Inchcape : Annual Report and Accounts 2022 (9.42 MB)

ANNUAL REPORT AND

ACCOUNTS 2022

STRONG FINANCIAL PERFORMANCE

IN A TRANSFORMATIONAL YEAR

12

Chief Executive's review

INCHCAPE BRINGS TOGETHER

ITS PEOPLE AND TECHNOLOGY

TO ACCELERATE THE AMBITIONS

OF MOBILITY COMPANIES

Through our unique expertise, our technology, our data and our advanced analytics, we provide the platform to help the world's leading mobility companies grow.

Our plug-and-play distribution platform connect the products of mobility brands with end-consumers. Our capabilities span product planning and pricing, import and logistics, brand and marketing to operating digital sales and aftermarket channels.

STRATEGIC REPORT	FINANCIAL STATEMENTS
2	Our business model	124	Independent auditor's report
5	Our strategy		to the members of Inchcape plc
8	Investment case	136	Consolidated income statement
10	Chairman's welcome	137	Consolidated statement
12	Chief Executive's review		of comprehensive income
16	Facing into the future	138	Consolidated statement
18	Acquisitions and disposals		of financial position
20	Stakeholder engagement	139	Consolidated statement
26	Key performance indicators		of changes in equity
28	Operating and financial review	140	Consolidated statement
37	Responsible Business		of cash flows
44	Task Force on Climate-related	141	Accounting policies
	Financial Disclosures	150	Notes to the financial statements
56	Non-financial information statement	206	Alternative performance
59	Risk management		measures
CORPORATE GOVERNANCE REPORT	209	Five year record
210	Company statement
70	Chairman's statement		of financial position
76	Governance at a glance	211	Company statement
78	Board of Directors		of changes in equity
85	Nomination Committee Report	212	Accounting policies
88	Audit Committee Report	215	Notes to the Company
94	CSR Committee Report		financial statements
96	Directors' Report on Remuneration	OTHER INFORMATION
117	Directors' Report
		228	Shareholder information

18

Acquisition and disposals

28

Operating and financial review

HIGHLIGHTS

Financial KPIs

Revenue

£8.1bn

2021: £6.9bn2

Adjusted operating

margin1

5.1%

2021: 4.1%2

Profit before tax and

adjusting items1

£373m

2021: £249m2

Free cash flow1

£380m

2021: £274m2

Return on capital

employed!

41%

2021: 28%2

Non-financial KPIs

BEVs sold

1.8%

2021: 1.2%

Reduction in Scope 1 and

Scope 2 GHG emissions

24%

Reputation.com

score

671

2021: 642

Women in Senior

Leadership positions³

22%

2021: 18%

STRATEGIC REPORT

GOVERNANCE

FINANCIAL

76

Governance

37

Responsible business

Our financial metrics

Metric	£m	Use of metric
Gross Profit	1,325.3	Direct profit contribution
		from Value Drivers (e.g.
		Vehicles and Aftersales)
Less: Segment operating	(914.5)
expenses
Adjusted operating profit¹	410.8	Profit generated
		by the Group
Less: adjusting items in	(10.5)
net operating expenses
Operating Profit	400.3	Statutory measure
		of Operating Profit
Less: Net Finance	(67.2)
Costs and JV losses
Profit before tax	333.1	Statutory measure of profit
		after the costs of financing
		the Group
Add back: adjusting items	10.5
in net operating expenses
Add back: adjusting items	29.6
in net finance costs
Adjusted profit Before Tax¹	373.2

1. APM (alternative performance measure), see page 206.
2. Restated, see page 142.
3. Includes the Group Executive Team and its direct reports, see page 121.

STATEMENTS

INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022

1

OUR BUSINESS MODEL: DIFFERENTIATED DISTRIBUTION

"BRINGING MOBILITY TO THE WORLD'S COMMUNITIES - FOR TODAY, FOR TOMORROW AND FOR THE BETTER"

Inchcape is the world's leading independent automotive distributor, operating in over 40 markets and geographies across Asia, Australasia and the Pacific; the Americas; Africa; Europe and the UK

AT A GLANCE

OUR DISTRIBUTION VALUE CHAIN

Inchcape's value chain comprises six key elements which provide full spectrum 'Differentiated Distribution' services for our original equipment manufacturer (OEM) partners.

Our value chain is differentiated from others by our investments in digital customer experience, in data analytics, our global connected platform - which enables us to deploy our processes consistently worldwide - and deep

local market expertise.

£8.1bn

Revenue

50+

Brand partners

1. Product planning Using our local market expertise to inform certification and vehicle ordering decisions (model types and specifications).
2. Logistics

Operating comprehensive post-factory connections to deliver vehicles and parts in our markets.

3. Brand and marketing Proposition development, brand positioning (including price setting) and national marketing, aimed at maximising market share for our partners.

175+

Years of successful international trade

19,000¹

Employees

1. Channel management Defining and building the optimal channels to reach consumers and businesses covering network management, digital, and omni- channel. This also includes selection and training of independent dealers, and ongoing performance management.
2. Retail services

Bringing our omni-channel platform to customers to deliver world-class, digital- first experiences across our OEM and market portfolio.

1. Aftermarket services Distribution of parts, and customer and vehicle lifecycle management including aftersales services via the omni-channelretail network.

1. Total as at 31 December 2022, including ~4,500 Derco employees

2 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022

OUR GLOBAL REACH
6	REVENUE SPLIT BY REGION
Continents
	Retail
40+
Europe & Africa
Americas
Asia Pacific (APAC)
Countries and geographies worldwide

STRATEGIC REPORT

GOVERNANCE

RETAIL

Australia

Poland

UK

3

markets

AMERICAS

Argentina

Barbados

Bolivia

Chile

Colombia

Costa Rica

Ecuador

El Salvador

Guatemala

Panama

Peru

Uruguay

12

markets

£2.3bn

£1.5bn

EUROPE & AFRICA

Belgium	North Macedonia
Bulgaria	Poland
Estonia	Romania
Finland	Djibouti
Greece	Ethiopia
Latvia	Kenya
Lithuania
Luxembourg

14

markets

ASIA PACIFIC (APAC)

Brunei

Guam

Hong Kong

Indonesia

Macau

Saipan

Singapore

Thailand

Australia

New Zealand

10

markets

£2.0bn

£2.3bn

FINANCIAL STATEMENTS

INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022

3