Quarter One Trading Update

RNS Number : 4021Y

Lookers PLC

17 May 2016

 

17 May 2016

QUARTER ONE TRADING UPDATE

Lookers plc, ("Lookers", "the company" or "the group"), one of the leading UK motor retail and aftersales service groups, issues its trading update for the quarter ended 31 March 2016, which shows a strong performance in the period and continued improvements in all areas of the business.

The company produced a positive trading performance in the quarter to 31 March 2016, ahead of the prior year, with a strong result during the important month of March.

Our motor division delivered another good performance in the three months to 31 March, with total gross profit from new cars increasing by 23%, or 5% on a like for like basis. Margins for both new retail and fleet cars were maintained at a similar level to the prior year.

Gross profit from used cars increased during the period and margins also improved, resulting in an increase in gross profit of 23% compared to the prior year or 7% on a like for like basis. Our used car volumes continue to increase in part due to higher volumes of leads generated by the group's website, which have increased further compared to last year. The website has recently been significantly upgraded and will benefit from further major developments later this year.

Our aftersales business increased gross profit by 25%, or 7% on a like for like basis and gross margins also increased in the period. The increase in volumes and margins continues to benefit from initiatives made in recent years to develop the aftersales business including further increases in the penetration of the sale of service plans. We also continue to invest in new technology and systems to provide enhanced levels of customer experience to further strengthen the aftersales business.

Our independent parts division made good progress in the period with increases in both turnover and gross profit compared to the prior year. This was against a background of an improving but competitive market and margins were maintained at a similar level to the prior year.

Cash flow continued to be strong during the period and was significantly higher at both the operational and net cash flow levels compared to budget. In our recent annual report, we referred to the sale of our Battersea VW dealership and are now pleased to report that we received the sale proceeds of £18.1 million on 4 April which have been used to reduce group borrowings. Following the renewal of our bank facilities in September last year, we have a high level of unutilised bank facilities which provide the group with significant additional funding capacity.

Outlook

The group has made a good start to the year with positive results for the first quarter from both the motor and parts divisions. The balance sheet continues to be strengthened by strong operational cash flow and we have substantial headroom in our bank facilities. This provides financial security as well as funding capacity to help develop the business through further strategic acquisitions in both the motor and parts divisions.

The financial performance of the group in the three month period builds on what was already a strong comparative in the previous year. We therefore believe that the results for the year ending 31 December 2016 should be in line with current market expectations, which will represent a significant increase over our 2015 performance. 

Update on the appointment of external auditor

Our recent annual report referred to a tender process for the appointment of an external auditor. This process, which includes the current auditor, Deloitte LLP, will not have finished by the date of the AGM on 26^th May 2016.  Consequently, shareholders are asked to consider, and if thought fit, approve the re-appointment of Deloitte LLP as auditor. The Board will then appoint or re-appoint the auditor based on the recommendation of the Audit and Risk Committee upon completion of the tender process. The firm which is appointed as auditor will remain in office until the next AGM in 2017.

Enquiries:

Lookers	Tel: [phone]
Andy Bruce, Chief Executive
Robin Gregson, Finance Director
Bell Pottinger	Tel:  [phone]
Nick Lambert Lucy Stewart

 

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