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HR Owen has a good year’s trading

HR Owen has posted group profits before tax and exceptional items of £3.2 million up in 2007 up from £0.7m in 2006.

Turnover from continuing operations rose by 15% to £184 million for the year ended December 31, 2007 compared to £159.3m in 2006.

John MacArthur, HR Owen chairman, said: "I am pleased again to report the completion of a good year's trading, with profits for our continuing businesses at record levels.

"These results were helped by the strong economy in London and the management's increased focus on the luxury sector following the disposal of the group's volume-orientated franchises."

MacArthur said HR Owen’s manufacturer partners had maintained the right balance between supply and demand which helped the company to maintain healthy profits and strong residual values for customers.

He said: "The group has a strong balance sheet and subject to the disposal of two final volume dealerships which is in process, HR Owen has reduced its exposure to the more competitive parts of the motor market."

The prestige dealer group generated £5m from its business disposals last year.

HR Owen will be expanding its property portfolio in London this year with more prestige locations, but did not say how many it was looking to acquire.

Mike Warren, HR Owen's group financial controller will be promoted to the position of finance director after David Jagger steps down from the role on May 1.

HR Owen represents three manufacturer groupings: Bentley, Bugatti and Lamborghini; Rolls-Royce and BMW/MINI (aftersales); and Ferrari, Maserati and Alfa Romeo.

  • Click on the next page for a performance review of HR Owen's brands.

    #AM_ART_SPLIT# During the year HR Owen commenced the final stage of its strategy to downsize and focus on our luxury brands business.

    It expects to complete this programme by the fourth quarter of 2008, with the disposal of two Volvo dealerships.

    The group said its specialist brands produced outstanding profits. However, the results were adversely affected by the difficulties experienced in the middle market for the group's volume brands where the BMW/MINI and Volvo franchises made losses and the Alfa Romeo franchise made a loss in its first full year of operation.

    HR Owen also incurred costs arising out of the return of capital in April and other expenses related to the disposal of the BMW and MINI businesses.

    In October 2007, the group acquired the business and assets of the Ferrari and Maserati sales franchises at St Albans from the Inchcape Group for a cash consideration of £327,000. This is the first acquisition the group made since its announcement to focus on luxury brands. The St Albans site has made an "encouraging start with strong results and already has a good forward-order book".

    In December, HR Owen disposed of two BMW/MINI dealerships (four sales franchises and four aftersales franchises) to Marsh Wall Limited for a cash consideration, after disposal costs, of £4,963,000. The funds from these disposals, net of debt, have been added to the group's existing cash resources.

    The remaining BMW and MINI aftersales franchise will be relocated to the group's specialist service centre in Acton by June this year and consolidated with Bentley, Bugatti, Lamborghini and Rolls-Royce.

    During 2007 the Bentley franchise performed extremely well for both new and used car sales. The results for the sales operation in particular benefited from the introduction of the Bentley Continental Convertible. In December, HR owen also completed a significant re-fit of the aftersales facility to Bentley's latest standards.

    In 2006, HR Owen's Jack Barclay subsidiary was appointed as the Bugatti sales and aftersales representative for the UK with 2007 being the first full year of operation. MacArthur said: "The new Veyron sports car has been a great success and we are delighted to have achieved the number one position for sales in the world."

    HR Owen's Lamborghini operations in London and Manchester had mixed results due to shortages caused by late deliveries of the new Gallardo Spyder. Nevertheless, its operations retained the number one position for sales and aftersales as the leading dealer in Europe and continued to make a healthy return.

    During 2007 the Rolls-Royce franchise recorded very good results which benefited in particular from the launch of two new models, the Phantom Extended Wheelbase and the Phantom Drophead Coupé. In 2008, Rolls-Royce will be introducing a third model, the Phantom Fixedhead Coupé, for which HR Owen holds "substantial forward orders".

    HR Owen's Ferrari and Maserati franchises experienced an "excellent sales performance" which has resulted in a number of expansion plans. Firstly, the group has agreed to split the sales operation for the brands, with Ferrari being relocated to a new showroom in the centre of London and the current Chelsea dealership being re-fitted as a solus Maserati showroom.

    This programme will be completed by the second quarter of 2009. Secondly, due to the high volume of sales and the expansion of models for both brands, HR Owen will develop a new dedicated aftersales facility in Park Royal which should be opened in June 2008.

    The Alfa Romeo franchise recorded losses during 2007. The results were adversely affected by the late arrival of the limited-edition 8C which are fully sold and will be delivered during 2008.

    During 2007 the BMW and Mini operations was significantly disrupted by the closure of HR Owen's Holland Park Avenue showroom and the disposal of another four sites late in the year. However, the results for the sales operations improved over previous years. HR Owen's remaining task in 2008 is to integrate the aftersales operation at Holland Park with the group's large Rolls-Royce operation at Acton. The changes are expected to be completed June.

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