Inc hcape plc Ann ual Report & Accounts 2015 Annual Report and Accounts 2015

164 Pages·2016·6.44 MB·English

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Inchcape plc is the global industry leader in the
premium automotive Distribution and Retail sectors.
We are present in 26 national markets and operate
as a key strategic partner to the world’s foremost
premium and luxury car brands for whom we
provide an effective, well-financed and customer-
centric route to market for vehicles and parts.
Strategic report DISCOVER WHAT MAKES
2 Performance Highlights INCHCAPE DIFFERENT
4 Business Model
8 Our Value Chain
Read about our business model
10 Product Planning and logistics
12 Brand Management 4 — 7
14 New and Used Car Retailing
16 Aftersales Servicing and Parts
18 Chairman’s Statement
20 Chief Executive’s Statement
A PROFESSIONAL
27 Key Performance Indicators
28 Operating Review ROUTE TO MARKET
38 Principal Risks
44 Corporate Responsibility Report
Read more about our value chain
Governance
8 — 17
48 Board of Directors
52 Corporate Governance Report
57 Committee Reports
63 Directors’ Report on Remuneration A VISION AND STRATEGY
78 Directors’ Report
FOR THE FUTURE
Financial statements
82 Consolidated income statement
Our CEO Stefan Bomhard sets out his strategic
83 Consolidated statement of comprehensive income
agenda for Inchcape to deliver superior returns
84 Consolidated statement of financial position
85 Consolidated statement of changes in equity for our stakeholders.
86 Consolidated statement of cash flows
87 Accounting policies Read more about our new strategic agenda
94 Notes to the financial statements
20 — 26
139 Five year record
140 Report of the auditors – Group
145 Company statement of financial position
146 Company statement of changes in equity
147 Accounting policies
149 Notes to the financial statements
158 Report of the auditors – Company
Other information
160 Shareholder information
Visit our website inchcape.com
Inchcape’s track record of performance continued in 2015. S
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Our robust profit growth was driven by our strong positions A
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in a global portfolio of markets, trading across a diversified IC
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set of five revenue streams as a Distributor and Retailer for E
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our leading OEM partners. RT
Building on this strong foundation and leveraging the opportunities
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we have identified from the changes underway in our industry, we O
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have developed a new strategy for continued growth. R
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Our new strategy is underpinned by a new vision:
to become the world’s most trusted automotive
Distributor and Retailer.
Trust underpins the virtuous circle that helps us to grow our
business: building and maintaining the trust of our OEM
partners creates new opportunities to gain the trust of our
customers; gaining the trust of customers drives results that
build and maintain the trust of our OEM partners.
This is why we seek to embed trust as our highest priority
at every stage of our value chain, from product planning
to brand management, from car retailing to Aftersales.
inchcape.com 1
ANOTHER YEAR OF ROBUST
TRADING PERFORMANCE…
2015 HIGHLIGHTS
Building on our long-term record of success
Sales Underlying operating margin* Adjusted earnings per share
6.8 4.7 52.1
£ bn % p
2014: £6.7bn 2014: 4.5% 2014: 50.2p
£5.9bn £5.8bn £6.1bn £6.5bn £6.7bn £6.8bn 4 50.2p 52.1p
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3.8% 4.2% 4.3% 4.3% 4.5% .7% 32.0 35.5p 39.1p .5p
p
10 11 12 13 14 15 10 11 12 13 14 15 10 11 12 13 14 15
* Excluding property profits of
£6.2m in Chile in 2013 and
£17.3m in Singapore in 2014
Operational successes
• Robust revenue growth of 7.8% and
operating profit growth of 10.3%,
underlying at constant currency
• Strength from our diversified portfolio,
including a strong performance by
our Emerging Markets segment
• Growth in our high margin
Aftersales operations
• Record New vehicle volume
for Subaru in Australia
• Underlying operating margin
expansion of 20 bps to 4.7%
2 Inchcape Annual Report and Accounts 2015
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Another year of strong cash generation
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Dividend per share Cash returned to shareholders Return On Capital Employed N
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20.9 182.5m 30 L
p £ % S
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2014: 20.1p 2014: £181.5m 2014: 26% EM
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17.4 0.1p .9p £125 21% 22% 22% 22%
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10 11 12 13 14 15 10 11 12 13 14 15 10 11 12 13 14 15
Strategic highlights
• Building on the Group’s strong
fundamentals to stay ahead
of our competitors
• Adapting to changes in the global
automotive industry:
• Leading in customer experience
• Delivering the full potential from
all our revenue streams
• Leveraging our strategic assets:
• Becoming vehicle manufacturers’
partner of choice
• Leveraging our global scale and
investing to accelerate growth
inchcape.com 3
… DRIVEN BY THE UNIQUE GLOBAL
PROPOSITION THAT DIFFERENTIATES US
OUR BUSINESS MODEL
Our business model brings together our core
strengths that enable us to leverage our unique
proposition in attractive, growing markets
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STRONG GLOBAL
POSITION
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A UNIQUE BUSINESS
DIVERSIFIED LEADING OEM
MODEL
REVENUE BRAND
STREAMS PARTNERSHIPS
3
DISTINCT ROUTES
TO MARKET
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STRONG GLOBAL POSITION E
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We have strong positions in 26 countries around the world. Our global portfolio is a fundamental strength E
of the Group, with a healthy balance between developed economies and emerging markets.
We have a leading presence with our high-margin, capital-light distribution model in small, medium and emerging
markets where we have secured strong positions with our marketing expertise, customer-centric approach and
technical capabilities. This is complemented by our scale retail presence in medium and large markets with our F
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strong portfolio of premium brands. A
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Strong in Asia Pacific, Selective in Emerging Markets, IA
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Scale in Developed Markets S
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Operations – Group Trading Profit %
A. UK .......................................................................................18% D. South Asia ........................................................15% 20. Macedonia
1. United Kingdom 10. Brunei 21. Peru
A.
F. B. Europe .......................................................................... 5% 11. Singapore 22. Poland
B. 32.. BFienllgainudm 1E.2 . BEmulgeargriiang Markets..........................14% 2234.. RRousmsiaania
4. Greece 13. Chile F. Australasia .................................................... 25%
5. Luxembourg 14. China 25. Australia
E. C. C. North Asia ....................................................... 23% 15. Djibouti 26. New Zealand
6. Guam 16. Estonia
DD.. 7. Hong Kong 17. Ethiopia
8. Macau 18. Latvia
9. Saipan 19. Lithuania
inchcape.com 5
OUR BUSINESS MODEL CONTINUED
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LEADING OEM BRAND PARTNERSHIPS
We have strong and long-standing relationships with the world’s leading OEM (Original Equipment
Manufacturer) groups. These OEMs are the world’s main drivers of automotive innovation, new fuel
technologies, powertrain developments, safety breakthroughs and cutting edge engineering.
Our partnerships provide us with an attractive line-up of models across the world. And by consistently
focusing on the core needs of our OEM partners, we seek to build and deliver ever-deeper relationships,
outstanding brand representation and strength in market share.
Long-standing relationships with the world’s
leading OEM groups
OEM partners: at the forefront
of industry innovations
The OEM partners for whom Inchcape
delivers a best in class route to market
are industry pioneers, delivering next
generation technological and
entertainment innovations and
constantly adapting to meet the
changing preferences and needs
of the modern day consumer.
6 Inchcape Annual Report and Accounts 2015
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DISTINCT ROUTES TO MARKET E
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Market size, potential and dynamics determine the specific operating model we employ from country to country. E
Trading profit split
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In small and medium sized markets, as exclusive Distributor, A
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we manage the entire value chain post the factory gate ail C
for our OEM partners. We are the OEM’s brand custodian et IA
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in these countries, responsible for everything from importing 22% STA
vehicles and parts to all sales and marketing activities, T
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including the appointment and management of the third M
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party retail network. D NT
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In larger, more developed markets, such as the UK, birt
we operate our Retail model, with a focus on delivering u
a superior customer experience online and in our retail oit
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and service centres.
Details in Operating Review on page 28
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DIVERSIFIED REVENUE STREAMS
Five distinct value drivers support Inchcape’s revenue and profit performance throughout the economic cycle.
We leverage opportunities from the New car market Gross profit mix
by selling New vehicles, Finance and Insurance
products. And we simultaneously take advantage u ra nce
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vehicle sales, Aftersales Servicing and Parts. an d
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Maintaining this balance prepares us well to respond c rs
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inchcape.com 7
INSIGHT AND EXPERTISE ACROSS THE
AUTOMOTIVE VALUE CHAIN
OUR VALUE CHAIN
We operate across every link of the post-factory automotive
value chain for our OEM partners, providing a highly efficient,
customer-focused route to market that delivers shared
rewards at every stage.
PRODUCT PLANNING AND LOGISTICS BRAND MANAGEMENT
Our in-depth knowledge of local markets, Under our Distribution model, we take on
customer preferences and trends total responsibility for our OEM partners’
enables our OEM partners to benefit brands, marketing and sales operations in
from our insights and understanding our local markets – we handle every aspect
throughout the entire planning process. of the customer interface from appointing
and managing the dealer network to
advertising and social media management.
Page 10 Page 12
Product specification Appoint and manage the dealer network
We work closely with our OEM partners for several Where we operate as a Distributor, we select and
years before a new model is launched, providing appoint an independent dealer network that has
clarity throughout the planning process as our view the best fit with our partners’ brands; training and
of market pricing, local fit requirements and sales managing them to meet the demanding standards
volumes gains precision. of our customer-focused ethos. Further, we typically
own and operate 15-20% of the network ourselves.
Import and logistics
National marketing and price positioning
Our global oversight of distribution by land or sea,
allied with comprehensive local port or border-to- We are scrupulous in projecting our partners’ brand
showroom capabilities, removes all logistical values and personality in all local marketing and
burdens from our partners. communications support, refining messages where
necessary to maximise positive impact in specific
markets. Our approach to price positioning is based
on in-depth knowledge of market trends and
competitor pricing.
8 Inchcape Annual Report and Accounts 2015