Cambria Automobiles plc Annual Report 2012

Plain-text annual report

Directors’ report and ﬁ nancial statements Registered number 05754547 31 August 2012 8641 Cover Spreads.indd 1 21/12/2012 14:08 Contents Chairman’s Statement ............................................................. 4 Operating and Financial Review ............................................. 7 Notes (continued) 11 Called up share capital Directors’ report ......................................................................16 Authorised 2012 £000 2011 £000 Statement of directors’ responsibilities in respect of the Directors’ Report and the ﬁ nancial 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 ﬁ nancial position ...................... 22 Consolidated cash ﬂ ow statement .........................................23 Notes ....................................................................................... 24 Company Balance Sheet ........................................................ 54 Company Reconciliation of movements in shareholders’ funds ....................................... 55 Ordinary shares of 10 pence each 10,000 10,000 Allotted, called up and fully paid Ordinary shares of 10 pence each Shares classiﬁ ed as liabilities Shares classiﬁ ed in shareholders funds 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 diﬀ erent or enhanced voting rights from any other shareholder. All shares are eligible Notes ....................................................................................... 56 for dividends and rank equally for dividend payments. 12 Share premium and reserves At 1 September 2011 Proﬁ t for the year Dividend paid At 31 August 2012 Share premium account Proﬁ t and loss account £000 799 - - 799 £000 2,852 1,264 (300) 3,816 13 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. 22 2 8641 Cover Spreads.indd 2 63 21/12/2012 14:08 8641 AW.indd 3 333 21/12/2012 12:55 Chairman’s Statement Our ﬁ nancial year 2011/12 coincided with a challenging period for our industry, which saw the Cambria Automobiles plc (“Cambria”) achieve revenues of £352.5 million and an underlying proﬁ t before tax of £3.1 million. Group Overview It is now six years since Cambria was established and two and a half years since it was admitted to the London Stock Exchange AIM market. The management, under the leadership our Chief Executive Mark Lavery, has sought to create a top 20 UK dealership group with a balanced portfolio of manufacturer brands spanning the high luxury, premium and volume segments. Much has been achieved towards reaching this target and Cambria now comprises a stable of 39 franchised dealerships spanning 16 brands, with Vauxhall, Dacia and Abarth being new additions in the year under review. A key feature of our development has been to build the business organically from our own resources, together with the close cooperation of our manufacturer partners, with due consideration to our geographical focus and range of brand representation. Crucially we have continued to remain faithful to our objective to minimise the creation of goodwill on acquisitions, but recognise that we may pay goodwill for the right opportunity. To date the Group has focussed its acquisition and growth strategy through acquiring businesses and assets that are underperforming. Indeed, in many cases the business has been in a distressed situation from a trading point of view. The Group’s management have done an exceptional job in producing strong returns from distressed businesses. This now puts the Group in a position where the Board can consider adding earnings enhancing acquisitions to the portfolio. Our positive operational cash generation provides us with a strong ungeared balance sheet, a foundation for the development of the business and we have a number of signiﬁ cant opportunities under review in the current year. We, of course, remain focussed on providing superior returns on shareholders’ funds, which reached 13.5% in the year reported. 4 8641 AW.indd 4 21/12/2012 12:55 The year to 31st August 2012 was a challenging one, although I am pleased to report that the second half was considerably stronger and in line with our record second half performance achieved in 2011. Your board took action during the ﬁ rst half to ameliorate the worst eﬀ ects of the testing UK car market, resulting in a signiﬁ cant reduction in our ongoing operational cost base. These measures are now largely complete but the discipline to seek eﬃ ciencies in our operations wherever we can ﬁ nd them remains ingrained in our culture. I am conﬁ dent that these results further underline the robustness of our business model and the eﬀ ectiveness of our senior management team in driving its implementation and that our continual focus upon tight management of costs, coupled with our lean operating procedures, will further contribute to our future performance. The improvement in our performance in the second half of the year continues into the opening months of our 12/13 ﬁ nancial year, with signs that the UK car market is performing more strongly as vehicle manufacturers face increasing challenges in continental European markets. Financial Management The Board places great importance on the prudent management of the Group’s ﬁ nances. Our balance sheet has been further strengthened by these results and for the ﬁ rst time we are in a position of closing the year with net cash and the balance sheet further underpinned by our ownership of freehold properties and by minimal goodwill. Liquidity remains high thanks to our banking facilities with Lloyds Banking Group. This strong ﬁ nancial position enables us to take advantage of acquisition opportunities as they arise. Promethean We announced in July that Promethean, a signiﬁ cant founding shareholder in the Group, intended to distribute its shareholding, which amounted to 33.32% of Cambria’s shares, to its own shareholders in specie. This distribution took place on 7 September 2012. Our broker Canaccord Genuity supported us in managing the aftermarket of the transaction and we now have a strengthened institutional shareholder base and considerably greater liquidity in our shares. 8641 AW.indd 5 5 21/12/2012 12:55 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 ﬁ nancial management. Notwithstanding the continued criticism to which UK lending banks are subjected, we are grateful for this continued strong support which will be important and a key diﬀ erentiator 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 eﬀ ective and valued business partner. We were pleased to add Vauxhall, Dacia and Abarth as brand partners in the year and expect to expand further our brand representation during the course of the current year as negotiations currently underway are concluded. As announced in November 2011, Rodney Smith, one of the founding Directors, retired and in February 2012, Warren Scott, my predecessor stepped down from the Board. On behalf of the Board and shareholders I would like to thank Rodney and Warren for their valued contribution to the Group. I would also like to thank the Cambria Associates who continue to demonstrate commitment through these challenging times. Dividend The Board is pleased to announce a 0.3p per share dividend for the year. It is the intention of the Board to maintain a progressive dividend policy. Outlook There has been a positive change in the new car market conditions since the beginning of the 2012 Calendar year and with the pressure on the mainland European car markets, the UK appears to be performing well in comparison. I am pleased to report that Cambria continues to maintain the momentum gained in the second half, and we enter the current ﬁ nancial year with conﬁ dence, having produced a strong ﬁ rst quarter, ahead of business plan and signiﬁ cantly ahead of previous year. Philip Swatman Non-Executive Chairman 6 8641 AW.indd 6 21/12/2012 12:55 Operating and Financial Review Chief Executive’s Review Mark Lavery, Chief Executive said Cambria has performed in line with our expectations and, after a particularly diﬃ cult ﬁ rst half, has produced a far better second half. The cost rationalisation programme carried out in the ﬁ rst half is now broadly completed and while we continue to look at areas where cost saving can be made, we are in a leaner position than at the same point last year. During the course of the year we completed the purchase of our ﬁ rst Vauxhall business with the addition of Doves Vauxhall Southampton to the portfolio, refurbishing the facility in line with manufacturer standards. We also purchased the freehold of our Blackburn Volvo and Renault facility and disposed of our loss making Birmingham Pure Triumph business. The Group has produced strong cash generation which for the ﬁ rst time has left the Group in a net cash position with no net gearing. The balance sheet and liquidity continue to improve and we have signiﬁ cant facilities available for continued expansion. It is critical that the Group protects its balanced Brand portfolio with signiﬁ cant interests in high luxury, premium and volume brands and we hope to be in a position to announce further acquisitions in the near future. There has been a positive change in new car market conditions since the beginning of the 2012 Calendar year. With the pressure on the mainland European car markets, the UK appears to be performing well in comparison. The Group has had a strong start to the current ﬁ nancial year, ahead of business plan and signiﬁ cantly ahead of previous year. New car volumes are 8.6% ahead of last year with improved margin. I am pleased to report that our Guest Connect programme is in its second year of operation and it is having a signiﬁ cant eﬀ ect on aftersales proﬁ t contribution. I remain conﬁ dent that the Group will deliver an improved performance in our 2013 ﬁ nancial year. 8641 AW.indd 7 21/12/2012 12:55 Operating and Financial Review Cambria Automobiles plc announces its full year results for the ﬁ nancial year ending 31st August 2012. Cambria is a franchised motor retail group formed in 2006 and developed through a buy-and-build strategy. We have completed 8 corporate acquisitions to date and now represent 16 diﬀ erent brands from 26 locations encompassing 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 proﬁ t* Underlying proﬁ t before tax* Underlying net proﬁ t margin* EBITDA Operating proﬁ t Proﬁ t before tax Non-recurring expenses Net Assets Net proﬁ t margin Underlying earnings per share* Earnings per share * these items exclude the non-recurring expenses of £0.39m (2011: £0.23m) 12 months Ended 31-Aug 2012 £m 12 months Ended 31-Aug 2011 £m 352.5 5.4 3.9 3.1 0.9% 5.0 3.5 2.7 0.4 21.5 0.78% 2.64p 2.34p 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 8 8641 AW.indd 8 21/12/2012 12:56 Operating and Financial Review (continued) In presenting the ﬁ nancial statements for the year to 31 August 2012, there has been a fall in our underlying pre-tax proﬁ ts to £3.1m against a previous year outcome of £4.9m. This result has been achieved in a period of signiﬁ cant economic uncertainty and poor consumer conﬁ dence and during the ﬁ rst half of the year we undertook a signiﬁ cant cost rationalisation programme. The underlying pre-tax proﬁ t from the continuing operations was £3.5m, with the newly acquired Vauxhall business in Southampton making a £0.22m loss and the Pure Triumph motorcycle dealership in Birmingham making a £0.14m loss before its disposal during the year. During the ﬁ rst half of the ﬁ nancial year, the Group made an underlying pre-tax proﬁ t of £1.1m, and £2m in the second half which, for the continuing businesses, was broadly in line with the second half achieved in 2011, our record ﬁ nancial year. Financial Highlights • Total revenue for the year of £352.5m, down from £373.3m in prior year • Underlying Proﬁ t before tax of £3.1m, versus £4.9m in prior year, in line with the Board’s expectation, reﬂ ecting weaker new car volume and proﬁ tability particularly in the ﬁ rst half of the year • Continuing businesses made an underlying Proﬁ t before tax of £3.5m with the acquired dealership making a loss of £0.22m and disposed dealership making a loss of £0.14m • Rationalisation programme implemented in the ﬁ rst quarter with a one oﬀ cost of £0.3m signiﬁ cantly reduced ongoing cost structure in like for like businesses • Underlying EBITDA of £5.4m • Strong cash ﬂ ows resulting in net cash of £0.1m, net gearing nil • Group net assets at £21.5m • Robust balance sheet position with only £0.3m of goodwill • Underlying return on shareholders’ funds of 13.5 % • Announcement of dividend for the year of 0.3p per share Operational Highlights • Total new vehicle unit sales decreased 5.4% year on year to 7,718 from 8,155 in 2011 against the Group’s Brand portfolio partners decrease in registrations of 4.1%. The total new car market registrations increased 1.6% year on year • The private retail element of the Group’s new car sales was ﬂ at year on year against a market up 2.3% year on year • New vehicle gross proﬁ t reduced by £1.5m with margin reducing 0.4% impacted by eﬀ ect of multiple pressures facing vehicle manufacturer partners, particularly during the ﬁ rst half • Used vehicle gross proﬁ t up £1.1m, and a 1% point margin improvement to 9.2%, against unit sales decrease of 2.7% year on year • Aftersales revenues reduced by 0.8%, with gross proﬁ ts decreasing £0.7m, impacted by the implementation of cost rationalisation programme • Acquisition of the Group’s maiden Vauxhall business completed in September 2011, with integration progressing well, although the business made losses of £0.22m • First Abarth showroom opened in March 2012 • Disposal of Birmingham Triumph completed in May 2012 removing losses of £0.14m • Purchase from cash ﬂ ow of the Blackburn freehold property costing £0.9m, reducing the Group’s external rent cost by £0.08m pa. Group Strategy Since our incorporation in March 2006, we have continued to apply our focussed “buy-and-build” strategy of acquiring under-performing motor dealership assets from internally generated funds. Following any acquisition, the Cambria management team implements new ﬁ nancial, 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. 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 reﬂ ect 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 deﬁ ned beneﬁ t pension schemes. We have always taken the approach that Cambria will not acquire any business unless there is a strong underlying business case to do so and our acquisitions have to date and will continue to be funded from our own cash resources and credit facility unless there is a large and supremely compelling acquisition opportunity that requires additional equity. 8641 AW.indd 9 9 21/12/2012 12:56 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 beneﬁ ts 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. Cambria is currently investing in the Cambria Academy which will develop and establish a training Academy for the Groups Associates, this is critically important as the Group embarks on its next exciting period of expansion. Operation With any new acquisition, the standard ﬁ nancial controls are implemented immediately ranging from individual cheque signatories to daily reporting of vehicle sales and aftersales revenues, margins and other performance ﬁ gures. 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 signiﬁ cant advantage particularly in diﬃ cult 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 improve those businesses acquired during previous ﬁ nancial years, and to integrate and develop the businesses that we have acquired and set up in the year making signiﬁ cant investment in the management of those businesses as well as in the property infrastructure. During the year we have acquired our ﬁ rst Vauxhall business and have refurbished the facility to align the site with Vauxhall requirements and to make it a positive Guest experience when visiting the site. We continue to work with Vauxhall to identify acquisition opportunities to ensure that the partnership develops, and that it becomes a Primary Brand partner. We have added the Abarth franchise into our Preston facility, alongside its sister brand Fiat and have added Dacia as a value proposition into the Renault showroom in Blackburn. 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 period under review. Cambria has enjoyed the beneﬁ ts 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. Prestige Aston Martin Alfa Romeo Honda Jaguar Volvo 10 8641 AW.indd 10 Volume Abarth Citroen Dacia Fiat Ford Mazda Nissan Renault Seat Vauxhall 3 1 2 5 5 16 Motorcycle Triumph 1 1 1 5 5 4 1 1 1 1 21 2 2 21/12/2012 12:56 Automobiles plc Locations across the UK Welwyn Garden City Brentwood Wimbledon Croydon Southampton Thanet Tunbridge Wells Canterbury Ashford Maidstone Gatwick Horsham Blackburn Preston Bolton Bury Oldham Warrington Wellingborough Northampton Woburn Swindon Exeter 8641 AW.indd 11 11 21/12/2012 12:56 Operating and Financial Review (continued) Cambria’s balanced brand portfolio has seen us beneﬁ t from the relative stability of the prestige/high luxury market. 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 while we restructure and invest in these businesses. 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 New vehicles - new vehicle revenue was down from £146.5m to £133.7m, with total new car and motorcycle sales down 5.4% from 7,718 units compared with 8,155 in 2011. The new vehicle department gross proﬁ t margin was 6.8% against 7.2% in 2011 and there was a £1.5m reduction in Gross proﬁ t. The reduced margin partly reﬂ ecting the increased pressure that we experienced on margin retention as our manufacturer partners experienced exchange rate pressure and a tougher consumer climate across Europe particularly in the back quarter of 2011. The European market has seen signiﬁ cant declines with European new car sales falling 7.3% in the 10 months to October 2012, and this has put increased pressure on our manufacturer brand partners. The new car performance of the Group was delivered against a backdrop of a 1.6% year on year increase in new vehicle registrations in the UK for the period 1 September 2011 to 31 August 2012. The private registrations element of the new car market increased 2.3% year on year which was a stark change in the market during the second half of the year. The Group’s Brand partners saw a combined 4.1% reduction in their total registrations during the course of the year with some of our partners experiencing signiﬁ cant volume reductions. The Group’s sale of new cars to private individuals was ﬂ at year on year. The sale of commercial and ﬂ eet vehicles by the Group reduced 28% and 40% respectively compared with prior year. The reduction was primarily the result of reduced supply terms between one of our manufacturer brand partners and a number of commercial and ﬂ eet customers during the period. This reduction in commercial and ﬂ eet vehicles impacted new car gross proﬁ t by only £0.08m. Used Car Sales Used vehicles – we have seen another strong performance in our used vehicle departments, although revenues decreased from £184.0m to £176.5m, and the number of units sold decreased 2.7% from 14,217 to 13,826. The gross proﬁ t generated increased by £1.1m to £16.2m with the margin increasing from 8.2% to 9.2%. The major driver of the increased margin and proﬁ tability was derived from the focus on sale of Finance and Insurance products. The Group has also focussed on the tight management of its used vehicle inventories. Close control of the total level of inventory as well as stock proﬁ le and age has shown some beneﬁ ts but the Board believes that there is still opportunity to improve further. Aftersales Aftersales – aftersales revenue decreased 0.7% year on year from £51.4m to £51.0m. Aftersales gross proﬁ t decreased by 3.2% year on year to £21.3m, in part reﬂ ecting the short term impact of the cost reduction programme implemented towards the end of 2011 and in part reﬂ ecting the reduced 0-3 year old car parc. The Group continues to review its processes for ensuring that we engage with all our guests to maximise the opportunity to interact with them through our Guest Relationship Management programme which is our contact strategy involving the sale of service plans and delivery of service and MOT reminders in a structured manner utilising all forms of digital media and traditional communication methods. Outlook There has been a positive change in new car market conditions since the beginning of the 2012 Calendar year and with the pressure on the mainland European car markets, the UK appears to be performing well in comparison. Whilst mindful of continued global economic uncertainty I am pleased to report that Cambria continues to maintain the momentum gained in the second half of 2012. We enter the current ﬁ nancial year with conﬁ dence, having produced a strong ﬁ rst quarter, exceeding management expectations and signiﬁ cantly ahead of previous year. Our continued strong cash generation coupled by a net ungeared balance sheet and minimal goodwill continues to place us well to develop and protect our balanced Brand portfolio. We continue to focus upon the development of our high luxury, premium and near premium brands and we hope to be in a position to announce further acquisitions in the near future. 12 8641 AW.indd 12 21/12/2012 12:56 Operating and Financial Review (continued) 2012 Revenue 2012 Revenue mix £m 133.7 176.5 51.0 (8.7) % 37.9 50.1 14.5 (2.5) 352.5 100.0 2012 Gross Proﬁ t £m 9.0 16.2 21.3 46.5 (42.6) 3.9 (0.4) 3.5 2012 Margin 2011 Revenue 2011 Revenue mix % 6.8 9.2 41.8 £m 146.5 184.0 51.4 (8.6) % 39.2 49.3 13.8 (2.3) 13.2 373.3 100.0 1.0 2011 Gross Proﬁ t £m 10.5 15.1 22.0 47.6 (41.9) 5.7 (0.2) 5.5 2011 Margin % 7.2 8.2 42.8 12.7 1.5 New Car Used Car Aftersales Internal sales Total Operating expenses Operating proﬁ t before ﬂ otation and transaction expenses Non-underlying expenses Operating proﬁ t 2012 total 2011 total Year on year growth 7,718 13,826 8,155 14,217 288,114 279,523 (5.4%) (2.7%) 3.1% New units Used units Service hours Mark Lavery Chief Executive 8641 AW.indd 13 13 21/12/2012 12:56 Operating and Financial Review (continued) Finance Director’s Report Overview Total revenues in the period decreased 5.6% to £352.5m from £373.3m in the prior year. The majority of the reduction came from new vehicle sales where unit volumes were down 5.4% and revenues down 8.7%. Used car unit sales decreased 2.7% and overall revenues reduced by 4%. Revenues from the aftersales businesses declined by 0.07% compared with the previous year. Total gross proﬁ t decreased by £1.1m (2.3%) from £47.6m to £46.5m in the year following the reduced new car volumes which accounted for £1.5m of the reduction. Gross proﬁ t margin across the Group improved from 12.7% to 13.2% reﬂ ecting the change in revenue mix with the reduction in new car sales. The used vehicle margin improved as a result of stronger proﬁ t per unit at 9.2%. The aftersales operations contributed 45.8% of the total gross proﬁ t for the Group compared to 46.2% in the previous period, at a gross proﬁ t margin of 41.8%. Underlying operating expenses for the continuing businesses were reduced by £1.1m year on year, although following the addition of Southampton the Group’s underlying administrative expenses, increased to £42.6m from £41.8m. During the ﬁ nancial year, the Group incurred non-underlying expenses of £0.1m in relation to transaction costs and opening new franchises, and £0.3m in relation to redundancy costs associated with the cost rationalisation initiatives. The underlying EBITDA in the period was £5.4m from £7.2m in the previous year. Underlying operating proﬁ t was £3.9m compared to £5.7m in the previous year, resulting in an operating margin of 1.1% (2011: 1.5%). Net ﬁ nance expenses remained at £0.8m. The Group’s underlying proﬁ t before tax was £3.1m in comparison with £4.9m in the previous year. The acquisitions and disposals accounted for losses of £0.4m in the year. The underlying earnings per share were 2.64p (2011: 3.63p). Basic earnings per share were 2.34p (2011: 3.47p), and the Group’s underlying return on shareholders’ funds for the year was 13.5% (2011: 22.7%). Taxation The Group tax charge was £0.4m (2011: £1.2m) representing an eﬀ ective rate of tax of 14.3% (2011: 25.6%) on the proﬁ t before tax of £2.7m (2011: £4.7m). The tax rate is low in the reporting period as a result of the recognition of a deferred tax asset and an element of a speciﬁ c capital allowances claim. The anticipated tax charge for 2013 is dependent on the outcome of the capital allowances claim, in the event no further capital allowances are recognised, the eﬀ ective tax rate will increase in 2013 back to 2011 levels. Financial Position The Group has a robust balance sheet with a net asset position of £21.5m under-pinned by £23.1m of freehold and long leasehold property. Reﬂ ecting our prudent approach to ﬁ nancial 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 £11.4m, each of the loans have diﬀ erent repayment proﬁ les between seven and ten years, and bear interest at between base plus 1.25% and LIBOR plus 3%. During the ﬁ nancial year the Group comfortably met the bank covenants attaching to these borrowings. The net cash position of the Group as at 31 August 2012 was £0.1m (2011: net debt £1.0m), reﬂ ecting a cash position of £11.5m (2011: £11.7m). The Group’s gearing at 31 August 2012 was (0.6%), reduced from 5.2% in 2011. The Group uses term loan facilities to fund the purchase of freehold and long leasehold properties, stocking loans to fund the acquisition of consignment, demonstrator and used vehicles and has a £4m overdraft facility which is used to manage seasonal ﬂ uctuations in working capital. The overdraft facilities are renewable annually and are next due in February 2013. 14 8641 AW.indd 14 21/12/2012 12:56 Operating and Financial Review (continued) The Group has arranged a £5m Revolving Credit Facility which is available for draw down against new business acquisitions and freehold property purchases. This additional funding facility gives us signiﬁ cant liquidity to identify and approach acquisition targets. Total facilities available including cash reserves equate to £20.5m. Cashﬂ ow and Capital Expenditure The Group generated an operating cash inﬂ ow of £3m with working capital increasing by £0.5m as a result of the acquired business and a total of £1.4m in capital expenditure. Capital expenditure included the acquisition of the freehold property in Blackburn for £0.9m, the refurbishment of the Vauxhall site in Southampton, the development of the Abarth showroom in Preston, and the acquisition of the Southampton business. During the year capital repayments of £1.34m were made against the total term loans outstanding. The capital repayments due in the ﬁ nancial year to 31 August 2013 are £1.35m. As a result of the net cash outﬂ ow of £0.2m, the cash position was £11.5m, with gross debt decreasing by £1.34m to £11.4m and overall net debt reduced from £1m to net cash of £0.1m. 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 deﬁ ned beneﬁ t pension schemes, and has no liability arising from any such scheme. The Group made contributions amounting to £0.15m to deﬁ ned contributions schemes for certain employees. Financial Instruments The Group does not have any contractual obligation under any ﬁ nancial instruments with respect to the hedging of interest rate risk. Dividends The Board is pleased to announce that it will make a dividend payment in respect of the ﬁ nancial year to 31 August 2012 of 0.3p per share as a full and ﬁ nal dividend payment. If approved by the shareholders at the Annual General Meeting to be held on 21 January 2013, the dividend will be payable on 25 January 2013 to those shareholders registered on 28 December 2012. 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 grow the Group using existing resources. James Mullins Finance Director 8641 AW.indd 15 15 21/12/2012 12:56 Directors’ report The directors present their directors’ report and ﬁ nancial statements for the year ended 31 August 2012. Principal activities Cambria’s principal activities are the sale and servicing of motor vehicles and the provision of ancillary services. The Group operates from 26 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 aﬀ ect 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, 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 8641 AW.indd 16 21/12/2012 12:56 Directors’ report (continued) Proposed dividend The directors recommend the payment of a full and ﬁ nal dividend for 2012 of 0.3p per share which equates to £300,000 (2011: £300,000). If approved at the Annual General Meeting to be held on 21 January 2013, the dividend will be payable on 25 January 2013 to those shareholders registered on 28 December 2012. Directors The directors who held oﬃ ce during the year were as follows: P H Swatman (appointed 3 April 2012) W Scott (resigned 3 April 2012) M J J Lavery R P Smith (resigned 30 November 2011) M W Burt J A Mullins Sir P A Burt All directors beneﬁ ted from qualifying third party indemnity provisions in place during the ﬁ nancial period. Associates The Group recognises the beneﬁ t of keeping associates informed of group aﬀ airs 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 diﬀ erently 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 eﬀ ort to accommodate them in suitable alternative employment. Political and charitable contributions During the year, the Company made a charitable donation of £10,000 to BEN, the Motor And Allied Trades Benevolent Fund (2011: £nil). The Group and its Associates also support BEN through a payroll giving scheme. Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year (2011: £nil). Disclosure of information to auditor The directors who held oﬃ ce at the date of approval of this directors’ report conﬁ rm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditor is 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 auditor is aware of that information. Auditor In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG Audit Plc as auditor 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 13 December 2012 8641 AW.indd 17 17 21/12/2012 12:56 Statement of directors’ responsibilities in respect of the Directors’ Report and the ﬁ nancial statements The directors are responsible for preparing the Directors’ Report and the group and parent company ﬁ nancial statements in accordance with applicable law and regulations. Company law requires the directors to prepare ﬁ nancial statements for each ﬁ nancial year. As required by the AIM rules of the London Stock Exchange they are required to prepare the group ﬁ nancial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company ﬁ nancial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice). Under company law the directors must not approve the ﬁ nancial statements unless they give a true and fair view of the state of aﬀ airs of the group and parent company and of their proﬁ t or loss for that period. In preparing each of the group and parent company ﬁ nancial 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 ﬁ nancial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU • for the parent company ﬁ nancial statements state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company ﬁ nancial statements; • prepare the ﬁ nancial 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 suﬃ cient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the ﬁ nancial position of the parent company and enable them to ensure that its ﬁ nancial 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 ﬁ nancial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of the ﬁ nancial statements may diﬀ er from legislation in other jurisdictions. 18 8641 AW.indd 18 21/12/2012 12:56 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 ﬁ nancial statements of Cambria Automobiles plc for the year ended 31 August 2012 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 ﬁ nancial reporting framework that has been applied in the preparation of the group ﬁ nancial statements is applicable law and International Financial Reporting Standards (IFRS) as adopted by the EU. The ﬁ nancial reporting framework that has been applied in the preparation of the parent company ﬁ nancial 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 auditor As explained more fully in the Directors’ Responsibilities Statement set out on page 18, the directors are responsible for the preparation of the ﬁ nancial statements and for being satisﬁ ed that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the ﬁ nancial 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 ﬁ nancial statements A description of the scope of an audit of ﬁ nancial statements is provided on the APB’s web-site at www.frc.org.uk/apb/scope/private.cfm. Opinion on ﬁ nancial statements In our opinion: • the ﬁ nancial statements give a true and fair view of the state of the group’s and of the parent company’s aﬀ airs as at 31 August 2012 and of the group’s proﬁ t for the year then ended; • the group ﬁ nancial statements have been properly prepared in accordance with IFRSs as adopted by the EU; • the parent company ﬁ nancial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice; • the ﬁ nancial 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 ﬁ nancial year for which the ﬁ nancial statements are prepared is consistent with the ﬁ nancial 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 ﬁ nancial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration speciﬁ ed by law are not made; or • we have not received all the information and explanations we require for our audit. Ian Brokenshire (Senior Statutory Auditor) 13 December 2012 for and on behalf of KPMG Audit plc, Statutory Auditor Chartered Accountants Arlington Business Park Reading Berkshire RG7 4SD 8641 AW.indd 19 19 21/12/2012 12:56 Consolidated Statement of comprehensive income for year ended 31 August 2012 Revenue Cost of sales Gross Proﬁ t Administrative expenses Results from operating activities Finance income Finance expenses Net ﬁ nance expenses Proﬁ t before tax from operations before non-recurring expenses, acquisitions and disposals Trading loss from branch acquired in year Trading loss from branch disposed in year Non-recurring expenses Proﬁ t before tax Taxation Proﬁ t and total comprehensive income for the period Note 3 4 4 9 9 5 4 10 2012 £000 352,535 2011 £000 373,303 (306,017) (325,748) 46,518 47,555 (43,019) (42,055) 3,499 5,500 54 (820) (766) 3,486 (217) (142) (394) 2,733 (393) 2,340 38 (882) (844) 4,974 - (87) (213) 4,656 (1,190) 3,466 3.47p Basic and diluted earnings per share 8 2.34p All comprehensive income is attributable to owners of the parent company 20 8641 AW.indd 20 21/12/2012 12:56 Consolidated Statement of changes in equity for year ended 31 August 2012 Note Share capital Share premium Retained earnings Total equity £000 £000 £000 £000 Balance at 31August 2010 Proﬁ t for the year 10,000 - 799 - 5,236 16,035 3,466 3,466 Balance at 31 August 2011 10,000 799 8,702 19,501 Proﬁ t for the year Dividend paid 21 - - - - 2,340 (300) 2,340 (300) Balance at 31 August 2012 10,000 799 10,742 21,541 8641 AW.indd 21 21 21/12/2012 12:56 Consolidated Statement of ﬁ nancial position at 31 August 2012 Note 2012 £000 2011 £000 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 11 12 13 14 15 16 17 18 20 17 20 13 21 25,751 25,676 391 626 470 356 26,768 26,502 56,342 7,123 11,503 57,460 6,905 11,702 74,968 76,067 101,736 102,569 (1,352) (67,829) (460) (41) (1,352) (69,109) (652) (41) (69,682) (71,154) (10,020) (11,358) (54) (439) (95) (461) (10,513) (11,914) (80,195) (83,068) 21,541 19,501 10,000 799 10,742 10,000 799 8,702 21,541 19,501 These ﬁ nancial statements were approved by the board of directors on 13 December 2012 and were signed on its behalf by: Mark Lavery Director Company registered number: 05754547 22 8641 AW.indd 22 21/12/2012 12:57 Consolidated Cash Flow Statement for year ended 31 August 2012 Notes Cash ﬂ ows from operating activities Proﬁ t for the year Adjustments for: Depreciation, amortisation and impairment 11/12 Financial income Financial expense Loss on sale of property, plant and equipment Proﬁ t on disposal of branch Taxation Non recurring 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 recurring expenses Net cash from operating activities Cash ﬂ ows from investing activities Interest received Acquisition of branch by trade and assets purchase Acquisition of property, plant and equipment Acquisition of other intangible assets Disposal of branch by trade and assets sale Net cash from investing activities Cash ﬂ ows from ﬁ nancing activities Interest paid Repayment of borrowings Dividend paid Net cash from ﬁ nancing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 September Cash and cash equivalents at 31 August 9 9 2 10 5 5 2 2 16 16 2012 £000 2,340 1,479 (54) 820 - (81) 393 394 5,291 (218) 1,002 (1,289) (41) 4,745 (493) (877) (394) 2,981 54 (313) (1,437) - 481 (1,215) (327) (1,338) (300) (1,965) (199) 11,702 11,503 2011 £000 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 8641 AW.indd 23 23 21/12/2012 12:57 Notes (forming part of the ﬁ nancial 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 oﬃ ce is Swindon Motor Park, Dorcan Way, Swindon, SN3 3RA. The registered number of the company is 05754547. These ﬁ nancial statements as at 31 August 2012 consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The parent company ﬁ nancial statements present information about the Company as a separate entity and not about its group. The Group ﬁ nancial 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 ﬁ nancial statements in accordance with UK GAAP; and these are presented on pages 54 to 64. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the ﬁ nancial statements. Judgements made by the directors in the application of these accounting policies that have signiﬁ cant eﬀ ect on the ﬁ nancial statements and estimates with a signiﬁ cant risk of material adjustment in the next year are discussed at the end of this note. Basis of preparation The ﬁ nancial 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 ﬁ nancial statements. Further information regarding the company’s business activities together with the factors likely to aﬀ ect its future development, performance and position is set out in the Directors’ Report on pages 16 to 17. Basis of consolidation The ﬁ nancial statements consolidate the ﬁ nancial statements of the Company together with its subsidiary companies. Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the ﬁ nancial and operating policies of an entity so as to obtain beneﬁ ts from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The ﬁ nancial 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. Identiﬁ able 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 proﬁ t or loss. The excess of the cost of an acquisition over the fair values of the Group’s share of identiﬁ able assets and liabilities acquired is recognised as goodwill. If the fair value of identiﬁ able assets and liabilities acquired (i.e. discount on acquisition) exceeds the cost of the business combination, the diﬀ erence is recognised directly in proﬁ t or loss. Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on consolidation. 24 8641 AW.indd 24 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial 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 identiﬁ ed as the Chief Executive Oﬃ cer. 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 signiﬁ cant 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, ﬁ nance charges on shares classiﬁ ed as liabilities, stocking interest charge on consignment and used vehicles and ﬁ nance 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 proﬁ t or loss as it accrues, using the eﬀ ective interest method. Operating proﬁ t Operating proﬁ t relates to proﬁ t before ﬁ nance income, ﬁ nance expense and income tax expense. 8641 AW.indd 25 25 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial 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 identiﬁ able assets, liabilities and contingent liabilities, and recognition of identiﬁ able intangibles at the date of acquisition. Identiﬁ able 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 identiﬁ able group of assets that generates cash inﬂ ows that are largely independent of the cash inﬂ ows 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 indeﬁ nite. Intangible assets with an indeﬁ nite 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 Order book Customer list 3 – 5 years 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 ﬂ ows. 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 diﬀ erent 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 • leasehold properties • plant and machinery • ﬁ xtures and ﬁ ttings • computer equipment 50 years over the lifetime of the lease 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 8641 AW.indd 26 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) Impairment of assets excluding inventories 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 eﬀ ect on the estimated future cash ﬂ ows of that asset. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill, assets that have an indeﬁ nite 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 ﬁ rst 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 identiﬁ able group of assets that generates cash inﬂ ows that are largely independent of the cash inﬂ ows from other assets or groups of assets. For an asset that does not generate largely independent cash inﬂ ows, 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 ﬁ rst-in ﬁ rst-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 facility provider. 8641 AW.indd 27 27 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 1 Accounting policies (continued) Financial Instruments Classiﬁ cation of ﬁ nancial 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 ﬁ nancial assets or to exchange ﬁ nancial assets or ﬁ nancial 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 ﬁ xed amount of cash or other ﬁ nancial assets for a ﬁ xed number of its own equity instruments. To the extent that this deﬁ nition is not met, the proceeds of issue are classiﬁ ed as a ﬁ nancial liability. Where the instrument so classiﬁ ed takes the legal form of the company’s own shares, the amounts presented in the historical ﬁ nancial information for called up share capital and share premium account exclude amounts in relation to those shares. Non-derivative ﬁ nancial instruments Non-derivative ﬁ nancial 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 eﬀ ective 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 eﬀ ective 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 ﬂ ow 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 eﬀ ective interest method. 28 8641 AW.indd 28 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 1 Accounting policies (continued) Taxation Tax on the proﬁ t 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 diﬀ erences between the carrying amounts of assets and liabilities for ﬁ nancial reporting purposes and the amounts used for taxation purposes. The following temporary diﬀ erences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that aﬀ ect neither accounting nor taxable proﬁ t other than in a business combination, and diﬀ erences 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 proﬁ ts will be available against which the temporary diﬀ erence can be utilised. Employee beneﬁ ts Deﬁ ned contribution plans A deﬁ ned contribution plan is a post-employment beneﬁ t plan under which the company pays ﬁ xed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to deﬁ ned 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 classiﬁ ed as ﬁ nance 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 ﬁ nance 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 ﬁ nance charge and the reduction of the outstanding liability. The ﬁ nance 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 outﬂ ow of economic beneﬁ ts will be required to settle the obligation. 8641 AW.indd 29 29 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 1 Accounting policies (continued) IFRS not yet applied A number of new standards, amendments to standards and interpretations are eﬀ ective for annual periods beginning after 1 January 2012, and have not been applied in preparing these consolidated ﬁ nancial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early and their adoption is not expected to have a material eﬀ ect on the ﬁ nancial statements unless otherwise indicated: • IFRS 9 Financial Instruments – IFRS 9 introduces new requirements for the classiﬁ cation and measurement of ﬁ nancial assets, based upon the business model in which they are held and the characteristics of their contractual cash ﬂ ows. IFRS 9 will be eﬀ ective for annual periods beginning on or after 1 January 2015 with early adoption permitted. • IFRS 13 Fair Value Measurement – IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value measurement guidance that is currently dispersed throughout IFRS. The Group may therefore need to review its methodologies used in determining fair values. IFRS 13 will be eﬀ ective for annual periods beginning on or after 1 January 2013 with early adoption permitted. 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 and property portfolio impairment The carrying values of goodwill and property are tested annually for impairment, for goodwill by using cash ﬂ ow projections for each cash generating unit, and for property by comparing the carrying value to the higher of value in use or market value. 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 eﬀ ectively under the control of the Group and are included within inventories in the Statement of Financial Position as the Group has the signiﬁ cant 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-recurring expenses Non-recurring 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 ﬁ nancial statements to present a true and fair view. 30 8641 AW.indd 30 21/12/2012 12:57 8641 AW.indd 31 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 2 Acquisitions and disposals of trading branches Eﬀ ect of acquisition and disposal in 2012 (There were no acquisitions or disposals in 2011) Acquisition of trading branch On 1 September 2011, the Group completed the acquisition of the Vauxhall dealership in Southampton from Hartwell Group plc. It is the Group’s intention to expand its relationship with Vauxhall as other opportunities arise. Pre-acquisition carrying amount and Fair Value Acquiree’s net assets at the acquisition date: Plant and equipment Inventories Trade and other payables Net and identiﬁ able assets and liabilities Goodwill on acquisition Consideration paid (note that transaction costs of £77,825 were written off to operating expenses in 2012), satisﬁ ed in cash The results attributable to the branch acquired during the ﬁ nancial year were as follows: Revenue Loss before tax 2012 £000 12,692 (217) £000 46 277 (10) 313 - 313 2011 £000 - - Disposal of trading branch The decision was made during the year to dispose of the Group’s Triumph motorcycle branch in Birmingham due to its location and trading prospects. The sale was completed on 14 May 2012 to Ducati Manchester with all employees being transferred. Net assets at the disposal date: Plant and equipment Inventories Net and identiﬁ able assets and liabilities Proﬁ t on disposal Consideration received (note that transaction costs of £18,068 were written off to operating expenses in 2012), satisﬁ ed in cash Pre-disposal carrying amount and Fair Value £000 6 394 400 81 481 32 8641 AW.indd 32 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 2 Acquisitions and disposals of trading branches (continued) The results attributable to the branch disposed during the ﬁ nancial year were as follows: Revenue Loss before tax 3 Revenue Sale of goods Aftersales services Total revenues 4 Segmental reporting 2012 £000 1,368 (142) 2012 £000 310,249 42,286 2011 £000 2,717 (87) 2011 £000 330,945 42,358 352,535 373,303 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 Oﬃ cer. 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. 2012 Revenue 2012 Revenue mix 2012 Gross Proﬁ t 2012 Margin 2011 Revenue 2011 Revenue mix 2011 Gross Proﬁ t 2011 Margin £m 133.7 176.5 51.0 (8.7) % 37.9 50.1 14.5 (2.5) £m 9.0 16.2 21.3 - % 6.8 9.2 41.8 - £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 - 352.5 100.0 46.5 13.2 373.3 100.0 47.6 12.7 New Car Used Car Aftersales Internal sales Total Operating expenses Operating proﬁ t before non recurring expenses Non recurring expenses (42.6) 3.9 (0.4) (41.9) 5.7 (0.2) Operating proﬁ t 3.5 1.0 5.5 1.5 The CODM reviews the performance of the business in terms of both net proﬁ t before tax and EBITDA, as such the following table shows a reconciliation of the Proﬁ t before tax to EBITDA. 8641 AW.indd 33 33 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 4 Segmental reporting (continued) Proﬁ t Before Tax Non recurring expenses (note 5) Underlying Proﬁ t Before Tax Net ﬁ nance expense Depreciation and amortisation Underlying EBITDA Non recurring expenses EBITDA Revenue and non-current assets are attributable to United Kingdom operations only. 5 Non recurring expenses Transaction and new franchising costs Cost rationalisation programme 6 Expenses and auditors’ remuneration The result from operating activities is stated after charging/(crediting) the following: Impairment loss recognised/(reversed) on other trade receivables and prepayments (note 22(b)) Auditors’ remuneration: Audit of these ﬁ nancial statements Audit of ﬁ nancial statements of subsidiaries pursuant to legislation Other services relating to taxation All other services 2012 £000 2,733 394 3,127 766 1,479 5,372 (394) 4,978 2012 £000 101 293 394 2012 £000 18 2012 £000 25 91 29 19 2011 £000 4,656 231 4,887 844 1,422 7,153 (231) 6,922 2011 £000 169 62 231 2011 £000 (89) 2011 £000 20 90 29 23 34 8641 AW.indd 34 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial 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 deﬁ ned contribution plans 2012 309 355 110 174 948 2012 £000 25,259 2,790 151 28,200 2011 299 382 107 172 960 2011 £000 25,796 2,748 154 28,698 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. Proﬁ t attributable to shareholders Non underlying costs (Note 5) Tax on adjustments (at 25.16 % (2011:27.16%)) Adjusted proﬁ t attributable to equity shareholders 2012 £000 2,340 394 (99) 2,635 2011 £000 3,466 231 (63) 3,634 Number of shares in issue (‘000) 100,000 100,000 Basic earnings per share Adjusted earnings per share 2.34p 2.64p 3.47p 3.63p 8641 AW.indd 35 35 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 9 Finance income and expense Recognised in proﬁ t or loss Finance income Rent deposit interest Interest receivable Total ﬁ nance income Finance expense Interest payable on bank borrowings Consignment and used stocking interest Total ﬁ nance expense Total interest expense on ﬁ nancial liabilities held at amortised cost Total other interest expense 10 Taxation Recognised in the income statement (written as Proﬁ t and Loss) Current tax expense Current year Adjustment in respect of prior years Adjustment in respect of prior years – capital allowances claim 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 in current year Total tax expense 36 8641 AW.indd 36 2012 £000 2011 £000 16 38 54 327 493 820 327 493 820 2012 £000 773 (12) (76) 685 34 (161) (161) (4) (292) 393 8 30 38 351 531 882 351 531 882 2011 £000 1,040 - - 1,040 150 - (45) 45 150 1,190 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 10 Taxation (continued) Reconciliation of total tax Proﬁ t for the year Total tax expense Proﬁ t excluding taxation Tax using the UK corporation tax rate of 25.16 % (2011: 27.16%) Non-deductible expenses Accounting deprecation for which no tax relief is due Depreciation in excess of capital allowances Utilisation of brought forward 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 Adjustments in respect of prior years Change in deferred tax in respect of property Total tax expense 2012 £000 2,340 393 2,733 688 45 114 4 (32) 34 2 143 (249) (356) 393 2011 £000 3,466 1,190 4,656 1,265 25 156 - - 150 45 216 (667) - 1,190 The applicable tax rate for the current year is 25.16% (2011: 27.16%) following the reduction in the main rate of UK corporation tax from 26% to 24% with eﬀ ect from 1 April 2012. The Chancellors Autumn Statement issued on 5 December 2012 announced that the UK corporation tax rate will reduce to 21% by April 2014. A reduction in the rate from 26% to 25% (eﬀ ective from 1 April 2012) was substantively enacted on 5 July 2011, and further reductions to 24% (eﬀ ective from 1 April 2012) and 23% (eﬀ ective from 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively. This will reduce the company’s future current tax charge accordingly. The deferred tax asset at 31 August 2012 has been calculated based on the rate of 23% substantively enacted at the balance sheet date. 8641 AW.indd 37 37 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 11 Property, plant and equipment Freehold land & buildings Long leasehold land & buildings Short leasehold improvements Plant & equipment Fixtures, ﬁ ttings & computer equipment Total £000 £000 £000 £000 £000 £000 Cost Balance at 1 September 2010 18,924 5,058 Additions Disposals Balance at 1 September 2011 Additions Branch acquisitions Disposals Branch disposals 463 - 19,387 900 - - - - - 5,058 - - - - 3,736 320 (161) 3,895 36 - - - 2,699 186 (284) 2,601 137 46 (65) (10) 6,114 526 (172) 6,468 364 - (335) (12) 36,531 1,495 (617) 37,409 1,437 46 (400) (22) Balance at 31 August 2012 20,287 5,058 3,931 2,709 6,485 38,470 Depreciation Balance at 1 September 2010 Charge for the year Disposals Balance at 1 September 2011 Depreciation charge for the year Disposals Branch disposals 1,092 241 - 1,333 280 - - 401 75 - 476 81 - 2,714 268 (161) 2,821 274 - - 2,195 239 (284) 2,150 222 (65) (7) 4,609 515 (171) 4,953 543 (334) (8) 11,011 1,338 (616) 11,733 1,400 (399) (15) Balance at 31 August 2012 1,613 557 3,095 2,300 5,154 12,719 Net book value At 31 August 2011 18,054 4,582 1,074 At 31 August 2012 18,674 4,501 836 451 409 1,515 25,676 1,331 25,751 As at 31 August 2012 there was a capital commitment to complete the refurbishment of the dealership in Swindon. The amount committed was £328,000 as at 31 August 2012 (2011: £nil) The directors have considered the property portfolio for impairment by comparing the carrying amount to the higher of value in use or market value and have concluded that no impairment is required. Security The title of all freehold 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 2012 there were no assets in the course of construction (2011: £nil). 38 8641 AW.indd 38 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 12 Intangible assets Cost Balance at 1 September 2010 Other acquisitions – externally purchased Balance at 1 September 2011 Balance at 31 August 2012 Amortisation and impairment Balance at 1 September 2010 Amortisation Balance at 1 September 2011 Amortisation for the year Balance at 31 August 2012 At 31 August 2011 and 1 September 2011 At 31 August 2012 Goodwill Software £000 £000 Other £000 346 - 346 346 - - - - 346 346 646 74 720 720 512 84 596 79 675 124 45 176 - 176 176 176 - 176 - 176 - - Total £000 1,168 74 1,242 1,242 688 84 772 79 851 470 391 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 Subsidiary undertakings Cambria Automobiles Group Limited England and Wales Holding Company Cambria Automobiles Acquisitions Limited ** England and Wales Investment Company Cambria Automobiles Property Limited ** England and Wales Property Company Class and percentage of shares held 100% Ordinary 100% Ordinary 100% Ordinary Cambria Automobiles (Swindon) Limited * England and Wales Motor retailer 100% Ordinary & Preference Grange Motors (Swindon) Limited * England and Wales Motor retailer Thoranmart Limited * England and Wales Motor retailer Cambria Vehicle Services Limited* England and Wales Motor retailer Cambria Automobiles (South East) Limited* England and Wales Motor retailer Grange Motors (Brentwood) Limited*** England and Wales Motor retailer 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary Invicta Motors Limited*** England and Wales Motor retailer 100% Ordinary & Preference Invicta Motors (Maidstone) Limited* England and Wales Motor retailer Deeslease Limited*** Dove Group Limited*** Translease Vehicle Management Limited*** England and Wales England and Wales England and Wales Dormant Dormant Dormant 100% Ordinary 100% Ordinary 100% Ordinary 100% Ordinary 8641 AW.indd 39 39 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 12 Intangible assets (continued) Amortisation charge The amortisation charge is recognised in the following line items in the income statement: Administrative expenses 2012 £000 79 2011 £000 84 Impairment loss and subsequent reversal Goodwill and indeﬁ nite life intangible assets considered signiﬁ cant 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 2012 £000 261 85 346 2011 £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 8641 AW.indd 40 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 13 Deferred tax assets and liabilities Recognised deferred tax assets and liabilities The amount of temporary diﬀ erences, unused tax losses and tax credits for which a deferred tax asset is recognised is set out below. The asset would be recovered if oﬀ set against future taxable proﬁ ts of the group. Tax value of losses carry-forwards (pre-acquisition losses) Property, plant and equipment Provisions Tax value of loss carry-forwards Recognised net deferred tax assets Assets 2012 £000 257 344 2 23 626 2011 £000 311 (846) 19 872 356 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 beneﬁ t 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 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. Amount payable to previous owner of subsidiary Unrecognised deferred tax assets and liabilities Assets 2012 £000 439 2011 £000 461 The deferred tax asset in relation to loss carried forward within a subsidiary has not been recognised due to uncertainty over the future proﬁ tability of the subsidiary, these losses are locked in to this particular subsidiary and cannot be utilised in the wider Group. Tax value of loss carry-forwards Unrecognised net tax assets Assets 2012 £000 755 755 2011 £000 - - The Chancellors Autumn Statement issued on 5 December 2012 announced that the UK corporation tax rate will reduce to 21% by April 2014. A reduction in the rate from 26% to 25% (eﬀ ective from 1 April 2012) was substantively enacted on 5 July 2011, and further reductions to 24% (eﬀ ective from 1 April 2012) and 23% (eﬀ ective from 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively. This will reduce the company’s future current tax charge accordingly. The deferred tax asset at 31 August 2012 has been calculated based on the rate of 23% substantively enacted at the balance sheet date. It has not yet been possible to quantify the full anticipated eﬀ ect of the announced further 2% rate reduction, although this will further reduce the company’s future current tax charge and reduce the company’s deferred tax asset accordingly. 8641 AW.indd 41 41 21/12/2012 12:57 Notes (continued) (forming part of the ﬁ nancial statements) 14 Inventories Vehicle consignment stock Motor vehicles Parts and other stock 2012 £000 32,900 21,154 2,288 2011 £000 33,747 21,621 2,092 56,342 57,460 Included within inventories is £nil (2011: £nil) expected to be recovered in more than 12 months. Raw materials, consumables and changes in ﬁ nished goods and work in progress recognised as cost of sales in the year amounted to £302 million (2011: £321 million). 15 Trade and other receivables Trade receivables Prepayments and other receivables 2012 £000 5,462 1,661 7,123 2011 £000 5,134 1,771 6,905 Included within trade and other receivables is £nil (2010: £nil) expected to be recovered in more than 12 months. 16 Cash and cash equivalents Cash and cash equivalents per balance sheet 11,503 11,702 Cash and cash equivalents per cash ﬂ ow statement 11,503 11,702 2012 £000 2011 £000 42 8641 AW.indd 42 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial 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 2012 £000 2011 £000 10,020 11,358 1,352 1,352 Nominal interest rate Year of Maturity Face Value and Carrying Amount Face Value and Carrying Amount Loan 31/07/06 Loan 01/08/07 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 2012 £000 2,009 580 6,620 2,163 2011 £000 2,281 653 7,407 2,369 11,372 12,710 8641 AW.indd 43 43 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) 18 Trade and other payables Current Vehicle consignment creditor Other trade payables Non-trade payables and accrued expenses Vehicle funding 2012 £000 38,498 6,903 6,540 15,888 67,829 2011 £000 39,644 8,350 7,159 13,956 69,109 Included within trade and other payables is £ nil (2011: £nil) expected to be settled in more than 12 months. 19 Employee beneﬁ ts Pension plans Deﬁ ned contribution plans The Group operates a number of deﬁ ned contribution pension plans. The total expense relating to these plans in the current year was £151,000 (2011: £154,000). 20 Provisions Balance at 1 September 2011 Provisions used during the year Balance at 31 August 2012 Current Non current Balance at 31 August 2011 Current Non current Balance at 31 August 2012 Onerous Leases £000 136 (41) 95 41 95 136 41 54 95 The onerous lease provision is being released against the costs incurred on the relevant lease. The provision will be fully released by 2015. 44 8641 AW.indd 44 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial 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 classiﬁ ed in shareholders funds 2012 £000 10,000 10,000 10,000 10,000 10,000 10,000 2011 £000 10,000 10,000 10,000 10,000 10,000 10,000 All of the shares rank pari passu, and no shareholder enjoys diﬀ erent or enhanced voting rights from any other shareholder. All shares are eligible for dividends and rank equally for dividend payments. 8641 AW.indd 45 45 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) Dividends The following dividends were declared and paid by the company in the year ended 31 August. 0.3p per ordinary share (2011: nil) 2012 £000 300 2011 £000 - After the end of the reporting period, the following dividends were proposed by the directors. The dividends have not been provided for and there are no tax consequences. 2012 £000 300 2011 £000 300 0.3p per ordinary share (2011: 0.3p) 22 Financial instruments 22 (a) Fair values of ﬁ nancial instruments Trade and other receivables The fair value of trade and other receivables, is estimated as the present value of future cash ﬂ ows, discounted at the market rate of interest at the balance sheet date if the eﬀ ect is material. Trade and other payables The fair value of trade and other payables is estimated as the present value of future cash ﬂ ows, discounted at the market rate of interest at the balance sheet date if the eﬀ ect 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 ﬂ ows, 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 ﬂ ows, discounted at the market rate of interest at the balance sheet date. The interest rates used to discount estimated cash ﬂ ows, where applicable are based on the weighted cost of capital and were as follows: Loans and borrowings 2012 % 2.5 2011 % 2.6 46 8641 AW.indd 46 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) Fair values The fair values for each class of ﬁ nancial assets and ﬁ nancial liabilities together with their carrying amounts shown in the balance sheet are as follows: 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 As at 31 August 2012 As at 31 August 2011 £000 £000 5,462 1,661 11,503 5,134 1,771 11,702 18,626 18,607 11,372 67,829 12,710 69,109 79,201 81,819 The Directors consider the carrying amount of the Group’s ﬁ nancial assets and ﬁ nancial liabilities, as detailed above, approximate their fair value. 8641 AW.indd 47 47 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) 22 Financial instruments (continued) 22 (b) Credit risk Credit risk management The Group is exposed to credit risk primarily in respect of its trade receivables and ﬁ nancial 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 ﬁ ndings 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 ﬁ nancial asset in the statement of ﬁ nancial 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 £5,462,000 (2011: £5,134,000) being the total of the carrying amount of ﬁ nancial 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 2012 £000 5,462 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 2012 £000 1,690 2,678 1,094 5,462 2011 £000 5,134 2011 £000 1,999 2,246 889 5,134 Credit quality of ﬁ nancial 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 48 8641 AW.indd 48 Gross Impairment Gross Impairment 2012 £000 5,462 64 5,526 2012 £000 - 64 64 2011 £000 5,134 46 5,180 2011 £000 - 46 46 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) 22 Financial instruments (continued) 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 2011 Impairment loss recognised Allowance for impairment utilised Balance at 31 August 2012 £000 46 19 (1) 64 The allowance account for trade receivables is used to record impairment losses unless the Group is satisﬁ ed 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 ﬁ nancial 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 ﬁ nanced primarily by bank loans, vehicle stocking credit lines and operating cash ﬂ ow. 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 ﬁ nancial forecasts, ﬁ nancial instruments and cash ﬂ ow 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 ﬁ nancial liabilities, including estimated interest payments and excluding the eﬀ ect of netting agreements: Interest is payable on loans of £2,589,000 (2011: £2,934,000) at Bank of England base rate plus 1.25%, loans of £6,620,000 (2011: £7,407,000) at LIBOR plus 1.75% and on loans of £2,163,000 (2011: £2,369,000) at LIBOR plus 3%. Carrying amount Contractual cash ﬂ ows 1 year or less 1 to <2years 2 to <5years 2011 £000 £000 £000 £000 £000 5years and over £000 Non-derivative ﬁ nancial liabilities Secured bank loans 12,710 14,251 1,671 1,636 4,702 6,242 Carrying amount Contractual cash ﬂ ows 1 year or less 1 to <2years 2 to <5years 2012 £000 £000 £000 £000 £000 5years and over £000 Non-derivative ﬁ nancial liabilities Secured bank loans 11,372 12, 480 1,625 1,591 5,686 3,578 8641 AW.indd 49 49 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) 22 Financial instruments (continued) 22 (d) Market risk Financial risk management Market risk is the risk that changes in market prices, such as interest rates will aﬀ ect the Group’s income or the value of its holdings of ﬁ nancial instruments Market risk - Foreign currency risk The Group does not have any exposure to foreign currency risk Market risk – Interest rate risk Proﬁ le At the balance sheet date the interest rate proﬁ le of the Group’s interest-bearing ﬁ nancial instruments was: Variable rate instruments Cash and cash equivalents Vehicle funding Loans and overdrafts 2012 £000 11,503 (15,888) (11,372) 2011 £000 11,702 (13,956) (12,710) (15,757) (14,964) The objectives of the Group’s interest rate policy are to minimise interest costs. The Group does not actively manage cash ﬂ ow 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 ﬂ oating 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 proﬁ t or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the eﬀ ect of ﬁ nancial instruments with variable interest rates, ﬁ nancial instrument at fair value through proﬁ t or loss or available for sale with ﬁ xed interest rates and the ﬁ xed rate element of interest rate swaps. The analysis is performed on the same basis for comparative periods. Equity Decrease Proﬁ t or loss Decrease 50 8641 AW.indd 50 2012 £000 135 2011 £000 133 135 133 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) 22 Financial instruments (continued) 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 beneﬁ ts to other stakeholders. The Group must ensure that suﬃ cient 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 ﬁ nancial 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 (surplus)/debt Total equity Gearing ratio 23 Operating leases Non-cancellable operating lease rentals are payable as follows: Less than one year Between one and ﬁ ve years More than ﬁ ve years As at 31 August 2012 As at 31 August 2011 £000 11,372 (11,503) £000 12,710 (11,702) (131) 1,008 21,541 19,501 (0.6%) 5.2% 2012 £000 2,640 8,297 23,321 2011 £000 2,533 7,885 24,769 34,258 35,187 The Group leases a number of motor dealership sites under operating leases. Land and buildings have been considered separately for lease classiﬁ cation. During the year £ 2,674,000 was recognised as an expense in the income statement in respect of op erating leases (2011: £2,434,000). 8641 AW.indd 51 51 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial 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 2011 and 2012. 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 ﬁ nance 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 45.4% (2011: 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 The emoluments consist of: Directors’ emoluments Philip Swatman (appointed 3/4/2012) James Mullins Rodney Smith (resigned 30/11/2011) Mark Lavery Warren Scott (resigned 3/4/2012) Sir Peter Burt Michael Burt 2012 £000 525 213 738 2011 £000 587 463 1,050 Salaries Consultancy fees Bonus Total Total 2012 £000 2012 £000 2012 £000 2012 £000 13 125 13 300 15 25 25 516 - - 9 - - - - 9 - 63 - 150 - - - 13 188 22 450 15 25 25 2011 £000 - 213 87 675 25 25 25 All directors beneﬁ ted from qualifying third party indemnity provisions during the ﬁ nancial period. 52 8641 AW.indd 52 213 738 1,050 21/12/2012 12:58 Notes (continued) (forming part of the ﬁ nancial statements) 25 Related parties (continued) During the year Mark Lavery and James Mullins (both Directors) each bought 4 vehicles from the Group and each sold 4 vehicles back to the Group. Rodney Smith and Warren Scott (whilst they were Directors during the year) each bought 1 vehicle from the Group and each sold 1 vehicle back to the Group. Sir Peter Burt bought 2 vehicles from the Group and sold 1 vehicle 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. 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 Dividend The Board is pleased to announce that it will make a dividend payment in respect of the ﬁ nancial year to 31 August 2012 of 0.3p (2011: 0.3p) per share as a full and ﬁ nal dividend payment. 8641 AW.indd 53 53 21/12/2012 12:58 Company Balance Sheet At 31 August 2012 Fixed assets Tangible Fixed Assets Investments Current assets Stock Debtors Cash at bank and in hand Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Net assets Capital and reserves Called up share capital Share premium account Proﬁ t and loss account Shareholders’ funds Note 2012 2011 £000 £000 £000 £000 5 6 7 8 9 11 12 12 162 666 584 538 15,374 16,496 (2,709) 218 666 828 884 550 376 14,606 15,532 (2,765) 13,787 14,615 14,615 10,000 799 3,816 14,615 12,767 13,651 13,651 10,000 799 2,852 13,651 These ﬁ nancial statements were approved by the board of directors on 13 December 2012 and were signed on its behalf by: M J J Lavery Director Company number: 05754547 54 8641 AW.indd 54 21/12/2012 12:58 Company Reconciliation of movements in shareholders’ funds for the year ended 31 August 2012 Proﬁ t for the ﬁ nancial year Dividend paid Net increase to shareholders’ funds Opening shareholders’ funds Closing shareholders’ funds Note Company Company 12 2012 £000 1,264 (300) 964 13,651 14,615 2011 £000 1,790 - 1,790 11,861 13,651 8641 AW.indd 55 55 21/12/2012 12:58 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 ﬁ nancial 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 ﬁ nancial statements. Further information regarding the company’s business activities together with the factors likely to aﬀ ect its future development, performance and position is set out in the Directors Report on page 16. Basis of preparation The ﬁ nancial 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 proﬁ t and loss account. Under Financial Reporting Standard 1 the Company is exempt from the requirement to prepare a cash ﬂ ow statement on the grounds that the Group ﬁ nancial statements include the Company in its own published consolidated ﬁ nancial 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 ﬁ xed 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 • plant and machinery • ﬁ xtures and ﬁ ttings • computer equipment 50 years 5 to 10 years 5 to 10 years 3 to 5 years No depreciation is provided on freehold land. Investments Investments in subsidiary undertakings are stated at cost less amounts written oﬀ . Where impairment indicators exist, the carrying value of investments will be reviewed against the value is use based upon the estimated future cash ﬂ ows of the subsidiary undertaking 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). Taxation The charge for taxation is based on the proﬁ t for the year and takes into account taxation deferred because of timing diﬀ erences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised, without discounting, in respect of all timing diﬀ erences 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. 56 8641 AW.indd 56 21/12/2012 12:58 Notes (continued) Classiﬁ cation of ﬁ nancial instruments issued by the Group Following the adoption of FRS 25, ﬁ nancial 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 ﬁ nancial assets or to exchange ﬁ nancial assets or ﬁ nancial 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 ﬁ xed amount of cash or other ﬁ nancial assets for a ﬁ xed number of its own equity instruments. To the extent that this deﬁ nition is not met, the proceeds of issue are classiﬁ ed as a ﬁ nancial liability. Where the instrument so classiﬁ ed takes the legal form of the Company’s own shares, the amounts presented in these ﬁ nancial statements for called up share capital and share premium account exclude amounts in relation to those shares. Finance payments associated with ﬁ nancial liabilities are dealt with as part of interest payable and similar charges. Finance payments associated with ﬁ nancial instruments that are classiﬁ ed 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 ﬁ nancial statements. 2 Remuneration of directors Directors’ emoluments Salaries Annual bonus The emoluments in respect of the highest paid director were: Directors’ emoluments Salaries Annual bonus 2012 £000 525 213 738 2012 £000 300 150 450 2011 £000 587 463 1,050 2011 £000 300 375 675 All directors beneﬁ ted from qualifying third party indemnity provisions during the ﬁ nancial period. 8641 AW.indd 57 57 21/12/2012 12:58 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 Other pension costs 4 Dividends The aggregate amount of dividends paid & received compromises: Aggregate amount of dividends paid in the ﬁ nancial year Aggregate amount of dividends received in the ﬁ nancial year Company 2012 Company 2011 37 34 Company 2012 £000 2,431 333 14 Company 2011 £000 2,741 352 11 2,778 3,104 2012 £000 300 2011 £000 - 1500 The aggregate amount of dividends proposed but not recognised at the year end is £300,000 (2011: £300,000). 58 8641 AW.indd 58 21/12/2012 12:59 Notes (continued) 5 Tangible ﬁ xed assets Company Cost At 1 September 2011 Additions At 31 August 2012 Depreciation At 1 September 2011 Charge for year At 31 August 2012 Net book value At 31 August 2012 31 August 2011 Computer equipment £000 416 86 502 198 142 340 162 218 Total £000 416 86 502 198 142 340 162 218 8641 AW.indd 59 59 21/12/2012 12:59 Notes (continued) 6 Fixed asset investments Company Cost and net book value At 1 September 2011 and 31 August 2012 Shares in group undertakings £000 666 The directors have considered the investments in subsidiary undertakings for impairment by comparing the carrying amount to the value in use and have concluded that no impairment is required. 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 Cambria Automobiles Property Limited ** England and Wales Property Company 100% Ordinary 100% Ordinary 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 7 Stocks Motor vehicles 60 8641 AW.indd 60 2012 £000 584 2011 £000 550 21/12/2012 12:59 Notes (continued) 8 Debtors Trade debtors Amounts owed by group undertakings Prepayments and accrued income Deferred tax (note 10) Corporation tax 9 Creditors: amounts falling due within one year Amounts owed to group undertakings Trade creditors Vehicle funding Other taxation and social security Accruals and deferred income Corporation tax 2012 £000 46 40 318 33 101 538 2012 £000 904 506 385 165 749 - 2,709 2011 £000 8 40 328 - - 376 2011 £000 356 654 - 269 1,360 126 2,765 8641 AW.indd 61 61 21/12/2012 12:59 Notes (continued) 10 Deferred taxation Deferred Taxation At 1 September 2011 Movement in period At 31 August 2012 The elements of deferred taxation are as follows: Difference between accumulated depreciation and capital allowances Other timing differences Total deferred tax 2012 £000 34 (1) 33 £000 Company - 33 33 2011 £000 - - - 62 8641 AW.indd 62 21/12/2012 12:59 Contents Chairman’s Statement ............................................................. 4 Operating and Financial Review ............................................. 7 Notes (continued) 11 Called up share capital Directors’ report ......................................................................16 Authorised 2012 £000 2011 £000 Statement of directors’ responsibilities in respect of the Directors’ Report and the ﬁ nancial 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 ﬁ nancial position ...................... 22 Consolidated cash ﬂ ow statement .........................................23 Notes ....................................................................................... 24 Company Balance Sheet ........................................................ 54 Company Reconciliation of movements in shareholders’ funds ....................................... 55 Ordinary shares of 10 pence each 10,000 10,000 Allotted, called up and fully paid Ordinary shares of 10 pence each Shares classiﬁ ed as liabilities Shares classiﬁ ed in shareholders funds 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 diﬀ erent or enhanced voting rights from any other shareholder. All shares are eligible Notes ....................................................................................... 56 for dividends and rank equally for dividend payments. 12 Share premium and reserves At 1 September 2011 Proﬁ t for the year Dividend paid At 31 August 2012 Share premium account Proﬁ t and loss account £000 799 - - 799 £000 2,852 1,264 (300) 3,816 13 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. 22 2 8641 Cover Spreads.indd 2 63 21/12/2012 14:08 Directors’ report and ﬁ nancial statements Registered number 05754547 31 August 2012 8641 Cover Spreads.indd 1 21/12/2012 14:08

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