Vertu Motors (VTU) investor relations material

Executive summary

• Delivered resilient performance with revenue increasing to £4.83bn for FY26, driven by acquisitions and start-ups, despite sector headwinds and a small decline in core revenues.

• Maintained profitability and strong cash generation for the 20th consecutive year, supported by disciplined cost control and a £10m cost reduction programme, including headcount reduction and dealership closures.

• Adjusted profit before tax fell to £24.5m from £29.3m, impacted by sector headwinds and a major cyberattack at JLR, partially offset by insurance proceeds.

• Strategic portfolio reconfiguration focused on Chinese brands and pruning underperforming operations to recycle capital.

• Strong aftersales business contributed 46% of gross profit, with record labour sales and resilient service contract base, underpinned by digitalization initiatives.

Financial highlights

• Group revenues grew by approximately £70 million, reaching £4.83bn, driven by acquisitions and startups, while core revenues declined 0.7% year-over-year.

• Gross profit rose to £540.0m, with gross margin stable at 11.2% despite margin pressure in new vehicles; after-sales gross profit up £8.4 million year-over-year.

• Adjusted operating profit declined 11.3% to £46.5m due to reduced new vehicle profitability in both retail and fleet channels.

• Net debt at year-end was £61.3 million, down from £66.6 million, with tangible net assets per share rising to 75.9p.

• Free cash inflow of £30.7 million generated; £10.7 million spent on share buybacks and £65.3 million paid in dividends since 2011.

Outlook and guidance

• Strong start to FY27 with profitability above prior year levels, aided by cost savings, dealership closures, and record aftersales performance.

• Continued focus on cost control, digitalization, and expanding used car initiatives, especially in older vehicles.

• Economic uncertainty, ZEV mandate, and regulatory changes reduce visibility for expansion; capital allocation favors buybacks over acquisitions unless strategic opportunities arise.

• Macro risks include Middle East conflict, inflation, and fuel price volatility, but no material consumer weakness observed.

• SMMT forecasts UK car registrations at 2.093m for 2026, with BEV mix revised down to 26.8%.