13 October 2021

Vertu Motors has hit a record adjusted first half profit before tax figure of £51.8 million. The results come on the back of a £1.9 billion turnover. Vertu has also upped its full year expectations from £50-55m to £65m and re-established a dividend with a figure of 0.65p per share.

Vertu also hinted that its growth in the number of dealerships would resume soon, saying it had an “increasingly visible acquisition pipeline”.

Commenting on the results, Robert Forrester, chief executive, said: “The record profitability delivered in the period has undoubtedly been aided by very favourable used vehicle market conditions, however, this is a remarkable performance outperforming market trends. I am proud of the entire Vertu team for their adaptability and effort.

“The group has continued to evolve during the period, with further enhancement of its strategy in achieving enhanced online sales capability via the group’s Click2Drive technology platform and the introduction of a ‘concierge’ service for sales customers under the Click2Drive banner. The number of sales outlets has again grown as a result of the execution of the group’s multi-franchise strategy. Efficiency and productivity gains continue to be delivered through the enhanced use of technology.

“We have again generated significant free cash flow and have a very strong balance sheet making the group very well placed to benefit from the changes and significant opportunities which are ahead of it. The resumption of paying dividends to shareholders shows the board’s optimism in our strategy and its execution.”

HIGHLIGHTS

• Record trading results delivered with Adjusted¹profit before tax of £51.8m (H1 FY21: £4.7m, H1 FY20: £16.9m), on revenues of £1.9bn
• Vehicle sales volumes ahead of market trends in all areas and on a like-for-like basis compared to H1 FY20 (6 months ended 31 August 2019)
• Gross margin of 11.6% reflects strong pricing disciplines in all areas
• Acquisitions successfully integrated and performing well
• Very strong cash flow performance – Free Cash Flow of £63.6m in the Period and Net cash²of £57.3m (H1 FY21: £36.5m)
• Net tangible assets per share of 61.5p (28 February 2021: 50.2p) reflecting strong asset base, Net cash position and cashflow generation
• 0m shares repurchased at a cost of £1.1m since 20 August 2021, buyback programme recommences today following publication of this statement
• 65p per share declared, payable in January

OUTLOOK

• Record trading performance delivered in key month of September with a trading profit of £20.0m
• New and used vehicle supply constraints continue and cost pressures evident, particularly in employment costs
• Colleague reward packages and development programmes being enhanced to ensure fully resourced, stable teams are in place to deliver improvements in customer experience, retention and gross profit generation.  Annualised investment of £12m expected
• Continuing cautious view of balance of the year
• The Board now anticipates that the Group’s adjusted profit before tax for FY22 will be at least £65m, previously £50m to £55m
• Increasingly visible acquisition pipeline

Tags: Robert Forrester, Vertu