Respect for customers, partners and staff. Service: another name for the respect that a company owes its customers, partners and staff.

Transcription

1 Respect for customers, partners and staff Service: another name for the respect that a company owes its customers, partners and staff.

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3 Vehicle glass KEY FIGURES (in EUR million) % change Total jobs (in millions) % Revenue 1, , % Operating result % Net extraordinary result Current result after taxes 2, share of Dicobel % Current result after taxes 2,3, share of D Ieteren % 1. Excluding Brazil. 2. Before amortisation of consolidation differences. 3. After allocation to the vehicle glass segment of a net financial charge after taxes of EUR 9.8 million (EUR 8.3 million in 2003) associated with the investment of D Ieteren in this segment. GEOGRAPHICAL REVENUE BREAKDOWN 1 1. At actual exchange rates. % revenue change Europe +5% France, Germany, United Kingdom, Ireland, Netherlands, Belgium, Spain, Italy, Portugal, Switzerland, Luxembourg, Denmark, Sweden, Norway Rest of the world +7% Canada, New Zealand, Australia, Brazil > Revenue growth despite a weak market; continued market share gains > Highly positive effect from recent geographical expansion > Improvement in operating result through revenue growth and operational efficiency gains > Extraordinary charge linked to cash settlement of management share option scheme as a result of the company not floating in 2005 > Significant savings in interest from refinancing > Acquisition of the second largest specialist in the vehicle glass sector in Italy > Belron s.a. Market share and operational efficiency gains 42 M E S SAG E F RO M T H E C H A I R M A N B I C E N T E N A RY K E Y F I G U R E S ST RU C T U R E K E Y E V E N T S AC T I V IT I E S OV E RV I E W C O R P O R AT E G OV E R N A N C E

4 INCREASE OF D IETEREN S INTEREST IN BELRON In July 2004, D Ieteren s.a. purchased 12% of Belron s.a. from various minority shareholders. This transaction valued the equity of Belron at EUR 625 million. In January 2005, D Ieteren s.a. purchased from Cobepa 5.53% of the capital of their subsidiary Dicobel, shareholder at 81.73% of Belron, valuing the equity of Belron at around EUR 690 million. Subsequently, D Ieteren and Cobepa own respectively 75.53% and 24.47% of Dicobel. D Ieteren owns, directly and indirectly (via Dicobel), 73.73% of Belron (vs % at 31 December 2003). These agreements confirm, for the next several years, the shareholders confidence in the successful leadership team and strategy for Belron. Liquidity mechanisms for minority shareholders have been provided for. ACTIVITIES AND RESULTS Belron delivered another strong performance in 2004, despite weaker than anticipated market conditions, as a result primarily of mild weather conditions in Europe. Revenue increased by 5.6% to EUR 1,120 million. Total repair and replacement jobs grew by 2% in 2004 to 4.8 million 1. Like-for-like revenue grew by 2% at constant exchange rates, recent geographic expansion added 3%, and currency translation had a 1% positive impact. Revenue growth in Europe after both currency translation and acquisitions was 5% up on France and Germany both reported increased revenues on 2003 and particularly strong performances came from Spain, the Scandinavian businesses and from Italy. The acquisition of the second largest specialist in the vehicle glass sector in Italy in March 2004 contributed 1% point to the revenue growth of the group. Lower glass breakage rates impacted revenues in the more established markets, notably the UK, the Netherlands and Belgium. Outside Europe, after both currency translation and consolidation of Brazil, revenue for 2004 was up 7%. Double-digit like-for-like growth in the Brazilian business reflected the continued growth of the vehicle glass repair and replacement market in this growing economy. Revenues in Australia grew as a result of new pricing and service initiatives. In the Canadian market, conditions remained challenging resulting in a decline in sales. Operating result for 2004 was EUR 95.6 million, up 15% on The majority of this profit improvement was due to revenue growth in the key growth markets of France, Germany and Italy. The recent expansion contributed EUR 5 million to the increase in operating profit, most notably Brazil, a business which is proving highly successful. Operational improvement plans initiated during the year by the businesses following weaker than expected sales delivered margin gains and savings in overhead costs. In Australia, the extensive review completed in 2003 has delivered results and the business there has enjoyed significant gains in margin. In Canada, a major cost reduction programme mitigated the impact the sales decline has had on profit. An extraordinary charge of EUR 19.2 million (EUR 15.3 million after taxes) has been provided for the cash settlement of the management share option scheme as Belron is no longer planning to float by 2005, following the acquisition of 12% of its share capital from various minority shareholders by D Ieteren s.a. in July This cash settlement is in lieu of diluting the existing shareholders of Belron through the issuance of new shares. Net financial costs before amortisation of consolidation differences decreased from EUR 30.2 million to EUR 24.0 million. This reflects lower net debt level, and interest savings following the global restructuring of Belron debt in September Current result after taxes, before amortisation of consolidation differences, share of Dicobel, rose from EUR 31.2 million to EUR 41.9 million, an increase of 34%. ACHIEVEMENTS AND STRATEGIC DEVELOPMENTS Belron continued to focus on a balance of revenue growth and profitability. Market conditions drove lower volume in some countries but Belron was able to grow market share. This was a result of its continued commitment to excellent customer service. Nearly half of all jobs (48%) were done away from Belron service centres, by mobile repair units. In countries such as Brazil and Norway, where the service centre is preferred, Belron increased the number of service centres to maximise coverage. Providing excellent service extends to the relationships Belron has with its key partners. The repair first strategy is an integral part of its relationship with insurers and fleet management companies as it represents for them a substantial saving, and during the year, 29% of all windscreen jobs were repairs, up 7% on During the year, Belron acquired two additional businesses. In March, Belron acquired the second largest specialist in the vehicle glass sector in Italy, which added 30 service centres to the Italian network. In November the group also acquired the assets of a small operator in Norway with two service centres. This represented an expansion to the existing Norwegian operations. 1. Excluding Brazil. C O R P O R AT E C I T I Z E N S H I P S H A R E I N F O R M AT I O N A U T O M O B I L E D I S T R I B U T I O N C A R R E N TA L V E H I C L E G L A S S A N N U A L A C C O U N T S 43

5 Further benefits were delivered in 2004 from the centralised supply chain. In France it was a year of consolidation and expansion of infrastructure with a move to bigger premises to cope with the increasing demands of the French business. In May 2004, the UK supply businesses were successfully merged into a single supply and distribution business, operating under the LADDAW brand. All distribution businesses continued to increase the service levels they provided to the fitting businesses, therefore reducing costly adverse buys. The group continued to make further savings within the supply chain through closer collaboration with suppliers. and with 100 employees. The first CARGLASS Belron branch will open in Budapest in April. As of 2005, a new long term incentive programme for the management will be introduced and will succeed the share option scheme launched in Its cost will be accounted for as a current charge. The programme to establish a common systems platform for Belron was re-launched in May, with a new IT implementation partner. The project has since made considerable progress. In May the decision was made to centralise responsibility for the formulation and implementation of the Belron sales and marketing strategy to ensure that best practice is leveraged across the group and that efficiencies are driven in this area of the business. FY 2005 OUTLOOK In 2005 there will be no change to the Belron strategy to drive profitable growth. Growth will come organically from existing markets, most notably France, Germany, Italy, and Spain. All businesses will continue to focus on customer service. Extending opening hours, including 24 hour opening of the French call centre will provide customers with ever better service. The service centre network will be strengthened in countries such as Germany and Italy and the mobile service will be leveraged in countries like Canada. Belron will continue to look for opportunities to expand geographically during In February, Belron signed an agreement with Pneutrade Service Kft which serves the Hungarian tyre replacement market along with other automotive services, using a network of 12 service centres in the main cities of the country 44 M E S SAG E F RO M T H E C H A I R M A N B I C E N T E N A RY K E Y F I G U R E S ST RU C T U R E K E Y E V E N T S AC T I V IT I E S OV E RV I E W C O R P O R AT E G OV E R N A N C E

6 > Trading in 27 countries - 18 corporate and 9 franchises C O R P O R AT E C I T I Z E N S H I P S H A R E I N F O R M AT I O N A U T O M O B I L E D I S T R I B U T I O N C A R R E N TA L V E H I C L E G L A S S A N N U A L A C C O U N T S 45