11 May 2011

Vertu Motors has announced strong growth in revenue and profits for the financial year to end February 2011. Revenue is up by 22% to £998.9m and adjusted operating profit up by 15.8% to £8.7m. Pre-tax profits were up 13.5% to £5.3m.

The growth has come on the back of a period of rapid acquisition, with the number of sales outlets increased from 59 to 75 by the year end. But like-for-like numbers were also good: the company said like-for-like revenue increased £37.4m in the year reflecting both increases in vehicles sales prices and the number of vehicles sold.

Chief executive, Robert Forrester, told shareholders: “A significant number of the businesses acquired in the year have the potential for performance improvements over a three to four year period to deliver higher margins and returns. These turnarounds are a key element of the group’s strategy to deliver shareholder value and to generate future earnings growth.

Mr Forrester added: “The group has had a successful year with the two key elements of the group’s strategy, growth through acquisition and improving aftersales, both contributing to a significant increase of 22% in underlying profit. Gross margin enhanced in the second half of the year to 12.3% from 11.5% in H1 and there was a like-for-like gross profit growth of £1.5m from aftersales.”

He concluded: “Current trading in March and April has been stronger than anticipated. Whilst the new vehicle supply constraints arising from the natural disaster in Japan in March pose a short term uncertainty, in the medium term new vehicle sales are set to rise and start to climb back to pre-recession levels. Used car sales and aftersales remain areas of significant opportunity particularly in the acquired businesses.”

The group has continued to focus on working capital management in the period and generated £12.0m of operating cashflow. As a result the company has a net cash position of £13.6m at the year end despite significant investment in new businesses in the period. It said it intends to continue to fund the acquisition of additional dealerships from these resources and from its available committed loan and working capital facilities of £35m.

The company has started to award dividends with 0.3p a share for the second half of the year, giving a full year dividend of 0.5p a share.
 

Tags: 2011, Financial results, Robert Forrester, Vertu Motors