Slide 1: Inchcape
+5 Inchcape
Slide 2: Preliminary results presentation
Preliminary results presentation 6 March 2007
Slide 3: Welcome
André Lacroix Group Chief Executive Welcome
Slide 4: Group financial highlights
Group financial highlights • Sales* up 7.8% to £4.8bn – Like for like sales* up 2.1% • Operating profit** up 12.6% to £213.2m – Like for like profit increase of 10.3% • Headline EPS*** up 19.8% to 35.7p • Final dividend up 58.7% to 10p • Full year dividend up 57.9% to 15p * At constant currency 4 **
Slide 5: Operational and strategic highlights
Operational and strategic highlights • Record performance – Challenging year in Asia – 34% operating profit* generated outside of Asia – Market share improvements in 16 out of 24 markets – Group margin improvement to 4.4% (+20bps v 05) • Transformational consolidation in the UK • Acceleration of int
Slide 6: Barbara Richmond, Group Finance Director
Barbara Richmond Group Finance Director
Slide 7: Sales
Sales 2006 2005 Change Change % Like-for-like* £m £m % constant change % currency constant currency Distribution 2,463 2,425 1.6 1.3 1.1 Retail 2,379 2,063 15.3 15.5 3.4 Total 4,842 4,488 7.9 7.8 2.1 7 * Definition in Appendix 1
Slide 8: Trading profit and ROIC
Trading profit* and ROIC 2006 2005 Change Change % Like-for-like £m £m % constant change % currency constant currency Distribution 185.5 176.3 5.2 4.6 4.4 Retail 53.3 31.9 67.5 68.3 42.4 Total 238.8 208.2 14.7 14.4 10.3 ROIC (%) 33.8 33.1 Negative effect of 31.01.07 exchange rates on 2006 trading pr
Slide 9: Regional analysis – trading profit
Regional analysis – trading profit 2006* 2005* 9% 16% 10% 15% 14% 19% 3% 5% 35% 15% 43% 16% Australia Asia Australia Asia Europe** Emerging Markets Europe** Emerging Markets UK ROW UK ROW 9 * Before central costs ** Excluding UK and Emerging Markets
Slide 10: Australia
Australia* • Subaru record 2006 Change market share of £m % Distribution Retail Distribution Retail 3.9% Sales 410 222 1.1 7.2 • Special editions Like-for-like sales 410 198 1.1 2.0 strengthened Distribution profits Trading profit 28.9 9.3 12.0 64.8 • Benefits of retail Like-for-like profit 28.9 8.7
Slide 11: Asia
Asia • Competitive pressure 2006 Change from parallel imports £m % • Strong model launches Sales 864 (10.1) by competitors Like-for-like sales 831 (11.0) • Singapore affected by Trading profit 80.9 (11.0) discontinuance of taxis Like-for-like profit 78.4 (12.6) in Q4 • Hong Kong ROS % 9.4 (0.1ppts)
Slide 12: Europe
Europe • Benefit on new 2006 Change Toyota models in £m % Distribution Retail Distribution Retail Belgium/Greece • Record market Sales 778 424 15.8 17.1 in Belgium Like-for-like sales 778 347 15.8 9.4 • Strong recovery Trading profit 41 (2.8) 21.3 13.4 in Greece – 9.8% Toyota Like-for-like profit 41
Slide 13: UK
UK • Continued focus 2006 Change on operational £m % excellence/customer Distribution Retail Distribution Retail service in UK Retail Sales 98 1,614 (14.8) 14.0 • Retail like-for-like Like-for-like sales 98 1,309 (14.8) - ROS up 0.8ppts to 2.8% Trading profit 3.8 42.1 1,013.7 46.1 • Integration of L
Slide 14: Emerging markets
Emerging markets* • Balkans markets up 2006 Change 34% £m % Distribution Retail Distribution Retail • Baltics markets up Sales 78 123 38.5 57.0 39% • Market share Like-for-like sales 78 109 38.5 38.5 growth in both Trading profit 8.4 3.7 55.1 130.6 regions Like-for-like profit 8.4 3.1 55.1 95.2 • Ne
Slide 15: Net interest, taxation and dividend
Net interest, taxation and dividend 2006 2005 Net interest cost 5.9 5.3 Tax rate (%) 21.7 25.5 H-EPS (p) 35.7 29.8 Dividend per share (p) 15.0 9.5 Free cash flow per share (p) 36.7 19.2 Dividend cover Earnings (times) 2.4 3.1 Cash 2.5 2.0 15
Slide 16: Cash flow and net debt
Cash flow and net debt Operating Free Net cash flow £m cash flow £m cash £m Operating 213.9 Operating 274.4 Net cash 01.01.06 165.9 profit cash flow Free cash flow 170.4 Depreciation/ 27.3 Net interest (7.5) Dividends (52.6) amortisation Taxation (50.2) Share buyback (30.3) Working 26.6 Minority (3.
Slide 17: Financial summary
Financial summary • Strong growth in European businesses • Strong performance in UK Retail • Weaker performance in Asia • Rapid growth in Emerging Markets • Increase in ROIC to 33.8% • Continued strong cash generation 17
Slide 18: 2007 Priorities
André Lacroix Group Chief Executive 2007 Priorities
Slide 19: Strategy in action – 2007 priorities
Strategy in action – 2007 priorities Strengthen Expand • Russia start up • New model launches • Build scale in Eastern Europe • UK Transformation - Baltics • Continuous focus on operational excellence - Balkans • China start up Like-for-like sales and profit growth Investment in emerging markets 19
Slide 20: Exciting new model launches in all key segments - 2007
Exciting new model launches in all key segments - 2007 Toyota Lexus Mercedes BMW Audi VW Subaru Mazda CAT A CAT B 1 Series Coupe Mazda 2 Auris Corolla Verso Polo Blue Motion Audi TT CAT C IS Coupe C-Class 3 Cabrio Touran Audi A5 CAT D Corolla Sedan Impreza LS Hybrid Audi R8 CAT E Alphard EOS X5 MPV
Slide 21: Successful new model launches in all key segments - 2006
Successful new model launches in all key segments - 2006 Toyota Lexus Mercedes BMW/MINI Audi VW Subaru Mazda CAT A MINI CAT B Yaris Audi TT Eos 3 Coupe CAT C S Class GS Hybrid Z4 Coupe Liberty GT MX-5 RHT CAT D Avensis Jetta E Class Passat CAT E Camry LS460 Mazda 8 Previa Golf R32 MPV Liberty Aurion
Slide 22: Transforming our UK business to focus on the Premium Segment
Transforming our UK business to focus on the Premium Segment in a wider geographical footprint New Inchcape portfolio Brand % of Number Position Network of sites Audi =1 8.7% 10 BMW 1 11.3% 18 Honda >3 1.5% 3 Lexus 2 9.8% 5 MINI 1 11.5% 18 Mercedes 2 (inc commercial) 11.4% 16 smart 1 9.6% 5 Toyota 1
Slide 23: Strengthening our UK portfolio by disposing of non core franchises
Strengthening our UK portfolio by disposing of non core franchises and businesses Number of sites Bentley 3 Ferrari 3 Ford 4 Jaguar 10 Kia 1 Land Rover 10 Maserati 3 Renault 1 Vauxhall 5 Volvo 7 Total 47 Disposal proceeds to be redeployed in Emerging Markets 23
Slide 24: Delivering improved operating margins on new UK portfolio
Delivering improved operating margins on new UK portfolio • Industry leading operational expertise to drive synergies Inchcape Lind EMH Used to new ratio 0.99 0.76 0.73 F&I penetration 42.0% 37.4% 40.4% Parts sales/service hours £96.30 £83.90 £89.30 Service productivity* 97.7% 91.6% 94.1% • Major pu
Slide 25: Streamlining UK overheads and increasing productivity
Streamlining UK overheads and increasing productivity • Remove EMH plc costs – Ongoing full year saving of £3.4m as of 2008 • Lower management overheads due to fewer franchises – Full year saving of approximately £1m as of 2008 • Accelerate our back office system integration progress – Capex investm
Slide 26: Continuous focus on operational excellence: new systems
Continuous focus on operational excellence: new systems in place since January 1st 2007 • Inchcape Advantage to drive sales and customer service – Daily reports for all 208 retail sites on traffic/leads/test drive and conversion – Monthly customer service monitoring • Consistent global management ac
Slide 27: Continuous focus on operational excellence: underperforming units
Continuous focus on operational excellence: address underperforming business units • Dispose of Inchcape Automotive (2006 loss of £2.2m) • Exit the Jaguar business in Paris (2006 loss of £0.4m) • Turnaround plans in place in European Retail – Accelerate Greek turnaround (2006 loss of £1.1m) – Turnar
Slide 28: Building a scale business in Russia
Building a scale business in Russia Russia Population 142.9 million Market 1.9m cars Imported 1.02m cars CAGR (imported) 4 year 74% Toyota/Lexus share 10.3% Inchcape 2009 target Volume c. 16,000 units Revenue c. £300m • We have established two anchor points in St Petersburg and Moscow • We are looki
Slide 29: Accelerating our growth in the Balkans
Accelerating our growth in the Balkans Romania • Strong growth opportunities • Second biggest car market in Eastern Europe • 2 3S facilities in Bucharest; 1 under planning • Network build up outside of Bucharest Population 22.3m Bulgaria Market 251,000 cars • Leadership position in Bulgaria CAGR 5 y
Slide 30: Building critical mass in the Baltics
Building critical mass in the Baltics Lithuania Estonia Population 3.6m Population 1.3m Market 13,000 cars Market 24,000 cars CAGR 5 year 13% CAGR 5 year 13% Inchcape volume* 764 units Inchcape volume* 1,747 units Inchcape share* 5.9% Inchcape share* 7.3% Inchcape revenue* £9.3m Inchcape revenue* £3
Slide 31: Clear entry strategy in China
Clear entry strategy in China China Population 1.3 billion Market 4.3m cars CAGR 5 year 38% Greater Shanghai Shaoxing Toyota opened Jan 2007 Shaoxing Lexus opening Q4 2007 Shanghai Lexus opening Q1 2008 Inchcape 2009 target Volume 2,830 units Revenue £85m We are looking at greenfield and acquisition
Slide 32: An excellent year; strong growth prospects for 2007 and beyond
An excellent year; strong growth prospects for 2007 and beyond • New strategy delivers with another record performance in 2006 • Strong profit growth of 34% operating profit outside of Asia, rebalancing our portfolio • Management team strengthened • Transformational consolidation strategy in the UK
Slide 33: Investment case
Investment case • A unique business model • Superior financial returns: like for like growth, margin expansion • Margin enhancement through continuous business improvement, customer focus • Long standing relationships with high growth brand partners • Expansion opportunities in both developed and em
Slide 34: Inchcape
+5 Inchcape
Slide 35: Disclaimer
Disclaimer The information and opinions contained in this presentation are provided as at the date of the document. Certain statements in this presentation, particularly those regarding the future prospects of Inchcape plc (“Inchcape”), returns, pricing, acquisitions, divestments, industry growth or
Slide 36: Inchcape
+5 Inchcape
Slide 37: Appendices
Appendices
Slide 38: Appendix 1 - Like-for-like definition
Appendix 1 - Like-for-like definition • The following are excluded from like-for-like sales: – Businesses that are acquired, from the date of acquisition until the 13th month of ownership – Businesses that are sold or closed – Retail centres that are relocated from the date of opening until the 13th
Slide 39: Appendix 2 – Emerging markets definition
Appendix 2 – Emerging markets definition • Emerging markets are those markets in which the Group operates and where total new vehicle volume sales by international brands are growing by 10% or above per annum • This currently covers the following countries: – The Balkans – The Baltics – China – Russ
Slide 40: Appendix 3 - The global consolidator in a fragmented industry
Appendix 3 - The global consolidator in a fragmented industry 5 year CAGR Sales £4.8bn 9% PBT £214m 30% Cash £100m generation p.a. Market cap. £2.5bn FTSE Rank: 111 26 countries
Slide 41: Distribution is the core of Inchcape
Distribution is the core of Inchcape Sales • Exclusive brand representation in a country Dist 51% – 51% of sales – 78% of trading profit 49% – Low capital intensity Retail Trading profit • Track record of organic growth Dist 78% • Market share growth in 15 out of 21 markets Retail • Delivers cash fl
Slide 42: Retail is where the expansion opportunities are
Retail is where the expansion opportunities are Sales • Delivering the brand to the consumer Retail 49% – 49% of sales – 22% of trading profit Dist – 208* sites in 25 countries 51% Trading profit Retail • Expansion 22% – In high growth and highly profitable emerging markets – Industry consolidation
Slide 43: Inchcape
+5 Inchcape