RNS Number:4711U
Bristol & London PLC
05 April 2007
Bristol and London plc
("Bristol & London" or the "Company")
Preliminary results for the year ended 31 January 2007
Bristol and London is the UK's leading specialist provider of prestige motor
cars to drivers following non-fault accidents.
Financial highlights
* Turnover broadly in line with 2006 despite increasingly difficult trading
conditions
* Continued profitability
* Dividend policy maintained
Operational highlights
* Encouraging results from new business initiatives
* Problematic contracts renegotiated on improved terms
* Referrals from contract with major UK motor insurance company are now in
line with expectations
Bob Woods, Chairman of Bristol and London
"The difficult trading conditions highlighted within my September interim report
continued through much of the second half of the year. However we are encouraged
by the initial success of the fleet management opportunities, which we believe
will provide the opportunity of business initiatives away from our more
traditional sources. In acknowledging a difficult and challenging period in what
can only be described as a very competitive marketplace, we look to the future
with optimism."
Enquiries:
Bob Woods, Chairman 01275 811111
Bristol and London PLC
William Staple / Richard Baty, 020 7601 6100
Hanson Westhouse Limited
CHAIRMAN'S STATEMENT
Overview
The difficult trading conditions highlighted within my September interim report
continued throughout much of the second half of the year. The results for the
year to 31 January 2007 are disappointing with sales down from #8.71m to #8.63m
and pre-tax profits down from #1.34m to #0.51m.
During the year, Bristol & London's fleet utilisation level fell short of its
predicted target. A principal factor was an agreement to purchase in excess of
100 Mercedes and BMW vehicles to secure two new contracts with these dealerships
for the provision of credit hire referrals. Under the contract it was necessary
to take delivery of these vehicles in advance of any referral business and I
regret to report that resultant introductions fell well short of anticipated
levels. As a result it was necessary to dispose of these vehicles ahead of the
normal cycle resulting in re-sale values that were below net book values. This
has had a significant impact on the Company's profit levels. Both these
contracts have now been renegotiated and steps have been taken to ensure that
Bristol & London's vehicle purchases will, from now on, be more closely geared
to reciprocal levels of credit hire introductions.
In August 2006 the Company announced that it had entered into an arrangement
with a major UK motor insurance company to provide replacement top-end, "exotic"
marques to its insured drivers who are involved in both fault and non-fault road
traffic accidents. Under the terms of this arrangement Bristol & London
provides replacement vehicles such as Aston Martin, Rolls Royce, Bentley,
Ferrari, Lamborghini and Porsche. In preparation for this arrangement Bristol &
London began to incur substantial costs from June onwards stocking up for this
new business opportunity. Business referrals commenced in late autumn and
although the level of introductions was initially below those anticipated. I am
pleased to announce that business levels are now in line with the predicted
number of referrals and we are optimistic that this relationship will be of
significant value to Bristol & London.
Business Development
Bristol & London has more proactively pursued the development of new revenue
streams, during the year, in addition to credit hire introductions from prestige
dealerships, bodyshops and insurance companies.
This has culminated in the Company offering a 24-hour, seven days a week,
internally managed accident management programme to major fleet and leasing
operators in the prestige sector of the market for both fault and non-fault
accidents. Our research suggests that the top 11 contract hire and fleet
operators provide more than one million vehicles in the UK market.
In February 2007 Bristol & London appointed Andrew Starr as fleet and leasing
director to head up this initiative. Andrew has over 20 years' experience in the
business, most recently with Masterlease.
I am pleased to say that in the short time Andrew has been with the Company, two
contracts to provide a full accident management service have been signed and we
are seeing significant appetite from customers for this facility.
Outlook
We are very encouraged by the initial success of the fleet management
opportunities, which we believe will provide the opportunity of business
initiatives away from our more traditional sources. In acknowledging a difficult
and challenging period in what can only be described as a very competitive
marketplace, we look to the future with optimism.
Dividend
The Board is recommending the payment of a final dividend of 0.25p per share to
be paid on 9 May 2007 to shareholders on the register at the close of business
on 20 April 2007.
Robert Woods
Executive Chairman
4 April 2007
FINANCE DIRECTOR'S REVIEW
Results
Turnover for the year to 31 January 2007 amounted to #8.63m compared to #8.71m
for the previous year representing a decrease of 0.9%.
Cost of sales for the year amounted to #4.9m being an increase over 2006 of
#0.69m. A significant element of the increase was directly attributable to
higher charges in relation to fleet depreciation and referral commissions
payable. This impacted severely on the gross profit reported for the year of
#3.73m (43% of sales) as compared to #4.5m (52% of sales) in the previous year
Administration costs were generally well controlled in the year amounting to
#2.52m compared with #2.47m in 2006 representing an increase of 1.8%.
As a result of lower sales and increased direct costs, operating profit for the
year fell from #2.02m in 2006 to #1.21m in 2007.
Marginally increased interest costs in the year of #0.71m up from #0.69m in 2006
resulted in a profit before tax of #0.5m compared to #1.34m in 2006.
Earnings per share consequently fell in the year from 3.6p in 2006 to 1.3p in
2007.
In accordance with FRS20 the fair value of share options granted, but not vested
has been charged to the profit and loss account. The amount so charged for the
year amounted to #23,296. A prior year adjustment of #8,982 has been made in
respect of the corresponding charge for 2006. There is no impact on the total
equity as the charge to the profit and loss account is offset by a corresponding
credit to reserves.
Dividends
The recommended final dividend for the year is 0.25p per share amounting to
#60,493 being based on 75% of available profits for the whole year. In
accordance with FRS 21 the final dividend will be incorporated in the accounts
when paid, rather than when proposed.
Cash and Debt
The reduction in debtor days experienced in the previous year has seen a
reversal in the year under review with debtor days having increased to 189 days
at 31 January 2007 from 150 days at 31 January 2006. Net cash inflow from
operations for the year was #3.38m compared to #4.5m in 2006.
Net debt on all borrowings at 31 January 2007 stood at #10.56m, having increased
from #9.49m at 31 January 2006.
Interest rate risk
The Company borrows in sterling at floating rates of interest. No interest rate
caps or swaps are used to manage exposure to interest rate fluctuations.
Liquidity risk
The Company policy continues to be to finance new vehicle purchases by way of
hire purchase contracts although vehicles are acquired under contract hire
arrangements where the terms obtainable are preferable. The Company does not
generally "cross hire" vehicles on short term contracts since this could damage
the Company's reputation for quality.
Lewis Ross
FinanceDirector
4 April 2007
PROFIT AND LOSS ACCOUNT
for the year ended 31 January 2007
2007 2006
# #
(Restated)
Turnover 8,633,561 8,710,136
Cost of sales (4,899,888) (4,211,247)
--------- ---------
Gross profit 3,733,673 4,498,889
Administrative expenses (2,519,994) (2,474,280)
--------- ---------
Operating profit 1,213,679 2,024,609
Other interest receivable and similar income 2,150 5,071
Interest payable and similar charges (710,187) (690,612)
--------- ---------
Profit on ordinary activities before taxation 505,642 1,339,068
Tax on profit on ordinary activities (184,918) (469,779)
--------- ---------
Profit on ordinary activities after taxation 320,724 869,289
========= =========
Earnings per share - basic 1.3p 3.6p
- diluted 1.3p 3.5p
All of the above amounts arose from continuing operations.
There are no recognised gains or losses other than those noted in the profit and
loss account.
BALANCE SHEET
at 31 January 2007
2007 2006
# # # #
Fixed assets 10,217,881 9,669,085
Current assets
Debtors 5,203,665 4,807,160
Cash at bank and in hand 11,873 14,166
--------- ---------
5,215,538 4,821,326
Creditors: amounts falling due within one year (4,579,003) (3,820,719)
--------- ---------
Net current assets 636,535 1,000,607
---------- ----------
Total assets less current liabilities 10,854,416 10,669,692
Creditors: amounts falling due after more than
one year (7,865,285) (7,529,738)
Provisions for liabilities and charges (446,052) (483,565)
---------- ----------
Net assets 2,543,079 2,656,389
========== ==========
Capital and reserves
Called up share capital 241,974 241,974
Share premium account 725,792 725,792
Profit and loss account 1,575,313 1,688,623
---------- ----------
Equity shareholders' funds 2,543,079 2,656,389
========== ==========
CASH FLOW STATEMENT 2007 2006
for the year ended 31 January 2007 (Restated)
# #
Net cash generated from operating activities 3,377,126 4,498,571
Returns on investments and servicing of finance (708,037) (685,541)
Taxation paid (414,463) (79,630)
Capital expenditure 3,027,926 2,655,276
Equity dividends paid (457,330) (653,328)
Financing (5,447,672) (4,651,557)
--------- ---------
(Decrease)/increase in cash in period (622,450) 1,083,791
========== =========
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 January 2007
2007 2006
(Restated)
# #
Profit for the financial period 320,724 869,289
Dividends (457,330) (653,328)
--------- ---------
Retained (loss)/ profit (136,606) 215,961
Credit in relation to share based payments 23,296 8,982
--------- ---------
Net (reduction)/addition in shareholders' funds (113,310) 224,943
Opening shareholders' funds 2,656,389 2,431,446
--------- ---------
Closing shareholders' funds 2,543,079 2,656,389
========= =========
RECONCILIATION OF NET CASH FLOWS TO MOVEMENTS IN NET DEBT
for the year ended 31 January 2007
Note 2007 2006
# #
(Decrease)/increase in cash in period (622,450) 1,083,791
Cashflow from decrease in debt less finance
lease repayments 5,447,672 4,651,557
--------- ---------
New finance leases (5,896,166) (5,069,394)
Movement in net debt in year (1,070,944) 665,954
Net debt at start of year (9,489,999) (10,155,953)
--------- ---------
Net debt at end of year (10,560,943) (9,489,999)
========== ==========
Notes to cash flow statement
2007 2006
(Restated)
# #
(a) Net cash generated from operating activities
Operating profit 1,213,679 2,024,609
Depreciation charges 2,004,680 1,852,848
Share based payment charge 23,296 8,982
(Increase)/decrease in debtors (396,505) 13,139
Increase in creditors 217,212 382,172
Loss on disposal of fixed assets 314,764 216,821
--------- ---------
3,377,126 4,498,571
--------- ---------
(b) Returns on investments and servicing of finance
Interest paid (148,194) (138,803)
Interest element of finance lease and hire purchase rental payments. (559,640) (551,809)
Interest on overdue tax (2,353) -
Interest received 2,150 5,071
--------- ---------
(708,037) (685,541)
--------- ---------
(c) Capital expenditure
Purchase of tangible fixed assets (716,832) (629,701)
Proceeds from the sales of fixed assets 3,744,758 3,284,977
--------- ---------
3,027,926 2,655,276
--------- ---------
(d) Financing
Capital repayments of hire purchase and finance lease agreements (5,315,194) (4,528,205)
Loan repayments (132,478) (123,352)
--------- ---------
(5,447,672) (4,651,557)
--------- ---------
NOTES TO THE ACCOUNTS
1. Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the Company's financial
statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost convention.
After making enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
The financial statements have been prepared on the same basis as the prior year,
except that:
- FRS 20 "Share-based payments" have been adopted in the year.
Fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value
of tangible fixed assets by installments over their estimated useful economic
lives to the Company as follows:
Motor vehicles - 20% to 25% straight line
Computers and software - 331/3% straight line
Other - 15% straight line
Buildings - 2% straight line
Debtors
Trade debtors are discounted to the amount which, in the opinion of the
directors, will be recovered from insurers. The discount estimates are regularly
reviewed and as the business and industry matures they can be calculated to a
greater degree of accuracy.
Leasing and hire purchase commitments
Assets held under finance leases, which are leases where substantially all the
risks and rewards of ownership of the asset have passed to the Company, and hire
purchase contracts are capitalised in the balance sheet and are depreciated over
their useful lives. The capital elements of future obligations under leases and
hire purchase contracts are included as liabilities in the balance sheet. The
interest elements of the rental obligations are charged in the profit and loss
account over the periods of the leases and hire purchase contracts and represent
a constant proportion of capital repayments outstanding.
Rentals payable under operating leases are charged in the profit and loss
account on a straight line basis over the lease term.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay more,
or a right to pay less or to receive more, tax, with the following exceptions:
* provision is made for tax on gains arising from the revaluation (and
similar fair value adjustments) of fixed assets, and gains on disposal of
fixed assets that have been rolled over into replacement assets, only to
the extent that, at the balance sheet date, there is a binding agreement
to dispose of the assets concerned. However, no provision is made where,
on the basis of all available evidence at the balance sheet date, it is
more likely than not that the taxable gain will be rolled over into
replacement assets and charged to tax only where the replacement assets
are sold; and
* deferred tax assets are recognised only to the extent that the directors
consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
tax rates and laws enacted or substantively enacted at the balance sheet date.
Value added tax
In accordance with industry practice output value added tax is accrued until the
settlement amount of invoices is known with certainty.
Turnover
Turnover represents the amounts invoiced (excluding value added tax) less
estimated discounts on settlement for the provision of vehicle hires to third
parties.
Share based payments
The share option programme enables employees to acquire shares in the Company at
the price prevailing at the date of grant. The fair value of options granted
after 7 November 2002 and not yet vested as at 1 February 2006 is recognised as
an expense with a corresponding increase in equity. The fair value is measured
at grant date and spread over the period during which the employees become
unconditionally entitled to the options. The fair value of the options granted
is measured using an option pricing model, taking into account the terms and
conditions upon which the options were granted.
2. Financial Information
The foregoing financial statements do not constitute Bristol & London's
statutory accounts. The Group's statutory accounts on which the Company's
auditors, KPMG Audit plc, have given an unqualified opinion in accordance with
Section 235 of the Companies Act 1985 are to be delivered to the Registrar of
Companies and will be posted to shareholders on 16 April 2007.
3. Annual General Meeting
The Annual General meeting of the Company will be held at 1pm on Wednesday 9 May
2007 at the registered office of Bristol & London, Harbour Court, Serbert Road,
Portishead, Bristol, BS20 7GB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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