Annual report and financial statements
Registered number 05754547
31 August 2018
Contents
Summary ........................................................................... 4
Chairman’s statement ....................................................... 7
Operating and financial review ........................................ 10
Strategic report ............................................................... 18
Directors’ report .............................................................. 20
Statement of directors’ responsibilities in respect
of the Strategic report, Directors’ report and
the financial 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 financial position .................. 28
Consolidated cash flow statement .................................. 29
Notes ............................................................................... 30
Company balance sheet ................................................. 60
Company statement of changes in equity....................... 61
Notes ............................................................................... 62
2
3
FINAL RESULTS 2018
Solid results in Group’s 12th year of trading, significant strategic progress, Group well positioned
Financial Highlights
Year ended 31 August
Revenue
Underlying EBITDA*
Underlying operating profit*
Underlying profit before tax*
Underlying profit before tax margin*
Net Non-recurring income/ (expenses)
Underlying earnings per share*
Operating profit
Profit before tax
Earnings per share (basic)
Dividend per share
2018
£m
630.0
13.3
10.9
9.8
1.6%
(0.7)
7.84p
10.2
9.1
7.27p
1.0p
2017
£m
644.3
13.7
11.8
11.3
1.8%
-
9.19p
11.8
11.3
9.18p
1.0p
Change
-2.2%
-2.9%
-7.8%
-13.3%
-20bps
-14.7%
-13.6%
-19.3%
-20.8%
* These items exclude net non-recurring expenses of £0.7m relating to the
refranchising activity and site closures (2017: nil)
4
4 Strong balance sheet – net assets £56.6m (2016/17: £50.4m)4 Strong operational cash flows, cash position of £15.5m (2016/17: £23.0m) 4 Significant investment in property portfolio during year deploying £20m in capex4 Net debt of £5.5m (2016/17: net cash £6.1m) 4 Underlying Return on Equity at 14.7% (2016/17: 19.9%)4 Proposed final dividend of 0.75p, maintaining the full year dividend at 1.0p per share (2016/17: 1.0p)4 Refinancing of the Group’s debt facilities to provide a new £40.0m, five year Revolving Credit Facility arranged in November 2017 Summary
Operational Highlights
4 The Group has been through a major year of
change with eight of the Group’s 42 Franchised
outlets either changing franchises or closing
during this reporting period
4 Significant development of the Group’s
franchising strategy with the successful addition
of three major High Luxury Segment (HLS)
brand partners:
• McLaren dealership in Hatfield opened in
January 2018
• Two Bentley dealerships in Essex and Kent
opened in January 2018
• Two Lamborghini dealerships in Essex and
Kent opened in April and November 2018
respectively
4 Addition of Peugeot into Warrington to replace
Fiat in September 2018
4 Planned closure of the Group’s two bodyshop
operations, Alfa Romeo and Jeep in Chelmsford
and Mazda and Honda in Tunbridge Wells
to facilitate the addition of Bentley and
Lamborghini in both locations
4 Planned closure of the Group’s loss-making
Blackburn site which previously represented
Fiat, Alfa Romeo, Renault and Volvo
4 New vehicle unit sales were, as expected down
17.2% (like-for-like down 14.8%) given the wider
market softening, with the total financial impact
slightly offset by a 1.2% increase in profit per unit
as a result of the premium mix shift. The like-for-
like units saw margin pressure with profit per unit
down 2.6%
4 Used vehicle unit sales down 6.9% following
site closures (like-for like down 2.6%), offset
by a 11.6% (like-for like 6.3%) improvement
in profit per unit which reflects the Group’s
portfolio changes and the additional new HLS
brands
4 Aftersales Revenue increased 1.6% (like-for-like
increase 4.1%)
4 Continuing investment in the Freehold portfolio;
to increase operational capacity and achieve
site potentials
4 Swindon Jaguar Land Rover “Arch” retail
concept development completed in July 2018
4 Hatfield Jaguar Land Rover, Aston Martin and
McLaren development progressing well for
completion of Jaguar Land Rover in December
2018 and Aston Martin and McLaren in January
2019
4 Chelmsford and Tunbridge Wells Freeholds
completely redeveloped to deliver Bentley and
Lamborghini dealerships
5
Summary (continued)
Mark Lavery, Chief Executive Officer of Cambria said:
“The 2017/18 financial year has been a busy period across the Group and I am pleased with the progress that has
been made. The changes made in the Brand portfolio have led to significant disruption in our day to day operations
as we have closed these businesses and developed the new facilities for the new franchises. We have extended
our representation in the High Luxury segment with the addition of one McLaren, two Bentley and two Lamborghini
dealerships. All of these brands have been brought into the Group without the payment of goodwill and are exceptional
examples of value creation for our shareholders.
The year has also seen a difficult new car market that has been impacted by weakening consumer demand in the face of the uncertainty
around the Brexit negotiations, inconsistent messaging around the future of diesel engines and the impact on car supply from the change
in emissions testing regulations to WLTP (Worldwide Harmonised Light Vehicle Test Procedure) in September. We have also had to cope
with Government driven central cost increases including the Apprenticeship Levy, pension contributions, increases in debit and credit card
charges and increased property rating costs. Regrettably we have no control over these areas of cost increase.
That being said, our exceptional management team have worked incredibly hard and despite the uncertainty, disruption and brand portfolio
changes we have delivered a solid result at both the revenue and profit levels, in line with market expectation. Our strong used car profit
performance combined with growth in aftersales has been a significant contributor.
Current financial year trading has been in line with the Board’s expectations in September and October and we are excited about the
opening of our new Hatfield site which will house Jaguar Land Rover, Aston Martin and McLaren. This state of the art facility will be fully
operational in January 2019.
We are very enthusiastic about the potential for growth with our new McLaren, Bentley, Lamborghini and Peugeot businesses.
The Board remains confident that Cambria’s resilient business model, enhanced franchise portfolio, focus on delivering a superior
Guest experience and financing arrangements leave it well positioned to take advantage of any opportunities that the current economic
uncertainty will provide.”
6
Chairman’s statement
After what has been an incredibly busy year for the management team, I am pleased to report that Cambria has delivered another strong
set of results for the full year ended 31 August 2018, against a challenging consumer backdrop and significant uncertainty caused by
Brexit. The results show continued improvement in the Group’s used car and aftersales operations, along with successful delivery of its
stated strategy to enhance the franchise portfolio alongside the property investment programme. The Group, in its 12th year of trading,
delivered £9.8m of underlying pre-tax profit after absorbing losses for the site closures, whilst the like-for-like businesses generated
£10.9m of underlying pre-tax profit. Since its inception in 2006, the Group has only raised a total of £10.8m in capital and continues to
maintain an excellent return on shareholders’ funds.
The strategic acquisitions which the Group has delivered over the past four financial years have accelerated the Group’s growth and
created a solid foundation in the premium and high luxury segment giving Cambria a broader and enhanced franchised dealership portfolio
mix and bolstering its underlying earnings capacity.
As widely documented, the UK motor retail industry has weakened since March 2017 where it showed record registration figures. The
new car market in 2017 saw registrations fall to 2.54m from 2.69m in 2016. In the 10 month period to October 2018, the market is down
7.2% on the 2017 comparative. The biggest change in the market is in the diesel segment which is down 30.7% to October. The new car
market has been subject to a high level of disruption with changes to Vehicle Excise Duty, the supply-impacting WLTP regulation changes
and diesel demonization all playing a part. The emergence of Alternatively Fuelled Vehicles through battery electric vehicles and plug in
hybrid will undoubtedly play a significant role in the future of the new car market to meet stringent EU targets for emissions by 2021 and
2030. How this evolution will manifest itself and which manufacturers will be the winners is uncertain but there is significant capital being
invested by the manufacturers.
During the 2018 financial year, the Group has delivered a financial performance in line with both the Board and market expectations and
the expected weakness in the new car sales that was highlighted last year. The Group has reported operational improvements in the
past three financial years and, with the exception of new cars, these have continued into the 2017/18 financial year. On a total and like
for like basis, Cambria generated gross profit growth across the used car and aftersales departments, with only the new car department
experiencing a decline.
Group revenue decreased by 2.2% to £630.0m (2016/17: £644.3m). Underlying profit before tax fell by 13.3% to £9.8m (2016/17: £11.3m)
and the Group delivered underlying earnings per share of 7.84p (2016/17: 9.19p) - a decrease of 14.7%.
The Group closed the year with net debt of £5.5m (2016/17: net cash £6.1m) after significant capital investments of £23.8m of which
£19.8m was invested into the Group’s property portfolio. The Group has net assets of £56.6m (2016/17: £50.4m), underpinned by the
ownership of £64.3m (2016/17: £45.2m) of freehold and long leasehold properties.
Our capacity for making acquisitions, alongside the property development programme, was further enhanced in November 2017 with a
refinancing and extension of banking facilities to £40m plus a £20m accordion facility. These facilities refinanced the previous £37m of
total facilities with a £40m Revolving Credit Facility (“RCF”) with a five year term available for acquisitions and property purchase and
development.
Sadly, Sir Peter Burt, Non-Executive Director, passed away on 28 November 2017. Sir Peter had been a Non-Executive member of the
Cambria board since 2008 and was Chair of the Nomination Committee and a member of the Audit Committee and had made a significant
contribution to the Group’s creation and development. Sir Peter was a founding partner and formerly the Chairman of Promethean
Investments plc, which originally invested a total of £10.66 million in Cambria before the Group’s listing on AIM in 2010.
7
Chairman’s Statement (continued)
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. It has made good progress over the past four years in delivering on this strategy by acquiring
businesses and opening dealerships as follows:
• Barnet Jaguar Land Rover in July 2014
• Swindon Land Rover in April 2015
• Welwyn Garden City Land Rover in January 2016
• Aston Martin Birmingham in May 2016
• Woodford Jaguar Land Rover in July 2016
• Bentley in Essex and Kent in January 2018
• McLaren in Hatfield in January 2018
• Lamborghini in Chelmsford in April 2018
• Lamborghini in Tunbridge Wells in November 2018
The Group closed its Swindon Motor Park business in January 2016 in preparation for the development of the Jaguar Land Rover “Arch”
retail concept facility on the site.
To facilitate the development of the Chelmsford and Tunbridge Wells Bentley and Lamborghini sites, the Group closed two bodyshops
along with an Alfa Romeo and Jeep business in Chelmsford and a Honda and Mazda business in Tunbridge Wells.
The Group took the decision to close its loss-making Blackburn site in July 2018, the site formerly represented Fiat, Alfa Romeo, Renault
and Volvo. The site comprised a leasehold showroom for Fiat and Alfa Romeo and the break clause in the lease has been exercised. The
Renault and Volvo showrooms are owned freehold and are currently held for sale.
Following the refranchising activity outlined above, the Group now comprises 27 dealerships, representing 42 franchises and 17 brands,
a well-balanced brand portfolio spanning the high luxury, premium and volume segments.
The completion of the Swindon Jaguar Land Rover facility in July 2018 on the Group’s Long Leasehold premises facilitated the relocation of
Swindon Land Rover from the property in Royal Wootton Bassett to the new facility alongside Jaguar. The Royal Wootton Bassett freehold
site is now held for sale. Subsequent to the year end, the Group has secured the Freehold title of the land on which the development sits
from Swindon Borough Council. In the 2019 financial statements the Long Leasehold property will therefore be transferred to Freehold
property.
The major property development at Hatfield which is due to complete in January 2019 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 facilities will all comply with the manufacturers latest
brand standards.
These new franchising and property developments are exciting for the Group and demonstrate its commitment to developing the Premium
and High Luxury segment franchises in geographically strategic locations.
8
Chairman’s Statement (continued)
Dividend
The Board is pleased to propose a final dividend of 0.75p per share (2016/17: 0.75p), subject to shareholder approval, resulting in a total
dividend for the year of 1.0p per share (2016/17: 1.0p) – maintaining the prior year level.
Outlook
As I stated in my report last year, the UK economy remains in a period of uncertainty while the ramifications 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 fiscal levers. We are unclear as to how these factors will impact the UK motor trade although both a
weaker Sterling and any tariffs would undoubtedly have a detrimental effect on the new car market.
The team have done an incredible job by securing the addition of Bentley, Lamborghini, McLaren and Peugeot to the Group’s brand
portfolio. Whilst these businesses are very much in their infancy, the potential to contribute to the Group’s growth as they mature is
significant.
Cambria’s robust balance sheet, industry leading return on investment and proven management team leave it well positioned to manage
any uncertainty that the broader market creates. We are actively looking to deliver on our commitments to the Brand partners that we
represent with our investment programme to enhance our property portfolio and are excited about the opening of our Hatfield development
in the coming months.
The Board is pleased with the progress that has been made and intends to continue to exploit selective growth opportunities while driving
the core operation of the existing businesses.
Philip Swatman
Chairman
Cambria
9
Operating and financial review
Chief Executive Officer’s review
Introduction
I am pleased to report that the Group has delivered a solid set of results for the 2018 financial year in line with management and market
expectations. The performance was delivered alongside significant franchising additions, changes, closures and site developments. Whilst
the results are behind those achieved in 2017, in the context of the weaker new car market and the significant amounts of disruption in the
sector and our own business, I am pleased with the performance for the year.
The table below summarises our financial performance, which is detailed in the Finance Director’s Report:
Year ended 31 August
Revenue
Underlying EBITDA*
Underlying operating profit*
Underlying profit before tax*
Underlying profit before tax margin*
Net Non-recurring income/ (expenses)
Underlying earnings per share*
Operating profit
Profit before tax
Earnings per share (basic)
Dividend per share
2018
£m
630.0
13.3
10.9
9.8
1.6%
(0.7)
7.84p
10.2
9.1
7.27p
1.0p
2017
£m
644.3
13.7
11.8
11.3
1.8%
-
9.19p
11.8
11.3
9.18p
1.0p
Change
-2.2%
-2.9%
-7.8%
-13.3%
-20bps
-14.7%
-13.6%
-19.3%
-20.8%
* These items exclude net non-recurring expenses of £0.7m relating to the refranchising activity and site closures (2017: (nil))
10
Operating and Financial Review (continued)
The Group celebrated its 12th anniversary in July 2018. During those 12 years the Group has grown from one site with three new car
franchises to 27 locations representing 42 new car franchises and 17 different Brand partners. The Group has utilised a total of £10.8m
of Share Capital to grow and has delivered an underlying Profit before Tax of £9.8m in the 2018 financial year. During the year, the Group
delivered a return on shareholder funds of 14.7%. The Group has consistently delivered strong operational cash flows and has built a net
asset position of £56.6m underpinned by over £64m of freehold and long leasehold property. The Group has developed an exceptional
franchise portfolio which has been enhanced further during 2018 through delivery of our property investments and the addition of Bentley,
Lamborghini, McLaren and Peugeot 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 those acquired and established in the previous year, making significant 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
Bentley
Jaguar
Lamborghini
Land Rover
McLaren
Volvo
Volume
Abarth
Fiat
Ford
Honda
Jeep
Mazda
Nissan
Peugeot
Vauxhall
3
2
5
2
4
1
4
21
Motorcycle
Triumph
2
3
5
1
1
3
1
1
2
19
2
2
The Group’s acquisition strategy evolved in 2013 to enhance our Premium and High Luxury brand representation which immediately
focused on participating in the Jaguar Land Rover (“JLR”) network restructuring. In January 2017 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. 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 acquired a 4.3
acre development site on Hatfield Business Park. The building work began in January 2018 with the creation of the temporary showroom
facility for McLaren to begin its representation on the site. The major building work has been underway through the year and the site will
be ready for occupation of the Jaguar Land Rover facility in December 2018 and the Aston Martin and McLaren facilities in January 2019.
The capital cost of the newly developed facility for the four franchises is c.£17.0m. The acquisition and development of the land is being
funded through the Group’s existing cash and RCF facilities secured against the freehold property.
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 define 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
RCF facility. Due to delays in the highways works being completed, it is now anticipated that work to the dealership will begin in Q2 2019.
In July 2017, 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.
11
Operating and Financial Review (continued)
During the 2015 financial year the Group acquired the Swindon Land Rover business. During the year the Group has re-developed its
Swindon Motor Park, long leasehold location to provide a new JLR facility in line with the new Arch design concept for JLR facilities.
Following completion of the development, the Land Rover business has re-located from the previous dealership property in Royal Wootton
Bassett. The build cost for the facility was £6.6m, and this was funded from the Group’s existing cash and new RCF facility. We are actively
selling the Royal Wootton Bassett freehold property at present and have exchanged on the sale of the freehold subject to planning consent
and expect to realise £2.75m. Post year end, we have acted on the opportunity to acquire the freehold title of the 3.2 acres of land that we
occupied under a long leasehold interest. Given the structure of the rent review clause in the long lease over 3.2 acres and the beneficial
impact on site value arising through freehold ownership, we decided to acquire the freehold title and completed on the purchase for £2.3m
in October 2018.
The Group was given the opportunity to
establish two new Bentley dealerships and
two new Lamborghini dealerships in Essex
and Kent and during the year we fully
redeveloped both our Chelmsford and
Tunbridge Wells facilities for these brands.
The developments utilised existing Group
freehold premises and have enhanced
the value of both properties. The total
project cost for both developments was
£1.94m.
Whilst the investments outlined above
are significant, the Board believes that
the investment in the facilities for JLR,
Aston Martin, Bentley, Lamborghini
and McLaren are core to the future
potential of the Group. The investment
into the property portfolio in
strategic, high profile locations
will hold the Group in good
stead to provide exceptional
representation for its brand
partners and a world class
Guest experience.
Preston
Bolton
Bury
Oldham
Warrington
Birmingham
Wellingborough
Northampton
Woburn
Swindon
12
Automobiles plc
Locations across the UK
Hatfield
Hatfield
Welwyn Garden City
Brentwood
Chelmsford
Chelmsford
Barnet
Woodford
Wimbledon
Croydon
Southampton
Thanet
Canterbury
Ashford
Maidstone
Tunbridge
Wells
Gatwick
Gatwick
Horsham
Operating and Financial Review (continued)
Operations
New vehicles
Used vehicles
Aftersales
Internal sales
Total
Administrative expenses
Operating profit before non-
recurring expenses
Non-recurring income/
(expenses)
Operating profit
New Vehicle Sales
New units
2018
2017
Revenue
Revenue
mix
Gross
Profit
Margin
Revenue
Revenue
mix
Gross
Profit
Margin
£m
290.6
279.1
72.5
(12.2)
630.0
%
46.1
44.3
11.5
(1.9)
100.0
£m
18.0
24.6
28.5
-
71.1
(60.2)
10.9
(0.7)
10.2
%
6.2
8.8
39.4
-
11.3
£m
308.7
277.3
71.4
(13.1)
644.3
%
47.9
43.0
11.1
(2.0)
100.0
%
6.9
8.5
38.9
-
11.3
£m
21.3
23.5
27.8
-
72.7
(60.9)
11.8
-
11.8
2018
9,158
2017
Year on year growth
11,052
(17.1)%
New vehicle revenue decreased from £308.7m to £290.6m (5.9%) and total new vehicle sales volumes were down 17.1%. Excluding the impact of
the acquisitions and disposals, our new volumes reduced by 14.8% on a like-for-like basis. Gross profit decreased by £3.3m (10.4%) in total and
by £3.3m on a like-for-like basis. The reduced new vehicle volumes were partially offset by an improvement in the gross profit per unit sold which
increased by 1.2%, a direct reflection of strengthening mix from the business additions which sell at higher price points.
The new car business has gone through a significant period of disruption with the closure or development of eight of the Group’s franchise
outlets; which has caused significant disruption in the day to day operations. However, the addition of two Lamborghini, two Bentley, one
McLaren and one Peugeot franchise, will make a major contribution to the Group’s growth plans as these new franchises mature.
On a like-for-like basis, excluding the impact of the additions and closures, our new volumes reduced by 14.8% with gross profit reducing by
£3.3m as profit per unit also decreased by 2.6%. The like-for-like volume reduction was attributable to reductions in unit sales from certain
volume manufacturer partners who have experienced significant reduction in national registrations.
The Group’s sale of new vehicles to private individuals was 17.3% lower year-on-year at 7,751 units, reflecting the volume reduction that we
anticipated. New commercial vehicle sales improved by 1.8% to 970 units in the period. New fleet unit vehicle sales decreased by 41.5%
to 433 units.
The new vehicle registration data from the Society of Motor Manufacturers & Traders showed total registrations were down 6.8% in the
rolling 12 month period to August 2018. The registration of cars to private individuals was down 4.7% for the rolling 12 months. The sale of
diesel engine vehicles has been hardest hit as a result of the negative media coverage around diesel engine emissions, and in the period,
sales of diesel vehicles were down 27.8%.
Used Vehicle Sales
Used units
2018
13,739
2017
Year on year growth
14,765
(6.9)%
We have delivered another good performance in used vehicle sales. Revenues increased from £277.3m to £279.1m whilst the number of
units sold declined by 6.9%, partly driven by the site closures. The gross profit on used vehicles increased by £1.1m to £24.6m, with profit
per unit sold increasing 11.6%.
On a like-for-like basis, volumes were down 2.6% while the gross profit generated increased by £1m (4.7%) with profit per unit increasing by 6.3%.
13
Operating and Financial Review (continued)
We have continued our focused strategy in the used car department to increase the efficiency 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 profitability of the
used car department. During the period, this strategy continued to deliver a strong 12 month rolling return on used car investment* of 125%.
This level was reduced from the 129% achieved last year, but reflects the increase in the average carrying value of the stock following the
higher representation of premium and High Luxury vehicles that are sold through the new businesses and removal of the high volume, lower
value product sold from the closed businesses. The ROI performance at 125% remains significantly ahead of the industry average of 85%.
* gross profit from used car operation over 12 months as a proportion of average stock levels for the year
Aftersales
Aftersales Revenue
2018
72.5m
2017
Year on year growth
£71.4m
1.5%
Combined aftersales revenue increased 1.5% year on year from £71.4m to £72.5m and related gross profit increased to £28.5m from
£27.8m. Like-for-like aftersales revenues were 4.1% higher year on year, with gross profit improving 5.7% to £26.8m, up £1.4m.
The aftersales departments contributed 11.5% of the Group’s revenue, and 40.1% of the Group’s overall gross profit. The aftersales
margin was improved in the year as a result of the increase in labour hours sold.
The Group continues to review its processes for ensuring that we engage with all of 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 the increase in new car sales experienced over the previous years produces cars
ready for interaction with our aftersales operations.
Total underlying administrative expenses remained well controlled during the year and as a percentage of revenue remained at 9.57%,
demonstrating good overhead recovery and strong capital disciplines as the Group continues to grow despite significant pressures on cost
resulting from central government initiatives.
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 and new franchise openings
are firmly in line with this strategy.
We have now completed 15 separate transactions since our incorporation. Following any acquisition, the Cambria management team
implements new financial and operational controls and processes in order to rationalise, restructure and develop each individual dealership.
A culture of delivering a world class Guest experience is ingrained into the business through the Cambria Academy training programme.
This tailored approach ensures the changes made to each dealership are sustainable and create shareholder value through achieving an
appropriate contribution for the level of investment.
We will continue with our three step approach to purchasing a new business - acquisition, integration and operation, as outlined below:
Acquisition
When acquiring new businesses, we are diligent in ensuring that none of the contractual obligations taken on upset the integrity of our
balance sheet. This includes ensuring that leases reflect market value and that any unusual contractual obligations are addressed prior to
acquisition in order to avoid taking on any legacy costs. We do not have any defined benefit pension schemes. We have always taken the
approach that Cambria will not acquire any business unless there is a strong underlying business case to do so and our acquisitions have
been funded from our own cash resources and banking facilities. All acquisitions and 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 returns on equity.
14
Operating and Financial Review (continued)
Integration
The integration process of every new dealership starts with an Associate engagement evening where our senior management present
the Cambria “Four Pillar” culture change programme. After this meeting, the Group integration team implements systems, processes and
procedures to improve legislator compliance including FCA and Health & Safety. Newly acquired Associates are transferred to Cambria
employment contracts with compensation and benefits commensurate with the particular business. An analysis of training needs is
conducted, followed by the implementation of training programmes for all relevant Associates in the new business.
Operation
With any new acquisition, the standard financial controls are implemented immediately, ranging from individual cheque signatories to daily
reporting of vehicle sales and aftersales revenues, margins and other performance figures. We then implement our two growth strategies
“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 to support the business and development needs of the Group. The initial training programmes for the sales teams have been
supplemented with induction programmes and specific telephone handling courses to ensure that we increase the competency of all our
Associates in dealing with Guest enquiries effectively.
The Academy was established to enhance the Cambria Guest Experience with the key strategic objective: “To deliver an outstanding
experience making it easy for our Guests to buy, own and maintain their vehicle, ensuring that they will want to do so again and recommend
us to others.”
We will continue to enhance and refine the Academy to help develop our own talent pool, promote Associate retention and to create our
own future management with the overriding objective of enhancing the Guest Experience when interacting with Cambria.
Outlook
The new car market in 2018 will see a further reduction on 2017, with current SMMT forecasts at 2.38m, 11.5% down on the record 2.69m
registrations of 2016.
There is little doubt that market sentiment has been impacted since the EU referendum vote in 2016. With the current weakness in the
sterling exchange rate, there is ongoing downward pressure on the number of cars registered in the UK as the manufacturer landed cost
of imported cars and components increases. Diesel engine vehicles have received the largest negative impact with a significant amount
of negative media coverage and clear political positioning in relation to diesel vehicle emissions.
Whilst the 2018 financial year delivered a solid set of results, as a result of the uncertainty in the economic outlook, the Board remains
cautious about the new car trading environment in 2019. Post the period end, September and October trading were in line with the Board’s
expectations and the previous year, supported by strong performances in our used car and aftersales operations.
We are enthusiastic about the potential for growth with our new McLaren, Bentley, Lamborghini and Peugeot businesses.
We have continued to make significant achievements in progressing both our property portfolio and franchising strategy are the Board is
excited about the opportunities that exist with both our existing and new Brands.
Mark Lavery
Chief Executive
15
Operating and Financial Review (continued)
Finance Director’s Report
Overview
Total revenues in the period decreased 2.2% to £630.0m from £644.3m in the prior year. New vehicle unit volumes were down 17.1% and
new vehicle revenues were down 5.8%. Used car sales increased by 1.1% although units reduced by 6.9%. Revenues from the aftersales
businesses increased by 1.5%, compared with the previous year.
Total gross profit decreased by £1.6m (2.2%) from £72.7m to £71.1m in the year. Gross profit margin across the Group remained consistent at
11.3%, reflecting the change in revenue mix with improvements in used cars and aftersales margins offsetting a reduction in new car margin.
The average selling price of both new and used cars increased year on year, as did the average profit per new and used units that we sold.
The aftersales operations contributed 40.1% of the total gross profit for the Group. The gross profit contribution made by the used car and
aftersales components of the business accounted for 74.7% of the Group’s total gross profit mix.
During the year, the Group has non-recurring net expenses of £0.7m. These related to the closure costs of Blackburn, the two bodyshops
and the Chelmsford and Tunbridge Wells businesses for the refranchising activity.
Underlying EBITDA was £13.3 in the period from £13.7m in the previous year. Underlying operating profit was £10.9m, compared with £11.8m
in the previous year, resulting in an underlying operating margin of 1.6% (2016/17: 1.8%).
Net finance expenses increased to £1m (2016/17: £0.5m) as a result of the increased borrowing to fund the property developments and
increased consignment stocking charges.
The Group’s underlying profit before tax reduced by 13.3% to £9.8m, compared with £11.3m in the previous year.
Underlying earnings per share were 7.84p (2016/17: 9.19p). Basic earnings per share were 7.27p (2016/17: 9.18p) and the Group’s underlying
return on shareholders’ funds for the year was 14.7% (2016/17: 19.87%).
Taxation
The Group tax charge was £1.9m (2016/17: £2.1m) representing an effective rate of tax of 20.3% (2016/17: 18.4%) on a profit before tax of
£9.1m (2016/17: £11.3m). As outlined in last year’s report, it is anticipated that the tax rate will continue at a substantially normal effective
tax rate.
Financial position
The Group has a robust balance sheet with a net asset position of £56.6m underpinned by £64.3m of freehold and long leasehold property
which are held on a historic cost basis.
In November 2017, the Group refinanced the Banking facilities and as a result, the revised £40m Revolving Credit Facility has no fixed capital
repayment profile throughout its 5 year term. There is a £20m accordion agreement available in the facility if the Group seeks to enhance its
borrowing capacity.
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 debt position of the Group as at 31 August 2018 was £5.5m (2016/17: net cash £6.1m), reflecting a cash position of £15.5m (2016/17:
£23m). This is after the £23.8m 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 fluctuations in working
capital. The overdraft facilities are renewable annually and are next due in September 2019.
16
Operating and Financial Review (continued)
Cash flow and capital expenditure
The Group generated an operating cash inflow of £13.2m with working capital reducing by £3.0m through efficient management of the vehicle
inventory and the stocking lines associated with that inventory together with higher levels of new vehicle deposits for new car orders for
September delivery. Total funds invested in capital expenditure were £23.8m. In the year, the Swindon development incurred £6.6m of capex
to complete the project, the Hatfield development incurred £5.7m for the land purchase and £5.4m on the development. The Chelmsford and
Tunbridge Wells property developments amounted to £1.9m. Including the fitout cost of Swindon and the Tunbridge Wells and Chelmsford
developments, there were fixtures, fittings plant and machinery additions of £3.7m and computer expenditure of £0.2m.
During the year, prior to the refinancing capital repayment of £0.3m were made. There has been a further draw down of £4.5m during the year.
As a result of the net cash outflow of £7.5m, the gross cash position was £15.5m with gross debt of £21m and overall net debt of £5.5m after
significant investment, compared with net cash at 31 August 2017 of £6.1m.
Capital expenditure commitments
As outlined in the Chief Executive’s report, the Group has committed to delivering property solutions to ensure the acquired businesses
comply with the franchise standards for its Brand partners. The significant investments in the 2018 financial year delivered on committed
projects. Over the coming 24 months the Group intends to complete the following major freehold investments; Swindon land freehold
purchase at £2.3m Hatfield JLR, Aston Martin and McLaren completion at c.£6m and Solihull Aston Martin at c.£5m. The developments will
be funded through a drawdown of 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 defined benefit pension schemes and has no liability arising from any such scheme. The Group made
contributions amounting to £0.4m (2016/17: £0.3m) to defined contributions schemes for certain employees.
Financial instruments
The Group does not have any contractual obligation under any financial instruments with respect to the hedging of interest rate risk.
Dividends
The Board is pleased to propose a final dividend payment in respect of the financial year to 31 August 2018 of 0.75p per share in addition
to the interim dividend of 0.25p per share paid in May 2018. If approved by the shareholders at the Annual General Meeting to be held on 4
January 2019, the dividend will be payable on 21 January 2019 to those shareholders registered on 28 December 2018, with an ex-dividend
date of 27 December 2018. 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
Date: 20 November 2018
17
Strategic report
Enhanced Business Review
All details required are covered in the Chairman’s Statement and the Operating and Financial Review between pages 3 and 16.
Cambria Business Philosophy
Cambria’s culture – The Four Pillars
The Group works hard to instil a group culture. This culture is built around four pillars which are:
Pillar One - Associate delight
The Directors believe that Associates are the Company’s most important asset and therefore members of the team are not referred to as
members of staff or employees, but rather as “Associates”. The Directors want all Associates to be proud to be associated with the Group
and to be given the autonomy to make decisions that affect the running of “their” business. The Directors promote internal development
and foster a culture whereby Associates feel they can achieve their career aspirations with Cambria. Equally, Cambria invests in its
Associates in order for them to achieve their full potential within the Group.
Pillar Two - Guest delight
Cambria Associates are encouraged to treat all customers at all times, in the way that they would treat a guest visiting their own home.
The Directors believe that Associate empowerment is key to achieving this goal and the Directors believe that the organisation must be
transparent and open at all times generating empathy with the diverse guest base of the Group.
Pillar Three - Brand delight
The Group’s goal is to become the retailer of choice for all of the automotive manufacturers that it represents. This pillar focuses on
achieving the following goals:
• brand vehicle sales objectives
• brand part sales objectives
• top half placing in brand customer satisfaction surveys
• the development of a trusting relationship with brand personnel from the manufacturer partners
Pillar Four - Stakeholder delight
The Group aims to provide satisfaction to its Stakeholders. It seeks to achieve this through:
• disclosing timely and accurate information providing Stakeholders with a detailed understanding of business performance; and
• communicating openly and transparently.
18
Strategic report (continued)
Primary Risks
The primary risk to the Group is the volatility in the new and used car markets and the changes made by our manufacturer brand partners
to the pricing and margin structure on the new vehicles that we sell.
The Group uses a variety of financial instruments including cash, borrowings and various items, such as trade debtors and trade creditors
that arise directly from its operations. The main purpose of these financial instruments is to provide working capital for the Group’s
operations.
The Directors are of the view that the main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, price risk
and credit risk. The Directors set and review policies for managing each of these risks and they are summarised below. These policies have
remained unchanged from previous years.
Interest rate risk
The Group finances its operations through a combination of bank funding and shareholders’ funds. The interest rate on bank funding is
variable with the base rate.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets
safely and profitably. The funding for significant new ventures is secured before commitments are made. Cash flows are monitored on a
monthly basis.
Price risk
The principal price risks arise from vehicle stocks which are either inappropriate for resale, or are bought at too high a price, relative to a
fast moving marketplace. The Group’s purchasing staff are trained and developed to be aware of the current marketplace. They are also
provided with all the latest available market data. The managers of each business unit consider their stock books and purchasing patterns
on a very regular basis, with a higher level of review by the Directors.
Credit risk
The principal credit risk arises from trade debtors. In order to manage credit risk, the Directors set limits for customers and ensure a
regular review is made of trade debtors outstanding. Credit limits are reviewed on a regular basis in conjunction with debt ageing and
collection history.
All potential areas of financial risk are monitored regularly and reviewed by the Directors and local management. Any preventative or
corrective measures are taken as necessary.
Associate involvement
During the year, the policy of providing Associates with information about the Group has been continued through internal media methods
in which Associates have also been encouraged to present their suggestions and views on the Group’s performance. Regular meetings
are held between local management and Associates to allow a free flow of information and ideas.
Through implementing tight controls and building a strong operational Group infrastructure, the Directors believe they are taking all
possible steps to protect the business.
By order of the board
James Mullins
Director
Date: 20 November 2018
Dorcan Way, Swindon, SN3 3RA
19
Directors’ report
The Directors present their Directors’ report and financial statements for the year ended 31 August 2018.
Principal activities
Cambria’s principal activities are the sale and servicing of motor vehicles and the provision of ancillary services. The Group operates from
27 sites with a total of 42 dealer franchises.
Proposed dividend
The Directors recommend the payment of a final dividend for 2018 of 0.75p per share which equates to £0.75m (2017: £0.75m). If
approved at the Annual General Meeting to be held on 4 January 2019, the dividend will be payable on 21 January 2019 to those
shareholders registered on 28 December 2018.
Directors
The Directors who held office during the year were as follows:
P H Swatman
M J J Lavery
M W Burt
J A Mullins
Sir P A Burt (deceased 28 November 2017)
T A Duckers
P McGill
W F Charnley
All Directors benefited from qualifying third party indemnity provisions in place during the financial period.
The Board announced that it has been informed that Sir Peter Burt, Non-Executive Director, passed away on 28 November 2017. Sir Peter
had been a Non-Executive member of the Cambria board since 2008 and was Chair of the Nomination Committee and a member of the
Audit Committee. Sir Peter was a founding partner and formerly the Chairman of Promethean Investments plc, which originally invested a
total of £10.66 million in Cambria.
Associates
The Group recognises the benefit of keeping Associates informed of group affairs and the views of Associates are given full consideration
at regular meetings with their representatives.
Full and fair consideration is given to the employment of disabled persons, who are treated no differently from other Associates as
regards recruiting, training, career development and promotion opportunities. For people who may become disabled, in the course of
employment, the Group will make every effort to accommodate them in suitable alternative employment.
Political and charitable contributions
During the year, the Company made no charitable donations.
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during the year (2017: £nil).
Disclosure of information to auditor
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no
relevant audit information of which the Company’s auditor is unaware; and each director has taken all the steps that he ought to have
taken as a director to make himself aware of any relevant audit information and to establish that the Company’s auditor is aware of that
information.
Auditor
In accordance with Section 489 of the Companies Act 2006, a resolution for the re-appointment of KPMG LLP as auditor of the Company
is to be proposed at the forthcoming Annual General Meeting.
By order of the board
James Mullins
Director
Date: 20 November 2018
20
Dorcan Way, Swindon, SN3 3RA
Statement of directors’ responsibilities in respect of the Annual Report and the
financial statements
The Directors are responsible for preparing the Annual report and the Group and parent company financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and parent company financial statements for each financial year. As required by
the AIM rules of the London Stock Exchange they are required to prepare the group financial statements and Operating and Financial
Review in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial
statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including
FRS101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and parent company and of their profit or loss for that period.
In preparing each of the Group and parent company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU
• for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any
material departures disclosed and explained in the parent company financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s
website. Legislation in the UK governing the preparation and dissemination of the financial statements may differ from legislation in
other jurisdictions.
21
Independent
Independent
Independent
auditor’s report
auditor’s report
auditor’s report
to the members of Cambria Automobiles plc
to the members of Cambria Automobiles plc
to the members of Cambria Automobiles plc
Overview
Overview
Overview
Materiality:
Materiality:
Materiality:
group financial
group financial
group financial
statements as a
statements as a
statements as a
whole
whole
whole
Coverage
Coverage
Coverage
£0.46m (2017:£0.57m)
£0.46m (2017:£0.57m)
£0.46m (2017:£0.57m)
5% (2017: 5%) of group profit
5% (2017: 5%) of group profit
before tax
before tax
5% (2017: 5%) of group profit
before tax
100% (2017: 100%) of group
100% (2017: 100%) of group
profit before tax
profit before tax
100% (2017: 100%) of group
profit before tax
vs 2017
vs 2017
Risks of material misstatement
Risks of material misstatement
Risks of material misstatement
Recurring risks Goodwill valuation
Recurring risks Goodwill valuation
Recurring risks Goodwill valuation
vs 2017
▲
▲
▲
Revenue recognition
Revenue recognition
Revenue recognition
Recoverability of
Recoverability of
Recoverability of
parent’s debt due from
parent’s debt due from
group entities
parent’s debt due from
group entities
group entities
▲
▲
▲
◄►
◄►
◄►
1. Our opinion is unmodified
1. Our opinion is unmodified
1. Our opinion is unmodified
In our opinion:
We have audited the financial statements of
We have audited the financial statements of
We have audited the financial statements of
Cambria Automobiles plc (“the Company”) for the
Cambria Automobiles plc (“the Company”) for the
Cambria Automobiles plc (“the Company”) for the
year ended 31 August 2018 which comprise the
year ended 31 August 2018 which comprise the
year ended 31 August 2018 which comprise the
consolidated statement of comprehensive income,
consolidated statement of comprehensive income,
consolidated statement of comprehensive income,
consolidated statement of changes in equity,
consolidated statement of changes in equity,
consolidated statement of changes in equity,
consolidated statement of financial position,
consolidated statement of financial position,
consolidated statement of financial position,
consolidated cash-flow statement, company
consolidated cash-flow statement, company
consolidated cash-flow statement, company
balance sheet, company statement of changes in
balance sheet, company statement of changes in
balance sheet, company statement of changes in
equity, and the related notes, including the
equity, and the related notes, including the
equity, and the related notes, including the
accounting policies in note 1.
accounting policies in note 1.
accounting policies in note 1.
In our opinion:
In our opinion:
— the financial statements give a true and fair
— the financial statements give a true and fair
— the financial statements give a true and fair
view of the state of the Group’s and of the
view of the state of the Group’s and of the
view of the state of the Group’s and of the
parent Company’s affairs as at 31 August 2018
parent Company’s affairs as at 31 August 2018
parent Company’s affairs as at 31 August 2018
and of the Group’s profit for the year then
and of the Group’s profit for the year then
and of the Group’s profit for the year then
ended;
ended;
ended;
— the group financial statements have been
— the group financial statements have been
properly prepared in accordance with
— the group financial statements have been
properly prepared in accordance with
International Financial Reporting Standards as
properly prepared in accordance with
International Financial Reporting Standards as
adopted by the European Union (IFRSs as
International Financial Reporting Standards as
adopted by the European Union (IFRSs as
adopted by the EU);
adopted by the European Union (IFRSs as
adopted by the EU);
adopted by the EU);
— the parent Company financial statements have
— the parent Company financial statements have
been properly prepared in accordance with with
— the parent Company financial statements have
been properly prepared in accordance with with
UK accounting standards, including FRS 101
been properly prepared in accordance with with
UK accounting standards, including FRS 101
Reduced Disclosure Framework; and
UK accounting standards, including FRS 101
Reduced Disclosure Framework; and
Reduced Disclosure Framework; and
— the financial statements have been prepared in
— the financial statements have been prepared in
accordance with the requirements of the
— the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006.
Companies Act 2006.
accordance with the requirements of the
Companies Act 2006.
Basis for opinion
Basis for opinion
We conducted our audit in accordance with
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities are
described below. We have fulfilled our ethical
(UK)”) and applicable law. Our responsibilities are
described below. We have fulfilled our ethical
responsibilities under, and are independent of the
described below. We have fulfilled our ethical
responsibilities under, and are independent of the
Group in accordance with, UK ethical requirements
responsibilities under, and are independent of the
Group in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to
Group in accordance with, UK ethical requirements
including the FRC Ethical Standard as applied to
listed entities. We believe that the audit evidence
including the FRC Ethical Standard as applied to
listed entities. We believe that the audit evidence
we have obtained is a sufficient and appropriate
listed entities. We believe that the audit evidence
we have obtained is a sufficient and appropriate
basis for our opinion.
we have obtained is a sufficient and appropriate
basis for our opinion.
basis for our opinion.
Basis for opinion
Independent
auditor’s report
to the members of Cambria Automobiles plc
Overview
Materiality:
group financial
statements as a
whole
£0.46m (2017:£0.57m)
5% (2017: 5%) of group profit
before tax
Coverage
100% (2017: 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 2018 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 2018
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 (IFRSs as
adopted by the EU);
— the parent Company financial statements have
been properly prepared in accordance with 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 2017):
The risk
Our response
Goodwill
Forecast based valuation:
Our procedures included:
£21.3 million;
(2017: £21.3 million)
Refer to page 30 accounting
policy) and page 43 (financial
disclosures).
Goodwill is significant and at risk of
irrecoverability due to weakening
demand within the new and used car
markets. The estimated recoverable
amount is subjective due to the inherent
uncertainty involved in forecasting and
discounting future cash flows.
— Benchmarking assumptions: comparing
the key assumptions (discount rate, growth
rate) used to externally derived data;
— Historical comparisons: comparing the
previously forecast cash flows to actual
results to assess the historical accuracy of
forecasting;
— Sensitivity analysis: performing analysis to
assess the sensitivity of the goodwill to
changes in the key assumptions of the
discount rate, growth rate and the forecast
cash flows;
— Assessing transparency: assessing
whether the group’s disclosures about the
sensitivity of goodwill to changes in key
assumptions reflected the risks inherent in
its valuation.
Revenue – sale of goods
2018/2019 sale of goods:
Our procedures included:
£569.9 million;
(2017: £586.0 million)
Refer to page 29 (accounting
policy) and page 36 (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 in respect
of vehicle sales.
— Control design and re-performance: we
tested controls relating to the sales process,
assessing whether revenue is recognised in
the period in which customer acceptance of
the vehicles is obtained;
— Test of details: with reference to customer
acceptance documentation, 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 material corrections relating
to 2018;
— Assessing manual journal postings: we
inspected a selection of manual revenue
journal postings during the month of August
to identify any indicators of management
fraud or bias.
Recoverability of parent’s debt
due from group entities
£18.7 million;
(2017: £18.8 million)
Refer to page 63 (accounting
policy) and page 68 (financial
disclosures).
Low risk, high value:
Our procedures included:
The carrying amount of the intra-group
debtor balance represents 88% 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
components, as part of the Group audit, and
considering the results of that work on their
profits and net assets and therefore their
ability to fund the repayment of the
receivables.
3. Our application of materiality and an overview
of the scope of our audit
Group profit before taxation
£9.1m (2017: £11.3m)
Group Materiality
£0.46m (2017: £0.57m)
Materiality for the group financial statements as a
whole was set at £0.46 million (2017: £0.57 million)
determined with reference to a benchmark of group
profit before taxation, of which it represents 5.0%
(2017: 5.0% determined with reference to a
benchmark of group profit before taxation,
normalised to exclude impairment of trade
receivables).
Materiality for the parent company financial
statements as a whole was set at £0.34 million
(2017: £0.21 million), determined with reference to
a benchmark of total assets, of which it represents
1.4% (2017: 1.0%).
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £0.02 million (2017: £0.03 million), in
addition to other identified misstatements that
warranted reporting on qualitative grounds.
All of the group’s thirteen (2017: twelve)
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% (2017: 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 £0.34 million (2017: £0.02 million to
£0.40 million), having regard to the mix of size and
risk profile of the group across these components.
£0.46m
Whole financial
statements materiality
(2017: £0.57m)
£0.4m
Range of materiality at fourteen
components £0.02m to £0.34m
(2017: £0.02m to £0.40m)
Group PBT
Group materiality
£0.02m
Misstatements reported to the
audit committee (2017:
£0.03m)
Group revenue
Group profit before tax
100%
(2017 100%)
100
100
100%
(2017 100%)
100
100
Group total assets
100%
(2017 100%)
100
100
Key:
Full scope for group audit purposes 2018
Full scope for group audit purposes 2017
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.
Derek McAllan (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
66 Queen Square
Bristol
BS1 4BE
20 November 2018
Consolidated statement of comprehensive income
for year ended 31 August 2018
Revenue
Cost of sales
Gross profit
Administrative expenses
Results from operating activities
Finance income
Finance expenses
Net finance expenses
Profit before tax from operations before non-recurring income/
(expenses)
Net non-recurring income and expenses
Profit before tax
Taxation
Profit and total comprehensive income for the period
Basic and diluted earnings per share
Note
3
4
4
9
9
5
4
10
8
All comprehensive income is attributable to owners of the parent company.
2018
£000
630,065
(558,944)
71,121
(60,969)
10,152
74
(1,102)
(1,028)
9,827
(703)
9,124
(1,853)
7,271
7.27p
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
26
Consolidated statement of changes in equity
for year ended 31 August 2018
Balance at 31 August 2016
Profit for the year
Dividend paid
Balance at 31 August 2017
Profit for the year
Dividend paid
Balance at 31 August 2018
Note
Share capital Share premium Retained earnings
Total equity
£000
£000
£000
£000
10,000
-
-
10,000
-
-
10,000
799
-
-
799
-
-
799
31,327
9,180
(950)
39,557
7,271
(1,000)
42,126
9,180
(950)
50,356
7,271
(1,000)
45,828
56,627
21
27
Consolidated statement of financial position
at 31 August 2018
Non-current assets
Property, plant and equipment
Intangible assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Property assets classified as held for resale
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
Deferred tax liability
Total liabilities
Net assets
Equity attributable to equity holders of the parent
Share capital
Share premium
Retained earnings
Total equity
Note
11
12
14
15
16
17
18
19
18
21
22
2018
£000
67,050
21,501
2017
£000
49,321
21,365
88,551
70,686
89,675
11,442
15,517
3,195
105,419
12,428
23,046
-
119,829
140,893
208,380
211,579
-
(128,794)
(721)
(1,000)
(142,498)
(801)
(129,515)
(144,299)
(21,053)
(1,000)
(185)
(15,883)
(1,000)
(41)
(22,238)
(16,924)
(151,753)
(161,223)
56,627
50,356
10,000
799
45,828
10,000
799
39,557
56,627
50,356
These financial statements were approved by the board of directors on 20 November 2018 and were signed on its behalf by:
M J J Lavery
Director
28
Company registered number: 05754547
Consolidated cash flow statement
for year ended 31 August 2018
Notes
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation, amortisation and impairment
11/12
Financial income
Financial expense
Loss on disposal of fixed assets
Taxation
Non-recurring (income)/expenses
Change in trade and other receivables
Change in inventories
Change in trade and other payables
9
9
10
5
Interest paid
Tax paid
Non-recurring expenses
5
Net cash from operating activities
Cash flows from investing activities
Interest received
Proceeds from sale of plant and equipment
Receipt of insurance claim settlement
Purchase of property, plant and equipment and software
Net cash from investing activities
Cash flows from financing activities
Proceeds from new loan
Interest paid
Repayment of borrowings
Dividend paid
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 September 2017
Cash and cash equivalents at 31 August 2018
5
11/12
22
16
16
2018
£000
7,271
2,481
(74)
1,102
74
1,853
703
13,410
986
15,744
(13,704)
16,436
(785)
(1,790)
(703)
13,158
74
136
-
(23,750)
(23,540)
4,500
(317)
(330)
(1,000)
2,853
(7,529)
23,046
15,517
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
29
Notes
(forming part of the financial statements)
1 Accounting policies
Cambria Automobiles plc is a company which is quoted on the AIM Market of the London Stock Exchange plc and is incorporated and
domiciled in the United Kingdom. The address of the registered office is Swindon Motor Park, Dorcan Way, Swindon, SN3 3RA. The
registered number of the company is 05754547.
These financial statements as at 31 August 2018 consolidate those of the Company and its subsidiaries (together referred to as the
“Group”). The parent company financial statements present information about the Company as a separate entity and not about its group.
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting
Standards as adopted by the EU (“Adopted IFRS”). The Company has elected to prepare its parent company financial statements in
accordance with FRS101; and these are presented on pages 59 to 70.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the financial
statements.
Judgements made by the directors in the application of these accounting policies that have significant effect on the financial statements
and estimates with a significant risk of material adjustment in the next year are discussed in note 2.
Basis of preparation
The financial statements are prepared under the historical cost convention.
The directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic
outlook.
At the balance sheet date, the Group had net current liabilities of £9.7m, 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 financial
statements.
Further information regarding the company’s business activities together with the factors likely to affect its future development, performance
and position is set out in the Strategic report and Directors’ report on pages 17 to 20.
Basis of consolidation
The financial statements consolidate the financial statements of the Company together with its subsidiary companies.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when it is exposed to, or has right to, variable returns from its investment
within the entity and has the ability to affect these returns through its power over the entity. The financial information of subsidiaries is
included from the date that control commences until the date that control ceases.
All business combinations are accounted for by applying the acquisition method. Business combinations are accounted for using the
acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.
For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:
-
the fair value of the consideration transferred; less
- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Costs related to the acquisition, other
than those associated with the issue of debt or equity securities, are expensed as incurred. Any contingent consideration payable is
recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement
is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or
loss.
30
Notes (continued)
(forming part of the financial 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 identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was
negative, a bargain purchase gain was recognised immediately in profit or loss. Transaction costs, other than those associated with the
issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost
of acquisition.
Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated on
consolidation.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the Chief Executive Officer.
All revenue generated and non-current assets held are attributable to UK operations only.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and
services provided in the normal course of business, net of discounts and VAT.
Sales of motor vehicles, parts and accessories are recognised when the significant risks and rewards of ownership have been transferred
to the buyer. In general this occurs when vehicles or parts are delivered to the customer and title has passed. Manufacturer incentives are
recognised as revenue when earned. Servicing and bodyshop sales, including warranty work, are recognised on completion of the agreed
work. Finance commission revenue is recognised as the related vehicles are sold.
Deposits received from customers
Deposits received from customers prior to the completion of a sale (delivery of vehicle) are included in the accounts as creditors falling
due within one year.
Financing income and expenses
Financing expenses comprise interest payable, stocking interest charge on consignment and used vehicles and finance leases. Financing
income comprises interest receivable on funds invested and interest credits received from manufacturers on stock management.
Borrowing costs are recognised in the period in which they are incurred.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.
Operating profit
Operating profit relates to profit before finance income, finance expense and income tax expense.
31
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Intangible assets
Goodwill
Goodwill represents the excess between the cost of an acquisition of a subsidiary compared to the net fair value of the identifiable assets,
liabilities and contingent liabilities, and recognition of identifiable intangibles at the date of acquisition. Identifiable intangibles are those
which can be sold separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units of the acquiree which
represent the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other
assets or groups of assets. Goodwill is not amortised but is tested annually for impairment. Any impairment is recognised immediately in
the statement of comprehensive income and is not subsequently reversed.
Other intangible assets
Expenditure on internally generated goodwill and brands is recognised as an expense as incurred.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment
losses.
Amortisation
Amortisation is charged on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite.
Intangible assets with an indefinite useful life and goodwill are systematically tested for impairment at each year. Other intangible assets
are amortised from the date they are available for use. The estimated useful lives are as follows:
Computer software
3 – 5 years
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property,
plant and equipment.
Depreciation is charged on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives are as follows:
• freehold buildings
• leasehold properties
• plant and machinery
• fixtures and fittings
• computer equipment
50 years
over the lifetime of the lease
5 to 10 years
5 to 10 years
3 to 5 years
Depreciation methods, useful lives, residual values and possible impairments have been reviewed at the year end. As a result of this review,
no impairment charge has been deemed necessary for the period.
32
Notes (continued)
(forming part of the financial 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 effect on the estimated
future cash flows of that asset. If any such indication exists, the asset’s recoverable amount is estimated.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is
estimated at each year end.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in income.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated
to cash-generating units and then to reduce the carrying amount of the other assets in the unit on a pro rata basis. A cash generating unit
is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets
or groups of assets.
For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit
to which the asset belongs.
Reversals of impairment
An impairment loss in respect of trade and other receivables carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of goodwill is not reversed.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Inventories
Inventories are stated at the lower of cost and net realisable value. In determining the cost of motor vehicles, the actual amount paid and
payable to date for each vehicle is used, for spare parts and service items cost is based on the first-in first-out principle. An appropriate
provision is made for obsolete or slow moving items.
New vehicles on consignment from manufacturers are included in the Statement of Financial Position with a corresponding liability in
creditors due within one year. This stock is considered to be under the control of the Group as it is considered that the Group bears all the
risks and rewards or ownership, even though legal title has not yet passed.
Consignment stock is held for a maximum period (which varies between manufacturers) before becoming due for payment. Part of the
consignment period is interest free and the remaining periods are interest bearing (periods and charges vary between manufacturers but
interest is generally linked to LIBOR).
Used motor vehicles are stated at the lower of cost or net realisable value, by reference to Glass’s Guide or CAP data.
Demonstrator vehicles are held within inventories at the lower of cost and net realisable value.
Vehicle funding and stocking loans form part of the Group’s working capital and are recognised at the fair value of the amount due to the
facility provider.
33
Notes (continued)
(forming part of the financial statements)
1 Accounting policies (continued)
Non-current assets held for sale
A non-current asset or a group of assets containing a non-current asset (a disposal group) is classified as held for sale if its carrying amount
will be recovered principally through sale rather than through continuing use, it is available for immediate sale and sale is highly probable
within one year.
On initial classification as held for sale, non-current assets and disposal groups are measured at the lower of previous carrying amount and
fair value less costs to sell with any adjustments taken to profit or loss. The same applies to gains and losses on subsequent remeasurement
although gains are not recognised in excess of any cumulative impairment loss. Any impairment loss on a disposal group first is allocated to
goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred
tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Group’s accounting
policies. Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated.
Financial Instruments
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the group to deliver cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially unfavourable to the group; and
b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s
exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes
the legal form of the company’s own shares, the amounts presented in the historical financial information for called up share capital and share
premium account exclude amounts in relation to those shares.
Non-derivative financial instruments
Non-derivative financial instruments comprise, trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and
other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using
the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral
part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow
statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost using the effective interest method.
34
Notes (continued)
(forming part of the financial statements)
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised except to the extent that it relates to items
recognised in other comprehensive income, in which case it is recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance
sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans
are recognised as an expense as incurred.
Share Based Payments
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured
at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value so determined has been
expensed on a straight line basis over the vesting period, based on the Company’s estimate of the number of shares that will eventually
vest and adjusted for the effect of non market-based vesting conditions.
Fair value is measured using a Black-Scholes-Merton option pricing model. The key assumptions used in the model have been adjusted,
based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
Leasing
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance
leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that of the
buildings. Leased assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present
value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses.
Lease payments are accounted for as described below.
Operating lease payments
Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is
allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Provisions
A provision is recognised in the Statement of Financial Position when the Group has a present legal or constructive obligation as a result of
a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation.
35
Accounting policies (continued)
(forming part of the financial 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 effective for the first time in the current financial year and have been adopted by the group with no
significant impact on the consolidated results or financial position:
• IFRS 14 Regulatory Deferral Accounts
• Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11
• Clarification 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 effective 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 (effective date 1 January 2018)
• Disclosure Initiative – Amendments to IAS 7 (effective date 1 January 2018)
• IFRS 9 Financial Instruments (effective date 1 January 2018)
• IFRS 15 Revenue from Contracts with Customers (effective date 1 January 2018)
• Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts – Amendments to IFRS 4 (effective date 1 January 2018)
• IFRS 16 Leases (effective date 1 January 2019)
New standards and interpretations not yet endorsed and not yet effective:
• Annual Improvements to IFRSs – 2014-2017 Cycle
• Classification 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 effect 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 took effect from accounting periods commencing from 1 January 2018. The Directors have assessed the impact of these changes
on the accounting policies of the Group. Based on the current assessment of the standard and the Groups contractual position with its
customers, the Directors do not currently believe that there will be a material impact on the financial statements.
IFRS 16 is due to take effect 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, but expect that it will change the balance sheet by increasing assets and
liabilities and operating profit versus interest.
36
Notes (continued)
(forming part of the financial 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 flow projections for each cash
generating unit, and for property by comparing the carrying value to the higher of value in use or market value.
Intangible assets
On Business combinations the directors consider separately identifiable intangible assets that are pertinent to the motor business. This
includes consideration of franchise rights, brand, and other intangible assets.
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 financial 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 identified as the Chief Executive Officer.
37
Notes (continued)
(forming part of the financial statements)
3 Revenue
Sale of goods
Aftersales services
Total revenues
4 Segmental reporting
2018
£000
569,880
60,185
630,065
2017
£000
585,991
58,295
644,286
The Group has adopted IFRS 8 ‘Operating Segments’ which determines and presents operating segments based on information presented
to the Group’s Chief Operating Decision Maker (“CODM”), the Chief Executive Officer. The Group is operated and managed on a Dealership
by Dealership basis. Dealerships operate a number of different 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 specific business streams.
Dealerships are considered to have similar economic characteristics and offer similar products and services which appeal to a similar
customer base. As such the results of each dealership have been aggregated to form one reportable operating segment.
All segment revenue, profit 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.
2018
Revenue
2018
Revenue
mix
2018
Gross
Profit
2018
Margin
2017
Revenue
2017
Revenue
mix
2017
Gross
Profit
2017
Margin
£m
290.6
279.1
72.5
(12.2)
%
46.1
44.3
11.5
(1.9)
£m
18.0
24.6
28.5
-
%
6.2
8.8
39.4
-
£m
308.7
277.3
71.4
(13.1)
%
47.9
43.0
11.1
(2.0)
£m
21.3
23.6
27.8
-
%
6.9
8.5
38.9
-
630.0
100.0
71.1
11.3
644.3
100.0
72.7
11.3
New Car
Used Car
Aftersales
Internal sales
Total
Administrative expenses
Operating profit before non-recurring
expenses
Non-recurring income/ (expenses)
Operating profit
(60.2)
10.9
(0.7)
10.2
(60.9)
11.8
-
11.8
The CODM reviews the performance of the business in terms of both net profit before tax and EBITDA, as such the following table shows
a reconciliation of the Profit before tax to EBITDA.
38
Notes (continued)
(forming part of the financial statements)
Profit Before Tax
Non-recurring expenses (note 5)
Underlying Profit Before Tax
Net finance expense
Depreciation and amortisation
Underlying EBITDA
Other operating profit
Non-recurring expenses
EBITDA
2018
£000
9,124
703
9,827
1,028
2,481
13,336
(703)
12,633
2017
£000
11,251
14
11,265
527
1,887
13,679
-
(14)
13,665
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 financial statements to
present a true and fair view.
Site closures costs
Welwyn fire insurance claim - replacement of fixed assets
- impairment for value in use
- impairment of fixed assets destroyed
- excess on insurance policy
- professional fees
2018
£000
(703)
-
-
-
-
-
(703)
2017
£000
-
411
(367)
(20)
(5)
(33)
(14)
39
Notes (continued)
(forming part of the financial 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 financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Other services relating to taxation
All other services
2018
£000
(20)
2018
£000
27
101
38
7
2017
£000
155
2017
£000
26
98
38
7
40
Notes (continued)
(forming part of the financial statements)
7 Staff numbers and costs
The average number of persons employed by the Group (including directors) during the year, analysed by category, was as follows:
Number of employees
Sales
Service
Parts
Administration
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Expenses related to defined contribution plans
Share based payments expense
2018
368
449
96
247
1,160
2018
£000
35,199
3,815
397
32
39,443
2017
385
447
113
265
1,210
2017
£000
35,752
3,843
338
32
39,965
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 profit 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 financial
position. The calculation is therefore £7,840,000 divided by £53,491,000 giving 14.7%.
Profit attributable to shareholders
Non recurring (income)/ expenses (Note 5)
Tax on adjustments (at 19% (2017: 20%))
Adjusted profit attributable to equity shareholders
Number of shares in issue (‘000)
Basic earnings per share
Adjusted earnings per share
2018
£000
7,271
703
(134)
7,840
100,000
7.27p
7.84p
2017
£000
9,180
14
(3)
9,191
100,000
9.18p
9.19p
41
Notes (continued)
(forming part of the financial statements)
9 Finance income and expense
Recognised in the income statement
Finance income
Rent deposit interest
Interest receivable
Total finance income
Finance expense
Interest payable on bank borrowings
Consignment and vehicle stocking interest
Total finance expense
Total interest expense on financial liabilities held at amortised cost
Total other interest expense
10 Taxation
Recognised in the income statement
Current tax expense
Current year
Adjustment in respect of prior years
Deferred tax
Adjustment in respect of prior years
Origination and reversal of temporary differences
2018
£000
-
74
74
317
785
1,102
317
785
1,102
2018
£000
1,767
(58)
1,709
48
96
144
2017
£000
2
47
49
226
350
576
226
350
576
2017
£000
2,049
(32)
2,017
(80)
134
54
Total tax expense
1,853
2,071
42
Notes (continued)
(forming part of the financial statements)
10 Taxation (continued)
Reconciliation of total tax
Profit for the year
Total tax expense
Profit excluding taxation
Tax using the UK corporation tax rate of 19% (2017: 19.58%)
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
Other fixed asset differences
Total tax expense
2018
£000
7,271
1,853
9,124
1,734
35
218
(113)
(11)
(10)
-
1,853
2017
£000
9,180
2,071
11,251
2,203
34
182
(154)
(14)
(112)
(68)
2,071
The applicable tax rate for the current year is 19% (2017: 19.58%) following the reduction in the main rate of UK corporation tax from 20%
to 19% with effect from 1 April 2017.
Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were
substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2018) and to 18% (effective from 1 April 2020)
were substantively enacted on 26 October 2015. An additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6
September 2017.
This will reduce the company’s future current tax charge accordingly.
43
Notes (continued)
(forming part of the financial statements)
11 Property, plant and equipment
Freehold
land &
buildings
Assets under
construction
£000
£000
Long
leasehold
land &
buildings
£000
Short
leasehold
improvements
Plant &
equipment
£000
£000
Fixtures,
fittings &
computer
equipment
£000
41,319
4,571
-
-
-
45,890
7,958
-
-
(3,258)
-
-
-
-
-
-
5,392
-
-
-
4,117
-
-
-
-
4,117
6,662
-
-
-
4,544
-
-
(1,546)
(514)
2,484
96
(353)
(45)
-
3,161
953
-
(758)
-
3,356
1,357
(294)
-
-
6,439
2,417
-
(1,169)
514
8,201
2,097
(882)
45
-
Total
£000
59,580
7,941
-
(3,473)
-
64,048
23,562
(1,529)
-
(3,258)
Cost
Balance at 1 September 2016
Additions
Branch acquisitions
Disposals
Reclassification
Balance at 1 September 2017
Additions
Disposals
Reclassification
Transfer to current assets held
for resale
Balance at 31 August 2018
50,590
5,392
10,779
2,182
4,419
9,461
82,823
Depreciation
Balance at 1 September 2016
Charge for the year
Disposals
Impairment
Reclassification
Balance at 1 September 2017
Depreciation charge for the
year
Disposals
Reclassification
Transfer to current assets held
for resale
3,407
611
-
-
-
4,018
815
-
-
(63)
Balance at 31 August 2018
4,770
Net book value
At 31 August 2017
41,872
-
-
-
-
-
-
-
-
-
-
-
-
706
105
-
-
-
811
106
-
-
-
4,176
120
(1,275)
-
(693)
2,328
44
(264)
(1)
-
2,353
356
(726)
269
-
2,252
487
(271)
-
-
4,989
668
(1,148)
116
693
5,318
977
(785)
1
-
15,631
1,860
(3,149)
385
-
14,727
2,429
(1,320)
-
(63)
917
2,107
2,468
5,511
15,773
3,306
156
1,104
2,883
49,321
At 31 August 2018
45,820
5,392
9,862
75
1,951
3,950
67,050
As at 31 August 2018 the Group was partially through the building project relating to its Hatfield dealership development. There was a
further £4.9m of contract sum payments to be made under the terms of the agreement with the main contractor (2017: £6m relating to
Swindon). The directors have considered the property portfolio for impairment by comparing the carrying amount to the higher of value in
use or market value and have concluded that no impairment is required.
Security
The title of all freehold and long leasehold properties have been pledged as security to the bank loans disclosed in note 17.
Property, plant and equipment under construction
At 31 August 2018 the Hatfield Jaguar Land Rover dealership was under construction, included in Freehold land and buildings is an
amount of £Nil.
44
Notes (continued)
(forming part of the financial statements)
12 Intangible assets
Cost
Balance at 1 September 2016
Additions
Balance at 1 September 2017
Additions
Balance at 31 August 2018
Amortisation and impairment
Balance at 1 September 2016
Amortisation
Balance at 1 September 2017
Amortisation for the year
Balance at 31 August 2018
Net book value
At 31 August 2017
At 31 August 2018
Goodwill
£000
21,346
21,346
-
21,346
-
-
-
-
-
21,346
21,346
Software
£000
Other
£000
800
800
188
988
755
26
781
52
833
19
155
176
176
-
176
176
-
176
-
176
-
-
Total
£000
22,322
22,322
188
22,510
931
26
957
52
1,009
21,365
21,501
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
Repair and Maintenance Plans Limited*
England and Wales
Motor trade services
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
100% Ordinary
The registered office of all of the Group Companies is Dorcan Way, Swindon, SN3 3RA.
45
Notes (continued)
(forming part of the financial statements)
12 Intangible assets (continued)
Amortisation charge
The amortisation charge is recognised in the following line items in the income statement:
Administrative expenses
Impairment loss and subsequent reversal
2018
£000
51
2017
£000
26
Goodwill and indefinite life intangible assets considered significant in comparison to the Group’s total carrying amount of such assets have
been allocated to cash generating units or Groups of cash generating units. For the purpose of impairment testing of goodwill and other
indefinite life assets, the Directors recognise the Group’s cash generating units to be connected groupings of dealerships. The identified
CGUs, grouped for allocation of goodwill are as follows:
Multiple units without significant goodwill
Goodwill
2018
£000
346
2017
£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 financial budgets approved by the board of Directors which are extrapolated using an estimated
growth rate. The budgets were prepared to 31 August 2019 and then projected for a further 4 years. The underlying expected performance
of the CGU gives sufficient 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.
Sensitivity to changes in assumptions
The estimated recoverable amounts for the JLR CGU exceeds the carrying amounts by approximately £47m (2017: £44m). The Group has
conducted sensitivity analysis on the impairment testing. Management believe no significant change in the key assumptions would cause
the carrying amount to exceed the recoverable amount for the CGU.
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 financial statements)
13 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
The amount of temporary differences, unused tax losses and tax credits for which a deferred tax asset is recognised is set out below, along
with the movement in the balance in the year. The asset would be recovered if offset against future taxable profits of the Group.
Property, plant and equipment
Provisions
Tax value of loss carry-forward
Share options
1 September
2017
Recognised
in income
Net 31
August 2018
Deferred tax
liabilities
Deferred tax
assets
£000
(61)
6
-
14
£000
(152)
4
-
4
£000
(213)
10
-
18
£000
(602)
-
-
-
£000
389
10
-
18
(41)
(144)
(185)
(602)
417
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
profitability of the subsidiary, these losses are locked in to this particular subsidiary and cannot be utilised in the wider Group.
Tax value of loss carry-forwards
Unrecognised net tax assets
Assets
2018
£000
229
229
2017
£000
329
329
47
Notes (continued)
(forming part of the financial statements)
14 Inventories
Vehicle consignment stock
Motor vehicles
Parts and other stock
2018
£000
43,453
43,117
3,105
89,675
2017
£000
74,682
27,524
3,213
105,419
Included within inventories is £nil (2017: £nil) expected to be recovered in more than 12 months.
Raw materials, consumables and changes in finished goods and work in progress recognised as cost of sales in the year amounted to
£555 million (2017: £567 million).
Details of stock held as security is given in note 18.
15 Trade and other receivables
Trade receivables
Prepayments and other receivables
2018
£000
8,026
3,416
2017
£000
6,588
5,840
11,442
12,428
Included within trade and other receivables is £nil (2017: £nil) expected to be recovered in more than 12 months.
16 Cash and cash equivalents
Cash and cash equivalents per balance sheet
Cash and cash equivalents per cash flow statement
2018
£000
15,517
15,517
2017
£000
23,046
23,046
17 Property Assets Classified as held for resale
During the year the Royal Wootton Bassett freehold property was vacated following the transfer of the Land Rover business to the newly
developed JLR site in Swindon. The Freehold has been transferred at its net book value to assets classified and held for resale.
On closure of the Blackburn dealership, the Freehold property has been transferred to assets held for resale at its net book value.
48
Notes (continued)
(forming part of the financial statements)
18 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
2018
£000
2017
£000
21,053
15,883
-
1,000
Nominal interest rate
Year of
Maturity
Face
Value and
Carrying Amount
Face Value and
Carrying Amount
2018
£000
2017
£000
Loan 31/12/2015
LIBOR +1.20%*
2020
21,053
16,883
21,053
16,883
*The Facilities arranged in November 2015 have different 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.
19 Trade and other payables
Current
Vehicle consignment creditor
Other trade payables
Non-trade payables and accrued expenses
Vehicle funding
2018
£000
51,899
10,785
24,368
41,742
2017
£000
89,024
14,021
13,539
25,914
128,794
142,498
Included within trade and other payables is £nil (2017: £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 financial statements)
20 Employee benefits
Pension plans
Defined contribution plans
The Group operates a number of defined contribution pension plans.
The total expense relating to these plans in the current year was £397,000 (2017: £338,000).
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 profit before tax of the Group which have to be achieved for the options to be exercisable.
During the year ended 31 August 2018, no share options were granted (2017: £250,000).
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 effects 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
2018
£
0.49
2018
5,000,000
-
2017
£
0.48
0.60
Number
of options
2017
4,750,000
250,000
Outstanding at the end of the year
0.49
5,000,000
0.49
5,000,000
Exercisable at the end of the year
-
-
The Company recognised an expense of £32,896 (year ended 31 August 2017: £32,896) in respect of share based payments in the year.
50
Notes (continued)
(forming part of the financial statements)
21 Provisions
Balance at 1 September 2017
Provisions used during the year
Provisions made in year
Balance at 31 August 2018
Current
Non-current
Balance at 31 August 2017
Current
Non-current
Balance at 31 August 2018
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.
22 Capital and reserves
Share capital
Authorised
100,000,000 Ordinary shares of 10 pence each
Allotted, called up and fully paid
100,000,000 Ordinary shares of 10 pence each
Shares classified in shareholders’ funds
2018
£000
10,000
10,000
10,000
2017
£000
10,000
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys different or enhanced voting rights from any other shareholder. All shares are
eligible for dividends and rank equally for dividend payments.
51
Notes (continued)
(forming part of the financial statements)
Dividends
The following dividends were paid by the company in the year ended 31 August.
0.7 p per ordinary share – prior year final (2017: 0.7p)
0.25p per ordinary share – current year interim (2017: 0.25p)
2018
£000
750
250
1,000
2017
£000
700
250
950
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.
2018
£000
750
2017
£000
750
0.75p per ordinary share – current year final (2017: 0.75p)
23 Financial instruments
23 (a) Fair values of financial instruments
Trade and other receivables
The fair value of trade and other receivables, is estimated as the present value of future cash flows, discounted at the market rate of interest at
the balance sheet date if the effect is material.
Trade and other payables
The fair value of trade and other payables is estimated as the present value of future cash flows, discounted at the market rate of interest at the
balance sheet date if the effect is material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its carrying amount where the cash is repayable on demand. Where it is not repayable
on demand then the fair value is estimated at the present value of future cash flows, discounted at the market rate of interest at the balance
sheet date.
Interest-bearing borrowings
Fair value, which after initial recognition is determined for disclosure purposes only, is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the balance sheet date.
The rates used to discount estimated cash flows, where applicable are based on the weighted average cost of capital and were as follows:
Loans and borrowings
2018
%
3.5
2017
%
3.5
52
Notes (continued)
(forming part of the financial statements)
Fair values
The fair values for each class of financial assets and financial liabilities together with their carrying amounts shown in the balance sheet are
as follows:
Financial assets
Loans and receivables at amortised cost including cash and cash equivalents
Trade receivables(net) (note 15)
Other receivables (note 15)
Cash and cash equivalents
Total Financial assets
Financial liabilities
Financial liabilities at amortised cost
Other interest-bearing loans and borrowings (note 18)
Trade and other payables (note 19)
Total Financial liabilities
As at 31 August
2018
As at 31 August
2017
£000
£000
8,026
3,383
15,517
6,588
5,840
23,046
26,926
35,474
21,053
128,794
16,883
142,498
149,847
159,381
The Directors consider the carrying amount of the Group’s financial assets and financial liabilities, as detailed above, approximate
their fair value.
53
Notes (continued)
(forming part of the financial statements)
23 Financial instruments (continued)
23 (b) Credit risk
Credit risk management
The Group is exposed to credit risk primarily in respect of its trade receivables. Trade receivables are stated net of provision for estimated
impairment losses. Exposure to credit risk in respect of trade receivables is mitigated by the Group’s policy of only granting credit to
certain customers after an appropriate evaluation of risk coupled with the findings from external reference agencies. Credit risk arises in
respect of amounts due from vehicle manufacturers in relation to bonuses and warranty receivables. This risk is mitigated by the number
of manufacturers for which the Group holds franchises, procedures to ensure timely collection of debts and management’s belief that
it does not expect any manufacturer to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying
amount of each financial asset in the statement of financial position.
Exposure to credit risk
The carrying amount of trade receivables represents the maximum credit exposure. Therefore, the maximum exposure to credit risk at the
balance sheet date was £8,026,000 (2017: £6,588,000) 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
2018
£000
8,026
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
2018
£000
2,641
3,314
2,071
8,026
2017
£000
6,588
2017
£000
4,189
1,266
1,133
6,588
Credit quality of financial assets and impairment losses
The ageing of trade receivables at the balance sheet date is given below. The Group’s policy is to provide for all debts which are past due.
The directors consider the balance to be recoverable based on credit terms and post balance sheet receipts.
Gross
2018
£000
8,026
359
8,385
Impairment
2018
£000
-
359
359
Gross
2017
£000
6,588
224
6,812
Impairment
2017
£000
-
224
224
Trade receivables not past due
Trade receivables past due
54
Notes (continued)
(forming part of the financial statements)
23 Financial instruments (continued)
23 (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 2017
Impairment loss recognised
Allowance for impairment utilised
Balance at 31 August 2018
£000
224
(20)
(57)
147
The allowance account for trade receivables is used to record impairment losses unless the Group is satisfied that no recovery of the
amount owing is possible; at that point the amounts considered irrecoverable are written off against the trade receivables directly.
23 (c) Liquidity risk
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity is managed by the Group’s
central treasury function within policy guidelines set by the Board with prime areas of focus being liquidity and interest rate exposure. The
Group is financed primarily by bank loans, vehicle stocking credit lines and operating cash flow. The directors have assessed the future
funding requirements of the Group and compared them to the level of committed available borrowing facilities. These committed facilities
are maintained at levels in excess of planned requirements and are in addition to short term uncommitted facilities that are also available
to the Group. The assessment included a review of financial forecasts, financial instruments and cash flow projections. These forecasts
and projections show that the Group, taking account of reasonably possible scenarios, should be able to operate within the level of its
borrowing facilities for the foreseeable future.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect of netting
agreements: Interest is payable on loans of £21,053,000 (2017: £16,883,000) at LIBOR plus 1.20%.
Non-derivative financial liabilities
Secured bank loans
Revolving Credit Facility
Trade and other payables
Non-derivative financial liabilities
Secured bank loans
Revolving Credit Facility
Trade and other payables
2017
Carrying
amount
Contractual
cash flows
£000
£000
1 year
or less
£000
1 to
<2years
£000
2 to
<5years
£000
5years and
over
£000
16,883
17,669
1,279
1,262
15,128
-
-
-
142,500
142,500
142,500
-
-
-
-
-
-
-
2018
Carrying
amount
Contractual
cash flows
1 year
or less
1 to
<2years
2 to
<5years
5years and
over
£000
£000
£000
£000
£000
£000
-
21,053
-
-
-
-
129,313
129,313
129,313
-
-
-
-
-
-
-
21,053
-
55
Notes (continued)
(forming part of the financial statements)
23 Financial instruments (continued)
23 (d) Market risk
Financial risk management
Market risk is the risk that changes in market prices, such as interest rates will affect the Group’s income or the value of its holdings of
financial instruments.
Market risk - Foreign currency risk
The Group does not have any exposure to foreign currency risk.
Market risk – Interest rate risk
Profile
At the balance sheet date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Cash and cash equivalents
Vehicle funding
Loans and overdrafts
2018
£000
15,517
(41,742)
(21,053)
2017
£000
23,046
(25,914)
(16,883)
(47,278)
(19,751)
The objectives of the Group’s interest rate policy are to minimise interest costs. The Group does not actively manage cash flow interest risk
as the directors believe that the underlying earnings from the retail sector in which the Group operates provides a natural hedge against
interest rate movements. Consequently, it is Group policy to borrow on a floating rate basis.
Whilst there are no hedging instruments, the Board reviews its hedging policy on a regular basis.
Sensitivity analysis
An increase of 0.5 basis points in interest rates at the balance sheet date would have decreased equity and profit or loss by the amounts
shown below.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant and considers the effect of financial
instruments with variable interest rates, financial instrument at fair value through profit or loss or available for sale with fixed interest rates
and the fixed rate element of interest rate swaps. The analysis is performed on the same basis for comparative periods.
Equity
Decrease
Profit or loss
Decrease
56
2018
£000
314
2017
£000
214
314
214
Notes (continued)
(forming part of the financial statements)
23 Financial instruments (continued)
23 (e) Capital management
Prior to each acquisition, the Board considers its funding options and the appropriate mix of secured debt and equity.
The Group’s primary objective when managing capital is to safeguard the Group’s ability to continue as a going concern in order to provide
returns for shareholders and benefits to other stakeholders. The Group must ensure that sufficient capital resources are available for
working capital requirements and meeting principal and interest payment obligations as they fall due.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio, which is calculated as net debt divided
by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the statement of
financial position) less cash and cash equivalents. Total capital is calculated as total shareholders’ equity.
The gearing ratios for each year are as follows:
Total borrowings
Less: cash and cash equivalents
Net (surplus)/deficit
Total equity
Gearing ratio
24 Operating leases
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
As at 31 August
2018
As at 31 August
2017
21,053
(15,517)
16,883
(23,046)
5,536
(6,163)
56,627
50,356
9.78%
0%
2018
£000
2,679
9,118
10,142
2017
£000
2,986
9,949
13,314
21,939
26,249
The Group leases a number of motor dealership sites under operating leases. Land and buildings have been considered separately for
lease classification.
During the year £3,391,000 was recognised as an expense in the income statement in respect of operating leases (2017: £3,141,000).
57
Notes (continued)
(forming part of the financial statements)
25 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 2017 and 2018.
In recognition of the Cambria Automobiles plc group bank and used vehicle funding facilities, the following companies have entered into
a joint agreement to guarantee liabilities with banks and finance houses of the motor manufacturers that provide new and used vehicles
to the Group:
Cambria Automobiles plc, Cambria Automobiles Property Limited, Cambria Automobiles Group Limited, Cambria Automobiles Acquisitions
Limited, Cambria Automobiles (Swindon) Limited, Grange Motors (Swindon) Limited, Thoranmart Limited, Cambria Automobiles (South
East) Limited, Grange Motors (Brentwood) Limited, Invicta Motors Limited, Invicta Motors (Maidstone) Limited, Cambria Vehicle Services
Limited and Repair and Maintenance Plans Limited.
Intra-group guarantees are accounted for as insurance contracts.
26 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 47.7% (2017: 47.56%) of the voting shares of the Company.
The compensation of key management personnel is as follows:
Directors’ emoluments
Salaries and consultancy fees
Annual bonus
Pension costs
Share related awards
2018
£000
986
584
1
24
2017
£000
1,001
646
-
24
1,595
1,671
58
Notes (continued)
(forming part of the financial statements)
26 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
2018
£000
2018
£000
Share
related
awards
2018
£000
Pension
costs
Total
Total
2018
£000
2018
£000
2017
£000
40
215
400
8
33
265
25
-
986
-
181
318
-
-
85
-
-
584
-
12
-
-
-
12
-
-
24
-
1
-
-
-
-
-
-
1
40
409
718
8
33
362
25
-
40
404
765
33
33
381
15
-
1,595
1,671
All directors benefited from qualifying third party indemnity provisions during the financial period.
During the year Mark Lavery bought 4 vehicles from the Group and sold 4 vehicles back to the Group, James Mullins bought 6 vehicles
from the Group and sold 6 vehicles back to the Group. Sir Peter Burt bought 1 vehicle from the Group and sold 1 vehicle back to the
Group. Tim Duckers bought 6 vehicles from the Group and sold 6 vehicles back to the Group. All transactions were carried out at arm’s
length and there were no outstanding balances due to the Group at the year end. The average value of each transaction in the year was
£68,686. William Charnley is a partner at the law firm King & Spalding, during the year the Group paid professional fees of £7,156 in relation
to the legal services provided to the Group.
27 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.
28 Post balance sheet events
Dividend
The Board is pleased to announce that it will make a final dividend payment in respect of the financial year to 31 August 2018 of 0.75p
(2017: 0.75p) per share in addition to the interim payment of 0.25p per share (2017: 0.25p).
59
Company balance sheet
At 31 August 2018
Fixed assets
Tangible fixed assets
Investments
Current assets
Stock
Debtors
Cash at bank
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Shareholders’ funds
Note
2018
2017
£000
£000
£000
£000
5
6
7
8
9
12
13
136
666
666
20,066
392
21,124
(8,756)
76
666
802
742
710
19,731
20,441
(7,480)
12,368
13,170
13,170
10,000
799
2,371
13,170
12,961
13,703
13,703
10,000
799
2,904
13,703
These financial statements were approved by the board of directors on 20 November 2018 and were signed on its behalf by:
M J J Lavery
Director
Company number: 05754547
60
Company Statement of changes in Equity
for the year ended 31 August 2018
Note
Share capital
£000
£000
Share
premium
£000
£000
Retained
earnings
£000
£000
Balance at 31August 2016
10,000
799
Profit for the year
Dividend paid
Dividend Received
-
-
-
-
-
-
789
65
(950)
3,000
Total equity
£000
£000
11,588
65
(950)
3,000
Balance at 31 August 2017
10,000
799
2,904
13,703
Profit for the year
Dividend paid
Dividend received
4
-
-
-
-
-
-
467
(1,000)
-
576
(1,000)
-
Balance at 31 August 2017
10,000
799
2,371
13,279
61
Notes
1 Accounting policies
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
financial statements.
Going concern
The directors believe that the company is well placed to manage its business risks successfully despite the current uncertain economic
outlook.
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis in preparing the annual financial statements.
Further information regarding the company’s business activities together with the factors likely to affect its future development, performance
and position is set out in the Strategic report on page 16.
Basis of preparation
These financial 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 effective immediately have been applied.
In preparing these financial 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 profit 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 financial 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 financial 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 fixed assets;
- Disclosures in respect of transactions with wholly owned subsidiaries;
- Disclosures in respect of capital management;
- The effects of new but not yet effective 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 financial 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 financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial
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 significant effect on the financial statements
and estimates with a significant risk of material adjustment in the next year are discussed on page 31.
62
Notes (continued)
Measurement convention
The financial statements are prepared on the historical cost basis.
Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets.
Leases in which the Company assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance
leases. Where land and buildings are held under leases the accounting treatment of the land is considered separately from that of the
buildings. Leased assets acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present
value of the minimum lease payments at inception of the lease, less accumulated depreciation and less accumulated impairment losses.
Lease payments are accounted for as described below.
Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of
tangible fixed 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 financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial 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 effect on the estimated future cash flows of that asset that can be estimated
reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. For financial instruments
measured at cost less impairment an impairment is calculated as the difference 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 profit or loss.
Non-financial assets
The carrying amounts of the Company’s non-financial 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 indefinite 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 profit and loss account on a
straight-line basis over the term of the lease. Lease incentives received are recognised in the profit and loss account as an integral part of
the total lease expense.
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans
are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.
63
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 reflect 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 reflect such conditions and there is no
true-up for differences 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 profit 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 financial instruments
Non-derivative financial 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 effective 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 effective 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 effective 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).
64
Notes (continued)
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit 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 differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of
deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using
tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the
temporary difference can be utilised.
Classification of financial instruments issued by the Company
Following the adoption of IAS 32, financial 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 financial assets or to exchange financial assets or
financial 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 fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified
takes the legal form of the Company’s own shares, the amounts presented in these financial statements for called up share capital and
share premium account exclude amounts in relation to those shares.
Finance payments associated with financial liabilities are dealt with as part of interest payable and similar charges. Finance payments
associated with financial instruments that are classified as part of shareholders’ funds (see dividends policy), are dealt with as appropriations
in the reconciliation of movements in shareholders’ funds.
Dividends on shares presented within equity
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised
and are no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the
financial statements.
65
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
2018
£000
986
584
1
24
1,595
2018
£000
400
318
718
2017
£000
1,001
646
-
24
1,671
2017
£000
400
365
765
All directors benefited from qualifying third party indemnity provisions during the financial 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:
Company
2018
Company
2017
61
56
Company
Company
2018
£000
4,447
605
21
32
5,105
2017
£000
4,380
529
18
32
4,959
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
66
Notes (continued)
4 Dividends
The aggregate amount of dividends paid and received compromises:
Aggregate amount of dividends paid in the financial year
Aggregate amount of dividends received in the financial year
2018
£000
1,000
-
The aggregate amount of dividends proposed but not recognised at the year end is £750,000 (2017: £750,000).
5 Tangible fixed assets
Company
Cost
At 1 September 2017
Additions
Disposals
At 31 August 2018
Depreciation
At 1 September 2017
Disposals
Charge for year
At 31 August 2018
Net book value
At 31 August 2018
At 31 August 2017
6 Fixed asset investments
Company
Cost and net book value
At 1 September 2017 and 31 August 2018
Computer
equipment
£000
783
124
(221)
686
707
(221)
64
550
136
76
2017
£000
950
3,000
Total
£000
783
124
(221)
686
707
(221)
64
550
136
76
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.
67
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
Repair and Maintenance Plans Limited*
England and Wales
Motor trade services
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
100% Ordinary
* Owned directly by Cambria Automobiles Acquisitions Limited
** Owned directly by Cambria Automobiles Group Limited
*** Owned directly by Cambria Automobiles (South East) Limited
The registered office of all of the Group Companies is Dorcan Way, Swindon, SN3 3RA.
7 Stocks
Motor vehicles
8 Debtors
Trade debtors
Amounts owed by group undertakings
Prepayments and accrued income
Deferred tax (note 11)
Other taxation
68
2018
£000
666
2018
£000
50
18,618
1,039
53
306
2017
£000
710
2017
£000
45
18,788
726
52
120
20,066
19,731
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
2018
£000
385
-
4,500
366
265
3,183
57
8,756
2017
£000
279
3,394
-
474
281
3,027
25
7,480
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 2017
Movement in period
At 31 August 2018
The elements of deferred taxation asset are as follows:
Difference between accumulated depreciation and capital allowances
Other timing differences
Total deferred tax
2018
£000
4,500
2018
£000
34
19
53
2017
£000
-
£000
52
1
53
2017
£000
52
-
52
69
Notes (continued)
12 Called up share capital
Authorised
2018
£000
2017
£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 classified in shareholder’s funds
10,000
10,000
10,000
10,000
All of the shares rank pari passu, and no shareholder enjoys different or enhanced voting rights from any other shareholder. All shares are
eligible for dividends and rank equally for dividend payments.
70
Notes (continued)
13 Share premium and reserves
At 1 September 2017
Profit for the year
Dividend paid
Dividend received
At 31 August 2018
Share premium account
Profit and loss account
£000
799
-
-
-
799
£000
2,904
576
(1,000)
-
2,480
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