Profit and cash generation ahead of expectations: dividend increased

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Annual report & financial statements for the year ended 28 February 2019

Robert Forrester interview on latest results

Interview with Robert commenting on the results

Analyst interview with Mike Allen.
Analyst interview with Mike Allen, Head of Research, Zeus Capital.

Financial highlights

  • Profit before tax of £25.3m (2018: £30.4m)
  • Adjusted profit before tax of £23.7m ahead of market expectations (2018: £28.6m)
  • Full year dividend of 1.6p per share, up 6.7% (2018: 1.5p per share)
  • VAT income of £3.1m, in addition to Adjusted PBT, received following HMRC clarification of finance deposit allowance treatment
  • Excellent cash conversion: Free Cash Flow of £21.2m delivered in the year (2018: £10.7m)

Strategy

  • Strong management and financial position enables growth of franchised businesses with major Manufacturer partners to deliver growth in value
  • Leads the sector in on-line capability for omni-channel retailing. On-line retailing capability developed in used cars, parts and vans
  • Delivery of market beating used car sales growth through use of technology in stock management and vehicle pricing together with cost-effective digital and TV marketing
  • Growing high margin service revenues through expanded capacity, high penetration of retention products such as service plans and delivery of outstanding customer experiences
  • Strong portfolio management including divestment of sub-scale and underperforming outlets/properties generating cash and reducing cost structures
  • Continuing value enhancing acquisitions

Operational

  • £186m (6.7%) growth in revenues to £3bn, with like-for-like revenue growth of 5.1%
  • Excellent aftersales performance with like-for-like revenue growth of 7.0% delivering a 6.4% growth in gross profit
  • Like-for-like used vehicle revenue growth of 11.6% delivering £2.5m additional gross profit
  • New retail volumes stable and ahead of the market trends

Capital Structure

  • Adjusted Net Cash of £22.9m (2018: £32.1m)
  • Strong balance sheet to fund future growth: tangible net assets per share of 44.9p reflective of extensive freehold property base
  • Major capital expenditure programme now largely complete aiding future Free Cash Flow generation
  • Used car stocking funding utilised of £23.2m (cover of 4.6 times used car stock value) (2018: £12.8m). Substantially lower than industry peer group reflecting resilient balance sheet
  • £3.6m of shares bought back in FY19 together with £5.7m of dividend payments
  • Share Buyback Programme recommenced on this announcement with £3m allocated

Outlook

  • Group has traded in line with managementís expectations in March and April 2019 with trading profit expected to be in line with prior year period

Results Past and Present

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