Vertu Motors Plc · LSE:VTU
Vertu Motors — H1 FY2021 Earnings Presentation
28 slides from Vertu Motors's earnings presentation, October 2020
Slide 1: Analyst & Investor Presentation
Analyst & Investor Presentation Interim results for the 6 months ended 31st August 2020
Slide 2: Highlights
Highlights Six-month period ended 31 August 2020 • Group well positioned ahead of COVID period with stable experienced management, strong balance sheet and in house technological innovation strategy • The Group executed strongly during this unprecedented period • Adjusted1 profit before tax of £4.7m
Slide 3: Financial highlights
Financial highlights Six-month period ended 31 August 2020 Q1 – 1 March to 31 May Q2 – 1 June to 31 August • Adjusted1 loss before tax of £14.3m • Adjusted1 profit before tax £19.0m (2019: profit of £13.1m) (2019: profit of £3.8m) • Dominated by lockdown closing all • Record used vehicle performance
Slide 4: Proactive colleague communication delivered momentum
Highlights Proactive colleague communication delivered momentum • Proactive communication vital with 80% of Group colleagues furloughed at peak • Regular vlogs by CEO • Engagement programmes such as ‘Haircuts for Heroes’ • Volunteering encouraged • Group culture reinforced • Moved to shorter term go
Slide 5: 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 6: Growth Scale and brand
Growth Scale and brand • Acquisition of Nottingham Kia completed 1 October, further augmenting Kia representation, introduced to Group in 2020 • Single sales outlet added in period in multi-franchised environment (Worcester Citroen): more multi-franchising planned • Bricks and clicks both considered
Slide 7: Digitalisation Generating revenues and efficiency benefits
Digitalisation Generating revenues and efficiency benefits Changing customer journeys Digitalisation increasing productivity • Changing customer behaviour post Covid lockdown • 15% of all service bookings are now made online evidenced by enquiry source – growth in internet and (up from 8% last year)
Slide 8: Financial highlights
Financial highlights Six-month period ended 31 August 2020 • Adjusted1 profit before tax of £4.7m delivered • Government support received of £27.2m through furlough income and rates support • Revenues of £1.12bn (2019: £1.65bn) • Strong cash generation with operating cash flow of £80.0m • Net cash2
Slide 9: Financial performance
Financial performance Six-month period ended 31 August 2020 H1 FY2021 H1 FY2020 % Change • Enhanced gross margins powered by record Revenue £1,119.3m £1,647.1m (32.0%) used car and service margins Gross profit £129.5m £172.7m (25.0%) Gross margin 11.6% 10.5% 1.1% • Analysis of finance costs Adjusted
Slide 10: Strong balance sheet
Strong balance sheet Flexibility and resilience 31 Aug 2020 31 Aug 2019 • Strong balance sheet underpinned by £’m £’m property: Tangible net assets of £164.6m Intangible assets 101.2 112.1 • Fully funded pension: no cash contributions Retirement benefit asset 8.4 7.8 required Right of use assets 81.
Slide 11: Cash flow
Cash flow Strong cash generation increases liquidity H1 H1 FY2021 FY2020 H1 Movement in working capital FY2021 £’m £’m £’m Adjusted EBITDA 23.5 33.4 Consignment new vehicle inventory 124.3 Working capital movement 64.2 1.8 Vehicle and other Payables (137.4) Capital expenditure (6.8) (7.1) New vehicl
Slide 12: Cash and borrowings
Cash and borrowings Facilities Drawn Facilities Drawn at 31 Aug 20 at 31 Aug 20 at 29 Feb 20 at 29 Feb 20 £’m £’m £’m £’m 5 year acquisition facility (from February 2019)1 62.0 53.8 62.0 43.6 1 year working capital facility (from May 2020) 68.0 - 68.0 - Total committed facilities 130.0 53.8 130.0 43
Slide 13: Profit bridge
Profit bridge Six-month period ended 31 August 2020 Q1: (£27.4m) Q2: +£15.2m 40.0 19.5 30.0 20.0 £’m 10.0 3.2 0.4 1.8 7.7 (0.8) .0 7.7 16.9 4.7 (10.0) (3.6) (1.2) (45.2) (1.7) (20.0) FY20 H1 Q1Q1 Q1 Core Q1 Non Core Q2 Q2 New Gross Fleet Gross Used Gross Aftersales Expenses Q2 Non Core Interest FY21
Slide 14: Trading performance
Trading performance Group performance by quarter Q12 FY21 Q23 FY21 H1 FY21 Q12 FY20 Q23 FY20 H1 FY20 Q12 FY21 Q23 FY21 £’m £’m £’m £’m £’m £’m % Var % Var Revenue 332.3 787.0 1,119.3 927.0 720.1 1,647.1 (64.2%) 9.3% Gross profit - New 11.7 11.6 23.3 19.4 14.3 33.7 (39.7%) (18.9%) - Fleet & Commercia
Slide 15: Revenue and margin analysis
Revenue and margin analysis Three-month period ended 31 August 2020 Revenue mix – Q2 2021 Revenue mix – Q2 2020 Gross margin % 60.0% 9% 9% 19% 23% 50.9% 50.0% 47.7% 27% 45% 24% 44% 40.0% 30.0% Gross profit mix – Q2 2021 Gross profit mix – Q2 2020 6% 20.0% 7% 13% 9.4% 10.0% 7.8% 8.3% 18% 44% 44% 5.4%
Slide 16: Aftersales
Aftersales High margin recurring revenues Q2 • Growth in service revenue (up 9.7% L4L) driven by: • Pent-up demand Parts and • Increased customer retention Core Group Service Accident Repair Total • Higher average invoice values due to better £’000 £’000 £’000 execution of VHC process, add-on sales
Slide 17: New vehicle departments
New vehicle departments Three-month period ended 31 August 2020 Units Sold (Group) L4L Market Volumes Q2 FY21 Q2 FY20 +/- % +/- % New Retail 7,333 6,505 +3.4 (2.2) New Motability 2,742 2,297 +11.7 +9.4 Fleet & Agency car 3,903 5,092 (29.2) (21.1) Vans 4,317 4,308 +0.2 (13.2) Gross Profit Per Unit (G
Slide 18: Used vehicle trends
Used vehicle trends Robust pricing and margins H1 H2 H1 H2 H1 H2 H1 Q1 Q2 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 FY2021 FY2021 Selling price per unit (£) 13,146 13,658 14,069 14,797 14,517 14,637 15,141 15,365 15,084 Gross profit per unit (£) 1,197 1,278 1,233 1,182 1,172 1,244 1,386 1,266
Slide 19: Current trading
Current trading September Performance Total Like-for-like SMMT % Var % Var % Var Group Revenues 19.7% 13.9% Service Revenues1 17.6% 10.8% Volumes Used Retail Vehicles 13.5% 8.9% New Retail Vehicles 14.5% 6.3% (1.1%) Motability Vehicles 17.3% 8.0% 4.3% New Fleet Cars2 (18.4%) (27.5%) (5.8%) New Comme
Slide 20: Outlook & summary
Outlook & summary • Group has emerged strongly from the lockdown period giving increasing confidence of a strong financial outcome for the financial year as a whole • Record beating trading performance from 1 June • Roll out of new technologies led to increased productivity and enhanced omni-channel
Slide 21: List of appendices
List of appendices 1. Definitions of key terminology 2. Like-for-like sales volumes by quarter 3. New retail vehicle trends 4. Fleet & commercial vehicle trends 5. Vehicle volumes sold 6. Dealership portfolio Analyst & Investor Presentation | 20
Slide 22: 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 23: Like-for-like sales volumes by quarter
Appendix 2 Like-for-like sales volumes by quarter Q1 FY21 Q2 FY21 H1 FY21 Q1 FY20 Q2 FY20 H1 FY20 Q1 FY21 Q2 FY21 Units Units Units Units Units Units % Var % Var Used retail cars 5,813 22,590 28,403 22,446 22,166 44,612 (74.1%) 1.9% New retail cars 4,771 6,684 11,455 11,731 6,465 18,196 (59.3%) 3.4%
Slide 24: New retail vehicle trends
Appendix 3 New retail vehicle trends H1 H2 H1 H2 H1 H2 H1 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 Selling price per unit [1] (£) 16,571 16,490 16,829 17,864 18,355 18,726 19,789 Gross profit per unit [1] (£) 1,370 1,382 1,365 1,447 1,418 1,524 1,436 Margin (Group) [1] 7.6% 7.7% 7.4% 7.4% 7.
Slide 25: Fleet & commercial vehicles trends
Appendix 4 Fleet & commercial vehicles trends H1 H2 H1 H2 H1 H2 H1 FY2018 FY2018 FY2019 FY2019 FY2020 FY2020 FY2021 Selling price per unit (£) 18,549 19,032 19,901 20,544 20,662 20,518 21,494 Gross profit per unit (£) 576 588 528 695 603 683 679 Margin (Group) 3.2% 3.2% 2.8% 3.5% 3.4% 4.0% 3.8% Anal
Slide 26: Vehicle volumes sold
Appendix 5 Vehicle volumes sold Total units sold Like-for-like units sold 29,713 28,403 Used Retail (34.0%) Used Retail (36.3%) 45,036 44,612 New Fleet & 6,315 New Fleet & 5,831 (46.1%) Agency Car 11,707 (50.2%) SMMT (50.6%) Agency Car 11,716 6,282 6,280 New Commercial (38.8%) New Commercial (38.8%)
Slide 27: Dealership portfolio
Appendix 6 Dealership portfolio Bristol Street Macklin Outlets Motors Vertu Motors Farnell Ford 22 19 3 Vauxhall 14 14 Nissan 11 9 2 Hyundai 10 8 2 12 Renault Peugeot 6 6 6 5 1 Volume Citroen 5 5 SEAT 4 4 Skoda 4 4 Kia 3 2 1 Mazda 2 1 1 Mitsubishi 1 1 37 Suzuki Total Volume 1 89 75 2 1 12 Honda 13 1
Slide 28: 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