15m to fund motor dealer Vertu's expansion
Oct 19 2010 by Karen Dent, The Journal
MOTOR dealer Vertu has secured £15m to fund more acquisitions over the next three years and says it is confident of driving up annual profits to record breaking levels after outperforming the market during the first half.
The fast-growing group, which now has 79 dealerships - 29 of which were snapped up since June last year - completed a refinancing deal with Barclays Bank in Newcastle on Friday, just days before unveiling its interim results.
Vertu, which mainly trades under the Bristol Street Motors brand, beat both its own and market expectations to post sales of £511m in the six months to the end of August from £401m last year, while its pre-tax profits increased from £2.8m to £4.9m.
Chief executive Robert Forrester said: “With the out-performance of market expectations by the group in the first half of the year and a strong financial result in September, the group is currently trading ahead of market expectations for the full year.”
Mr Forrester also revealed details of the deal with Barclays, which includes a £100m loan over five years and £15m over three years to fund further acquisitions.
“We have refinanced the debt for three to five years,” he said.
But he would not be drawn on whether Vertu would announce further acquisitions during the second half.
He said: “We’ll probably do less in the second half but our strategy is to acquire businesses.”
Vertu, which employs around 500 people in the North East and around 2,800 nationally, is pushing into Scotland where it now has eight dealerships under the Macklin Motors brand. It is also building up its coverage in Cheshire.
“The acquisitions undertaken last year have performed strongly and yet still have the potential for further improvements in profitability,” said Mr Forrester.
“Our more recent acquisitions are already exhibiting significant operational improvements and this will underpin future profit growth.”
Vertu’s new car sales increased by 6.4% while used car sales jumped by 6.1% in the first half, but Mr Forrester admitted that figures would be hit by the end of the Government-backed scrappage scheme.
He said the industry as a whole could suffer a 40-50% fall in new car sales during the next six months but Vertu’s portfolio of brands meant it was relatively well insulated.
“Scrappage was very much focused on Kia, Hyundai and Fiat and we are not really represented in those franchises,” said Mr Forrester.
He pointed to recent figures from the new car market, which had fallen by 19% overall, while Vertu was just down by 2.6% in comparison during September.
Vertu, which floated on the Alternative Investment Market (AIM) in 2006, will pay its maiden dividend to shareholders of 0.2p per share in January.
