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					A Tradition of Excellence




Annual Report & Accounts
for the year ended 31 December 2003
 The Mercedes E-Class                          The BMW Z4                              Lamborghini London’s state-of-the-art
                                                                                       South Kensington showroom




H.R. Owen Plc operates over 40 franchised automotive
retail sites, representing the majority of specialist brand
manufacturers under a broad range of trading names.




 Contents
 Operational and Financial Highlights ........................1            Independent Auditors’ Report.................................20
 Franchised Outlets and Our Showrooms ...................2                 Consolidated Profit and Loss Account .....................21
 2003 – Our Year in Review .......................................4        Consolidated Balance Sheet ....................................22
 Chairman’s Statement ...............................................6     Balance Sheet..........................................................23
 Board of Directors...................................................11   Consolidated Cash Flow Statement .........................24
 Report of the Directors...........................................12      Notes to the Consolidated Cash Flow Statement .....25
 Remuneration Committee Report .........................14                 Notes to the Financial Statements............................27
 Corporate Governance Report ...............................17             Notice of Meeting ..................................................44
 Statement of Directors’ Responsibilities...................19
Operational Highlights

➣ Two year franchise restructuring completed
  successfully and on time
➣ Retailed over 20,000 new and used vehicles in 2003
➣ Full year dividend maintained at 10 pence per share




Financial Highlights

                         529.0
         533.6
                 489.8



                                                     2.3
                                                           2.0


                                                                          7.8
                                                                                6.7




                                             (3.3)               (15.8)




page 1       Annual Report & Accounts 2003
H.R. Owen
Franchised Outlets



H.R. Owen Plc operates over 40
franchised automotive retail sites,
representing the majority of specialist
brand manufacturers under a broad
range of trading names.




Our Showrooms
Audi                           Holland Park BMW           Land Rover /Volvo           Mercedes-Benz of Gatwick   Citygate Van Centre
H.R. Owen                      & Mini                     H.R. Owen                   County Oak Way             Colindale
Imperial House                 142-144 Holland            Cowdray Avenue              Crawley, West Sussex       24 Carlisle Road
Edgware Road                   Park Avenue                Colchester, Essex           Tel: 01293 594 300         Colindale, London
Colindale, London              Kensington, London         Tel: 01206 216 900                                     Tel: 020 8931 3131
Tel: 020 8205 5050             Tel: 020 7221 8575                                     Mercedes-Benz of Redhill
                                                          Land Rover                  12 Brighton Road           Citygate Hayes
                               Jaguar                     H.R. Owen                   Redhill, Surrey            503 Uxbridge Road
Amersham Audi
                               H.R. Owen                  27 Old Brompton Road        Tel: 01737 770 404         Hayes, Middlesex
4-8 White Lion Road                                                                                              Tel: 020 8848 0202
Amersham, Bucks                78 Capitol Way             Kensington, London
                               Colindale, London          Tel: 020 7590 5900          Rolls-Royce
Tel: 01494 546 000                                                                                               Citygate Watford
                               Tel: 020 8358 2727                                     Rolls-Royce Motor
                                                          H.R.Owen                    Cars London                68 Chalk Hill,Watford
Finchley Road Audi                                                                                               Hertfordshire
                               H.R. Owen                  152 Dukes Road              70 Park Lane
277/279 Finchley Road                                     Western Avenue, London      London                     Tel: 01923 255 055
London                         397-405 Archway Road
                               Highgate, London           Tel: 020 8938 1300          Tel: 0870 112 0200
Tel: 020 7644 7878                                                                                               Volvo
                               Tel: 020 8348 9292                                                                H.R. Owen London North
                                                          Lexus                       SEAT
Whetstone Audi                                                                                                   Edgware Road
                               H.R. Owen                  Lexus Brighton              Citygate Tadworth
1085 High Road                                                                                                   Colindale, London
                               West End Road              116-120 St Andrews Road     The Avenue
Whetstone, London                                                                                                Tel: 020 8200 9797
                                                          Portslade, Brighton         Tadworth, Surrey
                               Ipswich, Suffolk
Tel: 020 8343 5050                                        Tel: 01273 411 333          Tel: 01737 812 461
                               Tel: 01473 215 900                                                                H.R. Owen
                                                                                                                 London Central
Bentley                                                   Lexus Hatfield              Smart                      373-375 Euston Road
                               Jaguar/Land Rover
Jack Barclay                                              170 Great North Road        Smart of Brighton          London
                               H.R. Owen
18 Berkeley Square                                        Hatfield, Hertfordshire     Victoria Road              Tel: 020 7383 8000
                               Newmarket Road             Tel: 01707 252 100          Portslade, Brighton
London
                               Bury St Edmunds, Suffolk                               East Sussex
Tel: 020 7629 7444             Tel: 01284 706 705                                                                H.R. Owen City and
                                                          Ferrari/Lotus/              Tel: 01273 707070          London South
BMW                                                       Maserati/Noble                                         50 New Kent Road
                               Jeep                       H.R. Owen Sports Cars       Smart of Gatwick
Chelsea BMW & Mini                                                                                               London
                               H.R. Owen                  Old Brompton Road           Denvale Trading Park
Brigade House                                                                                                    Tel: 020 7252 7000
                               168 Great North Road       Kensington, London          Crawley,West Sussex
Parsons Green                  Hatfield, Hertfordshire    Tel: 020 7341 6300          Tel: 01293 744 999         H.R. Owen Volvo Ipswich
Fulham, London                 Tel: 01707 252 222
Tel: 020 7736 8481                                                                                               519 London Road
                                                          Mercedes-Benz               Volkswagen                 Ipswich, Suffolk
                               H.R. Owen                  Mercedes-Benz of Brighton   Citygate Chalfont          Tel: 01473 215 900
Chiswick BMW & Mini            London Road                Victoria Road               Station Approach
Chiswick High Road             Romford, Essex             Portslade, Brighton         Little Chalfont
Chiswick, London               Tel: 01708 759 500         Tel: 01273 707 070          Buckinghamshire
Tel: 020 8996 8600                                                                    Tel: 01494 763 456
                               Lamborghini                Mercedes-Benz
Heathrow BMW & Mini            Lamborghini London         of Eastbourne               Citygate Colindale
Horton Road                    25 Old Brompton Road       Eastbourne Road             131-159 Edgware Road
West Drayton, Middlesex        Kensington, London         Pevensey, Eastbourne        Colindale, London
Tel: 01895 433 999             Tel: 020 7589 1472         Tel: 01323 465 000          Tel: 020 8357 1234



page 2    Annual Report & Accounts 2003
Working with leading brands
in key geographic locations
will enhance shareholder value.




                                  Other locations:
                                  • Amersham
                                  • Berkeley Square
                                  • Chiswick
                                  • Colindale
                                  • Euston Road
                                  • Finchley Road
                                  • Fulham
                                  • Hayes
                                  • Highgate
                                  • Kensington
                                  • Little Chalfont
                                  • New Kent Road
                                  • Park Lane
                                  • Park Royal
                                  • Watford
                                  • West Drayton
                                  • Whetstone
H.R. Owen
2003 - Our Year in Review
                                                                                  The Chrysler Jeep




Our ‘Tradition of Excellence’ emblem refers
to the Group’s attitude towards providing the
highest levels of customer service, upholding
a heritage of being the best.




In a year of change, we are building
for a strong and prosperous future
         APRIL 2003                                       JUNE 2003
 ➣ We acquired Heathrow Limited, a BMW and             ➣ We acquired the business and goodwill of a
   Mini dealership trading in the West Drayton           BMW and Mini dealership in Chiswick,West
   and Hillingdon area, for a consideration of           London for £4.9 million.
   £4.8 million.
                                                       ➣ We also acquired the business of the Brighton
         Heathrow BMW and Mini dealership                Mercedes-Benz dealership for a consideration
                                                         of £1.3 million.We already operate the
                                                         Mercedes-Benz Smart dealership for Gatwick
                                                         and the Mercedes-Benz dealerships for Redhill
                                                         and Eastbourne.The Brighton acquisition
                                                         completes the Group’s current Mercedes-Benz
                                                         acquisition programme.


                                                          JULY 2003
                                                       ➣ We acquired the business of a Jaguar dealership
                                                         at Colindale and Hampstead in North London
 ➣ We established a new Jaguar dealership alongside      for a consideration of £0.9 million. On the same
   Land Rover at the Group’s Bury St Edmunds             day, we announced the sale of our Land Rover
   dealership.                                           business in Stockport for a cash consideration
                                                         of £1.6 million.
 ➣ We established a new Lamborghini showroom
   at the Group’s former Bentley premises in South     ➣ We also disposed of our Porsche dealership
   Kensington and will open a new Lamborghini            at Hatfield for a cash consideration of
   dealership in Stockport by the end of April 2004.     £2.2 million.




page 4       Annual Report & Accounts 2003
Illuminated VW speedometer                           A technician working on a    Ferrari 575 Maranello Xenon light unit
                                                     Bentley Arnage Red Label

The Jaguar S-Type                                                                 The Audi A4 Cabriolet




         AUGUST 2003                                       SEPTEMBER 2003
 ➣ In late August we acquired the business and        ➣ We acquired the business and goodwill of a
   goodwill of a BMW and Mini dealership in             Lexus dealership in Brighton, East Sussex for
   Chelsea, London for a sum of £1.9 million.           a consideration of £0.1 million.

                                                           OCTOBER 2003
                                                      ➣ In late October we acquired the business and
                                                        goodwill of an Audi dealership in Finchley,
                                                        North London for a consideration of £1.2
                                                        million. In the same month, we disposed of
                                                        our specialist sports car dealership at St Albans,
                                                        Hertfordshire for a cash consideration of
                                                        £0.5 million.


         Chelsea BMW and Mini dealership


 ➣ The three BMW and Mini acquisitions, together
   with plans to develop a new BMW and Mini
   dealership at Park Royal, London and the
   existing BMW and Mini dealership at Holland
   Park, will result in the Group covering a large
   catchment area in the west of London for both
   BMW and Mini.




page 5       Annual Report & Accounts 2003
Chairman’s Statement
John P MacArthur
                                                                  Headlight adjustment of a Bentley Arnage




We have now completed the planned
reorganisation of our franchising… and believe
the Group’s franchise line-up is now one of the
most powerful in the UK, if not the EU, for
specialist brands under single ownership.




Committed to providing the
highest levels of service
Results and Dividends                                             Capital Structure
The results for 2003 reflect the restructuring of the Group’s     In October 2003, the Group issued a total of 4,437,398 new
portfolio in response to the changes to the rules for vehicle     ordinary shares by way of a Placing and Open Offer.The net
franchising in the EU. During the period, the smooth              proceeds of £6.7 million are being utilised to fund the
running of the business was affected by the extensive and         acquisition programme and working capital.
successful acquisition and disposal programme which                  The Company now has a fully-paid share capital of
continued throughout the year.The London retail economy           £23,467,888, consisting of 23,467,888 ordinary £1 shares.
remained weak for most of the year, and a number of our
brands suffered from being at the bottom of their model           The Motor Industry 2003
cycles. Delays in the introduction of new higher-margin           2003 proved to be yet another record-breaking year for new
models also had a detrimental effect on the performance           car sales in the UK, with 2.58 million registrations. A range
of our specialist brands.                                         of new models, good deals, and a resolute determination by
    In the year to 31 December 2003, turnover increased to        consumers to continue spending have sustained growth in
£534 million (2002: £490 million), largely as a result of our     the market despite the prospect of further increases in
recent acquisition programme. Pre-tax loss was £3.3 million,      interest rates.
as against a £2.3 million profit in 2002. Losses per share were       This national picture was not reflected uniformly across
15.8 pence (2002: earnings of 7.8 pence per share).               market segments or areas.The London economy only began
    The pre-tax loss before exceptionals and goodwill             to show signs of recovery towards the end of the year, and
amortisation was £1.7 million (2002: profit of £2.3 million).     sales in the region, particularly for the more specialist brands,
Adjusted losses per share were 7.4 pence (2002: earnings of       remained low due to delays in important new model
7.6 pence per share).                                             introductions. Competition between manufacturers
    Expenditure on acquisitions was £15.2 million and gross       continued to put pressure on dealers' profit margins (most
capital expenditure totalled £1.9 million.                        notably in the major cities) and brands without diesel-engine
    At 31 December 2003, net borrowing (excluding                 options struggled to retain their market share.
manufacturers’ vehicle stocking loans) was £17.6 million,
resulting in gearing of 56 per cent (2002: 35 per cent).
    The directors are recommending a final dividend of
5.0 pence per share, making 10.0 pence for the full year
(2002: 10.0 pence).




page 6   Annual Report & Accounts 2003
H.R. Owen Sports Cars Ferrari, Maserati and   ‘Engine Turned’ aluminium dash trim   The Lamborghini Gallardo          The Mercedes SLK
Lotus showroom on Old Brompton Road           on a Bentley Arnage T                 V10 500BHP

                                              The Audi A4




    Aside from these trading issues, the restructuring of the                           Two years ago, we developed a customer support unit
industry, following the introduction of the new Block                               to provide clients with one point of contact through a
Exemption, was largely completed during 2003. Both dealers                          dedicated adviser.This innovative programme has received
and manufacturers are now adapting to the new regime, and                           support from many of our manufacturer partners, focused
industry observers are waiting to see what effect the changes                       lines of communication and broadened the service and
will have on the operation of the market. Our general feeling                       products on offer to our customers.
is that the new structure will benefit the growth and                                   During the period, the Group’s new computer system
profitability of the larger dealer groups, such as ourselves.                       was rolled out to additional dealerships, with only a few
                                                                                    installations left to complete in 2004.The programme is
Review of Business                                                                  providing efficiencies and productivity increases across all
The intense level of corporate activity in 2002 continued                           sectors of the business, with further advantages to be gained
throughout 2003, with a large number of dealerships being                           through an on-going training programme for staff and
acquired, sold or closed.This created substantial one-off costs                     management.
and caused disruption to the normal running of the business.
We have now completed our reorganisation following the                              Specialist Division
Block Exemption review and believe the Group's franchise                            Bentley, Ferrari, Maserati, Lamborghini, Rolls-Royce, Lotus, Noble
line-up for specialist brands in the Southeast and London                           During the year we took high levels of forward orders for
region is one of the strongest in the UK, if not the EU, under                      luxury brands, particularly Bentley, Rolls-Royce and
single ownership.                                                                   Lamborghini. Deliveries of these new models were, however,
    The Group’s results were adversely affected by the impact                       delayed, with only a handful of cars arriving before the
of the weakness in the London economy on corporate sales                            end of the year.This had an adverse effect on the results
and delays to deliveries of a number of our forward-sold new                        for this division.
luxury and sports models. Sales and margins were also put                               Against this background there were a number of key
under severe pressure because of the run-out of key models                          developments during the year.
at the end of their respective cycles.                                                  In January, we opened a new Rolls-Royce showroom
    During 2003, we reorganised our advertising and                                 in Park Lane in temporary premises.The new Rolls-Royce
marketing by setting up partnerships with specialist agencies,                      Phantom was launched in the same month, and has been
which resulted in a much more targeted and creative strategy                        very well received. Despite delays, forward orders are high,
providing significant cost savings.                                                 with deliveries now proceeding as planned.


                                                                                    continued on page 8


page 7      Annual Report & Accounts 2003
Chairman’s Statement
continued
                                                                                                   The Chrysler Voyager




The two Chrysler/Jeep franchises have continued
to provide a good return, and have also benefited
from the reduction in the number of dealers in
the catchment area.




Many of the Group’s brands
delivered strong results
     In March, the Group established a new Lamborghini            DaimlerChrysler
showroom in South Kensington. At the same time we                 Mercedes-Benz Car, Chrysler/Jeep, Smart
announced our intention to open a second Lamborghini              We now operate sales and service points for Mercedes-Benz
showroom in Stockport to cover the North West.This                in Sussex and Surrey at Brighton, Eastbourne, Gatwick and
development is currently on schedule and is due to open           Redhill, and for Smart at Gatwick. Plans are at an advanced
this coming May.                                                  stage for the redevelopment of several of the sites and all of
     The new Lamborghini Gallardo was launched at the             the dealerships have performed well, in line with our plans.
end of the year to widespread critical acclaim. Although          We now await new models which are due to be introduced
deliveries were delayed in the year, the model is substantially   by Mercedes-Benz and Smart in 2004.
forward-sold.                                                         The two Chrysler/Jeep franchises have continued to
     In July, we sold our Porsche franchise to a subsidiary of    provide a good return and have also benefited from the
Porsche Cars Great Britain Limited.This dealership made           reduction of dealers in the catchment area.The business
a substantial contribution to the Group’s results during the      benefited from the new Crossfire sports car, which has sold
period up to the sale, as we were able to fulfil a significant    extremely well, and we now await the introduction of the
number of outstanding orders.                                     Dodge brand and further new models.
     The new Bentley Continental GT was unveiled during
the year, and our Jack Barclay subsidiary, which holds the sole   Premier Automotive Group
franchise for London, has one of the largest forward order        Jaguar, Land Rover,Volvo
lists for any specialist car that we have handled. Despite        During the year, we completed a new Jaguar development
earlier delays, deliveries of this superb model are now           alongside our Land Rover franchise at Bury St Edmunds.
proceeding as planned.                                            The necessary building works interrupted normal business,
     In October, we sold our Maserati franchise at St Albans to   but the multi-franchising of both brands now provides
Maranello Sales Limited.The Group will now concentrate            cost-effective coverage in the area.
its Maserati, Lotus and Noble franchises in London, with              In July, we acquired the Jaguar franchise for North West
Maserati continuing to be represented alongside Ferrari at        London from Guy Salmon, with outlets in Colindale and
the Kensington showroom.                                          Hampstead. Simultaneously, we sold our Land Rover
                                                                  business in Stockport to the same company.




page 8   Annual Report & Accounts 2003
Interior shot of the e-gear                   Interior clear trim XJ6   The Noble M12 GT0 3R              Technician measuring the tyre tread
Lamborghini Gallardo                                                                                      depth on a Bentley tyre




    The Group is now in the early stages of reorganising the                The Volkswagen franchises experienced difficult trading
London sites for the PAG franchises, and is delighted to have           conditions while awaiting the introduction of excellent
returned the Jaguar brand to London.                                    new models covering new sectors, namely the Phaeton
    In addition, the three brands continued to benefit from             and Touareg off-roader.
the introduction of new models. Early in the year, Jaguar                   Volkswagen’s largest-selling model, the Golf, was run out
announced its new XJ series and, later, a diesel variant of             during the year and has recently been replaced by the new
 the X-Type and the X-Type estate.Volvo also announced                  Golf which is expected to be one of the top sellers in its sector.
the outstanding new XC90 off-road vehicle. All of these                     Our Volkswagen Van Centre experienced difficult trading
models have created strong interest and sold well, and we               conditions as it was a model change-over year, with new
eagerly await a number of further important new model                   models introduced in the last quarter.These have been well
introductions from Volvo and Land Rover during the                      received in the market, with further new models being
course of this year.                                                    introduced in 2004.
                                                                            During the year, we also agreed to the relocation of our
Volkswagen Group Brands                                                 Hayes Volkswagen car franchise to a new purpose-built
Audi,Volkswagen,Volkswagen Van, SEAT                                    dealership in Ruislip, which should be open for business
Our two existing Audi dealerships at Colindale and                      early in 2005.
Whetstone recorded solid results for both sales and aftersales.
The new A8 and A3 models introduced during the year have                BMW
created strong interest.                                                      ,
                                                                        BMW Mini
    In October, we acquired the Audi franchise at Finchley              During the year, the Group announced the acquisition of
Road from Dutton-Forshaw and, in January this year, we                  three further BMW and Mini dealerships in West London.
completed the purchase of the Amersham franchise. Both these                In March, the Group acquired Heathrow Limited, a
sites have made encouraging starts, and are expected to provide         BMW and Mini dealership trading in the West Drayton and
a substantial contribution to the performance of this brand.            Hillingdon area. In June, we acquired the assets and goodwill
    In April, we closed our SEAT franchise in Chiswick.                 of Park West, a substantial BMW and Mini dealership in
Despite an impressive model line-up, it had proved difficult            Chiswick, from BMW (GB). Finally, in late August we also
to produce an adequate return from this site.We continue to             acquired the assets and goodwill of Sytner Chelsea, a BMW
operate the brand from Tadworth in Surrey.                              and Mini dealership.



                                                                        continued on page 10


page 9        Annual Report & Accounts 2003
Chairman’s Statement
continued
                                                                      The Volkswagen Polo                Bentley technicians comparing
                                                                                                         notes during a service




2004 will be a year of integrating the
newly acquired businesses into
the company structure.




Investing in a comprehensive
staff training programme
    These three acquisitions, together with our existing                 Staff
dealership at Holland Park and our plans to develop a new                Due to the far-reaching effects of the review of the Block
dealership at Park Royal near the A40 in London, will                    Exemption, 2003 has without doubt been one of the most
complete a large catchment area for West London for both                 uncertain periods for staff working within the retail motor
the BMW and Mini franchises.                                             industry. It was a very complicated and challenging year for
    Whilst business in this division has been tough during the           the Company, and I would like to thank all of our staff for
period under review, it is expected to improve as the new                coping so well in these conditions.
dealerships become absorbed into the Group and are                           As a number of dealerships were sold due to the
operated as one market territory. Furthermore, new-model                 reorganisation of our franchising, it is perhaps timely to
introductions for the Z4 and 5 and 6 Series have been a great            thank those who were employed with the Group for their
success and will soon be joined by further introductions                 hard work and to wish them well for the future. I would also
of the 1 Series, the X3 SAV (Sports Activity Vehicle) and                like to welcome the new staff who have joined through our
Mini Convertible.                                                        recent acquisition programme.

Lexus                                                                    Outlook for 2004
The Group’s Lexus dealership in Hatfield has performed in                Our restructuring programme has created a group of specialist
line with expectations, although we eagerly await the new                brands which is sharply focused. 2004 will be a year of
engines and models that are due to be introduced in 2004/5.              integrating the newly-acquired businesses into the Company
    At the end of September, we acquired the assets and                  structure. Although we shall continue to evaluate new
goodwill of the Lexus franchise in Brighton. Although only               opportunities when they arise, we will concentrate on
a small business, it produced a solid return for the final quarter.      maximising the operational efficiencies that are inherent in
Plans are now well advanced to relocate the temporary                    the large market areas that we now operate.The London
facilities to a newly-refurbished showroom adjacent to our               economy has improved which, coupled with deliveries of
Mercedes-Benz franchise in Brighton.                                     new models that are back on schedule, is increasing sales and
                                                                         margins. Against this background we view the future with
                                                                         considerable confidence.

                                                                         John P MacArthur
                                                                         Chairman
                                                                         26 March 2004




page 10   Annual Report & Accounts 2003
Board of Directors
The Volkswagen Beetle                      The Lamborghini London workshop   The Lotus Elise 111S            The Volvo S80
                                           in North Acton




John MacArthur                             David Evans                       Nicholas Mason                  Managing Director of
Chairman,Age 69                            Operations Director,Age 60        Non-Executive Director,Age 60   the Savoy Group plc and
Appointed Chairman in                      A fellow of The Institute         Appointed to the Board in       currently a non-executive
1993. A member of the                      of the Motor Industry.            1999. A successful musician,    director of Macdonalds
Audit, Nomination and                      Appointed to the Board in         he has been involved with       Hotels Plc.
Remuneration Committees.                   1993. Formerly he was a           the motor industry and
He is a merchant banker and                director of Lancaster Plc         motor sport for a number        John Robertson
Chairman of MacArthur &                    prior to joining H.R. Owen        of years. Formerly a director   Non-Executive Director,Age 63
Co Limited. Prior to that he               Plc in 1992.                      of National Motor Museum        A Chartered Accountant,
was chairman of Prudential-                                                  Limited and The Historic        Chairman of the Audit
Bache Capital Funding Plc                  Barry Green                       Grand Prix Cars Association     Committee and a member
and a director of Kleinwort                Business Development              Limited.                        of the Remuneration and
Benson.                                    Director,Age 49                                                   Nominations Committees.
                                           Appointed to the Board in         Brendan Moynahan                He was appointed to the
Nicholas Lancaster                         2000, having been a divisional    Non-Executive Director,Age 56   Board in 1999 and is also a
Chief Executive,Age 56                     managing director since           Appointed to the Board in       director of Indurite Plc and
Co-founded Lancaster Group                 1997. Prior to joining the        2001. He has extensive          Freeclaim IDC Plc.
which became Lancaster Plc                 Group in 1993 he had owned        international business
in 1969. Later became Joint                and managed a franchised          experience and is President   Anthony Smith
Chief Executive of Jardine                 Citroën dealership.               and a Director of Shelton     Non-Executive Director,Age 59
International Motor Holdings                                                 Corporation, a director of    Appointed to the Board in
prior to acquiring Malaya                  Colin Giltrap                     Shelly Eurocars Inc and a     2001. He has been involved
Group in 1992, which                       Non-Executive Director,Age 63     director of Vines Group.      in personal and business
subsequently became                        Deputy Chairman, he was                                         management within the
H.R. Owen Plc.                             appointed to the Board in         Ramón Pajares                 music industry for over
                                           1989. Has been a major            Non-Executive Director,Age 68 30 years and has film and
David Jaggar                               importer of cars to New           Senior Independent Director, property development
Financial Director,Age 56                  Zealand for over 30 years         Chairman of Remuneration      interests both in the UK
Joined the Group in 1992                   and owns and operates a           and Nominations Committees and USA. He is Chairman
and appointed to the Board                 substantial network of car        and member of the Audit       of the Thoroughbred Grand
in 1993. He held senior posts              dealerships through Giltrap       Committee. He was             Prix Championship
in Appleyard Plc before                    Motor Group Limited in            appointed to the Board in     Drivers’Association.
joining H.R. Owen Plc.                     New Zealand.                      1996. He is a former




page 11    Annual Report & Accounts 2003
Report of the Directors


The directors present their Report and the audited Financial        The interests of the directors (all of which were
Statements for the year ended 31 December 2003.                  beneficial) in the Company’s share capital are detailed in
                                                                 the Remuneration Committee Report on pages 15.
Principal Activity
The principal activity of the Group throughout the year was      Substantial Shareholders
that of franchised motor dealer.                                 At 25 March 2004 the Company had been notified of the
                                                                 following holdings of more than 3% of the Company’s issued
Business Review                                                  share capital in addition to the interests of the directors
A review of the development of the Group’s business and the      shown on page 15.
outlook for the year ahead is contained in the Chairman’s
Statement.                                                                                                 Number of
                                                                                                    Ordinary £1 shares        %
                                                                 Shelton Corporation                     2,750,012        11.72
Results and Dividends                                            Fleming Mercantile Investment Trust Plc 1,022,548         4.36
The Group made a loss before tax for the year to                 Trefick Limited                           827,633         3.53
31 December 2003 of £3,308,000 (2002: profit of                  Canada Life                               803,438         3.42
£2,310,000) with basic losses per share of 15.8 pence (2002:
earnings of 7.8 pence).                                          Employees
   The directors are proposing a final dividend of 5 pence       The Group is committed to a philosophy that content and
per £1 ordinary share (following an interim dividend of          well-trained employees are an important asset.Therefore, the
5 pence per share) payable on 4 June 2004 to shareholders        Group seeks to provide an environment which encourages
on the register at the close of business on 13 April 2004.       the continuous development of employees through
                                                                 comprehensive training programmes where appropriate.
Share Capital                                                       The Group has an equal opportunities policy and is
The authorised share capital of the Company is 40,000,000        committed to ensuring that all employees are treated fairly,
ordinary shares of £1 each.                                      regardless of gender, race, marital status and disability.
   As at the date of this report 23,467,888 ordinary shares         Information on matters of concern to employees is given
have been issued and are fully paid up. During 2003 a total of   through bulletins, the Company’s internal newsletter and
3,364 ordinary £1 shares were issued under the Company’s         the Company intranet, which seek to achieve a common
sharesave scheme. On 21 October 2003 a total of 4,437,398        awareness on the part of all employees of the financial and
ordinary £1 shares were issued, following the approval by        economic factors affecting the Group’s performance.
shareholders in general meeting of a placing and open offer.     Employees are encouraged to become shareholders in the
The shares were issued at a price of £1.65 per ordinary share.   Company through the Company’s sharesave scheme.
Directors                                                        Charitable Donations
The directors of the Company who served throughout the           Charitable donations made during the year amounted to
year to 31 December 2003 were as stated on page 11. In           £7,000 (2002: £8,000). Of this total, £3,000 related to
accordance with the Company’s Articles of Association            medical research, £3,000 to local charities and £1,000 to
Mr D G Evans, Mr C J Giltrap and Mr B C A Green retire           children’s charities. No political contributions were made
by rotation at the Annual General Meeting and, being             in either year.
eligible, offer themselves for re-election.




page 12   Annual Report & Accounts 2003
Payment to Suppliers
The Group agrees payment terms with its suppliers when it
enters into binding purchase contracts.The Group seeks to
abide by the payment terms agreed with suppliers whenever
it is satisfied that the supplier has provided the goods or
services in accordance with the agreed terms and conditions.
The Group does not have a standard or code which deals
specifically with the payment of suppliers.
     The Group’s average creditor payment period at
31 December 2003 was 24 days (2002: 25 days).

Post Balance Sheet Events
On 2 January 2004 the Group completed the acquisition
of an Audi dealership in Amersham, Buckinghamshire for
a cash consideration of £1,229,000.The dealership territory
is adjacent to the Group’s existing Audi territories in North
London and will significantly strengthen the Group’s
representation in this area.

Annual General Meeting
The notice convening the Annual General Meeting to be
held on Wednesday 12 May 2004 at 12 noon at Jack Barclay,
18 Berkeley Square, London W1J 6AE is set out on page 44.
    At the Annual General Meeting items of special business
will include a resolution to renew the directors’ authority to
disapply pre-emption rights.

Auditors
The auditors, PricewaterhouseCoopers LLP have indicated
their willingness to continue in office and a resolution
concerning their re-appointment and remuneration will
be proposed at the forthcoming Annual General Meeting.

By order of the Board

James Adams
Company Secretary
26 March 2004




page 13   Annual Report & Accounts 2003
Remuneration Committee Report


This is the report of the Remuneration Committee and               Remuneration of Non-Executive Directors
shareholders will be asked to vote on its approval by passing      The non-executive directors receive a fee which is agreed by
resolution number 3 at the forthcoming Annual General              the Board, following a recommendation by the Remuneration
Meeting, as set out in the Notice of Meeting on page 44.           Committee.They currently receive a fee of £20,000 per
    The disclosures set out in Part 3 of Schedule 7A to the        annum, effective since 1 July 1995 with the exception of the
Companies Act 1985 contained in this Remuneration                  Chairman who receives £35,000 per annum with effect from
Committee Report are required to be audited (‘the auditable        1 January 1999.The non-executive directors do not receive a
part’).The auditable part comprises only the information           pension or other benefits from the Company and do not
contained in the following named paragraphs: Directors’            participate in the bonus or share option schemes.
Remuneration and Interests in Share Options.
                                                                   Directors’Service Contracts
The Remuneration Committee                                         The service contract of Mr N R Lancaster, dated 25 August
The Remuneration Committee was established in 1996 and             1992, provides for a basic salary of £268,500 and is
its membership comprises three non-executive directors,            terminable by the Company on one year’s notice.The
currently Mr MacArthur, Mr Robertson and is chaired                service contract of Mr D G Evans, dated 31 October 1993,
by Mr Pajares. He will attend the Annual General Meeting           provides for a basic salary of £168,375 and is terminable by
and be available to answer questions. During the year, the         the Company on one year’s notice.
Chief Executive Mr Lancaster, made submissions to the                   The service contract of Mr D H Jaggar, dated 31
Committee for its consideration.                                   December 1993, provides for a basic salary of £161,750 and
    The Committee met three times during the year and is           is terminable by the Company on one year’s notice.The
responsible for making recommendations to the Board as             service contract of Mr B C A Green, dated 30 June 2000,
to the total remuneration of executive and non-executive           provides for a basic salary of £140,000 and is terminable by
directors. It is also responsible for administering, reviewing     the Company on one year’s notice.
and recommending appropriate incentive schemes for                      The non-executive directors do not have service contracts
directors and employees.                                           with the Company.They have a letter of appointment and are
                                                                   all appointed on the basis of serving two three-year terms, and
Policy on Remuneration of Executive Directors                      are subject to retirement by rotation in accordance with the
In formulating its remuneration policy, the Committee has          Articles of Association of the Company and may offer
given full consideration to the Combined Code and expects          themselves for re-election.
that this policy will continue for the next financial year.
    In formulating remuneration policy for employees the           Basic Salary and Benefits
Committee aims to attract, retain and motivate management          Basic annual salaries for executive directors and, where
of the appropriate calibre and experience to manage the            appropriate, other senior executives are reviewed by the
individual businesses and further the success of the Company.      Committee, normally annually or otherwise on promotion,
    In assessing the appropriate level and structure of            having regard to competitive market practice and also to
remuneration for each individual, regard is given to the           company and individual performance for the financial year
necessity to pay a competitive basic rate commensurate with        to 31 December.
the size and complexity of the Group, both of which have               Benefits are provided at a similar level for comparable
increased during the year. Any incentives paid in addition are     positions by reference to salary survey information and
linked to both corporate and individual performance.               include a car and medical and life insurance. Pension scheme
    The remuneration package for executive directors seeks         benefits are provided, details of which are given below.
to offer a range of benefits both performance-related and
non-performance related which meet the requirements of             Annual Bonus
corporate governance and the expectations of the directors         The Remuneration Committee determines awards to
and executives. Share options have been granted in previous        directors under an annual performance related bonus scheme.
years to directors and executives, details of which appear later   Since 1 January 2004, the Committee no longer permits an
in this report.The last grant was made in 2001 and linked to       element of a bonus payment to be guaranteed and all bonus
performance conditions which would require improved                payments are now linked to individual performance and to
growth in earnings per share at a rate suitably challenging to     the Company’s actual performance, with reference to
management and desirable for shareholders. No awards were          profitability, efficiency and share price performance.
made during 2003. Details of the performance measure
appear later in this report.                                       Pensions
                                                                   The executive directors receive contributions, based on
                                                                   salary, to their individual pension arrangements.




page 14   Annual Report & Accounts 2003
Directors’Remuneration
Details of the directors’ remuneration for the year are shown in the table below.
                                                Salary     Annual                      Other             Total           Total      Pensions
                                              and fees     bonuses     Pensions       benefits           2003            2002          2002
                                                    £           £            £             £                £               £             £
Executive
N R Lancaster                               268,500       40,000       67,125        28,506          404,131        374,089         67,125
D G Evans                                   168,375       27,000       21,047        16,135          232,557        211,433         20,578
D H Jaggar                                  161,750       27,000       20,220        16,609          225,579        205,598         20,905
B C A Green                                 140,000       15,000       17,500        20,661          193,161        179,947         17,503
Non-executive
J P MacArthur                                35,000             –            –              –         35,000         35,000               –
C J Giltrap                                  20,000             –            –              –         20,000         20,000               –
N B Mason                                    20,000             –            –              –         20,000         20,000               –
R Pajares                                    20,000             –            –              –         20,000         20,000               –
B G Moynahan                                 20,000             –            –              –         20,000         20,000               –
J L Robertson                                20,000             –            –              –         20,000         20,000               –
J A Smith                                    20,000             –            –              –         20,000         20,000               –

Interests in Shares
The interests of each director in the ordinary shares of the Company at 1 January and 31 December 2003 were:
                                                                                                                 31 December       1 January
                                                                                                                        2003            2003
J P MacArthur                                                                                                        63,466         56,000
N R Lancaster                                                                                                     4,609,502      4,547,002
D H Jaggar                                                                                                           61,339         57,339
D G Evans                                                                                                            40,002         37,489
B C A Green                                                                                                         123,838        119,839
C J Giltrap                                                                                                       1,625,851      1,471,851
R Pajares                                                                                                                 –              –
N B Mason                                                                                                           556,416        521,641
B G Moynahan                                                                                                              –              –
J L Robertson                                                                                                       692,738        692,738
J A Smith                                                                                                           780,866        689,000

All directors’ interests are beneficially held.There has been no change in the interests set out above between 31 December 2003
and 26 March 2004.

Interests in Share Options
Details of options held by the directors are set out in the table below:
                                                                                  At 1.1.2003    At 31.12.2003    Subscription     Period of
Directors’ Share Options 2003                                                        Number           Number             price      exercise
Executive
N R Lancaster                                                                       183,461          183,461          £1.30      2004-2011
D G Evans                                                                           117,211          117,211          £1.30      2004-2011
D H Jaggar                                                                          112,115          112,115          £1.30      2004-2011
B C A Green                                                                          96,154           96,154          £1.30      2004-2011




page 15   Annual Report & Accounts 2003
Remuneration Committee Report
continued


There were no options granted to, or exercised by, directors         Financial Year the performance condition was at least
during the year, nor did any of their share options lapse.           20 pence, which has not been achieved. Earnings per share
    None of the terms and conditions of these share options          for the 2004 Financial Year must be at least 21 pence for the
were varied during the year.                                         options to become exerciseable.
    The market price of the Company’s shares at the end of the
financial year was 1771⁄2 pence and the range of market prices       Shareholder Return Performance Graph
during the year was between 1231⁄2 pence and 1851⁄2 pence.           The Group’s total shareholder return, shown in the graph
    The performance condition to be met before an option             below, has been calculated in accordance with The Directors’
can be exercised under the 2001 Share Option Plan is based           Remuneration Report Regulations 2002.The Group has
upon the fully diluted earnings per share for the financial          been benchmarked against the FTSE Small-Cap Index
year in question, as shown in the Company’s consolidated             which is considered to be an appropriate comparison to
annual report and accounts in respect of ordinary activities         other public companies of a similar size.
adjusted for any non-cash exceptional items. For the 2003

Total Shareholder Return Performance: H.R. Owen vs FTSE Small Cap
£200


£180


£160


£140


£120


£100


£80


£60
                                                                                                            H.R. Owen
                                                                                                            FTSE Small Cap
£40


£20


£0
          December 1998              December 1999   December 2000         December 2001          December 2002              December 2003


Ramón Pajares
Chairman of the Remuneration Committee
26 March 2004




page 16      Annual Report & Accounts 2003
Corporate Governance Report


The Board supports the highest standards of corporate        The Audit Committee
governance as it seeks to protect and enhance shareholder    The Audit Committee comprises three non-executive
value and improve financial performance.The Company has,     directors: Mr J P MacArthur, Mr R Pajares and is chaired
therefore, reviewed and will continue to monitor its positionby Mr J L Robertson, who is considered to have recent and
in relation to adherence to the new Combined Code.The        relevant financial experience.The Committee met three
Company has complied throughout the period under review      times during the year and Mr Robertson will be available at
with all aspects of the existing Combined Code annexed to    the Annual General Meeting to answer any questions from
the Listing Rules of the Financial Services Authority.       shareholders.The Committee also meets once a year
                                                             specifically to update the members on changes in accounting
The Board                                                    and compliance issues which are relevant to the Company.
The Board comprises four executive and seven non-executive Meetings are also attended by the Company Secretary, the
directors. It is chaired by Mr J P MacArthur who is a        Finance Director and the external auditors.
non-executive director.The non-executive directors bring a       The Committee agrees the scope of, and the cost
breadth of successful commercial or professional experience  effectiveness of, the audit function and assists the Board in
to the Board and are all considered independent with the     ensuring that the Group’s published financial statements give
exception of Mr B G Moynahan who represents the Shelton a true and fair view.The Committee reviews the findings of
Corporation.The senior independent non-executive director the external auditor and agrees the key accounting policies
is Mr R Pajares. Both Mr J P MacArthur and Mr C J Giltrap    and judgements. It also monitors the accounting and control
have been directors for more than nine years but are still   activities in order to report to the Board on the on-going
considered to be independent and free from any business      development of the effectiveness of the Group’s internal
relationship that would interfere with their independent     controls.The Committee also focuses on compliance,
judgement. Directors’ biographies appear on page 11 and      corporate governance matters and risk assessment issues.
demonstrate a breadth of experience within the motor             The Committee considers the independence and
industry and outside.                                        objectivity of the external auditor and the level of fees
    The Board met seven times during the year and is         payable for both audit and non-audit work are agreed
scheduled to meet six times in 2004 with additional          by the Committee.
meetings if required.The Board reserves to itself a range        Details of the non-audit related fees paid to the auditors
of key decisions to ensure it retains proper direction and   during the year are shown in Note 7 to the Financial
control of the Group, whilst delegating authority to         Statements.
individual directors who are responsible for the day-to-day
management of the business.The Board retains responsibility The Remuneration Committee
for formulating the strategy for the Group, reviewing and    The Remuneration Committee comprises three non-
approving all acquisitions and disposals, monitoring         executive directors Mr J P MacArthur, Mr J L Robertson
divisional performance, approving the annual budget and      and is chaired by Mr R Pajares. Full details appear in the
generally seeking to improve performance and profitability   Remuneration Committee Report on pages 14 to 16.
to deliver value for shareholders from Group assets.
    All directors receive detailed financial and operational The Nominations Committee
reports on a monthly basis. Additionally, the non-executive  The Nominations Committee comprises Mr J L Robertson,
directors are encouraged to attend one of the monthly        Mr J P MacArthur and Mr R Pajares and is chaired by
meetings of the Franchise Board in order to gain more        Mr Pajares.The Committee did not meet during the year.
insight into key operational issues.
     All directors have access to the advice of the Company  Going Concern
Secretary who is responsible for ensuring that the Board     At the time of preparation of these accounts, after making
procedures are followed and for compliance with all          appropriate enquiries, the directors have a reasonable
applicable rules and regulations. In addition, a formal      expectation that the Company and the Group have adequate
procedure has been established for any director to seek      resources to continue operating for the foreseeable future.
independent professional advice in furtherance of his duties For this reason they continue to adopt the going concern
at the Company’s expense. All directors can receive          basis in preparing the Group’s financial statements.
appropriate training as necessary.
    The Board has established the following committees,
each having formal terms of reference approved by the
Board and complying with the existing Combined Code.




page 17   Annual Report & Accounts 2003
Corporate Governance Report
continued



Internal Controls                                                 internal controls for the period. Key elements of the Group’s
The Board acknowledges that it is responsible for the             system of internal controls are as follows:
Group’s system of internal control and believes it has            • There are clearly defined lines of authority and
maintained a sound system to safeguard the Group’s assets             responsibility at management and operational levels,
during the period under review.                                       including procedures for authorisation of capital
    Whilst the Board of Directors is responsible for the              expenditure.
Group’s system of internal controls and reviewing their           • All business units are guided by and make reference to a
effectiveness, it should be recognised that such a system can         financial accounting manual detailing Group policies and
provide only reasonable, and not absolute, assurance against          financial accounting procedures.
material misstatement or loss.                                    • The Group operates a comprehensive budgeting and
    The Board has established a continuous process for                financial reporting system, which compares actual
identifying and managing the significant risks faced by the           out-turn to budget.
Group and this process was conducted throughout the               • Monthly management accounts are compiled and
period under review and continues up to the date of                   analysed and any significant variance from budget is
approval of the accounts. A Risk Assessment Committee,                investigated fully.
comprising senior management across the Group and                 • The full year forecast is reviewed quarterly in the light
chaired by the Finance Director, regularly reviews previously         of on-going trading results.
identified risks and evaluates new risks faced by the Group       • Cash flow is checked against forecast regularly and bank
in the business environment. It will assess, where possible,          accounts are reconciled on a timely basis.
the potential impact of risks and, if necessary, enhance the      • Regular Health and Safety audits of dealership activities
internal control systems in place, or required to be                  are conducted.
implemented to manage them. A schedule of all risks               • Extensive use is made of site security measures.
identified, any action planned, and the outcome of such
action is documented for presentation to the Audit                    The Board has reviewed the requirement for an internal
Committee.The Finance Director reports any concerns               audit function and believes it has suitable centralised
regarding significant risks to the Board as appropriate.This      monitoring, control and accounting systems in place.
process is regularly reviewed by the Board and accords with       Therefore, there are no plans to appoint an internal auditor
the Turnbull guidance on Internal Control - Guidance for          at this time.The Board will continue to review this annually.
Directors on the Combined Code.
    The risk analysis conducted during 2003 covered               Shareholder Relations
strategic, operational, financial and compliance risks inherent   All Shareholders are welcome to communicate with the
in the business and identified, assessed and prioritised those    Company at any time and the Annual General Meeting is
risks. For each significant risk identified, the adequacy of      seen as an opportunity for investors to put questions to the
current controls were considered and any further action taken     Board and to meet the directors informally after the meeting.
as necessary.This is particularly relevant when integrating           The Board maintains a close relationship with its major
newly-acquired businesses into the Group’s system of              shareholders and keeps them informed as to the Company’s
financial reporting and management has worked on                  activities. Corporate and dealership information may be
streamlining and improving these controls in those businesses.    viewed on the Group’s website at www.hrowen.co.uk
    The Audit Committee would report to the Board any
material weakness in the internal control system identified       James Adams
together with the action taken to prevent any recurrence.         Company Secretary
The Board has reviewed the effectiveness of the system of         26 March 2004




page 18   Annual Report & Accounts 2003
Statement of Directors’ Responsibilities


The directors are required by UK company law to prepare
financial statements for each financial year which give a true
and fair view of the state of affairs of the Company and the
Group and of the profit or loss of the Group for that period.
    The directors confirm that suitable accounting policies
have been used and applied consistently and reasonable and
prudent judgements and estimates have been made in the
preparation of the financial statements for the year ended
31 December 2003.
    The directors also confirm that applicable accounting
standards have been followed and that the financial
statements have been prepared on the going concern basis.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time
the financial position of the Company and the Group and to
enable them to ensure that the financial statements comply
with the Companies Act 1985.They are also responsible for
safeguarding the assets of the Company and the Group, and
hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
    The directors confirm that they have complied with
these requirements in preparing the financial statements.
    The maintenance and integrity of the H.R. Owen Plc
website 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 financial
statements since they were initially presented on the website.
    Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.




page 19   Annual Report & Accounts 2003
Independent Auditors’ Report
to the members of H.R. Owen Plc


We have audited the financial statements which comprise the           of the Combined Code issued in June 1998 specified for
consolidated profit and loss account, the balance sheets, the         our review by the Listing Rules of the Financial Services
consolidated cash flow statement and the related notes.We             Authority, and we report if it does not.We are not required
have also audited the disclosures required by Part 3 of               to consider whether the Board’s statements on internal
Schedule 7A to the Companies Act 1985 contained in the                control cover all risks and controls, or to form an opinion
Remuneration Committee Report (‘the auditable part’).                 on the effectiveness of the Group’s corporate governance
                                                                      procedures or its risk and control procedures.
Respective Responsibilities of Directors and Auditors
The directors’ responsibilities for preparing the annual report       Basis of audit opinion
and the financial statements in accordance with applicable            We conducted our audit in accordance with auditing
United Kingdom law and accounting standards are set out in            standards issued by the Auditing Practices Board. An audit
the statement of directors’ responsibilities.The directors are also   includes examination, on a test basis, of evidence relevant to
responsible for preparing the directors’ remuneration report.         the amounts and disclosures in the financial statements and
     Our responsibility is to audit the financial statements and      the auditable part of the directors’ remuneration report. It
the auditable part of the directors’ remuneration report in           also includes an assessment of the significant estimates and
accordance with relevant legal and regulatory requirements            judgements made by the directors in the preparation of the
and United Kingdom Auditing Standards issued by the                   financial statements, and of whether the accounting policies
Auditing Practices Board.This report, including the opinion,          are appropriate to the Company’s circumstances, consistently
has been prepared for and only for the Company’s members              applied and adequately disclosed.
as a body in accordance with Section 235 of the Companies                  We planned and performed our audit so as to obtain
Act 1985 and for no other purpose.We do not, in giving this           all the information and explanations which we considered
opinion, accept or assume responsibility for any other                necessary in order to provide us with sufficient evidence to
purpose or to any other person to whom this report is                 give reasonable assurance that the financial statements and
shown or into whose hands it may come save where                      the auditable part of the directors’ remuneration report are
expressly agreed by our prior consent in writing.                     free from material misstatement, whether caused by fraud
     We report to you our opinion as to whether the financial         or other irregularity or error. In forming our opinion we
statements give a true and fair view and whether the                  also evaluated the overall adequacy of the presentation of
financial statements and the auditable part of the directors’         information in the financial statements.
remuneration report have been properly prepared in
accordance with the Companies Act 1985.We also report to              Opinion
you if, in our opinion, the directors’ report is not consistent       In our opinion:
with the financial statements, if the Company has not kept            • the financial statements give a true and fair view of the
proper accounting records, if we have not received all the               state of affairs of the Company and the Group at 31
information and explanations we require for our audit, or                December 2003 and of the loss and cash flows of the
if information specified by law regarding directors’                     Group for the year then ended;
remuneration and transactions is not disclosed.                       • the financial statements have been properly prepared in
     We read the other information contained in the annual               accordance with the Companies Act 1985; and
report and consider the implications for our report if we             • those parts of the directors’ remuneration report required
become aware of any apparent misstatements or material                   by Part 3 of Schedule 7A to the Companies Act 1985
inconsistencies with the financial statements.The other                  have been properly prepared in accordance with the
information comprises only the Chairman’s Statement,                     Companies Act 1985.
the Report of the Directors, the unaudited part of the
Remuneration Committee Report and the Corporate                       PricewaterhouseCoopers LLP
Governance Report.                                                    Chartered Accountants and Registered Auditors,
     We review whether the corporate governance statement             Cambridge
reflects the Company’s compliance with the seven provisions           26 March 2004




page 20   Annual Report & Accounts 2003
Consolidated Profit and Loss Account
for the year ended 31 December 2003


                                                                                                                     2003            2002
                                                                                                       Notes        £’000           £’000
Turnover
Continuing operations                                                                                            458,350      489,775
Acquisitions                                                                                                      75,254            –

                                                                                                           2     533,604       489,775
Cost of sales                                                                                              3    (448,560)     (412,421)

Gross profit                                                                                                      85,044        77,354
Net operating expenses                                                                                     3     (84,567)      (73,145)

Operating profit                                                                                                     477            4,209

Operating profit
Continuing operations                                                                                              1,217            4,209
Acquisitions                                                                                                        (740)               –

                                                                                                                     477         4,209
Loss on closure of business                                                                                4           –        (1,456)
Profit on sale of properties                                                                               4           –         1,434
(Loss)/profit on disposal of businesses                                                                    4      (1,125)        1,133
Amounts written off investments                                                                            4           –          (789)

(Loss)/profit on ordinary activities before interest                                                                (648)        4,531
Interest receivable and similar income                                                                     5          22            61
Interest payable and similar charges                                                                       6      (2,682)       (2,282)

(Loss)/profit on ordinary activities before taxation                                                       7      (3,308)           2,310
Taxation on (loss)/profit on ordinary activities                                                          10         227             (827)

(Loss)/profit on ordinary activities after taxation                                                               (3,081)        1,483
Dividends                                                                                                 11      (2,125)       (1,902)

Retained loss for the year                                                                             28, 29     (5,206)            (419)

Basic (loss)/earnings per share                                                                           13        (15.8)p           7.8p

Diluted (loss)/earnings per share                                                                         13        (15.8)p           7.8p


The Group has no recognised gains and losses other than those included in the profits and losses above, and therefore no separate
statement of total recognised gains and losses has been presented.




page 21   Annual Report & Accounts 2003
Consolidated Balance Sheet
at 31 December 2003


                                                                                                                    2003          2002
                                                                                                       Notes       £’000         £’000
Fixed assets
Intangible fixed assets                                                                                  14      12,789         5,610
Tangible fixed assets                                                                                    15      17,333        14,973
Other investments                                                                                        17         200           200

                                                                                                                 30,322        20,783

Current assets
Stocks and work in progress                                                                              18      91,112        72,258
Debtors                                                                                                  19      24,891        20,352
Cash at bank and in hand                                                                                             37           683

                                                                                                                116,040        93,293
Creditors: amounts falling due within one year                                                           20    (110,573)      (87,042)

Net current assets                                                                                                 5,467        6,251

Total assets less current liabilities                                                                            35,789        27,034

Creditors: amounts falling due after more than one year                                                  21       (4,098)       (1,289)

Provisions for liabilities and charges                                                                   25         (191)        (140)

Net assets                                                                                                       31,500        25,605

Capital and reserves
Called-up share capital                                                                                  26      23,468        19,027
Share premium account                                                                                    28      14,222        11,916
Profit and loss account                                                                                  28      (6,190)       (5,338)

Equity shareholders’ funds                                                                               29      31,500        25,605


The financial statements on pages 21 to 43 were approved by the board of directors on 26 March 2004 and were signed on its behalf by:

Nicholas R Lancaster                        David H Jaggar
Director                                    Director




page 22   Annual Report & Accounts 2003
Balance Sheet
at 31 December 2003


                                                                                                                    2003          2002
                                                                                                       Notes       £’000         £’000
Fixed assets
Tangible fixed assets                                                                                    15         180           160
Investments in Group undertakings                                                                        16      33,402        27,596
Other investments                                                                                        17         200           200

                                                                                                                 33,782        27,956

Current assets
Debtors due after more than one year                                                                     19      14,037        10,288
Debtors due within one year                                                                              19       5,666         7,238
Cash at bank and in hand                                                                                         12,297         2,631

                                                                                                                  32,000       20,157
Creditors: amounts falling due within one year                                                           20      (23,242)     (14,767)

Net current assets                                                                                                 8,758        5,390

Total assets less current liabilities                                                                            42,540        33,346

Creditors: amounts falling due after more than one year                                                  21       (3,250)       (1,000)

Net assets                                                                                                       39,290        32,346

Capital and reserves
Called-up share capital                                                                                  26      23,468        19,027
Share premium account                                                                                    28      14,222        11,916
Profit and loss account                                                                                  28       1,600         1,403

Equity shareholders’ funds                                                                                       39,290        32,346


The financial statements on pages 21 to 43 were approved by the board of directors on 26 March 2004 and were signed on its behalf by:

Nicholas R Lancaster                        David H Jaggar
Director                                    Director




page 23   Annual Report & Accounts 2003
Consolidated Cash Flow Statement
for the year ended 31 December 2003


                                                                                      Notes      2003      2002
                                                                              (Pages 25-26)     £’000     £’000
Net cash inflow from operating activities                                               A      3,738     6,791

Returns on investments and servicing of finance
Interest received                                                                                  22        61
Interest paid                                                                                  (2,681)   (2,277)
Interest element of finance lease and hire purchase rental payments                                (1)       (5)

Net cash outflow from returns on investments and servicing of finance                          (2,660)   (2,221)

Net corporation tax paid                                                                        (741)    (1,111)

Capital expenditure and financial investment
Purchase of tangible fixed assets                                                              (1,932)   (2,432)
Proceeds from exceptional disposal of freehold properties                                           –     2,982
Proceeds from disposals of other tangible fixed assets                                             20       876

Net cash (outflow)/inflow from capital expenditure and financial investment                    (1,912)   1,426

Acquisitions and disposals
Payments in respect of acquisitions                                                     D     (15,196)   (5,635)
Overdrafts acquired with subsidiary                                                              (121)        –
Proceeds from disposal of dealerships                                                   E       4,330     6,008

Net cash (outflow)/inflow from acquisitions and disposals                                     (10,987)     373

Equity dividends paid                                                                          (1,903)   (1,890)

Net cash (outflow)/inflow before financing                                                    (14,465)   3,368

Financing
Proceeds of share issue                                                                        7,326        317
Expenses of share issue                                                                         (579)         –
Receipt of bank term loan                                                                      2,500          –
Receipt/(repayment) of mortgages and other loans                                               2,203     (2,422)
Capital repayments on finance leases and hire purchase contracts                                 (11)       (26)

Net cash inflow/(outflow) from financing                                                      11,439     (2,131)

(Decrease)/increase in cash in the year                                                 C      (3,026)   1,237




page 24   Annual Report & Accounts 2003
Notes to the Consolidated Cash Flow Statement
for the year ended 31 December 2003


A. Reconciliation of operating profit to net cash inflow from operating activities

                                                                                                            2003         2002
                                                                                                           £’000        £’000
Operating profit                                                                                             477       4,209
Depreciation                                                                                               2,267       2,054
Amortised goodwill                                                                                           516         294
Loss on disposal of tangible fixed assets                                                                     49          71
Exceptional losses from closure of business                                                                    –        (295)
Increase in stock                                                                                         (7,303)     (5,296)
Increase in debtors                                                                                       (2,264)       (616)
Increase in creditors                                                                                      9,996       6,370
Net cash inflow from operating activities                                                                  3,738       6,791


B. Reconciliation of net cash flow to movement in net debt

                                                                                                            2003         2002
                                                                                                           £’000        £’000
(Decrease)/increase in cash in the year                                                                   (3,026)      1,237
Cash (inflow)/outflow from financing                                                                      (4,692)      2,449
Changes in debt resulting from cash flows                                                                 (7,718)      3,686
Loans acquired with subsidiary                                                                              (998)          –
Loans associated with disposal of dealership                                                                   –          39
Movement in net debt in the year                                                                          (8,716)      3,725
Net debt at 1 January 2003                                                                                (8,935)    (12,660)
Net debt at 31 December 2003                                                                             (17,651)     (8,935)


C. Movement in net debt

                                                                        At               Acquisitions      Other           At
                                                                 1 January       Cash (excluding cash    non-cash 31 December
                                                                      2003       flows and overdrafts)    changes        2003
                                                                    £’000       £’000          £’000       £’000        £’000
Cash at bank and in hand                                             683        (646)              –           –          37
Overdrafts                                                             –      (2,380)              –           –      (2,380)
                                                                     683      (3,026)              –           –      (2,343)
Debt due after more than one year                                 (1,282)     (2,816)              –           –      (4,098)
Debt due within one year                                          (8,318)     (1,887)           (998)          –     (11,203)
Finance leases                                                       (18)         11               –           –          (7)
                                                                  (9,618)     (4,692)           (998)          –     (15,308)
Total                                                             (8,935)     (7,718)           (998)          –     (17,651)




page 25   Annual Report & Accounts 2003
Notes to the Consolidated Cash Flow Statement
for the year ended 31 December 2003
continued

D. Analysis of the cash flows from acquisitions

                                                                                                                                     £’000
Cash consideration paid, including acquisition expenses, for acquisitions made in the year                                         15,196

Details of the assets and liabilities acquired through acquisitions made in 2003 are disclosed in Note 27 to the financial statements.


E. Analysis of the cash flows from dealership disposals

Net assets disposed of:                                                                                                              £’000
Fixed assets                                                                                                                           328
Stocks                                                                                                                               1,826
Debtors                                                                                                                                 68
Creditors                                                                                                                           (1,121)
Goodwill previously written off to reserves                                                                                          4,354

                                                                                                                                     5,455
Loss on disposal                                                                                                                    (1,125)

Consideration received in cash                                                                                                       4,330

The above note represents the Group’s disposal during 2003 of its Land Rover operation in Stockport, Cheshire, its Porsche operation
at Hatfield, Hertfordshire and its specialist sports car operation at St Albans, Hertfordshire. The results and cash flows of these
dealerships prior to their disposal are not considered material to the Group and therefore have not been separately disclosed as
discontinued operations.




page 26   Annual Report & Accounts 2003
Notes to the Financial Statements


1. Principal Accounting Policies
The financial statements have been prepared in accordance with the Companies Act 1985 and with applicable Accounting Standards
in the United Kingdom. A summary of the more important Group accounting policies, which have been applied consistently, is
set out below.

Basis of accounting
The financial statements are prepared in accordance with the historical cost convention.

In accordance with FRS 18 (‘Accounting policies’) the directors have formally reviewed the accounting policies and consider
them to be the most appropriate for the Group.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to
31 December 2003. The results of subsidiaries sold or acquired are included in the consolidated profit and loss account up to,
or from, the date control passes. Intra-group sales and profits are eliminated fully on consolidation. All subsidiaries have been
accounted for using acquisition accounting.

Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value of the identifiable
net assets acquired. Goodwill arising on acquisitions is capitalised and amortised over the periods which the directors estimate that the
values of the businesses acquired are expected to exceed the value of the underlying assets, not to exceed 20 years. Following the
implementation of FRS 10, ‘Goodwill and intangible assets’, goodwill on acquisitions made prior to 1 January 1998 remains written
off against reserves. This goodwill was eliminated as a matter of accounting policy and is charged in the profit and loss account on any
disposal of the business to which it relates. The carrying value of goodwill is subject to review and any impairment is charged to the
profit and loss account.

Investments in subsidiaries
Investments in subsidiaries are recorded at the total value of consideration paid plus all identifiable acquisition expenses less provision
for any impairment in value considered to be permanent.

Deferred taxation
Current tax, including UK corporation tax, is provided at amounts expected to be paid or recovered using the tax rates and laws that
have been enacted or substantially enacted by the balance sheet date. Provision is made for all deferred tax assets and liabilities in
accordance with FRS 19, using full provision accounting, when an event has taken place by the balance sheet date which gives rise to
an increased or reduced tax liability in the future. Deferred tax is measured at the average tax rates that are expected to apply in the
periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially
enacted by the balance sheet date. Deferred tax assets are recognised to the extent that they are regarded as recoverable. Deferred tax
assets and liabilities are not discounted.

Turnover
Sales of motor vehicles, parts and accessories are recognised on delivery to the customer. Servicing and bodyshop sales are recognised
on completion of the agreed work.

Tangible fixed assets
The cost of fixed assets is their purchase cost, together with any incidental costs of acquisition. Depreciation is calculated so as to write
off the cost of tangible fixed assets, less their estimated residual values, on a straight line basis over the expected useful economic lives
of the assets concerned.

The principal annual rates used for this purpose are:

Freehold buildings and long leaseholds                                                                                                     2%
Plant and machinery                                                                                                                     10%
Fixtures and fittings                                                                                                                   15%
Office equipment                                                                                                                        20%
Computer equipment                                                                                                                  22-33 1/3%
Short leasehold improvements are amortised over the period of the lease. Freehold land is not depreciated.




page 27   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



1. Principal Accounting Policies continued
Stocks and work in progress
Stocks and work in progress are valued at the lower of cost and net realisable value. Cost of vehicles and parts stock represents the
purchase price plus any additional costs incurred. Where necessary, provision is made for obsolete, slow-moving and defective stock.
Cars used for demonstration purposes are valued at cost less an appropriate charge for use.

Vehicles on consignment are included in stock when substantially all of the principal benefits and inherent risks rest with the Group.
The corresponding liability, after deducting any deposits, is included under creditors as manufacturers’ vehicle stocking loans.

Financial instruments
Outstanding foreign exchange contracts entered into for the purpose of hedging against cash flows for a future period are not
recognised at the balance sheet date and are carried forward against the corresponding gains and losses when they occur.

Pension scheme arrangements
The Group operates a number of pension schemes of which the major schemes are of the defined contribution type. The pension
schemes are funded by contributions partly from the employees and partly from the Group and are charged against profits in the
period for which they are payable. The assets of these schemes are held separately from those of the Group in independent, trustee-
administered funds.

Contributions to the defined benefit pension scheme are charged to the profit and loss account so as to spread the cost of providing
pensions over the employees’ working lives within the Group.Variations in pension cost, identified as a result of actuarial valuations,
are amortised over the average expected remaining lives of the employees. Differences between the amounts paid and the amounts
charged are treated as either prepayments or provisions in the balance sheet.

Leasing and hire purchase commitments
Assets held under finance leases and hire purchase contracts are capitalised in the balance sheet and depreciated over the shorter
of the lease terms and the useful lives of equivalent owned assets. The interest element of the contract obligations is charged to the
profit and loss account so as to give a constant periodic rate of charge on the remaining balance outstanding over the period of the
agreement. Costs in respect of operating leases are charged on a straight line basis over the lease term. Any incentives received are
similarly credited over the lease term.


2.Turnover
Turnover consists of the sales of motor vehicles, servicing and parts and accessories, excluding value added tax. Turnover relates
entirely to the United Kingdom.


3. Cost of Sales and Net Operating Expenses
                                                                                                           2003                        2002
                                                                                      Continuing                                 Continuing
                                                                                       operations   Acquisitions       Total      operations
                                                                                           £’000         £’000         £’000         £’000
Cost of sales                                                                           383,760         64,800      448,560          412,421
Net operating expenses
Selling and distribution costs                                                           43,679          7,001       50,680           42,791
Administration expenses                                                                  30,198          4,193       34,391           30,490
Other operating income                                                                     (504)             –         (504)            (136)
                                                                                         73,373         11,194       84,567           73,145




page 28   Annual Report & Accounts 2003
4. Exceptional (Loss)/Profit
                                                                                                                      2003          2002
                                                                                                                     £’000         £’000
Loss on closure of business                                                                                              –        (1,456)
Profit on sales of properties                                                                                            –         1,434
(Loss)/profit on disposal of businesses                                                                             (1,125)        1,133
Amounts written off investments                                                                                          –          (789)

In July 2003 the Group disposed of its Land Rover franchise in Stockport, Cheshire receiving a payment for goodwill of £1,000,000.
After writing off purchased goodwill of £3,770,000 and adjusting for disposal costs the Group recorded a loss on disposal of
£2,777,000. Also in July 2003 the Group disposed of its Porsche franchise in Hatfield, Hertfordshire receiving a payment for goodwill
of £2,000,000. After writing off purchased goodwill of £304,000 and adjusting for disposal costs the Group recorded a profit on
disposal of £1,685,000. In October 2003 the Group disposed of its specialist sports car business in St Albans, Hertfordshire receiving a
payment for goodwill of £250,000. After writing off purchased goodwill of £280,000 and adjusting for disposal costs, the Group
recorded a loss on disposal of £33,000.

In February 2002 the Group sold a freehold property in Bromley, Kent for £3,000,000. After adjusting for disposal costs the Group
recorded a profit on disposal of £1,434,000. In March 2002 the Group closed its Citroën franchise in Burnham, Berkshire. The Group
incurred certain closure related costs, including redundancy, which amounted to £295,000. In addition, the Group wrote back
goodwill of £1,161,000 previously written off to reserves. Overall, this produced a loss on closure of £1,456,000.

In May 2002 the Group disposed of its Mercedes-Benz franchise in Chelsea, London. The Group received £2,040,000 for goodwill.
After writing off purchased goodwill of £2,186,000 and adjusting for disposal costs and other adjustments the Group recorded a profit
on disposal of £248,000. In July 2002 the Group disposed of its Mercedes-Benz franchise in Bromley, Kent. The Group received
£1,320,000 for goodwill. After writing back goodwill of £751,000 previously written off to reserves and adjusting for disposal costs
and other adjustments the Group recorded a profit on disposal of £585,000. Also in July 2002, the Group disposed of its Toyota
franchise in Slough, Berkshire. The Group received £300,000 for goodwill. There was no purchased goodwill associated with this
business and the Group therefore recorded a profit on disposal of £300,000.

During 2002 the Group made full provisions against the carrying values of two of its investments. This resulted in the Group
recording a charge of £195,000 for the diminution in value of its investment in the Jensen motor consortium and a further charge
of £594,000 for the diminution in value of the 20% investment in Enabol Limited, an e-commerce venture.


5. Interest Receivable and Similar Income
                                                                                                                      2003          2002
                                                                                                                     £’000         £’000
Bank interest and similar income                                                                                        22            61


6. Interest Payable and Similar Charges
                                                                                                                      2003          2002
                                                                                                                     £’000         £’000
On bank term loans, mortgages and overdrafts                                                                           203           117
On manufacturers’ vehicle stocking loan                                                                              2,478         2,160
On finance leases and hire purchase contracts                                                                            1             5
                                                                                                                     2,682         2,282




page 29   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



7. (Loss)/Profit on Ordinary Activities before Taxation
                                                                                                                       2003             2002
                                                                                                                      £’000            £’000
(Loss)/profit on ordinary activities before taxation is stated after charging:
Depreciation charge for the year:
  Owned tangible fixed assets                                                                                        1,374         1,218
  Leased tangible fixed assets                                                                                         893           836
Amortisation of purchased goodwill                                                                                     516           294
Loss on disposal of tangible fixed assets                                                                               49            71
Auditors’ remuneration for audit services: Group                                                                       125           108
Operating leases – land and buildings                                                                                7,763         6,517
Operating leases – plant and machinery                                                                                 688           623

Of the total remuneration paid for audit services, the amount relating to audit services to the Company was £20,000 (2002: £20,000).

The total remuneration paid to the auditors for non-audit services was £118,000 (2002: £24,000). These fees comprised reporting
accountants’ fees for capital raising £65,000 (2002: £Nil), acquisitions £11,000 (2002: £1,000), tax services £31,000 (2002: £18,000)
and regulatory reporting £11,000 (2002: £5,000).


8. Directors’Emoluments
Detailed disclosures of directors’ individual remuneration and share options are given in the numerical analyses and associated text
in the Remuneration Committee Report on pages 14 and 15 and form part of these financial statements.
                                                                                                                       2003             2002
                                                                                                                      £’000            £’000
Aggregate emoluments                                                                                                 1,085         1,000
Company pension contributions to money purchase schemes                                                                126           126

Retirement benefits are accruing to four directors (2002: four directors) under money purchase schemes.
Emoluments payable to the highest paid director are as follows:
                                                                                                                       2003             2002
                                                                                                                      £’000            £’000
Aggregate emoluments                                                                                                   337              307
Company pension contributions to money purchase schemes                                                                 67               67


9. Employee Information
The average monthly number of persons (including executive directors) employed by the Group during the year was:

                                                                                                                     2003           2002
                                                                                                                   Number         Number
Office and management                                                                                                  295           266
Sales and aftersales                                                                                                 1,282         1,196
                                                                                                                     1,577         1,462

                                                                                                                       2003             2002
                                                                                                                      £’000            £’000
Staff costs (for the above persons)
Wages and salaries                                                                                                  41,098        35,165
Social security costs                                                                                                4,604         3,600
Pension costs (note 32)                                                                                                708           717
                                                                                                                    46,410        39,482




page 30   Annual Report & Accounts 2003
10.Taxation on (Loss)/Profit on Ordinary Activities
a) Analysis of credits for the year
                                                                                                                       2003           2002
                                                                                                                      £’000          £’000
Current tax:
UK corporation tax on (loss)/profit for the year                                                                      (222)            927
Adjustments in respect of previous years                                                                               (56)             48
Total current tax (see note 10b)                                                                                      (278)            975

Deferred tax:
Origination and reversal of timing differences                                                                          51             (148)
Tax (credit)/charge on (loss)/profit on ordinary activities                                                           (227)             827

b) Factors affecting the current tax credit for the year
The current credit for the year is different from the standard rate of corporation tax in the UK. The difference is explained below:

                                                                                                                       2003           2002
                                                                                                                      £’000          £’000
(Loss)/profit on ordinary activities before tax:                                                                    (3,308)          2,310
(Loss)/profit on ordinary activities multiplied by the standard rate of
  UK corporation tax of 30% (2002: 30%)                                                                               (992)            693
Effect of:
Differences between capital allowances and depreciation                                                                143               49
Timing differences                                                                                                      14                5
Utilisation of tax losses                                                                                                –              (20)
Rollover relief on profit on disposal of assets                                                                          –             (696)
Capital losses not relieved                                                                                            254                –
Expenses not deductible                                                                                                359              910
Adjustments in respect of prior years                                                                                  (56)              48
Lower rate tax on certain profits                                                                                        –              (14)
Current tax (credit)/charge (see note 10a)                                                                            (278)             975

There has been no impact on the taxation credit in the profit and loss account for the year in respect of the exceptional net loss
arising from the dealership disposals made during 2003.

c) Factors that may affect future tax charges
No provision has been made for deferred tax on gains recognised on the sale of capital items where potentially taxable gains have been
rolled over into replacement assets. Such tax would become payable only if the replacement assets were sold without it being able to
claim rollover relief. The total amount of unprovided deferred tax is £1.8 million (2002: £1.8 million). At present it is not envisaged
that any such tax will become payable in the foreseeable future.


11. Dividends
                                                                                                                       2003           2002
                                                                                                                      £’000          £’000
Interim dividend paid of 5p (2002: 5p) per ordinary share                                                              952             951
Final proposed dividend of 5p (2002: 5p) per ordinary share                                                          1,173             951
                                                                                                                     2,125           1,902




page 31   Annual Report & Accounts 2003
Notes to the Financial Statements
continued


12. Profit for the Financial Year
As permitted by section 230 of the Companies Act 1985, the holding company’s profit and loss account has not been included in these
financial statements. The Group loss on ordinary activities after taxation for the financial year comprises:

                                                                                                                          2003           2002
                                                                                                                         £’000          £’000
Profit dealt within the accounts of the holding company                                                                  2,322         2,313


13. (Loss)/Earnings per Share
Basic (loss)/earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year. The basic loss per share is based on the loss on ordinary activities after taxation
of £3,081,000 and the weighted average number of shares in issue during the year of 19,515,000 calculated to account for the bonus
element of the Placing and Open Offer in October 2003.

The earnings per share in 2002 was based on the profit on ordinary activities after taxation of £1,483,000. In accordance with
FRS 14 (‘Earnings per share’) the weighted average number of shares of 18,918,000 used in the prior year has been recalculated
as 19,100,000 to account for the bonus element of the Placing and Open Offer in October 2003. This has had no effect on the
earnings per share as stated in the prior year.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. The Company had no categories of dilutive potential ordinary shares during the year, due to the Company
not meeting the performance conditions required for the exercise of share options.


14. Intangible Fixed Assets
                                                                                                                                    Goodwill
Group                                                                                                                                 £’000
Cost
At 1 January 2003                                                                                                                      6,169
Additions (note 27)                                                                                                                    7,695
At 31 December 2003                                                                                                                   13,864

Aggregate amortisation
At 1 January 2003                                                                                                                        559
Charge for the year                                                                                                                      516
At 31 December 2003                                                                                                                    1,075

Net book value
At 31 December 2003                                                                                                                   12,789
At 31 December 2002                                                                                                                    5,610

Details of the goodwill purchased in the year are shown in Note 27.

The goodwill arising on acquisitions is amortised on a straight line basis over 20 years. This period is the period over which the directors
estimate that the values of the businesses acquired are expected to exceed the value of their underlying assets.




page 32   Annual Report & Accounts 2003
15.Tangible Fixed Assets
                                                                                 Freehold and        Short
                                                                                long leasehold   leasehold   Equipment
                                                                                      land and    land and         and
                                                                                     buildings   buildings   machinery        Total
Group                                                                                    £’000       £’000       £’000        £’000
Cost
At 1 January 2003                                                                      3,534      11,491         8,492       23,517
Acquisitions                                                                             999         618         1,475         3,092
Additions                                                                                  –         735         1,197         1,932
Disposals                                                                                  –        (160)       (1,256)       (1,416)
At 31 December 2003                                                                    4,533      12,684         9,908       27,125

Depreciation
At 1 January 2003                                                                        280       3,246         5,018        8,544
Charge for the year                                                                       52         863         1,352        2,267
Eliminated on disposals                                                                    –         (36)         (983)      (1,019)
At 31 December 2003                                                                      332       4,073         5,387        9,792

Net book value
At 31 December 2003                                                                    4,201       8,611         4,521       17,333
At 31 December 2002                                                                    3,254       8,245         3,474       14,973

Freehold and long leasehold land and buildings includes a net book value of £468,000 (2002: £486,000) in respect of a premium
on a long leasehold with less than 50 years to expiry. The remaining net book value comprises freehold land and buildings.

Equipment and machinery includes assets held under finance leases and hire purchase contracts with a total net book value of £6,000
(2002: £36,000). The total depreciation charge for the year includes £30,000 (2002: £56,000) in respect of these assets.

                                                                                                             Equipment
                                                                                                                   and
                                                                                                             machinery        Total
Company                                                                                                          £’000        £’000
Cost
At 1 January 2003                                                                                                  495           495
Additions                                                                                                           99            99
Disposals                                                                                                         (130)         (130)
At 31 December 2003                                                                                                464           464

Depreciation
At 1 January 2003                                                                                                  335           335
Charge for the year                                                                                                 79            79
Eliminated on disposals                                                                                           (130)         (130)
At 31 December 2003                                                                                                284           284

Net book value
At 31 December 2003                                                                                                180          180
At 31 December 2002                                                                                                160          160

The Company had no assets held under finance leases and hire purchase contracts (2002: £Nil).




page 33   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



16. Investments in Group Undertakings

Company                                                                                                                    £’000
Cost
At 1 January 2003                                                                                                        29,846
Additions                                                                                                                 4,806
At 31 December 2003                                                                                                      34,652

Provisions
At 1 January 2003                                                                                                          2,250
Released in the year                                                                                                      (1,000)
At 31 December 2003                                                                                                        1,250

Net book value
At 31 December 2003                                                                                                      33,402
At 31 December 2002                                                                                                      27,596

During the year the Company acquired the entire share capital of Heathrow Limited which operates a BMW dealership in Heathrow,
Middlesex. Further details on the acquisition are shown in Note 27.

The investments in the Group’s major undertakings can be summarised as follows:

                                                                                                                    Proportion of
                                                                                                                    nominal value
                                                                                              Description of             of issued
Name of Group undertaking                                 Nature of business                     shares held           shares held
Citygate Dealerships Limited                           Motor dealership               Ordinary £1 shares                     100
Heathrow Limited                                       Motor dealership               Ordinary £1 shares                     100
Holland Park Limited                                   Motor dealership               Ordinary 10p shares                    100
Jack Barclay Limited                                   Motor dealership               Ordinary £1 shares                     100
MJ Limousines Limited                                      Limousines                 Ordinary £1 shares                     100
Malaya Dealerships Limited                             Motor dealership               Ordinary £1 shares                     100
Sands of Burnham Limited                               Motor dealership            Ordinary £1 shares and
                                                                                     £1 Preference shares                    100
Citygate Motor Properties Limited                                Property             Ordinary £1 shares                     100

All of the Group undertakings above are incorporated in England and Wales.


17. Other Investments
Group                                                                                                                      £’000
Cost
At 1 January and 31 December 2003                                                                                            889

Provisions
At 1 January and 31 December 2003                                                                                            689

Net book value
At 31 December 2003                                                                                                          200
At 31 December 2002                                                                                                          200




page 34   Annual Report & Accounts 2003
17. Other Investments continued
Company                                                                                                                      £’000
Cost
At 1 January and 31 December 2003                                                                                              395

Provisions
At 1 January and 31 December 2003                                                                                              195

Net book value
At 31 December 2003                                                                                                            200
At 31 December 2002                                                                                                            200


18. Stocks and Work in Progress
                                                                                                                 2003          2002
Group                                                                                                           £’000         £’000
Vehicles                                                                                                      85,667        67,000
Parts and consumables                                                                                          5,251         5,042
Work in progress                                                                                                 194           216
                                                                                                              91,112        72,258

The Group’s stocks of new vehicles are held on consignment from manufacturers and are not included within the balance sheet until
either the vehicles are registered or the manufacturers’ free stocking period has expired. Stocks of vehicles shown above include
£21,217,000 (2002: £14,608,000) in respect of vehicles held on consignment from manufacturers. The value of vehicles excluded
from vehicle stocks above at 31 December 2003 was £12,478,000 (2002: £7,113,000).


19. Debtors
                                                                                                                 2003          2002
Group                                                                                                           £’000         £’000
Amounts due within one year:
Trade debtors                                                                                                 12,671        12,710
Corporation tax                                                                                                  517             –
Other debtors                                                                                                  4,797         2,220
Prepayments and accrued income                                                                                 6,906         5,422
                                                                                                              24,891        20,352

                                                                                                                 2003          2002
Company                                                                                                         £’000         £’000
Amounts due within one year:
Amounts owed by Group undertakings                                                                                879        1,034
Dividends receivable from Group undertakings                                                                    3,500        5,610
Deferred tax asset (note 25)                                                                                       86           63
Other debtors                                                                                                   1,201          531
                                                                                                                5,666        7,238

Amounts due after more than one year:
Amounts owed by Group undertakings                                                                            14,037        10,288




page 35   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



20. Creditors: Amounts falling due within one year
                                                                            2003     2002
Group                                                                      £’000    £’000
Bank overdrafts (note 22)                                                  2,380        –
Bank loans (note 22)                                                         250        –
Bank mortgages (note 22)                                                     133       63
Manufacturers’ vehicle stocking loans (note 22)                           37,177   25,760
Other loans (note 22)                                                     10,820    8,256
Obligations under finance leases and hire purchase contracts                   7       11
Trade creditors                                                           34,034   32,708
Corporation tax                                                                –      332
Other taxation and social security                                         1,438    1,227
Other creditors                                                           14,227   10,030
Accruals and deferred income                                               8,934    7,704
Dividends payable                                                          1,173      951
                                                                         110,573   87,042

                                                                            2003     2002
Company                                                                    £’000    £’000
Bank loans (note 22)                                                         250        –
Other taxation and social security                                           163       87
Amounts owed to Group undertakings                                        17,842    9,438
Other creditors                                                            1,913    2,312
Accruals and deferred income                                               1,901    1,979
Dividends payable                                                          1,173      951
                                                                          23,242   14,767


21. Creditors: Amounts falling due after more than one year
                                                                            2003     2002
Group                                                                      £’000    £’000
Bank loans (note 22)                                                       3,250    1,000
Bank mortgages (note 22)                                                     848      282
Obligations under finance leases and hire purchase contracts                   –        7
                                                                           4,098    1,289

                                                                            2003     2002
Company                                                                    £’000    £’000
Bank loans (note 22)                                                       3,250    1,000

Amounts falling due after more than one year are repayable as follows:
                                                                            2003     2002
Group                                                                      £’000    £’000
Between one and two years                                                    383    1,070
Between two and five years                                                 1,115      189
After five years                                                           2,600       30
                                                                           4,098    1,289

                                                                            2003     2002
Company                                                                    £’000    £’000
Between one and two years                                                    250    1,000
Between two and five years                                                   750        –
After five years                                                           2,250        –
                                                                           3,250    1,000




page 36   Annual Report & Accounts 2003
22. Loans and Overdrafts
Bank loans comprises a term loan of £3,500,000 repayable by annual instalments of £250,000 followed by a final instalment of
£2,250,000 in September 2009. The loan is secured by fixed and floating charges over the assets of the Group.

Bank overdrafts are secured by fixed and floating charges over the assets of the Group and are repayable on demand.

H.R.Owen Plc has entered into an agreement with HSBC Bank plc whereby its credit balance with the bank can, at any time,
be used to discharge sums due to the bank by any Group undertaking.

Bank mortgages comprised two separate mortgages. The first mortgage is secured on the freehold land and buildings owned by Malaya
Dealerships Limited. The mortgage bears interest at 2% over LIBOR and is repayable by quarterly instalments of £16,000. The balance
outstanding at 31 December 2003 was £281,000 which is repayable over the next five years. No repayments are due after more than
five years. The second mortgage is secured on the freehold land and buildings owned by Heathrow Limited. The mortgage bears interest
at 13/4% over the bank’s base rate and is repayable by quarterly instalments of £17,500. The balance outstanding at 31 December 2003
was £700,000 which is repayable over the next 10 years with £350,000 repayable after more than five years.

Manufacturers’ vehicle stocking loans and other loans are all at variable commercial rates of interest. Manufacturers’ vehicle stocking
loans are secured at any time by fixed and floating charges on stocks of new and demonstrator cars and commercial vehicles held.

Other loans are secured by fixed and floating charges on stocks of used cars.


23. Obligations under Finance Leases
At 31 December 2003 the Group had obligations under finance leases and hire purchase contracts in respect of equipment and
machinery as follows:
                                                                                                                         2003           2002
                                                                                                                        £’000          £’000
Obligations under finance leases and hire purchase contracts fall due as follows:
In one year or less                                                                                                          7            11
Between one and two years                                                                                                    –             7
                                                                                                                             7            18

The Company has no obligations under finance leases and hire purchase contracts (2002: £Nil).


24. Financial Instruments
The Group purchases financial instruments such as bank loans and overdrafts, new and used vehicle stocking loans and hire purchase
obligations in order to finance its operations and to manage the interest rate and liquidity risks that arise from those operations and
from its sources of finance. It is not the policy of the Group to trade in financial instruments.

The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk and foreign currency risk.
The Board reviews and agrees policies for managing each of these risks.

Interest rate risk
The Group finances its operations through a mixture of retained reserves and borrowings. These borrowings comprise bank loans,
overdrafts and mortgages, manufacturer and other vehicle stocking loans and hire purchase obligations. All borrowings are at floating rates.

The Group’s net interest charge for the year was £2,660,000 (2002: £2,221,000), an increase of £439,000.

The maturity profile of debt, shown below, shows total debt due within one year of £50.8 million (2002: £34.1 million).
Manufacturers’ vehicle stocking loans comprised £37.2 million of the total (2002: £25.8 million). These borrowings show large
fluctuations during the year and are heavily influenced by the bi-annual change in registration pre-fix letter and by the manufacturers’
own production schedules and sales levels. In the main, these borrowings do not generate cash flows until either the relevant vehicles
are registered or the manufacturers’ free stocking period expires.




page 37   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



24. Financial Instruments continued
All borrowings are denominated in sterling. There are no material differences between the fair values and book values of the Group’s
borrowings. The interest rates on debt and finance leases shown in the table are detailed in Note 22.

Liquidity risk
Liquidity risk is managed by borrowing with a spread of maturity periods. As indicated above, the Group has significant fluctuations in
short-term borrowings due to industry specific factors.The Group mitigates any potential liquidity risk through maintaining substantial
unutilised banking and used vehicle stocking loan facilities. At 31 December 2003, the Group had undrawn floating rate borrowing
facilities of £25.4 million (2002: £27.3 million) represented by overdraft and used vehicle stocking loans, all of which would be repayable
on demand.

These objectives, policies and strategies are consistent with those applied in the previous year.

A table showing the maturity of the Group’s financial liabilities is shown below:
                                                                                                                       Finance          2003
                                                                                                            Debt         leases        Total
                                                                                                           £’000         £’000         £’000
Within one year or on demand                                                                             50,759               7       50,766
Between one and two years                                                                                   383               –          383
Between two and five years                                                                                1,115               –        1,115
Over five years                                                                                           2,600               –        2,600
                                                                                                         54,857               7       54,864

                                                                                                            Debt        Finance          2002
                                                                                                                          leases         Total
                                                                                                           £’000         £’000          £’000
Within one year or on demand                                                                             34,079             11        34,090
Between one and two years                                                                                 1,063              7         1,070
Between two and five years                                                                                  189              –           189
Over five years                                                                                              30              –            30
                                                                                                         35,361             18        35,379

Debt due after five years relates to the bank mortgage and term loan. Short term debtors and creditors have been excluded from all
FRS 13 disclosures in these financial statements.

Foreign currency risk
The Group purchases its vehicles in sterling through the manufacturers’ UK operating companies with the sole exception of
Lamborghini where the Group purchases vehicles directly from the manufacturer in euros. The Group minimises the risk from foreign
currency fluctuations through the use of forward currency contracts. At 31 December 2003 the fair value of these contracts was
£31,000, which is the estimated amount which the Group would expect to pay on termination of the contracts, taking into
consideration current exchange rates.


25. Provisions for Liabilities and Charges
Deferred taxation provided in the financial statements, and the amount unprovided of the total potential liability, are as follows:
                                                                                                Amount provided          Amount unprovided
                                                                                              2003         2002           2003        2002
Group                                                                                        £’000        £’000          £’000       £’000
Tax effect of timing differences because of:
  excess of tax allowances over depreciation                                                  284            215             –             –
  other                                                                                       (93)           (75)        1,900         1,924
                                                                                              191            140         1,900         1,924

Unprovided deferred tax is primarily in respect of capital gains where rollover relief has been claimed.




page 38   Annual Report & Accounts 2003
25. Provisions for Liabilities and Charges continued
The movement on the provision for deferred taxation is as follows:

                                                                                                                                    £’000
At 1 January 2003                                                                                                                     140
Charged to profit and loss account                                                                                                     51
At 31 December 2003                                                                                                                   191

Company
The Company had a deferred taxation asset at 31 December 2003 of £86,000 (2002: £63,000). Unprovided deferred tax amounted
to£685,000 (2002: £706,000) primarily in respect of capital gains where rollover relief has been claimed.


26. Share Capital
                                                                                                                          2003
                                                                                                               Ordinary shares of £1 each
                                                                                                                                  Number
                                                                                                                     £’000          (000’s)
Authorised
At 1 January 2003                                                                                                  30,000         30,000
Increased in the year                                                                                              10,000         10,000

At 31 December 2003                                                                                                40,000         40,000

Allotted, issued and fully paid
At 1 January 2003                                                                                                  19,027         19,027
Issued in the year                                                                                                  4,441          4,441

At 31 December 2003                                                                                                23,468         23,468

In October 2003 the Company completed a Placing and Open Offer for 4,437,398 new ordinary £1 shares at £1.65 per share in order
to provide additional capital to complete its current acquisition programme and to provide working capital for the new dealerships.
The Placing and Open Offer raised net proceeds of £6,743,000 after issue expenses of £579,000. In February 2003, the Company also
issued 3,364 £1 ordinary shares pursuant to the exercise of options under the Company’s Sharesave scheme.

Details of share options at 1 January and 31 December 2003 are as follows:

                                                         At 1.1.2003    Exercised       Lapsed At 31.12.2003   Subscription     Period of
                                                            Number       Number        Number       Number            price      exercise
1992 Share Option Plan                                      89,286             –            –     89,286            £1.40     2000-2007
2001 Share Option Plan                                     785,863             –            –    785,863            £1.30     2004-2011
Sharesave                                                  163,138        (3,364)     (19,679)   140,095            £1.32     2002-2004
                                                         1,038,287        (3,364)     (19,679) 1,015,244

No new options were granted in the year. During 2003 options over 3,364 £1 ordinary shares were exercised under the Company’s
Sharesave scheme.

27. Acquisitions
On 1 April 2003 the Company acquired the entire share capital of Heathrow Limited which operates a BMW dealership in Heathrow,
Middlesex. The total consideration, including acquisition expenses, was £4,806,000 which was settled in cash on completion.

In June 2003 Malaya Dealerships Limited, a wholly owned subsidiary, acquired various assets and liabilities of a Mercedes-Benz
dealership in Brighton, East Sussex. The total consideration, including acquisition expenses, was £1,329,000 which was settled in cash.

Also in June 2003 Holland Park Limited, a wholly owned subsidiary, acquired various assets and liabilities of a BMW dealership in
Chiswick, London. The total consideration, including acquisition expenses, was £4,866,000 which was settled in cash. In August 2003
the company acquired various assets and liabilities of a BMW dealership in Chelsea, London. The total consideration, including
acquisition expenses, was £1,931,000 which was settled in cash.




page 39   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



27. Acquisitions continued
In July 2003 Citygate Dealerships Limited, a wholly owned subsidiary, acquired various assets and liabilities of a Jaguar dealership in
Colindale, London. The total consideration, including acquisition expenses, was £949,000 which was settled in cash. In September
2003 the company acquired various assets and liabilities of a Lexus dealership in Brighton, East Sussex. The total consideration,
including acquisition expenses, was £97,000 which was settled in cash and in October 2003 the company acquired various assets and
liabilities of an Audi dealership in Finchley, London. The total consideration, including acquisition expenses, was £1,218,000 which
was settled in cash.

The Group has used acquisition accounting to account for these purchases.

                                                                                                    Heathrow          Asset
                                                                                                     Limited    acquisitions       Total
                                                                                                       £’000         £’000         £’000
Tangible fixed assets                                                                                  1,331          1,761        3,092
Stocks                                                                                                 2,648          4,120        6,768
Debtors                                                                                                1,532            295        1,827
Creditors                                                                                             (2,874)        (1,312)      (4,186)

Book value and fair value of net assets acquired                                                       2,637          4,864       7,501
Total consideration                                                                                    4,806         10,390      15,196

Goodwill on acquisition                                                                                2,169          5,526        7,695

The profit after tax of Heathrow Limited from 1 January 2003 to the date of acquisition was £162,000 and for the previous
accounting year ended 31 December 2002 was £266,000. From the date of acquisition to 31 December 2003 Heathrow Limited
contributed £29.1 million to turnover and produced a profit before interest of £188,000 and after interest of £34,000. Heathrow
Limited generated £85,000 in operating cash flows, paid £154,000 in respect of interest and utilised £27,000 for capital expenditure.


28. Share Premium Account and Reserves
                                                                                                        Share
                                                                                                     premium    Profit & loss
                                                                                                      account        account       Total
Group                                                                                                   £’000          £’000       £’000
At 1 January 2003                                                                                     11,916         (5,338)       6,578
Retained loss for the year                                                                                 –         (5,206)      (5,206)
Goodwill written back on disposal of dealerships                                                           –          4,354        4,354
Share issues in the year                                                                               2,306              –        2,306
At 31 December 2003                                                                                   14,222         (6,190)       8,032

The total amount of goodwill which remains in reserves having been written off in prior years was £5,391,000 (2002: £9,745,000).

                                                                                                        Share
                                                                                                     premium    Profit & loss
                                                                                                      account        account       Total
Company                                                                                                 £’000          £’000       £’000
At 1 January 2003                                                                                     11,916          1,403      13,319
Retained profit for the year                                                                               –            197         197
Share issues in the year                                                                               2,306              –       2,306
At 31 December 2003                                                                                   14,222          1,600      15,822




page 40   Annual Report & Accounts 2003
29. Reconciliation of Movements in the Group’s Equity Shareholders’Funds
                                                                                                                    2003              2002
                                                                                                                   £’000             £’000
(Loss)/profit for the financial year                                                                              (3,081)            1,483
Dividends                                                                                                         (2,125)           (1,902)

                                                                                                                  (5,206)             (419)
Share issues in the year                                                                                           6,747               317
Goodwill written back on disposal of dealerships                                                                   4,354             1,912

Net increase in equity shareholders’ funds                                                                        5,895              1,810
Opening equity shareholders’ funds                                                                               25,605             23,795
Closing equity shareholders’ funds                                                                               31,500             25,605


30. Financial and Capital Commitments
At 31 December 2003 the Group had annual commitments under non-cancellable operating leases as follows:

                                                                                                 2003                        2002
                                                                                     Land and                    Land and
                                                                                     buildings          Other    buildings           Other
                                                                                        £’000           £’000      £’000             £’000
Expiring within one year                                                                  235            308           2              240
Expiring between two and five years inclusive                                           1,165            203         229              399
Expiring in over five years                                                             8,013             17       6,439               16
                                                                                        9,413            528       6,670              655

At 31 December 2003 the Group had capital commitments as follows:
                                                                                                                    2003              2002
                                                                                                                   £’000             £’000
Authorised and contracted for                                                                                        582              626


31. Post Balance Sheet Events
On 2 January 2004 the Group completed the acquisition of an Audi dealership in Amersham, Buckinghamshire for a cash consideration
of £1,229,000. The dealership territory is adjacent to the Group’s existing Audi territories in North London and will significantly
strengthen the Group’s representation in this area.


32. Pension Obligations
The holding company and certain subsidiary companies operate defined contribution pension schemes administered by trustees.
Contributions are charged against profits in the year in which they are payable and amounted to £358,000 (2002: £328,000).

The Group also operates the H.R.Owen London Defined Benefit Pension Scheme, a defined benefit pension scheme which operates
on a pre-funded basis. The funding policy is to contribute such variable amounts as, on the advice of the Scheme’s actuary, will
achieve a 100% funding level on a projected salary basis. Actuarial assessments covering expense and contributions are carried out by
independent qualified actuaries, with the last such review being carried out as at 5 April 2001 and updated to 31 December 2003.

At 5 April 2001, the market value of the assets of the Scheme was £3,103,000 and this value represented 112% of the value of the
benefits that had accrued to members after allowing for expected future increases in pensionable salaries.

The total pension cost of the defined benefit pension scheme for the year ended 31 December 2003, calculated in accordance with
SSAP 24, was £350,000 (2002: £389,000).

Defined benefit contributions paid by the Group during the same period totalled £318,000 and, as a result, a balance sheet accrual
of £102,000 existed at the year end (2002: £70,000).




page 41   Annual Report & Accounts 2003
Notes to the Financial Statements
continued



32. Pension Obligations continued
The major assumptions, under both SSAP 24 and FRS 17, used by the actuary were:

                                                               At 31 December 2003          At 31 December 2002         At 31 December 2001
Rate of increase in salaries                                           3.80%   p.a.                  3.35%    p.a.              3.50%    p.a.
Rate of increase in deferred pensions                                  2.50%   p.a.                  2.35%    p.a.              2.50%    p.a.
Rate of increase in pensions in payment                                2.50%   p.a.                  2.35%    p.a.              2.50%    p.a.
Discount rate                                                          5.40%   p.a.                  5.50%    p.a.              5.80%    p.a.
Inflation assumption                                                   2.80%   p.a.                  2.35%    p.a.              2.50%    p.a.

The Group has adopted the transitional disclosure requirements of FRS 17 which are shown below.

The assets in the Scheme were:
                                                                             Value                         Value                      Value
                                                               at 31 December 2003           at 31 December 2002        at 31 December 2001
                                                                            £’000                         £’000                      £’000
Equities                                                                     2,958                         2,265                      2,545
Fixed interest                                                                 741                           595                        603
Other                                                                           31                            32                         80
Total market value of assets                                                 3,730                         2,892                      3,228
Present value of Scheme liabilities                                         (4,031)                       (3,181)                    (2,958)
(Deficit)/surplus in the Scheme                                               (301)                         (289)                       270
Related deferred tax asset/(liability)                                          90                            87                        (81)
Pension (deficit)/asset (in accordance with FRS 17)                           (211)                         (202)                       189

The expected rates of return were:
                                                                    Long-term rates                 Long-term rates            Long-term rates
                                                                  of return expected             of return expected         of return expected
                                                               at 31 December 2003           at 31 December 2002        at 31 December 2001
Equities                                                                    6.80%                          6.50%                      7.00%
Fixed interest securities                                                   4.80%                          4.50%                      5.00%
Other assets                                                                4.00%                          4.00%                      4.50%

If the above pension deficit was recognised in the financial statements, the Group’s net assets and profit and loss reserve would
be as follows:
                                                                                          At 31 December 2003           At 31 December 2002
                                                                                                       £’000                         £’000
Net assets excluding pension deficit                                                                     31,500                      25,605
Pension deficit (in accordance with FRS 17)                                                                (211)                       (202)
Net assets including pension deficit                                                                     31,289                      25,403

                                                                                          At 31 December 2003           At 31 December 2002
                                                                                                       £’000                         £’000
Profit and loss deficit excluding pension deficit                                                         (6,190)                    (5,338)
Pension deficit (in accordance with FRS 17)                                                                 (211)                      (202)
Profit and loss deficit including the pension deficit                                                     (6,401)                    (5,540)




page 42   Annual Report & Accounts 2003
32. Pension Obligations continued
The impact on the Group’s profit and loss account would have been as follows:
                                                                                                                   2003         2002
                                                                                                                  £’000        £’000
Service cost                                                                                                       280          292
Past service cost                                                                                                    –            –
Amount charged to operating profit                                                                                 280          292

                                                                                                                   2003         2002
                                                                                                                  £’000        £’000
Expected return on pension scheme assets                                                                           186          224
Interest on pension liabilities                                                                                   (183)        (181)
Net return on pension scheme                                                                                         3           43

The amounts that would have been recognised in the statement of total recognised gains and losses (STRGL) were:
                                                                                                                   2003         2002
                                                                                                                  £’000        £’000
Actual return less expected return on assets                                                                       310         (942)
Experience gains and losses on liabilities                                                                          61          426
Changes in assumptions                                                                                            (424)        (149)
Actuarial loss recognised in STRGL                                                                                 (53)        (665)

The movement in the surplus during the year ended 31 December 2003 was as follows:
                                                                                                                   2003         2002
                                                                                                                  £’000        £’000
Deficit in Scheme at 1 January 2003                                                                               (289)         270
Current service cost                                                                                              (280)        (292)
Contributions                                                                                                      318          355
Net return on assets                                                                                                 3           43
Actuarial loss                                                                                                     (53)        (665)
Deficit in Scheme at 31 December 2003                                                                             (301)        (289)

At 31 December 2003 the difference between the expected and actual return on Scheme assets was a shortfall of £310,000 (2002:
£942,000), equivalent to 8% (2002: 33%) of Scheme assets. Experience gains on scheme liabilities amounted to £61,000 (2002:
£426,000), equivalent to 2% (2002: 13%) of Scheme liabilities. The net loss of £53,000 (2002: £665,000) recognised in the statement
of total recognised gains and losses was equivalent to 1% (2002: 21%) of Scheme liabilities.




page 43   Annual Report & Accounts 2003
Notice of Meeting


Notice is hereby given that the twentieth Annual General Meeting of H.R. Owen Plc will be held
on Wednesday 12 May 2004 at 12.00noon at Jack Barclay, 18 Berkeley Square, London W1 for the
following purposes:
As Ordinary Business:

Resolution No 1
To receive and adopt the Report of the Directors and the audited Financial Statements for the year ended 31 December 2003.

Resolution No 2
To re-appoint PricewaterhouseCoopers LLP as auditors of the Company and for their remuneration be determined by the directors.

Resolution No 3
To approve the Remuneration Committee Report for 2003.

Resolution No 4
To re-elect as a director Mr D G Evans, who retires by rotation in accordance with the Company’s Articles of Association.

Resolution No 5
To re-elect as a director Mr C J Giltrap, who retires by rotation in accordance with the Company’s Articles of Association.

Resolution No 6
To re-elect as a director Mr B C A Green, who retires by rotation in accordance with the Company’s Articles of Association.

Resolution No 7
To approve the directors’ recommendation of a final dividend for the year ended 31 December 2003 of 5 pence per ordinary share.

And as Special Business:

Resolution No 8
To consider and, if thought fit, to pass the following resolution as an Ordinary Resolution: the directors be generally and unconditionally
authorised in accordance with section 80 of the Companies Act 1985 (‘the Act’) to exercise all the powers of the Company to allot
all relevant securities (within the meaning of section 80(2) of the Act) up to an aggregate nominal amount of £7,822,629 during the
period commencing on the date of the passing of this resolution and expiring at the conclusion of the next Annual General Meeting
of the Company or on the date 15 months after passing of this resolution whichever shall be the earlier and provided that the
Company may at anytime before such expiry make an offer or agreement which would or might require relevant securities to be
allotted after such expiry and the directors may allot relevant securities in pursuance of any such offer or agreement as if the authority
conferred hereby had not expired.




page 44   Annual Report & Accounts 2003
Resolution No 9
To consider and, if thought fit, to pass the following resolution as a Special Resolution: the directors be empowered pursuant to
section 95 of the Companies Act 1985 (‘the Act’) to allot equity securities (within the meaning of section 94 of the Act) for cash
pursuant to the authority conferred by resolution 8 as if section 89(1) of the Act did not apply to any such allotment provided that
this power shall be limited:
(i) to the allotment of equity securities in connection with a rights issue in favour of ordinary shareholders where the equity securities
    respectively attributable to the interests of all Ordinary Shareholders are proportionate (as nearly as may be) to the respective number
    of ordinary shares held by them but subject to such exclusions or other arrangements as the directors may deem necessary or expedient
    to deal with legal or practical problems in respect of overseas holders, fractional entitlements, or otherwise; and
(ii) to the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities to an aggregate nominal amount
     of up to £1,173,394 representing 5.0 per cent of the issued share capital of the Company.

This authority will terminate no later than 15 months after the passing of this resolution.

By the order of the Board

James Adams
Company Secretary

Registered Office
75 Kinnerton Street
London SW1X 8ED
16 April 2004


Notes:
(1) Any member entitled to attend and vote at the meeting may appoint a proxy or proxies to attend and, on a poll, to vote instead
    of him/her. A proxy need not be a member of the Company. Appointment of a proxy will not preclude a member from attending
    the meeting and voting in person.
(2) The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a notarially
    certified copy of such power or authority, must be deposited at the offices of the Company’s registrars: Capita Registrars, Balfour
    House, 390/398 High Road, Ilford, Essex IG1 1NQ not less than 48 hours before the time appointed for the Meeting or any
    adjournment thereof.
(3) Copies of the directors’ service agreements are available for inspection during normal business hours on any weekday (Saturdays
    and public holidays excluded) at the registered office of the Company. Copies of such service agreements and the register of directors’
    interests will also be available for inspection at the Annual General Meeting from 11.45am until the end of the meeting.




page 45   Annual Report & Accounts 2003
Advisers


Secretary and                Stockbrokers
Registered Office            J M Finn & Co
James David Seton Adams      Salisbury House
75 Kinnerton Street          London Wall
London SW1X 8ED              London EC2M 5TA

Auditors                     Bankers
PricewaterhouseCoopers LLP   HSBC Bank plc
Abacus House                 26 North Station Road
Castle Park                  Colchester
Cambridge CB3 0AN            Essex CO1 1SY

Solicitors                   Registrars
Herbert Smith                Capita IRG plc
Exchange House               34 Beckenham Road
Primrose Street              Beckenham
London EC2A 2H5              Kent BR3 4TU

Plummer Tilsley Logan        Registered Number
Balkerne House               1753134
53 Crouch Street
Colchester
Essex CO3 3EL
H.R. Owen
75 Kinnerton Street
London SW1X 8ED
Tel: 020 7245 1122

www.hrowen.co.uk

				
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