Vertu Motors plc (VTU) Earnings Call Transcript & Summary

Welcome to our 2021 results presentation. Hopefully, the last one that will be presented under the pandemic conditions. My name Robert Forrester, Chief Executive of Vertu Motors Plc, and I'm joined by our Chief Financial Officer, Karen Anderson. It's 15 years since the company was incorporated, and we've navigated 1 global financial crisis and 1 global pandemic to create the ninth largest European automotive retailer and the fifth largest in the United Kingdom. We believe we've got a strong track record of execution with revenues approaching GBP 4 billion on a normalized basis. Profitability growth exhibited over the period, a strong history of cash flow generation and an exceptionally strong asset base with tangible net assets per share of 50.2p at the end of the period. There have been 2 key elements in this transition from a non-incorporated company to where we find ourselves today: one is stable committed management; and the second is an absolute focus on the culture of the business from day 1 to build a very strong culture. The fact that the business delivered over 130,000 vehicles during the global pandemic year, I think, is testament to what has been achieved. So the agenda is that I will cover the highlights. Karen will cover the details of the financial results and then I will talk about strategic update and the current trading [indiscernible]. So in terms of the highlights of financial year '21, they're not necessarily what we envisaged at the start of the financial year in March 2020. But there -- I think there are 4 key areas to highlight. The first is that the strategic decision to invest heavily in an in-house technology development team clearly came into its own during the period. And we have branded our sector-leading sales technology platform, Click2Drive because that just describes where we are today, this technology platform facilitates a full range of customer journeys, as you all can see. And our technology teams are focused not only on customer facing technology, but robotics and data. Secondly, we have had an objective from day 1 of growing scale. We now represent more manufacturers than any of the U.K. retailer, and we're delighted to add BMW and MINI to the portfolio during the year. 2020, despite its destructions, saw a considerable level of acquisition growth for the group. The third area is cash focused and cost management. We successfully managed our way through the pandemic with a strong focus on reduction of costs both for the long-term and for the short-term necessity. And we reset the long-term cost base with an annualized saving of GBP 10 million. This clearly enhances cash returns. The fourth element is culture. This is a people business and will remain so. And we rely on motivated colleagues with the right values to deliver outstanding customer experiences and we think we are achieving that across now a very large portfolio of businesses. The financial KPIs are summarized here. You can see, obviously, revenues have been impacted by the pandemic, but they've been augmented by the strong number of acquisitions, which we undertook. Strong margins in all areas of the business, especially in the second half of the financial year, put us on a trajectory to increase profit, which was clearly aided by the strong control of costs. The cash generation of the business was excellent with GBP 48 million of free cash flow and a conversion to free cash flow of 153%. EPS remained resilient, and the growth in tangible assets in the period led us to the tangible net asset per share of 50.2p. I'm now going to pass over to Karen to go through the details of the financial results.

Thanks, Robert. So turning to Slide 7, the income statement. Against the odds, perhaps and in spite of a significant loss incurred in the first quarter of the financial year, the group delivered of PBT GBP 24.6 million. This figure was in excess of expectations and 7% up on the prior year. Group turnover declined about GBP 0.5 billion despite acquisitions contributing additional GBP 134 million of revenues in the period. The core group turnover decline, saw over 90% of this decline arising in the first quarter of the year with our dealerships unable to sell vehicles during this lockdown. In successive lockdowns, the group was able to continue selling vehicles and actually did so. We delivered over 38,000 cars in January to March alone in the second, and well, third locksdown of the year. As Robert already mentioned, gross margins have strengthened to 11.8% with augmented margins coming from most departments, strong used vehicle pricing in the market, reflecting the strong pent-up demand at the time when supply was limited, good fleet and commercial margins, aided by the sales mix, and after sales margin also improved. Operating expenses were aided by significant government support, the impact of the restructuring and tight cost control, which I'll cover more in more detail in a subsequent slide. High levels of new vehicle consignment stock in the first quarter led to increased stocking charges, but this trend was reversed in the remaining 9 months of the year, so overall finance charges were level. The underlying tax rate increased ever so slightly as a result of non-qualifying depreciation and nondeductible expenses. And also the impact of removing the proposed reduction in the corporation tax rate has been treated as non-underlying within the tax charge. Turning to the next slide. We present the profit spreads. And again, we split the first quarter from the remaining 9 months of the year for clarity. The group delivered a GBP 14 million loss in the first quarter of the year, GBP 27 million less than last year despite significant government support received. In this bridge, including both the GBP 18 million worth of furlough grant support and GBP 2 million of business rates relief in that quarter. In the remaining 9 months of the year, the group delivered a GBP 39 million profit before tax. This was GBP 29 million higher than the prior year and more than offsetting the quarter 1 shortfall. The group is extremely grateful for the GBP 18 million government support that received in this 9 months as well as the support received in the first lock down. In this profit bridge, that government support figure includes both furlough and rates relief. New car profitability fell in the second 9 months of the year by GBP 4 million. This was both due to reduced volumes of vehicles sold and margins. With this margin decline being attributable to the level of bonus income received in June for the period relating to April and June, i.e. the first lock down. Underlying new car margins were robust and, in fact, actually, margins on new cars in H2 as evidenced in the appendices were actually a record level for the group. Fleet and commercial profitability was level in the June to February period. Like-for-like fleet car volumes were down driven by reduced demand for daily rental fleet, but commercial volumes were strong with the group taking share in a buoyant market. Profitability in this channel was level despite the overall decline in volume because of a growth in gross profit per unit, again, reflecting strong margin retention and the mix of business sold. Used vehicle gross profit grew GBP 8 million in the 9-month period. Pent-up demand was apparent, particularly in June to October in the summer months and volume of -- supply of used vehicles in that time was quite constrained, meaning margins were strong. The group balance volume and margin to reflect these market trends. So our overall like-for-like volumes of used cars sold in the period declined, we saw an overall improvement in retained gross profit as margins grew. The group's car aftersales gross profit also saw a decline of GBP 1 million in the period. This reduction was driven by parts and accident repair. Where fewer motoring journeys have led to less accidents and reduced trade part sales through this channel. In contrast, the group service departments saw an increase in gross profit retention of GBP 1.5 million. Like-to-like service revenues were up ever so slightly, but what was driving the improvement was improved gross margin retention, and that was driven by higher average invoice values generated and a reduced mix of warranty work. The group delivered an GBP 8 million saving in core operating expenses, and I'll cover that in more detail shortly. A GBP 1 million loss arose from the group's dealerships acquired with this result being better than was anticipated in the original acquisition plan. Despite these, not anticipating a third national lockdown. We are very happy with the progress that our acquisitions have made to date. And they are all fully integrated into group systems and processes. Turning to Slide 9. Cost focus. There's a lot of focus on costs in 3 specific areas: government and other support, variable cost reductions and improved productivity. In terms of government and other support, the group has received substantial support in the form of the furlough grant and business rates relief. This, as I've shown on the previous slide, helped offset substantial losses, particularly in the first lockdown, where the group reported a loss of GBP 20 million in April and May alone after government assistance. The group does not intend to repay this government support. Business rates relief will continue till the end of June, with the group benefiting by approximately GBP 0.9 billion a month. Whilst use of the furlough scheme in FY '22 has been very limited. And in the absence of additional or further lockdown restrictions, we do not anticipate making use of this facility anymore. In addition to the support from government, the group's manufacturer partners and suppliers also helped and took action to help the group's cash flows and reduce costs in the period. In terms of variable cost reductions, there was a reduction in activity levels we saw, saw reductions in cost. Vehicle cost savings of approximately GBP 3 million arose as a result of reduced demonstrator fleet requirements from our manufacturers during the restrictions as well as fewer business journeys being undertaken. Training moved online, saving approximately GBP 1.5 million, and vehicle cleaning and other such activity costs reduced, saving a further GBP 1.6 million, albeit increased cost of PPE partially offset some of these savings. These variable cost savings should be expected to reverse as activity ramps up to previous levels. Finally, the group's developed systems improvements, which increased the level of integration between our systems and also made use of robotic process automation to improve efficiency. Additional systems investments have seen additional growth, greater efficiency within sales process as well with the Click2Drive sales platform, integrating customers online and in dealership sales journey. But in summary, these cost focus areas combined to deliver strong cost savings in the core group over the year. The GBP 10 million annualized cost savings were delivered in the restructuring completed in the summer, with total redundancy costs related to this and any subsequent activity amounting to GBP 1.1 million also included in operating expenses. The investment in systems has led to sustainable changes in processes, which has improved productivity overall, with the group continuing to invest in system development to deliver further enhancement. Turning over to Slide 10 is more detail on our cash flow. The group was delighted with the strong cash flows delivered over the year. Free cash flow here, defined as net cash from operating activities, less principal lease repayments and sustaining capital expenditure was a record for the group at GBP 48 million. There is no deferred of deferral of tax or other creditor payments within our outstanding albeit with payments up to date. And part of this free cash flow was a positive cash flow from working capital. The group will reduce new vehicle funded inventory and the funding creditor, both reduced. There was a significant GBP 13 million reduction in trade debtors linked to the timing and level of fleet activity around year-end. Fully paid inventory also reduced GBP 3 million as less tactical activity around year end took place. And finally, there was a GBP 10 million reduction in the level of used vehicle inventory as a result of both tighter control of inventory levels and reduction in supply. Overall, the GBP 24 million reduction in net debt was achieved as a result of these positive cash flows. This net debt is analyzed on the next slide, Slide 11. The GBP 24 million reduction in apparent in the net debt, excluding lease liabilities line in the middle of the slide, which has a figure now of just GBP 4.5 million at the year-end. Industry peers would typically exclude used vehicle stocking loans and reporting net debt. So on a comparative basis, the group had adjusted net cash of GBP 1.4 million at the year-end. The BMW MINI acquisition back in December 2020 introduced mortgage debt into the debt structure of the group. This is provided by BMW Financial services is secured on the properties that were acquired as part of that acquisition at an 80% loan-to-value, and this facility is repayable in equal monthly installments over 20 years at a fixed interest rate of 2.9% over the first 5 years. In light of low utilization levels of the CMML facility, the peak facility available to a performance of the year is GBP 68 million was reduced to GBP 48 million on renewal of this facility early in FY '21 -- '22, sorry. In light of the strong cash held by the group, we took the decision to reduce the level of drawing on our used vehicle stocking loans to minimize interest costs, leaving just GBP 5.9 million drawn against a GBP 45 million facility. The group also manages its interest rate risk by hedging from boosting to fixed rates in respect to proportion of its long-term debt. Turning to capital allocation on Slide 12. The group has a strong balance sheet, with tangible net assets per share of just over 50p and also the debt fire power to grow. We take capital allocation decision seriously. So in terms of portfolio management and acquisitions, detailed business plans are prepared for potential acquisition targets with hurdle rates of target EV EBITDA ratios applied to be reached by year 3. We also frequently review our portfolio to identify poorly performing assets or those which have a lower return in terms of financial contribution to group performance. Where we identify action is needed, alternative approaches such as sale closure or refranchise are taken. We also invest oversee in capital expenditure and any strategic capital expenditures, such as expansion of the group's capacity is considered on a similar basis to acquisition with hurdle rates applied in decision-making. Increased flexibility of sales formats will mean additional investment in multi franchising should be expected. Dividends are an important discipline of the group. The substantial level of government support received in FY '21, which I've already outlined, and the need to protect the group's liquidity led to no final dividend being proposed or paid in respect of FY '20, and similarly, no dividend for FY '21. The Board intends to reestablish the payment of dividends in FY '22, dependent on the financial performance of the group. And finally, the group has previously bought shares back and will consider the use of its free cash flow to make further repurchases of shares at prices below intrinsic value. My final slide is Slide 13, which summarizes the group's balance sheet. As a result of the group's capital allocation decision-making that I've just outlined, a noncash impairment charge of GBP 1.5 million was incurred in FY '21, in respect of goodwill on a dealership, which is subject to some re-franchising activity in the coming year. A further GBP 1.4 million of assets has been transferred to sale as a result of the active management of the portfolio. One of these assets has already been realized into cash, having been sold on the 7th of May for proceeds of GBP 430,000, which was slightly in excess of book value. Noncurrent liabilities on this slide include group's warranty product obligations and deferred tax. And I'll hand back to Robert, who'll give an update on strategy.

Okay. Thank you very much, Karen, for that comprehensive assessment. There's no doubt that the wider automotive sector and, in particular, the retailing sector of automotive is going through a period of very rapid change. This was always going to happen, but I think the pandemic has brought it forward to some extent. We've outlined 4 key areas of evolving trends. The first is around customers, and there's no doubt that customer habits have changed during the pandemic, and the extent to which that is going to reverse is an interesting question. It is very clear towards the all but a very small minority actually want a dealership interaction, be that a visit to a dealership or a video call or indeed use of the phone. And we're finding that phone skills are absolutely paramount now because the vast majority of customer interaction is actually undertaken by the phone. Dealerships remain, in our opinion, highly relevant because customers do still want to deal locally. And they want the comfort of knowing who they're dealing with. And after sales is still an important consideration during the sales process itself. The way the industry is structured around manufacturer relations with retailers is certainly evolving. There's no doubt to us that the manufacturers are more open to a larger role for the larger groups, as Karen alluded to, much more flexible going forward around the formats of representation, different formats, more flexible standards and more flexible facilities. So we will see multi franchising, I think, increase, and certainly, we've got funds in that area. We're also seeing a tendency or much talk at least around a move to agency rather than franchise arrangements, and it's too early to discuss that, we feel at the moment and to understand the full implications. But certainly, we'll keep shareholders informed that, that progresses. And certainly, we don't think that will be all pervasive across all franchising arrangements. Disruptors have certainly been a hot topic in the last 12 months. And a number of them certainly have a high level of cash and indeed marketing firepower. But actually, we consider that the subject is much hype and of all the markets to choose in the world to go and attack used car market, the incumbents have probably the highest level of sophistication on the globe. So we don't necessarily see that there's too much for them to add. And one of the reasons for that is because of the existence of very large professional automotive retailers in the United Kingdom and the way that technology is being driven. And certainly, from our perspective, software development processes are absolutely critical, both in terms of the quantity of software development, but also the quality and the scale of software development teams within automotive retailers is really quite crucial to get through the myriad of projects, which have been identified certainly in our business, and we continue to increase the number of software development professionals that we have. We think we are very well placed due to that prowess to enhance customer journeys further and to drive down cost and increase productivity. The fourth evolving trend, which everyone is aware of, is clearly sustainability. Our business has always sought to be very sustainable and to have manageable growth. We've got very strong values. We want our colleagues to have a culture which promotes integrity and respect for everybody, customers, colleagues, and we think that fits in very well with the sustainability and the wide ESG agenda. And our commitment to our values is absolutely paramount in how we do our business on a daily basis and how customers feel about it. Clearly, when we're talking about sustainability, electrification and sustainable practices are really important. And nothing new to the group. We have been the largest seller of used LEAF vehicles in the United Kingdom for many years. We've got a lot of experience in the electrification area. But clearly, we think we need to prioritize this area. The road to net zero will present opportunities and it will prevent -- present challenges. And I suspect a lot of the opportune challenges will become a lot slower actually than a lot of people currently think but we will -- the industry will have time to adapt. If we take our strategy, and we'll come back to sustainability in more detail, as you can see on the next slide, what actually are we aiming for as a business. And there's a number of ways to look at this. First of all, we want each of our dealerships to be the best automotive retail operation in each town and city is a good objective to set our general managers. Secondly, is to have high integrity in all our actions and through that to deliver great customer experiences to create loyalty and to grow our business. And thirdly, it's to be the most admired player in the sector. And I think we are on our way in a lot of these areas to achieving these goals. We have 5 strategic pillars or goals, and it's worth just going through each. One is to continue to grow the scale of the business. That is a definite objective. It's always been core to our strategy. Why? Because it delivers economies of scale, it delivers deeper relationships with the manufacturers, and increasingly, it gives us marketing power and higher awareness across the United Kingdom. The second element is digitalization, both at the front of -- with the customer journey and the back of house, and that continues to be crucial. And that feeds in also then to the cost focus. We want to deliver outstanding customer experiences but from the lowest cost base possible due to high level of efficiency. Fourth around colleagues and customers is really talking about culture, having the right culture so that people feel the difference. And we're a great believer that culture actually eats strategy for breakfast as Peter Drucker says. And we spend an inordinate amount of time making sure the culture in our business is absolutely as it should be. The fifth pillar, which we've not discussed that much over the years, but is crucial to it is the development of ancillary businesses in the automotive area, which complements our core business, and they are now delivering significant profits, and we'll cover this later on. And we have to do all this with sustainability in mind, and this impacts strategy quite clearly, we have to make sure we partner with the right manufacturers with the right values, but also with the right electric vehicle prowess and the future because that is clearly where the future is. We have to put our own house in order in terms of our own emissions, our energy usage and other pollution elements such as other elements of waste. And we have to do the right things for our colleagues and for the communities in which we serve. And this really comes down to having the right culture and a very long-term perspective, which I'm pleased to say the group have always achieved. If we take sustainability, we've taken it one stage further. We have now set goals in 3 particular areas around the ESG agenda. And these goals have been progressing for a while. It's the first time we've been explicit about them, but we have been doing this for a long time to make sure our business is sustainable because sustainability has always been crucial to us as a management team and we believe, to our investors. An example would be, we have been measuring our energy usage, both gas and electric, every half an hour at every site for over 10 years to minimize usage, to minimize cost and to minimize emissions, and indeed, our commercial director regularly visit sites at 2:00 in the morning to actually check that everything is switched off and our overnight usage of electricity is minimized. So this is something that we are -- we have a competency for, and we will be monitoring ourselves against the standards that we have set in these targets. If we take the growth ambition. Growth is clearly vital to grow earnings. It's also vital to gain share to provide marketing domination in terms of brand awareness and to have scaled manufacturer relationships and scaled relationships are important because the more dedicated the management are on a franchise basis, the more successful they are. You can see that overall, we have a 4.2% share of the U.K. national retail new car market, and that is increasing as we gain share, and we actually represent more manufacturers than anyone else. And we believe that a diversified portfolio of manufacturers gives us a greater spread of risks from being at risk of specific manufacturer impacts. You can see here the retail market share we have by franchise. You can see that in a lot of cases, we're above the national market share of 4%. And in some cases, we're -- in the case of Honda, we're the largest operator in Europe. We will be doing a number of things around the portfolio. Multi franchising, we've mentioned a couple of times already. We believe this allows us to increase our number of outlets and increase our market share of the new car market with limited CapEx. But we think it's very important as the industry evolved, that we push more after sales throughput through the fixed cost base of a dealership and augmenting the number of manufacturers on a particular site gives us a higher high-margin after sales throughput. You can clearly see we are underweight in terms of our representation of the Kia brand, the Toyota brand and the Audi brand, and that is something that clearly, over the next few years, we would like to rebalance further with growth, and we are delighted to see BMW and MINI for the first time in our portfolio. And that, again, in the medium term, should give us extra scope for expansion. We've talked for a number of years about the importance of marketing as part of the business to drive inquiries to the business and to join the online and off-line activity, which is now paramount. Disruptors will and are having an impact in the marketing space, but we are responding to it. Our brand strategy to date is we've had 4 key brands. We will be reducing the number of brands down to 3. Our Farnell branded JLR business, Jaguar Land Rover business is going to re-brand to Vertu in the next few months, which means that the premium brand that is Vertu Motors will have 58 outlets in the U.K. Our stance is to grow the profile of the 3 brands, Bristol Street Motors, Macklin Motors in Scotland and Vertu to grow the awareness of those 3 brands across the U.K. In addition, we have manufacturers clearly, and they are spending millions in marketing on top to drive traffic into our dealerships, and that should not be forgotten. It's a great benefit, actually being a franchise dealer. So if we take the current position and the graph that's clearly there, this is a sample of 5,000 YouGov survey. And actually, we measure this monthly with YouGov to get to our U.K. prompted brand awareness. And you can see that Bristol Street Motors has a prompted brand awareness of 44%. That is the second highest in the U.K. automotive sector, including the disruptors. And you can see 2 disruptors have in relatively short order, got to a prompted brand awareness of about 22%. We anticipate that to rise due to the high spend that's currently being undertaken. But we believe that Bristol Street Motors, in particular, has a very strong brand awareness. And with the strategies that we've got we can grow that further. Spend is clearly one thing, but optimization of the spend is clearly another, and we have built a first class marketing function with well resource specialists to monitor activity, monitor the spend to maximize and optimize that spend. And that is fully integrated into operations, and we think is a real competitive advantage to our group. And we're very proud of what we're doing in marketing. In terms of growing the awareness, there are some examples here of the activity that's being underdone to drive the awareness of the core brand. Vertu is our premium based brand. It has currently low awareness. In fact, most of our competitors in the premium space have lower awareness as well. And therefore, that gives us an opportunity to go for the aim of being the number one premium franchise automotive brand over the next 3-year period, and we've got a plan to do that. We have recently become the principal sponsor of Durham County Cricket Club with the Vertu brand, a shirt sponsor of Yorkshire County Cricket Club. We've -- we are undertaking now Vertu branded advertising campaigns and both ITV and child football and recently branded the new basketball stadium in New Castle, the virtue of OTAs arena. So there's plenty of brand awareness work going on. If we take Bristol Street Motors and Macklin Motors, we are pretty well on the television advertising all the time, which is a great way of driving awareness. And both brands sponsor channel for Formula One programming, which we found has been a good way to drive that awareness. Finally, Bristol Street Motors has been the sponsor for a number of years now, the PSA player the month, which has great profile on social media. So where are the customers? Well, customer behavior has changed. It was forged into a change when showrooms were closed, and we expect that the change will be progressive, but probably slower than most experts think. Customers are undertaking complex journeys that are actually bespoke to each customer. We have caricatured the current position by identifying 3 types of customers. So the situation is actually very fluid. The first on the left-hand side is what is pure online retailing where customers go on the Internet and buy a car without any interaction whatsoever with human form. The volumes here across the sector are low. We actually were the first out of the traps with online retailing, pure online retailing of used cars in May 2017, a long time ago now. And we think our systems are pretty well developed. But we still only did 434 pure online vehicle transactions in FY '21 with all the closures. So the volumes there are really low, growing, but from an exceedingly low base. Why? Because these are relatively complex transactions and customers actually would prefer to have some help. The second middle box is what we call the hybrid, which means the customer has elements of both online and off-line interaction. They will interact with a dealership either by the phone or via a video chat or indeed a visit and we've done quite a lot to promote confidence in this area, made it very easier for customers to contact us. Our 14-day money back guarantee on new cars has given a lot of confidence to customers. And indeed, as Karen said, in quarter 1, without any showroom visits or test drives, we actually sold 38,000 cars in total, which does something. But as we've come out of lockdowns, customers -- a lot of customers actually do want to visit showrooms and undertake test drives in a more traditional way. But most customers are in this hybrid box, and there is a continuum of balance between online and off-line. The traditional approach of somebody arriving at a dealership unannounced and undergoing a sales process is still a significant proportion of our business, assuming actually that the government actually allows you to go into showrooms. And clearly, we've seen a big rise in sales as a consequence of the government allowing the reopening of showrooms in April, big rise in activity because people who still in the majority want to undertake test drives. Underlying this, therefore, is really a bricks-and-clicks strategy, and things will evolve. And clearly, the technology will evolve. The slide on next, which talks about the effortless customer journey, just shows you the complexity of what we're actually dealing with regards to both technology, dealerships and customer journeys, and it splits those online, flexible online, hybrid and physical dealership activity into 3 different customer journeys. Though it's fair to say things are a lot more complex than this because people move in and out all the time. And you can see what actually our strategy is to leave it up to the customer is how they actually want to undertake a customer journey. There is no one sales process anymore. It is very much up to the customer. However, we do have some advantages in this area. One, clearly, we've got credibility and trust, strong levels of customer experience. 96% of our used car customers would recommend us. And that has produced a very, very good database, for example, of customers, a very large database, which we can then reconnect with and prospect. We've got a very strong set of customer propositions, which we've developed over the last 12 months, free delivery within 30 miles, 14-day money back guarantee, 90-day warranty to give confidence to customers. And thirdly, we have a first-class sales technology platform, which we have branded now Click2Drive, and you will see that increasingly within our marketing where we have Click2Drive as part of our group technology, and that will be in adverts, predominantly in the Bristol Street Motors, you'll see it on the television coming through. It is very flexible. We think it's leading edge, and we think it gives us a competitive advantage. Ultimately, that technology allows the transaction to be uniform, whether you undertake it on your sofa or actually in a showroom. The fact that the disruptors are in the main investing in property. You've now seen Peugeot dealerships and Tesla dealerships. I think started all bricks-and-clicks is where it's at. And in most cases, it actually customers want to deal locally. They want to know where to go for their servicing, and they want to know where to go if there is a problem, which gives businesses like ours with our 149 outlets, a big advantage. In essence, then, if we turn over, we have a comprehensive customer offering in used cars, but we also have a comprehensive offering in new car service and repair. And what the disruptors have forced us to do is to be very, very clear about what our strategy is. And to be very, very good at executing it in terms of certainly online retailing. And you can see here the very comprehensive market offering that we now have, where we can do everything one of these disruptors can do as well as a lot more things. And with our scale and our brands, we think we will be very tough competitors to the disruptors. You can see 2 customer reviews here, which we have not changed in any way. You'll be pleased to know. The one on the right-hand side, there's a customer in South Wales actually buying from our Doncaster Honda business. And these actually highlight an effortless process, really strong technology online capability, and colleagues dealing with people with the right values. You can see in both cases, even though these are distant sales, where there are a lot of technology involved, they still want and having a great personal experience. The Click2Drive logo on the top right here, you will see this more and more as a customer-facing brand underneath really Bristol Street Motors to promote the online journey and online retailing and that flexibility of approach, and we will be launching that in some TV advertising in the coming months. If we turn to customers and colleagues, we've always believed that this is a people business. We've always realized that the colleagues actually deliver the strategy and they actually meet customer needs. They actually provide our execution and our brand experience. And the good news is that as a business, we have customer experience levels, which are significantly better than average. Our manufacturer sales and service scores, you can see are well above average. We have an absolute passion to eradicate errors via root cause analysis of all customer complaints. And we have a significant number of reviews, and we have real passion for getting very good views with it, Trustpilot or Google or whatever. The upshot is in used cars, for example, in H2, our Net Promoter Score was 84%, which is very creditable, indeed. This is delivered by colleagues. Colleague engagement development has always been a crucial part of our culture, and we have a real, we think, a real passion for it. The pandemic actually gave us an opportunity to put those values into sharp focus. We paid the colleagues who were on furlough significantly more than the furlough levels to reduce their financial stress, and we undertook regular communication. The upshot of that is an enhanced level of colleague satisfaction to record levels, 87% of colleagues in the comprehensive survey in October, said that Vertu Motors was a great place to work. And that there's very good alignment with our values. However, there is more that we can do. And we've agreed with one of our nonexecutive directors, Pauline Best, that she's going to take specific responsibility for colleague engagement, and we've got a detailed plan where she wins take visits, meetings with different job role representatives and a number of initiatives to bring the voice of colleagues into the boardroom and to drive our culture forward, which I think is a very positive thing. This presentation, as in many ways, sidelined aftersales, which is actually not right, we should not sideline aftersales. It represents 43% of our gross profit. It is a very resilient profit stream, and it has high and rising margins, as you can see in the graph at the bottom of the slide. And there are 3 insights I wanted to discuss: one is we have a very long-established retention strategy, which is paying off and continues to pay off, particularly around service plans; secondly, and for the first time in 2021, we have a strong digital initiative strategy to gain conquest customers. Historically, retailers have got service work in 2 ways: one from fleets, but secondly, from retail customers if they sell a car to. We clearly want that business, but we've also identified a digital conquest strategy to give us older cars, which are out in the vehicle park, which we never sold, but we'd like to service. And we've put a GBP 1.5 million budget against that digital conquest strategy this year, and it is now being executed with good effect. The final thing to say about aftersales is there was a saying in the industry, which is absolutely right, that sales sell the first car and service sell the second the fact we've got customers coming in every year into the dealership, where they're seeing the sales executive and hopefully having a very good experience in service, those a long way to increase retention of new and used cars and give us further sales in the future. The fifth strategic goal of the group is to complement our dealership businesses with ancillary businesses, and this has been going on for a number of years. We've really moved this forward this year. We've now got a Vertu Ventures division in which all these businesses come under, and it's under one single managing director. We've had an excellent year of growth with a strong contribution from these businesses in terms of profits and providing excellent group synergies. We've put 3 of the businesses -- we actually have more, but we put 3 of the important ones here. Vans Direct is the -- our online van retailer sold nearly 3,000 vans and had a real spectacular time actually during the last 12 months and generated GBP 1.4 million of group profit. Our Aceparts online parts retailer via marketplaces like eBay and Amazon has again seen real solid growth and generate average margins -- gross margins of 17.1%, which is significantly above group average. We have identified a number of bolt-on acquisitions, which we would look to work on in the coming months. Finally, we've had a long-running joint venture with Haymarket Media group called What Car? Leasing. And this is a new car, personal contract hire online retailer. We have plans with Haymarket market to grow that quite considerably and gain more market share over the next 12 months. It is on a picture of a very nice BMW dealership, which we are very proud of. And finally, if we move on to current trading and then outlook. It's fair to say I'm not going to dwell on year-on-year comparisons with regards to March and April on this slide because, in my opinion, they're pretty meaningless because we were closed for a fair chunk of March and April last year. So let's look at the actual performance for the two months. We're delighted to update our shareholders that the adjusted profit before tax for the 2 months was GBP 19.2 million and that compared to a loss in the previous year for the 2 months of GBP 4.7 million. So clearly, a completely different situation. And there are a number of very important points to make here. We had a record March in terms of profitability despite showrooms being closed, and I think that tells you just how strong our online success has been. April saw a strong sales bounce on reopening, which was predictable, where it was good to see it coming through. The van market remained very buoyant. And in fact, it was the best ever April for van registrations in the United Kingdom, and we took share. Our acquisitions, as Karen said earlier on, are contributing and they're performing above our business plan levels, which is excellent to see. It is worth pointing out that our service performance in April -- was very strong in March. But predictably, it was weaker in April when we'd expect it to be weaker in May. Because last year, we were locked down. The level of servicing was exceedingly low. And therefore, the service and MOT cadence has changed, and we clearly expect that to pick up in May because there'll be a lot of people who have the car serviced and MOT-d from May onwards last year. The result also benefited in the GBP 19.2 million from GBP 1.8 million of rate saving as Karen alluded to. So if we take the outlook and the near-term outlook, and then we'll finish off in terms of strategy. This is a strong business, and we are set to perform, we believe, strongly, we're in a good position operationally. There are some uncertainties, however, which we've drawn to the attention of the investors in our announcement. The first obviously relates to COVID-19 and maybe even flu in the winter and the extent to which the government introduces restrictions around that, which we don't know. Let's hope there's no need to. So we -- clearly, we've got to be cognizant of that, and that could affect the business. The second is in the area of new vehicle supply, and you will be aware from the press that there are constraints now coming through in terms of new vehicle supply both cars and vans due to a shortage of semiconductors on a global basis. These shortages are evident. They are increasingly visible. We just don't know the full impact or indeed the duration. This will probably feed through into used car supply tightness. We're already seeing tightness in the used car arena. And I actually think procuring the right level of used car stock is going to be one of the biggest challenges, certainly for the next 6 months. The flip side of that, clearly, is we would expect margins to be strong. We'd also expect aftersales, having seen the dip in April and likely in May as a result of the lockdown last year that servicing will pick up from June onwards. The upshot of that is that we have resumed guidance. We set out a range of adjusted profit before tax between GBP 24 million and GBP 28 million. And clearly, we'll update shareholders as some of these uncertainties become clear and unwind. As Karen said, we would look to restart the dividend in this financial year, depending on financial performance. So overall, I think the Board are very confident actually on being able to deliver on the strategy. We are very firm in what we believe needs to happen with the business. We are going to continue the growth with regards to acquisitions and multi franchising. We are going to continue to invest in our digital team, which continues to expand to provide the business with the software and the operating systems, which actually will add value. We will continue to have a marketing concentration to grow brand awareness. And I think going from 4 brands to 3 brands shows we're serious about that. And that will continue to benefit the business. And the acquisitions, which we've undertaken and a significant number, actually in the last 12 to 18 months, we've clearly got work to do to continue the improvement process to drive returns. I suppose, overall, in a period of quite significant change in our people, one of the key objectives of management is to actually balance the business and see it through a period of significant change and still to get it to perform. And that's probably my biggest challenge over the next 12 months. We are almost back to normal, and we certainly believe that this group has its best years ahead of it, I mean, ahead of successful first 15.