H.R. Owen Plc
(the "Company" or the "Group")
Preliminary Results 2013
H.R. Owen, the luxury motor retailer, today announces its preliminary results
for the year ended 31 December 2013.
Financial Highlights
* Revenue up 7% to £261.1 million
* Profit before exceptional items, discontinued operations and tax (the
"underlying operating profits") of £3.8 million (2012: £2.3 million), an
increase of 63%
* Profit before tax of £2.4 million (2012: £2.3 million)
* Profit from discontinued operations for the year of £0.2 million (2012:
£0.3 million)
* Basic earnings per share from continuing operations before exceptional
charges of 13.1 pence (2012: 6.0 pence)
* Basic earnings per share of 8.4 pence (2012: 7.3 pence)
* Proposed final dividend for 2013 of 2.0 pence per share (2012: 1.25 pence
per share)
Joe Doyle- Chief Executive, H.R.Owen Plc commented; "This is an excellent
result with underlying trading profits up 63% year on year. It was driven by a
strong performance acrossall areas of the business, although of particular
satisfaction was the execution of our used car strategy, delivering an increase
in volumes of over 30%whilst also increasing average margins.The outlook for
the business remains very positiveas we have a substantial new car forward
order book. We will alsocontinue in 2014, to pursue our strategy of increasing
manufacturer representation and delivering value added new products."
Further Information:
H.R. Owen (020 7245 1122)
Joe Doyle, Mike Warren
Charles Stanley Securities (020 7149 6000)
Marc Milmo, Carl Holmes
Halkin Communications (07904 680 547)
Sara Batchelor
About H.R. Owen
H.R. Owen has evolved into the business it is today over a period of nearly 70
years. We operate a number of vehicle franchises in the prestige and specialist
car market for both sales and aftersales, predominantly in the London area.
These cover fifteen sales franchises and eighteen aftersales franchises for
Aston Martin, Audi, Bentley, BMW, Bugatti, Ferrari, Lamborghini, Lotus,
Maserati, MINI, Pagani and Rolls-Royce. We have a long and prestigious history
and can trace our foundations back to the formation by Harold Rolfe Owen of a
dealership selling Bentley and Rolls-Royce cars in 1932.
More information about H.R. Owen can be found on our website http://www.hrowen.co.uk.
Chairman's Statement
In what was an eventful year for the Group, I am pleased to report that the
trading performance during 2013 was very strong, with underlying operating
profits up by 63%. Capital management was substantially improved, with return
on capital for the year advancing by four percentage points. We also continued
to enjoy a healthy cash position, with cash and deposits as at 31 December 2013
amounting to £11 million, some £5 million higher than at 31 December 2012.
During 2013 we continued to progress the development of several key strategic
initiatives. Our used car performance, which is a key area of opportunity for
the Group, showed excellent growth, with volumes up by 30% from the previous
year and with margins also higher. Digital marketing was further enhanced,
resulting in visitor numbers to our website, www.hrowen.co.uk, increasing by
36% over the previous year and continuing to grow at an encouraging rate. Our
new Customer Relationship Management system was fully implemented throughout
the Group and we have continued to develop our customer magazine "DRIVE".
The results from the former Broughtons business, which was acquired in August
2011 and was re-branded in 2012 as H.R. Owen, showed further significant
improvement in 2013, contributing in excess of £1 million towards the Group's
annual profit. The acquisition was strongly earnings enhancing in 2013.
During the summer of 2013, we commenced trading at our new Lamborghini
franchise for Berkshire, which is based alongside Bentley at our existing
Pangbourne premises. We were delighted to welcome Thomas Felbermair, Commercial
Director of Lamborghini SpA, to the dealership for its formal opening in
September.
We continue to develop the future strategy of the Company with further
opportunities to grow both our used car and aftersales businesses, and have
recently launched an H.R. Owen branded accident aftercare business. We also
continue to strengthen relationships with our manufacturer partners, and expect
to be opening at least one additional franchise during 2014.
Our progressive dividend policy has been maintained and accordingly we have
increased the proposed final dividend for 2013 to 2 pence per ordinary share.
Total payment of dividends for 2013 will therefore amount to 4 pence per share,
representing an increase of 78% over the 2¼ pence per share paid to
shareholders in relation to 2012.
In July 2013 the Board received an offer for the Company of 130 pence per share
from Berjaya Philippines Inc ("BPI"). Subsequently, in September 2013, BPI
increased their offer to 170 pence per share, which the Board considered
represented fair value for H.R. Owen and, as a result, recommended that
shareholders accept the increased offer. In October BPI closed their offer and
announced that their total beneficial shareholding amounted to approximately
71.2% of the Company's issued share capital. Our previous largest shareholder,
Bentley Motors Limited, decided to retain their shareholding, and currently own
approximately 26.3% of the Company's issued share capital.
Following the successful completion of Berjaya's offer, the Chairman, Jon
Walden decided to step down from the Board and, as Senior Independent Director,
I agreed to chair the Board until a new Chairman is appointed.
Earlier this month, shareholders approved a resolution to de-list the Company
and we expect this process to complete on 15 April 2014. This will mark the
beginning of a new chapter in the Company's history and we look forward to
working closely with BPI and Bentley to continue growing and developing the
business.
We are pleased with the way trading has commenced in the current financial year
and we look forward to 2014 with confidence. Our balance sheet remains strong
with a healthy cash position and we have the resources to continue to generate
profitable growth in our existing businesses, as well as develop new
opportunities as they arise.
Finally, I would like to record my appreciation of the significant contribution
made by all of our colleagues to the Group's performance in 2013.
Debbie Hewitt MBE
Chairman
26 March 2014
Business Review
Results
In the year to 31 December 2013, revenue from continuing operations increased
to £261.1 million (2012: £243.5 million). The Group made a profit from
continuing operations before tax and exceptional items for the year of £3.8
million (2012: £2.3 million). The Group incurred an exceptional charge of £1.4
million in the year associated with the successful offer made by Berjaya
Philippines Inc ("BPI"). Earnings per share from continuing operations before
exceptional items were 13.1 pence (2012: 6.0 pence) with total earnings per
share from continuing operations of 7.4 pence (2012: 6.0 pence). The Group's
basic earnings per share for the year were 8.4 pence (2012: 7.3 pence).
The Group's effective corporation tax rate for 2013 was 24.8%, significantly
lower than the 39.2% experienced in the comparative period. The tax charge for
2012 included capital gains tax which crystallised on a previously held-over
gain associated with a premium received on the surrender of a lease whilst the
current year charge benefitted from tax deductions associated with the issue of
shares under the Company's long term incentive plan.
A final dividend for 2012 of 1.25 pence per share and an interim dividend for
2013 of 2.0 pence per share were paid during the year. Considering the
performance of the Company during 2013, the directors are now recommending the
payment of an increased final dividend for 2013 of 2.0 pence per ordinary
share, to be paid on 23 May 2014 to shareholders on the register at the close
of business on 25 April 2014. The Board continues to plan for a progressive
dividend growth strategy for future years.
Review of financial position
At 31 December 2013, the Group had cash balances of £11.0 million (2012: £6.2
million, inclusive of current interest-bearing deposits of £1.5 million) and
vehicle stocking loans (excluding manufacturer stocking loans) of £8.0 million
(2012: £9.1 million). The Group recorded a cash inflow for the year of £6.3
million (2012: outflow of £2.5 million).
Net assets increased in the year by 24% to £15.6 million helped by the strong
trading result, a significant reduction in the deficit on the Group's
defined-benefit pension scheme and by share issues in the year. Net current
asset more than doubled in the year to £4.9 million.
Review of operationsand principal activities
The H.R. Owen group ("the Group") operates a number of vehicle franchises in
the prestige and specialist car market for both sales and aftersales,
predominantly in the London area but also in Berkshire, Gloucestershire,
Hertfordshire, Surrey, and Manchester. The Group continues to focus on selling
luxury and supercars to wealthy and discerning car buyers, primarily in the
South of England and to delivering superior customer service to many of the
UK's wealthiest people.
The Group holds dealer agreements with various manufacturers. These cover
fifteen sales franchises and fourteen aftersales franchises for its Aston
Martin, Bentley, Bugatti, Ferrari, Lamborghini, Maserati, Pagani and
Rolls-Royce marques. The Group also operates aftersales only franchises for
Audi, BMW, Lotus and MINI.
We recorded healthy growth in the volumes of cars sold in 2013 with a
particularly strong used car performance. Our Jack Barclay Bentley dealership
achieved the highest used car sales figures in the world in 2013 and was the
third highest for new cars. However, overall, our new car volumes fell slightly
year-on-year which reflected the UK national position for registrations for our
marques. Our sales of Bugattis remained amongst the highest in the world and
our Bentley Surrey dealership was the manufacturer's top performing dealer in
the UK. Like-for-like, combined new and used car sales increased by 15%. In
total, 672 new cars and 1,101 used cars were sold during the year.
Profits from the aftersales side of the business in 2013 improved to £7.8
million due to continuing excellent profitability in our key parts operations.
I was especially proud of our Jack Barclay aftersales business which was
successful in acquiring the Royal Warrant for Her Majesty the Queen, whilst our
Audi aftersales business won the "Technical Cup for 2013" beating all the other
Audi UK outlets for diagnosing and repairing technical faults. Our Bugatti
aftersales operation retains its status as a "Service Partner of Excellence",
one of only four in their worldwide network. Our Ferrari and Maserati
aftersales operations service the most vehicles of this type of dealers in
Europe.
Focus areas targeted in 2013
Three areas targeted for 2013 all saw significant improvement;
* Used car sales were 30% up year-on-year, helped by faster stock
preparation, an increased buying team and wider advertising of stock. The
Group won the `Used Car Dealership of the Year' award from Car Dealer
magazine, which reported, "H.R. Owen has undergone a magnificent
transformation".
* The `Group First' objective was championed behind the scenes through the
completion of the rollout of KORE, which allows all sites to see all
customers, and in public through Group-level activities and events
underpinned by consistent branding. Employees responded strongly in the
staff survey to the statement "I feel as much a part of the H.R. Owen group
as my specific site or franchise".
* Improvements in customer service were measured by rolling out surveys to
all customers via KORE. Over 2,500 email questionnaires were sent out in
the final quarter of 2013, generating a 13% response rate. The results were
exceptional and demonstrate the high value our customers place on H.R. Owen
service. The main measure on the survey is the widely used Net Promoter
Score, and the Company saw an average score of +71 (to put this in context
Apple, one of the world's most desirable brands, achieved a score of +47 in
a 2012 Interbrand survey).
Other key events
In March, the Group's defined benefit pension scheme was closed to future
accrual with all existing members being transferred across to a new defined
contribution Scheme and therefore becoming deferred members of the defined
benefit scheme. This resulted in a curtailment gain arising of £343,000 which
has been credited to Other Income in the Income Statement.
In November 2013 we repeated our annual employee survey. This was well received
with pleasing levels of participation and showed significant improvements in
levels of staff morale and motivation.
Future outlook
We continue to hold a strong order book for new cars and expect to benefit
further from additional new models due for launch in 2014. Used car trading has
started the year very strongly and aftersales is also ahead of current
expectations. I am also pleased to announce that an agreement has been reached
with one of our existing manufacturer partners for the grant of additional
sales and aftersales franchises, which will open in late 2014.
The foundations for the Group's success in serving a highly discerning target
market are now firmly in place and as 2013 has shown, the Group is already
reaping the benefit in both employee and customer loyalty. For 2014, three
areas of significance have been identified to focus on;
* Closing the gap between the top and bottom performers through coaching,
training and performance management;
* Creating a `one H.R. Owen' ethic across all sites;
* Identifying efficiency gains and incremental improvements that collectively
will improve profits and service.
Principal risks and uncertainties
The management of the business and the execution of the Group's strategy are
subject to a number of risks. These risks are formally reviewed by the Board
and where appropriate, monitored and mitigated by suitable processes.
Any business associated with the sale of cars is vulnerable to outside factors,
both political and economic. Interest rate changes, increasing fuel costs,
congestion charging and broader environmental concerns could all have an impact
on a consumer's decision whether or not to buy a particular new or used car.
Our activities are spread across a number of manufacturers and across both new
and used cars and aftersales in order to attempt to minimise the risks that
arise.
The Group continues to be dependent on high volumes of new car sales to allow
our business model to make a pre-tax profit as the cost of getting to market in
one of the most expensive cities in the world remains very high. However, the
Group is particularly sensitive to any deterioration in trading conditions,
especially where that is combined with a lack of new model introductions.
Having said this, our main franchises performed robustly and the Bentley,
Ferrari, Lamborghini and Rolls-Royce London operations retained their position
as the UK's largest dealer outlet for the supply of new cars.
Other risks relate to the close contractual relationships we have with a number
of vehicle manufacturers and in particular our reliance on their continuing to
supply a suitable mix of popular vehicle models at competitive prices. If this
supply ceases, is restricted or over-supplied for any reason, then clearly the
impact on our performance, especially in relation to new cars, could have an
adverse effect on profitability. This risk is mitigated by the Group's spread
of manufacturer relationships and the Group's careful observance of maintaining
manufacturer operational standards. Any change in control of the Group could
run the risk of either impacting on the relationships we have with the
manufacturers or conceivably causing our contracts with them to be terminated
altogether. However, we are satisfied that no adverse consequences have
resulted from the recent acquisition of a majority shareholding in the Company
by Berjaya Philippines Inc.
Possible future changes to the legislative framework governing the sale of new
cars in the UK and the competition provided by internet-based brokers and
sellers, also pose risks to us. We have developed a significant on-line
presence in order to ensure exposure to these rapidly developing new avenues of
sale. In the area of aftersales, any improvement in the reliability and
durability of cars will reduce their need for servicing and repairs, and the
threat of increased competition from the independent service and repair sector
is now a permanent feature of the market. The Group's investment in maintaining
close relationships with its customers aims to generate customer loyalty and
mitigate the risk of aftersales work migrating to the independent sector.
Finally, the Group is dependent upon a number of business critical systems
which, if interrupted for a significant period of time, would be likely to have
a material effect on the smooth running of the Group's operational and
financial systems. A number of contingency plans are already in place to
minimise this risk and which aim to ensure that the Group could resume
operations within an appropriate period of time.
Key performance indicators ("KPIs")
The Group monitors performance by reference to seven KPIs. Performance, during
the current and prior year, is set out in the table below.
2013 2012
Segment profit percentage:
* Sales 6% 5%
* Aftersales 21% 22%
New vehicle volumes 672 694
Used vehicle volumes: 1,101 844
Aftersales labour efficiency 86% 82%
Return on capital employed 13% 10%
Annual staff survey participation rate 86% 80%
Net promoter score from annual staff survey 39 16
Segment profit percentage for vehicle sales improved slightly from 2012 levels,
due to a significantly improved used car performance. However, profit
percentages achieved for aftersales fell marginally due to changes in sales
mix. Aftersales labour efficiency, defined as the hours sold by our technicians
as a percentage of their total hours worked, improved in the year as we reaped
the benefits of operational efficiencies during the period.
Return on capital employed improved significantly during 2013 due to a
combination of increased levels of profitability and tight controls over the
levels of working capital.
Net Promoter Score ("NPS") is a widely used management tool for gauging the
loyalty of a firm's relationships. NPS can be used with both staff and
customers, and serves as an alternative to traditional satisfaction research.
Staff are asked whether they would recommend H.R. Owen as a place to buy from
and then whether they would recommend the company as a place to work. From
individual scores an overall score for a business, ranging from -100 to +100,
can be calculated. An NPS that is greater than zero is considered good and an
NPS of more than 50 is considered excellent.
Joe Doyle
Chief Executive
26 March 2014
Unaudited Consolidated Income Statement
for the year ended 31 December 2013
Notes Before Exceptional 2013 2012
Exceptional Items Total Total
Items £'000 £'000 £'000
£'000
Continuing operations
Revenue 261,096 - 261,096 243,516
Cost of sales (222,072) - (222,072) (208,237)
Gross profit 39,024 - 39,024 35,279
Other income 730 - 730 304
Distribution costs (19,465) (42) (19,507) (17,303)
Administrative (15,594) (1,365) (16,959) (14,993)
expenses
Operating profit 4,695 (1,407) 3,288 3,287
Finance costs (980) - (980) (1,571)
Finance income 60 - 60 596
Profit before 3,775 (1,407) 2,368 2,312
taxation
Taxation (643) 55 (588) (906)
Profit for the year 3,132 (1,352) 1,780 1,406
from continuing
operations
Profit for the year 6 233 - 233 325
from discontinued
operations
Profit for the year 3,365 (1,352) 2,013 1,731
attributable to
owners of the parent
Earnings per share
from continuing
operations:
- Basic (pence per 3 7.4p 6.0p
ordinary share)
- Diluted (pence per 3 7.4p 6.0p
ordinary share)
Earnings per share:
- Basic (pence per 3 8.4p 7.3p
ordinary share)
- Diluted (pence per 3 8.4p 7.3p
ordinary share)
Unaudited Consolidated Statement of Other Comprehensive Income for the year
ended 31 December 2013
2013 2012
£'000 £'000
Profit for the year 2,013 1,731
Actuarial gains/(losses) recognised in defined 658 (581)
benefit pension scheme
Deferred taxation thereon (132) 134
Tax benefit on special pension contributions
- deferred tax (34) (28)
- current tax 38 29
Total other comprehensive income/(expense) for 530 (446)
the year
Total comprehensive income for the year 2,543 1,285
attributable to owners of the parent
2013 2012
£'000 £'000
Total comprehensive income for the year:
From continuing operations 2,310 960
From discontinued operations 233 325
Total comprehensive income for the year 2,543 1,285
attributable to owners of the parent
Unaudited Consolidated Balance Sheet
as at 31 December 2013
Notes 2013 2012
£'000 £'000
Assets
Non-current assets
Intangible assets 3,145 3,145
Property, plant and equipment 7 8,224 8,810
Deferred tax assets 228 699
Total non-current assets 11,597 12,654
Current assets
Inventories 44,962 39,848
Trade and other receivables 10,518 10,627
Cash and cash equivalents 10,996 4,657
Other current interest-bearing deposits - 1,500
10,996 6,157
Total current assets 66,476 56,632
Liabilities
Current liabilities
Financial liabilities - borrowings (31,996) (29,457)
Current tax liabilities (80) (892)
Trade and other payables (29,504) (24,138)
Total current liabilities (61,580) (54,487)
Net current assets 4,896 2,145
Non-current liabilities
Deferred tax liabilities (895) (1,128)
Retirement benefit liability 9 (5) (1,074)
Total non-current liabilities (900) (2,202)
Net assets 15,593 12,597
Equity attributable to owners of the parent
Ordinary shares 12,522 11,806
Share premium account 420 -
Retained earnings 2,651 791
Total equity 15,593 12,597
Unaudited Consolidated Statement of Changes in equity
for the year ended 31 December 2013
(Accumulated
deficit)/
Orinary Share retained Total
Shares Premium earnings equity
£'000 £'000 £'000 £'000
At 1 January 2012 11,806 - (142) 11,664
Profit for the year - - 1,731 1,731
Other comprehensive - - (581) (581)
(expense)/income:
Actuarial losses recognised
in defined benefit pension
scheme
Deferred tax thereon - - 134 134
Corporation tax benefit on
special pension contributions
- deferred tax - - (28) (28)
- current tax - - 29 29
Other comprehensive expense - - (446) (446)
for the year
Total comprehensive income - - 1,285 1,285
for the year
Transactions with owners: - - (402) (402)
Dividends paid
Share options:
- value of employee services - - 50 50
At 31 December 2012 11,806 - 791 12,597
Profit for the year - - 2,013 2,013
Other comprehensive - - 658 658
(expense)/income:
Actuarial gains recognised
in defined benefit pension
scheme
Deferred tax thereon - - (132) (132)
Corporation tax benefit on
special
pension contributions
- deferred tax - - (34) (34)
- current tax - - 38 38
Other comprehensive income - - 530 530
for the year
Total comprehensive income - - 2,543 2,543
for the year
Transactions with owners: - - (767) (767)
Dividends paid
Shares issued in the year 716 420 (452) 684
Share options:
- value of employee services - - 536 536
At 31 December 2013 12,522 420 2,651 15,593
Unaudited Consolidated Cash Flow Statement
for the year ended 31 December 2013
Notes As
restated
2013 2012
£'000 £'000
Cash flows from operating activities
Cash generated from operations 8 7,589 1,657
Finance costs (1,094) (923)
Tax paid (1,344) (558)
Tax recovered 54 22
Net cash generated from operating activities 5,205 198
Cash flows from investing activities
Proceeds from sale of property, plant and 12 7
equipment
Purchase of property, plant and equipment (1,371) (846)
Finance income 76 30
Decrease/(increase) in other current 1,500 (1,500)
interest-bearing deposits
Net cash generated from/(used in) investing 217 (2,309)
activities
Cash flows from financing activities
Issue of new shares 684 -
Payment of dividends to shareholders 4 (767) (402)
Receipt of other loans 1,000 -
Net cash generated from/(used in) financing 917 (402)
activities
Increase/(decrease) in cash and cash 6,339 (2,513)
equivalents
Cash and cash equivalents at 1 January 4,657 7,170
Cash and cash equivalents at 31 December 10,996 4,657
Explanatory notes to the Financial Information
1. Basis of preparation and statement of compliance
The consolidated financial information in this announcement does not constitute
statutory accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts of the Group, on which the auditors will report, will be
delivered to the Registrar of Companies. The financial information has been
prepared using the recognition and measurement principles of International
Financial Reporting Standards ("IFRSs") as adopted by the European Union and
the Listing Rules of the Financial Services Authority. The comparative figures
for the year to 31 December 2012 have been extracted from, but do not
constitute, the Group's statutory financial statements for that financial year.
Those financial statements have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified, did not contain an emphasis of matter paragraph and did not
contain a statement under sections 498(2) or 498(3) of the Companies Act 2006.
The accounting policies adopted are consistent with those applied in the 2012
financial statements and Accounts.
Company details
The Company's registered address is Melton Court, Old Brompton Road, London SW7
3TD. The Company is a public limited company and is incorporated and domiciled
in England and Wales. The Company's registration number at Companies House is
1753134.
New and forthcoming accounting standards
The following standard has been applied to the 2013 financial results:
* Amendments to IAS19 Employee Benefits: The amendments require immediate
recognition of actuarial gains and losses in other comprehensive income and
eliminate the corridor method. The principal amendment that will affect
most entities with a defined benefit plan is the requirement to calculate
net interest income or expense using the discount rate used to measure the
defined benefit obligation. The effect of adopting this Standard has been
to reduce finance income in the period by £157,000. There is no effect on
the net asset position. As a result of adopting IAS 19 (Revised) the
finance cost and finance income for the prior year have both been reduced
by £534,000 to reflect the net income or expense. There is no effect on the
net asset or overall cash flow position.
There are no other new standards, amendments to standards, or interpretations
which are effective in 2013 that are relevant to the Group.
Going concern
The Group's business activities, together with the factors likely to affect its
future development, performance and position are set out above in the Business
Review. The directors remain convinced that the Group is well placed to manage
its business risks successfully.
Therefore, after making appropriate enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources to continue
operating for the foreseeable future. For this reason they continue to adopt
the going concern basis in preparing the Group's financial statements.
2. Segmental reporting
The chief operating decision-maker has been identified as the board of
directors. The Board reviews the Group's internal reporting in order to assess
performance and allocate resources. Management has determined the operating
segments based on these reports.
The Board considers the business primarily from a product perspective,
assessing the performance of car sales (both new and used) and aftersales
(including servicing, parts and bodyshop).
The Board assesses the performance of the operating segments based on a measure
of adjusted operating profit, defined as gross profit less directly
attributable expenses. This measurement basis excludes the effects of
non-recurring income and expenditure from the operating segments, such as
exceptional gains on lease disposals and redundancy costs and other exceptional
items. Finance income and costs are not included in the result for each
operating segment that is reviewed by the Board. Other information provided to
the Board is measured in a manner consistent with that in the Financial
Statements.
For 2013 the Group is organised into two main business segments: the sale of
new and used motor vehicles and an aftersales operation consisting of the
servicing of vehicles, sales of parts and bodyshop repairs. Unallocated costs
represents shared property costs and depreciation of fixed assets, in addition
to background support services, such as finance, IT and marketing, and
corporate expenses which cannot be directly attributed to either business
segment.
The Group operates from a single geographical area, namely the United Kingdom.
Year ended Sales Aftersales Unallocated Group
31 December 2013 £'000 £'000 £'000 £'000
Continuing operations
Revenue - external customers 223,148 37,948 - 261,096
Segment result 12,736 7,789 (15,830) 4,695
Exceptional charge - - (1,407) (1,407)
Finance costs - - (980) (980)
Finance income - - 60 60
Profit before tax 12,736 7,789 (18,157) 2,368
Taxation - - (588) (588)
Profit for the year from continuing 12,736 7,789 (18,745) 1,780
operations
Discontinued operations
Revenue - external customers - - - -
Segment result - - 233 233
Finance costs - - - -
Finance income - - - -
Profit before tax - - 233 233
Taxation - - - -
Profit for the year from discontinued - - 233 233
operations
Inventories 41,846 3,116 - 44,962
Other segment assets 1,813 3,174 16,527 21,514
Unallocated assets
- property, plant and equipment - - 8,224 8,224
- intangible assets - - 3,145 3,145
- deferred tax - - 228 228
Total assets 43,659 6,290 28,124 78,073
Inventory stocking loans (31,337) (659) - (31,996)
Other segment liabilities (20,697) (1,098) (7,789) (29,584)
Unallocated liabilities
- Deferred tax and other - - (900) (900)
non-current liabilities
Total liabilities (52,034) (1,757) (8,689) (62,480)
Net assets/(liabilities) (8,375) 4,533 19,435 15,593
The total segmental loss of £15,597,000 which cannot be allocated to either Car
Sales or Aftersales segments includes depreciation charges of £1,948,000.
Similarly, other segment assets of £16,527,000 include capital expenditure of
£1,371,000.
Year ended Sales Aftersales Unallocated Group
31 December 2012 £'000 £'000 £'000 £'000
Continuing operations
Revenue - external customers 209,511 34,005 - 243,516
Segment result 9,626 7,354 (13,693) 3,287
Finance costs - - (1,037) (1,037)
Finance income - - 62 62
Profit before tax 9,626 7,354 (14,668) 2,312
Taxation - - (906) (906)
Profit for the year from continuing 9,626 7,354 (15,574) 1,406
operations
Discontinued operations
Revenue - external customers - - - -
Segment result - - 325 325
Finance costs - - - -
Finance income - - - -
Profit before tax - - 325 325
Taxation - - - -
Profit for the year from - - 325 325
discontinued operations
Inventories 36,623 3,225 - 39,848
Other segment assets 3,684 1,832 11,268 16,784
Unallocated assets
- property, plant and equipment - - 8,810 8,810
- intangible assets - - 3,145 3,145
- deferred tax - - 699 699
Total assets 40,307 5,057 23,922 69,286
Inventory stocking loans (28,975) (482) - (29,457)
Other segment liabilities (15,779) (781) (8,470) (25,030)
Unallocated liabilities
- Deferred tax and other - - (2,202) (2,202)
non-current liabilities
Total liabilities (44,754) (1,263) (10,672) (56,689)
Net assets/(liabilities) (4,447) 3,794 13,250 12,597
The total segmental loss of £13,368,000 which cannot be allocated to either Car
Sales or Aftersales segments includes depreciation charges of £1,918,000.
Similarly, other segment assets of £11,268,000 include capital expenditure of
£846,000.
3. Earnings per share
2013 2012
Pence per Pence per
ordinary ordinary
share share
Basic and diluted earnings per share 7.4 6.0
- continuing operations 1.0 1.3
- discontinued operations
Total basic and diluted earnings per share 8.4 7.3
Basic earnings per share is calculated by dividing the earnings attributable to
owners of the parent by the weighted average number of ordinary shares
outstanding during the year. The calculation of basic earnings per share is
based on the profit after taxation of £2,013,000 (2012: £1,731,000) and the
weighted average number of shares in issue during the period of 23,936,368
(2012: 23,611,742).
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares which are currently exercisable and where the exercise price is less
than the prevailing market share price. The Group has currently has no classes
of dilutive potential ordinary shares.
4. Dividends
2013 2012
£'000 £'000
Final dividend paid for the year ended 31 December 2012 295 165
of 1.25 pence (2011: 0.7 pence) per ordinary 50 pence
share
Interim dividend paid for the year ended 31 December 2013 472 237
of 2.0 pence (2012: 1.0 pence) per ordinary 50 pence
share
767 402
The directors are recommending the payment of a final dividend for the year
ended 31 December 2013 of 2.0 pence per ordinary share, to be paid on 23 May
2014, to shareholders on the register at the close of business on 25 April
2014.
5. Exceptional charge
Group
2013 2012
£'000 £'000
Costs associated with takeover 1,407 -
During the year the Company received an unsolicited offer which ultimately
resulted in Berjaya Philippines Inc acquiring a 71.2% shareholding in H.R. Owen
Plc. The professional fees associated with the Company's initial defence of the
bid along with accounting charges and employment costs associated with the
grant of awards under the Long Term Incentive Plan as a direct result of the
bid amounted to £1,407,000.
6. Discontinued operations
Group
2013 2012
£'000 £'000
Revenue - -
Cost of sales - -
Gross profit - -
Other income 233 325
Distribution costs - -
Administrative expenses - -
Operating profit 233 325
Finance costs and similar charges - -
Finance income - -
Profit before taxation 233 325
Taxation - -
Profit for the year from discontinued operations 233 325
The Group has disposed of various businesses over recent years, solely by sale
of trade and assets. As a result of these transactions, a number of residual
liabilities were retained by the Group which relate to pre-disposal trading and
the sale processes. At 31 December 2013 the Group has reassessed these balances
and released £233,000 of accruals and deferred income balances no longer
required to profit in the year. Remaining residual liabilities will continue to
be assessed in future periods.
In March 2011, the Group closed its Alfa Romeo dealership in Chelsea, London
and relinquished the franchise back to the manufacturer. In March 2012, the
lease was surrendered back to the landlord in return for a cash premium of £
325,000.
Discontinued operations had no effect on the Group's cash flow statement in the
current year. In the prior year, discontinued operations generated a cash
inflow of £325,000.
7. Property, plant and equipment
Year ended 31 December 2013 Long Short
leasehold leasehold Plant and
premiums improvements equipment Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2013 300 10,474 4,738 15,512
Additions - 746 625 1,371
Disposals - (340) (399) (739)
At 31 December 2013 300 10,880 4,964 16,144
Accumulated depreciation
At 1 January 2013 238 4,274 2,190 6,702
Charge for the year 28 1,101 819 1,948
Eliminated on disposals - (340) (390) (730)
At 31 December 2013 266 5,035 2,619 7,920
Net book value 34 5,845 2,345 8,224
At 31 December 2013
Net book value 62 6,200 2,548 8,810
At 31 December 2012
Long leasehold land and buildings includes a net book value of £34,000 (2012:
£62,000) in respect of premiums on long leaseholds with less than 50 years to
expiry.
Year ended 31 December 2012 Long Short
leasehold leasehold Plant and
premiums improvements equipment Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2012 458 10,486 4,816 15,760
Additions - 506 340 846
Disposals (158) (518) (418) (1,094)
At 31 December 2012 300 10,474 4,738 15,512
Accumulated depreciation
At 1 January 2012 368 3,721 1,778 5,867
Charge for the year 28 1,071 819 1,918
Eliminated on disposals (158) (518) (407) (1,083)
At 31 December 2012 238 4,274 2,190 6,702
Net book value 62 6,200 2,548 8,810
At 31 December 2012
Net book value 90 6,765 3,038 9,893
At 31 December 2011
8. Cash flows from operating activities
Reconciliation of net profit to net cash flows from operating activities:
2013 2012
£'000 £'000
Continuing operations 1,780 1,406
Profit for the year
Adjustments for:
Tax charge 588 906
Depreciation charge 1,948 1,918
(Profit)/loss on disposal of (3) 5
property, plant
and equipment
Share option charge/(credit) 536 50
Finance income (60) (27)
Finance costs 980 36
Changes in working capital:
(Increase)/decrease in inventories (2,635) 1,790
Decrease/(increase) in trade and 93 (2,127)
other receivables
Increase/(decrease) in trade and 4,467 (3,515)
other payables
Excess of pension contributions over (105) (76)
current service cost
Cash generated from continuing 7,589 1,332
operations
Discontinued operations
Profit for the year 233 325
Decrease in trade and other payables (233) -
Cash generated from/(used in) - 325
discontinued operations
Cash generated from operations 7,589 1,657
9. Retirement benefit liability
The Group operates the H.R. Owen London Defined Benefit Pension Scheme, a
defined benefit pension scheme, which operates on a pre-funded basis. The
funding policy is to contribute such variable amounts as, on the advice of the
Scheme's actuary, will achieve a 100% funding level on a projected salary
basis. Actuarial assessments covering expense and contributions are carried out
by independent qualified actuaries, with the last such completed review being
carried out as at 5 April 2010. The Scheme was closed to future accrual during
2013.
The Scheme currently operates in a deficit position and, as a result, H.R. Owen
Plc agreed with the Scheme's trustees that the Group would make an additional
annual contribution of £50,000 in May 2011 and May 2012 and, if the Scheme
remained in a deficit position, a further payment of £50,000 in 2013. By
agreement between the Company and the Trustees, the cash payment for 2013 was
increased from £50,000 to £100,000. All payments scheduled have been made to
the Scheme. H.R. Owen Plc also makes additional monthly contributions of £4,000
to the Scheme, with these additional monthly contributions continuing whilst
the Scheme remains in a deficit position.
10. Related party transactions
Bentley Motors Limited holds shares in H.R. Owen Plc equivalent to 26.3% (2012:
27.9%) of the Company's issued share capital and, accordingly has been deemed
to be a related party throughout the year under review.
The Group operates four Bentley franchises for new and used car sales, through
its Jack Barclay Limited and Broughtons of Cheltenham Limited subsidiaries. The
Group also operates five Bentley aftersales franchises from its service and
bodyshop facilities through its Jack Barclay Limited, Broughtons of Cheltenham
Limited and H.R. Owen Dealerships Limited subsidiaries. During the year, the
Group purchased a total value of vehicles and parts from Bentley Motors Limited
of £74.9 million (2012: £61.1 million). At 31 December 2013 an amount of £0.8
million (2012: £1.0 million) was owed by the Group to Bentley Motors Limited.
All transactions were conducted on an arm's length basis and under normal
commercial terms.
During 2013, two directors each purchased a car each from the Group with a
combined cost of purchase of £378,000. As part of these transactions £223,000
was allowed for cars taken in as part exchange. All of these transactions were
conducted on an arm's length basis and under normal commercial terms and no
amounts remain outstanding at 31 December 2013.
11.Ultimate parent company and controlling party
The immediate parent undertaking is Berjaya Philippines Inc, a company
incorporated in the Philippines and listed on the Philippine Stock Exchange.
The ultimate parent undertaking is Berjaya Corporation Berhad, a company
incorporated in Malaysia and listed on the Main Market of Bursa Malaysia
Securities Berhad, Malaysia.
The largest group in which the results of the company are consolidated is that
headed by Berjaya Corporation Berhad, incorporated in Malaysia. The
consolidated accounts are available to the public and may be obtained from The
Company Secretary, Berjaya Corporation Berhad, Lot 13-01A, Level 13 (East
Wing), Berjaya Times Square, No. 1 Jalan Imbi, 55100 Kuala Lumpur, Malaysia.
12. Responsibility statement
The responsibility statement below has been prepared in connection with the
Company's financial statements for the year ended 31 December 2013, certain
parts of which are not included within this preliminary announcement.
We confirm that to the best of our knowledge:
* The financial statements, prepared in accordance with International
Financial Reporting Standards as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and profit of
the Company and the Group; and
* The Chairman's Statement and Business Review include a fair review of the
performance of the business and the future outlook for the Company and the
Group, together with a description of the principal risks and
uncertainties.
The results for the year ended 31 December 2013, and these preliminary
financial statements, were approved by the board of directors on 26 March 2014.
Joe Doyle Mike Warren
Chief Executive Finance Director