BCA Regulatory News (BCA)

28 November 2017

BCA Marketplace (LSE:BCA) - Interim results for the 6 months ended 1 October 2017

Continued strong compound growth across Europe's leading automotive business services Group, fuelled by rapidly developing services and unique infrastructure, in support of the automotive industry's evolving supply chain. The Group is well placed for the future and remains confident of the outcome for the full year.

BCA Marketplace provides a comprehensive range of business services that facilitate the management of vehicles, throughout their lifetime, within the European automotive sector. Our unique, Pan-European infrastructure, includes large scale vehicle logistics and transportation, de-fleeting and inspection facilities combined with a range of financial, digital and online services to support the full spectrum of manufacturers, leasing organisations and automotive dealer groups. Alongside the provision of these services, the Group operates Europe's largest automotive exchange network, comprising WeBuyAnyCar and established physical, hybrid and digital auctions informed by our proprietary data and analytics providing our customers with the opportunity to maximise residual values and liquidity from their used car assets.

RESULTS IN BRIEF

FINANCIAL HIGHLIGHTS

· Revenue of £1,171.6m (2016: £909.8m) has increased primarily as a result of growth in WeBuyAnyCar, the full year effect of outsourced remarketing contracts, and acquisitions

· Adjusted EBITDA of £75.8m (2016: £64.5m), up 17.5%

· Operating profit of £40.9m (2016: £33.6m), stated after;

o amortisation of acquired intangibles of £20.0m (2016: £18.7m); and

o other non-recurring items of £2.1m (2016: £1.1m)

o giving an adjusted operating profit of £63.0m (2016: £53.4m), up 18.0%

· Net debt of £287.4m (2016: £255.9m)

· Diluted earnings per share of 3.2p. Adjusted diluted earnings per share of 5.4p, up 17.4%

· Interim dividend increased 18.2% to 2.6p per share (2016: 2.2p) to be paid on 31 January 2018 for shares on the register on 15 December 2017

OPERATIONAL HIGHLIGHTS

· UK Vehicle Remarketing volume exceeds half a million units, up 6.9%

· International Vehicle Remarketing volume of 175,000 units, up 4.2%

· WeBuyAnyCar sold 107,000 units, an increase of 13.8%

· Newly expanded Manchester auction site opened in September 2017 with five auction halls

· Greater integration of services throughout the Group, with BCA Automotive delivering a third of UK Remarketing vehicle movements

· Opening of the new centralised operational headquarters for the BCA Logistics business, which co-ordinates the growing Inspect and Collect, and consumer valuation product to OEM captive finance, leasing, rental and corporate customers

· On 16 October 2017, the UKLA approved the transfer of the Company's shares to a Premium Listing on the Official List

Avril Palmer-Baunack, Executive Chairman said:

"Against the changing landscape of the European automotive and transportation sector, I am very pleased with the first half performance, which was at the upper end of market expectations. BCA continues to grow and go from strength to strength. BCA's unique offering continues to support the requirements of all market participants, old and new. In particular, UK Vehicle Buying reported strong growth as greater numbers of customers used webuyanycar.com to value and sell their vehicle. Pleasingly, repeat customers now represent over 10% of WeBuyAnyCar's volume and this repeat business continues to grow. This straightforward, hassle-free service with fair, competitive pricing continues to earn trust and consolidate WeBuyAnyCar's position as the consumers' preferred choice in the vehicle buying market with a circa 80% share.

UK and International Vehicle Remarketing volumes again showed solid growth as vendors continue to recognise the advantage of the auction model to optimise pricing and cash flow in a dynamic and changing market with demand from our buying customers remaining robust. We have again demonstrated why BCA has been the trusted partner of key companies in the car market for over 70 years. We have continued to attract both new vendors and buyers to the Exchange through a focus on improving sales channels for medium and smaller dealers, whilst strengthening our long standing corporate relationships. The multitude of reasons people change vehicles, including, aspiration, technology, running costs and financing continues to consistently drive churn in the used car market.

Our expanded Automotive Services offering has performed well overall through increased de-fleet, refurbishment, logistics and linked services. Integration of the acquired businesses has resulted in our own transporter fleet now providing one-third of all auction vehicle movements for our UK Remarketing division, driving internal efficiencies.

The structures and capabilities we have put in place have made the Group stronger, more service orientated, agile and efficient. This progress not only puts BCA in a strong position for the future, but is also reflected in the strong financial performance of the Group today, with operational cash flow generation of £55.3m and year-on-year growth of 17.4% in our adjusted diluted earnings per share for the first half of the year. We continue to focus on growing the business revenue streams and operational performance and expect to see further progress through the second half of the year. This growth puts us on track for approximately a one third/two thirds, interim/final dividend split. The interim dividend of 2.6p per share follows the payment of the prior year final dividend of 4.55p per share.

We are pleased that the second half to date has seen the strong performance continue and is in line with our expectations and we therefore remain confident that we can continue to deliver our profit and growth targets."

For Information

BCA Marketplace plc (Investor Relations) tim.richmond@bca.com

Tim Richmond

Square1 Consulting (Financial PR) +44 (0)20 7929 5599

David Bick

www.bcamarketplaceplc.com

Notes:

I. Prior period comparatives include the results of the acquired businesses from their acquisition dates (Paragon 18 July 2016, the leading provider of de-fleet and refurbishment services, and Supreme Wheels 31 March 2017, an alloy wheel refurbishment business).

II. Adjusted EBITDA, adjusted operating profit, adjusted diluted earnings per share and adjusted basic earnings per share are non-IFRS financial measures and are referred to within the report. Divisional operating reviews are focused on adjusted EBITDA in order to give a more meaningful analysis, since depreciation, interest and tax are managed centrally and significant or non-recurring items do not directly correlate to continuing divisional operating performance. Similarly, adjusted diluted earnings per share are focused on by the Board as this measure adds back significant or non-recurring items, net of the items taxation impact, as they do not directly correlate to the continuing Group operating performance. A reconciliation of adjusted EBITDA to operating profit is provided in the Operational and Financial Review. The adjustments between IFRS financial measures and the non-IFRS measures are explained further in the segmental analysis and earnings per share notes (note 3 and note 5 of the condensed consolidated interim financial statements).

III. The Group definition of Net debt excludes the BCA Partner Finance funding, finance leases and the acquired Paragon invoice discounting facility (which was repaid and cancelled in February 2017) - see unaudited condensed consolidated interim cash flow statement for further details.

OPERATIONAL AND FINANCIAL REVIEW

Group Performance

We are pleased to announce another strong set of results for BCA Marketplace plc (the 'Group' or 'BCA'). Improved results in all divisions were driven through a combination of volume growth from the Vehicle Buying division, expanding existing corporate and new customer relationships, further integration of the acquired businesses and the full period effect of outsourced remarketing contracts.

Results Summary

Group revenue was £1,171.6m (2016: £909.8m) in the first half due to increases in the Vehicle Buying division's volume and the full period impact of both the Paragon acquisition and outsourced remarketing contracts.

Adjusted EBITDA in the first half was £75.8m (2016: £64.5m) an increase of £11.3m or 17.5%. Adjusted EBITDA growth was reported across all divisions driven by higher volumes, greater penetration of linked services (including BCA Assured, BCA Partner Finance, transport and BCA Live Online), improved operational efficiency and the full period impact of the Paragon acquisition.

Operating profit increased by £7.3m or 21.7%, driven by the growth in adjusted EBITDA partially offset by increases in depreciation, amortisation and significant or non-recurring items.

The divisional operating reviews are focused on adjusted EBITDA in order to provide more meaningful analysis, since depreciation, interest and tax are principally managed on behalf of the Group, and do not directly correlate to divisional operating performance. A reconciliation of adjusted EBITDA to operating profit is provided in the Financial Performance section.

Forward-looking statements

This document may contain forward-looking statements that may or may not prove accurate. For example statements referring to growth, trends, second half, perform well, in line with expectations are intended to be forward-looking statements. The business is not highly seasonal between the reported period and the second half. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements.

UK Vehicle Remarketing

The volume of vehicles sold through our UK auction operations has continued to grow, with increased vehicle numbers from strong growth in the Vehicle Buying division, alongside continued new customer wins in both OEM and the dealer sector. BCA won Car Dealers' Power 2017 Auction House of the Year in July and its pre-eminent position continues to attract increasing volumes from both existing and new vendors.

Relationships are being formed with some of the industry's newer participants who can see value both in the Group's growing technology and data offerings and in the liquidity that the auction provides. During the period a number of new partnerships have started, incorporating the BCA DealerPro imaging and consumer valuation tools, along with integrated remarketing and logistics services.

UK auction volume sold exceeded half a million units in the period and at 512,000 units showed an increase of 6.9% compared to the same period in 2016, producing adjusted EBITDA growth of 10.8%.

The growth in outsourced remarketing contract volume is the main contributor to increased revenue on a total and per unit basis as the full sales value of these vehicles is taken to revenue.

The average hammer price in the auctions has increased reflecting the newer and broader range of vehicles on offer. The highest hammer price in the period was £245,000 for a Lamborghini Murcielago SuperVeloce while the most common vehicle for sale was the Volkswagen Golf which accounted for just under 4% of total volume. The number of hybrid and electric vehicles continues to grow representing 1.4% (2016: 1.1%) of total volume.

In September 2017 the expanded Manchester auction centre held its first sales in the new back-to-back auction lanes. The centre now has five auction halls and under-cover viewing for over 1,000 vehicles, allowing the centre to expand the regular sales programme of car and Light Commercial Vehicle ('LCV') sales. The centre includes a large vehicle de-fleet and preparation facility with digital imaging and video bays utilising our AutosOnShow technology ensuring all vehicles can be processed, prepared and imaged to industry leading standards.

The granting of Royal Assent for HS2 has, as expected, resulted in the closure of BCA Birmingham LCV auction site. We continue to assess opportunities to further expand the UK Remarketing capacity at existing sites in the region.

Improvements in BCA DealerPro have simplified the vehicle remarketing process with communication of the remarketing requirement and arrangement for vehicle collection. Improvements in vehicle entry and information display have contributed to operating efficiency and enhanced customer experience. We continue to develop products, services and tools that improve the efficiency and confidence in transacting at BCA and drive value for our customers' businesses.

BCA Partner Finance continues to add liquidity and buyer demand in our marketplace. The number of financed units has grown throughout the period and penetration has increased to 11.3% of all BCA vehicles sold in September 2017 (September 2016: 7.9%), resulting in a loan book of £123.7m (2016: £79.4m). This product is an integral part of our proposition to dealers and we have expanded the product offering to include the financing of part exchange vehicles for selected BCA Partner Finance customers along with our new dedicated auction sales programme for our partners.

Adjusted EBITDA per unit increased by 3.4% to £92, reflecting the increased penetration of products and services and the improved operational efficiency through increased volume throughput and expanded sales programmes. This was achieved despite a backdrop of legislative changes leading to higher costs in labour, business rates and insurance premium tax.

Adjusted EBITDA margin in the UK of 10.4% results from the revenue recognition impact of increased outsourced remarketing contracts, where BCA takes ownership of the vehicles before onward sale through the remarketing channel and sells the vehicles in its own right as opposed to on an agency basis, giving rise to the recognition of the vehicle sale revenue, reducing the reported margin percentage.

International Vehicle Remarketing

The International Vehicle Remarketing division continues to grow volume, up 4.2%, at 175,000 units, compared to the same period in 2016. This, along with favourable exchange rate movements, resulted in a 10.3% increase in adjusted EBITDA.

Exchange rates produced a 7% favourable movement to our reported results compared to the prior period, with the average euro exchange rate for the period at €1.140:£1 (2016: €1.221:£1). If measured at constant exchange rates, revenue and adjusted EBITDA per unit for the period would have been £385 and £68.

In Europe, we are focused on initiatives that raise brand and auction awareness, to build strong relationships with our vendors and buyers and to provide an efficient exchange for the remarketing of vehicles. As part of the 'One Europe' programme we continue to develop and strengthen the management team and standardise our processes, products and services. We believe this will bring real benefits for both our vendors, and our buyer base, which is spread across over 40 countries with export volume of 27,000 units in the first half of 2017, up 28.6% on the prior year (2016: 21,000).

During the period we have established a new European transport brokerage operation to source and manage the efficient movement of vehicles purchased in BCA operations intended for export to other countries. Creating such a reliable timely transport solution is key to the borderless 'One-Europe' programme, to enable buyers to take faster delivery of vehicles and improve their stock turn.

These initiatives are in their early stages and we have to continue to build our infrastructure and capabilities, in advance of the volume gains we expect in the future.

In the first half, our operations in Europe have experienced differing underlying market conditions, ranging from favourable markets in Denmark and Sweden driven by exports, stable markets in the Netherlands and Spain, to more challenging markets during the period in Germany and Italy. Our portfolio of established European exchanges allow us to sustain development in comparison to nationally focused competitors.

Adjusted EBITDA has improved by 10.3% in the first half and 5.8% on a per unit basis. Adjusted EBITDA growth has been driven by a combination of volume increases through our existing infrastructure, maintaining a flexible cost base and the favourable currency impact.

Vehicle Buying

The Vehicle Buying division incorporates WeBuyAnyCar in the UK and CarTrade2B in Europe. The Vehicle Buying division brings both additional volume and a diverse range of vehicles to our remarketing exchanges.

WeBuyAnyCar continues to deliver strong volume growth into our UK Vehicle Remarketing division, increasing volumes by 13.8% in the period to 107,000 units sold. Revenue was £444.9m, up 14.9%, driven by increased volume and an average selling price of vehicles up 0.9%, reflecting a diverse range of high quality vehicles. Vehicle Buying in the UK delivered an adjusted EBITDA of £11.7m, up 33.0%, at a slightly improved operating margin at the top end of our target range.

WeBuyAnyCar provides the Group with a controlled but diverse supply of targeted vehicles into our remarketing network and the proportion of vehicles sold originating from this 'third disposal channel' for customers continues to increase (representing circa 21% of our UK Vehicle Remarketing volume). There remains significant scope for growth in penetration of the vehicle buying channel in the used car market. WeBuyAnyCar continues to grow both volume and market share, in spite of the efforts of new challengers and companies in this market.

We will continue to invest in our innovative data tools and marketing to ensure our brand strength, appeal and reach is expanded. This investment has allowed us to again achieve double digit volume growth while maintaining our unique model that allows vehicles to be remarketed in an average of 10 days. This ensures that our pricing model is optimised to reflect current market conditions and values and therefore manage residual values.

The webuyanycar.com brand promotes to customers the significant benefits of our quick, easy and safe service to facilitate the disposal of their cars. WeBuyAnyCar is seeing increased levels of repeat business as customers' trust in the brand rises. Our business model and advertising continue to deliver an increasingly diverse range of vehicles; the largest category of purchased vehicles was 28,000 superminis while we also purchased over 70 supercars including a £144,000 Bentley Mulsanne saloon.

WeBuyAnyCar is ideally placed to offer a convenient service to customers throughout the UK through our network of over 200 branches, enabling greater availability through extended opening hours and working days. The average customer took 81 seconds to get a quote, and drove under 15 minutes to an appointment which took around 25 minutes to conclude the transaction. The branch locations portfolio is regularly reviewed to improve the customer retail experience and journey ease.

In Europe, where opportunities arise to drive benefits in auction volume, awareness and efficiency, our vehicle buying activity focuses on purchasing batches of vehicles from corporate entities and remarketing them through the International Remarketing division.

 Automotive Services

The division comprises new and used vehicle storage, handling, enhancement, refurbishment and transport capabilities, enabling us to offer a comprehensive suite of services to our customers. The integration of recent acquisitions in the Automotive Services division has led to an improved customer offering and a broader geographic coverage. The anticipated slowdown and normalisation in the UK new car volumes has been offset by increasing operational efficiency, improvements in the automotive and logistics network and integration with the other business divisions.

This division operates through BCA Logistics, BCA Automotive, BCA Fleet Solutions and BCA Vehicle Services, providing a network of new and used vehicle processing, transport and logistics services for the benefit of UK customers.

BCA Logistics has performed well in the period, driven by the impact of prior period operating efficiencies, greater volumes of vehicle moves and inspections, the consolidation of operational platforms and significantly improved service delivery. Over 95% of inspections have now been migrated onto our newly enhanced Inspect Pro platform and at the same time the application has been developed to facilitate the migration of all branch based inspections. During the period the business unit completed a move to a new centralised operational headquarters providing increased capacity for Logistics operations.

BCA Automotive has improved efficiency through collaboration with BCA Logistics and the development of new hub and spoke routes. There are in excess of 65 dedicated trucks servicing the transport requirements of the UK Vehicle Remarketing branches. The purchase of over 100 trucks and the integration of the Paragon fleet of trucks have resulted in a market leading fleet of over 800 trucks serving the UK automotive market.

BCA Vehicle Services revenue is concentrated on the storage and handling of vehicles for OEM customers. During the period, profitability was suppressed due to anticipated lower new car volumes, however increased storage and inspection volumes were delivered and customer service levels have improved.

Our BCA Fleet Solutions sites provide refurbishment and associated services to the marketplace, to enhance vehicles to agreed standards before the remarketing of those vehicles back through the distribution network. BCA Fleet Solutions have recently undertaken a pilot exercise to refurbish selected BCA owned vehicles to enhance their value, before selling them through our auction network.

Group Costs

Group costs of £6.9m were incurred in the period (2016: £5.0m), driven by development of the corporate capability given the recent successful application to move to a Premium Listing on the Official List, and improved management capacity to deliver joined-up solutions across divisions for OEMs and major corporates.

Financial performance

The divisional operating reviews are focused on adjusted EBITDA in order to provide more meaningful analysis, since depreciation, interest and tax are principally managed at a Group level, and do not directly correlate to divisional operating performance. The following table reconciles adjusted EBITDA to operating profit and profit before tax.

The increase of depreciation and amortisation reflected a full period charge for the Paragon business and the general increase in capacity of the Group.

Amortisation of acquired intangible assets increased by £1.3m to £20.0m as a result of the full period impact of the prior year acquisitions and the impact of foreign exchange on Euro denominated intangible assets.

Significant or non-recurring items of £2.1m consist of £1.0m in relation to the move to the Premium Listing on the Official List and £1.1m of restructuring and non-recurring costs as we continue to develop the management structure. The prior period included acquisition costs in relation to the Paragon acquisition.

Cash flow and net debt position

In the first half, the Group generated cash flows from operations of £55.3m (2016: £75.0m), the prior period having benefited from a one off £36.1m positive cash flow effect associated with the commencement and amendment of commercial contracts. In the current period cash conversion from the improved operating profit was reduced by volume growth achieved and the increased value of cars purchased by WeBuyAnyCar at the end of the period, which created an increase in inventory of £10.2m at the end of the period. The cash and processing cycles for inventory remain constant with minimal risk to residual values given the speed at which purchases are turned to sales.

The Group ended the period with net debt of £287.4m up £26.9m on year end. The net cash inflow from operating activities of £34.2m (2016: £54.5m) was used to fund investing activities including a payment of £9.6m, being the first of two instalments of performance related deferred consideration in respect of the Paragon acquisition. Investing activity includes the continuing construction of the Bedford and Manchester sites, which brings the cumulative spend at these sites to in excess of £16.0m, which will be available for re-financing in the second half of the year as they are now operational. There were further costs in respect of the final dividend of £35.5m for the year ended 2 April 2017, as well as the choice to further directly fund Partner Finance by £4.9m in the period.

The Group definition of net debt excludes the debts relating to BCA Partner Finance and finance leases, as these are funded under separate asset-backed lending agreements. At the period end, facilities in relation to BCA Partner Finance totalled £120.0m (2016: £90.0m), of which £74.4m (2016: £61.7m) was drawn as a result of growth in this activity.

Tax

The tax charge of £8.7m (2016: £2.4m) includes a £4.3m (2016: £7.1m) net tax credit in relation to significant or non-recurring items, including £4.1m (2016: £4.0m) in relation to amortisation of acquired intangible assets. The income tax charge was lower in the period to 2 October 2016 primarily due to the impact of the UK corporation tax rate reduction on deferred tax assets of £3.4m. The underlying effective full year tax rate before significant or non-recurring items is 22.9%, (year to 2 April 2017 21.8%), reflecting an increase in the Group's overseas tax liabilities since the previous period.

Pension deficit

The net pension deficit has decreased to £13.2m (2 April 2017: £17.3m). The deficit has decreased compared to the prior period due to an improvement in corporate bond yields, which are a key valuation measure prescribed by the accounting standards. This movement, arising as a result of these actuarial assessments, is accounted for in the statement of other comprehensive income.

Earnings per share and dividends

Adjusted basic and diluted earnings were 5.6 and 5.4 pence per share respectively (2016: 4.7 and 4.6 pence per share respectively). The adjusted earnings per share measure uses adjusted earnings (see note 5).

Basic and diluted earnings per share were 3.3 and 3.2 pence per share respectively (2016: 3.1 and 3.0 pence per share respectively). The increase in the basic and diluted earnings per share is suppressed by the £3.4m deferred tax impact of the reduction in the future UK corporation tax rate in the prior period.

The Board has set out its intention to adopt a progressive dividend policy for the Group, reflecting its strong earnings and cash flow characteristics, while retaining sufficient capital to fund ongoing operational requirements and to invest in the Group's long-term growth plans. We remain committed to paying a significant proportion of after-tax profits as dividends and look to provide approximately a one-third/two-thirds, interim/final dividend split. We are pleased to announce an interim dividend of 2.6 pence per share (2016: 2.2p) an increase of 18.2%, payable to shareholders on the register on 15 December 2017 and which will be paid on 31 January 2018.

Related party transactions

There have been no changes in the nature of the related party transactions as described in note 28 to the Annual Report and Accounts 2017 and there have been no new related party transactions which have had a material effect on the financial position or performance of the Group in the six months ended 1 October 2017.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE INTERIM FINANCIAL REPORT

Each of the Directors confirms that to the best of their knowledge:

· The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;

· The interim management report includes a fair review of the information required by:

a. DTR 4.2.7R of the Disclosure and Transparency Rules (DTR), being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b. DTR 4.2.8R of the DTR, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

For and on behalf of the Directors:

27 November 2017

Directors

A Palmer-Baunack | P Coelewij | J Corsellis | S Gutteridge | J Kamaluddin | T Lampert | D Lis |M Brangstrup Watts

UNAUDITED CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

UNAUDITED CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

BCA Marketplace plc (the 'Company'), and its subsidiaries (together 'the Group') operate in the automotive industry. The Company was incorporated in April 2014 with the aim to acquire and manage companies in the UK and European automotive sector. On 2 April 2015, BCA Marketplace plc acquired the BCA Group ('BCA Group'). This was followed by the acquisitions of SMA Vehicle Remarketing Limited ('SMA') on 1 June 2015, Stobart Automotive Limited ('BCA Automotive') on 25 August 2015 and Ambrosetti (U.K.) Limited ('Ambrosetti') on 4 February 2016. On 18 July 2016 Paragon Automotive Limited Group of Companies ('Paragon') was acquired, followed by Supreme Wheels Direct Limited ('Supreme Wheels') on 31 March 2017.

The Company is a public limited company, listed on the London Stock Exchange and incorporated and domiciled in England and Wales with the registered number 09019615. The address of the Company's registered office is BCA Marketplace plc, BCA Bedford, Coronation Business Park, Kempston Hardwick, Bedford, MK43 9PR.

2. ACCOUNTING POLICIES

(a) Basis of preparation

These condensed consolidated financial statements for the period ended 1 October 2017 do not comprise statutory accounts within the meaning of sections 434 and 435 of the Companies Act 2006. They have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and the Disclosure and Transparency Rules of the Financial Conduct Authority.

The annual financial statements of BCA Marketplace plc are prepared in accordance with International Financial Reporting Standards ('IFRS') and IFRS Interpretations Committee ('IFRS IC') interpretations as adopted by the European Union ('Adopted IFRS') and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The condensed consolidated set of financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the period ended 2 April 2017. These condensed consolidated interim financial statements and notes to the accounts disclose only those material changes in balances and accounting policies by reference to those documents.

The comparative balance sheet figures as at 2 April 2017 are extracted from the BCA Marketplace plc annual report and accounts. Those accounts have been reported on by the auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 498 (2) and (3) of the Companies Act 2006.

These condensed consolidated interim financial statements were approved for issue on 27 November 2017. The results for the current and comparative interim income statement, interim statement of comprehensive income and interim cash flow statement are unaudited. The Group's auditor, PricewaterhouseCoopers LLP, has carried out a review of the condensed consolidated interim financial statements and their report is set out at the end of this document.

The financial statements and the notes to the financial statements are presented in millions of pounds sterling ('£m') except where otherwise indicated.

(b) Going concern

The Group maintains a mixture of medium-term debt, committed credit facilities, finance lease arrangements and cash reserves, which together are designed to ensure that the Group has sufficient available funds to finance its operations. The Board reviews forecasts of the Group's liquidity requirements based on a range of scenarios to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its committed borrowing facilities at all times, so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.

The principal risks and uncertainties affecting the Group's business remain largely unchanged from the Annual Report and Accounts 2017, and comprise the following risks: economic environment; strategic; commercial; operational; competition; IT systems and information security; intellectual property and brand; management; financial and liquidity; regulation and legislation; and physical damage. A full assessment of the principal risks and uncertainties that the Directors believe could have the most significant adverse impact on the Group's business are set out on pages 39 to 41 of the Annual Report and Accounts 2017, which is available on the Company's website, www.bcamarketplaceplc.com. The risks identified in the Annual Report and Accounts 2017 remain relevant for the second half of the financial year.

The Group is monitoring developments resulting from the triggering of Article 50 by the UK government in March 2017. The Board will monitor the outcome of negotiations with the EU, the withdrawal process and timeframe, and the period for which EU laws for member states will continue to apply to the UK.

After making appropriate enquiries and having considered the business activities and the Group's principal risks and uncertainties, the Directors are satisfied that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the condensed consolidated interim financial statements have been prepared on a going concern basis.

(c) Basis of consolidation

The condensed consolidated interim financial statements have been prepared under the historical cost convention. The same accounting policies, critical accounting judgements, critical accounting estimates, presentation and methods of computation have been applied in these condensed consolidated interim financial statements as were applied in the consolidated financial statements of the Group as at and for the period ended 2 April 2017.

The only accounting policy that differs relates to taxes on income, which in the interim period are accrued using the effective tax rate that would be applicable to the expected total annual earnings.

In the application of the Group's accounting policies the Directors are required to make judgements, estimates and assumptions about the carrying value of the assets and liabilities that are not readily apparent from the other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The critical judgements affecting the Group's condensed consolidated interim financial statements are acquisition accounting (including the fair value of acquired assets and liabilities and the valuation of acquired intangible assets), the impairment of goodwill and intangible assets, accruals for taxation, the recoverability of deferred tax assets, provisions for onerous leases, fair value of share based payments and the net retirement benefit obligation.

(d) New standards, amendments and interpretations

No new standards, amendments or interpretations effective for the first time for the financial year beginning on or after 3 April 2017 have had a material impact on the Group or Parent Company.

Standards and interpretations which are issued but not yet effective and have not been early adopted by the Group are as follows:

· IFRS 9 Financial instruments addresses the classification, measurement and recognition of financial assets and financial liabilities and replaces IAS 39. IFRS 9 will become effective for accounting periods starting on or after 1 January 2018, subject to EU endorsement. The impact of the standard is currently being assessed by management but it is not expected to have a material impact on the Group.

· IFRS 15 Revenue from contracts with customers will become effective for accounting periods starting on or after 1 January 2018. The impact of the standard is currently being assessed by management, which requires a thorough review of existing contractual arrangements. Given the proximity between the timing of performance obligations being met and revenue being recognised, management's initial assessment is that the impact of this standard is limited.

· IFRS 16 Leases establishes principles for the recognition, measurement, presentation and disclosure of leases, other than short-term and low-value assets, and replaces IAS 17. IFRS 16 will become effective for accounting periods starting on or after 1 January 2019.

IFRS 16 will result in the recognition of a lease liability and corresponding right of use asset on the Group's balance sheet in respect of the majority of operating leases, which predominantly represent property and vehicle transporters. It is expected that the timing and presentation of charges recognised in the income statement will also change as a result of the new standard, with current operating lease expenses replaced by depreciation of the right of use asset and interest on the lease liability. Management continue to assess the impact of the new standard.

3. SEGMENTAL REPORTING

Key Performance Indicator - adjusted EBITDA

Management uses an adjusted profit measure to monitor the ongoing profitability of the Group, which is defined as Earnings before interest, taxation, depreciation and amortisation ('EBITDA') adjusted for significant or non-recurring items. The significant or non-recurring items that are excluded from EBITDA to calculate adjusted EBITDA are as follows:

· acquisition expenses and gains and losses on business combinations, disposals and changes in ownership;

· income and expenses that are significant or non-recurring or non-trading in nature, including business closure costs, restructuring costs and onerous lease provisions;

· impairment charges and accelerated depreciation and amortisation on property, plant and equipment, intangibles and goodwill;

· amortisation of intangible assets arising on acquisition of businesses.

The Directors primarily use the adjusted EBITDA measure when making decisions about the Group's activities as it is the most reliable and relevant profit measure across all segments. As this is a non-GAAP measure, adjusted EBITDA measures used by other entities may not be calculated in the same way and hence are not directly comparable.

Management has determined the operating segments based on the operating reports reviewed by the Board of Directors that are used both to assess performance and make strategic decisions. Management has identified that the Board of Directors is the chief operating decision maker in accordance with the requirements of IFRS 8 'Operating Segments'.

The Board of Directors consider the business to be split into the four main divisions generating revenue: Vehicle Remarketing UK, Vehicle Remarketing International, Vehicle Buying and Automotive Services. Group Costs comprise central head office functions and any costs not directly attributable to the segments.

Information on segment assets and liabilities is not regularly reported to the Board of Directors and is therefore not disclosed.

Other significant or non-recurring items include premium listing costs of £1.0m and divisional management restructuring costs of £1.1m.

Acquisition costs of £2.2m related to the acquisition of the Paragon Group. Other significant or non-recurring items of £1.1m mainly reflected a £0.7m credit in respect of property.

4. CASH GENERATED FROM OPERATIONS

5. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net profit for the period attributable to ordinary shareholders by the weighted average number of Ordinary shares outstanding during the period.

Key Performance Indicator - adjusted earnings per share

Adjusted earnings per share is presented in addition to that required by IAS 33, Earnings per Share, to align the adjusted earnings measure with the performance measure reviewed by the Directors. The Directors consider that this gives a more appropriate indication of underlying performance. Adjusted earnings per share are calculated by dividing net profit for the period attributable to ordinary shareholders, adjusted for significant or non-recurring items and their associated tax impact, by the weighted average number of Ordinary shares outstanding during the period.

6. INCOME TAX

The income tax charge is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year.

The tax charge of £8.7m (2016: £2.4m) includes a £4.3m (2016: £7.1m) net tax credit in relation to significant or non-recurring items, primarily £4.1m (2016: £4.0m) in relation to amortisation of acquired intangible assets. The underlying effective tax rate before significant or non-recurring items is 22.9%, reflecting an increase in the Group's overseas tax liabilities since the previous year end.

7. NON CURRENT ASSETS

8. BANK BORROWINGS & PARTNER FINANCE BORROWINGS

The Group has a £500m multi-currency facility, comprising a £250m revolving facility and a £250m term loan. As at 1 October 2017 and 2 April 2017, the term loan has been drawn down in full, and £90m of the revolving facility has also been drawn down. The facility will run until February 2021 with an option for a further 12 months by mutual consent, with no repayment of capital due before that time.

The Group has an asset-backed finance facility to fund the Partner Finance business. This is a revolving facility that allows a drawdown of up to £120m. The amount is advanced solely to a Partner Finance subsidiary in respect of specific receivables.

9. DIVIDENDS

A final dividend of £35.5m, 4.55p per share (2016: £31.2m, 4.00p per share), was paid on 29 September 2017 to shareholders on the Register on 15 September 2017.

After the interim balance sheet date dividends of 2.6p per qualifying Ordinary share were proposed by the Directors (Interim 2016: 2.2p per share), payable on 31 January 2018 to shareholders on the Register on 15 December 2017. The dividends have not been provided for.

The Company has significant distributable reserves, and the cash generated by the operating companies in the Group can be distributed up the Group by dividends as required.

INDEPENDENT REVIEW REPORT TO BCA MARKETPLACE PLC

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed BCA Marketplace plc's condensed consolidated interim financial statements (the 'interim financial statements') in the Interim Report of BCA Marketplace plc for the 6 month period ended 1 October 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

· the condensed consolidated interim balance sheet as at 1 October 2017;

· the condensed consolidated interim income statement and condensed consolidated interim statement of comprehensive income for the period then ended;

· the condensed consolidated interim cash flow statement for the period then ended;

· the condensed consolidated interim statement of changes in equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the Interim Report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Interim Report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Interim Report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

St Albans

27 November 2017

For more information

bcamarketplaceplc.com

BCA Marketplace plc

BCA Bedford

Coronation Business Park

Kempston Hardwick

Bedford

MK43 9PR

Registered in England & Wales No. 09019615

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