City round-up: Lookers; Moneysupermarket; Tatton Asset Management; Sosandar; Ultimate Products
Altrincham-based motor dealership, Lookers, announced an increase in the board’s expectations for underlying profit before tax for the full year, today, of not less than £75m, compared with £90.1m in 2021.
Announcing third quarter results today, the group also said it has a cash and property portfolio equivalent to 98p per share as at September 30, 2022, up from 78p at December 31, 2021. The group has started a share buyback programme of up to £15m today.
Lookers said the total UK new car market declined in Q3 by -0.1% (H1 -11.9%). However, the group outperformed the market by approximately 5.6%, boosted by its omni-channel customer experience strategy. In the important new registration plate month of September, the group’s new retail unit sales were up 11.5% against the UK new retail car market which grew by 4.6%, with underlying profit before tax for the month in line with last year.
Global supply chain disruption continued throughout the period, impacting the supply and availability of both new and used vehicles. Vehicle gross margins remained broadly in line with those reported in the first half. The group continued to face significant cost inflationary pressures, partly offset by improvements in operational efficiency and a continuing focus on working capital management.
Like-for-like used unit sales were down -7.1% in Q3, an improvement on the -8.3% decline reported in H1. This volume decline was partly offset by ongoing improvements in both margin retention and the penetration of finance and ancillary products.
Aftersales revenues in the period remained robust and were ahead of last year on a like-for-like basis.
At September 30, 2022, the group had a net cash balance of circa £86m compared with net cash of around £33m a year ago.
The net book value of freehold and leasehold properties of circa £297m as at September 30, 2022, is a key underpin to the strong balance sheet as well as providing additional operational flexibility.
The board said it is encouraged by the strength of trading in Q3 and the early start to Q4, and it continues to maintain a strong new car order bank, which is above historical normalised levels.
However, it warned that the availability of new vehicles continues to be a factor limiting growth. The business is also cautious on how consumer spending might be affected during the remainder of this financial year, with inflation, higher interest rates and wider economic uncertainty.
Notwithstanding these factors, given the strength of performance in the period, the board now expects underlying profit before tax for 2022 to be ahead of its previous expectations and to report no less than £75m.
Chief executive, Mark Raban, said: “We have built on the strong first half trading momentum, particularly in the important month of September with the arrival of a new registration plate.
“We remain mindful of ongoing supply chain disruption and significant inflationary pressures affecting consumers and businesses alike. However, our intense focus on driving self-help operational efficiencies across the business and ensuring ongoing strong vehicle margin retention means that we are increasing our profit expectations for the full year.”
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Peter Duffy
Price comparison website, Moneysupermarket.com, reported a 33% increase in third quarter total revenues of £101.9m.
The business, based in Ewloe, near Chester, said revenue in the quarter to September 30, excluding c ashback, grew 15%, driven by strong growth in money and travel channels.
It said its third quarter performance was ahead of expectations, particularly in money, and the board said it expects full-year EBITDA to be towards the upper end of market expectations.
Chief executive, Peter Duffy, said: “The cost-of-living crisis makes our purpose of helping households save money as important as ever.
“This quarter was another good performance. There are early signs of improving trends in the Insurance market, and in money more consumers are finding attractive products to switch to. Our strong brands are well equipped to support consumers at this critical time.”
Russ Mould, investmet director at Manchester investment platform, AJ Bell, said: “The cost-of-living crisis is putting pressure on households to ensure their finances are ship-shape and that means shopping around for better deals. That’s music to the ears of Moneysupermarket, which is clearly benefiting from the difficult backdrop as individuals seek better rates on credit cards and other financial products.
“It’s not all perfect, though, as the energy switching market has effectively shut up shop on a temporary basis, and weaker consumer sentiment has trickled through to weaker demand for travel insurance.
“The net effect still swings in Moneysupermarket’s favour as revenue jumped by a third in the three months to 30 September, a greater rate of growth than the 24% revenue gain recorded in the first nine months of its financial year.
“Newspapers and mainstream news websites are full of stories giving personal finance tips and a large majority will recommend shopping around for better deals. Therefore, one might expect sales momentum to remain strong for Moneysupermarket well into 2023.”
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Paul Hogarth
Wilmslow-based investment management and IFA support services group, Tatton Asset Management, said it has performed well in the six months to September 30, in a trading update today.
It said it enjoyed continued growth in revenue and profits and strong net inflows in a difficult and volatile market.
Organic net inflows averaged £150m per month (Mar 2022: £106m per month) in the period. Total inflows in the period were £0.907bn an increase of 39.1% compared with the same period last year (Sept 2021: £0.652bn).
These strong organic net inflows were offset by a negative market performance of £0.905bn resulting in total AUM (assets under management) at the end of the period being in line with the prior year end at £11.343bn (Mar 2022: £11.341bn). The group also continued to attract new firms, which totalled 806 at the end of the period, an increase of eight per cent since the prior year end (Mar 2022: 746).
The business continued to execute its ‘Road Map to Growth’ strategy, a three-year target of increasing AUM from £9.0bn (Mar 21) to £15.0bn through a combination of organic new net inflows and strategically aligned acquisitions, by completing the acquisition of 50% of the share capital of 8AM Global Limited towards the end of the period. At the time of completion, the assets of 8AM were expected to be at least £0.8bn and are now anticipated to settle closer to £1.0bn at the end of the period.
Paradigm, the group’s IFA support services business, also continued to perform well, with mortgage firms increasing to 1,706 (Mar 2022: 1,674) and consulting member firms to 424 (Mar 2022: 421).
Paradigm Mortgages participated in mortgage completions of £7.2bn (Sept 2021: £6.6bn), an increase of 9.1% as the momentum from the prior year was carried forward into this period.
Founder and CEO, Paul Hogarth, said: “We are pleased with the continued progress we are making as a group against the backdrop of difficult and volatile markets that have been with us throughout this period. Organic net inflows were very strong in the first six months as we had a number of significant wins which complemented underlying flows. We anticipate that net inflows will return to a more normalised level in the second half of this year in line with H2 of the prior year.
“Paradigm Consultancy continues to perform well and our mortgage business participated in a record £7.2bn of gross lending in the period. Whilst applications have remained robust in the period, given the climate of increasing interest rates and general economic uncertainty, we anticipate that the second half will be more challenging.”
He added: “We look forward to making further progress in the rest of the year while remaining mindful of the continuing macro-economic turbulence and market volatility and we remain confident in the group’s longer term prospects.”
The unaudited results for the half year period will be announced on November 22, 2022.
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Ali Hall and Julie Lavington
Cheshire-based online fashion brand, Sosandar, unveiled an update for its first six months to September 30, today, which showed trading throughout period has been strong with continued revenue growth and a second six-month period of positive profit before tax.
This performance, set against a challenging macroeconomic backdrop, illustrates that Sosandar has a proven, agile model and continues to execute successfully in line with its stated strategy, it said.
Net revenue of £20.9m were a 72% increase against the same period in the prior year, while pre-tax profits of £0.1m were a substantial positive swing versus a £1.08m loss a year ago, being the second six-month period of positive profit before tax following H2 FY22.
Net cash of £4.2m as at September 30, 2022, against £7m for the full year 2022, reflects planned earlier delivery of autumn stock than the prior year to facilitate deliveries into third party partners. In addition, the company is starting to import more via lower cost sea freight which accelerates use of cash.
Following its successes with third party partnerships to date, the company has launched a new partnership with Manchester-based N Brown Group’s JD Williams on a wholesale agreement basis which started in September 2022.
Selling Sosandar products through JD Williams will further increase the brand’s reach and deliver profitable growth.
The partnership has got off to a promising start and, together with M&S, Next, John Lewis and the Very Group, there are significant opportunities for further growth, the business said.
Founders and co-CEOs, Ali Hall and Julie Lavington, said: “We are extremely pleased to have delivered a strong performance in the first half of the financial year. Our well planned and agile approach, together with our distinctive product range and effective communication strategy, has enabled us to deliver a significant increase in revenue, as well as a full period of profitability. This momentum has continued into the early weeks of the second half, with strong trading in October to date and tracking in line with our expectations.
“The challenging and volatile macroeconomic conditions currently make the short term future difficult to predict with any certainty and their true impact on the consumer is not yet known, however, we remain confident in our long term strategy. We continue to invest and expand our product range, offering our customers an even greater selection of on-trend, affordable, long lasting, lifestyle appropriate clothes. In addition, our performance with our selected third party partners continues to go from strength to strength – and we are delighted to have signed an agreement with another highly regarded brand such as N Brown.
“We have a clear strategy in place and a proven ability to execute our plan. This gives the board the confidence that the group will continue to make progress and deliver profitable growth in line with full year market expectations.”
The board believes that consensus market expectations for the year ending March 31, 2023, are revenues of £42.8m, EBITDA of £2.2m and PBT of £2.0m.
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Simon Showman
Oldham-based Ultimate Products, the owner of a number of leading homeware brands including Salter and Beldray, has renewed its trademark licence agreement with Spectrum Brands, which grants the group an exclusive licence to use the Russell Hobbs trademark in the UK, Europe, Australia and New Zealand for non-electrical kitchen and laundry products.
The new agreement is on a rolling four-year basis, rather than the previous fixed-term arrangement due to end in March 2023. This significantly reduces the licencing risk for the group, as the licence will always have four years to run, rather than having a fixed end date.
Russell Hobbs is a British heritage kitchenware brand for which Ultimate Products has had the licence for cookware lines since 2011. Ultimate Products’ Russell Hobbs offering spans a range of non-electrical kitchen and laundry products specifically designed to help with chores in the kitchen and beyond. The group’s licence with Spectrum Brands does not include Russell Hobbs electrical appliances.
In fiscal year 2022, the group generated unaudited revenues of £20.2m under the Russell Hobbs trademark, representing 13.1% of the group’s total revenue for that period. Following the group’s acquisition of Salter Brands in July 2021, Russell Hobbs is the only licence agreement that Ultimate Products operates.
Simon Showman, Ultimate Products CEO, said: “Moving from a fixed term arrangement to a rolling four-year contract decreases the ongoing licence risks, allowing us to focus on the long term growth of the brand, which will increase the benefits of the partnership for both Spectrum Brands and Ultimate Products.”
