TIDMLOOK
RNS Number : 8176X
Lookers PLC
15 August 2018
15 August 2018
LOOKERS plc
Unaudited Results for the six months ended 30 June 2018
Gaining share in a challenging market and in line with market
expectations for the full year
Lookers plc, ("Lookers", "the company" or "the group"), one of
the leading UK motor retail and aftersales service groups,
announces its results for the six months ended 30 June 2018.
Key financials:
HY2018 HY2017 Change
Turnover GBP2.58 billion GBP2.46 billion 5%
---------------- ---------------- -------
*Adjusted operating
profit GBP52.8m GBP58.1m (9%)
---------------- ---------------- -------
*Adjusted profit before
tax GBP43.1m GBP50.2m (14%)
---------------- ---------------- -------
**Profit before tax GBP45.7m GBP44.6m 2%
---------------- ---------------- -------
* Adjusted earnings
per share 9.07p 10.49p (14%)
---------------- ---------------- -------
Earnings per share 9.71p 9.07p 7%
---------------- ---------------- -------
Interim dividend per
share 1.48p 1.41p 5%
---------------- ---------------- -------
*Adjusted profit is profit before amortisation of intangible
assets, debt issue costs, pension costs, share based payments and
property profit
**Includes profit on the sale of a property of GBP7.6m
Operational highlights:
-- New car turnover was stable, with the reduction in volumes
less than the overall market decline
-- Total group turnover of used cars increased by 12% and gross profit increased by 4%
-- Turnover for aftersales increased by 6% and gross profit increased by 7%
-- Invested GBP14 million of capital expenditure into improving dealership facilities
-- Strengthened portfolio of franchise representation by closing
two dealerships and opening one new site in the period
Outlook:
-- Impact of Worldwide Harmonised Light Vehicle Testing
Procedure ("WLTP") has potential to cause some volatility in the
supply of new vehicles
-- Encouraging level of orders of new cars for the important month of September
-- On course to meet market expectations for the full year
Andy Bruce, Chief Executive of Lookers, said:
"I am pleased with our performance over the first half of the
year, which has been delivered despite ongoing challenging market
conditions. Although profits, excluding a profit of GBP7.6 million
on the sale of a property, are down on last year, as expected, this
was due to a very strong comparative period, driven by record new
car sales ahead of the decline seen across the market from April
2017.
"Against this backdrop, we continue to show good strategic
momentum, winning market share and outperforming the wider
industry, demonstrating the benefits of our clear strategy of
having the right brands in the right locations, with a well
invested dealership portfolio combined with excellent execution. We
are also benefiting from our scale and our diversified business
model which has resulted in revenue and gross profit growth across
both used cars and aftersales.
"Looking forward, we have an encouraging level of orders for the
important month of September. Whilst the new car market has seen
further reductions in 2018, the decrease appears to have stabilised
and volumes remain at a historically high level. Based on our first
half performance we expect to meet market expectations for the full
year."
There will be an analyst presentation today at 9.30am, taking
place at MHP Communications, 6 Agar Street, London, WC2N 4HN. The
presentation will also be accessible via a live conference call for
registered participants. To register for the call please contact
MHP Communications on +44 (0)20 3128 8742, or by email on
lookers@MHPC.com.
Enquiries
Lookers Tel: 0161 291 0043
Andy Bruce, Chief Executive Officer
Robin Gregson, Chief Financial Officer
MHP Communications Tel: 020 3128 8742 / 8730
Tim Rowntree Email: Lookers@mhpc.com
Simon Hockridge
INTRODUCTION
I am very pleased to report a good trading performance for the
first half of the year with an *adjusted profit before tax of
GBP43.1 million, compared to GBP50.2 million last year, as we
continue to outperform the market despite a difficult trading
background. The year on year pre-tax profit reduction was expected
given that the comparative period was particularly buoyant with new
car sales at record levels, benefitting from the increased demand
for new cars that preceded the changes in Vehicle Excise Duty
("VED") in April 2017. The adjusted profit before tax excludes a
profit of GBP7.6 million on the sale of a property in the
period.
This strong performance in the first half of last year was
followed by a sharp reduction in demand in the second half, mainly
as a result of the decline in sentiment and demand for diesel
vehicles. These factors resulted in an abnormal balance of profit
where 73% of our full year profit in 2017 was generated in the
first half of the year. We expect the balance of profits to return
to a more normal distribution in the current year, where the first
half should represent between 60% and 65% of full year profits, as
had been the trend for several years before 2017.
FINANCIAL REVIEW
Turnover increased by 5% to GBP2.58 billion (2017: GBP2.46
billion) in the first half, with turnover being maintained for new
cars but growth from used cars as well as aftersales. Gross profit
increased by 3% to GBP271 million (2017: GBP264 million), although
this increase was eroded by cost increases particularly salary
costs due to cost of living increases, increases in the minimum
wage, auto enrolment pension costs as well as higher rent, rates
and utility costs across our property estate.
EBITDA was GBP70.7 million for the period compared to GBP68.1
million in the prior year. *Adjusted profit from operations
decreased by 9% to GBP52.8 million (2017: GBP58.1 million).
Interest costs increased in the period to GBP9.7 million (2017:
GBP7.9 million), due to higher levels of stock, particularly
consignment stock, as well as the increase in the base rate last
November.
*Adjusted profit before tax was 14% below that of the prior year
at GBP43.1 million (2017: GBP50.2 million), for the reasons
explained earlier in this statement. Profit before tax of GBP45.7
million, which includes the profit of GBP7.6 million on the sale of
a property, increased by 2% (2017: GBP44.6 million). Earnings per
share were 9.71p compared to 9.07p, with adjusted earnings per
share of 9.07p (2017: 10.49p). Profit after tax increased by 7% to
GBP38.5 million (2017: GBP36.0 million) after a tax charge of
GBP7.2 million, representing an effective tax rate of 19% on the
trading profit before tax.
The group produced strong operational cash flow in the period
with cash generated from operations of GBP65.5 million (2017:
GBP66.5 million). We have invested GBP14.0 million of capital
expenditure during the period in improving dealership facilities as
part of our ongoing investment programme. We also received GBP29.7
million for the sale of two dealership properties, one of which
produced a profit of GBP7.6 million. These were both properties
that we had previously developed which were sold as sale and
leaseback transactions in both cases. Net cash inflow for the
period was GBP37.3 million compared to GBP6.8 million last year.
Net debt reduced to GBP54.5 million compared to GBP97.8 million at
the start of the year and GBP61.9 million at 30 June 2017.
With the reduction in net debt in the period, the group
continues to benefit from a strong balance sheet that supports
further investment in new and improved facilities, operational
capabilities and acquisition opportunities. The ratio of net debt
to EBITDA has reduced from 0.95 at the start of the year to the
current level of 0.51 and gearing has also reduced to 13% compared
to 25% at the start of the year. The value of freehold and long
leasehold properties of GBP308 million (2017: GBP295 million) at
the end of the period remains a key strength of the business.
Our group bank facilities consist of a term loan of GBP70
million and a revolving credit facility of GBP150 million, giving
total facilities of GBP220 million, which were renewed at the time
of the Benfield acquisition in 2015. There is also the potential to
increase the term loan by an additional GBP30 million to fund
future acquisitions. As net debt at 30 June was GBP54.5 million,
the group has a significant level of unutilised bank facilities of
GBP165 million. The extent and term of the facilities, which are
renewable in March 2020, continue to provide significant financial
security for the group.
*Adjusted profit is profit before amortisation of intangible
assets, debt issue costs, pension costs, share based payments and
property profit
DIVID
I am pleased to announce that, given the encouraging results and
strong financial position of the group, the Board is declaring an
increase in the interim dividend of 5%. This follows the 7%
increase in the total dividend last year and an increase in the
dividend of over 116%, compared to the dividend paid for the 2010
financial year, when the company recommenced dividend payments.
This continues our progressive policy of increasing the dividend
provided that the level of profitability is satisfactory.
The Board maintains its view that the level of cover should
reduce over the medium term to a level of between 3.5 and 4.0
times. However, the Board will continue to review the dividend
policy in the light of the company's trading performance whilst
retaining sufficient cash flow to fund future expansion in terms of
both organic growth and acquisitions. The interim dividend of 1.48p
per share (2017: 1.41p) will be payable to shareholders on 23
November 2018. The ex-dividend date will be 18 October 2018 and the
record date will be 19 October 2018.
SHARE BUYBACK PROGRAMME
In March we announced and implemented a share buyback programme
of GBP10 million which will continue for the rest of this year. We
have since purchased approximately 3 million shares which have been
cancelled. The Board continues to believe that the share buyback
programme at this level will increase capital efficiency as well as
providing an opportunity to return capital to shareholders, whilst
ensuring that the company continues to have a strong balance
sheet.
BOARD CHANGES
Last year we announced that Bill Holmes, who had been a
non-executive director since June 2008, would retire from the Board
upon completion of a successful handover of the position of chair
of the audit & risk committee to Stuart Counsell who was
appointed as a non-executive director in June 2017. A successful
handover of this important position was achieved in the first
quarter of this year and Bill Holmes therefore retired from his
position as a non--executive director on 28th March 2018. Together
with all my colleagues on the Board, I would like to thank Bill for
his exceptional and substantial contribution to the company during
the past ten years, serving as a non--executive director, chairman
of the audit & risk committee and senior independent director
in this period and we wish him well for the future.
OPERATING REVIEW
The results for the first half represent a good performance
against our objectives and KPIs, particularly given the strong
performance in the previous year and the challenging new car market
seen in the second half of last year. The key aspects of our
performance were:
-- New car turnover maintained at a similar level with a
reduction in volumes less than the overall market;
-- Continued growth in used car revenue and gross profit; and
-- Further progress in aftersales with increased revenue and gross profit.
Our motor retail group consists of 154 franchised dealerships
representing 32 manufacturers from 99 locations. The business
generates revenue from the sale of new and used cars and aftersales
activities. The high margin aftersales sector of the business
represents the largest proportion of gross profit at 42%, with new
cars and used cars contributing 31% and 27% respectively.
During the period, in March, we closed two Vauxhall dealerships
at Warrington and Yardley, near Birmingham. These were both
underperforming businesses and were closed with the agreement of
Vauxhall as part of the rationalisation of their UK dealer network.
In July we acquired a dealership which complements our larger
representation of Ford in Essex.
The number of new cars sold per annum in the UK has varied
between 2.26 million and 2.69 million during the past five years.
Our share of the retail sector of this market is 6% up from 4% in
2011. After five consecutive years of growth since 2011, the UK new
car market reduced by 5.6% in 2017 to 2.54 million cars. Whilst the
new car market has seen further reductions in 2018, as expected
given the strong market in the first half of 2017, the decrease
appears to have stabilised and despite the reduction, remains at a
historically high level.
We also continue to see significant opportunity to grow market
share and increase sales volumes within the UK used car market,
which currently has annual transactions of approximately 8 million
vehicles, of which franchised dealers represent approximately
50%.
Aftersales represents the servicing, repair and sale of
franchised parts to customers' vehicles. The aftersales market
applies to the overall number of cars in use on UK roads, which is
referred to as the UK car parc. There are approximately 37 million
vehicles with 20% (7.5 million) under three years old, which is
contributing to the continued growth of the aftersales market. This
is the predominant market for franchised motor dealers and we are
focused on developing the aftersales business and investing in our
offering through initiatives to increase volumes and margins.
The internet remains the primary means for our customers to
research and determine which new or used cars they are interested
in buying. We are committed to ongoing investment in our digital
marketing channels and developing the website, as part of our
omni-channel customer experience strategy to meet the needs of our
growing customer base.
Analysis of turnover and gross profit
H1 2018 GBPm H1 2017 GBPm % change
Turnover
------------- ------------- ---------
New cars 1,311 1,312 -
------------- ------------- ---------
Used cars 996 887 12%
------------- ------------- ---------
Aftersales 228 215 6%
------------- ------------- ---------
Leasing and other 41 44 (7%)
------------- ------------- ---------
Total 2,576 2,458 5%
------------- ------------- ---------
Gross profit
New cars 85 88 (3%)
---- ---- -----
Used cars 72 69 4%
---- ---- -----
Aftersales 105 98 7%
---- ---- -----
Leasing and other 9 9 -
---- ---- -----
Total 271 264 3%
---- ---- -----
New Cars
The sale of new cars represents 31% of total gross profit.
Despite a 5.6% reduction in the new car market in 2017 to 2.54
million, it has remained at historically high levels. The new car
market reduced by 6.3% in the first half of the year to 1.31
million, with the retail new car market reducing by 4.9% to 0.59
million and the fleet market reducing by 7.3% to 0.72 million. Our
total new car turnover was maintained at a similar level to 2017
compared to the market reduction in registrations of 6.3%. Retail
turnover reduced by 2% compared to the market reduction in new car
volumes of 4.9%.
Fleet turnover, including commercial vehicles, increased by 3%,
compared to the market reduction of 6%. The fleet sector continues
to represent a significant part of the market providing scope for
further growth whilst taking a sensible attitude to maintaining
margins. Total gross profit from new cars decreased by 3%, compared
to the prior year, reflecting a slight reduction in gross margin
although profit per unit was increased in the period.
Whilst the new car market reduced by 6.3% in the half year, the
decrease was more pronounced in the first quarter given the strong
comparatives from 2017 due to increased demand in advance of the
changes in VED. From April we have seen modest growth in April, May
and July and a small reduction in June. We therefore expect
registrations for the rest of the year to look more favourable
compared to last year.
From 1(st) September 2018 we will see the introduction of the
new vehicle emission testing regulations, the Worldwide Harmonised
Light Vehicle Testing Procedure ("WLTP"). There is the possibility
that this could cause some disruption to the production and supply
of certain vehicles, depending on the timetable and availability of
when the vehicles are tested for the manufacturers. Whilst we do
not currently believe that this will represent a material issue, it
has the potential to result in some volatility to the supply of new
vehicles.
The latest data from the Society of Motor Manufacturers and
Traders ("SMMT") for July shows the new car market has stabilised
and their current estimate is that new car volumes will be at 2.41m
units for the full year. This represents a reduction of 5.1% for
the full year compared to 2017 and implies a reduction in the
second half of 3.5%. However, this still represents a historically
high level of demand for the new car market. Notwithstanding these
forecasts, we continue to target increases in new car volumes and
our order take for the important month of September is continuing
at encouraging levels.
Our relationship with our manufacturer partners remains a
critical part of our success and we continue to work closely with
them to achieve a mutually beneficial commercial relationship,
underpinning the potential to develop further with them in the
future.
Used Cars
The used car market continues to be buoyant and values of used
cars have remained stable and predictable. Used cars contribute 27%
of total gross profit and group turnover of used cars increased by
12%, compared to 2017. Gross profit increased by 4% with profit per
unit maintained at the same level, although the average selling
price increased. This is a positive performance given that our used
car volumes have increased significantly in each of the last five
years.
In conjunction with recognising the vital importance of new cars
to our business model, the used car market still represents a
significant additional opportunity for the group and we plan to
accelerate our growth in used cars to take advantage of this.
Aftersales
Our higher margin aftersales business, which represents 42% of
gross profit, has performed well in the period. Turnover increased
by 6% compared to 2017 and gross profit increased by 7%, with the
margin also at a slightly higher level compared to last year. The
increased profitability has benefitted from the growth in the
vehicle parc of cars under three years old, a trend which has
continued in recent years due to increased sales of new cars.
Whilst this will continue to increase in the short term, it will be
at a lower rate. The increase in volumes and margin are also due to
the initiatives we have made to develop the aftersales business,
where we have concentrated on increasing capacity and customer
retention.
OUTLOOK
Our strategy of having the right brands in the right locations
combined with excellent execution leaves us well placed to continue
to make progress against our strategic goals. The group has
produced a good performance for the first six months of the year.
Whilst profit for the period was lower than last year, it has been
against the background of the distortion in the market in the first
quarter of last year due to the effect of changes in VED last
April. We therefore expect a more balanced distribution of profits
between the first and second half of this year and as such
anticipate a positive profit performance in the second half of the
year compared to the same period last year.
Our new car business has performed well in comparison to the
market and whilst the new car market is expected to reduce this
year, it is forecast to remain at historically high levels and we
have an encouraging level of orders for the important month of
September. We have also significantly increased our used car
volumes and profit, growing our share of this market and our high
margin aftersales business continues to have opportunities to
increase turnover and profit.
We continue to make significant investments to upgrade our
facilities and enhance our omni-channel customer experience. This,
together with the broad base of our franchise representation
strengthens our position as a leading UK automotive retail and
aftersales service group to enable us to achieve future growth over
the medium to long term.
The current political environment, Brexit and weaker exchange
rates create a degree of uncertainty in the UK economy, which is
unhelpful. We also have to remain aware of consumer confidence
levels and the Pound-Euro exchange rate, both of which could have
an impact on our business. We therefore look forward with a degree
of caution.
However, we have a strong balance sheet which continues to be
strengthened by operational cash flow with both net debt and net
debt to EBITDA being at relatively low levels and we have
substantial headroom in our bank facilities. This provides secure
funding capacity and financial security to grow the business
through further strategic acquisitions at a time when there
continue to be significant consolidation opportunities within the
sector.
The positive performance of the group in the first half of the
year is encouraging and the Board therefore believes, based on the
performance in the first half of the year, that the results for the
year ending 31 December 2018 should be in line with current market
expectations.
I would like to finish my review by thanking all my colleagues
at Lookers for their hard work, commitment and dedication to the
company and without whom we would not have been able to deliver
another positive result for the period.
Phil White
Chairman
15 August 2018
Condensed Consolidated Statement of Financial Performance
Six months ended 30 June 2018
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 June 30 June 31 Dec
2018 2017 2017
Note GBPm GBPm GBPm
---------------------------------- ----- ------------ ------------ ------------
Continuing operations
Revenue 3 2,576.5 2,458.5 4,696.3
Cost of sales (2,306.0) (2,194.7) (4,192.2)
---------------------------------- ----- ------------ ------------ ------------
Gross profit 270.5 263.8 504.1
Distribution costs (140.9) (146.1) (292.5)
Administration expenses (80.4) (63.8) (136.7)
Other operating income 7.6 0.5 2.5
---------------------------------- ----- ------------ ------------ ------------
Profit from operations 56.8 54.4 77.4
Profit from operations
before amortisation, share
based payments and property
profit 52.8 58.1 84.7
Amortisation of intangible
assets (2.7) (2.8) (5.6)
Share based payments (0.9) (0.9) (1.7)
Profit on sale of property 7.6 - -
Profit from operations 56.8 54.4 77.4
Interest payable 5 (9.7) (7.9) (16.6)
Interest receivable 5 - - 0.3
---------------------------------- ----- ------------ ------------ ------------
Net interest (9.7) (7.9) (16.3)
Net interest and costs
on pension scheme obligation (1.2) (1.7) (4.2)
Fair value on derivative
instruments - - 1.9
Debt issue costs (0.2) (0.2) (0.4)
Profit on ordinary activities
before taxation 45.7 44.6 58.4
Profit before tax, amortisation,
debt issue costs, pension
costs, share based payments
and property profit 43.1 50.2 68.4
Amortisation of intangible
assets (2.7) (2.8) (5.6)
Share based payments (0.9) (0.9) (1.7)
Fair value on derivative
instruments - - 1.9
Profit on sale of property 7.6 - -
Net interest on pension
scheme obligation (1.2) (1.7) (4.2)
Debt issue costs (0.2) (0.2) (0.4)
---------------------------------- ----- ------------ ------------ ------------
Profit on ordinary activities
before taxation 45.7 44.6 58.4
Tax charge 7 (7.2) (8.6) (10.5)
---------------------------------- ----- ------------ ------------ ------------
Profit for the period/year 38.5 36.0 47.9
Attributable to:
Shareholders of the company 38.5 36.0 47.9
Earnings per share
Basic earnings per share 6 9.71p 9.07p 12.06p
Diluted earnings per share 6 9.35p 8.73p 11.70p
---------------------------------- ----- ------------ ------------ ------------
Condensed Consolidated Statement of Comprehensive Income
Six months ended 30 June 2018
Unaudited Unaudited
six months six months Audited
ended ended Year ended
30 June 30 June 31 Dec
2018 2017 2017
GBPm GBPm GBPm
------------------------------- ------------ ------------ ------------
Profit for the period /
year 38.5 36.0 47.9
-------------------------------- ------------ ------------ ------------
Items that will never be
reclassified to profit
and loss:
Actuarial gains recognised
in post retirement benefit
schemes 4.0 1.1 10.6
Movement in deferred taxation
on
pension liability - (0.2) (1.9)
Items that are or may be
reclassified to profit
and loss: - - -
Fair value gain on derivative
instruments
and share based payments - - 0.2
Movement in deferred taxation
on derivative instruments - - (1.0)
-------------------------------- ------------ ------------ ------------
Other comprehensive income
for the period/year 4.0 0.9 7.9
-------------------------------- ------------ ------------ ------------
Total comprehensive income
for the period/year 42.5 36.9 55.8
-------------------------------- ------------ ------------ ------------
Attributable to:
Shareholders of the company 42.5 36.9 55.8
-------------------------------- ------------ ------------ ------------
Condensed Consolidated Statement of Financial Position
As at 30 June 2018
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2018 2017 2017
GBPm GBPm GBPm
---------------------------------- ---------- ---------- --------
Non current assets
Goodwill 108.9 107.6 108.9
Intangible assets 114.0 113.6 112.3
Property, plant and equipment 341.1 328.0 342.0
---------------------------------- ---------- ---------- --------
564.0 549.2 563.2
---------------------------------- ---------- ---------- --------
Current assets
Inventories 864.6 857.1 984.1
Trade and other receivables 251.7 320.4 242.1
Rental fleet vehicles 66.7 67.5 60.9
Cash and cash equivalents 47.9 72.7 45.3
1,230.9 1,317.7 1,332.4
---------------------------------- ---------- ---------- --------
Total assets 1,794.9 1,866.9 1,895.6
---------------------------------- ---------- ---------- --------
Current liabilities
Bank loans and overdrafts 31.4 51.8 66.1
Trade and other payables 1,146.5 1,199.5 1,227.5
Current tax liabilities 5.7 14.4 -
Derivative financial instruments - 3.0 0.6
---------------------------------- ---------- ---------- --------
1,183.6 1,268.7 1,294.2
---------------------------------- ---------- ---------- --------
Net current assets 47.3 49.0 38.2
---------------------------------- ---------- ---------- --------
Non current liabilities
Bank loans 71.0 82.8 77.0
Trade and other payables 25.1 35.0 36.8
Retirement benefit obligations 61.0 75.3 63.8
Deferred tax liabilities 38.8 34.3 38.8
195.9 227.4 216.4
---------------------------------- ---------- ---------- --------
Total liabilities 1,379.5 1,496.1 1,510.6
---------------------------------- ---------- ---------- --------
Net assets 415.4 370.8 385.0
---------------------------------- ---------- ---------- --------
Shareholders' equity
Ordinary share capital 19.7 19.9 19.9
Share premium 78.4 78.4 78.4
Capital redemption reserve 14.8 14.6 14.6
Retained earnings 302.5 257.9 272.1
---------------------------------- ---------- ---------- --------
Total equity 415.4 370.8 385.0
---------------------------------- ---------- ---------- --------
Condensed Consolidated Statement of Changes in Equity
Six months ended 30 June 2018
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
-------------------------------- --------- --------- ------------ ---------- ---------
As at 1 January 2018 19.9 78.4 14.6 272.1 385.0
Profit for the period - - - 38.5 38.5
Actuarial gains recognised on
defined
benefit pension schemes - - - 4.0 4.0
Share based payments - - - 0.9 0.9
Share buyback (0.2) - 0.2 (3.2) (3.2)
Dividend to shareholders - - - (9.8) (9.8)
-------------------------------- --------- --------- ------------ ---------- ---------
As at 30 June 2018 (unaudited) 19.7 78.4 14.8 302.5 415.4
-------------------------------- --------- --------- ------------ ---------- ---------
Six months ended 30 June 2017
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
---------------------------------------- --------- --------- ------------ ---------- --------
As at 1 January 2017 19.8 77.7 14.6 229.6 341.7
Profit for the period - - - 36.0 36.0
Actuarial gains recognised on
defined
benefit pension schemes - - - 1.1 1.1
Deferred taxation on pension liability - - - (0.2) (0.2)
Share based payments - - - 0.9 0.9
New shares issued 0.1 0.7 - - 0.8
Dividend to shareholders - - - (9.5) (9.5)
---------------------------------------- --------- --------- ------------ ---------- --------
As at 30 June 2017 (unaudited) 19.9 78.4 14.6 257.9 370.8
---------------------------------------- --------- --------- ------------ ---------- --------
Year ended 31 December 2017
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
---------------------------------------- --------- --------- ------------ ---------- --------
As at 1 January 2017 19.8 77.7 14.6 229.6 341.7
Profit for the year - - - 47.9 47.9
New shares issued 0.1 0.7 - - 0.8
Actuarial gains recognised on
defined benefit schemes - - - 10.6 10.6
Deferred taxation on pension liability - - - (1.9) (1.9)
Share based payments - - - 1.7 1.7
Current and deferred taxation
on share based payments - - - (0.8) (0.8)
Dividends to shareholders (15.0) (15.0)
As at 31 December 2017 19.9 78.4 14.6 272.1 385.0
---------------------------------------- --------- --------- ------------ ---------- --------
Condensed Consolidated Cash Flow Statement
Six months ended 30 June 2018
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 Dec
30 June 30 June 2017
2018 2017 GBPm
GBPm GBPm
------------------------------------------ ------------ ------------ ------------
Cash flows from operating activities
Profit for the period/year 38.5 36.0 47.9
Adjustments for:
Tax 7.2 8.6 10.5
Depreciation 10.3 10.0 20.7
Fair value on derivative instruments - - (2.4)
Loss on disposal of plant and equipment - - 0.4
Profit on disposal of rental fleet
vehicles (0.2) (0.2) -
Amortisation of intangible assets 2.7 2.8 5.6
Share based payments 0.9 0.9 1.7
Interest income - - (0.3)
Interest payable 9.7 7.9 16.6
Debt issue costs 0.2 0.2 0.4
Changes in working capital
Decrease/(increase) in inventories 119.5 (17.7) (144.7)
Increase in trade and other receivables (24.8) (95.4) (16.1)
(Decrease)/increase in payables (107.4) 113.4 143.0
Impact of funding of rental vehicles 8.9 - -
Cash generated from operations 65.5 66.5 83.3
Difference between pension charge
and cash contributions (2.8) (3.7) (7.8)
Net interest and costs on pension
scheme obligation 1.2 1.7 4.2
Purchase of rental fleet vehicles (52.7) (46.7) (87.1)
Proceeds from sale of rental fleet
vehicles 43.7 43.3 87.0
Interest paid (9.7) (7.9) (16.6)
Interest received - - 0.3
Tax paid (0.4) (8.7) (25.5)
------------------------------------------ ------------ ------------ ------------
Net cash inflow from operating
activities 44.8 44.5 37.8
------------------------------------------ ------------ ------------ ------------
Cash flows from investing activities
Purchase of property, plant and
equipment (14.0) (19.7) (46.1)
Purchase of intangibles (4.4) (7.1) (8.1)
Purchase of goodwill - - (1.3)
Proceeds from sale of property,
plant and equipment 29.7 3.0 8.0
Net cash (used)/generated by investing
activities 11.3 (23.8) (47.5)
------------------------------------------ ------------ ------------ ------------
Cash flows used by financing activities
Proceeds from issue of ordinary
shares - 0.8 0.8
Repayment of loans (5.8) (5.2) (12.5)
Share buyback (3.2) - -
Dividends paid to group shareholders (9.8) (9.5) (15.0)
Net cash outflow from financing
activities (18.8) (13.9) (26.7)
------------------------------------------ ------------ ------------ ------------
Increase/(decrease) in cash and
cash equivalents 37.3 6.8 (36.4)
Cash and cash equivalents at the
beginning of the period/year (7.6) 28.8 28.8
------------------------------------------ ------------ ------------ ------------
Cash and cash equivalents at the
end of the period/year 29.7 35.6 (7.6)
------------------------------------------ ------------ ------------ ------------
Notes to the Set of Financial Information
Six months ended 30 June 2018
1. GENERAL INFORMATION
The financial information for the period ended 30 June 2018 and
similarly the period ended 30 June 2017 has neither been audited
nor reviewed by the auditor. The financial information for the year
ended 31 December 2017 has been based on information in the audited
financial statements for that year.
The information for the year ended 31 December 2017 and the
Interim Financial Report for the period ended 30 June 2018 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those accounts was not qualified, did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying the report and did not contain
statements under section 498 (2) or (3) of the Companies Act
2006.
2. ACCOUNTING POLICIES
The annual financial statements of Lookers plc are prepared in
accordance with IFRSs as adopted by the European Union. The set of
condensed financial statements included in this half yearly
financial report has been prepared in accordance with International
Accounting Standards 34 'Interim Financial Reporting', as adopted
by the European Union. The same accounting policies, presentation
and methods of computation are followed in the half yearly
financial report as applied in the group's latest annual audited
financial statements.
For the year ended 31 December 2017, the group adopted a number
of new standards and interpretations which are listed on page 79 to
80 of the 2017 Annual Report. The adoption of the new standards and
amendments included in this report have had no significant impact
on the financial statements of the group. Furthermore, at the date
of authorisation of the half yearly financial report there are a
number of standards and interpretations also listed on page 80 of
the 2017 Annual Report which were in issue but not yet effective.
As such these have not been applied with the exception that IFRS 9
"Financial Instruments" and IFRS 15 ""Revenue from contracts with
customers" became effective and have been adopted with effect from
1 January 2018 but have not had a material impact on the financial
statements included in this half yearly financial report. The
directors anticipate that the adoption of these standards and
interpretations in future periods will have no material impact on
the financial statements of the group except that IFRS 16 may have
an impact on the reported assets, liabilities, income statement and
cash flows of the group and require extensive disclosures.
Basis of preparation: Going concern
This financial information has been prepared on a going concern
basis which the directors believe to be appropriate. This
conclusion is based on, amongst other matters, a review of the
group's financial projections together with a review of the cash
and committed borrowing facilities available to the group.
At 30 June 2018 the medium-term banking facilities included a
revolving credit facility of up to GBP150.0 million and a term loan
totalling GBP70.0 million, providing total facilities of GBP220.0
million. These facilities are due for renewal on 31 March 2020.
3. SEGMENTAL REPORTING
At 30 June 2018 the group is organised into one business segment
being motor distribution.
Unaudited Motor
Six months Distribution Unallocated Group
ended 30 June 2018 GBPm GBPm GBPm
----------------------------------------- -------------- ------------ --------
Continuing operations
New Cars 1,310.7 - 1,310.7
Used Cars 996.3 - 996.3
Aftersales and other 269.5 - 269.5
----------------------------------------- -------------- ------------ --------
Revenue 2,576.5 - 2,576.5
----------------------------------------- -------------- ------------ --------
Segmental result 52.8 52.8
Profit from sale of property - 7.6 7.6
Amortisation of intangible assets - (2.7) (2.7)
Interest expense (8.1) (1.6) (9.7)
Share based payments - (0.9) (0.9)
Net interest and costs on pension
scheme obligation - (1.2) (1.2)
Debt issue costs - (0.2) (0.2)
----------------------------------------- -------------- ------------ --------
Profit before taxation 44.7 1.0 45.7
Taxation (7.2)
----------------------------------------- -------------- ------------ --------
Profit for the financial period
from continuing 38.5
operations attributable to shareholders
----------------------------------------- -------------- ------------ --------
Segmental assets 1,794.8 - 1,794.8
----------------------------------------- -------------- ------------ --------
Total assets 1,794.8 - 1,794.8
----------------------------------------- -------------- ------------ --------
Segmental liabilities 1,277.0 - 1,277.0
Unallocated liabilities
- Corporate borrowings - 102.4 102.4
Total liabilities 1,277.0 102.4 1379.4
----------------------------------------- -------------- ------------ --------
Unaudited Motor
Six months Distribution Unallocated Group
ended 30 June 2017 GBPm GBPm GBPm
----------------------------------------- -------------- ------------ --------
Continuing operations
New Cars 1,311.7 - 1,311.7
Used Cars 886.7 - 886.7
Aftersales and other 260.1 - 260.1
----------------------------------------- -------------- ------------ --------
Revenue 2,458.5 - 2,458.5
----------------------------------------- -------------- ------------ --------
Segmental result 58.1 - 58.1
Amortisation of intangible assets - (2.8) (2.8)
Interest expense (6.3) (1.6) (7.9)
Share based payments - (0.9) (0.9)
Net interest and costs on pension
scheme obligation - (1.7) (1.7)
Debt issue costs - (0.2) (0.2)
----------------------------------------- -------------- ------------ --------
Profit before taxation 51.8 (7.2) 44.6
Taxation (8.6)
----------------------------------------- -------------- ------------ --------
Profit for the financial period
from continuing
operations attributable to shareholders 36.0
----------------------------------------- -------------- ------------ --------
Segmental assets 1,866.9 - 1,866.9
----------------------------------------- -------------- ------------ --------
Total assets 1,866.9 - 1,866.9
----------------------------------------- -------------- ------------ --------
Segmental liabilities 1,361.5 - 1,361.5
Unallocated liabilities
- Corporate borrowings - 134.6 134.6
Total liabilities 1,361.5 134.6 1,496.1
----------------------------------------- -------------- ------------ --------
Motor
Year ended Distribution Unallocated Group
31 December 2017 GBPm GBPm GBPm
-------------------------------------- -------------- ------------ --------
Continuing operations
New Cars 2,476.8 - 2,476.8
Used Cars 1,702.7 - 1,702.7
Aftersales and other 516.8 - 516.8
Revenue 4,696.3 - 4,696.3
-------------------------------------- -------------- ------------ --------
Segmental result 84.7 - 84.7
Amortisation of intangible assets - (5.6) (5.6)
Interest expense (13.7) (2.9) (16.6)
Interest income 0.3 - 0.3
Share based payments - (1.7) (1.7)
Fair value on derivative instruments - 1.9 1.9
Net interest and costs on pension
scheme obligation - (4.2) (4.2)
Debt issue costs - (0.4) (0.4)
Profit before taxation 71.3 (12.9) 58.4
Taxation (10.5)
-------------------------------------- -------------- ------------ --------
Profit for the financial year
attributable to shareholders 47.9
-------------------------------------- -------------- ------------ --------
Segmental assets 1,895.6 1,895.6
Total assets 1,895.6 - 1,895.6
-------------------------------------- -------------- ------------ --------
Segmental liabilities
Unallocated liabilities 1,367.5 - 1,367.5
- Corporate borrowings - 143.1 143.1
-------------------------------------- -------------- ------------ --------
Total liabilities 1,367.5 143.1 1,510.6
-------------------------------------- -------------- ------------ --------
4. Dividend DECLARATION
An interim dividend of 1.48p per ordinary share is proposed
(2017: 1.41p per share).
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2018 2017 2017
p p p
--------------------------------------- ------------ ------------ --------
Ordinary dividend per share - paid in
period/year 2.48 2.36 3.77
--------------------------------------- ------------ ------------ --------
- proposed 1.48 1.41 2.48
--------------------------------------- ------------ ------------ --------
The interim dividend which will be paid gross of tax will be
paid on 23 November 2018. The ex-dividend date for the interim
dividend will be 18 October 2018 and the record date will be 19
October 2018. A dividend reinvestment plan is available where the
election date is 2 November 2018.
5. FINANCE costs - net
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2018 2017 2017
GBPm GBPm GBPm
--------------------------------------------- ------------ ------------ --------
Interest expense
On amounts wholly repayable within
5 years:
Interest payable on bank borrowings (3.8) (2.4) (4.9)
Interest on consignment vehicle liabilities
and stocking loans (5.9) (5.5) (11.7)
Interest and similar charges payable (9.7) (7.9) (16.6)
--------------------------------------------- ------------ ------------ --------
Interest income
Bank interest - - 0.3
--------------------------------------------- ------------ ------------ --------
Total interest receivable - - 0.3
--------------------------------------------- ------------ ------------ --------
Net interest (9.7) (7.9) (16.3)
--------------------------------------------- ------------ ------------ --------
6. earnings per share
The calculation of earnings per ordinary share is based on
profit on ordinary activities after taxation amounting to GBP38.5
million (2017: GBP36.0 million) and a weighted average of
396,427,270 ordinary shares in issue during the period (2017:
396,913,653). The diluted earnings per share is based on the
weighted average numbers of shares, after taking account of the
dilutive impact of shares under option of 15,122,090 (2017:
15,298,787). The diluted earnings per share is 9.35p (2017: 8.73p).
Adjusted earnings per share is stated before amortisation of
intangible assets, pension costs, debt issue costs, share based
payments and the property profit and is calculated on profits of
GBP35.9 million for the period (2017: GBP41.6 million).
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 Dec 2017
30 June 2018 30 June 2017
Earnings
Earnings Earnings per
Earnings per share Earnings per share Earnings share
GBPm p GBPm p GBPm p
------------------------------- --------- ----------- --------- ----------- --------- ---------
Adjusted earnings per share
Earnings attributable to
ordinary shareholders 38.5 9.71 36.0 9.07 47.9 12.06
Amortisation of intangible
assets 2.7 0.68 2.8 0.71 5.6 1.40
Net interest and costs
on pension scheme obligation 1.2 0.31 1.7 0.43 4.2 1.06
Profit on sale of property (7.6) (1.92) - - - -
Share based payments 0.9 0.23 0.9 0.23 1.7 0.43
Debt issue costs 0.2 0.06 0.2 0.05 0.4 0.10
Fair value on derivative
instruments - - - - (1.9) (0.48)
------------------------------- --------- ----------- --------- ----------- --------- ---------
Adjusted 35.9 9.07 41.6 10.49 57.9 14.57
------------------------------- --------- ----------- --------- ----------- --------- ---------
7. TAXATION
The tax charge for the period has been provided at the effective
rate of 19.0% excluding capital gains (2017: 19.3%) representing
the best estimate of the average annual effective tax rate expected
for the full year applied to the pre-tax income for the six month
period.
8. PENSIONS
The defined benefit obligation as at 30 June 2018 has been
calculated in a manner consistent with that used in the group's
latest annual audited financial statements. This is calculated as a
valuation update as at 30 June 2018 by a qualified independent
actuary to take account of the requirements of IAS19 (Revised).
Scheme liabilities have been calculated using a consistent
projected unit valuation method and compared to the schemes' assets
at their market value at 30 June 2018.
9. RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the group's performance over the
remaining six months of the financial year and could cause actual
results to differ materially from expected and historical results.
The Board believes these risks and uncertainties to be consistent
with those disclosed in pages 41 and 42 of our latest annual
report, including any impact from Brexit, general economic factors
such as oil prices, interest rates, manufacturers' influence and
stability.
10. INTERIM STATEMENT
The interim announcement was approved by the Board and will be
posted to shareholders in September 2018. Copies are also available
to the public at the registered office of the company at Lookers
House, 3 Etchells Road, West Timperley, Altrincham, WA14 5XS.
Responsibility Statement
We confirm that to the best of our knowledge
(a) The interim financial statements have been prepared in accordance
with IAS 34 'Interim Financial Reporting'.
(b) The interim financial statements include a fair review of the
information required by DTR 4.2.7R
(identification of important events during the first six months
and their impact on the condensed set of financial statements
and description of principal risks and uncertainties for the
remaining six months of the year); and
(c) The interim financial statements include a fair review of the
information required by DTR 4.2.8R
(disclosure of related parties' transactions and charges therein).
By order of the Board
Andy Bruce Robin Gregson
Chief Executive Chief Financial
Officer
15 August 2018 15 August 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GGUGPRUPRPGC
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