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Vertu Motors sees profits fall 16% in line with expectations

Vertu Motors saw pre-tax profits fall by 16% to £4.1 million for the six months August 31, 2011 but the drop is in line with the group’s expectations.

Vertu’s interim results show that revenue grew by 7% and gross margins rose slightly from 11.5%to 11.6%with aftersales marging improving in "all areas".

Like-for-like used car volumes declined by 5.9% which Vertu said reflected the "tougher consumer environment".

Robert Forrester, Vertu chief executive, said: “I am pleased to report that against the backdrop of continued pressure on the UK consumer, the group has continued to deliver and invest in its growth strategy.

“We have opened a further seven sales outlets since March 1, 2011 taking the total to 82.

In addition, our new like-for-like retail car volumes were 10% better than the market and aftersales continues to be robust. The group continues to generate substantial amounts of cash.

“With our strong, ungeared balance sheet and the on-going significant operational cash generation Vertu Motors is clearly in a position where current market weakness will create further acquisition opportunities in line with our growth strategy.”

The group said consolidation opportunities were increasing and it has un-utilised facilities of £35m in addition to cash resources.

Forrester is expecting Vertu’s full year results to be “at the lower end of the range of market expectations” due to the challenges in the current market.

The business has reduced overheads in the six month period on a like-for-like basis with “strong financial controls and cost focus”.

Vertu’s balance sheet is underpinned by a freehold and long leasehold property portfolio (including assets held for resale) of £75.7m (31 August 2010 : £72.6m).

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