Full Annual Report - Inchcape

More documents

Recommendations

Info

Business review Overview Chairman’s statement confidence and lack of credit availability. However, with the gradual thawing of global credit markets and falling interest rates, assisted by government incentive schemes in several markets, 2009 global car sales outperformed most expectations. Globally, the industry sold just over 63m vehicles in 2009, a 3.9% decline from 2008 and a 5.1% decline from 2007*. Of particular note, China became the world’s largest car market in 2009, surpassing the USA. Car sales in China surged some 50% to 12.9m* vehicles in 2009,driven by government incentives on fuel efficient vehicles and increasing demand for car ownership. Strategy Inchcape has responded swiftly and decisively to an unprecedented global downturn.The Group’s focus continues to be on customer service and we have gained share in most of our markets,while cutting costs and reducing inventory.We are well positioned for the future. Ken Hanna Chairman This is my first year as Chairman of Inchcape plc and despite challenging trading conditions in most of our markets around the world I am pleased to report results for 2009 above our expectations with particularly impressive cash generation. This has demonstrated the resilience of Inchcape’s business model, the success of our self-help measures and an outstanding level of leadership and commitment from our employees. Automotive industry At the start of 2009, the global automotive industry faced a rapid and unprecedented downturn driven by falling consumer We have remained true to our differentiating Customer 1st strategy which has enabled us to both strengthen our market position and to further cement our relationships with our manufacturer brand partners.At the same time, management has remained focused on five self-help measures: growing market share; growing aftersales; reducing costs; managing working capital; and selective capital expenditure investment. These measures have generated a strong cash performance with a cost base and levels of working capital that are well below those at the end of 2008. Performance As a result of the unprecedented decline in the global car markets, Group sales have decreased by 10.8% to £5.6bn for the full year to 31 December 2009. On a like for like, constant currency basis, sales fell by 14.6%. We began our swift response to changing market conditions in the fourth quarter of 2008 when we implemented a number of restructuring measures to reduce our cost base. During the last quarter of 2008 and early 2009 we closed 31 less profitable sites and reduced our workforce by 2,350 people. These actions generated annualised cost savings of approximately £70m. Profit before tax and exceptional items of £155.1m was 18.7% lower than 2008 and adjusted earnings per share fell 46% to 2.7p (adjusted for the bonus element of the Rights Issue). On a statutory basis, profit before tax was £136.7m, 26.3% above 2008. Cash generated from operations during the year was £336.7m which is the highest * Source: Global Insight 6 Inchcape plc ¦ Annual Report and Accounts 2009
Section One Business review level generated by the Group since 2000 and represents a 215% conversion of operating profit. Debt reduction The Group has historically maintained an appropriate level of borrowings based on a prudent balance sheet strategy. Given the precipitous decline in economic conditions seen at the end of 2008 and the challenging trading environment forecast for 2009, the Board announced an equity raise via a Rights Issue in March 2009 which was completed in April 2009. This enabled us to reduce our debt and strengthen the capital structure of the Group.I would like to thank our shareholders for their support. The net proceeds of £234.3m raised by this Rights Issue together with the actions we took to restructure our cost base and reduce working capital, together with the benefits of our geographic spread and diversified revenue streams, enabled us to be in a net cash position at year end. Acquisition and disposals During 2009 we made an earn out payment of US$35m and a further US$5m will be paid in 2010 in relation to the acquisition of the 75.1% interest in the Musa Motors group,one of Russia’s largest car retailers.Whilst the Russian car market has been challenging in 2009 and we expect this environment to continue in 2010, we are confident that due to our scale position and the low levels of car ownership, our investment in Russia has placed us in a strong position to benefit when the market rebounds. Capital expenditure Whilst in 2009 we reduced our discretionary capital expenditure in agreement with our brand partners, we have continued to make strategic investments, opening nine greenfield sites across the world. Board After 15 years with the Group, Peter Johnson retired as Non-Executive Chairman and I was delighted to be appointed to the role with effect from 14 May 2009. I would like to thank Peter for his years of service and I feel privileged to be working with so many talented colleagues both on the Board and throughout the business. There have been a number of other changes to the Board. On 14 May 2009 Graham Pimlott was appointed as Chairman of the Audit Committee, with Raymond Ch’ien and Karen Guerra both retiring as Non-Executive Directors. Following three years with the Group and the successful completion of the Rights Issue, Barbara Richmond, Group Finance Director, left the Group at the end of June. John McConnell was appointed to the position with effect from 1 October 2009 and joined the Board as an Executive Director. John was formerly CEO Inchcape Australasia, before that CFO and has 10 years’ experience with the Group. Also, we were pleased to announce the appointment of two new Non-Executive Directors with effect from 1 July 2009:Alison Cooper, who is currently Chief Operating Officer, Chief Executive Designate and board member of Imperial Tobacco Group plc, joined the Board and has also become a member of the Audit Committee; Nigel Northridge, currently Chairman of Paddy Power plc, Senior Independent Director of Aggreko plc and Chairman of Debenhams plc, joined the Board and has also become a member of the Remuneration and Audit Committees. Dividend In line with our disclosure in last year’s Annual Report and Accounts and in the Prospectus published at the time of the Rights Issue, the Board is not recommending the payment of an ordinary dividend for the year in light of the challenging trading conditions. Whilst no decision has been made as yet concerning a dividend in 2010, we intend to return to our stated aim of maintaining a progressive dividend policy as soon as trading conditions allow. Share consolidation The Board intends to propose a 1 for 10 consolidation of Inchcape plc ordinary shares.The purpose of the share consolidation is to reduce the total number of shares now in issue following the Rights Issue undertaken in 2009 and to increase the likely price of the Company’s shares to a figure more appropriate for a listed company of its size and nature in the UK market.The share consolidation is subject to approval by shareholders at the Annual General Meeting to be held on 13 May 2010. Following the share consolidation there is expected to be approximately 460m Inchcape ordinary shares in issue, reduced from approximately 4.6bn at present. Approach to governance and corporate responsibility We continue to focus on the importance of good governance and apply the Combined Code and other relevant guidance for listed companies in our global operations. Integrating socially responsible behaviour into every aspect of how we operate and define ourselves remains high on our agenda. In 2009 we have built on the foundations of a global approach to corporate responsibility that is making responsible economic, environmental and social behaviour intrinsic to the way we work. People On behalf of the Board, I wish to express my sincere thanks to all our colleagues across the Group for their commitment and support throughout the extremely challenging trading conditions in 2009. Outlook Inchcape is uniquely positioned in the global car industry and in 2009 the Group has continued to outperform its competitors. Whilst we expect market conditions in 2010 to remain challenging,the Group is well placed to benefit from the market recovery and to take advantage of industry consolidation opportunities in the medium term. Ken Hanna Chairman www.inchcape.com 7
Page 1 and 2: Annual Report and Accounts 2009 Ind
Page 3 and 4: Section One Business review Financi
Page 5 and 6: Section One Business review Strengt
Page 7: Section One One Business review Nor
Page 11 and 12: Section One Business review Busines
Page 13 and 14: Section One Business review Uniquel
Page 15 and 16: The Inchcape business model Section
Page 17 and 18: The Inchcape Advantage Section One
Page 19 and 20: Global experience Section One Busin
Page 21 and 22: Superior customer service driving g
Page 23 and 24: Section One Business review Like fo
Page 25 and 26: Section One Business review Regiona
Page 27 and 28: Section One Business review Franchi
Page 29 and 30: Section One Business review The mar
Page 39 and 40: Section One Business review Cash fl
Page 41 and 42: Section One Business review Treasur
Page 43 and 44: Section One Business review Progres
Page 45 and 46: Section One Business review Our cus
Page 47 and 48: Section One Business review in acco
Page 49 and 50: Section One Business review 3 Toyot
Page 51 and 52: Section One Business review We have
Page 53 and 54: Section Two Governance Governance 5
Page 55 and 56: Section Two Two Governance 4 5 3 8
Page 57 and 58: Section Two Two Governance 9 10 11
Page 59 and 60:
Section Two Two Governance Inchcape
Page 61 and 62:
Section Two Two Governance Board ba
Page 63 and 64:
Section Two Two Governance iPOM - 7
Page 65 and 66:
Section Two Two Governance of inter
Page 67 and 68:
Section Two Two Governance In addit
Page 69 and 70:
Section Two Two Governance Chairman
Page 71 and 72:
Section Two Two Governance process,
Page 73 and 74:
Section Two Two Governance Notes to
Page 75 and 76:
Section Two Two Governance Notes on
Page 77 and 78:
Section Two Two Governance Director
Page 79 and 80:
Section Two Two Governance appropri
Page 81 and 82:
Section Three Financial statements
Page 83 and 84:
Page 85 and 86:
Page 87 and 88:
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Section Four Shareholder informatio
show all

Full Annual Report - Inchcape

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?