TIDMCAMB
RNS Number : 9632T
Cambria Automobiles Plc
20 November 2019
20 November 2019
Cambria Automobiles plc
("Cambria" or the "Group")
AIM: CAMB
FINAL RESULTS 2018/19 AND NOTICE OF AGM
Significant portfolio changes resulting in improved trading
performance despite challenging market headwinds
Cambria, the franchised motor retailer, announces its final
results for the year to 31 August 2019.
Financial Highlights
Year ended 31 August 2019 2018
GBPm GBPm Change
Revenue 657.8 630.0 4.4%
Underlying EBITDA* 17.1 13.3 28.6%
Underlying operating profit* 13.6 10.9 24.8%
Underlying profit before
tax* 12.3 9.8 25.5%
Underlying profit before
tax margin* 1.87% 1.55% 32bps
Underlying earnings per
share* 9.78p 7.84p 24.7%
Operating profit 13.9 10.2 36.3%
Profit before tax 12.5 9.1 37.4%
Earnings per share (basic) 9.95p 7.27p 36.9%
Dividend per share 1.1p 1.0p
* These items exclude net non-recurring income of GBP0.4m
relating to the profit on disposal of property assets held for
resale and GBP0.2m on closure costs (2018: closure costs
GBP0.7m)
-- Strong balance sheet - net assets GBP65.6m (2017/18: GBP56.6m)
-- Strong operational cash flows, cash balance at 31 August 2019
of GBP26.3m (2017/18: GBP15.5m)
-- Net debt of GBP3.8m (31 August 2018: net debt GBP5.5m)
-- Continued investment in freehold property portfolio during
year deploying GBP17.6m in capital expenditure
-- Underlying Return on Equity at 16.0% (2017/18: 14.7%)
-- Proposed final dividend of 0.85p, increasing the full year
dividend by 10% to 1.1p per share (2017/18: 1.0p)
Franchising Highlights
Over the past two financial years, the Group has undertaken
major changes in its franchise representation, delivering enhanced
opportunities as follows:
2017/18 changes:
-- Addition of two Bentley dealerships
-- Addition of one Lamborghini dealership
-- Addition of one McLaren dealership
-- To make way for the refranchising of the facilities, the
Group closed the operations that previously occupied these
premises
-- The Group closed the loss-making Blackburn site which
previously represented Alfa Romeo, Fiat, Renault and Volvo
-- The franchise changes outlined above have positively impacted
the dynamics of the earnings streams given the value of the new
cars being sold in the High Luxury Segment ("HLS") dealerships in
2018/19
2018/19 changes:
-- September 2018: Opening of Peugeot dealership in Warrington
-- November 2018: Opening of the Group's second Lamborghini
dealership, in Tunbridge Wells, further enhancing its HLS
representation
-- December 2018: Occupation of the newly completed Hatfield
Jaguar Land Rover Arch Concept dealership
-- December 2018: Disposal of Royal Wootton Bassett freehold
following the relocation of Jaguar Land Rover to Swindon in the
previous year
-- April 2019: Opening of Suzuki dealership in Maidstone
-- April 2019: Acquisition of land in Brentwood for development of dealership facilities
-- May 2019: Opening of Citroen dealership in Oldham
-- May 2019: Occupation of Hatfield Aston Martin and McLaren dealership
-- June 2019: Opening of Vauxhall dealership in Warrington
alongside Peugeot, enhancing PSA relationship
Operational Highlights
-- New unit sales to retail customers reduced 11.8%
(like-for-like down 8.1%), although gross profit improved as a
result of the 31.8% (like-for-like up 11.1%) increase in profit per
unit following the improvement in the franchise portfolio mix
-- Lower margin Fleet and Commercial units reduced 36.3% and 59.8% respectively
-- Overall unit sales of new vehicles reduced by 18%
(like-for-like down 15.3%). The unit impact was more than offset by
the increase of 40.3% in average profit per unit resulting from the
combination of the like-for-like profit improvement, the improved
franchise portfolio mix and the reduction in lower margin fleet and
commercial units. New car gross profit increased by GBP2.7m
-- Used vehicle unit sales down 4.9% following site closures
(like-for like up 1.4%), offset by an 8.7% (like-for like 7.0%)
improvement in profit per unit which reflects the Group's portfolio
changes and the additional new HLS brands. Used car gross profit
increased by GBP0.8m
-- Aftersales Revenue increased 4.3% (like-for-like increase
5.1%). Gross profit increased by GBP0.5m
Mark Lavery, Chief Executive Officer of Cambria said:
"We are pleased to have delivered a strong performance in the
2018/19 financial year. The strategic refranchising and property
development activity that started during the previous financial
year delivered a positive impact despite the significant headwinds
in the industry and broader economy. Our greater exposure to the
High Luxury Segment has driven the earnings capacity of the Group
and the increased new car department profit is a reflection of our
significantly enhanced property portfolio and diversified brand
mix.
On a general note and in line with my commentary last year, the
year has seen a difficult new car market that has been impacted by
weakening consumer demand in the face of the uncertainty around the
Brexit negotiations, inconsistent messaging around the future of
diesel engines and the impact on car supply from the change in
emissions testing. The challenges facing vehicle manufacturers in
achieving compliance with the 2020 and 2021 CO2 emissions targets
will impact the new car market over the next two years. Like our
peer group, we are also having to cope with Government driven
central cost increases including but not limited to the National
Minimum Wage increases, Apprenticeship Levy, pension contributions,
increases in debit and credit card charges and increased property
rating costs. Regrettably we have no control over these
factors.
That being said, our teams have worked incredibly hard and
delivered a strong result at both the revenue and profit levels,
which significantly outperformed market expectations. Our strong
new car profitability, improved used car profit performance,
combined with growth in aftersales have all been significant
contributors. I would like to thank our Associates for their
contributions throughout the year.
Trading in the current financial year has started in line with
the Board's expectations. The Board remains confident that
Cambria's resilient business model, enhanced franchise portfolio,
focus on delivering a superior Guest experience and financing
arrangements leave it well positioned to take advantage of any
opportunities that the current economic uncertainty will
provide."
Notice of AGM and posting of report and accounts
The Company also gives notice that the Annual General Meeting of
the Company will be held at 10am on 9 January 2020 at Grange Jaguar
Land Rover, Hatfield, AL10 9US (the "AGM").
The annual report and financial statement for the year ended 31
August 2019 (the "Report and Accounts") will shortly be posted to
shareholders together with a notice of its AGM.
Copies of the Reports and Accounts and the AGM notice will be
made available shortly from the Company's website,
www.cambriaautomobilesplc.com, in accordance with AIM Rule 20.
Enquiries:
Cambria Automobiles Tel: 01707 280 851
Mark Lavery, Chief Executive
James Mullins, Finance Director
www.cambriaautomobilesplc.com
N+1 Singer - Nomad & Joint Broker Tel: 020 7496 3000
Mark Taylor / Justin McKeegan
Zeus Capital - Joint Broker Tel: 020 7533 7727
Dominic King
FTI Consulting Tel: 020 3727 1000
Alex Beagley / James Styles /
Sam Macpherson
Chairman's statement
I am pleased to report that Cambria has delivered another strong
set of results for the year ended 31 August 2019. The Group has
delivered a number of strategic franchising and property investment
objectives and has still been able to demonstrate improved
profitability whilst absorbing those changes.
The results are even more favourable against a challenging
consumer backdrop and significant uncertainty caused by the ongoing
Brexit negotiations. The results show significant upside in the new
car department, continued improvement in the Group's used car and
aftersales operations and a clear focus on maintaining cost
discipline despite some unavoidable headwinds.
The Group has managed its cashflow well while delivering
significant capital investment projects and now has a well invested
property portfolio, strong net asset position and low level of
gearing.
The Group, in its 13(th) year of trading, delivered GBP17.1m of
underlying EBITDA and GBP12.3m of underlying pre-tax profit.
Since its inception in 2006, the Group has only raised a total
of GBP10.8m in capital and continues to maintain an excellent
return on shareholders' funds which this year reached 16%.
The strategic acquisitions, franchise changes and greenfield
developments which the Group has delivered over the past five
financial years have accelerated the Group's growth and created a
solid foundation in the Premium and High Luxury Segment giving
Cambria a broader and enhanced franchised dealership portfolio mix
and bolstering its underlying earnings capacity.
The new car market in the UK continues to come under pressure.
The overall market is forecast to end 2019 at 2.3m registrations
and the current forecast is set to see registrations continue to
fall in 2020 to 2.2m new car registrations, these are against the
record 2.69m registrations in 2016. The biggest change in the
market remains the diesel segment which is down 24% in the year.
The new car market will be further disrupted as the plethora of
different technologies hit the car market over the coming years
ranging from basic 48 volt electrical systems to mild hybrid, plug
in hybrid and full battery electric vehicles. The manufacturers are
being forced, through legislation, to accelerate technology
development to avoid the punitive fines system that will be imposed
in 2021 if they do not achieve CO2 target compliance at the end of
2020. The scramble towards this compliance in meeting challenging
CO2 targets requires unprecedented levels of investment from the
OEMs and by default is taking margin out of the distribution
chain.
Focusing on the Group's 2018/19 results, the Group has delivered
a financial performance that is ahead of both the Board's and
market's expectations despite two upgrades to market expectations
during the course of the financial year. The Group generated gross
profit growth across all its segments, with new cars growing
particularly as a result of the recently added High Luxury
franchises. On a like for like basis, Cambria generated gross
profit growth across the used car and aftersales departments, with
the new car department only marginally behind despite the unit
volume reduction.
Group revenue increased by 4.4% to GBP657.8m (2017/18:
GBP630.0m). Underlying profit before tax increased by 25.5% to
GBP12.3m (2017/18: GBP9.8m) and the Group delivered underlying
earnings per share of 9.78p (2017/18: 7.84p) - an increase of
24.7%.
The Group closed the year with net debt of GBP3.8m (2017/18: net
debt GBP5.5m) after significant capital investments of GBP21.9m of
which GBP17.6m was invested into the Group's freehold property
portfolio. The Group has net assets of GBP65.6m (2017/18:
GBP56.6m), underpinned by the ownership of GBP78.4m (2017/18:
GBP64.3m) of freehold properties.
Group overview
Cambria was established in 2006 with a strategy to build a
balanced motor retail group to deliver the self-funded acquisition
and turnaround of underperforming businesses. The strategy evolved
in 2013 to encompass the acquisition of Premium and High Luxury
businesses, located in geographically strategic locations. It has
made good progress over the past five years in delivering on this
strategy by acquiring businesses and opening dealerships as
follows:
-- Barnet Jaguar Land Rover in July 2014
-- Swindon Land Rover in April 2015
-- Welwyn Garden City Land Rover in January 2016
-- Aston Martin Birmingham in May 2016
-- Woodford Jaguar Land Rover in July 2016
-- Bentley in Essex and Kent in January 2018
-- McLaren in Hatfield in January 2018
-- Lamborghini in Chelmsford in April 2018
-- Lamborghini in Tunbridge Wells in November 2018
-- Refranchising Vauxhall and Peugeot into Warrington
-- Refranchising Citroen into Oldham
-- Refranchising Suzuki into Maidstone
Following the refranchising activity outlined above, the Group
now comprises 27 locations, representing 41 franchises and 16
brands, a well-balanced brand portfolio spanning the High Luxury,
Premium and Volume segments.
These new franchising and property developments are exciting for
the Group and demonstrate its commitment to developing the Premium
and High Luxury Segment franchises in geographically strategic
locations.
Dividend
The Board is pleased to propose a final dividend of 0.85p per
share (2017/18: 0.75p), subject to shareholder approval, resulting
in a total dividend for the year of 1.1p per share, an increase of
10% (2017/18: 1.0p).
Outlook
The UK economy remains in a period of significant uncertainty
while the ramifications of leaving the EU are worked through. There
is little clarity on how or if any free trade agreements will be
negotiated and there continue to be major implications for the
Sterling exchange rate and other fiscal levers. We are unclear as
to how these factors will impact the UK motor trade although
without stating the obvious, both a weaker Sterling and any tariffs
would undoubtedly have a detrimental effect on the new car
market.
The team has done a good job in delivering the changes to our
property portfolio and franchise mix which have enhanced the
Group's performance, developed the balance sheet and enhanced the
brand mix. The changes made over the past two years have started to
contribute positively and the Board believes that they have further
potential.
Cambria's robust balance sheet, industry leading return on
investment and proven management team leave it well positioned to
manage any uncertainty that the broader market creates. We are
actively looking to deliver on our commitments to the brand
partners that we represent with our investment programme to enhance
our property portfolio and the developments delivered over the past
24 months are first class, enhancing the retail environment for our
Associates, Guests and OEM partners.
The Board is pleased with the progress that has been made and
intends to continue to exploit selective growth opportunities while
driving the core operation of the existing businesses.
Philip Swatman
Chairman
Operating and financial review
Chief Executive Officer's review
Introduction
I am pleased to report that the Group has delivered a strong set
of results for the 2018/19 financial year, ahead of market
expectations after two earnings upgrades during the course of the
year. The performance was delivered alongside significant
franchising additions, changes, closures and site developments. The
year on year comparatives look favourable as a result of the
disruption encountered in the prior year whilst the franchise and
property changes were being delivered.
The table below summarises our financial performance, which is
detailed in the Finance Director's Report:
Year ended 31 August 2019 2018
GBPm GBPm Change
Revenue 657.8 630.0 4.4%
Underlying EBITDA* 17.1 13.3 28.6%
Underlying operating profit* 13.6 10.9 24.8%
Underlying profit before
tax* 12.3 9.8 25.5%
Underlying profit before
tax margin* 1.87% 1.55% 32bps
Underlying earnings per
share* 9.78p 7.84p 24.7%
Operating profit 13.9 10.2 36.3%
Profit before tax 12.5 9.1 37.4%
Earnings per share (basic) 9.95p 7.27p 36.9%
Dividend per share 1.1p 1.0p
*These items exclude net non-recurring income of GBP0.4m
relating to the profit on disposal of property assets held for
resale and GBP0.2m on closure costs (2018: closure costs
GBP0.7m)
The Group celebrated its 13(th) anniversary in July 2019. During
those 13 years the Group has grown from one site with three new car
franchises to 27 locations representing 41 new car franchises and
16 different brand partners. The Group has utilised a total of
GBP10.8m of Share Capital to grow and has delivered an underlying
Profit before Tax of GBP12.3m in 2018/19. During the year, the
Group delivered a return on shareholder funds of 16%. The Group has
consistently delivered strong operational cash flows and has built
a net asset position of GBP65.6m underpinned by GBP78.4m of
freehold property. The Group has developed an exceptional franchise
portfolio which has been enhanced further during 2018 and 2019
through delivery of our property investments and the addition of
Bentley, Lamborghini, McLaren, Citroen, Peugeot and Suzuki to the
Group's brand partnerships.
Brand partnerships
Management has continued to work hard to improve the businesses
acquired in previous years and to integrate and develop those
acquired and established in the previous year, making significant
investment in the management of those businesses. The core
like-for-like businesses have shown continued improvements during
the year and we are pleased with the performances delivered.
Our current portfolio of brand partners and dealerships
comprises:
High Luxury / Premium Volume Motorcycle
Aston Martin 3 Abarth 2 Triumph 2
Bentley 2 Citroen 1
Jaguar 5 Fiat 2
Lamborghini 2 Ford 5
Land Rover 4 Mazda 3
McLaren 1 Peugeot 1
Volvo 4 Suzuki 1
Vauxhall 3
Total 21 18 2
------------------ ----- --------- ---- -------- ---
A significant period of refranchising activity began during the
2017/18 financial year which demonstrated delivery of the Group's
acquisition strategy which evolved in 2013 to enhance our Premium
and High Luxury brand representation.
The period 2014 through 2016 saw a significant number of
acquisitions and disposals that were focused on the Group's desire
to participate in the Jaguar Land Rover ("JLR") network
restructuring. Along with the need to deliver on business
transactions to secure the franchise opportunity in the given
territories, the Group committed to deliver permanent property
solutions in line with the JLR Arch Concept for its distribution
network. Subsequent to the business acquisitions, the Group has
delivered on the Arch developments in Barnet, Swindon and Hatfield.
The land has been acquired for the Brentwood development which is
currently in the very early stages to secure planning permission.
The Group continues to work towards securing a suitable facility
for the relocation of its Woodford Jaguar Land Rover
dealership.
In May 2016, the Group opened its Aston Martin dealership in
Solihull. In order to secure the franchise for the territory, the
Group acquired a freehold property and invested in a refurbishment
of the facility to accommodate the Aston Martin franchise while the
permanent location is procured and built. The temporary facility
has enabled the Group to establish a representation point, build a
database and serve the Aston Martin car parc for the territory. The
Group has secured a new development site on the A34 in Solihull on
a business park named "The Green" for a permanent facility in line
with Aston Martin franchise standards. The Group has exchanged
contracts and completion is subject to planning permission and the
conclusion of extensive highways works to define the site and the
new estate road. It is anticipated that the total freehold
investment in the permanent facility will be c.GBP5m, and again
will be funded through the Group's existing cash and RCF facility.
Due to delays in the highways works being completed, it is now
anticipated that work on the dealership will begin in Q2 2020.
The Group was given the opportunity to establish two new Bentley
dealerships and two new Lamborghini dealerships in Essex and Kent
in 2018. During the 2017/18 financial year the Group delivered a
permanent property solution for the Kent territory with a major
refurbishment of its freehold property in Tunbridge Wells. The
Group was also able to deliver a temporary solution for the Essex
territory by refurbishing a freehold building in Chelmsford. The
permanent solution for the Bentley and Lamborghini operations in
Essex is intended to be a full relocation of the businesses to
Brentwood when the Group is able to deliver the significant
development housing Jaguar Land Rover, Aston Martin, Bentley and
Lamborghini which will be a flagship development in a very
prominent location.
The Group has also continued its refranchising efforts to
maximise the opportunity in other territories where the Group has
property solutions. The refranchising of Warrington to add Vauxhall
and Peugeot and Oldham to add Citroen has expanded the Group's
relationship with PSA to five franchises. The Group was also
pleased to add its first Suzuki business in Maidstone during the
year.
Operations
Year to 31 2019 2018
August
Revenue Revenue Gross Margin Revenue Revenue Gross Margin
mix Profit mix Profit
GBPm % GBPm % GBPm % GBPm %
New vehicles 293.8 44.7 20.6 7.0 290.6 46.1 17.9 6.2
Used vehicles 302.8 46.0 25.1 8.3 279.1 44.3 24.3 8.7
Aftersales 76.9 11.7 29.4 38.2 73.7 11.7 28.9 39.1
Internal sales (15.7) (2.4) - - (13.4) (2.1) - -
-------- -------- -------- ------- -------- -------- -------- -------
Total 657.8 100 75.1 11.4 630.0 100.0 71.1 11.3
-------- -------- -------- ------- -------- -------- -------- -------
Administrative expenses (61.4) (60.2)
Operating profit
before non- recurring
expenses 13.7 10.9
Non-recurring
income / (expenses) 0.2 (0.7)
-------- --------
Operating
profit 13.9 10.2
-------- --------
New vehicle sales
2019 2018 Year on year
growth
New units 7,509 9,158 (18%)
------ ------ -------------
New vehicle revenue increased from GBP290.6m to GBP293.8m (1.1%)
despite total new vehicle sales volumes being down 18%,
illustrating the significant increase in average transaction price
of the units sold. Gross profit increased by GBP2.7m (15%) in
total. The reduced new vehicle volumes were more than offset by the
significant improvement in the gross profit per unit sold which
increased by 40.3% in total. The significant increase was a result
of the combination of like-for-like increase in the profit of the
retail units sold, a reduction in the sales volume of low margin
commercial and fleet units and strengthening mix from the
businesses.
The new car business has gone through a significant period of
disruption with the site closures in the previous year and
franchise changes in the current year. The addition of two
Lamborghini, two Bentley and one McLaren franchise in the HLS
segment have made a marked difference to the new car department
profitability.
On a like-for-like basis, excluding the impact of the additions
and closures, our new volumes reduced by 15.3% with gross profit
reducing by GBP0.2m as profit per unit increased 19.7% on a like
for like basis. The like-for-like volume reduction was attributable
to reductions in unit sales from certain Volume manufacturer
partners who have experienced a significant reduction in national
registrations.
The Group's sale of new vehicles to private individuals was
11.8% lower year-on-year at 6,843 units (like-for-like down 8.1%),
the profit per unit for these vehicles improved 31.8%
(like-for-like 11.1%). New commercial vehicle sales transacted at
low profit per unit were significantly down by 59.8% to 390 units
in the period. Commercial vehicle sales concluded in the prior year
had a dilutive effect on the Group's average profit per unit in the
prior year. New fleet unit vehicle sales decreased by 36.3% to 276
units but the average profit per unit improved by 43.9%.
The new vehicle registration data from the Society of Motor
Manufacturers & Traders showed total registrations were down
6.4% in the rolling 12 month period to August 2018. The
registration of cars to private individuals was also down 6.4% for
the rolling 12 months. The sale of diesel engine vehicles has been
hardest hit as a result of the negative media coverage around
diesel engine emissions, and in the period, sales of diesel
vehicles were down 24%.
Used vehicle sales
2019 2018 Year on year
growth
Used units 13,072 13,739 (4.9%)
------- ------- -------------
We have delivered another good performance in used vehicle
sales. Revenues increased from GBP279.1m to GBP302.8m whilst the
number of units sold declined by 4.9%, partly driven by the site
closures and shift in mix to more Premium and High Luxury cars. The
gross profit on used vehicles increased by GBP0.8m to GBP25.1m,
with profit per unit sold increasing 8.7%.
On a like-for-like basis, volumes were up 1.4% while the gross
profit generated increased by GBP1.2m (6.1%) with profit per unit
increasing by 7%.
We have continued our focused strategy in the used car
department to increase the efficiency with which we source, prepare
and market our used vehicles in order to drive our Velocity trading
principles. This has produced strong results, increasing the
like-for-like profitability of the used car department. During the
period, this strategy continued to deliver a strong 12 month
rolling return on used car investment* of 117%. This level was
reduced from the 125% achieved last year but reflects the increase
in the average carrying value of the stock following the higher
representation of Premium and High Luxury vehicles that are sold
through the new businesses and removal of the high volume, lower
value product sold from the closed businesses. The ROI performance
at 117% remains significantly ahead of the industry average of
77.2%.
* gross profit from used car operation over 12 months as a
proportion of average stock levels for the year
Aftersales
2019 2018 Year on year
growth
Aftersales Revenue GBP76.9m GBP73.7m 4.3%
---------- ---------- -------------
Combined aftersales revenue increased 4.3% year on year from
GBP73.7m to GBP76.9m and related gross profit increased to GBP29.4m
from GBP28.9m. Like-for-like aftersales revenues were 5.1% higher
year on year, with gross profit improving 3% to GBP27.9m, up
GBP0.8m.
The aftersales departments contributed 11.7% of the Group's
revenue, and 39.1% of the Group's overall gross profit. The
aftersales margin was slightly diluted in the year.
The Group continues to review its processes for ensuring that we
engage with all of our Guests to maximise the opportunity to
interact with them through our Guest Relationship Management
Programme. This is our contact strategy involving the sale of
service plans and delivery of service and MOT reminders in a
structured manner, utilising all forms of digital media as well as
traditional communication methods. The Group continues to focus on
the sale of service plans and its unique warranty-4-life product to
enhance Guest retention.
Total underlying administrative expenses remained well
controlled during the year and as a percentage of revenue were 9.3%
(2017/18: GBP9.7%), demonstrating good overhead recovery and strong
capital disciplines as the Group continues to grow despite
significant pressures on cost resulting from central government
initiatives.
Group strategy
Since the Group's incorporation in March 2006, we have continued
to apply our focused buy-and-build strategy of acquiring motor
dealership assets using internally generated funds and bank
facilities. The earnings enhancing acquisitions and new franchise
openings are firmly in line with this strategy.
We have now completed 15 separate transactions since our
incorporation. Following any acquisition, the Cambria management
team implements new financial and operational controls and
processes in order to rationalise, restructure and develop each
individual dealership. A culture of delivering a world class Guest
experience is ingrained into the business through the Cambria
Academy training programme. This tailored approach ensures the
changes made to each dealership are sustainable and create
shareholder value through achieving an appropriate contribution for
the level of investment.
We will continue with our three step approach to purchasing a
new business - acquisition, integration and operation, as outlined
below:
Acquisition
When acquiring new businesses, we are diligent in ensuring that
none of the contractual obligations taken on upset the integrity of
our balance sheet. This includes ensuring that leases reflect
market value and that any unusual contractual obligations are
addressed prior to acquisition in order to avoid taking on any
legacy costs. We do not have any defined benefit pension schemes.
We have always taken the approach that Cambria will not acquire any
business unless there is a strong underlying business case to do so
and our acquisitions have been funded from our own cash resources
and banking facilities. All acquisitions and any related funding
requirements are assessed on their individual merits. For
compelling acquisition targets, where a premium may need to be
paid, we will still focus on ensuring that the Group delivers
strong returns on equity.
Integration
The integration process of every new dealership starts with an
Associate engagement evening where our senior management present
the Cambria "Four Pillar" culture change programme. After this
meeting, the Group integration team implements systems, processes
and procedures to improve legislator compliance including FCA and
Health & Safety. Newly acquired Associates are transferred to
Cambria employment contracts with compensation and benefits
commensurate with the particular business. An analysis of training
needs is conducted, followed by the implementation of training
programmes for all relevant Associates in the new business.
Operation
With any new acquisition, the standard financial controls are
implemented immediately, ranging from individual cheque signatories
to daily reporting of vehicle sales and aftersales revenues,
margins and other performance figures. We then implement our two
growth strategies "Cambria Digital", which is our internet social
networking strategy for vehicle sales coupled with our "Guest
Connect" support centre.
Cambria Academy
The Group has continued to develop the Cambria Academy, a
training Academy for the Group's Associates. The Academy is
evolving consistently to support the business and development needs
of the Group. The initial training programmes for the sales teams
have been supplemented with induction programmes and specific
telephone handling courses to ensure that we increase the
competency of all our Associates in dealing with Guest enquiries
effectively.
The Academy was established to enhance the Cambria Guest
Experience with the key strategic objective: "To deliver an
outstanding experience making it easy for our Guests to buy, own
and maintain their vehicle, ensuring that they will want to do so
again and recommend us to others."
We will continue to enhance and refine the Academy to help
develop our own talent pool, promote Associate retention and to
create our own future management with the overriding objective of
enhancing the Guest Experience when interacting with Cambria.
Outlook
The new car market in 2019 will see a further 2.8% reduction on
2018, with current SMMT forecasts at 2.30m from 2.37m in 2018. The
2019 forecast is 14.5% down on the record 2.69m registrations of
2016.
There is no doubt that consumer confidence, general economic and
political uncertainty have all impacted market sentiment since the
EU referendum vote in 2016 and the constant unrest being created as
we have moved closer to the previously set deadline of 31 October
2019 to exit the European Union.
Sterling remains weak and there is ongoing downward pressure on
the number of cars registered in the UK as the manufacturer landed
cost of imported cars and components increases. Diesel engine
vehicles have received the largest impact with a significant amount
of negative media coverage and clear political positioning in
relation to diesel vehicle emissions.
The manufacturers that we represent are in an unparalleled
period of capital investment to sustain the developments that they
need in order to meet the extremely challenging CO2 targets by the
end of 2020 and 2021 to avoid the draconian fines that the European
Commission will levy for non-compliance. If the technology advances
are not achieved to meet the targets then the OEMs may be forced to
significantly restrict their vehicle mix. The solution is not clear
as there are a number of challenges to delivering the right
technology, sustainably and at a price point that consumers can
afford. The 2021 challenge is driving pressure into the vehicle
supply chain.
Looking forward, the Board remains cautious as a result of the
uncertain political and economic environment as the UK exits the
European union and is monitoring the challenges that the OEMs will
continue to face towards 2021 CO2 emission compliance which will
undoubtedly have an impact on the new car market.
Despite the significant external challenges, the 2018/19
financial year delivered a good set of results and post the period
end, September and October trading were in line with the Board's
expectations. We have continued to make significant achievements in
progressing both our property portfolio and franchising strategy
and believe that current market conditions could lead to further
opportunities to develop the Group.
Mark Lavery
Chief Executive
Finance Director's report
Overview
Total revenues in the period increased 4.4% to GBP657.8m from
GBP630.0m in the prior year. New vehicle unit volumes were down 18%
but new vehicle revenues were up 1.1% as a result of the mix shift.
Used car revenue increased by 8.9% although units reduced by 4.9%.
Revenues from the aftersales businesses increased by 4.5%, compared
with the previous year.
Total gross profit increased by GBP4.0m (5.6%) from GBP71.1m to
GBP75.1m in the year. Gross profit margin across the Group improved
0.1% to 11.4%. The revenue mix saw an increase in used cars with
new cars reducing and aftersales remaining static as a proportion
of revenue. The average selling price of both new and used cars
increased year on year, as did the average profit per new and used
units that we sold. There was an improvement in the new car margin
to 7%, a reduction in used car margin to 8.3% and margin reduction
in aftersales to 38.2%. The aftersales operations contributed 39.1%
of the total gross profit for the Group. The gross profit
contribution made by the used car and aftersales components of the
business accounted for 72.6% of the Group's total gross profit
mix.
During the year, the Group has non-recurring net income of
GBP0.2m (2017/18 - net expense GBP0.7m). These related to the
GBP0.4m profit on sale of the Group's freehold in Royal Wootton
Bassett and GBP0.2m of one off closure costs relating Blackburn and
Welwyn Garden City relocation.
Underlying EBITDA was GBP17.1m in the period, up from GBP13.3m
in the previous year. Underlying operating profit was GBP13.6m,
compared with GBP10.9m in the previous year, resulting in an
underlying operating margin of 2.1% (2017/18: 1.7%).
Net finance expenses increased to GBP1.4m (2017/18: GBP1m) as a
result of the increased borrowing to fund the freehold property
investments and increased vehicle stocking charges.
The Group's underlying profit before tax increased by 25.5% to
GBP12.3m, compared with GBP9.8m in the previous year.
Underlying earnings per share were 9.78p (2017/18: 7.84p). Basic
earnings per share were 9.95p (2017/18: 7.27p) and the Group's
underlying return on shareholders' funds for the year was 16%
(2017/18: 14.7%).
Taxation
The Group tax charge was GBP2.5m (2017/18: GBP1.9m) representing
an effective rate of tax of 20.3% (2017/18: 20.3%) on a profit
before tax of GBP12.5m (2017/18: GBP9.1m). As outlined in last
year's report, it is anticipated that the tax rate will continue at
a substantially normal effective tax
Financial position
The Group has a robust balance sheet with a net asset position
of GBP65.6m underpinned by GBP78.4m of freehold property (fixed
assets and assets held for resale) which are held on a historic
cost basis.
In November 2017, the Group entered into revised Banking
facilities and as a result, the GBP40m Revolving Credit Facility
has no fixed capital repayment profile throughout its 5 year term.
There is a GBP20m accordion agreement available in the facility if
the Group seeks to enhance its borrowing capacity.
The cost of the facilities is LIBOR plus a margin. The margin
attributable to the term loans will be set each quarter and is
dependent on the net debt: EBITDA ratio for the Group. The spread
of margin chargeable against the facility ranges from 1.2% where
the net debt is less than 1 times EBITDA, up to 2% where the net
debt is greater than 2.5 times EBITDA.
The net debt position of the Group as at 31 August 2019 was
GBP3.8m (2017/18: net debt GBP5.5m), reflecting a cash position of
GBP26.3m (31 August 2018: GBP15.5m). This is after the GBP21.9m
investment in Capital Expenditure.
The Group typically uses bank facilities to fund the purchase of
freehold and long leasehold properties, stocking loans to fund the
acquisition of consignment, demonstrator and used vehicles and has
a GBP10m overdraft facility which is available to manage seasonal
fluctuations in working capital. The overdraft facilities are
renewable annually and are next due on 31 December 2019.
Cash flow and capital expenditure
The Group generated an operating cash inflow of GBP22.2m with
working capital reducing by GBP7.9m through efficient management of
the vehicle inventory and the stocking lines associated with that
inventory together with higher levels of new vehicle deposits for
new car orders for September delivery and higher levels of service
plan and warranty funds. Total funds invested in capital
expenditure were GBP21.9m.
During the year the material projects that incurred capital
expenditure were:
-- Hatfield Jaguar Land Rover, Aston Martin and McLaren build completion and fit out - GBP8.1m
-- Hatfield PDI centre land acquisition for storage and preparation - GBP3.7m
-- Warrington refurbishment for Peugeot and Vauxhall - GBP0.4m
-- Oldham refurbishment for Citroen - GBP0.2m
-- Swindon Freehold land purchase and completion of development - GBP2.7m
-- Brentwood Land purchase - GBP5.4m
-- Wellingborough Triumph refurbishment - GBP0.2m
-- Tunbridge Wells fit out - GBP0.2m
To fund some of the Capital Expenditure outlined above there was
a has been a draw down of GBP9m against the Revolving Credit
Facility. There were no capital repayments.
As a result of the net cash inflow of GBP10.8m, the gross cash
position was GBP26.3m with gross debt of GBP30.1m and overall net
debt of GBP3.8m after significant investment, compared with net
debt at 31 August 2018 of GBP5.5m.
Capital expenditure commitments
As outlined in the Chief Executive's report, the Group has
committed to delivering property solutions to ensure the acquired
businesses comply with the franchise standards for its brand
partners. The significant investments in the 2018 and 2019
financial year delivered on some of the committed projects. Over
the coming 24 months the Group intends to complete the following
major freehold investments; Solihull Aston Martin at c.GBP5m,
Brentwood Jaguar Land Rover, Aston Martin, Bentley and Lamborghini
c.GBP16m. The developments will be funded through a drawdown of RCF
and existing cash.
The Board is committed to these investments and anticipates that
by making the investments it will position the Group well for
realising the full operational potential of the businesses.
IFRS 16 Impact
IFRS 16 is due to take effect from accounting periods commencing
from 1 January 2019 and replaces IAS17. The new standard requires
lessees to recognise an asset (a Right of Use asset ("RoU")) and
lease liability for all leases (subject to certain exemptions)
based on the discounted future lease payments. Exemptions exist for
certain short-term leases and leases with a low asset value at
inception of the lease.
The Directors anticipate that the significant impact of the
standard on the Group will be the recognition of a RoU asset and a
corresponding lease liability in respect of the Group's property
portfolio which are presently accounted for as an operating lease
under IAS 17. In addition, this will result in an increase in
depreciation and finance charges which will replace the operating
lease rentals currently recognised in the Statement of
Comprehensive Income.
IFRS 16 provides a significant number of options on transition
including a retrospective approach whereby comparative amounts are
restated or a modified retrospective approach whereby the
cumulative effect of transition is recognised on the opening
balance of retained earnings (at 1 September 2019) and comparative
amounts are not restated. The Directors have reviewed the options
available and expect to apply the modified retrospective approach
with additional disclosures to increase comparability with the
comparative period.
On transition the Group will recognise a RoU asset of
approximately GBP5.9m, a receivable of GBP0.2m and a corresponding
lease liability of approximately GBP8.4m. Following adjustments to
remove rent prepayments (GBP0.2m) and onerous lease provisions
(GBP1m), then a restatement of opening reserves of approximately
GBP1.4m is anticipated. Whilst cash flows will remain unchanged,
property rent charges under IAS 17 will be replaced by depreciation
and finance charges.
In respect of the Group's present lease commitments, for the
period to 31 August 2020, the profit before tax is expected to
increase by approximately GBP0.2m.
Shareholders' funds
There are 100,000,000 ordinary shares of 10p each with an
associated share premium account of GBP0.8m. There were no new
funds raised during the year; therefore the share capital and share
premium account remain at GBP10.8m, consistent with the prior year.
All ordinary shares rank pari passu for both voting and dividend
rights.
Pension schemes
The Group does not operate any defined benefit pension schemes
and has no liability arising from any such scheme. The Group made
contributions amounting to GBP0.6m (2017/18: GBP0.4m) to defined
contributions schemes for certain employees.
Financial instruments
The Group does not have any contractual obligation under any
financial instruments with respect to the hedging of interest rate
risk.
Dividends
The Board is pleased to propose a final dividend payment in
respect of the financial year to 31 August 2019 of 0.85p per share
in addition to the interim dividend of 0.25p per share paid in May
2019. If approved by the shareholders at the Annual General Meeting
to be held on 9 January 2020, the dividend will be payable on 17
January 2020 to those shareholders registered on 19 December 2019,
with an ex-dividend date of 20 December 2019. The Board aims to
maintain a dividend policy that grows with the Group's earnings but
intends to ensure that the payment of dividend does not detract
from its primary strategy to continue to buy-and-build and grow the
Group.
James Mullins
Finance Director
Consolidated statement of comprehensive income
for year ended 31 August 2019
Note 2019 2018
GBP000 GBP000
Revenue 2,3 657,777 630,065
Cost of sales (582,723) (558,944)
Gross profit 3 75,054 71,121
Administrative expenses (61,188) (60,969)
Results from operating
activities 3 13,866 10,152
Finance income 7 64 74
Finance expenses 7 (1,435) (1,102)
Net finance expenses (1,371) (1,028)
Profit before tax from operations
before non-recurring income/
(expenses) 12,276 9,827
Net non-recurring income
and expenses 4 219 (703)
---------------------------------- -------- --------- --------------
Profit before tax 12,495 9,124
Taxation 8 (2,542) (1,853)
Profit and total comprehensive
income for the period 9,953 7,721
Basic earnings per share 6 9.95p 7.27p
Diluted earnings per
share 6 9.93p N/a
All comprehensive income is attributable to owners of the Parent
Company.
Consolidated statement of changes in equity
for year ended 31 August 2019
Note Share capital Share premium Retained Total equity
earnings
GBP000 GBP000 GBP000 GBP000
Balance at 31 August
2017 10,000 799 39,557 50,356
Profit for the year - - 7,271 7,271
Dividend paid - - (1,000) (1,000)
Balance at 31 August
2018 10,000 799 45,828 56,627
Profit for the year - - 9,953 9,953
Dividend paid - - (1,000) (1,000)
Balance at 31 August
2019 10,000 799 54,781 65,580
Consolidated statement of financial position
at 31 August 2019
Note 2019 2018
GBP000 GBP000
Non-current assets
Property, plant and equipment 9 85,336 67,050
Intangible assets 10 21,478 21,501
106,814 88,551
Current assets
Inventories 12 112,804 89,675
Trade and other receivables 13 12,051 11,442
Cash and cash equivalents 26,299 15,517
Property assets classified
as held for resale 14 899 3,195
152,053 119,829
Total assets 258,867 208,380
Current liabilities
Trade and other payables 16 (160,129) (128,794)
Current tax liability (1,297) (721)
Provision (459) -
(161,885) (129,515)
Non-current liabilities
Borrowings 15 (30,088) (21,053)
Provisions 17 (877) (1,000)
Deferred tax liability 11 (437) (185)
(31,402) (22,238)
Total liabilities (193,287) (151,753)
Net assets 65,580 56,627
Equity attributable to
equity holders of the
parent
Share capital 10,000 10,000
Share premium 799 799
Retained earnings 54,781 45,828
Shareholders' equity 65,580 56,627
Consolidated cash flow statement
for year ended 31 August 2019
Notes 2019 2018
GBP000 GBP000
Cash flows from operating activities
Profit for the year 9,953 7,271
Adjustments for:
Depreciation, amortisation
and impairment 9/10 3,437 2,481
Financial income (64) (74)
Financial expense 1,435 1,102
Profit/(loss) on disposal of
fixed assets (414) 74
Taxation 8 2,542 1,853
Non-recurring (income)/expenses 4 (219) 703
16,670 13,410
Change in trade and other receivables (609) 986
Change in inventories (23,129) 15,744
Change in payables, deferred
income and provisions 31,607 (13,704)
24,539 16,436
Interest paid (841) (785)
Tax paid (1,714) (1,790)
Non-recurring income / expenses 4 219 (703)
Net cash from operating activities 22,203 13,158
Cash flows from investing activities
Interest received 64 74
Proceeds from sale of plant
and equipment 2,917 136
Purchase of property, plant and
equipment and software (21,907) (23,750)
Net cash from investing activities (18,926) (23,540)
Cash flows from financing activities
Proceeds from new loan 9,000 4,500
Interest paid (495) (317)
Repayment of borrowings - (330)
Dividend paid (1,000) (1,000)
Net cash from financing activities 7,505 2,853
Net increase/(decrease) in
cash and cash equivalents 10,782 (7,529)
Cash and cash equivalents at
1 September 2018 15,517 23,046
Cash and cash equivalents at
31 August 2019 26,299 15,517
Notes to the consolidated accounts
(forming part of the financial statements)
1 Accounting policies
These financial statements as at 31 August 2019 consolidate
those of the Company and its subsidiaries (together referred to as
the "Group"). The Group financial statements have been prepared and
approved by the Directors in accordance with International
Financial Reporting Standards as adopted by the EU ("Adopted
IFRS").
2 Revenue
The Group derives its revenue from contracts with customers for
the transfer of goods and services over time and at a point in time
in the following major product lines. This is consistent with the
revenue information that is disclosed for each reportable segment
under IFRS 8 Operating Segments (see note 3)
2019 2018
GBP000 GBP000
Sale of new cars 293,805 290,653
Sale of used cars 302,749 279,123
Aftersales services 76,944 73,662
Internal sales (15,721) (13,373)
Total revenues 657,777 630,065
Timing of revenue recognition
The Group recognises all income at a point in time when the
performance obligations are satisfied and has not identified any
significant income recognised over time or received in advance of
performance obligations.
3 Segmental reporting
The Group has adopted IFRS 8 'Operating Segments' which
determines and presents operating segments based on information
presented to the Group's Chief Operating Decision Maker ("CODM"),
the Chief Executive Officer. The Group is operated and managed on a
Dealership by Dealership basis. Dealerships operate a number of
different business streams such as new vehicle sales, used vehicle
sales and after sales operations. Management is organised based on
the dealership operations as a whole rather than the specific
business streams. Dealerships are considered to have similar
economic characteristics and offer similar products and services
which appeal to a similar customer base. As such the results of
each dealership have been aggregated to form one reportable
operating segment.
All segment revenue, profit before tax, assets and liabilities
are attributable to the principal activity of the Group being the
provision of car vehicle sales, vehicle servicing and related
services. Therefore to increase transparency, the Group has
included below additional voluntary disclosure analysing revenue
and gross margins within the reportable segment.
2019 2019 2019 2019 2018 2018 2018 2018
Revenue Revenue mix Gross profit Margin Revenue Revenue mix Gross profit Margin
GBPm % GBPm % GBPm % GBPm %
New Car 293.8 44.7 20.6 7.0 290.6 46.1 17.9 6.2
Used Car 302.8 46.0 25.1 8.3 279.1 44.3 24.3 8.7
Aftersales 76.9 11.7 29.3 38.1 73.7 11.7 28.9 39.1
Internal
sales (15.7) (2.4) - - (13.4) (2.1) - -
Total 657.8 100.0 75.1 11.4 630.0 100.0 71.1 11.3
Administrative expenses (61.4) (60.2)
Operating profit before
non-recurring expenses 13.7 10.9
Non-recurring income/
(expenses) 0.2 (0.7)
Operating profit 13.9 10.2
From 1 September 2018, the Group analysed certain revenue and
gross profit within the aftersales department rather than the used
car department. The prior year comparatives have been adjusted to
reflect the same treatment, the impact is a reclassification in the
allocation between used car and aftersales is GBP1.2m of Revenue
and GBP0.3m of Gross Profit.
The CODM reviews the performance of the business in terms of
both net profit before tax and EBITDA, as such the following table
shows a reconciliation of the Profit before tax to EBITDA.
2019 2018
GBP000 GBP000
Profit Before Tax 12,495 9,124
Non-recurring (income) expenses
(note 4) (219) 703
Underlying Profit Before Tax 12,276 9,827
Net finance expense 1,371 1,028
Depreciation and amortisation 3,437 2,481
Underlying EBITDA 17,084 13,336
Non-recurring income (expenses) 219 (703)
EBITDA 17,303 12,633
4 Non-recurring Income/ (expenses)
Non-recurring income and expenses are items which derive from
events or transactions that are outside the normal course of
business, and do not directly relate to the on-going operations,
therefore have been separately disclosed in order for the financial
statements to present a true and fair view.
2019 2018
GBP000 GBP000
Profit on disposal of property held
for re-sale 414 -
Site closures costs (195) (703)
219 (703)
5 Staff numbers and costs
The average number of persons employed by the Group (including
directors) during the year, analysed by category, was as
follows:
Number of employees
2019 2018
Sales 338 368
Service 424 449
Parts 79 96
Administration 235 247
1,076 1,160
The aggregate payroll costs of these persons were as
follows:
GBP000 GBP000
Wages and salaries 34,996 35,199
Social security costs 3,433 3,815
Expenses related to defined contribution
plans 558 397
Share based payments expense 32 32
39,019 39,443
6 Earnings per share
Basic earnings per share are calculated by dividing the earnings
attributable to equity shareholders by the number of ordinary
shares in issue in the year. There is one class of ordinary share
with 100,000,000 shares in issue.
The Underlying Return on Equity number has been calculated as
the adjusted profit attributable to equity shareholders divided by
the unweighted average shareholder funds taking the average of the
opening and closing shareholders equity from the statement of
financial position. The calculation is therefore GBP9,775,000
divided by GBP61,104,000 giving 16.0%.
Basic earnings per share
2019 2018
GBP000 GBP000
Profit attributable to shareholders 9,953 7,271
Non-recurring (income)/ expenses (Note
4) (219) 703
Tax on adjustments (at 19% (2018: 19%)) 41 (134)
Adjusted profit attributable to equity
shareholders 9,775 7,840
Number of shares in issue ('000) 100,000 100,000
Basic earnings per share 9.95p 7.27p
Adjusted basic earnings per share 9.78p 7.84p
Diluted earnings per share
During the period the performance conditions relating to certain
share options were satisfied and therefore 1,050,000 of the
remaining 4,500,000 share options are considered dilutive at the
year-end.
2019 2018
GBP000 GBP000
Profit attributable to shareholders 9,953 7,271
Number of shares in issue ('000) 100,000 100,000
Effect of dilutive share options ('000) 189 -
100,189 100,000
Diluted earnings per share 9.93p 7.27p
7 Finance income and expense
Recognised in the income statement
2019 2018
GBP000 GBP000
Finance income
Interest receivable 64 74
Total finance income 64 74
Finance expense
Interest payable on bank borrowings 594 317
Consignment and vehicle stocking interest 841 785
Total finance expense 1,435 1,102
Total interest expense on financial liabilities
held at amortised cost 594 317
Total other interest expense 841 785
1,435 1,102
8 Taxation
Recognised in the income statement
2019 2018
GBP000 GBP000
Current tax expense
Current year 2,289 1,767
Adjustment in respect of prior years 1 (58)
2,290 1,709
Deferred tax
Adjustment in respect of prior years 79 48
Origination and reversal of temporary differences 173 96
252 144
Total tax expense 2,542 1,853
Reconciliation of total tax
2019 2018
GBP000 GBP000
Profit for the year 9.953 7,271
Total tax expense 2,542 1,853
Profit excluding taxation 12,495 9,124
Tax using the UK corporation tax rate
of 19% (2018: 19%) 2,374 1,734
Non-deductible expenses 15 35
Accounting deprecation for which no tax
relief is due 210 218
Tax losses brought forward utilised (63) (113)
Change in tax rate (24) (11)
On capital disposals 33 (10)
Other differences (3) -
Total tax expense 2,542 1,853
The applicable tax rate for the current year is 19% (2018: 19%).
Reductions to 17% (effective 1 April 2020) was substantively
enacted on 6 September 2017. This will reduce the Company's future
current tax charge accordingly.
9 Property, plant and equipment
Assets Long Short leasehold Fixtures,
Freehold under leasehold improvements fittings
land & construction land Plant & computer
buildings & buildings & equipment equipment Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 1 September
2017 45,890 - 4,117 2,484 3,356 8,201 64,048
Additions 7,958 5,392 6,662 96 1,357 2,097 23,562
Disposals - - - (353) (294) (882) (1,529)
Reclassification - - - (45) - 45 -
Transfer to current
assets held for
resale (3,258) - - - - - (3,258)
Balance at 1 September
2018 50,590 5,392 10,779 2,182 4,419 9,461 82,823
Additions 17,376 194 - 23 1,316 2,956 21,865
Disposals - - - (661) (442) (814) (1,917)
Reclassification 16,171 (5,392) (10,779) - - - -
Balance at 31 August
2019 84,137 194 - 1,544 5,293 11,603 102,771
Depreciation
Balance at 1 September
2017 4,018 - 811 2,328 2,252 5,318 14,727
Charge for the year 815 - 106 44 487 977 2,429
Disposals - - - (264) (271) (785) (1,320)
Reclassification - - - (1) - 1 -
Transfer to current
assets held for
resale (63) - - - - - (63)
Balance at 1 September
2018 4,770 - 917 2,107 2,468 5,511 15,773
Charge for the year 1,108 - 74 81 503 1,606 3,372
Disposals - - - (661) (322) (727) (1,710)
Reclassification 991 - (991) - - - -
Balance at 31 August
2019 6,869 - - 1,527 2,649 6,390 17,435
Net book value
At 31 August 2018 45,820 5,392 9,862 75 1,951 3,950 67,050
At 31 August 2019 77,268 194 - 17 2,644 5,213 85,336
As at 31 August 2019 the Group was working towards planning
applications for both the Solihull Aston Martin Dealership and the
Brentwood development. There were no committed contracts in place
at the balance sheet date. (2018: GBP4.9m relating to
Hatfield).
The Directors have considered the property portfolio for
impairment by comparing the carrying amount to the higher of value
in use or market value and have concluded that no impairment is
required.
Security
The title of all freehold properties have been pledged as
security to the Revolving Credit Facility disclosed in note 15.
10 Intangible assets
Goodwill Software Other Total
GBP000 GBP000 GBP000 GBP000
Cost
Balance at 1 September
2017 21,346 800 176 22,322
Additions - 188 - 188
Balance at 1 September
2018 21,346 988 176 22,510
Additions - 42 42
Disposals - (180) - (180)
Balance at 31 August 2019 21,346 850 176 22,372
Amortisation and impairment
Balance at 1 September
2017 - 781 176 957
Amortisation for the year - 52 - 52
Balance at 1 September
2018 - 833 176 1,009
Amortisation for the year - 65 - 65
Disposals - (180) - (180)
Balance at 31 August 2019 - 718 176 894
Net book value
At 31 August 2018 21,346 155 - 21,501
At 31 August 2019 21,346 132 - 21,478
Amortisation charge
The amortisation charge is recognised in the following line
items in the income statement:
2019 2018
GBP000 GBP000
Administrative expenses 65 52
Impairment loss and subsequent reversal
Goodwill and indefinite life intangible assets considered
significant in comparison to the Group's total carrying amount of
such assets have been allocated to cash generating units or groups
of cash generating units. For the purpose of impairment testing of
goodwill and other indefinite life assets, the Directors recognise
the Group's cash generating units ("CGU") to be connected groupings
of dealerships. The identified CGUs, grouped for allocation of
goodwill are as follows:
Goodwill
2019 2018
GBP000 GBP000
Multiple units without significant goodwill 346 346
Jaguar Land Rover ("JLR") 21,000 21,000
21,346 21,346
The recoverable amount of the JLR CGU has been calculated with
reference to its value in use. These calculations use projections
based on financial budgets approved by the Board of Directors which
are extrapolated using an estimated growth rate. The budgets were
prepared to 31 August 2020 and then projected for a further 4
years. The underlying expected performance of the CGU gives
sufficient headroom using conservative assumptions, a growth rate
of 0% was applied, and a terminal value was included with a 0%
growth rate in perpetuity. The discount rate used is 8%.
Management has also performed a review of forecast EBITDA for
the CGU for a number of years based on the EBITDA multiples being
paid for equivalent businesses in the marketplace. The Board
reviews transactional information and assesses the businesses
earnings capacity in order to ensure that the recoverable amount is
in excess of the carrying amount.
Sensitivity to changes in assumptions
The estimated recoverable amounts for the JLR CGU exceeds the
carrying amounts by approximately GBP73m (2018: GBP47m). The Group
has conducted sensitivity analysis on the impairment testing.
Management believe no significant change in the key assumptions
would cause the carrying amount to exceed the recoverable amount
for the CGU.
The value in use exceeds the above carrying values for each CGU,
therefore no impairment is considered necessary.
11 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
The amount of temporary differences, unused tax losses and tax
credits for which a deferred tax asset is recognised is set out
below, along with the movement in the balance in the year. The
asset would be recovered if offset against future taxable profits
of the Group.
Net 31
1 September Recognised August Deferred Deferred
2018 in income 2019 tax liabilities tax assets
GBP000 GBP000 GBP000 GBP000 GBP000
Property, plant and equipment (213) (254) (467) (890) 423
Provisions 10 15 25 - 25
Share options 18 (13) 5 - 5
(185) (252) (437) (890) 453
============ ========== ======= ================ ===========
Unrecognised deferred tax assets and liabilities
The deferred tax asset in relation to loss carried forward
within a subsidiary has not been recognised due to uncertainty over
the future profitability of the subsidiary, these losses are locked
in to this particular subsidiary and cannot be utilised in the
wider Group.
Assets
2019 2018
GBP000 GBP000
Tax value of loss carry-forwards 167 229
Unrecognised net tax assets 167 229
12 Inventories
2019 2018
GBP000 GBP000
Vehicle consignment stock 63,628 43,453
Motor vehicles 46,327 43,117
Parts and other stock 2,849 3,105
112,804 89,675
Included within inventories is GBPnil (2018: GBPnil) expected to
be recovered in more than 12 months.
Raw materials, consumables and changes in finished goods and
work in progress recognised as cost of sales in the year amounted
to GBP581million (2018: GBP555 million).
Details of stock held as security is given in note 12.
13 Trade and other receivables
2019 2018
GBP000 GBP000
Trade receivables 8,864 8,026
Prepayments and other receivables 3,187 3,416
12,051 11,442
Included within trade and other receivables is GBPnil (2018:
GBPnil) expected to be recovered in more than 12 months.
14 Property Assets Classified as held for resale
On closure of the Blackburn dealership, the Freehold property
has been transferred to assets held for resale at its net book
value.
In the prior period, the Royal Wootton Bassett freehold property
was vacated following the transfer of the Land Rover business
to the newly developed JLR site in Swindon. The Freehold was
transferred at its net book value to assets classified and held
for resale and has been sold in the current period resulting
in a gain on disposal of GBP414,000 which is disclosed as non-recurring
income.
15 Borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings, which are
measured at amortised cost.
2019 2018
GBP000 GBP000
Non-current liabilities
Revolving Credit Facility 30,088 21,053
Current liabilities
Revolving Credit Facility - -
Terms and debt repayment schedule
All debt is in GBP currency
Nominal interest Year of Value and Carrying Value and
rate Maturity Amount Carrying Amount
2019 2018
GBP000 GBP000
Revolving
Credit Facility LIBOR +1.20%* 2022 30,088 21,053
30,088 21,053
*The Facilities arranged in November 2017 have different margin
bandings that are dependent on the net debt: EBITDA ratio for
the previous quarter. The margin is 1.2% where the ratio is below
1 times, increasing to 2% where the ratio is in excess of 2.5
times.
16 Trade and other payables
2019 2018
GBP000 GBP000
Current
Vehicle consignment creditor 75,863 51,899
Other trade payables 10,099 10,785
Non-trade payables and accrued expenses 28,407 24,368
Vehicle funding 45,760 41,742
160,129 128,794
Included within trade and other payables is GBPnil (2018:
GBPnil) expected to be settled in more than 12 months.
Both the consignment and vehicle funding creditors are secured
on the stock to which they relate.
17 Provisions
Leases
GBP000
Balance at 1 September
2018 1,000
Provisions used during -
the year
Provisions made in year 336
Balance at 31 August 2019 1,336
Current -
Non-current 1,000
Balance at 31 August 2018 1,000
Current 459
Non-current 877
Balance at 31 August 2019 1,336
Of the provision, GBP1m represents a lease acquired on
unfavourable terms and will be released against the costs incurred
on the relevant lease. The unfavourable nature of the lease taken
on as part of the acquisition of Woodford Jaguar Land Rover will be
realised at the point that the Group vacates the Woodford showroom
and will need to sublet the premises for uses other than its
existing use. It is anticipated that at the point of vacation of
the premises there will be approximately 6 years of the lease
remaining. The provision made during the year relates to the vacant
properties at Welwyn Garden City following the occupation of the
Hatfield development and the vacant Blackburn freehold property
that is held as an Asset for Resale
18 Operating leases
Non-cancellable operating lease rentals are payable as
follows:
2019 2018
GBP000 GBP000
Less than one year 2,381 2,679
Between one and five years 6,196 9,118
More than five years 648 10,142
9,225 21,939
The Group leases a number of motor dealership, sites under
operating leases. Land and buildings have been considered
separately for lease classification.
During the year GBP2,815,000 was recognised as an expense in the
income statement in respect of operating leases (2018:
GBP3,391,000.
19 Post balance sheet events
Dividend
The Board is pleased to announce that it will make a final
dividend payment in respect of the financial year to 31 August 2019
of 0.85p (2018: 0.75p) per share in addition to the interim payment
of 0.25p per share (2018: 0.25p).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAKFNFLXNFFF
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