Robert Forrester CV
1990 After completing a geography degree, works as a chartered accountant with Arthur Anderson for nine years. His first job is to audit dealer group Peoples.
1999 Joins a property company as an accountant.
2001 Financial director at Reg Vardy.
2005 Managing director at Reg Vardy.
2006 The company is sold to Pendragon. Forrester leaves Reg Vardy.
December 2006 Vertu Motors floated on the stock exchange with Forrester as managing director.
The financials
JB: Your growth in turnover has been pretty spectacular. It’s doubled in four years. Was that your initial plan?
RF: The original business plan said we’d get to about 65 dealerships at the end of year five. If you look at business locations we probably go to about 68 locations by the end of year five and we’re now five and a half years in and we’ve got 70.
JB: Performance is pretty flat. Statutory profit before tax has been 0.6%, 0.5% and 0.5% in the last three years. Then after non-operational items you can say it declined.
RF: You can look at any company in the 2009/10 period and see a decline, reversed by scrappage, then experienced a downturn, but now seeing some upward movement.
JB: Are your shareholders satisfied with the level of return?
RF: Our shareholders have been supportive throughout. Are we happy with the return on investment? No, clearly not. We’ve spent a lot of money and downsized off to get the return. We’ll continue to do that.
JB: You can still grow and make returns with all the risk that comes with growth?
RF: Yes.
JB: What’s your aspiration in terms of returns? Could you be a 2% business?
RF: We might struggle to be a 2% business if the scale of our fleet operations continues, because fleet operations make a 2% gross margin. So the chance of making a 2% bottom line is slim as fleet is a fundamental part of our business. In the retail side of the business I think the return is certainly between 1-2% per cent. Some of our businesses make six.
JB: Why do they make six?
RF: Strong market share, they have volume franchises, very strong management, strong used car operations and aftersales contribution.
JB: Isn’t it replicable?
RF: It is replicable, but a smaller market share franchise is probably, depending on the size of the overheads, more unlikely to get to that level.
JB: You have no debt. Are you debt averse?
RF: In this economic environment we’re debt cautious. We will by the end of February have some debt as we will continue to grow. We’ve got quite substantial debt facilities.
JB: Your lack of debt has been deliberate?
RF: Absolutely. I remember the moment I decided. August 2008. I went to the CBI economic affairs committee meeting in London and realised the world might come to an end. Until then I hadn’t fully appreciated how serious it was.
JB: What is your feeling about the economy in 2013?
RF: We’ve got a government that’s going to stick to the plans and we’re not going to go bust. Families are in the process of rebuilding their balance sheets. Inflation is coming down and wages are going up a little bit. The fairly significant fall in wages last year knocked the car industry quite substantially last summer. Now, there is more confidence – not a lot of it, but the economy is now a benign environment.
Click on the next page to view Forrester's comments on Vertu's brand portfolio and approach to training.
Jeremy has been a journalist for 30 years, 20 of which have been in business-to-business automotive. He was a writer and news editor on AM-sister brand Fleet News for three years before setting up the AM website. For the last five years he has been Bauer B2B’s head of digital helping to manage the digital assets of AM, together with Fleet News, Commercial Fleet, Rail and Smart Transport.
Wish to remain anonymous - 30/01/2013 11:34
Hi, I am a shareholder in Vertu who after 5 years is back to where I started in terms of share price. I think there is excellent leadership through Mr Forrester, but I only hope he and Vertu remember to focus on long term profitability. I worry some of the acquisitions may be costly and I do hope consolidation will lead in time to a 2% (or even higher)margin. I remain a committed shareholder, thank Mr Forrester and his staff for their work, but ask that long term return to shareholders be at the forefront of what Vertu aims to achieve.