Member Info for Spac3y

1. Sales execs these days should all be getting monthly appraisals. If theyre not cutting the mustard, theyll be put into performance management. If after that theyre still not up to scratch, theyll be gone. Pretty much the same accross the sector. You do need the teams in place however to hit the volume required, so it is a careful balance. 2. As per previous post. 3. Most dealer groups are now running their own smart repair vans. So whilist you will always have late costs, proper appraisals at time of handover should be happening. (Havent we all seen PX`s that at time of appraisal were mint only to see when wheeled in at handover they had bits hanging off them !) Used car ops should have appraised properly on valuation in order to not hike prep way past the £300 levels. 4. Given the makeup of the aftersales contribution to bottom line, and given again techs should be getting monthly appraisals and performance managed if they are not hitting their KPIs, unless a site is on its knees then tech numbers shouldnt be really bloated. 5. Given the used car market, the only times currently I have seen stock level reductions is as always coming up to a year end where the balance sheet looks to be lean and tidy. I imagine VTU will be planning along the lines of x % growth on used cars next year, so will need appropriate stocking levels. ONE of the key things here is the internet. We are not at pretty much 50% conquest on new cars sales, circa 75-80% on used car sales. Basically, everyone is selling everyone elses stock and moving the vehicles up and down the country so stock levels I dont think will be reigned in too much. I need a beer , been a long day :D

Will the pound improve? No £1.05 to £1.10 new norm. -Think £1.10-£1.20 is about right New car sales will they fall yes further 5% - These will fall back from 2.6m to 2.5m next year so sounds about right. Will tariffs be applied to new cars. No we will strike a deal or the manufacturers will absorb most of the cost. So how will this affect vtu it won't bottom line but it will affect the following. 1 stock limit will reduce to help cash flow. - VTU in my opinion will only reduce site stock limits if they see a feed through on dropping sales, given the record used cars at the moment, currently I dont see any plans for this. IF their is a marked drop however, as we both know, you dont want caught with oodles of book dropping stock each month. 2 op stock and fully paid new cars plus demo stock run to minimum needed. - Demo fleets tend to be run to dealer standards these days, bare minumum as is. We also both know you should never have any fully paid stock, so Id imagine groups will look to pre-reg any problems out at the end of the quarter. 3 pre reg deals will have to be very attractive to vtu going forward. - Unless new car market picks up, or theirs a sever reduction in working capital or facilities, VTU will continue like most to pre-reg to hit targets, albeit these will be divisional targets to maximise earnings (pulling say 100% upto 105% or 110% paying for all their dealers) 4 massive push on aftersales - This is the biggie for everyoen. PDG are pulling most now out of aftersales, all dealer groups are looking to do the same. This is the silver linning , lead the horse to water. 5 head count looked at all levels (redundancies? ) - As per previous post 6 big push on war on waste. - VTU from memory already have WOW as part of their business. Expect to see the usual purchasing deals done (stationery etc). Did you see PDG`s interim statement Stal. Vehicle parc expected for 1-3 years to be fine, Used car volumes in line with the market, however it looked to me at a expense of margin.

Given our chat the other day Stal, I got speaking to a regional fleet exec on Wednesday to see what the script was. Currently their has been no change in cycle for the leasing companies. One of the things that did spark some interest was that traditional fleet business outright purchase is moving to short lease availablity. I.E - Instead of us buying a car for the new rep we have, we can get a short term lease on a vehicle incase they dont work out. Another thing of note was on pricing. Their are still a great deal of old priced stock in the system so currently unless its a new build their is no majot hike in pricing. What also has popped up is on passing on price increases, this currently hasnt really happened (although on new model you do get the normal twice yearly price rises atleast anyway). The kicker is however, price increases are not being passed on, as expected however, Fleet terms are being "adjusted" accordingly....so no actual price increase, but weve dropped the fleet terms you were getting by x % so in reality, pricing is starting to get passed on. Again in the car world, due to the wafer thin margin being traded on for fleet business (0.5% most of the time), their are still plenty orders in the system given lead time that havent worked through to build, so no realy drop there at the moment. Some manufacturers are however having issues with type approval, it seems one in particular doesnt actually know what type approval their actually after. Anyway, moving on. one of the figures Im waiting for is September pre-regs. CAP I see are expecting circa 21% of september REG`s (97K) with forecasts ranging 11-20% on average. I do expect this to be substantial. Coming back to some of the things you posed Stalin, we are now on dealership planning for next year accross all the manufacturers. PDG for instance have the knack of paying people off in December, just in time for 2017 budget kicking in. One thing I will say, if you have every produced accounts for the plcs, or reviewd , or written the plans, whilist their were issues with "bloatedness" in the past, headcount review is such a regular monthly occurence these days in ops reviews that most business`s tend to run pretty much as lean as can be. Now granted they will be the odd job that you can get rid off, but unless you have majoy reorganisations (moving seperate dealerships into CMA`s etc) then actually theirs not that much fat to trim these days. One of the first things youll get asked for when you pitch your budgets, are your structures, your headcount.Their isnt any hiding in these places with padding so as I say, you may have one here or their, but barring major restructuring, these are lean. Most of the valeting is outsourced getting just so the head count isnt on the books.

Agreed, their are alot of factors in the mix. Just coming back to your point RE the vardy aquisition. You have to hand it to Sir Peter and Robert for selling the buinsess at the very top of the market and extracting the premium they did. That was a legendary bit of business. Interms of PDG managing the aquisition, the main reason for purchasing Vardy was that their used car sales /margin / skills were second to none in the Industry. What PDG did was to turn the Vardy ops into Pendragon used car ops, something PDG was traditionally crap at. What they forgot to do, was turn PDG operations into Vardy operations.... Sad. What equally was so sad was the way Senior management treated the Regional guys. Pulling guys 3/4 of the way down the country for a meeting at Friday night at 5pm at Loxley, to chastise them about their guys not UCMing, even though those dealerships were far outperforming KPI , was just pathetic. Equally too pulling Regional RFC/RFD aside after conferences to announce reshuffles and having to apply for a lesser amount of jobs....absolutely shocking treatment. I left Jan 2011 after 11 years, formerly quicks/Bramall and then PDG. Alot of great people , especially loved the Bramall times. Atleasy you got out, I unfortunatly have another 20-25years so by the time I finish up, Ill be circa 40+ years in the trade... Gulp :D Have a great weekend

Hope all have had a productive Friday !. One thing I will always agree on Stal is that cars are sent to the auction for a reason, if a vehicle was retailable in this day in age it would be, so buyer beware....and also service departments beware, can we say double prep costs anyone ? :) Interms of those nuggets , if you were to take that amount of nuggets over VTU, youd be some 7500 nuggets. Given 41972 units sold for the half year, Im not quite sure any dealer groups used unit sales would consist of 10% nuggets...I may be wrong. We both know that for the volume retailers, the magic number is £1K GP, thats what they all aim for. Given VTU`s mix of dealerships is made up of predominantly volume manufacturers, theirs no reason to move away from this net value. Ok they are moving slightly into the mix with premium , but even then GP on the premium brands for used vehicles comes in at circa £1.5-2K a bonnett. You also have to wash into the used car mix those ageing vehicles that you dont want getting near 60-90 days. Afterall from memory VTU operate a 2/5/10% monthly provision so they still have to retail out of those. Interms of new car registrations, for fleet and retail, we have had 43 consecutive months of growth. In the last 4 years the market picked itself backupfrom the June 2009 low of circa 1.8m new registrations to a projected 2.63m this year. As far as available data goes, 2016 has shown an increase of 0.4% to 983K Private regs V 2015 979K to the end of September, Fleet has jumped 5.4% from 1.027m in 2015 to 1.082m in 2016 and their is a small reduction of 5K units in business. (Fleet share has risen to 50.3% from 49% previous year, Private retail showing a decrease of only 1%). I guess my point in all of this is that the current figures do not show any decrease in new regs overall this year (September itself was up 1.6%) so their is currently no washback again on px vehicles coming or due to come through over the next 2 years.) What we do need to wait to see is full year and H2 numbers before jumping to any decisions on volumes and their for what impact this may have on margins. Aftersales can always absord more hours providing the diaries are arranged accordingly. The big issue they currently face is having to cope with the increase in used car sales (and thus the prep on these vehicles) as well as trying to fit in retail and then warranty on top of that. This is an issue where if deliverys are not controlled properly, aftersales departments end up having to shut off the diaries. What we do have to watch out for is the VED change next year, this may impact on new car sales. Granted next year new car registrations are predicted to fall to around 2.5m, but the drop doesnt get close to denting any vehicle supply of PX`s. Used volumes contune to be strong. IF we considere H1 2014 their were 3.82m sales, H1 2015 3.87m sales and this year we are seing H1 sales of 4.18m, 7.86% rise over 2015 aint too shabby.

Ah, we were your volume and divisional competitor. Sith Lord SF. I remember being called to an accountants meeting in the west coast with AS and PR (PR sadly is no longer with us but he was a brilliant RFC, AS was a decent RD too), we were all told that funding was almost secured and we needed to keep everything tidy for 2 weeks whilist everything was signed off. Their were to be no large spikes in cashflow as one of the issues PDG had faced was huge spikes march september of cash outflows (Hence if you remember the policy moving to fully paid out by fincos and customer before release of the vehicle !). After another divisional reshuffle by those at the top, we then found ourselves under SK and DM.

I'm just wondering how up north and was I in your regional reviews lol ! I remember having to make MR a cuppa at one review, he insisted on a non cracked plain white cup ! Mindu, sat across from Mr Casha who just looked straight past me as if I wasn't their lol. Bring back TDF, he was a gent, and so knowledgable , VTU do have the suite named after him after all.

Not trying to tell you :) You could pick it apart, especially the spelling and grammar, it is atrocious :D. Having been in the trade 20years also and having seen my fair shair and worked with a fair share of good and bad operators, it is very easy to mess up a dealership never mind 100+ (PDG spring to mind with the Vardy aquisition !) Their is a mark of frustration on this sector as a whole. When its going well, the results in terms of SP appreciation never get near those of the other sectors, never quite understood so much why, apart from the fact that the margin trade is so thin ! As I always say, if your thinking of buying a dealership....dont...Stick your money in the bank youll make as much if not more and not have half the ops worrys :D

Plan sales are a key driver for all of the sector. VTU have managed to increase theirs by 20% year on year. Not only does this provide very handy for working capital, but its locked in business. The more the dealers lock in the business, the more consistency they will have in the lucrative aftersales ops. From everyone I have spoken to, used cars are absolutely on fire at the moment accross the sector (kind of makes a mockery of motor point reporting profit warnings in there reporting after just floating ! :) New cars continue with pre-regging in the quarters just to hit the ridicolous manufacturer targets which get re-negotiated at the end of the quarters when they realise theyre not hitting there numbers, but Its all part of the game. What will prove interesting is if their is further decline accross the sector thus improving divi yield. VTU certainly have also enough cash to be seeking very good aquisitions (40m available for aquisitions from memory ?) so I expect to see it continue along the same path. It is a pity the sector is so unloved most of the time, it actually does have some decent companies in it.

1. The % decrease in new cars affecting used margins would be reflected through book. Dealers would pay less for PX`s as would be mirrored accross the sector. This may not be great for those wishing to trade in their PX, and may affect volume this way, but dealers would still look to retain the £1K margin on average. 2. In order for the fleet volume to hit the supply of px`s, you would need to see a substantial movement downwards on fleet registrations (The last really substantial decrease was when we had the crash, registrations went from 2088 1.369m to 943K registrations) This was the last time there was really a constraint on nearly new. 3. Warranty is not high margin business. Its time consuming and labour rates are dictated by the manufacturer, as is what can be claimed. Serivce departments would make more from this, it would however increase vehicle prep costs for the used car departments and it would be down to see who the smart sales operators were by still being able to retain the £1K plus. The last time I looked, vertu dont have any operatins in Wales and only 34 operations from scotland to the North East. Growth is forecasted at around 2% until 2020 but lets half it to 1%....so were still growing. The last time we had a substantial hit to the economy with the reduction in vehicle registrations 2008 saw a GDP reduction of around 2.5% 2009 saw around the same. So, we are no where near any reduction in the economy which would rattle on through to the car market substantially. Unemployment was also around 5% which shot up to 8% (2008 through to 2010) Unemployment is at a steady 5% at the moment. Vehicle Parc currently sits at 34m, 2007 saw it at 31m or so.(Generally bounces around 32-33m) Interms of split around currently 21% of the parc is less than 3 years old, 4 -6 year old is around 17%, 64% is 7 year plus. Plenty of cars in the parc of a young enough age :)

As new car sales are generally low margin sales, whilist this as we have seen has already had an effect with manufacturers increasing prices (which they did before anyway)this doesn't concern me so much. Equally the pound will not stay at this level forever an we have been needing a correction of sorts. Inflation is not a bad thing currently. Low inflation has actually been keeping wage rate increase's low so inflation can actually help to boost spending in real terms, as long as wage increases' get passed along. Employment wise the reason we have such low unemployment is because unlike half the EU, we have very flexible and liberal employment laws, hence were pretty much not far off full employment.

Board :( lol

is their own broker. Everyone beleives there views correct at time of going to press :P The market has a tendancy as we all know to factor in wider economic implications quicker than you can say boo to a goose. Until such times as Brexit becomes clearer, the sector as a whole will perform , REGARDLESS of results ona a downward trajectory, that we know should be common sense. The CEO was and is in favour of a Brexit. The CEO has been having the usual investor meetings down in London/up in Edinburgh the last two weeks and interestingly his take appears to be that the motor industry will get what it needs in the negotiations for Brexit, ie no tarrifs. Equally, there appears to be plenty of meetings/lunches going on at the Palace of Westminster coinciding with the usual investor presentations so there is confidence there for a deal to be done for the sector. Would you press the button to buy now for the sector, with whats to come on Brexit, no you wouldnt. When the price does decrease as it will even further (for the whole of the sector), it will be worth picking up and sticking in the portfolio for the longer term. Aquisitions will be popping up left right and centre given the unknow upcoming negotitations, VTU have plenty of facilities to increase further aquisitions at very decent prices. The used car market is very buyoant at the moment, hell the cash flow from 100K service plan customers equates to around £10m a year free cash flow just from that.

is their own broker. Everyone beleives there views correct at time of going to press :P The market has a tendancy as we all know to factor in wider economic implications quicker than you can say boo to a goose. Until such times as Brexit becomes clearer, the sector as a whole will perform , REGARDLESS of results ona a downward trajectory, that we know should be common sense. The CEO was and is in favour of a Brexit. The CEO has been having the usual investor meetings down in London/up in Edinburgh the last two weeks and interestingly his take appears to be that the motor industry will get what it needs in the negotiations for Brexit, ie no tarrifs. Equally, there appears to be plenty of meetings/lunches going on at the Palace of Westminster coinciding with the usual investor presentations so there is confidence there for a deal to be done for the sector. Would you press the button to buy now for the sector, with whats to come on Brexit, no you wouldnt. When the price does decrease as it will even further (for the whole of the sector), it will be worth picking up and sticking in the portfolio for the longer term. Aquisitions will be popping up left right and centre given the unknow upcoming negotitations, VTU have plenty of facilities to increase further aquisitions at very decent prices. The used car market is very buyoant at the moment, hell the cash flow from 100K service plan customers equates to around £10m a year free cash flow just from that.

The problem when a sector becomes unloved. Very good set of interims released, trading for September and October very very strong. Yet, a drop and given the whole sector, the price will continue down due to the uncertainty over Brexit. The current value of the pound does little to help the manufacturers with 3 alone in the last two weeks announcing price rises for already expensive peices of kit for the marques. The overriding thing that VTU has got going for it is the used car volume increase , with a steady margin and inturn converting service plan customers which will further push on Service GP. Dont expect much love for the sector over the next 2 years, but if you were to buy, definatly here is where to buy once the price settles. The CEO is one of the hardest working in the whole business community; I dont know of many other CEO`s that spend most of the year actually visiting their businesses up and down the country week in week out. The board are very strong and with recent additions (marketing director from Dyson) etc, will continue to show strength in the sector. But, only when the sector levels out.

the volumes speak volumes on the interims. Pretty much much of the same as weve had for the last year. They can up NAV as much as they like, there is only one key here and that in itself is Argentina. Until something happens with Argentina, the price here will stay as it is (Still having a chuckle at the "rise" of 11% here today...not exactly a rise when they just move the spread). "The funding position remains dependent upon the continued forbearance of certain creditors."......happy cheery. "The strategy of the Group continues to be focussed on stabilising the financial position"...always good when your strategy is trying to just keep your head above the water. " The Board is also expecting to appoint a consultant in the near future to help improve our dealings with the Argentine operation." - Why on earth are we only doing this now..... So we still come back to the fact we have this very good performing asset that we cant get shot of. Until argentina is sold, were just in the same position we were a year ago.

Optomist, apologies for not replying sooner but in the midst of half year accounts so busy busy busy. Interms of did I attend the AGM, no I did not. Its at the opposite end of the country so that was a no ! Interms of administrators, adminstrators are there to extract the maximum they can from what they are left with hence being quite confident that breaking up the controlling holding wouldnt achieve the maximum value. Drip feeding them into the market would not acheive the circa 3+p they are looking for, at the end of the day, the administrators want paid so :) Interms of impairment, it is easy enough to reverse the impairment. At each required reporting date, You would look at the selling price of the assets less any costs associated to complete and sell said assets. If things had changed that mean the assets carrying value had increased for example, you could reverse the impairment taken. Interms of any increase in value, what would happen would most probably be on the sale of assets one would assume. So if the asset cost say 10m, you would have a disposal for 10m but if you say received 20m for said asset, there would be 10m of goodwill. Long of the short, the impairment can be reversed into P&L so long as the circumstances or evidence can be provided to do so. The reversal could only be for the amount previously impaired, not a higher amount. Looks like you guys have bought up the free float so any buys at the moment are pushing the stock up. I have no appetite to buy any more, but good luck to you for sticking your nuts out :D

Optomist, sterling administrators blocked res 5 & 6 at the agm because this would have decreased the value of the block they hold.Pure and simple, hence the reason they blocked the resolution at the AGM. Others are putting more on the IPSA date than me, so I shall see what pans out, I think people are reading to much into it, but I guess we shall find out. Welcome news from Macri on allowing profits etc to be repatrited as well as the hold outs repaid, again I guess the devil will be in the detail. The mm`s drop the prices here simply because there is no volume. Given the current working capital predicaments were in, if you were an MM would you hold tons of shares ? Perhaps you would..... Id like to give you a offer some amazing insight as to where to go, given the current issues we have selling assets, even I am scratching my head for once. One thing i do agree with you on is, in a firesale, there is still more value than the current price....but...the time a firesale would take persey, wouldnt be quick. <<<Scratching head

5 & 6 were always going to be voted down. Had these been voted through it effectivley at full issue would knock down Sterlings holding to just under 18%. I agree that the value in Sterlings holding is the block itself so the administrator was never going to vote for it. Equally, any ideas anyone has of the Steling Block being sold off in smaller peices. The reason the SP has held at this level is precisely because that has not happened. Should the block be sold of in smaller peices, it would be at a lesser value than the price is now then it would be just a drip feed into the market and a drop. Morris and Robotham both revoted so the administrator must have some sort of confidence there. Oh and please stop the MM buys sells, its bad enough Jedi doing it but Optomist come on ! In our lifetimes this will not change, no petition will change it so can we put that to bed.

My comment RE CHL has nothing to do with RUR operationally, merely I may actually realise something decent out an arb case that should have happened here. As for this being a "scam" in your words, unless you can prove thaty then given your occupation, one would be careful on posting terms like that. Its yet another aimer that promised so much, yet, sucked in funding and here we are.....welcome to Aim.. As for the SFO / FCA et all, youd be better off talking to yourself, nothing will happen here.