Annual report and financial statements
Registered number 05754547
31 August 2015
Contents
Summary ........................................................................... 4
Chairman’s statement ....................................................... 7
Operating and financial review ........................................ 10
Strategic report ............................................................... 18
Directors’ report .............................................................. 20
Statement of directors’ responsibilities in respect of
the Directors’ report and the financial statements .......... 21
Independent auditor’s report to the members of
Cambria Automobiles plc ................................................ 22
Consolidated statement of comprehensive income ........ 24
Consolidated statement of changes in equity ................. 25
Consolidated statement of financial position .................. 26
Consolidated cash flow statement .................................. 27
Notes ............................................................................... 28
Company balance sheet ................................................. 58
Company reconciliation of movements in
shareholders’ funds ......................................................... 59
Notes ............................................................................... 60
2
2
33
Financial Highlights
Year ended 31 August
2015
2014
Revenue
Underlying EBITDA*
Underlying operating profit*
Underlying profit before tax*
Underlying profit before tax margin*
Non-recurring expenses
Underlying earnings per share*
Earnings per share
Dividend per share
£m
523.8
10.2
8.5
7.7
1.5%
0.1
6.08p
6.03p
0.75p
£m
Change
450.1
7.4
5.9
5.4
1.2%
0.1
4.22p
4.15p
0.6p
16.4%
37.8%
44.1%
42.6%
30bps
44.1%
45.3%
25.0%
* These items exclude non-recurring expenses of £0.1m (2014: £0.1m)
4 Strong balance sheet - net assets £33.7m
4 Return on Equity at 19.6% (2013/14: 15.9%)
4 Strong operational cash flows, cash
position of £15.4m (2013/14: £10.3m)
4 Proposed final dividend of 0.6p, full year up
by 25.0% to 0.75p per share (2013/14: 0.6p)
4 Net cash of £1.0m (2013/14: net debt
£4.6m) after significant investment in April
2015
4 Post year-end, new £37.0m, 5 year banking
facilities arranged, including an undrawn
£22m revolving credit facility, providing
additional funding capacity
4
Summary
Operational Highlights
4 Growth in new vehicle sales of 9.0%
4 Barnet Jaguar Land Rover
4 New retail profit per unit increased
by 12.6%
4 Increase in used vehicle unit sales of
4.4%
4 Used car profit per unit increased by
5.3%
4 Increase of 7.8% in service and
bodyshop hours sold
acquisition from June 2014 integrating
well with profit contribution in line
with expectations
4 Swindon Land Rover acquired on
30 April 2015 for £7.6m,
integrating well and contributed in line
with expectations
5
Summary (continued)
Mark Lavery, Chief Executive Officer of Cambria said:
“The Group has delivered a strong set of full year results, with our sales exceeding £500m for the first time. Along with
the growth in our underlying profitability, this milestone reflects the continued progress that has been made across our
businesses as we take advantage of the UK economic recovery by identifying the right acquisition opportunities and
strengthening our position in high luxury and premium brands. The acquisitions of the Jaguar Land Rover business
in Barnet and the Land Rover business in Swindon fully align with this strategy and I am pleased to report that both
businesses have integrated well.
“Post the period end, the Group’s growth momentum has continued in the first two months of the new financial year with results
substantially ahead of the comparable period. We have also successfully agreed a new set of 5 year banking facilities, which, combined
with our strong cash reserves, have boosted our acquisition capacity. The Board remains focused on strengthening its brand portfolio
by actively delivering on our stated acquisition strategy to enhance shareholder value. We are well placed to continue our growth in the
current financial year.”
6
Chairman’s statement
I am very pleased to report that Cambria has delivered a strong set of results for the year ended 31 August 2015, which show continued
improvement in the Group’s operational and financial performance and successful delivery of its stated growth strategy.
The UK motor retail industry has continued to demonstrate year-on-year growth with the new car market reporting buoyant registration
data supported by strong consumer offers and a favourable exchange rate environment.
The Group reported significant operational improvements in the 2013/14 financial year and these have impacted positively the 2014/15
year. The Group generated gross profit growth across all core elements of the business, New Vehicles, Used Vehicles and Aftersales, as
well as delivering another significant premium brand acquisition in Land Rover Swindon to add to the major acquisition in the previous
year. These earnings accretive acquisitions have been delivered in line with the strategy for growth in the premium and high luxury
segment and have achieved our robust investment criteria.
Revenue increased by 16.4% to £523.8m (2013/14: £450.1m). Underlying profit before tax rose by 42.6% to £7.7m (2013/14: £5.4m).
Profit before tax also improved by 45.2% to £7.7m (2013/14: £5.3m), giving earnings per share of 6.03p (2013/14: 4.15p) - an increase of
45.3%.
The Group closed the year with net cash of £1.0m (2013/14: net debt £4.6m) and net assets of £33.7m (2013/14: £28.3m), underpinned
by the ownership of £37.6m (2013/14: £35.7m) of freehold and long leasehold properties.
Our capacity for making acquisitions, and the facilities development programme, have been enhanced post year end with a new set of
banking facilities of £37m. These facilities refinance the existing term loans of £14.4m and make available a further £22.0m of Revolving
Credit Facility.
Group overview
Cambria was established in 2006 with a strategy to build a balanced motor retail group through close cooperation with our manufacturer
partners to deliver the self-funded acquisition and turnaround of underperforming businesses. In my previous reports, I stated that our
strategy had evolved to encompass the acquisition of premium and high luxury businesses located in geographically strategic locations
which would be immediately earning enhancing.
In 2014 the Group, in line with this strategy was pleased to be able to announce the acquisition of the Jaguar and Land Rover dealership
in Barnet. The Board has been very pleased with the manner in which this business has integrated and is confident that it will continue
to deliver results in line with expectations. Following on from this successful acquisition, management has continued to identify and
review acquisition opportunities that meet these criteria, and on 30 April 2015 completed the acquisition of Swindon Land Rover for a
total consideration of £7.6m including £2.3m of freehold property. In the four months of ownership the Swindon Land Rover business has
contributed positively to the Group and is integrating well.
The strength of the Group’s balance sheet and new financing resources available allows us to continue our acquisition strategy, realise our
brand balance ambitions, while meeting our financial return criteria.
Following the acquisitions, and the closure of the Group’s only Citroen new car sales franchise in Swindon, the Group now comprises 29
dealerships, representing 45 franchises and 17 brands, a well balanced brand portfolio spanning the high luxury, premium and volume
segments.
Our relationship with the manufacturers which we represent is a core pillar of our business approach. The management team continues
to develop and maintain strong working relationships, in which Cambria is seen as an effective and valued business partner. I would also
like to thank all our Cambria Associates, who continue to demonstrate commitment to the Group. We believe that our investment in their
development, through the Cambria Academy, will increase skill levels in our Guest facing sales force and enhance their ability to provide
a world class Guest experience.
7
Chairman’s Statement (continued)
Dividend
The Board is pleased to announce a final dividend of 0.6p per share (2013/14: 0.5p), subject to shareholder approval, resulting in a total
dividend for the year of 0.75p per share (2013/14: 0.6p) - an increase of 25.0%. It remains the Board’s intention to grow dividends in line
with earnings.
Outlook
Since the industry lows experienced in Q4 2011, the UK market has enjoyed 43 consecutive months of year-on-year growth in new car
registrations to September 2015. This continuous growth trajectory plateaued in October against a strong prior year comparative and a
market which is expected to reach a record high in 2015 at over 2.6m new car registrations. We believe that the new car market will remain
robust although we do not expect year-on-year growth in new car registrations to continue when the market reaches its natural mid-cycle
level.
I am pleased to report that Cambria has maintained its growth momentum in the first two months of the new financial year, delivering
results substantially ahead of the comparable period. We are actively looking to deliver on our stated acquisition strategy to further
enhance the brand portfolio in strategic areas, whilst maintaining our aim to produce superior returns on Shareholders’ funds, which
reached 19.6% in the year under review (2013/14: 15.9%).
The Board is pleased with the progress that has been made over the last two financial years and intends to continue to exploit growth
opportunities whilst driving the core operation of the existing businesses.
Philip Swatman
Chairman
8
‘
A culture of delivering a World Class Guest
Experience is engrained into the business
through the Cambria Academy training
programme
’
9
Operating and Financial Review
Chief Executive’s review
Introduction
I am pleased to report that the Group has delivered a very good set of results for the 2015 financial year. The operational and financial
performance improvements delivered in H1 2015 continued into the second half with underlying profit before tax rising to £7.7m, a 42.6%
increase on the previous year.
It is pleasing to report that the results reflect both organic growth and profit increases in the like-for-like businesses as well as delivery of
the anticipated earnings from the acquisitions made in the current and previous financial year.
In line with our acquisition strategy, we completed the purchase of our second Land Rover dealership in Swindon in April 2015 for £7.6m
from existing cash resources and term debt. The integration of this business is progressing well and the business has operated in line with
our expectations during the first four months of ownership.
During the year under review, the like-for- like businesses contributed a £6.5m profit before tax, a 20.4% year on year increase, whilst the
Barnet and Swindon acquisitions contributed £1.2m profit before tax.
The table below summarises our financial performance, which is detailed in the Finance Director’s Report:
Year ended 31 August
Revenue
Underlying EBITDA*
Underlying operating profit*
Underlying profit before tax*
Underlying profit before tax margin*
EBITDA
Operating profit
Profit before tax
Non-recurring expenses
Net Assets
Profit before tax margin
Underlying earnings per share*
Earnings per share
* These items exclude non-recurring expenses of £0.1m (2013/14: £0.1m)
2015
£m
523.8
10.2
8.5
7.7
1.5%
10.1
8.4
7.7
0.1
33.7
1.5%
6.08p
6.03p
2014
£m
450.1
7.4
5.9
5.4
1.2%
7.3
5.8
5.3
0.1
28.3
1.2%
4.22p
4.15p
10
Operating and Financial Review (continued)
Total revenue for the Group exceeded £500m for the first time in its history, a milestone in the Group’s evolution from its inception in 2006.
Through a combination of operational improvements and strategic acquisitions the Group intends to continue to deliver controlled growth
and increasing profitability.
The Group also continued to deliver strong operational cashflow during the year which funded the acquisition of the Swindon Land Rover
business, and ensures that we have resources available to continue with our acquisition strategy to develop the Group’s profitability and
franchise mix. During the year we have worked with our banking partner Lloyds Banking Group to structure a new set of banking facilities
that will provide a refinancing of the existing £14.4m term loans and make available a £15.0m Revolving Credit Facility for acquisitions and
a further development facility of up to £7.0m for the property projects at our Barnet and Swindon dealerships to deliver the new Jaguar
Land Rover corporate standard facilities.
Brand partnerships
In line with our buy-and-build strategy, management has continued to work with both existing and potential Brand Partners (manufacturers)
with whom the Group may develop Primary Brand Partner relationships (i.e. more than three franchised dealerships). We have worked hard
to improve the businesses acquired in previous years and to integrate and develop the ones acquired and established in the year under
review, making significant investment in the management of those businesses.
Our current portfolio of Brand Partners and dealerships comprises:
High Luxury / Premium
Aston Martin
Alfa Romeo
Honda
Jaguar
Land Rover
Volvo
Volume
Abarth
Jeep
Dacia
Fiat
Ford
Mazda
Nissan
Renault
Seat
Vauxhall
3
2
2
6
2
5
20
Motorcycle
Triumph
1
2
1
5
5
4
1
1
1
2
23
2
2
During the year the Group acquired the Swindon Land Rover business for a total consideration of £7.6m, which included £2.3m of freehold
land and property, £0.1m of fixed assets and £2.2m of net working capital assets resulting in £3.0m of goodwill. It is our intention to fully
re-develop our Swindon Motor Park location to provide a new Jaguar Land Rover (JLR) facility in line with the new Arch design concept
for JLR facilities. It is anticipated that the development will be completed by summer 2017 and we are initiating the planning and design
process imminently. Once the new development is complete, we will relocate the Land Rover business from the existing dealership property
in Royal Wootton Bassett, and will then dispose of the Royal Wootton Bassett facility.
When we acquired the Barnet Jaguar Land Rover dealership in the 2013/14 financial year we committed to develop the freehold site to
provide a Jaguar Land Rover Arch concept facility on that location. At the time of writing we have now secured full planning consent and are
in the process of finalising the negotiations with contractors for delivery of the site. It is our expectation that the site development will begin
in calendar Q1 2016 with completion in calendar Q1 2017. We are excited about this development and are confident that once complete
it will provide an exceptional facility from which we can deliver a great Guest Experience and achieve the full potential of the businesses.
Cambria has enjoyed the benefits of a strategically balanced brand portfolio with a strong mix of high luxury, premium and volume businesses
and we intend to continue our buy-and-build strategy, acquiring businesses that further improve the brand mix and represent good value
for our shareholders.
We continue to promote the philosophy of stand-alone autonomous business units, in which local management teams are empowered via
our “Four Pillar Strategy” to run their own business units. Cambria dealerships do not trade under the “Cambria” name but focus on local
branding. Our dealerships trade as “Grange”, “Doves”, “Dees”, “Invicta Motors”, “County Motor Works”, “Pure Triumph” and “Motorparks”.
When acquiring a business, the Board considers the geographical location of the franchise and then chooses to either adopt a new trading
style or retain the existing business name. On completion of both the Barnet and Swindon acquisitions, the businesses were re-branded
as “Grange”.
11
Automobiles plc
Locations across the UK
Welwyn
Garden City
Brentwood
Chelmsford
Barnet
Thanet
Tunbridge
Wells
Canterbury
Ashford
Maidstone
Gatwick
Horsham
Wimbledon
Croydon
Southampton
Blackburn
Preston
Bolton
Bury
Oldham
Warrington
Wellingborough
Northampton
Woburn
Swindon
Exeter
12
Operating and Financial Review (continued)
Operations
2015
Revenue
2015
Revenue
mix
2015
Gross
Profit
2015
Margin
2014
Revenue
2014
Revenue
mix
2014
Gross
Profit
2014
Margin
£m
238.4
235.9
60.6
(11.1)
523.8
%
45.5
45.0
11.6
(2.1)
100.0
£m
15.5
20.8
25.8
-
62.1
(53.6)
8.5
(0.1)
8.4
%
6.5
8.8
42.5
-
11.9
1.6
£m
195.2
208.9
55.8
(9.8)
%
43.4
46.4
12.4
(2.2)
450.1
100.0
£m
12.3
19.0
23.9
-
55.2
(49.3)
5.9
(0.1)
5.8
%
6.3
9.1
42.9
-
12.3
1.3
2015
11,388
2014
Year on year growth
10,451
9.0%
New Vehicles
Used Vehicles
Aftersales
Internal sales
Total
Administrative expenses
Operating profit before non-
recurring expenses
Non-recurring expenses
Operating profit
New Vehicle Sales
New units
New vehicle revenue increased from £195.2m to £238.4m with total new vehicle sales volume up 9%. Excluding the impact of Barnet and
Swindon acquisitions, our new volumes rose by 1.1% on a like-for-like basis. Gross profit also increased by £3.2m (26.0%) in total and £0.3m
on a like-for-like basis with an improvement in the gross profit per unit sold.
This strong performance was delivered against an overall year-on-year increase of 7.2% in new UK car registrations in the 12 month period
to 31 August 2015. New car registrations for the rolling 12 months exceeded 2.57m in this period for the first time since 2007, and it is
anticipated that in the calendar year 2015 total registrations will exceed 2.6m for the first time. The private registrations element of the new
car market increased 4.4% year-on-year. ASE industry data indicates that dealer sales are at a lower level than the SMMT registration data
which also includes the impact of self/pre-registrations.
The Group’s sale of new vehicles to private individuals was 9.2% higher year-on-year at 9,693 units. Commercial and fleet vehicle sales by
the Group increased by 11.6% to 1,090 units and by 0.8% to 605 units respectively; these sales are transacted at lower margins hence the
dilutive effect on overall new car gross margin.
Used Vehicle Sales
Used units
2015
14,945
2014
Year on year growth
14,320
4.4%
We have delivered a strong performance in used vehicle sales. Revenues increased from £208.9m to £235.9m and the number of units sold
rose by 4.4%. Like-for-like volumes were up 1.3%. The gross profit generated increased by £1.8m (9.5%) in total and £0.9m on a like-for-like
basis.
The Group continues to place a major focus on managing and driving the used car operation within the business, and pleasingly, the improved
controls and trading style that the Group has adopted is delivering results. Over the past 24 months, the Group has adopted a “Velocity”
trading strategy which involves applying consistent controls to the level of used car stock being held, the pricing and presentation of the
inventory and the penetration of Finance and Insurance products to the sale of used cars. The adoption of this trading style has resulted in
the average gross profit on each unit retailed increasing year on year to £1,395 per unit (up 5.3%). The adoption of the Velocity trading strategy
means that the Group has also concentrated on tight management of its used vehicle inventories, closely monitoring stock turn and used
car Return on Investment with an improvement to 137% in the year from 119% in 2013 and 122% in 2014. Cambria has therefore further
distanced itself from the industry average used car Return on investment of 76.5%
13
Operating and Financial Review (continued)
Aftersales
Service and Bodyshop hours
2015
2014
Year on year growth
341,611
316,963
7.8%
Overall, the service and bodyshop elements of the business increased the number of hours sold by 7.8% and the total aftersales gross
profit by £1.9m (7.9%) to £25.8m. The combined aftersales revenue increased 8.6% year on year from £55.8m to £60.6m. The aftersales
departments contributed 41.5% of the Group’s overall gross profit.
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. This is our contact strategy involving the sale of service plans and delivery of
service and MOT reminders in a structured manner, utilising all forms of digital media and traditional communication methods.
The 0-3 year car parc continues to be replenished, as new car sales increases year on year, and this gives the Group confidence of further
progress in Guest relationship and retention and the aftersales business remaining strong.
Group Strategy
Since the Group’s incorporation in March 2006, we have continued to apply our focused buy-and-build strategy of acquiring motor dealership
assets using internally generated funds and bank facilities. The earnings enhancing acquisitions over the past two years of the Barnet and
Swindon businesses are firmly in line with this strategy and the opportunity to develop our relationship with Jaguar Land Rover fits our brand
portfolio aspirations perfectly.
We have now completed eleven separate transactions since our incorporation. Following any acquisition, the Cambria management team
implements new financial and operational controls and processes in order to rationalise, restructure and develop each individual dealership.
A culture of delivering a world class Guest experience is engrained into the business through the Cambria Academy training. This tailored
approach ensures the changes made to each dealership are sustainable and create shareholder value through achieving an appropriate
contribution for the level of investment.
We will continue with our three step approach to purchasing a new business - acquisition, integration and operation, as outlined below:
Acquisition
When acquiring new businesses, we are diligent in ensuring that none of the contractual obligations taken on upset the integrity of our balance
sheet. This includes ensuring that leases reflect market value and that any unusual contractual obligations are addressed prior to acquisition
in order to avoid taking on any legacy costs. We do not have any defined benefit pension schemes. We have always taken the approach that
Cambria will not acquire any business unless there is a strong underlying business case to do so and our acquisitions have been funded from
our own cash resources and banking facilities. Maintaining the Group’s balanced brand portfolio will be fundamental to its continued success
and development and this will undoubtedly mean that we will acquire and develop more Premium and Luxury businesses. All acquisitions and
any related funding requirements are assessed on their individual merits. For compelling acquisition targets, like Barnet and Swindon, where
a premium may need to be paid, we will still focus on ensuring that the Group delivers strong and consistent returns on equity.
Integration
The integration process of every new dealership starts with an Associate engagement evening where our senior management present
the Cambria “Four Pillar” culture change programme. After this meeting, the Group integration team implements systems, processes and
procedures to improve legislator compliance including FCA and Health & Safety. Newly acquired Associates are transferred to Cambria
employment contracts with compensation and benefits commensurate with the particular business. An analysis of training needs is
conducted, followed by the implementation of training programmes for all relevant Associates in the new business.
Operation
With any new acquisition, the standard financial controls are implemented immediately, ranging from individual cheque signatories to daily
reporting of vehicle sales and aftersales revenues, margins and other performance figures. We then implement our two growth strategies (i)
“Cambria Digital”, which is our internet social networking strategy for vehicle sales coupled with our “Guest Connect” support centre, and
(ii) in Aftersales our “Duty of Care Gearbox” and Local Contact Strategy which is designed to supply our Guests with a one stop solution
for all their vehicle maintenance needs.
14
Operating and Financial Review (continued)
Cambria Academy
The Group has continued to develop the Cambria Academy, a training Academy for the Group’s Associates, which was established nearly
three years ago. The Academy is evolving consistently in order to support the business and development needs of the Group. The initial
training programmes for the sales teams have been supplemented with induction programmes and specific telephone handling courses to
ensure that we increase the competency of all our Associates in dealing with Guest enquiries effectively.
The Academy was established to enhance the Cambria Guest Experience with the key strategic objective: “To deliver an outstanding
experience making it easy for our Guests to buy, own and maintain their vehicle, ensuring that they will want to do so again and recommend
us to others.”
We will continue to enhance and refine the Academy to help develop our own talent pool, promote Associate retention and to create our
own future management with the overriding objective of enhancing the Guest Experience when interacting with Cambria.
Outlook
The new financial year has started strongly. Group performance in the first two months is significantly ahead of the comparable period of
the 2014/15 financial year, and is tracking ahead of current market expectations. I am pleased with the progress that we are making across
our established businesses; and I am also pleased with the progress that we are making in both the Barnet and Swindon acquisitions.
Whilst there is further work to do in order that those businesses achieve their potential, the opportunity to generate significant returns from
these business is substantial. I am confident that through a disciplined approach to managing the used car operation and adhering to the
principles of the “Velocity” trading strategy that we have adopted, that Cambria can maintain this momentum and deliver further improved
performances across all its departments in the current financial year.
Our continued strong cash generation and new banking facilities leave us well positioned to develop our balanced brand portfolio. We will
continue to focus on the development of our high luxury and premium brands and Cambria continues to invest in identifying acquisition
opportunities.
Whilst there were 43 consecutive months of year-on-year growth in new car registrations in the UK to September, and a stabilising in
October, we believe that at just over 2.6m registrations for the year, the new car market is now mid-cycle and will remain around this level.
The UK remains an attractive place for the vehicle manufacturers to register and sell cars given the overall recovery of the economy and
the exchange rate benefit that the manufacturers receive if sterling remains strong.
As a result of the exchange rate benefit and the ongoing low interest rate environment, vehicle manufacturers continue to deliver strong
consumer offers, which represent attractive propositions for our Guests to acquire new cars. The level of cars sold on Personal Contract
Purchase “PCP” related products has increased significantly over the past four years. As a result of the increased penetration of the PCP
offers, there becomes a natural change cycle where a Guest is more likely to change a car for another new one during the term of the
PCP product. A larger portion of cars sold on PCP gives greater control of the Guest’s change cycle and creates an opportunity for us to
engage with our Guests.
Cambria remains data driven, digitised and agile which puts us in a good position to capitalise on the opportunities that the market
and brand partners present. We intend to continue the process of enhancing the existing businesses and acquiring businesses that fit
strategically in terms of brand, location and return on investment.
Mark Lavery
Chief Executive
15
Operating and Financial Review (continued)
Finance Director’s Report
Overview
Total revenues in the period increased 16.4% to £523.8m from £450.1m in the prior year. New vehicle unit volumes were up 9% and new
vehicle revenues were up 22.1%. Used car unit sales and revenues increased by 4.4% and 12.9% respectively. Revenues from the aftersales
businesses increased by 8.6%, compared with the previous year.
Total gross profit increased by £6.9m (12.5%) from £55.2m to £62.1m in the year. Gross profit margin across the Group reduced from 12.3%
to 11.9%, reflecting the change in revenue mix following the increase in new car sales and the improvement in commercial vehicles and fleet
cars. The average selling price of both new and used cars increased year on year, as did the average profit per new and used unit that we
sold. The aftersales operations contributed 41.5% of the total gross profit for the Group, compared to 43.3% in the previous period, at a
gross profit margin of 42.5%, compared with 42.9% in the previous year.
During the year, the Group incurred non-recurring expenses of £57,000 in relation to transaction and set up costs associated with the
acquisition of the Swindon Land Rover business.
Underlying EBITDA increased by 37.8% in the period to £10.2m from £7.4m in the previous year. Underlying operating profit improved 44%
to £8.5m, compared to £5.9m in the previous year, resulting in an underlying operating margin of 1.6% (2013/14: 1.3%).
Net finance expenses increased to £0.7m (2013/14: £0.5m) as a result of the additional mortgages against the Barnet and Swindon freehold
properties acquired and additional consignment stocking costs relating to the higher level of consignment stock carried across the year.
The Group’s underlying profit before tax rose by 42.6% to £7.7m, in comparison with £5.4m in the previous year. The acquisition accounted
for a profit of £1.2m in the year, in line with our budget.
Underlying earnings per share were 6.08p (2013/14: 4.22p). Basic earnings per share were 6.03p (2013/14: 4.15p) and the Group’s underlying
return on shareholders’ funds for the year was 19.6% (2013/14: 15.9%).
Taxation
The Group tax charge was £1.6m (2013/14: £1.2m) representing an effective rate of tax of 21.2% (2013/14: 21.8%) on a profit before tax
of £7.7m (2013/14: £5.3m). As outlined in last year’s report, it is anticipated that the tax rate will continue at a substantially normal effective
tax rate.
Financial Position
The Group has a robust balance sheet with a net asset position of £33.7m underpinned by £37.5m of freehold and long leasehold property
which are held on a historic cost basis. Secured against the freehold and long leasehold property are mortgages amounting to £14.4m.
As at the balance sheet date, each of the loans has different repayment profiles between three and fifteen years and bear interest at between
base plus 1.25% and LIBOR plus 3%. During the year, the Group comfortably met the bank covenants attached to these borrowings.
Post year end, on 23 November 2015, the Group entered into revised banking arrangements with Lloyds Banking Group to refinance the
existing £14.4m of term loans into one standardised facility of £15m that has a 5 year term, and 15 year capital repayment profile.
The cost of the facilities is LIBOR plus a margin. The margin attributable to the term loans will be set each quarter and is dependent on the
net debt: EBITDA ratio for the Group. The spread of margin chargeable against the facility ranges from 1.2% where the net debt is less than
1 times EBITDA, up to 2% where the net debt is greater than 2.5 times EBITDA.
The Group has also arranged two further Revolving Credit Facilities. The first is a 5 year, £15m RCF available for the acquisition of businesses
and property, the second is a 5 year property development facility to be used against the development of Barnet and Swindon properties. The
maximum drawdown against this facility is £7m, and it is intended that once the developments are complete that the RCF will be converted
into a standard amortising term facility. The margins attributable to these Revolving Credit Facilities mirror those attributable to the revised
term loan facilities.
16
Operating and Financial Review (continued)
The net cash position of the Group as at 31 August 2015 was £1.0m (2013/14: net debt £4.6m), reflecting a cash position of £15.4m
(2013/14: £10.3m). This is after the £7.6m investment in acquired businesses.
The Group typically 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 £5.0m overdraft facility which is used to manage seasonal
fluctuations in working capital. The overdraft facilities are renewable annually and are next due in February 2016. At the balance sheet date,
the Group had a £5.0m Revolving Credit Facility, (RCF) which has now been replaced with the revised facilities which give us significant
liquidity to identify and approach acquisition targets.
Cash Flow and Capital Expenditure
The Group generated an operating cash inflow of £15.0m with working capital reducing by £6.4m through efficient management of the
vehicle inventory and the stocking lines associated with that inventory, VAT inflow from increased consignment stock levels and higher
levels of new vehicle deposits. Total funds invested in business acquisitions and capital expenditure were £8.4m, of which £7.6m related
to the acquisition of the Swindon Land Rover business and £0.9m was fixtures and fittings, plant and equipment and computer equipment.
We drew down one new term loan of £1.6m against the freehold purchase of the Swindon Land Rover Property.
During the year, capital repayments of £2.1m were made against the total term loans outstanding. The capital repayments due in the
financial year to 31 August 2016 under the old facilities total £2.1m, under the revised facilities will equate to £1.3m in 2016 and £1m each
year thereafter.
As a result of the net cash inflow of £5.1m, the gross cash position was £15.4m with gross debt decreasing by £0.5m to £14.4m, overall
net debt decreased from a net debt position of £4.6m at 31 August 2014 to a net cash position of £1.0m.
Shareholders’ Funds
There are 100,000,000 ordinary shares of 10p each with an associated share premium account 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 the prior year. All ordinary shares
rank pari passu for both voting and dividend rights.
Pension Schemes
The Group does not operate any defined benefit pension schemes and has no liability arising from any such scheme. The Group made
contributions amounting to £0.3m (2013/14: £0.3m) to defined contributions schemes for certain employees.
Financial Instruments
The Group does not have any contractual obligation under any financial instruments with respect to the hedging of interest rate risk.
Dividends
The Board is pleased to propose a final dividend payment in respect of the financial year to 31 August 2015 of 0.6p per share in addition
to the interim dividend of 0.15p per share paid in May 2015. If approved by the shareholders at the Annual General Meeting to be held
on 14 January 2016, the dividend will be payable on 21 January 2016 to those shareholders registered on 29 December 2015, with an
ex-dividend date of 24 December 2015. The Board aims to maintain a dividend policy that grows with the Group’s earnings but intends to
ensure that the payment of dividend does not detract from its primary strategy to continue to buy-and-build and grow the Group.
James Mullins
Finance Director
23 November 2015
17
Strategic report
Enhanced Business Review
All details required are covered in the Chairman’s Statement and the Operating and Financial Review between pages 3 and 13.
Cambria Business Philosophy
Cambria’s culture – The Four Pillars
The Group works hard to instil a group culture. This culture is built around four pillars which are:
Pillar One - Associate delight
The Directors believe that Associates are the Company’s most important asset and therefore members of the team are not referred to as
members of staff or employees, but rather as “Associates”. The Directors want all Associates to be proud to be associated with the Group
and to be given the autonomy to make decisions that affect the running of “their” business. The Directors promote internal development
and foster a culture whereby associates feel they can achieve their career aspirations with Cambria. Equally, Cambria invests in its
Associates in order for them to achieve their full potential within the Group.
Pillar Two - Guest delight
Cambria Associates are encouraged to treat all customers at all times, in the way that they would treat a guest visiting their own home.
The Directors believe that associate empowerment is key to achieving this goal and the Directors believe that the organisation must be
transparent and open at all times generating empathy with the diverse guest base of the Group.
Pillar Three - Brand delight
The Group’s goal is to become the retailer of choice for all of the automotive manufacturers that it represents. This pillar focuses on
achieving the following goals:
• brand vehicle sales objectives
• brand part sales objectives
• top half placing in brand customer satisfaction surveys
• the development of a trusting relationship with brand personnel from the manufacturer partners
Pillar Four - Stakeholder delight
The Group aims to provide satisfaction to its Stakeholders. It seeks to achieve this through:
• disclosing timely and accurate information providing Stakeholders with a detailed understanding of business performance; and
• communicating openly and transparently.
Primary Risks
The primary risk to the Group is the 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.
The Group uses a variety of financial instruments including cash, borrowings and various items, such as trade debtors and trade creditors
that arise directly from its operations. The main purpose of these financial instruments is to provide working capital for the Group’s
operations.
The Directors are of the view that the main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, price risk
and credit risk. The Directors set and review policies for managing each of these risks and they are summarised below. These policies have
remained unchanged from previous years.
18
Strategic report (continued)
Interest rate risk
The Group finances its operations through a combination of bank funding and shareholders’ funds. The interest rate on bank funding is
variable with base rate.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets
safely and profitably. The funding for significant new ventures is secured before commitments are made. Cash flows are monitored on a
monthly basis.
Price risk
The principal price risks arise from vehicle stocks which are either inappropriate for resale, or are bought at too high a price, relative to a
fast moving marketplace. The Group’s purchasing staff are trained and developed to be aware of the current marketplace. They are also
provided with all the latest available market data. The managers of each business unit consider their stock books and purchasing patterns
on a very regular basis, with a higher level of review by the Directors.
Credit risk
The principal credit risk arises from trade debtors. In order to manage credit risk, the Directors set limits for customers and ensure a
regular review is made of trade debtors outstanding. Credit limits are reviewed on a regular basis in conjunction with debt ageing and
collection history.
All potential areas of financial risk are monitored regularly and reviewed by the Directors and local management. Any preventative or
corrective measures are taken as necessary.
Associate involvement
During the year, the policy of providing associates with information about the Group has been continued through internal media methods
in which associates have also been encouraged to present their suggestions and views on the Group’s performance. Regular meetings are
held between local management and associates to allow a free flow of information and ideas.
Through implementing tight controls and building a strong operational Group infrastructure, the Directors believe they are taking all
possible steps to protect the business.
By order of the board
James Mullins
Director
23 November 2015
Dorcan Way, Swindon, SN3 3RA
19
Directors’ report
The directors present their directors’ report and financial statements for the year ended 31 August 2015.
Principal activities
Cambria’s principal activities are the sale and servicing of motor vehicles and the provision of ancillary services. The Group operates from
29 sites with a total of 45 dealer franchises.
Proposed dividend
The directors recommend the payment of a final dividend for 2015 of 0.6p per share which equates to £0.6m (2014: £0.5m). If approved
at the Annual General Meeting to be held on 14 January 2015, the dividend will be payable on 21 January 2016 to those shareholders
registered on 29 December 2015.
Directors
The directors who held office during the year were as follows:
P H Swatman
M J J Lavery
M W Burt
J A Mullins
Sir P A Burt
All directors benefited from qualifying third party indemnity provisions in place during the financial period.
Associates
The Group recognises the benefit of keeping associates informed of group affairs and the views of associates are given full consideration
at regular meetings with their representatives.
Full and fair consideration is given to the employment of disabled persons, who are treated no differently from other associates as
regards recruiting, training, career development and promotion opportunities. For people who may become disabled, in the course of
employment, the Group will make every effort to accommodate them in suitable alternative employment.
Political and charitable contributions
During the year, the Company made a £10,000 charitable donation to support BEN, the Motor And Allied Trades Benevolent Fund. 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 (2014:
£nil).
Disclosure of information to auditor
The directors who held office at the date of approval of this directors’ report confirm that, so far as they are each aware, there is no relevant
audit information of which the Company’s 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 LLP as auditor of the Company
is to be proposed at the forthcoming Annual General Meeting.
By order of the board
James Mullins
Director
23 November 2015
20
Dorcan Way, Swindon, SN3 3RA
Statement of directors’ responsibilities in respect of the Strategic Report, the Directors’
Report and the financial statements
The directors are responsible for preparing the Strategic report, the Directors’ Report and the group and parent company financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. As required by the
AIM rules of the London Stock Exchange they are required to prepare the group financial statements and Operating and Financial Review
in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements
in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the group and parent company and of their profit or loss for that period.
In preparing each of the group and parent company financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• for the group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU
• for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the parent company financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company
will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of the financial statements may differ from legislation in other
jurisdictions.
21
KPMG LLP
Independent auditor’s report to the members of Cambria Automobiles plc
We have audited the financial statements of Cambria Automobiles plc for the year ended 31 August 2015 which comprise the Group
Statement of Financial Position and Parent Company Balance Sheet, the Group Statement of Comprehensive Income, the Group
Statement of Changes in Equity, the Group Statement of Cash Flow, the Parent Company Reconciliation of Movements in Shareholders’
Funds and the related notes. The financial reporting framework that has been applied in the preparation of the group financial statements
is applicable law and International Financial Reporting Standards (IFRS) as adopted by the EU. The financial reporting framework that has
been applied in the preparation of the parent company financial statements is applicable law and UK Accounting Standards (UK Generally
Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in
an auditor’s 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 17, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion
on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/
auditscopeukprivate
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 August 2015
and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
• the parent company financial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice;
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Operating and financial review, Chairman’s statement, Strategic report and Directors’ report for
the financial year for which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following. Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept, by the parent company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Ian Brokenshire (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Plym House
3 Longbridge Road
Plymouth
PL6 8LT
22
23 November 2015
23
Consolidated statement of comprehensive income
for year ended 31 August 2015
Revenue
Cost of sales
Gross profit
Administrative expenses
Results from operating activities
Finance income
Finance expenses
Net finance expenses
Profit before tax from operations before
non-recurring expenses, and acquisitions
Trading profit/(loss) from branch acquired in year
Non-recurring expenses
Profit before tax
Taxation
Profit and total comprehensive income for
the period
Basic and diluted earnings per share
Note
3
4
4
9
9
5
4
10
8
2015
£000
523,812
(461,746)
62,066
(53,672)
8,394
66
(805)
(739)
7,505
207
7,712
(57)
7,655
(1,625)
6,030
2014
£000
450,148
(394,930)
55,218
(49,415)
5,803
72
(564)
(492)
5,412
(20)
5,392
(81)
5,311
(1,158)
4,153
6.03p
4.15p
All comprehensive income is attributable to owners of the parent company.
24
Consolidated statement of changes in equity
for year ended 31 August 2015
Balance at 31August 2013
Profit for the year
Dividend paid
Balance at 31 August 2014
Profit for the year
Dividend paid
Note
Share capital Share premium Retained earnings
Total equity
£000
£000
£000
£000
10,000
-
-
10,000
-
-
799
-
-
799
-
-
13,834
4,153
(500)
24,633
4,153
(500)
17,487
28,286
6,030
(650)
6,030
(650)
21
Balance at 31 August 2015
10,000
799
22,867
33,666
25
Consolidated statement of financial position
at 31 August 2015
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
Other payables
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Share capital
Share premium
Retained earnings
Total equity
Note
11
12
13
14
15
16
17
18
20
17
13
21
2015
£000
40,040
8,393
155
2014
£000
38,571
5,370
463
48,588
44,404
87,051
13,200
15,395
77,100
10,358
10,251
115,646
97,709
164,234
142,113
(2,070)
(115,227)
(950)
-
(2,020)
(97,972)
(785)
(11)
(118,247)
(100,788)
(12,321)
-
(12,875)
(164)
(12,321)
(13,039)
(130,568)
(113,827)
33,666
28,286
10,000
799
22,867
10,000
799
17,487
33,666
28,286
These financial statements were approved by the board of directors on 23 November 2015 and were signed on its behalf by:
Mark Lavery
Director
26
Company registered number: 05754547
Consolidated cash flow statement
for year ended 31 August 2015
Notes
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation, amortisation and impairment
11/12
Financial income
Financial expense
Loss on sale of property, plant and equipment
Taxation
Non-recurring expenses
Change in trade and other receivables
Change in inventories
Change in trade and other payables
Change in provisions
Interest paid
Tax paid
Non-recurring expenses
Net cash from operating activities
Cash flows from investing activities
Interest received
Acquisition of branch net of cash acquired
Acquisition of land and property with branch acquired
Purchase of property, plant and equipment and software
Net cash from investing activities
Cash flows from financing activities
Proceeds from new loan
Interest paid
Repayment of borrowings
Dividend paid
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 September 2014
Cash and cash equivalents at 31 August 2015
9
9
10
5
5
2
2
21
16
16
2015
£000
6,030
1,715
(66)
805
-
1,625
57
10,166
(2,842)
(7,469)
16,855
(11)
16,699
(444)
(1,153)
(57)
15,045
66
(5,311)
(2,250)
(891)
(8,386)
1,575
(361)
(2,079)
(650)
(1,515)
5,144
10,251
15,395
2014
£000
4,153
1,542
(72)
564
-
1,158
81
7,426
(2,275)
(9,071)
16,096
(40)
12,136
(246)
(559)
(81)
11,250
72
(6,721)
(3,750)
(7,564)
(17,963)
4,700
(318)
(1,672)
(500)
2,210
(4,503)
14,754
10,251
27
Notes
(forming part of the financial statements)
1 Accounting policies
Cambria Automobiles plc is a company which is quoted on the AIM Market of the London Stock Exchange plc and is incorporated and
domiciled in the United Kingdom. The address of the registered office is Swindon Motor Park, Dorcan Way, Swindon, SN3 3RA. The
registered number of the company is 05754547.
These financial statements as at 31 August 2015 consolidate those of the Company and its subsidiaries (together referred to as the
“Group”). The parent company financial statements present information about the Company as a separate entity and not about its group.
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting
Standards as adopted by the EU (“Adopted IFRS”). The Company has elected to prepare its parent company financial statements in
accordance with UK GAAP; and these are presented on pages 54 to 62.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the financial
statements.
Judgements made by the directors in the application of these accounting policies that have significant effect on the financial statements
and estimates with a significant risk of material adjustment in the next year are discussed at the end of this note.
Basis of preparation
The financial statements are prepared under the historical cost convention.
The directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic
outlook
Despite the group having net current liabilities of £2,601,000, the directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing
the annual financial statements.
Further information regarding the company’s business activities together with the factors likely to affect its future development, performance
and position is set out in the Strategic report and Directors’ report on pages 14 to 16.
Basis of consolidation
The financial statements consolidate the financial 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
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are
currently exercisable or convertible are taken into account. The financial information of subsidiaries is included from the date that control
commences until the date that control ceases.
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the
acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
-
-
the fair value of the consideration transferred; less
the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Costs related to the acquisition, other
than those associated with the issue of debt or equity securities, are expensed as incurred. Any contingent consideration payable is
recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement
is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or
loss.
For acquisitions prior to 1 January 2010, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the
recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was
negative, a bargain purchase gain was recognised immediately in profit or loss. Transaction costs, other than those associated with the
28
Notes (continued)
(forming part of the financial statements)
issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost
of acquisition.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on
consolidation.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the Chief Executive Officer.
All revenue generated and non-current assets held are attributable to UK operations only.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and
services provided in the normal course of business, net of discounts and VAT.
Sales of motor vehicles, parts and accessories are recognised when the significant risks and rewards of ownership have been transferred
to the buyer. In general this occurs when vehicles or parts are delivered to the customer and title has passed. Manufacturer incentives are
recognised as revenue when earned. Servicing and bodyshop sales, including warranty work, are recognised on completion of the agreed
work. Finance commission revenue is recognised as the related vehicles are sold.
Deposits received from customers
Deposits received from customers prior to the completion of a sale (delivery of vehicle) are included in the accounts as creditors falling
due within one year.
Financing income and expenses
Financing expenses comprise interest payable, stocking interest charge on consignment and used vehicles and finance leases. Financing
income comprises interest receivable on funds invested and interest credits received from manufacturers on stock management.
Borrowing costs are recognised in the period in which they are incurred.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.
Operating profit
Operating profit relates to profit before finance income, finance expense and income tax expense.
Intangible assets
Goodwill
Goodwill represents the excess between the cost of an acquisition of a subsidiary compared to the net fair value of the identifiable assets,
liabilities and contingent liabilities, and recognition of identifiable intangibles at the date of acquisition. Identifiable intangibles are those
which can be sold separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units of the acquiree which
represent the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other
assets or groups of assets. Goodwill is not amortised but is tested annually for impairment. Any impairment is recognised immediately in
the statement of comprehensive income and is not subsequently reversed.
29
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Other intangible assets
Expenditure on internally generated goodwill and brands is recognised as an expense as incurred.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment
losses.
Amortisation
Amortisation is charged on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite.
Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each year. Other intangible assets
are amortised from the date they are available for use. The estimated useful lives are as follows:
Computer software
3 – 5 years
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property,
plant and equipment.
Depreciation is charged on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives are as follows:
• freehold buildings
• leasehold properties
• plant and machinery
• fixtures and fittings
• 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.
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 effect on the estimated
future cash flows of that asset. If any such indication exists, the asset’s recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is
estimated at each year end.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in income.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated
to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit
is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets
or groups of assets.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
30
Notes (continued)
(forming part of the financial statements)
Reversals of impairment
An impairment loss in respect of trade and other receivables carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. In determining the cost of motor vehicles, the actual amount paid and
payable to date for each vehicle is used, for spare parts and service items cost is based on the first-in first-out principle. An appropriate
provision is made for obsolete or slow moving items.
New vehicles on consignment from manufacturers are included in the Statement of Financial Position with a corresponding liability in
creditors due within one year. This stock is considered to be under the control of the Group as it is considered that the Group bears all the
risks and rewards or ownership, even though legal title has not yet passed.
Consignment stock is held for a maximum period (which varies between manufacturers) before becoming due for payment. Part of the
consignment period is interest free and the remaining periods are interest bearing (periods and charges vary between manufacturers but
interest is generally linked to LIBOR).
Used motor vehicles are stated at the lower of cost or net realisable value, by reference to Glass’s Guide or CAP data.
Demonstrator vehicles are held within inventories at the lower of cost and net realisable value.
Vehicle funding and stocking loans form part of the Group’s working capital and are recognised at the fair value of the amount due to the
facility provider.
31
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Financial Instruments
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the group to deliver cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially unfavourable to the group; and
b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s
exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes
the legal form of the company’s own shares, the amounts presented in the historical financial information for called up share capital and share
premium account exclude amounts in relation to those shares.
Non-derivative financial instruments
Non-derivative financial instruments comprise, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and
other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow
statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost using the effective interest method.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised except to the extent that it relates to items
recognised in other comprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary
difference can be utilised.
32
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans
are recognised as an expense as incurred.
Share Based Payments
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured
at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value so determined has been
expensed on a straight line basis over the vesting period, based on the Company’s estimate of the number of shares that will eventually
vest and adjusted for the effect of non market-based vesting conditions.
Fair value is measured using a Black-Scholes-Merton option pricing model. The key assumptions used in the model have been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Leasing
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance
leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that of the
buildings. Leased assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present
value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses.
Lease payments are accounted for as described below.
Operating lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is
allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Provisions
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of
a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation.
IFRS not yet applied
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015,
and have not been applied in preparing these consolidated financial 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 effect on the financial
statements unless otherwise indicated:
• IAS 36
When developing IFRS 13 Fair Value Measurement, the IASB decided to amend IAS 36 to require disclosures about the recoverable
amount of impaired assets. The amendments clarify the IASB’s original intention: that the scope of those disclosures is limited to the
recoverable amount of impaired assets that is based on fair value less costs to sell.
33
Accounting policies (continued)
(forming part of the financial statements)
IFRS not yet applied (continued)
• IAS 16 and IAS 38
- The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate and that
revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in
an intangible asset.
• IAS 32 Offsetting Financial Assets and Financial Liabilities – The amendments clarify the offsetting criteria, specifically:
- when an entity currently has a legal right of set off; and
- when gross settlement is equivalent to net settlement.
Amendments not yet endorsed by the EU
Annual improvements 2010 – 2012 and Annual improvements 2011 – 2013. The amendments to IFRSs from the two improvement cycles
were issued in Q4 of 2013. The IASB effective date for these amendments is 1 July 2014.
Disclosure initiative (amendments to IAS 1). Designed to further encourage companies to apply professional judgement in determining
what information to disclose in their financial statements.
Annual improvements 2012 – 2014. Amendments to IFRSs from the 2012 – 2014 cycle were issued in September 2014. The IASB effective
date is 1 January 2016.
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 flow 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 Business combinations the directors consider separately identifiable intangible assets that are pertinent to the motor business. This
includes consideration of franchise rights, brand, and other intangible assets. The directors have concluded that intangibles arising on
subsequent acquisitions are immaterial or have not arisen.
Consignment inventories
Consignment vehicles are regarded as being effectively under the control of the Group and are included within inventories in the Statement
of Financial Position as the Group has the significant risks and rewards of ownership even though legal title has not yet passed, if the
vehicles are not sold in the consignment period, the Group has the obligation to purchase. The corresponding liability is included in trade
and other payables.
Deferred tax
Deferred tax assets and liabilities require management judgement in determining the amounts to be recognised. In particular judgement
is used when assessing the extent to which deferred tax assets should be recognised with consideration given to the timing and level of
future taxable income.
Non-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 financial statements to present a true
and fair view.
34
Notes (continued)
(forming part of the financial statements)
2 Acquisitions of trading branches
Effect of acquisition in 2015
On 1 May 2015, the company completed the acquisition of the Land Rover dealership in Royal Wootton Bassett from T H White Ltd.
Acquiree’s net assets at the acquisition date:
Freehold land and buildings
Plant and equipment
Stocks
Trade and other creditors
Net and identifiable assets and liabilities
Goodwill on acquisition (The goodwill arising on acquisition is attributable to expanding our geographical
base for the Land Rover brand, and the anticipated profitability from the sale of vehicles from the Swindon
dealership)
Consideration paid (note that transaction and set up costs of £57k were written off to administrative expenses
in 2015), satisfied in cash
It is estimated that in the year before acquisition, the business generated £30m of revenue and a pre-tax profit
of £0.7m.
The results attributable to the branch acquired during the financial year and included in the group results were
as follows:
Turnover
Profit before tax
Pre-acquisition
carrying amount and
Fair Value
£000
2,250
71
2,482
(242)
4,561
3,000
7,561
9,045
207
35
Notes (continued)
(forming part of the financial statements)
2 Acquisitions and disposals of trading branches
Effect of acquisition in 2014
On 7 July 2014, the company completed the acquisition of the Jaguar and Land Rover dealership in Barnet from Lookers PLC
Recognised values on
acquisition and Fair Value
Acquiree’s net assets at the acquisition date:
Freehold land and buildings
Plant and equipment
Stocks
Trade and other creditors
Prepayments
Net and identifiable assets and liabilities
Goodwill on acquisition (The goodwill arising on acquisition is attributable to expanding our
geographical base for Jaguar, adding the Land Rover brand to our business, and the anticipated
profitability from the sale of vehicles from the Barnet dealership)
Consideration paid (note that transaction and set up costs of £81k were written off to
administrative expenses in 2014), satisfied in cash
£000
3,750
461
1,781
(566)
45
5,471
5,000
10,471
It is estimated that in the year before acquisition, the business generated £46m of revenue and a pre-tax profit of £0.7m. The results
attributable to the branch acquired during the financial year and included in the group results were as follows:
Effect of acquisition in 2014 (continued)
2014
£000
4,755
(20)
Turnover
Loss before tax
36
Notes (continued)
(forming part of the financial statements)
2 Acquisitions of trading branches (continued)
3 Revenue
Sale of goods
Aftersales services
Total revenues
4 Segmental reporting
2015
£000
474,316
49,496
523,812
2014
£000
404,129
46,019
450,148
The Group has adopted IFRS 8 ‘Operating Segments’ which determines and presents operating segments based on information presented
to the Group’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer. The Group is operated and managed on a Dealership
by Dealership basis. 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.
New Car
Used Car
Aftersales
Internal sales
Total
2015
Revenue
2015
Revenue
mix
2015
Gross
Profit
2015
Margin
2014
Revenue
2014
Revenue
mix
2014
Gross
Profit
2014
Margin
£m
238.4
235.9
60.6
(11.1)
%
45.5
45.0
11.6
(2.1)
£m
15.5
20.8
25.8
-
%
6.5
8.8
42.5
-
£m
195.2
208.9
55.8
(9.8)
%
43.4
46.4
12.4
(2.2)
£m
12.3
19.0
23.9
-
%
6.3
9.1
42.9
-
523.8
100.0
62.1
11.9
450.1
100.0
55.2
12.3
Administrative expenses
Operating profit before non-recurring
expenses
Non-recurring expenses
(53.6)
8.5
(0.1)
(49.3)
5.9
(0.1)
Operating profit
8.4
1.6
5.8
1.3
The CODM reviews the performance of the business in terms of both net profit before tax and EBITDA, as such the following table shows
a reconciliation of the Profit before tax to EBITDA.
37
Notes (continued)
(forming part of the financial statements)
4 Segmental reporting (continued)
Profit Before Tax
Non-recurring expenses (note 5)
Underlying Profit Before Tax
Net finance 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 costs
6 Expenses and auditor’s remuneration
The result from operating activities is stated after (crediting)/charging the following:
Impairment loss/(gain) recognised on other trade receivables and prepayments (note
22(b))
Auditor’s remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to taxation
All other services
38
2015
£000
7,655
57
7,712
739
1,715
10,166
(57)
10,109
2015
£000
57
2015
£000
285
2015
£000
26
94
41
7
2014
£000
5,311
81
5,392
492
1,542
7,426
(81)
7,345
2014
£000
81
2014
£000
(11)
2014
£000
25
91
29
7
Notes (continued)
(forming part of the financial statements)
7 Staff numbers and costs
The average number of persons employed by the group (including directors) during the year, analysed by category, was as follows:
Number of employees
Sales
Service
Parts
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Expenses related to defined contribution plans
Share based payments expense
2015
377
394
102
222
1,095
2015
£000
31,861
3,395
342
16
35,614
2014
343
362
109
210
1,024
2014
£000
28,545
3,128
326
-
31,999
8 Earnings per share
Basic earnings per share are calculated by dividing the earnings attributable to equity shareholders by the number of ordinary shares in
issue in the year. There is one class of ordinary share with 100,000,000 shares in issue.
The share options are not currently dilutive because the performance conditions are not yet met.
Profit attributable to shareholders
Non underlying costs (Note 5)
Tax on adjustments (at 20.58 % (2014: 22.16%))
Adjusted profit attributable to equity shareholders
2015
£000
6,030
57
(12)
6,075
2014
£000
4,153
81
(18)
4,216
Number of shares in issue (‘000)
100,000
100,000
Basic earnings per share
Adjusted earnings per share
6.03p
6.08p
4.15p
4.22p
39
Notes (continued)
(forming part of the financial statements)
9 Finance income and expense
Recognised in the income statement
Finance income
Rent deposit interest
Interest receivable
Total finance income
Finance expense
Interest payable on bank borrowings
Consignment and vehicle stocking interest
Total finance expense
Total interest expense on financial liabilities held at amortised cost
Total other interest expense
10 Taxation
Recognised in the income statement
Current tax expense
Current year
Adjustment in respect of prior years
Deferred tax
Adjustment in respect of prior years
Origination and reversal of temporary differences
2015
£000
2
64
66
361
444
805
361
444
805
2015
£000
1,341
(24)
1,317
22
286
308
2014
£000
2
70
72
318
246
564
318
246
564
2014
£000
1,013
(10)
1,003
3
152
155
Total tax expense
1,625
1,158
40
Notes (continued)
(forming part of the financial statements)
10 Taxation (continued)
Reconciliation of total tax
Profit for the year
Total tax expense
Profit excluding taxation
Tax using the UK corporation tax rate of 20.58% (2014: 22.16%)
Non-deductible expenses
Accounting deprecation for which no tax relief is due
Utilisation of brought forward losses
Change in tax rate
Adjustments in respect of prior years
Change in deferred tax in respect of property
2015
£000
6,030
1,625
7,655
1,575
29
134
(34)
(8)
(2)
(69)
2014
£000
4,153
1,158
5,311
1,177
44
132
(92)
(6)
(7)
(90)
Total tax expense
1,625
1,158
The applicable tax rate for the current year is 20.58% (2014: 22.16%) following the reduction in the main rate of UK corporation tax from
21% to 20% with effect from 1 April 2015.
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were
substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective from 1 April 2020)
were substantively enacted on 26 October 2015.
This will reduce the company’s future current tax charge accordingly and reduce the deferred tax asset at 31 August 2015 (which has been
calculated based on the rate of 20% substantively enacted at the balance sheet date).
41
Notes (continued)
(forming part of the financial statements)
11 Property, plant and equipment
Cost
Balance at 1 September 2013
Additions
Branch acquisitions
Disposals
Transfer
Balance at 1 September 2014
Additions
Branch acquisitions
Disposals
Freehold
land &
buildings
Long
leasehold
land &
buildings
Short
leasehold
improvements
Plant &
equipment
Fixtures,
fittings &
computer
equipment
Total
£000
£000
£000
£000
£000
£000
23,324
6,514
3,750
-
941
34,529
144
2,250
-
5,058
4,352
-
-
-
(941)
104
104
(8)
-
4,117
4,552
-
-
-
-
-
-
2,807
159
112
(171)
-
2,907
338
20
(205)
6,566
42,107
761
245
(482)
-
7,090
376
51
(200)
7,538
4,211
(661)
-
53,195
858
2,321
(405)
Balance at 31 August 2015
36,923
4,117
4,552
3,060
7,317
55,969
Depreciation
Balance at 1 September 2013
Charge for the year
Disposals
Transfer
Balance at 1 September 2014
Depreciation charge for the year
Disposals
Balance at 31 August 2015
Net book value
At 31 August 2014
1,913
364
-
213
2,490
411
-
2,901
639
71
-
(213)
497
105
-
602
32,039
3,620
At 31 August 2015
34,022
3,515
3,380
287
(8)
-
3,659
287
-
2,387
223
(171)
-
2,439
266
(202)
5,435
586
(482)
-
5,539
636
(198)
13,754
1,531
(661)
-
14,624
1,705
(400)
3,946
2,503
5,977
15,929
893
606
468
557
1,551
38,571
1,340
40,040
As at 31 August 2015 there are no capital commitments (2014: £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 2015 there were no assets in the course of construction (2014: £nil).
42
Balance at 1 September 2014
4,117
4,552
Balance at 31 August 2015
36,923
4,117
4,552
3,060
7,317
55,969
Freehold
Long
Short
Plant &
Total
land &
leasehold
leasehold
equipment
buildings
land &
improvements
buildings
Fixtures,
fittings &
computer
equipment
£000
£000
£000
£000
£000
£000
Balance at 1 September 2013
5,058
4,352
6,566
42,107
Cost
Additions
Disposals
Transfer
Branch acquisitions
Additions
Disposals
Branch acquisitions
Depreciation
Balance at 1 September 2013
Charge for the year
Disposals
Transfer
Balance at 1 September 2014
Depreciation charge for the year
Disposals
Net book value
At 31 August 2014
23,324
6,514
3,750
-
941
34,529
144
2,250
-
1,913
364
-
213
2,490
411
-
2,901
(941)
-
-
-
-
-
-
639
71
-
(213)
497
105
-
602
761
245
(482)
-
7,090
376
51
(200)
5,435
586
(482)
-
5,539
636
(198)
7,538
4,211
(661)
-
53,195
858
2,321
(405)
13,754
1,531
(661)
-
14,624
1,705
(400)
104
104
(8)
-
-
-
-
3,380
287
(8)
-
3,659
287
-
893
606
2,807
159
112
(171)
-
2,907
338
20
(205)
2,387
223
(171)
-
2,439
266
(202)
468
557
Balance at 31 August 2015
3,946
2,503
5,977
15,929
32,039
3,620
1,551
38,571
At 31 August 2015
34,022
3,515
1,340
40,040
Notes (continued)
(forming part of the financial statements)
12 Intangible assets
Cost
Balance at 1 September 2013
Additions
Balance at 1 September 2014
Additions
Balance at 31 August 2015
Amortisation and impairment
Balance at 1 September 2013
Amortisation
Balance at 1 September 2014
Amortisation for the year
Balance at 31 August 2015
Net book value
At 31 August 2014
At 31 August 2015
Goodwill
Software
£000
346
5,000
5,346
3,000
8,346
-
-
-
-
-
5,346
8,346
£000
720
25
745
33
778
710
11
721
10
731
24
47
Other
£000
176
-
176
-
176
176
-
176
-
176
-
-
Total
£000
1,242
5,025
6,267
3,033
9,300
886
11
897
10
907
5,370
8,393
The undertakings included in the consolidated Group accounts are as follows:
* Owned directly by Cambria Automobiles Acquisitions Limited
** Owned directly by Cambria Automobiles Group Limited
*** Owned directly by Cambria Automobiles (South East) Limited
Country of
incorporation
Principal
activity
Class and percentage
of shares held
Subsidiary undertakings
Cambria Automobiles Group Limited
England and Wales
Holding Company
Cambria Automobiles Acquisitions Limited **
England and Wales
Investment Company
Cambria Automobiles Property Limited **
England and Wales
Property Company
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***
England and Wales
England and Wales
Translease Vehicle Management Limited***
England and Wales
Dormant
Dormant
Dormant
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
43
Notes (continued)
(forming part of the financial statements)
12 Intangible assets (continued)
Amortisation charge
The amortisation charge is recognised in the following line items in the income statement:
Administrative expenses
Impairment loss and subsequent reversal
2015
£000
10
2014
£000
11
Goodwill and indefinite life intangible assets considered significant in comparison to the Group’s total carrying amount of such assets have
been allocated to cash generating units or groups of cash generating units as follows:
Grange Motors (Swindon) Ltd and Cambria Automobiles (Swindon) Ltd
Thoranmart Ltd
Grange Barnet dealership
Grange Swindon Land Rover dealership
Goodwill
2015
£000
261
85
5,000
3,000
8,346
2014
£000
261
85
5,000
-
5,346
The recoverable amount of each cash generating unit (CGU) has been calculated with reference to its value in use. The calculation for is
performed via a review of forecast EBITDA for the CGU for a number of years based on the EBITDA multiples being paid for equivalent
businesses in the marketplace. The board reviews transactional information and assesses the businesses earnings capacity in order to
ensure that the recoverable amount is in excess of the carrying amount.
The value in use exceeds the above carrying values for each CGU, therefore no impairment is considered necessary.
44
Notes (continued)
(forming part of the financial statements)
13 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
The amount of temporary differences, unused tax losses and tax credits for which a deferred tax asset is recognised is set out below, along
with the movement in the balance in the year. The asset would be recovered if offset against future taxable profits of the group.
Property, plant and equipment
Provisions
Tax value of loss carry-forward
Share options
1 September
2014
Recognised
in income
Net 31
August 2015
Deferred tax
liabilities
Deferred tax
assets
£000
£000
£000
£000
£000
431
5
27
-
463
(295)
9
(27)
5
(308)
136
14
-
5
155
(310)
-
-
-
(310)
446
14
-
5
465
The Group has an arrangement with the vendors of Cambria Automobiles (South East) Limited, which was acquired in the year ended 31
August 2008, under which an amount equal to any tax benefit received by the Group in relation to tax losses that existed at the date of
acquisition must be paid to the vendors as additional consideration. At the date of acquisition, the utilisation of tax losses was not probable
and therefore no deferred tax asset was recognised as part of the acquisition accounting, and the fair value of the liability for contingent
consideration was immaterial. Subsequent to the acquisition the utilisation of pre-acquisition losses became probable and, as a result, a
deferred tax asset was recognised. A liability for the contingent consideration payable to the vendors was recognised at its fair value. At
the end of the 2014 financial year, the final reconciliation of amounts due to the vendors was calculated and paid over. There is no further
liability arising from this agreement.
Amount payable to previous owner of subsidiary
Unrecognised deferred tax assets and liabilities
2015
£000
-
2014
£000
164
The deferred tax asset in relation to loss carried forward within a subsidiary has not been recognised due to uncertainty over the future
profitability of the subsidiary, these losses are locked in to this particular subsidiary and cannot be utilised in the wider Group.
Tax value of loss carry-forwards
Unrecognised net tax assets
Assets
2015
£000
624
624
2014
£000
657
657
The applicable tax rate for the current year is 20.58% (2014: 22.16%) following the reduction in the main rate of UK corporation tax from 21% to
20% with effect from 1 April 2015.
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively
enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective from 1 April 2020) were substantively
enacted on 26 October 2015.
This will reduce the company’s future current tax charge accordingly and reduce the deferred tax asset at 31 August 2015 (which has been
calculated based on the rate of 20% substantively enacted at the balance sheet date).
45
Notes (continued)
(forming part of the financial statements)
14 Inventories
Vehicle consignment stock
Motor vehicles
Parts and other stock
2015
£000
59,177
24,943
2,931
87,051
2014
£000
47,132
27,392
2,576
77,100
Included within inventories is £nil (2014: £nil) expected to be recovered in more than 12 months.
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in the year amounted to
£458 million (2014: £385 million).
Details of stock held as security is given in note 18.
15 Trade and other receivables
Trade receivables
Prepayments and other receivables
2015
£000
9,183
4,017
2014
£000
7,130
3,228
13,200
10,358
Included within trade and other receivables is £nil (2014: £nil) expected to be recovered in more than 12 months.
16 Cash and cash equivalents
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statement
2015
£000
15,395
15,395
2014
£000
10,251
10,251
46
Notes (continued)
(forming part of the financial statements)
17 Other interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at
amortised cost. For more information about the Group’s exposure to interest rate risk, see note 22.
Non-current liabilities
Secured bank loans
Current liabilities
Secured bank loans
Terms and debt repayment schedule
All debt is in GBP currency
2015
£000
2014
£000
12,321
12,875
2,070
2,020
Nominal interest rate
Year of
Maturity
Face Value and
Carrying Amount
Face Value and
Carrying Amount
Loan 31/07/2006
Loan 01/08/2007
Loan 31/12/2007
Loan 01/03/2010
Loan 01/02/2013
Loan 03/02/2014
Loan 07/07/2014
Loan 01/05/2015
Bank of England Base Rate +1.25%
Bank of England Base Rate +1.25%
LIBOR +1.75%
LIBOR +3.00%
LIBOR +1.95%
LIBOR +1.95%
LIBOR +1.95%
LIBOR + 1.95%
2019
2020
2020
2017
2018
2019
2019
2018
2015
1,122
363
4,261
1,545
1,485
2,210
1,843
1,562
2014
1,409
435
5,047
1,751
1,683
2,470
2,100
-
14,391
14,895
47
Notes (continued)
(forming part of the financial statements)
18 Trade and other payables
Current
Vehicle consignment creditor
Other trade payables
Non-trade payables and accrued expenses
Vehicle funding
2015
£000
69,888
10,081
13,318
21,940
115,227
2014
£000
55,419
10,537
11,306
20,710
97,972
Included within trade and other payables is £ nil (2014: £nil) expected to be settled in more than 12 months.
Both the consignment and vehicle funding creditors are secured on the stock to which they relate.
19 Employee benefits
Pension plans
Defined contribution plans
The Group operates a number of defined contribution pension plans.
The total expense relating to these plans in the current year was £342,000 (2014: £326,000).
Share-based payments
The Group has a share option scheme open to certain employees at the discretion of the Board. Options are exercisable at a price equal
to the higher of the nominal value or market price of the company’s shares on the date of grant.
In the scheme the options vest over a ten year period, depending on the terms of the individual grant.
4,750,000 options were granted in the year ended 31 August 2015 (2014: £nil).
The fair values were calculated using a Black-Scholes model. The inputs into the model were as follows:
Date of grant
2/3/15
1/4/15
Share price at
option date £
Exercise price £
Volatility
0.47
0.54
0.47
0.54
17.5%
17.2%
Expected life
(years)
1 year beyond
vesting date
1 year beyond
vesting date
Risk free rate
0.5%
0.5%
Expected volatility was determined using as a base the share price movements of the Company recorded over a 52 week period prior to
the grant of the options.
The expected life used in the model has been adjusted, based on management’s best estimate for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Outstanding at the beginning of the year
Forfeited during the year
Exercised during the year
Granted during the year
Lapsed during the year
Weighted average
exercise price
2015
£
-
-
-
0.48
-
Number
of options
2015
-
-
-
4,750,000
-
Outstanding at the end of the year
0.48
4,750,000
Exercisable at the end of the year
-
-
Weighted average
exercise price
2014
£
Number
of options
2014
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The Company recognised an expense of £15,668 (year ended 31 August 2014: £nil) in respect of share based payments in the year.
48
Notes (continued)
(forming part of the financial statements)
20 Provisions
Balance at 1 September 2014
Provisions used during the year
Balance at 31 August 2015
Current
Non-current
Balance at 31 August 2014
Current
Non-current
Balance at 31 August 2015
Onerous Leases
£000
11
(11)
-
11
-
11
-
-
-
The onerous lease provision is being released against the costs incurred on the relevant lease. The provision is now fully released.
21 Capital and reserves
Share capital
Authorised
100,000,000 Ordinary shares of 10 pence each
Allotted, called up and fully paid
100,000,000 Ordinary shares of 10 pence each
Shares classified in shareholders’ funds
2015
£000
10,000
10,000
10,000
2014
£000
10,000
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys different or enhanced voting rights from any other shareholder. All shares are
eligible for dividends and rank equally for dividend payments.
49
Notes (continued)
(forming part of the financial statements)
Dividends
The following dividends were paid by the company in the year ended 31 August.
0.5p per ordinary share – prior year final (2014: 0.4p)
0.15p per ordinary share – current year interim (2014: 0.1p)
2015
£000
500
150
650
2014
£000
400
100
500
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.
0.6 p per ordinary share – current year final (2014: 0.5p)
2015
£000
600
2014
£000
500
22 Financial instruments
22 (a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at
the balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
balance sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable
on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance
sheet date.
Interest-bearing borrowings
Fair value, which after initial recognition is determined for disclosure purposes only, is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the balance sheet date.
The rates used to discount estimated cash flows, where applicable are based on the weighted average cost of capital and were as follows:
2015
%
3.5
2014
%
3.5
Loans and borrowings
50
Notes (continued)
(forming part of the financial statements)
Fair values
The fair values for each class of financial assets and financial liabilities together with their carrying amounts shown in the balance
sheet are as follows:
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
2015
As at 31 August
2014
£000
£000
9,183
4,017
15,395
7,130
3,228
10,251
28,595
20,609
14,391
115,227
14,895
97,972
129,618
112,867
The Directors consider the carrying amount of the Group’s financial assets and financial liabilities, as detailed above, approximate
their fair value.
51
Notes (continued)
(forming part of the financial 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. Trade receivables are stated net of provision for estimated
impairment losses. Exposure to credit risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit to
certain customers after an appropriate evaluation of risk coupled with the findings from external reference agencies. Credit risk arises in
respect of amounts due from vehicle manufacturers in relation to bonuses and warranty receivables. This risk is mitigated by the number
of manufacturers for which the group holds franchises, procedures to ensure timely collection of debts and management’s belief that it
does not expect any manufacturer to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying
amount of each financial asset in the statement of financial position.
Exposure to credit risk
The carrying amount of trade receivables represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at
the balance sheet date was £9,183,000 (2014: £7,130,000) being the total of the carrying amount of trade receivables 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
2015
£000
9,183
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
2015
£000
4,465
2,755
1,963
9,183
2014
£000
7,130
2014
£000
3,359
2,403
1,368
7,130
Credit quality of financial assets and impairment losses
The ageing of trade receivables at the balance sheet date is given below. The Group’s policy is to provide for all debts which are past due.
The directors consider the balance to be recoverable based on credit terms and post balance sheet receipts.
Gross
Impairment
Gross
Impairment
2015
£000
9,183
156
9,339
2015
£000
-
156
156
2014
£000
7,130
89
7,219
2014
£000
-
89
89
Trade receivables not past due
Trade receivables past due
52
Notes (continued)
(forming part of the financial 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 1 September 2014
Impairment loss recognised
Allowance for impairment utilised
Balance at 31 August 2015
£000
89
285
(218)
156
The allowance account for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the
amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.
22 (c) Liquidity risk
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity is managed by the Group’s central
treasury function within policy guidelines set by the Board with prime areas of focus being liquidity and interest rate exposure. The Group is financed
primarily by bank loans, vehicle stocking credit lines and operating cash flow. The directors have assessed the future funding requirements of the
Group and compared them to the level of committed available borrowing facilities. These committed facilities are maintained at levels in excess
of planned requirements and are in addition to short term uncommitted facilities that are also available to the Group. The assessment included a
review of financial forecasts, financial instruments and cash flow projections. These forecasts and projections show that the Group, taking account
of reasonably possible scenarios, should be able to operate within the level of its borrowing facilities for the foreseeable future.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting
agreements: Interest is payable on loans of £1,485,000 (2014: £1,844,000) at Bank of England base rate plus 1.25%, loans of £4,261,000 (2014:
£5,047,000) at LIBOR plus 1.75%, loans of £1,545,000 (2014: £1,751,000) at LIBOR plus 3% and on loans of £7,100,000 (2014: £6,253,000) at
LIBOR plus 1.95%.
Non-derivative financial liabilities
Secured bank loans
Non-derivative financial liabilities
Secured bank loans
2014
Carrying
amount
Contractual
cash flows
1 year
or less
1 to
<2years
2 to
<5years
5years
and
over
£000
£000
£000
£000
£000
£000
14,895
15,998
2,362
2,314
10,115
1,207
2015
Carrying
amount
Contractual
cash flows
1 year
or less
1 to
<2years
2 to
<5years
5years
and
over
£000
£000
£000
£000
£000
£000
14,391
15,590
2,517
3,606
9,137
330
53
Notes (continued)
(forming part of the financial 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 affect the Group’s income or the value of its holdings of
financial instruments.
Market risk - Foreign currency risk
The Group does not have any exposure to foreign currency risk.
Market risk – Interest rate risk
Profile
At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Cash and cash equivalents
Vehicle funding
Loans and overdrafts
2015
£000
15,395
(21,940)
(14,391)
2014
£000
10,251
(20,710)
(14,895)
(20,936)
(25,354)
The objectives of the Group’s interest rate policy are to minimise interest costs. The Group does not actively manage cash flow interest risk
as the directors believe that the underlying earnings from the retail sector in which the Group operates provides a natural hedge against
interest rate movements. Consequently, it is Group policy to borrow on a floating rate basis.
Whilst there are no hedging instruments, the Board reviews its hedging policy on a regular basis.
Sensitivity analysis
An increase of 0.5 basis points in interest rates at the balance sheet date would have decreased equity and profit or loss by the amounts
shown below.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of financial
instruments with variable interest rates, financial instrument at fair value through profit or loss or available for sale with fixed interest rates
and the fixed rate element of interest rate swaps. The analysis is performed on the same basis for comparative periods.
2015
£000
2014
£000
182
176
182
176
Equity
Decrease
Profit or loss
Decrease
54
Notes (continued)
(forming part of the financial 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 benefits to other stakeholders. The Group must ensure that sufficient capital resources are available for
working capital requirements and meeting principal and interest payment obligations as they fall due.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio, which is calculated as net debt divided
by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statement of
financial position) less cash and cash equivalents. Total capital is calculated as total shareholders’ equity.
The gearing ratios for each year are as follows:
Total borrowings
Less: cash and cash equivalents
Net (surplus)/deficit
Total equity
Gearing ratio
23 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
As at 31 August
2015
As at 31 August
2014
£000
£000
14,391
(15,395)
14,895
(10,251)
(1,004)
4,644
33,666
28,286
(3.0)%
16.4%
2015
£000
2,402
9,229
18,667
2014
£000
2,394
8,775
16,153
30,298
27,322
The Group leases a number of motor dealership sites under operating leases. Land and buildings have been considered separately for
lease classification.
During the year £2,620,000 was recognised as an expense in the income statement in respect of operating leases (2014: £2,440,000).
55
Notes (continued)
(forming part of the financial statements)
24 Contingencies
The Group is jointly and severally liable in respect of value added tax liabilities arising in other group undertakings. The related fellow
subsidiary undertakings and the parent company were is a repayment situation at 31 August 2014 and 2015.
In recognition of the Cambria Automobiles plc group bank and used vehicle funding facilities, the following companies have entered into
a joint agreement to guarantee liabilities with banks and finance houses of the motor manufacturers that provide new and used vehicles
to the group:
Cambria Automobiles plc, Cambria Automobiles Property Limited, Cambria Automobiles Group Limited, Cambria Automobiles Acquisitions
Limited, Cambria Automobiles (Swindon) Limited, Grange Motors (Swindon) Limited, Thoranmart Limited, Cambria Automobiles (South
East) Limited, Grange Motors (Brentwood) Limited, Invicta Motors Limited, Invicta Motors (Maidstone) Limited and Cambria Vehicle
Services Limited.
Intra-group guarantees are accounted for as insurance contracts.
25 Related parties
Identity of related parties with which the Group has transacted
Key management personnel are considered to be the board of directors for the purposes of this disclosure.
Transactions with key management personnel
At the year end, the Directors of the Company and their immediate relatives controlled 47.04 % (2014: 46.96%) 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
Share related awards
The emoluments consist of:
Directors’ emoluments
Philip Swatman
James Mullins
Mark Lavery
Sir Peter Burt
Michael Burt
2015
£000
664
552
6
2014
£000
655
473
-
1,222
1,128
Total
Total
2015
£000
33
328
805
28
28
2014
£000
30
298
750
25
25
1,222
1,128
Salaries
Bonus
2015
£000
33
175
400
28
28
664
2015
£000
-
147
405
-
-
552
Share
related
awards
2015
£000
-
6
-
-
-
6
All directors benefited from qualifying third party indemnity provisions during the financial period.
56
Notes (continued)
(forming part of the financial statements)
25 Related parties (continued)
During the year Mark Lavery bought 6 vehicles from the Group and sold 6 vehicles back to the Group, James Mullins bought 3 vehicles
from the Group and sold 3 vehicles back to the Group. Sir Peter Burt bought 4 vehicles from the Group and sold 4 vehicles back to the
Group. Michael Burt bought 3 vehicles from the Group and sold 3 vehicles back to the Group. All transactions were carried out at arm’s
length and there were no outstanding balances due to the Group at the year end. The average value of each transaction in the year was
£50,472.
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 final dividend payment in respect of the financial year to 31 August 2015 of 0.6p (2014:
0.5p) per share in addition to the interim payment of 0.15p per share (2014: 0.1p).
Refinancing
Post year end, on 23 November 2015, the Group entered into revised banking arrangements with Lloyds Banking Group to refinance the
existing £14.4m of term loans into one standardised facility of £15m that has a 5 year term, and 15 year capital repayment profile.
The cost of the facilities is LIBOR plus a margin. The margin attributable to the term loans will be set each quarter and is dependant on
the net debt: EBITDA ratio for the Group. The spread of margin chargeable against the facility ranges from 1.2% where the net debt is less
than 1 times EBITDA, up to 2% where the net debt is greater than 2.5 times EBITDA.
The Group has also arranged two further Revolving Credit Facilities. The First is a 5 year, £15m RCF available for the acquisition of
businesses and property, the second is a 5 year property development facility to be used against the development of Barnet and Swindon
properties. The maximum drawdown against this facility is £7m, and it is intended that once the developments are complete that the
RCF will be converted into a standard amortising term facility. The margins attributable to these Revolving Credit Facilities mirror those
attributable to the revised term loan facilities.
57
Company Balance Sheet
At 31 August 2015
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
Profit and loss account
Shareholders’ funds
Note
2015
2014
£000
£000
£000
£000
5
6
7
8
9
11
12
12
98
666
919
8,499
5,533
14,951
(3,475)
109
666
764
775
860
4,985
9,445
15,290
(2,853)
11,476
12,240
12,240
10,000
799
1,441
12,240
12,437
13,212
13,212
10,000
799
2,413
13,212
These financial statements were approved by the board of directors on 23 November 2015 and were signed on its behalf by:
M J J Lavery
Director
Company number: 05754547
58
Company Reconciliation of movements in shareholders’ funds
for the year ended 31 August 2015
Loss for the financial year
Dividend paid
Net decrease in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
Note
Company
Company
12
2015
£000
(322)
(650)
(972)
13,212
12,240
2014
£000
(531)
(500)
(1,031)
14,243
13,212
59
Notes (continued)
1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
financial statements.
Going concern
The directors believe that the company is well placed to manage its business risks successfully despite the current uncertain economic
outlook
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis in preparing the annual financial statements.
Further information regarding the company’s business activities together with the factors likely to affect its future development, performance
and position is set out in the Strategic report on page 14.
Basis of preparation
The financial statements have been prepared in accordance with applicable accounting standards and under the historical cost accounting
rules.
Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss account.
Under Financial Reporting Standard 1 the Company is exempt from the requirement to prepare a cash flow statement on the grounds that
the Group financial statements include the Company in its own published consolidated financial statements.
The Company has taken advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with
entities which form part of the group.
Fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets by instalments over their estimated
useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
• computer equipment
3 to 5 years
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 flows 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 payable 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).
Notes (continued)
Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between
the treatment of certain items for taxation and accounting purposes.
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and
accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.
60
Notes (continued)
Classification of financial instruments issued by the Company
Following the adoption of FRS 25, financial instruments issued by the Group are treated as equity (i.e. forming part of shareholders’ funds)
only to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Company
(or Group); and
b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s
exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified
takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and
share premium account exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges. Finance payments
associated with financial instruments that are classified as part of shareholders’ funds (see dividends policy), are dealt with as appropriations
in the reconciliation of movements in shareholders’ funds.
Dividends on shares presented within equity
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised
and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the
financial statements.
2 Remuneration of directors
Directors’ emoluments
Salaries
Annual bonus
Pension costs
Share related awards
The emoluments in respect of the highest paid director were:
Salaries
Annual bonus
All directors benefited from qualifying third party indemnity provisions during the financial period.
2015
£000
664
552
-
6
2014
£000
655
473
2
-
1,222
1,130
2015
£000
400
405
805
2014
£000
400
350
750
61
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
Share related awards
4 Dividends
The aggregate amount of dividends paid and received compromises:
Aggregate amount of dividends paid in the financial year
Aggregate amount of dividends received in the financial year
Company
2015
Company
2014
55
49
Company
Company
2015
£000
3,897
446
21
16
2014
£000
3,336
443
28
-
4,3780
3,807
2015
£000
650
-
2014
£000
500
-
The aggregate amount of dividends proposed but not recognised at the year end is £600,000 (2014: £500,000).
62
Notes (continued)
5 Tangible fixed assets
Company
Cost
At 1 September 2014
Additions
At 31 August 2015
Depreciation
At 1 September 2014
Charge for year
At 31 August 2015
Net book value
At 31 August 2015
At 31 August 2014
Computer equipment
£000
623
52
675
514
63
577
98
109
Total
£000
623
52
675
514
63
577
98
109
63
Notes (continued)
6 Fixed asset investments
Company
Cost and net book value
At 1 September 2014 and 31 August 2015
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
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
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***
England and Wales
Invicta Motors Limited***
Deeslease Limited***
Dove Group Limited***
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
Class and
percentage
of shares held
100% Ordinary
100% Ordinary
100% Ordinary
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
64
2015
£000
919
2014
£000
860
Notes (continued)
8 Debtors
Trade debtors
Amounts owed by group undertakings
Prepayments and accrued income
Deferred tax (note 10)
Other taxation
9 Creditors: amounts falling due within one year
Trade creditors
Vehicle funding
Other taxation and social security
Accruals and deferred income
Corporation tax
The vehicle funding creditor is secured on the stock to which it relates.
2015
£000
86
7,639
586
54
134
8,499
2015
£000
392
477
301
-
2014
£000
18
4,458
380
38
91
4,985
2014
£000
339
317
251
-
2,305
1,946
3,475
2,853
65
Notes (continued)
10 Deferred taxation
Deferred taxation asset
At 1 September 2014
Movement in period
At 31 August 2015
The elements of deferred taxation asset are as follows:
Difference between accumulated depreciation and capital allowances
Other timing differences
Total deferred tax
2015
£000
54
-
54
£000
38
16
54
2014
£000
38
-
38
66
Notes (continued)
11 Called up share capital
Authorised
2015
£000
2014
£000
100,000,000 Ordinary shares of 10 pence each
10,000
10,000
Allotted, called up and fully paid
100,000,000 Ordinary shares of 10 pence each
10,000
10,000
Shares classified in shareholder’s funds
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys different or enhanced voting rights from any other shareholder. All shares are
eligible for dividends and rank equally for dividend payments.
12 Share premium and reserves
At 1 September 2014
Loss for the year
Dividend paid
At 31 August 2015
Share premium account
Profit and loss account
£000
799
-
-
799
£000
2,413
(322)
(650)
1,441
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.
67