Motorpoint Group Plc

Good morning, everybody, and welcome to our full year 2021 results, and more excitingly, a launch of our new strategy in how we're going to grow the business going forward. We have our ambitions to double the size of the business in the medium term. Today, I'm going to talk you through the financials from FY21. Chris will go through more detail of the financial summary, and then we'll go to the main part of the presentation, which is the strategy update and outlook. If you've got any questions, you can keep those to the end. But big bold statement to start with, that we are the UK's leading omnichannel vehicle retailer. I think it's important for everybody to remember that we are completely agnostic as to how we sell our cars. We will always meet whatever our customer demand requires, and whether that's online, offline, or a hybrid of both, we obviously sell through all three of those channels currently. Just a little bit of background, a bit more detail, as Alex mentioned. We are a group focused on two core businesses. We have Motorpoint, which is the retail business, consumer focused, basically selling nearly new cars up to three years old and 30,000 miles online and in branch. We also sell some light commercial vehicles or white vans as well through that part of the business. And that source business and specific relationships with large vendors, also from part exchanges from our customers, which is about 10% of our retail sales now, keeps growing. And in addition, we will launch later this year, sorry, later this summer, an ability to source cars from customers who are not part exchanging their cars. So basically sourcing cars from consumers direct, even though that consumer is not buying a car from us. Our second part of the business, which we've not really talked about much in the past, and we've realized that we've had an omnichannel business for 12 years without realizing it, a total e-commerce business called auctionforcars.com. This is our wholesale business. We sell all of the product that is outside of our retail criteria through this channel, totally online. sources the cars from Motorpoint mostly in the history, but going forward, we'll also source those cars from the public, as I just mentioned, that are outside of our retail criteria. So wholesale only and a trade-only website that's open to the traders in the market. We'll talk later about our strategy to double the size of the business in the medium term, but I think it's important to show that we've got a track record in this business as a management team. This graph shows, since I've been here, In FY12, we've trebled the revenue of the business and trebled the gross profit. So we are a growth business. We are also a profitable business. And obviously, there's lots of new entrants in the market. We've still managed to keep growing. We've got the challenges of COVID, which are well documented. But our strategy to continue growing now is reinforced with the presentation towards the end of the pack. But we're in a massive market. It's a huge opportunity, 100 billion total sales in the market, and that makes us around 8 million vehicles. And our market is the biggest market of us and our competitors because we sell online and offline. So that's really important that we get the total market as part of our proposition. And as I said earlier, whether you're online or offline, we will service that customer. In terms of the network, we have 14 branches currently. We're accelerating our digital transformation. We've always sold cars online. Typically, that was to lead an inquiry to our call center. Now customers can do a full end-to-end journey online. We have 800,000 customer email addresses. That's a 23-year heritage that we have as a business, so a huge marketing opportunity for us. And we took a little bit of that in going forward. But also the wholesale opportunity that was offered to us by Auction for Cars. That's a great part of the business that, as I said, we've started to talk more about now and explain. I think this slide gives us quite a big insight into how undervalued MotorPoint is as a business. And you can do the maths yourself, but we've selected what we believe are the key propositions of our business and how we compare that against our peer group. So you can see the revenue and the market cap across the top. There's no mis-spacing of full stops there. That is actually real, that we are 0.25 and the others are in the billions. we believe we have the best model. We are Omnichannel as we talked about, but also we are the only player that is focused on value. We have a price promise to our customer. We're a value operator. As we've scaled in the past, we've shared that value with the customers. And that's always been a real important thing to us in terms of giving the best possible value we can to our customers. We offer next day home delivery to our customers. So because we're within 30 minutes of our target markets, we actually can do next day home deliveries. We've even done same day home deliveries. If you live around the corner and the car you're buying is on the pitch, we'd be bringing it around to you this afternoon. We want to get that car on your driveway as quickly as possible. We have a full end-to-end journey, and that's basically to say that we have as good an end-to-end journey as the rest of them. Integrated part exchange valuations, integrated finance propositions, collection diaries, those sorts of things. Very light touch in terms of handling. And then in terms of our customer satisfaction, our MPS is 83%. Very hard yards to get to that level. We've gradually increased that. I think 83 is probably about as high as we want it to go because I think it starts costing you too much after that. But we don't bribe our customers to give us great scores or any of those things. We've got a genuine, strong customer proposition that our customers seem to like. I mentioned earlier addressing the full target market. That's important because we're online and offline. And I think in terms of what we're going to talk about later with the expansion of the branch network, the hub and spoke distribution model is really important to that. So we've over the past three years moved preparation off our sales branches. We focused into dedicated centers. We've got another one opening in Glasgow in August. And that just keeps growing our capacity, but also keeps growing the specialisms that we've got in those preparation branches and making sure we can then access the sales branch network that we have now, make them more sales oriented rather than preparation oriented. And also it opens up supply of new sales branches, as I'll talk about later. I mentioned auction for cars. That's our own. Wholesale channel, really important part of our business because it connects us into the trade, gives us really amazing MI in terms of what the market's doing. It's very important right now as an example when supply is going short and we can read the market better than others. But we are a clear market segment leader. We are the only ones focused on zero to three under 30,000 miles. We're in a niche segment we think is the best segment, but we are the only ones focusing on that. I talked earlier about our proven and profitable growth model. That 10-year heritage should count for something, in my opinion. But also, we are a cash-generative, capital-like model. The business has always thrown off cash when it was private, and since it's been public, we continue to throw off cash and distribute to shareholders. Because we have a capital-like model, even if we buy and build a building, we then suddenly sit back. And our award winning employee engagement, having a highly engaged workforce makes it much easier to offer great value to customers, but more importantly, great service, which leads up top with the MPS. So a really compelling slide, I think, as to why MotorPoint is the most comprehensive offering and the best investment in this sector. So just to find a little bit more detail, again, most of you know this, but you can see the addressable market. So the zero to three market is about one and a half million vehicles. And that is the under three, under 30,000. And you can see on the right hand side where our coverage is. You'll notice that there are quite a lot of grey areas without an orange dot. That means we've got opportunity to access those markets through the website or in person. And we know that when we open a branch, we get stronger market share, which I'll cover later. but our mission is to make car buying easy. That's our strap lengths, our consumer proposition, and we're easy to find, view, buy, collect, and contact. Whether that's online or offline is up to the customer. We're not going to force people into routes that they don't want to use. So you can see the find whether you're online or offline. If you're online, you can see all of our stock, thousands of cars, lots of different unique make model trims. If you're in branch, you can see the cars that are on site, but more importantly, you can transfer from another branch. So once you sat at the desk, you can access the rest of the stock as well. Easy to view in terms of online, we've upgraded our imaging. We now have 360 degree imaging. internally and externally of the vehicle. In branch, obviously you get the luxury of being able to come in, touch and feel and sit in the car and actually do a test drive as well if you'd rather do that. It's amazing how many people switch cars when they come to branch because they realize it doesn't drive well for them. It's not the right color. It's not the right size. You can't get the push chain in the boot. All those sorts of things happen when people are there in person, hence our omnichannel approach. Being easy to buy, so very easy with that end-to-end customer journey online. If you come into the branch, you get a really friendly face. Both experiences have the no hassle 14-day money back guarantee. That gives customers the assurance that if you do buy and you have a bit of buyer's remorse, we will look after you. We want you to be happy as our customer. And then easy to collect. So we offer all the ranges that everybody else offers and more. So you can reserve and collect, buy online, collect in store. You can come into store and driveway the same day. You can have next day free home delivery. And normally our average handover time is up to 30 minutes, which includes the test drive. All of the paperwork's been signed beforehand because you do that before you come in. And then in terms of being able to contact us, again, the luxury of being able to come into a branch and speak to somebody friendly in person, or whether it's over the phone or email or live chat, we can offer both solutions. I think it's important to remember with cars, people have a lot of questions. That omnichannel approach is absolutely the right model because people do have a lot of questions when they buy a car. It's the biggest ticket item that they will purchase. Just shadowing in on auction for cars, so an online and unique revenue stream. Why is this important? The reason we set this business up 14 years ago is because we didn't like sending cars to auction. You lost control of the car when it left the branch. You had to pay to get the car to the auction. If the car didn't sell at auction, You're then into no man's land. What do you actually do with this car now? Do you relist it the following week or two weeks later? Suddenly you've got a problem with a car sat somewhere else that you don't know what to do with. So keep control of the car. Keep it on our branch. Put it on a website and sell it to the trade directly. Cut out the buyer's fees that traders have to pay to the auction house or reduce them dramatically, which is what we've done. Our Stockton is amazing. 14-day Stockton on these products. We don't have to move them. They just stay on branch and the customer, which is a trade customer, comes to us. Very trusted brand, really important because we're not competing against the traders. So with BCA launching Cinch, they are now competing against their customers, which are the traders, and we are not doing that. We only trade cars that are outside of our retail criteria. Believe me, it took some time to explain that to the trade many years ago, but they get it. They understand it now that if that car is over 30,000 miles, it will be on auctionforcars.com. There's nothing wrong with the car. It's a great source of fantastic stock for those guys. And we have very high levels of customer service. Again, if they're not happy with the car, we look after the customer. We build long-term relationships. We have over 9,000 customers on there. Just to give you an idea, there's about 15,000 independent, or sorry, dealers in the UK. So we've got a good share of that already. We've got plenty of eyes on the cars. And it's a very low overhead business I mentioned earlier. Our buyer's fees are up to £75. If you go to BCA, you're talking in excess of £600 for a potential maximum fee that they charge. So dramatically cheaper. And that'll come to how we're going to scale this business going forward. Two opportunities for us. Accessing more product is the key thing to make auction for cars bigger and better. We need more cars in there. So we're opening up our criteria from customers to buy cars from customers who are not buying a car from us. That's from the summer. And then later this year, we will launch a new strategy to extend this and convert auctionforcars.com with a new website into a marketplace, allowing any vendor to sell their product on that platform. the network effect of that will allow us to get more cars in there that attracts more customers that attracts more bids that then attracts more cars so the network effect really builds over time with that we're really excited about it the auction market directly with bca mana and people like that at the moment it's about one and a half million units we're about two percent of that so 35 000 cars in fy20 and but on our motorpoint.co.uk website we value over 8 000 vehicles each week now lots of those customers are just looking to buy a car. And if we haven't got the car for them, which we don't always have the car for our customers, they might want a black one, we've only got a red one. They might want a five-year-old car, we've only got up to three years old. But we can still target those customers and say, even though you're not buying from us, we still want to buy your car from you. So you can imagine the opportunity that provides. But trade buyers are always looking for efficient ways to buy new stock. Typically, when the market's hot as it is now, our margin in auction cars goes up. So it's about 10% gross margin at the minute. Long-term average would be more like 5%. But importantly, we've built up the infrastructure to be able to handle this. We've got the infrastructure to handle customer drop-offs, which we do initially. But longer term, we will make sure that we are able to go and collect these cars from customers. We've got our home delivery network, which is building. That will be able to pick up cars from customers as well to supply auction for cars or the retail business if the car is within criteria. And I already mentioned the fees being much lower than the market average. I'm going to quickly talk through FY21. Obviously, COVID interrupted here, as everybody knows, but we did see an acceleration of online purchases. Even since we've reopened on April the 12th, 37% of our retail sales remain online. So that would have been high 20s before COVID. That's now gone to 37%. 65 in person, 35 online. We know that's going to continue moving. The online part is the growth part of the market. That's where our investment needs to go. We're completely aware of that. Our sales team were repurposed during lockdown. We made sure they were doing outbound calls and we made sure they were doing handover duties. That frees up our collection team to go and do home deliveries. So we're utilising the same number of people to do more. And our conversion of online traffic, we've invested a lot in online marketing to make sure that we continue converting that, and that's now approaching 4%, so we're becoming more efficient in our online marketing and converting more customers. I mentioned MPS earlier. It's fantastic to see now our online MPS is the same as our in-branch MPS. It's much harder to have an MPS that's high online, in my opinion, because you've not got that opportunity to see the customer, to see what's going on through the buying process. We talked about COVID. You'd imagine that we looked after our customers and our team, which we did. I mentioned home delivery already, but that was launched in May 2020. In FY20, we didn't do any home deliveries. In FY21, we did over 9,000, as you can see on the next slide. We sold 68,000 vehicles in FY21 compared to 96 the previous year. 69% of those were online. So if that's not an online potential business, I don't know what is. And of that, 25,000 cars were sold on auctioncars.com. The 22% of retail vehicles were delivered through home delivery in FY20, which is over 9,000 cars. Now going from a zero in the year before to 9,000, I think takes some doing. And as I said, we repurposed our teams. We retrained our teams. having a highly engaged team is absolutely critical to ask them to do new roles. And they say, yeah, I'll do that because I'm passionate about motorbike. That's a really important part. We've got 14 branches, which gives us access to the market within 60 minutes. But the online journey, just to continue a little bit more on that, 89% sales growth online in Q4, which is our jam to March 2021. 57% of these were fulfilled through home delivery. So in distancing times, distancing measures, more people take up home delivery. Once we open the branches, you see much more people coming into branches, much more people willing to collect in person rather than wait at home for the car to arrive. So again, we're agnostic. If you want us to deliver to home delivery,

We've got 47,000 cars sold online in FY21.

And of that, 35% of our motor point retail revenue was online. So dramatic increase on the previous year. And that's been created over time. This isn't suddenly a sharp turn in direction from us. We've always sold cars online, as I said. But we are easy to find, view, buy, collect, and contact online as well. So we've got a very strong range of stock, as I talked about. We've upgraded our imaging so you can get a much better view. We've got video on there. and everything else making us easy to buy. Digital end-to-end journey, including part exchange, finance, and that's home. Paperless check-in. So think Ryanair at the airport. You don't go to the desk. You just go straight in. You've done all the paperwork online before you get there to make sure that you can then walk in, pick up the car, and off you go. So you book your collection slot. We've got a team of 50 people online looking after the sales that come in through online, as well as the ones that are bought outright online online. and we've got 200 people in branch to help the customer. In terms of collection, I talked about most of that, but lots of options to collect. And in terms of being able to come into branch or in person over the phone with any support that you need from us. But new branches include open a new branch in a time it's a marketing spend it's an awareness brand it's making sure that people know who we are and what we do big cost in terms of making sure we um we get that right and opening in swansea in january 2020 you can see we were known in that market we had a three percent share that goes to an excess of ten percent once we've reopened so that is a really powerful start i think to give you the understanding of why we need to have these branches And looking at the value that we offer. So we've come up against Kazoo and Cinch on the next slide. So it gives you an idea of where they are positioned in their product. And it is not a value-based proposition. To me, value is the most important thing to the customer. You can buy online or in branch with us. You can only buy online with Kazoo. We have all of the key benefits, as you can see down the middle there. Lots of those things that we are really developed over many, many years to get it absolutely spot on. But you can see that the key point, our car is £500 cheaper and it's got 16,000 less miles on the clock. So that is a compelling proposition to us against Kazoo. And if you look at the siege, we're £650 cheaper and our car is one plate newer. Again, you can only buy online. So once Kazoo and Cintra go after 35% of the market, which in fairness is growing, we'll continue to offer 100% of the market for our product. And importantly for us, the quality standard is absolutely key. We've gradually increased and increased our quality. You can see the MPS going up and up and up. And that leads to higher repeat customers. I think importantly as well, making sure the quality of service throughout our process has been a big part of this year. I had lots of exposure to customer and in the year and making sure that we've got everything as thick as we possibly can be we've always got room to improve and you know no different now we always want our cars to be better quality we will start introducing much more detail on including pictures of imperfections on the car later this year because that's actually an important thing for customers to know that that car is in good condition before they come and collect the vehicle we bring it to the house And obviously acting responsible. So obviously the ESG is high up our agenda as well. And delighted that we've become the sole partner for the Birmingham City Council Clean Air Zone Initiative. So this is charging to go into town if you've got an older car. You can scrap that car. You need to go to a dealer in order to do that. We are the only people that you can do that with in Birmingham. So delighted we've got to do that. They're the first ones to do this. We see opportunity with that with other councils as we go through. Done a lot of development and technology changes to make that happen. with our own systems and it's been fantastic. But you can see there, the initiatives in 2021, basically we don't throw anything away. So barely anything goes to landfill and 82% of our parts are recycled. We recycle tyre casings and make sure that our validators are using biodegradable products. We've always been super strong on the community link and making sure that we, you know, diversity and gender balance is absolutely top of the agenda. We launched an apprenticeships for our preparation team. We have regional partners with charity, which each of our branches is looking at. We've launched payroll giving on our end, sorry, our payroll for our employees to take. And also we have always paid the most point living wage, which is actually the real living wage rather than the government living wage. And also we opened up some of our offices during COVID for disadvantaged groups who were no longer allowed to meet at places like hospitals because they were restricted entry. So really good use for the community as well. Can't emphasize enough this slide, you know, how important our people are. We are our people, basically. Without our people, we are nothing. We are the number one automotive company in best companies survey, which was just released. We were number 18 in the top 100, which is our record highest position. We've made 46 promotions. Promoting from within is what we do. We don't like bringing people in externally, but we will if we have to, to get the balance right. And our turnover continues falling. So under 20% now in FY21. We've got a team of 800 and our Glassdoor score is 4.5. So making sure that we keep talking to the team. We have an inclusion committee. We completely dedicated resource to our equality, diversity and inclusion plans. I actually do a happy hour, not very happy for the team maybe, but I do a happy hour with the team every month. I choose a group at random, so maybe salespeople, it may be black and ethnic minority employees, lesbian, gay, bisexual and trans group last month, making sure that I'm completely aware of what's going on in the business. And that is a fantastic thing I do and the best hours I spend a month. Again, I talked earlier, this isn't a short term strategy. You can see this by looking at the slide showing how many of the people are new in our senior leadership team. This journey commenced two years ago, recognizing we needed to move a bit faster. We needed to grow. COVID's delayed some of this, of course, but we brought in Chris, who's the new CFO. We brought in a new CTO, brought in the ops director and the marketing person. And we've got a gap now in terms of chief digital officer. We're hiring that slowly. We absolutely have to get that right. That's going to be a pivotal position in our future going forward. But completely bought into investment in our talent at all levels to support our leadership team. Just in summary on FY21, we are back open for business. We reopened April 12th. We had huge online growth in Q4 before we reopened. And since we've reopened, we've seen really strong demand in branch. So we're delighted with the way things are and feeling very confident about the future. So I'll just hand over to Chris for financial.