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James Mullins Finance Director 1 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 4 Developing Cambria 5 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 Jul-06 Aug-07 Dec-07 Jan-08 August 08September 09 Oct-09 Dec-09 Feb-10 Mar-11 September 11March 12 Jan-13 Acquisition of Swindon Acquisition of Thoranmart Ltd Acquisition of Summit Auto Group Acquisition of 4 dealerships from Insolvency Addition of franchises Acquisition of 4 dealerships from Insolvency Acquisition of 1 dealership from Insolvency Acquisition of D&F Trading Ltd Addition of 1 Site and 2 franchises Addition of 1 Site and 2 franchises Addition of 1 Site and 3 franchises 3 Franchises 2 Locations 1 Franchise 1 Location 15 Franchises 11 Locations 4 Franchises 4 Locations 4 Franchises 0 Additional sites 4 Franchises 4 Locations 2 Franchises 1 Location 4 Franchises 2 Locations 2 Franchises 1 Location 2 Franchises 1 Location 3 Franchises 1 Location Combined Losses pre acquisition c.£9.9m Total Invested in acquisitions at completion inc property £34.5m Total Goodwill paid £346k Total Share Capital raised £10.8m 8 Buy-and-Build 9 Buy-and-Build 10 Buy-and-Build 11 Buy-and-Build 12 Driving Cambria 13 Role of the FD HR IT Property Legal Company Secretary Risk Management Financial Control and reporting 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% 15 Complexity of the Business model – Maximising revenue streams Bodyshop Service Warranty Finance and Insurance Used Car Sales New Car Sales Parts Retail Parts Trade Fleet Sales Commercial Sales Motability Complexity of the Business model – Control of the Working Capital Car Fleet Debtors Manufacturer Debtors Finance Debtors Demonstrator Stock Used Car Stock New Car Stock Parts Stock Returns to supplier Parts Trade Debtors Service Warranty Debtors Service Fleet Debtors Bodyshop Debtors Complexity of the Business model – Complying with Regulation HSE FSA Trading Standards Employment Law Optimising the return – “The ingredients” Group Reporting Operational Reviews A Daily Framework On-site Trading Reviews Industry Leading Tools An Entrepreneurial Leader Changing Behaviour Optimal Return Communication The Cambria ‘Tool Box’ Sales Market Tracker I – Control After-sales Cambria LCS BCA Auction View C It Now EVHC Cambria Web Sites Postcode tracker BDM Voice Contact At Once Social Media Electronic Clocking Enquiry Builder Guest Connect Service Plans BDM Voice F&I Internet Tracker 1 Link Cambria Academy Marketing Delivery Group F&I Deals Group Supplier Deals Daily Processes Daily Processes Group Control - Local Contact Strategy TABLE REMOVED FOR CONFIDENTIALITY 23 Group Control - Vehicles displayed on the web TABLE REMOVED FOR CONFIDENTIALITY 24 Group Control - Enquiries TABLE REMOVED FOR CONFIDENTIALITY 25 Group Control - Sales DOC TABLE REMOVED FOR CONFIDENTIALITY 26 Group Control - After-sales DOC TABLE REMOVED FOR CONFIDENTIALITY 27 Group Control - Vehicle Stock Control TABLE REMOVED FOR CONFIDENTIALITY 28 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% Source: 2013 AM franchised dealer report Average dealer 85% ROI Top performing dealers 150% ROI Cambria 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 29 Monthly Operations Reviews General Management Sales Management Service Management Parts Management Business Management Branch Financial Controllers On-site Operational Reviews Service Department Local Contact Strategy review Technician monthly performance - Labour Analysis and review documents EVHC - Has every vehicle had a VHC Service Plan Performance Manufacturer CS program results by individual SA Recovery Rate Trackers Warranty - 3 jobcard review, evidence of self audit in the month Future booking work mix 10 job card individual recovery review 1 Link Performance stats month and YTD (volume, response times and uninvoiced) Marketing offers - current and planned - Local Independants Data Quality Parts Department Performance vs Manufacturer contract Stock holding ageing and profile (net movement on prior review) Check PDR process integrity inc awaiting credit Surcharge stock review 10 line stock check, evidence of perpetual checks ongoing Finance and Admin WEEKLY STOCKS AND DEBTORS REVIEW Current month forecast Review minutes of debt meetings Check banking Vehicle stock check reconciliation Health and Safety Review most recent report from Marcus Smith Changing Behaviour – Pay Plans Sales Associates Management Pay Plans Service Frontend team Technicians 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...” 34 8 potential steps to 2% aspiration 2% ROS 8 7 0.12 0.27 0.83 6 1.24 5 0.15 4 0.28 0.43 7.28 0.86 3 2 3.1 1 0 Underlying PBT 2012 New cars margin recovery CV and fleet Used Volumes to Advertising previous year per unit alignment Used unit volumes Used F&I Service Tyre and Oil Parts Margin Aspirational penetration recovery rate margin management Future PBT management 35 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 James Mullins Finance Director 37