Final Results

Lookers PLC 14 March 2001 14 March 2001 LOOKERS PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2000 HIGHLIGHTS Lookers plc is a leading national operator in the UK's retail motor industry * Strategy of investing in people to win customers for life enabled the Group to make good progress in a challenging market place * Mainland new car sales up 26% - national market up 1.1% * Service, Masterfit and Fastfit operating profit up 23% * Another excellent year from our Northern Ireland business * Operating profit before exceptionals and goodwill - £11.8million * Profit before tax up to £6.5million (previous 15 months £6.4million) * EPS up 4% to 10.5p * Final dividend up 6% to 6.0p per share making 8.6p for the year. Commenting on the outlook for the Group, Fred Maguire, Chairman, said: 'The Board is confident that the Group is well placed to exploit this more encouraging trading environment given the investment that has been made in recent years in all areas of our business. We are in good shape to face the future'. Enquiries Fred Maguire, Executive Chairman Allan Marston, Finance Director Telephone: 020 7796 4133 (on Wednesday, 14 March 2001 only) 0161 291 0043 (thereafter) Andrew Hayes/Penny Davis, Hudson Sandler: 0207 796 4133 An analyst briefing will be held at the offices of Hudson Sandler, 29 Cloth Fair EC1A 7NN at 09.30am on Wednesday 14 March 2001. LOOKERS PLC CHAIRMAN'S REVIEW INTRODUCTION Lookers strategy of investing in our business to win customers for life enabled the Group to make good progress in a very challenging market place. This investment concentrated on drawing our £40million refurbishment programme closer to a conclusion together with the establishment of significant market areas with selected manufacturers. Our unstinting efforts on customer service were reinforced by continued investment in training throughout the business with the transfer of best practice across our operations. This was supported by the further development of our customer management centre in order to further enhance our response to customers. FINANCIAL We achieved a very significant 26% increase in like for like new vehicle sales across our mainland dealerships where the national market increased by just over 1%. Our total turnover for the financial year amounted to £582.5million (£652.5million for the 15 month period to 31st December 1999). Operating profit before exceptionals and goodwill rose by 18% to £11.8million (£10million for the prior 15 month period) with EPS rising by 4% to 10.5pence. During the year we restructured our agricultural machinery division and, from a combination of sales and closures, incurred an exceptional loss of £329,000. Last year we had a profit on disposals of £948,000 from the motor division. The profit before taxation for the year amounted to £6,510,000 compared with £6,442,000 in the previous 15 month period. Our acquisitions of new dealerships and continued investment in our refranchising programme resulted in gearing of 67% on net assets of £70.3million. DIVIDEND The Board of Directors is recommending a final dividend of 6.0pence per Ordinary Share for the year ending 31st December 2000 to be paid on 31st May 2001 to shareholders on the register at 18th May 2001. With the interim dividend of 2.6pence paid on 30th November 2000 this brings the total dividend for the year to 8.6pence (8.25p for the previous period). This increase reflects the Board's confidence in its future outlook. STRATEGY In a competitive market place Lookers aims to differentiate itself by its customer focus. Our mission is nothing less than to win customers for life. To achieve this we continue to review all aspects of our business to ensure that our people are able to deliver outstanding service from a first class retail environment. Investment in our people and facilities continues to be a key feature of our approach to developing the business. The success of this strategy enabled Lookers to out-perform the national new car market for new vehicle sales on the mainland by a very considerable margin and, in addition, achieve good results in a challenging market. We have continued to improve relationships with many manufacturers who now regard Lookers as the preferred candidate when making further appointments. CAR MARKET The Year 2000 was the third largest new car market ever with 2,221,647 new registrations recorded, an increase of 1.1% over the previous year. However, considerable uncertainty characterised the market with price reductions on new cars, more latterly stimulating demand, yet having a detrimental impact on the valuation of used cars. This created a most challenging trading environment with particular difficulty being experienced where dealers were already committed to re-purchase vehicles at fixed prices which were supplied up to three years earlier - the motability scheme being a prime example. As a result of these trading pressures in the market place, margins on both new and used car sales were reduced. OPERATING REVIEW Performance The key management action throughout the year was to further improve the customer focus in all areas of our business. This was supported by an early decision to ensure that our pricing remained highly competitive in a market showing modest growth and acute sensitivity to pricing pressures. As a result, we out-performed the new car market on the mainland with like for like sales up 26%. Overall the mainland motor dealerships had a significant profit improvement over the previous period and particularly strong performances were recorded by the Audi, Land Rover and Mercedes Benz franchises. Our Vauxhall and, to a lesser extent, Renault dealerships were involved in the repurchase of motability vehicles and with the significant fall in used car values following price reductions on new cars, this depressed profits during the year. Vehicles will continue to be returned under the motability scheme until the beginning of March 2002 and the Group increased its provision by £ 1million which it believes adequately covers any future exposure. The Group's Northern Ireland business, Charles Hurst had another excellent year despite the continued pressure from imports from the South of Ireland. Refurbishment We are now in the final phases of our four year refurbishment programme which includes the development of a new satellite facility at Macclesfield working in conjunction with our core dealerships at Stockport. Land has also been acquired in Oldham for the relocation of our existing Volkswagen depot and the establishment of a new dealership that will encompass their new retailing concept. The Liverpool Vauxhall dealership is also being completely refurbished and a Saab franchise will be incorporated into this enhanced facility. Our state of the art customer management centre is also being planned into this development. A prime site has also been purchased in Chester where our Vauxhall dealership will be relocated to cover the enlarged marketing territory. We now have a network of dealerships which rank with the best in the industry for the quality of our retail environments. We have also purchased land and buildings to develop a new bodyshop facility in Belfast in order to release additional retail space at our multi-franchise Boucher Road complex. This area will be used to develop one of the first joint Renault/Nissan facilities following the link-up between these two manufacturers. The fact that Lookers and Charles Hurst have been selected for this important innovation is a testament to the regard in which both manufacturers hold your Company. Customer Focus An on-going priority was to improve still further the motivation of our sales force. A range of initiatives and incentives were introduced to reward out-performance. This includes the monthly publication of a 'Sales Premier League' which recognises our most successful dealerships and sales personnel by creating a competitive and positive culture across the Group. Our Liverpool customer management centre was extended with the volume of calls rising by 94% over the previous year. This facility greatly enhances our ability to drive a positive dialogue with our customers as well as being able to provide a speedy response to their enquiries. It is an increasingly important driver of our higher margin aftersales business - profits from our higher margin Service, Masterfit and Fastfit operations increased by 23% on an annual basis. As a complementary investment to the expansion of our customer management centre we have also developed our Central Fleet Management department. It has been successful in developing relationships with large fleet purchasers and has made good progress in securing major new orders. e-commerce We were delighted to win the Autowired.co.uk 'Top UK Motor Dealer Website Award' for our website at www.lookers.plc.uk. This success followed a controlled investment in our e-commerce strategy. We have now set up a specialist department to optimise our sales and work closely alongside our network of dealerships. We are continuing to generate a large number of leads to our site and are very encouraged that sales opportunities are being exploited in parts of the country where we do not have any representation. The level of interest has been much higher than we originally anticipated and in response to this demand we are now increasing staff and developing a specialist website for finance and separate sites to include motorcycles/ accessories and specialist cars. All of our sites include professionally taken photographs of our stock with full specifications and this is proving to be of great benefit when dealing with customers. We are continuing to develop new ways and techniques so that we are able to attract more customers to our websites. NON-CORE BUSINESS The improvement in profit before taxation was achieved after absorbing losses of £857,000 in our agricultural machinery division of which £329,000 has been treated as an exceptional item. The outlook for this business remains uncertain and we have concentrated on progressively reducing the capital we employ within it. The branch at Surfleet was sold in December and the depots at Grantham and Peterborough were closed. Our strategy will be to continue to reduce our investment. ACQUISITIONS During the year we added a further 18 outlets to the Group at a total cost approaching £13million. These investments were made with our selected trading partners and include representation for Honda, Renault, Nissan, Toyota and Jeep. In Greater Manchester we were the first Group to be selected for a major market area by Nissan. These businesses added £36million of turnover, as they were acquired mainly during the second half year. Considerable investment has been made to integrate these new businesses and the benefits of the acquisitions will begin to flow in the current financial year. MANAGEMENT STRUCTURE I have taken over the position of Executive Chairman and will have particular responsibility for corporate strategy, acquisitions, franchising relationships with manufacturers and shareholder relations. Ken Surgenor was appointed as Group Managing Director in January this year. He was previously the Managing Director of the Group's highly successful Charles Hurst operation in Northern Ireland. Andrew Bruce, formerly Sales Director of Land Rover UK, has been appointed as the new Operations Director for Charles Hurst. During the second half year we strengthened our senior management structure. Brian Schumacker and Mark Kass were appointed to the Main Board as Operations Directors for the Northern and Southern regions respectively. Craig McKinney, our previous Chairman, has taken up the position of Deputy Chairman and the Board would like to thank him for his valuable contribution as Chairman to the Group over many years. The management team has now been established to deliver the Group's future strategy. OUTLOOK Confidence is returning to the new car market place with five consecutive months of growth in new retail sales. In January and February, whilst the overall market was 3% ahead of last year, sales to private motorists were up by more than 20% over last year. Against this background a strong March is anticipated with the last change of the present registration system. We also anticipate a stronger September this year as a new registration plate system is to be introduced. The volume of motability buy back vehicles are now at a much lower level with the present scheme expiring in March 2002. In the meantime we have made adequate provision to mitigate any exposure. It is unlikely that Block Exemption will be renewed in its present form, however, the Board remains of the view that any changes are more likely to be for the benefit of dealers. With its spread of franchises and excellent retail facilities the Group believes it will be able to adapt quickly and take advantage of any changes. The Board is confident that the Group is well placed to exploit this more encouraging trading environment given the investment that has been made in recent years in all areas of our business. We are in good shape to face the future. F S MAGUIRE EXECUTIVE CHAIRMAN 14th March 2001 Lookers plc The Directors announce the following unaudited results of the Group for the year ended 31st December 2000 Consolidated Profit and Loss Account (Summarised) Twelve Fifteen months months ended ended 31st December 31st December 2000 1999 (Unaudited) (Audited) £000 £000 Turnover Continuing Operations 546,425 652,509 Acquisitions 36,104 - 582,529 652,509 Operating Profit Continuing Operations 9,822 9,187 Acquisitions 283 - 10,105 9,187 (Loss)/profit on closure/sale of operations (329) 948 Profit before interest 9,776 10,135 Interest payable 3,266 3,693 Profit before taxation 6,510 6,442 Taxation 1,820 1,611 Profit after taxation attributable 4,690 4,831 to shareholders Dividends - preference shares - preference 1,168 1,169 shares - accrued preference shares - 292 - ordinary shares 2,912 2,754 Earnings per ordinary share 10.5p 10.1p Lookers plc Consolidated Balance Sheet (Summarised) 31st December 31st December 2000 1999 (Unaudited) (Audited) £000 £000 FIXED ASSETS Intangible assets 9,879 10,155 Tangible assets 80,719 70,225 90,598 80,380 CURRENT ASSETS Stocks 60,644 64,036 Debtors 29,574 22,260 Cash at bank and in hand 3,258 29 93,476 86,325 CURRENT LIABILITIES Bank Overdraft 12,923 11,332 Trade Creditors 38,965 42,022 Other Creditors 28,044 22,020 Proposed dividend 2,032 1,886 81,964 77,260 Net current assets 11,512 9,065 Total assets less current liabilities 102,110 89,445 Long term liabilities and provisions 31,800 19,836 Shareholders' funds 70,310 69,609 Shareholders' funds are attributable to: Non-equity shareholders' funds 14,591 14,613 Equity shareholders' funds 55,719 54,996 70,310 69,609 Total borrowings 47,322 27,736 Gearing 67% 40% Lookers plc Consolidated Cashflow Statement (Summarised) Twelve Fifteen months months ended ended 31st 31st December December 2000 1999 (Unaudited) (Audited) £000 £000 Net Cash inflow from Operating Activities Operating Profit 10,105 9,187 Depreciation Charges 2,824 4,348 Profit on sale of fixed assets (520) (260) (Increase)/decrease in working capital (9,000) 1,105 Goodwill amortisation 670 817 Interest paid (3,294) (3,686) Non equity Dividends paid (1,168) (1,169) Taxation paid (1,229) (2,212) Net Cash Outflow from Capital Expenditure and Financial Investment (2,046) (10,253) Net Cash Outflow from Acquisitions and Disposals (7,056) - Equity Dividends Paid (2,766) (2,754) Net Cash Inflow from Financing 15,118 1,070 INCREASE/(DECREASE) IN CASH 1,638 (3,807) Lookers plc Notes: 1. Dividends (a) Ordinary shares of 25p An interim dividend of 2.6p per share (1999 - 2.6p per share) was paid on 30th November 2000. A final dividend of 6.0p per share is proposed (1999 - 5.65p per share second interim dividend paid), which if approved is payable on 31st May 2001 to shareholders on the register at the close of business on 18th May 2001. (b) 8% Cumulative redeemable preference shares of £1 each Preference dividends of 4.0p per share (1999 - 4.0p per share) have been paid for the six months to 31st March 2000 and also for the six months to 30th September 2000 (1999 - 4.0p per share). 2. Earnings per share The earnings per share is based on profit on ordinary activities after taxation and preference dividends calculated on a weighted average of 33,611,125 ordinary shares in issue during the year (1999 - 33,379,153). There are no potential ordinary shares or share options that give rise to a dilution of earnings per share (1999 - same). 3. Financial Information The financial information set out in the announcement does not constitute the Company's statutory accounts for the year ended 31 December 2000 or the fifteen months ended 31 December 1999. The financial information for the fifteen months ended 31 December 2000 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31 December 2000 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting.

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