TIDMMOTR
RNS Number : 5405G
Motorpoint Group plc
26 November 2020
26(th) November 2020
Motorpoint Group PLC
("Motorpoint", the "Company" or the "Group"))
Interim Results
Strong return from lockdown, well positioned to drive market
share growth
Motorpoint, the leading independent omni-channel vehicle
retailer in the UK, today announces its unaudited interim results
for the six months ended 30 September 2020 (FY21 H1).
Financial highlights
-- Revenue decreased 27% to GBP387.7m (FY20 H1: GBP533.9m)
reflecting the enforced closure of retail branches and preparation
centres in April to June.
-- Operating expenses decreased 16% to GBP24.3m (FY20 H1: GBP29.1m).
-- EBITDA(1) improved 4% to GBP14.0m (FY20 H1: GBP13.4m).
-- Profit before tax increased 3% to GBP9.7m (FY20 H1: GBP9.4m)
reflecting strong trading upon all retail branches fully reopening
in June and July.
-- Gross margin increased to 9.1% (FY20 H1: 7.5%) following
strong customer demand and increased stock turn.
-- Basic earnings per share increased 10% to 8.8p (FY20 H1: 8.0p).
-- No interim dividend is proposed, dividend policy remains under review (FY20 H1: 2.6p)
-- Government support received during closure through
Coronavirus Job Retention Scheme and Business Rates relief. All
taxes that could be deferred were paid in full by 30 September.
-- Maintained strong cash flow from operations conversion(2) of 159% (FY20 H1: 233%).
-- Robust balance sheet, with no structural debt and net cash of
GBP13.6m at 30 September 2020.
Operational highlights
-- Significant acceleration of Online sales growth in period;
accounting for over 40% of sales in H1.
-- Home Deliveries represented 20% of Online sales in September.
-- 14-day money back guarantee launched for all online customers.
-- Successful roll-out of free nationwide Home Delivery service
across all branches as well as a 'Contactless Collection' service
to extend our 'Reserve and Collect' e-commerce offering.
-- Decisive and swift actions taken upon lockdown to preserve
cash, reduces costs and subsequently reopened all branches
successfully.
-- Comprehensive roll-out of social distancing and safety
measures to protect our teams and customers.
-- Continued improvements to vehicle preparation speed and cost
with FY20 H2 improvements now embedded.
-- Market share growth following full reopening of all branches.
-- Senior team remuneration voluntarily reduced to maintain all
lower paid team members at 100% of earnings throughout closure.
-- Supported over 500 NHS workers across the UK through GBP300 purchase discount.
-- 13(th) branch (Swansea) performing ahead of expectations.
-- 14 (th) branch (Stockton on Tees) on schedule to open late December 2020.
(1) Calculated as operating profit of GBP11.1m adding back depreciation
of GBP2.9m (FY20 H1: Operating profit of GBP11.1m adding
back depreciation of GBP2.3m)
(2) Calculated as cash generated from operations of GBP17.7m
divided by operating profit of GBP11.1m (FY20 H1: Cash generated
from operations of GBP25.9m divided by operating profit of
GBP11.1m)
Outlook
Management remain confident that the Group's digitally
underpinned Home Delivery and Reserve & Collect offerings will
continue to service our existing customers and access new markets.
Our leading brand and compelling customer proposition of Car Buying
Made Easy will continue to offer unrivalled Choice, Value, Service
and Quality irrespective of whether the chosen purchase method is
online or at a branch.
Given the uncertainty of future demand and margin levels caused
by the ongoing impact of Covid-19 no earnings guidance will be
provided at this time.
Mark Carpenter, Chief Executive Officer of Motorpoint Group PLC
commented:
"During a very challenging period, I am exceptionally proud of
how the Group has responded. Through operational rigour and a focus
on e-commerce solutions, the Group delivered an improvement in
profit before tax against the prior year, despite a complete
closure during the UK-wide lockdown from March 24(th) , and order
fulfilment limited to home delivery only from May 21(st) . Since
fully reopening all branches in July, demand levels have exceeded
management's expectations and indeed the prior year performance.
Margins have also been above recent levels, reflecting strong
customer demand and continued improvements in vehicle preparation
speed and marketing effectiveness.
The enforced closure of all branches resulted in substantial
trading losses in April and May. Actions taken during the closure
to preserve cash and reduce costs included suspending capital
projects, reducing discretionary spending, furloughing a large
proportion of our team and all of our Senior team Leadership Team
and Board members taking voluntary pay reductions to help maintain
our lowest paid team members at 100% of earnings. The Group
returned to profitability in June.
The Group has demonstrated its agility to respond quickly to
changing trading conditions. 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 majority of customers who still want to view their
car before completing their purchase. These initiatives, alongside
the incredible hard work of our team and the strengths of our
market-leading platform, resulted in online sales growth that
outpaced our branch sales growth in the remainder of H1 and grew to
43% of sales in the three months to 30 September 2020, a volume
increase of 39%. Our free Home Delivery service represented 8% of
total sales in the same period, from zero only six months ago. The
increase in demand has meant that we have created around 30
additional preparation and customer service logistics roles since
reopening.
As a result of this strong trading since reopening, the Group
delivered a profit before tax for the six months to 30 September
ahead of the prior year. This underlines the strength and agility
of the Motorpoint business model, its high-quality digital offering
and the Group's ability to react quickly to external challenges
while maintaining its industry leading customer proposition.
Notwithstanding the challenging macroeconomic backdrop, we look to
the future with confidence as we continue to innovate and build on
the strengths of our low-cost, independent, flexible operating
model and leading brand to drive further market share growth."
Analyst Webinar
A virtual meeting for sell-side analysts will be held at 09:30am
today, the details of which can be obtained from FTI
Consulting.
Enquiries:
Motorpoint Group PLC via FTI Consulting
Mark Carpenter, Chief Executive
Officer
FTI Consulting (Financial PR) 020 3727 1000
Alex Beagley ( motorpoint@fticonsulting.com
)
James Styles
Sam Macpherson
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) prior to its release as part of this
announcement.
Notes to editors
Motorpoint is the leading independent omni-channel vehicle
retailer in the United Kingdom. The Group's principal business is
the sale of nearly-new vehicles, the majority of which are up to
two years old and which have covered less than 15,000 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 13 retail branches across
the United Kingdom; Derby, Burnley, Glasgow, Newport, Peterborough,
Chingford, Birmingham, Widnes, Birtley, Castleford, Oldbury,
Sheffield and Swansea; together with a national contact-centre
dealing with online enquiries.
More information is available at www.motorpointplc.com and
www.motorpoint.co.uk .
Cautionary Statement
This announcement contains unaudited information and
forward-looking statements that are based on current expectations
or beliefs, as well as assumptions about future events. These
forward looking statements can be identified by the fact that they
do not relate only to historical or current facts. Undue reliance
should not be placed on any such statements because they speak only
as at the date of this document and are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and the Group's plans and
objectives, to differ materially from those expressed or implied in
the forward looking statements. Motorpoint undertakes no obligation
to revise or update any forward-looking statement contained within
this announcement, regardless of whether those statements are
affected as a result of new information, future events or
otherwise, save as required by law and regulations.
FINANCIAL REVIEW
The Key Performance Indicators for the Group for the current
period and comparative periods are outlined below.
Group KPI (post IFRS 16) 6 months 6 months Change
to 30 September to 30 September
2020 2019
Revenue GBP387.7m GBP533.9m -27.4%
----------------- ----------------- -------
Gross profit GBP35.4m GBP40.2m -11.9%
----------------- ----------------- -------
EBITDA(1) GBP14.0m GBP13.4m +4.5%
----------------- ----------------- -------
Operating profit GBP11.1m GBP11.1m -%
----------------- ----------------- -------
Gross profit to operating expenses(2)
ratio 146% 138% +8pp
----------------- ----------------- -------
Profit Before Tax GBP9.7m GBP9.4m +3.2%
----------------- ----------------- -------
Cash flow from operations GBP17.7m GBP25.9m -31.7%
----------------- ----------------- -------
Cash flow from operations conversion(3) 159% 233% - 74pp
----------------- ----------------- -------
Net cash and cash equivalents GBP13.6m GBP10.3m +32%
----------------- ----------------- -------
Basic Earnings per Share (p) (4) 8.8 8.0 +10.0%
----------------- ----------------- -------
Number of branche s 13 12 +1
----------------- ----------------- -------
(1) Calculated as operating profit of GBP11.1m adding back
depreciation of GBP2.9m (FY20 H1: Operating profit of GBP11.1m
adding back depreciation of GBP2.3m).
(2) Calculated as gross profit of GBP35.4m divided by operating
expenses of GBP24.3m (FY20 H1: Gross profit of GBP40.2m divided by
operating expenses of GBP29.1m).
(3) Calculated as cash generated from operations of GBP17.7m
divided by operating profit of GBP11.1m (FY20 H1: Cash generated
from operations of GBP25.9m divided by operating profit of
GBP11.1m).
(4) Calculated by dividing the earnings attributable to equity
shareholders by the number of ordinary shares in issue at the
reporting date.
Despite the ongoing Covid-19 pandemic, the Group improved profit
before tax compared to the same period last year and generated cash
flow from operations of GBP17.7m, equating to a cash flow from
operations conversion of 159% (FY20 H1: 233%), resulting tight cash
controls during the period and a further improvement in stock
turn.
The Group's banking facilities include a committed GBP20m
facility provided by Santander UK PLC which was undrawn as at the
reporting date. An additional GBP15m uncommitted overdraft facility
was agreed with Santander UK PLC to help support working capital
and potential short-term cash impacts from any market disruption
during the Coronavirus pandemic. As at 30 September 2020, the Group
was supported by stocking facilities provided by Lombard of GBP26m
and Black Horse Limited of GBP75m of which GBP80.5m was drawn in
total.
OPERATIONAL REVIEW
Motorpoint's strategy is delivered through its retail branches
and its e-commerce platforms of Motorpoint.co.uk and
Auction4Cars.com. The Group's strategy is threefold; (i) to achieve
organic sales growth at existing branches (ii) to increase digital
sales through our e-commerce offering, and (iii) to open new
branches to expand into new markets across the UK.
The opening of Swansea in January 2020 was our eighth new branch
in eight years. These new branche s continue to mature in line with
our expectations with all branch es, including the latest addition
in Swansea, which achieved a positive contribution in the period.
Expanding our branch network to around 20 locations in the UK in
the medium-term remains our target with management continuing to
evaluate opportunities for our next retail branch locations. Our
14(th) branch , in Stockton On Tees, is due to open in December
2020.
The Group continues to evolve its operating model with the
introduction of our first dedicated preparation centre during FY20
and the opening of Swansea and Stockton On Tees as sales only
branches. The Group has further focussed its vehicle preparation by
moving preparation activities away from of some of our smaller
branches to other, larger, nearby branches. This change creates
economies of scale within preparation and also makes best use of
the retail capacity within the smaller locations allowing us to
better service our customers, providing them with increased choice.
As a result the Group has seen an increased speed of preparation
contributing towards improved gross margins.
MOTORPOINT VIRTUOUS CIRCLE
Motorpoint's operating model revolves around our three key
stakeholders; our team, our customers and our shareholders. Our
vision to offer our customers unrivalled Choice, Value, Service and
Quality along with supporting business plans are aligned to our
Virtuous Circle. The actions of everyone within Team Motorpoint,
regardless of role, are underpinned by a common mind-set, our
behaviours and our values of being proud, supportive, honest and
happy.
Our values are our DNA and we are immensely proud of them. They
epitomise what Motorpoint is about and are a very powerful tool in
driving our engagement and performance levels.
TEAM
We believe that by supporting our team, encouraging employee
engagement, and driving a common set of values as part of our
everyday activities our employees will remain motivated and driven
to succeed. Through having engaged and happy employees, each of our
customers receives a positive experience. We continue to learn from
every interaction as we strive for continual improvement in what we
deliver to our customers.
The Group furloughed all branch -based employees during March
2020 as well as the majority of head office staff. In addition to
utilising the Government's Coronavirus Job Retention Scheme, all of
our senior team took voluntary pay reductions to ensure that lower
paid team members could continue to receive 100% of their
earnings.
Further evidence of the strong cultural values within the Group
is demonstrated by our continued inclusion within The Sunday Times
Top 100 Mid-Sized Companies to Work For for the sixth consecutive
year. Our interim scores from October 2020 show a further
improvement in our Team engagement.
To support our team engagement, we continue to offer a number of
share schemes including an annual Performance Share Plan for senior
staff, a Share Incentive Plan and an annual Save As You Earn scheme
open to all of our team.
CUSTOMERS
The second part of our Virtuous Circle focuses on the customer
and our customer proposition of Car Buying Made Easy by providing
unrivalled Choice, Value, Service and Quality .
Our key measures of service are NPS (Net Promoter Score) and our
Feefo and Google ratings, and to ensure our level of customer
service is appropriate, all commissions and bonus schemes
throughout the business are tied to customer satisfaction.
Metric 6 months to 12 months to 6 months to
30 September 2020 31 March 2020 30 September 2019
NPS 72% 81% 81%
------------------- --------------- -------------------
Feefo 4.3/5 4.5/5 4.5/5
------------------- --------------- -------------------
Google 4.5/5 4.4/5 4.6/5
------------------- --------------- -------------------
Customer satisfaction in the current period was lower than the
same period last year driven primarily by the first two months of
trade on re-opening from lockdown. Strong demand placed substantial
pressure on our team as materially higher volumes than expected
were prepared and sold. A concerted effort to increase preparation
capacity and improve our customer journey gradually improved our
NPS scores to 79% in September, just short of last year's H1
average and 82% in October.
The Group's investment in our marketing team reflects a
continued commitment to understanding our customer base, ensuring
that our product and service offering delivers on our goal to make
car buying easy. While the introduction of free nationwide Home
Delivery, contactless 'Reserve & Collect' for online orders and
unaccompanied test drives reflect our versatility within an
evolving market, we continue to recognise that the majority of our
customers still want to browse our impressive choice of vehicles in
person, with customers able to take advantage of our popular same
day driveaway service.
DIVID
The Group is not declaring an interim dividend for FY21 (FY20
H1: 2.6p) due to the ongoing Covid-19 pandemic and its potential
impact on future demand. The business continues to be cash
generative and our dividend policy will be kept under review.
RECENT MARKET TRS
Motorpoint's core proposition is the sale of low mileage, nearly
new cars, the vast majority of which are up to two years old and
have covered fewer than 15,000 miles. The Group's remaining sales
are from vehicles that have covered up to 30,000 miles and are
under 4 years old as well as Light Commercial Vehicles.
The Group's business model continues to evolve in an
ever-changing marketplace, notably demonstrated in the period by
our swift enhanced digital offering through a free national Home
Delivery service as well as a "Contactless collection" option . We
are dedicated to providing all of our customers with a service and
product offering which suits them.
With the ongoing pandemic and Brexit nearly upon us there are
inherent uncertainties surrounding consumer demand in the short
term, however we remain confident that our current business model
and the dedication of our Team will allow us to continue to take
market share. Despite the obvious challenges within the current
economic climate, Motorpoint continues to strive to deliver for all
key stakeholders.
OUTLOOK
The H2 outlook has been impacted by the regional and subsequent
national 4-week lockdown in England, as well as the 17 day
'firebreak' lockdown in Wales from late October. Beyond these
measures, the existing restrictions in place surrounding Covid-19
are likely to continue to put pressure on H2 volumes as a result of
diminished consumer confidence and customer mobility
restrictions.
It is also worth noting that the Government's Brexit
negotiations could further influence our future performance in
unpredictable ways.
Despite this, management remain confident that the Group's
digitally underpinned Home Delivery and Reserve & Collect
offerings will continue to service our existing customers and help
us access new markets. Our leading brand and compelling customer
proposition of Car Buying Made Easy will continue to offer
unrivalled Choice, Value, Service and Quality irrespective of
whether the chosen purchase method is online or at a branch.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE FY21 UNAUDITED INTERIM RESULTS
The Directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and that the interim
management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed consolidated
interim financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
A list of current Directors and their biographies is maintained
on the Motorpoint Group PLC website www.motorpointplc.com
By order of the Board
Mark Carpenter
Chief Executive Officer
26(th) November 2020
Condensed Consolidated Income Statement
For the six months ended 30 September 2020
Unaudited Six Months
ended 30 September Unaudited Six Months Year ended 31 March
2020 ended 30 September 2019 2020
Note GBPm GBPm GBPm
Revenue 5 387.7 533.9 1,018.0
Cost of sales (352.3) (493.7) (939.1)
----------------------- ------------------------ ------------------------
Gross profit 35.4 40.2 78.9
Operating expenses (24.3) (29.1) (56.6)
----------------------- ------------------------ ------------------------
Operating profit 11.1 11.1 22.3
----------------------- ------------------------ ------------------------
Finance costs 6 (1.4) (1.7) (3.5)
----------------------- ------------------------ ------------------------
Profit before tax 9.7 9.4 18.8
Taxation 7 (1.8) (1.9) (3.6)
----------------------- ------------------------ ------------------------
Profit and total
comprehensive
income for the period/year
attributable to equity
holders of
the parent 7.9 7.5 15.2
----------------------- ------------------------ ------------------------
Earnings per share
Basic 9 8.8p 8.0p 16.4p
Diluted 9 8.7p 7.9p 16.4p
----------------------- ------------------------ ------------------------
The Company's activities all derive from continuing
operations.
The Company has no other comprehensive income. Total
comprehensive income for the period/year is equal to the profit for
the financial period/year and is all attributable to the
shareholders of the Company.
Condensed Consolidated Balance Sheet
As at 30 September 2020
30 September 2020 (unaudited) 30 September 2019 (unaudited) 31 March 2020
Note GBPm GBPm GBPm
ASSETS
Non-current assets
Property, plant and equipment 10 18.3 13.8 18.9
Right-of-use assets 11 41.3 41.7 41.6
Deferred tax assets 1.3 1.6 1.3
Total non-current assets 60.9 57.1 61.8
------------------------------ ------------------------------ --------------
Current assets
Inventories 102.5 82.1 111.8
Trade and other receivables 12 6.0 7.9 4.4
Current tax receivable 1.1 0.2 0.9
Cash and cash equivalents 13.6 10.3 10.8
------------------------------
Total current assets 123.2 100.5 127.9
------------------------------ ------------------------------ --------------
TOTAL ASSETS 184.1 157.6 189.7
------------------------------ ------------------------------ --------------
LIABILITIES
Current liabilities
Borrowings - - (10.0)
Lease liabilities 13 (2.8) (2.0) (2.3)
Trade and other payables 14 (108.1) (91.9) (111.6)
Contract liabilities - (0.8) (0.2)
Provisions 15 - (0.2) (0.2)
Current tax liabilities - - -
Total current liabilities (110.9) (94.9) (124.3)
------------------------------ ------------------------------ --------------
NET CURRENT ASSETS 12.3 5.6 3.6
Non-current liabilities
Lease liabilities 13 (43.1) (43.5) (43.1)
Provisions 15 (2.1) (1.7) (2.1)
Contract liabilities - (0.1) -
Total non-current liabilities (45.2) (45.3) (45.2)
------------------------------ ------------------------------ --------------
TOTAL LIABILITIES (156.1) (140.2) (169.5)
NET ASSETS 28.0 17.4 20.2
------------------------------ ------------------------------ --------------
EQUITY
Share capital 0.9 0.9 0.9
Capital redemption reserve 0.1 0.1 0.1
Capital reorganisation reserve (0.8) (0.8) (0.8)
Retained earnings 27.8 17.2 20.0
------------------------------ ------------------------------ --------------
TOTAL EQUITY 28.0 17.4 20.2
------------------------------ ------------------------------ --------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2020
Six Months
Ended 30 Capital Capital Total equity
September redemption Retained Reorganisation
2020 Share capital reserve earnings Reserve GBPm
(Unaudited) Note GBPm GBPm GBPm GBPm
-------------- ------------- -------------- ---------------- --------------
At 1 April 2020 0.9 0.1 20.0 (0.8) 20.2
Profit and total
comprehensive income
for the period - - 7.9 - 7.9
IFRS 2 Share Based
Payment - - (0.1) - (0.1)
At 30 September
2020 0.9 0.1 27.8 (0.8) 28.0
Six Months
Ended 30 Capital Capital Total equity
September redemption Retained Reorganisation GBPm
2019 Share capital reserve earnings Reserve
(Unaudited) Note GBPm GBPm GBPm GBPm
-------------- -------------- -------------- ---------------- --------------
At 1 April 2019 1.0 - 25.8 (0.8) 26.0
Profit and total
comprehensive income
for the period - - 7.5 - 7.5
Share-based payments - - (0.2) - (0.2)
Transactions with
shareholders
Buy back and
cancellation of
shares (0.1) - (11.1) - (11.2)
Final dividend for the
year ended 31 March
2020 8 - - (4.7) - (4.7)
At 30 September
2019 0.9 - 17.3 (0.8) 17.4
Year Ended Capital Capital Total equity
31 March 2020 redemption Retained Reorganisation GBPm
Share capital reserve earnings Reserve
Note GBPm GBPm GBPm GBPm
-------------- ---------------- ---------------- ---------------- --------------
At 1 April 2019 1.0 - 25.8 (0.8) 26.0
Profit and total
comprehensive
income for the
year - - 15.2 - 15.2
Share-based
payments - - (0.9) - (0.9)
Transactions with
shareholders
Buy back and
cancellation of
shares (0.1) 0.1 (13.1) - (13.1)
Final dividend for
the year ended 31
March 2019 8 - - (4.7) - (4.7)
Interim dividend
for the year
ended 31 March
2020 8 - - (2.3) - (2.3)
At 31 March 2020 0.9 0.1 20.0 (0.8) 20.2
Condensed Consolidated Cash Flow Statement
For the six months ended 30 September 2020
Note Unaudited Six Months Unaudited Six Months ended
ended 30 September 2020 30 September 2019 Year ended 31 March 2020
GBPm GBPm GBPm
Cash flows from operating
activities
Cash generated from
operations 16 17.7 25.9 33.2
Interest paid (1.4) (1.7) (3.5)
Income tax paid (2.0) (4.2) (6.4)
-------------------------- --------------------------- -------------------------
Net cash generated from
operating activities 14.3 20.0 23.3
-------------------------- --------------------------- -------------------------
Cash flows from investing
activities
Purchases of property,
plant and equipment (0.3) (6.2) (12.3)
Net cash used in investing
activities (0.3) (6.2) (12.3)
Cash flows from financing
activities
Dividends 8 - (4.7) (7.0)
Payments to acquire own
shares - (11.2) (13.1)
Payments to satisfy
employee share plan
obligations - - (0.9)
Repayment on leases (1.2) (1.4) (3.0)
Proceeds from borrowings - - 29.0
Repayment of borrowings (10.0) - (19.0)
-------------------------- --------------------------- -------------------------
Net cash used in financing
activities (11.2) (17.3) (14.0)
-------------------------- --------------------------- -------------------------
Net increase/(decrease) in
cash and cash equivalents 2.8 (3.5) (3.0)
Cash and cash equivalents
at the beginning of the
period 10.8 13.8 13.8
--------------------------
Cash and cash equivalents
at end of period/year 13.6 10.3 10.8
-------------------------- --------------------------- -------------------------
Net cash and cash
equivalents comprises:
Cash at bank 13.6 10.3 10.8
-------------------------- --------------------------- -------------------------
The notes form an integral part of these Condensed Consolidated
Interim Financial Statements.
1. Basis of Preparation
Motorpoint Group PLC ('the Company') is incorporated and
domiciled in the UK. The address of the registered office is
Chartwell Drive, West Meadows Industrial Estate, Derby, DE21 6BZ.
The Condensed Consolidated Interim Financial Statements of the
Company as at and for the six months ended 30 September 2020
comprise the Company and its subsidiaries, together referred to as
the "Group".
The Condensed Consolidated Interim Financial Statements for the
six months ended 30 September 2020 are unaudited and the auditors
have not performed a review in accordance with ISRE 2410, Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity.
Going concern
The Interim 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 6 weeks
from late March to the end of April. Subsequent to the interim
period end the Group's Wales based sites were subject to a two week
closure and its England based sites are presently closed as part of
a four week Government imposed lockdown. All of these closures
directly impact upon short term performance and liquidity. The
Group took immediate actions during April 2020 to limit the impact
of the first closures and have secured additional finance
facilities, including an uncommitted GBP15.0m overdraft, to support
operational cash flows if required. During the later periods of
closure the Group is taking similar actions to reduce cash outflows
while maintaining a reduced sales level through home delivery and
contactless collections.
The Board has reviewed the latest forecasts of the Group,
including the impact of multiple future site closures, and
considered the obligations of the financing arrangements.
The board have considered a stressed budget position, which
models significantly reduced sales volumes in the short and medium
term, reflecting periods of site closures through Winter months.
The actions which management have already taken to control costs
have been factored into this scenario, including the utilisation of
certain Government support initiatives. Whilst this stressed
scenario places additional pressures on both cash flow and
profitability, the Group ultimately expects to return to normal
levels of volume upon reopening.
The period considered for going concern purposes is a minimum of
12 months from the date of signing the accounts.
The board have 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 site trading expenses, team
costs most notably sales commissions, pausing new stock commitments
and extending the period for which expansionary capital spend and
share buybacks are suspended. All of these actions could
conceivably be performed within and throughout the going concern
period.
In light of the immediate impacts, including the period of
temporary site closure, the Group has already taken extensive
actions to minimise the impact on short term cash flows; reducing
capital expenditure, furloughing team members, suspending the share
buyback programme and reducing all non-essential spend. The Group
is making use of the Government's Coronavirus Job Retention Scheme
and continues to work closely with its banking partners, notably in
securing an additional uncommitted GBP15m overdraft facility with
Santander UK PLC. As this is an uncommitted facility all of our
downside planning has excluded the ability to draw these funds.
The Directors have considered the speed with which the Group
returned to previous levels of sales volumes following the previous
site closures to provide additional assurance around the continuing
viability of the business. While at present ten of the Groups sites
remain closed, the continued sales through home delivery and
contactless collections provide 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 accounting policies adopted in the preparation of the
interim financial statements are the same as those set out in the
Group's annual financial statements for the year ended 31 March
2020.The Group has not early adopted any other standard,
interpretation or amendment that has been issued but is not
effective.
2. Statement of Compliance
These Condensed Consolidated Interim Financial Statements have
been prepared in accordance with International Accounting Standard
34 Interim Financial Reporting as adopted by the European Union.
The financial information included does not constitute statutory
accounts within the meaning of section 434 of the Companies Act
2006 ('the Act') and do not include all the information required
for full annual financial statements. Accordingly, they should be
read in conjunction with the Annual Report and Financial Statements
of Motorpoint Group PLC for the year ended 31 March 2020 which are
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union. These condensed
consolidated interim financial statements were approved by the
Board of Directors on 25 November 2020.
3. Significant Accounting Policies
The same accounting policies, presentation and methods of
computation which were followed in the preparation of the Annual
Report and Financial Statements for Motorpoint Group PLC for the
period ended 31 March 2020 have been applied to these Condensed
Consolidated Interim Financial Statements where applicable. The
accounting policies and details of new standards adopted in the
year ended 31 March 2020 are listed in the Motorpoint Group PLC
Annual Report and Financial Statements on pages 82-88.
4. Comparative Figures
The comparative figures for the financial year ended 31 March
2020 are extracted from the Motorpoint Group PLC Annual Report and
Financial Statements for that financial year. The accounts have
been reported on by the Company's auditor and delivered to the
Registrar of Companies. The report of the auditor was (i)
unqualified (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498(2) or (3) of the Act.
The comparative figures for the six month period ended 30
September 2019 are as reported in the prior year and were prepared
in accordance with International Accounting Standard 34 Interim
Financial Reporting as adopted by the European Union.
5. Segment Reporting and Revenue
The Company's reportable operating segment is considered to be
the United Kingdom operations. The Company's chief operating
decision maker is considered to be the Board of Directors.
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 have 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.
(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
the customer. Payment of the transaction price is due immediately
when the customer purchases the vehicle.
(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 income statement 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.
Under IFRS 15, the assessment will be 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.
Products and Nature, timing of satisfaction of performance
services obligations and significant payment terms
Sale of motor The Group sells nearly new vehicles to retail
vehicles customers. Revenue is recognised at the point
the vehicle is collected by the customer. The
satisfaction of the performance obligation occurs
on delivery or collection of the product.
The Group sells vehicles acquired through retail
customer trade-ins to trade customers through
their website auction4cars. Vehicles do not leave
the premises until they are paid for in full and
therefore the revenue and the profit are recognised
at the point of sale. The satisfaction of the
performance obligation occurs on collection of
the vehicle.
The Group operates a return policy which is consistent
with the relevant consumer protection regulations.
---------------------------------------------------------
Sales of motor The Group receives commissions when it arranges
related services finance, insurance packages, extended warranty
and commissions and paint protection for its customers, acting
as agent on behalf of a limited number of finance,
insurance and other companies. For finance and
insurance packages, commission is earned and recognised
as revenue when the customer draws down the finance
or commences the insurance policy from the supplier
which coincides with the delivery of the product
or service. Commissions receivable are paid typically
in the month after the finance is drawn down.
For extended warranty and paint protection, the
commission earned by the Group as an agent is
recognised as revenue at the point of sale on
behalf of the Principal.
The Group o ered an Extended Guarantee for either
12 or 24 months, which commenced from the end
of the manufacturer's warranty period. The revenue
is deferred until the start of the policy period,
and then released on a straight -- line basis
over the policy term. Any directly attributable
costs from the sale (e.g. sales commission) are
also deferred and released over the same period.
Customer claims are taken to the Income Statement
as they are incurred during the policy term.
---------------------------------------------------------
Six Months Six Months
ended 30 ended 30 Year ended
September September 31 March
2020 2019 2020
GBPm GBPm GBPm
Revenue from sale of motor vehicles 370.2 506.4 965.5
Revenue from motor related services
and commissions 15.7 22.9 45.8
Revenue recognised that was
included in deferred income
at the beginning of the period
- Sale of motor vehicles 1.3 1.9 3.3
Revenue recognised that was
included in deferred income
at the beginning of the period
- Motor related services and
commissions 0.5 2.0 2.0
Revenue recognised that was
included in the contract liability
balance at the beginning of
the period -
Extended guarantee income - 0.7 1.4
------------ ------------ ------------
Total Revenue 387.7 533.9 1,018.0
------------ ------------ ------------
6. Finance Cost
Six Months ended 30
September Six Months ended 30
2020 September 2019 Year ended 31 March 2020
GBPm GBPm GBPm
Interest on bank borrowings - - 0.2
Interest on stocking finance
facilities 0.6 0.8 1.7
Other interest payable 0.8 0.9 1.6
----------------------------- ---------------------------- --------------------------
Total finance costs 1.4 1.7 3.5
----------------------------- ---------------------------- --------------------------
7. Taxation
The tax charge for the period is provided at the effective rate
of 18.6% (FY20 H1: 20%) representing the best estimate of the
average annual tax rate for the full year profit.
8. Dividends
Six Months ended 30 September Six Months ended 30
2020 September 2019 Year ended 31 March 2020
GBPm GBPm GBPm
Final dividend for the year
ended 31 March 2019 - 4.7 4.7
Interim dividend for the
year ended 31 March 2020 - - 2.3
Total dividends - 4.7 7.0
------------------------------ ---------------------------- -------------------------
9. 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 at the end of the period.
Six Months ended 30 Six Months ended 30
September 2020 September 2019 Year ended 31 March 2020
----------------------------- ----------------------------- -------------------------
Profit Attributable to
Ordinary Shareholders
(GBPm) 7.9 7.5 15.2
----------------------------- ----------------------------- -------------------------
Weighted average number of
ordinary shares in Issue
('000) 90,190 94,385 92,521
----------------------------- ----------------------------- -------------------------
Basic Earnings per share
(pence) 8.8 8.0 16.4
----------------------------- ----------------------------- -------------------------
Diluted Number of Shares in
Issue ('000) 90,453 94,750 92,577
----------------------------- ----------------------------- -------------------------
Diluted Earnings per share
(pence) 8.7 7.9 16.4
----------------------------- ----------------------------- -------------------------
The difference between the basic and diluted weighted average
number of shares represents the dilutive effect of the SAYE scheme.
This is shown below.
The shares for the SIP scheme were issued ahead of vesting. The
PSP awards up to and including FY20 have performance criteria which
have not been met as at the date of these interim financial
statements so the options are not yet deemed dilutive. Those shares
for PSP that have met the criteria and those awarded in FY21 as
Restricted Share Awards may be considered dilutive, however at
present the Company is not intending to satisfy these by way of
fresh issue of shares.
Six Months ended 30 Six Months ended 30
September 2020 September 2019 Year ended 31 March 2020
Weighted average number of
ordinary shares in Issue
('000) 90,190 94,385 92,521
Adjustment for share options
('000) 263 365 56
----------------------------- ----------------------------- -------------------------
Weighted average number of
ordinary shares for diluted
earnings per share ('000) 90,453 94,750 92,577
10. Property, plant and equipment
Short term Fixtures
Freehold leasehold Plant and Office
WIP Land property improvement and machinery fittings equipment Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April
2020
Cost 2.5 6.2 5.9 7.2 1.5 1.3 3.2 27.8
Accumulated
depreciation - - (0.1) (4.3) (1.0) (1.1) (2.4) (8.9)
----- ----- ----------- ------------- --------------- ---------- ----------- ------
Net book value 2.5 6.2 5.8 2.9 0.5 0.2 0.8 18.9
----- ----- ----------- ------------- --------------- ---------- ----------- ------
Opening net
book value 2.5 6.2 5.8 2.9 0.5 0.2 0.8 18.9
Additions 0.1 - 0.1 - - - 0.1 0.3
Depreciation - - (0.1) (0.4) (0.1) (0.1) (0.2) (0.9)
----- ----- ----------- ------------- --------------- ---------- ----------- ------
Closing net
book value 2.6 6.2 5.8 2.5 0.4 0.1 0.7 18.3
----- ----- ----------- ------------- --------------- ---------- ----------- ------
At 30 September
2020
Cost 2.6 6.2 6.0 7.2 1.5 1.3 3.3 28.1
Accumulated
depreciation - - (0.2) (4.7) (1.1) (1.2) (2.6) (9.8)
----- ----- ----------- ------------- --------------- ---------- ----------- ------
Net book value 2.6 6.2 5.8 2.5 0.4 0.1 0.7 18.3
----- ----- ----------- ------------- --------------- ---------- ----------- ------
11. Right of use assets
Six Months ended 30 September Six Months ended 30 September
2020 2019 Year ended 31 March 2020
Right of use assets GBPm GBPm GBPm
Balance brought forward 41.6 42.6 42.6
Additions 1.7 0.7 2.4
Depreciation charge (2.0) (1.6) (3.4)
41.3 41.7 41.6
------------------------------ ------------------------------- --------------------------
12. Trade and other receivables
30 September 2020 30 September 2019
31 March 2020
Due within one year GBPm GBPm GBPm
Trade receivables 3.9 4.2 3.0
Other receivables 0.5 0.3 1.0
Prepayments 1.4 2.2 0.3
Accrued income 0.2 1.2 0.1
------------------ ------------------ ----------------
6.0 7.9 4.4
------------------ ------------------ ----------------
The Directors' assessment is that the fair value of trade and
other receivables is equal to the carrying value.
13. Lease liabilities
Six Months ended 30
September Six Months ended 30
2020 September 2019 Year ended 31 March 2020
Lease liabilities GBPm GBPm GBPm
Balance brought forward 45.4 46.2 46.2
Additions to lease
liabilities 1.7 0.7 2.2
Repayment of lease
liabilities (including
interest element) (2.0) (2.2) (4.6)
Interest expense related to
lease liabilities 0.8 0.8 1.6
45.9 45.5 45.4
----------------------------- ---------------------------- --------------------------
Current 2.8 2.0 2.3
Non-current 43.1 43.5 43.1
----------------------------- ---------------------------- --------------------------
45.9 45.5 45.4
----------------------------- ---------------------------- --------------------------
14. Trade and other payables
Due less than 1 year
30 September 2020 30 September 2019
31 March 2020
GBPm GBPm GBPm
Trade payables
* Trade creditors 6.8 6.5 10.6
80.5 66.1 86.1
* Stocking finance facilities
Other taxes and social security
* VAT payable 3.2 4.4 1.4
0.8 0.7 0.8
* PAYE/NI payable
Accruals 16.8 14.2 12.7
------------------ ------------------ ----------------
108.1 91.9 111.6
------------------ ------------------ ----------------
The Directors' assessment is that the fair value of trade and
other payables is equal to the carrying value.
15. Provisions
30 September 2020 30 September 2019
31 March 2020
GBPm GBPm GBPm
Make good provision(1) 1.9 1.7 1.9
Onerous leases(2) 0.2 0.2 0.4
2.1 1.9 2.3
------------------ ------------------ ----------------
Current - 0.2 0.2
Non-current 2.1 1.7 2.1
------------------ ------------------ ----------------
2.1 1.9 2.3
------------------ ------------------ ----------------
(1) Make good provision
Motorpoint Limited is required
to restore the leased premises
of its retail stores to
their original condition
at the end of the respective
lease terms. A provision
has been recognised for
the present value of the
estimated expenditure required
to remove any leasehold
improvements. These costs
have been capitalised as
part of the cost of right-of-use
assets and are amortised
over the shorter of the
term of the lease and the
useful life of the assets.
(2) Onerous leases
The Group operates across
a number of locations and
if there is clear indication
that a property will no
longer be used for its
intended operation, a provision
may be required based on
an estimate of potential
liabilities for periods
of lease where the property
will not be used at the
end of the reporting period,
to unwind over the remaining
term of the lease.
16. Cash flow from operations
Six Months ended 30 Six Months ended 30
September 2020 September 2019 Year ended 31 March 2020
GBPm GBPm GBPm
Profit for the year,
attributable to equity
shareholders 7.9 7.5 15.2
Adjustments for:
Taxation charge 1.8 1.9 3.6
Finance costs 1.4 1.7 3.5
Operating profit 11.1 11.1 22.3
Share Based Compensation
Charge (0.1) (0.2) (0.1)
Loss on disposal of
property, plant and
equipment - - 0.1
Depreciation charge 2.9 2.3 5.0
Cash flow from operations
before movements in working
capital 13.9 13.2 27.3
Decrease/(Increase) in
inventory 9.3 34.1 4.4
(Increase)/Decrease in trade
and other receivables (1.6) 5.1 8.6
(Decrease)/Increase in trade
and other payables (3.9) (26.5) (7.1)
Cash generated from
operations 17.7 25.9 33.2
----------------------------- ----------------------------- -------------------------
17. Share buybacks
Movements in the issued share capital during the period are
shown in the table below:
30 September 2020 30 September 2020 31 March 2020 31 March 2020
Shares '000 GBPm Shares '000 GBPm
Shares in issue at start of period / year 90,190 0.9 96,166 1.0
Brought back and cancelled - - (5,976) (0.1)
Brought back and held as treasury shares - - (5) -
Released from treasury to satisfy employee - - 5 -
share plan obligations
------------------ ------------------ -------------- --------------
Shares in issue at end of period / year 90,190 0.9 90,190 0.9
------------------ ------------------ -------------- --------------
The total cost of shares purchased for cancellation as shown in
the Statement of Changes in Equity was GBPnil (FY20 H1:
GBP11.2m).
18. 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: the ongoing impact of Covid-19, a negative
implication to the Motorpoint brand and customer perception,
inability to maintain relationships with suppliers, fluctuation on
exchange rate having an impact on vehicle pricing, economic
conditions impacting trading, market driven fluctuations in vehicle
values, litigation and regulatory risk, failure of Group
information and systems, and availability of credit and vehicle
financing.
All other principal risks are consistent with those detailed in
the Motorpoint Group PLC Annual Report and Financial Statements .
The Board continually reviews 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 ended 31 March 2021.
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END
IR DELFLBFLZFBF
(END) Dow Jones Newswires
November 26, 2020 02:00 ET (07:00 GMT)
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