Motorpoint Regulatory News (MOTR)

26 January 2024

Motorpoint Group PLC

("Motorpoint", the "Company" or the "Group")

Q3 Trading Update and Commencement of share buyback

Motorpoint Group PLC, the UK's leading independent omnichannel vehicle retailer, provides an update on its trading performance for the quarter ended 31 December 2023 ("Q3").

Headlines

· Retail volume performance improved through Q3 and this momentum has continued into January

· Profitability adversely impacted in the quarter by sharp downward used car price adjustments as noted in the Group's Interim Results; values have stabilised in January 2024

· Stock mix proactively de-risked to minimise impact of volatile higher priced vehicles; influencing the reduction in average selling price from £19,750 at start of financial year to £14,500 currently

· Despite the seasonal stock build up for the busier Q4 trading period, and the impact of the flood in Derby leading to the store's temporary closure, net cash remained positive as at 31 December 2023

· Improving momentum going into Q4 with retail volumes demonstrating high single digit growth, albeit profit for FY24 will be adversely impacted

· Board's expectations for FY25 profitability remain unchanged

· Retail volumes in January 2024 are expected to be at their highest levels since August 2022

· Net Promoter Score industry leading at 83 in Q3 (up from 80 in Q2)

· Announcement of share buyback programme

Profitability

Macroeconomic conditions remained difficult in Q3 and were further compounded by the sharp falls in used car values and reduced selling prices. Whilst these falls had a significant negative impact on profitability, along with a reduction in finance commission, the Group is optimistic for FY25 as the used car market continues to normalise. Encouragingly, retail volumes improved through Q3 and ended the calendar year roughly consistent with the previous year, reversing the trend of H1. This momentum has continued into Q4 and volumes are growing year on year. Costs remain closely controlled, with further savings achieved in people costs and efficiencies resulting from technology investment.

Outlook

As a result of the pricing corrections in Q3, which was exacerbated by the timing of the Group's seasonal increase in stock, in addition to the disruption caused by the Derby store closure, profitability for FY24 is now likely to be £5m-£6m below expectations, even with an anticipated strong Q4. However, the Board believes that the corrective cost and efficiency actions taken in FY24, combined with the positive signs that economic headwinds will ease in FY25, will ensure the Group is well placed to deliver an improved financial performance in FY25 as the market returns to a more normal trading environment.

Mark Carpenter, Chief Executive Officer of Motorpoint Group PLC commented:

"I have previously commented on Motorpoint's agility and resilience in difficult times, and that I am confident the Group will emerge from this depressed consumer environment a much more efficient business. Now, at last, there are signs that the macroeconomic headwinds are easing, leading to renewed consumer confidence. As a result, the market size is expected to increase as demand grows, and supply is bolstered by new car registrations feeding into the used car market.

The actions already taken to right size the business, protect cash and improve unit economics, mean that Motorpoint is well placed to seize the significant growth opportunity despite this correction in used car values. I therefore look forward with renewed optimism and am excited as to what the business can achieve in FY25 and beyond."

Commencement of share buyback

Motorpoint announces that it will shortly commence a share buyback programme (the "Programme") to repurchase up to 5 million ordinary shares of 1 pence each in the capital of the Company ("Ordinary Shares") representing approximately 5% of the Company's Ordinary Shares. The aggregate purchase price of all Ordinary Shares acquired under the Programme will be no more than approximately £5m (excluding stamp duty and expenses). 

The Company has appointed Numis Securities Limited ("Numis") to manage the Programme.

Even after taking into consideration the capital required to fund organic growth, the Company's cash generation and the strength of its balance sheet has led the Board to conclude that the Programme is an attractive use of the Company's resources and beneficial for all shareholders.

The Board has concluded that the current level of liquidity in the issued Ordinary Shares will impact the progress of the Programme. In order to complete the Programme in an effective manner the Group, in discussions with its broker, Numis has agreed that on any given trading day a buyback of shares under the Programme may exceed 25 per cent. of the aggregated average daily trading volume across all trading platforms on which Motorpoint shares are traded. On days where a buyback of shares exceeds 25 per cent. of the average daily trading volume, the Group will not fall within the exemption contained in Article 5(1) MAR.

The Programme will be conducted in accordance with the general authority to repurchase shares granted by the Group's shareholders at the 2022 Annual General Meeting, Chapter 12 of the UK Listing Rules and within the parameters prescribed by the Market Abuse Regulation 596/2014/EU and the Commission Delegated Regulation 2016/1052/EU. As noted above, on days where a buyback of shares exceeds 25 per cent. of the average daily trading volume, the Group will not fall within the exemption contained in Article 5(1) MAR.

Details of any Ordinary Shares repurchased will be notified to a Regulatory Information Service by the Group following any repurchase as required by the MAR and the Listing Rules of the FCA. The Company confirms that it currently has no unpublished Inside Information.

Inside Information

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

Enquiries:

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

Notes to editors

Motorpoint is the UK's leading independent E-commerce led omnichannel vehicle retailer, focused on giving retail and trade customers the easiest, most affordable and seamless way of buying, selling and financing their car whether online, in store or a combination of both. Through its leading B2C platform Motorpoint.co.uk and UK network of 20 sales and collection stores, the Group provides an unrivalled offering in the nearly new car market, where consumers can effortlessly browse, buy or finance their next car and collect or have it delivered directly to their homes. Motorpoint's purely online wholesale platform Auction4Cars.com sells vehicles into the wholesale B2B market that have been part exchanged by retail customers, or purchased directly from them by the Group as part of its online car buying service. Motorpoint's diversified business model, underpinned by its established brand, industry leading technology and sophisticated marketing infrastructure, always delivers the best choice, value, service and quality for customers. The Group is proud to have been recognised for nine consecutive years as one of the Top 100 Best Companies to Work For.