Motorpoint Plc Ord

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.

yeah okay so um morning everybody so uh yes i've been a cfo since uh january um and i've been really greatly encouraged um since i've joined i think two two key things stand out for me one is the stability of the company now notwithstanding the challenges that we've gone through with covid and how the business has managed you know those strong headwinds through the year but i think we've come out of that very well um but i think more so it's just the really exciting plans that we've behind them as are the senior leadership team and the business behind that so I think you know we can look forward certainly with a lot of optimism I think in terms of what the opportunity presents so I find that really exciting so those are just sort of two early thoughts as a CFO. Just from financial highlights I mean obviously these quite quickly I think we all know what happened last year and I think it's been well time posted but clearly profits fell along with the revenue and but obviously branches were closed for over Six months of that period. But obviously we did see the real benefit in terms of online growth. Certainly decisive actions were taken to preserve cash and that proved to be successful. And also very importantly, protecting colleagues and customers. Obviously their safety is paramount. And also I think the pandemic, you know, I've caught the end of it, but certainly I think it's a big opportunity in terms of, A, in terms of accelerating digital investment. I think in Q4 we saw, you know, brilliant results that were absolutely achieved. But also how we challenge the business, particularly around discretionary costs, that sort of thing. And I think, you know, certainly there's been some quite helpful lessons in terms of how we should run the business and manage the business and manage the information going forward, which has come out of that. So that's been a real positive coming out of the COVID situation. Operating results, I just sort of touched on sort of revenue and profits just now. Probably just worth mentioning here, the gross profit, as you can see, sort of increased at a percentage points level, 8.7 versus 7.8. That was due to sort of strong operation control. We've got better pricing information, that certainly helps. And also the preparation processes as well have really been tied down. I think the COO, from what I can see in my short time here, has made a big difference in terms of how the business is managing its costs. And actually, I'm really grateful for that because it does give me real comfort that the business is managing its costs appropriately. And also, we had some really strong demand, particularly in Q2 of last year, where post the first lockdown. So we did see sort of strong margins. I think going forward, it was probably worth flagging that we don't necessarily see margins being at 8%. to nine, obviously the closer to 9%, but obviously it depends on how we invest for the customer value, margin mix of auction for cars, et cetera. But obviously it's sort of signposting 8% going forward, but hopefully pushing up towards nine, but obviously we'll manage that as we can. Marketing costs obviously dropped significantly and that will continue to grow as we see more of an online penetration. But also we increased our marketing spends primarily in March in relation to the opening in April 21. Come back to that in a sec. And then another overhead is really tightly controlled. And as I mentioned before, some really good lessons learned, I think, coming out of COVID in terms of how we managed to do business better going forward. Balance sheet is relatively straightforward. You can see going up from 118 to 128 and trading other payables going up in a contrary direction. And this is primarily or actually totally due to the stock build-up for the pre-opening in April. And very quickly, what we've seen, as Mark touched on before, Certainly in April and May, we've seen that unwind very quickly and really sort of generate cash again in the business. So I think good performance there, but certainly a planned build up of stock. Just very quickly on the cash flow. We talked about the stock build up, which has affected working capital, but then also probably the two key things to note on here is one is the Swansea disposal. where we've got 6 million in proceeds, and then the 3.6 of CapEx, as well as investment in IT, which we'll continue to see going forward. That relates to the stocks in sight, which was purchased. But again, I'm really pleased to see that, notwithstanding everything, we managed to grow cash in a really distressed period. We did get the furlough relief and the rates relief. You can see it there, 5.7. But notwithstanding that, with revenue down 29%, we were able to grow cash. So as I mentioned before, we've seen cash grow significantly in the first couple of periods of FY22. So I'm very pleased to report that. And then finally, return on capital employed. I think clearly we've dropped from 100 to just over 50%. I think the reasons for that are fairly obvious. But I think the fact is still is 53% really shows it is a capital-like model. And we do generate high levels of return. And obviously, I'm expecting that rocky number now to significantly improve as we move into FY22. So certainly all the signs of that after the first couple of months. So it's a good start to the year. OK, I'll now hand you back to Mark.

So now we're going to go into our strategic update and outlook. And I think it's a great time for us to reset in a post-COVID world what is Motivine going to look like? How will it adapt as we go forward? and make sure that we get all of the ambitions in place. I mean, really thought about the business in a lockdown environment. And, you know, basically we are going to go a lot faster in terms of what we've been doing in the past. So we have several strands to this. ambition, which is to more than double revenue in medium term to over £2 billion. And I think the important thing to remember is that this business has grown, as I mentioned earlier, threefold since I arrived and was always growing prior to that as well. And so we're making sure that we continue that and we get back on the front foot to expand more into territories where we are not represented, mainly in the south of England, but there are other pockets in the UK or Great Britain as well. And then leverage the existing resources we've got of Motorpoint as a consumer brand and auction for cars as a trade brand. So an exciting journey. But what does it really look like? If we go into a bit more detail, you can see the revenue doubling to over 2 billion on the left hand side. That online revenue, I think that'll be about 60% of that in the medium term. And by medium term, we mean three to four years. We're imagining it is exiting run rate of FY24. Gross profit margin, as Chris mentioned, we see will increase slightly. At the moment, we're running pretty hot with margins being strong at the moment. We don't expect that to continue. And I guess we want to make sure we continue balancing our investment in the customer with the revenue mix. So making sure that we get the value of the product still at the right level. We don't want to be beholden to a high margin business as others are suggesting they can achieve in this very competitive sector. Our PVT margin, 2% is our run rate in the long term. We know that we can leverage that by doubling the business. We expect to see some OPEX leverage again The caution in showing two to three is that that marketing investment and the data and tech investment to grow will be the priority. So our priority is to grow the business. And we know that that will obviously throw out good PBT margins, which we think will be between two and three. But growing the business is the priority. That actually converts into an EBITDA roughly 100 pips up from there. So a three to four percent margin. So really exciting ambition. But how are we going to do that? We'll come to in a second. We'll just take you through a little bit of a bit more detail into the medium to margins, particularly for the analysts, this is useful. but also just due to natural scale and economies. Marketing is probably going to run at about 1.5% in this year. So we see that doubling this year and then gradually coming back down as that cost requiring customers falls with efficiency over time. Depreciation occupancy is built in there. So you can see that being a similarish number. And then other than interest, we don't really see changes. So that gives you a bit of breakdown. Clearly, we'd want to improve on all of those things. And there will be some drag in the short term as we scale up the business. But these medium terms are very relevant as well. But why the new strategy? Well, we see huge potential in the current market. It's an 8 million transaction market. There's huge potential, even in our niche of nought to three, there's one and a half million. And as you know, we've got a share of about three to four percent in that niche. And we see a huge opportunity to disrupt the auction market. This is an auction market that's dominated by BCA, Mannheim to some extent, but mainly BCA. The fact that they're now competing against their own dealers gives an opportunity for us to grow our auction business and open it up to the wider market to use, which I'll come to later, as a response to that, basically, that unhappiness with BCA competing against dealers. The industry does have low levels of satisfaction and trust historically. We've always been completely open on that, on our levels of satisfaction and trust. We are very, very high on this and our openness and our honesty with our customers leads to very high levels of trust. But it remains a fragmented competitive landscape. OEMs are shrinking their networks. And that means that there's scope for us to grow with the availability of smaller fulfillment branches, which will have some stock on site, but nowhere near what we would have on other sites, because these are likely to be far more digitally led branches, offering home delivery services and collection facilities, as well as some sales functionality as well. So competitive landscape, which opportunity for us, but also the supply of these networks as well. But this isn't just over the last six to 12 months that we thought of this strategy. This has always been our strategy. Customers have always been fluid between channels. We've always had customers We're online and then say, I'll pop to the branch on Saturday. Customers are in branch and say, I've seen the car. I'll go home now and think about it. And then I'll probably buy it online. It's absolutely fine by us to buy whichever way you want to buy. We know 90% of our customers are on our online. Somehow we see customers value in their car to exchange online. not going any further on the process and then turning up on Saturday and buying the car first with the part exchange they've already got a price for. So we see this in the customer base that they do like the fact that they can do whatever suits them. If you're busy on Saturday, no problem, order the car online. If you've got a couple of hours and you want to go and see some lovely people to sell cars to, come and see us. That's absolutely fine by us as well. But what really matters to the customer is value, getting the best price, getting the right amount of choice. We've got thousands of cars, makes and models, and we've got them in your location as well. We're half an hour away from you in the markets that we're servicing well, and we're 66% of the population is within an hour of us. We need to get that to be higher, and we need a 30-minute market to be closer to us. But in terms of quality, we have our Motorpoint quality standard and all of our cars are under warranty. If the manufacturer warranty is compromised for some reason, maybe it's missed a service or something like that, or the car's gone over three years old, which has happened during COVID due to lockdowns, then we will make sure we put a Motorpoint three-month warranty on it. It's a no quibble warranty. We want the customers to be happy. Believe me, the customer is always right even when they're wrong because they think they're right. So we need to make sure we give the customer that service. And one thing we always say to our customers, we want you to be happy. And that's one of our values. We want our customers to be happy because they come back and they'll tell their friends how good we are. So making sure we offer that good service. If there is any issues, we've got our customer care team there to put it right. If something does go wrong, these are mechanical objects. But these seamlessness of process us with a customer going online offline we've always been paperless for for many years now and customers checking online at home they upload their driver's license they complete all the details they need for their finance and applications and then when they come to site there's no paperwork to sign it's literally one signature off you go super slick super convenient and really useful for customers to then be able to collect in branch or have free home delivery In terms of electric and hybrid vehicles, everybody's very keen to understand that. It's still very immature in the used car market. The market's absolutely on fire at the moment. The used car market, values are going through the roof. The only cars going down in value, guess what? Electric vehicles and hybrids. So I think that just tells you the market's still quite immature, but will continue to grow in maturity as we go forward. But looking at driving our investment to achieve our growth, the three main areas, And in technology and e-commerce, dramatically growing our technology team. We've doubled the team. We're doing a triple it, quadruple it going forward to make sure that we've got enough technology agility to be able to respond to whatever throws at us. So agility, I think, is absolutely critical in e-com, making sure you can respond quickly, test and learn fast, fail fast, and move on and get their ideas as best as you can, implement it as quickly as you can. In terms of data analysis and marketing, we've got CRM system being put in. We are going to use Salesforce, which is imminently to be installed. That would dramatically increase our ability to talk more personalized in a more personalized fashion to our customers and obviously invest in dramatically more in marketing as well to protect our brand and explain who we are to more people. And then in terms of logistics, we're building our own home delivery network. As the demand for home delivery continues to grow, we will scale the amount of vans and delivery trucks that we have, but also reserve and collect support as well to customers to have the car transferred to their nearest branch. There's no doubt our model is shifting. Online continues to grow. It is the growth part of the market, but still the majority of the market remains offline. So customers are migrating. I've already said, you know, 36 percent of sales since we reopened remain online. That can only go one way, in my opinion, probably be 40 percent next year. But the availability of smaller space to us fits absolutely beautifully with what we are doing. We need more branches in new markets to make sure that we can service that market and grow our market share in that market. So OEMs rationalize in their very expensive dealers. low density buildings. Absolutely primed for us to be able to put a couple of hundred cars on display, but mainly use it for a collection and a home delivery center. Drives brand awareness, as we talked about. We need less space because of our hub and spoke model, which is covered on the right hand side. And these provide increased capacity, much better operational efficiency. We've refurbished our branches, which are now looking much smarter to our customers post-COVID. We've used the time well, I feel, and we've acquired a new prep centre in Glasgow that will add about 20,000 vehicles to our capacity. Really making sure that we can get our capacity up to get our growth plans is really important. If we stop today and say, what's our capacity? It's probably about 100,000 cars, but we only do one shift. So we know that we can double the capacity by doing more shifts. And once we need the space to display those vehicles, which will come with the new branches being opened, we already have the preparation capacity to deliver that level of sales. And all of that adds up to increased market share. And when you look at where we are currently with Hub and Spoke, you can see on the left-hand side, 66% within 60 minutes of a motorway branch. Frankly, that's not quite good enough. We want to be 66, 70, 80% within 30 minutes because we have a dramatically higher share within 30 minutes. Customers do not travel as far as they used to travel, even for great value. They are unlikely to leave the time they are in in their droves to go to somewhere that's cheaper in the next time. They're much more likely to want a branch convenient to them And also we want to be convenient to them because they can reserve and collect or we can home deliver. We don't want to be driving two hours to home deliver a vehicle because that's pretty much five hours of an employee's time gone for the day. So we need to get these branches more local to the customers. You can see the grey areas on the map on the right hand side. You can see our market share. So making sure we've got our hub and spoke model particularly in the south of england and we've got other gaps in the country which you can see but making sure we can access those markets actually for home delivery ability as well as customers being able to buy and collect from those branches and you can see why this is important so the bottom left hand graph why we need to be in in branches you can see how over time our branch and share market share continues to grow So the branches have been opened over eight years, a 13% market share on average. The branches opened in less than eight years are about 8% market share. We know the overtime market share grows. If you think about the average repeat cycle of 3.5 years, broadly every turn of that cycle, we grow because we hold on to our customers. So we hold on to 33% of our total sales of repeats, but we hold on to more than that as customers continue to buy. But unfortunately for us, they only come back every three and a half years. We see an opportunity, which I'll come back later, coming to later, which actually increases that repeat cycle so that the costs spin a bit faster. And if we can get that down to 3.2 years, as an example, it grows our market by 10% without just really having to do anything. But just in case you missed the message, increased investment into technology and data along with e-commerce and our capacity will continue to accelerate our growth. And these are the four key strands to what we're going to do to double the business in the next couple of years over the medium term. So upscaling our e-commerce ability. We are actually an e-commerce business. The most important thing to me about e-commerce is have you got the data? Have you got the product located near the customer? Have you got the home delivery capability? And is your website good enough? All of the post, well, during COVID and then post-COVID focus has been on plugging all our systems into the website so that it's completely linked. That's all now been done. Believe me, that is a painful project. The only thing we've got left to do now is to reskin the website. I'm still not happy with how the website looks, but that is in progress and that will be reskinned. We'll continue to drive and invest in that part of the business. So the investment in the technology, but also data science, lots of projects going around Personally, I feel that we were always very, very strong on data in terms of business intelligence, but data science takes it to the next level. I'm super excited about what that can do. If you combine the best people in the industry in the used car space with then the data leverage that data science can bring, I think that's a pretty potent mix. And you actually, you can go buy in data science. You cannot buy in 23 years of running a used car business that we have throughout our organization. So we will look to leverage that increase online to as part of the retail business, we see revenues becoming 50%. That actually takes revenues to about 65% of total revenues will be online when you include auction for cars. I mentioned earlier the consumer supply channel that opens later in the summer and then auction for cars to become a marketplace to new vendors in late 2021. Auction for cars is a big part of what we do. Really excited about the potential for this business. Totally online, totally e-commerce driven. And actually a very light touch part of our business. Again, mentioned that network effect earlier. This will continue to build and build and who knows what possibilities are. In terms of increasing customer acquisition and retention, obviously we want more customers. We want more of our previous customers to come back to us. So opening 12 sales and collection branches, the people who drive a long way to multiply branch currently won't have to drive as far. But more importantly, we will offer our services in markets where currently there's not many motor point cars being sold in those markets. That is super important. I'm a bit of a nerd. When I'm in a new town or city, I will always be looking at number plates. And if I don't see many of my motor point number plates there, I want to know why. And I want to know, right, where do we need to be in order to service this market? Because every number plate I'm looking at in the car park has got a main dealer plate in it. I know in towns where we are, every other car has an out-of-mine plate in it. In some of our highest market share positions, we have a 25% market share of the 0-3 market. That is spectacularly strong, and we must get that to other parts of the country. I feel that people are missing out on the value we offer if we're not close enough to them. So we will continue to invest in marketing as we open those branches. That will increase the cost of acquiring customers in the short term, with a subsequent reduction in the medium term. We will drive e-commerce sales aggressively. I've mentioned that already, but making sure customers know you can buy online and make sure we get the value proposition across to customers properly. We've got a couple of branding exercises where we're trying to grow awareness of the brand. We've got to remember that customers are interested in value. We need to make sure we tell our customers what great value we offer. Do the research yourself. Go on Cinch, go on Kazoo, go on AutoTrader. We are the cheapest. So that is our raison d'etre that we make sure that we offer the best possible value we can, which makes it very, very hard for others to compete against us in the North 3 market. Personalization of e-commerce journey will really enhance the customer lifetime value. Increasing that customer repeat cycle, as I mentioned, will grow our market. Making sure quality control and our operational excellence led by our COO has been a brilliant addition to our team, along with our CTO and our marketing team. And make sure that we launch other teams continue talking to our customers so targeting outbound customers making sure we've got safe teams if people are thinking of cancelling their order you know really help to drive that that customer acquisition and retention and also then in terms of lcv that they are white vans and they will be fully online within the next couple of months we won't be selling those in person in branch about 80 of those sell online already and so we just make that an online channel and dedicated and going forward In terms of the wholesaler channels, that's auctionforcars.com. So again, you need to be a registered trader to be able to buy a car on auctionforcars.com. General public are not allowed into that forum. It's an eBay-style listing and then bidding. And the better, the more active that bid is, the more, or bidding is, the more we generate from that product. Super excited by this part of the business, I've said it several times, but that migration of a B2B platform with multiple vendors is really exciting. Not only will that grow Auction for Cars as an attractive proposition for others to sell their car on, but it will also give us fantastic management information about what is happening in the market, who is selling what for what, and that will help with our decisions as well. But we will hopefully provide a much better auction proposition to our customers on there and also to the buyers on that platform. And I talked already about the sell your car proposition. For the first time, we will buy cars where a customer is not buying a car from us. New parts of the business, whether the customer drops it off to us, we have the infrastructure for them to drop it off to us or for us to go and get the car from the customer in the coming months. And that operational efficiency, using technology to become more efficient, innovating consistently, lots of projects going on around making sure we can actually deliver on the project plan, lots of project management people being brought in to ensure that we actually do deliver all of the key requirements to enable this strategic vision So the capacity of increasing cars I mentioned, completing that hub and spoke model, we need a couple more preparation centers. They're actually a bit easier to find. We just need to find them in the right parts of the country. I mentioned Glasgow opening later in the summer, but increasing that automation and technology and preparation to get the quality right, to make sure we get better information to customers on the condition of the vehicle, making sure we get the employee efficiency right in that part of the business as well. And then logistics, moving cars is quite expensive. So the less we move them, the more efficient we can be using the data to place the car on the right site at the right time would be much more important going forward. But you can see that strapline underneath powered by our people. It's a massively, massively important part of the business to me, is ensuring we have a highly engaged team. Because believe me, they sweat blood and tears for Motorpoint and they're massively engaged in working here. And this journey that we're about to go on will be hugely engaging for them as well. You can see that our strategy is to make sure that we grow and get performance levels out of the team. That's absolutely fine. They're grownups. They understand that we need to perform. We need to make a profit. We need to be the best, get the best reputation in the sector. Very well understood by our team. That's enabled by the new organization design that we've shown earlier, making sure that we've got the right skills externally. Big change at the SLT level in the last couple of years. Five new roles out of eight people. We have rebuilt the senior leadership team. That's been several years in the making. This now allows this strategy to be put together and delivered, which we've been working on for the past six months. Ensuring that we've got the best employee, employer brand and the team engagement. That's a huge thing to continue with. I think we're up there already. I'm number one in automotive. we've got the best leadership capabilities i feel because we have that blend of many years of experience with expert buying and pricing decisions built in as well as data science which adds to that going forward and then in terms of goals around employees going forward we want them to be behave like shareholders we have a huge uptake in our savings scheme we want to continue to encourage employees to be shareholders and act like shareholders more importantly And that is a big part in making sure that they do score well when they say, you know, are they part of the team? Are they part of the vision? Do they understand what we're doing? Do they understand the strategy? It's a big part of the Be Heard ranking. That's a lot of the questions they ask about. And then making sure we've got that integrated ESG agenda and those recognisable measurable goals to make sure we increase diversity, gender balance and important things in that area. But that skilled workforce to support this digital aspiration, lots more people coming in who are technology data scientists to make sure that we got that grown, our technology team and our marketing team dramatically to be able to deliver on this strategy. Just in summary, the last slide you'll be relieved to know, we are a proven profitable growth model. There's many growth models out there at the minute, but I'm not sure many of them are proven and profitable yet. We've got 23 years of experience. We have always made a profit. We have always grown subject to COVID disruption. This business is a business that is on the front foot. We are growing. We've got very exciting plans to go forward. So today we've already got a high sales content online. We've got best in class NPS. We are the leading value retailer in any new cars, a highly defendable position in our opinion. We've got a fantastic part of the business called auctionforcars.com, which will go and now target and attack the auction model, and we're also in commercial vehicles where we access the trade market for white vans. And our opportunities for growth, I've gone through it in much more detail, but a relentless focus on e-commerce. We completely understand that the digital space is the growth part of the sector. We are invested in that. We have been invested in that. We have always sold cars at a distance. We have always sold cars online. We know how to do this. And that increasing shift provides more operating model opportunities for us. Greater market share will be expanded markets it's amazing what happens when you open a motor point branch in a town everybody suddenly realizes we great value and they've been paying too much for their cars for the last 20 years we get that messaging across very well and make sure that we deliver that value to our customers expanding auction for cars.com The wholesale market is ripe for disruption. There's two key players. They've had it to themselves for quite a long time. Auction for Cars can disrupt that and take some of that share by providing a similar experience to the wholesale market that we provide for our retail customers in the consumer market. That will be supported by increasing finance and ancillary products, making sure we continue investing in those products. Just recently launched new warranty to the customer. always making the product better, always invested in the customer. If I need to take a margin dip to make sure the product is the right thing that the customer wants, I will do that because providing that value and that excellent service for that high quality product is the most important thing for the long-term health of the business. And making sure we invest in new skills and talent. We need the team around us to make sure we do this. We've invested heavily in the last 12 months during COVID. We will continue to invest in bringing the right skills and talent into the business to ensure we deliver on this plan. So that's the end of the presentation and back to Alex for some Q&A.

Thank you very much, gents. And yes, feel free to have a glass of water after that epic marathon. If anyone would like to ask a question, please, can you raise your virtual hand? I'll then take you off mute and ask you to ask your question. Our first question today comes from Sanjay Vidyarthi at Librem. Sanjay, if you take yourself off mute, please go ahead.

Morning, Mark. Chris, a few questions for me, if I can. The first one is, of the retail sales that are online at the moment, can you give us an idea of what percentage are pure digital, what percentage are reserve and collect, and what proportion are basically just inquiries that may go through to the call centre and then lead to a sale?

Yeah, so about 10% of sales are online with no salesperson involved, if that's the measure that you're referring to. So 10% of current sales. That's about two months in, Sanjay. So as I said earlier, I'm not particularly happy with the way that the screens look. We're not pushing people when they're online to not talk to the call centre. And at the moment, it does push you probably more towards the call center than to buy outright online. And that will change when we revise the screens that customers see to just amend that journey. As I mentioned, we spent an awful lot of time plugging in the bottom of the website into the systems that lie beneath. And that's been very important. So overall, 37%. of sales are online and about 10% of total are within the, you know, sort of with no salesperson. So 27 and 10, to answer your question, 27 call centre, 10 fully digital, and then whatever the balance is, 63% are still in branch.

And just on that, Sandy, it's very worth making the point that digital thing has grown quite rapidly. So it hasn't been 10% for the whole of last year.

No.

That's really rewards. So the run right now is close to 10, as Mark says.

It's going up every month, Sanjay, yeah. So of the 1 billion then, what do you think will be pure digital? Have you got a target for pure digital or at this stage, are you just going to assume it's going to be... Well, I couldn't say 100%, but my call centre salespeople would probably get an heart attack if I say that.

So I think it'd be at least 50%, Sanjay. And I think, you know, we will... it's a different line because people who are happy to buy online, totally online, they still end up calling in. And so we've got a separate team who are, you know, supporting online customers. And then we have a sales team who continue to basically pick the phone up and say, yeah, I can sell you the car that you're looking at the website on. So yeah, We're relatively agnostic on that level, but I would say at least 50% in the medium term will be totally online, no human or salesperson involved of those online sales, of that 1 billion online sales.

OK, thanks. And this question in terms of the levers for growth, marketing and new stores. Can you give us a sense for I think the new stores are going to be smaller than your existing portfolio. Can you give us a sense for how you expect those to contribute to sales and maturity curve on those? And then also the kind of returns you're expecting on marketing just to give us a sense for those levers for growth over the next two or three years?

Yeah, so marketing cost per sale, we're imagining will be more like £200 a car in the short term and then coming back down to £150 in the medium term. And that's against the bench of probably £100 in the past. So that's how the marketing gets leveraged. In terms of the new branches, those new branches in the short term would probably have 2000 units in the first year, which is a 30 million ish of retail sales. And that then scales, you know, our biggest ones are over 100 million. We're not suggesting they get to that level. But I think the important thing is that these these fulfill online as well. So 2000 stores in store sales in year one. or first full year, will probably be supplemented by 1,000, 1,500, 2,000 online sales in the years going forward. So those branches will become 3,000 or 4,000 car branches and then grow from there. So the in-store part is less important going forward. We have one store inside the M25 in Chingford. that's roughly 65% online, 35% in branch. So that gives you an idea that the majority of customers in the South particularly want to buy online and then have it fulfilled either in branch or through home delivery. So we don't see that that's going to go back the other way and probably going to continue going to 70, 75, 80% online and a much smaller proportion in branch. So We know that we don't need these huge branch displays in the South of the country. You can flip that on its head though in the Midlands and the North of the country where you're talking 30% online, 70% offline in the Midlands and the North and in Wales and in Scotland. So the South is miles ahead in terms of the online mix.

Okay, thank you. And the last question for me is, how should we think about, from a logistics perspective, How should we think about that cost of moving a car, be it between branches or poor home delivery, either per unit or as a percentage of sales? How will that evolve over time?

Well, I don't see that it evolves dramatically more than what it does now because, you know, it's a per unit cost, as you rightly point out. So I think we move. cars roughly one and a half times per sale. And that's about 110, 120 pounds per unit. And that's been pretty consistent over time. Obviously, it's gone up a little bit more with moving cars for customers for home delivery and things like that. But the home delivery has been fulfilled by the customer service team who used to be in branch waiting for customers to come in. Now those people are as likely to be out on the road delivering a vehicle to a customer. And if a customer comes in for a handover now, the salesperson is more likely to hand the car over to you at the point that you're buying the car. So we've made efficiencies and now we've utilised the downtime that was sort of inbuilt in the system, if you like. And that's where some of the efficiencies come from.

OK, so you're not seeing more cars having to be moved between branches?

No, not at the minute. No, not necessarily. OK.

All right. That's great. Thank you very much.

Thanks, Sanjay. Our next question comes from George Pilokoutas at Numis. George, if you take yourself off mute, please go ahead.

Thanks very much. Morning, team. Can you just talk about the visibility on the kind of site pipeline, these kind of sites that you've already committed to, and then just any kind of colour around the geographical exposure of those sites And that kind of that 66% stat you've given, where are we going to get to after kind of 12 sites have been rolled out?

Yeah, so a big part of the population and a big part of the market, George, is in the south. And as I keep mentioning it, the sites in terms of the 12 that we're talking about, we have five at very advanced stages. Some of them are committed now, but not quite signed on the dotted line. And so I think that that is probably the best position we've been in. And that is made possible by some of the OEM rationalizations that we spoke about earlier. Quite a few of those five are existing or closed motor dealers, as in franchise dealers. In terms of the density, that 66% will obviously go up probably to around 85% with the addition of these 12 branches. But more importantly for me, George, is within 30 minutes. And the population density in the south means that you will need quite a few stores in the south. So over time, of those 12, and then there's a couple more to come after that, they will be more southern than anywhere else in the country. But we do have some pockets in the north and in Scotland to fill in.

Great, thanks. You've kind of set out the kind of nearly new market, 1.5 million units. I think that kind of gets you to kind of approaching kind of 7, 8 cent share on this kind of medium term agenda. I guess, where do you think that can get to? Is that kind of a bit of a ceiling or is kind of the low mid-teens that you achieve in some of your markets where you do have a site? Is that kind of more realistic, longer term where you think you can get to?

Yeah, I think because we start from a relatively modest base, I think that is possible. You know, we are, as I said, 25% in Newport and Burnley, which are the two most established sites. And on average, we're about 13% in those sites that have been open quite a long time. So I think... You know, there's no real upper limit to it. Making sure that if we can connect into the, successfully connect into more vendors, make sure that the public, you know, a lot of people do sell cars under three years old, members of the public, and, you know, competing for that product. is going to be really important to how we ensure that we can access more product going forward to allow us to grow that share. So the construction is unlikely to be customer-led, is more likely to be supplying. How do you get hold of more and more and more cars? um but even when we were 20 000 cars a year people were asking us you know how are you going to get the cars so you know we will get the cars because we create the run rate for sales that's the most important thing for a vendor if you buy cars of a vendor you can't shift them you won't be buying more cars off that vendor and then they get fed up with you so you know we buy the cars we stand on our prices we move the cars quickly we're back at the vendor the next day saying can we have some more and so we're the all of a twist of car retailing maybe but um you know we make sure that we uh We always want more cars and we have fantastic relationship with the industry, very well respected. And that really helps us when we are buying cars, but the product finds us because we create the run rate.

That's clear. On marketing spend, can you provide any... for kind of the channel of spend, whether it's offline on brand building, online aggregators, CAC's going to go from 100 to over 200. So where are kind of the key areas of deployment?

Yeah, so there's probably more, it's across all areas to answer the question completely openly, but the mix is probably moving more to online than what it would have been, but we're also aware that you've got a lot of above the line activity and sponsorship activity going on with Kazoo and Cinch in particular. To be honest, we've done a huge amount of that sponsorship activity in the past and frankly, from my perspective, once people have heard of you, that starts waning in its impact and we don't do anywhere near as much sponsorship now as we used to. We find the digital market much more effective and then the TV and radio gives you good above the line coverage. So, you know, I don't see the split dramatically shifting, but there'll be, you know, everything will double, but a bit more proportionately will go into digital.

And I think as well, just on that, I mean, with marketing, what will happen is we'll get more efficient naturally because as we open more branches, so we've got more nationwide coverage, particularly in the South, as Mark mentioned, then you're out on TV and radio and then you're getting to a much wider market that's accessible to you. So we'll get efficiency.

And we've been advertising nationally for many years, well, sorry, for the last year, but regionally for many years. So nationally, we've scaled the brand We're not spending as much as others, but we know that it's efficient when we do spend it. And we're not just going to throw the baby out with the bathwater and spend a hundred million quid on marketing in a year. We know we've got that base. We've actually spent a hundred billion on marketing in the past 20 years. So, you know, we've done a lot of this already. This building up of our brand has already happened in many ways. And we now need to keep pushing it and make sure that as we enter these new markets, these people who may have vaguely heard of Motorpoint actually understand who we are, what we do. And we're now in your time.

Great, thanks. And then on auction for cars, can you talk a bit more about, will there be marketing spend put behind that brand to kind of increase dealer awareness? How does that work? It's not quite as a mass market. So can you be very targeted on the spend there? Yeah, sorry. And then just how you kind of plan to grow the 9000 dealers that are currently on your platform. How do you grow that number, which is linked to the first question, but then can they be the same source that feeds kind of the marketplace business? Or do you already have access to 9000 dealers that could potentially be a huge source of supply for you? Or are these different dealers that you need to kind of build new relationships with?

Yeah, they're the same dealers in part. So part of the supplies to that marketplace offering will be these 9,000 dealers who are, you know, specialize only in German brands when they get a, A French or British car will trade out of that car, either through auction, typically by BCA or Mannheim, or they'll sell it to a dealer in time that they know maybe, but they won't be sure whether they've got a good price for it. So putting those cars on a marketplace will help. In terms of the advertising spend, it's not particularly a marketplace that will respond well to advertising. So I think it's important that we... We're very careful in that perspective. I think the one part that may need advertising that does help auction for cars is the sell your car proposition to the consumer to make sure people are aware that we will buy your car off you, even if you're not buying a car from us. So in our retail proposition, we will still advertise the fact that we're selling cars and we're great value. But also, you know, you can also get great value for your car that you don't want anymore, even if you're not buying a car from us. So I think that helps. But this is a relationship thing. To answer your question, how do you get that 9,000 customer base up? If you've got the product that they're buying, they will come to you. No question. People go to BCA because BCA have got cars being sold that they want to buy. It's a very supply-led market. Great. Thanks very much.

Thanks, George. I've got some questions to read out, gents, if I may. So our first is from Mike Allen at Zeus, asking whether there is a point at which you will deviate from the nought to three year market if supply constraints in the new car market intensify over the next 12 months?

Yeah, so I think, yeah, we're totally committed to nought to three. But, you know, if we get a shortage of a certain product, a certain brand, Or actually we think that these cars are on fire in terms of value. We will go a bit older if we need to. We do that now where maybe there's no good value Fiestas under three years old because there's a new model change or something like that. And we will dip into three to four. We are primarily under three. We're actually primarily under two, under 15,000. But, you know, we will ebb and flow with the mix. We're reasonably agnostic about what we're buying. What we need, what we know is we need to make sure we've got cars on the pitch. Actually, mileage is probably more important to a customer than the age of the car. So if I said to you, do you want to buy a 17 plate or an 18 plate? uh the 17 place got 50 000 miles in it the 18 place got 20 000 miles in it you probably rather than me sell you the uh the 17 plate so with the lower mileage so it um it does it is not as important but um we want to sell low mileage cars that's probably more important than the age of the car given that new car registrations are down last year we're very open-minded if we do need to to sell 17 and 67 plates which we currently are doing Then we'll assist with that if we're struggling on any other cars on the open market where obviously the demand is very high and the supply is quite constrained at the moment.

Mike follows on that he noticed both Motorpoint and Kazoo have approximately 3,000 cars for sale online at present. He appreciates you might have more targeted stock at lower price and mileage. Is this an accurate way of looking at stock availability at present? Fully appreciating stock levels are tight for everyone at the moment.

So the 3,000 on Kazoo is including their new car subscription business. So if you select used cars only, that's about 2,500 versus our 3,100. We also have another 800 vans on the website. So our total stock is more like 4,000 against their 2,500. But listen, we'd rather have 6,500 cars on the website. and when cars are approaching list price and as a used car then you have got to be careful what you're buying because that is going to correct at some point and some people will catch a cold what i would say for that is our stock tune is around 11 times a year kazoo's stock turn is aspirationally four times a year so you can do the maths on that i'm sure but we will be in and out and before other people have realized what's going on to valuations

Thank you. Next questions from David O'Brien at Equity Development. Two from him. Competition for nearly new cars is increasing, not just because of the new entrants, but also dealerships. How do you expect to fulfil requirements moving forward, not just now, but also once dealerships move to an agency model?

So, well, the agency model is affecting new cars. So that is really the only difference with an agency model is that new cars will be the main dealers, the franchise dealers will receive a handling fee from the manufacturer because the car has been sold online and then will end up with the customer. I don't see that that changes the dynamic on fleet content or any of those things. So I don't think that affects new car supply. Nearly new car supply, I don't see that there is... And any change in the landscape, it may be that Kazoo or Cinch have replaced a lower number of OEM dealers that have closed down in the period. But, you know, if you look at who is shrinking at the moment, it's the franchise dealers where the networks are being closed and rationalized. So manufacturers realize, I'm sure, that having a dealer network costs a lot of money. and shrinking that down to a more modest base will take capacity out of the market. I'm sure Kazoo and Cinch will be trying to accommodate some of that. But it's where we are experts and both of those sell cars that are four, five, six years old. Whereas we focus on the 0-3, we are the cheapest. Therefore, we believe we will continue to generate the run rate that will attract the supply.

And the second part, you may have answered as part of one of Sanjay's questions, but what you anticipate the cost of the delivery fleet moving forward?

Yeah, we answered that. So it's about £120 a car. To do a home delivery, currently that is free to the customer. We're open-minded about starting to charge for that, depending on what the competitive landscape suggests. But on average, that's about £20 per car to fulfil a home delivery. Most of those customers are within half an hour. Obviously, occasionally we have to do a two-hour home delivery, which costs a bit more. But basically, it's the employee time. most of the time it's a more efficient employee now and because if they were if they didn't have a collection until three o'clock and then you know between 12 and three they might not they might have a bit less work to do and now we will be saying jump in the van and go and deliver that home delivery car so um you know i don't see the efficiency mix changing much thank you um next question from darren shirley at shore capital um around the capital requirements of the new strategy so how much capex will be spent over the next three to four years

And a follow on where will this be spent re physical versus online?

Yes, so the CapEx requirement is much more about the new branches. As you know, we will always buy sites if we need to. We'd rather take a lease. The ones that I mentioned earlier, the five existing are all leases. So we don't have to buy, build and sell and lease back. But that's always been our model. Obviously, we sold Swansea in the period, Stockton on Tees. The latest one that we bought and refurbished is being marketed currently. these branches on our balance sheet. So the CapEx, although there may be short term CapEx, it comes back in the tin as quickly as we possibly can. In terms of the technology, you're talking, you know, maybe up to 5 million pounds of CapEx over a couple of years period. And, you know, we don't capitalize our team costs. There are some external costs, but to be honest, most of this internal and that is expensed and built into the OpEx plans as you've seen earlier.

Fantastic. Thank you. And we're back on the microphone, handing to Clive Black at Shaw Capital. Clive, if you just take yourself off mute, please go ahead.

Yeah, morning, guys. Thank you. Two hopefully short, direct questions for me. Mark, could you talk a little bit more about your procurement strategy for cars? Traditionally, you were buying from rental and fleet in particular. How do you see that evolving for Motorpoint going forward? And then Just a supplement on the real estate strategy. How do you find the market for the properties you're looking at at the moment? Are you looking for just conventional 10-year leases with a five-year break? Or are you finding something that's more in your favor given some of the dynamics of recent times? Thanks.

Yes, in terms of supply. So a couple of years ago, we wouldn't have sourced any of our supply from our customers. You know, most of the customers buying a car from us would be part exchange in a four year old, five year old car and going into a one or two year old car. So that's changed, obviously, where we now go into two to three a bit more than we would have done in the past. And that's why that part exchange mix of retail sales is around now 10%. So 10% of our sales are sourced direct from customers. I see that part becoming dramatically bigger. That obviously removes the pressure to buy in the open market. I don't see the fleet and manufacturer dynamic changing much. Obviously, as there's less manufacturer dealers, in the marketplace as they shrink their capacity, they have less places to sell those vehicles to the dealer network, their own dealer network. So some of those cars will come more on the open market. And we're already seeing moves from some manufacturers to talk to us more like a dealer in buying used cars than they would have done in the past. So as an example, closed auction, only the dealers are allowed in. Now it's only the dealers and Motorpoint who can come into the auction. So we're seeing some different behaviors from manufacturers. I think, Clive, the reputation we've built up over the 23 years is very good people to deal with, high integrity business. We work with our suppliers. We've got really close relationships with these people. you know, buying cars in the auction that you are in the open market. You're at the mercy of the market with that. But, you know, obviously some product is only available in the open market. So that's where you have to go if you want to buy it. So to answer your question in short, I see the fleet and manufacturer being, you know, as similar as what they've been in the past. And then the consumer part of the acquiring stock growing as we go forward. In terms of the supply of the new branches, so as I said, they are all leased. So we are now looking for 10-year leases. We don't particularly take five-year breaks because we only lease premises where we think we can get out of it if it's a problem. We have never, ever closed a branch. We have never, ever failed in launching a branch. So I'm not anticipating that we will need to have a less than 10-year lease. Sometimes we do it. Maybe there's redevelopment potential, things like that. But normally we would take a 10 year lease or longer with a 10 year break. But I think the important part is that we are now scaling our premises to the point where we know that even if that branch is only there to satisfy home delivery and to satisfy people coming into branch to reserve and collect, then that rent level that we're paying is at an acceptable level. So we've never paid the sort of, you know, sky high rents that the franchise dealers have paid because we've always been relatively modest. We're picking up dealer network branches that they don't think now meet their standards, and then we can refurbish them and they do meet our standards. So, you know, we don't need these super-duper gin palaces that the OEMs require. We can have very modest facilities because people understand that we're there to offer them the best value, not necessarily the best building.

Thank you very much. And very interesting comments about the virtues or otherwise of sponsorship. I'm sure you're gutted that Ancelotti has left Everton for Kazoo.

Thank you.

Cheers.

Thanks Clive. That's it for questions gentlemen so if you have any closing remarks Mark please go ahead.

I think COVID has obviously dominated the last financial year, but it's given us an opportunity to reset the balance in the business and making sure that we are back on the front foot and really now aggressively driving in a post-COVID world. We're absolutely adept and agile with this business. We've always morphed with what the customer requirements are. Our agility is one of our biggest strengths, I think, and our agnostic nature in terms of whether the whatever cars we sell, whatever brand we sell, however we sell the car, whether it be in branch or online, will absolutely set us up for great growth going forward and future success. So thanks very much, guys, for listening and look forward to speaking to you all again soon. Thanks, Alex. Thank you. Bye-bye. Thanks.