Vertu Motors Plc · LSE:VTU
Vertu Motors — FY2021 Earnings Presentation
38 slides from Vertu Motors's earnings presentation, 2021
Slide 1: Analyst and Investor Presentation Full Year Results
Analyst and Investor Presgntati6n Full Year Results
Slide 2: 15 Years to Build a Scaled Business
2 15 Years to Build a Scaled Business Full Year Results FY21
Slide 3: Agenda
Agenda 3 FY21 Highlights – Robert Forrester CEO Financial Results – Karen Anderson CFO Strategic Update and Outlook – Robert Forrester CEO Full Year Results FY21
Slide 4: FY21 Highlights
FY21 Highlights 4 Technological Innovation Focus on Cost and Delivered Enhanced Scale Culture Achieved Liquidity Click2Drive sales tech £3.7bn normalised Decisive action to 87% of colleagues platform best in class revenue business reduce costs as activity consider the Group a curtailed by Covid grea
Slide 5: FY21 Financial KPI's
FY21 Financial KPI’s 5 Revenues Profitability Cash Shareholders Revenues Gross Margin Free Cash Flow EPS £2.5bn 11.8% £48m 4.44p (21.6%) £22.4m 153% 50.2p Like-for-like Profit before tax FCF conversion Tangible Net decline Assets per share Full Year Results FY21
Slide 6: Financial Results
Financial Results Karen Anderson CFO Full Year Results FY21
Slide 7: Income Statement
Income Statement 7 March to May June to February FY £’m (unless otherwise stated) FY21 FY20 FY21 FY20 FY21 FY20 % Change Revenue 332.3 926.9 2,215.4 2,137.6 2,547.7 3,064.5 (16.9%) Gross profit 39.5 91.4 261.5 242.7 301.0 334.1 (9.9%) Gross margin % 11.9% 9.9% 11.8% 11.4% 11.8% 10.9% +0.9% Furlough
Slide 8: Profit Bridge
Profit Bridge 8 All values £’ million Q1 Mar – May significantly Jun – Feb 2 impacted by first lockdown Group Profit before tax £39m Group Loss before tax2 (£14m) 20 (45) Core Group Gross Profit +£3m 8 (1) 1 25 23 8 (1) 18 (4) - (2) Adjusted Government Core Group Acquired Government New Vehicle Flee
Slide 9: Cost-focus: Maximising Productivity
Cost-focus: Maximising Productivity 9 Government and other support Variable cost reductions Improved productivity • £27.8m Furlough grant support • Vehicle fleet costs • Sales process enhancement received • Training moved online including online • £10.5m business rates relief and • Activity based co
Slide 10: Strong Free Cash Flow
Strong Free Cash Flow 10 Net cash flow from operating activities: £75m Uses of Free Cash Flow 29 (16) Leases: (3) Other: (13) (11) 30 (16) Leases: 16 48 (20) Other: 14 32 (2) (2) 24 153% FCF Conversion Operating Depreciation Working Interest & Net Lease Free Cash Net M&A Purchase of Purchase of Redu
Slide 11: Net Debt
Net Debt 11 Facilities Drawn Facilities Drawn at 28 Feb 21 at 28 Feb 21 at 29 Feb 20 at 29 Feb 20 £’m £’m £’m £’m 5 year acquisition facility (from February 2019) 62.0 53.8 62.0 43.6 20 year mortgage facility (from December 2020) 12.7 12.6 - - 1 year working capital facility (from May 2021) 48.0 - 6
Slide 12: Capital Allocation Discipline
Capital Allocation Discipline 12 Portfolio Management and Growth Core Croup Investment Target EV/EBITDA ratios by year 3 on acquisitions Capital expenditure Portfolio review to identify poor performing assets Increasing Manufacturer flexibility over formats and Property portfolio optimisation repres
Slide 13: Balance Sheet
Balance Sheet 13 28 Feb 2021 29 Feb 2020 £’m £’m Intangible assets 101.1 101.4 Retirement benefit asset 6.2 8.9 Intangible assets: £1.5m non-cash Right of use assets 81.2 87.0 impairment of goodwill included in non- underlying costs Tangible assets 246.7 229.1 Non-current assets 435.2 426.4 Current
Slide 14: Strategic Update
Strategic Update Robert Forrester CEO Full Year Results FY21
Slide 15: Evolving Trends
Evolving Trends 15 Customers • Acceleration of propensity to embrace online as part of buying journey • Strong customer satisfaction and local presence important Industry • Changing Manufacturer ambitions and distribution arrangements (including agency) • New entrants and disrupters Technology • Dat
Slide 16: Group Strategy
Group Strategy Mission & 16 To aim for every dealership to be To deliver an outstanding customer motoring Vertu Motors to be the most Values the best retailer in their respective admired and respected dealer town or city experience through honesty and trust group in the automotive industry PASSION
Slide 17: Sustainability
Sustainability 17 Work with our Manufacturer partners to provide Reduce the environmental Care for our colleagues and increasingly sustainable Impact of our business support communities choices for customers Goals Goals Goals • Increase the share of the Group’s • Deliver an annual 10% like-for- • At
Slide 18: Growth: Opportunities to Fulfil Ambitions
Growth: Opportunities to Fulfil Ambitions 18 % of UK Group sales points share of Group represented franchise Sales UK total by the new retail Franchise Outlets sales points Group sales FY21 Honda 14 140 10.0% 12.4% Ford 22 376 5.9% 8.4% Vauxhall 14 243 5.8% 6.8% UK dealer network highly fragmented H
Slide 19: Importance of Brand Awareness
Importance of Brand Awareness 19 Drive Measure Optimise • 3 core Group brands; going forward 9 • YouGov survey of brand awareness • Website efficiency Farnell outlets to be re-branded to utilised monthly • Conversion rate optimisation Vertu • Over 5,000 adult responders • Product maximisation • Sign
Slide 20: Importance of Brand Awareness
Importance of Brand Awareness 20 Full Year Results FY21
Slide 21: Digitalisation: Three Types of Customer (at least!)
Digitalisation: Three Types of Customer (at least!) 21 Customers who want to Customers who want to Customers who prefer to complete a transaction purchase on their terms, transact in person physically entirely online flexing between at a dealership online and at a dealership 434 ‘pure’ online vehicl
Slide 22: Digitalisation: Effortless Customer Journeys
Digitalisation: Effortless Customer Journeys 22 Total annual enquiries Awareness Consideration Purchase Retention and like-for-like change Prospecting 96% of used car Appointment Customer 27,600 customers would recommend us Offer High standard Franchise (9.2%) 14-day money Free delivery of vehicle 9
Slide 23: Vertu: Comprehensive Market Offering
Vertu: Comprehensive Market Offering 23 ✓ Brand Leadership ✓ Pure Ecom, omni-channel or physical retail ✓ In-house vehicle refurbishment ✓ Fully digital finance and part-exchange process ✓ Market leading NPS in used cars 5 Star Google Reviews: ✓ National footprint ✓ Testdrive option ✓ Delivery and c
Slide 24: Customer and Colleague Focus
24 Customer and Colleague Focus 84% H2 NPS used car score 87% of colleagues believe Vertu Motors is (10,400 respondents) a great place to work (FY20: 84%) Root cause analysis Non-Executive for on any complaints Colleague Engagement Pauline Best - NED 4.2 34,713 Google Recognition reviews 64% Outlets
Slide 25: Aftersales: Inbuilt Resilience Generating 43% of Group Gross Profit
Aftersales: Inbuilt Resilience Generating 43% of Group Gross Profit 25 Gross profit composition Established retention strategies Accident Repair • Pre-paid service plans 5% • Advanced contact centre Parts and strategy 21% Service Digital conquest New Cars 74% strategy 18% Aftersales 43% Online servi
Slide 26: Ancillary Businesses
Ancillary Businesses 26 • Independent online commercial • Online parts and accessory sales • Successful JV with Haymarket vehicle retailer • Increased revenues of £8.8m Media Group • Leasing Broker Federation’s best (FY20 £7.1m) • Currently supply of leasing PCH van broker for the last four years •
Slide 27: Current Trading and Outlook
Current Trading and Outlook Robert Forrester CEO Full Year Results FY21
Slide 28: Current Trading
Current Trading 28 March and April Performance Total Like-for-like SMMT % Var % Var % Var Group Revenues +152.8% +134.8% Service Revenues1 +107.7% +91.8% Volumes Used Retail Vehicles +238.8% +215.9% New Retail Vehicles +59.1% +47.4% +41.8% Motability Vehicles +129.0% +122.8% +110.2% New Fleet Cars2
Slide 29: Outlook
Outlook 29 Near term outlook Strategic focus • Pent-up vehicle demand apparent • Focus on operational execution and following showrooms re-opening in delivery of strategic goals April 2021 • Continued digital development • Covid-19 situation continues to be • Marketing concentration on brand uncerta
Slide 30: Definitions of key terminology
Definitions of key terminology 30 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 years, onl
Slide 31: Like-for-Like Sales Volumes
Like-for-Like Sales Volumes 31 Mar-May Jun-Feb Mar-May Jun-Feb Mar-May Jun-Feb FY21 FY21 FY21 FY20 FY20 FY20 Y-o-Y Y-o-Y Units Units Units Units Units Units % Var % Var Used retail cars 5,813 55,897 61,710 22,446 61,651 84,097 (74.1%) (9.3%) New retail cars 4,771 18,324 23,095 11,731 20,770 32,501 (
Slide 32: New Retail Vehicle Trends
New Retail Vehicle Trends 32 H1 H2 H1 H2 H1 H2 H1 H2 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 Selling price per unit [1] (£) 16,571 16,490 16,829 17,864 18,355 18,726 19,789 19,980 Gross profit per unit [1] (£) 1,370 1,382 1,365 1,447 1,418 1,524 1,436 1,714 Margin (Group) [1] 7.6% 7.
Slide 33: Fleet and Commercial Vehicle Trends
Fleet and Commercial Vehicle Trends 33 H1 H2 H1 H2 H1 H2 H1 H2 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 Selling price per unit (£) 18,549 19,032 19,901 20,544 20,662 20,518 21,494 23,494 Gross profit per unit (£) 576 588 528 695 603 683 679 834 Margin (Group) 3.2% 3.2% 2.8% 3.5% 3.4%
Slide 34: Used Vehicle Trends
Used Vehicle Trends 34 H1 H2 H1 H2 H1 H2 H1 H2 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 Selling price per unit (£) 13,146 13,658 14,069 14,797 14,517 14,637 15,141 15,454 Gross profit per unit (£) 1,197 1,278 1,233 1,182 1,172 1,244 1,386 1,458 Margin (Group) 9.1% 9.4% 8.8% 8.0% 8.1%
Slide 35: Aftersales Trends
Aftersales Trends 35 Parts and Core Group Service Accident Repair Total £’000 £’000 £’000 • Decline in service revenue (down 15.0% L4L) [1] Revenue 112,328 129,433 241,761 Revenue[1] change (19,882) (38,125) (58,007) • Core Group underlying service margins rose from 78.1% to 77.0% due to: Like-for-l
Slide 36: Vehicle Volumes Sold
Vehicle Volumes Sold 36 Total units sold Like-for-like units sold 65,847 61,710 Used Retail (22.3%) Used Retail (26.6%) 84,771 84,097 New Fleet & 14,491 New Fleet & 13,131 (36.1%) Agency Car 22,671 (42.1%) SMMT (34.9%) Agency Car 22,682 15,627 15,624 New Commercial (11.6%) New Commercial (11.6%) SMM
Slide 37: Dealership Portfolio
Dealership Portfolio 37 Bristol Street Macklin Outlets Motors Motors Vertu Farnell Ford 22 19 3 Vauxhall 14 14 Nissan 11 9 2 Hyundai 10 8 2 149 sales outlets Peugeot 7 5 2 Renault 6 6 Volume Citroen 5 5 SEAT 4 4 14 Skoda 4 4 Kia 3 1 2 Mazda 2 1 1 Mitsubishi 1 1 Suzuki 1 1 Total Volume 90 75 13 2 Hon
Slide 38: Disclaimer
Disclaimer 38 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