Interim Results 2002
Inchcape PLC
05 August 2002
5 August 2002
Inchcape Announces Interim Results
Impressive First Half Results - Headline EPS* Increased Over 25.0%
Inchcape plc, the international automotive services group, announces its results
for the half-year to 30 June 2002.
Financial Highlights:
- Continuing operating profit* up by 10.8% at £59.5m
- Headline profit before tax* up 6.9% at £57.0m
- Profit before tax up 24.5% at £54.3m
- Headline EPS* up 25.9% at 51.1p
- Basic EPS up 75.0% at 47.6p
- Dividend up 13.6% at 10.0p per share
- Net debt only £17.2m, gearing of 4.5%
*Before goodwill amortisation and exceptional items
Operational Highlights:
- Inchcape appointed in June to develop Market Area Concept for Mercedes-Benz in
Oxford, Stratford-upon-Avon, Coventry and Banbury
- Subaru flagship site, a unique retail concept, opened in Melbourne - a city
that represents over 20.0% of the Australian market. Impact in 2003
- Earnings enhancing acquisition of minority shareholding in Inchcape Motors
Limited in Singapore with this benefit becoming apparent in the second half
- Recently announced Block Exemption revisions offer opportunities for Inchcape,
in line with strategic focus on specialist retail and business services
Peter Johnson, Chief Executive of Inchcape plc, commented:
'The benefits of focusing on scale businesses in six core markets and on key
manufacturer relationships can be clearly seen in today's results.
'Once again, profits exceeded the same period last year, driven by growth in all
of our core markets, with the exception of Hong Kong which was impacted by the
expected sharp reduction in the taxi market.
'I am encouraged by the progress being made on key strategic projects, in
specialist retail and in business services. With the full benefits of these
initiatives yet to be seen, and with the potential for us to use our strong
balance sheet to take advantage of the opportunities offered by the new Block
Exemption regime, I am confident that Inchcape will continue to build upon its
recent successful transformation into a broadly based automotive services
company.
'In the shorter term the market trends which are evident for the first half look
set to continue throughout the year.'
Financial Performance
2002 Interim Results
Summary Results
(£ million) 2002 2001
Turnover 1,816.5 1,755.4
Continuing operating profit* 59.5 53.7
Headline profit before tax* 57.0 53.3
Goodwill amortisation (2.7) (0.8)
Exceptional items - (8.9)
Profit before tax 54.3 43.6
Headline earnings per share* 51.1p 40.6p
Basic earnings per share 47.6p 27.2p
Ordinary dividend per share 10.0p 8.8p
*Before goodwill amortisation and exceptional items
Notes to Editors
A copy of the Interim Report 2002 including the Chairman's Statement follows.
For further information or a copy of the photograph, which accompanies this
release, please contact:
Group Communications, Inchcape plc
020 7546 0022
Hogarth Partnership Limited
020 7357 9477
Inchcape, as an international automotive services group, provides quality
representation for its manufacturer partners, a choice of channels to market and
products for its retail customers and a range of business services for its
corporate customers. Operating primarily in the UK, Greece, Belgium, Australia,
Hong Kong and Singapore, its key partners are Toyota, Subaru, Ferrari, Jaguar
and Land Rover. Inchcape's activities include exclusive Import, Distribution and
Retail, Business Services, automotive E-commerce and Financial Services.
For further information, visit us at www.inchcape.com
Chairman's Statement
These impressive first half results demonstrate the benefits of focusing the
Group on scale businesses in six core markets and on key manufacturer
relationships. Profits have increased in all of our core markets with the
exception of Hong Kong, which has returned to more normal levels, as expected,
following the end of the taxi replacement cycle.
Headline profit before tax in the first six months grew by 6.9% to £57.0m,
whilst Headline earnings per share grew 25.9% from 40.6p to 51.1p.
We recently purchased the minority shareholding in Inchcape Motors Limited
(IML), which was quoted on the Singaporean Stock Exchange. The offer became
unconditional on 2 May and the company was de-listed on 3 July. This resulted in
a cash outflow in the first half of £62.7m. The transaction will be earnings
enhancing, with this benefit becoming apparent in the second half.
A further major investment is our Subaru Retail project in Melbourne. By
investing £12.7m in facilities, Inchcape will shortly become the sole retailer
of Subaru vehicles in Melbourne. The flagship site, Subaru Docklands, opened in
May and by the end of the year we will be operating from seven sites selling
over 6,000 new and used cars per annum.
Whilst no further disposals were made in this period there are still certain
non-core businesses to be sold within our portfolio. Proceeds should exceed
£25.0m whilst the impact on operating profit is likely to be minimal.
We intend to use the strength of the balance sheet to continue to invest in the
development of Inchcape as a leading automotive services group. If available
funds are not applied for investment purposes, the Board has consistently said
that it will make additional returns of capital to shareholders. Given our
stated strategic intentions, a further return of capital is not currently
considered appropriate. However, our shareholder value driven approach is kept
under regular review.
Operating Review
Continuing Businesses
Continuing operating profit before goodwill amortisation and exceptional items
increased by 10.8% to £59.5m.
United Kingdom
Operating Profit £9.8m 2002, £9.1m 2001
The acquisition of the Bates Motors Group Ltd in September last year has been a
major contributory factor in the 19.4% increase in Retail profits over the first
half of 2001. Profits from other acquisitions, which were made as we expanded
with our key OEM partners (BMW, Toyota/Lexus, Audi, Mercedes-Benz and the
Premier Automotive Group (PAG) of Ford), have offset the impact of businesses
sold as we improved the quality of our portfolio.
Results from our Leasing business were disappointing in this period, and steps
are being taken to reduce the cost base of this business.
In Business Services, Eurofleet profits suffered from margin pressure due to
higher costs, such as insurance, and additional overheads resulting from a
number of strategic initiatives in progress. The focus is to broaden the revenue
base of Eurofleet by entering new market segments through innovative services
such as 'Inspect and Collect', which allows leasing companies to accurately bill
their customers for damage done to their vehicles.
Our start up businesses, Inchcape Fleet Management and AutoCascade, started
trading in January 2002. Performance is in line with expectations but additional
contracts will be required to ensure that an appropriate return is generated
from the investments made.
As forecast losses in Autobytel UK fell significantly in the period. In addition
income received from Autobytel.com, relating mainly to previous periods, helped
our results. A new contract was signed with Autobytel.com in the period,
extending our agreement to use their name through to 2027.
Our new venture, AA Buyacar, incurred start up losses as expected and is
progressing satisfactorily.
Profits at Ferrari were impacted by product supply constraints, which are
expected to ease in the second half. Maserati helped mitigate the impact of this
as returns improved following the launch of the new Coupe and Spider
Convertible.
Greece/Belgium
Operating Profit £12.8m 2002, £5.8m 2001
In Greece, despite the market being down 7.4%, profits increased. The new
Corolla has been well received but supply constraints have held back first half
volumes. Our ancillary businesses in Greece continue to perform well and our
results have benefited from the closure of the loss making daily rental
business. Our Balkans businesses were profitable compared to the start up losses
incurred last year.
The market in Belgium was down 1.7% despite this being a Brussels Motor Show
year. However, Toyota's volumes grew by 38.0% increasing our market share to
5.2%. This is due to the success of the new Corolla and, importantly, the new
diesel variants in a number of key models allowing Toyota to increase its diesel
market share in the passenger car market from 2.1% to 4.1%. This, allied to an
improved supply of RAV4, has resulted in an impressive operating profit
performance.
Australia/New Zealand
Operating Profit £9.9m 2002, £8.2m 2001
Our Australian business had an excellent first half, with Subaru continuing to
perform well in terms of market share and profitability, helped by the
strengthening of the Australian dollar in the first six months. Sydney Retail
continues its improved performance whilst Subaru Melbourne started trading in
May, incurring start up losses in the first half. The initial reaction to the
new flagship site and retailing concept is extremely encouraging.
Hong Kong
Operating Profit £17.1m 2002, £26.5m 2001
Profits fell as expected as a result of the much reduced taxi market (down from
6,122 units to 1,453 units). As previously announced the Hong Kong taxi fleet is
being changed from diesel to Liquefied Petroleum Gas (LPG). This process started
in the second half of 2000 and is substantially complete (over 86.1% of the
fleet has been changed). This has condensed a six-year replacement cycle into
less than three years and generated a high level of profit in the first half of
last year.
Our Toyota business performed well in the passenger car market increasing market
share and margins, despite the underlying market continuing to be weak.
Aftersales continues to be a strong performer across all franchises.
The performance of the Mazda franchise is expected to improve from the second
half onwards when new models, such as the Mazda 6, start to arrive.
Singapore/Brunei
Operating Profit £10.4m 2002, £8.5m 2001
The market in Singapore is down 19.5% on the first half of last year reflecting
the lower levels of Certificates of Entitlement (COE's) issued from May 2001 to
May 2002. The market for the rest of the year should be broadly similar to last
year. Despite this, volumes have increased in the first half as Toyota regained
market leadership with a 26.9% share, up from 20.9% last year. This allied to
increased margins, as COE prices fell, drove profits higher.
In Brunei profits rose. Here as well, Toyota remains market leader and the
market continues to grow strongly following the reduction in import duties late
last year.
Other
Operating Profit £5.3m 2002, £1.6m 2001
Operating profit in our Toyota business in Ethiopia rose and the results of
Mazda Finland, which is now trading at break-even, were much better than last
year. A £2.5m provision was made against our investment in Autobytel.com in
2001.
Central Costs
£5.8m 2002, £6.0m 2001
The fall in Central Costs reflects the continuing focus on reducing the level of
spend in this area.
Discontinued Businesses
Losses of £0.2m arose from discontinued businesses in this period. The
comparative figure for last year, a profit of £2.1m, includes IRB and Mazda
France.
Financial Review
New accounting standards
The Group has adopted FRS 19 'Deferred Tax'. This has resulted in a change in
the method of accounting for deferred tax from a partial to a full provision
basis. The tax charge is £0.4m lower for the first six months than it would have
been under SSAP 15, the previous standard. A prior period adjustment of £4.2m
has been made to net assets to reflect the impact of this standard on the period
before 1 January 2002. The comparatives in the profit and loss account and
balance sheet have been restated accordingly.
As reported in the Annual Report & Accounts 2001, the Group is following the
transitional arrangements of FRS 17 'Retirement Benefits'.
Acquisitions and disposals
On 2 May 2002 the Group announced that its offer to acquire the minority
shareholding (c. 36.7%) of Inchcape Motors Limited (IML), its Singaporean listed
subsidiary, was unconditional. The purchase price, including estimated costs,
was £63.0m and goodwill of £16.7m has arisen on the acquisition. This goodwill
will be amortised over its expected economic life of 20 years. The net assets
held by IML at the acquisition date included £88.4m of cash or cash equivalents.
In June 2002 the Group signed an agreement with Mercedes-Benz to represent their
brand in Oxford, Stratford-upon-Avon, Coventry and Banbury. The Group will
invest some £10.0m in this market area and £5.7m of this was spent in July 2002.
The balance of the investment will be made during the next 12 months.
There were no disposals of significance in this period. A number of transactions
were treated as exceptional items, although none exceeded £1.0m. The total of
exceptional items was nil.
Cash flow, interest and financing
Net cash outflow for this period was £34.7m resulting in net debt of £17.2m at
30 June 2002. Cash outflow relating to the IML minority purchase was £62.7m. The
Group also spent £34.0m during the first half on capital expenditure, however
the spend net of disposals was only £10.3m. A decrease in working capital within
the Group generated cash of £3.1m in this period. This was primarily due to a
reduction in stock levels compared to last year.
The Group net interest charge of £2.3m is lower than 2001 (£2.5m). However our
subsidiary charge of £2.3m (2001 - £1.5m) is higher due in part to the
acquisition of the Bates Group and Eurofleet. There is no interest charge in
this period for associates and joint ventures. This is due to the acquisition in
the second half of 2001 of the remaining shares in Eurofleet, previously a 49.0%
associate, and the sale of the Mazda UK Import and Distribution business by MCL
Group Ltd, our 40.0% owned associate, last year.
Maturing US loan notes totalling $72.0m were repaid on 31 May 2002. The Group's
principal committed facility, a £200.0m committed standby credit facility with a
maturity date of March 2003, was refinanced. On 30 July 2002 a five-year £250.0m
committed revolving credit facility was put in place with a syndicate of banks.
Exchange effects
The £3.7m increase in Headline profit before tax is after a reduction of £0.2m,
arising from using average exchange rates for 2002 compared to those for 2001.
This reduction was caused by depreciation in the values of the Singapore dollar
and Hong Kong dollar, which was partially offset by a strengthening of the
Australian dollar. Principal exchange rates are listed in Note 3 of the Notes to
the Accounts. The Group continues to operate a policy of hedging transactions
and, where appropriate, pre-transaction exposures.
Tax
The Headline tax rate, before goodwill amortisation, exceptional items and FRS
19 was 27.7% for the half-year. By adopting FRS 19 the rate fell to 27.0%. This
is some 2.4% lower than the equivalent rate for the full year 2001. This is due,
in the main, to lower unrelieved losses in the UK and is despite a deterioration
in the mix as a result of reduced profits from Hong Kong, a low tax
jurisdiction.
Minority interests
Profit attributable to minorities has decreased from £5.0m in the first half of
2001 to £2.7m during the first half of 2002. However 2001 included a £1.5m
exceptional profit on the sale of IRB.
Dividend
The Board has declared an interim dividend of 10.0p (2001 - 8.8p) representing a
13.6% increase. The interim dividend payment will be made to shareholders on the
register at 16 August 2002 and will be paid on 16 September 2002.
Prospects
The market trends, which are evident for the first half, look set to continue
throughout the year.
Our operations in the UK will again show improvement.
Our growth in Greece/Belgium will continue though at a much lower level, than in
the first half, as the impact of the launch of the Corolla and the Brussels
Motor Show diminishes.
Compared to the second half of last year, a strong performance is expected from
Australia aided by Subaru Melbourne.
In Hong Kong the decline from the inflated levels of last year will continue but
at a much reduced rate as the impact of the reduction in taxi sales decreases.
In Singapore trading looks set to remain at a similar level to the first half.
Looking Ahead
The Group's trading performance and balance sheet strength mean that we are very
well positioned to take advantage of investment opportunities that should arise
in the Group's chosen areas of strategic development.
The main focus in the short to medium-term remains the UK market where we intend
to continue expansion of our specialist Retail business and Business Services
operations. In specialist Retail the Group is examining a number of potential
opportunities for investment, which have been identified, particularly with PAG
(predominately Jaguar and Land Rover). In Business Services many initiatives are
underway to broaden our service offering.
The revised Block Exemption legislation comes into effect on 1 October 2002 and
will expire on 31 May 2010. There is a transition period of 12 months to allow
the industry to meet the new conditions.
The reforms offer considerable opportunities to Inchcape giving us greater
control over the shape of our retail investments, a choice on whether we provide
sales, service or a combination of both and greater security of tenure. We will
also now be able to leverage our new channels to market more effectively.
Our trading performance is impressive, cash generation from our operations is
strong and a number of strategic initiatives are being undertaken. I anticipate
further progress throughout the remainder of the year as we continue to develop
the Inchcape Group as a broadly based automotive services company.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Six months Six months Year to 31.12.01
restated
to 30.6.02 to 30.6.01
£m £m £m
Turnover including share of joint ventures
and associates
1,816.5 1,755.4 3,319.5
Less:
- share of joint ventures (18.2) (24.6) (41.4)
- share of associates (43.3) (92.4) (165.1)
Group subsidiaries' turnover 1,755.0 1,638.4 3,113.0
Operating profit before goodwill
amortisation 54.1 46.8 88.2
Share of profits of joint ventures 5.0 6.9 11.7
Share of profits of associates 0.2 2.1 3.7
Total operating profit before goodwill
amortisation 59.3 55.8 103.6
Goodwill amortisation (2.7) (0.8) (1.8)
Total operating profit after goodwill
amortisation 56.6 55.0 101.8
Net profit (loss) on disposal of
properties and investments 0.1 (1.8) (0.6)
Net (loss) including provisions on sale
and termination of operations (0.1) (7.1) (36.3)
Profit on ordinary activities before net
interest 56.6 46.1 64.9
Net interest:
Subsidiaries (2.3) (1.5) (2.5)
Share of joint ventures - - (0.1)
Share of associates - (1.0) (1.3)
(2.3) (2.5) (3.9)
Profit on ordinary activities before 54.3 43.6 61.0
taxation
Tax on profit on ordinary activities (15.4) (15.9) (29.3)
Profit on ordinary activities after 38.9 27.7 31.7
taxation
Minority interests (2.7) (5.0) (8.3)
Profit for the financial period 36.2 22.7 23.4
Dividends (7.5) (5.6) (19.5)
Retained profit for the financial period 28.7 17.1 3.9
Headline (before goodwill amortisation and exceptional items):
- Profit before tax (£m) 57.0 53.3 99.7
- Earnings per share (pence) 51.1p 40.6p 79.7p
Basic earnings per share (pence) 47.6p 27.2p 29.3p
Diluted earnings per share (pence) 46.9p 27.1p 29.0p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Six months Six months Year to
31.12.01
to 30.6.02 to 30.6.01 restated
£m £m £m
Profit for the financial period 36.2 22.7 23.4
Effect of foreign exchange rate changes:
- results for the period (0.8) 1.0 (1.0)
- foreign currency net investments (2.4) 3.7 (3.2)
Unrealised (deficit) on impairment of
revalued properties - - (0.2)
Total recognised gains relating to the period 33.0 27.4 19.0
Prior period adjustment (note 4) (4.2)
Total recognised gains since last annual
report 28.8
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Six months Six months Year to
31.12.01
to 30.6.02 to 30.6.01 restated
restated
£m £m £m
Profit for the financial period 36.2 22.7 23.4
Dividends (7.5) (5.6) (19.5)
28.7 17.1 3.9
Effect of foreign exchange rate changes (3.2) 4.7 (4.2)
Goodwill on disposals previously written off - 9.0 36.7
Deficit on impairment of revalued properties - - (0.2)
Shares issued during the year under share
option schemes 0.3 - 0.2
Shares purchased - (45.3) (45.3)
Net change in shareholders' funds 25.8 (14.5) (8.9)
Opening balance (2001 - originally £365.3m
before deducting prior period adjustment of
£3.7m, note 4) 352.7 361.6 361.6
Closing balance 378.5 347.1 352.7
SUMMARISED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2002
As at As at As at 31.12.01
restated
30.6.02 30.6.01 restated
£m £m £m
Fixed assets:
Intangible assets 90.6 3.4 76.2
Tangible assets 262.3 243.1 251.1
Investments:
- joint ventures:
share of gross assets 400.8 472.8 443.2
share of gross liabilities (351.4) (423.5) (393.7)
share of net assets 49.4 49.3 49.5
- associates 26.0 41.5 29.0
- other investments 7.0 4.0 4.0
435.3 341.3 409.8
Current assets:
Stocks 465.7 461.3 519.7
Debtors 228.0 216.6 214.2
Investments 10.6 14.2 14.2
Cash at bank and in hand 119.5 191.2 123.0
823.8 883.3 871.1
Creditors - amounts falling due within one year:
Borrowings (134.8) (61.4) (83.1)
Other (539.4) (543.5) (582.7)
(674.2) (604.9) (665.8)
Net current assets 149.6 278.4 205.3
Total assets less current liabilities 584.9 619.7 615.1
Creditors - amounts falling due after more than one year:
Borrowings (1.9) (44.5) (22.4)
Other (87.5) (61.2) (81.6)
(89.4) (105.7) (104.0)
Provisions for liabilities and charges (111.4) (119.1) (112.5)
Net assets 384.1 394.9 398.6
Equity shareholders' funds 378.5 347.1 352.7
Minority interests 5.6 47.8 45.9
384.1 394.9 398.6
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2002
Six months Six months Year to
31.12.01
to 30.6.02 to 30.6.01
RECONCILIATION OF OPERATING PROFIT TO £m £m £m
OPERATING CASH FLOWS
Operating profit before goodwill amortisation 54.1 46.8 88.2
Depreciation 13.1 13.2 26.6
Loss (profit) on sale of tangible fixed
assets other than property 0.5 - (0.4)
Decrease in working capital 3.1 91.2 64.9
Payments in respect of termination of
operations (0.6) (1.5) (2.2)
Other items (2.0) 6.6 11.4
Net cash inflow from operating activities 68.2 156.3 188.5
CONSOLIDATED CASH FLOW STATEMENT
Net cash inflow from operating activities 68.2 156.3 188.5
Dividends from joint ventures 3.2 4.5 7.2
Dividends from associates 3.4 2.8 3.5
Returns on investments and servicing of
finance (4.3) (4.0) (6.7)
Taxation (14.6) (11.5) (28.4)
Capital expenditure and financial investment (10.3) (14.4) (17.6)
45.6 133.7 146.5
Acquisitions and disposals (66.5) 17.6 6.6
Equity dividends paid (13.8) (11.7) (18.4)
Net cash (outflow) inflow before use of
liquid resources and financing (34.7) 139.6 134.7
Net cash inflow (outflow) from the management
of liquid resources 1.0 (14.9) 53.5
Net cash inflow (outflow) from financing 22.0 (105.6) (169.3)
Net (decrease) increase in cash (11.7) 19.1 18.9
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN
NET FUNDS AND DEBT
Net (decrease) increase in cash (11.7) 19.1 18.9
Net cash (inflow) outflow from decrease in debt
and lease financing (21.7) 60.4 124.2
Net cash (inflow) outflow from the management of
liquid resources (1.0) 14.9 (53.5)
Change in net debt and funds resulting from cash
flows (34.4) 94.4 89.6
Effect of foreign exchange rate changes on net
(debt) cash (0.1) 2.8 (4.6)
Net loans and finance leases relating to
acquisitions and disposals (0.2) 70.6 13.0
Liquid resources of subsidiaries sold - (13.4) (11.4)
Movement in net (debt) funds (34.7) 154.4 86.6
Opening net funds (debt) 17.5 (69.1) (69.1)
Closing net (debt) funds (17.2) 85.3 17.5
NOTES TO THE ACCOUNTS
1 SEGMENTAL ANALYSIS
Group turnover plus share of joint Total operating profit before goodwill
ventures and associates amortisation
Six months to Six months Six months Six months to
30.6.02 to 30.6.01 to 30.6.02 30.6.01
Year to Year to
31.12.01 31.12.01
£m £m £m £m £m £m
By geographical
market:
UK 647.9 556.3 1,074.2 9.8 9.1 14.8
Greece/Belgium 381.4 313.2 601.7 12.8 5.8 13.1
Australia/New Zealand 234.8 207.8 417.0 9.9 8.2 13.1
Hong Kong 162.9 244.8 440.5 17.1 26.5 49.0
Singapore/Brunei 251.3 230.3 427.5 10.4 8.5 19.2
Other 137.7 129.8 267.4 5.3 1.6 5.8
1,816.0 1,682.2 3,228.3 65.3 59.7 115.0
Central costs - - - (5.8) (6.0) (14.9)
Continuing 1,816.0 1,682.2 3,228.3 59.5 53.7 100.1
Discontinued 0.5 73.2 91.2 (0.2) 2.1 3.5
1,816.5 1,755.4 3,319.5 59.3 55.8 103.6
By activity:
Import, Distribution &
Retail 1,305.0 1,269.8 2,418.6 52.0 50.3 96.8
UK Retail 454.8 350.5 711.7 8.0 6.7 12.5
Financial Services 55.2 61.6 97.2 5.9 7.3 12.4
E-commerce 1.0 0.3 0.8 (0.6) (4.6) (6.7)
1,816.0 1,682.2 3,228.3 65.3 59.7 115.0
Central costs - - - (5.8) (6.0) (14.9)
Continuing 1,816.0 1,682.2 3,228.3 59.5 53.7 100.1
Discontinued 0.5 73.2 91.2 (0.2) 2.1 3.5
1,816.5 1,755.4 3,319.5 59.3 55.8 103.6
2 ANALYSIS OF TURNOVER AND TOTAL OPERATING PROFIT BEFORE GOODWILL AMORTISATION
Turnover Total operating profit before goodwill
amortisation
Six months Six months Six months to Six months to
to 30.6.02 to 30.6.01 30.6.02 30.6.01
Year to Year to
31.12.01 31.12.01
£m £m £m £m £m £m
Continuing:
The Company and its
subsidiaries 1,754.9 1,568.5 3,026.5 54.2 44.8 84.7
Joint ventures 18.2 24.0 40.8 5.0 6.8 11.6
Associates 42.9 89.7 161.0 0.3 2.1 3.8
Continuing 1,816.0 1,682.2 3,228.3 59.5 53.7 100.1
Discontinued:
The Company and its
subsidiaries 0.1 69.9 86.5 (0.1) 2.0 3.5
Joint ventures - 0.6 0.6 - 0.1 0.1
Associates 0.4 2.7 4.1 (0.1) - (0.1)
Discontinued 0.5 73.2 91.2 (0.2) 2.1 3.5
1,816.5 1,755.4 3,319.5 59.3 55.8 103.6
3 BASIS OF PRESENTATION
The results for the periods to 30 June have been prepared using the discrete
period approach (i.e. considering them as accounting periods in isolation). The
Headline tax charge is based on the effective tax rates estimated for the full
year in the Group's major countries of operation being applied to the actual
profits for the first half.
These unaudited interim financial statements do not constitute statutory
accounts and have been prepared on the basis of the accounting policies set out
in the Annual Report & Accounts 2001, except that FRS 19 'Deferred Tax' has been
adopted for the first time in these financial statements. This has resulted in a
change in the method of accounting for deferred tax from a partial to a full
provision basis (note 4).
The results for the year ended 31 December 2001 have been abridged from the
Group's published financial statements, which have been reported on by the
Group's auditors and filed with the Registrar of Companies. The report of the
auditors was unqualified and did not contain a statement under S237 (2) or (3)
of the Companies Act 1985.
The major exchange rates applied are as follows:
Average rates Period end rates
30.6.02 30.6.01 31.12.01 30.6.02 30.6.01 31.12.01
Australian dollar 2.71 2.78 2.80 2.72 2.77 2.84
Euro 1.61 1.61 1.61 1.54 1.66 1.63
Hong Kong dollar 11.27 11.23 11.22 11.89 10.97 11.35
Singapore dollar 2.63 2.57 2.58 2.69 2.56 2.69
4 PRIOR PERIOD ADJUSTMENT
The adoption of FRS 19 'Deferred Tax' has resulted in a change in the method of
accounting for deferred tax, from a partial to a full provision basis. This
change in accounting policy has been reflected in the accounts as a prior period
adjustment in accordance with FRS 3 and has required both the profit and loss
account and balance sheet comparatives to be restated. As a result, equity
shareholders' funds at 30 June 2001 and 31 December 2001 have decreased by £3.7m
and £4.3m respectively, and the minority interest share of net assets has
increased by £0.1m at 30 June 2001 and 31 December 2001. The comparative
taxation charge for the six months ended 30 June 2001 is unchanged, and there is
an increase of £0.6m in the comparative taxation charge for the year ended 31
December 2001.
5 EXCEPTIONAL ITEMS
Six months Six months Year to 31.12.01
to 30.6.02 to 30.6.01
£m £m £m
Net profit (loss) on disposal of properties
and investments 0.1 (1.8) (0.6)
Net (loss) profit including provisions on
sale and termination of operations:
- MCL - UK (2001 goodwill written off - - (24.5)
£24.5m)
- Seaking Automotive Ltd (2001 includes - (7.8) (7.9)
goodwill written off £5.3m)
- UK Retail dealerships (2001 includes - (4.0) (6.7)
goodwill written off £5.8m)
- IRB Finance Berhad - 3.9 3.9
- Other (0.1) 0.8 (1.1)
(0.1) (7.1) (36.3)
Total exceptional items - (8.9) (36.9)
A number of transactions are treated as exceptional items, none of which exceeds
£1.0m.
6 EARNINGS PER ORDINARY SHARE
Six months Six months Year to 31.12.01
restated
to 30.6.02 to 30.6.01
£m £m £m
Based on the profit for the period:
Headline profit before tax 57.0 53.3 99.7
Taxation on Headline profit (15.4) (15.9) (29.3)
Minority interests in Headline profit (2.7) (3.5) (6.8)
Headline earnings 38.9 33.9 63.6
Goodwill amortisation (2.7) (0.8) (1.8)
Exceptional items (note 5) - (8.9) (36.9)
Minority interests in exceptional items - (1.5) (1.5)
Earnings 36.2 22.7 23.4
Headline earnings per share 51.1p 40.6p 79.7p
Basic earnings per share 47.6p 27.2p 29.3p
Diluted earnings per share 46.9p 27.1p 29.0p
The weighted average number of fully paid shares in issue during the period,
excluding those held by the Inchcape Employee Trust, was 76,088,550 (interim
2001 - 83,452,798; full year 2001 - 79,816,472).
The diluted earnings per share arises from deferred bonus shares and the
exercise of share options that satisfy relevant performance criteria. It is
calculated by adjusting the weighted average number of ordinary shares for the
dilution, where the exercise price is less than the average market price of the
Company's ordinary shares during the period. The adjusted weighted average
number of ordinary shares was 77,256,824 (interim 2001 - 83,828,961; full year
2001 - 80,784,782).
Headline profit before tax and earnings (before goodwill amortisation and
exceptional items) are adopted in that they provide a representation of
underlying performance. The Group has redefined its Headline earnings in 2002 to
exclude goodwill amortisation and therefore Headline earnings and Headline
earnings per share comparatives have been restated accordingly.
7 TAXATION
Six months Six months Year to 31.12.01
restated
to 30.6.02 to 30.6.01
The charge for taxation includes the £m £m £m
following:
Overseas taxes 15.2 13.3 27.3
Joint ventures 1.2 1.9 3.5
Associates - 0.2 1.1
The adoption of FRS 19 has resulted in a decrease of £0.4m in the tax charge to
30 June 2002 (interim 2001- £nil, full year 2001 - £0.6m increase).
8 DIVIDENDS
The interim dividend of 10.0p per ordinary share (interim 2001 - 8.8p) will be
paid on 16 September 2002 to shareholders on the register on 16 August 2002.
9 ACQUISITION OF MINORITY INTEREST
On 2 May 2002, the Group announced that its cash offer to buy out the minority
holding (c. 36.7%) in its quoted Singaporean subsidiary, Inchcape Motors
Limited, had become unconditional. The minority interest share of profit before
tax from the end of the preceding financial year to the date of acquisition,
before exceptional items, amounted to £1.5m. The minority share of net assets at
the date of acquisition totalled £46.3m, which included cash and cash
equivalents of £32.5m. The purchase price was £63.0m (after estimated costs of
£1.0m) and goodwill arising on the acquisition of the minority interest amounted
to £16.7m. This goodwill is being amortised evenly over 20 years, the expected
economic life of the acquisition.
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