EXPANDING OUR CAPABILITIES
DERCO ACQUISITION
Extending Inchcape’s global leadership in automotive distribution
“ We are delighted to welcome the Derco team to
Inchcape. The combination with Derco is a transformative
and unique opportunity to accelerate our global
distribution business. In addition to delivering substantial
shareholder value, the acquisition will provide exciting
opportunities for our colleagues, OEM partners, dealers
and consumers, and is another great example of
Inchcape’s Accelerate strategy in action.”
DUNCAN TAIT
Group CEO
As outlined in our Accelerate st rategy (see pages 5 to 7), the global automotive market pres ents significant
opportunitie s for Inchcape to consolidate in the di stribution market. Despite bei ng the biggest independ ent
automotive distributo r, we had been tracking at around 1% of the 17 million vehicle volume add ressable
market. Accelerating acquis itions in this fragmented market is a key par t of our growth strategy.
The Group announced its pro posed acquisition of Derco in Ju ly 2022. Prior to Inchcape‘s acquisitio n, Derco,
afamily-founded and pr ivately owned company, was the largest indepe ndent automotive distributor i n Latin
America with revenue in 2022 of £2.2b n. Following shareholder an d market regulatory approval, the deal
completed on 31 December 2022, and the co re focus for 2023 is on integrating our operati ons in the Americas.
A STRATEGIC AND ACCRETIVE
ACQUI SITION
SIGNIFICANT SHAREHOLDER
VALUE CREATION
• I ncreases exposu re to higher
growth markets
• Leve rage combined scal e
tocapture more vehicle
lifetime value
• T he transaction is exp ected
to accelerate growth and
be margin accretive
• D erco is margin accretive
forthe Group
• Significant opportunity
forsynergies
• 15%+ EPS a ccretion in 2023;
20%+ accretive in 2024
• U p to £60m of one-o ca sh
costof delivering synergies
(overtwo years)
• Significantly increases
Inchcape’s distribution scale
• Global automotive distribution
remains highly f ragmented
• R OIC expected to exceed
project cost of capital i n third
full year following co mpletion
• Leve rage broader network
• Leverage partnerships with
financers and GFV
1
product
knowledge
• Leve rage Inchcape’s Digital
andData capabili ties
GUATEMA LA
COSTA RICA
PANAMA
COLOMBIA
ECUADOR
PERU
BOLIVIA
URUGUAY
BARBADOS
EL SALVADOR
CHILE
ARGENTINA
OUR LOCATIONS
Inchcape
Argentina
Barbados
Chile (headquarters)
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Panama
Peru
Uruguay
Derco
Bolivia
Chile (headquarters)
Colombia
Peru
Derco brands
• Changan
• Chev rolet
• Cit roen
• DS Automo biles
• Great Wal l
• Hava l
• Jac Motor s
• Joylong
• Mazda
• Renau lt
• Suzuki
The acquisition of De rco
extends our global lea dership
in auto distributio n and makes
Inchcape the largest
independent distributor in
Latin America. It also al most
doubles Inchcape’s share
ofthe 17 million addressabl e
market to around 2%.
EXISTING PORTFOLIO:
KEY FACTS
Financial
profile
Strong
topline growth
prospects
Margin
upside
Distribution
consolidation
Value
creation
Earnings
impact
£2.2bn
revenue (2022)
~4,500
colleagues
4
markets
1
11
OEM brands
150k
new vehicles
distributed
329
locations
~30% operated by Derco
1. Bolivi a, Chile, Colom bia and Peru
1. GFV = guaran teed future valu e (also commonly ref erred to as “PCP”)
New
opportunities
FIND OUT MORE
Scan to view the 2022
Interim Results we bcast
and presentatio n
24 INCH CAPE ANNUAL REPORT AND ACCO UNTS 2022 INCHCAPE ANNUAL REPO RT AND ACCOUNTS 2022 25
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
ATTRACTIVE
SHAREHOLDER RETURNS
CONSOLIDATION
OPPORTUNITIES
MARGIN
EXPANSION
STRONG
ORGANIC GROWTH
Dividend payout: 40 %
Track record of share
buybacks
Exposure to high- growth
markets
History of market
outperformance
Leverage our global scal e
to improve profitability
Actively pursuing h igher
margin activities
We are a leader with a
c.2% share of global
distribution
Market consolidation
expected to accelerate
MEDIUM TERM
FINANCIAL OUTLOOK
1
Distribution Excellence:
Mid-to-hig h single digit profit CAGR plus M& A
Vehicle Lifecycle Services:
>£50m incremental profit contribution
2
1. Based on co nstant exchang e rates as at Novembe r 2021 (>90% profits deri ved outside of th e UK).
2. Per annum, wit hin five years.
STRONG BALANCE SH EET NET DEBT TO EBITDA OF MA X 1x PRE IFRS16
£450m capex spe nd
(<1% of sales)
£560m of divide nds £1.9bn of distribution
acquisitions
£440m of share
buybacks
1
INVEST IN THE
BUSINESS
Capex for organic
growth and
technological
investment
2
DIVIDENDS
Policy: 40% annual
payout of basic
adjusted EPS (pre
adjusted)
3
VALUE
ACCRETIVE M&A
Disciplined
approach to
valuation
4
SHARE
BUYBACKS
Consider
appropriateness
ofshare buybacks
DIGITAL & DATA LEADER
36
markets now live with DXP (Dig ital
eXperience Platform)
Our digital and dataca pability is a
significantcom petitive advantage
• Created a le ading digital
and analytica l platform
• Glob al scale, and internal
capability a key die rentiator
• Our tec hnological progres s
is impressing OEM b rands
INVESTMENT PROPOSITION:
DELIVERING SUSTAINABLE GROWTH AND CASH RETURNS
INVESTMENT CASE
SUSTAINABLE GROWTH
AND RETURNS
We have set ambitious targets to grow our business , responsibly,
seeking to create significant value for all of our stakeholders.
WHY INVEST?
INCHCAPE IS THE GLOBAL LEADER, WITH AN AMBITION TO CONTINUOUSLY GROW
GLOBAL MARKET LEADER
>40
markets covering
six continents
The leading automot ive distributor
in a highly fragmented g lobal
market
• Presence across >40 markets;
covering six continent s
• We are the leader with c.2%
share of the global di stribution
market
• Market consolidation is
expected to accelerate
A RESPONSIBLE BU SINESS
50.3%
sites switched to
renewable energy supply
Growth ambition un derpinned
byour ESGstrategy: Respon sible
Business
• Resp onsible Busi ness is integral
to our Accelerate strategy
• Estab lished four priori ty areas:
Planet, People, Places , Practices
• Due co nsideration for all
stakeholders
In addition to our growth ambitions, the business is asset-l ight with a long history of
disciplined capital allocation and deliveri ng highly attractive returns to shareholders.
CAPITAL ALLOCATION POLICY:
HIGHLY ATTRACTIVE AND DISCIPLINED
ATTRACTIVE FINANCIALS
C.25%
ROCE
Deliver value throug h organic
growth, consolidation and
cashreturns
• Dis tribution markets ha ve higher
growth prospects tha n average
• Leveragi ng our global scale
to improve profitability
• Hig hly attractive returns (c.25%
ROCE) and capital al location
GROWING BRAND PRESE NCE
>50
OEM brands in our por tfolio
Expanding the reac h ofour
plug-and-play global distribution
platform
• Well inves ted operating model
a catalyst for furthe r expansion
• Exi sting portfoli o of >40 OEM
brands; continuin g to add
newpartners
• Cons tantly sharing exper tise
across the Group
NEW OPPORTUNITIES
75%
of a vehicle’s lifetim e value
in higher margin act ivities
Uniquely posit ioned tocapture
more of a vehicle’s lifetime value
• Hig her margin activiti es;
accounts for 75% of the profit-
pool of a vehicle’s life
• Curre ntly significantly
underserved by Inc hcape
• Clea r opportunity to leve rage
our existing footpri nt
Cumulative
2016 to 2022
8 INCHCAPE AN NUAL REPORT AND ACCOUNT S 2022 INCHCAPE ANNUAL REPORT AN D ACCOUNTS 2022 9
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
KEY
READING
Another important task for 2023 will
beto further bring our VLS initiatives
tolife. This will include operational
improvements and growth in
bravoauto, for example, and focusing
on the continued development and
launch of our digital parts platform.
We continue to focus on the medium-
term outlook outlined at our capital
markets day:
• Distribution Excellence:
mid-to-high single digit profit
CAGR plus M&A
• Vehicle Lifecycle Services:
>£50m of incremental profit
Inchcape is a business with great
momentum and an exciting future.
With a clear strategy, we are well-
positioned to capitalise on further
opportunities for organic growth
andmarket consolidation, and I am
confident we will continue to deliver
sustainable long-term value for all
ourstakeholders.
Directors’ approval of the
Strategic Report
The 2022 Strategic Report, from
pages 2 to 67, were reviewed and
approved by the Board of Directors
on 22 March 2023
DUNCAN TAIT
GROUP CEO
Investment case
P8
Derco acquisition
P24
OPERATING AND FINANCIA L REVIEW
ADRIAN LEWIS
ACTING CHIEF FINAN CIAL OFFICER
I am pleased to present the Operating and
Financial Review for 2022, a year in which the
Group has continued to make substantial
strategic, operational and financial progress.
2022 was a transformational year for the Group
as we made great strides with our strategy,
further shiing our portfol io towards distribution
and developing our vehicle lifecycle services
oering.
Fantastic operational execution from all our
teams drove growth in revenue and profit,
andanother year of excellent cash flow.
GREAT
STRATEGIC,
FINANCIAL AND
OPERATIONAL
PROGRESS
The combination of t he Group’s
distribution expertise, digital and data
capabilities , and strong financia l
position makes us th e consolidator
ofchoice in the highl y fragmented
automotive distribution industry. In
2022 we continued to expan d our
distributio n business throug h bolt-on
acquisition s in the Americas, fur ther
contract wins and the excit ing
acquisition of De rco, an important
milestone in the execut ion of our
Accelerate strategy. The pipel ine
forfuture M&A remain s healthy.
In addition to a strong revenu e and
profit outturn, the Gro up’s resolute
focus on cash resulted i n a record
level of free cash flow of £380 m,
versus the previous reco rd of £314m
in2017. As we look ahead, the
acquisition of De rco will provide
opportuniti es for us to deploy our
ownpractices and proces ses to
driveworking capita l eciencies
andadditiona l cash-flow generatio n.
Following the compl etion of the
acquisition of De rco in December
2022, the Group’s net debt positi on
was £378m. Given the pipeli ne of
M&A opportuni ties and our current
leverage position, we ha ve paused
share buybacks, bu t will continue
toreview the appropriaten ess in line
withour capital all ocation policy. The
Group’s proposed dividen d in relation
to 2022 is 28.8p, up from 22.5p in 20 21.
The Group launched Acce lerate in
2021, and we have made fantastic
progress agains t our ambitions to
extend our leaders hip in automotive
distributio n, and to capture more of
avehicle’s lifetime value. Whi le we
are excited about our progres s so far,
we will maintain our cap ital allocation
discipline, an d remain focused on
delivering benefi ts to all stakeholders.
ADRIAN LEWIS
ACTING CHIEF FINA NCIAL OFFICER
The Group delivered a great s et
ofresults in 2022, wit h all regions
contributing positively and driving
growth across our key finan cial
andnon-financial metrics.
During the year, consu mer
demandremained rob ust against
thebackdrop of vehicle s upply
constraints, whi ch supported our
performance dur ing the year. We
sawa gradual improveme nt in supply
through the year, which he lped an
acceleration of our revenu e growth.
During the period of s upply-demand
imbalance, we experi enced elevated
levels of vehicle profitabi lity (new and
used), although this normalised during
the second half of theyear.
Underpinnin g this is the qualit y of
ourpeople and the st rength of our
business mode l. This enabled the
Group to accelerate perfo rmance
together with increas ed geographic
diversificatio n, which will continu e
todrive resilience am id economic
uncertainties.
KEY PERFORMANCE INDICATORS
Our results are stated at act ual exchange rates. However, to enhan ce
comparabilit y we also present year-on- year changes in sales a nd adjusted
operating profit in cons tant currency, thereby isolati ng the impact of
translationa l exchange rate eects. Unles s otherwise stated, ch anges are
expressed in consta nt currency and figures are stated b efore adjusting items .
2022 2021
1
% change
reported
% change
constant
FX
2
% change
organic
3
Key financials (continuing operations)
Revenue £ 8,133m £6,9 01m +18% +16% +15%
Adjusted Operati ng Profit
1
£411m £281m +46% +41%
Adjusted Operati ng Margin
1
5.1% 4.1 % +100 bp s +9 0bps
Adjusted Profit Before Tax
1
£373m £249m +50%
Adjusted Basic EP S
1
72.0p 46.3p +56%
Dividend Per Sha re 28.8p 22.5p +28%
Free Cash Flow
1
£380m £ 274m +39%
Statutory financials
Operating Profit (continuing operations) £400m £181m
Profit Before Tax (continuing op erations) £333m £149m
Total (loss)/profit for the year £(6) m £122m
Basic EPS (continui ng operations) 61.1p 20.3p
1. Restated to adjust for the dis posal of the rema ining busi ness in Russ ia which has bee n reported as
adiscontinued o peration, se e page 142
2. These measu res are Alternat ive Performan ce Measures, s ee pages 206 to 207
3. Organic growth i s defined as revenue g rowth in operat ions that have be en open for at leas t a year
atconstant foreig n exchange rates
HIGHLIGHTS
Revenue
£ 8.1bn
2021: £6.9bn
Adjusted operat ing margin
2
£5.1%
2021: 4.1%
Profit before tax and adju sting items
1
£373 m
2021: £249m
Free cash flow
2
£380m
2021: £274m
Return on capital em ployed
1
41%
2021: 28%
Dividend per share
28.8p
2021: 22.5p
28 INCH CAPE ANNUAL REPORT AN D ACCOUNTS 2022 INCHCAPE ANNUAL REPO RT AND ACCOUNTS 2022 29
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Operating
and financial
review
P28
PLANETPRACT ICESPEOPLE PLACE S
RESPONSIBLE BUSINESS
DRIVING WHAT MATTERS
Developing our appro ach to responsible bu siness is central
to our future plans at Inc hcape. We know it will provide
measurable ben efits to Inchcape, bringi ng us closer to
our customers and pa rtners: it will make In chcape a more
rewarding and safer plac e to work; it will help us recruit,
engage and retain the bes t talent; and it will ensu re we
remain a trusted par tner to the OEMs with whom we work.
These elements are fu ndamental to the succes sful delivery
of our Accelerate strategy and to ensurin g Inchcape’s
sustainabil ity for the long-term.
We are united with the interest s of all our stakeholders i n
the need to play our role in mak ing a positive contrib ution
to the communities in w hich we operate, for our people,
for society and for the pl anet. For Inchcape though , being
a responsible bu siness extends into oth er key areas of our
operations where we can ma ke a positive dierence to
our stakeholders: by im proving inclusio n and diversity in
our organisatio n, as well as full acces sibility for our
customers; by ensur ing the safety and supp orting the
health and wellbei ng of our employees; and in su pporting
mobility and eco nomic development in the co mmunities
in which we operate.
To deliver this requires u s to have a plan that is suppor ted
with a robust framework. Ou r ‘Driving What Matte rs’ plan
has been designe d collaboratively wit h our markets, for
ownership and del ivery by our teams, local ly. The plan
concentrates on our 4Ps (or pill ars) of Responsible Bu siness
– Planet, People, Places , and Practices.
Mindful of the need to reflect t he dierent laws, regula tions,
and cultures where we ope rate, we have designed a
global framework wit h workstream charters t hat local
markets use to respond to wha t is important to meet
the needs of their loca l stakeholders.
Being a responsible business is reflective of our purpose and a fundamental
part of our strategy, mapping the way Inchcape creates sustainable value
forall our stakeholders.
• M apping the risk s and
opportunit ies of climate
change
• S etting GHG targets
• Re ducing waste
• I nclusion and Di versity
• Safety and Wellbeing
• Tal ent and Skills
• Strengthening our
governance policies
• Re flecting our posit ion
asaninternation al plc
• S afe mobility
• Incl usive mobility
• Socia l mobility
People pillar: R U OK Da y, September 2022
Inchcape Austra lia
Places pillar: Movilizando Corazones prosthetics donation programme,
Inchcape Colom bia
We have a partnership with Suzuk i now
extending to 46 years, signi ficantly expanding
this relationship i n 2018, and adding to our
established Sout h America platform with
ourfirst move into Central America and then
the Caribbean. In 2022 we completed t he
acquisition of Derco, addin g Suzuki to our
operations in Chile, Colombi a and Peru,
andadding Boliva to the portfo lio.
Locations
Distribution:
Argentina, Barbados
+
, Bolivia,
Chile, Colombia, Co sta Rica,
Panama, Peru, Singa pore
SUZUKI
INCHCAPE ANNUAL REPO RT AND ACCOUNTS 2022 37
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
36 INC HCAPE ANNUAL REPORT AN D ACCOUNTS 2022
Responsible
Business
P37
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 15
STRATEGIC REPORT