Slide 1: FY17 Results
FY17 RESULTS 27 FEBRUARY 2018
Slide 2: Stefan Bomhard, Group Chief Executive
STEFAN BOMHARD GROUP CHIEF EXECUTIVE
Slide 3: FY 2017 Highlights
FY 2017 HIGHLIGHTS Strong earnings Driven Reflective of Continuing focus on and FCF growth by Ignite evolving mix shareholder returns EPS growth +12% New businesses Distribution ROCE of 30% in Latam, E.Europe, c.80% of profit FCF conversion 77% DPS growth +13% Australia Regional diversification Buyb
Slide 4: Sustainable Platform for Growth
SUSTAINABLE PLATFORM FOR GROWTH SUPPORTING TOTAL SHAREHOLDER RETURNS CUMULATIVE CASH RETURNS % chg FY17 % chg v (CCR) Share buyback (cumulative) 1,119M Revenue £8,949m +14.2% +9.4% Dividends (cumulative) PBT £382.5m +9.5% +5.3% EPS 67.0p +12.4% £47M DPS 26.8p +12.6% 2018 * 2011 2012 2013 2014 2015 2
Slide 5: Evolving the Inchcape Footprint
EVOLVING THE INCHCAPE FOOTPRINT FY 2017 TRADING PROFIT MIX REGIONAL MIX CHANNEL MIX POSITIONS INCHCAPE 27% 22% Australasia Distribution WELL FOR: Retail 11% 21% Emerging 71% Markets 80% 29% 21% UK/Europe Growth 36% Asia 33% 29% 20% 2014 2017 2014 2017 EM mix +10% vs. FY 14 Distribution growth FCF su
Slide 6: Richard Howes, Chief Financial Officer
RICHARD HOWES CHIEF FINANCIAL OFFICER
Slide 7: Summary Income Statement
SUMMARY INCOME STATEMENT STRONG PROFIT GROWTH FY 2017 FY 2016 CHANGE CHANGE Ex S.America £M £M ACR CCR Acq CCR * Revenue 8,949.2 7,838.4 +14.2% +9.4% +4.4% Operating profit 407.5 359.1 +13.5% +8.8% +0.8% Profit before tax 382.5 349.4 +9.5% +5.3% Effective tax rate (%) 25.0 25.2 -20bps Basic adjusted
Slide 8: Distribution
DISTRIBUTION Strong profit growth across all regions FY 2017 FY 2016 CHANGE CHANGE - ex S. America acquisition +7.3% CCR £M £M ACR CCR Indumotora acquisition profit Revenue 4,203.4 3,424.4 +22.7% +16.5% accretive (£30m) Net FY17 Yen headwind Trading profit 346.3 283.3 +22.2% +17.5% in Australasia c.
Slide 9: Distribution Trading Profit
DISTRIBUTION TRADING PROFIT +£36M £346M Acquisition +£30M Organic +£6M +£12M +£2M +£15M £283M -£2M FY16 Translational Australasia UK & Europe Asia Emerging FY17 FX Markets Note: Regional profit growth at CCR; Australasia includes a net £10m negative transactional FX impact y-o-y 9
Slide 10: Retail
RETAIL Market pressures in the UK FY 2017 FY 2016 CHANGE CHANGE and Australia impacted H2 profit £M £M ACR CCR Encouraging recovery in Russia Revenue 4,745.8 4,414.0 +7.5% +3.8% driven by Ignite Trading profit 93.2 105.3 -11.5% -14.2% Robust Aftersales growth Trading margin % 2.0% 2.4% -40 bps 53% o
Slide 11: Retail Trading Profit
RETAIL TRADING PROFIT £105M +£3M £93M -£6M -£12M +£3M FY16 Translational Australasia UK & Europe Emerging FY17 FX Markets Note: Regional profit growth at CCR; Australasia includes £4m net property profit gain increase y-o-y 11
Slide 12: Value Driver Disclosure Aftersales and Vehicles
VALUE DRIVER DISCLOSURE AFTERSALES AND VEHICLES GROSS PROFIT MIX GROSS PROFIT YoY YoY (£M) CHANGE CHANGE FY 2017 CCR Ex Acqn* Vehicles 785.2 +10.4% +0.7% Vehicles 63% Aftersales 466.9 +12.3% +7.7% Aftersales 37% AFTERSALES SUPPORT TO GROWTH Note: *Acqn. refers to South American acquisition in Dec 20
Slide 13: Income Statement Review
INCOME STATEMENT REVIEW FY 2017 FY 2016 2018 £M £M £M GUIDANCE Trading profit 439.5 388.6 INTEREST COST Central costs (32.0) (29.5) Operating profit 407.5 359.1 c.£30m • Includes BOE announced interest Operating margin 4.6% 4.6% rate increase Finance charges / JVs (25.0) (9.7) Profit before tax 382.
Slide 14: Operating & Free Cash Flow
OPERATING & FREE CASH FLOW FY FY FY FY WORKING WORKINGCAPITAL CAPITAL OPERATING CASH FLOW 2017 2016 FREE CASH FLOW 2017 2016 £M £M £M £M 2017 2017 WC WCimprovements improvementsandand y-o-y timing adverse impact timing impact Operating profit 407.5 359.1 Operating cash flow 532.5 386.0 on 2016 WC mo
Slide 15: Capital Allocation Priorities
CAPITAL ALLOCATION DISCIPLINED APPROACH - Capex and Working Capital Organic - Key FY investments: BMW Poznan (Poland), IT infrastructure, investment JLR retail concept (UK), Ethiopia greenfield expansion Priorities - Acquisitions – Estonia (BMW) and Australia (PSA) Selective - Integration of signifi
Slide 16: Ignite Strategy Update
IGNITE STRATEGY UPDATE
Slide 17: Strategic Update
STRATEGIC UPDATE SUPPORTING OUR GROWTH Delivery against revenue stream initiatives South American acquisition performing above plan Further procurement savings achieved and identified Meaningful F&I opportunities identified following global review Solid foundations established for growth 17
Slide 18: Opportunity for Consolidation
OPPORTUNITY FOR CONSOLIDATION 8 focus Distribution-led regions with c.15M TIV, 20% of Global total Eastern Central Europe Asia Inchcape share of this addressable market <1% North Africa Asia Highly Fragmented Middle Pacifics - Only 4 companies in more The Africa East than 20 markets Americas - > 850
Slide 19: South America Update
SOUTH AMERICA UPDATE TRANSFORMATION OF SOUTH AMERICA FROM - 2016 TO - 2017 2 countries 4 countries >4x profit 1 strategic OEM 4 strategic OEMs c.£200M sales c.£600M sales 5k new vehicles sold 25k new vehicles sold c.500 colleagues c.2000 colleagues 19
Slide 20: South America Integration Success
SOUTH AMERICA INTEGRATION SUCCESS INTEGRATION STRONG ATTRACTIVE 2018 SUCCESS PORTFOLIO ACQUISITION OPPORTUNITY Double digit volume FY17 EBIT Trading Margin Organisational driven growth across above plan 7.4% vs. Group 4.9% synergies the markets Regional Record Subaru Acquisition price: Further lever
Slide 21: Become the OEM's Partner of Choice
BECOME THE OEM’S PARTNER OF CHOICE GUAM BMW CONTRACT WON OTHER KEY ACHIEVEMENTS BMW contract won in Guam, January 2018 PSA: - New Australia contract. +46% volumes under Inchcape Inchcape’s first BMW contract in Asia Toyota/Lexus/Hino: Inchcape present in Guam since 1970 - Celebrating 50 years of par
Slide 22: Enhancing the Customer Experience
ENHANCING THE CUSTOMER EXPERIENCE CUSTOMER EXPERIENCE INSIGHT DATA & DIGITAL DRIVEN DESIGN Digital Experience Salesforce - Tool introduced to track customer experience in - Pilots show Service reminder email open real time, leading to targeted improvements rates increasing from mid 20’s to 60% - UK
Slide 23: Developing Revenue Streams: Aftersales
DEVELOPING REVENUE STREAMS EXAMPLE 2017 ACHIEVEMENTS – AFTERSALES AFTERSALES UK Ignite developments - Mercedes the focus for Ignite pilots - Proprietary tools to optimise capacity - Mercedes service gross profit +12% - Standardised pricing across brands - Service and Parts dealer award (’16, ’17) -
Slide 24: Developing Revenue Streams: Used
DEVELOPING REVENUE STREAMS EXAMPLE 2017 ACHIEVEMENTS – USED USED UK Ignite developments - Audi focus : +30% y-o-y gross profit - Optimised pricing through centralised system - BMW/Mini Roll-out in 4Q17 - Standardised online product imaging and videos - Full roll-out by the end of 2018 - Right vehicl
Slide 25: Leverage Global Scale
LEVERAGE GLOBAL SCALE PROCUREMENT FINANCE & INSURANCE £20M annualised savings achieved to date * F&I global review completed - vs. £20-40M targeted savings - UK best practices to be leveraged - Opportunity through selling practices, data analytics, Key areas of saving to date include: new products -
Slide 26: Building the Organisational Structure for the Future
BUILDING THE ORGANISATIONAL STRUCTURE FOR THE FUTURE ORGANISATIONAL CHANGE SINCE THE LAUNCH OF IGNITE NEW GLOBAL FUNCTIONS REGIONAL ORGANISATION Customer Experience - Consolidation of South Asia and North Asia - Customer Experience Director functions, as well as European functions - Head of Digital
Slide 27: Looking Ahead
LOOKING AHEAD 2018
Slide 28: 2018 Outlook
2018 OUTLOOK - Strength in our Emerging Markets - UK and Singapore new car markets challenging Regions - Continued momentum in other regions - Stronger comparatives in 1H - Synergy and trading improvements expected for South America acquisition - Further development of Aftersales and Used Vehicles I
Slide 29: Conclusion
CONCLUSION Predominantly Strongly cash Significant growth Creating value Distribution in generative opportunities from for shareholders APAC & EM business model our Ignite strategy and our partners 29
Slide 30: Appendix
APPENDIX
Slide 31: FY17 Group Operating Profit
FY17 GROUP OPERATING PROFIT GROUP GROWTH +13.5% EM Acquisition Central +£30M -£3M Translational FX Asia +£16M +£15M Organic +£9M Australasia £359M -£8M UK & Europe £408M FY 2016 -£10M FY 2017 CCR Group Growth +8.8% Australasia UK &Europe Asia EM Group 6.2% 2.1% 9.3% 6.5% 4.6% MARGIN -90 bps -30 bps
Slide 32: Net Cash & Free Cash Flow Growth
NET CASH & FREE CASH FLOW GROWTH +£94M +£6M FREE CASH FLOW £314M -£1M -£29M +£48M +£5M £191M FCY FY16 Operating profit D&A Working Capital Pension and Other Net interest/ Net capex FCF FY17 Operating Taxation/ Non- controling interest +£314M NET CASH -£32M -£61M -£18M £80M -£103M £27M -£47M Net cash
Slide 33: Strong Cash Generation and Balance Sheet
CASH UTILISATION STRONG CASH GENERATION AND BALANCE SHEET CASH UTILISATION 1H 15 – 2H 17 Strong FCF generation to fund £89M £223M organic investment, dividends, cash returns £569M £199M Continued 2018 FCF confidence. New Buyback £279M announced(up to £100m) £123M £80M Strong balance sheet, scope to
Slide 34: Regional TIV Summary
REGIONAL TIV SUMMARY REGION 2015 Actual 2016 Actual 2017 Actual 2018 Est Australia 4% 2% 1% 1% UK 6% 2% (6)% (6)% Greece 7% 4% 12% 6% Belgium 2% 8% 3% 0% Eastern Europe 6% 19% 14% 7% Singapore 66% 41% 5% (15)% Hong Kong 10% (21)% 6% 0% South America* (12)% (1)% 7% 8% Russia (36)% (11)% 12% 10% Note:
Slide 35: 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,