Full Annual Report - Inchcape

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Financial statements Notes to the accounts continued 26 Notes to the consolidated statement of cash flows a. Reconciliation of cash generated from operations Cash flows from operating activities Operating profit 156.8 158.0 Exceptional items 18.4 82.5 Amortisation including non-exceptional impairment of intangible assets 2.8 3.7 Depreciation of tangible assets 32.8 27.5 Profit on disposal of property, plant and equipment (2.6) (2.6) Share-based payments charge / (credit) 3.8 (0.9) Decrease / (increase) in inventories 271.8 (27.9) Decrease in trade and other receivables 0.7 65.6 (Decrease) in trade and other payables (93.6) (112.8) (Decrease) / increase in provisions (2.6) 7.9 Decrease in post-retirement defined benefits * (31.9) (16.2) (Increase) / decrease in interest in leased vehicles (6.5) 4.3 Payment in respect of operating exceptional items (13.7) (5.8) Other items 0.5 0.4 Cash generated from operations 336.7 183.7 * The decrease in post-retirement defined benefits includes additional payments of £30.1m (2008 – £16.1m). b. Reconciliation of net cash flow to movement in net funds / (debt) Net (decrease) / increase in cash and cash equivalents (41.8) 61.3 Net cash outflow / (inflow) from borrowings and finance leases 458.4 (274.5) Change in net cash and debt resulting from cash flows 416.6 (213.2) Effect of foreign exchange rate changes on net cash and debt (8.9) 33.7 Net movement in fair value 0.9 2.8 Net loans and finance leases relating to acquisitions and disposals – (17.6) Movement in net funds / (debt) 408.6 (194.3) Opening net debt (407.8) (213.5) Closing net funds / (debt) 0.8 (407.8) Net funds / (debt) is analysed as follows: Cash at bank and in hand 319.6 351.3 Short-term deposits 61.7 106.7 Bank overdrafts (124.1) (145.2) Cash and cash equivalents 257.2 312.8 Bank loans (335.1) (858.0) Other loans (1.3) (9.2) Finance leases (4.7) (9.0) (83.9) (563.4) Fair value of cross currency interest rate swap 84.7 155.6 Net funds / (debt) 0.8 (407.8) 2009 £m 2009 £m 2009 £m 2008 £m 2008 £m 2008 £m 130 Inchcape plc ¦ Annual Report and Accounts 2009
Section Three Financial statements 27 Acquisitions and disposals a. Acquisitions In July 2008, the Group acquired 75.1% of the issued share capital of the Musa Motors group for a total cash consideration of US$240m: a US$200m initial downpayment was made in 2008; a further payment of US$35m was made in October 2009; and a final settlement of US$5m is due in 2010. The remaining 24.9% is to be acquired in early 2011, with payment dependent on 2010 EBITA, capped at US$250m. During the year, adjustments have been made to the net assets acquired of the Musa Motors group, as permitted by IFRS 3, ‘Business combinations’. These fair value adjustments were not material and therefore prior periods have not been restated. The changes to the net assets acquired were primarily due to a decrease in amounts due to suppliers and an increase in various taxes when compared to original estimates. These changes, together with revisions to amounts due in respect of the remaining contingent deferred consideration, have resulted in an increase in the amount of goodwill recognised on acquisition of £22.3m. b. Disposals During the year, the Group disposed of a small number of dealerships and operations generating disposal proceeds of £3.0m (2008 – £27.3m) and a loss on disposal of £0.7m (2008 – £1.2m) which has not been disclosed as an exceptional item. 28 Guarantees and contingencies Guarantees, performance bonds and contingent liabilities 16.3 17.7 Guarantees and contingencies largely comprise letters of credit issued on behalf of the Group in the ordinary course of business. The Group also has, in the ordinary course of business, commitments under foreign exchange instruments relating to the hedging of transactional exposures (see note 23). 29 Commitments a. Capital commitments Contracts placed for future capital expenditure at the balance sheet date but not yet incurred are as follows: Property, plant and equipment 9.5 7.6 Vehicles subject to residual value commitments * 98.6 108.5 Intangible assets – 0.1 * Residual value commitments comprise the total repurchase liability on all vehicles sold subject to a residual value commitment, of which £47.6m (2008 – £65.4m) has been included within ‘trade and other payables’. These commitments are largely expected to be settled within the next 12 months, with a minority to be settled within three years. 2009 £m 2009 £m 2008 £m 2008 £m www.inchcape.com 131
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Annual Report and Accounts 2009 Ind
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Full Annual Report - Inchcape

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