TIDMLOOK
RNS Number : 8860O
Lookers PLC
04 June 2020
4 June 2020
Lookers plc
TRADING AND OPERATIONAL UPDATE
Lookers plc, ("Lookers" or "the Group"), one of the leading UK
motor retail and aftersales service groups, provides the following
update after the re-opening of its dealerships on Monday 1 June, in
line with Government guidance:
Summary
-- Trading resumed across the Group, although at lower than normal capacity levels
-- Significant restructuring actions to position the Group for a
sustainable future, including the closure of a further 12 sites and
headcount reductions across the business, to deliver annual savings
of approximately GBP50m
-- Net debt of GBP57m at the end of May with a facility of
GBP250m and property portfolio with an adjusted net book value of
GBP325m at 31 December 2019
-- Discussions are progressing with banks to agree amendments to
covenants under its revolving credit facility
-- The Grant Thornton investigation is nearing completion with
Grant Thornton having prepared a draft report which is under review
and verification by the Board ahead of receiving the final
report
-- The Group is continuing to invest in and will accelerate the
development of more robust financial systems and controls and to
further improve culture and behaviours
-- The results for 2019 are expected to be published by the end
of June subject to the conclusion of banking discussions and
audit
Operations
We are pleased to have safely reopened our dealerships and
resumed selling new and used cars and providing after sales service
albeit at lower than normal capacity levels. We have taken the
opportunity during the recent period of closure to enhance our
digital capabilities to support the sale of vehicles through our
dealership network and to focus on improving the customer
experience.
On 23 March 2020, in light of the Covid-19 pandemic and
Government guidelines, the Board took the decision to temporarily
close all its trading locations. In April, following the
introduction of new operating measures, the Group then partly
reopened 41 locations to provide essential repairs, parts and
maintenance to key workers' vehicles.
Having successfully implemented and tested new operations and
processes, on 11 May 2020 the Group reopened all its aftersales
facilities and has gradually built capacity to around half the
normal level. Initial demand for aftersales from customers has been
encouraging. As demand builds additional technicians will return
from furlough to increase capacity.
On 18 May 2020 the Group implemented a new contactless vehicle
handover and delivery process. Since then, we have fulfilled a
total of nearly 4,000 new and used retail vehicle orders.
Following the introduction of new operating and social
distancing measures to ensure the health and safety of customers
and colleagues, the Group reopened most of its dealership sales
facilities on 1 June 2020. With the benefit of enhanced online
functionality which the business has been implementing, in the last
two weeks, the Group has taken retail orders for 2,865 new and used
vehicles which on a like-for-like basis represents approximately 51
% of sales for the same period last year.
The Group had approximately 66% of its total current colleague
base (c.8,100) remaining on furlough at the end of May. In June it
is expected that this will reduce to approximately 55%.
Portfolio Review
In November 2019 the Board announced an ongoing portfolio review
and identified 15 dealerships for closure. Working closely with its
brand partners the Group has identified a further 12 dealerships
(including 7 freehold sites) for either closure, consolidation or
refranchising. It is estimated this will be completed in the second
half of 2020. Following these closures the Group will operate from
a portfolio of 136 dealerships.
The Group currently holds surplus freehold properties for
disposal during the remainder of 2020 and 2021, with a net book
value of GBP30m as at 31 December 2019.
Restructuring
The Board has 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 has taken the difficult decision to commence redundancy
consultations across all areas of the Group which could, subject to
consultation, result in approximately 1,500 redundancies. The Board
has carefully considered all options and regrettably considers this
action as being necessary in the current environment to sustain and
protect the Lookers business over the long term. This restructuring
could, subject to consultation, deliver annual payroll savings of
approximately GBP50m. The one-off cash restructuring cost will be
circa GBP9m.
Financial Position
The Board remains focused on cash and working capital management
and the Group continues to use the measures implemented by the
Government. We are also grateful for the considerable support
received from our brand partners and other key stakeholders.
Net debt at the end of May was approximately GBP57m. The Group's
GBP250m revolving credit facility with five banks expires in March
2022. The Group is progressing discussions with its banking
partners with a view to agreeing certain amendments to the future
covenants contained within the facilities agreement.
The Group continues to enjoy the benefits of a strong property
portfolio with an adjusted net book value of GBP325m (as at 31
December 2019) (83.3p per share).
Fraud Investigation
On 10 March 2020 the Group announced a delay to the publication
of its financial results for the year ended 31 December 2019 due to
the identification of potentially fraudulent transactions in one of
its operating divisions. The Board engaged Grant Thornton LLP to
undertake an investigation, supported by an internal team.
Initially, the review focused on the operating division concerned
and subsequently this was extended across all operating divisions
to ensure the completeness of the review.
The Grant Thornton investigation is now nearing completion.
Grant Thornton have produced a draft report which is now under
review and verification by the Board ahead of Grant Thornton
preparing their final report. The draft report is also with the
Auditors for review in the context of the 2019 audit opinion.
A further update will be provided once the final findings of the
investigation are known.
The initial findings of the investigation have highlighted areas
where financial controls require strengthening to prevent a
repetition of such accounting irregularities in the future. In
addition, the investigation has highlighted the need for Lookers to
further strengthen some behavioural and cultural aspects relating
to its control environment. Robust remediation activity is in
progress.
Outlook
Given the ongoing uncertainties faced by the Group in the early
days of reopening the business, the Board continues to believe that
it is too early to make any reasonable estimate of the financial
impact on the Group during 2020 and beyond.
Publication of 2019 results
The results for 2019 are expected to be published by the end of
June subject to the conclusion of banking discussions and
audit.
Mark Raban, Chief Executive Officer, said:
"We are pleased to have reopened our dealerships and have been
careful to do this in a way that is safe for our customers and
colleagues. At the same time, we are having to reflect on the
outlook for the Group and how we must adapt to ensure a positive
future in what is likely to remain an uncertain economic and
industry environment.
Against this backdrop we have taken the decision to restructure
the size of the Group's dealership estate to position the business
for a sustainable future, which regrettably means redundancy
consultation with a number of our colleagues. This has been a very
difficult decision and we will be supporting our people as much as
possible throughout the process.
We have used the time as the business has been closed to adapt
and evolve to meet changes in consumer behaviour, not just for a
post Covid environment, but also to enhance our digital offering
and the trend towards electrification. We will also ensure that our
systems and processes are reliable and robust enough to position us
as a leading UK motor retailer. There is still a lot more work to
do, but we have the determination, platform and brand partnerships
to take the business forward."
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) No 596/2014
For further information:
Mark Raban, Chief Executive Officer Tel: 0161 291 0043
MHP Communications
Tim Rowntree, Simon Hockridge, Alistair Tel: 07709 496 125/ 07551
de Kare-Silver 170 451
Email: Lookers@mhpc.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTUOVNRRRUNRAR
(END) Dow Jones Newswires
June 04, 2020 02:00 ET (06:00 GMT)
Lookers (LSE:LOOK)
Historical Stock Chart
From Mar 2024 to Apr 2024
Lookers (LSE:LOOK)
Historical Stock Chart
From Apr 2023 to Apr 2024
