Despite lockdowns that shut dealerships three times Vertu Motors made adjusted profit before tax of £24.6m last year.
Even though revenue tumbled 21.6 per cent from £3.1bn in the previous 12 months to £2.5bn, the group – which runs 149 sites across the country – comfortably beat analysts’ forecasts.
Profit for the group’s 20-21 financial year, which ended on February 28, was up from £7.3m the year before.
Vertu also revealed that in March and April it has made record profits of £19.2m, compared to £14.8m in the same months in 2019.
The board expects to make around £24-28m for the current financial year and hopes to resume paying dividends in January next year.
Analyst Mike Allen from Zeus Capital said the results were ‘impressive’ and well ahead of ‘previously upgraded forecasts’.
Stock picker Sanjay Vidyarthi, from brokers Liberum, said Vertu remains his ‘top pick in the sector’ due to its ‘track record, strong management and balance sheet’.
Vertu Motors said that in the first quarter of 2021, when showrooms were shut by the third lockdown, it still managed to deliver 38,446 new and used vehicles.
It says ‘substantial growth’ in its online sales platform ‘Click2Drive’ has helped hugely and it has introduced ‘robotic process automation’ to help improve efficiency.
Robert Forrester, chief executive officer, will be talking to Car Dealer Live at 0845 this morning to discuss the results.
In the announcement to the Stock Market this morning, he said: ‘These results, which are ahead of expectations, are outstanding in the Covid interrupted circumstances.
‘I am proud of the entire Vertu team for their adaptability and effort to deliver these remarkable results.
‘The group has significantly evolved during the year, with accelerated delivery of its strategy in achieving enhanced online sales capability via its in-house developed Click2Drive technology platform, reduced cost base due to productivity gains and significantly grown the number of sales outlets.
‘We have started the new financial year very strongly, have generated record levels of cash and have a very strong balance sheet.
‘We have now re-instated guidance. Brexit uncertainty is now behind us, and we are exceedingly well placed to benefit from the changes and opportunities which are ahead of us.’
Acknowledging the government support that the group received during the year – which included rates relief of £8.7m and furlough cash of £27.8m for the year – chairman Andy Goss said the group was ‘extremely grateful’.
He said: ‘The board is also extremely grateful for the significant government support received both in respect of furloughed colleagues and business rates relief, and the assistance provided by its Manufacturer partners.
‘The latter demonstrates the partnership approach and a key strength of the franchised dealer model.’
No dividend will be paid for the year as a result of the government support the group received.
During the year, Vertu added 18 new dealerships to the group, the largest of which was its new partnership with BMW, Mini and BMW Motorrad when it acquired dealerships from Inchcape.
The group plans to continue growing and to ‘develop its portfolio of manufacturer partners’.
Vertu also plans to continue to be at the ‘forefront’ of online sales and use this to continue to reduce its cost base.
Figures show the group sold 61,710 (84,097 in the previous financial year) used vehicles during the year and 59,817 (82,335) new models.
Vertu currently has £48.4m of free cash to play with. Last night, shares in Vertu were trading at 44p – double their price in August last year.
Zeus Capital’s Mike Allen issued a note on the Vertu Motors results this morning, which said: ‘Vertu has released an impressive set of FY results, which are ahead of our previously upgraded forecasts.
‘Trading momentum remains strong with pent-up demand still evident, and with healthy cash generation and a strong balance sheet we believe Vertu is well positioned.
‘As a result of Vertu’s strong performance, we have upgraded our forecasts for the group. We now expect revenue to increase to £3.2bn in FY22, a 7.1% upgrade on our prior forecasts.
‘We forecast this to result in underlying PBT of £26.0m in FY22.’