REG - Motorpoint Group plc - Final Results
15/06/2022 07:00
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RNS Number : 8895O Motorpoint Group plc 15 June 2022
15 June 2022
Motorpoint Group PLC
("Motorpoint" or the "Group")
Final Results
Record revenue and earnings per share; strong market outperformance;
encouraging progress on strategic objectives
Motorpoint Group PLC, the UK's leading independent omnichannel vehicle
retailer, today announces its final results for the year ended 31 March 2022
("FY22").
Financial KPIs Year ended 31 March 2022 Year ended 31 March 2021 Change
Revenue £1,322.3m £721.4m +83.3%
Gross profit £106.3m £62.5m +70.1%
Operating profit £25.0m £12.6m +98.4%
Profit before taxation £21.5m £9.7m +121.6%
Basic earnings per share (p) 18.7p 8.4p +122.6%
Return on capital employed ((1)) 75% 53% +22ppts
(1) Calculated as operating profit of £25.0m (FY21: £12.6m) divided by
average of opening (£27.6m) and closing (£39.4m) net assets (FY21: opening
£20.2m and closing £27.6m)
FY22 Financial Highlights
● Revenue increased 83.3% to £1,322.3m (FY21: £721.4m), due to a combination
of market share growth and vehicle price inflation
● Profit before taxation increased 121.6% to £21.5m (FY21: £9.7m), even with
ongoing investment in technology, people and marketing to execute on our
strategy
● Basic earnings per share increased 122.6% to 18.7p (FY21: 8.4p)
● Return on capital employed increased from 53% to 75%, reflecting increased
profitability and operational efficiency, and our capital light asset
programme
FY22 Operational and Strategic Highlights
In June 2021, we announced our objective to significantly increase our rate of
growth, with the aim of at least doubling FY20 revenue to over £2bn in the
medium term, by:
● Growing our E-commerce revenue to over £1bn by substantially increasing
investment in marketing, technology and data
● Opening 12 new sales and collection branches to service revenue growth,
increasing investment in the customer proposition, and expanding our supply
channels
● Leveraging our E-commerce platform, Auction4Cars.com (http://Auction4Cars.com)
, to accommodate new supply channels and to launch our marketplace offering
● Increasing operational efficiency through further automation and technology
investment as customers migrate to E-commerce channels
The Group had a very successful year, both in terms of delivering excellent
operating results and progressing on its strategic objectives.
Operational KPIs Year ended 31 March 2022 Year ended 31 March 2021 Change
Market share (0-4 year old) 3.1% 2.4% +0.7ppts
Average market share within 30 min drive time of branch 7.7% 5.5% +2.2ppts
Revenue £1,322.3m £721.4m +83.3%
Retail £1,112.3m £593.8m +87.3%
Wholesale £210.0m £127.6m +64.6%
E-commerce revenue £624.9m £437.1m +43.0%
Vehicles sold 97.7k 67.5k +44.7%
Retail 62.9k 43.1k +45.9%
Wholesale 34.8k 24.4k +42.6%
Days in stock 54 67 -13 days
Retail gross profit per unit £1,446 £1,254 +15.3%
Customer acquired vehicles 11.3k 3.6k +213.9%
Customer acquisition cost per retail unit((1)) £300 £163 +£137
People cost per retail unit((1)) £552 £594 -£42
Number of market locations (at year end) 17 14 +3
Stocking facility £195.0m £106.0m +£89.0m
((1) Total marketing cost/ people cost per retail unit sold)
( )
Sales Momentum
● Group share of the 0-4 year old market was 3.1% (FY21: 2.4%). The Q4 FY22
share was 3.4% (Q4 FY21: 1.9%)
● Clear correlation between market share and unprompted brand awareness
Digital Growth and New Capabilities
● E-commerce revenue grew to £624.9m (FY21: £437.1m) with 60% of overall unit
volumes coming from online channels demonstrating the strength of the Group's
E-commerce offering and transformation to a digitally led business
● Auction4Cars.com successfully upgraded to operate as a digital marketplace
with third party vendors now active
● Successful launch of fully automated digital first consumer car buying
service. During FY22 17.9% of retail vehicles sold were sourced directly from
consumers (including part exchange) (FY21: 8.3%)
● Website traffic improved by 15% year on year, with improvements across a full
range of online marketing metrics, with unsubscribe rates dropping further to
just 0.1%
● Significant capability upgrades in the period, and associated investment in
people, technology and marketing with increased use of A.I. helping to
influence buying patterns and create customised marketing campaigns
Extending Infrastructure Scale
● Three new market area locations opened in strategically significant regions
(Manchester, Maidstone and Portsmouth), taking the total number to 17, with
further locations secured post year end. Our new branch programme is capital
light
● Motherwell preparation centre opened during August 2021, which adds more than
20,000 units to retail capacity; retail preparation capacity now in excess of
120,000 units per annum (on a single shift basis)
Stakeholder Excellence
● Net Promoter Score ('NPS') further improved to a record 84 (H2 FY21: 83)
● Placed in the Top 100 for the eighth successive year in The Best Large
Companies to Work for, and again placed Number One in the Automotive sector
● Established ESG Committee to be chaired by Non-Executive Director Adele Cooper
and launched what we believe is an industry leading initiative, purchasing
carbon credits to completely offset the first year of emissions for each
vehicle sold by Motorpoint
As a result of our strong performance in key strategic areas, the Group has
made good progress towards its target of delivering £2bn of total annual
revenue in the medium term as well as the other strategic targets set out last
year.
Outlook
The impacts of rising inflation and worldwide vehicle supply chain challenges
are likely to continue to affect our markets and all industry participants. In
general, rising inflation is putting increasing pressure on discretionary
spending power and consumer sentiment, and this position has worsened since
the start of our new financial year. This is very likely to reduce overall
sales and transactions in our markets. Further, supply chain shortages will
continue to limit new car production in the near term, which in turn
constrains the supply of used cars that fit our nearly new criteria. The
precise extent to which these factors will impact consumer behaviour and our
markets is increasingly difficult to predict.
At the same time, the used car market is evolving rapidly and becoming more
complex. Many traditional competitors are changing their models, refocusing
and diversifying, while several other large and well-capitalised players are
entering our markets and competing aggressively, albeit not all of them are
proving successful business models. The Board sees further consolidation as
likely over time as changing market dynamics continue to play out.
Within the context of this uncertain environment and evolving competitive
landscape, Motorpoint has continued to perform strongly and made substantial
progress towards its medium term strategic goals. We have a strong track
record of gaining market share in difficult times, since price leadership is
crucial and continues to serve us well, both now and will continue to do so in
the future. We have demonstrated that our strategy is working and will
continue to invest in our customer proposition in order to gain market share
in a relatively weakened competitive landscape. Given the Group's proven track
record of profitability and proactively responding to market conditions,
alongside our capital light model and robust balance sheet, the Board is
confident in its decision to continue to progress towards its medium term
strategic goals. This continued investment, much of which is variable and
hence adaptable to market conditions, will position the Group in a stronger
position with a bigger market share when the current macro headwinds subside.
Mark Carpenter, Chief Executive Officer of Motorpoint Group PLC commented:
"Motorpoint is a unique business with world class capabilities and knowledge
in the used car ecosystem. We have always successfully adapted our business to
meet every challenge and remain profitable since our inception 24 years ago. I
am extremely pleased with the progress we have made on our medium term
strategic objectives and am convinced Motorpoint will be a winner in these
rapidly evolving markets.
We are building a market leader with a disciplined operating culture, and we
are confident in the plan we laid out a year ago. Despite the ongoing
uncertainty, we will continue to invest in our business with the consumer
front of mind, in order to realise our long term ambition of increased market
share through price leadership, while remaining profitable.
Our team continue to inspire me with their passion for our business and our
customers and I'd like to thank them for building such an impressive business.
We have achieved significant growth and market share gains in the year; our
price leadership, strong customer service and focus on maintaining a highly
engaged team will continue to substantially grow the business in the years
ahead."
Analyst & investor webinar
There will be a webinar for sell-side analysts and investors at 9:30am BST
today, the details of which can be obtained from FTI Consulting via
motorpoint@fticonsulting.com.
Enquiries:
Motorpoint Group
PLC
via FTI Consulting
Mark Carpenter, Chief Executive Officer
Chris Morgan, Chief Financial Officer
FTI Consulting (Financial PR)
Alex
Beagley
020 3727 1000
Sam Macpherson
Harriet Jackson
Amy Goldup
Inside information: This announcement contains inside information as defined
in Article 7 of the retained EU law version of the Market Abuse Regulation No
596/2014 ("UK MAR") and has been announced in accordance with the Company's
obligations under Article 17 of UK MAR.
Forward looking statements: The information in this release is based on
management information. This report includes statements that are forward
looking in nature. Forward looking statements involve known and unknown risks,
assumptions, uncertainties and other factors which may cause the actual
results, performance or achievements of the Group to be materially different
from any future results, performance or achievements expressed or implied by
such forward looking statements. Except as required by the Listing Rules and
applicable law, the Company undertakes no obligation to update, revise or
change any forward looking statements to reflect events or developments
occurring after the date of this report.
Notes to editors
Motorpoint is the UK's leading independent E-commerce led omnichannel vehicle
retailer, focused on giving retail and trade customers the easiest, most
affordable and seamless way of buying, selling and financing their car whether
online, in-store or a combination of both. Through its leading B2C platform
Motorpoint.co.uk and UK network of 17 sales and collection branches, the Group
provides an unrivalled offering in the nearly new car market, where consumers
can effortlessly browse, buy or finance their next car and collect or have it
delivered directly to their homes. Motorpoint's purely online wholesale
platform Auction4Cars.com sells vehicles into the wholesale B2B market that
have been part exchanged by retail customers, or purchased directly from them
by the Group as part of its online car buying service. Motorpoint's
diversified business model, underpinned by its established brand, industry
leading technology and sophisticated marketing infrastructure, always delivers
the best choice, value, service and quality for customers. The Group is proud
to have been recognised for eight consecutive years as one of the Top 100 Best
Companies to Work For and for the second consecutive year the Number One in
the Automotive sector.
Chair's statement
Introduction
During my first few months as Chair, I have spent time with fellow Board
members and the Senior Leadership Team, immersing myself in the Head Office
and across the branch network, as well as the UK used car industry more
generally. I have been incredibly impressed by what I have seen so far. There
is no doubt that Motorpoint is a responsible, well operated and profitable
business, with unparalleled expertise in the UK's used car market.
These are important assets in the current environment and provide solid
foundations to support our emerging plans for long term growth.
Ambition, opportunity and execution
It was Motorpoint's ambition and the scale of the market opportunity that
initially attracted me to the business. The Group has seen significant changes
to car buying expectations as consumers increasingly embrace digital content
but expect to be able to pick and choose services from among both digital and
physical options. The used car retail market has also changed significantly
with the arrival of aggressive, well funded 'pure play' E-commerce competitors
coupled with many legacy dealers that may resist necessary change. We are
excited by the opportunity to lead as the market's largest omnichannel used
car retailer and believe we are well positioned for success.
The Group outlined a number of medium term strategic objectives in its FY21
Final Results which included, among other things, to achieve £1bn in online
revenue, generate more than £2bn in total revenue and open 12 new branches
offering sales, customer service and collection. I have been pleased to see
the progress made on these objectives just one year on, with the Group growing
overall revenue by 83% to £1.32bn, and E-commerce revenue by 43% to £625m
whilst also opening three new branches in strategically significant regions.
Motorpoint's medium term objectives remain a focus, as it embraces the amount
and pace of transformational change required for it to seize its growth
opportunity in the medium term and beyond. For example it will continue
developing new strategic capabilities across the business, and in particular
in technology and marketing. The Group has invested significantly in these
areas during FY22, recruiting a number of new leaders including a Chief
Digital Officer and a technology Board advisor.
The Group has also sought out commercial partners who, along with myself and
other Board members, have previous experience in leading digital and
transformational change which will lend itself to Motorpoint's transition to a
digitally led business. Embracing technology is essential for the future of
the business, and will help us redefine and evolve our exceptional customer
experience and leading value proposition for a digital age.
A responsibly minded business
Motorpoint has made great strides in progressing its ESG strategy, propelling
the Group towards being a more responsible business. The recently established
ESG Board Committee, and appointment of a third party advisor who has
consulted with us on how to measure and maximise our emission reductions,
reinforces our commitment to operating in a sustainable manner. The Group
looks forward to providing regular progress updates.
Value creation
I would like to thank all of my new colleagues at Motorpoint, at our Head
Office and across the branch network, for their continued hard work and
commitment. Whilst the current macroeconomic environment and related pressures
facing UK consumers are obvious, I am excited by the opportunity in front of
us and confident that Motorpoint is well positioned to deliver significant
shareholder value in the long term.
John Walden
Chair
15 June 2022
Chief Executive's statement
Overview
We continue to offer our customers every possible way of buying a vehicle to
ensure everyone can access our outstanding price leadership proposition. In
addition, during the year we successfully launched our car buying service to
increase our supply channels as new car supply continues to remain subdued.
I am especially pleased with our achievements in the year. We have
successfully navigated unprecedented vehicle inflation and widely documented
supply shortages. These shortages undoubtedly limited our growth, yet we still
managed to deliver revenue and profit before taxation growth of 83% and 122%
respectively, and our retail unit volumes grew by 46% on FY21. We also
continued to grow our market share, to 3.1% of the 0-4 year old market (FY21:
2.4%).
Strong progress has been made on our medium term strategic targets, with three
new branches opened successfully in the second half of FY22, namely
Manchester, Maidstone and Portsmouth in addition to our new preparation centre
in Motherwell, Scotland.
In line with our objective to leverage E-commerce platforms to expand our
supply channels, the Motorpoint car buying service is now a fully automated
digital first offering and payments are made to sellers within minutes of the
vehicle being received. Our Auction4Cars.com trading platform has also now
been successfully upgraded to operate as an automated marketplace to include
third party vendors. This is being fully launched to further new vendors in
FY23 and will enable them to auction their own vehicles digitally.
Execution of these strategic objectives provides further evidence of
Motorpoint's agility and entrepreneurialism to design, test and implement new
initiatives at pace as market opportunities arise. Motorpoint is leveraging
its exceptional industry knowledge to continue increasing its market share
across all channels, accelerated by investment in digital transformation.
Our ambitions for the business are growing and we see substantial shareholder
value creation and therefore we are increasing our investment levels further
in both our customer proposition and our investment in technology and building
our brand. We are more convinced than ever that our price leadership, strong
customer satisfaction and highly engaged team are winning in an increasingly
competitive market.
Our operating model begins with our team
The last two years or so has been unprecedented, and our team has been
exemplary in their commitment to the business throughout these difficult
times. Our team continues to inspire me and I am grateful for their passion,
energy and enthusiasm for our brand.
Our operating model of how our key stakeholders interact is well understood by
our team and is covered in detail, usually by myself, with every new starter
when they attend our induction programme. The Motorpoint Virtuous Circle
combined with our Values of Proud, Happy, Honest and Supportive continue to
provide a robust framework for explaining how we get things done and what
factors to consider when decisions are required. Our team also has an
opportunity to ask open questions and understand key decisions in their
interaction with our Senior Leadership Team, who host Team Forums at each
branch, or virtually, every month. Many of the improvement areas in the
business are found in these sessions and our team often has a creative
solution to issues we are facing whether they be people, customer or
operational challenges. We also ensure each member of our team has a one on
one meeting with their Manager each month, to ensure pastoral and performance
conversations happen regularly, which contributes to our ongoing high levels
of employee engagement.
The learning and development of our people is vital to the future success of
our business. Our new Learning and Development platform launched last year to
the entire Company allows individual learning journeys to be created, logged
and reviewed.
We believe that the happiness of our team is directly correlated to our
customer satisfaction and engagement can be enhanced by giving something back
to the team. Our 'One Big Dream' initiative has been a huge success, with our
people using two paid hours per month for their own fulfilment.
We continue to have fantastic examples of our team using this time to follow
their dreams, whether it be to attend a class or watch their child in a school
production. Since 2017 we have committed to being a Real Living Wage employer
and we launched our sixth SAYE scheme in the second half of this year, again
offering the opportunity to become a Motorpoint shareholder to our entire
team, with strong uptake. Finally, none of our team has had to work on their
birthday since 2015, something we believe is a great benefit and is unique in
the UK.
Our annual participation in the 'bHeard Best Companies to Work For' provides
an opportunity for our team to provide honest, valuable feedback on their
engagement levels and how we can improve these further. I am proud that we
again achieved Top 100 status in The UK's 100 Best Companies to Work For. This
is the eighth consecutive year that we have been placed in the Top 100 and is
testament to the hard work of our management team in listening and acting on
our people's feedback. We were also Number 1 in the Automotive category.
We have a responsibility to improve diversity and inclusion in our industry.
We appointed a Head of Recruitment and Inclusion in December 2020 and have
continued to advance our plans during the year.
ESG
During the year, the Group made significant progress on its ESG strategy. We
recognise that climate change is the most serious challenge currently
threatening the global community and we understand we have a role to play in
reducing greenhouse gas emissions. In partnership with an independent third
party, a thorough stakeholder engagement process and independent materiality
assessment was conducted to ensure we measure and maximise our emission
reductions. Through this process, we have been able to understand and then
offset through the purchase of carbon credits all our Scope 1 and 2 emissions
to be carbon net neutral. Our priority is to continue to reduce our Scope 1
and 2 emissions, and to focus on Scope 3 emissions.
Motorpoint has always been conscious of its sustainability footprint and has
recycled vehicle parts such as tyres, batteries and brake discs for many years
wherever possible. We have continued our partnership with Go Green to support
our drive to become more efficient with the classification and segregation of
our waste. The past year has seen 81% of all business waste recycled, and our
total waste to landfill figure dropping below 1%. The next financial year will
see us make further improvements to reduce our waste to landfill figure.
The Board is also pleased to announce that its recently established ESG
Committee will be chaired by Adele Cooper, an existing Non-Executive Director.
Adele's role is in addition to the appointment of a specialist Sustainability
Manager, who joined the Group in September 2021, to lead on the process
outlined above.
Customers
Our highly engaged team continued to deliver our market leading proposition of
Choice, Value, Service and Quality to our loyal customers during the period.
We have an unerring focus on customer satisfaction. We take it personally when
a customer is not happy, as we have failed if this happens, and immediately
look to remedy any dissatisfaction. We want our customers to be delighted. Our
Net Promoter Score ('NPS') was a record high 84 in FY22 (H2 FY21: 83).
This level of customer loyalty is recognition of our strategy of delivering
unrivalled Choice, Value, Service and Quality:
Choice - our unique independent model allows us to source and sell from the
broadest range of suppliers, allowing us to flex our offering to achieve the
greatest value for our customers. We also launched our digital car buying
service in the year, which is another important supply channel for Motorpoint.
In the year we have stocked well over 600 models from 38 manufacturers, and we
are able to rapidly follow emerging customer preferences, such as through our
increasing proportion of hybrid and electric sales. Our range increased in the
period with a greater proportion of prestigious vehicles, as well moving into
the greater than three year old car market, where we quickly gained market
share.
Value - we are an omnichannel vehicle retailer, predicated on working to a
high volume and keeping our cost base low. This allows us to share value with
our customers, reinforcing our volume model. We offer all customers finance
and ancillary product offerings, where we also champion low prices,
illustrated by our decision to again reduce our finance APR rates, from 9.9%
to 8.9% in October 2021. For higher value vehicles (over £35,000) our APR
rate is 7.9%. Our Value proposition continues to appeal during these uncertain
times.
Service - service is what will ultimately set us apart in the market. We
measure ourselves primarily using NPS - on this measure we have improved
again, with a record score of 84 (H2 FY21: 83). We are delighted with this
level of customer satisfaction, but are always striving for more, and
constantly challenge our processes to make the buying experience as smooth as
possible. Motorpoint serves all buyers, whatever their location, and whether
they wish to buy online, in person at our branches, or through a fluid
combination of both channels.
Motorpoint has become one of a select number of businesses to be included in
the brand new Platinum category in recognition for achieving successive years
of Feefo Gold Trusted Service status.
Quality - our strategic vision is to ensure that our omnichannel model
delivers the same exceptional experience in any channel with which the
customer chooses to interact. Our ambition is to be the most trusted
automotive retailer, and this means quality across everything we do, with
complete focus on our customers' needs.
Strategy Update
In June 2021, we announced our objectives to significantly increase our rate
of growth, with the aim of at least doubling FY20 revenue to over £2bn in the
medium term, by:
• Growing our E-commerce revenue to over £1bn by substantially
increasing investment in marketing, technology and data.
• Opening 12 new sales and collection branches to service revenue
growth, increasing investment in the customer proposition, and expanding our
supply channels.
• Leveraging our E-commerce platform Auction4Cars.com to accommodate
new supply channels and to launch our marketplace offering.
• Increasing operational efficiency through further automation and
technology investment as customers migrate to E-commerce channels.
Overall revenue grew 83.3% from £721.4m to £1,322.3m. Around 60% of
transaction volumes were online in FY22 (FY21: 69% which was inflated by
branch lockdown closures). E-commerce revenue grew to £624.9m (FY21:
£437.1m). Consequently, we are ahead of plan to grow revenue to £2bn.
As planned, we invested heavily in the period in capability, technology and
marketing. We are excited by our strong progress one year in, and as a result
are accelerating our pace of investment in transformational change. We have
completed a third party audit of our tech stack, and a future road map has
been developed. A significant number of new technology roles have been
recruited, with the focus on engineers and enabling our migration to the
cloud. Our new Chief Digital Officer was recruited in February 2022, and we
are already seeing the benefits this new experience brings as we execute our
shift to become an agile, product led digital leader.
We have made significant improvements to our website, email communications and
targeted digital marketing activity. Website traffic improved by 15% compared
to the same period a year ago, and improvements have been made in all email
metrics, with unsubscribe rates dropping to just 0.1%. We have invested in
data science tools and talent and this now supports buying and pricing
decisions and targeted customer communications; we are excited by the
opportunity this brings.
Three new branches opened successfully in the second half of FY22, namely
Manchester, Maidstone and Portsmouth, each strategically significant regions
for the Group. Our estate has therefore expanded to 17 branches. The future
pipeline remains strong and further openings can be expected in FY23 as we
expand our geographical footprint to increase market share. Our Motherwell
preparation centre, our second dedicated preparation site, opened in August
2021, and has the capacity to prepare 20,000 cars per annum; retail
preparation capacity is now in excess of 120,000 units per annum (on a single
shift basis) and provides headroom as we grow the business.
In line with our objective to leverage E-commerce platforms to expand our
supply channels, the Motorpoint car buying service is now a fully automated
digital first offering and payments are made to sellers within minutes of the
vehicle being received. This is an area we intend to grow significantly as
awareness of our highly competitive offering increases.
During FY22, 17.9% of retail vehicles sold were sourced from consumers
(including part exchange) (FY21: 8.3%). Our Auction4Cars.com trading platform
has now been successfully upgraded to operate as an automated marketplace to
include third party vendors. This will be fully launched to further new
vendors in FY23 and will enable them to auction their own vehicles digitally.
We are excited by the opportunity this presents and look forward to providing
further details in due course.
Motorpoint is an agile business with growing brand awareness, low fixed costs
and a compelling operating model that has always offered its customers the
best value proposition in the UK used car market. We have always sold cars
online, first through a call centre handling online enquiries and now through
a fully integrated, end to end digital customer journey. This digital led
experience will continue to evolve in accordance with what our customers
demand.
Fundamentally, we see this as providing a large choice of high quality
vehicles at outstanding value, and with best in class levels of customer
service in each market we operate in.
While pursuing these objectives we increasingly appreciate the significant
changes to consumer buying expectations and the changes to the marketplace of
used car retail. As the largest omnichannel used car retailer, we are excited
by the opportunity to lead, but we also embrace the amount and pace of change
required at Motorpoint to seize this opportunity.
Mark Carpenter
Chief Executive Officer
15 June 2022
Financial review
Successful year despite industry wide challenges
Despite the well-documented challenges in our industry with unprecedented
inflation and new vehicle shortages which limited our growth, the Group had a
successful year.
Group financial performance headlines
When branches reopened back in April 2021, we initially experienced record
sales and profitability. While demand was still high, revenue started to
moderate from June onwards reflecting industry wide stock shortages, although
we continued to increase market share in our core market.
Revenue for the full year increased by 83.3% to £1,322.3m (FY21: £721.4m),
following strong consumer demand for used vehicles and the Group's continued
strong market share gains. FY21 comparatives were impacted by COVID-19. Total
vehicles sold were 97.7k (FY21: 67.5k). Gross profit was £106.3m (FY21:
£62.5m), an increase of 70.1%. EBITDA, as defined within Alternative
Performance Measures at the end of the RNS, increased by 76.5% to £32.3m
(FY21: £18.3m). Profit before taxation increased by 121.6% to £21.5m (FY21:
£9.7m). This was despite a planned increase in strategic costs, as the
business further invested in people, technology and marketing.
Cash at bank increased to £7.8m (FY21: £6.0m) and we utilised £29.0m (FY21:
£Nil) of the revolving credit facility at year end. During the year
significant vehicle inflation impacted stock valuations, and we accordingly
negotiated increases in our stocking facilities from £106.0m at the start of
the year to £195.0m by year end. The last tranche of this increase of £30.0m
was made available in the last week of the financial year and used in the
early part of FY23 to reduce the revolving credit facility balance. By 23 May
2022, the Group returned to a net cash positive position.
Trading performance
The Group has two key revenue streams, being (i) vehicles sold to retail
customers via the Group's branches, call centre and digital channels, and (ii)
vehicles sold to wholesale customers via the Group's Auction4Cars.com website.
During the year, Motorpoint launched its car buying service, purchasing cars
directly from consumers, and is now a fully automated digital first offering
and payments are made to sellers within minutes of the vehicle being received.
This is an important enabler to increase the supply of retail vehicles and the
volume of transactions through Auction4Cars.com. During FY22, 17.9% of retail
vehicles sold were sourced from consumers (including part exchange) (FY21:
8.3%).
Retail customers Wholesale
customers
Total
Year ended 31 March 2022 Year ended 31 March 2021 Year ended 31 March 2022 Year ended 31 March 2021 Year ended 31 March 2022 Year ended 31 March 2021
£m £m £m £m £m £m
Revenue 1,112.3 593.8 210.0 127.6 1,322.3 721.4
Gross profit 91.0 54.1 15.3 8.4 106.3 62.5
Retail
Revenue from retail customers was up 87.3% to £1,112.3m (FY21: £593.8m),
with 62.9k vehicles sold. Retail volumes increased by 45.9% over FY21. Due to
the reduced supply of vehicles in the market, we expanded our offering from
our core market of vehicles under three years old, to include greater than
three years old, again showing our ability to successfully adapt at pace to
changing market conditions. In the year, our share of the 0-4 year old market
increased to 3.1% (FY21: 2.4%). Our average market share within a 30 minute
drive time of a branch was 7.7% (FY21: 5.5%).
Gross profit per retail unit for the financial year was £1,446 (FY21:
£1,254). In the first half, gross profit per retail unit benefited from
increased demand pushing prices up combined with robust internal changes in
buying and pricing strategies. After this period of unprecedented month on
month inflation, prices stabilised in the second half, albeit at record
levels. The Group also continued to focus on internal processes within the
vehicle handling and preparation side of the business. Improved speed of
preparation, combined with strong cost control, has resulted in efficiencies.
This was despite an increased cost of preparing vehicles in the greater than
three year old range.
Finance per vehicle sold improved significantly in the year, with an overall
penetration of 52% (FY21: 42%), and a record 58% in the last quarter. Our APR
finance rates were reduced further to 8.9% from 9.9% in October 2021 as we
reinforced our belief of being the best value car retailer in the UK. Warranty
penetration also improved from 34% in FY21 to 49%.
Our new branches in Manchester, Maidstone and Portsmouth opened in the second
half of the year, and whilst early days, we are pleased with performance thus
far.
Wholesale
Wholesale revenue via Auction4Cars.com, which sells vehicles which have been
part exchanged by retail customers, or directly purchased from consumers,
increased by 64.6%. Wholesale volumes were affected by the move into 3-4 year
old retail criteria. 34.8k vehicles were sold via this purely online platform
(FY21: 24.4k).
Gross margin strengthened to 7.3% (FY21: 6.6%), reflecting both the market and
internal pricing controls. Gross profit per wholesale unit was £440 (FY21:
£344). By the year end our Auction4Cars.com trading platform had been
successfully upgraded to operate as an automated marketplace to include third
party vendors, enabling them to auction their own vehicles digitally.
Operating expenses
Operating expenses increased from £49.9m in FY21 to £81.3m. COVID-19 relief
of approximately £3.9m explains part of this movement, along with variable
costs which were cut wherever possible last year, due to the COVID-19
lockdowns. This year the Group made a planned uplift in strategic costs, as we
further invest in people, technology and marketing. Marketing costs in total
were £18.9m (FY21: £7.0m) and people costs £34.7m (FY21: £25.6m).
Marketing costs included a greater proportion of digital spend than
previously, which is expected to continue. In addition, staff costs rose due
to planned headcount increases and bonuses. Customer acquisition cost per
retail unit was £300 (FY21: £163), and people cost per retail unit £552
(FY21: £594).
Exceptional items
There have been no exceptional items in the period (FY21: £Nil).
Interest
The Group's net financial expense was £3.5m (FY21: £2.9m).
Total interest charges on the stocking facilities in the period were £1.5m
(FY21: £1.1m), which reflected the sharp increase in inventory valuation.
Interest on lease liabilities of £1.7m (FY21: £1.6m) was incurred during the
period.
Interest on banking facilities was £0.3m (FY21: £0.2m).
Taxation
The tax charge in the period is for the amount assessable for UK corporation
tax in the year net of prior year adjustments and deferred tax. The effective
rate of tax in the year of 21.4% (FY21: 21.6%) is higher than the charge which
would result from the standard rate of corporation tax in the UK of 19.0%.
This reflects timing differences relating to fixed assets and adjustments made
in respect of prior years, partly offset by the impact of the tax rate change
on the deferred tax asset.
Shares
At 31 March 2021, 90,189,885 ordinary shares were in issue, of which 1,372,677
were held in the Employee Benefits Trust.
Earnings per share
Basic and diluted earnings per share were both 18.7p (FY21: 8.4p).
Dividends
No dividend was paid in the period (FY21: £Nil) and the Board has not
recommended a final dividend (FY21: £Nil) while it focuses on driving
significant growth.
Capital expenditure and disposals
Cash capital expenditure was £6.9m (FY21: £3.6m), and primarily related to
the fit out of the three new branches, the dedicated preparation centre in
Motherwell and various branch refits. All new properties were leased.
After the year end, the sale and leaseback of our Stockton on Tees site was
completed. The freehold was sold for £5.0m and leased backed at an annual
rent of £350k. There was no material profit or loss on this transaction.
Balance sheet
During FY22, the Group demonstrated its ability to respond to market
conditions and vehicle price inflation by successfully increasing its stocking
facilities, which now stand at £195.0m up from £106.0m in FY21. In addition,
the revolving credit facility was increased to £29.0m from £14.0m in FY21.
The Group also has an uncommitted overdraft facility of £6.0m which remains
in place and was undrawn at the year end. Both are agreed until May 2024.
Non current assets were £59.2m (FY21: £60.9m) made up of £0.6m of
intangibles, £10.9m of property, plant and equipment, £46.7m of right-of-use
assets and £1.0m of deferred tax asset (FY21: £Nil, £16.1m, £43.6m and
£1.2m respectively). At the year end the Group owned three properties, being
the preparation centre in Peterborough, the Stockton on Tees branch, and some
additional land in Glasgow. Stockton on Tees was subsequently sold after year
end and leased back. As a result of the intention to sell both Stockton on
Tees and Peterborough at the year end, there are assets held for sale of
£9.2m (FY21: £Nil). All other properties are on leases of various lengths.
Included within intangible assets was £0.6m in relation to IT projects.
The Group closed the year with £228.4m of inventory, up from £128.4m at FY21
year end. Whilst stock would have been inflated at the end of March 2021 due
to a build up for the post lockdown reopening, used vehicle values increased
considerably in the year, with inflation of over 30% since the FY21 year end.
The Group also broadened its mix of SKUs, with a greater proportion of more
expensive vehicles. Days in stock improved to 54 days (FY21: 67 days).
At 1 April 2021 the Group had £106.0m of stocking finance facilities
available with Black Horse Limited (£80.0m) and Lombard North Central PLC
(£26.0m), and £89.2m was drawn. During the year, in response to the
unprecedented inflation and move in vehicle mix, both facilities were
increased, to £120.0m and £75.0m respectively.
The Group also has a £35.0m facility with Santander UK PLC, split between
£6.0m available as an uncommitted overdraft and £29.0m available as a
revolving credit facility. At the year end, the revolving credit facility was
fully drawn, due to the timing of the availability of the stocking increase.
This revolving credit facility was increased by £15.0m during the year and
replaced the temporary £15.0m bank overdraft which expired earlier in May
2021.
Trade and other receivables have increased to £13.6m (FY21: £7.7m),
reflecting the increased volume and sales mix at the respective year ends,
with most sales being online in March 2021 due to COVID-19. When sales are
made online the cash reaches us instantly. When sales happen in branches the
use of card machines brings a timing delay and increases the debtors balance.
In addition, finance penetration increased to 52% (FY21: 42%) leading to an
increase in commissions due.
Trade and other payables, inclusive of the stock financing facilities, have
also increased to £193.8m (FY21: £125.7m), primarily reflecting increases in
the stocking facilities to £147.0m (FY21: £89.2m).
Borrowings reflect the use of the revolving credit facility. By 23 May 2022,
the Group had recorded a net cash positive position. The increase in total
lease liabilities to £52.8m (FY21: £49.3m) reflects the new branches.
Cash flow
Cash flow from operations was £(5.5)m outflow (FY21: £12.4m inflow). The
majority of this drop reflected the significant inflation coupled with
increased vehicle volumes, raising inventory values by £100.0m in the year,
and the timing of the stocking finance availability.
Other main items in the cash flow include capital expenditure of £6.9m (FY21:
3.6m), payments to satisfy future employee share plan obligations of £5.0m
(FY21 £0.4m), an increase in borrowings of £29.0m (FY21: £10.0m repayment),
principal lease repayments of £4.0m (FY21: £3.6m), interest payments of
£3.5m (FY21: £2.9m) and tax payments of £2.3m (FY21: £2.8m).
Capital structure and treasury
The Group's objective when managing capital is to ensure adequate working
capital for all operating activities and liquidity, including a comfortable
headroom to take advantage of opportunities, or to weather short term
downturns. The Group also aims to operate an efficient capital structure to
achieve the business plan.
The Group's long term funding arrangements consist primarily of the stocking
finance facilities with Black Horse Limited and Lombard North Central PLC (to
a maximum of £195.0m), trade and other payables, as well as an unsecured loan
facility provided by Santander UK PLC, split between £6.0m available as an
uncommitted overdraft and £29.0m available as a revolving credit facility.
This loan facility with Santander UK PLC is due to expire in May 2024.
Chris Morgan
Chief Financial Officer
15 June 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2022
Note 2022 2021
£m £m
Revenue 3 1,322.3 721.4
Cost of sales 4 (1,216.0) (658.9)
Gross profit 106.3 62.5
Operating expenses 4 (81.3) (49.9)
Operating profit 25.0 12.6
Finance expense (3.5) (3.5) (2.9)
Profit before taxation 21.5 9.7
Income tax expense 5 (4.6) (2.1)
Profit for the year 16.9 7.6
Other comprehensive income and expenses: (0.2) -
Items that will not be reclassified to profit or loss
Tax relating to items which will not be reclassified to profit or loss
Other comprehensive expense 5 (0.2) -
Total comprehensive income for the year attributable to equity holders of the 16.7 7.6
parent
Earnings per share attributable to equity holders of the parent
Basic 6 18.7p 8.4p
Diluted 6 18.7p 8.4p
The Group's activities all derive from continuing operations.
CONSOLIDATED BALANCE SHEET
For the year ended 31 March 2022
Note 2022 2021
£'m £m
ASSETS
£'
Non-current assets
Property, plant and equipment 10.9 16.1
Right-of-use assets 46.7 43.6
Intangible assets 0.6 -
Deferred tax asset 1.0 1.2
Total non-current assets 59.2 60.9
Current assets
Assets held for sale 9.2 -
Inventories 228.4 128.4
Trade and other receivables 13.6 7.7
Current tax receivable - 1.7
Cash and cash equivalents 7.8 6.0
Total current assets 259.0 143.8
TOTAL ASSETS 318.2 204.7
LIABILITIES
Current liabilities
Trade and other payables, excluding contract liabilities (193.8) (125.7)
Borrowings 7 (29.0) -
Lease liabilities (3.3) (2.4)
Current tax liabilities (0.6) -
Provisions (0.1) (0.1)
Total current liabilities (226.8) (128.2)
Net current assets 32.2 15.6
Non-current liabilities
Lease liabilities (49.5) (46.9)
Provisions (2.5) (2.0)
Total non-current liabilities (52.0) (48.9)
TOTAL LIABILITIES (278.8) (177.1)
NET ASSETS 39.4 27.6
EQUITY
Called up share capital 8 0.9 0.9
Capital redemption reserve 0.1 0.1
Capital reorganisation reserve (0.8) (0.8)
EBT reserve (4.7) (0.1)
Retained earnings 43.9 27.5
TOTAL EQUITY 39.4 27.6
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Note Called up Capital Capital EBT reserve Retained Total equity
redemption
reorganisation reserve
earnings
share capital
£m
£m
reserve £m £m
£m
£m
Balance at 1 April 2020 0.9 0.1 (0.8) --_ 20.0 20.2
Profit for the year - - - - 7.6 7.6
Other comprehensive income for the year _ _ _ _ _ _
Total comprehensive income for the year _ _ _ _ 7.6 7.6
Transactions with owners in their capacity as owners:
Share‑based payments - - - - 0.2 0.2
EBT share purchases and commitments _ _ _ (0.4) _ (0.4)
Share-based compensation options satisfied through the EBT _ _ _ 0.3 (0.3) _
_ _ _ (0.1) (0.1) (0.2)
Balance at 31 March 2021 0.9 0.1 (0.8) (0.1) 27.5 27.6
Profit for the year - - - - 16.9 16.9
Other comprehensive expense for the year - - - - (0.2) (0.2)
Total comprehensive income for the year - - - - 16.7 16.7
Transactions with owners in their capacity as owners:
Share‑based payments - - - - 0.1- 0.1
EBT share purchases and commitments _ _ _ (5.0) _ (5.0)
Share-based compensation options satisfied through the EBT _ _ _ 0.4 (0.4) _
- - - (4.6) (0.3) (4.9)
Balance at 31 March 2022 0.9 0.1 (0.8) (4.7) 43.9 39.4
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2022
Note 2022 2021
£m £m
Cash flows from operating activities
Cash (used in) / generated from operations 10 (5.5) 12.4
Interest paid on borrowings and financing facilities (1.8) (1.3)
Interest paid on lease liabilities (1.7) (1.6)
Income tax paid (2.3) (2.8)
Net cash (used in) / generated from operating activities (11.3) 6.7
Cash flows from investing activities
Purchases of property, plant and equipment and intangible assets (6.9) (3.6)
Proceeds from disposal of property, plant and equipment and right-of-use _ 6.1
assets
Net cash (used in) / generated from investing activities (6.9) 2.5
Cash flows from financing activities
Payments to satisfy employee share plan obligations (5.0) (0.4)
Repayment of leases (4.0) (3.6)
Proceeds from / (repayment of) borrowings 29.0 (10.0)
Net cash generated from / (used in) financing activities 20.0 (14.0)
Net increase / (decrease) in cash and cash equivalents 1.8 (4.8)
1.8
Cash and cash equivalents at the beginning of the year 6.0 10.8
Cash and cash equivalents at end of year 7.8 6.0
Net cash and cash equivalents comprises: Cash at bank 7.8 6.0
1. General information
Motorpoint Group Plc (the Company) is incorporated and domiciled in the United
Kingdom under the Companies Act 2006.
The Company is a public company limited by shares and is listed on the London
Stock Exchange; the address of the registered office is Champion House,
Stephensons Way, Derby, England, United Kingdom, DE21 6LY. The consolidated
financial statements of the Group as at and for the year ended 31 March 2022
comprise the Company, all of its subsidiaries and the Motorpoint Group Plc
Employee Benefit Trust (the 'EBT'), together referred to as the Group. This
financial information is presented in pounds sterling because that is the
currency of the primary economic environment in which the Group operates.
Going concern
The financial statements are prepared on a going concern basis. The Group
regularly reviews market and financial forecasts and has reviewed its trading
prospects in its key markets. During the year significant vehicle inflation
impacted stock valuations, and we accordingly negotiated increases in our
stocking facilities from £106.0m at the start of year to £195.0m by year
end. The last tranche of this increase was £30.0m, and this was made
available in the last week of the financial year. Accordingly, this was used
in the early part of FY23 to reduce the utilised revolving credit facility
balance of £29.0m as at the year end. This revolving credit facility was
increased by £15.0m during the year and replaced the temporary £15.0m bank
overdraft which expired earlier in May 2021.
The Board has reviewed the latest forecasts of the Group, including the impact
of multiple scenarios, and considered the obligations of the financing
arrangements.
For the purpose of considering going concern the Group focuses on a period of
at least 12 months from the point of signing the accounts.
The Board has considered a severe but plausible downside scenario in
considering the going concern status of the Group, reducing volumes and
prices, and increasing interest rates and comparing with headroom available
against banking covenants and liquid resources required to continue trading.
Taking the base case three-year forecast as the starting point, even when
applying a 25% reduction to revenue, as well as a substantial increase in
interest costs, the covenants were not breached, and liquid resources were not
depleted. In this model, operating costs were not flexed outside of built-in
inflationary increases, as in the event of a significant downturn, the Board
would take mitigating measures to reduce operating costs which would create
further headroom.
The Directors have made use of the post year end trading performance to
provide additional insight into the continuing viability of the business.
While only a short period has passed since the year end, this evidence adds
further comfort to the continuing strength of the Group in an active market.
Given the continued historical liquidity of the Group and sufficiency of
reserves and cash in the stressed scenarios modelled, the Board has concluded
that the Group has adequate resources to continue in operational existence
over the going concern period and into the foreseeable future thereafter.
Accordingly, they continue to adopt the going concern basis in preparing the
consolidated financial statements.
New standards, amendments and interpretations adopted by the Group
The Group has not early-adopted standards, interpretations or amendments that
have been issued but are not mandatory for 31 March 2022 reporting periods.
The following amended standards and interpretations effective for the current
financial year, have been applied and have not had a significant impact on the
Group's consolidated financial statements in the current or future reporting
periods and on foreseeable future transactions.
• Interest Rate Benchmark Reform - Amendments to IFRS 7, IFRS 4 and IFRS
16;
• Amendments to UK and Republic of Ireland accounting standards UK exit from
the European Union.
Basis of preparation
The financial information set out in this document does not constitute the
statutory financial statements of the Group for the year end 31 March 2022
within the meaning of Section 434 of the Companies Act 2006 but is derived
from the Annual Report and Accounts 2022. This financial information is
prepared in accordance with UK-adopted International Accounting Standards and
the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The auditors have reported on the annual
financial statements included within the Annual Report and Accounts 2022 and
issued an unqualified opinion and the auditor's report did not contain a
statement under section 498 of the Companies Act 2006.
The financial statements for the year ended 31 March 2021 have been delivered
to the Registrar of Companies and the auditor's report was unqualified and did
not contain a statement under section 498 of the Companies Act 2006.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company, entities controlled by the Company (its subsidiaries) and the
Motorpoint Group Plc Employee Benefit Trust made up to 31 March each year.
The EBT is consolidated on the basis that the Company has control, thus the
assets and liabilities of the EBT are included in the Balance Sheet and shares
held by the EBT in the Company are presented as a deduction from equity. The
EBT has been solely set up for the purpose of issuing shares to Group
employees to satisfy awards under the various share-based schemes and has no
ability to access or use assets, or settle liabilities, of the Group.
Subsidiaries are all entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They
are deconsolidated from the date that control ceases. Intercompany
transactions and balances between Group companies are eliminated on
consolidation.
2. Segmental reporting
The Group has prepared segmental reporting in accordance with IFRS 8
'Operating Segments'. During the year the information presented to the Board
has changed to reflect the different product mix and rates of growth which are
expected to continue in the future between the wholesale and the retail
revenue streams. Segmental information is presented on the same basis as the
management reporting. An operating segment is a component of the business
where discrete financial information is available and the operating results
are regularly reviewed by the Group's chief operating decision maker to make
decisions about resources to be allocated to the segment and to assess its
performance.
Operating segments are aggregated into reporting segments to combine those
with similar characteristics. The Group's reportable operating segment is
considered to be the United Kingdom operations. The Group's chief operating
decision maker is considered to be the Board of Directors.
The Group operates its omnichannel vehicle retailer offering through a branch
network and separate financial information is prepared for these individual
branch operations. These branches are considered separate 'cash-generating
units' for impairment purposes. However, it is considered that the nature of
the operations and products is similar and they all have similar long term
economic characteristics and the Group has applied the aggregation criteria of
IFRS 8. In addition, the Group operates an independent trade car auction site
offering a business-to-business entirely online auction market place platform
which is assessed by the Board as a separate operation and thus there are two
reportable segments: Motorpoint brand and Auction4Cars.com.
.
Motorpoint Motorpoint Auction4Cars Auction4Cars Total Total
2022 2021 2022 2021 2022 2021
£m £m £m £m £m £m
Revenue 1,112.3 593.8 210.0 127.6 1,322.3 721.4
Cost of sales (1,021.3) (539.7) (194.7) (119.2) (1,216.0) (658.9)
Gross profit 91.0 54.1 15.3 8.4 106.3 62.5
3. Revenue recognition
Revenue represents amounts chargeable, net of value added tax, in respect of
the sale of goods and services to customers. Revenue is measured at the fair
value of the consideration receivable, when it can be reliably measured, and
the specified recognition criteria for the sales type has been met. The
transaction price is determined based on periodically reviewed prices and are
separately identified on the customer's invoice. There are no estimates of
variable consideration.
The transaction price for motor vehicles and motor related services is at fair
value as if each of those products are sold individually.
(i) Sales of motor vehicles
Revenue from sale of motor vehicles is recognised when the control has passed;
that is, when the vehicle has been collected by, or delivered to, the
customer. Payment of the transaction price is due immediately when the
customer purchases the vehicle. Sales of accessories, such as mats, are
recognised in the same way.
(ii) Sales of motor related services and commissions
Motor related services sales include commissions on finance introductions,
extended guarantees and vehicle asset protection as well as the sale of paint
protection products. Sales of paint protection products are recognised when
the control has passed; that is, the protection has been applied and the
product is supplied to the customer.
Vehicle extended guarantees where the Group is contractually responsible for
future claims are accounted for by deferring the guarantee income received
along with direct selling costs, and then releasing the income on a straight
line basis over the remaining life of the guarantee. Costs in relation to
servicing the extended guarantee income are expensed to the statement of
comprehensive income as incurred. The Group has not sold any of these policies
in the current or prior period but continues to release income in relation to
legacy sales.
Vehicle extended guarantees and asset protection ('GAP insurance') where the
Group is not contractually responsible for future claims, are accounted for by
recognising the commissions attributable to Motorpoint at the point of sale to
the customer.
Where the Group receives finance commission income, primarily arising when the
customer uses third-party finance to purchase the vehicle, the Group
recognises such income on an 'as earned' basis.
The assessment is based on whether the Group controls the specific goods and
services before transferring them to the end customer, rather than whether it
has exposure to significant risks and rewards associated with the sale of
goods or services.
2022 2021
£m £m
Revenue from sale of motor vehicles 1,253.1 687.5
Revenue from motor related services and commissions 62.9 29.0
Revenue recognised included in deferred income at the beginning of the year - 3.3 1.7
Sale of motor vehicles
Revenue recognised included in deferred income at the beginning of the year - 3.0 3.0
Motor related services and commissions
Revenue recognised included in the contract liability balance at the beginning - 0.2
of the year
-Extended guarantee income
Total revenue 1,322.3 721.4
4. Operating profit
Operating profit include the effect of charging: 2022 2021
£m £m
Inventory recognised as expense 1,210.7 654.9
Write down of inventories recognised as an expense 1.0 0.2
Employee benefit expense 34.7 25.6
Depreciation of property, plant and equipment and right-of-use assets 7.3 5.7
Expense on short term and low value leases 0.4 0.2
Loss on disposal of property, plant and equipment - 0.1
Total expenses comprise: 2022 2021
£m £m
Cost of sales 1,216.0 658.9
Operating expenses:
Selling and distribution expenses 28.6 13.9
Administrative expenses 52.7 36.0
Total expenses 1,297.3 708.8
Receipts associated with the Job Retention Scheme of £0.1m which related to
April 2021 were re-paid in full to HMRC before the end of the year (FY21:
£3.9m claimed).
5. Taxation
2022 2021
£m £m
Current tax:
UK corporation tax 4.3 2.0
Adjustment in respect of prior years 0.3 -
Total current tax 4.6 2.0
Deferred tax:
Origination and reversal of temporary differences 0.2 0.1
Impact of UK corporation tax rate change (0.2) -
Total deferred tax - 0.1
Total tax charge in the consolidated statement of comprehensive income 4.6 2.1
Reconciliation of the total tax charge
The tax charge in the statement of comprehensive income in the year differs
from the charge which would result from the standard rate of corporation tax
in the UK of 19% (FY21: 19%):
2022 2021
£m £m
Profit before taxation 21.5 9.7
Profit before taxation at the standard rate of corporation tax of 19% (FY21: 4.1 1.8
19%)
Tax effect of:
- Fixed asset differences 0.3 0.3
- Expenses not deductible for tax purposes 0.1 -
- Adjustment in respect of prior years 0.3 -
- Re-measurement of deferred tax for changes in tax rates (0.2) -
Tax charge in the consolidated statement of comprehensive income 4.6 2.1
A tax payable balance of £0.6m (FY21: tax receivable balance of £1.7m) is
included within current liabilities (FY21: current assets) as a result of the
timing of the payments on account to HMRC.
2022 2021
£m £m
Aggregate current and deferred tax arising in the reporting period and (0.2) -
recognised in other comprehensive income and directly debited or credited to
equity:
- Deferred tax: Re-measurement of deferred tax for changes in tax rates
- Deferred tax: Adjustment in respect of prior years 0.4 -
Tax charge in the statement of comprehensive income 0.2 -
Factors affecting current and future tax charges
An increase in the UK corporation rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. As at the balance sheet date
of the 31 March 2022 the deferred tax asset has been calculated based on these
rates, reflecting the expected timing of reversal of the related temporary
differences (FY21: 19%).
6. Earnings per share ("EPS")
Basic and diluted EPS are calculated by dividing the earnings attributable to
equity shareholders by the weighted average number of Ordinary Shares during
the year.
2022 2021
Profit Attributable to Ordinary Shareholders (£m) 16.9 7.6
Weighted average number of Ordinary Shares in Issue ('000) 90,190 90,190
Basic EPS (pence) 18.7 8.4
Diluted weighted average number of Ordinary Shares in Issue ('000) 90,259 90,265
Diluted EPS (pence) 18.7 8.4
The difference between the basic and diluted weighted average number of shares
represents the dilutive effect of the currently operating schemes and the
vested but not yet exercised options. This is shown in the reconciliation
below.
The shares for the PSP20 scheme, RSA21 and RSA22 have performance criteria
which have not been met so the options are not yet dilutive. There is a
maximum of 1,142,392 additional options which have not been included in the
dilutive calculation in relation to these schemes.
2022 2021
Weighted average number of Ordinary Shares in Issue ('000) 90,190 90,190
Adjustment for share options ('000) 69 75
Weighted average number of Ordinary Shares for diluted earnings per share 90,259 90,265
('000)
7. Borrowings
The Group's available borrowings consist of an unsecured loan facility
provided by Santander UK PLC, split between £6.0m available as an overdraft
and £29.0m available as a revolving credit facility. A temporary 12 month
£15.0m overdraft facility was agreed with Santander UK PLC in May 2020 to
help support short term cash impacts, should it have been required during the
pandemic. This temporary £15.0m overdraft facility expired in May 2021 and
subsequently a £29.0m revolving credit facility was negotiated in January
2022. The revolving credit facility and the overdraft expire in May 2024. As
at the reporting date £29.0m of the revolving credit facility (FY21: £Nil)
and £Nil of the overdraft (FY21: £Nil) was drawn down. The terms of the
revolving credit facility and overdraft require a full repayment for a period
of at least one day or more in each financial year and half year with no less
than one month between repayments.
The finance charge for utilising the facility is dependent on the Group's
borrowing ratios as well as the base rate of interest in effect. During the
year ended 31 March 2022 interest was charged at 1.4% (FY21: 1.4%) per annum.
The interest charged for the year of £0.3m (FY21: £0.2m) has been expensed
as a finance cost.
8. Share capital
2022 2021
Number Amount Number Amount
'000 £m '000 £m
Allotted, called up and fully paid Ordinary Shares of 1p each
Balance at the end of the year ((1)) 90,190 0.9 90,190 0.9
(1) Share buyback
There has been no share buyback during FY21 and
FY22.
Since the commencement of the current share
buyback programme in 2019 as at 31 March 2022, 615,000 shares
have been bought back and cancelled
representing 0.7% of the issued Ordinary Shares, at a cost of £1.8m.
There are currently no shares held in treasury for use to satisfy employee
share plan obligations.
The Group does not have a limited amount of authorised capital.
9. Dividends
During the year no dividends were paid (FY21: £Nil).
The Board has not proposed a final dividend (FY21: £Nil) for the year ended
31 March 2022.
10. Cash flow from operations
2022 2021
£m £m
Profit for the year attributable to equity shareholders 16.9 7.6
Adjustments for:
Taxation charge 4.6 2.1
Finance costs 3.5 2.9
Operating profit 25.0 12.6
Share-based payments 0.1 0.2
Loss on disposal of property, plant and equipment and right-of-use assets - 0.1
Depreciation charge 7.3 5.7
Cash flow from operations before movements in working capital 32.4 18.6
Increase in inventory (100.0) (16.6)
Increase in trade and other receivables (5.9) (3.3)
Increase in trade and other payables and provisions 68.0 13.7
Cash flow from operations (5.5) 12.4
11. Post balance sheet events
After the year end, the sale and leaseback of our Stockton on Tees site was
completed. The freehold was sold for £5.0m and leased backed at an annual
rent of £350k. There was no material profit or loss on this transaction.
Alternative performance measures "APMs"
Earnings before interest, taxation, depreciation and amortisation (EBITDA)
Year ended 31 March 2022 2021
£m £m
Profit before taxation 21.5 9.7
Finance expense 3.5 2.9
Depreciation 7.3 5.7
Amortisation _ _
EBITDA 32.3 18.3
Return on capital employed (ROCE)
Year ended 31 March 2022 2021
£m £m
Operating profit 25.0 12.6
Average net assets 33.5 23.9
ROCE 74.6% 52.7%
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