TIDMINCH
RNS Number : 4434W
Inchcape PLC
29 July 2009
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29 July 2009
2009 Interim Results
Inchcape's self-help measures deliver strong cash flow
despite unprecedented market conditions
Inchcape plc, a leading independent automotive distributor and retailer,
announces its half year results for the period ended 30 June 2009.
Operational & strategic highlights:
* Increased share in most markets
* Continued strong Aftersales contribution
* Significant like for like cost reduction of 13%
* Rapid reduction in net debt to GBP28m, down from GBP408m at year end:
* strong operating cash flow generation of GBP217m
* net proceeds of GBP234m from successful Rights Issue
Financial highlights:
* Reported Sales GBP2.8bn (2008: GBP3.3bn), down 22.9% in constant currency
* Pre exceptional PBT GBP65.4m (2008: GBP130.3m), down 57.6% in constant currency
* Reported PBT GBP47.0m (2008: GBP130.3m)
* Adjusted EPS* 1.3p (2008: 3.5p**)
* Reported EPS 0.7p (2008: 3.5p**)
* Before exceptional items ** Adjusted to reflect the Rights Issue
André Lacroix, CEO of Inchcape plc, commented:
"The Group has delivered a resilient performance in the first half of this year,
demonstrating the strengths of our unique business model in a downturn and the
responsiveness of our organisation to unprecedented market conditions.
Despite particularly challenging trading conditions, our operational focus on
executing our five Group-wide priorities - of growing market share and
Aftersales, whilst reducing costs, managing working capital and reducing capital
expenditure - has delivered a strong cash flow performance. Combined with our
recent successful Rights Issue, this has considerably strengthened our balance
sheet.
We are pleased with our first half results due to solid performances in
Australia, Singapore and the UK, improved Used car margins and good Aftersales
resilience. However, in light of the global downturn, we remain cautious for the
second half.
We will continue to focus on our five priorities as conditions in our markets
remain challenging and we do not expect the global recovery to start until well
into 2010.
We are confident in our ability to deliver a solid performance for 2009 as
a whole and the Group is well positioned to benefit from the market recovery."
Group Communications, Inchcape plc
+44 (0) 20 7546 0022
Investor Relations, Inchcape plc
+44 (0) 20 7546 8209
Financial Dynamics (Jonathon Brill/Billy Clegg)
+44 (0) 20 7831 3113
www.inchcape.com
Notes to editors
About Inchcape:
Inchcape is the leading, independent international automotive distributor and
retailer operating in 26 markets. Inchcape has diversified multi-channel revenue
streams including sale of new and used vehicles, parts, service, finance and
insurance.
Inchcape's vision is to be the world's most customer-centric automotive retail
group and represents some of the world's leading automotive brands, including
Toyota, Lexus, Subaru, BMW, Mazda, Mercedes-Benz, Volkswagen, Audi, Honda, Land
Rover and Jaguar.
Inchcape, which has been listed on the London Stock Exchange since 1958, is
headquartered in London, employs around 15,000 people.
www.inchcape.com
2009 INTERIM RESULTS
Group CEO Statement
I am pleased to announce a solid set of results for the Group for the first half
of the year. Although below last year, this performance reflects our focus on
executing our five key operational priorities of growing market share, growing
Aftersales, reducing costs, managing working capital and reducing capital
expenditure.
Despite extremely challenging trading conditions, overall the Group delivered a
resilient financial performance with sales of GBP2.8bn, a decline of 15.5% in
the first half year and profit before tax and exceptional items of GBP65.4m,
down 49.8%. After exceptional items of GBP18.4m (June 2008: GBPnil), profit
before tax was GBP47.0m. The Group generated an operating profit before
exceptional items in the first half year of GBP87.4m, a decrease of 42.2% from
the first half of 2008. This resulted in a return on sales before exceptional
items of 3.1%, down from 4.6% in 2008.
Adjusted earnings per share (EPS) which excludes exceptional items were 1.3p
(June 2008: 3.5p) and basic EPS, which includes exceptional items, were 0.7p
(June 2008: 3.5p). As previously announced, the Board is not recommending the
payment of an interim dividend (June 2008: 5.46p per share).
GBP18.4m of exceptional items have been recorded in the first half year. GBP5.1m
resulted from additional restructuring of our Eastern European operations
together with the streamlining of the European Management structure. A further
GBP13.3m of non cash exceptional items have been charged comprising a GBP10.3m
property impairment in Latvia and a GBP3.0m vacant property provision.
Whilst the Group has seen customer demand for new vehicles remain weak, we have
increased our share in most of our markets. Our Aftersales business, which
contributes 50% of our gross margin, remains resilient and we have seen margin
improvements in Used cars.
In the first half of 2009, trading profit in our Distribution segment of
GBP64.2m fell by 53.2% in constant currency terms and declined 43.5% at actual
rates of exchange. Like for like sales declined 24.0% in constant currency. We
gained market share in Australia and performance in Singapore was ahead of
expectations. In Hong Kong, market sentiment and demand remains weak and trading
conditions across Europe and Eastern Europe are very challenging.
Our Retail segment delivered trading profit of GBP26.6m, down 41.3% in constant
and actual rates of exchange. On a like for like, constant currency basis, sales
were down 21.9%. The better than expected trading conditions in the UK Used car
market and in Australia generally, as well as the strength of our large retail
facilities with resilient Aftersales, have helped to compensate for the
challenging trading conditions across Europe and Russia and Emerging Markets,
particularly the Baltics and Balkans.
We have delivered a strong free cash flow performance and have ended the first
half with a significantly stronger balance sheet. Net debt has fallen by
GBP379.7m to GBP28.1m, largely due to a significant working capital reduction of
GBP207.3m in the period and the proceeds of our successful Rights Issue of
GBP234.3m.
Note: Trading profit is defined as operating profit before exceptional items and
unallocated central costs
Strategy update
Our results in the first half of 2009 have demonstrated both the strength of our
business model in a downturn and the responsiveness of our organisation to a set
of unprecedented market conditions. The fundamentals of the Group remain solid
and our strategic direction is clear. Despite the fact that all our key markets
were down:
* We have improved our competitive position by gaining share in most markets
* Our Distribution businesses continued to deliver robust profitability
* Our Retail businesses have benefited from our scale retail facilities and
superior Inchcape Advantage processes
* Our Aftersales operations have been resilient
* We have implemented a significant cost restructuring programme
* We have been able to rapidly drive down our working capital, principally
inventory levels.
The resilience of our unique business model, our experienced management teams,
our track record of operational excellence, our focus on superior customer
service, the strength of our long-standing relationships with our brand partners
as well our diversified geographic portfolio, provides us with significant
defensive qualities and positions us well for the market upturn.
Given the continuing challenging trading conditions in our markets, in the
second half of the year we remain focused on executing our five operational
priorities to improve our competitive position and maximise our cash flow.
Growing market share
During the first half year we increased our share in most of our markets.
In our Distribution businesses, we will seek to continue to drive customer
traffic into our showrooms with few but high impact campaigns, all focused
behind core models with strong product and value-for-money propositions. Our
teams are focused on targeted marketing initiatives with lower advertising costs
to take advantage of media cost deflation and we will seek to maximise customer
interest through innovation with new models, facelifts and limited editions.
In our Retail operations, our focus is on converting customer traffic entering
our showrooms. The Inchcape Advantage process that we launched in 2006 gives us
strong customer service differentiation in our local markets. We believe that
our daily data gathering (in terms of customer traffic, leads, test drives and
capture rate) gives us a unique opportunity to drive a performance management
discipline to maximise customer conversion. Moreover, we use our own customer
service database to obtain feedback from our customers enabling us to react
quickly to put the right offers in place.
Growing Aftersales
Resilient Aftersales contributed 50% of the Group's gross profit during the
period.
In our Distribution businesses our teams are focused on targeted direct
marketing to drive higher service retention, Service Advisor training and parts
and accessories promotions to drive additional margin opportunities with
all-inclusive packages and innovations like 'Express Service'.
In our Retail operations we have established rigorous sales processes with our
Inchcape Advantage programme. The daily capture of customer data, bookings,
hours sold and workshop productivity give us a unique advantage when it comes to
driving performance. Moreover, we are driving initiatives to increase
transaction value, like Vehicle Health Check, Oil and Tyre programmes. Our
customer service measurement system collects feedback which we use to
continuously drive improvement in our operations.
Reducing costs
Aggressive cost restructuring initiatives, started in the fourth quarter of 2008
are having a positive impact on margin. We have delivered a stronger than
expected cost reduction thanks to the speed and the impact of our initiatives.
During the fourth quarter of 2008 we reduced our headcount by 2,000 positions,
closed 24 sites, cut back non-essential expenditure and renegotiated some of our
supplier contracts. After adjusting for the Musa acquisition and the disposal of
our French operations we have reduced our cost base by GBP48.3m in constant
currency, which is a 13% year on year decline.
Given the challenging trading conditions in Finland, the Baltics and Russia, we
have decided to reduce our workforce even further by removing 350 from our
headcount and by closing another seven retail sites. This additional
restructuring and the removal of a European Management layer is expected to
provide an additional GBP5.5m annualised benefit.
The associated restructuring cost of GBP5.1m has been booked as exceptional at
the half year.
Managing working capital
Managing working capital remains key. Our inventory peaked at the end of the
third quarter last year, reflecting the unprecedented downturn in our markets.
Since the beginning of October, we have installed a new performance management
system to accelerate our destocking. Thanks to the focus from the top and
throughout the organisation, we have reduced our inventory, at constant
currency, by 37% since year end, achieving our year end stock cover target of
1.5 months by the second quarter, seven months early.
The rapid destocking has had a significant impact and led to a very low working
capital position at the end of June. We have also benefited from a material
level of 'one-offs', including higher registrations than expected in June from a
very low inventory level, delays in shipment from several OEMs/manufacturers and
in Greece, the increase of Supplier Related Payables to meet the increased
demand from the government tax incentive.
We expect more normalised levels of working capital in the second half.
Reducing capital expenditure
We have limited our investment to strategic sites and despite the downturn have
continued to take advantage of several representation opportunities whilst still
meeting our reduced capital expenditure targets for the year. This has been
appreciated by our OEM brand partners and will give us a further advantage when
the recovery starts. In the first six months of 2009, we have opened seven new
retail sites; in the next six months we have two openings scheduled.
People
I would like to express my sincere thanks to our colleagues across the Group for
their responsiveness and resilience to the unprecedented conditions we have been
facing during the downturn. I would especially like to recognise their ongoing
commitment and dedication to creating the ultimate customer experience for our
brand partners.
Summary
Whilst we expect to benefit in the second half from a lower cost base, our
resilient Aftersales business, good Used car margins and a stronger retail new
car market in the UK, we remain cautious for the second half of 2009 overall.
Challenging market conditions are expected in Singapore, Russia and Eastern
Europe due to weaker demand and pressure on margins.
However, based on the intrinsic strengths of our business together with the
prudent and decisive actions we have taken, we remain confident that despite
what we expect to be a lengthy global industry downturn, through our focus on
the execution of our five priorities we are confident in our ability to deliver
a solid performance for 2009 as a whole.
André Lacroix
Group Chief Executive
29 July 2009
Board changes
There have been a number of changes to the Board during the first half year. On
14 May, the day of our AGM, we were pleased to confirm Ken Hanna's appointment
as the Company's Non-Executive Chairman, succeeding Peter Johnson who left the
Company after 15 years. Graham Pimlott was appointed Chairman of the Audit
Committee, succeeding Ken Hanna. Raymond Ch'ien and Karen Guerra retired as
Non-Executive Directors of the Group.
Following three years with the Group and the successful completion of the Rights
Issue, Barbara Richmond, Group Finance Director, decided to leave the Group by
mutual consent at the end of June to pursue other interests.
Finally, we were pleased to announce the appointment of two new Non-Executive
Directors with effect from 1 July 2009. Alison Cooper, who is currently a member
of the Board and Chief Operating Officer of Imperial Tobacco Group PLC, joined
the Inchcape Board as a Non-Executive Director and member of the Audit
Committee. Nigel Northridge, currently Chairman of Paddy Power plc, Senior
Independent Director of Aggreko plc and Non-Executive Director of Thomas Cook
Group plc, joined the Inchcape Board as a Non-Executive Director and member of
the Remuneration Committee.
Operational review
Group key performance indicators*
+------------+----------+----------+
| | Six | Six |
| | months | months |
| | to | to |
| | 30.06.09 | 30.06.08 |
| | GBPm | GBPm |
+------------+----------+----------+
| Sales | 2,785.7 | 3,297.9 |
+------------+----------+----------+
| Like | (15.4) | 6.7 |
| for | | |
| like | | |
| sales | | |
| growth | | |
| / | | |
| (decline) | | |
| (%) | | |
+------------+----------+----------+
| Trading | 90.8 | 159.0 |
| profit | | |
+------------+----------+----------+
| Like | (41.4) | 9.7 |
| for | | |
| like | | |
| trading | | |
| profit | | |
| growth | | |
| / | | |
| (decline) | | |
| (%) | | |
+------------+----------+----------+
| Trading | 3.3 | 4.8 |
| margins | | |
| (%) | | |
+------------+----------+----------+
| Cash | 272.0 | 98.1 |
| generated | | |
| from | | |
| operating | | |
| activities | | |
+------------+----------+----------+
Regional analysis*
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 |
| | Operating | Exceptional | Trading | Operating | Exceptional | Trading |
| | profit | items | profit | profit | items | profit |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| Australasia | 16.6 | - | 16.6 | 22.1 | - | 22.1 |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 12.8 | - | 12.8 | 17.6 | - | 17.6 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 3.8 | - | 3.8 | 4.5 | - | 4.5 |
| Retail | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| Europe | 11.6 | (1.8) | 13.4 | 27.5 | - | 27.5 |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 14.3 | (0.2) | 14.5 | 25.5 | - | 25.5 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | (2.7) | (1.6) | (1.1) | 2.0 | - | 2.0 |
| Retail | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| North | 6.7 | - | 6.7 | 20.3 | - | 20.3 |
| Asia | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 6.7 | - | 6.7 | 20.3 | - | 20.3 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| South | 31.1 | - | 31.1 | 29.9 | - | 29.9 |
| Asia | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 31.1 | - | 31.1 | 29.9 | - | 29.9 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| United | 16.6 | (3.0) | 19.6 | 32.7 | - | 32.7 |
| Kingdom | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 1.7 | - | 1.7 | 1.6 | - | 1.6 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 14.9 | (3.0) | 17.9 | 31.1 | - | 31.1 |
| Retail | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| Russia | (8.7) | (12.1) | 3.4 | 26.5 | - | 26.5 |
| and | | | | | | |
| Emerging | | | | | | |
| Markets | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | (6.5) | (3.9) | (2.6) | 18.8 | - | 18.8 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | (2.2) | (8.2) | 6.0 | 7.7 | - | 7.7 |
| Retail | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| Total | 73.9 | (16.9) | 90.8 | 159.0 | - | 159.0 |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 60.1 | (4.1) | 64.2 | 113.7 | - | 113.7 |
| Distribution | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| - | 13.8 | (12.8) | 26.6 | 45.3 | - | 45.3 |
| Retail | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| Central | (4.9) | (1.5) | | (7.9) | - | |
| costs | | | | | | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
| | 69.0 | (18.4) | | 151.1 | - | |
+--------------+-----------+-------------+---------+-----------+-------------+---------+
* At actual exchange rates
Inchcape reports its results in the condensed set of consolidated financial
information using actual rates of exchange. The Operational review reports
results in actual rates of exchange but to enhance comparability are also shown
in a form that isolates the impact of currency movements from period to period
by applying the June 2009 exchange rates to both periods' results (constant
currency). It also adjusts for the impact of exceptional items. Where
exceptional items and unallocated central costs are excluded from operating
profit the results are referred to as trading profit.
Like for like sales and trading profit exclude the impact of acquisitions from
the date of acquisition until the thirteenth month of ownership, and businesses
that are sold or closed. It further removes the impact of retail centres that
are relocated. This is from the date of opening until the thirteenth month of
trading in the new location.
Operating cash flow is defined as trading profit adjusted for depreciation and
amortisation plus the change in working capital.
For the year ended 31 December 2009, the Group has adopted IFRS 8 'Segmental
Reporting'. IFRS 8 replaces IAS 14 'Segment Reporting' and is effective for
reporting periods beginning on or after 1 January 2009. IFRS 8 requires
operating segments to be identified on the basis of internal reports about
components of the Group that are regularly reviewed by the chief operating
decision maker in order to assess their performance and to allocate resources to
the segments. These operating segments are then aggregated into reporting
segments to combine those with similar characteristics. In contrast, the
predecessor standard required the Group to identify two sets of segments
(business and geographical), using a risks and rewards approach.
Under IFRS 8, the only change for the Group is that businesses previously
reported within the Rest of World segment under IAS 14 are reported within the
other segments that best match the characteristics of each individual business.
As a result, the Group's reportable segments for 2009 are as follows:
+------------------------------+----------------------------+
| Distribution | Retail |
+------------------------------+----------------------------+
| Australasia | Australasia |
+------------------------------+----------------------------+
| Europe | Europe |
+------------------------------+----------------------------+
| North Asia | |
+------------------------------+----------------------------+
| South Asia | |
+------------------------------+----------------------------+
| United Kingdom | United Kingdom |
+------------------------------+----------------------------+
| Russia and Emerging Markets | Russia and Emerging |
| | Markets |
+------------------------------+----------------------------+
These changes require comparative segmental information to be restated
accordingly.
Australasia
Key performance indicators*
+------------------------------+-----------+-----------+----------+-----------+
| | Six | Six | % | % change |
| | months to | months to | change | in |
| | 30.06.09 | 30.06.08 | | constant |
| | GBPm | GBPm | | currency |
+------------------------------+-----------+-----------+----------+-----------+
| Sales | 357.9 | 393.7 | (9.1) | (7.2) |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 218.5 | 248.5 | (12.1) | (10.2) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 139.4 | 145.2 | (4.0) | (2.2) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like sales | 344.8 | 384.2 | (10.3) | (8.4) |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 218.5 | 248.5 | (12.1) | (10.2) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 126.3 | 135.7 | (6.9) | (5.2) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading profit | 16.6 | 22.1 | (24.9) | (23.6) |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 12.8 | 17.6 | (27.3) | (25.9) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 3.8 | 4.5 | (15.6) | (14.5) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like trading profit | 16.1 | 22.1 | (27.1) | (26.2) |
| | | | | |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 12.8 | 17.6 | (27.3) | (25.9) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 3.3 | 4.5 | (26.7) | (27.1) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading margins (%) | 4.6 | 5.6 | (1.0)ppt | (1.0)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 5.9 | 7.1 | (1.2)ppt | (1.2)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 2.7 | 3.1 | (0.4)ppt | (0.4)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| Operating cash flow | 39.9 | 21.3 | | |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 24.5 | 8.3 | | |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 15.4 | 13.0 | | |
+------------------------------+-----------+-----------+----------+-----------+
* At actual exchange rates
The new Australasia segment contains the Group's operations in Australia and New
Zealand.
Australia has been one of the most resilient car markets in the developed world,
although it experienced a decline of 16.1% in the first six months.
Trading remained competitive throughout the first half year with significant
price discounting as competitors cleared stocks. Margins improved in the second
quarter assisted by a reduced level of inventory in the market.
Despite the market decline and the final months of run out of Liberty and
Outback models, we have improved our Subaru market share to a record 4.2% (3.8%
in 2008), reflecting the success of the new Forester and Impreza models. This
market share growth allowed the Group to outperform the market. On a like for
like constant currency basis, sales in our Distribution business declined by
10.2% compared to last year and trading profits were down 25.9%.
In our Retail operations we gained share by focusing on good customer management
through our Inchcape Advantage measures, leveraging the launch of the new Subaru
models, promoting strong value for money offers on Used cars and increasing our
Finance and Insurance penetration. Our Aftersales results were strong as we
drove growth with the launch of our 'Service Express' initiative and we improved
our on-line booking performance.
Our focus on working capital and cash flow has produced a solid first half
result in Australia, with a 34% reduction in working capital driving strong year
on year increase in cash flows in Australasia of GBP39.9m.
The latest industry forecast for the year shows the decline in the new car
market in Australia will be 13% in 2009, a total industry volume (TIV) of
860,000 vehicles.
Although trading conditions will remain challenging during the second half, in
our Australian Subaru Distribution business we will benefit from the launch of
the new Liberty and Outback models and we will continue to build upon the
success of Impreza and Forester.
In our Australian Retail operations, again we intend to capitalise on Subaru new
model launches and build upon the success of the Finance and Insurance and
Aftersales initiatives implemented during the first half year.
Europe
Key performance indicators*
+------------------------------+-----------+-----------+----------+-----------+
| | Six | Six | % | % change |
| | months to | months to | change | in |
| | 30.06.09 | 30.06.08 | | constant |
| | GBPm | GBPm | | currency |
+------------------------------+-----------+-----------+----------+-----------+
| Sales | 526.5 | 711.4 | (26.0) | (37.4) |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 416.7 | 476.4 | (12.5) | (26.0) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 109.8 | 235.0 | (53.3) | (60.5) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like sales | 526.5 | 644.9 | (18.4) | (30.9) |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 416.7 | 476.4 | (12.5) | (26.0) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 109.8 | 168.5 | (34.8) | (44.8) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading profit | 13.4 | 27.5 | (51.3) | (58.9) |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 14.5 | 25.5 | (43.1) | (52.1) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | (1.1) | 2.0 | (155.0) | (146.0) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like trading profit | 13.4 | 26.9 | (50.2) | (57.9) |
| | | | | |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 14.5 | 25.5 | (43.1) | (52.1) |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | (1.1) | 1.4 | (178.6) | (167.9) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading margins (%) | 2.5 | 3.9 | (1.4)ppt | (1.3)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 3.5 | 5.4 | (1.9)ppt | (1.9)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | (1.0) | 0.9 | (1.9)ppt | (1.8)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| Operating cash flow | 76.8 | 11.7 | | |
+------------------------------+-----------+-----------+----------+-----------+
| - Distribution | 66.6 | 15.3 | | |
+------------------------------+-----------+-----------+----------+-----------+
| - Retail | 10.2 | (3.6) | | |
+------------------------------+-----------+-----------+----------+-----------+
* At actual exchange rates
The Europe segment includes Belgium, Greece and Finland.
Trading conditions across our mainland European markets remained extremely
difficult in the first half of the year.
Despite very challenging markets, our Distribution business reported a trading
profit of GBP14.5m, 52.1% below last year in constant currency, with a trading
margin of 3.5% compared to 5.4% last year. Like for like sales were down 26.0%
in constant currency terms.
In our Retail business we incurred an overall trading loss of GBP1.1m, GBP3.1m
worse than last year and GBP3.5m down in constant currency. Like for like sales
reduced by 44.8% in constant currency terms.
In Belgium there has been no government stimulus package for the automotive
industry and the market has declined by 15.6% versus last year. We expect the
market to be down 30% for the full year with a TIV of 430,000 vehicles.
The Greek market declined by 28.9% during the first half year. We expect the
market to be down 30% for the full year with a TIV of 187,000 vehicles. However
in our Distribution business, we strengthened our market leadership position,
growing market share by 0.7% to 10.9%.
In our Finnish Distribution business, a 40.7% reduction in the domestic market
and a decline in the Baltic States ranging from 60% to 75% has resulted in
challenging trading. The Finnish market is expected to be down 38% for the full
year with a TIV of 140,000 vehicles.
Overall in Europe, our focus on working capital and in particular inventory
management has resulted in a strong cash flow of GBP76.8m, an improvement of
GBP65.1m on the last half year.
As a whole, we expect the European markets to continue to face challenges in the
second half of the year. The Greek government tax incentives available in the
first half year will end in August which may result in further market slowdown
in the fourth quarter. We will focus on driving market share growth, leveraging
the launch of new Toyota models (Prius, Verso and Urban Cruiser), the
introduction of Toyota Optimal Drive and the launch of the Mazda 3 while
maintaining our strong focus on cost reduction and working capital control.
North Asia
Key performance indicators*
+------------------------------+-----------+-----------+----------+-----------+
| Distribution | Six | Six | % | % change |
| | months to | months to | change | in |
| | 30.06.09 | 30.06.08 | | constant |
| | GBPm | GBPm | | currency |
+------------------------------+-----------+-----------+----------+-----------+
| Sales | 141.2 | 184.6 | (23.5) | (45.1) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like sales | 135.7 | 172.0 | (21.1) | (43.4) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading profit | 6.7 | 20.3 | (67.0) | (76.3) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like trading profit | 6.7 | 18.7 | (64.2) | (74.0) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading margins (%) | 4.7 | 11.0 | (6.3)ppt | (6.3)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| Operating cash flow | 39.9 | 5.9 | | |
+------------------------------+-----------+-----------+----------+-----------+
* At actual exchange rates
The new North Asia segment contains the Group's vertically integrated operations
in Hong Kong, Guam and Saipan.
Market sentiment was weak in Hong Kong in the first half year and as a result
the market declined by 42.9%. We also saw significant price discounting in the
market as competitor brands executed stock clearance programmes and this,
combined with some new lower price competitor model launches, led to a market
share loss for Inchcape in the first quarter but an improvement in the second
quarter. Despite extremely challenging conditions and thanks to our strong
Aftersales business, we have delivered a trading profit of GBP4.5m, enabling us
to retain a trading margin of 4.5%, 7.9ppt below last year.
We have delivered an 82% reduction in working capital in Hong Kong at actual
rates since year end, leading to a strong cash flow performance in North Asia of
GBP39.9m.
We expect the market in Hong Kong to remain weak in the second half, down 30% on
2008 with a TIV of 26,000. However, with planned new and face lifted model
launches (Alphard 250, Wish, RX450h, ISC, Ractis, Mazda 3, Jaguar XFR), we
expect to strengthen our market share. Additionally, we will grow Aftersales
traffic and expand business opportunities through innovative marketing
programmes and added-value packages (e.g. free pre-MOT inspections and car care
product promotions), continue to reduce overheads and working capital and limit
capital expenditure to maintenance items.
South Asia
Key performance indicators*
+------------------------------+-----------+-----------+----------+-----------+
| Distribution | Six | Six | % | % change |
| | months to | months to | change | in |
| | 30.06.09 | 30.06.08 | | constant |
| | GBPm | GBPm | | currency |
+------------------------------+-----------+-----------+----------+-----------+
| Sales | 317.3 | 254.7 | 24.6 | (2.1) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like sales | 317.3 | 254.7 | 24.6 | (2.1) |
+------------------------------+-----------+-----------+----------+-----------+
| Trading profit | 31.1 | 29.9 | 4.0 | (18.1) |
+------------------------------+-----------+-----------+----------+-----------+
| Like for like trading profit | 31.1 | 29.9 | 4.0 | (18.0) |
| | | | | |
+------------------------------+-----------+-----------+----------+-----------+
| Trading margins (%) | 9.8 | 11.7 | (1.9)ppt | (1.9)ppt |
+------------------------------+-----------+-----------+----------+-----------+
| Operating cash flow | 53.0 | 37.0 | | |
+------------------------------+-----------+-----------+----------+-----------+
* At actual exchange rates
The new South Asia segment contains the Group's vertically integrated operations
in Singapore and Brunei.
Our Singapore business had an excellent start to the year as we benefited from a
stronger than expected TIV in the first quarter and we have gained 6ppt of
market share versus last year. The market was weaker in the second quarter due,
in part, to the continued slowdown in de-registrations and also increasing
Certificate of Entitlement (COE) prices. As a result, the market at the end of
June was down by 20.8% versus last year.
Our market share performance was driven by the quality of our marketing
programmes offering core models at good value for money. We also benefited from
the fact that Parallel Importers have become less competitive due to the
strengthening of the Yen against the Singapore Dollar. Parallel Imports now
account for 18% of the market compared to 26% last year.
Overall, our business in Singapore has delivered a pleasing profit performance,
with trading profit of GBP27.9m for the first half year, 19.6% lower than last
year in constant currency.
Our focus on working capital reduction enabled us to deliver a strong cash flow
performance of GBP53.0m in South Asia.
We expect the market to be weaker in the second half as government vehicle
quotas in Singapore will be reduced in October and COE prices are likely to
remain at the current level. We estimate the full year TIV at 80,000 vehicles,
down 25% on last year.
Our focus in the second half will be on continuing to grow share in a declining
market through strong, value-led marketing programmes. We will leverage new
model launches from the first half year (Lexus RX, RX Hybrid, IS Convertible,
Prius) and maximise the second half new model launches (Alphard 2.4, Wish, Camry
face-lift). Further, we will seek to build on the first half year Aftersales
achievements in both service and parts.
United Kingdom
Key performance indicators
+------------------------------+-----------+----------+----------+-----------+
| | Six | Six | % | % change |
| | months to | months | change | in |
| | 30.06.09 | to | | constant |
| | GBPm | 30.06.08 | | currency |
| | | GBPm | | |
+------------------------------+-----------+----------+----------+-----------+
| Sales | 1,005.7 | 1,334.1 | (24.6) | (24.6) |
+------------------------------+-----------+----------+----------+-----------+
| - Distribution | 14.0 | 11.8 | 18.6 | 18.6 |
+------------------------------+-----------+----------+----------+-----------+
| - Retail | 991.7 | 1,322.3 | (25.0) | (25.0) |
+------------------------------+-----------+----------+----------+-----------+
| Like for like sales | 931.8 | 1,143.3 | (18.5) | (18.5) |
+------------------------------+-----------+----------+----------+-----------+
| - Distribution | 14.0 | 11.8 | 18.6 | 18.6 |
+------------------------------+-----------+----------+----------+-----------+
| - Retail | 917.8 | 1,131.5 | (18.9) | (18.9) |
+------------------------------+-----------+----------+----------+-----------+
| Trading profit | 19.6 | 32.7 | (40.1) | (40.1) |
+------------------------------+-----------+----------+----------+-----------+
| - Distribution | 1.7 | 1.6 | 6.2 | 6.2 |
+------------------------------+-----------+----------+----------+-----------+
| - Retail | 17.9 | 31.1 | (42.4) | (42.4) |
+------------------------------+-----------+----------+----------+-----------+
| Like for like trading profit | 20.2 | 27.0 | (25.2) | (25.2) |
| | | | | |
+------------------------------+-----------+----------+----------+-----------+
| - Distribution | 1.7 | 1.6 | 6.2 | 6.2 |
+------------------------------+-----------+----------+----------+-----------+
| - Retail | 18.5 | 25.4 | (27.2) | (27.2) |
+------------------------------+-----------+----------+----------+-----------+
| Trading margins (%) | 1.9 | 2.5 | (0.6)ppt | (0.6)ppt |
+------------------------------+-----------+----------+----------+-----------+
| - Distribution | 12.1 | 13.6 | (1.5)ppt | (1.5)ppt |
+------------------------------+-----------+----------+----------+-----------+
| - Retail | 1.8 | 2.4 | (0.6)ppt | (0.6)ppt |
+------------------------------+-----------+----------+----------+-----------+
| Operating cash flow | 68.0 | 77.6 | | |
+------------------------------+-----------+----------+----------+-----------+
| - Distribution | 10.8 | 6.3 | | |
+------------------------------+-----------+----------+----------+-----------+
| - Retail | 57.2 | 71.3 | | |
+------------------------------+-----------+----------+----------+-----------+
The United Kingdom segment remains unchanged under the new IFRS 8 adoption.
We continue to outperform the industry in the UK. The new vehicle market
declined by 25.9% in the first six months, with our sales being down 24.6% on
2008. We have seen some positive impact from the UK government scrappage
incentive scheme and as expected the scheme has largely benefited the volume
brands. We gained 0.3ppt share of the Premium segment in the first half year and
0.1ppt share of the total market.
We have also seen an improvement in our Used car business with both volumes and
margins ahead of last year.
Our Retail business delivered a pleasing trading profit of GBP17.9m, although
this was 42.4% down on last year. We delivered a trading margin of 1.8%.
The Distribution business, comprising Inchcape Fleet Solutions, saw trading
profits rise by 6.2% versus 2008 as residual values have firmed up since the
year end.
In our Retail business, a lower operating profit has resulted in a lower
operating cash flow despite a working capital reduction in the first six months.
We expect the Retail market to be stronger in the second half as we should see
the benefit of the scrappage incentive and, potentially, increased demand in the
fourth quarter ahead of the VAT change in 2010.
Our TIV market estimate for 2009 is between 1.75m to 1.85m vehicles but we could
see a lower market in 2010 once the government scrappage scheme and VAT benefit
have ceased.
For the second half, our focus is firmly on continuing to outperform the
industry by driving vehicle sales enquiries through innovative, local marketing.
Furthermore, there will be a number of new product launches across our 12
franchises from which we will take full advantage. We expect to build on our
first half year success in Used cars and Aftersales and maintain our significant
achievements in working capital and overhead reduction.
Russia and Emerging Markets
Key performance indicators*
+------------------------------+-----------+----------+-----------+-----------+
| | Six | Six | % | % change |
| | months to | months | change | in |
| | 30.06.09 | to | | constant |
| | GBPm | 30.06.08 | | currency |
| | | GBPm | | |
+------------------------------+-----------+----------+-----------+-----------+
| Sales | 437.1 | 419.4 | 4.2 | (6.9) |
+------------------------------+-----------+----------+-----------+-----------+
| - Distribution | 140.7 | 214.3 | (34.3) | (44.0) |
+------------------------------+-----------+----------+-----------+-----------+
| - Retail | 296.4 | 205.1 | 44.5 | 35.8 |
+------------------------------+-----------+----------+-----------+-----------+
| Like for like sales | 277.8 | 396.7 | (30.0) | (37.3) |
+------------------------------+-----------+----------+-----------+-----------+
| - Distribution | 126.5 | 201.3 | (37.2) | (46.4) |
+------------------------------+-----------+----------+-----------+-----------+
| - Retail | 151.3 | 195.4 | (22.6) | (26.9) |
+------------------------------+-----------+----------+-----------+-----------+
| Trading profit | 3.4 | 26.5 | (87.2) | (88.4) |
+------------------------------+-----------+----------+-----------+-----------+
| - Distribution | (2.6) | 18.8 | (113.8) | (111.8) |
+------------------------------+-----------+----------+-----------+-----------+
| - Retail | 6.0 | 7.7 | (22.1) | (18.7) |
+------------------------------+-----------+----------+-----------+-----------+
| Like for like trading profit | 1.6 | 26.2 | (93.9) | (94.6) |
| | | | | |
+------------------------------+-----------+----------+-----------+-----------+
| - Distribution | 1.6 | 18.5 | (91.4) | (92.7) |
+------------------------------+-----------+----------+-----------+-----------+
| - Retail | (0.0) | 7.7 | (100.0) | (100.4) |
+------------------------------+-----------+----------+-----------+-----------+
| Trading margins (%) | 0.8 | 6.3 | (5.5)ppt | (5.5)ppt |
+------------------------------+-----------+----------+-----------+-----------+
| - Distribution | (1.8) | 8.8 | (10.6)ppt | (10.6)ppt |
+------------------------------+-----------+----------+-----------+-----------+
| - Retail | 2.0 | 3.8 | (1.8)ppt | (1.4)ppt |
+------------------------------+-----------+----------+-----------+-----------+
| Operating cash flow | 45.6 | (9.8) | | |
+------------------------------+-----------+----------+-----------+-----------+
| - Distribution | 43.4 | (5.7) | | |
+------------------------------+-----------+----------+-----------+-----------+
| - Retail | 2.2 | (4.1) | | |
+------------------------------+-----------+----------+-----------+-----------+
* At actual exchange rates
The Russia and Emerging Markets segment contains the Group's operations in
Russia, the Balkans, the Baltics, Poland, China, South America and Africa.
The first half of the year saw significant declines in many of the Emerging
Markets which resulted in a like for like decline in sales of 37.3% at constant
currency for the segment. This segment remains profitable with a trading profit
of GBP3.4m due to the performance of Russia, Ethiopia and Poland partially
offset by losses in our Baltics and Balkans markets. In Russia the market
declined by 49.5% as demand for new cars was impacted by the general economic
downturn. In the Balkans, Romania saw a market decline of 51.4% and Bulgaria
43.3%. The Baltic markets saw significant declines of up to 75% in the first
half year reflecting the difficulty in credit availability and the economic
instability in those markets, particularly Latvia.
Despite the tough market conditions in Russia and following the acquisition of
Musa, we delivered a solid performance in the first half year with trading
profit of GBP8.6m up 47.6% on 2008 in constant currency and a trading margin of
4.0%, benefiting from our large retail facilities and the resilience of our
Aftersales business.
The Musa integration is progressing well and the final payment for the remainder
of our 75.1% share of our acquisition should be made in the second half. We are
growing share in both St Petersburg and Moscow and our focus for the second half
year is to strengthen our competitive position in those markets.
We are implementing the 'Inchcape Advantage Way of Selling' with a strong focus
on daily sales management. We expect to benefit from the many new model launches
(BMW X1, 5GT, Peugeot 308, 3008 SUV, Renault Laguna coupe, Megane Coupe, Kaleos
diesel, Clio, Land Rover Discovery facelift, Audi R8 5.2, Q7, A5 Sportsback, TT
RS, A5) and grow Aftersales with a focus on Vehicle Health Checks, retention
calls and Loyalty programmes.
Further, we will continue the implementation of our overhead cost reduction
programme and maintain effective working capital management.
In the Balkans, we faced significant market decline and pressure on margin as
all OEMs focused on liquidating their stock. Our focus will remain on maximising
cash flow with a further stock cleanse programme in the second half year.
In the Baltics, the extremely low level of demand and the need to liquidate our
stock resulted in pressure on margins. As part of the restructuring programme
announced at the year end and further restructuring conducted in the second
quarter, four sites were closed and we expect significant cost savings moving
forward. In the second half we will seek to maximise cost savings from our
restructuring programme, exploit the launch of the new Mazda 3, drive Aftersales
and continue to minimise working capital.
Poland performed above expectations with sales 11.6% above last year in constant
currency and a trading margin of 3.9%. In the second half we will open a new BMW
site in Warsaw, leverage new BMW models and continue to drive Aftersales through
improved productivity and margin focus.
In May 2009 we opened our third showroom in China for Lexus in Shanghai in a
market which grew 9.3% in the first half of the year. In the second half we will
drive customer traffic conversion through the implementation of Inchcape
Advantage, with a disciplined sales process, lead management and test drive
programme.
Our businesses in Ethiopia and Djibouti delivered strong performances with
trading profits up at constant currency compared to the first half of 2008.
Despite unprecedented market conditions in Russia and Emerging Markets we
delivered a strong cash flow of GBP45.6m as a result of our focus on inventory
management and stock reduction.
We expect the trading conditions in all these markets to be extremely
challenging in the second half of 2009.
Financial review
Currency option costs
In the first half of the year the Group has reported a gain of GBP3.3m within
operating profit. This related to the currency call options taken out in
February to hedge the profit translation impact from a potential strengthening
of Sterling. Of the reported gain, GBP3.0m is a crystallised gain on options
exercised between March and June, partially offset by a GBP2.5m cost of those
options, with a GBP2.8m mark to market gain on the remainder of the options.
This is reported in central costs.
Net financing costs
In the first half of the year, a non-cash cost of GBP3.9m was booked in our mark
to market reporting consisting of two components: the net mark to market
movement on the hedges for the remaining US loan notes was a loss of GBP7.9m;
and a one-off benefit of GBP4.0m to the interest line from swaps related to the
$114m repayment of US loan notes at par.
Underlying interest costs have decreased reflecting lower interest rates and
reduced debt levels following the reduction in working capital and the
utilisation of the GBP234.3m net proceeds from the Rights Issue to pay down
$114m higher rate US loan notes at par, with the balance paying down revolving
debt.
Tax
The pre exceptional effective tax rate for the Group rose to 31% from 25% in
2008, due to the restricted ability to obtain tax relief on UK financing costs
and the impact of Group profit mix across our territories.
Exceptional items
The exceptional cost of GBP18.4m includes three components. Having taken into
account the deteriorating trading conditions and based on current exchange rates
we have recorded a non cash impairment of GBP10.3m on the carrying value of the
land and buildings in Latvia. All of the goodwill related to Latvia was written
off in December 2008.
Further restructuring costs of GBP5.1m have been booked which relate to market
restructuring in Finland, the Baltics and Russia, which includes a closure of a
further seven sites across these markets, and the streamlining of our European
management layer. This, in total, will deliver GBP5.5m of annualised savings.
We have also taken a charge of GBP3.0m related to a lease commitment on land
which was part of the Inchcape Automotive business which was sold to Camden
Motors. Camden went into administration during the first half of the year.
Minority interests
Profits attributable to minority interests reduced to GBP1.8m in 2009 from
GBP3.1m in 2008.
Cash flow and financing
The Group generated GBP272.0m of cash from operating activities in the first
half year compared to GBP98.1m in 2008. The successful destocking initiative in
the first half year to re-align inventory across the Group to a lower level of
customer demand has seen inventory reduce and generate a GBP361.1m cash inflow.
We have achieved the year end stock cover target of 1.5 months, seven months
early. Funding of net capital expenditure fell to GBP42.3m from GBP56.2m in 2008
following the previously announced programme to restrict expenditure.
The Rights Issue generated GBP234.3m net cash in April 2009 which was used to
pay down the Group's debt.
The combination of strong operational cash flow and the Rights Issue proceeds
have reduced net debt to GBP28.1m compared to GBP271.4m at 30 June 2008 and
GBP407.8m at 31 December 2008.
Dividends
As previously announced, the Board is not recommending the payment of an interim
dividend.
Pensions
During the first half year and in line with the funding programme agreed with
the Trustees, the Group made additional cash contributions to the Group pension
schemes amounting to GBP16.9m.
Principal business risks
The Board has set out in the Annual Report and Accounts 2008, a number of
principal business risks which could impact the performance of the Group. The
key risks include, inter alia, prevailing market conditions, brand partner
relationships, integration of acquisitions and treasury risks including
currency, funding interest rate and counterparty. The Board has recently
reviewed the principal risks and confirms that they remain valid for the rest of
the year.
The most significant current risks result from the impact of continuing
difficult economic conditions on revenues and margins as well as foreign
exchange volatility.
The Group places great emphasis on maintaining excellent relationships with our
brand partners and by working alongside our partners during this period of
transformation, the Group will be well placed to perform in a recovered market.
The Group has taken decisive positive action over the last eight months to
mitigate these difficult economic conditions, through identifying and
implementing five key priorities (see pages 11-15 of the Annual Report and
Accounts 2008), such that in the six months to 30 June 2009 the results achieved
for the key metrics of cash flow and operating profit were pleasing.
Interest, currency, funding and liquidity risk
The Group continues to successfully hedge interest rate risk through cross
currency interest rate swaps, and is managing the impact of movements in
exchange rates on the consolidated income statement through the use of forward
contracts and purchase of currency options.
Funding and liquidity risk is actively managed through strict controls on
inventory and the use of supplier credit to fund the largest cash outflows of
the Group. In April, the Group completed a successful Rights Issue, the proceeds
of which have been used to reduce borrowings, thereby increasing available
headroom and reducing the interest charge of the Group. This successful raising
of capital has reduced the liquidity risk to the Group, and puts the Group in a
stronger position to take advantage of market recovery.
Further details of the Group's principal risks and risk management process can
be found on pages 27-29 and 47-48 of the Annual Report and Accounts 2008.
Going concern
Having reviewed the Group's financial projections which have been updated to
reflect performance in the first half of the year, improvements in working
capital and successful Rights Issue in April, the Directors have a reasonable
expectation that the Group will continue in operational existence for the
foreseeable future and have therefore continued to adopt the going concern basis
in preparing this interim condensed consolidated financial information.
Consolidated income statement (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | Six | | Six months | | Year to |
| | | months | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | to | | to 30.6.08 | | 31.12.08 |
| | | 30.6.09 | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | Notes | GBPm | | GBPm | | GBPm |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Revenue | 2 | 2,785.7 | | 3,297.9 | | 6,259.8 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Cost of sales | | (2,373.9) | | (2,815.2) | | (5,360.6) |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Gross profit | | 411.8 | | 482.7 | | 899.2 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Net operating expenses | | (342.8) | | (331.6) | | (741.2) |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Operating profit | 2 | 69.0 | | 151.1 | | 158.0 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Operating profit before exceptional items | | 87.4 | | 151.1 | | 240.5 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Exceptional items | 3 | (18.4) | | - | | (82.5) |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Share of profit after tax of joint | | 0.4 | | 1.1 | | 2.2 |
| ventures and associates | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Profit before finance and tax | | 69.4 | | 152.2 | | 160.2 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Finance income | 4 | 25.4 | | 34.5 | | 68.4 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Finance costs | 5 | (47.8) | | (56.4) | | (120.4) |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Profit before tax | | 47.0 | | 130.3 | | 108.2 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Tax | 6 | (20.1) | | (32.3) | | (52.9) |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Profit for the period | | 26.9 | | 98.0 | | 55.3 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Profit attributable to: | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| - Equity holders of the parent | | 25.1 | | 94.9 | | 51.4 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| - Minority interests | | 1.8 | | 3.1 | | 3.9 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | 26.9 | | 98.0 | | 55.3 |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| | | | | | | |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Basic earnings per share (pence)* | 7 | 0.7p | | 3.5p | | 1.9p |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
| Diluted earnings per share (pence)* | 7 | 0.7p | | 3.5p | | 1.9p |
+--------------------------------------------+-------+-----------+--+------------+--+-----------+
* Earnings per share have been restated to reflect the bonus element of the
Rights Issue.
Consolidated statement of comprehensive income (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+--------------------------------------------+---+-------------+------------+------------+
| | | Six months | Six | Year to |
| | | | months | |
+--------------------------------------------+---+-------------+------------+------------+
| | | to 30.6.09 | to | 31.12.08 |
| | | | 30.6.08 | |
+--------------------------------------------+---+-------------+------------+------------+
| | | GBPm | GBPm | GBPm |
+--------------------------------------------+---+-------------+------------+------------+
| | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Profit for the period | | 26.9 | 98.0 | 55.3 |
+--------------------------------------------+---+-------------+------------+------------+
| | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Other comprehensive income: | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Cash flow hedges | | (100.0) | (13.6) | 111.6 |
+--------------------------------------------+---+-------------+------------+------------+
| Net investment hedge | | 2.9 | - | (14.4) |
+--------------------------------------------+---+-------------+------------+------------+
| Fair value gains / (losses) on available | | 0.7 | (0.3) | (1.1) |
| for sale financial assets | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Effect of foreign exchange rate changes | | (120.0) | 39.5 | 205.4 |
+--------------------------------------------+---+-------------+------------+------------+
| Actuarial (losses) / gains on defined | | (77.9) | 3.6 | (41.3) |
| benefit pension schemes | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Foreign exchange gains recycled through | | - | - | (2.1) |
| the consolidated income statement | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Tax recognised directly in shareholders' | | 43.8 | 6.8 | (30.8) |
| equity | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Other comprehensive income for the period | | (250.5) | 36.0 | 227.3 |
+--------------------------------------------+---+-------------+------------+------------+
| | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Total comprehensive income for the period | | (223.6) | 134.0 | 282.6 |
+--------------------------------------------+---+-------------+------------+------------+
| | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| Total comprehensive income attributable | | | | |
| to: | | | | |
+--------------------------------------------+---+-------------+------------+------------+
| - Equity holders of the parent | | (222.9) | 129.5 | 273.1 |
+--------------------------------------------+---+-------------+------------+------------+
| - Minority interests | | (0.7) | 4.5 | 9.5 |
+--------------------------------------------+---+-------------+------------+------------+
| | | (223.6) | 134.0 | 282.6 |
+--------------------------------------------+---+-------------+------------+------------+
Consolidated statement of financial position (unaudited)
AS AT 30 JUNE 2009
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | As at | As at | As at |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | 30.6.09 | 30.6.08 | 31.12.08 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | Notes | GBPm | GBPm | GBPm |
| | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Non-current assets | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Intangible assets | | 543.6 | 444.0 | 537.4 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Property, plant and equipment | | 663.8 | 601.5 | 708.1 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Investments in joint ventures and | | 20.9 | 16.7 | 21.3 |
| associates | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Available for sale financial assets | | 17.9 | 16.3 | 17.9 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Trade and other receivables | | 23.3 | 24.5 | 26.5 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Deferred tax assets | | 9.5 | 15.2 | 11.5 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Retirement benefit assets | | 0.8 | 52.8 | 49.4 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | 1,279.8 | 1,171.0 | 1,372.1 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Current assets | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Inventories | | 659.9 | 956.7 | 1,084.1 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Trade and other receivables | | 260.8 | 306.4 | 271.8 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Available for sale financial assets | | 0.2 | 0.5 | 2.0 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Derivative financial instruments | | 94.2 | 5.1 | 306.9 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Current tax assets | | 4.7 | 1.6 | 6.0 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Cash and cash equivalents | | 365.0 | 455.0 | 458.0 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | 1,384.8 | 1,725.3 | 2,128.8 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Assets held for sale and disposal group | 11 | 5.4 | 58.9 | 5.4 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | 1,390.2 | 1,784.2 | 2,134.2 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Total assets | | 2,670.0 | 2,955.2 | 3,506.3 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Current liabilities | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Trade and other payables | | (891.0) | (1,077.4) | (1,123.9) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Derivative financial instruments | | (1.1) | (19.1) | - |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Current tax liabilities | | (35.7) | (49.1) | (48.2) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Provisions | | (51.0) | (28.4) | (50.6) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Borrowings | | (137.8) | (244.6) | (165.3) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | (1,116.6) | (1,418.6) | (1,388.0) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Non-current liabilities | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Trade and other payables | | (78.7) | (46.9) | (78.1) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Provisions | | (38.6) | (42.5) | (52.0) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Deferred tax liabilities | | (23.4) | (22.5) | (69.1) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Borrowings | | (333.2) | (488.2) | (856.1) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Retirement benefit liabilities | | (51.6) | (6.2) | (43.4) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | (525.5) | (606.3) | (1,098.7) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Liabilities directly associated with the | 11 | - | (29.9) | - |
| disposal group | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Total liabilities | | (1,642.1) | (2,054.8) | (2,486.7) |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Net assets | | 1,027.9 | 900.4 | 1,019.6 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Shareholders' equity | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Share capital | | 163.3 | 121.9 | 121.9 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Share premium | | 126.1 | 126.0 | 126.1 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Capital redemption reserve | | 16.4 | 16.4 | 16.4 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Other reserves | | 89.2 | 40.7 | 273.1 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Retained earnings | | 612.9 | 576.2 | 458.0 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Equity attributable to equity holders of | | 1,007.9 | 881.2 | 995.5 |
| the parent | | | | |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Minority interests | | 20.0 | 19.2 | 24.1 |
+--------------------------------------------+-------+-----------+--------------+--------------+
| Total shareholders' equity | | 1,027.9 | 900.4 | 1,019.6 |
+--------------------------------------------+-------+-----------+--------------+--------------+
Consolidated statement of changes in equity (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | Share | Share | Capital | Other | Retained | Equity | Minority | Total |
| | capital | premium | redemption | reserves | earnings | attributable | interest | shareholders' |
| | | | reserve | | | to equity | | equity |
| | | | | | | holders of | | |
| | | | | | | the parent | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| At 1 January | 121.6 | 123.4 | 16.4 | 12.7 | 539.5 | 813.6 | 24.2 | 837.8 |
| 2008 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Total | - | - | - | 28.0 | 101.5 | 129.5 | 4.5 | 134.0 |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period ended | | | | | | | | |
| 30 June 2008 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Share-based | - | - | - | - | 2.3 | 2.3 | - | 2.3 |
| payments | | | | | | | | |
| charge | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Net purchase | - | - | - | - | (3.0) | (3.0) | - | (3.0) |
| of own shares | | | | | | | | |
| by ESOP Trust | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Share buy back | - | - | - | - | (16.0) | (16.0) | - | (16.0) |
| programme | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Dividends: | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| - Equity | - | - | - | - | | (48.1) | - | (48.1) |
| holders of the | | | | | (48.1) | | | |
| parent | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| - Minority | - | - | - | - | - | - | (2.1) | (2.1) |
| interests | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Issue of | 0.3 | 2.6 | - | - | - | 2.9 | - | 2.9 |
| ordinary share | | | | | | | | |
| capital | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Acquisition of | - | - | - | - | - | - | (7.4) | (7.4) |
| business | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| At 30 June | 121.9 | 126.0 | 16.4 | 40.7 | 576.2 | 881.2 | 19.2 | 900.4 |
| 2008 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| At 1 January | 121.6 | 123.4 | 16.4 | 12.7 | 539.5 | 813.6 | 24.2 | 837.8 |
| 2008 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Total | - | - | - | 260.4 | 12.7 | 273.1 | 9.5 | 282.6 |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| year | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Share-based | - | - | - | - | (0.9) | (0.9) | - | (0.9) |
| payments | | | | | | | | |
| credit | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Net purchase | - | - | - | - | (4.2) | (4.2) | - | (4.2) |
| of own shares | | | | | | | | |
| by ESOP Trust | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Share buy back | - | - | - | - | (16.0) | (16.0) | - | (16.0) |
| programme | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Dividends: | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| - Equity | - | - | - | - | (73.1) | (73.1) | - | (73.1) |
| holders of the | | | | | | | | |
| parent | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| - Minority | - | - | - | - | - | - | (2.6) | (2.6) |
| interests | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Issue of | 0.3 | 2.7 | - | - | - | 3.0 | - | 3.0 |
| ordinary share | | | | | | | | |
| capital | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Acquisition of | - | - | - | - | - | - | 0.6 | 0.6 |
| business | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Acquisition of | - | - | - | - | - | - | (7.6) | (7.6) |
| minority | | | | | | | | |
| interest | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| At 1 January | 121.9 | 126.1 | 16.4 | 273.1 | 458.0 | 995.5 | 24.1 | 1,019.6 |
| 2009 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Total | - | - | - | (183.9) | (39.0) | (222.9) | (0.7) | (223.6) |
| comprehensive | | | | | | | | |
| income for the | | | | | | | | |
| period ended | | | | | | | | |
| 30 June 2009 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Share-based | - | - | - | - | 1.0 | 1.0 | - | 1.0 |
| payments | | | | | | | | |
| charge | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Issue of | 41.4 | - | - | - | 192.9 | 234.3 | - | 234.3 |
| ordinary share | | | | | | | | |
| capital | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| Dividends: | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| - Minority | - | - | - | - | - | - | (3.4) | (3.4) |
| interests | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
| At 30 June | 163.3 | 126.1 | 16.4 | 89.2 | 612.9 | 1,007.9 | 20.0 | 1,027.9 |
| 2009 | | | | | | | | |
+--------------------+-------------+-------------+------------+-------------+------------+--------------+-----------+---------------+
Consolidated statement of cash flows (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2009
+---------------------------------------------+-------+-------------+------------+------------+
| | | Six months | Six months | Year to |
+---------------------------------------------+-------+-------------+------------+------------+
| | | to 30.6.09 | to 30.6.08 | 31.12.08 |
+---------------------------------------------+-------+-------------+------------+------------+
| | Notes | GBPm | GBPm | GBPm |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash generated from operating activities | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash generated from operations | 9a | 272.0 | 98.1 | 183.7 |
+---------------------------------------------+-------+-------------+------------+------------+
| Tax paid | | (28.3) | (24.9) | (57.6) |
+---------------------------------------------+-------+-------------+------------+------------+
| Interest received | | 3.5 | 9.8 | 20.0 |
+---------------------------------------------+-------+-------------+------------+------------+
| Interest paid | | (30.0) | (34.0) | (74.0) |
+---------------------------------------------+-------+-------------+------------+------------+
| Net cash generated from operating | | 217.2 | 49.0 | 72.1 |
| activities | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash flows from investing activities | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Acquisition of businesses, net of cash and | | - | (25.7) | (135.4) |
| overdrafts acquired | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Net cash inflow from sale of businesses | | 2.0 | 20.0 | 27.3 |
+---------------------------------------------+-------+-------------+------------+------------+
| Purchase of tangible and intangible assets | | (44.0) | (63.8) | (128.6) |
+---------------------------------------------+-------+-------------+------------+------------+
| Proceeds from disposal of property, plant | | 1.7 | 7.6 | 26.8 |
| and equipment | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Net disposal of available for sale | | 0.2 | 0.5 | 0.4 |
| financial assets | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Dividends received from joint ventures and | | - | - | 1.3 |
| associates | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Net cash used in investing activities | | (40.1) | (61.4) | (208.2) |
+---------------------------------------------+-------+-------------+------------+------------+
| | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash flows from financing activities | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Proceeds from issue of ordinary shares | | 234.3 | 2.9 | 3.0 |
+---------------------------------------------+-------+-------------+------------+------------+
| Share buy back programme | | - | (16.0) | (16.0) |
+---------------------------------------------+-------+-------------+------------+------------+
| Net purchase of own shares by ESOP Trust | | - | (3.0) | (4.2) |
+---------------------------------------------+-------+-------------+------------+------------+
| Net cash (outflow) / inflow from borrowings | | (448.1) | 77.7 | 275.2 |
+---------------------------------------------+-------+-------------+------------+------------+
| Payment of capital element of finance | | (1.2) | (0.1) | (0.7) |
| leases | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Loans granted to joint ventures | | (1.2) | - | (1.7) |
+---------------------------------------------+-------+-------------+------------+------------+
| Settlement of derivatives | | (5.4) | 8.3 | 17.5 |
+---------------------------------------------+-------+-------------+------------+------------+
| Equity dividends paid | | - | (48.1) | (73.1) |
+---------------------------------------------+-------+-------------+------------+------------+
| Minority dividends paid | | (3.4) | (2.1) | (2.6) |
+---------------------------------------------+-------+-------------+------------+------------+
| Net cash from financing activities | | (225.0) | 19.6 | 197.4 |
+---------------------------------------------+-------+-------------+------------+------------+
| | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Net (decrease) / increase in cash and cash | 9b | (47.9) | 7.2 | 61.3 |
| equivalents | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash and cash equivalents at beginning of | | 312.8 | 198.6 | 198.6 |
| the period | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Effect of foreign exchange rate changes | | (23.5) | 14.4 | 52.9 |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash and cash equivalents at end of the | | 241.4 | 220.2 | 312.8 |
| period | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| Cash and cash equivalents consist of: | | | | |
+---------------------------------------------+-------+-------------+------------+------------+
| - Cash at bank and in hand | | 258.4 | 328.2 | 351.3 |
+---------------------------------------------+-------+-------------+------------+------------+
| - Short term bank deposits | | 106.6 | 126.8 | 106.7 |
+---------------------------------------------+-------+-------------+------------+------------+
| - Bank overdrafts | | (123.6) | (234.8) | (145.2) |
+---------------------------------------------+-------+-------------+------------+------------+
| | | 241.4 | 220.2 | 312.8 |
+---------------------------------------------+-------+-------------+------------+------------+
Notes (unaudited)
1 Basis of preparation and accounting policies
Basis of preparation
The interim report for the period ended 30 June 2009 has been prepared on a
going concern basis in accordance with International Accounting Standard 34
'Interim Financial Reporting' as adopted by the European Union, and the
Disclosure and Transparency Rules of the Financial Services Authority. The
interim report should be read in conjunction with the Annual Report and Accounts
2008, which have been prepared in accordance with IFRSs as adopted by the
European Union, on a going concern basis and under the historical cost
convention, except for the retention of certain freehold properties and
leasehold buildings at previously revalued amounts (which were treated as deemed
cost on transition to IFRS) and the measurement of certain balances at fair
value as disclosed in the Annual Report and Accounts 2008.
The interim financial report is unaudited, but has been reviewed by the external
auditors. The condensed set of consolidated financial information in the interim
report does not constitute statutory accounts within the meaning of Section 434
of the Companies Act 2006. The Group's published consolidated financial
statements for the year ended 31 December 2008 were approved by the Board of
Directors on 19 March 2009 and filed with the Registrar of Companies. The report
of the auditors on those accounts was unqualified and did not contain an
emphasis of matter paragraph or a statement under Section 237 (2) or (3) of the
Companies Act 1985. The condensed set of consolidated financial information was
approved by the Board of Directors on 29 July 2009.
Significant accounting policies
The accounting policies adopted in the preparation of the condensed set of
consolidated financial information are consistent with those of the Group's
Annual Report and Accounts 2008, other than the adoption, with effect from 1
January 2009, of IFRS 8 'Operating segments', IAS 1 (revised) 'Presentation of
Financial Statements' and the amendment to IAS 16 in respect of the sale of
property, plant and equipment that has previously been held for rental to
others.
The Group has adopted IFRS 8 'Operating segments' which replaces IAS 14 and
requires segmental reporting to be presented on the same basis as the internal
management reporting. This has had no impact on the results or financial
position of the Group. All comparatives have been restated according to the
revised segmental disclosure. Further discussion of the changes can be seen in
note 2.
IAS 1 (revised), 'Presentation of financial statements' has been adopted by the
Group, which prohibits the presentation of non-owner items of income and
expenses in the consolidated statement of changes in equity and has also had no
impact on the results or financial position of the Group.
Upon the adoption of the amendment to IAS 16, Group policy states that where an
asset is held for rental to others, for a period of longer than 12 months, it is
held as property, plant and equipment and depreciated to residual value over the
course of the lease. Upon expiry of the lease, when the asset is held for sale,
the asset is transferred to inventory at net book value and upon sale of the
asset, the subsequent revenue and the net book value is recorded on a gross
basis, through revenue and cost of sales. The Group has adopted the amended
standard on a prospective basis from 1 January 2009. The adoption of the
amendment has not had a material impact on the results or position of the Group
for the six months ended 30 June 2009.
The following new standards are effective for accounting periods beginning 1
January 2009 but have not had a material impact on the results or financial
position of the Group:
- IFRIC 13, 'Customer loyalty programmes'
- IFRIC 15, 'Agreements for the construction of real estate'
- IFRIC 16, 'Hedges of a net investment in a foreign operation'
- IAS 39 (amendment), 'Financial instruments: Recognition and measurement'
IFRS 3 (Revised) 'Business Combinations' and subsequent amendments to IAS 27
(Revised) 'Consolidated and Separate Financial Statements', IAS 28, 'Investments
in associates' and IAS 31, 'Interests in joint ventures', were in issue but were
not yet effective at balance sheet date. These revised standards have not been
early adopted by the Group, and will be applied for the Group's financial years
commencing on or after 1 January 2010.
Notes (unaudited)
1 Basis of preparation and accounting policies continued
IFRIC 17, 'Distributions of non-cash assets to owners' is effective for annual
periods beginning on or after 1 July 2009 and IFRIC 18, 'Transfers of assets
from customers' is effective for transfers of assets received on or after 1 July
2009. These IFRICs are currently not relevant to the Group and therefore have
not been early adopted.
The principal exchange rates used for translation purposes are as follows:
+---------------------------+---------+---------+----------+---+---------+---------+----------+
| | Average rates | | Period end rates |
+---------------------------+------------------------------+---+------------------------------+
| | 30.6.09 | 30.6.08 | 31.12.08 | | 30.6.09 | 30.6.08 | 31.12.08 |
+---------------------------+---------+---------+----------+---+---------+---------+----------+
| | | | | | | | |
+---------------------------+---------+---------+----------+---+---------+---------+----------+
| Australian dollar | 2.11 | 2.15 | 2.19 | | 2.04 | 2.07 | 2.06 |
+---------------------------+---------+---------+----------+---+---------+---------+----------+
| Euro | 1.11 | 1.30 | 1.27 | | 1.17 | 1.26 | 1.03 |
+---------------------------+---------+---------+----------+---+---------+---------+----------+
| Hong Kong dollar | 11.55 | 15.49 | 14.56 | | 12.76 | 15.52 | 11.14 |
+---------------------------+---------+---------+----------+---+---------+---------+----------+
| Singapore dollar | 2.22 | 2.76 | 2.63 | | 2.38 | 2.70 | 2.07 |
+---------------------------+---------+---------+----------+---+---------+---------+----------+
2 Segmental analysis
From 1 January 2009, the Group has adopted IFRS 8 'Segmental Reporting'. IFRS 8
replaced IAS 14 'Segment Reporting'.
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision maker in order to assess their performance and to allocate
resources to the segments. These operating segments are then aggregated into
reporting segments to combine those with similar characteristics. In contrast,
the predecessor standard required the Group to identify two sets of segments
(business and geographical), using a risks and rewards approach.
Under IFRS 8, the only change for the Group is that businesses previously
reported within the Rest of World segment under IAS 14 are reported within the
other segments that best match the characteristics of each individual business.
Emerging markets are those countries in which the Group operates that have
started to grow but have yet to reach a mature stage of development and
accordingly were in, and are expected to return to, the growth phase of the
development cycle. These currently comprise China, Balkans, Baltics, Poland,
South America and Africa.
Comparative segmental information has been restated accordingly.
Notes (unaudited)
2 Segmental analysis continued
+----------------------+-------------+---------+---------+---------+----------+-----+----------+-------------+-----+-----+
| | | | | | | | Distribution |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Six months | Australasia | Europe | North | South | United | Russia | Total |
| | | | Asia | Asia | Kingdom | and | Distribution |
| | | | | | | Emerging | |
| | | | | | | Markets | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| to 30.6.09 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Revenue from third | 218.5 | 416.7 | 141.2 | 317.3 | 14.0 | 140.7 | 1,248.4 |
| parties | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Results | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Operating profit | 12.8 | 14.5 | 6.7 | 31.1 | 1.7 | (2.6) | 64.2 |
| before | | | | | | | |
| exceptional items | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Exceptional items | - | (0.2) | - | - | - | (3.9) | (4.1) |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Segment result | 12.8 | 14.3 | 6.7 | 31.1 | 1.7 | (6.5) | 60.1 |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Share of profit | - | 1.0 | - | - | - | - | 1.0 |
| after tax of joint | | | | | | | |
| ventures and | | | | | | | |
| associates | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Profit before | 12.8 | 15.3 | 6.7 | 31.1 | 1.7 | (6.5) | 61.1 |
| finance and tax | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| |
+------------------------------------------------------------------------------------------------------------------------+
| | | | | | | | Distribution |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Six months | Australasia | Europe | North | South | United | Russia | Total |
| | | | Asia | Asia | Kingdom | and | Distribution |
| | | | | | | Emerging | |
| | | | | | | Markets | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| to 30.6.08 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Revenue from third | 248.5 | 476.4 | 184.6 | 254.7 | 11.8 | 214.3 | 1,390.3 |
| parties | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Results | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Operating profit | 17.6 | 25.5 | 20.3 | 29.9 | 1.6 | 18.8 | 113.7 |
| before exceptional | | | | | | | |
| items | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Exceptional items | - | - | - | - | - | - | - |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Segment result | 17.6 | 25.5 | 20.3 | 29.9 | 1.6 | 18.8 | 113.7 |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Share of profit | - | 0.9 | - | - | 0.2 | - | 1.1 |
| after tax of | | | | | | | |
| joint ventures and | | | | | | | |
| associates | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| Profit before | 17.6 | 26.4 | 20.3 | 29.9 | 1.8 | 18.8 | 114.8 |
| finance and tax | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------------+----------+-------------------+
| |
+------------------------------------------------------------------------------------------------------------+
| | | | | | | | Distribution |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Year to | Australasia | Europe | North | South | United | Russia | Total |
| | | | Asia | Asia | Kingdom | and | Distribution |
| | | | | | | Emerging | |
| | | | | | | Markets | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| 31.12.08 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Revenue from third | 456.1 | 837.9 | 378.5 | 536.0 | 20.7 | 425.5 | 2,654.7 |
| parties | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Results | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Operating profit | 33.3 | 39.9 | 38.7 | 63.0 | (5.7) | 23.7 | 192.9 |
| before exceptional | | | | | | | |
| items | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Exceptional items | (1.3) | (4.0) | (0.1) | - | - | (47.8) | (53.2) |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Segment result | 32.0 | 35.9 | 38.6 | 63.0 | (5.7) | (24.1) | 139.7 |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Share of profit | - | 2.1 | - | - | 0.2 | - | 2.3 |
| after tax of joint | | | | | | | |
| ventures and | | | | | | | |
| associates | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------------+
| Profit before | 32.0 | 38.0 | 38.6 | 63.0 | (5.5) | (24.1) | 142.0 |
| finance and tax | | | | | | | |
+----------------------+-------------+---------+---------+---------+----------+----------------+-------------------+
| |
+----------------------+-------------+---------+---------+---------+----------+-----+----------+-------------+-----+-----+
Notes (unaudited)
2 Segmental analysis continued
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | Retail | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Six months | Australasia | Europe | United | Russia | Total | Total | Central | Total |
| | | | Kingdom | and | Retail | pre | | |
| | | | | Emerging | | Central | | |
| | | | | Markets | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| to 30.6.09 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Revenue from third | 139.4 | 109.8 | 991.7 | 296.4 | 1,537.3 | 2,785.7 | - | 2,785.7 |
| parties | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Results | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Operating profit | 3.8 | (1.1) | 17.9 | 6.0 | 26.6 | 90.8 | (3.4) | 87.4 |
| before | | | | | | | | |
| exceptional items | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Exceptional items | - | (1.6) | (3.0) | (8.2) | (12.8) | (16.9) | (1.5) | (18.4) |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Segment result | 3.8 | (2.7) | 14.9 | (2.2) | 13.8 | 73.9 | (4.9) | 69.0 |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Share of profit | - | - | - | (0.6) | (0.6) | 0.4 | - | 0.4 |
| after tax of | | | | | | | | |
| joint ventures and | | | | | | | | |
| associates | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Profit before | 3.8 | (2.7) | 14.9 | (2.8) | 13.2 | 74.3 | (4.9) | 69.4 |
| finance and tax | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Net finance costs of GBP22.4m are not allocated to individual segments |
+--------------------------------------------------------------------------------------------------------------+
| | | | | | Retail | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Six months | Australasia | Europe | United | Russia | Total | Total | Central | Total |
| | | | Kingdom | and | Retail | pre | | |
| | | | | Emerging | | Central | | |
| | | | | Markets | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| to 30.6.08 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Revenue from third | 145.2 | 235.0 | 1,322.3 | 205.1 | 1,907.6 | 3,297.9 | - | 3,297.9 |
| parties | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Results | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Operating profit | 4.5 | 2.0 | 31.1 | 7.7 | 45.3 | 159.0 | (7.9) | 151.1 |
| before | | | | | | | | |
| exceptional items | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Exceptional items | - | - | - | - | - | - | - | - |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Segment result | 4.5 | 2.0 | 31.1 | 7.7 | 45.3 | 159.0 | (7.9) | 151.1 |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Share of profit | - | - | - | - | - | 1.1 | - | 1.1 |
| after tax of | | | | | | | | |
| joint ventures and | | | | | | | | |
| associates | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Profit before | 4.5 | 2.0 | 31.1 | 7.7 | 45.3 | 160.1 | (7.9) | 152.2 |
| finance and tax | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Net finance costs of GBP21.9m are not allocated to individual segments |
+--------------------------------------------------------------------------------------------------------------+
| | | | | | Retail | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Year to | Australasia | Europe | United | Russia | Total | Total | Central | Total |
| | | | Kingdom | and | Retail | pre | | |
| | | | | Emerging | | Central | | |
| | | | | Markets | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| 31.12.08 | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Revenue from third | 263.2 | 391.3 | 2,319.4 | 631.2 | 3,605.1 | 6,259.8 | - | 6,259.8 |
| parties | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Results | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Operating profit | 8.9 | 0.7 | 28.8 | 18.8 | 57.2 | 250.1 | (9.6) | 240.5 |
| before | | | | | | | | |
| exceptional items | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Exceptional items | - | (3.0) | (23.1) | (1.8) | (27.9) | (81.1) | (1.4) | (82.5) |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Segment result | 8.9 | (2.3) | 5.7 | 17.0 | 29.3 | 169.0 | (11.0) | 158.0 |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Share of profit | - | - | 0.3 | (0.4) | (0.1) | 2.2 | - | 2.2 |
| after tax of | | | | | | | | |
| joint ventures and | | | | | | | | |
| associates | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Profit before | 8.9 | (2.3) | 6.0 | 16.6 | 29.2 | 171.2 | (11.0) | 160.2 |
| finance and tax | | | | | | | | |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
| Net finance costs of GBP21.9m are not allocated to individual segments |
+----------------------+-------------+---------+---------+----------+---------+-----------+----------+---------+
Notes (unaudited)
+------------------------------------------+---------------+---------------+---------------------------------------+
| 3 Exceptional items | | | |
+------------------------------------------+---------------+---------------+---------------------------------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------------------------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------------------------------+
| | GBPm | GBPm | GBPm |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Other asset impairment | (10.3) | - | - |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Restructuring costs | (5.1) | - | (28.3) |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Vacant property | (3.0) | - | - |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Goodwill impairment | - | - | (54.2) |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Operating exceptional items | (18.4) | - | (82.5) |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Exceptional tax | - | - | (3.6) |
+------------------------------------------+---------------+---------------+---------------------------------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------------------------------+
| Total exceptional items | (18.4) | - | (86.1) |
+------------------------------------------+---------------+---------------+---------------------------------------+
The Other asset impairment charge of GBP10.3m relates to property, plant and
equipment and arises from an impairment review of the Group's business in Latvia
which was updated following a further deterioration in trading conditions.
The charge of GBP5.1m in the period relates to the costs of further
restructuring in the Group's businesses. The restructuring costs represent the
costs of headcount reduction and site closures in Finland, the Baltics and
Russia, together with changes in the composition of the Executive Committee.
The vacant property cost of GBP3.0m represents an onerous lease provision
relating to a site occupied by the Inchcape Automotive business that was sold in
2007 and which went into administration in early 2009.
The Goodwill impairment charge in 2008 was in respect of the business in Latvia
and certain sites in the United Kingdom which have been sold or closed.
+------------------------------------------+---------------+---------------+---------------+
| 4 Finance income | | | |
+------------------------------------------+---------------+---------------+---------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+------------------------------------------+---------------+---------------+---------------+
| Bank and other interest receivable | 2.2 | 8.5 | 16.9 |
+------------------------------------------+---------------+---------------+---------------+
| Expected return on post-retirement plan | 21.9 | 24.7 | 49.4 |
| assets | | | |
+------------------------------------------+---------------+---------------+---------------+
| Other finance income | 1.3 | 1.3 | 2.1 |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| Total finance income | 25.4 | 34.5 | 68.4 |
+------------------------------------------+---------------+---------------+---------------+
+------------------------------------------+---------------+---------------+---------------+
| 5 Finance costs | | | |
+------------------------------------------+---------------+---------------+---------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+------------------------------------------+---------------+---------------+---------------+
| Interest payable on bank borrowings | 3.0 | 7.1 | 11.7 |
+------------------------------------------+---------------+---------------+---------------+
| Interest payable on Private Placement | 6.3 | 10.8 | 18.2 |
+------------------------------------------+---------------+---------------+---------------+
| Interest payable on revolving credit | 1.6 | 3.3 | 11.3 |
| facility | | | |
+------------------------------------------+---------------+---------------+---------------+
| Interest payable on other borrowings | 1.0 | 1.0 | 3.2 |
+------------------------------------------+---------------+---------------+---------------+
| Fair value loss / (gain) on | 77.6 | 1.6 | (147.6) |
| cross-currency interest rate | | | |
| swaps | | | |
+------------------------------------------+---------------+---------------+---------------+
| Fair value adjustment on Private | (73.7) | (0.9) | 144.8 |
| Placement | | | |
+------------------------------------------+---------------+---------------+---------------+
| Stock holding interest | 5.0 | 9.8 | 21.5 |
+------------------------------------------+---------------+---------------+---------------+
| Interest expense on post-retirement plan | 19.3 | 21.5 | 43.1 |
| liabilities | | | |
+------------------------------------------+---------------+---------------+---------------+
| Other finance costs | 8.1 | 3.1 | 17.1 |
+------------------------------------------+---------------+---------------+---------------+
| Capitalised borrowing costs | (0.4) | (0.8) | (2.9) |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| Total finance costs | 47.8 | 56.4 | 120.4 |
+------------------------------------------+---------------+---------------+---------------+
Notes (unaudited)
+----------------------+--------------------+---------------+---------------+---------------+
| 6 Tax | | | | |
+----------------------+--------------------+---------------+---------------+---------------+
| | | Six months | Six months | Year to |
+----------------------+--------------------+---------------+---------------+---------------+
| | | to 30.6.09 | to 30.6.08 | 31.12.08 |
+----------------------+--------------------+---------------+---------------+---------------+
| | | GBPm | GBPm | GBPm |
+----------------------+--------------------+---------------+---------------+---------------+
| Current tax | - UK | 2.7 | 0.2 | (2.6) |
+----------------------+--------------------+---------------+---------------+---------------+
| | - Overseas | 17.3 | 30.8 | 55.8 |
+----------------------+--------------------+---------------+---------------+---------------+
| | | 20.0 | 31.0 | 53.2 |
+----------------------+--------------------+---------------+---------------+---------------+
| Deferred tax | - UK | (3.1) | 1.7 | 3.5 |
+----------------------+--------------------+---------------+---------------+---------------+
| | - Overseas | 3.2 | (0.4) | (7.4) |
+----------------------+--------------------+---------------+---------------+---------------+
| Tax before | | 20.1 | 32.3 | 49.3 |
| exceptional tax | | | | |
+----------------------+--------------------+---------------+---------------+---------------+
| Exceptional tax | - Current | - | - | (2.4) |
+----------------------+--------------------+---------------+---------------+---------------+
| | - Deferred | - | - | 6.0 |
+----------------------+--------------------+---------------+---------------+---------------+
| Total tax | | 20.1 | 32.3 | 59.9 |
+----------------------+--------------------+---------------+---------------+---------------+
The subsidiaries Headline tax rate, defined as tax on profit before exceptional
items and excluding the Group's share of profit after tax of joint ventures and
associates, for the first half of 2009 is 31% (2008 - 25.0%).
+------------------------------------------+---------------+---------------+---------------+
| 7 Earnings per share | | | |
+------------------------------------------+---------------+---------------+---------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+------------------------------------------+---------------+---------------+---------------+
| Profit for the period | 26.9 | 98.0 | 55.3 |
+------------------------------------------+---------------+---------------+---------------+
| Minority interests | (1.8) | (3.1) | (3.9) |
+------------------------------------------+---------------+---------------+---------------+
| Basic earnings | 25.1 | 94.9 | 51.4 |
+------------------------------------------+---------------+---------------+---------------+
| Exceptional items | 18.4 | - | 86.1 |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| Adjusted earnings | 43.5 | 94.9 | 137.5 |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| Basic earnings per share | 0.7p | 3.5p | 1.9p |
+------------------------------------------+---------------+---------------+---------------+
| Diluted earnings per share | 0.7p | 3.5p | 1.9p |
+------------------------------------------+---------------+---------------+---------------+
| Basic Adjusted earnings per share | 1.3p | 3.5p | 5.0p |
+------------------------------------------+---------------+---------------+---------------+
| Diluted Adjusted earnings per share | 1.3p | 3.5p | 5.0p |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------+
| | Number | Number | Number |
+------------------------------------------+---------------+---------------+---------------+
| Weighted average number of fully paid | 3,461,425,507 | 486,476,096 | 486,854,223 |
| ordinary | | | |
| shares in issue during the period | | | |
+------------------------------------------+---------------+---------------+---------------+
| Weighted average number of fully paid | | | |
| ordinary | | | |
| shares in issue during the period: | | | |
+------------------------------------------+---------------+---------------+---------------+
| -Held by the ESOP Trust | (9,710,927) | (1,408,423) | (1,257,218) |
+------------------------------------------+---------------+---------------+---------------+
| -Repurchased as part of the | (26,875,606) | (26,282,846) | (26,602,853) |
| share buy back | | | |
| programme | | | |
+------------------------------------------+---------------+---------------+---------------+
| -Bonus element of Rights | - | 2,262,820,079 | 2,263,852,212 |
| Issue | | | |
+------------------------------------------+---------------+---------------+---------------+
| Weighted average number of fully paid | 3,424,838,974 | 2,721,604,906 | 2,722,846,664 |
| ordinary shares for the purposes of | | | |
| basic EPS | | | |
+------------------------------------------+---------------+---------------+---------------+
| Dilutive effect of potential ordinary | 121,906 | 6,165,610 | 1,720,575 |
| shares | | | |
+------------------------------------------+---------------+---------------+---------------+
| Adjusted weighted average number of | 3,424,960,880 | 2,727,770,516 | 2,724,567,239 |
| fully paid ordinary shares in issue | | | |
| during the period for the purposes of | | | |
| diluted EPS | | | |
+------------------------------------------+---------------+---------------+---------------+
Earnings per share have been restated to reflect the bonus element of the Rights
Issue.
Basic earnings per share is calculated by dividing the basic earnings for the
period by the weighted average number of fully paid ordinary shares in issue
during the period, less those shares held by ESOP Trust and those repurchased as
part of the share buy back programme.
Notes (unaudited)
7 Earnings per share continued
Diluted earnings per share is calculated on the same basis as the basic earnings
per share with a further adjustment to the weighted average number of fully paid
ordinary shares to reflect the effect of all dilutive potential ordinary shares.
Dilutive potential ordinary shares comprise share options and deferred bonus
plan awards.
Adjusted earnings (which excludes exceptional items) is adopted to assist the
reader in understanding the underlying performance of the Group. Adjusted
earnings per share is calculated by dividing the Adjusted earnings for the
period by the weighted average number of fully paid ordinary shares in issue
during the period, less those shares held by the ESOP Trust and those
repurchased as part of the share buy back programme.
Diluted Adjusted earnings per share is calculated on the same basis as the
Adjusted earnings per share with a further adjustment to the weighted average
number of fully paid ordinary shares to reflect the effect of all dilutive
potential ordinary shares. Dilutive potential ordinary shares comprise share
options and deferred bonus plan awards.
+------------------------------------------+---------------+---------------+---------------+
| 8 Shareholders' equity | | | |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| a. Issue of ordinary shares | | | |
+------------------------------------------+---------------+---------------+---------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+------------------------------------------+---------------+---------------+---------------+
| Share capital | 41.4 | 0.3 | 0.3 |
+------------------------------------------+---------------+---------------+---------------+
| Share premium | - | 2.6 | 2.7 |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| | 41.4 | 2.9 | 3.0 |
+------------------------------------------+---------------+---------------+---------------+
Rights Issue
On 23 April 2009, 4,143,316,500 new ordinary shares of 1p each were issued by
way of a 9 for 1 Rights Issue. The issue raised GBP234.3m net of issue costs.
The structure utilised to facilitate the Rights Issue attracted merger relief
under Section 131 of the Companies Act 1985 and as a result the excess of the
net proceeds over the nominal value of the shares issued was initially recorded
as a merger reserve. Subsequent transactions required to complete the Rights
Issue resulted in the excess of GBP192.9m being transferred to retained
earnings.
Treasury shares
During the six months ended June 2009, the Group did not repurchase its own
shares (June 2008 - the Group repurchased 4,460,000 shares through purchases on
the London Stock Exchange). The total consideration paid in the prior period to
June 2008 was GBP16.0m and this was deducted from the Retained earnings reserve.
The number of Treasury shares held by the Group at 30 June 2009 is 26,875,606
(December 2008: 26,875,606). The shares are held as Treasury shares and may
either be cancelled or used to satisfy share options at a later date.
Share options
No shares were issued during the period under the Group's share option schemes.
+------------------------------------------+---------------+---------------+---------------+
| b. Dividends |
+------------------------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------------------------+
| The following dividends were paid by the Group: |
+------------------------------------------------------------------------------------------+
| | Six months | Six months | Year to |
+------------------------------------------+---------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+------------------------------------------+---------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+------------------------------------------+---------------+---------------+---------------+
| Interim dividend for the six months | - | - | 25.0 |
| ended 30 June 2008 of 5.46p per share | | | |
+------------------------------------------+---------------+---------------+---------------+
| Final dividend for the year ended 31 | - | 48.1 | 48.1 |
| December 2007 of 10.5p per share | | | |
+------------------------------------------+---------------+---------------+---------------+
| | | | |
+------------------------------------------+---------------+---------------+---------------+
| | - | 48.1 | 73.1 |
+------------------------------------------+---------------+---------------+---------------+
There is no proposal to pay an interim dividend for the six months ended 30 June
2009.
Notes (unaudited)
+---------------------------------------------+------------+---------------+---------------+
| 9 Notes to the statement of cash flows | | | |
+---------------------------------------------+------------+---------------+---------------+
| | | | |
+---------------------------------------------+------------+---------------+---------------+
| a. Reconciliation of cash generated from | | | |
| operations | | | |
+---------------------------------------------+------------+---------------+---------------+
| | Six months | Six months | Year to |
+---------------------------------------------+------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+---------------------------------------------+------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+---------------------------------------------+------------+---------------+---------------+
| Cash flows from operating activities | | | |
+---------------------------------------------+------------+---------------+---------------+
| Operating profit | 69.0 | 151.1 | 158.0 |
+---------------------------------------------+------------+---------------+---------------+
| Exceptional items | 18.4 | - | 82.5 |
+---------------------------------------------+------------+---------------+---------------+
| Amortisation | 1.1 | 1.6 | 3.7 |
+---------------------------------------------+------------+---------------+---------------+
| Depreciation | 16.0 | 17.6 | 27.5 |
+---------------------------------------------+------------+---------------+---------------+
| Profit on disposal of property, plant and | (0.3) | (1.5) | (2.6) |
| equipment | | | |
+---------------------------------------------+------------+---------------+---------------+
| Share-based payments charge / (credit) | 1.0 | 2.3 | (0.9) |
+---------------------------------------------+------------+---------------+---------------+
| Decrease / (increase) in inventories | 361.1 | (72.1) | (27.9) |
+---------------------------------------------+------------+---------------+---------------+
| (Increase) / decrease in trade and other | (6.9) | (25.6) | 65.6 |
| receivables | | | |
+---------------------------------------------+------------+---------------+---------------+
| (Decrease) / increase in trade and other | (146.9) | 41.3 | (112.8) |
| payables | | | |
+---------------------------------------------+------------+---------------+---------------+
| (Decrease) / increase in provisions | (5.3) | (3.4) | 7.9 |
+---------------------------------------------+------------+---------------+---------------+
| Decrease in post-retirement defined | (17.2) | (11.0) | (16.2) |
| benefits* | | | |
+---------------------------------------------+------------+---------------+---------------+
| Movement in vehicles subject to residual | (9.3) | (4.8) | 4.3 |
| value commitments | | | |
+---------------------------------------------+------------+---------------+---------------+
| Payment in respect of operating exceptional | (9.0) | - | (5.8) |
| items | | | |
+---------------------------------------------+------------+---------------+---------------+
| Other items | 0.3 | 2.6 | 0.4 |
+---------------------------------------------+------------+---------------+---------------+
| Cash generated from operations | 272.0 | 98.1 | 183.7 |
+---------------------------------------------+------------+---------------+---------------+
| * The decrease in post-retirement defined benefits includes additional payments of |
| GBP16.9m (June 2008 - GBP11.0m). |
+------------------------------------------------------------------------------------------+
| |
+------------------------------------------------------------------------------------------+
| b. Reconciliation of net cash flow to movement in net debt |
+------------------------------------------------------------------------------------------+
| | Six months | Six months | Year to |
+---------------------------------------------+------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+---------------------------------------------+------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+---------------------------------------------+------------+---------------+---------------+
| Net (decrease) / increase in cash and cash | (47.9) | 7.2 | 61.3 |
| equivalents | | | |
+---------------------------------------------+------------+---------------+---------------+
| Net cash outflow / (inflow) from borrowings | 449.3 | (77.6) | (274.5) |
| and lease financing | | | |
+---------------------------------------------+------------+---------------+---------------+
| Change in net cash and debt resulting from | 401.4 | (70.4) | (213.2) |
| cash flows | | | |
+---------------------------------------------+------------+---------------+---------------+
| Effect of foreign exchange rate changes on | (17.8) | 13.2 | 33.7 |
| net cash and debt | | | |
+---------------------------------------------+------------+---------------+---------------+
| Net movement in fair value | (3.9) | (0.7) | 2.8 |
+---------------------------------------------+------------+---------------+---------------+
| Net loans and finance leases relating to | - | - | (17.6) |
| acquisitions | | | |
+---------------------------------------------+------------+---------------+---------------+
| Movement in net debt | 379.7 | (57.9) | (194.3) |
+---------------------------------------------+------------+---------------+---------------+
| Opening net debt | (407.8) | (213.5) | (213.5) |
+---------------------------------------------+------------+---------------+---------------+
| Closing net debt | (28.1) | (271.4) | (407.8) |
+---------------------------------------------+------------+---------------+---------------+
Net debt has been restated to include the derivative relating to the Private
Placement borrowing and is analysed as follows:
+---------------------------------------------+------------+---------------+---------------+
| | Six months | Six months | Year to |
+---------------------------------------------+------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+---------------------------------------------+------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+---------------------------------------------+------------+---------------+---------------+
| Cash at bank and in hand | 258.4 | 328.2 | 351.3 |
+---------------------------------------------+------------+---------------+---------------+
| Short term bank deposits | 106.6 | 126.8 | 106.7 |
+---------------------------------------------+------------+---------------+---------------+
| Bank overdrafts | (123.6) | (234.8) | (145.2) |
+---------------------------------------------+------------+---------------+---------------+
| Cash and cash equivalents | 241.4 | 220.2 | 312.8 |
+---------------------------------------------+------------+---------------+---------------+
| Bank loans | (338.8) | (485.1) | (858.0) |
+---------------------------------------------+------------+---------------+---------------+
| Other loans | (1.5) | (4.4) | (9.2) |
+---------------------------------------------+------------+---------------+---------------+
| Finance leases | (7.1) | (8.5) | (9.0) |
+---------------------------------------------+------------+---------------+---------------+
| | (106.0) | (277.8) | (563.4) |
+---------------------------------------------+------------+---------------+---------------+
| Fair value of cross-currency interest rate | 77.9 | 6.4 | 155.6 |
| swap | | | |
+---------------------------------------------+------------+---------------+---------------+
| Net debt | (28.1) | (271.4) | (407.8) |
+---------------------------------------------+------------+---------------+---------------+
Notes (unaudited)
10 Acquisitions and disposals
Acquisitions
In July 2008, the Group acquired 75.1% of the issued share capital of Musa
Motors for a cash consideration of US$200m. This US$200m was an initial
down-payment, with a further payment due in 2009 which is dependent on 2008
EBITA less acquired debt, subject to a cap of US$250m. The remaining 24.9% is to
be acquired in early 2011, with payment dependent on 2010 EBITA, capped at
US$250m.
In the six months to 30 June 2009, adjustments have been made to the net assets
acquired of Musa Motors, as permitted by IFRS 3 - Business Combinations. These
fair value adjustments are not material and therefore have not been restated for
prior periods. The changes to the net assets acquired were primarily due to a
decrease in supplier creditors and an increase in various taxes, compared to
original estimates. These changes, together with revisions to amounts due in
respect of the contingent deferred consideration, have resulted in an increase
in the amount of goodwill recognised on acquisition.
Disposals
The Group disposed of some European businesses during the period, with disposal
proceeds of GBP1.9m (June 2008 - GBP14.2m) before disposal costs.
+---------------------------------------------+------------+---------------+---------------+
| 11 Assets held for sale and disposal group | | | |
+---------------------------------------------+------------+---------------+---------------+
| | Six months | Six months | Year to |
+---------------------------------------------+------------+---------------+---------------+
| | to 30.6.09 | to 30.6.08 | 31.12.08 |
+---------------------------------------------+------------+---------------+---------------+
| | GBPm | GBPm | GBPm |
+---------------------------------------------+------------+---------------+---------------+
| Assets directly associated with the | - | 54.9 | - |
| disposal group | | | |
+---------------------------------------------+------------+---------------+---------------+
| Assets held for sale | 5.4 | 4.0 | 5.4 |
+---------------------------------------------+------------+---------------+---------------+
| Assets held for sale and disposal group | 5.4 | 58.9 | 5.4 |
+---------------------------------------------+------------+---------------+---------------+
| Liabilities directly associated with the | - | (29.9) | - |
| disposal group | | | |
+---------------------------------------------+------------+---------------+---------------+
| | | | |
+---------------------------------------------+------------+---------------+---------------+
| The assets and liabilities in the disposal | | | |
| group comprise the following: | | | |
+---------------------------------------------+------------+---------------+---------------+
| Goodwill | - | 5.2 | - |
+---------------------------------------------+------------+---------------+---------------+
| Property, plant and equipment | - | 13.6 | - |
+---------------------------------------------+------------+---------------+---------------+
| Inventories | - | 24.8 | - |
+---------------------------------------------+------------+---------------+---------------+
| Trade and other receivables | - | 11.3 | - |
+---------------------------------------------+------------+---------------+---------------+
| Assets held for sale and disposal group | - | 54.9 | - |
+---------------------------------------------+------------+---------------+---------------+
| Trade and other payables | - | (29.9) | - |
+---------------------------------------------+------------+---------------+---------------+
| Liabilities directly associated with the | - | (29.9) | - |
| disposal group | | | |
+---------------------------------------------+------------+---------------+---------------+
Assets held for sale relate to surplus properties which are being actively
marketed.
12 Related party disclosures
There have been no material changes to the principal subsidiaries and joint
ventures as listed in the Annual Report and Accounts for the year ended 31
December 2008. All related party transactions arise during the ordinary course
of business and are on an arm's length basis. There were no material
transactions or balances between the Group and its key management personnel
during the six months to 30 June 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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