TIDMLOOK
RNS Number : 2850N
Lookers PLC
29 January 2021
29 January 2021
LOOKERS plc ("Lookers" or the "Group")
Unaudited Interim Results for the six months ended 30 June 2020
and Trading Update for the year ended 31 December 2020
Update on restoration of listing
Resilient trading performance and refocusing on strategic
opportunities
Lookers plc, one of the leading UK motor retail and aftersales
service groups, today announces its unaudited interim results for
the six months ended 30 June 2020, a trading update for the full
year ended 31 December 2020 and an update on the restoration of
listing of the Company's shares to the premium listing segment of
the Official List of the Financial Conduct Authority ("FCA") and to
trading on the London Stock Exchange.
Interim Results
-- Revenue of GBP1,563.7m (H1 2019: GBP2,605.1m) reflecting the
impact of COVID-19 and the closure of a large part of the Group's
business for a significant period.
-- Modest outperformance of the UK new car market, with
resilient trading in both used car sales and aftersales.
-- Commenced a planned restructuring to strengthen the Group's
operating model. This included a further 12 site closures before
the end of 2020 (15 closed in 2019) and a total of c.1,500
redundancies. The full benefit of these changes will be seen in FY
2021.
-- Strong cost control mitigated some of the reduction in
revenue, however, the Group recorded an underlying loss before tax
of GBP36.1m (H1 2019: profit of GBP22.0m) and statutory loss before
tax of GBP50.0m (H1 2019: profit of GBP19.6m).
-- Net debt of GBP11.0m at 30 June 2020 (31 December 2019:
GBP59.5m) driven by strong working capital and cost control,
alongside the benefit of deferred VAT and delayed PAYE / National
Insurance payments agreed under Government schemes.
H1 2019
H1 2020 (restated)* Var % FY 2019
Underlying
Revenue GBPm GBP1,563.7m GBP2,605.1m (40.0%) GBP4,787.2m
Underlying (loss)/profit
before tax GBPm (GBP36.1m) GBP22.0m (264.1%) GBP4.2m
Underlying (loss)/earnings
per share (p) (7.50p) 4.58p (263.6%) 0.87p
Statutory
(Loss)/profit before tax
GBPm (GBP50.0m) GBP19.6m (355.1%) (GBP45.5m)
(Loss)/earnings per share
(p) (12.94p) 3.96p (427.0%) (10.69p)
Dividend per share (p) Nil 1.48p (100.0%) 1.48p
Net debt GBPm GBP11.0m GBP71.7m 84.7% GBP59.5m
---------------------------- ------------- --------- ------------
*The figures shown for H1 2019 reflect the adjustments to the
interim results for 2019, consistent with those made in the
recently published audited financial statements for the year ended
31 December 2019. A reconciliation of these adjustments is
presented in Note 18.
** Underlying profit before tax is profit before tax and
non-underlying items. Underlying earnings per share is
(Loss)/earnings per share after tax and before non-underlying items
(see Note 3).
*** Bank loans and overdrafts less cash and cash equivalents,
excluding stocking loans and lease liabilities under IFRS 16.
Full year trading update
-- Trading in the second half of 2020 was encouraging,
underpinned by significant outperformance of the retail UK new car
market, continued resilient trading in used and aftersales and
increasing used car margins. The second half performance also
includes the early impact of the Group's restructuring
programme.
-- Despite the impact of the second national lockdown in
November, performance in the second half of the year is expected to
be ahead of last year, largely offsetting H1 underlying loss before
tax of GBP36.1m.
-- The Group continues to benefit from improvements made to its
online offering and call centre capabilities, including the launch
of 'Click and Drive' which enables contactless vehicle purchases,
alongside upgraded sales systems and processes.
-- The Board remains focused on working capital control, with
significantly reduced net debt of approximately GBP45.0m at the end
of December 2020 (2019: GBP59.5m) reflecting the net proceeds of
GBP17.4m from the disposal of a number of properties during
2020.
-- Completion of the planned restructuring commenced in the
first half of 2020, with the closure of 12 sites and a total of
c1,500 redundancies across the Group.
-- The disposal of Platts Harris in November 2020 is expected to realise proceeds of GBP1.6m.
-- The Group has reduced its RCF from GBP250m to GBP238m
following the sale of certain properties. The Group continues to
have strong liquidity headroom and refinancing conversations with
the Group's banking club are ongoing.
-- The Board refresh is progressing, and we are pleased to
welcome Robin Churchouse and Anna Bielby to the Board of Lookers
plc as Chair of the Audit Committee and Interim Chief Financial
Officer, respectively. Also, today we have announced the
appointment of Duncan McPhee to the Board as Chief Operating
Officer. A search is underway for the appointment of Phil White's
successor as Chairman.
-- As previously announced, BDO LLP have been appointed as the Group's statutory auditors.
-- As a result of the continued uncertainty around the COVID-19
pandemic and as part of its ongoing actions to protect the Group's
balance sheet, the Board has decided that it will not be
recommending any dividends for the year ended 31 December 2020.
However, the Board recognises the importance of dividends to
shareholders and will reinstate the payment of dividends as soon as
it believes that it is prudent to do so.
Outlook
-- The country is now in a third national lockdown and whilst
the closure of showrooms will impact revenue, this will be partly
mitigated by the continued progress of 'Click and Drive' and the
continued operation of the Group's COVID-19 compliant Aftersales
division.
-- In light of the evolving COVID-19 situation and latest
lockdown restrictions impacting much of the Group's portfolio, the
Board remains cautious about the outlook for 2021. However, the
Board continues to believe the Group is well positioned to benefit
from its continued progress and the exciting sector developments
including electrification and further digitisation.
Restoration of listing
-- The Board has applied to the FCA for the restoration of the
Company's shares to the premium listing segment of the Official
List of the FCA and to trading on the London Stock Exchange.
Mark Raban, Chief Executive Officer, said:
"2020 was a challenging year for Lookers, managing the impact of
the COVID-19 pandemic and a number of legacy issues facing the
Group, which required significant action to restructure and improve
the business for the long term. Despite a resilient sales
performance, the benefit of Government support and prompt action
taken to manage costs, in the first half we incurred a significant
loss in a very difficult period for the car retail industry.
Although various restrictions continued into the second half of
the year, trading improved significantly, benefiting from the
material cost saving measures implemented earlier in the year and
enhancements we have made to our retail offer, including the
capability to carry out contactless vehicle sales.
I would like to thank all my colleagues for their continued
dedication in these difficult circumstances and also our OEM brand
partners for their ongoing support.
Going into 2021 there remains a high level of uncertainty in the
wider environment, but we are confident that the Group is now much
better positioned for the longer term and can capitalise on the
various opportunities ahead, not least in electrification and
digital developments."
Details of results webcast
There will be a webcast at 9 :30am UK time today for analysts
and institutional investors. To register please contact MHP
Communications on +44 (0)20 3128 8193 / 8778, or by email on
lookers@mhpc.com
Enquiries:
Lookers
Mark Raban, Chief Executive Officer 0161 291 0043
MHP Communications
Tim Rowntree / Simon Hockridge / 07709 496 125 / 020 3128
Alistair de Kare-Sliver 8193
About Lookers plc ( www.lookersplc.com )
The Group's principal activities are the sale of new and used
cars, vans and aftersales activities. The Group's businesses have a
total of 140 franchised dealerships representing 31 manufacturers,
operating from 96 locations across the UK and Republic of
Ireland.
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.
Strategic and Operating Review
Strategy Update
As stated above, trading in the second half of 2020 was
encouraging, underpinned by significant outperformance of the
retail UK new car market, continued resilient trading in used and
aftersales and increasing used car margins. The second half
performance also includes the early impact of the Group's
restructuring programme. As a result, despite the impact of the
second national lockdown in November, performance in the second
half of the year is expected to be ahead of last year, largely
offsetting H1 underlying loss before tax of GBP36.1m.
Against this backdrop and the progress made on resolving the
historic legacy issues faced by the Group, we are focusing on our
strategic priorities to ensure ongoing improvements to our business
model and to exploit the exciting sector opportunities ahead. Our
strong brand partner relationships, having the right brands in the
right locations, our flexible freehold property portfolio and our
recently restructured operations, provide us with the right
platform from which to further enhance the Lookers proposition and
build our market share. Our five strategic priorities are as
follows:
1) Closure of remaining legacy issues and continued enhancement of the control environment
2) Drive operational excellence focusing on cost control and cash management
3) Digital investment to drive competitive advantage
4) Preparing for vehicle electrification, and connected car services
5) Robust approach to capital allocation including refinancing the business in Q1 2021
We will evolve and report on these priorities as we move through
2021.
Impact of COVID-19
The first half saw a material underlying loss before tax,
reflecting the significant impact of the COVID-19 pandemic.
Throughout the initial lockdown period, and since, the primary
concern of the Board has been to protect the safety and welfare of
our colleagues and customers by ensuring safe and sustainable
operating procedures. The Board is extremely grateful for the
support received from all stakeholders including the UK Government,
our OEM brand partners, suppliers, and finance providers.
Impact on operations
In light of the UK Government's guidelines, the Board took the
decision to temporarily close all trading locations in late March
before partly reopening 41 locations (including 10 parts
distribution centres) in April to provide essential repairs, parts
and maintenance to key workers' vehicles, following the
introduction of new enhanced operating measures. Having
successfully implemented new operational processes, the Group
reopened all its aftersales facilities in mid-May and began
building capacity by gradually bringing technicians back from
furlough.
Management acted quickly to improve the Group's integrated
online presence and call centre capabilities. The Group's website
was enhanced by the roll out of a 'Click and Drive' functionality,
allowing multichannel vehicle purchase and the processing of a
consumer finance application.
The Group also implemented a new contactless vehicle handover
and delivery process and started to fulfil both existing and new
customer orders.
In June the Group reopened all its dealerships in England,
followed later in the month by operations in Northern Ireland and
Scotland.
During the second and third national lockdowns in November 2020
and January 2021 respectively, pre-booked aftersales services
continued to be provided in compliance with lockdown restrictions,
with vehicle sales activity carried out via 'Click &
Drive'.
Restructuring
Over the course of 2020, the Board took decisive action and
implemented significant restructuring actions to position the Group
for a strong and sustainable future.
On 4 June 2020, the Board announced it had identified a further
12 sites for either closure, consolidation or refranchising. These
closures are now complete. The Group currently operates from a
portfolio of 140 dealerships following 27 site closures over the
course of 2019 and 2020.
In addition, the Board also undertook a review of the future
structure of the Group in light of long-term potential demand, a
smaller dealership estate and the structural changes taking place
across the industry. Having carefully considered all options and
following a period of consultation approximately 1,500 redundancies
were confirmed. This action was deeply regrettable but necessary to
sustain and protect the Group over the long term. The one-off cash
restructuring costs in the period were GBP4.2m and are included in
the non-underlying items (see Note 3).
Other actions
In addition to the above activities, the Board also implemented
a number of other short-term initiatives to manage the impact of
COVID-19 through reducing costs, controlling working capital and
limiting capital expenditure to enhance the liquidity position of
the Group. These actions included:
-- Furloughing the majority of colleagues as all trading
locations were temporarily closed. The Group accessed the UK
Government's Coronavirus Job Retention Scheme (CJRS) and other
Government initiatives to protect cash flow. The Group incurred
GBP4.4m of cost to supplement CJRS payments to furloughed
employees, which have been treated as underlying costs in the
Income Statement.
-- The Board and various members of senior management agreed to
a temporary reduction to their base salary of up to 30%. This was
reinstated with effect from 1 September 2020. Executive bonus
entitlement was also waived.
-- Various capital expenditure programmes were delayed.
-- Interim and full year dividends in respect of 2020 were cancelled.
-- All discretionary cost areas were reviewed and reduced.
-- The Group's fleet business was reviewed and restructured to
focus on margin retention and working capital.
The Board would like to thank its financing and banking partners
who have been so supportive during this difficult period.
H1 2020 Segmental analysis of revenue and gross profit:
H1 2019
H1 2020 (restated)*
Revenue GBPm GBPm Variance LFL Variance
New Cars 705.2 1,267.0 (44.3)% (42.7)%
Used Cars 770.0 1,232.0 (37.5)% (35.4)%
Aftersales 162.1 254.0 (36.2)% (34.4)%
Leasing and Other 52.5 45.9 14.4% 32.7%
Less: intercompany (126.1) (193.8)
-------------------- ------------- --------- -------------
Total 1,563.7 2,605.1 (40.0)% (38.0)%
-------------------- ------------- --------- -------------
H1 2019
H1 2020 (restated)*
Gross Profit GBPm GBPm Variance LFL Variance
New Cars 47.8 89.4 (46.5)% (47.3)%
Used Cars 38.4 68.1 (43.6)% (44.4)%
Aftersales 68.3 106.9 (36.1)% (34.5)%
Leasing and Other 14.1 16.7 (15.7)% (22.9)%
Total 168.6 281.1 (40.0)% (40.4)%
------------------- ------------- --------- -------------
New cars
H1 2019
New cars H1 2020 (restated)* Variance LFL Variance
Retail unit sales 18,842 34,459 (45.3)% (43.1)%
Fleet unit sales 16,163 31,356 (48.5)% (47.4)%
Total unit sales 35,005 65,815 (46.8)% (45.2)%
------------------- ------------- --------- -------------
Gross margin % 6.8% 7.0% (27)BPS (59)BPS
------------------- ------------- --------- -------------
*The figures shown for H1 2019 reflect the adjustments to the
interim results for 2019, consistent with those made in the
recently published audited financial statements for the year ended
31 December 2019. A reconciliation of these adjustments is
presented in Note 18.
The COVID-19 pandemic had a material impact on UK new car
registrations during H1, and the UK new car market declined by
48.5%. In the first two months of 2020, prior to lockdown, the new
car market declined by 5.8%. The start of lockdown during March
resulted in a market decline of 44.4%, before the full impact was
felt in April and May, with the market recording a decline of 97.3%
and 89.0% respectively.
Against this, on a like-for-like basis, the Group's sales of new
units declined by 45.3% representing a modest outperformance
against the UK market. Performance strengthened throughout H1 with
May and June outperforming the new car market by 11.9% and 8.3%
respectively. This trend of outperformance has continued in H2.
Gross margin was 27bps below last year, driven by lower
manufacturer bonus income as a result of the significantly reduced
volumes.
Used cars
Used cars H1 2020 H1 2019 Variance LFL Variance
Retail unit sales 34,644 54,087 (36.0)% (33.5)%
Gross margin % 5.0% 5.5% (54)BPS (81)BPS
Like-for-like used unit sales declined by 33.5% which we believe
is a robust performance versus the market given the total lockdown
in the franchised sector during April and May. Gross margin was
54bps lower than last year. The Group took active measures during
the lockdown period to reduce overall used car stock levels and
significantly improve the ageing profile.
Initial trading post lockdown was encouraging, particularly in
the sub GBP10k price point sector. The ease of implementing social
distancing measures in large retail premises, pent-up demand,
consumer aversion to public transport and the cancellation of
holiday plans boosting consumer discretionary spending were the key
consumer drivers post lockdown. Like-for-like used unit sales
during June, in the Group's dealerships in England, were up 5.9%
and this was combined with improved margin retention. Throughout H1
and H2, used car residual values have remained robust. The Board
remains cautious about the sustainability of this position and is
managing its used inventory levels accordingly.
Aftersales
Aftersales H1 2020 H1 2019 Variance LFL Variance
Revenue GBPm 162.1 254.0 (36.2)% (34.4)%
Gross margin % 42.1% 42.1% 5BPS (10)BPS
At the outset of lockdown, the Group asked for volunteers from
its technician and parts teams in order to maintain a presence at
41 after sales locations. These facilities were dedicated to the
essential repairs, parts and maintenance of key workers' vehicles.
The Board would like to thank all the teams that were involved in
providing those services.
On a like-for-like basis after sales revenues were 34.4% down.
Gross margin was maintained at 42.1%.
H1 2020 Financial Review
Restatement of prior period
The Group's H1 2019 comparatives have been restated to reflect
the impact of previously reported legacy accounting issues and for
other changes made to ensure that the presentation of H1 2019 is
consistent with the 2019 Annual Report & Accounts. These
reduced previously reported underlying profit before tax by GBP7.2m
to GBP22.0m. An explanation of the adjustments and full
reconciliation to previously reported figures is provided in Note
18.
Revenue
H1 revenue of GBP1,563.7m was 40.0% lower than the comparative
period (H1 2019: GBP2,605.1m). Like-for-like revenue declined by
38.0% with revenue from new cars, used cars and aftersales all
declining as a result of the temporary closure of the Group's
dealerships as a consequence of the COVID-19 global pandemic.
Gross profit
Gross profit decreased by 40.0% to GBP168.6m (H1 2019:
GBP281.1m) in line with revenue and Gross margin was flat
year-on-year at 10.8%.
Operating expenses and Government support schemes
Underlying net operating expenses at GBP186.5m (H1 2019:
GBP240.4m) were 22.4% below the comparative period. Operating
expenses include the impact of both a GBP29.7m receipt from the
CJRS and GBP3.5m of rates reductions under the Government's
business rates holiday scheme. Excluding these items underlying net
operating expenses were 8.6% below last year as a result of ongoing
focus and control of all discretionary cost items.
Non-underlying items
The Group incurred GBP13.9m of non-underlying costs, largely
related to the Group's restructuring programme, impairment of
goodwill, and costs in relation to the investigation and resolution
of legacy accounting issues (see Note 3).
Net finance costs
Net finance costs were slightly lower than the comparative
period at GBP18.2m (H1 2019: GBP18.7m). Given the unprecedented
situation and resulting uncertainty, the Board made the decision to
make substantial drawings against the Group's revolving credit
facility and hold these sums in cash, creating an inefficient
liquidity position and increasing financing costs; however, this
was offset by lower interest cost on vehicle rental liabilities and
reduced stock levels.
Tax
The Group's reported effective tax rate is (1%). As referred to
in the 2019 Annual Report & Accounts, the 2019 deferred tax
liability was calculated using the relevant enacted UK corporation
tax rate of 17% (to be effective 1 April 2020). The Group noted
that the announcement in the March 2020 budget that the UK tax rate
would remain at the current rate of 19% would have a consequential
effect on the Group's future tax charge.
For the period to 30 June 2020, the Group has estimated that the
corporation tax credit arising from the loss incurred in the period
is largely offset by the charge arising from recalculating deferred
tax at the higher rate of 19%, resulting in an effective tax rate
of (1%) for this period.
Earnings per share (EPS)
Underlying EPS decreased by 264% to (7.50)p loss per share (H1
2019: 4.58p profit). Basic EPS decreased by 427% to (12.94)p loss
per share (H1 2019: 3.96p profit).
Dividend
As a result of the continued uncertainty around the COVID-19
pandemic and as part of its ongoing actions to protect the Group's
balance sheet, the Board has decided that it will not be
recommending any dividends for the year ended 31 December 2020.
However, the Board recognises the importance of dividends to
shareholders and will reinstate the payment of dividends as soon as
it believes that it is prudent to do so.
Cashflow and net debt
Throughout the COVID-19 lockdown the Group maintained a strong
focus on operational cash flow. Cash generated from operations in
H1 was GBP114.2m (H1 2019: GBP113.8m), largely as a result of
ongoing working capital initiatives and additional controls.
Property, plant and equipment capital expenditure (including
capitalised vehicle leases) totalled GBP16.3m (H1 2019: GBP36.3m),
a material reduction from the prior period as the Board took the
decision to delay and cancel certain initiatives in order to
protect the cash position of the Group.
Net debt at 30 June 2020 was GBP11.0m (30 June 2019: GBP71.7m;
31 December 2019: GBP59.5m). This includes the benefit of deferred
VAT and delayed PAYE / National Insurance payments agreed under
Government schemes, in addition to GBP3.5m of rates relief,
alongside our broader debt management actions.
The Group continues to benefit from a strong property portfolio.
The net book value of freehold and leasehold properties of
GBP313.7m (equivalent to 80.4p per share) at the end of the Period
remains a key strength of the business.
Financing
The Group has access to a revolving credit facility, which it
has reduced from GBP250.0m to GBP238.1m, following the disposal of
certain properties as part of the restructuring programme referred
to above. These facilities are not due for renewal until March 2022
and the Group remains in active discussions with its banking
partners regarding refinancing options.
Pensions
At 30 June 2020, the IAS 19 pension valuation showed a total
deficit of GBP69.5m (30 June 2019: GBP67.4m; 31 December 2019:
GBP55.7m). The significant decrease in corporate bond yields during
the Period and the associated decrease in discount rate has
resulted in the liabilities increasing, which has been partly
offset by an increase in the schemes' asset values. In the first
half of the year, and in-line with the funding programme agreed
with the Trustees, the Group made additional cash contributions
including expenses to the Lookers pension scheme amounting to
GBP4.2m (H1 2019: GBP4.3m).
The final assets and liabilities of the Dutton Forshaw Plan were
transferred into the Lookers Pension Plan with effect from 1 June
2020. The Group's actuary has assessed the IAS 19 valuation of the
Lookers Pension Plan as at 30 June 2020. The deficit on the
Benfield Pension Plan has not been assessed for the Period based on
materiality, however a full assessment will be undertaken for the
year ended 31 December 2020.
Board changes
Following the publication of the 2019 Annual Report and
Accounts, Jim Perrie stepped down as interim Chief Financial
Officer. Anna Bielby was appointed as interim Chief Financial
Officer in December and joined the Board as a Director on 5 January
2020.
Duncan McPhee has been appointed to the Board today, as Chief
Operating Officer. He has been at Lookers for 12 years in a number
of senior management roles, most recently as Chief Retail
Operations Officer, with responsibility for the dealership
portfolio and OEM relationships.
On the back of today's announcements, Phil White resumes a
non-executive role as Chairman. Having indicated at this year's AGM
that he would step down as Chairman, a search has commenced for the
appointment of his successor.
Heather Jackson took over the role of Senior Independent
Director from Richard Walker on 1 July 2020 and became Chair of the
Remuneration Committee at the completion of the 2019 results in
November 2020.
Vicky Mitchell assumed the role of Chair of Lookers Motor Group
Limited, the FCA-regulated entity from 1 July 2020.
Robin Churchouse joined the Board as an independent
Non-Executive Director on 8 December 2020 as a member of the Audit
and Risk, Remuneration and Nomination Committees, as well as
becoming a Director of Lookers Motor Group Limited. As previously
announced, Stuart Counsell agreed to remain on the Board until the
completion of the 2019 Annual Report and Accounts and the
appointment of his successor as Chair of the Audit and Risk
Committee. Robin became Chair of the Audit and Risk Committee on 1
January 2021 and Stuart left Lookers on that date.
As previously communicated, Tony Bramall, Non-Executive
Director, retired at the end of December 2020
Non-Executive Directors Sally Cabrini and Richard Walker both
decided not to seek re-election at the 2020 Annual General Meeting,
and both stood down from the Board on 29 June 2020.
Change of auditor
As previously announced, the Company appointed BDO LLP as its
new auditor, and this was confirmed by shareholders at the General
Meeting held on 28 December 2020.
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 expected and historical results. The Board believes
the wider risks and uncertainties to be consistent with those
described on pages 38 to 43 in the 2019 Annual Report and Accounts,
however there are a number of risks where an update is
appropriate:
1) COVID-19: Subsequent to the publication of our 2019 Annual
Report and Accounts, the Group is managing the impacts of a third
national lockdown to control the COVID-19 pandemic. Whilst the
impacts of the new strain and the duration and impact of the new
lockdown cannot yet be fully understood, the Group remains
confident in its COVID-19 protocols and contactless sales offering.
We remain focussed on protecting our customers and our colleagues,
and in continuing to run our core business as effectively and
efficiently as circumstances allow. This includes close management
of our working capital in light of reduced business volumes.
2) Brexit: The Group continues to monitor the impact of Brexit
following the deal agreed by the UK Government with the EU, with
the impact on UK companies still to be fully understood. This
includes liaising closely with our brand partners to ensure minimal
disruption of both new vehicle and parts stocks. At the time of
writing no material adverse impacts have impacted on our business,
but we keep the situation under constant review.
3) Financial reporting and suspension of shares: The Group is in
continued discussion with the FCA around the events that led to the
delay in publishing the 2019 Annual Report and Accounts and the
suspension of the Company's shares from trading on 1 July 2020. As
noted above, the Board has applied to the FCA for the restoration
of the Company's shares to the premium listing segment of the
Official List of the FCA and to trading on the London Stock
Exchange.
Review of regulated activities
As previously reported, we have been working internally and with
the FCA to review our governance, systems and controls as they
relate to our regulated businesses. This programme of work included
the design and implementation of revised sales and oversight
processes, a robust risk management framework, governance
arrangements and systems and controls. This work was sponsored and
overseen by the Board and subject to independent assurance through
third party FCA Skilled Person Reports. The work included the
appointment of a Chief Risk Officer and two additional
Non-Executive Directors with experience in financial services and
regulated businesses (with the recent appointment of Robin
Churchouse bringing this number to three). Having concluded these
reviews, we have, and continue, to focus on ensuring that all the
actions identified are fully embedded, and that a programme of
assurance of their ongoing effectiveness is in place.
The FCA's investigation into past sales processes is continuing
and we are cooperating fully with the regulator. As previously
communicated, the Group included a provision of GBP10.4m in the
2019 Annual Report and Accounts against liabilities that may arise.
That provision remains at GBP10.4m as at 30 June 2020.
Brexit
The UK and the EU have agreed a Free Trade Agreement (FTA) which
came into effect, subject to EU ratification, on the 1st January
2021.
For the Group, the immediate impact of the FTA is to continue
the tariff-free trade of new vehicles and parts with the EU, so
maintaining input price stability.
The Group has a presence in Northern Ireland through its Charles
Hurst business.
As part of the EU-UK Withdrawal Agreement, from the 1st January
2021 Northern Ireland remains within the EU for the supply of goods
but has unfettered access to the GB market.
The Group welcomes the decision of the UK Government to
reinstate in Northern Ireland the "second-hand margin scheme",
which allows traders to pay VAT on the margin of second-hand goods
rather than the full cost, and will facilitate the Group continuing
to trade vehicles between Great Britain and Northern Ireland.
However, the impact of the Northern Ireland Protocol on tariffs has
not been concluded and may result in additional industry-wide costs
and/or barriers to trade between Great Britain and Northern
Ireland.
The Group has taken necessary actions to prepare for the
administrative impacts of Brexit on its Northern Ireland
business.
Summary and outlook
The COVID-19 global pandemic had an inevitable and unprecedented
impact on the Group's operational and financial performance in the
first half of 2020. During lockdown, the Group rolled out several
new initiatives and implemented a decisive, wide-ranging
restructuring plan to ensure the long-term viability of the Group.
These actions, together with the invaluable support of our many
stakeholders, allowed us to emerge from the initial lockdown period
in a strong position.
Trading in the second half of 2020 was encouraging, underpinned
by significant outperformance of the retail UK new car market,
continued resilient trading in used and aftersales and increasing
used car margins. The second half performance also included the
early benefits of the Group's restructuring programme.
Despite the impact of the second national lockdown in November,
performance in the second half of the year is expected to be ahead
of last year, largely offsetting H1 underlying loss before tax of
GBP36.1m.
In light of the evolving COVID-19 situation and latest lockdown
restrictions impacting much of the Group's portfolio, the Board
remains cautious about the outlook for 2021. However, the Board
continues to believe the Group is well positioned to benefit from
its continued progress and the exciting sector developments
including electrification and further digitisation.
In conclusion, on behalf of the Board I would like to thank all
our stakeholders and particularly my colleagues across the business
for their support and dedication.
Mark Raban
Chief Executive Officer
29 January 2021
Condensed Statement of Total Comprehensive Income
Unaudited Unaudited
six months six months
ended ended 30 Audited
30 June June 2019 year ended
2020 (restated*) 31 December
Note GBPm GBPm 2019 GBPm
-------------------------------------------- ----- ------------ ------------- -------------
Revenue 2 1,563.7 2,605.1 4,787.2
============================================ ===== ============ ============= =============
Cost of sales (1,395.1) (2,324.0) (4,274.1)
============================================ ===== ============ ============= =============
Gross profit 168.6 281.1 513.1
============================================ ===== ============ ============= =============
Net operating expenses (200.4) (242.8) (526.3)
============================================ ===== ============ ============= =============
Operating (loss)/profit (31.8) 38.3 (13.2)
-------------------------------------------- ----- ============ ------------- =============
Underlying operating (loss)/profit (17.9) 40.7 36.5
Non-underlying items 3 (13.9) (2.4) (49.7)
-------------------------------------------- ----- ------------ ------------- -------------
Net interest 4 (18.2) (18.7) (32.3)
============================================ ===== ------------ ============= =============
(Loss)/profit before taxation (50.0) 19.6 (45.5)
============================================ ===== ------------ ============= =============
Underlying (loss)/profit before
taxation (36.1) 22.0 4.2
Non-underlying items 3 (13.9) (2.4) (49.7)
-------------------------------------------- ----- ------------ ------------- -------------
Tax (charge)/credit (0.5) (4.2) 3.9
============================================ ===== ============ ============= =============
(Loss)/profit for the period/year (50.5) 15.4 (41.6)
============================================ ===== ------------ ============= =============
Actuarial (losses)/gains on pension
scheme obligations (not recycled
to profit and loss) (17.0) (1.7) 7.1
============================================ ===== ============ ============= =============
Deferred tax on pension scheme obligations
(not recycled to profit and loss) 2.9 0.3 (1.2)
============================================ ===== ============ ============= =============
Total other comprehensive (expense)/income
for the period/year (14.1) (1.4) 5.9
============================================ ===== ============ ============= =============
Total comprehensive (expense)/income
for the period/year (64.6) 14.0 (35.7)
============================================ ===== ============ ============= =============
Attributable to:
=================================================== ============ ============= =============
Shareholders of the company (64.6) 14.0 (35.7)
============================================ ===== ============ ============= =============
(Loss)/earnings per share:
============================================ ===== ============ ============= =============
Basic (loss)/earnings per share
(p) 6 (12.94) 3.96 (10.69)
============================================ ===== ============ ============= =============
Diluted (loss)/earnings per share
(p) 6 (12.94) 3.80 (10.69)
============================================ ===== ============ ============= =============
*Details of the restatements due to presentational changes and
correction of errors are made in Note 18.
**In the period ended 30 June 2020 and year ended 31 December
2019 the basic and diluted earnings per share are equal as a result
of the Group incurring a loss for the period/year.
Condensed Statement of Financial Position
Unaudited
Unaudited 30 June Audited
30 June 2019 31 December
2020 (restated*) 2019
Note GBPm GBPm GBPm
=============================== ===== ============= ============= =============
Non-current assets
====================================== ============= ============= =============
Goodwill 7 79.3 111.7 81.9
=============================== ===== ============= ============= =============
Intangible assets 8 112.6 114.3 114.2
=============================== ===== ============= ============= =============
Property, plant
and equipment 9 415.5 431.2 429.2
=============================== ===== ============= ============= =============
Right of use assets 10 109.7 107.9 107.7
=============================== ===== ============= ============= =============
717.1 765.1 733.0
====================================== ============= ============= =============
Current assets
====================================== ============= ============= =============
Inventories 12 856.2 922.2 956.5
=============================== ===== ============= ============= =============
Trade and other
receivables 133.6 282.7 140.2
=============================== ===== ============= ============= =============
Current tax receivable 6.2 - 9.8
=============================== ===== ============= ============= =============
Rental fleet vehicles 54.2 64.2 59.4
=============================== ===== ============= ============= =============
Cash and cash equivalents 295.5 189.7 150.3
=============================== ===== ============= ============= =============
Assets held for
sale 11 10.6 6.5 10.0
=============================== ===== ============= ============= =============
1,356.3 1,465.3 1,326.2
====================================== ============= ============= =============
Total assets 2,073.4 2,230.4 2,059.2
====================================== ============= ============= =============
Current liabilities
====================================== ============= ============= =============
Bank loans and overdrafts 14 92.4 108.0 119.4
=============================== ===== ============= ============= =============
Trade and other
payables 1,232.4 1,331.9 1,261.5
=============================== ===== ============= ============= =============
Lease liabilities 14 18.5 18.5 18.5
============= =============
Provisions 13 - 2.0 -
============= =============
Current tax payable - 4.8 -
====================================== ============= ============= =============
1,343.3 1,465.2 1,399.4
====================================== ============= ============= =============
Net current assets / (liabilities) 13.0 0.1 (73.2)
====================================== ------------- ------------- -------------
Non-current liabilities
====================================== ============= ============= =============
Bank loans 14 214.1 153.4 90.4
=============================== ===== ============= ============= =============
Trade and other
payables 38.7 31.0 42.3
=============================== ===== ============= ============= =============
Lease liabilities 14 117.3 114.5 115.6
=============================== ===== ============= ============= =============
Provisions 13 10.4 - 10.4
=============================== ===== ============= ============= =============
Pension scheme obligations 69.5 67.4 55.7
=============================== ===== ============= ============= =============
Deferred tax liabilities 31.9 32.7 34.0
=============================== ===== ============= ============= =============
481.9 399.0 348.4
====================================== ============= ============= =============
Total liabilities 1,825.2 1,864.2 1,747.8
====================================== ============= ============= =============
Net assets 248.2 366.2 311.4
====================================== ============= ============= =============
Shareholders' equity
====================================== ============= ============= =============
Ordinary share capital 19.5 19.5 19.5
=============================== ===== ============= ============= =============
Share premium 78.4 78.4 78.4
====================================== ============= ============= =============
Capital redemption
reserve 15.1 15.1 15.1
=============================== ===== ============= ============= =============
Retained earnings 135.2 253.2 198.4
====================================== ============= ============= =============
Total equity 248.2 366.2 311.4
====================================== ============= ============= =============
*Details of the restatements due to presentational changes and
correction of errors are made in Note 18
Condensed Statement of Changes in Equity
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
Period ended 30 June 2019 (unaudited) Note GBPm GBPm GBPm GBPm GBPm
--------------------------------------- ===== ========= ========= ============ ========== ========
As at 1 January 2019 19.4 78.4 15.1 249.0 361.9
======================================= ===== ========= ========= ============ ========== ========
Profit for the period (restated*) 15.4 15.4
======================================= ===== ========= ========= ============ ========== ========
Total other comprehensive income
for the period (1.4) (1.4)
--------------------------------------- ----- --------- --------- ------------ ---------- --------
Total comprehensive expense
for the period - - - 14.0 14.0
========== ========
New shares issued 0.1 - - - 0.1
======================================= ===== ========= ========= ============ ========== ========
Share based compensation - - - 0.8 0.8
======================================= ===== ========= ========= ============ ========== ========
Foreign exchange translation
differences - - - (0.5) (0.5)
======================================= ===== ========= ========= ============ ========== ========
Dividends paid 5 - - - (10.1) (10.1)
========== ========
As at 30 June 2019 19.5 78.4 15.1 253.2 366.2
======================================= ===== ========= ========= ============ ========== ========
Year ended 31 December 2019
(audited)
--------------------------------------- ========= ========= ============ ========== ========
As at 1 January 2019 19.4 78.4 15.1 249.0 361.9
======================================= ===== ========= ========= ============ ========== ========
Loss for the year (41.6) (41.6)
======================================= ===== ========= ========= ============ ========== ========
Total other comprehensive expense
for the year 5.9 5.9
--------------------------------------- ----- --------- --------- ------------ ---------- --------
Total comprehensive income for
the year (35.7) (35.7)
========= ========= ============ ========== ========
New shares issued 0.1 - - - 0.1
======================================= ===== ========= ========= ============ ========== ========
Share based compensation - - - 1.4 1.4
======================================= ===== ========= ========= ============ ========== ========
Foreign exchange translation
differences - - - (0.4) (0.4)
======================================= ===== ========= ========= ============ ========== ========
Dividends paid 5 - - - (15.9) (15.9)
========== ========
As at 31 December 2019 19.5 78.4 15.1 198.4 311.4
======================================= ===== ========= ========= ============ ========== ========
Period ended 30 June 2020 (unaudited)
--------------------------------------- ===== --------
As at 1 January 2020 19.5 78.4 15.1 198.4 311.4
======================================= ===== ========= ========= ============ ========== ========
Loss for the period (50.5) (50.5)
======================================= ===== ========= ========= ============ ========== ========
Total other comprehensive expense
for the period (14.1) (14.1)
--------------------------------------- ----- --------- --------- ------------ ---------- --------
Total comprehensive expense
for the year - - - (64.6) (64.6)
========== ========
Share based compensation - - - 0.6 0.6
======================================= ===== ========= ========= ============ ========== ========
Foreign exchange translation
differences - - - 0.8 0.8
======================================= ===== ========= ========= ============ ========== ========
Dividends paid 5 - - - - -
========== ========
As at 30 June 2020 19.5 78.4 15.1 135.2 248.2
======================================= ===== ========= ========= ============ ========== ========
*Details of the restatements due to presentational changes and
correction of errors are made in Note 18
Condensed Statement of Cash Flows
Unaudited
Unaudited six months
six months ended 30 Audited
ended 30 June 2019 year ended
June 2020 (restated*) 31 December
Note GBPm GBPm 2019 GBPm
===== ============ ============= =============
Cash flows from operating activities
======================================= ===== ============ ============= =============
(Loss)/profit for the period/year (50.5) 15.4 (41.6)
======================================= ===== ============= =============
Tax charge/(credit) 0.5 4.2 (3.9)
======================================= ===== ============= =============
Depreciation of property, plant
and equipment, rental fleet and
right of use assets 26.7 27.2 54.1
======================================= ===== ============= =============
(Gain)/loss on disposal of property,
plant and equipment and rental
fleet (0.4) - (5.2)
======================================= ===== ============= =============
Gain on lease surrenders 10 - - (0.4)
======================================= ===== ============= =============
Amortisation of intangible assets 2.3 3.3 6.1
======================================= ===== ============= =============
Share based compensation 0.6 0.8 1.4
======================================= ===== ============= =============
Impairment of property, plant and
equipment 9 3.2 - 4.3
======================================= ===== ============= =============
Impairment of right of use assets 3 0.3 - 1.8
======================================= ===== ============= =============
Impairment of intangible assets
(underlying) - - 0.4
======================================= ===== ============= =============
Impairment of goodwill and intangible
assets (non-underlying) 3 2.6 - 30.4
======================================= ===== ============= =============
Interest income excluding pension
related interest 4 - - -
======================================= ===== ============= =============
Interest payable excluding pension
related interest and debt issue
costs 4 17.4 17.5 30.0
======================================= ===== ============= =============
Debt issue costs 0.2 0.2 0.4
======================================= ===== ============= =============
Difference between pension charge
and cash contributions (3.0) (2.9) (6.1)
======================================= ===== ============= =============
Proceeds from sale of vehicles
for long term leasing 5.3 6.3 11.3
======================================= ===== ============= =============
Proceeds from sale of rental fleet
vehicles 20.1 27.8 58.7
======================================= ===== ============= =============
Creation of provisions - 2.0 10.4
======================================= ===== ============= =============
Changes in inventories 101.0 40.1 23.1
======================================= ===== ============= =============
Changes in receivables 6.6 (121.9) 20.6
======================================= ===== ============= =============
Changes in payables (18.7) 93.8 25.3
======================================= ===== ============= =============
Cash generated from operations 114.2 113.8 221.1
======================================= ===== ------------ ------------- -------------
Interest paid (14.6) (14.6) (24.3)
======================================= ===== ============= =============
Interest paid - finance leases (2.8) (2.9) (5.7)
======================================= ===== ============= =============
Interest received 0.0 - -
======================================= ===== ============= =============
Tax received/(paid) 3.6 (3.2) (9.3)
======================================= ===== ============= =============
Net cash inflow from operating
activities 100.4 93.1 181.8
======================================= ===== ------------ ------------- -------------
Cash flows from investing activities
======================================= =====
Purchase of property, plant and
equipment (9.2) (18.8) (45.8)
======================================= ===== ============= =============
Purchase of vehicles for long term
leasing (7.1) (17.5) (35.5)
======================================= ===== ============= =============
Purchase of rental fleet vehicles (21.7) (34.2) (61.7)
======================================= ===== ============= =============
Purchase of intangibles (0.7) (4.2) (7.9)
======================================= ===== ============= =============
Proceeds from disposal of property,
plant and equipment 3.4 3.4 17.6
======================================= ===== ------------- -------------
Net cash outflow from investing
activities (35.3) (71.3) (133.3)
======================================= ===== ------------ ------------- -------------
Cash flows from financing activities
======================================= =====
Proceeds from issue of ordinary
shares - - 0.1
======================================= ===== ============= =============
Receipt of funding advanced for
vehicle leasing arrangements 14 29.1 42.8 76.5
======================================= ===== ============= =============
Repayment of funding advanced for
vehicle leasing arrangements 14 (38.7) (32.8) (69.0)
======================================= ===== ============= =============
Receipt/(repayment) of loans 14 0.8 2.3 (1.4)
======================================= ===== ============= =============
Draw down on RCF 14 150.0 117.0 186.9
======================================= ===== ============= =============
Repayment on RCF 14 (26.3) (93.7) (224.2)
======================================= ===== ============= =============
Repayment of lease liabilities 14 (7.2) (7.8) (15.6)
===== ============= =============
Receipt of lease incentives 14 - - 1.2
===== ============= =============
Dividends paid - (10.1) (15.9)
======================================= ===== ------------- -------------
Net cash inflow / (outflow) from
financing activities 107.7 17.7 (61.4)
======================================= ===== ------------ ------------- -------------
Increase / (decrease) in cash and
cash equivalents 172.8 39.6 (12.9)
======================================= ===== ============= =============
Cash and cash equivalents at 1
January 31.4 44.3 44.3
======================================= ===== ============= =============
Cash and cash equivalents at 30
June/31 December 204.2 83.9 31.4
======================================= ===== ------------ ------------- -------------
Analysis of cash and cash equivalents
Cash and cash equivalents 295.5 189.7 150.3
======================================= ===== ============= =============
Bank overdraft (91.3) (105.8) (118.9)
======================================= ===== ============= =============
Cash and cash equivalents at 30
June/31 December 204.2 83.9 31.4
======================================= ===== ------------ ------------- -------------
* Details of the presentational adjustments and corrections of
errors are made in Note 18
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.
1. Basis of preparation
This condensed consolidated interim financial report for the
half-year reporting period ended 30 June 2020 has been prepared on
a going concern basis in accordance with Accounting Standard IAS 34
Interim Financial Reporting and the Disclosure and Transparency
Rules of the Financial Conduct Authority.
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 2019 were approved by the Board of Directors on 25
November 2020 and filed with the Registrar of Companies on 29
December 2020. The report of the auditors on those accounts was
unqualified, but contained an emphasis of matter paragraph in
respect of going concern. It did not contain any statement under
section 498 of the Companies Act 2006.
The financial information for the six months ended 30 June 2020
and 30 June 2019 is unaudited and has not been externally reviewed.
The financial information for the year ended 31 December 2019 has
been based on the audited financial statements for that year.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, these
condensed consolidated interim financial statements should be read
in conjunction with 2019 Annual Report and Accounts , which have
been prepared in accordance with IFRS as adopted by the European
Union.
Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 December 2019, as
described in the 2019 Annual Report & Accounts, except where
disclosed otherwise in these notes. Corporation tax in the interim
periods is accrued using the estimated tax rate that would be
applicable to expected total annual earnings.
Critical accounting estimates and judgments
The preparation of interim financial information requires
management to make judgments, 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
judgments 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 2019, with the exception of the
consideration of the potential impact of the ongoing COVID-19
pandemic There have been no material revisions to either the nature
or amount of estimates reported in prior periods. However, the
ongoing impacts of the COVID-19 pandemic have required both
significant new critical accounting judgements and estimates to be
made as well as immaterial changes to certain existing critical
accounting judgements and estimates. The Group has revised its
financial forecasts used in assessing the carrying value of its
goodwill balance, and further details can be found in Note 7.
Going concern
The Directors have made an assessment of going concern,
considering the Group's cash and liquidity position, current
performance and outlook, using the information available up to the
date of issue of these condensed consolidated interim financial
statements and which considered the impact of the COVID-19 pandemic
and the measures taken to mitigate its impact on the Group. The
Board has also considered the impact on the going concern
assumption of general economic conditions, Brexit, its ongoing FCA
investigation and its banking relationships
In making this assessment the Directors have considered
available liquidity in relation to net debt and committed
facilities, the Group's latest forecasts for 2021 cash flows,
together with COVID-19 adjusted scenarios. The Board is satisfied
that the Group will be able to operate within the level of its
committed facilities for the foreseeable future.
During the lockdown period, management worked closely with its
key OEM partners, who have positively supported the business
throughout 2020 and are continuing to do so in 2021. Management
continue to take the appropriate actions to protect the balance
sheet and cash flow including furloughing of employees, use of HMRC
VAT deferral scheme, deferral of capital expenditure and
identification of property assets available for sale, and cessation
of the dividend for 2020.
Additionally, management has taken a number of longer term
actions to protect cash including accelerating and investing in the
development of the Group's end-to-end online ordering capability, a
comprehensive review of working capital management, taking
additional measures to resize the operating footprint and cost base
of the business, and changed operational practices to de-risk the
intra-month cash requirements.
Following the third COVID-19 lockdown in early 2021, management
ran a number of forecast scenarios to assess the impact of the
current COVID-19 situation on our trading and hence on the
liquidity needs of the business and the likely impact on banking
covenants, These scenarios explored the continuation of the current
lockdown for varying periods and more severe trading impacts where
"Click and Drive" could no longer operate and so volumes were more
severely impacted. These tests made varying assumptions on how
strongly the market did or did not bounce back after lockdown
ended. Management also ran a number of reverse stress tests to
identify the point where covenant compliance would become an issue,
and in parallel identified a range of mitigating actions it could
reasonably assume to address both liquidity and profitability. In
running and assessing these tests, and in particular in assessing
their likelihood, management has also taken into consideration our
performance to date under the current lockdown.
In the core tests the Group had sufficient liquidity and was
able to comply with its banking covenants. In the reverse stress
tests management were satisfied that the stresses were sufficiently
severe, and that sufficient mitigating actions are available to
them, for these tests to not impact on going concern
considerations.
The Group has certain reporting obligations with its lenders.
Delays in achievement of deadlines could also cause a covenant
breach. In such circumstances and without actioning the various
mitigating actions available, the Group may be unable to realise
assets and discharge liabilities in the normal course of
business.
In view of the various COVID-19 sensitivities and reverse stress
testing, the Board concludes that preparing the accounts on the
basis of Going Concern is appropriate.
At 31 December 2020 the Group had net debt of c.GBP45.0m (2019:
GBP59.5m).
At 31 December 2020 the banking facilities included a revolving
credit facility of up to GBP238m. These facilities are due for
renewal before March 2022.
The Group has agreed revised covenants with its banking partners
for the period to June 2021.
Alternative Performance Measures
The Group uses a number of Alternative Performance Measures
(APMs) which are non-IFRS (International Financial Reporting
Standards) 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.
Following the introduction of non-underlying items in the
Statement of Total Comprehensive Income the Group's APMs have also
been redefined to be based around underlying measures, whereas
previously the basis had been to use adjusted profit measures. 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 17 .
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.
2. Segmental reporting
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2020 2019 (restated) 2019
GBPm Mix* GBPm Mix* GBPm Mix*
-------------------- --------------- ------ ------------------- ------ ------------------ ------
New cars 705.2 41.7% 1,267.0 45.3% 2,226.4 43.0%
==================== =============== ====== =================== ====== ================== ======
Used cars 770.0 45.6% 1,232.0 44.0% 2,326.3 44.9%
==================== =============== ====== =================== ====== ================== ======
Aftersales 162.1 9.6% 254.0 9.1% 495.3 9.5%
==================== =============== ====== =================== ====== ================== ======
Leasing and other 52.5 3.1% 45.9 1.6% 134.0 2.6%
=============== ====== =================== ====== ================== ======
Less: intercompany (126.1) - (193.8) - (394.8) -
-------------------- --------------- ------ ------------------- ------ ------------------ ------
Revenue 1,563.7 100% 2,605.1 100% 4,787.2 100%
-------------------- --------------- ------ ------------------- ------ ------------------ ------
*Mix calculation excludes the effect of intercompany
revenues.
3. 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.
Unaudited
Unaudited six months
six months ended 30 Audited
ended 30 June 2019 year ended
June 2020 (restated) 31 December
Note GBPm GBPm 2019 GBPm
------------------------------------------- ------ ------------ ------------ -------------
Non-underlying items at operating
profit
=========================================== ====== ============ ============ =============
1 - Loss/(gain) on property disposals 0.1 0.3 (4.9)
=================================================== ============ ============ =============
2 - Impairment of property, plant
and equipment 3.2 - 3.7
=================================================== ============ ============ =============
2 - Impairment of right of use assets 0.3 - 1.8
=================================================== ============ ============ =============
2 - Restructuring costs 4.2 0.1 8.8
=================================================== ============ ============ =============
3 - Impairment of goodwill and intangible
assets 2.6 - 30.4
=================================================== ============ ============ =============
4 - Value added tax (VAT) - - (6.2)
=================================================== ============ ============ =============
5 - Restructure of regulated activities - 2.0 4.7
=================================================== ============ ============ =============
5 - FCA provision - - 10.4
=================================================== ============ ============ =============
6 - Accrual for potential tax penalties - - 1.0
=================================================== ============ ============ =============
7 - Professional fees 3.5 - -
=========================================== ====== ============ ============ =============
Non-underlying items at operating
profit 13.9 2.4 49.7
--------------------------------------------------- ------------ ------------ -------------
The following details items of income and expenditure that the
Group has classified as non-underlying in its statement of total
comprehensive income.
1 - Property disposals in H1 2020 relate to a loss following the
sale and leaseback of a property and disposals in H1 2019 relate to
a loss following the sale of freehold properties. Details of the
items affecting the year ended 31 December 2019 are made in the
2019 Annual Report & Accounts.
2 - Costs relating to the group-wide restructuring, site closure
and impairment losses have been recognised during the period.
Details of the items affecting the year ended 31 December 2019 are
made in the 2019 Annual Report & Accounts. Onerous lease
provisions reclassified against the carrying values of right of use
assets in the year ended 31 December 2019 have been similarly
re-presented in Note 10 as at 30 June 2019; this reclassification
does not give rise to a P&L charge in H1 2019.
3 - During the period the Directors have concluded that
impairment of some of the Group's intangible asset base is required
given the current market conditions (see Note 7). Details of the
items affecting the year ended 31 December 2019 are made in the
2019 Annual Report & Accounts.
4,5,6 - Details of the items affecting the year ended 31
December 2019 are made in the 2019 Annual Report &
Accounts.
7 - During H1 2020 the Group has incurred certain professional
fees in relation to the fraud investigation procedures carried out
by a number of advisory firms (see ' Financial statements
restatement and presentational changes' in Note 18) .
4. Net interest
Unaudited
six months
Unaudited ended 30 Audited
six months June 2019 year ended
ended 30 June (restated) 31 December
2020 GBPm GBPm 2019 GBPm
------------------------------------------------ --------------- ------------ -------------
Interest expense:
------------------------------------------------ --------------- ------------ -------------
Interest payable on bank borrowings (5.0) (4.5) (10.0)
================================================ =============== ============ =============
Interest on consignment, repurchase vehicle
liabilities and stocking loans (6.1) (6.2) (12.1)
================================================ =============== ============ =============
Interest on vehicle rental finance liabilities (3.5) (3.9) (2.2)
================================================ =============== ============ =============
Interest on lease liabilities (2.8) (2.9) (5.7)
================================================ =============== ============ =============
Interest cost on defined benefit pension
obligation (2.9) (4.2) (8.1)
------------------------------------------------ --------------- ------------ -------------
Debt issue costs (0.2) (0.2) (0.4)
(20.5) (21.9) (38.5)
------------------------------------------------ --------------- ------------ -------------
Interest income:
------------------------------------------------ --------------- ------------ -------------
Interest income on bank balances - - -
================================================ =============== ============ =============
Interest income on pension scheme assets 2.3 3.2 6.2
2.3 3.2 6.2
------------------------------------------------ --------------- ------------ -------------
Net interest (18.2) (18.7) (32.3)
------------------------------------------------ --------------- ------------ -------------
* Details of the presentational adjustments and corrections of
errors are made in Note 18.
5. Dividends
Unaudited Unaudited
six months six months
ended ended Audited
30 June 30 June year ended
2020 2019 31 December
GBPm GBPm 2019 GBPm
-------------------------------------------------- ------------- ------------ -------------
Interim dividend for the years ended 31 December
2019 1.48p - - 5.8
================================================== ============= ============ =============
Final dividend for the years ended 31 December
2018 2.60p - 10.1 10.1
-------------------------------------------------- ------------- ------------ -------------
- 10.1 15.9
---------------------------------------------------------------- ------------ -------------
The Directors do not propose an interim dividend for 2020 (2019:
interim dividend 1.48p).
6. Earnings per share
Unaudited Unaudited
six months six months Audited year
ended 30 June ended 30 June ended 31 December
2020 2019 (restated) 2019
-------------------
(Loss)/earnings attributable to
ordinary shareholders (GBPm) (50.5) 15.4 (41.6)
======================================= =============== ================= ===================
Weighted average number of shares
in issue 390,138,374 389,084,483 389,182,654
Basic (loss)/earnings per share
(p) (12.94) 3.96 (10.69)
--------------------------------------- --------------- ----------------- -------------------
(Loss)/earnings attributable to
ordinary shareholders (GBPm) (50.5) 15.4 (41.6)
======================================= =============== ================= ===================
Dilutive effect of share based
payment options and weighted average
number of shares in issue 390,138,374 404,826,421 389,182,654
Diluted (loss)/earnings per share
(p) (12.94) 3.80 (10.69)
--------------------------------------- --------------- ----------------- -------------------
(Loss)/profit before tax (GBPm) (50.0) 19.6 (45.5)
======================================= =============== ================= ===================
Add: Non-underlying items (GBPm) 13.9 2.4 49.7
--------------------------------------- --------------- ----------------- -------------------
Underlying (loss)/profit before
tax (GBPm) (36.1) 22.0 4.2
======================================= =============== ================= ===================
Tax rate 19.0% 19.0% 19.0%
======================================= =============== ================= ===================
Underlying tax (GBPm) 6.9 (4.2) (0.8)
--------------------------------------- --------------- ----------------- -------------------
Underlying earnings attributable
to ordinary shareholders (GBPm) (29.2) 17.8 3.4
======================================= =============== ================= ===================
Weighted average number of shares
in issue 390,138,374 389,084,483 389,182,654
Underlying basic (loss)/earnings
per share (p) (7.50) 4.58 0.87
--------------------------------------- --------------- ----------------- -------------------
In the periods to 31 December 2019 and 30 June 2020 the basic
and diluted earnings per share are equal as a result of the Group
incurring a loss for the period / year. This has therefore created
an anti-dilutive impact. Earnings per share have been restated
following the recognition of prior period adjustments.
7. Goodwill
Unaudited
Unaudited six months
six months ended Audited
ended 30 June year ended
30 June 2019 (restated) 31 December
Cost 2020 GBPm GBPm 2019 GBPm
------------ ----------------- -------------
As at 1 January and 31 December 122.4 122.4 122.4
----------------------------------- ------------ ----------------- -------------
Aggregate impairment
================================== ============ ================= =============
At 1 January 40.5 10.7 10.7
===================================== ============ ================= =============
Charge for the
period/year 2.6 - 29.8
============ =================
As at 31 December 43.1 10.7 40.5
----------------------------------- ------------ ----------------- -------------
Carrying amount at 31 December 79.3 111.7 81.9
---------------------------------- ------------ ----------------- -------------
Following an update to the Group's annual impairment review and
reflecting a deterioration in expected market conditions as a
result of COVID-19 underpinning the value in use calculations, an
impairment charge of GBP2.6m has been recognised during the period
against the Ford CGU.
The following table summarises goodwill and intangibles with an
indefinite useful economic life allocated by CGU:
2020 2019
Interim Interim 2019
2020 Licences 2020 2019 Licences 2019 Licences
Interim and Interim Interim and Interim 2019 and 2019
Goodwill brands Total Goodwill brands Total Goodwill brands Total
CGU GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
JLR 9.0 - 9.0 11.8 - 11.8 9.0 - 9.0
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Audi 22.1 28.9 51.0 22.1 28.9 51.0 22.1 28.9 51.0
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Charles Hurst 9.4 - 9.4 9.4 - 9.4 9.4 - 9.4
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Renault Nissan
Dacia
Vauxhall 2.8 2.9 5.7 2.8 2.9 5.7 2.8 2.9 5.7
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Mercedes-Benz 15.2 28.2 43.4 15.2 28.2 43.4 15.2 28.2 43.4
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Volkswagen 6.9 15.9 22.8 6.9 15.9 22.8 6.9 15.9 22.8
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Ford 4.8 2.9 7.7 24.8 2.9 27.7 7.4 2.9 10.3
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
BMW 0.0 21.7 21.7 9.6 22.3 31.9 0.0 21.7 21.7
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
Fleet &
Leasing 9.1 - 9.1 9.1 - 9.1 9.1 - 9.1
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
79.3 100.5 179.8 111.7 101.1 212.8 81.9 100.5 182.4
---------- ---------- --------- ---------- ---------- --------- ---------- ---------- -------
During 2020 the Group has merged the operational activities of
the former Renault Nissan Dacia CGU with that of the former
Vauxhall CGU. The above table therefore disclosures the new CGU
following the transfer of GBP0.2m of goodwill relating to
Vauxhall.
The Group prepares forecasts that consider the Group's profit
and loss, cashflows, debt and other key financial ratios over the
relevant period. There are a number of key assumptions within these
forecasts and these have been based on management's past experience
and knowledge of the market. The key assumptions that have been
used in determining the value in use of each cash generating unit
in the impairment model are set out in the table below:
Assumption 2020 H1 2019 FY 2018 FY 2017 FY
0.0% to 0.0% to 0.0% to 0.0% to
One to five year revenue growth 1.0% 1.0% 1.4% 1.6%
-------- -------- -------- --------
One to five year operating expenses 0.0% to 0.0% to 0.0% to 0.0% to
growth 2.0% 2.0% 1.1% 1.1%
-------- -------- -------- --------
Post year five growth rate 0% 0% 0% 0%
-------- -------- -------- --------
Discount rate 8.14% 8.51% 8.70% 9.70%
-------- -------- -------- --------
The value-in-use of each CGU is calculated using cash flow
projections for a five-year period; from 1 January 2021 to 31
December 2025. These projections are based on the budget for the
year ended 31 December 2021 and form the basis for the Group's
strategic plan. The key assumptions in the most recent annual
budget on which the cash flow projections are based relate to
expectations of sales volumes and margins and expectations around
changes in the operating cost base.
The pre-tax adjusted discount rate used has been calculated
using the Group's estimated cost of capital, adjusted for the
impact of IFRS 16 and benchmarked against externally available
data. The Directors believe this is an appropriate proxy for
industry cost of capital.
Details regarding sensitivity analysis are included in the 2019
Annual Report & Accounts. Following the completion of the
updated interim impairment review the Directors are still of the
same view that the Ford, BMW and JLR CGUs are the most susceptible
to potential further impairments and they will continue to monitor
the headroom of these CGUs when undertaking the 2020 annual
impairment review for the purpose of the 2020 Annual Report &
Accounts.
Details with regards to subsequent events affecting the carrying
value of goodwill and non-amortised intangible assets are provided
in Note 15.
8. Intangible assets
Licences
and brands IT development Total
Group GBPm GBPm GBPm
----------------------------------------- ------------ --------------- ------
Cost
========================================= ============ ===============
At 1 January 2019 102.6 31.7 134.3
========================================== ============ =============== ======
Additions - 4.2 4.2
========================================== ============ =============== ======
At 30 June 2019 102.6 35.9 138.5
------------------------------------------ ------------ --------------- ------
At 1 January 2019 102.6 31.7 134.3
========================================== ============ =============== ======
Additions - 7.9 7.9
========================================== ============ =============== ======
At 31 December 2019 102.6 39.6 142.2
------------------------------------------ ------------ --------------- ------
At 1 January 2020 102.6 39.6 142.2
========================================== ============ =============== ======
Additions - 0.7 0.7
========================================== ============ =============== ======
At 30 June 2020 102.6 40.3 142.9
------------------------------------------ ------------ --------------- ------
Accumulated amortisation and impairment
========================================== ============ =============== ======
At 1 January 2019 (restated) 1.5 19.4 20.9
========================================== ============ =============== ======
Charge for the period - 3.3 3.3
========================================== ============ =============== ======
At 30 June 2019 (restated) 1.5 22.7 24.2
------------------------------------------ ------------ --------------- ------
At 1 January 2019 (restated) 1.5 19.4 20.9
========================================== ============ =============== ======
Charge for the period - 6.1 6.1
========================================== ============ =============== ======
Impairment charge 0.6 0.4 1.0
========================================== ============ =============== ======
At 31 December 2019 2.1 25.9 28.0
------------------------------------------ ------------ --------------- ------
At 1 January 2020 2.1 25.9 28.0
========================================== ============ =============== ======
Charge for the period - 2.3 2.3
========================================== ============ =============== ======
At 30 June 2020 2.1 28.2 30.3
------------------------------------------ ------------ --------------- ------
Carrying amount
As at 30 June 2019 (restated) 101.1 13.2 114.3
------------------------------------------ ------------ --------------- ------
As at 31 December 2019 100.5 13.7 114.2
------------------------------------------ ------------ --------------- ------
As at 30 June 2020 100.5 12.1 112.6
------------------------------------------ ------------ --------------- ------
Details of the items affecting the year ended 31 December 2019
are made in the 2019 Annual Report & Accounts.
9. Property, plant and equipment
Motor
Freehold Leasehold vehicles
property property for rental Other Total
Cost GBPm GBPm GBPm GBPm GBPm
------------------------------- ---------- ---------- ------------ ------- -------
At 1 January 2019 (restated) 268.5 77.4 98.5 84.9 529.3
=============================== ========== ========== ============ ======= =======
Movements in foreign exchange 2.3 - - - 2.3
=============================== ========== ========== ============ ======= =======
Additions 1.7 1.5 17.5 15.6 36.3
=============================== ========== ========== ============ ======= =======
Disposals (0.7) (1.0) (0.9) (2.4) (5.0)
=============================== ========== ========== ============ ======= =======
Transfers - 3.1 - (3.1) -
=============================== ========== ========== ============ =======
Transfers to inventories - - (13.2) - (13.2)
=============================== ========== ========== ============ =======
Transfers to assets held for
sale - - - - -
========== ============ =======
At 30 June 2019 (restated) 271.8 81.0 101.9 95.0 549.7
------------------------------- ---------- ---------- ------------ ------- -------
At 1 January 2019 (restated) 268.5 77.4 98.5 84.9 529.3
=============================== ========== ========== ============ ======= =======
Movements in foreign exchange (1.0) - - (0.1) (1.1)
=============================== ========== ========== ============ ======= =======
Additions 3.7 10.5 35.5 31.6 81.3
=============================== ========== ========== ============ ======= =======
Disposals (9.7) (1.6) (0.4) (10.2) (21.9)
=============================== ========== ========== ============ ======= =======
Transfers 15.3 6.6 - (21.9) -
=============================== ========== ========== ============ =======
Transfers to inventories - - (32.5) - (32.5)
=============================== ========== ========== ============ =======
Transfers to assets held for
sale (6.6) - - - (6.6)
========== ============ =======
At 31 December 2019 270.2 92.9 101.1 84.3 548.5
------------------------------- ---------- ---------- ------------ ------- -------
At 1 January 2020 270.2 92.9 101.1 84.3 548.5
=============================== ========== ========== ============ ======= =======
Movements in foreign exchange 0.3 - - - 0.3
=============================== ========== ========== ============ ======= =======
Additions 0.8 0.8 7.1 7.6 16.3
=============================== ========== ========== ============ ======= =======
Disposals (3.7) - (0.8) (1.7) (6.2)
=============================== ========== ========== ============ ======= =======
Transfers (2.6) 2.6 - - -
=============================== ========== ========== ============ =======
Transfers to inventories - - (11.0) - (11.0)
=============================== ========== ========== ============ =======
Transfers to assets held for
sale (0.6) - - - (0.6)
========== ============ =======
At 30 June 2020 264.4 96.3 96.4 90.2 547.3
------------------------------- ---------- ---------- ------------ ------- -------
Accumulated depreciation and
impairment
At 1 January 2019 (restated) 19.8 16.6 30.9 45.2 112.5
=============================== ========== ========== ============ ======= =======
Movements in foreign exchange - - - - -
=============================== ========== ========== ============ ======= =======
Charge for the period 1.3 1.3 12.0 2.7 17.3
=============================== ========== ========== ============ ======= =======
Impairment loss - - - - -
=============================== ========== ========== ============ ======= =======
Disposals (0.2) (0.2) (0.5) (1.6) (2.5)
=============================== ========== ========== ============ ======= =======
Transfers to inventories - - (7.2) - (7.2)
=============================== ========== ========== ============ ======= =======
Transfers to assets held for
sale (1.6) - - - (1.6)
========== ============ =======
At 30 June 2019 (restated) 19.3 17.7 35.2 46.3 118.5
------------------------------- ---------- ---------- ------------ ------- -------
At 1 January 2019 (restated) 19.8 16.6 30.9 45.2 112.5
=============================== ========== ========== ============ ======= =======
Movements in foreign exchange - - - (0.1) (0.1)
=============================== ========== ========== ============ ======= =======
Charge for the year 2.5 3.0 19.0 9.5 34.0
=============================== ========== ========== ============ ======= =======
Impairment loss 3.1 - - 1.2 4.3
=============================== ========== ========== ============ ======= =======
Disposals (0.6) (1.3) (0.4) (10.0) (12.3)
=============================== ========== ========== ============ ======= =======
Transfers to inventories - - (17.6) - (17.6)
=============================== ========== ========== ============ ======= =======
Transfers to assets held for
sale (1.5) - - - (1.5)
========== ============ =======
At 31 December 2019 23.3 18.3 31.9 45.8 119.3
------------------------------- ---------- ---------- ------------ ------- -------
At 1 January 2020 23.3 18.3 31.9 45.8 119.3
=============================== ========== ========== ============ ======= =======
Movements in foreign exchange - - - - -
=============================== ========== ========== ============ ======= =======
Charge for the period 1.2 1.3 10.6 4.8 17.9
=============================== ========== ========== ============ ======= =======
Impairment loss 3.0 0.1 - 0.1 3.2
=============================== ========== ========== ============ ======= =======
Disposals (0.2) - (0.5) (1.5) (2.2)
=============================== ========== ========== ============ ======= =======
Transfers to inventories - - (6.4) - (6.4)
=============================== ========== ========== ============ ======= =======
Transfers to assets held for
sale - - - - -
========== ============ =======
At 30 June 2020 27.3 19.7 35.6 49.2 131.8
------------------------------- ---------- ---------- ------------ ------- -------
Carrying amount
As at 30 June 2019 (restated) 252.5 63.3 66.7 48.7 431.2
------------------------------- ---------- ---------- ------------ ------- -------
As at 31 December 2019 246.9 74.6 69.2 38.5 429.2
------------------------------- ---------- ---------- ------------ ------- -------
As at 30 June 2020 237.1 76.6 60.8 41.0 415.5
------------------------------- ---------- ---------- ------------ ------- -------
10. Right of Use Assets
Property Other Total
GBPm GBPm GBPm
Cost
At 1 January 2019 240.1 6.0 246.1
============================ ========= ====== ======
Additions 11.1 2.0 13.1
============================ ========= ====== ======
Retirements and surrenders (0.1) (2.0) (2.1)
At 30 June 2019 251.1 6.0 257.1
---------------------------- --------- ------ ------
At 1 January 2019 240.1 6.0 246.1
============================ ========= ====== ======
Additions 19.5 2.9 22.4
============================ ========= ====== ======
Retirements and surrenders (5.3) (2.6) (7.9)
At 31 December 2019 254.3 6.3 260.6
---------------------------- --------- ------ ------
At 1 January 2020 254.3 6.3 260.6
============================ ========= ====== ======
Additions 8.2 0.2 8.4
============================ ========= ====== ======
Retirements and surrenders - (2.0) (2.0)
At 30 June 2020 262.5 4.5 267.0
---------------------------- --------- ------ ------
Accumulated depreciation
and impairment
At 1 January 2019 138.9 3.9 142.8
============================ ========= ====== ======
Charge for the period 5.7 1.4 7.1
============================ ========= ====== ======
Impairment charge 1.4 - 1.4
============================ ========= ====== ======
Retirements and surrenders (0.1) (2.0) (2.1)
At 30 June 2019 145.9 3.3 149.2
---------------------------- --------- ------ ------
At 1 January 2019 138.9 3.9 142.8
============================ ========= ====== ======
Charge for the year 11.5 2.8 14.3
============================ ========= ====== ======
Impairment charge 1.8 - 1.8
============================ ========= ====== ======
Retirements and surrenders (3.4) (2.6) (6.0)
At 31 December 2019 148.8 4.1 152.9
---------------------------- --------- ------ ------
At 1 January 2020 148.8 4.1 152.9
============================ ========= ====== ======
Charge for the period 5.0 1.1 6.1
============================ ========= ====== ======
Impairment charge 0.3 - 0.3
============================ ========= ======
Retirements and surrenders - (2.0) (2.0)
At 30 June 2020 154.1 3.2 157.3
---------------------------- --------- ------ ------
Carrying amount
---------------------------- --------- ------ ------
As at 30 June 2019 105.2 2.7 107.9
---------------------------- ------
As at 31 December 2019 105.5 2.2 107.7
---------------------------- --------- ------ ------
As at 30 June 2020 108.4 1.3 109.7
---------------------------- --------- ------ ------
Details of the items affecting the year ended 31 December 2019
are made in the 2019 Annual Report & Accounts.
Impairment charges totalling GBP1.4m in H1 2019 have been
reclassified from onerous lease accruals previously held in the
balance sheet; this reclassification does not give rise to a
P&L charge in H1 2019
11. Assets held for sale
Unaudited Unaudited Audited
June June 31 December
Lower of carrying amount and fair value 2020 2019 2019
less cost to sell GBPm GBPm GBPm
At 1 January 10.0 8.0 8.0
========================================= ========== ========== =============
Net transfers from property, plant and
equipment and financial liabilities 0.6 1.6 5.1
========================================= ========== ========== =============
Disposals - (3.1) (3.1)
========================================= ========== ========== =============
At 30 June/31 December 10.6 6.5 10.0
----------------------------------------- ---------- ---------- -------------
During the prior period and prior year the total carrying amount
disposed from held for sale amounted to GBP3.1m. Total proceeds
received was GBP2.9m resulting in a loss on property disposals of
GBP0.2m. As a result of the restructuring events during 2019 and
2020 certain properties have been transferred from property, plant
and equipment into assets held for sale at 30 June 2019, 31
December 2019 and 30 June 2020 respectively.
12. Inventories
Unaudited Audited
Unaudited June 2019 31 December
June 2020 (restated) 2019
GBPm GBPm GBPm
Goods for resale 307.2 448.4 398.7
================================ =========== ============ =============
Vehicle spare parts for resale 18.9 21.2 24.1
================================ =========== ============ =============
Consignment vehicles 530.1 452.6 533.7
856.2 922.2 956.5
-------------------------------- ----------- ------------ -------------
13. Provisions
Audited
Unaudited Unaudited 31 December
June 2020 June 2019 2019
GBPm GBPm GBPm
-------------------------------------------- -------------------------------- ----------- -------------------------
Restructure of regulated activities - 2.0 -
-------------------------------- ----------- -------------------------
Provision in respect of regulatory matters 10.4 - 10.4
-------------------------------------------- -------------------------------- ----------- -------------------------
At 31 December 10.4 2.0 10.4
-------------------------------------------- -------------------------------- ----------- -------------------------
Provisions
for other
charges
-------------------------------------------- --------------------------------
Created in the year -
============================================ ================================
Created in the period 2.0
============================================ ================================
At 30 June 2019 2.0
-------------------------------------------- --------------------------------
At 1 January 2019 -
============================================ ================================
Created in the year 10.4
============================================ ================================
At 31 December 2019 10.4
-------------------------------------------- --------------------------------
At 1 January 2020 10.4
============================================ ================================
Created in the period -
============================================ ================================
At 30 June 2020 10.4
-------------------------------------------- --------------------------------
The Group is currently in discussion with the FCA on a number of
matters including the past business review, ongoing enforcement
review and the events that led to the delay in publishing the 2019
Annual Report & Accounts, these 2020 interim statements and the
suspension of shares on 1 July 2020. After careful consideration of
the open matters, the Board has concluded that it is more likely
than not that the Group will incur an outflow of economic resources
in respect of at least some of these matters and, as previously
communicated, the Group included a provision of GBP10.4m in the
2019 Annual Report and Accounts against liabilities that may
arise.
14. Financial Instruments
At 1 At 30
Jan June
Movement in 2019 Net RCF Loan Lease Lease Lease Non-cash 2019
financial (restated) movement receipt incentives repayment receipt movement (restated)
liabilities GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------ ---------- ----------- ------------ ----------- --------- ---------- ------------
Other loans 11.5 - 2.3 - - - - 13.8
=============== ============ ========== =========== ============ =========== ========= ========== ============
RCF 118.7 23.3 - - - - (0.2) 141.8
============ =========== ============ =========== ========= ========== ============
Lease
liabilities 128.4 - - - (7.8) - 12.4 133.0
=============== ============ ========== =========== ============ =========== ========= ========== ============
Vehicle rental
finance
liabilities 89.7 - - - (32.8) 42.8 - 99.7
===============
348.3 23.3 2.3 - (40.6) 42.8 12.2 388.3
--------------- ------------ ------------
Cash and cash
equivalents (152.8) (189.7)
=============== ============ ============
Bank overdraft 108.5 105.8
--------------- ============
Net debt
excluding
lease
and vehicle
rental
liabilities 85.9 71.7
--------------- ------------ ------------
Net debt
including
lease
and vehicle
rental
liabilities 304.0 304.4
--------------- ------------ ------------
At 1
Jan At 31
Movement in 2019 Net RCF Loan Lease Lease Lease Non-cash Dec
financial (restated) movement repayment incentives repayment receipt movement 2019
liabilities GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------ ---------- ----------- ------------ ----------- --------- ---------- ------------
Other loans 11.5 - (1.4) - - - - 10.1
=============== ============ ========== =========== ============ =========== ========= ========== ============
RCF 118.7 (37.3) - - - - (0.6) 80.8
=========== ============ =========== ========= ========== ============
Lease
liabilities 128.4 - - 1.2 (15.6) - 20.1 134.1
=============== ============ ========== =========== ============ =========== ========= ========== ============
Vehicle rental
finance
liabilities 89.7 - - - (69.0) 76.5 - 97.2
===============
348.3 (37.3) (1.4) 1.2 (84.6) 76.5 19.5 322.2
--------------- ------------ ------------
Cash and cash
equivalents (152.8) (150.3)
=============== ============ ============
Bank overdraft 108.5 118.9
--------------- ============
Net debt
excluding
lease
and vehicle
rental
liabilities 85.9 59.5
--------------- ------------ ------------
Net debt
including
lease
and vehicle
rental
liabilities 304.0 290.8
--------------- ------------ ------------
At 1 At 30
Jan Net RCF Loan Lease Lease Lease Non-cash June
Movement in financial 2020 movement receipt incentives repayment receipt movement 2020
liabilities GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- ---------- --------- ------------ ----------- --------- ---------- --------
Other loans 10.1 - 0.8 - - - - 10.9
========================= ======== ========== ========= ============ =========== ========= ========== ========
RCF 80.8 123.7 - - - - ( 0.2) 204.3
======== ========
Lease liabilities 134.1 - - - (7.2) - 8.9 135.8
========================= ======== ========== ========= ============ =========== ========= ========== ========
Vehicle rental finance
liabilities 97.2 - - - ( 38.7) 29.1 - 87.6
=========================
322.2 123.7 0.8 - (45.9) 29.1 8.7 438.6
------------------------- -------- --------
Cash and cash
equivalents (150.3) (295.5)
========================= ========
Bank overdraft 118.9 91.3
------------------------- ========
Net debt excluding lease
and vehicle rental
liabilities 59.5 11.0
------------------------- -------- --------
Net debt including lease
and vehicle rental
liabilities 290.8 234.4
------------------------- -------- --------
Non-cash movements arise following the retranslation of a Euro
denominated loan and the reclassification and amortisation of the
Group's debt issue costs. Non-cash movements in relation to IFRS 16
relate to the recognition and de-recognition of lease
liabilities.
15. Subsequent events
COVID-19
Subsequent to the balance sheet date the UK continues to be
subject to the COVID-19 pandemic. Given the inherent uncertainties
it is not possible at this time to fully quantify the impact of
COVID-19 nor provide a quantitative assessment of this impact.
During the second and third national lockdowns in November 2020
and January 2021 respectively, pre-booked aftersales servicing
continues to be provided in compliance with lockdown restrictions,
with new and used vehicle sales activity carried out via 'Click
& Drive'. The impact of COVID-19 has resulted in a contraction
of the market and thereby had a detrimental impact on the Group's
expected revenues and cash inflows. It is too early to fully
quantify what the impact will be in terms of the cash realisation
relating to the Group's inventories and whether the Group's
property portfolio and the carrying values of goodwill and
non-amortised intangible assets will be adversely affected.
The Board's impairment review assessment over goodwill and
non-amortised intangible assets was based on economic and market
conditions prevalent at 30 June 2020. Following the completion of
this impairment review as at 30 June 2020, the Directors are of the
view that the Ford, BMW and JLR CGUs are the most susceptible to
potential further impairments and they will continue to monitor the
headroom of these CGUs when undertaking the 2020 annual impairment
review for the purpose of the 2020 Annual Report &
Accounts.
The Group continues to draw down on its revolving credit
facility in order to ensure it has sufficient cash reserves
available to meet its short-term financial liabilities.
The Group has also reassessed the impact on the Lookers Pension
Plan (the Group's largest scheme) at 30 September 2020. The deficit
of this scheme has been estimated to increase to GBP69.7m (31
December 2019: GBP56.7m) based on a decrease in the discount rate
applied of 1.6% which has increased the estimate of the total of
the defined benefit obligation. This increase in the benefit
obligation has been offset somewhat by an increase in expected
returns of scheme assets but not to the same extent. The effect of
these is shown in the increase in the overall scheme deficit
compared with 31 December 2019.
Other pension scheme matters
As referred to in the 2019 Annual Report & Accounts,
negotiations following the triennial review of the Lookers Pension
Plan at 31 March 2019 have concluded. The Group has now received
approval from its lenders to increase pension deficit payments on
the Lookers Pension Plan to GBP12m plus expenses and PPF levy, all
subject to increases linked to CPI. The revised contributions were
effective from 1 July 2020.
During 2020 the Dutton Forshaw Pension Plan trustees resolved
the transfer of all remaining assets and liabilities to the Lookers
Pension Plan.
The triennial valuation at 31 December 2019 of the Benfield
Pension Plan remains ongoing. Management is working closely with
the actuary and advisors to agree the ongoing level of
contributions and expenses. The current deficit contributions are
GBP0.3m plus expenses and PPF levy.
In a ruling issued on 20 November 2020, the High Court indicated
that the trustees of the Group's defined benefit schemes could not
rely on any statutory provisions, scheme rules or any discharge
agreements made with the transferring members that would prevent
the schemes needing to pay additional top-ups in respect of GMP
equalisation. As a result, all transfers out since 17 May 1990 will
need to be equalised. The Group is currently assessing the
potential impact of this ruling on transfers out from its relevant
pension schemes but does not believe that this impact will be
material.
Restructuring and portfolio management
As referred to in the 2019 Annual Report & Accounts, the
Board considered the future structure of Lookers in light of
potential demand, a smaller dealership estate and the structural
changes taking place across the industry. As a result, the Group
took the difficult decision to commence redundancy consultations
across all areas of the Group which resulted in approximately 1,500
redundancies. The Board carefully considered all options and
regrettably considered this action as being necessary in the
current environment to sustain and protect the Lookers business
over the long term.
In addition, and having worked closely with our brand partners,
the Group identified a further 12 sites (including seven freehold
sites) for either closure, consolidation or refranchising. Closure
of these sites is now complete, with related property disposals
ongoing. Following these closures, the Group now operates from a
portfolio of 140 dealerships.
Banking facilities
The Group has reduced its RCF commitment with its Lenders from
GBP250.0m to GBP238.1m. Refinancing conversations with the Group's
banking syndicate are ongoing.
16. Related parties
There have been no material changes to the Group's principal
subsidiaries as listed in the 2019 Annual Report &
Accounts.
The following table provides the total amount of transactions
that have been entered into with related parties for the relevant
financial period:
Purchases Amounts Amounts
Sales from owed owed
to related related by related to related
parties parties parties parties
GBPm GBPm GBPm GBPm
------------------ --------------------------- ------------ ---------- ------------ ------------
Key management personnel of the Group:
Other directors'
interests: period ended 30 June 2020 - 0.1 - -
---------------------------
period ended 30 June 2019 - 0.1 - -
---------------------------
year ended 31 December
2019 0.9 0.4 - -
---------------------------------------------- ------------ ---------- ------------ ------------
During 2019, Group companies made sales at market prices to
Winterquay Limited, Bramall Properties Limited and Vantage Motor
Group Limited. During both 2020 and 2019, Group companies made
purchases at market prices from Bramall Properties Limited. These
are considered to be related parties due to them having directors
common to those of Lookers plc.
17. Reconciliation of Alternative Performance Measures
The Group uses a number of Alternative Performance Measures
(APMs) 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 believes
these Measures 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. In particular, the
Group uses Measures which reflect the underlying performance on the
basis that this provides users of the financial statements with
additional useful information to better assess the a more relevant
focus on the core business performance of the Group. Details of the
definitions of APMs are made within the Glossary. The table below
shows restated comparative figures to show the impact of the
adjustments identified in the notes below. A reconciliation of the
statutory measures to the Alternative Performance Measures is set
out below:
Unaudited
Unaudited June 2019 Audited 31
Like-for-like revenue June 2020 (restated) December 2019
--------------------------------------------- -------------- -------------- ---------------
Revenue (GBPm) 1,563.7 2,605.1 4,787.2
============================================= ============== ============== ===============
Less: Non like-for-like revenue (38.8) (144.0) (228.4)
============================================= -------------- -------------- ---------------
Like-for-like revenue (GBPm) 1,524.9 2,461.1 4,558.8
============================================= ============== ============== ===============
Underlying operating (loss)/profit (GBPm)
--------------------------------------------- -------------- -------------- ---------------
Operating (loss)/profit (GBPm) (31.8) 38.3 (13.2)
============================================= ============== ============== ---------------
Add: Non-underlying items (GBPm) - Note
3 13.9 2.4 49.7
============================================= -------------- -------------- ---------------
Underlying operating (loss)/profit (GBPm) (17.9) 40.7 36.5
============================================= ============== ============== ===============
Underlying profit before tax and underlying
basic EPS
--------------------------------------------- -------------- -------------- ---------------
(Loss)/profit before tax (GBPm) (50.0) 19.6 (45.5)
============================================= -------------- -------------- ---------------
Add: Non-underlying items (GBPm) - Note
3 13.9 2.4 49.7
============================================= -------------- -------------- ---------------
Underlying profit before tax (GBPm) (36.1) 22.0 4.2
============================================= -------------- -------------- ---------------
Tax rate (%) 19% 19% 19%
-------------- -------------- ---------------
Underlying tax (GBPm) 6.9 (4.2) (0.8)
============================================= -------------- -------------- ---------------
Underlying profit after tax (GBPm) (29.2) 17.8 3.4
============================================= -------------- -------------- ---------------
Weighted average number of shares in issue
- Note 6 390,138,374.0 389,084,483.2 389,182,653.8
=============================================
Underlying basic EPS (p) (7.5) 4.6 0.9
============================================= -------------- -------------- ---------------
Property portfolio and property portfolio
by share
Property, plant and equipment (GBPm) 415.5 431.2 429.2
============================================= -------------- -------------- ---------------
Less: Other property, plant and equipment
(GBPm) - Note 9 (41.0) (48.7) (38.5)
============================================= -------------- -------------- ---------------
Less: Motor vehicles (GBPm) - Note 9 (60.8) (66.7) (69.2)
============================================= -------------- -------------- ---------------
Property portfolio (GBPm) 313.7 315.8 321.5
============================================= -------------- -------------- ---------------
Share capital at 30 June/31 December 390,138,374.0 389,237,645.0 390,138,374.0
=============================================
Property portfolio per share (p) 80.4 81.1 82.4
============================================= -------------- -------------- ---------------
Net debt excluding lease liabilities and
rental vehicle finance liabilities
Bank loans and overdrafts (GBPm) 306.5 261.4 209.8
============================================= -------------- -------------- ---------------
Less: Cash and cash equivalents (GBPm) (295.5) (189.7) (150.3)
============================================= -------------- -------------- ---------------
Net debt (GBPm) 11.0 71.7 59.5
============================================= -------------- -------------- ---------------
18. Other presentational changes and prior period
adjustments
Financial statements restatement and presentational changes
As announced on 10 March 2020 and subsequently updated in RNS
announcements, following the identification of a potential fraud
and other issues in an operating division, in conjunction with
Grant Thornton the Board immediately commenced a two-stage
Investigation. Initially, the first stage, conducted by Grant
Thornton, reviewed the operating division concerned and
subsequently the Board extended the work performed by Grant
Thornton and also implemented an extensive internal review.
Together these are considered "the Investigation". Further details
of the Investigation and of the remediation activity being
undertaken to address the issues identified are provided in the
2019 Annual Report & Accounts.
The Investigation led to the identification of adjustments
required to the 2019 Profit before Tax and 31 December 2019 Balance
Sheet, and these are detailed in the 2019 Annual Report &
Accounts.
These prior year restatements have now been assessed and the
accounts for the six months ended 30 June 2019 restated to reflect
these adjustments. These restatements are within those disclosed in
the 2019 Annual Report & Accounts.
The adjustments that have now been made to the 2019 half year
accounts comprise items that can be clearly and specifically
identified as belonging to the first half of the year, and/or items
where a reasonable apportionment of the full year total can be made
between the first and second halves of the year. In identifying the
prior year restatements, the aim and priority was to ensure the
closing 2019 year-end balance sheet reflected all prior year
adjustments. Although a similar exercise was carried out on the
half year balance sheet, it was not as comprehensive as for the
full year. It is important to note that this restatement exercise
has therefore involved an element of judgement by management. Our
substantive review of H1 2019 and H1 2020 did not identify any
additional issues that required adjustment.
This has resulted in a total of GBP5.8m of adjustments to the H1
2019 Profit before Tax (GBP7.7m adjustment at the Underlying Profit
before Tax level).
Further changes are made to ensure that the presentation of H1
2019 is consistent with the 2019 Annual Report & Accounts. In
particular, voluntary changes were made to the presentational
disclosure of the Income Statement, and there are a number of
Balance Sheet reclassifications arising from the update of
assumptions on discount rates applied in the adoption of IFRS 16
Leasing. The net impact of these further changes on the H1 2019
Underlying Profit before Tax is GBP0.5m.
For the purposes of this report, and to assist understanding,
the adjustments have been aggregated where the nature and cause of
the misstatement is similar. These groupings are as follows:
-- Presentational adjustments
-- Correction of fictitious transactions
-- Correction of errors arising from inappropriate or
inconsistent accounting standards application 'Policy
misapplication'
-- Correction of errors arising from weaknesses in controls
grouped by nature 'Control weaknesses'.
-- Impact of IFRS 16
A summary of the adjustments to Profit and Loss items arising
from the Investigation is presented below, consistent with the
table and supporting analysis on pages 32-35 of the 2019 Annual
Report & Accounts:
Nature of adjustment H1 2019 Impact FY 2019 Impact - GBPm
- GBPm
Fictitious transactions (1.2) (1.2)
Policy misapplication
Cash and bank - (0.3)
Leasing companies 0.3 0.3
Staff car schemes (0.1) (1.2)
0.2 (1.2)
Control weaknesses
Property, plant and
equipment and intangible
assets (0.4) (5.9)
Manufacturer bonuses (0.6) (0.4)
Central finance function (2.5) 1.6
Divisional finance function (1.3) (3.8)
(4.8) (8.5)
Impact before taxation (5.8) (10.9)
Taxation 0.8 2.6
Total Retained Earnings
Impact (5.0) (8.3)
Further details of these adjustments are made in the restatement
tables below:
Condensed Statement of Total Comprehensive Income (restated)
As
previously Correction As
reported Correction of errors Correction Impact restated
unaudited of errors - accounting of errors of unaudited
30 June Presentational - fictitious policy - control IFRS 30 June
Period ended 30 2019 adjustments transactions misapplication weaknesses Subtotal 16 2019
June 2019 GBPm GBPm GBPm GBPm GBPm - GBPm GBPm GBPm
================== =========== ============= =============== =========== ======= ==========
Revenue 2,646.4 - - (41.2) (0.1) 2,605.1 - 2,605.1
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Cost of sales (2,372.2) - (1.2) 49.4 - (2,324.0) - (2,324.0)
----------- ---------- ----------
Gross profit 274.2 - (1.2) 8.2 (0.1) 281.1 - 281.1
Net operating
expenses (234.2) (0.3) - (4.1) (4.6) (243.2) 0.4 (242.8)
Loss on property,
plant and
equipment (0.3) 0.3 - - - - - -
Operating profit 39.7 - (1.2) 4.1 (4.7) 37.9 0.4 38.3
Underlying
operating
profit 42.8 (0.8) (1.2) 4.1 (4.6) 40.3 0.4 40.7
Non-underlying
items (3.1) 0.8 - - (0.1) (2.4) - (2.4)
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Net interest (13.6) (1.2) - (3.9) (0.1) (18.8) 0.1 (18.7)
================== =========== =============== ============= =============== =========== ========== ======= ==========
Net interest on
pension scheme
obligations (1.0) 1.0 - - - - - -
================== =========== =============== ============= =============== =========== ========== ======= ==========
Debt issue costs (0.2) 0.2 - - - - - -
Profit before
taxation 24.9 - (1.2) 0.2 (4.8) 19.1 0.5 19.6
Underlying profit
before taxation 29.2 (2.0) (1.2) 0.2 (4.7) 21.5 0.5 22.0
Non-underlying
items (4.3) 2.0 - - (0.1) (2.4) - (2.4)
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Tax charge (4.8) - - - 0.8 (4.0) (0.2) (4.2)
Profit for the
period 20.1 - (1.2) 0.2 (4.0) 15.1 0.3 15.4
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Actuarial losses
on pension
scheme
obligations (1.7) - - - - (1.7) - (1.7)
================== =========== =============== ============= =============== =========== ========== ======= ==========
Deferred tax on
pension scheme
obligations 0.3 - - - - 0.3 - 0.3
------------------
Total other
comprehensive
expense for the
period (1.4) - - - - (1.4) - (1.4)
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Total
comprehensive
income/(expense)
for the period 18.7 - (1.2) 0.2 (4.0) 13.7 0.3 14.0
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
(Loss)/earnings
per share:
------------------
Basic
(loss)/earnings
per share (p) 5.2 - (0.3) 0.1 (1.0) 3.9 0.1 4.0
------------------
Diluted
(loss)/earnings
per share (p) 5.0 - (0.3) 0.0 (1.0) 3.7 0.1 3.8
----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Non-underlying
items at
operating
profit
Gain on property,
plant and
equipment (0.3) - - - - (0.3) - (0.3)
================== =========== =============== ============= =============== =========== ========== ======= ==========
Share based
compensation (0.8) 0.8 - - - - - -
================== =========== =============== ============= =============== =========== ========== ======= ==========
Restructure of
regulated
activities (2.0) - - - - (2.0) - (2.0)
================== =========== =============== ============= =============== =========== ========== ======= ==========
Restructuring
costs - - - - (0.1) (0.1) - (0.1)
================== =========== =============== ============= =============== =========== ========== ======= ==========
(3.1) 0.8 - - (0.1) (2.4) - (2.4)
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Non-underlying
items below
operating
profit
Net interest on
pension scheme
obligations (1.0) 1.0 - - - - - -
================== =========== =============== ============= =============== =========== ========== ======= ==========
Debt issue costs (0.2) 0.2 - - - - - -
(1.2) 1.2 - - - - - -
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Non-underlying
items at profit
before tax (4.3) 2.0 - - (0.1) (2.4) - (2.4)
------------------ ----------- --------------- ------------- --------------- ----------- ---------- ------- ----------
Statement of Financial Position (restated)
As previously Correction
reported Correction of errors Correction As restated
unaudited of errors - accounting of errors Impact unaudited
30 June - fictitious policy - control of IFRS at 30
2019 transactions misapplication weaknesses 16 June 2019
GBPm GBPm GBPm GBPm GBPm GBPm
============== ============== ================= ============ ========= ============
Non-current assets
========================== ============== ============== ================= ============ ========= ============
Goodwill 116.2 - - (4.5) - 111.7
========================== ============== ============== ================= ============ ========= ============
Intangible assets 115.4 - - (1.1) - 114.3
========================== ============== ============== ================= ============ ========= ============
Property, plant and
equipment 364.5 - 70.2 (0.4) (3.1) 431.2
========================== ============== ============== ================= ============ ========= ============
Right of use
assets 81.7 - - - 26.2 107.9
============== ============== ================= ============ ========= ============
677.8 - 70.2 (6.0) 23.1 765.1
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Current assets
==========================
Inventories 990.9 - (68.7) - - 922.2
========================== ============== ============== ================= ============ ========= ============
Trade and other
receivables 302.3 (2.7) (0.5) (16.4) - 282.7
========================== ============== ============== ================= ============ ========= ============
Current tax receivable - - - - - -
========================== ============== ============== ================= ============ ========= ============
Rental fleet vehicles 64.2 - - - - 64.2
========================== ============== ============== ================= ============ ========= ============
Cash and cash equivalents 93.6 - 96.1 - - 189.7
========================== ============== ============== ================= ============ ========= ============
Assets held for sale 6.5 - - - - 6.5
============== ============== ================= ============ ========= ============
1,457.5 (2.7) 26.9 (16.4) - 1,465.3
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Total assets 2,135.3 (2.7) 97.1 (22.4) 23.1 2,230.4
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Current liabilities
========================== ============== ============== ================= ============ ========= ============
Bank loans and overdrafts 13.0 - 95.0 - - 108.0
========================== ============== ============== ================= ============ ========= ============
Trade and other payables 1,340.2 - (2.6) (4.3) (1.4) 1,331.9
========================== ============== ============== ================= ============ ========= ============
Lease liabilities 9.7 - - - 8.8 18.5
============== ============== ================= ============ ========= ============
Provisions 2.0 - - - - 2.0
============== ============== ================= ============ ========= ============
Current tax payable 1.4 - - 3.4 - 4.8
============== ============== ================= ============ ========= ============
1,366.3 - 92.4 (0.9) 7.4 1,465.2
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Net current assets 91.2 (2.7) (65.5) (15.5) (7.4) 0.1
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Non-current liabilities
========================== ============== ============== ================= ============ ========= ============
Bank loans 154.5 - (1.1) - - 153.4
========================== ============== ============== ================= ============ ========= ============
Trade and other payables 25.2 - 5.8 - - 31.0
========================== ============== ============== ================= ============ ========= ============
Lease liabilities 95.4 - - - 19.1 114.5
========================== ============== ============== ================= ============ ========= ============
Pension scheme
obligations 67.4 - - - - 67.4
========================== ============== ============== ================= ============ ========= ============
Deferred tax liabilities 40.3 - - (4.2) (3.4) 32.7
============== ============== ================= ============ ========= ============
382.8 - 4.7 (4.2) 15.7 399.0
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Total liabilities 1,749.1 - 97.1 (5.1) 23.1 1,864.2
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Net assets 386.2 (2.7) - (17.3) - 366.2
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Shareholders' equity
========================== ============== ============== ================= ============ ========= ============
Ordinary share capital 19.4 - - 0.1 - 19.5
========================== ============== ============== ================= ============ ========= ============
Share premium 78.4 - - - - 78.4
========================== ============== ============== ================= ============ ========= ============
Capital redemption
reserve 15.1 - - - - 15.1
========================== ============== ============== ================= ============ ========= ============
Retained earnings 273.3 (2.7) (0.0) (17.4) - 253.2
============== ============== ================= ============ ========= ============
Total equity 386.2 (2.7) (0.0) (17.3) - 366.2
-------------------------- -------------- -------------- ----------------- ------------ --------- ------------
Statement of Cash Flows (restated)
As previously
reported As restated
unaudited Correction Impact unaudited
30 June Correction of errors of IFRS at 30 June
2019 of errors - leasing 16 2019
GBPm GBPm GBPm GBPm GBPm
============== =========== =========== ========= ============
Cash flows from operating activities
======================================= ============== =========== =========== ========= ============
Profit for the period 20.1 (5.3) 0.3 0.3 15.4
======================================= ============== =========== =========== ========= ============
Tax charge 4.8 (0.8) - 0.2 4.2
======================================= ============== =========== =========== ========= ============
Depreciation of property, plant
and equipment, rental fleet
and right of use assets 15.9 1.5 7.2 2.6 27.2
======================================= ============== =========== =========== ========= ============
(Gain)/loss on disposal of property,
plant and equipment and rental
fleet 0.3 - (0.3) - -
======================================= ============== =========== =========== ========= ============
Gain on lease surrenders - - - - -
======================================= ============== =========== =========== ========= ============
Amortisation of intangible assets 3.3 - - - 3.3
======================================= ============== =========== =========== ========= ============
Share based compensation 0.8 - - - 0.8
======================================= ============== =========== =========== ========= ============
Impairment of property, plant
and equipment - - - -
======================================= ============== =========== =========== ========= ============
Impairment of right of use assets - - - - -
======================================= ============== =========== =========== ========= ============
Impairment of intangible assets
(underlying) - - - - -
======================================= ============== =========== =========== ========= ============
Impairment of goodwill and intangible
assets (non-underlying) - - - - -
======================================= ============== =========== =========== ========= ============
Interest income excluding pension
related interest (0.1) 0.1 - - -
======================================= ============== =========== =========== ========= ============
Interest payable excluding pension
related interest and debt issue
costs 13.7 3.7 - 0.1 17.5
======================================= ============== =========== =========== ========= ============
Debt issue costs 0.2 - - - 0.2
======================================= ============== =========== =========== ========= ============
Difference between pension charge
and cash contributions (2.9) - - - (2.9)
======================================= ============== =========== =========== ========= ============
Purchase of rental fleet vehicles (51.5) - 51.5 - -
======================================= ============== =========== =========== ========= ============
Proceeds from sale of vehicles
for long term leasing - - 6.3 - 6.3
======================================= ============== =========== =========== ========= ============
Proceeds from sale of rental
fleet vehicles 38.7 - (10.9) - 27.8
======================================= ============== =========== =========== ========= ============
Creation of provisions 2.0 - - - 2.0
======================================= ============== =========== =========== ========= ============
Changes in inventories 36.8 15.7 (12.4) - 40.1
======================================= ============== =========== =========== ========= ============
Changes in receivables (127.2) 5.3 - - (121.9)
======================================= ============== =========== =========== ========= ============
Changes in payables 111.3 (16.0) - (1.4) 93.9
======================================= -------------- ----------- ----------- --------- ------------
Cash generated from operations 66.2 4.2 41.7 1.8 113.9
======================================= -------------- ----------- ----------- --------- ------------
Proceeds from sale of vehicles
for long term leasing - -
======================================= ============
Proceeds from sale of rental
fleet vehicles - - - -
======================================= ============== =========== =========== ========= ============
Interest paid (13.9) (3.6) - 2.9 (14.6)
======================================= ============== =========== =========== ========= ============
Interest paid - finance leases - - - (2.9) (2.9)
======================================= ============== =========== =========== ========= ============
Interest received 0.1 (0.1) - - -
======================================= ============== =========== =========== ========= ============
Tax received/(paid) (3.2) - - - (3.2)
======================================= -------------- ========= ------------
Net cash inflow from operating
activities 49.2 0.5 41.7 1.8 93.2
======================================= -------------- ----------- ----------- --------- ------------
Cash flows from investing activities
============== =========== =========== ========= ============
Purchase of property, plant
and equipment (21.7) 2.9 - - (18.8)
======================================= ============== =========== =========== ========= ============
Purchase of vehicles for long
term leasing - - (17.5) - (17.5)
======================================= ============== =========== =========== ========= ============
Purchase of rental fleet vehicles - - (34.2) - (34.2)
======================================= ============== =========== =========== ========= ============
Purchase of intangibles (1.8) (2.4) - - (4.2)
======================================= ============== =========== =========== ========= ============
Purchase of subsidiaries net
of cash received - - - - -
======================================= ============== =========== =========== ========= ============
Proceeds from disposal of property,
plant and equipment 3.4 - - - 3.4
======================================= ============== =========== =========== ========= ============
Net cash outflow from investing
activities (20.1) 0.5 (51.7) - (71.3)
======================================= -------------- ----------- ----------- --------- ------------
Cash flows from financing activities
======================================= =========
Proceeds from issue of ordinary
shares - - - -
======================================= ============== =========== =========== ========= ============
Redemption of ordinary shares - - - - -
======================================= ============== =========== =========== ========= ============
Receipt of funding advanced
for vehicle leasing arrangements - 42.8 - 42.8
======================================= ============== =========== =========== ========= ============
Repayment of funding advanced
for vehicle leasing arrangements - (32.8) - (32.8)
======================================= ============== =========== =========== ========= ============
Receipt/(repayment) of loans (0.5) 2.8 - - 2.3
======================================= ============== =========== =========== ========= ============
Draw down on RCF 117.0 - - - 117.0
======================================= ============== =========== =========== ========= ============
Repayment on RCF (90.0) (3.7) - - (93.7)
======================================= ============== =========== =========== ========= ============
Repayment of lease liabilities (6.0) - - (1.8) (7.8)
============== =========== ============
Receipt of lease incentives - - - - -
Dividends paid (10.1) - - - (10.1)
======================================= -------------- ----------- ----------- --------- ------------
Net cash outflow from financing
activities 10.4 (0.9) 10.0 (1.8) 17.7
======================================= -------------- ----------- ----------- --------- ------------
Increase in cash and cash equivalents 39.5 0.1 - - 39.6
======================================= ============== =========== =========== ========= ============
Cash and cash equivalents at
1 January 43.3 1.0 - - 44.3
======================================= -------------- ----------- ----------- --------- ------------
Cash and cash equivalents at
30 June 82.8 1.1 - - 83.9
======================================= -------------- ----------- ----------- --------- ------------
Analysis of cash and cash equivalents
Cash and cash equivalents 93.6 96.1 - - 189.7
======================================= ============== =========== =========== ========= ============
Bank overdraft (10.8) (95.0) - - (105.8)
-------------- ----------- ----------- --------- ------------
Cash and cash equivalents at
31 December 82.8 1.1 - - 83.9
======================================= -------------- =========== =========== ========= ------------
Notes of restatements
Condensed Statement of Total Consolidated Comprehensive
Income
Presentational adjustments
This column discloses the reclassification of gains on property
disposals to within non-underlying items in addition to the
inclusion of debt issue costs and net interest on pension scheme
obligations to within net interest and the reclassification of
share-based compensation costs to within net operating expenses.
These reclassifications are presentational only and do not change
the reported result for the period ended 30 June 2019.
Correction of errors - fictitious transactions
Correction of error totalling GBP1.2m in relation to the
fictitious entries created in one of the Group's operating entities
for manufacturer bonus credits in the period ended 30 June
2019.
Correction of errors - accounting policy misapplication
Correction of errors in relation to misapplication of accounting
policies. These consist of the following adjustments:
Period ended 30 June 2019 /
Adjustment # 1 2 3 Total
Impact on profit before tax
- GBPm - 0.3 (0.1) 0.2
---- ------ ------
1 - Adjustments to correctly recognise ring-fenced cash and
associated financial liabilities, adjustments to disclose cash and
overdrafts gross of any offsetting and adjustments to impair
unamortised debt issue costs in the period ended 30 June 2019
2 - Adjustments to correct the accounting entries made within
the Group's leasing business units including adjustments to
recognise revenue and cost of sales in addition to the recognition
of increased depreciation and lease interest charges. These
reductions in revenue and cost of sales are to reverse the previous
treatment of these as sales which was incorrect because control was
retained. Balance sheet adjustments relate to the reclassification
of inventories to property, plant and equipment and the recognition
of lease buy-back creditors and deferred income
3 - Adjustments to correct the accounting entries made within
the Group's motor trading business units with regards to company
staff car schemes. This has resulted in adjustments to revenue and
cost of sales in addition to balance sheet adjustment for
inventories, trade and other receivables and trade and other
payables. These reductions in revenue and cost of sales are to
reverse the previous treatment of these as sales which was
incorrect because control was retained
Correction of errors - control weaknesses
Correction of errors in relation to failures in internal control
and processing. These consist of the following adjustments:
Period ended 30 June 2019 /
Adjustment # 4 5 6 7 Total
Impact on profit before tax
- GBPm (0.4) (0.6) (2.5) (1.3) (4.8)
------ ------ ------ ------ ------
4 - Adjustments in relation to corrective accounting entries to
property plant and equipment, goodwill and intangible assets which
principally affects net operating expenses and associated balance
sheet cost and accumulated depreciation and impairment totals
5 - Adjustments in relation to corrective measures for the
recognition of manufacturer bonus income in cost of sales and motor
vehicle trade debtors
6 - Adjustments in relation to corrective measures across the
head office accounting function which has resulted in corrections
to a number of trade and other receivable and trade and other
payable balances in relation to cut-off errors and recharge
accounting which have affected net operating expenses
7 - Adjustments in relation to corrective measures across the
divisional accounting functions which has resulted in corrections
to a number of trade and other receivable and trade and other
payable balances in relation to cut-off errors and recharge
accounting which have affected net operating expenses
Consolidated statement of financial position
Correction of errors - fictitious transactions
Correction of error totalling GBP2.7m in relation to the
fictitious entries created in one of the Group's operating entities
for manufacturer bonus credits.
Correction of errors - accounting policy misapplication
Correction of errors in relation to misapplication of accounting
policies. These consist of the following adjustments:
30 June 2019 / Adjustment # 1 2 3 Total
Impact on non-current assets - 70.2 - 70.2
------ ------- ------ ------
Impact on current assets 95.5 (59.1) (9.5) 26.9
------ ------- ------ ------
Impact on current liabilities 95.9 5.6 (9.1) 92.4
------ ------- ------ ------
Impact on non-current liabilities (1.1) 5.8 - 4.7
------ ------- ------ ------
1 - Adjustments to correctly recognise ring-fenced cash and
associated financial liabilities, adjustments to disclose cash and
overdrafts gross of any offsetting and adjustments to impair
unamortised debt issue costs in the period ended 30 June 2019
2 - Adjustments to correct the accounting entries made within
the Group's leasing business units including adjustments to
recognise revenue and cost of sales in addition to the recognition
of increased depreciation and lease interest charges. These
reductions in revenue and cost of sales are to reverse the previous
treatment of these as sales which was incorrect because control was
retained. Balance sheet adjustments relate to the reclassification
of inventories to property, plant and equipment and the recognition
of lease buy-back creditors and deferred income
3 - Adjustments to correct the accounting entries made within
the Group's motor trading business units with regards to company
staff car schemes. This has resulted in adjustments to revenue and
cost of sales in addition to balance sheet adjustment for
inventories, trade and other receivables and trade and other
payables. These reductions in revenue and cost of sales are to
reverse the previous treatment of these as sales which was
incorrect because control was retained.
Correction of errors - control weaknesses
Correction of errors in relation to failures in internal control and
processing. These consist of the following adjustments:
30 June 2019 / Adjustment # 4 5 6 7 Total
Impact on non-current assets (9.1) - 3.1 - (6.0)
------ ------ ------ ------ -------
Impact on current assets (0.8) (1.8) (7.9) (5.9) (16.4)
------ ------ ------ ------ -------
Impact on current liabilities (5.3) 0.6 4.5 (0.7) (0.9)
------ ------ ------ ------ -------
Impact on non-current liabilities - - - (4.2) (4.2)
------ ------ ------ ------ -------
4 - Adjustments in relation to corrective accounting entries to property
plant and equipment, goodwill and intangible assets which principally
effects net operating expenses and associated balance sheet cost and
accumulated depreciation and impairment totals
5 - Adjustments in relation to corrective measures for the recognition
of manufacturer bonus income in cost of sales and motor vehicle trade
debtors
6 - Adjustments in relation to corrective measures across the head office
accounting function which has resulted in corrections to a number of
trade and other receivable and trade and other payable balances in relation
to cut-off errors and recharge accounting which have affected net operating
expenses
7 - Adjustments in relation to corrective measures across the divisional
accounting functions which has resulted in corrections to a number of
trade and other receivable and trade and other payable balances in relation
to cut-off errors and recharge accounting which have affected net operating
expenses
Condensed consolidated statement of cash flows
With the exception of the omitted bank accounts referred to above,
the impact of the adjustments does not affect the net movement in
cash and cash equivalents for 2019. However, by adjusting for the
restatements above, there have been a number of reclassifications
of items between Operating, Financing and Investing cash flows. These
are primarily attributed to the correction of accounting policies
applied to the Group's vehicle leasing companies. As detailed above,
the Group previously treated these transactions as sales which was
incorrect because control was retained. As a consequence, the cash
flow statement previously treated such transactions as operating
cash flows. In restating the cash flow statement for the revised
policy, this primarily results in:
- an increase in investing outflows of to reflect the purchase of
GBP86.2m rental fleet assets; and
- an increase in financing inflows of GBP72.7m and outflows of GBP79.3m
to reflect the financial liabilities arising in connection with the
financing of the vehicle leasing arrangements.
19. 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)
-- 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
29 January 2021
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 To provide a consistent
dealerships have contributed overview of comparative
twelve months of revenue trading performance
and profit contribution
in both the current and
comparative periods presented.
Gross profit margin Gross profit as a percentage A measure of the significant
of revenue. revenue channels' operational
performance
Non-underlying items Relate to costs or incomes A key metric of the Group's
which are not incurred non-underlying business
in the normal course of performance.
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.
Underlying operating Operating profit before A key metric of the Group's
profit the impact of non-underlying underlying business performance.
items as defined above.
Underlying profit before Profit before tax before A key metric of the Group's
tax the impact of non-underlying underlying business performance
items as defined above.
Profit after tax Profit after tax before A key metric of the Group's
the impact of non-underlying underlying business performance
items as defined above.
Underlying earnings Earnings per share before A key metric of the Group's
per share (EPS) the impact of non-underlying underlying business performance
items as defined above.
Net debt Bank loans and overdrafts A measure of the Group's
less cash and cash equivalents. net indebtedness that
Lease liabilities and provides an indicator
stocking loans are not of the overall balance
included in net debt. sheet strength
Property portfolio The net book value of A key metric of the Group's
freehold and leasehold statement of financial
properties as at the balance position
sheet date.
New car unit sale A new vehicle sale which A measure of statistical
has generated revenue volumes and indicator
for the Group. of operational performance
Used car unit sale Any vehicle sold that A measure of statistical
isn't a new car unit sale. volumes and indicator
of operational performance
Car parc The approximate number A measure of the UK market
of vehicles on the UK size and indicator for
road network. growth opportunities
New car market Total number of annual A measure of the UK market
new vehicle unit registrations size and indicator for
made in the UK as defined growth opportunities
by the Society of Motor
Manufacturers and Traders
(SMMT).
New car market share The Group's annual share Our relative performance
of the new car market against the UK market
calculated as a percentage
of the Group's new car
unit sales to the new
car market size.
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END
IR ZZGZMLRFGMZM
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