Vertu Motors chief executive Robert Forrester has insisted that he is not under pressure from shareholders to deliver growth through acquisition after reporting reductions of 0.9% in turnover and 9.2% in profits in the group’s annual results.

Forrester told AM that the strategy of the group lies wholly in the hands of the leadership team, but conceded that the business was now “on the front foot” to make acquisition during 2018 as the market begins to present opportunities offering greater value.

“I didn’t talk acquisitions up this time last year because the market was in a very different position,” he said.

“Now the SMMT’s forecasts suggest that we will see growth in the new car market between April and December, consumer confidence is recovering and I think we may see wage growth.

“It’s a tough prediction to make, but we may have hit the bottom.

“When a market’s in decline you don’t buy things because the value is likely to be cheaper in the future.”

Vertu’s annual financial results for the year to February 28, 2018, showed a turnover reduced to £2.796 billion, 0.9% down on 2017’s £2.823 billion, with adjusted profit before tax down 9.2% at £28.6m (2017: £31.5m).

The group’s new vehicle retail and Motability volumes fell by 14.7% as used car volumes declined by 2.2% during the period.

New vehicle retail and Motability revenues down by 8% (£836.5m) and used vehicle revenues rose by 3% (£1.069bn) during the period, with service revenues also up by 3.5% (£228.2m).

The reported period saw Vertu embark on a share buy-back programme which saw it repurchase 12.3m shares, equivalent to 3.1% of the Group's issued share capital, a process which has continued to a point where 4.53% of the group's share capital has now been repurchased. 

The cash saving from lower dividend payments as a result of the Buy-back Programme, based upon an annual dividend of 1.5p per share, amounts to £270,000 per annum, it said.

A focus on property has also seen the group realise a £4.1m profit from a sale and leaseback, with the disposal or closure of five underperforming sales outlets realising cash of £2.8m, with a further £2m realised from surplus property disposals subsequent to the year end. 

The Group's balance showed net cash of £19.3m and available, unutilised bank facilities of £30m with the potential to add a further £30m.

Forrester said that the group had emerged from what was “a more challenging year for the sector” in a strong position.

Commenting on his findings following anaylysis of Vertu’s results – and those of the post February 28 period of trading, Sanjay Vidyarthi, an analyst at Canaccord Genuity Limited (UK), said: “This is a cautious management team, so when the outlook statement mentions that 'the prospects for the UK new car market are likely to be more favourable' and 'the outlook for used cars is strong' along with 'aftersales prospects are positive,' the market should take note.

“Vertu has outperformed the market in the first two months of FY19E, with LFL new retail volume -2.6% in March/April vs. a market down 8.8%. Market share was also taken in Motability, fleet and commercial.

“Gross margins were stable. There was higher spend on marketing in Q4 18 to support March sales. Used car LFL volumes were up 7% (with stable margins) while LFL service revenues were up 6.8%, benefitting from additional technicians now in place.”

He added: “We maintain our view that this is a high-quality asset and management has built solid foundations - financial, strategic and cultural - to deliver long-term earnings growth and cash generation.”

Vertu now employs 5,300 staff and operates 117 franchised sales outlets, and three non-franchised sales outlets, from 103 locations. 

This follows its disposal of Chesterfield Peugeot and Boston Volkswagen businesses during the trading period, along with the closure of Mazda Bristol and Volvo Sheffield facilities

The group also completed its exit from the Fiat Group business with the closure in December 2017 of Worcester Fiat and Alfa Romeo and of its multi-franchise Cheltenham Fiat and Mazda business in March 2018.

These changes released £1.2m from property assets and £1.6m from working capital which was re-deployed to activities generating higher returns, it said.