Year on year profits rise

Profits for the H&H Group, Carlisle, have increased by almost five per cent on the year, with measured growth also being achieved in turnover, dividend and earnings per share.

Profits before tax to the end of June this year are £477,000 compared with £455,000 the previous year, and turnover was £8,175,000 against £7,504,000 a year ago.

Chairman David Trimble, in his statement in the Group's annual report and accounts, describes the results as satisfactory in what had been a frustrating year.

"While the future remains as difficult to forecast as ever, your Directors feel confident in recommending an increased dividend of 10.5p per share which, with the interim dividend of 4.5p per share, makes a total of 15p per share for the year," says Mr Trimble who will present the accounts at the Group's annual general meeting on October 28 in the Shepherds Inn, Carlisle.

Confidence in the Group's performance has been reflected in an increase in the average price of shares sold in the last 12 months, from just below £7 to just over £10 per share.

Group chief executive Trevor Hebdon, in his report for the year which he describes as challenging, says that, as well as tougher external trading conditions, the Group has continued to carry significant costs in response to the need to comply with the new rules with regard to the FSA and the DTI, the additional and ongoing legislative requirements in connection with employment, health & safety and risk management issues, and the constantly changing and demanding DEFRA regulations.

While turnover and volumes of livestock handled across sales centres have been maintained, percentage rises in a number of cost lines have outstripped inflation and as such, the underlying trading profit of Harrison & Hetherington' s farmstock business was reduced. However, it should be noted that the actual reported profit includes the net benefit of the payment from DEFRA in connection with FMD valuation fees.

Mr Hebdon adds: "Going forward, concerns remain as to what impact the CAP reform and the introduction of the new single farm payment scheme will eventually have upon livestock numbers and values, and the very real over-regulation being imposed upon the auction mart sector by DEFRA.

"Our commitment to provide the farming community with a financially sound and viable livestock marketing structure is reflected in our continued and considerable investment in our sites during the year. "At Borderway, Kirkby Stephen and Lockerbie new cattle handling facilities have been installed and at Kirkby Stephen specifically, major works are being undertaken in respect of new mart offices, new roofing to provide additional pennage cover and refurbishment of the sales ring.

" While there had been a marked reduction in the number of motor vehicles changing hands due to higher interest rates and dampened consumer confidence, Borderway Finance, the Group's motor vehicle finance operation, maintained its levels of new advances in contrast to a national downward trend.

H&H Bowe, the chartered surveying, land agency, valuation and quota brokerage business has seen a substantial shift in the make-up of its income streams, with further growth in professional and managed estate work part compensating for a dramatic reduction in income from farm sales and quota brokerage as a direct result of the CAP reform.

Alongside Borderway Insurance Brokers' long established and extensive customer base, the agricultural books of insurance acquired from HBOS and Richard Utting Insurance Services in Penrith have bedded in well. After factoring in the costs of the acquisitions as well as a substantial IT upgrade, the insurance brokerage operation turned in a strong profit performance in line with budget and ahead of the previous year's actual profit.

With the exception of the residential lettings department (where there has been a further year-on-year increase in new business) the residential estate agency and fine art and furniture sales operation H&H King have had a difficult year.

There has been a reduction in the number of properties sold and house prices have levelled out in line with the regional trends and, together with the negative impact upon the market following the severe floods in Carlisle in the first week of January, there has been a resultant and notable reduction in profitability. The two auction rooms experienced arduous trading conditions with a national decline in furniture values, partly offset as a direct result of the ongoing and energetic promotion of the speciality auctions.

Borderway Motor Auctions had another commendable trading year with the numbers of sales held and vehicles sold having been maintained during a period of change within the industry, in particular with regard to the fall in the prices of both new and used motor vehicles.

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