Annual Results: Year ended 31 December 2016 · Dividend per share 3.64p 3.12p Underlying Tax Charge...
Transcript of Annual Results: Year ended 31 December 2016 · Dividend per share 3.64p 3.12p Underlying Tax Charge...
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Annual Results: Year ended 31 December 2016
Presented byAndy Bruce Chief Executive OfficerRobin Gregson Chief Financial OfficerNigel McMinn Chief Operating Officer
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Record profits and well positioned for future growth
Lookers Annual Results: Year end 31 December 2016
§ Strong financial performance – eighth successive year of turnover and profit growth § Record profit before tax of £77.1m, increase of 7%§ Revenue increased 17% to £4.3 billion (2015: £3.65 billion)§ Earnings per share up 4% at 15.87p (2015: 15.24p)
§ Robust capital structure§ Strong cash flow reduces debt from £162m to £74m§ Debt/ EBITDA now at 0.7:1 and at lower end of range 0.5:1 – 1.5:1§ High return on capital of 22%
§ Total dividend up by 17% - proposed final dividend of 2.36p per share
§ Proven business model§ Significant restructuring of portfolio§ Successful integration of Knights and Drayton businesses§ Further progress in upgrading dealership estate§ Continued investment in key drivers of customer experience
§ Good start to current financial year – healthy order book for new cars in March
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The Right Strategy
Lookers Annual Results: Year end 31 December 2016
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Portfolio Transformed: Right Brands, Right Locations
Acquisitions Disposals
Knights BMW/MINI
Drayton Mercedes-Benz Nissan Leeds
Skoda West London
Other non core businesses
Lookers Annual Results: Year end 31 December 2016
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Portfolio Transformed: Right Brands, Right Locations
Successful integration of Knights and Drayton
§ Knights acquired on 22 August for £26.6m
§ Drayton acquired on 4 November for £56.3m
§ Earnings enhancing in 2017
§ Significantly increases Mercedes-Benz representation
§ BMW/MINI provides platform for further premium growth
§ Economies of scale
§ Excellent cultural fit
Lookers Annual Results: Year end 31 December 2016
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Dealership estate upgrade
Lookers plc / For the year end 31 December 2016
2016 2017 2018 2019 2020
£m Maintenance 8 8 8 8 8
£m Upgrades 28 30 20 15 5
£m TOTAL 36 38 28 23 13
Mercedes-Benz Tonbridge
Jaguar Land Rover in West London
Newcastle Volkswagen
Newcastle Nissan
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Financial Review
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Strong Financial Performance Lookers plc2016(£)
2015(£)
Turnover 4,281.7m 3,649.1m
Gross profit 504.2m 452.2m
Gross margin 11.8% 12.4%
Operating Profit 94.7m 85.9m
Interest 17.6m 13.8m
Underlying Profit Before Tax 77.1m 72.1m
Underlying Operating Margin 2.2% 2.4%
Pre-Tax Margin 1.8% 2.0%
EPS 15.87p 15.24p
Net Debt 74.1m 161.7m
Gearing 22% 54%
EBITDA (12 months) 107.6m 100.4m
Dividend per share 3.64p 3.12p
Underlying Tax Charge 13.7m 12.0m
Profit after Tax 81.3m 50.8m
Return on Capital Employed 22.6% 24.2%
§ Record profit before tax of £77.1m, increase of 7%
§ Revenue increased 18% to £4.3 billion (2015: £3.65 billion)
§ Earnings per share up 4% at 15.87p (2015: 15.24p)
§ Strong cashflow, reduced debt to £74m from £162m at year end
§ Final dividend increased by 15% to 2.36p per share (2015: 2.05p)
Lookers Annual Results: Year end 31 December 2016
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Underlying Profit
Group Profit Bridge
Lookers Annual Results: Year end 31 December 2016
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Strong growth across the business
2016 £m
2015 £m
% change 2016 £m
2015 £m
% change
TURNOVER GROSS PROFIT
New Cars 2,206 1,835 20% New Cars 161 145 11%
Used Cars 1,437 1,212 19% Used Cars 105 90 17%
Aftersales 365 319 14% Aftersales 166 141 18%
Parts Division 193 219 NC Parts Division 55 62 NC
Leasing and other 80 64 25% Leasing and other 17 14 21%
TOTAL TURNOVER 4,281 3,649 17% TOTAL GROSS PROFIT
504 452 12%
LFL TURNOVER LFL GROSS PROFIT
New Cars: retail 1,375 1,277 8% New Cars: retail 135 130 4%
New Cars: fleet 831 736 13% New Cars: fleet 26 26 -
Used Cars 1,437 1,341 7% Used Cars 105 98 7%
Aftersales 365 337 8% Aftersales 166 153 9%
Lookers Annual Results: Year end 31 December 2016
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Robust Capital Structure
31 Dec 2014£m
31 Dec 2015£m
2016 (£m) 2015 (£m)
Fixed Assets 319.1 282.9
Rental Fleet Vehicles (VRS) 67.1 67.0
Stocks 839.4 816.0
Debtors 225.0 252.6
Current Liabilities (excluding bank loans) 1,105.2 1,002.0
Non Current Liabilities (excluding bank loans) 147 115.3
Vehicle rental fleet finance (VRS) 53.2 49.7
Net Assets 341.7 297.8
Net Debt 74.1 161.7
Gearing 22% 54%
Net Debt / EBITDA 0.7 1.61
§ Significant reduction in net debt to £74.1m due to strong cash flow (2015: £161.7m)
§ Low levels of gearing, reduced to 22% (2015: 54%)
§ Strong balance sheet and highlevel of unutilised bank facilities
Lookers Annual Results: Year end 31 December 2016
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Positive Cash Flow Generation2016 (£m)
2015 (£m)
EBITDA 107.6 100.4
Working capital decrease/ (increase) 33.3 (32.7)
Cash generated from operations 140.9 67.9
Acquisition of subsidiary companies (92.6) (104.4)
Purchase of fixed assets (36.3) (35.2)
Proceeds from asset disposals 28.9 9.8
Net proceeds from parts division 111.5 -
VRS Rental Fleet Vehicles purchased (93.7) (83.2)
Sale of VRS Rental Fleet Vehicles 87.4 76.2
Dividends paid to shareholders (13.2) (11.6)
Loan repayments (10.2) (11.8)
New loans 14.0 62.2
Interest paid (net) (17.6) (13.8)
Tax paid (14.2) (11.3)
Decrease/(increase) in net debt 87.6 (109.8)
Increase/(decrease) in cash 92.3 (59.8)
• Cash flow was particularly strong with cash generated from operations of £140.9m (2015: £67.9m)
• Invested £36.3m of capital expenditure in improving dealership facilities
• Received £28.9m for the sale of assets
• Net cash inflow was £92.3m compared to £(59.8)m in 2015
• Reduction in net debt to £74.1m compared to £161.7m at the start of the year
• The ratio of net debt to EBITDA has reduced from 1.6 at the start of the year to the current level of 0.7
• Gearing was reduced to 22% compared to 54% at the start of the year
Lookers Annual Results: Year end 31 December 2016
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2012 2013 2014 2015 2016
Consistent Financial Track Record
Lookers plc / For the year end 31 December 2016
£m
Group Pre-tax Profit Trend
£m
Group Net Assets Trend
£m
Group Net Debt
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2012 2013 2014 2015 2016
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2012 2013 2014 2015 2016
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298342
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Operational Review
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Strong market fundamentals
Lookers Annual Results: Year end 31 December 2016
New car registration growth
EU Car Registrations
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1959
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§ Car sales track population growth and GDP
§ EU now recovered to previous peak
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Retail
Fleet
New cars
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LFL total gross profit
£m
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1,375
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+13%
LFL new car turnover
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§ Growth in retail gross profit§ Finance penetration increased from 79% to 83%§ Gross profit increase of 4% in retail§ Maintained share in retail and significant gain in fleet
All figures on a like for like basis
Lookers Annual Results: Year end 31 December 2016
+4%+8%
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Fleet1,277736
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PCP growth
Lookers Annual Results: Year end 31 December 201617
Used Car Finance %New Car Finance %
50%55%
61%56%
60%
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75% 77% 78% 79%83%
33%
25%
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38%
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New Finance % % of PCP
37% 37% 37% 36%38% 39%
42% 43% 42% 42% 42%
7% 7% 6% 5% 6% 7% 9% 17%
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Used Finance % % of PCP %
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Affordability of new cars
Lookers Annual Results: Year end 31 December 2016
2008 Audi A4 1.8 TFSi4door(2017 MY 2.0 TFSi)• Cash price UP from £24,505 to £28,750• Deposit Remains £999
Monthly payments from £447 Monthly payments from £264
2008 2017
Mercedes-Benz SLK (2017 MY SLC250d Sport)• Cash price UP from £31,782 to £34,345• Deposit REDUCED from £4,999 to £4,199
2008 2017
Monthly payments from £399 Monthly payments from £317
BMW 5 Series Touring F11• Cash price UP from £48,500 to £51,465• Deposit £9,500 Customer Contribution and
£4,000 BMW Contribution to £8,500 Customer Contribution and £5,000 BMW Contribution
Monthly payments from £669 Monthly payments from £482
2013 2017
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Strong market fundamentals
Lookers Annual Results: Year end 31 December 2016
Average age of used vehiclesUsed vehicle market
Source: Statista.comSource: SMMT and DVLA Data
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New car market Used car market
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§ Record used car market§ Demand for used cars is exceeding supply
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Used cars
§ Gross profit increase of 7%§ Finance penetration remained stable§ Residual value stability underpins margins§ Disciplined approach to stock management
LFL used car turnover
All figures on a like for like basis
LFL total gross profit
Lookers Annual Results: Year end 31 December 2016
1,341 84.3
£m £m1,437
+7%
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Dealership Aftersales Market Fundamentals
Lookers Annual Results: Year end 31 December 2016
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2014 2015 2016 2017 Predicted
UK Vehicle Parc
Age (years) 0-3
Age (years) 4-6
Age (years) 7-9
Age (years) 10-12
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Dealership Aftersales
LFL aftersales turnover
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LFL aftersales gross profit
+8% +9%
§ Turnover increased by 8% and gross profit by 9%§ Strong gross margin result from 44% to 45%§ Continued progress in creating capacity
All figures on a like for like basis
Lookers Annual Results: Year end 31 December 2016
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320325330335340345350355360365370
2015 2016
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Dealership Aftersales Retention Strategy
Lookers Annual Results: Year end 31 December 2016
010,00020,00030,00040,00050,00060,00070,00080,00090,000
100,000
Cumulative Service Plans – Live book
32% 33%
38% 38% 38%
0%5%
10%15%20%25%30%35%40%45%50%
2012 2013 2014 2015 2016
% Vehicles sold with a Service Plan*
All figures on a like for like basis
*Adjusted for Benfield
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Operational Excellence
Lookers Annual Results: Year end 31 December 2016
Allan Rushforth, Managing Director
§ Accomplished Executive within the motor industry§ Former Nissan vice president of global sales and
chief operating officer of Hyundai Motor Europe
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Used Car GP/unit 2016
§ Scale of potential operational improvement
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Outlook
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Outlook: Well positioned and confident in delivering further growth
Lookers Annual Results: Year end 31 December 2016
§ Focused on growth
§ Organic, via the best customer experience and operational excellence
§ Acquisitions – right brands, right locations - set to be a leading player in consolidation
§ Positive start to 2017
§ Healthy March order book
§ New car market – over the medium term – will continue to grow
§ Two-thirds of our gross profit comes from Used Cars and After Sales – which represents a major growth opportunity
§ Continued investment in the multi-channel customer experience
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The Right Strategy
Lookers Annual Results: Year end 31 December 2016
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Appendices
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Business Portfolio – Franchise & Distribution Outlets
MOTOR DIVISION Dacia Jaguar Mercedes Renault Vauxhall Guildford SERVICE CENTRE
Alfa Romeo Belfast Amersham Ashford Belfast Belfast Newcastle Renault Chelmsford
Cardiff Carlisle Belfast Brighton Carlisle Birkenhead Teesside Volvo ChelmsfordChester Glasgow Canterbury Chester Birmingham Vauxhall Dundonald
Aston Martin Newcastle London – Park Royal Eastbourne Newcastle Chester Volvo Belfast Newtonabbey Motherwell Gatwick Newtonabbey Ellesmere Port Colchester LEASING
Newtonards Maidstone Newtonards Lisburn Glasgow HarrogateAudi Stockport Jeep Shrewsbury Stockport Liverpool Motherwell ManchesterAyr Belfast Stafford Newtonabbey StockportBasingstoke Ferrari Cardiff Stoke on Trent Seat Portadown FLEET FINANCIAL
Camberley Belfast Stourbridge Manchester Selly Oak USED CAR BelfastDublin Kia Tonbridge Stockport Speke BelfastEdinburgh Fiat Belfast Walsall St. Helens Dublin VEHICLE RENTAL
SERVICESGlasgow Stockport Newcastle Wolverhampton Skoda WarringtonGuildford Sheffield Worcester Eccles Yardley MOTORCYCLES BeaconsfieldHamilton Ford Stockport Guildford BMW – BelfastNewcastle Braintree Mini Harrogate Volkswagen Honda – Belfast AGRICULTURAL
DIVISIONStirling Chelmsford Land Rover Crewe Manchester Battersea Yamaha – BelfastTeesside Colchester Belfast Stafford Newcastle Blackburn New HollandTyneside Guiseley Bishops Stortford Stoke on Trent Stockport Blackpool TPS Darley DaleWearside Harrogate Chelmsford West London Carlisle Edinburgh Tuxford
Leeds Glasgow – North Nissan Dumfries GlasgowBentley Sheffield Glasgow – South Belfast Smart Darlington GuildfordBelfast South W Ferrers London – Battersea Carlisle Brighton Guildford Newcastle
Sudbury London – Park Royal Chester Gatwick Morden ReadingBMW Sunderland Motherwell Gateshead Maidstone Newcastle TeessideCrewe Leeds Stoke on Trent NorthallertonStafford Honda Lexus Motherwell Stourbridge Preston TYRESStoke on Trent Orpington Belfast Newcastle Tonbridge Silverlink Belfast Boucher Rd
Newtonabbey Wolverhampton Teesside Belfast Sydenham Rd
Citroen Hyundai Maserati Newtonards Worcester Walton on Thames ColeraneNewport Dundonald Belfast Omagh
2017 Additions
Motherwell Peugeot Toyota Volkswagen CV PortadownBelfast Belfast CarlisleCardiff Dundonald DarnleyNewport Newtonabbey Glasgow
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Franchise Locations
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