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Trading statements

Lookers on track

30 October 2015 07:25

Car dealer and aftersales service group Lookers saw continued improvements in all areas of the business in the three months to the end of September.

The company says it produced a strong trading performance in the quarter, particularly during the important month of September and the board is very pleased to yet again report a record result for the period. This positive result was a healthy improvement on the corresponding period in 2015. An update says: "As we announced on 3 September, the major development for the group in the period was the acquisition of Benfield Motor Group for a purchase consideration of £87.5 million. This added 30 dealerships to the business and also made a significant contribution to the group result in September. During the period we also acquired a Jaguar dealership in Amersham and sold our used car supermarkets in Bristol and Burton-on-Trent.

"Our motor division delivered another excellent performance in the nine months to 30 September with total gross profit from new cars increasing by 7%. Margins for both new retail and fleet cars were maintained at a similar level to the prior year.

"Gross profit from used cars increased by 7% during the period, which continues the growth trend of recent years, with margins being maintained at similar levels. We continue to focus on stock management, sourcing good quality used cars and improving our online presence through continual improvements to our website, to generate further growth in used car volumes and margins.

"Our aftersales business increased turnover by 8% compared to 2014, benefitting from the growth in the vehicle parc of cars under three years old and increased the gross margin compared to the previous year. Gross profit from aftersales increased by 9% compared to the prior year. The increase in volumes and margins is also a result of the various initiatives that we have made in recent years to develop the aftersales business, in particular the increasing proportion of our customers who choose to enter into service contracts, which continues to improve customer retention.

"Our independent parts division made good progress in the period with increases in both turnover and profit before tax compared to the prior year, against a background of an improving but competitive market. Operating margins were maintained at a similar level to the prior year, with careful control of overheads resulting in a satisfactory increase in profit before tax.

"Operational cash flow continued to be strong during the period and was significantly higher compared to the prior year. Net cash flow includes the acquisition of Benfield for £87.5 million, but was ahead of last year if this is excluded. Whilst the ratio of net debt to EBITDA has increased following the Benfield acquisition, it should be well below 1.5 by the end of the year. Our bank facilities were renewed and extended at the time of the Benfield acquisition with total facilities of £250m at lower interest rates than the previous facilities and for an extended term. This continues to provide us with substantial levels of unutilised bank facilities and the group therefore has a significant amount of additional funding capacity." Looking ahead, the group says the balance sheet continues to be strengthened by strong operational cash flow and positive working capital management and we have substantial headroom in our new and increased bank facilities. The financial performance of the group in the nine month period builds on what was already a strong comparative in the previous year. The board is confident that the group should make further progress during the rest of this year and believes that the results for the year ending 31 December 2015 should be in line with current market expectations, which will represent a significant increase over the result for the previous financial year.

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