Record profitability

Excellent cash conversion and robust balance sheet to drive future growth

Download our 2017 preliminary results here: PDF

Download our 2017 annual report and financial statement here: PDF

Download the 2017 Analyst & Investor Presentation.

Click here to watch our Q&A webcast

Pre-close Trading Update

Interview with Michael Sherwin, Chief Financial Officer.
Interview with Michael Sherwin, Chief Financial Officer.
Analyst interview with Mike Allen.
Analyst interview with Mike Allen, Head of Research, Zeus Capital.

Pre-close Trading Update

  • Trading in line with trends set out in AGM statement
  • Sale and leaseback of Jaguar Land Rover property in Leeds
    • Prominent dealership property in prime city centre location
    • Attractive lease yield and conditions
    • 15 year term
    • Profit on sale of circa £4m
    • Generates cash of £14m to fund ongoing investment in future growth
    • Selective approach
    • Focus on capital allocation
  • Share buy-back programme in progress

Record profitability, excellent cash conversion and robust balance sheet to drive future growth

  • Revenues increased by 16.5% to £2,822.6m (2016 : £2,423.3m)
  • Like-for-like service revenues up 5.8% long-term growth trend continues
  • Like-for-like used vehicle volumes increased 7.1%: over 5 years of continuous growth
  • Softening of new private retail market: Group like-for-like new car retail volumes down 6.4%
  • Record Group trading performance driven by improvement in recently acquired businesses, a strong used car performance and growth in higher margin service area
  • Growth strategy progressed with greater premium mix, including the addition of the Mercedes-Benz and Toyota franchises to the Group

* adjusted for amortisation of intangible assets and share based payments charge.

Strengthening Margins

  • Group gross profit margins increased from 10.9% to 11.1%
  • Group like-for-like service gross profit margins strengthened from 76.8% to 77.7%
  • Like-for-like used car margins strengthened from 10.1% to 10.6%

Managing Operating Expenses and Tax Payments

  • Operating expenses as a percentage of revenue up to 10.0% (2016: 9.7%) due to increased numbers of customer facing colleagues and higher used car marketing spend
  • Growth in expenses as a percentage of revenue stabilised in H2
  • Effective rate of taxation 19.5% (2016: 20.3%)

Generating Cash Profits and Managing Working Capital

  • EBITDA up 20% to £41.4m (2016: £34.5m)
  • Cash generated from operations of £58.1m (2016: £65.8m) representing cash conversion of operating profits of 181%
  • Record profit before tax up to 14.6% to £29.8m (2016 : £26.0m)
  • Cash of £16.0m generated from working capital (2016 : £30.5m)

Investing to Support Future Cash Growth

  • £54.4m invested in acquiring land and dealerships (2016: £31.0m)
  • £25.1m of capital expenditure, primarily on new dealership developments and increasing capacity in sales and aftersales areas (2016: £14.0m)
  • Year one of a two year period of major capital investment: spend levels expected to substantially reduce thereafter

Operational Highlights

  • Record Group trading performance driven by improvement in recently acquired businesses, a strong used car performance and growth in higher margin service area
  • Growth strategy progressed with greater premium mix, including the addition of the Mercedes-Benz franchise to the Group
  • Strong balance sheet to fund future growth with net cash of £21.0m (2016 : £23.1m) and new five year acquisition banking facility signed in February of £40m, with the potential to add a further £30m
  • Encouraging outlook with robust trading in March and April 2017 - Board remains confident about the Group’s prospects for the year ahead

Focus on Shareholder Returns

  • Dividend up 7.7% to 1.4p per share (2016 : 1.3p per share)
  • 280% dividend growth since dividends commenced in 2011:
  • Return on equity fell to 10.8% (2016 : 11.4%) following the equity raise during the year
  • Long term (10 years) free cashflow to equity as a percentage of equity 12.1% (2016 : 9 years, 12.7%)

Very Strong Balance Sheet to Fund Growth

  • Period end net cash of £21.0m (2016 : £23.1m)
  • New five year acquisition banking facility signed in February of £40m, with the potential to add a further £30m
  • Raised £35m in March 2016 to finance further acquisitions: this capital has been deployed as planned
  • Used car inventory largely unencumbered from short-term stocking loans
  • Freehold and long leasehold property of £182.0m (2016 : £137.7m)

Current Trading and Outlook

  • In March and April 2017 (“the post year-end period”) the Group has continued to trade strongly, with profits ahead of the prior year on a like-for-like and total basis. Margins strengthened and operating expenses on a like-for-like basis were reduced as the cost base was flexed for lower new vehicle sales volumes and cost efficiency programmes delivered.
  • Used cars continued to see like-for-like volume growth and margin improvement. Service also witnessed growing revenues and stable margins on a like-for-like basis.
  • The March plate change month saw a record number of new vehicle registrations in the UK according to the SMMT. The 4.4% growth in March new retail UK registrations was aided by an element of pull forward of demand due to increasing vehicle excise duty from 1 April 2017 and the timing of Easter. April, as anticipated, saw a decline in SMMT new retail registrations of 28.4%. In the post year-end period SMMT new retail registrations declined by 3.5%. The Group saw significant growth in new retail vehicle profit contribution in the post year-end period despite a 9.7% decline in like-for-like new retail volumes. Pricing disciplines and cost control delivered higher margins and profits year on year in new vehicle sales.
  • The Board is also pleased to report an excellent contribution in the post year-end period from dealerships acquired in the previous financial year.
  • While the Board is aware of the wider reporting of the UK entering a more cautious consumer environment, trading in the post year-end period has been strong. The Board remains confident about the Group’s prospects for the current financial year and in delivering further progress in enlarging the scale of the Group.

Results Past and Present

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