# Vertu Motors Plc Q&A with Zeus Capital’s Mike Allen (LON:VTU)

- Link: https://www.directorstalkinterviews.com/vertu-motors-plc-qa-zeus-capitals-mike-allen-lonvtu/412738065
- Published: 2017-10-13T09:00:37+01:00
- Author: Amilia Stone

**Vertu Motors Plc** (LON:VTU) is the topic of conversation when Zeus Capital’s 
Head of Research Mike Allen caught up with DirectorsTalk for an exclusive interview

 

**Q1: Mike, Vertu Motors issued interim results for year-ended 31st August, what
do you think of the results?**

**A1**: The results were good considering the market backdrop so they delivered 
growth of between 3%-7% on most of the headline metrics such as revenue, operating
profit and PBT. They were 5% ahead of our earnings forecast as well and the dividend
was in line with our expectations and up 10% year-on-year as they maintain their
progressive policy.

 

**Q2: What were the key performance drivers?**

**A2**: I think during the period, the market had definitely got softer so new cars
were down, used cars were also down as well in terms of year-on-year margin profits,
after-sales was ahead and fleet and commercial was ahead as well. I think management
took a lot of action during the period, particularly on the cost side of the business,
I think that helped deliver the performance that they delivered and interest costs
were also lower as well. So, it was a mixture of strong operational performance 
in a softer market backdrop.

 

**Q3: With that in mind then, what are your throughs on the valuation for Vertu 
Motors Plc?**

**A3**: I think in terms of the valuation, it still looks compelling, it’s on a 
PE of around 7 times, EBITDA of 4 times and a growing dividend yield of 3% as well.
The balance sheet is extremely healthy so a net cash position but the balance sheet
is very healthy as well, very asset-rich so freeholds and long-leasehold properties
amount to £175 million which is quite close to the current market cap. Minimal pension
issues and they’re very conservative about how they account for all aspects of new
and used car stocking as well.

So, I think Vertu Motors is in good shape for what we believe to be softer market
conditions.

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