Final Results

Lookers PLC 12 March 2008 12 March 2008 LOOKERS plc PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 The Board of Lookers is pleased to announce its audited preliminary results for the year ended 31 December 2007. Commenting on the results, Lookers' Chief Executive Ken Surgenor said: 'I am pleased to report a year of steady progress for Lookers in line with market expectations. These results are testament to our successful strategy of having a diversified business model from which we continue to enjoy broad revenue streams. This strategy has given us a positive start to 2008 despite the challenging trading environment across the new and used car retail market and we look forward to the future with confidence.' Financial Highlights • Good growth across all the Group with turnover up 17 per cent to £1.68 billion (2006: £1.43 billion) • Profit from operations up 21 per cent to £38.3m (2006: £31.7m) • Adjusted* profit from operations up 9 per cent to £40.0m (2006: £36.6m) • Profit on ordinary activities before tax up 7 per cent to £23.0m (2006: £21.4m) • Basic earnings per ordinary share up 12 per cent to 9.09p (2006: 8.13p) • Total dividend up 15 per cent to 4.02p (2006: 3.50p) • Strong cash flow from operations of £60.1m against £55.7m last year. * Adjusted pre exceptional items and amortisation of intangible assets (see income statement). Operational Highlights • Franchise business continues to outperform the market • New car sales up 9 per cent like for like against a market up 2.5 per cent • New car sales represented only 30 per cent of gross profit, in line with strategy to broaden revenue streams • Approval to represent Ford - with 8 dealerships now in the Group • Acquisition of Dutton Forshaw for £54.9 million, with integration plan on track • Restructuring of business and management of our used car supermarkets • Strong performance across our independent aftermarket parts distribution business • New Sheffield and Nottingham FPS Distribution facilities open and fully operational • Acquisition and successful integration of BTN Turbo Charger Service Limited in a fast growing market An analysts' briefing will be held at the offices of Hudson Sandler at 29 Cloth Fair, London EC1A 7NN at 9.30am on 12 March 2008. Enquiries: Lookers Telephone: 020 7796 4133 Ken Surgenor, Chief Executive (on 12 March only, and on 0161 291 0043 thereafter) David Dyson, Finance Director Hudson Sandler Telephone: 020 7796 4133 Andrew Hayes/Nick Lyon/Kate Hough CHAIRMAN'S REVIEW I am pleased to report that Lookers has delivered another strong performance in 2007. Our franchise business again performed well despite the tougher market conditions in the second half of the year and once again outperformed the market, with Lookers' new car sales up 9 per cent against a market up 2.5 per cent. Our independent aftermarket parts distribution business had an excellent year and we continue to monitor opportunities to expand our business in this core market. These results have been achieved despite the underperformance of our Used Car Supermarkets and the acquisition of Dutton Forshaw Group. Dutton Forshaw only became part of Lookers for the traditionally slower fourth quarter. FINANCIAL HIGHLIGHTS AND DIVIDEND The Group has continued to grow both organically and by acquisition with turnover advancing by 17 per cent to £1.68 billion. Profit before tax at £23.0 million has increased by 7 per cent against £21.4 million last year. The adjusted profit before tax was £24.5 million compared with £26.4 million last year. We have continued to outperform the new car market with like for like sales up 9 per cent against a market up 2.5 per cent. However, as previously highlighted in our fourth quarter trading update, the more competitive trading environment in the second half of the year did place some pressure on margins for both new and used cars. Reflecting this solid performance and our confidence in the Group's future prospects, the Board is recommending a final dividend of 2.42p, making a total dividend for the year of 4.02p, an increase of 15%. CORPORATE DEVELOPMENTS During the year we announced two significant developments in our franchise business. In August we were pleased to receive approval to represent Ford, the UK's leading motor car supplier by market share and, in doing so, we now hold franchises that represent 83% market coverage of the UK new car business. This is in line with our strategy of having as wide a portfolio of manufacturers as possible to protect us from the product cycle of each individual manufacturer. In October we announced the acquisition of the entire issued share capital of Dutton Forshaw Group, the motor retail division of Lloyds TSB Asset Finance Division. This acquisition allowed us to strengthen our presence in existing market areas with certain manufacturers as well as giving us a foothold in new areas in the UK, in line with our ongoing strategy of broadening our geographical base. We continue to develop our complementary business streams alongside our franchise operations and in May we announced that we had further strengthened our independent aftermarket parts business with the acquisition of BTN Turbo Charger Service Limited. THE FUTURE Reflecting the current economic outlook, we anticipate trading will remain competitive for the year ahead. However, Lookers is well positioned to continue to make progress in 2008 because of our diversified business model which generates a broad range of revenue streams. Our first priority is to grow profits organically by improving operational performance in our businesses as well as taking a robust approach to underperforming outlets. We will continue to consider acquisition opportunities against our specific criteria and will evaluate each one on its merits. As anticipated, the timing of the Dutton Forshaw acquisition meant that it was earnings dilutive in 2007 but will be earnings enhancing in 2008. We look forward to seeing the strategic benefits of this acquisition in the coming year, as well as those from the re-organisation and restructuring of our used car supermarkets. 2008 marks Lookers' centenary year and a significant landmark in the history of the business. It originated from just a single outlet in Manchester and has grown organically and through acquisitions to the successful national business which it is today. I would like to take this opportunity to thank all of the team at Lookers for their hard work and support over the years. Today Lookers has one of the most robust business models in the industry with an exciting future ahead as a leading operator in our chosen markets and the Board looks forward to the future with confidence. Phil White Chairman 12 March 2008 CHIEF EXECUTIVE'S REVIEW These results reflect the continued success of Lookers' stated strategy and the robust nature of our business model. Across our franchise business we pride ourselves on our close relationships with our manufacturer partners and this remains a key priority as we continue to grow and expand. Our de-centralised dealer enfranchised model is at the heart of our success in delivering superior returns from the franchises we operate. We continue to focus on the development of complementary businesses to our franchise operations. We have pursued this strategy for some time and continue to broaden our revenue streams, identify new growth opportunities and reduce our reliance on the new car market. Consequently new car sales now represent only 30 per cent of gross profit with our after sales business representing 54 per cent. ACQUISITIONS Our ability to successfully integrate acquisitions whilst retaining and incentivising local management remains a key part of our success. Both the fragmented nature of the motor retail and parts distribution industry continue to offer us excellent opportunities to further develop our business. In August we were pleased to receive approval to represent Ford, the UK's leading motor car supplier by market share. Through the acquisition of certain assets from the administrator of Dixons Motor Group we were able to take up the position as the solus Ford dealer in Sheffield in September for both passenger cars and light commercial vehicles. In October we announced the acquisition of the entire issued share capital of Dutton Forshaw Group, the motor retail division of Lloyds TSB Asset Finance Division for a total consideration of £54.9 million. The acquisition was in line with our stated strategy to expand the existing market areas in which the Group already operates. It also enabled us to build on our new relationship with Ford, bringing the Group's total number of Ford outlets from one to eight, and expanded our already established relationships with Chevrolet, Chrysler Jeep and Dodge, Citroen, Honda, Hyundai, Land Rover, Peugeot, Mercedes-Benz and Volkswagen. Significantly this acquisition has further strengthened our presence in the North West and the South East of England and provided a foothold into South Wales. Since the completion of the acquisition in October we have made excellent progress on integrating these dealerships and implementing measures to drive further growth. We continue to develop our complementary business streams alongside our franchise operations and in May announced that we had further strengthened our independent parts division with the acquisition of the entire share capital of BTN Turbo Charger Service Limited for £3.9 million. The business has now been successfully integrated and its performance has been excellent, beyond management's original expectations. FINANCIAL COMMENTARY AND DIVIDEND Turnover has increased to £1.68 billion from £1.43 billion last year, representing growth of 17 per cent. As previously highlighted, the more competitive trading environment in the second half of the year did place some pressure on retail margins for both new and used cars. Nonetheless we continue to remain focused on driving out operating efficiencies and accordingly adjusted profit from operations increased from £36.6 million to £40 million. Through our proven successful strategy we continue to drive organic growth, which contributed significantly to this increase. Profit before exceptionals and amortisation of intangible assets amounted to £24.5 million (2006: £26.4 million), generating adjusted earnings per share of 9.81p (2006: 10.63p). Dividend The Board is proposing a final dividend of 2.42p, bringing the total dividend for the year to 4.02p (2006: 3.50p). This increase on 2006 reflects our commitment to a more progressive dividend policy, as outlined previously and the Board's continued confidence in the Group's prospects. Subject to final approval at the Annual General Meeting, the final dividend will be paid on 30 May 2008 to shareholders on the register at 11 April 2008. OPERATING REVIEW Franchised Business The Group saw a strong performance across its new car franchise network in the first half of the year and despite a more competitive trading environment in the second half of the period, we continued to outperform the market and gain market share. As a result, new car sales for the Group were up 9 per cent like for like for the year against a market up 2.5 per cent. This strong performance can once again be credited to a result of the combined scale and geographic spread of our operations based on a broad range of manufacturing partners with whom we have strong relationships. The Group currently operates 141 franchise outlets across 31 brands. In order to achieve an in-depth focus on and understanding of each of the brands, we operate a decentralised management structure, with key management directors taking responsibility for their respective franchises across the UK. In August, we were delighted to receive approval from Ford the UK's leading motor car supplier by market share, and the introduction into our portfolio of Ford which complements our existing mix of volume and prestige brands. Through the acquisitions of various assets from the administrators of Dixons Motor Group and the acquisition of Dutton Forshaw, we have since expanded our relationship with Ford to include a further seven dealerships. The recently launched flagship Mondeo has had a powerful impact on this brand. In 2006, we were awarded a Mercedes-Benz franchise market area and have been pleased with the progress we have made both financially and operationally during 2007. We have improved 'customer satisfaction' levels, as measured by the manufacturer, considerably in both sales and aftersales within our short period of ownership. Whilst it has traded satisfactorily and in line with our expectations we are confident that this can still be developed further. The acquisition of Dutton Forshaw has enabled us to double our number of Mercedes dealerships from four to eight in adjacent territories and increased our presence in Mercedes in the South East. We see further opportunities to improve the performances of these dealerships. Across our established franchises, the year has seen yet another strong performance from Vauxhall. Land Rover and Jaguar have performed well in Scotland and Northern Ireland, however as previously highlighted at the half year, the South East remains more challenging. Charles Hurst, our business in Northern Ireland has once again delivered a strong performance. The division continues to outperform the Northern Ireland market with new car sales up 6.7 per cent against a market up 5.6 per cent. Used Car Supermarkets As previously highlighted, we have been extremely disappointed with the performance in this area of our business which delivered an operating loss of £4.2 million for the year. However, the year has seen a full review of our used car supermarket business. We took the decision to close the 'greenfield' site in Essex because we could not see this business making a satisfactory return and we have rationalised and restructured two of our sites in the South West and the Midlands with a completely new management team. The benefits of the rationalisation programme and the strengthening of the management team started to take effect towards the end of 2007. As a result of the impact of these actions, together with a significant reduction in vehicle stocks, we expect this business to return to profit during 2008. Independent Aftermarket Parts Distribution Our independent aftermarket parts business continues to move from strength to strength and has once again delivered an excellent performance in 2007. Our strategy of leveraging our unique national infrastructure with additional product groups continues to yield excellent returns and complement strong organic growth. FPS Distribution ('FPS'), the only national parts distributor, achieved excellent results in 2007 with profit from operations up 12 per cent on last year after absorbing an additional £0.8 million of operating costs resulting from the new purpose built distribution facility in Sheffield. We expect to see a steady improvement in the contribution from this investment as additional products and distribution contracts are taken on. In June we opened a new FPS outlet in Nottingham which has provided further support to, and enhanced, our distribution capability across the East Midlands and we have been delighted with its performance to date. We continue to ensure that our product offer is market leading and during 2007 increased our offer to include exhausts which are already available from over half of our sites across the division. In order to further strengthen this increasingly important part of our business we acquired BTN Turbo Charger Service Limited during the period. The acquisition expands our offering in the growing parts distribution aftermarket, particularly in the fast growing sector of turbochargers. The acquisition has been successfully integrated and its strong performance has already exceeded management's original expectations. Apec Limited, our braking parts specialist, has also had a good year. The business benefited from a warehouse reorganisation at the end of 2006 to support an enlarged product offering and the latter end of 2007 saw the successful launch of a new range of hydraulic brake parts to the market. OUTLOOK Across our franchised businesses trading is in line with expectations. For the crucial March plate change month, new cars delivered in the first few days of the month are ahead of last year on a like for like basis, which gives us a solid platform to achieve a strong performance in the first three months. Our used car supermarkets are benefitting from the business and management restructuring exercise we carried out late last year. This has already led to a much improved financial performance and we expect further improvements as the year progresses. Our independent aftermarket parts business continues to go from strength to strength. We are enjoying the full benefit of our investment last year in the Sheffield warehouse and the expansion of our branch network, together with the excellent contribution from BTN Turbo, which did not come on stream until May 2007. In January we completed the relocation of the Birmingham depot to larger premises and plan to relocate both the Liverpool and Bristol depots to larger sites, to facilitate both the increasing demand and to be able to continue the rollout of our exhaust offering. We have also added a further distribution contract with the Lucas branded lighting and mirror programme for which we now provide the UK distribution further expanding the FPS product offering. The integration of our Dutton Forshaw businesses is at an advanced stage and we expect this to be earnings enhancing in 2008, compared to a post acquisition loss in 2007, due to the timing of the acquisition. We have recently signed Heads of Agreement to acquire two Volkswagen businesses and a contract hire operation. This will increase our representation of Volkswagen to 11 outlets. In addition, it gives us an entry into the contract hire market with an experienced management team. Completion is anticipated to be at the end of March for a cash consideration of approximately £3 million. In addition to a plethora of model year revisions and niche models we will benefit in 2008 from a number of major product launches. The most significant of these will be the Vauxhall Insignia, which replaces the Vectra, the Volkswagen Tiguan compact 4 x 4, and the Jaguar XF, which has received outstanding reviews and was voted Car of the Year for 2008. The Group has grown considerably in recent years and we recognise the need to align our senior management resource in line with our increased scale. We therefore plan to appoint a third Operations Director to the Motor Division in order to ensure that our reporting lines are optimised and there is the correct level of operational focus on each business. The new appointment will be effective from April 2008. In summary, the market for new and used cars remains challenging. Our franchised businesses are, nonetheless, performing to expectations, our used car supermarkets are showing significant year on year improvement and our independent parts business is ahead of our planned performance. This, combined with the full year contribution from the Dutton Forshaw businesses, gives us confidence that 2008 will represent another year of progress for the Group. Ken Surgenor Chief Executive 12 March 2008 FINANCE DIRECTOR'S REVIEW 2007 Turnover has increased by 17 per cent to £1.68 billion from £1.43 billion of which 12% was organic. The effect of the pressure on new and used margins has been to reduce gross profit by 60 basis points to 12.3 per cent from 12.9 per cent. However we continue to control costs and this has resulted in a 9 per cent increase in profit from operations before amortisation and exceptional items. Profit before tax for the year was £23.0 million against £21.4 million, an increase of 7 per cent, but before amortisation and exceptional items was £24.5 million, compared with the £26.4 million reported last year. This has resulted in adjusted earnings per share of 9.81p against 10.63p last year. Net exceptional items amounted to a charge of £0.4 million against a charge of £4.1 million last year which included £4.1 million of bid defence costs. CASHFLOW AND CAPITAL EXPENDITURE Once more, the Group saw strong cash flow from operations of £60.1 million against £55.7 million last year and despite significant investment of £81.7 million in acquisitions and net capital expenditure, we have managed to keep our gearing at 113 per cent compared with 79 per cent the previous year. We renegotiated a £260 million banking facility in October 2007 of which £125 million was utilised at the year end, providing significant headroom for expansion. Whilst we continue to hedge interest rates to ensure a degree of certainty over the Group's blended borrowing costs, there was nevertheless a succession of base rate rises which adversely impacted our interest charge. In addition, a significant proportion of our funds are based on LIBOR rates, which in the second half of 2007 were considerably higher than the equivalent base rates prevailing at the time. The Group's hedging strategy is to ensure at least 50% of the 'core' debt is hedged against rate rises. Following the recent acquisitions the Group will ensure this level of hedging is maintained at the appropriate time. PROPERTY PORTFOLIO Our portfolio of freehold and long leaseholds continues to grow and at 31 December amounted to £185.2 million at net book value against £137.6 million last year. DIVIDENDS The total dividend of 4.02 pence represents an increase of 15 per cent and is covered approximately 2.5 times based on adjusted earnings. We will again be offering a scrip alternative because the take up is well supported with approximately 3.6 million new shares being admitted to the Stock Exchange, since its inception. PENSION DEFICIT The Group has been actively managing its pension liability. Not only has the Group continued to fund the deficit by contributing an additional £2.1 million per annum which commenced in 2005 but we have also taken active measures to reduce our exposure to this liability. The reported deficit has remained broadly static at £11.2 million in 2007 from £11.5 million last year. However, we have also now consolidated the Dutton-Forshaw Pension liability of £12.6 million to give a total pension deficit of £23.8 million. We will continue to actively manage our exposure to these two schemes. David Dyson Finance Director 12 March 2008 The Directors announce the following audited results of the Group for the year ended 31 December 2007 Consolidated Income Statement For the Year Ended 31 December 2007 Note 2007 2006 £M £M Revenue 1,680.0 1,426.7 Cost of Sales (1,473.0) (1,242.8) Gross profit 207.0 183.9 Distribution costs (125.8) (106.3) Administration expenses (43.2) (46.3) Other operating income 0.3 0.4 _______ ______ Profit from operations 38.3 31.7 Operating profit before amortisation and exceptional items 40.0 36.6 Amortisation of intangible assets (0.8) (0.8) Exceptional items 3 (0.9) (4.1) Profit from operations 38.3 31.7 Interest payable 4 (16.9) (10.7) Interest receivable 4 1.9 0.5 Debt issue costs (0.3) (0.1) Profit before tax, amortisation, exceptional items and debt issue costs 24.5 26.4 Amortisation of intangible assets (0.8) (0.8) Total Exceptional items 3 (0.4) (4.1) Debt issue costs (0.3) (0.1) ______ _____ Profit on ordinary activities before taxation 23.0 21.4 Taxation 6.6 6.8 ______ ______ Profit for the year 16.4 14.6 ====== ====== Basic earnings per ordinary share 9.09p 8.13p ====== ====== Diluted earnings per ordinary share 9.05p 8.09p ====== ====== Adjusted earnings per ordinary share 9.81p 10.63p ====== ====== Dividend per ordinary share - interim 1.60p 1.30p - final 2.42p 2.20p ______ _____ 4.02p 3.50p ====== ====== Consolidated Balance Sheet As at 31 December 2007 2007 2006 £M £M NON CURRENT ASSETS Goodwill 43.0 28.6 Intangible assets 15.6 16.0 Property, plant & equipment 214.0 160.9 _______ _______ 272.6 205.5 _______ _______ CURRENT ASSETS Inventories 317.5 257.9 Trade and other receivables 107.4 82.6 Cash and cash equivalents 14.8 2.9 _______ _______ 439.7 343.4 _______ _______ TOTAL ASSETS 712.3 548.9 ======= ====== CURRENT LIABILITIES Financial liabilities - Bank loans and overdrafts 10.0 8.3 - Hire purchase obligations 0.1 0.1 Trade and other payables 413.9 335.0 Current tax liabilities 8.6 3.9 Short term provisions 0.4 0.3 ________ ________ 433.0 347.6 ======== ======== NET CURRENT ASSETS/(LIABILITIES) 6.7 (4.2) _______ _______ NON CURRENT LIABILITIES Financial liabilities - Bank loans 130.2 76.4 - Hire purchase obligations - 0.1 Retirement benefit obligations 23.8 11.5 Deferred tax liabilities 12.8 7.9 Long term provisions 1.0 1.1 _______ _______ 167.8 97.0 ======= ======= TOTAL LIABILITIES 600.8 444.6 ======= ======= NET ASSETS 111.5 104.3 ======= ====== SHAREHOLDERS' EQUITY Ordinary share capital 9.1 9.0 Share premium 5.6 4.3 Capital redemption reserve 14.6 14.6 Other reserve 0.4 0.2 Retained earnings 81.8 76.2 ________ _______ TOTAL EQUITY 111.5 104.3 ======= ====== Net Borrowings 125.5 82.0 ======= ====== Gearing 113% 79% ======= ====== Consolidated Cashflow Statement For the year ended 31 December 2007 2007 2006 £M £M Cash generated from operations Profit for the year 16.4 14.6 Adjustments for: Tax 6.6 6.8 Depreciation 7.7 5.8 Loss on disposal of plant and equipment 0.1 0.4 Profit on disposal of properties (1.9) (0.5) Amortisation of intangibles 0.8 0.8 Curtailment gain (0.4) - Interest income (1.4) (0.5) Interest receivable on VAT refund (0.5) - Interest payable 16.9 10.7 Debt issue costs 0.3 0.1 Share based payments charge 0.2 0.2 Changes in working capital (excluding effects of acquisitions and disposal of subsidiaries) Decrease/(increase) in inventories 14.7 (58.4) Decrease/(increase) in trade and other receivables 1.6 (15.5) Increase in payables 1.8 95.0 Decrease in pensions (2.8) (3.4) Movement in provisions - (0.4) ______ _____ Cash generated from operations 60.1 55.7 Interest paid (17.4) (10.9) Interest received 1.6 0.1 Tax paid (0.7) (5.5) _______ ______ Net cash from operating activities 43.6 39.4 _______ ______ Cashflows from investing activities Acquisition of subsidiaries (net of cash acquired) (72.5) (27.6) Purchase of property, plant and equipment (12.0) (20.3) Proceeds from sale of property, plant & equipment 2.8 1.3 Proceeds from sale of business - 1.5 ______ _____ Net cash used by investing activities (81.7) (45.1) ______ _____ Cashflows from financing activities Proceeds from issue of ordinary shares - 0.7 Repayment of loans (2.6) (70.6) New loans 60.0 84.7 Debt issue costs (1.0) (0.9) Principal payments under HP agreements (0.1) (0.1) Dividends paid to group shareholders (5.5) (5.1) Net cash from financing activities 50.8 8.7 ====== ===== Increase in cash and cash equivalents 12.7 3.0 Cash and cash equivalents at the beginning of the period 2.1 (0.9) _______ ______ Cash and cash equivalents at the end of the period 14.8 2.1 ====== ===== Consolidated Statement of Recognised Income and Expense For the year ended 31 December 2007 2007 2006 £M £M Actuarial (losses)/gains recognised in post retirement benefit scheme (5.4) 5.1 Taxation credit/(charge) thereon 1.5 (1.5) ______ ______ Net (losses)/gains recognised directly in equity (3.9) 3.6 Profit for the year 16.4 14.6 ______ ______ Total recognised income and expenses for the period 12.5 18.2 ===== ===== Notes 1. Basis of Preparation The financial information has been prepared under International Financial Reporting Standards (IFRS) issued by the IASB and as adopted by the European Commission (EC) and on the same basis as in 2006 other than the adoption of IFRS 7 'Financial Instruments: Dislosures'. Further information in relation to the Standards adopted by the Group is available on the Group's website www.lookers.co.uk. Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS's, this announcement does not itself contain sufficient information to comply with IFRS's. The Group expects to publish full financial statements that comply with IFRS's in April 2008. The information for the years ended 31 December 2007 and 2006 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985, but is derived from the 31 December 2007 accounts. A copy of the statutory accounts for 2006 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified. Those for 2007 will be delivered following the company's annual general meeting which will be convened on 13 May 2008. The auditors have reported on these accounts; their report was unqualified and did not contain any statement under Section 237(2) or (3) of the Companies Act 1985. 2. Dividends The final dividend proposed at the rate of 2.42p per share (2006 - 2.20p per share) is payable on 30 May 2008 to shareholders on the register at close of business on 11 April 2008. Together with the interim dividend paid 30 November 2007, the total dividend for 2007 is 4.02p (2006 - 3.50p) 3. Exceptional items 2007 2006 £M £M Bid defence costs/strategic review (0.7) (4.1) Loss on termination of businesses/restructuring costs (1.3) (0.5) Profit on disposal of properties 1.9 0.5 Aborted acquisition costs (1.2) - VAT refund 0.4 - _____ _____ Exceptional items included within Operating Profit (0.9) (4.1) Interest on VAT refund 0.5 - _____ _____ Total exceptional items (0.4) (4.1) ==== ==== 4. Interest costs - net £M £M Bank interest payable (11.5) (7.2) Hire purchase agreements (0.1) - Net interest payable on pensions scheme - (0.2) Interest on consignment vehicles (5.3) (3.3) _____ ______ (16.9) (10.7) Fair value gains on interest rate hedges - 0.4 Bank interest receivable 1.1 0.1 Net interest receivable on pension scheme 0.3 - Interest received on VAT refund 0.5 - _____ _____ 1.9 0.5 _____ _____ Interest Costs - net (15.0) (10.2) ==== ==== 5. Earnings per share The calculation of earnings per ordinary share is based on profits on ordinary activities after taxation amounting to £16.4 million (2006: £14.6million) and a weighted average of 180,371,502 ordinary shares in issue during the year (2006: 179,616,603). The diluted earnings per share is based on the weighted average number of shares, after taking account of the dilutive impact of shares under option of 785,360 (2006: 901,994). Adjusted earnings per share is stated before amortisation of intangible assets, loss on disposal/termination of businesses, the profit on disposal of properties, bid defence/strategic review, business relocation and integration costs, aborted acquisition costs and the exceptional VAT credits and is calculated on profits of £17.7 million for the year (2006: £19.1 million). 2007 2006 Earnings Earnings Earnings Earnings £M per share £M per share P P Earnings attributable to ordinary shareholders 16.4 9.09 14.6 8.13 Amortisation of intangible 0.8 0.44 0.8 0.44 assets Exceptional items (net) 0.4 0.22 4.1 2.28 Tax on exceptional items (net) 0.1 0.06 (0.4) (0.22) ______ ______ ______ ______ 17.7 9.81 19.1 10.63 ====== ====== ====== ====== 6. Property, Plant and Equipment 2007 2006 £M £M Freehold property 135.5 99.0 Long leasehold property 49.7 38.6 Short leasehold property 9.8 8.5 Plant and machinery 7.2 5.4 Fixtures, fittings, tools and equipment 11.8 9.4 _______ ______ 214.0 160.9 ====== ===== This information is provided by RNS The company news service from the London Stock Exchange R ILFSDVAILLIT

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