Full year financial results for Cambria Automobiles saw its underlying pre-tax profit drop by more than a third while turnover also fell - but the group remains firmly on the acquistion trail with two deals looming.
Total revenue fell £20.8 million year-on-year to £352.5m in the year to August 31, show the results published today on the London Stock Exchange.
Underlying profit before tax fell to £3.1m from £4.9m. Cambria said this was in line with the board’s expectation, and reflected weaker new car volume and profitability, particularly in the first half of its financial year, when it conducted a cost-cutting programme which included redundancies. Sixty people lost their jobs - around 5% of the total workforce.
Cambria said underlying pre-tax profit from continuing operations was £3.5m.
It still reported a 13.5% return on capital employed (AM100 average: 12.6%) and 13.5% return on shareholder funds - "Not good enough, but still better than the rest of the sector," said Lavery.
Its first Vauxhall dealership, acquired during the year from Hartwell, made a £220,000 loss, although Cambria said integration is progressing well.
A Triumph dealership in Birmingham sold off also contributed a £140,000 loss.
Chief executive Mark Lavery said: "Cambria has performed in line with our expectations and, after a particularly difficult first half, has produced a far better second half. The cost rationalisation programme carried out in the first half is now broadly completed and while we continue to look at areas where cost saving can be made, we are in a leaner position than at the same point last year."
The group said strong cashflows resulted in net cash of £0.1m, and nil net gearing.
Group net assets stand at £21.5m, and there is only £300,000 goodwill on the balance sheet.
Lavery said it was critical that the group protects its balanced brand portfolio with significant interests in high luxury, premium and volume brands. Current Q1 trading has been significantly better than last year: we're selling more new cars and aftersales profitability is up."
He said the group has had a strong start to the current financial year, ahead of business plan and significantly ahead of previous year. New car volumes are 8.6% ahead of last year with improved margin.
Lavery said factors driving this improvment were a "leaner, more efficient organisation"; local contact strategy in aftersales which sees customers met at showrooms by the same staff member that arranged their appointment, focus on electronic vehicle health checks, more efficient technicians (each business reports technicians' performance to the rest of the business - and service plan sales (50% up year-on-year).
Two acquisitions are in the pipeline, one in due diligence and the other head of terms. If both come to fruition, they would add five franchised outlets, three brands Cambria already represents, and two additions.
The group portfolio will remain 50:50 premium and volume. The deals would also add £40m turnover. Each is expected to be finalised after the AGM on January 21.
There is headroom to grow turnover by 50% and Lavery said Cambria could become a £1bn business, but only as a consequence of growth rather than a business imperative.
Detailed accounting report: