REG - Inchcape PLC - 2015 Annual Results Announcement <Origin Href="QuoteRef">INCH.L</Origin> - Part 3
15/03/2016 07:05
- Part 3: For the preceding part double click ID:nRSO0680Sb
£m
Segment assets and liabilities
Segment assets 132.7 12.7 477.8 121.4 744.6 1,312.6
Other current assets 642.9
Non-current assets 1,313.0
Segment liabilities (135.5) (13.0) (494.6) (86.3) (729.4) (1,361.8)
Other liabilities (588.6)
Net assets 1,318.1
Segment assets include net inventory, receivables and derivative assets.
Segment liabilities include payables, provisions and derivative liabilities.
Retail
2014 Australasia Europe United Kingdom Emerging Markets Total Total pre Central Central Total
£m £m £m £m Retail £m £m £m
£m
Other segment items
Capital expenditure:
- Property, plant and equipment 0.3 0.5 32.7 4.9 38.4 56.8 1.1 57.9
- Interest in leased vehicles - - - - - 22.9 - 22.9
- Intangible assets 0.4 - 4.0 2.5 6.9 12.0 9.0 21.0
Depreciation:
- Property, plant and equipment 1.9 0.7 10.8 9.0 22.4 34.9 0.1 35.0
- Interest in leased vehicles - - - 0.1 0.1 10.1 - 10.1
Amortisation of intangible assets - - 3.1 3.5 6.6 9.3 0.1 9.4
Goodwill impairment - - - 47.4 47.4 47.4 - 47.4
Net provisions charged to the consolidated income statement 8.1 0.2 19.6 1.7 29.6 39.0 0.7 39.7
Net provisions include inventory, trade receivables impairment and other
liability provisions.
3 EXCEPTIONAL ITEMS
2015 2014
£m £m
Goodwill impairment (49.5) (47.4)
Total exceptional items before tax (49.5) (47.4)
Exceptional tax (see note 6) (4.8) -
Total exceptional items (54.3) (47.4)
Following further weakening in the macroeconomic outlook for Russia, the Group
has recognised a £49.5m non cash impairment charge (2014 £47.4m)
4 FINANCE INCOME
2015 2014
£m £m
Bank and other interest receivable 3.1 2.7
Net interest income on post-retirement plan assets and liabilities 4.2 5.1
Other finance income 7.1 7.0
Total finance income 14.4 14.8
5 FINANCE COSTS
2015 2014
£m £m
Interest payable on bank borrowings 1.7 1.4
Interest payable on Private Placement 3.1 2.9
Interest payable on other borrowings 0.3 0.2
Fair value adjustment on Private Placement 6.4 8.9
Fair value gain on cross currency interest rate swaps (7.3) (10.4)
Stock holding interest (see note 20) 18.4 18.6
Other finance costs 5.1 6.5
Total finance costs 27.7 28.1
The Group capitalisation rate used for general borrowing costs in accordance
with IAS 23 was a weighted average rate for the year of 2.0% (2014 - 2.0%).
6 TAX
2015 2014
£m £m
Current tax:
- UK corporation tax 6.2 -
- Overseas tax 73.1 66.5
79.3 66.5
Adjustments to prior year liabilities:
- UK - -
- Overseas (0.6) (0.2)
Current tax 78.7 66.3
Deferred tax (3.8) 2.3
Tax before exceptional tax 74.9 68.6
Exceptional tax - deferred tax (note 3) 4.8 -
Total tax charge 79.7 68.6
The UK corporation tax charge is calculated upon net UK profit and after
taking account of all relevant prior year losses and other deductions
including pension contributions and capital allowances on plant and
buildings.
Factors affecting the tax expense for the year
The effective tax rate for the year before the impact of exceptional items is
24.0%, the same as 2014 (excluding the tax free property gain of £17.3m in
South Asia in that year).
The weighted average tax rate is 24.3% (2014 - 24.0%). The weighted average
tax rate comprises the average statutory rates across the Group, weighted in
proportion to accounting profits and losses.
The table below explains the differences between the expected tax expense at
the weighted average tax rate and the Group's total tax expense.
2015 2014
£m £m
Profit before tax 262.6 255.8
Profit before tax multiplied by the weighted average tax rate of 24.3% (2014 - 24.0%) 63.8 61.4
Effects of:
- Permanent differences 6.9 0.5
- Non-taxable income (2.4) (0.9)
- Prior year items (1.7) (5.1)
- Unrecognised deferred tax movement (1.3) (3.2)
- Overseas tax audits and settlements - 8.3
- Taxes on undistributed earnings 2.5 1.9
- Impact of impairment of intangible assets (Russia) 9.9 9.5
- Impact of derecognition of deferred tax assets (Russia) 4.8 -
- Tax free property gain in South Asia - (2.9)
- Other items (including tax rate differentials) (2.8) (0.9)
Total tax charge 79.7 68.6
The recognition of deferred tax assets, particularly in respect of tax losses,
is based upon whether it is probable that there will be sufficient and
suitable taxable profits in the relevant legal entity or tax group against
which to utilise the assets in the future. Judgement is required when
determining probable future taxable profits. The Group assesses the
availability of future taxable profits based on historic performance and the
forecasts for the Group's operations as are used in the Group's value in use
calculations. On this basis, the Directors have determined that net deferred
tax assets in respect of tax losses in Russia should no longer be recognised
resulting in a deferred tax charge of £4.8m.
7 EARNINGS PER SHARE
2015 2014
£m £m
Profit for the year 182.9 187.2
Non-controlling interests (7.1) (7.6)
Basic earnings 175.8 179.6
Exceptional items 54.3 47.4
Adjusted earnings 230.1 227.0
Basic earnings per share 39.8p 39.7p
Diluted earnings per share 39.4p 39.0p
Basic Adjusted earnings per share 52.1p 50.2p
Diluted Adjusted earnings per share 51.6p 49.3p
2015 2014
number number
Weighted average number of fully paid ordinary shares in issue during the year 442,230,291 455,975,201
Weighted average number of fully paid ordinary shares in issue during the year:
- Held by the Inchcape Employee Trust (753,647) (1,907,636)
- Held in Treasury - (1,443,183)
Weighted average number of fully paid ordinary shares for the purposes of basic EPS 441,476,644 452,624,382
Dilutive effect of potential ordinary shares 4,468,252 7,959,690
Adjusted weighted average number of fully paid ordinary shares in issue during the 445,944,896 460,584,072
year for the purposes of diluted EPS
Basic earnings per share is calculated by dividing the Basic earnings for the
year by the weighted average number of fully paid ordinary shares in issue
during the year, less those shares held by the Inchcape Employee Trust and
repurchased as part of the share buy-back programme.
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
other share-based awards.
Basic 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 year by the weighted average number of fully paid ordinary shares in
issue during the year, less those shares held by the Inchcape Employee Trust.
Diluted Adjusted earnings per share is calculated on the same basis as the
Basic 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 other share-based awards.
8 DIVIDENDS
The following dividends were paid by the Group:
2015 2014
£m £m
Interim dividend for the six months ended 30 June 2015 of 6.8p per share (30 June 2014 - 6.3p per share) 30.0 28.5
Final dividend for the year ended 31 December 2014 of 13.8p per share (31 December 2013 - 11.7p per share) 61.1 53.0
91.1 81.5
A final proposed dividend for the year ended 31 December 2015 of 14.1p per
share amounting to £61.0m is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability as at 31 December
2015.
9 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
a. Reconciliation of cash generated from operations
2015 2014
£m £m
Cash flows from operating activities
Operating profit 275.2 271.0
Exceptional items (see note 3) 49.5 47.4
Amortisation of intangible assets 14.0 9.4
Depreciation of property, plant and equipment 34.5 35.0
Profit on disposal of property, plant and equipment (2.1) (17.6)
Share-based payments charge 9.6 9.5
(Increase) / decrease in inventories (246.5) 3.8
(Increase) / decrease in trade and other receivables (68.5) 3.4
Increase in trade and other payables 282.2 59.3
Decrease in provisions (4.2) (11.9)
Pension contributions less than / (in excess of) the pension charge for the year* 2.7 (1.0)
(Increase) / decrease in interest in leased vehicles (12.3) 3.3
Payments in respect of exceptional items - (1.3)
Other non-cash items (5.7) (4.5)
Cash generated from operations 328.4 405.8
* Includes additional payments of £1.7m (2014 - £1.7m).
b. Reconciliation of net cash flow to movement in net funds
2015 2014
£m £m
Net (decrease) / increase in cash and cash equivalents (20.3) 125.9
Net cash (outflow) / inflow from borrowings and finance leases (3.2) 1.1
Change in net cash and debt resulting from cash flows (23.5) 127.0
Effect of foreign exchange rate changes on net cash and debt (21.2) (41.3)
Net movement in fair value 0.9 1.5
Movement in net funds (43.8) 87.2
Opening net funds 210.2 123.0
Closing net funds 166.4 210.2
Net funds is analysed as follows:
2015 2014
£m £m
Cash at bank and cash equivalents 335.3 368.9
Short-term deposits 138.5 159.3
Bank overdrafts (98.5) (111.4)
Cash and cash equivalents 375.3 416.8
Bank loans (312.6) (302.4)
Finance leases (3.7) (4.3)
59.0 110.1
Fair value of cross currency interest rate swap 107.4 100.1
Net funds 166.4 210.2
10 ACQUISITIONS AND DISPOSALS
During the year, the Group acquired a new dealership in the UK for a
consideration of £5.1m, with goodwill arising on the transaction of £4.0m.
In 2015, the Group disposed of small number of dealerships in Australia and
its interest in Excelease SA, a financial services business in Belgium,
generating disposal proceeds of £5.4m and a profit on disposal of £0.6m (2014
- disposals in Australia and Finland at net book value generating disposal
proceeds of £1.9m).
11 RELATED PARTY DISCLOSURES
Trading transactions
Intra-group transactions have been eliminated on consolidation and are not
disclosed in this note. Details of transactions between the Group and other
related parties are disclosed below:
Transactions Amounts outstanding
2015 2014 2015 2014
£m £m £m £m
Vehicles purchased from related parties - 0.2 - -
Vehicles sold to related parties - 0.9 - -
Other income paid to related parties 0.6 1.1 0.1 0.2
Other income received from related parties - 0.2 - -
All of the transactions arise in the ordinary course of business and are on an
arm's length basis. The amounts outstanding are unsecured and will be settled
in cash. There have been no guarantees provided or received for any related
party receivables.
The Group has not raised any provision for doubtful debts relating to amounts
owed by related parties (2014 - £nil).
12 FOREIGN CURRENCY TRANSLATION
The main exchange rates used for translation purposes are as follows:
Average rates Year end rates
2015 2014 2015 2014
Australian Dollar 2.04 1.83 2.02 1.91
Euro 1.38 1.24 1.36 1.29
Hong Kong Dollar 11.85 12.80 11.42 12.08
Singapore Dollar 2.10 2.09 2.09 2.06
Russian Rouble 93.72 63.29 107.30 92.65
13 EVENTS AFTER THE REPORTING PERIOD
In the year ended 31 December 2015, the Company purchased, for cancellation,
11,931,693 ordinary shares at a cost of £91.4m
In the period from 1 January to 14 March 2016, the Company purchased, for
cancellation, a further 4,541,107 ordinary shares at a cost of £32.0m. The
Company is committed to completing a £58.6m share buy back programme in the
first half of 2016.
Principal risks
The Group applies an effective system of risk management which identifies,
monitors and mitigates risks
Risk is a part of doing business: the risk management system aims to provide
assurance to all stakeholders of the effectiveness of our control framework in
managing risk against a background of highly diverse and competitive markets.
The key benefits of the system include maximised resource efficiency through
controlled prioritisation of issues, benchmarking between business units,
sharing best practice and effective crisis management. The following provides
an overview of the principal business risk areas facing the Group:
· Loss of distribution contract with major OEM partners
· Significant retrenchment of credit available to customers, dealer
network or Inchcape plc
· OEM Brand failure globally
· Major interruption to OEM partner operations or product reputation
· Major loss of confidential or sensitive data
· Failure to extract maximum value from acquisition strategy
· Growth in new routes to market and methods of engaging the customer
· Increasing demands from brand partners for direct ownership data (e.g.
connected customer) restricts our ability to drive demand / margin.
Directors' responsibilities
The Directors are responsible for preparing the Annual Report, the Directors'
Report on Remuneration and the financial statements in accordance with
applicable law and regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union, and the
parent Company financial statements in accordance with applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and the Company and of the profit or loss of the Group
for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether IFRS, as adopted by the European Union and applicable United
Kingdom Accounting Standards, have been followed, subject to any material
departures disclosed and explained in the Group and parent Company financial
statements respectively; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and the
Group and enable them to ensure that the financial statements and the
Directors' Report on Remuneration comply with the Companies Act 2006 and, as
regards the Group financial statements, article 4 of the IAS regulation. They
are also responsible for safeguarding the assets of the Company and the Group
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Each of the Directors confirms that, to the best of their knowledge:
· the Group financial statements, which have been prepared in accordance with
IFRS as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit of the Group; and
· the Operating Review includes a fair review of the development and
performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that it faces.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on Inchcape
See all newsREG - Inchcape PLC - Directorate change
AnnouncementREG - Inchcape PLC - Transaction in Own Shares
AnnouncementREG - Inchcape PLC - Transaction in Own Shares
AnnouncementREG - Inchcape PLC - Transaction in Own Shares
AnnouncementREG - Inchcape PLC - Transaction in Own Shares
Announcement