Shields Automotive, one of Scotland's last independent motor groups, has reported a £1.5 million turnaround in profitability in three years after abandoning its multi-franchise autoparks.
The business, created 19 years ago at Shields Road in Darnley, Glasgow, by founder Joe O'Donnell, had expanded to three sites and six franchises, but in 2009 it made a £1.2m loss on turnover of £57m.
The accounts for 2012 just published show turnover shrunk to £20m but an operating profit up from £326,000 in 2011 to £456,000, and pre-tax profit doubled to £351,000.
Five of its six franchises were losing money when sold, and Mr O'Donnell has taken the business, which began as a Rover franchise, back to its roots, retreating to a core dealership for Land Rover at a time when the upmarket marque has been breaking records.
In January, Land Rover announced that global sales rose by 36% last year, including a 24% rise in the UK. Land Rover was sold by Ford to Tata Motors of India in 2008.
In an interview in August 2008, just as the financial squeeze was hitting the industry, Mr O'Donnell told The Herald that 50% of his forward order book was for new Range Rovers.
The group's autoparks at Darnley and Hamilton housed five marques until Shields sold off its Ford, Mazda, Mitsubishi and Peugeot franchises in 2010 for £2.5m to acquisitive Newcastle-based and AIM-listed Vertu, which operates in Scotland as Macklin Motors.
The site at Hamilton, however, remained with Shields, which has property worth £10m on the balance sheet. Then in August 2011 Mr O'Donnell, who had in earlier years captured two Ford dealerships to break the monopoly of Arnold Clark, disposed of the group's Toyota dealership to Clark, leaving Shields to concentrate on its original Glasgow site selling only for Land Rover.
Mr O'Donnell, who was in the US yesterday, writes in the annual report that no significant changes are envisaged in the current year.
"The company aims to deliver an exceptional customer experience and believes that this is the key factor in the generation of business value and growth for the longer term," he goes on. The group "benefits from a high level of long-serving staff", the accounts also note.
However, staff numbers fell from 91 to 33 in the reshaped company.
Turnover in the core Land Rover dealership was hiked by 14% in the year to June 2012, despite the economic headwinds.
The former Toyota business had contributed £18m of turnover in the previous year but made a £301,000 loss.
However, the Land Rover business saw its margins squeezed, with operating profit dropping from £627,000 to £456,000, a fall of 27%. Finance charges fell from £153,000 to £105,000.
The group's net debt eased from £2.7m to £2.6m, with gearing falling from 43% to 39%. Shareholder funds were unchanged at £6.7m, reflecting Mr O'Donnell's focus on owning property freeholds.
The highest-paid director, assumed to be the founder, received £83,051, up from £82,743 the previous year, but still almost halved from his payout of £164,888 in 2007/08.
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