Half Yearly Report

RNS Number : 6307L

Lookers PLC

14 August 2013

 

14 August 2013

LOOKERS plc

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2013

Lookers plc, ("Lookers" or "the group") one of the leading UK motor retail and aftersales services groups, announces its results for the six months ended 30 June 2013.

Peter Jones, Lookers Chief Executive, said:

"We are very pleased to report that Lookers has achieved another record trading performance and that the group has delivered four and a half successive years of profit improvement.  Our motor division has produced an excellent result and the parts division has performed well and returned to growth. Operational cash flow remained strong in the period, resulting in a strengthened balance sheet with relatively low borrowings and gearing. The continuing recovery in the UK new car market and the recovery in our parts division gives us confidence that we can continue to grow the business, deliver improved results for the full year and increase dividend payments to our shareholders."

 

Financial highlights

·           Revenue increased to £1.24 billion (2012: £1.03 billion) - up 20.3%

·           *Adjusted profit before tax increased to £28.8 million (2012: £24.1 million) - up 19.5%

·           Profit before tax increased to £28.0 million (2012: £23.3 million) - up 20.2%

·           Earnings per share increased to 5.52p (2012: 4.55p) - up 21.3%

·           Strong cash flow from operations of £42.4 million (2012: £32.6 million)

·          Net debt reduced to £39.1 million (31 December 2012: £48.2 million)

·           Gearing reduced to 18% (31 December 2012: 22%)

·           Increase in interim dividend of 10% to 0.88p per share (2012: 0.80p)

Operational highlights

·     Record performance from the motor division

·     Growth in new retail car volumes ahead of the market with increased margins

·     Further strong growth in used car volumes and margins

·     Revenue maintained in aftersales

·     Good recovery in our market leading independent aftermarket parts division

*Adjusted before amortisation of intangible assets and debt issue costs

Enquiries:

Lookers	Today 020 7920 3150
Peter Jones, Chief Executive Andy Bruce, Chief Operating Officer	Thereafter:  0161 291 0043
Robin Gregson, Finance Director
Tavistock Communications	Telephone:  [phone]
Catriona Valentine/Keeley Clarke

Interim Management Report

INTRODUCTION

I am very pleased to report that Lookers has delivered another excellent trading performance, generating a record half year *adjusted profit before tax of £28.8 million, compared to £24.1 million for the same period last year. This result, combined with the continuing recovery in the UK car market gives the board confidence that Lookers should deliver a strong performance for the full year.

The UK new car market improved by 10% during the six months to 30 June 2013 with total registrations of 1.16 million units. Against this improving background, our motor division delivered an excellent performance, outperforming the market in both new and used car volumes. Further details of this are provided in the operating review below.

As previously reported, turnover and profitability at our independent parts division had been affected by difficult market conditions. However, I am very pleased to report that we have made significant progress with the division, improving both turnover and profit before tax to levels which are ahead of last year.

Our continued growth demonstrates the strength of the group's businesses which is underpinned by strong operational cash flow. Working capital continues to be well managed which, combined with the generation of significant levels of free cash flow, has reduced borrowings compared to the start of the year, despite significant investment expenditure in the period. Our improved financial position and strong trading results have enabled the company to increase the interim dividend, further details of which are set out below.

FINANCIAL REVIEW

Turnover increased by 20.3% to £1.24 billion (2012: £1.03 billion) and operating profit before amortisation of intangible assets increased to £35.0 million from £30.1 million last year. I am pleased to report that, once again, there were no exceptional charges. Good control of working capital ensured that interest costs of £6.2 million were maintained at a similar level to last year. *Adjusted profit before tax increased by 19.5% to £28.8 million compared to £24.1 million last year and profit before tax improved by 20.2% to £28.0 million (2012: £23.3 million). Earnings per share, as disclosed in note 6, increased by 21.3% to 5.52p compared to 4.55p. Profit after tax improved by 21.5% to £21.5 million (2012: £17.7 million) after a tax charge of £6.5 million, which is an effective tax rate of 23.2%.

Cash flow for the six months continued to be strong with cash generated from operations of £42.4 million (2012: £32.6 million), an increase of 30%. We invested £8.7 million on the acquisition of Shields Automotive Limited ("Shields Automotive") and £8.5 million on capital expenditure, which had an impact on net cash flow in the period. Net cash inflow was therefore £17.4 million compared to £8.9 million in 2012.  The group continues to benefit from a strong balance sheet where, despite significant spending on investment, net borrowings reduced by £9.1 million to £39.1 million compared to £48.2 million at the start of the year. This reduced gearing to 18% and the ratio of net debt to EBITDA has now fallen to 0.59 compared to 0.80 at the start of the year. The value of freehold and long leasehold properties of £195 million at the end of the period remains a key strength of the business.

The group's banking facilities, which are renewable in March 2016, consist of a term loan of £45 million and a revolving credit facility of £55 million, giving total facilities of £100 million. There is also the potential to increase the term loan by an additional £30 million to fund future acquisitions. As net debt at 30 June 2013 was £39.1 million, the group has a significant level of unutilised bank facilities of £60.9 million, which provides significant financial security for the group.

*Adjusted before amortisation of intangible assets and debt issue costs

DIVIDEND

I am pleased to announce that, given the encouraging results and strong financial position of the group, the board intends to increase the interim dividend by 10%, which follows the 29% increase in the dividend delivered over the last two years. The interim dividend will therefore be 0.88p per share (2012: 0.80p) and will be payable to shareholders on 29 November 2013.

BOARD CHANGES

I have several changes to the board to announce today. The first of which is that Peter Jones, our Chief Executive, has decided to retire from this position on 31 December 2013. Peter has been an outstanding Chief Executive of the group since his appointment on 1 October 2009. He has led the company during a period where the profitability and market capitalisation of the company have increased significantly with consecutive record results from 2009 to the present day, with these record interim results. Peter is a top class leader with exceptional management qualities and I have really enjoyed working with him. Together with all my colleagues on the board I would like to thank Peter for his major contribution to the success of Lookers and we wish him well for the future.

I am however, delighted to announce that from 1 January 2014 Andy Bruce, our Chief Operating Officer, will be our new Chief Executive.  Andy too, is a key member of our board and the development of the motor division under Andy's leadership has been tremendous. I have absolute and total confidence that the group's continuing development could not be in better hands and we wish Andy continued success in his new role.

I am equally delighted to announce the appointment of Nigel McMinn as Managing Director of our motor division and appointment as a director of the company, to take over from Andy Bruce. Nigel is a Chartered Accountant who has a wealth of experience in the sector, latterly as CEO of Benfield Motor Group and previously in senior positions with Pendragon plc and Reg Vardy plc, who enjoys a superb reputation with our manufacturer partners, his peers and most importantly his team.  Nigel joins the company on 19 August and his appointment will, I am confident, be a major factor in the continuing development of our motor division. We welcome him to Lookers and wish him every success in his new role.

OPERATING REVIEW

Motor Division

Our motor division consists of 126 franchise dealerships, representing 32 marques from 69 sites. The business generates revenue from the sale of new and used cars, vehicle servicing and repair and the sale of franchise parts. I am pleased to report that, in the first six months of this year, the motor division increased profit before tax by 18.5%, to £26.3 million, compared to £22.2 million last year.

We continue to improve the balance of our portfolio of franchise representation and, since the start of the year, we have sold or closed five underperforming businesses and made one acquisition. This was Shields Automotive, whichoperates a significant Land Rover dealership in South Glasgow and was acquired for a cash consideration of £8.7 million on 16 May. This included a number of surplus freehold properties, two of which were sold before the half year for proceeds of £4.3 million, reducing the net consideration paid for the business.

New Cars

The UK new car market increased by 10% to 1.16 million cars in the period, with the retail new car market increasing by 17% and the fleet market increasing by 4.3%. Our core retail new car sales increased by 19.0% compared to 2012, on a like for like basis, 2% ahead of the UK market.  In the fleet sector, our volumes fell by 8%, as we continue to improve the quality of our fleet business and avoid very low margin business.

Gross profit per unit on new retail cars increased by 6.9%, whilst gross profit per unit on fleet business increased by 12.9%. In terms of fleet gross profit, the increased margin more than offset the reduction in gross profit from the lower volume. New car market conditions have been relatively buoyant during the first six months of the year and our order take for the important month of September is tracking on plan. Industry forecasts suggest that the new car market will continue to benefit from prevailing good conditions in the second half of the year, anticipating an outturn for the year in excess of 2.2 million units compared to 2.05 million in 2012.

Used Cars

Group sales volumes increased by an excellent 22%, when compared on a like for like basis to 2012, and gross profit per unit increased by 6.4%. This was an extremely positive performance compared to DVLA market statistics for quarter one, which indicated that total used car transactions were 5% lower than the previous year. We have continued to follow a robust stocking policy to deliver increased stock turn as well as increasing our resource for sourcing good quality used car stock. These policies have been in place some time now and it is encouraging to see the improved volumes and margins that are now being achieved. A further factor which is helping to improve used car volumes is the increasing number of leads being generated from the group website, which have increased by 37% compared to last year. This is an area in which we shall continue to invest so that our website maintains its position as one of the best in the industry. 

Aftersales

Turnover in the important area of aftersales remained consistent with the prior year, despite continued pressure in this sector of the market. On a like for like basis, revenue was marginally lower than the previous year. This was due to low margin parts sales in the prior year, which were not repeated this year. After adjusting for this factor, aftersales turnover increased by 1.2% and this was accompanied by an increase in margin from 40.2% to 41.6%. This is a positive result which demonstrates our continued focus on increasing average customer spend per visit using electronic vehicle health checks. Sales of service plans, where customers commit to longer term contracts for vehicle servicing, which improves customer loyalty and retention, have also increased significantly. Our commitment to enhance customer experience continues with the objective of improving retention and delivering our "customers for life" strategy, to strengthen the business and further improve profitability.

Parts Division

Our independent aftermarket parts division operates through three companies, FPS, Apec Braking and BTN Turbo, each supplying automotive parts to the independent aftermarket. Each of these businesses is a market leader in its sector and the customer base is primarily motor factors which in turn, supply the independent repair sector. The total vehicle car parc in the UK market has been stable at over 31 million vehicles, with the markets served by the parts division representing up to 80% of the total.

As referred to earlier in my report, our parts division experienced challenging market conditions in 2012, although managing to maintain turnover in that year. I am therefore very pleased to report that the parts division has returned to growth with both turnover and profits increasing compared to the prior year, against a background of an improving market although one that  continues to be competitive.

Turnover for the division increased by 3% compared to the prior year as we continue to invest in existing and new product lines. Whilst sales volumes increased, this was accompanied by a small reduction in margin. Overheads, however, were carefully controlled resulting in an increase in profit before tax of 5% to £6.56 million, compared to £6.2 million in the previous year. Despite the market conditions, our parts division continues to make a significant contribution to group earnings.

FPS, our national warehouse distributor of quality branded automotive parts, is the largest company in the parts division and represents almost 75% of divisional turnover. Turnover increased by 4% with profit before tax increasing by a similar amount. The increase in turnover resulted from active pricing management leading to higher product volumes in conjunction with new product development and range extension. The business continues to benefit from efficiency improvements particularly from further increases in electronic order capture.

Apec Braking, the aftermarket leader in the UK for 'dry' braking (pads and discs), also had a difficult year in 2012 due to weak demand, resulting from significant competition in the market, particularly from lower cost, lower quality products. I am therefore pleased to report a return to growth for Apec with turnover increasing by 1% compared to the prior year. Demand for core products was stable and a secondary tier braking product was introduced in the period, which helped to secure key customers and protect the business from lower priced competitors. This was accompanied by a small recovery in margin which, combined with careful overhead control, resulted in a modest improvement in profit before tax.

BTN Turbo, the UK's leading distributor of turbochargers and supplier of related value added services, continued to experience competitive trading conditions. Turnover reduced by 3% as customers increased their take up of the OMX exchange programme instead of new product, although this did help to protect against a loss in sales volumes.  Whilst margins were maintained, the reduced turnover resulted in a modest reduction in profit, which was restricted to this level by careful control of overheads. The sector remains competitive but the business continues to pursue development opportunities within the turbo and ancillary products sector of the market.

OUTLOOK

Whilst the recovery in the UK economy and customer confidence has been tentative in 2013, there has clearly been a welcome recovery in the UK new car market and our motor division has produced an outstanding result in the first six months of the year. Growth in new retail sales at Lookers has been ahead of a buoyant and recovering market and we have a healthy order book for the delivery of new cars in the important month of September. We have also benefited from a substantial increase in used car volumes, increasing both our share of this market and improving margins. The parts division has made a good recovery in the first half, despite challenging but improving market conditions, and this should continue during the second half.

We have continued to benefit from strong operational cash flow, which has strengthened the group balance sheet and we have substantial headroom in our bank facilities. Working capital continues to be closely controlled and net debt is at a lower level than both budget and the start of the year. This provides secure funding capacity and financial security for the group to grow the business through further strategic acquisitions in both the motor and parts divisions.

As the results for the first half of the year demonstrate, we have now had four and a half years of improving financial performance, which highlights the ability of the group to perform well in challenging markets The broad base of our franchise representation, the aftersales bias to the business and the recovery in the UK new car market provide opportunities for additional growth and we are confident that the group should make further progress this year.

I would like to conclude by thanking all our people at Lookers for their hard work and dedication and without whom we would not have been able to deliver such a result.

Phil White

Chairman

14 August 2013

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 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

Peter Jones	Robin Gregson
Chief Executive	Finance Director
14 August 2013	14 August 2013

Condensed Consolidated Statement of Financial Performance

Six months ended 30 June 2013

	Note	Unaudited Six months ended 30 June 2013 £m	Unaudited Six months ended 30 June 2012 £m	Audited Year ended 31 Dec 2012 £m
Continuing operations
Revenue	3	1,243.5	1,033.6	2,056.6
Cost of sales		(1,084.1)	(898.5)	(1,784.3)
Gross profit		159.4	135.1	272.3
Distribution costs		(79.8)	(69.3)	(144.3)
Administration expenses		(45.3)	(36.4)	(80.1)
Other operating income		0.1	0.1	0.2
Profit from operations		34.4	29.5	48.1
Profit from operations before amortisation		35.0	30.1	49.2
Amortisation of intangible assets		(0.6)	(0.6)	(1.1)
Profit from operations		34.4	29.5	48.1
Interest payable	5	(6.2)	(6.1)	(12.6)
Interest receivable	5	-	0.1	0.2
Net interest		(6.2)	(6.0)	(12.4)
Debt issue costs		(0.2)	(0.2)	(0.4)
Profit on ordinary activities before taxation		28.0	23.3	35.3
Profit before tax, amortisation
and debt issue costs		28.8	24.1	36.8
Amortisation of intangible assets		(0.6)	(0.6)	(1.1)
Debt issue costs		(0.2)	(0.2)	(0.4)
Profit on ordinary activities before taxation		28.0	23.3	35.3
Tax charge	7	(6.5)	(5.6)	(8.2)
Profit for the period / year		21.5	17.7	27.1
Attributable to:
Shareholders of the company		21.4	17.6	27.0
Non-controlling interests		0.1	0.1	0.1
Continuing operations
Earnings per share
Basic earnings per share	6	5.52p	4.55p	7.00p
Diluted earnings per share	6	5.41p	4.46p	6.90p

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2013

	Unaudited Six months ended 30 June 2013 £m	Unaudited Six months ended 30 June 2012 £m	Audited Year ended 31 Dec 2012 £m
Profit for the period / year	21.5	17.7	27.1
Actuarial gains/(losses) recognised in post
retirement benefit schemes	0.1	3.9	(15.9)
Movement in deferred taxation on pension liability	(0.1)	(0.8)	3.5
Other comprehensive income for the period / year	-	3.1	(12.4)
Total comprehensive income for the period / year	21.5	20.8	14.7
Attributable to:
Shareholders of the company	21.4	20.7	14.6
Non-controlling interests	0.1	0.1	0.1

Condensed Consolidated Statement of Financial Position

As at 30 June 2013

	Unaudited 30 June 2013 £m	Unaudited 30 June 2012 £m	Audited 31 Dec 2012 £m
Non current assets
Goodwill	62.6	47.7	61.4
Intangible assets	14.2	13.9	14.8
Property, plant and equipment	207.6	188.8	197.1
	284.4	250.4	273.3
Current assets
Inventories	411.3	313.2	384.1
Trade and other receivables	202.3	157.1	123.8
Rental fleet vehicles	41.4	30.3	39.4
Cash and cash equivalents	21.7	25.8	8.7
Assets held for sale	1.9	3.4	3.2
	678.6	529.8	559.2
Total assets	963.0	780.2	832.5
Current liabilities
Bank loans and overdrafts	23.3	7.6	15.7
Trade and other payables	588.9	443.3	479.8
Current tax liabilities	10.8	10.3	8.4
Short term provisions	0.6	0.9	0.6
Derivative financial instruments	8.5	8.5	8.5
	632.1	470.6	513.0
Net current assets	46.5	59.2	46.2
Non current liabilities
Bank loans	37.5	45.0	41.2
Trade and other payables	22.0	12.4	21.0
Retirement benefit obligations	42.1	26.1	44.1
Deferred tax liabilities	9.0	12.5	8.6
Long term provisions	0.8	0.8	0.8
	111.4	96.8	115.7
Total liabilities	743.5	567.4	628.7
Net assets	219.5	212.8	203.8
Shareholders' equity
Ordinary share capital	19.4	19.4	19.4
Share premium	75.5	75.1	75.3
Capital redemption reserve	14.6	14.6	14.6
Other reserve	(1.4)	(1.4)	(1.4)
Retained earnings	110.8	104.7	95.4
Equity attributable to shareholders of the company	218.9	212.4	203.3
Non-controlling interests	0.6	0.4	0.5
Total Equity	219.5	212.8	203.8

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2013

	Share capital £m	Share premium £m	Capital redemption reserve £m	Other reserve £m	Retained earnings £m	Equity distributable to shareholders of company £m	Non controlling interest	Total equity £m
As at 1 January 2013	19.4	75.3	14.6	(1.4)	95.4	203.3	0.5	203.8
Profit for the period	-	-	-	-	21.4	21.4	0.1	21.5
New shares issued	-	0.2	-	-	-	0.2	-	0.2
Actuarial gains recognised on defined
benefit pension schemes	-	-	-	-	0.1	0.1	-	0.1
Deferred taxation on pension liability	-	-	-	-	(0.1)	(0.1)	-	(0.1)
Dividend to shareholders	-	-	-	-	(6.0)	(6.0)	-	(6.0)
As at 30 June 2013  (unaudited)	19.4	75.5	14.6	(1.4)	110.8	218.9	0.6	219.5

Six months ended 30 June 2012

As at 1 January 2012	19.3	75.0	14.6	(1.4)	89.3	196.8	0.3	197.1
Profit for the period	-	-	-	-	17.6	17.6	0.1	17.7
New shares issued	0.1	0.1	-	-	-	0.2	-	0.2
Actuarial gains recognised on defined
benefit pension schemes	-	-	-	-	3.9	3.9	-	3.9
Deferred taxation on pension liability	-	-	-	-	(0.8)	(0.8)	-	(0.8)
Dividend to shareholders	-	-	-	-	(5.3)	(5.3)	-	(5.3)
As at 30 June 2012  (unaudited)	19.4	75.1	14.6	(1.4)	104.7	212.4	0.4	212.8

Year ended 31 December 2012

As at 1 January 2012	19.3	75.0	14.6	(1.4)	89.3	196.8	0.3	197.1
New shares issued	0.1	0.3	-	-	-	0.4	-	0.4
Profit for the year	-	-	-	-	27.0	27.0	0.1	27.1
Actuarial losses recognised on defined
benefit pension schemes	-	-	-	-	(15.9)	(15.9)	-	(15.9)
Deferred taxation on pension liability	-	-	-	-	3.5	3.5	-	3.5
Dividends to shareholders	-	-	-	-	(8.4)	(8.4)	-	(8.4)
Non-controlling interest in subsidiary undertaking	-	-	-	-	(0.1)	(0.1)	0.1	-
As at 31 December 2012	19.4	75.3	14.6	(1.4)	95.4	203.3	0.5	203.8

Condensed Consolidated Cash Flow Statement

Six months ended 30 June 2013

		Unaudited Six months ended 30 June 2013 £m	Unaudited Six months ended 30 June 2012 £m	Audited Year ended 31 Dec 2012 £m
Cash flows from operating activities
Profit for the period/year		21.5	17.7	27.1
Adjustments for:
Tax		6.5	5.6	8.2
Depreciation		6.0	4.8	10.8
Profit on disposal of plant and equipment		-	-	(0.3)
Profit on disposal of rental fleet vehicles		(0.3)	(0.2)	(0.4)
Amortisation of intangible assets		0.6	0.6	1.1
Interest income		-	(0.1)	(0.2)
Interest payable		6.2	6.1	12.6
Debt issue costs		0.2	0.2	0.4
Changes in working capital
	(Increase)/ decrease in inventories	(27.2)	7.1	(63.9)
	Increase in trade and other receivables	(78.5)	(48.0)	(14.8)
	Increase in payables	108.1	38.8	83.5
	Impact of net working capital of acquisitions	(0.7)	-	2.0
Cash generated from operations		42.4	32.6	66.1
Difference between pension charge and cash contributions		(2.4)	(2.2)	(4.5)
Purchase of rental fleet vehicles		(27.7)	(24.0)	(52.0)
Proceeds from sale of rental fleet vehicles		23.7	21.9	38.8
Interest paid		(6.2)	(6.1)	(12.6)
Interest received		-	0.1	0.2
Tax paid		(3.7)	(3.5)	(7.8)
Net cash inflow from operating activities		26.1	18.8	28.2
Cash flows from investing activities
Acquisition of subsidiaries		(8.7)	(1.3)	(17.2)
Purchase of property, plant and equipment		(8.5)	(4.8)	(15.3)
Purchase of intangibles		0.2	-	(1.4)
Proceeds from sale of property, plant and equipment		5.8	3.7	3.7
Proceeds from sale of business		-	1.3	1.2
Net cash used by investing activities		(11.2)	(1.1)	(29.0)
Cash flows used by financing activities
Proceeds from share save scheme		0.2	0.2	0.4
Repayment of loans		(3.7)	(3.7)	(7.5)
New Loans		12.0	-	-
Dividends		(6.0)	(5.3)	(8.4)
Net cash inflow/(outflow) from financing activities		2.5	(8.8)	(15.5)
Increase/(decrease) in cash and cash equivalents		17.4	8.9	(16.3)
Cash and cash equivalents at the beginning of the period/year		0.5	16.8	16.8
Cash and cash equivalents at the end of the period/year		17.9	25.7	0.5

Notes to the Set of Financial Information

Six months ended 30 June 2013

1. GENERAL INFORMATION

The financial information for the period ended 30 June 2013 and similarly the period ended 30 June 2012 has neither been audited nor reviewed by the auditor.  The financial information for the year ended 31 December 2012 has been based on information in the audited financial statements for that year.

The information for the year ended 31 December 2012 and the Interim Financial Report for the period ended 30 June 2013 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. The group will adopt IAS19 Revised: Employee Benefits, for the financial statements at 31 December 2013. This has not been adopted at the half year as the directors do not consider the impact to be material to the results for the period.

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 2013 the medium-term banking facilities included a revolving credit facility of up to £55.0 million and a term loan totalling £45.0 million, providing total facilities of £100.0 million. These facilities are due for renewal in March 2016.

3. SEGMENTAL REPORTING

At 30 June 2013 (2012: same) the group is organised into two main business segments, motor distribution and parts distribution.

Unaudited Six months ended 30 June 2013	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	580.8	-	-	580.8
Used Cars	428.0	-	-	428.0
Aftersales	135.9	98.8	-	234.7
Revenue	1,144.7	98.8	-	1,243.5

Notes to the Set of Financial Information

Six months ended 30 June 2013

3. SEGMENTAL REPORTING (continued)

Unaudited Six months ended 30 June 2013	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Segmental result before amortisation
of intangible assets	29.9	6.6	(1.5)	35.0
Amortisation of intangible assets	-	-	(0.6)	(0.6)
Interest expense	(3.6)	-	(2.6)	(6.2)
Debt issue costs	-	-	(0.2)	(0.2)
Profit before taxation	26.3	6.6	(4.9)	28.0
Taxation	-	-	-	(6.5)
Profit for the financial period from continuing
operations attributable to shareholders				21.5
Segmental assets	822.2	140.8	-	963.0
Total assets	822.2	140.8	-	963.0
Segmental liabilities	608.9	73.8	-	682.7
Unallocated liabilities       -  corporate borrowings	-	-	60.8	60.8
Total liabilities	608.9	73.8	60.8	743.5

Unaudited

Six months

ended 30 June 2012

Continuing operations
New Cars	472.7	-	-	472.7
Used Cars	331.7	-	-	331.7
Aftersales	133.7	95.5	-	229.2
Revenue	938.1	95.5	-	1,033.6
Segmental result before amortisation
of intangible assets	25.3	6.3	(1.5)	30.1
Amortisation of intangible assets	-	-	(0.6)	(0.6)
Interest expense	(3.2)	(0.1)	(2.8)	(6.1)
Interest income	0.1	-	-	0.1
Debt issue costs	-	-	(0.2)	(0.2)
Profit before taxation	22.2	6.2	(5.1)	23.3
Taxation	-	-	(5.6)	(5.6)
Profit for the financial period from Continuing operations attributable to shareholders				17.7
Segmental assets	644.5	135.7	-	780.2
Total assets	644.5	135.7	-	780.2
Segmental liabilities	442.0	72.9	-	514.9
Unallocated liabilities - Corporate borrowings	-	-	52.5	52.5
Total liabilities	442.0	72.9	52.5	567.4

Notes to the Set of Financial Information

Six months ended 30 June 2013

3. SEGMENTAL REPORTING (continued)

Audited Year ended 31 December 2012	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	953.5	-	-	953.5
Used Cars	646.6	-	-	646.6
Aftersales	269.9	186.6	-	456.5
Revenue	1,870.0	186.6	-	2,056.6
Segmental result before amortisation
of intangible assets	38.6	11.2	(0.6)	49.2
Amortisation of intangible assets	-	-	(1.1)	(1.1)
Interest expense	(6.9)	(0.1)	(5.6)	(12.6)
Interest income	-	-	0.2	0.2
Debt issue costs	-	-	(0.4)	(0.4)
Profit before taxation	31.7	11.1	(7.5)	35.3
Taxation	-	-	(8.2)	(8.2)
Profit for the financial year from
continuing operations attributable
to shareholders				27.1
Segmental assets	706.9	125.6	-	832.5
Total assets	706.9	125.6	-	832.5
Segmental liabilities	506.6	65.2	-	571.8
Unallocated liabilities
- Corporate borrowings	-	-	56.9	56.9
Total liabilities	506.6	65.2	56.9	628.7

For the purposes of monitoring segment performance and allocating resources between segments, the group's Chief Executive monitors the tangible, intangible and financial assets attributable to each segment.  All assets are allocated to reportable segments with the exception of other financial assets (except for trade and other receivables) and tax assets.  Assets used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments. The information for the six months ended 30 June 2012 has been re-presented to be consistent with that disclosed in the financial statements for the year ended 31 December 2012.

4. Dividends

An interim dividend of 0.88p per ordinary share is proposed (2012: 0.8p per share).

	Unaudited Six months ended 30 June 2013 p	Unaudited Six months ended 30 June 2012 p	Audited Year ended 31 Dec 2012 p
Ordinary dividend per share - paid in period/year	1.55	1.38	2.18
- proposed	0.88	0.8	1.55

The interim dividend will be paid on 29 November 2012 to shareholders on the register on 1 November 2013.

Notes to the Set of Financial Information

Six months ended 30 June 2013

5. FINANCE costs - net

	Unaudited Six months ended 30 June 2013 £m	Unaudited Six months ended 30 June 2012 £m	Audited Year ended 31 Dec 2012 £m
Interest expense
On amounts wholly repayable within 5 years:
Interest payable on bank borrowings	(2.5)	(2.8)	(6.2)
Interest on consignment vehicle liabilities	(2.8)	(2.5)	(5.2)
Other interest	(0.1)	(0.1)	-
Net interest on pension schemes	(0.8)	(0.7)	(1.2)
Interest and similar charges payable	(6.2)	(6.1)	(12.6)
Interest income
Bank interest	-	0.1	0.2
Total interest receivable	-	0.1	0.2
Net interest	(6.2)	(6.0)	(12.4)

6. earnings per share

The calculation of earnings per ordinary share is based on profits on ordinary activities after taxation amounting to £21.4 million (2012: £17.6 million) and a weighted average of 387,973,748 ordinary shares in issue during the period (2012: 386,947,173).

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 7,905,389 (2012: 7,810,606). The diluted earnings per share is 5.41p (2012: 4.46p).

Adjusted earnings per share is stated before amortisation of intangible assets, impairment of goodwill and debt issue costs and is calculated on profits of £22.2 million for the period (2012: £18.4 million).

	Unaudited Six months ended 30 June 2013		Unaudited Six months ended 30 June 2012		Audited Year ended 31 Dec 2012
	Earnings £m	Earnings per share p	Earnings £m	Earnings per share p	Earnings £m	Earnings per share p
Earnings attributable to
ordinary shareholders	21.4	5.52	17.6	4.55	27.0	7.0
Amortisation of intangible assets	0.6	0.15	0.6	0.15	1.1	0.3
Debt issue costs	0.2	0.05	0.2	0.05	0.4	0.1
Adjusted	22.2	5.72	18.4	4.75	28.5	7.4

7. TAXATION

The tax charge for the period has been provided at the effective rate of 23.25% (2012: 24.0%) 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. ACQUISITIONS

On 16 May 2013 the group acquired the entire issued share capital of Shields Automotive Limited, a company incorporated in Scotland for a consideration of £8.7 million. A table detailing the assets acquired at fair value will be included in the annual financial statements for the year ending 31 December 2013.

9. PENSIONS

The defined benefit obligation as at 30 June 2013 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 2013 by a qualified independent actuary to take account of the requirements of IAS19. 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.

10. 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 23 and 24 of our latest annual report, including general economic factors such as oil prices, interest rates, manufacturers' influence and stability.

11. INTERIM STATEMENT

The interim announcement was approved by the Board and will be posted to shareholders in August 2013.  Copies are also available to the public at the registered office of the company at 776 Chester Road, Stretford, Manchester M32 0QH.

 

END

 

 

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