Making a Vertu of sales surge toward £1bn barrier

Vertu Motors, the listed car dealership looking to take on some of Scotland's biggest players, is gearing up for £1 billion of annual sales after a 27 per cent surge in first-half revenues.

The group - launched as a cash shell in December 2006 and now the eighth largest UK motor retailer - has also played down fears of a sales reversal following tomorrow's comprehensive spending review and January's VAT hike.

Unveiling a strong first-half performance yesterday, chief executive Robert Forrester said: "Personally, I don't think any of that will create much noise frankly. People have known about the CSR for a long time, yet we have just sold 1,000 cars in three days.

"I think the consumer is stronger than most people give credit for," Forrester told The Scotsman. "The economy is stronger than it was in 2008-9 so I'm actually pretty positive."

As well as the double-digit rise in sales, to 511.1 million from 401.3m a year earlier, adjusted profit before tax rose 24 per cent to 5.2m. The group plans to pay a maiden dividend of 0.2p per share in January.

First-half results, for the six months to 31 August, were fuelled by an acquisition spree which shows little sign of letting up.

Since the start of March, Vertu has added 16 sales outlets in nine locations, bringing Nissan, Alfa Romeo and Mitsubishi within the group's franchise portfolio. It takes the showroom count - both franchised and non-franchised - to 74.

North of the Border, the Aim-listed firm has built up a "significant" presence through the acquisition of eight outlets, which it has brought under the Macklin Motors brand.

The new name faces stiff opposition from established Scottish heavyweights such as Eastern Western, Arnold Clark and Belmont-owner John Martin. Indigenous dealerships Phoenix Car Company and Peter Vardy have also been hitting the acquisition trail in recent years.

Forrester said he was "very happy" with the direction the business was heading and reiterated earlier comments about further expanding the Scottish footprint.

Yesterday's interim report pointed to a dip in gross margins during the period, which Forrester put down to comparisons with the same six-month period last year when used car margins were at an "unprecedented" level due to a shortage of vehicles.

"Those margins are back to normality," he noted.

Brokerage Panmure Gordon said the figures "surpassed" its expectations and retained a "buy" recommendation on the stock.Analysts raised their 2011 and 2012 forecasts by 16 per cent and 7 per cent respectively on the "positive" interim results.

Vertu trades mainly under the Bristol Street Motors banner south of the Border following the March 2007 acquisition of the UK's 13th largest motor retailer.

On the dividend decision, Forrester said: "This is our fourth year of activity now, we have stable profits and it's the right thing to do."