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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 Apr 2019 to Apr 2024
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:
Hot Features
Premium
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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August 15, 2018 02:00 ET (06:00 GMT)
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