Company Announcements

6 October 2022

Motorpoint Group PLC

("Motorpoint" or the "Group")

Half Year Trading Update

Motorpoint Group PLC, the UK's leading independent omnichannel vehicle retailer, provides an update on its trading performance for the six months ended 30 September 2022 ("H1 FY23").

H1 FY23 Highlights:

·     Record first half revenue of c.£785m, up c.30% (H1 FY22: £605m) helped by vehicle mix and price inflation

·     Increased market share of the 0-4 year old market to 3.6% (H1 FY22: 2.9%) - reaching a record high in June of 3.8%

·     In line with stated growth strategy, the Group invested an incremental c.£4m compared to H1 FY22 to grow market share through price leadership and new openings; on track to grow revenue to £2bn in the medium term

·     Meaningful market share gains achieved in H1 although profitability was significantly lower than the record performance in H1 FY22 due to investment in new stores, digital and technology capability, and price leadership

·     The Group remains cash flow positive and has a strong balance sheet with no structural debt and a net cash position of c.£4.5m at 30 September 2022 (31 March 2022: £7.8m). The Group has unsecured loan facilities of £35m (undrawn at 30 September 2022) and stocking facilities of £195m

·     Opened 18^th location (Edinburgh) at end of September and 19^th location (Coventry) due to open at end of October 2022

·     Net Promoter Score remained at an industry leading 84 in the period. The Group's relentless customer focus is a key enabler to support long term value creation

Revenue

The Group achieved record revenue of c.£785m in H1 FY23, up c.30% (H1 FY22: £605m), with this strong growth driven by branch rollout, an increase in premium models being sold and vehicle price inflation.

Sales volumes in April and May 2022 were down against exceptionally strong prior year comparators which reflected post-lockdown branch re-openings. The Group returned to positive year on year volume growth in June 2022, which continued into July and August. However, in September volumes were down c.9% caused in part by adverse economic news flow and political uncertainty which continue to undermine already fragile consumer confidence.

Strategy Update

Encouraged by the record revenue, growing cash balances and continuing market share gains in FY22, the Group has maintained strategic investment in H1 FY23 in order to meet the medium term objectives outlined in June 2021. During the period, we invested an incremental c.£4m compared to H1 FY22 to grow market share, investing in our growing digital and technology capability, and our roll out of more branches in new catchment areas.  Six new branches have opened since 2020.

In the period April to June 2022, the Group's share of the 0-4 year old market increased to 3.6% (H1 FY22: 2.9%) and in June alone, the Group's share reached a record high of 3.8% (H1 FY22: 2.6%), providing further confidence that the Group's strategy continues to succeed.

Profitability and cash

The Board strongly believes there is a significant opportunity for Motorpoint to become a highly profitable market leader, and that certain targeted strategic investments are important particularly as some of the Group's competitors are less ambitious or lack financial capacity. The results of the strategic investments made to date underpin this belief and the current strategy. Accordingly, as a result of the investments during H1 FY23, coupled with the costs of maintaining market leading finance rates at 8.9% (9.9% from 1 October 2022), Profit before Taxation ("PBT") for the period is c.£3m. This PBT is significantly lower than H1 FY22 (£13.5m) and reflects the increased strategic investment (c.£4m) and interest costs (c.£1m) in H1 FY23 and compares against record margins experienced in H1 FY22.

Macroeconomic conditions continue to worsen, which is causing increasing consumer uncertainty, and it is therefore likely that this will reduce used car sales volumes in the UK for the foreseeable future. Although the Company does not provide specific profit guidance, it believes these macro factors will continue to challenge financial performance in FY23, the extent of which is difficult to predict.  In this environment the Group will carefully manage its cost base, align its consumer financing rates with borrowing costs, and continue to build technology and digital capabilities which increase automation, data-led decision making and customer self-service, thereby enhancing the agility of the Group to proactively manage its cost base.  Further, the Group will continue to invest in important strategic capabilities but only to the extent that it remains profitable and cash generative, and maintains a strong balance sheet. 

The Company's balanced approach to investment, profit and cash is demonstrated by the Group growing cash balances during the first half and the absence of any structural debt. At period end, the Group had a net cash position of c.£4.5m (31 March 2022: £7.8m) and stocking finance headroom of c.£70m. The strength of the balance sheet will provide further firepower to continue the planned strategic investment.  

Outlook

As has been previously highlighted, the impact of rising inflation, interest rates, consumer uncertainty and worldwide vehicle supply chain challenges are significantly affecting the used car market. Whilst it is prudent to remain cautious given these short term headwinds, the Group will continue to invest now for the longer term in a weakening competitor landscape, whilst also delivering appropriate levels of profitability and cash generation.

Enquiries:

Inside information:   This announcement contains inside information as defined in Article 7 of the retained EU law version of the Market Abuse Regulation No 596/2014 ("UK MAR") and has been announced in accordance with the Company's obligations under Article 17 of UK MAR.

Forward looking statements:   The information in this release is based on management information. This announcement includes statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the Listing Rules and applicable law, the Company undertakes no obligation to update, revise or change any forward looking statements to reflect events or developments occurring after the date of this announcement.

Notes to editors

Motorpoint is the UK's leading independent E-commerce led omnichannel vehicle retailer, focused on giving retail and trade customers the easiest, most affordable and seamless way of buying, selling and financing their car whether online, in-store or a combination of both. Through its leading B2C platform Motorpoint.co.uk and UK network of 18 sales and collection branches, the Group provides an unrivalled offering in the nearly new car market, where consumers can effortlessly browse, buy or finance their next car and collect or have it delivered directly to their homes. Motorpoint's purely online wholesale platform Auction4Cars.com sells vehicles into the wholesale B2B market that have been part exchanged by retail customers, or purchased directly from them by the Group as part of its online car buying service. Motorpoint's diversified business model, underpinned by its established brand, industry leading technology and sophisticated marketing infrastructure, always delivers the best choice, value, service and quality for customers. The Group is proud to have been recognised for eight consecutive years as one of the Top 100 Best Companies to Work For and for the second consecutive year the Number One in the Automotive sector.