3rd Sep 2007 07:01
Lookers PLC03 September 2007 3 September 2007 LOOKERS plc UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2007 Lookers plc, a leading UK motor retail group, announces interim results for thesix months ended 30 June 2007. Commenting on the results, Ken Surgenor, Chief Executive said: "I am delighted to report that Lookers has continued to outperform the marketand achieved record results for the period, in line with expectations. This excellent performance is testament to the success of our proven strategy.We remain dedicated to the further development of our complementary businessesthrough both organic growth and acquisitions. Moreover we have one of thebroadest revenue streams in the industry. We are particularly delighted to have been approved to represent Ford, the UKmarket leader. We look forward to working with Ford in the city of Sheffield andexpanding our representation of their brand. Our business model means that we are well placed to capitalise on the growthopportunities in our markets and we remain confident for the outlook of theremainder of 2007." Key Financials Half year to 30 June 2007 2006 ChangeTurnover £878.9M £726.6M +21%Operating profit £25.0M £17.8M +40%Adjusted* operating profit £24.9M £22.0M +13%Profit before tax £18.1M £12.8M +41%Adjusted* earnings per share 7.16p 6.69p +7%Interim dividend 1.6p 1.3p +23% * Adjusted pre exceptional items, goodwill impairment and amortisation ofintangible assets Highlights • New car sales up 6% against a market up 2% • Particularly strong performance across Vauxhall, Mercedes and specialist cars • Strong first half performance for Charles Hurst division • Ford franchise added to our expanding portfolio • Parts Distribution operating profit up 10% • New FPS Sheffield distribution facility completed and fully operational • Acquisition of BTN Turbo Charger Service Limited to broaden aftersales offering An analysts' briefing will be held at the offices of Hudson Sandler at 29 ClothFair, London EC1A 7NN at 9.00 a.m. on 3rd September 2007. Enquiries: Lookers Telephone: 020 7796 4133Ken Surgenor, Chief Executive (on Monday 3 September only, and on David Dyson, Finance Director 0161 291 0043 thereafter) Hudson Sandler Telephone: 020 7796 4133Andrew Hayes/Nick Lyon/Kate Hough High resolution photographs will be available to media at www.vismedia.co.uk from 12.30pm. CHIEF EXECUTIVE'S REVIEW I am delighted to report that Lookers has continued to outperform the market andachieved record results for the half-year period ended 30 June 2007, in linewith expectations. This excellent performance is testament to the success of our proven strategy.We remain dedicated to the further development of our complementary businessesthrough both organic growth and acquisition. Moreover we have one of thebroadest revenue streams in the industry. Our close relationships with manufacturer partners and our de-centralisedmanagement structure, has once again enabled us to deliver superior returnsacross our new car franchise division and outperform the market. We areparticularly delighted to have been approved to represent Ford, the UK's leadingsupplier. We look forward to working with Ford in the city of Sheffield andexpanding our representation of their brand. During the period we have also seen a strong performance across our aftersalesdivision and were delighted to announce the acquisition of BTN Turbo ChargerService Limited, further widening our offer in this growing market. FINANCIAL COMMENTARY AND DIVIDEND Once again Lookers has delivered strong sales and profit growth ahead of thestrong performance in the comparable period last year. Turnover for the firsthalf increased 21% to £878.9 million (2006: £726.6 million). Adjusted* operatingprofit was up 13% to £24.9 million (2006: £22.0 million) with profit fromoperations up 40% to £25.0 million (2006: £17.8 million). Adjusted* profit before tax was up 6% to £18.1 million (2006: £17.0 million) andprofit before tax was up 41% to £18.1 million (2006: £12.8 million), generatingadjusted earnings per share of 7.16p (2006: 6.69p). Our tight control on working capital has resulted in strong operating cash flowof £24.3 million (2006: £14.8 million) for the period. Gearing fell to 61%, downfrom 79% at the previous year end. Dividend The Board is proposing an increase in the interim dividend of 23% to 1.6p (2006:1.3p) reflecting the Group's strong performance for the period and the Board'scontinued confidence as we enter the second half. This will be paid on 30November 2007 to shareholders on the register at 21 September 2007. This increase in dividend reflects the Group's commitment to a more progressivedividend policy and our previously stated policy to increase the proportion ofthe dividend proposed in the first half of the year. OPERATING REVIEW Franchise network Lookers currently operates 111 franchise outlets across 28 brands. The Group sawa strong performance across its new car franchise network in the first half andcontinued to outperform the market, with like for like sales in new cars up 6%against a market up 2%. Trading was strong across the division for the entireperiod, which includes the important registration month of March. Our CharlesHurst business in Northern Ireland also delivered a strong performance followingexcellent sales in January, a key month for new registrations in the region. This success has once again been driven by the Group's broad base ofmanufacturing partners and wide geographic coverage, coupled with ourdecentralised dealer structure, which empowers key franchise directors and localmanagement and enables us to offer a first class service to both customers andpartners. Across our volume franchises, Vauxhall saw a good start to the year benefitingfrom the extensive refurbishment programme, which took place across a number ofour Vauxhall outlets in 2006. This programme is now complete, offering a muchbetter customer experience in our Vauxhall showrooms, used car displays andservice capabilities. The Group currently operates 18 Vauxhall outlets acrossthe significant market areas of the North West, Midlands and Northern Ireland. In 2006 we welcomed the Korean value brand Kia into our portfolio, under boththe Lookers and Charles Hurst brands. Dealerships were opened in Macclesfield,Stockport and Belfast and these continue to trade in line with our expectations.The Kia brand complements our existing portfolio and we look forward to buildingon our relationships with Kia Motors in the future. Whilst Premier Automotive Group (PAG) is performing well, particularly with LandRover and Jaguar in Scotland and Northern Ireland, the South East has proved tobe more challenging and the Volvo franchise, specifically has performed wellbelow our expectations. We now operate 25 PAG dealerships in the UK across the South East of England,South West of Scotland and Northern Ireland. Our PAG presence in the South Eastwas further strengthened last year by the acquisition of 8 dealerships from HROwen, which have been successfully integrated and continually improving theirperformance. We also continue to see the benefits of the completedredevelopment in our Taggarts Glasgow and Motherwell facilities to PAG multifranchise sites. In September 2006 we were delighted to welcome Mercedes Benz into our franchiseportfolio, through the acquisition of four dealerships from HR Owen. Thesedealerships have been fully integrated into the business and we have seen a goodperformance from Mercedes for the first half, in line with our expectations. Our Charles Hurst division in Northern Ireland has also delivered strong resultsin the first half with record trading in the important month of January. Ourspecialist car division in Northern Ireland continues to perform well and duringthe period we have seen the successful launch of the Aston Martin V8 Roadsterand the Maserati Quattroporte Automatic. Used cars In line with our plans we continue to broaden our revenue streams by expandinginto complementary business areas. Through our Used Car Supermarket business, weare selling a growing number of vehicles, sourced from our existing franchisenetwork and now have a presence in the South East, South West and Midlands.However, management issues resulted in a very disappointing financialperformance where losses were incurred during the period. This has beenaddressed and we expect to see the benefits of this action coming through in thesecond half of the year. Parts Distribution Our parts distribution business has once again delivered an excellentperformance for the first half of the year. FPS Distribution ("FPS") has performed well over the first half with operatingprofit up more than 5% on 2006 despite a significant increase in its cost base,arising from the operation of the new warehouse in Sheffield and the resultantdual running costs up to the end of June. The business has begun to see thebenefits from this new purpose built facility expanding our distributioncapacity through the provision of 140,000 square feet of storage, which iscapable of being further expanded to over 200,000 square feet. In June we were delighted to open a new FPS outlet in Nottingham which willfurther support and enhance our distribution capability across the EastMidlands. Already its daily sales rate is performing ahead of our expectations. Apec, our braking parts specialist has also performed well for the period,benefiting from a warehouse reorganisation at the end of 2006 to support furthersales growth in the current year. The second half of 2007 will see the launch ofa new range of hydraulic brake parts onto the market. To further strengthen this increasingly important part of our business, in Maywe were delighted to announce the acquisition of the entire share capital of BTNTurbo Charger Service Limited. This acquisition broadens our offering in theparts distribution aftermarket, particularly in such a fast growing sector asturbo chargers and will be an important contributor to the continued expansionof this part of our business. OUTLOOK This excellent half-year performance has once again been driven by our focus onorganic growth and our strategy to continue to seek value-enhancing,complementary acquisitions across all three of our existing businesses. The second half of the year has started well against strong comparatives.Trading since the period end has remained in line with expectations and theorder book for September, usually the second largest retail month, is also aheadof last year. We are also building a solid order bank for models to be releasedin the second half of the year including the Aston Martin DBS, the BentleyBrooklands and Bentley GT Continental Speed, the Ferrari 430 Scuderia and theMaserati Gran Turismo. In the last 18 months, we have seen a 125 basis point rise in interest ratesrepresenting a 28% increase in interest costs. While this has led to anincrease in interest costs to the Group and has also had a slightly negativeimpact on consumer confidence, our broad based business model ensures we arewell placed to capitalise on the growth opportunities in our markets and weremain confident for the outlook of the remainder of 2007. Ken Surgenor Chief Executive 3 September 2007 The Directors announce the following unaudited results of the Group for thehalf-year ended 30 June 2007 Consolidated Income Statement (Summarised) Half-year ended Half-year ended Year ended 31 December 2006 30 June 2007 30 June 2006 £M £M £M Revenue 878.9 726.6 1,426.7 Operating profit before amortisation and exceptional items 24.9 22.0 36.6Amortisation of intangible assets and impairment of goodwill (0.4) (0.4) (0.8)Exceptional items 0.5 (3.8) (4.1) Profit from operations 25.0 17.8 31.7Interest costs - net (6.8) (5.0) (10.2)Debt issue costs (0.1) - (0.1) Profit before tax, amortisation, impairment, exceptional itemsand debt issue costs 18.1 17.0 26.4Amortisation of intangible assets and impairment of Goodwill (0.4) (0.4) (0.8)Exceptional items 0.5 (3.8) (4.1) Debt issue costs (0.1) - (0.1) Profit on ordinary activities before taxation 18.1 12.8 21.4 Taxation (5.2) (4.7) (6.8) _____ ____ ____Profit for the period 12.9 8.1 14.6 ==== ==== ====Basic earnings per ordinary share 7.16p 4.52p 8.13p ==== ==== ====Diluted earnings per ordinary share 7.12p 4.52p 8.09p ==== ==== ====Adjusted earnings per ordinary share 7.16p 6.69p 10.63p ==== ==== ===== Consolidated Balance Sheet (Summarised) 30 June 30 June 31 December 2007 2006 2006 £M £M £MFIXED ASSETS Goodwill 28.8 22.5 28.6Other intangible fixed assets 15.6 16.4 16.0Property, plant and equipment 161.4 142.3 160.9 ______ _______ ______ 205.8 181.2 205.5 ______ _______ ______CURRENT ASSETS Inventories 264.4 209.0 257.9Trade and other receivables 114.9 97.4 82.6Cash and cash equivalents 8.4 0.8 2.9 ______ ______ ______ 387.7 307.2 343.4 ______ ______ ______ TOTAL ASSETS 593.5 488.4 548.9 ===== ===== =====CURRENT LIABILITIES Financial liabilities 7.6 22.2 8.4Trade and other payables 367.5 283.6 335.0 Tax liabilities and short term provisions 12.9 11.0 4.2 ______ ______ ______ 388.0 316.8 347.6 ===== ===== ===== NET CURRENT LIABILITIES (0.3) (9.6) (4.2) ______ ______ ______NON CURRENT LIABILITIESFinancial liabilities 72.5 54.8 76.5Retirement benefit obligation 4.3 10.5 11.5Deferred taxation and long term provisions 11.0 4.5 9.0 ______ ______ _____ 87.8 69.8 97.0 ===== ===== =====TOTAL LIABILITIES 475.8 386.6 444.6 ===== ===== =====NET ASSETS 117.7 101.8 104.3 ===== ===== =====Total Borrowings 71.7 76.2 82.0 ===== ===== =====Gearing 61% 75% 79% ===== ===== ===== Consolidated Cashflow Statement (Summarised) Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £MCash generated from operations Profit for the period 12.9 8.1 14.6Adjustments for tax 5.2 4.7 6.8Adjustments for depreciation 3.4 2.7 5.8Profit on disposal of property, plant and equipment (2.1) (0.5) (0.1)Other exceptional items 1.6 4.0 -Amortisation of intangibles 0.4 0.4 0.8Interest expense - net 6.8 5.0 10.2 Debt issue costs 0.1 - 0.1Share based payments charge 0.1 - 0.2Changes in working capital (excluding effects ofacquisitions and disposal of subsidiaries)Increase in inventories (4.2) (16.7) (58.4)Increase in trade and other receivables (28.0) (30.1) (15.5)Increase in payables 29.5 38.7 95.0Movement in pensions (1.4) (0.7) (3.4)Movement in provisions - (0.8) (0.4) _____ _____ _____Cash generated from operations 24.3 14.8 55.7 Tax received/(paid) 1.3 (1.5) (5.5)Interest paid (7.6) (5.2) (10.8) ______ ______ _____Net cash from operating activities 18.0 8.1 39.4 ______ ______ _____ Cashflows from investing activities Acquisition of businesses/subsidiaries (net of cash (2.7) (5.5) (27.6)acquired)Purchase of property, plant and equipment (4.4) (7.1) (20.3)Proceeds from sale of property, plant and equipment 2.8 1.3 1.3Proceeds from sale of business - 1.5 1.5 ____ ____ _____Net cash used by investing activities (4.3) (9.8) (45.1) Cashflows from financing activities Proceeds from issue of ordinary shares - 0.7 0.7Repayment of loans (3.8) (8.3) (70.6)New loans - 5.0 84.7Debt issue costs - - (0.9)Principal payments under HP agreements (0.1) (0.1) (0.1)Dividends paid to group shareholders (3.5) (2.9) (5.1) _____ _____ ___Net cash (for)/from financing activities (7.4) (5.6) 8.7 ==== ==== ===Increase/(decrease) in cash and cash equivalents 6.3 (7.3) 3.0Cash and cash equivalents at the beginning of the period 2.1 (0.9) (0.9) _____ ____ _____Cash and cash equivalents at the end of the period 8.4 (8.2) 2.1 ==== ==== ==== Consolidated Statement of Recognised Income and Expense Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £MActuarial gains recognised in post retirement benefit 5.8 8.0 5.1schemeTaxation thereon (1.7) (2.4) (1.5) ____ ____ ____ Net gains recognised directly in equity 4.1 5.6 3.6Profit for the financial period 12.9 8.1 14.6 ____ ____ ____ Total recognised income and expenses for the period 17.0 13.7 18.2 ==== ==== ==== Notes 1. Basis of Preparation The unaudited information has been prepared in accordance with the Listing Rulesof the Financial Services Authority and on the basis of International FinancialReporting Standards (IFRS) issued by the IASB and as adopted by the EuropeanCommission (EC) with the exception of IAS 34 "Interim Reporting" which is notyet required by UK Company Law. The accounting policies adopted are alsoconsistent with those adopted in the Group's financial statements for the yearended 31 December 2006. The information for the year ended 31 December 2006 does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. A copyof the statutory accounts for that year have been delivered to the Registrar ofCompanies. The auditors' report on those accounts was not qualified and did notcontain statements under section 237 (2) or (3) of the Companies Act 1985. 2. Dividends Ordinary shares of 5p each The interim dividend proposed at the rate of 1.60p per share (2006 - 1.30p pershare) is payable on 30 November 2007 to shareholders on the register at closeof business on 21 September 2007. Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 Pence Pence PenceOrdinary dividend per share- paid in period 2.20 2.10 1.30 ===== ==== ====- proposed 1.60 1.30 2.20 ===== ==== ==== 3. Exceptional items Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £MProfit on disposal of properties 2.1 0.5 0.5Other items (net) (1.6) (4.3) (4.6) ____ ____ ___ 0.5 (3.8) (4.1) ==== === === 4. Interest costs - net Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £MBank interest payable 4.2 3.2 7.2Fair value losses on interest rate swaps andcollars - - (0.4)Bank interest receivable - - (0.1)Interest on consignment vehicles 2.8 1.5 3.3Net interest on pension scheme (0.2) 0.3 0.2 _____ ____ ____ 6.8 5.0 10.2 ==== ==== ==== 5. Earnings per share The calculation of earnings per ordinary share is based on profits on ordinaryactivities after taxation amounting to £12.9M (2006: £8.1M) and a weightedaverage of 180,228,247 ordinary shares in issue during the period (2006:179,140,033). The diluted earnings per share is based on the weighted average number ofshares, after taking account of the dilutive impact of shares under option of902,068 (2006: 125,089). The diluted earnings per share is 7.12p (2006: 4.52p). Adjusted earnings per share is stated before amortisation of intangible assets,impairment of goodwill, the profit on disposal of properties, less otherexceptional items (net) and is calculated on profits of £12.9M for the period(2006: £12.0M) Half-year ended Half-year ended Year ended 30 June 2007 30 June 2006 31 December 2006 Earnings Earnings per Earnings Earnings Earnings Earnings per share share p £M p £M per share £M pEarningsattributable toordinary 12.9 7.16 8.1 4.52 14.6 8.13shareholders Amortisation ofintangible assetsand impairment ofgoodwill 0.4 0.22 0.4 0.22 0.8 0.44 Exceptional items (0.5) (0.28) 3.8 2.12 4.1 2.28(net) Tax debit/(credit)exceptional items 0.1 0.06 (0.3) (0.17) (0.4) (0.22) Adjusted 12.9 7.16 12.0 6.69 19.1 10.63 6. Taxation The tax charge for the period has been provided at the effective rate of 29.0%(2006: 36.7%). 7. Interim Statement The interim announcement was approved by the Board and will be posted toshareholders on 3 September 2007. Copies are also available to the public at theregistered office of the company at 776 Chester Road, Stretford, Manchester M32OQH. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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