TIDMLOOK
RNS Number : 7562D
Lookers PLC
01 July 2021
01 July 2021
LOOKERS plc ("Lookers" or the "Group")
Preliminary results announcement for the year ended 31 December
2020
Full year 2021 outlook ahead of current expectations
Multiple growth opportunities ahead
Lookers plc, one of the leading UK motor retail and aftersales
service groups, today announces its preliminary results for the
year ended 31 December 2020 (the "year")
Highlights
-- Revenue of GBP3.7bn (2019: GBP4.8bn) impacted by lockdown and
trading restrictions throughout the year.
-- Underlying profit before tax of GBP14.1m (2019: GBP4.0m) with
strong performance in the second half of the year, more than
offsetting a challenging first half. Statutory profit before tax of
GBP2.0m (2019: Loss before tax GBP45.7m).
-- Outperformance against the UK retail new car market of 9.6
percentage points with resilient trading in used cars and
aftersales.
-- Significant restructuring activity completed, reducing
headcount, strengthening the Group's operating model and materially
reducing the cost base. On track to deliver annualised savings of
approximately GBP50m.
-- Strong balance sheet with a valuable property portfolio of c.GBP300m (77p per share).
-- Reduction in net debt benefitting from management actions.
Net debt has reduced further in 2021, with a net cash position
currently of approximately GBP18m.
-- Revolving Credit Facility extension agreed with existing
banking club for an initial GBP150m.
-- FCA investigation into the Group's historic sales processes
closed without sanctions, resulting in the release of the prior
year GBP10.4m provision.
Financial Summary
FYR 2020 FYR 2019 Var %
Underlying*
Underlying profit before
tax GBPm GBP14.1m GBP4.0m 253%
Underlying earnings per
share (p) 2.93p 0.83p 253%
Statutory
Revenue GBPm GBP3,699.9m GBP4,806.5m (23%)
Profit/(loss) before tax
GBPm GBP2.0m (GBP45.7m) n/a
Loss per share (p) (1.05p) (10.74p) 90%
Dividend per share (p) - 1.48p -
Net debt GBPm** GBP40.7m GBP59.5m 31.6%
-------------------------- ------------ ------
* Underlying profit before tax is profit before tax and
non-underlying items. Underlying earnings per share is 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, vehicle rental liabilities and lease
liabilities under IFRS 16.
Strategic Priorities
-- Investment and development of the Group's omni-channel
customer experience, enhancing choice through a hybrid combination
of digital engagement and high-quality forecourt service.
-- Harnessing growth from the transition to electric vehicles
through infrastructure investment and connected car services,
alongside the roll-out of new aftersales products and services.
-- Continued focus on driving operational excellence through
further productivity improvements, effective cash management and a
robust approach to capital allocation.
-- Focus and investment in people and systems to support the
Group's simplification, controls, engagement and transparency
initiatives.
Current Trading and Outlook
-- Trading in the first six months of the year has been
exceptionally strong underpinned by robust consumer demand, ongoing
outperformance of the UK retail new car market, improving used
vehicle margins and the Group's self-help restructuring
programme.
-- As we look forward into the second half of 2021 there remains
some uncertainty driven by the ongoing impact of COVID-19 and
notable supply restrictions in both new and used vehicles which
have been tightening in recent weeks.
-- Notwithstanding these uncertainties given the strength of
performance during the first half of 2021 the Board remains
confident about the outlook for the remainder of 2021.
Mark Raban, Chief Executive Officer, said:
"2020 was a challenging year for the Group dealing with both the
impact of COVID-19 and the Group's legacy issues.
We are emerging from this period operationally, financially and
culturally as a better business, focused on putting the customer at
the centre of everything we do.
We expect to build on the strong momentum within the business,
underpinned by our excellent manufacturer relationships,
omni-channel technology platform and fantastic Lookers colleagues.
We are now in a great position to benefit from the many growth
opportunities available for the business."
Details of results webcast
There will be a webcast at 9 :30am UK time on 1 July 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
Anna Bielby, Interim Chief Financial Officer
MHP Communications
Tim Rowntree / Simon Hockridge / Alistair de Kare-Sliver 07709
496 125 / 020 3128 8193
The Company is registered in England at Lookers House, 3
Etchells Road, West Timperley, Altrincham WA14 5XS. Company
registration number 00111876. LEI number 213800TSB8PJEACDAV33
Chairman's statement
Introduction
I was appointed Chairman of the Board on 4 September 2006 and it
is with some sadness that I present my final Chairman's statement.
The recruitment process for my successor is progressing as planned
and I will step down when an appointment is confirmed later this
year.
Like all businesses, over the years Lookers has experienced many
challenges and none greater than those of 2020. The COVID-19 global
pandemic resulted in the complete closure and severe disruption to
our normal business operations and trading patterns throughout much
of the year. This had a material impact on our financial
performance. During this time, we made many changes and
enhancements to our operating model which not only helped mitigate
the impact of COVID-19 but also served to act as a catalyst for
permanent change and improvement across the business.
In addition, in June 2020 we requested the FCA temporarily
suspend our shares whilst we investigated potentially fraudulent
transactions in one of our operating divisions, concluded a
substantial independent investigation and delayed the publication
of both the full year 2019 results and interim 2020 results.
Following the successful conclusion of these matters, we requested
and were granted restoration of our shares to the official list of
the London Stock Exchange on 29 January 2021.
In June 2020 we also announced a material restructuring
programme to prepare the business for a more sustainable future and
to optimise the many opportunities we believe lie ahead.
The combination of these issues resulted in material uncertainty
throughout much of the year.
"I am extremely grateful for the support and patience that we
have received from our stakeholders, including the UK government,
throughout what has been a very challenging period for both the
business and our people."
Strategy
Following this period of uncertainty and reflecting on our
learnings throughout the COVID-19 pandemic, we refreshed our
strategy. The customer remains front and centre of everything we
do, underpinned by the right brands in the right locations. Our
strategic building blocks are centred on delivering operational
excellence, providing an engaging and safe environment for all our
colleagues and customers, enabling technology both front and back
of house and simplifying and strengthening our policy
framework.
Our strategic initiatives are focused on continuing with
increasing our efficiency and improved cash management, digital
investment, preparing for electrification which we see as the
biggest opportunity in a generation and our controls enhancement
programme.
COVID-19
On 23 March 2020, in order to protect the safety and welfare of
our people and customers and in response to the UK Government's
social distancing advice, we temporarily closed all our trading
locations. Following the introduction of new operating measures,
the Group partly reopened 31 locations to provide essential repairs
and maintenance to key workers' vehicles alongside 10 parts
distribution centres.
From the middle of May 2020 we progressively opened all our
locations in a manner consistent with appropriate local
regulations. We implemented new operational processes to ensure the
appropriate COVID-19 secure protocols were in place protecting both
staff and customers. This included the complete redesign of our
sales processes to offer a fully contactless experience.
In November 2020 further restrictions came into effect and as a
result we were only able to provide our customers with pre-booked
aftersales appointments and to provide both new and used vehicles
sales using our Click & Drive contactless solution as the
showrooms remained closed. In December 2020 various regional and
tiered restrictions were implemented across England, Scotland and
Ireland.
On 4 January 2021 a third national lockdown commenced which saw
our vehicle showrooms closed. This situation continued until 12
April 2021 (Northern Ireland - 30 April 2021) when we were
delighted to be able to re-open the entire business as normal.
We remain committed to providing the best possible service
whilst ensuring the well-being of both our colleagues and
customers.
Restructuring
In June 2020 the Board undertook a review of the Group to
consider the future operating model in light of potential demand, a
reduced dealership estate and structural changes taking place
across the industry. As a result, the Board took the difficult
decision to commence redundancy consultations across all areas of
the business, which resulted in approximately 1,500 redundancies
and the closure or consolidation of 12 sites. The Board carefully
considered all options and regrettably considered this action as
being necessary in the current environment to sustain, protect and
enhance the business over the long term.
Performance in 2020
The financial performance of the Group during the year was
significantly impacted by the disruption caused by the COVID-19
global pandemic together with a number of non-underlying one-off
costs resulting from the Group's restructuring programme,
impairment of goodwill and costs in relation to the investigation
and resolution of legacy accounting issues.
Statutory profit before tax for the year was GBP2.0m (2019:
restated loss of GBP45.7m). Excluding the impact of non-underlying
items, the Group recorded an underlying profit before tax* of
GBP14.1m (2019: restated GBP4.0m).
The first six months of the year (H1) proved very challenging
with the complete closure and lockdown of operations for over two
months. As we emerged from lockdown, performance in the second six
months of the year (H2) improved materially. This was driven by
strong outperformance of the retail new car market, improved used
car margins, the early benefits of the Group's restructuring
initiatives and several operational improvements implemented during
lockdown. Underlying profit before tax* in H2 was GBP50.2m (2019:
loss (GBP18.1m)). Our performance in H2 brings me confidence that
we can deliver our 1.5% - 2.0% target return on sales over the long
term.
Refinancing
Throughout the year the Board was focused on preserving cash and
protecting the Group's liquidity position. As at 31 December 2020
net debt* was GBP40.7m (2019: GBP59.5m). This reduction has been
delivered through increased control and focus on all aspects of
working capital management and a robust approach to capital
allocation.
In May 2021 we agreed with our Banking Club a new credit
facility providing an initial GBP150m expiring in September 2023. I
would like to take the opportunity to thank our Banking Club for
all their support over the last 18 months.
Regulatory relations
As previously reported, we have been working internally to
review our governance, systems and controls including as they
relate to our regulated activities. On 2 March 2021 we announced
that the FCA had advised the Board of its decision to close the
investigation against Lookers Motor Group Limited for the possible
mis-selling of regulated products between January 2016 and June
2019. The FCA closed the investigation without applying any
sanction but noted several concerns relating to the historic
culture, systems and controls of the Group which the Board fully
accepted.
The Group is satisfied that the FCA confirmation represents an
adjusting event after the balance sheet date as this provides proof
that there was not an obligating event and have therefore and have
released the GBP10.4m provision made in the 2019 financial
statements in 2020.
Management and Board changes
2020 was a year of significant change as we sought to refresh
and reshape the Board to prepare for the significant opportunities
and challenges ahead. Richard Walker, Sally Cabrini, Stuart
Counsell and Tony Bramall all left the Board as planned during
2020.
We were delighted to appoint Mark Raban as Chief Executive
Officer in February 2020 and Duncan McPhee as Chief Operating
Officer in January 2021.
Anna Bielby was appointed as Interim Chief Financial Officer in
January 2021 for a term of six months. Since then she has made a
very valuable contribution to the Group. She has agreed to extend
her assignment and will leave the Group at the end of July 2021
following completion of a number of big projects. A search for
Anna's replacement is underway.
* Alternative performance measure - see Note 15
Heather Jackson was appointed Senior Independent Director and
Chair of the Remuneration Committee in July 2020 and November 2020
respectively. On 13 April 2021 Heather advised the Board of her
decision to step down to focus on her increasing non-executive
directorships and business interests.
Vicky Mitchell assumed the role of Chair of Lookers Motor Group,
the FCA regulated entity, in July 2020.
We were also pleased to appoint Robin Churchouse as an
independent Non-Executive Director and Chair of Audit and Risk
Committee in December 2020 and January 2021 respectively, and Paul
Van der Burgh as Non-Executive Director in April 2021 and then as
Senior Independent Director from May 2021.
As the search for my successor continues the Board has asked me
to remain as Chair in order to ensure an orderly handover, and I
therefore stood for re-election at the 2021 AGM.
I would like to thank all my Board colleagues, past and present,
for their continued support and contribution to the Group.
Dividends
The Board remains mindful of its relationships and commitments
to all stakeholders. The dividend policy remains that subject to
satisfactory trading prospects, dividends are covered around 3.0 to
3.5 times underlying earnings and paid in approximately one third
(interim dividend) and two thirds (final dividend) split.
In the light of the financial performance during the period,
continued uncertainty around COVID-19 and as part of its ongoing
actions to protect the Group's balance sheet the Board has decided
not to recommend any dividends for the year.
Current trading and financial outlook
In line with COVID-19 restrictions, the Group's showrooms
remained closed until 12 April 2021 (Northern Ireland - 30 April
2021). Despite these restrictions, the Group continued to take
orders and fulfil vehicle handovers through its dealership teams,
call centres and website. These activities were underpinned by our
Click & Drive and contact-less technology platform.
As we announced on 25 May 2021 and 28 June 2021, trading across
the Group has been robust since the reopening of our dealerships.
We continue to experience strong consumer demand and ongoing
outperformance of the UK retail new car market. Used vehicle
margins also remain strong, benefitting from improving residual
values and greater operational focus. In addition to these market
trends the Group continues to benefit from its enhanced hybrid
omni-channel customer offer, and the decisive self-help
restructuring initiatives implemented last year.
As we look forward into the second half of 2021 there remains
some uncertainty driven by the ongoing impact of COVID-19 and
notable supply restrictions in both new and used vehicles which
have been tightening in recent weeks - the former in part due to
the current worldwide semiconductor chip shortage.
Notwithstanding these uncertainties, given the strength of
performance during the first half of 2021, the Board remains
confident about the outlook for the remainder of 2021.
Conclusion
2020 was a very challenging year. I am extremely proud of how
our people responded, showing real dedication and flexibility. I
would like to personally thank the whole Lookers team for their
understanding and dedication during such a challenging time for the
Group.
We have always enjoyed strong relationships with our Original
Equipment Manufacturer (OEM) Brand Partners and are grateful for
their support across a range of financial and other measures during
the year.
The investigation into our financial systems and accounting
controls, the delay in the publication of our 2019 results and the
subsequent temporary suspension of our shares were a great
disappointment. With these matters now resolved we can look to the
future with increased confidence.
Lookers is a great business with great brands and great people.
It is difficult to look too far ahead at the moment, but I am
reassured that we have the resilience to weather the current storm
and the agility to emerge as a business which can build on its
strong foundations. We can now move forward from here focussing on
the many thousands of customers who rely on us for their
mobility.
It has been a great privilege to chair Lookers , and I wish all
my colleagues, our stakeholders, and my successor as Chair every
future success.
Phil White
Chairman
30 June 2021
Operating review
Market overview
The new car market in 2020 was severely disrupted by the
COVID-19 global pandemic. UK new vehicle registrations at 1.63m was
the lowest level on record since 1992 and represented a decline of
29.4% versus 2019. New vehicle registrations to fleet customers
were 0.88m representing 54.2% of the total market, declining by
31.7%. New vehicles registrations to retail customers declined by
26.6%.
Registrations of diesel and petrol engines continued to decline
being 48% and 33% below 2019 respectively. There are notable
regulatory pressures facing our OEM Brand Partners in achieving
emissions targets. As a result of changing customer preferences and
the evolving legislative landscape the registrations of alternative
fuel vehicles continued to gain market share and showed a growth of
67%. The Board believes that the continued migration towards pure
electric vehicles represents a significant opportunity for the
Group.
In the period the Group outperformed the new car market and
currently enjoys a 6.2% (2019: 5.8%) share of the UK retail
market.
The used car market remains an area of material opportunity for
the Group. In 2020 there were approximately 6.8m used vehicle
transactions. Throughout the COVID-19 global pandemic consumers
have continued to favour private transportation and in the period
after the first lockdown in particular the Group experienced strong
demand for cheaper used cars as consumers sought second and third
vehicles for the household.
Aftersales represents the servicing and repair of vehicles and
sale of franchised parts. In the UK the car parc is approximately
36.7m cars and light commercial vehicles, with a significant
proportion under three years old. This represents a significant
opportunity for franchised motor dealers, and we are focused on
developing the aftersales business and investing in our offering
through initiatives to increase volumes and margins.
The internet remains the primary means for our customers to
research and determine which new or used cars they are interested
in buying. As the Group responded to COVID-19 we made many
enhancements to our online capabilities including launching Click
& Drive, online finance applications, remote document
authorisation and contactless handover. These initiatives have
helped to mitigate the financial impact of COVID-19 trading
restrictions and to ensure the continued safety of customers and
our colleagues.
Operations summary
Total revenue GBP3,699.9m (2019 restated: GBP4,806.5m) was 23.0%
lower than 2019. Like-for-like (LFL*) revenue declined by 20.4%
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.
Analysis of revenue
Revenue 2020 2019 GBPm Variance 2020 LFL 2019 LFL LFL variance
GBPm (restated) GBPm GBPm
New cars 1,709.3 2,226.4 (23.2%) 1,690.3 2,135.3 (20.8%)
-------- ------------ --------- --------- --------- -------------
Used cars 1,779.1 2,326.3 (23.5%) 1,757.1 2,214.3 (20.6%)
-------- ------------ --------- --------- --------- -------------
Aftersales 383.8 495.3 (22.5%) 378.0 470.0 (19.6%)
-------- ------------ --------- --------- --------- -------------
Leasing and
other 148.4 153.3 (3.2%) 136.0 137.3 (0.9%)
-------- ------------ --------- --------- --------- -------------
Less: intercompany (320.7) (394.8) (313.6) (376.0)
-------- ------------ --------- --------- --------- -------------
Total 3,699.9 4,806.2 (23.0%) 3,647.8 4,580.9 (20.4%)
-------- ------------ --------- --------- --------- -------------
* See Glossary of terms on Note 16
Analysis of gross profit
Gross profit 2020 GBPm 2019 GBPm Variance 2020 LFL 2019 LFL LFL variance
(restated) GBPm GBPm
New cars 109.2 147.0 (25.7%) 107.6 143.3 (24.9%)
---------- ------------ --------- --------- --------- -------------
Used cars 117.9 138.1 (14.6%) 116.8 135.1 (13.5%)
---------- ------------ --------- --------- --------- -------------
Aftersales 164.6 211.9 (22.3%) 161.7 198.3 (18.5%)
---------- ------------ --------- --------- --------- -------------
Leasing
and other 19.3 16.1 19.9% 18.0 17.7 1.7%
---------- ------------ --------- --------- --------- -------------
Total 411.0 513.1 (19.9%) 404.1 494.4 (18.3%)
---------- ------------ --------- --------- --------- -------------
Gross Margin
% 11.1% 10.7% 11.1% 10.8%
---------- ------------ --------- --------- --------- -------------
Gross profit decreased by 19.9% to GBP411.0m (2019: GBP513.1m)
driven by the revenue shortfall. Gross margin at 11.1% was 0.4
percentage points ahead of 2019. Gross margin in the first six
months of the year (H1) was broadly flat recovering in the second
six months of the year (H2) as the Group drove stronger used
vehicle margin.
New cars
New cars 2020 2019 Variance 2020 LFL 2019 LFL LFL variance
Retail unit
sales 46,665 59,212 (21.2%) 45,784 55,179 (17.0%)
------- -------- --------- --------- --------- -------------
Fleet unit
sales 39,890 53,694 (25.7%) 39,834 52,687 (24.4%)
------- -------- --------- --------- --------- -------------
Total unit
sales 86,555 112,906 (23.3%) 85,618 107,866 (20.6%)
------- -------- --------- --------- --------- -------------
Gross margin
% 6.4% 6.6% 6.4% 6.7%
------- -------- --------- --------- --------- -------------
The sale of new cars represented 26.6% (2019: 28.7%) of total
gross profit. The COVID-19 global pandemic had a material impact on
UK new car registrations during 2020. 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. This had a material impact on the
overall H1 new car market which declined by 48.5%. Against this on
a like-for-like basis, the Group's sale of new units declined by
45.2% representing a modest outperformance against the UK
market.
In H2 the new car market showed some recovery with UK new
vehicle registrations declining by 6.2% year-on-year. The Group's
new vehicle sales performance improved materially in H2,
benefitting from several operational initiatives and recording an
outperformance of the total market by 16.2%.
Used cars
Used cars 2020 2019 Variance 2020 LFL 2019 LFL LFL variance
Retail unit
sales 78,341 100,764 (22.3%) 76,968 94,629 (18.7%)
------- -------- --------- --------- --------- -------------
Gross margin
% 6.6% 5.9% 6.6% 6.1%
------- -------- --------- --------- --------- -------------
The sale of used cars represented 28.7% (2019: 26.9%) of total
gross profit. Like-for-like used unit sales declined by 18.7% which
is a resilient result given the serious disruption caused by
various lockdown restrictions throughout the year.
Gross margin was 0.7 percentage points ahead of 2019. In H1
gross margin was below last year's levels as the Group took active
measures to reduce overall used car stock levels and significantly
improve the ageing profile in response to the initial lockdown.
These measures together with an improved market and robust residual
values drove improved margin during H2.
We continue to focus on robust stock management and sourcing
good quality vehicles, both of which help to improve profitability.
The used car market remains of significant importance to our
business model and continues to represent a significant opportunity
for the Group. During the period we made several enhancements to
our business process's including unaccompanied test drives, a
number of online enhancements and contactless handover all of which
have helped mitigate the impact of lockdown restrictions and
provide a catalyst for permanent positive change.
Aftersales
Aftersales 2020 2019 Variance 2020 LFL 2019 LFL LFL variance
Revenue
GBPm 383.8 495.3 (22.5%) 378.0 470.0 (19.6%)
------ ------ --------- --------- --------- -------------
Gross margin
% 42.9% 42.8% 42.8% 42.2%
------ ------ --------- --------- --------- -------------
Aftersales is a key part of the Group and represented 40% (2019:
41.3%) of total gross profit. On a like-for-like basis aftersales
revenues were 19.6% down versus 2019. At the outset of lockdown,
the Group asked for volunteers from its technicians and parts teams
in order to maintain a presence at 41 aftersales locations
supporting key workers.
Our workshops remained fully operational throughout H2 operating
with upweighted COVID-19 secure protocols to protect both our
customers and colleagues. We implemented online service check-in
which has proved popular with customers and has helped to drive
productivity.
We continue to focus on increasing the penetration of service
plans. We now have 168,986 live service plan agreements, which is
up 5% on 2019. Service plan contracts are a strong retention tool
for the Group, creating a long lasting and sustainable relationship
with our customers.
We remain fully committed to our ongoing technician apprentice
scheme which has developed significantly over the past year.
Financial review
Financial performance
Despite operating against a backdrop of COVID-19 for the
majority of the year, the Board is pleased with the financial
performance of the business, recording an underlying profit before
tax* of GBP14.1m ahead of 2019 restated GBP4.0m and a profit before
tax of GBP2.0m (2019: restated loss of GBP45.7m).
The first half of the year was materially impacted by the
COVID-19 pandemic which led to the closure of the Group's
operations for a significant period. Despite this, restructuring,
strong cost control actions and the development of the Group's
omni-channel offering (including the launch of 'Click & Drive')
led to a resilient performance in the second half, underpinned by
significant outperformance of the retail UK new car market.
Revenue for the year was GBP3,699.9m which was 23.0% lower than
last year (restated GBP4,806.5m). Like-for-like* revenue declined
by 20.4% with revenue from new cars, used cars and aftersales all
impacted by the COVID-19 pandemic. In line with revenue, gross
profit decreased by GBP102.1m to GBP411.0m (2019: GBP513.1m). Gross
profit margin was higher than the prior year at 11.1% (2019: 10.7%)
largely as a result of strong used margins in the second half of
the year, driven by a buoyant market and robust residual
values.
Underlying net operating expenses at GBP368.0m (2019 restated:
GBP476.2m) were 22.7% below last year. The Group's Statement of
Consolidated Income includes the benefit of both a GBP34.9m receipt
from the Government's job retention scheme and GBP10.2m of rates
reductions under the Government's business rates holiday scheme.
Excluding these items, underlying net operating expenses were 14.6%
below last year as a result of ongoing focus and control of the
Group's cost base.
During the year, the Group's bank borrowings were based on a
floating rate linked to LIBOR. Net finance costs were slightly
below the prior year at GBP28.9m (2019: GBP32.9m). Given the
unprecedented COVID-19 situation, 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.
Taxation
The Group's taxation charge for the year is GBP6.1m (2019:
credit of GBP3.9m) which is composite of a corporation tax credit
of GBP0.4m and a deferred tax charge of GBP6.5m. The Group's tax
charge is considerably higher this year as a result of a
significant increase in profits chargeable for taxation, capital
gains resulting from property disposals, and the revaluation of the
Group's deferred tax liabilities following the 11 March 2020 Budget
announcement that the standard rate of corporation tax would remain
at 19% instead of reducing to 17% from 1 April 2020. The current
tax recoverable recorded in the Group statement of financial
position has reduced from GBP9.8m to GBP1.1m following receipts
received from HMRC during the year.
*Alternative performance measures - see Note 15
Cash flow
The Group's net cash inflow from operating activities is
GBP37.8m (2019: restated GBP79.0m).
The prior year net cash inflow includes the benefit of increased
stocking funding in 2019 (from 81% in 2018 to 93% in 2019)
alongside a small delay in payments of trade and other payable
balances at the end of that year.
In 2020, we have seen the unwind of those 2019 year end actions
which did not repeat in 2020. We have also seen the continued focus
on working capital, in particular tighter controls around the
management of inventory and debtors. The year end Consolidated
Statement of Financial Position shows a significant year on year
reduction in inventory and debtors and we have also seen an
improvement in the ageing profiles. Stock funding at the balance
sheet date has remained consistent at 93%.
Property, plant and equipment capital expenditure totalled
GBP13.8m (2019: GBP45.8m) reflecting significantly lower spend as a
result of the COVID-19 pandemic as the Board took the decision to
delay and cancel certain initiatives in order to protect the cash
position of the Group.
The Group realised GBP18.0m from the disposal of freehold
properties during the year (2019: GBP17.6m) and continues to
benefit from its strong property portfolio. The net book value of
freehold and leasehold properties was GBP301m (equivalent to 77
pence per share) at the year-end.
Net debt* (excluding lease liabilities, vehicle rental
liabilities and stocking loans) at 31 December 2020 was GBP40.7m
(2019: GBP59.5m). This includes the benefit of GBP15.6m of deferred
VAT agreed under Government schemes.
Bank funding
At 31 December 2020, the Group had a revolving credit facility
(RCF) of GBP238m provided by five banks (The Bank of Ireland,
Barclays, HSBC, Lloyds and NatWest).
In May 2021, the Group agreed an amendment and extension to its
RCF, with the same banks. The amended RCF is for an initial GBP150m
and will expire on 30 September 2023. Under the amended facility,
interest is charged at a margin of between 3.25% and 4.25% (above
SONIA) based on the level of utilisation. The facility is subject
to quarterly covenant tests on leverage, interest cover and a
minimum EBITDA* per rolling twelve month period.
The Board has run a number of scenarios and stress tests in
order to test the appropriateness of these facilities and based on
the results of those tests, the Board supports the preparation of
the Annual Report & Accounts on a Going Concern basis (see
Basis of Preparation).
Dividends
As a result of the impact of the COVID-19 pandemic, the Board
previously communicated that it will not be recommending a
dividend for the year ended 31 December 2020.
The Board remains mindful of its relationships with, and
commitments to, all stakeholders and 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.
As noted in our 2019 Annual Report & Accounts, the Board has
become aware of an issue concerning technical compliance with the
2006 Act in relation to the payment of interim and final dividends
in 2013, 2014 and 2015. The effect of these irregularities is that
the interim and final dividends paid in 2013, 2014 and 2015 were
paid to shareholders at a time when the Company did not hold
adequate distributable reserves. However, there were sufficient
reserves held in subsidiaries of the Company which could have been
distributed to the Company in order to provide the Company with
adequate reserves.
To satisfy the steps required to rectify these irregularities,
the Company will put forward a resolution at the Company's
forthcoming General Meeting. The Company has put in place the
necessary controls and processes to ensure that a similar issue
will not reoccur.
Pension schemes
The Group has two defined benefit pension schemes, The Lookers
Pension Plan and The Benfield Motor Group Pension Plan. Both
schemes are closed to entry for new members and closed to future
accrual.
During June 2020 the former Dutton Forshaw Pension Plan trustees
resolved to transfer all remaining assets and liabilities to The
Lookers Pension Plan.
*Alternative performance measures - see Note 15
During the year the Group concluded its triennial valuation of
The Lookers Pension Plan and received approval from its lenders to
increase pension deficit payments to GBP12m plus expenses and PPF
levy, all subject to increases linked to CPI. The revised
contributions were effective from 1 July 2020.
The Group's triennial valuation of the Benfield Pension Plan was
concluded in February 2021 with a continuation of deficit
contributions of GBP0.3m plus expenses and PPF levy.
At 31 December 2020, the aggregate IAS 19 pension deficit is
GBP79.3m (31 December 2019: GBP55.7m). The year on year increase
arises as a result of the decrease in both corporate bond yields
and discount rate, which has been partly offset by an increase in
the schemes' asset values. The total actuarial loss on the Group's
defined benefit pension schemes in the year was GBP32.5m (2019:
gain of GBP7.1m).
Relatively small changes in the bases of valuation can have a
significant effect on the calculated deficit hence the movement in
the calculated deficit can be subject to high levels of
volatility.
Non-underlying items
The Group recorded net non-underlying costs of GBP12.1m during
the year. The Board has taken the view that each of the following
items relate to costs or income which are not incurred in the
normal course of business or due to their size, nature and
irregularity are not included in its assessment of financial
performance. Non-underlying items have been presented separately on
the face of the Statement of Total Comprehensive Income.
The principal items are as follows:
Restructuring costs and associated asset impairment
GBP12.5m.
During the year, the Board took decisive restructuring actions
to position the Group for a strong and sustainable future. This
included the identification of 12 sites (2019: 15) for either
closure, consolidation or refranchising. The Group now operates
from a portfolio of 150 dealerships.
The Board also undertook a review of the Group's operating model
in light of both its strategy and the structural changes taking
place across the industry. This led to 1,500 redundancies being
made. These costs are now complete.
Professional fees GBP9.2m
In our 2019 Annual Report & Accounts we detailed the
Accounts investigation. During the year, the Group incurred certain
professional fees in relation to procedures carried out by a number
of different advisory firms. These costs are now complete.
During 2020, and into 2021, the Group has continued to improve
its controls and governance and is making progress against the
remediation. To date the Group has:
-- Made progress in the formalisation of accounting policies,
processes and procedures, focussing initially on financial
reporting risk and judgemental areas
-- Restructured the Finance team and recruited a Group Financial Controller
-- Implemented a Financial Reporting attestation process for
senior financial and operational management
-- Continued to standardise the Group's Dealer Management System
with more dealerships now aligned to the Group's agreed
"blueprint."
Goodwill and intangible impairments GBP3.6m
In the first half of the year the Group made a non-cash
impairment charge of GBP2.6m against its Ford cash generating unit,
following a deterioration in market conditions. The Group also
fully impaired its Lomond brand in the second half of the year,
resulting in a noncash charge of GBP1.0m.
FCA provision GBP10.4m credit
In March 2021, the FCA advised the Board that it had decided to
close its investigation against Lookers Motor Group Ltd for the
possible mis-selling of regulated products between January 2016 and
June 2019. The FCA investigation was closed without applying any
sanction but noted several concerns relating to the historic
culture, systems and controls of the Group which the Board fully
accepted. The Group is satisfied that the FCA confirmation
represents an adjusting event after the balance sheet date as this
provides evidence that there was not an obligating event and have
therefore released the GBP10.4m provision - created in the 2019
Annual Report & Accounts - into non-underlying items in
2020.
Gain on property disposal GBP3.1m credit
Following the closure of 15 dealerships in 2019, and a further
12 this year, a number of freehold properties no longer required
within the Group have been disposed, generating a gain of
GBP3.1m.
Prior period adjustments - Group
(a) IFRS 16 leases
During the course of our year end procedures we identified a
number of leases which had been omitted in error from our IFRS 16
lease calculations. These omissions have a material impact on
balance sheets at 1 January 2019 and 31 December 2019. As a result,
and in line with IAS8, we have included this as a prior year
adjustment. The most significant impact of this adjustment on the
Group's 2019 Consolidated statement of financial position is an
increase in right of use assets and lease liabilities of GBP11.3m
and GBP12.8m respectively. Full details of this adjustment are set
out in Notes 1 and 11.
(b) Rental fleet vehicles
In addition, as part of our year-end procedures, we identified
that certain balances and transactions in the Group's Get Motoring
UK Limited subsidiary had been incorrectly treated in respect of
IFRS 16 in the Group's 20019 Annual Report & Accounts. Whilst
the impact of this is not material to the Group's Financial
Statements, the correct accounting treatment does impact the
classification and treatment of particular Financial Statement line
items and these have therefore been corrected. See Note 1 for
details.
Prior period adjustment - Company
Dividend receipts
In preparing subsidiary Financial Statements the Directors
identified a number of adjustments that had not been made in the
2019 Group Financial Statements and that impacted dividends paid by
these subsidiaries to Lookers plc in 2019 and prior. This has
required an adjustment to the Lookers plc Financial Statements. See
Note 1d.
Anna Bielby
Interim Chief Financial Officer
30 June 2021
Risk overview and management
Enterprise risk management framework
As with all organisations, Lookers is exposed to a wide range of
risks, both internal and external, as part of our on-going
activities. The identification and management of those risks is
integral to the achievement of our long-term goals which rely on
our ability to identify and control those things that can hurt us
and exploit opportunities that arise, both within our business and
the wider market. We identify risks and assess the effectiveness of
our control environment on an ongoing basis through robust risk
management processes and reporting. As a part of this, we undertake
horizon scanning to identify emerging risk, maintain ongoing
dialogue with the business, provide management information to the
Executive and the Board and keep up to date with developments in
the automotive sector and wider economy. To assist, we have
developed an Enterprise Risk Management Framework (ERMF) designed
to deliver a common language that helps us define and categorise
the risks that we face. It sets the high-level principles and
underpinning minimum requirements for the identification,
assessment, management and monitoring of each of those risk
categories in line with Lookers' defined risk appetite.
Three lines of defence
Lookers applies a "three lines of defence" governance model
across its business. The principal aim of this model is to ensure
that Lookers exercises ownership of risk in the first line of
business functions, and independent oversight and challenge of
those risks and their management by its second line departments
(Risk and Compliance). Internal Audit (the third line) are in place
to provide independent assurance to the Board of the effectiveness
of our controls. In summary the accountabilities between lines are
split as follows:
-- The first line of defence (the business) are accountable for
owning, taking and managing the risk
-- The second line of defence (Risk and Compliance) operate
independently of the first line. They do not own the risk but
instead independently oversee, advise and challenge the first line
activity
-- The third line of defence (Internal Audit) provide
independent assurance to the Board of the controls
Risk appetite framework
Our risk appetite framework defines the level of risk we are
willing to take across the different risk categories and allows us
to track mitigating action when our tolerance metrics suggest that
we are moving away from where we want to be. Risk appetite is key
for our decision-making process, including ongoing business
planning, new products approvals and business change
initiatives.
In setting the risk appetite, the Board outlines the "tone from
the top" and provides a basis for ongoing dialogue between
management and Board with respect to our current and evolving risk
profile, allowing strategic and financial decisions to be made on
an informed basis.
Financial reporting
The Executive Directors oversee the preparation of the Group's
annual corporate plan; the Board reviews and approves it and
monitors actual performance against it on a monthly basis. When
deemed appropriate, revised forecasts are prepared and presented
for Board review and approval. To ensure that information
consolidated into the Group's financial statements is in compliance
with relevant accounting standards and the Group's own accounting
policies, internal reporting data is reviewed regularly.
The Audit and Risk Committee reviews the appropriateness of the
Group's accounting policies each reporting period. The Audit and
Risk Committee considers reports from Executive Management,
Internal Audit, the Risk and Compliance teams and the Group's
external auditor, the application of IFRS and the reliability of
the Group's system of control over financial reporting.
During 2020 the Group's control environment has continued to
evolve, including internal controls over financial reporting. The
Financial Risk Policy and supporting Policy Standards have been
further developed. A review of the underpinning processes and
procedures has been undertaken and documented, including a
strengthened balance sheet reconciliation process and a dedicated
risk and control register. In addition, the Finance function has
been strengthened with an enhanced operating model introduced
across the period.
The Board continues to oversee a programme of work to further
enhance finance controls. These enhancements address the issues
previously identified in the Financial Review.
Controls have been designed to ensure that the Group's financial
reporting presents a true and fair reflection of the Group's
financial position. Many of these improvements have been
implemented although the process of further improving controls will
continue during 2021.
Principal risks and uncertainties
Appreciating that the operation of any business entails an
element of risk, the Board maintains a policy of continuous
identification, management and review of risks which may threaten
the achievement of our strategic objectives.
These risks are those that could cause the greatest damage if
not effectively identified, assessed and managed. The Board keeps
the Group's risk appetite under periodic review in light of
changing market conditions and the Group's performance and
strategic focus.
Directors' responsibilities statement
The Directors confirm to the best of their knowledge:
-- The Financial Statements have been prepared in accordance
with the applicable set of accounting standards and Article 4 of
the IAS Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the Group
and Company.
-- The Annual Report & Accounts includes a fair review of
the development and performance of the business and the financial
position of the Group and Company, together with a description of
the principal risks and uncertainties that they face.
-- The Annual Report & Accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Group's position and performance,
business model and strategy.
This responsibility statement was approved by the Board of
Directors and is signed on its behalf by:
Mark Raban
Chief Executive Officer
30 June 2021
Basis of preparation
The financial information presented in this preliminary
announcement is extracted from, and is consistent with, the Group's
audited financial statements for the year ended 31 December 2020.
The financial information set out below does not constitute the
Company's statutory financial statements for the periods ended 31
December 2020 or 31 December 2019 but is derived from those
financial statements. Statutory financial statements for 2020 will
be delivered following the Company's annual general meeting. The
auditors have reported on those financial statements; their report
was unqualified and did not contain a statement under section
498(2) or (3) of the Companies Act 2006.
The financial information in this announcement has been
extracted from the Group's Annual Report and Accounts for the year
ended 31 December 2020 and is prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and with International
Financial Reporting Standards (IFRS) adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union. Whilst the
financial information included in this preliminary announcement has
been computed in accordance with IFRS, this announcement does not
itself contain sufficient information to comply with IFRS and the
financial information set out does not constitute the Company's
statutory accounts for the current or prior year.
Going concern
The Directors have considered the future prospects and
performance of the Group and have made an assessment of going
concern considering the Group's cash and liquidity position,
current performance and outlook, which assessed the restrictions
put in place by the UK Government to control the impact of the
COVID-19 pandemic, using the information available up to the date
of issue of the financial statements.
During the lockdown restrictions throughout 2020 and 2021,
management worked closely with its key OEM Brand Partners, who have
positively supported the business and are continuing to do so.
Management has continued to take action to protect the balance
sheet and cash flow including accepting UK Government support
measures including the Coronavirus Job Retention Scheme and the
Expanded Retail Discount 2020/21 for business rates in addition to
other self-help measures through a significant cost reduction
programme, the deferral of capital expenditure, identification of
property assets available for sale and cessation of the FY20
dividend.
Additionally, management has taken a number of longer term
actions to protect cash including continued investment in the
development of the Group's end-to-end online ordering capability
through the use of Click & Drive, a comprehensive review of
working capital management, and changed operational practices to
de-risk the intra-month cash requirements.
At the date of approval of the consolidated Financial
Statements, the UK is returning to some level of normality as
lockdown restrictions are eased, however the Directors are
cautiously monitoring the potential impact for future disruption.
The UK Government is very well progressed in the roll out of the
vaccination programme which should help the UK manage the future
impact from the pandemic.
Banking facilities and funding position
As at 31 December 2020 the Group had GBP238m of committed
revolving credit facilities due to expire on 31 March 2022. In
recognition of the trading uncertainty through 2020 the financial
covenants were renegotiated and included a suspension of the
interest cover ratio and replacement with EBITDA and Liquidity
covenants. The Group has satisfied each of those financial
covenants.
The Group's revolving credit facilities were successfully
renegotiated with its existing Banking Club in May 2021, for an
initial amount of GBP150m and with an extension to September 2023.
The profitability and cash generation of the Group has rebased the
size of facility required to support the ongoing working capital
needs of the Group following the restructuring of operations and
reduced footprint of the Group and closure of sites in 2020. The
amended facilities return to more normal covenant tests including
core leverage, interest cover and EBITDA testing on a quarterly
basis with effect from June 2021.
The Group has not made use of any borrowing under the COVID-19
Corporate Financing Facility or the Coronavirus Large Business
Interruption Loan Scheme.
In addition to the revolving credit facility, the Group has
stocking funding lines which were utilised at GBP210.0m as at 31
December 2020 (2019: GBP337.1m).
Assessment of the Group's financial position
The Group experienced significant disruption as a result of the
impact of the COVID-19 pandemic, the details of which are set out
in the Operating Review and the Financial Review.
The Directors have considered the potential impact of ongoing
measures to manage the impact of COVID-19 pandemic and considered
the possible medium term-risks on the macroeconomic impact the
restrictions could have on the UK economy across the period to June
2022. The Directors have also considered the potential disruption
to supply of new vehicles following the worldwide shortage of
semiconductor chips.
Management has modelled a number of adverse scenarios to assess
the potential impact that COVID-19 and possible stock shortages may
have on the Group's operations in addition to the scenarios
discussed in the Viability Statement. The Directors acknowledge
that there remains uncertainty regarding the timing of a full
return to the UK economic activity following the easing of
restrictions in the UK and the potential for some further
disruption to the UK economy. The Group has demonstrated
significant resilience to issues faced during 2020.
The business has adapted to a new omni-channel operating
platform and has shown great resilience to the issues faced in 2020
and 2021. This is underpinned by a strong balance sheet which has
been reinforced by the renegotiation of the core funding
facilities. The support received from OEM Brand Partners, the UK
Government and other key partners has contributed to a strong
financial position and places the Group in a strong position to
manage its way through other future potential disruptions.
The conclusion of a trade deal between the UK and the EU has
created more confidence with supply chains. The impact of Brexit
has thus far been immaterial and the Directors do not expect it to
cause any material impact to the supply chain or cause any issues
with access to skilled labour.
To support the assessment of the Group's ability to continue as
a going concern, the Directors have modelled a Base Case and three
downside scenarios as follows.
-- A medium-term downside scenario, where further lockdown
measures occur in quarter 4 of 2021 followed by a recession in the
first half of 2022 caused by macro-economic conditions.
-- A medium-term downside scenario, where potential stock
restrictions are caused by the impact of semiconductor chip
shortages. This sensitivity reduces volumes of new, used and fleet
sales from September 2021 to March 2022. This would be partly
offset by a reduction in operating costs. Normal trading
performance is expected to resume from April 2022. As this
potential issue continues to evolve, a second more severe
sensitivity was run to further test the Group's resilience. The
additional sensitivity reduces volumes of new and fleet volumes
further and extends the downturn out to June 2022. This is partly
offset by an increase in used volumes - though these are still
below the Base Case - and reflects both slightly stronger gross
margins and a modest reduction in operating costs.
-- A reverse stress test scenario, which is designed to breach
either liquidity or financial covenants. This scenario is driven
from Base Case and sensitises a reduction in vehicles sales volumes
and aftersales revenue only from April 2021. The scenario assumes a
constant reduction in aftersales revenues from April 2021 and
various reductions in vehicle volumes at increments over the period
to June 2022. It does not reflect any mitigating actions which the
Board could take.
In each of the scenarios the Directors have assumed that
property disposals between May 2021 and June 2022 are postponed and
therefore increase the net debt by the same value. Throughout 2020
and despite the impact of COVID-19, Management achieved several
surplus property disposals with a net profit to book value. Under
the base case and medium-term downside scenarios, the Group is
forecast to comply with the financial covenants set out in its
funding agreements and operate comfortably within its banking
facility limits. The Government has reacted to the impact of
COVID-19 by initiating demonstrable financial support to the
macro-economy and implemented a world leading roll out of the
vaccine.
The Group has equally reacted well to previous COVID-19
lockdowns as demonstrated by the performance in the four months to
April 2021, where the Group has consistently outperformed the
market.
The reverse stress test scenario models a decrease in sales
volumes and aftersales revenues not factoring in management taking
any significant mitigating actions. If the Group experienced a
significant reduction in aftersales or vehicle sales revenue, the
Board would take a series of actions to protect the business as
evidenced in 2020.
Based on the findings above, the Directors are confident in the
scenarios tested that there are no liquidity issues and that any
potential breaches in financial covenants can reasonably be
prevented or avoided through mitigating actions, as we have
demonstrated very well in 2020.
In view of the various sensitivities and additional stress
testing, the Board concludes that preparing the accounts on the
basis of Going Concern is appropriate.
Statement of Total Consolidated Comprehensive Income
For the year ended 31 December 2020 and
31 December 2019
Restated*
2020 2019
Note GBPm GBPm
Revenue 2 3,699.9 4,806.5
================================================== ===== ========== ==========
Cost of sales (3,288.9) (4,293.4)
================================================== ===== ========== ==========
Gross profit 411.0 513.1
================================================== ===== ========== ==========
Net operating expenses (380.1) (525.9)
================================================== ===== ========== ==========
Operating profit/(loss) 30.9 (12.8)
-------------------------------------------------- ----- ========== ==========
Underlying operating profit 43.0 36.9
Non-underlying items 3 (12.1) (49.7)
-------------------------------------------------- ----- ---------- ----------
Finance costs 4 (28.9) (32.9)
================================================== ===== ---------- ----------
Profit/(loss) before taxation 2.0 (45.7)
================================================== ===== ---------- ----------
Underlying profit before taxation 14.1 4.0
Non-underlying items 3 (12.1) (49.7)
-------------------------------------------------- ----- ---------- ----------
Tax (charge)/credit 5 (6.1) 3.9
================================================== ===== ========== ==========
Loss for the year (attributable to shareholders
of the Company) (4.1) (41.8)
================================================== ===== ---------- ----------
Exchange differences on translation of
foreign operation (may be recycled to profit
and loss)** 0.3 (0.4)
Actuarial (losses)/gains on pension scheme
obligations (not recycled to profit and
loss) (32.5) 7.1
================================================== ===== ========== ==========
Deferred tax on pension scheme obligations
(not recycled to profit and loss) 7.3 (1.2)
================================================== ===== ---------- ==========
Total other comprehensive (expense)/income
for the year (24.9) 5.5
================================================== ===== ========== ==========
Total comprehensive expense for the year
(attributable to shareholders of the Company) (29.0) (36.3)
================================================== ===== ========== ==========
Loss per share:
================================================== ===== ========== ==========
Basic loss per share (p) 7 (1.05) (10.74)
================================================== ===== ========== ==========
Diluted loss per share (p)*** 7 (1.05) (10.74)
================================================== ===== ========== ==========
*See Note 1 for details.
** In the year ended 31 December 2019 the exchange difference
loss of GBP0.4m was incorrectly disclosed directly in equity.
*** In the years ended 31 December 2020 and 31 December 2019
the basic and diluted earnings per share are equal as a result
of the Group incurring a loss for the year.
Consolidated and Company Statements
of Financial Position
As at 31 December 2019 and 31 December
2020
Group Restated Restated Company Restated Restated
2020 * 2019 * 2018 2020 * 2019 * 2018
Note GBPm GBPm GBPm GBPm GBPm GBPm
============================= ===== ======== ========= ========= ======== ========= =========
Non-current assets
===================================== ======== ========= ========= ======== ========= =========
Goodwill 8 79.3 81.9 111.7 - - -
============================== ===== ======== ========= ========= ======== ========= =========
Intangible assets 9 110.8 114.2 113.4 11.1 13.5 12.0
============================== ===== ======== ========= ========= ======== ========= =========
Property, plant
and equipment 10 399.9 429.2 416.8 0.7 0.8 0.9
============================== ===== ======== ========= ========= ======== ========= =========
Right of use assets 11 117.6 119.0 110.6 0.8 1.1 1.2
============================== ===== ======== ========= ========= ======== ========= =========
Investment in subsidiaries - - - 126.8 126.8 126.8
============================== ===== ======== ========= ========= ======== ========= =========
Deferred tax assets - - - 14.2 9.5 12.2
============================== ===== ======== ========= ========= ======== ========= =========
707.6 744.3 752.5 153.6 151.7 153.1
===================================== ======== ========= ========= ======== ========= =========
Current assets
===================================== ======== ========= ========= ======== ========= =========
Inventories 12 655.2 956.5 972.9 - - -
============================== ===== ======== ========= ========= ======== ========= =========
Trade and other
receivables 124.6 168.3 182.6 327.4 356.1 399.3
============================== ===== ======== ========= ========= ======== ========= =========
Current tax
receivable 1.1 9.8 - 3.4 11.7 8.8
============================== ===== ======== ========= ========= ======== ========= =========
Rental fleet vehicles 30.1 32.0 32.9 - - -
============================== ===== ======== ========= ========= ======== ========= =========
Cash and cash equivalents 243.0 150.3 152.8 0.1 17.4 19.2
============================== ===== ======== ========= ========= ======== ========= =========
Assets held for
sale 13.0 10.0 8.0 - - -
============================== ===== ======== ========= ========= ======== ========= =========
1,067.0 1,326.9 1,349.2 330.9 385.2 427.3
===================================== ======== ========= ========= ======== ========= =========
Total assets 1,774.6 2,071.2 2,101.7 484.5 536.9 580.4
===================================== ======== ========= ========= ======== ========= =========
Current liabilities
===================================== ======== ========= ========= ======== ========= =========
Bank loans and overdrafts 116.9 119.4 110.0 36.5 40.6 25.9
============================== ===== ======== ========= ========= ======== ========= =========
Trade and other
payables 911.8 1,261.5 1,220.4 61.1 149.2 139.1
============================== ===== ======== ========= ========= ======== ========= =========
Lease liabilities 19.1 20.1 19.8 0.5 0.7 0.6
========= ========= ======== ========= =========
Current tax payable - - 3.3 - - -
===================================== ======== ========= ========= ======== ========= =========
1,047.8 1,401.0 1,353.5 98.1 190.5 165.6
===================================== ======== ========= ========= ======== ========= =========
Net current assets/(liabilities) 19.2 (74.1) (4.3) 232.8 194.7 261.7
===================================== -------- --------- --------- ======== ========= =========
Non-current liabilities
===================================== ======== ========= ========= ======== ========= =========
Bank loans 166.8 90.4 128.7 158.4 81.4 118.7
============================== ===== ======== ========= ========= ======== ========= =========
Trade and other
payables 39.8 42.3 39.3 - - -
============================== ===== ======== ========= ========= ======== ========= =========
Lease liabilities 125.3 126.8 117.0 0.4 0.4 0.6
============================== ===== ======== ========= ========= ======== ========= =========
Provisions 13 - 10.4 - - - -
============================== ===== ======== ========= ========= ======== ========= =========
Pension scheme obligations 79.3 55.7 68.9 77.0 56.6 69.4
============================== ===== ======== ========= ========= ======== ========= =========
Deferred tax liabilities 33.2 34.0 33.0 - - -
============================== ===== ======== ========= ========= ======== ========= =========
444.4 359.6 386.9 235.8 138.4 188.7
===================================== ======== ========= ========= ======== ========= =========
Total liabilities 1,492.2 1,760.6 1,740.4 333.9 328.9 354.3
===================================== ======== ========= ========= ======== ========= =========
Net assets 282.4 310.6 361.3 150.6 208.0 226.1
===================================== ======== ========= ========= ======== ========= =========
Shareholders' equity
===================================== ======== ========= ========= ======== ========= =========
Ordinary share capital 19.5 19.5 19.4 19.5 19.5 19.4
============================== ===== ======== ========= ========= ======== ========= =========
Share premium 78.4 78.4 78.4 78.4 78.4 78.4
===================================== ======== ========= ========= ======== ========= =========
Capital redemption
reserve 15.1 15.1 15.1 15.1 15.1 15.1
============================== ===== ======== ========= ========= ======== ========= =========
Retained earnings 169.4 197.6 248.4 37.6 95.0 113.2
===================================== ======== ========= ========= ======== ========= =========
Total equity 282.4 310.6 361.3 150.6 208.0 226.1
===================================== ======== ========= ========= ======== ========= =========
The loss after tax for the Company was GBP33.9m (2019: restated
loss of GBP9.3m). The financial statements of Lookers plc, registered
no. 111876 were approved by the Directors on 30 June 2021.
Signed on behalf of the Board of Directors
M. D. Raban
Director
Consolidated Statement of Changes
in Equity
As at 1 January 2019, 31 December 2019 and 31 December
2020
Capital
Share Share redemption Retained Total
capital premium reserve earnings equity
Year ended 31 December 2019 Note GBPm GBPm GBPm GBPm GBPm
--------------------------------- ===== ========= ========= ============ ========== ========
As at 1 January 2019 19.4 78.4 15.1 249.0 361.9
========= ========= ============ ==========
Correction of errors* - - - (0.6) (0.6)
--------------------------------- ----- --------- --------- ------------ ---------- --------
As at 1 January 2019 (restated) 19.4 78.4 15.1 248.4 361.3
================================= ===== ========= ========= ============ ========== ========
Loss for the year (restated) - - - (41.8) (41.8)
================================= ===== ========= ========= ============ ========== ========
Total other comprehensive
income for the year - - - 5.5 5.5
--------------------------------- ----- --------
Total comprehensive expense
for the year (restated) - - - (36.3) (36.3)
========= ========= ============ ========== ========
New shares issued 0.1 - - - 0.1
================================= ===== ========= ========= ============ ========== ========
Share based compensation - - - 1.4 1.4
================================= ===== ========= ========= ============ ========== ========
Dividends paid 6 - - - (15.9) (15.9)
========== ========
As at 31 December 2019 19.5 78.4 15.1 197.6 310.6
================================= ===== ========= ========= ============ ========== ========
Year ended 31 December 2020
---------------------------------
As at 1 January 2020 19.5 78.4 15.1 197.6 310.6
================================= ===== ========= ========= ============ ========== ========
Loss for the year - - - (4.1) (4.1)
================================= ===== ========= ========= ============ ========== ========
Total other comprehensive
expense for the year - - - (24.9) (24.9)
--------------------------------- ----- --------- --------- ------------ ---------- --------
Total comprehensive expense
for the year - - - (29.0) (29.0)
===== ========= ========= ============ ========== ========
Share based compensation - - - 0.8 0.8
================================= ===== ========= ========= ============ ========== ========
As at 31 December 2020 19.5 78.4 15.1 169.4 282.4
================================= ===== ========= ========= ============ ========== ========
*Opening reserves at 1 January 2019 have been restated by GBP0.6m
and the loss for the year in the year ended 31 December 2019
has been restated by GBP0.2m in relation to corrections to lease
accounting entries in one of the Group's subsidiaries and following
further adjustments in relation to the adoption of IFRS 16.
Retained earnings include GBP16.5m (2019: GBP16.5m) of non-distributable
reserves relating to properties which had been revalued under
UK GAAP, but treated as deemed cost under IFRS.
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
and 31 December 2019
2020 2019 (restated)
Note GBPm GBPm
===== ======== ================
Cash flows from operating activities
============================================== ===== ======== ================
(Loss) for the year (4.1) (41.8)
============================================== ===== ================
Tax charge/(credit) 6.1 (3.9)
============================================== ===== ================
Depreciation of property, plant and
equipment, rental fleet and right
of use assets 51.2 52.3
============================================== ===== ================
Profit on disposal of property, plant
and equipment (3.1) . (4.9)
============================================== ===== ================
Gain on lease surrenders (1.2) (0.4)
============================================== ===== ================
Gain on disposal of right of use asset
associated with rental fleet vehicles (1.9) (3.3)
============================================== ===== ================
Amortisation of intangible assets 4.8 6.1
============================================== ===== ================
Share based compensation 0.8 1.4
============================================== ===== ================
Impairment of property, plant and
equipment 5.0 4.3
============================================== ===== ================
Impairment of right of use assets 0.4 1.8
============================================== ===== ================
Impairment of intangible assets (underlying) - 0.4
============================================== ===== ================
Impairment of goodwill and intangible
assets (non-underlying) 3.6 30.4
============================================== ===== ================
Finance costs excluding pension related
finance costs and debt issue costs 4 27.3 30.6
============================================== ===== ================
Debt issue costs 4 0.5 0.4
============================================== ===== ================
Difference between pension charge
and cash contributions (8.9) (6.1)
============================================== ===== ================
Purchase of rental fleet vehicles (21.8) (17.4)
============================================== ===== ================
Purchase of right of use assets associated
with rental fleet vehicles (1.9) (3.3)
============================================== ===== ================
Purchase of vehicles for long term
leasing (27.8) (35.5)
============================================== ===== ================
Changes in provisions 13 (10.4) 10.4
============================================== ===== ================
Changes in inventories 355.1 57.4
============================================== ===== ================
Changes in receivables 43.4 14.7
============================================== ===== ================
Changes in payables (359.8) 25.3
============================================== ===== ================
Cash generated from operations 57.3 118.9
============================================== ===== -------- ----------------
Finance costs paid (21.2) (24.3)
============================================== ===== ================
Finance costs paid - finance leases (6.1) (6.3)
============================================== ===== ================
Tax refunded/(paid) 7.8 (9.3)
============================================== ===== ================
Net cash inflow from operating activities 37.8 79.0
============================================== ===== -------- ----------------
Cash flows from investing activities
============================================== ===== ================
Purchase of property, plant and equipment (13.8) (45.8)
============================================== ===== ================
Purchase of intangibles (3.0) (7.9)
============================================== ===== ======== ================
Finance lease rentals collected 4.0 6.2
============================================== ===== ======== ================
Proceeds from disposal of property,
plant and equipment 18.0 17.6
============================================== ===== ======== ================
Net cash inflow/(outflow) from investing
activities 5.2 (29.9)
============================================== ===== -------- ----------------
For the year ended 31 December 2020
and 31 December 2019
Cash flows from financing activities
============================================== =====
Proceeds from issue of ordinary shares - 0.1
============================================== ===== ================
Receipt of funding advanced for vehicle
leasing arrangements 74.8 76.5
============================================== ===== ================
Repayment of funding advanced for
vehicle leasing arrangements (84.1) (69.0)
============================================== ===== ================
Repayment of loans (0.6) (1.4)
============================================== ===== ================
Draw down on RCF 150.0 186.9
============================================== ===== ================
Repayment on RCF (72.0) (224.2)
============================================== ===== ================
Repayment of lease liabilities (15.3) (16.2)
===== ================
Receipt of lease incentives - 1.2
===== ================
Dividends paid 6 - (15.9)
============================================== ===== ================
Net cash inflow/(outflow) from financing
activities 52.8 (62.0)
============================================== ===== -------- ----------------
Increase/(decrease) in cash and cash
equivalents 95.8 (12.9)
============================================== ===== ================
Cash and cash equivalents at 1 January 31.4 44.3
============================================== ===== ================
Cash and cash equivalents at 31 December 127.2 31.4
============================================== ===== -------- ----------------
Analysis of cash and cash equivalents
Cash and cash equivalents 243.0 150.3
============================================== ===== ================
Bank overdraft (115.8) (118.9)
============================================== ===== ================
Cash and cash equivalents at 31 December 127.2 31.4
============================================== ===== -------- ----------------
Notes to the financial information
For the year ended 31 December 2020
1a Statement of Total Comprehensive Income (restated) for the
year ended 31 December 2019
As previously
reported Restated
31 December 31 December
2019 Correction 2019
Group GBPm of errors GBPm
============== =============
Revenue 4,787.2 19.3 4,806.5
-------------------------------------------------- -------------- ----------- -------------
Cost of sales (4,274.1) (19.3) (4,293.4)
-------------------------------------------------- -------------- ----------- -------------
Gross profit 513.1 - 513.1
================================================== ============== =========== =============
Net operating expenses (526.3) 0.4 (525.9)
================================================== ============== =========== =============
Operating loss (13.2) 0.4 (12.8)
Underlying operating profit 36.5 0.4 36.9
Non-underlying items below operating
profit (49.7) - (49.7)
-------------------------------------------------- -------------- ----------- -------------
Finance costs (32.3) (0.6) (32.9)
Loss before taxation (45.5) (0.2) (45.7)
Underlying profit before taxation 4.2 (0.2) 4.0
Non-underlying items (49.7) - (49.7)
-------------------------------------------------- -------------- ----------- -------------
Tax credit 3.9 - 3.9
-------------------------------------------------- -------------- ----------- -------------
Loss for the year (attributable to shareholders
of the Company) (41.6) (0.2) (41.8)
-------------------------------------------------- -------------- ----------- -------------
Exchange differences on translation
of foreign operation (may be recycled
to profit and loss) (0.4) - (0.4)
Actuarial losses on pension scheme obligations 7.1 - 7.1
Deferred tax on pension scheme obligations (1.2) - (1.2)
==================================================
Total other comprehensive income for the
year 5.5 - 5.5
-------------------------------------------------- -------------- ----------- -------------
Total comprehensive expense for the year (36.1) (0.2) (36.3)
-------------------------------------------------- -------------- ----------- -------------
(Loss) per share:
-------------------------------------------------
Basic (loss) per share (p) (10.69) (0.05) (10.74)
--------------------------------------------------
Diluted (loss) per share (p) (10.69) (0.05) (10.74)
-------------------------------------------------- -------------- ----------- -------------
In preparing the IFRS16 adjustments for the year ended 31
December 2020 the Directors identified errors in the underlying
calculations. These errors originated at the point of initial
adoption for the leases in question, so adjustments to the
statement of financial position at 1 January 2019 were required to
increase the amounts recorded within right of use assets by
GBP7.3m, to increase total lease liabilities by GBP8.4m and to
decrease retained earnings by GBP1.1m. Adjustments to the statement
of financial position at 31 December 2019 were required to increase
the amounts recorded within right of use assets by GBP11.3m, to
increase total lease liabilities by GBP12.8m and to decrease
retained earnings by GBP1.5m. The impact of these adjustments has
been to increase the loss for the year ended 31 December 2019 by
GBP0.4m, being the net impact of a GBP0.6m increase in finance
costs and GBP0.2m reduction in net operating expenses. The
adjustments had no overall impact on cashflows, however cash
inflows from operating activities increased by GBP0.6m and cash
outflows from financing activities decreased by GBP0.6m.
In addition, as part of our year end procedures, we identified
that certain balances and transactions in the Group's Get Motoring
UK Limited subsidiary had been incorrectly treated in respect of
IFRS 16. Rental fleet vehicles acquired via sale and repurchase
agreements had incorrectly been recognised as owned assets within
current assets. As the Group has the right to control the vehicles
only for a period of time the transactions should have been treated
as leases. In addition, adjustments have been recorded to change
the treatment of the subsequent rental of these vehicles, in which
the Group acts as lessor, from operating leases to finance leases
as these sub-leases are for substantially the entire period of the
lead leases. The combined impact of these adjustments to the
statement of financial position at 1 January 2019 is an increase to
trade and other receivables of GBP21.8m (being the recognition of a
repurchase debtor at the contractual repurchase amount (GBP20.8m)
and finance lease receivable (GBP1.0m)), a reduction in rental
fleet vehicles of GBP21.3m, and an increase in retained earnings of
GBP0.5m. Adjustments to the statement of financial position at 31
December 2019 have increased trade and other receivables by
GBP28.1m (being the recognition of a repurchase debtor at the
contractual repurchase amount (GBP26.7m) and finance lease
receivable (GBP1.4m)), reduced rental fleet vehicles by GBP27.4m,
and increased retained earnings by GBP0.7m. The impact of these
adjustments has been to reduce the loss for the year ended 31
December 2019 by GBP0.2m. Despite no overall impact to cashflows,
the adjustments described above decrease both cash inflows from
operating activities and cash outflows from investing activities by
GBP6.2m in the Consolidated Statement of Cash Flows for the year
ended 31 December 2019. In addition the treatment of proceeds from
sale of rental fleet vehicles has been corrected, alongside the
treatment of proceeds from sale of vehicles for long term leasing,
to remove both the proceeds and associated profits from the face of
the cashflow statement, with adjustments recorded against changes
in inventories. These adjustments have no overall impact on the
Consolidated Statement of Cash Flows, or any sub-categories
included within.
Further, the profit on sale of owned rental fleet vehicles in
the Group's Get Motoring UK Limited subsidiary had been incorrectly
recorded net within the statement of consolidated comprehensive
income for the year ended 31 December 2019 as disposals of fixed
assets but should have been presented as sales of inventories.
Adjustments to recognise sale proceeds and costs separately have
increased revenues and cost of sales by GBP19.3m, with no change to
profit for the year.
Separately, purchase of vehicles for long term leasing and
purchase of rental fleet vehicles were incorrectly presented as
investing cash outflows. In accordance with IAS 7, as these
vehicles are subsequently held for sale the cashflows should be
presented within operating activities. As a result these have been
reclassified in the Consolidated Statement of Cash Flows for the
year ended 31 December 2019, decreasing cash flows from operating
activities and cash outflows from investing activities by
GBP97.2m.
1b Statement of Financial Position (restated)
As
As previously At 31 previously
reported December reported At 1 January
31 December Correction 2019 1 January Correction 2019
2019 of errors (restated) 2019 of errors (restated)
Group GBPm GBPm GBPm GBPm GBPm GBPm
------------- ================== =========== ============ ============= =========== ===============
Non-current assets
=================== ============= =========== ============ ============= =========== =============
Goodwill 81.9 - 81.9 111.7 - 111.7
=================== ============= =========== ============ ============= =========== =============
Intangible assets 114.2 - 114.2 113.4 - 113.4
=================== ============= =========== ============ ============= =========== =============
Property, plant
and
equipment 429.2 - 429.2 416.8 - 416.8
=================== ============= =========== ============ ============= =========== =============
Right of use
assets 107.7 11.3 119.0 103.3 7.3 110.6
=========== ===========
733.0 11.3 744.3 745.2 7.3 752.5
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Current assets
===================
Inventories 956.5 - 956.5 972.9 - 972.9
=================== ============= =========== ============ ============= =========== =============
Trade and other
receivables 140.2 28.1 168.3 160.8 21.8 182.6
=================== ============= =========== ============ ============= =========== =============
Current tax
receivable 9.8 - 9.8 - - -
=================== ============= =========== ============ ============= =========== =============
Rental fleet
vehicles 59.4 (27.4) 32.0 54.2 (21.3) 32.9
=================== ============= =========== ============ ============= =========== =============
Cash and cash
equivalents 150.3 - 150.3 152.8 - 152.8
=================== ============= =========== ============ ============= =========== =============
Assets held for
sale 10.0 - 10.0 8.0 - 8.0
1,326.2 0.7 1,326.9 1,348.7 0.5 1,349.2
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Total assets 2,059.2 12.0 2,071.2 2,093.9 7.8 2,101.7
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Current
liabilities
=================== ============= =========== ============ ============= =========== =============
Bank loans and
overdrafts 119.4 - 119.4 110.0 - 110.0
=================== ============= =========== ============ ============= =========== =============
Trade and other
payables 1,261.5 - 1,261.5 1,220.4 - 1,220.4
=================== ============= =========== ============ ============= =========== =============
Lease liabilities 18.5 1.6 20.1 18.6 1.2 19.8
============= =========== ============ ============= =========== =============
Current tax
payable - - - 3.3 - 3.3
===========
1,399.4 1.6 1,401.0 1,352.3 1.2 1,353.5
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Net current
liabilities (73.2) (0.9) (74.1) (3.6) (0.7) (4.3)
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Non-current
liabilities
=================== ============= =========== ============ ============= =========== =============
Bank loans 90.4 - 90.4 128.7 - 128.7
=================== ============= =========== ============ ============= =========== =============
Trade and other
payables 42.3 - 42.3 39.3 - 39.3
=================== ============= =========== ============ ============= =========== =============
Lease liabilities 115.6 11.2 126.8 109.8 7.2 117.0
=================== ============= =========== ============ ============= =========== =============
Provisions 10.4 - 10.4 - - -
=================== ============= =========== ============ ============= =========== =============
Pension scheme
obligations 55.7 - 55.7 68.9 - 68.9
=================== ============= =========== ============ ============= =========== =============
Deferred tax
liabilities 34.0 - 34.0 33.0 - 33.0
=========== ===========
348.4 11.2 359.6 379.7 7.2 386.9
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Total liabilities 1,747.8 12.8 1,760.6 1,732.0 8.4 1,740.4
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Net assets 311.4 (0.8) 310.6 361.9 (0.6) 361.3
------------------- ------------- ----------- ------------ ------------- ----------- -------------
Shareholders'
equity
=================== ============= =========== ============ ============= =========== =============
Ordinary share
capital 19.5 - 19.5 19.4 - 19.4
=================== ============= =========== ============ ============= =========== =============
Share premium 78.4 - 78.4 78.4 - 78.4
=================== ============= =========== ============ ============= =========== =============
Capital redemption
reserve 15.1 - 15.1 15.1 - 15.1
=================== ============= =========== ============ ============= =========== =============
Retained earnings 198.4 (0.8) 197.6 249.0 (0.6) 248.4
===========
Total equity 311.4 (0.8) 310.6 361.9 (0.6) 361.3
------------------- ------------- ----------- ------------ ------------- ----------- -------------
1c Consolidated Statement of Cash Flows (restated)
As previously
reported At 31
31 December Correction December
2019 of errors 2019 (restated)
Group GBPm GBPm GBPm
============== =========== =================
Cash flows from operating activities
================================================ ============== =========== =================
Loss for the year (41.6) (0.2) (41.8)
================================================ ============== =========== =================
Tax credit (3.9) - (3.9)
================================================ ============== =========== =================
Depreciation of property, plant and equipment,
rental fleet and right of use assets 54.1 (1.8) 52.3
================================================ ============== =========== =================
Profit on disposal of property, plant
and equipment (5.2) 0.3 (4.9)
================================================ ============== =========== =================
Gain on lease surrenders (0.4) - (0.4)
================================================ ============== =========== =================
Gain on disposal of right of use asset
associated with rental fleet assets - (3.3) (3.3)
================================================ ============== =========== =================
Amortisation of intangible assets 6.1 - 6.1
================================================ ============== =========== =================
Share based compensation 1.4 - 1.4
================================================ ============== =========== =================
Impairment of property, plant and equipment 4.3 - 4.3
================================================ ============== =========== =================
Impairment of right of use assets 1.8 - 1.8
================================================ ============== =========== =================
Impairment of intangible assets (underlying) 0.4 - 0.4
================================================ ============== =========== =================
Impairment of goodwill and intangible
assets (non-underlying) 30.4 - 30.4
================================================ ============== =========== =================
Finance costs excluding pension related
finance costs and debt issue costs 30.0 0.6 30.6
================================================ ============== =========== =================
Debt issue costs 0.4 - 0.4
================================================ ============== =========== =================
Difference between pension charge and
cash contributions (6.1) - (6.1)
================================================ ============== =========== =================
Proceeds from sale of vehicles for long
term leasing 11.3 (11.3) -
================================================ ============== =========== =================
Proceeds from sale of rental fleet vehicles 58.7 (58.7) -
================================================ ============== =========== =================
Purchase of rental fleet vehicles - (17.4) (17.4)
================================================ ============== =========== =================
Purchase of right of use assets associated
with rental fleet vehicles - (3.3) (3.3)
================================================ =========== =================
Purchase of vehicles for long term leasing - (35.5) (35.5)
================================================ ============== =========== =================
Changes in provisions 10.4 - 10.4
================================================ ============== =========== =================
Changes in inventories 23.1 34.3 57.4
================================================ ============== =========== =================
Changes in receivables 20.6 (5.9) 14.7
================================================ ============== =========== =================
Changes in payables 25.3 - 25.3
================================================ ============== =========== =================
Cash generated from operations 221.1 (102.2) 118.9
================================================ -------------- ----------- -----------------
Finance costs paid (24.3) - (24.3)
================================================ =================
Finance costs paid - finance leases (5.7) (0.6) (6.3)
============== =========== =================
Tax refunded/(paid) (9.3) - (9.3)
================================================ ============== =========== =================
Net cash inflow from operating activities 181.8 (102.8) 79.0
================================================ -------------- ----------- -----------------
Cash flows from investing activities
Purchase of property, plant and equipment
and own use vehicles (45.8) - (45.8)
================================================ ============== =========== =================
Purchase of vehicles for long term leasing (35.5) 35.5 -
================================================ ============== =========== =================
Purchase of rental fleet vehicles (61.7) 61.7 -
================================================ ============== =========== =================
Purchase of intangibles (7.9) - (7.9)
================================================ ============== =========== =================
Finance lease rentals collected - 6.2 6.2
================================================ ============== =========== =================
Proceeds from disposal of property, plant
and equipment 17.6 - 17.6
================================================ ============== =========== =================
Net cash outflow from investing activities (133.3) 103.4 (29.9)
------------------------------------------------ -------------- ----------- -----------------
Cash flows from financing activities
================================================
Proceeds from issue of ordinary shares 0.1 - 0.1
================================================ ============== =========== =================
Receipt of funding advanced for vehicle
leasing arrangements 76.5 - 76.5
================================================ ============== =========== =================
Repayment of funding advanced for vehicle
leasing arrangements (69.0) - (69.0)
================================================ ============== =========== =================
Repayment of loans (1.4) - (1.4)
================================================ ============== =========== =================
Draw down on RCF 186.9 - 186.9
================================================ ============== =========== =================
Repayment on RCF (224.2) - (224.2)
================================================ ============== =========== =================
Repayment of lease liabilities (15.6) (0.6) (16.2)
================================================ ============== =========== =================
Receipt of lease incentives 1.2 - 1.2
============== =========== =================
Dividends paid (15.9) - (15.9)
================================================ ============== =========== =================
Net cash outflow from financing activities (61.4) (0.6) (62.0)
================================================ -------------- ----------- -----------------
Decrease in cash and cash equivalents (12.9) - (12.9)
================================================ ============== =========== =================
Cash and cash equivalents at 1 January 44.3 - 44.3
================================================ ============== =========== =================
Cash and cash equivalents at 31 December 31.4 - 31.4
================================================ -------------- ----------- -----------------
Analysis of cash and cash equivalents
Cash and cash equivalents 150.3 - 150.3
================================================ ============== =========== =================
Bank overdraft (118.9) - (118.9)
============== =========== =================
Cash and cash equivalents at 31 December 31.4 - 31.4
================================================ ============== =========== -----------------
2. Segmental reporting
The Group presents segmental information to better reflect the
Group's revenue streams and the single-segment trading nature of
the business' operations. No further disclosures have been made
given the single segment trading nature of the business' operations
which are predominantly transacted in the United Kingdom. All
channels have been shown as gross totals prior to the elimination
of intercompany trading activity so as to provide more granular
detail around the Group's internal trading activities.
2020 2019 (restated)
Group GBPm Mix* GBPm Mix* (restated)
-------------------- -------- ------ ---------------- ----------------
New cars 1,709.3 42.5% 2,226.4 42.8%
===================== ======== ====== ================ ================
Used cars 1,779.1 44.3% 2,326.3 44.7%
===================== ======== ====== ================ ================
Aftersales 383.8 9.5% 495.3 9.5%
===================== ======== ====== ================ ================
Leasing and other 148.4 3.7% 153.3 3.0%
===================== ======== ====== ================ ================
Less: intercompany (320.7) - (394.8) -
--------------------- -------- ------ ----------------
Revenue 3,699.9 100% 4,806.5 100%
--------------------- -------- ------ ---------------- ----------------
*Mix calculation excludes the effect of intercompany
revenues.
3. Non-underlying items
The following details items of income and expenditure that the
Group has classified as non-underlying in its statement of total
comprehensive income.
2020 2019
Group GBPm GBPm
------------------------------------------- ------- ------
Non-underlying items at operating
profit
=========================================== ======= ======
1 - Gain on property disposals (3.1) (4.9)
============================================ ======= ======
2 - Impairment of property, plant
and equipment 3.4 3.7
============================================ ======= ======
2 - Impairment of right of use assets 0.4 1.8
============================================ ======= ======
2 - Gain on lease surrenders (1.2) (0.4)
============================================ ======= ======
2 - Restructuring costs 9.9 9.2
============================================ ======= ======
3 - Impairment of goodwill and intangible
assets 3.6 30.4
============================================ ======= ======
4 - Value added tax (VAT) - (6.2)
============================================ ======= ======
5 - Restructure of regulated activities - 4.7
============================================ ======= ======
5 - FCA provision (10.4) 10.4
============================================ ======= ======
6 - Accrual for potential tax penalties - 1.0
============================================ ======= ======
7 - Professional fees 9.2 -
=========================================== ======= ======
8 - Finance overpayments 0.3 -
Non-underlying items at operating
profit 12.1 49.7
-------------------------------------------- ------- ------
1 - Property disposals relate to the net gains on the sale of a
number of freehold properties during the current and prior
year.
2 - During the year, the Board took decisive restructuring
actions to position the Group for a strong and sustainable future.
This included the closure, consolidation or refranchising of 12
sites (2019: 15 sites). In addition to the Group-wide
restructuring, costs relating to site closure and impairment losses
have been recognised during the current and prior year net of
GBP1.6m (2019: net of GBP0.6m income) insurance income.
3 - During the current and prior year the Directors have
concluded that impairment charges against the carrying value of
certain elements of the Group's intangible asset base are required
(Ford CGU goodwill impairment GBP2.6m - see Note 8; Lomond brand
impairment GBP1.0m - see Note 9).
4 - During the prior year the Group has benefitted from a change
in how HMRC view VAT treatment for dealer deposit contributions
which was previously uncertain and has given rise to a one-off
credit of GBP5.6m in respect of prior periods. In addition a
one-off VAT charge totalling GBP2.0m was made in relation to
manufacturer deposit contributions and following a challenge over
accounting for VAT on Motability sales the Group recognised a
credit of GBP2.6m in year ended 31 December 2019.
5 - Costs totalling GBP4.7m in respect of the Group-wide FCA
focused restructure plan were recorded as non-underlying in the
prior year. These costs represented the infrequently occurring
set-up expenditure for the establishment of new processes and
controls and governance structure in order to improve internal
control, risk assurance systems and internal audit as well as
delivering best practice and an enhanced customer experience. A
provision of GBP10.4m was recorded in the year ended 31 December
2019 in respect of FCA matters. This provision was released in the
year ended 31 December 2020. See Note 13 for further details.
6 - An accrual of GBP1.0m was recognised in the prior year in
respect of potential tax penalties arising from the understatement
of taxable profits in prior years in some of the Group's subsidiary
undertakings.
7 - Professional fees incurred in relation to dealing with the
Group's share suspension and investigation into prior period
accounting irregularities have been treated as non-underlying
items.
8 - GBP0.3m of additional costs have been incurred during the
current year in respect of rectifying historic issues in relation
to finance overpayments.
4. Finance costs
2019
2020 (restated)
Group Note GBPm GBPm
------------------------------------------------ ------ ------- -------------
Finance costs:
------------------------------------------------ ------ ------- -------------
On revolving credit facility (3.9) (3.3)
======================================================== ======= =============
On other bank borrowings (1.6) (2.7)
======================================================== ======= =============
On consignment, repurchase vehicle liabilities
and stocking loans (14.0) (16.1)
======================================================== ======= =============
On vehicle rental finance liabilities (1.7) (2.2)
======================================================== ======= =============
On lease liabilities (6.1) (6.3)
======================================================== ======= =============
Debt issue costs (0.5) (0.4)
======================================================== ======= =============
(27.8) (31.0)
------------------------------------------------------- ------- -------------
Net pension costs:
------------------------------------------------ ------ ------- -------------
On defined benefit pension obligation (6.1) (8.1)
======================================================== ======= =============
On pension scheme assets 5.0 6.2
(1.1) (1.9)
------------------------------------------------------- ------- -------------
Finance costs (28.9) (32.9)
-------------------------------------------------------- ------- -------------
Amounts disclosed in the year ended 31 December 2019 have been
reanalysed to show a more detailed split of finance costs and have
been restated for prior year adjustments. See Note 1.
5. Taxation
2020 2019
Group GBPm GBPm
----------------------------------------- ------ -------
Current tax credit
========================================= ====== =======
Current year - (1.2)
=========================================== ====== =======
Adjustment in respect of prior years (0.4) (2.5)
(0.4) (3.7)
----------------------------------------- ------ -------
Deferred tax charge/(credit):
========================================= ====== =======
Deferred tax - origination and reversal
of temporary differences 3.5 0.2
=========================================== ====== =======
Deferred tax rate adjustment 5.0 -
========================================= ====== =======
Adjustment in respect of prior years (2.0) (0.4)
6.5 (0.2)
----------------------------------------- ------ -------
Total tax charge/(credit) 6.1 (3.9)
------------------------------------------- ------ -------
Tax on items (credited)/charged
to other comprehensive income:
========================================= ====== =======
Tax on pension scheme obligations (7.3) 1.2
=========================================== ====== =======
(7.3) 1.2
----------------------------------------- ------ -------
2020 2019
GBPm GBPm
----------------------------------------- ------ -------
Reconciliation of total tax
========================================= ====== =======
Profit/(loss) before tax 2.0 (45.7)
=========================================== ====== =======
Standard rate of corporation tax
at 19% (2019: 19%) 0.4 (8.7)
=========================================== ====== =======
Disallowable items 1.4 6.5
=========================================== ====== =======
Capital gains 1.3 -
========================================= ====== =======
Share based compensation 0.5 0.7
=========================================== ====== =======
Adjustment in respect of prior years (2.4) (2.9)
=========================================== ====== =======
Deferred tax rate adjustment 5.0 -
========================================= ====== =======
Difference on overseas tax rate (0.1) 0.5
Total tax 6.1 (3.9)
------------------------------------------- ------ -------
In the 11 March 2020 budget it was announced that the UK tax
rate will remain at the current rate of 19% and not reduce to 17%
from 1 April 2020. This will have a consequential effect on the
Group's future tax charge. Deferred tax assets and liabilities have
been recalculated based on a rate of 19% as at 31 December 2020
which has given rise to an overall increase in the Group's deferred
tax base and an increased charge in the current period.
A UK corporation tax rate of 25% was announced in the
Chancellor's Budget of 3 March 2021, along with a temporary
extension to the loss carry-back rules allowing up to GBP2.0m of
tax losses to be carried back to the preceding three periods. The
25% rate will apply from 1 April 2023 and the carry-back of losses
is expected to apply to years ending 31 December 2020 and 31
December 2021. If these two measures had been substantively enacted
at the balance sheet date the Group's deferred tax liability would
have increased by GBP10.4m and the current tax asset increased by
GBP0.3m.
6. Dividends
2020 2019
Group GBPm GBPm
------------------------------------------------- ------- ------
Interim dividend for the year ended 31 December
2020 nil p (2019: 1.48p) - 5.8
=================================================== ===== ======
Final dividend for the year ended 31 December
2019 nil p (2019: 2.60p) - 10.1
=================================================== ----- ------
- 15.9
--------------------------------------------------------- ------
The Directors do not propose a final dividend in respect of the
financial year ended 31 December 2020 (2019: nil).
As noted in the 2019 Annual Report & Accounts, the Board has
become aware of an issue concerning the technical compliance with
the 2006 Act in relation to the payment of interim and final
dividends in 2013, 2014 and 2015. The effect of these
irregularities is that the interim and final dividends paid in
2013, 2014 and 2015 were paid to shareholders at a time when the
Company did not hold adequate distributable reserves. However,
there were sufficient reserves held in subsidiaries of the Company
which could have been distributed to the Company in order to
provide the Company with adequate reserves.
To satisfy the steps required to rectify these irregularities,
the Company will put forward a resolution at the Company's
forthcoming General Meeting.
7. Loss per share
2019
Group 2020 (restated)
Loss attributable to ordinary shareholders
(GBPm) (4.1) (41.8)
======================================================= ================ ============
Weighted average number of shares in issue 390,138,374 389,182,654
Basic loss per share (p) (1.05) (10.74)
------------------------------------------------------- ================ ------------
Loss attributable to ordinary shareholders
(GBPm) (4.1) (41.8)
======================================================= ================ ============
Dilutive effect of share based payment options
and weighted average number of shares in issue 390,138,374 389,182,654
Diluted loss per share (p) (1.05) (10.74)
------------------------------------------------------- ---------------- ------------
Profit/(loss) before tax (GBPm) 2.0 (45.7)
======================================================= ================ ============
Add: Non-underlying items (GBPm) 12.1 49.7
------------------------------------------------------- ---------------- ------------
Underlying profit before tax (GBPm) 14.1 4.0
======================================================= ================ ============
Tax rate 19.0% 19.0%
======================================================= ================ ============
Underlying tax (GBPm) (2.7) (0.8)
------------------------------------------------------- ---------------- ------------
Underlying earnings attributable to ordinary
shareholders (GBPm) 11.4 3.2
======================================================= ================ ============
Weighted average number of shares in issue 390,138,374 389,182,654
Underlying basic earnings per share (p) 2.93 0.83
------------------------------------------------------- ---------------- ------------
In the years ended 31 December 2020 and 31 December 2019 the
basic and diluted earnings per share are equal as a result of the
Group incurring a loss for the year. This has therefore created an
anti-dilutive impact. The diluted weighted average number of shares
in issue in 2020 was 398,084,323 (2019: 393,961,890).
8. Goodwill
Group
2020 2019
Cost GBPm GBPm
------------------------------ ------ ------
At 1 January and 31 December 122.4 122.4
-------------------------------- ------ ------
Aggregate impairment
=============================== ====== ======
At 1 January 40.5 10.7
================================== ====== ======
Charge for the
year 2.6 29.8
At 31 December 43.1 40.5
-------------------------------- ------ ------
Carrying amount at 31
December 79.3 81.9
------------------------------- ------ ------
Following the Group's annual impairment review and a
deterioration in expected market conditions and site closures
underpinning the value in use calculations, an impairment charge of
GBP2.6m has been recognised during the year (2019: GBP29.8m). The
2020 charge of GBP2.6m was recognised in the first half of the
year. No additional goodwill impairment was required following
management's year end impairment reviews.
In 2020 the Group has merged the operational activities of the
former Renault Nissan Dacia CGU with that of the former Vauxhall
CGU to form one new revised CGU. No impairments were identified
during the annual impairment review on either the new or old CGU
allocation basis in relation to this CGU.
Details of the GBP1.0m impairment of intangible assets is given
in Note 9.
The following table summarises goodwill and intangibles with an
indefinite useful economic life allocated by CGU:
2020 Licences 2019 Licences 2019
2020 Goodwill and brands 2020 Total 2019 Goodwill and brands Total
CGU GBPm GBPm GBPm GBPm GBPm GBPm
JLR 9.0 - 9.0 9.0 - 9.0
-------------- -------------- ----------- -------------- -------------- -------
Audi 22.1 27.9 50.0 22.1 28.9 51.0
-------------- -------------- ----------- -------------- -------------- -------
Charles Hurst 9.4 - 9.4 9.4 - 9.4
-------------- -------------- ----------- -------------- -------------- -------
Ford 4.8 2.9 7.7 7.4 2.9 10.3
-------------- -------------- ----------- -------------- -------------- -------
Mercedes-Benz 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
-------------- -------------- ----------- -------------- -------------- -------
BMW - 21.7 21.7 - 21.7 21.7
-------------- -------------- ----------- -------------- -------------- -------
Vauxhall Renault
Nissan Dacia 2.8 2.9 5.7 2.8 2.9 5.7
-------------- -------------- ----------- -------------- -------------- -------
Fleet & Leasing 9.1 - 9.1 9.1 - 9.1
-------------- -------------- ----------- -------------- -------------- -------
79.3 99.5 178.8 81.9 100.5 182.4
-------------- -------------- ----------- -------------- -------------- -------
The Group's three year strategic review considers the Group's
profit and loss, cashflows, debt and other key financial ratios
over the 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 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 Board approved
strategic plan to 31 December 2023. The key assumptions in the
strategic plan 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 assumptions made are
based on the Board's understanding of the extent and duration of
the COVID-19 related trading restrictions currently imposed in
addition to the current macro-economic context and outlook, past
experience adjusted for expected changes, and external sources of
information.
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 2019 2018
Three to five year revenue
growth 0.0% to 1.4% 0.0% to 1.0% 0.0% to 1.4%
------------- ------------- -------------
Three to five year operating
expenses growth 0.0% to 2.0% 0.0% to 2.0% 0.0% to 1.1%
------------- ------------- -------------
Post year five growth rate 0% 0% 0%
------------- ------------- -------------
Discount rate 9.87% 8.51% 8.70%
------------- ------------- -------------
The pre-tax adjusted discount rate used has been calculated
using the Group's estimated cost of capital and benchmarked against
externally available data.
As noted above an impairment of GBP2.6m has been recognised in
the current year to reduce the carrying amount of goodwill in the
Ford CGU. This impairment was recorded during the preparation of
the Group's interim Financial Statements and appreciated the
uncertainty COVID-19 was causing the business and on the market
conditions at that time. In accordance with IFRIC 10 Interim
Financial Reporting and Impairment, impairments recorded in interim
Financial Statements are not permitted to be reversed should
changes in facts and circumstances result in the recoverable amount
of the CGU being higher than its carrying amount at the subsequent
impairment test date. Having performed a number of additional
sensitivity tests including modelling the impact of the Group's
sensitised going concern model and increasing the WACC rate by 1.0%
no additional disclosures are considered necessary as neither of
these models resulted in any impairment. In addition a reverse
stress test on the base case model was performed in order to
eradicate the headroom on the CGU that started with the least
headroom in the base case model. In order to achieve this a change
in circumstances beyond what the Board considers to be a reasonable
change in circumstances and assumptions would be required. As a
result, no additional sensitivity disclosures have been
disclosed.
9. Intangible assets
Licences
and brands IT development Total
Group GBPm GBPm GBPm
----------------------------------------- ------------ --------------- ------
Cost
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 - 3.0 3.0
========================================== ============ =============== ======
Reclassifications to property, plant
and equipment - (0.6) (0.6)
============ ======
At 31 December 2020 102.6 42.0 144.6
------------------------------------------ ------------ --------------- ------
Accumulated amortisation and impairment
========================================== ============ =============== ======
At 1 January 2019 1.5 19.4 20.9
========================================== ============ =============== ======
Charge for the year - 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 year - 4.8 4.8
========================================== ============ =============== ======
Impairment charge 1.0 - 1.0
========================================== ============ =============== ======
At 31 December 2020 3.1 30.7 33.8
------------------------------------------ ------------ --------------- ------
Carrying amount
As at 1 January 2019 101.1 12.3 113.4
------------------------------------------ ------------ --------------- ------
As at 31 December 2019 and 1 January
2020 100.5 13.7 114.2
------------------------------------------ ------------ --------------- ------
As at 31 December 2020 99.5 11.3 110.8
------------------------------------------ ------------ --------------- ------
Intangible assets are considered as part of the Group's annual
impairment review (see Note 8).
An impairment charge of GBP1.0m has been made relating to the
Group's Lomond brand. Following a review of the Group's marketing
positioning the Board are now of the view that the value previously
attributed to the Lomond brand has now been diminished and as such
have recorded an impairment charge in the year as a non-underlying
item.
At 31 December 2020 there is an amount of GBPnil (2019: GBPnil)
committed for future capital expenditure.
10. Property, plant and equipment
Motor
Freehold Leasehold vehicles
property property for rental Other Total
Group GBPm GBPm GBPm GBPm GBPm
Cost
At 1 January 2019 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 1.1 - - 0.1 1.2
====================================== ========== ========== ============ ======= =======
Additions 3.0 1.2 28.9 8.5 41.6
====================================== ========== ========== ============ ======= =======
Disposals (14.1) (3.0) (2.8) (13.3) (33.2)
====================================== ========== ========== ============ ======= =======
Transfers (2.5) 3.2 4.2 (4.9) -
====================================== ========== ========== ============ ======= =======
Transfers from intangible
assets - - - 0.6 0.6
====================================== ========== ========== ============ ======= =======
Transfers to inventories - - (34.6) - (34.6)
====================================== ========== ========== ============ ======= =======
Transfers to assets held
for sale (7.8) (2.4) - - (10.2)
-------------------------------------- ---------- ---------- ------------ ------- -------
At 31 December 2020 249.9 91.9 96.8 75.3 513.9
-------------------------------------- ---------- ---------- ------------ ------- -------
Accumulated depreciation
and impairment
At 1 January 2019 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 - - - 0.1 0.1
====================================== ========== ========== ============ ======= =======
Charge for the year 2.9 2.5 16.8 10.0 32.2
====================================== ========== ========== ============ ======= =======
Impairment loss 0.2 - - 1.3 1.5
====================================== ========== ========== ============ ======= =======
Disposals (3.1) (2.2) (1.9) (13.1) (20.3)
====================================== ========== ========== ============ ======= =======
Transfers to inventories - - (18.0) - (18.0)
====================================== ========== ========== ============ ======= =======
Transfers to assets held
for sale (0.8) - - - (0.8)
========== ============ =======
At 31 December 2020 22.5 18.6 28.8 44.1 114.0
-------------------------------------- ---------- ---------- ------------ ------- -------
Carrying amount
As at 1 January 2019 248.7 60.8 67.6 39.7 416.8
-------------------------------------- ---------- ---------- ------------ ------- -------
As at 31 December 2019 and
1 January 2020 246.9 74.6 69.2 38.5 429.2
-------------------------------------- ---------- ---------- ------------ ------- -------
As at 31 December 2020 227.4 73.3 68.0 31.2 399.9
-------------------------------------- ---------- ---------- ------------ ------- -------
Assets in the course of construction relate to build costs that
have been incurred but the property is not yet in use and are
included in Other. The total of these assets held at 31 December is
GBP4.3m (2019: GBP3.6m). These assets will be transferred to
Freehold or Leasehold property when complete. Other includes plant
and machinery, fixtures, fittings and tools and equipment.
Included within freehold property is freehold land at a cost of
GBP7.5m (2019: GBP7.5m) which is not depreciated. At 31 December
2020 there is an amount of GBP7.3m (2019: GBP7.2m) committed for
future capital expenditure.
During the year ended 31 December 2020 the total net book value
of disposals from property amounted to GBP12.0m (2019: GBP9.6m).
Total proceeds received was GBP14.5m (2019: GBP14.7m) resulting in
a gain on disposals of GBP2.5m (2019: GBP5.1m).
Following the Group's restructuring program, an impairment
charge of GBP1.5m (2019: GBP3.0m) has been recorded representing an
adjustment to the expected recoverable values of assets. In the
prior year, a further GBP1.3m has been recognised as an impairment
loss against the carrying amount of affected assets following a
fire at one of the Group's dealerships during 2019. At the balance
sheet date GBP9.4m (2019: GBP5.1m) of properties have been
reclassified into to assets held for sale.
11. Right of use assets
Property Other Total
Group GBPm GBPm GBPm
Cost
At 1 January 2019 240.1 6.0 246.1
========================================== ========= ====== =======
Correction of errors* 18.2 - 18.2
========================================== ========= ====== =======
At 1 January 2019 (restated) 258.3 6.0 264.3
------------------------------------------ --------- ------ -------
Additions 24.5 6.2 30.7
========================================== ========= ====== =======
Retirements and surrenders (5.3) (5.9) (11.2)
=======
At 31 December 2019 277.5 6.3 283.8
------------------------------------------ --------- ------ -------
Cost
At 1 January 2020 277.5 6.3 283.8
========================================== ========= ====== =======
Additions 12.7 3.7 16.4
========================================== ========= ====== =======
Retirements and surrenders (11.0) (2.9) (13.9)
========= ====== =======
At 31 December 2020 279.2 7.1 286.3
------------------------------------------ --------- ------ -------
Accumulated depreciation and impairment
At 1 January 2019 138.9 3.9 142.8
========================================== ========= ====== =======
Correction of errors* 10.9 - 10.9
------------------------------------------ --------- ------ -------
At 1 January 2019 (restated) 149.8 3.9 153.7
========================================== ========= ====== =======
Charge for the year 12.5 2.8 15.3
========================================== ========= ====== =======
Impairment charge 1.8 - 1.8
========================================== ========= ====== =======
Retirements and surrenders (3.4) (2.6) (6.0)
------------------------------------------ --------- ------ -------
At 31 December 2019 160.7 4.1 164.8
------------------------------------------ --------- ------ -------
At 1 January 2020 160.7 4.1 164.8
========================================== ========= ====== =======
Charge for the year 12.4 2.6 15.0
========================================== ========= ====== =======
Impairment charge 0.4 - 0.4
========================================== ========= ====== =======
Retirements and surrenders (10.5) (1.0) (11.5)
=======
At 31 December 2020 163.0 5.7 168.7
------------------------------------------ --------- ------ -------
Carrying amount
----------------------------------------- --------- ------ -------
As at 1 January 2019 108.5 2.1 110.6
------------------------------------------ --------- ------ -------
As at 31 December 2019 and 1 January
2020 116.8 2.2 119.0
------------------------------------------ --------- ------ -------
As at 31 December 2020 116.2 1.4 117.6
------------------------------------------ --------- ------ -------
*Details of the correction of errors are shown in Note 1.
Included within the Other category are leases for motor vehicles
and IT equipment.
A charge of GBP0.4m (2019: GBP1.8m) has been recognised
following the cessation of trade from certain dealerships during
the year thereby giving rise to an impairment charge which has been
treated as a non-underlying item (see Note 3).
12. Inventories
2020 2019
Group GBPm GBPm
------------------------- -------------- ------------------
Goods for resale 255.7 398.7
=========================== ============== ==================
Vehicle spare parts for
resale 17.2 24.1
=========================== ============== ==================
Consignment vehicles 382.3 533.7
655.2 956.5
------------------------- -------------- ------------------
Total write-offs of GBPnil (2019: GBPnil) have been incurred
during the year and there have been no reversals of past
write-downs (2019: none). Stocking loans provided by third party
finance houses are secured over the vehicles used for the provision
of such finance.
Included within goods for resale are vehicles leased out to
staff employees on short-term lease arrangements via a third party
but are still actively marketed for immediate sale to third parties
by the Group as the group has not relinquished control of these
vehicles. As at 31 December 2020 these total GBP23.6m (2019:
GBP33.0m).
At 31 December 2020 the Group had entered into a number of
future purchase commitments amounting to GBP4.8m (2019: GBP11.6m)
which are not recognised in the financial statements.
13. Provisions
Group
2020 2019
GBPm GBPm
-------------------- ----------------------
Provision in respect
of regulatory matters - 10.4
========================= ===================
At 31 December - 10.4
------------------------- ------------------- ----------------------
Provisions Provisions
for other for other
charges charges
Group 2020 GBPm 2019 GBPm
------------------------ -------------------- ----------------------
At 1 January 10.4 -
======================== ==================== ======================
Created in the year - 10.4
========================= =================== ======================
Released during the
year (10.4) -
======================== --------------------
At 31 December - 10.4
------------------------- ------------------- ----------------------
In the year ended 31 December 2019, after careful consideration
of the open matters with the FCA (namely the past business review,
ongoing enforcement review and the events that led to the delay in
publishing the Annual Report & Accounts and the suspension of
shares on 1 July 2020) the Board 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 recorded a
provision at 31 December 2019. The spectrum of possible outcomes
included restitution of customer detriment, additional costs
associated with the regulated activities and potential sanctions
was considered broad and the considered outcome based on that range
was considered to be GBP10.4m.
On 2 March 2021 the Group announced that the FCA had advised the
Board of its decision to close the investigation against Lookers
Motor Group Limited, the Group's FCA regulated entity, for the
possible mis-selling of regulated products, and associated issues
relating to potential customer detriment. In closing the case, the
FCA further advised the Board that it did not intend to use its
statutory powers to apply any sanctions against the Group in
relation to the matters under investigation. As the investigation
specifically covers the period from January 2016 to June 2019, the
Group is satisfied that the FCA confirmation represents an
adjusting event after the balance sheet date as there is no longer
an obligating event and have therefore released the GBP10.4m
provision into non-underlying items in the year ended 31 December
2020.
14. Subsequent events
COVID-19
On 4 January 2021 a third national lockdown was implemented. The
business has been able to continue to operate with pre-booked
aftersales service being provided supplemented by new and used car
sales activity being carried out via 'Click & Drive'. This
activity has continued in earnest up to 12 April 2021 when all of
the Group's dealerships fully re-opened and began trading normally.
The Board continues to consider the effects of COVID-19 as an event
affecting underlying activities.
FCA regulatory matters
On 2 March 2021 the Group announced that the FCA had advised the
Board of its decision to close the investigation against Lookers
Motor Group Limited, the Group's FCA regulated entity, for the
possible mis-selling of regulated products, and associated issues
relating to potential customer detriment. In closing the case, the
FCA further advised the Board that it did not intend to use its
statutory powers to apply any sanctions against the Group in
relation to the matters under investigation. As the investigation
specifically covers the period from January 2016 to June 2019, the
Group is satisfied that the FCA confirmation represents an
adjusting event after the balance sheet date as there is no longer
an obligating event and have therefore released the GBP10.4m
provision into non-underlying items in the year ended 31 December
2020.
Banking facilities
In May 2021 the Group successfully renegotiated its revolving
credit facilities with its existing club of banks for an initial
amount of GBP150m with an extension to September 2023. The amended
facilities include core leverage, interest cover and EBITDA
covenants which are tested on a quarterly basis commencing 30 June
2021.
15. Reconciliation of Alternative Performance Measures
The Group uses a number of Alternative Performance Measures
(APM) 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 the
APM 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 APM which reflect the underlying performance on the basis that
this provides users of the financial statements with additional
useful information to better assess the core business performance
of the Group. Details of the definitions of APM are made within the
Glossary in Note 16. A reconciliation of the statutory measures to
the APM is set out below:
Like-for-like revenue 2020 2019*
--------------------------------------------- -------------- -----------------
Revenue (GBPm) 3,699.9 4,806.5
============================================= ============== =================
Less: Non like-for-like revenue (52.1) (225.6)
============================================= -------------- -----------------
Like-for-like revenue (GBPm) 3,647.8 4,580.9
============================================= ============== =================
Gross profit margin
============================================= ============== =================
Revenue (GBPm) 3,699.9 4,806.5
============================================= ============== =================
Gross profit (GBPm) 411.0 513.1
============================================= ============== =================
Gross profit margin (%) 11.1% 10.7%
============================================= ============== =================
Underlying operating profit (GBPm)
--------------------------------------------- -------------- -----------------
Operating profit/(loss) (GBPm) 30.9 (12.8)
============================================= -------------- -----------------
Add: Non-underlying items (GBPm) 12.1 49.7
============================================= -------------- -----------------
Underlying operating profit (GBPm) 43.0 36.9
============================================= ============== =================
EBITDA and underlying EBITDA (GBPm)
--------------------------------------------- -------------- -----------------
Operating profit/(loss) (GBPm) 30.9 (12.8)
============================================= -------------- -----------------
Add: Depreciation (GBPm) 51.2 52.3
============================================= -------------- -----------------
Add: Amortisation (GBPm) 4.8 6.1
============================================= -------------- -----------------
EBITDA (GBPm) 86.9 45.6
============================================= ============== =================
Add: Non-underlying items (GBPm) 12.1 49.7
============================================= -------------- -----------------
Underlying EBITDA (GBPm) 99.0 95.3
============================================= ============== =================
Underlying profit before tax and underlying
basic EPS
--------------------------------------------- -------------- -----------------
Profit/(loss) before tax (GBPm) 2.0 (45.7)
============================================= -------------- -----------------
Add: Non-underlying items (GBPm) 12.1 49.7
============================================= -------------- -----------------
Underlying profit before tax (GBPm) 14.1 4.0
============================================= -------------- -----------------
Tax rate (%) 19.0% 19.0%
-------------- -----------------
Underlying tax (GBPm) (2.7) (0.8)
============================================= -------------- -----------------
Underlying profit after tax (GBPm) 11.4 3.2
============================================= -------------- -----------------
Weighted average number of shares in issue 390,138,374 389,182,654
=============================================
Underlying basic EPS (p) 2.93 0.83
============================================= -------------- -----------------
Property portfolio and property portfolio
by share
Property, plant and equipment (GBPm) 399.9 429.2
============================================= -------------- -----------------
Less: Other property, plant and equipment
(GBPm) (31.2) (38.5)
============================================= -------------- -----------------
Less: Motor vehicles (GBPm) (68.0) (69.2)
============================================= -------------- -----------------
Property portfolio (GBPm) 300.7 321.5
============================================= -------------- -----------------
Share capital at 31 December 390,138,374 390,138,374
=============================================
Property portfolio per share (p) 77.1 82.4
============================================= -------------- -----------------
Net debt excluding lease liabilities and
rental vehicle finance liabilities
Bank loans and overdrafts (GBPm) 283.7 209.8
============================================= -------------- -----------------
Less: Cash and cash equivalents (GBPm) (243.0) (150.3)
============================================= -------------- -----------------
Net debt (GBPm) 40.7 59.5
============================================= -------------- -----------------
*2019 restated
16. 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 Definition Why we measure
measure it
Like-for-like These are calculated To provide a
(LFL) where dealerships consistent overview
have contributed of comparative
twelve months trading performance
of revenue and
profit contribution
in both the
current and
comparative
periods presented.
------------------------- -------------------------
Gross profit Gross profit A measure of
margin as a percentage the significant
of revenue. revenue channels'
operational
performance
------------------------- -------------------------
Non-underlying Relate to costs A key metric
items or incomes which of the Group's
are not incurred non-underlying
in the normal business performance.
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.
------------------------- -------------------------
Underlying Operating profit A key metric
operating before the impact of the Group's
profit of non-underlying underlying business
items as defined performance.
above.
------------------------- -------------------------
Underlying Profit before A key metric
profit tax before the of the Group's
before impact of non-underlying underlying business
tax items as defined performance
above.
------------------------- -------------------------
Profit Profit after A key metric
after tax tax before the of the Group's
impact of non-underlying underlying business
items as defined performance
above.
------------------------- -------------------------
Underlying Earnings per A key metric
earnings share before of the Group's
per share the impact of underlying business
(EPS) non-underlying performance
items as defined
above.
------------------------- -------------------------
Net debt Bank loans and A measure of
overdrafts less the Group's
cash and cash net indebtedness
equivalents. that provides
Lease liabilities, an indicator
vehicle rental of the overall
liabilities balance sheet
and stocking strength
loans are not
included in
net debt.
------------------------- -------------------------
Property The net book A key metric
portfolio value of freehold of the Group's
and leasehold statement of
properties as financial position
at the balance
sheet date.
------------------------- -------------------------
New car A new vehicle A measure of
unit sale sale which has statistical
generated revenue volumes and
for the Group. indicator of
operational
performance
------------------------- -------------------------
Used car Any vehicle A measure of
unit sale sold that isn't statistical
a new car unit volumes and
sale. indicator of
operational
performance
------------------------- -------------------------
Car parc The approximate A measure of
number of vehicles the UK market
on the UK road size and indicator
network. for growth opportunities
------------------------- -------------------------
New car Total number A measure of
market of annual new the UK market
vehicle unit size and indicator
registrations for growth opportunities
made in the
UK as defined
by the Society
of Motor Manufacturers
and Traders
(SMMT).
------------------------- -------------------------
New car The Group's Our relative
market annual share performance
share of the new car against the
market calculated UK market
as a percentage
of the Group's
new car unit
sales to the
new car market
size.
------------------------- -------------------------
Details of the reconciliations of APMs to statutory measures are
made in Note 15.
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END
FR FFFVVRFIIVIL
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July 01, 2021 02:00 ET (06:00 GMT)
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