Car dealerships group expects to publish delayed accounts next month

Lookers

Altrincham-based car dealerships group Lookers said it expects to publish two sets of delayed results next month.

The annual accounts for the year ended December 31, 2019, and the interim results for the six months ended June 30, 2020, have been delayed due to audit investigations.

But in a trading update for the three months to September 30, today, the company said it expects both results to be published next month.

Having requested the temporary suspension of dealing in the group’s shares on July 1, due to the delays, Lookers said it expects to request a restoration of the listing of its shares shortly before publication of the interim results.

Lockdown has hit the business with the closure of dealerships earlier this year. It has shed 1,400 jobs and closed and disposed of a number of its dealerships.

Today’s update said trading for the third quarter was better than expected.

This was underpinned by a significant outperformance of the UK retail new car market, robust like-for-like growth in both used car sales and aftersales revenues.

It also reflected the strengthening of used car margins and the cost saving and other benefits of the group’s restructuring programme.

On a like-for-like basis, the group sold more than 42,000 new retail and used cars, 13.6% higher than the same period last year.

This growth was fuelled by the release of pent-up demand from more than two months of closure and the ongoing trend of private car use instead of public transport. Lookers has also had a good customer response to its improved, simplified and more digitised sales process, which has helped boost our performance.

The group said it outperformed the UK retail market for new cars with like-for-like unit sales up by 27.1% on last year.

It has repositioned its fleet business, withdrawing from certain uneconomic activities to focus on business which maximises margin retention and working capital efficiency.

On a like-for-like basis Lookers invoiced and delivered approximately 12,000 fleet units, which was 12.6% below last year.

During the period like-for-like used unit sales were 6.2% above last year.

Like-for-like service revenue was 7.4% above last year.

Today’s update says the group remains focused on driving cash flow through enhanced working capital management, portfolio management, cost reduction and the selective disposal of surplus property.

Like-for-like retail operating costs in the period were approximately 16% below last year.

Excluding the impact of the Government’s Job Retention Scheme and business rates holiday scheme, retail operating costs were approximately nine per cent below last year as a result of the continued focus on all discretionary cost items.

As at September 30 net debt was approximately £22.5m (2018: around £132.6m), substantially lower than last year.

The group currently holds freehold property for disposal with a net book value of around £30m. Approximately £12m from these disposals is expected to be received before December 31, 2020.

Looking ahead, Lookers said the temporary closure of its dealerships throughout the lockdown period had a significant impact on financial performance during the first half. As a consequence, the group expects to report a material underlying pre-tax loss in the first half.

Trading in the third quarter resulted in underlying profit before tax significantly ahead of last year, largely offsetting the loss recorded in the first half.

The fourth quarter will benefit from the full impact of the group’s restructuring activity, however, the board says it remains mindful of the ongoing uncertainty regarding COVID-19 and the possible impact on the UK car market.

Chief executive, Mark Raban, said: “Our decisive self-help measures, combined with better than expected trading in Q3 and strong support from our brand partners, have helped the group emerge from lockdown in a strong position.

“Naturally, we remain cautious around the future outlook given the ongoing COVID-19 backdrop, but we are well positioned to deal with any emerging challenges.”

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