Vertu Motors plc

Good morning and welcome to the presentation of our latest preliminary results for the year-ended February 2026. My name is Robert Forrester, Chief Executive. I'm joined by Karen Anderson, our long-standing Chief Financial Officer. So the group, I think, has proven during the year that it can focus on controlling the control of elements of the business despite significant external challenges. And the aim is obviously to deliver long-term returns to shareholders. This is the 20th year we've been in business. We've got 5% of the UK car and van market, and the company has never lost money in a financial year. We have an excellent, resilient after-sales business, which continues to show growth. Management have been proactive in managing the business. Our strong ethos of risk management is clearly seen in the presence of the extended insurance cover, which largely protected the business from the third party cyber outage that we incurred with Jaguar Land Rover in the period. Our use of technology to drive productivity and very, very good customer journeys comes through. That's also aided 10 million pound of cost savings, which we've actioned in recent months to aid FY27 profits. We have a big focus on returns for shareholders And to date, we have, in the form of dividends and buybacks, returned £112 million in cash, reflecting the strong underlying cash flows of the group. We announced recently another £12 million buyback programme. We will make the right decisions for the long term, be it in pruning of operations that deliver poor returns, so recycling, capital in growing the Chinese brand presence to secure market share and future cash flows and to continue to invest in leadership training and future management. We've rolled out a very successful degree apprenticeship program to strengthen our TALA pipeline for the long run and in January promoted two new managing directors and we're already feeling the benefits of that move. We have the financial and operational capacity to grow when we've got visibility on returns and when we will grow the scale of the group when the time is right. In terms of the performance, you can see here in headlines that we've got increased revenues, but profits were back. The zero emission vehicle mandate that the government is putting to target battery electric vehicles in the UK is weighing heavily across the UK automotive sector, including on ourselves. Overall profit pools in the UK automotive sector are reduced in the new car channel. Many auto retailers are now losing money. We remain profitable. We remain cash generative and in control of our costs. Our strong balance sheet reflects in the 61 million of net debt against a very strong asset base. And that's before the receipt of 3.4 million of insurance payouts on the JLR cyber attack, which we've included in FY26 profits. Our tangible net assets per share is up again, 75.9 pence, and we continue to sell surplus property at the above net book value, showing that our property book values are indeed conservative. There are other key themes present. The growing strength of Chinese brands in the new car market is clearly important for the long run, and it's a key issue for management to address, making choices as to which partners to partner with and the speed of growth. The FCA stance on motor finance claims rumbles on. We've had a redress scheme announced and we've now had a redress scheme postponed, clearly aimed at lenders rather than the credit brokers such as us. Overall, we're in control of the business. We're controlling the controllables and looking to seize opportunities. If we turn to current trading in the months of March and April, We're delighted to show that we've had a strong start to the financial year with growing profitability above last year levels. There's a number of reasons for this. We've had the positive impact of last year's closures among the performing dealerships. Our startup and acquisition has started to mature, and the cost savings that have been delivered are clearly helping. The profit bridge here shows two very interesting trends. The first is the growth in the new retail and motability market, which has been in decline recently. for much of the past two or three years. The reason for that growth is that the manufacturers are actually starting now to push the retail channel to overcome their increased reliance on low margin fleet. The Chinese are coming into the market with a cost advantage and that is driving growth. And we're of the view actually that the growth in the new car market is partly and it's debatable how much, but it's certainly there that the Chinese are switching used car customers with two or three-year-old cars into relatively affordable PCPs on new cars. And we think that explains a lot of the growth. The market is also seeing increased levels of pre-registration activity in new cars, which flatters the S&MT registration statistics. But it's good to see growth. particularly as well the return to growth in the motability market, which was down heavily last year. That's generated more gross profit. We have seen what we think is startling growth again in our after-sales business with 2.9 million more gross profit in the core business in the two months. Record labor sales were achieved in the month of March. We are seeing a benefit in terms of efficiency in our service departments because a lot of the portfolio now does not open for service on a Saturday and that is increasing the efficiency and profitability of our service departments. If we turn to fleet and commercial new vehicle sales, this actually showed a modest decline in gross profit, which is unusual. Last year, in March, we saw significant deliveries of high margin pickup sales in the commercial vehicle arena ahead of tax changes, which clearly we didn't get this year. We are seeing major growth in volumes. If you see in the fleet car area, we were up 32% in the two months. However, we are seeing a knock on margins due to channel mix. Vans historically have a higher margin than cars, and we are entering into car markets with slightly reduced margins. So we think we'll benefit in the full year from growth. The van market itself remains subdued, but we're delighted that we grew by 8.5%. Like for like, taking good share. It is a major focus of ourselves to grow our fleet and van volumes this year. The use channel is very steady. sense that certainly premium used car demand is being impacted by the growth of new cars in the Chinese, but we do expect growth in the year in the used car channel. If we turn to outlook, what of the outlook? Well, we can all name significant headwinds and imagine all kinds of problems ahead of us from impacts of oil supply to growing inflation due to the Middle East war and lack of economic growth in the United Kingdom. If we take the oil issue, I think the biggest concern around the Middle Eastern war, apart from the wider impact on the economy, is actually oil supply itself. We cannot service petrol and diesel cars without motor oil. That's a pretty fruitless task. However, we have stockpiled supplies of motor oil to mitigate supply disruption. So we think that will stand us in good stead if the dislocation continues. We remain very focused on costs and cost control, and we've got a number of initiatives to grow sales and profits going forward, including a new initiative in the used car arena, which I'll talk about more in due course. The ZEV mandate is not going away. In fact, the targets for cars and vans are the major drag on activity in the whole automotive sector and in due profits. They remain, in fact, they ratchet up. This is the highest level of state intervention since the 1970s when the government actually owns the car plants, and it is set to get worse. We expect the government to act in relation to wholesale feedback from the whole automotive chain, from parts suppliers through to manufacturers through to retailers, and there will have to be some change to that policy going forward. If we look at our strategy, this slide has remained consistent and is likely to do so. We are committed to growing the scale of the group. However, in the past 12 months and actually in the near term, the economic uncertainty and the impact of the ZEB mandate has reduced visibility of returns and we have concluded that it wasn't the right time and isn't the right time for expansion. unless there are strategic opportunities of very, very much the right value. This may happen in terms of the distress in the sector, but we will clearly look at opportunities and assess them. However, we have been allocating capital to buybacks and portfolio reconfiguring rather than acquisitions. That is likely to remain the case. As things change, we will clearly look at opportunities. We've got the management, the systems, the strong core business, the financial firepower to attack when we consider it right to do so. And we feel we are well positioned to do so. So what's the external environment? I think one word that most people would use is volatile. There are four key elements of change which has affected the financial year and some of them going forward. The first is obviously the ZEV mandate. I've talked a lot about this over the last two, three years. The targets set by the government for battery electric vehicle mix will not be hit in cars or in vans. In fact, the SMT have recently reduced the percentage of battery electric vehicles they expect in 2026 in the car side. We are not going to achieve the ratcheted up targets to 80% ZEV mix by 2030. In fact, the policy defies basic economics. It forces manufacturers to heavily discount and retailers to discount to hit targets, reducing cash flow for further reinvestment. There will be, in all likelihood, a change in the policy because of the immense pressure that is being put on the government from the impact of this policy. It's likely that the battery electric vehicle mixes will be reduced. out to 2035 or even 2040 with more alignment with the European Union. The second area is the well-documented rise of Chinese brands, which you can see with your own eyes on Britain's roads. Chinese-owned manufacturing brands had a 14% share of the UK market year-to-date, and, indeed, Chery's G7 was the best-selling car in March. We will and are expanding with the Chinese, but it is nuanced. Not all of the entrants into the United Kingdom will be successful. Traditional players in our portfolio make good profits around very strong aftersales from years and years of selling cards. The Chinese have no aftersales from the end of the UK. We therefore apply our consistent investment models to seek to maximize returns and profits over a three-year time frame. We may indeed go slower than others, but we are ultimately seen as a desirable partner for new entrants and will gain share over time in a deliberate manner and that we can accelerate that through acquisition or indeed brands changing their representation plans over time. So we are not concerned about the speed with which we are taking on Chinese brands. The third area is the FCA Motor Commission review. The redress scheme was announced. It's now been announced it will be postponed. and that's because it's being challenged as well documented in the press. The redress is aimed primarily at lenders and therefore we've been consistent in not making provisions in this area and that remains the case today. We will, however, be working with lenders on providing data so they can deal with claims as and when they arise. The regulatory uncertainty and the retrospective changes to profitability of the lenders could indeed have a damaging impact going forward on the financial sector. If people aren't clear that the rules might not change in the future and lose confidence, then motor financing could be difficult with tighter supply. We're not seeing any changes in current supply, but it is worth noting that two of the major providers of used car finance have reduced their exposure to the UK or announced their intention to do so. And an independent player, according to press speculation, looks like it will go into administration. So the regulatory machinations of recent years could very well have an impact on future supply. We've clearly also got the Jaguar Land Rover cyber attack, which clearly is now finished and complete. We were very pleased with how Jaguar Land Rover reacted to the outages that they saw in September. They got production back up quicker. It is now back to normality. We originally in October set out we thought the impact could be up to 5.5. At the end, it was 3.9. But the insurance policy that we had has now paid out 3.4 million. and hopefully that issue is now behind us. So we've had to work nimbly and intentionally to manage the business through a period of some turbulence which indeed continues. We have not been distracted by major acquisitions and actually I think that has helped because we haven't been in integration mode. We've been focusing on what we can control and here are the areas that I think are worthy of discussion. In terms of digitalization, the business has always been very tech-focused, and our systems are generally seen as sector-leading. We have 60 in-house developers, and this area is undergoing absolutely major change in recent months almost with the impact of AI coding, which leads to much faster development, and our team are busy being retrained, and indeed we're taking on AI specialists. We've seen great use of AI deployed in our contact center environment and also in the sales environment, where we built our own large language model looking at 30,000 inbound sales phone calls, where we can now see a projected conversion for each call, but it also prompts our teams on what the next steps are in the sales process. What are the hot buttons? What should you not say? It also helps our regulatory risk. So there's some great work being done here. There's more to come. The finance efficiency project, which we've talked about and has been led by Cowen, has delivered real savings in removing manual processing. There is more to come, but we're delighted with progress there. The investment in the data warehouse and customer data platform in recent years is now being extended in terms of the number of use cases. That is helping efficiency and, indeed, aiding our conversion in marketing by having more targeted personalized marketing. In terms of the web, I think we highlighted to shareholders about 18 months ago that we thought we were off the pace with regards to the search engine optimization and the way our websites drove and held search engine optimization. I'm pleased to report that the modular changes made to our website are now fairly well complete. It is now designed to drive SEO performance, and our SEO performance is now much better with a leading visibility score in the sector. That's allowed us to rebalance our pay-per-click spend, which I think we over-indexed in. We're now investing in YouTube as a channel with car reviews. That helps SEO, especially in an age of increasing AI search and rich content. We're increasing the number of the online car reviews, and that's driving more engagement. I'll now pass to Karen to discuss the cost reductions.

Thank you, Robert. Yeah, the group took very proactive action on costs and undertook for the second consecutive year a significant cost reduction programme. We anticipate that we'll deliver £10 million of cost savings in FY27, so the current financial year, as a result of this latest exercise. And this included a further headcount reduction of approximately 280 colleagues, and that's over and above the 290 colleagues we took out last year. And that's anticipated to deliver a £7 million cost saving. And we were unable to do that as a result of some of the inefficiencies initiatives that Robert's just outlined. The avoidance of losses from closed dealerships that we identified as part of our pruning process adds a further £400,000 of cost savings. And we anticipate marketing cost savings, both as a result of reduction in sponsorship and partnership arrangements, as well as capturing the benefits of the one brand that we went to in April and the efficiency that gives us. In terms of other savings, the majority of this represents the introduction of charging for wash and vacuum in our group's volume dealership service departments, which generates a significant saving on valet costs. We also have energy savings coming through from an additional investment in solar, and we've optimised each and every one of our group's supply arrangements. in order to reduce costs where we could. Finally, the group started to trial building management systems with some good early results in terms of reduction in utility costs. We're expecting to further extend this project in the coming months, which will help us further reduce costs over and above the 10 million that we anticipated.

Okay, so let's turn to portfolio development, and the big subject here is where we're going with Chinese brands. We are repositioning our portfolio with more Chinese brand exposure, either by reconfiguring existing sites to add additional franchises or removing traditional brands in some cases and replacing them with the Chinese. I visited China in March, and the two managing directors independently visited China in April for the Beijing Voter Show. In terms of key learnings from that, Chinese car factors are currently running at about 55% capacity, which is unheard of in the Western world. and indeed shows you the amount of oversupply in the Chinese car market. This is not helped by a major decline in battery electric vehicle sales in China since subsidies were ended by the Chinese government in December 2025. The domestic market is currently running about 22% back year on year, and this goes hand in hand with a switch to exports, of which the UK is clearly very important. BYD, for example, now exporting 46% of their volume outside China. In China itself, there is massive oversupply, real problems with discounting, real pressure on manufacturers and domestic retailers from a profit standpoint. The UK is very much seen as the place to go. We are one of the few places in the world with very low tariffs on Chinese cars, and the Chinese are coming with technologically advanced cars and also with a cost advantage. We have identified four major players, BYD, which is preeminent in the battery electric vehicle market in China. We've now got five outlets. Geely, which actually also owns Volvo, we've now got three outlets with them with more to come. The Cherry family of brands, which includes JQ, Emoda, and Letpass as well as the Cherry brand, we have plans to engage with sites across those brands over the next five to six months. The final one is the long-standing MG brand in the UK, owned by SIIC. And we've always been a strong partner with MG, with a close relationship, and they are our four key pillars. In addition, Stellantis, which owns Vauxhall Peugeot Citroen, actually part-own a Chinese brand called LEED Motors, and we will be adding LEED Motors into a number of our Vauxhall sites over the coming months. So Chinese representation is a major area for what we're selling forward. In terms of identifying opportunities we can control as opposed to relying on the market, the selling of older used cars has been on the agenda for a while. On the 1st of April, we launched a new initiative in this area. Cleared with people's living standards in the UK under pressure, it's no great surprise that the element of the used car market with the highest growth is for cars over seven years old. Historically, this is not a core market for franchise retailers, and only 11% of our current used car sales are in this bracket. We actually have the cars coming in in part exchange, but have been trading them to auction houses as opposed to retailing them ourselves. From the 1st of April, this changes to mean we attack this growing segment. We've got revised preparation standards. We've procured cheaper parts to use in reconditioning, and we've got new finance and warranty products. In terms of the impact of this, the margin on average on our used cars is around 7%. But if you sell a £9,000 car for a £2,000 profit, you can make 22%. So this really, I think, helps margins, helps grow volumes, and provides us with future service work when we sell service plans. It's gone very well with management. I think we've made a good start. The business is really based on having very good people. We've got a strong operational business due to stable management, long-term investment in training at all levels, including leadership development. And the results from this are very clear on the right-hand side. We have high levels of colleague satisfaction. We have high customer experience scores measured by the manufacturers, which then aid customer retention well above national average levels. In the promotion of two of our operational directors to managing director on the 1st of January, The operations of the business, the operating division, now report to them, not me. That has given more capacity for the group to both operationally work much more tightly, but also make much better decisions. I'm spending my time more with the manufacturers, visiting dealerships, getting together with our strategic partnerships and close suppliers, and also meeting key customers. I think we are seeing the benefits.

Thank you. Slide 16 shows a summarised income statement. Group revenues grew by approximately £70 million, with this growth attributed to acquisitions and new business startups. Core group revenues saw a very small 0.7% decline. The introduction of the agency model in mini Honda franchises reduced revenue in the core group by approximately £70 million year-on-year. Growth margins were stable at 11.2%, and that's despite the well-publicized reduction in fleet and new vehicle margins due to the impact of the ZERV mandate. And we managed to offset this with a higher mix of after-sales revenues and, of course, the impact of agency I've just described. Costs at the percentage of revenue would have been stable at around 10.1% if the impact of the agency model on revenue was removed, reflecting the strong cost control in the group. Adjusted operating profit reduced on prior levels, driven by the reduction of profitability and the sale of new vehicles in both the retail and fleet channels. The group's interest costs reduced by £1.1 million compared to prior year, and this is driven by reduced interest rates and the reduction in the outstanding mortgage balance as the instrument is repaid over time. Non-underlying costs represent the cost of the group's reorganisation and cost-cutting programme as described earlier, and also include some impairment provisions as the group worked hard to reduce its cost base in the light of the declining new vehicle profitability and cost headwinds. Turning to slide 17, And usually for us, we have two profit bridges represented. The top one showing the normal core group in total, and the second showing the separate impact of the JLR cyber attack within the overall core group movements. Core group gross profit declined by £4.3 million over the prior year, driven largely by the impact of reduced new vehicle profitability and, of course, the JLR cyber attack, which amounted to £3.9 billion of the total. The standout negative here, as you can see, is the £8.7 million reduction in gross profit from new vehicle sales, retail and motorability. This is the second consecutive year of declining new vehicle profitability for the group, which saw a £10.9 million reduction on this measure last year. The reasons for this are clear. Significant discounting of battery electric vehicles by manufacturers, striving to hit government targets, which has impacted our margins, and a reduction in motorability sales volume. Offsetting this new car shortfall was the significantly improved gross profit generation from the Group's resilient and high-margin after-sales operations, which generated an additional $8.4 million of gross profit year-on-year. Approximately $4 million of this uplift is due to the increase in internal rates that the after-sales departments charge the vehicle department for the preparation of vehicles for sale, with the majority of this increased cost in service having been absorbed by the used vehicle sales department. used gross profit generation in the core group was stable, and this was a good result considering the absorption of both the increase in the internal rates I've just described, and of course the impact of the JLR cyber attack on the department, which reduced gross profit by 1.7 million. As anticipated, core group operating expenses grew year on year, and I'll cover these in more detail in the next slide. Remember that the core group operating expenses include the benefit of the insurance payout of £15.4 million in respect of the JLR cyber attack. I've already covered the year-on-year reduction in finance costs, and contributions from dealerships acquired or started up represents the year-on-year movement of £15.1 million, with losses in start-up operations, current year acquisitions driven by timing, offset by improved profit year-on-year from the borough's acquisitions. Turning over to slide 18, this shows more detail on the core and total group underlying expenses. Core group operating expenses rose £1.1 million over the year. That's below the rate of the inflation for the same period, and this excludes the impact of the JLR insurance settlement, as you can see from the table. The single biggest cost of the group is salary costs, remembering that the figures on this slide do not include the productive cost of technicians, which are included in costs for sale. Salary costs in the core group rose £3.8 million, or 1.5%. And this is despite the notable headwinds driven by the 2025 budget increases in employers' national insurance and increases in the national minimum wage. The group has worked hard to reduce headcount and undertook, if you remember, a significant headcount reduction at the programme at the end of FY25 to offset the estimated £10 million annual costs of that budget. And in light of the continued and unavoidable cost pressure, we obviously took the further cost reduction exercise at the end of FY26, which I'll describe the cost of which in more detail on my next slide, but I've obviously already pointed out the savings. Marketing costs increased, reflecting the investment in the Single Virtue brand and in three group-wide sales events. As we've already seen, marketing cost savings have been targeted for FY27, as we see the benefit of efficiency of the single brand and have reduced sponsorship spending. The significant reduction in vehicle and ballot costs has been aided by the introduction of charging for service wash and vacuum in the Group's volume dealerships. The cost saving was also aided by tighter control of our demonstrator and courtesy vehicle seats. The increase in property costs largely relates to business rates, which represent a significant cost to the Group, and where we have been very successful in securing rates rebates in FY25, following a number of successful rates appeals. The growth in the size of the group, and therefore in the number of senior managers awarded options under the group's partnership share scheme, has seen costs rise over time in terms of share-based payments. Awards for FY27 were reduced to half previous levels, reflective of the reduction in group profitability. Slide 19 analyses our non-underlying items which were incurred in the year. Exceptional costs of £5.1 million include the cost of the redundancy programme undertaken at the end of FY26, which reduced headcount by a third of the 280 colleagues over and above the 290 colleagues taken out at the end of FY25. Impairment charges of £1.3 million include the impairment of Goodwill and the Group's mortgage-added dealerships, following disappointing profit performances from the sites in the last two years. In addition, lease or property impairments have been taken in respect of two sales outlets where performance has been below the required levels and we are looking at changes for the locations. Dealership closure costs, which do not include the cost of redundancy of colleagues at the site, which are included in the redundancies figure as previously described, These include clearance, asset provisions, and where applicable, any remaining lease costs. A property remediation provision has been taken in respect of a failed roof at one of the group's large dealerships. Expert reports were obtained to highlight the extent of the remediation required, and the Board is currently evaluating whether a legal claim can be made in respect of this defect. Finally, profits on the sale of surface properties and the sale of businesses of £0.9 million have been offset against non-underlying costs. Stepping over to slide 20, this shows the group's balance sheet. The balance sheet is very stable and strong, underpinned by the freehold of the long leasehold property portfolio of £327 million, prudently carried at historic depreciated costs. Four of the five properties held for sale at the start of the financial year, i.e. 1st of March 2025, have been sold during the financial year we're reporting on, generating cash proceeds of £5.1 million and a profit on disposal of half a million pounds, in illustration of the prudent level with which we carry our properties. Working capital was stable year on year, with unencumbered used vehicle stock at a value of £174 million included in there. Tangible net assets per share are 75.9 pence, and this clearly reflects the strong asset backing of the group, and this increase from last year's 72.9 pence aided a little by the share buyback, which was conducted at prices below tangible net assets per share. Turning on to slide 21, this is the group's cash flows for the year, and the group generated a free cash inflow of £30.7 million. The working capital movement was minimal during the year, with notable movements within this minimal figure being an 8 million outflow arising from an increase in used vehicle stock, a 5 million pound outflow from reduced customer vehicle deposits, partly due to the move to agency and certain of our franchises, and these outflows were more than offset by a reduction in trade receivables driven by the timing of the customer receipts around year end. The sustaining capital expenditure of 30 million was spent in the period, with this partially offset by proceeds from sale of surplus properties and other assets of £5.3 million. A further £8.2 million has been spent in the period on capital projects which enhance the operating capacity of the group and freehold and business acquisitions during the year. Net debt at the end of the year was £61.3 million excluding lease liabilities, representing a £5.3 million decrease on last year's figure. The final slide once again covers the Group's capital allocation discipline. The Group continues to seek a balance between investment and growth, targeting returns in an excessive weight of average cost of capital in order to deliver on our strategic objectives and shareholder returns. As Robert's already mentioned, the key element of our approach to capital allocation is pruning, where we consistently review dealership operations to ensure adequate returns on investment and contributions to good profitability. Following such reviews, the group has edited several sites during the year as listed on this slide. The group has had a programme of share buybacks in place since FY18, and the group has spent £10.7 million in the year on buybacks. And since the start of these programmes, we've brought now back over 21% of issued shares for a total of £46.5 million. The group announced a further £12 million share buyback programme in March for execution in FY27. And finally, The group has actually paid £65.3 billion in dividends since we started paying dividends back in January 2011. The FY26 final dividend of 1.15 pence per share holds the dividend overall at last year's level of 2.05 pence per share. And that is a cover compared to adjusted fully-divided EPS of 2.6 times, in line with the group's stated dividend policy on this measure. I'll now hand back to Robert for a more detailed update on trading in the year.

Thank you, Karen. If we turn to new vehicle sales performance, you can clearly see here it's been a mix of growth in some channels and decline in others. The financial year saw a new car market dominated by fleet, the rise of Chinese brands, and massive distortions created by the zero emission vehicle mandate, which forced discounts in a market that's unrecognizable as a free market. The new retail channel saw growth by the group. However, it underperformed the SLMT registration numbers for two reasons. One, Chinese brand representation being lower in our group than the market, partly actually because of the like-for-like calculations, but also the growth of pre-registration, which goes through our sales as used, but the market puts them through new retail registrations. Motability saw major declines throughout the year due to change cycle timings, which have now reversed in March and April. The group continued to pick up share and is Motability's biggest partner. There were major share gains in fleet car market. We acted to the weakness in the van market and the pressure on the retail channel by really going out with resources and focus to grow in the fleet car channel. That remains to be the case. The market was clearly bolstered by battery electric vehicle sales through fleet as the manufacturers pushed products through the broker channels, salary sacrifice schemes, and in the public sector fleet channels. You can see top right, the fleet market was 33% battery electric vehicle, where the retail market was 15%. While it is fair to say that electric vehicle grants introduced by the government during the course of the year helped, the retail mix is still very low indeed at around 15%, considering the target is now 33%. The group, I'm pleased to say, outperformed for the second year running in private battery electric vehicle sales. The market was up 50%, but we were up 71%, and we continued to focus to drive battery electric vehicle sales through the business because that significantly helps our manufacturers hit their targets. The van market was clearly down 8.6% of the market. We were actually down 10%. There are key issues driving this market backwards. One clearly is business confidence. which was on the floor during the period. The second was the zero emission vehicle mandate for vans, which we have not discussed that much. But bear in mind that in 2026, there is a mandate of 24% battery electric vehicle mix. The market last year, and indeed this year, is running at about 9%. And remember that the fines for vans are £15,000 per van, as opposed to cars, £12,000. This market is stuck. We will not see big increases, and that is certainly an area the government needs to address. Fleet and commercial margins actually reduced in the period. This is actually largely due to mix. Vans have higher margins historically than car, and indeed some of the new fleet business we did at slightly lower margins. It was a reduction in van volumes, however, which reduced our gross profit by 4.2 million. Overall, we are 5% of the car and van market and are clearly pleased with that. The further acquisition growth will clearly enhance it. We turn to used vehicle sales. This was a period really of stability in terms of demand and supply. The weakest residuals were seen in natural electric vehicles. That is no surprise given the oversupply compared to demand in that market. However, I think residuals have stabilized, but they do depreciate faster than petrol and diesel cars. There are also, as a result of the oil shock, we've seen recent concern over large diesel car residuals, which in an oil shock with high diesel prices, tend to accelerate depreciation, and that is clearly one to watch. It was good to get back to volume growth in H2, because that is despite very strong new car offers, which have taken, I think, some used car business, and indeed the Chinese coming out with cheaper payments and moving some used car business into new. We're pleased with our performance. We think we outperformed, on auto traders' metrics, the overall franchised daily used car market. Stable margins was quite an achievement given the fact we transferred 3.4 million of extra labor costs on internal preparation of cars into the used car department. And I think it's fair to say that our insights algorithmic pricing is doing its job in terms of helping with margins in stock term. Finally, if we turn to after sales, we've left the best to last. This is the star of the show for sure. With gross profit growth in all areas, There are now 42.5 million vehicles on Britain's roads. That's an historic record, and that clearly drives after sales demand. It will not surprise you to know that the tyre sales are going exceptionally well, since with the rise in British vehicles, we also have the historic rise in the number of potholes and the average depth of a pothole, which is driving our tyre sales. There is no major impact in our business at the moment on electrification, and we think electrification will be a very slow process. However, when we look at fleet work less than three years old, we are seeing a decline in average invoice value as a consequence of electrification. However, we believe that we get more retention in battery electric vehicles, which is what we've said in the past when asked the question. Also, modern vehicles with software and radar and batteries have a tendency to go wrong, particularly around software, so they do lead to rather large repair costs when they come in. The growth in March and April showed the opportunity in after sales through execution and the appropriate strategies. We think it will be resilient for many years to come, and best sales are frankly unlikely to ramp up as originally planned anyway. The key to success in all these areas really is operational execution. It is driving service plans. So when a customer buys a new or used car, they go out with a service plan to absolutely make sure they come back for a service. It's having high levels of customer experience, which we deliver, and also having a vehicle health check process to make sure we're safe to check the car, that we sell the additional work that's needed, including tyres, and that we've significantly increased conversion and profits built in this area with our VPay pay later. Now, accident repair sensors, which are body shops in common parlance, they actually saw weaker demand, and we think that it's just the increasing number of cars with radar to tell the driver that there's a potential hazard ahead is having a material impact on the number of accidents. If there's more cars than vans on the road, you'd expect accidents to go up due to congestion, but accidents are actually down about 25%. However, in saying that, the smart repair business continued to expand. And overall, between accident repair and smart repair, we saw a £2 million increase in gross profit and better margins. So we are pleased with that. All channels delivered more. So finally, we think the group is exceedingly well positioned. We are stable. We're well capitalised. We're asset-backed. We do have the firepower in terms of management and financials to expand our operations and scale. Our digitalization gathers pace in terms of its impact, benefiting customers and profitability. Our people are stable. They want to work here. They're delivering high levels of customer experience, and that is a good start when you're in business. So we are certainly excited by the amount of change we have to deal with. We see it as a challenge, and we think there's plenty of opportunity going forward. Thank you very much.

Thank you to Robert and Karen for the presentation. And we've had a number of questions that have been pre-submitted and also submitted live. Just as a reminder, if you'd like to ask a question, please do so by typing into the Q&A box, which is situated on the right-hand side of your screen. And the first question that we have is, are you worried that cheap Chinese EVs could actually undercut and cannibalize some of the brands you already sell, particularly your volume franchises?

It's a good question. The interesting thing is when you look at part exchanges that are coming through franchises such as BYD, the top three brands where the part exchange comes in is actually BMW, Audi and Mercedes-Benz. Apart from the fact where you've re-franchised the dealership and clearly the franchise that we've re-franchised from figures fairly heavily because of customs use coming in. So I don't necessarily see this as... massively taking share disproportionately, actually, from the volume players. And I think there's more and more evidence that rather than cannibalizing new cars, generally, that the Chinese manufacturers are hitting a bit of a sweet spot in taking people in, say, premium four-year-old product that was probably bought one year old as a used car and converting them into a new car. And I think that's why we're seeing the growth, actually, of the new car market. So it goes without saying that more manufacturers in the mix means that potentially profitability involving the others is likely lower than it would have been. And that's exactly true. And that's clearly why we've got a strategy for managing that to maximize profitability over time whilst reorientating the franchise mix into more Chinese.

Thanks, Robert. And does the board see potential future issues with residual values on Chinese EVs considering the massive recent increase in the market?

Well, I think we always have to look at demand and supply issues ahead of them occurring and try and manage them as much as we can. For example, the very high diesel price is likely to put downward pressure on residuals of large diesel SUVs currently, for example, I think the question actually makes a fair point that, you know, if you push a lot of supply of one thing into a market, that's going to have an impact, unless demand rises to meet it structurally. So I think there is going to be quite a lot of people watching when big slugs of, say, Chinese product that has been pushed in comes back. and we'll have to see where demand is at that point. But if demand is lower than supply, you will get some price reductions.

In your interviews, Robert, you talk about used cars and the potential for higher returns. How exposed are you if used car prices soften?

Well, as ever, we've got £170 million worth of used car stock. It tends to turn just over 30 days. But as people who've studied this company and other motor retailers will note, when you get significantly large falls in residual values in used pricing, then we suffer lower margins. And that is just a fact of the business. I'm not particularly worried about the moment apart from that point around large diesel SUVs because of the diesel price. I think that's the market's pretty stable. Residuals actually are strengthening a little bit, although the depreciation over time is fairly steady. So our exposure is the sudden shifts down, I would say, that are faster than our stock turn. You know, we haven't got a contract high company with a three year exposure. We haven't got any buyback commitments, which can also be problematic. So I think our exposure is weaker as night follows day. lower residual values impact profitability, just like post-COVID when residual values went up significantly, I think we'd see the profits upgrade every six weeks.

Thank you, Robert. Our next question was very similar to what you've just answered that. You've just launched the value car by Virtu, going after this seven to 14-year-old used car market. That's quite different from your usual customer. How much are you betting on that? And what does success look like this time next year? Okay. It's not completely a different customer.

Historically, 11% of our sales, used car sales, were in the bracket of over seven years. So I think it's fair to say we have simplified the way we're going to approach this. We've got better finance in place. We've got new warranty products. We have taken the cost of preparation down and slightly reduced the cosmetic standards on these cars. And I think that does give us a good opportunity. It's quite clear that there are margin enhancements from selling older cars. The profitability per unit is actually proportionally higher than the sales price. I'll be betting on it. I think it's a useful strategy. I don't think the entire future of the company is dependent on it. But I think it can give us incremental profitability. And I think we'll see that if it's successful in of used car gross profit margin percentages, growth in volume and gross profit, barring other things happening, which clearly can happen in a large business like us. But I think if we can see that 11% grow further, which I think we will actually, then I think we will declare victory.

And next question, after sales is always a big part of your story. Could you expand on how you see this being part of the used car story?

I think this is a very specific question in regards to the financial early results for FY26. We increased the internal labour rate that the service department charges the used car and the new car department, the predominantly used cars, on the 1st of March 2025. That effectively shifted around three to four million pounds worth of gross profit from the used car department into the service departments. We have not made that change again on the 1st of March 2026. We've got no thoughts of doing it again. So we're now into like-for-like territory of comparing apples and with apples. I think that's therefore good news when you look at the 2.9 million increase in gross profit from after sales in March and April, which is a true measure. Used cars are a major part of after sales because the internal customer is a reasonably good percentage of the work that goes to a service department that any motor retailer will know. So used cars are intrinsically part of the after sales story as a major customer, but So one of the things about growing new star volumes, which we're always keen on, is also making sure that the percentage, a high percentage of them, let's target 50%, for example, go out with a two to three year service plan so they come back into service. The whole point, you cannot understand franchise major retailing unless you see this leadership as a symbiotic organism that only thrives when every single department works together and is successful.

Thank you. If the market is undervaluing Virtu, why shouldn't you be more aggressive with share buybacks?

I'll take that one if that's okay. I don't think we've not been aggressive. We've brought 21% of the company back already and we've returned to shareholders over 100 million in share buybacks and dividends over time. But there's a balance, isn't there, to be struck between growth and executing our growth strategy and returns to shareholders. That said... Obviously, at share prices below tangible net assets per share, we do see the value, and that's why we've got another £12 million to spend on bypass for the year ahead. And if you remember, we have got the ability to go above the more volume limits from time to time if we feel it's appropriate.

Thank you, Karen. I'll ask this, and I think it's a very similar answer probably, but why haven't you continued the share-back programme for two months, instead focusing on the EBIT fund? Do you think paying down Virtu's debt would have been a better way to spend shareholders' money?

Okay, so while the EBT was buying, it seemed illogical for us to compete effectively with ourselves to continue with the share-buy-back. We'll be pushing our own prices up between ourselves. But actually, we are paying down debt because the mortgage is being repaid over time. And the gearing as low as 17% as it was, we think that actually they've struck the right balance.

Thank you. And next question, what is the structure of the EBIT? What are the triggers for payouts? And what happens to the shares purchased by EBIT if performance targets are not achieved?

Okay, the Employee Benefit Trust is merely a structure to buy shares, which can be issued in satisfaction of options granted to managers as part of their remuneration. So we give long-term incentive share awards to managers at general manager level and above. Those awards that go to the executives are obviously part of the remuneration report, which is approved by shareholders each year via advisory votes. And the EBT merely buys and holds shares such that when individual colleagues want to exercise options that are vested, the EBT issues those with the shares or sells them on their behalf. So the EBT, if targets are not achieved, will continue to hold the shares, but there are clearly far fewer shares in the EBT than there are outstanding options. So we shouldn't be in that situation.

Thank you. The next question relates to Helston garages. You paid £120 million estimated for 27 garages, soon to be 24. What return are you getting on that investment? Currently, Virtu Motors PLC is valued at £195 million and owns 191 sites, less 24 for Helston. Can you explain how the allocation of funds and debt was money well spent? Yeah, I mean, I think you've got a few things in that mix.

First of all, the market capitalization of the group is clearly net of the cash paid to shareholders on the buyback, which I think from memory is about 46 million. So I think you've got to be quite careful where your starting point is. In terms of Helston, it was a strategic acquisition for us that gave us 32 dealerships, I believe, at the time down in the southwest. We have subsequently to that disposed of loss making in what we believe were non-core businesses and there was some property in there as well. So that actually has generated 12 million pounds of cash receipts and reduced realized stock since then. So that's the sort of level we're playing with. I think it's fair to say that we've got a strong business now in the Southwest. We've got strong BMW dealerships, JLR businesses, as well as a number of volume businesses. And we probably have the top three Volvo businesses that go from Land's End to Somerset. So I think we're very pleased with the results we're getting out of those businesses. However, the elephant in the room really is that the business, I think we bought it in December 2022, the sector has seen quite a significant reduction in profitability since then compared to now. If you take our group, our like-to-like basis, our new car profitability has declined significantly. 20 million pounds in the last two years. And health is clearly part of that on a life to life basis. But that is reducing returns as a whole in the sector. So I think we're happy with the acquisition. If we paid 120 million, we've only got 60 million of debt, we've clearly generated a lot of cash to pay down the debt, because we did it on a debt basis. So I think We're pleased we're in the Southwest. We're pleased with the returns we're getting. We've got very strong management down there in a strong set of franchises.

Thank you. And given the pressures on consumer finances, how are you looking at demand over the next six to 12 months?

The good thing about this country is there is no one consumer. Older used car strategy of value cars by virtue, the seven-year plus thing, is a direct strategy reflective of the fact that quite a significant section of the population aren't seeing real wage growth and are probably financially struggling. So therefore, buying cheaper used cars is where the growth area is, for sure. If you look at auto trader data, that's where the growth's been for the last 24 months. So I think that strategy actually works quite well. But at the other end, actually, we're having a pretty good time with Ferrari used vehicles. So I think we've got to manage the business. Downturns in the consumer clearly have an impact on aggregate demand for motor vehicles, but we've got to make sure that we take a disproportionate share and that we've got the strategies in vehicle sales to win out. The work we've done on new car events, on used car events using the Virtue brand, I think is very strong. We just had a new car event which started a week last Thursday and we've picked up a lot of share in that. We're very, very pleased with how that marketing and indeed the performance of the dealerships is working. Our job is to take a disproportionate share and try and come up with strategies so we overcome challenges, in most cases likely dumped on us by the government.

And at what point do higher rates materially impact affordability and conversion rates?

Yeah, that's an interesting question. I think we are starting to see, because of higher interest rates in the financial system, from the 1st of June, we think new car finance rates and PCPs will go up. We're starting to see a little bit of pressure in terms of used car finance rates. And clearly, if the price of something goes up, you tend to get less demand. So we'll just have to work harder to overcome that. We were probably starting the year expecting in January rates to come down, rates are not coming down, rates are going to come up. There are a lot of elements, though, to overall consumer demand. In terms of confidence, you know, you could argue the minimum wage has put extra money in people's pockets, probably at the lower end of the used car market, which is probably helpful, again, goes back to value cars by virtue. But we've been through many a cycle in Virtue's 20-year history. We're 20 years old this year. And I'll just remind everybody that this is a company that has actually never had a financial year where we lost money. So we think we are well positioned with low gearing to withstand any downturns.

Now, you've gone as far as writing to the government asking them to bring forward their ZEV mandate review from 2027 to 2026. Are you getting any traction there or does it feel like you're shouting into the wind?

Well, we haven't written one letter, I can assure you. I think the government has received about 350 letters from colleagues and MPs who've been written to by local general managers. And it's not just a virtue effort. The SMT have done excellent work with regards to putting pressure on the government around this zero emission mandate, which let's be honest, is not just about cars. It's also about vans. I myself, you know, from some work on the media, I've actually been to recently see the minister. And I think there is a general acceptance that there are, quote, a lot of challenges. what I've communicated to the government is let's define challenges, it's job losses, it's youngsters with no apprentices, and it's a lack of investment in the whole automotive sector, including manufacturing and tier one supply. I think the message is there, but clearly, trying to get change in a period of political upheaval in the governing party is going to be slightly problematic. The economic and political pressure to amend the zero emission mandate to make it more realistic and more in line with actual market reality and, quote, align it with the EU's position of 2035 ban, I think is pretty unstoppable. The question is, are the politicians going to listen anytime soon? So I think in the median term, six months, 12 months horizon, I'm very confident. Clearly, there's not much point talking to them this week.

Now, you killed off the Bristol Street Motors and the Macklin Motors brand and all went in on virtue. That's a bold call. Has it actually worked? Are customers noticing? And are you saving the money you promised?

Yeah, well, I think Karen's outlined quite clearly that we have got planned savings in marketing this year, quite substantial ones. Actually, we made a good fist of it last year. I think there's work to do in growing the brand awareness of Virtue. It's further lower than we finished off with Bristol Street Motors, but we've done it before. We've had no negative feedback at all from customers. I was in Birmingham a week last Saturday. There was no noise at all coming from customers. They fully understand it. As one general manager said when he was asked by a customer who were Virtue, he said they're the people who have been paying me for the last 18 years with the Bristol Street Motors brand. So I'm pleased with how it's gone. It's much simpler to operate a business with one brand than three. It makes the whole marketing piece much, much easier. We couldn't do what we've just done on the TV. Last week, with half a million pounds for the TV stand on new cars, if we had a group that was half the size, which effectively what virtual business streamers was. So it was definitely the right decision. It will prove to be the right decision. And it's gone well in the first 12 months.

Now, you saw 1.9 million in redundancy cost this year as part of restructuring. Are these staff cuts now complete, or should shareholders expect further restructuring charges in 26-27? Michelle?

Do I have a go?

You want to have a go. I'll have a go first, which is I don't think anybody could call an end to any degree of restructuring in such a dynamic and volatile economic and political environment. with my opening gambit. I'm sure Karen can elucidate more detail.

Yeah, and I think that's actually, it also will depend on the rollout of some of the AI and automation, things that Robert outlined earlier, which will allow us to further streamline and make more productive, which might mean we need fewer people. Certainly not in the dealership environment, but maybe in the future.

Yeah, I think, you know, we've just had two years of looking at costs and headcount clinically. I think we've got to the stage where in order to maintain the very high levels of customer experience and indeed gross profit generation, the next stage in dealerships would be counterproductive, in my view. Clearly, in terms of looking at other areas and increasing use of technology, I think that's just an ongoing thing now. I think the speed of AI development is astonishing. make businesses leaner and more productive, I think is very exciting. I think we're into a long period of transformation. Will there be other dealerships that we will quote, prune, sell, close, I think that is another inevitable consequence of quite a high period of transformation with new franchises coming in and changes in market share, but also changes in economic circumstance. We haven't got any immediate plans at the moment, but we will be actively managing the portfolio and managing the cost base.

Thank you. And the next question is, what is the effect of your cost savings on customer satisfaction? And in brackets, they put valeting, courtesy car, management, etc.

And we did a lot of work on this. We didn't just introduce these changes without piloting it. The answer is people are used to menu style sale. So the Ryanair example where you actually pay more for different bits. We're not at that level. But I think in circumstances where labour is expensive and where there is so much pressure in the system, you have to make logical decisions. There's actually a slide in the presentation which may have been missed when somebody asked the question. If you actually look at our current business selection scores, we are significantly better than the national average as measured by the manufacturers. And when we've done things like give people the choice about whether they want to wash and vacuum and their service, and if they want it, they pay £6.99. That has made no difference whatsoever to our customer satisfaction scores. In terms of collection delivery, we do collection delivery, albeit we charge for it. And I make absolutely no apology for that because actually we charge £60 But given the high cost of labour that actually costs us £100 to deliver. So there's a little bit of a balance. I think it's not correct that Mrs. Smith who sits in the dealership diligently for three hours waiting gets charged exactly the same as somebody working from home who's got a collection delivery both there and back and isn't hindered. So I think there has to be charge. I think that is accepted by a lot, most people. And the industry will be moving this way. This is a consequence of cost pressures on the economy.

Thank you. Just a reminder, if you would like to ask a question, please do so by typing into the bottom of your screen. You say Virtu is excellently positioned for sector consolidation. Are you actively looking at acquisitions right now? What size and type of deal are you targeting?

We always look at acquisitions and we will always look at every opportunity that comes across the desk and to be honest, it's quite unusual that something happens in the sector that we weren't aware of or able to take place in. I think at the moment, as I've said, I think even the corporation tax increase 19 to 25 and the impact of the zero emission mandate returns in the sector are at a low point in the cycle. Clearly, that will change in our belief when the zero emission mandate gets amended. And that makes investment in acquisitions harder to justify versus, say, share buybacks. So I think that's the point. However, there is pressure in the system of the sector. And if you're over leveraged and operationally challenged, I do believe there can be some distressed assets come to market, just as was seen in 2009, 2010, or the back end of lockdowns or whatever. So we will continue to look. They could be of whatever size. You're looking at a 5 billion revenue group near us, and with a 16%, 17% gearing ratio. So we have the financial capacity to do it. We are very asset rich, 3 to 7 million of real property, 170 million of unencumbered, no stocking loan use costs. So we have the financial capacity. The other question you have to ask yourself is have you got the management capacity to do it? And the Management augmentation of appointing two management directors in January has helped that. I think we've got increasing capacity. I think the core business is under control, which is good. We wouldn't want to expand if it wasn't. So I think, are the assets available at the right price? Possibly coming in the future. Are we organized and have management capacity? Yes. The next thing then is, what's the returns outlook and what's the level of economic And I think that's a bit weak at the moment in terms of what's the interest rate environment, what's the consumer environment, what's the political environment. And I think we'd be wanting probably a little bit more visibility before we wanted to deploy much more in capital, hence why you see the continuation of the share buyback program.

And the next question is, what do you view as a relatively normal mid-cycle PBT margin level? is the bridge to get to that?

I'm not going to answer that too much because I think that are we in cycles or are we in structural transformation? I think it's an interesting question. What I would point to is that our profit in my opinion is £20 million lower than it would be if the government didn't intervene through the zero emission mandate. And that's the sort of way that we look at it. So, we see that change as a catalyst in improving profitability. Whether the industry gets the whole of its profit pull back and we get an extra 20 million, but we would see much improved circumstances for profitability if the zero emission mandate was more sensible and linked to reality.

Thank you. a view that car dealers did not get material benefits of scale. Given all your history in the industry going back to Reg Bardi, are there more scale benefits today versus 2007?

If you look at ICDP, which is sort of the industry European brainchild, brain trust as it were, I think In Reg Vardy time, and that was like 2005, 2006, I think there was no demonstrable benefit of scale. However, I think today there definitely is. I think most people would accept that if you've got the right management, management being critical, backed up by the right systems, we've invested heavily in systems, then you can run scaled groups that can drive value far in excess of what you put 20 or 30 years ago. And I would also say, and this isn't necessarily a great thing, but it's the truth, that the greater complexity of operating automotive retail in terms of regulations, in pretty well all areas, but let's take the FCA, make larger companies far easier to have specialists in those areas and have a very high level of compliance maybe than somebody with two dealerships. even things down to compliance with the minimum wage, for example. So I think there are definitive benefits of scale without any shadow of a question and I think most commentators would agree. The fact that we've now got nearly 200 dealerships with one brand go on TV and spread those costs over 200 dealerships is a tangible benefit to us and I think gets us more sales. You could argue in the counter way that yes, the profitability is at a low level, but I'd argue that's not a lot to do with scale. That's a lot to do with the environment we find ourselves in around cost base, minimum wage, national insurance, corporation tax, and zero emission on that.

Thank you. So with five of the 125 UK BYD franchises, do you feel that you have the right level of BYD growth exposure?

Well, I think for BYD, I wouldn't just pick on BYD, actually. I'd say, have we got the right level of exposure to the Chinese? And I think this is quite nuanced. My personal view is we are growing with BYD, we're growing with Geely, we're growing with the Cherry organization, and we've already got MG. Do we have the same market share in those new entrant franchises than we do in some of the core traditional ones? Absolutely not. Is it our intention to do so in the short term? No. Will we do in the long term? Yes. Why are we going slower? Because we have established relationships with traditional manufacturers that give us a good return. And if you put a new entrant in a new building, with no vehicle park and no after sales, you're in for a gloomy time. So we need to balance finding showrooms, retaining our after-sales business from the traditional manufacturers, maybe through multi-franchising or as a repairer to keep those profit streams going. Our job is not to chase market share in the short term. Our job is to maximize shareholder returns through profitability. And we believe our strategy of engaging with a new Chinese brand, with gaining expertise, gaining trust, we will therefore grow over the medium term and probably the short term. And while we might lose out on market share, And like-for-likes versus SMT, that's not what we're paid to do. We are paid to generate shareholder value and profitability within our strategy if that area will do so.

Well, that is all the time we have at the present time. So, Robert, I'd like to hand back to you for any closing remarks.

Well, I'd like to thank everybody for giving up their time and having an interest in Virtue Motors. I think we're well positioned as a business. We're in the middle of a roadshow. My next step with Karen is we're off to visit perspective shareholders in London and Dublin for the rest of the week. So if you are a shareholder in Virtu, thank you very much indeed.

Thank you so much. Thank you to Robert and Karen for joining us today. That concludes the Virtu Motors investor presentation. Please take a moment of time to complete the short survey following this event. The recording event will be made available on Engage Investor and I hope you enjoy today's webinar. Thank you.

Thank you.