Vertu Motors Plc · LSE:VTU
Vertu Motors — FY2022 Earnings Presentation
35 slides from Vertu Motors's earnings presentation, May 2022
Slide 1: Analyst and Investor Presentation Year End Results
Vertu Motors plc " = - Analyst and Investor Presentation» le Year End Result Na | Year ended 28 February 2022
Slide 2: Agenda
AGENDA 2 Highlights – Robert Forrester CEO Financial Results – Karen Anderson CFO Strategic Update and Outlook – Robert Forrester CEO Full Year Results FY22
Slide 3: At a Glance
AT A GLANCE 3 Full Year Results FY22
Slide 4: FY22 Highlights – Tailwinds with Delivery of Operational Excellence
FY22 HIGHLIGHTS – TAILWINDS WITH DELIVERY OF OPERATIONAL EXCELLENCE 4 Technological Innovation Portfolio Management Capital Allocation Discipline Colleague Focus Sales tech platform best in class and Development of strong consumer brands Net Cash £16.2m, net of used car stocking 88% of colleagues co
Slide 5: Financial Results
Financial Results Karen Anderson CFO
Slide 6: FY22 Financial KPI's
FY22 FINANCIAL KPI’s 6 Revenue Profitability Cash Shareholders Revenue Gross Margin Free Cash Flow Basic EPS £3.6bn 12.0% £44.2m 16.64p 1 2 32.2% £78.8m £16.2m 66.8p Like-for-like Profit Before Tax Net Cash Tangible Net Assets growth per share 1 Like-for-like comparison is based on FY22 vs FY21 2 In
Slide 7: Income Statement
INCOME STATEMENT 7 Year Ended 28 February 2022 v 2020 £’m (unless otherwise stated) 2022 2021 2020 % Change Revenue 3,615.1 2,547.7 3,064.5 +18.0% Gross profit 435.4 301.0 334.1 +30.3% Gross margin % 12.0% 11.8% 10.9% +1.1% Government support (rates and CJRS) 6.6 36.5 - - Operating expenses (354.3)
Slide 8: Profit Bridge – FY22 v Pre-Pandemic FY20
PROFIT BRIDGE – FY22 V PRE-PANDEMIC FY20 8 Core Group Gross Profit Movement: +£54.8m 6.6 (11.0) 1.5 4.5 80.7 38.1 1.7 2.8 (0.4) Core Group Operating Expenses Increase +£11.0m Headcount & Salary +£1.8m Performance Related Pay +£6.4m 6.7 Marketing +£3.9m 7.2 Other Costs (£1.1m) 23.0 FY20 New New fleet
Slide 9: Strong Free Cash Flow
STRONG FREE CASH FLOW 9 Net cash flow from operating activities: £69.0m Working Capital net cash outflow (£28.0m) Used vehicle inventory & demonstrators (£34.8m) 31.3 Funded new vehicle inventory including VAT (£32.0m) Fully paid new vehicle inventory £24.3m Increased customer deposits £12.0m 1.1 Ot
Slide 10: Capital Allocation Discipline
CAPITAL ALLOCATION DISCIPLINE 10 Tangible net assets per share 66.8p Significant firepower of £90m1 Net Cash position of £16.2m at 28 February 2022 (net of £11.6m used vehicle stocking loan utilisation) Investment in growth Return to Shareholders Acquisitions and Growth Reinvest in Operations Divide
Slide 11: Balance Sheet
BALANCE SHEET 11 28 Feb 2022 28 Feb 2021 £’m £’m Current Assets: Decline of inventory due to reduced supply of new vehicles Intangible assets 105.2 101.1 Retirement benefit asset 9.1 6.2 Vehicle Inventory Right of use assets 78.3 81.2 Tangible assets 254.1 246.7 28 Feb 2022 28 Feb 2021 Variance £’m
Slide 12: Strategic Update
Strategic Update Robert Forrester CEO
Slide 13: Consistent Group Strategy
CONSISTENT GROUP STRATEGY 13 Mission & Vertu Motors to be the most admired and Values 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 14: Vehicle Sales: Market Trends
VEHICLE SALES: MARKET TRENDS 14 Electrification UK Market UK share of registrations by fuel type (SMMT) New Vehicles Used Vehicles BEV/Hybrid BEV/Hybrid UK vehicle registration Average value 3-year, forecast 20221 Reduced 60k mile vehicle supply 22% in 2021 2 1.72 million FY22 FY21 ICE ICE 4.5% on
Slide 15: Vehicle Sales
VEHICLE SALES 15 Like-for-Like Vehicle Volumes Group Like- Group Like- FY2022 FY2020 for-like % UK % Change 1 for-like v Group Used Car Sales Units Units Change (SMMT) SMMT % Selling price per unit2 Retail 27,081 31,696 (14.6) (17.1) 2.5 £17,848 Motability 7,261 9,235 (21.4) (24.5) 3.1 £14,573 Fleet
Slide 16: Agency Introduction
AGENCY INTRODUCTION 16 Current Status Impact • Some Manufacturers implementing or considering • Reduction in turnover and cost of sales move from Block Exemption Franchise model for new • Margin enhancement of handling fee vehicle sales to agency models • Reduced operating expenses • Consultation un
Slide 17: Aftersales: Market Trends and Service Performance
17 AFTERSALES: MARKET TRENDS AND SERVICE PERFORMANCE UK Market Group Service revenue mix – Core Group UK licenced cars by year of registration FY2022 FY2020 £'m £'m %Change Millions 2018 1 2021 2 % Change Retail 62.8 59.9 4.8 Internal 27.7 28.0 (1.1) 0-3 years 7.0 5.2 (25.7%) Warranty 15.3 18.8 (18.
Slide 18: Aftersales: Inbuilt Resilience Generating 38% of Group Gross Profit
18 AFTERSALES: INBUILT RESILIENCE GENERATING 38% OF GROUP GROSS PROFIT Accident Like-for-like FY22 v FY20 Service Parts Total & Smart Repair Revenue1 (£’m) 131.0 149.2 22.5 302.7 Revenue1 Change % 0.0% 0.5% 21.2% 1.6% Gross profit change (£’m) (0.4) 1.7 1.4 2.7 Gross Margin2 % 76.7% 22.5% 37.8% 47.1
Slide 19: Digitalisation Progress
DIGITALISATION PROGRESS 19 Online Reservation Concierge Service Ecommerce Used Vehicle Aftersales of Vehicle Sales 60% conversion from £99 New centralised team launched Approximately 900 vehicles sold Over 73,000 online service reservation fees taken to sale mid October 2021 purely online bookings O
Slide 20: Brand Strength – Effective Marketing and Partnerships
BRAND STRENGTH – EFFECTIVE MARKETING AND PARTNERSHIPS 20 Prompted UK Brand Awareness Vertu Motors 6.9%1 Macklin Motors 39.9%2 Bristol Street Motors 51.9%1 1 2 England & Wales only Scotland only Source: YouGov survey April 2022 TV Campaign: Always at the heart of it TV Campaign: It’s all in the detai
Slide 21: Colleague Engagement and Development
21 COLLEAGUE ENGAGEMENT AND DEVELOPMENT Engagement and Retention Training and Development • UK labour shortages persist, currently approx. • Pace of sector change drives need for 500 Group vacancies enhanced training and skills development • Full review and implementation of revised • Over 200 appre
Slide 22: Current Trading and Outlook
Current Trading and Outlook | > \\ Robert Forrester CEO &)s
Slide 23: Current Business Priorities
CURRENT BUSINESS PRIORITIES 23 Cost Conversion Customer Experience Full Year Results FY22
Slide 24: Current Trading
CURRENT TRADING 24 Like-for-like March & April Performance Total Like-for-like variance3 SMMT (2022 v 2021) % Var % Var to market % Var Group Revenues 5.1% 4.3% Service Revenues1 5.8% 5.0% Volumes Used Retail Vehicles (12.9%) (13.2%) - New Retail Vehicles 9.3% 7.4% 0.3% 7.1% Motability Vehicles (17.
Slide 25: Outlook
OUTLOOK 25 Near-term outlook Strategic focus • Impact of vehicle supply constraints likely to continue • Focus on operational execution and delivery of • Cost of living pressure may impact consumer strategy: confidence and demand • Growth • Cost pressures on Group remain • Digitisation • Priorities
Slide 26: Definitions of Key Terminology
DEFINITIONS OF KEY TERMINOLOGY 26 Core: Comparison against FY2020 Dealerships that have traded for the full period of March to February 2020 and March to February 2022 Comparison against FY2021 Dealerships that have traded for the full period of March to February 2021 and March to February 2022 Like
Slide 27: New Retail Vehicle Trends
NEW RETAIL VEHICLE TRENDS 27 H1 H2 H1 H2 H1 H2 H1 H2 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 FY2022 Selling price per unit [1] (£) 16,829 17,864 18,355 18,726 19,789 19,980 21,423 22,539 Gross profit per unit [1] (£) 1,365 1,447 1,418 1,524 1,436 1,714 1,688 2,205 Margin (Group) [1] 7.4% 7.
Slide 28: Fleet and Commercial Vehicle Trends
FLEET AND COMMERCIAL VEHICLE TRENDS 28 H1 H2 H1 H2 H1 H2 H1 H2 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 FY2022 Selling price per unit (£) 19,901 20,544 20,662 20,518 21,494 23,494 23,850 24,874 Gross profit per unit (£) 528 695 603 683 679 834 878 1,046 Margin (Group) 2.8% 3.5% 3.4% 4.0% 3.8
Slide 29: Used Vehicle Trends
USED VEHICLE TRENDS 29 H1 H2 H1 H2 H1 H2 H1 H2 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2022 FY2022 Selling price per unit (£) 14,069 14,797 14,517 14,637 15,141 15,454 16,194 19,951 Gross profit per unit (£) 1,233 1,182 1,172 1,244 1,386 1,458 1,657 1,844 Margin (Group) 8.8% 8.0% 8.1% 8.5% 9.2%
Slide 30: Aftersales Trends
AFTERSALES TRENDS 30 Service revenue mix – Core Group FY22 vs FY20 Parts and Core Group Service Accident Repair Total FY2022 FY2020 % £’000 £’000 £’000 £'m £'m Change Revenue[1] 130,982 171,639 302,621 Retail 62.8 59.9 4.8 Revenue [1] change (39) 4,710 4,671 Internal 27.7 28.0 (1.1) [1] Warranty 15.
Slide 31: Vehicle Volumes Sold
VEHICLE VOLUMES SOLD 31 Total units sold FY22 vs FY20 Like-for-like units sold FY22 vs FY20 +/- % +/- % 35,916 33,953 (26.4%) Used Trade (16.3%) Used Trade 30,054 24,979 84,771 83,025 (7.1%) Used Retail +4.7% Used Retail 88,772 77,126 21,548 (28.0%) 22,757 New Fleet & Agency Car New Fleet & Agency C
Slide 32: Net Debt
NET DEBT 32 Facilities Drawn Facilities Drawn at 28 Feb 22 at 28 Feb 22 at 28 Feb 21 at 28 Feb 21 £’m £’m £’m £’m 5 year acquisition facility (from February 2019) 62.0 44.0 62.0 53.8 20 year mortgage facility (from December 2020) 12.7 12.0 12.7 12.6 1 year working capital facility (from May 2022) 48
Slide 33: Digitalisation: Effortless Customer Journeys
DIGITALISATION: EFFORTLESS CUSTOMER JOURNEYS 33 Total enquiries and like-for- Awareness Consideration Purchase Retention like change FY22 v 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 appoi
Slide 34: Dealership Portfolio
DEALERSHIP PORTFOLIO Bristol Street Macklin Vertu 34 Outlets Motors Motors Motors Ford 21 19 2 Vauxhall 15 14 1 160 sales outlets Hyundai Nissan 12 11 9 9 3 2 Renault 9 8 1 Peugeot 8 6 2 Volume Citroen 6 6 SEAT 4 4 85 Skoda 4 4 Kia 3 1 2 MG 3 2 1 Mazda 2 1 1 Total Volume 98 82 14 2 Honda 14 14 60 Vo
Slide 35: Disclaimer
DISCLAIMER 35 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