Interim Results
Lookers PLC
29 August 2002
29 August 2002
LOOKERS PLC
INTERIM RESULTS FOR THE HALF YEAR, ENDED JUNE 30th 2002
Lookers plc, a leading volume and specialist car retailer in the UK motor retail
industry, announces record turnover for the half-year.
HIGHLIGHTS
• Half-year turnover at record level, £402.7m, up 8%
• Operating profit up 9% at £9.28m (£8.52m, 2001)
• Profit before taxation up 18% at £7.7m (£6.5m, 2001)
• Earnings per share up 21% at 14.2p
• Half-year dividend payable of 3.0p per share (2.85p, 2001)
• Completion of acquisition programme in Birmingham and Liverpool
• Gearing reduced to 51% despite continued expansion and investment
programme and purchase of 702,333 preference shares in the market.
• New and used car sales in England up 29%, well ahead of UK market
• Further improvement in aftersales and service operations
Commenting on the outlook for the Group, Fred Maguire, Chairman, said:
'Overall, the Group made excellent progress in the first half, bearing in mind
our very strong performance in the same period last year.
We believe the new car market will remain buoyant and we will benefit in the
second half-year from the investment made in integrating our recent
acquisitions. The Board is confident that Lookers is in a strong position to
make further good progress in the second half and into the longer term.'
An analyst briefing will take place at 9.30am today at the offices of Hudson
Sandler, 29 Cloth Fair, London EC1A 7NN. If you would like to attend, please
call Rebecca Ghent on 020 7796 4133.
Enquiries:
Fred Maguire, Executive Chairman Telephone: 020 7796 4133 (on Thursday 29th August 2002)
Allan Marston, Finance Director 0161 291 0043 (thereafter)
Ken Surgenor, Chief Executive 07885 346 290 (thereafter)
Andrew Hayes/James Hill Telephone: 020 7796 4133
Hudson Sandler
CHAIRMAN'S REVIEW
INTRODUCTION
Lookers continues to build on its track record of delivering growth well ahead
of the UK motor retail market and I am delighted to announce, once again,
excellent results for the first half of the financial year.
Record turnover of over £400 million was achieved for the six-month period to
June 30th 2002 with profit before taxation rising by 17.8% to £7.7 million.
Reflecting management's confidence in the outlook for the Group, the Board is
pleased to declare an increase in the interim dividend from 2.85p to 3.0p per
share for the period.
These results should be viewed in context against very demanding comparisons
with the previous equivalent period (itself a record) and despite the temporary
trading impact of the Jubilee celebrations and the distractions of the World Cup
in June.
I am also happy to report that despite continued investment throughout the
Group, our acquisition programme, and the purchase in the market of 702,333
preference shares, gearing has been reduced to 51% with interest cover of 5.8
times for the period.
MARKET OVERVIEW
The national new car market showed a healthy increase of 6.2% over the six
months ended 30th June 2002 continuing the buoyant trends of the last two years.
This was fuelled by lower prices, low interest rates and the introduction of
many attractive new models.
The European Commission has now finalised the new Block Exemption rules which
will take effect from September 2002 and we are entering a transitional period.
However the future direction of the industry is now clear and, overall, we
believe that the new rules have successfully addressed the concerns of consumer
groups and will also be of benefit to the larger dealer groups such as Lookers.
PERFORMANCE
Against very strong prior year comparatives, turnover for the period rose 8% to
£403 million (2001: £374 million) with operating profits before goodwill
increasing by 9% to £9.7 million which included the impact of costs incurred in
integrating and rationalising acquired businesses. Profit before tax for the
period was £7.7 million, generating reported earnings per share of 14.2p - an
increase of 21.4%.
Our Renault and existing Vauxhall operations produced good results in line with
those achieved last year. Our new Honda dealerships acquired last year in the
East Midlands achieved a good result. A number of acquisitions were undertaken
during the period in line with our long term strategy of extending partnerships
with preferred suppliers and these incurred additional start-up and
reorganisation costs as part of their integration into the Lookers 'Customers
for Life' culture.
Charles Hurst in Northern Ireland produced yet another excellent result slightly
ahead of the record figures produced last year.
Our after sales activities produced a much improved performance over the same
period last year.
Platts Harris, the Group's agricultural machinery business, incurred a loss in
the first half-year in line with the budget set for the traditionally more
difficult first half period. This included the closure of the Metheringham
depot in Lincolnshire. The capital employed has been further reduced and costs
remain tightly controlled.
DIVIDEND
Reflecting the encouraging underlying performance and positive outlook for the
business, the Board is pleased to declare an increase in the interim dividend
from 2.85 pence to 3.0 pence per share - an increase of 5.3% - to be paid on
29th November 2002 to shareholders on the register at 1st November 2002.
OPERATING PERFORMANCE
Overview
Overall, the Group made excellent progress in the first half against very strong
prior year comparatives.
Our English dealerships achieved 29% growth in both new and used car sales, well
ahead of the market.
In Northern Ireland, our new car sales increased slightly despite the impact of
imports from Southern Ireland due to the strength of Sterling. We concentrated
our used car retailing on the successful promotion of our used car brand,
UseDirect.
Operating review
Our operational priorities continued to be investment in our 'Customers For
Life' programmes and franchise extension with our preferred partners. We also
continued to develop complementary routes to market.
During the period we announced our new Look 4 Car Deals.com venture which we are
piloting at three stores operated by Wm Morrison Supermarkets PLC situated at
Oldham, Bradford and Sheffield. Early indications are encouraging and customers
appear to be much more relaxed in a shopping environment with which they are
familiar, as opposed to a traditional car showroom. This initiative will be
fully evaluated at the end of the six month pilot programme.
More generally we have continued to improve our website www.lookers.co.uk and it
is being integrated both into our dealer management system and the Look 4 Car
Deals offering in order to minimise the duplication of effort.
Management continued to focus on developing our Customer Management Centre based
in Liverpool in order to help deliver our 'Customers For Life' policy and drive
aftersales growth. This has now been housed in a purpose built facility with
capacity for further expansion.
Our performance continues to be reflected in national awards. We are delighted
the Customer Management Centre won the Gold Award for Customer Service at the
recent Motor Trader Awards.
We are continuing to develop our sub-prime finance arm, Look 4 Car Credit,
whereby we source cars to match the payment patterns for this section of our
customer base.
In Northern Ireland, work has commenced on a new 30,000 sq ft Renault/Nissan
facility on the Boucher Road complex with separate brand identities for showroom
and sales operations but with combined 'back of house' facilities for all other
operations. The new Lexus facility has been completed on the Boucher Road
complex and is now fully operational. We have also commenced the building of a
new 15,000 sq ft Peugeot facility. This operation has been brought onto the
Motor Village complex at Boucher Road and enables us to vacate the existing
leased premises.
Franchise development
We continue to work with our preferred partners with a view to extending our
market areas and territories wherever appropriate with both volume and prestige
manufacturers.
The Group recently completed the purchase of the business and assets of Elt Bros
Limited - a Vauxhall main dealership in Birmingham, which completes the
Birmingham market area for Vauxhall following the purchases of two businesses
from Rylands Group at Aston and Selly Oak and the 452 Motor Company earlier in
the year. Initial start up costs were incurred in the territory but following
the purchase of the last link in the chain I believe we will be able to
implement the economies of scale across the market area in the second half-year.
We also purchased the share capital of Picking (Liverpool) Ltd - now trading as
Lookers Speke - which completes the market territory for the whole of Liverpool
for Vauxhall. Lookers now operate the market areas for two of the country's
major cities - Birmingham and Liverpool - for the sale of Vauxhall products.
SMAC Continental, our Mercedes dealership in Southend was sold at the beginning
of the financial year. We believe that we have established a good on-going
working relationship with Mercedes and look forward to working with them again
in the future.
MANAGEMENT
During the period there have been a number of changes involving the Directors of
the Company. Ken Surgenor was appointed as Chief Executive and Andy Bruce has
been appointed to the Main Board. Earlier this month Mark Kass ceased to be a
Director of the Company.
There have also been changes to the non-Executive Directors - Craig McKinney and
Gerard Ryan have resigned as has Dan O'Connor as an Alternate Director. David
Mace has been appointed as a non-Executive Director and Neil Clyne takes over as
the representative from GE Capital Woodchester.
OUTLOOK
Following the very strong July new car market, the Society of Motor
Manufacturers and Traders has now revised upwards its market forecasts for the
year. We believe that the new car market will remain buoyant as there is little
likelihood in the short term of an increase in interest rates. Importantly,
continued investment over many years across the Group, combined with the
on-going extension of our franchises with preferred partners, means that Lookers
is well placed to exploit these encouraging market trends.
In addition, we anticipate that the Group will benefit in the second half-year
from the investments made in integrating recent acquisitions. As a result, the
Board is confident that Lookers is in a strong position to make further good
progress in the second half and into the longer term.
Fred Maguire
Chairman
29th August 2002
The Directors announce the following unaudited results of the Group for the
half-year ended 30 June 2002
Consolidated Profit and Loss Account (Summarised)
(Re-stated) (Re-stated)
(see Note 3) (see Note 3)
Half-year Half-year Year
ended ended ended
30 June 2002 30 June 2001 31 December 2001
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Turnover 402,742 374,437 717,894
_______ _______ _______
Operating Profit 9,279 8,522 14,004
Interest payable 1,589 1,996 3,939
_______ _______ _______
Profit on ordinary activities before
taxation 7,690 6,526 10,065
Taxation 2,306 1,976 2,507
_______ _______ _______
Profit after taxation attributable
to shareholders 5,384 4,550 7,558
_______ _______ _______
Dividends - preference shares 576 584 1,167
- ordinary shares 1,021 965 3,168
_______ _______ _______
Earnings per ordinary share 14.2p 11.7p 18.9p
====== ====== ======
Consolidated Balance Sheet (Summarised)
(Re-stated) (Re-stated)
(see Note 3) (see Note 3)
30 June 2002 30 June 2001 31 December 2001
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
FIXED ASSETS
Intangible assets 9,501 9,536 9,534
Tangible assets 81,310 84,950 86,540
_______ _______ _______
90,811 94,486 96,074
_______ _______ _______
CURRENT ASSETS
Stocks 65,368 59,518 59,189
Debtors 56,281 47,336 30,443
Cash at bank and in hand 31 34 31
_______ _______ _______
121,680 106,888 89,663
_______ _______ _______
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE
YEAR
Bank overdrafts 5,179 10,898 5,337
Trade creditors 67,300 50,814 42,589
Other creditors 40,072 40,475 39,299
Proposed dividend 1,021 965 2,202
_______ _______ _______
113,572 103,152 89,427
_______ _______ _______
NET CURRENT ASSETS 8,108 3,736 236
_______ _______ _______
TOTAL ASSETS LESS CURRENT LIABILITIES 98,919 98,222 96,310
_______ _______ _______
CREDITORS: AMOUNTS FALLING DUE AFTER MORE
THAN ONE YEAR 22,001 24,791 22,677
PROVISIONS FOR LIABILITIES AND CHARGES 735 698 691
_______ _______ ______
22,736 25,489 23,368
_______ _______ ______
SHAREHOLDERS' FUNDS 76,183 72,733 72,942
====== ====== ======
SHAREHOLDERS' FUNDS ARE ATTRIBUTABLE TO
Non-equity shareholders' funds 13,889 14,591 14,591
Equity shareholders' funds 62,294 58,142 58,351
_______ _______ _______
76,183 72,733 72,942
====== ====== ======
Total borrowings 39,138 46,350 41,515
====== ====== ======
Gearing 51% 64% 57%
====== ====== ======
Consolidated Cashflow Statement (Summarised)
Half-year Half-year Year
ended ended ended
30 June 2002 30 June 2001 31 December 2001
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Net Cash Inflow from Operating Activities 7,877 11,338 25,306
Interest paid (1,834) (1,976) (3,847)
Non-equity Dividends Paid (576) (584) (1,167)
Taxation paid (967) (126) (2,575)
Net Cash Inflow/ (Outflow) from Capital
Expenditure and Financial Investments 2,117 (4,138) (6,536)
Net Cash Outflow from Acquisitions and
Disposals (552) (1,514) (2,388)
Equity Dividends Paid (2,202) (2,032) (2,998)
Net Cash Outflow from Financing (3,705) (2,167) (1,436)
_______ _______ _______
INCREASE/(DECREASE) IN CASH 158 (1,199) 4,359
====== ====== ======
Notes
1. Dividends
(a) Ordinary shares of 25p
The interim dividend proposed at the rate of 3.0p per share
(2001 - 2.85p per share) is payable on 29 November 2002 to shareholders
on the register at the close of business on 1 November 2002.
(b) 8% Cumulative redeemable preference shares of £1 each
The preference dividend of 4.0p per share (2001 - 4.0p per share) was
paid on 31 March 2002. The next preference dividend is payable on
30 September 2002 to preference shareholders on the register at the close
of business on 13 September 2002.
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
33,942,273 ordinary shares in issue during the period (2001 - 33,867,560).
3. Financial Information
The financial information has been prepared on the basis of the
accounting policies adopted at 31 December 2001, with the exception that
Financial Reporting Standard 19 - Deferred Tax has been adopted. This has
had the impact of increasing the deferred tax provision, and consequently
reducing shareholders' funds by £614,000 at 31 December 2001 and by
£596,000 at 30 June 2001. The increase in the tax charge for the year
ended 31 December 2001 of £12,000 and the increase for the half-year
ended 30 June 2001 of £18,000 above that previously reported also arises
as a result of the adoption of FRS19.
The financial information set out in the announcement does not constitute
the Company's statutory accounts for the year ended 31 December 2001.
The financial information for the year ended 31 December 2001 is
derived from the statutory accounts for that year which have been
delivered to the Registrar of Companies.
The auditors reported on those accounts; their report was unqualified and
did not contain a statement under s 237(2) or (3) Companies Act 1985.
4. Profit on Ordinary Activities Before Taxation
Profit on ordinary activities has been calculated after taking into
account the amortisation of goodwill of £375,000 (half-year ended
30 June 2001 - £350,000, year ended 31 December 2001 £693,000).
5. Capital Reduction
The special resolution to reduce the share premium account of the Company
by £15,050,000 was approved at the AGM held on 9 May 2002 and sanctioned
by the Court on 10 July 2002.
6. 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.
A copy of the presentation to Analysts and Institutional Shareholders
following the release of the interim results can be found at
www.hemscott.net by entering Lookers plc in the company search box.
Executive Directors
F S Maguire, M Sc - Executive Chairman
H K Surgenor - Chief Executive
A S Marston, F.C.A - Financial Director
D J Blakeman, LL.B - Secretary
B Schumacker, M Sc - Operations Director
A C Bruce, BA - Operations Director
Non-Executive Directors
G J Morris
D C Mace
N Clyne
Registered Office
776 Chester Road
Stretford
Manchester
M32 OQH
Telephone: 0161 291 0043
Website: www.lookers.co.uk
Registrars and Transfer Office
Northern Registrars Limited
Northern House
Penistone Road
Fenay Bridge
Huddersfield
HD8 OLA
Telephone: 01484 600 900
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