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Cambria reports record £614m turnover during 'softening' retail market

Mark Lavery, Cambria Automobiles

Cambria Automobiles has seen a 17.3% rise in turnover and 53.2% rise in profit before tax to record revenues despite a “clear softening” of the retail market in Q2 and Q3, the group has reported.

The Swindon-based top AM100 group saw revenues rise to £614.2m and profit before tax rise to £11.8m in the year to August 31 and reported that the “significant operational improvements” of the past two financial years had continued into the 2015/16 financial year.

Following a busy year of acquisitions – and some dealership closures – the group now comprises 31 dealerships, representing 46 franchises and 17 brands.

Among the operational highlights featured in a report to shareholder published today were new vehicle sales up 9.9%, with a 13.2% increase in profit per unit, and used vehicle sales up 5.2% with an 8.1% improvement in profit per unit.

Aftersales revenue increased 8.1% to £65.5m – with gross profit of £26.6m – with an increase of 3.7% in service and bodyshop hours sold, the group also revealed.

Cambria chairman Philip Swatman said: “The group reported significant operational improvements in the past two financial years and these have continued into the 2015/16 financial year.

“The UK motor retail industry has continued to demonstrate year-on-year growth in 2016 with the new car market reporting buoyant registration data.

“However, there has been a clear softening in private registrations during Q2 and Q3 of 2016.”

Swatman said that strategic acquisitions over the past two financial years had helped to deliver a step change in the profile of the group’s franchised dealership portfolio, adding that “its underlying earnings capacity which has doubled in the past two years”.

In its financial report Cambria said that it had generated gross profit growth across all core elements of the business, as well as delivering growth through the acquisitions of Welwyn Garden City Land Rover, Woodford Jaguar Land Rover and the opening of a new site in Birmingham for Aston Martin.

Revenue increased by 17.3% to £614.2m (2014/15: £523.8m). Underlying profit before tax rose by 37.7% to £10.6m (2014/15: £7.7m).

Profit before tax also improved by 53.2% to £11.8m (2014/15: £7.7m) and the Group delivered underlying earnings per share of 8.33p (2014/15: 6.08p) – an increase of 37%.

Cambria closed the year with net cash of £0.4m (2014/15: net cash £1.0m) and net assets of £42.1m (2014/15: £33.7m), underpinned by the ownership of £41.3m (2014/15: £37.6m) of freehold and long leasehold properties.

Swatman suggested that further growth of the size of the group was also on the cards, with its capacity for making acquisitions bolstered by a new set of banking facilities of £37m arranged in November 2015.

These facilities refinance the existing term loans of £14.4m and make available a further £22.0m of Revolving Credit Facility.

Mark Lavery, chief executive of Cambria, was pleased with his record set of results, but warned that 2017 did present the industry with a “period of uncertainty”.

Lavery said: “It remains too early to assess the full implications of the UK electorate’s decision to leave the EU, however we appreciate that the UK economy is in a period of uncertainty post the EU referendum vote in June 2016.

“At the time of writing the Sterling exchange rate has been very volatile and in recent weeks reached its low point equivalent to summer 2011.

“In the years following 2011 we have seen significant year on year growth in UK new car registrations as Sterling has strengthened relative to the Euro. The current volatility in Sterling could impact the strategy adopted by the manufacturers that we represent.”

Lavery said that Cambria were confident, however, that its resilient business model saw the business well positioned to “take advantage of any opportunities that the current economic uncertainty could provide”.

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