Directors’ report and financial statements
Registered number 05754547
31 August 2011
Contents
Chairman’s Statement ............................................................. 4
Operating and Financial Review ............................................. 7
Directors’ report ......................................................................16
Statement of directors’ responsibilities in respect of the
Directors’ Report and the financial statements ....................18
Independent auditor’s report to the members of
Cambria Automobiles plc .......................................................19
Consolidated Statement of comprehensive income ............ 20
Consolidated Statement of changes in equity ....................... 21
Consolidated Statement of financial position ..................... 22
Consolidated Cash Flow Statement .......................................23
Notes ....................................................................................... 24
Company Balance Sheet .........................................................53
Company Reconciliation of movements in
shareholders’ funds ................................................................ 54
Notes ....................................................................................... 56
2
2
33
Chairman’s Statement
Once again I am pleased to report another set of record results for Cambria with the Group achieving revenues of £373.3 million and an underlying
profit before tax of £4.9m million. The ongoing development and the resulting performance of the Group is very encouraging particularly in
light of the extremely tough trading conditions. Cambria has successfully integrated the acquisitions made in recent years and is well placed to
consolidate on its success.
Group Overview
Cambria was established in 2006 with a plan to create a top ten UK dealership group through the acquisition of attractive individual or groups of
dealerships, and build on these opportunities through organic investment and development from the Group’s own resources. For a significant
proportion of the period since the formation of the Group, the UK economy has struggled and it is testament to the quality of the Cambria
operating teams that they have not only taken advantage of opportunities to acquire businesses, but also have significantly improved the
operational performance of those businesses acquired. Delivering operational improvement is key to the Board’s objective of providing superior
returns on shareholders’ funds, which reached 22.7% in the year reported
Challenging markets can test the best of plans, but we believe that these results underline the robust nature of our business model and the
effectiveness of our senior management team in driving its implementation. A continual focus upon tight management of costs, coupled with
our lean operating procedures, has also contributed to this result.
We believed that the economic recession and the challenges faced by our industry in the UK would provide further opportunities for acquisition
and the Group examined a number of potential acquisitions during the year to 31 August 2011 without completing any. I am pleased to report
however that we have completed one subsequent to the year end. This is evidence of the rigour we apply in the analysis and assessment of an
opportunity. We maintain a pipeline of prospects, but we will only acquire a business if we believe that it is capable of generating a superior
return against capital required and will respond to the operational changes and discipline the team brings to all our businesses.
4
UK New Car Market
The UK new car market decreased by 9% in the year compared to the previous year. When I reported last year I said the outlook for the following
12 months in the UK was at best uncertain. This proved to be the case with some of the most difficult trading conditions many automotive
operators had ever experienced in the UK. It is believed that the UK economy is suffering a double dip recession, which may continue for the next
12 months and conceivably for some time to come. The Board has once again recognised the challenges that this is creating operationally and the
2011/2012 budget process implemented a further cost review programme to ensure the Group is appropriately shaped to continue to maximise
profitability in the current environment. We anticipate more difficult trading conditions but believe we are well prepared for this environment.
Most importantly the Board remains confident that our business model will enable us to continue to be successful notwithstanding these
operating challenges.
Financial Management
The Board continues to place great importance on the prudent management of Cambria’s finances. The Group balance sheet has been
strengthened by the results for 2010/2011 and continues to be underpinned by the ownership of freehold properties at a number of the dealerships
we operate, together with an overall prudent level of debt. We will continue to purchase freeholds of the dealerships we acquire where such
freeholds can be acquired at reasonable cost and are locations we believe will serve us well in the future. Liquidity remains high as a result of our
banking facilities with Lloyds Banking Group and as well as our stock finance facilities. This liquidity will enable us to take advantage of future
acquisition opportunities as they arise and this prudent approach to the management of key aspects of our business will drive future returns.
As I reported last year, in 2010 Cambria achieved a key milestone when its shares were admitted to trading on AIM in April. We did not raise
new funds at the time of the IPO as the Board believed it had sufficient capital to continue to expand the Group for the foreseeable future in a
manner which enhanced shareholder value. We have retained this capital and will deploy it selectively going forward. The Board continues to
work on broadening the institutional shareholder base and attracting shareholders who will support the Group in its future development. The
Board is pleased to announce the appointment of Collins Stewart as Cambria’s broker. The appointment of Collins Stewart will broaden the
access we have to institutional investors who are attracted to the Cambria story. Collins Stewart will support us in managing the broadening of
the shareholder base in a structured manner when the lock-up period for Promethean held shares ceases.
5
Chairman’s Statement (continued)
Key Relationships
Our lending bank Lloyds Banking Group and our other credit institutions have continued to support the Group and in particular have been
responsive to our acquisition programme recognising our strategy of prudent financial management. Notwithstanding the continued criticism
of the UK lending banks, we are grateful for this continued strong support which will be important and a key differentiator in capitalising on
future acquisition opportunities.
Our relationship with the manufacturers that we represent is a core pillar of our business approach. The management team continues to develop
and maintain strong working relationships where Cambria is seen as an effective and valued business partner. We are pleased to add Alfa Romeo
and Vauxhall as brand partners and we continue to discuss representation with a number of additional manufactures that we do not currently
represent with a view to securing opportunities with them in the future.
As announced in our pre-close statement issued in September, Rodney Smith, a Non-Executive Director, and founding Director of the Group
informed the Board of his intention to retire, and will step down from the Board on 30 November 2011. On behalf of the Board and shareholders
I would like to thank Rodney for his valued contribution to the development of the Group over the past five years. We will announce the
appointment of a new Non-Executive Director in due course.
Finally the Board would like to thank the Cambria associates who in these challenging times continue to demonstrate a strong commitment to
the Cambria Group.
Dividend
The Board is pleased to announce the inaugural dividend payment by the Company of 0.3p per share. It is the intention of the Board to maintain
a progressive dividend policy.
Outlook
Cambria continues to take positive steps to manage the cost base in order to ensure that we have a business which is agile enough to meet
the challenges of the market in which we operate. We continue to out-perform our underlying markets and view the future with confidence,
notwithstanding the obvious short-term challenges which our industry faces.
Warren Scott
Non-Executive Chairman
6
Operating and Financial Review
Chief Executive’s Review
Mark Lavery, Chief Executive said
“The year to August 2011 has been another strong year for Cambria with underlying profit before
tax growing by 16.7% to £4.9m, up from £4.2m in a very difficult market. While the ending of the
government sponsored scrappage scheme reduced revenues, the cost reduction actions taken during the year more than offset
the reduction in revenues. This is the fourth successive year in which Cambria has delivered significant earnings growth and
high level of return on shareholders’ funds.
I am pleased with the performance achieved by the Group against the backdrop of challenging new and used car markets. We
continue to use this market weakness to drive forward our buy-and-build strategy, utilising our strong balance sheet. It was
pleasing to announce the acquisition of our maiden Vauxhall dealership, Doves Vauxhall in Southampton, on 1 September
2011. We continue to out-perform our underlying markets and view the future with confidence, notwithstanding the obvious
short-term challenges which the industry faces.
Cambria continues to take positive steps to manage the cost base of the business with further rationalisation of the more
mature businesses in the portfolio to ensure that these businesses are more agile in the challenging market conditions.
There are obvious challenges in the consumer environment. Economic times remain uncertain and UK consumer confidence
remains fragile; combined with exchange rate pressures and inflationary pressures these lead the Board to be cautious about
the trading outlook for the current financial year”
Operating and Financial Review
Cambria Automobiles plc announces its full year results for the financial year ending 31st August 2011, its second set of full year results as a
public company. Cambria is a franchised motor retail group that was formed in 2006 and through a buy-and-build strategy, encompassing eight
corporate acquisitions to date, has grown to represent 14 different brands from 27 locations with 39 new car and motorcycle franchises. The
Group focuses on acquiring and improving under-performing businesses where it believes the best shareholder returns can be achieved.
Revenue
Underlying EBITDA*
Underlying operating profit*
Underlying profit before tax*
Underlying net profit margin*
EBITDA
Operating profit
Profit before tax
Non-underlying expenses
Net Assets
Net profit margin
Underlying earnings per share*
Earnings per share
* these items are excluding the non-underlying costs of £0.23m (2010: £1.54m)
12 months ended
31-Aug 2011
£m
12 months ended
31-Aug 2010
£m
373.3
7.2
5.7
4.9
1.3%
6.9
5.5
4.7
0.2
19.5
1.25%
3.63p
3.47p
392.1
6.1
4.7
4.2
1.06%
4.5
3.2
2.6
1.54
16.0
0.66%
3.06p
1.95p
8
Operating and Financial Review (continued)
I am pleased to announce that for the fourth year in succession we have seen significant growth in our underlying pre tax profits to £4.9m against
a previous year of £4.2m. These results have been achieved in a period of significant economic uncertainty and poor consumer confidence,
which has impacted particularly in the second half of our financial year.
Despite the reduced revenue of £373m, down 4.8%, the Group delivered an improved gross margin, which combined with tight cost management,
has resulted in the improvement in Group net profit.
Financial Highlights
• Fourth successive year of increased underlying PBT, achieving £4.9m compared with the previous year’s £4.2m
• Total revenue decreased 4.8% year on year to £373.3m significantly impacted by the removal of the scrappage scheme
• Gross profit decreased by 1% year on year, however underlying EBITDA increased by 17.9% to £7.2m Underlying earnings per share increased
to 3.63p from 3.06p
• Group net assets at £19.5m under-pinned by £22.6m of freehold and long lease-hold property
• Robust balance sheet position with only £0.3m of goodwill
• Strong cash flow ensured net debt reduced to £1m from £4.4m , gearing at 5.2%
• Underlying return on shareholders’ funds of 22.7 %
• Announcement of maiden dividend of 0.3p per share
Operational Highlights
• New Car Unit Volumes decreased 11% year on year against a new car market decrease of 9% year on year and a market decline in private
registrations of 21%
• New car volumes excluding scrappage increased 9%
• Used Car Volumes increased 1% year on year
• Service Hours increased 2% year on year
• Major re-development and opening of an additional facility adding Alfa Romeo and a further Renault dealership to the Group’s brand portfolio
• Major re-development of the Maidstone freehold property for Honda and Mazda
• Continued robust approach to the management of the Group’s working capital and cash generation
• Additional £5m, three year Revolving Credit Facility arranged to finance further acquisitions
• Post year end addition of the Group’s maiden Vauxhall dealership
Operating Review
Group Strategy
Since our incorporation in March 2006, we have continued to apply our focused “buy-and-build” strategy organically acquiring under-
performing motor dealership assets. Following any acquisition, the Cambria management team implements new financial, operational controls
and processes in order to rationalise, restructure and develop each individual dealership. This tailored approach ensures the changes made to
each dealership are sustainable and create shareholder value through achieving an appropriate contribution for the level of investment. We have
now completed eight separate transactions since our incorporation.
During the period under review, the Group has continued to integrate the ten additional businesses acquired in the previous financial year, six of
which had been acquired from an Administrator. One of the Acquisitions required that a major re-development of a dealership was undertaken
during the period under review. In Blackburn, the Group has also entered into occupation of a leasehold premises, redeveloped it and added
Alfa Romeo and a further Renault dealership to the Group.
We continue with our three step approach to purchasing a new business – acquisition, integration, operation, as laid out below:
Acquisition
When acquiring new businesses we are diligent in ensuring that none of the contractual obligations that are taken on pursuant to the acquisition
upset the integrity of our balance sheet. This includes ensuring that leases reflect market value and that any unusual contractual obligations are
addressed prior to acquisition to ensure that we avoid any legacy costs. Our Group balance sheet shows that on consolidation we have only £0.3m
of goodwill which has been generated across the eight acquisitions. We do not have any defined benefit pension schemes. We have always taken
the approach that Cambria will not acquire any business unless there is a strong underlying business case to do so, and have aborted on a transaction
this year where this criterion was not met. Our acquisitions have to date, and will continue to, be funded from our own cash resources.
9
Operating and Financial Review (continued)
Integration
The integration process starts with an Associate engagement evening where our senior management present the Cambria “Four Pillar” culture
change programme. After this meeting, the Group integration team implements systems, processes and procedures to improve legislator
compliance i.e. FSA, Health & Safety etc. Newly acquired Associates are transferred to Cambria employment contracts with the compensation
and benefits commensurate with the particular business. A training needs analysis is conducted followed by the implementation of training
programmes for all relevant Associates in the new business.
Operation
With any new acquisition, the standard financial controls are implemented immediately ranging from individual cheque signatories to daily
reporting of vehicle sales and aftersales revenues, margins and other performance figures. We then implement our two growth strategies
(i) “Cambria Digital”, which is our internet social networking strategy for vehicle sales, and (ii) in aftersales we implement the “Duty of Care
Gearbox” which is designed to supply our guests with a one stop solution for all their vehicle maintenance needs.
We believe our three step approach gives us a significant advantage particularly in difficult economic times.
Brand Partnerships
In line with our “buy-and-build” strategy, we have continued to work with existing Brand Partners and new potential Brand Partners with whom
we can develop Primary Brand Partner relationships (more than three franchises). During the year we have worked hard to integrate those
businesses acquired in the first half of the previous financial year, making significant investment in the management of those businesses as well
as in the property infrastructure.
During the period we have completed the redevelopment of the Maidstone Honda and Mazda dealership at a capital investment of £0.7m. The
redevelopment caused significant interruption to the business performance, but now leaves us with a well presented modern retail facility from
which we can represent our brand partners. Additionally we have entered into a new leasehold property in Blackburn, adjoining our existing
Blackburn dealership. We have completed a major refurbishment of that facility and have added Alfa Romeo and Renault onto the Blackburn
Motorpark which now represents Alfa Romeo, Fiat, Renault and Volvo. Again this development and start up took significant management and
capital investment of £0.5m. By mutual consent we have terminated the Lotus franchise in Preston.
During the course of the year we worked with a number of new potential Brand Partners to identify acquisition opportunities within their
networks. We entered into a number of acquisition target negotiations, none of which concluded during the financial year. Unfortunately
during the process of one such negotiation, we took the decision to abort the transaction as a result of our diligence investigations after incurring
significant professional fees.
On 1 September 2011 we completed the acquisition of our maiden Vauxhall dealership, in Southampton, which has been long established with
the Vauxhall Brand. We are very pleased to bring the Vauxhall franchise into the Group’s Brand portfolio and intend to make Vauxhall a Primary
Brand Partner as other opportunities arise. The acquisition was the Groups 8th corporate transaction and takes the Group to 27 locations
representing 39 franchised outlets.
Cambria has enjoyed the benefits of a strategically balanced brand portfolio with a strong mix of prestige/high luxury and volume businesses,
and intends to continue the buy and build strategy acquiring businesses that represent good value for our shareholders.
Volume
Citroen
Fiat
Ford
Mazda
Nissan
Renault
Seat
Vauxhall
3
1
2
5
5
16
Motorcycle
Triumph
1
5
5
4
1
2
1
1
20
3
3
Prestige
Aston Martin
Alfa Romeo
Honda
Jaguar
Volvo
10
Blackburn
Preston
Bolton
Bury
Oldham
Warrington
Birmingham
Wellingborough
Northampton
Woburn
Swindon
Exeter
Automobiles plc
Locations across the UK
Welwyn
Garden City
Brentwood
Wimbledon
Croydon
Southampton
Thanet
Tunbridge
Wells
Canterbury
Ashford
Maidstone
Gatwick
Horsham
11
Operating and Financial Review (continued)
Cambria’s balanced brand portfolio has seen us benefit from the relative stability of the prestige/high luxury market. The government’s
scrappage scheme finished in May 2010 and this has had a major impact on volume operations in relation to the vehicle unit sales in our 2010
reporting period.
When making acquisitions, the Board understands that the integration and maturing of the dealerships takes time and management investment.
Where we acquire businesses from distressed sales, the integration process typically takes longer, and we have to be conscious of the potential
dilution in earnings whilst these businesses are restructured and invested in.
We continue to promote the philosophy of stand alone autonomous business units where a local management team are empowered via our “four
pillar strategy” to run a local business unit. Cambria dealerships do not trade under the “Cambria” name but prefer to focus on local branding.
Cambria’s dealerships trade as “Grange”, “Doves”, “Dees”, “Invicta Motors”, “Pure Triumph” or “Motorparks” depending on the franchise and the
name in the local area. When acquiring a business, the Board consider the geographical location of the franchise and then chooses to either
adopt a new trading style or retain the existing business name.
New Car Sales
The new car market in the period was down by 9% against the previous period which was assisted significantly by the government’s scrappage
scheme which represented 13% of the market in that period. The more important and relevant measure for franchised dealers is the private
registrations statistics which showed the market down 21% year on year. Our new car volumes for the period were 8,155 units against a previous
year of 9,163 units, a decrease of 11% year on year. The Government backed scrappage scheme accounted for 18% of our volumes in the previous
period. It is also worth noting that the Japanese Tsunami had an impact on the supply and availability of certain manufacturer models that were
reliant either on component supply from Japan or indeed where the vehicles were manufactured in Japan. Gross Margin for new cars improved
from 6.9% to 7.2% as expected due to the low margins retained on those scrappage vehicles sold in the previous year.
Used Car Sales
2011 saw Cambria grow used car volumes to 14,217 units against a previous year of 14,034, an increase of 1%. The average price of the used cars sold
reduced, but Gross margin on used cars showed a small improvement from 8.1% to 8.2%. Our used car strategy continues to be a core part of our
activity and with the continued success of the Cambria Digital strategy we believe this is an area where we can continue to improve performance.
We continue to pay particular attention to stock profile, price alignment and brand offerings in all our retail outlets. We have a small central
buying team and continue to work with our re-marketing partner and local management to increase their knowledge and understanding of
local market conditions. We continue to demonstrate that local management should purchase stock profiled by price and model for their local
market.
Aftersales
Notwithstanding the continued decrease in the one to three year car parc, as new vehicle registrations fall year on year, we saw our aftersales
revenue remain broadly flat. Gross margin in the period improved from 42.3% to 42.8% in the current year. The Aftersales departments
contributed £22m of gross profit which represents 46.2% of total gross profit for the year.
We continue to invest in vehicle health checks, and our Guest Connect Strategy for retaining our aftersales guests outside of the 0-3 year car parc
with our “Duty of Care Gearbox” that is intended to provide all guests with a one stop maintenance solution for their vehicle.
Outlook
The current trading environment is difficult and the Board notes that the second half of the financial year was more challenging than the strong
first half that the Group experienced. The Board is able to report that September trading has been acceptable, with profits broadly in line with
business plan but behind the strong performance experienced in the previous year’s trading. There are obvious challenges in the consumer
environment. Economic times remain uncertain and UK consumer confidence remains fragile: combined with exchange rate pressures and
inflationary pressures these lead the Board to be cautious about the trading outlook for the current financial year.
12
Operating and Financial Review (continued)
Outlook (continued)
The Board is being pro-active in ensuring that the cost base is fit for it’s expectation that the trading environment will continue to be difficult,
and is intending to rationalise the existing cost base appropriately. In addition, there are still opportunities to improve performance in our
existing businesses that are all at different stages of maturity and development.
The Group’s Guest Connect Programme, encompassing Cambria Digital and Service & MOT Reminder, Electronic Vehicle Health Check
and Service Plans, was launched last year and we believe it has the potential to be an industry leading GRM process (Guest Relationship
Management). We continue to strive to provide world class service within our individual business units and have made progress in improving
customer satisfaction scores.
The three prong strategy of acquisition, integration and operation will continue to be driven with the Group well placed to take advantage of
acquisition opportunities that will arise in these difficult economic times. The Group has continued to drive profit in tough trading conditions;
and this has, through tight cost control and cash management, put the Group in a position with only £1m of net debt and significant financing
facilities available for investment in acquisitions.
The Board continues to review acquisition opportunities with both existing and new franchise partners, and intends to capitalise on the
opportunities presented by the challenging market to expand the Group. The acquisition of the Vauxhall business in Southampton opens a new
relationship with the second largest volume franchise in the UK market, and we look forward to developing that relationship.
2011
Revenue
2011
Revenue
mix
£m
146.5
184.0
51.4
(8.6)
%
39.2
49.3
13.8
(2.3)
373.3
100.0
2011
Gross
Profit
£m
10.5
15.1
22.0
47.6
(41.9)
5.7
(0.2)
5.5
2011
Margin
2010
Revenue
2010
Revenue
mix
%
7.2
8.2
42.8
£m
158.6
190.4
51.5
(8.4)
%
40.4
48.6
13.1
(2.1)
12.7
392.1
100.0
1.5
2010
Gross
Profit
£m
10.9
15.4
21.8
48.1
(43.4 )
4.7
(1.5)
3.2
2010
Margin
%
6.9
8.1
42.3
12.3
0.8
2011 total
2010 total
Year on year growth
8,155
8,155
9,163
(1,666)
7,497
14,217
14,034
279,523
273,345
(11%)
9%
1%
2%
New Car
Used Car
Aftersales
Internal sales
Total
Operating expenses
Operating profit before flotation
and transaction expenses
Non-underlying expenses
Operating profit
New units
Scrappage units
New units excluding Scrappage
Used units
Service hours
Mark Lavery
Chief Executive
13
Operating and Financial Review (continued)
Finance Director’s Report
Overview
Total revenues in the period decreased 4.8% to £373.3m from £392.1m in the prior year. The majority of the reduction was from new vehicle sales
where unit volumes were down 11% and revenues down 7.6%. Whilst used car unit sales increased 1% the average sales price reduced and overall
revenues reduced by 3.4%. Revenues from the aftersales businesses remained in line with the previous year.
Total gross profit decreased by £0.5m (1%) from £48.1m to £47.6m in the year following the reduced new car volumes which accounted for £0.4m
of the reduction. Gross profit margin across the Group improved from 12.3% to 12.7% reflecting the change in revenue mix with the reduction in
new car sales post scrappage, but at better margins. The used vehicle margin remained resilient at 8.2%. The aftersales operations contributed
46.2% of the total gross profit for the Group compared to 45.3% in the previous period, at a gross profit margin of 42.8%.
Underlying operating expenses continue to be well managed, and as a result of Group initiatives that were put in place at the business planning
stage for the year, underlying operating expenses reduced to £41.9m from £43.4m.
During the financial year, the Group incurred non-underlying expenses of £0.17m in relation to aborted transaction costs and opening new
franchises, and £0.06m in relation to redundancy costs associated with the cost rationalisation initiatives. The prior year non underlying
expenses were in relation to the one off expenses associated with the listing on AIM which were £1.47m, and the transaction costs associated to
the acquisition of new businesses in 2010 were £0.07m resulting in a total of £1.54m of non recurring costs.
The underlying EBITDA in the period rose to £7.2m from £6.1m in the previous year. Underlying operating profit was £5.7m compared to £4.7m
in the previous year, resulting in an operating margin of 1.5% (2010: 1.2%). Following the conversion to IFRS there are no amortisation charges
relating to goodwill in the year or prior year.
Net finance expenses increased to £0.8m from £0.6m in the previous year primarily due to interest on the consignment stock as a result of the
reduced new vehicle units sold.
The Group’s underlying profit before tax was £4.9m in comparison with £4.2m in the previous year, a 16.6% increase.
The underlying earnings per share were 3.63p (2010: 3.06p). Basic earnings per share were 3.46p (2010: 1.95p), and the Groups underlying return
on shareholders’ funds for the year was 22.7% (2010: 21.7%).
Taxation
The Group tax charge was £1.2m in the period (2010: £0.6m) representing an effective rate of tax of 25.6% (2010: 25.2%) on the profit before tax
of £4.7m (2010: £2.6m).
Financial Position
The Group has a robust balance sheet with a net asset position of £19.5m under-pinned by £22.6m of freehold and long leasehold property.
Reflecting our prudent approach to financial management the Group has only £0.3m of goodwill on the balance sheet. Secured against the
freehold and long leasehold property are mortgages amounting to £12.7m, each of the loans have different repayment profiles between seven
and ten years, and bear interest at between base plus 1.25% and LIBOR plus 3%. During the financial year the Group comfortably met the bank
covenants attaching to these borrowings.
The net debt of the Group as at 31 August 2011 was £1.0m (2010: £4.4m), reflecting a cash position of £11.7m (2010: £9.3m). The Group’s gearing
at 31 August 2011 was 5.2%, reduced from 27.6% in 2010.
The Group uses term loan facilities to fund the purchase of freehold and long leasehold properties, it utilises stocking loans to fund the acquisition
of consignment, demonstrator and used vehicles and has a £4m overdraft facility which is used to manage seasonal fluctuations in working capital.
The overdraft facilities are renewable annually and are next due in February 2012. During the course of the year, the Group arranged a £5m, three year
Revolving Credit Facility which is available for draw down against new business acquisitions and freehold property purchases. This additional funding
facility gives us significant liquidity to identify and approach acquisition targets. Total facilities available including cash reserves equate to £20m.
14
Operating and Financial Review (continued)
Cashflow and Capital Expenditure
The Group generated an operating cash inflow of £5.3m with working capital remaining similar year on year and invested a total of £1.5m in
capital expenditure.
Capital expenditure included the significant redevelopment of our Maidstone dealership which represents Honda and Mazda for £0.7m and the
development of the new leasehold premises in Blackburn to add Alfa Romeo and Renault to the facility at a cost of £0.5m.
During the year capital repayments of £1m were made against the total term loans outstanding. The capital repayments due in the financial year
to 31 August 2012 are £1.35m.
As a result of the net cash increase of £2.4m to £11.7m and gross debt decreasing by £1m to £12.7m, overall net debt reduced from £4.4m to £1m.
Shareholders’ Funds
There are 100,000,000 ordinary shares of 10p each with a resulting share premium of £0.8m. There were no new funds raised during the year
therefore the share capital and share premium account remain at £10.8m consistent with prior year. All ordinary shares rank pari passu for both
voting and dividend rights.
Pension Schemes
The Group does not operate any defined benefit pension schemes, and has no liability arising from a scheme. The Group made contributions
amounting to £0.2m to defined contributions schemes for certain employees.
Financial Instruments
The Group does not have any contractual obligation under any financial instruments with respect to the hedging of interest rate risk.
Dividends
The Board is pleased to announce a maiden dividend for the year ended 31 August 2011 of 0.3p per share. If approved by shareholders at the
Annual General Meeting to be held on 9 January 2012, the dividend will be payable on 16 January 2012 to those shareholders registered on 9
December 2011. The Board aims to maintain a progressive dividend policy but intends to ensure that the payment of dividend does not detract
from its primary strategy to continue to “buy-and-build” and to organically grow the Group using existing resources.
James Mullins
Finance Director
15
Directors’ report
The directors present their directors’ report and financial statements for the year ended 31 August 2011.
Principal activities
Cambria’s principal activities are the sale and servicing of motor vehicles and the provision of ancillary services. The Group operates from 27
sites with a total of 39 dealer franchises.
Enhanced Business Review
All details required are covered in the Chairman’s Statement and the Operating and Financial Review between pages 1 and 10.
Cambria Business Philosophy
Cambria’s culture – The Four Pillars
The Group works hard to instil a group culture. This culture is built around four pillars which are:
Pillar One - associate delight
The Directors believe that associates are the Company’s most important asset and therefore members of the team are not referred to as members
of staff or employees, but rather as “associates”. The Directors want all associates to be proud to be associated with the Group and to be given
the autonomy to make decisions that affect the running of “their” business. The Directors promote internal development and foster a culture
whereby associates feel they can achieve their career aspirations with Cambria. Equally, Cambria invests in its associates in order for them to
achieve their full potential within the Group.
Pillar Two - guest delight
Cambria associates are encouraged to treat all customers at all times, in the way that they would treat a guest visiting their own home. The
Directors believe that associate empowerment is key to achieving this goal and the Directors believe that the organisation must be transparent
and open at all times generating empathy with the diverse guest base of the Group.
Pillar Three - brand delight
The Group’s goal is to become the retailer of choice for all of the automotive manufacturers that it represents. This pillar focuses on achieving
the following goals:
• brand vehicle sales objectives
• brand part sales objectives
• top half placing in brand customer satisfaction surveys
• the development of a trusting relationship with brand personnel from the manufacturer partners
Pillar Four - stakeholder delight
The Group aims to provide satisfaction to its Stakeholders. It seeks to achieve this through:
• disclosing timely and accurate information providing Stakeholders with a detailed understanding of business performance; and
• communicating openly and transparently.
Primary Risks
The primary risk to the Group is the continuing decline in the UK economy and volatility in the new and used car markets and the changes
made by our manufacturer brand partners to the pricing and margin structure on the new vehicles that we sell. Through implementing tight
controls and building a strong operational Group infrastructure, the Directors believe they are taking all possible steps to protect the business.
The Group also has exposure to movements in interest rate due to the variable nature of the term loans.
16
Directors’ report (continued)
Proposed dividend
The directors recommend the payment of a full and final dividend for the year ended 31 August 2011 of 0.3p per share which equates to £300,000
(2010: £nil). If approved by shareholders at the Annual General Meeting to be held on 9 January 2012, the dividend will be payable on 16 January
2012 to those shareholders registered on 9 December 2011.
Directors
The directors who held office during the year were as follows:
W Scott
M J J Lavery
R P Smith
M W Burt
J A Mullins
Sir P A Burt
On 8 September 2011 Rodney Smith informed the Board of his intention to retire, and it was agreed that he would serve his notice until 30
November 2011.
All directors benefited from qualifying third party indemnity provisions in place during the financial period.
Associates
The Group recognises the benefit of keeping associates informed of group affairs and the views of associates are given full consideration at
regular meetings with their representatives.
Full and fair consideration is given to the employment of disabled persons, who are treated no differently from other associates as regards
recruiting, training, career development and promotion opportunities. For people who may become disabled, in the course of employment, the
group will make every effort to accommodate them in suitable alternative employment.
Political and charitable contributions
Neither the Company nor any of its subsidiaries made any political or charitable donations or incurred any political expenditure during the year
(2010: £nil).
Disclosure of information to auditors
The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each aware, there is no relevant audit
information of which the Company’s auditors are unaware; and each director has taken all the steps that he ought to have taken as a director to
make himself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG Audit Plc as auditors of the Company
is to be proposed at the forthcoming Annual General Meeting.
By order of the board
James Mullins
Director
Dorcan Way, Swindon, SN3 3RA
25 November 2011
17
Statement of directors’ responsibilities in respect of the Directors’ Report and the
financial statements
The directors are responsible for preparing the Directors’ Report and the group and parent company financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. As required by the AIM rules of the London Stock
Exchange they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally
Accepted Accounting Practice).
Under company law the directors must not approve the financial statements unless they give a true and fair view of the state of affairs of the
group and parent company and of their profit or loss for that period.
In preparing each of the group and parent company financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU
• for the parent company financial statements state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the parent company financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will
continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions
and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial
statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.
Legislation in the UK governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.
18
KPMG Audit plc
Arlington Business Park
Reading
Berkshire
RG7 4SD
Independent auditor’s report to the members of Cambria Automobiles plc
We have audited the financial statements of Cambria Automobiles plc for the year ended 31 August 2011 which comprise the Group Statement
of Financial Position and Parent Company Balance Sheet, the Group Statement of Comprehensive Income, the Group Statement of Changes in
Equity, the Group Statement of Cash Flow, the Parent Company Reconciliation of Movements in Shareholders’ Funds and the related notes. The
financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International
Financial Reporting Standards (IFRS) as adopted by the EU. The financial reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditors’ report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company
and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 18, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the
financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB’s web-site at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 August 2011 and of the
group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
• the parent company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice;
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent
with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following. Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept, by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Derek McAllan (Senior Statutory Auditor) 25 November 2011
for and on behalf of KPMG Audit plc, Statutory Auditor
Chartered Accountants
19
Consolidated Statement of comprehensive income
for year ended 31 August 2011
Note
2011
£000
2010
£000
Revenue
Continuing operations
Cost of sales
Continuing operations
Gross Profit
Continuing Operations
Administrative expenses
Continuing operations
Results from operating activities
Finance income
Finance expenses
Net finance expenses
Profit before tax from continuing operations before
non-underlying expenses
Flotation expenses
Non-underlying expenses
Profit before tax
Taxation
Profit and total comprehensive income for the period
3
4
4
9
9
5
5
4
10
373,303
392,117
(325,748)
(344,056)
47,555
48,061
(42,055)
(44,878)
5,500
38
(882)
(844)
4,887
(231)
4,656
(1,190)
3,466
3,183
12
(588)
(576)
4,151
(1,474)
(70)
2,607
(657)
1,950
1.95p
Basic and diluted earnings per share
8
3.47p
All comprehensive income is attributable to owners of the parent company
20
Consolidated Statement of changes in equity
for year ended 31 August 2011
Balance at 31August 2009
Profit for the year
Balance at 31August 2010
Profit for the year
Balance at 31 August 2011
Share capital
Share premium Retained earnings
Total equity
£000
£000
£000
£000
318
-
10,000
-
10,000
10,481
-
799
-
799
3,286
1,950
5,236
3,466
14,085
1,950
16,035
3,466
8,702
19,501
21
Consolidated Statement of financial position
at 31 August 2011
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Other interest-bearing loans and borrowings
Trade and other payables
Taxation
Provisions
Non-current liabilities
Other interest-bearing loans and borrowings
Provisions
Other payables
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Share capital
Share premium
Retained earnings
Total equity
Note
11
12
13
14
15
16
17
18
20
17
20
13
21
2011
£000
25,676
470
356
26,502
57,460
6,905
11,702
76,067
2010
£000
25,520
480
508
26,508
62,435
7,938
9,266
79,639
102,569
106,147
(1,352)
(69,109)
(652)
(41)
(71,154)
(11,358)
(95)
(461)
(11,914)
(83,068)
19,501
10,000
799
8,702
19,501
(1,024)
(74,896)
(519)
(342)
(76,781)
(12,672)
(151)
(508)
(13,331)
(90,112)
16,035
10,000
799
5,236
16,035
These financial statements were approved by the board of directors on 25 November 2011 and were signed on its behalf by:
Mark Lavery
Director
22
Company registered number: 05754547
Consolidated Cash Flow Statement
for year ended 31 August 2011
Note
2011
£000
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation, amortisation and impairment
11/12
Financial income
Financial expense
Loss on sale of property, plant and equipment
Taxation
Non-underlying expenses
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
(Decrease)/increase in trade and other payables
Decrease in provisions
Interest paid
Tax paid
Non-underlying expenses
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of subsidiary
Acquisition of property, plant and equipment
Acquisition of other intangible assets
Net cash from investing activities
Cash flows from financing activities
Proceeds from new loan
Interest paid
Repayment of borrowings
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 September
Cash and cash equivalents at 31 August
9
9
10
5
5
2
16
16
3,466
1,422
(38)
882
1
1,190
231
7,154
1,033
4,975
(5,787)
(357)
7,018
(531)
(952)
(231)
5,304
38
-
(1,495)
(74)
(1,531)
-
(351)
(986)
(1,337)
2,436
9,266
11,702
2010
£000
1,950
1,338
(12)
588
1
657
1,544
6,066
(738)
(17,609)
22,388
(195)
9,912
(233)
-
(1,544)
8,135
12
(5,082)
(1,429)
(57)
(6,556)
2,655
(355)
(390)
1,910
3,489
5,777
9,266
23
Notes
(forming part of the financial statements)
1 Accounting policies
Cambria Automobiles plc is a company which is quoted on the AIM Market of the London Stock Exchange plc and is incorporated and domiciled
in the United Kingdom. The address of the registered office is Swindon Motor Park, Dorcan Way, Swindon, SN3 3RA. The registered number
of the company is 05754547.
These financial statements as at 31 August 2011 consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The
parent company financial statements present information about the Company as a separate entity and not about its group.
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting
Standards as adopted by the EU (“Adopted IFRS”). The Company has elected to prepare its parent company financial statements in accordance
with UK GAAP; and these are presented on pages 53 to 63.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the financial statements.
Judgements made by the directors in the application of these accounting policies that have significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are discussed at the end of this note.
Basis of preparation
The financial statements are prepared under the historical cost convention.
The directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook
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 in preparing the annual financial statements.
Further information regarding the company’s business activities together with the factors likely to affect its future development, performance
and position is set out in the Directors’ Report on pages 16 to 17.
Basis of consolidation
The financial statements consolidate the financial statements of the Company together with its trading subsidiary companies.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial
and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently
exercisable or convertible are taken into account. The financial information of subsidiaries is included from the date that control commences
until the date that control ceases.
All business combinations are accounted for by applying the purchase method. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are initially measured at fair value at the acquisition date irrespective of the extent
of any minority interest. Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration are recognised in profit or loss.
The excess of the cost of an acquisition over the fair values of the Group’s share of identifiable assets and liabilities acquired is recognised as
goodwill. If the fair value of identifiable assets and liabilities acquired (i.e. discount on acquisition) exceeds the cost of the business combination,
the difference is recognised directly in profit or loss.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation.
24
Notes (continued)
(forming part of the financial statements)
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified
as the Chief Executive Officer.
All revenue generated and non-current assets held are attributable to UK operations only.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services
provided in the normal course of business, net of discounts and VAT.
Sales of motor vehicles, parts and accessories are recognised when the significant risks and rewards of ownership have been transferred to the
buyer. In general this occurs when vehicles or parts are delivered to the customer and title has passed. Manufacturer incentives are recognised
as revenue when earned. Servicing and bodyshop sales, including warranty work, are recognised on completion of the agreed work. Finance
commission revenue is recognised as the related vehicles are sold.
Deposits received from customers
Deposits received from customers prior to the completion of a sale (delivery of vehicle) are included in the accounts as creditors falling due
within one year.
Financing income and expenses
Financing expenses comprise interest payable, finance charges on shares classified as liabilities, stocking interest charge on consignment
and used vehicles and finance leases. Financing income comprises interest receivable on funds invested and interest credits received from
manufacturers on stock management.
Borrowing costs are recognised in the period in which they are incurred.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.
Operating profit
Operating profit relates to profit before finance income, finance expense and income tax expense.
25
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Intangible assets
Goodwill
Goodwill represents the excess between the cost of an acquisition of a subsidiary compared to the net fair value of the identifiable assets,
liabilities and contingent liabilities, and recognition of identifiable intangibles at the date of acquisition. Identifiable intangibles are those which
can be sold separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units of the acquiree which represent
the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups
of assets. Goodwill is not amortised but is tested annually for impairment. Any impairment is recognised immediately in the statement of
comprehensive income and is not subsequently reversed.
Other intangible assets
Expenditure on internally generated goodwill and brands is recognised as an expense as incurred.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation
Amortisation is charged on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible
assets with an indefinite useful life and goodwill are systematically tested for impairment at each year. Other intangible assets are amortised
from the date they are available for use. The estimated useful lives are as follows:
Computer software
3 – 5 years
Order book
Customer list
6 months following date of acquisition
3 years following date of acquisition
The fair value of customer lists on acquisition have been calculated using discounted cash flows. The fair value of the order book on acquisition
has been calculated based on margins associated with deposits for future sales held at the date of acquisition.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant
and equipment.
Depreciation is charged on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is
not depreciated. The estimated useful lives are as follows:
• freehold buildings
50 years
• leasehold properties
over the lifetime of the lease
• plant and machinery
• fixtures and fittings
• computer equipment
5 to 10 years
5 to 10 years
3 to 5 years
Depreciation methods, useful lives, residual values and possible impairments have been reviewed at the year end. As a result of this review, no
impairment charge has been deemed necessary for the period.
26
Notes (continued)
(forming part of the financial statements)
Impairment excluding inventories and deferred tax assets
The carrying amounts of the Group’s assets, are reviewed at each year end to determine whether there is any indication of impairment; an asset
is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows
of that asset. If any such indication exists, the asset’s recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated
at each year end.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in income.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to
cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit is the
smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of
assets.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to
which the asset belongs.
Reversals of impairment
An impairment loss in respect of trade and other receivables carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. In determining the cost of motor vehicles, the actual amount paid and payable
to date for each vehicle is used, for spare parts and service items cost is based on the first-in first-out principle. An appropriate provision is made
for obsolete or slow moving items.
New vehicles on consignment from manufacturers are included in the Statement of Financial Position with a corresponding liability in creditors
due within one year. This stock is considered to be under the control of the Group as it is considered that the Group bears all the risks and
rewards or ownership, even though legal title has not yet passed.
Consignment stock is held for a maximum period (which varies between manufacturers) before becoming due for payment. Part of the
consignment period is interest free and the remaining periods are interest bearing (periods and charges vary between manufacturers but
interest is generally linked to LIBOR).
Used motor vehicles are stated at the lower of cost or net realisable value, by reference to Glass’s Guide or CAP data.
Demonstrator vehicles are held within inventories at the lower of cost and net realisable value.
Vehicle funding and stocking loans form part of the Group’s working capital and are recognised at the fair value of the amount due to the
manufacturer.
27
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Financial Instruments
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the group to deliver cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially unfavourable to the group; and
b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation
to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a
fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes
the legal form of the company’s own shares, the amounts presented in the historical financial information for called up share capital and share
premium account exclude amounts in relation to those shares.
Non-derivative financial instruments
Non-derivative financial instruments comprise, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and
other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the
effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the
effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part
of the Group’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost using the effective interest method.
28
Notes (continued)
(forming part of the financial statements)
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised except to the extent that it relates to items recognised
in other comprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet
date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary
difference can be utilised.
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and
will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are
recognised as an expense as incurred.
Leasing
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Where
land and buildings are held under leases the accounting treatment of the land is considered separately from that of the buildings. Leased
assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease
payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses. Lease payments are accounted for
as described below.
Operating lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term of the
lease. Lease incentives received are recognised as an integral part of the total lease expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is
allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Provisions
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of a past
event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation.
29
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
IFRS not yet applied
The following IFRSs have been issued but have not been applied by the Group in these financial statements as they are yet to be endorsed by the
EU. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:
• IFRS 9 issued to replace in phases IAS 39 in order to clarify the requirements for recognising and measuring financial assets, financial
liabilities and some contracts to buy or sell non-financial items.
Critical accounting judgements in applying the Group’s accounting policies
Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future
events that are believed to be reasonable under the circumstances.
Certain critical accounting judgements in applying the Group’s accounting policies are described below:
Goodwill impairment
The carrying value of goodwill is tested annually for impairment by using cash flow projections for each cash generating unit.
Intangible assets
On the acquisition of Grange Motors (Swindon) Limited in the period ended 31 August 2007, a third party valuation has been carried out on the
intangible assets that are pertinent to the motor business. This included consideration of franchise rights, brand, and other intangible assets.
The directors apply the principles of the external valuation of the intangibles on the Swindon acquisition to subsequent acquisitions and have
concluded that intangibles arising on subsequent acquisitions are immaterial.
Consignment inventories
Consignment vehicles are regarded as being effectively under the control of the Group and are included within inventories in the Statement of
Financial Position as the Group has the significant risks and rewards of ownership even though legal title has not yet passed, if the vehicles are
not sold in the consignment period the group has the obligation to purchase. The corresponding liability is included in trade and other payables.
Deferred tax
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular judgement is used
when assessing the extent to which deferred tax assets should be recognised with consideration given to the timing and level of future taxable
income.
Non-underlying expenses
Non-underlying expenses are items which derive from events or transactions that are outside the normal course of business, and do not directly
relate to the on-going operations, therefore have been separately disclosed in order for the financial statements to present a true and fair view.
30
Notes (continued)
(forming part of the financial statements)
2 Acquisition of subsidiaries
Effect of acquisitions in 2011
There were no acquisitions in 2011.
Effect of acquisitions 2010
On 31 October 2009 the Group acquired the trade and assets of certain dealerships from the Administrators of Autohaus Limited for a cash
consideration of £369,000. Transaction fees of £30,000 have been charged to operating expenses in the year. No goodwill arose on this
transaction. In the 10 months to 31 August 2010 the businesses contributed a net loss of £161,000 to the consolidated net profit for the year. No
further disclosures have been made in respect of this acquisition as the directors consider the amounts to be immaterial.
On 4 January 2010 the Group began trading as a Fiat and Mazda dealer in Bolton following the acquisition of certain assets from the Administrator
of Lythgoe Motors Limited for £22,500 on 23 December 2009. No goodwill arose on this transaction. In the 8 months to 31 August 2010 the
business contributed a net loss of £170,000 to the consolidated net profit for the year. No further disclosures have been made in respect of this
acquisition as the directors consider the amounts to be immaterial.
On 25 February 2010, the Group acquired all of the ordinary shares in D & F Trading Limited (renamed Invicta Motors (Maidstone) Limited post
acquisition) and two freehold properties from Drake and Fletcher Limited. The company was a motor dealership group based in Kent. In the 6
months to 31 August 2010 the subsidiary contributed net profit of £65,000 to the consolidated net profit for the year.
The reason for the acquisition was to expand the Group’s representation in the Kent area with Mazda and the addition of the Honda franchise
to the Group.
The acquisition had the following effect on the Group’s assets and liabilities.
Acquiree’s net assets at the acquisition date:
Freehold property
Plant and equipment
Inventories
Trade and other payables
Net and identifiable assets and liabilities
Goodwill on acquisition
Consideration paid (note that transaction costs of £39,500 were written off to operating expenses in 2010),
satisfied in cash
Pre-acquisition carrying
amount and Fair Value
£000
3,738
150
1,303
(109)
5,082
-
5,082
32
Notes (continued)
(forming part of the financial statements)
3 Revenue
Sale of goods
Aftersales services
Total revenues
4 Segmental reporting
2011
£000
330,945
42,358
2010
£000
349,096
43,021
373,303
392,117
The Group has adopted IFRS 8 ‘Operating Segments’ which determines and presents operating segments based on information presented to
the Groups Chief Operating Decision Maker (“CODM”), the Chief Executive Officer. The Group is operated and managed on a Dealership by
Dealership basis. The CODM receives information both on a dealership basis and by revenue stream (New, Used, Aftersales). Given the number
of dealerships, it was deemed most appropriate to present the information by revenue stream for the purposes of segmental analysis.
2011
Revenue
2011
Revenue
mix
2011
Gross
Profit
2011
Margin
2010
Revenue
2010
Revenue
mix
2010
Gross
Profit
2010
Margin
£m
146.5
184.0
51.4
(8.6)
%
39.2
49.3
13.8
(2.3)
£m
10.5
15.1
22.0
-
%
7.2
8.2
42.8
-
£m
158.6
190.4
51.5
(8.4)
%
40.4
48.6
13.1
(2.1)
£m
10.9
15.4
21.8
-
%
6.9
8.1
42.3
-
New Car
Used Car
Aftersales
Internal sales
Total
373.3
100.0
47.6
12.7
392.1
100.0
48.1
12.3
Operating expenses
Operating profit before flotation
and transaction expenses
Non-underlying expenses
(41.9)
5.7
(0.2)
(43.4)
4.7
(1.5)
Operating profit
5.5
1.5
3.2
0.8
The CODM reviews the performance of the business in terms of both net profit before tax and EBITDA, as such the following table shows a
reconciliation of the Profit before tax to EBITDA.
33
Notes (continued)
(forming part of the financial statements)
4 Segmental reporting (continued)
Profit Before Tax
Non-underlying expenses (note 5)
Underlying Profit Before Tax
Net finance expense
Depreciation and amortization
Underlying EBITDA
Non-underlying expenses
EBITDA
Revenue and non-current assets are attributable to United Kingdom operations only.
5 Non–underlying expenses
Listing costs
Transaction and new franchising costs
Cost rationalisation programme
6 Expenses and auditors’ remuneration
Included in profit are the following:
Impairment loss (reversed)/recognised on other trade receivables and prepayments
Auditors’ remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to taxation
All other services
34
2011
£000
4,656
231
4,887
844
1,422
7,153
(231)
6,922
2011
£000
-
169
62
231
2011
£000
56
2011
£000
20
90
29
23
2010
£000
2,607
1,544
4,151
576
1,338
6,066
(1,544)
4,522
2010
£000
1,474
70
-
1,544
2010
£000
(261)
2010
£000
20
90
25
30
Notes (continued)
(forming part of the financial statements)
7 Staff numbers and costs
The average number of persons employed by the group (including directors) during the year, analysed by category, was as follows:
Number of employees
Sales
Service
Parts
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Expenses related to defined contribution plans
2011
299
382
107
172
960
2011
£000
25,796
2,748
154
2010
281
339
165
161
946
2010
£000
26,761
2,860
161
28,698
29,782
8 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by the number of ordinary shares in issue in
the year. There is one class of ordinary share with 100,000,000 shares in issue.
There are no dilutive share options in issue.
Profit attributable to shareholders
Non-underlying expenses (Note 5)
Tax on adjustments (at 27.16% (2010:28%))
Adjusted profit attributable to equity shareholders
2011
£000
3,466
231
(63)
3,634
2010
£000
1,950
1,544
(432)
3,062
Number of shares in issue (‘000)
100,000
100,000
Basic earnings per share
Adjusted earnings per share
3.47p
3.63p
1.95p
3.06p
35
Notes (continued)
(forming part of the financial statements)
9 Finance income and expense
Recognised in profit or loss
Finance income
Rent deposit interest
Interest receivable
Total finance income
Finance expense
Interest payable on bank borrowings
Consignment and used stocking interest
Total finance expense
Total interest expense on financial liabilities held at amortised cost
Total other interest expense
10 Taxation
Recognised in the income statement
Current tax expense
Current year
Deferred tax
Utilisation of tax losses paid to previous owner of subsidiary undertaking
Adjustment in respect of prior years
Origination and reversal of temporary differences
Change in tax rate of tax losses due to previous owner of subsidiary undertaking
Total tax expense
36
2011
£000
2010
£000
8
30
38
351
531
882
351
531
882
2011
£000
1,040
1,040
150
-
(45)
45
150
1,190
-
12
12
355
233
588
355
233
588
2010
£000
519
519
215
(77)
-
-
138
657
Notes (continued)
(forming part of the financial statements)
10 Taxation (continued)
Reconciliation of total tax
Profit for the year
Total tax expense
Profit excluding taxation
Tax using the UK corporation tax rate of 27.16 % (2010: 28%)
Non-deductible expenses
Accounting deprecation for which no tax relief is due
Utilisation of tax losses
Tax payment due to previous owners of subsidiary in relation to utilisation of pre-
acquisition losses
Change in tax rate in respect of deferred tax on utilisation of pre-acquisition
losses due to previous owner of subsidiary
Change in tax rate
Adjustment in respect of prior years deferred tax*
Total tax expense
2011
£000
3,466
1,190
4,656
1,265
25
156
-
150
45
216
(667)
1,190
2010
£000
1,950
657
2,607
730
168
144
(523)
215
-
-
(77)
657
*The 2011 adjustment in respect of prior years deferred tax is comprised of the following; recognising a deferred tax asset in respect of trading
losses carried forward, reducing the deferred tax asset in respect of a capital loss, and other small differences in relation to accelerated capital
allowances.
The applicable tax rate for the current year is 27.16% following the reduction in the main rate of UK corporation tax from 28% to 26% with effect
from 1 April 2011.
On 23 March 2011 the Chancellor announced the reduction in the main rate of UK corporation tax to 26 per cent with effect from 1 April 2011
and a further reduction to 25 per cent with effect from 1 April 2012. These changes became substantively enacted on 29 March 2011 and 5 July
2011 respectively and therefore the effect of these rate reductions creates a reduction in the deferred tax asset which has been included in the
figures above.
37
Notes (continued)
(forming part of the financial statements)
11 Property, plant and equipment
Freehold
land &
buildings
Long
leasehold
land &
buildings
Short
leasehold
improvements
Plant &
Equipment
Fixtures,
fittings &
computer
equipment
Total
£000
£000
£000
£000
£000
£000
Cost
Balance at 1 September 2009
Additions
Acquired through business
combinations
Disposals
14,606
580
3,738
-
Balance at 1 September 2010
18,924
5,058
Additions
Disposals
463
-
-
-
5,058
3,654
2,825
6,329
32,472
-
-
-
82
-
-
3,736
320
(161)
169
150
622
-
1,453
3,888
(445)
(837)
(1,282)
2,699
186
(284)
6,114
526
(172)
36,531
1,495
(617)
Balance at 31 August 2011
19,387
5,058
3,895
2,601
6,468
37,409
Depreciation
Balance at 1 September 2009
Charge for the year
Disposals
Balance at 1 September 2010
Depreciation charge for the year
Disposals
Balance at 31 August 2011
Net book value
At 31 August 2010
836
256
-
1,092
241
-
1,333
318
83
-
401
75
-
476
2,530
184
-
2,714
268
(161)
2,359
280
(444)
2,195
239
(284)
4,963
481
(835)
4,609
515
(171)
11,006
1,284
(1,279)
11,011
1,338
(616)
2,821
2,150
4,953
11,733
At 31 August 2011
18,054
4,582
1,074
17,832
4,657
1,022
504
451
1,505
25,520
1,515
25,676
Security
The title of all freehold and long leasehold properties have been pledged as security to the bank loans disclosed in note 17.
Property, plant and equipment under construction
At 31 August 2011 there were no assets in the course of construction (2010: £nil).
38
Notes (continued)
(forming part of the financial statements)
12 Intangible assets
Cost
Balance at 1 September 2009
Other acquisitions – externally purchased
Balance at 1 September 2010
Other acquisitions – externally purchased
Balance at 31 August 2011
Amortisation and impairment
Balance at 1 September 2009
Amortisation
Balance at 1 September 2010
Amortisation for the year
Balance at 31 August 2011
At 31 August 2010 and 1 September 2010
At 31 August 2011
Goodwill
£000
Software
£000
Other
£000
346
-
346
-
346
-
-
-
-
-
346
346
589
57
646
74
720
458
54
512
84
596
134
124
176
-
176
-
176
176
-
176
-
-
-
-
Total
£000
1,111
57
1,168
74
1,242
634
54
688
84
772
480
470
The undertakings included in the consolidated Group accounts are as follows:
* Owned directly by Cambria Automobiles Acquisitions Limited
** Owned directly by Cambria Automobiles Group Limited
*** Owned directly by Cambria Automobiles (South East) Limited
Country of incorporation
Principal activity
Class and percentage of
shares held
Subsidiary undertakings
Cambria Automobiles Group Limited
England and Wales
Holding Company
Cambria Automobiles Acquisitions Limited **
England and Wales
Investment Company
100% Ordinary
100% Ordinary
Cambria Automobiles Property Limited **
England and Wales
Property Company
100% Ordinary
Cambria Automobiles (Swindon) Limited *
England and Wales
Grange Motors (Swindon) Limited *
Thoranmart Limited *
Cambria Vehicle Services Limited*
England and Wales
England and Wales
England and Wales
Cambria Automobiles (South East) Limited*
England and Wales
Grange Motors (Brentwood) Limited***
Invicta Motors Limited***
Deeslease Limited***
Dove Group Limited***
England and Wales
England and Wales
England and Wales
England and Wales
Translease Vehicle Management Limited***
England and Wales
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Dormant
Dormant
Dormant
Invicta Motors (Maidstone) Limited*
England and Wales
Motor retailer
100% Ordinary & Preference
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary & Preference
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
39
Notes (continued)
(forming part of the financial statements)
12 Intangible assets (continued)
Amortisation charge
The amortisation charge is recognised in the following line items in the income statement:
Administrative expenses
2011
£000
84
2010
£000
54
Impairment loss and subsequent reversal
Goodwill and indefinite life intangible assets considered significant in comparison to the Group’s total carrying amount of such assets have been
allocated to cash generating units or groups of cash generating units as follows:
Grange Motors (Swindon) Ltd and Cambria Automobiles (Swindon) Ltd
Thoranmart Ltd
Goodwill
2011
£000
261
85
346
2010
£000
261
85
346
The recoverable amount of each CGU has been calculated with reference to its value in use. The key assumptions of this calculation are a review
of one year’s EBITDA.
The value in use exceeds the above carrying values for each CGU, therefore no impairment is considered necessary.
40
Notes (continued)
(forming part of the financial statements)
13 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
The amount of temporary differences, unused tax losses and tax credits for which a deferred tax asset is recognised is set out below. The asset
would be recovered if offset against future taxable profits of the group.
The Group has an arrangement with the vendors of Cambria Automobiles (South East) Limited, which was acquired in the year ended 31 August
2008, under which an amount equal to any tax benefit received by the Group in relation to tax losses that existed at the date of acquisition must be
paid to the vendors as additional consideration. At the date of acquisition, the utilisation of tax losses was not probable and therefore no deferred
tax asset was recognised as part of the acquisition accounting, and the fair value of the liability for contingent consideration was immaterial.
Subsequent to the acquisition, in the period to 31 August 2009, the utilisation of pre-acquisition losses became probable and, as a result, a deferred
tax asset has been recognised. A liability for the contingent consideration payable to the vendors has been recognised at its fair value.
Tax value of losses carry-forwards (pre-acquisition losses)
Property, plant and equipment
Provisions
Tax value of loss carry-forwards
Recognised net tax assets
Assets
2011
£000
311
(846)
19
872
356
2010
£000
508
-
-
-
508
Unrecognised deferred tax assets and liabilities
In the prior year, the deferred tax liability relating to plant, property and equipment and provisions had not been recognised as it was not material.
Property, plant and equipment
Provisions
Tax value of loss carry-forwards
Tax (liabilities)/assets
Unrecognised net tax (liabilities)/assets
Assets
2011
£000
-
-
-
-
-
2010
£000
(407)
132
261
(14)
(14)
On 23 March 2011 the Chancellor announced the reduction in the main rate of UK corporation tax to 26 per cent with effect from 1 April 2011 and a
further reduction to 25 per cent with effect from 1 April 2012. These changes became substantively enacted on 29 March 2011 and 5 July 2011 respectively
and therefore the effect of these rate reductions creates a reduction in the deferred tax asset which has been included in the figures above.
The Chancellor proposed changes to further reduce the main rate of corporation tax by one per cent per annum to 23 per cent by 1 April 2014,
but these changes have not yet been substantively enacted and therefore are not included in the figures above. The overall effect of the further
reductions from 25 per cent to 23 per cent, if these applied to the deferred tax balance at 31 August 2011, would be to further reduce the deferred tax
asset by approximately £28k.
41
Notes (continued)
(forming part of the financial statements)
14 Inventories
Vehicle consignment stock
Motor vehicles
Parts and other stock
2011
£000
33,747
21,621
2,092
57,460
2010
£000
40,040
20,044
2,351
62,435
Included within inventories is £nil (2009: £nil) expected to be recovered in more than 12 months.
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in the year amounted to £321 million
(2010: £341 million).
15 Trade and other receivables
Trade receivables
Prepayments and other debtors
2011
£000
5,134
1,771
6,905
Included within trade and other receivables is £nil (2009: £nil) expected to be recovered in more than 12 months.
16 Cash and cash equivalents
Cash and cash equivalents per balance sheet
2011
£000
11,702
2010
£000
5,443
2,495
7,938
2010
£000
9,266
Cash and cash equivalents per cash flow statement
11,702
9,266
42
Notes (continued)
(forming part of the financial statements)
17 Other interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at
amortised cost. For more information about the Group’s exposure to interest rate risk, see note 22.
Non-current liabilities
Secured bank loans
Current liabilities
Secured bank loans
Terms and debt repayment schedule
All debt is in GBP currency
2011
£000
2010
£000
11,358
12,672
1,352
1,024
Nominal interest rate
Year of Maturity
Face Value and
Carrying Amount
Face Value and
Carrying Amount
Loan 31/07/2006
Loan 01/08/2007
Loan 31/12/2007
Loan 01/03/2011
Bank of England Base Rate +1.25%
Bank of England Base Rate +1.25%
LIBOR +1.75%
LIBOR +3.00%
2019
2020
2020
2017
Finance lease liabilities
There were no finance lease liabilities at 31 August 2010 or 2011.
2011
£000
2,281
653
7,407
2,369
2010
£000
2,530
725
7,866
2,575
12,710
13,696
43
Notes (continued)
(forming part of the financial statements)
18 Trade and other payables
Current
Vehicle consignment creditor
Other trade payables
Non-trade payables and accrued expenses
Vehicle funding
2011
£000
39,644
8,350
7,159
13,956
69,109
2010
£000
46,148
8,881
7,820
12,047
74,896
Included within trade and other payables is £ nil (2010: £nil) expected to be settled in more than 12 months.
19 Employee benefits
Pension plans
Defined contribution plans
The Group operates a number of defined contribution pension plans.
The total expense relating to these plans in the current year was £154,000 (2010: £161,000).
20 Provisions
Restructuring provision
Balance at 1 September 2010
Provisions used during the year
Balance at 31 August 2011
Current
Non current
Balance at 31 August 2010
Current
Non current
Balance at 31 August 2011
Onerous leases/
contracts
£000
192
(56)
136
41
151
192
41
95
136
Staff costs
£000
301
(301)
-
301
-
301
-
-
-
Total
£000
493
(357)
136
342
151
493
41
95
136
The onerous lease provision is being released against the costs incurred on the relevant lease. The provision will be fully released by 2015.
44
Notes (continued)
(forming part of the financial statements)
21 Capital and reserves
Share capital
Authorised
Ordinary shares of 10 pence each
Allotted, called up and fully paid
Ordinary shares of 10 pence each
Shares classified in shareholders funds
2011
£000
2010
£000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys different or enhanced voting rights from any other shareholder. All shares are eligible
for dividends and rank equally for dividend payments.
45
Notes (continued)
(forming part of the financial statements)
22 Financial instruments
22 (a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at
the balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
balance sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable
on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance
sheet date.
Interest-bearing borrowings
Fair value, which after initial recognition is determined for disclosure purposes only, is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the balance sheet date.
The interest rates used to discount estimated cash flows, where applicable are based on the weighted cost of capital and were as follows:
Loans and borrowings
Fair values
2011
%
2.2
2010
%
2.2
The fair values for each class of financial assets and financial liabilities together with their carrying amounts shown in the balance sheet are as follows:
As at 31 August 2011
As at 31 August 2010
£000
£000
Financial assets
Loans and receivables at amortised cost including cash and cash equivalents
Trade receivables(net) (note 15)
Other receivables (note 15)
Cash and cash equivalents
Total Financial assets
Financial liabilities
Financial liabilities at amortised cost
Other interest-bearing loans and borrowings (note 17)
Trade and other payables (note 18)
Total financial liabilities
5,134
1,771
11,702
18,607
12,710
69,109
81,819
5,443
2,495
9,266
17,204
13,696
74,896
88,592
The Directors consider the carrying amount of the Group’s financial assets and financial liabilities, as detailed above, approximate their fair value.
46
Notes (continued)
(forming part of the financial statements)
22 (b) Credit risk
Credit risk management
The Group is exposed to credit risk primarily in respect of its trade receivables and financial assets. Trade receivables are stated net of provision
for estimated impairment losses. Exposure to credit risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit
to certain customers after an appropriate evaluation of risk coupled with the findings from external reference agencies. Credit risk arises in
respect of amounts due from vehicle manufacturers in relation to bonuses and warranty receivables. This risk is mitigated by the number of
manufacturers for which the group holds franchises, procedures to ensure timely collection of debts and management’s belief that it does not
expect any manufacturer to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying amount of each
financial asset in the statement of financial position.
Exposure to credit risk
The carrying amount of trade receivables represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the
balance sheet date was £5,134,000 (2010: £5,443,000) being the total of the carrying amount of financial assets, excluding equity investments,
shown in the table below.
The maximum exposure to credit risk for trade receivables at the balance sheet date by geographic region was:
United Kingdom
2011
£000
5,134
The maximum exposure to credit risk for trade receivables at the balance sheet date by type of counterparty was:
Vehicle debtors
Non vehicle debtors
Manufacturer debtors
2011
£000
1,999
2,246
889
5,134
2010
£000
5,443
2010
£000
2,475
2,029
939
5,443
Credit quality of financial assets and impairment losses
The ageing of trade receivables at the balance sheet date is given below. The Group’s policy is to provide for all debts which are past due. The
directors consider the balance to be recoverable based on credit terms and post balance sheet receipts.
Trade receivables not past due
Trade receivables past due
Gross
2011
£000
5,134
46
5,180
Impairment
2011
£000
-
46
46
Gross
2010
£000
5,443
135
5,578
Impairment
2010
£000
-
135
135
47
Notes (continued)
(forming part of the financial statements)
22 (b) Credit risk (continued)
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 31 August 2010
Impairment loss reversed
Allowance for impairment utilised
Balance at 31 August 2011
£000
135
56
(145)
46
The allowance account for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount
owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.
22 (c) Liquidity risk
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity is managed by the Group’s central
treasury function within policy guidelines set by the Board with prime areas of focus being liquidity and interest rate exposure. The group is financed
primarily by bank loans, vehicle stocking credit lines and operating cash flow. The directors have assessed the future funding requirements of the
Group and compared them to the level of committed available borrowing facilities. These committed facilities are maintained at levels in excess
of planned requirements and are in addition to short term uncommitted facilities that are also available to the Group. The assessment included a
review of financial forecasts, financial instruments and cash flow projections. These forecasts and projections show that the Group, taking account
of reasonably possible scenarios, should be able to operate within the level of its borrowing facilities for the foreseeable future.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting
agreements: Interest is payable on loans of £2,934,000 (2010: £3,255,000) at Bank of England base rate plus 1.25%, loans of £7,407,000 (2010:
£7,866,000) at LIBOR plus 1.75% and on loans of £2,369,000 (2010: £2,575,000) at LIBOR plus 3%.
2010
Carrying
amount
Contractual
cash flows
1 year or
less
1 to <2 years
2 to <5 years
5 years and
over
£000
£000
£000
£000
£000
£000
Non-derivative financial liabilities
Secured bank loans
13,696
15,267
1,384
1,619
2,902
9,362
2011
Carrying
amount
Contractual
cash flows
1 year or
less
1 to <2 years
2 to <5 years
5 years and
over
£000
£000
£000
£000
£000
£000
Non-derivative financial liabilities
Secured bank loans
12,710
14,205
1,358
1,591
3,024
8,232
48
Notes (continued)
(forming part of the financial statements)
22 (d) Market risk
Financial risk management
Market risk is the risk that changes in market prices, such as interest rates will affect the Group’s income or the value of its holdings of financial instruments
Market risk - Foreign currency risk
The Group does not have any exposure to foreign currency risk
Market risk – Interest rate risk
Profile
At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Cash and cash equivalents
Vehicle funding
Loans and overdrafts
2011
£000
11,702
(13,956)
(12,710)
2010
£000
9,266
(12,047)
(13,696)
(14,964)
(16,477)
The objectives of the Group’s interest rate policy are to minimise interest costs. The Group does not actively manage cash flow interest risk as
the directors believe that the retail sector in which the Group operates provides a natural hedge against interest rate movements. Consequently,
it is Group policy to borrow on a floating rate basis.
Whilst there are no hedging instruments, the Board reviews its hedging policy on a regular basis.
Sensitivity analysis
An increase of 0.5 basis points in interest rates at the balance sheet date would have decreased equity and profit or loss by the amounts shown below.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of financial instruments
with variable interest rates, financial instrument at fair value through profit or loss or available for sale with fixed interest rates and the fixed rate
element of interest rate swaps. The analysis is performed on the same basis for comparative periods.
Equity
Decrease
Profit or loss
Decrease
2011
£000
133
2010
£000
130
133
130
49
Notes (continued)
(forming part of the financial statements)
22 (e) Capital management
Prior to each acquisition, the Board considers its funding options and the appropriate mix of secured debt and equity.
The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits to other stakeholders. The Group must ensure that sufficient capital resources are available for working
capital requirements and meeting principal and interest payment obligations as they fall due.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio, which is calculated as net debt divided by
total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statement of financial
position) less cash and cash equivalents. Total capital is calculated as total shareholders’ equity.
The gearing ratios for each year are as follows:
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Gearing ratio
23 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
As of 31 August 2011
As of 31 August 2010
£000
12,710
(11,702)
1,008
19,501
£000
13,696
(9,266)
4,430
16,035
5.2%
27.6%
2011
£000
2,533
7,885
24,769
35,187
2010
£000
2,434
8,197
25,617
36,248
The Group leases a number of motor dealership sites under operating leases. Land and buildings have been considered separately for lease classification.
During the year £ 2,434,000 was recognised as an expense in the income statement in respect of operating leases (2010: £2,394,000).
50
Notes (continued)
(forming part of the financial statements)
24 Contingencies
The Group is jointly and severally liable in respect of value added tax liabilities arising in other group undertakings. The related fellow subsidiary
undertakings and the parent company were is a repayment situation at 31 August 2010 and 2011.
In recognition of the Cambria Automobiles plc group bank and used vehicle funding facilities, the following companies have entered into a joint
agreement to guarantee liabilities with banks and finance houses of the motor manufacturers that provide new and used vehicles to the group:
Cambria Automobiles plc, Cambria Automobiles Property Limited, Cambria Automobiles Group Limited, Cambria Automobiles Acquisitions
Limited, Cambria Automobiles (Swindon) Limited, Grange Motors (Swindon) Limited, Thoranmart Limited, Cambria Automobiles (South East)
Limited, Grange Motors (Brentwood) Limited, Invicta Motors Limited, Invicta Motors (Maidstone) Limited and Cambria Vehicle Services Limited.
Intra-group guarantees are accounted for as insurance contracts.
25 Related parties
Identity of related parties with which the Group has transacted
Key management personnel are considered to be the board of directors for the purposes of this disclosure.
Transactions with key management personnel
At the year end, the Directors of the Company and their immediate relatives controlled 49.1% per cent of the voting shares of the Company.
The compensation of key management personnel is as follows:
Directors’ emoluments
Salaries and consultancy fees
Annual bonus
Non-contractual bonuses
The emoluments consist of:
Directors’ emoluments
James Mullins
Rodney Smith
Mark Lavery
Warren Scott
Sir Peter Burt
Michael Burt
2011
£000
587
463
-
2010
£000
507
525
910
1,050
1,942
Salaries Consultancy Fees
2011
£000
125
50
300
25
25
25
550
2011
£000
-
37
-
-
-
-
37
Bonus
2011
£000
88
-
375
-
-
-
Total
2011
£000
213
87
675
25
25
25
Total
2010
£000
319
288
1,290
25
10
10
463
1,050
1,942
All directors benefited from qualifying third party indemnity provisions during the financial period.
During the year Mark Lavery, James Mullins, Rodney Smith and Warren Scott each bought 4 vehicles from the Group and each sold 4 vehicles
back to the Group. All transactions were carried out at arm’s length and there were no outstanding balances due to the Group at the year end.
51
Notes (continued)
(forming part of the financial statements)
25 Related parties (continued)
Other related party transactions
The Company is quoted on the AIM Market. Promethean own 33% of the company. During the year the company paid £nil (2010: £44,000) in
management fees to Promethean.
26 Ultimate parent company and parent company of larger group
In the opinion of the directors, the distribution of the ordinary shares and the rights attributing themselves to them means that there is no
overall controlling party of the company.
27 Post balance sheet events
Acquisition
On 1 September 2011, the Group acquired the trade and assets of the Vauxhall dealership in Southampton from Hartwell PLC. The total
consideration payable for the business and assets acquired was £323,601 there was no goodwill payable on the acquisition.
Dividend
The Board is pleased to announce that it will make its maiden dividend payment in respect of the financial year to 31 August 2011 of 0.3p per
share as a full and final dividend payment.
52
Company Balance Sheet
At 31 August 2011
Note
2011
2010
£000
£000
£000
£000
Fixed assets
Tangible Fixed Assets
Investments
Current assets
Stock
Debtors
Cash at bank and in hand
5
6
7
8
Creditors: amounts falling due within one year 9
Net current assets
Total assets less current liabilities
Provisions for liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Shareholders’ funds
10
11
12
12
218
666
550
376
14,606
15,532
(2,765)
202
666
884
868
339
290
11,987
12,616
(1,623)
12,767
13,651
-
13,651
10,000
799
2,852
13,651
10,993
11,861
-
11,861
10,000
799
1,062
11,861
These financial statements were approved by the board of directors on 25 November 2011 and were signed on its behalf by:
Mark Lavery
Director
Company number: 05754547
53
Company Reconciliation of movements in shareholders’ funds
for the year ended 31 August 2011
Note
Company
Company
Profit for the financial year
12
Net increase to shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
2011
£000
1,790
1,790
11,861
13,651
2010
£000
1,267
1,267
10,594
11,861
54
Notes (continued)
1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the financial
statements.
Going Concern
The directors believe that the company is well placed to manage its business risks successfully despite the current uncertain economic outlook
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable
future. Thus they continue to adopt the going concern basis in preparing the annual financial statements
Further information regarding the company’s business activities together with the factors likely to affect its future development, performance
and position is set out in the Directors Report on page 11.
Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules.
Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss account.
Under Financial Reporting Standard 1 the Company is exempt from the requirement to prepare a cash flow statement on the grounds that the
Group financial statements include the Company in its own published consolidated financial statements.
The Company has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with entities
which form part of the group.
Fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by instalments over their estimated useful
lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
• freehold buildings
50 years
• plant and machinery
5 to 10 years
• fixtures and fittings
5 to 10 years
• computer equipment
3 to 5 years
No depreciation is provided on freehold land.
Investments
Investments in subsidiary undertakings are stated at cost less amounts written off.
Stocks
Stocks are stated at the lower of cost and net realisable value. In determining the cost of motor vehicles, the actual amount paid to date for each
car is used, for spare parts and service items stocks are valued at invoiced cost on a FIFO basis. An appropriate provision is made for obsolete
or slow moving items.
New vehicles on consignment from manufacturers are included in the balance sheet where it is considered that the company bears the risks and
rewards or ownership.
Consignment stock is held for a maximum period (which varies between manufacturers) before becoming due for payment. Part of the
consignment period is interest free and the remaining period are interest bearing (periods varies between manufacturers).
55
Notes (continued)
Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes.
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and
accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.
Classification of financial instruments issued by the Group
Following the adoption of FRS 25, financial instruments issued by the Group are treated as equity (i.e. forming part of shareholders’ funds) only
to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company (or
Group); and
b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no obligation
to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s exchanging a
fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes
the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and share premium
account exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges. Finance payments associated
with financial instruments that are classified as part of shareholders’ funds (see dividends policy), are dealt with as appropriations in the
reconciliation of movements in shareholders’ funds.
Dividends on shares presented within equity
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised and are
no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the financial statements.
56
Notes (continued)
2 Remuneration of directors
Directors’ emoluments
Salaries and consultancy fees
Annual bonus
Non-contractual bonuses
The emoluments in respect of the highest paid director were:
Directors’ emoluments
Salaries
Annual bonus
Non-contractual bonuses
All directors benefited from qualifying third party indemnity provisions during the financial period
2011
£000
587
463
-
1,050
2011
£000
300
375
-
675
2010
£000
507
525
910
1,942
2010
£000
270
360
660
1,290
57
Notes (continued)
3 Staff numbers and costs
The average number of persons employed by the Company (including directors) during the period, analysed by category, was as follows:
Number of employees
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Non-recurring listing bonuses
Non-recurring social security costs
Other pension costs
4 Dividends
The aggregate amount of dividends received compromises:
Aggregate amount of dividends received in the financial year
The aggregate amount of dividends proposed and not paid at the year end is £300,000 (2010: £nil).
Company
2011
Company
2010
34
35
Company
2011
£000
2,741
352
-
-
11
Company
2010
£000
2,724
291
1,025
131
10
3,104
4,181
2011
1,500
2010
2,610
58
Notes (continued)
5 Tangible fixed assets
Company
Cost
At 1 September 2010
Additions
At 31 August 2011
Depreciation
At 1 September 2010
Charge for year
At 31 August 2011
Net book value
At 31 August 2011
31 August 2010
Computer equipment
£000
Total
£000
287
129
416
85
113
198
218
202
287
129
416
85
113
198
218
202
59
Notes (continued)
6 Fixed asset investments
Company
Cost and net book value
At 1 September 2010 and 31 August 2011
Shares in group
undertakings
£000
666
The undertakings in which the Company’s interest at the year end is more than 20% are as follows:
Country of
incorporation
Principal activity
Class and percentage of
shares held
Subsidiary undertakings
Cambria Automobiles Group Limited
England and Wales
Holding Company
Cambria Automobiles Acquisitions Limited **
England and Wales
Investment Company
100% Ordinary
100% Ordinary
Cambria Automobiles Property Limited **
England and Wales
Property Company
100% Ordinary
Cambria Automobiles (Swindon) Limited *
England and Wales
Grange Motors (Swindon) Limited *
Thoranmart Limited *
Cambria Vehicle Services Limited*
England and Wales
England and Wales
England and Wales
Cambria Automobiles (South East) Limited*
England and Wales
Grange Motors (Brentwood) Limited***
Invicta Motors Limited***
Deeslease Limited***
Dove Group Limited***
England and Wales
England and Wales
England and Wales
England and Wales
Translease Vehicle Management Limited***
England and Wales
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Motor retailer
Dormant
Dormant
Dormant
Invicta Motors (Maidstone) Limited*
England and Wales
Motor retailer
100% Ordinary & Preference
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary & Preference
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
* Owned directly by Cambria Automobiles Acquisitions Limited
** Owned directly by Cambria Automobiles Group Limited
*** Owned directly by Cambria Automobiles (South East) Limited
2011
£000
550
2010
£000
339
7 Stocks
Motor vehicles
60
Notes (continued)
8 Debtors
Trade debtors
Amounts owed by group undertakings
Prepayments and accrued income
9 Creditors: amounts falling due within one year
Amounts owed to group undertakings
Trade creditors
Other taxation and social security
Accruals and deferred income
Corporation tax
2011
£000
8
40
328
376
2011
£000
356
654
269
1,360
126
2,765
2010
£000
77
40
173
290
2010
£000
306
494
-
823
-
1,623
61
Notes (continued)
10 Provisions for liabilities
Deferred Taxation
At 1 September 2010
Movement in period
At 31 August 2011
The elements of deferred taxation are as follows:
Difference between accumulated depreciation and capital allowances
Total deferred tax
Unrecognised deferred tax asset
Recognised deferred tax asset
2011
£000
-
-
-
-
£000
Company
-
-
-
2010
£000
11
11
(11)
-
The deferred tax asset not recognised in 2010, which consists primarily of tax losses carried forward, would be recovered if set off against future
profits of the company.
62
Notes (continued)
11 Called up share capital
Authorised
Ordinary shares of 10 pence each
Allotted, called up and fully paid
Ordinary shares of 10 pence each
Shares classified as liabilities
Shares classified in shareholders funds
2011
£000
2010
£000
10,000
10,000
10,000
10,000
10,000
10,000
10,000
-
10,000
10,000
10,000
-
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys different or enhanced voting rights from any other shareholder. All shares are eligible
for dividends and rank equally for dividend payments.
12 Share premium and reserves
At 1 September 2010
Profit for the year
At 31 August 2011
13 Related party disclosures
Share premium account
Profit and loss account
£000
799
-
799
£000
1,062
1,790
2,852
The Company is quoted on the AIM Market. Promethean own 33% of the Company. During the year the Company paid £nil (2010: £44,000) to
Promethean.
14 Ultimate parent company and parent undertaking of larger group
In the opinion of the directors, the distribution of the ordinary shares and the rights attributing themselves to them means that there is no
overall controlling party of the Company.
63