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Rights issue funds Vertu’s expansion

Vertu has raised £30 million from a share placing which will see it expand its network from 41 franchised dealerships to 100.

Vertu issued 104,319,377 new shares at 30 pence each to raise the capital for its expansion plans.

The announcement follows the dealer group’s preliminary results for the year to the end of February which saw the company deliver a modest pre-tax profit of £72,000 compared to £140,000 over the 16 months to end of February 2008.

New car volumes fell 2.4% on a like-for-like basis, but used vehicles had a better time and volumes grew by 10.5%.

Revenue for the year was £760.8 million, against £677.2 million for the prior 16 month period.

Vertu chief executive Robert Forrester said: “In the context of what’s happened within the motor retail industry I’m very pleased with the results.

“We’re not going to do anything spectacular or outrageous with the £30 million, but over the next 12 months we will be looking at picking up more volume sites. We’re fairly open minded where we will acquire the sites but we’d like to increase our representation in the north in particular. We have the firepower to increase our network by 60.”

Forrester is looking to buy the freeholds of existing leasehold sites and believes the current fragmented condition of the UK motor retail sector will allow Vertu to acquire “good new businesses at low valuations”.

The van market is a particular point of pain for Vertu which is heavily exposed with three Iveco dealerships and 14 Ford commercial sites.

Forrester told AM: “Van demand is in a depressed state right now, but it’s something we’re just going to have to work through.”

Vertu’s plan is to put further focus on its aftersales this year.
Forrester said: “Aftersales already represents 51% of our gross profits and there’s no reason why that won’t go up in the near future.”

 

Scrappage

Forrester: “There was a lot of toing and froing over tax with scrappage but that’s all sorted now. It’s an entirely positive move. There are no negatives involved as far as I’m concerned. Our dealerships are experiencing good demand.”

Forrester said he wasn’t concerned by the administrative burden which scrappage could represent.

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