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Share Name Share Symbol Market Type Share ISIN Share Description
Cambria Automobiles Plc LSE:CAMB London Ordinary Share GB00B4R32X65 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  1.50 2.56% 60.00 57.00 60.00 59.25 57.50 59.00 22,592 16:35:25
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 524.0 10.2 8.2 7.3 60

Cambria Automobiles Plc Unaudited Interim Results 2020

06/05/2020 7:00am

UK Regulatory (RNS & others)


Cambria Automobiles (LSE:CAMB)
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RNS Number : 0291M

Cambria Automobiles Plc

06 May 2020

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

6 May 2020

Cambria Automobiles plc

("Cambria" or the "Group")

Unaudited Interim Results 2020

Cambria Automobiles plc (AIM: CAMB), the franchised motor retailer, is pleased to announce its unaudited interim results for the six months ended 29 February 2020, which show that the Group has performed ahead of the prior year and marginally ahead of management's expectations. The Group has continued to deliver on its Brand portfolio and property strategies in the period.

Continued Suspension of Forward Guidance

As announced on 24 March 2020, the Group took the decision to temporarily close its car showrooms across the UK, in line with Government guidance. Some of the Group's aftersales facilities have remained open on a limited basis to support key workers. This closure will have a material impact on the Group's financial performance in the current financial year to 31 August 2020 and as a result, the Board has suspended financial guidance in the market. In addition to other cost reduction measures taken by the Group, the CEO took a 50% reduction in salary and the Board voluntarily agreed between a 20% to 50% reduction in salary and fees whilst our Associates are on furlough leave. The Board is currently working through a number of return to work scenarios that can be initiated at the appropriate time, in line with Government guidance on social distancing, with the health, safety and wellbeing of our Associates and Guests integral to this process.

Financial highlights:

   --    Revenue reduced by 1.7% to GBP303.1m (H1 2019: GBP308.3m) 
   --    Underlying profit before tax up 14.5% at GBP6.3m (H1 2019: GBP5.5m) 
   --    Underlying earnings per share increased 13.3% to 5.11p (H1 2019: 4.51p) 
   --    Underlying net profit margin of 2.07% (H1 2019: 1.79%) 

-- Positive operational cash flows maintained, with a cash position of GBP20.1m (H1 2019: GBP22.9m) and net debt of GBP6.0m (H1 2019 net debt: GBP3.2m)

   --    Strong balance sheet with net assets of GBP68.5m (H1 2019: GBP60.6m) 
   --    Rolling twelve month return on equity* of 15.85% (H1 2019: 14.99%) 

-- As previously signalled, interim dividend suspended in light of COVID 19 impact (H1 2019: 0.25p)

Operational highlights:

-- Units of new vehicle sales reduced by 10.1%, as anticipated, with the reduced unit impact offset by an 11.6% increase in average profit per unit following the improvement in the Group's franchise portfolio mix

-- Units of used vehicle sales up 2.8%; gross profit increased as a result of the increased volumes and a 1.8% improvement in profit per unit

   --    Aftersales revenue increased by 1.1% with improvement in gross profit 

-- Group's entry into the Scottish market with the acquisition of an Aston Martin dealership and its Freehold Property in Edinburgh taking the Group to 4 Aston Martin dealerships

-- Strengthening of High Luxury Segment with acquisition of Rolls-Royce Motor Cars dealership in leasehold premises in Edinburgh, welcoming this prestigious brand into the portfolio

   --    Refranchising of Volvo Preston into Alfa Romeo and Jeep to create FCA Brand centre in Preston 

-- Post period end completion of land purchase in Solihull for the development of Aston Martin Birmingham site relocation

* underlying profit after tax as a proportion of Average Shareholder's funds

Mark Lavery, Chief Executive of Cambria, said:

"Whilst I am pleased with the results from the first half of our financial year, the material impact of Coronavirus has overtaken the normal operation of our businesses, as it has across the wider motor retail sector. The Group performed well in what were already difficult trading conditions and we were continuing to see improved results from the significant re-franchising activity of the previous few years.

"The impact of Coronavirus cannot be underestimated and despite the significant actions that we have taken to reduce costs, it will have a material negative impact on the financial performance in the second half of the financial year. We currently do not have visibility on the exit strategy from lockdown nor on the actions that we will have to take in light of the economic outturn as society has to operate in a different way. However, we are working through a number o f return to work scenarios that can be initiated at the appropriate time, in line with Government guidance.

"The industry was already facing some significant headwinds in relation to changing technology to meet more stringent emissions targets, an increasing cost base and disruptive supply factors. The emergence from the COVID-19 lockdown will be another challenge that we will need to contend with but we reiterate that the Group is well placed to respond to these challenges. Along with our strong balance sheet, we are confident that we have sufficient liquidity to see through the challenges that the pandemic currently presents.

"I am very proud of the response of all of our Associates and thank them for all the support and flexibility that they have shown. Our resilient business model will help us navigate the current environment whilst our enhanced franchised portfolio stands us in good stead to benefit from the eventual upturn."

Enquiries:

 
 Cambria Automobiles                 Tel: 01707 280 851 
  Mark Lavery, Chief Executive 
  James Mullins, Finance Director 
  www.cambriaautomobilesplc.com 
 N+1 Singer - Nomad & Joint Broker   Tel: 020 7496 3000 
  Mark Taylor 
 Zeus Capital - Joint Broker         Tel: 020 7533 7727 
  Dominic King 
 FTI Consulting                      Tel: 020 3727 1000 
  Alex Beagley / James Styles / 
  Sam Macpherson 
 

About Cambria - www.cambriaautomobilesplc.com

Cambria Automobiles ("Cambria") was established in 2006 and has built a balanced portfolio of high luxury, premium and volume car dealerships, comprising over 40 franchises representing major brands across the UK. The Group's businesses are autonomous and trade under local brand names, including County Motor Works, Dees, Doves, Grange, Invicta, Motorparks and Pure Triumph.

The Group's strategy is to complement its existing franchise and brand portfolio by acquiring earnings enhancing operations, using its strong balance sheet and disciplined approach to capital allocation.

Cambria's medium-term ambition is to create a GBP1 billion turnover business producing attractive returns on capital.

CHIEF EXECUTIVE'S REVIEW

Introduction

I am pleased to report an improved set of results for the period, delivering underlying profit before tax of GBP6.3m, up 14.5% on the prior year. The results in the first half of our 2019/20 financial year have shown sustained improvement in our used car and aftersales businesses and a stabilisation in new car profitability, notwithstanding the reduction in new car volumes.

Financial highlights:

 
                                       Six months     Six months   Change 
                                            ended          ended 
                                      29 February    28 February 
                                             2020           2019 
 Revenue                                GBP303.1m      GBP308.3m    -1.7% 
 Underlying EBITDA* **                   GBP10.1m        GBP7.7m   +31.2% 
 Underlying operating 
  profit* **                              GBP7.2m        GBP6.1m   +18.0% 
 Underlying profit before 
  tax* **                                 GBP6.3m        GBP5.5m   +14.5% 
 Underlying net profit 
  margin*                                   2.07%          1.79%   +28bps 
 Underlying earnings per 
  share*                                    5.11p          4.51p   +13.3% 
 
 Non-recurring (expense)/income*        (GBP0.1m)        GBP0.2m 
 EBITDA **                                GBP9.9m        GBP7.9m   +25.3% 
 Operating profit                         GBP7.0m        GBP6.4m    +9.4% 
 Profit before tax                        GBP6.1m        GBP5.8m    +5.2% 
 Net profit margin                          2.01%          1.87%   +14bps 
 Earnings per share                         4.99p          4.72p    +5.7% 
 
 

*Underlying numbers in H1 2020 exclude non-recurring expenses of GBP0.1m relating to acquisition costs and net income of GBP0.2m in 2019 relating to the profit on sale of Royal Wootton Bassett less closure cost of Blackburn.

**The adoption of IFRS 16 has an impact on the PBT, Operating Profit and EBITDA calculation as a result of the operating lease expense for rent payable being unwound and replaced with depreciation and finance expense. See Note 3.

Underlying profit before tax was up 14.5% to GBP6.3m (H1 2019: GBP5.5m) with the Group's net profit margin at 2.07%. The positive impact on the profit before tax resulting from the adoption of IFRS 16 in the period was GBP0.14m.

Underlying operating profit increased 18.0% to GBP7.2m (H1 2019: GBP6.1m), which resulted in an operating margin of 2.38% (H1 2019: 1.98%). The IFRS 16 adoption impact on operating profit was a positive GBP0.3m in the period.

Underlying earnings per share were 5.11p (H1 2019: 4.51p).

Gross profit increased by 2.5% to GBP36.7m (H1 2019: GBP35.9m) with the new car division up GBP0.1m; used cars up GBP0.5m and aftersales up GBP0.3m. The overall gross profit margin across the Group showed an increase over the previous period to 12.1% (H1 2019: 11.6%) as a result of the change in revenue mix following reduced unit sales.

The Board considers the expenses associated with business closures, acquisition fees and refranchising activity of GBP0.1m and net profit from sales of freehold properties in H1 2019 giving net income of GBP0.2m to be non-recurring.

Net finance expenses for the period increased to GBP0.96m (H1 2019: GBP0.62m); the direct impact year on year of the IFRS 16 impact was GBP0.16m of the GBP0.34m overall increase. The remainder of the increase related partly due to the increased level of borrowing against the enhanced property assets and partly as a result of the increased consignment stock costs. The tax charge for the period of GBP1.1m represents an effective tax rate of 18.56% (H1 2019: 18.19%).

Balance sheet

Cambria has a strong balance sheet with net assets of GBP68.5m (H1 2019: GBP60.6m), underpinned by GBP79.5m of freehold property. At the balance sheet date, mortgages amounting to GBP26.1m were drawn.

The Group had a net debt position as at 29 February 2020 of GBP6.0m (H1 2019 net debt: GBP3.2m), reflecting gross debt of GBP26.1m (H1 2019: GBP26.1m) and the cash position of GBP20.1m (H1 2019: GBP22.9m).

Cash flow

During the period the Group generated an operating cash inflow of GBP3.0m (H1 2019: GBP10.9m). This includes a GBP5.4m outward movement in working capital in the period, GBP3.2m of which was a result of the VAT debtor arising from a movement in new vehicle stock and the freehold purchase in Edinburgh within the final quarter.

Cambria has continued to deliver on its property developments and strategic portfolio enhancement over the past three years. During the period the level of investment in development projects was significantly lower and therefore the total CAPEX in the period was GBP2.98m compared with GBP10.5m in the prior year. The major CAPEX items include the Edinburgh Aston Martin freehold purchase for GBP1.58m, development of existing freeholds of GBP0.6m, fixtures and fittings of GBP0.4m (including the Edinburgh acquisitions) and computer equipment of GBP0.2m.

Since the period end, the Group has completed on the purchase of land in Solihull for the development of its Aston Martin Birmingham dealership, although given the current pandemic the timing associated with commencement of the development is under review.

Given the Group's strong cash position during the period it repaid GBP4.0m of the RCF reducing the level of drawn facility from GBP30m to GBP26m. Post period end and as a precautionary, protective measure when entering the lock-down period, the Group took the decision to fully draw the GBP40m RCF facility to protect the cash balance in the Group.

A dividend of GBP0.85m, relating to the 2019 financial year, was paid in January 2020 following approval at the Annual General Meeting.

The total net cash outflow for the period was GBP6.2m (H1 2019: inflow GBP7.4m).

Dividend

As signalled on 24 March 2020, the Board is taking the prudent decision to suspend dividend payments until there is more clarity around the impact of the Coronavirus pandemic.

Acquisitions, refranchising and openings

Cambria's ongoing strategy is to build on the favourable mix of its brand portfolio and maintain a good balance of high luxury, premium and volume brands. It has made good progress over the past five years in delivering on this strategy by acquiring businesses, refranchising and opening dealerships as follows:

   --    Alfa Romeo and Jeep in Preston in March 2020 
   --    Aston Martin and Rolls-Royce in Edinburgh in January 2020 
   --    Vauxhall in Warrington in May 2019 
   --    Citroen in Oldham in May 2019 
   --    Suzuki in Maidstone in April 2019 
   --    Peugeot in Warrington in October 2018 
   --    Lamborghini in Tunbridge Wells in November 2018 
   --    Lamborghini in Chelmsford in April 2018 
   --    McLaren in Hatfield in January 2018 
   --    Bentley in Essex and Kent in January 2018 
   --    Woodford Jaguar Land Rover in July 2016 
   --    Aston Martin Birmingham in May 2016 
   --    Welwyn Garden City Land Rover in January 2016 
   --    Swindon Land Rover in April 2015 
   --    Barnet Jaguar Land Rover in July 2014 

Operational review

 
                             Six months ended 29 February           Six months ended 28 February 
                                         2020                                   2019 
                         Revenue   Revenue     Gross   Margin   Revenue   Revenue     Gross   Margin 
                                       mix    profit                          mix    profit 
                            GBPm         %      GBPm        %      GBPm         %      GBPm        % 
 
 New Vehicles              121.2      40.0       9.7      8.0     133.5      43.3       9.6      7.2 
 Used Vehicles             151.4      50.0      12.5      8.3     143.1      46.4      12.0      8.4 
 Aftersales                 37.9      12.5      14.5     38.3      37.5      12.2      14.2     38.0 
 Internal sales            (7.4)     (2.5)                        (5.8)     (1.9) 
                        --------  --------  --------  -------  --------  --------  --------  ------- 
 Total                     303.1     100.0      36.7     12.1     308.3     100.0      35.8     11.6 
 
 Admin Expenses                               (29.5)                                 (29.7) 
 
 Underlying Operating 
  Profit                                         7.2                                    6.1 
 

New vehicles sales

 
               H1 2020   H1 2019   Year-on-year 
 New units       3,087     3,432        (10.1%) 
             ---------  --------  ------------- 
 

New vehicle revenue decreased by 9.2% to GBP121.2m (H1 2019: GBP133.5m) with total new vehicle sales volumes being down 10.1%. The new vehicle gross profit margin was 8% (H1 2019: 7.2%) and there was a GBP0.1m increase in gross profit despite the volume reduction. The average profit per unit sold increased by 11.6% with improved mix of sales arising from the High Luxury Segment dealerships.

The Group's sale of new vehicles to private individuals was 9.2% lower year-on-year at 2,828 units. New commercial vehicle sales decreased by 27.7% to 141 units reflecting the decision not to enter into any low margin Commercial Vehicle fleet deals. New fleet unit vehicle sales decreased by 3.3% to 118 units.

Prior to the impact of the COVID-19 lockdown the Group was already experiencing reduced volumes and specific reductions in the performance of manufacturers with heavy diesel content in the range of models as well as a challenging and uncertain consumer outlook. Additionally the motor manufacturers remain under significant pressure with the investment demands put upon them in their attempts to meet the challenging European Union emissions targets to avoid the penal fines that they will incur for non-compliance with the targets.

Used vehicle sales

 
               H1 2020   H1 2019   Year-on-year 
 Used units      6,407     6,235           2.8% 
              --------  --------  ------------- 
 

The Group delivered another good performance in used vehicle sales. Revenues increased by 5.8% to GBP151.4m (H1 2019: GBP143.1m) whilst the number of units sold increased by 2.8%. The gross profit on used vehicles increased by 4.2% to GBP12.5m (H1 2019: GBP12.0m), with the profit per unit sold increasing by 1.8%.

We have continued our focused strategy in the used car department of increasing the efficiency with which we source, prepare and market our used vehicles in order to drive the Group's Velocity trading principles. This approach has produced pleasing results, increasing the profitability of the used car department from an already strong base.

Aftersales

 
                 H1 2020     H1 2019   Year-on-year 
 Aftersales 
  Revenue       GBP37.9m    GBP37.5m           1.1% 
              ----------  ----------  ------------- 
 

Aftersales revenue increased by 1.1% year on year to GBP37.9m (H1 2019: GBP37.5m), and the related gross profit increased to GBP14.5m (H1 2019: GBP14.2m). The aftersales department contributed 39.5% of the Group's overall gross profit.

Guest experience

The Group continues to review its processes for ensuring that it engages with all Guests to maximise the interaction opportunities through the Guest Relationship Management programme. Prior to the COVID-19 lockdown the Guest engagement process was already evolving as a reaction to the demands of customers and the level of interaction digitally and physically. The Group envisages that the impact of the COVID-19 pandemic will have a significant and long-lasting impact on the way that the business interacts with its Guests as appropriate social distancing and hygiene measures are adopted.

Outlook

As outlined above, the closure of the Group's car showrooms on 23 March 2020 will have a material impact on the Group's financial performance in the current financial year to 31 August 2020. The Board is currently working through a number of return to work scenarios that can be initiated at the appropriate time, maintaining the Government guidance on social distancing. The health and wellbeing of our Associates and Guests is integral to the scenario planning process and the relevant measures will be put in place to ensure the safest possible Guest experience as and when we are advised to reopen our car showrooms. The Board will continue to monitor the constantly evolving situation and will update shareholders as and when appropriate.

Mark Lavery

Chief Executive

6 May 2020

Consolidated Statement of Comprehensive Income

for the six months ended 29 February 2020

 
                                                    6 months to   6 months to     12 months to 
                                      Notes         29 February   28 February   31 August 2019 
                                                           2020          2019 
                                                         GBP000        GBP000           GBP000 
 
 
Revenue                                                 303,055       308,258          657,777 
 
Cost of Sales                                         (266,396)     (272,404)        (582,723) 
 
Gross Profit                                             36,659        35,854           75,054 
 
Administrative expenses: 
 before exceptional items                              (29,466)      (29,720)         (61,188) 
Administrative expenses: 
 exceptional items                        4               (149)           248 
 
Results from operating activities                         7,044         6,382           13,866 
 
Finance income                                               47            34               64 
Finance expenses                                          (961)         (651)          (1,435) 
 
Net finance expenses                                      (914)         (617)          (1,371) 
----------------------------------  -------  ------------------  ------------  --------------- 
Profit before tax from operations 
 before non- 
recurring (expense)/income                                6,279         5,517           12,276 
 
Non-recurring (expense)/income            4               (149)           248              219 
 
Profit before tax                                         6,130         5,765           12,495 
 
Taxation                                  7             (1,138)       (1,049)          (2,542) 
 
Profit and total comprehensive 
 income for the period                                    4,992         4,716            9,953 
 
Basic earnings per share                  5               4.99p         4.72p            9.95p 
Diluted earnings per share                5               4.98p         4.72p            9.93p 
 

Consolidated Statement of Changes in Equity

for the six months ended 29 February 2020

 
                                    Share     Share   Retained    Total 
                                  Capital   premium   earnings   Equity 
                                  GBP000s   GBP000s    GBP000s  GBP000s 
 
For the 6 months ended 29 
 February 2020 
Balance at 31 August 2019          10,000       799     54,781   65,580 
Change in accounting policy     8                      (1,218)  (1,218) 
 
As restated as at 1 September 
 2019                              10,000       799     53,563   64,362 
Profit for the period                   -         -      4,992    4,992 
Dividend paid                           -         -      (850)    (850) 
 
Balance at 29 February 2020        10,000       799     57,705   68,504 
 
 
For the 12 months ended 
 31 August 2019 
Balance at 31 August 2018          10,000       799     45,828   56,627 
Profit for the period                   -         -      9,953    9,953 
Dividend paid                           -         -    (1,000)  (1,000) 
 
Balance at 31 August 2019          10,000       799     54,781   65,580 
 
For the 6 months ended 28 
 February 2019 
Balance at 31 August 2018          10,000       799     45,828   56,627 
Profit for the period                   -         -      4,716    4,716 
Dividend paid                           -         -      (750)    (750) 
 
Balance at 28 February 2019        10,000       799     49,794   60,593 
 
 

Consolidated Statement of Financial Position

as at 29 February 2020

 
                                       As at         As at            As at 
                                 29 February   28 February   31 August 2019 
                                        2020          2019 
                                      GBP000        GBP000           GBP000 
 
Non-current assets 
Property, Plant & equipment           86,401        75,894           85,336 
Intangible assets                     21,456        21,487           21,478 
Right of use assets                    7,282             -                - 
 
                                     115,139        97,381          106,814 
 
Current assets 
Inventories                          116,527       120,602          112,804 
Trade and other receivables           15,458        16,791           12,051 
Cash & Cash equivalents               20,062        22,895           26,299 
Property assets classified as 
 held for resale                         899           890              899 
 
                                     152,946       161,178          152,053 
 
Total assets                         268,085       258,559          258,867 
 
Current liabilities 
Trade and other payables           (161,867)     (169,669)        (160,129) 
Lease liabilities                    (2,479)             -                - 
Taxation                             (1,472)       (1,042)          (1,297) 
Provisions                              (48)             -            (459) 
 
                                   (165,866)     (170,711)        (161,885) 
 
Non-current liabilities 
Other Interest Bearing loans 
 and borrowings                     (26,105)      (26,070)         (30,088) 
Provisions                                         (1,000)            (877) 
Deferred tax liability                 (192)         (185)            (437) 
Lease liabilities                    (7,418)             -                - 
 
                                    (33,715)      (27,255)         (31,402) 
 
Total liabilities                  (199,581)     (197,966)        (193,287) 
 
Net assets                            68,504        60,593           65,580 
 
Equity attributable to equity 
 holders of the parent 
Share capital                         10,000        10,000           10,000 
Share premium                            799           799              799 
Retained earnings                     57,705        49,794           54,781 
 
                                      68,504        60,593           65,580 
 
 

Consolidated Cash flow statement

for the six months ended 29 February 2020

 
                                        6 months to   6 months to     12 months to 
                                        29 February   28 February   31 August 2019 
                                               2020          2019 
                                             GBP000        GBP000           GBP000 
Cash flows from operating activities 
Profit for the period                         4,992         4,716            9,953 
Adjustments for: 
Depreciation, amortisation and 
 impairment                                   2,864         1,521            3,437 
Finance income                                 (47)          (34)             (64) 
Finance expense                                 961           651            1,435 
Non-recurring (Profit)/loss 
 on sale of property, plant and 
 equipment                                        -         (414)            (414) 
Taxation                                      1,138         1,049            2,542 
Non-recurring expenses                          149           166            (219) 
 
                                             10,057         7,655           16,670 
 
Decrease/(Increase) in trade 
 and other receivables                      (3,341)       (5,349)            (609) 
(Increase) / decrease in inventories        (3,723)      (30,927)         (23,129) 
Increase in trade and other 
 payables                                     1,706        40,875           31,607 
 
                                              4,699        12,254           24,539 
Interest paid                                 (658)         (437)            (841) 
Taxation paid                                 (927)         (728)          (1,714) 
Non-recurring income/(expenses)               (149)         (166)              219 
 
Net cash flow from operating 
 activities                                   2,965        10,923           22,203 
 
Cash flows from investing activities 
Interest received                                47            34               64 
Proceeds from sale of property, 
 plant and equipment                              1         2,874            2,917 
Acquisition/purchase of property, 
 plant and equipment                        (2,980)      (10,506)         (21,907) 
 
Net cash flow from investing 
 activities                                 (2,932)       (7,598)         (18,926) 
 
Cash flows from financing activities 
Proceeds for new loan                       (3,983)         5,017            9,000 
Interest paid                                 (303)         (214)            (495) 
Lease payments                              (1,134)             -                - 
Dividend paid                                 (850)         (750)          (1,000) 
 
Net cash (outflow)/inflow from 
 financing activities                       (6,270)         4,053            7,505 
 
Net increase/(decrease) in cash 
 and cash equivalents                       (6,237)         7,378           10,782 
Cash and cash equivalents at 
 start of period                             26,299        15,517           15,517 
 
Cash and cash equivalents at 
 end of period                               20,062        22,895           26,299 
 
 

Notes

   1             General information 

Cambria Automobiles plc is a company which is listed on the Alternative Investment Market (AIM) and is incorporated and domiciled in the United Kingdom. The address of the registered office is Swindon Motor Park, Dorcan Way, Swindon, SN3 3RA. The registered number of the company is 05754547.

These interim financial statements as at and for the six months ended 29 February 2020 comprise the Company and its subsidiaries (together referred to as the "Group") and have been prepared in accordance with Adopted International Financial Reporting Standards as Adopted by the EU ("Adopted IFRS").

The financial statements for the period ended 29 February 2020 have neither been audited nor reviewed by the auditors. The financial information for the year ended 31 August 2019 has been based on information in the audited financial statements for that period.

   2             Accounting policies 

The Group's principal activity is the sale and servicing of motor vehicles and the provision of ancillary services.

With the exception of accounting for leases, the accounting policies adopted in these interim financial report are consistent with the Groups financial report for the year ended 31 August 2019 which can be found on the website:

www.cambriaautomobilesplc.com .

The Group has applied the requirements of IFRS 16 "Leases" in these interim financial statements for the first time having transitioned using the modified retrospective approach. Under IFRS 16 the Group previously classified leases as operating or finance leases based on an assessment of whether the lease transferred significantly all the risks and rewards of ownership of the underlying asset. From 1 September 2019, subject any permitted exemptions, the Group has recognised a Right of Use asset and associated lease liability in the Statement of Financial Position. The Group takes exemption from this treatment where lease terms are less than 12 months at inception of the lease and such leases are charged to the Income statement over the period of the lease. Right of use assets are depreciated over the remaining life of the lease and are tested for impairment.

   3             Operating Segments 

Segmental reporting

The Group complies with IFRS 8 'Operating Segments' which determines and presents operating segments based on information presented to the Groups Chief Operating Decision Maker ("CODM"), the Chief Executive Officer. The Group is operated and managed on a Dealership by Dealership basis. The CODM receives information both on a dealership basis and by revenue stream (New, Used, Aftersales). Given the number of dealerships, it was deemed most appropriate to present the information by revenue stream for the purposes of segmental analysis.

 
                             Six months ended 29 February           Six months ended 28 February 
                                         2020                                   2019 
                         Revenue   Revenue     Gross   Margin   Revenue   Revenue     Gross   Margin 
                                       mix    profit                          mix    profit 
                            GBPm         %      GBPm        %      GBPm         %      GBPm        % 
 
 New Vehicles              121.2      40.0       9.7      8.0     133.5      43.3       9.6      7.2 
 Used Vehicles             151.4      50.0      12.5      8.3     143.1      46.4      12.0      8.4 
 Aftersales                 37.9      12.5      14.5     38.3      37.5      12.2      14.2     38.0 
 Internal sales            (7.4)     (2.5)                        (5.8)     (1.9) 
                        --------  --------  --------  -------  --------  --------  --------  ------- 
 Total                     303.1     100.0      36.7     12.1     308.3     100.0      35.8     11.6 
 
 Admin Expenses                               (29.5)                                 (29.7) 
 
 Underlying Operating 
  Profit                                         7.2                                    6.1 
 

The CODM reviews the performance of the business in terms of both net profit before tax and EBITDA, as such the following table shows a reconciliation of EBITDA to the Profit before tax.

The EBITDA in the period varies significantly with the prior year comparative as a result of the transition to IFRS 16 lease accounting (positive impact on Profit Before Tax of GBP0.14m) which resulted in the exclusion of operating lease expenses (GBP1.56m) and replacement with depreciation on the right of use assets (GBP1.26m) and finance expenses in relation to the lease liability (GBP0.16m) for those leased assets. Excluding the impact of IFRS 16 the Underlying EBITDA for the period would have been GBP8.5m (H1 2019: GBP7.7m).

 
                                       6 months to    6 months to 
                                       29 February    28 February 
                                              2020           2019 
                                            GBP000         GBP000 
 Profit Before Tax                           6,130          5,765 
 Net finance expense                           757            617 
 Finance expense IFRS 16                       157              - 
 Depreciation                                1,601          1,521 
 Depreciation - Right of use asset           1,263              - 
 
 EBITDA                                      9,908          7,903 
 Non-recurring Expenses/(Income)               149          (248) 
 
 Underlying EBITDA                          10,057          7,655 
 
 
   4             Non-recurring Income / (Expense) 
 
                                               6 months   6 months to 
                                         to 29 February    28 February 
                                                   2020       2019 
                                                 GBP000      GBP000 
 Site closures and refranchising 
  cost                                             (12)          (166) 
 Profit on sale of Freehold 
  property                                            -            414 
 Acquisitions                                     (137) 
 Net non-recurring income 
  / (expense)                                     (149)            248 
 
 
   5             Earnings per share 

Basic earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to equity shareholders by the number of ordinary shares in issue in the period. There is one class of ordinary share with 100,000,000 shares in issue.

 
                                       6 months to   6 months to       Year ended 
                                       29 February   28 February   31 August 2019 
                                              2020          2019 
                                           GBP'000       GBP'000          GBP'000 
 
Profit attributable to shareholders          4,992         4,716            9,953 
Non-recurring income and expenses              149         (248)            (219) 
Tax on adjustments (at 18.56 
 %) (2019: 18.19%)                            (27)            45               41 
 
Adjusted profit attributable 
 to equity shareholders                      5,114         4,513            9,775 
 
Adjusted number of share in 
 issue ('000s)                             100,000       100,000          100,000 
 
Basic earnings per share                     4.99p         4.72p            9.95p 
 
Adjusted earnings per share                  5.11p         4.51p            9.78p 
 

Diluted Earnings Per Share

In the previous financial year the performance conditions relating to certain share options were satisfied and therefore 740,000 of the remaining 4,500,000 are considered dilutive at the period-end.

 
                                       6 months to   6 months to       Year ended 
                                       29 February   28 February   31 August 2019 
                                              2020          2019 
                                           GBP'000       GBP'000          GBP'000 
 
Profit attributable to shareholders          4,992         4,716            9,953 
Number of shares in issue (000's)          100,000       100,000          100,000 
Effect of dilutive share options 
 (000's)                                       178             -              189 
 
Adjusted number of shares in 
 issue ('000s)                             100,178       100,000          100,189 
 
 
Diluted earnings per share                   4.98p         4.72p            9.93p 
 
   6             Acquisitions 

Effect of Acquisitions in the period ended 29 February 2020

On 21 January 2020, the Group announced the acquisition of the trade and assets of the Aston Martin and Rolls-Royce Motor Cars dealerships in Edinburgh for a total cash consideration of GBP1.57m. Transactions fees, payroll arrears and rationalization costs of GBP137,000 have been expensed through operating expenses in the period.

 
                                                 Recognised 
                                                     values 
                                             on acquisition 
                                                     GBP000 
Acquiree's Net Assets at the acquisition 
 date 
 
 
Plant and equipment                                      70 
Freehold Property                                     1,589 
 
 
                                                      1,659 
Goodwill on acquisition                                   - 
 
 
   7             Taxation 

The tax charge for the six months ended 29 February 2020 has been provided at the effective rate of 18.56% (H1 2019: 18.19%).

   8             IFRS 16 Leases 

In the period to 29 February 2020, the Group has applied the requirements of IFRS 16 "Leases" for the first time. The Group has transitioned to IFRS 16 using the modified retrospective approach whereby comparatives amounts have not been restated. The adjustments arising from the change of accounting policy have therefore been recognised in the opening position as at 1 September 2019.

On transition, the Group has recognised lease liabilities in relation to property leases which were previously accounted for as operating leases and these liabilities are measured at the present value of the estimated future lease payments discounted as the Groups incremental borrowing rate which was applied to all such leases in the portfolio. An associated Right of Use asset was measured on the retrospective basis assuming that the asset had been calculated at the commencement of each individual lease and depreciated over the period to 31 August 2019.

This change in accounting policy resulted in the following adjustments on transition (as at 1 September 2019):-

   Right of Use asset                                  Increase                  GBP5,655,000 
   Current assets                                         Increase                  GBP66,000 
   Lease liability                                          Increase                  GBP8,475,000 
   Onerous lease provision                         Decrease                 GBP1,288,000 
   Deferred Tax Liability                             Decrease                 GBP249,000 
   Retained earnings                                  Decrease                 GBP1,218,000 

In applying IFRS 16 for the first time the following practical expedients, included in the standard have been applied:-

a) The use of a single estimated incremental borrowing rate applied to all leases in a portfolio;

   b)            Previous assessment of the onerous nature of leases; 

c) The use of hindsight when establishing the period of the lease in respect of options to change the lease term;

d) The exclusion of leases with a remaining term of less than 12 months at the date of transition.

As the comparative amounts have not been restated, the table below illustrates the impact on the interim financial statements of the change in accounting policy

 
 
                                   Previous                Effect      29/02/2020 
                                     GBP000                GBP000          GBP000 
 Revenue                            303,055                     -         303,055 
 Cost of sales                    (266,396)                     -       (266,396) 
                             --------------  --------------------  -------------- 
 Gross profit                        36,659                     -          36,659 
 Operating expenses                (29,764)                   298        (29,466) 
                             --------------  --------------------  -------------- 
 Operating profit                     6,895                   298           7,193 
 Net finance 
  expense                             (757)                 (157)           (914) 
 Underlying 
  Profit before 
  tax                                 6,138                   141           6,279 
                             --------------  --------------------  -------------- 
 Exceptional 
  items                               (149)                     -           (149) 
                             --------------  --------------------  -------------- 
 Profit before 
  tax                                 5,989                   141           6,130 
 Taxation                           (1,102)                  (36)         (1,138) 
 Profit after 
  tax                                 4,887                   105           4,992 
                             --------------  --------------------  -------------- 
 
 
                                   Previous                Effect      29/02/2020 
                                     GBP000                GBP000          GBP000 
 Non current 
  assets                            107,857                 7,282         115,139 
 Current assets                     152,945                     1         152,946 
 Total assets                       260,802                 7,283         268,085 
                             --------------  --------------------  -------------- 
 
 Current liabilities              (163,798)               (2,068)       (165,866) 
 Deferred Tax                         (405)                   213           (192) 
 Non-current liabilities           (26,982)               (6,541)        (33,523) 
                                  (191,185)               (8,609)       (199,581) 
                             --------------  --------------------  -------------- 
 
 Net assets                          69,617                -1,113          68,504 
                             --------------  --------------------  -------------- 
 
 
 

The change of accounting policy has not affected the overall cash flows of the Group.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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