Overview Of The Business

Vertu Motors was formed in late 2006 to acquire and consolidate UK motor retail businesses. The Executive Directors are experienced within the sector, having previously held senior positions within Reg Vardy plc, the previously quoted motor retail group. On 27th March 2007 the Group acquired the 13th largest motor retailer in the United Kingdom, Bristol Street Motors. With the addition of Blake Holdings on 2nd May 2007, Vertu Motors is now the 10th largest motor retailer in the united kingdom. The Company will continue to seek to acquire businesses with the potential for performance improvements and which may contain freehold property portfolios. The Directors envisage that performance improvement opportunities will arise in acquired dealerships from increasing sales in new and used cars and after-sales services through improving efficiency of the business processes and providing exceptional customer service. This will be aided through the development of high performing motor retail professionals throughout the business as a result of training and selective recruitment. Further profit enhancements will be sought through the possible development and maximisation of channels to market, such as the internet, sub-prime finance, contract hire and fleet operations.

Acquisition Strategy

It is intended that the Company will acquire motor retail operations in the form of franchised dealerships and used car only operations. The Directors intend to acquire motor retail groups together with bolt-on dealerships in appropriate franchises and locations. The Company’s strategy will then be to drive operational efficiencies and organic growth to deliver returns to Shareholders.

The Company has a number of strategies to grow revenues going forward.

• Empowerment of senior management

• Priority focus on used car sales to improve the new : used car ratio

• Development of fleet and contract hire opportunities

• Utilisation of sub-prime finance providers to increase used car sales

• Focus on internet retail presence, diverting spend away from traditional marketing; and

• Development of an in-house used car warranty product.

In addition to revenue growth, the Company intends to introduce cost-saving measures such as:

Centralisation of procurement, for example oil, insurance, tyres etc

Spreading of marketing costs across multiple dealers

Improved customer retention through a roll-out of centralised contact centres

Cost synergies across multiple acquisitions, for example head office costs.

It is the intention of the Directors to acquire businesses which may include freehold property portfolios which will be used to maximise long term value for Shareholders. The Directors will look to complete acquisitions at valuations that will provide a positive return for Shareholders over the medium term.

Reasons For Admission and Placing

The story so far…

• In December 2006 the Group was admitted to Aim following an oversubscribed equity raise of £25m (£23.6 million after expenses).
• On 27th February 2007 the Group announced that it had exchanged contracts to purchase the entire share capital of Bristol Street Group Limited for estimated consideration of £31 million cash and £9m of shares to be placed with the vendor. In addition, debt estimated at £29m was to be assumed.
• On 27th March 2007 the Group completed the acquisition of Bristol Street and concluded a further equity placing of £26m (£22.6m after finance and acquisition expenses).
• On 2nd May 2007 the Group completed the acquisition of Blake Holdings Limited for estimated consideration of £4.9 million.
  The Blakes operations include a Vauxhall dealership in Chesterfield, a Vauxhall service centre in Matlock and Peugeot dealerships located in Chesterfield and Worksop.
• On 29th June 2007 the Group acquired four Honda car dealerships and one Honda Motorcycle dealership in the East Midlands, through the purchase of the entire share capital of Grantham Motors Company Limited for a cash consideration of £4.6m. The dealerships required are located in Grantham, Lincoln, Beston, Retford.
• On 29th June 2007 the Group acquired the trade and assets a Ford dealership in Morpeth, Northumberland from the Jennings Group for cash consideration of £2.6m.