BCA Marketplace plc (formerly Haversham Holdings plc) Annual Report and Accounts 2016

Download full Annual Report 2016

Keeping the
marketplace moving

BCA Marketplace provides customer-centric solutions along the automotive value chain, fuelling the largest used-vehicle remarketing exchange in the UK and Europe.

Download full Annual Report 2016

Business highlights

A strong first year

Vehicles sold at auction -
UK Vehicle Remarketing

783,000 (excl SMA)

Vehicles sold at auction -
International Vehicle Remarketing

333,000

We Buy Any Car vehicles sold

172,000

BCA Partner Finance
live customers

1,002

Equity raised

£1.0bn

Revenue

£1.2bn

Full year dividend

6.0p
Business highlights (PDF 35kb)

Executive Chairman's statement

Together for growth

"I am pleased to announce a strong first set of full year results for the Group. BCA Marketplace plc was formed to build a cohesive, broad-based services business in the automotive sector."

Avril Palmer-Baunack Executive Chairman
7.9% Volume growth in the UK (excl SMA)
6.4% Volume growth in Europe
15.4% Volume growth in We Buy Any Car

I am pleased to announce a strong first set of full year results for the Group. BCA Marketplace plc was formed to build a cohesive, broad-based services business in the automotive sector. The acquired BCA Group, the UK and Europe’s leading vehicle remarketing business, provides the strong platform at the core of our business. It is the market leader in the UK and all of the key markets in which it operates and also owns We Buy Any Car, the UK’s largest vehicle buying service.

Our physical auction site infrastructure, market-leading IT systems, valuation tools and data are at the heart of our business, providing an efficient exchange for the automotive market, complemented by our logistical ability to store, remarket and transport large volumes of vehicles effectively. Combined with the physical and digital transactional liquidity offered to vendors and buyers, it places the Group at the centre of the automotive value chain.

In June 2015, we increased the scale of our UK operation through the acquisition of SMA Vehicle Remarketing (‘SMA’) and, following the successful conclusion of the CMA inquiry, added a further four auction centres to our existing 19 centres. These new centres are currently being integrated into the UK Vehicle Remarketing business and together with development opportunities on a number of the existing sites will provide us with additional capacity to accommodate the increasing number of vehicles expected to flow into our business over the coming years.

We achieved year on year volume growth of 7.9% in the UK (excluding SMA) and 6.4% in Europe, where we saw development in all of our territories which contributed to the Group’s success. Our strategy in continental Europe, where penetration rates remain well below those in more established markets such as the UK and USA, is to continue to raise the awareness of both physical and digital auction as a remarketing solution and to provide a more consistent offering across our businesses.

The Board is committed to enhancing our service offering by developing remarketing solutions for the major vehicle fleets, dealers, car manufacturers and finance companies. Since the BCA Group acquisition we have cemented relationships with our major customers and gained volume from new and existing vendors, including long-term full outsource defleet and remarketing contracts, and we have attracted new buyers to the auctions. We continue to broaden our service offering, enabling the Group to offer full remarketing and outsource solutions to our customers.

We have been successful in winning a five year contract with one of the top three leasing businesses in the UK to provide a fully outsourced remarketing and logistics services operation and a three year contract with an OEM for a package of services including new car preparation, logistics, used car defleet and remarketing. Our BCA Dealer Pro tool has had immense success within the dealer and OEM customer base in the UK and Europe and is establishing itself as the valuation tool of choice in the marketplace. Our BCA Partner Finance business in the UK is demonstrating strong growth and will, we expect, be a key profit generator in the future.

We Buy Any Car continues to show strong growth, with volumes increasing by 15.4% in the year driving a varied product base into the auction operations. Whilst We Buy Any Car is the market leading brand in its area, this still represents a small proportion of the overall number of used car transactions and there are considerable opportunities ahead as this method of vehicle disposal increases market share.

In August, the Group acquired a substantial UK logistics business, now renamed as BCA Automotive. This brought into the Group a new revenue stream from the delivery of new cars into the UK retail market, enhancing our relationships with the automotive OEMs, whilst also addressing some cost and operational pressure in the BCA logistics business, driven by a lack of capacity in the car transporter market. We are in the process of integrating BCA Automotive with our logistics operations into and out of auction centres, including We Buy Any Car volumes and single vehicle movements, and expect to see operational benefits in future years.

In addition, the acquisition of Ambrosetti in February 2016, a company specialising in vehicle preparation, refurbishment and defleet, brings another new business area into the Group to complement the existing suite of automotive services. We have created a structure to combine these into a new Services division for 2016/17, which will continue to enhance our strategic aim of becoming the full service provider of choice for the automotive industry.

Trading for the year, since the acquisition of the BCA Group, has been strong with good performances in all of our operations and we are pleased to have achieved all the strategic goals for the year which we set out as part of the acquisition. Our aim is to deliver strong earnings growth coupled with a high dividend pay-out ratio and, following an interim dividend of 2.0p per share, we propose today, subject to shareholder approval at our AGM, a 4.0p final dividend to be paid on 30 September 2016. Since the year end, the business continues to trade well and in line with Board expectations.

Much has been achieved in the last year in forming the BCA Marketplace family and I would like to thank all of our employees for their continued dedication and loyalty to the businesses that have come together to form this Group. I look forward to working together with our team through our Together for Growth programme to continue to deliver the strong business growth which I anticipate continuing in all our markets.

Avril Palmer-Baunack Executive Chairman 27 June 2016

Our business

At a glance

BCA Marketplace plc (formerly Haversham Holdings plc) was formed with the objective of creating value through an acquisition-led growth strategy with investment in businesses in the automotive, support services, leasing, engineering or manufacturing sectors in both the UK and Europe. This was initiated with the acquisition of the BCA Group of companies and the simultaneous listing of the Company on the Official List of the London Stock Exchange in April 2015.

We own and operate the UK and Europe’s largest used-vehicle marketplace both in terms of the number of vehicles sold and revenue in the exchanges, as well as the UK’s market leading provider of vehicle buying services, We Buy Any Car. Together, this allows the Group to provide an efficient and effective mechanism to facilitate the change in ownership of used vehicles that matches the complex requirements of both vendors and buyers of used vehicles who utilise the Exchange.

We operate through three divisions

The Group’s UK Vehicle Remarketing division trades under the BCA brand at 19 auction centres in 17 locations together with a further four auction centres in the acquired SMA business. BCA sells vehicles at our Exchanges on behalf of a broad portfolio of vendors including manufacturers (OEMs), leasing companies, dealers and vehicle buying companies. Buyers include car supermarkets, franchised and independent dealers, professional vehicle traders and consumers.

Exchanges comprise physical and digital auctions and outsourced remarketing services. These are complemented by a portfolio of pre- and post-sale value-added services including our buyer funding service, BCA Partner Finance.

23 UK Auction sites
28 European auction centres
22 Other sites

The Group’s International Vehicle Remarketing division operates primarily across nine countries throughout Europe at 28 auction centres with operations in Denmark, France, Germany, Italy, the Netherlands, Portugal, Spain, Switzerland and Sweden.

Distinct from the UK market, European customers have a higher propensity to trade at online auctions both in a single country and between operating markets and to buy vehicles to export to countries including Austria, Belgium, Poland, Romania and Serbia.

23 UK Auction sites
28 European auction centres
22 Other sites

In the UK, the Group’s Vehicle Buying division operates from over 200 locations as We Buy Any Car and in Europe as CarTrade2B. We Buy Any Car is the UK’s leading car buying service, now established as the third disposal channel for consumers. Used vehicles purchased directly from the public by We Buy Any Car are disposed of exclusively through the BCA Exchange.

CarTrade2B was successfully trialled in Germany and similar projects have now been initiated in the Netherlands, Spain and Sweden. These businesses focus upon buying batches of vehicles direct from corporate entities and remarketing them through the International Vehicle Remarketing division.

200+ We Buy Any Car locations

Our marketplace

How we fit into the marketplace

Across all markets in which we operate, we are the market leader for vehicle remarketing. Our portfolio of value-added services supports customers, both large and small, throughout the automotive value chain.

Our business model

Adding value in all areas

The Exchange is at the hub of the Group's business model, managing the transaction of used vehicles between vendors and buyers. This is complemented by a broad range of value-added services that fuel the Exchange. Scale, liquidity, value, efficiency and transparency are hallmarks of the operation.

BCA sells used vehicles of all ages and types, principally cars and LCVs, both online and at physical auctions with most vehicles being auctioned simultaneously online and at one of the Group's physical auction centres. BCA earns fees from the vendor and buyer of the vehicles.

Supply is generated from a wide range of customers who use auction as their primary disposal channel and who appreciate the transparency, efficiency and liquidity provided by the Exchange. Another key source of supply is from the Group's Vehicle Buying division.

Demand is generated by a large, diverse buyer base that ranges from large car supermarkets to vehicle traders who recognise the value, scale, choice and footprint of the Exchange network.

The Group provides a broad portfolio of services both upstream of the Exchange with automotive logistics and technical services and also pre- and post-sale at the Exchange. These value-added services provide additional income streams and support the onward flow of vehicles to the Exchange.

The Group's systems capture vehicle data and information including details of the Exchange transaction and at other key stages of the automotive value chain. Analytics tools and models generate insight that is used to optimise the performance of the Vehicle Remarketing and Vehicle Buying divisions as well as providing insight services to customers.



How we deliver value

For shareholders, the Group provides an excellent opportunity to deliver strong shareholder returns based upon a proven strategy, strong management team and sustainable competitive advantages.

  • Strong earnings potential
  • Cash generative business model
  • Opportunities for organic and acquisitive growth
  • Investment in the Group's long-term sustainable growth plans
  • Progressive dividend policy
  • Targeted pay-out ratio of 75% of earnings in the medium term

For vendors, the Group optimises price performance and sale conversion rates of their used vehicles through a route that maximises financial return, speed and convenience.

  • Physical footprint optimising returns to vendors
  • Promotion of vehicles including BCA Search; online aggregation of all inventories
  • Comprehensive vehicle descriptions including age, mileage, specification, condition, guide pricing and images
  • Full portfolio of auction services for best presentation of vehicles including BCA Dealer Pro, collections, appraisal, valeting and BCA Assured
  • Bidding/buying power achieved through buyer base diversity

For buyers, the Group fulfils buyers' ourcing needs via the largest aggregation of stock, providing choice, convenience and value.

  • Wide choice of stock across marques, models, ages, conditions and provenance
  • Market leading aggregator showing all stock with comprehensive vehicle information including guide pricing giving confidence buying online
  • Excellent vehicle presentation
  • Full calendar of sales throughout the year
  • Stock funding service for managing cash flow and additional source of lending
  • Delivery of vehicles
  • Assistance with marketing vehicles e.g. imagery
What sets us apart?

Our business model is unique in its breadth of services accross the automotive value chain. This provides a compelling customer service offering and also creates efficiencies through synergies across all the divisions.

  • The scale and capacity of the geographic footprint, which in the UK has sites positioned along the spine of the country and close to motorways and in Europe the ability to operate as a single market
  • The aggregation of invetory with a balanced portfolio across sectors and vendors, including the mix and diversity of supply from We Buy Any Car
  • The tenure and strength of customer relationships on both the supply and demand side
  • The experience and professionalism of the operations team
  • Financial services to provide additional liquidity to the Exchange
  • The ability to offer fulfilment of services along the automotive value chain
  • Efficiencies created through operational synergies
  • Digital innovation in the provision of standard tools and services across the business
  • The vehicle transaction database

Our strategy

Creating value

The Group's strategy is to create value through acquisition-led growth in the automotive sectors in the UK and Europe. Our aim is to drive growth along the automotive value chain, focusing on the core business: increasing volumes, creating value-added services and driving efficiency.

This has been executed in the first year of trading with a primary focus on the UK.

Short term

UK Vehicle Remarketing

  • Continue to win volume through strong customer relationships
  • Secure volume for long term and grow to full scale
  • Grow BCA Partner Finance
  • Seek efficiencies
  • Expand outsourced remarketing solutions

International Vehicle Remarketing

  • Grow volume through increasing market awareness
  • Standardise processes and tools and employ best practice
  • Build one market
  • Seek efficiencies
  • Expand service offering

Vehicle Buying

  • Continue to grow volume by promoting the third disposal channel
  • Reinforce the We Buy Any Car brand
  • Provide vehicle mix and volume to the Exchange
  • Seed new sites and sale days in Europe

Services

  • Consolidate to achieve single, efficient operating model
  • Grow through winning new business, expand customer relationships in Vehicle Remarketing
  • Expand proposition of value-added services
  • Seek efficiencies
Medium term

In the medium term, we will continue to develop our operations and service offering in both the UK and Europe to reach full scale. This will build upon the strengths of our fulfilment capabilities, physical real estate, vehicle buying and customer relationships.

Long term

We will continue to develop our strategy along the automotive value chain in the longer term through both organic growth and tactical acquisitions with a focus upon the exploitation of data and other innovations.