Slide 1: 2014 Results
2014 Results 10 March 2015
Slide 2: André Lacroix, Group Chief Executive
ANDRÉ LACROIX GROUP CHIEF EXECUTIVE
Slide 3: Fifth consecutive year of double-digit EPS growth
FIFTH CONSECUTIVE YEAR OF DOUBLE-DIGIT EPS GROWTH 7.0 Revenue 6,703 Operating Profit* Operating Margin* 6,525 350.0 318.4 5.0 4.8 6.5 4.8 6,085 286.9 4.4 5,885 5,826 300.0 4.6 4.3 £bn £m 6.0 259.8 4.4 4.2 % 244.4 4.2 5.5 250.0 225.5 3.8 4.0 3.8 5.0 200.0 3.6 2010 2011 2012 2013 2014 2010 2011 2012 2
Slide 4: Acceleration of sales momentum
ACCELERATION OF SALES MOMENTUM FY14 Group sales +10% constant currency 12.0% 10.3% 10.8% 9.2% 10.0% 8.0% 7.0% 5.3% 6.0% 4.3% 4.0% 2.0% H1 12 H2 12 H1 13 H2 13 H1 14 H2 14 UK Europe North Asia +11.2% +5.1% +11.7% South Asia Australasia Emerging Mkts +26.9% +2.0% +12.8% Constant currency revenue growt
Slide 5: Strong 2014 underlying profit growth of +15.3%
STRONG 2014 UNDERLYING PROFIT GROWTH OF +15.3%* Underlying Operating Profit / Margin* 320.0 301.1 300.0 280.0 261.2 260.0 +15.3% 240.0 £m 220.0 2013 2014 OP Margin 4.3% 4.5% Group Analysis Regional Margin Analysis GM 14.2% stable YoY North Asia 11.1% +60 BPS • Value drivers mix effect • Strong prici
Slide 6: Continued discipline on cost and productivity
CONTINUED DISCIPLINE ON COST AND PRODUCTIVITY Overheads / Revenue* Profit per employee (£k)** 5 year CAGR +11.4% 26 11.7% 23.9 24 21.4 11.1% 22 20.0 20 19.1 10.5% 17.8 18 10.1% 9.9% 16 % 9.7% 13.9 14 12 10 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 5 year overheads / revenue improve
Slide 7: 2014 step-up in cash generation
2014 STEP-UP IN CASH GENERATION Free cash flow Cash generated 300 291 450 from operations 406 400 250 337 350 193 193 274 200 300 245 249 £m £m 227 250 150 98 200 94 100 71 150 100 50 50 0 0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Working capital and Capex timing benefit 7
Slide 8: Sustainable dividend growth
SUSTAINABLE DIVIDEND GROWTH 3 year full year dividend CAGR +22.3% 25.0 20.1 20.0 17.4 14.5 15.0 11.0 10.0 p 5.0 0.0 2011 2012 2013 2014 £307m cash returned through dividends & the buyback in the past 24 months 8
Slide 9: John McConnell, Group Finance Director
JOHN McCONNELL GROUP FINANCE DIRECTOR
Slide 10: Summary profit & loss account
SUMMARY PROFIT & LOSS ACCOUNT 2014 2013 Change £m £m % Sales 6,702.7 6,524.9 +2.7% Operating profit* 318.4 286.9 +11.0% Net financing costs (13.3) (12.3) -8.1% Profit before tax* 303.2 274.6 +10.4% Tax rate (%)** 24.0% 24.0% - Basic adjusted EPS (p)* 50.2p 43.5p +15.4% * Pre exceptional items ** Eff
Slide 11: Regional analysis: trading profit
REGIONAL ANALYSIS: TRADING PROFIT* 2014 2013 Emerging Markets Emerging 13% Markets Australasia 17% Australasia 27% 26% UK 20% £327.3m £299.6m UK 21% Europe North Asia 6% North Asia 20% 21% Europe South Asia 6% South Asia 13% 10% Note: Pre exceptional items All numbers at actual exchange rates * Excl
Slide 12: Group: trading profit
GROUP: TRADING PROFIT Reported Growth +12.7% (+21.0% at constant currency) Underlying Growth +9.3% (+16.9% at constant currency) 17.3 350.0 330.0 11.7 10.4 7.7 310.0 1.3 1.9 344.6 (6.2) £m 290.0 327.3 (5.3) 305.8 299.6 270.0 250.0 2013 Property 2013 Emerging Europe UK North Australasia South 2014 Pr
Slide 13: Net finance costs
NET FINANCE COSTS 2014 2013 £m £m Bank and loan interest 1.1 2.0 Stock holding interest (18.6) (19.9) Interest on private placement notes (2.9) (2.8) Pension interest net 5.1 5.4 Other including capitalised interest adj. 0.5 0.7 Interest excluding mark to market (14.8) (14.6) FV on private placement
Slide 14: Impact of currency on operating profit
IMPACT OF CURRENCY ON OPERATING PROFIT* 2013 @ actual 2014 @ 2013 2014 @ actual £m Impact exchange rates actual rates exchange rates Australasia 78.9 99.9 89.3 (10.6) Europe 19.5 21.9 20.8 (1.1) North Asia 59.2 70.5 66.9 (3.6) South Asia 29.7 62.6 58.7 (3.9) Emerging Markets 55.2 48.4 43.7 (4.7) Tot
Slide 15: Cash flow
CASH FLOW Operating cash flow 2014 2013 Free cash flow 2014 2013 Net cash 2014 2013 £m £m £m £m £m £m Operating profit* 318.4 286.9 Operating cash flow 405.8 227.0 Free cash flow 290.7 71.0 Depreciation / amortisation 44.4 39.7 Net interest (17.8) (17.8) Share issue 1.0 9.6 Other non cash items (12.
Slide 16: Guidance – Full year 2015
GUIDANCE – FULL YEAR 2015 Tax rate 24% Interest cost (excl. mark to market) c £14m Capital expenditure £85m Net cash c £210m 16
Slide 17: Business update
BUSINESS UPDATE
Slide 18: Customer 1st strategy differentiation
CUSTOMER 1ST STRATEGY DIFFERENTIATION Creating an STRENGTHEN incredible EXPAND Superior customer customer Selective investment experience for value proposition the best car in high margin & through Inchcape brands in the high growth areas world Advantage Customer Service – NPS* 140 128 120 100 100 8
Slide 19: Leading premium and luxury brands with exciting new product developments
LEADING PREMIUM AND LUXURY BRANDS WITH EXCITING NEW PRODUCT DEVELOPMENTS Land Rover / VW / Audi / BMW / MINI Toyota / Lexus Jaguar Mercedes Benz Subaru Porsche X6 XE AMG GT Outback Alphard TT H1 3 Series (f/l) Discovery Sport CLA SB Liberty Prius C (f/l) Passat 6 Series XJ (f/l) S Class Cab Vellfire
Slide 20: Driving customer conversion with digital
DRIVING CUSTOMER CONVERSION WITH DIGITAL Group-wide digital standards driving customer traffic to retail centres, leads, conversion and enhancing customer satisfaction / retention Functionality update of Group’s 150 websites in 2014 Compare selected vehicle to 2-3 models from any brand Fully adaptiv
Slide 21: 2015 Outlook
2015 OUTLOOK • Good visibility across our markets and categories • New vehicle segment to grow in most markets, Inchcape’s premium and luxury brands to continue taking market share • Vehicle margin improvement expected in the UK and Russia • Aftersales – Service and Parts, to benefit from growth of
Slide 22: UK: 2M units potential from pent up demand
UK: 2M UNITS POTENTIAL FROM PENT UP DEMAND Industry Growth Drivers 2.6 Pent up demand 2.4 2.2 PCP financing 2.0 shortening the 1.8 replacement cycle 1.6 2007 2008 2009 2010 2011 2012 2013 2014 2015E Growth of the 1-5 UK New Car Sales (m) Difference to 2007 (m) year Car Parc Sources: SMMT and Inchcap
Slide 23: Europe: the start of a replacement cycle in Greece
EUROPE: THE START OF A REPLACEMENT CYCLE IN GREECE Industry Growth Drivers 350 300 Replacement cycle 250 growth in Greece, 200 150 driven by the aged 100 Car Parc (av. age 50 14yrs) 0 2007 2008 2009 2010 2011 2012 2013 2014 2015E Hybrid taking share Greece New Car Sales (k) Difference to 2007 (k) in
Slide 24: North Asia: 82k commercial vehicles to be phased out over 5 yrs
NORTH ASIA: 82K COMMERCIALVEHICLES TO BE PHASED OUT OVER 5 YRS 2014 Hong Kong New Vehicles Industry Growth Drivers 60 +10% YoY Multi-year diesel 40 commercial vehicle k 20 (DCV) replacement 0 2009 2010 2011 2012 2013 2014 scheme PC CV & Taxi New Territories: Old DCV Car Parc Population and road 40 E
Slide 25: South Asia: COE cycle driving growth
SOUTH ASIA: COE CYCLE DRIVING GROWTH Industry Growth Drivers Singapore: De-registrations De-registrations 5,500 growing significantly 5,000 4,500 as vehicles reach 10 4,000 3,500 years old 3,000 2,500 c190k vehicles aged 2,000 1,500 over 8 years at 31 Dec 2014 Sep-13 Sep-14 Aug-13 Aug-14 Jan-13 Jun-
Slide 26: Australasia: increasing SUV market penetration
AUSTRALASIA: INCREASING SUV MARKET PENETRATION SUV Penetration % Industry Growth Drivers 35.0% SUV Growth (Subaru) 30.0% Population growth 25.0% New South Wales – 20.0% strong macro 15.0% 2010 2011 2012 2013 2014 Premiumisation of demand 2014 Trivett ROS Trivett ROCE Japanese brand 3.9% 20.5% import
Slide 27: EM: mobility linked to wealth creation
EM: MOBILITY LINKED TO WEALTH CREATION Industry Growth Drivers 600 Passenger cars per 1000 Australia 500 UK Population growth Greece Belgium population 400 Balkans 300 Growth of middle Russia 200 Baltics class 100 Chile Peru 0 Africa Improving road 0 20 40 60 80 infrastructure GDP per capita (nomina
Slide 28: Russia: long term potential
RUSSIA: LONG TERM POTENTIAL Short Term Drivers Long Term Drivers Demand: • Growing vehicle • Rouble devaluation increasing local prices penetration and impacting demand • Aftersales resilience • Premiumisation of • Premium / Luxury brand resilience demand • Higher Used car demand • Increasing financ
Slide 29: Looking ahead
LOOKING AHEAi D
Slide 30: Positioned to perform in a growth industry
POSITIONED TO PERFORM IN A GROWTH INDUSTRY New Car Volume Car Parc 1-5 yrs • 21 Markets 4.3% APAC / • 54% of Revenue 3.5% 3.7% Emerging APAC / • 75% of Trading Profit markets Emerging 1.2% CAGR: markets • 6.7% Trading Margin 2010-14 2014-19 New Car Volume Car Parc 1-5 yrs • 5 Markets 3.3% UK / Europ
Slide 31: Strong in small markets with distribution
STRONG IN SMALL MARKETS WITH DISTRIBUTION DISTRIBUTION RETAIL ONLY TRADING PROFIT TRADING PROFIT APAC & 83% 17% EMERGING MARKETS 75% 74% 1% UK AND EUROPE 25% 9% 16% …AND SELECTIVE IN LARGE MARKETS WITH RETAIL 2014 Revenue and Trading Profit data 31
Slide 32: Sustainable earnings growth with high ROCE
SUSTAINABLE EARNINGS GROWTH WITH HIGH ROCE 55.0 +13.1% 5 Year EPS CAGR 45.0 35.0 p 25.0 15.0 2010 2011 2012 2013 2014 Consensus EPS 1 Jan Actual Basic Adjusted EPS Ahead of peak performance* Below peak performance* UK Group EM Australasia South Asia £m £m North Asia Europe 0.0 10.0 20.0 30.0 -40.0 -
Slide 33: Efficient capital structure
EFFICIENT CAPITAL STRUCTURE Strong cash flow: Efficient capital Disciplined capital allocation allocation • Invest in organic growth • Sustained revenue and • Dividend 40% earnings growth Support growth with WC and payout ratio • Operational Capex investment • Seize attractive discipline on cash M&A
Slide 34: Inchcape: an exhilarating drive
INCHCAPE: AN EXHILARATING DRIVE HIGH QUALITY DISTRIBUTION & RETAIL BUSINESSES OPERATING IN A GROWTH INDUSTRY BENEFITING FROM UNIQUE LOCAL DRIVERS SALES, PROFIT & CASH MOMENTUM DISCIPLINED CAPITAL ALLOCATION 34
Slide 35: Appendix
APPENDIX
Slide 36: 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 37: Capex investment
CAPEX INVESTMENT • Capacity expansion • UK £30m • Australia • Singapore • Greenfield expansion • Ethiopia £5m • Australia • IT upgrades £28m • Maintenance capex £22m • Total £85m 37
Slide 38: Segmental performance
SEGMENTAL PERFORMANCE 2014 2013 Change £m £m % Sales Distribution 2,584.1 2,540.0 1.7 Retail 4,118.6 3,984.9 3.4 6,702.7 6,524.9 2.7 Operating profit* Distribution 260.8 219.4 18.9 Retail 83.8 86.4 (3.0) Central costs (26.2) (18.9) (38.6) 318.4 286.9 11.0 Operating margin* Distribution 10.1% 8.6% 15
Slide 39: Distribution: trading profit
DISTRIBUTION: TRADING PROFIT 2014 2014 trading margins 260.8 Reported Property 11.1 Distribution* 9.4% +100 BPS Profit Delta 2014 249.7 Australasia 11.3% +310 BPS Underlying South Asia 11.7 South Asia 9.4% +140 BPS Australasia 9.3 North Asia 11.1% +60 BPS North Asia 7.7 Europe 4.0% +10 BPS UK 1.8 UK
Slide 40: Retail: trading profit
RETAIL: TRADING PROFIT 2014 trading margins 2014 83.8 Retail 2.0% -20 BPS Australasia 1.1 Europe 0.2% +20 BPS Australasia 3.7% +20 BPS Europe 0.3 UK 2.3% -20 BPS Emerging Markets 0.4% -40 BPS UK 0.1 Emerging (4.1) Markets 2013 86.4 £m 75.0 80.0 85.0 90.0 Note: Pre exceptional items All numbers at ac
Slide 41: Exceptional items
EXCEPTIONAL ITEMS £m 2014 2013 Restructuring costs - (4.6) Acquisition of business - (3.9) Goodwill impairment (47.4) - Total operating cost exceptionals before tax (47.4) (8.5) 41
Slide 42: Group productivity metrics
GROUP PRODUCTIVITY METRICS 300 # Sites* Overheads (£m)** 290 280 266 700 280 270 259 260 615 635 650 612 640 260 250 240 600 230 220 550 210 200 500 2011 2012 2013 2014 2011 2012 2013 2014 Overheads as % of sales** Profit per employee (£k)*** 10.6% 10.5% 30 23.9 10.4% 25 21.4 10.1% 19.1 20.0 10.2% 2
Slide 43: Broad geographic spread - truly international
BROAD GEOGRAPHIC SPREAD - TRULY INTERNATIONAL United Kingdom R Australasia South Asia North Asia Europe 36.9% of '14 Group Revenue 18.6% of '14 Group Revenue 6.6% of '14 Group Revenue 9.0% of '14 Group Revenue 9.4% of '14 Group Revenue 18.9% of '14 Group Trading 25.9% of '14 Group Trading 17.0% of '
Slide 44: 2014 Results
2014 Results 10 March 2015