Acquisition of Musa Motors, Russia. 24 th April 2008

Transcription

1 Acquisition of Musa Motors, Russia André Lacroix Group Chief Executive Barbara Richmond Group Finance Director 4 th April 008

2 Important Notice The information in this document does not constitute or form any part of an offer or invitation to sell, or issue, or any solicitation of any offer to purchase, subscribe for or otherwise acquire any shares or other securities in Inchcape plc ( Inchcape ) in any jurisdiction, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract therefor. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this document or on its completeness. No representation or warranty, expressed or implied, is given on behalf of Inchcape plc or any of its subsidiaries, directors, employees, agents or advisers as to the accuracy or completeness of the information and no liability is accepted (and all such liability is hereby excluded) for any such information or opinions. Readers of this document are reminded that the information in this document has not been verified and is liable to change. This document is being supplied to you solely for your information and may not be reproduced or further distributed to any other person or published, in whole or part, for any purpose. This document is intended only for distribution to persons who are persons falling within Articles 9 (5), 49 and 50 (but, for avoidance of doubt, not a self-certified sophisticated investor under Article 50A) of the Financial Services and Markets Act 000 (Financial Promotion) Order 005 (all such persons being referred to as relevant persons ). This document must not be acted on or relied on by or sent to persons who are not relevant persons. The distribution of this document in certain jurisdictions may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any such distribution could result in a violation of the law of such jurisdiction. The information in this document is confidential and, as such, may constitute inside information relating to the securities of Inchcape plc for the purposes of relevant insider dealing laws.

3 Highlights Acquisition of Musa Motors Group, one of Russia s largest car retailing groups, based in Moscow Provides Inchcape with a significant scale position in Moscow with 6 sites with key global OEM brand partners Earnings enhancing in 008* Complements existing Russian operations and provides platform for further growth 009 combined Russian revenue expected to reach bn. Delivering on our Emerging Markets strategy *This statement is not intended to constitute a profit forecast for the financial year ended 3 December 008 or for any other period. In addition, this statement should not be interpreted to mean that earnings per share (before any one-off costs and amortisation of intangible assets) will necessarily be greater than those for the relevant preceding financial period. 3

4 Transaction rationale Russia is a core market for Inchcape: High growth market (+ >60% in 007, foreign brands) Scale sites Strong profit margins Provides immediate, significant scale to existing Inchcape operations Broadens premium brand coverage Professional management team Springboard for next stage of growth Acquisition provides scale platform in Moscow to increase Group s exposure to continued strong Russian growth 4

5 Musa Motors a scale acquisition One of the largest, customer-focused retail groups in Russia with high quality sites 007 revenue US$597m, EBITDA $4.5m Units sold 3,8* units in 007 Q 008 new cars sold 3,, +5.8% YoY 6 retail centres Strong pipeline of new retail developments Represents 0 franchises, focused on premium brands: BMW, MINI, Rolls-Royce, Volvo, Jaguar, Land Rover, Chrysler, Jeep, Dodge, Renault * New and Used cars 5

6 Acquisition consistent with strategy for Russia Build scale, multi-brand Retail operations in St Petersburg Gain strong, multi-brand Retail presence in Moscow Exploit regional opportunities 6

7 New car sales volume and OEM ranking % Growth OEM ranking in Russia BMW 8,87 46 MINI Rolls-Royce Solus Volvo,90 3,09 58 Jaguar Land Rover,4,54 89 Chrysler Jeep Dodge Renault 4,06 4,073-3 Increased focus on premium brands 7

8 Musa Motors 007 results Revenue Rolls Royce 3% Other 4% US$m Chrysler Jeep Dodge 7% Renault 0% Land Rover & Jaguar 3% Sales EBIT EBITDA ROS (%) 3.9 BMW&MINI 0% Volvo 5% Multi-brand scale retail operation with sustainable margins 8

9 Musa Motors strong & growing retail group 6 retail centres, located in or around Moscow: 3 3S centres in Moscow showrooms in Moscow showroom in St Petersburg New retail centres and significant refurbishments planned: New BMW and Land Rover 3S retail centres opened in Moscow, March 008 Relocation of 3S Moscow retail centres for Jaguar, Land Rover, Renault and Volvo to increase capacity in 009. Site also has space for two additional retail centres (US$ 77m). Two additional 3S retail centres (US$ 49m) due to open in 009, including BMW One new multi-franchise bodyshop (US$ 6m). Planned floor space increase from current 34,0m to 96,4m by end 009 9

10 Retail centres - existing and planned ** BMW 3S* 3 MINI Show room Rolls-Royce Show room Volvo 3S Jaguar 3S Land Rover 3S Chrysler Dodge Jeep 3S Renault 3S Additional centres 3S TOTAL*** * 3S = sales, service and spare parts retail centre ** 009 includes relocation of 4 sites (Volvo, Jaguar, Land Rover, Renault) to larger premises *** Excludes JV with 3S facility located in Nizhniy Novgorod 0

11 Sustainable growth momentum in Russia Foreign brands sales volume:.6 million units in 007, up over 60% YoY Q 008 equivalent of 0.46 million units, +54% YoY New foreign cars accounted for 5 per cent of total sales in 003 but are forecast to account for 78 per cent in 00 Car penetration less than half that of Developed markets Source: Avtostat

12 Inchcape organisation in place to integrate expansion activities in Moscow and St Pete s Inchcape Russia Musa Motors Inchcape Olimp Inchcape Independence Inchcape resources in Russia at completion Managing Director Chief Financial Officer Operations Director including delivery of Inchcape Advantage Programme Human Resources Director Legal Director Business Development Head

13 Inchcape Retail Model will be applied to deliver value Invest in profitable growth opportunities Brands Sites IT Systems Empowerment Deliver the best Customer Experience Inchcape Advantage Vehicles Aftersales Operational excellence to maximise profitability Focus on value drivers Process improvements Rewards Strong Team Training Quality Innovation Product Services including F&I Processes 3

14 Phase of Russian expansion now complete St Petersburg Toyota, Lexus, Audi, Peugeot Rolls Royce through Musa 8,850 units in 007 Significant expansion of Toyota capacity underway New Lexus site to be constructed Moscow 5 retail centres today in Moscow with plans to add 4 retail centres by 009 Toyota retail sites opening in Q4 008/009 8 retail centres by 009 4

15 A scale business in a fast growing market Sites Musa Independence Olimp revenue in Russia expected to reach bn 5

16 Transaction structure 75.% being acquired in 008 with payment in two stages - Down payment of US$00m on completion - Further payment in 009 based on 008 EBIT less acquired debt, capped at $50m 4.9% to be acquired early 0 - Final payment in 0 based on 00 EBIT, capped at US$50m Completion subject to approval of regulatory authorities in Russia 6

17 Expected financial effects Immediately earnings enhancing* Satisfies Group IRR criteria Financed from within Group s existing debt facilities Tangible assets as at 3 December 007: - US$59m of property at current market value - US$3m of working capital *This statement is not intended to constitute a profit forecast for the financial year ended 3 December 008 or for any other period. In addition, this statement should not be interpreted to mean that earnings per share (before any one-off costs and amortisation of intangible assets) will necessarily be greater than those for the relevant preceding financial period. 7

18 Inchcape now a powerful force in Russia Acquisition increases Inchcape s total market share in the fast growing Russian market Powerful bases now established in the two major cities in Russia which together account for 5%* of the foreign brand car market 009 combined revenue in Russia expected to reach bn Excellent platform from which to expand into the regional markets Delivering on our Emerging Markets strategy * Source: Avtostat 8