Just Car Clinics Group PLC
04 March 2008
FOR RELEASE 4 MARCH 2008
Preliminary Results
Another Record Year
Just Car Clinics Group plc ('Just Car Clinics'), the independent collision
repair chain with 21 vehicle repair centres, today announces its preliminary
results for the year ended 31 December 2007.
Highlights:
• Turnover up 32% to £36.8 million (2006: £27.8 million)
• Like for like turnover growth of 9%
• Profit margin improved from 3.1% to 3.2%
• Underlying* profit before taxation up 34% to £1,164,000 (2006:
£869,000)
• EPS up 26% to 5.8p (2006: 4.6p)
• Operating cash flow strong at £1.1 million
• Number of trading operations increased by 3, with new sites in Durham,
Hinckley and Nottingham, making a total of 20 at the end of 2007
• Total dividend for 2007 of 1.5p per share (2006: nil)
• Acquisition of additional site in Swindon in February 2008
* Underlying results exclude the notional profit on disposal of fixed assets
arising from the replacement of old assets for new as a result of an
insurance claim relating to one Sheffield site
Commenting on the results, Barry Whittles, Chief Executive of Just Car Clinics,
said:
'I am delighted by another year of significant progress for Just Car Clinics.
Strong performances from our established branches together with improving
contributions from acquired locations clearly demonstrate the success of our
strategy. I look forward to continuing success and further expansion during
2008.'
For further information, please contact:
Just Car Clinics:
Barry Whittles, Chief Executive 07850 268369
Chris Elton, Finance Director 07702 598344
Buchanan Communications:
Tim Thompson / Robin Haddrill 020 7466 5000
CHAIRMAN'S AND CHIEF EXECUTIVE'S REPORT
OVERVIEW AND HIGHLIGHTS
It is very pleasing to report the continuing progress of Just Car Clinics Group
plc ('the Group') during 2007, with significant volume increases, both
organically and by acquisition, and an increase in underlying profits by a third
during the year. With another record year the Board was delighted to recognise
the maturity of the business by commencement of dividend payments during the
year.
RESULTS
Revenue for the year increased by almost £9 million to £36.8 million (2006:
£27.8 million) representing overall growth of 32.3%. After allowing for the
impact of acquisitions during 2006 and 2007, the like for like increase was 8.7%
of which volume increases accounted for approximately 6%.
The Group's strategy for increasing volumes continues to be a focus on achieving
excellence in both customer service and training, combined with proactive
relationships with corporate clients aimed at understanding and reacting to
their requirements.
During 2007 the Group introduced a formal system of monitoring customer service,
whereby 20% of customers are independently contacted and asked about their
experience throughout the repair process. Members of the management and customer
facing teams receive a significant part of their remuneration on the basis of
this monitoring. The percentage of customers who are entirely satisfied with the
repair process has increased from 87.5%, when the system was fully implemented
in January 2007, to 93.8% by the end of 2007.
Gross margins for the year reduced slightly to 43.0% (2006: 43.1%). Gross
profits at mature locations were in line with the previous year; however, the
overall margin was lowered slightly by new locations which operate at reduced
margins as throughput builds. It is anticipated that these acquisitions will
take approximately eighteen months to reach maturity.
Cost control remains an important aspect of the Group's performance and expenses
as a percentage of sales remained almost constant at 39.7% (2006: 39.6%),
reflecting a combination of relatively higher operating expenses at new sites as
volumes build, and increases to fuel and power costs throughout the Group,
compensated by higher absorption of central costs and fixed costs at more mature
locations.
The net interest charge for the year was £65,000 (2006: £112,000) representing
an interest cover of 19 times (2006: 9 times). The decreased charge reflected
stringent working capital control and the positive cash flows generated from the
business.
During June 2007 one of the Group's sites in Sheffield was seriously affected by
flooding and was forced to close for a period. It is pleasing to report that the
Group's disaster recovery plan was successfully implemented and this rapid
intervention and the use of resources and facilities at other branches minimised
disruption to customers and allowed the site to be operational again in less
than a month. There was no overall effect on the underlying results for the
year, with the loss of profits during the site closure of approximately £135,000
being covered by a business interruption insurance claim which was settled in
January 2008. All affected plant was either repaired or replaced; under the
insurance policy the replacement of assets was on a new for used basis and this
resulted in a notional gain on disposal of £27,000 during the period.
Increased sales, maintained margins and good control of operating and finance
costs resulted in a 33.9% improvement in underlying profit before taxation to
£1,164,000 (2006: £869,000), excluding the non-recurring gain on disposal of
flood affected assets.
The effective income tax charge for the year was 29.3% (2006: 29.7%).
Earnings per share increased by 1.2p to 5.8p (2006: 4.6p).
DIVIDENDS
As previously announced, the Company was granted permission during the year to
eliminate the adverse balance on retained earnings by means of a transfer from
its share premium account. The effect of this elimination has been to allow the
payment of dividends to its shareholders, and the board of directors were
pleased to announce the payment of an interim dividend of 0.5p per share in
October 2007.
In line with its previously stated policy of paying interim and final dividends
broadly in the proportion 1:2, and reflecting the continuing development of the
Group, the Board is proposing a final dividend for 2007 of 1.0p per share,
making a total of 1.5p per share, and a resolution proposing this will be
submitted at the AGM.
ACQUISITIONS
During 2007 the number of trading locations has been increased by three, with
new branches acquired in Durham, Hinckley and Nottingham at a total cost of
£525,000.
After the period end, on 26 February 2008, the Group acquired an additional site
in Swindon. The business operates from 15,000 square foot leasehold premises,
employs 23 team members and had sales of approximately £1.7 million in its last
financial year.
The acquisitive phase of the Group's development commenced during the second
half of 2006 and the number of branches has increased from thirteen to twenty
one over the last eighteen months with expanding geographic coverage. The seven
additional sites, acquired during 2006 and 2007, have contributed sales of £7.5
million and profit before tax of approximately £0.1 million to the overall
result in 2007.
The Group continues to seek suitable acquisition opportunities which meet
established criteria and expects to continue this expansion during 2008 and
beyond.
WORKING CAPITAL
Operating cash flow was strong at £1,091,000 (2006: £1,857,000) with increases
in trade receivables reflecting revenue increases in both the existing locations
and acquired units. Despite this increase and the costs of adding three
locations during the year, the overall net debt of the Group increased only
marginally by £36,000 to £1,640,000 (2006: £1,604,000). This represents a
gearing level of 52%, improving from 68% at the end of 2006.
During the year the Group negotiated a new five year £2 million bank term loan,
the proceeds of which were used to repay previous bank loans of £0.7 million and
the remaining deferred acquisition consideration of £1.3 million. This committed
term loan facility has interest set at 1.5% above LIBOR on a quarterly basis and
the interest charge is hedged by an interest rate swap on an equivalent nominal
value. The Group also has a debtor finance facility of £2.5 million and an
overdraft facility of £0.2 million, which are available to fund peaks in cash
flow and future acquisitions, but were not utilised at 31 December 2007.
EMPLOYEES
The Group's most important asset is undoubtedly the high quality team which
works within the business. The progress of the Group is due entirely to the
daily hard work and commitment of this team and the Board would like to thank
everyone for their contribution.
The importance of team development and effective training remains a central
aspect of the Group's strategy. Training, carried out at the Group's dedicated
facility, has focused on customer service and management development, in
addition to technical training reflecting the increased complexity in the
manufacture of vehicles and developments in repair methods.
The Group aims to establish a successful 'team culture' based on a high level of
internal communication, recruiting quality individuals and, where possible, by
promoting from within. The percentage of employees leaving the Group during
2007, excluding the impact of recently acquired sites, was 18.6% (2006: 16.6%),
an increase from the previous year but still significantly below industry
averages.
STRATEGY AND PROSPECTS
The strategy of the Group continues to be one of expansion; organically from
existing locations where capacity allows, by acquisition and, where suitable
acquisitions are not available at an acceptable price, by opening new
facilities. Potential acquisition targets are evaluated against a number of
specific criteria including location and price.
Trading during the first two months of 2008 has been in line with expectations
and the recently acquired locations continue to make progress. The Board
believes that Just Car Clinics is well positioned to continue its success, and
remains confident of continued progress during 2008 and beyond.
David Hickey Barry Whittles
Chairman Chief Executive
4 March 2008
International Financial Reporting Standards have been adopted for the first time
in respect of the year ended 31 December 2007 and comparative information has
been restated accordingly as set out in the announcement of 30 August 2007.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2007
2007 2006
£'000 £'000
REVENUE 36,802 27,813
Cost of sales (20,978) (15,824)
---------- ----------
GROSS PROFIT 15,824 11,989
---------- ----------
Selling and distribution costs (8,341) (6,216)
Administrative expenses (6,254) (4,793)
Net gain on disposal of property, plant and
equipment 27 1
---------- ----------
OPERATING PROFIT 1,256 981
Finance revenue 44 -
Finance costs (109) (112)
---------- ----------
PROFIT BEFORE TAXATION 1,191 869
Income tax expense (349) (258)
---------- ----------
PROFIT FOR THE YEAR - attributable to equity holders
of Parent 842 611
---------- ----------
EARNINGS PER SHARE ( note 2)
Basic earning per share 5.8p 4.6p
Diluted earnings per share 5.7p 4.6p
The results for the year derive entirely from the continuing operations of the
Group.
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2007
Equity share Share premium Other reserves Retained Total
capital account earnings equity
£'000 £'000 £'000 £'000 £'000
At 1 January
2006 129 2,371 (89) (920) 1,491
Exercise of
share options 16 80 - - 96
Share based
payments - - - 8 8
Income tax -
share based
payments - - - 143 143
Profit for the
year - - - 611 611
At 31 December
2006 145 2,451 (89) (158) 2,349
Exercise of
share options 1 9 - - 10
Transfer of
merger reserve - - 89 (89) -
Share based
payments - - - 17 17
Reduction in
share premium
account - (2,118) - 2,118 -
Income tax -
share based
payments - - - 17 17
Loss on
interest rate
hedge - - (32) - (32)
Profit for the
year - - - 842 842
Equity
dividend paid - - - (72) (72)
At 31 December
2007 146 342 (32) 2,675 3,131
CONSOLIDATED BALANCE SHEET
at 31 December 2007
2007 2006
£'000 £'000
ASSETS
Non current assets
Property, plant and equipment 2,275 2,068
Intangible assets 1,906 1,642
---- ----
4,181 3,710
---- ----
Current assets
Inventories 639 565
Trade and other receivables 4,926 3,992
Cash and cash equivalents 60 381
---- ----
5,625 4,938
---- ----
TOTAL ASSETS 9,806 8,648
---- ----
LIABILITIES
Current liabilities
Trade and other payables (4,521) (4,216)
Financial liabilities (400) (1,359)
Derivative financial instruments (32) -
Income tax payable (292) (8)
---- ----
(5,245) (5,583)
---- ----
Non current liabilities
Financial liabilities (1,300) (626)
Deferred tax liability (130) (90)
---- ----
(1,430) (716)
---- ----
TOTAL LIABILITIES (6,675) (6,299)
---- ----
TOTAL NET ASSETS 3,131 2,349
---- ----
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT
Issued equity share capital 146 145
Share premium account 342 2,451
Other reserves (32) (89)
Retained earnings 2,675 (158)
---- ----
TOTAL EQUITY 3,131 2,349
---- ----
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2007
2007 2006
£'000 £'000
Operating activities
Profit after taxation for the year 842 611
Adjustments to arrive at operating cashflow:
Income tax 349 258
Net finance costs 65 112
Depreciation and amortisation 483 410
Gain on sale of property, plant and equipment (27) (1)
Expense arising from share based payments 17 8
Changes in inventories (5) (85)
Changes in trade and other receivables (934) (507)
Changes in trade and other payables 309 1,202
---- ----
Cash generated from operations 1,099 2,008
Income tax paid (8) (151)
---- ----
Net cashflow from operating activities 1,091 1,857
---- ----
Investing activities
Sale of property, plant and equipment 63 2
Payments to acquire property, plant and equipment (518) (411)
Payments to acquire computer software (4) (5)
Payments to acquire businesses (525) (353)
---- ----
Net cashflow from investing activities (984) (767)
---- ----
Financing activities
Interest paid (109) (103)
Interest received 44 -
Proceeds from shares issued on exercise of options 10 96
Repayments of borrowings (2,301) (582)
Receipts from new borrowings 2,000 -
Dividend paid to equity holders of Parent Company (72) -
---- ----
Net cashflow from financing activities (428) (589)
---- ----
Change in cash and cash equivalents (321) 501
Cash and cash equivalents at beginning of year 381 (120)
---- ----
Cash and cash equivalents at end of year 60 381
---- ----
Reconciliation to net debt
Net debt at beginning of year (1,604) (2,672)
Change in cash and cash equivalents (321) 501
Repayments of borrowings during year 2,301 582
Amortisation of finance issue costs (16) (15)
New borrowings during the year (2,000) -
---- ----
Net debt at end of year (1,640) (1,604)
---- ----
NOTES TO THE PRELIMINARY STATEMENT
1. BASIS OF PREPARATION OF THE ACCOUNTS
The results comprise those of Just Car Clinics Group plc and its subsidiary for
the year ended 31 December 2007. This preliminary announcement does not
constitute the Company's statutory accounts within the meaning of Section 240 of
the Companies Act 1985. Statutory accounts for 2006 have been delivered to the
Registrar of Companies, whereas those for 2007 will be delivered following the
Company's Annual General Meeting on 21 May 2008. The auditors have reported on
these accounts; their reports were unqualified and did not contain a statement
under section 237 (2) or (3) of the Companies Act 1985.
The preliminary announcement has been prepared on the basis of International
Financial Reporting Standards ('IFRS') which have been adopted for the first
time for the current accounting period. Details of the accounting policies for
the Group and the effect of transition to IFRS can be found in the transition
document, which was published on 30 August 2007.
The financial statements for the year ended 31 December 2007 were approved by
the Board on 4 March 2008.
2. EARNINGS PER SHARE
The calculation of earnings per share is based on the profit for the year
attributable to equity holder of the Parent Company of £842,000 (2006: £611,000)
and on 14,515,392 ordinary shares (2006: 13,211,151), being the weighted average
number of shares in issue during the year.
The calculation of diluted earnings per share is based on profit for the year
attributable to equity holders of the Parent Company of £842,000 (2006:
£611,000) and on 14,694,329 ordinary shares (2006: 13,410,692) after taking
account of the potentially dilutive effect of outstanding share options.
3. ANNUAL REPORT
The Report and Accounts will be posted to shareholders on 3 April 2008 and will
be available from the registered office of the Company at Rawcliffe Road, Goole,
East Yorkshire DN14 6XL.
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