Interim Results

Lookers PLC 03 September 2007 3 September 2007 LOOKERS plc UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2007 Lookers plc, a leading UK motor retail group, announces interim results for the six months ended 30 June 2007. Commenting on the results, Ken Surgenor, Chief Executive said: 'I am delighted to report that Lookers has continued to outperform the market and achieved record results for the period, in line with expectations. This excellent performance is testament to the success of our proven strategy. We remain dedicated to the further development of our complementary businesses through both organic growth and acquisitions. Moreover we have one of the broadest revenue streams in the industry. We are particularly delighted to have been approved to represent Ford, the UK market leader. We look forward to working with Ford in the city of Sheffield and expanding our representation of their brand. Our business model means that we are well placed to capitalise on the growth opportunities in our markets and we remain confident for the outlook of the remainder of 2007.' Key Financials Half year to 30 June 2007 2006 Change Turnover £878.9M £726.6M +21% Operating profit £25.0M £17.8M +40% Adjusted* operating profit £24.9M £22.0M +13% Profit before tax £18.1M £12.8M +41% Adjusted* earnings per share 7.16p 6.69p +7% Interim dividend 1.6p 1.3p +23% * Adjusted pre exceptional items, goodwill impairment and amortisation of intangible assets Highlights • New car sales up 6% against a market up 2% • Particularly strong performance across Vauxhall, Mercedes and specialist cars • Strong first half performance for Charles Hurst division • Ford franchise added to our expanding portfolio • Parts Distribution operating profit up 10% • New FPS Sheffield distribution facility completed and fully operational • Acquisition of BTN Turbo Charger Service Limited to broaden aftersales offering An analysts' briefing will be held at the offices of Hudson Sandler at 29 Cloth Fair, London EC1A 7NN at 9.00 a.m. on 3rd September 2007. Enquiries: Lookers Telephone: 020 7796 4133 Ken Surgenor, Chief Executive (on Monday 3 September only, and on David Dyson, Finance Director 0161 291 0043 thereafter) Hudson Sandler Telephone: 020 7796 4133 Andrew Hayes/Nick Lyon/Kate Hough High resolution photographs will be available to media at www.vismedia.co.uk from 12.30pm. CHIEF EXECUTIVE'S REVIEW I am delighted to report that Lookers has continued to outperform the market and achieved record results for the half-year period ended 30 June 2007, in line with expectations. This excellent performance is testament to the success of our proven strategy. We remain dedicated to the further development of our complementary businesses through both organic growth and acquisition. Moreover we have one of the broadest revenue streams in the industry. Our close relationships with manufacturer partners and our de-centralised management structure, has once again enabled us to deliver superior returns across our new car franchise division and outperform the market. We are particularly delighted to have been approved to represent Ford, the UK's leading supplier. We look forward to working with Ford in the city of Sheffield and expanding our representation of their brand. During the period we have also seen a strong performance across our aftersales division and were delighted to announce the acquisition of BTN Turbo Charger Service Limited, further widening our offer in this growing market. FINANCIAL COMMENTARY AND DIVIDEND Once again Lookers has delivered strong sales and profit growth ahead of the strong performance in the comparable period last year. Turnover for the first half increased 21% to £878.9 million (2006: £726.6 million). Adjusted* operating profit was up 13% to £24.9 million (2006: £22.0 million) with profit from operations up 40% to £25.0 million (2006: £17.8 million). Adjusted* profit before tax was up 6% to £18.1 million (2006: £17.0 million) and profit before tax was up 41% to £18.1 million (2006: £12.8 million), generating adjusted earnings per share of 7.16p (2006: 6.69p). Our tight control on working capital has resulted in strong operating cash flow of £24.3 million (2006: £14.8 million) for the period. Gearing fell to 61%, down from 79% at the previous year end. Dividend The Board is proposing an increase in the interim dividend of 23% to 1.6p (2006: 1.3p) reflecting the Group's strong performance for the period and the Board's continued confidence as we enter the second half. This will be paid on 30 November 2007 to shareholders on the register at 21 September 2007. This increase in dividend reflects the Group's commitment to a more progressive dividend policy and our previously stated policy to increase the proportion of the dividend proposed in the first half of the year. OPERATING REVIEW Franchise network Lookers currently operates 111 franchise outlets across 28 brands. The Group saw a strong performance across its new car franchise network in the first half and continued to outperform the market, with like for like sales in new cars up 6% against a market up 2%. Trading was strong across the division for the entire period, which includes the important registration month of March. Our Charles Hurst business in Northern Ireland also delivered a strong performance following excellent sales in January, a key month for new registrations in the region. This success has once again been driven by the Group's broad base of manufacturing partners and wide geographic coverage, coupled with our decentralised dealer structure, which empowers key franchise directors and local management and enables us to offer a first class service to both customers and partners. Across our volume franchises, Vauxhall saw a good start to the year benefiting from the extensive refurbishment programme, which took place across a number of our Vauxhall outlets in 2006. This programme is now complete, offering a much better customer experience in our Vauxhall showrooms, used car displays and service capabilities. The Group currently operates 18 Vauxhall outlets across the significant market areas of the North West, Midlands and Northern Ireland. In 2006 we welcomed the Korean value brand Kia into our portfolio, under both the Lookers and Charles Hurst brands. Dealerships were opened in Macclesfield, Stockport and Belfast and these continue to trade in line with our expectations. The Kia brand complements our existing portfolio and we look forward to building on our relationships with Kia Motors in the future. Whilst Premier Automotive Group (PAG) is performing well, particularly with Land Rover and Jaguar in Scotland and Northern Ireland, the South East has proved to be more challenging and the Volvo franchise, specifically has performed well below our expectations. We now operate 25 PAG dealerships in the UK across the South East of England, South West of Scotland and Northern Ireland. Our PAG presence in the South East was further strengthened last year by the acquisition of 8 dealerships from HR Owen, which have been successfully integrated and continually improving their performance. We also continue to see the benefits of the completed redevelopment in our Taggarts Glasgow and Motherwell facilities to PAG multi franchise sites. In September 2006 we were delighted to welcome Mercedes Benz into our franchise portfolio, through the acquisition of four dealerships from HR Owen. These dealerships have been fully integrated into the business and we have seen a good performance from Mercedes for the first half, in line with our expectations. Our Charles Hurst division in Northern Ireland has also delivered strong results in the first half with record trading in the important month of January. Our specialist car division in Northern Ireland continues to perform well and during the period we have seen the successful launch of the Aston Martin V8 Roadster and the Maserati Quattroporte Automatic. Used cars In line with our plans we continue to broaden our revenue streams by expanding into complementary business areas. Through our Used Car Supermarket business, we are selling a growing number of vehicles, sourced from our existing franchise network and now have a presence in the South East, South West and Midlands. However, management issues resulted in a very disappointing financial performance where losses were incurred during the period. This has been addressed and we expect to see the benefits of this action coming through in the second half of the year. Parts Distribution Our parts distribution business has once again delivered an excellent performance for the first half of the year. FPS Distribution ('FPS') has performed well over the first half with operating profit up more than 5% on 2006 despite a significant increase in its cost base, arising from the operation of the new warehouse in Sheffield and the resultant dual running costs up to the end of June. The business has begun to see the benefits from this new purpose built facility expanding our distribution capacity through the provision of 140,000 square feet of storage, which is capable of being further expanded to over 200,000 square feet. In June we were delighted to open a new FPS outlet in Nottingham which will further support and enhance our distribution capability across the East Midlands. Already its daily sales rate is performing ahead of our expectations. Apec, our braking parts specialist has also performed well for the period, benefiting from a warehouse reorganisation at the end of 2006 to support further sales growth in the current year. The second half of 2007 will see the launch of a new range of hydraulic brake parts onto the market. To further strengthen this increasingly important part of our business, in May we were delighted to announce the acquisition of the entire share capital of BTN Turbo Charger Service Limited. This acquisition broadens our offering in the parts distribution aftermarket, particularly in such a fast growing sector as turbo chargers and will be an important contributor to the continued expansion of this part of our business. OUTLOOK This excellent half-year performance has once again been driven by our focus on organic growth and our strategy to continue to seek value-enhancing, complementary acquisitions across all three of our existing businesses. The second half of the year has started well against strong comparatives. Trading since the period end has remained in line with expectations and the order book for September, usually the second largest retail month, is also ahead of last year. We are also building a solid order bank for models to be released in the second half of the year including the Aston Martin DBS, the Bentley Brooklands and Bentley GT Continental Speed, the Ferrari 430 Scuderia and the Maserati Gran Turismo. In the last 18 months, we have seen a 125 basis point rise in interest rates representing a 28% increase in interest costs. While this has led to an increase in interest costs to the Group and has also had a slightly negative impact on consumer confidence, our broad based business model ensures we are well placed to capitalise on the growth opportunities in our markets and we remain confident for the outlook of the remainder of 2007. Ken Surgenor Chief Executive 3 September 2007 The Directors announce the following unaudited results of the Group for the half-year ended 30 June 2007 Consolidated Income Statement (Summarised) Half-year ended Half-year ended Year ended 31 December 2006 30 June 2007 30 June 2006 £M £M £M Revenue 878.9 726.6 1,426.7 Operating profit before amortisation and exceptional items 24.9 22.0 36.6 Amortisation of intangible assets and impairment of goodwill (0.4) (0.4) (0.8) Exceptional items 0.5 (3.8) (4.1) Profit from operations 25.0 17.8 31.7 Interest costs - net (6.8) (5.0) (10.2) Debt issue costs (0.1) - (0.1) Profit before tax, amortisation, impairment, exceptional items and debt issue costs 18.1 17.0 26.4 Amortisation of intangible assets and impairment of Goodwill (0.4) (0.4) (0.8) Exceptional items 0.5 (3.8) (4.1) Debt issue costs (0.1) - (0.1) Profit on ordinary activities before taxation 18.1 12.8 21.4 Taxation (5.2) (4.7) (6.8) _____ ____ ____ Profit for the period 12.9 8.1 14.6 ==== ==== ==== Basic earnings per ordinary share 7.16p 4.52p 8.13p ==== ==== ==== Diluted earnings per ordinary share 7.12p 4.52p 8.09p ==== ==== ==== Adjusted earnings per ordinary share 7.16p 6.69p 10.63p ==== ==== ===== Consolidated Balance Sheet (Summarised) 30 June 30 June 31 December 2007 2006 2006 £M £M £M FIXED ASSETS Goodwill 28.8 22.5 28.6 Other intangible fixed assets 15.6 16.4 16.0 Property, plant and equipment 161.4 142.3 160.9 ______ _______ ______ 205.8 181.2 205.5 ______ _______ ______ CURRENT ASSETS Inventories 264.4 209.0 257.9 Trade and other receivables 114.9 97.4 82.6 Cash and cash equivalents 8.4 0.8 2.9 ______ ______ ______ 387.7 307.2 343.4 ______ ______ ______ TOTAL ASSETS 593.5 488.4 548.9 ===== ===== ===== CURRENT LIABILITIES Financial liabilities 7.6 22.2 8.4 Trade and other payables 367.5 283.6 335.0 Tax liabilities and short term provisions 12.9 11.0 4.2 ______ ______ ______ 388.0 316.8 347.6 ===== ===== ===== NET CURRENT LIABILITIES (0.3) (9.6) (4.2) ______ ______ ______ NON CURRENT LIABILITIES Financial liabilities 72.5 54.8 76.5 Retirement benefit obligation 4.3 10.5 11.5 Deferred taxation and long term provisions 11.0 4.5 9.0 ______ ______ _____ 87.8 69.8 97.0 ===== ===== ===== TOTAL LIABILITIES 475.8 386.6 444.6 ===== ===== ===== NET ASSETS 117.7 101.8 104.3 ===== ===== ===== Total Borrowings 71.7 76.2 82.0 ===== ===== ===== Gearing 61% 75% 79% ===== ===== ===== Consolidated Cashflow Statement (Summarised) Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £M Cash generated from operations Profit for the period 12.9 8.1 14.6 Adjustments for tax 5.2 4.7 6.8 Adjustments for depreciation 3.4 2.7 5.8 Profit on disposal of property, plant and equipment (2.1) (0.5) (0.1) Other exceptional items 1.6 4.0 - Amortisation of intangibles 0.4 0.4 0.8 Interest expense - net 6.8 5.0 10.2 Debt issue costs 0.1 - 0.1 Share based payments charge 0.1 - 0.2 Changes in working capital (excluding effects of acquisitions and disposal of subsidiaries) Increase in inventories (4.2) (16.7) (58.4) Increase in trade and other receivables (28.0) (30.1) (15.5) Increase in payables 29.5 38.7 95.0 Movement in pensions (1.4) (0.7) (3.4) Movement in provisions - (0.8) (0.4) _____ _____ _____ Cash generated from operations 24.3 14.8 55.7 Tax received/(paid) 1.3 (1.5) (5.5) Interest paid (7.6) (5.2) (10.8) ______ ______ _____ Net cash from operating activities 18.0 8.1 39.4 ______ ______ _____ Cashflows from investing activities Acquisition of businesses/subsidiaries (net of cash (2.7) (5.5) (27.6) acquired) Purchase of property, plant and equipment (4.4) (7.1) (20.3) Proceeds from sale of property, plant and equipment 2.8 1.3 1.3 Proceeds from sale of business - 1.5 1.5 ____ ____ _____ Net cash used by investing activities (4.3) (9.8) (45.1) Cashflows from financing activities Proceeds from issue of ordinary shares - 0.7 0.7 Repayment of loans (3.8) (8.3) (70.6) New loans - 5.0 84.7 Debt issue costs - - (0.9) Principal payments under HP agreements (0.1) (0.1) (0.1) Dividends paid to group shareholders (3.5) (2.9) (5.1) _____ _____ ___ Net cash (for)/from financing activities (7.4) (5.6) 8.7 ==== ==== === Increase/(decrease) in cash and cash equivalents 6.3 (7.3) 3.0 Cash and cash equivalents at the beginning of the period 2.1 (0.9) (0.9) _____ ____ _____ Cash and cash equivalents at the end of the period 8.4 (8.2) 2.1 ==== ==== ==== Consolidated Statement of Recognised Income and Expense Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £M Actuarial gains recognised in post retirement benefit 5.8 8.0 5.1 scheme Taxation thereon (1.7) (2.4) (1.5) ____ ____ ____ Net gains recognised directly in equity 4.1 5.6 3.6 Profit for the financial period 12.9 8.1 14.6 ____ ____ ____ Total recognised income and expenses for the period 17.0 13.7 18.2 ==== ==== ==== Notes 1. Basis of Preparation The unaudited information has been prepared in accordance with the Listing Rules of the Financial Services Authority and on the basis of International Financial Reporting Standards (IFRS) issued by the IASB and as adopted by the European Commission (EC) with the exception of IAS 34 'Interim Reporting' which is not yet required by UK Company Law. The accounting policies adopted are also consistent with those adopted in the Group's financial statements for the year ended 31 December 2006. The information for the year ended 31 December 2006 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year have been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. 2. Dividends Ordinary shares of 5p each The interim dividend proposed at the rate of 1.60p per share (2006 - 1.30p per share) is payable on 30 November 2007 to shareholders on the register at close of business on 21 September 2007. Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 Pence Pence Pence Ordinary dividend per share - paid in period 2.20 2.10 1.30 ===== ==== ==== - proposed 1.60 1.30 2.20 ===== ==== ==== 3. Exceptional items Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £M Profit on disposal of properties 2.1 0.5 0.5 Other items (net) (1.6) (4.3) (4.6) ____ ____ ___ 0.5 (3.8) (4.1) ==== === === 4. Interest costs - net Half-year Half-year Year ended ended ended 31 December 30 June 2007 30 June 2006 2006 £M £M £M Bank interest payable 4.2 3.2 7.2 Fair value losses on interest rate swaps and collars - - (0.4) Bank interest receivable - - (0.1) Interest on consignment vehicles 2.8 1.5 3.3 Net interest on pension scheme (0.2) 0.3 0.2 _____ ____ ____ 6.8 5.0 10.2 ==== ==== ==== 5. Earnings per share The calculation of earnings per ordinary share is based on profits on ordinary activities after taxation amounting to £12.9M (2006: £8.1M) and a weighted average of 180,228,247 ordinary shares in issue during the period (2006: 179,140,033). 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 902,068 (2006: 125,089). The diluted earnings per share is 7.12p (2006: 4.52p). Adjusted earnings per share is stated before amortisation of intangible assets, impairment of goodwill, the profit on disposal of properties, less other exceptional items (net) and is calculated on profits of £12.9M for the period (2006: £12.0M) Half-year ended Half-year ended Year ended 30 June 2007 30 June 2006 31 December 2006 Earnings Earnings per Earnings Earnings Earnings Earnings per share share p £M p £M per share £M p Earnings attributable to ordinary 12.9 7.16 8.1 4.52 14.6 8.13 shareholders Amortisation of intangible assets and impairment of goodwill 0.4 0.22 0.4 0.22 0.8 0.44 Exceptional items (0.5) (0.28) 3.8 2.12 4.1 2.28 (net) Tax debit/(credit) exceptional items 0.1 0.06 (0.3) (0.17) (0.4) (0.22) Adjusted 12.9 7.16 12.0 6.69 19.1 10.63 6. Taxation The tax charge for the period has been provided at the effective rate of 29.0% (2006: 36.7%). 7. Interim Statement The interim announcement was approved by the Board and will be posted to shareholders on 3 September 2007. Copies are also available to the public at the registered office of the company at 776 Chester Road, Stretford, Manchester M32 OQH. This information is provided by RNS The company news service from the London Stock Exchange

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