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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bca Marketplace Plc | LSE:BCA | London | Ordinary Share | GB00BP0S1D85 | ORD �0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 236.20 | 236.20 | 236.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBCA
RNS Number : 9122Q
BCA Marketplace PLC
15 September 2017
THIS ANNOUNCEMENT DOES NOT CONSTITUTE A PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SHARES OR OTHER SECURITIES IN THE COMPANY NOR SHALL IT FORM THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER.
15 September 2017
BCA Marketplace plc
Notification of Transfer to a Premium Listing
BCA Marketplace plc (the "Company" or "BCAM") announces that it is proposing to transfer the listing category of its ordinary shares (the "Ordinary Shares") from a standard listing (shares) to a premium listing (commercial company) on the Official List of the UK Listing Authority ("Official List") in accordance with Rule 5.4A of the Listing Rules (the "Transfer").
The provision of 20 business days' notice (which period commenced by way of today's announcement) is required to effect the Transfer. No shareholder approval is required in connection with the transfer. It is anticipated that the Transfer will take effect at 8.00 a.m. on 16 October 2017, conditional on the approval of the UK Listing Authority ("UKLA").
1. Background to and reasons for the Transfer
Since the formation of the Company (as Haversham Holdings plc) in October 2014, the Company's board of directors ("Board") has sought to maintain the most appropriate listing and trading facility for the Company's Ordinary Shares. The Company's Ordinary Shares were admitted to trading on AIM in November 2014 with the objective of creating value through an acquisition-led growth strategy. Upon the acquisition of the BCA Trading Group of companies ("BCA Trading Group") in April 2015, the Company's shares were admitted to the standard listing segment of the Official List and to trading on the Main Market for listed securities of the London Stock Exchange.
Since that time, the flexibility afforded by the standard listing has enabled the Company to move quickly to take advantage of opportunities to grow by acquisition and equip its business to accommodate the rapid growth in transaction volumes that BCA has achieved in the past two years. The Company remains ambitious and growth-focussed but the Board considers that there is no longer the same requirement for flexibility and that this is the appropriate time for the Company to seek a listing on the premium listing segment of the Official List under Rule 5.4A of the Listing Rules.
The Company has therefore requested that the UKLA approve the Transfer with effect from 8.00 a.m. on 16 October 2017. As at 15 September 2017, the Company had 780,247,192 Ordinary Shares in issue.
2. Effect of the Transfer
No changes to the Company's business have been or are proposed to be made in connection with the Transfer.
The Board believes that the Transfer will bring with it a number of benefits to the Company and its investors and does not consider there to be any particular risk associated with the Transfer:
-- increased protection for investors under the Listing Rules as a result of the higher standards placed on premium listed companies, including in relation to significant and related party transactions;
-- the potential for increased trading liquidity of the Company's shares as a result of potential FTSE inclusion; and
-- an enhanced Company profile associated with a premium listing and as a result of potential FTSE inclusion.
Following the Transfer certain additional provisions of the Listing Rules will formally apply to the Company. These provisions, set out under Chapters 6 to 13 (inclusive) of the Listing Rules, relate to the following matters:
-- the application of certain requirements that are specific to companies with a premium listing (Chapter 6);
-- the application of the Premium Listing Principles set out in Listing Rule 7.2.1AR (Chapter 7);
-- the requirement to appoint a sponsor in certain circumstances (Chapter 8);
-- the requirement to comply with various continuing obligations, including compliance with all relevant provisions of the UK Corporate Governance Code (or provide an explanation for any non-compliance, if applicable, in its annual financial report) (Chapter 9);
-- the requirement to announce, or obtain shareholder approval for, certain transactions (depending on their size and nature) and for certain transactions with 'related parties' of the Company (Chapters 10 and 11);
-- certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and
-- various specific contents requirements that will apply to circulars issued by the Company to its shareholders (Chapter 13).
3. Working capital
In the opinion of the Company, the Company and its subsidiary undertakings (the "Group") have sufficient working capital available for the Group's requirements for at least the next 12 months from the date of this announcement.
4. Corporate Governance
The Board is committed to the highest standards of corporate governance. The Company expects to be in compliance with the recommendations set out in the April 2016 UK Corporate Governance Code immediately prior to the Transfer, save for Avril Palmer-Baunack's role as Executive Chairman. The Annual Report and Accounts for the year ended 1 April 2018 will report on compliance and provide reasons for non-compliance with the UK Corporate Governance Code.
The UK Corporate Governance Code, under section A2.1, recommends that the role of Chairman and Chief Executive should not be exercised by the same individual. Avril Palmer-Baunack continues to hold the role of Executive Chairman. Avril has significant and unique expertise, knowledge and industry relationships in the UK and Europe which continues to contribute to the successful acquisition and management of businesses by the Company in accordance with its stated strategy to develop a range of automotive service solutions that enable the Group to add value along the vehicle supply chain. In light of this proven expertise the Board continues to believe, with support from major shareholders, that combining the roles of Chairman and Chief Executive remains the right approach at this stage in the Group's development.
Since completion of the acquisition of the BCA Trading Group, the Company has appointed four additional independent non-executive directors, Stephen Gutteridge (who also acts as the senior independent non-executive director), Jon Kamaluddin, Piet Coelewij and David Lis. As a result, half of the Board consists of independent non-executive directors which the Board believes provides a sufficiently robust level of independence to act as a safeguard and mitigate any governance-related concerns that may arise from the combined Executive Chairman role.
5. UK Takeover Code
As the Company has its registered office in the UK and its Ordinary Shares are admitted to trading on the Main Market of the London Stock Exchange, it is subject to the UK Takeover Code, with which the Company complies.
6. Appointment of Sponsor
The Company has appointed Cenkos Securities plc ("Cenkos") to act as its Sponsor in relation to the Transfer. Cenkos is currently joint corporate broker to the Company.
7. Financial information incorporated by reference
The financial information listed below is incorporated by reference into this announcement and can be found in the annual report and accounts of BCAM for the year ended 2 April 2017 which can be found on the Company's website via the link www.bcamarketplaceplc.com. The non-incorporated parts of the annual report and accounts of BCAM for the year ended 2017 are not relevant for the purposes of this announcement.
Hot Features
Premium
Information incorporated Reference document Page number
by reference in reference
into this announcement document
------------------------- --------------------------- --------------
Annual audited Directors' report Pages 61 -
accounts of BCA Independent auditor's 63
Marketplace plc report Pages 64 -
for the financial Consolidated income 65
year ended 2 statement Page 66
April 2017 and Consolidated statement Page 67
the independent of comprehensive income Page 68
auditor's report Consolidated statement Page 69
thereon of changes in equity Page 70
Consolidated balance Pages 71 -
sheet 107
Consolidated cash flow
statement
Notes to the consolidated
financial statements
------------------------- --------------------------- --------------
8. Further financial information on the Group
In order to provide a three year track record of the Group, as required by Chapter 6 of the Listing Rules, historical financial information for the Group, along with the independent accountant's report thereon, are set out below. This historical track record has been prepared in accordance with the basis of preparation which applies predecessor and successor accounting as described in Annexure paras 56-57 of SIR 2000 (Investment Reporting Standard applicable to public reporting engagements on historical financial information) issued by the UK Auditing Practices Board. Consequently the historical financial information reflects the consolidated financial results for the BCA Trading Group up to its acquisition on 2 April 2015 and thereafter reflects the consolidated financial results of the BCA Trading Group and it's new parent company BCA Marketplace plc.
In order to align this historical financial information with previously reported periods this is presented as historical financial information for the year to 31 December 2014 and the 15 months to 3 April 2016.
For the 15 month period ended 3 April 2016 the presentation of this historical financial information differs from the audited Annual Report and Accounts 2016, which also represents the 15 month period ended 3 April 2016, as the Annual Report and Accounts 2016 only included the BCA Trading Group for a 12 month period from its date of acquisition on 2 April 2015.
9. FTSE eligibility and qualification
FTSE's Europe, Middle East and Africa (EMEA) Committee meets on a quarterly basis to review the constituents of the FTSE UK index series, incorporating the FTSE 100, FTSE 250 and FTSE SmallCap. It is anticipated that, subject to the Transfer becoming effective and other conditions being met, the Company will be considered for inclusion into the FTSE UK Index Series and such inclusion would become effective on 18 December 2017.
10. Consents
Cenkos has given and has not withdrawn its written consent to the inclusion of the reference to its name in the form and context in which it is included in this announcement.
PricewaterhouseCoopers LLP has given and not withdrawn its consent to the inclusion of its accountant's report on the combined and consolidated financial information for BCA Trading Group and BCAM for the 15 month period ended 3 April 2016 and the references to it in the form and context in which they are included in this announcement.
Enquiries
For further information:
BCA Marketplace plc
Tim Richmond tim.richmond@bca.com
Cenkos Securities plc Tel: +44 (0)20
7397 8900
Elizabeth Bowman, Jeremy Osler,
Harry Hargreaves
Media enquiries:
Square1 Consulting Tel: +44 (0)20
7929 5599
David Bick
IMPORTANT NOTICE:
The contents of this announcement have been prepared by and are the sole responsibility of the Company. The Company is not offering any Ordinary Shares or other securities in connection with the proposals described in this announcement. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in the Company or securities in any other entity, in any jurisdiction, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction. This announcement does not constitute a recommendation regarding any securities.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should", or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's result of operations, financial condition, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position, the Company's earnings, financial position, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future.
Subject to the Company's regulatory obligations, including under the Listing Rules, the Disclosure Guidance and Transparency Rules, the EU Market Abuse Regulation and the Financial Services and Markets Act 2000 ("FSMA"), neither the Company nor Cenkos Securities plc undertakes any obligation to update publicly or revise any forward looking-statement whether as a result of new information, future events or otherwise. None of the statements made in this announcement in any way obviates the requirements of the Company to comply with its regulatory obligations.
The contents of the Company's website do not form part of this announcement.
Cenkos Securities plc, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting for the Company and for no one else in connection with the Transfer and will not be responsible to any person other than the Company for providing the protections afforded to clients of Cenkos Securities plc, nor for providing advice in relation to the Transfer, the content of this announcement or any matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed on Cenkos Securities plc by the FSMA or the regulatory regime established thereunder, neither Cenkos Securities plc nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Cenkos Securities plc in connection with this announcement, any statement contained herein or otherwise, nor makes any representation or warranty, express or implied, in relation to, the contents of this announcement, including its accuracy, completeness or verification or for any other statement purported to be made by Cenkos Securities plc, or on behalf of Cenkos Securities plc in connection with the Company or the Transfer. Cenkos Securities plc accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability to any person who is not a client of Cenkos Securities plc, whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of this announcement or any such statement.
SECTION A - ACCOUNTANT'S REPORT ON THE HISTORICAL FINANCIAL INFORMATION FOR THE 15 MONTHSED 3 APRIL 2016 AND THE YEARED 31 DECEMBER 2014
The Directors
BCA Marketplace plc
20 Buckingham Street
London
WC2N 6EF
Cenkos Securities plc (the "Sponsor")
6 - 8 Tokenhouse Yard
London
EC2R 7AS
15 September 2017
Dear Ladies and Gentlemen,
BCA Marketplace plc (the "Company")
We report on the combined and consolidated financial information of the Group (being prior to 2 April 2015, the BCA Trading Group and its consolidated subsidiaries and undertakings, and, thereafter the Company and its consolidated subsidiaries and undertakings) for the 15 months ended 3 April 2016 and the year ended 31 December 2014 set out in section B below (the "Financial Information Table"). The Financial Information Table has been prepared for inclusion in the notification of transfer to a premium listing dated 15 September 2017 (the "Announcement") of the Company on the basis of the accounting policies set out in note 2 to the Financial Information Table. This report is required for the purposes of complying with item 6.1.3(1) of the Listing Rules of the United Kingdom Listing Authority (the "Listing Rules") and for no other purpose.
Responsibilities
The Directors of the Company are responsible for preparing the Financial Information Table in accordance with the basis of preparation set out in note 2 to the Financial Information Table.
It is our responsibility to form an opinion as to whether the Financial Information Table gives a true and fair view, for the purposes of the Announcement and to report our opinion to you.
Save for any responsibility which we may have to those persons to whom this report is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with item 6.1.3(1) of the Listing Rules.
Basis of opinion
We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevant to the amounts and disclosures in the financial information. It also included an assessment of significant estimates and judgments made by those responsible for the preparation of the financial information and whether the accounting policies are appropriate to the Group's circumstances, consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial information is free from material misstatement whether caused by fraud or other irregularity or error.
Opinion
In our opinion, the Financial Information Table gives, for the purposes of the Announcement dated 15 September 2017, a true and fair view of the state of affairs of the Group as at the dates stated and of its losses, cash flows and changes in equity for the periods then ended in accordance with the basis of preparation set out in note 2 to the Financial Information Table.
Yours faithfully
PricewaterhouseCoopers LLP
Chartered Accountants
PricewaterhouseCoopers LLP, 1 Embankment Place, London, WC2N 6RH
T: +44 (0) 2075 835 000, F: +44 (0) 2072 124 652, www.pwc.co.uk
PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Conduct Authority for designated investment business.
SECTION B - HISTORICAL FINANCIAL INFORMATION FOR THE 15 MONTHSED 3 APRIL 2016 AND THE YEARED 31 DECEMBER 2014
COMBINED AND CONSOLIDATED INCOME STATEMENT
Note For the
15 months For the
ended year ended
3 April 31 December
2016 2014
GBPm GBPm GBPm GBPm
-------------------------------- --------------------------------- ----- ------- ------- ------- --------
Revenue 4 1,441.8 886.1
Cost of sales (1,064.9) (636.3)
-------------------------------- --------------------------------- ----- ---------------- ------- --------
Gross profit 376.9 249.8
Operating costs 7 (375.7) (226.6)
Other income - 0.6
----------------
Operating profit 4 1.2 23.8
Finance income 1.4 4.5
Finance costs 9 (32.6) (69.7)
-------------------------------- --------------------------------- ----- ------- ------- ------- --------
Loss before income tax (30.0) (41.4)
Income tax credit 12 4.9 4.2
------------------------------------------------------------------- ----- ------- ------- ------- --------
Loss for the period/year (25.1) (37.2)
=================================================================== ===== ======= ======= ======= ========
Attributable to:
Equity owners of the parent (25.2) (37.1)
Non-controlling interests 0.1 (0.1)
------------------------------------------------------------------- ----- ------- ------- ------- --------
(25.1) (37.2)
================================ ================================= ===== ======= ======= ======= ========
Operating profit 1.2 23.8
Add: - Depreciation and amortisation 4 20.3 11.3
- Impairment of property,
plant & equipment 4 - 4.8
- Amortisation of acquired
intangibles 4 35.3 3.5
- New business start-up
costs 4 - 2.0
- Management fees to
private equity investor 4 - 0.5
- Restructuring costs 4 - 3.4
- Aborted IPO costs 4 2.7 13.1
- Onerous lease provision 4 - 19.6
- Acquisition costs 4 32.4 -
- EBT and share based
payment settlement costs 4 17.9 -
- Business closure costs 4 2.5 -
- Other significant or
non-recurring items 4 4.3 0.3
Adjusted EBITDA 116.6 82.3
Less: - Depreciation and amortisation 4 (20.3) (11.3)
- Net finance costs (31.2) (65.2)
Adjusted profit before income
tax 65.1 5.8
------------------------------------------------------------------- ----- ------- ------- ------- --------
Loss per share from continuing
operations attributable to the
equity holders of the parent during
the period/year
--------------------------------------- --- ---- ------
Basic and diluted loss per share
(pence) 11 4.0 927.5
=======================================
COMBINED AND CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the For the
15 months year ended
ended 31 December
3 April 2014
2016
GBPm GBPm
------------------------------------- ----------- -------------
Loss for the period/year (25.1) (37.2)
Other comprehensive income:
Items that will not be reclassified
to the income statement
Remeasurements on defined benefit
schemes, including deferred tax (1.9) (2.8)
Items that may be subsequently
reclassified to the income
statement
Foreign exchange translation 28.4 (1.0)
--------------------------------------
Total other comprehensive
income/(expense), net of tax 26.5 (3.8)
-------------------------------------- ----------- -------------
Total comprehensive profit/(loss)
for the period/year 1.4 (41.0)
====================================== =========== =============
Attributable to:
Equity owners of the parent 1.3 (40.9)
Non-controlling interests 0.1 (0.1)
-------------------------------------- ----------- -------------
1.4 (41.0)
===================================== =========== =============
COMBINED AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity owners
of the Parent
----------------------------------------------------------------------------------
(Accumulated
Foreign deficit)
Share Share Merger exchange / retained Non-controlling Total
capital premium reserve reserve profit Total interests equity
------------------ ----- -------- -------- -------- --------- ------------- -------- ---------------- --------
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- -------- -------- -------- --------- ------------- -------- ---------------- --------
Balance at 31
December 2013 4.0 14.8 - (0.6) (67.5) (49.3) - (49.3)
Total
comprehensive
loss of the
BCA Trading
Group
Loss for the
year - - - - (37.1) (37.1) (0.1) (37.2)
Other
comprehensive
loss - - - (1.0) (2.8) (3.8) - (3.8)
------------------ -----
Total
comprehensive
loss for the
year - - - (1.0) (39.9) (40.9) (0.1) (41.0)
Contributions
and distributions
Share based
payments 29 - - - - 2.7 2.7 - 2.7
Changes in
ownership
interests
Step
acquisition - - - - 0.6 0.6 - 0.6
Acquisition
of subsidiary
with
non-controlling
interest - - - - - - (0.2) (0.2)
------------------ -----
Total
transactions
with owners - - - - 3.3 3.3 (0.2) 3.1
------------------ ----- -------- -------- -------- --------- ------------- -------- ---------------- --------
Balance at 31
December 2014 4.0 14.8 - (1.6) (104.1) (86.9) (0.3) (87.2)
Total
comprehensive
loss of the
BCA Trading
Group to 2 April
2015
(Loss)/profit
for the period - - - - (32.9) (32.9) 0.1 (32.8)
Other
comprehensive
loss - - - (0.6) (1.6) (2.2) - (2.2)
------------------ -----
Total
comprehensive
loss of the
BCA Trading
Group to 2 April
2015 - - - (0.6) (34.5) (35.1) 0.1 (35.0)
------------------
Total - - - - - - - -
transactions
with owners
------------------ ----- -------- -------- -------- --------- ------------- -------- ---------------- --------
Balance at 2
April 2015 4.0 14.8 - (2.2) (138.6) (122.0) (0.2) (122.2)
================== ===== ======== ======== ======== ========= ============= ======== ================ ========
The table above reflects the consolidated statement of changes in equity of the BCA Trading Group, the predecessor, for the year ended 31 December 2014 and the period to acquisition by BCAM on 2 April 2015.
The table that follows reflects the combined and consolidated statement of changes in equity of BCAM, the successor, starting with BCA Trading Group position as at 2 April 2015 and showing movements in equity for the remainder of the period to 3 April 2016.
COMBINED AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY continued
Attributable to equity owners
of the Parent
--------------------------------------------------------------------
(Accumulated
Foreign deficit)
Share Share Merger exchange / retained Non-controlling Total
capital premium reserve reserve profit Total interests equity
------------------ ----- --------- ---------- --------- --------- ------------- -------- ---------------- --------
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- --------- ---------- --------- --------- ------------- -------- ---------------- --------
Balance at 2
April 2015 4.0 14.8 - (2.2) (138.6) (122.0) (0.2) (122.2)
Contributions
and distributions
of BCA Trading
Group
Eliminate
reserves
of the BCA
Trading
Group as at
2 April 2015 (4.0) (14.8) - 2.2 138.6 122.0 0.2 122.2
Contributions
and distributions
of BCAM
Reserves of
BCAM brought
in at
acquisition 0.3 28.7 - - (0.3) 28.7 - 28.7
Net proceeds
from shares
issued 7.5 986.6 103.6 - - 1,097.7 - 1,097.7
Capital
reduction - (1,015.3) - - 1,015.3 - - -
Equity-settled
share based
payments - - - - 0.6 0.6 - 0.6
Dividends paid 25 - - - - (15.6) (15.6) - (15.6)
Changes in
ownership
interests
Acquisition
of subsidiary
with
non-controlling
interest 5 - - - - - - (0.2) (0.2)
------------------
Total
transactions
with owners 3.8 (14.8) 103.6 2.2 1,138.6 1,233.4 - 1,233.4
------------------ ----- --------- ---------- --------- --------- ------------- -------- ---------------- --------
Total
comprehensive
income of BCAM
for the period
to 3 April 2016
Profit for the
period - - - - 7.7 7.7 - 7.7
Other
comprehensive
income - - - 29.0 (0.3) 28.7 - 28.7
------------------ -----
Total
comprehensive
income of BCAM
to 3 April 2016 - - - 29.0 7.4 36.4 - 36.4
------------------ -----
Balance at 3
April 2016 7.8 - 103.6 29.0 1,007.4 1,147.8 (0.2) 1,147.6
================== ===== ========= ========== ========= ========= ============= ======== ================ ========
COMBINED AND CONSOLIDATED BALANCE SHEET
As at As at
3 April 31 December
2016 2014
Note GBPm GBPm
-------------------------------------- ----- --------- -------------
Non-current assets
Intangible assets 13 1,449.5 550.6
Property, plant and equipment 14 115.5 58.8
Interest in joint venture - 0.3
Deferred tax assets 23 15.9 18.2
--------- -------------
Total non-current assets 1,580.9 627.9
-------------------------------------- ----- --------- -------------
Current assets
Inventories 15 19.3 29.0
Employee benefit trust - 2.9
Trade and other receivables 16 210.0 89.0
Cash and cash equivalents 17 102.4 31.1
Assets held for sale - 1.6
Current tax 0.3 1.3
-------------------------------------- ----- --------- -------------
Total current assets 332.0 154.9
-------------------------------------- ----- --------- -------------
Total assets 1,912.9 782.8
-------------------------------------- ----- --------- -------------
Non-current liabilities
Bank borrowings 19 (273.1) (626.7)
Trade and other payables 18 (88.7) (57.4)
Pension deficit 22 (7.6) (2.9)
Provisions 21 (18.7) (18.1)
Deferred tax liabilities 23 (110.8) (10.1)
-------------------------------------- ----- --------- -------------
Total non-current liabilities (498.9) (715.2)
-------------------------------------- ----- --------- -------------
Current liabilities
Bank borrowings 19 - (23.3)
Partner Finance borrowings 20 (40.2) (13.3)
Trade and other payables 18 (225.3) (117.2)
Provisions 21 (0.9) (1.0)
-------------------------------------- ----- --------- -------------
Total current liabilities (266.4) (154.8)
-------------------------------------- ----- --------- -------------
Total liabilities (765.3) (870.0)
-------------------------------------- ----- --------- -------------
Net assets/(liabilities) 1,147.6 (87.2)
====================================== ===== ========= =============
Equity shareholders' funds
Share capital 24 7.8 4.0
Share premium 24 - 14.8
Merger reserve 24 103.6 -
Foreign exchange reserve 24 29.0 (1.6)
Retained profit/(accumulated
deficit) 24 1,007.4 (104.1)
-------------------------------------- ----- --------- -------------
Equity shareholders' funds/(deficit) 1,147.8 (86.9)
Non-controlling interests (0.2) (0.3)
-------------------------------------- ----- --------- -------------
Total shareholders' funds/(deficit) 1,147.6 (87.2)
====================================== ===== ========= =============
COMBINED AND CONSOLIDATED CASH FLOW STATEMENT
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
Note GBPm GBPm
------------------------------------- ----- ----------- -------------
Cash generated from operations 6 163.0 72.7
Increase in Partner Finance
loan book (45.8) (18.9)
Interest paid (26.6) (17.7)
Interest received 0.5 0.1
Income tax paid (3.2) (2.4)
------------------------------------- ----- ----------- -------------
Net cash inflow from operating
activities before acquisition
related cash flows 87.9 33.8
Acquisition related cash (46.4) -
flows
----------- -------------
Net cash inflow from operating
activities 41.5 33.8
------------------------------------- ----- ----------- -------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (27.0) (11.1)
Purchase of intangible assets (15.8) (12.4)
Payments to acquire non-controlling
interests - (0.1)
Proceeds from sale of property,
plant and equipment 5.4 1.6
Proceeds from sale of asset 1.5 -
held for sale
Acquisition of subsidiary
undertakings, net of cash
acquired 5 (690.3) (3.2)
----------- -------------
Net cash outflow from investing
activities (726.2) (25.2)
------------------------------------- ----- ----------- -------------
Cash flows from financing
activities
Proceeds from share issue 24 993.4 -
Dividends paid 25 (15.6) -
Proceeds from borrowings 275.0 20.0
Repayments of borrowings (468.6) (13.2)
Financing fees paid 19 (7.7) -
Payment of finance lease (1.8) -
liabilities
Increase in Partner Finance
borrowings 26.9 13.3
----------- -------------
Net cash inflow from financing
activities 801.6 20.1
------------------------------------- ----- ----------- -------------
Net increase in cash and
cash equivalents 116.9 28.7
Less cash and cash equivalents
of BCA Trading Group as at
2 April 2015* 5 (73.9) -
Foreign exchange on cash (0.5) -
held
Cash and cash equivalents
of BCA Trading Group as at
1 January 2015 31.1 2.4
Cash and cash equivalents 28.8 -
of BCAM as at 2 April 2015
------------------------------------- -----
Cash and cash equivalents
at period/year end 17 102.4 31.1
===================================== ===== =========== =============
* Cash and cash equivalents of the BCA Trading Group at 1 January 2015 plus cash flow movements to 2 April 2015, incorporated in the above, gave the BCA Trading Group cash when acquired by BCAM of GBP73.9m. The BCA Trading Group cash on acquisition figure is also included within Acquisition of subsidiary undertakings, net of cash acquired above. In order to avoid double counting this figure is therefore removed.
NOTES TO THE COMBINED AND CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
BCA Marketplace plc ('BCAM' or the 'Company'), is a public limited company, listed on the London Stock Exchange and incorporated and domiciled in the UK with the registered number 09019615. The address of the Company's registered office is BCA Bedford, Coronation Business Park, Kempston Hardwick, Bedford, MK43 9PR.
On 2 April 2015, BCAM acquired BCA Osprey I Limited and its subsidiary undertakings ('BCA Trading Group'), thereafter constituting the main operating business of the Company. This was followed by the acquisitions of SMA Vehicle Remarketing Limited ('SMA') on 1 June 2015, Stobart Automotive Limited ('BCA Automotive') on 25 August 2015 and Ambrosetti (U.K.) Limited ('Ambrosetti') on 4 February 2016.
For the purposes of this historical financial information, the term 'Group' means prior to 2 April 2015, BCA Trading Group and its consolidated subsidiaries and undertakings, and, thereafter BCAM and its consolidated subsidiaries and undertakings.
2. ACCOUNTING POLICIES (a) Basis of preparation
The combined and consolidated historical financial information presents the financial track record of the Group for the year ended 31 December 2014 and the 15 month period ended 3 April 2016, incorporating the additional acquired entities from the respective dates of acquisition.
Following the acquisition of the BCA Trading Group by BCA Marketplace plc, the Company changed its accounting reference date from 31 December to 31 March, and prepares its financial statements to a Sunday within seven days of 31 March, in order to present its financial position in the most meaningful way. The Directors have taken advantage of the option within section 390 of the Companies Act 2006 to make the historical financial information up to a date seven days either side of the company's accounting reference date. This historical financial information has been prepared for the purposes of inclusion in this Announcement for the purposes of admission to the premium segment of the Official List maintained by the Financial Conduct Authority for trading on the main market for Listed Securities operated by the London Stock Exchange. This historical financial information has been prepared in accordance with the requirements of the Listing Rules, in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS') except as noted below, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
Due to the change in the capital structure of the Group that occurred on 2 April 2015 as a result of the acquisition of the BCA Trading Group by the Company as set out in note 1 above, certain accounting conventions commonly used for the preparation of historical financial information for inclusion in investment circulars, as described in the Annexure to SIR 2000 (Investment Reporting Standard applicable to public reporting engagements on historical financial information) issued by the UK Auditing Practices Board, have been applied. The application of these conventions results in the following material departures from IFRS in the year ended 31 December 2014 and the 15 month period ended 3 April 2016. In all other respects IFRS has been applied:
- the preparation of the financial information on a combined and consolidated basis, as IFRS does not provide for such preparation.
- the calculation of earnings per share as set out in note 11 as a result of the change in capital structure of the business on 2 April 2015.
Due to changes in the capital structure of the Group, this historical financial information has been combined and consolidated on the following basis:
Year ended 31 December 2014
The historical financial information is the consolidated financial information of the BCA Trading Group.
15 month period ended 3 April 2016
The historical financial information is a combination of:
- the consolidated financial information for the BCA Trading Group for the period from 1 January 2015 to 1 April 2015 (the predecessor); and
- the consolidated financial information of of the BCA Trading Group and its new parent company BCA Marketplace plc (the successor) for the period from 2 April 2015 to 3 April 2016.
2. ACCOUNTING POLICIES continued (a) Basis of preparation continued
The historical financial information has been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivatives) at fair value through profit or loss. The historical financial information and the notes to the historical financial information are presented in millions of pounds sterling ('GBPm') except where otherwise indicated.
The principal accounting policies adopted in the preparation of the historical financial information are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated.
Judgements made by the Directors in the application of the accounting policies that have a significant effect on the historical financial information and estimates with a significant risk of material adjustment in the next year are discussed in note 3.
(b) Going concern
The Group maintains a mixture of medium-term debt, committed credit facilities, finance lease arrangements and cash reserves, which together are designed to ensure that the Group has sufficient available funds to finance its operations. The Board reviews forecasts of the Group's liquidity requirements based on a range of scenarios to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its committed borrowing facilities at all times, so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
After making appropriate enquiries and having considered the business activities and the Group's principal risks and uncertainties, the Directors are satisfied that the Company and the Group as a whole have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the historical financial information has been prepared on a going concern basis.
(c) Basis of consolidation
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.
Losses applicable to non-controlling interests are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.
Intragroup balances, and any gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the combined and consolidated historical financial information. Gains arising from transactions with jointly controlled entities are eliminated to the extent of the Group's interest in the entity. Losses are eliminated in the same way as gains, but only to the extent that there is no evidence of impairment.
(d) New standards, amendments and interpretations
Standards, amendments and interpretations effective and adopted by the Group
IFRSs applicable to the annual financial statements of the Group for the period ended 2 April 2017 have been applied.
Standards and interpretations issued but not yet effective
IFRSs that have been issued but are not yet effective and have not been early adopted by the Group are listed below:
-- IFRS 9 Financial instruments addresses the classification, measurement and recognition of financial assets and financial liabilities and replaces IAS 39. IFRS 9 will become effective for the accounting periods starting on or after 1 January 2018, subject to EU endorsement. The impact of the standard is currently being assessed by management but is not expected to have a material impact on the Group.
-- IFRS 15 Revenue from contracts with customers will become effective for accounting periods starting on or after 1 January 2018, subject to EU endorsement. The impact of the standard is currently being assessed by management, which requires a thorough review of existing contractual arrangements. Given the proximity between the timing of performance obligations being met and revenue being recognised, management's initial assessment is that the impact of this standard is limited.
2. ACCOUNTING POLICIES continued (d) New standards, amendments and interpretations continued
-- IFRS 16 Leases establishes principles for the recognition, measurement, presentation and disclosure of leases and replaces IAS17. IFRS 16 will become effective for accounting periods starting on or after 1 January 2019, subject to EU endorsement. The impact of the standard is currently being assessed by management but will result in the recognition of a lease liability and corresponding asset on the Group's balance sheet in respect of the majority of leases, which predominantly represent buildings and vehicle transporters, and are currently classified as operating leases.
(e) Foreign currency translation
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within finance income or costs. All other foreign exchange gains and losses are presented in the income statement within other income or other operating costs.
Consolidation of Group companies
The results and financial position of all Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
-- assets and liabilities including goodwill, intangible assets arising on acquisition and fair value adjustments arising on consolidation for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
-- income and expenses for each income statement presented are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income and are accumulated in the foreign exchange translation reserve or non-controlling interest.
On disposal of a foreign subsidiary the cumulative amount of the exchange differences recognised in other comprehensive income and accumulated in the foreign exchange translation reserve shall be recognised in the income statement when the gain or loss on disposal is recognised.
(f) Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items of property, plant and equipment. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and when the cost of the item can be measured reliably. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the income statement.
Assets under construction
The costs of assets that are being constructed are capitalised as described in the Owned assets paragraph above. Assets under construction are not depreciated until the asset is deemed to be available for use. For the asset to be available for use it has to be in the location and condition necessary for it to be capable of operating in the intended manner. Once the asset is available for use it is no longer classified as an asset under construction and is instead depreciated like any other item of property, plant and equipment.
Leased assets
Leases under which the Group assumes substantially all the risks and rewards of ownership of an asset are classified as finance leases. Property, plant and equipment acquired under a finance lease is recorded at fair value or, if lower, the present value of minimum lease payments at inception of the lease, less depreciation and any impairment. Each lease payment is allocated between the liability and finance charges. The corresponding rental
2. ACCOUNTING POLICIES continued (f) Property, plant and equipment continued
obligations, net of finance charges, are included in the other short-term or long-term payables as appropriate. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Assets leased under operating leases are not recorded on the balance sheet. Rental payments are charged directly to the income statement on a straight-line basis over the period of the lease. Lease incentives received are recognised as a reduction of rental expense over the lease term, on a straight line basis.
Depreciation
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Any property, plant and equipment acquired under a finance lease is depreciated over the shorter of the useful life of the asset and the lease term. Freehold land and assets under construction are not depreciated. The rates of depreciation are as follows:
Land and buildings 50 years, or the unexpired lease period if shorter
Fixture, fittings and equipment 2 - 10 years
Plant, machinery and motor vehicles 3 - 25 years
Assets acquired through business combinations are depreciated over the remaining useful life at acquisition.
The residual values and useful lives are reviewed and adjusted if appropriate, at each balance sheet date. For the Group's impairment policy on non-financial assets see (i) Impairment of non-financial assets.
(g) Intangible assets
Intangible assets comprise internally generated software, acquired computer software, and intangible assets such as customer relationships and brand arising as part of the assessment of assets on the acquisition of a business. These are carried at cost less accumulated amortisation and any recognised impairment loss.
Costs relating to the development of computer software for internal use are capitalised once all the development phase recognition criteria of IAS 38 are met. Costs incurred before this point are expensed as incurred and are not recognised as an asset in a subsequent period. The assessment identifies unique software products that are controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year. Salary and related employment costs that are directly attributable to the development of the software are then capitalised. When the software is available for its intended use, these costs are amortised in equal annual amounts over the estimated useful life of the software.
Amortisation and impairment are charged to operating costs in the period in which they arise. Amortisation is calculated on a straight-line basis from the date on which the assets are brought into use, with useful lives as indicated below:
Customer relationships 12 - 20 years Brand 15 - 25 years Software - Internally generated 3 - 10 years
Software - Acquired 3 - 7 years, or the licence term if shorter
Assets acquired through business combinations are amortised over the remaining useful life at acquisition.
Amortisation periods and methods are reviewed annually and adjusted if appropriate. For the Group's impairment policy on non-financial assets see (i) Impairment of non-financial assets.
(h) Goodwill
Goodwill arises on the acquisition of subsidiaries and is recognised initially as the excess of the consideration transferred, over the Group's interest in fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree. Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units, which are no higher than an operating segment prior to aggregation, and is not amortised but is tested annually for impairment.
2. ACCOUNTING POLICIES continued (h) Goodwill continued
An impairment charge is recognised in the income statement for any amount by which the carrying value of goodwill exceeds its recoverable amount. Goodwill that is not denominated in Sterling is retranslated at each balance sheet date.
(i) Impairment of non-financial assets
Goodwill has an indefinite useful life and is not subject to amortisation. As a result it is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired. Other assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows ('cash-generating units'), which are largely independent of the cash inflows from other assets or group of assets. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
(j) Financial assets
Classification
The Group classifies its financial assets as loans and receivables. Management determines the classification of its financial assets at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that arise principally through the provision of services to customers. They are initially recognised at fair value, and are subsequently stated at amortised cost using the effective interest method, where the impact is material. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. Loans and receivables comprise trade and other receivables and cash and cash equivalents in the balance sheet.
Impairment of financial assets
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty, default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms of the receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable discounted at the assets' original effective interest rate.
For trade receivables, which are reported net of any provisions, such provisions are recorded in a separate provision account with the loss being recognised within operating costs in the income statement. On confirmation
that the trade receivable will not be collectable, the gross carrying value of the asset is written off
against the associated provision. (k) Inventories
Inventories primarily represent vehicles acquired by the Group that have not yet been sold and where the Group has the risk and reward of ownership of such vehicles. Other inventories include vehicle spares. All inventories are stated at the lower of purchase cost and net realisable value. Cost represents expenses incurred in bringing each product to its present location and condition. In the Vehicle Remarketing divisions, in the course of achieving a successful sale on behalf of a vendor, it can be necessary to take legal title of a vehicle before selling it to the end customer. This occurs with 1% to 2% of volume and the net gain or loss is included within cost of sales. In the Vehicle Buying division the vehicle cost is net of any administration fees paid to the Group by the seller of the vehicle. Net realisable value is based on estimated normal selling price, less further costs expected to be incurred on completion of the sale and disposal.
(l) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the cash flow statement.
2. ACCOUNTING POLICIES continued
(m) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
(n) Trade and other payables
Trade and other payables are initially stated at fair value and subsequently measured at amortised cost using the effective interest method.
(o) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the expected utilisation of the facility to which it relates.
There is a choice, when determining if a new facility is substantially different from an existing facility, between making a decision solely on quantitative factors or also using qualitative factors. Management have taken the decision to apply qualitative factors when making this assessment. Where the assessment indicates that the new facility is substantially different from the old facility, the impact of this is to derecognise the old facility and the associated arrangement fees.
(p) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be measured reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance costs.
Property leases and dilapidations
Provisions for onerous leases on property are recognised when it is probable that future obligations under the lease will exceed earnings achievable from the property, taking into account the Directors' estimation of likely income from the subletting of vacant property. The amounts of such net outflows are discounted at the risk-appropriate rate, and are stated net of any anticipated sub-lease income.
Provisions for dilapidations are made in respect of property leases on a lease by lease basis and are based on the Group's best estimate of the likely committed cash outflow. Where relevant, these estimated outflows are discounted to net present value.
(q) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from the proceeds.
(r) Revenue
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods and services supplied, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group's activities, as described below.
2. ACCOUNTING POLICIES continued (r) Revenue continued
Outsourced vehicle auction revenue represents the vehicle sale proceeds obtained when the vehicle is sold and is recognised on the date of sale. It is the intention for the Group to take legal title of certain vehicles based on contractual agreements with Corporates before the vehicle is sold to the end customer through the various remarketing channels.
Vehicle auction revenue represents vendor and buyer fees for vehicles sold by the Group together with fees for related services including transportation, inspection, valeting and mechanical checks. Revenue is recognised at the time the service is provided, which is predominantly at the point the vehicle is sold at auction. Revenue represents the fees for the auction service not the value of the vehicle sold, as the Group does not incur the significant risks and rewards of ownership as part of the transaction.
Interest and loan origination fees earned in respect of the provision of Partner Finance loans are recognised over the term of the funding and are included within revenue. Fees charged by Partner Finance are recognised evenly over the period that the relevant service is provided.
Vehicle buying revenue represents the vehicle sale proceeds obtained when the vehicle is sold and is recognised on the date of sale. Transaction fees charged to vendors of vehicles are recognised on the purchase invoice date and treated as a reduction in the cost of inventory and therefore in the cost of sales.
Revenue for other services, including logistics and automotive services, is recognised once the contracted service has been provided. For transportation or delivery services, this is deemed to be when the customer has received the vehicle; for storage services this is deemed to be once an activity has been completed, such as receiving and parking a vehicle, and generally on a daily basis for storage charges; for vehicle repair and vehicle enhancement work this is deemed to be when work has been completed to a stage that can be invoiced to the customer; and for fleet services management this is deemed to be over the period the service is provided.
(s) Advertising and marketing costs
The Group carries out a variety of advertising and marketing activities. These include advertising activities which correlate to the number of vehicles that are acquired by the Group through the Vehicle Buying division and for subsequent sale through the Group's auctions for which revenue is recognised. These direct advertising costs are therefore recognised as a cost of sale. All other indirect advertising and marketing costs are recognised within operating costs.
The cost of advertising design is expensed as incurred and the expense of advertising campaigns is expensed in the income statement in the period in which the advertising space or air time is utilised.
(t) Net finance costs
Finance costs
Finance costs comprise interest payable on borrowings, direct transaction costs, unwinding of the discount on provisions, net interest cost of defined benefit pension arrangements and foreign exchange losses on finance balances. Transaction costs are amortised over the life of the debt using the effective interest method.
Finance income
Finance income comprises interest receivable on funds invested and foreign exchange gains on finance balances. Interest income is recognised in the income statement as it accrues using the effective interest method.
(u) Income tax
Income tax for the periods presented comprises current and deferred tax. Income tax is recognised in income or other comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to taxes payable in respect of previous periods. Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
2. ACCOUNTING POLICIES continued (u) Income tax continued
The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of other assets or liabilities that affect neither accounting nor taxable profit other than in a business combination and differences relating to investments in subsidiaries to the extent that they are unlikely to reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.
(v) Employee benefits
Pension obligations
The Group operates defined contribution and defined benefit plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The defined benefit plans operated by the Group in the United Kingdom are closed to new members. The costs of providing benefits under the plans are determined using the projected unit credit actuarial valuation method.
The current service cost is included in operating costs in the combined and consolidated income statement. Past service costs are similarly included where the benefits have vested, otherwise they are amortised on a straight line basis over the vesting period. Administrative scheme expenses associated with the plans are recorded within operating costs when incurred in line with IAS 19. Net interest income or interest cost relating to the funded defined benefit pension plans is included within finance income or finance costs as relevant in the combined and consolidated income statement.
Changes to the retirement benefit obligation or asset due to experience and changes in actuarial assumptions are included in the combined and consolidated statement of comprehensive income, presented as remeasurements of the defined benefit scheme in full in the period in which they arise.
Where scheme assets exceed the defined benefit obligation the net asset is only recognised to the extent that an economic benefit is available to the Group in accordance with the terms of the scheme and where consistent with relevant statutory requirements.
2. ACCOUNTING POLICIES continued (v) Employee benefits continued
Share based payment transactions
The Group operates equity-settled, share-based plans. The fair value of the employee services received in exchange for the grant of the awards is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the compensation as determined by independent valuations. Non-market vesting conditions are included in assumptions about the number of awards that are expected to vest.
The cost of equity-settled transactions are recognised, together with a corresponding increase in equity, over the period which the performance conditions are fulfilled, ending on the date on which the relevant employees are expected to become fully entitled to the award (vesting date).
At each reporting date, the cumulative expense recognised for equity-settled transactions reflects, in the opinion of the Directors, the number of awards that will vest and the proportion of the period to vesting that has expired. Directors' estimates are based on the best available information at that date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting, irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Group's combined and consolidated historical financial information under Adopted IFRS requires the Directors and management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Accounting policies are reviewed annually for appropriateness. Estimates and judgements are evaluated continually and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates, with any changes arising being recognised in the period in which the change in estimate is made or the final result determined.
Certain of the Group's significant accounting policies are considered by the Directors to be critical because of the level of complexity, judgement or estimation involved in their application and their impact on the combined and consolidated historical financial information. These are discussed below:
Judgements
The principal judgements made in the period are as follows:
Acquisition accounting
As described in note 5, BCA Marketplace plc legally acquired the BCA Trading Group in April 2015. Management were required to apply judgement as to whether this should be treated as an accounting acquisition or reverse acquisition. Having considered all the factors in IFRS 3 Business combinations, it was determined that this transaction should be accounted for as an acquisition.
Estimates
The Directors consider that the following estimates and assumptions are likely to have the most significant effect on the amounts recognised in the combined and consolidated historical financial information:
Acquisition accounting
For all acquisitions in the period, management are required to apply judgement and make estimates in relation to the identification and valuation of separable assets and liabilities arising on these acquisitions. In determining the period over which the asset is to be amortised, management must also assess the likely economic life of the asset.
Management have estimated the fair value of contingent consideration likely to arise on the acquisition of subsidiary undertakings by taking account of financial and market targets over the relevant period of time. The time value of money was estimated using an appropriate discount rate.
Impairment of goodwill and intangible assets
An impairment review has been performed of all goodwill and intangible assets held by the Group. The impairment review is performed on a value in use basis, which requires estimation of future net operating cash flows, the time period over which they will occur, an appropriate discount rate and an appropriate growth rate. Specifically, the future cash flows are sensitive to the assumptions made about the revenue growth, EBITDA margin and the long-term growth rate of the relevant market. Given the degree of subjectivity involved, actual outcomes could vary significantly from these estimates. The detailed assumptions used and associated sensitivity analysis is discussed further in note 13.
Taxation
Accruals for current tax and amounts payable under local indirect taxes such as sales taxes and VAT are based on management's interpretation of country-specific tax law, and require judgements about the likelihood that tax positions taken will be sustained. Management estimates the amount of taxes payable based upon their analysis and determines whether provision should be made for potential settlement of disputed positions through negotiation. All such provisions are included in current liabilities. Any estimated exposure to interest on tax liabilities is provided for in the related tax charge.
Deferred tax assets and liabilities represent management's best estimate in determining the amounts to be recognised. When assessing the extent to which deferred tax assets should be recognised, consideration is given to the timing and level of future taxable income.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES continued
Provisions for onerous leases
When the present value of the future cash flows receivable from the operation of leased assets is less than the present value of the rental payments to which the Group is committed, the Group provides for any further onerous element of the contract. Determining the amount of such a provision requires estimating the future net cash flows receivable in respect of these assets, and in the particular case where the leased properties are vacant this requires assessing the likely period for which the property will remain vacant, the cost of any works required to enhance its marketability and the rental income receivable when the property is sublet.
Share based payments
The Group's shared based payments have been valued by independent valuation experts. The key estimates used in calculating the fair value of the options are the fair value of the Company's shares at the grant date, the expected share price volatility, the risk-free interest rate, the expected life of the instrument and the number of shares expected to vest.
Pensions
The Group's net retirement benefit obligation, which is assessed by independent actuaries each period, is based on key assumptions including discount rates, inflation, future salary increases and pension costs. These assumptions may be different to the actual outcome.
4. SEGMENTAL REPORTING
Key Performance Indicator - adjusted EBITDA
Management uses an adjusted profit measure to monitor the ongoing profitability of the Group, which is defined as Earnings before interest, taxation, depreciation and amortisation ('EBITDA') adjusted for significant and non-recurring items. The significant and non-recurring items that are excluded from EBITDA to calculate adjusted EBITDA are as follows:
-- acquisition expenses and gains and losses on business combinations, disposals and changes in ownership;
-- income and expenses that are significant and non-recurring or non-trading in nature, including business closure costs, restructuring costs and onerous lease provisions;
-- impairment charges and accelerated depreciation and amortisation on property, plant and equipment, intangibles and goodwill; and
-- amortisation of intangible assets arising on acquisition of businesses.
The Directors primarily use the adjusted EBITDA measure when making decisions about the Group's activities as it is the most reliable and relevant profit measure across all segments. As this is a non-GAAP measure, adjusted EBITDA measures used by other entities may not be calculated in the same way and hence are not directly comparable.
Management has determined the operating segments based on the operating reports reviewed by the Board of Directors that are used both to assess performance and make strategic decisions. Management has identified that the Board of Directors is the chief operating decision maker in accordance with the requirements of IFRS 8 'Operating Segments'.
The Board of Directors consider the business to be split into the four main divisions generating revenue: Vehicle Remarketing UK, Vehicle Remarketing International, Vehicle Buying and Automotive Services. Group Costs comprise central head office functions and any costs not directly attributable to the segments.
Information on segment assets and liabilities is not routinely reported to the Board of Directors and is therefore not disclosed.
4. SEGMENTAL REPORTING continued
For the 15 months ended 3 April
2016
--------------------------- -----------------------------------------------------------------
Vehicle Automotive Group
Vehicle Remarketing Buying Services Costs Total
----------------------- -------- ----------- ------- --------
UK International
------- --------------
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------- -------------- -------- ----------- ------- --------
Revenue
Total revenue 299.1 136.6 895.6 130.4 - 1,461.7
Inter-segment revenue (4.0) (0.5) - (15.4) - (19.9)
---------------------------
Total revenue from
external customers 295.1 136.1 895.6 115.0 - 1,441.8
Adjusted EBITDA 84.2 22.5 17.1 3.8 (11.0) 116.6
Depreciation and
amortisation (11.9) (3.7) (1.5) (2.9) (0.3) (20.3)
---------------------------
72.3 18.8 15.6 0.9 (11.3) 96.3
=========================== ======= ============== ======== =========== ======= ========
Amortisation of
acquired intangibles (18.5) (10.1) (6.6) (0.1) - (35.3)
Aborted IPO costs - - - - (2.7) (2.7)
Acquisition costs - - - - (32.4) (32.4)
Employee benefit
trust and share
based payment settlement
costs - - (4.4) - (13.5) (17.9)
Business closure
costs (0.4) - (1.7) - (0.4) (2.5)
Other significant
or non-recurring
items (0.2) (0.9) - - (3.2) (4.3)
---------------------------
Operating profit 53.2 7.8 2.9 0.8 (63.5) 1.2
Finance income 1.4
Finance cost (32.6) Loss before taxation (30.0) =========================== ======= ============== ======== =========== ======= ======== Capital expenditure 29.8 4.0 2.6 20.5 0.1 57.0 =========================== ======= ============== ======== =========== ======= ========
Acquisition costs of GBP32.4m relate to the acquisition of the BCA Trading Group (GBP25.6m), SMA (GBP4.7m including the loss on the sale of Newcastle of GBP2.5m), BCA Automotive (GBP0.7m), Ambrosetti (GBP0.4m) and further due diligence costs of transactions not completed (GBP1.0m), which have been charged to operating costs.
Employee benefit trust and share based payment settlement costs were incurred as a result of the acquisition of the BCA Trading Group by BCA Marketplace plc causing the share options to vest.
4. SEGMENTAL REPORTING continued
For the year ended 31 December
2014
------------------------- ----------------------------------------------------------------
Vehicle Remarketing Vehicle Automotive Group Total
Buying Services Costs
----------------------- -------- ----------- ------- -------
UK International
------- --------------
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ------- -------------- -------- ----------- ------- -------
Revenue
Total revenue 183.1 102.7 556.5 67.9 - 910.2
Inter-segment revenue (2.1) (0.3) - (21.7) - (24.1)
-------------------------
Total revenue from
external customers 181.0 102.4 556.5 46.2 - 886.1
Adjusted EBITDA 46.9 17.8 15.0 6.2 (3.6) 82.3
Depreciation and
amortisation (6.7) (3.2) (0.9) (0.5) - (11.3)
-------------------------
40.2 14.6 14.1 5.7 (3.6) 71.0
-------------------------
Amortisation of
acquired intangibles - - (3.5) - - (3.5)
Impairment of PPE - (4.8) - - - (4.8)
Restructuring costs - (3.4) - - - (3.4)
Management fees
to private equity
investor - - - - (0.5) (0.5)
New business start-up
costs - - (2.0) - - (2.0)
Aborted IPO costs
including management
incentives - - (2.2) - (10.9) (13.1)
Onerous lease provision (18.8) (0.8) - - - (19.6)
Non-recurring items - - - - (0.3) (0.3)
-------------------------
Operating profit 21.4 5.6 6.4 5.7 (15.3) 23.8
Finance income 4.5
Finance cost (69.7)
Loss before taxation (41.4)
========================= ======= ============== ======== =========== ======= =======
Capital expenditure 14.7 4.9 2.0 0.6 - 22.2
========================= ======= ============== ======== =========== ======= =======
Revenue with external customers in the UK and Ireland represents GBP1.3bn (2014: GBP0.8bn) of the Group's revenue, with the other GBP0.1bn (2014: GBP0.1bn) being generated within Europe. Revenue by type is shown below:
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
GBPm GBPm
----------------------- ----------- -------------
Sale of goods 897.1 556.7
Rendering of services 537.0 328.2
Interest 7.7 1.2
Total revenue 1,441.8 886.1
======================== =========== =============
5. ACQUISITIONS
The following acquisitions have been made by the Group in the 15 month period to 3 April 2016:
BCA Trading Group (acquired 2 April 2015)
On 2 April 2015 the Group acquired 100% of the Ordinary shares of the BCA Trading Group for GBP815.5m satisfied by GBP711.2m in cash and GBP104.3m by the issue of 69,535,522 Ordinary shares. The fair value of the Ordinary shares issued was based on the placing share price of the Company at 2 April 2015 of GBP1.50 per share. The BCA Trading Group is the number one vehicle remarketing business in the UK and Europe, as well as owning WeBuyAnyCar, the market leading vehicle buying business in the UK. This acquisition is the first in the Group's strategy of acquiring and developing substantial businesses in the automotive sector.
Goodwill has arisen on the acquisition due to the unique position that the BCA Trading Group has in the automotive sector. The BCA Trading Group has created a marketplace and a proposition with an assembled workforce, significant barriers to entry and geographical presence generating a value that cannot be defined and measured as an intangible asset. As such the excess over the identified net assets has been recognised as goodwill.
SMA (acquired 1 June 2015)
SMA operates within the vehicle remarketing sector of the automotive industry and therefore complements the acquisition of the BCA Trading Group. Goodwill represents the assembled workforce and geographic coverage which are not identified as intangible assets in their own right.
BCA Automotive (acquired 25 August 2015)
BCA Automotive operates vehicle transporters in the UK and therefore complements the acquisition of the BCA Trading Group and SMA through its additional logistics expertise and geographical coverage. Goodwill arising on the acquisition represents the assembled workforce, logistics capabilities and buyer synergies arising from the combining of the operations of BCA Automotive with the logistics businesses within the BCA Trading Group and SMA.
Ambrosetti (acquired 4 February 2016)
Ambrosetti specialises in vehicle preparation, refurbishment and de-fleet services as well as logistics services from its storage facilities in Northamptonshire and Kent. The acquisition therefore adds to the Group's capability to provide services along the automotive value chain, from factory gates or port with technical and logistics services for new vehicles to refurbishment and logistics services for used vehicles and the core remarketing and auction operation. Goodwill represents the assembled workforce and geographic coverage which are not identified as intangible assets in their own right.
Impact of acquisitions
Had all the acquisitions occurred on 1 January 2015, it is estimated that Group revenue and profit before tax for the 15 months to 3 April 2016 would have been GBP1,540.8m and GBP11.8m respsectively. In determining these amounts management has assumed that the fair value adjustments that arose on the date of acquisition and all costs of acquisition would have been the same if the acquisitions had occurred on 1 January 2015.
5. ACQUISITIONS continued
The fair value of acquired assets and liabilities are as follows:
BCA Trading Other acquisitions Total
Group fair values fair Value
fair value
GBPm GBPm GBPm
-------------------------------------- ------------ ------------------- ------------
Intangible
assets: - Brand name 158.9 2.1 161.0
- Vendor relationships 329.0 9.1 338.1
- Buyer relationships 61.3 1.1 62.4
- Software fair
value uplift 22.5 - 22.5
- Software net
book value 21.0 0.2 21.2
Property, plant and equipment 54.3 35.3 89.6
Inventories 14.7 0.6 15.3
Trade and other receivables 144.8 36.0 180.8
Cash and cash equivalents 73.9 5.9 79.8
Trade and other payables (298.0) (48.4) (346.4)
Provisions (21.1) - (21.1)
Pension liability (5.0) (3.2) (8.2)
Deferred tax liability
created (97.0) (1.8) (98.8)
Borrowings and overdraft (451.9) (17.3) (469.2)
-------------------------------------- ------------ ------------------- ------------
Net assets acquired 7.4 19.6 27.0
Goodwill 807.9 38.7 846.6
-------------------------------------- ------------ ------------------- ------------
Consideration 815.5 58.3 873.8
Non-controlling interests (0.2) - (0.2)
-------------------------------------- ------------ ------------------- ------------
815.3 58.3 873.6
====================================== ============ =================== ============
Breakdown of acquired
receivables:
Fair value of acquired
receivables 122.2 32.2 154.4
Gross contractual amounts
receivable 123.3 32.5 155.8
Contractual cash flows
not expected to be received 1.1 0.3 1.4
====================================== ============ =================== ============
The following acquisitions were made in the year ended 31 December 2014:
On 19 May 2014 the Group acquired 25% of Fleet Control Monitor GmbH (FCM), a company providing fleet management solutions, increasing the ownership percentage from 51% to 76%. The additional shares in the company were purchased for cash consideration of GBP0.1m.
On 16 July 2014 the Group acquired 51% of Tradeouts Limited for cash consideration of GBP1.2m, with deferred cash consideration of GBP0.8m. There is a Put and a Call option over the remaining 49% of the shares in Tradeouts Limited. Both the financial asset and financial liability that results from these options have been valued by management at GBP0.8m, which is therefore also the value attributed to the deferred consideration. Tradeouts Limited have established an online dealer to dealer platform and the acquisition was made in furtherance of the Group's strategy of developing businesses complementary to its auction operations in the United Kingdom. Of the total consideration of GBP2.0m, GBP1.8m was attributed to goodwill and GBP0.2m was for their customer list.
On 9 August 2014 the Group acquired 51% of Life On Show Limited for cash consideration of GBP2.0m, with deferred cash consideration of GBP0.5m. There is a Put and a Call option over the remaining 49% of the shares in Life on Show Limited. Both the financial asset and financial liability that results from these options have been valued by management at GBP0.5m, which is therefore also the value attributed to the deferred consideration. Life on Show Limited provides photographic software to the automotive industry and the acquisition was made in furtherance of the Group's strategy of developing businesses complementary to its auction operations in the United Kingdom. Of the total consideration of GBP2.5m, GBP1.8m was attributed to goodwill and GBP0.7m was for their patent and customer list.
6. CASH GENERATED FROM OPERATIONS
For the
15 months For the
ended year ended
3 April 31 December
Note 2016 2014
GBPm GBPm
------------------------------------- ----- ----------- -------------
Cash flows from operating
activities
Loss for the period/year (25.1) (37.2)
Adjustments for:
Income tax credit 12 (4.9) (4.2)
Finance income (1.4) (4.5)
Finance costs 9 32.6 69.7
Depreciation 14 9.1 5.9
Amortisation 13 46.5 8.9
Impairment - 4.8
Profit on sale of property,
plant and equipment (0.1) (0.2)
Equity-settled share based 0.6 -
payments
Retirement benefit obligations (0.9) 0.4
Share of joint venture results 0.1 0.4
Significant or non-recurring
items 50.2 1.2
Changes in working capital:
Inventories 10.6 4.2
Trade and other receivables (44.5) 5.5
Trade and other payables 91.7 (1.1)
Provisions (1.5) 18.9
------------------------------------- ----- -------------
Cash generated from operations 163.0 72.7
===================================== ===== =========== =============
7. OPERATING COSTS
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
GBPm GBPm
----------------------------- ----------- -------------
Employment costs 141.3 91.5
Operating lease - land
and buildings 38.6 31.0
Operating lease - other 2.7 1.1
Depreciation of property,
plant and equipment 9.1 5.9
Amortisation of intangible
assets 46.5 8.9
Impairment of property,
plant and equipment - 4.8
Provision for onerous lease - 19.6
Other operating costs 137.5 63.8
Operating costs 375.7 226.6
============================== =========== =============
8. EMPLOYEES AND DIRECTORS
Staff costs for the Group during the period/year:
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
Note GBPm GBPm
------------------------- ----- ----------- -------------
Wages and salaries 166.8 86.0
Pension costs 4.0 3.1
Social security costs 19.4 10.4
Share based payment
expense 29 8.2 3.8
----------- -------------
Total gross employment
costs 198.4 103.3
------------------------- ----- ----------- -------------
Staff costs capitalised (8.9) (3.1)
------------------------- -----
Total employment cost
expense 189.5 100.2
========================= ===== =========== =============
Average monthly number of people employed (including Executive Directors) by reportable segment:
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
Number Number
------------------------ ----------- -------------
UK 2,333 1,739
International 797 759
------------------------ ----------- -------------
Vehicle Remarketing 3,130 2,498
Vehicle Buying 435 356
Automotive Services 1,530 404
Group 22 -
Total employee numbers 5,117 3,258
======================== =========== =============
The employee numbers reflect the average employee numbers, or where applicable the average number of employees since acquisition. For the 15 month period ended 3 April 2016 the total includes the average number of people employed by the BCA Trading Group for the 15 month period ended 3 April 2016, by SMA for the ten month period, BCA Automotive for the seven month period and Ambrosetti the two month period. The average number of employees for the 15 month period would otherwise be 4,415 people, which is not reflective of the ongoing number of employees within the Group. The year ended 31 December 2014 reflects the average number of employee across the year within the BCA Trading Group.
Retirement benefits
The Group offers membership to defined contribution schemes in the UK and Europe. The pensions cost in the period to 3 April 2016 was GBP2.8m (2014: GBP2.1m).
In addition the Group operates the BCA Pension Plan and the Automotive Plan. The BCA Pension Plan and the Automotive Plan are defined benefit schemes closed to new members. Further information is set out in note 22.
8. EMPLOYEES AND DIRECTORS continued
Directors' emoluments
For the For the
15 months year ended
ended 31 December
3 April 2016 2014
GBPm GBPm
Jon Olsen -
Aggregate emoluments 0.5 0.7
Accrued retirement benefits from defined benefit
pension scheme 0.1 0.1
Simon Hosking -
Aggregate emoluments 0.3 0.5
Accrued retirement benefits from defined benefit
pension scheme - -
Avril Palmer-Baunack -
Aggregate emoluments 7.2* -
Accrued retirement benefits from defined benefit
pension scheme - -
Tim Lampert -
Aggregate emoluments 0.3 -
Accrued retirement benefits from defined benefit
pension scheme - -
Spencer Lock -
Aggregate emoluments 0.3 -
Accrued retirement benefits from defined benefit
pension scheme - -
============================================================= ============= ============
* Avril Palmer-Baunack's service agreement contains a bonus arrangement which was dependent on the completion of the first acquisition of a trading business or company by the Group. Once this condition was satisfied Avril was entitled to an amount equal to 0.5% of the enterprise value of the transaction and as such, as a consequence of the acquisition of the BCA Trading Group, Avril was entitled to a completion bonus of GBP6,044,000.
9. FINANCE COSTS
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
Note GBPm GBPm
------------------------------------ ----- ----------- -------------
Interest payable on borrowings 12.6 17.7
Interest on payment in kind
certificates 10.8 20.4
Interest on loan from Osprey
Investments S.a.r.l. 6.0 21.7
Amortisation of issue costs - 1.8
Interest rate swaps - 1.3
Unwinding of discount on
provisons and non-current
liabilities 2.5 0.3
Net interest expense on retirement
benefit obligations 22 0.3 -
Finance lease interest 0.4 -
Write-off of arrangement
fees - 6.5
------------------------------------ -----
Finance costs 32.6 69.7
==================================== ===== =========== =============
10. AUDITOR'S REMUNERATION
During the period/year the Group (including its overseas subsidiaries) obtained the following services from the Group auditor at costs as detailed below:
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
GBPm GBPm
----------------------------------------- ----------- -------------
Fees payable to the Group auditor
and its associates for the audit
of the Parent Company and consolidated
financial statements 0.3 0.1
Fees payable to Group auditor
and its associates for other services:
- The audit of Group subsidiaries 0.7 0.4
- Audit related assurance services 1.9 1.7
- Tax advisory services 0.1 0.2
- Tax compliance services 0.1 -
Total auditor's remuneration 3.1 2.4
========================================= =========== =============
11. LOSS PER SHARE
Basic loss per share amounts are calculated by dividing net loss for the period attributable to ordinary shareholders by the weighted average number of Ordinary shares outstanding during the period.
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
---------------------------------------- ----------- -------------
Loss for the period/year attributable
to equity shareholders (GBPm) 25.2 37.1
---------------------------------------- ----------- -------------
Weighted average number of shares
used in calculating basic and diluted
loss per share (millions) 639.0 4.0
---------------------------------------- ----------- -------------
Basic and diluted loss per share
(pence) 4.0 927.5
======================================== =========== =============
At 3 April 2016 there were 13.0m (2014: nil) incremental shares in respect of employee share schemes that have not been included in the calculation of diluted loss per share as they are antidilutive, which may become dilutive in future periods.
12. INCOME TAX
Note For the
15 months For the
ended year ended
3 April 31 December
2016 2014
Current taxation GBPm GBPm
----------------------------------- ----- ----------- -------------
Current tax on profit
for the period/year 4.5 2.0
Adjustments in respect
of prior periods - (2.2)
Total current tax charge/(credit) 4.5 (0.2)
----------------------------------- ----- ----------- -------------
Deferred taxation
----------------------------------- ----- ----------- -------------
Origination and reversal
of temporary differences (0.7) (4.0)
Adjustments in respect - -
of prior periods
Changes in recognition - -
of deferred tax
Impact of change of UK (8.7) -
tax rate
Total deferred tax credit 23 (9.4) (4.0)
----------------------------------- ----- ----------- -------------
Income tax credit (4.9) (4.2)
=================================== ===== =========== =============
12. INCOME TAX continued
The tax credit for the period/year differs from the standard rate of corporation tax in the UK of 20.2% (2014: 21.5%). The differences are explained below:
For the
15 months For the
ended year ended
3 April 31 December
2016 2014
GBPm GBPm
---------------------------------------- ----------- -------------
Loss on ordinary activities
before tax 30.0 41.4
---------------------------------------- ----------- -------------
Loss on ordinary activities
multiplied by the rate of corporation
tax in the UK of 20.2% (2014:
21.5%) (6.1) (8.9)
Effects of:
Expenses not deductible for
tax purposes 12.2 6.7
Income not subject to tax (2.5) (0.3)
Reduction in UK tax rate (8.7) -
Changes in recognition of deferred (0.4) -
tax
Effect of different tax rates
on profits earned outside the
UK 0.6 0.5
Adjustments in respect of prior
periods - (2.2)
Total taxation credit (4.9) (4.2)
======================================== =========== =============
The Group has operations across Europe, however the principal location of trading where the majority of business profits are derived is the UK. The effective tax rate has therefore been referenced to the UK corporation tax rate of 20.2% for the period.
The standard rate of corporation tax in the UK reduced from 21.0% to 20.0% with effect from 1 April 2015 (2014: 23.0% to 21.0%). Accordingly, the Group's profits for the accounting period ended 3 April 2016 are taxed at an effective rate of 20.2% (2014: 21.5%). Profits will be taxed at 19.0% from 1 April 2017 and 18.0% from 1 April 2020 as these rates were substantively enacted on 26 October 2015. Deferred taxes reported at the balance sheet date have been measured based on these rates.
13. INTANGIBLE ASSETS
Customer
Goodwill relationships Brands Software Total
Cost GBPm GBPm GBPm GBPm GBPm
----------------------------- --------- --------------- ------- --------- --------
At 1 January 2014 475.4 1.0 53.0 28.7 558.1
Acquired through business
combinations - - - 1.0 1.0
Additions 4.6 1.0 - 12.5 18.1
Disposals - - - (1.6) (1.6)
Exchange difference - - - (0.2) (0.2)
At 31 December 2014 480.0 2.0 53.0 40.4 575.4
Additions for the period
to 2 April 2015 - - - 2.5 2.5
Eliminate BCA Trading
Group (480.0) (2.0) (53.0) (42.9) (577.9)
Add BCAM - - - - -
Acquired through business
combinations 846.6 400.5 161.0 43.7 1,451.8
Additions for the remainder
of the period - - - 13.3 13.3
Disposals (2.9) - - (1.3) (4.2)
Exchange difference 18.3 10.8 1.9 1.4 32.4
At 3 April 2016 862.0 411.3 162.9 57.1 1,493.3
----------------------------- --------- --------------- ------- --------- --------
Accumulated amortisation
----------------------------- --------- --------------- ------- --------- --------
At 1 January 2014 - 0.2 1.2 16.1 17.5
Charge for the year - 0.4 3.1 5.4 8.9
Disposals - - - (1.6) (1.6)
Exchange difference - - - - -
At 31 December 2014 - 0.6 4.3 19.9 24.8
Charge for the period
to 2 April 2015 - 0.1 0.8 2.0 2.9
Eliminate BCA Trading
Group - (0.7) (5.1) (21.9) (27.7)
Add BCAM - - - - -
Charge for the remainder
of the period - 22.0 8.8 12.8 43.6
Disposals - - - (0.8) (0.8)
Exchange difference - 0.6 0.1 0.3 1.0
At 3 April 2016 - 22.6 8.9 12.3 43.8
----------------------------- --------- --------------- ------- --------- --------
Net book value
At 31 December 2014 480.0 1.4 48.7 20.5 550.6
--------- --------------- ------- --------- --------
At 3 April 2016 862.0 388.7 154.0 44.8 1,449.5
============================= ========= =============== ======= ========= ========
Amortisation charges have been treated as operating costs in the income statement. Further details of intangible assets acquired through business combinations are disclosed in note 5.
13. INTANGIBLE ASSETS continued
Goodwill as at 3 April 2016
Goodwill acquired in a business combination is allocated to the cash generating unit ('CGU') or group of CGU's that are expected to benefit from the synergies associated with that business combination. These CGU groups represent the lowest level within the Group at which the associated goodwill is monitored for management purposes. Goodwill is monitored by management at an operating segment level and has been allocated to operating segments as follows:
Goodwill
GBPm
--------------------- -------------
Vehicle Remarketing
- UK 535.4
Vehicle Remarketing
- International 195.0
Vehicle Buying 115.9
Automotive Services 15.7
862.0
===================== =============
Goodwill is tested annually for impairment at each reporting date, or whenever there is an indication that the asset may be impaired, by comparing the carrying amount of these assets with their recoverable amounts which is derived from a value in use calculation. Where the recoverable amount exceeds the carrying amount of the assets, the assets are considered as not impaired. No impairment charges were incurred in the period ended 3 April 2016.
The budgets for the next financial year, which were subject to Board approval, form the basis of the cash flow projections for each CGU. For Vehicle Remarketing and Vehicle Buying, cash flow projections for the next 6 financial years reflect management's expectations of the medium term operating performance of each CGU and growth prospects in the CGU's markets and regions, and are based on the forecasts that were prepared at the time of the acquisition of the BCA Trading Group. Cash flow forecasts covering a further period of 5 years have been used for the other acquired businesses.
Other key assumptions in the value in use calculation are shown below:
Vehicle Automotive
Vehicle Remarketing Buying Services
---------------------- -------- -----------
UK International
---------------------------- ------ -------------- -------- -----------
Growth rate applied beyond
approved forecast period 1.8% 1.0% 1.8% 1.0%
11.3% -
Pre-tax discount rate 10.9% 13.8% 10.9% 11.8%
============================ ====== ============== ======== ===========
Growth rates used do not exceed expectations of long-term growth in the local market.
The discount rate is estimated by the Group using a range of equity costs for similar companies and external market data, with samples chosen where applicable from the same markets or territories as the CGU.
The calculation of value in use for goodwill is sensitive to the following key assumptions:
-- Operating cash flow -- Discount rate
The Directors consider that there is no reasonably possible change in the key assumptions made in their impairment calculations that would give rise to an impairment.
13. INTANGIBLE ASSETS continued
Goodwill as at 31 December 2014
Goodwill comprises that arising on the acquisition of the BCA Trading Group by CD&R in 2010 of GBP380.2 million, the acquisition of Pennine Metals B Limited in 2013 of GBP88.3 million and a number of smaller acquisitions in the United Kingdom and Europe.
The Group reviews assets that have an indefinite useful life at least annually to assess whether their recoverable amount exceeds their carrying value. The recoverable amount is defined as the higher of fair value less costs to sell and value in use, which in turn is the present value of the future cash flows expected to be derived from the asset. The recoverable amount of goodwill and acquired intangible assets is assessed on the basis of the value in use of the cash generating unit or group of cash generating units ("CGU") to which they are attributed.
At 31 December 2014 the Group considered it operated three CGUs to which Goodwill could be allocated; Vehicle Remarketing UK, Vehicle Remarketing International and Vehicle Buying. On the basis of the estimates and assumptions made as part of the impairment review, the value in use of all three CGUs exceeds its carrying value. Therefore no impairment is deemed necessary. The estimated value in use of these businesses is most sensitive to the discount rate.
The CGU's; Vehicle Remarketing UK, Vehicle Remarketing International and Vehicle Buying, have all been reviewed for impairment separately based on their carrying amounts of GBP271.8m, GBP119.9m and GBP88.3m respectively. A range of discount rates between 10% and 11%, management forecasts for the next four years and long-term nominal growth rates between 1% and 2% have been used as estimates as part of the Vehicle Remarketing UK and Vehicle Remarketing International reviews. The long-term nominal growth rates used are based on prudent estimates of growth in mature economies, which would represent the majority of the markets in which the Vehicle Remarketing UK and Vehicle Remarketing International CGU's operate. Discount rates between 10% and 11%, management forecasts for the next 10 years, with earnings growth rates of initially around 20% declining to the long-term rate over the 10 year period, and a subsequent long-term nominal growth of 2% have been used as estimates as part of the Vehicle Buying review. The use of the initial 20% growth rate, which then declines to the long-term rate over 10 years is based on the Vehicle Buying CGU being considered high growth, as the business model is young and has not yet been expanded to all of the markets in which the Group operates. By the end of the 10 years, management expect the Vehicle Buying CGU to be a mature business, at which point its long-term nominal growth rate then becomes consistent with the rest of the Group. Underlying those rates was an estimate of the Group's weighted average cost of capital of 10.7%.
If the estimate of the Group's weighted average cost of capital were increased to 11.7%, but all other assumptions on which the estimates of value in use are based were held constant, no impairment charge would arise in any of the CGU's. Similarly if the forecast EBITDA growth rates were reduced by 5%, with all other assumptions remaining the same, no impairment charge would arise in any of the CGU's.
14. PROPERTY, PLANT AND EQUIPMENT
Plant,
Fixtures, machinery
Land fittings and motor
and buildings and equipment vehicles Total
Cost GBPm GBPm GBPm GBPm
--------------------------- --------------- --------------- ----------- -------
At 1 January 2014 54.3 9.9 7.7 71.9
Acquired through business - - - -
combinations
Additions 2.4 2.1 6.6 11.1
Disposals (1.7) (0.6) (2.8) (5.1)
Exchange difference (3.8) (0.5) (0.3) (4.6)
--------------------------- --------------- --------------- ----------- -------
At 31 December 2014 51.2 10.9 11.2 73.3
Additions for the period
to 2 April 2015 0.4 1.1 1.5 3.0
Disposals for the period
to 2 April 2015 - (1.3) (0.9) (2.2)
Eliminate BCA Trading
Group (51.6) (10.7) (11.8) (74.1)
Add BCAM - - - -
Acquired through business
combinations 58.9 5.5 25.2 89.6
Additions 12.8 2.7 22.7 38.2
Disposals (5.8) (0.2) (3.6) (9.6)
Exchange difference 3.4 0.5 0.3 4.2
At 3 April 2016 69.3 8.5 44.6 122.4
--------------------------- --------------- --------------- ----------- -------
Accumulated depreciation
--------------------------- --------------- --------------- ----------- -------
At 1 January 2014 1.1 5.7 1.0 7.8
Charge for the year 1.8 1.7 2.4 5.9
Impairment charge for
the year 4.8 - - 4.8
Disposals - (0.5) (1.6) (2.1)
Exchange difference (1.3) (0.4) (0.2) (1.9)
--------------------------- --------------- --------------- ----------- -------
At 31 December 2014 6.4 6.5 1.6 14.5
Charge for the period
to 2 April 2015 0.4 0.3 0.6 1.3
Disposals for the period
to 2 April 2015 - (1.2) (0.4) (1.6)
Eliminate BCA Trading
Group (6.8) (5.6) (1.8) (14.2)
Add BCAM - - - -
Charge for the remainder
of the period 1.6 1.4 4.8 7.8
Disposals (0.1) - (1.7) (1.8)
Exchange difference 0.6 0.2 0.1 0.9
At 3 April 2016 2.1 1.6 3.2 6.9
--------------------------- --------------- --------------- ----------- -------
Net book value
At 31 December 2014 44.8 4.4 9.6 58.8
--------------- --------------- ----------- -------
At 3 April 2016 67.2 6.9 41.4 115.5
=========================== =============== =============== =========== =======
Land and buildings includes assets under construction at the Perry Bar, Belle Vue and Bedford sites with a net book value of GBP14.8m, which are not yet being depreciated. Land and buildings also includes an investment property, which has been accounted for using the cost model. The investment property was acquired through a business combination at its fair value of GBP2.2m and since then depreciation of GBPnil has been charged, leaving a net book value of GBP2.2m at the period end.
The Group reviews tangible assets for evidence of impairment. Where the value in use, as determined by the present value of discounted cash flows, is less than the carrying value, the Group considers the fair value of the asset. In December 2014 the value in use of properties in Spain, Denmark, the UK and Portugal were assessed as lower than the carrying value. Based on Directors estimates the fair value was determined to be GBP4.8m below the carrying value and accordingly the carrying values were impaired. The Directors' estimates were based on knowledge of the relevant property markets and other appropriate information.
14. PROPERTY, PLANT AND EQUIPMENT continued
Finance lease commitments
Included in property, plant and equipment are land and building assets held under finance leases with a net book value of GBP3.4m (2014: GBP3.1m) and accumulated depreciation of GBP0.6m (2014: GBP0.8m) and plant, machinery and motor vehicle assets under finance leases with a net book value of GBP25.2m (2014: GBPnil) and accumulated depreciation of GBP2.1m (2014: GBPnil).
15. INVENTORIES
As at As at
3 April 31 December
2016 2014
GBPm GBPm
--------------------- --------- -------------
Gross inventories 19.6 29.5
Inventory provision (0.3) (0.5)
Net inventories 19.3 29.0
===================== ========= =============
Inventories recognised as an expense and charged to cost of sales for the period to 3 April 2016 were GBP846.2m (2014: GBP523.5m). Write-down of inventories recognised as an expense in the period to 3 April 2016 amounted to GBP0.3m (2014: GBPnil).
16. TRADE AND OTHER RECEIVABLES
As at As at
3 April 31 December
2016 2014
GBPm GBPm
----------------------------------- --------- -------------
Trade receivables not past
due 147.6 50.4
Trade receivables past
due 26.5 9.4
Provision for impairment (2.0) (0.5)
------------------------------------ --------- -------------
Trade receivables - net 172.1 59.3
Other receivables 12.3 10.4
Accrued income 7.9 6.4
Prepayments 17.7 12.9
------------------------------------ ---------
Total trade and other receivables 210.0 89.0
==================================== ========= =============
As at 3 April 2016 GBP64.7m (2014: GBP18.9m) of trade receivables were due from customers under the Partner Finance arrangements and are secured on vehicles held by those customers. Trade and other receivables are presented as current assets and there is no difference between the carrying amount and the fair value. Trade and other receivables are considered past due once they have passed their contracted due date. The creation and release of provisions for impaired receivables have been included in operating costs in the income statement. Movements on the Group provision for impairment of trade receivables are as follows:
As at As at
3 April 31 December
2016 2014
GBPm GBPm
---------------------------------------- --------- -------------
At period/year start (0.5) (0.8)
Provision for receivables impairment (0.4) -
to 2 April 2015
Unused amounts reversed to 2 0.2 -
April 2015
Eliminate BCA Trading Group 0.7 -
Add BCAM - -
Acquired through business combinations (1.4) -
Provision for receivables impairment
for the remainder of the period (1.0) (0.6)
Utilisation of provision during
the period 0.3 0.1
Unused amounts reversed for
the remainder of the period 0.1 0.8
At period/year end (2.0) (0.5)
======================================== ========= =============
16. TRADE AND OTHER RECEIVABLES continued
The ageing of receivables is as follows:
As at As at
3 April 31 December
2016 2014
GBPm GBPm
------------------------------------ --------- -------------
Not past due and not impaired 147.6 50.4
Up to 30 days overdue and not
impaired 19.3 7.4
Up to 30 days overdue and impaired - -
Past 30 days overdue and not
impaired 5.0 1.5
Past 30 days overdue and impaired 2.2 0.5
Total trade receivables 174.1 59.8
Impairment (2.0) (0.5)
Net trade receivables 172.1 59.3
==================================== ========= =============
17. CASH AND CASH EQUIVALENTS
As at As at
3 April 31 December
2016 2014
GBPm GBPm
-------------------------- --------- -------------
Cash at bank and in hand 102.4 31.1
========================== ========= =============
Cash and cash equivalents are shown net of overdrafts. The Group has a legal right of offset over specified bank accounts. The gross cash and overdraft balances are shown below:
As at As at
3 April 31 December
2016 2014
GBPm GBPm
-------------------------------------- --------- -------------
Gross amount of recognised financial
assets: Cash at bank and in hand 109.5 49.7
Gross amount of recognised financial
liabilities set off in the balance
sheet: Overdraft (7.1) (18.6)
Cash at bank and in hand 102.4 31.1
====================================== ========= =============
18. TRADE AND OTHER PAYABLES
As at As at
3 April 31 December
2016 2014
GBPm GBPm
-------------------------------- --------- -------------
Trade payables 139.8 59.6
Obligations under operating
leases 66.9 46.5
Social security and other
taxes 11.5 5.1
Accruals and other payables 68.9 56.9
Unamortised leaseback premium - 6.5
Obligations under finance 26.9 -
leases
Total trade and other payables 314.0 174.6
================================= ========= =============
Trade and other payables
- current 225.3 117.2
Trade and other payables
- non-current 88.7 57.4
---------------------------------
Total trade and other payables 314.0 174.6
================================= ========= =============
Obligations under operating leases reflect the fair value of current market terms of operating leases at acquisition, together with the cumulative difference between annual operating lease charges and cash payments made in accordance with the lease agreement. The Group also hold finance leases, further details of which can be seen as follows:
As at As at
3 April 31 December
2016 2014
GBPm GBPm
------------------------------- ---------- -------------
The minimum lease payments under finance
leases fall due as follows:
Not later than one year 5.0 -
Later than one year but 20.9 -
not more than five
More than five years 4.1 -
------------------------------- ---------- -------------
Minimum lease payments 30.0 -
Future finance charge on (3.1) -
finance leases
----------
Present value of finance 26.9 -
lease liabilities
=============================== ========== =============
Of which:
Not later than one year 4.1 -
Later than one year but 18.8 -
not more than five
More than five years 4.0 -
------------------------------- -------------
Minimum lease payments 26.9 -
=============================== ========== =============
19. BANK BORROWINGS
As at As at
3 April 31 December
2016 2014
GBPm GBPm
----------------------------------- --------- -------------
Non-current
Bank borrowings 273.1 268.0
Loan notes - payment in
kind certificates - 158.5
Balance due to Osprey Investments
S.a.r.l. - 200.2
------------------------------------ --------- -------------
273.1 626.7
=================================== ========= =============
Current
Bank borrowings - 23.3
================== =====
As part of the acquisition of the BCA Trading Group on 2 April 2015 the pre-acquisition debt structure within the BCA Trading Group was settled in full.
In April 2015, the Group agreed a five year committed GBP300m multi-currency facility, including a GBP100m revolving facility and a GBP200m term facility, which was drawn down in full, net of transaction costs of GBP7.1m, and used as financing to repay the previous debt facility within the BCA Trading Group of companies. The facility matures at the end of the five year period, with no repayment of capital due before that time.
In June 2015, the term facility was increased by GBP75m to a principal amount of GBP275m for further transaction costs of GBP0.6m, with no change to the maturity date. The additional drawdown was primarily used to fund the purchase of SMA and BCA Automotive. The total transaction costs of GBP7.7m, together with the interest expense, are being allocated to the income statement over the term of the facility at a constant rate on the carrying amount.
Carrying amounts are stated net of unamortised transaction costs. The fair value of bank borrowings is equal to the nominal value of the bank loan as the impact of discounting is not significant. The fair value of gross bank borrowings is GBP279.3m, (2014: GBP682.0m) which is equal to the nominal value. The effective interest rate of bank borrowings including the impact of non-utilisation fees on the GBP100m revolving facility and the utilisation fees for the letters of credit drawn down from the revolving facility, as well as the amortisation of debt issue costs is 3.7% (2014: 5.1%).
The Group's principal bank loans at 3 April 2016 were denominated in Sterling GBP231.3m, and Euros EUR60.0m, and bear variable interest based on LIBOR and EURIBOR respectively. They were secured by a fixed and floating charge over the Group's present and future assets.
At 3 April 2016, the Group had issued letters of credit in the ordinary course of business of GBP5.5m (2014: GBP5.3m) and drawn down GBPnil (2014: GBP20.0m) on the revolving facility, leaving the following as undrawn borrowing facilities:
As at As at
3 April 31 December
2016 2014
GBPm GBPm
-------------------------- --------- -------------
Floating rate borrowings
Expiring beyond one year 94.5 40.5
=========================== ========= =============
For more information about the Group's exposure to interest rate and foreign currency risk see note 27.
20. PARTNER FINANCE BORROWINGS
The Group has an asset-backed finance facility to fund the Partner Finance business. This is a revolving facility that allows a drawdown of up to GBP60.0m. The amount is advanced solely to a Partner Finance subsidiary in respect of specific receivables. Interest is charged on the drawn down element of the facility at a variable rate of interest, based on the Bank of England base rate. At 3 April 2016 the borrowings were GBP40.2m (2014: GBP13.3m).
21. PROVISIONS
Onerous
lease provision Other Total
GBPm GBPm GBPm
----------------------------- ----------------- ------ -------
At 31 December 2014 18.9 0.2 19.1
Utilised to 2 April 2015 (0.3) - (0.3)
Unwinding of discounted
amount to 2 April 2015 0.1 - 0.1
Eliminate BCA Trading Group (18.7) (0.2) (18.9)
Add BCAM - - -
Acquired through business
combinations 20.4 0.7 21.1
Utilised the for remainder
of period (1.9) (0.2) (2.1)
Unwinding of discounted
amount for the remainder
of period 0.6 - 0.6
At 3 April 2016 19.1 0.5 19.6
============================= ================= ====== =======
Analysis of maturity profile:
As at As at
3 April 31 December
2016 2014
GBPm GBPm
------------------------------- --------- -------------
Current 0.9 1.0
Non-current 18.7 18.1
Total provisions 19.6 19.1
================================ ========= =============
Onerous lease provision
Prior to the acquisition of the BCA Trading Group two properties in the UK had been identified for which the Group had no future use. A provision exists for the minimum lease payments estimated to be paid until the end of the leases in 2031, net of management's estimate as to likely revenues receivable in respect of sub leases or other uses of the properties. The future payments have been discounted, where appropriate, at the risk-appropriate rate of 3%.
Other provisions
This balance primarily relates to a dilapidations provision, which was made in order to make good any defects within leasehold buildings used within the business and is expected to be utilised within the next ten years.
22. PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Group participates in several defined contribution schemes and two defined benefit schemes ('the BCA Pension Plan' within the BCA Trading Group and 'the Automotive Plan' within BCA Automotive).
The BCA Pension Plan provides benefits based on final pensionable salary. The plan is closed to new members. The valuation used for these accounts is based on the results of an actuarial valuation carried out as of 5 April 2014 and updated to the period end date by Capita, independent consulting actuaries, in accordance with IAS 19.
The Automotive Plan provides benefits based on final pensionable salary. The plan closed to future accrual from 1997. The valuation used for these accounts is based on the results of an actuarial valuation carried out as of 6 April 2013 and updated to the date of the acquisition of the BCA Automotive business on 25 August 2015, and at the period end date by Broadstone, independent consulting actuaries, in accordance with IAS 19.
The defined benefit plans are registered with HMRC and comply fully with the regulatory framework published by the UK pensions regulator. Benefits are paid to the members from a separate fund administered by independent trustees. The BCA Pension Plan has five trustees, three of whom are appointed by the Group and two chosen by scheme members. The Automotive Plan has four trustees, two of whom are appointed by the Group and two chosen by scheme members. The Trustees are required to act in the best interests of the members and are responsible for making funding and investment decisions in conjunction with the Group.
22. PENSIONS AND OTHER POST-RETIREMENT BENEFITS continued
The principal assumptions used for the BCA Pension Plan and the Automotive Plan are as follows:
As at 3 April As at 31 December
2016 2014
BCA Automotive BCA Automotive
Rate of increase in
salaries 3.10% n/a 3.20% n/a
Rate of increase in
deferred pensions 2.10% 2.10% n/a n/a
Rate of increase in
pensions:
LPI (5.0% Cap) 3.00% n/a 3.05% n/a
LPI (2.5% Cap) 2.05% n/a 2.05% n/a
Fixed 3.00% Nil or n/a n/a
3.00%
Discount rate 3.45% 3.45% 3.60% n/a
Rate of inflation:
Retail price index 3.10% 3.10% 3.20% n/a
Consumer price index 2.10% 2.10% 2.20% n/a
======================== ====== =========== ======= ===========
Assumptions regarding future mortality experience are set based on published statistics and experience.
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice.
The mortality assumptions adopted imply the following expected future lifetimes from age 65:
As at 3 April As at 31 December
2016 2014
BCA Automotive BCA Automotive
Age Age Age Age
--------- ----- ----------- ------ ------------
Males 22.9 22.2 22.8 n/a
Females 24.9 24.4 24.7 n/a
========= ===== =========== ====== ============
The liability recognised in the consolidated balance sheet is determined as follows:
As at 3 April As at 31 December
2016 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- ------- ----------- ------- ------- ----------- -------
Present value of
funded obligations (73.8) (13.6) (87.4) (69.9) n/a (69.9)
Fair value of plan
assets 68.0 11.8 79.8 67.0 n/a 67.0
Net pension liability (5.8) (1.8) (7.6) (2.9) n/a (2.9)
======================= ======= =========== ======= ======= =========== =======
The amounts recognised in the income statement are as follows:
For the 15 months
ended For the year ended
3 April 2016 31 December 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------- ------ ----------- ------ ------ ----------- ------
Current service cost (1.2) - (1.2) (1.0) n/a (1.0)
Net interest (expense)/income (0.2) (0.1) (0.3) 0.1 n/a 0.1
Total amount charged
to the income statement (1.4) (0.1) (1.5) (0.9) n/a (0.9)
=============================== ====== =========== ====== ====== =========== ======
22. PENSIONS AND OTHER POST-RETIREMENT BENEFITS continued
The amounts recognised in the statement of comprehensive income are as follows:
For the 15 months ended For the year ended
3 April 2016 31 December 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------
Actuarial (losses)/gains on liabilities:
Experience gains and losses 0.1 0.1 0.2 (0.1) n/a (0.1)
Changes in demographic assumptions - - - (0.5) n/a (0.5)
Changes in financial assumptions (1.0) - (1.0) (6.5) n/a (6.5)
Actuarial gains/(losses) on assets:
Experience gains and (losses) (1.5) 0.1 (1.4) 3.5 n/a 3.5
Total amount recognised in other comprehensive income (2.4) 0.2 (2.2) (3.6) n/a (3.6)
============
Analysis in the movement in the net liability:
As at 3 April 2016 As at 31 December 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
------ -----------
At start of period/year (2.9) - (2.9) 0.8 - 0.8
Balance at acquisition - (3.2) (3.2) - - -
Contributions by employer 0.9 1.3 2.2 0.8 - 0.8
Actuarial (losses)/gains recognised in the period (2.4) 0.2 (2.2) (3.6) - (3.6)
Net interest (expense)/income (0.2) (0.1) (0.3) 0.1 - 0.1
Current service cost (1.2) - (1.2) (1.0) - (1.0)
At end of period/year (5.8) (1.8) (7.6) (2.9) - (2.9)
====== ===========
Changes in the present value of the defined benefit obligation are as follows:
As at 3 April 2016 As at 31 December 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
At start of period/year 69.9 - 69.9 60.4 - 60.4
Balance at acquisition - 14.0 14.0 - - -
Current service cost 1.2 - 1.2 1.0 - 1.0
Interest expense on plan liabilities 3.0 0.3 3.3 2.7 - 2.7
Actuarial losses/(gains):
Experience gains and losses (0.1) (0.1) (0.2) 0.1 - 0.1
Changes in demographic assumptions - - - 0.5 - 0.5
Changes in financial assumptions 1.0 - 1.0 6.5 - 6.5
Contributions by employees 0.5 - 0.5 0.4 - 0.4
Benefits paid (1.7) (0.6) (2.3) (1.7) - (1.7)
At end of period/year 73.8 13.6 87.4 69.9 - 69.9
22. PENSIONS AND OTHER POST-RETIREMENT BENEFITS continued
Changes in the fair value of the defined benefit asset are as follows:
As at 3 April 2016 As at 31 December 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
------ ----------- ------ ------ -----------
At start of period/year 67.0 - 67.0 61.2 - 61.2
Balance at acquisition - 10.8 10.8 - - -
Interest income on plan assets 2.8 0.2 3.0 2.8 - 2.8
Employer contributions 0.9 1.3 2.2 0.8 - 0.8
Actuarial gains/(losses):
Experience gains and losses (1.5) 0.1 (1.4) 3.5 - 3.5
Contributions by employees 0.5 - 0.5 0.4 - 0.4
Benefits paid (1.7) (0.6) (2.3) (1.7) - (1.7)
At end of period/year 68.0 11.8 79.8 67.0 - 67.0
====== =========== ====== ====== ===========
At the end of the reporting period/year the plan assets by category had been invested as follows:
As at 3 April 2016 As at 31 December 2014
BCA Automotive Total BCA Automotive Total
GBPm GBPm GBPm GBPm GBPm GBPm
----- ----------- ------
Equities (quoted) 33.9 6.2 40.1 34.0 - 34.0
Corporate bonds (quoted) 24.8 2.1 26.9 23.9 - 23.9
Government bonds (quoted) 3.5 3.0 6.5 3.5 - 3.5
Diversified growth funds (quoted) 5.5 - 5.5 5.5 - 5.5
Other 0.3 0.5 0.8 0.1 - 0.1
Total plan assets 68.0 11.8 79.8 67.0 - 67.0
===== =========== ======
22. PENSIONS AND OTHER POST-RETIREMENT BENEFITS continued
Risk management
These defined benefit plans expose the Group to actuarial risks, such as mortality risk, interest rate risk and market investment risk. The investment policies of each scheme are described below:
Asset volatility Plan liabilities, in respect of defined benefit obligations, are calculated on a discounted
basis using a discount rate which is set with reference to corporate bond yields. If the plan
assets underperform this yield, then this will create a deficit. The trustees of each plan,
and their advisers, carry out regular reviews of asset allocations within each plan and consider
the need to switch assets in line with the investment strategies. Currently the plans hold
approximately 40% of assets as defensive assets (government and corporate bonds) with the
intention of mitigating significant changes in yields.
As each plan matures, the level of investment risk is reduced by investing more in government
and corporate bonds that better match the liabilities. However, the Group believes that due
to the long term nature of the scheme liabilities, a level of continuing equity investment
is an appropriate element of the long term investment strategy.
In respect of Guaranteed Minimum Pension ('GMP') obligations, the strategy has the objectives
of achieving an overall rate of return that is sufficient to meet pensioners' reasonable
expectations,
reduce investment return volatility over the short-term period to retirement where this is
possible and to invest in assets that are liquid such that they enable switching between asset
classes. In order to achieve these objectives, the strategy is to invest in a mixture of on-risk
assets (including equities) and off-risk assets (including bonds, gilts and cash), with the
proportionate allocation of the latter increasing according to an agreed profile as members
approach their normal retirement date.
Inflation The plans' pension liabilities in deferment are linked to inflation. Higher inflation will
lead to higher liabilities, although in the majority of cases there are caps on the level
of inflationary increases to be applied to pension obligations in order to protect the plans
from extreme inflation. The BCA Pension Plan holds approximately 5% of the plans' assets in
index-linked bonds to partially hedge against this risk. The remainder of the plans' assets
are either unaffected by or loosely correlated with inflation, and so an increase in inflation
can lead to an increase in the plan deficit.
Mortality The plans' obligation is to provide a pension for the life of their members, so realised increases
in life expectancy will result in an increase in the plans' benefit payments. Whilst future
mortality rates cannot be predicted with certainty the plans adopt up to date mortality assumptions
and review the overall risk as part of the triennial actuarial valuations.
Bond yields Plan liabilities are likely to increase following a decrease in the interest rate. This is
due to a reduction in the interest rate having the effect of a decrease in bond yields. This
risk is partially mitigated by the level of defensive assets held by the plans, which will
increase in value following a decrease in interest rate. If interest rates increase, the opposite
is true for both plan liabilities and assets.
Salary changes The calculation of the BCA Pension Plan liabilities uses the future estimated salaries of
plan participants. Increases in the salary of plan participants above that assumed will increase
the plan liabilities.
The Automotive Plan is closed to future accruals, so is not exposed to this risk.
22. PENSIONS AND OTHER POST-RETIREMENT BENEFITS continued
Sensitivity analysis
The disclosures above are dependent on the assumptions used. The table below demonstrates the sensitivity of the defined benefit obligations to changes in the significant assumptions used for the schemes.
Impact on the defined benefit obligations:
BCA Automotive BCA Automotive
GBPm GBPm % of liability % of liability
Discount rate: +0.25% (3.3) (0.6) (4.4%) (4.4%)
Inflation and related assumptions: +0.25% 1.8 0.1 2.4% 0.7%
Mortality: reduced by 10% 2.4 n/a 3.2% n/a
Mortality: Long-term rate of longevity improvement: +0.25% n/a 0.3 n/a 2.2%
The above analysis is based on a change in an assumption while holding all other assumptions constant, and in practice this is unlikely to occur. The above variances have been used as they are believed to be reasonably possible fluctuations.
Expected future cash flows
The Group expects the employer contributions to be made to its defined benefit plans in the 2016/17 financial year to be GBP1.2m. The Group's management do not expect any material changes to the annual cash contributions over the next three years; however it keeps contributions under review in the light of movements in the funding position of the schemes.
The defined benefit obligations are based on the current value of expected benefit payment cash flows to members over the next several decades. The average duration of the liabilities is approximately 20 years for the BCA Pension Plan and 18 years for the Automotive Plan.
23. DEFERRED TAX
Property, plant and Operating lease Losses carried
Deferred tax assets equipment obligations Pension deficit forward Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2014 0.4 9.4 - 4.1 0.2 14.1
Credited to the
income statement 1.0 0.8 - 1.4 0.2 3.4
Credited to other
comprehensive income - - 0.6 - - 0.6
Exchange difference - - - 0.1 - 0.1
At 31 December 2014 1.4 10.2 0.6 5.6 0.4 18.2
Property, plant Operating lease Losses carried
Deferred tax assets and equipment obligations Pension deficit forward Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2015 1.4 10.2 0.6 5.6 0.4 18.2
(Charged)/Credited
to the income
statement to 2
April 2015 0.1 0.2 - 2.1 (0.1) 2.3
Credited to other
comprehensive
income to 2 April
2015 - - 0.4 - - 0.4
Eliminate BCA
Trading Group (1.5) (10.4) (1.0) (7.7) (0.3) (20.9)
Add BCAM - - - - - -
Acquired through
business
combinations 3.3 2.9 1.6 17.1 0.2 25.1
(Charged)/credited
to the income
statement for the
remainder of the
period 0.8 - 0.1 (10.3) 0.3 (9.1)
Charged to other
comprehensive
income for the
remainder of the
period - - (0.2) - - (0.2)
Exchange difference - - - 0.1 - 0.1
At 3 April 2016 4.1 2.9 1.5 6.9 0.5 15.9
Deferred tax liabilities Intangible Assets Other Total
GBPm GBPm GBPm
At 1 January 2014 (10.5) (0.4) (10.9)
Credited/(charged) to the income
statement 0.7 (0.1) 0.6
Credited to other comprehensive
income - 0.2 0.2
At 31 December 2014 (9.8) (0.3) (10.1)
Deferred tax liabilities Intangible Assets Other Total
GBPm GBPm GBPm
At 1 January 2015 (9.8) (0.3) (10.1)
(Charged)/Credited to the income
statement to 2 April 2015 0.2 (0.1) 0.1
Eliminate BCA Trading Group 9.6 0.4 10.0
Add BCAM - - -
Acquired through business
combinations (123.9) - (123.9)
Credited to the income statement 16.5 - 16.5
Exchange difference (3.4) - (3.4)
At 3 April 2016 (110.8) - (110.8)
23. DEFERRED TAX continued
Deferred tax assets are recognised in respect of losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.
24. SHARE CAPITAL AND RESERVES
Number of GBP1 Number of GBP0.01 Nominal value Share premium Merger reserve
Ordinary Shares Ordinary Shares (GBPm) (GBPm) (GBPm)
At 1 January 2014
and 31 December
2014 4,000,002 - 4.0 14.8 -
------------------ ------------------
Eliminate BCA
Trading Group (4,000,002) - (4.0) (14.8) -
Add BCAM - 25,041,670 0.3 28.7 -
Issued in
connection with
the
acquisition of
BCA Trading Group - 755,205,522 7.5 1,021.7 103.6
Share issue costs
relating to
equity - - - (35.1) -
Capital reduction - - - (1,015.3) -
At 3 April 2016 - 780,247,192 7.8 - 103.6
==================
The holders of Ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at meetings of the Company. The movements in share capital are described below:
-- On 2 April 2015, BCA Marketplace plc issued 755,205,522 shares for the Placing as part of the acquisition of the BCA Trading Group. 685,670,000 were issued for cash at a price of GBP1.50 each and 69,535,522 were issued as consideration for shares in the BCA Trading Group at a fair value of GBP1.50 each. On the same date, all 780,247,192 Ordinary shares in issue were admitted to the Official List of the UK Listing Authority and to trading on the Main Market of the London Stock Exchange.
-- On 3 June 2015, the Company cancelled its share premium account by Special Resolution as confirmed by an Order of the High Court of Justice, Chancery Division.
The following describes the nature and purpose of each reserve within shareholders' equity:
Share premium
The amount subscribed for share capital in excess of nominal value less any costs directly attributable to the issue of new shares.
Merger reserve
The amount in excess of nominal value of shares issued in exchange for shares on an acquisition in relation to section 612 of the Companies Act 2006.
Foreign exchange reserve
The foreign exchange reserve represents the difference arising from the changes to foreign exchange rates upon assets and liabilities of overseas subsidiaries.
Retained earnings
Cumulative net gains and losses recognised in the Group income statement.
25. DIVIDS
An interim dividend of GBP15.6m, 2.0p per share (2014: GBPnil), was paid on 18 December 2015 to shareholders on the Register on 11 December 2015.
After the balance sheet date a final dividend of 4.0p per qualifying Ordinary share has been proposed by the Directors (2014: 0.0p per share), subject to approval by shareholders at the AGM. This will be payable on 30 September 2016 to shareholders on the Register on 23 September 2016. The final dividend has not been provided for.
26. COMMITMENTS AND CONTINGENCIES
Capital commitments
Capital commitments at the year end were GBP10.9m (2014: GBPnil).
Operating lease commitments
The Group leases various properties and other assets under operating lease agreements. The non-cancellable lease terms are between three months and 61 years, and certain of the lease agreements are renewable at the end of the lease period at market rates.
The total future aggregate minimum lease payments under operating leases are as follows:
As at As at
3 April 2016 31 December 2014
Land and buildings Other Land and buildings Other
GBPm GBPm GBPm GBPm
Within one year 31.5 4.9 23.7 0.7
Later than one year and less than five years 119.2 9.7 98.5 0.6
After five years 347.4 0.2 351.1 -
Total operating lease commitments 498.1 14.8 473.3 1.3
=============================================
The total future aggregate minimum lease payments due to the Group under sub leases are GBP4.1m (2014: GBPnil).
Contingencies
There are no disputes with any third parties that would result in a material liability for the Group.
27. FINANCIAL INSTRUMENTS - RISK MANAGEMENT
Categories of financial instruments
As at As at
3 April 2016 31 December 2014
GBPm GBPm
Financial assets
Loans and receivables 286.8 100.8
Financial liabilities
Amortised cost 533.5 784.9
Loans and receivables include trade receivables, other receivables and cash and cash equivalents. Included in financial liabilities at amortised cost are trade and other payables excluding obligations under operating and finance leases, bank borrowings and Partner Finance borrowings.
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk. Risk management is carried out by the Audit & Risk Committee on behalf of the Board of Directors.
27. FINANCIAL INSTRUMENTS - RISK MANAGEMENT continued
Market risk
Market risk is the risk that changes in market prices (principally exchange rates and interest rates) will affect the Group's income or the value of its holdings of financial instruments.
Foreign exchange risk
The Group operates in the UK and continental Europe (Germany, France, Spain, Portugal, Netherlands, Italy, Denmark, Sweden, and Switzerland) and is therefore exposed to foreign exchange risk. Foreign exchange risk arises primarily on recognised assets and liabilities and net investments in foreign operations. These overseas operations' revenues and costs are mainly denominated in the currencies of the countries in which the operations are located. The most significant of these is the Euro. The Euro to Sterling exchange rates used by the Group are shown below:
For the For the
15 months ended year ended
3 April 2016 31 December 2014
------------------------------
Euro - opening (period start) 1.2871 1.2031
Euro - average 1.3500 1.2418
Euro - closing 1.2503 1.2871
The functional currencies of the revenue and adjusted EBITDA of the Group's operations are as follows:
For the 15 months ended For the year ended
3 April 2016 31 December 2014
GBP Euro Other Total GBP Euro Other Total
Revenue (GBPm) 1,294.2 129.9 17.7 1441.8 780.0 94.4 11.7 886.1
Revenue (%) 89.8% 9.0% 1.2% 100.0% 88.0% 10.7% 1.3% 100.0%
Adjusted EBITDA (GBPm) 95.2 16.6 4.8 116.6 64.0 14.6 3.7 82.3
Adjusted EBITDA (%) 81.6% 14.3% 4.1% 100.0% 77.8% 17.7% 4.5% 100.0%
The Group does not have significant transactional foreign currency cash flow exposures. The Group monitors its exposure to currency fluctuations on an ongoing basis. The Group maintains part of its net debt in Euros to reflect the currency in which its EBITDA is generated.
The Group does not normally hedge profit translation exposures. During the year and as at 3 April 2016 the Group did not have any hedges in place.
For the period ended 3 April 2016, if Sterling had strengthened by 10% on average against the Euro with all other variables held constant, adjusted EBITDA for the period would have been GBP1.5m lower (2014: GBP1.6m lower) as a result of a reduction of the equivalent value in Sterling of profits denominated in Euros.
Details of the currencies in which the Group's cash, trade and other receivables, trade and other payables and loans and overdrafts are denominated are set out below:
As at 3 April 2016 As at 31 December 2014
GBP Euro Other Total GBP Euro Other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Cash 58.8 35.6 8.0 102.4 4.8 22.6 3.7 31.1
Trade and other receivables 160.9 39.4 9.7 210.0 58.1 27.9 3.0 89.0
Trade and other payables (236.6) (64.9) (12.5) (314.0) (128.3) (42.1) (4.2) (174.6)
Borrowings (including Partner Finance
borrowings) (266.4) (46.9) - (313.3) (547.5) (102.5) - (650.0)
Net (283.3) (36.8) 5.2 (314.9) (612.9) (94.1) 2.5 (704.5)
27. FINANCIAL INSTRUMENTS - RISK MANAGEMENT continued
Interest rate risk
The Group's interest rate risk arises from the Group's borrowings as disclosed in Note 19. Interest rates have been historically low and stable in terms of both LIBOR and EURIBOR rates and consequently no structured hedging has been implemented in the current period. The Group will continue to monitor interest rates and assess the requirement for hedging in the future. All of the Group's finance leases are at fixed rates of interest.
For the period ended 3 April 2016, if the average rate on floating rate borrowings had been 50 basis points higher with all other variables held constant, post-tax profit for the period would have been GBP1.1m lower (2014: GBP1.1m lower).
Credit risk
Credit risk is the risk of financial loss in the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally through trade receivables from customers and cash balances.
The Group has policies in place to ensure that services are only provided to clients with an appropriate credit history.
Customers who have an account with BCA Partner Finance are able to finance vehicles acquired through UK Vehicle Remarketing. Prior to opening an account and subsequently, at least on an annual basis, a credit assessment is completed and appropriate security is obtained. In addition, legal title of the vehicle remains with the Group until the outstanding balance is settled in full.
Cash and cash equivalents are held with reputable institutions. The cash required for working capital is held with reputable banks in each country of operation as appropriate. All other material cash balances are deposited with financial institutions whose credit rating is at least Standard and Poors A- or equivalent.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group Finance. Group Finance monitors forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group minimises the risk of breaching borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group's debt financing plan and covenant compliance requirements on its borrowings.
The Group has a GBP100m (2014: GBP65m) revolving facility. At 3 April 2016 GBPnil (2014: GBP20m) of the facility had been drawn, as well as GBP5.5m (2014: GBP5.3m) of the facility having been utilised to provide guarantees to third parties. This revolving facility is considered by management to provide adequate flexibility given the current liquidity of the business.
The table below analyses the Group's non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the tables below are the contractual undiscounted cash flows:
Between Between
Within 1 and 2 and Over
As at 31 December 2014 Carrying amount Contractual Total 1 year 2 years 5 years 5 years
GBPm GBPm GBPm GBPm GBPm GBPm
-------- --------- --------- ---------
Bank borrowings 650.0 650.4 23.3 3.1 382.0 242.0
Partner Finance borrowings 13.3 13.3 13.3 - - -
Trade and other payables 174.6 120.3 117.2 0.3 2.2 0.6
27. FINANCIAL INSTRUMENTS - RISK MANAGEMENT continued
Capital risk management
The Board's policy is to maintain a strong capital base (which comprises share capital, reserves and net debt excluding finance leases and Partner Finance borrowings) so as to maintain creditor and market confidence and to sustain future development of the business. There were no changes in the Group's approach to capital management during the period.
Fair value
The fair values of all financial instruments are equal to their carrying value.
28. RELATED PARTY TRANSACTIONS
Remuneration of the Directors, who constitute the key management personnel of the Group, has been disclosed in note 8. Other related party transactions with the Group are as follows:
Transaction amount Balance owed/(owing)
For the For the
15 months ended year ended As at As at
Related party relationship 3 April 2016 31 December 2014 3 April 2016 31 December 2014
GBPm GBPm GBPm GBPm
Osprey Investments S.a.r.l. (6.0) (21.7) - (200.2)
BCA Gestão de Pátios S.A. (0.2) (0.4) 0.1 1.4
CC Automotive Group Limited - 0.1 - -
Carcraft Executive Pension Scheme - (0.1) - -
Management fees to private equity investor (0.1) (0.5) - -
Marwyn Capital LLP (7.7) - - -
Axio Capital Solutions Ltd (0.1) - - -
================= =============
Payments to Marwyn Capital LLP relate to acquisition fees and on-going administrative and office services. On 23 October 2014 as amended on 20 March 2015, the Company entered into an agreement with Marwyn Capital LLP, a limited liability partnership in which James Corsellis and Mark Brangstrup Watts are managing partners, pursuant to which Marwyn Capital LLP agreed to provide corporate finance advice and various office and finance support services to the Company. In accordance with this agreement, a fee of GBP7,053,000 was paid to Marwyn Capital LLP on the successful completion of the BCA Trading Group acquisition and is included in the analysis above. This was in addition to the reimbursement of all out-of-pocket expenses incurred by Marwyn Capital LLP, including legal and other professional adviser costs. Axio Capital Solutions Ltd, a company related to Marwyn, provides company secretarial services.
The shareholder loan notes represent amounts due by BCA Trading Group to Osprey Investment S.a.r.l.. The balance accrued interest at 12.1% per annum.
The Group has not made any provision for bad or doubtful debts in respect of related party debtors nor has any guarantee been given during the period regarding related party transactions.
29. SHARE BASED PAYMENTS
BCAM
As at 3 April 2016, share based incentives are in place for senior executives within the Group. These arrangements are based around shares in H.I.J. Limited ('H.I.J.') and are subject to the Share Incentive Scheme Cap ('the Incentive Cap'), which restricts the aggregate value of all share incentives in place to a maximum value of 10% of the growth in Shareholder Value, which is broadly defined as the increase in market capitalisation of all Ordinary shares of the Company issued up to the date of vesting, allowing for any dividends and other capital movements.
The Group has the option to settle all incentives in issue either for cash or for the issue of new Ordinary shares at its discretion. It is assumed that the incentives will be settled by the issue of new Ordinary shares.
29. SHARE BASED PAYMENTS continued
There are two incentive schemes in place as at 3 April 2016, the H.I.J. scheme (which applies to the Company and the Group) and the Performance based scheme (which applies to the Group only).
(a) The H.I.J. scheme is subject to both a Growth condition and the satisfaction of at least one of the Vesting conditions.
i. Growth condition
The Growth condition requires that the average compound annual growth of the Company's equity value must be at least 10% per annum. The Growth condition is measured from 10 November 2014, when the Company was admitted to trading on AIM ('Aim Admission') and takes into account new shares issued, dividends and capital returned to shareholders.
ii. Vesting conditions
At least one of the Vesting conditions must be (and continue to be) satisfied. The vesting period ends on the fifth anniversary of Admission, being 10 November 2019.
The Vesting conditions are as follows:
-- a sale of all or a material part of the business of H.I.J. Ltd; -- a sale of all of the issued Ordinary shares of H.I.J. Ltd occurring; -- a winding up of the H.I.J. Ltd occurring; -- a sale or change of control of the Company; or -- it is later than the third anniversary of Aim Admission.
(b) The Performance based scheme is subject to the same Growth condition and Vesting conditions described above and in addition is also subject to further Performance conditions.
iii. Performance conditions
Performance conditions are based on the business's key performance indicators ('KPIs') including volumes, average revenue/unit and EBITDA. Under these measures, points accrue over a three-year period starting with the year ending 3 April 2016, which determine the proportion of the scheme that will vest, up to a maximum of 1.5% of the growth in Shareholder Value. For example, if 50% of the points available from these KPIs are earned, then 50% of the 1.5% (0.75%) will be available under the Performance based scheme.
Any share of the growth in Shareholder Value not earned through achievement of KPIs will revert to the H.I.J. scheme, such that, subject to the Growth condition and the Vesting conditions, all of the Incentive Cap will vest.
The incentive holders have agreed that if they cease to be involved with the Group during the performance period then in certain circumstances a proportion of their incentives may be forfeited.
The share based incentives in issue are shown in the table below:
Current
participation in
Number of H.I.J. Nominal value of Subscription value increase in
Date issued shares H.I.J. shares of H.I.J. shares Shareholder Value
At 31 December 2014 405,000 GBP4,050 GBP4,050 6.46%
For the 15 months ended 3 April 2016
Issued during the
period:
H.I.J. scheme 15 June 2015 101,423 GBP1,014 GBP5,071 1.62%
H.I.J. scheme 22 October 2015 26,654 GBP267 GBP1,999 0.42%
Performance based
scheme 14 December 2015 n/a n/a n/a 1.50%
At 3 April 2016
H.I.J. scheme 533,077 GBP5,331 GBP11,120 8.50%
Performance based scheme n/a n/a n/a 1.50%
Total Incentive Cap 10.00%
29. SHARE BASED PAYMENTS continued
Valuation of share based incentives
The share based incentives have been assumed to be equity-settled and have been accounted for in accordance with IFRS 2.
The value of the services received in exchange for the share based incentives is measured by reference to the fair value of the incentives at their grant date. The fair value is recognised in the consolidated income statement, together with a corresponding increase in shareholders' equity, on a straight-line basis over the vesting period, based on an estimate of the number of shares that will ultimately vest.
Vesting conditions, other than market conditions, are not taken into account when estimating the fair value. Market conditions are those conditions that are linked to the share price of the Group.
At the end of each reporting period the Group revises its estimates of the number of shares that are expected to vest due to non-market conditions. It recognises the impact of the revision to original estimates, if any, in the consolidated income statement, with a corresponding adjustment to shareholders' equity. At the year end the Group expects all share based incentives to vest in full.
During the period, GBP0.6m (2014: GBP0.0m) has been recognised in the consolidated income statement as a charge in relation to the share based incentives. The value of the share based incentives granted under the scheme has been calculated using a Monte Carlo model:
-- The fair value of the issue on 11 July 2014 was performed prior to the Admission of the Group to AIM and is therefore based on a weighted average estimate of GBP20m raised on Admission and volatility of 20% based on a weighted average share price over the vesting period. The issue of shares on 15 June 2015 was part of a reduction in the value of those share incentives, as a result of the introduction of the Incentive Cap, and therefore no further assessment of fair value was required.
-- The fair values of the issues on 22 October 2015 and 14 December 2015 are based on the market capitalisation of the Group at the date of their grant and volatility of 20% based on an analysis of the share price volatility foa sample of the Group's peer group.
BCA Trading Group
Awards of restricted shares and zero cost options over shares have been made to employees of the Group. The restricted shares and options vested when the Group was sold on 2 April 2015. The value of these awards had been determined using management estimates considering the earnings of the Group, valuation multiples appropriate to the business and the liquidity of such shares. The cost in the period ended 3 April 2016 to the Group of the shares vesting was GBP4.7m, the amortised cost for the year ended 31 December 2014 was GBP2.7m.
29. SHARE BASED PAYMENTS continued
Awards of cash over Long-Term Incentive Plans ('LTIPs') were made to employees of the Group. The LTIPs also vested when the BCA Trading Group was sold. The cost to the Group in the 15 month period to 3 April 2016 was GBP2.9m, the amortised cost for the year ended 31 December 2014 was GBP4.0m.
30. EVENTS AFTER THE REPORTING PERIOD
On 18 July 2016 the Group acquired 100% of the Ordinary shares of Paragon Automotive Limited and subsidiary companies for initial consideration of GBP102.7m, which is subject to adjustment based on certain circumstances and contingent earn- out payments of up to a maximum of GBP30m, subject to achievement of financial and market targets over the two financial years ending March 2017 and 2018. Management provisionally estimates that earn-out payments of GBP20m will be made over this period, which together with expected adjustments to the initial consideration and discounting for the time-value of money, represent a fair value of GBP18.6m. The March 2017 earn-out payment was subsequently paid.
In October 2016 the Perry Barr site owned by the Group, was sold and leased back on an operating lease basis. The transaction was carried out on arms length basis and resulted in a profit of GBP5.3m.
In February 2017 the Group agreed a GBP500m multi- currency facility, including a GBP250m revolving facility and a GBP250m term loan. The term loan was drawn down in full and GBP90m of the revolving facility was also drawn down, net of transaction costs of GBP2.9m, and used to repay the previous debt facility held within the Group. The facility will run for four years with an option for a further 12 months by mutual consent, with no repayment of capital due before that time. Management assessed the refinance using qualitative factors including the reduction in restrictive clauses in the loan agreement, the proportion of senior debt compared to revolving credit facility and the reduced risk profile of the Group. It was determined that the new facility was an extinguishment and refinance and as such the previous facility arrangement fee costs of GBP4.9m yet to be amortised, were written off.
31. LIST OF GROUP UNDERTAKINGS
All companies are 100% owned unless otherwise stated.
Group undertaking Nature of business Country of incorporation Registered Office
Autolink Ltd* Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
Autotrax Ltd (76%)* Property Leasing England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BC Autolicitatii România Dormant Romania Bucharest, 1st district,
- S.R.L Buzesti St. no. 50-52, module
12, 11th floor
BC Remarketing S.A. Motor Vehicle Remarketing France 5 rue Charles de Gaulle -
94140 Alfortville
BCA Administratie B.V. Vehicle Sale and Purchase Netherlands De Landweer 4, 3771 LN
Barneveld
BCA Auctions GmbH Motor Vehicle Remarketing Germany Flosshafenstrasse 5, 41460
Neuss, Germany
BCA Auctions Holdings B.V. Intermediate Parent Netherlands De Landweer 4, 3771 LN
Barneveld
BCA Autoauktion A/S Motor Vehicle Remarketing Denmark Auktionsvej 8, DK-7120, Vejle
BCA Autoauktionen GesmbH Non-trading Austria Börsegasse 10/5, 1010
Wien
BCA Autoauktionen GmbH Motor Vehicle Remarketing Germany Flosshafenstrasse 5, 41460
Neuss, Germany
BCA Automotiv GmbH & Co. KG Motor Vehicle Remarketing Germany Flosshafenstrasse 5, 41460
Neuss, Germany
BCA Automotiv Verwaltungs GmbH Intermediate Parent Germany Flosshafenstrasse 5, 41460
Neuss, Germany
BCA Automotive Ltd* Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA AutoRemarketing Schweiz Motor Vehicle Remarketing Switzerland Industriepark / LC2, CH -
6246 Altishofen
BCA Autoveiling - Non-trading Belgium Rue de l'Hospice Communal 35
Enchères Autos S.A. - 1170 Watermael-Boitsfort
BCA Autoveiling B.V. Motor Vehicle Remarketing Netherlands De Landweer 4, 3771 LN
Barneveld
BCA Central Ltd Intermediate Parent and England and Wales Headway House, Crosby Way,
Management Service Company Farnham, Surrey GU9 7XG
BCA España Autosubastas Motor Vehicle Remarketing Spain Sagasta, 15 Planta 2 puerta
de Vehículos SL Izquierda 28004 Madrid
BCA Europe Ltd Intermediate Parent and England and Wales Headway House, Crosby Way,
Management Service Company Farnham, Surrey GU9 7XG
BCA Gestao de Patios SA Motor Vehicle Remarketing Brazil Rua Projetada Um, 143
(24.5%)** Sala 02, Mogi das Cruzes, Sao
Paulo 08735-230
BCA Group Europe Ltd Intermediate Parent England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
* Acquired during the 15 month period ended 3 April 2016.
** Disposed of on 15 June 2016.
31. LIST OF GROUP UNDERTAKINGS continued
Group undertaking Nature of business Country of incorporation Registered Office
BCA Holdings Germany GmbH Intermediate Parent Germany Flosshafenstrasse 5, 41460
Neuss, Germany
BCA Holdings Ltd Intermediate Parent England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Hungária Dormant Hungary 1061 Budapest,
Gépjármű-aukciós Andrássy út 36.
Kft. 2. em. 5. ,
Magyarország
BCA Italia SRL Motor Vehicle Remarketing Italy Via Emilia 143/A, Lodi
26900
BCA L.A. (50%)** Intermediate Parent Brazil Rua Projetada Um, 143
Sala 02, Mogi das Cruzes,
Sao Paulo 08735-230
BCA Logistics Ltd Motor Vehicle Distribution England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Ltd Dormant England Headway House, Crosby Way,
and Wales Farnham, Surrey GU9 7XG
BCA Osprey Finance Ltd Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Osprey I Ltd Intermediate Parent England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Osprey II Ltd Intermediate Parent England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Outsource Solutions Ltd Motor Vehicle Remarketing England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Pension Trustees Ltd Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Polska Sp. z o.o. Motor Vehicle Remarketing Poland Klaudyn, 5 Estrady str.,
05-080 Izabelin
BCA Remarketing Group Ltd Intermediate Parent England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Remarketing Solutions Ltd Motor Vehicle Remarketing England Headway House, Crosby Way,
and Wales Farnham, Surrey GU9 7XG
BCA Servicios Inmobiliarios SL Property Leasing Spain Sagasta, 15 Planta 2
puerta Izquierda 28004
Madrid
BCA Trading Ltd Intermediate Parent England Headway House, Crosby Way,
and Wales Farnham, Surrey GU9 7XG
BCA Vehicle Finance Ltd Motor Vehicle Finance England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
BCA Vehicle Remarketing AB Motor Vehicle Remarketing Sweden Box 5208, 151 13
Södertälje
BCAuto Enchères S.A. Motor Vehicle Remarketing France 5 rue Charles de Gaulle -
94140 Alfortville
British Car Auctions Ltd Motor Vehicle Remarketing England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
Burrpark Ltd* Supply of Labour and Scotland BCA Kinross, Bridgend,
Equipment Kinross KY13 8EN
* Acquired during the 15 month period ended 3 April 2016.
** Disposed of on 15 June 2016.
31. LIST OF GROUP UNDERTAKINGS continued
Group undertaking Nature of business Country of incorporation Registered Office
Carland.com Ltd (84%) Motor Vehicle Remarketing England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
CarTrade2B AB *** Vehicle Sale and Purchase Sweden Box 5208, 151 13
Södertälje
CarTrade2B GmbH *** Vehicle Sale and Purchase Germany Flosshafenstrasse 5, 41460
Neuss, Germany
CD&R Osprey Investment Dormant Luxembourg 5, Rue Guillaume J. Kroll,
S.à r.l. * Luxembourg, Luxembourg
Expedier Catering Ltd Catering England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
Expert Remarketing Ltd Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
Fleet Control Monitor GmbH Vehicle Inventory Management Germany Alsfelder Str. 23, 36272
(76%) Niederaula, Germany
FleetSelect B.V. Motor Vehicle Remarketing Netherlands De Landweer 4, 3771 LN
Barneveld
G - Grupo - Investimentos e Intermediate Parent Portugal Av. Antonio Augusto de Aguiar,
Participações, 38 - 6 , 1050-016 Lisboa
S.A.
H.I.J. Ltd* Intermediate Parent Jersey One Waverley Place, Union
Street, St Helier, Jersey JE1
1AX
Life on Show Ltd (51%) Supply of Photographic England and Wales Headway House, Crosby Way,
Software to the Automotive Farnham, Surrey GU9 7XG
Industry
Magna Motors Ltd Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
Motor Auctions (Properties) Property Leasing Scotland BCA Kinross, Bridgend, Kinross
Ltd* KY13 8EN
NKL Automotive Ltd Provision of Logistics Labour England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
Pennine Metals B Ltd Intermediate Parent England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
S.P.L.A. - Sociedade Motor Vehicle Remarketing Portugal Av. Antonio Augusto de
Portuguesa de Leliões Aguiar, 38 - 6 , 1050-016
de Automóveis, S.A. Lisboa
Scottish Motor Auctions Dormant England and Wales Headway House, Crosby Way,
(Holdings) Ltd* Farnham, Surrey GU9 7XG
Scottish Motor Auctions Ltd Dormant Scotland BCA Kinross, Bridgend,
* Kinross KY13 8EN
Sensible Automotive Ltd* Distribution and Vehicle England and Wales Headway House, Crosby Way,
Services for the Automotive Farnham, Surrey GU9 7XG
Sector
SMA Vehicle Remarketing Ltd Motor Vehicle Remarketing England and Wales Headway House, Crosby Way,
* Farnham, Surrey GU9 7XG
Smart Prepared Systems Ltd Dormant England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
* Acquired during the 15 month period ended 3 April 2016.
*** Formed during the 15 month period ended 3 April 2016.
31. LIST OF GROUP UNDERTAKINGS continued
Group undertaking Nature of business Country of incorporation Registered Office
The British Car Auction Group Intermediate Parent England and Wales Headway House, Crosby Way,
Ltd Farnham, Surrey GU9 7XG
Tradeouts Ltd (51%) Provision of Online Dealer to England and Wales Headway House, Crosby Way,
Dealer Platforms for Online Farnham, Surrey GU9 7XG
Sales
Walon Automotive Services Ltd Dormant England and Wales Headway House, Crosby Way,
* Farnham, Surrey GU9 7XG
Walon Ltd * Logistics Services for the England and Wales Headway House, Crosby Way,
Automotive Sector Farnham, Surrey GU9 7XG
We Buy Any Car Ltd Vehicle Sale and Purchase England and Wales Headway House, Crosby Way,
Farnham, Surrey GU9 7XG
ZABATUS Gründstucks - Property Leasing Germany Königsallee 106, 40216
Vermietungsgesellschaft mbH & Düsseldorf, Germany
Co. Objekt BCA Neuss KG (94%)
* Acquired during the 15 month period ended 3 April 2016.
Financial statements for all of the companies listed can be requested from the Company Secretary at BCA Bedford, Coronation Business Park, Kempston, Hardwick, Bedford, MK43 9PR.
For more information
bcamarketplaceplc.com
BCA Marketplace plc
Coronation Business Park
Kempston Hardwick
Bedford
MK43 9PR
Registered in England & Wales No. 09019615
(c) BCA Marketplace plc
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFVLADIELID
(END) Dow Jones Newswires
September 15, 2017 07:47 ET (11:47 GMT)
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