Slide 1: Premium Growth, Premium Returns: 2013 Results
PREMIUM GROWTH PREMIUM RETURNS 2013 Results 11th March 2014
Slide 2: Record PBT, EPS growth of 11%
Record PBT, EPS growth of 11% Revenue Operating profit* Operating Margin* 7.0 286.9 6,525 300.0 4.7 259.8 4.4 6.5 244.4 4.5 4.3 6,085 4.2 5,885 5,826 250.0 225.5 4.3 6.0 £bn 4.1 £m % 200.0 3.8 5.5 3.9 3.7 5.0 150.0 3.5 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013 +7.2% +10.4% +10 BPS
Slide 3: Strong in small markets with Distribution…
Strong in small markets with Distribution… DISTRIBUTION AND VIR RETAIL ONLY TRADING PROFIT TRADING PROFIT 79% 21% APAC AND EMERGING Hong Kong (67), Guam (91), Macau (86), Saipan (>100), Brunei Russia (7) MARKETS (79), Singapore (68), Romania (54), Bulgaria (74), Macedonia (97), China (1) Albania (>1
Slide 4: Positive operating leverage with 10 BPS increase
Positive operating leverage with 10 BPS increase Group 2013 Analysis Regional Margin Analysis GM 14.2% -20 BPS YoY North Asia 10.5% +30 BPS Record OP • Value driver effect • Strong pricing power performance on new South Asia 8.0% -110 BPS vehicles in distribution markets offset by competitive pressu
Slide 5: Continued cost discipline
Continued cost discipline 30 78 43 20 (6) £m (154) (32) 686 640 640 615 2008 Adj* Inflation Non LFL Cost 2013 2012 Inflation Non LFL Property Cost 2013 Reduction Profit Reduction 5 year overhead cost reduction (pre-inflation) of £154m At actual currency * 2008 Adj reflects a £25m increase for the Mu
Slide 6: Capital discipline remains firmly in place
Capital discipline remains firmly in place Capital allocation policy 2013 highlights Support growth with WC investment WC increase of £20m Capex investment to Invested in growth in Singapore, drive growth and pricing power South America, Russia and the UK Maximise shareholder returns 4 consecutive y
Slide 7: Trivett acquisition on track
Trivett acquisition on track Australia’s leading premium & luxury 2013 Contribution (10 months) automotive group acquired for £76m Revenue £299m Acquisition multiples Trading Profit £9.9m 5.5x 2012 EBITDA FX Impact £(0.5)m 4.3x 2012 EBITDA ex property* ROS 3.3% ROS target of 3.5% in medium term ROCE
Slide 8: Summary profit & loss account
Summary profit & loss account 2013 2012 Change £m £m % Sales 6,524.9 6,085.4 +7.2% Operating profit* 286.9 259.8 +10.4% Net financing costs (12.3) (13.0) +5.4% Profit before tax* 274.6 247.0 +11.2% Tax rate (%) 24.0% 24.6% (60) BPS Basic adjusted EPS (p)* 43.5p 39.1p +11.3% * Pre exceptional items 2
Slide 9: Regional analysis: trading profit
Regional analysis: trading profit 2012 2013 Russia and Russia and Emerging Markets Emerging Markets 15% Australasia 18% Australasia 24% 26% £280.1m £305.8m UK UK 23% 21% North Asia 19% North Asia 19% Europe Europe South Asia 6% South Asia 6% 13% 10% Note: Pre exceptional items All numbers at actual
Slide 10: Group: trading profit
Group: trading profit 310.0 12.2 11.7 290.0 Property 6.4 Profit £6.2m 305.8 2.7 £m Trivett £9.9m 270.0 (5.4) (1.9) 280.1 250.0 2012 South Asia UK Europe North Asia Australasia Russia & 2013 Emerging Markets Note: Pre exceptional items All numbers at actual exchange rates 10
Slide 11: Net finance costs
Net finance costs 2013 2012 £m £m Bank and loan interest 2.0 2.9 Stock holding interest (19.9) (18.0) Interest on private placement notes (2.8) (4.4) Pension interest net 5.4 0.9 Other including capitalised interest adj. 0.7 0.8 Interest excluding mark to market (14.6) (17.8) FV on private placement
Slide 12: Impact of currency on operating profit
Impact of currency on operating profit* 2012 @ actual 2013 @ 2012 2013 @ actual £m Impact exchange rates actual rates exchange rates Australasia 67.2 83.9 78.9 (5.0) Europe 16.8 18.7 19.5 0.8 North Asia 52.8 58.3 59.2 0.9 South Asia 35.1 29.4 29.7 0.3 Russia and EM 43.0 55.9 55.2 (0.7) Total oversea
Slide 13: Cash flow
Cash flow Operating cash flow 2013 2012 Free cash flow 2013 2012 Net cash 2013 2012 £m £m £m £m £m £m Operating profit* 286.9 259.8 Operating cash flow 227.0 249.2 Free cash flow 71.0 93.8 Depreciation / amortisation 39.7 33.4 Net interest (17.8) (17.6) Share issue 9.6 10.1 Other non cash items (9.1
Slide 14: Guidance – Full Year 2014
Guidance – Full Year 2014 Tax rate 24% Interest cost (excl. mark to market) c £15m Capital expenditure £70m Net cash c £150m 14
Slide 15: Business Updates and Outlook
BUSINESS UPDATES AND OUTLOOK
Slide 16: Customer 1st Strategy Differentiation
Customer 1st Strategy Differentiation Continuous NPS improvement 120 115 110 Creating an incredible 105 customer experience for the 100 best car brands in the world 95 90 2010 2013 Rebased combined Sales and Aftersales NPS 16
Slide 17: Execution of our Top Priorities
Execution of our Top 5 Priorities Inchcape Bespoke Operating Processes MARKET INTELLIGENCE SUPPLY & MARKETING & INNOVATION & FORECASTING WORKING CAPITAL MANAGEMENT DEALER NETWORK WORLD CLASS RETAIL CUSTOMER SERVICE DEVELOPMENT STANDARDS PERFORMANCE GLOBAL IT MANAGEMENT CAPEX & INVESTMENT INFRASTRUCT
Slide 18: 2014 outlook
2014 outlook • Good visibility on markets and categories following robust 2013 exit trends and January / February 2014 traffic data • Favourable trend in the New vehicle segment with all Inchcape markets growing or remain broadly stable • Aftersales (Service and Parts), 50% of Group Gross Profit, wi
Slide 19: UK and Europe outlook
UK and Europe outlook UK Belgium Greece 2014 TIV est. 2,300k 533k 68k YoY Growth +2% Flat +10% Business initiatives Control on cost and cash Leverage demand for Consolidate market leadership will remain firmly in fuel efficiency with position in growing market place. Vehicle over- launch of mid-size
Slide 20: North Asia and South Asia outlook
North Asia and South Asia outlook Hong Kong Singapore 2014 TIV est. 50k 39k YoY Growth +4% +15% Business initiatives Leverage model launches from our Toyota, Benefit from new model launches Lexus, Ford, Jaguar and Land Rover (Toyota Altis and Camry, Lexus NX) brands and employ strong LCV marketing a
Slide 21: Australasia outlook
Australasia outlook Distribution Retail 2014 TIV est. 1,160k YoY Growth +2% Business initiatives Leverage strong pricing power based on Introduce Inchcape Advantage premium Subaru brand positioning and processes across all Trivett sites in exploit strong model line-up in SUV (XV, Sydney and Melbourn
Slide 22: Eastern Europe and Russia outlook
Eastern Europe and Russia outlook Eastern Europe Russia 2014 TIV est. 455k 2,700k YoY Growth +2% -3% Business initiatives Introduce dedicated F&I retail vehicle Control on cost and cash will remain specialists to take advantage of firmly in place. Vehicle over-supply demand for consumer finance expe
Slide 23: Chile & Peru and Ethiopia outlook
Chile & Peru and Ethiopia outlook Chile & Peru Ethiopia 2014 TIV est. 608k N/A YoY Growth +5% Positive Business initiatives In Chile, build on successful 2013 Leverage favourable economic opening of new flagship Santiago site conditions with three new model and leverage significant growth in the lau
Slide 24: Looking Ahead
LOOKING AHEAD
Slide 25: Premium growth delivering premium returns
Premium growth delivering premium returns Markets Strategy Strong Distribution footprint Differentiated customer in medium/small automotive service grows market share markets and selective Retail and strengthens the pricing positions in large markets power of our brand partners Operations Growth Ope
Slide 26: Broad-based growth across markets and categories
Broad-based growth across markets and categories GDP TIV CarParc 1-5yrs 5.4% • 21 Markets 4.7% 5.0% APAC / • 56% of Revenue 3.6% Emerging 3.3% markets • 73% of Trading Profit • 6.1% Trading Margin 0.7% CAGR: 2010-13 2013-18 GDP TIV CarParc 1-5yrs 2.0% • 5 Markets 1.5% 1.4% 1.5% UK / Europe • 44% of
Slide 27: The operating leverage opportunity
The operating leverage opportunity • Structural New vehicle growth in high margin APAC / EM markets Group Operating Margin • Gradual New vehicle recovery in 4.7 Europe 4.5 4.3 4.4 4.2 • High margin Aftersales growth across 4.3 4.1 % all markets 3.9 3.8 3.7 • Cost discipline to be maintained, LFL 3.5
Slide 28: Sustained earnings growth and capital allocation discipline
Sustained earnings growth and capital allocation discipline delivering shareholder value Strong cash flow: Support growth with WC investment Disciplined capital allocation: • Sustained revenue and earnings growth Capex investment to • Supports organic drive growth and pricing power growth • Operatio
Slide 29: Appendix
® Inchcape
Slide 30: Definitions
Definitions Like-for-like The following are excluded from like-for-like sales: 1. Businesses that are acquired, from the date of acquisition until the 13th month of ownership 2. Businesses that are sold or closed 3. Retail centres that are relocated from the date of opening until the 13th month of t
Slide 31: Strong 2014 model line-up
Strong 2014 model line-up Land Rover / VW / Audi / BMW / MINI Toyota / Lexus Jaguar Mercedes Benz Subaru Porsche MINI HB F Type Coupe C Class WRX STi Lexus ES Macan H1 X5 Range Rover LWB GLA Altis A2 2 Series XF Noah TT X3 Evoque S Coupe Aygo A8 H2 X4 Discovery Lexus NX Cayenne X6 Camry Inchcape’s b
Slide 32: Capex investment
Capex investment • Capacity expansion • Chile £14m • Russia • Ethiopia • Greenfield expansion £6m • Audi Oldham • IT upgrades £26m • Maintenance capex £24m • Total £70m 32
Slide 33: Segmental performance
Segmental performance 2013 2012 Change £m £m % Sales Distribution 2,540.0 2,511.5 1.1 Retail 3,984.9 3,573.9 11.5 6,524.9 6,085.4 7.2 Operating profit* Distribution 219.4 194.0 13.1 Retail 86.4 86.1 0.3 Central costs (18.9) (20.3) 6.9 286.9 259.8 10.4 Operating margin* Distribution 8.6% 7.7% 90 BPS
Slide 34: Distribution: trading profit
Distribution: trading profit 2013 trading margins 2013 219.4 Russia & Distribution* 8.4% +70 BPS Property Profit 17.1 Emerging £6.2m Markets Russia and Emerging Markets* 10.6% +160 BPS North Asia 6.4 UK 20.8% +150 BPS Australasia 3.7 Australasia 8.2% +130 BPS Europe 2.2 North Asia 10.5% +30 BPS 1.4
Slide 35: Retail: trading profit
Retail: trading profit 2013 trading margins 2013 86.4 Retail 2.2% -20 BPS Australasia 8.0 Europe - +40 BPS UK 2.5% -30 BPS Europe 0.5 Australasia 3.5% -30 BPS UK (3.3) Russia and Emerging Markets 0.8% -60 BPS Russia & Emerging (4.9) Markets 2012 86.1 70.0 80.0 90.0 £m Note: Pre exceptional items All
Slide 36: Exceptional items
Exceptional items £m 2013 2012 Restructuring costs (4.6) (17.3) Acquisition of business (3.9) - Closure of defined benefit pension schemes - 19.2 Loss on deemed disposal of JV - (1.2) Total operating exceptionals before tax (8.5) 0.7 2012 restated for IAS19 (revised) 36
Slide 37: Group productivity metrics
Group productivity metrics # Sites* Overheads (£m)** 300 700 290 280 655 612 640 650 615 280 269 270 259 260 600 260 550 250 240 500 2010 2011 2012 2013 2010 2011 2012 2013 Overheads as % of sales** Profit per employee (£k)*** 11.5% 25 11.1% 21.4 19.1 20.0 11.0% 20 17.8 10.5% 10.5% 15 10.1% 10.0% 9.
Slide 38: Broad geographic spread - truly international
Broad geographic spread - truly international United Kingdom R Australasia South Asia North Asia Europe 34.1% of '13 Group Revenue 20.9% of '13 Group Revenue 5.7% of '13 Group Revenue 8.7% of '13 Group Revenue 9.6% of '13 Group Revenue 20.7% of '13 Group Trading 25.8% of '13 Group Trading 9.7% of '1
Slide 39: 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