I am very pleased to report another strong year for the company with our eighth successive year of pro t growth generating *adjusted pro t before tax of £77.1 million (2015: £72.1 million), an increase of 7%. This result has been achieved during a period in which volumes in the UK new car market improved to their highest ever level. It also represents a great achievement in what has been a year of significant change and reorganisation for the group with the sale of the parts division, the major acquisitions of Knights BMW and MINI as well as Drayton Mercedes-Benz. We also reviewed and realigned our franchise representation with the sale of ten dealerships where the financial performance was either loss making or provided a limited profitability.
This result demonstrates a significant achievement and provides further evidence that our business model is both resilient and expansive. The motor division delivered another excellent trading performance during the year with an increase in pro t before tax of 7.3% to £69.2 million, compared to £64.5 million last year.
The parts division made positive progress and produced a good result for the ten months of the year that it was part of the group, with a profit before tax of £12.2 million. This compares to £12.6 million last year, for a full twelve month period.
The key elements of our performance were:
This growth has been encouraging and gives us further confidence in our ability to grow the business in 2017, as we believe that both the used and new car markets are likely to be stable this year. The growth in the new car market over recent years will continue to increase demand for aftersales and parts, as the number of cars under three years old continues to rise. This should provide significant opportunities for further growth in both these sectors of the market where Lookers, as a leading company in the industry, benefits from economies of scale, the skills of our people and our ability to invest in improved technology.
As referred to above, a major event of the year was the sale of the parts division to Alliance Automotive UK Ltd (“Alliance Automotive”). On 10 August 2016 we announced that the company had entered into a conditional agreement to sell the parts division to Alliance Automotive. This was subject to clearance from the EU competition commission and subsequently completed on 4 November and a total consideration of £126 million was received. The £28.0 million pro t on the sale of the parts division has been included in the accounts as an exceptional profit.
This disposal, which was at a price that the Board believed to be attractive, provided the group with an opportunity to refine its strategy of buying and selling cars in our motor retail division and adding value through acquisitions. The sale proceeds will be used to pursue acquisitions in the motor division over the short and medium-term, two of which were completed during the second half of 2016.
Given the group’s proven track record of delivering successful acquisitions in recent years, the Board is con dent of acquiring further businesses in the motor division, which we believe will deliver an increase in shareholder value over the medium-term.
