REG - Vertu Motors PLC - Interim Results <Origin Href="QuoteRef">VTU.L</Origin> - Part 2
11/10/2017 07:06
- Part 2: For the preceding part double click ID:nRSK2517Ta
- - - 244 (237) 7
Dividends 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
NOTES
For the six months ended 31 August 2017
1. Basis of Preparation
Vertu Motors plc is a Public Limited Company which is quoted on the AiM Market
and is incorporated and domiciled in the United Kingdom. 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 financial information for the period ended 31 August 2017 and similarly
the period ended 31 August 2016 has neither been audited nor reviewed by the
auditors. The financial information for the year ended 28 February 2017 has
been based on information in the audited financial statements for that
period.
The information for the year ended 28 February 2017 does not constitute
statutory accounts as defined in section 434 of the Companies Act 2006. A copy
of the statutory accounts for that period has been delivered to the Registrar
of Companies. The Auditors' Report on those accounts was not qualified and
did not contain an emphasis of matter statement under section 498 of the
Companies Act 2006.
2. Accounting policies
The annual consolidated financial statements of Vertu Motors plc are prepared
in accordance with IFRSs as adopted by the European Union. The annual report
has been prepared under the historical cost convention, as modified by the
revaluation of available-for-sale financial assets, share based payments and
financial assets and liabilities (including derivative financial instruments)
at fair value through profit or loss.
The accounting policies adopted in this interim financial report are
consistent with those of the Group's financial statements for the year ended
28 February 2017 and can be found on the Group's website,
www.vertumotors.com.
In addition, this unaudited interim financial report does not comply with IAS
34 Interim Financial Reporting, which is not required to be applied under the
AiM Rules.
3. Segmental information
The Group complies with 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. There
has been no change in the Group's one reportable operating segment.
Dealerships operate a number of different business streams such as new vehicle
sales, used vehicle sales and aftersales operations. Management is organised
based on the dealership operations as a whole rather than the specific
business streams.
These 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 business segment.
The CODM assesses the performance of the operating segment based on a measure
of both revenue and gross profit. Therefore, to increase transparency, the
Group has included below an additional voluntary disclosure analysing revenue
and gross margin within the reportable segment.
Six Months ended 31 August 2017 Revenue £'m Revenue Mix % Gross Profit £'m Gross Profit Mix % Gross Margin %
Aftersales4 115.5 8.0 64.2 40.4 45.2
Used vehicles 546.9 37.8 49.8 31.3 9.1
New car retail and Motability 450.6 31.2 34.3 21.5 7.6
New fleet & commercial 332.7 23.0 10.8 6.8 3.2
Total 1,445.7 100.0 159.1 100.0 11.0
Six Months ended 31 August 2016 Revenue £'m Revenue Mix % Gross Profit £'m Gross Profit Mix % Gross Margin %
Aftersales4 113.4 7.8 62.9 39.1 45.4
Used vehicles 525.6 36.1 52.3 32.5 9.9
New car retail and Motability 483.9 33.3 35.0 21.8 7.2
New fleet & commercial 331.7 22.8 10.6 6.6 3.2
Total 1,454.6 100.0 160.8 100.0 11.1
Year ended 28 February 2017 Revenue £'m Revenue Mix % Gross Profit £'m Gross Profit Mix % Gross Margin %
Aftersales4 227.0 8.0 123.4 39.3 44.6
Used vehicles 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 & commercial 648.7 23.0 21.5 6.8 3.3
Total 2,822.6 100.0 313.9 100.0 11.1
4 margin in aftersales expressed on internal and external turnover
4. Exceptional income
Six monthsended31 August Six monthsended31 August Year ended28 February
2017 2016 2017
£'000 £'000 £'000
Profit on disposal of freehold property 4,149 - -
Exceptional income 4,149 - -
On 31 August 2017 the Group completed the sale and operating lease back of the
freehold property operated by the Group's Jaguar Land Rover dealership in
Leeds, West Yorkshire. This transaction realised £14,150,000 of cash proceeds
and a £4,149,000 profit on disposal.
5. Finance income and costs
Six monthsended31 August Six monthsended31 August Year ended28 February
2017 2016 2017
£'000 £'000 £'000
Interest on short term bank deposits 6 29 34
Vehicle stocking interest 36 - -
Net finance income relating to Group pension scheme 24 112 227
Finance income 66 141 261
Bank loans and overdrafts (364) (393) (876)
Other finance costs (164) (28) (1,639)
Vehicle stocking interest - (883) -
Finance costs (528) (1,304) (2,515)
6. Taxation
The tax charge for the six months ended 31 August 2017 has been provided at
the effective rate of 19% (Six months ended 31 August 2016: 20%).
7. 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 period or the diluted weighted average number of ordinary
shares in issue in the period.
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 as 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 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 period.
Six monthsended31 August Six months ended31 August Year ended28 February
2017 2016 2017
£'000 £'000 £'000
Profit attributable to equity shareholders 19,625 14,987 24,020
Exceptional income (4,149) - -
Amortisation of intangible assets 313 304 614
Share based payments charge 548 483 1,082
Tax effect of adjustments 417 (61) (119)
Adjusted earnings attributable to equity shareholders 16,754 15,713 25,597
Weighted average number of shares in issue ('000s) 394,938 387,047 391,116
Potentially dilutive shares ('000s) 5,412 7,783 6,800
Diluted weighted average number of shares in issue ('000s) 400,350 394,830 397,916
Basic earnings per share 4.97p 3.87p 6.14p
Diluted earnings per share 4.90p 3.80p 6.04p
Adjusted earnings per share 4.24p 4.06p 6.54p
Diluted adjusted earnings per share 4.18p 3.98p 6.43p
8. Reconciliation of net cash flow to movement in net cash
31 August2017 31 August2016 28 February2017
£'000 £'000 £'000
Net increase / (decrease) in cash and cash equivalents 4,313 (11,795) (4,070)
Cash inflow from increase in borrowings (4,926) (13,846) (10,831)
Cash outflow from repayment of borrowings - 16,468 14,000
Cash movement in net cash (613) (9,173) (901)
Borrowing acquired - (1,085) (1,085)
Capitalisation of loan arrangement fees 425 107 107
Amortisation of loan arrangement fee (53) (91) (261)
Non cash movement in net cash 372 (1,069) (1,239)
Movement in net cash (241) (10,242) (2,140)
Opening net cash 21,008 23,148 23,148
Closing net cash 20,767 12,906 21,008
9. Retirement benefits
31 August2017 31 August2016 28 February2017
£'000 £'000 £'000
Bristol Street Pension Scheme surplus 5,704 2,673 1,884
SHG Pension Scheme deficit - (1,298) -
Net retirement benefit asset 5,704 1,375 1,884
On 27 February 2017, the assets and liabilities of the SHG Pension Scheme were
merged into the Bristol Street Pension Scheme. The Group now operates only one
defined benefit pension scheme, the Bristol Street Pension Scheme, and the SHG
Pension Scheme is in the process of being wound up.
During the six month period ended 31 August 2017, there was a gain on assets
of £942,000. There have also been changes in the financial and demographic
assumptions underlying the calculation of the liabilities. In particular, the
assumed rate of future RPI has fallen over the six month period, and the
expectation of future mortality improvements has reduced. The effect of these
changes in assumptions was a decrease in liabilities of £2,768,000. In total,
there was an actuarial gain of £3,710,000 recognised in the Statement of
Comprehensive Income in the period, before deferred taxation.
10. Cash flow from movement in working capital
The following adjustments have been made to reconcile from the movement in
working capital balance sheet headings to the amount presented in the cash
flow from the movement in working capital. This is in order to more
appropriately reflect the cash impact of the underlying transactions.
For the six months ended 31 August 2017
Inventories Trade and other receivables Trade and other payables Total working capital movement
£'000 £'000 £'000 £'000
Trade and other payables (592,050)
Deferred consideration (1,807)
Deferred income (8,254)
At 31 August 2017 502,585 63,007 (602,111)
At 28 February 2017 506,470 52,545 (619,741)
Balance sheet movement 3,885 (10,462) (17,630)
Disposals (297) (11) 144
Movement excluding disposal of business 3,588 (10,473) (17,486) (24,371)
Pension related balances (86)
Decrease in capital creditor 381
Increase in interest accrual (77)
Increase in share repurchase accrual (240)
Movement in working capital (24,393)
For the six months ended 31 August 2016
Inventories Trade and other receivables Trade and other payables Total working capital movement
£'000 £'000 £'000 £'000
Trade and other payables (598,264)
Deferred consideration (5,331)
Deferred income (7,122)
At 31 August 2016 512,076 49,223 (610,717)
At 29 February 2016 530,406 63,416 (638,890)
Balance sheet movement 18,330 14,193 (28,173)
Acquisitions 17,342 4,678 (22,403)
Disposals - - (3,500)
Movement excluding business combinations 35,672 18,871 (54,076) 467
Pension related balances (156)
Decrease in capital creditor 1,800
Increase in interest accrual (29)
Movement in working capital 2,082
For the year ended 28 February 2017
Inventories Trade and other receivables Trade and other payables Total working capital movement
£'000 £'000 £'000 £'000
Trade and other payables (610,317)
Deferred consideration (1,808)
Deferred income (7,616)
At 28 February 2017 506,470 52,545 (619,741)
At 29 February 2016 530,371 63,412 (639,126)
Balance sheet movement 23,901 10,867 (19,385)
Acquisitions 17,345 4,325 (21,583)
Disposals (149) (56) 199
Movement excluding business combinations 41,097 15,136 (40,769) 15,464
Pension related balances (247)
Decrease in capital creditor 736
Decrease in interest accrual 87
Movement in working capital 16,040
11. Goodwill and other indefinite life assets
31 August 31 August 28 February
2017 2016 2017
£'000 £'000 £'000
Goodwill 74,403 74,488 74,403
Other indefinite life assets - Franchise relationships 20,192 20,192 20,192
At end of period 94,595 94,680 94,595
12. Risks and uncertainties
There are certain risk factors which could result in the actual results of the
Group differing materially from expected results. These factors include:
failure to deliver on the strategic goal of the Group to acquire and
consolidate UK motor retail businesses, failure to meet competitive challenges
to our business model or sector, advances in vehicle technology providing
customers with mobility solutions which bypass the dealer network, inability
to maintain current high quality relationships with manufacturer partners,
economic conditions, including the potential consequences of the UK decision
to leave the EU, impacting trading, market driven fluctuations in used vehicle
values, litigation and regulatory risk, failure to comply with health and
safety policy, failure to attract, develop and retain talent, failure of Group
information and telecommunication systems, malicious cyber-attack,
availability of credit and vehicle financing, use of estimates and currency
risk.
All of the above principal risks are consistent with those detailed in the
Annual Report for the year ended 28 February 2017.
The Board continually review the risk factors which could impact on the Group
achieving its expected results and confirm that the above principal factors
will remain relevant for the final six months of the financial year ending 28
February 2018.
1 Adjusted for exceptional items, amortisation of intangible assets and share
based payments charge
2 The Board considers market expectations for the financial year ending 28
February 2018 are best defined by taking the range of forecasts of adjusted
profit before taxation published by analysts who consistently follow the
Group. The current consensus of adjusted profit before taxation as at 11
October 2017, based on the published analysts' forecasts of which the Board is
aware, is £31.8m.
3 Margin expressed on internal and external turnover
4 Relates to businesses acquired or developed subsequent to 1 March 2016 with
businesses migrating into core once they have been in the Group for over 12
months
5 2016 volumes include businesses acquired in the year ended 29 February 2016
This information is provided by RNS
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