Final Results
Lookers PLC
7 March 2002
7th March 2002.
LOOKERS PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31st DECEMBER 2001
Lookers plc is a leading, multi-franchise national operator in the UK motor
retail industry.
HIGHLIGHTS
• New car sales significantly outperform market in both England and
Northern Ireland.
• Turnover up by 23% to £718 million.
• Operating profit before goodwill up 36% to £14.7 million.
• Profit before taxation and amortisation of goodwill up 50% to £10.8
million.
• Profit before taxation up 55% to £10.1 million.
• Service Operating Profit - including fastfit - over 40% increase.
• Earnings per share up 80% to 18.9p.
• Final dividend up 8.3% making an overall increase for the year of 8.7%.
• Gearing at improved level of 56% (2000 - 67%)
• Confidence has returned to the new car marketplace with 16 months of
consecutive growth to January 2002.
Commenting on the outlook for the Group, Fred Maguire, Chairman, said:
'The Board is pleased to report a record performance in the year, with turnover
and profit growth well ahead of a buoyant UK motor retail market.
The outlook for the UK car market is encouraging with a continued shift to
higher margin retail sales and the current year has started well. The investment
we have made across the group positions us strongly to deliver continued good
growth in 2002.'
Enquiries
Fred Maguire, Executive Chairman
Ken Surgenor, Managing Director
Allan Marston, Finance Director
Telephone: 020 7796 4133 (on Thursday 7th March 2002 only)
0161 291 0043 (thereafter)
Andrew Hayes/James Hill, Hudson Sandler: 0207 796 4133
LOOKERS PLC
CHAIRMAN'S REVIEW
Once again Lookers has achieved a record performance, with turnover and profit
growth in the year well ahead of the buoyant UK motor retail market. This builds
on our already strong performance in the previous financial year when trading
conditions were more difficult.
Turnover has increased by 23% to £718 million and we sold over 76,000 new and
used cars with profit before taxation rising by 55% to £10.1 million.
These outstanding results reflected strong management and strict financial
controls combined with our ability to consistently win market share.
Like-for-like new car sales have increased ahead of the market across our
England and Northern Ireland operations.
The completion of our refurbishment programme and the continuing focus on our '
Customers For Life' programmes have been critical in building customer loyalty
and retention with the foundations firmly in place to deliver further good
growth in the current year and beyond.
MARKET OVERVIEW
Last year saw the highest ever number of new car registrations in the UK at
2,458,769 units, an increase of 10.7% over the previous year. The main feature
of the year was the strong growth in retail sales where Lookers business is
focused. Cars registered by private buyers rose every month with cumulative full
year growth of 22%.
This level of growth in car sales has been driven by low interest rates and a
reduction in new car prices by many manufacturers. Retail sales performed
particularly strongly as changes to benefits in kind taxation led businesses to
introduce so-called cash for cars schemes thus turning what were previously
fleet purchasers into private retail purchasers. Company car taxation changes
also created significant growth in diesel car sales due to their lower emissions
ratings.
FINANCIAL
Turnover rose 23% to £718 million (2000 : £583 million) generating a 36%
improvement in operating profit before goodwill to £14.7 million (2000 : £10.8
million). Pre-tax profits rose 55% to £10.1 million (2000 : £6.5 million) after
an interest charge of £3.9 million (2000 : £3.3 million). Earnings per share
rose by 80% to 18.9p (2000 : 10.5p).
Despite continued investment throughout the business and the acquisition of new
dealerships, gearing was reduced from 67% to 56% by the year-end. During the
year more strict working capital controls were introduced and this has resulted
in the positive cash generation over the financial year.
Our 8% Cumulative Redeemable Preference Shares of £1 each are due for final
redemption in the year 2004. In January 2002 we have taken the opportunity to
purchase in the market 702,333 shares, representing 4.8% of the issued
Preference Share capital. This is our first step in the process to redeem the
shares by the final redemption date. Further details regarding the redemption
of Preference Shares will be fully explained in the published accounts for the
year.
DIVIDEND
Reflecting this excellent performance and encouraging outlook for the business,
the Board is pleased to recommend an 8.3% increase in the final dividend to 6.5
pence per Ordinary share for the year ended 31st December 2001, to be paid on
31st May 2002 to shareholders on the register at 17th May 2002. With the
interim dividend of 2.85 pence paid on 30th November 2001, this brings the total
dividend for the year to 9.35 pence, an increase of 8.7% over the previous year.
OPERATING REVIEW
Our new management structure introduced in June 2001 has enabled us to operate
more effectively across the business. The division of management of our
operations by manufacturer partners enables us to have greater franchise focus
and tighter control across nationally located franchise outlets. This
facilitates common sales initiatives throughout the group and successful
marketing with our internet operation into areas where we have no
representation.
Performance
Our sales performance was outstanding during the year with an overall increase
of 35% in new car sales across the group. Even after adjusting for new outlets,
our like-for-like sales increase for operations in England was 17% compared with
the national increase of almost 11% and in Northern Ireland we had a 21%
like-for-like sales increase compared to a 3% increase in the Northern Ireland
market. Overall the Group sold 76,696 new and used vehicles during the year
with particularly strong performances from Renault, Vauxhall, Land Rover,
Peugeot and Toyota. Despite a difficult trading environment, our agricultural
machinery division, Platts Harris, eradicated losses incurred in the previous
year.
Charles Hurst, our subsidiary in Northern Ireland, also had another record year.
In particular, very good results were achieved from our Renault, Nissan, Land
Rover, Toyota and Peugeot dealerships.
The strength of Sterling continues to have an impact on trading in Northern
Ireland. We have steadfastly resisted importing cars from the Republic of
Ireland and have worked closely alongside our manufacturing partners in
protecting market share. We believe this strategy will continue to be to the
overall benefit to the group and our Charles Hurst subsidiary sells 22% of all
new cars bought in the Province.
Motability repurchases, at fixed prices set some three years earlier came to an
end at the end of February 2002. Further progress on margin improvement is
therefore envisaged with the franchises concerned.
Development of our aftersales car servicing operations, including fast-fit, has
been rewarded with a year-on-year increase in operating profit of more than 40%.
This aspect of our business is increasingly benefiting from our investment in
customer relationship management and our 'Customers for Life' programmes.
Investment programme
During the year we continued to invest throughout the business to achieve good
organic growth and extend our business. The Vauxhall dealership in Liverpool
was rebuilt and a state of the art retail facility has been incorporated into
the development to accommodate the Saab franchise. In addition, the national
customer management centre is being expanded and relocated into a purpose built
facility. This centre greatly enhances our ability to build a relationship with
our customers and is now being replicated on a regional basis.
In recent years the group has extended its investments with Renault into larger
marketing territories. New outlets at Chester, Macclesfield and Colchester
contributed to a very significant improvement in profitability with this
partner.
A new purpose built facility was opened in Southport in December with the Honda
franchise which complements our well established business in Liverpool.
Together with the Honda dealerships purchased in the Midlands earlier in the
year, Lookers now represents Honda at five locations.
In Northern Ireland, planning permission has been granted for the upgrading of
our 16 acre Boucher Road retail park, the largest multi-franchise operation in
Europe, including a combined new Renault/Nissan facility. Work has already
commenced on the building of a new Lexus facility for Northern Ireland. The
accident repair facility has been transferred from the Boucher Road complex to
Dunmurry in order to release more prime retail selling space.
During the year we continued to develop our sub-prime finance arm. This enables
us to sell cars to customers wishing to repair their credit status by allowing
us to match cars we have for disposal to their requirements. This is a reversal
of the more traditional approach where customers select vehicles and are then
found a suitable finance package. Results to date from this new venture have
been encouraging.
All of our investment programmes are underpinned by our on-going commitment to
the training and infrastructure necessary to deliver our 'Customer for Life'
initiatives.
Acquisitions and disposals
Our strategy of acquiring new dealerships with strong manufacturer partners has
enabled us to profitably extend the reach of our business. The new Honda
dealerships at Nottingham, Derby and Mapperley have performed well and have been
quickly integrated into the group, producing good results. Land Rover has
continued its good progress with improved results, with the Broadfields business
at Bishops Stortford now well integrated into our south east England operating
structure.
Our Mercedes dealership, SMAC Continental in Southend, had a record year. As
part of the national reorganisation of the Mercedes Benz network it was agreed
to sell the business and certain of the assets of SMAC Continental immediately
following the year end - a disposal which generated £5.1million cash. However,
we are delighted that we have now agreed a new marketing area with Mercedes
Benz, which is much larger than the territory we relinquished with the sale of
SMAC Continental.
In Northern Ireland the Renault and Chrysler Jeep dealerships purchased last
year from the Prentice Group have now settled down well and have been integrated
under the Charles Hurst banner.
After the year-end we were awarded one of the largest Vauxhall territories in
the UK covering the Birmingham area. Initially we have purchased the business
of 452 Motor Co. Limited, situated at Castle Bromwich, followed by the two
Rystar outlets at Aston and Selly Oak from Ryland Group plc. Further
investments will be made in the area and the total investment by Lookers plc is
projected to be approximately £6million. This is a further major opportunity
with one of our preferred partners with whom we already have a very successful
relationship covering Merseyside and the Wirral.
Internet
Our central Internet operation continues to develop and we are increasing our
supply of vehicles into areas where we have no representation. We have
continued to invest in this important area of marketing and, even after taking
account of the one-off set up costs, we have traded profitably during our first
full year of operation.
OUTLOOK
Block Exemption
The final outcome of the review of block exemption is due to be announced in
September 2002. At this stage the outcome is far from certain but early
indications suggest that dealers could have more commercial independence. The
European Commission appears determined to encourage multi-franchise retailing,
cross-territory sales through channels such as the internet and greater freedom
in aftersales operations. Lookers is well placed to take advantage of all these
developments.
In Northern Ireland we already sell many different makes of car into the same
territory but from separate brand specific facilities. Over the years we have
built up considerable expertise and therefore have a business model that could
be either replicated or modified should there be changes to the rules.
Our sheer size and scale of operation may afford better buying opportunities for
the purchase of vehicles in the future. Our internet strategy is established and
our investment in customer relationship management creates further opportunities
in aftersales and servicing.
Trading conditions
The outlook for the UK car market is encouraging with a continued shift to
higher margin retail sales and the low interest rate environment forecast to
continue. The current year has started well and new car sales continue to grow.
The investment we have made across the group to reinforce our customer focus,
develop strong management structures, work closely with our manufacturer
partners and extend our reach into new regions of the UK, positions us strongly
to deliver continued good growth in the years ahead.
Fred Maguire
Chairman - Lookers plc
7th March 2002
Lookers plc
The Directors announce the following unaudited results of the Group for the year
ended 31st December 2001
Consolidated Profit and Loss Account (Summarised)
Year ended Year ended
31st December 2001 31st December
2000
(Unaudited) (Audited)
£000 £000
Turnover
Continuing Operations 688,169 582,529
Acquisitions 29,725 -
717,894 582,529
Operating Profit before Goodwill Amortisation 14,697 10,775
Goodwill Amortisation 693 670
Operating Profit
Continuing Operations 13,460 10,105
Acquisitions 544 -
14,004 10,105
Loss on closure of continuing operations - (329)
Profit before interest 14,004 9,776
Interest payable 3,939 3,266
Profit on ordinary activities before taxation 10,065 6,510
Taxation 2,495 1,820
Profit after taxation attributable
to shareholders 7,570 4,690
Dividends
- preference shares 1,167 1,168
- ordinary shares 3,168 2,912
Earnings per ordinary share 18.9p 10.5p
Lookers plc
Consolidated Balance Sheet (Summarised)
Year ended Year ended
31st December 2001 31st December
2000
(Unaudited) (Audited)
£000 £000
FIXED ASSETS
Intangible assets 9,534 9,879
Tangible assets 86,540 80,719
96,074 90,598
CURRENT ASSETS
Stocks 59,189 60,644
Debtors 30,443 29,574
Cash at bank and in hand 31 3,258
89,663 93,476
CURRENT LIABILITIES
Bank Overdraft 5,337 12,923
Trade Creditors 42,589 38,965
Other Creditors 39,299 28,044
Proposed dividend 2,202 2,032
89,427 81,964
Net current assets 236 11,512
Total assets less current liabilities 96,310 102,110
Creditors: Amounts falling due after more than one year 22,677 31,698
Provisions for liabilities and charges 77 102
Shareholders' funds 73,556 70,310
Shareholders' funds are attributable to:
Non-equity shareholders' funds 14,591 14,591
Equity shareholders' funds 58,965 55,719
73,556 70,310
Total borrowings 41,515 47,322
Gearing 56% 67%
Lookers plc
Consolidated Cashflow Statement (Summarised)
Year ended Year ended
31st December 2001 31st December
2000
(Unaudited) (Audited)
£000 £000
Net Cash inflow from Operating Activities
Operating Profit 14,004 10,105
Depreciation Charges 2,935 2,824
Profit on sale of fixed assets (388) (520)
Increase in debtors (869) (5,376)
Increase/(decrease) in creditors 7,096 (14,007)
Decrease in stocks 1,835 10,383
Goodwill amortisation 693 670
Interest paid (3,847) (3,294)
Non equity Dividends paid (1,167) (1,168)
Taxation paid (2,575) (1,229)
Net Cash Outflow from Capital Expenditure
and Financial Investment (6,536) (2,046)
Net Cash Outflow from Acquisitions and Disposals (2,388) (7,056)
Equity Dividends Paid (2,998) (2,766)
Net Cash (Outflow)/Inflow from Financing (1,436) 15,118
INCREASE IN CASH 4,359 1,638
Lookers plc
Notes:
1. Dividends
(a) Ordinary shares of 25p
An interim dividend of 2.85p per share (2000 - 2.6p per share) was paid
on 30th November 2001. A final dividend of 6.5p per share is proposed
(2000 - 6.0p per share), which if approved is payable on 31st May 2002 to
shareholders on the register at the close of business on 17th May 2002.
(b) 8% Cumulative redeemable preference shares of £1 each
Preference dividends of 4.0p per share (2000 - 4.0p per share) have
been paid for the six months to 31st March 2001 and also for the six
months to 30th September 2001 (2000 - 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
33,870,060 ordinary shares in issue during the year (2000 - 33,611,125).
There are no potential ordinary shares or share options that give rise to
a dilution of earnings per share (2000 - same).
3. Financial Information
The financial information has been prepared on the basis of the
accounting policies adopted at 31 December 2000, together with the
adoption of Financial Reporting Standard 18 - Accounting Policies. The
accounting requirements of Financial Reporting Standards 17 and 19
'Retirement Benefits' and 'Deferred Tax' have not been adopted.
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the year ended 31 December
2001 or the year ended 31 December 2000. The financial information for the
year 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 2001 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.
This information is provided by RNS
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