TIDMVTU
RNS Number : 2820M
Vertu Motors PLC
12 October 2016
12 October 2016
Vertu Motors plc ("Vertu", "Group")
Unaudited interim results for the six months ended 31 August
2016
Growth strategy delivers record half year revenues and
profits
Full year results anticipated to be in line with market
expectations
Vertu Motors plc, the automotive retailer with a network of 129
sales and aftersales outlets across the UK, announces its interim
results for the six months ended 31 August 2016.
Financial Highlights
-- Revenues increased by 17.7% to GBP1,454.6m (2015 H1 : GBP1,236.1m)
-- Record profit before tax up 14.0% to GBP18.7m (2015 H1 : GBP16.4m)
-- Adjusted(1) profit before tax up 14.7% to GBP19.5m (2015 H1: GBP17.0m)
-- Period end net cash of GBP12.9m (2015 H1 : GBP32.1m)
-- Cash generated from operations of GBP26.4m (2015 H1 : GBP37.6m)
-- Earnings per share of 3.87p (2015 H1 : 3.82p)
-- Raised GBP35m in March 2016 to finance further acquisitions,
with the majority of funds deployed
-- Interim dividend up 11.1% to 0.50p per share (2015 H1 : 0.45p
per share) to be paid in January 2017
Operational Highlights
-- Record Group trading performance driven by improvement in
recently acquired businesses, a strong used car performance and
growth in higher margin service area
-- Growth strategy progressed with greater premium mix,
including additions of Mercedes-Benz and Toyota franchises to
Group
-- Group gross profit margins increased from 10.6% to 11.1%
-- Like-for-like service revenues up 6.6%: long-term growth trend continues
-- Group service gross profit margins strengthened from 76.9% to 77.9%
-- Like-for-like used vehicle volumes increased 8.5%: the 10(th)
consecutive half year period of growth
-- Like-for-like used car margins strengthened from 10.0% to 10.7%
-- Total car and van volumes sold up 10.7%
-- Softening of new private retail market: Group like-for-like new car retail volumes down 4.2%
-- Strong performance in new commercial van sales with
strengthening fleet and commercial margins
Outlook Highlights
-- Robust September trading performance ahead of last year on a like-for-like basis
-- Like-for-like new car retail volumes in line with SMMT data: broadly flat year on year
-- Recent acquisitions contributing to profit growth
6 months ended 31 August 2016
Growth Rates
Total Like-for-Like SMMT UK
Registrations
Group Revenues 17.7% 4.7%
Service Revenues 26.6% 6.6%
Volumes :
Used retail vehicles 17.5% 8.5%
New retail vehicles 8.3% (4.2%) (0.8%)
Motability vehicles 1.3% (3.0%) (0.9%)
Fleet new cars (4.5%) (10.6%) 6.1%
Commercial new
vehicles 13.4% 11.6% 3.9%
Commenting on the results, Robert Forrester, Chief Executive,
said:
"In the first six months of trading, our proven growth strategy
has delivered a record set of results with increased revenues,
gross margins and profits. We have continued to successfully grow
the business, through both organic growth and the acquisition and
integration of premium franchises, as we seek to build a balanced
portfolio. Consistent delivery of an outstanding customer
experience continues to be a strong driver of the growth of
dealership performances across the Group. This is demonstrated by
the growing number of customers retained into the Group's
aftersales businesses.
"The outlook for the remainder of the year remains positive,
underpinned by low interest rates and record high levels of
employment in the UK economy. The Group's trading performance in
the key September plate change month was strong. The Board
anticipates that the Group's full year results will be in line with
market expectations."
For further information please contact:
Vertu Motors plc
Robert Forrester, CEO Tel: 0191 491 2111
Michael Sherwin, CFO Tel: 0191 491 2112
Liberum
Peter Tracey Tel: 020 3100 2000
Richard Crawley
Jamie Richards
Zeus Capital Limited
Adam Pollock Tel: 020 7533 7727
Camarco
Billy Clegg Tel: 020 3757 4980
Georgia Mann
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
INTRODUCTION
During the six months ended 31 August 2016 ("the Period") the
Group has continued to grow revenues, gross margins and profits.
Used vehicle sales and vehicle servicing channels have seen
excellent growth and this has underpinned the delivery of record
revenues and profits for the Group. Used vehicles and aftersales
together represent 71.8% of Group gross profit (2015 H1:
70.8%).
The new car market stands at, or near to, record levels. After
four years of sustained growth, the UK private new retail market
softened during the Period recording slight declines in
registrations from April 2016 onwards. There was a reduction of
0.8%(2) for the Period.
The Group has performed strongly by pursuing the three elements
of its strategy to deliver earnings growth:
-- acquiring further businesses, both currently profitable and
turnaround opportunities representing both existing manufacturer
partners and those which are new to the Group including
Mercedes-Benz and Toyota;
-- improving the profit contribution from the significant number
of businesses acquired or opened in recent years; and
-- continued review of the Group's portfolio in terms of
franchise representation and appropriate allocation of capital to
identify future opportunities to make changes to maximise return on
investment.
The Group undertook a GBP35m (gross) equity placing in March
2016 to finance further acquisitions and the majority of these
funds were deployed during the Period. The Group has a very strong
balance sheet with net cash.
The Group has maintained strict disciplines over working
capital, resulting in a strong conversion of profits into cash.
GBP26.4m of cash generated from operations compared to operating
profits of GBP19.9m, leading to GBP12.9m of net cash in the Group's
balance sheet as at 31 August 2016. In addition to new
acquisitions, the Group has continued to invest heavily in new
dealership development projects, expansion of the capacity of
existing dealerships and other dealership refurbishment projects to
reflect latest manufacturer standards. The Group spent GBP7.3m on
these projects during the Period and will continue to invest at a
similar rate over the next 18 months. Once this period is over the
Board expects a substantial reduction in ongoing capital
expenditure and a consequent increase in free cashflow.
An interim dividend of 0.50 pence per share, representing an
increase of 11.1%, (2015 : 0.45p) will be paid on 20 January 2017.
The ex-dividend date will be 22 December 2016 and the associated
record date 23 December 2016.
FINANCIAL REVIEW
Revenues in the Period grew by 17.7% (GBP218.5m) to GBP1,454.6m
(2015 H1 : GBP1,236.1m). Acquisitions in the Period accounted for
GBP67.3m of growth and those businesses acquired in the previous
year contributed further revenue growth of GBP101.0m. Core Group
revenues grew by 4.6% (GBP55.2m), reflecting growth in every major
vehicle sales and aftersales channel. Closed or sold businesses
accounted for a decline in revenue of GBP5.0m. Overall gross
margins increased to 11.1% (2015 H1 : 10.6%) driven by stronger
margins in vehicle servicing and used vehicle sales. Operating
profit grew by 17.8% to GBP19.9m, with adjusted operating margins
stable at 1.4% (2015 H1 : 1.4%).
The Group's finance charges have increased by GBP0.7m to GBP1.2m
(2015 H1 : GBP0.5m) due to higher vehicle stocking interest. This
reflected higher pipeline stocks during the Period as new vehicle
sales slowed, coupled with the increase in the number of premium
franchise operations in the Group which operate structurally with
higher vehicle stocking costs.
Following the further reduction in the UK Corporation Tax rate
to 20%, the Group's effective tax rate for the Period was 20% (2015
H1 : 20.5%).
Earnings per share was 3.87p (2015 H1: 3.82p) taking account of
the higher number of shares in issue following the equity raise
effective on 31 March 2016.
During the Period, the Group has maintained its focus on the
tight control of working capital which has resulted in a working
capital inflow of GBP2.1m during the Period, driven mainly by the
growth in the sales of service plans and in-house warranty
products.
The Group, in common with all sector participants, is in the
process of a major programme of capital investment; developing new
dealerships, increasing capacity in existing dealerships and
responding to Manufacturer Partner led refurbishments of the
existing dealership portfolio. In particular, substantial sums are
being invested in increasing capacity and enhancing the retail
environment of the Jaguar Land Rover dealerships with the
implementation of the "Arch" concept.
The spend on this programme during the Period, along with the
anticipated spend in future periods, is set out below:
Actual Estimate
---------------------- -------------------------------
Capital Expenditure FY H1 FY FY FY
Trends 2016 FY2017 2017 2018 2019
GBPm GBPm GBPm GBPm GBPm
New dealership development
projects
* Purchase of property 6.3 0.7 2.1 - -
* New dealership build 1.8 4.5 10.6 7.1 4.5
Existing dealership
capacity increases 4.5 1.6 7.6 16.7 5.1
Manufacturer-led
refurbishment projects 3.2 1.2 3.9 3.2 1.9
IT and other recruitment 4.9 2.2 3.8 4.0 4.0
--------- ----------- --------- --------- ---------
20.7 10.2 28.0 31.0 15.5
--------- ----------- --------- --------- ---------
The Board is confident that the significant decline in future
capital spend anticipated in FY2019 will drive enhanced free cash
flow from the business from that point in time.
The Group operates two defined benefit pension schemes, both of
which are closed to new entrants and to future accrual. The
reduction in bond yields in the UK over the second quarter of the
Period has caused an increase in the assessment of the scheme
liabilities and a consequent reduction in the net pension scheme
surplus for the two schemes combined to GBP1.4m (February 2016 :
GBP6.1m). There is no current expectation that these fluctuations
will impact upon the Group's cash contributions to the schemes,
which currently amount to GBP0.4m per annum.
CURRENT TRADING AND OUTLOOK
On 23 June 2016, the UK voted to exit the EU. The result of the
referendum has not materially impacted consumer confidence and the
Group has not experienced any significant change in consumer
behaviour. We remain in a low interest rate environment with record
high levels of employment, both of which are providing a robust
foundation for our market.
The market for aftersales, the Group's highest margin activity,
remains strong as the vehicle parc has continued to grow following
several years of strong new vehicle markets. This, in conjunction
with the Group's successful customer retention strategies, provides
the Board with confidence regarding the continuation of a strong
aftersales performance.
The used vehicle market remains buoyant, underpinned by stable
residual values. The Group continues to perform strongly in used
vehicles, and the focus on the continuous development of the
Group's used vehicle marketing provides the Board with confidence
regarding the sustainability of performance in this channel.
The latest SMMT forecast for 2016 UK new vehicle registrations
stands at 2.64 million (2015 : 2.63 million) and the Board sees no
reason to disagree with the underlying market stability implied by
this forecast. The market is starting to see vehicle price
increases reflecting the manufacturers' reaction to declining
Sterling exchange rates against all major currencies. Lower margin
channels for manufacturers and retailers alike, such as Fleet car
supply and Motability, are likely to see more impact than higher
margin retail channels. There are diverging economic forecasts with
regards to Sterling's currency outlook and this leads to
uncertainty over future manufacturer volume strategies and pricing.
The Board shares the outlook on the new car market given by the
SMMT which anticipates a fall in 2017 registrations of around 6%.
This would equate to a historically robust new car market of around
2.5 million units.
September is a key month for the Group's profitability in the
second half of the financial year, being a registration plate
change month. Profit in the month was ahead of prior year levels on
a like-for-like basis and recent acquisitions further bolstered the
Group result. The Group's service and used car performance
continued to demonstrate strong underlying growth trends in
September. Like-for-like new car private volumes for the Group were
down 1.7% year on year, in line with the SMMT registration
data.
The Board continues to examine further acquisition and
development opportunities.
The Board anticipates that the Group's full year results will be
in line with market expectations.
OPERATING REVIEW
Colleague and Customer Satisfaction
The Mission Statement of the Group is to deliver an outstanding
customer motoring experience through honesty and trust.
The Board believe that in a retail environment, it is vital to
have a thriving and engaged workforce to deliver this objective,
together with the consequent financial success that goes alongside
it. Repeat vehicle sales and successive aftersales visits are a
major driver of financial success in operating automotive retail
dealerships and these derive from loyal customers. It is the
Group's colleagues on the ground who deliver this.
In order to assess the engagement levels of colleagues, in July
2016 the Group undertook its fifth annual colleague satisfaction
survey across the Group. 75% of colleagues in the Core Group
completed the voluntary survey and the results reflect the strong
Group culture that has been developed around the Mission Statement,
the Group Vision and Values. 97% of colleagues knew the Group
Vision and Values and over 90% believed management acted in
accordance with those Values. This strong values-based approach
underpins the delivery of outstanding customer experience with 91%
of colleagues feeling they could recommend the Group to their
friends and 87% were confident the Group serves customers better
than its rivals. These are strong scores, despite the Group's fast
growth rate since incorporation in 2006, and point to the Group's
successful execution of its buy and build strategy.
The Group's customer experience indicators continue to show that
the Group delivers above industry average experience. Used car
customer experience is measured by JudgeService and in the Period,
95% of customers responded that they would recommend their friends
and family to the Group.
Based on the measures of customer experience applied by the
Group's manufacturer partners, 65% of sales outlets and 56% of
service outlets performed in the Period above national average
levels. This area continues to be a major focus of Group
strategies, including investment in dealership environments,
colleague training and development and ensuring on-line channels
are designed to maximise customer experience.
Growth Strategy and Portfolio Development
The Group has continued to grow and strengthen the business,
with the addition of nine sales outlets during the Period. The
Group now operates 129 sales outlets at 107 locations across the
United Kingdom.
The Group has continued to acquire new outlets and to develop
both existing and new property assets to enhance and expand the
capacity of the ongoing business. The growth has been primarily in
Premium franchises as the Group seeks to build a balanced portfolio
on the foundation of a scaled volume franchise portfolio.
On 1 March 2016, the Group purchased Greenoaks (Maidenhead)
Limited which operates three Mercedes-Benz dealerships, for
GBP21.7m (alongside the settlement of GBP9m of shareholder loans).
These dealerships in Ascot, Reading and Slough have historically
underperformed. The Board is pleased with the progress made to date
to integrate and improve the performance of the businesses and they
have traded in line with the performance targets the Board put in
place at the time of the acquisition. For the year ended 31
December 2015 the business achieved revenues of GBP88m and
adjusted(3) profit before tax of GBP1.2m
In the Period the Group has completed three further transactions
totalling GBP22.6m which were anticipated when the Group undertook
the GBP35m Placing (gross) in March 2016. These transactions
represent a swift deployment of a substantial portion of the
capital raised.
On 3 May 2016, the Group acquired the business and assets of
Leeds Jaguar from Inchcape for a consideration of GBP0.6m,
including GBP0.5m of goodwill. For the year ended 31 December 2015,
this business was at breakeven. The Jaguar franchise is currently
witnessing a significant turnaround in profitability on the back of
new products such as the excellent Jaguar F-PACE. This business,
together with the existing Leeds Land Rover business, will shortly
be relocated to a state-of-the-art freehold dealership in the
centre of Leeds. This property has undergone major redevelopment to
house these two businesses and to meet the latest manufacturer
standards.
On 1 June 2016, the Group acquired the entire issued share
capital of Gordon Lamb Group Limited, a group which operated five
sales outlets in Derbyshire. This freehold rich acquisition
introduced the Toyota franchise to the Group and added a sixth Land
Rover dealership, together with two Skoda and a single Nissan sales
outlet to the portfolio. Estimated consideration amounted to
GBP18.8m, including a GBP8.3m payment for goodwill. For the year
ended 31 December 2015, Gordon Lamb Limited had consolidated
revenue of GBP85.8m(4) and adjusted(3) profit before tax of
GBP2.7m. The integration of these businesses has gone well. Derby
Skoda is currently in a short-term leasehold property outside of
the city and it is planned to relocate this outlet to an existing
Group location in the centre of Derby in the first quarter of 2017.
This will significantly enhance the trading potential of the
business and reduce ongoing operating costs.
On 23 June 2016, the Group acquired the freehold and long
leasehold interests from Honda in two Honda dealerships operated by
the Group in Nottingham and Derby. Consideration amounted to
GBP3.2m.
In August 2016 the Group opened the Morpeth Honda outlet
alongside an existing Ford outlet. This is the Group's 13(th) Honda
outlet consolidating the Group's position as Honda's largest
partner in Europe, and completing full coverage of the North East
market area from Tweed to the Tees.
A further landmark freehold development is nearing completion,
the building of a new Nissan dealership in the centre of Glasgow.
The Group was awarded the whole of Glasgow as a market area for
Nissan from 1 April 2015 and the completion of this dealership will
see the relocation of the business from a north Glasgow temporary
site. The Group will then have excellent dealership representation
both north and south of the Clyde.
The Group's largest franchise partner is Ford with 22 outlets.
Investment continues to be made in the "Ford Store" concept which
sell the full range of Ford product. The Group is now reaping the
rewards of the investment made in its Birmingham Ford Store and
Orpington Ford Store operations. The Group's Gloucester Ford
dealership is currently undergoing redevelopment into a Ford Store
and work will shortly commence on a significant Ford Store
development at Bolton. Further investment has been made in
expanding the aftersales capacity of the Ford division with new
offsite aftersales facilities now in place at West Bromwich,
Shirley and Orpington so the Group can maximise the growing higher
margin aftersales opportunity.
The Group operates six Volkswagen dealerships and the final
investment in new franchise standards is close to completion with
the redevelopment of Nottingham North. Furthermore, Hereford Audi
has been undergoing substantial redevelopment and the business has
been operating from a temporary location throughout the Period. The
new facility will commence operations by Christmas and is expected
to augment operational.
The Group continues to review the portfolio of businesses
operated to ensure that long term returns are maximised and capital
allocation disciplines maintained. On 1 October 2016, the Group
disposed of its Fiat Group dealership in Newcastle which comprised
three sales outlets (Fiat, Jeep and Alfa Romeo). The disposal to
Richard Hardie Limited, is part of their creation of a Fiat Group
market area in the North East. Additionally, Fiat sales will cease
at the Group's sales outlets in Cheltenham and Derby at the end of
December 2016. This will leave the Group with a single Fiat and
Alfa Romeo sales outlet in Worcester and no Jeep
representation.
OPERATIONAL PERFORMANCE
Revenue and Margins
Six Months ended Gross Gross Gross
31 August 2016 Revenue Revenue Margin Margin Margin
GBP'm Mix % GBP'm Mix % %
Aftersales(5) 113.4 7.8 63.4 39.4 45.7
Used Consolidated 525.6 36.1 52.3 32.4 9.9
New 483.9 33.3 35.0 21.7 7.2
Fleet & Commercial 331.7 22.8 10.4 6.5 3.1
-------- -------- -------- -------- --------
Total Department 1,454.6 100.0 161.1 100.0 11.1
-------- -------- -------- -------- --------
Six Months ended Gross Gross Gross
31 August 2015 Revenue Revenue Margin Margin Margin
GBP'm Mix % GBP'm Mix % %
Aftersales(5) 93.8 7.6 50.7 38.8 44.4
Used Consolidated 426.5 34.5 42.0 32.1 9.8
New 413.1 33.4 30.3 23.1 7.3
Fleet & Commercial 302.7 24.5 7.9 6.0 2.6
-------- -------- -------- -------- --------
Total Department 1,236.1 100.0 130.9 100.0 10.6
-------- -------- -------- -------- --------
Aftersales
The Group's higher margin aftersales operations, which account
for an increasing proportion of the Group's revenues (7.8% of
revenues (2015 H1 : 7.6%)) earned 39.4% of the Group's gross profit
in the Period (2015 H1 : 38.8%).
Total aftersales gross profit grew by 25.0% in the Period, an
increase of 6.8% on a like-for-like basis. A growing UK vehicle
parc and the Group's retention initiatives and capabilities,
particularly the sale of service plans to both new and used car
customers, have continued to contribute to these favourable
profitability trends. The Group now has 97,427 customers paying
monthly for their service and MOT through the Group's own service
plan products (2015 H1 : 80,902). In the vital area of vehicle
servicing, total service revenues grew by 26.6% and like-for-like
service revenues grew by 6.6%. Like-for-like service margins also
increased from 77.1% to 78.3% as the Group achieved higher levels
of workshop efficiency as volumes increased. This continued
progress demonstrates the success of the Group's constant focus on
customer retention, loyalty and experience thus improving the
performance of this key engine of the Group's profit delivery.
Vehicle Sales
Vehicle unit sales analysis
2016 2016 2016 2015 Total Like-for-Like
Core Acquired(6) Total Total(7) % Variance % Variance
Used Retail 38,096 3,876 41,972 35,708 17.5% 8.5%
New Retail 19,922 2,903 22,825 21,079 8.3% (4.2%)
New Motability 5,786 303 6,089 6,010 1.3% (3.0%)
Total New Retail
& Motability 25,708 3,206 28,914 27,089 6.7% (4.0%)
------- ------------- ------- ---------- ------------ --------------
Fleet Car 9,145 645 9,790 10,249 (4.5%) (10.6%)
Commercial 8,819 212 9,031 7,961 13.4% 11.6%
Fleet and Commercial 17,964 857 18,821 18,210 3.4% (0.9%)
------- ------------- ------- ---------- ------------ --------------
Total Fleet
& New Retail 43,672 4,063 47,735 45,299 5.4% (2.7%)
------- ------------- ------- ---------- ------------ --------------
Total Units
Sold 81,768 7,939 89,707 81,007 10.7% 2.2%
------- ------------- ------- ---------- ------------ --------------
Used Vehicles
The Group has continued to grow volumes, market share and
profitability in its key used vehicle operations, delivering total
volume growth of 17.5% and like-for-like volume growth of 8.5% in
the Period. This is the Group's 10th consecutive half year of
like-for-like volume growth in used vehicles, demonstrating the
consistency of performance in this vital channel, which is
considered a core strength of the Group. The used vehicle volume
growth was driven in part by the Group's increasing focus on
innovative and effective marketing, particularly via the promotion
of the Group's Bristolstreet.co.uk and Macklinmotors.co.uk
websites, through increasing marketing spend directly on-line and
through TV advertising campaigns. Continued innovation in marketing
is a particular focus following the appointment of Liz Cope as
Chief Marketing Officer in the Period.
In addition to substantial volume growth, the Group delivered
further used vehicle margin improvements. Like-for-like gross
profit per unit grew by 6.3%, helping drive an increase of 15.1% in
like-for-like used vehicle gross profits. Used vehicles are
delivering an increasing proportion of Group revenues and gross
profits. Like-for-like gross margins strengthened from 10.0% to
10.7% in the Period. This improvement reflected strong pricing
disciplines, a structured sales process underpinned by training and
underlying balance of supply and demand in the wider used vehicle
wholesale markets. Total used vehicle gross margins were up from
9.8% to 9.9% with the lower rate of growth reflecting the lower
inherent gross profit margin percentages in Premium franchises.
These businesses are an increasingly important component of the
Group's portfolio following the last few years of acquisition
growth.
New Cars
Total new car revenues grew by 17.1% and new car gross profit
grew by 15.8%. This growth was driven by the acquisitions in the
Period and last year with like-for-like revenues stable. Strong
disciplines ensured that gross margins were stable in the Period.
UK private new vehicle registrations during the Period fell by 0.8%
and the Group's like-for-like new vehicle volumes declined by 4.2%.
Increasingly over the Period it became evident that, as a result of
the softening in the new car market, the market was becoming
characterised by higher levels of self-registration by retailers
with these vehicles registered as "retail" as measured by the SMMT.
Retailers are financially motivated to self-register new vehicles
in order to either achieve volume targets set by Manufacturers or
to take advantage of bulk purchasing deals on offer. These cars are
then sold into the retail market as used cars. In such a Period, UK
private registrations tend to grow faster than the Group's new
retail sales volumes.
Fleet & Commercial
The Group grew like-for-like gross profit from its combined
fleet and commercial operations by 13.2% in the Period.
Like-for-like gross profit per unit rose from GBP423 to GBP491.
Consequently, overall profitability in the Fleet and Commercial
channel rose GBP1m in the Period, which is clearly an excellent
result.
Overall UK registrations in the Fleet car channel rose 6.1%
whilst Group like-for-like registrations fell 10.6%. This market
share decline reflected fewer deliveries in the low margin supply
of vehicles to daily rental companies. This trend reflected the
increasing management of used vehicle residual values by the
Group's manufacturer partners through reducing overall supply
volumes in this low margin channel including seeking to extend
daily rental replacement cycles. These measures aid the balancing
of used car supply and demand in the UK market. Overall these
trends augmented Group margins in the Fleet car channel.
The Group's total commercial vehicle (light van) sales volumes
have grown by 13.4% and by 11.6% on a like-for-like basis. This
strength reflects the Group's strong market position in new van
supply and the excellent economic conditions in the UK in the
Period for business. During the Period, the UK light commercial
vehicle registrations grew by 3.9% hence the Group's market share
has once again risen. The Group has now seen seven half year
periods of like-for-like volume growth in the new van channel.
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the six months ended 31 August 2016
Six months Six months
ended ended Year
ended
31 August 31 August 29 February
2016 2015 2016
Note GBP'000 GBP'000 GBP'000
Revenue
Continuing operations 1,387,349 1,236,083 2,423,279
Acquisitions 67,268 - -
------------------- ------------ -------------------
1,454,617 1,236,083 2,423,279
Cost of sales
Continuing operations (1,234,812) (1,105,195) (2,160,000)
Acquisitions (58,713) - -
------------------- ------------ -------------------
(1,293,525) (1,105,195) (2,160,000)
Gross profit
Continuing operations 152,537 130,888 263,279
Acquisitions 8,555 - -
------------------- ------------ -------------------
161,092 130,888 263,279
Operating expenses
Continuing operations (132,067) (113,391) (234,631)
Acquisitions (8,347) - -
------------------- ------------ -------------------
(140,414) (113,391) (234,631)
Operating profit before
amortisation and share
based payments charge
Continuing operations 20,470 17,497 28,648
Acquisitions 208 - -
------------------- ------------ -------------------
20,678 17,497 28,648
Amortisation of intangible
assets (304) (273) (558)
Share based payments charge (483) (367) (911)
==================================== ===== =================== ============ ===================
Operating profit 19,891 16,857 27,179
Finance income 4 141 74 173
Finance costs 4 (1,304) (545) (1,390)
Profit before tax, amortisation
and share based payments
charge 19,515 17,026 27,431
Amortisation of intangible
assets (304) (273) (558)
Share based payments charge (483) (367) (911)
Profit before tax 18,728 16,386 25,962
Taxation 5 (3,741) (3,356) (5,282)
------------------- ------------ -------------------
Profit for the period attributable
to equity holders 14,987 13,030 20,680
===================
Basic earnings per share
(p) 6 3.87 3.82 6.06
Diluted earnings per share
(p) 6 3.80 3.74 5.92
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
For the six months ended 31 August 2016
Six months Six months
ended ended Year
ended
31 August 31 August 29 February
2016 2015 2016
Note GBP'000 GBP'000 GBP'000
Profit for the period 14,987 13,030 20,680
Other comprehensive
(expense)/income
Items that will not be reclassified
to profit or loss:
Actuarial (loss)/gain
on retirement benefit
obligations 9 (4,990) 642 680
Deferred tax relating
to actuarial (loss)/gain
on retirement benefit
obligations 849 (128) (137)
Items that may be reclassified subsequently
to profit or loss:
Cash flow hedges - 19 23
Deferred tax relating
to cash flow hedges - (4) (6)
----------- --------------------
Other comprehensive (expense)/income
for the period, net of
tax (4,141) 529 560
----------- -------------------- -------------------
Total comprehensive
income for the period
attributable to equity
holders 10,846 13,559 21,240
=========== ==================== ===================
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 31 August 2016
31 August 31 August 29 February
2016 2015 2016
Note GBP'000 GBP'000 GBP'000
Non-current assets
Goodwill and other indefinite
life assets 8, 11 94,680 59,392 69,209
Other intangible assets 1,699 1,797 1,672
Retirement benefit asset 9 1,375 3,771 6,097
Property, plant and
equipment 187,855 138,037 150,361
285,609 202,997 227,339
---------- ---------- ------------
Current assets
Inventories 512,076 395,519 530,406
Trade and other receivables 49,223 51,005 63,416
Property assets held
for sale - 1,144 537
Cash and cash equivalents 32,120 39,012 43,915
---------- ---------- ------------
Total current assets 593,419 486,680 638,274
---------- ---------- ------------
Total assets 879,028 689,677 865,613
========== ========== ============
Current liabilities
Trade and other payables (598,264) (473,178) (630,912)
Deferred consideration (3,651) (1,809) (241)
Current tax liabilities (5,022) (7,194) (3,647)
Derivative financial -
instruments - (5)
Borrowings (19,048) (6,759) (6,756)
---------- ---------- ------------
Total current liabilities (625,985) (488,945) (641,556)
---------- ---------- ------------
Non-current liabilities
Borrowings (166) (166) (14,011)
Deferred consideration (1,680) (291) (1,659)
Deferred income tax
liabilities (5,636) (3,446) (4,450)
Deferred income (7,122) (5,610) (6,078)
---------- ---------- ------------
(14,604) (9,513) (26,198)
---------- ---------- ------------
Total liabilities (640,589) (498,458) (667,754)
========== ========== ============
Net assets 238,439 191,219 197,859
========== ========== ============
Capital and reserves
attributable to equity
holders of the Group
Ordinary shares 39,727 34,109 34,127
Share premium 124,932 96,848 96,901
Other reserve 10,645 10,645 10,645
Hedging reserve - (2) -
Treasury share reserve (1,000) - -
Retained earnings 64,135 49,619 56,186
---------- ---------- ------------
Shareholders' equity 238,439 191,219 197,859
========== ========== ============
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
For the six months ended 31 August 2016
Six months Six months
ended ended Year ended
31 August 31 August 29 February
2016 2015 2016
Note GBP'000 GBP'000 GBP'000
Operating profit 19,891 16,857 27,179
Profit on sale of property,
plant and equipment (394) (29) (26)
Amortisation of intangible
assets 304 273 558
Depreciation of property,
plant and equipment 4,079 3,166 6,803
Movement in working capital 10 2,082 16,994 30,515
Share based payments charge 483 357 781
--------------
Cash generated from operations 26,445 37,618 65,810
Tax received 226 3 4
Tax paid (2,826) (2,680) (7,704)
Finance income received 29 29 36
Finance costs paid (1,292) (678) (1,451)
--------------
Net cash generated from
operating activities 22,582 34,292 56,695
----------- ----------- --------------
Cash flows from investing
activities
Acquisition of businesses,
net of cash, overdrafts
and borrowings acquired (46,208) (8,837) (24,565)
Acquisition of freehold
land and buildings (4,106) (150) (6,475)
Proceeds from disposal
of business (net of cash,
overdrafts and borrowings) - 782 2,137
Purchases of intangible
assets (299) (164) (325)
Purchases of property,
plant and equipment (11,346) (7,308) (13,977)
Proceeds from disposal
of property, plant and
equipment 950 - 1,120
--------------
Net cash outflow from investing
activities (61,009) (15,677) (42,085)
----------- ----------- --------------
Cash flows from financing
activities
Proceeds from issuance
of ordinary shares 33,631 56 127
Proceeds from borrowings 7 13,846 4,474 18,288
Repayment of borrowings 7 (16,468) (1,000) (4,441)
Purchase of treasury shares (1,000) - -
Dividends paid to equity
shareholders (3,377) (2,387) (3,923)
--------------
Net cash inflow/(outflow)
from financing activities 26,632 1,143 10,051
----------- ----------- --------------
Net (decrease)/increase
in cash and cash equivalents 7 (11,795) 19,758 24,661
Cash and cash equivalents
at beginning of period 43,915 19,254 19,254
----------- ----------- --------------
Cash and cash equivalents
at end of period 32,120 39,012 43,915
=========== =========== ==============
CONDENSED CONSOLIDATED CHANGES IN EQUITY (UNAUDITED)
For the six months ended 31 August 2016
Treasury
Ordinary Share Other share Retained Total
share capital premium reserve reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 March 2016 34,127 96,901 10,645 - 56,186 197,859
Profit for the
period - - - - 14,987 14,987
Actuarial loss
on retirement benefit
obligations - - - - (4,990) (4,990)
Tax on items taken
directly to equity - - - - 849 849
Total comprehensive
income for the
period - - - - 10,846 10,846
New ordinary shares
issued 5,600 29,400 - - - 35,000
Costs on issuance
of shares - (1,369) - - - (1,369)
Purchase of treasury
shares - - - (1,000) - (1,000)
Dividend paid - - - - (3,377) (3,377)
Share based payments
charge - - - - 480 480
----------
As at 31 August
2016 39,727 124,932 10,645 (1,000) 64,135 238,439
======== ========== ========== ========= =========== ========
The purchase of treasury shares in the period relates to the
acquisition of 2,635,687 shares by Estera Trust (Jersey) Limited,
the Trustee of Vertu Motors plc's Employee Benefit Trust. The
shares were purchased by the Trustee to be held for the purposes of
the Employee Benefit Trust, and may be used to transfer shares to
individuals when options are exercised. This could include the
Company's Long Term Incentive Plan, under which each of the
executive directors of the Company and the Company's other PDMRs is
a potential participant, and is therefore regarded as having a
notional interest in these shares.
The other reserve is a merger reserve, arising from shares
issued for shares as consideration, to the former shareholders of
acquired companies.
For the six months ended 31 August 2015
Ordinary Share Other Hedging Retained Total
share capital premium reserve reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 March 2015 34,091 96,810 10,645 (17) 38,105 179,634
Profit for the period - - - - 13,030 13,030
Actuarial losses
on retirement benefit
obligations - - - - 642 642
Tax on items taken
directly to equity - - - (4) (128) (132)
Fair value gains - - - 19 - 19
-------- ---------- ---------- ---------- ----------- ----------
Total comprehensive
income for the period - - - 15 13,544 13,559
New ordinary shares
issued 18 38 - - - 56
Dividend paid - - - - (2,387) (2,387)
Share based payments
charge - - - - 357 357
----------
As at 31 August
2015 34,109 96,848 10,645 (2) 49,619 191,219
======== ========== ========== ========== =========== ==========
For the year ended 29 February 2016
Ordinary Share Other Hedging Retained Total
share capital premium reserve reserve earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 March 2015 34,091 96,810 10,645 (17) 38,105 179,634
Profit for the
period - - - - 20,680 20,680
Actuarial gains
on retirement benefit
obligations - - - - 680 680
Tax on items taken
directly to equity - - - (6) (137) (143)
Fair value gains - - - 23 - 23
-------- ---------- ---------- ---------- ----------- --------
Total comprehensive
income for the
year - - - 17 21,223 21,240
New ordinary shares
issued 36 91 - - - 127
Dividend paid - - - - (3,923) (3,923)
Share based payments
charge - - - - 781 781
----------
As at 29 February
2016 34,127 96,901 10,645 - 56,186 197,859
======== ========== ========== ========== =========== ========
NOTES
For the six months ended 31 August 2016
1. Basis of Preparation
Vertu Motors plc is a Public Limited Company which is quoted on
the AiM Market and is incorporated and domiciled in the United
Kingdom. The address of the registered office is Vertu House, Fifth
Avenue Business Park, Team Valley, Gateshead, Tyne and Wear, NE11
0XA. The registered number of the Company is 05984855.
The financial information for the period ended 31 August 2016
and similarly the period ended 31 August 2015 has neither been
audited nor reviewed by the auditors. The financial information for
the year ended 29 February 2016 has been based on information in
the audited financial statements for that period.
The information for the year ended 29 February 2016 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that
period has been delivered to the Registrar of Companies. The
Auditors' Report on those accounts was not qualified and did not
contain an emphasis of matter statement under section 498 of the
Companies Act 2006.
2. Accounting policies
The annual consolidated financial statements of Vertu Motors plc
are prepared in accordance with IFRSs as adopted by the European
Union. The annual report has been prepared under the historical
cost convention, as modified by the revaluation of
available-for-sale financial assets, share based payments and
financial assets and liabilities (including derivative financial
instruments) at fair value through profit or loss.
The accounting policies adopted in this interim financial report
are consistent with those of the Group's financial statements for
the year ended 29 February 2016 and can be found on the Group's
website, www.vertumotors.com.
In addition, this unaudited interim financial report does not
comply with IAS 34 Interim Financial Reporting, which is not
required to be applied under the AiM Rules.
3. Segmental information
The Group complies with IFRS 8 "Operating Segments", which
determines and presents operating segments based on information
provided to the Group's Chief Operating Decision Maker ("CODM"),
Robert Forrester, Chief Executive. As such, the Group has only one
reportable business segment, since the Group is operated and is
managed on a dealership by dealership basis. Dealerships operate a
number of different business streams such as new vehicle sales,
used vehicle sales and aftersales operations. Management is
organised based on the dealership operations as a whole rather than
the specific business streams.
These 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 business
segment.
The CODM assesses the performance of the operating segment based
on a measure of both revenue and gross profit. Therefore, to
increase transparency, the Group has decided to include additional
voluntary disclosure analysing revenue and gross profit within the
reportable segment.
Six Months ended Gross Gross Gross
31 August 2016 Revenue Revenue Margin Margin Margin
GBP'm Mix % GBP'm Mix % %
Aftersales(5) 113.4 7.8 63.4 39.4 45.7
Used Consolidated 525.6 36.1 52.3 32.4 9.9
New 483.9 33.3 35.0 21.7 7.2
Fleet & Commercial 331.7 22.8 10.4 6.5 3.1
-------- -------- -------- -------- --------
Total Department 1,454.6 100.0 161.1 100.0 11.1
======== ======== ======== ======== ========
Six Months ended Gross Gross Gross
31 August 2015 Revenue Revenue Margin Margin Margin
GBP'm Mix % GBP'm Mix % %
Aftersales(5) 93.8 7.6 50.7 38.8 44.4
Used Consolidated 426.5 34.5 42.0 32.1 9.8
New 413.1 33.4 30.3 23.1 7.3
Fleet & Commercial 302.7 24.5 7.9 6.0 2.6
-------- -------- -------- -------- --------
Total Department 1,236.1 100.0 130.9 100.0 10.6
======== ======== ======== ======== ========
Year ended 29 Gross Gross Gross
February 2016 Revenue Revenue Margin Margin Margin
GBP'm Mix % GBP'm Mix % %
Aftersales(5) 189.0 7.8 102.9 39.1 44.8
Used Consolidated 850.2 35.1 83.5 31.7 9.8
New 796.5 32.9 59.3 22.5 7.4
Fleet & Commercial 587.6 24.2 17.6 6.7 3.0
-------- -------- -------- -------- --------
Total Department 2,423.3 100.0 263.3 100.0 10.9
======== ======== ======== ======== ========
(5) margin in aftersales expressed on internal and external
turnover
4. Finance income and costs
Six months Six months
ended ended Year ended
31 August 31 August 29 February
2016 2015 2016
GBP'000 GBP'000 GBP'000
Interest on short term
bank deposits 29 23 36
Net finance income relating
to Group pension scheme 112 51 137
----------- ----------- --------------
Finance income 141 74 173
=========== =========== ==============
Bank loans and overdrafts (393) (290) (619)
Other finance costs (28) (44) (199)
Vehicle stocking interest (883) (211) (572)
----------- ----------- --------------
Finance costs (1,304) (545) (1,390)
=========== =========== ==============
5. Taxation
The tax charge for the six months ended 31 August 2016 has been
provided at the effective rate of 20% (Six months ended 31 August
2015: 20.5%).
6. Earnings per share
Basic and diluted earnings per share are calculated by dividing
the earnings attributable to equity shareholders by the weighted
average number of ordinary shares during the period or the diluted
weighted average number of ordinary shares in issue in the
period.
The Group only has one category of potentially dilutive ordinary
shares, which are share options. A calculation has been undertaken
to determine the number of shares that could have been acquired at
fair value (determined as the average annual market price of the
Group's shares) based on the monetary value of the subscription
rights attached to the outstanding share options. The number of
shares calculated as above is compared with the number of shares
that would have been issued assuming the exercise of the share
options.
Adjusted earnings per share is calculated by dividing the
adjusted earnings attributable to equity shareholders by the
weighted average number of ordinary shares in issue during the
period.
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2016 2015 2016
GBP'000 GBP'000 GBP'000
Profit attributable to equity
shareholders 14,987 13,030 20,680
Amortisation of intangible
assets 304 273 558
Share based payments charge 483 367 911
Tax effect of adjustments (61) (55) (112)
----------- ----------- ---------------
Adjusted earnings attributable
to equity shareholders 15,713 13,615 22,037
=========== =========== ===============
Weighted average number of
shares in issue ('000s) 387,047 340,968 341,080
Potentially dilutive shares
('000s) 7,783 7,107 8,388
----------- ----------- ---------------
Diluted weighted average
number of shares in issue
('000s) 394,830 348,075 349,468
=========== =========== ===============
Basic earnings per share 3.87p 3.82p 6.06p
=========== =========== =============
Diluted earnings per share 3.80p 3.74p 5.92p
=========== =========== =============
Adjusted earnings per share 4.06p 3.99p 6.46p
=========== =========== =============
Diluted adjusted earnings
per share 3.98p 3.91p 6.31p
=========== =========== =============
7. Reconciliation of net cash flow to movement in net cash
31 August 31 August 29 February
2016 2015 2016
GBP'000 GBP'000 GBP'000
Net (decrease) / increase
in cash and cash equivalents (11,795) 19,758 24,661
Cash inflow from increase
in borrowings (13,846) (4,474) (18,288)
Cash outflow from repayment
of borrowings 16,468 1,000 4,441
---------- ---------- ------------
Cash movement in net
cash (9,173) 16,284 10,814
Borrowing acquired (1,085) - (3,409)
Capitalisation of loan
arrangement fees 107 201 201
Amortisation of loan
arrangement fee (91) (68) (128)
---------- ---------- ------------
Non cash movement in
net cash (1,069) 133 (3,336)
Movement in net cash (10,242) 16,417 7,478
Opening net cash 23,148 15,670 15,670
---------- ---------- ------------
Closing net cash 12,906 32,087 23,148
========== ========== ============
8. Acquisitions
On 1 March 2016, the Group acquired the entire issued share
capital of Sigma Holdings Limited and its subsidiary Greenoaks
(Maidenhead) Limited (together "Greenoaks") which operates three
Mercedes-Benz outlets in Reading, Ascot and Slough. Total
consideration amounted to GBP21,743,000 including initial
consideration of approximately GBP8,243,000 settled from the
Group's existing cash resources and a GBP10,000,000 bank facility
repayable in November 2016, with a further GBP3,500,000 deferred
over 12 months. In addition, vendor shareholders loans of
GBP9,000,000 were settled in cash on completion. The excess of
consideration over the provisional fair value of the net assets
acquired was GBP15,740,000 of which GBP3,771,000 has been allocated
to franchise relationships. The financial statements for Greenoaks
for the year ended 31 December 2015 showed revenues of
GBP87,998,000 and adjusted(3) profit before taxation of
GBP1,200,000.
On 2 May 2016, the Group acquired the business and certain
assets of Leeds Jaguar from a subsidiary of Inchcape Plc. The
estimated consideration for this leasehold acquisition was
GBP592,000 and was settled in cash from the Group's existing
resources. The excess of consideration over the provisional fair
value of the net assets acquired was GBP500,000.
On 1 June 2016, the Group acquired the entire issued share
capital of Gordon Lamb Group Limited and its subsidiaries,
including Gordon Lamb Limited (together "Gordon Lamb") which
operates the Toyota, Land Rover, Skoda, and Nissan outlets in
Chesterfield and the Skoda outlet in Derby. The estimated
consideration amounted to GBP18,819,000 including retention payable
of GBP500,000. The remaining balance was settled in cash from the
Group's existing resources. The excess of consideration over the
provisional fair value of net assets acquired was GBP8,959,000 of
which GBP3,207,000 has been allocated to franchise relationships.
The financial statements of Gordon Lamb for the year ended 31
December 2015 showed revenues of GBP85,800,000(4) and adjusted(3)
profit before taxation of GBP2,700,000.
(3) adjusted for non-recurring and non-corporate items.
(4) adjusted to restate revenue to the same basis as that
adopted in the Group's financial reporting.
9. Retirement benefits
The retirement benefit asset at 31 August 2016 reflects both the
Bristol Street Pension Scheme and the SHG Pension Scheme, which was
acquired as part of the acquisition of SHG Holdings Limited in the
year ended 29 February 2016.
31 August 31 August 29 February
2016 2015 2016
GBP'000 GBP'000 GBP'000
Bristol Street Pension
Scheme surplus 2,673 3,771 4,424
SHG Pension Scheme (deficit)/surplus (1,298) - 1,673
---------- ---------- ------------
Net retirement benefit
asset 1,375 3,771 6,097
========== ========== ============
The trustees of the Bristol Street Pension Scheme and the SHG
Pension Scheme have agreed to merge the two schemes, and the merger
is expected to be completed by the end of the financial year ending
28 February 2017. As a result of this, the schemes surplus and
deficit shown above have been presented on the balance sheet based
on the net position at 31 August 2016.
During the six month period ended 31 August 2016, there was a
gain on assets of GBP7,642,000 in the Bristol Street Pension Scheme
and GBP468,000 in the SHG Pension Scheme. There have also been
changes in the financial assumptions underlying the calculation of
the liabilities in the same period. In particular, the discount
rate has decreased in line with a fall in corporate bond yields
over the six month period. The effect of these changes in financial
assumptions was an increase in liabilities of GBP9,629,000 in the
Bristol Street Pension Scheme and GBP3,471,000 in the SHG Pension
Scheme. In total, there was an actuarial loss of GBP4,990,000
recognised in the Consolidated Statement of Comprehensive Income in
the period, GBP1,987,000 in respect of the Bristol Street Pension
Scheme and GBP3,003,000 in respect of the SHG Pension Scheme,
before deferred taxation.
10. Cash flow from movement in working capital
The following adjustments have been made to reconcile from the
movement in working capital balance sheet headings to the amount
presented in the cash flow from the movement in working capital.
This is in order to more appropriately reflect the cash impact of
the underlying transactions.
For the six months
ended 31 August 2016
Trade Trade Total working
and and other capital
Inventories other payables movement
receivables
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables (598,264)
Deferred consideration (5,331)
Deferred income (7,122)
-----------
At 31 August 2016 512,076 49,223 (610,717)
At 29 February 2016 530,406 63,416 (638,890)
Balance sheet movement 18,330 14,193 (28,173)
Acquisitions 17,342 4,678 (22,403)
Disposals - - (3,500)
-------------- ------------- -----------
Movement excluding
business combinations 35,672 18,871 (54,076) 467
============== ============= ===========
Pension related balances (156)
Decrease in capital
creditor 1,800
Increase in interest
accrual (29)
Movement in working
capital 2,082
==============
For the six months
ended 31 August 2015
Trade Trade Total working
and and other capital
Inventories other payables movement
receivables
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables (473,178)
Deferred consideration (2,100)
Deferred income (5,610)
-----------
At 31 August 2015 395,519 51,005 (480,888)
At 28 February 2015 394,287 53,500 (466,865)
Balance sheet movement (1,232) 2,495 14,023
Acquisitions 1,080 99 (1,223)
Disposals (116) (23) 88
-------------- ------------- -----------
Movement excluding
business combinations (268) 2,571 12,888 15,191
============== ============= ===========
Pension related balances (75)
Decrease in capital
creditor 828
Increase in fixed asset
disposal debtor 1,057
Increase in interest
accrual (7)
Movement in working
capital 16,994
==============
For the year ended
29 February 2016
Trade Trade Total
and other and other working
Inventories receivables payables capital
movement
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables (630,912)
Deferred consideration (1,900)
Deferred income (6,078)
-----------
At 29 February 2016 530,406 63,416 (638,890)
At 28 February 2015 394,287 53,500 (466,865)
-------------- ------------- -----------
Balance sheet movement (136,119) (9,916) 172,025
Acquisitions 16,030 2,739 (11,433)
Disposals (164) (15) 88
Deferred consideration
for acquisition - - (1,500)
-------------- ------------- -----------
Movement excluding
business combinations (120,253) (7,192) 159,180 31,735
============== ============= ===========
Pension related balances (756)
Increase in capital
creditor (447)
Increase in interest
accrual (17)
Movement in working
capital 30,515
============
11. Goodwill and other indefinite life assets
31 August 31 August 29 February
2016 2015 2016
GBP'000 GBP'000 GBP'000
Goodwill 74,488 47,675 55,995
Other indefinite life assets
- Franchise relationships 20,192 11,717 13,214
At end of period 94,680 59,392 69,209
========== ========== ============
12. Risks and uncertainties
There are certain risk factors which could result in the actual
results of the Group differing materially from expected results.
These factors include: failure to deliver on the strategic goal of
the Group to acquire and consolidate UK motor retail businesses,
failure to meet competitive challenges to our business model or
sector, inability to maintain current high quality relationships
with manufacturer partners, economic conditions impacting trading,
market driven fluctuations in used vehicle values, litigation and
regulatory risk, failure to comply with health and safety policy,
failure to attract, develop and retain talent, failure of Group
information and telecommunication systems, malicious cyber-attack,
availability of credit and vehicle financing, use of estimates,
currency risk and the potential impact of the UK having voted to
leave the EU. The Board believes that the main risks associated
with the decision to leave the EU are significant changes in
consumer behaviour and the impact of exchange rates on manufacturer
volume strategies and vehicle pricing. All other principal risks
are consistent with those detailed in the Annual Report for the
year ended 29 February 2016.
The Board continually review the risk factors which could impact
on the Group achieving its expected results and confirm that the
above principal factors will remain relevant for the final six
months of the financial year ending 28 February 2017.
13. Post balance sheet events
On 1 October 2016, the Group disposed of the Fiat Group
dealership in Newcastle which comprised three sales outlets (Fiat,
Jeep and Alfa Romeo). The disposal to Richard Hardie Limited is
part of their creation of a Fiat Group market area in the North
East. In addition, Fiat sales will cease at the Group's sales
outlets in Cheltenham and Derby at the end of December 2016. This
will leave the Group with a single Fiat and Alfa Romeo sales outlet
in Worcester and no Jeep representation.
(1) adjusted for amortisation of intangible assets and share
based payments charge
(2) source-SMMT
(3) adjusted for non-recurring and non-corporate items.
(4) adjusted to restate revenue to the same basis as that
adopted in the Group's financial reporting.
(5) margin aftersales expressed on internal and external
turnover
(6) Relates to businesses acquired or developed subsequent to 1
March 2015 with businesses migrating into core once they have been
in the Group for over 12 months
(7) 2015 volumes include businesses acquired in the year ended
28 February 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UAARRNSARAUA
(END) Dow Jones Newswires
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