Turnover at the UK and international vehicle distributor Inchcape plc increased by 9.6% to £3,855.2m, for 2003. Operating profit before goodwill amortisation and exceptional items rose strongly, by 20.1% in the year, from £117.2m in 2002 to £140.8m in 2003. The resultant operating margins strengthened from 3.3% in 2002 to 3.7% in 2003.

The group confirmed the full value of its VAT recovery at £37.5m – over £15m was attributed to exceptional profit items in the 2003 accounts.

Inchcape reported strong trading in several of its Asian, Australian and European businesses, and improved performance in the UK. Chief Executive Peter Johnson commented, “The new Block Exemption legislation has now provided us with the opportunity to apply this strategy to our UK Retail business. The ability of large dealer groups, such as Inchcape, to invest with selected manufacturers in locations they find attractive will change the retail landscape in the UK over the coming years. Inchcape will continue to play a part in that.

“This excellent set of results has maintained our recent record of reporting profit growth and strong cash generation, and we are well placed to continue this in 2004 despite the current weakness of the US dollar. We will also be investing further in our core markets to take advantage of the significant growth opportunities available to the Group.”

“Our primary focus during 2003 was the restructuring of our UK Retail network in the run up to the new Block Exemption legislation, which came into effect on 1 October 2003. The most significant transactions related to the BMW franchise, where we purchased six dealerships, building the largest contiguous territory in the country stretching from Tunbridge Wells in the east through to Thames Ditton in the west. As part of this restructuring we disposed of four BMW outlets.

In addition we acquired, or opened, seven dealerships in the year with other manufacturer partners. UK Retail now has a strong base from which it will continue the development of scale relationships with selected manufacturers, as part of our strategy to build large contiguous territories.”

Total spend on acquisitions in the period was £22.1m, of which £21.0m related to UK Retail. Cash inflow from disposals totalled £21.6m, of which £15.7m related to UK Retail.