Article date: 11 December 2003
RAC plc (RAC), the motoring and vehicle services company, willannounce full year results to 31 December 2003 on 25 February2004.
At the time of our AGM statement in April and again whenannouncing half year results in July we were able to report strongprogress. We are now pleased to report that trading performanceremains in line with our expectations, and significantly ahead oflast year.
Consumer Services continues to perform strongly, with individualmembership numbers increasing for the fourth consecutive year androadside revenues up by 8% over last year. Roadside serviceperformance and customer satisfaction have improved furtherfollowing the implementation of our new despatch system in 2002 andthe successful launch this year of our patented rapid deploymenttrailers.
Non-roadside revenues have continued to perform well and are 14%up on prior year. Both BSM and Legal Services maintained the strongprofits momentum reported at the half year, whilst the restructuredFinancial Services business is beginning to build.
The new management team at RAC Auto Windscreens is making goodprogress. Revenues will be broadly flat with last year.
The implementation of our new customer management and datawarehousing system has now been completed. The cut-over from ourlegacy systems was effected seamlessly during the fourth quarterand these are now being retired.
The 10 year contract with British Airways to manage and maintainits 6,300 strong ground fleet has now been implemented and willprovide the platform for further growth in airside, one of the fivetarget sectors we have identified.
Lex Vehicle Leasing has continued the good progress reported atthe half year, and its fleet has now grown organically to over100,000 vehicles, a first for the industry. Used car prices haveremained stable during the year, but our current pricing continuesto be cautious.
As anticipated, Lex Auto Logistics has been impacted in thesecond half by the expiry of our contract with Paccar to distributeDAF parts. In the current year, this has been more than offset bythe improved margins resulting from Paccar’s previousdecision to terminate Leyland production. The terms of our contractwill result, as expected, in additional profits of approximately£12m in 2003. Unity, our collaboration with Norwich Union to sourceand provide parts for its accident repair network, is continuing togrow strongly with around 260 centres being serviced.
RAC Business Solutions has performed well, with sales up 11%.The division has delivered solid growth in its roadside businessfollowing new vehicle manufacturer contract wins and growth in theinsurance sector.
Hyundai has delivered sales growth of 6% during the year, and– in a record new car market – has increased its marketshare to 1.24%.
The performance of our remaining Mechanical Handling businesseshas improved during the second half of the year, although they willstill generate modest trading losses during the period. Followingthe disposal of Lex Harvey and Lex Birchwood in the first half, weare in discussions with a number of interested purchasers for ourremaining operations. An impairment charge of around £30m inrespect of our remaining Mechanical Handling businesses will betaken as an exceptional item at the year end.
Our cash flow for 2003 as a whole will be strongly positive. Asanticipated, there will have been a net outflow during the secondhalf of the year due to the timing of Hyundai’s workingcapital requirements. Net debt is expected to be in line with ourexpectations.
As announced separately today, we are pleased to report that DebbieHewitt, our Group HR Director, has been appointed Managing Directorof our Roadside business. She will take up her new appointment inMay 2004 following the retirement of Barrie Thrussell.
Richard Pennycook - Group Finance Director 01628 843703
Niall Addison - Group Finance & Investor Relations Manager07764 624701