RAC plc (RAC), the motoring and vehicle solutions company, will announce its preliminary results for the year ended 31 December 2002 on 26 February 2003.
RAC plc (RAC), the motoring and vehicle solutions company, will announce its preliminary results for the year ended 31 December 2002 on 26 February 2003.
RAC will conduct its normal year end round up meetings with analysts in the coming fortnight ahead of the close period. This update will form the basis for those meetings.
RAC's underlying profit before goodwill amortisation, exceptional items and taxation in 2002 is expected to be in line with market expectations.
RAC Consumer Services continues to perform well and has increased its individual membership file by over 4% for the third consecutive year. There has been further growth in non-roadside revenues, with BSM, Legal Services and Financial Services all sustaining the profit momentum reported at the half year. RAC Insure, our new financial services business, comes fully on stream in January 2003 and will provide the platform to significantly increase profits earned from financial products.
RAC Business Solutions' underlying business has performed well with significant growth in non-roadside revenues following the award of new outsourcing contracts for claims management from financial institutions and the extension of its existing services.
We are currently on the short list for contracts with lifetime revenues of Ł2.4bn including a major parts distribution contract where we have been appointed preferred bidder and for which a pilot trial is currently being undertaken. These contracts will be delivered using the unique range of skills and products within RAC's portfolio of which vehicle leasing, mobile maintenance, claims management and logistics are integral parts.
RAC has continued to develop its major strategic IT systems. RAC's automatic despatch system (iCAD) is now fully operational and service delivery in all key areas is performing normally.
Considerable progress has been made in the implementation of the new customer relationship management and data warehouse system (CCM) which is now operational for RAC Business Solutions' customers. The implementation for RAC Consumer Services is being introduced on a phased basis and will be completed during the first half of 2003. The new system is already delivering significant benefits as we have been able to retire some of our legacy systems and improve the quality of our data management and campaign planning. It is anticipated that additional implementation costs of about Ł4m will be incurred during 2002 as a result of the introduction of these two systems.
Our contract with Paccar to distribute DAF truck parts will end in June 2003. Our other contract to distribute Leyland parts will generate improved margins due to Paccar’s termination of Leyland production and this is expected to result in additional profits of about Ł7m in 2002. At least the same level of profit is expected from Paccar in 2003. Contracts with total lifetime revenues of Ł185m have been won by our inventory management business this year.
Our Mechanical Handling businesses have continued to find trading conditions difficult. The market for used forklift trucks has deteriorated and accordingly accelerated depreciation of about Ł5m will be taken against the value of the UK fleet to reflect reduced residual values. In addition, partly due to poorer economic conditions in France, an asset impairment of about Ł6m will be recognised in the 2002 accounts in respect of Lex Manutention.
The additional Paccar revenues, the costs incurred as a result of the delayed implementation of iCAD and CCM systems in RAC and the accelerated depreciation in the UK Mechanical Handling business will all be separately identified in the segment analysis of our Underlying Profit in the preliminary results. The asset impairment at Lex Manutention will be treated as an operating exceptional item below this line.
Lex Vehicle Leasing has continued to improve its profits and has increased its fleet size during the second half of the year. Although used car prices have been broadly stable during 2002 they are expected to fall by 10% over the next three years. We expect that the provision for residual value losses made at the end of 2000 will cover the impact of this reduction for all vehicles now on the fleet.
In common with other pension funds, the group's pension deficit has increased substantially this year because of the weak performance of the equity markets. The company's pension contributions are expected to increase by Ł5m a year from the middle of 2003. The impact of this increase will only apply for the second half of 2003.
As we indicated at the interim results, the movement in our debt position during the second half of the year will be broadly neutral. During the year we have generated significant positive cash flows.
Enquiries:
Paul Hewitt Group Finance Director - 01628 843703
Niall Addison Group Finance and Investor Relations Manager- 07764 624701