Half Yearly Report

RNS Number : 7723V

Lookers PLC

12 August 2015

 

12 August 2015

LOOKERS plc

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

Lookers plc, ("Lookers" or "the group") one of the leading UK motor retail and aftersales service groups, announces its results for the six months ended 30 June 2015.

Andy Bruce, Chief Executive, said: "We have delivered a strong trading performance in the first half of the year which is another record result and the seventh successive year of improved profitability. Both the motor and parts divisions have produced excellent results with improved cash flow for the period, further strengthening our balance sheet. We are well placed to take advantage of growth prospects across all areas of the business as well as consolidation opportunities in the sector. This gives us confidence that we can continue to grow and deliver improved results for the full year."

Financial highlights

·           Revenue increased to £1.75 billion (2014: £1.6 billion) - up 9%

·           *Adjusted profit before tax increased to £43.1million (2014: £40.2 million) - up 7%

·           Profit before tax increased to £39.9 million (2014: £37.7 million) - up 6%

·           Earnings per share increased to 8.08p (2014: 7.59p) - up 6%

·           Net debt reduced to £38.2 million from £51.9 million at 1 January 2015

·           Increase in interim dividend of 10% to 1.07p per share (2014: 0.97p)

Operational highlights

·           Record performance from the motor division

·           Growth in new car volumes and margins

·           Further growth in used car volumes and margins

·           Revenue and margins increased in aftersales

·           Investment in our website delivers further increases in enquiries

·           Further growth from our market leading independent aftermarket parts division

*Adjusted profit is profit before amortisation of intangible assets, debt issue costs, pension costs and share based payments

Enquiries:

Lookers	Today: 020 7920 3150
Andy Bruce, Chief Executive Robin Gregson, Finance Director	Thereafter: 0161 291 0043
Tavistock	Telephone:  [phone]
Keeley Clarke/Matt Ridsdale/Emma Blinkhorn

Interim Management Report

INTRODUCTION

I am delighted to report that Lookers has delivered another excellent trading performance, generating *adjusted profit before tax of £43.1 million (2014: £40.2 million) which is a record for a half year. This result has been achieved during a period in which volumes in the UK new car market have continued to improve in conjunction with further improvements in the UK economy. The board is therefore confident that Lookers will deliver a strong performance for the full year.

Total registrations in the UK new car market increased by 7% during the six months to 30 June 2015, with total registrations of 1.37 million units. Our motor division, once again delivered an excellent performance with growth in turnover and profit before tax. Further details of this are provided in the operating review below.

Our independent parts distribution business also made good progress in the period in what continues to be an improving but competitive market place with growth in both turnover and profits compared to the prior year.

Our continued growth demonstrates the strength of the group's businesses which are underpinned by strong cash flow which has reduced financial gearing compared to the start of the year, despite significant investment expenditure. Our improved financial position and strong trading results have enabled the company to increase the interim dividend again, further details of which are set out below.

FINANCIAL REVIEW

Turnover increased by 9% to £1.75 billion (2014: £1.6 billion) with growth from new and used cars as well as aftersales. *Adjusted profit from operations increased by 7% to £49.2 million (2014: £45.9 million). Interest costs increased slightly in the period to £6.1 million (2014: £5.7 million), which is a reflection of the higher turnover. *Adjusted profit before tax increased by 7% to £43.1 million (2014: £40.2 million) and profit before tax improved by 6% to £39.9 million (2014: £37.7 million). Earnings per share, increased by 6% to 8.08p compared to 7.59p. Profit after tax improved by 8% to £31.8 million (2014: £29.5 million) after a tax charge of £8.1 million, which is an effective tax rate of 20.5%.

Cash flow for the six months continued to be strong with cash generated from operations of £42.0 million (2014: £55.9 million). During the period we have invested £5.8 million of capital expenditure in improving dealership facilities and £4.3 million in acquisitions. Net cash inflow was therefore an improvement to £9.4 million compared to £6.0 million in 2014. 

The group continues to benefit from a strong balance sheet where, despite significant spending on investment, net borrowings reduced by £13.7 million to £38.2 million compared to £51.9 million at the start of the year. Gearing was therefore reduced to 13% and the ratio of net debt to EBITDA has now fallen to 0.42 compared to 0.59 at 1 January 2015. The value of freehold and long leasehold properties of £194 million at the end of the period remains a key strength of the business.

Our group bank facilities consist of a term loan of £38.75 million and a revolving credit facility of £90 million, giving total facilities of £128.75 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

2015 was £38.2 million, the group has a significant level of unutilised bank facilities, which were £90.55 million at the end of the period. The extent and term of the facilities, which are renewable in March 2018, provide significant financial security for the group.

*Adjusted profit is profit before amortisation of intangible assets, debt issue costs, pension costs and share based payments

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 58% increase in the dividend over the last five financial years. The interim dividend will therefore be 1.07p per share (2014: 0.97p) and will be payable to shareholders on 27 November 2015.

OPERATING REVIEW

Motor Division

The motor division consists of 124 franchised dealerships representing 31 marques from 80 locations. The business generates revenue from the sale of new and used cars and aftersales activities. Aftersales represents the servicing, repair and sale of franchised parts to customers' vehicles. The new car market in the UK has varied between 1.9 million and 2.47 million new cars sold per annum during the past five years and our share of the retail sector of this market is just over 3%. The used car market in the UK has annual transactions of approximately 7.0 million vehicles and continues to represent a major opportunity for us to increase volumes in this part of the market. The aftersales market applies to the overall number of cars in use on UK roads, which is referred to as the UK car parc. This consists of approximately 33 million vehicles where approximately 20% are less than three years old. These newer vehicles are the market which is catered for primarily by the franchised motor dealers, including our motor division. The internet is the primary means for our customers to research and determine which new or used car they are interested in buying. Our website and associated digital marketing channels are therefore a very important part of the business.

I am pleased to report that the motor division increased profit before tax by 6%, to £39.7 million, compared to £37.5 million last year. We continue to improve the balance of our portfolio of franchise representation and, since the start of the year, we have acquired a Mercedes-Benz dealership in Canterbury which complements our existing Mercedes-Benz businesses in Kent and Sussex. We have also added an Audi service and used car centre in South Glasgow as well as a used car operation in Dublin.

New Cars

The UK new car market increased by 7% to 1.37 million cars in the period, with the retail new car market and the fleet market increasing by 2% and 13% respectively. Our total new car volumes increased by 4% compared to 2014.

We have put more focus and investment into the fleet sector and our volumes, including commercial vehicles, increased by 21%, compared to the market growth of 13%. Despite this increase in volumes, we have continued to target quality fleet sales and avoid very low margin business.

Gross profit per unit on new retail cars increased by 5%, whilst gross profit per unit on fleet was slightly ahead of last year, with the result that total gross profit from new cars was 7% ahead of last year, on a like for like basis. New car market conditions have been favourable 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 the expected good conditions in the second half of the year, anticipating an outturn for the year in excess of 2.5 million units compared to 2.47 million in 2014.

Used Cars

Group sales volumes increased by 8%, when compared on a like for like basis to 2014. Gross profit per unit was slightly higher compared to last year, which resulted in an increase in gross profit from used cars of 7%. This is a positive performance when considered against the background where our used car volumes have increased by over 43% in the last three years. We continue to focus on stock management and sourcing good quality used cars, both of which help to improve profitability. The used car market still represents a significant opportunity for the group and this will benefit from the increasing number of leads generated by the group's website, which have increased by 41% compared to last year. The website has recently been significantly upgraded and will benefit from further major developments to continually develop our online presence.

Aftersales

As well as improving the margin, our higher margin aftersales business increased turnover by 5% compared to 2014, benefitting from the growth in the vehicle parc of cars under three years old. This trend will continue due to the increase in the new car market in the last three years. Gross profit from aftersales increased by 5% compared to the prior year and further positive momentum is demonstrated by the increase in the margin from 42.8% to 43.3%. The increase in volumes and margins is also due to the initiatives we have made in recent years to develop the aftersales business, in particular the increasing proportion of our customers who choose to enter into service contracts, which continues to improve customer retention. Our commitment to enhance customer experience continues with the objective of improving retention and delivering our "customers for life" strategy, which strengthens the business and helps to improve profitability.

Parts Division

Our parts division operates in the independent aftermarket sector of the UK motor retail market, through three distinct operating companies. FPS is a national warehouse distributor of quality branded automotive parts and is the largest company in the parts division, representing almost 75% of divisional turnover. Apec Braking is the aftermarket leader in the UK for 'dry' braking products (pads and discs) and BTN Turbo is the UK's leading distributor of turbochargers and supplier of related value added services. These businesses supply automotive parts to the independent automotive aftermarket, where we operate from 22 locations serving the whole of the UK. This means that our customers are predominantly motor factors who are the final part of the distribution chain and who distribute parts to the independent non franchised repairers. The parts division typically supplies parts to 80% of the UK vehicle parc where the vehicles are over three years old, with the primary focus on the four to nine year old aftermarket and therefore operates in a different part of the market to the franchised dealerships. This represents a market of approximately 25 million cars in the UK and each of the three companies in our parts division are market leaders in their segment of the market.

Our independent parts division has continued to make good progress in the period with increases in both turnover and profit compared to the prior year, against a background of an improving but competitive market. Operating margins were maintained at a similar level to the prior year and careful control of overheads resulted in a satisfactory increase in profit before tax.

Turnover for the division increased by £8.1m, up 8% on the prior year as we continue to expand the business by investing in existing and new product lines. The increased turnover at FPS was the result of investment in the core proposition as well as in new product development and range extensions. Demand for core products at Apec braking improved and our second tier braking product has successfully established itself in the market.  BTN Turbo experienced steady demand in core aftermarket turbo sales whilst having some encouraging wins in developing its higher value added specialist segment.

Pricing management was used to optimise gross margin in a competitive market with a focus on efficiency improvements and overhead control resulting in profit before tax increasing by 5.8% to £7.3 million compared to £6.9 million. Whilst it should be appreciated that the phasing of turnover results in a higher proportion of profit being generated in the first half of the year, this represents a good result from our parts division which continues to make a significant contribution to group earnings where it represents 17% of group profit before tax with a consistent and relatively high net margin in excess of 6%.

OUTLOOK

The group has produced excellent results for the first six months of the year. Growth in our new car volumes has resulted in a further increase in gross profits, we have a healthy order book for the delivery of new cars in the important month of September and the UK new car market is expected to show modest growth during the rest of this year. We have also benefited from further increases in used car volumes, increasing our share of this market and our aftersales business continues to perform well.

The company has achieved outstanding growth in recent years and we believe the significant investment we are making in upgrading our facilities to reflect the latest manufacturer retail standards and multi-channel customer experience will give us a competitive advantage and further improve our position of leadership in the motor retail sector. These factors, together with the broad base of our franchise representation leave us very well positioned for future growth.

The parts division made good progress in the period with healthy improvements in turnover and profit before tax, which together with continued investment in new product lines, improved facilities and systems, leaves the business in a good position for further growth and development.

The group balance sheet has been further strengthened and we have substantial headroom in our bank facilities with both net debt and net debt to EBITDA being at their lowest levels for many years. This provides secure funding capacity and financial security to grow the business through further strategic acquisitions at a time when there are significant consolidation opportunities within the sector.

The excellent performance of the group in the first half of the year builds on what was already a strong comparative in the previous year. The board is confident that the group should make further progress during the rest of this year with a result which should be slightly ahead of current market expectations.

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 yet again deliver another strong result for the period.

Phil White

Chairman

12 August 2015

Condensed Consolidated Statement of Financial Performance

Six months ended 30 June 2015

	Note	Unaudited Six months ended 30 June 2015 £m	Unaudited Six months ended 30 June 2014 £m	Audited Year ended 31 Dec 2014 £m
Continuing operations
Revenue	3	1,746.8	1,601.3	3,042.9
Cost of sales		(1,529.9)	(1,400.7)	(2,646.8)
Gross profit		210.5	200.6	396.1
Distribution costs		(110.8)	(106.7)	(212.6)
Administration expenses		(52.0)	(48.7)	(109.3)
Other operating income		0.1	0.1	0.1
Profit from operations		47.8	45.3	74.3
Profit from operations before amortisation and share based payments		49.2	45.9	76.6
Amortisation of intangible assets		(0.8)	(0.6)	(1.2)
Share based payments		(0.6)	-	(1.1)
Profit from operations		47.8	45.3	74.3
Interest payable	5	(6.2)	(5.7)	(11.9)
Interest receivable	5	0.1	-	0.3
Net interest		(6.1)	(5.7)	(11.6)
Net interest and costs on pension scheme obligation		(1.6)	(1.7)	(3.1)
Debt issue costs		(0.2)	(0.2)	(0.4)
Profit on ordinary activities before taxation		39.9	37.7	59.2
Profit before tax, amortisation, debt issue costs,
pension costs and share based payments		43.1	40.2	65.0
Amortisation of intangible assets		(0.8)	(0.6)	(1.2)
Share based payments		(0.6)	-	(1.1)
Net interest on pension scheme obligation		(1.6)	(1.7)	(3.1)
Debt issue costs		(0.2)	(0.2)	(0.4)
Profit on ordinary activities before taxation		39.9	37.7	59.2
Tax charge	7	(8.1)	(8.2)	(12.4)
Profit for the period / year		31.8	29.5	46.8
Attributable to:
Shareholders of the company		31.8	29.5	46.8
Continuing operations
Earnings per share
Basic earnings per share	6	8.08p	7.59p	12.03p
Diluted earnings per share	6	7.91p	7.43p	11.75p

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2015

	Unaudited Six months ended 30 June 2015 £m	Unaudited Six months ended 30 June 2014 £m	Audited Year ended 31 Dec 2014 £m
Profit for the period / year	31.8	29.5	46.8
Items that will never be reclassified to profit and loss:
Actuarial gains/(losses) recognised in post
retirement benefit schemes	3.7	(4.7)	(16.1)
Movement in deferred taxation on pension liability	(1.0)	0.8	3.3
Items that are or may be reclassified to profit and loss:
Fair value on derivative instruments	-	-	2.2
Movement in deferred taxation on derivative instruments	-	-	(0.5)
Other comprehensive income/(expense) for the period / year	2.7	(3.9)	(11.1)
Total comprehensive income for the period / year	34.5	25.6	35.7
Attributable to:
Shareholders of the company	34.5	25.6	35.7

Condensed Consolidated Statement of Financial Position

As at 30 June 2015

	Unaudited 30 June 2015 £m	Unaudited 30 June 2014 £m	Audited 31 Dec 2014 £m
Non current assets
Goodwill	83.0	96.6	80.6
Intangible assets	33.2	13.3	33.6
Property, plant and equipment	216.7	214.5	215.6
	332.9	324.4	329.8
Current assets
Inventories	566.5	480.7	548.8
Trade and other receivables	268.9	231.3	179.4
Rental fleet vehicles	55.6	54.8	57.1
Cash and cash equivalents	20.5	16.6	5.9
Assets held for sale	-	0.5	-
	911.5	783.9	791.2
Total assets	1,244.4	1,108.3	1.121.0
Current liabilities
Bank loans and overdrafts	25.3	20.2	20.2
Trade and other payables	779.6	683.7	688.2
Current tax liabilities	15.7	15.0	11.3
Short term provisions	0.6	0.4	0.6
Derivative financial instruments	4.9	7.0	4.9
	826.1	726.3	725.2
Net current assets	85.4	57.6	66.0
Non current liabilities
Bank loans	33.4	40.1	37.6
Trade and other payables	33.7	37.0	30.8
Retirement benefit obligations	52.6	47.8	57.6
Deferred tax liabilities	13.2	9.2	12.3
Long term provisions	0.6	0.8	0.6
	133.5	134.9	138.9
Total liabilities	959.6	861.2	864.1
Net assets	284.8	247.1	256.9
Shareholders' equity
Ordinary share capital	19.7	19.4	19.7
Share premium	77.1	75.6	76.9
Capital redemption reserve	14.6	14.6	14.6
Other reserve	-	(1.1)	-
Retained earnings	173.4	138.6	145.7
Equity attributable to shareholders of the company	284.8	247.1	256.9
Non-controlling interests	-	-	-
Total Equity	284.8	247.1	256.9

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2015

	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 2015	19.7	76.9	14.6	-	145.7	256.9	-	256.9
Profit for the period	-	-	-	-	31.8	31.8	-	31.8
Actuarial gains recognised on defined				-
benefit pension schemes	-	-	-	-	3.7	3.7	-	3.7
Deferred taxation on pension liability	-	-	-	-	(1.0)	(1.0)	-	(1.0)
Share based payments	-	-	-	-	0.6	0.6	-	0.6
New shares issued	-	0.2	-	-	-	0.2	-	0.2
Dividend to shareholders	-	-	-	-	(7.4)	(7.4)	-	(7.4)
As at 30 June 2015  (unaudited)	19.7	77.1	14.6	-	173.4	284.8	-	284.8

Six months ended 30 June 2014

As at 1 January 2013	19.4	75.6	14.6	(1.1)	118.8	227.3	0.7	228.0
Profit for the period	-	-	-	-	29.5	29.5	-	29.5
Transfer of shares in minority interest	-	-	-	-	0.7	0.7	(0.7)	-
Actuarial losses recognised on defined
benefit pension schemes	-	-	-	-	(4.7)	(4.7)	-	(4.7)
Deferred taxation on pension liability	-	-	-	-	0.9	0.9	-	0.9
Dividend to shareholders	-	-	-	-	(6.6)	(6.6)	-	(6.6)
As at 30 June 2014  (unaudited)	19.4	75.6	14.6	(1.1)	138.6	247.1	-	247.1

Year ended 31 December 2014

As at 1 January 2014	19.4	75.6	14.6	(1.1)	118.8	227.3	0.7	228.0
New shares issued	0.3	1.3	-	-	-	1.6	-	1.6
Profit for the year	-	-	-	-	46.8	46.8	-	46.8
Actuarial losses recognised on defined
benefit pension schemes	-	-	-	-	(16.2)	(16.2)	-	(16.2)
Deferred taxation on pension liability	-	-	-	-	3.3	3.3	-	3.3
Share based payments	-	-	-	-	1.1	1.1	-	1.1
Deferred taxation on share based payments	-	-	-	-	1.1	1.1	-	1.1
Transfer to retained earnings	-	-	-	1.1	(1.1)	-	-	-
Dividends to shareholders	-	-	-	-	(10.4)	(10.4)	-	(10.4)
Transfer of shares in minority interest					0.7	0.7	(0.7)	-
Fair value on derivative instruments	-	-	-	-	2.1	2.1	-	2.1
Deferred taxation on derivative instruments	-	-	-	-	(0.5)	(0.5)	-	(0.5)
As at 31 December 2014	19.7	76.9	14.6	-	145.7	256.9	-	256.9

Condensed Consolidated Cash Flow Statement

Six months ended 30 June 2015

		Unaudited Six months ended 30 June 2015 £m	Unaudited Six months ended 30 June 2014 £m	Audited Year ended 31 Dec 2014 £m
Cash flows from operating activities
Profit for the period/year		31.8	29.5	46.8
Adjustments for:
Tax		8.1	8.2	12.4
Depreciation		7.3	6.7	13.5
Loss / (profit) on disposal of plant and equipment		0.2	-	(0.1)
Profit on disposal of rental fleet vehicles		(0.2)	(0.4)	(0.7)
Amortisation of intangible assets		0.8	0.6	1.2
Share based payments		0.6	-	1.1
Interest income		(0.1)	-	(0.3)
Interest payable		6.2	5.7	11.9
Debt issue costs		0.2	0.2	0.4
Changes in working capital
	Increase in inventories	(17.7)	(34.1)	(102.2)
	Increase in trade and other receivables	(89.5)	(77.3)	(25.5)
	Increase in payables	94.3	117.8	115.2
	Impact of net working capital of acquisitions	-	(1.0)	(7.6)
Cash generated from operations		42.0	55.9	66.1
Difference between pension charge and cash contributions		(2.6)	(2.4)	(5.8)
Net interest and costs on pension scheme obligation		1.6	1.7	3.1
Purchase of rental fleet vehicles		(43.4)	(40.4)	(80.5)
Proceeds from sale of rental fleet vehicles		42.4	36.4	72.2
Interest paid		(6.2)	(5.7)	(11.9)
Interest received		0.1	-	0.3
Tax paid		(3.7)	(2.4)	(8.9)
Net cash inflow from operating activities		30.2	43.1	34.6
Cash flows from investing activities
Acquisition of subsidiaries		(4.3)	(22.9)	(24.3)
Purchase of property, plant and equipment		(5.8)	(6.6)	(16.5)
Purchase of intangibles		(0.5)	(0.1)	(0.7)
Proceeds from sale of property, plant and equipment		0.9	1.1	7.2
Purchase of Goodwill		-	-	(0.2)
Net cash used by investing activities		(9.7)	(28.5)	(34.5)
Cash flows used by financing activities
Proceeds from share save scheme		0.2	-	1.6
Repayment of loans		(3.9)	(3.7)	(7.8)
New loans		-	1.7	14.6
Dividends		(7.4)	(6.6)	(10.4)
Net cash outflow from financing activities		(11.1)	(8.6)	(2.0)
Increase/(decrease) in cash and cash equivalents		9.4	6.0	(1.9)
Cash and cash equivalents at the beginning of the period/year		(3.7)	(1.8)	(1.8)
Cash and cash equivalents at the end of the period/year		5.7	4.2	(3.7)

Notes to the Set of Financial Information

Six months ended 30 June 2015

1. GENERAL INFORMATION

The financial information for the period ended 30 June 2015 and similarly the period ended 30 June 2014 has neither been audited nor reviewed by the auditor.  The financial information for the year ended 31 December 2014 has been based on information in the audited financial statements for that year.

The information for the year ended 31 December 2014 and the Interim Financial Report for the period ended 30 June 2015 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.

For the year ended 31 December 2014, the group adopted a number of new standards and interpretations which are listed on page 59 of the 2014 Annual Report.  The adoption of the new standards and amendments included in this report have had no significant impact on the financial statements of the Group.  Furthermore, at the date of authorisation of the half yearly financial report there are a number of standards and interpretations also listed on page 59 of the 2014 Annual Report which were in issue but not yet effective.  As such these have not been applied in this half yearly financial report. The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group.

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 2015 the medium-term banking facilities included a revolving credit facility of up to £90.0 million and a term loan totalling £38.8 million, providing total facilities of £128.8 million. These facilities are due for renewal on 31 March 2018.

Notes to the Set of Financial Information

Six months ended 30 June 2015 (Continued)

3. SEGMENTAL REPORTING

At 30 June 2015 (2014: same) the group is organised into two main business segments, motor distribution and parts distribution.

Unaudited Six months ended 30 June 2015	Motor Division £m		Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	861.3		-	-	861.3
Used Cars	584.3		-	-	584.3
Aftersales	188.4		112.8	-	301.2
Revenue	1,634.0		112.8	-	1,746.8
Segmental result before amortisation
of intangible assets		43.7	7.3	(1.8)	49.2
Amortisation of intangible assets		-	-	(0.8)	(0.8)
Interest expense		(4.0)	-	(2.2)	(6.2)
Interest income		-	-	0.1	0.1
Share based payments		-	-	(0.6)	(0.6)
Net interest and costs on pension scheme obligation		-	-	(1.6)	(1.6)
Debt issue costs		-	-	(0.2)	(0.2)
Profit before taxation		39.7	7.3	(7.1)	39.9
Taxation		-	-	-	(8.1)
Profit for the financial period from continuing
operations attributable to shareholders					31.8
Segmental assets		1,088.0	156.4	-	1,244.4
Total assets		1,088.0	156.4	-	1,244.4
Segmental liabilities		822.1	78.8	-	900.9
Unallocated liabilities - Corporate borrowings		-	-	58.7	58.7
Total liabilities		822.1	78.8	58.3	959.6

Unaudited Six months ended 30 June 2014		Motor Division £m	Parts Distribution £m		Unallocated £m		Group £m
Continuing operations
New Cars	787.2			-	-	787.2
Used Cars	530.1			-	-	530.1
Aftersales	179.3			104.7	-	284.0
Revenue	1,496.6			104.7	-	1,601.3
Segmental result before amortisation
of intangible assets	41.1			6.9	(2.1)	45.9
Amortisation of intangible assets	-			-	(0.6)	(0.6)
Interest expense	(3.6)			-	(2.1)	(5.7)
Net interest and costs on pension scheme obligation					(1.7)	(1.7)
Debt issue costs	-			-	(0.2)	(0.2)
Profit before taxation	37.5			6.9	(6.7)	37.7
Taxation	-			-	-	(8.2)
Profit for the financial period from continuing operations attributable to shareholders						29.5

Notes to the Set of Financial Information

Six months ended 30 June 2015 (Continued)

3. SEGMENTAL REPORTING (CONTINUED)

Unaudited Six months ended 30 June 2014		Motor Division £m	Parts Distribution £m		Unallocated £m		Group £m
Segmental assets	963.8			144.5	-	1,108.3
Total assets	963.8			144.5	-	1,108.3
Segmental liabilities	727.9			73.0	-	800.9
Unallocated liabilities - Corporate borrowings	-			-	60.3	60.3
Total liabilities	727.9			73.0	60.3	861.2
Audited Year ended 31 December 2014	Motor Division £m			Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	1,476.5			-	-	1.476.5
Used Cars	1,008.5			-	-	1,008.5
Aftersales	352.4			205.5	-	557.9
Revenue	2,837.4			205.5	-	3,042.9
Segmental result before amortisation of intangible assets	67.0			12.2	(2.6)	76.6
Amortisation of intangible assets	-			-	(1.2)	(1.2)
Interest expense	(8.7)			-	(3.2)	(11.9)
Interest income	-			-	0.3	0.3
Share based payments	-			-	(1.1)	(1.1)
Net interest and costs on pension scheme obligation	-			-	(3.1)	(3.1)
Debt issue costs	-			-	(0.4)	(0.4)
Profit before taxation	58.3			12.2	(11.3)	59.2
Taxation	-			-	(12.4)	(12.4)
Profit for the financial year from continuing operations attributable to shareholders						46.8
Segmental assets	984.3			136.7	-	1,121.0
Total assets	984.3			136.7	-	1,121.0
Segmental liabilities	739.8			66.5	-	806.3
Unallocated liabilities - Corporate borrowings	-			-	57.8	57.8
Total liabilities	739.8			66.5	57.8	864.1

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.

Notes to the Set of Financial Information

Six months ended 30 June 2015 (Continued)

4. Dividends

An interim dividend of 1.07p per ordinary share is proposed (2014: 0.97p per share).

	Unaudited Six months ended 30 June 2015 p	Unaudited Six months ended 30 June 2014 p	Audited Year ended 31 Dec 2014 p
Ordinary dividend per share - paid in period/year	1.87	1.7	1.55
- proposed	1.07	0.97	0.88

The interim dividend will be paid on 27 November 2015 to shareholders on the register on 31 October 2015.

5. FINANCE costs - net

	Unaudited Six months ended 30 June 2015 £m	Unaudited* Six months ended 30 June 2014 £m	Audited Year ended 31 Dec 2014 £m
Interest expense
On amounts wholly repayable within 5 years:
Interest payable on bank borrowings	(2.6)	(2.3)	(5.0)
Interest on consignment vehicle liabilities	(3.6)	(3.4)	(6.9)
Interest and similar charges payable	(6.2)	(5.7)	(11.9)
Interest income
Bank interest	0.1	-	0.3
Total interest receivable	0.1	-	0.3
Net interest	(6.1)	(5.7)	(11.6)

* Restated to reflect the impact of IAS 19 (Revised)

6. earnings per share

The calculation of earnings per ordinary share is based on profits on ordinary activities after taxation amounting to £31.8 million (2014: £29.5 million) and a weighted average of 393,808,956 ordinary shares in issue during the period (2014: 388,614,148)

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 8,350,815 (2014: 8,689,120). The diluted earnings per share is 7.91p (2014: 7.43p).

Adjusted earnings per share is stated before amortisation of intangible assets, pension costs, debt issue costs and share based payments and are calculated on profits of £35.0 million for the period (2014: £32.0 million)

	Unaudited Six months ended 30 June 2015		Unaudited Six months ended 30 June 2014		Audited Year ended 31 Dec 2014
	Earnings £m	Earnings per share p	Earnings £m	Earnings per share p	Earnings £m	Earnings per share p
Earnings attributable to
ordinary shareholders	31.8	8.08	29.5	7.59	46.8	12.03
Amortisation of intangible assets	0.8	0.20	0.6	0.15	1.2	0.30
Net interest and costs on pension scheme obligation	1.6	0.41	1.7	0.44	3.1	0.79
Share based payments	0.6	0.15	-	-	1.1	0.30
Debt issue costs	0.2	0.05	0.2	0.05	0.4	0.10
Adjusted	35.0	8.89	32.0	8.23	52.6	13.52

Notes to the Set of Financial Information

Six months ended 30 June 2015 (Continued)

7. TAXATION

The tax charge for the period has been provided at the effective rate of 20.5% (2014: 21.75%) 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

In June 2015 the group acquired the entire issued share capital of Vikings Canterbury Limited, a company incorporated in England for a consideration of £4.3 million.  The acquisition accounting has been applied on a provisional basis and this may be adjusted in the 12 month measurement period.  A table detailing the assets acquired at a fair value will be included in the annual financial statements for the year ending 31 December 2015.

9. PENSIONS

The defined benefit obligation as at 30 June 2015 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 2015 by a qualified independent actuary to take account of the requirements of IAS19 (Revised). 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 2015.

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 24 and 25 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 2015.  Copies are also available to the public at the registered office of the company at 776 Chester Road, Stretford, Manchester M32 0QH.

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 their impact on the condensed set of Financial Statements 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

Andy Bruce	Robin Gregson
Chief Executive	Finance Director
12 August 2015	12 August 2015

 

END

 

 

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