Interim Results
22/08/2023 07:00
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RNS Number : 9917J Lookers PLC 22 August 2023
22 August 2023
Lookers plc ("Lookers" or the "Group")
Unaudited Interim Results for the six months ended 30 June 2023
Good trading performance despite macroeconomic headwinds
Lookers plc, one of the leading UK integrated automotive retail and service
groups, today announces its unaudited interim results for the six months ended
30 June 2023 ("H1" or "the period").
Highlights
· Revenue up 8.0% at £2,419m (H1 2022 (restated): £2,240m) with
all revenue streams delivering growth and reflecting improved vehicle supply.
· Continued focus on cost control with underlying profit before
tax* broadly in line with last year, despite £6.7m of additional interest
expense.
· Like-for-like new unit growth +16.1%, used unit growth +3.5%,
aftersales revenues +13.5%.
· Cash generation continues to be strong with net funds of £101.4m
as at 30 June 2023 (30 June 2022: £78.5m; 31 December 2022: £66.5m).
· Interim dividend of 1.00p previously declared 17 August 2023,
payable on 8 September 2023.
· An all-cash offer of 130p per share from Global Auto Holdings
Limited, has been unanimously recommended by the Lookers Board of Directors.
The offer is to be effected by a Scheme of Arrangement and meetings to approve
the offer have been convened for 5 September 2023.
Financial Summary
H1 2023 H1 2022 (restated) FY 2022 (restated)
Revenue £2,419m £2,240m £4,319m
Underlying profit before tax* £46.1m £47.2m £82.7m
Statutory profit before tax £40.4m £49.9m £84.4m
Underlying earnings per share* 9.02p 9.67p 18.21p
Basic earnings per share 7.92p 10.31p 18.87p
Dividend per share 1.00p 1.00p 3.00p
Net funds** £101.4m £78.5m £66.5m
* Underlying profit before tax is profit before tax and non-underlying items.
Underlying earnings per share is the earnings per share after tax and before
non-underlying items (see Note 5).
** Cash and cash equivalents less bank loans and overdrafts, excluding
stocking loans, vehicle rental liabilities and lease liabilities under IFRS 16
(see Note 7).
Mark Raban, Chief Executive Officer, said:
"Against significant macroeconomic headwinds the Group has once again
delivered a good trading performance. I would like to thank the entire Lookers
team for their amazing contribution and dedication to the company."
"The Board unanimously recommends the cash offer for Lookers by Global Auto
Holdings Limited at 130p per share, which represents a premium of
approximately 61% 1 (#_ftn1) . The Board believes that the offer is in the
best interests of all shareholders and provides an opportunity to crystallise,
in cash, the value of their investments."
Enquiries:
Lookers
Mark Raban, Chief Executive
Officer
0161 291 0043
Oliver Laird, Chief Financial Officer
MHP Communications
Tim Rowntree / Charles Hirst
020 3128 8193
Lookers@mhpgroup.com (mailto:Lookers@mhpgroup.com)
About Lookers plc (www.lookersplc.com (http://www.lookersplc.com)
)
The Group's principal activities are the sale of new and used cars, commercial
vehicles and aftersales activities. The Group's businesses have a total of 148
franchised car and commercial vehicle dealerships representing 35
manufacturers, operating across the UK and Republic of Ireland.
The Company is registered in England at Lookers House, 3 Etchells Road, West
Timperley, Altrincham WA14 5XS. Company registration number 00111876. LEI
number 213800TSB8PJEACDAV33
Cautionary statement
This Interim Report has been prepared solely to provide additional information
to shareholders to assess the Group's strategies and the potential for those
strategies to succeed. The Interim Report should not be relied on by any party
or for any other purpose.
All statements other than statements of historical fact included in this
document, including, without limitation, those regarding the financial
condition, results, operations and businesses of Lookers plc and its strategy,
plans and objectives and the markets and economies in which it operates, are
forward-looking statements. Such forward-looking statements are made by the
Directors in good faith based on the information available to them up to the
time of their approval of this report. Such statements should be treated with
caution due to the inherent uncertainties, known and unknown risks, and other
important factors underlying any forward-looking information which could cause
the actual results, performance or achievements of Lookers or the markets and
economies in which it operates to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. Lookers and its Directors accept no liability to third parties in
respect of this report save as would arise under English law.
INTERIM MANAGEMENT REPORT
The Lookers Directors have recommended an all-cash offer of 130p per share
from Global Auto Holdings Limited for the issued and to be issued share
capital of Lookers plc. It is intended that the offer be implemented by way of
a Court-sanctioned scheme of arrangement (the "Scheme") under Part 26 of the
Companies Act. To become effective, among other things, the Scheme requires
both approval from 75% of Lookers shareholders who are present and vote
(either in person or by proxy), and receipt of approval from the FCA. For
further details on the offer please see the "Publication And Posting Of Scheme
Document" announcement published on our corporate website on 14 August 2023 at
07:00 (www.lookersplc.com/investors/regulatory-news).
We delivered a good financial performance for the first half of 2023, with
underlying profits broadly in line with the comparative period in 2022. We
continued to deliver against our strategic priorities which has allowed us to
harness our market position and enhance our OEM brand partner relationships.
The first half result is strong considering both the uplift in the Bank of
England base rates which have materially increased finance costs, and the
continued inflationary pressures on our cost bases across the business.
Update on strategic priorities
The Board continues to believe that our business model and the advancement of
our strategic priorities place the Group at the forefront of integrated
automotive retail in the UK. The diversity of our OEM relationships and the
range of services we offer has supported the strong performance in H1. We
provide an update on the progress against each of our strategic priorities
below:
Operational optimisation:
· Increase in used finance penetration to 50.6% (H1 2022: 48.0%).
· The "Lookers Service Core Process" has been successfully piloted
in H1 and will be rolled out more widely in H2 2023.
· Strong cost control with underlying cost growth restricted to
2.6%.
· Developed procurement team and processes resulting in robust
underlying cost control.
· Excellent working capital management delivering c.£43.0m of cash
flow benefit.
Leveraging technology and digitisation:
· Rigorous Sales Transformation user acceptance testing underway to
ensure rollout commences in Q4 2023 and the project is delivered across the
Group by Q2 2024.
· The customer journey will be streamlined with customers being
able to start, pause, and continue the sales journey either in person, by
telephone, or online. Reports are being developed to fully utilise the
additional data that will be captured, with significant productivity
improvements anticipated.
Expanding OEM relationships:
· Lotus is now operational in Belfast.
· Three ORA sites are now open in Wolverhampton, Belfast, and
Braintree.
· Three sites agreed with Electric Brands to retail their XBUS and
Evetta brands.
· Acquired the business and assets of Waterhouse Cars Limited,
extending our Volvo footprint to four dealerships.
· Successfully deployed agency model across our Mercedes-Benz
division in January and more recently at all our Volvo dealerships. Continuing
work to harmonise the agency journey for both our customers and colleagues as
advancements in the process become available.
Increasing used vehicle penetration:
· Physical building works on the Lookers CarHub have now commenced
with completion expected in Q4 2023.
· Actively engaged in the identification of additional sites that
will follow the Lookers CarHub blueprint.
Developing aftersales revenues:
· We now have 39 fixed cosmetic repair facilities operational and
22 dedicated vans on the road; we are making good progress in ensuring all our
locations have the required cosmetic repair facilities to capitalise on the
opportunity.
· Introduced new competitive service plans and improved the
visibility in our reporting.
· Set up Battery Competence Centres on behalf of certain OEMs
ensuring we are best placed to support our customers.
Leveraging corporate leasing and fleet capabilities:
· The restructuring of our fleet business in 2022 is showing
positive results with improved sales efficiency. The centralisation of
divisional salespeople and amended pay plans have also significantly improved
collaboration with the leasing businesses through referrals.
· Acquired and integrated Fourways Vehicle Solutions Limited in the
period. Operational platforms have been aligned with synergies already
delivered.
Operating Review
Overview
H1 2023 Segmental analysis of revenue and gross profit:
Revenue H1 2023 H1 2022 (restated) Variance LFL Variance
£m £m
New Vehicles 1,110.6 976.1 13.8% 13.3%
Used Vehicles 1,269.1 1,219.0 4.1% 5.1%
Aftersales 255.0 234.1 8.9% 13.5%
Leasing and Other 73.1 64.6 13.2% 11.0%
Less: intercompany (288.9) (254.0)
Total 2,418.9 2,239.8 8.0% 8.5%
Gross Profit H1 2023 H1 2022 Variance LFL Variance
£m £m
New Vehicles 93.7 84.3 11.2% 10.7%
Used Vehicles 83.7 88.5 (5.4)% (5.3)%
Aftersales 102.7 97.9 4.9% 6.9%
Leasing and Other 14.1 12.1 16.5% 9.3%
Total 294.2 282.8 4.0% 4.3%
Gross margin 12.2% 12.6% -40 BPS -50 BPS
New vehicles
New vehicles H1 2023 H1 2022 Variance LFL Variance
Car retail unit sales 19,815 20,756 (4.5)% (3.3)%
Car fleet unit sales 17,928 14,308 25.3% 25.3%
Total car unit sales 37,743 35,064 7.6% 8.5%
Commercial vehicles 9,841 6,193 58.9% 58.9%
Total unit sales 47,584 41,257 15.3% 16.1%
Gross margin % 8.4% 8.6% -20 BPS -20 BPS
The sale of new vehicles represented 41.0% (H1 2022: 39.1%) of total revenue
and 31.8% (H1 2022: 29.8%) of total gross profit. LFL total car unit sales
volume increased by 8.5% when compared to H1 2022.
There have been 11 consecutive months of growth in the new car market as
production constraints continue to ease across the industry following the
supply chain shortages that were prevalent in recent years. In H1 there were
c.950,000 new cars registered in the UK, an increase of 18.4% versus last year
(Retail +1.7%, Fleet +37.5%).
Demand for new vehicles remains resolute, with the Group carrying a retail
order bank of 17,206 vehicles (31 December 2022: 17,321) into the second half
of the year.
The electric vehicle (EV) market continued to expand in the period, with EVs
now representing 16.1% (H1 2022: 14.4%) of UK new car registrations. Our
volume of EVs sold has increased by 27.3%. EVs represent 20.8% of our new
vehicles sold, outperforming the market by 470 BPS.
Used vehicles
Used vehicles H1 2023 H1 2022 Variance LFL Variance
Retail unit sales 43,579 42,543 2.4% 3.5%
Gross margin 6.6% 7.3% -70 BPS -70 BPS
The sale of used vehicles represented 46.9% (H1 2022: 48.9%) of total revenue
and 28.5% (H1 2022: 31.3%) of total gross profit. Like-for-like unit sales
increased by 3.5%. Lookers' increase in unit sales volumes follows the same
upward trend of the UK used car market which rose by 4.1% in H1.
The UK used car market saw its best start to a year since 2020 as the
increased supply in the new car market drove growth in used car availability.
The increased supply to the used market has resulted in used car values
softening and the gross margin reducing by 70 BPS to 6.6%, when compared to H1
2022.
The gross profit per unit has fallen to c.£1,900, compared to c.£2,100 in H1
2022.
Aftersales
Aftersales H1 2023 H1 2022 (restated) Variance LFL Variance
Revenue £m 255.0 234.1 8.9% 13.5%
Gross margin 40.3% 41.8% -150 BPS -170 BPS
Aftersales represented 9.4% (H1 2022: 9.4%) of total revenue and 34.9% (H1
2022: 34.6%) of total gross profit.
In H1 like-for-like aftersales revenue growth was 13.5% which drove increased
gross profit of £4.8m. Gross margin was 40.3% (H1 2022: 41.8%). Gross margin
eroded by necessary inflationary increases to technicians pay and a shift in
revenue mix, with lower margin parts sales increasing at a greater rate than
revenue from service labour and bodyshop.
We have maintained our focus on operational optimisation initiatives around
customer conversion, IT platforms, customer propositions, staff retention, and
digitising the customer aftersales journey. We also continued to roll out our
cosmetic repair facilities, resulting in bodyshop revenue and gross profits
increasing.
H1 2023 Financial Review
Revenue
H1 revenue of £2,419m was 8.0% higher than the comparative period (H1 2022
(restated): £2,240m). Like-for-like revenue increased by 8.5% with increased
revenue from fleet, used, and aftersales being partially offset by reduced new
retail vehicle revenue.
Gross profit
Gross profit increased by 4.0% to £294.2m (H1 2022: £282.8m). Gross profit
margin at 12.2% was marginally behind the same period last year by 40 BPS. The
increase in absolute gross profit was driven by the volume growth of fleet and
aftersales. However, the margin percentage was slightly eroded by reductions
in used and aftersales.
Operating expenses
Underlying net operating expenses of £229.8m (H1 2022: £224.0m) were 2.6%
above the comparative period. This represents a significant reduction against
the uplift observed in H1 2022, with this improvement driven by inflationary
pressures reducing, and strong cost management (strengthened procurement
team).
Non-underlying items
The Group recorded a net non-underlying charge of £5.7m (H1 2022: net credit
£2.7m). The largest element of this is professional services costs incurred
in relation to the potential transaction (£3.6m). We have also incurred
£1.5m of non-underlying cost relating to the implementation of the Sales
Transformation project.
Net finance costs
Net finance costs were higher than the comparative period at £18.3m (H1 2022:
£11.6m). This has been driven by increases to the Bank of England base rate,
which has been increased in 14 consecutive periods by the Monetary Policy
Committee.
Taxation
The Group's tax charge was £10.0m (H1 2022: £9.5m), an effective tax rate
of 24.8% (H1 2022: 19.0%).
The increase in the effective rate is predominantly due to the increase in UK
corporation tax rate from 19% to 25% on 1 April 2023.
Earnings per share (EPS)
Underlying EPS decreased by 6.7% to 9.02p per share (H1 2022: 9.67p per
share). Basic EPS decreased by 23.2% to 7.92p per share (H1 2022: 10.31p per
share).
Dividend
The Board has declared an interim dividend of 1.00p per ordinary share which
will be paid on 8 September 2023 to shareholders on the register at the close
of business on 25 August 2023.
A dividend of £7.7m relating to the 2022 financial year was paid in June
2023.
Cash flow and net debt
Throughout H1 the Group maintained a strong focus on operational cash flow.
The net cash inflow from operating activities in H1 was £62.8m (H1 2022:
£80.2m), largely as a result of the strong trading performance and ongoing
working capital focus. We expect some of the working capital benefit to unwind
into H2. The Group was also able to return £8.1m to shareholders as part of
the share buyback programme. At the balance sheet date stocking loans totalled
£231.3m (31 December 2022: £247.2m), equivalent to 75% of goods for resale
(31 December 2021: 82%). Property, plant and equipment capital expenditure
totalled £14.4m (2022: £8.0m).
Net funds at 30 June 2022 were £101.4m (30 June 2022: £78.5m; 31 December
2022: £66.5m).
Financing
The RCF facility which was renegotiated and extended in June 2022 remains
undrawn at 30 June 2023. The facility is subject to quarterly covenant tests
on leverage and interest cover.
Pension schemes
The Group's actuary has assessed the IAS 19 valuation of both the Lookers
Pension Plan and Benfield Pension Plan as at 30 June 2023.
At 30 June 2023, the IAS 19 pension valuation showed a total deficit of
£16.5m (30 June 2022: £24.3m; 31 December 2022: £23.5m). The reduction in
the deficit is predominately due to the Group's continued contributions to the
schemes. Over the period, lower than expected returns were achieved on scheme
assets, but this was mostly offset by the impact of an increased net discount
rate on the scheme liabilities. We are pleased to announce that the triennial
review valuation for the Lookers Pension Plan, including the funding strategy,
was agreed during the period.
Risks and uncertainties
As with any business, there are a number of potential risks and uncertainties
which could have a material impact on the Group's future performance and could
cause actual results to differ materially from both expected and historical
results. The Board believes the wider risks and uncertainties to be materially
consistent with those described on pages 39 to 43 in the 2022 Annual Report
and Accounts.
In addition, the Board continues to manage and robustly monitor the change
agenda that supports the implementation of the Group's strategic priorities.
An update on these priorities is provided in the Strategy Update earlier in
this document.
We continue to be mindful of a number of external factors that are subject to
ongoing close monitoring. These include inflationary pressures and interest
rate rises that can impact the Group's operating costs and potentially affect
consumer confidence.
Summary and outlook
We are encouraged by our good H1 performance, particularly the resilience of
the Group in the face of rapidly increasing interest rates and persistent cost
pressures. We maintain a strong new vehicle order bank moving into the second
half of 2023 but remain cognisant of continuing macroeconomic pressures.
The Board continues to believe that our business model and the advancement of
our strategic priorities place the Group at the forefront of integrated
automotive retail in the UK. We expect inflationary cost pressures to continue
and that the Bank of England base rate will stabilise in the near future.
However, the Board are confident that the business is well placed to respond
to the continued challenging trading environment and maximise the strategic
change opportunities ahead.
The Board unanimously recommends the cash offer for Lookers by Global Auto
Holdings Limited at 130p per share, which represents a premium of
approximately 61% 2 (#_ftn2) . The Board believes that the offer is in the
best interests of all shareholders and provides an opportunity to crystallise,
in cash, the value of their investments.
Mark Raban
Chief Executive Officer
21 August 2023
INDEPENDENT REVIEW REPORT TO Lookers Plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2023 which comprises the Condensed Consolidated Income Statement,
Condensed Consolidated Statement of Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed Consolidated Statement
of Changes in Equity, Condensed Consolidated Statement of Cash Flows and the
notes to the interim results.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in the basis of preparation, the annual financial statements of
the group are prepared in accordance with UK adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report have been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting".
Material uncertainty relating to going concern
We draw attention to the matter disclosed in the basis of preparation section
of this report, which indicates that there is some doubt as to whether the
Group will continue to operate in its current form following the receipt of a
cash offer made by Global Auto Holdings Limited.
As stated in the basis of preparation section, these conditions indicate that
a material uncertainty exists that may cast significant doubt on the Group's
ability to continue as a going concern in its current form. Our opinion is not
modified in respect of this matter.
Based on our review procedures, we have concluded that the directors' use of
the going concern basis of accounting in the preparation of the interim report
is appropriate.
Our responsibilities, and the responsibilities of the directors, with respect
to going concern are described in the relevant sections of this report. This
conclusion is based on the review procedures performed in accordance with ISRE
(UK) 2410, however future events or conditions may cause the group to cease to
continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
Manchester, UK
21 August 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Condensed Consolidated Statement of Total Comprehensive Income
Note Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 (restated) Audited year ended 31 December 2022 (restated)
£m
£m
£m
Revenue 1 2,418.9 2,239.8 4,318.9
Cost of sales (2,124.7) (1,957.0) (3,768.7)
Gross profit 294.2 282.8 550.2
Net operating expenses (235.5) (221.3) (441.3)
Operating profit 58.7 61.5 108.9
Underlying operating profit 64.4 58.8 107.2
Non-underlying items 2 (5.7) 2.7 1.7
Finance costs 4 (18.3) (11.6) (24.5)
Profit before taxation 40.4 49.9 84.4
Underlying profit before taxation 46.1 47.2 82.7
Non-underlying items 2 (5.7) 2.7 1.7
Tax charge (10.0) (9.5) (10.5)
Profit for the period/year (attributable to shareholders of the Company) 30.4 40.4 73.9
Exchange differences on translation of foreign operation (may be recycled to (0.5) 0.3 0.8
profit and loss)
Actuarial (losses)/gains on pension scheme obligations (not recycled to profit (1.0) 12.2 6.9
and loss)
Deferred tax on pension scheme obligations (not recycled to profit and loss) 0.3 (3.0) (1.7)
Total other comprehensive (expense)/income for the period/year (1.2) 9.5 6.0
Total comprehensive income for the period/year (attributable to shareholders 29.2 49.9 79.9
of the Company)
Earnings per share:
Basic earnings per share (p) 5 7.92 10.31 18.87
Diluted earnings per share (p) 5 7.84 10.19 18.64
Condensed Consolidated Statement of Financial Position
Note Unaudited 30 June 2023 Unaudited 30 June 2022 Audited 31 December 2022
£m
£m
£m
Non-current assets
Goodwill 80.1 79.3 79.3
Intangible assets 104.1 106.6 105.2
Property, plant and equipment 425.6 396.7 404.4
Right of use assets 115.9 113.1 114.9
725.7 695.7 703.8
Current assets
Inventories 683.9 489.9 664.6
Trade and other receivables 161.5 139.5 125.4
Current tax receivable 4.0 - 8.8
Rental fleet vehicles 43.4 32.9 51.9
Cash and cash equivalents 177.6 153.8 111.8
Assets held for sale 6 1.5 4.0 2.6
1,071.9 820.1 965.1
Total assets 1,797.6 1,515.8 1,668.9
Current liabilities
Bank loans and overdrafts 7 76.2 68.5 45.3
Trade and other payables 980.6 770.7 905.9
Lease liabilities 7 23.3 21.8 22.3
Current tax payable - 1.6 -
1,080.1 862.6 973.5
Net current liabilities (8.2) (42.5) (8.4)
Non-current liabilities
Bank loans 7 - 6.8 -
Trade and other payables 86.8 38.9 74.3
Lease liabilities 7 120.2 125.1 120.7
Pension scheme obligations 16.5 24.3 23.5
Deferred tax liabilities 46.3 48.0 45.0
269.8 243.1 263.5
Total liabilities 1,349.9 1,105.7 1,237.0
Net assets 447.7 410.1 431.9
Shareholders' equity
Ordinary share capital 19.1 19.6 19.3
Share premium 79.9 78.4 78.4
Capital redemption reserve 15.9 15.1 15.4
Retained earnings 332.8 297.0 318.8
Total equity 447.7 410.1 431.9
Condensed Consolidated Statement of Changes in Equity
Share capital Share premium Capital redemption reserve Retained earnings Total equity
Period ended 30 June 2022 (unaudited) Note £m £m £m £m £m
As at 1 January 2022 19.6 78.4 15.1 256.5 369.6
Profit for the period - - - 40.4 40.4
Total other comprehensive income for the period - - - 9.5 9.5
Total comprehensive income for the period - - - 49.9 49.9
Share based compensation - - - 0.4 0.4
Dividends paid to shareholders 3 - - - (9.8) (9.8)
As at 30 June 2022 19.6 78.4 15.1 297.0 410.1
Year ended 31 December 2022 (audited)
As at 1 January 2022 19.6 78.4 15.1 256.5 369.6
Profit for the year - - - 73.9 73.9
Total other comprehensive income for the year - - - 6.0 6.0
Total comprehensive income for the year - - - 79.9 79.9
Share-based compensation - - - 0.7 0.7
Own shares purchased for cancellation (0.3) - 0.3 (4.6) (4.6)
Dividends paid to shareholders 3 - - - (13.7) (13.7)
As at 31 December 2022 19.3 78.4 15.4 318.8 431.9
Period ended 30 June 2023 (unaudited)
As at 1 January 2023 19.3 78.4 15.4 318.8 431.9
Profit for the period - - - 30.4 30.4
Total other comprehensive income for the period - - - (1.2) (1.2)
Total comprehensive income for the period - - - 29.2 29.2
New shares issued 0.3 1.5 - - 1.8
Share-based compensation - - - 0.6 0.6
Own shares purchased for cancellation (0.5) - 0.5 (8.1) (8.1)
Dividends paid to shareholders 3 - - - (7.7) (7.7)
As at 30 June 2023 19.1 79.9 15.9 332.8 447.7
Condensed Consolidated Statement of Cash Flow
Note Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 Audited year ended 31 December 2022
£m
£m
£m
Cash flows from operating activities
Profit for the period/year 30.4 40.4 73.9
Tax charge 10.0 9.5 10.5
Depreciation of property, plant and equipment, rental fleet and right of use 26.9 23.8 49.9
assets
Gain on disposal of property, plant and equipment (0.3) (5.5) (6.4)
Gain on disposal of leases - (0.8) (1.9)
Gain on modification of leases - - (0.1)
Gain on disposal of right of use asset associated with rental fleet assets (0.3) (0.3) (0.4)
Amortisation of intangible assets 2.1 2.4 4.7
Loss on disposal of intangibles - - 0.3
Share-based compensation 0.6 0.4 0.7
Impairment/(impairment reversal) of property, plant and equipment - 0.2 (0.2)
Impairment of right of use assets 2 - 1.2 1.1
Finance costs excluding pension related finance costs and debt issue costs 4 17.4 10.5 22.7
Amortisation of debt issue costs 4 0.4 0.7 1.2
Difference between pension charge and cash contributions (8.0) (6.7) (12.8)
Purchase of rental fleet vehicles (7.7) (13.5) (22.6)
Purchase of right of use assets associated with rental fleet assets (0.3) (0.3) (0.3)
Purchase of vehicles for long term leasing (30.7) (27.7) (52.8)
Changes in inventories 1.5 42.0 (139.7)
Changes in receivables (35.7) (29.4) (14.1)
Changes in payables 77.2 50.6 185.9
Cash generated from operations 83.5 97.5 99.6
Finance costs paid (14.2) (7.4) (16.5)
Finance costs paid - lease liabilities (3.2) (3.1) (6.2)
Tax paid (3.3) (6.8) (19.8)
Net cash inflow from operating activities 62.8 80.2 57.1
Cash flows from investing activities
Purchase of property, plant and equipment and own use vehicles (14.4) (8.0) (16.8)
Purchase of intangibles (0.9) (1.2) (2.3)
Acquisition of businesses, net of cash acquired 8 (1.9) - -
Amounts paid to surrender leases - - (0.2)
Finance lease rentals collected 0.6 1.0 1.5
Proceeds from disposal of property, plant and equipment 1.8 29.4 32.9
Net cash (outflow)/inflow from investing activities (14.8) 21.2 15.1
Cash flows from financing activities
Receipt of funding advanced for vehicle leasing arrangements 7 38.4 41.2 75.4
Repayment of funding advanced for vehicle leasing arrangements 7 (29.1) (47.2) (45.9)
Payment of loan arrangement fees 7 - - (1.1)
Repayment of loans 7 - (0.4) (8.3)
Repayment on revolving credit facility 7 - (12.5) (12.5)
Repayment of lease liabilities 7 (8.4) (7.6) (16.3)
Proceeds from issue of ordinary shares 1.8 - -
Purchase of own shares (8.1) - (4.6)
Dividends paid 3 (7.7) (9.8) (13.7)
Net cash outflow from financing activities (13.1) (36.3) (27.0)
Increase in cash and cash equivalents 34.9 65.1 45.2
Cash and cash equivalents at 1 January 66.5 21.3 21.3
Cash and cash equivalents at 30 June/31 December 101.4 86.4 66.5
Analysis of cash and cash equivalents
Cash and cash equivalents 177.6 153.8 111.8
Bank overdraft (76.2) (67.4) (45.3)
Cash and cash equivalents at 30 June/31 December 101.4 86.4 66.5
Notes to the Financial Information
General information
Lookers plc is a public limited company incorporated in the United Kingdom
under the Companies Act 2006, with registered number 111876 in England and
Wales and a registered office of Lookers House, 3 Etchells Road, West
Timperley, Altrincham, WA14 5XS.
Basis of preparation
These condensed consolidated interim financial statements for the six months
to 30 June 2023 have been prepared in accordance with IAS 34 'Interim
financial reporting' and also in accordance with the measurement and
recognition principles of UK adopted international accounting standards. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the 2022 Annual Report and
Accounts, which were prepared in accordance with UK Adopted International
Accounting Standards.
These condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2022 were approved by
the Board of Directors on 4 April 2023 and have been filed with the Registrar
of Companies. The report of the auditors on those accounts was unqualified. It
did not contain any statement under section 498 of the Companies Act 2006.
The financial information for the periods ended 30 June 2023 and 30 June 2022
is unaudited but has been externally reviewed by BDO. The financial
information for the year ended 31 December 2022 has been based on the audited
financial statements for that year.
Accounting policies
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 31 December 2022, as described in the
2022 Annual Report & Accounts. Corporation tax in the interim periods is
accrued using the estimated tax rate that is expected be applicable to total
annual earnings.
Critical accounting estimates and judgements
The preparation of interim financial information requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. In preparing
these condensed consolidated interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the consolidated financial statements for the year ended 31 December 2022.
There have been no material revisions to either the nature or amount of
estimates reported in prior periods. The Group has used up to date financial
forecasts in considering its ability to continue as a going concern, and the
carrying value of its goodwill balance.
Going concern
At 30 June 2023 the Group is in a net current liabilities position of £8.2m
(31 December 2022: £8.4m, 30 June 2022: £42.5m). The Group has considerable
financial resources together with long-standing relationships with OEMs and a
good reputation within the motor-trade industry. In their consideration of
going concern, the Board have considered the future prospects and performance
of the Group, considering the Group's cash and liquidity position, current
performance and outlook. The latter was subjected to various sensitivities and
stress testing which assessed the potential future downside risks including,
but not limited to: worsening supply restrictions caused by macro-economic
factors, reduced consumer demand due to the cost of living crisis, and
increases to the Group's cost base due to inflationary pressures.
The Group's revolving credit facility provides £100m of credit and expires on
30 September 2025. The facility is subject to quarterly covenant tests on
leverage and interest cover. At 30 June 2023 £Nil (31 December 2022: £Nil,
30 June 2022: £Nil) was drawn down against this facility, giving the Group
significant liquidity.
In view of the various sensitivities, additional stress testing, strong cash
holding, and significant RCF headroom, the Board concludes that the Group has
sufficient liquidity for at least 12 months from the date of this announcement
and therefore that preparing the accounts on the basis of going concern is
appropriate.
Material uncertainty in relation to going concern
As set out in the post balance sheet events disclosure, the Group is the
subject of an all-cash offer from Global Auto Holdings Limited (the "Offeror")
that, if successful, is expected to complete in H2 2023. The Directors note
the intentions of the Offeror as set out in the Scheme circular, however while
they do not have any reason to believe that the Offeror would not continue to
support the Group or would materially change its activities in the next 12
months, they are not party to the detailed intentions of the acquirer.
Although this does not change the Directors' conclusion as to the
appropriateness of preparing the financial statements of the Group on a going
concern basis, it is considered, on the assumption that the deal has
completed, to create a material uncertainty which may cast significant doubt
on the Group's ability to continue as a going concern. Accordingly, the
financial statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
Alternative Performance Measures
The Group uses a number of Alternative Performance Measures (APMs) which are
non-IFRS measures in establishing their financial performance. The Group
believes the APMs provide useful, historical financial information to assist
investors and other stakeholders to evaluate the performance of the business
and are measures commonly used by certain investors for evaluating the
performance of the Group. APMs should be considered in addition to IFRS
measures and are not intended to be a substitute for IFRS measurements.
More details of the APMs and a reconciliation of the IFRS measures used in the
Interim Report to those APMs used for KPI monitoring are including in Note 12.
Like-for-like is the collection of dealerships and other trading businesses
that have both a full period of trading activity in the current and prior
periods.
1. Segmental reporting
Unaudited six months ended 30 June 2023 Mix* Unaudited six months ended 30 June 2022 (restated) Mix* Audited year ended 31 December 2022 (restated) Mix*
£m
£m
£m
New vehicles 1,110.6 41.0% 976.1 39.1% 1,980.0 41.0%
Used vehicles 1,269.1 46.9% 1,219.0 48.9% 2,255.2 46.8%
Aftersales 255.0 9.4% 234.1 9.4% 461.9 9.6%
Leasing and other 73.1 2.7% 64.6 2.6% 126.6 2.6%
Less: intercompany (288.9) - (254.0) - (504.8) -
Revenue 2,418.9 100% 2,239.8 100% 4,318.9 100%
*Mix calculation excludes the effect of intercompany revenues.
2. Non-underlying items
Non-underlying items relate to (costs) or incomes which are not incurred in
the normal course of business or due to their size, nature and irregularity
are not included in the assessment of financial performance in order to
reflect management's view of the core-trading performance of the Group.
The following details items of income and expenditure that the Group has
classified as non-underlying in its statement of total comprehensive income.
Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 Audited year ended 31 December 2022
£m
£m
£m
Non-underlying items in operating profit
1 - Gain on sale and leaseback - 6.0 6.0
2 - Gain on property disposals 0.7 0.1 1.7
3 - Impairment of property, plant and equipment - (0.4) (1.8)
3 - Impairment of right of use assets - (1.2) (1.1)
3 - Other property exit and restructuring costs (1.3) (1.8) (3.0)
4 - Impairment reversal of property, plant and equipment - - 2.0
5 - Sales transformation project (1.5) - (2.1)
6 - Proposed transaction costs (3.6) - -
Non-underlying items in operating profit (5.7) 2.7 1.7
1 - In March 2022 the Group completed the sale and leaseback of the VW
dealership in Battersea. The net gain on sale has been deemed non-underlying
by its size and nature.
2 - Property disposals relate to the net gains on the sale of a number of
freehold and leasehold properties during the current period and prior year.
These items have been deemed non-underlying by nature.
3 - During the prior year a number of sites were exited as part of Group-wide
restructuring. This has continued into the current period where we have closed
or announced our intention to close one site (FY 2022: six sites). Items
include site closure costs, restructuring costs, and impairment losses. These
items have been deemed non-underlying by irregularity.
4 - In 2020 we classified a site as an asset held for sale and at this point
it was impaired in line with IAS 36. In 2022 we secured a new franchise for
this site and it is due to re-open in 2023, therefore the value in use
significantly increased and we reversed the impairment. Both the original
impairment and subsequent reversal have been included within non-underlying
items.
5 - In the prior year we have commenced a Sales transformation project which
has continued throughout the current period. Costs incurred include external
and internal incremental resource required to implement the new sales system.
These items are considered non-underlying due to their irregularity.
6 - Professional fees incurred in connection with the all-cash offer from
Global Auto Holdings Limited for the issued and to be issued share capital of
Lookers plc. As detailed in the Scheme Document additional fees are expected
to be incurred in the second half of 2023. These costs have been considered
non-underlying due to their size and irregularity.
The net cash flow from operating activities associated with non-underlying
items is an outflow of £0.8m (H1 2022: inflow of £29.3m, FY 2022: inflow of
£25.1m).
3. Dividends
Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 Audited year ended 31 December 2022
£m
£m
£m
Final dividend for the year ended 31 December 2021 2.5p - 9.8 9.8
Interim dividend for the year ended 31 December 2022 1.0p - - 3.9
Final dividend for the year ended 31 December 2022 2.0p 7.7 - -
7.7 9.8 13.7
Following approval at the Annual General Meeting a final dividend of £7.7m
for the year ended 31 December 2022 was paid in June 2023 and represented a
payment of 2.0p per ordinary share in issue at the time. An interim dividend
of 1.0p per ordinary share has been declared by the Board but not recorded as
a financial liability in these interim statements. The dividend will be paid
on 8 September 2023 to those shareholders on the register on 25 August 2023.
The shares will go ex-dividend on 24 August 2023 and the last date for
elections to be made under the dividend reinvestment plan is 25 August 2023.
4. Finance costs
Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 Audited year ended 31 December 2022
£m
£m
£m
Finance costs:
On revolving credit facility (0.3) (0.8) (0.9)
On other bank borrowings - (0.3) (0.4)
On consignment, repurchase vehicle liabilities and stocking loans (11.7) (5.2) (12.7)
On vehicle rental finance liabilities (2.2) (1.1) (2.5)
On lease liabilities (3.2) (3.1) (6.2)
Debt issue costs (0.4) (0.7) (1.2)
(17.8) (11.2) (23.9)
Net pension costs:
On defined benefit pension obligation (4.6) (2.8) (5.6)
On pension scheme assets 4.1 2.4 5.0
(0.5) (0.4) (0.6)
Finance costs (18.3) (11.6) (24.5)
5. Earnings per share
Note Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 Audited year ended 31 December 2022
£m
£m
£m
Profit attributable to ordinary shareholders (£m) 30.4 40.4 73.9
Weighted average number of shares in issue 383,700,479 392,021,146 391,627,955
Basic earnings per share (p) 7.92 10.31 18.87
Profit attributable to ordinary shareholders (£m) 30.4 40.4 73.9
Dilutive effect of share-based compensation options and weighted average 387,566,856 396,603,368 396,385,849
number of shares in issue
Diluted earnings per share (p) 7.84 10.19 18.64
Profit before tax (£m) 40.4 49.9 84.4
Add: Non-underlying items (£m) 2 5.7 (2.7) (1.7)
Underlying profit before tax (£m) 46.1 47.2 82.7
Underlying tax* (£m) (11.5) (9.3) (11.4)
Underlying earnings attributable to ordinary shareholders (£m) 34.6 37.9 71.3
Weighted average number of shares in issue 383,700,479 392,021,146 391,627,955
Underlying basic earnings per share (p) 9.02 9.67 18.21
* Underlying tax is calculated as the tax charge per condensed statement of
total comprehensive income (£10.0m (30 June 2022: £9.5m; 31 December 2022:
£10.5m)) excluding tax relating to non-underlying items ((£1.5m) (30 June
2022: £0.2m; 31 December 2022: (£0.9m)).
6. Assets held for sale
Lower of carrying amount and fair value less cost to sell Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 Audited year ended 31 December 2022
£m
£m
£m
At 1 January 2.6 5.0 5.0
Net transfers from property, plant and equipment - 0.3 1.1
Disposals (1.1) (1.3) (3.5)
At 30 June/31 December 1.5 4.0 2.6
All items included in the analysis above relate to properties held by the
Group and have been transferred into assets held for sale following the
cessation of trade at certain dealerships and the subsequent commencement of
procedures to dispose of these vacant properties from the Group's portfolio.
Properties held within assets held for sale are being actively marketed for
disposal and there is an expectation that such properties will be disposed of
within 12 months of the balance sheet date. Where necessary, provision for
impairment to bring the assets' carrying value in line with their estimated
fair value less costs of disposal has been recorded whilst the assets were
held within property, plant and equipment and prior to their subsequent
transfer into assets held for sale.
During the period the total carrying amount disposed from held for sale
amounted to £1.1m (H1 2022: £1.3m, FY 2022: £3.5m). Total proceeds received
amounted to £1.8m (H1 2022: £1.2m, FY 2022: £4.2m) resulting in a profit on
property disposals of £0.7m (H1 2022: loss of £0.1m, FY 2022: gain of
£0.7m).
7. Financial Instruments
Movement in liabilities arising from financing activities At 1 Jan 2022 Net RCF movement Loan repayment Lease repayment Loan receipt Non-cash movement At 30 Jun 2022
£m
£m
£m
£m
£m
£m
£m
Other loans 8.3 - (0.4) - - - 7.9
RCF 10.0 (12.5) - - - 2.5 -
Lease liabilities 136.8 - - (10.7) - 20.8 146.9
Vehicle rental finance liabilities 84.1 - (47.2) - 41.2 - 78.1
239.2 (12.5) (47.6) (10.7) 41.2 23.3 232.9
Cash and cash equivalents (103.9) (153.8)
Bank overdraft 82.6 67.4
Net funds excluding lease and vehicle rental liabilities (3.0) (78.5)
Net debt including lease and vehicle rental liabilities 217.9 146.5
Movement in liabilities arising from financing activities At 1 Jan 2022 Net RCF movement Loan repayment Lease repayment Loan receipt Non-cash movement At 31 Dec 2022
£m
£m
£m
£m
£m
£m
£m
Other loans 8.3 - (8.3) - - - -
RCF 10.0 (12.5) - - - 2.5 -
Lease liabilities 136.8 - - (16.3) - 22.5 143.0
Vehicle rental finance liabilities 84.1 - (45.9) - 75.4 - 113.6
239.2 (12.5) (54.2) (16.3) 75.4 25.0 256.6
Cash and cash equivalents (103.9) (111.8)
Bank overdraft 82.6 45.3
Net funds excluding lease and vehicle rental liabilities (3.0) (66.5)
Net debt including lease and vehicle rental liabilities 217.9 190.1
Movement in liabilities arising from financing activities At 1 Jan 2023 Net RCF movement Loan repayment Lease repayment Loan receipt Non-cash movement At 30 Jun 2023
£m
£m
£m
£m
£m
£m
£m
Lease liabilities 143.0 - - (8.4) - 8.8 143.4
Vehicle rental finance liabilities 113.6 - (29.1) - 38.4 - 122.9
256.6 - (29.1) (8.4) 38.4 8.8 266.3
Cash and cash equivalents (111.8) (177.6)
Bank overdraft 45.3 76.2
Net funds excluding lease and vehicle rental liabilities (66.5) (101.4)
Net debt including lease and vehicle rental liabilities 190.1 164.9
Non-cash movements in relation to lease liabilities relate to the recognition
and de-recognition of lease liabilities and accrued and repaid interest.
Non-cash movements in relation to the Group's RCF is the reclassification of
unamortised debt issue costs to prepayments.
8. Business combinations
On 2 March 2023, Lookers plc acquired 100% of the share capital of Fourways
Vehicle Solutions Limited, a leading vehicle hire and brokerage business. The
acquisition is part of Lookers key strategic priorities to grow its corporate
leasing, fleet, and rental capabilities.
On 28 April 2023, Lookers plc acquired the business and assets of Waterhouse
Car Limited, which operated a Volvo dealership in Chelmsford, extending the
Group's Volvo footprint to four dealerships.
The combined assets and liabilities recognised as a result of the acquisitions
are as follows:
£m
Property plant and equipment 0.3
Inventories 0.9
Trade and other receivables 0.8
Cash and cash equivalents 0.1
Trade and other payables (0.8)
Tax liabilities (0.1)
Net identifiable assets acquired 1.2
Goodwill 0.8
Total consideration satisfied by cash 2.0
Net cash outflow arising from acquisitions: £m
Cash consideration 2.0
Less: cash and cash equivalents acquired (0.1)
1.9
The goodwill is attributable to the profitability of the acquired business.
None of the goodwill recognised is expected to be deductible for income tax
purposes.
The fair value of the acquired trade and other receivables is £0.8m with a
gross contractual amount of £0.8m. The best estimate at the acquisition dates
of the contractual cash flows not to be collected was £Nil.
No contingent liabilities have been recognised as a result of the
acquisitions.
Acquisition related costs included within the Lookers plc statement of total
consolidated comprehensive income for the period ended 30 June 2023 amount to
£0.1m.
The combined businesses acquired contributed £4.3m to revenue and £0.2m to
the Group's profit for the period between the dates of acquisition and the 30
June 2023. If the acquisition of the businesses had been completed on 1
January 2023, contribution to Group revenues for the period would have been
£10.6m and contribution to Group profit would have been £0.4m.
There were no acquisitions in the year ended 31 December 2022.
9. Subsequent events
On 20 June 2023, the boards of directors of Global Auto Holdings Limited (the
"Offeror") and Lookers announced the recommended proposed cash offer by the
Offeror for the entire issued and to be issued share capital of Lookers which
was to be effected by way of a scheme arrangement under Part 26 of the
Companies Act 2006.
On 27 July 2023, the boards of directors of the Offeror and Lookers announced
that they had reached agreement on the terms of an increased recommended cash
offer by the Offeror for the entire issued and to be issued share capital of
Lookers at a price of 130 pence per Lookers Share and a switch from a Scheme
to a takeover offer.
On 4 August 2023, it was announced that the increased offer would revert to
being implemented by way of a scheme arrangement under Part 26 of the
Companies Act 2006.
Scheme documentation has been issued to the shareholders, and a Court Meeting
and General Meeting to vote on the scheme will be held on 5 September 2023.
10. Related parties
There have been no material changes to the Group's principal subsidiaries as
listed in the 2022 Annual Report & Accounts except for the acquisition of
Fourways Vehicle Solutions Limited as detailed in Note 8.
There have been no related party transactions in the period (H1 2022: none).
11. Condensed Consolidated Statement of Total Comprehensive Income (restated)
As previously reported unaudited six months ended 30 June 2022 Correction of errors Unaudited six months ended 30 June 2022 (restated) As previously reported audited year ended 31 December 2022 Correction of errors Audited year ended 31 December 2022 (restated)
£m
£m
£m
£m
£m
£m
Revenue 2,230.0 9.8 2,239.8 4,300.9 18.0 4,318.9
Cost of sales (1,947.2) (9.8) (1,957.0) (3,750.7) (18.0) (3,768.7)
Gross profit 282.8 - 282.8 550.2 - 550.2
Net operating expenses (221.3) - (221.3) (441.3) - (441.3)
Operating profit 61.5 - 61.5 108.9 - 108.9
Underlying operating profit 58.8 - 58.8 107.2 - 107.2
Non-underlying items 2.7 - 2.7 1.7 - 1.7
Finance costs (11.6) - (11.6) (24.5) - (24.5)
Profit before taxation 49.9 - 49.9 84.4 - 84.4
Underlying profit before taxation 47.2 - 47.2 82.7 - 82.7
Non-underlying items 2.7 - 2.7 1.7 - 1.7
Tax charge (9.5) - (9.5) (10.5) - (10.5)
Profit for the period/year (attributable to shareholders of the Company) 40.4 - 40.4 73.9 - 73.9
Exchange differences on translation of foreign operation (may be recycled to 0.3 - 0.3 0.8 - 0.8
profit and loss)
Actuarial gains on pension scheme obligations (not recycled to profit and 12.2 - 12.2 6.9 - 6.9
loss)
Deferred tax on pension scheme obligations (not recycled to profit and loss) (3.0) - (3.0) (1.7) - (1.7)
Total other comprehensive income for the period/year 9.5 - 9.5 6.0 - 6.0
Total comprehensive income for the period/year (attributable to shareholders 49.9 - 49.9 79.9 - 79.9
of the Company)
Earnings per share:
Basic earnings per share (p) 10.31 - 10.31 18.87 - 18.87
Diluted earnings per share (p) 10.19 - 10.19 18.64 - 18.64
As part of the transition to operating under an agency model with certain
OEMs, a review of the accounting treatment for agency income has been
undertaken. As a result of this, it has been identified that in the prior year
some agency income had been incorrectly netted against cost of sales rather
than recognised within revenue. As a consequence, in H1 2022 revenue and cost
of sales were both understated by £9.8m. For FY 2022, revenue and cost of
sales were both understated by £18.0m. There was no impact to the statement
of financial position or the cash flow statement as a result of this
correction. A prior period adjustment has been made to the statement of total
consolidated comprehensive income presented in these financial statements to
correct this error, as laid out above.
12. Reconciliation of Alternative Performance Measures
The Group uses a number of Alternative Performance Measures (APM) which are
non-IFRS measures in establishing their financial performance. Like-for-like
is the collection of dealerships and other trading businesses that have both a
full year of trading activity in the current year and prior year. The Group's
income statement identifies separately adjusted measures and non-underlying
items. These adjusted measures reflect adjustments to IFRS measures. The
Directors believe the APMs provide useful, historical financial information to
assist investors and other stakeholders to evaluate the performance of the
business and are measures commonly used by certain investors for evaluating
the performance of the Group. Adjusted results are stated before exceptional
items. Details of the definitions of APMs are made within the Glossary. A
reconciliation of the statutory measures to the APM is set out below:
Like-for-like revenue Note Unaudited six months ended 30 June 2023 Unaudited six months ended 30 June 2022 (restated) Audited year ended 31 December 2022 (restated)
Revenue (£m) 1 2,418.9 2,239.8 4,318.9
Less: Non like-for-like revenue (£m) (22.7) (30.9) (29.7)
Like-for-like revenue (£m) 2,396.2 2,208.9 4,289.2
Gross profit margin
Revenue (£m) 1 2,418.9 2,239.8 4,318.9
Gross profit (£m) 294.2 282.8 550.2
Gross profit margin (%) 12.2% 12.6% 12.7%
EBITDA and underlying EBITDA (£m)
Operating profit (£m) 58.7 61.5 108.9
Add: Depreciation (£m) 26.9 23.8 49.9
Add: Amortisation (£m) 2.1 2.4 4.7
EBITDA (£m) 87.7 87.7 163.5
Add: Non-underlying items (£m) 2 5.7 (2.7) (1.7)
Underlying EBITDA (£m) 93.4 85.0 161.8
Underlying operating profit (£m)
Operating profit (£m) 58.7 61.5 108.9
Add: Non-underlying items (£m) 2 5.7 (2.7) (1.7)
Underlying operating profit (£m) 64.4 58.8 107.2
Underlying profit before tax and underlying basic EPS
Profit before tax (£m) 40.4 49.9 84.4
Add: Non-underlying items (£m) 2 5.7 (2.7) (1.7)
Underlying profit before tax (£m) 46.1 47.2 82.7
Underlying tax (£m) 5 (11.5) (9.3) (11.4)
Underlying profit after tax (£m) 34.6 37.9 71.3
Weighted average number of shares in issue 5 383,700,479 392,021,146 391,627,955
Underlying basic EPS (p) 9.02 9.67 18.21
Net funds excluding lease liabilities and rental vehicle finance liabilities
Cash and cash equivalents (£m) 177.6 153.8 111.8
Less: Bank loans and overdrafts (£m) (76.2) (75.3) (45.3)
Net funds (£m) 101.4 78.5 66.5
13. Interim statement
Copies of this report and the last Annual Report and Accounts are available
from the Company Secretary at the registered office of the company at Lookers
House, 3 Etchells Road, West Timperley, Altrincham, WA14 5XS and can be viewed
via the Group's website at www.lookersplc.com. Copies of this report have also
been submitted to the UK Listing Authority and will shortly be available at
the UK Listing Authority's Document Viewing Facility at 25 North Colonnade,
Canary Wharf, London E14 5HS (Telephone +44 (0) 207 066 1000).
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
· The interim financial statements have been prepared in accordance
with IAS 34 'Interim Financial Reporting';
· 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
· 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
Mark Raban
Chief Executive Officer
21 August 2023
Glossary of terms
Introduction
In the reporting of the financial statements, the Directors have adopted
various Alternative Performance Measures (APMs) of financial performance,
position or cash flows other than those defined or specified under
International Financial Reporting Standards (IFRS). These measures are not
defined by IFRS and therefore may not be directly comparable with other
companies' APMs, including those in the Group's industry. APMs should be
considered in addition to IFRS measures and are not intended to be a
substitute for IFRS measurements.
Purpose
The Directors believe that these APMs provide additional useful information on
the underlying performance and position of the Group.
APMs are also used to enhance the comparability of information between
reporting periods by adjusting for irregularity factors which affect IFRS
measures, to aid the user in understanding the Group's performance.
Consequently, APMs are used by the Directors and management for performance
analysis, planning, reporting and incentive setting purposes. The key APMs
that the Group has focused on this period are as follows:
Performance measure Definition Why we measure it
Like-for-like (LFL) These are calculated where dealerships have contributed twelve months of To provide a consistent overview of comparative trading performance.
revenue and profit contribution in both the current and comparative periods
presented.
Gross profit margin Gross profit as a percentage of revenue. A measure of the significant revenue channels' operational performance.
Non-underlying items Relate to costs or incomes which are not incurred in the core operations of A key metric of the Group's non- underlying business performance.
the business or due to their size, nature and irregularity are not included in
the assessment of financial performance in order to reflect management's view
of the core-trading performance of the Group (see Note 2).
Earnings before interest, tax, depreciation, and amortisation (EBITDA) Operating profit before deducting depreciation and amortisation. A key metric of the Group's underlying business performance.
Underlying operating profit Operating profit before the impact of non-underlying items as defined above. A key metric of the Group's underlying business performance.
Underlying profit before tax Profit before tax before the impact of non-underlying items as defined above. A key metric of the Group's underlying business performance.
Underlying basic earnings per share (EPS) Earnings per share before the impact of non-underlying items as defined above, A key metric of the Group's underlying business performance.
and the impact of tax rate changes.
Net funds Cash and cash equivalents less bank loans and overdrafts. Lease liabilities, A measure of the Group's net funds that provides an indicator of the overall
vehicle rental liabilities and stocking loans are not included in net funds. balance sheet strength.
New car unit sale A new car sale which has generated revenue for the Group. A measure of statistical volumes and indicator of operational performance.
Used car unit sale Any car sold that is not a new car unit sale. A measure of statistical volumes and indicator of operational performance.
New car market Total number of annual new car unit registrations made in the UK as defined by A measure of the UK market size and indicator for growth opportunities.
the Society of Motor Manufacturers and Traders (SMMT).
New car market share The Group's annual share of the new car market calculated as a percentage of Our relative performance against the UK market.
the Group's new car unit sales to the new car market size.
Order bank New vehicle orders taken but not fulfilled (delivered). A measure of statistical volumes and indicator of operational performance.
1 (#_ftnref1) Premium calculated with reference to the volume weighted
average price per Lookers Share of 80.9 pence for the 12-month period ended on
19 June 2023 (being the last business day prior to the start of the offer
period).
2 (#_ftnref2) Premium calculated with reference to the volume weighted
average price per Lookers Share of 80.9 pence for the 12-month period ended on
19 June 2023 (being the last business day prior to the start of the offer
period).
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