REG - Vertu Motors PLC - Final results for the year ended 28 February 2017 <Origin Href="QuoteRef">VTU.L</Origin> - Part 2
10/05/2017 07:06
- Part 2: For the preceding part double click ID:nRSJ6651Ea
period, over £17.3m has been returned to the owners of the
business, with the dividend per share increasing by 280% over the same period.
While still maintaining one of the strongest balance sheets in the listed
automotive retail sector, the dividend has been funded from cash generated
from operations, without any negative impact to ongoing capital expenditure
programme nor funding of suitable acquisitions.
Maintaining a strong balance sheet is a key element of the Board's approach to
capital management, with a stated policy of moving dividend cover closer to
four times. The Board has proposed an increase in the final dividend for
2017, payable on 31 July 2017, to 0.9 pence per share (2016: 0.85), which,
when taken together with the interim dividend paid in January 2017 of 0.5
pence per share (2016: 0.45p), provides a total dividend for the year of 1.40
pence per share (2016: 1.30p). This represents an increase of 7.7% and a
dividend cover of 4.7 times (2016: 4.9 times) based upon adjusted earnings per
share. The ex-dividend date will be 29 June 2017 and the associated record
date 30 June 2017.
The proposed full year dividend of 1.40 pence represents an annualised cash
dividend of £5.5m (2016: £4.9m). The distributable reserves in the parent
company balance sheet as at 28 February 2017 were £58.9m (2016: £43.8m). At
this level of pay-out the Board does not consider there to be any significant
risks to the Group's ability to continue to pay dividends in accordance with
this pay-out strategy other than those risks listed in the annual report.
Return on equity
The Group's post-tax return on equity (measured as a 12 month average
throughout the Period) was 10.8% (2016 : 11.4%). This dilution resulted from
the use of the cash raised from the equity raise in March 2016 to fund the
acquisition of the freehold property-rich premium dealerships. While these
acquisitions have strengthened the Group's property and brand portfolios, the
Board is cognisant of the impact of equity returns, and intends to utilise the
new debt facilities to finance future acquisitions, hence improving equity
returns.
Free cashflow to equity
The Board regularly measures the long term free cashflow (operating cashflow
less interest, capital expenditure and tax, before acquisitions and dividends)
as a return on the shareholders' cash invested capital (capital raised plus
after-tax operating profits less dividends). This measure, when compared to
the cost of capital, provides an indication of the extent to which cash, hence
value, is being created in the long term. This measure stands at 12.1% over
the 10 years since the Group's formation (2016: 12.7% over 9 years). This
return compares favourably to the Group's weighted average cost of capital of
8%. The reduction in the recent Period indicated above is a result of the
high level of cash deployed on capital investment in the Period. As set out
above, we expect this level of capital investment to increase in the current
financial year before declining in 2019, when the free cashflow to equity
metric should begin to increase.
Robert Forrester
Michael Sherwin
Chief Executive Officer
Chief Financial Officer
CONSOLIDATED INCOME STATEMENT (AUDITED)
For the year ended 28 February 2017
2017 2016
Note £'000 £'000
Revenue 2,822,589 2,423,279
Cost of sales (2,509,049) (2,160,000)
Gross profit 313,540 263,279
Operating expenses (281,466) (236,100)
Operating profit 32,074 27,179
Amortisation of intangible assets 614 558
Share based payments charge 1,082 911
Operating profit before amortisation and share based payments charge 33,770 28,648
Finance income 2 261 173
Finance costs 2 (2,515) (1,390)
Profit before tax 29,820 25,962
Amortisation of intangible assets 614 558
Share based payments charge 1,082 911
Profit before tax, amortisation and share based payments charge 31,516 27,431
Taxation 3 (5,800) (5,282)
Profit for the year attributable to equity holders 24,020 20,680
Basic earnings per share (p) 4 6.14 6.06
Diluted earnings per share (p) 4 6.04 5.92
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (AUDITED)
For the year ended 28 February 2017
2017 2016
Note £'000 £'000
Profit for the year 24,020 20,680
Other comprehensive (expense) / income
Items that will not be reclassified to profit or loss:
Actuarial (losses) / gains on retirement benefit obligations (4,687) 680
Deferred tax relating to actuarial losses / (gains) on retirement benefit obligations 937 (137)
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges - 23
Deferred tax relating to cash flow hedges - (6)
Other comprehensive (expense) / income for the year, net of tax (3,750) 560
Total comprehensive income for the year
attributable to equity holders 20,270 21,240
CONSOLIDATED BALANCE SHEET (AUDITED)
As at 28 February 2017
2017 2016
Note £'000 £'000
Non-current assets
Goodwill and other indefinite life assets 94,595 69,484
Other intangible assets 1,518 1,672
Retirement benefit asset 1,884 6,097
Property, plant and equipment 197,545 150,361
295,542 227,614
Current assets
Inventories 506,470 530,371
Trade and other receivables 52,545 63,412
Property assets held for sale - 537
Cash and cash equivalents 39,845 43,915
Total current assets 598,860 638,235
Total assets 894,402 865,849
Current liabilities
Trade and other payables (610,317) (631,148)
Deferred consideration (1,572) (241)
Current tax liabilities (3,840) (3,647)
Borrowings (8,671) (6,756)
Total current liabilities (624,400) (641,792)
Non-current liabilities
Borrowings (10,166) (14,011)
Deferred consideration (236) (1,659)
Deferred income tax liabilities (5,555) (4,450)
Deferred income (7,616) (6,078)
(23,573) (26,198)
Total liabilities (647,973) (667,990)
Net assets 246,429 197,859
Capital and reserves attributable to equity holders of the Group
Ordinary shares 39,727 34,127
Share premium 124,932 96,901
Other reserve 10,645 10,645
Treasury reserve (756) -
Retained earnings 71,881 56,186
Shareholders' equity 246,429 197,859
CONSOLIDATED CASH FLOW STATEMENT (AUDITED)
For the year ended 28 February 2017
2017 2016
Note £'000 £'000
Cash flows from operating activities
Operating profit 32,074 27,179
Profit on sale of property, plant and equipment (285) (26)
Amortisation of other intangible assets 614 558
Depreciation of property, plant and equipment 8,665 6,803
Movement in working capital 16,040 30,515
Share based payments charge 1,015 781
Cash generated from operations 58,123 65,810
Tax received 359 4
Tax paid (6,103) (7,704)
Finance income received 34 36
Finance costs paid (2,447) (1,451)
Net cash generated from operating activities 49,966 56,695
Cash flows from investing activities
Acquisition of businesses, net of cash and overdrafts acquired (49,962) (24,565)
Acquisition of freehold and long leasehold land and buildings (4,456) (6,475)
Purchases of intangible assets (460) (325)
Purchases of other property, plant and equipment (25,092) (13,977)
Proceeds from disposal of business (net of cash and overdrafts) 875 2,137
Proceeds from disposal of property, plant and equipment 950 1,120
Net cash outflow from investing activities (78,145) (42,085)
Cash flows from financing activities
Net proceeds from issuance of ordinary shares 33,631 127
Proceeds from borrowings 6 10,831 18,288
Repayment of borrowings 6 (14,000) (4,441)
Purchase of treasury shares (1,000) -
Dividends paid to equity holders (5,353) (3,923)
Net cash inflow from financingActivities 24,109 10,051
Net (decrease) / increase in cash and cash equivalents (4,070) 24,661
Cash and cash equivalents at beginning of year 43,915 19,254
Cash and cash equivalents at end of year 39,845 43,915
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (AUDITED)
For the year ended 28 February 2017
Ordinaryshare capital Sharepremium Otherreserve Treasury sharereserve RetainedEarnings TotalEquity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 March 2016 34,127 96,901 10,645 - 56,186 197,859
Profit for the year - - - - 24,020 24,020
Actuarial losses on retirement benefit obligations - - - - (4,687) (4,687)
Tax on items taken directly to equity - - - - 937 937
Total comprehensive income for the year - - - - 20,270 20,270
New ordinary shares issued 5,600 29,400 - - - 35,000
Cost of issuance of ordinary shares - (1,369) - - - (1,369)
Purchase of treasury shares - - - (1,000) - (1,000)
Treasury shares issued - - - 244 (237) 7
Dividend paid - - - - (5,353) (5,353)
Share based payments charge - - - - 1,015 1,015
As at 28 February 2017 39,727 124,932 10,645 (756) 71,881 246,429
The purchase of treasury shares in the period relates to the acquisition of
2,635,687 shares by Estera Trust (Jersey) Limited, the Trustee of Vertu Motors
plc's Employee Benefit Trust ("EBT"). The shares were purchased by the Trustee
to be held for the purposes of the Employee Benefit Trust, and may be used to
transfer shares to individuals when options are exercised. This could include
the Company's Long Term Incentive Plan ("LTIP"), under which each of the
executive directors of the Company, the Company's other PDMRs and certain
other senior managers are potential participants, and is therefore regarded as
having a notional interest in these shares.
During the year, 625,134 treasury shares were transferred or sold by the EBT
on exercise of vested LTIP options, and 20,000 treasury shares were
transferred or sold by the EBT on exercise of vested Company Share Options.
The other reserve is a merger reserve, arising from shares issued for shares
as consideration to the former shareholders of acquired companies
For the year ended 29 February 2016
Ordinaryshare capital Sharepremium Otherreserve Hedgingreserve Retainedearnings TotalEquity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 March 2015 34,091 96,810 10,645 (17) 38,105 179,634
Profit for the year - - - - 20,680 20,680
Actuarial gains on retirement benefit obligations - - - - 680 680
Tax on items taken directly to equity - - - (6) (137) (143)
Fair value gains - - - 23 - 23
Total comprehensive income for the year - - - 17 21,223 21,240
New ordinary shares issued 36 91 - - - 127
Dividend paid - - - - (3,923) (3,923)
Share based payments charge - - - - 781 781
As at 29 February 2016 34,127 96,901 10,645 - 56,186 197,859
NOTES
For the year ended 28 February 2017
1. Basis of Preparation
Vertu Motors plc is a Public Limited Company which is listed on the AiM market
and is incorporated and domiciled in England. The address of the registered
office is Vertu House, Fifth Avenue Business Park, Team Valley, Gateshead,
Tyne and Wear, NE11 0XA. The registered number of the Company is 05984855.
The Group prepares financial information under International Financial
Reporting Standards (IFRS) issued by the IASB and as adopted by the European
Union (EU) and on the same basis as in 2016. Further information in relation
to the Standards adopted by the Group is available on the Group's website
www.vertumotors.com.
Whilst the financial information included in this announcement has been
computed in accordance with International Financial Reporting Standards
(IFRS's), this announcement does not itself contain sufficient information to
comply with IFRS's. The Group published full financial statements that comply
with IFRS's today and these are available on the Group's website,
www.vertumotors.com.
The financial information presented for the years ended 28 February 2017 and
29 February 2016 does not constitute the Company's statutory accounts as
defined in Section 434 of the Companies Act 2006, but is derived from those
financial statements. The auditors' reports on the 2017 and 2016 financial
statements were unqualified. A copy of the statutory accounts for 2016 has
been delivered to the Registrar of Companies. Those for 2017 will be
delivered following the Company's annual general meeting, which will be
convened on 26 July 2017.
Accounting policies
The annual consolidated financial statements of Vertu Motors plc are prepared
in accordance with IFRS's as adopted by the European Union. The annual report
has been prepared on the going concern basis under the historical cost
convention, as modified by the revaluation of financial assets and liabilities
(including derivative financial instruments) at fair value through profit or
loss.
The accounting policies adopted in this annual report can be found on our
website, www.vertumotors.com, and are consistent with those of the Group's
financial statements for the year ended 29 February 2016.
Segmental information
The Group adopts IFRS 8 "Operating Segments" which determines and presents
operating segments based on information provided to the Group's Chief
Operating Decision Maker ("CODM"), Robert Forrester, Chief Executive Officer.
There has been no change in the Group's one reportable business segment.
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.
The CODM assesses the performance of the operating segment based on a measure
of both revenue and gross margin. Therefore, to increase transparency, the
Group has included below an additional voluntary disclosure analysing revenue
and gross margin within the reportable segment.
Year ended 28 February 2017
Revenue RevenueMix GrossMargin GrossMarginMix Gross Margin
£'m % £'m % %
Aftersales * 227.0 8.0 123.4 39.4 44.6
Used cars 1,037.5 36.8 100.7 32.1 9.7
New car retail and Motability 909.4 32.2 68.3 21.8 7.5
New fleet and commercial 648.7 23.0 21.1 6.7 3.3
2,822.6 100.0 313.5 100.0 11.1
Year ended 29 February 2016
Revenue RevenueMix GrossMargin GrossMarginMix Gross Margin
£'m % £'m % %
Aftersales* 189.0 7.8 102.9 39.1 44.8
Used cars 850.2 35.1 83.5 31.7 9.8
New car retail and Motability 796.5 32.9 59.3 22.5 7.4
New fleet and commercial 587.6 24.2 17.6 6.7 3.0
2,423.3 100.0 263.3 100.0 10.9
*margin in after-sales expressed on internal and external turnover
2. Finance income and costs
2017 2016
£'000 £'000
Interest on short term bank deposits 34 36
Net finance income relating to defined benefit pension schemes 227 137
Finance income 261 173
Bank loans and overdrafts (876) (619)
Vehicle stocking interest (1,639) (572)
Other finance costs - (199)
Finance costs (2,515) (1,390)
3. Taxation
2017 2016
£'000 £'000
Current tax
Current tax charge 6,468 5,598
Adjustment in respect of prior years (227) (258)
Total current tax 6,241 5,340
Deferred tax
Origination and reversal of temporary differences (70) 395
Adjustment in respect of prior years (112) (145)
Rate differences (259) (308)
Total deferred tax (441) (58)
Income tax expense 5,800 5,282
2017 2016
£'000 £'000
Profit before taxation from continuing operations 29,820 25,962
Profit before taxation multiplied by the rate of corporation tax in the UK of 20% (2016: 20.08%) 5,964 5,213
Non-qualifying depreciation 357 245
Non-deductible expenses 267 412
Effect on deferred tax balances due to rate change (259) (308)
Property adjustment (168) 153
Permanent benefits (22) (30)
Adjustments in respect of prior years (339) (403)
Total tax expense included in the income statement 5,800 5,282
The standard rate of Corporation Tax in the UK is 20% with effect from 1 April
2015. Accordingly, the Group's profits for this accounting period are taxed
at a rate of 20%. The standard rate of Corporation Tax in the UK will be 19%
with effect from 1 April 2017.
4. Earnings per share
Basic and diluted earnings per share are calculated by dividing the earnings
attributable to equity shareholders by the weighted average number of ordinary
shares during the year or the diluted weighted average number of ordinary
shares in issue in the year.
The Group only has one category of potentially dilutive ordinary shares, which
are share options. A calculation has been undertaken to determine the number
of shares that could have been acquired at fair value (determined at the
average annual market price of the Group's shares) based on the monetary value
of the subscription rights attached to the outstanding share options.
The number of shares calculated, as set out above, is compared with the number
of shares that would have been issued assuming the exercise of the share
options.
Adjusted earnings per share is calculated by dividing the adjusted earnings
attributable to equity shareholders by the weighted average number of ordinary
shares in issue during the year.
2017 2016
£'000 £'000
Profit attributable to equity shareholders 24,020 20,680
Amortisation of intangible assets 614 558
Share based payments charge 1,082 911
Tax effect of adjustments (119) (112)
Adjusted earnings attributable to equity shareholders 25,597 22,037
Weighted average number of shares in issue ('000s) 391,116 341,080
Potentially dilutive shares ('000s) 6,800 8,388
Diluted weighted average number of shares in issue ('000s) 397,916 349,468
Basic earnings per share 6.14p 6.06p
Diluted earnings per share 6.04p 5.92p
Basic adjusted earnings per share 6.54p 6.46p
Diluted adjusted earnings per share 6.43p 6.31p
5. Dividends per share
Dividends of £5,353,000 were paid in the year to 28 February 2017 (2016:
£3,923,000), 1.35p per share (2016: 1.15p). A final dividend in respect of
the year ended 28 February 2017 of 0.90p per share, is to be proposed at the
annual general meeting on 26 July 2017. The ex-dividend date will be 29 June
2017 and the associated record date 30 June 2017. This dividend will be paid,
subject to shareholder approval, on 31 July 2017 and these financial
statements do not reflect this final dividend payable.
The last date for shareholders to elect for the Dividend Re-Investment Plan
(DRIP) will be 6 July 2017 (or such other date as the Group may specify). A
facility is provided by Capita IRG Trustees Limited in conjunction with the
Group's registrars, Capita Asset Services, for any Group shareholders who wish
to re-invest dividend payments in the Group. Under this facility, cash
dividends may be used to purchase additional ordinary shares.
Any shareholder requiring further information should call Capita on 0871 664
0300 (Calls cost 12p per minute plus your phone company's access charge. Calls
outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public
holidays in England and Wales. Overseas shareholders are best to use: +44 371
664 0300 Calls outside the United Kingdom will be charged at the applicable
international rate)or visit www.capitaassetservices.com.
6. Reconciliation of net cash flow to movement in net cash
2017 2016
£'000 £'000
Net (decrease) increase in cash and cash equivalents (4,070) 24,661
Cash inflow from proceeds of borrowings (10,831) (18,288)
Cash outflow from repayment of borrowings 14,000 4,441
Cash movement in net cash (901) 10,814
Borrowings acquired (1,085) (3,409)
Capitalisation of loan arrangement fees 107 201
Amortisation of loan arrangement fees (261) (128)
Non-cash movement in net cash (1,239) (3,336)
Movement in net cash (2,140) 7,478
Opening net cash 23,148 15,670
Closing net cash 21,008 23,148
7. Acquisitions
On 1 March 2016, the Group acquired the entire issued share capital of Sigma
Holdings and its subsidiary Greenoaks (Maidenhead) Limited (together
"Greenoaks") which operates three Mercedes-Benz outlets in Reading, Ascot and
Slough. Total consideration amounted to £30,743,000 comprising initial
consideration of £11,743,000 settled from the Group's existing cash resources,
a £10,000,000 bank loan and vendor shareholder loans of £9,000,000 which were
settled in cash on completion.
On 2 May 2016, the Group acquired the business and certain assets of Leeds
Jaguar from a subsidiary of Inchcape Plc. The consideration for this
acquisition was £592,000 and was settled in cash from the Group's existing
resources.
On 1 June 2016, the Group acquired the entire issued share capital of Gordon
Lamb Group Limited and its subsidiaries, including Gordon Lamb Limited
(together "Gordon Lamb") which operates the Toyota, Land Rover, Skoda, and
Nissan outlets in Chesterfield and the Skoda outlet in Derby. The estimated
consideration amounted to £18,781,000 and was settled in cash from the Group's
existing resources.
8. Post balance sheet events
On 31 March 2017, the Group disposed of the trade and certain assets of its
Peugeot dealership in Chesterfield to Decidebloom Limited, trading as
Stoneacre. The Group still owns the freehold property from which the
dealership operates.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Vertu Motors
See all newsREG - Vertu Motors PLC - Notice of AGM and Annual Report
AnnouncementREG - Vertu Motors PLC - Notification of Director’s interests
AnnouncementREG - Vertu Motors PLC - Notification of PDMR interests
AnnouncementREG - Vertu Motors PLC - Transaction in Own Shares
AnnouncementREG - Vertu Motors PLC - Full Year Results
Announcement