Earnings Call: H1 2021

Oct 7, 2020

Good morning. My name is Robert Forrester. I'm the chief executive of Virtu Motors, and I'm joined by our chief financial officer, Karen Anderson, to present our financial results for the six months ended thirty one August twenty twenty. It was actually a very successful first half, beyond any expectations that we could have hoped for when we got locked down, by the government on the March 23. The business has actually made massive progress, and and I think taking full advantage of the tailwinds, which The UK automotive, retail sector has had since lockdown, which has come back very, very strongly. We had a strong business before in terms of the fundamentals, but I think we've improved it in h one to give ourselves a stronger business now. And if you look at the performance, we generated a profit, which certainly wasn't my expectation, in at the March. We've actually generated in September a record profit in terms of the month, in the history of the group, in terms of a September or a March, the highest in our history. I think we've got a stronger culture, within the business. We went, very much into significant communication via videos during the lockdown and subsequently, and I think that helps to galvanize, the fighting spirit and the bounce back. We've got a very strong balance sheet. We've always had a strong balance sheet. We have net tangible assets of £165,000,000 and that gives us a great platform. And actually the financial stability and strength of the business meant that whilst executive management were focused on cash, we were also focused on how we could maximize the opportunity presented by the pandemic rather than worry about existential threats. And as part of that, we launched a plethora of new technologies both around omni channel retailing and indeed given us greater efficiency and productivity. So we think we're well positioned for future growth. We will be mindful in terms of our capital allocation approach to make sure that any acquisitions that we do meet relevant hurdle rates, and we remain hopeful, as a Board that we'll be able to reinstate the dividend in the next financial year, obviously subject to financial performance. So unusually, if you turn over to Slide two, you can see that the financial period really was best broken down into two quarters. There were actually three distinct periods. Quarter one actually fell into two distinct periods for me. If we take quarter one, you can see we actually lost money, pounds 14,300,000.0 loss as against the £13,000,000 profit in the prior year. And given that has our normally highest profit month of March in, just takes some believing when you read it. The first period to talk about is the period up to the March 23 when we had our March peak trading month, but clearly that got impacted by, the prospective lockdown and loss of consumer activity. And then clearly in the last week, we were actually locked down. However, March was a profitable month, albeit at lower levels than normal as we previously disclosed. The period from the March 24 to the June 1, saw, all our sales showrooms closed, across The UK. They came back at different times depending on jurisdictions. There was a progressive relaxation, in England towards the last part of that period, but we think we opened the business during the lockdown more than the competition. We opened 98 service departments within three days of, Boris' lockdown announcement, because clearly they were essential, to the national effort. Our centralized contact centers did fantastic work in terms of answering the phone centrally, also in terms of handling sales inquiries even though our showrooms were closed. And, our after sales contact centers booking those key workers and essential businesses into our service departments to keep people on the road. We also had the vast majority of our general managers still in the business, in the showrooms, making sure that, costs were minimized, that sales were maximized despite the constraints, and that the after sales environment was safe both for colleagues and for customers. Clearly, the period, the business has benefited, as you can see on the slide, from considerable government support, particularly in Q1 and around the job retention grant, but also rates relief, which will carry on until the March year. Turning to q two, the industry rebounded far quicker than anybody could have imagined. Certainly, expectations were nowhere near, the bounce back that we saw. Demand, came back, quickly, particularly actually in used cars and service. The consumer has sat at home, vast majority being paid and couldn't spend money, so they generated cash. And their options to spend money has been heavily curtailed. They really couldn't go on holiday abroad. They couldn't really, in much of a mood to go out. When they did go out, the government paid 50% of their restaurant bills. So the the cash has gone, I think, in in the economy into two major areas. One is buying cars and two is home improvements, and we clearly benefited from that. We've also seen very strong relative demand in terms of vans as more and more people have entered the courier market to do home deliveries. And service saw pent up demand. I actually don't think we've seen pent up demand so much in sales, but certainly in service we have. People want their car serviced, and we were closed, or significantly closed or lower capacity for a couple of months. So we've seen the benefit of that. We also saw supply constrained in terms of new and used cars, and that augmented margins, and you can see that in the financial results for q two, a significant margin expansion. Our online businesses, which sometimes get forgotten, such as our online van, selling business van direct in South Wales and our, online parts retailing business in Kent, Gourdates parts, they went through the lockdown pretty unscathed and in fact, in number of months actually grew year on year and gave us a profit stream, which, was very, very useful and they continue to be performing well ahead of our expectations. If we turn over to slide three, we're a great believer in our business actually that culture eats strategy for breakfast and getting the culture right within the business is of paramount importance, making sure that people feel included, that they understand going on, that they understand what's expected. And we felt as we went into lockdown that our five and a half thousand, 6,000, colleagues will be sat nervous as to what it meant for their lives, what it meant for their families, and what it meant for their jobs. So we we did a number of things. We financially supported, colleagues in the group in excess of the monies we received from the government. The board felt that was absolutely the right thing to do. So in general, everyone, got paid 80% of average earnings. Our senior management took a significant pay cuts during the lockdown, and we thought it was right to give the message that, we were all in this together. We then commenced, a almost continuous process of video blogs, to colleagues, using their private email addresses to keep them informed as to what was happening in the business, but also keep them informed of what was happening in terms of, people's lives generally. We encourage volunteering, and we have some great news stories to try and keep the spirits up. And that communication significantly helped us as we came out because people felt they they knew what was happening and and weren't sat there just worrying about it. As we came out of lockdown, we actually decided to come up with two, short term visions and plans, which we communicated via physical meetings or indeed via videos, to the all the population of colleagues to make sure they knew what was required, which supported people during the lockdown and we and they wanted to come back quickly and they wanted to do their bit, to rebuild the group. So in May to July, you can see in the middle there, three months plan to reenergize. This focused on clearly keeping customers and colleagues safe, working together to maximize the group benefit, make sure we all work together for the greater good, to balance the capacity, which we needed to bring back into the business while being mindful of consumer demand. And we brought the capacity back gradually, but probably quicker than most groups, I suspect. We have an absolute focus on costs and an absolute focus on cash, and everyone in the group knew the targets that we set, and we delivered those targets, and we delivered them in advance of where we thought we were going to be. And really, was a question of management leading from the front. Our general managers actually were positioned on the front door of the dealership so they could talk to customers, make sure their expectations as to social distancing in place, taking the temperatures of all colleagues every morning, which we're still doing to make sure we have a safer environment as possible. We had a successful time with that. And then August and September, when the market was clearly strong, we sought to maximize the opportunity and launched another plan around speed, simplicity, and confidence and to put the basics and the disciplines back in the business. We've been running very tight and we're now, I'm pleased to say back to normality in terms of operations of the group. Turning to Slide four, this is a reiteration of the group strategy. The group strategy has not changed with regards to COVID. It remained highly relevant. We reviewed it as a board and came to the conclusion that the trends that we felt we needed to be cognizant of were merely accelerating rather than changing and I think that's absolutely the case. And the key themes are scale. We fundamentally believe to be successful in motor retail, you need to have scale of brands and operation, you need to invest in technology, technology to deliver omnichannel retailing, but also significant enhancements in productivity across the business to make sure that everyone is adding the maximum value using technology. But also a focus on people because, yes, technology is vitally important, but it's still a people business and delivery of success in our business is absolutely down to having the right people in the right jobs in our dealerships And to deliver for customers because customers still want to deal with people, our mission statement is to deliver an outstanding customer motoring experience through honesty and trust. That takes people to do, clearly backed up by great technology, and to have a business with strong ethics and strong core values, which I think we have exhibited across the business in the past few months. If we take on Slide five a look further at scale and brands, scale delivers a number of benefits in automotive retail for me. It allows you to apply technology, which you've invested in across a larger number of outlets. It allows you to drive scale benefits and cost reductions. It also gives brand synergies in terms of having big brands where you add more outlets, you're effectively spreading your marketing costs and giving you more marketing power, and also to make sure that we are working closely with manufacturer partners with meaningful scale of partnerships and, allowing us to have dedicated franchise management who are absolutely specializing in that manufacturer, because all the manufacturers we deal with are different in terms of how they operate the franchises and we need to be very closely aligned to those manufacturers. So we are growing the group. You can see that we bought a key dealership in Nottingham last week. We've now added three Kia dealerships in the last nine months. Having not represented Kia, it was a hole in our portfolio, which we are now plugging and it allows us to have some scale in that relationship. We're also continuing to follow a strategy, which we've been fighting for a number of years of multi franchising, significant number of dealerships. This maximizes both throughput of new car sales, but also throughput of aftersales and we're seeking to future proof the business by multi franchising where we think that is appropriate. You can see here that the strategy is around having a bricks and clicks, strategy, having great online capability and superb offline facilities and processes. And we have four key brands and I think that marketing has increasingly become a core, of what we do in the business, increasingly spending time on marketing, we've got a fully resourced marketing function, which worked, tirelessly through the lockdown in terms of customer perception and communication. And, we actually kept our marketing going, significantly on TV during the lockdown, which I think significantly helped the group as we came out. So we aim to build very strong brands. The Bristol Street Motors brand is ranked number two in The UK in terms of, prompted awareness. 53% of UK, subjects are aware of Bristol Street Motors. We would aim for that to be the biggest brand in The UK within the next couple of years, and think we can achieve that despite the fact it only represents English volume brands. We've got 77 outlets at the moment. We have a different brand in Scotland, Maclin Motors. That's actually got 75%, prompted awareness in Scotland, a significant amount of awareness because we've been promoting it heavily on TV. We're now growing the number of outlets in Scotland. And both Bristol Street Motors and Macklin have sponsored the channel four coverage of Formula One over the past, four or five months, which has helped lift brand awareness as well as Bristol Street Motors sponsoring the PSA Player of the Month in terms of football. So we are growing these brands, and that helps us to generate inquiries, traffic, and and promote the substantial web site assets that we have. The Farnell brand is a premium brand for Jaguar Land Rover in the North Of England, and it is very well developed and is a fabulous business. And then finally, we've got the Virtue Motors brand. Now Virtue Motors now has 37 premium outlets in The UK. We actually have relaunched our virtuomotors.com website, which this time last year was an investor website for the PLC, but it's now a retail website for the Virtu Motors brand with online retailing capability. And we're launching now over the last few months that Virtu brand to get greater brand awareness. So, for example, we sponsored some Channel four correlated programs and bits instigated TV campaigns to drive traffic to virtuomotors.com. Digitalization is clearly a big subject. It falls into two categories, for us. One is, changing customer journeys and the development of omni channel retailing and the second is digitalization increasing productivity. Karen is going to deal with the digitalization through increasing productivity and I'll deal with, the changing customer journeys. It's fair to say that COVID has accelerated some of the existing trends that we were seeing. Clearly, actually, during the lockdown, customers were forced into a non dealership based process, and we sold lots of cars without a traditional test drive, and purely over the phone or indeed the Internet. It's not actually what customers want. Customers actually do want to come into a dealership and test drive cars for the vast, vast majority of the time. And as we've then opened the showrooms and we opened June 1 in terms of England and then July 1 in terms of Scotland, we have seen, a slight change in customer behavior. So we classify inquiries in in sales in four items, Internet inquiries, phone inquiries, walk ins, and where we've made an appointment from our database. A walk in is where somebody walks into a dealership without having previously contacted us, and we've seen that decline, not massively, but has declined as people ring up in advance or contact us via the Internet to actually make an appointment or or to try and secure the car. Actually, we've seen that effect of declining walk ins, come, back. It's less pronounced actually than it was a few months ago. Dealership divisions have not diminished in any degree of iota. This is definitely bricks and clicks because people want to actually touch and feel the product in the vast majority of cases. We put a lot of major innovation into the sales process and some of this affects the how the dealership experiences and some of it affects what happens on the on the web. But actually, in reality, the aim of the exercise is to make sure that the processes are absolutely identical, whether it's sitting on your sofa or sitting in a dealership, apart from the fact you clearly can't test drive a car from your sofa. So the major innovations that we put in place, we can now sit in a showroom and screen share via our showroom system to a customer sitting at home, so they can actually look at the deal, look at product presentations, etcetera. We can now do video appointments where we can actually talk live, FaceTime via our showroom system. In August, we launched ReserveItNow where customers can, take a car off sale automatically on the Internet by paying a £99 reservation fee that that's our sales forty eight hours while we conclude the deal. That significantly increased productivity within our sales teams and 1,000 customers have taken advantage of that since the August 1. Similarly, booking appointments online, where we can actually guarantee that appointments will be, kept and customers can go on, and we've got over 1,800 people, since the August 1 booking appointments online, and that's part of effectively in the customer's mind making sure that it's part of their safety, that we know they're coming, we can manage social distance far better. The final thing, which is not technological, but shows you how COVID has changed, what we do and the flexibility that we've employed as now we do on a company test drives. So the customer is in the car on the test drive and our sales executives are not in the car with them. That is pretty revolutionary in the thinking of, UK motor retail. And I think it's increased productivity because when the customer is actually out on the test drive, our sales execs can be preparing, everything for when the customer gets back and it speeds up the sales process quite significantly. We do have more developments in the pipeline as our software development team has expanded and is generating a lot of very good items. I'll now pass over to Karen to talk about productivity. Okay. Thank you, Robert. Our ultimate aim really has to be to grow growth profits, whilst actually reducing costs so that we get the least cost transactional the least cost per transaction as we possibly can using automation and increased systems integration. So a couple of examples of this are the increasing use of online service bookings, where we've seen 15% of all of our service bookings now made online. Actually, we've made more progress now in terms of robotics, helping to translate those service bookings online straight into service diaries, which reduces the need for intervention here in the contact center. The other area where we've increased integration is in vehicle admin. So, what used to be a relatively paper based process with a lot of human intervention has now transformed itself. On the bottom right hand side of the slide, you see something or a snapshot of something called our delivery dashboard. This makes electronic all our electronic deal files or all our deal files for vehicles, and it shows at a glance what's missing from the deal file, what work needs to be done, and more importantly, how we can prioritize, our actions for which deliveries are going out first. The other thing it does is in moving electronically. We don't have any physical paper anymore to pass between administration and sales team, meaning our sales teams or our administration teams can work remote from each other, which has been essential. This has allowed us to reduce headcount in the key area of vehicle administration, which is part of our overall cost reduction. We're actually developing this even further to take more work out for vehicle admin. For example, we're gonna be using robotic processes to tax and register cars with BBLA, including payment of those cars. And all also using via using robotics to invoice vehicles off such as invoice in vehicles in trade at BCA. So it's the great bit of use of technology that's allowed us to reduce that transactional cost, and we're gonna continue. If I turn over to slide seven, this sets out the financial highlights for the six month period. As already mentioned, the first half of the year or the first quarter of the half was dominated by the impact of lockdown, and then we saw strong performance in the second quarter. Overall, we delivered an adjusted profit before tax of 4,700,000.0, which was much better than we could have hoped for back in May. We haven't classified any items as exceptional because quite frankly, it was hard to draw the line particular in quarter one between what was exceptional and what was normal. Government support within the figure was substantial, totaling 27,200,000.0 in the period in respect of the furlough scheme. In addition, we received rates released on the group's dealerships. Included in the results is the cost of our restructuring program, which was about £800,000, and this will generate cost savings of £10,000,000 on an annualized basis going forward. The results also include the small profit on the disposal of the surplus property as well as the cost of PPE to enable our dealerships to open safely. One area where I've been delighted with the group's performance has been in cash generation, and we generated significant amounts of cash during the period ending with a net cash balance of £36,500,000 and, with substantial liquidity, and that figure including our use of used vehicle stocking loans. Our bank covenants were waged in the first half of the year, but, actually, the group has operated within those original covenants from quarter two and projects that it should continue to do so. Despite this, we've actually sought a reset of the covenants for the second half to reestablish the previous levels of headroom we enjoyed. If I turn over to slide eight, there's more detail on the financial performance for the for the six month period. Clearly, the impact of lockdown on turnover and gross profit can be seen on this slide, but the mix of overall sales has actually caused us an increase in the period in terms of gross margin percentage. Another area where we've seen costs increase has been in finance costs, and there's an analysis on the right hand side of the slide. The biggest movement has been in manufacturer stocking charges on new vehicles. The lockdown saw no growth in the pipeline as factories also closed down, but actually what happens is with no sales, cars in the pipeline started to age and small cars bore interest. Manufacturers also helped the dealer network through, delaying adoptions of new cars, which again caused the growth in overall interest bearing stock. On average, these new car stock levels were £80,000,000 higher in q one than in the previous quarter. This drove up overall interest costs despite actually some of our manufacturers reducing interest rates to us to also assist during quarter one. Another area where we've seen an increase is in tax in terms of our effective tax rate. The government enacted or government reversed the previous decision to reduce the headline rate of corporation tax to 17%, and as such, deferred tax balances have been revalued at 19, which has had a one off impact on our effective tax rate. If I turn over to the balance sheet on slide nine, the group has arguably the strongest balance sheet of the quoted retail sector. We have net tangible assets of 164,600,000.0 and tangible net assets per share of approximately 47p. We have a pension scheme in surplus both on the accounting basis and it's fully funded on the actuarial basis, and we have low levels of gearing. This provides the group with resilience as well as the firepower to invest in growth. Turning to cash flow. There's been some big moving parts, and that's on slide 10. We generated a substantial free cash flow in the period. Now this is not because the group delayed any payments to creditors. In a natural fact, we are up to date on all creditor payments, including rent on property and all taxes. We saw a significant cash inflow from a reduction in working capital. A big chunk of this, 27,100,000.0, came from a targeted reduction in used in used vehicle inventory and demonstrators. And given our low use of used vehicle stocking funding, this flows to cash. A £9,100,000 reduction in fully paid inventory was also seen as the year end peak peak position on this stock unwind. A reduction in parts inventory was aided by the changes in Vauxhall parts distribution as previously flagged, and receivables actually increased as a result of the significant trading activity we saw in the period. The biggest number, however, in terms of VAT is in terms of VAT. The significant sales rate in quarter two has meant that actually we've seen a VAT payable buildup of £35,000,000. This compares to a VAT receivable of £10,000,000 at the February. As I said before, this is not a reflection of us delaying payments of VAT. It merely relates to the quarter's performance. If I turn over to slide 11, this sets out the group's cash and borrowings position. The funding arrangements of the group are perhaps a little different from some of the other quoted players and this is worthy of note. Typically, I believe other groups have a revolving credit line, which covers them for both acquisitions and working capital, whereas we split these facilities. We have a five year acquisition facility with a £62,000,000 limit and a further 15,000,000 uncommitted accordion facility available to us on this line. The group's working capital funding needs are met by a significant committed money market loan facility, the limit of which flexes in line with our normal seasonal peaks in working capital absorption, which are the months following each calendar quarter end. This gives us plenty of liquidity. Additional working capital is funded through the use of a used vehicle stocking line. This is not uncommon in the industry, but what is uncommon is the fact that we treat this as actual debt and not within trade payables. You can see that we use these facilities quite selectively, and at the moment, they're down as low as £12,700,000 against a stock value of over a 100,000,000. In addition, the group also gets funding from its manufacturer partners in respect of its new vehicle stock, and this is actually included in trade tables that clearly can bear interest as we've seen on the profit and loss account. Finally, for me, turning over to slide 12, which sets out the profit bridge split between quarter one and quarter two, And you can clearly see the significant swing in the in the success of the group in quarter one driven by the lockdown, seeing a 27,400,000.0 swing in profitability. The bounce back in quarter two is evident where we've generated 15,200,000.0 more profit than we did in the same period in the prior year. We see that new within quarter two, we see that new and fleet possibility is down, and this is due to some quarterly bonus, which Robert will go into in more detail. New car used car performance saw very strong performance as did u as did after sales. Sorry. Good cost control was exhibited and we saw a positive contribution from our acquisitions. I'll hand back to Robert now, who's going go in more detail on the departmental performance in Q2. So I'm going to start on Slide 13, which I apologize is a busy slide, but it's important to see how profit loss count looked quarter, by quarter year on year. The first thing to say is in quarter one, we saw revenues down 64% as the lockdown is evident, but it was offset by cost savings and indeed government support, which is outlined on the schedule. The gross profit falls in quarter one, are interesting. Used car gross profit was actually down 72%, whilst new car gross profit was only down 40%, And that's due to the fact that used cars are strong in all three months, whereas clearly, new cars are much stronger at quarter end in terms of gross profit generation as you get your volume bonuses. So March actually delivered, and then there's less profitability normally in April and May. So it's actually quite interesting when you see that. We have, in quarter two, seen lower gross profit in new and fleet, as Karen outlined, and that is due to volume bonuses, which are accounted for on a quarterly basis. So in June, the volume bonuses we received on new vehicle sales from manufacturers was lower. They reduced the targets, but they were paid on much lower volumes as a result of being closed in the lockdown period. As a consequence of that, we saw a low gross profit and indeed an impact on quarter two margins. I'm pleased to say underlying new car margins have actually been strong. The real news here though is just look at the strength of used cars and service, albeit there's some help here from acquisitions which we've undertaken. You can see a 34% increase in used car gross profit in quarter two and an 11% increase in aftersales gross profit, a tremendous performance. Used cars is all about the market dynamics, which I'm going go through in more detail, but it was aided by strong marketing campaigns, which meant we felt we didn't maximize in terms of used cars. And service is a story of true pent up demand, we believe. So in terms of revenue margin analysis, in terms of revenues, revenues in new cars, excluded as new retail, actually rose from 24% of revenue to 27% of revenue looking at the quarter two period, the three months to August. Fleet was actually down, and this is due to an inherent weakness we've seen in the fleet departments around cars where daily rental demand has been low, corporate contract hire has been low, which we're putting down to confusion around home working and where that corporate contract high market is going to go going forward. In terms of retail, volumes rose. We lost normal seasonality patterns in essence for our sector. What you would assume, I've been in the sector nineteen and a half years, to happen in a month didn't happen. It was completely put out by the lockdown. So we saw new vehicles much stronger actually in volume terms, than normal, but also rising selling prices as well across the board. If you look at gross profit, used car made up 37% of quarter two gross profit as opposed to last year's 31%. We saw higher margins. We took a call on supply in mid May. We felt it would be constrained and then had a deliberate strategy of rising our prices in order to take, cognizance of that. We didn't think we'd be able to grow volume because of the lack of supply that worked for us. In terms of service, we saw margins over 50% for the first time. Inherent margins in the service department were strong due to mix issues, but the other part of our aftersales business, parts and accident repair, were weaker, for reasons I'll go into, which meant actually we had more of the higher margin service work compared to parts and accident repair. New car margins, as you can see, actually came off, and that's due to this effect of lower bonuses accounted for in June relating to the April to June period. Manufacturers did their best to support us, but in essence, we sold less cars. So let's take aftersales first. You'll be familiar with these slides if you've studied the group before. A strong growth in like for like gross profit in the service department. Like for like revenue of 9.7%, gross profit of 12.4%. We saw good demand, and we saw good margin growth. We definitely saw pent up demand and continue to see pent up demand, and this will continue for a number of months as the MOT deferrals from the lockdown come in as a distinct lack of capacity in service at present. We saw more retail work, coming into the workshops. Retail overall was up 24.7%. And within retail, that actually includes, corporate work coming in from fleets. And fleets, servicing came back much slower. It had got back to normal levels by August, but it's at a lower margin. So we were in a real sweet spot for the first few months post lockdown, which clearly aided, margin growth. Warranty work, which has been growing, significantly over the, the last few years, actually fell 20.8%. And again, that tends to be lower margin, so enriched our margins. We actually felt we came out faster than the rest of the sector in terms of after sales. We had 98 departments open during the lockdown, which meant we could build quickly and managing that technician capacity in and bookings in was a bit of a chicken and egg situation, but I think we actually managed it well. You can see on the parts and accident repair side of the business, declines, significant declines, revenues down 9.4%. Three things really to talk about here. One is, as we flagged previously and Karen mentioned, we pulled out a Vauxhall trade parts business as they reorganized and put them into PSA hubs. We declined to do a hub, so that has actually reduced our turnover, but we've taken cost out to get that business right sized. We similar to new cars, we actually had lower parts bonuses in June for the quarter to June. Clearly, we weren't selling many parts in in April and May, and that impacted gross profit. And overall, my car, for example, was sat on the drive unmoved for eight weeks during the lockdown, which meant there's less cars on the road, you have less accidents. The weather was also excellent, which is also bad news for accident repair. So we saw less demand, for accident repair itself, but also parts flew through from our trade operations into accident repair. We've also seen the largest provider of accident repair service in The UK going to administration, Nationwide Action Repair, I think that shows the pressure that there's been on that segment. Overall, our core gross profit after sales rose $1,200,000 in quarter two on the back of the very strong service performance. Slide 16 shows new vehicle departments in all its aspects, so new retail, new motability, fleet and agency car and also vans, new van demand and quite complex trends really. You can see gross margins and profit down in new car and fleet. That's due to this bonus, missing the the high volume bonuses that we get in June. That's quite clear underlying margins as I say have been excellent. New retail demand was slower during the lockdown than used cars and came back slower, but came back with real vengeance mid June through to July in particular. We had good supply of new cars in the lockdown. As Karen said, we have really high levels of adopted stock. And so the industry was in short of cars, but obviously the impact of European car factories closing, for a couple of months and then having to do social distancing has meant tight supply has got tighter over time and remains tight. That is really quite clear. You can see in new retail, our growth like for like was 3.4%. The market was down 2.2%. I think we did outperform and do well, but we have to be cognizant that the market includes tactical registrations, pre registrations and some degree of push historically, and in a supply constrained situation and certainly with fleet demand lower that we've definitely seen the difference between SMNG registrations and our sales activity, certainly in the retail segment perhaps being quite clear. Motability is an important channel of new cars for us. Motability actually closed the doors on the scheme. April and May reopened the June 1. There's been a significant pent up demand there without any doubt. And we outperformed the market with our like for likes of 11.7%, market up 9.4%. The real area of weakness has been in fleet car, demand actually, down our like for likes down 29.2%. The corporate company car market is, I believe, in some degree of dislocation, partly due to emissions confusion, but also due to the fact people are working from home and maybe questioning whether they're going to have a company car and I think fleets are doing reviews of that. The data rental segment for obvious reasons with the lack of airports and travel and tourism and business travel, has been, very low and and clearly quite constrained. And overall, manufacturers have not been pushing high volumes into the fleet segment. They've been trying to keep the the higher margin retail business going. So I think we've seen quite a movement actually in fleet cars, which at some point will reverse. The van market, however, has been very different. You can see the market actually fell 13.2%, but the group had an excellent performance with vans up 0.2%, significantly outperforming the market. We've seen strong demands from couriers, obviously, as more and more people get deliveries to their home. We've seen competitor actions where maybe on the back of working capital constraints, they've been removing themselves from chunks of the fleet market, we've been specifically going out there and trying to take it. And our Vans Direct business, which we bought, nearly two years ago, has proved an excellent business, made profits throughout the lockdown and has been growing quite steadily. It's fully integrated into the group now. And the business is based in South Wales, but all inquiries now get handled initially via our contact centers in Gateshead, and that's proved to a good win in terms of conversion. Overall, therefore, our gross profit in the core is down $3,600,000 in new retail and motability, as you can see on the profit bridge. And fleet and commercial is down $1,200,000 So we saw reduced profitability from new vehicles. However, used vehicles is a completely different story. We have seen a significant growth in used vehicle profitability, as you can see on the profit bridge, and this has been a major driver of the group's profit. It's quite a busy slide, but there's some really important points here. The period last year for Q2 was a period, as you can see on the bottom left graph, where values declined quite considerably in excess of 2% a month. The industry was struggling to cope with that price decline and prices were weak. And I actually think we did well last year getting our stock turn up and not getting swept into that margin erosion around prices. But clearly, that's the backdrop. This year is a complete reverse. We've had high demands. We have seen volumes up 1.9%, which we're pleased with because last year, we were we were actually moving stock very quickly to overcome the price fall. So to actually keep volumes up against that is really good. We feel we had superbly executed marketing strategies. We centralized our marketing approach during the lockdown. We've got a plan on marketing all the way out to the end of the financial year in terms of exactly what adverts we're running across the group. We put our prices up in mid May. It was an important call that our operational team made. We believe that we would see an elastic demand supply curves and that putting prices up wouldn't affect volume too much. We couldn't necessarily replace the cars we were selling, so we needed to make maximum margin we could, and that worked for us. And in terms of why demand's high, the lack of opportunity to spend money in anything else. A lot of holidays been taken in The UK, and people wanted, bigger cars or more reliable cars to go. And I also think the message that Boris said on a particular interesting, communication to the nation that, you know, avoid public transport, use your private car, or worse, that effect was the greatest advert that our industry has had for many a long year and certainly made one chief executive happy. People are nervous of public transport. I went past the bus this morning that said full due to social distancing, so it's potentially unreliable, and who wants to, wear masks for long periods if you can sit in your car listening to your own music, and I think the public get that, if I'm honest. So our margins increased substantially. You can see that, the pricing stability on the bottom left, the green line has been rock solid. In fact, anything prices have been going up. Our gross profit generation has been up year on year, particularly in July. We had an exceptionally strong July on the back of reopening, the English dealerships and running a very successful TV marketing campaign. So we're very, very pleased with that. We've also been reporting for a number of years in the premium some of certain premium manufacturers, there's been a lot of pressure on nearly new products due to tactical registrations and pre registrations, which was having a negative effect in terms of used car margins. That lack of tactical portion pre registration has meant we've now got clean used car businesses with a proper age profile, and our margin has gone back to excellent levels and has had a big impact in terms of profitability. As I say, where do I see used car prices going in quarter four? Unless we see a significant down in demand above seasonal normality, I can see stability and relatively good levels of normal seasonality in terms of used car values. I don't see, anything else. So if we turn away from quarter two into September, September was the most profitable month in the history of the group. Now we've got more dealerships, which certainly aided that and the acquisition certainly turned up and delivered significant profitability from the ones we did earlier on in the year. But still, it was a very, very solid performance with definite trade, tailwinds, from, the general economic position that the industry finds itself in. We grew strong revenue growth. Revenue is up 13.9% year on year. You can see strong service growth there aided by an extra working day. But all channels grew apart from new fleet for the reasons that I flagged. The SMMT numbers are on there. You can clearly see new retail volumes like for like up 6.3%, actually total group of 14.5%, which we're very pleased with. But the like for like growth compares to a decline in terms of the SMMT, and this is because the SMMT numbers for retail include a heavy push in the last three days of thousands and thousands of cars, which then go into dealer stocks and aren't sold to consumers until following quarter. So there's going to some interesting, I think, how that plays out because actually, you would therefore if there's been less pre registration at the September, you'd think October would also see, quite a significant increase in sales for dealers relative to, relatively to the market. And I actually also think due to supply constraints, there's been a move of registrations from September into October. So I think October should be relatively strong. It's good to outperform the market as measured there. Motability continues to be significantly up on the market and that's that's pure. There's obviously no pre registration or anything in the motability market, so it's good to see us outperform that. The real surprise, I guess, to many will be that the band market was significantly year on year, 26% up in terms of UK registrations. But last year was very peculiar because of the implementation of WLTP for vans at the August 31, which crucified, van registrations in September because people registered them in August. Like for like, we were up 53.3%. So all the hard work that we've done to gain share in the van market has come to fruition, and we're clearly very pleased with that, but it is obviously factored by the WLTP effect. On to used cars, 8.9% increase in like for like volumes. We are absolutely delighted with, some really strong, continued demand for, the used cars. And because we managed to do a lot of new car business, we got those used car exchanges in, the supply was a little bit better in the month and therefore we managed to grow. So we were very pleased to deliver that result. So looking at the outlook, and summary, the final slide on slide 19, the group has emerged strongly from lockdown. I think the industry has emerged strongly from lockdown, but I would hope to think we have outperformed. We have increasing confidence of a strong financial outcome for the year as a whole, and clearly, we've got more visibility on that, though there are clearly a lot of uncertainties around the economy and consumer confidence, the impact of lockdowns and virus restrictions, and also, obviously, we we people forget about this, Brexit, and what is there a trade deal? Is it not a trade deal? I guess you could say that we've had a lots of things to handle this year, and this is just another one to add to the list. But the board is confident. We think we've got a great business with, you know, highly motivated, energized colleagues who are bought into what we're trying to do. We've got a strong culture, increasingly consistent culture, and we've got some great technologies. Our software teams have done an exceptional job. All the developments that we're putting in place are in house developed through our own robotics experts or software developers, and I think that gives us confidence that we can be ahead of the curve in regards to the changes that customers will demand of us. So overall, I think we are confident and excited actually about the future in terms of what can be achieved with this group in the next few months and years. The balance sheet gives us great resilience and ability to expand. The management team, I would just like to thank them and all the colleagues in the group, for doing such sterling work in quite difficult times. Actually, at times, it was, it was not a pleasant experience to furlough 5,000 people, but it was much more pleasant to bring them back. So the board is therefore confident, and, I'd just like to thank you for your time, and, hopefully, we have covered the salient points. Thank you.