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James Mullins Finance Director. Contents. Background and experiences Developing Cambria The FD role and business complexity Driving Cambria. James Mullins – CV. Manchester University, BA in Accounting and Finance Chartered Accountant (ACA) in 2001 - PowerPoint PPT Presentation
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1
James Mullins
Finance Director
Contents
Background and experiences Developing Cambria The FD role and business complexity Driving Cambria
2
James Mullins – CV
Manchester University, BA in Accounting and Finance Chartered Accountant (ACA) in 2001 Joint Insolvency Examination Board (JIEB) exams in 2005 8 years Grant Thornton in the automotive service team. Including Audit,
CF, Restructuring, Secondment at FCE Cambria May 2007 to date
3
Experiences and lessons learned
Audit – learning the trade, entrepreneurs, development, controls Corporate Finance – business plans, cash flow modelling, raising finance, stakeholder
management, advisory, due diligence, disposals, acquisitions, MBO’s Captive Finance house – secured lending, external stakeholders views on businesses,
internal workings at OEM Restructuring – cashflow, cost reduction, banking covenants, options assessment Stakeholder advisory – managing agendas and personalities, presenting options and
recommendations Accelerated M&A – value preservation, risk management, stakeholder management Insolvency – security structures and pecking order, technical requirements, mechanics of
insolvency, risks of buying businesses from insolvency Growing and developing a business – Acquisition, Integration, Operation AIM listing - Equity markets, process and perspectives
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Developing Cambria
27 Dealerships 42 Franchises 17 Brand partners 9 Acquisitions completed
6
Our Strategy
To establish geographic regions with Primary Manufacturer Brand Partners representing minimum of three, maximum of 10 locations with the exception of ultra luxury partners
To grow organically through brand extension and self-financed acquisition to create a £1 billion turnover Group
Regional structure with stand alone autonomous dealerships able to make locally based entrepreneurial decisions - no Head Office
Each region to have the capacity to be developed into £200m turnover business in the medium term
Balanced brand portfolio. Currently: Volume 55%; Premium and Luxury 40%; Motorcycle 5%
7
Group development July 2006 – April 2013
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3 Franchises 1 Franchise 15 Franchises 4 Franchises 4 Franchises 4 Franchises 2 Franchises 4 Franchises 2 Franchises 2 Franchises 3 Franchises2 Locations 1 Location 11 Locations 4 Locations 0 Additional sites 4 Locations 1 Location 2 Locations 1 Location 1 Location 1 Location
Mar-11
Addition of 1 Site and 2 franchises
August 08- September 09
Addition of franchises
Oct-09
Acquisition of 4 dealerships from
Insolvency
Feb-10
Acquisition of D&F Trading Ltd
Jan-08
Acquisition of 4 dealerships from
Insolvency
Dec-09
Acquisition of 1 dealership from
Insolvency
Jan-13
Addition of 1 Site and 3 franchises
Jul-06
Acquisition of Swindon
Aug-07
Acquisition of Thoranmart Ltd
Dec-07
Acquisition of Summit Auto
Group
September 11- March 12
Addition of 1 Site and 2 franchises
Combined Losses pre acquisition c.£9.9mTotal Invested in acquisitions at completion inc property £34.5mTotal Goodwill paid £346kTotal Share Capital raised £10.8m
Buy-and-Build
Acquisition
IntegrationOperation
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Buy-and-Build
Acquisition• Balanced brand portfolio• Primary brand partners• Retained the focus on underperforming assets
with turnaround opportunity• Zero legacy costs (pensions, onerous leases etc)• Will consider the purchase of earnings
enhancing assets with the right Brand Partners
10
Buy-and-Build
Integration• Implement Group DMS• Implement Group financial and operational
processes and controls• Restructuring plan if required• Standardise supplier contracts where beneficial• “Buddying” system to hand hold through
integration process
11
Buy-and-Build
Operation• Cambria Digital lead generation• Cambria Academy• Guest Connect Centre• GRM strategy• Operational reviews
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Driving Cambria
Role of the FD
Financial Control and
reporting
Risk Management
Company Secretary
Legal
Property
ITHR Banking and
financing relationships
Board of Directors
Business Development
Shareholders
Other stakeholders
Professional Advisors
Our Strategy
To establish geographic regions with Primary Manufacturer Brand Partners representing minimum of three, maximum of 10 locations with the exception of ultra luxury partners
To grow organically through brand extension and self-financed acquisition to create a £1 billion turnover Group
Regional structure with stand alone autonomous dealerships able to make locally based entrepreneurial decisions - no Head Office
Each region to have the capacity to be developed into £200m turnover business in the medium term
Balanced brand portfolio. Currently: Volume 55%; Premium and Luxury 40%; Motorcycle 5%
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Complexity of the Business model – Maximising revenue streams
New Car Sales
Used Car Sales
Finance and
Insurance
Warranty
ServiceBodyshop
Parts Retail
Parts Trade
Fleet Sales
Commercial Sales
Motability
Complexity of the Business model – Control of the Working Capital
New Car Stock
Used Car Stock
Demonstrator Stock
Finance Debtors
Manufacturer Debtors
Car Fleet Debtors Parts Stock
Returns to supplier
Parts Trade Debtors
Service Warranty Debtors
Service Fleet Debtors
Bodyshop Debtors
Complexity of the Business model – Complying with Regulation
FSA
HSE Trading Standards
Employment Law
Optimising the return – “The ingredients”
Optimal Return
An Entrepreneurial
Leader
Industry Leading Tools
A Daily Framework
Group Reporting Operational Reviews
On-site Trading Reviews
Changing Behaviour
Communication
The Cambria ‘Tool Box’
SalesMarket Tracker
I – Control
BCA Auction View
C It Now
Cambria Web Sites
Postcode tracker
Contact At Once
Social Media
Enquiry Builder
Guest Connect
BDM Voice
F&I Internet Tracker
Cambria Academy
Marketing Delivery
Group F&I Deals
After-sales Cambria LCS
EVHC
BDM Voice
Electronic Clocking
Service Plans
1 Link
Group Supplier Deals
Daily Processes
Daily Processes
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Group Control - Local Contact Strategy
TABLE REMOVED FOR CONFIDENTIALITY
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Group Control - Vehicles displayed on the web
TABLE REMOVED FOR CONFIDENTIALITY
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Group Control - Enquiries
TABLE REMOVED FOR CONFIDENTIALITY
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Group Control - Sales DOC
TABLE REMOVED FOR CONFIDENTIALITY
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Group Control - After-sales DOC
TABLE REMOVED FOR CONFIDENTIALITY
28
Group Control - Vehicle Stock Control
TABLE REMOVED FOR CONFIDENTIALITY
Used car stock ROI
Days in Stock prior to sale
Gross profit per unit
1 to 30 days £894
31 to 60 days £707
61 to 90 days £258
Over 90 days (£78)
Days in Stock prior to sale
Annualised return on investment
1 to 30 days 226%
31 to 60 days 62%
61 to 90 days 13%
Over 90 days -2%
Average dealer 85% ROI Top performing dealers 150% ROICambria Group 120%
Features of best performers: Used cars = investment Plan for the life of the car in line with stocking matrix - ROI Speculative cars are restricted Stocking time limits adhered to
Highest ROI cars <30 days in stock Under £5k Over 5 years old
29Source: 2013 AM franchised dealer report
Monthly Operations Reviews
General Management
Sales Management
Service Management
Parts Management
Business Management
Branch Financial
Controllers
On-site Operational Reviews
On Site ReviewNew Car SalesPerformance vs Manufacturer contract YTD (current campaign position)Sales Performance by sales exec - Group League Tables (inc Service Plans)Enquiry Management - Guest Connect - BDM Calls - Enquiry Builder - Ebbon DacsService Department Guest List from previous day workshop activityManufacturer F&I Renewal dataEbbon Dacs Data Quality for New Enquiries from last 7 daysReview New Stock position and consignment fundingForward order bank3 deal files month-end delivered - see deal file master listShowroom - detail / what are the offers?New Marketing offers - On and Off LineManufacturer CS program results by individual SE
Used Car Sales Sales Performance by sales exec - Group League Tables (inc Service Plans)Used Stock Position - Ageing order to month endDigital Review - Description, pricing, positioningFive car - would I buy this.?. Presentation and pricing3 deal files month-end delivered Auction Performance prior month / current flashShowroom - detail / what are the offers?Marketing offers - current and plannedContact 2 guests at random from prior week (One purchase, one lost sale)
Dealership F+ISales Performance by sales exec - Performance Management documentFSA paperwork random checkReview current supplier offers
Service DepartmentLocal Contact Strategy reviewTechnician monthly performance - Labour Analysis and review documentsEVHC - Has every vehicle had a VHCService Plan PerformanceManufacturer CS program results by individual SARecovery Rate TrackersWarranty - 3 jobcard review, evidence of self audit in the monthFuture booking work mix10 job card individual recovery review1 Link Performance stats month and YTD (volume, response times and uninvoiced)Marketing offers - current and planned - Local IndependantsData Quality
Parts DepartmentPerformance vs Manufacturer contractStock holding ageing and profile (net movement on prior review)Check PDR process integrity inc awaiting creditSurcharge stock review10 line stock check, evidence of perpetual checks ongoing
Finance and AdminWEEKLY STOCKS AND DEBTORS REVIEWCurrent month forecastReview minutes of debt meetingsCheck bankingVehicle stock check reconciliation
Health and SafetyReview most recent report from Marcus Smith
Changing Behaviour – Pay Plans
Pay Plans
Sales Associates
Technicians
Service Front-end team
Management
Changing Behaviour - Measuring Technician Performance
TABLE REMOVED FOR CONFIDENTIALITY
Key Themes for developing the existing business – Playing the margins– Return on investment– Simple things every day
“Aggregation of Marginal Gains”
“...you can’t make a 100% improvement in 1 area but you can make a 1% improvement in 1000 areas...”
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8 potential steps to 2% aspiration
35
2% ROS
Underlyin
g PBT
2012
New ca
rs - m
argin re
cover
y
CV and fleet
Volumes to prev
ious year
Used Adve
rtising p
er unit a
lignmen
t
Used unit v
olumes
Used F&
I pen
etrati
on
Servic
e reco
very r
ate
Tyre a
nd Oil m
argin m
anage
ment
Parts M
argin m
anag
emen
t
Aspirational
Future
PBT0
0.5
1
1.5
2
2.5
3
3.5
3.1
Summary
FD role is multi-faceted, have to be able to wear a number of hats
Group growth has been delivered with structure albeit opportunistic
Fire power available to continue adding single and multiple dealerships of varying size
Controlling the business is a daily affair in order that it can be driven
Aggregation of Marginal Gains mean that there are still opportunities for
the enhancement of the existing business
36
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James Mullins
Finance Director