Farnell proves a star performer as owner to beat expectations

The group said it is very pleased with the pace of integration and the performance of the Farnell Land Rover business and said the firm will make a significant contribution to the group this year.

Farnell is a long-established Land Rover dealership with sites in Leeds, Bradford and Guiseley.

The £31m Farnell acquisition was Vertu’s biggest to date and the company is on the hunt for further deals.

Vertu’s chief executive Robert Forrester, the former finance director and managing director of Reg Vardy, described the deal as the most significant moment in the company’s history after its acquisition of Bristol Street Motors.

“Farnell is such a strong proposition because it offers a great product and values customer service,” he said.

Farnell’s Leeds dealership won the best Land Rover dealership in 2012. In 2011, the accolade went to Farnell’s Bradford dealership.

Mr Forrester said Farnell was a very strong, well-run business before the acquisition.

“It didn’t need any changes. Our objective was to make sure all the management and colleagues were happy with the change and that customers didn’t notice any difference,” he said.

“The management were excited to be part of a larger group. We’ve got strong IT systems and reporting systems and we’ve got scale with purchase. I’m delighted with how it’s gone.”

He added that Vertu’s other businesses in Yorkshire are performing strongly.

In July, it opened a new state-of-the-art Vauxhall dealership in Knaresborough and in January it bought a Vauxhall dealership in Keighley.

Last September it bought a Renault and Nissan dealership in Bradford.

“Yorkshire is one of our key target areas,” said Mr Forrester.

“It’s got very concentrated population centres and economic growth-wise I think Yorkshire will have a good time.

“You’ve got one of the major regional centres in terms of Leeds and from a Land Rover perspective, there are a lot of wealthy customers.”

Vertu now plans to open more Bristol Street Motors dealerships in the county.

The group’s turnover rose by 33 per cent to £837m in the six months to August 31 and pre-tax profits rose by 69 per cent to £8.6m.

Vertu said conditions were favourable for the motor market over the first half with strong new car retail market growth combined with used car price rises.

It added that stronger volumes in car sales should lead to higher after sales revenues in the coming periods.

Mr Forrester said the UK consumer environment has strengthened over recent months, reflecting an improved UK economic backdrop.

He added that the weakness of the wider European economy means manufacturers are likely to direct higher volumes of new vehicles to the UK.

While there is a risk that this could lead to pressure on new vehicle margins, he said a higher volume environment normally benefits the group. The latest SMMT forecast for the total new car market for 2013 has been increased to 2.22 million, and the forecast for 2014 is 2.24 million.

September is a key month for group profitability, being a new vehicle plate change month.

Analysts at Liberum Capital said: “Vertu is developing an excellent track record for delivering on its acquisition and turnaround strategy.

“The balance sheet is strong with net cash of £15.3m forecast for 2014 and property backing of £104.5m, leaving plenty of firepower for further acquisitions in both premium and volume.”

Vertu is the sixth largest automotive retailer in the UK with a network of 99 sales and aftersales outlets across the UK.

Its dealerships operate under the Bristol Street Motors, Vertu Honda, Vertu Volkswagen, Farnell Land Rover and Macklin Motors brand names.

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