Annual report and fi nancial statements
Registered number 05754547
31 August 2017
Contents
Summary ........................................................................... 4
Chairman’s statement ....................................................... 7
Operating and fi nancial review ........................................ 10
Strategic report ............................................................... 18
Directors’ report .............................................................. 20
Statement of directors’ responsibilities in respect
of the Strategic report, Directors’ report and
the fi nancial statements .................................................. 21
Independent auditor’s report to the members of
Cambria Automobiles plc ................................................ 22
Consolidated statement of comprehensive income ........ 26
Consolidated statement of changes in equity ................. 27
Consolidated statement of fi nancial position .................. 28
Consolidated cash fl ow statement .................................. 29
Notes ............................................................................... 30
Company balance sheet ................................................. 61
Company statement of changes in equity....................... 62
Notes ............................................................................... 63
2
3
AUDITED PRELIMINARY RESULTS 2016/17
Solid results in Group’s 11th year of trading, continued strategic progress
Cambria, the franchised motor retailer, announces its audited preliminary results for the year to 31 August 2017.
Financial Highlights
Year ended 31 August
Revenue
Underlying EBITDA*
Underlying operating profi t*
Underlying profi t before tax*
Underlying profi t before tax margin*
Net non-recurring income/ (expenses)
Underlying earnings per share*
Operating profi t
Profi t before tax
Earnings per share (basic)
Dividend per share
2017
£m
644.3
13.7
11.8
11.3
1.8%
-
9.19p
11.8
11.3
9.18p
1.0p
2016
£m
614.2
13.1
11.2
10.6
1.7%
1.16
8.33p
12.4
11.8
9.26p
0.9p
Change
4.9%
4.6%
5.4%
6.6%
10bps
10.3%
-4.8%
-4.2%
-0.9%
11.1%
* These items exclude net non-recurring income / (expenses) of £nil (2016: £1.16m)
✔ Strong balance sheet – net assets £50.4m
✔ Underlying Return on Equity at 19.87%
(2015/16: £42.1m)
(2015/16: 21.98%)
✔ Strong operational cash fl ows, cash position of
✔ Proposed fi nal dividend of 0.75p, up by 11.1%
£23.0m (2015/16: £19.8m)
✔ Net cash of £6.1m (2015/16: net cash £0.4m)
after signifi cant investment in property
during year
over the full year to 1.0p per share
(2015/16: 0.9p)
✔ Refi nancing of the Group’s existing debt facilities
to provide a new £40.0m, fi ve year Revolving
Credit Facility arranged in November 2017
4
Summary
Operational Highlights
✔ New vehicle sales down 11.7%, with
the impact offset by a 25.7% increase
in profi t per unit
✔ Used vehicle sales down 6.1%
following site closure, offset by a 5.6%
improvement in profi t per unit
✔ Aftersales Revenue increased 9%
✔ Signifi cant development of the Group’s
franchising strategy with the successful
addition of two major High Luxury
Segment brand partners:
• McLaren dealership in Hatfi eld to be
opened in January 2018
• Two Bentley dealerships to be
opened in January 2018
✔ Continuing investment in the Freehold
portfolio; to increase operational
capacity and achieve site potentials
and comply with our Brand partners
franchise standards
✔ Barnet Jaguar Land Rover
development completed along with
other Brand led corporate identity
developments
✔ Swindon Motor Park, the Group’s fi rst
business, was closed to make way
for the Swindon Jaguar Land Rover
dealership development on its site. The
demolition and building work began in
July and is now progressing well
✔ Hatfi eld development site secured with
works due to begin in January 2018 for
Jaguar, Land Rover, Aston Martin and
McLaren
5
Summary (continued)
Mark Lavery, Chief Executive Offi cer of Cambria said:
“The Group has delivered a solid set of results for the full year, with underlying Profi t Before Tax of £11.3m, up from
£10.6m in the previous year, a 6.6% increase.
The fi rst half of the fi nancial year was strong and we reported signifi cant year on year growth. As fl agged in our Interim
Results statement on 9 May 2017 and the subsequent Trading Update on 5 September, the Board remains cautious
on the overall consumer outlook. As has been well documented, the trading environment in the period post March has
been more challenging, particularly in the new car arena which has been impacted by a number of factors. The weakening in the Sterling
exchange rate has led to infl ation in the landed cost of imported vehicles into the UK which, combined with a level of consumer uncertainty
in the market, has led to the anticipated reduction of new car sales.
Our strategy for the 2016/17 fi nancial year was to integrate the acquired businesses from last year and progress the property investments
needed to bring those businesses up to manufacturer standards. We have made good progress in this regard during the year, completing
Barnet, beginning the build work at Swindon and securing the Hatfi eld site for development work to begin in January 2018.
Moreover, I am delighted that we have been given the opportunity to develop facilities for such prestigious brands as McLaren and Bentley
in addition to our already excellent portfolio of Brand partners. This is an exciting development for the Group and we are looking forward
to working with our new partners. The new bank funding also gives us the required fl exibility to deliver on the strategic investments that
we are making in facilities and new franchise opportunities.
Post the period end, trading in September and October was in line with the Board’s expectations, but behind the prior year as a result of
the weaker new car market.
The Board remains confi dent that Cambria’s resilient business model, focus on delivering a superior Guest experience and fi nancing
arrangements leave it well positioned to take advantage of any opportunities that the current economic uncertainty could provide.”
6
Chairman’s statement
I am pleased to report that Cambria has delivered another strong set of results for the full year ended 31 August 2017, which again shows
continued improvement in the Group’s operational and fi nancial performance, along with successful delivery of its stated growth strategy.
Whilst the second half of the fi nancial year was more challenging than the fi rst with a shift in the new car market, the Group continued to
focus on delivery of used car and aftersales improvements. The Group in its 11th year of trading, hit £11.3m of underlying pre-tax profi t,
maintaining an excellent return on shareholders’ funds.
The strategic acquisitions delivered over the past three fi nancial years have accelerated the Group’s growth and have proved to be shrewd
investments, giving the Group a broader and enhanced franchised dealership portfolio mix and bolstering its underlying earnings capacity.
The UK motor retail industry has seen a weakening since the March plate change month where it showed record registration fi gures.
As reported in its Interim results, the Group’s trading to the end of the half year at the end of February and into the plate change month
of March was very strong. However, the period from April to August was weaker year on year as consumer demand softened across
the industry and we witnessed a more diffi cult trading environment with some of our OEM partners being exposed to a weaker foreign
exchange position as importers.
The Group has reported operational improvements in the past three fi nancial years and these have continued into the 2016/17 fi nancial
year. On a like for like basis, Cambria generated gross profi t growth across the used car and aftersales departments with the new car
department reducing as a result of the reductions in the second half of the year.
Revenue increased by 4.9% to £644.3m (2015/16: £614.2m). Underlying profi t before tax rose by 6.6% to £11.3m (2015/16: £10.6m) and
the Group delivered underlying earnings per share of 9.19p (2015/16: 8.33p) - an increase of 10.3%.
The Group closed the year with net cash of £6.1m (2015/16: net cash £0.4m) and net assets of £50.4m (2015/16: £42.1m), underpinned
by the ownership of £45.2m (2015/16: £41.3m) of freehold and long leasehold properties.
Our capacity for making acquisitions, and the property development programme, has been enhanced after the year-end with a refi nancing
and extension of banking facilities to £40m arranged in November 2017. These facilities refi nance the existing £37m of total facilities with
a £40m Revolving Credit Facility with a fi ve year term available for acquisitions and property purchase and development.
We have also strengthened our Board during the course of the year following the appointments of Tim Duckers as Managing Director of
the motor division in September 2016 and then in February 2017 Paul McGill and William Charnley as Non-Executive Directors. Tim has
worked in the Group since 2008 and has been heavily involved in its development to date. Paul was most recently Head of Projects at
Lloyds Banking Group, where he was responsible for promoting the Black Horse Consumer Finance brand across the Group, leading
new business initiatives and recruiting key individuals to the business. William is a solicitor specialising in mergers and acquisitions,
capital markets and private equity with over 25 years experience. All three appointments bring to the Group a vast amount of experience,
knowledge and expertise of the motor retail industry which will complement the existing management team.
7
Chairman’s Statement (continued)
Group overview
Cambria was established in 2006 with a strategy to build a balanced motor retail group to deliver the self-funded acquisition and turnaround
of underperforming businesses. The strategy evolved in 2013 to encompass the acquisition of premium and high luxury businesses,
located in geographically strategic locations, which would be immediately earning enhancing.
In line with this strategy, in the period July 2014 to July 2016, the Group announced the acquisition of the Jaguar and Land Rover dealership
in Barnet, the acquisitions of Swindon Land Rover, Welwyn Garden City Land Rover and Woodford Jaguar Land Rover. In May 2016, the
Group opened a new dealership for Aston Martin in Birmingham. The Group continues to integrate and develop these businesses.
To support the acquisitions and developments outlined above in the previous year, the Group agreed to divest of its Exeter Jaguar business
in January 2016, to close the Exeter Aston Martin dealership which shared a facility with Jaguar and to dispose of the Croydon Jaguar
franchise in March 2016 which shared a facility alongside the Group’s Volvo franchise.
The Group closed its Swindon Motor Park business in January 2016 in order that the site could be cleared ready for the development of
the Jaguar Land Rover Arch concept facility on the site.
Following the acquisitions, disposals and the closure of the Group’s only SEAT new car sales franchise in Swindon, the Group now
comprises 31 dealerships, representing 46 franchises and 16 brands, a well balanced brand portfolio spanning the high luxury, premium
and volume segments.
The major property development at Hatfi eld which is due to start in January 2018 will relocate the Group’s Jaguar, Land Rover and Aston
Martin dealerships in Welwyn Garden City which currently operate in short leasehold facilities into a purpose built freehold property with
the addition of the McLaren franchise which will operate on the same site.
The Group will also be opening two new Bentley dealerships in January 2018 operating from existing Group freehold facilities. The
dealership properties are currently undergoing refurbishments to meet the Bentley franchise standard requirements.
These new franchising developments are exciting for the Group and demonstrate its commitment to developing the Premium and High
Luxury segment franchises in geographically strategic locations.
Dividend
The Board is pleased to propose a fi nal dividend of 0.75p per share (2015/16: 0.7p), subject to shareholder approval, resulting in a total dividend
for the year of 1.0p per share (2015/16: 0.9p) - an increase of 11.1%. It remains the Board’s intention to maintain a progressive dividend policy.
Outlook
The UK economy remains in a period of uncertainty while the ramifi cations of leaving the EU are worked through. There is a lack of clarity
on how any free trade agreements will be negotiated and there continue to be major implications for the Sterling exchange rate and other
fi scal levers. As I stated in my report last year, and still at the time of writing we are unclear as to how these factors will impact the UK
motor trade although we have seen an industry-wide softening in the new car market from April onwards. That said, we are continuing to
invest for future growth as we consider that the Group is in a strong fi nancial position. Moreover, Cambria’s robust balance sheet, industry
leading return on investment and proven management team leave it well positioned to manage any uncertainty.
We are actively looking to deliver on our commitments to the Brand partners that we represent with the investment programme to enhance
our property portfolio, while maintaining our aim to produce superior returns on Shareholders’ funds, which reached 19.87% (note 8) in
the year under review (2015/16: 21.98%).
The Board is pleased with the progress that has been made over the last two fi nancial years and intends to continue to exploit selective
growth opportunities while driving the core operation of the existing businesses.
Philip Swatman
Chairman
8
9
Operating and fi nancial review
Chief Executive Offi cer’s review
Introduction
I am pleased to report that the Group has delivered a solid set of results for the 2017 fi nancial year. The operational and fi nancial
performance improvements delivered in the 2016 fi nancial year continued through to H1 2017 but declined in the second half. Overall our
underlying profi t before tax rose to £11.3m from £10.6m, a 6.6% increase on the previous year.
The table below summarises our fi nancial performance, which is detailed in the Finance Director’s Report:
Year ended 31 August
Revenue
Underlying EBITDA*
Underlying operating profi t*
Underlying profi t before tax*
Underlying profi t before tax margin*
Net Non-recurring income/ (expenses)
Underlying earnings per share*
Operating profi t
Profi t before tax
Earnings per share (basic)
Dividend per share
2017
£m
644.3
13.7
11.8
11.3
1.8%
-
9.19p
11.8
11.3
9.18p
1.0p
2016
£m
614.2
13.1
11.2
10.6
1.7%
1.16
8.33p
12.4
11.8
9.26p
0.9p
Change
4.9%
4.6%
5.4%
6.6%
10bps
10.3%
-4.8%
-4.2%
-0.9%
11.1%
* These items exclude net non-recurring income / (expenses) of £nil (2016: £1.16m)
10
Operating and Financial Review (continued)
The Group celebrated its 11th anniversary in July 2017. During those 11 years the Group has grown from one site with three new car
franchises to 31 locations representing 46 new car franchises and 16 diff erent Brand Partners. The Group has utilised a total of £10.8m of
Share Capital to grow and has delivered an underlying Profi t before Tax of £11.3m in its 11th year of trading. During the year, the Group
delivered a return on shareholder funds of 19.87%. The Group has consistently delivered strong operational cash fl ows and has built a net
asset position of £50.4m underpinned by over £45.2m of freehold and long leasehold property. The Group has developed an exceptional
franchise portfolio which will be enhanced further during 2018 through delivery of the property investments that the Group is making and
the addition of the McLaren and Bentley franchises to the Group’s brand partnerships.
Brand partnerships
In line with our buy-and-build strategy, management has continued to work hard to improve the businesses acquired in previous years
and to integrate and develop the ones acquired and established in the previous year, making signifi cant investment in the management
of those businesses. The core like-for-like businesses have shown continued improvements during the year and we are pleased with the
performances delivered.
Our current portfolio of Brand Partners and dealerships comprises:
High Luxury / Premium
Aston Martin
Alfa Romeo
Jaguar
Jeep
Land Rover
Volvo
Volume
Abarth
Dacia
Fiat
Ford
Honda
Mazda
Nissan
Renault
Vauxhall
3
2
5
2
4
5
21
Motorcycle
Triumph
2
1
5
5
2
4
1
1
2
23
2
2
The Group’s acquisition strategy evolved in 2013 to enhance the Group’s Premium and High Luxury mix which immediately focused on
participating in the Jaguar Land Rover network restructuring. In January 2016 the Group acquired the Welwyn Garden City Land Rover
business. The business currently operates from leasehold premises under a short lease agreed with the vendor of the business. The
Group’s existing Jaguar and Aston Martin businesses in Welwyn Garden City are located two miles from the Land Rover dealership. In line
with the strategy to combine the Jaguar and Land Rover dealerships into the new Arch concept facilities, the Group has identifi ed and
agreed terms to acquire a 4.3 acre freehold plot of land in Hatfi eld to build a new facility for JLR and Aston Martin and we are excited to
confi rm that McLaren will also be represented on this development.
We have exchanged contracts on the development land with the only condition for completion of the purchase being the receipt of detailed
planning permission which we anticipate receiving in mid-December. The tender documents for the development have been issued to
contractors and we expect to begin the construction work in January 2018 with expected completion in December 2018. The anticipated
capital cost of the newly developed facility for the four franchises is £17m. The acquisition and development of the land will be funded
through the Group’s existing cash and new RCF facilities secured against the freehold property. In order that the Group can begin to
represent McLaren in January 2018 from the Hatfi eld site, a temporary sales facility will be established. This will enable the Group to begin
to build a database and forward orders whilst the development work is ongoing.
In May 2016, the Group opened its Aston Martin dealership in Solihull. In order to secure the franchise for the territory, the Group acquired
a freehold property and invested in a refurbishment of the facility to accommodate the Aston Martin franchise while the permanent location
is procured and built. The temporary facility is enabling the Group to establish a representation point, build a database and serve the
Aston Martin car parc for the territory. The Group has secured a new development site on the A34 in Solihull on a business park named
“The Green” for a permanent facility in line with Aston Martin franchise standards. The Group has exchanged contracts and completion is
subject to planning permission and the conclusion of extensive highways works to defi ne the site and the new estate road. It is anticipated
that the total freehold investment in the permanent facility will be c.£5m, and again will be funded through the Group’s existing cash and
new RCF facility. It is anticipated that the development will be completed by the end of Q1 2019.
11
Operating and Financial Review (continued)
In July 2016, the Group acquired the Jaguar and Land Rover business in Woodford, North London and continues to work towards securing
a suitable facility for the relocation of the operation.
During the 2015 fi nancial year the Group acquired the Swindon Land Rover business. The Group is in the process of re-developing its
Swindon Motor Park location to provide a new JLR facility in line with the new Arch design concept for JLR facilities. The planning process
for the approval of the new JLR facility was signifi cantly extended whilst we obtained Highways and Environment Agency consent for
the development which was eventually received at the end of May 2017. The on-site development work began in July 2017 and will be
completed by July 2018. Once the new development is complete, we will relocate the Land Rover business from the existing dealership
property in Royal Wootton Bassett, and will sell that freehold property. The anticipated investment in the site is £6m, and this will be funded
from the group’s existing cash and new RCF facilities.
When the Group acquired the Barnet Jaguar Land Rover
dealership in the 2013/14 fi nancial year it committed
to develop the freehold site to provide a Jaguar
Land Rover Arch concept facility on that location.
During the course of the 2015/16 and 2016/17
fi nancial years the building work was ongoing
at the site and we have operated the business
through very diffi cult operational logistics on
the site. The development was eventually
completed in July 2017 with the total property
investment and fees amounting to £7m. The
facility now provides the basis for the Group
to take advantage of the territory opportunity
in Barnet, capitalising on the Jaguar Land
Rover product and the strong demographics
of the area.
The Group has been given the opportunity
to establish two new Bentley dealerships,
and is in the process of refurbishing
existing Group freehold premises
in order that the sites can be
operational in January 2018 at a
cost of c£1m.
Whilst
the
investments outlined
above are signifi cant, the Board
Blackburn
Preston
Bolton
Bury
Oldham
believes that the investment in the
Warrington
facilities for JLR, Aston Martin,
McLaren and Bentley are core to
Birmingham
the future potential of the Group.
Wellingborough
The investment into the property
portfolio in strategic, high profi le
locations will hold the Group in
good stead to provide exceptional
representation for its brand partners
and a world class Guest experience.
Northampton
Woburn
Swindon
12
Automobiles plc
Locations across the UK
Welwyn Garden City
Brentwood
Chelmsford
Barnet
Woodford
Wimbledon
Croydon
Southampton
Thanet
Tunbridge
Wells
Canterbury
Ashford
Maidstone
Gatwick
Horsham
Operating and Financial Review (continued)
Operations
New vehicles
Used vehicles
Aftersales
Internal sales
Total
Administrative expenses
Operating profi t before non-
recurring expenses
Non-recurring income/
(expenses)
Operating profi t
New Vehicle Sales
New units
2017
2016
Revenue
Revenue
mix
Gross
Profi t
Margin
Revenue
Revenue
mix
Gross
Profi t
Margin
£m
308.7
277.3
71.4
(13.1)
644.3
%
47.9
43.0
11.1
(2.0)
100.0
£m
21.3
23.5
27.8
-
72.7
(60.9)
11.8
-
11.8
%
6.9
8.5
38.9
-
11.3
£m
297.4
264.2
65.5
(12.9)
614.2
%
48.4
43.0
10.7
(2.1)
100.0
%
6.5
9.0
40.7
-
11.3
£m
19.3
23.7
26.6
-
69.6
(58.4)
11.2
1.2
12.4
2017
11,052
2016
Year on year growth
12,516
(11.7)%
New vehicle revenue increased from £297.4m to £308.7m with total new vehicle sales volumes down 11.7%. Excluding the impact of the
acquisitions and disposals, our new volumes reduced by 17% on a like-for-like basis. Gross profi t increased by £2m (10.4%) in total but
reduced by £0.2m on a like-for-like basis. The reduced new vehicle volumes were off set by an improvement in the gross profi t per unit sold
which increased by 25.7%, a combination of like-for-like increase and strengthening mix from the JLR and Aston Martin businesses acquired
as this product typically sells at higher price points.
On a like-for-like basis, excluding the impact of the Welwyn Garden City, Woodford and Birmingham acquisitions and Swindon Motor Park
closure, our new volumes reduced by 17% with gross profi t reducing by £0.2m as profi t per unit increased by 19%. The like-for-like volume
reduction was partly attributed to the reduction in unit sales from the Barnet JLR site during the disruptive building project, and partly
attributable to reductions in unit sales from certain volume manufacturer partners. The achievement of annual new car volume related
bonuses for the 2016 calendar year has had a positive impact on the profi t per unit and therefore overall gross profi t reported in the period.
The Group’s sale of new vehicles to private individuals was 10.2% lower year-on-year at 9,359 units, showing the volume reduction that we
anticipated. New commercial vehicle sales reduced by 34% to 953 units in the period. New fl eet unit vehicle sales increased by 14.4% to
740 units.
The new vehicle registration data from the Society of Motor Manufacturers & Traders showed total registrations were down 1.0% in the rolling
12 month period to August. The registration of cars to private individuals was down 5.2% for the rolling 12 months, but in the period April
to August was down 13.8%. The sale of diesel engine vehicles has been hardest hit as a result of the negative press around diesel engine
emissions, and in the period from April to August, the sale of diesels was down 20.2%.
The signifi cant improvement in profi t per unit on both a total and like-for-like basis was particularly pleasing in a very competitive new car
market where each of the manufacturers are delivering compelling consumer off ers and requiring increasing levels of sales from the dealers
to meet their own registration requirements.
Used Vehicle Sales
Used units
2017
14,765
2016
Year on year growth
15,729
(6.1)%
We have delivered another good performance in used vehicle sales. Revenues increased from £264.2m to £277.3m whilst the number of units
sold declined by 6.1% partly driven by the closure of Swindon Motor Park, which was a high volume used car operation. The gross profi t on
used vehicles decreased by 0.8% (£0.2m) to £23.5m, however the profi t per unit sold increased 5.6%.
On a like-for-like basis, excluding the impact of the Welwyn Garden City, Woodford and Birmingham acquisitions and Swindon Motor Park
closure whilst volumes were down 2.4% the gross profi t generated increased by £0.5m (2.1%) with profi t per unit increasing by 4.3%.
13
Operating and Financial Review (continued)
We have continued our focused strategy in the used car department to increase the effi ciency with which we source, prepare and market our
used vehicles in order to drive our Velocity trading principles. This has produced strong results, increasing the like-for-like profi tability of the
used car department. During the period, this strategy continued to deliver a strong 12 month rolling return on used car investment* of 129%.
This level was reduced from the 147% achieved last year, but refl ects the increase in the average carrying value of the stock resulting from
the higher representation of premium vehicles that are sold through the acquired businesses and removal of the high volume, lower value
product sold from the Swindon Motor Park site. The ROI performance at 129% remains signifi cantly ahead of the industry average of 89.8%.
* gross profi t from used car operation over 12 months as a proportion of average stock levels for the year
Aftersales
Aftersales Revenue
2017
2016
Year on year growth
£71.4m
£65.5m
9%
The combined aftersales revenue increased 9% year on year from £65.5m to £71.4m and related gross profi t increased to £27.8m from
£26.6m. Like-for-like aftersales revenues excluding the impact of the Welwyn Garden City, Woodford and Birmingham acquisitions and
Swindon Motor Park closure were 2.9% higher year on year, with gross profi t improving 1.7% to £24.5m, up £0.4m.
The aftersales departments contributed 11.1% of the Group’s Revenue, and 38.2% of the Group’s overall gross profi t. The aftersales
margin was slightly diluted in the year as the parts component of the aftersales revenue increased in mix terms. The margin in the parts
element is smaller than that generated by service and bodyshop labour sales.
The fi re that took place in October 2016 at the Group’s Jaguar and Aston Martin aftersales workshop in Welwyn Garden City had a
signifi cant impact on the profi tability of that site, and whilst we have attempted to maintain a service level for our Guests by utilising the
Welwyn Garden City Land Rover dealership, the constraint on both operations has been evident. The business interruption insurance claim
has now been settled and has been included within the trading fi gures for the full year. The site reinstatement took signifi cantly longer than
fi rst anticipated as a result of the complexity around stakeholders and insurance liability allocation. Whilst this was frustrating the work is
now complete and we were able to reoccupy the workshop in July 2017.
Our Associates operating from the site performed incredibly well in mitigating the potentially damaging losses that could have arisen as a
result of the fi re and we are grateful for their commitment and eff orts through a diffi cult set of circumstances.
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 as well as traditional communication methods. The
Group continues to focus on the sale of service plans and its unique warranty-4-life product to enhance Guest retention.
The 0-3 year car parc continues to be replenished, as new car sales increase year on year, and this gives the Group confi dence of further
progress in Guest relationship and retention and the aftersales business remaining strong.
Total underlying administrative expenses remained well controlled during the year and as a percentage of revenue remained at 9.5%,
demonstrating good overhead recovery and strong capital disciplines as the Group continues to grow.
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 three years of
the Barnet, Swindon, Welwyn Garden City, and Woodford businesses are fi rmly in line with this strategy and the opportunity to develop
our relationship and representation with Jaguar Land Rover fi ts our brand portfolio aspirations perfectly. The Birmingham Aston Martin
business opening creates a future opportunity for the Group once it has established in a permanent facility and has developed a database.
We have now completed 14 separate transactions since our incorporation. Following any acquisition, the Cambria management team
implements new fi nancial 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 refl ect 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 defi ned benefi t pension schemes. We have always taken the approach that
Cambria will not acquire any business unless there is a strong underlying business case to do so and our acquisitions have 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
14
Operating and Financial Review (continued)
any related funding requirements are assessed on their individual merits. For compelling acquisition targets, like the JLR acquisitions, 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 benefi ts 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 fi nancial controls are implemented immediately, ranging from individual cheque signatories to daily
reporting of vehicle sales and aftersales revenues, margins and other performance fi gures. We then implement our two growth strategies
“Cambria Digital”, which is our internet social networking strategy for vehicle sales coupled with our “Guest Connect” support centre.
Cambria Academy
The Group has continued to develop the Cambria Academy, a training Academy for the Group’s Associates. 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 specifi c telephone handling courses to ensure that we increase the competency
of all our Associates in dealing with Guest enquiries eff ectively. The Group launched its Leadership Development Programme during the
year with the fi rst cohort of Associates working towards achieving a Level 5 Diploma in Management. The aim of the fi rst stage of the LDP
is to develop high calibre managers into the Group’s future General Managers.
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 refi ne 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 car market in 2017 will see another strong year for registrations in the UK, with current SMMT forecast at 2.57m, 4.5% down on
the record 2.69m registrations of 2016 but nonetheless above the mean average of 2.35m for the past 17 years.
There is little doubt that market sentiment has been impacted since the EU referendum vote in 2016. With the current weakening in the
sterling exchange rate, there has been some downward pressure on the number of cars registered in the UK as the manufacturer landed
cost of imported cars and components increases. The SMMT is currently forecasting a 2.43m new car market in 2018, a further 5.5%
reduction in new car registrations forecast for the 2017 outturn. There has been a downward shift in new car sales in the period from
April 2017 onwards as the level of consumer uncertainty increases. Diesel engines have received a signifi cant amount of negative press
speculation over the past six months following political positioning in relation to diesel vehicle emissions. The speculation around how
diesels will be taxed has impacted the sale of these cars and clarity around the strategy is needed.
Whilst the 2017 fi nancial year delivered a solid set of results, because of the uncertainty in the economic outlook, the Board is cautious
about trading in the coming year particularly in the new car arena. Post the period end, September and October trading were in line with
expectations but down on the previous year driven by new car volume and bonus achievements impacting new car margins.
The achievements we have made to progress our property portfolio and franchising strategy are pleasing and we are excited about the
opportunities with the new Brands that we are adding to the Group in 2018.
The formative years of the Group have laid solid foundations with an extremely capable management team and high quality digitised data
systems. In uncertain times, the quality of people and systems is absolutely critical and the Board is confi dent that Cambria remains well
placed to take advantage of any opportunities aff orded to the Group.
We intend to continue the process of enhancing the existing businesses and focusing on integrating and optimising the businesses
acquired to reap the full potential of those acquisitions. We will continue our relentless focus on driving strong returns on shareholder funds
from the foundations that we have put in place.
Mark Lavery
Chief Executive Offi cer
15
Operating and Financial Review (continued)
Finance Director’s Report
Overview
Total revenues in the period increased 4.9% to £644.3m from £614.2m in the prior year. New vehicle unit volumes were down 11.7% new
vehicle revenues were up 3.8%. Used car unit sales reduced by 6.1% although revenues increased by 5.0%. Revenues from the aftersales
businesses increased by 9%, compared with the previous year.
Total gross profi t increased by £3.1m (4.5%) from £69.6m to £72.7m in the year. Gross profi t margin across the Group remained consistent
at 11.3%, refl ecting the change in revenue mix with new car margins improving, off setting the slight reductions in used cars and aftersales
margins. The average selling price of both new and used cars increased year on year, as did the average profi t per new and used units that
we sold. The aftersales operations contributed 38.2% of the total gross profi t for the Group. The gross profi t contribution made by the used
car and aftersales components of the business accounted for 70.6% of the Group’s total gross profi t mix.
During the year, the Group has non-recurring net expenses of £14,000 only relating to the accounting income and expenses associated with
the insurance pay-out relating to the fi re at Welwyn Garden City Jaguar. This net £14,000 expense refl ects gross income of £0.4m for the
replacement of fi xed assets which have been capitalised, off set by £0.4m of impairment and third party expenses due to the fact that we will
be relocating the Jaguar and Aston Martin dealership before January 2019 once the Hatfi eld development is complete. In the prior year, the
Group generated a non-recurring net income of £1.16m which was a combination of £1.95m of non-recurring income from the sale of Exeter
Jaguar and Croydon Jaguar and non-recurring expenses totalling £0.79m in relation to the transaction and set up costs associated with the
acquisitions made in the year and the write off of certain assets as a result of the acquisitions.
Underlying EBITDA increased by 4.6% in the period to £13.7m, from £13.1m in the previous year. Underlying operating profi t improved 5.4%
to £11.8m, compared with £11.2m in the previous year, resulting in an underlying operating margin of 1.8% (2015/16: 1.8%).
Net fi nance expenses reduced to £0.5m (2015/16: £0.6m) as a result of the savings in the mortgage interest following the refi nancing in
November 2015 and slightly reduced consignment stocking charges.
The Group’s underlying profi t before tax rose by 6.6% to £11.3m, compared with £10.6m in the previous year.
Underlying earnings per share were 9.19p (2015/16: 8.33p). Basic earnings per share were 9.18p (2015/16: 9.26p) and the Group’s underlying
return on shareholders’ funds for the year was 19.87% (2015/16: 21.98%).
Taxation
The Group tax charge was £2.1m (2015/16: £2.5m) representing an eff ective rate of tax of 18.4% (2015/16: 21.3%) on a profi t before tax of £11.3m
(2015/16: £11.8m). As outlined in last year’s report, it is anticipated that the tax rate will continue at a substantially normal eff ective tax rate.
Financial position
The Group has a robust balance sheet with a net asset position of £50.4m underpinned by £45.2m of freehold and long leasehold property which
are held on a historic cost basis. Secured against the freehold and long leasehold property are mortgages and RCF amounting to £16.9m.
As at the balance sheet date, and as a result of the banking facility arranged on 23 November 2015, the Group had a term loan with a fi ve year
term, and 15 year capital repayment profi le which amounted to repayments of £1m per annum, and this is disclosed in the balance sheet as
due within one year. Post year end, the Group refi nanced the Banking facilities and as a result, the revised £40m Revolving Credit Facility has
no fi xed capital repayment profi le throughout its 5 year term.
The loans outstanding at the balance sheet date refl ect very similar commercial terms, 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 net cash position of the Group as at 31 August 2017 was £6.1m (2015/16: net cash £0.4m), refl ecting a cash position of £23m (2015/16:
£19.8m). This is after the £7.9m investment in Capital Expenditure.
The Group typically uses bank 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 fl uctuations in working
capital. The overdraft facilities are renewable annually and are next due in September 2018.
16
Operating and Financial Review (continued)
Cash fl ow and capital expenditure
The Group generated an operating cash infl ow of £14.5m with working capital reducing by £3.3m through effi cient management of the vehicle
inventory and the stocking lines associated with that inventory and higher levels of new vehicle deposits for new car orders for September
delivery. Total funds invested in capital expenditure were £7.9m. In the year, the Barnet development incurred £4.5m of capex to complete
the project, the Croydon Ford dealership was fully refurbished at a total cost of £0.7m, other smaller site refurbishments totalled £0.6m and
the Welwyn Garden City Jaguar workshop is capitalised at a total cost of £0.4m. There were fi xtures, fi ttings plant and machinery additions
of £1.5m and computer expenditure of £0.2m.
During the year, and as a result of the Group banking facilities, capital repayment of £1m were made. There was a repayment of the £5m of
RCF that was drawn at 31 August 2016. On completion of the Barnet development £3.5m of the property development RCF was drawn.
As a result of the net cash infl ow of £3.2m, the gross cash position was £23m with gross debt of £16.9m and overall net cash of £6.1m after
signifi cant investment, compared with net cash at 31 August 2016 of £0.4m.
Capital expenditure commitments
As outlined in the Chief Executive’s report, the Group has committed to delivering property solutions to facilitate the acquired businesses
complying with the franchise standards for its Brand partners. Over the coming 24 months the Group intends to complete the following major
freehold investments; Swindon JLR development forecast at c.£6m, Welwyn Garden City JLR, Aston Martin and McLaren at c.£17m and
Solihull Aston Martin at c.£5m and Bentley site refurbishments at c.£1m, the total freehold new build investment being in the order of £29m.
The developments will be funded through a drawdown of newly arranged RCF and existing cash. The Board intends to draw down against the
RCF normal Loan to Value security against each development which the Board forecasts at 70% of the land purchase and development cost.
The Board is committed to these investments and anticipates that by making the investments it will position the Group well for realising the
full operational potential of the businesses acquired over the past three years.
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 defi ned benefi t pension schemes and has no liability arising from any such scheme. The Group made
contributions amounting to £0.3m (2015/16: £0.4m) to defi ned contributions schemes for certain employees.
Financial instruments
The Group does not have any contractual obligation under any fi nancial instruments with respect to the hedging of interest rate risk.
Dividends
The Board is pleased to propose a fi nal dividend payment in respect of the fi nancial year to 31 August 2017 of 0.75p per share in addition
to the interim dividend of 0.25p per share paid in May 2017. If approved by the shareholders at the Annual General Meeting to be held on 4
January 2018, the dividend will be payable on 22 January 2018 to those shareholders registered on 29 December 2017, with an ex-dividend
date of 28 December 2017. 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
17
Strategic report
Enhanced Business Review
All details required are covered in the Chairman’s Statement and the Operating and Financial Review between pages 7 and 17.
Cambria Business Philosophy
Cambria’s culture – The Four Pillars
The Group works hard to instil a group culture. This culture is built around four pillars which are:
Pillar One - Associate delight
The Directors believe that Associates are the Company’s most important asset and therefore members of the team are not referred to as
members of staff or employees, but rather as “Associates”. The Directors want all Associates to be proud to be associated with the Group
and to be given the autonomy to make decisions that aff ect the running of “their” business. The Directors promote internal development
and foster a culture whereby Associates feel they can achieve their career aspirations with Cambria. Equally, Cambria invests in its
Associates in order for them to achieve their full potential within the Group.
Pillar Two - Guest delight
Cambria Associates are encouraged to treat all customers at all times, in the way that they would treat a guest visiting their own home.
The Directors believe that Associate empowerment is key to achieving this goal and the Directors believe that the organisation must be
transparent and open at all times generating empathy with the diverse guest base of the Group.
Pillar Three - Brand delight
The Group’s goal is to become the retailer of choice for all of the automotive manufacturers that it represents. This pillar focuses on
achieving the following goals:
• brand vehicle sales objectives
• brand part sales objectives
• top half placing in brand customer satisfaction surveys
• the development of a trusting relationship with brand personnel from the manufacturer partners
Pillar Four - Stakeholder delight
The Group aims to provide satisfaction to its Stakeholders. It seeks to achieve this through:
• disclosing timely and accurate information providing Stakeholders with a detailed understanding of business performance; and
• communicating openly and transparently.
Primary Risks
The primary risk to the Group is the 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 fi nancial 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 fi nancial 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 fi nancial 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 fi nances its operations through a combination of bank funding and shareholders’ funds. The interest rate on bank funding is
variable with the base rate.
Liquidity risk
The Group seeks to manage fi nancial risk by ensuring suffi cient liquidity is available to meet foreseeable needs and to invest cash assets
safely and profi tably. The funding for signifi cant new ventures is secured before commitments are made. Cash fl ows 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 fi nancial 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 fl ow 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
Date: 21 November 2017
Dorcan Way, Swindon, SN3 3RA
19
Directors’ report
The Directors present their Directors’ report and fi nancial statements for the year ended 31 August 2017.
Principal activities
Cambria’s principal activities are the sale and servicing of motor vehicles and the provision of ancillary services. The Group operates from
31 sites with a total of 46 dealer franchises.
Proposed dividend
The Directors recommend the payment of a fi nal dividend for 2017 of 0.75p per share which equates to £0.75m (2016: £0.7m). If approved
at the Annual General Meeting to be held on 4 January 2018, the dividend will be payable on 22 January 2018 to those shareholders
registered on 29 December 2017.
Directors
The Directors who held offi ce during the year were as follows:
P H Swatman
M J J Lavery
M W Burt
J A Mullins
Sir P A Burt
T A Duckers (appointed 5 September 2016)
P McGill (appointed 7 February 2017)
W F Charnley (appointed 7 February 2017)
All Directors benefi ted from qualifying third party indemnity provisions in place during the fi nancial period.
On 5 September 2016 Tim Duckers was appointed to the Board of Directors as Managing Director of the motor division. Tim has been
an employee of the Group since 2008, and has been heavily involved in the Group’s development. On 7 February 2017 Paul McGill and
William Charnley were appointed to the Board as Non-Executive Directors. Both Paul and William have extensive knowledge of the motor
industry and further strengthen the Board.
Associates
The Group recognises the benefi t of keeping Associates informed of group aff airs and the views of Associates are given full consideration
at regular meetings with their representatives.
Full and fair consideration is given to the employment of disabled persons, who are treated no diff erently from other Associates as
regards recruiting, training, career development and promotion opportunities. For people who may become disabled, in the course of
employment, the Group will make every eff ort to accommodate them in suitable alternative employment.
Political and charitable contributions
During the year, the Company made no charitable donations.
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year (2016: £nil).
Disclosure of information to auditor
The Directors who held offi ce at the date of approval of this Directors’ Report confi rm that, so far as they are each aware, there is no relevant
audit information of which the Company’s auditor is unaware; and each director has taken all the steps that he ought to have taken as a director
to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information.
Auditor
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG LLP as auditor of the Company
is to be proposed at the forthcoming Annual General Meeting.
By order of the board
James Mullins
Director
Date: 21 November 2017
20
Dorcan Way, Swindon, SN3 3RA
Statement of directors’ responsibilities in respect of the Annual Report and the
fi nancial statements
The Directors are responsible for preparing the Annual report and the Group and parent company fi nancial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and parent company fi nancial statements for each fi nancial year. As required by
the AIM rules of the London Stock Exchange they are required to prepare the group fi nancial statements 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 fi nancial
statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including
FRS101 Reduced Disclosure Framework.
Under company law the directors must not approve the fi nancial statements unless they are satisfi ed that they give a true and fair view of
the state of aff airs of the Group and parent company and of their profi t or loss for that period.
In preparing each of the Group and parent company fi nancial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• for the Group fi nancial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU
• for the parent company fi nancial statements, state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the parent company fi nancial statements; and
• prepare the fi nancial statements on the going concern basis unless it is inappropriate to presume that the Group and parent company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are suffi cient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the fi nancial position of the parent company and enable them to ensure
that its fi nancial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and fi nancial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of the fi nancial statements may diff er from legislation in
other jurisdictions.
21
Independent
auditor’s report
to the members of Cambria Automobiles plc
Materiality:
group financial
statements as a
whole
Coverage
£0.57m (2016:£0.59m)
5% (2016: 5%) of group profit
before tax
100% (2016:100%) of group
profit before tax
Risks of material misstatement vs 2017
Recurring risks Goodwill valuation
Revenue recognition
Recoverability of
parent’s debt due from
group entities
◄►
◄►
◄►
1. Our opinion is unmodified
We have audited the financial statements of
Cambria Automobiles plc (“the Company”) for the
year ended 31 August 2017 which comprise the
consolidated statement of comprehensive income,
consolidated statement of changes in equity,
consolidated statement of financial position,
consolidated cash-flow statement, company
balance sheet, company statement of changes in
equity, and the related notes, including the
accounting policies in note 1.
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 2017
and of the Group’s profit for the year then
ended;
— the group financial statements have been
properly prepared in accordance with
International Financial Reporting Standards as
adopted by the European Union;
— the parent Company financial statements have
been properly prepared in accordance with UK
accounting standards, including FRS 101
Reduced Disclosure Framework; and
— the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are
described below. We have fulfilled our ethical
responsibilities under, and are independent of the
Group in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to
listed entities. We believe that the audit evidence
we have obtained is a sufficient and appropriate
basis for our opinion.
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial
statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In
arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows (unchanged
from 2016):
Goodwill
Forecast based valuation
Our procedures included:
The risk
Our response
£21.3 million;
(2016: £21.3 million)
Refer to page 30 accounting
policy) and page 44 (financial
disclosures).
Goodwill acquired in a business
combination is allocated to the Group’s
Cash Generating Units (CGUs).
— Benchmarking assumptions: comparing
the key assumptions (discount rate, growth
rate) used to externally derived data;
The recoverable amounts of the CGUs
are determined from value in use
calculations and where the carrying
value of a CGU exceeds its recoverable
amount an impairment charge is
required. This is a key judgement area
as inaccuracies in assumptions,
particularly relating to forecast cash
flows and discount rates, could result in
the recoverable amount being calculated
incorrectly resulting in potentially
material impairment charges not being
recognised or too great an impairment
charge being recorded.
— Historical comparisons: comparing the
previously forecast cash flows to actuals to
assess the historical accuracy of forecasting;
— Assessing transparency: considering the
adequacy of Group’s disclosures in respect
of Goodwill;
— Sensitivity analysis: we evaluated the
Group’s sensitivity analysis, by performing
our own analysis to assess the sensitivity of
the impairment reviews to changes in the
key assumptions of the discount rate,
growth rate and the forecast cash flows.
Revenue
2017/2018 sales
Our procedures included:
£644.3 million;
(2016: £614.2 million)
Refer to page 29 (accounting
policy) and page 37 (financial
disclosures)
The business is seasonal in nature, with
peak revenues in the months of March
and September. Trading in the motor
industry continues to be competitive and
there is pressure on management to
achieve financial targets. These
conditions give rise to an increased risk
of management bias or fraud over the
timing of revenue recognition.
— Control design and re-performance: we
tested controls relating to the sales process,
assessing whether third party
documentation was collated in line with
Group policy;
— Test of details: we assessed whether
revenue had been recorded in the correct
period for a sample of sales invoices raised
around the year-end. We also assessed
credit notes raised after the year-end to
identify significant corrections relating to
[We continue to perform procedures over [identify key audit matter]. However, following [explain why risk is less significant
2017.
this year], we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not
separately identified in our report this year.]
Low risk, high value
Our procedures included:
Recoverability of parent’s debt
due from group entities
£18.8 million
(2016: £19.9 million)
Refer to page 64 (accounting
policy) and page 70 (financial
disclosures).
The carrying amount of the intra-group
debtor balance represents 89% of the
parent company’s total assets. Their
recoverability is not at a high risk of
significant misstatement or subject to
significant judgement. However, due to
their materiality in the context of the
parent company financial statements,
this is considered to be the area that had
the greatest effect on our overall parent
company audit.
— Tests of detail: Assessing 100% of group
debtors to identify, with reference to the
relevant debtors’ draft balance sheet
whether they have a positive net asset value
and therefore coverage of the debt owed, as
well as assessing whether those debtor
companies have historically been profit-
making.
,
— Assessing subsidiary audits: Assessing
the evidence obtained during our audit of
those subsidiaries and considering the
results of that work on their profits and net
assets.
3. Our application of materiality and an
overview of the scope of our audit
Group profit before taxation
£11.4m (2016: £11.8m)
Group Materiality
£0.57m (2016: £0.59m)
Materiality for the group financial statements as a
whole was set at £0.57 million (2016: £0.59
million) determined with reference to a benchmark
of group profit before taxation, normalised to
exclude this year’s impairment in respect of trade
receivables as disclosed in note 22, of £11.4
million, of which it represents 5.0% (2016:
determined with reference to a benchmark of
group profit before taxation of 5.0%).
Materiality for the parent company financial
statements as a whole was set at £0.21 million
(2016: £0.23 million), determined with reference to
a benchmark of total assets, of which it represents
1.0% (2016: 1.0%).
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £0.03 million (2016: £0.04 million), in
addition to other identified misstatements that
warranted reporting on qualitative grounds.
All of the group’s thirteen (2016: thirteen)
components, including the parent company, were
subject to full scope audits for group purposes, all
of which were performed by the group team.
These audits accounted for 100% (2016: 100%) of
total group revenue, group profit before tax and
total group assets and were performed to
individual component materiality levels which
ranged from £0.02 million to £0.40 million (2016:
£0.01 million to £0.53 million), having regard to the
mix of size and risk profile of the group across
these components.
£0.57 million
Whole financial
statements materiality
(2016: £0.59m)
£0.4 million
Range of materiality at thirteen
components
£0.02m-£0.4m
(2016: £0.02m to £0.5m)
Group PBT
Group materiality
£0.03m
Misstatements reported to the
audit committee
(2016: £0.04m)
Group revenue
Group profit before tax
100%
(2016 100%)
100
100
100%
(2016 100%)
100
100
Group total assets
Group profit before exceptional
items and tax
100%
(2016 100%)
100
100
100%
(2016 100%)
100
100
Key:
Full scope for group audit purposes 2017
Full scope for group audit purposes 2016
4. We have nothing to report on going concern
7. Respective responsibilities
We are required to report to you if we have concluded that
the use of the going concern basis of accounting is
inappropriate or there is an undisclosed material uncertainty
that may cast significant doubt over the use of that basis for
a period of at least twelve months from the date of approval
of the financial statements. We have nothing to report in
these respects.
5. We have nothing to report on the other information in
the Annual Report
The directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not
express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial
statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or
our audit knowledge. Based solely on that work we have
not identified material misstatements in the other
information.
Strategic report and directors’ report
Based solely on our work on the other information:
— we have not identified material misstatements in the
strategic report and the directors’ report;
— in our opinion the information given in those reports for
the financial year is consistent with the financial
statements; and
— in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
6. We have nothing to report on the other matters on
which we are required to report by exception
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.
We have nothing to report in these respects
Directors’ responsibilities
As explained more fully in their statement set out on page
[A], the directors are responsible for: the preparation of the
financial statements including being satisfied that they give
a true and fair view; such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error; assessing the Group and,
parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
8. The purpose of our audit work and to whom we owe
our responsibilities
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.
Ian Brokenshire (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
22 November 2017
Consolidated statement of comprehensive income
for year ended 31 August 2017
Revenue
Cost of sales
Gross profi t
Administrative expenses
Other operating profi t
Results from operating activities
Finance income
Finance expenses
Net fi nance expenses
Profi t before tax from operations before non-recurring income/
(expenses)
Net non-recurring income and expenses
Profi t before tax
Taxation
Profi t and total comprehensive income for the period
Basic and diluted earnings per share
Note
3
4
4
9
9
5
4
10
8
All comprehensive income is attributable to owners of the parent company.
2017
£000
644,286
(571,607)
72,679
(60,901)
-
11,778
49
(576)
(527)
11,265
(14)
11,251
(2,071)
9,180
9.18p
2016
£000
614,218
(544,614)
69,604
(59,158)
1,950
12,396
133
(761)
(628)
10,605
1,163
11,768
(2,508)
9,260
9.26p
26
Consolidated statement of changes in equity
for year ended 31 August 2017
Balance at 31 August 2015
Profi t for the year
Dividend paid
Balance at 31 August 2016
Profi t for the year
Dividend paid
Balance at 31 August 2017
Note
Share capital Share premium Retained earnings
Total equity
£000
£000
£000
£000
10,000
-
-
10,000
-
-
10,000
799
-
-
799
-
-
799
22,867
9,260
(800)
31,327
9,180
(950)
33,666
9,260
(800)
42,126
9,180
(950)
39,557
50,356
21
27
Consolidated statement of fi nancial position
at 31 August 2017
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
Non-current liabilities
Other interest-bearing loans and borrowings
Provisions
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
17
20
21
2017
£000
49,321
21,365
-
2016
£000
43,949
21,391
13
70,686
65,353
105,419
12,428
23,046
95,068
13,314
19,817
140,893
128,199
211,579
193,552
(1,000)
(142,539)
(801)
(6,000)
(129,731)
(1,245)
(144,340)
(136,976)
(15,883)
(1,000)
(13,450)
(1,000)
(16,883)
(14,450)
(161,223)
(151,426)
50,356
42,126
10,000
799
39,557
10,000
799
31,327
50,356
42,126
These fi nancial statements were approved by the board of directors on 21 November 2017 and were signed on its behalf by:
M J J Lavery
Director
28
Company registered number: 05754547
Consolidated cash fl ow statement
for year ended 31 August 2017
Notes
Cash fl ows from operating activities
Profi t for the year
Adjustments for:
Depreciation, amortisation and impairment
11/12
Financial income
Financial expense
Loss on disposal of fi xed assets
Profi t on sale of branches
Taxation
Non-recurring (income)/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 fl ows from investing activities
Interest received
Proceeds from sale of plant and equipment
Acquisition of branch net of cash acquired
Disposal of branches by trade and asset sale
Receipt of insurance claim settlement
Purchase of property, plant and equipment and software
Net cash from investing activities
Cash fl ows from fi nancing activities
Proceeds from new loan
Interest paid
Repayment of borrowings
Dividend paid
Net cash from fi nancing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 September 2016
Cash and cash equivalents at 31 August 2017
9
9
10
5
5
28
5
21
16
16
2017
£000
9,180
2,271
(49)
576
324
-
2,071
(411)
13,962
886
(10,351)
12,767
-
17,264
(350)
(2,461)
-
14,453
49
-
-
-
411
(7,941)
(7,481)
3,433
(226)
(6,000)
(950)
(3,743)
3,229
19,817
23,046
2016
£000
9,260
1,837
(133)
761
-
(1,950)
2,508
787
13,070
(131)
(6,827)
12,956
1,000
20,068
(460)
(2,075)
(787)
16,746
133
95
(12,946)
2,058
-
(5,622)
(16,282)
29,950
(301)
(24,891)
(800)
3,958
4,422
15,395
19,817
29
Notes
(forming part of the fi nancial statements)
1 Accounting policies
Cambria Automobiles plc is a company which is quoted on the AIM Market of the London Stock Exchange plc and is incorporated and
domiciled in the United Kingdom. The address of the registered offi ce is Swindon Motor Park, Dorcan Way, Swindon, SN3 3RA. The
registered number of the company is 05754547.
These fi nancial statements as at 31 August 2017 consolidate those of the Company and its subsidiaries (together referred to as the
“Group”). The parent company fi nancial statements present information about the Company as a separate entity and not about its group.
The Group fi nancial statements have been prepared and approved by the directors in accordance with International Financial Reporting
Standards as adopted by the EU (“Adopted IFRS”). The Company has elected to prepare its parent company fi nancial statements in
accordance with FRS101; and these are presented on pages 61 to 71.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the fi nancial
statements.
Judgements made by the directors in the application of these accounting policies that have signifi cant eff ect on the fi nancial statements
and estimates with a signifi cant risk of material adjustment in the next year are discussed in note 2.
Basis of preparation
The fi nancial statements are prepared under the historical cost convention.
The directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic
outlook.
At the balance sheet date, the Group had net current liabilities of £3,447,000, the Directors have a reasonable expectation that the Group
has adequate resources given the cash position at year end, the banking facilities and the trading performance of the Group that it will
continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the annual
fi nancial statements.
Further information regarding the company’s business activities together with the factors likely to aff ect its future development, performance
and position is set out in the Strategic report and Directors’ report on pages 18 to 20.
Basis of consolidation
The fi nancial statements consolidate the fi nancial statements of the Company together with its subsidiary companies.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when it is exposed to, or has right to, variable returns from its investment
within the entity and has the ability to aff ect these returns through its power over the entity. The fi nancial information of subsidiaries is
included from the date that control commences until the date that control ceases.
All business combinations are accounted for by applying the 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 identifi able assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profi t 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 classifi ed 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 profi t or
loss.
30
Notes (continued)
(forming part of the fi nancial statements)
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 identifi able assets, liabilities and contingent liabilities of the acquiree. When the excess was
negative, a bargain purchase gain was recognised immediately in profi t or loss. Transaction costs, other than those associated with the
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 identifi ed as the Chief Executive Offi cer.
All revenue generated and non-current assets held are attributable to UK operations only.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and
services provided in the normal course of business, net of discounts and VAT.
Sales of motor vehicles, parts and accessories are recognised when the signifi cant risks and rewards of ownership have been transferred
to the buyer. In general this occurs when vehicles or parts are delivered to the customer and title has passed. Manufacturer incentives are
recognised as revenue when earned. Servicing and bodyshop sales, including warranty work, are recognised on completion of the agreed
work. Finance commission revenue is recognised as the related vehicles are sold.
Deposits received from customers
Deposits received from customers prior to the completion of a sale (delivery of vehicle) are included in the accounts as creditors falling
due within one year.
Financing income and expenses
Financing expenses comprise interest payable, stocking interest charge on consignment and used vehicles and fi nance leases. Financing
income comprises interest receivable on funds invested and interest credits received from manufacturers on stock management.
Borrowing costs are recognised in the period in which they are incurred.
Interest income and interest payable is recognised in profi t or loss as it accrues, using the eff ective interest method.
Operating profi t
Operating profi t relates to profi t before fi nance income, fi nance expense and income tax expense.
31
Notes (continued)
(forming part of the fi nancial statements)
1 Accounting policies (continued)
Intangible assets
Goodwill
Goodwill represents the excess between the cost of an acquisition of a subsidiary compared to the net fair value of the identifi able assets,
liabilities and contingent liabilities, and recognition of identifi able intangibles at the date of acquisition. Identifi able intangibles are those
which can be sold separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units of the acquiree which
represent the smallest identifi able group of assets that generates cash infl ows that are largely independent of the cash infl ows from other
assets or groups of assets. Goodwill is not amortised but is tested annually for impairment. Any impairment is recognised immediately in
the statement of comprehensive income and is not subsequently reversed.
Other intangible assets
Expenditure on internally generated goodwill and brands is recognised as an expense as incurred.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment
losses.
Amortisation
Amortisation is charged on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefi nite.
Intangible assets with an indefi nite useful life and goodwill are systematically tested for impairment at each year. Other intangible assets
are amortised from the date they are available for use. The estimated useful lives are as follows:
Computer software
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 diff erent useful lives, they are accounted for as separate items of property,
plant and equipment.
Depreciation is charged on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives are as follows:
• freehold buildings
• leasehold properties
• plant and machinery
• fi xtures and fi ttings
• computer equipment
50 years
over the lifetime of the lease
5 to 10 years
5 to 10 years
3 to 5 years
Depreciation methods, useful lives, residual values and possible impairments have been reviewed at the year end. As a result of this review,
no impairment charge has been deemed necessary for the period.
32
Notes (continued)
(forming part of the fi nancial statements)
Impairment of assets excluding inventories
The carrying amounts of the Group’s assets, are reviewed at each year end to determine whether there is any indication of impairment;
an asset is considered to be impaired if objective evidence indicates that one or more events have had a negative eff ect on the estimated
future cash fl ows of that asset. If any such indication exists, the asset’s recoverable amount is estimated.
For goodwill, assets that have an indefi nite useful life and intangible assets that are not yet available for use, the recoverable amount is
estimated at each year end.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in income.
Impairment losses recognised in respect of cash-generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated
to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit
is the smallest identifi able group of assets that generates cash infl ows that are largely independent of the cash infl ows from other assets
or groups of assets.
For an asset that does not generate largely independent cash infl ows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
Reversals of impairment
An impairment loss in respect of trade and other receivables carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. In determining the cost of motor vehicles, the actual amount paid and
payable to date for each vehicle is used, for spare parts and service items cost is based on the fi rst-in fi rst-out principle. An appropriate
provision is made for obsolete or slow moving items.
New vehicles on consignment from manufacturers are included in the Statement of Financial Position with a corresponding liability in
creditors due within one year. This stock is considered to be under the control of the Group as it is considered that the Group bears all the
risks and rewards or ownership, even though legal title has not yet passed.
Consignment stock is held for a maximum period (which varies between manufacturers) before becoming due for payment. Part of the
consignment period is interest free and the remaining periods are interest bearing (periods and charges vary between manufacturers but
interest is generally linked to LIBOR).
Used motor vehicles are stated at the lower of cost or net realisable value, by reference to Glass’s Guide or CAP data.
Demonstrator vehicles are held within inventories at the lower of cost and net realisable value.
Vehicle funding and stocking loans form part of the Group’s working capital and are recognised at the fair value of the amount due to the
facility provider.
33
Notes (continued)
(forming part of the fi nancial statements)
1 Accounting policies (continued)
Financial Instruments
Classifi cation of fi nancial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
a) a) they include no contractual obligations upon the group to deliver cash or other fi nancial assets or to exchange fi nancial assets or
fi nancial liabilities with another party under conditions that are potentially unfavourable to the group; and
b) b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s
exchanging a fi xed amount of cash or other fi nancial assets for a fi xed number of its own equity instruments.
To the extent that this defi nition is not met, the proceeds of issue are classifi ed as a fi nancial liability. Where the instrument so classifi ed takes
the legal form of the company’s own shares, the amounts presented in the historical fi nancial information for called up share capital and share
premium account exclude amounts in relation to those shares.
Non-derivative fi nancial instruments
Non-derivative fi nancial instruments comprise, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and
other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the eff ective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the eff ective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of
the Group’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash fl ow statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost using the eff ective interest method.
Taxation
Tax on the profi t or loss for the year comprises current and deferred tax. Tax is recognised except to the extent that it relates to items
recognised in other comprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary diff erences between the carrying amounts of assets and liabilities for fi nancial reporting purposes
and the amounts used for taxation purposes. The following temporary diff erences are not provided for: the initial recognition of goodwill; the
initial recognition of assets or liabilities that aff ect neither accounting nor taxable profi t other than in a business combination, and diff erences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the temporary
diff erence can be utilised.
34
Notes (continued)
(forming part of the fi nancial statements)
Employee benefi ts
Defi ned contribution plans
A defi ned contribution plan is a post-employment benefi t plan under which the company pays fi xed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defi ned contribution pension plans
are recognised as an expense as incurred.
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 eff ect 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 eff ect 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 eff ects 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 classifi ed as fi nance
leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that of the
buildings. Leased assets acquired by way of fi nance lease are stated at an amount equal to the lower of their fair value and the present
value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses.
Lease payments are accounted for as described below.
Operating lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense.
Finance lease payments
Minimum lease payments are apportioned between the fi nance charge and the reduction of the outstanding liability. The fi nance charge is
allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Provisions
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of
a past event, that can be reliably measured and it is probable that an outfl ow of economic benefi ts will be required to settle the obligation.
35
Accounting policies (continued)
(forming part of the fi nancial statements)
1 Accounting policies (continued)
IFRS
The following accounting standards and interpretations, issued by the IASB and endorsed by the EU or International Financial Reporting
Interpretations Committee (IFRIC), are eff ective for the fi rst time in the current fi nancial year and have been adopted by the group with no
signifi cant impact on the consolidated results or fi nancial position:
• IFRS 14 Regulatory Deferral Accounts
• Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11
• Clarifi cation of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38.
• Agriculture: Bearer Plants – Amendments to IAS 16 and IAS 41
• Equity Method in Separate Financial Statements – Amendments to IAS 27
• Annual Improvements to IFRSs – 2012-2014 Cycle
• Investment entities: Applying the Consolidation Exception – Amendments to IFRS 10, IFRS 12 and IAS 28
• Disclosure Initiative – Amendments to IAS 1
The IASB and the IFRIC have also issued the following standards and interpretations with an eff ective date after the date of these
Financial Statements:
New standards and interpretations endorsed but not yet effective:
• Recognition of Deferred Tax Assets for Unrealised Losses – Amendments to IAS 12 (eff ective date 1 January 2017)
• Disclosure Initiative – Amendments to IAS 7 (eff ective date 1 January 2017)
• IFRS 9 Financial Instruments (eff ective date 1 January 2018)
• IFRS 15 Revenue from Contracts with Customers (eff ective date 1 January 2018)
• Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts – Amendments to IFRS 4 (eff ective date 1 January 2018)
• IFRS 16 Leases (eff ective date 1 January 2019)
New standards and interpretations not yet endorsed and not yet effective:
• Annual Improvements to IFRSs – 2014-2016 Cycle
• Classifi cation and Measurement of Share-based Payment Transactions – Amendments to IFRS 2
• IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration
• Amendments to IAS 40 Investment Property
• IFRIC 23 Uncertainty over Income Tax Treatments
• Amendments to IFRS 9 Financial Instruments
• Amendments to IAS 28 Investments in Associates and Joint Ventures
• IFRS 17 Insurance contracts
Amendments to IFRS 9 are due to take eff ect from accounting periods commencing from 1 January 2018. The Directors do not anticipate
that the adoption of IFRS 9, where relevant in future periods, will have a material impact.
IFRS 15 is due to take eff ect from accounting periods commencing from 1 January 2018. The Directors are currently assessing the impact
of these changes on the accounting policies of the Group.
IFRS 16 is due to take eff ect from accounting periods commencing from 1 January 2019. The Directors are currently assessing the impact
of these changes on the accounting policies of the Group.
36
Notes (continued)
(forming part of the fi nancial statements)
2 Critical accounting judgements in applying the Group’s accounting policies
Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of
future events that are believed to be reasonable under the circumstances.
Certain critical accounting judgements in applying the Group’s accounting policies are described below:
Goodwill and property portfolio impairment
The carrying values of goodwill and property are tested annually for impairment, for goodwill by using cash fl ow projections for each cash
generating unit, and for property by comparing the carrying value to the higher of value in use or market value.
Intangible assets
On Business combinations the directors consider separately identifi able 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
acquisitions are immaterial or have not arisen.
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 income and expenses
Non-recurring income and expenses are items which derive from events or transactions that are outside the normal course of business,
and do not directly relate to the on-going operations, therefore have been separately disclosed in order for the fi nancial statements to
present a true and fair view.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identifi ed as the Chief Executive Offi cer.
37
Notes (continued)
(forming part of the fi nancial statements)
3 Revenue
Sale of goods
Aftersales services
Total revenues
4 Segmental reporting
2017
£000
585,991
58,295
644,286
2016
£000
557,776
56,442
614,218
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 Offi cer. The Group is operated and managed on a Dealership
by Dealership basis. Dealerships operate a number of diff erent business streams such as new vehicle sales, used vehicle sales and after
sales operations. Management is organised based on the dealership operations as a whole rather than the specifi c business streams.
Dealerships are considered to have similar economic characteristics and off er similar products and services which appeal to a similar
customer base. As such the results of each dealership have been aggregated to form one reportable operating segment.
All segment revenue, profi t before tax, assets and liabilities are attributable to the principal activity of the Group being the provision of car
vehicle sales, vehicle servicing and related services. Therefore to increase transparency, the Group has included below additional voluntary
disclosure analysing revenue and gross margins within the reportable segment.
2017
Revenue
2017
Revenue
mix
2017
Gross
Profi t
2017
Margin
2016
Revenue
2016
Revenue
mix
2016
Gross
Profi t
2016
Margin
£m
308.7
277.3
71.4
(13.1)
%
47.9
43.0
11.1
(2.0)
£m
21.3
23.5
27.8
-
%
6.9
8.5
38.9
-
£m
297.4
264.2
65.5
(12.9)
%
48.4
43.0
10.7
(2.1)
£m
19.3
23.7
26.6
-
%
6.5
9.0
40.7
-
644.3
100.0
72.7
11.3
614.2
100.0
69.6
11.3
New Car
Used Car
Aftersales
Internal sales
Total
Administrative expenses
Operating profi t before non-recurring
expenses
Non-recurring income/ (expenses)
Operating profi t
(60.9)
11.8
-
11.8
(58.4)
11.2
1.2
12.4
The CODM reviews the performance of the business in terms of both net profi t before tax and EBITDA, as such the following table shows
a reconciliation of the Profi t before tax to EBITDA.
38
Notes (continued)
(forming part of the fi nancial statements)
Profi t Before Tax
Other operating profi t
Non-recurring expenses (note 5)
Underlying Profi t Before Tax
Net fi nance expense
Depreciation and amortisation
Underlying EBITDA
Other operating profi t
Non-recurring expenses
EBITDA
2017
£000
11,251
-
14
11,265
527
1,887
13,679
-
(14)
13,665
2016
£000
11,768
(1,950)
787
10,605
628
1,837
13,070
1,950
(787)
14,233
5 Non-recurring Income/ (expenses)
Non-recurring income and expenses are items which derive from events or transactions that are outside the normal course of business,
and do not directly relate to the on-going operations, therefore have been separately disclosed in order for the fi nancial statements to
present a true and fair view.
Income from sale of businesses
Relocation costs – relating to asset write off
Restructuring costs
Transaction costs
Welwyn fi re insurance claim - replacement of fi xed assets
- impairment for value in use
- impairment of fi xed assets destroyed
- excess on insurance policy
- professional fees
2017
£000
-
-
-
-
411
(367)
(20)
(5)
(33)
(14)
2016
£000
1,950
(498)
(28)
(261)
-
-
-
-
-
1,163
39
Notes (continued)
(forming part of the fi nancial statements)
6 Expenses and auditor’s remuneration
The result from operating activities is stated after charging the following:
Impairment loss recognised on other trade receivables and prepayments (note 22(b))
Auditor’s remuneration:
Audit of these fi nancial statements
Audit of fi nancial statements of subsidiaries pursuant to legislation
Other services relating to taxation
All other services
2017
£000
155
2017
£000
26
98
38
7
2016
£000
467
2016
£000
26
98
38
7
40
Notes (continued)
(forming part of the fi nancial statements)
7 Staff numbers and costs
The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:
Number of employees
Sales
Service
Parts
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Expenses related to defi ned contribution plans
Share based payments expense
2017
385
447
113
265
1,210
2017
£000
35,752
3,843
338
32
39,965
2016
374
451
105
245
1,175
2016
£000
34,639
3,685
362
32
38,718
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.
The Underlying Return on Equity number has been calculated as the Adjusted profi t attributable to equity shareholders divided by the
unweighted average shareholder funds taking the average of the opening and closing shareholders equity from the statement of fi nancial
position. The calculation is therefore £9,191,000 divided by £46,241,000 giving 19.87%.
Profi t attributable to shareholders
Non recurring (income)/ expenses (Note 5)
Tax on adjustments (at 19.58% (2016: 20%))
Adjusted profi t attributable to equity shareholders
Number of shares in issue (‘000)
Basic earnings per share
Adjusted earnings per share
2017
£000
9,180
14
(3)
9,191
100,000
9.18p
9.19p
2016
£000
9,260
(1,163)
232
8,329
100,000
9.26p
8.33p
41
Notes (continued)
(forming part of the fi nancial statements)
9 Finance income and expense
Recognised in the income statement
Finance income
Rent deposit interest
Interest receivable
Total fi nance income
Finance expense
Interest payable on bank borrowings
Consignment and vehicle stocking interest
Total fi nance expense
Total interest expense on fi nancial liabilities held at amortised cost
Total other interest expense
10 Taxation
Recognised in the income statement
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
2017
£000
2
47
49
226
350
576
226
350
576
2017
£000
2,049
(32)
2,017
(80)
134
54
2016
£000
2
131
133
301
460
761
301
460
761
2016
£000
2,373
(7)
2,366
(1)
143
142
Total tax expense
2,071
2,508
42
Notes (continued)
(forming part of the fi nancial statements)
10 Taxation (continued)
Recognised in the income statement
Profi t for the year
Total tax expense
Profi t excluding taxation
Tax using the UK corporation tax rate of 19.58% (2016: 20%)
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
Other fi xed asset differences
Total tax expense
2017
£000
9,180
2,071
11,251
2,203
34
182
(154)
(14)
(112)
-
(68)
2,071
2016
£000
9,260
2,508
11,768
2,354
124
152
(83)
2
(8)
(33)
-
2,508
The applicable tax rate for the current year is 19.58% (2016: 20%) following the reduction in the main rate of UK corporation tax from 20%
to 19% with eff ect from 1 April 2017.
Reductions in the UK corporation tax rate from 23% to 21% (eff ective from 1 April 2014) and 20% (eff ective from 1 April 2015) were
substantively enacted on 2 July 2013. Further reductions to 19% (eff ective from 1 April 2017) and to 18% (eff ective from 1 April 2020)
were substantively enacted on 26 October 2015. An additional reduction to 17% (eff ective 1 April 2020) was substantively enacted on 6
September 2016.
This will reduce the company’s future current tax charge accordingly.
43
Notes (continued)
(forming part of the fi nancial statements)
11 Property, plant and equipment
Cost
Balance at 1 September 2015
Additions
Branch acquisitions
Disposals
Balance at 1 September 2016
Additions
Branch acquisitions
Disposals
Reclassifi cation
Freehold
land &
buildings
Long
leasehold
land &
buildings
Short
leasehold
improvements
Plant &
equipment
Fixtures,
fi ttings &
computer
equipment
Total
£000
£000
£000
£000
£000
£000
36,923
4,396
-
-
41,319
4,571
-
-
-
4,117
4,552
-
-
-
9
-
(17)
4,117
4,544
-
-
-
-
-
-
(1,546)
(514)
3,060
509
97
(505)
3,161
953
-
(758)
-
7,317
687
121
(1,686)
6,439
2,417
-
(1,169)
514
55,969
5,601
218
(2,208)
59,580
7,941
-
(3,473)
-
Balance at 31 August 2017
45,890
4,117
2,484
3,356
8,201
64,048
Depreciation
Balance at 1 September 2015
Charge for the year
Disposals
Balance at 1 September 2016
Depreciation charge for the year
Disposals
Impairment
Reclassifi cation
2,901
506
-
3,407
611
-
-
-
602
104
-
706
105
-
-
-
3,946
247
(17)
4,176
120
(1,275)
-
(693)
2,503
305
(455)
2,353
356
(726)
269
-
5,977
651
(1,639)
4,989
668
(1,148)
116
693
15,929
1,813
(2,111)
15,631
1,860
(3,149)
385
-
Balance at 31 August 2017
4,018
811
2,328
2,252
5,318
14,727
Net book value
At 31 August 2016
37,912
3,411
At 31 August 2017
41,872
3,306
368
156
808
1,450
43,949
1,104
2,883
49,321
As at 31 August 2017 the Group was partially through the building project relating to its Jaguar Land Rover dealership in Swindon. There was a
further £6m of contract sum payments to be made under the terms of the agreement with the main contractor (2016: £4.1m relating to Barnet).
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 with the
exception of the freehold property acquired in the year for the Aston Martin dealership in Solihull.
Property, plant and equipment under construction
At 31 August 2017 the Swindon Jaguar Land Rover dealership was under construction, included in Freehold land and buildings is an
amount of £Nil (2016: £2.8m relating to Barnet).
amount of £Nil (2016: £2.8m relating to Barnet).
44
Notes (continued)
(forming part of the fi nancial statements)
12 Intangible assets
Cost
Balance at 1 September 2015
Additions
Balance at 1 September 2016
Additions
Balance at 31 August 2017
Amortisation and impairment
Balance at 1 September 2015
Amortisation
Balance at 1 September 2016
Amortisation for the year
Balance at 31 August 2017
Net book value
At 31 August 2016
At 31 August 2017
Goodwill
Software
£000
8,346
13,000
21,346
-
21,346
-
-
-
-
-
21,346
21,346
£000
778
22
800
-
800
731
24
755
26
781
45
19
Other
£000
176
-
176
-
176
176
-
176
-
176
-
-
Total
£000
9,300
13,022
22,322
-
22,322
907
24
931
26
957
21,391
21,365
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
The registered offi ce of all of the Group Companies is Dorcan Way, Swindon, SN3 3RA.
45
Notes (continued)
(forming part of the fi nancial statements)
12 Intangible assets (continued)
Amortisation charge
The amortisation charge is recognised in the following line items in the income statement:
Administrative expenses
Impairment loss and subsequent reversal
2017
£000
26
2016
£000
24
Goodwill and indefi nite life intangible assets considered signifi cant in comparison to the Group’s total carrying amount of such assets have
been allocated to cash generating units or Groups of cash generating units. For the purpose of impairment testing of goodwill and other
indefi nite life assets, the Directors recognise the Group’s cash generating units to be connected groupings of dealerships. The identifi ed
CGU’s are as follows:
Multiple units without signifi cant goodwill
Goodwill
2017
£000
346
2016
£000
346
Jaguar Land Rover
21,000
21,000
21,346
21,346
The recoverable amount of the Jaguar Land Rover cash generating unit (CGU) has been calculated with reference to its value in use. These
calculations use projections based on fi nancial budgets approved by the board of Directors which are extrapolated using an estimated
growth rate. The budgets were prepared to 31 August 2017 and then projected for a further 4 years. As the goodwill is newly acquired and
the underlying expected performance of the CGU gives suffi cient headroom using conservative assumptions, a growth rate of 0% was
applied, and a terminal value was included with a 0% growth rate in perpetuity. The discount rate used is 8%.
Management has also performed 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.
46
46
Notes (continued)
(forming part of the fi nancial statements)
13 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
The amount of temporary diff erences, unused tax losses and tax credits for which a deferred tax asset is recognised is set out below, along
with the movement in the balance in the year. The asset would be recovered if off set against future taxable profi ts of the Group.
Property, plant and equipment
Provisions
Tax value of loss carry-forward
Share options
1 September
2016
Recognised
in income
Net 31
August 2016
Deferred tax
liabilities
Deferred tax
assets
£000
(29)
6
-
36
13
£000
(32)
-
-
(22)
(54)
£000
(61)
6
-
14
£000
(442)
-
-
-
£000
381
6
-
14
(41)
(442)
401
Unrecognised deferred tax assets and liabilities
The deferred tax asset in relation to loss carried forward within a subsidiary has not been recognised due to uncertainty over the future
profi tability of the subsidiary, these losses are locked in to this particular subsidiary and cannot be utilised in the wider Group.
Tax value of loss carry-forwards
Unrecognised net tax assets
Assets
2017
£000
329
329
2016
£000
490
490
47
Notes (continued)
(forming part of the fi nancial statements)
14 Inventories
Vehicle consignment stock
Motor vehicles
Parts and other stock
2017
£000
74,682
27,524
3,213
105,419
2016
£000
62,702
29,297
3,069
95,068
Included within inventories is £nil (2016: £nil) expected to be recovered in more than 12 months.
Raw materials, consumables and changes in fi nished goods and work in progress recognised as cost of sales in the year amounted to
£567million (2016: £540 million).
Details of stock held as security is given in note 18.
15 Trade and other receivables
Trade receivables
Prepayments and other receivables
2017
£000
6,588
5,840
2016
£000
8,580
4,734
12,428
13,314
Included within trade and other receivables is £nil (2016: £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 fl ow statement
2017
£000
23,046
23,046
2016
£000
19,817
19,817
48
Notes (continued)
(forming part of the fi nancial statements)
17 Other interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at
amortised cost. For more information about the Group’s exposure to interest rate risk, see note 22.
Non-current liabilities
Secured bank loans
Current liabilities
Secured bank loans
Terms and debt repayment schedule
All debt is in GBP currency
2017
£000
2016
£000
15,883
13,450
1,000
6,000
Nominal interest rate
Year of
Maturity
Face
Value and
Carrying Amount
Face Value and
Carrying Amount
2017
£000
2016
£000
Loan 31/12/2015
LIBOR +1.20%*
2020
16,883
14,450
16,883
14,450
*The Facilities arranged in November 2015 have diff erent margin bandings that are dependent on the net debt: EBITDA ratio for the
previous quarter. The margin is 1.2% where the ratio is below 1 times, increasing to 2% where the ratio is in excess of 2.5 times.
18 Trade and other payables
Current
Vehicle consignment creditor
Other trade payables
Non-trade payables and accrued expenses
Vehicle funding
Deferred tax liability
2017
£000
89,024
14,021
13,539
25,914
41
2016
£000
74,308
10,313
18,303
26,807
-
142,539
129,731
Included within trade and other payables is £nil (2016: £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.
49
Notes (continued)
(forming part of the fi nancial statements)
19 Employee benefi ts
Pension plans
Defi ned contribution plans
The Group operates a number of defi ned contribution pension plans.
The total expense relating to these plans in the current year was £338,000 (2016: £362,000).
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. There are certain performance criteria
relating to shareholder return and the underlying profi t before tax of the Group which have to be achieved for the options to be exercisable.
During the year ended 31 August 2017, 250,000 share options were granted (2016: £nil).
The fair values were calculated using a Black-Scholes model. The inputs into the model were as follows:
Date of grant
Share price at
option date £
Exercise price £
Volatility
Expected life (years)
Risk free rate
2/3/15
1/4/15
12/12/16
0.47
0.54
0.60
0.47
0.54
0.60
17.5%
17.2%
1 year beyond vesting date
1 year beyond vesting date
39.19%
1 year beyond vesting date
0.5%
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 eff ects of non-transferability,
exercise restrictions and behavioural considerations.
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Weighted average
exercise price
Number
of options
Weighted average
exercise price
2017
£
0.48
0.60
2017
4,750,000
250,000
2016
£
0.48
-
Number
of options
2016
4,750,000
-
Outstanding at the end of the year
0.49
5,000,000
0.48
4,750,000
Exercisable at the end of the year
-
-
The Company recognised an expense of £32,896 (year ended 31 August 2016: £31,887) in respect of share based payments in the year.
50
Notes (continued)
(forming part of the fi nancial statements)
20 Provisions
Balance at 1 September 2016
Provisions used during the year
Provisions made in year
Balance at 31 August 2017
Current
Non-current
Balance at 31 August 2016
Current
Non-current
Balance at 31 August 2017
Onerous Leases
£000
1,000
-
-
1,000
-
1,000
1,000
-
1,000
1,000
The provision represents a lease acquired on unfavourable terms and is being released against the costs incurred on the relevant lease.
The unfavourable nature of the lease taken on as part of the acquisition of Woodford Jaguar Land Rover will be realised at the point that
the Group vacates the Woodford showroom and will need to sublet the premises for uses other than its existing use. It is anticipated that
at the point of vacation of the premises there will be approximately 6 years of the lease remaining.
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 classifi ed in shareholders’ funds
2017
£000
10,000
10,000
10,000
2016
£000
10,000
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys diff erent or enhanced voting rights from any other shareholder. All shares are
eligible for dividends and rank equally for dividend payments.
51
Notes (continued)
(forming part of the fi nancial statements)
Dividends
The following dividends were paid by the company in the year ended 31 August.
0.7 p per ordinary share – prior year fi nal (2016: 0.6p)
0.25p per ordinary share – current year interim (2016: 0.2p)
2017
£000
700
250
950
2016
£000
600
200
800
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.
2017
£000
750
2016
£000
700
0.75p per ordinary share – current year fi nal (2016: 0.7p)
22 Financial instruments
22 (a) Fair values of fi nancial instruments
Trade and other receivables
The fair value of trade and other receivables, is estimated as the present value of future cash fl ows, discounted at the market rate of interest at
the balance sheet date if the eff ect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash fl ows, discounted at the market rate of interest at the
balance sheet date if the eff ect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable
on demand then the fair value is estimated at the present value of future cash fl ows, discounted at the market rate of interest at the balance
sheet date.
Interest-bearing borrowings
Fair value, which after initial recognition is determined for disclosure purposes only, is calculated based on the present value of future principal
and interest cash fl ows, discounted at the market rate of interest at the balance sheet date.
The rates used to discount estimated cash fl ows, where applicable are based on the weighted average cost of capital and were as follows:
Loans and borrowings
2017
%
3.5
2016
%
3.5
52
Notes (continued)
(forming part of the fi nancial statements)
Fair values
The fair values for each class of fi nancial assets and fi nancial liabilities together with their carrying amounts shown in the balance sheet are
as follows:
Financial assets
Loans and receivables at amortised cost including cash and cash equivalents
Trade receivables(net) (note 15)
Other receivables (note 15)
Cash and cash equivalents
Total Financial assets
Financial liabilities
Financial liabilities at amortised cost
Other interest-bearing loans and borrowings (note 17)
Trade and other payables (note 18)
Total Financial liabilities
As at 31 August
2017
As at 31 August
2016
£000
£000
6,588
5,840
23,046
8,580
4,734
19,817
35,474
33,131
16,883
142,539
19,450
129,731
159,422
149,181
The Directors consider the carrying amount of the Group’s fi nancial assets and fi nancial liabilities, as detailed above, approximate
their fair value.
53
Notes (continued)
(forming part of the fi nancial statements)
22 Financial instruments (continued)
22 (b) Credit risk
Credit risk management
The Group is exposed to credit risk primarily in respect of its trade receivables. Trade receivables are stated net of provision for estimated
impairment losses. Exposure to credit risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit to
certain customers after an appropriate evaluation of risk coupled with the fi ndings from external reference agencies. Credit risk arises in
respect of amounts due from vehicle manufacturers in relation to bonuses and warranty receivables. This risk is mitigated by the number
of manufacturers for which the Group holds franchises, procedures to ensure timely collection of debts and management’s belief that
it does not expect any manufacturer to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying
amount of each fi nancial asset in the statement of fi nancial position.
Exposure to credit risk
The carrying amount of trade receivables represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the
balance sheet date was £6,588,000 (2016: £8,580,000) 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
2017
£000
6,588
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
2017
£000
4,189
1,266
1,133
6,588
2016
£000
8,580
2016
£000
3,578
3,034
1,968
8,580
Credit quality of fi nancial assets and impairment losses
The ageing of trade receivables at the balance sheet date is given below. The Group’s policy is to provide for all debts which are past due.
The directors consider the balance to be recoverable based on credit terms and post balance sheet receipts.
Gross
2017
£000
6,588
224
6,812
Impairment
2017
£000
-
224
224
Gross
2016
£000
8,580
361
8,941
Impairment
2016
£000
-
361
361
Trade receivables not past due
Trade receivables past due
54
Notes (continued)
(forming part of the fi nancial statements)
22 Financial instruments (continued)
22 (b) Credit risk (continued)
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 September 2016
Impairment loss recognised
Allowance for impairment utilised
Balance at 31 August 2017
£000
361
155
(292)
224
The allowance account for trade receivables is used to record impairment losses unless the Group is satisfi ed that no recovery of the
amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.
22 (c) Liquidity risk
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its fi nancial obligations as they fall due. Liquidity is managed by the Group’s central
treasury function within policy guidelines set by the Board with prime areas of focus being liquidity and interest rate exposure. The Group is fi nanced
primarily by bank loans, vehicle stocking credit lines and operating cash fl ow. The directors have assessed the future funding requirements of the Group
and compared them to the level of committed available borrowing facilities. These committed facilities are maintained at levels in excess of planned
requirements and are in addition to short term uncommitted facilities that are also available to the Group. The assessment included a review of fi nancial
forecasts, fi nancial instruments and cash fl ow projections. These forecasts and projections show that the Group, taking account of reasonably possible
scenarios, should be able to operate within the level of its borrowing facilities for the foreseeable future.
The following are the contractual maturities of fi nancial liabilities, including estimated interest payments and excluding the eff ect of netting
agreements: Interest is payable on loans of £16,883,000 (2016: £14,450,000) at LIBOR plus 1.20%.
2016
Carrying
amount
Contractual
cash fl ows
£000
£000
1 year
or less
£000
1 to
<2years
£000
2 to
<5years
£000
5years and
over
£000
Non-derivative fi nancial liabilities
Secured bank loans
Revolving Credit Facility
Trade and other payables
Non-derivative fi nancial liabilities
Secured bank loans
Revolving Credit Facility
Trade and other payables
15,125
1,237
1,219
12,669
14,450
5,000
-
-
129,731
129,731
129,731
-
-
-
-
2017
-
-
-
Carrying
amount
Contractual
cash fl ows
1 year
or less
1 to
<2years
2 to
<5years
5years and
over
£000
£000
£000
£000
£000
£000
16,883
17,669
1,279
1,262
15,128
-
-
-
142,500
142,500
142,500
-
-
-
-
-
-
-
55
Notes (continued)
(forming part of the fi nancial statements)
22 Financial instruments (continued)
22 (d) Market risk
Financial risk management
Market risk is the risk that changes in market prices, such as interest rates will aff ect the Group’s income or the value of its holdings of
fi nancial instruments.
Market risk - Foreign currency risk
The Group does not have any exposure to foreign currency risk.
Market risk – Interest rate risk
Profi le
At the balance sheet date the interest rate profi le of the Group’s interest-bearing fi nancial instruments was:
Variable rate instruments
Cash and cash equivalents
Vehicle funding
Loans and overdrafts
2017
£000
23,046
(25,914)
(16,883)
2016
£000
19,817
(26,807)
(19,450)
(19,751)
(26,440)
The objectives of the Group’s interest rate policy are to minimise interest costs. The Group does not actively manage cash fl ow interest risk
as the directors believe that the 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 fl oating rate basis.
Whilst there are no hedging instruments, the Board reviews its hedging policy on a regular basis.
Sensitivity analysis
An increase of 0.5 basis points in interest rates at the balance sheet date would have decreased equity and profi t or loss by the amounts
shown below.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the eff ect of fi nancial
instruments with variable interest rates, fi nancial instrument at fair value through profi t or loss or available for sale with fi xed interest rates
and the fi xed rate element of interest rate swaps. The analysis is performed on the same basis for comparative periods.
2017
£000
214
2016
£000
211
214
211
Equity
Decrease
Profi t or loss
Decrease
56
Notes (continued)
(forming part of the fi nancial statements)
22 Financial instruments (continued)
22 (e) Capital management
Prior to each acquisition, the Board considers its funding options and the appropriate mix of secured debt and equity.
The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefi ts to other stakeholders. The Group must ensure that suffi cient capital resources are available for
working capital requirements and meeting principal and interest payment obligations as they fall due.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio, which is calculated as net debt divided
by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statement of
fi nancial position) less cash and cash equivalents. Total capital is calculated as total shareholders’ equity.
The gearing ratios for each year are as follows:
Total borrowings
Less: cash and cash equivalents
Net (surplus)/defi cit
Total equity
Gearing ratio
23 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and fi ve years
More than fi ve years
As at 31 August
2017
As at 31 August
2016
16,883
(23,046)
19,450
(19,817)
6,163
(367)
50,356
42,126
0%
0%
2017
£000
2,986
9,949
13,314
2016
£000
2,824
9,426
14,465
26,249
26,715
The Group leases a number of motor dealership sites under operating leases. Land and buildings have been considered separately for
lease classifi cation.
During the year £3,141,000 was recognised as an expense in the income statement in respect of operating leases (2016: £2,710,000).
57
Notes (continued)
(forming part of the fi nancial statements)
24 Contingencies
The Group is jointly and severally liable in respect of value added tax liabilities arising in other group undertakings. The related fellow
subsidiary undertakings and the parent company were in a repayment situation at 31 August 2016 and 2017.
In recognition of the Cambria Automobiles plc group bank and used vehicle funding facilities, the following companies have entered into
a joint agreement to guarantee liabilities with banks and fi nance houses of the motor manufacturers that provide new and used vehicles
to the Group:
Cambria Automobiles plc, Cambria Automobiles Property Limited, Cambria Automobiles Group Limited, Cambria Automobiles Acquisitions
Limited, Cambria Automobiles (Swindon) Limited, Grange Motors (Swindon) Limited, Thoranmart Limited, Cambria Automobiles (South
East) Limited, Grange Motors (Brentwood) Limited, Invicta Motors Limited, Invicta Motors (Maidstone) Limited and Cambria Vehicle
Services Limited.
Intra-group guarantees are accounted for as insurance contracts.
25 Related parties
Identity of related parties with which the Group has transacted
Key management personnel are considered to be the board of directors for the purposes of this disclosure.
Transactions with key management personnel
At the year end, the Directors of the Company and their immediate relatives controlled 47.56% (2016: 47.09%) 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
2017
£000
1,001
646
24
2016
£000
677
636
12
1,671
1,325
58
Notes (continued)
(forming part of the fi nancial statements)
25 Related parties (continued)
The emoluments consist of:
Directors’ emoluments
Philip Swatman
James Mullins
Mark Lavery
Sir Peter Burt
Michael Burt
Tim Duckers
Paul McGill
William Charnley
Salaries
Bonus
2017
£000
2017
£000
Share
related
awards
2017
£000
Total
Total
2017
£000
2016
£000
40
215
400
33
33
265
15
-
1,001
-
177
365
-
-
104
-
-
646
40
404
765
33
33
381
15
-
36
373
850
33
33
-
-
-
1,671
1,325
12
12
-
24
All directors benefi ted from qualifying third party indemnity provisions during the fi nancial period
During the year Mark Lavery bought 7 vehicles from the Group and sold 5 vehicles back to the Group, James Mullins bought 5 vehicles
from the Group and sold 4 vehicles back to the Group. Sir Peter Burt bought 4 vehicles from the Group and sold 4 vehicles back to the
Group. Tim Duckers bought 4 vehicles from the Group and sold 3 vehicles back to the Group. Philip Swatman bought 2 vehicles from 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 £57,175. William Charnley is a partner at the law fi rm King & Spalding, during the year
the Group paid professional fees of £5,807 In relation to the legal services provided to the Group.
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 fi nal dividend payment in respect of the fi nancial year to 31 August 2017 of 0.75p
(2016: 0.7p) per share in addition to the interim payment of 0.25p per share (2016: 0.2p).
Banking Facilities
Post year end, the Group refi nanced the Banking facilities and as a result, the revised £40m Revolving Credit Facility has no fi xed capital
repayment profi le throughout its 5 year term.
59
Notes (continued)
(forming part of the fi nancial statements)
28 Acquisitions of trading branches
On 11 January 2016, the company completed the acquisition of the Land Rover dealership in Welwyn Garden City from Jardine
Motor Group.
Acquiree’s net assets at the acquisition date:
Plant and equipment
Stocks
Trade and other payables
Net and identifi able 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
profi tability from the sale of vehicles from the Welwyn Garden City dealership)
Consideration paid, in cash
Pre-acquisition carrying
amount and Fair Value
£000
87
1,066
(331)
822
10,000
10,822
On 6 July 2016, the company completed the acquisition of the Jaguar and Land Rover dealership in Woodford, North London from
Pendragon PLC.
Pre-acquisition carrying
amount and Fair Value
Acquiree’s net assets at the acquisition date:
Plant and equipment
Stocks
FV adjustment for lease acquired on unfavourable terms
Trade and other payables
Net and identifi able assets and liabilities
Goodwill on acquisition (The goodwill arising on acquisition is attributable to
expanding our geographical base for the Jaguar Land Rover brand, and the
anticipated profi tability from the sale of vehicles from the Woodford dealership)
Consideration paid, in cash
£000
132
301
(1,000)
(309)
(876)
3,000
2,124
60
Company Balance Sheet
At 31 August 2017
Fixed assets
Tangible fi xed assets
Investments
Current assets
Stock
Debtors
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Profi t and loss account
Shareholders’ funds
Note
2016
2015
£000
£000
£000
£000
5
6
7
8
9
11
12
12
76
666
710
19,731
20,441
(7,480)
103
666
742
769
1,073
20,858
21,931
(11,112)
12,961
13,703
13,703
10,000
799
2,904
13,703
10,819
11,588
11,588
10,000
799
789
11,588
These fi nancial statements were approved by the board of directors on 21 November 2017 and were signed on its behalf by:
M J J Lavery
Director
Company number: 05754547
61
Company Statement of changes in Equity
for the year ended 31 August 2017
Balance at 31August 2015
Profi t for the year
Dividend paid
Balance at 31 August 2016
Profi t for the year
Dividend paid
Dividend received
Note
Share capital
£000
£000
10,000
-
-
10,000
-
-
-
4
Share
premium
£000
£000
799
-
-
799
-
-
-
Retained
earnings
£000
£000
1,441
148
(800)
Total equity
£000
£000
12,240
148
(800)
789
11,588
65
(950)
3,000
65
(950)
3,000
Balance at 31 August 2017
10,000
799
2,904
13,703
62
Notes
1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
fi nancial statements.
Going concern
The directors believe that the company is well placed to manage its business risks successfully despite the current uncertain economic outlook.
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis in preparing the annual fi nancial statements.
Further information regarding the company’s business activities together with the factors likely to aff ect its future development, performance
and position is set out in the Strategic report on page 16.
Basis of preparation
These fi nancial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS
101”). The amendments to FRS 101 (2014/15 Cycle) issued in July 2015 and eff ective immediately have been applied.
In preparing these fi nancial statements, the Company applies the recognition, measurement and disclosure requirements of International
Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary in order to comply with
Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.
Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own profi t and loss account.
IFRS 1 grants certain exemptions from the full requirements of Adopted IFRSs in the transition period. The following exemptions have
been taken in these fi nancial statements:
- Business combinations – Business combinations that took place prior to 1 September 2015 have not been restated.
- Share based payments – IFRS 2 is being applied to equity instruments that were granted after 7 November 2002 and that had not vested
by 1 September 2014.
In these fi nancial statements, the company has applied the exemptions available under FRS 101 in respect of the following disclosures:
- a Cash Flow Statement and related notes;
- Comparative period reconciliations for share capital and tangible fi xed assets;
- Disclosures in respect of transactions with wholly owned subsidiaries;
- Disclosures in respect of capital management;
- The eff ects of new but not yet eff ective IFRSs;
- Disclosures in respect of the compensation of Key Management Personnel; and
- Disclosures of transactions with a management entity that provides key management personnel services to the company.
As the consolidated fi nancial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101
available in respect of the following disclosures:
- IFRS 2 Share Based Payments in respect of group settled share based payments
- Certain disclosures required by IFRS 13 Fair Value Measurement and the disclosures required by IFRS 7 Financial Instrument Disclosures.
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next fi nancial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these fi nancial
statements and in preparing an opening FRS 101 balance sheet at 1 September 2014 for the purposes of the transition to FRS 101.
Judgements made by the directors, in the application of these accounting policies that have signifi cant eff ect on the fi nancial statements
and estimates with a signifi cant risk of material adjustment in the next year are discussed on page 31.
63
Notes (continued)
Measurement convention
The fi nancial statements are prepared on the historical cost basis.
Tangible fi xed assets
Tangible fi xed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of tangible fi xed assets have diff erent useful lives, they are accounted for as separate items of tangible fi xed assets.
Leases in which the Company assumes substantially all the risks and rewards of ownership of the leased asset are classifi ed as fi nance
leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that of the
buildings. Leased assets acquired by way of fi nance lease are stated at an amount equal to the lower of their fair value and the present
value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses.
Lease payments are accounted for as described below.
Depreciation is charged to the profi t and loss account on a straight-line basis over the estimated useful lives of each part of an item of
tangible fi xed assets. Land is not depreciated. The estimated useful lives are as follows:
• computer equipment
3 to 5 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
Impairment excluding stocks and deferred tax assets
Financial assets (including trade and other debtors)
A fi nancial asset not carried at fair value through profi t or loss is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A fi nancial asset is impaired if objective evidence indicates that a loss event has occurred after the initial
recognition of the asset, and that the loss event had a negative eff ect on the estimated future cash fl ows of that asset that can be estimated
reliably.
An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the diff erence between its carrying amount
and the present value of estimated future cash fl ows discounted at the asset’s original eff ective interest rate. For fi nancial instruments
measured at cost less impairment an impairment is calculated as the diff erence between its carrying amount and the best estimate of the
amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to
be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through profi t or loss.
Non-fi nancial assets
The carrying amounts of the Company’s non-fi nancial assets, other than stocks and deferred tax assets, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is
estimated. For goodwill, and intangible assets that have indefi nite useful lives or that are not yet available for use, the recoverable amount
is estimated each year at the same time.
Leases
Operating lease payments
Payments (excluding costs for services and insurance) made under operating leases are recognised in the profi t and loss account on a
straight-line basis over the term of the lease. Lease incentives received are recognised in the profi t and loss account as an integral part of
the total lease expense.
Employee benefi ts
Defi ned contribution plans
A defi ned contribution plan is a post-employment benefi t plan under which the company pays fi xed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defi ned contribution pension plans
are recognised as an expense in the profi t and loss account in the periods during which services are rendered by employees.
64
Notes (continued)
Share based payments
Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are
accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company.
The grant date fair value of share-based payments awards granted to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period in which the employees become unconditionally entitled to the awards. The fair value
of the awards granted is measured using an option valuation model, taking into account the terms and conditions upon which the awards
were granted. The amount recognised as an expense is adjusted to refl ect the actual number of awards for which the related service and
non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number
of awards that do meet the related service and non-market performance conditions at the vesting date. For share-based payment awards
with non-vesting conditions, the grant date fair value of the share-based payment is measured to refl ect such conditions and there is no
true-up for diff erences between expected and actual outcomes.
Share-based payment transactions in which the Company receives goods or services by incurring a liability to transfer cash or other assets
that is based on the price of the Company’s equity instruments are accounted for as cash-settled share-based payments. The fair value
of the amount payable to employees is recognised as an expense, with a corresponding increase in liabilities, over the period in which the
employees become unconditionally entitled to payment. The liability is remeasured at each balance sheet date and at settlement date. Any
changes in the fair value of the liability are recognised as personnel expense in profi t or loss.
The Company took advantage of the option available in IFRS 1 to apply IFRS 2 only to equity instruments that were granted after 7
November 2002 and that had not vested by 1 September 2014.
Non-derivative fi nancial instruments
Non-derivative fi nancial instruments comprise investments in equity and debt securities, trade and other debtors, cash and cash
equivalents, loans and borrowings, and trade and other creditors.
Trade and other debtors
Trade and other debtors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the eff ective interest method, less any impairment losses.
Trade and other creditors
Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the eff ective interest method.
Investments in debt and equity securities
Investments in subsidiaries are carried at cost less impairment.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the eff ective interest method, less any impairment losses.
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).
65
Notes (continued)
Taxation
Tax on the profi t or loss for the year comprises current and deferred tax. Tax is recognised in the profi t and loss account except to the
extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity
or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary diff erences between the carrying amounts of assets and liabilities for fi nancial reporting purposes
and the amounts used for taxation purposes. The following temporary diff erences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities that aff ect neither accounting nor taxable profi t other than in a business combination, and
diff erences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the
temporary diff erence can be utilised.
Classifi cation of fi nancial instruments issued by the Company
Following the adoption of IAS 32, fi nancial instruments issued by the Company 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 to deliver cash or other fi nancial assets or to exchange fi nancial assets or
fi nancial liabilities with another party under conditions that are potentially unfavourable to the Company; and
b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s
exchanging a fi xed amount of cash or other fi nancial assets for a fi xed number of its own equity instruments.
To the extent that this defi nition is not met, the proceeds of issue are classifi ed as a fi nancial liability. Where the instrument so classifi ed
takes the legal form of the Company’s own shares, the amounts presented in these fi nancial statements for called up share capital and
share premium account exclude amounts in relation to those shares.
Finance payments associated with fi nancial liabilities are dealt with as part of interest payable and similar charges. Finance payments
associated with fi nancial instruments that are classifi ed as part of shareholders’ funds (see dividends policy), are dealt with as appropriations
in the reconciliation of movements in shareholders’ funds.
Dividends on shares presented within equity
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised
and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the
fi nancial statements.
66
Notes (continued)
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
2017
£000
1,001
646
-
24
1,671
2017
£000
400
365
765
2016
£000
677
636
-
12
1,325
2016
£000
400
450
850
All directors benefi ted from qualifying third party indemnity provisions during the fi nancial period.
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
Company
2017
Company
2016
56
48
Company
Company
2017
£000
4,380
529
18
32
4,959
2016
£000
4,064
512
20
32
4,628
67
Notes (continued)
4 Dividends
The aggregate amount of dividends paid and received compromises:
Aggregate amount of dividends paid in the fi nancial year
Aggregate amount of dividends received in the fi nancial year
2017
£000
950
3,000
The aggregate amount of dividends proposed but not recognised at the year end is £750,000 (2016: £700,000).
5 Tangible fi xed assets
Company
Cost
At 1 September 2016
Additions
At 31 August 2017
Depreciation
At 1 September 2016
Charge for year
At 31 August 2017
Net book value
At 31 August 2017
At 31 August 2016
6 Fixed asset investments
Company
Cost and net book value
At 1 September 2016 and 31 August 2017
Computer
equipment
£000
£000
749
34
783
646
61
707
76
103
2016
£000
800
-
Total
£000
£000
749
34
783
646
61
707
76
103
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.
68
Notes (continued)
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
* Owned directly by Cambria Automobiles Acquisitions Limited
** Owned directly by Cambria Automobiles Group Limited
*** Owned directly by Cambria Automobiles (South East) Limited
The registered offi ce of all of the Group Companies is Dorcan Way, Swindon, SN3 3RA.
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
7 Stocks
Motor vehicles
8 Debtors
Trade debtors
Amounts owed by group undertakings
Prepayments and accrued income
Deferred tax (note 11)
Other taxation
2017
£000
710
2017
£000
45
18,788
726
52
120
2016
£000
1,073
2016
£000
25
19,932
662
74
165
19,731
20,858
69
Notes (continued)
9 Creditors: amounts falling due within one year
Trade creditors
Bank overdraft
Bank loan
Vehicle funding
Other taxation and social security
Accruals and deferred income
Corporation tax
2017
£000
279
3,394
-
474
281
3,027
25
2016
£000
337
1,481
5,000
849
303
3,075
67
7,480
11,112
The vehicle funding creditor is secured on the stock to which it relates.
10 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Company’s interest-bearing loans and borrowings, which are measured
at amortised cost.
Creditors falling due within less than one year
Secured bank loans
11 Deferred taxation
Deferred taxation asset
At 1 September 2016
Movement in period
At 31 August 2017
The elements of deferred taxation asset are as follows:
Difference between accumulated depreciation and capital allowances
Other timing differences
Total deferred tax
70
2017
£000
-
2017
£000
52
-
52
2016
£000
5,000
£000
74
(22)
52
2016
£000
74
-
74
Notes (continued)
12 Called up share capital
Authorised
2017
£000
2016
£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
Shares classifi ed in shareholder’s funds
10,000
10,000
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys diff erent or enhanced voting rights from any other shareholder. All shares are
eligible for dividends and rank equally for dividend payments.
13 Share premium and reserves
At 1 September 2016
Profi t for the year
Dividend paid
Dividend received
At 31 August 2017
Share premium account
Profi t and loss account
£000
799
-
-
-
799
£000
789
65
(950)
3,000
2,904
14 Ultimate parent company and parent undertaking of larger group
In the opinion of the directors, the distribution of the ordinary shares and the rights attributing themselves to them means that there is no
overall controlling party of the Company.
71