REG - Vertu Motors PLC - Interim Results
04/10/2023 07:15
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RNS Number : 5768O Vertu Motors PLC 04 October 2023
4 October 2023
Vertu Motors plc ("Vertu", "Group")
Unaudited interim results for the six months ended 31 August 2023
"Record revenues, year-on-year profit and dividend growth"
Vertu Motors plc, the automotive retailer with a network of 190 sales and
aftersales outlets across the UK and with sector leading brands, announces its
interim results for the six months ended 31 August 2023 ("the Period").
Commenting on the results, Robert Forrester, Chief Executive, said:
"The Group has delivered 11.7% year-on-year profit growth benefitting from
increased scale. The consistent strategies around digitalisation, cost
efficiency, smart capital allocation and the development of our management and
colleagues is providing a firm grounding to deliver value to our
shareholders. The interim dividend increase of 21.4% shows the Group's
financial strength and the progress being made. Trading in the key month of
September was strong reflecting the plate change in new cars."
FINANCIAL SUMMARY
H1 FY24 H1 FY23 FY23
Revenue £2,422.5m £1,999.7m £4,014.5m
Adjusted(1) profit before tax £31.5m £28.2m £39.3m
Free Cash Flow (£0.4m) £23.2m £54.3m
Basic Adjusted(1) EPS 6.89p 6.50p 9.16p
Dividends per share 0.85p 0.70p 2.15p
Net (Debt) / Cash(2) (£90.7m) £17.8m (£75.4m)
HIGHLIGHTS
· Delivery of strategy to grow a scaled franchised dealership group
exhibited with successful integration of the significant Helston acquisition
· Revenues grew over 20% to record levels aided by acquisitions and
growth in the Core Group
· Core Group gross profit increased £11.9m in the Period
· Adjusted(1) profit before tax up 11.7% to £31.5m (H1 FY23: £28.2m)
· Gross margin of 11.0% (H1 FY23: 11.2%) achieved, with an increase in
used vehicle gross profit per unit compared to H2 FY23
· Free Cash Flow reflects targeted investment in used vehicle inventory
to drive market share in H2: Capex forecast for full year reduced by £10.2m
· Net tangible assets per share of 70.9p (28 February 2023: 65.3p)
reflecting strong asset base
· Bristol Street Motors remains the highest-ranking franchised
dealership brand in England for prompted brand awareness
· 7.7m shares (representing 2.2% of share capital in issue on 1 March
2023) repurchased at a cost of £5.0m since 1 March 2023: buyback continues
with 14% of issued shares repurchased over the last seven years
· Increased interim dividend of 0.85p per share declared, up 21.4% from
0.70p in H1 FY23, payable in January 2024
· Low gearing ratio of 25.5% with strong freehold asset base
CURRENT TRADING AND OUTLOOK
· The Board anticipates that full year profits will be in line with
current market expectations
· Strong performance delivered in the plate change month of September
despite economic headwinds
· New vehicle supply continues to improve
· Used vehicle sales volume improving with prices reflecting more
normalised depreciation patterns
· High margin aftersales demand remains robust and increased technician
resource is being sourced to capture more aftersales revenues and profits
· Number of quality bolt-on acquisition opportunities identified
· The Board is closely monitoring the impact of the Agency model on
Group performance
(1) Adjusted to remove share-based payments charge, amortisation of intangible
assets and other non-underlying items
(2) Excludes lease liabilities, includes used vehicle stocking loans
Webcast details
Vertu management will make a webcast available for analysts and investors this
morning on the Group's website https://investors.vertumotors.com/results/
(https://investors.vertumotors.com/results/)
For further information please contact:
Vertu Motors plc
Robert Forrester, CEO Tel: 0191 491 2121
Karen Anderson, CFO
Phil Clark, investor relations PClark@vertumotors.com
Zeus Capital Limited
Jamie Peel Tel: 020 3829 5000
Dominic King
Camarco
Billy Clegg Tel: 020 3757 4983
Tom Huddart
Letaba Rimell
CHAIRMAN'S STATEMENT
The Group continued its long run success in delivering high levels of
operational excellence during the period ended 31 August 2023. Adjusted(3)
profit before tax of £31.5m represents an increase of 11.7% on the same
period last year, despite economic headwinds and was aided by the significant
Helston acquisition executed in December last year. There were a number of
noteworthy highlights in the Period:
· Successful integration of the Helston acquisition and the Board is
pleased with progress to date. This acquisition added a total of 28 sales
outlets to the Group and despite the extent of this acquisition, full
integration onto the Group's systems platforms and processes was completed by
the end of March 2023.
· The Group's strategic objective to grow as a major scaled franchise
automotive retail group is born from the belief that scale benefits can be
maximised in a larger group, which the Group is demonstrating. Enduring
manufacturer partnerships continue to play a pivotal role in realising these
advantages. I take great pride in the fact that our Group maintains strong
relationships with our carefully chosen manufacturer partners. These
relationships are a direct result of our commitment to operational excellence
and customer experience and the mutual respect that underpins our
collaborations.
· The Group's scale justifies investment in the in-house development of
systems, delivering both for customers, colleagues, and enhanced cost
efficiency. These scalable platforms were quickly rolled into the acquired
dealerships and work continues to maximise Group-wide efficiency benefits
using technology. During the Period, the Group has improved its aftersales
customer journey with the roll out of self-service on-line check in capability
which not only provides a great customer experience but also aids efficiency
in the dealerships. The Group has started to roll out its in-house developed
deferred payment service to aftersales customers, providing enhanced customer
choice at a reduced cost to the Group. Significant progress has been made in
the use of data to improve used car stock and sales management through the
rollout of the new Vertu Insights product.
· There has been continued application of stringent capital allocation
disciplines:
1. The Group has continued to apply a multi-franchising strategy to
maximise the profit opportunity in certain physical locations and to align
with Manufacturer representation plans.
2. Pruning activities have been successfully undertaken in the Period
with the sale of an accident repair centre in Newcastle and surplus property
held for resale, releasing capital to be redeployed to generate returns in
excess of cost of capital. There is more cash to release from these
activities.
3. The interim dividend, a vital element of shareholder return, has been
increased by 21.4%.
4. Additionally, the Group has also returned £5.0m to shareholders
through the repurchase of over 7.7m shares since 1 March 2023. The Group
currently has £4m of unutilised buyback authority, following an additional
£3m authority.
· The Group has continued to progress towards the reduction of its
environmental impact and management of energy costs. £1.9m has been
invested in the Period in green technologies such as solar panels and LED,
with a remaining £3.0m planned for further such installations in the
remainder of FY24. The investment in solar panels has been made in
connection with the Group's energy strategy which seeks to self-generate 12%
of the Group's energy needs via onsite solar energy and it is pleasing to note
that whilst the project is not yet complete, 9.54% of the Group's energy needs
in August were self-generated.
· Having the right resource levels and leadership throughout the
business is critical to deliver operational excellence. Technician and sales
team remuneration packages have been enhanced and restructured in the Period,
to increase retention and recruitment.
· At board level, John Mewett, CEO of Screwfix, joined as a
Non-executive Director in June 2023. John brings to the Board substantial
retailing experience, including omnichannel experience, as well as experience
in running substantial multi-site operations. We are confident his
perspectives will add value and are already seeing benefits. The Nominations
Committee is currently undergoing a process to recruit a successor to Ken
Lever, Senior Non-executive director, who will have been on the Board for nine
years next year and will consequently step down, having made an incredible
contribution to the development of the Group.
I am very proud to see how every colleague has contributed to the success of
the Group and I would like to thank them for this. The commitment that they
continue to show is exemplary and humbling. Performance is critical but the
manner in which it is delivered is of equal importance.
Andy Goss, Chairman
(3) Adjusted to remove share-based payments charge, amortisation of intangible
assets other non-underlying items.
CHIEF EXECUTIVE'S REVIEW
Strategy Summary
The Group's key long-term strategic goal remains: To deliver growing,
sustainable cashflows from operational excellence in the franchise automotive
retail sector. The strategic objectives of the Group, which have been
recently reviewed and confirmed by the Board, are summarised below:
• To grow as a major scaled franchised dealership group and to
develop our portfolio of Manufacturer partners, while being mindful of
industry development trends, to maximise long-run returns.
· To be at the forefront of digitalisation in the sector, delivering a
cohesive 'bricks and clicks' strategy with cost optimisation and efficiency:
o Optimise omnichannel development, bringing bricks and clicks together.
o Digitalise aftersales processes to improve customer service and
efficiency.
o Reduce the cost base of the Group by delivering efficiency using
technology.
o Utilise data driven decision making to generate enhanced returns.
· To develop and motivate the Group's colleagues to ensure operational
excellence is delivered constantly across the business.
· To develop ancillary businesses to add revenue and returns that
complement the automotive retail dealership business.
The Group continues to make progress in all four areas of its strategy.
There are two very important matters which are and will influence the Group's
development and performance in the coming years, being electrification and the
transition to the agency model in new sales by a number of the Group's
Manufacturer partners. These are addressed below:
1. Electrification
The UK Government, until recent announcements, intended to ban the sale of new
petrol and diesel cars in the UK from 2030. However, implementation of a
strategy for infrastructure to achieve this deadline is lagging, meaning the
UK is likely to lack the required charging infrastructure needed by 2030.
Given the current cost of living pressures on consumers and the potential
impact on the wider economy, the Government has taken a pragmatic approach to
row back from an all-out ban until 2035. This aligns to the strategy adopted
by the EU.
Despite this policy announcement, the UK Government have imposed a mandate for
Manufacturers to achieve specific zero emissions vehicle sales targets (ZEV
mandate), starting at 22% of total car sales and 10% of van sales in 2024.
The target rises incrementally each year to 80% for cars and 70% for vans
in 2030, and 100% for both by 2035. Manufacturers will pay the Government
£15,000 for every car that doesn't comply. This policy will drive
electrification, despite the Prime Minister's recent announcement, but at
least now provides certainty.
Increased supply of new electric vehicles from Manufacturers, is evident
whilst retail demand (as opposed to fleet) remains muted. The Government's
confusing messaging may further contribute to this. Manufacturers are
therefore seeking to stimulate retail demand for these vehicles through the
offer of discounted prices and supported finance rates. These market
dynamics combined with the ZEV mandate have the potential to disrupt the
recovery of the new car market in the next few years.
The transition to battery electric vehicles ("BEV") also faces a further
challenge from tightening Rules of Origin requirements under the post-Brexit
Trade and Cooperation Agreement. From January 2024 an electric vehicle
shipped between the UK and the EU will need to have 60% of its battery value
and at least 45% of its overall parts value sourced from within the two
regions, or tariffs will apply between the EU and UK. It is likely, therefore,
that from 2024, some BEVs sold between the EU and UK will face 10% tariffs,
pushing up prices for consumers. The UK Government has sought to delay the
introduction of this levy until 2027. This is backed by Manufacturers in
both the UK and EU, who have warned they will not be able to comply due to the
lack of current battery manufacturing capacity in Europe. The German
government has recently been reported as adding their support to a three-year
delay to these requirements, fearing European manufacturers will be left
uncompetitive against Chinese BEV Manufacturer entrants. The latter are
starting to commence sales in Europe and appear to have some cost and
potentially technological advantages. They may take market share to some
degree from established players and the Group has a strategy to ensure there
is a continued and increasing Chinese component to its franchise portfolio.
The SMMT registration statistics show UK BEV registrations in the calendar
year to 31 August 2023 represented 16.4% of all sales, a growth of 40.5%
year-on-year. All this growth has been achieved in the fleet sales channel
which delivered sales growth of 64.8%. Sales of BEV cars to retail customers
in the year to August have declined 8.5% compared to the prior year. This
evidence of a cooling of demand for BEV from retail customers is driven by a
number of factors. Higher electricity costs have increased running costs,
the removal of the plug-in car grant scheme on 14 June 2022 and inadequate UK
public charging infrastructure have all had an impact on demand and public
perception. The media in the UK have been increasingly negative on the topic
of BEV.
Increased electrification of the vehicle parc requires ongoing investment in
infrastructure such as in aftersales capabilities and charging facilities.
The Group invested £0.2m in charging infrastructure in the Period with a
further £1.3m planned in the remainder of the financial year. Aftersales
revenues from electrification will undergo changes with reducing servicing
likely, however, there are other opportunities in areas such as tyres,
accident repair and battery repair and replacement. Changes in the UK
vehicle parc will arise very gradually and a slower pace of electrification
would elongate this.
The Board is confident that the Group's Manufacturer partners have the
technological and financial capability to make the required transitions to
BEV. The Group is successfully selling BEV product profitably across its
portfolio.
2. Agency model of distribution
Several Manufacturers in the UK have moved or indicated they will move to an
agency sales distribution model over varying timescales. Under this model,
in respect of new vehicle sales, the Manufacturer invoices the customer
directly, while the retailer undertakes the sales process and customer contact
as an agent, as a physical touchpoint. The retailer-turned-agent receives a
commission on each new vehicle sale but in many cases, owns no new car
inventory and no longer sets prices or discounts. There are varying
iterations of the agency model proposed and the picture continues to evolve
both legally and in detailed implementation.
The Group has long operated on an agency basis for a significant proportion of
fleet and parts sales. The first of the Group's significant Manufacturer
partners to operate the agency model for new retail sales was Mercedes-Benz
passenger cars which moved to a genuine agency model on 1 January 2023.
Volvo followed with their implementation in June 2023. These implementations
have been largely successful from a systems perspective. The Volkswagen Group
brands are likely to be the next in line for agency implementation over the
next 12 months for BEV vehicles only.
Agency models are a change in how the business operates in the new retail
channel, with reduced capital requirements and risk from inventory and the
impact of supply and demand imbalances in new cars. The implementation is at
an early stage across the sector (a number of Manufacturers have stated they
will not make the transition). The Board believe that on the basis
Manufacturers require, in either an agency or traditional franchised setting,
a visible retail network (including aftersales) making an appropriate return
to investors, we consider that medium-term returns will remain attractive in
either model. We will continue to monitor business performance by
Manufacturer as has always been the case.
Strategic Execution Highlights
The following represents an update on the Group's execution of its strategy in
the Period:
· Financial strength
The Group's balance sheet strength is underpinned by an extensive freehold and
long leasehold property portfolio and a largely unencumbered inventory of used
vehicles. This strong asset base, together with a low gearing level of
25.5%, (including used vehicle stocking loans) means the Group has a high
level of financial resilience and the firepower to fulfil further growth
ambitions in the future. This conservative approach is reflected in the
Boards stated objective that Net debt/EBITDA should not exceed 1.5 times in
the medium-term.
· Management capacity
The Group has a stable and very experienced senior management team, with an
established track record of execution and performance delivery. The three
founders from 2006 remain Executive Directors. A 'Next Generation' two-year
talent programme, to develop the next generation of the Group's senior
management, was launched at the start of the Period to augment the Group's
existing training and leadership development initiatives. This is an
important initiative.
On 1 September 2023 one of the members of this programme, Anthony Masterson,
was promoted to the Group's operational board, the CEO Committee, as BMW/MINI
Group Operations Director. Anthony joined the Group in 2020 and has
successfully developed a substantial new division for the Group in that time.
On 14 August 2023, another Next Generation programme member, Spencer
Clayton-Jones joined the Group as Strategy Director. He joins after having a
long career with Volkswagen and Nissan. He was latterly Nissan GB Network
Development and Customer Quality Director.
Both of these appointments to the CEO Committee strengthen the core senior
team providing deep expertise and additional bandwidth.
· Strong Brands
The Group operates three major customer facing brands in the UK: Bristol
Street Motors, Macklin Motors and Vertu Motors with a significant marketing
strategy in place. Bristol Street Motors is the leading franchise sector
brand in England and Wales in terms of prompted brand awareness (56.6%:
Source: YouGov). Each of the Group's brands is supported by TV campaigns,
sports sponsorships and partnerships and digital marketing initiatives.
Tangible scale benefits arise from this strategy as additional outlets are
added.
· In-house developed Technological Platform
The scale of the Group allows it to invest in the development of systems and
operations to further augment the Group's customer offering and enhance
profitability through maximising margins and increasing productivity to reduce
costs. The Group's in-house developed systems provide uniform processes and
control, as well as live management information and data to allow speedy and
appropriate decision making. The in-house function has 54 software and
robotics developers.
During the Period a comprehensive Group data warehouse has been developed.
This will provide a bedrock of data for the Group and the opportunity to drive
further efficiencies across our finance, sales, aftersales and marketing
functions.
The Group's Customer Data Platform is an example of the use of the data
warehouse to increase the personalisation, targeting and ROI of the Group's
marketing spend. Initial use cases have been rolled out successively, for
example, in the area of post service follow up of aftersales customers and a
significant expansion of use cases is planned.
An in-house developed deferred payment option for service customers is
currently being rolled out across the Group. The offering has a powerful
impact on converting work from Visual Health Check activity and drives higher
average invoice values whilst at a reduced cost when compared to the existing
third-party solution.
A new project commenced in the Period investing substantial development
resource to improve the productivity and efficiency of the Group's financial
processing. Initial scoping has highlighted exciting opportunities to
improve efficiency levels in several key areas.
The Period saw the benefits of the introduction of a third-party digital
self-service check-in system for customers to use in the Group's service
departments. Customers can check-in from home and use the instore kiosks
where they can safely deposit their vehicle keys. Fifty percent of customers
now check-in online and one in four customers are using the kiosks to drop off
their keys. The Group has also seen increased penetration of add-on sales in
service from customers using this facility. Further developments are in
progress around remote payments and provision of courtesy cars via the kiosks.
· Development of Ancillary Businesses
The Group has a strategy to develop ancillary businesses to add revenue and
returns that complement the core dealership businesses. Opportunities are
reviewed to extend these operations further and one highlight is the growth of
the Vertu Cosmetic Repair business in the Period. It now operates a fleet of
114 vans and by the end of the financial year, the fleet will have increased
further. The vans are augmented by a number of fixed sites including a
substantial new investment made in Exeter. Dedicated management oversee the
operations of this cosmetic repair business and the Group's 12 accident repair
centres. This focus has driven an improvement in the profitability of these
businesses in the Period. A new standalone accident repair centre is about
to open in Yeovil.
The Group is actively exploring the development of a separate retail focused
smart repair business to provide cosmetic repair to the Group's 2 million
customers.
· Colleague resource and development
It is a priority of the Group to develop and motivate the Group's colleagues
to ensure the delivery of operational excellence and outstanding customer
experiences. This drives long-term sustainable cashflows. Workforce
recruitment and retention remains a challenge for UK business, with the number
of UK job vacancies remaining around 1.0 million (source: ONS), despite
recently falling. The Group was successful in reducing vacancy levels in the
second half of FY23. The Group has reviewed resource levels particularly in
the areas of technicians and the sales team and believes further recruitment
can boost revenues in vehicle sales and service. Current vacancy levels have
therefore increased again as the Group seeks to expand the productive
workforce. In addition, the Group is recruiting significant numbers of
apprentices across the business. The Group acted on remuneration levels in
the areas of technicians and sales executives over the summer, to improve
recruitment and retention levels.
The Group has long been committed to extensive investment in the development
of all colleagues to provide opportunity to those who are talented and have a
strong work-ethic to succeed. Programmes include a degree apprentice scheme,
technician apprentice schemes and development programmes to facilitate
progression to management roles in all areas. These schemes and the Group's
wider talent programmes are designed to deliver a meritocracy in the Group
with equal opportunities: Hard-working, talented colleagues with excellent
character are promoted quickly through the organisation.
· Responding to energy cost increases
The Group has continued to execute on its energy purchasing strategy in the
Period. This strategy includes an intention to enter into a 5-year Power
Purchase Agreement (PPA) which will provide the Group with 40% of its
electricity needs from off-grid energy solutions. This proposed contract
will manage the Group's exposure to energy market price volatility risks. In
addition, 35 of the Group's dealerships now have solar panels installed and
these panels generated 9.54% of the Group's August electricity requirement.
Solar panel installations at the remaining dealerships approved in the overall
£3m investment will be completed by the end of October.
Portfolio Development
In the year ended 28 February 2023, the Group completed the largest single
acquisition in its history and increased its number of sales outlets by a net
31 over the Year. The Helston acquisition has progressed well, with all
Group systems implemented and brands adopted by the end of March 2023.
Recruitment remains critical to ensure the acquired business has the right
resource levels to increase sales, maximise the market opportunity and deliver
outstanding customer service. The Board envisages expected synergies to be
delivered to the previously announced timescales. The acquisition has
significantly helped the Group grow overall earnings in the Period.
The Group has several potential bolt-on acquisitions in the pipeline to
continue to deliver on its Growth Strategy and to gain scale and market share.
· Multi-franchising and new outlets
On the 24 April 2023, the Group agreed a sub-lease of a former Cazoo outlet in
Tamworth, Staffordshire. The outlet opened in July 2023 as a Bristol Street
Motor Nation used car outlet and has performed successfully since opening.
The opening follows the strategy of the Group being opportunistic as
opportunities arise in strong retail locations for the Group. In the past
outlets which opened as Bristol Street Motor Nation in Doncaster and Glasgow
have been transitioned to Franchise dealerships over time. Indeed, the
Group's Bristol Street Motor Nation outlet in Stockton, which opened on 1
March 2022 will soon be rebranded to the Nissan franchise, with new vehicle
sales for the brand targeted to commence on 1 December 2023. This will
complete a market area for the Group representing Nissan across the whole of
Teesside.
In July 2023, the Group agreed a sub-lease of a former Stratstone Jaguar
dealership in the west of Newcastle upon Tyne. This site is being
refurbished for the relocation of the Group's existing Vauxhall franchise from
nearby Scotswood Road in the City. The targeted opening date for Vauxhall in
this new location is 1 November 2023. Following the move, the substantial
freehold dealership vacated by Vauxhall will open as a Ford car and commercial
vehicle operation. This follows the award by Ford of Tyne and Wear as a
market area to the Group. This additional significant Ford operation
augments the existing representation of the brand by the Group in nearby
Morpeth, Durham, and Hartlepool.
On 12 September 2023, the MG franchise opened in Chesterfield, alongside the
Group's existing Vauxhall dealership. This marks the fourth sales outlet for
the MG brand (owned by SAIC of China) operated by the Group, alongside the
existing outlets in Beaconsfield, Carlisle and Edinburgh. MG has a 4.16%
market share of the UK car market in the 8 months ended 31 August 2023.
· Active Management
The Board continues to actively manage the Group's portfolio of properties and
businesses. This includes assessing further growth opportunities as well as
the future potential of existing businesses, utilising strict investment
return metrics to ensure discipline in capital allocation.
Between FY18 and FY23, active management of the portfolio has generated cash
proceeds of £6.2m from the sale of surplus properties, £1.2m more than book
value. In the Period, the Group continued to generate cash from surplus
properties, selling two of the properties held of resale as at 28 February
2023. A surplus dealership in Taunton acquired in the Helston acquisition,
was sold for proceeds of £0.8m and the accident repair centre business and
property in Newcastle was disposed for £1.6m in the period. These
transactions generated a profit on disposal of £0.5m. Additional surplus
properties are held by the Group and are expected to be disposed in the next
nine months. Cash proceeds of £7.3m are anticipated, circa £2.5m in excess
of book value. The largest element within this portfolio is a development
site in central Glasgow. Planning has been approved and the four months
judicial review window is now open. Proceeds of £5.5m are anticipated to be
received in the first half of the calendar year 2024.
During the Period, the Group closed operations at its BMW/MINI outlet in
Malton, Yorkshire and secured an early exit from the associated leasehold
premises. The Group also exited from a Ford operation in Stroud,
Gloucestershire. Exiting these sub-scale dealerships has reduced operating
expenses and the Group has retained many of the sales and service customers in
its nearby York BMW and MINI and Gloucester Ford dealerships, so augmenting
revenues and profits at these outlets. The Stroud site is freehold and has
been sold for £0.9m subject to residential planning consent.
Current Trading and Outlook
The Board anticipates that profits for the financial year ending 29 February
2024 will be in line with current market expectations.
September trading performance saw strong profit generation reflective of a
plate change month. Like-for-like new car, fleet and commercial volume
growth was delivered, aided by the improving supply situation. New vehicle
margins are normalising as supply has eased.
Used car volume trends improved compared to the reported Period. UK used
vehicle values are starting to see a more normal monthly declining pattern.
The market is seeing some weakness in higher-end product values and margins,
whilst used electric vehicle value reductions have normalised.
Aftersales demand remained strong and higher technician resource levels are
helping to drive increased revenues. This improved resource level should
underpin aftersales performance for the remainder of the financial year.
Cost control remains a major focus. The delivery of the Group's energy
buying strategy should minimise the risk of utility cost fluctuations.
Whilst recent action on pay has been undertaken, this should boost recruitment
and retention of key roles such as sales executives and technicians.
Future consumer confidence levels will be key in determining future retail
vehicle demand and the Board remain cautious in this regard.
The Board believes that the Group is very well positioned to deliver on its
stated strategy and to take advantage of the increasing opportunities in the
UK sector, with a good pipeline of bolt-on acquisitions.
Robert Forrester, CEO
CHIEF FINANCIAL OFFICER'S REVIEW
The Group's income statement for the Period is summarised below:
H1 FY24 H1 FY23 H1 FY24 Var to H1 FY23
£'m £'m %
Revenue 2,422.5 1,999.7 21.1%
Gross Profit 267.2 223.7 19.4%
Operating expenses (225.8) (192.4) (17.4%)
Adjusted Operating Profit 41.4 31.3 32.3%
Net Finance Charges (9.9) (3.1) (219.4%)
Adjusted Profit Before Tax 31.5 28.2 11.7%
Non-Underlying items(4) (1.4) (1.3) (7.7%)
Profit Before Tax 30.1 26.9 11.9%
Taxation (7.7) (5.4)
Profit After Tax 22.4 21.5
(4) Non-underlying items represent share-based payment charges, amortisation
of intangible assets and other non-underlying items.
The Group delivered an adjusted profit before tax of £31.5m in the Period,
aided by the contribution from the substantial Helston acquisition completed
in December 2022. Of the £11.1m increase in adjusted operating profit,
£6.0m related to Helston businesses with other acquisitions and disposals
contributing another £0.6m. Underlying core Group adjusted operating profit
therefore also increased in the Period despite economic pressures and cost
headwinds.
Revenue grew by £0.4bn to £2.4bn, with an increase of £159.9m (8.1%)
delivered in the Core Group, aided by new and used average vehicle sales
prices. The remaining increase in revenues of £262.9m arose from
dealerships and businesses acquired.
Net finance charges rose by £6.8m to £9.9m reflecting higher new car
stocking loans, the impact of higher interest rates and higher levels of debt
year-on-year, reflecting the substantial purchase of the Helston Group.
Revenue and Gross Profit by Department
An analysis of total revenue and gross profit by department is set out below:
H1 FY24 H1 FY23 H1 FY24
£'m £'m Var to H1 FY23
Revenue %
New 744.0 557.6 33.4%
Fleet & Commercial 525.6 428.7 22.6%
Used 947.8 854.5 10.9%
Aftersales 205.1 158.9 29.1%
Total Group Revenue 2,422.5 1,999.7 21.1%
Gross Profit
New 63.0 47.4 32.9%
Fleet & Commercial 26.8 20.2 32.7%
Used 67.4 67.1 0.1%
Aftersales 110.0 89.0 23.6%
Total Gross Profit 267.2 223.7 19.4%
Gross Margin
New 8.5% 8.5% -
Fleet & Commercial 5.1% 4.7% 0.4%
Used 7.1% 7.9% (0.8%)
Aftersales(5) 43.8% 45.4% (1.6%)
Total Gross Margin 11.0% 11.2% (0.2%)
(5) Aftersales margin expressed on internal and external revenues
The total volumes of vehicles sold by the Group and like-for-like trends
against market data are set out below:
Total units sold Like-for-like units sold
H1 FY24 H1 FY23 % Variance H1 FY24 H1 FY23 % Variance
Used retail vehicles 43,921 43,022 2.1% 40,099 42,501 (5.7%)
New retail cars(5) 20,027 17,673 13.3% 17,608 17,408 1.1%
Motability cars 8,626 4,711 83.1% 8,291 4,659 78.0%
Direct fleet cars 9,688 9,205 5.2% 8,730 9,008 (3.1%)
Agency fleet cars 3,725 2,317 60.8% 3,725 2,325 60.2%
Total fleet cars 13,413 11,522 16.4% 12,455 11,333 9.9%
Commercial vehicles 9,422 8,707 8.2% 9,229 8,692 6.2%
Total New vehicles 51,488 42,613 20.8% 47,583 42,092 13.0%
Total Vehicles 95,409 85,635 11.4% 87,682 84,593 3.7%
( ) Variance(6) UK Market (SMMT)
New Retail Car (0.3%) 1.4%
Motability Car 12.6% 65.4%
Fleet Car (26.4%) 36.3%
Commercial (13.6%) 19.8%
(5)Including agency volumes
(6) Represents the variance of like-for-like Group volumes to the UK trends
reported by SMMT
Used retail vehicles
Three consecutive years of low new vehicle registrations in the UK have led to
an ongoing constrained supply of used vehicles, which will continue for a
further number of years. Autotrader recently highlighted that these supply
trends will drive 27%(7) fewer sub-5-year-old-cars in the UK parc in 2024
compared to 2019. These trends have increased the mix of older vehicles on
dealership forecourts. Such vehicles typically require more preparation to
ready them for sale, in terms of both mechanical and cosmetic repair work and
form an increasing proportion of Group stock. Despite the impact of cost of
living and rising interest rates, for many, used vehicles remain a necessity
purchase, so there remains consistent demand for used vehicles in the UK.
Supply constraints have, helped to drive stability in overall used vehicle
prices, despite average prices generally remaining high, current prices are
around 25% higher than January 2021. One exception to this overall benign
pricing picture, however, has been electric vehicles. Used EV supply grew
rapidly in the last 12 months, albeit from a very low base, and it is
anticipated that, one in seven 1-3-year-old cars in the UK parc will be
electric by the end of 2023. Consequently, used EV supply outstripped retail
demand partly due to their high prices in the early part of the year. Prices
fell significantly as a result, with a 44%(8) correction in the last year.
However, the latest monthly price fall was the smallest movement applied to
EVs this year and was broadly in line with other fuel-types of vehicles.
Used EV pricing appears to have bottomed out and a new, more affordable base
price has been established for used electric vehicles. Demand and supply are
therefore much more aligned. In the Period, EV sales in used cars
represented 4.7% of Group used vehicle volumes.
The Group monitors the pricing demand and supply environment and has continued
to develop its used vehicle pricing and analytical tools to optimise gross
profit generation, stock turn and control inventory. The Period started with
reduced levels of used vehicle inventory as the Group reduced inventory with a
view to maximising margin, return on investment and to reduce exposure to any
consumer downturn impacts. Group target inventory levels were increased from
the end of June 2023 to take account of the increased time to prepare vehicles
for sale and to ensure that the Group optimises sales. The Group has been
successful in securing additional used vehicle inventory, despite the supply
constraints, growing the like-for-like number of used retail units in
inventory by 12.7% compared to the position at 28 February 2023 and the
overall level of used inventory grew by £33.3m. The Group continues to buy
used electric vehicles since they represent a market opportunity at lower
prices.
Rising interest rates have increased cost to change for customers and in
addition, the Group has been unable to run its popular 0% finance offers on
used vehicles during event periods as it did in the prior year. This change
in approach and general stock constraints, contributed to a reduction in the
number of like-for-like used vehicles sold by 5.7%. Gross profits per unit
remain significantly better than the pre-pandemic norm and were broadly stable
with the comparative period last year, evidencing the Group's robust inventory
pricing disciplines. Indeed, gross profit per unit rose in H1 2024 to
£1,535 versus H2 2023 (£1,468).
Core Group gross profit from the sale of used vehicles totalled £60.2m for
the Period. This represented a £5.9m decrease in Core Group gross profit
generated from used vehicle sales with the reduction due to the volume
decline. Gross margin in the Core Group reduced to 7.4% (H1 FY23: 7.9%)
reflecting higher average sales prices.
The Group continues to measure customer experience on used cars in the
majority of the Group via the Judge Service third party platform. The Net
Promoter Scores throughout the Year have been very strong at c.84%, which is
sector leading amongst major market players. Great service goes hand-in-hand
with profitability and future retention, which is so vital in creating a
sustainable business.
(7) Source: Autotrader
(8) Source: CAPHI: September 2023 Car market overview
New retail cars and Motability sales
Overall, UK car registrations increased 20.2% in the Period, reflecting an
improving supply situation, however, this is still below pre-pandemic levels
by 7.5%(9). It is the fleet market that is largely driving the increase, as
private registrations remain muted, up just 1.4% in the Period. This is
reflective of the fact that new car market in the UK is ordinarily correlated
to exchange rate movements and consumer confidence(10) (and indicators, such
as the housing market) which has come under pressure. Recent increased
supply of new electric vehicles appeared to be exceeding retail demand as the
Period progressed. Manufacturers reacted to this trend through the offer of
discounted prices and supported finance rates to stimulate retail demand.
Against this backdrop, the Group's like-for-like new retail vehicle volumes
grew by 1.1% in the Period. Overall, the Group increased UK retail market
share to 4.6% (H1 FY23: 4.1%) aided by its increased dealership footprint.
The Group's order bank levels for new retail vehicles have reduced over the
Period, as would be expected as production issues slowly unwind. New retail
vehicles ordered but remaining undelivered as at 31 August 2023 totalled
approximately 9,500 units (28 February 2023: 12,900). Fleet and Motability
order banks also remain very robust.
UK Motability registrations benefitted from pent up demand, as already
extended contracts came to an end and supply came through from Manufacturers,
rising a significant 65.4% over the Period. The Group's Motability volumes
significantly outperformed the market, growing 78.0% on a like-for-like basis
and representing an increasing UK market share of 6.2% (H1 FY23: 5.6%). The
Group is Motability's largest partner in the UK with over 36,500 vehicles on
the fleet. These vehicles require an annual service funded by Motability in
the Group's service departments and Motability is a vital customer in the
Group's higher margin service business.
As supply has eased and the mix of lower margin Motability sales has grown,
the Group has seen a slight weakening of gross profit retention in new car
sales with gross profit per unit still at healthy levels of £2,016 (H1 FY23
£2,102) despite this mix change. Gross margin percentages saw a dilution
from 8.5% to 8.2% due to a 3% increase in average sales prices and the slight
weakening in gross profit per unit. Nevertheless, the Group successfully
grew retained gross profits from the sale of new vehicles in the period on a
like-for-like basis by £6.2m.
In new vehicles, sales customer experience is measured by the Group's
Manufacturer partners. Approximately 55% of the Group's Core sales outlets
delivered experience levels above national average levels.
(9)Source: SMMT
(10) Source: Autotrader
Fleet & Commercial vehicle sales
As set out above, the UK car fleet market has been the main driver of the
increase in vehicle registrations in the UK over the Period. This
performance was aided by a robust demand for electric vehicles through the
fleet channel and adoption of such vehicles in the corporate market is
critical to the electrification of the vehicle parc. Registration volumes in
the UK car fleet market have grown 36.3% in the Period compared to the six
months ended 31 August 2022. A proportion of this growth has arisen from the
return of increased registrations in the low margin daily rental space.
CAPHPI recently reported a 188% increase in such registrations in the month of
July alone, however, sales through this channel remain well below pre-COVID
levels. Like-for-like, the Group delivered 13,413 fleet cars in the Period,
representing an increase of 9.9% compared to H1 FY23. The Group's
performance was below the market trends as the Group kept pricing disciplines
to maintain margin and did not undertake significant volumes of daily rental
sales.
The Group saw a 6.2% increase in the like-for-like volume of new commercial
vehicles sold, with the market up 19.8% over the Period compared to the six
months to 31 August 2022. The Group's performance against the market
reflects strong outperformance in the comparative period and the Group's
franchise mix in van sales, which lost some share in the Period.
Reflecting the focus on higher margin fleet sales, gross profit per unit
strengthened by 14.3% to record levels of £1,126. Gross margin % rose from
4.7% to 5.1% in the Period. Overall, like-for-like gross profit in the fleet
and commercial channels rose by £4.9m as a result of the positive trends.
Aftersales
The Group's high margin aftersales operations are a vital contributor to Group
profitability, generating over 40% of total gross profit. Overall, compared
to the six-month period ended 31 August 2022, the following like-for-like
trends in aftersales performance were witnessed:
Service Accident & Smart Repair Total
Parts Forecourt
£'m £'m £'m £'m £'m
Revenue(11) 85.5 106.4 11.9 6.0 209.8
Revenue(11) change 4.6 11.3 2.3 (0.8) 17.4
Revenue(11) change (%) 5.7% 11.8% 23.5% (11.3%) 9.0%
Gross profit change 2.1 2.7 1.8 0.1 6.7
Gross margin(12) H1 FY24 (%) 73.3% 22.6% 58.5% 8.2% 44.9%
Gross margin(12) H1 FY23 (%) 74.8% 22.4% 53.3% 5.9% 45.4%
Margin change (%) (1.5%) 0.2% 5.2% 2.3% (0.5%)
(11) includes internal and external revenues
(12) Aftersales margin expressed on internal and external revenues
· Service
At the end of March 2023, there were 40.8 million(13) licensed vehicles in the
UK, including commercial vehicles. Of this total, just 770,000 (1.8%) were
battery electric vehicles, which is a significant increase of over 50% on the
prior year but still represents a very small proportion of the overall parc.
These cars, motorbikes and commercial vehicles require access to maintenance
and repair services and demand increased as the vehicle parc has aged in the
last four years.
Vehicle service and repair is a key and resilient profit source for the
Group. The Group saw strong demand, for its service and repair operations
during the Period, driving like-for-like service revenue growth of £4.6m
(5.7%). Technician resource levels have been a constraining factor in
meeting both retail demand for work and in the preparation of used vehicles
for sale, with older vehicles in stock requiring significantly more
preparation. To improve the recruitment and retention of Technicians, the
Group has taken further pay action in July. At the end of August 2023, there
were 126 technician vacancies in the Group, however, since the end of July
there has been a doubling of the number of applications the Group has received
for each technician vacancy. The like-for-like number of technicians
employed by the Group rose 6.4% in the Period to 897 (February 2023: 843) Each
technician generates an average £115,000 of service and parts gross profit
for the Group, so the reduction of technician vacancy levels is a key focus of
management, in order to maximise the opportunity to the Group.
Gross margin percentages on vehicle servicing were 73.3% (H1 FY23: 74.8%) in
the Core Group reflecting increased remuneration to address technician
resource constraints. However, positively gross profit generation rose on a
like-for like basis by £2.1m in service.
(13) Source:
https://www.gov.uk/government/statistics/vehicle-licensing-statistics-january-to-march-2023/vehicle-licensing-statistics-january-to-march-2023
· Parts
The Group's substantial parts operations include traditional wholesale
operations, agency distribution centres, on-line parts retailing and accessory
sales to dealership customers. These operations supply parts to the Group's
service and accident repair operations as well as to other businesses and
retail customers in the UK and across the world. Parts revenues in the Core
Group grew £11.3m compared to last year due to price rises, increased vehicle
service and repair activity and an increase in sales in wholesale parts
operations.
· Accident and Smart Repair
The Group continues to expand its substantial Smart Repair operations through
adding additional vans to the core cosmetic business as well as introducing
new streams including vans specialising in wheel repairs and glass
replacement. In addition, enhanced smart repair fixed facilities are being
created, such as in Exeter to serve the Group's substantial dealership
operations there. This fleet largely serves the Group's dealerships and has
seen increased demand, as a result of the increase in the age of used vehicles
held for sale, which therefore require more preparation. The fleet also
carries out some limited sales to external customers across the UK. There
remains considerable scope for the expansion of this retail element of the
business and this is a future focus area.
The Group's accident repair centres are managed separately from the dealership
businesses in a standalone division, concentrating solely on the management of
accident repair operations. The Group has delivered a 23.5% increase in
revenues generated from the Group's accident and smart repair operations and a
£1.8m increase in gross profit. Specific KPI improvement targets,
introduction of uniform operating systems and focus on higher margin work
providers, have all driven this excellent improvement over the Period.
· Fuel Forecourt
In the Core Group one fuel forecourt is operated by the Group in Widnes. As
a result of the tempering of fuel prices from the peaks in FY23, this
forecourt saw slightly reduced revenues but a return to more normal gross
margins of 8.2% in the Period. Active pricing strategies ensure that the
forecourt has maintained market share. A second forecourt was acquired in
Yeovil as part of the Helston Group, this is currently being redeveloped to
enhance the retail offering.
Acquisitions, Disposals and Closures
Dealerships acquired or closed since 1 March 2022 have contributed an
additional £6.6m of operating profit in the Period compared to prior year, as
summarised below:
Other Acquisitions Closures Total
Helston
£'m £'m £'m £'m
H1 FY24
Revenue 248.6 43.0 8.0 299.6
Gross Profit 29.4 4.6 0.9 34.9
Operating profit 6.0 (0.2) (0.1) 5.7
H1 FY23
Revenue - 10.0 26.7 36.7
Gross Profit - 0.8 2.6 3.4
Operating profit - (0.6) (0.3) (0.9)
H1 FY24 variance to H1 FY23
Revenue 248.6 33.0 (18.7) 262.9
Gross Profit 29.4 3.8 (1.7) 31.5
Operating profit 6.0 0.4 0.2 6.6
The contribution from the Helston businesses is in line with the levels
envisaged at the time of purchase. This scaled acquisition of 28 sales
outlets has been fully integrated into Group systems and processes and the
expected synergies are on track for delivery.
Other Acquisitions include the new dealership openings for the Toyota brand in
Scotland, the Bristol Street Motor Nation outlets in Stockton and Tamworth and
the BMW Motorrad acquired dealerships in Shipley and Rotherham. The results
from these operations were satisfactory for the Period and the operating
losses were anticipated given the start-up nature of the Toyota and used
vehicle outlets.
Closed sites include Stroud Ford, Malton BMW and MINI and the accident repair
centre in Newcastle, described in the Portfolio Development section above.
Operating Expenses
A summary of Core Group operating expenses is set out below:
H1 FY24 H1 FY23 H1 FY24 Var to H1 FY23
£'m £'m £'m
Salary costs 110.6 109.2 1.4
Vehicle and valeting costs 21.4 18.6 2.8
Property costs and rates 24.6 22.8 1.8
Marketing costs 18.0 18.7 (0.7)
Energy costs 4.4 2.1 2.3
Other 17.5 16.7 0.8
Core Group operating expenses 196.5 188.1 8.4
Acquisitions 28.3 1.4 26.9
Disposals 1.0 2.9 (1.9)
Group Net Underlying Operating Expenses 225.8 192.4 33.4
Core Group operating expenses totalled £196.5m in the Period representing an
increase of £8.4m (4.5%) compared to H1 FY23. Dealerships acquired in the
period since 1 March 2022, significantly the Helston dealerships acquired,
contributed a further £26.9m of operating expenses in the Period.
The most significant cost increases in the core Group arise in vehicle and
valet costs and energy. Vehicle and valet costs rose due to the impact of
National Minimum Wage rises in valeting and increases in vehicle prices which
pushed up the cost of the Group's demonstration and courtesy vehicle fleets.
The Group benefited from below market rate electricity costs under a fixed
contract which covered the majority of the Group's dealerships until the end
of September 2022, the Group has previously highlighted that energy costs
would increase significantly as this contract ended. The Group has been
executing its energy purchase strategy to mitigate energy cost increases.
Salary costs represent the biggest single cost to the Group. The salary
costs included in operating expenses exclude the productive cost of the
Group's aftersales technicians, which are included in cost of sales. Salary
costs in operating expenses rose by just £1.4m with the impact of pay reviews
and the application of the national minimum wage being partially offset by
savings in variable pay such as commissions as used vehicle volumes declined
in the Period. Salary costs were also lower than anticipated due to the
level of vacancies in the Period.
The Group delivered savings in Marketing costs. These savings have been
delivered whilst Bristol Street Motors has remained the highest-ranking
franchised dealership brand in England for prompted brand awareness, 56.6%(14)
(28 February 2023: 54%)
(14) Source: YouGov.
Net Finance Charges
The movement in net finance charges is analysed below:
H1 FY24 H1 FY23 H1 FY24 Var to H1 FY23
£'m £'m £'000
Interest on bank borrowings 4.9 0.8 4.1
New vehicle Manufacturer stocking interest 3.3 0.9 2.4
Used vehicle stock funding interest 0.8 0.2 0.6
Interest on lease liabilities 1.7 1.7 -
Interest on bank deposits (0.7) (0.4) (0.3)
Net finance income relating to defined benefit pension scheme (0.1) (0.1) -
Net Finance Charges 9.9 3.1 6.8
Interest on bank borrowings increased as the Group drew a new 20-year mortgage
facility from BMW Financial Services for £74.8m in December 2022, to
partially fund the acquisition of Helston Garages Group limited. This
mortgage is secured against a portfolio of 22 of the Group's freehold and long
leasehold properties and is repayable in equal instalments over the 20-year
term. Interest is charged on this facility rate of 2.8% above BMW Base Rate.
To minimise the risk of interest rate fluctuations on this facility, the
Group entered into an interest rate cap contract in the Period, in respect of
£50 million of this facility. This limits the variable element of the
applicable interest rate to a maximum of 4.5%.
Interest on the Group's revolving credit facility has increased because of
rate rises. Existing swap arrangements over £22m of borrowing at the
favourable rate of 1.28% expired on 27 February 2023. A new interest rate
swap over £30m of borrowing was secured in the Period, this fixes the
underlying SONIA rate charged at 4.42% until March 2025.
A significant increase in manufacturer new vehicle stocking interest has been
seen in the Period. Increased pipelines of new vehicle inventory, as supply
constraints have eased and prices have risen, higher rates of interest being
charged and reduced free funding periods have all contributed to these
increased charges in the Period.
Non-underlying items
H1 FY24 H1 FY23
£'m £'m
Share based payments charge 1.0 1.1
Amortisation 0.4 0.2
Redundancy costs 0.8 -
Lease surrender premium (0.8) -
1.4 1.3
The Group undertook a strategic review of aftersales collection and delivery
service at the start of the Period. Customer charges for this service were
increased, to match the cost of provision more closely. The number of
employed drivers was also significantly reduced in order to match likely
demand levels given the increase in cost to customers. This led to a one-off
redundancy cost in the Period of £0.8m.
The Group purchased the freehold interest in it's Derby multi-site operation
in FY23. A premium was received in the Period in respect of the remaining
lease obligation between a tenant of the freeholder and the Group as
sub-lessee. The premium received has been included in non-underlying items
due to its one-off nature and size.
Pensions
The Group has a closed defined benefit scheme which remains fully funded and
requires no ongoing cash contribution from the Company.
The Scheme invests in an LDI portfolio which aims to fully hedge the Scheme's
interest rate and inflation risk to maintain this fully funded position.
The accounting surplus on the scheme at 31 August 2023 was £3.1m (28 February
2023: £3.2m)
Tax
The Group's underlying effective rate of tax for the Period was 25.5% (H1
FY23: 19.8%). The overall effective tax rate follows the change in the
headline rate of corporation tax in the UK from 19% to 25% on 1 April 2023.
The total tax charge for the Period was £7.7m (H1 FY23: £5.4m). The
Group continues to be classified as "low risk" by HMRC and takes a pro-active
approach to minimising tax liabilities whilst ensuring it pays the appropriate
level of tax to the UK Government.
Dividend
An interim dividend of 0.85p per share (H2 FY23: 0.70p) in respect of FY24
will be paid on 19 January 2024. The ex-dividend date will be 14 December
2023 and the associated record date 15 December 2023.
Cash Flows
The decision to increase the level of used vehicle inventory held by the Group
to drive market share has absorbed cash in the Period. Compared to the low
level of inventory held on 28 February 2023, the movement in used vehicle
stock is the main reason for a net cash outflow in respect of working capital
in the Period of £30.0m. This investment in inventory led to a Free Cash
Outflow in the Period of £0.4m (H1 FY23: Free Cash Inflow of £23.2m).
The Group has successfully disposed of two of the properties held for resale
at 28 February 2023 delivering a cash inflow of £2.2m in the Period. These
sales proceeds have been deducted in arriving at net capital expenditure of
£11.7m incurred in the Period. £5.1m of this total was incurred in respect
of projects which add additional capacity to the Group or were one-off in
nature, such as the solar panel installation. This £5.1m has therefore been
excluded from the calculation of Free Cash Flow in the period.
Capital expenditure for the full year FY24 was previously forecast at
£38.0m. This forecast has been revised down to £27.8m, a reduction of
£10.2m (26.8%). £2.2m of this reduction relates to the property disposals
in the Period highlighted above. Further proceeds from the sale of surplus
properties are expected but not included in the revised forecast. £6.0m of
previously forecast spend will now be deferred until FY25. Finally, a change
in scope in one planned project has resulted in a £2.0m reduction in expected
spend.
In the financial year to date, the Group has continued to buy back shares,
repurchasing approximately 7.7m shares, representing 2.2% of opening shares in
issue, for a total cost of £5.0m. The Board believes that this is an
appropriate use of capital and will continue a programme of Buybacks as a
relevant element of returns to shareholders, alongside dividend payments.
The Board has agreed a further £3m buyback programme for deployment once the
current remaining authority of £1m is utilised. £4.9m was spent on
dividends in the Period as a result of the final dividend in respect of the
year ended 28 February 2023.
Karen Anderson, CFO
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the six months ended 31 August 2023
Six months ended 31 August 2023 Six months ended 31 August 2022 Year ended 28 February 2023
Note Underlying items Non-underlying items Total Underlying items Non-underlying items Total Underlying items Non- Total
(note 4) (note 4) underlying items
(note 4)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 2,422,454 - 2,422,454 1,999,712 - 1,999,712 4,014,544 - 4,014,544
Cost of sales (2,155,239) - (2,155,239) (1,775,991) - (1,775,991) (3,566,134) - (3,566,134)
Gross profit 267,215 - 267,215 26 223,721 - 223,721 448,410 - 448,410
Operating expenses (225,787) (1,354) (227,141) (192,417) (1,278) (193,695) 5) (399,590) (6,828) (406,418)
Operating profit / (loss) 41,428 (1,354) 40,074 31,304 (1,278) 30,026 48,820 (6,828) 41,992
Finance income 5 749 - 749 479 - 479 1,300 - 1,300
Finance costs 5 (10,672) - (10,672) (3,566) - (3,566) (10,842) - (10,842)
Profit before tax 31,505 (1,354) 30,151 28,217 (1,278) 26,939 39,278 (6,828) 32,450
Taxation 6 (8,029) 298 (7,731) (5,598) 182 (5,416) (7,663) 746 (6,917)
Profit for the period attributed to equity holders 23,476 (1,056) 22,420 22,619 (1,096) 21,523
31,615 (6,082) 25,533
Basic earnings per share (p) 7 6.58 6.19
7.40
Diluted earnings per share (p) 7 6.16 5.85
7.02
For the six months ended 31 August 2023
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2023 2022 2023
Note £'000 £'000 £'000
Profit for the period 22,420 21,523 25,533
Other comprehensive (expense) / income
Items that will not be reclassified to profit or loss:
Actuarial loss on retirement benefit obligations 9 (51) (4,048) (5,973)
Deferred tax relating to actuarial loss on retirement benefit obligations 13 1,012 1,493
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges 941 185 172
Deferred tax relating to cash flow hedges (215) (35) (43)
Other comprehensive income / (expense) for the period, net of tax 688 (2,886) (4,351)
Total comprehensive income for the period attributable to equity holders 23,108 18,637
21,182
As at 31 August 2023
31 August 31 August 28 February
2023 2022 2023
Note £'000 £'000 £'000
Non-current assets
Goodwill and other indefinite life assets 11 127,462 105,077 127,590
Other intangible assets 2,105 2,397 2,286
Retirement benefit asset 9 3,129 5,073 3,188
Property, plant and equipment 331,085 261,712 328,405
Right of use assets 74,600 74,608 73,078
Derivative financial instruments 1,365 - 507
539,746 448,867 535,054
Current assets
Inventories 694,493 496,739 674,380
Trade and other receivables 89,740 72,117 86,317
Current tax assets - - 1,654
Derivative financial instruments - 190 -
Cash and cash equivalents 47,885 85,860 78,984
832,118 654,906 841,335
Property assets held for sale 4,984 - 6,077
Total current assets 837,102 654,906 847,412
Total assets 1,376,848 1,103,773 1,382,466
Current liabilities
Trade and other payables (750,743) (569,717) (758,594)
Current tax liabilities (978) (3,039) -
Contract liabilities (13,528) (12,526) (13,477)
Borrowings (16,033) (12,954) (29,821)
Lease liabilities (9,706) (14,415) (14,498)
Total current liabilities (790,988) (612,651) (816,390)
Non-current liabilities
Borrowings (122,536) (55,063) (124,519)
Lease liabilities (75,092) (70,691) (68,959)
Deferred income tax liabilities (20,701) (13,448) (19,117)
Contract liabilities (11,963) (11,897) (12,104)
Total non-current liabilities (230,292) (151,099) (224,699)
Total liabilities (1,021,280) (763,750) (1,041,089)
Net assets 355,568 340,023 341,377
Capital and reserves attributable to equity holders of the Group
Ordinary share capital 34,157 34,894 34,894
Share premium 124,939 124,939 124,939
Other reserve 10,645 10,645 10,645
Hedging reserve 859 154 133
Treasury share reserve (2,143) (3,134) (2,653)
Capital redemption reserve 5,570 4,833 4,833
Retained earnings 181,541 167,692 168,586
Total equity 355,568 340,023 341,377
For the six months ended 31 August 2023
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2023 2022 2023
Note £'000 £'000 £'000
Cash flows from operating activities
Operating profit 40,074 30,026 41,992
(Profit) / loss on sale of property, plant and equipment (468) 6 102
Profit on lease modification (547) (2) (449)
Amortisation of intangible assets 408 214 509
Depreciation of property, plant and equipment 8,515 6,900 14,510
Depreciation of right of use assets 8,895 7,775 16,225
Impairment charges - - 1,500
Movement in working capital 10 (29,973) 904 23,737
Share based payments charge 777 857 1,651
Cash inflow from operations 27,681 46,680 99,777
Tax received 7 - 100
Tax paid (3,724) (4,801) (9,118)
Finance income received 475 356 1,053
Finance costs paid (9,803) (3,394) (10,983)
Net cash inflow from operating activities 14,636 38,841 80,829
Cash flows from investing activities
Acquisition of businesses, net of cash, overdrafts and borrowings acquired - (2,626) (122,066)
Acquisition of freehold and long leasehold land and buildings (2,084) (7,468) (7,468)
Disposal of businesses 204 - -
Purchases of intangible assets (100) (1) (186)
Purchases of other property, plant and equipment (11,864) (7,835) (13,785)
Proceeds from disposal of property, plant and equipment 2,239 - 179
Net cash (outflow) / inflow from investing activities (11,605) (17,930) (143,326)
Cash flows from financing activities
Proceeds from borrowings 8 - 671 110,570
Repayment of borrowings 8 (15,976) (319) (23,358)
Principal elements of lease repayments (8,461) (7,827) (16,187)
Sale of treasury shares 91 304 744
Purchase of treasury shares - (2,000) (2,000)
Cash settled share options (109) (169) (180)
Repurchase of own shares (4,762) (5,898) (5,898)
Dividends paid to equity holders (4,913) (3,606) (6,003)
Net cash (outflow)/inflow from financing activities (34,130) (18,844) 57,688
8 (31,099) 2,067 (4,809)
Net (decrease) /increase in cash and cash equivalents
Cash and cash equivalents at beginning of period 78,984 83,793 83,793
Cash and cash equivalents at end of period 47,885 85,860 78,984
For the six months ended 31 August 2023
Treasury share Capital redemption reserve
Ordinary Share Other Hedging reserve reserve Retained Total
share capital premium reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 March 2023 34,894 124,939 10,645 133 (2,653) 4,833 168,586 341,377
Profit for the period - - - - - - 22,420 22,420
Actuarial losses on retirement benefit obligations - - - - - - (51) (51)
Tax on items taken directly to equity - - - (215) - - 13 (202)
Fair value gains - - - 941 - - - 941
Total comprehensive income for the period - - - 726 - - 22,382 23,108
Sale of treasury shares - - - - 510 - (419) 91
Cancellation of repurchased shares (737) - - - - 737 - -
Repurchase of own shares - - - - - - (4,762) (4,762)
Dividends paid - - - - - - (4,913) (4,913)
Share based payments charge - - - - - - 667 667
As at 31 August 2023 34,157 124,939 10,645 859 (2,143) 5,570 181,541 355,568
The repurchase of own shares in the period was made pursuant to the share
buyback programmes announced on 5 October 2022 and 10 May 2023.
7,372,160 ordinary shares to the value of £4,762,000 had been repurchased in
the six months ended 31 August 2023. These shares were cancelled immediately
and accordingly, the nominal value of these shares has been transferred to the
capital redemption reserve.
The 'Other reserve' is a merger reserve, arising from shares issued as
consideration to the former shareholders of acquired companies.
For the six months ended 31 August 2022
Treasury share Capital redemption reserve
Ordinary Share Other Hedging reserve reserve Retained Total
share capital premium reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 March 2022 35,942 124,939 10,645 4 (1,586) 3,785 158,152 331,881
Profit for the period - - - - - - 21,523 21,523
Actuarial losses on retirement benefit obligations - - - - - - (4,048) (4,048)
Tax on items taken directly to equity - - - (35) - - 1,012 977
Fair value gains - - - 185 - - - 185
Total comprehensive income for the period - - - 150 - - 18,487 18,637
Sale of treasury shares - - - - 452 - (131) 321
Purchase of treasury shares - - - - (2,000) - - (2,000)
Cancellation of repurchased shares (1,048) - - - - 1,048 - -
Repurchase of own shares - - - - - - (5,898) (5,898)
Dividends paid - - - - - - (3,606) (3,606)
Share based payments charge - - - - - - 688 688
As at 31 August 2022 34,894 124,939 10,645 154 (3,134) 4,833 167,692 340,023
For the year ended 28 February 2023
Ordinary Share Other Hedging reserve Treasury share Capital redemption reserve Retained Total
share capital premium reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 March 2022 35,942 124,939 10,645 4 (1,586) 3,785 158,152 331,881
Profit for the year - - - - - - 25,533 25,533
Actuarial losses on retirement benefit obligations - - - - - - (5,973) (5,973)
Tax on items taken directly to equity - - - (43) - - 1,493 1,450
Fair value gains - - - 172 - - - 172
Total comprehensive income for the year - - - 129 - - 21,053 21,182
Sale of treasury shares - - - - (2,000) - - (2,000)
Issuance of treasury shares - - - - 933 - (189) 744
Repurchase of own shares - - - - - - (5,898) (5,898)
Cancellation of repurchased shares (1,048) - - - - 1,048 - -
Dividends paid - - - - - - (6,003) (6,003)
Share based payments charge - - - - - - 1,471 1,471
As at 28 February 2023 34,894 124,939 10,645 133 (2,653) 4,833 168,586 341,377
For the six months ended 31 August 2023
1. Basis of preparation
Vertu Motors plc is a Public Limited Company which is quoted on the AiM Market
and is incorporated and domiciled in the United Kingdom. The address of the
registered office is Vertu House, Fifth Avenue Business Park, Team Valley,
Gateshead, Tyne and Wear, NE11 0XA. The registered number of the Company is
05984855.
The financial information for the period ended 31 August 2023 and similarly
the period ended 31 August 2022 has neither been audited nor reviewed by the
auditors. The financial information for the year ended 28 February 2023 has
been based on information contained in the audited financial statements for
that year.
The information for the year ended 28 February 2023 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory accounts for that year has been delivered to the Registrar of
Companies. The Auditors' Report on those accounts was not qualified under
section 498 of the Companies Act 2006.
2. Accounting policies
In line with International Accounting Standard 34 and the Disclosure and
Transparency Rules of the Financial Conduct Authority, these condensed interim
financial statements have been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's published
consolidated financial statements for the year ended 28 February 202
3. Segmental information
The Group adopts IFRS 8 "Operating Segments", which determines and presents
operating segments based on information provided to the Group's Chief
Operating Decision Maker ("CODM"), Robert Forrester, Chief Executive
Officer. The CODM receives information about the Group overall and therefore
there is one operating segment.
The CODM assesses the performance of the operating segment based on a measure
of both revenue and gross margin. However, to increase transparency, the
Group has included below an additional voluntary disclosure analysing revenue
and gross margin within the reportable segment.
Six months ended 31 August 2023 Revenue £'m Revenue Mix % Gross Profit £'m Gross Profit Mix % Gross Margin %
Aftersales(15) 205.1 8.5 110.0 41.2 43.8
Used vehicles 947.8 39.1 67.4 25.2 7.1
New retail and Motability 744.0 30.7 63.0 23.6 8.5
New fleet & commercial 525.6 21.7 26.8 10.0 5.1
Total 2,422.5 100.0 267.2 100.0 11.0
Six months ended 31 August 2022 Revenue £'m Revenue Mix % Gross Profit £'m Gross Profit Mix % Gross Margin %
Aftersales(15) 158.9 8.0 89.0 39.8 45.4
Used vehicles 854.5 42.7 67.1 30.0 7.9
New retail and Motability 557.6 27.9 47.4 21.2 8.5
New fleet & commercial 428.7 21.4 20.2 9.0 4.7
Total 1,999.7 100.0 223.7 100.0 11.2
Year ended 28 February 2023 Revenue £'m Revenue Mix % Gross Profit £'m Gross Profit Mix % Gross Margin %
Aftersales(15) 336.8 8.4 182.5 40.7 44.5
Used vehicles 1,658.2 41.3 125.2 27.9 7.5
New retail and Motability 1,121.9 27.9 98.4 22.0 8.8
New fleet & commercial 897.6 22.4 42.3 9.4 4.7
Total 4,014.5 100.0 448.4 100.0 11.2
15 Aftersales margin expressed on internal and external revenue
4. Non-underlying items
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2023 2022 2023
£'000 £'000 £'000
Impairment charges - - (1,500)
Acquisition costs - - (2,753)
Redundancy costs (778) - -
Lease surrender premium 845 - -
Share based payment charge (1,013) (1,064) (2,066)
Amortisation (408) (214) (509)
Non-underlying loss before tax (1,354) (1,278) (6,828)
Non-underlying taxation charge 298 182 746
Non-underlying loss after tax (1,056) (1,096) (6,082)
5. Finance income and costs
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2023 2022 2023
£'000 £'000 £'000
Interest on short-term bank deposits 672 356 1,053
Net finance income relating to Group pension scheme 77 123 247
Finance income 749 479 1,300
Bank loans and overdrafts (4,885) (802) (3,112)
Vehicle stocking interest (4,054) (1,119) (4,242)
Lease liability interest (1,733) (1,645) (3,488)
Finance costs (10,672) (3,566) (10,842)
6. Taxation
The Group's underlying effective rate of tax is 25.5%, (H1 2023: 19.8%), which
is higher than the standard rate of corporation tax in the UK as a result of
the impact of non-qualifying depreciation and non-deductible expenses. The
overall effective tax rate of 25.7% includes tax on non-underlying items.
The Group continues to be classified as "low risk" by HMRC and takes a
pro-active approach to minimising tax liabilities whilst ensuring it pays the
appropriate level of tax to the UK Government.
7. Earnings per share
Basic and diluted earnings per share are calculated by dividing the earnings
attributable to equity shareholders by the weighted average number of ordinary
shares during the period or the diluted weighted average number of ordinary
shares in issue in the period.
The Group only has one category of potentially dilutive ordinary shares, which
are share options. A calculation has been undertaken to determine the number
of shares that could have been acquired at fair value (determined as the
average annual market price of the Group's shares) based on the monetary value
of the subscription rights attached to the outstanding share options. The
number of shares calculated as above is compared with the number of shares
that would have been issued assuming the exercise of the share options.
Adjusted earnings per share is calculated by dividing the adjusted earnings
attributable to equity shareholders by the weighted average number of ordinary
shares in issue during the period.
7. Earnings per share (continued)
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2023 2022 2023
£'000 £'000 £'000
Profit attributable to equity shareholders 22,420 21,523 25,533
Non-underlying items (note 4) 1,056 1,096 6,082
Adjusted earnings attributable to equity shareholders 23,476 22,619 31,615
Weighted average number of shares in issue ('000s) 340,685 347,939 345,239
Potentially dilutive shares ('000s) 23,253 20,072 18,703
Diluted weighted average number of shares in issue ('000s) 363,938 368,011 363,942
Basic earnings per share 6.58p 6.19p 7.40p
Diluted earnings per share 6.16p 5.85p 7.02p
Underlying earnings per share 6.89p 6.50p 9.16p
Diluted underlying earnings per share 6.45p 6.15p 8.69p
At 31 August 2023, there were 341,282,768 shares in issue (including 4,575,452
held by the Group's employee benefit trust).
8. Reconciliation of net cash flow to movement in net cash
31 August 31 August 28 February
2023 2022 2023
£'000 £'000 £'000
Net (decrease) / increase in cash and cash equivalents (31,099) 2,067 (4,809)
Cash inflow from proceeds of borrowings - (671) (110,570)
Cash outflow from repayment of borrowings 15,976 319 23,358
Cash movement in net cash (15,123) 1,715 (92,021)
Capitalisation of loan arrangement fees - - 1,037
Amortisation of loan arrangement fees (85) (39) (131)
Increase in accrued loan interest (121) - (408)
Non-cash movement in net cash (206) (39) 498
Movement in net (debt)/cash (excluding lease liabilities) (15,329) 1,676 (91,523)
Opening net (debt)/cash (excluding lease liabilities) (75,356) 16,167 16,167
Closing net (debt)/cash (excluding lease liabilities) (90,685) 17,843 (75,356)
Opening lease liabilities (83,457) (88,830) (88,830)
Capitalisation of new leases (11,953) (4,196) (13,307)
Disposal of lease liabilities 2,152 93 2,493
Interest element of lease repayments (1,732) (1,645) (3,488)
Cash outflow from lease repayments 10,193 9,472 19,675
Closing lease liabilities (84,797) (85,106) (83,457)
Closing net debt (including lease liabilities) (175,482) (67,263) (158,813)
9. Retirement benefit asset
The Group operates a trust based defined benefit pension scheme, "Bristol
Street Pension Scheme", which has three defined benefit sections which were
closed to new entrants and future accrual on 31 May 2003, with another section
closed to new entrants in July 2003 and future accrual in October 2013. The
Group has applied IAS 19 (revised) to the scheme. The scheme remains fully
funded and in surplus on the accounting basis.
During the six month period ended 31 August 2023, there have been changes in
the financial and demographic assumptions underlying the calculation of the
liabilities. In particular, the discount rate has increased due to a rise in
corporate bond yields and life expectancy assumptions have been modified. The
effect of these changes in assumptions was a decrease in liabilities of
£1,417,000. The hedging strategy in place within the scheme investment
portfolio meant that the period also saw a decline in the market value of
scheme assets of £1,476,000, offsetting the decrease in liabilities. In
total, an actuarial loss of £51,000 was recognised in the Consolidated
Statement of Comprehensive Income.
10. Cash flow from movement in working capital
The following table reconciles the movement in balance sheet headings to the
movement in working capital as presented in the Consolidated Cash Flow
Statement.
For the six months ended 31 August 2023
Trade and other receivables Trade and other payables Total working capital movement
£'000 £'000 £'000
Inventories
£'000
Trade and other payables (750,743)
Contract liabilities (25,491)
At 31 August 2023 694,493 89,740 (776,234)
At 28 February 2023 674,380 86,316 (784,175)
Balance sheet movement (20,113) (3,424) (7,941)
Disposals (104) (27) 9
Movement excluding business combinations (20,217) (3,451) (7,932) (31,600)
Pension related balances 85
Decrease in capital creditor 1,925
Increase in interest accrual (383)
Movement in working capital (29,973)
For the six months ended 31 August 2022
Trade and other receivables Trade and other payables Total working capital movement
£'000 £'000 £'000
Inventories
£'000
Trade and other payables (569,717)
Contract liabilities (24,423)
At 31 August 2022 496,739 72,117 (594,140)
At 28 February 2022 475,027 51,839 (552,285)
Balance sheet movement (21,712) (20,278) 41,855
Acquisitions 123 16 156
Movement excluding business combinations (21,589) (20,262) 42,011 160
Pension related balances 57
Decrease in capital creditor 823
Increase in interest accrual (136)
Movement in working capital 904
10. Cash flow from movement in working capital (continued)
For the year ended 28 February 2023
Trade and other receivables Trade and other payables Total working capital movement
£'000 £'000 £'000
Inventories
£'000
Trade and other payables (758,594)
Contract liabilities (25,581)
At 28 February 2023 674,380 86,317 (784,175)
At 28 February 2022 475,027 51,839 (552,285)
Balance sheet movement (199,353) (34,478) 231,890
Acquisitions 62,730 19,545 (54,098)
Previous year acquisitions - - 333
Movement excluding business combinations (136,623) (14,933) 178,125 26,569
Pension related balances 141
Increase in capital creditor (2,268)
Increase in interest accrual (705)
Movement in working capital (23,737)
10. Goodwill and other indefinite life assets
31 August 31 August 28 February
2023 2022 2023
£'000 £'000 £'000
Goodwill 83,559 76,182 83,687
Other indefinite life assets - Franchise relationships 43,903 28,895 43,903
At end of period 127,462 105,077 127,590
11. Risks and uncertainties
There are certain risk factors which could result in the actual results of the
Group differing materially from expected results. These factors include:
failure to deliver on the strategic goal of the Group to acquire and
consolidate UK motor retail businesses, failure to meet competitive challenges
to our business model or sector, advances in vehicle technology providing
customers with mobility solutions which bypass the dealer network, inability
to maintain current high quality relationships with Manufacturer partners,
economic conditions impacting trading, market driven fluctuations in used
vehicle values, litigation and regulatory risk, failure to comply with health
and safety policy, failure to attract, develop and retain talent, failure of
Group information and telecommunication systems, malicious cyber-attack,
availability of credit and vehicle financing, use of estimates and currency
risk.
All of the above principal risks are consistent with those detailed in the
Annual Report for the year ended 28 February 2023.
The Board continually review the risk factors which could impact on the Group
achieving its expected results and confirm that the above principal factors
will remain relevant for the final six months of the financial year ending 29
February 2024. A review of risks pursuant to Task Force on Climate-Related
Financial Disclosures is underway and an update will be provided in the annual
financial statements.
Set out below are the definitions and sources of various alternative
performance measures which are referred to throughout the Interim Financial
Report. All financial information provided is in respect of the Vertu Motors
plc Group.
Definitions
Like-for-like
Dealerships that have comparable trading periods in two consecutive financial
years, only the comparable period is measured as "Like-for-like".
H1
FY23
The six month period ended 31 August 2023
H1
FY22
The six month period ended 31 August 2022
Adjusted
Adjusted for amortisation of intangible assets, share based payment charges
and other non-underlying items as these are unconnected with the ordinary
business of the Group.
Aftersales gross margin Aftersales gross margin compares the gross
profit earned from aftersales activities to total aftersales revenues,
including internal revenue relating to service and vehicle preparation work
performed on the Group's own vehicles. This is to properly reflect the real
activity of the Group's aftersales departments.
Alternative Performance Measures
Adjusted Operating Profit Six months Six months
ended ended
31 August 31 August
2023 2022
£'000 £'000
Operating profit 40,074 30,026
Share based payment charge 1,013 1,064
Amortisation 408 214
Redundancy costs 778 -
Lease surrender premium (845) -
Adjusted Operating Profit 41,428 31,304
Adjusted Profit Before Tax (PBT) Six months Six months
ended ended
31 August 31 August
2023 2022
£'000 £'000
Profit before tax 30,151 26,939
Share based payment charge 1,013 1,064
Amortisation 408 214
Redundancy costs 778 -
Lease surrender premium (845) -
Adjusted PBT 31,505 28,217
Free Cash Flow
Six months Six months
ended ended
31 August 2023 31 August 2022
£'000 £'000
Net cash inflow from operating activities 14,636 38,841
Purchase of other property, plant and equipment (11,864) (7,835)
Enhancement capital expenditure included in above 3,121 -
Purchase of intangible assets (100) (1)
Proceeds from disposal of property, plant and equipment 2,239 -
Principal elements of lease repayments (8,461) (7,827)
Free Cash Flow (429) 23,178
Tangible net assets per share 31 August 28 February
2023 2023
£'000 £'000
Net assets 355,568 341,377
Less:
Goodwill and other indefinite life assets (127,462) (127,590)
Other intangible assets (2,105) (2,286)
Add:
Deferred tax on above adjustments 12,604 12,621
Tangible net assets 238,605 224,122
Tangible net assets per share 70.9p 65.3p
At 31 August 2023, there were 341,282,768 shares in issue (28 February 2023:
348,945,522), of which 4,575,452 were held by the Group's employee benefit
trust (28 February 2023: 5,665,352). Rights to dividends on shares held in the
Group's employee benefit trust have been waived and therefore such shares are
not included in the tangible net asset per share calculation.
Gearing ratio 31 August 28 February
2023 2023
£'000 £'000
Net debt (excluding lease liabilities) 90,685 75,356
Shareholders' equity 355,568 341,377
Gearing ratio (Net debt/Shareholders' equity) 25.5% 22.1%
Like-for-like reconciliations:
Revenue by department
H1 FY24 H1 FY24
Group revenue Acquisitions Disposals revenue Like-for-like revenue £'m
£'m revenue £'m
£'m
New retail and Motability 744.0 (96.2) (1.2) 646.6
New fleet and commercial 525.6 (31.0) (1.4) 493.2
Used vehicles 947.8 (130.0) (4.5) 813.3
Aftersales 205.1 (34.4) (0.9) 169.8
Total revenue 2,422.5 (291.6) (8.0) 2,122.9
H1 FY23 H1 FY23
Group revenue Acquisitions Disposals revenue Like-for-like revenue £'m
£'m revenue £'m
£'m
New retail and Motability 557.6 (1.1) (4.1) 552.4
New fleet and commercial 428.7 (0.1) (6.9) 421.7
Used vehicles 854.5 (8.2) (13.5) 832.8
Aftersales 158.9 (0.6) (2.2) 156.1
Total revenue 1,999.7 (10.0) (26.7) 1,963.0
Gross profit by department
H1 FY24 H1 FY24
Group gross profit Acquisitions gross profit Disposals Like-for-like gross profit
£'m £'m gross profit £'m
£'m
New retail and Motability 63.0 (9.6) (0.2) 53.2
New fleet and commercial 26.8 (1.9) (0.2) 24.7
Used vehicles 67.4 (7.1) (0.1) 60.2
Aftersales 110.0 (15.4) (0.5) 94.1
Total gross profit 267.2 (34.0) (1.0) 232.2
H1 FY23 H1 FY23
Group gross profit Acquisitions gross profit Disposals Like-for-like gross profit
£'m £'m gross profit £'m
£'m
New retail and Motability 47.5 (0.1) (0.4) 47.0
New fleet and commercial 20.1 - (0.3) 19.8
Used vehicles 67.1 (0.4) (0.6) 66.1
Aftersales 89.0 (0.3) (1.3) 87.4
Total gross profit 223.7 (0.8) (2.6) 220.3
Like-for-like reconciliations (continued):
Number of vehicles sold by department
H1 FY24 H1 FY24
Total Group Acquisitions Disposals Core Group
New retail 20,027 (2,367) (42) 17,618
New Motability 8,626 (240) - 8,386
New fleet 13,413 (927) (31) 12,455
New commercial 9,422 (192) (7) 9,223
Used vehicles 43,921 (4,432) (253) 39,236
Total 95,409 (8,158) (333) 86,918
H1 FY23 H1 FY23
Total Group Acquisitions Disposals Core Group
New retail 17,673 (58) (118) 17,497
New Motability 4,711 (5) (9) 4,697
New fleet 11,522 (12) (201) 11,309
New commercial 8,707 (2) (45) 8,660
Used vehicles 43,022 (488) (655) 41,879
Total 85,635 (565) (1,028) 84,042
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