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BCA Marketplace PLC

BCA Marketplace PLC Delivers a strong financial performance

BCA Marketplace PLC (LON: BCA) has delivered a strong financial performance in the period and continued to make good progress in its development as Europe’s leading automotive marketplace and solutions provider. Revenue and profit growth continued across the Remarketing divisions as vendors value the speed and efficient access to liquidity and buyers are attracted by the breadth and quality of vehicles for sale. WeBuyAnyCar, the market-leading vehicle buying service, maintained its double-digit volume growth with an enhanced branch network providing increased convenience for consumers. Despite the impact of the Worldwide Harmonised Light Vehicle Test Procedure (‘WLTP’) constricting new vehicle supply, the Group remains on track to deliver the Board’s expectations for the full year.

RESULTS IN BRIEF

 

 

6 months ended

30 September 2018

6 months ended

1 October 2017

Revenue

£1,429.7m

£1,171.6m

Adjusted EBITDA1

£85.4m

£75.8m

Operating profit

£50.6m

£40.9m

Net debt2

£264.0m

£287.4m

Adjusted diluted earnings per share

6.4p

5.4p

Diluted earnings per share

4.4p

3.2p

Interim dividend per share

3.0p

2.6p

 

INTERIM HIGHLIGHTS

·      Revenue of £1,429.7m (2017: £1,171.6m)

·      Adjusted EBITDA of £85.4m (2017: £75.8m), up 12.7%

·      Operating profit of £50.6m (2017: £40.9m), stated after;

o  amortisation of acquired intangibles of £20.1m (2017: £20.0m); and

o  other non-recurring items of £0.7m (2017: £2.1m);

giving an adjusted operating profit of £71.4m (2017: £63.0m), up 13.3%

·      Net debt of £264.0m (2017: £287.4m)

·      Final dividend for the year ended 1 April 2018 of £47.5m paid in the period (2017: £35.5m) representing 5.95p per share (2017: 4.55p per share)

·      Diluted earnings per share of 4.4p (2017: 3.2p). Adjusted diluted earnings per share of 6.4p (2017: 5.4p), up 18.5%

·      Interim dividend increased 15.4% to 3.0p per share (2017: 2.6p) to be paid on 30 January 2019 for shares on the register on 14 December 2018

·      Newly upgraded Nottingham auction site completed, with capacity to sell 100,000 vehicles a year

·      Our digital, data and valuation products continue strong growth with a 20% increase in BCA Dealer Pro registered dealers and Dealer Pro valuations in the period

·      BCA Partner Finance provided funding for £0.5 billion of vehicle purchases in the period

·      European Transport Solutions adoption accelerated; 20,000 vehicle movements brokered compared to 3,000 in the previous 12 months

Avril Palmer-Baunack, BCA Marketplace PLC Executive Chairman said:

“Performance and progress in the first half has been good. BCA’s position as the market leader of integrated solutions for both physical and digital services to the automotive industry has allowed us to facilitate faster changes of vehicle ownership creating a compelling customer offering. We are winning multi-service contracts across de-fleet, refurbishment, inspection and collection, inventory management and physical and digital remarketing, through delivering synergies and efficiencies to customers.

The number of vehicles sold through our UK Vehicle Remarketing division has continued to grow, with volumes up 3% from strong growth in WeBuyAnyCar, alongside continued OEM and dealer wins, although supply from corporate, leasing and OEMs has been constrained due to lower new car registrations. This has resulted in strong used car pricing and demand from remarketing buyers. BCA won Motor Trader’s Remarketing Company of the Year Award for 2018 reflecting its pre-eminent position with vendors and buyers. We continue to drive efficiencies through modernisation of systems and processes, successfully running our first paperless vehicle entry auction in the period. Synergies from deploying the BCA Automotive transporter fleet on auction vehicle movements progressed with 49% (2017: 40%) moved by our own transporters.

Regulatory changes have led to an expected dislocation in new car markets through constrained supply. The implementation of the Worldwide Harmonised Light Vehicle Test Procedure (‘WLTP’) and the Real Driving Emissions (‘RDE’) test has required OEMs to adopt these emission and fuel consumption procedures on all model variations for new car registrations from September. OEMs actively reduced their holdings of vehicles homologated under the previous New European Driving Cycle (‘NEDC’) regime prior to the September deadline and testing delays have impacted supply. This is illustrated through The Society of Motor Manufacturers and Traders ‘SMMT’ volumes which rose 2.1% year-on-year between April and July, had an unusual increase of 23.1% year-on-year in the traditionally low registration month of August, before a significant year-on-year reduction of 20.5% in the peak registration month of September, resulting in a net 4.3% year-on-year reduction over the reporting period. The testing delays have resulted in fewer ex-factory vehicles requiring technical services, pre-delivery inspections and new car transportation. The shortage of vehicles has delayed fleet operators’ replacement cycle, suppressing the number of vehicles requiring end of lease refurbishment. The effect of WLTP has primarily impacted the Automotive Services division in the period and will diminish as new testing procedures become established.

WeBuyAnyCar has delivered double digit volume growth in each half year under BCA ownership, achieving 14% growth in the period. We continue to focus on developing an efficient digital solution supported by a convenient national network. Investment in our 247 branch network has reduced the average drive time for our customers to just 14 minutes. As the UK’s market-leading car buying service, WeBuyAnyCar provided 3.8m unique vehicle valuations in the period, purchasing 124,000 vehicles.

International Vehicle Remarketing delivered volume growth of 8% with continued focus on developing a scale cross-border business to realise value arbitrage opportunities from an enhanced buyer base. This is supported by our European transport brokerage service which is beginning to gain scale, moving 20,000 vehicles in the period.

Automotive is an increasingly data-driven industry; as we expand our touch points with vehicles the quality and breadth of our insight is further improved. During the first half of the year we interacted with over 6 million unique vehicles in the UK across our operations; many of these unique vehicles interacted with multiple touch points across the Group. There are opportunities both in the business to business and business to consumer markets for BCA to create choice and provide data which links vendors and buyers bringing value to both parties. We continue to see excellent growth opportunities, through further leverage of existing capabilities and our optimisation initiatives, including procurement and acquisitions.

Net debt has reduced by £23.4m to £264.0m compared to 1 October 2017. The interim dividend of 3.0p per share to be paid in January 2019 follows the payment of the prior year final dividend of 5.95p per share in September 2018.

We anticipate that the impact of WLTP will continue to restrict the supply of new vehicles in the second half, although due to our multi-channel and multinational business we remain confident that we can continue to deliver our profit and growth targets.”

Notes:

1. Adjusted EBITDA, adjusted operating profit, adjusted diluted earnings per share and adjusted basic earnings per share are non-IFRS financial measures and are referred to within the report. Divisional operating reviews are focused on adjusted EBITDA in order to give a more meaningful analysis since depreciation, interest and tax are managed centrally and significant or non-recurring items do not directly correlate to continuing divisional operating performance. Similarly, adjusted diluted earnings per share is focused on by the Board as this measure adds back significant or non-recurring items, net of the items’ taxation impact, as they do not directly correlate to the continuing Group operating performance. A reconciliation of adjusted EBITDA to operating profit is provided in the Operational and Financial Review. The adjustments between IFRS financial measures and the non-IFRS measures are explained further in the segmental analysis and earnings per share notes (note 5 and note 6 of the condensed consolidated interim financial statements).

2. The Group definition of net debt excludes the BCA Partner Finance funding, and finance leases – see unaudited condensed consolidated interim cash flow statement for further details.

About BCA Marketplace plc

BCA operates across every link of the post-factory automotive value chain, providing physical and digital solutions at scale to our customers.

Once a new vehicle leaves its place of manufacture, we provide a comprehensive range of services including single and bulk vehicle collections and deliveries, inspection checks, customs management, storage, refurbishment, vehicle preparation, finance, pricing data and used vehicle buying. Our digital and physical auction platforms bring together OEMs, leasing companies, fleet operators, retail dealers and buyers to efficiently transfer the ownership of vehicles while protecting value.

We are a key facilitator and link to the entire value chain in automotive, whether that is the manufacturer, the dealer, the vehicle financier or the end consumer. BCA facilitates the UK and European vehicle market, enabling vehicles to be moved, bought and sold, thereby providing liquidity and choice.