TIDMVTU
RNS Number : 1901M
Vertu Motors PLC
07 May 2020
7 May 2020
Vertu Motors plc ("Vertu Motors" or "Company")
Trading Update
Operational update
Following introduction of the UK Government's social distancing
restrictions which came into effect on 23 March, the Group
temporarily closed all retail vehicle sales and aftersales
operations from close of business on the 24 March, with vehicle
sales deliveries suspended.
On-line and telephone sales operations have continued and an
order bank has been built up since 25 March, comprising 825 retail
vehicle orders and 749 fleet and commercial orders. These firm
orders and the order bank from previous months, as yet undelivered
will be delivered to customers once the Government's restrictions
on showroom operations are lifted. Internet sales enquiries for
April were approximately 37% of last year's levels and boosted by a
TV marketing campaign which highlighted digital options available
for customers.
98 of the Group's 133 dealership aftersales operations were
reopened in late March and have been providing vital service and
repair services to key workers, vehicles undertaking essential
activities and vulnerable customers who rely on their cars. Van
repairs have been a crucial element of the workload during the
lockdown. 18% of the Group's technicians are actively at work in
these locations. Average invoice values demonstrate good
disciplines, despite skeleton teams, and overall labour sales are
running at 20% of pre-lockdown levels. April service labour
revenues are expected to be around GBP1.7m. The Group's central
contact centre has been operating very effectively from home and,
in recent days, additional colleague resource has been added to
enable service bookings to be diarised from June onwards.
Costs
Costs are being managed very closely with the Group using the
furlough provisions to temporarily layoff approximately 80% of
Group colleagues. The Group has applied for grants under the
Government's Job Retention Scheme in respect of these colleagues.
All furloughed colleagues, including new starters, will receive 80%
of their average earnings in April and May subject to a minimum
payment of National Minimum Wage. The GBP2,500 per month cap under
the Job Retention Scheme Grant was not applied to colleagues' pay.
All colleagues who remained at work will be paid 100% of their
average earnings (other than senior management and other higher
paid colleagues where certain caps on earnings have been
applied).
The Directors were unanimous that supporting colleagues at this
critical time was the appropriate action to take. The Executive
Directors waived 30% of their basic salary and pension contribution
for each month of dealership sales closure in respect of the
pandemic, which includes April and May. The non-executive directors
of the Company have also taken a corresponding reduction in fees.
In addition, with the agreement of the Remuneration Committee, the
Executive Directors have waived any annual bonus entitlement that
may arise for the financial year ending 28 February 2021,
notwithstanding that some elements may have entitled them to
payment. In addition, the Executive Directors have waived their
right to the LTIPs issued in the year ended 29 February 2020 and
these have been cancelled. No LTIPs will be awarded for the year
ending 28 February 2021.
Other senior management of the Group have waived 20% of their
basic salary and pension contribution for each month of dealership
sales activity closure.
Careful control of site closures has delivered other cost
savings, including an approximate 60% saving on dealership energy
costs compared to the month prior to closure. Manufacturer partners
continue to be highly supportive in terms of reducing cost of
franchises during this period.
Plans for reopening
To a person, the Group's colleagues have been outstanding during
the pandemic and the Board would like to extend its thanks to each
and every one of them. Our primary focus remains the continued
health and safety of our valued colleagues and customers.
Meticulous planning has been undertaken for the re-opening of
dealerships in a safe and socially distanced way, with strict
guidelines and the use of personal protection equipment (PPE) where
appropriate, once restrictions are lifted. The Group will train all
colleagues in these matters prior to re-opening and will ensure
that customers are well informed as to the protocols, including the
implementation of timed appointments in sales and service and
social distancing requirements. Dealership sales showrooms will
open when restrictions are lifted with a phased return of
colleagues from furlough likely to be adopted to balance resource
levels and opportunity. The Group continues to work closely with
trade bodies, Manufacturer partners and the Government to ensure
that the Group's approach will be in line with likely approved
industry guidelines.
Strong cash position
The Group is fortunate that it had a very strong balance sheet,
with low levels of debt and significant assets (including freehold
land and buildings with a book value of GBP186m) and liquidity at
the start of the period of disruption. Adjusted net debt, excluding
used vehicle stocking loans, was GBP2.8m at 29 February 2020. The
Group drew a further GBP10m of its revolving credit facility in
March 2020.
The Group has and continues to enjoy, supportive relationships
with our banking partners, Barclays and The Royal Bank of Scotland.
Covenant waivers have been obtained for the May and August
measurement periods with a further review agreed for the subsequent
quarterly covenant measurement periods.
Additional working capital facilities have been approved by the
Group's bankers, providing substantial headroom against our
forecast cash flow requirements for the next six months. These cash
flow forecasts assume a resumption of dealership showroom activity
by the beginning of June. Demand for vehicle sales, in particular,
is assumed to be muted during the forecast period. The Group's
Manufacturer partners continue to be very supportive offering
extended new vehicle funding and reduced funding costs.
The Group at 29 February 2020 had used vehicle stock (excluding
demonstrators) of GBP121.3m which has risen to current levels of
GBP136.8m reflecting March trading patterns. The Group has
historically not utilised used car stocking loans on an extensive
basis, with GBP25.5m of such financing at the year-end rising to
current levels of GBP31.0m. An additional GBP10m used vehicle
stocking facility has been agreed taking total available vehicle
stocking facilities to GBP45m. This facility increase has not yet
been drawn upon given that the current cash balances held by the
Group stand at cGBP30m.
As a consequence of these actions in relation to the Group's
financial position, the Directors are confident that the Group has
sufficient liquidity to exit the lockdown restrictions and to
capitalise on the trading opportunities arising as markets return
to a more normal level of activity.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
For further information please contact:
Vertu Motors plc Tel: 0191 491 2111
Robert Forrester, CEO Tel: 0191 491 2112
Karen Anderson, CFO
Zeus Capital Limited Tel: 020 3829 5000
Jamie Peel
Andrew Jones
Dominic King
Camarco Tel: 020 3757 4983
Billy Clegg
Tom Huddart
Notes to Editors
Vertu Motors is the fifth largest automotive retailer in the UK
with a network of 133 sales outlets across the UK. Its dealerships
operate predominantly under the Bristol Street Motors, Vertu,
Farnell and Macklin Motors brand names.
Vertu Motors was established in November 2006 with the strategy
to consolidate the UK motor retail sector. It is intended that the
Group will continue to acquire motor retail operations to grow a
scaled dealership group. The Group's acquisition strategy is
supplemented by a focused organic growth strategy to drive
operational efficiencies through its national dealership network.
The Group currently operates 130 franchised sales outlets and 3
non-franchised sales operations from 110 locations across the
UK.
Vertu's Mission Statement is to "deliver an outstanding customer
motoring experience through honesty and trust".
Vertu Motors Group websites - www.vertumotors.com /
www.vertucareers.com
Vertu brand websites - www.bristolstreet.co.uk /
www.vertuhonda.com / www.vertutoyota.com / www.macklinmotors.co.uk
/ www.farnelllandrover.com / www.farnelljaguar.com /
www.vertuvolkswagen.com / www.vertumercedes-benz.com
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END
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