Finance Review
The Group has delivered results ahead of our expectations
In addition to the segmental results, detailed below are the financial implications of our operating activities.
Central costs
Unallocated central costs for the full year are £22.6m before exceptional items (2009: £18.8m). The year on year increase is principally driven by increases in share based award costs following the growth in the share price.
Joint ventures and associates
The share of profit after tax from joint ventures was a loss of £1.7m driven primarily by a net loss in our Greek joint venture, as a result of the significant market impact of the austerity measures in the market.
Exceptional items
We have reported exceptional costs of £21.9m for 2010 which relate to a global restructuring exercise conducted in the fourth quarter of 2010, to ensure we continue to maintain an organisation structure and cost base which reflects trading conditions across the Group. The costs relate to a reduction in headcount and disposal of 15 underperforming sites and write off of associated goodwill.
Net financing costs
Net financing costs for the full year of £9.8m are £11.0m lower than 2009 as we benefited from strong cash generation across the Group, lower interest rates in many of our markets and lower levels of debt.
The hedging arrangements in place for the US$ Private Placement resulted in a net gain of £2.0m for 2010 (2009: £0.9m).
Tax
The effective tax rate before exceptional items for the year is 29% compared to 28% in 2009. This marginal increase has arisen due to the mix of profits across the territories in which we operate. The rate is expected to be similar for 2011.
Non controlling interests
Profits attributable to our non controlling interests were £5.1m, compared to £3.0m in 2009. This increase was largely due to increased profits in our Australia business. At the year end, the Group’s non controlling interests principally comprise a 33% minority holding in UAB Vitvela in Lithuania, a 30% share in NBT Brunei and a 10% share of Subaru Australia.
Foreign currency
During 2010, the Group benefited by £9.9m from the translation of its overseas profits before tax into sterling at the 2009 average exchange rate.
Cashflow and net debt
The Group’s operations have delivered a strong cash generative performance in 2010. The Group’s focus on tight working capital management has delivered a further £58.3m reduction to £18.4m, a historically low position. The Group has invested £44.3m in capital expenditure during the year. At the end of 2010 we had £205.8m in net cash.
The year end net cash position has enabled the Group to review and cancel £225.0m of undrawn borrowing facilities.
Dividend
The Board recommends a final ordinary dividend of 6.6p per ordinary share which is subject to the approval of shareholders at the 2011 Annual General Meeting. No interim dividend was paid in 2010.
Pensions
During the year, and in line with the funding programme agreed with the Trustees in 2009, the Group made cash contributions to the UK defined benefit scheme amounting to £28.4m (2009: £34.7m). A revision of market and actuarial assumptions for the UK defined benefit schemes has resulted in a closing deficit on Group schemes of £22.2m, compared to a deficit of £74.8m in 2009.
Acquisitions and disposals
We invested £10.7m in a joint venture with the Independence Group of Companies to establish a Toyota Retail Centre in Moscow. In addition, we had a further £2.2m payment for Musa Motors.
Capital expenditure
The Group continues to work closely with its brand partners to minimise the level of capital expenditure while maintaining the required operational standards and as a result net capital expenditure additions were £19.5m in 2010, which includes £24.8m of disposal proceeds relating primarily to the sale of surplus land in Australia. The Group has continued to make strategic investments by opening a new Jaguar Land Rover site in Shaoxing in China.
The Group also continued with its implementation plans for SAP, with a focus on development in Russia.
John McConnell,
Group Finance Director
7 March 2011
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