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February 2016 Company Results

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Vertu results, reports and presentations

Date Title Results Reports Presentation Webcast
29th February 2016 Annual Results 2016 Download Download

Full year results for the 12 months ended 29th February 2016

Interview with Robert commenting on the results

Analyst interview with Mike Allen, Head of Research, Zeus Capital

Continued growth in all areas of the business delivering record revenues and profits

  • Adjusted* profit before tax up 24.5% to £27.4m
  • Record profit before tax rose 23.8% to £26.0m from £21m
  • Revenue up 16.8% to £2.42bn
  • Very strong cash generated from operations of £65.8m from £26.1m
  • Earnings per share up 24.4% to 6.06p from 4.87p
  • Adjusted* operating profit up 26%
  • Adjusted* earnings per share growth of 25.4%
  • Period end net cash of 23.1m from 15.7m
  • Final dividend up 21.4% to 0.85p per share from 0.70p per share: to be paid in July 2016
  • (1) Adjusted for exceptional charges, amortisation of intangible assets and share based payments charge.
    (2) Core: Dealerships that have traded for two full consecutive financial years.

Operational Highlights

  • Fourth consecutive year of growth in revenues and profits
  • Like-for-like service revenues rose 6.5%: sixth consecutive year of growth with 90,000 live service plans in place
  • Continued improvement in aftersales performance - gross margins increased to 44.8% (2015: 43.5%)
  • New retail vehicle like-for-like volume growth of 4.0%
  • Used vehicle like-for-like volume growth of 8.0%
  • Over 70,000 used vehicles sold during the year for the first time: total volume growth up 13.0%
  • Stable overall gross margins despite increasing vehicle sales mix, showing underlying business improvements
  • Significant recruitment into operational management team to support future growth

Strong balance sheet and funds available for expansion

  • Net cash of £15.7m (2014: £31.4m)
  • Significant unutilised bank facilities refinanced in March 2015 provide substantial resources of £40m for further expansion opportunities
  • Balance sheet underpinned by freehold and long leasehold property portfolio of £126.6m (2014: £105.6m)
  • Net assets of £179.6m (2014: £163.4m):net assets per share of 52.7p (2014: 48.5p)

Current Trading and Outlook

  • The Group has traded ahead of the current year financial plan and the prior year in March and April 2016 ("the post year-end period").
  • In the post year-end period, aftersales margins rose from 45.2% to 46.7% with like-for-like revenue increases. Service like-for-like revenues rose 7.0% and continued to benefit from the successful customer retention initiatives being executed by the Group.
  • The post year-end period includes March, which remains the most significant month for the profitability of UK automotive retail.
  • The Group's like-for-like used vehicle retail volumes were up 5.9% in the post year-end period continuing the sustained, long term growth in performance.
  • Given trading in March and April 2016 and the encouraging improvements we are seeing in the acquired businesses, the Board remains confident about the Group's prospects for the current year.
  • Group service revenues have continued to grow 7.2% on a like-for-like basis in March and April
  • Seeing consistent profit growth from improving recently acquired dealerships

Group well positioned for further growth

  • Current trading ahead of prior year with strong operational management team in place
  • Strong aftersales dimension with growing resilience due to focus on retention strategies
  • Portfolio contains dealerships with significant potential to enhance margins
  • Increasing number of premium franchise outlets providing diversification benefits higher profiability
  • Group marketing initiatives driving market share improvements: new Chief Marketing Officer started 1 March 2016; further transactions in progress
  • Strong property-backed balance sheet with conservative debt appetite
  • Capital raised via placing being swiftly deployed as anticipated: Leeds Jaguar acquisition 2 May 2016; further transactions in progress
  • Plans to refinance borrowing facilities on a long-term basis being progressed
  • Board's confidence in future prospects reflected in 23.8% increase in full year dividend

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