) car sales and 10% of new vans are • BEV’s shipped between EU and UK now m
Slide 20: Agency
Agency 20 • Several Manufacturers have moved, or indicted they will move to an agency distribution model • Implementation is at an early stage • The Group has long operated the agency model for fleet and parts sales • Mercedes-Benz passenger cars moved to agency from 1 January 2023 and Volvo followe
Slide 21: Consistent Group Strategy
Consistent Group Strategy Mission & Values 21 Vertu Motors to be the most admired and To aim for every dealership to be the best To deliver an outstanding customer motoring respected dealer group in the automotive retailer in their respective town or city experience through honesty and trust industr
Slide 22: Growth – Helston acquisition, integration progressing as planned
Growth – Helston acquisition, integration progressing as planned 22 Performance in the Period: 6 Months Ended 31 August 2023 £’m Revenues 248.6 Gross Profit 29.4 Operating profit 6.0 • Scaled acquisition of 28 sales outlets in December 2022 • Fully integrated into Group’s systems and platforms by en
Slide 23: Brand Awareness
Brand Awareness 23 Prompted UK Brand Awareness 1 Bristol Street Motors 56.6% 2 Macklin Motors 38.3% 1 Vertu Motors 7.6% 1 2 England & Wales only Scotland only Source: YouGov survey August 2023 TV Campaign: Always at the heart of it The Group currently has over 485k social media followers This is ove
Slide 24: Digitalisation
Digitalisation 24 Vertu Self-service Data and Customer Data V-Pay Insights check in Platform (CDP) Market “first” used vehicle optimisation Deferred payment facility for service Significant enhancement in service Significant investment in Group’s data and automation platform, replacing customers all
Slide 25: Focus on Operational Excellence
Focus on Operational Excellence 25 Interim Results FY24
Slide 26: Current Trading & Outlook
Current Trading & Outlook 26 FY24 earnings in-line with current market expectations Current Trading Outlook • Strong trading profit generation in plate change month of • The Board remains cautious with regards to consumer September confidence and the impact of interest rates • Like-for-like vehicle
Slide 27: Summary
Summary 27 Group well-capitalised and asset backed Firepower to further expand operations and scale Digitalisation gathering pace in impact, benefiting customers and productivity People-focus provides talented, motivated colleagues to serve customers Group excited to benefit from pace of change and
Slide 28: Definitions of key terminology
Definitions of key terminology 28 Core: Comparison against H1 FY23 Dealerships that have traded for the full period of March 2022 to August 2023 and March 2021 to August 2022 Like-for-like: Dealerships that have comparable trading periods in two consecutive financial years, only the comparable perio
Slide 29: New Retail Vehicle Trends
New Retail Vehicle Trends 29 H1 H2 H1 H2 H1 H2 H1 H2 H1 FY20 FY20 FY21 FY21 FY22 FY22 FY23 FY23 FY24 Selling price per unit [1] (£) 18,355 18,726 19,789 19,980 21,423 22,539 24,062 24,191 25,906 Gross profit per unit [1] (£) 1,418 1,524 1,436 1,714 1,688 2,205 2,105 2,246 2,170 Margin (Group) [1] 7.
Slide 30: Fleet and Commercial Vehicle Trends
Fleet and Commercial Vehicle Trends 30 H1 H2 H1 H2 H1 H2 H1 H2 H1 FY20 FY20 FY21 FY21 FY22 FY22 FY23 FY23 FY24 Selling price per unit (£) 20,662 20,518 21,494 23,494 23,850 24,874 24,109 25,730 27,085 Gross profit per unit (£) 603 683 679 834 878 1,046 988 1,049 1,160 Margin (Group) 3.4% 4.0% 3.8% 4
Slide 31: Used Vehicle Trends
Used Vehicle Trends 31 H1 H2 H1 H2 H1 H2 H1 H2 H1 FY20 FY20 FY21 FY21 FY22 FY22 FY23 FY23 FY24 Selling price per unit (£) 14,517 14,637 15,141 15,454 16,194 19,951 19,861 20,328 21,580 Gross profit per unit (£) 1,172 1,244 1,386 1,458 1,657 1,844 1,560 1,468 1,535 Margin (Group) 8.1% 8.5% 9.2% 9.4%
Slide 32: Vehicle Volumes Sold
Vehicle Volumes Sold 32 H1 FY24 vs H1 FY23 H1 FY24 vs H1 FY23 Total units sold Like-for-like units sold +/- % +/- % 13,834 +0.3% Used Trade 14,195 +9.7% Used Trade 13,882 15,577 42,501 (5.7%) Used Retail 43,022 +2.1% Used Retail 40,099 43,921 11,333 +9.9% 11,522 New Fleet & Agency Car SMMT +36.3% Ne
Slide 33: Dealership Portfolio Enlarged
Dealership Portfolio Enlarged Bristol Street Macklin Vertu 33 Group Motors Motors Motors Helston Ford 20 19 1 - - 190 sales outlets Vauxhall Hyundai 16 12 15 9 1 3 - - - - Peugeot 11 6 2 - 3 Nissan 11 9 2 - - Volume Renault 9 8 1 - - Citroen 7 7 - - - 91 SEAT 4 4 - - - Skoda 4 4 - - - MG 4 3 1 - - K
Slide 34: Disclaimer
Disclaimer 34 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