MOTOR dealer Vertu is expecting to announce another acquisition within months as it continues to defy the downturn and drives ahead with expansion plans.
The Newcastle group – which trades as Bristol Street Motors – revealed its plans as it unveiled an almost 50% rise in half-yearly pre-tax profits. The figure increased to £2.8m from £1.9m in the six months to the end of August, despite revenues dropping from £423.5m to £401.3m.
Vertu credited the success of the Government’s scrappage scheme – which resulted in 1,686 car sales in the period – and the strength of the used car market for boosting profits.
It sold 3.7% more used cars than a year earlier in a market where demand for secondhand motors is exceeding supply.
Vertu chief executive Robert Forrester said: “Interestingly, the Government has actually made money on the scrappage scheme because the incremental tax raise on VAT has been higher than the subsidy.
“Used cars have also been very good for us in the period. Prices have held up well and increased. It has been a turnaround – whether it is the turnaround I don’t know.”
Vertu has opened 10 new dealerships since the start of March and now operates 50 franchised, four non-franchised and two standalone businesses around the UK.
Mr Forrester said: “We have grown the business substantially in the last few months.
“We are company that wants to grow – our strategy is to grow into a bigger group. We have £20m of net cash so we have the funds to do so.
“We are well positioned. This growth is sustainable; financially, we are very, very strong. We have systems and processes in place to do well.”
Vertu raised £30m in a rights issue to shareholders to fund its £7.9m takeover of several of sites from Brooklyn Motors which went into administration in June. Mr Forrester said he was currently looking at more potential takeover targets and he expected to announce another deal within a couple of months.
The group is also poised to create 20 jobs by opening a new business in Darlington to prepare used cars for sale. It is currently looking at premises.
Mr Forrester said: “We are proud to be a North East company. We have created jobs in Newcastle with a contact centre for car-servicing plans and our IT web development team in Newcastle has grown from one to three people.”
He remained confident the group would continue to beat its own expectations. September’s new car sales – a plate-change month and the second most important four weeks in the car industry – were 16.3% higher than last year.
But he said: “There are some headwinds. VAT will go up in January and will have an impact on new cars. The end of scrappage when it comes will also have an impact. The general economy is not good and not getting better, in my opinion.”
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