Slide 1: Industry leader – Interim results presentation
Industry leader Interim results presentation 2 August 2007
Slide 2: Industry leader… delivering on our strategy
Industry leader… delivering on our strategy André Lacroix Group Chief Executive
Slide 3: Group financial highlights – record trading performance
Group financial highlights – record trading performance • Sales* up 31% to £3.2bn • Like-for-like sales* up 3.1% • Operating profit** up 26.1% to £138.6m • Like-for-like profit increase of 5.9% • EPS*** up 2.2% to 18.9p • Interim dividend up 5.0% to 5.25p Acceleration of sales and profit growth * At
Slide 4: H1 2007 Operational and strategic highlights
H1 2007 Operational and strategic highlights • Record profit for the Group, and in Australia, Greece, Belgium, UK and Emerging Markets • Emerging Markets sales doubled and profits tripled • Existing businesses strengthened: share gain in 16 markets and like for like profit up 5.9% • Successful portf
Slide 5: Industry leader… delivering on our strategy
Industry leader… delivering on our strategy Barbara Richmond Group Finance Director
Slide 6: Sales
Sales H1 H1 Change Change % Like-for-like 2007 2006 % constant change % £m £m currency constant currency Distribution 1,263.3 1,312.5 (3.7) 0.2 0.3 Retail 1,873.2 1,128.1 66.0 67.1 6.4 Total 3,136.5 2,440.6 28.5 31.1 3.1 6
Slide 7: Trading profit & ROS
Trading profit & ROS Trading Profit H1 H1 Change Change % Like-for-like 2007 2006 % constant change % £m £m currency constant currency Distribution 98.9 95.3 3.8 9.2 5.6 Retail 45.2 25.1 80.1 81.5 7.0 Total 144.1 120.4 19.7 24.2 5.9 ROS (%) H1 H1 Change Like-for-like 2007 2006 ppt change ppt Distrib
Slide 8: Impact of currency on pre-tax profit
Impact of currency on pre-tax profit £m H1 2007 H1 2007 Currency actual constant impact exchange currency rates Hong Kong 13.2 14.7 1.5 Singapore 25.6 27.0 1.4 Australia 20.5 20.9 0.4 Europe 24.3 24.8 0.5 Emerging markets 12.4 12.8 0.4 Rest of World 12.3 13.6 1.3 Trading profits 5.5 Interest/JV & As
Slide 9: Regional analysis – trading profit
Regional analysis – trading profit H1 2007* H1 2006* 8% 9% 16% 14% 9% 19% 25% 9% 3% 18% 9% 16% 28% 17% Australia Hong Kong Singapore Europe** * Before central costs Emerging Markets UK 9 ** Excluding UK and Emerging Markets ROW
Slide 10: Australia
Australia* • Record profits Distribution Distribution Retail Retail £m change % £m change % • Distribution profits up over 20% Sales 211.1 (3.8) 122.6 5.9 • Distribution sales lower due to model Like-for-like sales 211.1 (3.8) 114.4 (1.2) run outs • Distribution margins Trading profit 17.3 20.3 3.7
Slide 11: Hong Kong (VIR)
Hong Kong (VIR) • Strong sales recovery £m Change % • New models and store relocation boost sales Sales 123.0 16.0 • Government incentive increased hybrid sales Like-for-like sales 97.6 12.8 • Market share improvement to 37% Trading profit* 11.8 16.8 (2006: 36%) Like-for-like profit* 9.0 12.0 ROS %*
Slide 12: Singapore (VIR)
Singapore (VIR) • Expected weakness £m Change % • New car market decline of 7.1% Sales 283.2 (20.9) • Sales down 20.9% • No taxi sales in 2007 Like-for-like sales 283.2 (20.9) • Growth of parallel imports (PI) continues Trading profit 27.0 (20.2) • Market share decline of Like-for-like profit 27.0 (
Slide 13: Europe
Europe • Excellent Distribution Distribution Retail Retail £m change % £m change performances across % the region Sales 468.2 9.0 207.8 (8.9) • Record results in Greece and Belgium Like-for-like sales 468.2 9.0 202.0 4.3 • Distribution market Trading profit 23.9 16.8 0.8 NA* share increased in Greec
Slide 14: UK
UK Distribution Distribution Retail Retail • Retail like-for-like £m change % £m change % sales up 5.1% • UK market up 2.0% Sales 43.0 (19.8) 1,397.8 91.6 in first half • LFL ROS still strong Like-for-like sales 15.3 (25.7) 716.9 5.1 at 2.7% Trading profit 1.8 (30.8) 34.0 65.1 • Combined UK Retail b
Slide 15: Emerging markets
Emerging markets Distribution Distribution Retail Retail • Sales up 130% and £m change % £m change % profit up 200% • Like-for-like sales Sales 59.6 66.5 155.2 183.4 up 54% and profit up 84% Like-for-like sales 59.6 66.5 79.7 45.4 • Balkans Distribution Trading profit 5.7 74.3 7.0 745.6 market share
Slide 16: Net interest, taxation and dividend
Net interest, taxation and dividend H1 H1 2007 2006 Net interest cost 14.9 0.6 Tax rate (%) 25 21.7 EPS (p)* 18.9 18.5 Dividend per share (p) 5.25 5.0 Free cash flow per share (p) 27.6 33.1 Dividend cover Earnings (times) 3.6 3.7 Cash 5.2 6.7 * normalised 16
Slide 17: Cash flow and net debt
Cash flow and net debt Operating cash flow £m Free cash flow £m Net cash £m Operating profit* 133.2 Operating cash flow 186.2 Free cash flow 127.1 Depreciation/ Net interest (12.9) Dividends (46.6) amortisation 17.7 Taxation (22.2) Pension (9.5) Working capital 37.7 Minority interest (1.6) Acquisiti
Slide 18: Funding
Funding H1 H1 2007 2006 Capital expenditure (net) 22.4 16.3 Acquisitions (net) 191.2 19.5 • Syndicated revolving credit facility of £500m, expires 2012 • US$ 550m raised through private placement • Bilateral of £35m expires 2010
Slide 19: Financial summary
Financial summary • Continued strength in Europe • Strong UK performance in challenging market • Continuing weakness as expected in Singapore • Recovery in Hong Kong • Rapid growth in Emerging Markets • Continued strong cash generation 19
Slide 20: Industry leader… delivering on our strategy
Industry leader… delivering on our strategy André Lacroix Group Chief Executive
Slide 21: Strategy in Action – 2007 priorities
Strategy in Action – 2007 priorities Strengthen Expand • New model launches • Russia start up • UK Transformation • Build scale in Eastern • Continuous focus on Europe operational excellence • China start up H1 H1 like-for-like like-for-like sales sales growth growth +3.1% +3.1% H1 H1 £125m £125m in
Slide 22: Clear strategic focus across our markets
Clear strategic focus across our markets Strengthen Strengthen Expand Expand Belgium Russia Greece China Hong Kong Singapore Australia UK Romania Bulgaria Brunei Ethiopia Latvia Lithuania France Estonia Guam Macedonia Luxemburg Macau Finland New Zealand Poland Chile Saipan Peru 8 core markets repres
Slide 23: Delivering on our strategy
Delivering on our strategy Agreement to acquire in Latvia (VIR) Strengthen Strengthen Agreement to acquire in Lithuania (VIR) Sale of non-Core, non- Retail UK businesses Expand Expand Market Forces F&I model roll-out Opened in China (Retail) New Reporting Acquired EMH (Retail) Sale of Inchroy Entere
Slide 24: UK Retail H1 2007 performance
Strengthen Strengthen UK Retail H1 2007 performance • Record sales up 92% and record operating profit up 65% • LFL turnover up 5.1%, accelerated from +3.3% in Q1 to +6.4% in Q2 - New 4.4% - Service 1.6% - Used 4.8% - Parts 8.6% • Industry leading LFL ROS of 2.7% (- 0.1pt YOY) • Used car margin erosi
Slide 25: UK transformation strategy
Strengthen Strengthen UK transformation strategy • The premium segment continues to outperform the market • Lind acquisition delivering YOY ROS improvement Lind Lind H2 2006 H1 2007 • Used to new ratio 0.76 0.71 • F&I penetration 37.4% 37.8% • Parts Sales/Service hours £83.90 £87.60 • Service produc
Slide 26: UK H2 outlook
Strengthen Strengthen UK H2 outlook • Continue to out perform the market with strong like for like sales growth • Key model launches: Audi A5, Mercedes C Class, BMW X5, BMW 3 Cabriolet, MINI Clubman, Lexus LS600h • Further progress on our Inchcape Advantage customer service initiative • Focus on val
Slide 27: Strong recovery in Hong Kong
Strengthen Strengthen Strong recovery in Hong Kong H1 Highlights • Market rebound, up 5.4% • Inchcape share of 37.4% (+1.3pt YOY) • Strong Lexus performance, registrations up 69% • Double digit sales and profit growth with strong ROS of 9.6% H2 Priorities • Strong sales momentum expected with new mo
Slide 28: Addressing challenges in Singapore
Strengthen Strengthen Addressing challenges in Singapore H1 Highlights • Challenging environment: market contraction and growth of parallel imports • Lack of taxi sales: no Toyota Euro IV product available • Sales and profit decline but healthy ROS of 9.5% retained H2 Outlook • Protect our market le
Slide 29: Building Retail and Distribution in emerging markets
Building Retail and Distribution in Expand Expand emerging markets Latvia Estonia Russia Lithuania China Poland Bulgaria Romania Macedonia 29 From 13 Retail sites in 2006 to 24 at the end of H1 2007
Slide 30: We are building scale in emerging markets
We are building scale in emerging Expand Expand markets • Tripling number of retail sites by 2008 • Targeting over 75% increase in revenues by 2008 • High margin region £m 40 1,200 36 35 1,000 30 30 +75% 24 800 25 20 600 440 15 12 13 400 H2 10 141 199 200 5 H1 0 0 2005 2006 2007 2008 2005 2006 2007
Slide 31: Acquisitions in the Baltics give leading market share
Acquisitions in the Baltics give Expand Expand leading market share • Lithuania: leading 20% market share • 67% stake in UAB Vitvela • Leadership position with distribution and retail of Mazda, Ford and Mitsubishi; leading share of Hyundai retail • Latvia: market leader with over 10% market share •
Slide 32: Building scale business in Russia
Building scale business in Russia Expand Expand • Market up 70% in the first half of 2007 • Establishing two anchor points in St Petersburg and Moscow • Excellent ROS performance • Strong growth potential • Developing further expansion opportunities - greenfield and acquisition 32
Slide 33: Clear entry strategy on China
Clear entry strategy on China Expand Expand • Market up by 26% in first half Greater Shanghai Focus as step 1 Shaoxing Toyota: opened Jan 2007 Shaoxing Lexus: opening Q4 2007 Shanghai Lexus: opening Q1 2008 Pursuing greenfield and acquisition opportunities to build scale in the three biggest regiona
Slide 34: Strong growth in 2007 and beyond
Strong growth in 2007 and beyond Strengthen Strengthen Expand Expand • Acceleration of sales and profit growth momentum • Record trading performance in H1 2007 • Emerging Market sales doubled and profits tripled • UK transformational strategy out performing the market Broader and stronger geographic
Slide 35: Appendices
Appendices
Slide 36: Appendices
® Inchcape Appendices
Slide 37: Like-for-like definition
Like-for-like definition • 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 month of trading
Slide 38: Emerging markets definition
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 • Poland • Russia 3
Slide 39: 2006 Business segmental H1/H2 split
2006 Business segmental H1/H2 split
Slide 40: 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 41: Inchcape
® Inchcape