Slide 1: FY19 Results
FY19 RESULTS 27 FEBRUARY 2020
Slide 2: Nigel Stein, Chairman
Cf dei hi NIGEL STEIN * | i CHAIRMAN
Slide 3: Stefan Bomhard, Group Chief Executive
STEFAN BOMHARD GROUP CHIEF EXECUTIVE
Slide 4: FY19 Highlights
FY19 HIGHLIGHTS Resilience in Meaningful Ignite continues to Disciplined business model strategic progress drive the business capital allocation PBT flat y-o-y Disposal of non-strategic First Daimler distribution Buybacks: (excluding transactional retail assets contracts established ‘19: £100M compl
Slide 5: Underlying Resilience
UNDERLYING RESILIENCE IN THE CONTEXT OF CHALLENGING MARKETS % chg IFRS 16 FY 2019 % chg Continued Group revenue growth (CCR) Revenue1 £9,380M +1.1% +1.3% PBT flat y-o-y, excluding transactional Yen headwind2 PBT £326M (6.9%) (7.4%) Strong profit growth in Europe, solid underlying Australasia and res
Slide 6: Meaningful Strategic Progress
MEANINGFUL STRATEGIC PROGRESS PORTFOLIO IMPROVED FURTHER IN 2019 DISTRIBUTION MODEL ATTRACTIVE MEANINGFUL STRATEGIC PROGRESS OVER 2019 Distribution trading profit1 Disposal of multiple Retail only businesses £354M • Non-strategic assets in UK, Australia, China +32%2 • >£800m revenue disposed (c.9% o
Slide 7: Gijsbert de Zoeten, Chief Financial Officer
GIJSBERT DE ZOETEN CHIEF FINANCIAL OFFICER
Slide 8: Summary Income Statement
SUMMARY INCOME STATEMENT FY 2019 FY 2018 CHANGE CHANGE 2019 PBT (EX-YEN): IFRS 16 £M £M ACR CCR Flat year-on-year Revenue1 9,380 9,277 +1.1% +1.3% IFRS 16 Operating profit2 373 399 (6.4%) (6.7%) ACCOUNTING Fully retrospective Profit before tax 326 351 (6.9%) (7.4%) FY18 restated Effective tax rate (
Slide 9: Distribution
DISTRIBUTION UNDERLYING RESILIENCE DESPITE SUPPLY AND MARKET CHALLENGES GROUP REVENUE GROUP TRADING PROFIT IFRS 16 FY 2019 FY 2018 CHANGE CHANGE £M £M ACR CCR 54% 91% 57% proforma2 93% proforma2 Revenue1 5,041 4,988 +1.1% +1.2% Strong performance in Europe offset by LatAm-driven EM declines Trading
Slide 10: Distribution by Region
DISTRIBUTION BY REGION TRADING PROFIT £383M £1M £0M £3M £9M £354M £26M £16M Aus total: (£26M) FY18 Translation FX Australasia Australasia Europe 2 Asia Emerging FY19 Distribution TP (Ex-Yen) Yen 1 Markets 3 Distribution TP Note: 1) Yen transactional headwind given purchase of goods in Yen and sale i
Slide 11: Asia: Operational Improvements
ASIA: OPERATIONAL IMPROVEMENTS STRONG PERFORMANCE THROUGH THE CYCLE PROFIT IMPROVEMENT THROUGH THE CYCLE PROFITS WELL MANAGED IN ASIA Asia Trading Profit (Ex-China) Progression over the cycle has been strong 180 80% • Expanded product offering 160 60% • Improved cost structure (fixed cost review; 14
Slide 12: EM: Market Challenges
EM: MARKET CHALLENGES ETHIOPIA MOMENTUM BETTER BUT CHILE WEAK ETHIOPIA IMPROVEMENT SEEN IN 2H CHILE MARKET CHALLENGED IN 2019 Currency-driven supply issues since 2017 Copper market decline (trade-war related) 2H 19 improved momentum, with: Civil unrest in 2H; resulting in 2020 constitutional reform
Slide 13: Retail
RETAIL IMPROVED PERFORMANCE FOLLOWING CHALLENGING 2018 GROUP REVENUE GROUP TRADING PROFIT IFRS 16 FY 2019 FY 2018 CHANGE CHANGE £M £M ACR CCR 46% 9% 43% proforma2 7% proforma2 for disposals for disposals Revenue1 4,338 4,289 +1.2% +1.4% Stable UK & Europe retail performance, as anticipated Trading 3
Slide 14: Retail by Region
RETAIL BY REGION TRADING PROFIT £4M £36M £32M £0M £0M £0M FY18 Retail TP Translational FX Australasia UK & Europe Emerging Markets FY19 Retail TP 14
Slide 15: Income Statement Review
INCOME STATEMENT REVIEW 2019 INTEREST FY 2019 FY 2018 IFRS 16 £M £M IFRS16: c.£47m IAS17: c.£28m Trading profit 390 415 Central costs (17) (16) 2019 PBT FLAT EX YEN Operating profit 373 399 AUD/JPY: £(26)m impact Operating margin 4.0% 4.3% Finance charges / JVs (47) (48) 2020 GUIDANCE Profit before
Slide 16: Cash Flow
CASH FLOW GOOD UNDERLYING CASH CONVERSION WORKING CAPITAL OPERATING FY 19 FY 18 FREE FY 19 FY 18 FY 19 CASH FLOW £M £M CASH FLOW £M £M Negative timing impact driven by acquisitions, disposals, and Ethiopia Operating profit 373 399 Operating cash flow 456 586 (government) receivables Depreciation / 1
Slide 17: 2020 - Looking Ahead
GIJSBERT DE ZOETEN 2020 - LOOKING AHEAD
Slide 18: 2020 Outlook
2020 OUTLOOK MARKET OUTLOOK PROFIT GUIDANCE (EX AUD/JPY, EX DISPOSALS)1 Market weighted TIV to remain challenging Modest decline in group profit • Singapore TIV est -25% • Asia down (Singapore cycle, HK protests) • Hong Kong, Chile, Australia expected • Australia weak (market weakness) to remain cha
Slide 19: A Strong Portfolio
A STRONG PORTFOLIO SUPPORTING RESILIENCE IN THE BUSINESS 2019 MARKET CONTEXT PORTFOLIO DIVERSIFICATION INCHCAPE REVENUE- MARKET COVERAGE AFTERSALES vs. VEHICLES OEM EXPOSURE WEIGHTED TIV: EM share of group profits Aftersales market: Acquisitions have -4% +9ppts since 2016 c.0-5 year old cars helped
Slide 20: Resilient Business Model
RESILIENT BUSINESS MODEL STRENGTH THROUGH THE CYCLE REVENUE (£) STRONG TRACK RECORD 9.0Bn 9.3Bn 9.4Bn OF WEATHERING CYCLES 7.8Bn 6.1Bn 6.3Bn 5.9Bn 5.6Bn 4% revenue CAGR (2007 to 2019) // 07 08 09 10 16 17 18 19 Revenue growth 8% p.a. since 2015 OPERATING PROFIT (£M) IFRS 16 400 % margin 10.0% EBIT m
Slide 21: Capital Allocation
CAPITAL ALLOCATION MAINTAINING OUR DISCIPLINED APPROACH DIVIDEND POLICY ACQUISITIONS BUYBACK LEVERAGE RATIO Progressive dividend policy 12 acquisitions under Ignite Disciplined approach Max 1x Net Debt to EBITDA • FY19 DPS unchanged • c£550M spent since 2016 • £150M announced for 2020 (Pre-IFRS16) •
Slide 22: Multi-Layered Growth Proposition
MULTI-LAYERED GROWTH PROPOSITION ATTRACTIVE TOTAL RETURN OPPORTUNITY ANNUAL RETURN CONSIDERATION MARKET • Inchcape market growth expectations DRIVERS ORGANIC GROWTH OPERATIONAL • Revenue stream optimisation EXCELLENCE • Global cost efficiencies and best practices ATTRACTIVE CONTRACT • Strong balance
Slide 23: Strategy Update
STEFAN BOMHARD STRATEGY UPDATE
Slide 24: Ignite Strategy to Drive Growth
IGNITE STRATEGY TO DRIVE GROWTH IGNITE FRAMES INCHCAPE'S STRATEGIC FOCUS IGNITE STRATEGY SUCCESS TO DATE Implemented industry-leading tools to evolve the customer journey digitally OPERATIONAL EXCELLENCE: Lead in customer MAXIMISING PROFIT AGAINST experience Strengthened OEM relationships; new UNDER
Slide 25: Ignite: Driving the Customer Experience
IGNITE: DRIVING THE CUSTOMER EXPERIENCE IMPROVING THE ONLINE AND IN-STORE EXPERIENCE AVERAGE GROUP REPUTATION.COM GLOBAL WEBSITE STATISTICS FY19 vs. FY18 SCORE ACROSS LFL INCHCAPE SITES Listing views1 >3x Actions from listings +80% PLATFORM PROVIDES INSIGHT IMPLEMENTATION OF PLATFORM AND TARGETED MA
Slide 26: Ignite: Being the OEM Partner of Choice
IGNITE: BEING THE OEM PARTNER OF CHOICE MILESTONES ACHIEVED IN 2019 DAIMLER BMW SUZUKI • First distribution contracts with • OEM-led Baltics consolidation • Costa Rica and Panama Daimler after 30 year Retail-only completed with the acquisition of operations awarded Suzuki partnership Lithuania contr
Slide 27: Ignite: Focusing on All Revenue Streams
IGNITE: FOCUSING ON ALL REVENUE STREAMS GROWING DIVERSIFICATION OF PROFIT DRIVERS USED INITIATIVES AFTERSALES INITIATIVES Growth in Emerging Markets key to group progress Group gross profit growth +2% KEY SUCCESS KEY SUCCESSES Costa Rica: Northern Europe1 Australasia2 • Used car operations turned to
Slide 28: Ignite: Leveraging Our Global Scale
IGNITE: LEVERAGING OUR GLOBAL SCALE ACHIEVEMENT OF TARGETS IN 2019 FINANCE & INSURANCE PROCUREMENT £30M incremental income target achieved £50M annualised savings achieved Achieved over 24 months Achieved since 2016 launch Key 2019 achievements: Key areas of saving over 2019: • F&I profit growth ahe
Slide 29: Ignite: Investing to Accelerate Growth
IGNITE: INVESTING TO ACCELERATE GROWTH 12 DISTRIBUTION DEALS SINCE 2016 CONSOLIDATION THEMES REGIONAL PLATFORM CREATION CONSOLIDATION BOLT-ONS Acquisitions that enable OEM-led consolidation with Small business wins supported Acquisitions further contract growth Inchcape preferred partner by existing
Slide 30: Ignite: Investing for Growth (LatAm)
IGNITE: INVESTING FOR GROWTH (LATAM) CREATING A MEANINGFUL LATAM PRESENCE CHINESE DEVELOPMENT OF LATAM THROUGH IGNITE MARKET SUBARU HINO SUZUKI BMW JLR DAIMLER BRANDS Costa Rica FROM - 2016 TO – 2019 PF Panama 2 countries 8 countries Peru Platform for 1 strategic OEM 6 strategic OEMs Chile continued
Slide 31: Future Trends: Digital Customer
FUTURE TRENDS: DIGITAL CUSTOMER TRANSFORMING THE CUSTOMER JOURNEY OMNICHANNEL DEVELOPMENT - MELBOURNE OMNICHANNEL PILOT FOCUS Data-driven Used car trade-in valuation tool Integrated omni-channel platform implemented in all physical and online stores • Q4: 51% conversion of valuations offered with to
Slide 32: Future Trends: Mobility
FUTURE TRENDS: MOBILITY DEVELOPING NEW PARTNERSHIPS PRIVATE HIRE VEHICLE SERVICING - SINGAPORE AUTOMONOUS VEHICLES - SINGAPORE • Trial: quick service proposition for fleet cars launched • Autonomous Singapore University shuttle service in 2018 launched in 2019; In partnership with Comfort DelGro (a
Slide 33: Conclusion
YY. 4 / | STEFAN BOMHARD Ps 7 CONCLUSION
Slide 34: Investment Proposition
INVESTMENT PROPOSITION GROWTH AND CASH RETURNS Distribution at our core: A highly cash generative and sustainable business model Strong and increasing weighting to higher growth markets supports our diversification Ignite strategy driving organic performance ahead of market growth Continued consolid
Slide 35: Appendix
APPENDIX
Slide 36: Regional TIV Summary
REGIONAL TIV SUMMARY REGION 2016 ACTUAL 2017 ACTUAL 2018 ACTUAL 2019 ACTUAL 2020 EST Australia 2% 1% (3%) (8%) (4%) UK 2% (6%) (7%) (2%) (3%) Greece 4% 12% 17% 10% 7% Belgium 8% 1% 1% 0% (7%) Eastern Europe 19% 14% 11% 3% 3% Singapore 41% 5% (18%) (5%) (25%) Hong Kong (21%) 6% (7%) *** (10%) (20%) S
Slide 37: Disposal Impact in 2020
DISPOSAL IMPACT IN 2020 DISTRIBUTION DISPOSAL IMPACT • China Retail was included in Asia Distribution – China: c.£170m revenue; £9m trading profit • Remaining distribution operations: £345m trading profit (2019-PF) RETAIL DISPOSAL IMPACT • UK IFS and retail sites: c.£300m revenue; £9m trading profit
Slide 38: Aftersales vs. Vehicle Profit
AFTERSALES VS. VEHICLE PROFIT AFTERSALES A STABILISER YoY GROSS PROFIT (£M) GROSS PROFIT MIX CHANGE FY 2019 CCR Vehicles 772 (4.8%) Aftersales 500 +1.5% Vehicles 61% Aftersales 39% 38
Slide 39: Net Debt
NET DEBT BALANCE SHEET REMAINS STRONG BUYBACK FY 19 FY 19 £M £M £100M completed over 2019 Free cash flow 213 Opening net funds/debt (446) £150M announced for 2020 Exceptional cash (11) Net cash flow 173 Acquisitions and disposals 189 Net movement in fair value (0) ACQUISITIONS AND DISPOSALS Equity d
Slide 40: IFRS 16 – FY18 Restated
IFRS 16 – FY18 RESTATED FULLY RETROSPECTIVE APPROACH FY 2018, £M1 Pre-IFRS 16 Adjustment IFRS 16 Fully retrospective Revenue 9,277 - 9,277 • Restatement of the prior year Gross profit 1,301 - 1,301 • Year-on-year statements are LFL accounting treatment Operating lease rentals (86) 82 (4) Depreciatio
Slide 41: The Inchcape World Today
THE INCHCAPE WORLD TODAY UNIQUE GLOBAL DISTRIBUTOR AND RETAILER GLOBAL DISTRIBUTOR AND RETAILER 2019 PROFIT BY CHANNEL 33 Markets Distribution at the core 9% Retail Distribution Distribution Retail only 91% LONG-TERM PARTNERSHIPS 2019 PROFIT BY REGION Strong brand portfolio Number of years of partne
Slide 42: Distribution: Attractive Economics
DISTRIBUTION: ATTRACTIVE ECONOMICS HIGHER GROSS MARGIN, LOWER FIXED COSTS, HIGHER ROCE VS. RETAIL BRAND CUSTODIAN IN MARKET DISTRIBUTION MODEL Distributor responsibilities: Higher margin business driven by gross margin Product planning Customer experience Greater variability of overheads Brand posit
Slide 43: Markets with Growth Opportunity
MARKETS WITH GROWTH OPPORTUNITY GROWTH OF INCHCAPE MARKETS HIGHER THAN GLOBAL AUTO PASSENGER VEHICLE AND COMMERCIAL VEHICLE PER ‘000 PPL 1000 Inchcape Market since Inchcape Market launch of Ignite strategy Other Market DISTRIBUTION OF PROFIT 900 800 United States c.90% New Zealand Finland Poland Aus
Slide 44: Distribution: Highly Fragmented
DISTRIBUTION: HIGHLY FRAGMENTED MOSTLY SMALL FAMILY-RUN BUSINESSES FRAGMENTED INDUSTRY INCHCAPE DEAL MOMENTUM STRUCTURE IGNITE STRATEGY LAUNCHED 2016 Large-scale deals // CATEGORY # OF COMPANIES * 1993 2007 2016 2017 2018 2019 Subaru Baltics Indumotora BMW BMW BMW Lithuania Australia multi-OEM Eston
Slide 45: Disclaimer
DISCLAIMER The information contained in this presentation in relation to Inchcape plc (“Inchcape”) and its subsidiaries (the "Inchcape Group") has been prepared solely for use at this presentation. It should not be used for whole or in part for any other purpose. The presentation is not directed to,