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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Lookers Plc | LSE:LOOK | London | Ordinary Share | GB00B17MMZ46 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 129.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMLOOK
RNS Number : 8104Y
Lookers PLC
08 March 2017
LOOKERS plc
Annual Results for the year ended 31 December 2016
RECORD PROFITS AND WELL POSITIONED FOR FUTURE GROWTH
Lookers plc, ("Lookers", "the company" or "the group"), one of the leading UK motor retail and aftersales service groups, announces its annual results for the year ended 31 December 2016.
Eighth successive year of turnover and profit growth
Hot Features
Premium
-- Revenue increased 17% to GBP4.3 billion (2015: GBP3.65 billion)
-- Profit before tax increased by 46% to GBP91.8 million (2015: GBP62.8
million) including an exceptional profit of GBP28 million on sale of
the parts division
-- *Adjusted profit before tax increased 7% to GBP77.1 million (2015:
GBP72.1 million)
-- *Adjusted operating profit increased 10% to GBP94.7 million (2015:
GBP85.9 million)
-- Earnings per share up 59.2% at 20.51p (2015: 12.88p)
-- *Adjusted earnings per share up 4% at 15.87p (2015: 15.24p)
Total dividend up by 17%
-- Proposed final dividend of 2.36p per share - total dividend per share
up 17% at 3.64p (2015: 3.12p)
Structural change to focus on growth
-- Parts division sold for GBP126 million in November 2016
-- Strategically important acquisitions of Knights BMW/MINI and Drayton
Mercedes-Benz completed - both now successfully integrated
-- Disposal of ten underperforming dealerships
-- Focused on the completion of future acquisitions of the right brands
in the right locations in the motor division - with the balance sheet
strength to do so - to deliver increased shareholder value
Investment in the customer experience
-- Continued investment in the multi-channel customer experience, especially
the website, driving significant increases in visitor and enquiry levels;
and
-- New website to be launched in 2017 to enhance operational efficiencies
further
Visibility of demand and positive current trading
-- Growth in new car market in recent years underpins continued demand,
as number of cars under three years old continues to rise; and
-- Good start to the current financial year, and a healthy order book
for the delivery of new cars in March 2017
Andy Bruce, Chief Executive of Lookers, said:
"I am pleased to announce an excellent set of year end results. Our profit is at record levels and has increased for the eighth consecutive year - evidence of both an expansive and a resilient business model. We know our strategy of having the right brands in the right locations and excellent execution is the right one - and during the year we've managed our portfolio of dealerships to reflect that.
Generating shareholder value through acquisitions is one of the things we do best. We will be making more acquisitions and have the balance sheet strength to do so. We've made a good start to the current financial year and have a healthy order book for the delivery of new cars in the important month of March. Our strategy of acting as a consolidator - and growing organically - leaves us ideally placed for growth and increased earnings in 2017 and beyond."
If you would like to attend the analyst briefing today at 9.30am please contact: lookers@bellpottinger.com
Alternatively, details of the conference call at the same time are:
United Kingdom (Local): 020 3059 8125
All other locations: + 44 20 3059 8125
Participant Access Code: Lookers plc Preliminary Announcement
(*Adjusted operating profit is operating profit before amortisation and impairment of intangibles, exceptional items and share based payments. Adjusted profit is profit before amortisation and impairment of intangible assets, debt issue costs, pension costs, exceptional items and share based payments)
Enquiries:
Lookers Today: 020 3772 2500 Andy Bruce, Chief Executive Officer Thereafter: 0161 291 0043 Robin Gregson, Chief Financial Officer Bell Pottinger Tel: 020 3772 2500 Victoria Geoghegan Nick Lambert Zara de Belder
STRATEGIC AND OPERATIONAL REVIEW
BUSINESS MODEL AND STRATEGY
Business model
With group turnover of GBP4.3 billion in 2016, Lookers is one of the leading motor retail and aftersales groups in the UK. We sell over 210,000 new and used cars and light commercial vehicles. Our operations are across the UK and Ireland, with a presence in most of the major population centres. Until 4 November 2016, when the parts division was sold, the group operated through two distinct divisions, the motor division and the parts division. Details of each division are explained below.
Motor division
The motor division consists of 160 franchised dealerships representing 33 marques from 102 locations. The business generates revenue from the sale of new and used cars, vans and aftersales activities.
The number of new cars sold per annum in the UK has varied between 2.1 million and 2.69 million during the past five years. Our share of the retail sector of this market is 5.5%.
The size of the UK new car market increased by 2.3% in 2016 to 2.69 million cars, its highest ever level. The new car market has two principal sectors, each of which represents approximately 50% of the market.
The retail sector represents sales to individual customers and the fleet sector provides sales to corporate customers. Retail sales are generally at higher margins whilst fleet sales consume significantly higher levels of working capital.
The used car market in the UK has annual transactions of approximately 8 million vehicles, of which franchised dealers represent approximately 50%. There continues to be a major opportunity for Lookers to increase volumes in this part of the market.
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 34 million vehicles with 22% (7.5 million) under three years old. This is the predominant market for franchised motor dealers.
The internet continues to be the primary means for our customers to research and determine which new or used cars they are interested in buying. Our website and digital marketing channels are therefore a very important part of our business and customer service offering. We continue to invest in and develop these channels in order to meet the needs of our growing customer base.
Parts division
On 4 November 2016, our parts division was sold to Alliance Automotive UK Ltd for GBP126 million. The rationale for the sale of the parts division is explained in the business review.
Business strategy
Our strategy is to have the right brands and locations alongside excellent execution. Underpinning this strategy is our commitment to providing an outstanding retail experience.
We deliver on our strategy by operating a diverse business in the UK motor sector, supported by a variety of manufacturing partners across various geographies. This helps reduce our exposure to anomalies or fluctuations in demand, which may affect specific manufacturers or geographic locations.
We aim to grow the existing business through a combination of organic growth, seeking opportunities to increase our revenue and presence, whilst actively pursuing an earnings-enhancing acquisitive strategy. Our track record of successful acquisitions makes this a significant differentiator for us, as we generate an average ROI in the range of over 15% on acquisitions made in recent years.
Another key differentiator is the service and experience we offer to our customers. We aim to provide the highest standards of customer experience in the sector by continually investing in and improving three key areas of our business:
-- People: Attracting, nurturing and retaining the best people and empowering
them to deliver a genuine and personalised experience;
-- Technology: Striving in an omni-channel retail environment to provide
a seamless customer experience, allowing customers to engage with us
whenever and wherever they choose to;
-- Brand: Developing our brand proposition to enhance our reputation with
our customers, employees, suppliers and shareholders
Our eighth successive year of profit growth highlights the strength of our strategy and demonstrates that our sub-sector and business model are no more overly exposed to the economic cycle than general retailers.
The group's business activities, financial condition, results of operations or the company's share price could be affected by certain principal risks or uncertainties which are included in the governance section of the 2016 annual report and accounts.
BUSINESS REVIEW
SUMMARY OF FINANCIAL AND NON FINANCIAL KPIS:
Financial 2016 2015 ------------------------------- ---------- ---------- Turnover GBP4,282m GBP3,649m ------------------------------- ---------- ---------- Gross Profit GBP504.2m GBP452.2m ------------------------------- ---------- ---------- Gross margin 11.8% 12.4% ------------------------------- ---------- ---------- Operating profit GBP94.7m GBP85.9m ------------------------------- ---------- ---------- Operating margin 2.2% 2.4% ------------------------------- ---------- ---------- *Adjusted profit before tax GBP77.1m GBP72.1m ------------------------------- ---------- ---------- * Adjusted net margin 1.8% 2.0% ------------------------------- ---------- ---------- * Adjusted earnings per share 15.87p 15.24p ------------------------------- ---------- ---------- Net debt GBP74.1m GBP161.7m ------------------------------- ---------- ----------
Gearing 22% 54% ------------------------------- ---------- ---------- Net debt to EBITDA 0.69 1.61 ------------------------------- ---------- ---------- Return on capital employed 22.6% 24.2% ------------------------------- ---------- ---------- Non-financial ------------------------------- ---------- ---------- UK new car market 2.69m 2.63m ------------------------------- ---------- ---------- Group new car sales 101,931 90,009 ------------------------------- ---------- ---------- Share of UK new car retail 5.5% 4.7% ------------------------------- ---------- ---------- Group used car sales 81,387 70,492 ------------------------------- ---------- ---------- Group employees 7,872 7,287 ------------------------------- ---------- ----------
Performance
I am very pleased to report another strong year for the company with our eighth successive year of profit growth generating *adjusted profit before tax of GBP77.1 million (2015: GBP72.1 million), an increase of 7%. This result has been achieved during a period in which volumes in the UK new car market improved to their highest ever level. It also represents a great achievement in what has been a year of significant change and reorganisation for the company with the sale of the parts division, the major acquisitions of Knights BMW and MINI as well as Drayton Mercedes-Benz. We also reviewed and realigned our franchise representation with the sale of ten dealerships where the financial performance was either loss making or provided a limited profitability.
This result demonstrates a significant achievement and provides further evidence that our business model is both resilient and expansive. The motor division delivered another excellent trading performance during the year with an increase in profit before tax of 7.3% to GBP69.2 million, compared to GBP64.5 million last year.
The parts division made positive progress and produced a good result for the ten months of the year that it was part of the group, with a profit before tax of GBP12.1 million. This compares to GBP12.6 million last year, for a full twelve month period.
The key elements of our performance were:
-- A significant increase in new car turnover and gross profit; -- Further growth in used car turnover and gross profit; -- Improvement in both aftersales turnover and margin; and -- Improved profitability in the parts division
This growth has been encouraging and gives us further confidence in our ability to grow the business in 2017, as we believe that both the used and new car markets are likely to be stable this year. The growth in the new car market over recent years will continue to increase demand for aftersales and parts, as the number of cars under three years old continues to rise. This should provide significant opportunities for further growth in both these sectors of the market where Lookers, as a leading company in the industry, benefits from economies of scale, the skills of our people and our ability to invest in improved technology.
(*Adjusted profit is profit before amortisation and impairment of intangible assets, debt issue costs, pension costs, exceptional items and share based payments)
Sale of the parts division
As referred to above, a major event of the year was the sale of the parts division to Alliance Automotive Ltd UK ("Alliance Automotive"). On 10 August 2016 we announced that the company had entered into a conditional agreement to sell the parts division to Alliance Automotive. This was subject to clearance from the EU competition commission and subsequently completed on 4 November and a total consideration of GBP126 million was received. The GBP28.0 million profit on the sale of the parts division has been included in the accounts as an exceptional profit.
This disposal, which was at a price that the Board believed to be attractive, provided the group with an opportunity to refine its strategy on buying and selling cars in our motor retail division and adding value through acquisitions. The sale proceeds will be used to pursue acquisitions in the motor division over the short and medium-term, two of which were completed during the second half of 2016.
Given the group's proven track record of delivering successful acquisitions in recent years, the board is confident of acquiring further businesses in the motor division, which we believe will deliver an increase in shareholder value over the medium term.
OPERATING REVIEW
MOTOR DIVISION
I am pleased to report that the motor division increased turnover by GBP658 million to GBP4.1 billion and profit before tax by 7.3% to GBP69.2 million, compared to GBP64.5 million last year. The acquisitions of Knights BMW/MINI and Drayton Mercedes-Benz made a good contribution to the increase in turnover but it was also pleasing to see organic growth in turnover of GBP527 million, with acquisitions contributing GBP131 million of the total increase.
Acquisitions and portfolio management
2016 has been a year of transformation for the motor division, with highlights of the year being the acquisition of Knights on 22 August and Drayton on 4 November 2016. Both of these were strategically important and major transactions for the company. Knights was acquired for GBP26.6 million and represents BMW and MINI from six dealerships in Stoke, Stafford and Crewe and it was also a major milestone in introducing both these prestige brands to the company's portfolio.
Drayton was acquired for GBP56.3 million and represents Mercedes-Benz and Smart from seven locations in Stoke on Trent, Stafford, Shrewsbury, Wolverhampton, Walsall, Stourbridge and Worcester. The acquisition complements our existing Mercedes-Benz and Smart businesses in Kent and Sussex. This has increased our partnership with these brands and the combined business will have an annual turnover of more than GBP600m and has established us as the leading retailer for Mercedes-Benz and Smart in the UK.
Both these acquisitions have been successfully integrated during the year and will make a further positive contribution in 2017. I am delighted to welcome our new colleagues from Knights and Drayton to Lookers.
We also carried out a strategic review of our brand representation during the year. Our strategy is to have a meaningful representation of the major automotive brands in the larger areas of population in the UK. As part of this review, we decided to relinquish some of our franchise representation of dealerships. This would ensure that all our dealerships were aligned with our strategy and could generate meaningful profits in the future. Following this review we have sold or closed ten businesses and this, together with the two acquisitions, has significantly improved and strengthened the balance of our portfolio of franchise representation.
New Cars
The UK new car market increased by 2.3% to 2.69 million cars in the year, with the new car retail market being essentially flat, with a reduction of 0.2% compared to 2015. The fleet market showed positive growth and increased by 4.3%. Our total new car turnover increased by 20% year-on-year, or 10% on a like-for-like basis.
We have continued to put more focus and investment into the fleet sector and our fleet turnover, including commercial vehicles, increased by 16%, or 13% on a like-for-like basis. The fleet sector is a significant part of the market and is a major profit opportunity, providing scope for organic growth given our lower market share compared to our retail business. Despite this increase in volumes, we have continued to target quality fleet sales and avoid very low margin business. To facilitate this, we continue to make the necessary investment in people with the specialist skills, relationships and reputation in the sector, as well as investing in systems and facilities to process higher volumes.
Gross profit from new cars increased by 11% year-on-year. Whilst new car market conditions were favourable during the first six months of the year, they were less buoyant in the second half. However, the new car market continues to be relatively healthy into 2017 with our order take for the important month of March continuing to build in line with our expectations. Industry forecasts suggest that the new car market will show a 5% reduction this year, although in recent years, these forecasts have been outperformed with volumes being higher than forecast.
Therefore, we have a more optimistic view and believe that the market is likely to be a similar level to 2016. As this was the highest market ever, the outlook for new cars is still positive and is an opportunity for us to increase market share.
Used Cars
Turnover of used cars increased by 19%, or 7% on a like-for-like basis, compared to 2015. Gross profit increased by 17%, or 7% on a like-for-like basis. This is a positive performance given our used car volumes have increased significantly over the last four years. We continue to focus on stock management and sourcing good quality used cars, both of which help to improve profitability.
The used car market still represents a significant opportunity for the group and this will benefit from the increasing number of leads generated by the group's website, which have increased by 25% compared to last year. We have seen significant increases in our online visitor and enquiry levels from our improved and responsive website which was launched last year. We plan to develop the website further in order to continue to drive momentum in our online offering.
Aftersales
As well as improving the margin, our high margin aftersales business increased gross profit by 18%, or 9% on a like-for-like basis compared to 2015, with the margin being maintained at a similar level to last year. The increased profitability has benefitted from the growth in the vehicle parc of cars under three years old and is also due to the initiatives we have made in recent years to develop the aftersales business, with an increased emphasis on performance and specific targets being introduced to improve profitability. We continue to have great success in improving penetration of an increasing proportion of customers who choose to enter into service contracts, which improves customer loyalty and retention.
We have also developed further initiatives to improve the aftersales business, particularly in relation to technology and systems. In this area, we are focussed on improving the customer experience to improve retention levels.
Developing our retail environment
We have previously announced that the group is committed to developing the customer journey through a significant programme of further capital investment planned for the next three years.
This programme will ensure that our entire dealership estate represents the best in class in modern motor retailing. We also announced that we were making a significant investment in our multi-channel customer experience concept.
The internet and our website play a critical and important part of the customer journey, influencing how our customers research vehicles before they enter the showroom. Our in-house digital marketing team now covers all digital marketing activities and the latest version of a new, much improved and fully responsive website, which was launched during the previous year, has resulted in a significant increase in our visitor and enquiry levels. To continue with this momentum we are making further major developments to our website and a new website will be launched later this year. This will result in exciting improvements in functionality and interaction with our customers. Our aim is to produce an industry-leading website, which will improve the customer experience, and ultimately increase sales and profitability.
Good progress has been made during the year and we are introducing new systems which will improve the customer experience further. This will also result in greater operational efficiencies. We believe this will enable us to provide an industry leading customer experience and give us a significant competitive advantage and improved profitability.
Customer experience
Our goal is to be recognised as providing the best customer experience in the UK motor retail sector. We conduct extensive customer research to monitor feedback as we appreciate that customers have high expectations and increasingly more access to detailed product information themselves. We also continue to invest in our technology through new and improved systems.
Our people
Our people are the key to help us to deliver our strategy and provide a first class customer experience. We continue to invest in our people with a new training and development programme, including induction training for all new recruits as well as further improvements to our structured and formal management development programme. We have also made significant enhancements to the holidays and benefits for our people so that we can now offer the most attractive employment prospects in our sector. Our aim is to be the best place to work in our industry so that we can attract and retain the best people to achieve enhanced levels of customer satisfaction and help us become the best in the UK motor retail sector. It was therefore a great achievement for our progress in this important area to be recognised when we were the only motor retailer to be awarded the exclusive Top Employers United Kingdom 2017 certification. This is a symbol of our commitment to building a positive employee experience and of our commitment to optimise, develop and work with all our people to build a meaningfully and noticeably different experience for them and our customers.
PARTS DIVISION
Against a background of an improving, but competitive market our independent parts division made good progress in the period with increases in both turnover and profit compared to the prior year. Turnover for the division in the ten months prior to the sale, increased by GBP4.0 million, up 2% on the prior year, as the business continued to expand by investment in existing and new product lines.
Operating margins improved slightly compared to the prior year and careful control of overheads resulted in a 9% increase in profit before tax compared to GBP11.2 million in the same period last year. This was a good result for the division in the ten month period and we wish all our colleagues in the parts division every success for the future under their new ownership.
FINANCIAL REVIEW
GROUP RESULTS
Turnover increased by 17% to GBP4.3 billion (2015: GBP3.65 billion), with strong growth from new and used cars. The acquisitions of Knights and Drayton contributed GBP131 million of turnover following their acquisition in August and November. Gross profit of GBP504 million increased by GBP52 million compared to the previous year, with the growth coming from new and used cars as well as GBP14.5 million from acquisitions. The gross margin of 11.8% was slightly lower compared to the prior year of 12.4%, due to a greater proportion of gross profit coming from the increased volume of car sales, which have a lower percentage margin than parts and aftersales.
The operating margin was slightly lower than last year at 2.2% (2015: 2.4%). *Adjusted profit from operations increased by 10% to GBP94.7 million (2015: GBP85.9 million).
Net interest costs increased by 27.5%, to GBP17.6 million (2015: GBP13.8 million) due to interest on pursuing our acquisitive strategy, including the acquisition cost of Benfield last year and interest incurred in the Benfield business. Higher levels of working capital, a large proportion of which were due to the acquisitions, were also a factor contributing to the higher interest charge.
Interest on group borrowings is based on floating interest rates together with interest rate hedges, where we have GBP30 million of hedges which were established in 2007 at an average rate of 5.1%, when interest rates were significantly higher than current levels. These increase the total interest charge so that we do not get the full benefit of the low UK base rate which has now been applicable for nine years.
Key financial highlights are summarised below:
-- *Adjusted profit before tax for the year increased by 7% to GBP77.1
million, from GBP72.1 million last year, which is the highest trading
result to date for the company;
-- Profit before tax was GBP91.8 million compared to a profit before tax
in the previous year of GBP62.8 million, an increase of 46%. This includes
net exceptional income of GBP23.3m which is explained in further detail
below;
-- Profit after tax was GBP81.3 million, an increase of 60% compared to
GBP50.8 million in 2015; and
-- Earnings per share increased by 59.2% to 20.51p compared to 12.88p
in the prior year and *adjusted earnings per share of 15.87p compared
to 15.24p in the prior year, an increase of 4.1%.
(*Adjusted profit is profit before amortisation and impairment of intangible assets, debt issue costs, pension costs, exceptional items and share based payments)
TAXATION
The tax charge for the year of is GBP10.5 million (2015: GBP12 million) and reflects a charge of 11.4% of profit before tax. This is significantly lower than the standard rate of Corporation Tax for the year of 20%. This is due to two factors: the first is the reduction in the deferred tax liability due to a future reduction in the rate of Corporation tax to 17%. This creates a one off benefit of approximately GBP4 million which is reflected in the current year tax charge.
The second relates to the taxation of the sale of the Battersea property in last year's accounts where Corporation Tax of GBP3.4m was provided. This is subsequently not required as the gain on the sale of the property is covered by roll over relief and the tax provision reversed this year, which reduced this year's tax charge by GBP3.4m.
EXCEPTIONAL ITEMS
Exceptional items in the year consist of the following and there has been a significant level of exceptional profit included in profit before tax which predominantly relates to the sale of the parts division in the year.
2016 2015
-------------------------------- ----------- -----------
GBPmillion GBPmillion
-------------------------------- ----------- -----------
Profit on sale of the parts 28.0 -
division
-------------------------------- ----------- -----------
Net refund of VAT claim 4.8 -
-------------------------------- ----------- -----------
Profit on the sale of property - 18.1
-------------------------------- ----------- -----------
Property write downs - (11.4)
-------------------------------- ----------- -----------
Terminated businesses (9.1) (1.7)
-------------------------------- ----------- -----------
Transaction costs (0.4) (0.6)
-------------------------------- ----------- -----------
Reorganisation costs - (2.7)
-------------------------------- ----------- -----------
Total exceptional income 23.3 1.7
-------------------------------- ----------- -----------
Tax charge on exceptional (3.7) -
items
-------------------------------- ----------- -----------
Total exceptional income
after tax 19.6 1.7
-------------------------------- ----------- -----------
The loss on terminated businesses relates to the strategic review of our brand representation during the year, as described in the operating review where we relinquished dealerships which did not fit our strategy.
CASH FLOW
Cash generated from operations for the year was a large increase compared to the prior year at GBP140.9 million (2015: GBP67.9 million). Net working capital reduced by GBP33.3 million (2015: increase of GBP32.7 million). Stock increased by GBP23.4 million but this was more than offset by positive movements in debtors which reduced by GBP27.6 million and creditors which increased by GBP93.2 million.
Capital expenditure was GBP36.3 million (2015: GBP35.2 million) with proceeds from the sale of properties and dealership businesses of GBP28.9 million (2015: GBP9.8 million), including GBP9.1 million for the parts division properties. Net capital expenditure was therefore GBP7.4 million (2015: GBP25.4 million). The majority of capital expenditure was on new or improved premises for dealerships and the increase compared to the previous year reflects our ongoing commitment to improve our retail premises so they reflect modern and state of the art facilities, as we signalled in our annual report last year.
As referred to in the Strategic and Operational Review, expenditure on acquisitions during the year relates to the acquisitions of Knights on 22 August 2016 for a cash consideration of GBP26.6 million and Drayton on 4 November 2016 for a cash consideration of GBP56.3 million. The sale of the parts division on 4 November 2016 resulted in gross sale proceeds of GBP126 million, including GBP9.1 million for the freehold properties used in the business.
The strong operational cash flow allowed us to make further reductions in bank loans where loan repayments of GBP10.2 million were made during the year compared to GBP11.8 million last year. New loans of GBP14.0 million relate to the loans acquired with the Knights business which were funding the freehold properties. We had intended to lease these properties as the interest rate on the loans was significantly above the market rate. However, we negotiated a reduction in the interest rate and it was therefore sensible to retain these loans at the reduced rate of interest.
Net debt reduced by GBP87.6 million due to the strong operational cash flow but also as a result of the proceeds from the sale of the parts division exceeding the amount spent on the acquisitions of Knights and Drayton. This reduction in net debt resulted in net borrowings of GBP74.1 million at 31 December 2016 compared to GBP161.7 million at the start of the year, net debt being calculated as gross bank borrowings less cash balances.
BANK FUNDING
Our bank facilities were renewed and increased on 2 September 2015, at the time of and to fund the acquisition of Benfield. The facilities were also extended for two years to March 2020 and were agreed with a group of six banks: Bank of Ireland, Barclays, HSBC, Lloyds, RBS and Yorkshire Bank. The facilities consisted initially of a term loan of GBP100 million, which has since reduced to GBP85.0 million and a revolving credit facility of GBP150 million.
There is also the potential to increase the term loan by up to an additional GBP30 million to fund future acquisitions. Interest is charged on both loans at a margin of between 1.2% and 2.15% above LIBOR, depending on the ratio of net bank debt to EBITDA. These facilities are subject to half yearly covenant tests on interest cover and net bank debt to EBITDA. The covenant tests are set at levels that provide sufficient headroom and flexibility for the group until maturity of the facilities in March 2020.
At 31 December 2016, total facilities were GBP235.0 million (2015: GBP245.0 million) of which GBP74.1 million, net of cash balances, was being utilised, leaving unutilised facilities of GBP160.9 million. These bank facilities, together with the group's strong operational cash flow, indicate that the group has sufficient facilities available to fund its operations and allow for future expansion. At 31 December 2016, gearing was 22% compared to 54% at 31 December 2015 and net debt to EBITDA was 0.69 compared to 1.61 last year. The group's underlying profitability and strong cash flow should result in further reductions in borrowing in the future and help ensure that the level of borrowing remains under control and is at a reasonable level in relation to net assets.
PROPERTY PORTFOLIO
The group has a policy of investing in freehold and long leasehold property as the preferred means of providing premises for our car dealerships, where possible. As a result, we have a significant and valuable portfolio of freehold and long leasehold properties, where the net book value at 31 December 2016 was GBP287.7 million compared to GBP252.4 million last year. Short leasehold properties had a value of GBP4.6 million (2015: GBP5.9 million).
DIVIDS
In our interim report, we indicated that due to the encouraging results and strong financial position of the group, the interim dividend would be increased by 20% to 1.28p per ordinary share and this was paid on 25 November 2016. We are now proposing a 15% increase in the final dividend to 2.36p per share (2015: 2.05p), giving a total dividend for the year ended 31 December 2016 of 3.64p per share (2015: 3.12p), representing an annual increase of 17%.
The dividend has now increased by over 100% compared to the dividend payable for the year ended 31 December 2010 and continues our policy of increasing the dividend provided there is satisfactory growth in profitability.
The increase in the total dividend this year recognises that the dividend cover has risen significantly due to the continued increase in profits of recent years. The board has taken the decision 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 whist retaining sufficient cash flow to fund future expansion in terms of both organic growth and acquisitions.
The final dividend of 2.36p per share is subject to shareholder approval at the Annual General Meeting and will be payable on 31 May 2017. The ex-dividend date will be 4 May 2017 and the record date will be 5 May 2017. This will represent a cash outflow of GBP9.3 million, which gives a total dividend for the year of GBP14.4 million (2015: GBP12.3 million). Dividends paid in cash during the year were GBP13.2 million, an increase of 13.8% compared to the previous year.
PENSION SCHEMES
The group has operated two defined benefit pension schemes for a number of years, The Lookers Pension Plan and The Dutton Forshaw Pension Plan. We also acquired another defined benefit pension scheme with the acquisition of Benfield. However, the Benfield scheme is reasonably well funded and there is a modest surplus of GBP0.4m in the 2016 accounts in relation to the Benfield pension scheme. All three schemes are closed to entry for new members and also closed to future accrual. Whilst the asset values of the Lookers and Dutton Forshaw schemes have increased by GBP26.6 million during the year, the valuation of the liabilities has increased by GBP49.7 million due to the significant reduction in the yield of UK Government bonds, following the EU referendum.
As a result, the net deficit included in the balance sheet increased by GBP23.1 million, although there is a deferred tax asset which reduces this by GBP3.9 million. However it is important to appreciate that the assessment of valuation of the pension schemes is based on several key assumptions prescribed by accounting standards and over which the directors have no control. As a result, the calculation which estimates the potential liabilities of the schemes can increase or decrease the liabilities due to factors that have no relation or relevance to the trading results of the group.
The impact of these factors is that the combined value of the deficits of both schemes increased in the year and the total deficit after deferred tax is now GBP65.1 million (2015: GBP44.2 million). Relatively small changes in the bases of valuation can have a significant effect on the calculated deficit hence the movement in the calculated deficit can be subject to high levels of volatility. The board continues to look at its options to reduce both the annual cost of operating both schemes and what actions can be taken to reduce the deficit on the schemes, thereby reducing exposure to movements in these liabilities and reducing the deficit over the medium and longer term.
OUTLOOK
2016 was a transformational year for the company with a healthy increase in profit, the sale of the parts division and the acquisition of Knights and Drayton. Our strategy of having the right brands in the right locations with excellent execution leaves us ideally placed to continue our growth of the last eight years. The group has made a good start to the current financial year and we have a healthy order book for the delivery of new cars in the important month of March. Our used car volumes continue to show growth and aftersales continues to perform well. We therefore expect the result for the first quarter to be in line with management's expectations.
Whilst the new car market achieved a record level in 2016, we believe it will be relatively stable in 2017 and this is also likely to apply to the used car market. The continuing increase in the vehicle parc of cars less than three years old provides further opportunities for us to increase revenue in the high margin aftersales sector. However, there is still uncertainty resulting from the process and timing for the UK to leave the EU. Whilst we have not yet noticed any significant difference in customer behaviour, particularly for orders of new and used cars, we have to remain aware of consumer confidence levels and the Pound-Euro exchange rate, both of which could have an impact on our business.
The company has achieved outstanding growth in recent years, with the 2016 profit being twice that compared to 2012. We believe the significant investment we are making in upgrading our facilities and enhancing our multi-channel customer experience gives us a competitive advantage, strengthening our position as a leading UK motor retail and aftersales service group.
The group balance sheet has been strengthened by strong operational cash flow and we have substantial headroom in our bank facilities with both net debt and net debt to EBITDA being at relatively low levels. 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 important acquisitions of Knights and Drayton should also make a greater contribution this year and as in previous years, we are continuing to look to acquire high quality businesses which will complement our existing franchise representation. Our track record of successfully integrating acquisitions and turning around performance is a significant differentiator for Lookers and these factors, together with the broad base of our franchise representation, leave us very well positioned for the future. We are therefore confident of the group delivering further growth in 2017.
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 yet again deliver another excellent result for the eighth successive year.
Andy Bruce
Chief Executive
8 March 2017
Consolidated Income Statement
For the year ended 31 December 2016
Continuing Discontinued Total Continuing Discontinued Total
Operations Operations 2016 Operations Operations 2015
GBPm GBPm GBPm GBPm GBPm GBPm
Note
Revenue 4,088.2 193.5 4,281.7 3,430.3 218.8 3,649.1
Cost of sales (3,638.7) (138.8) (3,777.5) (3,039.6) (157.3) (3,196.9)
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Gross profit 449.5 54.7 504.2 390.7 61.5 452.2
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Distribution costs (254.5) (27.8) (282.3) (217.4) (33.2) (250.6)
Administration Expenses (94.2) (14.7) (108.9) (105.2) (15.8) (121.0)
Other operating income 0.5 - 0.5 0.5 - 0.3
Profit from operations 101.3 12.2 113.5 68.6 12.5 80.9
Profit from operations
before amortisation,
share based payments,
impairment of goodwill
and exceptional items 82.5 12.2 94.7 73.4 12.5 85.9
Amortisation of intangible
assets (1.7) - (1.7) (1.6) - (1.6)
Impairment of goodwill (1.0) - (1.0) (3.6) - (3.6)
Share based payments (1.8) - (1.8) (1.5) - (1.5)
Exceptional items 23.3 - 23.3 1.7 - 1.7
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Profit from operations 101.3 12.2 113.5 68.4 12.5 80.9
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Interest payable 4 (17.6) - (17.6) (14.1) - (14.1)
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Interest receivable 4 - - - 0.3 - 0.3
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Net interest (17.6) - (17.6) (13.8) - (13.8)
Net interest on pension
scheme obligation (3.7) - (3.7) (3.9) - (3.9)
Debt issue costs (0.4) - (0.4) (0.4) - (0.4)
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Profit on ordinary
activities
before taxation 79.6 12.2 91.8 50.3 12.5 62.8
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Profit before taxation,
amortisation, exceptional
items, debt issue costs,
pension costs, impairment
of goodwill and share
based payments 64.9 12.2 77.1 59.6 12.5 72.1
Amortisation of intangible
items (1.7) - (1.7) (1.6) - (1.6)
Share based payments (1.8) - (1.8) (1.5) - (1.5)
Net interest and costs
on pension scheme
obligation (3.7) - (3.7) (3.9) - (3.9)
Exceptional items 23.3 - 23.3 1.7 - 1.7
Impairment of goodwill (1.0) - (1.0) (3.6) - (3.6)
Debt issue costs (0.4) - (0.4) (0.4) - (0.4)
Profit on ordinary
activities
before taxation 79.6 12.2 91.8 50.3 12.5 62.8
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Tax charge (7.9) (2.6) (10.5) (9.4) (2.6) (12.0)
Profit for the year 71.7 9.6 81.3 64.9 9.9 50.8
Attributable to:
Shareholders of the company 71.7 9.6 81.3 64.9 9.9 50.8
Earnings per share
Basic earnings per share 5 20.51 12.88
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Diluted earnings per
share 5 20.10 12.58
----------------------------- ----- ------------ ------------- ---------- ------------ ------------- ----------
Consolidated Statement of Comprehensive Income
2016 2015
GBPm GBPm
--------------------------------------------- ------- -------
Profit for the financial year 81.3 50.8
---------------------------------------------- ------- -------
Items that will never be reclassified
to profit and loss:
Actuarial (losses)/gains recognised
in post-
retirement benefit schemes (27.2) (2.1)
Movement in deferred taxation on pension
liability 4.1 0.6
Tax rate adjustment (0.5) (0.4)
Items that are or may be reclassified
to profit and loss:
Fair value on derivative instruments (2.0) -
Movement in deferred taxation on derivative
instruments (0.8) 1.1
---------------------------------------------- ------- -------
Other comprehensive (expense)/income
for the year (26.4) 0.8
---------------------------------------------- ------- -------
Total comprehensive income for the
year 54.9 50.0
---------------------------------------------- ------- -------
Attributable to:
--------------------------------------------- ------- -------
Shareholders of the company 54.9 50.0
---------------------------------------------- ------- -------
Consolidated Statement of Financial Position
As at 31 December 2016
2016 2015
GBPm GBPm
---------------------------------- -------- --------
Non-current assets
Goodwill 107.6 96.4
Intangible assets 109.8 61.9
Property, plant and equipment 319.1 282.9
536.5 441.2
---------------------------------- -------- --------
Current assets
Inventories 839.4 816.0
Trade and other receivables 225.0 252.6
Rental fleet vehicles 67.1 67.0
Cash and cash equivalents 39.8 8.3
1,171.3 1,143.9
---------------------------------- -------- --------
Total assets 1,707.8 1,585.1
----------------------------------- -------- --------
Current liabilities
Bank loans and overdrafts 25.1 83.4
Trade and other payables 1,087.5 982.8
Current tax liabilities 14.7 13.8
Short-term provisions - 0.6
Derivative financial instruments 3.0 4.8
----------------------------------- -------- --------
1,130.3 1,085.4
---------------------------------- -------- --------
Net current assets 41.0 58.5
Non-current liabilities
Bank loans 88.8 86.6
Trade and other payables 33.6 34.1
Retirement benefit obligations 78.4 55.3
Deferred tax liabilities 35.0 25.2
Long-term provisions - 0.7
----------------------------------- -------- --------
235.8 201.9
---------------------------------- -------- --------
Total liabilities 1,366.1 1,287.3
----------------------------------- -------- --------
Net assets 341.7 297.8
----------------------------------- -------- --------
Shareholders' equity
Ordinary share capital 19.8 19.8
Share premium 77.7 77.7
Capital redemption reserve 14.6 14.6
Retained earnings 229.6 185.7
----------------------------------- -------- --------
Total equity 341.7 297.8
----------------------------------- -------- --------
Consolidated Cash Flow Statement
For the year ended 31 December 2016
2016 2015
GBPm GBPm
---------------------------------------------------------------- ------- --------
Cash flows from operating activities
Profit for the year 81.3 50.8
Adjustments for:
Tax 10.5 12.0
Depreciation 21.5 16.7
Profit on disposal of plant and equipment - 0.6
Profit on disposal of rental fleet vehicles (0.2) (0.4)
Profit on disposal of business (28.0) -
Amortisation of intangible assets 1.7 1.6
Share based payments 1.8 1.5
Interest income - (0.3)
Interest payable 17.6 14.1
Debt issue costs 0.4 0.4
Impairment of goodwill 1.0 3.6
Changes in working capital
Increase in inventories (23.4) (267.2)
Decrease/(increase) in receivables 27.6 (73.2)
Increase in payables 93.2 289.9
Impact of net working capital from discontinued
business (70.2) -
Impact of net working capital of acquisitions 6.1 17.8
---------------------------------------------------------------- ------- --------
Cash generated from operations 140.9 67.9
Difference between pension charge and
cash contributions (7.1) (6.8)
Net interest and costs on pension scheme
obligation 3.7 3.9
Purchase of rental fleet vehicles (93.7) (83.2)
Proceeds from sale of rental fleet vehicles 87.4 76.2
Interest paid (17.6) (14.1)
Interest received - 0.3
Tax paid (14.2) (11.3)
---------------------------------------------------------------- ------- --------
Net cash inflow from operating activities 99.4 32.9
---------------------------------------------------------------- ------- --------
Cash flows from investing activities
Acquisition of subsidiaries (92.6) (104.4)
Purchase of property, plant and equipment (36.3) (35.2)
Purchase of intangibles (9.2) (0.8)
Purchase of goodwill - (1.8)
Proceeds from sale of property, plant
and equipment 28.9 9.8
Net proceeds from sale of business 111.5 -
---------------------------------------------------------------- ------- --------
Net cash used by investing activities 2.3 (132.4)
---------------------------------------------------------------- ------- --------
Cash flows from financing activities
Proceeds from issue of ordinary shares - 0.9
Repayment of loans (10.2) (11.8)
New loans 14.0 62.2
Dividends paid to group shareholders (13.2) (11.6)
---------------------------------------------------------------- ------- --------
Net cash inflow / (outflow) from financing
activities (9.4) 39.7
---------------------------------------------------------------- ------- --------
Increase/(decrease) in cash and cash equivalents 92.3 (59.8)
Cash and cash equivalents at 1 January (63.5) (3.7)
Cash and cash equivalents at 31 December 28.8 (63.5)
---------------------------------------------------------------- ------- --------
Consolidated Statement of Changes in Equity
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ---------- ---------- ------------ ----------- ---------
As at 1 January 2016 19.8 77.7 14.6 185.7 297.8
Profit for the year - - - 81.3 81.3
Actuarial losses on defined
benefit pension schemes - - - (27.2) (27.2)
Deferred taxation on
pension liability - - - 3.6 3.6
Share based payments - - - 1.8 1.8
Deferred taxation on derivatives - - - (0.8) (0.8)
Current and deferred taxation
on share
based payments - - - (1.6) (1.6)
Dividends to shareholders - - - (13.2) (13.2)
---------------------------------- ---------- ---------- ------------ ----------- ---------
As at 31 December 2016 19.8 77.7 14.6 229.6 341.7
---------------------------------- ---------- ---------- ------------ ----------- ---------
As at 1 January 2015 19.7 76.9 14.6 145.7 256.9
New shares issued 0.1 0.8 - - 0.9
Profit for the year - - - 50.8 50.8
Actuarial losses on defined
benefit pension schemes - - - (2.1) (2.1)
Deferred taxation on
pension liability - - - 0.6 0.6
Share based payments - - - 1.5 1.5
Rate adjustment - - - (0.4) (0.4)
Foreign exchange gain - - - 0.1 0.1
Deferred taxation on
share based payments - - - 1.1 1.1 Dividends to shareholders - - - (11.6) (11.6) ---------------------------------- ---------- ---------- ------------ ----------- --------- As at 31 December 2015 19.8 77.7 14.6 185.7 297.8 ---------------------------------- ---------- ---------- ------------ ----------- ---------
Explanatory Notes to the Financial Information
1. Basis of preparation
The financial information has been prepared under International Financial Reporting Standards (IFRS) issued by the IASB and as adopted by the European Union (EU). This financial information has been prepared on the same basis as in 2015. Further information in relation to the Standards adopted by the group is available on the group's website, www.lookersplc.co.uk.
Whilst the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS's), this announcement does not itself contain sufficient information to comply with IFRS's.
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2016 or 2015, but is derived from those accounts. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) Companies Act 2006.
A copy of the full group accounts that comply with IFRS's for the period ended 31 December 2016 can be found at www.lookersplc.co.uk and will be posted to shareholders this month.
Going Concern
This financial information has been prepared on a going concern basis which the directors believe to be appropriate for the reasons set out below.
The company and the group continue to meet their day to day working capital requirements through short term stocking loans, the revolving credit facility and medium term funding requirements through a term loan. At the year end, the medium term banking facilities included a revolving credit facility of up to GBP150.0 million and a term loan of GBP85.0 million, providing total facilities of GBP235.0 million until March 2020.
The financial position of the group, its cash flows, liquidity position and borrowing facilities are described earlier. The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facility. Therefore the directors have a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
2. Segmental Reporting
As at 31 December 2016 the group is organised into one business segment, being the motor distribution segment. The parts distribution segment was discontinued on the sale of FPS Distribution Limited on 4 November 2016 (see note 3). All revenue and profits originate in the United Kingdom and the Republic of Ireland.
Primary reporting format - business segments
Motor Parts
Year ended Division Distribution Unallocated Group
ended 31 December 2016 GBPm GBPm GBPm GBPm
------------------------------------------ ---------- --------------- ------------ --------
Continuing operations
New Cars 2,206.1 - - 2,206.1
Used Cars 1,437.2 - - 1,437.2
Aftersales 444.9 193.5 - 638.4
Revenue 4,088.2 193.5 - 4,281.7
Segmental result before amortisation
of intangible assets 82.6 12.1 - 94.7
Amortisation of intangible assets - - (1.7) (1.7)
Interest expense (13.4) - (4.2) (17.6)
Share based payments (1.8) (1.8)
Impairment of goodwill (1.0) (1.0)
Exceptional items 23.3 23.3
Net interest and costs on pension scheme
obligation (3.7) (3.7)
Debt issue costs (0.4) (0.4)
Profit before taxation 69.2 12.1 10.5 91.8
------------------------------------------ ---------- --------------- ------------ --------
Taxation (10.5)
------------------------------------------ ---------- --------------- ------------ --------
Motor Parts
Division Distribution Unallocated Group
GBPM GBPm GBPm GBPm
------------------------------------- ---------- --------------- ------------ --------
Profit for the financial year from
continuing operations attributable
to shareholders 81.3
Segmental assets 1,707.8 - - 1,707.8
-------------------------------------- ---------- --------------- ------------ --------
Total assets
------------------------------------- ---------- --------------- ------------ --------
Segmental liabilities
Unallocated liabilities 1,252.2 - - 1,252.2
* Corporate borrowings - - 113.9 113.9
-------------------------------------- ---------- --------------- ------------ --------
Total liabilities 1,252.2 - 113.9 1,366.1
-------------------------------------- ---------- --------------- ------------ --------
Motor Parts
Division Distribution Unallocated Group
Year ended
31 December 2015 Note GBPm GBPm GBPm GBPm
----------------------------------------- ------ ---------- -------------- ------------ --------
Continuing operations
New Cars 1,835.3 - - 1,835.3
Used Cars 1,212.1 - - 1,212.1
Aftersales 382.9 218.8 - 601.7
------------------------------------------------- ---------- -------------- ------------ --------
Revenue 3,430.3 218.8 - 3,649.1
------------------------------------------------- ---------- -------------- ------------ --------
Segmental result before amortisation
of intangible assets 74.9 12.6 (1.6) 85.9
Amortisation of intangible assets - - (1.6) (1.6)
Interest expense (10.4) - (3.7) (14.1)
Interest income - - 0.3 0.3
Share based payments - - (1.5) (1.5)
Impairment of goodwill - - (3.6) (3.6)
Exceptional items - - 1.7 1.7
Net interest and costs on pension
scheme obligation - - (3.9) (3.9)
Debt issue costs - - (0.4) (0.4)
------------------------------------------------- ---------- -------------- ------------ --------
Profit before taxation 64.5 12.6 (14.3) 62.8
Taxation - - (12.0) (12.0)
------------------------------------------------- ---------- -------------- ------------ --------
Profit for the financial year from
continuing
operations attributable to shareholders 50.8
------------------------------------------------- ---------- -------------- ------------ --------
Segmental assets 1,429.4 155.7 - 1,585.1
Total assets 1,429.4 155.7 - 1,585.1
Segmental liabilities 1,037.2 80.1 - 1,117.3
Unallocated liabilities
- Corporate borrowings - - 170.0 170.0
Total liabilities 1,037.2 80.1 170.0 1,287.3
------------------------------------------------- ---------- -------------- ------------ --------
Notes to the Consolidated Financial Statements
3. Discontinued Operations
On 4 November 2016, the group disposed of FPS Distribution Limited and its subsidiary companies to Alliance Automotive UK Limited. FPS Distribution Limited and subsidiaries operated the company's parts division segment.
The disposal was effected in order to generate cash flow for the expansion of the group's other dealership networks.
The results of the discontinued operation, which have been included in the consolidated income statement, were as follows:-
Income Statements
Discontinued Discontinued
Operations Operations
2016 2015
----------------------------------------- ------------- -------------
GBPm GBPm
Revenue 193.5 218.8
Cost of sales (159.7) (157.3)
Gross Profit 54.7 61.5
Distribution Costs (27.8) (33.2)
Administration Expenses (14.7) (15.8)
Profit from operations 12.2 12.5
Tax charge (2.6) (2.6)
----------------------------------------- ------------- -------------
Net profit attributable to discontinued
operations 9.6 9.9
----------------------------------------- ------------- -------------
During the year, FPS Distribution Limited used GBP2.8million in the group's net operating cash flows and paid GBP12.7million in respect of investing activities.
A profit of GBP28.0 million arose on the sale of the company being the difference between sale proceeds and the carrying value of the net assets and attributable goodwill. The profit has been disclosed within exceptional items of which an analysis is shown below.
2016 2015
GBPm GBPm
---------------------------------- ------- -------
Exceptional items:
Profit on sale of business 28.0 -
VAT refund 4.8 -
Termination of franchises (9.1) -
Loss on terminated businesses - (1.7)
Net profit on property sales - 6.7
Reorganisation costs - (2.7)
Transaction costs on acquisition (0.4) (0.6)
---------------------------------- ------- -------
Total Exceptional items 23.3 1.7
---------------------------------- ------- -------
4. Finance Costs - Net
2016 2015
GBPm GBPm
--------------------------------------------- ------- -------
Interest expense
On amounts wholly repayable within
5 years:
Interest payable on bank borrowings (5.6) (5.9)
Interest on consignment vehicle liabilities (12.0) (8.2)
--------------------------------------------- ------- -------
Interest and similar charges payable (17.6) (14.1)
--------------------------------------------- ------- -------
Interest income
Bank interest - 0.3
Total interest receivable - 0.3
--------------------------------------------- ------- -------
Finance costs - net (17.6) (13.8)
--------------------------------------------- ------- -------
Notes to the Consolidated Financial Statements
5. Earnings per share
The calculation of earnings per ordinary share is based on the profit on ordinary activities after taxation attributable to shareholders amounting to GBP81.3m (2015: GBP50.8m) and a weighted average number of ordinary shares in issue curing the year of 396,357,194 (2015: 394,384,284).
The Adjusted Earnings per share are stated before amortisation of intangible assets, pension costs, debt issue costs, impairment of goodwill, exceptional items and share based payments and are calculated on profits of GBP62.9m (2015: GBP60.1m) for the year. These adjustments are net of tax.
2016 2015
2016 Earnings 2015 Earnings
Earnings per share Earnings per share
Continuing operations GBPm p GBPm p
----------------------------------- ----------- ----------- ---------- -----------
Basic EPS
Earnings attributable to ordinary
shareholders 81.3 20.51 50.8 12.88
Effect of dilutive securities - (0.41) - (0.30)
----------------------------------- ----------- ----------- ---------- -----------
Diluted EPS 81.3 20.10 50.8 12.58
----------------------------------- ----------- ----------- ---------- -----------
Adjusted EPS
Earnings attributable to ordinary
shareholders 81.3 20.51 50.8 12.88
Amortisation of intangible
assets 1.7 0.43 1.6 0.41
Net interest and costs on pension
scheme obligations 3.7 0.93 3.9 0.99
Share based payments 1.8 0.45 1.5 0.38
Exceptional items (23.3) (5.88) (1.7) (0.43)
Tax on exceptional items (3.7) (0.93) - -
Impairment of goodwill 1.0 0.25 3.6 0.91
Debt issue costs 0.4 0.10 0.4 0.10
Adjusted EPS 62.9 15.87 60.1 15.24
----------------------------------- ----------- ----------- ---------- -----------
6. Dividends
2016 2015
GBPm GBPm
--------------------------------------------------- ----- -----
Interim dividend for the year ended 31 December
2016 1.28p (2015: 1.07p) 5.0 4.2
Final dividend for the year ended 31 December
2015 2.05p (2014: 1.87p) 8.2 7.4
--------------------------------------------------- ----- -----
13.2 11.6
--------------------------------------------------- ----- -----
The directors propose a final dividend of 2.36p per share in respect of the financial year ending 31 December 2016 (2015: 2.05p). The proposed final dividend is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The final dividend will be payable on 31 May 2017. The ex-dividend date will be 4 May 2017 and the record date will be 5 May 2017.
7. Principal Risks and uncertainties
There are a number of potential risks and uncertainties which could have a material impact on the group's performance, business activities, financial condition, results of operations or the company's share price and could cause actual results to differ materially from expected and historical results. The Board maintains a policy of continuous identification and review of risks and uncertainty and the principal risks identified are the adverse impact of the global economy, manufacturers' financial stability, adverse movements in exchange rates, changes in the Block Exemption regulations which govern franchise agreements in the UK retail motor industry, liquidity and financing issues for the company, legislative changes in relation to vehicle taxation and transport policy, failure of group information systems and the relative strength and influence of the vehicle manufacturers on the UK market. The Board has recently reviewed the risk factors and confirms that they should remain valid for the rest of this year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LIFFRVAITIID
(END) Dow Jones Newswires
March 08, 2017 02:18 ET (07:18 GMT)
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