(VTU.L) Vertu Motors PLC Buy/Sell

LONDON, Nov 2 (Reuters) - Vertu Motors Plc:

RNS Number : 7493B Vertu Motors PLC 02 November 2009

2 November 2009

Vertu Motors plc

("Vertu Motors" or the "Group")

Acquisition of Vauxhall dealership

Vertu Motors plc, the 9th largest UK motor retailer, announces that the Group today acquired the trade and assets of Lichfield Vauxhall for a cash consideration of approximately £2.78m from Steve Thompson Cars Limited. This includes the purchase of a freehold property for £1.675m.

The Lichfield dealership is located in close proximity to other Group dealerships in the West Midlands such as Stafford Ford and Burton Citroen. The acquisition again strengthens the Bristol Street Motors brand in its heartland of the West Midlands and increases the number of Vauxhall dealerships held by the Group to 7.

Robert Forrester, CEO of Vertu Motors said:

"We are pleased to add a further business to the Group bringing our total number of sales outlets up to 55, and our number of Vauxhall dealerships to 7. The acquisition further strengthens the regional concentration of the Bristol Street Motors brand in the West Midlands area.

"The Lichfield Vauxhall business fits in well with our stated strategy of building a successful, scalable motor retail group delivering shareholder value and we continue to evaluate further growth opportunities that the current market conditions present."

RNS Number : 1379B Vertu Motors PLC 21 October 2009

21 October 2009

Vertu Motors plc (the "Company")

Director Dealings

Vertu Motors plc (the "Company") was notified on 20 October 2009 that on 20 October 2009, Mr Robert Forrester, Chief Executive of the Company, transferred his interest in 3,037,917 ordinary shares of 10p each in the Company ("Ordinary Shares") for nil consideration to his wife, Mrs Helen Forrester.

Following this transaction Mr Forrester and his connected persons remain interested in 4,406,941 Ordinary Shares representing 2.24% of the issued share capital of the Company.

The Company's issued share capital consists of 196,301,855 Ordinary Shares with voting rights. The Company does not hold any Ordinary Shares in treasury.

For further information please contact: Vertu Motors plc
Robert Forrester, CEO Tel: 0191 206 4617
Karen Anderson, FD Tel: 0191 298 6514

Brewin Dolphin Investment Banking
Andrew Kitchingman Tel: 0845 270 8613

Sean Wyndham-Quin

Panmure Gordon (UK) Limited
Andrew Burnett Tel: 020 7459 3600

Stuart Gledhill

Financial Dynamics Caroline Stewart / Edward Westropp Tel: 020 7831 3113

RNS Number : 7246A
  Vertu Motors PLC
  14 October 2009
   

14 October 2009 

Vertu Motors plc ("Vertu" or "Group")

Unaudited interim results for the six months ended 31 August 2009 

Vertu Motors plc, the 9th largest UK motor retailer, announces its interim results for the six months ended 31 August 2009.

                                        Six months       Six months
                                             ended            ended
                                    31 August 2009       31 August 
                                                               2008
                                         (H1 2010)        (H1 2009)
 Revenue                                   £401.3m          £423.5m
 Adjusted EBITDA*                            £6.3m            £5.2m
 Adjusted operating profit*                  £5.1m            £4.1m
 Adjusted profit before tax*                 £4.2m            £3.0m
 Adjusted earnings per share*               2.11p            2.36p 
 EBITDA                                      £5.0m            £4.2m
 Operating profit                            £3.7m            £3.0m
 Exceptional charges                         £1.3m            £0.9m
 Profit before tax                           £2.8m            £1.9m
 Earnings per share                         1.40p            1.49p 
 Operating cash inflow                       £1.4m            £5.9m
 Net cash (debt)                            £21.0m         (£15.3m)
 Net assets per share                       44.4p            64.2p 

* adjusted for exceptional charges, amortisation of intangible assets and share based payments charge

Financial Highlights

* Adjusted EBITDA up 21.2% to £6.3m (H1 2009 : £5.2m)

*     Profit before tax up 47.4% to £2.8m (H1 2009 : £1.9m)

*     Balance sheet underpinned by strong freehold and long leasehold property portfolio (including assets held for resale) of £57.3m (31 August 2008: £51.2m)

*     Strong asset backing with net cash position of £21.0m to fund growth 

Operational Highlights

* Trading performance in the half year and September has been ahead of Board's expectations

*     Successful placing raised £29.9m of net proceeds to invest in market opportunities including:

*     *     new dealership operations

*     extending the productive capacity of existing operations; and 

*     the purchase of existing leasehold sites

*     10 sales outlets in 6 locations added to the Group since 1 March 2009

*     Fiat, Chevrolet and Mazda franchises added to the portfolio

*     Group delivered 1,686 scrappage scheme sales in the period generating £0.9m of additional net tax revenues in excess of the Government subsidy

*     Used retail car volumes up by 3.7% on a like-for-like basis in a declining market and margins increased

*     Strengthened Board through appointment of David Forbes as Non-Executive Director

Commenting on the results, Robert Forrester, Chief Executive, said:

"Following the very challenging market conditions of the 2009 financial year, this financial period has been much improved, aided by the introduction of the highly successful scrappage scheme and rising used car values. Our profitability has risen significantly as we continue to expand and drive higher margins from our existing businesses.

Our successful placing in June has provided the funds for the Group to grow and take advantage of lower asset values when purchasing new dealerships, and to enable us to build on our long-term objective of growing a scaled dealership group. The Group has acquired nine new sales outlets in the year to date and we would anticipate further expansion in the coming months to consolidate our position in the market."

For further information please contact:

 Vertu Motors plc
 Robert Forrester, CEO              On the day tel: 0207 831 3113 
 Karen Anderson, FD                 and thereafter
                                    Tel: 0191 206 4617

 Brewin Dolphin Investment Banking
 Andrew Kitchingman                 Tel: 0845 213 4730
 Sean Wyndham-Quin

 Panmure Gordon (UK) Limited
 Andrew Burnett                     Tel: 020 7459 3600
 Stuart Gledhill

 Financial Dynamics
 Caroline Stewart                   Tel: 020 7831 3113
 Edward Westropp

      INTRODUCTION

The Group has delivered a trading performance ahead of market expectations in the six months to 31 August 2009, with profit before tax rising 47.4% from £1.9m to £2.8m in the period. Adjusted operating profit rose 24.4% in the period to £5.1m.

The Group saw improved margins from used vehicle sales as values rose and volumes were at higher levels than last year. Previously underperforming businesses continued to produce enhanced results, as streamlined management practices drove higher activity and controlled costs. The Group also benefited from the UK Government's scrappage scheme announced in May 2009 which resulted in 1,686 new vehicle sales for the Group in the period. When taking account of the additional VAT revenues to the Treasury, the Group's scrappage sales to August have provided a net benefit to the UK Taxpayer of £0.9m as well as providing environmental and general economic benefits. The scheme has now been extended further and this should continue to support new car sales despite the anticipated rise in VAT in January.

In a future environment of anticipated lower vehicle sales, the Group's profitability will be underpinned by its after-sales performance. After-sales operations generated 42.1% of total gross profit and strategies are in place to improve after-sales profitability. These strategies centre on enhancing customer retention levels through a focus on delivering an outstanding customer experience at each visit and through the offer of products such as service plans, which fix servicing costs to the consumer for a three year period and spread these costs into affordable monthly payments to aid consumer budgeting.

The Board set out a strategy earlier in the year to expand the business, principally targeting the Group's existing franchises whilst adding a small number of new franchises. Following the placing in June, which raised £29.9m net of expenses, the Group has invested £10.0m in a further 9 outlets operating from 6 locations and has added the Mazda, Fiat and Chevrolet franchises to its portfolio. With its strong net cash position, the Group continues to be very well placed to undertake further earnings accretive expansion.

On 11 August 2009 David Forbes, a Managing Director at Rothschild, was appointed as an independent Non-Executive Director. David has significant expertise in corporate finance, including mergers and acquisitions and corporate strategy. This appointment demonstrates the Board's commitment to high levels of corporate governance.

FINANCIAL REVIEW

Revenue in the period decreased by 5.2% to £401.3m (H1 2009: £423.5m) reflecting the significant decline in the UK new vehicle market and lower used car transaction prices. Acquisitions were undertaken late in the period and contributed £14.1m of revenue. Gross margins have risen from 11.1% to 12.5%, driven largely by used car volumes and margin expansion and enhanced performances from historically underperforming businesses as the Group continues to deliver on its strategy for organic growth.

Adjusted EBITDA in the period rose to £6.3m, compared to £5.2m in the six months ended 31 August 2008. EBITDA and profit before tax were £5.0m (H1 2009: £4.2m) and £2.8m (H1 2009: £1.9m) respectively, exhibiting the Group's strong profit growth. Exceptional charges of £1.3m (H1 2009: £0.9m) were incurred in the period, relating to losses on the disposal of two of the Group's freehold properties. These two disposals generated £4.7m of cash and three surplus freehold properties with a net book value of £5.0m remain to be sold.

Net finance costs were reduced to £0.8m for the period (H1 2009: £1.1m). Bank loans and overdraft interest reduced from £1.0m in the period to 31 August 2008 to £0.5m, as a result of bank base rate cuts, the convergence of bank base rate to LIBOR and reduced levels of borrowing.

In the second half of the last financial year, the Group incurred significant manufacturer stocking charges as a component of net finance costs. The Group's pipeline of new vehicle stocks rose significantly as demand, particularly in the commercial vehicle market, fell. Such charges in this period were £0.3m compared to £0.6m in the second half of the last financial year (Six months ended 31 August 2008: £0.1m). Over the period the Group has successfully reduced its excess of pipeline new vehicle stocks and ongoing manufacturer stocking charges have reduced significantly to pre-recession levels.

The Group has a strong balance sheet with shareholders' funds of £87.1m (31 August 2008: £59.1m), representing net assets per share of 44.4p (31 August 2008: 64.2p), having been diluted by the impact of the placing in June 2009. The balance sheet is underpinned by a freehold and long leasehold property portfolio (including properties held for resale) of £57.3m (31 August 2008: £51.2m) and cash deposits at the balance sheet date of £30.7m (31 August 2008: £10.6m).

As a result of the placing and the sale of two freehold properties referred to above, the Group has a net cash position of £21.0m (31 August 2008: net debt of £15.3m). As at 31 August 2009, the Group had loans drawn down of £9.8m (31 August 2008: £24.0m) and achieved this significant debt reduction without applying any of the proceeds of the placing to bank borrowings. The remaining loan of £9.8m is repayable in March 2012.

The Group has generated an operating cash inflow of £1.4m. Overall working capital increased by £4.9m. The Group's vehicle stocks increased in the period, absorbing cash of £5.3m. This reflected predominantly increased values of used vehicles and stock purchases for the newly acquired dealerships.

OPERATING REVIEW

Group Strategy

The strategy of the Group is focused on creating shareholder value through delivering operational and financial improvements in our existing businesses and augmenting this by acquiring additional UK motor retail operations to add size and scale to the Group.

Portfolio Development

In line with the Group's expansion strategy, 10 sales outlets have been added since 1 March 2009 in 6 locations.  

The Group currently operates 50 franchised, 4 non-franchised sales operations and 2 stand alone service operations from 48 English locations. All franchised operations are branded Bristol Street Motors with the exception of those operating the Honda franchise. Non- franchised sales operations are branded Bristol Street Motor Nation. The table below sets out the dealerships currently operated by the Group:

 Car Franchises (45)     Commercial Vehicle Franchises (4)  Motorcycle Franchises (1)

 Ford            16      Iveco                 3            Honda       1
 Peugeot         6       Fiat Commercials      1
 Vauxhall        6
 Honda           5
 Citroen         4
 Renault         2
 Mazda           2
 Fiat            2
 Hyundai         1
 Chevrolet       1

 Bristol Street Motor Nation used car outlets  4
 Stand alone service centres                   2

In June 2009, the Group acquired the trade and assets of certain dealerships from the receivers of Brooklyn Motors plc ("Brooklyn") for £6.9m. This transaction augmented the strong market position of the Group in the West Midlands for Ford adding Worcester Ford and Redditch Ford to the existing scaled operations in Birmingham and Gloucestershire and providing the opportunity for substantial operational synergies.

The Brooklyn acquisition also brought the Mazda franchise to the Group for the first time, in Redditch and Cheltenham. In September, the Fiat franchise was added to the Group in excellent additional showrooms in the Worcester and Cheltenham dealerships. These franchise developments are a part of the Board's strategy to gain representation with key, successful franchises.

The Group also developed a new Vauxhall market area in North East London in the period, through re-franchising and redeveloping an existing non-franchised dealership in Waltham Cross and purchasing, for £0.1m, a Vauxhall and Chevrolet outlet in Ilford. This brings the total number of Vauxhall dealerships operated by the Group to 6 and adds the Chevrolet franchise to the Group for the first time.

The Group operates highly successful Honda dealerships in Boston, Grantham, Lincoln and Retford. This business was expanded on 1 August 2009, with the opening of a new dealership in Mansfield, in newly acquired freehold premises. This enlarged geographic footprint for the Group's Honda franchise will allow further management and marketing economies of scale to be realised.

The used car outlet division of the Group is branded Bristol Street Motor Nation and the Group expanded this to 4 dealerships through the opening of Darlington Motor Nation on 1 March 2009. The Board's strategy is to continue to grow this division, through the acquisition of prime, former franchise dealership locations. In addition to selling used cars these operations have started offering retail servicing to generate further revenues.

In addition to new dealership operations, the Group has taken advantage of the decline in commercial property values to purchase freeholds of existing leasehold sites. To date, two freeholds have been purchased for a total consideration of £3.0m and a rental saving of approximately £0.24m will accrue in 2010/2011. Whilst this is a capital intensive strategy, the Board believe it to be an essential component of the Group's development allowing it to increase long term margins, reduce long term lease liabilities and reduce exposure to future rent increases.

Dealership Operations

It has been well documented that the national market for new cars has been challenging since March 2008. This market has received a significant boost over the summer months of 2009, from the UK Government's scrappage scheme introduced in May 2009, which incentivises owners of vehicles over ten years old to replace their cars. Scrappage sales have changed the normal market share patterns amongst the vehicle manufacturers. Historic large market share players such as Ford and Vauxhall have seen lower retail market share, as manufacturers such as Hyundai have gained, based on sales of predominantly lower priced, small vehicles. Whilst the Group sold 1,686 cars on the scrappage programme to the end of August 2009, lack of significant manufacturer representation in the scrappage "winners" led to the Group's new retail vehicle like-for-like volumes falling 12.0% against an overall retail market fall of 11.0%. The Group, however, continued to take market share in terms of its share of sales of its major manufacturer partners.

As a consequence of this outperformance on new retail sales in the marques the Group represents, significant volume bonuses were earned by the Group during the period. Margins in new retail sales were stable at 8.2% (H1 2009 : 8.3%).

Fleet new vehicle sales of cars and commercial vehicles represent 32.7% of total Group turnover and are a significant element of the Group's operations. Commercial vehicle sales have been under significant pressure as economic conditions have deteriorated. Whilst UK new car registrations to the fleet sector declined by 26.8% in the six months ended 31 August 2009, light commercial and heavy commercial vehicle registrations fell by 42.6% and 42.5% respectively. The overall market decline of the fleet and commercial sector was 30.6%. The Group saw a 7.7% fall in fleet and commercial new vehicle volumes in this period and has therefore significantly outperformed the market.

The Group has previously reported a significant excess supply of new commercial vehicles following the market falls. This has now been cleared with the exception of heavy vehicles in our Iveco operation. The stock reductions achieved have to some extent been obtained through discounting and therefore reduced margins. Fleet and commercial gross profits declined in the period from 3.1% to 2.4% as a consequence of this stock clearance and a greater amount of low margin daily rental car supply being undertaken. The Group's Iveco operation, comprising dealerships in Gloucester, Swindon and Bristol, remains exposed to the market downturn highlighted above and delivered a loss in the period.  

The Group's enhanced profitability in the period has been secured primarily from a strong performance from its used car operations. The Group's systems, processes and marketing in used cars are highly developed and this has enabled the Group to take advantage of the better market conditions in 2009. Lack of used car supply led to a significant rise in used car prices and margins in the period and prices stabilised over the summer and into September. The market for used cars has been lower in the UK in 2009 (with Experian reporting a 6.6% fall in April to June used car sales compared to the previous year) and some substitution into scrappage new car sales has been evident. Against this market backdrop, the Group is pleased to report a 3.7% like-for-like increase in used vehicle volumes in the period and a 52.2% increase in gross margin percentage from 9.0% to 13.7%. The latter reflected overall lower used car selling prices, but higher gross profits per unit in the period. Margins were aided by rising used car values from January 2009, enhanced stock turn and increased finance and insurance sales due to process improvements.

After-sales activities such as servicing, body repairs and supply of parts remain a major element of the Group's operations. Service volumes declined on a like-for-like basis by 4.6% with warranty sales falling 22.7% as product quality increased and no major recalls arose. This trend was significantly offset by enhanced penetration of the retail service market which rose 3.7% on a like-for-like basis. These changes in the mix of service work resulted in enhanced margins. Parts margins declined in the period as a result of timing differences in the recognition of volume related bonuses. After-sales margins overall in the period remained stable. The share of total gross profit contributed from after-sales fell from 45.5% to 42.1%, due to the much enhanced used car gross profit generation in the period.

A number of strategies are in place to ensure profitability from service and parts is maintained and improved. These include: 

*     All outbound service prospecting calls are now undertaken from centralised contact centres

*     An additional contact centre has been created in Newcastle upon Tyne to sell service plans, giving fixed price service costs with monthly payments 

*     Increasing use of new technology such as handheld PDAs for technicians to record the work undertaken on all vehicles electronically, to enhance efficiency and increase selling opportunities on work identified

*     Increased focus on after-sales processes to increase customer retention through enhancing the customer experience and satisfaction

*     Enhanced internet functionality is being developed to sell services and parts

These initiatives are going hand in hand with significant training programmes in the after-sales arena, whilst continuing our ongoing investment in sales and management training. Reflecting this investment in training, the Group became the first major motor retail group to be awarded Specialist Automotive Finance Approved status by the Finance and Leasing Association (FLA) in August 2009. This status required all 370 employees handling the sale of consumer finance to undergo training and pass compliance tests.

CURRENT TRADING AND OUTLOOK

As it is a plate change month, September is the second most important month for new car sales, and is a key month for the Group's trading performance in the second half of the financial year. The Group's new car performance in September was ahead of the Board's expectations as the highly successful scrappage scheme continued to stimulate the market. New car retail volumes in the UK rose 41.3% in the month and like-for-like new retail volumes for the Group rose 16.3%, as manufacturers not significantly represented by the Group took additional market share boosted by scrappage scheme sales.  

As stated previously, recent months have seen used car demand under increased pressure as prices rise and scrappage sales have led to some limited substitution. Like-for-like sales declined 7.2% in September, whilst margins and overall used car profitability remained strong. Used car values and margins continue to remain stable, reflecting ongoing supply constraints, but are anticipated to reduce to more normal patterns and levels in the coming months.

With the outperformance of market expectations by the Group in the first half and a strong financial result in September, the Group is currently trading ahead of market expectations for the full financial year.  

The ending date of the newly extended scrappage scheme, the impact of January's VAT rise on new car sales and the wider economic outlook present uncertainties. However, the Board believes that, whilst the trading environment will continue to be challenging, the Group has an asset-backed balance sheet and the structure and platform in place to take advantage of opportunities to scale the business as they arise. 

      

CONSOLIDATED INCOME STATEMENT (UNAUDITED)

For the six months ended 31 August 2009

    
                                           Six months  Six months             
                                                ended       ended   Year ended
                                            31 August   31 August  28 February
                                                 2009        2008         2009
                                     Note       £*000       £*000        £*000
                                                                              
 Revenue                                                                      
 Continuing operations                        387,215     423,547      760,810
 Acquisitions                                  14,130           -            -
                                              401,345     423,547      760,810
                                                                              
 Cost of sales                                                                
 Continuing operations                      (339,097)   (376,702)    (671,680)
 Acquisitions                                (12,201)           -            -
                                            (351,298)   (376,702)    (671,680)
                                                                              
 Gross profit                                                                 
 Continuing operations                         48,118      46,845       89,130
 Acquisitions                                   1,929           -            -
                                               50,047      46,845       89,130
                                                                              
 Operating expenses                                                           
 Continuing operations                       (43,035)    (42,742)     (83,617)
 Acquisitions                                 (1,945)           -            -
                                             (44,980)    (42,742)     (83,617)
                                                                              
 Operating profit before                        5,067       4,103        5,513
 amortisation, share based payments
 charge and exceptional charges
 Amortisation of intangible assets              (100)        (85)        (183)
 Share based payments (charge)                    (4)        (80)          221
 credit
 Exceptional charges                    7     (1,305)       (949)      (3,441)
 Operating profit                                                             
 Continuing operations                          3,674       2,989        2,110
 Acquisitions                                    (16)           -            -
                                                3,658       2,989        2,110
                                                                              
 Finance income                                   623         783        1,788
 Finance costs                                (1,441)     (1,867)      (3,830)
 Net finance costs                      6       (818)     (1,084)      (2,042)
                                                                              
 Profit before tax                              2,840       1,905           68
 Taxation                               9       (800)       (536)          789
                                                                              
 Profit for the period                          2,040       1,369          857
                                                                              
 Attributable to:                                                             
 Equity holders of the Group                    2,040       1,369          857
                                                                              
 Basic earnings per share (p)           8        1.40        1.49         0.93
 Diluted earnings per share (p)         8        1.40        1.49         0.93

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

For the six months ended 31 August 2009

    
                                              Six months  Six months             
                                                   ended       ended   Year ended
                                               31 August   31 August  28 February
                                                    2009        2008         2009
                                                   £*000       £*000        £*000
                                                                                 
 Actuarial losses on retirement                  (2,867)     (3,795)      (4,138)
 benefit obligations
 Cash flow hedges                                      7         148        (981)
 Taxation thereon                                    801       1,021        1,434
 Net losses recognised directly in equity        (2,059)     (2,626)      (3,685)
 Profit for the period                             2,040       1,369          857
                                                                                 
 Total comprehensive loss for the                   (19)     (1,257)      (2,828)
 period
                                                                                 
 Attributable to:                                                                
 Equity holders of the Group                        (19)     (1,257)      (2,828)

CONSOLIDATED BALANCE SHEET (UNAUDITED)

As at 31 August 2009

    
                                                     As at      As at        As at
                                                 31 August  31 August  28 February
                                                      2009       2008         2009
                                           Note      £*000      £*000        £*000
 Non-current assets                                                               
 Goodwill                                           18,612     18,612       18,612
 Other intangible assets                               984      1,063        1,043
 Retirement benefit asset                    12          -          -          130
 Property, plant and equipment                      58,710     48,903       49,813
                                                    78,306     68,578       69,598
                                                                                  
 Current assets                                                                   
 Inventories                                       131,239    145,916      155,698
 Property assets held for sale                       5,000     11,390       10,250
 Trade and other receivables                        17,243     14,063       19,791
 Cash and cash equivalents                          30,709     10,609       12,907
                                                                                  
 Total current assets                              184,191    181,978      198,646
                                                                                  
 Total assets                                      262,497    250,556      268,244
                                                                                  
 Current liabilities                                                              
 Trade and other payables                        (152,858)  (155,057)    (185,056)
 Current tax liabilities                           (3,543)    (3,581)      (2,370)
 Borrowings                                              -    (3,619)      (2,000)
                                                                                  
 Total current liabilities                       (156,401)  (162,257)    (189,426)
                                                                                  
 Non-current liabilities                                                          
 Borrowings                                        (9,697)   (22,299)     (14,336)
 Derivative financial instruments                  (1,427)      (304)      (1,434)
 Deferred income tax liabilities                   (3,622)    (5,144)      (4,416)
 Retirement benefit liability                12    (2,254)      (119)            -
 Provisions for other liabilities and charges      (1,965)    (1,362)      (1,433)
                                                  (18,965)   (29,228)     (21,619)
                                                                                  
 Total liabilities                               (175,366)  (191,485)    (211,045)
                                                                                  
 Net assets                                         87,131     59,071       57,199
                                                                                  
 Capital and reserves attributable                                                
 to equity holders of the Group
 Ordinary shares                                    19,630      9,198        9,198
 Share premium                                      60,506     40,991       40,991
 Other reserve                                       7,969      7,969        7,969
 Hedging reserve                                   (1,027)      (219)      (1,032)
 Retained earnings                                      53      1,132           73
                                                                                  
 Shareholders* equity                               87,131     59,071       57,199

CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)

For the six months ended 31 August 2009

    
                                                                    Six months  Six months             
                                                                         ended       ended   Year ended
                                                                     31 August   31 August  28 February
                                                                          2009        2008         2009
                                                              Note       £*000       £*000        £*000
                                                                                                       
 Operating profit                                                        3,658       2,989        2,110
 Loss on sale of tangible fixed assets                                      17           6           14
 Loss on sale of properties                                              1,305           -            -
 Amortisation of intangible assets                                         100          85          183
 Depreciation of property, plant and equipment                           1,244       1,141        2,344
 (Increase) decrease in inventories                                    (5,327)       2,949        8,650
 Decrease (increase) in trade and other receivables                      3,507       (820)      (7,115)
 Decrease in property assets held for sale                                   -           -        1,140
 (Decrease) increase in payables                                       (3,660)       (899)       13,674
 Increase in provisions                                                    532         333          404
 Movement in share based payments charge                                     4          80        (221)
 Cash generated from operations                                          1,380       5,864       21,183
 Tax received                                                              379           -          173
 Tax paid                                                                    -           -        (367)
 Finance income received                                                    10          56          211
 Finance costs paid                                                      (612)     (1,594)      (2,751)
 Net cash generated from operating activities                            1,157       4,326       18,449
                                                                                                       
 Cash flows from investing activities                                                                  
 Acquisition of businesses, net of cash, overdrafts      11            (7,225)           -            -
 and borrowings acquired
 Acquisition of freehold land and buildings                            (2,752)           -            -
 Purchases of intangible fixed assets                                     (42)        (79)        (156)
 Purchases of property, plant and equipment                            (1,321)     (2,599)      (4,916)
 Proceeds from disposal of property, plant and                             876           2          190
 equipment
 Proceeds from disposal of property assets held for                      3,839           -            -
 sale
 Net cash outflow from investing activities                            (6,625)     (2,676)      (4,882)
                                                                                                       
 Cash flows from financing activities                                                                  
 Net proceeds from issuance of ordinary shares                          29,947           -            -
 Repayment of borrowings                               10              (6,677)       (500)     (10,119)
 Net cash inflow (outflow) from financing                               23,270       (500)     (10,119)
 activities
                                                                                                       
 Net increase in cash and cash                                  10      17,802       1,150        3,448
 equivalents
 Cash and cash equivalents at beginning of period                       12,907       9,459        9,459
 Cash and cash equivalents at                                           30,709      10,609       12,907
 end of period

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For the six months ended 31 August 2009
    
                                 Ordinary                                                
                                    share     Share    Other  Hedging  Retained     Total
                                  capital   premium  reserve  reserve  earnings    equity
                                    £*000     £*000    £*000    £*000     £*000     £*000
                                                                                         
 As at 1 March 2009                 9,198    40,991    7,969  (1,032)        73    57,199
 Profit for the period                  -         -        -        -     2,040     2,040
 Actuarial losses on retirement         -         -        -        -   (2,867)   (2,867)
 benefit obligations
 Tax on items taken directly to         -         -        -      (2)       803       801
 equity
 Fair value gains during the            -         -        -        7         -         7
 period
 Share based payments credit            -         -        -        -         4         4
 New ordinary shares issued        10,432    20,864        -        -         -    31,296
 Costs associated with issuance         -   (1,349)        -        -         -   (1,349)
 of ordinary shares
 As at 31 August 2009              19,630    60,506    7,969  (1,027)        53    87,131

For the six months ended 31 August 2008
    
                                 Ordinary                                              
                                    share    Share    Other  Hedging  Retained    Total
                                  capital  premium  reserve  reserve  earnings   equity
                                    £*000    £*000    £*000    £*000     £*000    £*000
                                                                                       
 As at 1 March 2008                 9,194   40,991    7,950    (326)     2,416   60,225
 Profit for the period                  -        -        -        -     1,369    1,369
 Actuarial losses on retirement         -        -        -        -   (3,795)  (3,795)
 benefit obligations
 Tax on items taken directly to         -        -        -     (41)     1,062    1,021
 equity
 Fair value gains during the            -        -        -      148         -      148
 period
 Share based payments credit            -        -        -        -        80       80
 New ordinary shares issued             4        -       19        -         -       23
 As at 31 August 2008               9,198   40,991    7,969    (219)     1,132   59,071

For the year ended 28 February 2009
    
                                 Ordinary                                              
                                    share    Share    Other  Hedging  Retained    Total
                                  capital  premium  reserve  reserve  earnings   equity
                                    £*000    £*000    £*000    £*000     £*000    £*000
                                                                                       
 As at 1 March 2008                 9,194   40,991    7,950    (326)     2,416   60,225
 Profit for the period                  -        -        -        -       857      857
 Actuarial losses on retirement         -        -        -        -   (4,138)  (4,138)
 benefit obligations
 Tax on items taken directly to         -        -        -      275     1,159    1,434
 equity
 Fair value losses during the           -        -        -    (981)         -    (981)
 period
 Share based payments charge            -        -        -        -     (221)    (221)
 New ordinary shares issued             4        -       19        -         -       23
 As at 28 February 2009             9,198   40,991    7,969  (1,032)        73   57,199

The other reserve is a merger reserve, arising from shares issued for shares, as deferred consideration, to the former shareholders of acquisitions.
      NOTES

For the six months ended 31 August 2009

1. General information

Vertu Motors plc is a Public Limited Company which is listed on the Alternative Investment Market (AiM) and is incorporated and domiciled in the United Kingdom. The address of the registered office is Rotterdam House, 116 Quayside, Newcastle upon Tyne, NE1 3DY. The registered number of the Company is 05984855.

The financial information for the period ended 31 August 2009 and similarly the period ended 31 August 2008 has neither been audited nor reviewed by the auditors. The financial information for the year ended 28 February 2009 has been based on information in the audited financial statements for that period.

The information for the year ended 28 February 2009 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain an emphasis of matter statement under section 498 of the Companies Act 2006. 

2. Accounting policies

The annual consolidated financial statements of Vertu Motors plc are prepared in accordance with IFRSs as adopted by the European Union. This interim financial report has been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, share based payments and financial assets and liabilities (including derivative financial instruments) at fair value through profit or loss.

In addition, this unaudited interim financial report does not comply with IAS 34 'Interim Financial Reporting', which is not required to be applied under the AiM Rules.

The accounting policies adopted in this interim financial report are consistent with those of the Group's financial statements for the year ended 28 February 2009 and can be found on our website, www.vertumotors.com.

IAS 1 (revised) requires the presentation of a Consolidated Statement of Changes in Equity as a primary statement, separate from the Consolidated Income Statement and Consolidated Statement of Comprehensive Income. As a result, a Consolidated Statement of Changes in Equity has been included in the primary statements, showing changes in each component of equity for each period presented.

3. Segmental analysis

The Group has adopted IFRS 8 "Operating Segments" from the beginning of the financial year, which determines and presents operating segments based on information provided to the Group's Chief Operating Decision Maker ("CODM"), Robert Forrester, Chief Executive. As such, there has been no change in the Group's one reportable business segment following this adoption, since the Group is operated and is managed on a dealership by dealership basis. These dealerships are considered to have similar economic characteristics and offer similar products and services which appeal to a similar customer base. As such, the results of each dealership have been aggregated to form one reportable business segment.

4. Going concern

The Directors have a reasonable expectation that the Group has adequate resources to continue as a going concern for the foreseeable future. As such, the Group continues to adopt the going concern basis in preparing its interim management report.

In determining whether the Group is a going concern, the Directors have reviewed the Group's current financial position and have prepared detailed financial projections. These projections, even after allowing for headroom to accommodate a reasonable downside scenario (including weaker trading and adverse movements in interest rates), indicate that the Group would be able to manage its operations so as remain within its current facilities and in comfortable compliance with its banking covenants.

5. Critical accounting judgements and estimates

The preparation of interim financial reports and annual consolidated financial statements, in conformity with IFRS, requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.  The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are assessed as being the same as those applied and disclosed in the consolidated financial statements for the year ended 28 February 2009.
      

6. Net finance costs

    
                                          Six months   Six months             
                                               ended        ended   Year ended
                                           31 August    31 August  28 February
                                                2009         2008         2009
                                               £*000        £*000        £*000
                                                                              
 Bank loans and overdrafts                     (501)      (1,005)      (1,653)
 Vehicle stocking interest                     (250)        (113)        (597)
 Other finance costs relating to               (683)        (742)      (1,567)
 Group pension scheme
 Other finance costs                             (7)          (7)         (13)
 Finance costs                               (1,441)      (1,867)      (3,830)
                                                                              
 Other finance income relating to                561          727        1,577
 Group pension scheme
 Interest on short term bank                      62           56          211
 deposits
 Finance income                                  623          783        1,788
                                                                              
 Net finance costs                             (818)      (1,084)      (2,042)

7. Exceptional charges

    
                                           Six months  Six months             
                                                ended       ended   Year ended
                                            31 August   31 August  28 February
                                                 2009        2008         2009
                                                £*000       £*000        £*000
                                                                              
 Loss on sale of properties                     1,305           -            -
 Reorganisation costs                               -         114          570
 Closure costs                                      -         335          482
 Impairment of property assets held                 -           -        1,140
 for sale
 Environmental costs                                -           -          400
 Empty property provisions                          -         423          571
 Onerous lease costs                                -           -          201
 Abortive costs                                     -          77           77
                                                1,305         949        3,441

There is no explicit explanation of exceptional cost under IFRS. For the purposes of the interim management report and consolidated financial statements, exceptional charges are items which individually, or if of a similar type, in aggregate, need to be disclosed, by virtue of their nature, size or incidence, in order to allow a proper understanding of performance of the Group.

Exceptional charges of £1.3m (2008: £0.9m) were incurred in the period, relating to losses on the disposal of two of the Group's freehold properties. These two disposals generated £4.7m of cash and three surplus freehold properties with a net book value of £5.0m remain to be sold and are categorised as property assets held for sale.
      

8. Earnings per share

Basic and diluted earnings per share are calculated by dividing the earnings attributable to equity shareholders by the weighted average number of ordinary shares during the period or the diluted weighted average number of ordinary shares in issue in the period.  

The Group only has one category of potentially dilutive ordinary shares, which are share options. A calculation has been undertaken to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Group's shares) based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

Adjusted earnings per share is calculated by dividing the adjusted earnings attributable to equity shareholders by the weighted average number of ordinary shares in issue during the period. 

    
                                                     Six months  Six months             
                                                          ended       ended   Year ended
                                                      31 August   31 August  28 February
                                                           2009        2008         2009
                                                          £*000       £*000        £*000
                                                                                        
 Profit attributable to equity                            2,040       1,369          857
 shareholders
 Amortisation of intangible                                 100          85          183
 assets
 Share based payments charge                                  4          80        (221)
 (credit)
 Exceptional charges                                      1,305         949        3,441
 Tax effects of adjustments                               (365)       (312)        (829)
 Adjusted earnings attributable to equity                 3,084       2,171        3,431
 shareholders
                                                                                        
 Weighted average number of                             145,843      91,944       91,981
 shares in issue (*000s)
 Potentially dilutive shares                                  -           -            -
 (*000s)
 Diluted weighted average number                        145,843      91,944       91,981
 of shares in issue (*000s)
                                                                                        
 Basic earnings per share                                 1.40p       1.49p        0.93p
 Diluted earnings per share                               1.40p       1.49p        0.93p
 Adjusted earnings per share                              2.11p       2.36p        3.73p
 Diluted adjusted earnings per                            2.11p       2.36p        3.73p
 share

9. Taxation

The tax charge for the six months ended 31 August 2009 has been provided at the effective rate of 28.2% (Six months ended 31 August 2008: 28.1%).

      

10. Reconciliation of net cash flow to movement in net cash (debt)

    
                                           Six months  Six months             
                                                ended       ended   Year ended
                                            31 August   31 August  28 February
                                                 2009        2008         2009
                                                £*000       £*000        £*000
 Net increase in cash and cash                 17,802       1,150        3,448
 equivalents
 Cash outflow from repayment of                 6,677         500       10,119
 borrowings
 Cash movement in net debt                     24,479       1,650       13,567
                                                                              
 Amortisation of loan arrangement fee            (38)        (38)         (75)
 Non cash movement in net debt                   (38)        (38)         (75)
                                                                              
 Total movement in net debt                    24,441       1,612       13,492
 Opening net debt                             (3,429)    (16,921)     (16,921)
 Closing net cash (debt)                       21,012    (15,309)      (3,429)

11. Acquisitions

On 1 March 2009, the Group opened a new Bristol Street Motor Nation used car sales outlet in Darlington. This dealership utilises leased premises and therefore no trade or assets were acquired.

On 26 June 2009, the Group acquired the trade and assets of certain dealerships from the receivers of Brooklyn Motors plc for total cash consideration of £7.1m, inclusive of £0.2m of fees. The fair value of the net assets acquired were also £7.1m, therefore no goodwill arose on this transaction.

On 27 July 2009, the Group acquired the trade and assets of Ilford Vauxhall and Chevrolet from Crown Motors (Dagenham) Limited, for cash consideration of £0.1m. No goodwill arose on this transaction.

On 1 August 2009, the Group began trading as a Honda dealership in Mansfield, having acquired the freehold premises for a total cash consideration of £1.2m on 30 June 2009. 

12. Retirement benefits

The defined benefit plan assets and liabilities have been updated to reflect their market value as at 31 August 2009. Differences between the expected return on assets and the actual return on assets have been recognised as an actuarial gain or loss in the Consolidated Statement of Comprehensive Income in accordance with the Group's accounting policy.

During the six month period ended 31 August 2009, equity and bond markets rose significantly and returned more than assumed.  Overall, this led to a gain on assets of £3,763,000.  There have also been changes in the financial assumptions underlying the calculation of the liabilities in the same period. In particular, the yield on AA-rated corporate bonds has decreased considerably and the long-term outlook for inflation increased. This has led to a higher value being placed on liabilities at the 31 August 2009 than assumed at the beginning of the financial year, resulting in loss of £6,630,000. Therefore, in total, there was an actuarial loss in the period of £2,867,000 before deferred taxation, recognised in the Consolidated Statement of Comprehensive Income.

This information is provided by RNS
The company news service from the London Stock Exchange
 
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