Annual Results: Year Ended 31 December 2017

Transcription

1 Annual Results: Year Ended 31 December 2017 Highly Resilient Financial Performance Presented by Andy Bruce Chief Executive Officer Robin Gregson Chief Financial Officer Nigel McMinn Chief Operating Officer

2 Highly Resilient Financial Performance Profit before tax of 68.4m (2016: 77.1m) Parts Division contributed 12.1m in 2016 before disposal at year end Continuing businesses PBT of 68.4m vs 64.9m in % Revenue increased to 4.7bn (2016: 4.3bn) EPS in continuing businesses up 1.3% at 14.57p (2016: 14.38p) LFL growth across all profit streams - outperforming the market Cost pressures from employment costs, rates, dealership investments etc. More aggressive approach to cost control - 2.5m cost in December saving at least 3m per annum 2

3 Robust Capital Structure / Capital Allocation Strong operational cash flow Net debt of 97.8m net debt 74.1m Invested in well priced used car stock in December Planned sale and leasebacks delayed to end Q1-29m proceeds Net debt / EBITDA 0.95:1 at mid point of range of 0.5:1-1.5:1 Significant headroom for targeted acquisitions Dividend increased by 7% with proposed final dividend of 2.48p Share buy back programme to commence immediately - Capital value 10m 3

4 Proven Strategy and Business Model Maintain focus on Right Brands in Right Locations Driving profit per outlet and ROI 3 more loss making dealerships closed in the period Continuous process of evaluation Knights and Drayton fully integrated Further investment in dealership estate to improve customer experience Significant progress on the key people agenda 4

5 Current Financial Year Robust performance in January March order book building in line with the plan Improved pipeline of acquisitions 5

6 Our Strategy 6

7 Right Brands, Right Locations 7

8 Transformed Portfolio % change Outlets Total Turnover (Gross) 1.75bn 4.93bn +181 Turnover per Outlet 14.2m 31.8m +124 Total GP 191m 464m +143 GP/ Outlet 1.54m 3.0m +95 PBT * 19.9m 75.5m +212 PBT per Outlet 160k 487k +204 *N.B. Excludes ancillary businesses and head office costs. Dealerships only. 8

9 Investment in Dealership Estate Glasgow Jaguar Dublin Audi Glasgow Volvo Colchester Land Rover Stockport Volvo m Maintenance m Upgrades m TOTAL

10 Financial Review 10

11 Robust Financial Performance Lookers plc 2017 m 2016 m Profit before tax of 68.4m Revenue increased 10% to 4.7 billion (2016: 4.3 billion) Earnings per share of 14.57p (2016: 15.87p) Final dividend increased by 5% to 2.48p per share (2016: 2.36p) Turnover 4, ,281.7 Gross profit Gross margin 10.7% 11.8% Operating Profit Interest Underlying Profit Before Tax Underlying Operating Margin 1.8% 2.2% Pre-Tax Margin 1.5% 1.8% EPS 14.57p 15.87p Net Debt Gearing 25% 22% EBITDA (12 months) Dividend per share 3.89p 3.64p Underlying Tax Charge Profit after Tax Return on Capital Employed 17.8% 22.6% 11

12 Financial performance: continuing operations Revenue increased by 15% Profit before tax increases by 5% Earnings per share increased by 1.3% 2017 m 2016 m Turnover 4, ,088.2 Operating Profit Interest (16.3) (17.6) Underlying Profit Before Tax Underlying Operating Margin 1.8% 2.0% Pre-Tax Margin 1.5% 1.6% Basic EPS 14.57p 14.38p 12

13 Underlying Profit Profit 2016 New Cars Used Cars Dealership Aftersales Costs Sale of Parts Division Finance Costs Profit

14 Strong growth across the business 2017 m 2016 m % change 2017 m 2016 m % change TURNOVER GROSS PROFIT New Cars 2,477 2,206 12% New Cars % Used Cars 1,702 1,437 18% Used Cars % Aftersales % Aftersales % Parts Division NC Parts Division - 55 NC Leasing and other % Leasing and other TOTAL TURNOVER 4,696 4,281 10% TOTAL GROSS PROFIT LFL TURNOVER LFL GROSS PROFIT New Cars: retail 1,499 1,477 2% New Cars: retail % New Cars: fleet % New Cars: fleet (9%) Used Cars 1,702 1,518 12% Used Cars % Aftersales % Aftersales % 14

15 Balance Sheet Low levels of gearing, at 25% (2016: 22%) Strong balance sheet and high level of unutilised bank facilities 2017 m 2016 m Fixed Assets Rental Fleet Vehicles (VRS) Dec Dec 2014 Stocks m m Debtors Current Liabilities (excluding bank loans) 1, ,105.2 Non Current Liabilities (excluding bank loans) Vehicle rental fleet finance (VRS) Net Assets Net Debt Gearing 25% 22% Net Debt / EBITDA

16 Positive Cash Flow Generation Cash flow was strong with cash generated from operations of 83.0m (2016: 140.9m) Invested 46.8m of capital expenditure in improving dealership facilities Received 8.1m for the sale of assets Net cash outflow was 36.4m compared to 92.3m in 2016 The ratio of net debt to EBITDA continued to be low Gearing was maintained at the low level of 25% compared to 22% at the start of the year 2017 m 2016 m EBITDA Working capital increase/(decrease) (17.8) 33.3 Cash generated from operations Acquisition of subsidiary companies - (92.6) Purchase of fixed assets (46.1) (36.3) Proceeds from asset disposals Purchase of intangibles (8.1) (9.2) Net proceeds from parts division Purchase of goodwill (1.3) - VRS Rental Fleet Vehicles purchased (87.1) (93.7) Sale of VRS Rental Fleet Vehicles Dividends paid to shareholders (15.0) (13.2) Loan repayments (12.5) (10.2) New loans Interest paid (net) (16.3) (17.6) Tax paid (25.5) (14.2) Pension payments (net) (3.6) (3.4) Shares issued (Increase) / Decrease in net debt (23.6) 87.6 (Decrease) / Increase in cash (36.4)

17 Consistent Financial Track Record m Group Pre-tax Profit Trend Group Net Assets Trend m m Group Net Debt

18 Operational Review 18

19 Industry backdrop Strong registrations in first quarter Weaker second quarter Continued double digit decline in second half Declining diesel share PCP is resilient Residual values stable Used and aftersales markets still strong 19

20 Diesel Progressive slow decline in diesel mix Accelerated change in mix from Q2 onwards Residual value (RV) decline in Q2 arrested in Q3 20

21 Diesel trends Diesel YOY performance 3 years 60,000 miles ,400,000 1,200,000 1,000, , , , , % 50.0% 40.0% 30.0% 20.0% 10.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0 0.0% -2.5 Diesel volume Diesel share

22 UK New Passenger Car Registrations by Fuel Type - Forecast 70% UK New Passenger Car Registrations by Fuel Type forecast 60% 50% 40% 30% 20% 10% 0% Diesel Petrol HEV PHEV BEV Source: CapHpi 22

23 m m New cars Growth in turnover and gross profit despite market downturn Finance penetration stable at 81% Strong gross profit increase of 6% in retail Maintained market share Fleet margins under pressure All figures on a like for like basis 1,600 1,400 1,200 1, LFL new car turnover +2% +6% 1,375 1,477 1, , Retail Fleet LFL total gross profit +6% (9)% Retail Fleet

24 33% 32% 38% 49% 52% 54% 63% 72% 79% 84% 84% 7% 7% 6% 5% 6% 7% 9% 17% 26% 37% 47% 50% Lookers PCP growth New Car Finance % Used Car Finance % 90% 80% 70% 67% 83% 79% 81% 75% 77% 78% 60% 50% 40% 37% 37% 37% 36% 38% 39% 42% 43% 42% 42% 42% 42% 60% 50% 55% 50% 61% 60% 56% 30% 20% 40% 10% 30% 0% New Finance % New PCP % Used Finance % Used PCP % 24 24

25 m m Used cars Turnover growth taking more market share Strong gross profit increase of 15% Finance penetration remained stable at 42% Residual value stability underpins robust margins despite diesel decline Continued discipline in stock management All figures on a like for like basis LFL used car turnover LFL total gross profit 1,750 1, % % 1,650 1,600 1,550 1,500 1,450 1, , ,518 1, ,

26 Monthly movements 3 years 60,000 miles 1.5 Stable monthly movements Seasonal Avg to Source: CAP HPi 26

27 m m Dealership Aftersales Turnover and gross profit grew in line with the parc growth Strong gross margin result All figures on a like for like basis LFL aftersales turnover LFL aftersales gross profit % % (1%)

28 2007 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 Strategy Cumulative Service Plans Live book % Vehicles sold with a service plan 120, ,000 39% 38% 37% 38% 38% 38% 38% 80,000 36% 35% 60,000 40,000 34% 33% 32% 32% 33% 20, % 30% 29% All figures on a like for like basis 28

29 Investing in our technology new website 2017 Users: +25% YoY 2017 Enquiries: +34% YoY Better Search Functionality and Improved User Experience - Driven by Our Customers Enhanced for Mobile Personalised Content for Returning Customers My Lookers section for Saved Search Terms and Shortlisted Vehicles Cleaner, De-cluttered and Easier to Access Content with More Intuitive Navigation 29

30 Attracting Talent 30

31 Outlook 31

32 Outlook Confident of further progress in 2018 Our strategy is working New car market expected to fall by c. 6% Biggest impact in Q1 then comparatives ease Demonstrated resilience in new car GP vs market Expect to see further growth in used and aftersales GP Restructuring actions in 2017 will mitigate cost pressures in 2018 and beyond Acquisition opportunities will further increase EPS 32

33 Appendices 33

34 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 m

35 Strong market fundamentals Used vehicle market New Used Average age of used vehicles Source: SMMT and DVLA Data Source: Statista.com 35

36 Millions Dealership Aftersales Market Fundamentals % +8% Forecast 0-3 Years 4-6 Years 7-9 Years Years Source: SMMT 36

37 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 37

38 Acquisition history: Delivering successful integration and synergies AMERSHAM VRS Lomond Group Chipperfield Land Rover Canterbury Mercedes smart Benfield Motor Group Amersham Jaguar Knights BMW Drayton Mercedes-Benz Total Acquisition cost c 200m 2017 profit of c 40m ROI 20% 38

39 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 Vauxhall Dundonald Chester Glasgow Canterbury Renault Newtonabbey Glasgow Audi Newcastle West London Eastbourne Belfast Guildford Ayr Newtonabbey Gatwick Carlisle Vauxhall Newcastle LEASING Basingstoke Newtonards Jeep Maidstone Chester Belfast Teesside Harrogate Camberley Stockport Belfast Shrewsbury Newcastle Birkenhead Dublin Stafford Newtonabbey Birmingham Volvo Edinburgh Ferrari Kia Stoke on Trent Newtonards Chester Colchester FLEET FINANCIAL Glasgow Belfast Belfast Stourbridge Stockport Ellesmere Port Glasgow Belfast Guildford Newcastle Tonbridge Lisburn Stockport Hamilton Ford Stockport Walsall Seat Liverpool VEHICLE RENTAL Newcastle Braintree Wolverhampton Manchester Newtonabbey USED CAR SERVICES Stirling Chelmsford Land Rover Worcester Stockport Portadown Belfast Beaconsfield Teesside Colchester Belfast Selly Oak Dublin Tyneside Guiseley Bishops Stortford MINI Skoda Speke AGRICULTURAL Wearside Harrogate Chelmsford Crewe Eccles St. Helens MOTORCYCLES DIVISION Leeds Chipperfield Stafford Guildford Warrington BMW Belfast Darley Dale Bentley Sheffield Colchester Stoke-on-Trent Harrogate Yardley Honda Belfast Tuxford Belfast South W Ferrers Glasgow North Manchester Yamaha Belfast Sudbury Glasgow South Nissan Newcastle Volkswagen BMW Sunderland London Battersea Belfast Stockport London - Battersea TPS Crewe Motherwell Carlisle West London Blackburn Edinburgh Stafford Honda West London Chester Blackpool Glasgow Stoke-on-Trent Orpington Gateshead Smart Carlisle Guildford Lexus Leeds Brighton Dumfries Newcastle Citroen Hyundai Belfast Motherwell Gatwick Darlington Reading Belfast Dundonald Newcastle Maidstone Guildford Teesside Motherwell Maserati Newtonabbey Shrewsbury Morden Belfast Newtonards Stoke-on-Trent Newcastle TYRES Stourbridge Northallerton Belfast Boucher Rd Tonbridge Preston Belfast Sydenham Rd Wolverhampton Silverlink Colerane Worcester Teesside Omagh Walton-on-Thames Portadown 39

40 Franchise Locations

41 Thank you