full Annual Report 2016

Transcription

Keeping the
marketplace moving
BCA Marketplace plc
(formerly Haversham Holdings plc)
Annual Report and Accounts 2016
Introduction
BCA Marketplace provides
customer-centric solutions along
the automotive value chain, fuelling
the largest used-vehicle remarketing
exchange in the UK and Europe.
Contents
Strategic report
01
02
04
09
16
19
20
24
26
Business highlights
Executive Chairman’s statement
Our business
Our marketplace
Our business model
Our strategy
Our performance
Risk management
Corporate responsibility
P01
Governance
30
32
33
35
37
38
48
51
52
P30
Board of Directors
Executive Chairman’s governance statement
Governance report
Audit & Risk Committee report
Nomination Committee report
Directors’ remuneration report
Directors’ report
Statement of Directors’ responsibilities
Independent auditor’s report
Financials
54 Consolidated income statement
55 Consolidated statement of
comprehensive income
56 Consolidated statement of
changes in equity
57 Consolidated balance sheet
58 Consolidated cash flow statement
59 Notes to the consolidated financial statements
94 Company balance sheet
95 Company statement of changes in equity
96 Company cash flow statement
97 Notes to the Company financial statements
100 Shareholder information
P54
Business highlights
Vehicles sold at auction –
International Vehicle Remarketing
783,000
333,000
Governance
Vehicles sold at auction
– UK Vehicle Remarketing
Strategic report
A strong first year
(excl SMA)
We Buy Any Car vehicles sold
BCA Partner Finance
live customers
172,000
Equity raised
£1.0bn
Revenue
£1.2bn
Full year dividend
6.0p
01
BCA Marketplace plc Annual Report and Accounts 2016
Financials
1,002
Executive Chairman’s statement
Together for growth
“I am pleased to announce a strong first set of full
year results for the Group. BCA Marketplace plc was
formed to build a cohesive, broad-based services
business in the automotive sector.”
7.9%
Volume growth in the UK
(excl SMA)
6.4%
Volume growth in Europe
Avril Palmer-Baunack
Executive Chairman
02
15.4%
Volume growth in
We Buy Any Car
In June 2015, we increased the scale of our
UK operation through the acquisition of SMA
Vehicle Remarketing (‘SMA’) and, following
the successful conclusion of the CMA inquiry,
added a further four auction centres to our
existing 19 centres. These new centres are
currently being integrated into the UK Vehicle
Remarketing business and together with
development opportunities on a number of
the existing sites will provide us with additional
capacity to accommodate the increasing
number of vehicles expected to flow into our
business over the coming years.
We Buy Any Car continues to show strong
growth, with volumes increasing by 15.4% in
the year driving a varied product base into the
auction operations. Whilst We Buy Any Car is
the market leading brand in its area, this still
represents a small proportion of the overall
number of used car transactions and there are
considerable opportunities ahead as this
method of vehicle disposal increases market
share.
In August, the Group acquired a substantial
UK logistics business, now renamed as BCA
Automotive. This brought into the Group a
new revenue stream from the delivery of new
cars into the UK retail market, enhancing our
relationships with the automotive OEMs,
whilst also addressing some cost and
operational pressure in the BCA logistics
business, driven by a lack of capacity in the car
transporter market. We are in the process of
In addition, the acquisition of Ambrosetti in
February 2016, a company specialising in
vehicle preparation, refurbishment and defleet,
brings another new business area into the
Group to complement the existing suite of
automotive services. We have created a
structure to combine these into a new Services
division for 2016/17, which will continue to
enhance our strategic aim of becoming the
full service provider of choice for the
automotive industry.
Trading for the year, since the acquisition of
the BCA Group, has been strong with good
performances in all of our operations and we
are pleased to have achieved all the strategic
goals for the year which we set out as part of
the acquisition. Our aim is to deliver strong
earnings growth coupled with a high dividend
pay-out ratio and, following an interim
dividend of 2.0p per share, we propose today,
subject to shareholder approval at our AGM,
a 4.0p final dividend to be paid on
30 September 2016. Since the year end, the
business continues to trade well and in line
with Board expectations.
Much has been achieved in the last year in
forming the BCA Marketplace family and I
would like to thank all of our employees for
their continued dedication and loyalty to the
businesses that have come together to form
this Group. I look forward to working together
with our team through our Together for
Growth programme to continue to deliver
the strong business growth which I anticipate
continuing in all our markets.
Financials
We achieved year on year volume growth of
7.9% in the UK (excluding SMA) and 6.4% in
Europe, where we saw development in all of
our territories which contributed to the
Group’s success. Our strategy in continental
Europe, where penetration rates remain well
below those in more established markets such
as the UK and USA, is to continue to raise the
awareness of both physical and digital auction
as a remarketing solution and to provide a
more consistent offering across our businesses.
We have been successful in winning a five year
contract with one of the top three leasing
businesses in the UK to provide a fully
outsourced remarketing and logistics services
operation and a three year contract with an
OEM for a package of services including new
car preparation, logistics, used car defleet and
remarketing. Our BCA Dealer Pro tool has had
immense success within the dealer and OEM
customer base in the UK and Europe and is
establishing itself as the valuation tool of
choice in the marketplace. Our BCA Partner
Finance business in the UK is demonstrating
strong growth and will, we expect, be a key
profit generator in the future.
integrating BCA Automotive with our logistics
operations into and out of auction centres,
including We Buy Any Car volumes and single
vehicle movements, and expect to see
operational benefits in future years.
Executive Chairman
27 June 2016
See how we fit into our
marketplace P09-13
03
Governance
Our physical auction site infrastructure,
market-leading IT systems, valuation tools and
data are at the heart of our business, providing
an efficient exchange for the automotive
market, complemented by our logistical ability
to store, remarket and transport large volumes
of vehicles effectively. Combined with the
physical and digital transactional liquidity
offered to vendors and buyers, it places the
Group at the centre of the automotive value
chain.
The Board is committed to enhancing our
service offering by developing remarketing
solutions for the major vehicle fleets, dealers,
car manufacturers and finance companies.
Since the BCA Group acquisition we have
cemented relationships with our major
customers and gained volume from new and
existing vendors, including long-term full
outsource defleet and remarketing contracts,
and we have attracted new buyers to the
auctions. We continue to broaden our service
offering, enabling the Group to offer full
remarketing and outsource solutions to our
customers.
Strategic report
I am pleased to announce a strong first set
of full year results for the Group. BCA
Marketplace plc was formed to build a
cohesive, broad-based services business in the
automotive sector. The acquired BCA Group,
the UK and Europe’s leading vehicle
remarketing business, provides the strong
platform at the core of our business. It is the
market leader in the UK and all of the key
markets in which it operates and also owns
We Buy Any Car, the UK’s largest vehicle
buying service.
Our business
At a glance
BCA Marketplace plc (formerly Haversham Holdings plc) was formed with the
objective of creating value through an acquisition-led growth strategy with
investment in businesses in the automotive, support services, leasing, engineering
or manufacturing sectors in both the UK and Europe. This was initiated with the
acquisition of the BCA Group of companies and the simultaneous listing of the
Company on the Official List of the London Stock Exchange in April 2015.
We operate through three divisions
UK Vehicle
Remarketing
International Vehicle
Remarketing
The Group’s UK Vehicle Remarketing division trades under the BCA
brand at 19 auction centres in 17 locations together with a further four
auction centres in the acquired SMA business. BCA sells vehicles at our
Exchanges on behalf of a broad portfolio of vendors including
manufacturers (OEMs), leasing companies, dealers and vehicle buying
companies. Buyers include car supermarkets, franchised and
independent dealers, professional vehicle traders and consumers.
The Group’s International Vehicle Remarketing division operates
primarily across nine countries throughout Europe at 28 auction centres
with operations in Denmark, France, Germany, Italy, the Netherlands,
Portugal, Spain, Switzerland and Sweden.
Distinct from the UK market, European customers have a higher
propensity to trade at online auctions both in a single country and
between operating markets and to buy vehicles to export to countries
including Austria, Belgium, Poland, Romania and Serbia.
Exchanges comprise physical and digital auctions and outsourced
remarketing services. These are complemented by a portfolio of
pre- and post-sale value-added services including our buyer funding
service, BCA Partner Finance.
Map key:
Auction locations
Other sites
04
Strategic report
We own and operate the UK and Europe’s largest used-vehicle marketplace
both in terms of the number of vehicles sold and revenue in the exchanges,
as well as the UK’s market leading provider of vehicle buying services,
We Buy Any Car. Together, this allows the Group to provide an efficient
and effective mechanism to facilitate the change in ownership of used
vehicles that matches the complex requirements of both vendors and
buyers of used vehicles who utilise the Exchange.
See how our business model operates P16-17
Governance
Vehicle Buying
In the UK, the Group’s Vehicle Buying division operates from over
200 locations as We Buy Any Car and in Europe as CarTrade2B.
We Buy Any Car is the UK’s leading car buying service, now
established as the third disposal channel for consumers. Used
vehicles purchased directly from the public by We Buy Any Car
are disposed of exclusively through the BCA Exchange.
CarTrade2B was successfully trialled in Germany and similar projects
have now been initiated in the Netherlands, Spain and Sweden.
These businesses focus upon buying batches of vehicles direct from
corporate entities and remarketing them through the International
Vehicle Remarketing division.
Financials
23
UK auction centres
28
200+
European auction centres
We Buy Any Car locations
05
22
Other sites
Our business
History
BCA Marketplace plc has acquired companies
with a heritage of growth and innovation
Milestone
1979
Milestone
Scottish Motor
Auctions Group
(SMA) started
trading
1st Used Car
Market Report
Innovation
1991
2000
New
operation
Walon (now
part of BCA
Automotive)
started trading
Ambrosetti UK
started trading
Acquisition
1997
Smart Prepared
BCA Live Online
New
operations
1987
Motor Auction
Group
New
operation
New
New
operation operation
1989
2001
Acquisition
New
operation
New
New
operation operation
1994
1999
2007
2005
1988
GB Auctions
Innovation
1992
Milestone
1946
IMS for
manufacturers
First auction as
Southern Counties
Car Auctions
New
operation
Innovation
1990
BCA Vision
Milestone
2006
We Buy Any Car
started trading
06
Milestone
Innovation
2010
2013
Bugatti Veyron
sells for
£625,000
BCA Video Appraisals
Strategic report
Acquisitions
NKL
We Buy Any Car
Fleet Select (NL)
900,000
vehicle transactions
Milestone
2014
Haversham
Holdings formed
Innovation
Innovation
BCA Bid Now
BCA Buy Now
2011
Auction Grading
New
operation
Acquisition
New
operation
2016
Ambrosetti UK
Governance
Innovation
2012
BCA Dealer Pro
BCA Assured
Milestone
2015
BCA Group acquired by
Haversham Holdings
Float on LSE as BCA
Marketplace plc
2008
800,000
Acquisitions
SMA Vehicle
Remarketing (SMA)
BCA Automotive
Acquisition
Acquisition
UFD
2009
JTK
07
1,100,000
Financials
New
operation
Our business
Size and scale
11m
unique visitors to webuyanycar.com
£174,000
463,491 vehicles
appraised using BCA Dealer Pro
highest value car sold
at auction in the period
3,000+
auctions in a year
9m
11.8m
searches on BCA Search
visits to BCA platforms in Europe
1,039 vehicles
100
sold at largest sales day
in Europe, Barneveld (NL),
on 29 December 2015
vehicles sold per hour per hall
08
Our marketplace
Strategic report
The vehicle marketplace
The automotive value chain is supplied
and serviced by a diverse range of businesses
OEMs: OEMs manufacture new vehicles
and distribute them principally through a
network of franchised dealers for onward
sale to the retail or corporate customer.
Third party companies provide automotive
logistics and technical services from factory
or port of entry into the distribution network.
OEMs typically use exchanges to dispose
of demonstration fleets, buy-backs from
rental companies and management vehicles.
The vehicles sold through exchanges by the
OEM tend to be amongst the youngest sold
and are usually less than two years old.
Corporates: Corporates include rental,
contract hire, leasing and finance companies.
Corporates purchase vehicles from OEMs,
sometimes via new vehicle dealers, for the
onward lease or sale to another business
or to an owner/driver. Corporates typically
dispose of end-of-lease or repossessed vehicles
through exchanges. Leasing companies,
when acting as a vendor, seek to liquidate
end-of-lease vehicles as quickly as possible
through an exchange. Corporates recover
vehicles from end users and drivers using
inspection and collection services and in
some cases will instruct technical services
companies to carry out smart repairs prior to
sale. Corporate vendors typically sell vehicles
that are between three and five years old,
although rental fleets will be younger.
Dealers (used vehicles): Dealers (used
vehicles) include both franchised and
non-franchised (independent) dealers.
An independent dealer is less likely to be
part of a dealer group and the majority
sell multi-marque vehicles. In size they
vary from a large car supermarket to
wholesale traders. They source their
inventory from an exchange, consumer
part-exchanges, other dealers or traders.
Vehicle buying: Vehicle buying companies
purchase vehicles directly from consumers and
then dispose of them principally via exchanges.
In the UK they have become the third disposal
route for consumers to traditional partexchange or consumer to consumer sales.
Vehicle buying companies provide consumers
with the opportunity to liquidate their asset for
cash transparently and efficiently. The initial
valuation is provided online and the final price
agreed at a physical location where the vehicle
is checked for age, mileage and condition.
CORPORATE
(New Vehicles)
FLEET
USERS
VEHICLE
BUYING
OEM
EXCHANGE
DEALERS
(Used Vehicles)
DEALERS
(New Vehicles)
CONSUMERS
CONSUMERS
(New Vehicles)
(Used Vehicles)
09
SALVAGE
(End of Life)
Financials
Dealers (new vehicles): Dealers (new
vehicles) are franchised dealers who receive
vehicles from OEMs for retail to consumers
or corporate/fleet customers. Dealers (new
vehicles) are often part of a multi-franchise
dealer group. Consumers buy a vehicle
from a dealer as a direct purchase or via a
financing arrangement such as a Personal
Contract Purchase (‘PCP’), often trading
in their old vehicle in part-exchange.
The part-exchange vehicle might be retained
for retail, moved to a franchised dealership
within their dealer group with the same
marque or disposed of via an exchange.
Governance
Exchanges: Exchanges facilitate used vehicle
transactions and the efficient transfer of
ownership between wholesale customers
by offering the aggregation of supply and
demand, transparency, speed, certainty and
liquidity. For vendors, exchanges provide
a fast route to liquidate unwanted assets
through the consolidation of demand and
for buyers, they provide on-market pricing
and the maximum choice of vehicles.
Our marketplace
How we fit
into the marketplace
CORPORATE
(New Vehicles)
FLEET
Xxxxxxxx
USERS
OEM
DEALERS
(New Vehicles)
CONSUMERS
(New Vehicles)
10
•BCA Marketplace hosts exchanges across 49
physical locations and online and provides
outsourced remarketing services.
•Fully integrated pre-sale (exchange) services
optimise the presentation of vehicles
including appraisal of vehicle condition, BCA
Assured and vehicle preparation (valet and
smart repairs) that are marketed on BCA
Auction View (search engine).
•BCA Partner Finance is a stock funding
service for authorised buyers of vehicles at
the BCA Exchange that funds the hammer
price, fees and delivery of vehicles purchased
at auction for up to 120 days.
•BCA Dealer Pro is an application used by
dealers to facilitate the part-exchange
process and the disposal of unwanted
vehicles to the Exchange.
•We Buy Any Car, through its website
webuyanycar.com, is the UK’s best
known consumer vehicle buying service,
operating from over 200 locations. In
Europe, vehicle buying is managed under
the CarTrade2B brand.
•BCA Logistics provides inspection services to
manufacturers, leasing and captive finance
companies and also moves over 1.0m single
vehicles per annum, including collections
and deliveries to and from the Exchange.
•BCA Automotive runs the UK’s largest
transporter fleet, carrying manufacturers’
vehicles from port of entry to retail
dealerships and from dealerships to the
Exchange. In total, including factory to port
this is over 1.5m vehicle moves per annum.
•BCA Technical Services provide new, in-life
and used-vehicle technical services.
Strategic report
Across all markets in which we operate,
we are the market leader for vehicle
remarketing. Our portfolio of valueadded services supports customers, both
large and small, throughout the
automotive value chain.
Governance
DEALERS
(Used Vehicles)
SALVAGE
(End of Life)
Financials
CONSUMERS
(Used Vehicles)
11
Our marketplace
Portfolio of products
and services
The breadth of the Group’s portfolio
of products and services
Types of auction: physical,
hybrid or digital
Services to enhance
the Exchange
•Auction network of centres in the
UK and Europe
•BCA Live Online
•BCA Bid Now
•BCA Buy Now
•BCA X-Bid
•Appraisal – Branch Appraisal App
•Video Appraisal for LCV
•Imaging – beauty and damage shots
•Valeting
•BCA Assured – 30 point mechanical
inspection
•Technical Services – Smart Repair
•Logistics – Collection and Delivery
•Logistics – Storage
•BCA Search – aggregating stock, vehicle data
and imagery
•Marketing – promotion of sales and stock to
buyers
Services to provide liquidity
to the Exchange
Outsourced Remarketing
Services
•BCA Partner Finance
•Chrono45
•BCA Online
•Docusafe
•BCA IMS
Other services to the
automotive sector along the
value chain
Inventory to Exchange
•We Buy Any Car
•CarTrade2B
Logistics
•Single plate moves
•Multi-vehicle moves – transporters
•Inspections
Retail Services
Technical Services
•Smart Repair
•Mechanical Workshop
•Paint Shop
•BCA Dealer Pro
•BCA MarketPrice
•Imagery
12
Our marketplace
Strategic report
UK and Europe’s largest
used-vehicle marketplace
The Group is at the heart of the market as it operates the UK
and Europe’s largest used-vehicle marketplace through its
vehicle remarketing and vehicle buying businesses.
of vendor supply. The transparency of the We Buy Any Car offering to
the consumer assists the whole industry to become more efficient.
Private to private transactions which previously didn’t generate revenue
or income in the industry are being brought back into the value chain
and historically financially inefficient part-exchanges (often when
consumers shift brand) can now find an alternative outlet via selling to
We Buy Any Car. Investment in the We Buy Any Car brand has secured
vehicle buying as the third disposal channel.
The divisions facilitated the sale of over 1.1m vehicles in the last year
operating in two distinct markets; the UK trades right-hand drive
vehicles and Europe left-hand drive vehicles. The International Vehicle
Remarketing division facilitates the sale and export of vehicles across
country borders as well as in the local markets. The markets are also
distinguished by their sales channels and market penetration; the UK
vendors and buyers typically trade at physical auction centres, although
all physical auctions can be accessed electronically through BCA Live
Online, whereas the European customers have a higher propensity to
trade at online auctions. In the UK, exchanges are the primary disposal
channel for corporates and dealers, whilst the European market has a
bigger opportunity to increase penetration.
Governance
Vehicle Remarketing
The Vehicle Remarketing divisions facilitate the exchange of used
vehicles through both physical and online auctions. Trading under the
BCA brand, the two divisions operated from 19 auction centres in the
UK and 28 auction centres in nine countries throughout Europe during
the period.
Within Europe, a new car buying initiative, CarTrade2B, was successfully
trialled in Germany and we have now initiated similar projects in the
Netherlands, Spain and Sweden. These businesses are focused on
buying batches of vehicles direct from corporate entities, rather than
direct from the public, and remarketing them through the International
Vehicle Remarketing division.
Expanding our footprint
Acquiring the BCA Group was the first step in our journey and,
following on from the SMA acquisition, we have continued to expand
our footprint in the wider marketplace with the following acquisitions.
In August 2015, the Group completed the acquisition of a UK
automotive logistics business, now rebranded BCA Automotive. The
acquired business operates the largest UK transporter fleet which has
undergone significant investment over the last two years, with almost
half of the fleet renewed. This complements the existing logistics
business within BCA that supports the auction operation and which
focuses upon single moves and inspections. BCA Automotive has a
large portfolio of long-term relationships with OEMs and leasing
companies in the UK, delivering OEMs volumes in a given geographical
region or from a given location.
As an exchange the Group does not generally take title to the vehicles
that it sells, instead generating revenue through transaction fees from
both buyers and sellers, as well as fees generated through a portfolio of
value-added digital and physical pre- and post-auction services such as
inspections, logistics, appraisals, repair, valet, ancillary auction services
and from the provision of buyer finance through BCA Partner Finance.
The Group increased the operating capacity and footprint of its
Exchange through the acquisition of SMA in June 2015, contributing an
additional four auction centres which have all been rebranded as BCA
post year end.
In February 2016, the Group acquired Ambrosetti, a market leader in
the specialist preparation of new and used vehicles. This has been
rebranded as BCA Technical Services and this acquisition provides the
Group with the capability to operate vehicle defleet, refurbishment,
logistics and storage facilities. Operating from a footprint of over 100
acres and with the capacity to handle around 100,000 vehicles
annually, the business has extensive technical and administrative
expertise in reconditioning, conversion, pre-delivery inspections,
servicing, storage and onward logistics movements providing excellent
customer service to an impressive portfolio of customers including
vehicle manufacturers and importers, major fleets and dealer groups.
Vehicle Buying
Vehicle Buying brings consumers’ vehicles directly into the Exchange.
We Buy Any Car, through its website webuyanycar.com, is the UK’s
leading car buying service, leveraging its proprietary online pricing
quotation systems and rapid physical sale process. We Buy Any Car
purchases used vehicles direct from the public, which it then disposes
of exclusively through the BCA Exchange, thereby generating revenue.
The We Buy Any Car business model brings many synergies to the
Group: for example diversity, mix and supply. This controlled sourcing
for BCA supply-side dynamics ensures utilisation of assets in the BCA
Vehicle Remarketing division and de-risks the Group from the variability
Both of these acquisitions expand our service offering to customers
and increase our presence in the automotive marketplace.
13
Financials
Outsourced remarketing services are provided in the UK to a number of
manufacturers. The BCA Online proposition includes the digital
marketing and telesales of vehicles from the manufacturer to their
network of dealers.
Case study
We Buy Any Car
We Buy Any Car was established in 2006 as an alternative
disposal route for consumers. Many early users of the service
were disposing of a no longer needed second vehicle and We
Buy Any Car was a convenient way to liquidate their asset for
cash. The service is now the third disposal channel in the UK.
The service starts with a visit to the We Buy Any Car website.
After the vehicle registration, email address and a few vehicle
details have been entered, an instantaneous valuation is given.
Customers then book an appointment at a local pod where
the vehicle will be appraised and the sale concluded.
Customers praise the speed, efficiency, professionalism
and value of the service.
“Your buyer was honest, professional and considerate.
I was delighted with the seamless procedure, once we
had agreed the valuation. The money was in my bank
by the time I returned home! Thanks to all for
eliminating the stress of selling a car.”
Trust Pilot review
14
Strategic report
Governance
Case study
BCA Assured
Vendors using BCA Assured have reported improved price
performance. Buyer confidence is improved significantly for
online bidders, who have another layer of information
alongside the catalogue information, digital images or video,
vehicle grading and BCA’s own condition appraisal.
BCA Assured inspections in period
387,557
15
Financials
The BCA Assured service launched in 2012 and is
designed to give peace of mind to buyers by providing a
30 point independent mechanical check report. The check
includes an onsite drive to test brakes, warning lights, tyre
depths, engine noise, gearbox, vehicle suspension and fluid
levels. The independent inspectors, from one of the UK’s
leading motoring organisations, are based at BCA’s UK auction
centres and reports are uploaded instantaneously into the BCA
database and onto the BCA Search platform for customers to
view online. Buyers have up to 48 hours or 500 miles to inform
BCA if the vehicle they purchased does not
match the report it was sold with.
Our business model
Adding value
in all areas
The Exchange is at the hub of the Group’s business model,
managing the transaction of used vehicles between vendors and buyers.
This is complemented by a broad range of value-added services that fuel
the Exchange. Scale, liquidity, value, efficiency and transparency are
hallmarks of the operation.
BCA sells used vehicles of all ages and types, principally cars and
LCVs, both online and at physical auctions with most vehicles being
auctioned simultaneously online and at one of the Group’s physical
auction centres. BCA earns fees from the vendor and buyer of
the vehicles.
The Group provides a broad portfolio of services both upstream of
the Exchange with automotive logistics and technical services and
also pre-and post-sale at the Exchange. These value-added services
provide additional income streams and support the onward flow of
vehicles to the Exchange.
Supply is generated from a wide range of customers who use
auction as their primary disposal channel and who appreciate the
transparency, efficiency and liquidity provided by the Exchange.
Another key source of supply is from the Group’s Vehicle Buying
division.
The Group’s systems capture vehicle data and information including
details of the Exchange transaction and at other key stages of the
automotive value chain. Analytics tools and models generate insight
that is used to optimise the performance of the Vehicle Remarketing
and Vehicle Buying divisions as well as providing insight services
to customers.
DATA
VENDOR
CORPORATE
VAL
B U Y ER
UA
TIO
OEM
NS
D ATA
BC
LIQ
UI
DI
TY
A PA
R T N ER
FI N A
N CE
DATA
DEMAND
CAR SUPERMARKET
INDEPENDENT DEALER
FRANCHISE DEALER
TRADER
EF
FIC
IEN
CY
DEALER
PHYSIC
A
AUCTIO L
N
DE
F
T EC L EE T A N D
H SE
RV ICES
Y
AN
UY M
O
EB
W AR.C
C
DIGITA
L
AUCTIO
N
SCAL
E&
CAR BUYING
TR
AN
SP
A
DATA
L
ITA
DIG ICES
RV
SE
SUPPLY
C
HI
E
AG
ER
V
CO
Y
NC
RE
GE
OG
RA
P
Demand is generated by a large, diverse buyer base that ranges from
large car supermarkets to vehicle traders who recognise the value,
scale, choice and footprint of the Exchange network.
S
IC
IST S
LOG VICE
SER
V
UE
AL
16
&
Strategic report
How we deliver value
For shareholders, the
Group provides an excellent
opportunity to deliver strong
shareholder returns based
upon a proven strategy,
strong management team
and sustainable competitive
advantages.
•Physical footprint optimising returns
to vendors
•Promotion of vehicles including
BCA Search; online aggregation
of all inventories
•Comprehensive vehicle descriptions
including age, mileage, specification,
condition, guide pricing and images
•Full portfolio of auction services for best
presentation of vehicles including BCA
Dealer Pro, collections, appraisal, valeting
and BCA Assured
•Bidding/buying power achieved through
buyer base diversity
For buyers, the Group fulfils
buyers’ sourcing needs via
the largest aggregation
of stock, providing choice,
convenience and value.
•Wide choice of stock across marques,
models, ages, conditions and provenance
•Market leading aggregator showing all
stock with comprehensive vehicle
information including guide pricing giving
confidence buying online
•Excellent vehicle presentation
•Full calendar of sales throughout the year
•Stock funding service for managing cash
flow and additional source of lending
•Delivery of vehicles
•Assistance with marketing vehicles
e.g. imagery
Our business model is unique in its breadth of
services across the automotive value chain. This provides a compelling
customer service offering and also creates efficiencies through synergies
across all the divisions.
•The scale and capacity of the geographic footprint, which in the UK
has sites positioned along the spine of the country and close to
motorways and in Europe the ability to operate as a single market
•The aggregation of inventory with a balanced portfolio across
sectors and vendors, including the mix and diversity of supply
from We Buy Any Car
•The tenure and strength of customer relationships on both
the supply and demand side
•The experience and professionalism of the operations team
•Financial services to provide additional liquidity to the Exchange
•The ability to offer fulfilment of services along the automotive
value chain
•Efficiencies created through operational synergies
•Digital innovation in the provision of standard tools and services
across the business
•The vehicle transaction database
17
Financials
What sets us apart
Governance
•Strong earnings potential
•Cash generative business model
•Opportunities for organic and
acquisitive growth
•Investment in the Group’s long-term
sustainable growth plans
•Progressive dividend policy
•Targeted pay-out ratio of 75% of earnings
in the medium term
For vendors, the Group
optimises price performance
and sale conversion rates of
their used vehicles through a
route that maximises financial
return, speed and convenience.
Case study
BCA Partner Finance
BCA Partner Finance provides an additional source of
funding to authorised buyers for the purchase of vehicles at
BCA auctions. For a single set up fee and a flat rate of interest,
buyers can fund 100% of the hammer price and also the fees
and delivery costs, for up to 120 days or when the vehicle
is sold, whichever is the sooner.
BCA Partner Finance allows dealers to get on with the
profitable business of sourcing and retailing used vehicles.
Dealers value the simplicity of the service and can use the
facility to fund any auction purchase. Some dealers are now
purchasing over 25% more vehicles, whilst others have used
the facility to purchase higher value vehicles. BCA Partner
Finance customers have used the financial freedom it delivers
to expand their retail sites, uplift their stock profile or invest in
IT development.
BCA Partner Finance live customers
1,002
18
Our strategy
Strategic report
Creating value
The Group’s strategy is to create value through acquisition-led growth
in the automotive sectors in the UK and Europe. Our aim is to drive growth along
the automotive value chain, focusing on the core business: increasing volumes,
creating value-added services and driving efficiency.
This has been executed in the first year of trading with
a primary focus on the UK.
Governance
Short term
UK Vehicle
Remarketing
International Vehicle
Remarketing
Vehicle Buying
Services
•Continue to win volume
through strong customer
relationships
•Secure volume for long term
and grow to full scale
•Grow BCA Partner Finance
•Seek efficiencies
•Expand outsourced remarketing
solutions
•Grow volume through
increasing market awareness
•Standardise processes and tools
and employ best practice
•Build one market
•Expand service offering
•Continue to grow volume by
promoting the third disposal
channel
•Reinforce the We Buy Any Car
brand
•Provide vehicle mix and volume
to the Exchange
•Seed new sites and sale days
in Europe
•Consolidate to achieve single,
efficient operating model
•Grow through winning new
business, expand customer
relationships in Vehicle
Remarketing
•Expand proposition of
value-added services
Financials
Medium term
In the medium term, we will continue to develop our operations and service offering in both
the UK and Europe to reach full scale. This will build upon the strengths of our fulfilment
capabilities, physical real estate, vehicle buying and customer relationships.
Long term
We will continue to develop our strategy along the automotive value chain in the longer term
through both organic growth and tactical acquisitions with a focus upon the exploitation of
data and other innovations.
19
Our performance
Delivering expected growth
The acquisition of the BCA Group was the first major step in the delivery
of the Group’s strategy to acquire and manage companies in the
automotive sector, with a view to delivering value from operational
efficiencies across the value chain. The combination of organic volume
growth, increasing penetration of new and existing services, and
improved efficiency, together with the subsequent acquisitions of SMA,
BCA Automotive and Ambrosetti, have delivered the strong financial
results that the Board envisaged at the point of the BCA Group
acquisition.
Volume growth of 7.9% reflects additional volumes from both existing
and new customers across all vendor types, including the award of a
new OEM contract. We have continued to grow market share during
this period.
The mix of vehicles coming from our vendors, coupled with the diverse
range of vehicles coming to auction through our Vehicle Buying division,
presents an attractive product range to our buyer base. In addition, the
investment made in vehicle appraisal, imagery and the BCA Assured
service is increasing the confidence buyers have in purchasing at BCA.
The number of active buyers participating in each auction, both in the
hall and via BCA’s Live Online platform, continues to increase, driving
better price performance and higher conversion rates.
In order to present its financial position in the most meaningful way,
BCA Marketplace plc changed its year end from 31 December to
31 March and will therefore prepare its accounts to a Sunday within
seven days of 31 March. Whilst we are reporting on a 15 month period,
it represents 12 months of trading since the BCA Group acquisition. This
has resulted in Group statutory revenue of £1,153.1m (8 months ended
31 December 2014: £nil) in the period and adjusted EBITDA1 of £98.5m
which is broken down by division as follows:
Revenue
£m
UK Vehicle Remarketing
Vehicle Buying – We Buy Any Car
Vehicle Buying – International
Other
Central costs
Total
BCA’s commitment to continually improving vendor and buyer
experiences, optimising stock availability and online sales channels, have
all contributed to the increased volume sold. The increased penetration
of online sales and value-added services, such as BCA Assured and BCA
Partner Finance, has delivered average revenue per vehicle growth of
5.2%, resulting in strong overall revenue growth of 13.6%.
Adjusted
EBITDA1
£m
267.2
109.5
688.6
9.8
78.0
–
69.4
18.9
16.9
(0.8)
3.2
(9.1)
1,153.1
98.5
BCA Partner Finance is strategically important for the UK Vehicle
Remarketing division as it adds liquidity and generates additional buyer
demand in the marketplace. The number of vehicles financed has shown
significant growth over this period and penetration has now increased
to 7.0% of all BCA vehicles sold in March 2016, resulting in a loan book
of £64.7m (up from 3.6% and £28.1m respectively as at the point of
acquisition on 2 April 2015). There is significant scope for further growth
as the product is made available to a wider buyer base in a structured
rollout.
Adjusted EBITDA margin in the UK increased as a result of improved
operational leverage and a focus on operating costs in the auction
business, which was partly offset by cost pressures in the logistics
business. This translated to period on period adjusted EBITDA growth
of 23.5%.
In order to provide a context for the Group results, the following
divisional analysis includes prior period comparatives which have been
prepared on a proforma basis and relate to the equivalent prior
12 month period for the acquired BCA Group. Other acquired
businesses are dealt with separately in ‘Other’ below.
Our UK logistics business was impacted during the period by a lack of
available bought-in capacity to sustain customer service levels given the
increase in vehicle movements. The acquisition of the BCA Automotive
business and the logistics capability of SMA has stabilised this business
and has given the Group the opportunity to redesign the logistics
network to optimise the efficiency of vehicle movements.
The UK Vehicle Remarketing division delivered a strong performance,
driven by growth in the volumes of vehicles traded through its auction
operations. As supply has increased, buyer demand has been strong and
conversion rates have also remained higher than the comparable period,
resulting in improved operational efficiency.
Highlights Vehicles sold (‘000)
Revenue per vehicle (£)
Revenue (£m)
Adjusted EBITDA1 (£m)
Adjusted EBITDA per vehicle (£)
Adjusted EBITDA margin (%)
Year ended Year ended
3 April 2016 4 April 20152
783
341
267.2
69.4
89
26.0
726
324
235.2
56.2
77
23.9
In order to provide capacity for the targeted growth in auction volumes
and to enhance the strategic footprint to support buyer demand, the
investment in, and development of, new and existing auction centres is
progressing. Increased capacity at our key auction centres in Manchester
Belle Vue, Bedford and Blackbushe, as well as the on-going
development of our new brownfield auction centre at Birmingham Perry
Barr, are all expected to become operational in 2016/17.
Change
+7.9%
+5.2%
+13.6%
+23.5%
+15.6%
The International Vehicle Remarketing division has performed well in the
period recording 333,000 sold vehicles, a growth of 6.4% compared to
the prior year. Throughout the division, we are committed and focused
on initiatives that raise brand and auction awareness, enabling us to
continue to build stronger relationships with both vendors and buyers.
1 Adjusted EBITDA is considered by management to be the most appropriate
indicator for assessing operational performance of the business and represents the
continuing earnings before interest, tax, depreciation and amortisation, acquisition
costs and other significant or non-recurring costs
Despite the adverse impact of exchange rate movements in the period
(€1.35:£1 in the current period compared to €1.26:£1 in the prior
period), the division delivered a 5.0% increase in adjusted EBITDA. At
constant currency the division has delivered EBITDA growth of 12.8%
over the period and revenue and EBITDA per unit would have been
£353 and £61 respectively, representing increases of 7.3% and 5.2%
compared to the prior year.
2 Prior period comparatives relate to the acquired BCA Group and have been
prepared on a proforma basis for the equivalent prior year period to provide a
context for the Group results. The figures are unaudited
20
Strategic report
Highlights
Vehicles sold (‘000)
Revenue (£m)
3 April 2016 4 April 20152
333
329
109.5
18.9
57
17.3
313
329
103.1
18.0
58
17.5
Change
Highlights - International
+6.4%
–
+6.2%
+5.0%
-1.7%
Revenue (£m)
Vehicle Buying
The Vehicle Buying division incorporates We Buy Any Car in the UK and
CarTrade2B, our new vehicle buying initiative in Europe. We Buy Any
Car’s focus remains on growing the third disposal channel in the UK,
providing a significant supply of vehicles to the UK Vehicle Remarketing
division. Shortly after the BCA Group acquisition, management took the
strategic decision to cease operating the loss-making We Buy Any Car
model in Europe.
Other
This includes the other acquired businesses, SMA, BCA Automotive
and Ambrosetti, together with non-core activities and Group costs.
From acquisition to
3 April 2016
Change
Highlights +15.4%
+3.1%
+19.1%
+28.0%
+10.1%
Revenue
£m
Adjusted
EBITDA1
£m
SMA
BCA Automotive
Ambrosetti
Other
Group costs
28.5
44.3
4.3
0.9
–
2.3
2.1
(0.6)
(0.6)
(9.1)
Other
78.0
(5.9)
21
Financials
Subsequent to the period end the Group disposed of its interest in its
Brazilian joint venture.
149
3,882
578.4
13.2
89
2.3
Governance
Included in the International adjusted EBITDA is a loss of £0.8m relating
to the now closed European We Buy Any Car operation. A new car
buying initiative, CarTrade2B, was successfully trialled in Germany and we
have now initiated similar projects in the Netherlands, Spain and Sweden.
These businesses are focused on buying batches of vehicles direct from
corporate entities and remarketing them through the International
Vehicle Remarketing division. Management will continue to deploy a
similar operating model tactically in certain specific international markets
where they bring benefits to auction awareness, volume and efficiency.
As the division grows we will deploy technology and products already
used in the UK Vehicle Remarketing business on a market-by-market
basis as we strive towards standardised offerings across the division,
thereby improving efficiency.
172
4,003
688.6
16.9
98
2.5
+50.0%
+25.6%
–
We Buy Any Car has seen growth in both volume and revenue per unit
as the business model is accepted by more consumers who see the
benefit of this means of disposal and have higher value vehicles for We
Buy Any Car to acquire. Operating from a portfolio of over 200 branches
nationwide, We Buy Any Car is in close proximity to consumers,
providing both convenience and brand awareness when they are
considering the disposal of their vehicle. The combined benefit of
increased volume and gross profit over a deployed fixed cost base has
driven an EBITDA improvement from £13.2m to £16.9m.
As the supply of vehicles increases, we continue to develop initiatives to
support buyer demand including Chrono45 (an extended payment
terms and transport package) and CarTrade2B, a vehicle buying service.
Throughout Europe, most transactions are completed partially or entirely
digitally and we have added smaller flexible local sites closer to our
customers to support the storage, inspection and delivery of
electronically transacted units.
Revenue (£m)
2
7.8
(0.8)
We Buy Any Car has delivered strong volume growth and, through
sustained and targeted advertising, provides a controlled supply of
vehicles into the UK Vehicle Remarketing division. The integration of We
Buy Any Car with the UK Vehicle Remarketing division means that, on
average, it takes 10 days from paying the consumer for their vehicle to
selling the vehicle at auction.
A focus on our diverse vendor base has resulted in a pleasing level of
growth in auction volumes across all markets in Europe, with the
majority of volume growth in the current period derived from the dealer
segment. This reflects the initial results of initiatives to raise awareness of
auction, as both a source of vehicles and a disposal route for surplus
stock, through activities such as customer workshops (dealer days). The
continued rollout of software solutions, such as BCA Dealer Pro and
BCA MarketPrice (a part-exchange valuation tool), continue to help our
vendors improve their stock turn and profitability whilst driving
continued growth in volumes.
Highlights - UK
3
9.8
(0.8)
Change
Established as a brand in 2006 and having invented the third disposal
channel, We Buy Any Car continues to grow in the UK, providing the
consumer with an alternative to private sale or part-exchange. The
benefits of selling in an easy, safe and quick environment, together with
having funds available to purchase a replacement car, continues to gain
traction with the UK motorist. We have continued to invest in our brand
through a refreshed advertising campaign in early 2016 which focuses
on reinforcing these benefits.
Since the acquisition of the BCA Group, the Group has appointed a
Chief Operating Officer to lead the entire International Vehicle
Remarketing division to improve operational alignment, sharing best
practice and building a common technology platform across our
European operations.
3 April 2016 4 April 20152
3 April 2016 4 April 20152
Our performance continued
Other continued
SMA was operated under a ‘hold separate’ order for the majority of
the period since its acquisition in June 2015 whilst the Competition and
Markets Authority (‘CMA’) inquiry was undertaken. The agreed remedy
with the CMA was for the Group to dispose of the SMA Newcastle
auction centre which was successfully achieved in January 2016. The
four remaining SMA auction centres have been incorporated into the
UK Vehicle Remarketing division from the beginning of the new financial
year. Management is pleased with the performance of the SMA
business during the period of uncertainty and believes the full
integration into the UK Vehicle Remarketing division will bring benefits
to both vendors and buyers.
Significant or non-recurring costs of £65.2m consist of acquisition costs
of £27.4m relating to the four completed acquisitions and other aborted
acquisitions, amortisation of the associated acquired intangible assets of
£34.4m and other significant or non-recurring costs of £3.4m. Details of
the acquisition accounting are included in note 5.
Other significant or non-recurring costs of £3.4m relate to the
reorganisation of the Group to form clearer divisional structures,
including flattening the leadership structure and closure costs of
loss-making businesses, and the integration of all of the acquired
businesses.
Cash flow and net debt
During the period, the Group completed a capital reduction which
facilitates the payment of dividends and also completed a successful
syndication of the Group’s financing facilities. As at the period end, the
Group facilities comprise a term loan of £275m which, together with a
£100m revolving facility funded at competitive interest rates, provides
additional headroom for future projects.
BCA Automotive was acquired in August 2015 and has, in the seven
months since its acquisition, completed more than 600,000 vehicle
deliveries throughout the UK and 250,000 fixed route deliveries from
production facilities to their export point. On an annualised basis this
equates to approximately 1.5m vehicle movements and represents a
significant share of vehicle movements in the UK.
During the period the Group generated strong cash flows from
operations of £89.9m and ended the period with net debt of £170.7m.
The Group definition of net debt excludes the debts relating to BCA
Partner Finance and finance leases, as these are funded under separate
asset-backed lending agreements.
BCA Automotive has also assumed responsibility for the operation of
the fleet of SMA transporters and now operates a fleet of over 540
transporters. In addition, an increasing number of vehicle movements
are being carried out on behalf of the UK Vehicle Remarketing and
Vehicle Buying divisions. The divisions are working closely together to
integrate the transport network deliveries with the branch requirements
and single-vehicle moves, which will lead to greater efficiency in the
overall logistics operations.
As at the balance sheet date, the Group has additional asset-backed
facilities in relation to BCA Partner Finance totalling £60m of which
£40.2m was drawn at the period end and finance leases
totalling £26.9m.
Ambrosetti, a company specialising in vehicle preparation, refurbishment
and defleet services, was acquired in February 2016 and will be
integrated into the Group’s operations during 2016/17.
The Group continues to operate comfortably within its
banking covenant.
With the acquisition of the automotive, logistics and technical
services businesses into the Group during the period, management
have completed another step in the execution of the strategy to
become a broad-based automotive services company.
Earnings per share and dividends
Adjusted basic and diluted earnings per share were 7.1p and 7.0p
respectively. Earnings per share has been adjusted by using adjusted
earnings and calculating the weighted average number of shares in issue
for the period from the date of the Placing and acquisition of the BCA
Group as shown in note 11. Statutory basic and diluted earnings were
1.2p per share.
Financial performance
The divisional operating reviews are focused on adjusted EBITDA as this
is the measure used by management to monitor business performance.
The following table reconciles adjusted EBITDA to statutory
operating profit.
The Board intends to adopt a progressive dividend policy for the Group
to reflect its strong earnings potential and cash flow characteristics,
while allowing it to retain sufficient capital to fund on-going operating
requirements and to invest in the Group’s long-term growth plans.
The Board is targeting a pay-out ratio of 75% of earnings as dividends
in the medium term. In addition to the 2.0p per share paid in December
2015, we are pleased to propose a dividend of 4.0p per share, subject
to approval at the Annual General Meeting on 8 September 2016,
to be paid on 30 September 2016 to shareholders on the Register on
23 September 2016.
15 month
period ended 8 months ended
3 April 2016 31 December 2014
£m
£m
Vehicle Buying – We Buy Any Car
Vehicle Buying – International
Other
69.4
18.9
16.9
(0.8)
(5.9)
–
–
–
–
(0.3)
Total adjusted EBITDA
Less:
Depreciation and amortisation
Significant or non-recurring costs
98.5
(0.3)
(17.0)
(65.2)
–
–
Operating profit/(loss)
16.3
(0.3)
22
Strategic report
Governance
Case study
BCA Automotive
BCA Automotive is a leading provider of automotive
logistics for major global manufacturers from the import
centres (ports) to their network of franchise dealers in the
UK, employing the UK’s largest fleet of over 540
transporters. BCA Automotive can now provide an
integrated service to these dealerships by collecting their
used vehicles when returning from delivering new vehicles
and moving them to the auction centres, freeing up much
needed retail real estate.
1.5m vehicles
per annum
23
Financials
BCA Automotive moves more than
Risk management
Principal risks and uncertainties
The Board takes overall responsibility for risk management with a particular focus on determining the nature and extent of the risks it is willing to
take to achieve its strategic objectives. The Audit & Risk Committee of the Board takes responsibility for overseeing the effectiveness of the risk
management processes in the business.
The Group faces a range of risks and uncertainties. Set out below are the principal risks and uncertainties that the Directors believe could have the
most significant adverse impact on the Group’s business.
Risk
Description
Economic environment
The Group could be impacted by any material adverse change in the general economic or geopolitical
environment in the UK and the rest of Europe. Activity levels in the automotive industry can be affected by
such factors as the availability of consumer credit, the growth of average wages and the level of
unemployment, amongst others, which in turn could impact over time vehicle churn and the volume of
vehicles passing through the Group’s remarketing Exchanges. Due to the relative size of the UK business as
compared to the rest of Europe, the Group is more exposed to changes in the UK economic environment.
Strategic
The Group’s future operating results are dependent, in part, on its success in implementing its strategic
initiatives. The Group’s strategic initiatives are focused on expanding its Vehicle Remarketing operations and
platforms, its Vehicle Buying division and its buyer finance business together with expanding the Group’s
services businesses. For more detail see Our Strategy on page 19. These initiatives require extensive planning
and management attention and therefore entail execution risk.
The Group’s growth has, in part, been attributable to the acquisition of other businesses, and the Group may
continue to expand its business through acquisitions and other business combinations in the future.
Diversification of the Group through adding new business activities to the traditional core auction activity
brings increased complexity and requires additional management resources and skills in order to execute the
Group’s strategy of developing a more extensive automotive support services business.
Commercial
The Group’s business is dependent on the supply of vehicles to its remarketing platforms. The Group’s key
vendors provide large volumes of vehicles for resale and are typically large businesses having considerable
resources. The loss of a number of these customers or a significant adverse change in the structure of the
marketplace as regards the normal terms of business could have a material negative impact on the Group’s
future performance.
Operational
The Group incurs significant employment costs and competes with other service providers to recruit and retain
employees. An increase in the wages and salaries necessary to attract and retain suitable employees may be
necessary in the future. In addition, future legislative changes could necessitate an increase in payroll costs. The
Group undertakes significant marketing activities, in particular for its Vehicle Buying division, and any material
increase in advertising costs could increase the Group’s marketing expenses. In addition, the Group incurs
significant fuel costs in its logistics operations that may escalate. If the Group is unable to pass on future cost
increases to its customers, its operating profit margin could be impacted.
Competition
There is competition for both the supply of vehicles and for the buyers of those vehicles. In the current
marketplace, particularly in the UK, the Group has developed very high standards for physical auctions and
nationwide vehicle buying, offering a wide portfolio of well-situated sites which provide efficient solutions for
customers and the ability to store and manage significant volumes of vehicles. These high standards need to be
maintained to retain market share. With the increasing use of technology as new remarketing and distribution
channels are created and trialled, the Group needs to ensure that it leads innovation and maintains its
competitive advantage.
24
Strategic report
Risk
Description
Intellectual property and
brand
The Group’s intellectual property rights include proprietary technology relating to online auction systems as
well as trademarks of the Group’s brands, business knowledge and copyrights. The Group has well-established
names and brands in many of the markets in which it operates. Any significant damage to these could have an
adverse impact on the Group’s performance.
Management
The Group’s senior management has extensive experience in the industry in which the Group operates and has
skills that are critical to the operation of the Group’s businesses and the execution of its strategy. A significant
change in the Group’s senior management could weaken the Group’s business and its ability to execute its
strategy.
Financial
The Group reports its results in Sterling but operates in the UK and continental Europe and is therefore
exposed to foreign currency exchange rate fluctuations. The Group’s strategy involves, amongst other things,
growing areas of the business that include providing credit facilities to vehicle buyers and buying and holding
vehicles in different countries as inventory, on a short-term basis, prior to resale through the Group’s
Exchanges. The Group relies on its finance providers to provide adequate debt to enable the Group to execute
its strategies. The Group operates in multiple taxation regimes which increases the complexity and risk of
compliance with certain indirect taxes such as VAT or its equivalent.
Regulation and legislation
The Group’s operations are subject to compliance with extensive laws and regulations, both in the UK and
across continental Europe, including laws relating to vehicle brokerages and auctions, data protection,
competition, consumer protection, health and safety, money laundering, bribery and taxation. Non-compliance
with or a change in these laws and regulations could adversely affect the reputation and performance of the
Group.
Physical damage or loss
Natural events, such as hail storms and flooding or other events such as terrorism, large-scale accidents or theft
may impact the Group’s physical auction facilities or affect vehicles stored on the Group’s property awaiting
sale or other activity. Whilst the Group maintains insurance cover for such risks, claims not covered by insurance
could result in financial loss to the Group.
25
Financials
The Group’s business and financial performance depends on the effective operation of its information and
technology systems. Any issues with the reliability, availability or security of the Group’s systems, online service
offerings and business information could impact the Group’s reputation, the number of buyers or vendors or
necessitate additional costs.
Governance
IT systems and information
security
Recognising our leading position
within the industry and our place
within the wider community
The Group is aware of its role as an employer and a good neighbour
within its community and seeks to be both positive and supportive to
the areas in which it operates. We also recognise our place within the
wider environment and our leading position within the industry and
aim to conduct our business in a safe, secure, legal and fair manner for
all interested parties including customers, suppliers, staff and the wider
community. Maintaining high standards in all these areas is vital to the
continued success and development of the Group.
The Group is committed to treating all its employees and job applicants
fairly and equally. The Group is committed to equality of opportunity in
all its employment practices, policies and procedures. No employee or
potential employee will therefore receive less favourable treatment
because of their age, disability, sex, sexual orientation, gender
reassignment, race, colour, ethnic or national origin, religion or belief,
marriage or civil partnership, pregnancy and maternity or membership
or non-membership of a trade union.
Our approach to corporate responsibility covers the following key areas:
our employees, the environment, health and safety and our community.
The Board has overall responsibility for corporate responsibility, regularly
assessing the needs of the Group’s stakeholders and delegating
day-to-day management of corporate responsibility issues to the
divisional operating boards. The Group’s principles of corporate
responsibility apply to all our employees and set the minimum standard
for their behaviour.
We are committed to ensuring that people with disabilities are
supported and encouraged to apply for employment with the Group
and to achieve progress through the Group. They are treated so that
they have an equal opportunity to be selected, trained and promoted. Every reasonable effort is made to enable disabled persons to be
retained in the employment of the Group by investigating the possibility
of making reasonable adjustments to their roles to suit their needs.
Whilst the Group does not have a specific human rights policy, the
Group’s existing policies and procedures adhere to and promote
internationally proclaimed human rights principles and we are
committed to our obligations to comply with the Modern Slavery
Act 2015.
Our employees
We believe our people are the best in the business. They are friendly,
expert and professional and they understand that providing excellent
service to our customers is how we grow the business. Because they
are so important, we treat our employees properly. We aim to make
working for the Group rewarding in every sense, including a positive
work environment, exciting career options and voluntary benefits.
Environment
While our operating property portfolio is one of our key strengths,
we appreciate that this brings with it a responsibility to the environment
and our neighbours. The Group therefore strives to maintain its
properties, land and boundaries to a condition that does not degrade
the visual amenities of its neighbours or affect or endanger its
surrounding communities. The Group also abides by local planning and
other by-laws prevalent where its businesses operate and responds
quickly to issues or concerns raised by its neighbours pertaining to
its business.
The Group also operates initiatives enabling employees to gain
nationally recognised professional qualifications such as National
Vocational Qualifications and The Institute of Car Fleet Management’s
Introductory Level Certificate. We also operate an Apprentice and
Graduate Training Scheme to develop future talent.
We place considerable value on employee involvement and
commitment. We have a policy of sharing our vision and performance
with employees through a number of channels including team
meetings, written communications, electronic communications,
bespoke staff campaigns, bulletin boards and the Company intranet.
Regular consultation takes place with all levels of employees as
appropriate. An annual conference also takes place where employees
are recognised for achievements, including the best performers, and for
long service.
Female
Male
Total
Directors of BCA Marketplace plc
1
6
7
Senior Managers (being members
of the divisional operating boards,
excluding Directors)
2
17
19
Gender diversity as at 31 March 2016
Other senior staff, department
heads and unit and regional
managers
All employees
43
184
227
1,530
3,944
5,474
The Group is committed to conducting business in ways that are
sensitive to the environmental needs of the communities in which we
operate. Our locations integrate environmental management into their
operational systems and procedures. Monitoring and reporting on
environmental performance, including the emission and discharge of
pollutants into the air and water, is an integral part
of the Group’s operations.
Greenhouse gas reporting
Following Admission to the Official List of the London Stock Exchange,
the Group is required by the Companies Act 2006 (Strategic Report and
Directors’ Report) Regulations 2013 to measure and report its direct
and indirect greenhouse gas (‘GHG’) emissions.
Direct GHG emissions are emissions from sources that are owned or
controlled by the Group. Indirect GHG emissions are emissions that are
a consequence of the activities of the Group but that occur at sources
owned or controlled by other entities.
26
Strategic report
•Scope 1 emissions: Direct emissions controlled by the Group arising
from the combustion of fuel which results from the logistics fleet and
company cars. This is regardless of whether the vehicles are owned or
leased as we are responsible for their emissions.
•Scope 2 emissions: Indirect emissions attributable to the Group due
to its consumption of purchased electricity.
We are committed to providing a safe working environment wherever
we operate and operate a proactive network of health and safety
personnel covering all our locations that share knowledge and
experience with the aim of fostering best practice and ensuring
consistently high standards of safety across the Group. Health & Safety
Managers and committees across our operations are responsible for
monitoring and reporting adherence to the Group’s health and safety
protocols to the HASEC committee which ultimately reports health and
safety matters to the Board.
Our community
The Group is conscious that it operates within the automotive
community. As part of its commitment to this we work with BEN, the
automotive industry charity, by hosting fundraising activities and
encouraging our vendors and buyers to support the organisation. BEN
is a not-for-profit organisation, dedicated to making positive differences
to people’s lives, helping those from the automotive industry and their
families deal with any problems they may be facing. BEN provides a
wide range of free confidential information, advice and support
services, including highly-regarded care centres at various locations
throughout the UK. Furthermore, We Buy Any Car is one of the longest
standing supporters of Brake, the road safety charity, offering support
to the charity across a number of campaigns. In 2015/16, We Buy Any
Car worked with Brake to promote and push vital road safety messages
to primary school children throughout the UK.
The report includes the ‘Scope 1’ (combustion of fuel) and ‘Scope 2’
(purchased electricity and gas) emissions associated with our offices
and vehicles for the 12 months from Admission on 2 April 2015 to
3 April 2016 and is not therefore for the whole financial period. We
have used revenue as our intensity ratio as this is a relevant indicator
of our growth and is aligned with our business strategy.
Absolute carbon emissions (tCO2)
Scope 1
Scope 2
33,047
8,707
41,754
Revenue (£m)
Carbon intensity (tonnes of CO2 per £m revenue)
1,153.1
36.2
Governance
The methodology used to calculate our emissions is based on the GHG
Protocol’s Financial Control approach. Emission factors used are from
UK government (DEFRA) conversion factor guidance current for the
year reported.
The Strategic report (which comprises the Business highlights, the
Executive Chairman’s statement, Our business, Our marketplace, Our
business model, Our strategy, Our performance, Risk management and
Corporate responsibility sections) is approved by the Board of Directors
and signed on its behalf by:
Financials
The above figures reflect the impact of our physical infrastructure and
include the operation of the logistics fleet which increased significantly
following the acquisition of BCA Automotive in August 2015.
Health and safety
The Group’s Vehicle Remarketing divisions operate from over 50
locations across the UK and continental Europe, and sold over 1.1m
vehicles in the current financial period. In addition, the Group operates
in over 200 locations to support the Vehicle Buying division. As large
numbers of vehicles are stored and prepared for sale at these sites and
at the physical auctions, members of the public and the Group’s
employees come into close contact with streams of vehicles moving to
and from the auction hall. Furthermore, the Group’s employed and
contracted drivers collect and deliver vehicles across both the UK and
continental Europe and operate a fleet of over 540 vehicle transporters.
Consequently, the Group’s operations are subject to regulations
requiring adequate precautions to prevent injuries arising from collisions
and impacts with vehicles moving within the Group’s locations and on
public roads.
Executive Chairman
27 June 2016
27
Tim Lampert
Chief Financial Officer
Case study
BCA Dealer Pro
BCA Dealer Pro is an application-based part-exchange
management system used by over 1,000 dealers. It provides
them with a vehicle look-up, appraisal and valuation capability
to provide accurate information to support the sales process. In
a single dealership, an unwanted part-exchange vehicle can be
pushed to the Remarketing division’s auction systems at the
touch of the screen ensuring immediate marketing to the
auction buyer base. In a larger dealer group, BCA Dealer
Pro provides a real-time view of all part-exchange appraisals
across the group, to ensure that retail quality vehicles
are retained whilst non-retail vehicles are
remarketed quickly and efficiently.
“For Jardine Motors, the implementation of this new
process is both technically innovative and a profitable
business decision. It connects our business in a new way,
cementing relationships and stimulating teamwork and
co-operation across our dealerships as well as
strengthening manufacturer partnerships creating
an environment which makes brand repatriation
straightforward and commercially advantageous.”
Jason Cranswick, Commercial Director,
Jardine Motors Group
28
Strategic report
Governance
Case study
BCA Live Online in Europe
In 2013, BCA in France took the bold step of becoming an
online only vehicle remarketing business. This successful model
has continued to grow. In 2015, the operation moved to new
premises in a seven storey office block in Alfortville, Paris.
Success has been driven by placing significant focus upon the
buyer to make sure that they can easily find and purchase the
vehicles that they need for their businesses. These are then
delivered from smaller flexible local sites.
BCA’s customers appreciate the ease of buying, provision of
additional value-added services, regional proximity and
excellent customer services offered by BCA’s digital platforms
and buyer customer service teams.
29
Financials
From two dedicated auction suites the real-time sales are
hosted by live auctioneers with customers bidding via the BCA
Live Online platform. Bidders have access to all the information
they need digitally including high definition photographs, most
of which are taken in BCA’s purpose built imaging booths, and
complemented by vehicle data including make, model,
specification, age, mileage and the vehicle grade.
Governance
Board of Directors
Tim Lampert
Date of appointment to Board 30 September 2015
Committee membership None
Tim started his career in manufacturing companies before joining a division
of Bombardier Inc. in finance roles in the UK and the Middle East. He joined
Autologic Holdings Plc in 1997 and held various roles including Finance,
Logistics, Projects and Managing Director. He was also involved in a number
of acquisitions and disposals and, ultimately, the successful sale of this
company. Tim was instrumental in the acquisition of the BCA Group
and has a wide range of experience of the requirements of growth
for large businesses.
Executive Chairman
Date of appointment to Board 4 July 2014
Committee membership None
Avril has over 20 years of executive experience with leading businesses in
the UK automotive, support services, industrial engineering and insurance
services sectors. Through a number of high profile industry roles, Avril has
acquired significant experience of delivering operational improvements and
implementing business turnarounds, executing organic and acquisitive
growth strategies and a track record of delivering shareholder value in a
public environment.
Avril has also held a broad range of executive roles throughout the
automotive industry, with experience in companies engaged in vehicle
salvage, car hire, auctions, transportation, distribution, logistics, vehicle
processing and infrastructure.
Avril was previously Executive Chairman and Deputy CEO of Stobart
Group plc, one of the largest British multimodal logistics companies with
interests in transport, distribution and infrastructure. Prior to this Avril was
CEO of Autologic Holdings Plc, the largest finished vehicle logistics company
in the UK and Europe. She joined Autologic from Universal Salvage Plc,
where she held the position of CEO from March 2005 until the sale of
the company to Copart UK Ltd in June 2007.
Avril is also currently Non-Executive Chairman of Redde plc.
30
Strategic report
Jon Kamaluddin
Independent Non-Executive Director
Date of appointment to Board 27 August 2015
Committee membership Audit & Risk (Chair),
Nomination, Remuneration
Jon, a Chartered Accountant, has a strong
background in finance, retail and e-commerce.
He serves as a Non-Executive Director at a
number of private companies and was, until
October 2013, International Director of ASOS
plc, having also held the role of Finance Director
and Company Secretary between 2004 and
2009. He was instrumental to ASOS plc’s
significant growth and led its global expansion.
James Corsellis
Non-Executive Director
Committee membership Audit & Risk,
Nomination (Chair), Remuneration
James Corsellis founded Marwyn, the asset
management and corporate finance group, in
2002 with Mark Brangstrup Watts. James is joint
managing partner of Marwyn Capital LLP, which
provides corporate finance advice, and Marwyn
Investment Management LLP, which provides
asset management solutions and investment
advisory services. James is a Director of Marwyn
Asset Management Limited, a regulated fund
manager, and is also a trustee of the Marwyn
Trust, a charity focused on initiatives supporting
education and entrepreneurship for young
people in disadvantaged communities.
James has held board positions on several
Official List and AIM listed companies, including
as Chairman of Entertainment One Limited and
Director of Breedon Aggregates Limited and
Concateno plc, amongst others. James is
currently an Executive Director of Gloo Networks
plc and Marwyn Management Partners plc.
31
Mark Brangstrup Watts
Non-Executive Director
Nomination, Remuneration (Chair)
Mark Brangstrup Watts founded Marwyn,
the asset management and corporate finance
group, in 2002 with James Corsellis. Mark is joint
managing partner of Marwyn Capital LLP, which
provides corporate finance advice, and Marwyn
Investment Management LLP, which provides
asset management solutions and investment
advisory services. Mark is a Director of Marwyn
Asset Management Limited, a regulated fund
manager, and is also a trustee of the Marwyn
Trust, a charity focused on initiatives supporting
education and entrepreneurship for young
people in disadvantaged communities.
Mark has held board positions on several
Official List and AIM listed companies,
including Entertainment One Limited,
Advanced Computer Software plc, Inspicio plc,
Melorio plc and Talarius plc, amongst others.
Mark is currently a Non-Executive Director of
Zegona Communications plc and an Executive
Director of Gloo Networks plc and Marwyn
Management Partners plc.
Financials
Piet Coelewij
Independent Non-Executive Director
Piet is a multilingual Dutch national who has an
extensive international background and a proven
track record of leading growth businesses in
innovative and disruptive business environments.
Piet is Vice President of Global Operations of
US-based Sonos, a wireless HiFi equipment
manufacturer, having previously been Managing
Director, Europe. He has previously held senior
positions at Amazon.com in the UK between
2007 and 2011 and at Phillips Consumer
Electronics in China between 2004 and 2006.
Piet’s extensive digital experience and
background will support the Group’s digital
growth opportunities.
Governance
Stephen Gutteridge
Senior Independent Non-Executive Director
Stephen has an extensive range of industrial and
public company experience both as an Executive
and Non-Executive Director across the oil and
gas, utilities, packaging, training and education
sectors. He held the roles of Chairman at
Nighthawk Energy plc between 2011 and 2014,
at President Energy plc between 2007 and 2011
and also at Star Energy Group plc from its IPO
through to its acquisition by Petronas. Stephen’s
executive experience includes his role as
Managing Director of Supply at Seeboard plc
during its time as a £1.5bn publicly-listed utility
company. Stephen is currently a Non-Executive
Director of Fulcrum Utility Services plc.
Governance
Executive Chairman’s
governance statement
Dear Shareholder
On behalf of the Board, I am pleased to present our Governance report
for the financial period ended 3 April 2016, our first year as a public
company on the Main Market. As Executive Chairman, it is my
responsibility to ensure that the Group is governed and managed
with transparency and in the best interests of stakeholders.
As part of the BCA Group acquisition process and in preparation for
Admission to the Official List, we carried out a review of the existing
governance structure in conjunction with our external advisers, in order
to identify any measures that would need to be implemented. As a
result there has been a large focus since Admission on establishing
governance structures and enhancing internal control systems, policies
and procedures to ensure they are appropriate for a company of our size
and complexity. Whilst the Company is not required to comply or explain
non-compliance with the UK Corporate Governance Code (September
2014) (the ‘Code’) for as long as it has a Standard Listing, the Company
is however committed to, and recognises the value and importance of,
high standards of corporate governance. In due course and in any event
prior to admission to the Premium segment of the Official List, the Board
intends to comply as far as appropriate with the Code.
“We have established a Board
that has a well-balanced array
of skills and is well-attuned to
the Group’s requirements.”
As a result of this review, there were several changes to the Board
during the year. On 27 August 2015, we were pleased to announce
the appointment of three independent Non-Executive Directors to
strengthen the Board. To enhance the quality of our decision-making
process and bring the required level of objectivity and independence to
the Board, we conducted a very thorough search to identify the right
blend of experience and expertise for our group of independent
Non-Executive Directors and the Board is delighted with the outcome.
With their collective knowledge and experience of areas such as retail
and digital development as well as growth of public companies in
international markets Stephen, Jon and Piet bring considerable value to
the Board and greatly benefit the Group as it continues to progress its
strategy. To further strengthen the Board, Tim Lampert, who was
appointed Chief Financial Officer on 11 June 2015, formally joined the
Board on 30 September 2015. This gives us a Board that has a wellbalanced array of skills and is well-attuned to the Group’s requirements.
We have also welcomed a number of new entities to the Group and,
as we look to finalise our operational structure going forward, we will
continue to focus on improving our standards of corporate governance
across the whole business.
We are committed to maintaining an active dialogue with our
shareholders and will hold our Annual General Meeting on
8 September 2016 at the offices of Berwin Leighton Paisner LLP,
Adelaide House, London Bridge, London, EC4R 9HA.
Executive Chairman
27 June 2016
32
Governance
As noted in the Executive Chairman’s statement, the Board is
committed to managing the Group’s operations in accordance with its
intention to adopt the UK Corporate Governance Code (September
2014) (the ‘Code’) when it becomes a Premium Listed entity.
A full version of the Code can be found on the Financial Reporting
Council’s website http://www.frc.org.uk. As a Standard Listed entity the
Group is not required to comply with the requirements of the Code and
therefore has not adopted the Code. However, the Directors aim to
comply with the spirit of the Code and have been working throughout
the period since Admission to implement processes and policies in line
with those principles.
Governance
James Corsellis and Mark Brangstrup Watts have been Non-Executive
Directors of the Company since its formation and, through their
position as managing partners of Marwyn, were heavily involved in
the Company’s acquisition of the BCA Group and, as noted in the
Directors’ remuneration report, they have an on-going interest in the
H.I.J. scheme and as a result they are not considered by the Board to
be independent. Notwithstanding this, the Group does meet the Code
requirement for at least half of the Board, excluding the Chairman, to
comprise independent Non-Executive Directors.
Strategic report
Governance report
Committees of the Board
Following Admission, the Board established three Committees –
the Audit & Risk Committee, the Remuneration Committee and
the Nomination Committee – to carry out certain tasks on its behalf.
The full terms of reference for each Committee are available on the
Company’s website (www.bcamarketplaceplc.com) under Corporate
Governance and from the Company Secretary on request.
The role of the Board
The Company is controlled by the Board of Directors on behalf of the
Company’s shareholders and provides leadership of the Company.
Matters reserved for the Board include setting strategy, approving
budgets and financial statements and setting up key policies. Other
matters are delegated to the Board committees. Day-to-day operational
matters are delegated to the Executive Directors and the Group’s
divisional operating boards. The Board has held seven full meetings
since Admission and attendance is summarised on page 34. The Board
meetings consider business and financial performance, updates on key
programmes within the business, strategic considerations, periodic risk
assessments, reports from Board committees and legal and investor
relations feedback.
Financials
Board composition
The Board at the date of this report consists of three independent
Non-Executive Directors, two Non-Executive Directors and two
Executive Directors, including an Executive Chairman.
The Code recommends that the role of chairman and chief executive
should not be exercised by the same individual. Avril Palmer-Baunack
holds the role of Executive Chairman. When Haversham Holdings plc
was established, its objective was to acquire and manage companies in
the UK and European automotive, support services, leasing,
engineering or manufacturing sectors, areas in which Avril has
significant and unique expertise, knowledge and industry relationships
all of which contributed to the successful acquisition of the BCA Group.
With a stated strategy to develop a range of automotive service
solutions that enable the new Group to add value right along the
vehicle supply chain, the Board considered that combining these roles
to have Avril as Executive Chairman was and remains the right
approach for this stage in the Group’s development.
33
Governance
Governance report
Committees of the Board continued
Audit & Risk
Nomination
Remuneration
Role and terms of reference
Reviews and reports to the
Board on the Group’s financial
and narrative reporting, internal
controls and risk management
systems, compliance,
whistleblowing and fraud, and
internal and external audit
Reviews the structure, size and
Responsible for all elements of
composition of the Board and
the remuneration of the Executive
its Committees and makes
Directors
appropriate recommendations to
the Board. Considers succession
planning for the Executive
Directors
Chairman
Jon Kamaluddin
James Corsellis
Members
Stephen Gutteridge
Piet Coelewij
James Corsellis
Stephen Gutteridge
Piet Coelewij
Jon Kamaluddin
Stephen Gutteridge
Piet Coelewij
Jon Kamaluddin
James Corsellis
Committee report on pages
35 to 36
37
38 to 47
The Chairman of each Committee provides a report or update of each meeting of the respective Committee to the Board at the subsequent
Board meeting.
Board and Committee membership and attendance
The attendance of Directors at Board and Committee meetings of which they were members from Admission on 2 April 2015 to 3 April 2016 is
set out below.
Full Board
Audit & Risk
Remuneration
Nomination
Total number of meetings
7
1
2
1
Tim Lampert(1)
Spencer Lock(2)
James Corsellis
Stephen Gutteridge(3)
Jon Kamaluddin(3)
Piet Coelewij(3)
7
6
1
5
6
6
6
6
*
*
n/a
1
1
1
1
1
*
n/a
n/a
1
2
1
1
1
*
n/a
n/a
1
1
–
–
–
Board evaluation
Knowing where the Board performs well and where it can improve is
a key part of ensuring on-going improvement and effectiveness. Given
that the Board has only had its full complement of Directors since
August 2015 no Board evaluation has been carried out in the current
period. We intend to conduct a thorough review of the Board process,
practice and culture on an annual basis.
1 Tim Lampert was appointed to the Board on 30 September 2015. He has attended
all of the full Board meetings after this date
2 Spencer Lock was appointed on 2 April 2015 and resigned from the Board on
30 September 2015. He had attended all of the full Board meetings between these
dates
3 Stephen Gutteridge, Jon Kamaluddin and Piet Coelewij were appointed to the
Board on 27 August 2015. They attended all of the full Board and Committee
meetings after this date
* Avril Palmer-Baunack and Tim Lampert attended these meetings by invitation
Relations with shareholders
The Board is committed to providing good communication channels
with our shareholders. The Executive Directors along with our Investor
Relations Manager are in regular contact with our main shareholders to
ensure their views on the Company are known and discussed. We aim
to keep shareholders abreast of Group developments through press
releases and trading and other statements, together with formal
reporting of the interim and full year results. We host numerous
shareholder visits to our operations to gain a better understanding of
our business, and regularly partake in investor roadshows. An investor
relations report is presented at Board meetings to ensure all aspects of
shareholder communication, changes in holdings and price movements
are discussed. Our website offers a readily available source of Company
information, from trade press releases to formal Stock Exchange
announcements and other key financial documents.
The Board also held a further eight meetings to approve procedural
matters.
Biographies of all the members of the Board appear on pages 30 to 31.
Advice and support
The Directors may take independent professional advice at
the Company’s expense provided that they give notice to the
Executive Chairman.
34
Governance
Strategic report
During the acquisition process and as part of completing the Financial
Position, Prospects and Procedures Report, a detailed assessment of the
following key areas was carried out with the support of
PricewaterhouseCoopers LLP:
•Board governance including the Committee and the procedure for
assessing the Group’s key risks;
•Management accounting process and the information provided to
the Board;
•External financial reporting procedures, audit arrangements and
reporting standards;
•The internal control environment at both high and detailed levels;
•Complex transactions, potential exposure and risk;
•Information systems; and
•Budgeting and forecasting procedures and controls.
Dear Shareholder
I am pleased to have been appointed Chairman of the Audit & Risk
Committee upon my appointment as an independent Non-Executive
Director in August 2015, and am looking forward to working with and
leading the Audit & Risk Committee at this exciting time in the
Group’s development.
The Audit & Risk Committee acts on behalf of the Board and
shareholders, to ensure the integrity of the Group’s financial reporting,
evaluate its system of risk management and internal control, and
oversee the performance of the internal and external auditors.
Governance
Progress has been made on addressing the key issues identified relating
to Board composition and governance structures, which have been
discussed in the Governance report above, and risk identification
processes, financial reporting timetables and processes, general
compliance and internal audit which are discussed below. Management
and the Committee continue to focus on making progress on these
matters, in addition to determining how internal control and risk
management can be further embedded into the enlarged operations of
the business, and on how to deal with additional areas of improvement
which come to the attention of management and the Board.
In respect of risk management, risks are highlighted through a number
of different reviews at operational, functional and Group level and
culminate in a risk register, which identifies the risk area, the probability
of the risk occurring, the impact if it does occur and the actions being
taken to manage the risk to the desired level. The principal risks and
uncertainties facing the Group are disclosed on pages 24 to 25.
In respect of financial reporting, monthly consolidated management
accounts provide relevant, reliable and up-to-date financial and
non-financial information to management and are summarised in the
Chief Financial Officer’s report to the Board which analyses the
differences between actual and budgeted results on a monthly basis.
Annual plans, forecasts, performance targets and long-range financial
plans allow management to monitor the key business and financial
activities, and progress towards achieving the financial objectives. The
annual budget is approved by the Board.
Since formation, the Committee has met to consider the interim
results announcement, the planning of the audit process and its
effectiveness, the Group’s relationship with the external auditor and to
undertake a detailed review of the Group’s internal controls and risk
management systems.
In addition, there are formal policies and procedures in place to ensure
the integrity and accuracy of the accounting records and to safeguard
the Group’s assets. There are formal procedures by which staff can, in
confidence, raise concerns about possible improprieties in financial
administration and other matters, under the Group’s
whistleblowing policy.
Internal control and risk management systems in relation to the
financial reporting process
The Board acknowledges its responsibility for establishing and
maintaining the Group’s system of internal controls and delegates
responsibility for monitoring the effectiveness of this to the Audit & Risk
Committee. The Audit & Risk Committee reviews the system of internal
controls through reports received from management, along with others
from the external auditor.
The Committee receives regular reports from management regarding
monitoring of these controls, and assures itself that the internal control
environment of the Group is operating effectively.
The system of internal controls is designed to manage, rather than
eliminate, the risk of failure to achieve business objectives and can
provide only reasonable and not absolute assurance against material
misstatement or loss.
35
Financials
Following Admission, the Company identified the need to strengthen the
independence of the Committee. As a result, I was appointed Chairman,
along with the independent Non-Executive Directors Stephen Gutteridge
and Piet Coelewij. Non-Executive Directors Mark Brangstrup Watts
and James Corsellis, who have been members since the Committee
was formed in April 2015, remain members. I am happy to report that
the Committee membership not only complies with the UK Corporate
Governance Code and related guidance, with all members being
Non‑Executive Directors, but also maintains the sound range of financial
and commercial expertise required to fulfill its role effectively.
Governance
Annual Report and Accounts
The Committee met during the period to review and approve the interim financial statements and to approve the plan for the Annual Report and
Accounts. The Committee has also met once since the year end to approve the Group’s Annual Report and Accounts. In reviewing the financial
statements with management and the auditor, the critical accounting judgements and key sources of estimation uncertainty set out in note 3 to
the financial statements have been discussed and debated. As a result of our review, the following items have been identified that require
particular judgement or have significant potential impact on the interpretation of this Annual Report and Accounts:
Significant issue
How addressed
Acquisition v reverse acquisition
Consideration was given to the specific circumstances of the transaction and the requirements of IFRS 3
to determine that the transaction to acquire the BCA Group was an acquisition rather than a reverse
acquisition, notwithstanding the relative sizes of the entities.
Valuation of intangibles
The Group used external specialists to assist in the identification and valuation of the acquired intangible
assets. Management reviewed and challenged the assumptions used by the external specialist.
Impairment of goodwill
Consideration has been given to management’s assumptions, in particular in relation to future trading and
the current discount rate, used to support the carrying value of goodwill.
Significant or non-recurring items
Consideration has been given to management’s classification of items as significant or non‑recurring, in
particular in relation to acquisition and other significant costs.
Share based payments and pension
benefits
In conjunction with the advice of relevant specialists, consideration was given to the specific circumstances
of the arrangements and the requirements of the associated standards in relation to management’s
calculation and the presentation of the share based payment and pension arrangements.
Further details of the accounting policies, judgements and estimates
are given on pages 65 to 66.
On the basis of this, it was concluded that it was in the best interests
of the Company to recommend the re-appointment of PwC as auditor
for the forthcoming year. The resolution to re-appoint PwC will
propose that they hold office until the conclusion of the next Annual
General Meeting at which accounts are laid before the Company,
at a level of remuneration to be determined by the Directors.
The Committee has reviewed the judgements made in these areas by
management and, after due challenge and debate, was content with
the assumptions made and the judgements applied.
Internal audit
The acquired BCA Group has an internal audit function which focuses
on operational processes and controls.
The Audit & Risk Committee has reviewed the remuneration received
by PwC for non-audit work conducted during the financial period
which is detailed in note 10 to the financial statements on page 72 and
note that the majority of non-audit fees relate to one-off costs related
to the acquisition of the BCA Group and Placing.
External audit
The Audit & Risk Committee is responsible for monitoring the
performance, objectivity and independence of the Group’s auditor
PricewaterhouseCoopers LLP (‘PwC’). PwC have been external auditor
to the Company since its formation in 2014 and were also auditor to
the acquired BCA Group. In assessing the effectiveness of the external
audit process, the Committee has considered:
Jon Kamaluddin
Chairman, Audit & Risk Committee
27 June 2016
•The external audit plan, including the key audit risk areas, materiality
and significant judgement areas;
•The terms of the audit engagement letter and the associated level of
audit fees;
•Management’s feedback on the external audit process; and
•The independence of the external auditor including a review of the
non-audit services provided.
36
Governance
Strategic report
Nomination Committee report
The Committee also considered the composition of the three
Committees of the Board. The Code states that the Remuneration
and Audit & Risk Committees should be comprised of at least three
independent Non-Executive Directors. On Admission and in the
absence of any independent Non-Executive Directors, Mark and I were
appointed to these Committees. Following this, it was determined that
Stephen, Jon and Piet would also join these Committees thereby
fulfilling the requirement for having three independent Non-Executive
Directors. However, in order to take advantage of the knowledge of
the strategic direction of the Group and of the acquired businesses, the
Committee recommended and the Board concluded that Mark and I
would remain on these Committees and in particular, given the stage
of the Group’s development, that Mark would chair the Remuneration
Committee. This also has the benefit of providing on-going continuity
to the Committee membership.
Dear Shareholder
I am pleased to introduce the report of the Nomination Committee for
2016. The purpose of the Committee is to ensure that there is a formal
and transparent procedure for the appointment of new Directors to the
Board. Our duties include reviewing the Board’s structure, size and
composition, including the skills, knowledge and experience the Board
needs. We then make recommendations to the Board, taking into
account succession planning for Directors, the Group’s challenges and
opportunities and with due regard for the benefits of diversity on the
Board. Our policy is to ensure that the best candidate is selected to join
the Board and this approach will remain in place going forward,
without prescriptive or quantitative targets.
Governance
The Code also states that the Nomination Committee should be
chaired by an independent Non-Executive Director. For similar
reasons to those discussed above, the Committee recommended
and the Board concluded that I should remain as Chairman of the
Nomination Committee.
Board induction and training
There was a detailed induction programme for the new Non-Executive
Directors that included a comprehensive pack of information on the
Group, meetings with senior management and other Board members,
visits to a number of the Group’s sites and briefings to share the
Group’s strategy.
The Directors have access to on-going training as required.
On the recommendation of the Committee all Directors will offer
themselves for election or re-election at the forthcoming AGM.
James Corsellis
Chairman, Nomination Committee
27 June 2016
The Committee has met once to evaluate and recommend the
appointments of the three independent Non-Executive Directors
Stephen Gutteridge, Jon Kamaluddin and Piet Coelewij to the Board for
a period of three years, subject to annual re-election at the AGM. It
also recommended the appointment of Jon Kamaluddin as Chairman
of the Audit & Risk Committee. Their appointments followed an
objective assessment of the Group’s needs and strategy and the Board’s
current skills and experience, and involved a thorough search with the
assistance of one of the world’s leading global executive search firms,
Korn Ferry, with whom the Group has no other relationship.
37
Financials
The members of the Committee are Mark Brangstrup Watts and I, as
Non-Executive Directors who have been members since the Committee
was formed, and following their appointment to the Board in August
2015 the three independent Non-Executive Directors Stephen
Gutteridge, Jon Kamaluddin and Piet Coelewij. The Code recommends
that the Committee is comprised of a majority of independent
Non-Executive Directors and indeed that has now been achieved.
Other members of the Board attend the Committee by invitation
as appropriate.
Annual statement by the chairman of the
Remuneration Committee
A completion bonus equal to 0.5% of the enterprise value of the
BCA Group acquisition was paid to Avril Palmer-Baunack in accordance
with her existing service contract.
As part of the fundraising for the BCA Group acquisition, a substantial
amendment was agreed to the existing long-term incentive scheme
(the H.I.J. scheme, formerly referred to as the Executive Founder
Shares), which had the effect of reducing the potential share of any
growth in the Company to be awarded under that scheme, including
any other share scheme, from 13.5% to 10.0% of such growth. At the
same time changes were made to the existing Executive and
Non‑Executive service arrangements: James Corsellis and I entered into
appointment letters dated 26 March 2015, under which we receive
annual fees of £50,000. Prior to this, fees of £1 were charged for our
services. In addition, Avril Palmer-Baunack’s salary was increased from
£250,000 to £485,000 reflecting the increase in responsibilities
involved in running a significantly enlarged Group.
There have also been a number of changes to the Board. On 2 April
2015, Spencer Lock was appointed to the Board as Group Managing
Director on similar terms to those on which he was previously employed
within the BCA Group. On 30 September 2015, Spencer resigned from
the Board and Tim Lampert, who had previously been appointed as the
Group’s Chief Financial Officer, was promoted to the Board on similar
terms to those on which he was previously employed. On 22 October
2015, Tim Lampert was awarded 26,654 shares under the H.I.J. scheme
in order to align the structure of his long-term incentives with those of
other Board members.
Dear Shareholder
On behalf of the Board I am pleased to present the Remuneration
Committee’s report for the period ended 3 April 2016.
The report is presented in two separate sections; the Annual report on
remuneration relating to remuneration for the period and the
forward‑looking Remuneration Policy.
The Annual report on remuneration, on pages 39 to 43, includes the
amounts earned by the Directors in respect of the period ended 3 April
2016 and details of their interests in incentive schemes and is subject to
an advisory shareholder vote at the AGM. The Remuneration Policy, on
pages 44 to 47, sets out the policy which is subject to approval by
shareholders through a binding vote at the AGM and which, subject to
that approval, will be applied immediately.
On 27 August 2015, the three independent Non-Executive Directors
were appointed following a recruitment process run through and
advised by Korn Ferry, specialist consultants who are independent of
the Group.
During the period, the Committee has finalised its inaugural
Remuneration Policy and is satisfied that it has established a firm
foundation from which to operate in the future, with clear policies
which properly support the Group’s long-term strategic objectives. As a
result, the Committee looks forward to your support of our proposed
Remuneration Policy at the 2016 AGM.
The Remuneration Committee deals with all aspects of the Executive
Directors’ remuneration. Following Admission to the Official List on
2 April 2015, it initially included James Corsellis and myself as Chairman,
and since their appointment on 27 August 2015 also includes Stephen
Gutteridge, Jon Kamaluddin and Piet Coelewij. The Committee met
twice during the period and has held a further meeting since the period
end to agree the Remuneration Policy referred to above.
As part of the acquisition of the BCA Group and the Admission to the
Official List, there were developments to the existing remuneration
policy as follows:
Chairman, Remuneration Committee
27 June 2016
38
Strategic report
Annual report on remuneration
The information provided in this Annual report on remuneration, on pages 39 to 43, is subject to audit except where indicated otherwise.
The remuneration of the Executive Directors for the 15 month period ended 3 April 2016 with comparatives for the 8 month period from
incorporation to 31 December 2014 is made up as follows:
Executive Directors’ remuneration as a single figure
15 month period ending 3 April 2016
Tim Lampert(1)
Spencer Lock(2)
Completion
bonus
£’000
Annual
incentive
scheme
£’000
Pension(b)
£’000
Total
£’000
547
135
147
50
16
13
6,044
–
–
485
135
150
48
14
–
7,174
300
310
Salary
£’000
All taxable
benefits
£’000
Completion
bonus
£’000
Annual incentive
scheme
£’000
Pension
£’000
Total
£’000
37
–
–
–
–
37
Governance
8 month period ending 31 December 2014
Salary
£’000
All taxable
benefits(a)
£’000
1 Tim Lampert was appointed as a Director on 30 September 2015. His salary, taxable benefits and pension are included for the 6 months ended 3 April 2016. The annual
incentive scheme is payable at a rate of 100% of salary and was earned for services over the full year ended 3 April 2016. The remuneration receivable under the annual
incentive has been included pro-rata for the period as a Director
2 Spencer Lock was appointed as a Director on 2 April 2015 and resigned on 30 September 2015. His remuneration is included for this 6 month period. The annual incentive
scheme is payable at a rate of 100% of salary. The remuneration receivable under the annual incentive scheme has been included pro-rata for the period as a Director
a The Directors each had use of a fully expensed company car and received private medical insurance and life insurance
b Amounts paid into money purchase personal pension plans
Salary
The annual salary of Avril Palmer-Baunack with effect from 2 April 2015 was £485,000 and the annual salary of Tim Lampert with effect from his
appointment was £270,000. For the 3 months to 2 April 2015 Avril Palmer-Baunack received a salary of £62,000.
Annual incentive scheme
The Executive Directors participate in an incentive scheme, payable in cash, in which the minimum annual incentive payable is nil and the
maximum is 100% of relevant salaries. The targets for the period were based on the achievement of Group profitability targets set from the three
year plan created for the acquisition of the BCA Group and the successful completion of key acquisitions, which were achieved in full.
Pension
Pension contributions into money purchase pension plans are made as shown at the rate of 10% of salary for the Executive Directors.
39
Financials
Completion bonus
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 Group, Avril was entitled to a completion bonus
of £6,044,000.
The remuneration of the Non-Executive Directors for the 15 month period ended 3 April 2016 and for the 8 month period from incorporation to
31 December 2014 is made up as follows:
Non-Executive Directors’ remuneration as a single figure
15 month
period ending
3 April 2016
Fees
£’000
8 month
period ending
31 December 2014
Fees
£’000
50
50
30
36
30
–
–
–
–
–
James Corsellis(1)
Mark Brangstrup Watts(1)
Stephen Gutteridge(2)
Jon Kamaluddin(2)
Piet Coelewij(2)
1 James Corsellis and Mark Brangstrup Watts each received fees of £1 for their services up to and including the acquisition of the BCA Group on 2 April 2015, from which
point they each received fees of £50,000 per annum for their services as Non-Executive Directors
2 Stephen Gutteridge, Jon Kamaluddin and Piet Coelewij were each appointed on 27 August 2015 and therefore their remuneration represents the seven months ended
3 April 2016
Directors’ interest in shares and share options
Interest in Ordinary shares
Tim Lampert
Funds managed by Marwyn Asset Management Ltd(1)
Marwyn Long Term Incentive LP(2)
Interest in H.I.J. scheme (unvested)
At 3 April 2016
At 1 January 2015(a)
At 3 April 2016
At 1 January 2015(a)
666,667
–
18,541,110
–
–
–
6,666,666
–
303,923
26,654
–
202,500
202,500
–
–
202,500
1 James Corsellis and Mark Brangstrup Watts ultimately own and are Non-Executive Directors of Marwyn Asset Management Limited
2 Marwyn Long Term Incentive LP is a partnership in which James Corsellis and Mark Brangstrup Watts have a beneficial interest
a Or date of appointment
T hroughout his period as a Director, Spencer Lock held a beneficial interest in 4,361,974 Ordinary shares of the Company. These shares were held
in trust throughout his period as a Director and he was not able to sell them.
No other Director holds, or held at any time during the period, a beneficial interest in the Company’s Ordinary shares.
Long-term incentive scheme – the H.I.J. scheme (formerly referred to as the Executive Founder Shares)
As disclosed in the 2014 financial statements prior to the acquisition of the BCA Group, an incentive scheme was created to reward the Directors
for the creation of value for shareholders, once all investors have received a preferential level of return. In order to make these arrangements most
efficient, they were based around a subscription for shares in H.I.J. Limited (the H.I.J. shares), a wholly owned subsidiary of BCA Marketplace plc.
The Directors subscribe for H.I.J. shares, which are subject to a number of conditions, as detailed below. If these conditions have been met, the
holders of H.I.J. shares can give a redemption notice to the Company. On being offered such a notice, the Company may purchase the H.I.J.
shares either for cash or for the issue of new Ordinary shares at its discretion, at a value as described below.
Growth condition
The growth condition is the compound annual growth rate of the invested capital in the Company being equal to or greater than 10% per
annum. The growth condition takes into account the date and price at which shares in the Company have been issued, the date and price of any
subsequent share issues and the date and amount of any dividends paid or capital returned by the Company to its shareholders.
40
Strategic report
Vesting condition
The H.I.J. shares are subject to certain vesting conditions, at least one of which must be, and continue to be, satisfied in order for a holder of H.I.J.
shares to exercise their redemption rights and which ends on 10 November 2019. The vesting conditions are as follows:
(i)
(ii)
(iii)
(iv)
(v)
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 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 (which was 10 November 2014).
The Directors have agreed that if they cease to be involved with the Company in the first three years following AIM Admission then in certain
circumstances a proportion of their H.I.J. shares may be forfeited.
Governance
Compulsory redemption
If the growth condition is not satisfied on or before the fifth anniversary of AIM Admission or such later date as the Company and holders of 66%
of all the H.I.J. shares agree, the H.I.J. shares must be sold to the Company or, at its election, redeemed, in both cases at a price equal to the
subscription price per H.I.J. share. Subsequently, if there is a sale of the business within a period of one year of the fifth anniversary, which would
otherwise have satisfied the conditions, the holders of the H.I.J. shares will be entitled to receive an amount calculated in accordance with
the award.
Redemption value
Subject to the provisions detailed above, the H.I.J. shares can each be sold to the Company for a proportion of an aggregate value up to the
Incentive Scheme Cap.
Under the Incentive Scheme Cap, the value of awards under all of the Company’s share incentive arrangements will not, at the point of vesting or
over a 10 year period, exceed 10% of the excess of the market value of the Company (based on a 30 day volume-weighted average mid-market
price and taking dividends and any prior return of capital into account) over and above the aggregate price paid by shareholders for its share
capital (the ‘10% Growth’).
The effect of the Incentive Scheme Cap is that if there are no other share incentive schemes with any potential value at the time that the H.I.J.
shares vest, then the aggregate value of the H.I.J. shares will be all of the 10% Growth. If other share incentive arrangements are in place, the
potential value of those arrangements will be deducted from the value attributed to the H.I.J. shares, such that the aggregate value of those
arrangements together with the H.I.J. shares does not exceed the 10% Growth.
Current participation in the 10%
Growth(a)
Date of award
Minimum
Maximum
11 July 2014
15 June 2015
Tim Lampert
Marwyn Long Term Incentive LP(1)
Total
Aggregate holding
22 October 2015
11 July 2014
4.85%
0.42%
3.23%
5.70%
0.50%
3.80%
8.50%
10.00%
Issue price
Number Subscription value
£0.01
£0.05
202,500
101,423
£2,025
£5,071
£0.07
£0.01
303,923
26,654
202,500
£7,096
£1,999
£2,025
533,077
1 Marwyn Long Term Incentive LP is a partnership in which James Corsellis and Mark Brangstrup Watts are limited partners
a At 3 April 2016 other share incentive arrangements were in place which may entitle the holders to up to 1.5% of the 10% Growth. These awards are subject to separate
performance conditions and it is possible that no award could be made under these arrangements. These are disclosed in note 29 to the financial statements
41
Financials
Awards under the H.I.J. scheme
Details of the awards made to date under the H.I.J. scheme, together with the number outstanding at 3 April 2016, are shown below. None of
the H.I.J. shares were forfeited, exercised or expired during the period.
Payments to past Directors
Spencer Lock resigned as a Director on 30 September 2015 but at that time remained as Group Managing Director. On 31 March 2016, Spencer
Lock left the business subject to a 12 month notice period included in his service agreement. During this period Spencer Lock is restricted from
working (other than with agreed exceptions) and the Company will pay Spencer Lock’s salary and other contractual benefits excluding any annual
incentive entitlement. For completeness, the table below shows the total amounts paid and payable by the Company to Spencer Lock since he
resigned from the Board on 30 September 2015:
Payment in lieu of
Salary
notice
£’000
£’000
Spencer Lock
150
All taxable
benefits
£’000
Annual incentive
scheme(a)
£’000
Payment in
lieu of pension
contributions(b)
£’000
Total
£’000
12
150
66
678
300
a In respect of the period from 1 October 2015 to 3 April 2016, excluding the amount included in the table of Executive Directors’ remuneration above, which is in respect of
services between 2 April 2015 and 30 September 2015
b Representing payment of taxable income in lieu of pension contributions at 10% of salary
In addition, it was agreed that with effect from 1 January 2016, Spencer Lock would be able to sell his shares in BCA Marketplace plc through the
Company’s broker, which would otherwise have been restricted until 2 April 2016.
The following disclosures in the Annual report on remuneration are not subject to audit.
Share price
The chart illustrates the performance over the period of an investment of £100 in the Company’s shares made on 2 April 2015, when the
Company acquired the BCA Group and was admitted to trading on the Official List, which has been compared to the performance of the same
investment on the same date in the FTSE 250 All Share Index. The Board believes this is the most appropriate broad equity market index with
which to compare the Company’s performance.
120
115
110
105
100
95
90
85
02/04/2015
02/06/2015
BCA Marketplace plc
02/08/2015
02/10/2015
02/12/2015
FTSE 250
42
02/02/2016
03/04/2016
Strategic report
Executive Chairman’s total remuneration as a single figure
The table below sets out the Executive Chairman’s total remuneration as a single figure together with the percentage of maximum annual
incentive awarded over the same period as the chart above in respect of the Company’s share price.
Period from 2 April 2015 to 3 April 2016
Executive Chairman total remuneration (£’000)
Annual incentive awarded (% of maximum)
Share award vesting (% of maximum)
1,068
100%
None
As the Company had no trade prior to its acquisition of the BCA Group no previous comparisons are included.
Percentage change in remuneration of Director undertaking the role of Chief Executive
As noted above, it is not possible to present meaningful or comparable analysis on the change in remuneration of the Director undertaking the
role of Chief Executive. The Company acquired the BCA Group on 2 April 2015 and prior to this the remuneration of the Chief Executive,
represented by the Executive Chairman as shown above, and those of all employees of the Group, shown in note 8 to the accounts, do not
provide meaningful year-on-year comparisons.
Governance
The single figure for total remuneration shown above is for the period from 2 April 2015 to 3 April 2016 and is therefore representative of the
remuneration over the same period as the share price performance chart shown above. The remuneration of £1,068,000 excludes salary of
£62,000 for the three months to 2 April 2015 and the completion bonus of £6,044,000 paid in respect of the acquisition of the BCA Group. This
single figure for total remuneration provides a more meaningful comparison of remuneration in respect of the share price performance and is a
more meaningful basis for comparison in future years. The single figure for total remuneration for the 15 month period to 3 April 2016
is £7,174,000.
Relative importance of spend on pay
The chart below shows the relative importance of spend on pay for all employees in comparison to distributions to shareholders. Total employee
pay includes wages and salaries, pension costs, social security and share-based payments. Taking into account the timing of acquisitions during
the year, the Group has employed an average of 5,117 staff. Distributions to shareholders include interim and final dividends paid and payable in
respect of the financial period.
180
£157.2m
150
£m
Financials
120
90
60
£46.8m
30
0
Total employee pay
Distributions to shareholders
43
Remuneration Policy (unaudited)
Following its Admission to the Official List on 2 April 2015, the Company will present its first Remuneration Policy at the 2016 AGM. It is proposed
that the Policy, which is subject to a binding vote, will take effect from the close of the AGM on 8 September 2016 and unless there is any reason
to review it earlier, it will continue to apply until no later than 8 September 2019, being three years from its date of approval.
Due to the nature of the development of the Company a significant proportion of the Remuneration Policy, in particular with regard to the
H.I.J. scheme, the Company’s long-term incentive scheme, had already been established as part of the process of the Admission of the Company
to the Official List. The process to formalise the Remuneration Policy has been with the goal to build a comprehensive and balanced package
around this established long-term incentive scheme to ensure that the remuneration packages offered, and the terms of the contracts of service,
are competitive and will attract, retain and motivate Executive Directors of the right calibre.
In order to achieve this, the Committee’s policy is to offer a competitive fixed salary allied to an annual incentive scheme broadly equal to this as
reward for excellent annual performance, with recognition and reward for achieving long-term performance recognised as a proportion of those
gains enjoyed by the shareholder investors in the long term under the H.I.J. scheme.
Remuneration packages for Executive Directors
The following table provides a summary of the key components of the remuneration package for Executive Directors, explaining the purpose of
each component linked to the strategy of the Company, their operation and performance conditions, the opportunity for remuneration and the
performance metrics:
Element
Purpose and link to strategy
Operation and performance
conditions
Salary
A fixed element of the
Executive Directors’
remuneration, intended to
attract, retain and motivate
them, whilst remaining
competitive
Benefits
Maximum opportunity
Performance assessment
Takes into account the role
performed by the individual
and information on the rates
of pay for similar jobs in
companies of comparable size
and complexity
Salary is reviewed annually
and otherwise by exception.
Annual increases will ordinarily
be in line with awards to other
employees within the Group.
Consistent with other roles
within the Group, other specific
adjustments may be made to
take account of any changes to
individual circumstances, such
as an increase in scope and
responsibility, an individual’s
development and performance
in the role and any realignment to market levels
An individual’s performance
is one of the considerations in
determining the level of annual
increase in salary
competitive
Benefits are paid to the
Executive Directors in line with
market practice
Benefits are set at a level which Not applicable
the Remuneration Committee
considers to be commensurate
with the role and comparable
with those provided in
companies of a similar size
and complexity
Pension
competitive
Takes into account the role
performed by the individual
and information on the rates of
pay and pension contributions
for similar jobs in companies
of comparable size and
complexity
Contributions are set at a
level which the Remuneration
Committee considers to be
commensurate with the role
and comparable with those
provided in companies of a
similar size and complexity
Annual
incentive
scheme
The annual incentive scheme
is intended to reward
Executive Directors for
their achievements and the
performance of the Group in
the financial year
Following the end of
Maximum of 100% of salary
each financial period, the
Remuneration Committee
reviews actual performance
against the objectives set under
the scheme and determines
awards accordingly
44
Not applicable
The targets against which
annual performance is judged
are primarily based on the
Group’s underlying profitability
and can include other strategic
objectives
Strategic report
Element
Purpose and link to strategy
Long-term The H.I.J. scheme is intended
incentive
to motivate Executive Directors
scheme
for their contribution towards
the long-term development of
the Group
Operation and performance
conditions
Maximum opportunity
The Remuneration Committee
reviews the development of
the Group against the terms of
the scheme
Performance assessment
In aggregate for all participants 10% Growth, as defined on
in the scheme, a maximum of page 41
10% of the growth in value of
the Company, as described on
pages 40 to 41, but subject to
dilution from any other share
incentive arrangements in place
Due to the long term nature of the H.I.J. scheme, which only allows the Directors to receive benefits under that scheme once shareholders have
experienced significant growth in the value of their investment and had an opportunity to realise that growth, there are no clawback
arrangements in respect of awards.
Governance
Salary
Basic salary is reviewed annually with effect from the start of each financial year and is determined by taking account of information on the rates
of salary for similar jobs in companies of comparable size and complexity. Any changes to this basic salary will be made by taking into account
additional responsibilities held by that individual, their performance and inflationary or general pay awards within the Group.
Benefits
Benefits are provided to Executive Directors commensurate with their role and will include a fully expensed car, private medical insurance and
life insurance.
Pensions
The Company policy is to pay pension contributions into Executive Directors’ personal pension plans at a level agreed with each Director as part of
their overall emoluments package. For existing Executive Directors this is at a rate of 10% of salary. Alternatively, the Directors can elect to join a
stakeholder pension scheme.
Annual incentive schemes
The Executive Directors participate in annual incentive schemes, payable in cash, in which the minimum payable is nil and the maximum is 100%
of relevant salaries. Awards are issued under terms set by the Remuneration Committee.
The targets against which annual performance is judged are primarily based on the Group’s underlying profitability and can include other strategic
objectives. For the year ending 2 April 2017, 100% of the performance target is based on underlying profitability set from the three year plan
created for the acquisition of the BCA Group.
This incentive scheme was designed in consultation with the shareholders that invested as part of the Placings on AIM and the Official List in
November 2014 and April 2015 respectively. Under the main terms of the scheme, the performance criteria is to achieve a compound annual
growth rate of 10% on the amounts invested by shareholders, over a three to five year period from the initial investment in November 2014.
Once this performance criteria is met, the Directors are entitled to a share of that growth subject to an overall cap of 10% of the share of the
growth in value of the Company when measured in aggregate with all other share incentive schemes in place. Further details are provided on
pages 40 to 41.
The Committee has adopted the H.I.J. scheme within its Remuneration Policy and as such, no other long-term incentive schemes will be
introduced for the Directors.
Share ownership guidelines
There is no minimum shareholding requirement.
Other payments
The Committee reserves the right to make payments outside the Remuneration Policy in exceptional circumstances. The Committee would only
use this right where it believes that this is in the best interests of the Company and when it would be disproportionate to seek the specific
approval of the shareholders in a general meeting.
Policy for payment on loss of office
The service agreements for the Executive Directors allow for lawful termination of employment by making a payment in lieu of notice or by
making phased payments over any remaining unexpired period of notice. There is no automatic or contractual right to annual incentive payments.
At the discretion of the Committee, for certain leavers, a pro-rata annual incentive may become payable at the normal payment date for the
period of employment and based on full year performance. Should the Committee decide to make a payment in such circumstances, the rationale
would be fully disclosed in the Annual report on remuneration.
45
Financials
Long-term incentive scheme
The long-term incentive scheme is provided through the H.I.J. scheme, the details of which are provided on pages 40 to 41.
Remuneration Policy (unaudited)
Policy for payment on loss of office continued
The Committee reserves the right to make additional liquidated damages payments outside the terms of the Directors’ service contracts where
such payments are made in good faith in order to discharge an existing legal obligation, or by way of damages for breach of such an obligation,
or by way of settlement or compromise of any claim arising in connection with the termination of a Director’s office or employment.
Recruitment
When hiring a new Executive Director, the Committee will use the Remuneration Policy to determine the Executive Director’s remuneration
package. To facilitate the hiring of candidates of the appropriate calibre to implement the Group’s strategy, the Committee may include any other
remuneration component or award not explicitly referred to in this Remuneration Policy sufficient to attract the right candidate. For example, the
Committee may compensate a Director in respect of incentive arrangements forfeited on leaving a previous employer after taking account of
relevant factors such as the nature of the award, any performance conditions attached to the award and their vesting date. Where the recruitment
requires the individual to relocate appropriate relocation costs may be offered.
In determining the appropriate remuneration the Committee will take into consideration all relevant factors, including the quantum and nature of
the remuneration, to ensure the arrangements are in the best interests of the Company and its shareholders.
Contracts of service
The Company’s policy is to offer contracts of employment that attract, motivate and retain skilled employees who are incentivised to deliver the
Company’s strategy.
The current service contracts were concluded with Avril Palmer-Baunack on 25 March 2015 and with Tim Lampert on 1 July 2015. Both service
contracts are terminable by either party on notice of one year and the Company has the option of making a payment in lieu of any unexpired
notice period.
Director
Date of contract
Notice period
(months)
Length of service
at 27 June 2016
4 July 2014 25 March 2015
30 September 2015
1 July 2015
12
12
2 years
9 months
Date of appointment
Tim Lampert
Remuneration packages for Non-Executive Directors
Element
Purpose and link to strategy Operation
Maximum opportunity
Fees
To attract and retain
The fees of Non-Executive Directors are determined by the Board based upon
Not applicable
Non-Executive Directors comparable market levels. Other than with the exception noted above in relation to the
of the right calibre
H.I.J. share scheme, the Non‑Executive Directors do not participate in the Company’s
incentive schemes and nor do they receive any benefits or pension contributions. Where
Non-Executive Directors have the responsibility to chair a sub-committee they may be
eligible to receive additional annual fees of £10,000
Fees
The base fees of Non-Executive Directors for the year ending 2 April 2017 will be £50,000 and the chairman of the Audit & Risk Committee will
receive an additional fee of £10,000.
Letters of appointment
The terms of appointment of the Non-Executive Directors are set out in their letter of appointment. The appointments are terminable by either
party on notice of three months. This notice period does not apply and the Company has no obligation to make termination payments in the
event that a Non-Executive Director is not re-elected as a Director at an AGM.
Director
Date of appointment
James Corsellis
Stephen Gutteridge
Jon Kamaluddin
Piet Coelewij
4 July 2014
4 July 2014
27 August 2015
27 August 2015
27 August 2015
Date of letter of
appointment
Notice period
(months)
Length of service
at 27 June 2016
25 March 2015
25 March 2015
10 August 2015
21 August 2015
17 August 2015
3a
3a
3a
3a
3a
2 years
2 years
10 months
10 months
10 months
a If not re-elected as a Director at an AGM the appointment is terminated with immediate effect and without compensation
46
Strategic report
Illustrations of the application of the policy
The charts below show an indication of the level of remuneration that each Executive Director could receive in the following year, in accordance
with the policy described above.
The charts show the level of remuneration on three bases of performance:
The illustrations include a representation of the potential value of the H.I.J. scheme. In order for any value to accrue under this scheme the
Directors must achieve a minimum of a 10% compound annual growth rate in the amounts invested by shareholders.
Governance
•Fixed only includes remuneration in the following year that is not subject to specific performance criteria, including salary, taxable benefits and
pension contributions.
•On-target includes, in addition to fixed remuneration, the level of remuneration subject to performance criteria. For this purpose, it has been
assumed for the annual incentives that the objective as set in the policy above has been met in full, which represents 100% of salary.
•Maximum is calculated on a similar basis to the On-target basis and in addition includes a representation of the amount that could be received
under the H.I.J. scheme. No remuneration is due to be received in respect of this scheme in the following year and the earliest vesting date is
10 November 2017 unless a sale or change in control occurs at an earlier date (see page 41). However, as this is a once-only award, rather than
one of a series of annual awards, for the purpose of this illustration the potential total value of the award has been included assuming that
compound annual growth of 10% is achieved. This total value has been divided over the vesting period (which is the period from their issue
until 10 November 2017) to provide an indication of the remuneration in a single year. In so doing, it is intended that this illustration includes an
annualised value for the award under the H.I.J. scheme. It should be noted that under the H.I.J. scheme, there is no maximum monetary value
of award, but instead the Directors share a proportion of any gains in the value of the Company.
Tim Lampert
6
6
5
5
4
4
3
£m
£m
82%
2
2
1
0
3
8%
55%
10%
Fixed only
£585,000
On-target
£1,070,000
Maximum
£5,822,000
1
0
100%
46%
54%
49%
23%
28%
Fixed only
£383,000
On-target
£703,000
Maximum
£1,379,000
Salary, benefits and pension
Annual incentives
Long-term incentives
From April 2016, Avril Palmer-Baunack’s salary remains unchanged for the forthcoming year at £485,000. Tim Lampert’s salary was increased to
£320,000 to reflect his wider role in the business.
In addition to the disclosure shown above for Executive Directors and as described on page 41, James Corsellis and Mark Brangstrup Watts also
have an interest in the H.I.J. scheme, as founders of the Company, through Marwyn Long Term Incentive LP. When calculated on a similar basis to
that described above the annual value of these incentives to Marwyn Long Term Incentive LP may represent £3,166,000 in aggregate.
Outside appointments
The Company recognises that Executive Directors may be invited to become Non-Executive Directors of other companies and that this can help
broaden the skills and experience of a Director. Executive Directors are permitted to take on other Non-Executive positions with other companies
and to retain their fees in respect of such a position.
Upon appointment as the Executive Chairman of the Company Avril Palmer-Baunack was permitted to retain her existing Non-Executive
Chairmanship of Redde plc and the associated annual remuneration of £200,000.
Statement of consideration of employment conditions elsewhere in the Group
The Group applies the same key principles to setting remuneration for its employees as those applied to the Directors’ remuneration. In setting
salaries and benefits each business considers the need to retain and incentivise key employees to ensure the continued success of the Group.
Employees of the Group were not consulted in setting the Remuneration policy.
Consideration of shareholder views
The Committee considers it extremely important to maintain open and transparent communication with the Company’s shareholders. The views
of shareholders received through various avenues, such as at the AGM, during meetings with investors and through other contact during the year,
are considered by the Committee and will help to inform the development of the overall remuneration policy.
47
Financials
45%
100%
Governance
Directors’ report
BCA Marketplace plc is incorporated and domiciled in the UK and is
registered in England with the registered number 09019615. The
address of the Company’s registered office is 20 Buckingham Street,
London, WC2N 6EF.
receive dividends as declared from time to time, and are entitled to one
vote per share at general meetings of the Company. Movements in the
Company’s share capital in the year are shown in note 24 to the
Group’s financial statements.
The Company changed its name from Haversham Holdings plc on
30 March 2015. Furthermore, the Company has changed its accounting
reference date from 31 December to 31 March and will therefore
prepare its accounts to a Sunday within seven days of 31 March. This
annual report therefore covers the 15 month period from 1 January
2015 to 3 April 2016. Whilst this is a 15 month period, it represents 12
months of trading following the acquisition of the BCA Group on
2 April 2015.
Powers of the Company Directors
The AGM in June 2015 granted the Directors the authority to allot
shares up to a maximum nominal amount of £2.6m (being one third of
the Company’s issued share capital at that date) plus a further £2.6m in
connection with a rights issue. The AGM also granted the Directors the
authority to make market purchases of shares up to 15% of the share
capital of the Company within prescribed limits. These authorities were
not exercised in the period.
The report has been drawn up and presented in accordance with, and
in reliance upon, applicable English Law and the liabilities of the
Directors in preparing this report shall be subject to the limitations and
restrictions provided by such law. The Directors’ report is designed to
inform shareholders and help them assess how the Directors have
performed their duty to promote the success of the Company.
Substantial shareholdings
As at 20 June 2016, the Directors had been advised of the following
interests in the shares of the Company.
Strategic report and corporate governance
The Strategic report can be found on pages 1 to 27 and is included by
reference into this Director’s report. The Strategic report sets out the
development and performance of the Group’s business during the
financial period, the position of the Company at the end of the period,
a description of the principal risks and uncertainties facing the
Company, indications of future developments in the business, reporting
of Greenhouse Gas Emissions and the Group’s Governance report.
Invesco Asset Management
Aviva Investors
Capital Group Co
Woodford Asset Management
AXA Framlington Investment
Management
M&G Investment Managers
Royal London Asset Management
Substantial shareholders of 3% or more, as at
20 June 2016
Number of shares
Dividend
An interim dividend of 2.0p per Ordinary share was paid to
shareholders on the Register of members at the close of business on
11 December 2015. The Directors are recommending a final dividend
for the period of 4.0p per Ordinary share which together with the
interim dividend of 2.0p, makes a total for the period of 6.0p,
amounting to £46.8m. Subject to shareholders’ approval at the Annual
General Meeting (‘AGM’) on 8 September 2016, the final dividend will
be paid on 30 September 2016 to shareholders on the Register of
members at the close of business on 23 September 2016.
% shareholding
169,779,288
133,341,640
128,565,955
87,240,163
21.76
17.09
16.48
11.18
33,716,667
30,000,000
26,863,900
4.32
3.84
3.44
It should be noted that these holdings may have changed since notified
to the Company. However, notification of any change is not required
until the next applicable threshold is crossed. As at the date of this
report, no further changes had been notified to the Company pursuant
to Rule 5.1 of the Disclosure and Transparency Rules.
Directors
The Directors of the Company as at the date of this report are named
on pages 30 to 31 together with their profiles. In addition, Spencer
Lock was appointed to the Board on 2 April 2015 and resigned with
effect from 30 September 2015.
Share capital
The shares in issue at the year-end comprised 780,247,192 (2014:
25,041,670) Ordinary shares of £0.01, giving a total nominal value of
£7.8m (2014: £0.3m). The holders of Ordinary shares are entitled to
48
Strategic report
Political donations
During the year the Group did not make any donations to any political
party or other political organisation and did not incur any political
expenditure within the meanings of Sections 362 to 379 of the
Companies Act 2006.
All Directors who have served during the year and who remain a
Director as at 3 April 2016 will retire and offer themselves for either
election or re-election at the forthcoming AGM. The interests of the
Directors in the share capital of the Company at 3 April 2016, the
Directors’ total remuneration for the year and details of their service
contracts and Letters of Appointment are set out in the Directors’
remuneration report on pages 38 to 47.
Events after the balance sheet date
Events after the balance sheet date are disclosed in note 30 to the
financial statements. There have been no events after the balance sheet
date which require disclosure.
With the exception of the interest in H.I.J. shares disclosed on page 41,
no Directors have beneficial interests in the shares of any subsidiary
company. There have been no changes in the interests of the Directors
in the share capital of the Company from 3 April 2016 to 27 June 2016.
Annual General Meeting
The AGM of the Company will be held at the offices of Berwin
Leighton Paisner LLP, Adelaide House, London Bridge, London, EC4R
9HA at 9am on 8 September 2016.
The resolutions being proposed at the 2016 AGM are general in nature
and include the receipt of these Annual Report and Accounts including
the Directors remuneration report and Remuneration Policy, the
election or re-election of all the members of the Board, the reappointment of the auditor, the renewal for a further year of the limited
authority of the Directors to allot the unissued share capital of the
Company and the disapplication of pre-emption rights, the renewal of
the authority to make off-market purchases and the request for
shareholder approval to reduce the notice period for calling general
meetings (other than the AGM) to 14 clear days.
Directors’ conflicts of interest
The Group has procedures in place for managing conflicts of interest.
Should a Director become aware that they, or their connected parties,
have an interest in an existing or proposed transaction with the Group,
they should notify the Board in writing or at the next Board meeting.
Internal controls are in place to ensure that any related party
transactions involving Directors, or their connected parties, are
conducted on an arm’s length basis. Directors have a continuing duty
to update any changes to these conflicts.
Financials
Significant agreements – change of control
The Group’s term loan and revolving facility contain customary
prepayment, cancellation and default provisions including, if required
by a lender, mandatory prepayment of all utilisations provided by that
lender upon the sale of all or substantially all of the business and assets
of the Group or a change of control. The Company does not have
agreements with any Director that would provide compensation for
loss of office or employment resulting from a takeover except for
provisions which may cause awards and options granted under such
arrangements to vest on a takeover.
Governance
Directors’ indemnities
The Company maintains Directors’ and officers’ liability insurance,
which gives appropriate cover for legal action brought against its
Directors and officers.
The Board considers that issues of corporate responsibility are
important. The Board’s report, including the Group’s policies on
employee involvement and disability, and a statement on Greenhouse
Gas Emissions for the Group, is set out in the Corporate responsibility
report on pages 26 and 27.
49
Governance
Directors’ report
Going concern
The Group’s business activities, together with the factors likely to affect
its future development, performance and position are set out on pages
1 to 27. The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the ’Our performance’
section on pages 20 to 22. In addition, note 27 to the Group financial
statements include the Group’s objectives, policies and processes for
managing its capital, its financial risk management objectives, details of
its financial instruments and hedging activities and its exposures to
credit risk and liquidity risk. The Board has a reasonable expectation
that the Company and Group have adequate resources to continue in
operational existence for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing these
financial statements.
Responsibility statement of the Directors in respect of the
Annual Report and Accounts
We confirm that to the best of our knowledge:
•the financial statements, prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation taken as a whole; and
•the Strategic report includes a fair review of the development and
performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.
For and on behalf of the Directors:
Auditor
PricewaterhouseCoopers LLP has confirmed its willingness to continue
in office as auditor of the Group. In accordance with section 489 of the
Companies Act 2006, separate resolutions for the re-appointment of
PricewaterhouseCoopers LLP as auditor of the Group and for the
Directors to determine their remuneration will be proposed at the
forthcoming AGM of the Company.
Executive Chairman
27 June 2016
Statement as to disclosure of information to auditors
The Directors who held office at the date of approval of this Directors’
report confirm that, so far as they are each aware, there is no relevant
audit information of which the Company’s auditor is unaware; and
each Director has taken all the steps that they ought to have taken
as a Director to make themselves aware of any relevant audit
information and to establish that the Company’s auditor is aware
of that information.
50
Tim Lampert
Governance
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Strategic report
Statement of Directors’ responsibilities
financial position of the parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006.
They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under that law
they are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent Company financial statements on
the same basis.
Under applicable law and regulations, the Directors are also responsible
for preparing a Strategic report, Directors’ report, Directors’
remuneration report and Corporate Governance Statement that
complies with that law and those regulations.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and parent Company and of their
profit or loss for that period. In preparing each of the Group and parent
Company financial statements, the Directors are required to:
•select suitable accounting policies and then apply them consistently;
•make judgements and estimates that are reasonable and prudent;
and
•state whether they have been prepared in accordance with IFRSs as
adopted by the EU.
Governance
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent Company’s
transactions and disclose with reasonable accuracy at any time the
Financials
51
Governance
Independent auditor’s report
Report on the financial statements
Our opinion
In our opinion:
Opinions on other matters prescribed by the Companies
Act 2006
In our opinion:
•BCA Marketplace plc’s Group financial statements and parent
Company financial statements (the ‘financial statements’) give a true
and fair view of the state of the Group’s and of the Company’s affairs
as at 3 April 2016 and of the Group’s profit and the Group’s and the
parent Company’s cash flows for the 15 month period (the ‘period’)
then ended;
•the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards (‘IFRSs’)
as adopted by the European Union;
•the parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the Companies
Act 2006; and
•the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
•the information given in the Strategic report and the Directors’ report
for the financial period for which the financial statements are
prepared is consistent with the financial statements; and
•the part of the Directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and
explanations received
Under the Companies Act 2006 we are required to report to you if, in
our opinion:
•we have not received all the information and explanations we require
for our audit; or
•adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
•the Company financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with the
accounting records and returns.
What we have audited
The financial statements, included within the Annual Report and
Accounts (the ‘Annual Report’), comprise:
•the consolidated and parent Company balance sheets as at 3 April
2016;
•the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
•the consolidated and parent Company cash flow statements for the
period then ended;
•the consolidated and parent Company statements of changes in
equity for the period then ended; and
•the notes to the financial statements, which include a summary of
significant accounting policies and other explanatory information.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in
our opinion, certain disclosures of Directors’ remuneration specified
by law are not made. We have no exceptions to report arising from
this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the Directors
As explained more fully in the Statement of Directors’ responsibilities
set out on page 51, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true
and fair view.
The financial reporting framework that has been applied in the
preparation of the financial statements is IFRSs as adopted by the
European Union, and applicable law and, as regards the Company
financial statements, as applied in accordance with the provisions of
the Companies Act 2006.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’). Those
standards require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
In applying the financial reporting framework, the Directors have made
a number of subjective judgements, for example in respect of
significant accounting estimates. In making such estimates, they have
made assumptions and considered future events.
This report, including the opinions, has been prepared for and only for
the Company’s members as a body in accordance with Chapter 3 of
Part 16 of the Companies Act 2006 and for no other purpose. We do
not, in giving these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our
prior consent in writing.
52
Strategic report
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An
audit involves obtaining evidence about the amounts and disclosures in
the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of:
•whether the accounting policies are appropriate to the Group’s and
the parent Company’s circumstances and have been consistently
applied and adequately disclosed;
•the reasonableness of significant accounting estimates made by the
Directors; and
•the overall presentation of the financial statements.
Governance
We primarily focus our work in these areas by assessing the Directors’
judgements against available evidence, forming our own judgements,
and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing
techniques, to the extent we consider necessary to provide a
reasonable basis for us to draw conclusions. We obtain audit evidence
through testing the effectiveness of controls, substantive procedures or
a combination of both.
In addition, we read all the financial and non-financial information in
the Annual Report to identify material inconsistencies with the audited
financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing the audit.
If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Financials
John Minards (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
St Albans
27 June 2016
53
Consolidated financial statements
Consolidated income statement
For the 15 months
ended 3 April 2016¹
Note
Revenue
Cost of sales
£m
4
Gross profit
Operating costs
7
4
Adjusted EBITDA
Less: – Depreciation and amortisation
– Amortisation of acquired intangibles
– Acquisition costs
– Business closure costs
– Other significant or non-recurring items
£m
For the 8 months
ended 31 December 20142
£m
1,153.1
(844.5)
–
–
308.6
(292.3)
–
(0.3)
16.3
(0.3)
98.5
4
4
4
4
4
£m
(17.0)
(34.4)
(27.4)
(1.1)
(2.3)
(0.3)
–
–
–
–
–
(82.2)
–
16.3
0.3
(12.7)
(0.3)
–
–
3.9
(0.3)
3.8
–
Profit/(loss) for the period
7.7
(0.3)
Attributable to:
Equity owners of the parent
Non-controlling interests
7.7
–
(0.3)
–
7.7
(0.3)
1.2
1.2
(5.5)
(5.5)
Finance income
Finance costs
9
Profit/(loss) before income tax
Income tax credit
12
Earnings/(loss) per share from continuing operations
attributable to the equity holders of the parent during
the period
(expressed in pence per share)
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
11
11
1 The current period is a 15 month period ended 3 April 2016, which represents 12 months of trading since the BCA Group acquisition on 2 April 2015
2 Prior period comparatives relate to BCA Marketplace plc, which during that period was known as Haversham Holdings plc, and its subsidiary H.I.J. Limited, for the 8 month
period from incorporation to 31 December 2014
54
Strategic report
Consolidated statement of
comprehensive income
For the
15 months ended
3 April 2016
£m
7.7
For the
8 months ended
31 December 2014
£m
Other comprehensive income:
Items that will not be reclassified to the income statement
Remeasurements on defined benefit schemes, including deferred tax
Items that may be subsequently reclassified to the income statement
Foreign exchange translation
29.0
–
Total other comprehensive income, net of tax
28.7
–
Total comprehensive profit/(loss) for the period
36.4
(0.3)
Attributable to:
Equity owners of the parent
36.4
–
(0.3)
–
36.4
(0.3)
(0.3)
(0.3)
–
Governance
Financials
55
Consolidated statement of
changes in equity
Attributable to equity owners of the parent
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Foreign
exchange
reserve
£m
–
–
–
–
–
–
–
–
–
0.3
Total transactions with owners
Balance at 31 December 2014
(Accumulated
deficit)/
retained
profit
£m
Total
£m
Noncontrolling
interests
£m
Total
equity
£m
–
–
–
–
–
(0.3)
(0.3)
–
(0.3)
–
–
(0.3)
(0.3)
–
28.7
–
–
–
29.0
–
(0.3)
29.0
0.3
28.7
–
–
–
29.0
–
29.0
0.3
28.7
–
–
(0.3)
28.7
–
28.7
–
–
–
–
–
–
–
29.0
7.7
(0.3)
7.7
28.7
–
–
7.7
28.7
–
–
–
29.0
7.4
36.4
–
36.4
7.5
–
–
–
986.6
(1,015.3)
–
–
103.6
–
–
–
–
–
–
–
–
1,015.3
0.6
(15.6)
1,097.7
–
0.6
(15.6)
–
–
–
–
1,097.7
–
0.6
(15.6)
–
–
–
–
–
–
(0.2)
(0.2)
7.5
(28.7)
103.6
–
1,000.3
1,082.7
(0.2)
1,082.5
Balance at 3 April 2016
7.8
–
103.6
29.0
1,007.4
1,147.8
(0.2)
1,147.6
Note
Balance on incorporation at 30 April 2014
Total comprehensive income for the
period
Loss for the period
Total comprehensive loss for the
period
Contributions and distributions
Net proceeds from shares issued
24
period
Profit for the period
Other comprehensive income
period
Capital reduction
Equity-settled share based payments
Dividends paid
Changes in ownership interests Acquisition of subsidiary with
non-controlling interest
24
24
29
25
56
Note
Non-current assets Intangible assets
Property, plant and equipment
Deferred tax assets
13
14
23
Total non-current assets
15
16
17
Total current assets
Total assets
Non-current liabilities
Bank borrowings
Trade and other payables
Pension deficit
Provisions
Deferred tax liabilities
As at
31 December 2014
£m
1,449.5
115.5
15.9
–
–
–
1,580.9
–
19.3
210.0
102.4
0.3
–
–
28.8
–
332.0
28.8
1,912.9
28.8
–
–
–
–
–
(498.9)
–
(40.2)
(225.3)
(0.9)
–
(0.1)
–
Total current liabilities
(266.4)
(0.1)
Total liabilities
(765.3)
(0.1)
Net assets
1,147.6
28.7
7.8
–
103.6
29.0
1,007.4
0.3
28.7
–
–
(0.3)
Equity shareholders’ funds
1,147.8
(0.2)
28.7
–
Total shareholders’ funds
1,147.6
28.7
22
21
23
Total non-current liabilities
Current liabilities
Buyer finance borrowings
Provisions
20
18
21
Share capital
Share premium
Merger reserve
Foreign exchange reserve
Retained profit/(accumulated deficit)
24
24
24
24
24
The financial statements on pages 54 to 93 were approved by the Board on 27 June 2015 and were signed on its behalf by:
Executive Chairman
Tim Lampert
57
Financials
(273.1)
(88.7)
(7.6)
(18.7)
(110.8)
19
18
Governance
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current tax
As at
3 April 2016
£m
Strategic report
Consolidated balance sheet
Consolidated cash flow statement
Note
Cash generated from operations
Increase in buyer finance loan book
Interest paid
Interest received
Tax paid
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
89.9
(36.6)
(6.1)
0.3
(3.7)
(0.1)
–
–
–
–
43.8
(46.4)
(0.1)
–
(2.6)
(0.1)
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of asset held for sale
Acquisition of subsidiary undertakings, net of cash acquired
(24.6)
(13.3)
4.9
1.5
(690.3)
–
–
–
–
–
Net cash outflow from investing activities
(721.8)
–
993.4
(15.6)
275.0
(468.6)
(7.7)
(1.8)
20.5
28.9
–
–
–
–
–
–
795.2
28.9
70.8
2.8
28.8
28.8
–
–
102.4
28.8
6
Net cash inflow/(outflow) from operating activities before acquisition related cash flows
Acquisition related cash flows
Net cash outflow from operating activities
Cash flows from financing activities
Proceeds from share issue
Dividends paid
Proceeds from borrowings
Repayments of borrowings
Financing fees paid
Payment of finance lease liabilities
Increase in buyer finance borrowings
24
25
19
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Foreign exchange on cash held
Cash and cash equivalents at period start
Cash and cash equivalents at period end
17
58
Notes to the consolidated financial statements
Strategic report
1. General information
BCA Marketplace plc (the ‘Company’), formerly Haversham Holdings plc, was incorporated in April 2014 with the aim to acquire and manage
companies in the UK and European automotive sector. On 2 April 2015, BCA Marketplace plc acquired the BCA Group (‘BCA Group’). 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. Acquisitions are discussed further in note 5.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’) and equity account the
Group’s interests in joint ventures. The parent Company financial statements present information about the Company as a separate entity and not
about its Group, and can be found on pages 94 to 99.
BCA Marketplace plc has changed its year end from 31 December to 31 March and will prepare its financial statements to a Sunday within seven
days of 31 March in order to present its financial position in the most meaningful way. Whilst this is therefore a 15 month period ended 3 April
2016, it represents 12 months of trading since the BCA Group acquisition on 2 April 2015. The comparative period is for an 8 month period from
incorporation to 31 December 2014 and includes no trading activities.
2. Accounting policies
(a) Basis of preparation
These consolidated financial statements for the 15 month period ended 3 April 2016 have been prepared in accordance with International
Financial Reporting Standards (‘IFRS’) and IFRS Interpretations Committee (‘IFRS IC’) interpretations as adopted by the European Union (‘Adopted
IFRS’) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies set out below have,
unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements. The consolidated financial
statements have 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.
Governance
BCA Marketplace plc is incorporated and domiciled in the UK with the registered number 09019615. The address of the Company’s registered
office is 20 Buckingham Street, London, WC2N 6EF.
The financial statements and the notes to the financial statements are presented in millions of pounds Sterling (‘£m’) except where
otherwise indicated.
Judgements made by the Directors in the application of the accounting policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are discussed in note 3.
(b) Going concern
At the start of the period the Group had no debt. When the Group acquired the BCA Group it also agreed new finance facilities, as discussed
in note 19.
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 consolidated financial statements have 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
consolidated financial statements. 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.
59
Financials
The Group now 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.
2. Accounting policies continued
(d) New standards, amendments and interpretations
Adopted IFRSs applicable to the annual financial statements of the Group and the Company for the period ended 3 April 2016 have been applied.
The accounting policies adopted in the presentation of the consolidated and parent Company financial statements reflect the adoption of the
amendments to the following standards as of 1 January 2015:
•IFRS 2 Share based payments
•IFRS 3 Business combinations
•IFRS 8 Operating segments
•IFRS 13 Fair value measurement
•IAS 16 Property, plant and equipment
•IAS 19 Employee benefits
•IAS 24 Related party disclosures
•IAS 36 Impairment of assets
These amendments were all effective as at 1 February 2015, but none have had a material impact on the consolidated and parent Company
financial statements.
Standards and interpretations which are issued but not yet effective and have not been early adopted by the Group are as follows:
•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 accounting periods starting on or after 1 January 2018, subject to EU endorsement. The impact of the
standard is currently being assessed.
•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.
•IFRS 16 Leases establishes principles for the recognition, measurement, presentation and disclosure of leases and replaces IAS 17. 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.
(e) Foreign currency translation
The functional currency of the Company and the majority of entities within the Group is Sterling because that is the currency of the primary
economic environment in which they operate. The Group’s presentation currency is Sterling.
Transactions and balances
Foreign currency transactions are translated into the respective functional currency of Group entities using the exchange rates prevailing at the
date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
period-end exchange rates of unsettled monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the
date of the transaction.
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 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 reserve shall be recognised in the income statement when the gain or loss on disposal is recognised.
60
Strategic report
(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.
Governance
Investment property
Properties that meet the definition within IAS 40 of an investment property are accounted for using the cost model as described in the Owned
assets paragraph above.
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 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 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.
Land and buildings
Fixture, fittings and equipment
Plant, machinery and motor vehicles
50 years, or over the unexpired period of the lease on leasehold buildings if shorter
2 – 10 years
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 other intangible assets 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.
Acquired computer software and software licences are capitalised and amortised on a straight-line basis over their useful lives. 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.
61
Financials
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:
(g) Intangible assets continued
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 they are brought into use with useful lives as indicated below:
Customer relationships Brand
Software – Internally generated
Software – Acquired
12 – 20 years
15 – 25 years
3 – 10 years
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. 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 mainly cash and cash equivalents and trade and other receivables.
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 asset’s 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. Inventories are stated at the lower of purchase cost, less any administration fees paid to the Group by the seller of the
vehicle, and net realisable value. Cost represents expenses incurred in bringing each product to its present location and condition. 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.
62
Strategic report
(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 drawdown 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.
Governance
(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-free 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.
Vehicle Remarketing revenue represents selling 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.
In the execution of auction activities, the Group may occasionally, in the course of achieving a successful sale on behalf of the vendor, take title to
or sell vehicles on its own account (between 1% and 2% of volume) resulting in a net loss or gain which is included within cost of sales rather
than revenue.
Interest earned in respect of the provision of buyer finance is recognised over the term of the funding and is included within revenue.
Vehicle Buying revenue represents the vehicle sale proceeds obtained when the vehicle is sold. 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 cost of sales. The Vehicle Buying
revenue is recognised on the date of sale.
Revenue for other services, including logistics and automotive services, are recognised as the contracted service has been provided.
63
Financials
(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.
(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.
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 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 consolidated income statement.
64
Strategic report
Changes to the retirement benefit obligation or asset due to experience and changes in actuarial assumptions are included in the 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.
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 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 costs of equity-settled transactions are recognised, together with a corresponding increase in equity, over the period in 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).
Governance
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.
(w) EBITDA, adjusted EBITDA and adjusted operating profit
Earnings before interest, taxation, depreciation and amortisation (‘EBITDA’), adjusted EBITDA and adjusted operating profit are non-GAAP
measures used by management to assess the operating performance of the Group. The following items are excluded from EBITDA and operating
profit to calculate adjusted EBITDA and adjusted operating profit, respectively:
•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;
•amortisation of intangible assets arising on acquisition of businesses.
3. Critical accounting judgements and estimates
The preparation of the Group’s consolidated and parent Company financial statements 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. 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.
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 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.
Once this had been determined, and for all other acquisitions in the period, management are then 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.
65
Financials
The Directors primarily use the adjusted EBITDA measure when making decisions about the Group’s activities. As these are non-GAAP measures,
adjusted EBITDA and adjusted operating profit measures used by other entities may not be calculated in the same way and hence are not
directly comparable.
3. Critical accounting judgements and estimates continued
Estimates
Furthermore, the Directors consider that the following estimates and assumptions are likely to have the most significant effect on the amounts
recognised in the consolidated and parent Company financial statements.
Impairment of goodwill
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.
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.
66
Strategic report
4. Segmental reporting
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.
The Board of Directors consider the business to be split into three main segments generating revenue: Vehicle Remarketing, comprising the UK
and International divisions, and Vehicle Buying. ‘Other’ comprises central head office functions and costs not directly attributable to the segments,
as well as recently acquired businesses which have yet to be integrated into existing business segments.
For the 15 months ended 3 April 2016
Vehicle Remarketing
Vehicle Buying
UK
International
Total
£m
£m
£m
£m
Other
Total
£m
£m
270.2
(3.0)
109.9
(0.4)
380.1
(3.4)
698.4
–
80.1
(2.1)
1,158.6
(5.5)
Total revenue from external customers
267.2
109.5
376.7
698.4
78.0
1,153.1
Adjusted EBITDA
Depreciation and amortisation
69.4
(10.0)
18.9
(2.9)
88.3
(12.9)
16.1
(1.2)
(5.9)
(2.9)
98.5
(17.0)
Adjusted operating profit
59.4
16.0
75.4
14.9
(8.8)
81.5
Amortisation of acquired intangibles
Acquisition costs
Business closure costs
Other significant or non-recurring items
(34.4)
(27.4)
(1.1)
(2.3)
Operating profit
Finance income
Finance cost
16.3
0.3
(12.7)
Capital expenditure
3.9
25.4
3.4
28.8
2.1
20.6
51.5
Information on segment assets and liabilities is not regularly reported to the Board of Directors.
Acquisition costs of £27.4m relate to the acquisition of the BCA Group (£20.6m), SMA (£4.7m, including the loss on the sale of the Newcastle site
of £2.5m), BCA Automotive (£0.7m), Ambrosetti (£0.4m) and further due diligence costs of transactions not completed (£1.0m), which have been
charged to operating costs.
Revenue with external customers in the UK and Ireland represents £1.1bn of the Group’s revenue, with the other £0.1bn being generated within
Europe. Revenue by type is shown below:
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
699.6
446.8
6.7
–
–
–
1,153.1
–
Sale of goods
Rendering of services
Interest
Total revenue
67
Financials
Profit before taxation
Governance
Revenue
Total revenue
Inter-segment revenue
4. Segmental reporting continued
Comparative information for the 8 months ended 31 December 2014
In the comparative period the Group incurred operating costs of £0.3m.
The segments identified above represent segments that were formed following the acquisition of the BCA Group. As a result there is no
comparative information available within BCA Marketplace plc. Proforma information for the BCA Group during the equivalent period in
the prior year from April 2014 to March 2015 is available on pages 20 to 22. This does not include BCA Marketplace plc, SMA, BCA Automotive
or Ambrosetti.
5. Acquisitions
The following acquisitions have been made by the Group in the period.
BCA Group
On 2 April 2015 the Group acquired 100% of the Ordinary shares of the BCA Group for £815.5m satisfied by £711.2m in cash and £104.3m 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 £1.50 per share. The company acquired was CD&R Osprey Investment S.à.r.l., the immediate parent of the BCA Group. The BCA Group is the
number one vehicle remarketing business in the UK and Europe, as well as owning We Buy Any Car, the market leading vehicle buying business in the
UK. This acquisition is part of the Group’s strategy of acquiring and developing substantial businesses in the automotive sector.
Fair value
£m
Intangible assets:– Brand
– Vendor relationships
– Buyer relationships
– Software fair value uplift
– Software net book value
Inventories
Provisions
Pension liability
Deferred tax liability
Borrowings
158.9
329.0
61.3
22.5
21.0
54.3
14.7
144.8
73.9
(298.0)
(21.1)
(5.0)
(97.0)
(451.9)
Net assets acquired
Goodwill
7.4
807.9
Consideration
815.5
(0.2)
815.3
Goodwill has arisen on the acquisition due to the unique position that the BCA Group has in the automotive sector. The BCA 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.
The acquired balance sheet above has changed from what was reported in the Interim report for the nine months ended 4 October 2015. The net
movement of £1.5m reflects the finalisation of the fair value acquisition accounting and predominantly relates to the valuation of property,
acquired corporation tax debtor and deferred tax liability.
The fair value of acquired receivables was £122.2m. The gross contractual amounts receivable were £123.3m were, at the acquisition date, £1.1m
of contractual cash flows were not expected to be received.
68
Strategic report
Other acquisitions
The Group made three other acquisitions in the financial period and in each case acquired 100% of the share capital. Fair values of the assets
and liabilities (excluding cash and borrowings) have been determined on a provisional basis whilst being formally reviewed and will be finalised
within 12 months of each acquisition.
SMA (acquired 1 June 2015)
SMA operates within the vehicle remarketing sector of the automotive industry and therefore complements the acquisition of the BCA 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 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 combining the operations of BCA Automotive with the logistics businesses within the BCA Group
and SMA.
Governance
Ambrosetti (acquired 4 February 2016)
Ambrosetti specialises in vehicle preparation, refurbishment and defleet 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.
Fair values of the acquired assets and liabilities at acquisition are as follows:
SMA
£m
BCA Automotive
£m
Ambrosetti
£m
Total
£m
1.4
6.1
1.1
0.1
16.7
0.5
12.5
3.9
(17.1)
(1.7)
(16.7)
–
0.7
3.0
–
0.1
18.0
–
17.8
2.0
(27.8)
(0.1)
–
(3.2)
–
–
–
–
0.6
0.1
5.7
–
(3.5)
–
(0.6)
–
2.1
9.1
1.1
0.2
35.3
0.6
36.0
5.9
(48.4)
(1.8)
(17.3)
(3.2)
Net assets acquired
Goodwill
6.8
23.0
10.5
5.5
2.3
10.2
19.6
38.7
Consideration (settled in cash)
29.8
16.0
12.5
58.3
The net movements of £3.7m since the Interim statement predominantly reflect updates to the property valuations.
Breakdown of acquired receivables:
Fair value of acquired receivables
Gross contractual amounts receivable
Contractual cash flows not expected to be received
SMA
£m
BCA Automotive
£m
Ambrosetti
£m
Total
£m
10.8
10.9
0.1
16.9
17.1
0.2
4.5
4.5
–
32.2
32.5
0.3
Impact of acquisitions
Note 4 shows the contribution of the acquisitions from the date of the respective transactions to 3 April 2016. 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 £1,540.8m and
£11.8m respectively. 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.
69
Financials
Intangible assets: – Brand
– Vendor relationships
– Buyer relationships
– Software net book value
Inventories
Deferred tax liability
Borrowings and overdraft
Pension liability
6. Cash generated from operations
Note
Cash flows from operating activities
Adjustments for:
Income tax credit
Finance income
Finance costs
Depreciation
Amortisation
Profit on sale of property, plant and equipment
Retirement benefit obligations
Acquisition costs
Changes in working capital:
Increase in inventories
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Decrease in provisions
For the
8 months ended
31 December 2014
£m
7.7
(3.8)
(0.3)
12.7
7.8
43.6
(0.2)
0.6
(1.0)
27.4
(3.7)
8.3
(7.7)
(1.5)
(0.3)
–
–
–
–
–
–
–
–
–
–
–
0.2
–
89.9
(0.1)
12
9
14
13
Cash generated from operations
For the
15 months ended
3 April 2016
£m
7. Operating costs
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
–
–
–
–
–
0.3
0.3
Employment costs
Operating lease – land and buildings
Operating lease – other
Depreciation of property, plant and equipment
Amortisation of intangible assets
Other operating costs
110.1
30.9
2.4
5.8
43.6
99.5
Operating costs
292.3
70
Strategic report
8. Employees and Directors
Staff costs for the Group during the period:
Wages and salaries
Pension costs
Social security costs
Share based payment expense
Total gross employment costs
Note
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
29
137.3
3.3
16.0
0.6
–
–
–
–
157.2
–
(8.1)
Staff costs capitalised
Total employment cost expense
–
–
For the
15 months ended
3 April 2016
Number
For the
8 months ended
31 December 2014
Number
UK
International
2,477
797
–
–
Vehicle Remarketing
Vehicle Buying
Other
3,274
435
1,408
–
–
3
Total employee numbers
5,117
3
Average monthly number of people employed (including Executive Directors) by reportable segment:
Governance
149.1
The employee numbers above reflect the average employee numbers since each acquisition and therefore includes the average number of people
employed by the BCA Group for the 12 month period ended 3 April 2016, SMA for the 10 month period, BCA Automotive for the seven month
period and Ambrosetti for the two month period. The average number of employees for the 15 month period would otherwise be 3,668 people,
which is not reflective of the on-going number of employees within the 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 £2.3m
(period to 31 December 2014: £nil).
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.
71
Financials
Directors’ emoluments
For details of Directors’ emoluments see the Directors’ remuneration report on pages 39 to 43.
9. Finance costs
Note
Interest payable
Finance lease interest
Net interest expense on retirement benefit obligations
Unwinding of discount on provisions and non-current liabilities
22
Finance costs
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
9.6
0.4
0.2
2.5
–
–
–
–
12.7
–
10. Auditor’s remuneration
During the period the Group (including its overseas subsidiaries) obtained the following services from the Group auditor at costs as detailed
below:
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
Fees payable to Group auditor and its associates for the audit of the parent Company and
consolidated financial statements
Fees payable to Group auditor and its associates for other services:
The audit of Group subsidiaries
Audit related assurance services
Tax advisory services
Tax compliance services
0.3
0.7
1.9
0.1
0.1
–
–
0.3
–
–
Total auditor’s remuneration
3.1
0.3
Included in fees payable to the Group auditor and its associates for the audit of parent Company and consolidated financial statements is £0.1m
relating to the audit of the Company’s financial statements.
11. Earnings per share
Basic earnings per share is calculated by dividing net profit for the period attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period.
For the
15 months ended
3 April 2016
For the
8 months ended
31 December 2014
7.7
(0.3)
Weighted average number of shares used in calculating basic earnings per share (millions)
Incremental shares in respect of employee share schemes
630.2
13.0
5.2
–
Weighted average number of shares used in calculating diluted earnings per share
643.2
5.2
1.2
1.2
(5.5)
(5.5)
Profit/(loss) for the period attributable to equity shareholders (£m)
Basic earnings/(loss) per share (pence)
Diluted earnings/(loss) per share (pence)
72
Strategic report
An adjusted diluted earnings per share has been calculated using the weighted average number of shares in issue for the 12 month period from
the Placing and acquisition of the BCA Group on 2 April 2015. Management believe this adjustment to the weighted average number of shares is
consistent with the earnings of the BCA Group which are included for the same period.
Note
Profit/(loss) for the period attributable to equity shareholders
Add back:
Significant or non-recurring costs
Tax credit on significant or non-recurring costs
4
Adjusted earnings
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
7.7
65.2
(17.7)
(0.3)
–
–
55.2
(0.3)
m
Weighted average number of shares used in calculating adjusted basic earnings per share
Incremental shares in respect of employee share schemes
780.2
13.1
5.2
–
Weighted average number of shares used in calculating adjusted diluted earnings per share
793.3
5.2
7.1
7.0
(5.5)
(5.5)
Adjusted basic earnings/(loss) per share (pence)
Adjusted diluted earnings/(loss) per share (pence)
Governance
m
12. Income tax
For the
8 months ended
31 December 2014
£m
Current taxation:
Current tax for the period
Adjustments in respect of prior periods
3.6
–
–
–
Total current tax charge
3.6
–
Deferred taxation:
Origination and reversal of temporary differences
Tax rate adjustment
1.7
(9.1)
–
–
(7.4)
–
(3.8)
–
Note
Total deferred tax credit
23
Income tax credit
73
Financials
For the
15 months ended
3 April 2016
£m
12. Income tax continued
The tax credit for the period differs from the standard rate of corporation tax in the UK of 20.2% (2014: 21.0%). The differences are
explained below:
For the
15 months ended
3 April 2016
£m
For the
8 months ended
31 December 2014
£m
Profit/(loss) on ordinary activities before tax
3.9
(0.3)
Profit/(loss) on ordinary activities multiplied by the rate of corporation tax in the UK of 20.2% (2014: 21.0%)
0.8
(0.1)
Effects of:
Expenses not deductible for tax purposes
Income not subject to tax
Reduction in tax rate
Effect of different tax rates on profits earned outside the UK
Unrecognised tax losses
6.9
(2.5)
(9.1)
0.5
(0.4)
–
–
–
–
0.1
Total taxation credit
(3.8)
–
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: 21.0%). 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
Goodwill
£m
Customer
relationships
£m
Brands
£m
Software
£m
Total
£m
Cost
At 1 January 2015
Acquired through business combinations
Additions
Disposals
Exchange difference
–
846.6
–
(2.9)
18.3
–
400.5
–
–
10.8
–
161.0
–
–
1.9
–
43.7
13.3
(1.3)
1.4
–
1,451.8
13.3
(4.2)
32.4
At 3 April 2016
1,493.3
862.0
411.3
162.9
57.1
Accumulated amortisation
At 1 January 2015
Charge for the year
Disposals
Exchange difference
–
–
–
–
–
22.0
–
0.6
–
8.8
–
0.1
–
12.8
(0.8)
0.3
–
43.6
(0.8)
1.0
At 3 April 2016
–
22.6
8.9
12.3
43.8
Net book value
At 1 January 2015
–
–
–
–
–
862.0
388.7
154.0
44.8
1,449.5
At 3 April 2016
The Group had no intangible assets in the comparative period.
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.
74
Strategic report
Goodwill
Goodwill acquired in a business combination is allocated to the cash-generating unit (‘CGU’) or group of CGUs 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
£m
Vehicle Remarketing – UK
Vehicle Remarketing – International
Vehicle Buying
Other
515.3
195.0
115.9
35.8
862.0
Governance
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 Group. Cash flow forecasts covering a 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 Remarketing
Growth rate applied beyond approved forecast period
Pre-tax discount rate
UK
International
1.8%
10.9%
1.0%
13.8%
Vehicle Buying
Other
1.8%
1.0%
10.9% 11.3%–11.8%
Growth rates used do not exceed expectations of long-term growth in the local market.
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.
75
Financials
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.
14. Property, plant and equipment
Land and
buildings
£m
Fixtures,
fittings and
equipment
£m
Plant,
machinery and
motor vehicles
£m
Total
£m
Cost
At 1 January 2015
Additions
Disposals
Exchange difference
–
58.9
12.8
(5.8)
3.4
–
5.5
2.7
(0.2)
0.5
–
25.2
22.7
(3.6)
0.3
At 3 April 2016
69.3
8.5
44.6
Accumulated depreciation
At 1 January 2015
Charge for the year
Disposals
Exchange difference
–
1.6
(0.1)
0.6
–
1.4
–
0.2
–
4.8
(1.7)
0.1
–
7.8
(1.8)
0.9
At 3 April 2016
2.1
1.6
3.2
6.9
–
–
–
–
67.2
6.9
41.4
115.5
Net book value
At 1 January 2015
At 3 April 2016
–
89.6
38.2
(9.6)
4.2
122.4
The Group had no property, plant and equipment in the comparative period.
Land and buildings includes assets under construction at the Birmingham Perry Bar, Manchester Belle Vue and Bedford sites with a net book value
of £14.8m, 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 £2.2m and since then depreciation of
£nil has been charged, leaving a net book value of £2.2m at the period end.
Finance lease commitments
Included in property, plant and equipment are land and building assets held under finance leases with a net book value of £3.4m (2014: £nil) and
accumulated depreciation of £0.6m (2014: £nil) and plant, machinery and motor vehicle assets under finance leases with a net book value of
£25.2m (2014: £nil) and accumulated depreciation of £2.1m (2014: £nil).
15. Inventories
As at
3 April 2016
£m
As at
31 December 2014
£m
Gross inventories
Inventory provision
19.6
(0.3)
–
–
Net inventories
19.3
–
Inventories recognised as an expense and charged to cost of sales for the period to 3 April 2016 were £657.8m (period to 31 December 2014: £nil).
Write-down of inventories recognised as an expense in the period to 3 April 2016 amounts to £0.3m (period to 31 December 2014: £nil).
76
Strategic report
16. Trade and other receivables
As at
3 April 2016
£m
As at
31 December 2014
£m
147.6
26.5
(2.0)
–
–
–
Trade receivables – net
Other receivables
Accrued income
Prepayments
172.1
12.3
7.9
17.7
–
–
–
–
Total trade and other receivables
210.0
–
As at 3 April 2016 £64.7m (2014: £nil) of trade receivables were due from customers under the buyer finance arrangements and are secured on
vehicles held by those customers.
Governance
Trade receivables due but not past due
Trade receivables past due
Provision for impairment
Trade and other receivables are presented as current assets and any fair value difference is not material. Trade and other receivables are considered
past due once they have passed their contracted due date.
Movements on the Group provision for impairment of trade receivables are as follows:
As at
3 April 2016
£m
As at
31 December 2014
£m
At period start
Provision for receivables impairment
Utilisation of provision during the period
Unused amounts reversed
–
(1.4)
(1.0)
0.3
0.1
–
–
–
–
–
At period end
(2.0)
–
Financials
The creation and release of provisions for impaired receivables have been included in operating costs in the income statement.
The ageing of receivables is as follows:
As at
3 April 2016
£m
As at
31 December 2014
£m
Not past due and not impaired
Up to 30 days overdue and not impaired
Up to 30 days overdue and impaired
Past 30 days overdue and not impaired
Past 30 days overdue and impaired
147.6
19.3
–
5.0
2.2
–
–
–
–
–
Total trade receivables
Impairment
174.1
(2.0)
–
–
Net trade receivables
172.1
–
77
17. Cash and cash equivalents
Cash at bank and in hand
As at
3 April 2016
£m
As at
31 December 2014
£m
102.4
28.8
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
3 April 2016
£m
As at
31 December 2014
£m
Gross amount of recognised financial assets: Cash at bank and in hand
Gross amount of recognised financial liabilities set off in the balance sheet: Overdraft
109.5
(7.1)
28.8
–
102.4
28.8
As at
3 April 2016
£m
As at
31 December 2014
£m
Trade payables
Obligations under operating leases
Social security and other taxes
Accruals and other payables
Obligations under finance leases
139.8
66.9
11.5
68.9
26.9
–
–
–
0.1
–
Total trade and other payables
314.0
0.1
Trade and other payables – current
Trade and other payables – non-current
225.3
88.7
0.1
–
314.0
0.1
18. Trade and other payables
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 holds
finance leases, further details of which can be seen below.
As at
3 April 2016
£m
As at
31 December 2014
£m
The minimum lease payments under finance leases fall due as follows:
Not later than one year
Later than one year but not more than five
More than five years
5.0
20.9
4.1
–
–
–
Minimum lease payments
Future finance charge on finance leases
30.0
(3.1)
–
–
Present value of finance lease liabilities
26.9
–
Of which:
Not later than one year
Later than one year but not more than five
More than five years
4.1
18.8
4.0
–
–
–
Minimum lease payments
26.9
–
78
Strategic report
19. Bank borrowings
Non-current
Bank borrowings
As at
3 April 2016
£m
As at
31 December 2014
£m
273.1
–
As part of the acquisition of the BCA Group on 2 April 2015 the pre-acquisition debt structure within the BCA Group was settled in full.
In April 2015, the Group agreed a five year committed £300m multi-currency facility, including a £100m revolving facility and a £200m term
facility, which was drawn down in full, net of transaction costs of £7.1m, and used as financing to repay the previous debt facility within the BCA
Group of companies. The facility matures at the end of the five year period, with no repayment of capital due before that time.
Governance
In June 2015, the term facility was increased by £75m to a principal amount of £275m for further transaction costs of £0.6m, 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
£7.7m, 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 £279.3m. The effective interest rate, including the
impact of non-utilisation fees on the £100m 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 3.5%.
The Group’s principal bank loans at 3 April 2016 were denominated in Sterling (£231.3m) and Euros (€60.0m), 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 £5.5m and had the following undrawn
borrowing facilities:
Floating rate borrowings
Expiring beyond one year
79
As at
31 December 2014
£m
94.5
–
Financials
For more information about the Group’s exposure to interest rate and foreign currency risk see note 27.
As at
3 April 2016
£m
20. Buyer finance borrowings
The Group has an asset-backed finance facility to fund the buyer finance business. This is a revolving facility that allows a drawdown of up to
£60.0m. The amount is advanced solely to a buyer 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 £40.2m.
21. Provisions
Onerous lease
provision
£m
Other
£m
Total
£m
At 1 January 2015
Utilised
Unwinding of discounted amount
–
20.4
(1.9)
0.6
–
0.7
(0.2)
–
–
21.1
(2.1)
0.6
At 3 April 2016
19.1
0.5
19.6
As at
3 April 2016
£m
As at
31 December 2014
£m
Current
Non-current
0.9
18.7
–
–
Total provisions
19.6
–
Analysis of maturity profile:
Onerous lease provision
Prior to the acquisition of the BCA Group two properties in the UK and one in Spain 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 in the UK and 2016 in Spain, 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-free rate of 3%.
Other provisions
This 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.
80
Strategic report
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 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 date of acquisition, on 2 April 2015,
and at 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 principal assumptions used for the BCA Pension Plan and the Automotive Plan are as follows:
Governance
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 separate funds 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.
As at 3 April 2016
Rate of increase in salaries:
Rate of increase in deferred pensions:
Rate of increase in pensions:
LPI (5.0% Cap)
LPI (2.5% Cap)
Fixed
Discount rate
Rate of inflation:
Retail price index
Consumer price index
BCA
Automotive
3.10%
2.10%
3.00%
2.05%
3.00%
3.45%
3.10%
2.10%
n/a
2.10%
n/a
n/a
Nil or 3.00%
3.45%
3.10%
2.10%
Assumptions regarding future mortality experience are set based on published statistics and experience.
The mortality assumptions adopted imply the following expected future lifetimes from age 65:
As at 3 April 2016
Males
Females
81
BCA
Years
Automotive
Years
22.9
24.9
22.2
24.4
Financials
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.
22. Pensions and other post-retirement benefits continued
The liability recognised in the consolidated balance sheet is determined as follows:
As at 3 April 2016
BCA
£m
Present value of funded obligations
Fair value of plan assets
Net pension liability
Automotive
£m
Total
£m
(73.8)
68.0
(13.6)
11.8
(87.4)
79.8
(5.8)
(1.8)
(7.6)
The amounts recognised in the income statement are as follows:
BCA
£m
Automotive
£m
Total
£m
Current service cost
Net interest expense
(1.0)
(0.1)
–
(0.1)
(1.0)
(0.2)
Total amount charged to the income statement
(1.1)
(0.1)
(1.2)
The amounts recognised in the statement of comprehensive income are as follows:
BCA
£m
Automotive
£m
Total
£m
Actuarial (losses)/gains on liabilities:
Experience gains and losses
Changes in financial assumptions
Actuarial (losses)/gains on assets:
(0.1)
3.8
(4.1)
0.1
–
0.1
–
3.8
(4.0)
Total amount recognised in other comprehensive income
(0.4)
0.2
(0.2)
Analysis in the movement in the net liability:
BCA
£m
Automotive
£m
Total
£m
Balance at acquisition
Contributions by employer
Actuarial (losses)/gains recognised in the period
Net interest expense
(5.0)
0.7
(0.4)
(0.1)
(1.0)
(3.2)
1.3
0.2
(0.1)
–
(8.2)
2.0
(0.2)
(0.2)
(1.0)
At 3 April 2016
(5.8)
(1.8)
(7.6)
82
Strategic report
Changes in the present value of the defined benefit obligation are as follows:
BCA
£m
Automotive
£m
Total
£m
Interest expense on plan liabilities
Actuarial losses/(gains):
Changes in financial assumptions
Contributions by employees
Benefits paid
75.0
1.0
2.4
0.1
(3.8)
0.4
(1.3)
14.0
–
0.3
(0.1)
–
–
(0.6)
89.0
1.0
2.7
At 3 April 2016
73.8
13.6
87.4
BCA
£m
Automotive
£m
Total
£m
–
(3.8)
0.4
(1.9)
Interest income on plan assets
Employer contributions
Actuarial (losses)/gains:
Contributions by employees
Benefits paid
70.0
2.3
0.7
(4.1)
0.4
(1.3)
10.8
0.2
1.3
0.1
–
(0.6)
80.8
2.5
2.0
At 3 April 2016
68.0
11.8
79.8
Governance
Changes in the fair value of the defined benefit asset are as follows:
(4.0)
0.4
(1.9)
At the end of the reporting period, the plan assets by category had been invested as follows:
As at 3 April 2016
Automotive
£m
Total
£m
Equities (quoted)
Corporate bonds (quoted)
Government bonds (quoted)
Diversified growth funds (quoted)
Other
33.9
24.8
3.5
5.5
0.3
6.2
2.1
3.0
–
0.5
40.1
26.9
6.5
5.5
0.8
Total plan assets
68.0
11.8
79.8
83
Financials
BCA
£m
22. Pensions and other post-retirement benefits continued
Risk management
These defined benefit plans expose the Group to actuarial risks, such as longevity (mortality) risk, currency risk, interest rate risk and market
investment risk. The investment policies of each scheme are described below:
BCA Pension Plan
Asset volatility
Scheme liabilities are calculated on a discounted basis using a discount rate which is set with reference to corporate bond yields. If scheme assets
underperform this yield, then this will create a deficit. The scheme holds approximately 40% of assets as defensive assets (gilts, bonds) which
mitigate significant changes in yields, and active monitoring plans are in place to identify opportunities to increase the proportion of such assets
further when economically possible.
As the scheme matures, the Group reduces the level of investment risk 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.
Inflation risk
The majority of the Group’s defined benefit obligations 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 and approximately 5% of the scheme’s
assets are held as index-linked gilts to hedge against residual inflation risk in the context of these scheme cap rules.
Life expectancy
The plans’ obligations are to provide a pension for the life of the member, so realised increases in life expectancy will result in an increase in the
plans’ benefit payments. Future mortality rates cannot be predicted with certainty. The scheme conducts scheme-specific mortality investigations
regularly, to ensure the Group has a clear understanding of any potential increase in liability due to pensioners living for longer than assumed. The
trustees of the scheme hedge this risk by adopting a prudent approach in their assumptions for future improvements.
Automotive Plan
Scheme structure
The scheme invests assets according to a Statement of Investment Principles which was established to ensure that the investment strategy is
appropriate to the nature of the underlying liabilities in the scheme. There are two relevant sections of the Automotive scheme, being the defined
benefit section and the Guaranteed Minimum Pension (‘GMP’) underpin section, each of which has a specific investment strategy.
Asset volatility and profiling for life expectancy
The strategy for the defined benefit section of the scheme is to invest in government and corporate bonds in respect of pensions in payment and
to invest the remainder in equities and other appropriate assets with a view to achieving longer-term growth at an acceptable level of risk. The
allocation between asset classes making up the on-risk and off-risk will vary over time to reflect the profile of liabilities and the perceived value
and risk of different asset classes.
GMP investment strategy
The strategy for the GMP section 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.
Asset profiling
The scheme trustees and their advisers carry out half yearly reviews of the actual asset allocations and consider the need to switch assets in line
with the investment strategies. The scheme currently holds approximately 40% of assets in government and corporate bonds, 55% in equities
and 5% in cash.
84
Strategic report
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
£m
BCA
Discount rate: +0.25%
Inflation and related assumptions: +0.25%
Mortality: reduced by 10%
Mortality: Long-term rate of longevity improvement: +0.5%
(3.3)
1.8
2.4
n/a
% of liability
Automotive
(0.6)
0.1
n/a
0.3
BCA
Automotive
(4.4%)
2.4%
3.2%
n/a
(4.4%)
0.7%
n/a
2.2%
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 £1.2m. 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.
Governance
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.
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 equipment
£m
Operating
lease
obligations
£m
At 1 January 2015
(Charged)/credited to the income statement
Charged to other comprehensive income
Exchange difference
–
3.3
0.8
–
–
–
2.9
–
–
–
–
1.6
0.1
(0.2)
–
–
17.1
(10.3)
–
0.1
–
0.2
0.3
–
–
–
25.1
(9.1)
(0.2)
0.1
At 3 April 2016
4.1
2.9
1.5
6.9
0.5
15.9
Deferred tax assets
Pension
deficit
£m
Losses carried
forward
£m
Other
£m
Total
£m
Deferred tax liabilities
At 1 January 2015
Credited to the income statement
Exchange difference
–
(123.9)
16.5
(3.4)
At 3 April 2016
(110.8)
Deferred tax assets are recognised in respect of tax losses carried forward to the extent that the realisation of the related tax benefit through
future taxable profits is probable.
85
Financials
Intangible
assets
£m
24. Share capital and reserves
Issued on incorporation
Issued in relation to plc share
capital requirement
Issued in relation to share
reorganisation
Share reorganisation
Share reorganisation
Issued in connection with Placing
Gifted to the Company and
cancelled
Share issue costs relating to equity
At 31 December 2014
Number of £1
Ordinary shares
Number of £1.20
Ordinary shares
Number of £0.01
Ordinary shares
Number of £1.19
Deferred shares
Nominal value
£m
Share premium
£m
Merger reserve
£m
1
–
–
–
–
–
–
49,999
–
–
–
–
–
–
4
(50,004)
–
–
–
41,670
(41,670)
–
–
–
41,670
25,000,000
–
–
41,670
–
–
–
–
0.3
–
–
–
29.8
–
–
–
–
–
–
–
–
–
–
(41,670)
–
–
–
–
(1.1)
–
–
–
–
25,041,670
–
0.3
28.7
–
Issued in connection with the
acquisition of the BCA Group
Share issue costs relating to
equity
Capital reduction
–
–
755,205,522
–
7.5
1,021.7
103.6
–
–
–
–
–
–
–
–
–
–
(35.1)
(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:
•The Company issued one Ordinary share of £1 upon incorporation.
•On 10 July 2014, the Company issued 49,999 Ordinary shares of £1.00 each to Marwyn Investment Management LLP bringing the total issued
share capital to 50,000 Ordinary shares of £1.00 each.
•On 23 October 2014, the Company allotted four Ordinary shares of £1.00 each (the ‘Allotment’). Immediately following the Allotment, the
following steps took place:
–the entire issued share capital of the Company, being 50,004 Ordinary shares of £1.00 each, was subdivided into 41,670 Ordinary shares of
£1.20 each (‘First Subdivision’);
–immediately following the First Subdivision the entire issued share capital of the Company was further subdivided and reclassified into 41,670
Ordinary shares of £0.01 each and 41,670 deferred shares of £1.19 each.
–On 10 November 2014, the Company issued 25,000,000 shares for the Placing at a placement price of £1.20 each. All 25,000,000 Ordinary
shares were admitted to AIM for trading and the Company was gifted the 41,670 deferred shares by the holder of the deferred shares, which
were subsequently cancelled, creating a capital redemption reserve.
•On 2 April 2015, the Company issued 755,205,522 shares for the Placing as part of the acquisition of the BCA Group. 685,670,000 were issued
for cash at a price of £1.50 each and 69,535,522 were issued as consideration for shares in the BCA Group at a fair value of £1.50 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.
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.
86
Strategic report
25. Dividends
An interim dividend of £15.6m (2.0p per share) was paid on 18 December 2015 to shareholders on the Register on 11 December 2015.
Since the balance sheet date dividends of 4.0p per qualifying Ordinary share have been proposed by the Directors, 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 dividends have
not been provided for.
26. Commitments and contingencies
Capital commitments
The capital commitments at the period end were £10.9m (2014: £nil).
Operating lease commitments
The Group leases various properties and other assets under operating lease agreements. The non-cancellable lease terms are between 3 months
and 61 years, and certain of the lease agreements are renewable at the end of the lease period at market rates.
As at 3 April 2016
As at 31 December 2014
Land and
buildings
£m
Other
£m
Land and
buildings
£m
Other
£m
Within one year
Later than one year and less than five years
After five years
31.5
119.2
347.4
4.9
9.7
0.2
–
–
–
–
–
–
Total operating lease commitments
498.1
14.8
–
–
Governance
The total future aggregate minimum lease payments under operating leases are as follows:
The total future aggregate minimum lease payments due to the Group under sub-leases are £4.1m.
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
31 December 2014
£m
Financial assets
Loans and receivables
286.8
28.8
Financial liabilities
Amortised cost
533.5
0.1
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 buyer 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.
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.
87
Financials
As at
3 April 2016
£m
27. Financial instruments – risk management continued
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 and the Euro to Sterling exchange rates used by the Group can be seen below:
Euro – at 2 April 2015
Euro – average
Euro – closing
For the
15 months ended
3 April 2016
For the
8 months ended
31 December 2014
1.3595
1.3500
1.2503
n/a
n/a
n/a
The functional currencies of the revenue and adjusted EBITDA of the Group’s operations are as follows:
Revenue (£m)
Revenue (%)
Adjusted EBITDA (£m)
Adjusted EBITDA (%)
GBP
Euro
Other
For the
15 months ended
3 April 2016
1,037.2
90.0%
79.6
80.8%
101.6
8.8%
15.0
15.2%
14.3
1.2%
3.9
4.0%
1,153.1
100.0%
98.5
100.0%
The Group does not have significant transactional foreign currency cash flow exposures. The Group monitors its exposure to currency fluctuations
on an on-going 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 period 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 £1.4m 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
31 December 2014
As at 3 April 2016
GBP
£m
Euro
£m
Other
£m
Total
£m
Total
£m
Cash
Borrowings (including buyer finance borrowings)
58.8
160.9
(236.6)
(266.4)
35.6
39.4
(64.9)
(46.9)
8.0
9.7
(12.5)
–
102.4
210.0
(314.0)
(313.3)
28.8
–
(0.1)
–
Net
(283.3)
(36.8)
5.2
(314.9)
28.7
Interest rate risk
The Group’s interest rate risk arises from the Group’s borrowings as disclosed in note 19. The 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 the 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 0.5% higher with all other variables held constant,
post-tax profit for the period would have been £1.1m lower.
88
Strategic report
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 no concentrations of credit risk. 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.
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.
Governance
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group has a £100m revolving facility. At 3 April 2016 £5.5m of the facility had 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 table are the contractual undiscounted cash flows at
3 April 2016.
Contractual
total
£m
Within
1 year
£m
Between 1
and 2 years
£m
Between 2
and 5 years
£m
Over
5 years
£m
273.1
40.2
314.0
279.3
40.2
247.1
–
40.2
218.8
–
–
5.4
279.3
–
18.9
–
–
4.0
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 buyer
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.
89
Financials
Bank borrowings
Buyer finance borrowings
Carrying
amount
£m
28. Related party transactions
Remuneration of the Directors, who constitute the key management personnel of the Group, has been disclosed in the Directors’ remuneration
report on pages 39 to 43. Other related party transactions with the Group are as follows:
Transaction amount
For the
15 months ended
3 April 2016
£m
Related party relationship
As at
3 April 2016
£m
As at
31 December 2014
£m
–
–
–
0.1
–
–
–
–
–
(0.1)
(7.7)
(0.1)
BCA Gestão de Pátios S.A.
Marwyn Capital LLP
Axio Capital Solutions Ltd
Balance owed/(owing)
For the
8 months ended
31 December 2014
£m
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 £7,053,000 was paid to Marwyn Capital LLP on the
successful completion of the BCA Group acquisition and is included in the analysis above. This was in addition to the reimbursement of all out-ofpocket 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 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
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.
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 AIM 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 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) T he 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 KPIs including volumes, average revenue/unit and EBITDA. Under these measures, points will
accrue over a three-year period starting with the year ending 3 April 2016, which will 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.
90
Strategic report
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 H.I.J. Ltd 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:
Number of H.I.J.
shares
11 July 2014
405,000
£4,050
£4,050
6.46%
405,000
£4,050
£4,050
6.46%
15 June 2015
22 October 2015
14 December 2015
101,423
26,654
n/a
£1,014
£267
n/a
£5,071
£1,999
n/a
1.62%
0.42%
1.50%
For the 8 months ended 31 December 2014
Issued during the period:
H.I.J. scheme
At 31 December 2014
Issued during the period:
H.I.J. scheme
H.I.J. scheme
Performance based scheme
At 3 April 2016
H.I.J. shares
533,077
n/a
£5,331
n/a
£11,120
n/a
8.50%
1.50%
Total Incentive Cap
10.00%
Governance
Date issued
Nominal value of Subscription value
H.I.J. shares
of H.I.J. shares
Current
participation
in increase in
Shareholder
Value
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.
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 period end the Group expects all share based incentives to vest in full.
Date of issue
Number of shares granted
Exercise price
Vesting period
Vesting date assumed for the
calculation of fair value
Fair value of incentives at grant
H.I.J. shares (1st issue)
H.I.J. shares (2nd issue)
11 July 2014 and 15 June 2015
22 October 2015
14 December 2015
506,423
26,654
n/a
n/a
n/a
n/a
From the third anniversary of
AIM Admission to the fifth
anniversary
From the third anniversary of
AIM Admission to the fifth
anniversary
From 30 September 2018
10 November 2018
10 November 2017
30 September 2018
£268,000
£1,030,977
£3,060,266
91
Financials
The value of the services received in exchange for the share based incentives are 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.
29. Share based payments continued
During the period, £570,000 (2014: £29,000) 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 £20m 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 Group’s peer group.
Investor Founder Shares
During the period ended 31 December 2014, 194,996 Investor Founder Shares with an aggregate issue price and nominal value of £1,950 were
issued to a number of Investor Founders that participated in the initial Placing on AIM on 10 November 2014. The Investor Founder Shares were
subject to similar growth and vesting conditions as the H.I.J. shares and as at 31 December 2014 could each be sold to the Group for an
aggregate value equivalent to a maximum of 6.5% of the increase in Shareholder Value in the Group. As part of the Placing to acquire the BCA
Group on 2 April 2015 it was agreed that the Investor Founder Shares would be forfeited and as such all Investor Founder Shares were
repurchased by the Group at their nominal value of £1,950 and then cancelled.
The Investor Founder Shares Scheme has been accounted for in accordance with the requirements of IAS 32 as a financial liability at fair value as
the incentive scheme does not include a service requirement. Following the cancellation of the Investor Founder shares the charge of £277 made
in the period ended 31 December 2014 has been reversed during the period.
30. Events after the reporting period
There have been no events after the balance sheet date which require disclosure.
31. List of Group undertakings
All companies are 100% owned unless otherwise stated.
Group undertakings
Nature of business
Country of
incorporation
Ambrosetti (U.K) Ltd
Autolink Ltd
Autotrax Ltd (76%)
BC Autolicitatii România - S.R.L
BC Remarketing S.A.
BCA Administratie BV
BCA Auctions GmbH
BCA Auctions Holdings B.V.
BCA Auctions Ltd
BCA Autoauktion A/S
BCA Autoauktionen GesmbH
BCA Autoauktionen GmbH
BCA Automotiv GmbH & Co. KG
BCA Automotiv Verwaltungs GmbH
BCA Automotive Ltd
BCA AutoRemarketing Schweiz
BCA Autoveiling – Enchères Autos S.A.
BCA Autoveiling B.V.
BCA España Autosubastas de Vehículos SL
BCA Europe Ltd
BCA Finance Ltd
BCA Gestao de Patios SA (24.5%)*
BCA Group Europe Ltd
BCA Holdings Germany GmbH
BCA Holdings Ltd
BCA Hungária Gépjármú-aukciós Kft.
BCA Italia SRL
BCA L.A. (50%)*
BCA Logistics Ltd
Vehicle Rectification Services
Dormant
Property leasing
Dormant
Motor Vehicle Remarketing
Vehicle Sale and Purchase
Intermediate Parent
Dormant
Non-trading
Intermediate Parent
Dormant
Non-trading
Intermediate Parent and Management Service Company
Dormant
Intermediate Parent
Intermediate Parent
Intermediate Parent
Dormant
Intermediate Parent
Motor Vehicle Distribution
England and Wales
England and Wales
England and Wales
Romania
France
Netherlands
Germany
Netherlands
England and Wales
Denmark
Austria
Germany
Germany
Germany
England and Wales
Switzerland
Belgium
Netherlands
Spain
England and Wales
England and Wales
Brazil
England and Wales
Germany
England and Wales
Hungary
Italy
Brazil
England and Wales
92
Strategic report
Country of
incorporation
BCA Ltd
BCA Osprey Finance Ltd
BCA Osprey I Ltd
BCA Osprey II Ltd
BCA Osprey IV Ltd
BCA Pension Trustees Ltd
BCA Polska Sp. z o.o.
BCA Remarketing Group Ltd
BCA Remarketing Solutions Ltd
BCA Servicios Inmobiliarios SL
BCA Smart Prepared Ltd
BCA Smart Repairs Ltd
BCA Trading Ltd
BCA Vehicle Finance Ltd
BCA Vehicle Remarketing AB
BCAuto Enchères S.A.
British Car Auction Services Ltd
British Car Auctions Ltd
Burrpark Ltd
Carland.com Ltd (84%)
CarTrade2B GmbH
CD&R Osprey Investment S.à r.l.
Expedier Catering Ltd
Expert Remarketing Ltd
Fleet Control Monitor GmbH (76%)
FleetSelect B.V.
G – Grupo – Investimentos e Participações, SA
H.I.J. Ltd
Life on Show Ltd (51%)
Magna Motors Ltd
Motor Auctions (Properties) Ltd
NKL Automotive Ltd
NKL Ltd
Pennine Metals B Ltd
S.P.L.A. – Sociedade Portuguesa de Leliões de
Automóveis, S.A.
Scottish Motor Auctions (Holdings) Ltd
Scottish Motor Auctions Ltd
Sensible Automotive Ltd
SMA Vehicle Remarketing Ltd
Smart Prepared Ltd
Smart Prepared Systems Ltd
Suresell Ltd
The British Car Auction Group Ltd
The Omega Finance Company Ltd
The Omega Insurance Company Ltd
Tradeouts Ltd (51%)
United Fleet Distribution Ltd
Walon Automotive Services Ltd
Walon Ltd
We Buy Any Car Ltd
ZABATUS Gründstucks – Vermietungsgesellschaft mbH
& Co. Objekt BCA Neuss KG (94%)
Dormant
Dormant
Intermediate Parent
Intermediate Parent
Intermediate Parent and Management Service Company
Dormant
Intermediate Parent
Property leasing
Dormant
Dormant
Intermediate Parent
Motor Vehicle Finance
Dormant
Supply of labour and equipment
Dormant
Catering
Dormant
Vehicle Inventory Management
Intermediate Parent
Intermediate Parent
Supply of photographic software to the automotive industry
Dormant
Property leasing
Provision of Logistics Labour
Dormant
Intermediate Parent
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Poland
England and Wales
England and Wales
Spain
England and Wales
England and Wales
England and Wales
England and Wales
Sweden
France
England and Wales
England and Wales
Scotland
England and Wales
Germany
Luxembourg
England and Wales
England and Wales
Germany
Netherlands
Portugal
Jersey
England and Wales
England and Wales
Scotland
England and Wales
England and Wales
England and Wales
Portugal
Dormant
Dormant
Distribution and vehicle services for the automotive sector
Dormant
Dormant
Dormant
Intermediate Parent
Dormant
Dormant
Provision of Online Dealer to Dealer Platforms for Online Sales
Dormant
Dormant
Logistics services for the automotive sector
England and Wales
Scotland
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Property leasing
Germany
* Disposed of on 15 June 2016
All of the companies listed above that are incorporated in England and Wales are registered at Headway House, Crosby Way, Farnham, Surrey. GU9 7XG. Financial statements
for all of the companies listed can be requested from the Company Secretary at this address.
93
Financials
Nature of business
Governance
Group undertakings
Company financial statements
Company balance sheet
Non-current assets Investments
Note
As at
3 April 2016
£m
As at
31 December 2014
£m
2
1,067.6
–
1,067.6
–
17.1
3.7
–
28.8
20.8
28.8
1,088.4
28.8
Total non-current assets
Current assets
3
4
Total current assets
Total assets
Current liabilities
5
Total liabilities
Net assets
Share capital
Share premium
Merger reserve
Retained profit/(accumulated deficit)
6
6
6
Total shareholders’ funds
(2.5)
(0.1)
(2.5)
(0.1)
1,085.9
28.7
7.8
–
103.6
974.5
0.3
28.7
–
(0.3)
1,085.9
28.7
The financial statements on pages 94 to 99 were approved by the Board on 27 June 2016 and were signed on its behalf by:
Executive Chairman
Tim Lampert
94
Strategic report
Company statement of
changes in equity
Share capital
£m
Share premium
£m
Merger reserve
£m
(Accumulated
deficit)/retained
profit
£m
Balance on incorporation at 30 April 2014
Total comprehensive income for the period
Loss for the period
–
–
–
–
–
–
–
–
(0.3)
(0.3)
Total comprehensive loss for the period
–
–
–
(0.3)
(0.3)
Note
Total
£m
28.7
–
–
29.0
0.3
28.7
–
–
29.0
Balance at 31 December 2014
0.3
28.7
–
(0.3)
28.7
–
–
–
(25.5)
(25.5)
–
–
–
(25.5)
(25.5)
7.5
–
–
–
986.6
(1,015.3)
–
–
103.6
–
–
–
–
1,015.3
(15.6)
0.6
1,097.7
–
(15.6)
0.6
7.5
(28.7)
103.6
1,000.3
1,082.7
Balance at 3 April 2016
7.8
–
103.6
974.5
1,085.9
6
Total comprehensive income for the period
Loss for the period
Total comprehensive loss for the period
Capital reduction
Dividends paid
6
6
7
10
Governance
0.3
Financials
95
Company cash flow statement
For the
15 months ended
3 April 2016
£m
Cash flows from operating activities
Loss for the period
Adjustments for:
Finance income
Acquisition related costs
Changes in working capital:
Increase in trade and other receivables
Increase in trade and other payables
For the
8 months ended
31 December 2014
£m
(25.5)
(0.3)
(0.2)
0.6
23.0
–
–
–
(0.4)
1.8
–
0.2
(0.7)
0.2
(0.1)
–
Net cash outflow from operating activities before acquisition related costs
Acquisition related costs
(0.5)
(22.4)
(0.1)
–
Net cash outflow from operating activities
(22.9)
(0.1)
Cash flows from investing activities
Acquisition of subsidiary undertaking
Capital contribution to subsidiary undertaking
(711.2)
(252.1)
–
–
Net cash outflow from investing activities
(963.3)
–
Cash flows from financing activities
Proceeds of share issue
Amounts loaned to subsidiary undertakings
Dividends paid
993.4
(16.7)
(15.6)
28.9
–
–
Net cash inflow from financing activities
961.1
28.9
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at period start
(25.1)
28.8
28.8
–
3.7
28.8
Cash outflow from operations
Interest received
Cash and cash equivalents at period end
96
Notes to the company financial statements
Strategic report
1. Accounting policies
Basis of preparation
These Company financial statements for the 15 month period ended 3 April 2016 have been prepared in accordance with International Financial
Reporting Standards (‘IFRS’) and IFRS Interpretations Committee (‘IFRS IC’) interpretations as adopted by the European Union
(‘Adopted IFRS’) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The accounting policies have,
unless otherwise stated, been applied consistently to all periods presented in these financial statements. The financial statements have been
prepared under the historical cost convention.
The financial statements and the notes to the financial statements are presented in millions of pounds sterling (‘£m’) except where
otherwise indicated.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company profit and
loss account and the related notes. The loss for the parent Company for the 15 month period ended 3 April 2016 was £25.5m (8 month period
ended 31 December 2014: loss of £0.3m).
Governance
The accounting policies applied in the preparation of these Company financial statements are the same as those set out in note 2 of the Group
financial statements, with the exception of section 2(c) ‘Basis of consolidation’ and the policy on investments in subsidiaries, which are stated at
cost less impairment.
2. Investments in subsidiaries
Total
£m
Cost
At 1 January 2015
Additions
–
1,067.6
At 3 April 2016
1,067.6
The addition in the period relates to the acquisition of CD&R Osprey S.à.r.l., the immediate parent of the BCA Group. This was subsequently
transferred to H.I.J. Ltd. At 3 April 2016 the Company owns 100% of the issued share capital of H.I.J. Ltd, a company incorporated in Jersey, and
owns indirectly the subsidiary undertakings listed in note 31 of the consolidated financial statements.
3. Trade and other receivables
As at
31 December 2014
£m
Other receivables
Amounts owed by subsidiary undertakings
0.4
16.7
–
–
Total trade and other receivables
17.1
–
As at
3 April 2016
£m
As at
31 December 2014
£m
3.7
28.8
4. Cash and cash equivalents
97
Financials
As at
3 April 2016
£m
Notes to the company financial statements
5. Trade and other payables
As at
3 April 2016
£m
As at
31 December 2014
£m
Trade payables
Social security and other taxes
Accruals and other payables
Amounts owed to subsidiary undertakings
0.2
0.1
1.8
0.4
–
–
0.1
–
2.5
0.1
6. Share capital and reserves
The details of the Company’s share capital and the nature of the reserves are disclosed in note 24 of the consolidated financial statements.
7. Dividends
The details of the Company’s dividends are disclosed in note 25 of the consolidated financial statements.
8. Financial instruments – risk management
Financial risk management
The Company’s activities expose it to a variety of financial risks: market risk (including currency 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.
Market risk
Market risk is the risk that changes in market prices (principally exchange rates and interest rates) will affect the Company’s income or the value of
its holdings of financial instruments.
Foreign exchange risk
The Company has no direct significant interaction with foreign currency. Members of the Group in which the Company holds its investment
operate in mainland Europe, which means that through its investment the Company has some indirect exposure to foreign exchange risk.
Interest rate risk
The Company has no external debt and therefore has no significant exposure to interest rate risk.
Credit risk
Credit risk is the risk of financial loss in the Company if a counterparty to a financial instrument fails to meet its contractual obligations and arises
principally through receivables from Group companies and cash balances.
The Company has no concentrations of credit risk. Cash and cash equivalents are held with reputable institutions. All material cash amounts are
deposited with one of the Group’s principal bank service providers in the UK.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when
due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The Company currently meets all liabilities from cash reserves. The Company’s liability for operating expenses is monitored on an on-going basis
to ensure cash resources are adequate to meet liabilities as they fall due.
The table below analyses the Company’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 table are the contractual undiscounted cash flows at
3 April 2016.
Carrying
amount
£m
Contractual
Total
£m
Within
1 year
£m
Between 1
and 2 years
£m
Between 2
and 5 years
£m
Over
5 years
£m
2.5
2.5
2.5
–
–
–
98
Strategic report
Capital risk management
The aim of the Company is to maintain sufficient funds to enable it to make suitable investments and incremental acquisitions whilst minimising
recourse to bankers and/or shareholders.
Fair values
The fair value of all financial instruments in both periods are equal to their carrying values.
9. Related party transactions
Remuneration of the Directors, who constitute key management personnel of the Company, has been disclosed in the Directors’ remuneration
report on pages 39 to 43. Other related party transactions with the Company are as follows:
Transaction amount
For the
15 months ended
3 April 2016
£m
Related party relationship
–
–
2.3
0.1
–
–
–
–
(7.7)
(0.1)
–
–
As at
3 April 2016
£m
16.7
(0.4)
–
–
–
–
As at
31 December 2014
£m
–
–
–
–
Governance
Subsidiaries:
Amounts owed to the Company (loan)
Amounts owing by the Company
Management fees
Interest income
Other:
Marwyn Capital LLP
Axio Capital Solutions Ltd
Balance owed/(owing)
For the
8 months ended
31 December 2014
£m
–
–
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 and is included in the analysis above. In accordance with this agreement, a fee of £7,053,000
was paid to Marwyn Capital LLP on the successful completion of the BCA Group acquisition. 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 Company 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.
11. Commitments and contingencies
Capital commitments
There are no capital commitments at either period end to disclose in this report.
Contingencies
There are no disputes with any third parties that would result in a material liability for the Company.
The Company has entered into an agreement over various bank loans and overdrafts of certain Group undertakings and has granted as security a
fixed and floating charge over all its present and future assets. At the period end the loans totalled £279.3m (31 December 2014: £nil).
99
Financials
10. Share based payments
The details of the Company’s share based payments are set out in note 29 of the consolidated financial statements.
Shareholder information
Advisers and Registrars
Financial Adviser and Joint Broker
Cenkos Securities plc
Joint Broker
Zeus Capital Ltd
Corporate Finance Adviser
Marwyn Capital LLP
Auditor
PricewaterhouseCoopers LLP
Solicitors
Berwin Leighton Paisner LLP
PR advisers
Square 1 Consulting
Bell Pottinger
Registrars
Capita Asset Services
Group Company Secretary and General Counsel
Ian Farrelly
ISIN: GB00BP0S1D85
Ticker: BCA
Registered Office
BCA Marketplace plc
20 Buckingham Street
London, WC2N 6EF
Company Number: 09019615
Website: www.bcamarketplaceplc.com
100
BCA Marketplace plc
20 Buckingham Street
London
WC2N 6EF
www.bcamarketplaceplc.com

full Annual Report 2016

Transcription

Similar documents

I`m helping to end MS by participating in the 2016 Jayman BUILT MS

Itinerariul Dialog

The Board of Directors of Qatar Fuel (WOQOD) is pleased to invite

5 `S` Training Program at ABV-IIITM, Gwalior on 21.07.2016

Newsletter September - Baytown Christian Academy

“Greening our Built Environment” competition

4 star ALOE HOTEL, PAPHOS

loyola institute for ministry on-campus open house thursday, may 12

HALF OFF - Bavarian Inn

The Magic Wizard