05 October 2022

Vertu has delivered its second highest set of first-half results on record with an adjusted profit before tax of £28.2 million on a turnover just shy of £2 billion and hinted at more acquisitions.

In the same period in 2021, Vertu recorded an adjusted profit of £51.8m on a turnover of £1.92bn.

The drop in profits was down to an increase in overall operating expenses which were up £24.7m and the removal of Government aid (£5.6m). Part of the increase was down to an £8.6m increase in salaries, some of which will now be reversed following Government’s U-turn on the NIC increase announced by the Chancellor last month.

Commenting on the results, Vertu chief executive Robert Forrester said: “The first half has seen a strong trading performance with vehicle margin strength offsetting market driven volume shortfalls. The group continues to benefit from its focus on operational excellence around cost, conversion and customer experience aided by continued digitalisation initiatives. Cashflow generation has been strong and the dividend for the first half has increased again.”

And hinting at future takeovers, he added: “The business is strategically very well placed with significant firepower to expand its footprint of franchised dealerships across the UK.”

The group’s H1 2022 results also stated that it expected full year results to be ahead of expectations.

Following the results, analyst Zeus Capital raised its forecast for the group’s full year adjusted EBIT profit to £46.4m.

HIGHLIGHTS

• Delivery of strategy to grow scaled franchised dealership group with commencement of operations of Toyota in the West of Scotland
• Revenues grew 3.9% and the Group is now anticipated to be the fourth largest automotive retailer in the UK by revenues
• Market share growth in all new vehicle channels with 6% new van market share achieved
• Adjusted¹ profit before tax of £28.2m (H1 FY22: £51.8m), on revenues of £2.0bn
• Gross margin of 11.2% (H1 FY22: 11.6%) reflects continued strong pricing disciplines in all areas
• Free Cash Flow of £23.2m in the Period and Net Cash² of £17.8m (28 February 2022: £16.2m)
• Net tangible assets per share of 71.2p (28 February 2022: 66.8p) reflecting strong asset base and cashflow generation
• 10.5m shares (representing 2.9% of share capital in issue on 1 March 2022) repurchased at a cost of £5.9m since 1 March 2022
• Increased interim dividend of 0.70p per share declared, up from 0.65p in H1 FY22, payable in January 2023

Tags: Robert Forrester, Vertu