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John Clark recovers after mystery debt

Analysts believe John Clark Group is staging a recovery following what is described as “a serious breakdown in accounting systems and controls” at an unnamed subsidiary in 2003.

The Aberdeen-based group has reported a surplus of £229,670 in 2004, following a £1.2m loss in the previous year when there was a “one-off” write-off of £624,375. That was said to represent potentially non-recoverable assets and previously unrecorded liabilities.

John Clark, chairman and chief executive, says in the report he is planning further expansion and one analyst says: “It appears that he has come through the aftermath of the write-off that was never explained. The group’s turnover has risen this year, and we now wait to see whether the momentum can be sustained in 2006.”

Clark says group accountancy procedures have been reviewed and strengthened since 2003. He is also restructuring the group’s property portfoio to cut interest costs, which climbed to £1.6m last year from £1.2m in 2003.

In June, the AM100 listed John Clark Group at number 54 with a turnover of £167m. In the November update, the business is up to 42 with sales totalling £206m.

Clark was not available as AM went to press, but in his annual report he says: “Volume growth was significant in both new and used cars, though margins remained under pressure in all franchises.”

Volkswagen appears to be his main concern because Clark says there were “continued losses”. The business has VW car outlets in Aberdeen and Kirkcaldy, and VW Van centres in Aberdeen and Edinburgh.

Clark says his BMW and Audi dealerships performed satisfactorily last year. Land Rover in Edinburgh “also made a positive contribution”.

He adds: “Although the new car market for the 10 months to October is down – some 15% in the areas in which the group operates – 2005 is shaping up well and our results are again forecast to show significant improvement.

“Our ethos has always been to build our business by taking a medium- to long-term view, building relationships with particular manufacturers and investing for the future.”

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