H.R. Owen plc Interim Results 2011H.R. Owen, the luxury motor retailer, today announces its interim results for the six months ended 30
Six months to
Six months to
Revenue (£million)* £93.1 £78.9 +17.9
Profit before tax and exceptional items (£million)* £1.7m £1.6m +8.5
Profit before tax (£million)* £1.7m £0.8m +105.3
Basic earnings per share 4.1p 2.0p +105.0
Cash and cash equivalent balances £12.7m £11.5m +10.6
(*From continuing operations, i.e. all business units that have been operating throughout the six months ended 30 June 2011)
Andy Duncan Chief Executive, H.R. Owen Plc commented: The business had a strong first half and we grew sales despite the challenging economic headwinds. We are particularly pleased to have grown new car sales and improved our used car margins during this tough time.
There has been real momentum behind our new growth strategy Experience is Everything, including the opening of our Ferrari Atelier at The Berkeley and the acquisition of Broughtons of Cheltenham which strengthens our Bentley business and takes H.R. Owen into the Aston Martin franchise for the first time.
There are exciting product developments to come during the second half, including the launch of the Ferrari FF and Lamborghinis Aventador models. However, there is no room for complacency and we remain realistic about the prospects for the UK economy.
H.R. Owen (020 7245 1122)
Andy Duncan, Mike Warren
Maitland (020 7379 5151)
Richard Farnsworth, Tom Eckersley
About H.R. Owen
H.R. Owen has evolved into the Group it is today over a period of nearly 80 years. H.R. Owen operates a number of vehicle franchises in the prestige and specialist car market for both sales and aftersales, predominantly in the Greater London area. These cover thirteen sales franchises and fifteen aftersales franchises for Aston Martin, Audi, BMW/MINI, Bentley, Bugatti, Ferrari, Lamborghini, Lotus, Maserati, and Rolls-Royce. The company has a long and prestigious history and can trace its foundations back to the formation by Harold Rolfe Owen who opened a dealership selling Bentley and Rolls-Royce cars in 1932.
More information about H.R. Owen can be found on their website http://www.hrowen.co.uk
Chief Executives ReportI am pleased to report that the Group has improved its underlying trading results in the six months to 30
June 2011 and that performance has been ahead of internal expectations, despite the extremely challenging economic climate.
Profits from continuing operations, before tax and exceptional items, for the period were £1.7 million compared to £1.6 million to 30 June 2010. Group profit from continuing operations before tax for the period was £1.7 million (2010: £0.8 million which was net of an exceptional charge of £0.7 million) representing earnings per share after tax of 4.1 pence (2010: 2.0 pence). Earnings per share from continuing operations for the period was 5.5 pence (2010: 2.4 pence). Revenue from continuing operations for the period was £93.1 million compared to £78.9 million for the first half of 2010, an increase of 18%.
On 27 May 2011, the Company paid the final dividend in respect of the year ended 31 December 2010 of 2.0 pence per ordinary share. As part of H.R. Owens new strategy for growth Experience is everything we have carefully considered the Groups future expected uses for cash resources, specifically the investment required to drive the implementation of the strategy and the current level of the dividend paid to shareholders. In the recent past, the Group has distributed amounts equivalent to its full annual retained profits as dividend, but as a result of this review and the opportunities for growth outlined in the new strategy, the Board has decided to rebase the dividend to a lower level and, accordingly, have declared an interim dividend for the six months ended 30 June 2011 of 0.5 pence per ordinary share (2010: 2.0 pence per ordinary share). This dividend is expected to be paid on 21 October
2011 to shareholders on the register at the close of business on 23 September 2011. We expect the new H.R. Owen strategy will deliver significant growth for the Group in the years ahead, and in line with this, we would expect to be in a position to adopt a progressive dividend growth strategy for future years, with a target cover range of between 1.5 and 2.5.
Overall, there was a cash outflow in the period of just £0.5 million (2010: £3.6 million) despite significant capital expenditure in the period on the Groups new Bentley aftersales facility at Wandsworth, London and at the new Ferrari atelier at The Berkeley, Central London. The Group finished the period with a strong balance sheet including cash balances of £12.7 million (compared to
£13.2 million at 31 December 2010 and £11.5 million at 30 June 2010). Excluding manufacturer stocking loans of £12.9 million (2010: £11.7 million) the Group had no net debt (2010: Nil).
In the first six months of the year, when the Groups Sales operations traditionally deliver proportionally their best performance, new car volumes from continuing operations increased to 277 cars compared to 240 cars delivered to 30 June 2010. Results were boosted by strong deliveries in both the Groups Ferrari and Bentley Divisions. Used car volumes from continuing operations reduced to
231 cars from 250 cars delivered in 2010. However, margins on used cars were better than in the prior year and more than mitigated for the volume reduction.
Our Aftersales operations were adversely affected by the relocation of our Bentley aftersales operation in the period and by a restructuring of our BMW/MINI aftersales operations but are now noticeably improving.
Capital expenditure in the six months was £3.1 million (2010: £1.2 million), primarily associated with the development of the relocated Bentley aftersales business in Wandsworth, London and with the new Ferrari atelier at The Berkeley in Central London.
Following a review of the business after joining the Company we formally unveiled the new growth strategy for the Group, Experience is Everything, at the Annual General Meeting in May. Central to this new strategy is the strengthening of our relationships with clients from pre-purchase to the point of purchase and enhancing our post-sales offering. Implementation of the strategy is gaining momentum following the Ferrari Atelier opening and the acquisition of Broughtons of Cheltenham both of which enhance our service and product offer to clients.
In March 2011, the Group closed its Alfa Romeo dealership located at Parsons Green in London and, by mutual agreement, relinquished the franchise back to the manufacturer. The Group has entered into an agreement with its landlord at the site for the early surrender of the lease and expects this to occur shortly.
In July 2011, the Group acquired the entire share capital of Broughtons of Cheltenham Limited for a cash consideration of £1.5 million, including a payment for goodwill of £1.1 million. In addition, the Group settled a group loan of £1.3 million and assumed the companys outstanding bank overdraft. Broughtons of Cheltenham Limited operates three Bentley and one Aston Martin Sales and Aftersales operations in Cheltenham, Pangbourne and Byfleet and one Audi Aftersales operation in Cheltenham. The acquisition will significantly enhance the Groups Bentley representation and will also add Aston Martin to the marques represented by the Group. Due to the timing of the acquisition, the transaction is not expected to be earnings enhancing for the current year but is expected to be significantly earnings enhancing from 2012 onwards.
The results for the first half of 2011 have been very encouraging. Previously we highlighted to shareholders that, due to the profile of expected new car delivery dates for certain new car models, the generation of profits between the first and second halves of the year was expected to be more balanced than usual in 2011. Whilst this is still expected to be the case, there remains a degree of uncertainty over delivery schedules and this, combined with continuing significant signs of weakness in the UK economy, leads the Board to remain cautious. However, the implementation of the Groups recently announced strategy, including the acquisition of Broughtons of Cheltenham Limited, is expected to produce significant value for shareholders in the coming years.
Finally, I would like to record my appreciation of the contribution made by all our colleagues to the
Groups continuing improved performance.
22 August 2011
Independent Review Report to H.R. Owen PlcIntroduction
We have been engaged by the company to review the condensed set of financial statements in the half- yearly financial report for the six months ended 30 June 2011, which comprises the consolidated
income statement, consolidated statement of other comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes. We
have read the other information contained in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the
conclusion, has been prepared for and only for the company for the purpose of the Disclosure and
Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and
Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less
in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2011 is not
prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted
by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial
PricewaterhouseCoopers LLP Chartered Accountants Cambridge
22 August 2011
(a) The maintenance and integrity of the H.R. Owen Plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim report since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.
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