TIDMMOTR
RNS Number : 0642C
Motorpoint Group plc
16 June 2021
16 June 2021
Motorpoint Group PLC
("Motorpoint" or the "Group")
Final Results and New Strategic Objectives
New strategic objectives of achieving GBP1bn in online revenue
and more than GBP2bn in total revenue in the medium term
Accelerated investment in E-commerce driving strong online
revenue growth
Robust full year financial performance given COVID-19
disruption, with branches closed for over six months, and strong
reopening performance in April 2021
Motorpoint Group PLC, the UK's leading independent omnichannel
vehicle retailer, today announces its final results for the year
ended 31 March 2021 ("FY21"), and presents its new strategic
objectives.
New strategic objectives
The Group has exciting plans to significantly increase its rate
of growth, with the aim of at least doubling FY20 revenue to over
GBP2bn in the medium term, with an improved margin and strong cash
generation as we leverage the operating cost base.
This will be achieved through:
-- Growing our E-commerce revenue to over GBP1bn 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 Auction4Cars.com platform 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
Our Auction4Cars.com business has a huge opportunity to disrupt
the established vehicle auction market using the well respected and
trusted Motorpoint brand to acquire stock, as well as from other
vendors to supply the wholesale market, generating additional
revenue and profit. Our plan scales this business significantly. We
are launching developments to our existing online auction site
(which sold over 35,000 cars in FY20) which will significantly
increase volumes.
FY21 Financial highlights
-- Revenue of GBP721.4m down 29.1% (FY20: GBP1,018.0m), as
a consequence of the COVID-19 pandemic and Government
imposed lockdowns
-- Gross profit of GBP62.5m (FY20: GBP78.9m), and profit
before taxation of GBP9.7m (FY20: GBP18.8m)
-- Improved gross margin of 8.7%, up 90bps (FY20: 7.8%) due
to efficient vehicle sourcing, improved operational controls
and strong demand following the first UK lockdown
-- EBITDA(1) of GBP18.3m (FY20: GBP27.3m)
-- Operating cash conversion(2) of 98.4% (FY20: 148.9%)
-- Basic earnings per share of 8.4p(3) (FY20: 16.4p)
-- Relief claimed from Government via CJRS in FY21 of GBP3.9m
(FY20: GBP0.3m) and rates support of GBP1.8m (FY20: GBPNil)
FY21 Operational highlights
-- 69% of units were sold online, over 47,000 units (FY20:
54%, over 52,000 units)
-- Approximately 68,000 vehicles sold in the year, including
circa 25,000 via the Group's Auction4Cars.com purely E-commerce
platform
-- E-commerce investment in technology and marketing infrastructure
accelerated, with results that have exceeded the Board's
expectations
-- Q4 (Jan-Mar 2021) online retail sales grew 89% against
prior year, with Home Delivery representing 57% of this
-- 9,300 cars delivered through free Home Delivery which
was fully launched in May 2020
-- Launch of fully digital end-to-end customer journey
-- Significantly increased opportunities for new sales-only
branches to complete hub and spoke network, due in part
to OEM rationalisation of franchised network
-- Investment in upgrading technology and marketing infrastructure
substantially increased during period, further enhancing
E-commerce opportunity
-- H2 Net Promoter Score ('NPS') of 83, an all-time high,
and repeat customers 33.1% (FY20: 30.5%)
-- Employee engagement at record levels; placed 18(th) in
The Sunday Times Best Large Company to Work for, and placed
1(st) in the Automotive sector
-- Opened 14(th) branch at Stockton on Tees in December 2020
-- Scotland Preparation Centre acquired, adding >20,000 units
to retail capacity; retail preparation capacity now in
excess of 120,000 units per annum
Current trading and outlook
-- Since branches reopened, trading has been strong and significantly
ahead of the same period in FY20 (which represents a more
meaningful comparative than FY21) reinforcing our belief
that our customer-centric omnichannel proposition remains
the most appropriate business model for the used car market
-- Margins for both retail and wholesale sales have been
strong, well ahead of seasonal levels due to increased
use of data in pricing decisions and strong demand
-- Semi-conductor shortage impacting new car production expected
to benefit sales of nearly new cars in the short term,
although this could result in a future headwind
-- Strong balance sheet at year end maintained, with cash
levels trending positively
-- All employees have returned from furlough
Mark Carpenter, CEO of Motorpoint, said:
"I am delighted with our performance in the year given the
external challenges faced as we have transformed our capability by
continuing to invest in our E-commerce execution. We now have a
fully scaled Home Delivery service, an integrated, end-to-end
digital customer journey, additional capacity to grow through our
increased preparation and branch presence, and an ambitious growth
strategy to more than double revenue and profit in the medium term
through increased investment in technology, marketing, data and
talent.
At the heart of Motorpoint is our team and culture and I am
proud that this was recognised with our record employee engagement
score and our record NPS of 83 during exceptional circumstances in
the year. I would like to thank all our employees for their
contribution; their passion, agility and determination to win is
inspiring.
Motorpoint is already well advanced on its journey to become the
dominant E-commerce led omnichannel used car retailer in the UK
with an unrivalled consumer offering in the nearly new market,
coupled with a digital-led auction channel with huge potential. We
will continue investing in the business to achieve our medium term
goal of at least doubling revenue and growing E-commerce revenue to
over GBP1bn.
I believe Motorpoint is the best in class in the nearly new car
market with leading national brand awareness metrics, an unrivalled
heritage, enhanced digital presence and expertise that will ensure
we continue to strengthen our competitive position. We now have an
opportunity to grow rapidly as we continue our transformation into
an E-commerce led business with huge potential."
Enquiries:
Motorpoint Group PLC via FTI Consulting
Mark Carpenter, Chief Executive
Officer
Chris Morgan, Chief Financial
Officer
FTI Consulting (Financial PR)
Alex Beagley
James Styles
Sam Macpherson 020 3727 1000
Explanatory notes
(1) Calculated as profit before tax of GBP9.7m adding back
finance expense of GBP2.9m and depreciation of GBP5.7m (FY20:
Profit before tax of GBP18.8m adding back finance expense of
GBP3.5m and depreciation of GBP5.0m).
(2) Calculated as cash generated from operations of GBP12.4m
divided by operating profit of GBP12.6m (FY20: Cash generated from
operations of GBP33.2m divided by operating profit of
GBP22.3m).
(3) See note 6 for calculation.
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 omnichannel vehicle
retailer, selling through its E-commerce platforms of
Motorpoint.co.uk and Auction4Cars.com and 14 retail branches. The
Group's principal business is the sale of nearly-new vehicles,
which are up to three years old and have covered less than 30,000
miles. Motorpoint sells vehicles from brands representing over 95
per cent of new vehicle sales in the United Kingdom, with models
from Ford, Vauxhall, Volkswagen, Nissan, Hyundai, Audi and BMW
being amongst the top sellers. The Group operates from 14 retail
branches across the United Kingdom: Birmingham, Birtley, Burnley,
Castleford, Chingford, Derby, Glasgow, Newport, Oldbury,
Peterborough, Sheffield, Stockton on Tees, Swansea and Widnes, of
which six have opened in the last five years; together with
E-commerce channels for retail and trade, supported by a customer
contact centre.
Chairman's statement
Introduction
At the onset of the first UK lockdown, with uncertainty around
the duration and depth of the crisis, the Board took a number of
short-term actions to protect the business and sought to share the
burden of those across stakeholder groups. 2021 Executive Director
annual bonus schemes were cancelled, and the Executive Directors
and the Senior Leadership Team took voluntary pay cuts. Our CEO
Mark Carpenter received the pay equivalent to the National Minimum
Wage for two months and the salary and fees of the other directors
were halved. Dividends were suspended and share buy backs
cancelled. These were difficult decisions, but we acted quickly to
protect the business and it placed the Group in an exceptionally
strong position when the market reopened.
As the UK's leading independent omnichannel vehicle retailer,
our approach has always been to provide the customer with a first
class, integrated customer experience. Our customers can shop
online from a desktop or mobile device, by telephone, and/or at one
of our retail branches, and the experience is seamless. The
increase in our online business accelerated the need to upskill,
train and bring on board additional team members. We prioritised
investment in E-commerce, launching contactless collections, a free
Home Delivery service, a 14-day money back guarantee and, most
recently, a fully digital part-exchange and finance offering. This
enables customers to complete their purchase process entirely
online. These initiatives build from a strong and long history of
online sales and previous investment in automation and data
utilisation.
The Group is utilising the footprint of existing retail
locations to act as spokes for distribution and collection
nationwide, enabling same day in-branch collection and next-day
home delivery. Motorpoint serves all car buyers, whatever their
location, and whether they wish to buy online, in-person at our
branches or through a combination of both channels. Motorpoint
customers are delighted with the unrivalled Choice, Value, Service
and Quality they receive: underlined in our recent NPS of 83 in H2,
up from 81 in FY20.
Performance
Group revenues for the year were 29.1% lower compared to the
previous year, as a consequence of the COVID-19 pandemic and
Government imposed lockdowns. Our showrooms were shut for around
six months of the year. In these circumstances, the Group delivered
a robust performance, underlining the strength of Motorpoint's
omnichannel model and in particular, the momentum and potential of
its online channel. Approximately 68,000 vehicles were sold during
the year, including circa 25,000 wholesale units purely online
through the Group's Auction4Cars.com platform. Of the retail sales,
52% were sold online (over 22,000 units), retaining our position as
one of the leading retailers of nearly new cars in the UK, both
online and offline.
In the first three months of 2021, when all retail branches were
closed, online sales grew 89% against the equivalent period last
year, with Home Delivery contributing 57% of this. In March alone,
3,300 units were sold online. The results from our accelerated
investment to date have exceeded the Board's expectations and
E-commerce will continue to be our priority moving forward.
The Group successfully opened its 14(th) branch, at Stockton on
Tees, in December 2020, and completed the sale and leaseback of its
Swansea branch in early 2021.
Closing Position
The Group's balance sheet remains robust with no structural
debt, and net cash (comprising cash and cash equivalents less
borrowings) at the year end was GBP6.0m. The cash positive position
demonstrates the strength of the business, the impact of the
investment decisions and activities, not having forward purchasing
commitments, and a well-controlled and adaptable cost base. The
significant amount of cash that the business is able to generate
allows flexibility to invest in our E-commerce strategy and new
branches.
Dividend
Given that FY21 represented a period of disruption and
uncertainty, the Board has decided it is not appropriate to declare
a final dividend. While the Group's capital allocation framework
under our new strategic objectives will prioritise investment in
faster growth, the very high cash generative qualities of the
business mean that shareholders should still expect ongoing cash
returns, and as such, this will be kept under regular review.
Board Composition
Part of my role as Chairman is to ensure that your Board has the
necessary skills, knowledge and experience to make informed
judgements that are in the best interests of all stakeholders.
I would like to pay tribute to Gordon Hurst, who stepped down in
May 2020. We welcomed Keith Mansfield to the Board in May 2020 as
Chair of the Audit Committee and Non-Executive director of the
Company. Keith also serves on the Nomination and Remuneration
committees. A chartered accountant by profession, Keith has chaired
a number of audit committees for organisations with a public as
well as commercial mandate.
James Gilmour stepped down as Chief Financial Officer on 20
August 2020, having been with the Group since 2016. We welcome his
replacement, Chris Morgan, who joined us as the new Chief Financial
Officer in January 2021. Chris brings a strong set of financial,
operational and strategic skills to the Board.
We are looking to further broaden the skill base of the Board to
help ensure we capture the opportunity afforded by evolving
customer buying habits.
The Year Ahead
All of the Group's retail branches reopened on 12 April 2021 in
England and Wales, and on 26 April 2021 in Scotland, supported by a
host of operational improvements delivered over the last year. The
Board anticipated pent-up consumer demand upon reopening, and this
has proven to be the case.
The Board also expects continued growing momentum for its
E-commerce, Home Delivery and Reserve and Collect services as
consumer buying habits evolve. The accelerated expansion of our
E-commerce offering, coupled with new sales and fulfilment
branches, provides the Board with a high level of confidence in the
Group's potential to gain significant further market share.
Further excitement comes from the investment into Auction4Cars
and the significant opportunity this will bring.
We have today unveiled our new strategic objectives, and the
Board is very excited about the changes and opportunities that this
brings. The new plans are discussed in more detail in the Chief
Executive's statement.
Finally, I would like to thank my fellow Board members and
everyone at Motorpoint for their hard work and commitment, and for
the way they responded to the COVID-19 pandemic, ensuring that the
business was further strengthened during these difficult times.
Mark Morris
Chairman
16 June 2021
Chief Executive's statement
Overview
Motorpoint has delivered a resilient trading performance for the
year, against a backdrop of forced branch closures and the
challenging economic uncertainty caused by the COVID-19 pandemic.
We took positive actions to accelerate planned initiatives, notably
investment in digital, to support our growth strategy.
The Group has prioritised investment in E-commerce, launching
contactless collections, a free Home Delivery service, a 14-day
money back guarantee and, most recently, a fully digital
part-exchange and finance offering, enabling customers to complete
their purchase process entirely online. The results from our
accelerated investment to date have exceeded expectations and
E-commerce will continue to be our priority moving forward.
Our focus on growing our E-commerce and Home Delivery channels
continued throughout FY21 with further milestones achieved. We also
continued our branch expansion programme, opening a new branch (our
14(th) ) at Stockton on Tees in December 2020. The pandemic
situation has meant that branch research activity to identify
further new locations was reduced during the lockdowns. Lockdown
easing in the new financial year has meant that this activity has
accelerated, and we are confident of opening more branches this
year, with several at an advanced stage. These will further support
our digital investment, by offering Reserve and Collection centres
and Home Delivery on a nationwide basis.
Our operating model begins with our people
The past year has been unprecedented, and our people have been
exemplary in their commitment to the business, with team engagement
scores reaching their highest ever level in the second half of the
year.
Our operating model of how our key stakeholders interact is well
understood by our people and is covered in detail with every new
starter when they attend our induction programs, which were held
virtually this year. The Motorpoint Virtuous Circle combined with
our Motorpoint Values continue to provide a robust framework for
explaining how we get things done and what factors to consider when
decisions are required. Our people have 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, usually every month. Many of the improvement areas in
the business are found in these sessions and the team often has a
creative solution to issues we are facing whether they be people,
customer or operational challenges.
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. I am also
delighted at the progress we have made by growing our Technology
and Marketing teams this past year.
We believe that the happiness of our people 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 fulfilment. We continue to have fantastic
examples of our people using this time to follow their dreams,
whether it be to attend a class or watch a school production. I am
proud of the breadth of team engagement enterprises that Motorpoint
actively supports.
Since 2017 we have ensured a minimum pay rate that is in line
with the Real Living Wage and we launched our fifth SAYE scheme
offering the opportunity to become a Motorpoint shareholder to our
entire team. I am delighted to see that the rewards of this scheme
are embraced by our team, with this year's offering again seeing
strong take-up across the business.
Our annual participation in the Sunday Times Top 100 Best
Companies to Work For provides an opportunity for our people to
provide valuable feedback on their engagement levels and where we
can improve these further. This year was no exception, and great
insight was provided by our people and I am extremely pleased that
we again achieved Top 100 status. This is the seventh 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 have a responsibility to improve diversity and inclusion in
our industry. We appointed a Head of Recruitment and Inclusion in
December 2020 and will advance our plans in the months ahead. I
have also joined the Automotive 30% Club, a voluntary network of
MDs and CEOs from UK based automotive manufacturing, retailing and
supplier companies with the purpose of achieving a better gender
balance within the automotive industry.
Customers
Our highly engaged team continued to deliver our leading
proposition of Choice, Value, Service and Quality to our loyal
customers during the year. We have an unerring focus on customer
satisfaction and that leads to 33% of customers repeat purchasing
from us. We take it personally when a customer is not happy, as we
have failed if this happens.
This level of 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. In the year we have
stocked over 300 models, and we are able to rapidly follow emerging
customer preferences, such as through our increasing proportion of
hybrid and electric sales.
Value - we are an omnichannel car retailer, predicated on
working to a high volume and keeping our cost base modest. This
allows us to share value with our customers, reinforcing our volume
model. We support our cars with competitive finance and ancillary
offerings, where we also champion low prices, such as where we have
reduced our customer finance rates in December 2020. Our Value
proposition has become increasingly appealing during these
uncertain times.
Service - service is what will ultimately set us apart in the
market. We measure ourselves primarily using Net Promoter Score
('NPS') - on this measure we have improved again, with a score of
83 in H2 (H2 is considered to be a more representative period,
since customer activity was significantly impacted during the first
lockdown at the start of FY21). We are delighted with this level of
customer satisfaction, but are always striving for more, and
constantly challenge our processes to make the car-buying
experience as smooth as possible. Motorpoint serves all car buyers,
whatever their location, and whether they wish to buy online,
in-person at our branches, or through a 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 - a new pillar to our strategic vision to ensure that
our omnichannel model delivers the same experience as our pure
branch model. 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.
Financial position
Group revenues of GBP721.4m for the year were 29.1% lower
compared to the previous year (FY20: GBP1,018.0m), as a consequence
of the COVID-19 pandemic and Government imposed lockdowns. Profit
before tax reduced to GBP9.7m (FY20: GBP18.8m) and we were able to
break even in the second half of the year despite all retail
branches being closed for over four of the six months. Overall
marketing spend was in line with the previous year, reflecting a
reduction during lockdowns, but an acceleration in spend prior to
the reopening of branches in April 2021.
Gross margin increased to 8.7% (FY20: 7.8%). This increase
reflects robust vehicle margins, strong buying and pricing
controls, as well as efficiency improvements to the preparation
processes.
Trade revenue fell in line with retail sales, since
Auction4Cars.com sells wholesale vehicles which have been part
exchanged by retail customers. Roughly 25,000 vehicles were sold
via this purely online platform. Gross margin strengthened to 6.6%
(FY20: 5.2%), again the result of the market and internal pricing
controls.
Operating expenses fell by 11.8% to GBP49.9m (FY20: GBP56.6m),
despite the opening of Stockton on Tees and the full year effect of
Swansea, which opened in January 2020. The business also benefitted
from CJRS income totalling GBP3.9m (FY20: GBP0.3m) and rates relief
of GBP1.8m (FY20: GBPNil) in FY21. Overheads remained under tight
control throughout FY21, with all discretionary spend challenged.
Branch level costs were reduced wherever possible, particularly
during periods where there were no onsite customers.
Due to the branch closures, specific cost reduction and cash
management steps were taken, including a voluntary pay reduction. I
received salary equivalent to the National Minimum Wage for two
months, and the salary of the former CFO was halved during this
period. All 2021 annual bonus schemes were suspended, and the
entire Senior Leadership Team took voluntary pay cuts.
The Group's balance sheet remains robust with no structural
debt, and net cash at the year end increased to GBP6.0m (FY20:
GBP0.8m). This ensured headroom within both the bank financing and
stocking facilities.
Capital expenditure of GBP3.6m (FY20: GBP12.3m) related to the
new Stockton on Tees branch, and investment in IT to accelerate our
digital investment. Also, a number of branches were refurbished in
the year. The sale and leaseback of our Swansea branch was
completed in early 2021, realising cash proceeds of GBP6.1m.
New strategic objectives: To achieve GBP1bn in online revenue
and more than GBP2bn in total revenue in the medium term
Motorpoint is an agile business with strong 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 whether purchasing online,
through our retail branches, or using a combination of these
channels.
The customer journey is becoming ever more fluid. An accelerated
expansion of our E-commerce offering, coupled with 12 new sales and
collection branches, provides the Board with increased confidence
that we can grow both market share and revenue rapidly in the
coming years.
The Group has exciting plans to significantly increase its rate
of growth, with the aim of at least doubling FY20 revenue in the
medium term, with an improved margin and strong cash generation as
we leverage the operating cost base.
This will be achieved through:
-- Growing our E-commerce revenue to over GBP1bn by substantially
increasing investment in marketing, technology and data
-- Opening 12 new sales and collection branches, increasing
investment in the customer proposition, and expanding
our supply channels
-- Leveraging our E-commerce Auction4Cars.com platform 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
We will use data and technology to enable targeted customer
segmentation, expand our branch network to increase capacity and
establish customer collection and home delivery hubs, and enhance
organisational design to support this digital transformation with
further investment in our people.
Our Auction4Cars.com business has a huge opportunity to disrupt
the established vehicle auction market, using the well respected
and trusted Motorpoint brand to acquire stock to supply the
wholesale market, generating additional revenue and profit. There
are exciting opportunities to scale the business further and
investment in this E-commerce channel will enable its marketplace
potential to be unleashed.
Current Trading and Outlook
In line with the Government's COVID-19 roadmap, the Group's
retail branches fully opened in April 2021. The Board has been very
encouraged by the initial levels of consumer demand since
reopening, with a number of branches achieving record sales weeks.
Supply has more recently been constrained, but we expect this to
ease. Margins have remained strong. Digital sales continued to
perform well, and the Board expects growing momentum for its
E-commerce, Home Delivery and Reserve and Collect services as
consumer buying habits evolve.
Thanks to our focus on innovation, along with our low-cost,
agile operating model and strong brand offering, Motorpoint is well
positioned to take advantage of the continued shift of consumers to
purchase online, whilst also continuing to access the currently
larger in-branch market.
Our truly omnichannel offering means that we can provide a
seamless, fully integrated experience to our customers, whether
they wish to buy online, in-person or through a combination of
both.
Mark Carpenter
Chief Executive Officer
16 June 2021
Financial review
COVID-19
During the pandemic the Group demonstrated its agility to
respond quickly to changing trading conditions. Branches were
closed from the middle of March 2020 through to June, with further
closures in November and December, and then from January 2021 for
the remainder of our financial year.
Actions taken during the year to preserve cash and reduce costs
included suspending capital projects, reducing discretionary
spending and furloughing a large proportion of colleagues, with the
senior leadership team and Board members also taking voluntary pay
reductions to help maintain our lowest paid colleagues at 100% of
their salaries. In addition, a further temporary 12 month GBP15.0m
overdraft facility was agreed with our lender, Santander UK PLC, in
May 2020 to help support short term cash impacts, should it have
been required during the pandemic. This additional facility was not
used. Amounts relating to the CJRS scheme totalling GBP3.9m (FY20:
GBP0.3m) and rates support of GBP1.8m (FY20: GBPNil) were received
in the year.
Despite the challenges of COVID-19, the Group experienced strong
sales when branches were open to customers, especially during the
second quarter of the financial year, and enjoyed an excellent
start to FY22 as we entered the next phase of our growth plans. In
addition, the Board was encouraged by E-commerce sales during FY21,
and the outlook for this revenue stream.
Group financial performance headlines
Revenue for the year to 31 March 2021 reduced by 29.1% to
GBP721.4m (FY20: GBP1,018.0m) as a consequence of the COVID-19
pandemic and Government imposed lockdowns.
Gross profit was GBP62.5m (FY20: GBP78.9m), a decrease of 20.8%.
Gross margin increased to 8.7% (FY20: 7.8%). This increase
reflected robust vehicle margins, strong buying and pricing
controls, as well as efficiency improvements to the preparation
processes.
EBITDA decreased by 33.0% to GBP18.3m (FY20: GBP27.3m). Profit
before tax fell to GBP9.7m (FY20: GBP18.8m), with the increased
reduction against revenue reflecting the proportion of fixed costs
within overheads. The Group broke even in the second half of the
year, despite all retail branches being closed for over four of the
six months of that period, and an increase in marketing spend in
March 2021 in preparation for the April 2021 reopening.
The Group's balance sheet remains robust with no structural
debt, and net cash at the year end increased to GBP6.0m (FY20:
GBP0.8m).
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.
Wholesale Total
Retail customers customers
Year ended Year ended Year ended Year ended Year Year
31 March 31 March 31 March 31 March ended ended
2021 2020 2021 2020 31 March 31 March
2021 2020
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 593.8 839.0 127.6 179.0 721.4 1,018.0
Gross profit 54.1 69.6 8.4 9.3 62.5 78.9
Despite the impact of COVID-19, the Group delivered a robust
volume performance in the year, underlining the strength of
Motorpoint's omnichannel model, and in particular, the momentum and
potential of its online channels. Roughly 68,000 vehicles were sold
in total.
We accelerated our investment in our digital offering through
the rollout of our free national Home Delivery service and a
streamlined, contactless Reserve and Collect option for the large
number of customers who still want to view their car before
completing their purchase.
Retail
Revenue from retail customers was down 29.2% to GBP593.8m (FY20:
GBP839.0m), with approximately 43,000 vehicles sold. Of these 52%
were sold online, retaining our position as the number one retailer
of nearly new cars in the UK, both online and offline. Between
launch in May 2020 and the end of the period, circa 9,300 vehicles
were delivered to customers' homes (FY20: Nil).
Gross margin improved to 9.1% in the year (FY20: 8.3%)
reflecting a number of positive trends. While vehicle margin
benefited from increased demand pushing prices up during open
periods, internal changes in buying and pricing strategies have
resulted in continued positive movements in this area.
Finance and extras per vehicle sold were broadly consistent with
the previous year, despite the increased mix of online trading.
The Group also continues 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 a further strengthening of gross margin in the
year.
The Group opened a new branch in December 2020 at Stockton on
Tees, taking the total of trading locations to 14. Due to the
lockdown from January 2021, sales from this new branch were minimal
in the year. However, sales at Swansea, which opened in January
2020, were encouraging during the times when that branch was open.
Both branches have performed well once the lockdown measures were
lifted in April 2021.
Wholesale
Wholesale revenue fell in line with retail sales, since
Auction4Cars.com sells wholesale vehicles which have been
part-exchanged by retail customers. Roughly 25,000 vehicles were
sold via this purely online platform. Gross margin strengthened to
6.6% (FY20: 5.2%), again the result of the market and internal
pricing controls.
Operating expenses
Operating expenses fell by 11.8% to GBP49.9m (FY20: GBP56.6m),
including the impact of CJRS receipts of GBP3.9m (FY20: GBP0.3m)
and rates support of GBP1.8m (FY20: GBPNil). Overheads remained
under tight control throughout FY21, with all discretionary spend
challenged. Branch level costs were reduced wherever possible,
particularly during periods when there were no onsite customers.
Marketing expenses were level with the previous year, with reduced
activity during periods of closure, but increased activity as we
moved towards the April 2021 reopening. Marketing costs also
included a greater proportion of digital spend than previously,
which is expected to continue.
Exceptional items
There have been no exceptional items in the year (FY20:
GBPNil).
Interest
The Group's net financial expense decreased to GBP2.9m (FY20:
GBP3.5m) with borrowings under the Group's bank facility being
fully repaid during the year.
During FY21 the Group increased its stocking facility with Black
Horse Limited by GBP5.0m, taking the total to GBP80.0m, in addition
to the existing GBP26.0m stocking facility with Lombard North
Central PLC.
At 31 March 2021 the Group had GBP106.0m (FY20: GBP101.0m) of
stocking finance facilities available of which GBP89.2m (FY20:
GBP86.1m) was drawn.
The Black Horse Limited facility is repayable on the earlier of
the sale of the respective vehicle or a latest date of between 90
and 150 days from date of drawdown of the facility amount. The
repayment term was extended by 30 days for vehicles on the scheme
as at 18 March 2021. Since renegotiation the facility bears
interest at the rate of 1.0% over Finance House Base Rate.
The Lombard North Central PLC was negotiated in March 2019 and
all borrowings are secured against the vehicle which the stocking
finance facility is drawn down against. The finance is repayable on
the earlier of the respective vehicle sale, or a latest date of
between 90 and 120 days from date of drawdown of the facility
amount. The repayment term was extended by 60 days for vehicles on
the scheme as at 4 February 2021. The facility bears interest at
the rate of 1.35% over Finance House Base Rate.
The Group also has a GBP20.0m facility with Santander UK PLC,
split between GBP6.0m available as an overdraft and GBP14.0m
available as a revolving credit facility. At 31 March 2020,
GBP10.0m was drawn on this facility, to ensure operational
liquidity over the year end period of COVID-19 disruption. This was
fully repaid in the year.
Total interest charges on these above facilities were GBP1.3m
(FY20: GBP1.9m).
Interest on lease liabilities of GBP1.6m (FY20: GBP1.6m) was
incurred during the year.
Taxation
The Group seeks to manage its taxation obligations in the UK in
compliance with applicable tax laws and regulations, ensuring that
available tax incentives and allowances are utilised, and
recognised where it makes commercial sense to do so giving regard
to the costs of making the associated claims.
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 credits. The effective rate of tax in the year of
22.0% (FY20: 19.0%) 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.
Shares
At 31 March 2021, 90,189,885 ordinary shares were outstanding,
of which 34,841 were held in the Employee Benefits Trust.
Earnings per share
Basic and diluted earnings per share were both 8.4 pence (FY20:
both 16.4 pence), a fall of 48.8%.
Dividends
No interim dividend was paid in the year (FY20: GBP2.3m) and the
Board has not recommended a final dividend (2020: GBPNil). There
has also been no share buybacks during the year.
Capital expenditure and disposals
Cash capital expenditure was GBP3.6m (FY20: GBP12.3m), primarily
relating to the opening of Stockton on Tees. Only one new location
was opened during the year, as lockdown had restricted the
identification of new branches.
The Group is also investing in projects to strengthen its
digital offering and online presence; this strategy will continue
into FY22.
Disposal proceeds in the year of GBP6.1m (FY20: GBPNil) relate
to the Swansea branch (opened January 2020), for which the Group
entered a Sale and Leaseback agreement to free up funds for other
growth activities. This approach aligns the financing of Swansea
with the majority of the property estate.
Balance sheet
The Group continues to have a strong balance sheet, with net
current assets increasing by GBP12.0m to GBP15.6m. In addition to
cost scrutiny, working capital was proactively managed during the
year.
Net assets at 31 March 2021 were GBP27.6m (FY20: GBP20.2m),
equivalent to 30.6 pence per share.
Non-current assets were GBP60.9m (FY20: GBP61.8m) made up of
GBP16.1m of property, plant and equipment, GBP43.6m right-of-use
assets and GBP1.2m of deferred tax assets (FY20: GBP18.9m, GBP41.6m
and GBP1.3m respectively). The Group currently owns three
properties being the preparation centre in Peterborough, the
Stockton on Tees branch, and some additional land in Glasgow. All
other properties are on leases of various lengths.
The Group closed the year with GBP128.4m of inventory, up 14.8%
compared to FY20. This planned increase was partly due to the
addition of the Stockton on Tees branch, but primarily due to
preparing for the pent up demand of the April 2021 branch
reopening.
As a result of increased buying activity the Group has a
significant VAT receivable balance at the year end of GBP3.7m,
which compares to a GBP1.4m payable in FY20. Prepayments and
accrued income have also risen from GBP0.4m in FY20 to GBP1.4m,
primarily due to the timing of a rebate receivable in the current
period.
Trade and other payables, inclusive of the stock financing
facilities, have also increased to GBP125.7m (FY20: GBP111.8m) as a
direct result of increased buying activities in the lead up to the
year end.
The increase in total lease liabilities to GBP49.3m (FY20:
GBP45.4m) reflects the new branch activity.
Cash flow and net debt
Cash generated operations was GBP12.4m (FY20: GBP33.2m)
representing an operating cash conversion of 98.4%, down from
148.9% in the previous year. This movement is primarily driven by
the same factors described above relating to COVID-19, and balance
sheet trends, as preparation for branches reopening in April 2021
has driven increased inventory purchasing.
Capital spend was reduced and shareholder distributions were
paused in the year resulting in cash outflows from investing and
financing activities being lower than the previous year.
The Group's position net of cash and cash equivalents, and debt,
has improved from GBP0.8m to GBP6.0m demonstrating the Group's
flexibility and strength in a stressed environment.
Closing monthly net cash balances remained positive throughout
the year.
Capital structure and treasury
The Group's long term funding is provided primarily through
shareholders' funds and IFRS 16 related property debt, with bank
debt available should it be required.
The Group's loan facility with Santander UK PLC, split between
GBP6.0m available as an overdraft and GBP14.0m available as a
revolving credit facility, is used primarily as a mechanism for
funding short term working capital needs. A further temporary 12
month GBP15.0m 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 additional facility was not
used. The existing GBP20.0m facility expires in May 2024.
Capital allocation policy
The Board intends to continue to invest in the business in order
to grow revenue, profit and return on capital employed. This is
expected to include expenditure for E-commerce investment and new
locations to support the Group's strategy.
The Board's objective is to maximise long term shareholder
returns through a disciplined deployment of cash generated, and it
has adopted the following capital allocation policy in support of
this:
-- Organic growth: the Board will continue to invest in IT
systems and new locations to better enable us to serve
customers, whether they wish to purchase online or at
a branch;
-- Regular returns to shareholders: the Board intends to
pay a regular dividend to shareholders, with a policy
of growing dividends through the business cycle;
-- Acquisitions: the Board would consider value enhancing
acquisition opportunities in markets consistent with its
existing operations;
-- Treatment of excess capital: whilst the Board is committed
to maintaining an efficient balance sheet, their expectation
is that there will be a resumption of returning excess
cash to shareholders, in the form of share buybacks or
special dividends.
Chris Morgan
Chief Financial Officer
16 June 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2021
2021 2020
Note GBPm GBPm
Revenue 721.4 1,018.0
Cost of sales 3 (658.9) (939.1)
-------- --------
Gross profit 62.5 78.9
Operating expenses 4 (49.9) (56.6)
-------- --------
Operating profit 12.6 22.3
Finance expense (2.9) (3.5)
-------- --------
Profit before income tax 9.7 18.8
Income tax expense 5 (2.1) (3.6)
-------- --------
Profit and total comprehensive income for 7.6 15.2
the year attributable to equity holders
of the parent
Earnings per share attributable to equity
holders of the parent
Basic 6 8.4p 16.4p
Diluted 6 8.4p 16.4p
-------- --------
The Group's activities all derive from continuing
operations.
The Group has no other comprehensive income. Total comprehensive
income for the year is equal to the profit for the financial
year.
CONSOLIDATED BALANCE SHEET
At 31 March 2021
2021 2020
Note GBPm GBPm
ASSETS
Non-current assets
Property, plant and equipment 16.1 18.9
Right-of-use assets 43.6 41.6
Deferred tax asset 1.2 1.3
Total non-current assets 60.9 61.8
-------- --------
Current assets
Inventories 128.4 111.8
Trade and other receivables 7.7 4.4
Current tax receivable 1.7 0.9
Cash and cash equivalents 6.0 10.8
--------
Total current assets 143.8 127.9
-------- --------
TOTAL ASSETS 204.7 189.7
-------- --------
LIABILITIES
Current liabilities
Borrowings 7 - (10.0)
Trade and other payables, excluding contract liabilities (125.7) (111.6)
Contract liabilities - (0.2)
Lease liabilities (2.4) (2.3)
Provisions (0.1) (0.2)
Total current liabilities (128.2) (124.3)
-------- --------
NET CURRENT ASSETS 15.6 3.6
Non-current liabilities
Lease liabilities (46.9) (43.1)
Provisions (2.0) (2.1)
Total non-current liabilities (48.9) (45.2)
-------- --------
TOTAL LIABILITIES (177.1) (169.5)
NET ASSETS 27.6 20.2
-------- --------
EQUITY
Share capital 8 0.9 0.9
Capital redemption reserve 0.1 0.1
Capital reorganisation reserve (0.8) (0.8)
EBT reserve (0.1) -
Retained earnings 27.5 20.0
-------- --------
TOTAL EQUITY 27.6 20.2
-------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2021
Capital Capital
Called redemption reorganisation Retained Total
up share reserve reserve EBT earnings equity
Note capital GBPm GBPm reserve GBPm GBPm
GBPm GBPm
----------- ------------ ---------------- ----------- ----------- -----------
Balance at 1
April 2019 1.0 - (0.8) - 25.8 26.0
Profit and total
comprehensive
income for the
year - - - - 15.2 15.2
Transactions
with
owners in their
capacity as
owners:
Share-based
payments - - - - (0.9) (0.9)
Buy back and
cancellation
of shares (0.1) 0.1 - - (13.1) (13.1)
Final dividend
for the year
ended 31 March
2019 9 - - - - (4.7) (4.7)
Interim dividend
for the year
ended 31 March
2020 9 - - - - (2.3) (2.3)
----------- ------------ ---------------- ----------- ----------- -----------
(0.1) 0.1 - - (21.0) (21.0)
Balance at 31
March 2020 0.9 0.1 (0.8) - 20.0 20.2
Profit and 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
----------- ------------ ---------------- ----------- ----------- -----------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2021
2021 2020
Note GBPm GBPm
Cash flows from operating activities
Cash generated from operations 10 12.4 33.2
Interest paid on lease liabilities (1.6) (1.6)
Interest paid on borrowings and financing facilities (1.3) (1.9)
------- -------
Income tax paid (2.8) (6.4)
------- -------
Net cash generated from operating activities 6.7 23.3
------- -------
Cash flows from investing activities
Purchases of property, plant and equipment (3.6) (12.3)
Proceeds from disposal of property, plant and equipment and right-of-use assets 6.1 -
Net cash generated from / (used in) investing activities 2.5 (12.3)
------- -------
Cash flows from financing activities
Dividends paid 9 - (7.0)
Payments to acquire own shares - (13.1)
Payments to satisfy employee share plan obligations (0.4) (0.9)
Repayment of leases (3.6) (3.0)
Proceeds from borrowings - 29.0
Repayment of borrowings (10.0) (19.0)
------- -------
Net cash used in financing activities (14.0) (14.0)
------- -------
Net decrease in cash and cash equivalents (4.8) (3.0)
Cash and cash equivalents at the beginning of the year 10.8 13.8
-------
Cash and cash equivalents at end of year 6.0 10.8
------- -------
Net cash and cash equivalents comprises: Cash at bank 6.0 10.8
------- -------
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 Chartwell Drive, West Meadows Industrial Estate, Derby, England,
United Kingdom, DE21 6BZ. The consolidated financial statements of
the Group as at and for the year ended 31 March 2021 comprise the
Company, all of its subsidiaries and the Motorpoint Group Plc
Employee Benefit Trust (the 'EBT'), together referred to as the
Group. These financial statements are 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. As a result of
Coronavirus the Group operations were closed for six weeks from
late March 2020. The Group's branches were subject to further
periods of closure as a result of Government imposed lockdowns. All
of these closures directly impacted short term performance and
liquidity. The Group took immediate actions to limit the impact of
this closure and secured additional finance facilities, including
an additional uncommitted GBP15.0m overdraft facility, to support
operational cash flows if required. This was not used and has now
expired and not been renewed. During the later periods of closure
the Group was able to maintain reduced levels of sales through home
delivery and contactless collections.
The Board has reviewed the latest forecasts of the Group,
including the impact of multiple reopening 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 taken a reverse stress test approach in
considering the going concern status of the Group, reducing volumes
to the point at which the Group is either no longer compliant with
banking covenants or depletes liquid resources required to continue
trading, whichever is earlier. Plausible mitigating actions were
built into the model including: reducing spend on specific variable
cost lines including marketing and branch trading expenses, team
costs most notably sales commissions, pausing new stock
commitments, taking advantage of existing and confirmed
Governmental support, and extending the period for which
expansionary capital spend and share buybacks/ dividends are
suspended. With the exception of the Government support initiatives
which have only been assumed to be available under current
legislation, all of these actions could conceivably be performed
throughout the going concern period.
The reverse stress test model demonstrated that a prolonged
period of volume reduction in excess of 31% against FY20, despite
the positive impact expected of opening Swansea and Stockton on
Tees, was required before a covenant breach, which is considered
implausible. FY22 volumes have started strongly and are expected to
exceed FY21 given no further prolonged government enforced periods
of lockdown.
The Group approaches FY22 cautiously but with renewed optimism,
and therefore while some of the previous cash saving initiatives
could be maintained in the short term, the Group has started to
invest in its pre-Covid growth plans.
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 accounting standards, interpretations and amendments 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
2021 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.
-- Definition of a Business - Amendments to IFRS 3;
-- Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39
and IFRS 7;
-- Revised Conceptual Framework for Financial Reporting;
-- Definition of Material - amendments to IAS 1 and IAS 8;
and
-- IFRIC 23 Uncertainty over Income Tax Treatments.
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 2021 within the meaning of
Section 434 of the Companies Act 2006 but is derived from the
Annual Report and Accounts 2021. This financial information is
prepared in accordance with the recognition and measurement
criteria of international accounting standards in conformity with
the requirements of the Companies Act 2006 ('IFRS') and the
applicable legal requirements of the Companies Act 2006. In
addition to complying with international accounting standards in
conformity with the requirements of the Companies Act 2006, the
consolidated financial statements also comply with international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. The auditors have
reported on the annual financial statements included within the
Annual Report and Accounts 2021 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 2020 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. Segment Reporting
The Group has prepared segmental reporting in accordance with
IFRS 8 'Operating Segments', which requires segments to be
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 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, as they are all based
within the UK. Accordingly the Group has applied the aggregation
criteria of IFRS 8 and thus considers it has one reportable
segment. As a consequence no additional segmental information is
required.
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.
2021 2020
GBPm GBPm
Revenue from sale of motor vehicles 687.5 965.5
Revenue from motor related services and commissions 29.0 45.8
Revenue recognised that was included in deferred income at the beginning of the year - Sale
of motor vehicles 1.7 3.3
Revenue recognised that was included in deferred income at the beginning of the year - Motor
related services and commissions 3.0 2.0
Revenue recognised that was included in the contract liability balance at the beginning of
the year - Extended guarantee income 0.2 1.4
------- ---------
Total Revenue 721.4 1,018.0
------- ---------
4. Operating profit
Analysed as:
Operating profit include the effect of charging / (crediting): 2021 2020
GBPm GBPm
Inventory recognised as expense 654.9 928.0
Movement in provision against inventory 0.2 (0.2)
Employee benefit expense 25.6 28.5
Depreciation of property, plant and equipment and right-of-use assets 5.7 5.0
Expense on short term and low value leases 0.2 0.2
Loss on disposal of property, plant and equipment and right-of-use assets 0.1 0.1
Total expenses comprise: 2021 2020
GBPm GBPm
Cost of sales 658.9 939.1
Operating expenses:
* Selling and distribution expenses 13.9 16.4
* Administrative expenses 36.0 40.2
------- -------
Total expenses 708.8 995.7
------- -------
Receipts associated with the Job Retention Scheme of GBP3.9m
(FY20: GBP0.3m) have been recognised in employee benefit expenses.
All receipts from the Job Retention Scheme have been paid in full
to staff on furlough.
5. Taxation
2021 2020
GBPm GBPm
Current tax:
UK corporation tax 2.0 3.5
Adjustments in respect of prior years - (0.1)
Total current tax 2.0 3.4
------- -------
Deferred tax:
Origination and reversal of temporary differences 0.1 0.4
Impact of UK corporation tax rate changes - (0.2)
------- -------
Total deferred tax 0.1 0.2
Total tax charge in the statement of comprehensive income 2.1 3.6
------- -------
The tax charge in the consolidated statement of comprehensive
income represents:
Reconciliation of the total tax charge
The tax charge in the statement of comprehensive income in the
year differs from (FY20: is consistent with) the charge which would
result from the standard rate of corporation tax in the UK of 19%
(FY20: 19%):
2021 2020
GBPm GBPm
Profit before tax 9.7 18.8
------- -------
1.8 3.6
Profit before tax at the standard rate of corporation tax of 19% (2020:19%)
Tax effect of:
* Fixed asset differences 0.3 0.2
* Expenses not deductible for tax purposes - 0.1
* Adjustments to tax charge in respect of prior years - (0.1)
* Adjustment to opening deferred tax - (0.2)
------- -------
Tax charge in the statement of comprehensive income 2.1 3.6
------- -------
A tax receivable balance of GBP1.7m (2020: GBP0.9m) is included
within current assets as a result of the payments on account to
HMRC exceeding the tax charge for the year.
Factors affecting current and future tax charges
In the Spring UK Budget 2020, the Government announced that from
1 April 2020 the corporation tax rate would remain at 19% (rather
than reducing to 17%, as previously enacted). This new law was
substantively enacted on 17 March 2020 and so deferred tax balances
have been measured at 19%. The UK Budget 2021 announcement on 3
March 2021 included measures to support economic recovery as a
result of the Coronavirus pandemic. These included an increase to
the UK's main corporation tax rate to 25%, which is due to be
effective from 1 April 2023.
This will leave a consequential effect on the Group's future tax
charge. If this rate change had been substantively enacted at the
current balance sheet date the deferred tax asset would have
increased by GBP0.4m.
6. Earnings per Share
Basic and diluted earnings per share ('EPS') are calculated by
dividing the earnings attributable to equity shareholders by the
weighted average number of Ordinary Shares during the year.
2021 2020
Profit Attributable to Ordinary Shareholders (GBPm) 7.6 15.2
Weighted average number of Ordinary Shares in Issue ('000) 90,190 92,521
------- -------
Basic EPS (pence) 8.4 16.4
------- -------
Diluted weighted average number of Shares in Issue ('000) 90,265 92,577
------- -------
Diluted EPS (pence) 8.4 16.4
------- -------
The difference between the basic and diluted weighted average
number of shares represents the dilutive effect of the FY19, FY20,
FY21 SAYE schemes and the vested but not yet exercised options
under the FY17 and FY18 PSP schemes. This is shown in the
reconciliation below.
The shares for the PSP schemes for 2019 and 2020 and RSA for
2021 have performance criteria which have not been met so the
options are not yet dilutive. There is a maximum of 1,214,031
additional options which have not been included in the dilutive
calculation in relation to these schemes.
2021 2020
Weighted average number of Ordinary Shares in Issue ('000) 90,190 92,521
Adjustment for share options ('000) 75 56
--------- ---------
Weighted average number of Ordinary Shares for diluted earnings per share ('000) 90,265 92,577
--------- ---------
7. Borrowings
The Group's available borrowings consist of an unsecured loan
facility provided by Santander UK PLC, split between GBP6.0m
available as an overdraft and GBP14m available as a revolving
credit facility. A further temporary 12 month GBP15.0m 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 additional facility was not used. The
existing GBP20.0m facility expires in May 2024. As at the reporting
date GBPNil (FY20: GBP10.0m) was drawn down.
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 2021 interest was charged
at 1.4% (FY20: 1.4%) per annum. The interest charged for the year
of GBP0.2m (FY20: GBP0.2m) has been expensed as a finance cost.
8. Share Capital
2021 2020
Number Amount Number Amount
'000 GBPm '000 GBPm
Allotted, called-up and
fully paid Ordinary Shares
of 1p each
Balance at the beginning
of the year 90,190 0.9 96,166 1.0
Bought back and held as - - (5) -
treasury shares during
the year(1)
Released from treasury - - 5 -
to satisfy employee share
plan obligations(1)
Bought back and cancelled
during the year(1) - - (5,976) (0.1)
Balance at the end of the
period 90,190 0.9 90,190 0.9
------- ------- -------- -------
(1) Share buyback
During FY20 the Company purchased 5,981,000 Ordinary Shares
on-market for GBP13.1m in order to reduce the share capital of the
Company and return funds to shareholders who sell their shares.
There has been no share buyback during FY21.
Since the commencement of the current share buyback programme in
2019 as at 31 March 2021, 615,000 shares have been bought back and
cancelled representing 0.7% of the issued Ordinary Shares, at a
cost of GBP1.8m.
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:
2021 2020
GBPm GBPm
Final dividend for the year ended 31 March 2019 - 4.7
Interim dividend for the year ended 31 March 2020 - 2.3
Total dividends - 7.0
------ -----
The Board has not proposed a final dividend (FY20: GBPNil) for
the year ended 31 March 2021.
10. Cash generated from operations
2021 2020
GBPm GBPm
Profit for the year, attributable to equity shareholders 7.6 15.2
Adjustments for:
Taxation charge 2.1 3.6
Finance costs 2.9 3.5
------- -------
Operating profit 12.6 22.3
Share-based payment 0.2 (0.1)
Loss on disposal of property, plant and equipment and right-of-use assets 0.1 0.1
Depreciation charge 5.7 5.0
Cash flow from operations before movements in working capital 18.6 27.3
(Increase) /Decrease in inventory (16.6) 4.4
(Increase) /Decrease in trade and other receivables (3.3) 8.6
Increase / (Decrease) in trade and other payables 13.7 (7.1)
Cash generated from operations 12.4 33.2
======= =======
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END
FR SFESIMEFSESM
(END) Dow Jones Newswires
June 16, 2021 02:00 ET (06:00 GMT)
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