Interim Results

RNS Number : 4904M

Lookers PLC

17 August 2011

 



17 August 2011

LOOKERS plc

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

Lookers plc, one of the leading UK motor retail and aftersales services groups announces its results for the six months ended 30 June 2011.

Commenting on the results, Lookers Chief Executive Peter Jones said:

"We are pleased to announce that we have delivered a strong trading performance in the first six months of 2011. Our motor division produced a creditable result notwithstanding the weak new car market and the parts division produced another record trading performance. Operational cashflow for the period was particularly positive resulting in a strengthened balance sheet which gives us confidence that we can continue to grow the business, deliver satisfactory results for the full year, significantly increase our dividend payments and be in a position to pursue strategic growth opportunities as and when they arise."

Financial Highlights

·     Revenue increased by 1.4% to £1.0 billion (2010: £988 million)

·     *Adjusted profit before tax maintained at £22.6 million (2010: £22.7 million)

·     Profit before tax maintained at £21.3 million (2010: £21.4 million)

·     Basic earnings per share increased to 4.04p (2010: 3.94p)

·     Operational cashflow increased to £40.0 million (2010: £32.1 million)

·     Net debt reduced by £25.6 million to £31.0 million (2010: reduction of £24.4 million)

·     Gearing reduced to 16% (2010: 32%)

·     Interim dividend increased by 33% to 0.8p per share (2010: 0.6p)

Operational Highlights

·     Resilient performance against a challenging market environment

·     Another record performance from our market leading independent aftermarket parts division

·     Good performance from the motor division

·     New retail car sales continued to increase market share

·     Improved performance from aftersales

*Adjusted before amortisation of intangible assets and debt issue costs.

Enquiries:

Lookers	Telephone:  [phone]
Peter Jones, Chief Executive
Robin Gregson, Finance Director
Hudson Sandler	Telephone:  [phone]
Nick Lyon/Kate Hough

Interim Management Report

INTRODUCTION

I am very pleased to report that Lookers has delivered a strong trading performance for the first six months of 2011, closing with an *adjusted profit before tax of £22.6m, very close to our 2010 record result.  These results should be considered against the background of the difficult trading conditions in the motor retail market and uncertain general economic conditions across the UK. The group's performance represents a significant achievement against this challenging environment and is an encouraging first half performance which gives your board confidence that we can deliver a successful result for the full year.

Our motor division delivered strong results, despite the UK new car market having reduced by 7.1% in the first half of the year to 1.03m units and the new car retail market reduced by 18.1%, although volumes in 2010 were inflated by the Government's scrappage scheme.  Group sales of new retail cars were 5.4% ahead of the market and indicate a continued increase in our market share. Total industry sales in the corporate sector increased by 3.1% in the period but group volumes in this sector have reduced slightly compared to the prior year, as we have adopted a selective approach to avoid very low margin business. We have continued to grow our used car volumes, up by 5%, against the market trend, and we have again taken an increased share of the aftersales market. We continue to improve the balance of our portfolio of franchise representation and in the first six months we have sold or closed five underperforming businesses and added an additional three businesses.

Our market leading independent parts division continues to perform well and has made further improvements in profitability, which is ahead of both budget and the prior year. We continue to invest in new product lines and opportunities to expand the business as well as making an increased and significant contribution to group earnings. The parts division is of particular importance to the group as it is not subject to the fluctuations that can occur in the new car market and therefore generates earnings which are more resilient. Furthermore, as the national market leader in this sector of the market, we are in a strong position to exploit future growth opportunities through the introduction of new products and services.

Economic conditions continue to be influenced by weak consumer confidence and trading conditions in the motor division in the second quarter have been challenging. However, our strong performance in both 2010 and the first half of this year demonstrate the resilience of the group's businesses, which are underpinned by profits generated by dealership aftersales and the independent parts division. Furthermore, the group continued to generate significant levels of free cashflow, reducing gearing from 32% at 30 June 2010 to 16% this year. This improved financial position has enabled the company to significantly increase our dividend payment for the period, further details of which are set out below.

FINANCIAL REVIEW

Turnover increased by 1.4% to £1.0 billion and operating profit before amortisation of intangible assets, was a similar level to that of the previous year at £29.2 million. Following further reductions in working capital, interest costs reduced by 7.0% to £6.6 million. *Adjusted profit before tax was maintained at £22.6 million in line with the record result reported last year. *Adjusted earnings per share, as disclosed in note 6, were 4.38p compared to 4.28p in the previous period. After a tax charge of £5.8 million, which represents an effective tax rate of 27.2%, profit after tax was £15.5 million, compared to £15.1m in 2010, an increase of 3%.

Cashflow for the six months was particularly strong and significantly improved compared to the prior year with cash generated from operations of £40.0 million compared to £32.1 million last year. Net cash inflow for the period before loan repayments, was £25.6 million compared to £24.4 million in 2010. Following the strong cashflow in the period, the balance sheet has been further strengthened, with net borrowings of £31.0 million compared to £56.6 million at the start of the year and £54.6 million at 30 June 2010. This has reduced gearing to 16% compared to 31% at the start of the year and 32% at 30 June 2010. Furthermore the ratio of net debt to EBITDA has now reduced to below 0.6. A further indication of the strength of the balance sheet is the value of freehold and long leasehold properties which was £174 million at the end of the period and remains a key strength of the business.

With the relatively low level of net debt, the group has significant headroom in its banking facilities which amounted to £83.9 million at 30 June 2011 and this provides improved financial security for the group. These facilities are due for renewal on 30 April 2012 and we are currently finalising the refinancing of the group with our banks and expect this to be successfully concluded in the second half of this year. 

DIVIDEND

I am pleased to announce that given the encouraging results and strong financial position of the group, the Board intends to make a significant increase to the dividend this year and the interim dividend will increase to 0.8p per share (2010: 0.6p). This represents an increase of 33.3%. The dividend will be payable to shareholders on 30 November 2011.

BOARD CHANGES

As announced on 1 July 2011, Neil Davis was appointed as a director of the company on that date. Neil is Managing Director of the parts division and his appointment is part of a succession plan that has been under consideration for some time. Terry Wainwright, who is 64 this year, will stay on the Board until the end of this year, following which he will continue with the business in his current role as Chairman of the parts division. I am delighted to welcome Neil to the Board recognising the fantastic job he has overseen in developing our parts division in conjunction with Terry.

OPERATING REVIEW

Motor Division

Our motor division consists of 119 franchise dealerships representing 33 marques from 71 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 maintained *adjusted profit before tax at the same level as last year at £18.5 million.

During the half year we have added two further franchises to existing locations, which will improve turnover per site with a minimal increase in fixed costs, thereby improving economies of scale and profitability. At the start of the year we acquired the Audi business in South Dublin as a precursor to establishing a flagship brand centre in Dublin, which we believe will deliver good profit returns in the medium term. We continue to improve the balance of our portfolio of franchise representation and in the first half of the year we have sold or closed five underperforming businesses.

In March we acquired Get Motoring UK Limited which trades as Vehicle Rental Services ("VRS") and supplies vehicles on short term leases to car rental operators in the UK. VRS complements Lookers existing vehicle leasing businesses and with anticipated annual EBITDA of approximately £3 million, will help to broaden the range of earnings sources in the group. VRS has made a good start as part of the group and profitability for the period since acquisition is ahead of expectations.

New Cars

The new car market reduced by 7.1% to 1.03 million cars in the period, with the retail new car market reducing by 18.1% and the fleet market increasing by 3.14%. Group retail new car sales of 17,746 reduced by 12.7% compared to 2010 levels, although this was 5.4% ahead of the UK market, improving our market share to 4.04% from 3.8% in 2010.  In the fleet sector we sold 10,593 cars compared to 11,670 in 2010, which represents 1.79% of the market. The reduction in volume in the period is due to reduced sales of low margin fleet business, where the margin on specific deals was reduced from 2010 levels.

Gross profit per unit on new retail cars remained in line with the prior year and by concentrating on higher quality fleet business, the gross profit per unit increased by 56% compared to the previous year, which more than offset the 9% reduction in fleet volume. Whilst conditions in the new car market continue to be difficult, our order take for the important month of September is tracking on plan and the industry forecast for the new car market in the second half of the year indicates that it should be at a similar level to 2010.

Used Cars

Group sales of 21,744 vehicles increased by 5% compared to 2010 levels, on a like for like basis. Gross margins decreased slightly by 3.4%, but this was offset by the increased volume. The used car market, which has annual sales of circa 6.7 million vehicles, remains a huge area of opportunity for the group. Through improved sourcing and a broader stock mix, together with rigidly applied stock control policies, we expect to take advantage of the stable market conditions in the used car sector to improve volumes and margins.

Aftersales

The aftersales business in the motor division continues to grow, despite what has been a declining vehicle parc within the 1 to 3 year vehicle sector, although this decline is now bottoming out. The group maintained like for like aftersales revenue, excluding closed or sold businesses, which represents good progress in this market and margins were the same level as last year.

We continue to invest in technology and procedures to further improve customer retention and average sales value per customer visit. In particular, we have made a number of improvements to our customer relationship marketing processes where our conversion rates have significantly increased, along with a lower cost per customer contact. We are also now enjoying the benefits of full deployment of our Electronic Vehicle Health Check system across the whole motor division and continue to see higher levels of additional spend per visit. Our sales of service plans, whereby customers commit to longer term contracts for vehicle servicing, are showing significant growth and this will improve customer retention still further. All these initiatives help us to identify and optimise service and repair requirements on all vehicles visiting us, which combined with our determination to deliver excellent customer service, are key factors in strengthening and optimising customer retention.

Parts Division

Following a record year in 2010 our independent aftermarket parts division has continued to perform ahead of last year and is heading for another record performance. The parts division operates through three companies, FPS, Apec Braking and BTN Turbo, each supplying hard parts to the independent aftermarket. The customer base is primarily motor factors who, in turn supply the independent repair sector.

The total vehicle car parc in the UK market is over 30 million vehicles, with just over 6.5 million of these being in the conventionally, dealership dominated 1 to 3 year vehicle parc.  In contrast to the younger vehicle parc, the 4 year plus vehicle parc in the UK has benefited from growth in recent years as people choose to maintain and retain their vehicles. The outlook for our independent parts operations is good as each of the businesses continues to take an increased share of a growing market opportunity.

Turnover for the division increased by 7%, operating profit increased by 3% and *adjusted profit before tax increased by 3%, from £6.9 million to £7.1 million.

FPS, the only national distributor of quality branded automotive hard parts delivered strong results with turnover increasing by 7% and profit before tax being maintained at the same level as 2010. Growth continues to be supported by the introduction of new product lines and further growth from product lines introduced in previous years, whilst efficiency benefits were achieved by an increase in electronic order capture and information exchange.

Apec Braking, the market leader in the UK for 'dry' braking (pads and discs) increased turnover by 8% and delivered an increase in profit before tax over budget and the prior year. Good levels of growth were achieved across all major customers and product lines. Margins have been maintained despite significant competition in the market.

BTN Turbo, a leading supplier and provider of technical support and servicing of turbochargers, achieved turnover growth of 2%, despite a temporary reduction in demand from a major customer. Profit before tax was slightly below the level of the previous year but there are good prospects for further growth in the motor factor sector.

OUTLOOK

Overall, the motor division has had a satisfactory first half, which is a good performance in a difficult market against a background of challenging economic conditions. The new and used car retail markets are likely to continue to be affected whilst economic conditions remain uncertain. However the aftersales bias to the motor division helps to reduce the financial impact of this. The broad base of our franchise representation and the restructuring of our portfolio over the last two years have provided the motor division with a structural resilience to adapt to market challenges, which we believe will help deliver a satisfactory result this year.

Our market leading independent parts division continues to perform well and has made further improvements in profitability, which is ahead of both budget and last year. It continues to invest in new product lines and opportunities to expand the business. The parts division is a key factor that differentiates Lookers from our competitors in the retail motor sector and provides a high quality earnings stream that is subject to fewer fluctuations in the demand for new and used cars. We are confident that it will produce a strong result for the year.

We continue to focus on working capital management and cashflow is ahead of budget and has also benefited from the sale of surplus assets, which have realised £12 million in the first half of the year. Net debt continues to be well managed and is at a lower level than both budget and the start of the year. Together with the significant headroom in our bank facilities, this will allow us to take advantage of strategic acquisition opportunities in both the motor and parts divisions.

The board, in conjunction with its advisers, has recently carried out a full and detailed review of various strategic options for the business in the future and how to create value for shareholders. The Board considered whether the current business form with both a motor and a parts division was the optimum structure, or whether one or both the divisions should be sold, demerged or retained. We have concluded that the best strategy for the company at this stage is for it to continue to expand organically and to enhance this with meaningful and complementary acquisitions, in both the motor and parts divisions. A great deal of work has been carried out in the past two years to rationalise and refine the portfolio of businesses in the motor division and we believe this should continue but be supplemented by a brand selective acquisition policy. To fund this strategy we have incorporated an element of additional headroom in the new facilities that we are requesting from our banks as part of the current refinancing exercise. Additional but significant funding could also be potentially obtained from the selective sale and leaseback of key properties, whilst still retaining a majority of freehold properties in our portfolio. The combination of these facilities would provide the group with substantial funds for expansion when suitable acquisition opportunities are identified and allow the group to make meaningful improvements in earnings in the medium term. The Board also remains flexible should we determine that there are other opportunities that facilitate shareholder value enhancement.

Furthermore, in the light of the strong cash generation achieved by the group over the last 12 months and our expectations for the future, the Board has also determined that it is proposing to enhance the return to shareholders by way of dividend payments, where the interim dividend has been increased by 33%.

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

Phil White, Chairman

17 August 2011

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
17 August 2011	17 August 2011

Condensed Consolidated Statement of Financial Performance

Six months ended 30 June 2011

	Note	Unaudited Six months ended 30 June 2011 £m	Unaudited Six months ended 30 June 2010 £m	Audited Year ended 31 Dec 2010 £m
Continuing operations
Revenue	3	1,002.2	988.3	1,883.8
Cost of sales		(868.9)	(850.7)	(1,623.2)
Gross profit		133.3	137.6	260.6
Distribution costs		(70.4)	(69.9)	(140.0)
Administration expenses		(34.5)	(38.7)	(75.5)
Other operating income		0.1	0.1	0.5
Profit from operations		28.5	29.1	45.6
Profit from operations before amortisation		29.2	29.8	46.9
Amortisation of intangible assets		(0.7)	(0.7)	(1.3)
Profit from operations		28.5	29.1	45.6
Interest payable	5	(6.7)	(7.2)	(13.4)
Interest receivable	5	0.1	0.1	0.1
Net interest		(6.6)	(7.1)	(13.3)
Debt issue costs		(0.6)	(0.6)	(1.2)
Profit on ordinary activities before taxation		21.3	21.4	31.1
Profit before tax, amortisation
and debt issue costs		22.6	22.7	33.6
Amortisation of intangible assets		(0.7)	(0.7)	(1.3)
Debt issue costs		(0.6)	(0.6)	(1.2)
Profit on ordinary activities before taxation		21.3	21.4	31.1
Tax charge	7	(5.8)	(6.3)	(8.2)
Profit for the period / year		15.5	15.1	22.9
Attributable to:
Shareholders of the company		15.5	15.1	22.9
Non-controlling interests		-	-	-
Continuing operations
Earnings per share
Basic earnings per share	6	4.04p	3.94p	5.97p
Diluted earnings per share	6	3.96p	3.85p	5.85p

Condensed Consolidated Statement of Comprehensive Income

Six months ended 30 June 2011

	Unaudited Six months ended 30 June 2011 £m	Unaudited Six month ended 30 June 2010 £m	Audited Year ended 31 Dec 2010 £m
Profit for the period / year	15.5	15.1	22.9
Actuarial (losses) / gains recognised in post
retirement benefit schemes	-	(5.9)	3.8
Movement in deferred taxation on pension liability	(0.5)	1.2	(1.2)
Fair value on derivative instruments	-	(1.5)	(2.3)
Movement in deferred taxation on derivative instruments	-	-	0.6
Other comprehensive income for the period / year	(0.5)	(6.2)	0.9
Total comprehensive income for the period / year	15.0	8.9	23.9
Attributable to:
Shareholders of the company	15.0	8.9	23.8
Non-controlling interests	-	-	-

Condensed Consolidated Statement of Financial Position

As at 30 June 2011

	Unaudited 30 June 2011 £m	Unaudited 30 June 2010 £m	Audited 31 Dec 2010 £m
Non current assets
Goodwill	46.3	44.8	44.8
Intangible assets	15.0	16.3	15.7
Property, plant and equipment	214.0	192.4	194.6
	275.3	253.5	255.1
Current assets
Inventories	312.4	287.0	292.3
Trade and other receivables	147.5	160.9	104.2
Cash and cash equivalents	30.7	31.4	24.3
Assets held for sale	4.4	9.2	7.8
	495.0	488.5	428.6
Total assets	770.3	742.0	683.7
Current liabilities
Financial liabilities
- Bank loans and overdrafts	11.8	10.1	14.1
- Hire purchase obligations	-	0.1	-
Trade and other payables	447.2	405.4	353.8
Current tax liabilities	12.8	13.7	9.7
Short term provisions	0.9	0.9	0.9
Derivative financial instruments	8.5	8.5	8.5
	481.2	438.7	387.0
Net current assets	13.8	49.8	41.6
Non current liabilities
Financial liabilities
- Bank loans	49.9	75.9	66.8
Trade and other payables	8.7	8.7	7.2
Retirement benefit obligations	22.7	39.8	27.1
Deferred tax liabilities	15.1	9.2	13.3
Long term provisions	0.7	0.7	0.7
	97.1	134.3	115.1
Total liabilities	578.3	573.0	502.1
Net assets	192.0	169.0	181.6
Shareholders' equity
Ordinary share capital	19.2	19.2	19.2
Share premium	73.6	73.6	73.6
Capital redemption reserve	14.6	14.6	14.6
Other reserve	(1.4)	(1.4)	(1.4)
Retained earnings	85.8	63.0	75.6
Equity attributable to shareholders of the company	191.8	169.0	181.6
Non-controlling interests	0.2	-	-
Total Equity	192.0	169.0	181.6

Condensed Consolidated Statement of Changes in Equity

Six months ended 30 June 2011

	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 2011	19.2	73.6	14.6	(1.4)	75.6	181.6	-	181.6
Profit for the period	-	-	-	-	15.5	15.5	-	15.5
Actuarial losses recognised on defined
benefit pension schemes	-	-	-	-	-	-	-	-
Deferred taxation on pension liability	-	-	-	-	(0.5)	(0.5)	-	(0.5)
Non-controlling interest in
subsidiary undertaking	-	-	-	-	(0.2)	(0.2)	0.2	-
Dividend to shareholders	-	-	-	-	(4.6)	(4.6)	-	(4.6)
As at 30 June 2011  (unaudited)	19.2	73.6	14.6	(1.4)	85.8	191.8	0.2	192.0

Six months ended 30 June 2010

As at 1 January 2010	19.2	73.6	14.6	(1.4)	54.1	160.1	-	160.1
Profit for the period	-	-	-	-	15.1	15.1	-	15.1
Actuarial losses recognised on defined
benefit pension schemes	-	-	-	-	(5.9)	(5.9)	-	(5.9)
Deferred taxation on pension liability	-	-	-	-	1.2	1.2	-	1.2
Fair value on derivative instruments	-	-	-	-	(1.5)	(1.5)	-	(1.5)
As at 30 June 2010  (unaudited)	19.2	73.6	14.6	(1.4)	63.0	169.0	-	169.0

Consolidated Statement of Changes in Equity

Year ended 31 December 2010

	Share capital £m	Capital Share premium £m	redemption reserve £m	Other reserve £m	Retained earnings £m	Total £m
As at 1 January 2010	19.2	73.6	14.6	(1.4)	54.1	160.1
Profit for the year	-	-	-	-	22.9	22.9
Actuarial losses recognised on defined
benefit pension schemes	-	-	-	-	3.8	3.8
Deferred taxation on pension liability	-	-	-	-	(1.2)	(1.2)
Dividends to shareholders	-	-	-	-	(2.3)	(2.3)
Fair value on derivative instruments	-	-	-	-	(2.3)	(2.3)
Deferred taxation on derivatives	-	-	-	-	0.6	0.6
As at 31 December 2010	19.2	73.6	14.6	(1.4)	75.6	181.6

Condensed Consolidated Cash Flow Statement

Six months ended 30 June 2011

		Unaudited Six months ended 30 June 2011 £m	Unaudited Six months ended 30 June 2010 £m	Audited Year ended 31 Dec 2010 £m
Cash flows from operating activities
Profit for the period/year		15.5	15.1	22.9
Adjustments for:
Tax		5.8	6.3	8.2
Depreciation		4.3	4.0	7.8
Loss on disposal of plant and equipment		-	-	0.2
Amortisation of intangible assets		0.7	0.7	1.3
Interest income		(0.1)	(0.1)	(0.1)
Interest payable		6.7	6.7	13.4
Debt issue costs		0.6	0.6	1.2
Changes in working capital
	Increase in inventories	(17.7)	(39.7)	(44.9)
	(Decrease)/increase in trade and other receivables	(39.3)	(54.6)	2.1
	Increase in payables	65.4	94.5	41.3
	Difference between pension charge and
	cash contributions	(1.9)	(1.4)	(4.1)
Cash generated from operations		40.0	32.1	49.3
Interest paid		(6.7)	(6.7)	(13.3)
Interest received		0.1	0.1	0.1
Tax paid		(2.7)	(1.3)	(5.9)
Net cash inflow from operating activities		30.7	24.2	30.2
Cash flows from investing activities
Acquisition of subsidiaries		(1.0)	-	-
Purchase of property, plant and equipment		(19.4)	(3.3)	(12.3)
Proceeds from sale of property, plant and equipment		18.7	3.6	7.0
Proceeds from sale of business		1.2	-	-
Net cash (used by)/from investing activities		(0.5)	0.3	(5.3)
Cash flows used by financing activities
Repayment of loans		(19.2)	(5.0)	(10.0)
Dividends		(4.6)	-	-
Principal payments under HP agreements		-	(0.1)	(0.2)
Debt issue costs		-	-	(2.3)
Net cash used by financing activities		(23.8)	(5.1)	(12.5)
Increase in cash and cash equivalents		6.4	19.4	12.4
Cash and cash equivalents at the beginning of the period/year		24.3	11.9	11.9
Cash and cash equivalents at the end of the period/year		30.7	31.3	24.3

Notes to the Set of Financial Information

Six months ended 30 June 2011

1. GENERAL INFORMATION

The financial information for the period ended 30 June 2011 and similarly the period ended 30 June 2010 has neither been audited nor reviewed by the auditor.  The financial information for the year ended 31 December 2010 has been based on information in the audited financial statements for that period.

The information for the year ended 31 December 2010 and the Interim Financial Report for the period ended 30 June 2011 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.

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 2011 the medium-term banking facilities included a revolving credit facility of up to £53.3 million and a term loan totalling £61.6 million, providing total facilities of £114.9 million. These facilities are due for renewal in April 2012. The Directors are currently finalising the refinancing and expect the agreements to be signed well in advance of the year end.

3. SEGMENTAL REPORTING

At 30 June 2011 (2010: same) the group is organised into two main business segments, motor distribution and parts distribution.

Unaudited Six months ended 30 June 2011	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	451.8	-	-	451.8
Used Cars	308.0	-	-	308.0
Aftersales	145.6	96.8	-	242.4
Revenue	905.4	96.8	-	1,002.2

Notes to the Set of Financial Information

Six months ended 30 June 2011

3. SEGMENTAL REPORTING (continued)

Unaudited Six months ended 30 June 2011	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Segmental result before amortisation
of intangible assets	22.0	7.2	-	29.2
Amortisation of intangible assets	(0.4)	(0.3)	-	(0.7)
Interest expense	(3.6)	(0.1)	(3.0)	(6.7)
Interest income	0.1	-	-	0.1
Debt issue costs	-	-	(0.6)	(0.6)
Profit before taxation	18.1	6.8	(3.6)	21.3
Taxation	-	-	(5.8)	(5.8)
Profit for the financial period from continuing
operations attributable to shareholders				15.5
Segmental assets	655.3	115.0	-	770.3
Total assets	655.3	115.0	-	770.3
Segmental liabilities	447.1	69.5	-	516.6
Unallocated liabilities
- Corporate borrowings	-	-	61.7	61.7
Total liabilities	447.1	69.5	61.7	578.3

Unaudited Six months ended 30 June 2010	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	437.9	-	-	437.9
Used Cars	310.5	-	-	310.5
Aftersales	149.2	90.7	-	239.9
Revenue	897.6	90.7	-	988.3
Segmental result before amortisation
of intangible assets	22.8	7.0	-	29.8
Amortisation of intangible assets	(0.4)	(0.3)	-	(0.7)
Interest expense	(4.3)	(0.1)	(2.8)	(7.2)
Interest income	-	-	0.1	0.1
Debt issue costs	-	-	(0.6)	(0.6)
Profit before taxation	18.1	6.6	(3.3)	21.4
Taxation	-	-	(6.3)	(6.3)

Notes to the Set of Financial Information

Six months ended 30 June 2011

3. SEGMENTAL REPORTING (continued)

Unaudited Six months ended 30 June 2010	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Profit for the financial period from
continuing operations attributable
to shareholders				15.1
Segmental assets	622.0	120.0	-	742.0
Total assets	622.0	120.0	-	742.0
Segmental liabilities	419.9	67.1	-	487.0
Unallocated liabilities
- Corporate borrowings	-	-	86.0	86.0
Total liabilities	419.9	67.1	86.0	573.0

Audited Year ended 31 December 2010	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Continuing operations
New Cars	844.0	-	-	844.0
Used Cars	595.4	-	-	595.4
Aftersales	268.4	176.0	-	444.4
Revenue	1,707.8	176.0	-	1,883.8
Segmental result before amortisation
of intangible assets	35.9	12.4	(1.4)	46.9
Amortisation of intangible assets	-	-	(1.3)	(1.3)
Interest expense	(7.6)	(0.1)	(5.7)	(13.4)
Interest income	-	-	0.1	0.1
Debt issue costs	-	-	(1.2)	(1.2)
Profit before taxation	28.3	12.3	(9.5)	31.1
Taxation	-	-	(8.2)	(8.2)
Profit for the financial year from
continuing operations attributable
to shareholders				22.9

Notes to the Set of Financial Information

Six months ended 30 June 2011

3. SEGMENTAL REPORTING (continued)

Audited Year ended 31 December 2010	Motor Division £m	Parts Distribution £m	Unallocated £m	Group £m
Segmental assets	566.4	117.3	-	683.7
Total assets	566.4	117.3	-	683.7
Segmental liabilities	356.1	65.1	-	421.2
Unallocated liabilities
- Corporate borrowings	-	-	80.9	80.9
Total liabilities	356.1	65.1	80.9	502.1

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.

4. Dividends

An interim dividend of 0.8p per ordinary share is proposed (2010: 0.6p per share).

	Unaudited Six months ended 30 June 2011 p	Unaudited Six months ended 30 June 2010 p	Audited Year ended 31 Dec 2010 p
Ordinary dividend per share - paid in period/year	1.2	-	0.6
- proposed	0.8	0.6	1.2

The interim dividend will be paid on 30 November 2011 to shareholders on the register on 4 November 2011.

Notes to the Set of Financial Information

Six months ended 30 June 2011

5. FINANCE costs - net

	Unaudited Six months ended 30 June 2011 £m	Unaudited Six months ended 30 June 2010 £m	Audited Year ended 31 Dec 2010 £m
Interest expense
On amounts wholly repayble within 5 years:
Interest payable on bank borrowings	(4.2)	(4.5)	(8.4)
Interest on consignment vehicle liabilities	(2.2)	(2.1)	(3.9)
Other interest	-	(0.1)	-
Net interest on pension schemes	(0.3)	(0.5)	(1.1)
Interest and similar charges payable	(6.7)	(6.7)	(13.4)
Interest income
Bank interest	0.1	0.1	0.1
Total interest receivable	0.1	0.1	0.1
Net interest	(6.6)	(7.1)	(13.3)

6. earnings per share

The calculation of earnings per ordinary share is based on profits on ordinary activities after taxation amounting to £15.5m (2010: £15.1m) and a weighted average of 383,605,676 ordinary shares in issue during the period (2010: 383,530,764).

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 7,357,815 (2010: 8,607,046). The diluted earnings per share is 3.96p (2010: 3.85p).

Adjusted earnings per share is stated before amortisation of intangible assets, impairment of goodwill, the profit on disposal of properties and is calculated on profits of £16.8m for the period (2010: £16.4m).

	Unaudited Six months ended 30 June 2011		Unaudited Six months ended 30 June 2010		Audited Year ended 31 Dec 2010
	Earnings £m	Earnings per share p	Earnings £m	Earnings per share p	Earnings £m	Earnings per share p
Earnings/(loss) attributable to
ordinary shareholders	15.5	4.04	15.1	3.94	22.9	5.97
Amortisation of intangible assets	0.7	0.18	0.7	0.18	1.3	0.34
Debt issue costs	0.6	0.16	0.6	0.16	1.2	0.32
Adjusted	16.8	4.38	16.4	4.28	25.4	6.63

Notes to the Set of Financial Information

Six months ended 30 June 2011

7. TAXATION

The tax charge for the period has been provided at the effective rate of 27.2% (2010: 30.1%) 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. Following the budget in June 2010, The Finance (No.2) Act 2010 includes a reduction in the rate of Corporation Tax from 28% to 27% from 1 April 2011.

8. ACQUISITIONS

On 4 January 2011 the Group acquired the entire share capital of Audi Centre Limited, a company incorporated in the Republic of Ireland for a consideration of €800,000.

On 9 March 2011 the Group acquired 90% of the issued share capital of Get Motoring UK Limited for a cash consideration of £3.1m. A table detailing the assets acquired at fair value will be included in the annual financial statements on 31 December 2011.

9. PENSIONS

The defined benefit obligation as at 30 June 2011 is calculated on a year-to-date basis, using the latest actuarial valuation as at 31 December 2008.  There have not been any significant fluctuations or one-time events since that time that would require adjustment to the actuarial assumptions made at 31 December 2008.

The defined benefit plan assets have been updated to reflect their market value as at 30 June 2011. Differences between the expected return on assets and the actual return on assets have been recognised as an actuarial gain or loss in the Statement of Comprehensive Income in accordance with the Group's accounting policy.

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 on 23 August 2011.  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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