Motor dealer Vertu sees pre-tax profits rise 116% to £17.5m

Vertu chief executive Robert Forrester has described the year to February 2014 as 'transformational', with sales topping £1.68bn

Robert Forrester, Chief Executive of Vertu Motors
Robert Forrester, Chief Executive of Vertu Motors

Motor dealers Vertu has more than doubled pre-tax profits to £17.5m in a transformational year strengthening its “buy and build” strategy”

The Gateshead-based firm, which now operates 108 sales and aftersales outlets around the UK, has seen revenues rocket to £1.68bn in the year to February 28 2014, a lift of 33.8% on the previous period.

Bouyed by a strong market in new and used car sales, pre-tax profits rose by 116% on last year’s £8.1m, while earnings per share also increased significantly to 4.15p, up 144% from 1.70p. EBITDA was up 131%, from £9.6m to £22.2m.

Vertu’s chairman Robert Forrester said the Farnell Land Rover business was integrating well following its acquisition in June 2013, going on to win Land Rover Dealer of the Year 2013.

Acquisitions made in previous periods are also continuing to show improvements in performance and margins.

The disposal of the firm’s non-core heavy truck operation also generated £1.9m of cash.

The company said trading performance in March was significantly ahead of earlier years’ levels and the new car retail market year levels is showing continued growth, with group like-for-like sales volumes in March up 20.5% and UK private registrations up 20.8%.

The year ended with the company making its first premium franchise acquisition, with the £8.2m deal to buyout Lancashire’s Hillendale Group, which operates a Jaguar dealership in Bolton and Land Rover dealership in Burnley. Further acquisitions are also in the pipeline.

Paul Williams, non-executive chairman, said: “These dealerships represent a broadening of the franchise composition of the group rather than a change of direction.

“We will continue to acquire dealerships across the volume and premium spectrum as the group continues its acquisition strategy.

“The fragmented nature of the UK automotive retail sector means that significant growth potential remains through continued strategic acquisitions. The addition of further dealerships and marques to the Group’s portfolio will help to deliver the board’s goal of mirroring the market share of manufacturers in the UK in the group’s portfolio of franchised dealerships.”

The dividend was also increased, from 0.7p to 0.8p, up 14.3% for the full year.

Mr Forrester said: “This has been a transformational year for the group during which we have expanded significantly and sustainably, gained our first major premium franchise and developed scaled operations with both Land Rover and Volkswagen, and delivered record profits at every level.

“This growth has been driven by both like-for-like growth from our core business and acquisition.

“The board looks to the future with confidence as reflected in our increased dividend.

The new and used car markets remain strong with our core business growing. Recently acquired under-performing businesses continue to be turned around.

“We have a strong pipeline of acquisition opportunities and the financial firepower to execute them and we have further strengthened management in the year to allow the expansion to continue.”

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