TIDMPDG
RNS Number : 0638F
Pendragon PLC
17 February 2015
Issued: 17 February 2015 Press Release
PENDRAGON PLC - The UK's Leading Automotive Retailer
Announces Full Year Results To 31 December 2014
"Profits up 36% to GBP60.2 million; launch of the UK's first
automotive click and collect service"
Financial Highlights
-- Operating leverage continues, with gross profit up 4.5% and operating profit up 17.9%.
-- Underlying profit before tax up GBP16.0 million (+36.2%),
from GBP44.2 million to GBP60.2 million. Underlying profit has
doubled in three years.
-- Underlying earnings per share up 0.8p (+34.8%), from 2.3p to 3.1p.
-- Net debt : EBITDA ratio at 0.8, which remains below the lower end of our target range.
-- Final proposed dividend doubled to 0.6p per share. Our 2015
interim dividend is also expected to double to 0.6p per share.
Strategic Highlights
-- Delivering our strategy - resulting in underlying profit
before tax up by 36.2% to GBP60.2 million.
-- Our four strategic 'pillars' are key to our success:
-- No. 1 Online - Launch of 'Move Me Closer', the UK's first
automotive 'click and collect' service.
-- Value - 'Sell Your Car' providing value to the consumer and
additional used car supply for the Group.
-- IT Superiority - our proprietary IT solutions provide a key differentiator in the market.
-- National Footprint - 227 retail points and further roll-out
of footprint planned for 2015.
Operational Highlights
-- Our focus on used continues to enhance profitability, with record performance in 2014.
-- Online visits to Stratstone.com, Evanshalshaw.com and
Quicks.co.uk increased by 2.2 million (+16.3%), from 13.5 million
to 15.7 million.
-- Aftersales gross profit increased by GBP7.2 million (+4.0%),
as the vehicle parc grows (like for like).
-- Used gross profit increased by GBP10.5 million (+7.9%), with
sales up 8.1% year on year (like for like).
-- New gross profit increased by GBP11.2 million (+8.0%), with
strong growth in Stratstone.com (like for like).
Trevor Finn, Chief Executive, commented:
"We are delighted with the performance across our business, with
a 36% improvement in underlying profitability. The heart of our
proposition is to offer value, choice, service and convenience to
our consumers from our key brands of Evanshalshaw.com and
Stratstone.com. We have expanded our convenience proposition, with
the launch of 'Move Me Closer' on Evanshalshaw.com - the UK's first
automotive 'click and collect' service and enhanced our value
proposition with the implementation of 'Sell Your Car'. We have a
clear strategy which will enable us to continue to grow and are
well positioned to take the business to the next level.
We have doubled the dividend to reward our shareholders and our
strong balance sheet and cashflow generation will ensure we can
maintain this dividend level alongside our expansion plans. We
thank our people for their continued support in helping to deliver
our performance and we are looking forward to 2015. We are
confident that 2015 will be another year of good performance, with
Group performance in line with current expectations for the
year."
Enquiries
================ ================== ============== ============
Trevor Finn Chief Executive Pendragon PLC 01623 725114
Tim Holden Finance Director Pendragon PLC 01623 725114
Gordon Simpson Partner RLM Finsbury 0207 2513801
Philip Walters Associate Partner RLM Finsbury 0207 2513801
================ ================== ============== ============
Summary of Contents
1. Financial Overview
2. Segmental Results
3. Strategic Progress
4. Industry Insight and Outlook
5. Detailed Financials
1. Financial Overview
Pendragon PLC Summary Results* Year Ended Year Ended YOY
31 December 2014 31 December 2013 Change
GBPm %
-------------------------------- ----------------- ----------------- -------
Underlying Revenue 4,000.4 3,848.9 +3.9%
-------------------------------- ----------------- ----------------- -------
Underlying Gross Profit 522.6 499.9 +4.5%
Underlying Operating Costs (431.7) (422.8) +2.1%
-------------------------------- ----------------- ----------------- -------
Underlying Operating Profit 90.9 77.1 +17.9%
Underlying Interest (30.7) (32.9) -6.7%
-------------------------------- ----------------- ----------------- -------
Underlying Profit Before Tax 60.2 44.2 +36.2%
-------------------------------- ----------------- ----------------- -------
Operating Profit 97.2 77.2 +25.9%
Interest (32.6) (38.3) -14.9%
-------------------------------- ----------------- ----------------- -------
Profit Before Tax 64.6 38.9 +66.1%
-------------------------------- ----------------- ----------------- -------
Underlying Gross Margin (%) 13.1% 13.0% +0.1%
Underlying Operating Margin
(%) 2.3% 2.0% +0.3%
Underlying Earnings Per Share
(p) 3.1 2.3 +34.8%
Full Year Dividend Per Share**
(p) 0.9 0.4 +125.0%
-------------------------------- ----------------- ----------------- -------
* Underlying results, where stated, exclude items that have
non-trading attributes due to their size, nature or incidence
** Full Year Dividend Per Share is the interim dividend per
share plus the proposed final dividend per share
NOTE: Within this document, like for like results include only
current trading businesses which have a 12 month comparative
history. All percentages shown are the calculated value from the
table shown and may vary from the actual numbers due to rounding.
Year on year percentage variances for margins show the absolute
percentage movement only. All commentary is versus the prior year,
unless stated.
Income Statement Highlights
Revenue increased by GBP151.5 million, up 3.9% on the prior
year, mainly due to increases within the used and new vehicle
departments. On a like for like basis, revenue increased by
GBP216.9 million and we improved used revenue by 8.1%, new revenues
by 4.3% and aftersales revenues by 3.6%.
Underlying gross profit increased by GBP22.7 million (+4.5%) in
the period and on a like for like basis by GBP30.7 million (+6.3%)
over the prior year. We achieved record performance in our used
vehicle sector, with gross profit up GBP10.5 million (+7.9%) on a
like for like basis. In the used vehicle sector, we continue to
grow our presence and reputation and deliver further efficiency
gains. The new sector has increased by GBP11.2 million (+8.0%) on a
like for like basis as the new car market continues to grow.
Aftersales has grown by GBP7.2 million (+4.0%) on a like for like
basis as a result of new car sales growth and our growth in used
vehicle sales increasing the available vehicle parc. In the period,
we increased overall underlying gross margin by 10 basis points, to
13.1%.
Operating costs increased on a like for like basis by GBP18.4
million (+4.6%), of which half relates to variable costs (+4.6%)
and half to indirect costs, with the key cost increases due to
property, people related costs and marketing costs.
Underlying operating profit increased by GBP13.8 million in the
period and increased by GBP12.3 million on a like for like basis.
Underlying interest savings of GBP2.2 million were achieved in the
period as the debt level has been further reduced. Our operating
profit margin of 2.3% is a 30 basis points improvement on the prior
year.
Balance Sheet and Cash Flow
The Group has been focussing on achieving a strong balance sheet
and lowering its debt profile. The following table summarises the
cash flows and net debt of the Group for the years ended 31
December 2014 and 31 December 2013 as follows:
Summary Cashflow and Net Debt Year Ended Year Ended
31 December 31 December
GBPm 2014 2013
------------------------------------------------ ------------ ------------
Underlying Operating Profit Before Other
Income 89.8 76.8
Depreciation and Amortisation 27.0 19.8
Non-underlying Items - 2.0
Share Based Payments 1.5 1.6
Working Capital and Contract Hire Vehicle
Movements (11.9) 35.1
Operating Cash Flow 106.4 135.3
------------------------------------------------ ------------ ------------
Tax Paid (8.3) (0.9)
Underlying Net Interest Paid (29.0) (33.6)
Non-underlying Net Interest Paid & Refinancing
Costs - (8.0)
Replacement Capital Expenditure (21.8) (19.5)
Acquisitions (20.8) (12.5)
Disposals 12.6 16.3
Dividends (8.6) (2.8)
Other 0.3 2.5
Reduction In Net Debt 30.8 76.8
------------------------------------------------ ------------ ------------
Closing Net Debt 108.8 139.6
------------------------------------------------ ------------ ------------
The Group's net debt fell from GBP139.6 million at 31 December
2013 to GBP108.8 million at 31 December 2014. This GBP30.8 million
net debt reduction was largely due to increased underlying
operating profit before other income of GBP13.0 million.
The following table illustrates the debt : underlying EBITDA
ratio for the years ended 31 December 2014 and 31 December
2013:
Debt : Underlying EBITDA Ratio Year on
Year Ended Year Ended Year
GBPm 31 December 2014 31 December 2013 Improvement
-------------------------------- ----------------- ----------------- ------------
Underlying Operating Profit 90.9 77.1 +17.9%
Depreciation & Amortisation 50.2 40.9 +22.7%
Underlying EBITDA 141.1 118.0 +19.6%
-------------------------------- ----------------- ----------------- ------------
Net Debt 108.8 139.6 -22.1%
-------------------------------- ----------------- ----------------- ------------
Debt : Underlying EBITDA Ratio 0.8 1.2 -33.3%
-------------------------------- ----------------- ----------------- ------------
As a consequence of this lower debt level and strong EBITDA
performance, the debt : underlying EBITDA ratio has reduced from
1.2 at 31 December 2013 to 0.8 at 31 December 2014 and falls below
the lower end of our target range of 1.0 to 1.5. This reflects the
appropriate balance of capital efficiency and growth potential,
providing both a strong balance sheet and, with our strong cashflow
generation and realisations from low performing assets, the ability
to invest for the future.
Property, acquisitions and disposals
Our property portfolio is an important aspect of our business,
with the Group operating from both leasehold and freehold
properties. In addition, through strategic investment choices,
including the decision to close some franchise points, we have a
number of vacant property assets which we hold for sale. At 31
December 2014, the Group had GBP164.4 million of land and property
assets (2013: GBP161.3 million). Additionally, the Group held
assets for sale of GBP11.6 million (2013: GBP13.1 million).
Acquisitions of GBP20.8 million include the purchase of six
properties from King Arthur Properties for GBP12.9 million.
Disposals consist of GBP1.1 million from business disposals and
GBP11.5 million from property disposals. Business disposals
resulted in a profit on disposal of GBP0.1 million and property
disposals resulted in a profit of GBP3.1 million. During the
period, the Group closed or disposed of 12 franchise points which
were low performing or surplus to requirements, and added one used
vehicle point.
Property Joint Venture
The Group occupies as tenant a number of properties that were
previously held in a joint venture in which the Group held an
investment. In November 2013 the Group invested GBP10.0 million in
a new company, King Arthur Properties which acquired all of the
property from the joint venture. This 6% stake in the new company
generated an underlying dividend of GBP1.1 million, received by the
Group in the year. During the year we received non-underlying
dividends of GBP3.1 million relating to property disposals and
refinancing of King Arthur Properties. This investment has been
realised subsequent to the year end, resulting in a non-underlying
profit of GBP14 million and a cash inflow to be received in 2015 of
GBP24 million. We also took the opportunity to acquire six
properties from King Arthur Properties in December 2014 for GBP12.9
million, saving rent of GBP1.3 million per annum.
Pensions
The net liability for defined benefit pension scheme obligations
has increased from GBP43.4 million at 31 December 2013 to GBP66.4
million at 31 December 2014. Whilst the value of scheme assets
increased by GBP21.3 million, this was offset by an increase in
benefit obligations of GBP44.3 million which has been caused by a
90 basis points reduction in the pension scheme discount rate. This
increase in the deficit of 53% in the year contrasts with the
reported increase in deficits in FTSE 350 companies of 90%.
Dividend
We are delighted to be proposing to double the final dividend.
Our 35% increase in earnings for the year is backed by a strong
balance sheet, cashflow generation and recycling of low performing
assets which gives us the capacity to fund our expansion of
footprint and anticipated growth in other sectors. The Board is
therefore confident to announce an increase in the proposed final
dividend to 0.6p per share in respect of 2014.
Following this rebasing of our dividend cover, the Board intends
to adopt a progressive dividend approach in the future.
A final dividend of 0.3p per share was paid in May in respect of
2013 and an interim dividend of 0.3p per share was paid in October
in respect of 2014.
The proposed final dividend, subject to approval at the AGM,
will be paid on the 22 May 2015 for those shares registered on 24
April 2015. The Board currently anticipates that the interim
dividend, usually paid in October, will also be doubled to 0.6p per
share.
Non-underlying Items
Non-underlying items for the years ended 31 December 2014 and 31
December 2013 are as follows:
Non-underlying Items Year Ended Year Ended
31 December 31 December
GBPm 2014 2013
------------------------------------------- ------------ ------------
Refinancing Costs and Interest - (7.1)
Property Impairments and Gain / (Loss) on
Disposals 3.2 (1.9)
Pensions (1.9) (1.3)
Dividends received 3.1 -
VAT Settlements - 5.0
------------------------------------------- ------------ ------------
Total 4.4 (5.3)
------------------------------------------- ------------ ------------
In the period, property disposal profits net of impairments and
associated property and business disposal costs provide a GBP3.2
million credit in the period versus a GBP1.9 million charge in the
prior year. The Group sold seven properties, yielding proceeds of
GBP11.5 million.
In the period, the Group received GBP3.1 million of
non-underlying dividend income (2013: GBPnil) which relates to King
Arthur Properties, a company in which we had a 6% investment.
On 30 January 2015 we realised this investment resulting in a
non-underlying profit of GBP14 million for 2015. This will result
in a cash inflow of circa GBP24 million in 2015.
Risks and Uncertainties
The Board maintains a policy of continuous identification and
review of risks which may cause our actual future Group results to
differ materially from expected results. The principal risks
identified were: failure to adopt the right strategy or failure of
our adopted strategy to be effectively implemented or to deliver
the desired results, dependence on vehicle manufacturers for the
success of our business, failure to meet competitive challenges to
our business model or sector, European economic instability
affecting the UK in particular impacting used vehicle prices, UK
governmental spending constraints, changes to the type of vehicles
sold or the amount of road use, availability of debt funding,
funding requirements of the occupational pension scheme,
significant litigation or regulator action against or otherwise
impacting the Group, failure of systems, reliance on the use of
estimates, failure to attract, develop, motivate and retain good
quality team members, failure to provide safe working and retail
environments and failure to control environmental hazards. The
Board has recently reviewed the risk factors and confirms that they
should remain valid for the rest of the current year. The Board
considers the main areas of risk and uncertainty that could impact
profitability to be used vehicle prices and economic and business
conditions.
2. Segmental Results
The Group has four segments, which we refer to as the Motor
Segment and three segments which we refer to as the Support
Segment. The Motor Segment consists of: Stratstone, Evans Halshaw,
California and Quicks. The Support Segment consists of: Pinewood,
Leasing and Quickco. The following table shows the revenue, gross
profit, operating costs and operating profit by segment for our
Motor Segment for the years ended 31 December 2014 and 31 December
2013:
Motor Segment Results for Year Ended 31 December
======================================================================================================
GBPm Stratstone Evans Halshaw Quicks California Motor Segment
(unless stated) 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
================== ======= ======= ======= ======= ===== ===== ====== ====== ======= =======
Revenue:
Aftersales 132.5 132.1 144.7 142.5 2.7 2.7 23.1 23.6 303.0 300.9
Used 683.2 624.5 878.1 852.3 46.9 46.2 61.2 52.7 1,669.4 1,575.7
New 775.4 711.3 1,047.5 1,061.8 - - 119.7 118.6 1,942.6 1,891.7
Revenue 1,591.1 1,467.9 2,073.3 2,056.6 49.6 48.9 204.0 194.9 3,915.0 3,768.3
================== ======= ======= ======= ======= ===== ===== ====== ====== ======= =======
Gross Profit:
Aftersales 76.2 75.4 102.3 99.2 0.6 0.6 12.2 12.8 191.3 188.0
Used 47.2 42.1 91.1 86.5 4.2 4.6 3.8 4.4 146.3 137.6
New 70.0 63.5 65.0 63.5 - - 18.2 17.4 153.2 144.4
Gross Profit 193.4 181.0 258.4 249.2 4.8 5.2 34.2 34.6 490.8 470.0
Operating Costs (157.9) (154.1) (225.8) (221.8) (7.0) (7.5) (25.6) (25.6) (416.3) (409.0)
================== ======= ======= ======= ======= ===== ===== ====== ====== ======= =======
Operating Profit 35.5 26.9 32.6 27.4 (2.2) (2.3) 8.6 9.0 74.5 61.0
================== ======= ======= ======= ======= ===== ===== ====== ====== ======= =======
Metrics:
Gross Margin
% 12.2% 12.3% 12.5% 12.1% 9.7% 10.6% 16.8% 17.8% 12.5% 12.5%
Units Sold
('000) 54.9 53.1 200.8 200.3 6.7 7.3 4.8 4.6 267.2 265.3
Stratstone (Stratstone.com)
Our Stratstone business is one of the UK's leading premium motor
car retailers, with 79 franchise points. Stratstone holds
franchises to retail and service Aston Martin, BMW, Ferrari, Honda,
Jaguar, Land Rover, Mercedes-Benz, MINI, Morgan, Porsche and Smart
vehicles as well as three motor-cycle franchises. This segment also
contains our retail and service outlets for DAF commercial
vehicles, under our Chatfields brand name.
Stratstone.com had a strong year, with performance improvements
across all departments. On a like for like basis, operating profit
increased by GBP6.5 million. Stratstone's largest area of
improvement was in used, with gross profit increasing by 14.6% on a
like for like basis, mainly due to revenue growth with margin
slightly improved. The new department improved like for like gross
profit by 13.6% as a result of strong growth in Aston Martin, Land
Rover, Mercedes-Benz and Porsche. Aftersales continues to grow,
with 5.2% gross profit growth on a like for like basis and a 6.5%
increase in retail labour sales. Stratstone businesses have
extended their use of high definition videos from the sales teams'
online presentation of used vehicles to the aftersales department
communication of vehicle service and repair. This has further
enhanced our customer proposition, enabling the customer to see
vehicle service and repair issues direct from the workshop on their
electronic device and to authorise work from the link provided.
This further illustrates our investment in our online activities
and the IT infrastructure that supports all our businesses and
activities.
Evans Halshaw (Evanshalshaw.com)
Our Evans Halshaw business is the UK's leading volume motor car
retailer, with 125 franchise points. Evans Halshaw holds franchises
to retail and service Citroen, Dacia, Ford, Hyundai, Kia, Nissan,
Peugeot, Renault, SEAT and Vauxhall vehicles.
Evanshalshaw.com increased like for like operating profit by
GBP5.8 million, with strong performance across all sectors. The
greatest improvement in gross profit in Evans Halshaw came from the
used sector, with like for like gross profit up 6.0% as a result of
both revenue and margin improvement.
In the period, Evans Halshaw focussed on improving used margin,
resulting in like for like used gross profit increasing by GBP5.1
million, an improvement of 6.0%. Aftersales like for like gross
profit increased by GBP4.0 million or 4.1%. Retail labour sales
grew by 2.1% on a like for like basis in 2014 and the increased
used stock and sales volume has increased internal vehicle
preparation by 11.6% in the year. We are continuing to identify
efficiency gains and capacity improvements to achieve further
growth. At Evans Halshaw, consumers can choose how they transact,
from a variety of methods and channels for aftersales services. We
believe our innovation and responsiveness to consumers' needs in
this area is giving us an advantage. We increased our like for like
new vehicle gross profit in the period by GBP2.1 million, as we
improved our new vehicle margin by 30 basis points.
Quicks (Quicks.co.uk)
At Quicks, our dedicated used car business, we retail used motor
vehicles and provide associated aftersales services. We take the
opportunity in Quicks to test systems and processes prior to
implementation within the Group. In the period, Quicks performed in
line with the prior year, but, on a like for like basis, the
business improved by GBP0.1 million.
California
Our motor retail business in the US continues to achieve strong
results from its nine franchise points in Southern California,
which represent the Aston Martin, Jaguar and Land Rover brands.
Operating profit fell by just GBP0.4 million from the exceptional
year of 2013. New car performance continues to improve, offset by
small profit reductions in aftersales and used. We continue to
explore earnings enhancing opportunities to add to our existing US
operations.
Support Businesses
Our Support businesses provide a broad range of services, both
to the Group and to external customers. These specialist businesses
consist of Pinewood for dealer management systems, Leasing for
fleet and contract hire vehicles and Quickco for wholesale vehicle
parts.
The following table shows the revenue and operating profit for
our Support segment and the Group results, for each of the years
ended 31 December 2014 and 31 December 2013:
Underlying Support Sector Results For Year Ended 31 December
Pinewood Leasing Quickco Support Group*
Segment
GBPm 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
================== ===== ===== ===== ===== ==== ==== ===== ===== ======= =======
Revenue 10.9 10.4 22.2 18.0 52.3 52.2 85.4 80.6 4,000.4 3,848.9
Operating Profit 8.7 8.9 5.6 5.4 2.1 1.8 16.4 16.1 90.9 77.1
Operating Margin
(%) 79.8% 85.6% 25.2% 30.0% 4.0% 3.4% 19.2% 20.0% 2.3% 2.0%
================== ===== ===== ===== ===== ==== ==== ===== ===== ======= =======
* Group comprises the total of the support segment and the motor
segment.
3. Strategic Progress
Strategy
Our strategy is to grow profitability in used, aftersales and
new and we represent this by our four strategic pillars. These
strategic pillars are: number one online, value, superior IT and
national footprint and are supported by the 'our people'
foundation.
Number One Online
We continue to invest in our online platforms. Visits to
Stratstone.com, Evanshalshaw.com and Quicks.co.uk increased by
16.3% over the prior year, to 15.7 million visitors. Overall, we
are attracting over 10.2 million online visitors more than we did
five years ago. This channel is becoming a key aspect of our
business, supported by our national retail locations.
Evanshalshaw.com and Quicks.co.uk are operating on our latest
platform, which recognises and is dynamic to consumers' chosen
electronic device. Stratstone will transfer to this platform at the
end of quarter one of 2015. We are now fully operational with our
'Sell Your Car' initiative (www.evanshalshaw.com/sell-your-car/)
where consumers can sell their car direct to evanshalshaw.com, and
we will guarantee to pay more than 'webuyanycar.com'. Having added
a further four retail locations since the October interim
management statement, we now offer this service at a total of 42
retail locations in the UK, gaining an inflow of used cars sourced
directly from consumers.
In February 2015, we launched 'Move Me Closer' which enables the
consumer to reserve a vehicle direct from their electronic device
and choose to have it physically delivered to their nearest store
location (www.evanshalshaw.com/move-me-closer/). Through this
service, consumers can research and view online over 20,000
vehicles then inspect the vehicle they reserved at a physical
location convenient to them.
Value
Our value pricing provides consumers with the assurance of
frequently researched prices. We have been operating our value
pricing methodology for over six years, enabling us to provide
pricing transparency to our customers. By applying this process, in
2014 we made over 600,000 price changes to used cars through
updates made twice a day to our internet prices, to ensure we
provide value for our customers. We continue to invest in
developing this area, to ensure we can continue to monitor value
effectively, as we increase our stock holding, range, geographical
footprint and consumer base.
Superior IT
Our business benefits from an IT platform superior to those of
our competitors, owing to the strength and expertise of our
wholly-owned technology company. This enables us more directly to
monitor, control, analyse and report on our results and the
progress we are making against our objectives. This platform also
enables us to react quickly to customer demands and needs,
transforming the customer experience in a number of areas. For
example, within aftersales, we now offer customers a fully
integrated online service booking, supported by a HD video vehicle
health check for them to view. Our 'Move Me Closer' service was
conceived and designed, proved and launched in a time scale
achieved only as a result of this superior IT capability.
National Footprint
Our business has the largest motor retail footprint and scale in
the UK. This brings benefits to our customers: for both vehicle
selection and purchasing, and for aftersales services, they can
visit our stores at locations convenient to them. We have commenced
a programme to invest and open stores in the key market areas in
the UK where we do not yet have a significant presence. This
investment will bring us even closer to existing and potential
customers, by further enhancing our offering of choice, convenience
of contact and service and our unique used car consumer
proposition. This, coupled with the 'Move Me Closer' initiative,
gives our UK consumers even more opportunity to touch and appraise
their potential vehicle purchase at a place local to them.
At this stage we have identified three properties which we
already either own or lease which are suitable for our retail
location expansion. In addition we have begun a programme of new
site search and selection which we anticipate will result in adding
five sites during 2015, taking us towards our planned total of 40
additional sites. We expect to finance this growth through our
cashflow and by recycling low performing assets.
Our People
Our people are a foundational asset and key to the success of
our business. We have always placed a significant focus on our team
members and defining and refining how we do business, communicate,
and engage with our customers. Not only has this foundation
supported our plans to further enhance our human resource
approaches and our plans to develop our teams; it has also been the
driver behind new processes and propositions for our customers and
reward and recognition of our team members. In 2014, we opened our
training academy, further evidence of our investment in training
and belief in development for all our people.
Finally we celebrated 25 years as a 'plc' in November 2014 and
we thank all our people, both long-term and current team members,
for their hard work, loyalty, energy and dedication to Pendragon
PLC.
We are looking forward to the next 25 years!
4. Industry Insight and Outlook
New Sector
The new vehicle sector consists of the first registration of
cars and commercial vehicles. In 2014, the UK new car market, the
second largest market in Europe, increased by 9.3% over the prior
year, with 2.476 million registrations, up from 2.265 million in
2013.
The UK new car market is primarily divided into retail and fleet
markets. The retail market is the direct selling of vehicle units
to individual consumers and operates at a higher margin than the
fleet market. The fleet market represents selling of multiple
vehicles to businesses and is predominantly transacted at a lower
margin and consumes higher levels of working capital than does
retail. The retail market is the key market opportunity for the
Group and represents just under half of the total UK market.
The following table summarises the UK new car vehicle market,
separating the retail and fleet components for the years ended 31
December 2014 and 31 December 2013:
New Car Vehicle Registrations for Year Ended 31 December ('000)
------------------------------------------------------------------------
2014 2013 Change Change %
----------------------------------- ------- ------- ------ ---------
UK Retail Market 1,179.5 1,074.6 104.9 +9.8%
UK Fleet Market 1,296.9 1,190.1 106.8 +9.0%
----------------------------------- ------- ------- ------ ---------
UK New Market 2,476.4 2,264.7 211.7 +9.3%
Group Represented* UK Retail
Market 797.8 724.3 73.5 +10.1%
Group Represented* UK Fleet
Market 900.9 856.6 44.3 +5.2%
----------------------------------- ------- ------- ------ ---------
Group Represented* UK New Market 1,698.7 1,580.9 117.8 +7.5%
----------------------------------- ------- ------- ------ ---------
* Group Represented is defined as national registrations for the
franchised brands that the Group represents as a franchised
dealer.
The UK commercial vehicle market, consisting of light commercial
vehicles and trucks, had a market size of 363 thousand units in
2014, an increase of 11% over the prior year. SMMT's expectations
for 2015 are that the light commercial vehicle market will be
stable.
The Group has a small and successful representation in
California. The USA new vehicle market was 16.4 million in 2014, an
increase of 6% over 2013. This was the highest vehicle market since
2006 and The National Automobile Dealers' Association expects the
USA market to be 16.9 million vehicles in 2015, an increase of 3%.
The USA market provides an opportunity for earnings enhancing
acquisitions.
New Industry Insight
We believe that 2015 will see continued growth in the UK new car
market, but the levels of growth will be more moderate than 2014.
March 2014 saw the highest monthly registrations in a decade. We
believe that achieving strong growth on top of this comparative is
unlikely. Summarising, the year on year growth phase is coming to
an end and we expect this will become apparent in the March 2015
year on year comparison. We believe the UK new car market should
now run at a "natural" 2.5 million to 2.6 million units per annum
level, a slight upward revision on the estimate we gave following
publication of the September 2014 new car registrations data.
Used Sector
The used vehicle sector comprises the selling of vehicles by one
party to another for all vehicles except newly registered vehicles.
Provisional UK national used vehicle market data is only available
up to 30 September 2014, and current estimates show the used market
increasing by 2.8%. We are expecting the market to be around 7.0
million for the full year to 2014, rising to 7.11 million in 2015.
Around half of these transactions are conducted by franchised
dealers and the balance by independent dealers and private
individuals.
Used Industry Insight
We have modelled the impact of the last three years' increases
in new market volumes on the used car market. Whilst the used car
market has been constant, at around 6.7 million transactions
annually, we believe we will see steady growth of 1 to 2 percent
per annum over the next three years. When we segment the used
market by age of vehicle, our analysis shows that the supply of
vehicles in the less than three years old segment will continue to
grow. Additionally, we believe we will see growth in the four to
six years old segment in 2015 following 2014's decline.
Aftersales Sector
Aftersales encompasses the servicing, maintenance and repair of
motor vehicles, including bodyshop repairs and the retailing of
parts and other motor related accessories. The main determinant of
the aftersales market is the number of vehicles on the road, known
as the 'vehicle parc'. The vehicle parc in the UK has risen to 33
million vehicles, having been typically around 32 million vehicles
in the prior three years. The vehicle parc can also be segmented
into markets representing different age groups. Typically, around
20% of the car parc is represented by less than three year old
cars, around 17% is represented by four to six year old cars and
63% is greater than seven year old cars.
The size of each of these age groups within the car parc is
determined by the number of new cars entering the parc and the
number exiting the parc. The demand for servicing and repair
activity is less impacted by any adverse economic conditions than
other sectors, as motor vehicles require regular maintenance and
repair for safety, economy and performance reasons.
Aftersales Industry Insight
The aftersales servicing and repair business will benefit from
increased new and used car activity. As a result of the increased
new vehicle supply, we are anticipating growth in 2015 in the less
than three year old car parc of around 7%. Interestingly, within
the four to six year old vehicle parc, we are expecting growth of
around 2% following two years of decline, as a result of increased
registration of new cars from 2012 falling into this segment in
2015.
Customer Insight
Our customers are central to everything we do. We monitor our
customer satisfaction scores closely and regard as a key measure of
our success the proportion of customers who have given us a four or
five star rating for vehicle sales and aftersales service. We are
pleased to report that our overall rating in this area has
increased from 83.4% at 31 December 2013 to 85.3% at 31 December
2014. We see this as an important component of our business going
forward and will continue to invest to build on our recent
innovations and success in this area.
Outlook
Delivery of our clear strategy is reflected in an outstanding
set of results. We are excited by a number of current developments
we have in progress, from the roll out of our 'Sell Your Car'
initiative, to the launch of our 'Move Me Closer' online
proposition and our national footprint expansion, all of which will
propel the Group forward. Together with this, we see further growth
in the used and aftersales markets as result of strong market
dynamics, providing further impetus for our business. Our strategic
plans to expand our business will be supported by our strong
balance sheet and funded from cashflow and the recycling of low
performing assets. Our prospects for 2015 are in line with current
expectations.
5. Detailed Financials
Consolidated Income Statement
Year ended 31 December 2014
Underlying Non- underlying 2014 Underlying Non- underlying 2013
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Revenue 4,000.4 - 4,000.4 3,848.9 - 3,848.9
Cost of sales (3,477.8) - (3,477.8) (3,349.0) - (3,349.0)
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Gross profit 522.6 - 522.6 499.9 - 499.9
Operating expenses (432.8) - (432.8) (423.1) 0.7 (422.4)
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Operating profit before
other income 89.8 - 89.8 76.8 0.7 77.5
Other income - gains / (losses)
on the
sale of businesses and property - 3.2 3.2 - (0.6) (0.6)
Other income - dividends
received 1.1 3.1 4.2 0.3 - 0.3
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Operating profit 90.9 6.3 97.2 77.1 0.1 77.2
Finance expense (note 4) (31.2) (1.9) (33.1) (33.3) (9.3) (42.6)
Finance income (note 5) 0.5 - 0.5 0.4 3.9 4.3
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Net finance costs (30.7) (1.9) (32.6) (32.9) (5.4) (38.3)
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Profit before taxation 60.2 4.4 64.6 44.2 (5.3) 38.9
Income tax (expense) / credit (15.3) 0.5 (14.8) (11.4) 13.6 2.2
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Profit for the year 44.9 4.9 49.8 32.8 8.3 41.1
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Profit for the year attributable
to:
Equity shareholders of the
parent 44.9 4.9 49.8 32.8 6.4 39.2
Non-controlling interests
(pension
related) - - - - 1.9 1.9
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
44.9 4.9 49.8 32.8 8.3 41.1
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Earnings per share (note
3)
Basic earnings per share 3.5p 2.8p
Diluted earnings per share 3.4p 2.7p
Non GAAP measure (note 3)
Underlying basic earnings
per share 3.1p 2.3p
Underlying diluted earnings
per share 3.1p 2.2p
--------------------------------- ---------- --------------- --------- ---------- --------------- ---------
Consolidated Statement of Comprehensive Income
Year ended 31 December 2014
2014 2013
GBPm GBPm
---------------------------------------------------------------- ------- ------
Profit for the year 49.8 41.1
------------------------------------------------------------------ ------- ------
Other comprehensive income
Items that will never be reclassified to profit and loss:
Defined benefit plan remeasurement gains and (losses) (24.0) 23.5
Income tax relating to defined benefit plan remeasurement
gains and (losses) 4.8 (4.7)
Income tax relating to amendment to the pension partnership
agreement - 7.2
(19.2) 26.0
---------------------------------------------------------------- ------- ------
Items that are or may be reclassified to profit and loss:
Fair value gains on investments 14.0 -
Foreign currency translation differences of foreign operations 0.3 (0.5)
------------------------------------------------------------------ ------- ------
14.3 (0.5)
---------------------------------------------------------------- ------- ------
Other comprehensive income for the year, net of tax (4.9) 25.5
------------------------------------------------------------------ ------- ------
Total comprehensive income for the year 44.9 66.6
------------------------------------------------------------------ ------- ------
Total comprehensive income for the year attributable to:
Equity shareholders of the parent 44.9 64.7
Non-controlling interests (pension related) - 1.9
------------------------------------------------------------------ ------- ------
44.9 66.6
---------------------------------------------------------------- ------- ------
Consolidated Statement of Changes in Equity
Year ended 31 December 2014
Capital
Share Share redemption Other Translation Retained Non-controlling
capital premium reserve reserves reserve earnings interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Balance at 1 January
2014 71.9 56.8 2.5 12.6 (0.9) 162.3 - 305.2
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Total comprehensive
income for 2014
Profit for the year - - - - - 49.8 - 49.8
Other comprehensive
income for the year,
net of tax - - - - 0.3 (5.2) - (4.9)
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Total comprehensive
income for the year - - - - 0.3 44.6 - 44.9
Issue of ordinary
shares 0.9 - - - - (0.5) - 0.4
Dividends paid - - - - - (8.6) - (8.6)
Own shares (acquired)
/ issued under share
schemes - - - - - (3.7) - (3.7)
Share based payments - - - - - 1.5 - 1.5
Income tax relating
to share based payments - - - - - 0.2 - 0.2
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Balance at 31 December
2014 72.8 56.8 2.5 12.6 (0.6) 195.8 - 339.9
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Balance at 1 January
2013 71.8 56.8 2.5 12.6 (0.4) 98.3 33.8 275.4
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Total comprehensive
income for 2013
Profit for the year - - - - - 39.2 1.9 41.1
Other comprehensive
income for the year,
net of tax - - - - (0.5) 26.0 - 25.5
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Total comprehensive
income for the year - - - - (0.5) 65.2 1.9 66.6
Issue of ordinary
shares 0.1 - - - - (0.1) - -
Dividends paid - - - - - (2.8) - (2.8)
Own shares issued
under share schemes - - - - - 1.2 - 1.2
Distribution from
pension partnership
to pension scheme - - - - - - (2.5) (2.5)
Amendment to the pension
partnership agreement - - - - - (2.8) (33.2) (36.0)
Share based payments - - - - - 1.6 - 1.6
Income tax relating
to share based payments - - - - - 1.7 - 1.7
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Balance at 31 December
2013 71.9 56.8 2.5 12.6 (0.9) 162.3 - 305.2
------------------------- -------- -------- ----------- --------- ----------- --------- --------------- ------
Consolidated Balance Sheet
At 31 December 2014
2014 2013
GBPm GBPm
Non-current assets
Property, plant and equipment 312.0 295.7
Goodwill 365.4 365.4
Other intangible assets 6.1 5.0
Investments 24.0 10.0
Deferred tax assets 23.9 22.7
--------------------------------------------------- ---------- ----------
Total non-current assets 731.4 698.8
--------------------------------------------------- ---------- ----------
Current assets
Inventories 676.1 602.5
Trade and other receivables 117.9 103.2
Cash and cash equivalents 91.4 58.4
Non-current assets classified as held for
sale 11.6 13.1
--------------------------------------------------- ---------- ----------
Total current assets 897.0 777.2
--------------------------------------------------- ---------- ----------
Total assets 1,628.4 1,476.0
--------------------------------------------------- ---------- ----------
Current liabilities
Trade and other payables (884.1) (796.8)
Deferred income (26.2) (24.9)
Current tax payable (33.0) (30.5)
Provisions (2.5) (2.4)
--------------------------------------------------- ---------- ----------
Total current liabilities (945.8) (854.3)
--------------------------------------------------- ---------- ----------
Non-current liabilities
Interest bearing loans and borrowings (200.2) (198.0)
Trade and other payables (31.0) (28.3)
Deferred income (41.6) (43.1)
Retirement benefit obligations (66.4) (43.4)
Provisions (3.5) (3.7)
--------------------------------------------------- ---------- ----------
Total non-current liabilities (342.7) (316.5)
--------------------------------------------------- ---------- ----------
Total liabilities (1,288.3) (1,170.8)
--------------------------------------------------- ---------- ----------
Net assets 339.9 305.2
--------------------------------------------------- ---------- ----------
Capital and reserves
Called up share capital 72.8 71.9
Share premium account 56.8 56.8
Capital redemption reserve 2.5 2.5
Other reserves 12.6 12.6
Translation reserve (0.6) (0.9)
Retained earnings 195.8 162.3
--------------------------------------------------- ---------- ----------
Total equity attributable to equity shareholders
of the Company 339.9 305.2
--------------------------------------------------- ---------- ----------
Registered Company Number: 2304195
Consolidated Cash Flow Statement
Year ended 31 December 2014 2014 2013
GBPm GBPm
Cash flows from operating activities
Profit for the year 49.8 41.1
Adjustment for taxation 14.8 (2.2)
Adjustment for net financing expense 32.6 38.3
Adjustment for dividend received (4.2) (0.3)
93.0 76.9
Depreciation and amortization 27.0 19.8
Share based payments 1.5 1.6
(Profit) / Loss on sale of businesses and property (3.2) 0.6
Impairment of property, plant and equipment - 0.9
Impairment of assets held for sale 1.0 1.0
Reversal of impairment of assets held for sale (1.0) (0.6)
Changes in inventories (60.1) (1.0)
Changes in trade and other receivables (15.1) (6.2)
Changes in trade and other payables 83.5 56.9
Changes in retirement benefit obligations (2.9) (0.2)
Changes in provisions 0.2 (0.1)
Movement in contract hire vehicle balances (17.5) (14.3)
------------------------------------------------------- -------- --------
Cash generated from operations 106.4 135.3
Taxation paid (8.3) (0.9)
Interest received 0.5 4.3
Interest paid (29.5) (34.0)
------------------------------------------------------- -------- --------
Net cash from operating activities 69.1 104.7
------------------------------------------------------- -------- --------
Cash flows from investing activities
Dividends received 4.2 0.3
Proceeds from sale of businesses 1.1 9.0
Purchase of property, plant, equipment and intangible
assets (96.7) (68.1)
Proceeds from sale of property, plant and equipment 65.6 53.4
Acquisition of investments - (10.0)
------------------------------------------------------- -------- --------
Net cash used in investing activities (25.8) (15.4)
------------------------------------------------------- -------- --------
Cash flows from financing activities
Proceeds on issue of shares (net of costs paid) 0.4 -
Dividends paid to shareholders (8.6) (2.8)
Own shares (acquired) / issued under share schemes (3.7) 1.2
Repayment of bank loans 1.6 (272.6)
Proceeds from issue of bond and loans - 199.7
Payment of transaction costs related to bonds
and loans - (11.9)
Distribution from pension partnership to pension
scheme - (2.5)
Net cash outflow from financing activities (10.3) (88.9)
------------------------------------------------------- -------- --------
Net increase in cash and cash equivalents 33.0 0.4
Cash and cash equivalents at 1 January 58.4 58.0
Cash and cash equivalents at 31 December 91.4 58.4
------------------------------------------------------- -------- --------
Reconciliation of net cash flow to movement in
net debt
2014 2013
GBPm GBPm
------------------------------------------------------- -------- --------
Net increase in cash and cash equivalents 33.0 0.4
Repayment of bank loans (1.6) 272.6
Proceeds from issue of bond and loans (net of
directly attributable transaction costs) - (195.8)
Non-cash movements (0.6) (0.4)
------------------------------------------------------- -------- --------
Decrease in net debt in the year 30.8 76.8
Opening net debt (139.6) (216.4)
------------------------------------------------------- -------- --------
Closing net debt (108.8) (139.6)
------------------------------------------------------- -------- --------
NOTE: The reconciliation of net cash flow to movement in net
debt is not a primary statement and does not form part of the
consolidated
cash flow statement but forms part of the notes to the financial
statements.
Notes to the Financial Statements
1. Basis of preparation
The Group summary financial statements have been prepared and approved
by the directors in accordance with international accounting standards,
being the International Financial Reporting Standards as adopted by the
EU ("adopted IFRSs").
The summary financial statements are presented in millions of UK pounds,
rounded to the nearest GBP0.1m. They have been prepared under the historical
cost convention except for certain financial instruments which are stated
at their fair value. In addition, non-current assets classified as held
for sale are measured at the lower of their carrying amount and fair
value less costs to sell.
The summary financial statements have been prepared on a going concern
basis. In determining the appropriate basis of preparation of the financial
statements, the directors are required to consider whether the Group
can continue in operational existence for the foreseeable future.
The directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Thus they continue to adopt the going concern basis of accounting in
preparing the annual financial statement.
The preparation of summary financial statements in conformity with adopted
IFRSs requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the summary financial
statements and the reported amounts of revenues and expenses during the
reporting year. Although these estimates are based on management's best
knowledge of the amount, events or actions, actual results ultimately
may differ from those estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
Non-underlying income and expenses are items that have non-trading attributes
due to their size, nature or incidence. The directors consider that these
items should be disclosed separately to enable a full understanding of
the Group's results.
2. Non-underlying items
2014 2013
GBPm GBPm
-------------------------------------- --------------- ------------- ----------- -----------
Within operating expenses:
Impairment of property, plant and equipment - (0.9)
Impairment of assets held
for sale (1.0) (1.0)
Reversal of impairment on assets classified as
held for sale 1.0 0.6
VAT assessment refunds - 2.0
------------------------------------------------------- ------------------ ----------- -----------
- 0.7
--------------- --------------------------------------------------------- ----------- -----------
Within other income - gains / (losses) on the sale of businesses
and property:
Gains / (losses) on the sale
of businesses 0.1 (1.1)
Gains on the sale of property 3.1 0.5
---------------------------------------------------------------------- --- ----------- -----------
3.2 (0.6)
--------------- --------------------------------------------------------- ----------- -----------
Within other income - dividends
received:
-------------------------------------- --------------- ------------- ----------- -----------
Dividends received 3.1 -
-------------------------------------- --------------- ------------- ----------- -----------
Within finance expense:
Net interest on pension scheme obligations (1.9) (1.3)
Refinancing fees and costs - (8.0)
---------------------------------------------------------------------- --- ----------- -----------
(1.9) (9.3)
--------------- --------------------------------------------------------- ----------- -----------
Within finance income:
Interest receivable - 0.9
Interest on VAT refunds - 3.0
---------------------------------------------------------------------- --- ----------- -----------
- 3.9
--------------- --------------------------------------------------------- ----------- -----------
Total non-underlying items
(before tax) 4.4 (5.3)
---------------------------------------------------------------------- --- ----------- -----------
Total non-underlying items attributable
to:
Equity shareholders of the
parent 4.4 (7.2)
Non-controlling interests (pension
related) - 1.9
------------------------------------------------------- ------------------ ----------- -----------
4.4 (5.3)
--------------- --------------------------------------------------------- ----------- -----------
The following amounts have been presented as non-underlying items in
the financial statements:
Group tangible fixed assets and assets held for sale have been reviewed
for possible impairments in the light of economic conditions. As a result
of this review there was an impairment charge against assets held for
sale tangible fixed assets of GBP1.0m during the year (2013: GBP1.0m).
In addition, a reversal of previous impairment charges of GBP1.0m was
made for assets held for sale where anticipated proceeds less costs to
sell have increased over their impaired carrying values (2013: GBP0.6m).
In the previous period there was also an impairment charge recognised
against tangible fixed assets of GBP0.9m.
The net financing return on pension obligations in respect of the defined
benefit schemes closed to future accrual is shown as a non-underlying
item due to the volatility of this amount. A net expense of GBP1.9m has
been recognised during the year (2013: GBP1.3m of which GBP1.9m was attributable
to the non-controlling interests).
Other income, being the profit on disposal of businesses and property,
comprises a GBP3.1m profit on sale of properties (2013: GBP0.5m) and
a GBP0.1m profit on the disposal of motor vehicle dealerships (2013:
loss GBP1.1m).
During the year the Group received dividend income from its investment
in King Arthur Holdings S.a.r.L of GBP4.2m. Of this GBP3.1m was deemed
to be non-underlying in nature as the income related to a distribution
of profits the company made on disposal of some of it's investment properties
and cash released following it's refinancing, rather than that earned
from the rental of those properties.
During the previous year, upon the successful completion of the refinancing
of the Group in May 2013, a net loss of GBP8.0m was recorded which comprised
of refinancing related costs.
A VAT refund of GBP2.0m, net of costs, was received in the previous year
in respect of VAT overpaid on demonstrator vehicles over the period from
1973 to 1996. Associated interest received of GBP3.0m during the previous
year is disclosed within finance income.
The Group received a refund of overcharged interest of GBP0.9m during
the previous year. This was in respect of a business acquired in 2006
and the overcharge related to a period prior to that acquisition.
3. Earnings per share
2014 2014 2013 2013
Earnings Earnings Earnings Earnings
per share Total per share Total
pence GBPm pence GBPm
----------------------------------------- ----------- ---------- ----------- --------------
Basic earnings per share 3.5 49.8 2.8 39.2
Adjusting items:
Non-underlying items attributable
to the parent (see note 2) (0.4) (4.4) 0.5 7.2
Tax effect of non-underlying
items - (0.5) (1.0) (13.6)
----------------------------------------- ----------- ---------- ----------- --------------
Underlying earnings per share
(Non GAAP measure) 3.1 44.9 2.3 32.8
----------------------------------------- ----------- ---------- ----------- --------------
Diluted earnings per share 3.4 49.8 2.7 39.2
Diluted earnings per share
- underlying (Non GAAP measure) 3.1 44.9 2.2 32.8
----------------------------------------- ----------- ---------- ----------- --------------
The calculation of basic, adjusted and diluted earnings per share is
based on the following number of shares in issue (millions):
2014 2013
Number Number
------------------------------------- --------------- ---------- ----------- --------------
Weighted average number of
ordinary shares in issue 1,428.6 1,421.0
Weighted average number of dilutive shares
under option 27.0 55.6
----------------------------------------------------------- ---------- ----------- --------------
Weighted average number of shares in
issue taking account of applicable outstanding
share options 1,455.6 1,476.6
----------------------------------------------------------- ---------- ----------- --------------
Non-dilutive shares under
option 15.7 25.5
----------------------------------------- ---------------- ---------- ----------- --------------
The directors consider that the underlying earnings per share figure
provides a better measure of comparative performance.
4. Finance expense
2014 2013
Recognised in profit and loss GBPm GBPm
------------------------------------------ ----------- --------- --------- --------------
Interest payable on bank borrowings,
bond and loan notes 15.0 16.2
Refinancing fees and costs (non-underlying) - 8.0
Vehicle stocking plan interest 14.6 15.2
Interest payable on finance
leases 0.1 0.1
Net interest on pension scheme obligations
(non-underlying) 1.9 1.3
Less : interest capitalised (0.1) -
------------------------------------------ ----------- --------- --------- --------------
Total interest expense in respect of
financial liabilities held at amortised
cost 31.5 40.8
Unwinding of discounts in contract hire
residual values 1.6 1.8
------------------------------------------------------- --------- --------- --------------
Total finance expense 33.1 42.6
------------------------------------------------------- --- --------- --------- --------------
5. Finance income 2014 2013
Recognised in profit and loss GBPm GBPm
------------------------------------------ ----------- --------- --------- --------------
Interest receivable on bank
deposits 0.5 0.4
Other interest receivable (non-underlying) - 0.9
Interest on VAT refunds (non-underlying) - 3.0
Total finance income 0.5 4.3
------------------------------------------------------- --- --------- --------- --------------
6. Net Debt 2014 2013
GBPm GBPm
------------------------------------------ ----------- --------- --------- --------------
Cash and cash equivalents 91.4 58.4
Non-current interest bearing
loans and borrowings (200.2) (198.0)
(108.8) (139.6)
----------------------------------------------------------- --------- --------- --------------
7. Movement in contract hire 2014 2013
vehicle balances GBPm GBPm
------------------------------------------ ----------- --------- --------- --------------
Depreciation 23.2 21.1
Changes in trade and other payables and
deferred income 8.0 6.1
Purchases of contract hire
vehicles (47.1) (39.7)
Unwinding of discounts in contract hire
residual values (1.6) (1.8)
------------------------------------------------------------ --------- --------- --------------
(17.5) (14.3)
----------------------------------------------------------- --------- --------- --------------
8. Pension Funds
The net liability for defined benefit obligations has increased from
GBP43.4m at 31 December 2013 to GBP66.4m at 31 December 2014. The increase
of GBP23.0m comprises contributions of GBP2.9m, net expense recognised
in the income statement of GBP1.9m and a net actuarial loss of GBP24.0m.
The net actuarial loss has arisen due in part to changes in the principal
assumptions used in the valuation of the scheme's assets and liabilities
and also the change in value of the assets held over the year. The main
assumptions subject to change are the discount rate of 3.60% (2013: 4.50%),
inflation rate (RPI) of 3.00% (2013: 3.50%) and inflation rate (CPI)
of 2.00% (2013: 2.50%).
9. Annual report
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2014 or 2013 but is
derived from those accounts. Statutory accounts for 2013 have been delivered
to the registrar of companies, and those for 2014 will be delivered in
due course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
Full financial statements for the year ended 31 December 2014 are published
on the Group's website at www.pendragonplc.com and will be posted to
shareholders and after adoption at the Annual General Meeting on 8 May
2015 they will be delivered to the registrar.
Copies of this announcement are available from Pendragon PLC, Loxley
House, 2 Oakwood Court, Little Oak Drive, Annesley, Nottinghamshire,
NG15 0DR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TFMLTMBIBBJA
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