Interim Results

Lookers PLC 5 September 2000 LOOKERS PLC INTERIM RESULTS FOR THE HALF-YEAR ENDED 30TH JUNE 2000 Highlights * Turnover - increased by 6% * Profit before taxation - up 11% * EPS up 12.8% to 8.8p * Mainland new car sales - up 25% compared with a national market increase of 2.1% * Mainland service and fast fit profit - up 20% * Continued strong performance by Charles Hurst in Northern Ireland * Further development and growth of Internet and E-commerce activity * Repeated success with training awards * Expansion programme of 18 further outlets at a time when good value could be achieved. * New car pricing order will bring stability to the market place - lower car prices will stimulate sales Enquiries Lookers plc Fred Maguire Chief Executive Tel No: 0161 291 0043/Mobile 07802 934840 Lookers plc Alan Marston Financial Director Tel No: 0161 291 0043/Mobile 07976 535353 LOOKERS PLC INTERIM REPORT 2000 CHAIRMAN'S REVIEW INTRODUCTION This is the first announcement of results for a half-year period following the change of year end last December. Comparative figures for the identical trading period last year have been provided as this is a Stock Exchange listing requirement - even though these results have not been announced previously. RESULTS The profit before taxation for the half-year ended 30th June 2000 amounted to £5.0M compared with £4.5M in the same period last year. Turnover has increased by 6% facilitating an increase in operating profit which together with reduced interest charges has resulted in an 11% increase in the profit before taxation. Having regard to the on-going investment programme covering both property refurbishments and new dealerships the Board recommends that the interim dividend of 2.6p is maintained at the same level. CAR MARKETS The UK new car market was 2.1% ahead of last year for the first six months. By comparison our own new sales have shown an increase of 8% with retail sales remaining at an almost identical level to last year. This is particularly pleasing as there have been widespread reports in the press regarding the shortage of retail customers coming into car showrooms. We welcome the publication of the Supply of New Cars Order 2000 which we hope will remove the issue of new car pricing and have the effect of restoring stability and confidence to the market place. The introduction of the 'X' registration plate in September will stimulate demand and volumes will benefit from the release of any pent-up demand in the system. Our initial sales and outstanding order banks for September delivery are running slightly ahead of last year and appear to be gathering pace. The used car market has been difficult mainly through falling valuations and retail volumes have declined by 3% during the half-year when compared with 1999. TRADING PERFORMANCE Mainland UK Despite the uncertainty over the new car pricing issue, our mainland motor dealerships achieved 25% growth in new car sales volume which included a 12% increase in retail sales. As the major rebuilding programme is nearing completion we have benefited from being able to operate from first class retail premises with much less disruption to our business. A combination of the strong sales growth and tight control of stock has resulted in a very significant profit increase over the same period last year. A major turnaround in the results was achieved by our Rover outlets where significant losses sustained last year were replaced by a small profit overall. This is particularly commendable in view of the uncertainty caused by the sale of Rover to the Phoenix Consortium by BMW. A very good performance was also recorded by the Group's specialist franchises of Land Rover, Mercedes and Audi. Our centralised telephone call centre has been developed further and continues to generate many bookings for our aftersales activities. Our car service and fast fit operations have shown an improvement in operating profit of some 20% when compared with last year. Trading conditions in the farming sector continue to be difficult and this had a knock-on effect on our agricultural machinery division. Overall there was an increase in losses compared with the same period last year with the results being hampered by product supply difficulties. Wherever possible we are continuing to cut costs in the business and to keep our stock levels under very strict control. Northern Ireland Charles Hurst operated at slightly lower volumes yet maintained profits at a similar level to last year and once again recorded an excellent performance. The entire portfolio of franchised outlets contributed to the result achieved. This result is particularly significant when considering the on-going disruption to the market place caused by imported vehicles from Southern Ireland. INTERNET AND E-COMMERCE We have a dedicated team controlling the development of our e- commerce and internet business and have recently launched our redesigned website which simplifies the buying process and should appeal to a much wider customer base. The site includes colour photographs and full sales descriptions of used vehicles and will offer net-only offers on a selection of new vehicles. All leads will be promptly dealt with by our dedicated, and newly formed, centralised internet sales team. We already have an established presence on manufacturer websites and have initiated links to other third party websites to enable all sales opportunities to be fully exploited. We have invested in new technology to service all of these websites from a single source, whilst enabling a Group intranet and sophisticated car locator system to be utilised. The facility for direct service bookings and parts ordering is working well as is our specialist service to fleet customers enabling them to source vehicles to their required specification, and order on-line. We will continue to make controlled investments so that the Group is able to grow significantly this aspect of our business. TRAINING Training and staff development continues to be a top priority and I am delighted that we have repeated the success achieved last year. In 1999 the Group gained recognition from the motor industry publication Automotive Management with 2 gold awards. In the Year 2000, we entered the Motor Trader Industry Awards and were highly commended for our Modern Vehicle Selling Apprenticeship Programme and were delighted to win the Aftersales section for our centralised call centre. DEALERSHIP EXPANSION PROGRAMME Our proactive expansion programme has resulted in a further 18 outlets being added to the Group in a period extending just over 2 months. In early July we purchased the share capital of Mark Kass Limited based in London and the South East. Mark Kass holds 3 Nissan and 2 Toyota franchises with a further Toyota dealership in the course of construction. This gives us a solid base in the South East from which to operate presenting greater economies of scale when combined with our own businesses. We are also very pleased to have entered into a franchising agreement with Nissan to cover the Greater Manchester area. The Nissan Manchester business was purchased from Ryland Group plc and relocated into our motor village at Stretford, Manchester. Agreement was also reached with them to occupy their premises in Hale on a short-term basis. We have replaced Mitsubishi in our Stockport motor village with Nissan thus utilising their vacant territory. We have also entered into agreements to occupy premises in Rochdale and Oldham to once again provide representation in these areas. We continue to work successfully alongside Renault and Nissan in Northern Ireland and welcome the close tie-up between these two manufacturers. The Group is well established on Merseyside and to complement our various activities in this area our first Honda dealership was purchased in a prominent position close to Albert Dock. We intend to develop further our relationship with Honda and agreement has already been reached to extend our original territory. In addition, we recently completed the purchase of the assets of Windsor Auto Sales (Colchester) Limited which extends our existing Renault territory from our dealership in Chelmsford. We have also finalised the purchase of Godfrey Davis Renault in Hadleigh and this completes the enlarged Renault marketing territory. Our Northern Ireland subsidiary, Charles Hurst has recently purchased from the Prentice Group the business and assets of 3 Renault and 2 Chrysler Jeep dealerships. The total cost of these acquisitions amounted to £13M. These developments with our selected partners will ensure that the Group is well positioned to take advantage of a more stable trading climate. BOARD COMPOSITION The Group has expanded rapidly during a short period of time and the opportunity has been taken to strengthen the Board of Directors. I am delighted to welcome Brian Schumacker who has been employed by the Group for 15 years to take up the position of Operations Director - North and Mark Kass following the acquisition of his very successful motor group to take up the position of Operations Director - South. Gerard Ryan, the Chief Executive of GE Capital Woodchester in the UK has been appointed as a non-Executive Director and Neil Clyne - the Sales Director of GE Capital Woodchester in the UK - has been appointed as his alternate. CURRENT OUTLOOK The mainland motor division has achieved very strong sales growth in a market overshadowed by the new car pricing issue. Profits have improved significantly from our industry leading retail facilities. We have a sound business in Northern Ireland which is continuing to perform exceedingly well. Our agricultural machinery division continues to operate in a difficult trading climate and we are very actively pursuing the reduction of capital employed in this business. Our motor dealerships overall have operated well and this background has enabled us to add a significant number of outlets to the Group at a time when good value could be achieved. The new car pricing order, bringing lower car prices will stimulate sales. We welcome the fact that our overall buying power will allow us to purchase on similar terms to large fleets, improving our trading position and enabling us to pass on lower prices to our customers. In our opinion, the latest new car pricing trends have been taken account of fully in the used car market and therefore it is unlikely that there will be further major downward adjustments. Early indications show encouraging results at our new outlets and the entire group will benefit from stability being restored to the marketplace. We look forward to the future with confidence. C McKinney Chairman 5 September 2000 Half-year Half-year Fifteen ended 30 ended 30 months June 2000 June 1999 ended 31 December 1999 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Turnover 297,865 280,885 652,509 ------- ------- ------- Operating Profit 6,449 6,172 9,187 ------- ------- ------- Profit on closure/sale of continuing operations - - 948 ------- ------- ------- Profit before interest 6,449 6,172 10,135 Interest payable 1,420 1,635 3,693 ------- ------- ------- Profit on ordinary activities before taxation 5,029 4,537 6,442 Taxation 1,509 1,361 1,611 ------- ------- ------- Profit after taxation attributable to 3,520 3,176 4,831 shareholders ------- ------- ------- Dividends - preference 585 585 1,169 shares - accrued - - 292 preference shares - ordinary shares 868 868 2,754 ------- ------- ------- Basic earnings per ordinary 8.8p 7.8p 10.1p shares ------- ------- ------- The above results all derive from continuing operations Consolidated Balance Sheet (Summarised) 31 30 June 30 June December 2000 1999 1999 (Unaudited) (Unaudited) (Audited) £000 £000 £000 FIXED ASSETS Intangible assets 9,828 10,482 10,155 Tangible assets 68,937 66,062 70,225 ------- ------- ------- 78,765 76,544 80,380 ------- ------- ------- CURRENT ASSETS Stocks 59,968 67,254 64,036 Debtors 39,714 41,151 22,260 Cast at Bank and in Hand 30 31 29 ------- ------- ------- 99,712 108,436 86,325 ------- ------- ------- CURRENT LIABILITIES Bank Overdrafts 15,559 16,946 11,332 Trade Creditors 46,758 50,383 42,022 Other Creditors 29,862 33,793 22,020 Proposed Dividend 868 868 1,886 ------- ------- ------- 93,047 101,990 77,260 ------- ------- ------- Net Current assets 6,665 6,446 9,065 ------- ------- ------- Total assets less current 85,430 82,990 89,445 liabilities Long term liabilities and 13,972 20,945 19,836 provisions ------- ------- ------- Shareholders' funds 71,458 62,045 69,609 ------- ------- ------- Shareholders' funds are attributable to Non-equity shareholders' 14,591 14,613 14,613 funds Equity shareholders' funds 56,867 47,432 54,996 ------- ------- ------- 71,458 62,045 69,609 ------- ------- ------- Total borrowings 29,575 38,383 27,736 ------- ------- ------- Gearing 41% 62% 40% Consolidated Cashflow Statement (Summarised) Half-year Half-year Fifteen ended 30 ended 30 months June 2000 June 1999 ended 31 December 1999 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Net Cash Inflow from Operating Activities 2,553 4,303 15,197 Interest paid (1,420) (1,635) (3,686) Taxation paid (438) (438) (2,212) Net Cash Outflow from Capital Expenditure (63) (5,343) (10,253) Dividends paid (2,471) (2,470) (3,923) Net Cash (Outflow)/Inflow from Financing (2,387) 3,419 1,070 ------- ------- ------- DECREASE IN CASH (4,226) (2,164) (3,807) Notes 1. Dividends (a) Ordinary shares of 25p The interim dividend proposed at the rate of 2.6p per share (1999 - 2.6p per share) is payable on 30 November 2000 to shareholders on the register at the close of business on 3 November 2000. Part of the consideration for the acquisition of the Mark Kass Group was the issue of 478,527 ordinary shares to the vendors. Completion took place in July and the shares were then issued. Consequently, at 30th June, there was no liability to provide for the interim dividend amounting to £12,000 on these shares, however, they will be eligible to receive the interim dividend on the due date. (b) 8% Cumulative redeemable preference shares of £1 each The preference dividend of 4.0p per share (1999 - 4.0p per share) was paid on 31 March 2000. The next preference dividend is payable on 29 September 2000 to preference shareholders on the register at the close of business on 15 September 2000 2. Earnings per share The earnings per share is based on profit on ordinary activities after taxation and preference dividends calculated on a weighted average of 33,380,730 ordinary shares in issue during the period (1999 - 33,378,627) 3. Comparative Figures The accounts for the fifteen month period ended 31 December 1999 are not full accounts. A copy of the full accounts for that period, on which the Auditors have issued an unqualified report, has been delivered to the Registrar of Companies The accounting policies adopted for the six months ended 30 June 2000 are consistent with those used for the fifteen month period ended 31 December 1999. 4. Interim Statement The interim statement will be posted to ordinary and preference shareholders today. Copies will also be available to the public at the registered office of the company at 776 Chester Road, Stretford, Manchester M32 OQH Executive Directors F S Maguire - Deputy Chairman & Chief Executive A S Marston F.C.A - Financial Director D J Blakeman LL.B - Secretary H K Surgenor - Managing Director - Northern Ireland B Schumacker - Operations Director - North M J Kass - Operations Director - South Non-Executive Directors C McKinney - Chairman G J Morris G Ryan D O'Connor - (Alternate to C McKinney) N Clyne - (Alternate to G Ryan) Registered Office 776 Chester Road Stretford Manchester M32 OQH Telephone : 0161 291 0043 Website: www.lookers.plc.uk Registrars and Transfer Office Northern Registrars Limited Northern House Woodsome Park Fenay Bridge Huddersfield HD8 OLA Telephone : 01484 600900

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