TIDMMOTR
RNS Number : 6166C
Motorpoint Group plc
14 June 2023
14 June 2023
Motorpoint Group PLC
("Motorpoint" or the "Group")
Final Results
Motorpoint Group PLC, the UK's leading independent omnichannel
used vehicle retailer, today announces its final results for the
year ended 31 March 2023 ("FY23").
FY23 Financial Highlights
Year ended Year ended Change
31 March 2023 31 March 2022
Revenue GBP1,440.2m GBP1,322.3m +8.9%
--------------- --------------- ----------
Gross profit GBP85.7m GBP106.3m -19.4%
--------------- --------------- ----------
Operating expenditure GBP(79.2)m GBP(81.3)m -2.6%
--------------- --------------- ----------
Operating profit GBP6.8m GBP25.0m -72.8%
--------------- --------------- ----------
Finance expense GBP(7.1)m GBP(3.5)m +102.9%
--------------- --------------- ----------
(Loss)/ Profit before
taxation GBP(0.3)m GBP21.5m -101.4%
--------------- --------------- ----------
Basic earnings per share
(p) (0.7)p 18.7p -103.7%
--------------- --------------- ----------
Net cash/ (debt) excluding GBP5.6m GBP(21.2)m +GBP26.8m
lease liabilities
--------------- --------------- ----------
Return on capital employed
(1) 17.3% 74.6% -76.8%
--------------- --------------- ----------
(1) Calculated as last 12 month's operating profit of GBP6.8m
(FY22: GBP25.0m) divided by average of opening GBP39.4m and closing
GBP38.9m net assets (FY22: opening GBP27.6m and closing
GBP39.4m)
-- Revenue increased to a record GBP1,440.2m (FY22: GBP1,322.3m)
helped by vehicle mix and inflation
-- (Loss)/ Profit before taxation decreased to GBP(0.3)m
(FY22: GBP21.5m), influenced by rising financing costs,
limited stock availability and the well-documented fall
in value of Electric Vehicles, along with increased investment
of GBP6.1m relating to delivery of strategic objectives
(FY22: GBP1.0m)
-- Increased finance expense reflected material interest
rate rises
-- Significant net cash improvement of GBP26.8m since 31
March 2022 (FY22: net debt GBP21.2m), reflected working
capital improvement and proceeds of two sale and leasebacks
(GBP9.7m)
-- Unsecured loan facility totalling GBP35m extended to June
2026, with the option of two further one year extensions
(at the agreement of both parties)
FY23 Operational and Strategic Highlights
Year ended Year ended Change
31 March 31 March
2023 2022
Market share (0-4 year old) 3.5% 3.1% +40bps
------------ ------------ ---------
Average market share within 30
min drive time of store 8.9% 7.7% +120bps
------------ ------------ ---------
Revenue GBP1,440.2m GBP1,322.3m +8.9%
------------ ------------ ---------
Retail GBP1,175.7m GBP1,112.3m +5.7%
------------ ------------ ---------
Wholesale GBP264.5m GBP210.0m +26.0%
------------ ------------ ---------
E-commerce revenue GBP660.5m GBP624.9m +5.7%
------------ ------------ ---------
Vehicles sold 89.7k 97.7k -8.2%
------------ ------------ ---------
Retail 57.3k 62.9k -8.9%
------------ ------------ ---------
Wholesale 32.4k 34.8k -6.9%
------------ ------------ ---------
Finance penetration 56% 52% +7.7%
------------ ------------ ---------
Strategic investment GBP6.1m GBP1.0m +GBP5.1m
------------ ------------ ---------
Days in stock 51 54 -3 days
------------ ------------ ---------
Retail gross profit per unit GBP1,300 GBP1,446 -10.1%
------------ ------------ ---------
Wholesale gross profit per unit GBP346 GBP440 -21.4%
------------ ------------ ---------
Customer acquired vehicles retailed
(% of sold units) 23.8% 17.9% +33.0%
------------ ------------ ---------
Number of market locations at
year end 19 17 +2
------------ ------------ ---------
Stocking facility headroom (GBP195.0m
available at year end) GBP92.5m GBP48.0m +92.7%
------------ ------------ ---------
Sales Momentum
-- Group share of the 0-4 year old market increased to 3.5%
(FY22: 3.1%), further underlining the power of our price
leadership
-- E-commerce revenue grew to a record GBP660.5m (FY22: GBP624.9m),
owing to more effective marketing, with agile product
and engineering teams rapidly improving our digital offering
On going investment in digital capabilities
-- In-house digital marketing capability now in place with
agency cost savings realised
-- Numerous improvements made to Motorpoint's website to
further support the customer journey, whilst the website
for the Auction4Cars brand has undergone a significant
upgrade, providing benefits for customers and employees
-- New CTO joined in March 2023 with over 20 years of experience
in technology leadership; a passionate advocate of utilising
AI capabilities to benefit customers and employees
-- Technology advancements and improvements in digital capability
driving the efficiencies behind a reduced ongoing cost
base; automation has already driven annual cost savings
in excess of GBP2m per annum
-- New brand advertising campaign "There's no car like a
Motorpoint car" launched at Christmas 2022; resonating
well with consumers, focusing on quality, service and
expertise
Expansion of markets
-- A further two new market area locations opened in strategically
significant regions, Edinburgh and Coventry, with both
trading well, in line with expectations. Ipswich opened
in May 2023, taking the total to 20 stores
Stakeholder excellence
-- Net Promoter Score ('NPS') remained at a market leading
high of 84
-- Good progress made against our ESG strategy, delivering
on key targets focused on reducing energy, waste and water
consumption
Motorpoint's long term ambitions to build significant scale and
leadership in the used car market remain, as does our confidence in
growing our market share, revenues and profits over time. As we
have previously described, this ambition has required significant
investment, particularly in digital and technological capabilities
to distinguish our omnichannel sourcing and customer sales
experiences, in new stores that provide a national network of
customer service, and in marketing that builds awareness of our
differentiated propositions. We are pleased with the progress that
we have made on these ambitions in a short time but there is more
to do.
The UK's difficult macroeconomic conditions, and their knock-on
effect on the used car market, impacted our growth and
profitability in FY23, particularly in the second half. Our stated
investment strategy was to continue to invest in new strategic
capabilities to the extent possible while remaining profitable. We
made good progress on strategic investments; although in the end we
made a small loss. For the next year we expect that conditions will
remain challenging. Although our long term ambitions remain, we
have tempered our growth expectations and will limit investments to
those that offer the best near term returns with a focus on
customer experiences in areas such as online, using data to support
buying, selling and marketing activity, technology enhancements to
create greater efficiency and the integration of sales channels.
Consequently, we will pause our new store rollout programme.
However, as the markets improve so will our capacity to invest.
Outlook
As already mentioned, rising inflation and interest rates,
consumer uncertainty and vehicle supply challenges significantly
affected the used car market and impacted our financial performance
in FY23. However, Motorpoint has a strong track record of
demonstrating financial resilience in a downturn, with market share
gains and an ability to effectively manage cash resources. This
ability will allow the Group to continue investing prudently in our
strategic objectives. The Group expects to emerge in a normalised
market as a leaner and more valuable business ready to seize a
significant opportunity. Our short term focus is on cash
conservation by increasing margin and lowering our cost base, which
will improve profitability.
Mark Carpenter, Chief Executive Officer of Motorpoint Group PLC
commented:
"Having recently celebrated our 25(th) anniversary, I have been
reflecting on the Group's performance and our journey to date. FY23
was marked by record revenues and further strategic investments as
we endeavour to provide customers across the UK a seamless car
buying experience. This investment is thus far delivering good
results and has positioned the Group better for the future. This
allows us to pause the level of ongoing investment, given the
current consumer and macro environment, while enjoying the
efficiencies we have now built into the business and continuing to
deliver on our growth strategy within the market constraints.
" Whilst the impact of higher interest rates and inflation will
continue into FY24, new car registrations have been steadily
increasing, with the fleet market driving much of the growth, which
will in turn benefit used vehicle supply. This, coupled with
continued market share gains and progress on our key initiatives,
will enable Motorpoint to emerge from the current environment in a
strong position to more aggressively pursue profitable market
leadership."
Analyst & investor webinar
There will be a webinar for sell-side analysts and investors at
9:30am BST today, the details of which can be obtained from FTI
Consulting via motorpoint@fticonsulting.com .
Enquiries:
Motorpoint Group PLC via FTI Consulting
Mark Carpenter, Chief Executive Officer
Chris Morgan, Chief Financial Officer
FTI Consulting (Financial PR)
Alex Beagley 020 3727 1000
Sam Macpherson
Harriet Jackson
Amy Goldup
Forward looking statements: The information in this release is
based on management information. This report includes statements
that are forward looking in nature. Forward looking statements
involve known and unknown risks, assumptions, uncertainties and
other factors which may cause the actual results, performance or
achievements of the Group to be materially different from any
future results, performance or achievements expressed or implied by
such forward looking statements. Except as required by the Listing
Rules and applicable law, the Company undertakes no obligation to
update, revise or change any forward looking statements to reflect
events or developments occurring after the date of this report.
Notes to editors
Motorpoint is the UK's leading independent E-commerce led
omnichannel vehicle retailer, focused on giving retail and trade
customers the easiest, most affordable and seamless way of buying,
selling and financing their car whether online, in store or a
combination of both. Through its leading B2C platform
Motorpoint.co.uk and UK network of 20 sales and collection stores,
the Group provides an unrivalled offering in the nearly new car
market, where consumers can effortlessly browse, buy or finance
their next car and collect or have it delivered directly to their
homes. Motorpoint's purely online wholesale platform
Auction4Cars.com sells vehicles into the wholesale B2B market that
have been part exchanged by retail customers, or purchased directly
from them by the Group as part of its online car buying service.
Motorpoint's diversified business model, underpinned by its
established brand, industry leading technology and sophisticated
marketing infrastructure, always delivers the best choice, value,
service and quality for customers. The Group is proud to have been
recognised for nine consecutive years as one of the Top 100 Best
Companies to Work For.
Non-Executive Chair's statement
I have been with Motorpoint for 17 months and am impressed by
what the Group has achieved against a challenging macroeconomic and
industry backdrop. To have delivered record revenues of GBP1,440.2m
and increased market share to 3.5% in its target market of 0-4 year
old vehicles is to be commended. The Company faced rising financing
costs, constrained stock availability and pricing shocks to
Electric Vehicle inventory, but nevertheless was able to continue
to make a number of important strategic investments. Although
greater yearly profitability was expected early in the year, our
stated goal has been to invest in growth and new strategic
capabilities to the extent possible while remaining profitable.
Although the Company eventually made a small loss in a difficult
trading environment, I am pleased with the progress made. I have
highlighted below my thoughts on the current landscape of the UK's
used car market, the strengths of the Motorpoint model, and why I
believe there is an opportunity for Motorpoint to continue gaining
market share and, as the UK economy normalises, substantially grow
profit.
Market context
The UK used car market is highly fragmented among branded new
car franchises, local and regional used car dealers, and emerging
online companies. The industry's car sales practices are fairly
entrenched, organised around a physical store model with high
costs, and generally not favoured or well trusted by consumers
compared to other retail shopping experiences. The supply side of
the used car market is similarly unchanged for most used car
dealers. It has traditionally been limited to part exchanges,
purchases off lease, bulk purchases from OEM manufacturers and
rental fleets, and purchases from a wholesale trade marketplace.
Both sides of the market, sales and supply, have recently
experienced intensified competition. New car franchises have
shifted more attention to used cars to cover for lower new car
production, new online-only sales models have emerged, and
constrained used car supply has caused all players to compete more
aggressively for stock from all sources.
The growth of the online channel and use of contemporary
technology presents an opportunity, at least in theory, to
disintermediate the used car market by selling direct to consumers
through a lower cost, higher service model, by buying direct from
consumers or via new online marketplaces, and by building brand
leadership and market share through aggressive marketing.
Used car competitors can respond to this opportunity in a range
of ways, from building a basic catalogue-type website to spending
massive money on technology and marketing on an online only model
in hopes that scale can eventually cover central costs and show
profit. We believe that Motorpoint and its strategic approach are
uniquely positioned to become a leader in this changing used car
market and thereby grow revenues and profit substantially.
Customer proposition
Based on our customer data, the use of digital services is
becoming universal amongst car buyers and sellers. However, some
degree of physical connection continues to be preferred by most
customers to provide reassurance and trust in the transaction. In
other words, UK consumers prefer to buy used cars and ancillary
services on a cross-channel basis, using digital channels and
physical touchpoints interchangeably in their purchase journey.
Similarly, consumers prefer a cross-channel approach to selling
their cars, as online sources provide pricing and other data while
a physical connection is required to validate and collect the
vehicle. Motorpoint, as an omnichannel retailer, is perfectly
positioned to serve this need and is developing integrated consumer
journeys to provide a digital channel, store sales and service
channel, and home delivery and collection options, underpinned by
sophisticated data, that allows customers to learn, shop and build
confidence and trust in their purchase or sale and helps Motorpoint
know just what degree of assistance is needed at each stage of the
journey. This innovative customer experience, coupled with
Motorpoint's price and service offer, should provide a leading
proposition in the market.
Growth
Motorpoint has seen its market share grow with increased brand
awareness. Importantly, we also see this awareness grow where we
have a local store presence. Where Motorpoint has stores and has
deployed targeted marketing programmes, its mature market share of
0-4 year old vehicles is 8.9% compared to 3.5% nationally.
The profitability profile of a Motorpoint store is also
favourable. Historically in a normalised economic environment a new
store turns profitable in its second year and at maturity can
generate profit in excess of GBP2m-GBP3m per annum. With ongoing
improvements to its digital and store customer experiences, and
expanded and improved marketing, we believe that Motorpoint's
mature and national market shares can be higher and its timeline to
maturity accelerated.
Motorpoint has stores in 20 market regions and believes up to 25
markets are targets for future stores, leaving ample growth
opportunity. With national brand awareness, a strong digital offer
and an expanded network of service points, we would expect market
share outside of store catchments to grow as well.
Value creation
Motorpoint is today one of the best operators in the UK's used
car market, as measured by its strong margin per car sold while
simultaneously providing a lowest price promise, and industry
leading NPS. With over 25 years of experience, it has proven its
superior pricing models and market-leading efficiency in inventory
management, vehicle re-conditioning, logistics and store
operations. Motorpoint is using technology to further reduce costs
across business processes and operations, including to reflect the
cost saving opportunities in stores and call centres from increased
consumer take-up of Motorpoint's improved digital services.
In the near term we expect the market for used cars in the UK to
continue to be difficult due to, among other things, softened
consumer demand, limited stock availability and high financing
costs. However, we believe Motorpoint will emerge from the current
depressed consumer market a more efficient and competitive business
having made progress on multiple key strategic initiatives in
technology, marketing, and its digital and physical channels. Over
the long term we will make further investments, offset to a degree
by efficiencies across the business. As Motorpoint continues to
improve its omnichannel customer experiences and data-driven
processes, and to invest in more effective marketing and store
expansion, its brand awareness, market share, sales and profits
should rise, creating a substantially bigger and more profitable
business.
I would like to thank all of my colleagues at Motorpoint, at our
Head Office and across the UK network, for their continued hard
work and commitment. Whilst the current macroeconomic environment
and car industry pose challenges for our company and UK consumers
face significant uncertainty, I remain excited by the opportunity
in front of us and confident that Motorpoint is well positioned to
deliver significant shareholder value in the long term.
John Walden
Non-Executive Chair, Motorpoint PLC
14 June 2023
Chief Executive's statement
Overview
During FY23, we continued to execute on our investment strategy
to offer our customers a truly holistic experience when it comes to
purchasing a used car, with guaranteed access to our outstanding
price leadership proposition.
I am pleased that we achieved record revenue of GBP1,440.2m, up
8.9% on FY22, of which GBP660.5m was derived from E-commerce sales
(FY22: GBP624.9m). This was helped by vehicle mix and inflation,
but we also achieved meaningful market share gains in a smaller
market due to investment in new geographical areas, digital and
technology capability, and price leadership.
As previously highlighted, we experienced a number of headwinds
in FY23, which impacted profitability. Rapidly rising inflation,
consumer uncertainty and worldwide vehicle supply chain challenges
are significantly affecting the used car market. For example, the
market for our 0-4 year old sector has fallen from a pre Covid high
of 2.45m sales per annum to 1.55m. In addition, higher interest
rates also resulted in lower finance commissions where we chose not
to pass the full cost increases onto customers, and our interest
costs of GBP7.1m more than doubled from FY22. Margins were also
eroded by the well-documented fall in Electric Vehicle prices in
the latter part of FY23 with as much as a 30% reduction in stock
values over a four month period. These factors influenced the
reduction in profitability, resulting in a loss before taxation of
GBP0.3m, down from a profit of GBP21.5m in FY22. Despite these
headwinds we consciously continued to execute our planned
investment in strategic objectives, which cost an incremental
GBP6.1m in FY23. We have worked hard during the year to manage
non-strategic costs, and headcount at year end had dropped to 794
(FY22: 928), even with the opening of new stores.
Our cash position has improved significantly since the end of
FY22, despite the lower profitability. Net cash, excluding lease
liabilities, at year end was GBP5.6m, compared to net debt of
GBP(21.2)m in FY22. This was largely due to the use of the stocking
facilities, which allowed full repayment of the GBP29.0m revolving
credit facility during the first few months of FY23.
We believe that there is a significant opportunity for
Motorpoint to become a larger, highly profitable market leader in a
changing and fragmented market. This will involve investments over
time in data-driven technology, digital and store customer
experiences, and growth including marketing and store expansion. In
the shorter term, the business is expected to benefit from the
increase in new car registrations, expanding supply.
Strategy Update
In June 2021, we announced our objectives to significantly
increase our rate of growth, with the aim of at least doubling FY20
revenue to over GBP2bn in the medium term, by:
-- Growing our E-commerce revenue to over GBP1bn by substantially
increasing investment in marketing, technology and data.
-- Opening 12 new sales and collection stores to service
revenue growth, increasing investment in the customer
proposition, and expanding our supply channels.
-- Leveraging our E-commerce platform Auction4Cars.com to
accommodate new supply channels and to launch our marketplace
offering.
-- Increasing operational efficiency through further automation
and technology investment as customers migrate to E-commerce
channels.
As a result of our strong performance in key strategic areas,
the Group has made good progress on these targets. Since the
objectives were announced, the Group has benefitted from high
vehicle inflation and car mix, increasing the average selling price
per vehicle; however, challenges in availability and then weaker
demand in the used car market has materially hindered unit sales
growth.
In the year, our share of the 0-4 year old market increased to
3.5% (FY22: 3.1%, and from 2.4% when the strategy was launched),
whilst market share within 30 minute drive time of a store
increased to 8.9% (FY22: 7.7%). There is clear correlation between
market share and unprompted brand awareness.
Two more new stores opened successfully in FY23, namely
Edinburgh and Coventry. Both are in strategically significant
regions, and we are pleased with their performance. Ipswich, our
20(th) store, opened in May of this year. While difficult trading
conditions remain, we will pause our new store rollout programme,
as we concentrate on investment that offers the best near term
return.
During FY23, we have made rapid progress enhancing our digital
capability. We are seeing the benefits of hiring an experienced
Chief Digital Officer, who has built up an in-house digital team,
with a significant increase in digital sales leads. We also opened
our new state-of-the-art Tech Hub in Manchester to help us attract
the best talent in the digital industry as we enhance our online
presence. Our website has been subject to much investment, and now
includes a new, lifestyle inspiring landing page, improved search
workings, imagery, product information, drop down functionality and
a more premium look and feel. In addition, work has been
progressing quickly on integrating marketing platforms, SEO
enhancements, targeted brand awareness and communication, and eCRM
capability. These enhancements are all designed to improve the
customer journey and increase efficiency.
We continually enhance the way in which we use data to make
informed decisions, particularly with regard to how we price
vehicles. Our capability has been bolstered with the introduction
of Tom Tang who joined Motorpoint as Chief Technology Officer in
March. Tom has over 20 years of experience in technology leadership
with his recent roles as CIO, Alliant Energy, Sainsbury's and
Argos. Tom is an advocate of the benefits of AI capabilities which
benefit both the customer and employee. A key focus for the
business has been the use of automation to improve efficiency,
whether it be making things easier for customers in store and on
the website or automating back office functions. Automation
progress will further accelerate as Tom settles into the
business.
The investment that we undertook in FY23 was to build a market
leader. This included future-proofing the business, providing us
with enhanced technology capabilities to improve our customer
proposition and automation to drive efficiencies, both of which
help us to withstand tougher market conditions. The Group is now
better positioned for the future, and we are in a position to scale
back on our investment spend by c.GBP8m in FY24, utilising these
new capabilities, and focus only on pursuing the most impactful
strategic investments.
Customers
As we innovate our omnichannel customer experiences, our highly
engaged team continued to deliver our market leading proposition of
Choice, Value, Service and Quality to our loyal customers with an
unerring focus on customer satisfaction. Our NPS for sold vehicles
remains at a record high 84.
During FY23, we introduced Project One, which is Group wide, and
looks at how Motorpoint will operate in the future to seamlessly
join our online and in store customer journey. The focus currently
is on improving customer experience, and how we can serve them even
better, linking their in store experience to online research. How
customers shop with us is becoming increasingly interchangeable
between channels.
Our team
Our operating model of how our employees and stakeholders
interact, the Motorpoint Virtuous Circle, combined with our Values
of Proud, Happy, Honest and Supportive continue to provide a robust
framework for explaining how we get things done and what factors to
consider when decisions are required.
During the year, we introduced new and improved tools to help us
attract and retain the best talent including a new careers website
and e-applicant tracking system, an onboarding tool and a powerful
internal communication platform. We are already seeing the benefits
of attracting top talent and we were pleased to receive an
increased number of applicants for positions at our new store in
Ipswich.
We believe that the engagement of our team is directly
correlated to our customer satisfaction, and we sponsor multiple
initiatives to enhance their experience with Motorpoint. Our 'One
Big Dream' initiative has been a huge success, with our people
using two paid hours per month for their own fulfilment. We are
proud to have again been selected in the UK's 100 Best Companies to
Work For, our ninth consecutive selection.
At my senior team level, with the introduction of Kal Singh,
Chief Operating Officer, in December and more recently, Tom Tang,
Chief Technology Officer, in March, I believe that all the building
blocks are now in place to further accelerate our strategic
objectives.
Environmental, Social and Governance (ESG)
The Group has made significant progress on its ESG strategy. The
ESG Committee is fully operational and has been instrumental in
setting out appropriate ESG targets. We want to be viewed as the
most environmentally friendly used car retailer.
During FY23 we have had a specific focus on 'GHG emissions and
reductions', 'recycling, waste recovery and reductions', and
'energy use, conservation and reductions.' We delivered a 7.3%
reduction in energy usage per square foot compared to FY22, and
waste to landfill was practically zero (0.2%). Also, water
consumption fell by 15.4% in the year. Working towards these
targets has seen us make good progress in data availability,
visibility, and awareness across the business.
Throughout FY23 we have remained committed to energy management,
championing this through internal communication channels which
promote and incentivise energy efficiency.
From an Electric Vehicle (EV) standpoint, FY23 saw us make
substantial progress upgrading our estate to support this expanding
part of the market. We sold 137% more EVs this year compared to
FY22.
Outlook
As already mentioned, rising inflation and interest rates,
consumer uncertainty and vehicle supply challenges significantly
affected the used car market and impacted our financial performance
in FY23. However, Motorpoint has a strong track record of
demonstrating financial resilience in a downturn, with market share
gains and an ability to effectively manage cash resources. This
ability will allow the Group to continue investing prudently in our
strategic objectives. The Group expects to emerge in a normalised
market as a leaner and more valuable business ready to seize a
significant opportunity. Our short term focus is on cash
conservation by increasing margin and lowering our cost base, which
will improve profitability.
Mark Carpenter
Chief Executive Officer
14 June 2023
FINANCIAL REVIEW
Group financial performance headlines
Despite the fall in profitability, the Group experienced record
revenue, which increased by 8.9% to GBP1,440.2m (FY22:
GBP1,322.3m), with further strong market share gains. This growth
was supported by new stores, an increase in more expensive premium
models being sold, and vehicle price inflation.
Gross profit was GBP85.7m (FY22: GBP106.3m). FY22 benefitted
from the record used car inflation. In FY23 we invested in the
customer to ensure we maintained our price leading position, in
terms of low vehicle prices and taking a lower finance commission
to offset APR increases. The latter part of FY23 was also impacted
by retail price reductions to clear through the well-publicised
fall in Electric Vehicle values.
(Loss) / Profit before taxation was GBP(0.3)m (FY22: GBP21.5m),
reflecting the fall from record margins in FY22, a lower number of
units sold due to a smaller market, increased strategic investment,
losses from new store openings and higher interest costs.
Despite the lower profitability net cash improved significantly.
Net cash, excluding lease liabilities, at 31 March 2023 was
positive GBP5.6m (31 March 2022: net GBP21.2m negative, being
GBP7.8m cash and GBP29.0m fully drawn down revolving credit
facility).
Trading performance
The Group has two key revenue streams, being (i) vehicles sold
to retail customers via the Group's stores, call centre and digital
channels, and (ii) vehicles sold to wholesale customers via the
Group's Auction4Cars.com website.
Retail customers Wholesale customers Total
FY23 FY22 FY23 FY22 FY23 FY22
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 1,175.7 1,112.3 264.5 210.0 1,440.2 1,322.3
Gross profit 74.5 91.0 11.2 15.3 85.7 106.3
Retail
Revenue from retail customers was up 5.7% to GBP1,175.7m (FY22:
GBP1,112.3m), with 57.3k vehicles sold (FY22: 62.9k). The number of
vehicles sold is a consequence of the fall in size of our available
market, as our share of this 0-4 year old market increased to 3.5%
(FY22: 3.1%). Of the sales, 37.5% were sold online/ digitally.
Since re-opening post Covid, the majority of customers still prefer
the store experience for their vehicle purchase.
We purchased 5,016 vehicles directly from consumers and of these
3,387 were sold through the retail channel.
Gross profit per retail unit for the financial year was GBP1,300
(FY22: GBP1,446). This reduction reflected investment in price
leadership, both in terms of vehicle pricing and lower finance
commissions, and the marking down of Electric Vehicles.
Finance penetration increased to 56% (FY22: 52%). Our APR
finance rates continue to be competitive despite an increase in
October from 8.9% to 9.9%, and in January to 10.9% which reflected
the increase in cost of finance. In FY23 we did not pass all of the
cost of money increases to customers which demonstrated our price
leadership but deflated gross margin.
Our 18(th) (Edinburgh) and 19(th) (Coventry) stores opened in
the Autumn, and both are trading well. Ipswich opened in
mid-May.
Wholesale
Wholesale units sold via Auction4Cars.com, which sells vehicles
that have been part exchanged by retail customers, or directly
purchased from consumers, was down against last year reflecting the
fall in retail units. 32.4k vehicles were sold via this purely
online platform (FY22: 34.8k). Gross profit per wholesale unit was
GBP346 (FY22: GBP440). Last year benefitted from the strong market
conditions, and this year marks a return to more normal levels
(FY21: GBP344).
Operating expenses
Operating expenses decreased from GBP81.3m in FY22 to GBP79.2m.
This fall is despite a planned uplift in strategic costs with
further investments in digital, technology and new stores. These
incremental costs amounted to GBP6.1m (FY22: GBP1.0m). Despite new
stores and growth of the digital marketing team, overall headcount
reduced 14.4% to 794, as we focus on efficiency in stores,
preparation and head office. Energy usage per square foot fell 7.3%
compared to last year. Overall property costs increased due to new
locations and business rates (Government relief available in
previous year). Marketing costs decreased from GBP18.9m to
GBP14.0m. The early part of FY22 included increased marketing costs
to support stores post lockdown.
Other income
Other income relates to the small gain on the sale and leaseback
transactions during FY23 (no such transactions in FY22).
Exceptional items
There have been no exceptional items in the period (FY22:
GBPNil).
Interest
The Group's net financial expense was GBP7.1m (FY22: GBP3.5m);
the increase reflected the sharp rise in cost of borrowing, which
materially impacted the funding of stock facilities.
Total interest charges on the stocking facilities were GBP4.7m
(FY22: GBP1.5m).
Interest on lease liabilities of GBP2.0m (FY22: GBP1.7m) was
incurred in the year.
Interest on banking facilities was GBP0.4m (FY22: GBP0.3m).
Taxation
The tax charge in the period is for the amount assessable for UK
corporation tax in the year net of prior year adjustments and
deferred tax credits. The tax charge has reduced to GBP0.3m (FY22:
GBP4.6m), reflecting lower profitability.
Shares
At 31 March 2023, 90,189,885 ordinary shares were outstanding,
of which 1,686,307 were held in the Employee Benefit Trust.
Earnings per share
Basic and diluted earnings per share were both (0.7) pence
(FY22: 18.7 pence).
Dividends
No dividend was paid in the period (FY22: GBPNil) and the Board
has not recommended a dividend (FY22: GBPNil) while it focuses on
investment to drive organic growth.
Capital expenditure and disposals
Cash purchases of property, plant and equipment, and intangible
assets was GBP9.4m (FY22: GBP6.9m), and primarily related to
bringing the new stores in Edinburgh and Coventry up to standard
for opening, major refits at Newport and Burnley stores, and
intangibles relating to software and website development. All new
properties were leased.
In the year, two sale and leaseback transactions were
successfully completed. These were the Stockton-on-Tees store and
the Peterborough preparation centre. The freeholds were sold gross
for GBP5.0m and GBP4.8m and leased backed at annual rents of
GBP350k and GBP265k respectively.
Balance sheet
Net assets remained broadly consistent with prior year at
GBP38.9m. Working capital was proactively managed, with a
significant improvement in the net cash position.
Non-current assets were GBP75.2m (31 March 2022: GBP59.2m) and
made up of GBP13.1m of property, plant and equipment, GBP58.4m
right-of-use assets and intangible assets of GBP3.7m (31 March
2022: GBP10.9m, GBP46.7m, GBP0.6m and a deferred tax asset of
GBP1.0m respectively). The Group currently owns one remaining
freehold plot of land in Glasgow. All other properties are on
leases of various lengths.
The Group closed the period with GBP148.6m of inventory, down
from GBP228.4m at 31 March 2022. Days in stock for the period
improved to 51 days (FY22: 54 days). Although the record price
inflation experienced in FY22 was not repeated, used vehicle prices
generally remained high compared to historic levels. However, we
did experience a significant fall in Electric Vehicle prices in the
second half of FY23, which negatively impacted margin.
At 31 March 2023, the Group had GBP195.0m (31 March 2022:
GBP195.0m) of stocking finance facilities available of which
GBP102.5m (31 March 2022: GBP147.0m) was drawn. The Group has
available stocking facilities with Black Horse Limited of
GBP120.0m, and GBP75.0m with Lombard North Central PLC.
The Group also has a GBP35.0m facility with Santander UK PLC,
split between GBP6.0m available as an uncommitted overdraft and
GBP29.0m available as a revolving credit facility. This facility
was extended in June 2023 for a further three years, with the
option of two one-year extensions. At 31 March 2023, GBPNil (31
March 2022: GBP29.0m) was drawn on this facility.
Trade and other receivables were GBP18.4m (31 March 2022:
GBP13.6m). This increase related to timing of commissions due from
Finance providers.
Trade and other payables, inclusive of the stock financing
facilities, have decreased to GBP143.8m (31 March 2022: GBP193.8m)
primarily reflecting a reduction in the drawn down stocking
facilities.
The increase in total lease liabilities to GBP63.6m (31 March
2022: GBP52.8m) reflects the new store additions, along with the
sale and leasebacks of Stockton-on-Tees and Peterborough
preparation centre. Ipswich opened in May 2023.
Cash flow
Cash generated from operations was GBP41.3m inflow (FY22:
GBP5.5m outflow). This reflected the large reduction in the value
of inventory which more than offset the drop in creditors and lower
operating profit.
Other main items in the cash flow include: capital expenditure
of GBP9.4m (FY22: GBP6.9m), payments to satisfy future employee
share plan obligations of GBP0.7m (FY22: GBP5.0m), a net repayment
of borrowings (RCF) of GBP29.0m (FY22: GBPNil), principal lease
repayments of GBP5.9m (FY22: GBP4.0m), interest payments of GBP7.1m
(FY22: GBP3.5m) and tax payments of GBP1.1m (FY22: GBP2.3m). Net
proceeds of GBP9.7m were received for the two sale and
leasebacks.
Capital structure and treasury
The Group's objective when managing working capital is to ensure
adequate working capital for all operating activities and
liquidity, including comfortable headroom to take advantage of
opportunities, or to weather short term downturns. The Group also
aims to operate an efficient capital structure to achieve its
business plan.
The Group's long term funding arrangements consist primarily of
the stocking finance facilities with Black Horse Limited and
Lombard North Central (to a maximum of GBP195.0m) and an unsecured
loan facility provided by Santander UK PLC, split between GBP6.0m
available as an uncommitted overdraft and GBP29.0m available as a
revolving credit facility. This loan facility with Santander UK PLC
has been extended in June 2023 and will now expire in June 2026,
with the option of two one-year extensions, if agreed by both
parties.
Chris Morgan
Chief Financial Officer
14 June 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2023
2023 2022
Note GBPm GBPm
------------------------------------------------------ ---- --------- ------------------
Revenue 3 1,440.2 1,322.3
Cost of sales 4 (1,354.5) (1,216.0)
------------------------------------------------------ ---- --------- ------------------
Gross profit 85.7 106.3
Operating expenses 4 (79.2) (81.3)
Other income 0.3 _
------------------------------------------------------ ---- --------- ------------------
Operating profit 6.8 25.0
Finance expense (7.1) (3.5)
------------------------------------------------------ ---- --------- ------------------
(Loss) / Profit before income tax (0.3) 21.5
Income tax expense 5 (0.3) (4.6)
------------------------------------------------------ ---- --------- ------------------
(Loss) / Profit for the year (0.6) 16.9
------------------------------------------------------ ---- --------- ------------------
Other comprehensive expenses:
Items that will not be reclassified to profit
or loss
Tax relating to items which will not be reclassified
to profit or loss 5 (0.1) (0.2)
------------------------------------------------------ ---- --------- ------------------
Other comprehensive expense (0.1) (0.2)
------------------------------------------------------ ---- --------- ------------------
Total comprehensive (expense) / income for
the year attributable to equity holders of
the parent (0.7) 16.7
------------------------------------------------------ ---- --------- ------------------
Earnings per share attributable to equity
holders of the parent
Basic 6 (0.7p) 18.7p
Diluted 6 (0.7p) 18.7p
------------------------------------------------------ ---- --------- ------------------
The Group's activities all derive from continuing
operations.
CONSOLIDATED BALANCE SHEET
AS At 31 March 2023
2023 2022
Note GBPm GBPm
--------------------------------------------- ---- ------- -------
ASSETS
Non-current assets
Property, plant and equipment 13.1 10.9
Right-of-use assets 58.4 46.7
Intangible assets 3.7 0.6
Deferred tax assets _ 1.0
--------------------------------------------- ---- ------- -------
Total non-current assets 75.2 59.2
--------------------------------------------- ---- ------- -------
Current assets
Assets held for sale _ 9.2
Inventories 148.6 228.4
Trade and other receivables 18.4 13.6
Current tax receivable 1.3 _
Cash and cash equivalents 5.6 7.8
--------------------------------------------- ---- ------- -------
Total current assets 173.9 259.0
--------------------------------------------- ---- ------- -------
TOTAL ASSETS 249.1 318.2
--------------------------------------------- ---- ------- -------
LIABILITIES
Current liabilities
Trade and other payables, excluding contract
liabilities (143.8) (193.8)
Borrowings 7 _ (29.0)
Lease liabilities (3.4) (3.3)
Current tax liabilities _ (0.6)
Provisions -_ (0.1)
--------------------------------------------- ---- ------- -------
Total current liabilities (147.2) (226.8)
--------------------------------------------- ---- ------- -------
Net current assets 26.7 32.2
--------------------------------------------- ---- ------- -------
Non-current liabilities
Lease liabilities (60.2) (49.5)
Provisions (2.6) (2.5)
Deferred tax liabilities (0.2) _
--------------------------------------------- ---- ------- -------
Total non-current liabilities (63.0) (52.0)
--------------------------------------------- ---- ------- -------
TOTAL LIABILITIES (210.2) (278.8)
--------------------------------------------- ---- ------- -------
NET ASSETS 38.9 39.4
--------------------------------------------- ---- ------- -------
EQUITY
Called up share capital 8 0.9 0.9
Capital redemption reserve 0.1 0.1
Capital reorganisation reserve (0.8) (0.8)
EBT reserve (5.3) (4.7)
Retained earnings 44.0 43.9
--------------------------------------------- ---- ------- -------
TOTAL EQUITY 38.9 39.4
--------------------------------------------- ---- ------- -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2023
Called
up Capital Capital
share capital redemption reorganisation Retained
reserve reserve EBT reserve earnings Total equity
Note GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----- -------------- ----------- --------------- ----------- --------- ------------
Balance at 1
April 2021 0.9 0.1 (0.8) -(0.1) 27.5 27.6
-------------------------------- -------------- ----------- --------------- ----------- --------- ------------
Profit for the
year - - - - 16.9 16.9
Other comprehensive
expense for the
year _ _ _ _ (0.2) (0.2)
-------------------------------- -------------- ----------- --------------- ----------- --------- ------------
Total comprehensive
income for the
year _ _ _ _ 16.7 16.7
-------------------------------- -------------- ----------- --------------- ----------- --------- ------------
Transactions
with owners in
their capacity
as owners:
Share -- based
payments - - - - 0.1 0.1
EBT share purchases
and commitments _ _ _ (5.0) _ (5.0)
Share-based compensation
options satisfied
through the EBT _ _ _ 0.4 (0.4) _
_ _ _ (4.6) (0.3) (4.9)
------------------------------- -------------- ----------- --------------- ----------- --------- ------------
Balance at 31
March 2022 0.9 0.1 (0.8) (4.7) 43.9 39.4
Loss for the year _ _ _ _ (0.6) (0.6)
Other comprehensive
expense for the
year _ _ _ _ (0.1) (0.1)
Total comprehensive
expense for the
year _ _ _ _ (0.7) (0.7)
Transactions
with owners in
their capacity
as owners:
Share -- based
payments _ _ _ _ 0.9 0.9
EBT share purchases
and commitments _ _ _ (0.7) _ (0.7)
Share-based compensation
options satisfied
through the EBT _ _ _ 0.1 (0.1) _
_ _ _ (0.6) 0.8 0.2
------------------------------- -------------- ----------- --------------- ----------- --------- ------------
Balance at 31
March 2023 0.9 0.1 (0.8) (5.3) 44.0 38.9
-------------------------------- -------------- ----------- --------------- ----------- --------- ------------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2023
2023 2022
GBPm GBPm
---------------------------------------------------- ------ -------
(Loss) / profit for the year attributable
to equity shareholders (0.6) 16.9
Adjustments for:
Taxation charge 0.3 4.6
Finance costs 7.1 3.5
----------------------------------------------------- ------ -------
Operating profit 6.8 25.0
----------------------------------------------------- ------ -------
Share-based payments 0.1 0.1
Depreciation and amortisation charges 9.4 7.3
----------------------------------------------------- ------ -------
Cash flow from operations before movement
in working capital 16.3 32.4
----------------------------------------------------- ------ -------
Decrease / (Increase) in inventory 79.8 (100.0)
Increase in trade and other receivables (4.8) (5.9)
(Decrease) / Increase in trade and other payables (50.0) 68.0
----------------------------------------------------- ------ -------
Cash generated from / (used in) operations 41.3 (5.5)
----------------------------------------------------- ------ -------
Interest paid on borrowings and financing
facilities (5.1) (1.8)
Interest paid on lease liabilities (2.0) (1.7)
Income tax paid (1.1) (2.3)
----------------------------------------------------- ------ -------
Net cash generated from / (used in) operating
activities 33.1 (11.3)
----------------------------------------------------- ------ -------
Cash flows from investing activities
Purchases of property, plant and equipment
and intangible assets (9.4) (6.9)
Proceeds from disposal of property, plant _
and equipment and right-of-use assets 9.7
---------------------------------------------------- ------ -------
Net cash generated from / (used in) investing
activities 0.3 (6.9)
----------------------------------------------------- ------ -------
Cash flows from financing activities
Payments to satisfy employee share plan obligations (0.7) (5.0)
Repayment of principal element of leases (5.9) (4.0)
Repayment of borrowings (57.0) _
Proceeds from borrowings 28.0 29.0
Net cash (used in) / generated from financing
activities (35.6) 20.0
----------------------------------------------------- ------ -------
Net (Decrease) / Increase in cash and cash
equivalents (2.2) 1.8
Cash and cash equivalents at the beginning
of the year 7.8 6.0
----------------------------------------------------- ------ -------
Cash and cash equivalents at end of year 5.6 7.8
----------------------------------------------------- ------ -------
Net cash and cash equivalents comprises: Cash
at bank 5.6 7.8
----------------------------------------------------- ------ -------
1. General information
Motorpoint Group Plc (the 'Company') is incorporated and
domiciled in the United Kingdom under the Companies Act 2006.
The Company is a public company limited by shares and is listed
on the London Stock Exchange; the address of the registered office
is Champion House, Stephensons Way, Derby, England, United Kingdom,
DE21 6LY. The consolidated financial statements of the Group as at
and for the year ended 31 March 2023 comprise the Company, all of
its subsidiaries and the Motorpoint Group Plc Employee Benefit
Trust (the 'EBT'), together referred to as the 'Group'. These
financial statements are presented in pounds sterling because that
is the currency of the primary economic environment in which the
Group operates.
Going concern
In accordance with the UK Corporate Governance Code 2018, the
Board has assessed the prospects of the Group over a period in
excess of 12 months from the date of signing the Group financial
statements as required by the 'Going Concern' provision, by
selecting an 18 month period from signing, to December 2024, which
takes into account the Group's current position and the potential
impact of the principal risks and uncertainties.
In making their assessment the Directors considered the Group's
current balance sheet, and operational cash flows, the availability
of facilities, and stress testing of the key trading assumptions
within the Group's plan. Three scenarios were modelled with the
outcomes as follows:
Scenario Outcome
Base Case The Group is not in breach of
Based upon the Group's most recent any financial covenants and is
approved forecasts. not in a drawdown position on
the RCF at the end of the going
concern period. The Group is able
to meet all forecast obligations
as they fall due for the going
concern period.
---------------------------------------
Sensitised The Group is not in breach of
A severe, plausible, downside any financial covenants at the
scenario including reducing revenue end of the going concern period.
(26% from base case) and incorporating The Group is able to meet all
an above inflation cost increase forecast obligations as they fall
of 17% from base case. due for the going concern period.
---------------------------------------
Reverse Stress Test This scenario is designed to result
A scenario created to model the in a covenant breach within the
circumstances required to breach assessed going concern period.
the Group's banking covenants Management believes the combination
within the going concern period. of severe downsides to be remote,
The Board considered a range of and that there are numerous mitigating
combined scenarios and potential factors over and above those built
impacts in preparing the stress into the reverse stress test modelling
test. The below scenario was analysed: which the Board would consider
Reducing revenue (33% decrease to avoid a covenant breach.
from the base case) and increasing
fixed costs (35% increase over
and above the forecasts in the
base case).
---------------------------------------
The selection of the assumptions for the sensitised case is
inherently subjective, and whilst the Board considered these
assumptions to reflect a severe but plausible downside scenario,
the future impact of economic downturn, interest rate rises or
inflating overhead costs is impossible to predict with absolute
accuracy.
Whilst the same applies to the reverse stress test, we note that
this scenario is specifically designed to demonstrate the point at
which the covenants breach during the going concern period. The
reverse stress test reflects, in the Board's opinion, a remote
circumstance and numerous mitigating factors could be implemented
to avoid a covenant breach in this scenario.
Scenario modelling has been considered throughout the year and
at year end by management to formulate response options against
moderate or severe downturns in sales volumes, potential margin
pressures and possible cost challenges.
During FY23, the Group maintained its available headroom by
successfully extending its terms on its revolving credit facility
which stands at GBP29.0m. The Group also has an uncommitted
overdraft facility of GBP6.0m which remains in place and was
undrawn at the year end. Both are until June 2026 with the option
to extend for two further one year extensions if agreed by both
parties. With respect to the Group's stocking facilities these are
unchanged from FY22 at GBP195.0m, which the Board deem appropriate
given current market conditions over the stabilisation of vehicle
price inflation.
In the eventuality of a period of prolonged economic downturn
resulting in material reductions in sales volume or prices as well
as rising overhead costs, it is possible that the Group would need
to negotiate changes to its current banking covenants, but such an
extreme downturn is not currently considered plausible.
The Group continues to consider and monitor further potential
mitigation actions it could take to strengthen its cash position
and reduce operating costs in the event of a more severe downside
scenario. Such cost reduction and cash preservation actions would
include but are not limited to: reducing spend on specific variable
cost lines including marketing and store trading expenses; team
costs, most notably sales commissions; pausing new stock
commitments; and extending the period for which expansionary
capital spend, dividends and share buybacks are suspended.
The Group has continued to demonstrate a flexible approach to
trading and despite the ongoing constriction in the supply of
vehicles, which is expected to continue into FY24, we have been
able to use our market position to access more stock to satisfy
customer demand, both online and in store.
The Directors have also made use of the post year end trading
performance to provide additional assurance that no stores require
an impairment provision. While only a short period has passed since
the year end, this evidence adds comfort to the strength of the
Group in an active market.
Based on this assessment, the Board confirms it has a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the going concern
period.
The Board has determined that the 18 month period constitutes an
appropriate period over which to provide its going concern
assessment. This is the period detailed in our Strategic Plan which
we approve each year as part of the strategic review. Whilst the
Board has no reason to believe the Group will not be viable over a
longer period, given the inherent uncertainty involved we believe
this presents users of the Annual Report and Accounts with a
reasonable degree of confidence while still providing a medium term
perspective.
New standards, amendments and interpretations
The Group has not early-adopted standards, interpretations or
amendments that have been issued but are not mandatory for 31 March
2023 reporting periods.
The following amended standards and interpretations effective
for the current financial year have been applied and have not had a
significant impact on the Group's consolidated financial statements
in the current or future reporting periods and on foreseeable
future transactions.
-- Proceeds Before Intended Use - Amendments to IAS 16
-- Onerous Contracts - Cost of Fulfilling a Contract - Amendments
to IAS 37
-- Annual Improvements to IFRS Standards 2018-2020 - Amendments
to IFRS 9 and IFRS 16
Basis of preparation
The financial information set out in this document does not
constitute the statutory financial statements of the Group for the
year end 31 March 2023 within the meaning of Section 434 of the
Companies Act 2006 but is derived from the Annual Report and
Accounts 2023. This financial information is prepared in accordance
with UK-adopted International Accounting Standards and the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The auditor has reported on the
annual financial statements included within the Annual Report and
Accounts 2023 and issued an unqualified opinion and the auditor's
report did not contain a statement under section 498 of the
Companies Act 2006.
The financial statements for the year ended 31 March 2022 have
been delivered to the Registrar of Companies and the auditor's
report was unqualified and did not contain a statement under
section 498 of the Companies Act 2006.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company, entities controlled by the Company (its
subsidiaries) and the Motorpoint Group Plc Employee Benefit Trust
made up to 31 March each year.
The EBT is consolidated on the basis that the Company has
control, thus the assets and liabilities of the EBT are included in
the Balance Sheet and shares held by the EBT in the Company are
presented as a deduction from equity. The EBT has been solely set
up for the purpose of issuing shares to Group employees to satisfy
awards under the various share-based schemes and has no ability to
access or use assets, or settle liabilities, of the Group.
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. Intercompany transactions and
balances between Group companies are eliminated on
consolidation.
2. Segmental reporting
The Group has prepared segmental reporting in accordance with
IFRS 8 'Operating Segments'. The Group's chief operating decision
maker is considered to be the Board of Directors. Segmental
information is presented on the same basis as the management
reporting. An operating segment is a component of the business
where discrete financial information is available and the operating
results are regularly reviewed by the Group's chief operating
decision maker to make decisions about resources to be allocated to
the segment and to assess its performance.
Operating segments are aggregated into reporting segments to
combine those with similar characteristics.
The Group operates its omnichannel vehicle retailer offering
through a store network and separate financial information is
prepared for these individual store operations. These stores are
considered separate 'cash-generating units' for impairment
purposes. However, it is considered that the nature of the
operations and products is similar and they all have similar long
term economic characteristics and the Group has applied the
aggregation criteria of IFRS 8. In addition, the Group operates an
independent trade car auction site offering a business-to-business
entirely online auction marketplace platform which is assessed by
the Board as a separate operation and thus there are two reportable
segments: retail (Motorpoint) and wholesale (Auction4Cars).
Motorpoint Motorpoint Auction4Cars Auction4Cars Total Total
2023 2022 2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---------- ---------- ------------ ------------ --------- ---------
Gross profit
Revenue 1,175.7 1,112.3 264.5 210.0 1,440.2 1,322.3
Cost of sales (1,101.2) (1,021.3) (253.3) (194.7) (1,354.5) (1,216.0)
-------------- ---------- ---------- ------------ ------------ --------- ---------
Gross profit 74.5 91.0 11.2 15.3 85.7 106.3
-------------- ---------- ---------- ------------ ------------ --------- ---------
3. Revenue recognition
Revenue represents amounts chargeable, net of value added tax,
in respect of the sale of goods and services to customers. Revenue
is measured at the fair value of the consideration receivable, when
it can be reliably measured, and the specified recognition criteria
for the sales type has been met. The transaction price is
determined based on periodically reviewed prices and are separately
identified on the customer's invoice. There are no estimates of
variable consideration.
The transaction price for motor vehicles and motor related
services is at fair value as if each of those products are sold
individually.
(i) Sales of motor vehicles
Revenue from the sale of retail vehicles is recognised when the
control has passed; that is, when the vehicle has been collected
by, or delivered to, the customer. Payment of the transaction price
is due immediately when the customer purchases the vehicle. Sales
of accessories, such as mats, are recognised in the same way.
Revenue from the sale of wholesale vehicles is recognised when
the control has passed; that is, when full payment has been made
for the vehicle.
(ii) Sales of motor related services and commissions
Motor related services sales include commissions on finance
introductions, extended guarantees and vehicle asset protection as
well as the sale of paint protection products. Sales of paint
protection products are recognised when the control has passed;
that is, the protection has been applied and the product is
supplied to the customer.
Vehicle extended guarantees where the Group is contractually
responsible for future claims are accounted for by deferring the
guarantee income received along with direct selling costs, and then
releasing the income on a straight line basis over the remaining
life of the guarantee. Costs in relation to servicing the extended
guarantee income are expensed to the statement of comprehensive
income as incurred. The Group has not sold any of these policies in
the current or prior period but continues to release income in
relation to legacy sales.
Vehicle extended guarantees and asset protection ('GAP
insurance') where the Group is not contractually responsible for
future claims, are accounted for by recognising the commissions
attributable to Motorpoint at the point of sale to the
customer.
Where the Group receives finance commission income, primarily
arising when the customer uses third-party finance to purchase the
vehicle, the Group recognises such income on an 'as earned'
basis.
The assessment is based on whether the Group controls the
specific goods and services before transferring them to the end
customer, rather than whether it has exposure to significant risks
and rewards associated with the sale of goods or services.
2023 2022
GBPm GBPm
-------------------------------------------------------- ------- -------
Revenue analysis
Revenue from sale of motor vehicles 1,370.7 1,253.1
Revenue from motor related services and commissions 62.6 62.9
Revenue recognised that was included in deferred income
at the beginning of the year - Sale of motor vehicles 3.9 3.3
Revenue recognised that was included in deferred income
at the beginning of the year - Motor related services
and commissions 3.0 3.0
Total revenue 1,440.2 1,322.3
-------------------------------------------------------- ------- -------
4. Operating profit
2023 2022
Operating profit includes the effect of charging: GBPm GBPm
-------------------------------------------------- ------- -------
Inventory recognised as expense 1,345.0 1,210.7
Movement in provision against inventory (0.1) 1.0
Employee benefit expense 36.2 34.7
Depreciation of property, plant and equipment and
right-of-use assets 9.0 7.3
Amortisation of intangible assets 0.4 _
Expense on short term and low value leases 0.4 0.4
-------------------------------------------------- ------- -------
2023 2022
Total expenses comprise: GBPm GBPm
---------------------------------- ------- -------
Cost of sales 1,354.5 1,216.0
Operating expenses:
Selling and distribution expenses 23.5 28.6
Administrative expenses 55.7 52.7
---------------------------------- ------- -------
Total operating expenses: 79.2 81.3
---------------------------------- ------- -------
Total expenses 1,433.7 1,297.3
---------------------------------- ------- -------
5. Income tax expense
The tax charge in the statement of comprehensive income 2023 2022
represents: GBPm GBPm
-------------------------------------------------------- ----- -----
Current tax:
UK corporation tax 0.3 4.3
Adjustment in respect of prior years (1.1) 0.3
-------------------------------------------------------- ----- -----
Total current tax (0.8) 4.6
-------------------------------------------------------- ----- -----
Deferred tax:
Origination and reversal of temporary differences (0.1) 0.2
Adjustments in respect of prior years 1.2 _
Impact of UK corporation tax rate change _ (0.2)
-------------------------------------------------------- ----- -----
Total deferred tax 1.1 _
-------------------------------------------------------- ----- -----
Total tax charge in the consolidated statement of
comprehensive income 0.3 4.6
-------------------------------------------------------- ----- -----
Reconciliation of the total tax charge
The tax charge in the statement of comprehensive income
in the year differs from (FY22: differs from) the
charge which would result from the standard rate of 2023 2022
corporation tax in the UK of 19% (FY22: 19%): GBPm GBPm
---------------------------------------------------------- ----- -----
(Loss) / profit before taxation (0.3) 21.5
---------------------------------------------------------- ----- -----
(Loss) / profit before taxation at the standard rate
of corporation tax of 19% (FY22: 19%) (0.1) 4.1
Tax effect of:
- Fixed asset differences 0.3 0.3
- Expenses not deductible for tax purposes 0.2 0.1
- Adjustment in respect of prior years (0.1) 0.3
- Re-measurement of deferred tax for changes in tax
rates _ (0.2)
---------------------------------------------------------- ----- -----
Tax charge in the consolidated statement of comprehensive
income 0.3 4.6
---------------------------------------------------------- ----- -----
A tax receivable balance of GBP1.3m (FY22: tax payable balance
of GBP0.6m) is included within current assets (FY22: current
liabilities) as a result of the timing of the payments on account
to HMRC.
Amounts recognised directly in equity
2023 2022
GBPm GBPm
------ --------
Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit
or loss or other comprehensive income but directly
debited or credited to equity:
- Deferred tax: Re-measurement of deferred tax for
changes in tax rates (1.1) (0.2)
- Deferred tax: Adjustment in respect of prior years 1.2 0.4
---------------------------------------------------------- ------ ------
Tax charge in the consolidated statement of comprehensive
income 0.1 0.2
---------------------------------------------------------- ------ ------
Factors affecting current and future tax charges
An increase in the UK corporation rate from 19% to 25%
(effective 1 April 2023) was substantively enacted on 24 May 2021.
As at the balance sheet date of the 31 March 2023 the deferred tax
asset has been calculated based on these rates, reflecting the
expected timing of reversal of the related temporary differences
(FY22: 25%).
6. Earnings per share
Basic and diluted EPS are calculated by dividing the earnings
attributable to equity shareholders by the weighted average number
of Ordinary Shares during the year.
2023 2022
------------------------------------------------------ ------ ------
(Loss) / profit attributable to Ordinary Shareholders
(GBPm) (0.6) 16.9
------------------------------------------------------ ------ ------
Weighted average number of Ordinary Shares in Issue
('000) 90,190 90,190
------------------------------------------------------ ------ ------
Basic EPS (pence) (0.7) 18.7
------------------------------------------------------ ------ ------
Diluted weighted average number of Ordinary Shares
in Issue ('000) 90,190 90,259
------------------------------------------------------ ------ ------
Diluted EPS (pence) (0.7) 18.7
------------------------------------------------------ ------ ------
The difference between the basic and diluted weighted average
number of shares represents the dilutive effect of the currently
operating schemes and the vested but not yet exercised options.
This is shown in the reconciliation below. No dilution in FY23 due
to the Group making a loss before taxation.
The shares for the PSP20 scheme, RSA21 and RSA22 have
performance criteria which have not been met so the options are not
yet dilutive. There is a maximum of 1,142,392 additional options
which have not been included in the dilutive calculation in
relation to these schemes.
2023 2022
------------------------------------------------------- ------ ------
Weighted average number of Ordinary Shares in Issue
('000) 90,190 90,190
Adjustment for share options ('000) _ 69
------------------------------------------------------- ------ ------
Weighted average number of Ordinary Shares for diluted
earnings per share ('000) 90,190 90,259
------------------------------------------------------- ------ ------
7. Borrowings
The Group's available borrowings consist of an unsecured loan
facility provided by Santander UK PLC, split between GBP6.0m
available as an uncommitted overdraft and GBP29.0m available as a
revolving credit facility. The availability of the revolving credit
facility and overdraft was extended in June 2023 to expire in June
2026 (previously May 2024), with the option to further extend for
two further one year periods. As at the reporting date GBPNil of
the revolving credit facility (FY22: GBP29.0m) and GBPNil of the
overdraft (FY22: GBPNil) was drawn down. The terms of the revolving
credit facility and overdraft require a full repayment for a period
of at least one day or more in each financial year and half year
with no less than one month between repayments.
The finance charge for utilising the facility was dependent on
the Group's borrowing ratios as well as the base rate of interest
in effect. During the year ended 31 March 2023 interest was charged
at 2.4% (FY22: 1.4%) per annum. The interest charged for the year
of GBP0.4m (FY22: GBP0.3m) has been expensed as a finance cost.
8. Share capital
2023 2022
============== ==============
Number Amount Number Amount
'000 GBPm '000 GBPm
----------------------------------- ------ ------ ------ ------
Allotted, called up and fully paid
Ordinary Shares of 1p each
Balance at the end of the year 90,190 0.9 90,190 0.9
----------------------------------- ------ ------ ------ ------
There are currently no shares held in treasury for use to
satisfy employee share plan obligations. Shares are held on behalf
of employees within the Employee Benefit Trust (EBT).
The Group does not have a limited amount of authorised
capital.
9. Post balance sheet events
Arrangements relating to the unsecured loan facility provided by
Santander UK PLC (GBP35.0m split between GBP6.0m available as an
uncommitted overdraft and GBP29.0m available as a revolving credit
facility) were extended in June 2023 to June 2026 (previously May
2024), with the option to extend for two further one year periods
if agreed by both parties.
The Group's 20th store opened in Ipswich in May 2023.
ALTERNATIVE PERFORMANCE MEASURES "APM s"
Earnings before interest, taxation, depreciation and
amortisation (EBITDA)
2023 2022
GBPm GBPm
-------------------------------- ----- -----
(Loss) / profit before taxation (0.3) 21.5
Finance expense 7.1 3.5
Depreciation 9.0 7.3
Amortisation 0.4 _
-------------------------------- ----- -----
EBITDA 16.2 32.3
-------------------------------- ----- -----
Return on capital employed (ROCE)
2023 2022
--------------------------- ----- -----
Operating profit (GBPm) 6.8 25.0
Average of opening and
closing net assets (GBPm) 39.2 33.5
--------------------------- ----- -----
ROCE 17.3% 74.6%
--------------------------- ----- -----
Net cash / (debt) excluding lease liabilities
2023 2022
GBPm GBPm
-------------------------- ----- ------
Cash and cash equivalents 5.6 7.8
Bank borrowings _ (29.0)
-------------------------- ----- ------
Net cash / (debt) 5.6 (21.2)
-------------------------- ----- ------
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END
FR FFFVIRVIVLIV
(END) Dow Jones Newswires
June 14, 2023 02:00 ET (06:00 GMT)
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