Aviva Plc · LSE:AV.
Aviva — RAC — FY2002 Earnings Presentation
43 slides from Aviva's earnings presentation, Feb 26, 2003
Slide 1: Preliminary Results
Preliminary Results Wednesday 26 February 2003 Sir Trevor Chinn Chairman Andy Harrison Chief Executive Paul Hewitt Finance Director
Slide 2: Another year of good progress
Another year of good progress – Underlying profit up 8% from £65.1m to £70.2m – despite £7m higher pension charge – Underlying EPS up 5% from 41.9p to 43.9p – Net cashflow £44m, year end debt down to £155m – Dividend increased by 5% to 23p
Slide 3: Another year of good progress: divisions
Another year of good progress Consumer – Total sales up 6% : non-roadside sales up 22% – Profits increase to £45.2m Business Services – LVL profits up by 11% – RAC Business Solutions sales up 16% – New contract wins: revenues of £397m Manufacturer Support Services – Delivering value from Paccar cont
Slide 4: Priorities for 2003
Priorities for 2003 – Continue to deliver growth in – RAC Consumer – Business Services; new contracts – Complete RAC systems investment and deliver benefits – Fix Mechanical Handling – Implement pension changes
Slide 5: RAC plc - divisional trading profit
RAC plc - divisional trading profit Profits: Profits: 2001 £37.7m 2001 £19.3m 2002 £45.2m 2002 £19.2m Motoring RAC Consumer and Business Services Services Vehicle Solutions Manufacturer Support Services Profits: 2001 £21.9m 2002 £23.2m
Slide 6: Growing Consumer
Growing Consumer Revenue £m 2001 2002 Growth Roadside 173.7 183.1 5% Non-roadside 41.9 51.0 22% RAC Auto Windscreens 71.6 * 96.0 - Total 287.2 330.1 - Individual membership (000) 2,034 2,146 6% Renewal rate 82.9% 83.8% * Consolidated for 9 months
Slide 7: Growing Consumer: Financial and BSM
Growing Consumer Financial : - Sales up 96% : Profits up 126% - Successful launch of RAC Insure (Jan 03) - Loan base doubles BSM : - Sales up 17% : Profits up 19% - Record number of instructors 2,600 - Number of pupils increases by 8%
Slide 8: Growing Consumer: Legal
Growing Consumer Legal : - Sales up 33% : Profits up 36% - LEI policies increase by 13% to 1.8m - PI claims increase by 33% to 18,000 cases - Increased marketing expenditure
Slide 9: Systems implementation
Systems implementation System Capital Completed In Progress £m Automatic 5 Fully implemented in Complete Despatch Summer 2002 - some disruption - 3 minute improvement in response times CRM 26 Customer data warehouse live in 2001 RAC Business Solutions RAC Consumer - implemented Q4 2002 - completion
Slide 10: Systems benefits
Systems benefits Annual benefits (£m) 2002 2003 2004 Efficiency Automatic despatch 1 3 3 CRM - legacy systems - 2 2 - marketing 1 3 4 Depreciation -2 -4 -5 One off costs -4 -3 - Total benefits / (costs) -4 1 4 System is cost justified - the real kicker is revenue growth – already coming through in T
Slide 11: Business Services
Business Services £m 2001 2002 RAC Business Solutions 1.0 2.3 Lex Vehicle Leasing 15.7 17.5 Lex Industrial Solutions 2.6 -0.6 Business Services 19.3 19.2
Slide 12: Business Services: contracts won and renewed
Business Services Won NU repair centres (Auto Logistics, Business Solutions) – piloted 50 centres – aggregate parts purchasing and logistics – significant revenue potential Renewed RAF White Fleet (LVL, Transfleet, Business Solutions) – 3,000 vehicles Retained in-house BT fleet (LVL, Transfleet, Bus
Slide 13: Business Services: RAC Business Solutions
Business Services RAC Business Solutions – Revenues up 16% to £146m – Profits increase from £1.0m to £2.3m – Extending Norwich Union, Motability
Slide 14: Business Services: Lex Vehicle Leasing
Business Services Lex Vehicle Leasing – Profits up 11% to £17.5m (50% share) – Improved margins, fleet up to 95,700 – CLAS is delivering - process efficiency – RV provision remains adequate – £58m net dividends
Slide 15: Business Services: Lex Industrial Solutions
Business Services Lex Industrial Solutions – Lex Transfleet - record year – MoD, fleet management – Lex Mechanical Handling – falling fleet values – goodwill write off (£22m) – examining alternative approaches – manufacturer partners
Slide 16: Manufacturer Support Services: Lex Auto Logistics and Paccar
Manufacturer Support Services Lex Auto Logistics and Paccar – Improved Leyland margin £8.4m in 2002 – Expected to continue, at a declining level, to 2006 – Offsets loss from DAF in H2 2003, leaving total Paccar income similar in 2003 – 2002 new contract wins, £226m contract revenue (Fleetguard, Denn
Slide 17: Manufacturer Support Services: Hyundai
Manufacturer Support Services Hyundai – Registrations up 5%, market share flat – Model mix continues to improve – UK’s leading warranty : 5 years – Growing parts business Trucks – Good progress
Slide 18: Paul Hewitt, Finance Director
Paul Hewitt Finance Director
Slide 19: Profit
Profit £m 2000 2001 2002 Underlying PBT before charging 64.9 75.3 84.0 Interest -10.3 -10.2 -10.8 One off items within trading -12.9 - -3.0 Underlying Profit 41.7 65.1 70.2
Slide 20: Profit
Profit £m 2001 2002 Underlying PBT before charging 75.3 84.0 Interest -10.2 -10.8 One off items within trading - -3.0 Underlying Profit 65.1 70.2 Operating exceptionals 1.8 -9.3 Goodwill -13.9 -29.3 Exceptional items 9.3 -8.5 PBT 62.3 23.1
Slide 21: Profit
Profit £m Mechan’l Group Systems Other Total Handling structure 2002 Underlying PBT before; 84.0 Interest -10.8 One off items -3.0 Underlying Profit 70.2 Operating exceptionals -9.3 Goodwill -29.3 Exceptional items -8.5 PBT 23.1
Slide 22: Profit
Profit £m Mechan’l Group Systems Other Total Handling structure 2002 Underlying PBT before; 84.0 Interest -10.8 One off items -7.2 -3.0 Underlying Profit 70.2 Operating exceptionals -6.4 -9.3 Goodwill -22.2 -29.3 Exceptional items -8.5 PBT 23.1
Slide 23: Profit
Profit £m Mechan’l Group Systems Other Total Handling structure 2002 Underlying PBT before; 84.0 Interest -10.8 One off items -7.2 8.4 -3.0 Underlying Profit 70.2 Operating exceptionals -6.4 -2.9 -9.3 Goodwill -22.2 -29.3 Exceptional items -9.5 -8.5 PBT 23.1
Slide 24: Profit
Profit £m Mechan’l Group Systems Other Total Handling structure 2002 Underlying PBT before; 84.0 Interest -10.8 One off items -7.2 8.4 -4.2 -3.0 Underlying Profit 70.2 Operating exceptionals -6.4 -2.9 -9.3 Goodwill -22.2 -29.3 Exceptional items -9.5 -8.5 PBT 23.1
Slide 25: Profit
Profit £m Mechan’l Group Systems Other Total Handling structure 2002 Underlying PBT before; 84.0 Interest -10.8 One off items -7.2 8.4 -4.2 -3.0 Underlying Profit 70.2 Operating exceptionals -6.4 -2.9 -9.3 Goodwill -22.2 -7.1 -29.3 Exceptional items -9.5 1.0 -8.5 PBT 23.1
Slide 26: Growing long term business
Growing “long term” business £m 2000 2001 2002 3000 2500 739 842 2000 1004 Inventory mgn't 767 685 RAC subs'ns 1500 RAC Bus Sols 659 404 1000 357 Contract hire 278 500 849 922 560 0 £2501m £2733m £2832m
Slide 27: Pensions - managing our commitment
Pensions - managing our commitment Increased Reduced normal cost Some stock company £5.0m pa from mid 2003 market contributions recovery 2003 £2.5m 2004 £5.0m Expected to cover 2/3rds of £129m*shortfall * Net of deferred tax
Slide 28: Annual % change in the CAP composite
Annual % change in the CAP composite 10% 8% 5% 1% 0% -2% -3% -6% -5% -9% -10% 1997 1998 1999 2000 2001 2002
Slide 29: Lex Vehicle Leasing - residual value provision
Lex Vehicle Leasing - residual value provision 9 9 £m Provision Provision Provision made used remaining Cars returned to 31 Dec 2002 31.9 -22.5 9.4 Cars still to be returned 13.1 - 13.1 Total 45.0 -22.5 22.5 RAC share (50%)
Slide 30: Tax charge
Tax charge £m 2002 Current tax – underlying profit (28%) 19.6 Deferred tax – prior year over provision -6.5 Total charge for the year 13.1
Slide 31: Key financial ratios
Key financial ratios 2001 2002 Interest cover 7.4 7.5 Net debt / EBITDA 2.3 2.0 Underlying tax rate 26% 28% Underlying EPS 41.9p 43.9p Dividend per share 22.0p 23.0p Dividend cover 1.9 1.9
Slide 32: Cash flow
Cash flow £m 2001 2002 Operating profit before goodwill 53.8 62.4 Interest -11.0 -9.6 Tax paid -9.4 -10.2 Working capital -42.4 35.5 -9.0 78.1 Capital expenditure - net -17.9 -14.0 Net cash flow – non contract hire -26.9 64.1
Slide 33: Cash flow: strong cash flow
Cash flow £m 2001 2002 Non-contract hire -26.9 64.1 Contract hire subsidiaries 7.8 -7.0 Associates & joint ventures - dividends 10.8 16.2 Operational cash flow -8.3 73.3 Dividends paid -24.6 -25.7 Net acquisition/disposal of businesses -111.1 -4.3 Sale of Synnex stake 46.8 - Other 1.9 0.9 Net cash f
Slide 34: Balance sheet
Balance sheet £m 2001 2002 Fleet assets 159 143 Goodwill 536 506 Other fixed assets/investments 223 238 Working capital/other -160 -187 Capital employed 758 700 Asset finance -134 -127 Net capital employed 624 573 Net debt -200 -155 Shareholders’ funds 424 418 Closing net debt is after offsetting £3
Slide 35: Andy Harrison, Chief Executive
Andy Harrison Chief Executive
Slide 36: RAC plc Delivering Inspirational Service
RAC plc Delivering Inspirational Service Inspiring Inspire Shareholder our our Value People Customers Colleague Revenue Profit growth, Satisfaction Growth Cash flow Profit growth: 8% 2002 70% 4% Cash inflow : £44m Making a good company … a great company
Slide 37: RAC plc ... growth opportunities
RAC plc … growth opportunities 6.5m individual consumers - CRM cross selling Big organisations - multi-activity (MoD, Norwich Union) Motoring Consumer and Business Services Vehicle Solutions Manufacturer Support Services 20,000 business customers - cross referral Vehicle manufacturers
Slide 38: Outlook
Outlook – Continuing growth in Consumer – building on three years delivery – plus boost from CRM, H2 2003 – Progress in Business Services – Delivery of other 2003 priorities – Consistent performance improvement the ingredients for another good year
Slide 39: Additional Material
Additional Material Preliminary Announcement 26th February 2002
Slide 40: Service awards 2003
Service awards 2003 RAC Business Solutions Lex Vehicle Leasing – Best Accident Management Provider, Fleet – Service Supplier of the Year 2003, Fleet Excellence Excellence Awards Awards –Top Fleet Software Provider 2003, RAC – Best Contract Hire Company 2003, Fleet Excellence Software Solutions Award
Slide 41: Service awards 2002
Service awards 2002 RAC Consumer Services Lex Vehicle Leasing – Motoring Organisation, Motability Special Award at the – FreeChoice: Best Product Award 2002 (2nd consecutive year), EASE Awards Institute of Transport Management – 2002 Green Fleet Award, bronze Private Sector award – Commendation from
Slide 42: New and old segmental
New and old segmental RAC RAC LVL Industrial Manufact’er Other Group Consumer Business Solutions Support Costs LVL X Transfleet X Lex Software Solutions X Multipart X Mechanical Handling X Business Services RAC X X X RAC Auto Windscreens X Motoring Services Hyundai X Isuzu X Commercials X Vehicle Ma
Slide 43: Lex Vehicle Leasing - dividend value creation
Lex Vehicle Leasing - dividend value creation £m 10 5 0 -5 1994 1995 1996 1997 1998 1999 2000 2001 2002 -10 -15 -20 -25 Cumulative contribution to RAC £58m - (RAC share)