Car retailer Vertu Motors (VTU) has seen a surge in profitability over the past year as its acquisition-led growth strategy has started to bear fruit. The Albert Farnell Land Rover dealership, acquired in July, contributed a net £2m to group profit - considerably better than chief executive Robert Forrester had banked on. Other, lower-quality, dealerships snapped up in recent years are also starting to improve.
Meanwhile, car sales ballooned, with Vertu outperforming a very buoyant market. Group underlying sales grew 13 per cent, driven by a 20 per cent rise in new car volumes - far oustripping the 15 per cent growth in the wider new car market. More lucrative service revenues grew 7 per cent, thanks both to higher car sales and to Vertu's clever customer-retention strategy. As a result, group adjusted operating profit almost doubled to £17.9m.
Vertu acquired its first Jaguar dealership during the year, and more acquisitions are in the pipeline. The new car market is unlikely to repeat last year's frenzied performance, but Mr Forrester believes growth will, nonetheless, be a healthy 5 to 10 per cent. Panmure Gordon expects adjusted pre-tax profit of £19.8m this year, giving EPS of 4.5p - up from £17.5m and 4.7p.
| VERTU MOTORS (VTU) | ||||
|---|---|---|---|---|
| ORD PRICE: | 61p | MARKET VALUE: | £205m | |
| TOUCH: | 61-62p | 12-MONTH HIGH: | 68p | LOW: 40p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 49p* | NET CASH: | £31.4m | |
| Year to 28 Feb | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 0.82 | 4.6 | 2.2 | nil |
| 2011 | 1.00 | 5.3 | 2.0 | 0.5 |
| 2012 | 1.09 | 5.5 | 2.5 | 0.6 |
| 2013 | 1.26 | 4.4 | 1.7 | 0.7 |
| 2014 | 1.68 | 15.8 | 4.2 | 0.8 |
| % change | +33 | +262 | +144 | +14 |
Ex-div: 25 Jun Payment: 29 Jul *Includes intangible assets of £42.4m or 13p a share | ||||
