Interim Results: Half Year Ended 30 June 2018

Transcription

1 Interim Results: Half Year Ended 30 June 2018 Presented by Andy Bruce Chief Executive Officer Robin Gregson Chief Financial Officer Nigel McMinn Chief Operating Officer

2 Highlights Profit before tax of 43.1m (2017: 50.2m) Unbalanced profit split H1 v H2 in 2017 VED inflated H1 Diesel issues suppressed H2 More normal split expected in 2018 Revenue increased to 2.58bn (2017: 2.46bn) Continuing to take market share in new cars Further organic profit growth in used cars and aftersales Continued cost pressures mitigated by self help actions 2

3 A game of two halves 64% 36% 62% 38% 66% 34% 73% 27% H H H H H H H H Profits for H1 are generally between 60% and 65% of full year profits 3

4 Plenty of firepower Net debt / EBITDA 0.5:1 at the lower end of the range of 0.5:1-1.5:1 Significant headroom to continue to invest in organic growth and sector consolidation Dividend increased by 5% to 1.48p per share Share buy back programme ongoing 4

5 Strategic progress Closure of 2 underperforming businesses in the period and opened 1 new dealership Clear focus on operational excellence Continuing to invest in dealership estate and omni-channel retailing 5

6 Investment in dealership estate Land Rover Motherwell Audi Farnborough JLR Belfast VW Battersea Audi Guildford 6

7 Financial Review

8 Financial performance Revenue increased 5% with growth in used cars and aftersales Profit before tax of 43.1m in line with expectations: Strong comparatives in 2017 Excluding property profit of 7.6m Net debt down - positive cashflow and the sale and leaseback of two dealerships Interim dividend increased by 5% reflecting our progressive dividend policy H H Turnover 2,576.5m 2,458.5m Operating Profit 52.8m 58.1m Interest (9.7)m (7.9)m Underlying Profit Before Tax 43.1m 50.2m Underlying Operating Margin 2.1% 2.4% Pre-Tax Margin 1.7% 2.0% Adjusted EPS 9.07p 10.49p Net Debt 54.5m 61.9m Gearing 13% 17% EBITDA (12 months) 107.9m 115.3m Dividend per share 1.48p 1.41p Tax Charge 7.2m 8.6m Profit after Tax 38.5m 36.0m 8

9 Group profit bridge m H Profit Profit New Cars Used Cars Dealership Aftersales Costs Finance Costs H Profit 9

10 Used cars and aftersales drive growth H m H m % change H m H m % change TURNOVER GROSS PROFIT New Cars 1,311 1,312 - New Cars (3%) Used Cars % Used Cars % Aftersales % Aftersales % Leasing and other (7%) Leasing and other TOTAL TURNOVER 2,576 2,458 5% TOTAL GROSS PROFIT % 10

11 Robust capital structure Significant increase in net assets H m H m 31 Dec 2017 m Reduction in net debt to 54.5m (31 December: 97.8m) Low levels of gearing, reduced to 13% (31 December: 25%) Strong balance sheet and high levels of unutilised bank facilities Well positioned to invest in consolidation opportunities within the sector Fixed Assets Stocks Debtors Current Liabilities (excluding bank loans) 1, , ,228.1 Non Current Liabilities (excluding bank loans) Net Assets Net Debt Gearing 13% 17% 25% Net Debt / EBITDA

12 Positive cash generation H m H m Strong operational cash flow Working capital levels reduced Investment of 14.0m in dealership facilities Received 29.7m for the sale of properties Purchased 3.1m of shares Ratio of net debt to EBITDA continues to be at low level EBITDA (adjusted) Working capital (increase)/decrease (3.8) 0.3 Cash generated from operations Purchase of fixed assets (14.0) (19.7) Proceeds from asset disposals Purchase of intangibles (4.4) (7.1) VRS rental fleet vehicles purchased (52.7) (46.7) VRS rental fleet vehicles sold Dividends paid to shareholders (9.8) (9.5) Loan repayments (5.8) (5.2) Interest paid (9.7) (7.9) Tax paid (0.4) (8.7) Pension payments (net of charge) (1.6) (2.0) Shares (purchased)/issued (3.1) 0.8 Increase in cash Decrease in net debt

13 Capital expenditure outlook m Maintenance m Upgrades m TOTAL

14 Operational Review

15 Industry backdrop New car market decline in H2 17 carried over into Q1 18 Prior year H1 inflated by: VED changes on 1 April Diesel demand still robust Pre election consumer confidence stronger H1 18 registration numbers inverse of H1 17 Diesel demand and new car market stabilised WLTP Resilience in PCP Residual values stable Used and aftersales markets still growing organically 15

16 PCP dominating New Car Finance % Used Car Finance % 90% 80% 70% 60% 50% 40% 30% 60% 50% 40% 30% 20% 10% 0% New Finance % New PCP % Used Finance % Used PCP % 16

17 Diesel stabilised 1,500,000 1,000, ,000 0 UK Diesel Passenger Car New Registrations % 40.0% 20.0% 0.0% 70% 60% 50% 40% 30% 20% 10% 0% UK New Passenger Car Registrations By Fuel Type Forecast Diesel volume Diesel share Diesel Petrol HEV PHEV BEV Petrol vs. Diesel 3 years 60,000 miles black book live monthly movements Diesel Petrol Overall Market Movement From April 2018 petrol and diesel cars have performed inline with each other Source: CAP HPi 17

18 Residual values remain strong Cumulative movements for 2018 show strength in used cars (all fuel types) February March April May June July August September October November December January Source: CAP HPi 18

19 WLTP Different pattern, same H2 outlook Real world emissions testing commencing 1 September Good availability of compliant models Some limited pre-registration at 31 August 19

20 m m New Cars Stability in a weaker market Total turnover maintained at same level Gross profit decrease in retail but stable in fleet Profit per unit maintained Selective growth in the fleet business New car turnover Total gross profit % % % Retail 40 Fleet Retail Fleet %

21 m m Used Cars Another period of growth Profit per unit stable Residual value stability underpins margins Significant growth opportunity Used car turnover Total gross profit 1,020 1, % 72 +4%

22 Used Cars Accelerating growth +40% +30% Actual Projected 22

23 m m Aftersales Further improvement in performance Strong gross margin, slightly improved Continued progress in creating capacity and customer retention Aftersales turnover Aftersales gross profit % %

24 Investment in omni-channel retailing Growing Lookers Organic Visibility Lookers.co.uk Source: SEO Search Visibility (SearchMetrics.com) Sitecore Stock portal Microsoft Dynamics Upgraded Sales system Cisco telephony Red Box call recording DMS read and write API Manufacturer and Finance Company integration 24

25 Outlook

26 Strategic priorities for H2 and beyond Accelerate growth in used cars Value added acquisitions Expansion with key brand partners Ongoing investment in dealership estate and multi-channel offering Focus on operational excellence 26

27 Current trading and outlook Strong start to H2 trading - more normal H1/H2 profit split expected September orders building Diesel demand and new car market stabilised WLTP may distort normal pattern of sales - no change to H2 outlook On track to meet market expectations for the full year 27

28 Appendices

29 Consistent financial track record Group H1 pre-tax profit trend, continuing operations m Jun m Group net debt Jun-18 December m Group net assets trend Jun-18 December 29

30 Stock mix Total Group Consignment stock - ' Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Trading Franchises Jul 17 - Jun 18 Trading Franchises Jul 16 - Jun 17 Linear (Trading Franchises Jul 17 - Jun 18) Linear (Trading Franchises Jul 16 - Jun 17) 30

31 2007 H H H H H H H H H H H H H H H H H H H H H H H1 Dealership aftersales retention maintained Cumulative Service Plans Live book Service plan penetration 120, ,000 80,000 60,000 40,000 20, % 40% 35% 30% 25% 20% 15% 10% 5% 0% 32% 33% 38% 38% 38% 38% 39% H1 All figures on a like for like basis 31

32 Strong market fundamentals Car sales track population growth and GDP EU now recovered to previous peak New car registration growth 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 0 EU Car Registrations 32

33 Strong market fundamentals Record used car market Demand for used cars is exceeding supply Used vehicle market 9,000,000 Average age of used vehicles 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 New car market Used car market Source: SMMT and DVLA Data Source: Statista.com 33

34 Millions Dealership aftersales market % +8% Forecast 0-3 Years 4-6 Years 7-9 Years Years 34

35 Market Update: Consolidation of ownership creates opportunities Gradual reduction in franchised dealerships set to continue Will drive up average sales per outlet Helps leverage fixed cost base 35

36 Acquisition history: Delivering successful integration and synergies AMERSHAM VRS Lomond Group Chipperfield Land Rover Colbornes Canterbury Mercedes smart Benfield Motor Group Amersham Jaguar Knights BMW Drayton Mercedes-Benz Total Acquisition cost 188m 2017 Actual 38m ROI 20% 36

37 Business Portfolio Franchise & Distribution Outlets MOTOR DIVISION Dacia Jaguar Mercedes-Benz Peugeot Toyota Volkswagen CV SERVICE CENTRE Aston Martin Belfast Amersham Ashford Belfast Belfast Carlisle Renault Chelmsford Belfast Carlisle Belfast Brighton Dundonald Darnley Volvo Chelmsford Chester Glasgow Canterbury Renault Newtonabbey Glasgow Vauxhall Dundonald Audi Newcastle West London Eastbourne Belfast Guildford Ayr Newtonabbey Motherwell Gatwick Carlisle Vauxhall Newcastle LEASING Basingstoke Newtonards Maidstone Chester Belfast Teesside Harrogate Camberley Stockport Jeep Shrewsbury Newcastle Birkenhead Dublin Belfast Stafford Newtonabbey Birmingham Volvo Edinburgh Ferrari Stoke on Trent Newtonards Chester Colchester FLEET FINANCIAL Glasgow Belfast Kia Stourbridge Stockport Ellesmere Port Glasgow Belfast Guildford Belfast Tonbridge Lisburn Stockport Hamilton Fiat Newcastle Walsall Seat Liverpool VEHICLE RENTAL Newcastle Stockport Stockport Wolverhampton Manchester Newtonabbey USED CAR SERVICES Stirling Worcester Stockport Portadown Belfast Beaconsfield Teesside Ford Land Rover Selly Oak Dublin Tyneside Braintree Belfast MINI Skoda Speke AGRICULTURAL Wearside Chelmsford Bishops Stortford Crewe Eccles St. Helens MOTORCYCLES DIVISION Colchester Chelmsford Stafford Guildford BMW Belfast Darley Dale Bentley Frinton Chipperfield Stoke-on-Trent Harrogate Volkswagen Honda Belfast Tuxford Belfast Guiseley Colchester Manchester London - Battersea Yamaha Belfast Harrogate Glasgow North Nissan Newcastle Blackburn BMW Leeds Glasgow South Belfast Stockport Blackpool TPS Crewe Sheffield London Battersea Carlisle West London Carlisle Edinburgh Stafford South W Ferrers Motherwell Chester Dumfries Glasgow Stoke-on-Trent Sudbury West London Gateshead Smart Darlington Guildford Sunderland Leeds Brighton Guildford Newcastle Citroen Lexus Motherwell Gatwick Morden Reading Belfast Honda Belfast Newcastle Maidstone Newcastle Teesside Orpington Newtonabbey Shrewsbury Northallerton Maserati Newtonards Stoke-on-Trent Preston TYRES Hyundai Belfast Stourbridge Silverlink Belfast Boucher Rd Dundonald Tonbridge Teesside Belfast Sydenham Rd Motherwell Wolverhampton Walton-on-Thames Colerane Worcester Omagh Portadown 37

38 Franchise Locations

39 Thank you