Like businesses the world over, we
faced some uncertainty at the start
of the year because of the continued
challenges brought by the pandemic.
I am delighted to report, however,
that we recovered well, adapted to
new ways of working, and achieved
a performance during 2021 that
has exceeded expectations. It’s
testament to the resilience of our
business, and the determination
and ingenuity of our people, that
we performed ahead of the market
and we emerged with great optimism
for the future.
PERFORMANCE
The momentum we built coming out
of the most severe restrictions of 2020
propelled the business to an excellent
performance overall, thanks to the
hard work of our thousands of
colleagues around the world. Having
joined the Group during the first year
of the pandemic, seeing the resolve
and resilience of our people left me
in no doubt that we would quickly
thrive again, and I am delighted to
say this confidence was borne out
in our results.
Revenues were £7.6bn, an increase
of 12% on 2020 as we began our
recovery to pre-pandemic levels.
We delivered profit (before tax and
exceptional items) of £296m, a 131%
rise on the prior year and driven by
both strong execution and higher
vehicle gross margins. We were also
highly cash generative in the year,
booking free cash flow of £289m
which has resulted in the further
strengthening of our financial position.
We talked in our updates during the
year about the global shortage of
semiconductors which has affected
manufacturers’ post-pandemic
recovery. Although demand is high,
there’s a significant impact on the
supply of new vehicles and we are
expecting constraints to continue
well into 2022.
Despite the external challenges we
have seen in 2021, our teams
continued to deliver against
expectations every day. They also
continued to innovate at speed, to
build our capabilities in digital, and to
grow the business through acquisition
and contract wins.
Additionally in 2021, we launched
our new strategy and our Responsible
Business plan, which you can read
more about below. In all, we can look
back on 2021 as a year of significant
recovery and progress that I am
confident will prove to be a
springboard to accelerated
performance and growth in the
years to come.
STRATEGIC DEVELOPMENT
In last year’s Report, I described how
we were embarking on a new phase
of the Group’s journey. With strong
foundations in place following a
period of growth and forward
momentum, our new strategy is all
about preparing the Group for the
future and has Distribution Excellence
and Vehicle Lifecycle Services (VLS)
at its heart.
We have called our new strategy
‘Accelerate’, and it will build on our
strong foundations through cutting-
edge digital technology and smart
use of data as described on page 13.
Over the past year, we’ve made
progress in rolling out Accelerate
across the Group. In particular, we’ve
advanced our digital capabilities in
a number of important areas.
Our omni-channel platform, (known
internally as DXP for Digital eXperience
Platform) offers customers a seamless,
continuous customer experience,
however they choose to interact with
us. At the start of the year, the
platform was available in just one
country. During 2021 we’ve extended
its availability to 27 markets, with 11
OEMs now live on the platform. The
initial signs are very exciting with the
platform driving significantly better
sales conversion rates.
DXP is part of a wider platform that
we’ve been further developing during
the past year. It spans a host of digital
capabilities that I believe can position
Inchcape as the undisputed number
one distribution partner of choice for
OEMs. DAP (our Digital Analytics
Platform) is another component of this
wider platform. It provides advanced
analytics and machine learning,
leveraging our data and driving
smarter, faster and better business
decisions which results in improved
performance across lead
management, customer retention
and pricing.
During 2021, we established two
digital delivery centres (DDCs) as we
embarked on our technological
transformation. There are already over
500 ‘Inchcapers’ working in the DDCs,
providing 24/7 services and solutions
which has significantly increased
our internal digital delivery capability.
In the year we also established our
Global Business Services in
partnership with Cognizant to
manage the majority of our
transactional finance operations and
enable smarter business partnering
within the finance function.
Collectively, these services are
helping the Group to be more
responsive and efficient, providing an
ecosystem of connected technology
– a ‘plug and play’ platform for our
OEM partners that facilitates their
preferred route to market. I firmly
believe this platform can help us
build a highly effective automotive
distribution capability and service
for automotive partners.
While Distribution Excellence is one
cornerstone of our Accelerate
strategy, the other is centred around
VLS which has untapped potential
for us across all our markets. This will
be all about placing more emphasis
on capturing the lifetime value of
both customers and vehicles.
Specifically, we have developed
an approach to maximising the
opportunity presented by the second
and third stages of a vehicle’s
lifecycle – in other words, its life
beyond the original sale as a new
vehicle. We’ll do this by providing an
aggregator service in markets where
the service doesn’t already exist;
something that fits with our well-
established approach of building
distribution businesses in small to
medium-sized markets. Our omni-
channel used vehicle platform,
bravoauto is now ready to scale and
is rolling out globally. This represents
an exciting new opportunity for us, as
does our digital parts platform which
is at an earlier stage of development
but will also accelerate during 2022.
BUSINESS DEVELOPMENT
In line with our focus on markets with
high growth potential, we continued
to further expand our distribution
footprint, agreeing deals that will
add annualised revenue of £200m.
In addition to leveraging our existing
geographic and brand footprint,
these deals will give us access to
new markets and brand partners.
In December 2021 we announced an
acquisition of a distribution business
in the Caribbean, a new territory for
the Group, where we will distribute
vehicles for Suzuki, Mercedes-Benz,
Subaru and Chrysler – a new OEM
brand partner in our portfolio.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2021 9
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT