Cambria Automobiles : Audited Preliminary Results 2017/18 and Notice of AGM - 22nd November 2018

21 November 2018

Cambria Automobiles plc ("Cambria" or the "Group")

AIM: CAMB

AUDITED PRELIMINARY RESULTS 2017/18 AND NOTICE OF AGM

Solid results in Group's 12th year of trading, significant strategic progress, Group well positioned

Cambria, the franchised motor retailer, announces its preliminary results for the year to 31 August 2018.

Financial Highlights

Change
Revenue	630.0	644.3	-2.2%
Underlying EBITDA*	13.3	13.7	-2.9%
Underlying operating profit*	10.9	11.8	-7.8%
Underlying profit before tax*	9.8	11.3	-13.3%
Underlying profit before tax margin*	1.6%	1.8%	-20bps
Net Non-recurring income/ (expenses)	(0.7)	-
Underlying earnings per share*	7.84p	9.19p	-14.7%
Operating profit	10.2	11.8	-13.6%
Profit before tax	9.1	11.3	-19.3%
Earnings per share (basic)	7.27p	9.18p	-20.8%
Dividend per share	1.0p	1.0p

2018 2017 £m £m

Year ended 31 August

* These items exclude net non-recurring expenses of £0.7m relating to the refranchising activity and site closures (2017: nil)

• • Strong balance sheet - net assets £56.6m (2016/17: £50.4m)

• • Strong operational cash flows, cash position of £15.5m (2016/17: £23.0m)

• • Significant investment in property portfolio during year deploying £20m in capex

• • Net debt of £5.5m (2016/17: net cash £6.1m)

• • Underlying Return on Equity at 14.7% (2016/17: 19.9%)

• • Proposed final dividend of 0.75p, maintaining the full year dividend at 1.0p per share (2016/17: 1.0p)

• • Refinancing of the Group's debt facilities to provide a new £40.0m, five year Revolving Credit Facility

  arranged in November 2017

Operational Highlights

• • The Group has been through a major year of change with eight of the Group's 42 Franchised outlets either changing franchises or closing during this reporting period

• • Significant development of the Group's franchising strategy with the successful addition of three major High Luxury Segment (HLS) brand partners:

  • ! McLaren dealership in Hatfield opened in January 2018

  • ! Two Bentley dealerships in Essex and Kent opened in January 2018

  • ! Two Lamborghini dealerships in Essex and Kent opened in April and November 2018 respectively

• • Addition of Peugeot into Warrington to replace Fiat in September 2018

• • Planned closure of the Group's two bodyshop operations, Alfa Romeo and Jeep in Chelmsford and Mazda and Honda in Tunbridge Wells to facilitate the addition of Bentley and Lamborghini in both locations

• • Planned closure of the Group's loss-making Blackburn site which previously represented Fiat, Alfa Romeo, Renault and Volvo

• • New vehicle unit sales were, as expected down 17.2% (like-for-like down 14.8%) given the wider market softening, with the total financial impact slightly offset by a 1.2% increase in profit per unit as a result of the premium mix shift. The like-for-like units saw margin pressure with profit per unit down 2.6%

• • Used vehicle unit sales down 6.9% following site closures (like-for like down 2.6%), offset by a 11.6% (like-for like 6.3%) improvement in profit per unit which reflects the Group's portfolio changes and the additional new HLS brands

• • Aftersales Revenue increased 1.6% (like-for-like increase 4.1%)

• • Continuing investment in the Freehold portfolio; to increase operational capacity and achieve site potentials

• • Swindon Jaguar Land Rover "Arch" retail concept development completed in July 2018

• • Hatfield Jaguar Land Rover, Aston Martin and McLaren development progressing well for completion of Jaguar Land Rover in December 2018 and Aston Martin and McLaren in January 2019

• • Chelmsford and Tunbridge Wells Freeholds completely redeveloped to deliver Bentley and Lamborghini dealerships

Mark Lavery, Chief Executive Officer of Cambria said:

"The 2017/18 financial year has been a busy period across the Group and I am pleased with the progress that has been made. The changes made in the Brand portfolio have led to significant disruption in our day to day operations as we have closed these businesses and developed the new facilities for the new franchises. We have extended our representation in the High Luxury segment with the addition of one McLaren, two Bentley and two Lamborghini dealerships. All of these brands have been brought into the Group without the payment of goodwill and are exceptional examples of value creation for our shareholders.

The year has also seen a difficult new car market that has been impacted by weakening consumer demand in the face of the uncertainty around the Brexit negotiations, inconsistent messaging around the future of diesel engines and the impact on car supply from the change in emissions testing regulations to WLTP (Worldwide Harmonised Light Vehicle Test Procedure) in September. We have also had to cope with Government driven central cost increases including the Apprenticeship Levy, pension contributions, increases in debit and credit card charges and increased property rating costs. Regrettably we have no control over these areas of cost increase.

That being said, our exceptional management team have worked incredibly hard and despite the uncertainty, disruption and brand portfolio changes we have delivered a solid revenue result and profit levels slightly ahead of market expectations. Our strong used car profit performance combined with growth in aftersales has been a significant contributor.

Current financial year trading has been in line with the Board's expectations in September and October and we are excited about the opening of our new Hatfield site which will house Jaguar Land Rover, Aston Martin and McLaren. This state of the art facility will be fully operational in January 2019.

We are very enthusiastic about the potential for growth with our new McLaren, Bentley, Lamborghini and Peugeot businesses.

The Board remains confident that Cambria's resilient business model, enhanced franchise portfolio, focus on delivering a superior Guest experience and financing arrangements leave it well positioned to take advantage of any opportunities that the current economic uncertainty will provide."

Notice of AGM and posting of report and accounts

The Company also gives notice that the Annual General Meeting of the Company will be held at 10am on 4 January 2019 at Grange Aston Martin, Great North Road, Welwyn Garden City, AL8 7TQ (the "AGM").

The annual report and financial statement for the year ended 31 August 2018 (the "Report and Accounts") will shortly be posted to shareholders together with a notice of its AGM.

Copies of the Reports and Accounts and the AGM notice will be made available shortly from the Company's website,www.cambriaautomobilesplc.com, in accordance with AIM Rule 20.

Enquiries:

Cambria Automobiles

Tel: [phone]

Mark Lavery, Chief Executive James Mullins, Finance Directorwww.cambriaautomobilesplc.com

N+1 Singer - Nomad & Joint Broker	Tel: [phone]
Mark Taylor / Jen Boorer
Zeus Capital - Joint Broker	Tel: [phone]
Dominic King
FTI Consulting	Tel: [phone]
Alex Beagley / James Styles / Fern Duncan
Chairman's statement

After what has been an incredibly busy year for the management team, I am pleased to report that Cambria has delivered another strong set of results for the full year ended 31 August 2018, against a challenging consumer backdrop and significant uncertainty caused by Brexit. The results show continued improvement in the Group's used car and aftersales operations, along with successful delivery of its stated strategy to enhance the franchise portfolio alongside the property investment programme. The Group, in its 12th year of trading, delivered £9.8m of underlying pre-tax profit after absorbing losses for the site closures, whilst the like-for-like businesses generated £10.9m of underlying pre-tax profit. Since its inception in 2006, the Group has only raised a total of £10.8m in capital and continues to maintain an excellent return on shareholders' funds.

The strategic acquisitions which the Group has delivered over the past four financial years have accelerated the Group's growth and created a solid foundation in the premium and high luxury segment giving Cambria a broader and enhanced franchised dealership portfolio mix and bolstering its underlying earnings capacity.

As widely documented, the UK motor retail industry has weakened since March 2017 where it showed record registration figures. The new car market in 2017 saw registrations fall to 2.54m from 2.69m in 2016. In the 10 month period to October 2018, the market is down 7.2% on the 2017 comparative. The biggest change in the market is in the diesel segment which is down 30.7% to October. The new car market has been subject to a high level of disruption with changes to Vehicle Excise Duty, the supply-impacting WLTP regulation changes and diesel demonization all playing a part. The emergence of Alternatively Fuelled Vehicles through battery electric vehicles and plug in hybrid will undoubtedly play a significant role in the future of the new car market to meet stringent EU targets for emissions by 2021 and 2030. How this evolution will manifest itself and which manufacturers will be the winners is uncertain but there is significant capital being invested by the manufacturers.

During the 2018 financial year, the Group has delivered a financial performance with profit slightly ahead of both the Board and market expectations and the expected weakness in the new car sales that was highlighted last year. The Group has reported operational improvements in the past three financial years and, with the exception of new cars, these have continued into the 2017/18 financial year. On a total and like for like basis, Cambria generated gross profit growth across the used car and aftersales departments, with only the new car department experiencing a decline.

Group revenue decreased by 2.2% to £630.0m (2016/17: £644.3m). Underlying profit before tax fell by 13.3% to £9.8m (2016/17: £11.3m) and the Group delivered underlying earnings per share of 7.84p (2016/17: 9.19p) - a decrease of 14.7%.

The Group closed the year with net debt of £5.5m (2016/17: net cash £6.1m) after significant capital investments of £23.8m of which £19.8m was invested into the Group's property portfolio. The Group has net assets of £56.6m (2016/17: £50.4m), underpinned by the ownership of £64.3m (2016/17: £45.2m) of freehold and long leasehold properties.

Our capacity for making acquisitions, alongside the property development programme, was further enhanced in November 2017 with a refinancing and extension of banking facilities to £40m plus a £20m accordion facility. These facilities refinanced the previous £37m of total facilities with a £40m Revolving Credit Facility ("RCF") with a five year term available for acquisitions and property purchase and development.

Sadly, Sir Peter Burt, Non-Executive Director, passed away on 28 November 2017. Sir Peter had been a Non-Executive member of the Cambria board since 2008 and was Chair of the Nomination Committee and a member of the Audit Committee and had made a significant contribution to the Group's creation and development. Sir Peter was a founding partner and formerly the Chairman of Promethean Investments plc, which originally invested a total of £10.66 million in Cambria before the Group's listing on AIM in 2010.

Group overview

Cambria was established in 2006 with a strategy to build a balanced motor retail group to deliver the self-funded acquisition and turnaround of underperforming businesses. The strategy evolved in 2013 to encompass the acquisition of premium and high luxury businesses, located in geographically strategic locations. It has made good progress over the past four years in delivering on this strategy by acquiring businesses and opening dealerships as follows:

• • Barnet Jaguar Land Rover in July 2014

• • Swindon Land Rover in April 2015

• • Welwyn Garden City Land Rover in January 2016

• • Aston Martin Birmingham in May 2016

• • Woodford Jaguar Land Rover in July 2016

• • Bentley in Essex and Kent in January 2018

• • McLaren in Hatfield in January 2018

• • Lamborghini in Chelmsford in April 2018

• • Lamborghini in Tunbridge Wells in November 2018

The Group closed its Swindon Motor Park business in January 2016 in preparation for the development of the Jaguar Land Rover "Arch" retail concept facility on the site.

To facilitate the development of the Chelmsford and Tunbridge Wells Bentley and Lamborghini sites, the Group closed two bodyshops along with an Alfa Romeo and Jeep business in Chelmsford and a Honda and Mazda business in Tunbridge Wells.

The Group took the decision to close its loss-making Blackburn site in July 2018, the site formerly represented Fiat, Alfa Romeo, Renault and Volvo. The site comprised a leasehold showroom for Fiat and Alfa Romeo and the break clause in the lease has been exercised. The Renault and Volvo showrooms are owned freehold and are currently held for sale.

Following the refranchising activity outlined above, the Group now comprises 27 dealerships, representing 42 franchises and 17 brands, a well-balanced brand portfolio spanning the high luxury, premium and volume segments.

The completion of the Swindon Jaguar Land Rover facility in July 2018 on the Group's Long Leasehold premises facilitated the relocation of Swindon Land Rover from the property in Royal Wootton Bassett to the new facility alongside Jaguar. The Royal Wootton Bassett freehold site is now held for sale. Subsequent to the year end, the Group has secured the Freehold title of the land on which the development sits from Swindon Borough Council. In the 2019 financial statements the Long Leasehold property will therefore be transferred to Freehold property.

The major property development at Hatfield which is due to complete in January 2019 will relocate the Group's Jaguar, Land Rover and Aston Martin dealerships in Welwyn Garden City which currently operate in short leasehold facilities into a purpose built freehold property with the addition of the McLaren franchise which will operate on the same site. The facilities will all comply with the manufacturers latest brand standards.

These new franchising and property developments are exciting for the Group and demonstrate its commitment to developing the Premium and High Luxury segment franchises in geographically strategic locations.

Dividend

The Board is pleased to propose a final dividend of 0.75p per share (2016/17: 0.75p), subject to shareholder approval, resulting in a total dividend for the year of 1.0p per share (2016/17: 1.0p) - maintaining the prior year level.

Outlook

As I stated in my report last year, the UK economy remains in a period of uncertainty while the ramifications of leaving the EU are worked through. There is a lack of clarity on how any free trade agreements will be negotiated and there continue to be major implications for the Sterling exchange rate and other fiscal levers. We are unclear as to how these factors will impact the UK motor trade although both a weaker Sterling and any tariffs would undoubtedly have a detrimental effect on the new car market.

The team have done an incredible job by securing the addition of Bentley, Lamborghini, McLaren and Peugeot to the Group's brand portfolio. Whilst these businesses are very much in their infancy, the potential to contribute to the Group's growth as they mature is significant.

Cambria's robust balance sheet, industry leading return on investment and proven management team leave it well positioned to manage any uncertainty that the broader market creates. We are actively looking to deliver on our commitments to the Brand partners that we represent with our investment programme to enhance our property portfolio and are excited about the opening of our Hatfield development in the coming months.

The Board is pleased with the progress that has been made and intends to continue to exploit selective growth opportunities while driving the core operation of the existing businesses.

Philip Swatman

Chairman

Operating and financial review

Chief Executive Officer's review

Introduction

I am pleased to report that the Group has delivered a solid set of results for the 2018 financial year with profit slightly ahead of management and market expectations. The performance was delivered alongside significant franchising additions, changes, closures and site developments. Whilst the results are behind those achieved in 2017, in the context of the weaker new car market and the significant amounts of disruption in the sector and our own business, I am pleased with the performance for the year.

The table below summarises our financial performance, which is detailed in the Finance Director's Report:

Year ended 31 August	2018	2017
£m	£m	Change
Revenue	630.0	644.3	-2.2%
Underlying EBITDA*	13.3	13.7	-2.9%
Underlying operating profit*	10.9	11.8	-7.8%
Underlying profit before tax*	9.8	11.3	-13.3%
Underlying profit before tax margin*	1.6%	1.8%	-20bps
Net Non-recurring income/ (expenses)	(0.7)	-
Underlying earnings per share*	7.84p	9.19p	-14.7%
Operating profit	10.2	11.8	-13.6%
Profit before tax	9.1	11.3	-19.3%
Earnings per share (basic)	7.27p	9.18p	-20.8%
Dividend per share	1.0p	1.0p

* These items exclude net non-recurring expenses of £0.7m relating to the refranchising activity and site closures (2017: (nil))

The Group celebrated its 12th anniversary in July 2018. During those 12 years the Group has grown from one site with three new car franchises to 27 locations representing 42 new car franchises and 17 different Brand partners. The Group has utilised a total of £10.8m of Share Capital to grow and has delivered an underlying Profit before Tax of £9.8m in the 2018 financial year. During the year, the Group delivered a return on shareholder funds of 14.7%. The Group has consistently delivered strong operational cash flows and has built a net asset position of £56.6m underpinned by over £64m of freehold and long leasehold property. The Group has developed an exceptional franchise portfolio which has been enhanced further during 2018 through delivery of our property investments and the addition of Bentley, Lamborghini, McLaren and Peugeot to the Group's brand partnerships.