Slide 1: H1 2017 Results
y * Inchcape “ H1 2017 WE 27 J ULY 2017 — rg
Slide 2: Stefan Bomhard, Group Chief Executive
STEFAN BOMHARD GROUP CHIEF EXECUTIVE
Slide 3: H1 2017 Highlights
H1 2017 HIGHLIGHTS Broad-based Strong EM Strong free cash Distribution M&A earnings performance & flow generation momentum growth return to profit growth in Asia Distribution c.75% Group profit Continuing to deliver on Ignite strategy 3
Slide 4: Sustainable Platform for Growth
SUSTAINABLE PLATFORM FOR GROWTH SUPPORTING TOTAL SHAREHOLDER RETURNS H1 2017 TRADING PROFIT MIX EBIT DPS Australasia 23% Asia 33% 7.9p £208M Emerging 5.7p £154M Markets 19% UK & Europe 25% Emerging Markets mix +9% vs. H1 14 H1 2013 H1 2017 H1 2013 H1 2017 UK down to c.15% of total Note: pre exce
Slide 5: Delivering on Our Ignite Strategy
DELIVERING ON OUR IGNITE STRATEGY Robust Aftersales profit growth Further procurement savings achieved Distribution contract acquisitions with BMW in Estonia and addition of PSA in Australia South American acquisition performing in-line with expectations Business development and innovation supported
Slide 6: Richard Howes, Chief Financial Officer
RICHARD HOWES CHIEF FINANCIAL OFFICER
Slide 7: Summary Income Statement
SUMMARY INCOME STATEMENT STRONG PROFIT GROWTH H1 2017 H1 2016 CHANGE CHANGE CCR EX S. £M £M ACR CCR AMERICA** Revenue 4,458.5 3,756.2 +18.7% +9.5% +4.6% Operating profit 208.0 169.5 +22.7% +10.8% +2.7% Profit before tax 196.8 165.0 +19.3% +7.8% Tax rate (%)* 25.5 25.8 -30bps Basic adjusted EPS (p) 3
Slide 8: Distribution
DISTRIBUTION H1 2017 H1 2016 CHANGE CHANGE £M £M ACR CCR Strong underlying profit growth, driven by Asia and Emerging Markets Revenue 2,027.2 1,549.9 +30.8% +16.7% Indumotora acquisition profit accretive (£15m) Trading profit 161.1 130.3 +23.6% +10.7% Yen headwind in Australasia c.£20m Aftersales Gr
Slide 9: Distribution – Trading Profit
DISTRIBUTION – TRADING PROFIT £15M Acquisition £7M £2M £3M £15M £20M £9M £161M £130M H1 16 FX Yen impact Australasia - UK & Europe Asia EM H1 17 underlying Note: Regional profit growth at CCR 9
Slide 10: Retail
RETAIL H1 2017 H1 2016 CHANGE CHANGE £M £M ACR CCR Retail decreasing in the mix Continue to optimise property Revenue 2,431.3 2,206.3 +10.2% +4.1% portfolio Aftersales Gross Profit +8% CCR Trading profit 60.3 53.4 +12.9% +8.1% Trading margin % 2.5% 2.4% +10 bps 55% of Group 27% of Group Revenue Trad
Slide 11: Retail – Trading Profit
RETAIL – TRADING PROFIT £3M £1M £0M £9M £2M £60M £53M H1 16 FX Australasia - Australasia - UK & Europe EM H1 17 property profit underlying Note: Regional profit growth at CCR 11
Slide 12: Group Operating Profit
GROUP OPERATING PROFIT Group Growth +22.7% EM Acquisition Yen impact UK & Asia +£15m Translational FX Australasia Europe +£7m +£17m £20m (Ex Yen impact) (YoY +£1m +£15m * Organic profit +£3m growth) £170M £208M H1 2016 CCR (inc Yen impact) Group Growth +10.8% H1 2017 6.3% 2.5% 9.3% 6.3% 4.7% MARGIN
Slide 13: Value Driver Disclosure Aftersales and Vehicles
VALUE DRIVER DISCLOSURE AFTERSALES AND VEHICLES GROSS PROFIT YoY YoY (£M) CHANGE CHANGE GROSS PROFIT MIX H1 2017 CCR Ex Acqn* Vehicles 386.3 3.9% (4.7)% Aftersales 228.7 12.9% +8.1% GROUP Total 615.0 7.1% - Vehicles 63% (-2% YoY) Aftersales 37% (+2% YoY) Aftersales growing well, Yen pressure for Veh
Slide 14: Operating & Free Cash Flow
OPERATING & FREE CASH FLOW H1 H1 H1 H1 OPERATING CASH FLOW 2017 2016 FREE CASH FLOW 2017 2016 2017 GUIDANCE £M £M £M £M UNCHANGED Underlying capital expenditure £75m Operating profit* 208.0 169.5 Operating cash flow 252.0 134.8 £25m additional spend Depreciation / amortisation 31.1 26.2 Net interest
Slide 15: Income Statement Review
INCOME STATEMENT REVIEW H1 2017 H1 2016 £M £M £M 2017 GUIDANCE Trading profit 221.4 183.7 Central costs (13.4) (14.2) Interest cost Operating profit 208.0 169.5 Operating margin 4.7% 4.5% Finance charges / JVs (11.2) (4.5) c.£19m Profit before tax 196.8 165.0 Tax (50.1) (42.6) Tax rate 25-26% Tax %
Slide 16: Capital Allocation Priorities
CAPITAL ALLOCATION DISCIPLINED APPROACH • Capex and Working Capital Organic investment • Key H1 investments: BMW Poznan (Poland) • Acquisitions – Estonia (BMW) and Australia (PSA) Priorities • Integration of significant South American Selective M&A acquisition going to plan • Pipeline of opportuniti
Slide 17: Cash Utilisation
CASH UTILISATION STRONG PIPELINE OF M&A OPPORTUNITIES CASH UTILISATION 1H 15 – 1H 17 Successful M&A deals over +£525M -£190M the past 12 months -£201M -£257M Given attractive acquisition pipeline, £123M £0M no further buyback at this stage 1H15 net cash 1H17 net cash Cash generation * Dividend payme
Slide 18: Ignite Strategy Update
@in Ehcape ~~ IGNITE STRATEG Y UPDATE
Slide 19: Strategic Update
STRATEGIC UPDATE SUPPORTING OUR GROWTH Robust Aftersales profit growth Further procurement savings achieved Acquisition in Estonia with BMW and addition of PSA in Australia South American acquisition trading in-line with expectations Business development and innovation supported by stronger OEM rela
Slide 20: Opportunity for Consolidation
OPPORTUNITY FOR CONSOLIDATION INCHCAPE SHARE OF THIS 8 FOCUS REGIONS WITH c.15M ADDRESSABLE MARKET <1% TIV, c.20% OF GLOBAL TOTAL Europe Central Asia North Africa Asia Middle East Pacifics Africa The Americas 20
Slide 21: South America Update
SOUTH AMERICA UPDATE INTEGRATION SUCCESS AREAS OF OPPORTUNITY • Integration process going well • Subaru & Hino market share growth • Subaru Chile growth over H1 +8% YoY • Leveraging scale across larger South American platform • On track to deliver project-WACC in year 2/3 • Working capital optimisat
Slide 22: Invest to Accelerate Growth
INVEST TO ACCELERATE GROWTH M&A SMALL BOLT-ON ACQUISITIONS Thailand (JLR), Estonia (BMW), Australasia (PSA) CAN GENERATE SIGNIFICANT RETURNS AND BENEFITS THROUGH: £M (Combined) Year 1* Year 3 (EST) Earnings uplift (synergies, Ignite benefits) Trading profit 2 10 Working capital optimisation Investme
Slide 23: Become the OEM's Partner of Choice
BECOME THE OEM’S PARTNER OF CHOICE ACHIEVEMENTS OVER PAST 12 MONTHS Hino in 2 new markets Subaru in 4 new markets Awarded distribution for Thailand Celebrating 50 years Strong market share gain of partnership in Australia UK investment to support growth Entry into Estonia UK Parts & Service Award fo
Slide 24: Robust Aftersales Growth
ROBUST AFTERSALES GROWTH UK H1 Gross Profit • Capacity increases +8% (ex Acqn*) • UK technician recruitment drive • Ignite diagnostic tool highlighted technician shortage • Over > 100 technicians recruited in last 2 months • New pay-plan and clear career progression to attract and retain the best te
Slide 25: Used Growth Opportunity
USED GROWTH OPPORTUNITY UK PILOTS TRIALS • UK Used Gross profit +10% • Pilots complete in Audi Swindon and Cheshire Oaks • Successful start, rolling out across brands • Centralised pricing, dynamic to market AUSTRALIA – TRIVETT DIRECT • Warehouse location • Low overhead model • Average GP Margin 12.
Slide 26: Enhancing the Customer Experience
ENHANCING THE CUSTOMER EXPERIENCE INCHCAPE EXPERIENCE PILOTS DIGITAL SHOWROOM EXPERIENCE • Global framework created • Mall-based • Detailed guidelines for regions showroom (Australia) SATISFACTION MONITORING • Experience-led retail sales process (UK) • Enhanced NPS measurement • Supplemented by exte
Slide 27: Leverage Global Scale
LEVERAGE GLOBAL SCALE Procurement savings on c.£400m DRIVING cost base progressing well EFFICIENCY FROM OUR 29 MARKETS £14m annualised savings achieved COST BASE (vs. £7m at FY16)* Finance & Insurance (F&I) global BETTER review on product opportunity REVENUE AND SHARING OF conducted KNOWLEDGE GROSS
Slide 28: Looking Ahead
@in Ehcape ~ LOOKING AHEAD
Slide 29: 2017 Outlook
2017 OUTLOOK Portfolio of markets support growth opportunity SOLID Increased Emerging Markets presence • CONSTANT • Slower New Vehicle trend expected in some mature markets CURRENCY Ignite strategy contributing well to growth PERFORMANCE • Annualised procurement savings EXPECTED • Strong pipeline of
Slide 30: Conclusion
CONCLUSION Predominantly Distribution in Strongly cash Asia Pacific & generative Emerging Markets business model Driving performance for our partners and Significant growth creating value for opportunities from shareholders our Ignite strategy 30
Slide 31: Appendix
APPENDIX
Slide 32: Regional TIV Summary
REGIONAL TIV SUMMARY REGION 2014 Actual 2015 Actual 2016 Actual 2017 Est Australia (2)% 4% 2% 1% Greece 23% 7% 4% 5% Belgium 0% 2% 8% 3% Eastern Europe 13% 6% 19% 10% Singapore 39% 66% 41% (5)% Hong Kong 12% 10% (21)% 0% South America* (4)% (12)% (1)% 5% Russia (10)% (36)% (11)% 0% Note: TIV = Total
Slide 33: Disclaimer
DISCLAIMER The information and opinions contained in this presentation are provided as at the date of the document. Certain statements in this presentation, particularly those regarding the future prospects of Inchcape plc (“Inchcape”), returns, pricing, acquisitions, divestments, industry growth or