Inchcape plc
22a St James’s Square
London SW1Y 5LP
T +44 (0) 20 7546 0022
www.inchcape.com
Registered Number 609782
P
O
W
E
R
I
N
G
B
E
T
T
E
R
M
O
B
I
L
I
T
Y
/
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
3
VEHICLE DETAILS
27,000
SPECIFICATION
INTERIOR
EXTERIOR
SAFETY
TECHNOLOGY
Annual Report
2023
15
Group Chief Executive’s Review
26
Operating and Financial Review
33
Responsible Business
HIGHLIGHTS
Financial KPIs
Revenue
£11.4bn
2022: £8.1bn
Non-financial KPIs
BEVs sold
2.4%
2022: 2.5%
Adjusted operating
margin1
Reduction in scope 1 and 2
greenhouse gas emissions4
31%
Reputation.com
score
702
2022: 671
Women in Senior
Leadership positions³
28%
2022: 22%
5.8%
2022: 5.1%
Profit before tax and
adjusting items1
£502m
2022: £373m
Free cash flow1
£498m
2022: £380m
Return on capital
employed1
26%
2022: 41%2
Statutory financial measures:
Operating Profit
(continuing operations)
Profit before tax
(continuing operations)
£413m
2022: £333m
£619m
2022: £400m
Total profit/(loss) for the period
£283m
2022: £(6)m
Our financial metrics
Metric
Gross Profit
£m
Use of metric
1,939 Direct profit contribution from Value
Drivers (e.g. Vehicles and Aftersales)
Less: Segment
operating expenses
(1,270)
Adjusted operating profit¹
Less: adjusting items in
net operating expenses
Operating Profit
Less: Net Finance
Costs and JV losses
Profit before tax
669
(50)
619
(206)
413
Add back: adjusting items
in net operating expenses
Add back: adjusting items
in net finance costs
50
39
Adjusted profit before tax¹ 502
Profit generated by the Group
Statutory measure of Operating Profit
Statutory measure of profit after
the costs of financing the Group
65
Governance
1. APM (alternative performance measure), see page 200.
2. Adjusted to remove capital employed of Derco, which was acquired on the last
day of 2022 and therefore did not contribute to operating profit during that year
3. Includes the Group Executive Team and its direct reports, see page 81.
4. Reduction against 2019 revised baseline.
WE ACCELERATE THE PERFORMANCE
OF OUR MOBILITY COMPANY PARTNERS,
UNLOCKING OPPORTUNITIES THROUGH
OUR PEOPLE AND TECHNOLOGY.
Delivering for our partners, our customers, and our
people – so they can realise their ambitions in the
new world of mobility.
STRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
136 Consolidated statement
4 Our business model
8 Our strategy
Investment case
10
12 Chairman’s welcome
15 Group Chief Executive’s review
18 Facing into the future
20 Stakeholder engagement
24 Key performance indicators
26 Operating and financial review
33 Responsible Business
40
Task Force on Climate-related
Financial Disclosures
54 Non-financial & sustainability
information statement
56 Risk management
WWW.INCHCAPE.COM
66 Chairman’s statement
70 Governance at a glance
72 Board of Directors
78 Nomination Committee Report
82 Audit Committee Report
90 CSR Committee Report
92 Directors’ Report
on Remuneration
115 Directors’ Report
FINANCIAL STATEMENTS
120 Independent auditor’s report
to the members of Inchcape plc
132 Consolidated income statement
133 Consolidated statement
of comprehensive income
134 Consolidated statement
of financial position
135 Consolidated statement
of changes in equity
of cash flows
137 Accounting policies
147 Notes to the financial statements
200 Alternative performance
measures
203 Five year record
204 Company statement
of financial position
205 Company statement
of changes in equity
206 Company accounting policies
208 Notes to the Company
financial statements
OTHER INFORMATION
221 Shareholder information
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
1
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
OUR BUSINESS MODEL: DIFFERENTIATED DISTRIBUTION
BRINGING MOBILITY
TO THE WORLD’S
COMMUNITIES
FOR TODAY, FOR
TOMORROW AND
FOR THE BETTER
Inchcape is the leading independent global
automotive distributor. We are a business
delivering sustainable growth and cash
returns, with a diversified geographic
presence in over 40+ markets.
We partner with our mobility companies,
unlocking opportunities through our
people and technology. We use our
in-market expertise coupled with our
advanced data analytics to deliver
outstanding performance for our partners,
and build stronger automotive brands.
2
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
AT A GLANCE
£11.4bn
Revenue
60
brand partners
175+
years of successful international trade
40+
markets worldwide
43
deals since 2016
(includes M&A and contract wins)
22,000
colleagues
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
3
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OUR BUSINESS MODEL: DIFFERENTIATED DISTRIBUTION
OUR STRATEGIC PRIORITIES
VALUE PROPOSITION:
Accelerating the performance of
our mobility company partners,
unlocking opportunities through
our people and technology.
By combining our in-market expertise with our unique technology and
advanced data analytics, we create innovative customer experiences
that deliver outstanding performance for our partners – building stronger
automotive brands and creating sustainable growth.
We deliver for our partners, our customers, and our people – so they
can realise their ambitions in the new world of mobility.
OUR BUSINESS MODEL IS DRIVEN BY FIVE KEY PILLARS
1 BUILDING
SCALE
• We are the leading
independent global
automotive distributor
of vehicles and parts with
c.2% market share
• Diversified presence in
a broad range of markets
• We build scale through
market consolidation
and organic growth
• We operate in high-growth
markets and our competitive
advantage supports our
continued outperformance
in our markets
2 CREATING VALUE
FOR OUR
CUSTOMERS
3 LEADING WITH
DIGITAL
• We create value for our
mobility partners and
end consumers
• The combination of our local
market knowledge and our
global platforms, systems and
processes provide us with
unique insights, through
our technology and data
analytics, and best practices
• Our business is underpinned
by our technology
• Digital Experience Platform
(DXP) for customers
• Digital Analytics Platform
(DAP) for predictive analytics
and business intelligence
driving market share gains
UNDERPINNED BY DOING
BUSINESS RESPONSIBLY
4
We are a Responsible Business creating sustainable value for all our stakeholders. Our ‘Driving What Matters’ plan
is central to our strategy, encompassing our Planet, People, Places and Practices.
DRIVES FINANCIAL PERFORMANCE
AND SHAREHOLDER VALUE
5
We continue to drive strong revenue growth through organic growth and value accretive acquisitions, which
are highly cash-generative and deliver attractive returns for our shareholders. We are focused on leveraging scale
and are committed to our disciplined capital allocation policy.
4
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
OUR GLOBAL REACH
The geographic reach of our business has
been driven by a deep understanding of
our mobility partners and customers needs.
This is coupled with our global expertise
and local market knowledge.
c.80%
of revenues generated from Distribution
Our markets are characterised by low motorisation rates
and high GDP growth rates. We understand our markets
through our digital-led approach, using data analytics
and business intelligence to grow market share in our
regions. With our robust practices framework and our
aim to being the lowest carbon route to market, we focus
on delivering market share for our mobility partners.
Our mobility partners can focus on operating in the
major markets and their transition to electric vehicles.
AMERICAS
£3.7bn (+153%1)
EUROPE & AFRICA
£2.5bn (+23%1)
Argentina
Barbados
Bolivia
Chile
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Honduras
Panama
Peru
Uruguay
13
markets
Belgium
Bulgaria
Estonia
Finland
Greece
Latvia
Lithuania
Luxembourg
North Macedonia
Poland
Romania
Djibouti
Ethiopia
Tanzania
Kenya
15
markets
ASIA PACIFIC (APAC)
£2.8bn (+21%1)
RETAIL
£2.4bn (+4%1)
Brunei
Guam
Hong Kong
Indonesia
Macau
Philippines
Saipan
Singapore
Thailand
Australia
New Zealand
11
markets
Poland
UK
2
markets
1. Reported year-over-year revenue growth.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
5
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OUR BUSINESS MODEL: MOBILITY COMPANY PARTNERSHIP
DELIVERING OUTSTANDING
RESULTS FOR OUR MOBILITY
COMPANY PARTNERS
Inchcape accelerates
the performance of our
mobility company partners,
unlocking opportunities
for them through our
people and technology.
Inchcape’s mobility company
partnership began in the 1920s when
we started working with Mack. Since
then we have built and maintained
close relationships with some of
the world’s leading automotive
manufacturers, adding new
partnerships as we have expanded,
and bringing further long-standing
relationships into our portfolio
through acquisitions.
Inchcape’s value proposition, built
around our people and technology,
continues to be compelling for our
mobility company partners. In 2023,
we signed 15 distribution agreements,
with both new and existing partners,
across the Americas, APAC, and
Europe & Africa, providing more
mobility company partners access
to Inchcape’s markets.
OUR MOBILITY COMPANY PARTNERSHIPS – IN NUMBERS
60mobility company
partnerships in place
12Expanded with 12 mobility
partner relationship in 2023
across all 3 regions
3new mobility partners
added in 2023
31distribution contracts
won since 2016
Brand partnerships
page online:
www.inchcape.
com/our-
approach/
brand-partners/
6
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
A COMPELLING
VALUE PROPOSITION
By combining our in-market
expertise with our unique
technology and advanced
data analytics, we create
innovative customer
experiences that deliver
outstanding performance
for our partners – helping
to build stronger automotive
brands and creating
sustainable growth
for Inchcape and our
partners in the markets
where we work.
The world of mobility is changing.
Vehicles are changing. The needs
of mobility partners and consumers
are changing – they are looking
for better and more sustainable
mobility and services.
To succeed, Western, Japanese
and the emerging Chinese mobility
companies need a partner like
Inchcape, with deep insight into
evolving consumer behaviours
and markets, who can deploy
their expertise, resources, and
infrastructure to deliver in line
with rising expectations. A partner
with capabilities who can enable
them to unlock new opportunities
through an efficient and seamless
way to operate in markets, whether
mature or developing, and help
them accelerate their ambitions.
Our longest-standing partnerships*,
in years of relationship:
100
Mack
53
Jaguar Land
Rover
36
Mercedes-
Benz
34
BMW Group
56
Toyota
47
Suzuki
35
Volkswagen
Group
31
Subaru
Corporation
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
7
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OUR STRATEGY
ACCELERATING
OUR AMBITION
Transforming Inchcape to accelerate our growth through
Distribution Excellence and Vehicle Lifecycle Services
We have developed two strategic pillars to leverage these growth opportunities:
Distribution Excellence and Vehicle Lifecycle Services
OUR GROWTH DRIVERS:
DISTRIBUTION EXCELLENCE
VEHICLE LIFECYCLE SERVICES
OUR ENABLERS:
Culture and Capabilities
Digital, Data & Analytics
Efficient Scale Operations
Culture and people, underpinned
by our Responsible Business plan,
‘Driving What Matters’, more details
on which are on pages 33 to 39.
Digital and data analytics
expertise and technology stack,
supporting our performance
for our mobility partners.
Core capabilities, product and
service offerings, and market
presence to expand and grow.
Scaled and diversified operations,
with global processes and systems,
which are tailored for local delivery
and performance.
Responsible Business
OUR STRATEGIC PILLARS ARE DESIGNED TO ACCESS SIGNIFICANT
GROWTH OPPORTUNITIES
As our world, our industry and our business continues to go through unprecedented change,
Inchcape has a significant growth opportunity by:
Existing markets
New markets
Diversification
Long-term growth
Generating more
value from existing
markets and
mobility partners
Expanding into
new markets with
new and existing
mobility partners
+
+
Broadening into
new areas
Being the leading
independent global
automotive distributor
=
8
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
DISTRIBUTION EXCELLENCE
As the world’s leading independent automotive distributor,
Inchcape operates for mobility partners in smaller, more
complex, and harder to reach markets, which tend to
be higher growth with low motorisation rates. Inchcape
has significantly expanded its footprint in these markets
in recent years, but there is still a huge opportunity to
capture more market share. Our current position is 2%
market share of our total addressable markets.
This opportunity will be achieved by Inchcape by continuing
to deliver Distribution Excellence for its mobility partners by
driving market share gains. This will be achieved by:
• organic growth: through new distribution contracts
from mobility partners and by Inchcape’s investment
in its digital and data capabilities; and
• targeted acquisitions: by utilising Inchcape’s strong
financial position to develop its geographic footprint
and mobility partner portfolio.
Our Distribution Excellence approach connects the
products of our mobility partners with consumers,
supported by insights from our data analytics platform, by
providing our capabilities across the following value chain:
1
2
3
PRODUCT PLANNING
LOGISTICS
BRAND AND MARKETING
Using our local market expertise
to inform certification and vehicle
ordering decisions, around
elements including model types
and specification.
Delivering vehicles and parts in
our markets.
Brand proposition development,
brand positioning, price setting,
and marketing, aimed at maximising
market share for our partners.
4
5
S
T A I L
E
E D
H I C L
E
V
6
0
0
7 , 0
2
CHANNEL MANAGEMENT
DIGITAL RETAIL
R I O R
E
I N T
Developing the optimal channels
to reach consumers and businesses
covering network management,
digital, and omni-channel, including
the selection and management
of independent third party dealers,
where appropriate.
Bringing our omni-channel
platform to customers to deliver
world-class, digital-first experiences
for consumers through DXP, our Digital
Experience Platform.
AFTERMARKET SERVICES
In particular, the distribution
of vehicle parts.
VEHICLE LIFECYCLE SERVICES (VLS)
There is substantial untapped value, and potential profit pools, in the second
and third phases of a vehicle’s lifecycle. Inchcape is accessing this opportunity
by leveraging our existing assets, relationships, and expertise.
VLS will drive enhancements to our core Distribution business and initiatives
through capabilities which include our Digital Parts Platform, a used car channel
for our independent dealers, further finance and insurance programmes
and warranty management.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
9
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
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.
INVESTMENT PROPOSITION:
DRIVING SCALE AND DIVERSIFICATION
GLOBAL MARKET
LEADERSHIP IN
AUTOMOTIVE
DISTRIBUTION:
with compelling
offering for mobility
company partners
DIFFERENTIATED
BUSINESS
MODEL:
asset-light and
digitally-enabled, with
high barriers to entry
ON-GOING
INVESTMENT
IN GROWTH
OPPORTUNITIES:
organic investment
and acquisitions
TRACK RECORD
OF DELIVERING
HIGH LEVELS OF
RETURNS AND
FREE CASH FLOW:
enabling investment
in compound growth
60
mobility partner
relationships
1. As at 31st December 2023.
74%
FCF conversion1
26%
ROCE1
UNDERPINNED BY CONSISTENT EXECUTION AGAINST CLEAR STRATEGIC OBJECTIVES
WHY INVEST?
INCHCAPE IS THE GLOBAL LEADER, WITH AN AMBITION TO SUSTAINABLY GROW
GLOBAL MARKET LEADER
A RESPONSIBLE BUSINESS
DIGITAL & DATA LEADER
>40
markets covering
six continents
31%
reduction in scope 1 & 2 greenhouse
gas emissions vs 2019 baseline
250+
machine-learning
algorithms globally
The leading independent
automotive distributor in a highly
fragmented global market
Growth ambition underpinned
by our ESG strategy:
Responsible Business
• Presence across >40 markets;
• Responsible Business is integral
covering six continents
• We are the leader with
c.2% share of the global
distribution market
• Market consolidation is
expected to accelerate
to our Accelerate strategy
• Established four priority areas:
People, Places, Planet,
and Practices
• Due consideration for
all stakeholders
Our digital and data capability is a
significant competitive advantage
• Created a leading digital
and analytical platform
• Global scale, and internal
capability a key differentiator
• Our technological progress
is impressing mobility company
partner brands
10
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
In addition to our growth ambitions, the business is asset-light with a long history of
disciplined capital allocation and delivering highly attractive returns to shareholders.
CAPITAL ALLOCATION POLICY:
A DISCIPLINED APPROACH
1
2
3
4
INVEST IN THE BUSINESS
DIVIDENDS
VALUE ACCRETIVE M&A
SHARE BUYBACKS
£
£
Capex for organic growth
and technological
investment
Policy: 40% annual payout
of basic adjusted EPS
Disciplined approach
to valuation
Consider appropriateness
of share buybacks
NET DEBT TO ADJUSTED EBITDA LIMIT OF 1X (PRE IFRS16)
ATTRACTIVE FINANCIALS
GROWING BRAND PRESENCE
NEW OPPORTUNITIES
26%
ROCE
60
mobility brands
in our portfolio
Deliver value through organic
growth, consolidation,
and cash returns
Expanding the reach of
our plug-and-play global
distribution platform
• Distribution markets have higher
growth prospects than average
• Leveraging our global scale
to improve profitability
• Well invested operating model
a catalyst for further expansion
• Existing portfolio of >60 mobility
company partner brands;
continuing to add new partners
75%
of a vehicle’s lifetime value
in higher margin activities
Uniquely positioned to capture
more of a vehicle’s lifetime value
• Higher margin activities;
accounts for 75% of the profit-
pool of a vehicle’s life
• Currently significantly
underserved by Inchcape
• Clear opportunity to leverage
• Constantly sharing expertise
our existing footprint
across the Group
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
11
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CHAIRMAN’S WELCOME
A YEAR OF
IMPRESSIVE
STRATEGIC
PROGRESS
NIGEL STEIN
CHAIRMAN
12
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
DEAR SHAREHOLDERS
AND STAKEHOLDERS
I will retire from the Board
at the conclusion of the
AGM in May 2024 after six
years as Chair. I am delighted
that Jerry Buhlmann will
become Chair upon my
departure and a Q&A with
him is given on page 14.
I am pleased with the progress
Inchcape has made in the last
six years, delivering on its strategy;
focusing on higher value-add
distribution markets; growing
organically through new contract
wins with successful mobility
company partners; and judicious
acquisitions leading to a meaningful
market presence.
Our wider market presence has not
only brought a broader base to our
sources of income, but enhanced our
standing with current and potential
mobility company partners.
The Group is very well placed
for future growth and success.
This has all been achieved through
the hard work and dedication
of the Inchcape team in all our
markets. It has been a huge pleasure
to be part of that and I thank them
sincerely for all that they do.
Review of the year
Inchcape produced an excellent
performance in 2023, as we
continued to deliver on our purpose
of bringing mobility to the world’s
communities. This pleasing result
was against a backdrop of continued
geo-political and economic
uncertainty, including ongoing
inflationary pressure. The strong
financial and operational
performance demonstrates the
resilience of Inchcape’s global
business, the strength and focus
of our Accelerate strategy and the
quality of our leadership team.
We made good strategic progress,
in particular with the integration of
Derco, the major acquisition we
completed last year, the execution
of a number of bolt-on acquisitions
across our APAC region and the
achievement of a record number
of distribution contracts with our
mobility company partners.
Our continued focus on
a sustainable future
The automotive industry continues
to make progress towards its carbon
neutral goals albeit at different
speeds in different regions. The
transition to electric vehicles (EVs)
remains central to the industry’s
reduction in its CO2 emissions globally.
During 2023, Inchcape made
continued progress in building
its position with leading EV
manufacturers including adding
partnerships with Chinese mobility
companies who are EV leaders with
more than half the worldwide sales of
EVs in 2023. This makes Inchcape one
of the largest distribution partners with
Chinese mobility companies, adding
to our other long-standing mobility
partner relationships. Inchcape also
supports mobility partners in meeting
their own sustainability goals with
our aim to be the lowest carbon
route to market.
In that respect, Inchcape made
excellent progress in 2023 with its own
‘Driving What Matters’ plan, including
delivering ahead-of-plan reductions
in its scope 1 and 2 greenhouse gas
emissions. Our Group Chief Executive,
Duncan Tait, discusses this in more
detail in his review of the year, on
page 15.
Further strengthening your Board
After the completion of the Derco
acquisition, Juan Pablo Del Río
Goudie joined the Board in January
2023, bringing a deep and long-
standing knowledge of Latin
American markets. Byron Grote
also joined the Board in January,
bringing a wealth of experience
gained at several large multi-national
organisations, where he held
a number of senior executive
and non-executive roles.
Following his promotion to Group
Chief Financial Officer, Adrian Lewis
joined the Board in May 2023. Adrian
has brought extensive Inchcape
experience to the Board having held
several Finance leadership roles
across our global business. Adrian’s
promotion is an excellent example
of Inchcape’s commitment to
developing leadership talent from
within the Company.
In July 2023, we also welcomed Stuart
Rowley to the Board. Stuart has over
30 years’ global experience at the
Ford Motor Company and brings to
the Board a deep understanding of
the global automotive industry and
extensive international experience.
And most recently in January 2024
Alison Platt joined the Board as a
Non-Executive Director, adding
further excellent listed company
experience. Further details are given
in the Nomination Committee Report
on page 78.
I would like to personally thank my
colleagues on the Board for their
continued commitment and
contribution during 2023.
Building a high-performance culture
Inchcape’s culture of being an
ambitious but responsible Company
is a key enabler of our Accelerate
strategy. We are pleased with the
progress we continue to make in
building and aligning our culture
across our global business, particularly
in our recently acquired businesses,
where local teams have been
implementing thorough change and
communication plans to integrate
them into our global organisation.
During the year, the Board
participated in a number of
engagement sessions with Inchcape
colleagues, including a Reward
Forum as well as an Engagement
Forum held during our Board’s visit to
the Hong Kong business in October.
The Group continued to drive inclusion
and diversity and we were pleased
to see the strong results of Inchcape’s
‘Be Heard’ colleague experience
survey. It was pleasing to see
Inchcape’s inclusion score at upper
quartile levels, reflecting the excellent
progress made over the previous years.
As a Board, we believe in the strong
connection between a diverse and
high-performance culture and strong
business performance.
Delivering shareholder value
We have a clear and balanced
capital allocation policy, based
on four priority areas which the
Board review regularly.
First is to invest in our business to
support organic growth. Second, our
policy is to pay out 40% of adjusted
earnings in annual dividend payment
to shareholders. Third, we target value
accretive acquisitions where there
is a strong strategic fit and, fourth
we consider the appropriateness
of returning excess capital to
shareholders via share buybacks.
Based on this policy, and considering
the strong performance of Inchcape
in 2023, the Board recommends that
the Company continues to pay a
dividend of 40% of annual adjusted
EPS. This payment would result in an
overall dividend payment of 33.9p.
Inchcape is well positioned
for sustainable growth
During 2023, Inchcape continued
to develop a solid foundation for
future growth. Despite muted
demand and continuing challenging
macro-economic conditions in some
markets, our well-executed Accelerate
strategy continues to drive outstanding
performance for our mobility partners
and, subsequently, for the Group.
The unique strengths of our business,
in particular our high-quality people,
diversified geographic spread of our
operations and our industry-leading
digital capabilities, ensures that we
remain resilient and well positioned
for sustainable growth in the future.
Your Board remains confident in
Inchcape’s ability to bring mobility
to the world’s communities, for today,
for tomorrow and for the better.
NIGEL STEIN
CHAIRMAN
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
13
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
INTRODUCING OUR PROPOSED NEW CHAIR
JERRY BUHLMANN
Q&A
WITH JERRY
BUHLMANN
What do you see as the focus
for the Inchcape Board in the
coming years?
Looking ahead, the automotive sector
will continue to experience rapid
transformation and development.
Customer preferences and buying
habits will continue to evolve and the
need for sustainable mobility solutions
across more markets will increase.
To that end, while the transition to
electric vehicles (EVs) is underway,
it is not without its complexities.
Inchcape has a real opportunity here,
as we continue to support our mobility
company partners across more
markets, in a dynamic and increasingly
complex industry. The Board has an
important role to play in this, leading
from the front, ensuring that the Group
continues to develop and enhance
its inclusive, collaborative, and
innovative culture.
What do you think the major
strategic opportunities will be
for Inchcape in the automotive
industry in the future?
The transformation of our industry
presents compelling opportunities
for Inchcape. I see three key themes
where we can support our mobility
company partners in a fast-moving
environment: driving market
consolidation; supporting them in
the EV transition; and helping them
to drive down the cost of complexity,
by supporting them in smaller, more
niche markets, where Inchcape will
continue to drive market leadership.
Inchcape’s unique experience,
market insight, and digital platform
therefore provides a compelling
value proposition for our mobility
company partners. This is reinforced
by the tremendous number of new
partnerships we achieved in 2023, with
15 new distribution contracts secured
across a range of markets and partners.
Furthermore, Chinese mobility
company partners will continue to play
a central role in the transition to EVs
and, in this regard, Inchcape has
developed partnerships with several
leading players in each of our regions,
helping to ensure a wider range of
high-quality new energy vehicles are
available across our markets.
What do you believe are the
key strengths of Inchcape?
I have been on the Inchcape Board
for seven years and, in this time, I have
been fortunate enough to meet a wide
range of stakeholders. Based on these
conversations, my view is that
Inchcape’s key differentiator is our
unmatched ability to support our
multiple mobility company partners
across a wide and diverse range of
markets. This is driven by our market-
leading digital and data analytics
capabilities, the calibre of our people,
who have specialist expertise in the
markets in which they operate, and our
long track record of delivering for our
partners on a regular and consistent
basis. This provides a solid platform
from which Inchcape will continue
to deliver for our mobility company
partners, to grow, and to lead the
industry, thereby driving growth
and value for our stakeholders.
JERRY BUHLMANN
PROPOSED NEW CHAIR
Jerry Buhlmann, the Board’s
current Senior Independent
Director, is nominated to succeed
Nigel Stein as Chair following the
conclusion of the Group’s next
Annual General Meeting (AGM)
on 9 May 2024, subject to
shareholder approval.
Jerry has been a member of the
Inchcape Board since March 2017
and his appointment will help
ensure seamless continuity of
Board leadership to support the
Group, as it continues to deliver
on its Accelerate strategy.
Jerry has over 40 years’
experience in the media and
advertising industries and was
formerly CEO of Aegis Group plc
and Dentsu Aegis Network. Jerry
is currently Chair of three private
equity-owned digital marketing
agencies: Dept, Croud Limited,
and Hybrid. Jerry is also a member
of the Supervisory Board of
Serviceplan GmbH.
A THANK
YOU TO
NIGEL STEIN
ON BEHALF OF THE BOARD, I WOULD LIKE TO THANK NIGEL
FOR HIS LEADERSHIP SINCE HE BECAME CHAIR IN 2018.
NIGEL HAS LED A CONSISTENT ENHANCEMENT OF THE BOARD’S
EXPERTISE AND SKILLSETS, AS WELL AS DRIVING DIVERSITY.
IN ADDITION, NIGEL HAS BUILT A STRONG COLLEGIATE CULTURE
AROUND THE BOARD, AND I AIM TO CONTINUE TO BUILD
ON HIS EXCELLENT WORK IN ALL THESE AREAS IN THE FUTURE.
JERRY BUHLMANN
PROPOSED NEW CHAIR
14
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
GROUP CHIEF EXECUTIVE’S REVIEW
UNLOCKING
OPPORTUNITIES
THROUGH OUR
PEOPLE AND
TECHNOLOGY
DUNCAN TAIT
GROUP CHIEF EXECUTIVE
What were Inchcape’s key
strategic achievements in 2023?
2023 was an excellent year for
Inchcape. We produced further
positive momentum in key markets
and made strong progress in
diversifying and scaling our business
in our regions.
From a strategic perspective, we
made progress in executing our
Accelerate strategy. We successfully
completed three bolt-on acquisitions
in APAC, in the exciting growth markets
of Philippines, Indonesia, as well
as New Zealand, positioning us well
for future growth there. We won
15 distribution contracts across all
our regions with Asian and European
mobility partners. We were also
successful in integrating Derco in
the Americas.
Our industry-leading digital and data
analytics capabilities continue to
support our growth prospects across
our global business.
Can you give an overview of
Inchcape’s operational and
financial performance during
the year?
Despite a challenging environment
in certain markets, Inchcape
remained resilient and our global
business performed strongly during
2023. I continue to be impressed by
the commitment and performance
of our global colleagues as they
deliver solutions that accelerate the
performance of our mobility partners.
During the year, Inchcape delivered
a strong set of results, with growth in
all regions, driven by consistently high
levels of operational execution across
our global business, which drove
further growth in revenue, operating
profit, and free cash flow generation.
Group revenue for the year was
£11.4bn, an increase of 41% on 2022.
We delivered adjusted profit before
tax of £502m, an increase of 35% on
2022 driven by top line growth and
improved operating margins. We also
reported adjusted free cash flow of
£498m, up 31% on last year, further
strengthening our cash position.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
15
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
GROUP CHIEF EXECUTIVE’S REVIEW
CONTINUED
What underpins the record number
of contract wins you achieved
during the year?
Inchcape has a winning distribution
platform. Our success in winning
15 distribution contracts across our
APAC, Americas and Europe & Africa
regions highlights the high level of
service we are delivering for our
mobility partners and emphasises the
trust and confidence they continue
to place in Inchcape. These contract
wins included BYD Commercial in
Singapore and Benelux, Subaru in
Bolivia, XCMG in Colombia and Peru
and Changan in the Philippines and
across a number of markets in Africa.
During 2023, we continued to build
stronger partnerships with our Chinese
mobility partners, including a global
strategic partnership with Great Wall
Motors. China is now the largest
automotive exporter globally. Chinese
mobility partners are changing the
automotive landscape by playing
a central role in the global long-term
transition towards new energy
vehicles, producing over 50% of
the world’s electric vehicles (EVs).
Building on the Chinese mobility
partnerships through our acquisition
of Derco, Inchcape now has more
Chinese mobility partnerships than
any other automotive distributor.
Can you discuss in more detail
your progress on the integration
of Derco during 2023?
We are really pleased with our
progress on the integration of Derco,
which is an outstanding business
that has helped the Group to win
more distribution contracts, not only
in the Americas region but also
in our other regions. Derco has
therefore already made a substantial
contribution in driving our market
share in several markets.
We were successful in accelerating
cost and cost-related synergies from
the acquisition of £21m in 2023, and
now expect to deliver at least £50m
in FY 2024 with one off integration
cash costs of £70m over three years.
Inchcape ways or working and
reducing inventory.
Derco also delivered against our
margin expectations, producing
margins at the top end of the 5% to
7% range, pre-synergies, as expected.
Can you discuss the key market
trends during the year?
Our markets continued to evolve
and develop at different rates during
the year, with supply normalising
in many markets, while consumer
demand is mixed.
One consistent theme in most of
our markets is further demand
from consumers for omni-channel
experiences, with the initial product
touchpoint for customers being
through digital channels, particularly
for new energy vehicles. There is also
some growth in underlying consumer
demand for EVs in many of our
markets, albeit at different levels of
pace of adoption and product
penetration, which is fundamentally
determined by the quality and
reliability of EV infrastructure and
government support in a market.
What makes Inchcape’s approach
to digital and data market-leading?
There are a number of factors
supporting our market-leading digital
and data position. DXP, our digital
customer experience platform, is
delivering value for our mobility
partners, and DAP, our data analytics
platform, is powering our business
in several areas.
We have continued to develop
and roll out DXP, as we provide
more customers with a seamless
experience, however they
choose to interact with us and
our mobility partners.
DAP, which provides advanced
analytics and machine learning,
leverages our data and driving
smarter, faster and better business
decisions. By the end of 2023,
we had over 250 machine-learning
algorithms globally.
Our Americas management team
also made progress in improving
Derco’s working capital position both
in the alignment of supplier terms with
These capabilities are supported by
our digital delivery centres (DDCs),
which operate in Colombia, the
Philippines and following the
2023 WAS AN
EXCELLENT YEAR
FOR INCHCAPE.
WE PRODUCED
FURTHER POSITIVE
MOMENTUM IN
KEY MARKETS AND
MADE STRONG
PROGRESS IN
DIVERSIFYING
AND SCALING
OUR BUSINESS.
acquisition of Derco, we now have
a satellite DDC in Chile. By the end
of 2023, we now have more than
1,400 digital experts providing 24/7
services and solutions, further
enhancing our digital delivery
and cybersecurity capability.
How are you progressing with
your Vehicle Lifecycle Services
(VLS) initiatives?
We continue to believe in the
strategic importance of VLS for the
Group, with an opportunity to unlock
value in the subsequent phases
of the vehicle’s lifecycle, through
value-added services. VLS will
drive enhancements to our core
Distribution business and initiatives
through capabilities which include
our Digital Parts Platform, a used
car channel for our independent
dealers, further finance and
insurance programmes and
warranty management.
The Digital Parts Platform in Australia
continues to gain traction, with
an ambition to modernise the
aftermarket parts industry. We
are further scaling this product in
Australia, with 12 distributors and 410
aftersales workshops now using the
platform, and several new mobility
company partners signed up to the
platform. We plan to launch the
platform across other markets in
APAC in 2024.
16
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
We intend to further reduce the scale
of bravoauto to its profitable core,
particularly given our continued
strategic focus on reducing our
retail-only footprint. This will ensure a
more focused and tailored approach
for bravoauto, as a value-added
service for our Distribution business,
with a moderated operational and
geographic profile. Our investment
in bravoauto since its inception
continues to be disciplined. In light
of our review of strategic options
for the UK retail business, we are
re-evaluating our ambitions for
bravoauto as part of VLS. VLS remains
a strategic opportunity for the Group
but, particularly in light of reducing
the scale of bravoauto to its profitable
core, we are re-evaluating the
phasing of our financial objectives
for VLS.
Can you talk about developments
on your approach to sustainability
during the year?
Operating responsibly is central
to our mobility partnerships and
how we work globally. In 2021
we implemented our ‘Driving What
Matters’ plan built around our
four pillars of Planet, People, Places
and Practices, and we continued
to make good progress in 2023.
In the second half of 2023 we
completed a sustainability materiality
assessment of our business to improve
our understanding of the sustainability
priorities of our stakeholders. The
results of the assessment will be
communicated in our first Sustainability
Report, to be released later this year.
Under the Planet pillar, we made
good progress with our scope 1 and
2 greenhouse gas emissions targets,
reducing emissions by 31%, ahead of
our targets and on track to meeting
our 2030 target of 46%. You can read
more about our approach to climate
change in our Task Force on Climate-
related Financial Disclosures on
pages 40 to 53.
I am pleased with the progress we
are making with our People pillar as
we continue to expand the delivery
of our programmes to enhance
inclusion and diversity across
Inchcape. For example, women in
senior leadership positions at
Inchcape increased to 28%, up
from 15% from 2020.
During the year we ran our global
colleague experience survey ‘Be
Heard’ and I was very pleased by
the strong results. A record number
of Inchcape colleagues – 88% –
completed the survey, including our
new Derco colleagues, with key
engagement KPIs above global
averages and our Inclusion score was
upper quartile. These results reflect
the excellent work of global
leadership and People teams to
drive colleague engagement and
inclusion. The survey also identified
areas of development across our
business and our global teams have
developed action plans to enhance
engagement and improve the
experience of our colleagues.
An integral part of our Responsible
Business approach is being a good
company and partner for the
communities where we work. I have
been delighted to see the passion
and enthusiasm from our people
on road safety education for local
communities, charitable partnerships
focused on diversity inclusion and
internship programmes for
underrepresented groups under
the Places pillar.
Fundamental to our value proposition
is our approach to high standards of
ethical business under the Practices
pillar. To support this, during 2023 and
early 2024 we rolled out our enhanced
Code of Conduct across our global
business, including to our new
colleagues from acquisitions in
Indonesia, New Zealand, and the
Philippines, as well as to more than
4,000 new colleagues in the Americas
from the Derco acquisition.
What is your message to
Inchcape’s people, following
our performance in 2023?
I was fortunate enough to visit many
Inchcape markets during 2023,
spending time with colleagues
from across our global workforce.
I continue to be impressed by the
quality and commitment of our
colleagues and I am grateful for their
performance during the year. What
we collectively deliver for our mobility
company partners is outstanding and
I am extremely grateful for the hard
work and commitment of our people.
I would also like to thank and
recognise my Executive team
colleagues for their collaborative
spirit, outstanding leadership, and
delivery during the year. Developing
leadership talent from within our
organisation is a priority for Inchcape
and I was delighted to see two
colleagues promoted to the Executive
team in the year with Adrian Lewis
promoted to Group Chief Financial
Officer in May and Phil Jenkins
promoted to Chief M&A Officer in
October. In addition, Liz Brown joined
us from Diageo in February as Chief
Strategy Officer.
How do you see the future
for Inchcape?
I am really excited about the medium
to long-term outlook of our business.
Building on our cash generative and
capital-light characteristics, I believe
we will continue to lead the
consolidation of a range of highly
fragmented markets.
To that end, our focus for 2024 remains
on further consolidating our global
position as the leading independent
automotive distributor, through
leveraging our digital platform across
our global footprint so that we can
continue to operate at scale, build
market share and accelerate the
performance of our mobility partners.
Building on our performance in 2023,
with our global market leadership
position and our diversified and
scaled business model, Inchcape
remains well positioned for the future.
Directors’ approval
of the Strategic Report
The 2023 Strategic Report, from
pages 2 to 64, were reviewed
and approved by the Board
of Directors on 4 March 2024
DUNCAN TAIT
GROUP CHIEF EXECUTIVE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
17
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
FACING INTO THE FUTURE
EMBRACING CHANGES
TO OUR INDUSTRY
CHANGING
MACRO
TRENDS
CHANGING
AUTOMOTIVE
INDUSTRY
CHANGING
CONSUMER
DYNAMICS
FOCUS ON
ENVIRONMENT
& SOCIETY
Geopolitical
uncertainties
Geopolitical tensions
increasing global
uncertainty
CASE* trends
Growing EV penetration,
but uneven subject
to market dynamics
Consumer habits
Catering to different
vehicle ownership
models and buying-
decision criteria
Emissions
Low emission vehicles and
corporate greenhouse
gas reductions expected
%
Higher for longer
interest rates
Impacting consumer
confidence and supplier-
related financing
Generative AI
Opportunity and need
to leverage technology
Retail trends
Expectations for
a personalised
digitally integrated
experience through
omni-channel platforms
Circular economy
Resource scarcity
and waste prevention
key considerations
Risk of low economic
growth and/or ‘soft’
recession
Weakening demand,
consumer spending
erosion, pressure on pricing
Route to market
Helping mobility company
partners get even closer to
customers and new markets
Consumer confidence
Higher interest rates
and lower disposal
income impacts
discretionary spend
Colleague expectations
Workforce looking for
purpose-driven employers
How is Inchcape responding?
Scaled business model
and a diversified mobility
company partner portfolio
has proven resilient
in turbulent times
We provide mobility
company partners with
a solution in lower volume
and high growth potential
emerging markets
Our digital and data
capabilities allow us
to better understand
consumers and cater
to their needs, optimising
their experience
Solid Responsible Business
agenda implemented
across our markets
Geographically diverse
footprint means we are
well placed to navigate
the current macro-
economic climate
Developing innovative
solutions and collaborating
with tech leader to bring
value to consumers and
mobility company partners
Our expertise supports
customers throughout
the buying journey and
their ownership lifecycle
We are a forward-thinking
purpose-driven employer,
leveraging our global
scale to develop talent
Our purpose is to bring mobility to the world’s communities – for today, for tomorrow and for the better.
* Connected, autonomous, smart, electric vehicles.
18
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
ACQUISITIONS AND DISPOSALS
OPTIMISING OUR PORTFOLIO
Inchcape’s focus on building and maintaining close and long-standing
mobility company partnerships provides the foundation for our ability
to execute strategic and accretive growth through acquisition.
Inchcape has accelerated industry
consolidation since focusing on
distribution expansion in 2016. Since
then, we have been developing a
plug and play distribution platform.
This will support scale acquisitions and
important bolt-on deals, adding new
partnerships, markets, and significant
revenue to the business, while
optimising our retail footprint through
select disposals. Our ambition is for
Inchcape to become the undisputed
number one distribution partner of
choice for automotive manufacturers,
many of which are looking for
consolidation and proven integration
capabilities in their partnerships. Key
factors in achieving this include: our
track record of successful integration;
investment in technology and digital
capabilities that can be deployed
at scale; our people’s capabilities
and approach to retaining key
management; and the firepower
we have available to execute
deals through a strong balance
sheet and disciplined approach
to capital allocation.
A NUMBER OF EXCITING CONTRACT ADDITIONS IN 2023
Mobility partners
Markets
Tata
RAM
XCMG
Honduras
Philippines
Tanzania
OUR M&A FRAMEWORK:
Strategic
• Additive to existing brand footprint
• Broadens geographic reach
• Enhanced by Inchcape’s
distribution platform
Financial
• Focus on markets with higher
growth prospects
• Take a considered approach
to valuing targets
• ROIC > project WACC targeted
in year 3
Organisational
• Focus on retaining
and nurturing talent
• ‘Responsible Business’ programme
• Opportunity to
professionalise processes
Revenue
+£400m
New
Existing
BYD Commercial
Changan
Chrysler
Dodge
Geely
Great Wall
Jaguar
Jeep
Land Rover
Maxus
Mercedes-Benz
Subaru
Belux
Bolivia
Colombia
Djibouti
Ecuador
El Salvador
Guatemala
Indonesia
Kenya
Peru
Singapore
Thailand
New Zealand
REBALANCING OUR PORTFOLIO IN FAVOUR OF DISTRIBUTION SINCE 2016
31distribution contracts
won since 2016
12M&A deals since 2016 with c.£4bn
of annualised revenue added
17new markets and 18 new
OEMs since 2016
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
19
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
STAKEHOLDER ENGAGEMENT
FORGING STRONG
RELATIONSHIPS
STAKEHOLDER
MOBILITY COMPANY
PARTNERS
CUSTOMERS
COLLEAGUES
SHAREHOLDERS
COMMUNITIES
HOW WE CREATE VALUE
We provide our mobility company
partners with professional and efficient
routes to market for the post-factory
automotive chain.
We provide access to automotive
ownership and support services
throughout the customer journey and
aim to deliver the best experiences
globally for customers in our industry.
INTERESTS
• Strategy
• Long-term commercial sustainability
and business viability
• Trusted partnerships
• Brand protection
• Health, safety, and environment (HSE)
• Environment, social, and
governance (ESG)
• Access to vehicle products and services
• World renowned automotive brands
• Specialist product and service
knowledge
• Customer service
• Aftersales
• Safe facilities
• Tailored experiences both on- and offline
• Business viability (for long-term
contracts, e.g. fleet management)
HOW WE ENGAGE
Management
Management
Management
Management
Management
• Top-to-top relationship building with
• Reporting of customer and dealer
• Launch of updated Code of Conduct
• Regular dialogue with institutional
• Market-specific activity
new partners acquired through
mergers and acquisitions (M&A)
• Regular top-to-top executive
management meetings
• Market level operational meetings
• Pan-market brand development
Board
• Major mobility company partner
deep dive review annually
• Regular feedback from Group
Chief Executive
• Three strategic acquisitions in
the APAC region and 15 new
distribution contract wins globally
• All new mobility partners acquired
via acquisitions retained
satisfaction scores on reputation.com
• Best practices shared with
dealer network
• Engaging regional teams with training
on reputation.com to drive focus
on performance
• Provide advice and knowledge to
customers and dealer network
Board
• Update on the customer satisfaction
analytics from reputation.com at
each meeting
• Customer omni-channel platform is
live in 42 markets with 15 mobility
company partners (2022: 36 markets,
13 mobility company partners)
• Reputation.com: 98,000 total reviews
across 1,070 locations in 2023 (2022:
84,400 reviews). 4.7/5 average rating
from customers
OUTCOMES
We aim to enable every colleague
to achieve their personal goals at
Our objective is to deliver outstanding
We have a balanced approach to
returns on long-term investment based
engagement with the communities
each stage of the colleague journey;
on a sustainable platform for growth,
in which we operate, empowering
to recognise and develop talent; and
disciplined approach to capital
ownership at local level with structural
to foster a socially conscious culture
allocation, and cash returns through
support from the Group.
based on inclusion, empowerment, and
dividends and share buybacks.
optimised potential through learning.
• Strategy
• Strategy
• Local employment
• Inclusion & Diversity (I&D), reward,
• Company purpose and values
• HSE, including local environmental
and training and development
• Financial performance and strength
concerns, e.g. waste disposal
• Strong approach to HSE – duty of care
of balance sheet
• Company purpose and values
• Capital allocation
• Community activities, e.g. support
of local charities
• Long-term commercial sustainability
• Responsible Business/ESG
• Local road safety campaigns
• Security of employment stemming
• Long-term commercial sustainability
• Responsible approach to local
from business viability
• Responsible employer
and business viability
• Key developments in the business
and issues we are facing
law and regulations
• Colleague experience survey
• One Inchcape performance
management framework
investors (roadshows and conferences)
co-ordinated at local level
• Investor webinars and financial
• Group-level support for
results presentations
extraordinary events affecting
• Global and regional leadership and
• Annual Report and Company website
our market communities
development programmes
• Colleague engagement forums
Board
Board
• Annual general meeting (AGM)
• Chairman’s periodic one-to-one
• Colleague experience surveys
meetings
and action plans
• Committee members interaction
Board annually
Board
• Updates on Places pillar of the
Responsible Business framework
at each CSR meeting and to the
• Designated Non-Executive Director
• Annual Board site visit
• Regular updates to CSR Committee
and an annual update to the Board
• Colleague experience event in
• Held over 200 investor meetings
• Strong levels of local community
Hong Kong facilitated by the
during 2023
designated Non-Executive Director
• Deep dive session on Derco with
involvement including road safety
campaigns and inclusive mobility
• Virtual Reward Forum held for Europe
the CEO Americas during the 2023
• 6,500 people enrolled across 88
& Africa region
• 16,964 colleagues across 18
languages completed the
inaugural annual Be Heard survey
half-year interim results
inclusive, safe, and social mobility
• Optimised the capital structure
initiatives in 2023
through issuing a new five year bond
• 40,000+ people positively affected
New mobility partner expansion
Reputation.com average rating
Colleague survey participation
Number of individual investors met
Number of inclusive, safe, and social
mobility initiatives undertaken in 2023
4.7/5
4.7/5
4.7/5
79%
81%
88%
Singapore
Philippines
Indonesia
2021
2022
2023
2019
2021
2023
2023
2022
c.370
88(2022: 46)
c.260
20
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
STAKEHOLDER
MOBILITY COMPANY
CUSTOMERS
COLLEAGUES
SHAREHOLDERS
COMMUNITIES
PARTNERS
Inchcape’s success is dependent on the continued trust and support of all its stakeholders;
strong relationships that allow us to work with our key stakeholders are therefore fundamental
to the long-term success of the Group.
READ MORE by visiting www.inchcape.com
We aim to enable every colleague
to achieve their personal goals at
each stage of the colleague journey;
to recognise and develop talent; and
to foster a socially conscious culture
based on inclusion, empowerment, and
optimised potential through learning.
• Strategy
• Inclusion & Diversity (I&D), reward,
and training and development
• Strong approach to HSE – duty of care
• Company purpose and values
• Long-term commercial sustainability
• Security of employment stemming
from business viability
• Responsible employer
Our objective is to deliver outstanding
returns on long-term investment based
on a sustainable platform for growth,
disciplined approach to capital
allocation, and cash returns through
dividends and share buybacks.
We have a balanced approach to
engagement with the communities
in which we operate, empowering
ownership at local level with structural
support from the Group.
• Strategy
• Company purpose and values
• Financial performance and strength
of balance sheet
• Capital allocation
• Responsible Business/ESG
• Long-term commercial sustainability
and business viability
• Key developments in the business
and issues we are facing
• Local employment
• HSE, including local environmental
concerns, e.g. waste disposal
• Community activities, e.g. support
of local charities
• Local road safety campaigns
• Responsible approach to local
law and regulations
Management
Management
Management
• Launch of updated Code of Conduct
• Colleague experience survey
• One Inchcape performance
management framework
• Regular dialogue with institutional
• Market-specific activity
investors (roadshows and conferences)
co-ordinated at local level
• Investor webinars and financial
• Group-level support for
results presentations
• Global and regional leadership and
• Annual Report and Company website
extraordinary events affecting
our market communities
HOW WE CREATE VALUE
We provide our mobility company
We provide access to automotive
partners with professional and efficient
ownership and support services
routes to market for the post-factory
throughout the customer journey and
automotive chain.
aim to deliver the best experiences
globally for customers in our industry.
INTERESTS
• Strategy
• Access to vehicle products and services
• Long-term commercial sustainability
• World renowned automotive brands
HOW WE ENGAGE
Management
Management
• Top-to-top relationship building with
• Reporting of customer and dealer
and business viability
• Trusted partnerships
• Brand protection
• Environment, social, and
governance (ESG)
• Health, safety, and environment (HSE)
• Aftersales
• Specialist product and service
knowledge
• Customer service
• Safe facilities
• Tailored experiences both on- and offline
• Business viability (for long-term
contracts, e.g. fleet management)
new partners acquired through
mergers and acquisitions (M&A)
• Regular top-to-top executive
management meetings
• Market level operational meetings
• Pan-market brand development
Board
satisfaction scores on reputation.com
• Best practices shared with
dealer network
• Engaging regional teams with training
on reputation.com to drive focus
on performance
• Provide advice and knowledge to
customers and dealer network
• Major mobility company partner
deep dive review annually
Board
• Regular feedback from Group
• Update on the customer satisfaction
Chief Executive
analytics from reputation.com at
each meeting
• Three strategic acquisitions in
the APAC region and 15 new
• Customer omni-channel platform is
live in 42 markets with 15 mobility
distribution contract wins globally
company partners (2022: 36 markets,
• All new mobility partners acquired
13 mobility company partners)
via acquisitions retained
• Reputation.com: 98,000 total reviews
across 1,070 locations in 2023 (2022:
84,400 reviews). 4.7/5 average rating
from customers
OUTCOMES
• Designated Non-Executive Director
• Annual Board site visit
• Regular updates to CSR Committee
and an annual update to the Board
• Colleague experience event in
Hong Kong facilitated by the
designated Non-Executive Director
• Virtual Reward Forum held for Europe
& Africa region
• 16,964 colleagues across 18
languages completed the
inaugural annual Be Heard survey
• Held over 200 investor meetings
• Strong levels of local community
during 2023
• Deep dive session on Derco with
the CEO Americas during the 2023
half-year interim results
• Optimised the capital structure
involvement including road safety
campaigns and inclusive mobility
• 6,500 people enrolled across 88
inclusive, safe, and social mobility
initiatives in 2023
through issuing a new five year bond
• 40,000+ people positively affected
New mobility partner expansion
Reputation.com average rating
Colleague survey participation
Number of individual investors met
Number of inclusive, safe, and social
mobility initiatives undertaken in 2023
4.7/5
4.7/5
4.7/5
79%
81%
88%
Singapore
Philippines
Indonesia
2021
2022
2023
2019
2021
2023
2023
2022
c.370
88(2022: 46)
c.260
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
21
Board
Board
• Annual general meeting (AGM)
• Chairman’s periodic one-to-one
• Colleague experience surveys
meetings
and action plans
• Committee members interaction
• Updates on Places pillar of the
Responsible Business framework
at each CSR meeting and to the
Board annually
development programmes
• Colleague engagement forums
Board
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
STAKEHOLDER ENGAGEMENT CONTINUED
STAKEHOLDER ENGAGEMENT IN 2023
Stakeholders
Engagement
Matters raised
Subsequent feedback/engagement
Q1 Colleagues
• Inchcape Enabled webinar
• International Women’s Day
• Non-visible disabilities,
• Accessibility Project rolled out in
communication, and language
Shareholders
• 2022 results presentation with Q&A
• Investor roadshow and conferences
• 2022 performance and final dividend
• Completion of the Derco acquisition
and updated guidance
Q2 Colleagues
• I&D e-learning roll out
• Cultural Diversity Day
• Pride Month
• World Mental Health Day
Australia and the United Kingdom,
with audits complete across 118 sites
• Key areas of focus: the integration
of Derco including potential cost
and revenue synergies, working
capital dynamics, and interest costs
• e-learning completed by
c.8,800 colleagues
Shareholders
• AGM held in May 2023
• Q1 trading update with Q&A
• Investor conferences
• Trading update during the first
• Strong support for all resolutions
quarter of 2023
at the AGM
• Update on Derco integration
• Key areas of focus: Derco integration
and progress on working capital
Q3 Colleagues
• Be Heard survey
• Europe & Africa Reward Forum
• Communication of change, reward
and benefits, career development,
and wellbeing
• Equal pay, I&D, and sustainability
Mobility
partners
• Management meetings with Hino,
Mazda, Subaru, Suzuki, and Toyota
in Japan
• Global relationships, DAP/DXP, energy
transition, consolidation, and future
trends and industry challenges
Shareholders
• Interim results and presentation
• 2023 interim performance
with Q&A
and interim dividend
• Investor roadshow and conferences
• Update on progress of Derco
integration
• Strategic update including
contract wins and acquisitions
• Update to our FY 2023 outlook
and working capital progress, regional
performance, supply, demand and
price dynamics, and updates on
M&A progress
• All leaders record top three actions
to drive improvements for their teams
in the dashboard. Regional and
functional teams discussed results
and developed action plans
to tackle issues
• Feedback on matters raised
presented to the Board along
with management plans to
address specific issues
• Regular top-to-top meetings
scheduled throughout 2024
• Key areas of focus: Derco working
capital and integration progress,
balance sheet position, and free
cash flow performance.
• Strategic progress, including M&A
updates, contract win momentum,
and the growing relationships with
Chinese mobility company partners
Various
• Materiality assessment
Q4 Colleagues
• Designated Non-Executive Director
engagement session in Hong Kong
• Sustainable mobility, colleague
health, safety and wellbeing,
cybersecurity, and reduction of
greenhouse gas emissions
• Matrix will support future
considerations around sustainability
issues and how to mitigate and
capitalise key risks and opportunities
• I&D, approach to ESG, and role
of regional business in electric
vehicle transition
• Feedback on issues discussed
presented to the Board with
management action plans
to address specific issues
Mobility
partners
• Meeting with Mercedes-Benz
• Sustainability in relation to retail
• Follow up meeting with sustainability
and distribution networks
experts to share learnings and
best practice
• Trading update on the third
• Key areas of focus: regional
quarter of 2023
• Completion of three acquisitions
in APAC
• Capital Allocation Policy
• Update on Derco cost synergies
• Proposed appointment of
new Chairman
performance, and update on
Derco working capital performance
and integration progress
• Progress on Accelerate strategy
Shareholders
• Q3 trading update with Q&A
• Investor roadshow
22
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
SECTION 172(1) STATEMENT
The Directors have exercised their duties under the Companies Act 2006
throughout the year, including the duty to promote the success of the
Company while having regard for the factors under Sections 172(1)(a) to (f).
These and other factors are taken into consideration by the Directors when
making decisions in their role as the Board of Inchcape plc.
How the Board considered
stakeholders during the year
The Board is responsible for the
long-term success of the Group
and understands that operating
across six continents can affect
many stakeholders. The Board’s
understanding of stakeholder interests
is at the heart of its responsibilities
and stakeholder engagement
takes place in a variety of ways
and through various channels.
The considerations surrounding
our key stakeholders including
engagement methods, decision
making, their importance to our
operating model, together with
the Board’s oversight, are cross
referenced in the table.
The Board also takes the opportunity
to engage with stakeholders as
appropriate. Pages 20 to 22 as well
as the pages referenced in the table
form part of this statement and
provide examples of how key
stakeholders have been engaged.
The importance of stakeholders
Our colleagues are crucial to the
success of the Group, therefore
a comprehensive engagement
programme is in place to understand
their view. Along with the
communities, environment, and
a strong ethical mind-set, they
form the cornerstone of our
Responsible Business framework.
Shareholders are the owners of
the business and it is important to
understand how they feel about
performance, governance, and risk
to ensure we meet their expectations.
Customers and suppliers are critical
to the business model, and being
aware of their interests helps us
achieve our strategic goals and
deliver the Accelerate strategy.
Section 172(1) matter
Impact
(a) Likely consequences of any
decision in the long-term
Strategy – pages 8 to 9
TCFD – pages 40 to 53
Risk management – pages 56 to 64
Principal decisions – page 76
When making decisions, the Board considers:
what value will be created for shareholders;
if appropriate resources are available; impact
on current and future colleagues, customers,
partners, and suppliers; the impacts these
decisions will have on communities and the
environment in which Inchcape operates;
and the impact on the Group’s reputation.
(b) Interests of colleagues
Chief Executive’s review – page 15
Responsible Business – pages 33 to 39
Principal risks – page 57
Corporate Governance – page 66
Directors’ Report – pages 115 to 118
Members of the Board participate in
workforce engagement sessions enabling
two-way dialogue. For M&A transactions,
a comprehensive change management
plan is put in place including a series of
townhalls to explain the process, an on-
boarding programme, and providing
an opportunity for colleagues to express
their views.
(c) Fostering business relationships
Our business model – page 4
Chairman’s welcome – page 12
Chief Executive’s review – page 15
Principal risks – page 57
Our mobility company partner relationships
are of paramount importance to the
achievement of the Accelerate strategy and
the length of these relationships is testament to
their strength. When considering acquisitions
and new partnerships, the Board considers
whether this will be a good strategic and
cultural fit.
(d) Impact of operations on
communities and the environment
Our business model – pages 4 to 7
Responsible Business – pages 33 to 39
TCFD – pages 40 to 53
NFSI statement – pages 54 to 55
A materiality assessment was undertaken
to improve our understanding of the
sustainability priorities of our stakeholders.
The Planet pillar assesses the impact the
automotive industry has on the environment
and the impact of climate change upon
our business by focusing on understanding
the Group’s climate-related risks and
opportunities and greenhouse gas emissions.
(e) High standards of business conduct
Chief Executive’s review – page 15
NFSI statement – pages 54 to 55
Corporate Governance – page 66
Directors’ Report – pages 115 to 118
Maintaining a reputation for high standards
of business conduct is taken into account by
the Board when making material decisions, i.e.
acquisitions, joint ventures, and remuneration
outcomes. This can include due diligence
findings, management and external advisor
reports, and understanding local reputation.
(f) Act fairly as between shareholders
Shareholder engagement – page 21
Remuneration Report – pages 92 to 114
Directors’ Report – pages 115 to 118
Engagement is a key tool for taking into
account the views of shareholders. Feedback
received from investors provide valuable input.
Before the Directors’ Remuneration Policy
was approved by shareholders at the 2023
AGM, the Remuneration Committee Chair
and the Chairman carried out a consultation
with shareholders seeking their views on the
Company’s position on remuneration.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
23
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
KEY PERFORMANCE INDICATORS
Link to strategy
Remuneration –
see pages 92 to 114 for
performance measures
MEASURING PROGRESS
Key performance indicators (KPIs) provide insight into how the Board and Group Executive Team monitor
the Group’s strategic and financial performance, as well as directly linking to the key measures for Executive
remuneration. KPIs are stated in actual rates of exchange and pages 200 to 202 provide definitions of KPIs
and other alternative performance measures.
FINANCIAL KPIs
Revenue
£11.4bn
2022: £8.1bn
Adjusted
operating
margin1
5.8%
2022: 5.1%
Profit before
tax and
adjusting items1
£502m
2022: £373m
2023
2022
2021
2020
2019
£11.4bn
£8.1bn
£6.9bn2
£6.8bn
£9.4bn
Definition
Consideration receivable from the sale of goods
and services. It is stated net of rebates and any
discounts, and excludes sales-related taxes.
5.8%
5.1%
2023
2022
2021
2020
2019
2.4%
4.1%2
4.0%
Definition
Operating profit from continuing operations
(before adjusting items) divided by sales.
2023
2022
2021
2020
2019
£502m
£373m
£249m2
£128m
£326m
Definition
Represents the profit made after operating
and interest expense excluding the impact
of adjusting items and before tax is charged.
Why we measure
Top-line growth is a key financial measure
of success.
2023 performance
The Group delivered £11.4bn of revenue,
up 12% organically (excluding currency
effects and net M&A) and up 41% reported
versus prior year. This was driven by volume
growth as supply continued to normalise,
with some positive pricing impact, and
contribution of M&A.
Why we measure
A key metric of operational efficiency, ensuring
we are leveraging our scale to translate sales
growth into profit.
2023 performance
Operating margin is 5.8%, up 70bps versus
2022. This is owing to organic topline growth,
the contribution of M&A, Derco synergies
and some operating leverage. One off items
include a net benefit of property profit of £14m.
Why we measure
A key driver of delivering sustainable growth
and growing earnings to shareholders.
2023 performance
In 2023 this increased 35% to £502m, reflecting
the contribution from acquisitions, strong
improvement in revenue and operating profit.
Free cash flow1
£498m
2022: £380m
2023
2022
2021
2020
£498m
£380m
£274m2
£117m
£289m
2019
£213m
Definition
Net cash flows from operating activities, before
adjusting cash flows, less net capital expenditure
and dividends paid to non-controlling interests.
Return on capital
employed1
26%
2022: 41%3
2023
2022
2021
2020
2019
26%
28%2
41%
12%
22%
Definition
Operating profit (before adjusting items) divided
by the average of opening and closing capital
employed where capital employed is defined
as net assets add net debt/less net funds.
Why we measure
A key driver of the Group’s ability to fund
inorganic growth and to make distributions
to shareholders.
2023 performance
The Group delivered free cash flow (FCF)
of £498m, an increase of 31% on 2022 and
representing a conversion of operating
profit of 74%.
Why we measure
Adjusted ROCE is a measure of the Group’s
ability to drive better returns for investors
on the capital we invest.
2023 performance
Adjusted ROCE for the period was 26%,
compared to 41% in 2022, with the decrease
driven by the dilutionary effect of acquisitions,
and is aligned with our historic guidance
of approximately 25%.
1. Alternative performance measure, see page 200. 2. Represented for Russia disposal. 3. Adjusted to remove capital employed of Derco, which was acquired on
the last day of 2022 and therefore did not contribute to operating profit during that year.
24
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Link to strategy
Distribution
People
Planet
We have a number of non-financial KPIs which align to our business model as part of our Accelerate strategy and ‘Driving
What Matters’ plan. Our focus on the customer whilst operating responsibly is at the heart of our business model. This is
a fundamental to our strategy, and maps the way Inchcape creates sustainable value for all our stakeholders.
NON-FINANCIAL KPIs
2018
BEVs sold
2.4%
2022: 2.5%
Reduction in
scope 1 and 2
greenhouse
gas emissions
31%
2019
2023
2022
2.4%
2.5%
Definition
% volumes of battery electric
vehicles (BEVs) sold*. BEVs are
fully battery powered and run
on electric power.
* Outputs of models and processed data
are likely to be affected by the quality of
2018
underlying data which include a number
of judgements and assumptions. 2022
2019
£XXbn
restated based on refreshed data set
£XXbn
2020
2023
£XXbn
31%
Definition
Aggregate scope 1 and 2
greenhouse gas emissions in 2023
vs 2019 baseline.*
Further information can be found
in the Task Force on Climate-related
Financial Disclosures on pages 40
to 53.
* 2019 figures have been restated to
reflect relevant disposals, acquisitions,
and data rectification.
Reputation.com
Score
702
2022: 671
2023
2022
2021
2020
2019
702
671
642
566
522
Definition
A measure of the end customer
experience in our dealerships
(both distribution and retail), using
Google Business Profile star ratings
among other metrics. Score
up to 1,000.
Women in
Senior Leadership
positions
2023
2022
2021
28%
22%
18%
28%
2022: 22%
Definition
Percentage of women in senior
leadership, which includes
the Group Executive Team
and its direct reports.
Please see page 81 for more
information, including a complete
breakdown of the gender diversity
within the Group.
Why we measure
This has been a KPI since 2022. A core element of our
strategy is the deployment of BEVs, which underpins
our core business model and is fundamental to the
long-term sustainability of the business.
2023 performance
We continue to make progress on the number of BEVs
sold. In 2023, the overall percentage as a Group reduced
given the acquisition of Derco had a dilutionary impact.
As part of our Responsible Business Plan, we will
continue to see growth in this trend, particularly
in our developed markets.
Why we measure
This KPI was created in 2022. Reducing the emissions
over which we have the greatest degree of control is
a key sustainability priority for the Group. We have set
targets for scopes 1 and 2 using Science Based Targets
methodology with the aim of reducing our emissions
by 46% by 2030 and achieving net zero by 2040.
2023 Performance
Scope 1 and 2 emissions were reduced by 21,000 tonnes
measured on a market basis and by over 17,000 tonnes
on a location basis against the 2019 revised baseline.
Greenhouse gas emission (GHG) reductions is a strategic
element of the Group Chief Executive’s bonus – please
see page 107 for further details.
Why we measure
Customer reputation score is a measure we introduced
in 2018 which provides a commercially relevant customer
experience measure using Google Business Profile and
monitors customer sentiment.
2023 Performance
Adoption of Reputation is at an all-time high and we see
this through our continued performance increase in 2023.
We have been focusing on improving our management
of the platform, ensuring data accuracy, promoting
positive, timely responses to our customers, with our
focus on offering a high level of service in our dealerships
around the world.
Why we measure
We created a new KPI in 2022 to increase the proportion
of women in senior positions from 18% to 30% by the end
of 2025. The Women into Leadership programme also
aims to target no less than 90% progression to a new
role (at the same level or promoted) within 24 months
of programme completion.
2023 Performance
We have made significant improvements in the
percentage of women in senior leadership, increasing by
6% to 28% this year. Since the programme inception, eight
cohorts of the Women into Leadership Programme have
launched covering all geographic regions. Currently, over
100 women have completed the programme and we
continue to track their progression. In 2024, we will launch a
programme focused on junior female talent development
to strengthen our pipeline of women into leadership roles.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
25
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
A SOLID
OPERATIONAL
AND FINANCIAL
PERFORMANCE
ADRIAN LEWIS
GROUP CHIEF FINANCIAL OFFICER
26
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
2023 was another excellent
year for Inchcape, during
which we delivered another
strong set of financial
results, coupled with
excellent strategic progress,
despite challenges in
certain markets.
During the year, I was proud
to have been formally
appointed by the Board
as Chief Financial Officer
and it is a great honour and
privilege to be part of the
leadership of the Group
at such an exciting time.
Our business is the global
market leader with a long
track record of success
across a diversified range
of markets and I am
confident that we have
a very bright future,
continuing to deliver value
for all of our stakeholders.
Overview of 2023 performance
Supported by a normalisation of
supply in many of our markets, we
delivered a strong performance
across each of our regions, with
growth both organically and
supported by acquisitions. This helped
the Group to generate a record level
of free cash flow, which enabled
further strategic investments during
the year and a continuation of value
generation for shareholders.
Our businesses in APAC produced
excellent momentum, with growth
across the region, further accelerated
by three acquisitions completed
during the year.
Europe & Africa also performed well,
supported by an improvement in
supply, in comparison to a constrained
2022, leading to an unwinding of
our order bank, against a backdrop
of muted new consumer demand.
The Americas produced growth in
many markets, with Derco delivering
against all metrics, despite macro
challenges in a number of markets.
Despite these pressures, we continued
to take market share across the region
during the year.
HIGHLIGHTS
Revenue
£11.4bn
2022: £8.1bn
Free cash flow1
£498m
2022: £380m
Continued strategic progress
As Duncan highlighted on page 15,
we made significant strategic
progress during the year, with a
record number of distribution deals.
This helped us to build a foundation
for a more diversified business, to drive
on-going organic growth in the future.
The transformational acquisition
of Derco, completed at the end
of 2022, has seen the Group deliver
record levels of financial performance
and has helped to drive new revenue
opportunities across the group.
During the year, Derco delivered
margins in line with our expectations,
despite the challenging backdrop
in certain markets. In this context,
I am particularly pleased with the
progress we have made in normalising
the excess inventory in Derco, which
contributed to a positive working
capital inflow during the year.
The integration programme is well
on track, with cost synergies of £21m
delivered during the year. We now
expect to deliver at least £50m
by the end of FY 2024, with one-off
integration cash costs of £70m over
3 years, as we take more time to
integrate physical facilities and systems.
Financial performance and
balance sheet in 2023
The Group performed well against all
financial metrics, including revenue,
profit, and margins. In addition, we
delivered a record level of free cash
flow of £498m, a 74% conversion rate
of adjusted operating profit, which
is a testament to the fundamental
qualities of our business model.
The Group’s net debt position closed
the year at £601m, with leverage
at 0.8x, which remains below our
internally-mandated limit of 1x.
Over the medium term, we expect
to continue to generate strong free
cashflow which we will deploy in-line
with our capital allocation policy.
Adjusted operating margin1
Return on capital employed1
5.8%
2022: 5.1%
26%
2022: 41%2
Profit before tax and adjusting items1
Dividend per share
£502m
2022: £373m
33.9p
2022: 28.8p
1. These measures are Alternative Performance Measures, see pages 200 to 202.
2. Adjusted to remove capital employed of Derco, which was acquired on the last day of 2022 and
therefore did not contribute to operating profit during that year.
During the year, our capital structure
was further optimised to provide
stability and certainty in the medium
term, with 70% of our debt fixed and
over 50% has a maturity of at least
three years.
During the year, we successfully
issued a £350m public bond and
renewed our syndicated revolving
credit facility, increasing it to £900m
and extending its maturity to
December 2028.
Driving value for shareholders
We remain committed to delivering
value to shareholders through
a capital allocation policy which
has four key elements:
• to invest in the business to strongly
position it for the future;
• to make dividend payments;
• to conduct value-accretive M&A;
and
• in the absence of inorganic
opportunities, to consider share
buybacks, as appropriate.
Our dividend policy targets a 40%
annual payout ratio of basic adjusted
EPS, and as such our full year dividend
amounts to 33.9p compared to 28.8p
in 2022.
Outlook
Future growth and operating margin
delivery at Inchcape will be driven
by our market leadership, resilient
and cash generative business model,
diversified geographic footprint and
digital-led approach and supported
by acquisitions and contract wins.
The Group will also continue to invest
in digital capabilities to enhance
customer loyalty and drive margins.
FY 2024 is expected to be another
year of growth, albeit moderated,
with the Group maintaining prudent
expectations for recovery in FY 2024
in certain markets, which are weaker
than previous years. To that end, the
Group is driving an even stronger
focus on cost management to deliver
a moderated short term growth
profile, in the context of broader
market dynamics.
Over the medium to long term, the
Group is expecting to return to higher
levels of growth, compared to FY
2024, with many markets, particularly
in the Americas, expected to recover
from what are anticipated to be
towards historical lows in FY 2024.
Medium to long term growth will
be supported by the Group’s even
stronger focus on cost management.
ADRIAN LEWIS
GROUP CHIEF FINANCIAL OFFICER
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
27
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
CONTINUED
PERFORMANCE
REVIEW
Performance review: full year 2023
The Group delivered a strong
operational and financial
performance in 2023, driven by
top line growth and margins well
ahead of historic levels, supported
by a continued shift towards our
higher-margin and faster-growth
Distribution business.
Group revenue of £11.4bn (2022:
£8.1bn) rose 41% year-on-year
reported, supported by organic
growth and acquisitions. On an
organic basis, excluding currency
effects and net acquisitions, revenue
increased by 12%. This was
predominantly driven by volume
growth, as supply continued to
normalise, with some positive pricing
impact on new and used vehicles
across our Distribution businesses.
We maintained positive momentum
in APAC, while our performance
in Europe and Africa was supported
by an order bank unwind during
the year. Volume growth across
the Americas was flat, although we
continued to increase share in many
markets. Retail remained resilient.
The Group delivered an adjusted
operating profit of £669m (2022:
£411m), up 63% year-on-year
reported, reflecting our continued shift
towards Distribution, with organic
revenue growth, the contribution
of acquisitions, Derco synergies
and some operating leverage.
Adjusted operating margins
increased by 70bps to 5.8%. Included
within adjusted operating profit is
a net property profit of £14m (2022:
£2m), primarily related to the sale
of a property in Australia, which more
than offset impairment charges for
certain retail sites. The Group also
saw translational currency headwinds
of (£4m) during the year.
Adjusted profit before tax (PBT)
of £502m (2022: £373m) increased
as a result of the improvement
in revenue and operating profit.
This profit performance more than
offset the increase in adjusted net
interest expense to £168m (2022:
£38m). This increase is primarily due
to the shift in the Group’s capital
structure from Net Cash to a Net
Debt profile over the last 12 months,
following the acquisition of Derco, and
a higher interest rate environment.
During the year pre-tax adjusting
items amounted to an expense
of £89m (2022: £40m). This was
primarily driven by acquisition and
integration costs (£50m), of which
(£35m) related to Derco, the finance
component of the deferred Derco
dividend payment (£10m) and
non-cash, non-operational
losses arising from the adoption
of hyperinflation accounting relating
to Ethiopia (£29m).
The highly cash-generative nature of
our business model drove strong free
cash flow generation of £498m (2022:
£380m), representing a conversion of
adjusted operating profit of 74% (2022:
92%), above our guidance range of
60% – 70%, reflecting a stronger
working capital performance. The net
working capital inflow of £155m (2022:
inflow £75m) was driven by a £215m
reduction in excess inventory at Derco
and an alignment of supplier trading
terms, offset by a normalisation of
working capital elsewhere across the
Group. Net interest payments in the
year increased to £130m (2022: £20m),
excluding payment for leases, for
the reasons outlined above.
As at 31 December 2023, Group
adjusted net debt amounted to
£601m (2022: £378m) (excluding lease
liabilities), following ordinary dividend
payments of £128m, payments
relating to Derco of £267m and
acquisition outflows primarily for the
three acquisitions in APAC of £137m.
On an IFRS 16 basis (including lease
liabilities), the Group ended the
period with net debt of £1,041m
(December 2022: net debt of £877m).
Group leverage on a proforma
basis was approximately 0.8x at
31 December 2023, within the Group’s
internally-mandated leverage limit
of 1x (pre IFRS16).
In June 2023, the Group successfully
issued a £350m public bond, with
6.5% coupon and a five-year maturity.
The proceeds from the bond were
used to re-finance the bridge facility
put in place to fund the acquisition
of Derco, the initial term for which was
due to expire at the end of FY 2023.
Additionally, in December 2023, the
28
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Group’s syndicated revolving credit
facility was renewed and increased
to £900m, extending the maturity to
December 2028.
Return on capital employed over the
period was 26%, compared to 41%
for the equivalent period last year,
driven by the dilutive effect of
acquisitions, and in line with our
guidance of approximately 25%.
Update on Derco – delivering
against key metrics
We made further progress on the
integration of Derco during the year,
with all mobility company partner
relationships maintained or extended,
key personnel retained and the
technology integration on track.
As a result of the acquisition, the
Group consolidated its market
leadership position in the Americas,
with foundations in place for revenue
synergies, to help grow market share
and further extend our mobility
company partnerships in the region.
Furthermore, there were strategic
benefits achieved globally, including
distribution contracts with Great
Wall Motors in Indonesia and with
Changan in the Philippines and East
Africa, both of whom were historical
Derco relationships.
Derco delivered a resilient financial
performance in FY 2023, with
operating margin towards the top
end of the 5% – 7% range of a typical
distribution business, pre-synergies.
Furthermore, as a result of proactive
management action, excess
inventory of c.£200m was successfully
reduced during the year, resulting
in a strong working capital inflow.
This inflow was further supported
by an alignment of trading terms.
We achieved accelerated cost-
related annualised synergies in FY
2023 of £21m and we now expect
to deliver an additional £10m of
annualised cost synergies, of at least
£50m, by the end of FY 2024. One-
time integration cash costs of £70m
will be invested in driving these
synergies, of which £35m was invested
in FY 2023, with these costs now
expected to be incurred over three
years, to help support the future
delivery of cost-related synergies.
Looking ahead, we remain confident
that the high quality of the combined
Inchcape and Derco business, with
its leading market positions in the
Americas, will deliver strong revenue
and profit growth in the future.
DISTRIBUTION
The Distribution segment
reported revenue of £9.1bn
increasing 55% year-on-year,
with all regions growing
versus the prior year.
Distribution reported revenue of
£9.1bn, increasing 55% year-on-year
on a reported basis, reflecting the
contribution of acquisition as well
as organic growth, which was up 16%.
The combination of an excellent
revenue performance and margin
expansion of 70bps drove adjusted
operating profit1 of £629m (2022:
£363m). Adjusted operating margin1
rose 70bps to 6.9%.
APAC revenue was up 21% year-on-
year, reflecting organic growth of
16% and contribution of acquisitions.
Adjusted operating profit1 rose 44%,
with an elevated adjusted operating
margin of 8.3%. Excluding the impact
of property profits, operating margin
was higher year-on-year at 7.7%.
Our Asia markets performed well,
particularly Guam and Brunei. In Hong
Kong, where the market continued
to show some signs of recovery, we
delivered market share gains and
gained traction in certain segments
where our brands perform relatively
well. This was supported by a healthy
order bank and further progress in
diversifying our mobility company
partner portfolio, particularly in
Electric Vehicles. In Singapore, vehicle
licence availability remained well
below peak levels, but there were
some encouraging signs of licence
availability towards the end of the
year. In Australasia, our strong
performance was driven by
momentum in new vehicle volumes,
with market share gains achieved. This
was partly due to improved supply
against a strong opening order bank.
During Q3 2024, we made three
bolt-on distribution acquisitions
in APAC (CATS in the Philippines,
Mercedes-Benz in Indonesia and
Great Lake Motor Distributors in
New Zealand), which added an
aggregate c.£400m in annualised
revenue, with these businesses
starting to contribute in FY 2023.
Europe & Africa revenue was up 23%
year-on-year with adjusted operating
profit1 rising 47%, with elevated levels
of adjusted operating margin at 5.2%.
In Europe, accelerated supply and
an order bank unwind helped to
drive top-line growth and margin
performance. During the year, there
were particularly strong performances
from Belux, Greece and Romania. The
region’s elevated order bank reduced
during the course of 2023, and new
consumer demand remains muted in
a number of markets. Africa continues
to be an exciting long-term growth
prospect for the Group and has
performed well, supported by a
resilient aftermarket capability.
Americas revenue grew 153% year-on-
year, driven by the contribution from
Derco and organic growth of 7%.
Adjusted operating profit1 grew 138%,
with adjusted operating margin of
7.0%. Despite challenges across the
year in certain markets, and further
slowdown in a number of markets in
Q4 2023, we continued to gain market
share and drive growth in many
markets across the region, supported
by the benefit of diversification.
Our businesses in Peru, Bolivia,
Uruguay, Ecuador, across Central
America and in the Caribbean
performed well during the year, with
market share gains in a number of
these markets. Industry volumes in
Chile and Colombia were significantly
reduced from the prior year but our
businesses in those markets remain
resilient, with strong market share.
We remain confident about our
prospects in the Americas over the
medium to long-term, with our highly
diversified geographic footprint and
product portfolio, and supported
by the region’s high GDP growth
and low motorisation rates.
DISTRIBUTION REGIONAL BREAKDOWN
APAC
Europe & Africa
Americas
Revenue
Adjusted operating profit1
Adjusted operating margin1
2023
2022
9,093
2023
5,869
2022
629
363
6.9%
6.2%
2023
2022
1. Operating profit and operating margin stated pre-adjusting items.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
29
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
CONTINUED
RETAIL
Our Retail segment includes
the results of our UK and
Poland franchise dealerships
and our bravoauto business
in these markets.
Retail delivered organic revenue
growth of 3% and adjusted operating
profit1 declined (17)%, resulting in an
adjusted operating margin of 1.7%.
Retail remained resilient, despite
weaker consumer demand,
supported by new vehicle growth
from a stronger fleet market and
a robust aftersales business.
The reduction in operating profit
largely reflects a more normalised
margin in used cars.
As previously announced, following
approaches from a number of
interested parties, the Group is
reviewing strategic options for the
UK Retail business, which potentially
could include a sale. This review
remains at an early stage and there
can be no certainty that it will result
in a transaction. A further update
on this review will be provided as
and when appropriate.
We note that the FCA has announced
a review into historical finance
commission arrangements. We look
forward to the outcome of the
FCA review and the clarity that this
will bring for customers, lenders
and dealers.
RETAIL PERFORMANCE
Total Retail (UK & Poland)
Revenue
2023
2022
Adjusted operating profit1
Adjusted operating margin1
2,354
2023
2,264
2022
40
48
1.7%
2.1%
2023
2022
1. Operating profit and operating margin stated pre adjusting items.
30
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Non-controlling interests: Profits
attributable to our non-controlling
interests increased to £13m (2022:
£5m). Non-controlling interests now
include a 40% holding in the CATS
Group of Companies in the Philippines
and a 30% holding in the Mercedes-
Benz distribution business in Indonesia
following their acquisition by the
Group during the year. Other
significant non-controlling interests
include a 30% share in NBT Brunei
and a 10% share of Subaru Australia.
Dividend: The Board has proposed
a final ordinary dividend of 24.3p,
which is subject to the approval of
shareholders at the 2024 Annual
General meeting, and if approved will
be paid in June 2024. This follows an
interim dividend of 9.6p, and takes the
total dividend in respect of FY 2023
to 33.9p. The Dividend Reinvestment
Plan is available to ordinary
shareholders and the final date for
receipt of elections to participate is
24 May 2024.
Capital expenditure: During 2023,
the Group incurred net capital
expenditure of £62m (2022: £58m),
consisting of £93m of capital
expenditure (2022: £68m) and £31m
of proceeds from the disposal of
property, plant and equipment
(2022: £10m).
OTHER FINANCIAL
ITEMS
Adjusting items: In the year, we have
reported a pre-tax charge of £89m
(2022: £40m) in respect of adjusting
items. This was primarily driven by
acquisition and integration costs
(£50m), the finance component
of the deferred dividend payment
(£10m) and non-cash, non-
operational losses arising from the
adoption of hyperinflation accounting
relating to Ethiopia (£29m).
Net financing costs: Adjusted net
finance costs increased to £168m
(2022: £38m), primarily due to the shift
in the Group’s capital structure from
Net Cash to a Net Debt profile over
the last 12 months, following the
acquisition of Derco, and a higher
interest rate environment. Reported
net finance costs were £207m (2022:
£67m), as they included the finance
component of the deferred dividend
payment (£10m) and non-cash,
non-operational losses arising from
the adoption of hyperinflation
accounting relating to Ethiopia (£29m).
Tax: The effective tax rate on adjusted
profit is 27.9% (2022: 26.0%), within the
Group’s guidance range of between
27% and 28%, and on a statutory basis
is 31.5% (2022: 29.4%). The effective tax
rate on adjusted profit continues to
be higher than the weighted average
tax rate (22.4%) due primarily to the
impact of unrecognised deferred tax
assets across the group, principally
in the UK and Americas.
Financing: As at 31 December 2023,
the funding structure of the Group
is comprised of a committed
syndicated revolving credit facility of
£900m (2022: £700m), sterling Private
Placement Loan Notes totalling £210m
(2022: £210m), a 5-year bond of
£350m, at a fixed coupon of 6.5%,
a term facility of £250m (2022: £250m)
and debt remaining outstanding from
acquisitions (including prior year
acquisitions) of £80m (2022: £617m).
As at 31 December 2023, £150m of
the syndicated revolving credit facility
was drawn (2022: undrawn). For
our corporate debt, excluding our
Revolving Credit Facility, around 70%
is at fixed rates and over 50% has a
maturity of at least 3 years. The Group
remains well within its debt covenants.
Pensions: As at 31 December 2023,
the IAS 19 net post-retirement surplus
was £67m (2022: £93m), with the
decrease driven largely by lower than
expected returns on scheme assets
and movements in corporate bond
yields affecting the discount rate
assumption used to determine the
value of scheme liabilities. In line
with the funding programme agreed
with the Trustees, the Group made
additional cash contributions to the
UK pension schemes of £2m (2022:
£3m). In addition, the Group acquired
post-retirement liabilities of £11m as a
result of the acquisitions in the year.
Acquisitions: During the year
the Group continued to further
expand its distribution footprint,
completing three acquisitions
during the year, amounting to net
acquisition outflows of £146m, with
£23m of additional debt acquired
(excluding lease liabilities).
VALUE DRIVERS
We provide disclosure on the value drivers behind the Group’s gross profit. This includes:
• Gross profit attributable to Vehicles: New Vehicles, Used Vehicles and the associated income from Finance
and Insurance products; and
• Gross profit attributable to Aftersales: Service and Parts.
Vehicles
2023
2022
Aftersales
1,391
2023
548
883
2022
442
We operate across the automotive value chain, and during the year we generated 28% of gross profit through Aftersales
(2022: 33%). This reflects greater gross profit contribution from vehicles as volumes improved, the contribution of acquisitions
and higher vehicle gross margins.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
31
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
CONTINUED
REGIONAL BUSINESS MODELS
DISTRIBUTION
Exclusive distribution, sales and marketing activities of New Vehicles and Parts. Sale of New and Used Vehicles together with
logistics services where the Group may also be the exclusive distributor, alongside associated Aftersales activities of service,
body shop repairs and parts sales.
Americas
Country
Argentina
Barbados1
Bolivia
Chile
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Honduras
Panama
Peru
Uruguay
Brands
Subaru, Suzuki
Chrysler, Daimler Trucks, Dodge, Freightliner, Fuso, Isuzu, JCB, Jeep, John Deere, Mercedes-Benz, Mitsubishi,
Subaru, Suzuki, Western Star
Changan, Chevrolet, JAC Motors, Komatsu, Mazda, Renault, Still, Subaru, Suzuki
BMW, BMW Motorrad, DFSK, Changan, Geely, Great Wall, Hangcha, Haval, Hino, JAC Motors, Jaguar, JCB, Komatsu,
Land Rover, Landini, Massey Ferguson, Mazda, MINI, Porsche, Renault, Rolls-Royce, Still, Subaru, Suzuki, Volvo
Citroen, Develon, DFSK, Dieci, Doosan, DS Automobiles, Hangcha, Hino, Jaguar, Komatsu, Land Rover, Liebher,
Linde, Mack, Mercedes-Benz, Still, Subaru, Suzuki, XCMG
Changan, JAC, Suzuki
Freightliner, Geely, Mercedes-Benz, Subaru, Western Star
Freightliner, Geely, Mercedes-Benz, Western Star
Freightliner, Geely, Mercedes-Benz, Western Star
Freightliner, Geely, Mercedes-Benz, Western Star
Suzuki
BMW, BMW Motorrad, Changan, Citroen, DFSK, Great Wall, Haval, Hino, JAC Motors, Komatsu, Mazda, MINI,
Renault, Still, Subaru, Suzuki, XCMG
Freightliner, Fuso, Mercedes-Benz
1. Distribution agreements for these brands across a range of Caribbean islands, centred on Barbados.
APAC
Country
Brunei
Guam2
Hong Kong
Indonesia
Macau
Saipan
Singapore
Philippines
Thailand
Australia
New Zealand
Brands
Lexus, Toyota
BMW, Chevrolet, Lexus, Toyota, Morrico heavy equipment3
Hino, Jaguar, Land Rover, Lexus, Maxus, ORA, Toyota
Great Wall, Harley-Davidson, Jaguar, Land Rover, Mercedes-Benz
Hino, Jaguar, Land Rover, Lexus, ORA, Toyota
Toyota, Lexus
BYD commercial vehicles, Hino, Lexus, Suzuki, Toyota
Changan, Harley Davidson, Jaguar, Land Rover, Mazda, Mercedes-Benz, Ram
Jaguar, Land Rover, Tata Motors
Citroen, Peugeot, Subaru
Maxus, Subaru
2. Distribution agreements for these brands across a range of Pacific islands, centred on Guam.
3. Morrico heavy equipment – Bomag, CNHI International SA, Cummins, Daimler, Detroit Diesel International Direct, Dieci, DTNA, EL Industries, Fuso, Haulotte,
Hyundai, Kohler, Load King, New Holland, Rosenbauer, Schwarze, Sullivan Palatek, Vac Con, WanCo.
Europe & Africa
Country
Belgium
Bulgaria
Estonia
Finland
Greece
Latvia
Lithuania
Luxembourg
North Macedonia
Poland
Romania
Djibouti
Ethiopia
Kenya
Brands
BYD, BYD commercial vehicles, Lexus, Toyota
Lexus, Toyota
BMW, BMW Motorrad, Jaguar, Land Rover, Mazda, MINI
Jaguar, Land Rover, Mazda
Lexus, Toyota
BMW, BMW Motorrad, Ford, Jaguar, Land Rover, Mazda, MINI
BMW, BMW Motorrad, Ford, Jaguar, Land Rover, Mazda, MINI
BYD, Lexus, Toyota
Lexus, Toyota
Jaguar, Land Rover
Lexus, Toyota
BMW, Changan, Komatsu, Toyota
Hino, Komatsu, New Holland, Suzuki, Toyota
BMW, BMW Motorrad, Changan, Jaguar, Land Rover
Tanzania
Changan
RETAIL
Sale of New and Used Vehicles, together with associated Aftersales activities of service, body shop repairs and parts sales in the UK and Europe.
Country
Australia4
Poland
UK
Brands
Isuzu Ute, Jeep, Kia, Mitsubishi, Volkswagen
BMW, BMW Motorrad, MINI
Audi, BMW, Jaguar, Land Rover, Lexus, Mercedes-Benz, MINI, Porsche, Smart, Toyota, Volkswagen
4. Following scale disposal of retail businesses in Australia, no longer disclosed within Retail.
32
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
RESPONSIBLE BUSINESS
DRIVING WHAT MATTERS
Being a responsible business is reflective of our purpose and
a fundamental part of our strategy, mapping the way Inchcape
creates sustainable value for all our stakeholders.
Being a responsible business provides measurable benefits
to society as a whole and to Inchcape: it makes Inchcape
a more rewarding and safer place to work; it helps us
recruit, engage, and retain the best talent; and it ensures
we remain a trusted business to the mobility company
partners with whom we work. All are fundamental to the
successful delivery of our Accelerate strategy and to
ensuring Inchcape’s sustainability for the long-term.
For Inchcape, being a responsible business extends into
other key areas of our operations where we seek to make
a positive difference for our stakeholders:
• by improving inclusion and diversity in our businesses;
• by providing full accessibility for our customers;
• by ensuring the safety and supporting the health
and wellbeing of our colleagues; and
• in supporting mobility and economic development
in the communities in which we operate.
Being a responsible business is reflective of our purpose
and a fundamental part of our strategy. To deliver this,
our ‘Driving What Matters’ plan has been designed
collaboratively with our markets, for ownership and delivery
by our teams locally. The plan concentrates on our four
pillars of Responsible Business – Planet, People, Places,
and Practices.
Mindful of the need to reflect the different laws, regulations,
and cultures where we operate, we have designed
a global framework with workstream charters that local
markets use to respond to what is important to meet the
needs of their local stakeholders.
ENGAGING STAKEHOLDERS IN 4 STEPS
STEP 1
STEP 2
STEP 3
STEP 4
STAKEHOLDER
EXPLORATION
STAKEHOLDER
ANALYSIS &
MAPPING
STAKEHOLDER
COMMUNICATION
STRATEGY
INSPECT AND
ADAPT
MATERIALITY ASSESSMENT
Prioritising sustainability issues
In 2023, we undertook a materiality assessment in order
to determine the sustainability issues that matter most
to our business and stakeholders. As a global business,
Inchcape impacts, and is impacted by, a wide range of
potential environmental, social, and governance-related
issues. Assessing, prioritising, and understanding our role
in addressing these issues is important to the ongoing
success of our business, and is essential to guiding our
Responsible Business strategy.
The assessment allowed us to capture the views of our
stakeholders, their expectations of us as an organisation,
and how their requirements and concerns have evolved.
The outcomes of the assessment will help ensure that we
are taking action on issues most important to our business
and stakeholders.
Our process
Conducted with the support of an external sustainability
partner, we undertook a robust evaluation process in line
with the standards of the Global Reporting Initiative (GRI).
The GRI is a leading, internationally recognised framework
that guides disclosures around the inward and outward
impacts of an organisation that will become financially
material over time.
We began by assessing sustainability standards,
benchmarking against peer organisations, and researching
current and emerging sustainability issues in order to create
a shortlist of 14 key issues that are potentially material
to our business. We then mapped these issues to the GRI
and Sustainability Accounting Standards Board frameworks
in order to align with best practice for reporting.
To build on and contextualise this work, we undertook
an extensive programme of surveys and interviews with
key internal and external stakeholders, in order to gather
qualitative and quantitative insights on the importance
of these topics to Inchcape’s global colleagues and
stakeholders. We included five key stakeholder groups in
the materiality process, tailoring our approach to Inchcape
senior leadership, colleagues, mobility company partners,
investors, and industry bodies.
We asked survey respondents to give both absolute and
relative importance, risk, and opportunity scores for key
issues across our four Responsible Business pillars. We also
asked qualitative questions about each stakeholder’s
perception of our current performance on each issue,
as well as its strategic importance to our business.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
33
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
Our stakeholders
Inchcape engages with internal and external stakeholders
to inform our Responsible Business framework. We engage
with stakeholders both at a Group level and in our markets.
The long-term success of the business and the effectiveness
of our engagement on sustainability issues are dependent
on the continued trust and support of all our stakeholders.
Further information on stakeholder engagement can be
found on pages 20 to 22.
The materiality assessment involved:
1,271
survey respondents
4
Inchcape regions
34
countries
33
interviews conducted
RESPONSIBLE BUSINESS
CONTINUED
We conducted 33 interviews with a representative sample
of key stakeholders to contextualise and further review
the findings of our survey. Additionally, we conducted
focus groups with customers in Australia and Chile focusing
on automotive sustainability, including perspectives
on electric vehicles (EVs), which fed into our positioning.
Our materiality surveys received nearly 1,300 total
responses, representing 34 countries in which we have
a presence. After gathering and analysing all of our
assessment data, we mapped the findings onto several
matrices to inform decisions and action – most notably
our double materiality matrix, presented below. Double
materiality considers both inward and outward impacts
on and of our business over time. We discussed and
reviewed the findings in workshops with senior leaders
from within the business and finalised the matrix with
the Board and Group Executive Team.
We also built a prioritisation matrix, which mapped issues
by their importance to our stakeholders and our ability
to influence. This will support future considerations around
which sustainability issues we prioritise through our
Responsible Business strategy, and how we allocate time
and resources. This matrix will also be used to inform how
we mitigate or capitalise on our key risks and opportunities.
Results: Materiality Matrix
People
1 Wellbeing, health, and safety
6 Learning and development
12 Inclusion, diversity, and equity
Places
2 Direct community impact
4 Road safety
9 Shared value systems
14 Indirect community impact
5
10
8
13
Practices
3 Cybersecurity
7 Responsible governance
8 Partners’ ESG performance
Planet
5 Sustainable mobility
10 Circularity
11 GHG emissions (direct)
13 GHG emissions (indirect)
h
g
H
i
t
c
a
p
m
i
d
r
a
w
n
I
i
m
u
d
e
M
w
o
L
1
3
6
12
11
2
7
4
14
9
Low
Medium
Outward impact
High
34
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
PEOPLE
Our colleagues are at the heart
of the People pillar of our ‘Driving
What Matters’ plan, which aims to
ensure we have a safe operating
environment with an inclusive and
diverse culture as well as the best
talent and skills to deliver our future
success. The People pillar encompasses
the three main themes: Inclusion
& Diversity; safety, health, and
wellbeing; and talent & skills.
A breakdown of the Group’s gender
diversity can be found on page 81
650+
leaders engaged
in the Inclusive
Leadership Programme
118
sites completed the
Accessibility Analysis
8
cohorts of the Women into
Leadership Programme
808
colleagues on an Early
Careers Programme
Inclusion & Diversity (I&D)
In our ongoing commitment to I&D, our Inclusive Leadership
Programme has successfully engaged over 650 colleagues
globally since 2021, which includes all senior leaders. Plans
are underway for the next phase of the programme with
our senior leaders which will involve a practical learning
session focused on navigating non-inclusive behaviour
and an action planning session to create their I&D plans
for 2024 and beyond.
In 2023, we globally launched our first I&D e-learning
module, which has been completed by c.8,800 colleagues,
with implementation ongoing into 2024. Additionally, an
Inclusive Hiring Training Programme was created, with pilot
workshops involving 100+ colleagues and managers across
all regions laying the foundation for a global rollout in 2024.
Our disability inclusion group, Inchcape Enabled, hosted
impactful webinars with 4,000 participants and rolled out
the Accessibility Project across Australia and the United
Kingdom, completing audits at all 118 sites. The project
aims to understand and review the experience for
colleagues and customers with disabilities across our
sites. Recommendations for site accessibility are being
formulated for 2024, with further audits planned in
additional markets.
Safety, health, and wellbeing
We have prioritised colleagues’ safety, health, and
wellbeing by establishing global minimum standards,
encompassing our colleague assistance programme,
flexible working, life insurance, and parental leave. These
standards, alongside health and wellbeing roadmaps,
are being rolled out across markets to cater to the diverse
needs of our communities.
The launch of the health and safety culture survey in 2024 is
a proactive measure to continue cultivating a workplace
culture and collective sense of responsibility for everyone’s
safety and wellbeing. The findings will provide valuable
insights and improvements to enhance existing protocols,
ensuring continuous improvement in our overall health and
safety practices.
Talent & skills
We are tracking and refocusing our Early Careers
Programmes to align with future strategic skills. Currently
808 colleagues are on an Early Careers Programme and
the structured feedback process we are introducing will
enhance their experience and amplify their voices.
Through the launch of eight cohorts of the Women into
Leadership Programme since 2021, we have had over
100 female colleagues at Inchcape graduate from the
programme and we continue to track their progression
in the business. Our Non-Executive Directors and senior
leaders of all genders have actively contributed as
speakers, providing invaluable personal insights and
mentorship within this transformative initiative.
Feedback from the Women into Leadership Programme
participants demonstrates how important this development
is for early on in women’s careers. Therefore, we are in the
process of building the Aspire Women Programme focused
on the careers of our junior female talent.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
35
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RESPONSIBLE BUSINESS
CONTINUED
DRIVING BRILLIANT
COLLEAGUE ENGAGEMENT
Be Heard 2023 colleague experience survey
Be Heard 2023 in numbers
88%
of colleagues
completed the survey
72%
of colleagues intend to
stay for three years or more
89%
would recommend Inchcape
products or services
to people they know
82%
Inclusion score – a standout
strength and industry-leading
performance
81%
would recommend Inchcape
as a place to work
3%
above external benchmarks
for confidence in senior
leadership to make the
right decisions for Inchcape
In 2023, Inchcape launched its new global
colleague experience survey – Be Heard.
The survey approach was developed on an industry-
leading platform and methodology. Members of the global
People team collaboratively designed it to measure
colleague views and sentiment, as well as support the
behaviours needed to deliver our Accelerate strategy.
Over 16,000 colleagues completed the survey, including
the colleagues who joined the business in January 2023
from the Derco acquisition.
Across the business, the results have been shared and
discussed openly and teams are now focused on the
development and delivery of action plans. These plans,
designed by leaders in partnership with colleagues,
prioritise the actions needed to enhance colleague
experience and support better business performance.
The survey will run annually from 2023 onwards.
Global areas of focus:
• Our strengths
Strong levels of engagement and high levels of advocacy
and confidence in the future. Core elements of Inclusion
are at high performing levels.
• Our areas of development
Enhancing communication of change, build understanding
of reward and benefits, and improve line manager
capabilities around career development and wellbeing.
36
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
PLACES
At Inchcape we want to make
a positive contribution to our
communities. The Places pillar focuses
on improving mobility and quality of life
in the communities in which we operate
by working in three areas: Safe Mobility,
Inclusive Mobility, and Social Mobility.
88
initiatives across Safe Mobility,
Inclusive Mobility, and Social Mobility
6,500+
colleagues enrolled in supporting
Places initiatives locally
40,000+
members of our communities
positively impacted through
educational programmes,
volunteering, and donations
Social Mobility
We have undertaken more than 20 initiatives globally,
fostering partnerships with educational institutions,
collaborating with local industries to uplift underprivileged
and underrepresented groups, and actively participating
in recycling projects across vulnerable communities.
Our collective projects have reached over 40,000
members of the community and further increases social
inclusivity and the promotion of upward mobility for all.
Safe Mobility
We have implemented 21 safe mobility initiatives across
all regions, collaborating with our brand partners and
collectively influencing thousands of lives within our
communities. These range from toolkits on safe driving
in poor conditions in the UK, rolling out safety mobility
training across Europe & Africa, promotion of safe driving
online in the Americas, and safe driving pledges in APAC.
Inclusive Mobility
We proudly support and sponsor initiatives across various
markets, aimed at enhancing physical mobility and
fostering better access for individuals living with disabilities.
In our Americas region, our prosthetics programme has not
only supported our environmental efforts but has also
resulted in tangible benefits for our local communities.
Through these innovative recycling practices, we have
repurposed materials to provide 156 prosthetic donations
to members of the community with disabilities, offering
them a renewed sense of independence and inclusivity.
Accessibility audits were also completed across all of
our Australia and United Kingdom sites.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
37
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RESPONSIBLE BUSINESS
CONTINUED
PRACTICES
As a global business we have huge
opportunities, but also a great sense
of our responsibilities. Being an ethical
organisation depends on everyone,
and at Inchcape we will continue
to update and strengthen our
practices to ensure our colleagues
always do what is right.
95%
completion of Code of Conduct
training by colleagues
25
policy summaries contained
within the launched Global
Policy Statement Handbook
Success
in integration & onboarding
Code of Conduct
Training for our Code of Conduct has seen good progress,
with 95% completion achieved. In 2023, we reviewed and
updated our Code of Conduct to include additional
guidance on our Planet commitments and outline our
evolved responsibilities in addressing climate change
and energy efficiency management to ensure we can
meet our climate change targets. The updated Code
of Conduct was cascaded to all colleagues.
Global Policy Statement Handbook
We launched our Global Policy Statement Handbook
which provides the highest standards of governance
to help strengthen the decisions we make and so that
our colleagues, mobility company partners, customers,
shareholders, suppliers, and communities in which
we operate are clear on our values and how they underpin
the company we want to be. The handbook provides
summary statements of all our global policies, training
requirements, and where to go for more information.
Integration and onboarding
The success of our integration and onboarding processes
for our newly acquired businesses and joint ventures reflects
our collaborative and inclusive culture at Inchcape. Our
approach empowers our new colleagues to excel in their
roles from the beginning. It incorporates activities on our
One Inchcape Values and Behaviours, Q&A sessions with
senior leaders, tailored training modules, and opportunities
for personal development. This includes fundamental
learning on our Code of Conduct and Speak Up processes,
maintaining the highest standards, and ensuring alignment
with our ethical principles across the business.
38
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
PLANET
Understanding the impact our industry
has upon the environment and also
the likely impact of climate change
upon our business means that we
can be well prepared for the future
challenges. Our journey to become
the lowest carbon route to market
is underway supported in three areas:
understanding, reporting and acting
upon climate-related risks and
opportunities; reducing our scope
1 and 2 emissions; and, addressing
our value chain emissions.
Further information on pages 40 to 53
32%
sites covered by renewable tariffs
21,000
CO2 tonnes reduced against 2019
revised baseline on a market-basis
22%
of vehicles sold are new
energy vehicles
Addressing our value chain emissions
The Group has mapped its value chain emissions which
provides the baseline to address scope 3 emissions, using
the Group’s influence, where possible, to help to reduce
them. The Group continues to work on identifying the routes
to market where Inchcape really has control over emissions
and has a realistic chance of making meaningful reductions.
Understanding, reporting, and acting upon
climate change risks and opportunities
We undertake Group-wide exercises to understand our
climate change risks and opportunities. This includes
hotspot analysis in each market, which helps determine
direction on where to focus efforts as regions develop
costed five-year plans. Quantifying the potential impacts
of the most important risks are then incorporated into
the Group’s financial planning.
Scope 1 and 2 emissions
We have set science-based targets for scope one and
two emissions with the aim of halving emissions by 2030
and achieving net zero by 2040. The key programmes
to achieve this include reducing energy usage,
electrification of new sites, onsite generation of solar
panels, and switching to green tariffs at the first opportunity.
Toolkits and training are provided to markets, including
on energy management and sub-metering guidance.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
39
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
OUR APPROACH TO
CLIMATE CHANGE
The automotive sector is a significant contributor to global greenhouse gas emissions.
Man-made climate change, and the actions that societies and policy makers are taking
to seek to minimise its effects, will have material impacts upon our business. We incorporate
consideration of those impacts into the development of our strategy and into our risk analysis.
We set relevant and appropriate metrics and targets and operate within a robust
governance framework.
The climate-related financial disclosures made by Inchcape plc comply with the requirements of the Companies
Act 2006 as amended by the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022.
This year, our disclosure is consistent with the TCFD recommendations except for the disclosure of an Internal Carbon
Price (ICP), which we explain in the metrics and targets section on page 52. We have also not quantified the
potential financial impact for Risk 4 and Opportunities 1 and 2 in this disclosure because the data is not yet
sufficiently robust. We have therefore concluded that such analysis would not lead to better informed decision
making at this stage, but we expect to build on these strong foundations in future disclosures.
TCFD Index
TCFD Disclosure
Description of progress
Page reference
Governance
a) Describe the board’s oversight of climate-related risks and opportunities.
Page 41 to 42
b) Describe management’s role in assessing and managing climate-related
risks and opportunities.
Strategy
a) Describe the climate-related risks and opportunities the organisation has
Page 43 to 44
identified over the short, medium, and long-term.
b) Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning.
c) Describe the resilience of the organisation’s strategy, taking into consideration
different climate related scenarios, including a 2°C or lower scenario.
Risk Management
a) Describe the organisation’s process for identifying and assessing climate risk.
Page 44 to 49
b) Describe the organisations processes for managing climate-related risks.
c) Describe how processes for identifying, assessing, and managing climate-
related risks are integrated into the organisation’s overall risk management.
Metrics and targets
a) Disclose the metrics used by the organisation to assess climate-related
Pages 50 to 52
risks and opportunities in line with its strategy and risk management process.
b) Disclose scope 1, 2, and, if appropriate, scope 3 greenhouse gas emissions and
the related risks.
c) Describe the targets used by the organisation to manage climate-related risks
and opportunities and performance against targets.
Aligned
aligned
partially aligned
unaligned
40
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
GOVERNANCE
a) Board’s oversight of climate-related risks
and opportunities
Inchcape considers climate change to be a critical
strategic issue and it is considered by the Board during
its discussions on strategy, risk management, remuneration,
financial performance, and ESG matters. The Board is
also responsible for approving and monitoring strategic
programmes and expenditure. Further information on
the Board’s consideration of climate change in relation
to strategy is given on page 43.
At the beginning of the year the Board considered the
work undertaken to quantify the Group’s principal climate-
related risks and opportunities (CROs) and the Group’s
scope 3 emissions including the degree of control that the
Company has over those emissions. The Board followed a
three-step approach to assess the potential to set scope 3
emissions targets. The Board considered the level of control
the Company has in relation to different scope 3 categories
and the assessment of emissions trajectories to 2030 under
different scenarios. The Board determined that the Company
would not be able to set emissions targets in line with the
requirements of the Science Based Targets Initiative that it
would have a realistic prospect of being able to achieve.
Recognising, however, the need to address its scope 3
emissions, the Board undertook to:
• do everything in our control to reduce scope 3 emissions,
at the fastest pace possible;
• take into account scope 3 emissions in the context of its
choices about mobility company partners and portfolio
considerations; and
• support customers, teams, and mobility company
partners in the transition.
Whilst the Board has responsibility for overseeing strategic
climate-related matters, other climate-related matters,
such as reviewing progress against climate-related
reduction targets, are delegated to other Board and
management committees.
The CSR Committee is responsible for ensuring the ‘Driving
What Matters’ plan (Plan) is fit for purpose and appropriate
metrics and targets are in place and reported upon.
The Plan consists of four pillars: People, Places, Practices
and Planet. It is the Planet pillar that has responsibility
for considering the impact the industry has on the
environment, and the likely impact of climate change
upon the business. The Planet pillar remit includes:
• understanding, reporting, and acting upon climate
change risks and opportunities;
• reducing the Group’s controllable emissions; and
• defining our approach towards value chain emissions.
The CSR Committee meets three times a year and reviews
progress of the Planet pillar against its action plans and
emissions reduction targets. Further information on the
activities of the CSR Committee are given on pages 90
and 91, and the Planet pillar is given on page 39.
The Audit Committee is responsible for reviewing the
Group’s principal and emerging risks, including those
impacted by climate change and provides advice to
the Board to enable it to carry out its annual review of
the Group’s risk profile. The Audit Committee also considers
the impact of climate change when assessing significant
accounting judgements and the ongoing viability of the
Group. The Audit Committee meets four times a year, with
risks being considered at every meeting and significant
accounting judgements considered twice a year. Further
information on the activities of the Audit Committee is
given on pages 82 to 89.
The Remuneration Committee has responsibility for
considering the inclusion of climate-related metrics in the
Group’s incentive plans. Scope 1 and 2 emissions reduction
targets were included in the 2023 bonus plan for the Group
Chief Executive (CEO), and the Committee reviewed
progress against targets when approving outcomes for
the year. Further information is given in the Directors’ Report
on Remuneration on pages 107.
b) Management’s role in assessing and managing
climate-related risks and opportunities
The Group Executive Team (GET) has primary responsibility
for assessing and monitoring climate related risks and
opportunities as part of the:
• development, and implementation of the Accelerate
Strategy; and
• implementation of the Group’s enterprise risk
management (ERM) framework.
In developing the Accelerate strategy, the OEM Pipeline
Committee considers entering into relationships with new
mobility company partners taking into account the risk
of misalignment between our product portfolio in a given
market and the pace of EV adoption in that market.
Detailed ERM plans to mitigate short-term climate-related
risks are developed by each region with approval and
oversight on progress by the GET. In addition, the members
of the GET are responsible for identifying and managing
risks in their own business areas and the GET as a whole
determines the Group’s principal risks at both the half year
and year end following a comprehensive risk management
review process.
Regional scope 1 and 2 emissions reduction plans are
regularly assessed by the CEO, Group Chief Financial
Officer (CFO), and Chief Sustainability Officer, while the
Investment Committee approves any material capital
expenditure required to help to achieve the targets.
The Sustainability Reporting and Disclosure Committee
(formerly the TCFD Working Group) consists of the CFO,
Group General Counsel & Chief Sustainability Officer,
Chief Strategy Officer, Head of Internal Audit, and Group
Company Secretary. The Group meets quarterly to monitor
the main climate-related risks and opportunities, in the
context of strategy, governance and financial
performance. Functional leaders from Finance, Legal,
Strategy, Risk, and the Planet pillar, monitor:
• GHG emissions – progress against scope 1 and 2
reduction targets, and assessment of scope 3 footprint;
• impact on impairment;
• existing and emerging climate-related regulatory
requirements;
• integration of climate-related risks into ERM framework;
and
• implementation of policies, tools, and best practices
throughout the Group.
Please see the Governance Framework
on page 42 for further information
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
41
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
GOVERNANCE FRAMEWORK
THE BOARD
The Board has ultimate responsibility for overseeing strategic climate-related
matters and oversight of the Group’s strategy, which includes consideration
of climate-related risks and opportunities and the impact on the long-term
sustainable success of the Group.
The Board’s responsibilities include:
• Overseeing the Group’s strategy.
• Ensuring maintenance of effective risk management
and internal control system, including approval of
the Group’s Principal Risks.
• Approving risk appetite and risk policy.
• Approving the Group’s emissions reduction targets
for scopes 1 and 2, considering scope 3 emissions,
and the implications on strategy.
• Approving TCFD disclosure and other sustainability
related disclosures.
CSR
COMMITTEE
AUDIT
COMMITTEE
REMUNERATION
COMMITTEE
• Oversight of the Planet pillar of the
Responsible Business framework.
• Agrees emission reduction targets
and monitors progress against plans
for each region.
• Reviews TCFD disclosure.
• Oversight of risks management
and internal control frameworks,
including CROs.
• Ensures CROs are effectively
managed, and emerging climate
risks are identified and monitored.
• Reviews impact of CROs on
significant accounting judgements
such as impairment.
• Ensures alignment of the Group’s
remuneration policies and
procedures to achieve
sustainability related goals.
• Reviews and approves level
of emissions reduction targets
in CEO and CFO bonuses.
• Consideration of climate-related
target for long-term incentives
schemes.
GROUP EXECUTIVE COMMITTEE
Responsibilities include:
• Design of strategy – considering strategic choices through
a climate change lens.
• Implementation of risk management framework – related
oversight of how climate-related risks are being continually
assessed at regional level.
• Financial performance – impact of climate on future cash
flows and impairment.
• Business development – assessment of current and future
mobility partners, and market infrastructure.
• Customers – consideration of changing consumer
preferences in relation to new energy vehicles (NEVs).
SUSTAINABILITY REPORTING
AND DISCLOSURE COMMITTEE
(previously TCFD working group)
• Engage with functional teams in
developing KPIs, risk assessment
and management, data collection,
and climate-related disclosures.
• Led the quantification of the
CROs and oversees an annual
review to ensure the assessments
remain appropriate.
OEM PIPELINE COMMITTEE
• The committee consists of all
members of the GET.
• Considers new mobility partners and
business development, taking into
account misalignment risk analysis
and mitigations against this.
INVESTMENT COMMITTEE
• The committee consists of the
Group Chief Executive, Group Chief
Financial Officer, and the Group
General Counsel and Chief
Sustainability Officer.
• Approves capital expenditure in
relation to climate-related projects,
such as the purchase of solar panels.
• Reviews energy efficiency designs of
new sites and refurbishments.
FINANCE
• The Group-wide
emissions reporting
framework.
• Consideration
of the financial
impact of climate
change on
impairment
assessment.
STRATEGY
• Monitor changing
EV environment in
terms of mobility
partners,
customers, and
infrastructure in the
markets in which
the Group
operates.
RISK
• Integration of CROs
into the Group’s
ERM framework.
• Monitor and
escalate principal
and emerging
climate risks.
LEGAL
• Review existing
& emerging
regulatory
requirements.
• Consideration of
mobility company
partners approach
to climate-change
risks and
opportunities.
SUSTAINABILITY
• Review progress
against scope 1
and 2 targets for
each region.
• Monitoring the
implementation of
policies, tools, and
best practice.
42
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
STRATEGY
a) Climate-related risks and opportunities over the short,
medium, and long term
The impacts of man-made climate change are material
and are being felt today by the customers and
communities that we serve. Those impacts will only grow
over time. The automotive sector recognises this and is on
a journey to decarbonise. This journey will bring risks and
opportunities for our business; consideration of those risks
and opportunities is therefore an integral part of the
process to define and execute our strategy.
Transition and physical risks can manifest over different time
horizons. We have evaluated the implications of climate
risks and opportunities over the following time periods:
• Short term (up to 2026): a three-year period aligns with
our viability assessment and incorporates the actions
needed to achieve our short-term targets;
• Medium term (up to 2030): this time period aligns
with our interim climate-related targets; and
• Long-term (2030 to 2050): this time period aligns
with our long-term climate-related targets.
To identify our climate-related risks, we have looked
at transition and physical risks. Transition risks are risks
associated with changes to the way markets operate
that may result from regulation or consumer habits as
we transition to a low carbon economy. Physical risks
are the exposure of our assets or value chain to physical
hazards caused by the effects of climate change.
Transition risks bring the most material climate-related
impacts to our business. We identify these risks and
opportunities through:
• regulatory horizon scanning. Senior leadership and their
teams are accountable for identifying regulatory risk
and incorporating these into the existing risk register; and
• assessment of key external forces such as market,
technology, and political and social trends that could
affect the business or our reputation. Our Strategy team
specifically recognises climate change as an external
force linked to market and technology risks.
Our exposure to physical risk is identified and monitored
through our scenario analysis. We assess the impact of
six different acute hazards against our assets out to 2050.
We screen our sites for insured value, stock value and
exposure to physical hazards using climate models.
b) Describe the impact of climate-related risks and
opportunities on the organisation’s business, strategy,
and financial planning
The most material climate-related risks to the Group’s
business, strategy, and financial planning are given in the
table on page 48. Impacts include loss of market share
in the markets in which we operate, reduction in aftersales
revenue, pressure on distributor margins and financial loss
due to damage caused by extreme weather events.
To reduce the potential impacts of climate risks and take
advantage of opportunities, the Board considers:
• the misalignment risk analysis is used to inform mobility
partner participation and consolidation strategy;
• new aftersales revenue streams to develop aftersales
strategy;
• identification and development of alternative value
pools to offset margin risk; and
• incorporation of transition and physical risk
considerations in acquisitions and future growth plans.
During the Strategy Day in May, the Board carried out a
deep dive into the following areas in addition to its broader
discussion on strategy:
Powertrain
Impact of BEV adoption on global emissions
Alternative EV powertrains
Regional EV adoption
EV batteries
Market
Regulation
Impact of subsidies
EV adoption forecasts
Mobility company partner landscape
Mobility company partner commitments
Misalignment
Mobility
company
partners
Key risk
The Board also considered portfolio choices in the
context of climate change which considers the Group’s
participation strategy through the lens of sustainability
and guiding principles on businesses we own today
and businesses that we may acquire in the future.
This has led to a considered approach to M&A as
evidenced by the recent acquisition of Great Lake Motor
Distributors (GLM) in New Zealand. The New Zealand
automotive market is going through a dramatic shift away
from internal combustion engine (ICE) vehicles towards
electric vehicles (EVs), driven by Government legislation
and supported by a strong charging network and
consumer appetite. The Group’s mobility company partner
in the market prior to the acquisition of GLM consisted
of an ICE product line-up only with EV models not likely
to be available for some time.
The acquisition of GLM gives the business access to
commercial battery electric vehicle (BEV) product in a
market where EV penetration is increasing at pace. The
addition of LDV (MAXUS, the commercial arm of SAIC) and
SsangYong strengthens Inchcape’s product portfolio across
several key segments, including electric vehicles, light
commercial vehicles, and SUVs, ensuring Inchcape is
poised to offer mobility solutions to meet the full range of
customer requirements in New Zealand.
The Board and the Group Executive Team review climate
change factors that could impact the business plan in the
short, medium, and long term, and the scenario analysis
around the potential impacts of climate change, such as
expectation of the pace of change, and how transition
to BEVs will impact the operations carrying out servicing
or repairs. Key steps undertaken in financial planning is
to ensure that the base case forward cashflow assumptions
remain appropriate in light of the scenario analysis and
to ensure that the sensitivity analysis performed covers all
the reasonably probable outcomes identified through the
scenario analysis. Further information is given in the
Financial Statements on pages 165 to 166.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
43
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
c) Describe the resilience of the organisation’s strategy
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
In order to limit global warming to less than 2°C above
pre-industrialised levels, there would need to be an
acceleration in the energy transition, including faster
adoption of battery electric vehicles (BEVs). Our mobility
company partners are developing their BEV offerings at
pace and we play an important role in helping them to
understand the speed and characteristics of the transition
in the markets in which we operate. This ensures we have
a resilient strategy by ensuring that we have the right
product available for our customers at the right time
and in the right place.
Chinese mobility partners are likely to play an increasingly
important role in the global automotive market, not least
as a result of their leading position in BEV technology. We
are continuing to develop our relationships with Chinese
mobility company partners, in particular those that have
a strong BEV offering. This includes BYD, SAIC, Changan,
and Great Wall Motors.
As a result of our approach, breadth of mobility partner
relationships and flexible business model, we believe that
we have a high degree of resilience to a range of different
climate-related scenarios and are well placed to respond
to the risks and take advantage of the opportunities.
RISK MANAGEMENT
Further information on identifying and managing risks
can be found in Risk management section on pages 56
to 63.
a) Describe the process for identifying and assessing
climate risk
On a quarterly basis our risk management team holds a risk
review with each market to understand their risks, monitor
movements and determine if risks are pervasive across
markets, which may require aggregation of risk impacts.
We then overlay how climate change will affect the risk.
Our risk thresholds are defined by geography (market,
region, and Group) or strategic importance (project,
programme, and portfolio). Risks are categorised
dependent on their impact, considering more than just
financial risk and each criteria overlaps so risks are
escalated/demoted accordingly. The Group defines
risk appetites as risk-averse, risk tolerant and risk seeking.
The appetite for each specific risk is decided by the Group.
b) Describe the process for managing climate-related risks
Our organisation manages and monitors climate related
risks and opportunities (CROs) through both a top-down
and bottom-up process. For each risk, our markets consider
the impact and risk appetite to determine the target risk
level. To monitor and manage risks, each risk is assigned
to a risk owner and action owners. This risk owner is
accountable for the risk and holds action owners to
account for progressing action that move the risk to
its target level.
c) Describe how processes for identifying and
managing climate-related risks are integrated
into overall risk management
During the year, all markets and regions provided more
detail on the specific climate-related risks and
opportunities in their market (the CRO assessments),
which were then added to the risk register to be
monitored. Consideration was given to the factors which
may influence the level of EV transition risk in each market.
These factors include government legislation, market
EV infrastructure, mobility company partner ambitions,
and the level of competition. Additional information
was provided in ‘timing’ to indicate the earliest year
when the risk might materialise.
The CRO assessments identified the key risks as EV transition;
freight costs; tax and regulatory change and extreme
weather as main (downside) risks. The key opportunities
are favourable tax incentives and regulation; new mobility
partnerships; new revenue streams and energy efficiency.
The Market and Regional Risk Committees used the outputs
from the CRO assessments to develop mitigation action
plans, which included more explicit incorporation of an
assessment of carbon tax risk. The CRO assessments will
be updated in 2024, ensuring close alignment of business
risk analysis with strategy-setting, GET action-planning, and
external scenario analysis. Outputs from CRO assessments
will also provide inputs to strategic planning activity.
The key CROs are linked to several of our principal risks:
• EV transition – remains a moderate risk to the Group as
we continue to seek alignment between supply of EVs
and changing market conditions (Principal Risk B –
page 58;
• HSE – physical risks – extreme weather events, wildfires,
typhoons, flood (Principal Risk E – page 59); and
• Business interruption – our ability to recover (page 60).
In addition, several emerging climate-related risks have
been identified and are monitored on the watchlist.
Risk title
Definition
Climate activism
Impact of climate activism such as potential
litigation, protests, or digital disruption.
Climate reporting Increasing demands of external regulation
relating to CO2 reduction targets and other
aspects of climate change.
EV: battery supply
shortage
Shortage of rare earth materials disrupts the
supply of EV batteries, leading to a shortage
of available EV vehicles.
Government
action to reduce
car ownership
Government legislation discouraging car
ownerships/use.
Extreme weather –
property damage
Increased frequency and intensity of property
damage and business interruption arising from
flooding, wildfires, and hailstorms.
44
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
RISK IDENTIFICATION AND ASSESSMENT PROCESS
192 POTENTIAL
CROS IDENTIFIED
10 CROS
CONTINUED
5 CROS
SHORTLISTED
In 2021 we undertook a full value chain analysis
at a business unit level and from 2022 all markets
complete a risk questionnaire every six months,
which considers new legislation, mobility company
partner ambitions, competitor capabilities, and
the market EV status.
Key exposures were reviewed and assessed
by conducting workshops and interviews with
a range of stakeholders across strategy, finance
and risk management.
Using the outputs of our assessment we reviewed
the long list of CROs to develop a short list of key
CROs for the business. Each risk and opportunity
is qualitatively rated for likelihood, velocity, and
potential impact (see below).
In 2022, we carried out a quantified scenario analysis
on the key CROs identified. This process concluded
that some CROs have a low financial impact and
others can be combined with adjacent risks.
COMPARATIVE
IMPORTANCE
OF RISKS
Likelihood
To assess the likelihood of a CRO, we considered
the alignment between the outcome under a 1.5ºC
scenario, 4ºC scenario and an intermediate scenario
in which temperatures are more likely than not to
exceed 2ºC. Each risk is then categorised as very
high, high, medium, or low.
Velocity
Our assessment at the time in which the exposure to
each CRO is expected. The purpose of this measure
is to assess how fast external pressures are changing.
Velocity was assessed across the defined short,
medium, and long-term horizons.
Potential impact
The potential impact was determined which
qualitatively categorised CROs and considered
technology trends, supply/demand projections,
impact to revenue and impact to our cost base.
RISK ASSESSMENT APPROACH
SCENARIOS
CLIMATE CHANGE SCENARIOS
CROs:
CLIMATE RISK &
OPPORTUNITIES
TRANSITION
RISKS
PHYSICAL
RISKS
Tax, legal, regulatory, EV
market transition, supply
chain, reputational risks.
Flooding, heat,
cyclones, wildfire, rising
sea levels, drought.
OPPORTUNITIES
New markets, products,
services, income streams,
lower operating costs,
access to finance.
ASSESSMENT
METHOD
Integrated into existing
enterprise risk
management assessments.
Supplementary analysis
for EV transition risks
(supply & demand).
Centralised, natural
catastrophe modelling
using property values and
insurance data at Group.
Evaluate opportunities:
use risk register criteria
or existing investment
appraisal procedures.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
45
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
SCENARIO ANALYSIS
Climate scenario analysis was carried out in 2022 to help us understand the potential financial impacts to our business,
in its current state, from our short-listed CROs under two scenarios.
Our 1.5°C scenario is characterised by accelerated intervention and is used to assess our exposure to higher impacts from
a transition to a low carbon economy. Our 4°C scenario assumes greater impacts from physical risks. Combining the
outputs of both will inform the key areas where our response must focus. Please see the below table which outlines our
scenario assumptions.
SCENARIOS
IPCC RCP 2.6
IEA NZE
NGFS NET ZERO
IPCC RCP 8.5
1.5°C aligned
• Higher transition risk
• Lower physical risks
• Strong government
intervention
1.5°C aligned
• Additionally to RCP 2.6,
includes a granular
accelerated EV transition
1.5°C aligned
• Additionally to RCP 2.6,
includes disorderly and
orderly carbon price
assumptions
4°C aligned
• Low government intervention
• BAU emission increases
• Lower transition risks
• Higher physical risks
Key: IEA NZE: International Energy Agency Net Zero, NGFS Net Zero: Network for greening the financial system, IPCC: Intergovernmental Panel on Climate Change
RPC: Representative Concentration Pathway
Representative Concentration Pathways (RCP) were chosen because they are defined emissions pathways which can be
input into global climate models to derive the physical climate futures. The IEA NZE scenario was selected due to the
additional detail specific to the transport sector. This granularity is critical because the transition from ICE to EVs is significant
to our business. The NGFS Net Zero scenario was used to assess our exposure to carbon taxes because it includes regional
carbon prices which vary significantly across our markets. It enables comparison between orderly and disorderly scenarios
using the same sources, and there is transparency over the key policy changes that drive modelling assumptions. Further
details of the NGFS Net Zero scenarios are publicly available.
Scope of analysis
Transition risks
To scope markets for our analysis we set a financial threshold for coverage. We included the markets with a significant
contribution to our operating profit until we had coverage which was >70% of overall operating profit. This helped us filter
markets and compare the relativity of these financial impacts.
CROs were assessed at either:
• a market-level and aggregated up to determine the financial exposure; or
• due to data constraints, we assessed the risk exposure at a global level.
We are taking steps to enable detailed quantification in future reporting.
Climate risk
Level of granularity
Markets included
Misalignment
Market-level (>10% of
operating profit by market
coverage in scope)
Aftersales
Global level
Australia, Belgium, Chile, Hong Kong, Luxembourg, Singapore, and UK
A shift from conventional ICE to BEV could potentially develop new aftersales services
specifically targeted for BEV. Despite uncertainty over how new revenue streams could
evolve over time, our analysis showed potential cashflows are expected to be more
significant for BEV than for ICE vehicles due to additional weight and cost of electric
components, albeit less regular in occurrence.
Carbon tax
Market-level
All markets
Margin pressure
Analysis of potential impacts performed on a qualitative basis
BEV (battery electric vehicles).
ICE (internal combustion engine).
46
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Physical risks
Physical risk analysis considered the impact of six key acute hazards, including coastal inundation, surface water flooding,
riverine flooding, extreme wind, forest fire and extreme heat. A screening of 590 sites by hazard type, insured value, stock
value and gross profit was completed to determine those sites that are financially significant. The screening filtered the
sites down to 23. For these sites we investigated the likelihood and severity of each hazard to provide an overview of the
potential asset and stock value at risk, and the impact on operations.
The map below identifies the most material sites and the relative exposure under the RCP 8.5 pathway, which represents
a high emissions scenario, exceeding 4°C.
GUAM
Extreme heat
SINGAPORE
Surface water
flooding
ECUADOR
Extreme heat
PERU
Extreme heat
CHILE
Riverine flooding
ETHIOPIA
Extreme heat
CLYDE GESSEL PLACE
AUSTRALIA
Surface water flooding
DOCKLANDS
AUSTRALIA
Riverine flooding
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
47
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
RISKS
Risk
Description
Summary
1
Misalignment
between
mobility
company
partners and
markets on
BEVs leads
to market
share decline
Misalignment between
the speed at which our
mobility company partners
transition their model line-
up to BEVs and the pace
of adoption in the markets
in which we operate. This
misalignment may mean
that we lose market share.
Analysis showed the risk
of misalignment is greatest
in the short to medium term
in the APAC region but
is expected to disappear
by 2050.
2
Reduction
in aftersales
revenue for
BEVs
3
Carbon
tax costs
4
Transition to
BEVs leads
to pressure
on distributor
margins
5
Physical
risk – direct
impact to
property and
inventories
from extreme
weather
events
Due to a reduced
number of moving parts
in a BEV compared to
an ICE vehicle, we may
experience a reduction
in revenue generated
from the existing aftersales
services we offer around
repair, maintenance, and
replacement of parts.
Our analysis indicated
this may affect our retail
businesses more than our
distribution businesses.
Governments are likely to
use carbon taxation as a
mechanism to decarbonise
the economy. Despite
expected variation in
carbon tax policy across
countries we anticipate
carbon taxation will affect
all markets. We analysed
this risk across our scope 1
and 2 emissions.
An accelerated EV
transition could affect
certain cost drivers for
our mobility company
partners until cost parity
is reached between BEVs
and ICE vehicles, which in
turn could lead to potential
downwards pressure.
on distributor margins.
However, where there is
the potential for current
prices to be maintained for
BEV vehicles, the impact
on gross margins can be
mitigated or maintained.
Exposure to climate-
related physical risks can
expose our property and
inventory to potential
damage. It can also lead
to business interruption
at our sites causing lost
revenue. Our 590 sites were
screened against six acute
physical hazards. We then
calculated our exposure for
our 23 most material sites.
Scenario Financial impact
Short Med Long
IEA NZE
1.5°C
Med High N/A
4°C
Low Low
IEA NZE
1.5°C
Low Low N/A
4°C
Low Low
Strategic response and resiliency
Measurement
• As part of our broader strategy, our ambition is
to form new partnerships with pure EV entrants
to expand our mobility company partner
portfolio. We have taken proactive steps to
achieve this by joining with mobility company
partners such as BYD and Ora. This will help
offset any potential misalignment identified
with our current portfolio.
• We are actively taking measures to facilitate
the EV transition through:
– providing consumers with the option of
a BEV alternative for every ICE model;
– facilitating EV charging through product
packages to enable customers to switch
to EVs; and
– providing consumers knowledge
of quantified carbon footprint savings
for choosing BEV.
Metric:
NEV sales as
a % of new
vehicle sales
Sensitivity:
% Revenue
CAGR
% Gross margin
% Long-term
growth rate
The low-impact outcome from this risk is
largely driven by the relatively low global BEV
volume in comparison to ICE in 2030 in a 1.5°C
scenario. However, this exposure may affect
us in the long term as global BEV volumes
increase. Therefore, we are considering an
expansion of our proposition for aftersales
services to include new BEV-specific services.
Potential services could include battery
diagnostics and transportation for end-of-life
(EoL) batteries. These additional services could
help offset any potential impact to revenue
reduction from aftersales services.
Metric:
% of AFS
revenue
attributable
to NEV
Sensitivity:
% Revenue
CAGR
% Gross margin
% Long-term
growth rate
Low Med High Our analysis considers our targets and presents
Metric:
NGFS
1.5°C
orderly
NGFS
1.5°C
dis-
orderly
Med High High
4°C
Low Low Low
reduced impact if we take action. Based on
these findings we are actively implementing
decarbonisation levers across scope 1 and
2 to ensure we meet our interim target of
46% reduction by 2030 and net zero by 2040
(please see pages 50 and 51). This includes
switching to renewable electricity supply
and installation of solar panels at our larger
sites. Our strategy acknowledges a faster
decarbonisation can help avoid the risk of
high carbon tax costs.
IEA NZE
1.5°C
4°C
N/A N/A N/A
N/A N/A N/A Our analysis indicates that the impacts of
margin pressure may be offset due to the
disparity of price between BEVs and ICE
vehicles. We actively monitor margins at the
market level and our Accelerate Strategy is
designed to address this risk by providing a
compelling offering to our mobility company
partners (Distribution Excellence), capturing
additional vehicle profit pools (Vehicle
Lifecycle Services) and enabling expansion
into new, margin-accretive markets through
M&A. We have not quantified the potential
impact as the data is not sufficiently robust,
and therefore we concluded that such
analysis would not lead to better informed
decision making.
Scope 1 and 2
absolute
Sensitivity:
% Revenue
CAGR
% Gross margin
Metric:
Gross margin
Sensitivity:
% Average
gross margin
RCP 2.6
1.5°C
4°C
Low Low Low
Low Low Low Our analysis showed low impacts across our
physical assets with the highest risk exposure
from surface water floods in Singapore.
However, this resulted in low impact due to
the low financial significance and existing
insurance policies in place to mitigate the
risk. To mitigate risk for future sites from new
acquisitions. We will include physical risk
assessments in our consideration of organic
and inorganic growth opportunities.
Metric:
% sites at risk
from physical
hazards
Sensitivity:
% Revenue
CAGR
48
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
OPPORTUNITIES
Opportunity
Description
Summary
1
Alignment
between
mobility
company
partners and
markets on EVs
leads to market
share increase
2
Increase in
aftersales
revenue for BEV
In markets where there
is a rapid shift towards
EVs, there is potential to
capture market share
where supply of EVs from
our mobility company
partners keeps pace
with BEV adoption rates.
In a 1.5°C scenario,
the accelerated EV
transition increases this
potential opportunity,
with our analysis showing
this opportunity is most
significant in the near-
term where the disparity
between different levels
of EV supply from mobility
company partners
is greatest.
A shift from conventional
ICE to BEV could
potentially develop
new aftersales services
specifically targeted for
BEV. Despite uncertainty
over how new revenue
streams could evolve
over time, our analysis
showed potential cash
flows are expected to
be more significant for
BEV than for ICE vehicles
due to additional weight
and cost of electric
components, albeit less
regular in occurrence.
Scenario Financial impact
Short Med Long
IEA NZE
1.5°C
N/A N/A N/A
4°C
N/A N/A
Strategic response and resiliency
Measurements
As part of our broader strategy, our ambition is
to consider forming new partnerships with pure
EV entrants to add to our mobility company
partner portfolio. We have not quantified the
overall opportunity from alignment due to a
lack of robust data, however we assess the
financial opportunity presented from new
mobility company partners within specific
markets on a case-by-case basis.
Metric:
NEV sales as
a % of new
vehicle sales
Sensitivity:
% Revenue
CAGR
% Gross margin
% Long-term
growth rate
N/A N/A N/A We are facilitating the choice of a BEV among
Metric:
IEA NZE
1.5°C
4°C
N/A N/A
consumers in our retail business by increasing
consumer knowledge of the benefits of BEVs
and expanding our aftersales services to
facilitate BEV adoption for the customer. The
potential size of opportunity has not been
quantified due to a lack of robust data and
significant uncertainties in how the aftersales
market could evolve. However work is ongoing
to consider how we can expand our aftersales
proposition with new BEV-specific services
and we will continue to monitor changes to
aftersales market dynamics.
% of AFS
revenue
attributable
to NEV
Sensitivity:
% Revenue
CAGR
% Gross margin
% Long-term
growth rate
The sensitivities applicable to each of the risks and opportunities can be found on pages 165 and 166 (note 10) of the financial statements.
Key:
Distribution Excellence
Financial impact key:
Low impact:
impact to revenue
<£100m
Time Horizon key:
Short term (up to 2026):
three-year period aligns
with viability assessment
Vehicle Lifecycle Services Medium impact:
High impact:
impact to revenue
£100m – £200m
impact to revenue
>£200m
Medium term (up to 2030): aligns with interim
climate-related targets
Long term (2030 to 2050): aligns with long-term
climate-related targets
We have disclosed the financial impact, up to 2030, of our CROs as low, medium, and high impact, which is aligned to our
risk rating criteria as defined by our risk management framework. We have not specifically quantified the long-term impacts
of EV transition due to the inherent uncertainty of the extent of the CRO. In comparison, data sets and assumptions for
carbon taxes and physical risks are more readily available so have been disclosed to 2050.
Estimates for the potential financial impact of climate risks are indicative at this stage, with significant uncertainties in
their underlying assumptions. We aim to build on this analysis going forward, improving on the robustness of data and
assumptions where available. The likelihood of all risks manifesting concurrently is very low, so the aggregation of potential
impacts would represent an extremely unlikely scenario.
There have been no material changes to the structure of our markets which would indicate a change to the profile of
the key climate-related risks, therefore further analysis was not carried out in 2023. The misalignment risk analysis is used
to inform the judgement on impairment, further details can be found in the financial statements on pages 165 to 166.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
49
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
HOW WE ARE DRIVING ACTION
TO REDUCE EMISSIONS
During the year we developed a plan to reduce emissions supported by short, medium,
and long-term actions. The plan is commensurate with the Accelerate strategy and
demonstrates how we will continue to grow a sustainable and climate resilient business.
EFFICIENCY MANAGEMENT
ELECTRIFICATION
ONSITE GENERATION
77% of our scope 1 and 2 emissions
come from our buildings (location-
based): our dealerships, our
warehouses, our offices, and our call
centres. Reducing the amount of
energy that we use in our premises
is therefore a key element of our
decarbonisation programme. As well
as reducing our carbon footprint, this
also reduces cost and mitigates the
impact of future energy price rises.
Achievements to date:
• LED upgrades in 20 markets
across the four regions
• HVAC systems upgrades
• Metering & sub-metering in the UK,
saving an average of 10% per site
• Energy audits undertaken in
Australia, Ethiopia, Guam, Kenya,
and Singapore
• Colleague awareness programmes
in every region
National grids are steadily
decarbonising as they become
increasingly reliant upon renewable
sources of electricity. Using electricity
rather than fossil fuels therefore helps
us to reduce our emissions footprint.
Achievements to date:
• Switch to air source heat pumps
in Oxford, UK
• Electric paint booth retrofit in
Chile and Latvia
• Doubled EV vehicles in proportion
of UK demo stock
• 42% of pool cars in Singapore are
either EV or hybrid
Onsite generation enables an
immediate reduction of site CO2
emissions. The benefits include the
production of CO2 free electricity,
reduction in electricity costs and
moderates impact of future electricity
price rises. Onsite generation also
provides security of supply.
Generating renewable electricity at
our premises means that we do not
need to draw electricity from the grid.
It reduces our carbon footprint, saves
us money, and provides energy security
for the future.
Achievements to date:
• Solar panels installed across
markets in all four regions
• Across a full year of operating,
the solar panels are forecasted to
avoid 3,000 tonnes of CO₂ emissions
per year, reducing emissions and
utility costs
• Future installations being investigated
GREEN TARIFFS
Buying electricity on green tariffs
contributes to a reduction in
carbon emissions.
Achievements to date:
• 32% of all sites are on green tariffs
50
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
MINIMUM REQUIREMENTS FOR ALL INCHCAPE BUSINESSES
ENERGY EFFICIENCY
GREEN TARIFFS
• Identifying opportunities to reduce
• To maintain and extend our green tariff
energy consumption through efficient
running of our buildings and investing in
energy efficiency
procurement programme
• Identify other opportunities for renewable electricity
procurements, such as Power Purchase Agreements
ELECTRIFICATION
ONSITE GENERATION
• To plan for our locations to be all electric with
the removal of fossil fuels, in normal operations
• To move our company car fleet to new
energy vehicles
• To identify more opportunities to install solar panels
as well as identify other onsite renewable
technologies, such as ground source systems
where possible
PATHWAY TO 2030 SCOPE 1 AND 2 TARGET (MARKET-BASED)
Decrease
67,926
Total
Decrease
46,594
-21,332
-741
-521
-6,413
-4,424
36,680
2019 revised
baseline
Reductions
from
strategic
programmes
2023
Renewable
electricity
tariffs
Onsite
generation
Electrification
Efficiency
management
2030 target
2019 – 2023 reduction
2024 – 2030 reduction pathway
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
51
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
CONTINUED
METRICS AND TARGETS
The Group uses a variety of metrics to measure the current and potential impact of our climate-related risks and
opportunities, including greenhouse gas (GHG) emissions and business specific metrics. Our metrics are laid out across
the seven cross-industry metric categories defined by the TCFD.
In 2021, we established our GHG reduction target to reduce our scope 1 and scope 2 emissions by 46% by 2030 and
in the longer term we are committed to reaching net zero by 2040. The GHG emissions, capital deployment and
remuneration metrics are used to measure our progress to net zero. Pages 50 to 51 sets out the actions being taken
across the Group to reduce emissions. We measure the number of new energy vehicles (NEVs) sold to monitor the
impact of misalignment risk and misalignment opportunity.
During the year the GET assessed the appropriateness of using an internal carbon price within the business. This analysis
is still being reviewed and a further update will be given next year.
Key metrics used to measure progress
Metric category
Status
Metric
2023 actual Objective
GHG emissions
Physical risk
Capital deployment
Remuneration
Transition risk
Opportunities
Scope 1 and 2
emissions (tCO2e)
% of sites at 100%
renewable electricity
Energy intensity by
revenue (tCO2e/£m)
46,594
32%
3.7
To track the reduction in our emissions,
improvements in our energy efficiency and
generation of our own renewable power.
We do not have physical risk metric in place
% of capex towards
climate initiatives
6.6%
Scope 1 and 2
emissions (tCO2e)
% of NEV sold
% of NEV sold
46,594
22.26%
22.26%
To demonstrate the level of investment we are
committing towards climate to achieve our
strategy
Incentivising leadership to deliver emissions
reductions. Included in the short-term incentives
-% of NEV sold
-% of NEV sold
Internal carbon pricing
We do not have an internal carbon pricing in place
Key
Metric in place
No metric in place
All data is market-based.
Greenhouse gas (GHG) emissions
Direct GHG emissions are from our operations through combustion of fuels (scope 1). We also purchase energy from the
grid (Scope 2) and have indirect GHG emissions throughout the value chain mainly because of our purchase of goods,
consumer use of vehicles, and transportation, which together make up more than 95% of our total scope 3 emissions.
We are acting across all three scopes and working closely with our partners to reduce GHG emissions for our business,
our customers, and our value chain. We report our greenhouse gas emissions according to the Greenhouse Gas Protocol,
published by the World Business Council for Sustainable Development, and the World Resources Institute. Please see page
53 for our Streamline Energy and Carbon Emission reporting (SECR).
SCOPE 1 AND 2 EMISSIONS (tCO2e)
The target is to reduce scope 1 and scope 2 emissions by 46% by 2030. The 2019 baseline has been adjusted in line with
Inchcape policy derived from GHG Protocol Corporate Standard ‘Tracking Emission Over time’ for a) structural changes
in the business including M&A and divestitures, and b) amendments for data gaps above the significance threshold.
Emissions reductions have been driven by the switch to renewable energy tariffs, reduced electricity consumption
and lower emission factors driving decreases in the Americas and APAC, and reductions in refrigerant emissions due
to management schemes put in place in Australia and Belgium.
67,926
49,908
46,594
43,163
36,680
2019
2021
2022
2023
Target
tCO2e (market-based)
52
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
SCOPE 3 FOOTPRINT
We have calculated the Group’s scope 3 emissions profile
for the 2019 baseline, the vast majority of which are directly
related to our mobility company partners activities and
account for 99.97% of our total emissions footprint at
a total of 18.7m tCO2e. The Group’s 2023 scope 3 emissions
is 15.2m tCO2e, which includes all scope 3 categories
except for: upstream leased assets, downstream
transportation and distribution, processing of sold
products, and franchises.
STREAMLINED ENERGY AND CARBON REPORTING REGULATIONS (SECR)
We collect data for all material emissions for which we deem ourselves to be responsible and look for ways in which to
minimise our footprint. Data is collected for two key performance indicators: scope 1 – our use of gas and fuel in vehicles
we own and scope 2 – our global energy usage. The below does not include scope 3 intensity ratios or emissions data.
Data collection and reporting period
Data has been collected for all markets from 1 January 2023 to 31 December 2023. The level at which we report is by
business unit for each market. This covers our retail operations, distribution operations and business service operations,
which fall within our operational control boundary.
Intensity ratio
The Group’s intensity ratio compares emissions data by dividing total tonnes of CO2e by revenue, an appropriate financial
indicator. This allows for a fair comparison over time of CO2e emissions given the growth trajectory envisaged for the Group
and cyclical variations in business activity. As required under the SECR regulations the following information relates to the
energy consumed in our operations. The list of United Kingdom entities is given on page 219.
Total Energy Consumption (kWh)
Scope 1 (tCO2e)
Stationary Combustion (tCO2e)
Vehicle Fuel Combustion (tCO2e)
Fugitive Emissions (tCO2e)
Scope 2 (Location-based, tCO2e)
Scope 2 (Market-based, tCO2e)
Total scope 1 & 2 (Location-based, tCO2e)
Scope 1 & 2 emissions intensity ratio (Location-based, tCO2e/£m)
Total scope 1 & 2 (Market-based, tCO2e)
Scope 1 & 2 emissions intensity ratio (Market-based, tCO2e/£m)
Revenue (£m)
Methodologies used in calculation of disclosures
2023
2022
UK & Offshore
Global
UK & Offshore
Global
32,392,786 199,320,469
31,174,666 139,657,792
3,598
2,117
1,278
203
3,088
5
6,686
6.3
3,603
3.4
1,065
27,066
9,663
15,733
1,671
32,581
19,528
59,647
4.8
46,594
3.7
12,498
3,617
1,702
1,698
216
2,886
8
6,503
3.2
3,624
1.8
2,029
27,298
9,403
15,895
2,000
33,205
22,610
60,503
7.5
49,908
6.2
8,112
GHG Protocol Corporate Accounting and Reporting Standard
GHG Protocol Corporate Value Chain Accounting and Reporting Standard
GHG Protocol Scope 2 Guidance
Emissions data previously published in the 2022 Annual Report and Accounts has been restated. This is because the prior
year has been adjusted for structural changes in the business and amendments for data gaps.
Carbon efficiency measures
The Group’s Controllable Emissions management team developed its strategic programmes to reduce carbon emissions,
focusing on four key areas: energy efficiency, onsite renewable energy generation, electrification, and renewable
electricity purchasing. Our markets are implementing the programmes to identify opportunities to reduce our carbon
emissions. Carbon efficiency measures introduced in 2023 included:
• Energy audits undertaken in Australia, Ethiopia, Guam, and Singapore, identifying opportunities to reduce energy
consumption and carbon emissions;
• Automatic metering and monitoring installed in the United Kingdom, saving an average 10% energy consumption
across sites;
• Installing solar panels in 11 countries across all regions. When operating for the full year, the panels installed in 2023
are forecasted to avoid over 2,000 tCO₂e per year;
• Increasing our share of hybrid and electric vehicles in Bulgaria, Estonia, Hong Kong, Philippines, and Singapore; and
• Expanding the number of green electricity contracts in Bulgaria, Estonia, Finland, Latvia, Lithuania, Poland, Romania,
and Uruguay.
In 2024, focus will be on implementing opportunities that the four strategic programmes identify, such as further rolling
out of automatic metering solutions, LED lighting, building controls, increasing the number of hybrids and electric vehicles
in our company car fleets, and considering a green roof for new United Kingdom sites to increase biodiversity net gain.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
53
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
NON-FINANCIAL & SUSTAINABILITY INFORMATION STATEMENT
NON-FINANCIAL & SUSTAINABILITY
INFORMATION STATEMENT
ENVIRONMENTAL
MATTERS
COLLEAGUES
HUMAN RIGHTS
Environmental matters are considered
as part of the Planet pillar of the
‘Driving What Matters’ plan, including:
• our health, safety & environment
(HSE) framework, which is designed
to ensure colleagues comply with
relevant environmental legislation;
• the Group has set science based
targets for scope 1 and 2 emissions.
Each region has developed its own
action plans in order to achieve
these targets; and
• energy efficiency plans are also
implemented at local level.
The Planet Charter is set out on
page 39 and manages climate-
related issues, carbon performance
metrics, and responsible resource use.
Our framework and policies are
designed to help pursue activities
that influence us and our suppliers
to reduce their carbon footprints.
The Group’s first standalone
Sustainability Report will be published
in 2024 and will be available at
www.inchcape.com.
We aim to ensure we have a safe
operating environment with an
inclusive and diverse culture and
the best talent and skills for our
future success, including:
We embrace, support, and respect
the human rights of everyone we work
with and we comply with appropriate
human rights legislation in the countries
in which we operate, including:
• our Inclusion & Diversity (I&D)
• employment policies are
framework, which demonstrates our
commitment to helping address the
barriers preventing full participation
for marginalised groups;
• our HSE framework, which is
designed to protect the health
and safety of colleagues;
• our Code of Conduct, which
provides guidance on the ethical
behaviour we expect from all
colleagues; and
• our Whistleblowing Policy, which
provides guidance to colleagues
on how to raise concerns without
fear of reprisal.
The People Charter is stated on
page 35 focusing on HSE, training,
culture, reward, and Inclusion &
Diversity. All colleague related policies
were reviewed and updated where
necessary during 2023.
implemented at local level and
are designed to protect
colleagues’ human rights; and
• our Modern Slavery Statement
describes the actions taken in
respect of our supply chain.
Our policies set out our commitment
to human rights and the steps taken
to assess the risk of slavery.
Modern slavery training has been
rolled out to colleagues whose roles
and remit require additional focus
in this area reinforcing an ethical
business culture.
Our Modern Slavery Statement is
available at www.inchcape.com.
Primary Principal Risks
EV transition; Business interruption
(pandemic, natural hazards).
Primary Principal Risks
People: engagement and retention;
HSE; People: future skills.
Primary Principal Risks
Political risks; Legal,
regulatory compliance.
Associated Policies
Code of Conduct; Travel Policy.
Associated Policies
Code of Conduct; Global Anti-
Discrimination Policy; Global Inclusion
& Diversity Policy; Speak Up Policy.
Associated Policies
Code of Conduct; Modern
Slavery Statement
54
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Non-financial information
People
Practices
Places
Planet
Where to find more information
Responsible Business
– page 35
Responsible Business
– page 38
Responsible Business
– page 37
Responsible Business
– page 39
CSR Committee Report
– pages 90 to 91
Risk management
– pages 56 to 64
Directors’ Report
– pages 115 to 118
Audit Committee Report
– pages 82 to 89
TCFD
– pages 40 to 53
Risk management
– pages 56 to 64
Directors’ Report
– pages 115 to 118
The non-financial reporting requirements contained in sections 414CA and 414CB of the Companies Act 2006 are addressed in this section and by means of cross
reference. The Group’s business model is given on pages 4 to 7. The Group’s KPIs are stated on pages 24 to 25. Principal risks are given on pages 57 to 61.
COMMUNITIES AND
SOCIAL MATTERS
ANTI-BRIBERY AND
ANTI-CORRUPTION
Social matters cover a vast range of
potential issues including Responsible
Business related policies. Our policies
set out our commitment to high social
standards and the requirements for
our supply chain. We have in place
the following Group-wide policies:
• Tax strategy;
• Data protection/data privacy;
• Competition/anti-trust;
• Privacy policy; and
• Conflicts of interest policy.
The Group’s tax strategy is available
at www.inchcape.com.
We do not have a global policy
covering community matters as any
initiatives are championed at local
level. Social matters form part
of the Places pillar of our ‘Driving
What Matters’ plan.
Our Places Charter is set out on
page 37 outlining sustainable
procurement, responsible
approach to tax, and supporting
vulnerable customers.
It is important that the Group operates
to high ethical standards and
complies with all applicable laws.
Colleagues and supply chain partners
are made aware of the Group’s
strategy and how their behaviours
affect delivery and they are expected
to work in line with the Group’s values.
To support this the Group has in place
the following policy statements which
detail the expected conduct of our
colleagues and supply chain:
• Anti-bribery and corruption; and
• Anti-money laundering.
The policy statements are available
at www.inchcape.com and set out
the risk assessment, procedures,
due diligence, communications,
and monitoring involved from any
instances of bribery, corruption, or
fraud being reported. The findings
of any investigations are then
reported to the Audit Committee.
Primary Principal Risks
Macro-economic conditions;
Margin pressure.
Primary Principal Risks
Legal, regulatory compliance;
Loss of distribution contract.
Associated Policies
Anti-Trust Policy; Conflict of Interest
Policy; Data Privacy Policy;
Procurement Policy; Tax Policy.
Associated Policies
Anti-Bribery & Corruption Policy;
Anti-Money Laundering & Counter
Terrorist Financing Policy; Gifts and
Entertainment Policy.
CLIMATE-RELATED
DISCLOSURES
The climate-related financial
disclosures comply with the
Companies (Strategic Report)
(Climate-related Financial Disclosure)
Regulations 2022:
The governance
arrangements in relation
to assessing and managing
risks and opportunities
– pages 41 to 42;
How risks and opportunities
are identified, assessed, and
managed – pages 44 to 45;
How processes for identifying,
assessing, and managing
risks are integrated into the
overall risk management
process – pages 44 to 45;
The principal risks and
opportunities arising in
connection with operations,
and the time periods by
reference to which those
risks and opportunities are
assessed – pages 48 to 49;
The actual and potential
impacts of the principal risks
and opportunities on the
business model and strategy
– pages 48 to 49;
An analysis of the resilience
of the business model and
strategy, taking into
consideration different
scenarios – page 46;
The targets used to
manage risks and to realise
opportunities and of
performance against those
targets – page 52; and
The KPIs used to assess
progress against targets used
to manage risks and realise
opportunities and of the
calculations on which those
KPIs are based – page 52.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
55
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
STEERING A COURSE
THROUGH VOLATILE TIMES
Well-managed risk-taking lies at the heart of our ambition to be the undisputed number
one distribution partner for automotive manufacturers, the employer of choice for current
and future colleagues, and the stock of choice for our investors.
There are many market forces which underlie and drive our
risk profile. Geopolitical tensions have led to cost inflation,
suppressed economic growth, and the increased cost
of cash as central banks curb inflation. New mobility
company partners are challenging existing players with
new electric vehicle products. A changing climate and our
response to it presents transition and physical risks that give
rise to a range of risks and opportunities for our business.
The extent and severity of risks will vary depending on the
actions taken at an international level. A Group-wide
business continuity strategy has been designed to address
these risks should they eventuate. We set out in this report
how our risk profile is changing and how we are responding.
We respond to these challenges through delivery of our
Accelerate strategy and maintaining a resilient business.
We remained focused on our transformation agenda
and managing the associated risks while continuing
to successfully integrate significant investments – our
most important to date being the acquisition of Derco.
The combination of our two businesses is bringing both
opportunity and risk. The exposure to operational risk in
particular is augmented during integration: health and
safety, financial reporting, and fraud risks among them.
We have closely monitored these and other risks, including
risks to the achievement of expected synergies during
the transition. This will continue into 2024 and beyond.
Through 2024, we expect to see margin pressures increase
as vehicle supply normalises, demand softens, and our
mobility company partners are increasingly challenged
to seek the lowest cost route to market. Historically high
levels of interest rates across our markets are softening
demand and increasing the cost of cash. Cost inflation
may remain for a period through 2024 increasing the risk
of supply chain disruption, macro-economic conditions,
and margin pressure.
The transition to electric vehicles (EVs) is underway and
we are navigating this change, which presents us with
considerable opportunity as well as downside risk. Most
important is the need to align with mobility company
partners who themselves have accurately aligned their
product offering to market demand. If our mobility partners
cannot produce at scale when EV-demand accelerates,
we may lose market share. Equally, we will grow market
share where alignment is strong. Due to a reduced number
of moving parts in battery EVs (BEV) compared to ICE
vehicles, the Group could experience a reduction in
revenue generated from existing aftersales services. This
can be offset by the generation of new revenue streams
and from new aftersales products and services.
People, technology, and operational excellence underpin
our future success and we continue to progress our
multi-year health, safety & environment (HSE), and
cybersecurity improvement programmes. Although we
have made significant progress to equip ourselves with over
1,000 digital specialists, we continue to plan for our future
workforce needs, to ensure we have the digital, change,
and EV skills we need. Our business operations are exposed
to risks which cannot be fully prevented – including the
recent pandemic and other natural perils such as
earthquakes and flooding. We are upgrading existing
business continuity capability to respond. Derco has
increased the concentration of property and stock in
Latin America which is exposed to natural hazards, such as
Chilean earthquakes and flooding in Peru. We have also
experienced flooding at our Jaguar Land Rover site in
Derby, United Kingdom. We are taking action to ensure
these risks are mitigated to these increased exposures
including reviewing and updating insurance and business
continuity arrangements.
CLIMATE TRANSITION
Embracing the risks and opportunities presented
by climate change
For the second year, leadership teams across our markets
have been assessing 33 headlines categories of risk
and opportunity. Physical risks such as flooding and
heatwave, as well as the legal, market, and supply
chain challenges presented by the transition to the new
drivetrains which will characterise low-carbon mobility.
Opportunities to connect with a new generation of
mobility company partners, new revenue streams, and
cost saving through energy efficiency are just some
of the possibilities evaluated. These assessments are
supplemented by specialist external assessments
of physical risk exposures and market opportunities.
Regional strategy teams build this information into
strategic planning, driving changes to existing practices.
Risks are tracked in existing enterprise risk management
processes to drive mitigation action and the
strengthening of business resilience activity.
56
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Principal risks facing the Group
The Group’s principal risks, and their relation to strategy,
are shown below. Further details on impact, likelihood,
and trend are given on pages 58 to 61.
Changes to principal risks in 2023
Business interruption replaced Covid-19 as a principal
risk during the year. This risk relates to the Group’s ability
to successfully respond to and recover from a further
pandemic or other natural hazard (e.g. windstorm,
flooding, earthquake, or hailstorm).
S
R A T E G I C & M A R KET
T
New mobility
company partner
relationships
New mobility
solutions
R A T E G I C & M A R KET
T
S
L
A
I
C
N
A
N
I
F
&
C
I
M
OECD tax
reform
Climate
reporting
O
N
O
Retrenchment
of consumer
credit
C
E
Action to
reduce car
ownership
Loss of
distribution
contract
Derco
integration
Acquisition
funding
Strategy
delivery &
transformation
New market
entrants:
business models
or technology
Carbon
taxes
EV transition
Acquisition
ROI
A C C E L E R A T E
Cyber
security
incident
Loss of
Loss of
technology
systems
(non-cyber)
(non-cyber)
technology
systems
Foreign
exchange
Financial
reporting,
fraud
Macro-
economic
conditions
Margin
pressure
Supply
chain
disruption
Legal,
regulatory
compliance
EV battery
supply
O
P
E
R
Vehicle
assembly
Political
risks
Business
interruption
(pandemic,
natural
hazards)
A
TIO
NS
HSE: health,
safety, or
environmental
incident
People:
People:
engagement
engagement
and retention
and retention
People:
People:
future
future
skills
skills
Climate
activism
AI impact
on workforce
planning
Inclusion
& Diversity
E
L
P
O
E
P
AI adoption
rates
Semi-
conductor
supply
T
E
C
H
N
O
L
O
G
Y
L
A
I
C
N
A
N
I
F
&
C
I
M
O
N
O
C
E
T
E
C
H
N
O
L
O
G
Y
Key
Tier 1 risk
Tier 2 risk
Emerging risk
Climate-related
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
57
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
PRINCIPAL RISKS
PRINCIPAL RISKS (TIER 1)
Of the principal risks assessed, the Tier 1 risks have the highest relative impact or likelihood scores and are assessed as the
most significant ‘net’ risks, after mitigation has been applied. Risks are rated by impact (minimal, minor, moderate, major,
or critical) and by likelihood (rare, unlikely, possible, likely, or almost certain). Impact is estimated in terms of financial, HSE,
reputational, operational, and strategic criteria. Data is used to inform assessments where available, which are largely
qualitative, drawing on the insight and experience of leadership teams across the business.
A) CYBERSECURITY
INCIDENT
B) EV TRANSITION
C) MARGIN PRESSURE
Development of new technology
platforms and digital capabilities form
an integral part of our Accelerate
strategy. These initiatives continue to
be delivered at pace and benefits are
already being realised by the business.
However, geopolitical tensions and the
continued digitalisation of our business
also increases the likelihood of cyber
attacks, which, if successful, could
result in confidential data being
compromised, significant business
disruption, reputational damage,
and/or financial loss.
Mitigating actions
• a multi-year security improvement
programme underway as an integral
component of the Accelerate
strategy; and
• existing cybersecurity measures,
including policies and controls, asset
management, risk assessment, access
control, protective technologies, and
disaster recovery plans.
Strategic impact
DE, M&A, VLS
The transition from the internal
combustion engine (ICE) to new power
trains, such as BEVs, is underway. This
transition introduces the risk of lost
market share if the Group and its
mobility company partners fail to align
product supply to the market uptake of
EVs. Some mobility company partners
may be unable to produce EVs at scale,
which could lead to periods of stagnant
sales growth.
Mitigating actions
We address these changes through:
• monitoring of emerging EV-related
legislation in each market;
• market-level risk assessment of
EV infrastructure, legislative
plans, mobility company partner,
and competitive capability;
• close liaison with mobility company
partners to understand their ambitions
and feedback on the EV readiness
of individual markets, and to ensure
optimal EV allocation;
• brand diversification – contracts
with new mobility partners; and
• operational changes to marketing,
pricing, customer service, and vehicle
technician training.
Strategic impact
DE, VLS
The transition to new power trains,
such as BEVs, has introduced new
competitors for our mobility company
partners and has increased their
research, development, and production
costs. Achieving the lowest cost route
to market is one tool to offset these
challenges and will increase the
pressure on margins for all distributors,
including Inchcape. This risk is closely
linked to, and exacerbated by, the
macro-economic conditions risk.
Mitigating actions
The Group’s Accelerate strategy
is designed to address this risk in
three ways through:
• a compelling offering to our mobility
partners, known as Distribution
Excellence, by transforming the
route to market via the development
of a consistent, technologically
advanced, low-cost, low-carbon
distribution and retail offering;
• Vehicle Lifecycle Services (VLS)
– enabling the Group to capture
new sources of value throughout
the vehicle and customer lifetime,
as well as exploring new EV-related
profit pools; and
• expanded M&A, enabling our
growth into new, margin-accretive
markets and with potentially new
mobility company partners.
Strategic impact
DE, VLS
Risk level with current mitigation
Risk level with current mitigation
Risk level with current mitigation
Impact:
Major
Likelihood:
Likely
Trend:
Impact:
Major
Likelihood:
Likely
Trend:
Impact:
Major
Likelihood:
Likely
Trend:
58
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
R A T E G I C & M A R KET
T
S
EV transition
Macro-
economic
conditions
Margin
pressure
A C C E L E R A T E
Cyber
Political
risks
HSE: health,
safety, or
environmental
incident
T
E
C
H
N
O
L
O
G
Y
L
A
I
C
N
A
N
I
F
&
C
I
M
O
N
O
C
E
O
P
E
R
A
TIO
NS
E
L
P
O
E
P
Key
Trend
STABLE
DECREASING
INCREASING
Strategic Impact
Distribution Excellence
DE
M&A Mergers & Acquisitions
VLS
Vehicle Lifecycle Services
D) MACRO-ECONOMIC
CONDITIONS
E) HSE: HEALTH, SAFETY,
OR ENVIRONMENTAL
INCIDENT
F) POLITICAL RISK
Failure to react quickly to changing
macro-economic conditions and
financial volatility could erode
consumer confidence and adversely
impact financial performance.
Historically high interest rates increase
the cost of cash and might make
financing for new cars less affordable
and dampen sales growth.
Geopolitical tensions have driven high
inflation and high interest rates which
increase our operating costs and have
slowed demand in some markets.
Mitigating actions
We address these changes through:
• management and monitoring
of cost base;
• financial budgeting and forecasting;
• cash flow and margin management;
• reviews of potential cost base
efficiencies; and
• maintaining and increasing our
geographic diversification as well
as our diversified mobility company
partner portfolio (origin, segments,
positioning and more) to offset
downturns in any particular market.
Strategic impact
DE, VLS
The operation of vehicles, machinery,
and other manual activities across all
of our operations worldwide exposes our
colleagues, customers, and the public
to risks of serious injury or fatality. The
use, and disposal, of harmful substances
and chemicals poses a risk to the
environment. These risks are exacerbated
by the introduction of new technologies,
such as BEVs, and as we bring new
businesses and contracts into the
Inchcape group. The pressures of
remote working, transformation projects,
and organisational restructuring impact
the mental and physical wellbeing
of our colleagues.
Mitigating actions
• introduction of a dedicated safety risk
management programme for BEVs;
• ongoing implementation of HSE
programmes, including mental
health support;
• monitoring the progress of that
implementation;
• roll-out of executive due diligence
programme;
• mandatory annual HSE training;
• regular review of performance by the
Board and Group Executive Team;
and
• evaluation and remediation of risks
related to EVs underway.
Strategic impact
DE, VLS
The Group operates in markets where
there may be greater volatility in the
political, economic, and social
environment (ESG), for example in, and
adjacent, to: Ethiopia, Hong Kong, and
Latin America. This may threaten the
safety of our colleagues and property
and disrupt business operations. 40
countries representing 41% of the world’s
population will be holding elections
in 2024, including India and the United
States, as well as markets where
Inchcape operates, such as Belgium,
Indonesia, and the United Kingdom,
or neighbouring Inchcape markets (e.g.
Mexico, South Sudan, and Venezuela).
This may indirectly increase the risk of
social unrest as new political parties
reset relationships with neighbouring
countries.
Mitigating actions
• close monitoring of political situation
in higher-risk markets;
• business continuity planning and
insurance in selected countries;
• collaboration with mobility company
partners on stock allocation flexibility;
and
• expansion of digital trading
capabilities.
Strategic impact
DE, VLS
Risk level with current mitigation
Risk level with current mitigation
Risk level with current mitigation
Impact:
Moderate
Likelihood:
Almost
certain
Trend:
Impact:
Major
Likelihood:
Likely
Trend:
Impact:
Major
Likelihood:
Likely
Trend:
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
59
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
OTHER PRINCIPAL RISKS (TIER 2)
The Tier 2 risks are listed in alphabetical order
ratings after current mitigation. Rating scales
are the same as those applied to Tier 1 risks.
L
A
I
C
N
A
N
I
F
&
C
I
M
O
N
O
C
E
Key
Impact
Likelihood
Trend
Strategic Impact
MINOR
RARE
MODERATE
UNLIKELY
STABLE
MAJOR
POSSIBLE
DECREASING
Distribution Excellence
DE
M&A Mergers & Acquisitions
VLS
Vehicle Lifecycle Services
INCREASING
R A T E G I C & M A R KET
T
S
Loss of
distribution
contract
Derco
integration
New market
entrants:
business models
or technology
Strategy
delivery &
transformation
Acquisition
ROI
Foreign
exchange
Financial
reporting,
fraud
A C C E L E R A T E
Loss of
technology
systems
(non-cyber)
T
E
C
H
N
O
L
O
G
Y
Supply
chain
disruption
Legal,
regulatory
compliance
People:
engagement
and retention
Business
interruption
(pandemic,
natural
hazards)
People:
future
skills
O
L
A
I
C
N
A
N
I
F
&
C
I
M
O
N
O
C
E
R A T E G I C & M A R KET
T
S
T
E
C
H
N
O
L
O
G
Y
P
E
R
A
TIO
NS
E
L
P
O
E
P
M&A
DE,
M&A,
VLS
M&A
Risk title
Acquisition
return on
investment
(ROI)
MODERATE
POSSIBLE
Business
interruption
(pandemic,
natural
hazards)
MODERATE
POSSIBLE
Derco
integration
MODERATE
UNLIKELY
Strategic
impact Description and impact
Trend
Key mitigating actions
Inorganic growth continues to underpin the
significant role in growing the Group’s profit
before tax. As we continue to accelerate M&A
activity, we recognise the risk of failure to optimise
value creation and ROI targets through effective
integration of new acquisitions into the Group.
A significant interruption to our business due to
external events, a global health emergency, or
other natural hazard could restrict access to our
sites, negatively affect our operations and brands,
or pose a threat to the safety of our colleagues;
any of which could have a negative impact on
our commercial and financial performance.
• Pipeline of opportunities
• Experienced M&A teams at Group and
regional levels
• M&A playbook
• Integration playbook
• Post-merger reviews and audits
• Board review of larger transactions
• Monitoring of risks and issues post-completion
• Financial headroom and balance sheet strength
• Technology response and disaster recovery plans
• Operational resilience framework (in progress),
NEW
including business continuity plans and
lessons learned
We may experience unforeseen difficulties in
integrating Derco and the Group may not realise,
or it might take the longer than expected to
realise, the benefits and synergies of the deal.
NEW
• Supply chain management
• Property risk assessments and loss control measures
• Insurance
• Due diligence/integration strategy – two year plan
• Post-integration specialist advisor project
management support continuing into H2
• Integration Committee
• Mobility company partner engagement strategy
• HSE Derco site audit
• Internal controls integration
• Group Code of Conduct and relevant training
• Established financial control framework
• Monthly monitoring of control performance
• Change management and staff retention
arrangements to enable a smooth transition
• Internal Audit assurance reviews
• Group and regional controls oversight
• Integration of financial controls into new businesses,
with training, support, and hyper-care assurance
• Treasury policy and hedging strategies
• Central treasury function and regional treasury
centres (in relevant regions)
• Monthly monitoring of foreign exchange impacts
and hedging positions
• Group-wide Code of Conduct, with
associated training
• Updated Group policy framework, supported
by market-level policies and procedures
• Nominated legal representative and/or
retained counsel in major markets to monitor
existing and emerging legislation
• Online training for specific regulations
• Arrangements in place to comply with FCA
requirements with regards to responding to
complaints from customers pending the outcome of
its investigation and to comply with all requests for
information that may arise as a result of the review.
Financial
reporting, fraud
MODERATE
UNLIKELY
DE,
M&A,
VLS
The Group may be subjected to the risk of
inaccurate or delayed financial reporting
or fraud. These risks may be increased as
we integrate new acquisitions or transform
established ways of working.
DE,
M&A,
VLS
DE,
M&A,
VLS
Foreign
exchange
MODERATE
UNLIKELY
Legal,
regulatory
compliance
MODERATE
POSSIBLE
The Group operates a geographically diverse
structure with transactions occurring in multiple
currencies, therefore the Group is exposed to
the risk of adverse currency fluctuations which
can impact financial results and asset values.
The Group must comply with a diverse range of
laws and regulations in the markets in which it
operates, including those relating to anti-bribery
and corruption, data protection, competition,
anti-money laundering, and the distribution
and sale of Finance and Insurance. In that
context we note the FCA investigation into certain
historical finance commission arrangements
and the risks associated with the outcome of
that investigation. The Group must also meet the
terms of its distribution and retail contracts and
contractual risks assumed during acquisitions.
60
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Strategic
impact Description and impact
Trend
Key mitigating actions
DE
The Group has individual distribution contracts,
several of which have been in place for many
years. The loss of such contracts would have a
significant impact on revenue and profit, as well
as future growth opportunities. The cancellation
of a number of smaller contracts at the same
time could have a similar impact.
DE,
M&A,
VLS
There is a risk that we do not have timely or
reliable access to business-critical information
or information systems. This could be due to
issues such as systems outages, software glitches,
hardware failure, system complexity, and
capacity or ineffective change management.
DE
There is a risk that new or existing competitors may
enter our markets with new business models and/
or new technology which could result in a decline
in revenue or a gradual reduction of margins.
Risk title
Loss of
distribution
contract
MAJOR
RARE
Loss of
technology
systems (non-
cyber)
MODERATE
UNLIKELY
New market
entrants:
business
models or
technology
MINOR
POSSIBLE
People:
engagement
and retention
DE,
M&A,
VLS
MODERATE
POSSIBLE
Relatively low-levels of unemployment,
post-Covid-19 growth and the pressures
and pace of business transformation expose
Inchcape to the loss of talented colleagues
and teams.
People:
future skills
MODERATE
POSSIBLE
DE,
M&A,
VLS
Appropriate skills and knowledge required to
deliver on objectives. This risk may become
more significant as we venture into new parts of
the value chain; new ways of working become
increasingly dependent on people with
business-critical skill sets which are in demand
and may become harder to recruit and retain.
Strategy
delivery and
transformation
DE,
M&A,
VLS
MODERATE
POSSIBLE
Supply chain
disruption
DE
MINOR
POSSIBLE
Success of the Group’s strategic transformation
priorities are dependent on the delivery of
a number of key enabling programmes.
There is a risk that we lack the capacity and
risk mitigation to deliver on these key enabling
programmes on time, with quality, within
budget while realising the expected benefits.
The risk of interruption to the normal supply of
vehicles and parts to our Distribution or Retail
businesses has reduced significantly as supply
chains return to normal post-Covid-19 and
demand softens.
The Group’s Accelerate strategy is designed
to mitigate this risk in the following ways:
• through a compelling offering to our mobility
partners known as Distribution Excellence;
• through VLS which enables us to capture more
value from the vehicle lifecycle while reducing
dependency on specific contracts; and
• maintaining and increasing (through M&A)
our geographic diversification as well as our
diversified mobility company partner portfolio
(origin, segments, and positioning).
• Consolidation of existing systems into Software as
a Service with availability service level agreements
• Cloud-hosting, physical and technical security
in place with active system monitoring
• Incident management, disaster recovery
and continuity plans
• Back-up and restoration procedures in place
• IT general controls in place and audited
• Crisis management training and
simulations undertaken
• Existing value proposition: digitalisation
and enhanced omni-channel offering
• Monitoring of competitor activity
• Brand profile and service levels
• Diversification of brand relationships, geographies,
and revenue streams
• Colleague experience surveys followed by analysis
and action planning at senior management level
• Colleague wellbeing frameworks, programmes,
and support
• Global leadership and enhanced career
development programmes and talent reviews
• Reformed change management and
retention initiatives
• Pay and reward reviews and benchmarking
• Strategic resource planning
• Future skillsets defined; current gaps identified
• Specialist recruitment agencies used
• Reward and compensation packages
• Recruitment targets
• Established key skill sets
• Recruitment procedures
• Company profile and branding
• Development programmes, e.g. digital academy,
digital literacy programmes, internal moves, and
project opportunities
• Digital Delivery Centres
• Oversight by the Group’s Transformation
Committee, supported by Portfolio Management
tool to track status
• Ongoing reviews and reprioritisation of
initiatives and resourcing to ensure focus
on strategic imperatives
• Risk and issue management
• Sales and operation planning (S&OP) procedures
• Inventory management and planning processes
• Close management and monitoring of margins
• Portfolio management and close liaison with
our mobility company partners
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
61
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
EMERGING RISKS
Emerging risks are those uncertain events which timing,
impact, or probability are difficult to quantify. We identify
emerging risks in various ways: through the strategic
replanning process; external publication analysis (including
peer reviews and mobility company partner risk
disclosures); review of risk studies and publications; the
regular cadence of risk committees and Board meetings;
and risk-related discussions and analysis. Through regular
consideration and monitoring of these emerging risks early
on, we can effectively respond to potential threats by
preparing contingency plans, implementing mitigants, or
adjusting our operations and Group strategy as required.
R A T E G I C & M A R KET
T
New mobility
company partner
relationships
New mobility
solutions
S
Action to
reduce car
ownership
Acquisition
funding
Carbon
taxes
L
A
I
C
N
A
N
I
F
&
C
I
M
OECD tax
reform
Climate
reporting
A C C E L E R A T E
O
N
O
Retrenchment
of consumer
credit
C
E
EV battery
supply
O
P
E
R
Vehicle
assembly
Climate
activism
A
TIO
NS
AI adoption
rates
Semi-
conductor
supply
T
E
C
H
N
O
L
O
G
Y
AI impact
on workforce
planning
Inclusion
& Diversity
E
L
P
O
E
P
• A changing climate brings a range of emerging risks,
including the potential for higher carbon taxes and
levies, government action to reduce car ownership,
a shortage of raw materials to maintain battery supply,
and increased climate-related reporting and activism.
Global trends in our marketplace are creating new
mobility solutions and the growth of new mobility partners.
• A rapid growth of M&A opportunities may challenge
our ability to fund investment in all opportunities.
A prolonged economic downturn may also restrict
the availability of consumer credit.
• Emerging technology-related risks include the potential
for geopolitical risks to disrupt the supply of
semiconductors to the auto industry and the impacts
of the rapid adoption of artificial intelligence (AI).
Consumer expectations regarding AI capability are
rapidly increasing; and the rapid adoption of AI will
disrupt existing workforce arrangements and plans.
• We continuously seek greater inclusion and diversity
across our businesses worldwide, which we see as
a source of competitive advantage. Failure to drive
these programmes of work successfully would result
in an erosion of that benefit.
• Although a non-material source of Group revenue,
vehicle assembly may increase the Group’s public
and product liability exposures.
62
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
APPROACH TO RISK MANAGEMENT
AND INTERNAL CONTROL
Effective risk management is essential to executing our
Accelerate strategy and achieving sustainable shareholder
value. We believe that effective risk management starts
with the right conversations to drive better business
decisions. Our primary focus is to identify and embed
mitigating actions for significant risks that could affect
our current or future performance, and/or our reputation.
Our risk management efforts aim to be holistic and
integrated, bringing together risk management, internal
controls, and Responsible Business, ensuring that our
activities across this agenda focus on the risks that
could have the greatest impact.
Inchcape deploys three lines of defence to manage risk
which is overseen by the Board and its Committees.
Accountability for managing risk is, however, fully
embedded across our business. Each region and function
undertake quarterly risk assessments, establishes mitigation
plans, and monitors risk on a continual basis. These risks are
consolidated into our Group’s principal risks, emerging risks,
and risk appetite and are reviewed by the Group Executive
Team and Board twice per year. The Audit Committee
at least annually review the effectiveness of the risk
management and internal control systems.
The three lines in practice – accurate and timely
financial reporting.
Timely and accurate financial reporting forms the
bedrock of delivering Accelerate successfully and
protecting shareholders’ investment. Management
teams (line 1) implement and monitor 130 key
financial reporting controls, designed by the
central controls team (Line 2). The central controls
team objectively checks management’s self-
assessment on an ongoing basis. Finally, the Group’s
internal audit function (Line 3) periodically tests both
the design and implementation of the controls to
provide management with a holistic view of risk and
control performance.
Risk management framework
B O A R D
S
R
E
D
I
V
O
R
P
E
C
N
A
R
U
S
S
A
T
S
I
L
A
I
C
E
P
S
E
X
T
E
R
N
A
L
A
U
D
I
T
A
N
D
R
E
G
U
L
A
T
O
R
S
LINE 1
Management and CEO
Risk ownership
Reporting
Accountability
LINE 2
Risk and control teams
Support
Monitoring
Challenge
A C C E L E R A T E
LINE 3
Internal Audit
Insights
Assurance
AUDIT C O M M I T T E E
The Board is ultimately accountable for the system of risk management and internal control, and for managing risks to be
within acceptable levels. During 2023, the Board, Audit Committee, and Group Executive Team reviewed the following
topics relating to the Group’s principal risks:
Q1
Q2
Q3
Q4
Board
Audit Committee
Group Executive Team
CROs quantification and scope 3;
legal and regulatory; risk policy;
capital structure; viability; M&A;
and Derco integration
Internal controls (financial
reporting, fraud, technology
systems risks); viability; and
Derco integration
Strategy: macro and industry trends;
EV and industry decarbonisation;
Distribution Excellence; VLS; mobility
company partners; EV transition;
and climate change
Cybersecurity; internal
controls (financial reporting,
fraud, and technology systems
risks); and Derco integration
EV transition (scope 1 & 2, EV strategy);
political (high risk markets); HSE due
diligence (M&A); principal and
emerging risks; business continuity;
people (leadership); VLS; and
Distribution Excellence
Cyber; EV transition (portfolio choices);
people (health & wellbeing); digital
(S&OP, and data analytics platform);
Responsible Business; business resilience;
VLS; Distribution Excellence; Global
Business Services (GBS); principal and
emerging risks; and strategy
Half-year risk review; Derco
integration; Responsible Business;
and cybersecurity
Half-year risk review; internal
controls (financial reporting,
fraud, and technology
systems risks); GBS; and Derco
integration
Digital (enterprise resource planning,
and digital experience platform);
people (health & wellbeing, Inclusion
and Diversity, and leadership); ESG; and
financial reporting (transfer pricing)
HSE; digital; people; strategy; supply
chain disruption; principal and
emerging risks; and risk appetite
Cybersecurity; internal controls
(financial reporting, fraud, and
technology systems risks); GBS;
Derco integration; and risk
management effectiveness
Cyber; AI; EV transition (materiality
assessment, and EV procedures);
principal and emerging risks; people
(colleague engagement); global policy
standards; M&A; strategy; distribution
agreements; legal & regulatory
compliance (Code of Conduct); and
Responsible Business (Planet)
Risk appetite
Risk appetite is the level of risk Inchcape is willing to accept in delivering our Accelerate strategy. It is a cornerstone of the
Group’s approach to risk management and is determined by the Board. This definition provides direction to all areas of
the Group on acceptable levels of risk and where further remediation is required to reduce the risk to acceptable levels.
Acceptable levels are determined by the target risk rating for each principal risk. The Board has considered its risk appetite
in relation to the Group’s principal risks in July and November 2023. Risks were allocated to one of three acceptable levels
of exposure (aligned to the risk heatmap), indicating tolerable levels of risk:
RISK-SEEKING/
ACCEPTANCE
We are prepared to (or may have
to) accept elevated levels of risk
in these areas.
RISK-TOLERANT
We have a moderate appetite for
these areas of risk. We will take
action to reduce risk levels if they
reach elevated levels.
RISK-AVERSE
We have a low or very low level of
tolerance for these risks. We will
take action to keep them as low
as reasonably practicable.
• Cybersecurity incident
• Macro-economic conditions
• Political risk
• Supply chain disruption
• HSE incident
• Financial reporting, fraud
• Legal, regulatory compliance
• Acquisition ROI
• Business interruption
(pandemic, natural hazards)
• Derco integration
• EV transition
• Foreign exchange
• Loss of distribution contract
• Loss of technology systems
(non-cyber)
• Margin pressure
• New market entrants: business
models or technology
• People: engagement, retention
• People: future skills
• Strategy delivery and
transformation
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
63
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
VIABILITY
STATEMENT
The Directors have assessed the viability of the Group by
reference to the Group’s current financial position, its
recent performance and forecasts of future performance,
its business model (pages 2 to 7), strategy (pages 8 to 9),
and the principal risks and mitigating factors (pages 56 to
63). The Group’s continued viability is dependent upon the
continuation of its relationships with mobility company
partners. With many mobility company partner contracts
covering three-year terms, three years is considered a key
timeline for new car changeover in mature retail markets
with good personal finance penetration. In addition to
this, the number of Units in Operation up to three years old
is also a key driver of our Aftersales business. However,
as illustrated in the diagram below, a variety of other
time horizons are also relevant to the management
of the business.
The Directors have determined three years to be the most
appropriate period for the viability assessment as they
believe that it strikes a balance between the different
time horizons which are used to manage the business
and is a reasonable period for a shareholder to expect
a distribution business to be assessed over.
Process and scenarios considered
Our financial planning process incorporates an Annual
Operating Plan for the next financial year (2024), together
with financial forecasts/models for the remaining years
covered by the viability assessment. These financial
forecasts consider the Group’s profitability, gearing, cash
flows, and other key financial metrics over the period to
December 2026. These metrics are subjected to sensitivity
analysis, in which a number of the main underlying
assumptions are adjusted and tested to consider
alternative risk-based scenarios. Using the Group’s most
significant risks, unlikely but realistic worse-case scenarios
are created, and their impact projected onto the
three-year projections.
1 Year
Detailed financial
forecasts
Currency hedging
Succession planning
Target setting for long-term incentive plans
Viability
(3 years)
New vehicle replacement in
mature markets
Impairment
modelling
Strategic planning
Financing considerations
Average remaining lease life
Investment planning
Pension obligations
64
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
5 years
These risks are: (i) loss of a material distribution contract; (ii)
a major cyber incident; (iii) digital disruption to our markets
and pricing; (iv) macro-economic conditions incorporating
the impact of a reduction in inventory conditions financing;
and (v) foreign exchange risk. These risks have been
modelled individually and concurrently, i.e. assuming all
five materialise during the three-year period. Modelling
these risks tests the Group’s ability to withstand a material
reduction in revenue (distribution contract and macro-
economic conditions); a material degradation in margins
(digital disruption); a material reduction in performance
(foreign exchange risk); and the impact of an unexpected
operational expense (cyber attack).
The models assume that a portion of uncommitted
inventory financing facilities is also withdrawn. The testing
recognises that some mitigating actions would remain
available to management to partially mitigate the impact
of these risks, including reductions in operational and
capital expenditure.
In the most severe scenario modelled, the test indicates
that the Company would not breach the single financial
(interest) covenant on its committed facilities. Details of the
Company’s financing arrangements can be found in note
22 to the financial statements on pages 179 to 180.
Longer-term prospects
The following factors are considered both in the formulation
of the Group’s strategic plan, and in the longer-term
assessment of the Group’s prospects:
• the principal risks and uncertainties faced by the Group,
as well as emerging risks as they are identified, and the
Group’s response to these;
• the prevailing economic climate and global economy,
and changing customer behaviours; and
• any opportunities through operational simplification and
leveraging technology.
Viability statement
Based on the outcomes of the scenarios and considering
the Group’s financial position, and principal risks, the
Directors have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment. The
Directors’ statement regarding the adoption of the going
concern basis for the preparation of the financial
statements can be found on page 118.
10 years
+
GOVERNANCE
66 Chairman’s Statement
70 Governance at a glance
72 Board of Directors
78 Nomination Committee Report
82 Audit Committee Report
90 CSR Committee Report
92 Directors’ Report on Remuneration
115 Directors’ Report
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
65
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CHAIRMAN’S
STATEMENT
NIGEL STEIN
CHAIR
DEAR SHAREHOLDERS AND STAKEHOLDERS
I am pleased to present the Corporate
Governance Report for the year ended
31 December 2023. The next few sections
explain how the Board and its Committees
have discharged their duties throughout
the year and I hope you find it informative.
As announced in December 2023, I will retire from the
Board at the conclusion of the annual general meeting
(AGM) in May 2024. I joined the Board as a Non-Executive
Director in October 2015 becoming Chair in May 2018.
As well as celebrating many successes over the years,
as a Board we have also had to tackle some difficult
issues, throughout being guided by Inchcape’s strong
culture of ‘doing the right thing’ and being a truly
responsible Company.
Inchcape has a proven and resilient business model
and over the years the Group has developed into
a highly focused and agile business in a strong position
to successfully deal with the many changes likely
to affect the automotive industry in the years to come.
I have thoroughly enjoyed my years at Inchcape,
especially working with so many talented colleagues
both on the Board and across the business. I know
I am leaving Inchcape in very good hands.
Overview of the year
It has been another busy year for the Board, with key
decisions made on the mergers and acquisitions (M&A)
agenda and the Group’s capital structure and major
change programmes within the business, such as the
integration of Derco. An insight into how the Board
reached certain key decisions is given on page 71.
In Hong Kong, the Board experienced the progress made
in DXP, to provide customers with seamless online to offline
experience and also how data analytic (DAP) models are
further improving aftersales profits. In the Philippines, the
Board gained insight into the Inchcape Digital operating
model, and how building capabilities in the DDCs are
harnessing technology to improve the business. A deep
dive into DAP allowed the Board to gain a broader
understanding of how high value analytics are deployed to
transform customer experience and operational efficiency.
Board changes
We welcomed Stuart Rowley in July 2023, and Adrian Lewis
was promoted to Chief Financial Officer in May 2023 having
held the role on a temporary basis since November 2022.
I am also delighted that Alison Platt joined the Board in
January 2024. As noted last year, Byron Grote and Juan
Pablo Del Río joined the Board as Non-Executive Directors
at the start of year bringing a wealth of knowledge and
experience to the Board’s deliberations. Further information
on the Board appointments can be found in the
Nomination Committee Report on pages 78 to 81.
Governance landscape
Despite the Government’s decision late in the year not
to proceed with the governance reform legislation,
a high-level analysis of the design of the Group’s current
entity-level control framework was carried out in line with
the expected changes to the UK Corporate Governance
Code. Further details can be found in the Audit Committee
Report on page 82 to 89.
Colleague engagement
Ensuring our colleagues are engaged is absolutely essential
to the success of the Group, and the Board reviewed the
outcomes of various forms of engagement throughout
the year including the results of the Be Heard survey which
was carried out in September 2023.
During the overseas Board visit, two of our Non-Executive
Directors (NEDs), Nayantara Bali and Jane Kingston,
facilitated an engagement session at the head office
in Hong Kong. In addition, Jane Kingston held a Reward
Forum with our colleagues from Europe & Africa. These
engagement sessions allow the Board to understand the
issues of importance to colleagues, what their motivations
are and, importantly, what could be done better. The NEDs
give feedback on the insights gained from the sessions
to the Board, and a list of actions are agreed with
management. Further details are given in the CSR
Committee Report on pages 90 to 91, and the Directors’
Report on Remuneration on pages 92 to 114, respectively.
Looking forward
I would like to take this opportunity to thank all Inchcape
colleagues across the Group for their hard work during the
year which contributed to our strong performance in some
challenging conditions.
In October 2023, the Board visited the Group’s operations
in Hong Kong, and also travelled to the Philippines, where
they saw the new CATS business and spent time in the
Digital Delivery Centre (DDC).
NIGEL STEIN
CHAIRMAN
66
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
We have complied with all Code provisions throughout
the year ended 31 December 2023 except for Code
provision 38, where the pension contribution rates for
executive directors, or payments in lieu, should be aligned
with those available to the workforce. Further information is
given in the Directors’ Report on Remuneration on page 92.
Board to operate effectively, generating value for shareholders,
and contributing to wider society.
If a Director has a concern about the running of the
Company which cannot be resolved, it will be recorded
in the Board minutes. No such concerns arose during 2023.
The Board monitors and assesses the indicators of culture within
the organisation through regular meetings with management
to discuss the approach to specific issues such as colleague
wellbeing and Inclusion & Diversity programmes. It also reviews
the outcomes of the Be Heard survey and action plans to
address issues raised. A regular update on people and
capability metrics such as voluntary turnover, leadership
development programmes, colleague assistance programmes,
and health, safety & environment (HSE) KPIs also allow the
Board to assess the culture within the organisation.
Compliance with the UK Corporate Governance Code
The 2023 Annual Report and Accounts is prepared with
reference to the UK Corporate Governance Code 2018
(Code) which is published by the Financial Reporting
Council (FRC) and available at www.frc.org.uk. The
Corporate Governance Report on pages 66 to 118
describes how we applied the principles of the Code
throughout the year and gives references where key
content can be found elsewhere in the Annual Report
and Accounts.
Board leadership and company purpose
The Board is collectively responsible for defining, approving,
and monitoring the Accelerate strategy to ensure it delivers
long-term sustainable success within a fast-changing
environment, ensuring value for all its stakeholders.
The Directors use their judgement and objectivity, supported
by a structured governance framework, which enables the
The Group’s purpose is underpinned by the Accelerate
strategy, ‘Driving What Matters’ Responsible Business plan,
and the One Inchcape Value & Behaviours. In order to operate
effectively, it is important that the appropriate culture is
embedded throughout the business, and this is approached
in several ways:
• Code of Conduct;
• a designated Non-Executive Director responsible
for workforce engagement;
• whistleblowing hotline;
• remuneration policies and practices;
• setting appropriate financial targets and monitoring
performance against these throughout the year;
• colleague experience survey; and
• delegated authorities.
THE ONE INCHCAPE VALUES & BEHAVIOURS
We
deliver
Great
experiences
Fresh
thinking
Better
together
We deliver great experiences through fresh thinking and working better together
The Board reviews performance against strategic targets
throughout the year and reviews certain key performance
indicators to ascertain whether the necessary resources
are in place to achieve the Group’s strategic aims. Through
its governance structure, the Board also ensures that
the necessary controls, processes, and procedures are
in place to drive a strong ethical culture to facilitate the
delivery of the strategy.
The Company has a broad group of clearly defined
stakeholders and engages with them via a variety of
channels allowing the Board to understand what issues are
important to stakeholders. The Chair of the CSR Committee
is the designated Non-Executive Director responsible
for engagement with the workforce.
The Code of Conduct, among other policies, sets out the
behaviours expected of our colleagues and ensures policies
remain aligned to culture and support long-term success.
Other policies include HSE, anti-bribery and corruption,
Inclusion & Diversity, and whistleblowing, which are all
available in multiple languages.
The Board recognises the importance of a two-way flow of
communication and the importance of colleagues having
the facilities to raise matters of concern, via the whistleblowing
hotline. The Board has delegated oversight of the Company’s
whistleblowing arrangements to the Audit Committee who
review the issues raised, and the actions put in place by
management to resolve them, at each meeting.
Strategy – pages 8 to 9
Biographies – pages 72 to 73
Matters reserved for the Board www.inchcape.com
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
67
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Division of responsibilities
The Chair is responsible for the leadership of the Board
and is separate from the role of Group Chief Executive. He sets
meeting agendas designed to encourage constructive
debate and promote a culture of openness and inclusion.
The Chair also ensures the Directors receive accurate, timely,
and clear information. The Chair was considered independent
on appointment and this is assessed annually.
The Board includes an appropriate combination of Executive
Directors and NEDs, with at least half of the Board consisting
of Independent NEDs (excluding the Chairman) throughout
the reporting period. There is a clear division of responsibilities
between the leadership of the Group. The Group Chief
Executive is responsible for developing the Group’s strategy,
running the day-to-day operations, reporting to the Board on
performance, implementing strategy, managing risk and
internal control, and engaging with shareholders. The Senior
Independent Director acts as a sounding board for the
Chairman, serving as an intermediary to other Board
members, and leads the annual appraisal of the Chairman’s
performance with the other NEDs.
The NEDs are appointed to provide a wide range of skills,
knowledge, and experience to supply context to the
matters being debated, and the decisions needed to achieve
the Accelerate strategic goals. The NEDs are required to
allocate sufficient time to the Company to discharge their
responsibilities. When reviewing the Nomination Committee’s
recommendation to appoint a new Director, the Board will
always assess whether the candidate is able to allocate
enough time to the role. Similarly, when assessing the
acceptability of an existing Director’s wish to take on other
external appointments, the Board will assess the additional
demand on that Director’s time before authorising the
appointment, and whether it would result in over-boarding.
No Board Director took up new significant external
appointments with other publicly listed companies during 2023.
Board dates are agreed two years in advance and the time
commitment expected is reviewed annually to ensure Directors
can plan their time accordingly.
The Group Company Secretary supports the Board by
providing advice on the governance framework and ensuring
that the appropriate policies and procedures are in place to
allow it to function effectively. The appointment and removal
of the Group Company Secretary is a decision for the Board
as a whole.
Board skills – page 71
Biographies – pages 72 to 73
Board evaluation – page 77
Committee terms of reference www.inchcape.com
Matters reserved for the Board www.inchcape.com
Composition, succession, and evaluation
Ensuring there is the right mix of Board Directors is a key
element of the succession planning process. The Nomination
Committee reviews the skills matrix and tenure of Directors on
a regular basis to ensure its succession plan remains aligned
with the natural rotation of Directors off the Board, and the
strategic objectives of the Group in the longer-term.
The succession plans for the senior management team
are regularly reviewed by the Board.
The Nomination Committee engages external recruitment
consultancies when searching for Board position candidates.
The Directors must possess the skills, experience, and
knowledge to support and challenge management in the
execution of the Accelerate strategy and to provide sound
advice and insight on material issues. The Board use a skills
matrix to ensure it has the necessary combination to meet its
strategic objectives. The Committee considers breadth
of perspective on the Board that can only be achieved
by appointing Directors from a diverse range of backgrounds
and considers ethnicity, gender, and professional experience
when considering suitable candidates.
The Directors provide feedback on how the Board operates,
its culture, and effectiveness during the evaluation process.
During 2023, the Board carried out an external evaluation
which reviewed the Board’s composition, diversity,
and effectiveness.
The specific reasons why the Board considers that each
Director’s contribution is, and continues to be, important to
the Company’s long-term sustainable success may be found
in the Board evaluation section of this report and the Notice
of Annual General Meeting.
Board skills – page 71
Board evaluation – page 77
Nomination Committee – pages 78 to 81
Notice of Meeting www.inchcape.com
68
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Audit, risk, and internal control
The Audit Committee Chair reports to the Board on the
independence and effectiveness of internal and external
audit functions and the integrity of the financial statements
throughout the year.
The Audit Committee regularly meets with the auditor without
the presence of management to discuss any areas of concern
they might have. The Chair of the Audit Committee also meets
with the Group Chief Financial Officer and Head of Internal
Audit in one-to-one meetings which enable her to fully
understand the key issues ahead of Committee meetings.
The Board reviews the Annual Report and Accounts, the
interim financial statements, and the trading updates prior to
publication to confirm to the best of their knowledge that these
are all fair, balanced, and understandable and provides the
information necessary for shareholders to assess the Group’s
performance, business model, strategy, and prospects. The
Board considers the weight given to published information to
ensure that it is objective and there are no omissions. The Board
also ensures that the narrative reporting is consistent with the
financial statements.
The Group has a system of risk management and internal
control which is designed around an established three lines
of defence model. This model engages management teams,
corporate functions, and independent assurance to manage
risk, which is overseen by the Board and its Committees.
The risk management and internal control processes are
designed to manage rather than eliminate the risk of failure
to achieve business strategic objectives. In establishing and
reviewing the system of internal control, the Directors have
regard for the nature and extent of relevant risks, the likelihood
of loss being incurred, and the costs of control. The system
can only provide reasonable but not absolute assurance
against material misstatement or loss and cannot eliminate
business risk.
On behalf of the Board, the Audit Committee carries out a
review of the effectiveness of internal control. Any significant
control failings or weaknesses are reported to the Board, along
with a detailed review of the findings and mitigation plans
being put in place. The Board will monitor progress against
plans until it is satisfied that the matter has been resolved
appropriately. The process has been in place for the year
under review and up to the date of the approval of the 2023
Annual Report and Accounts.
The Directors are satisfied that the Group’s risk management
and internal control systems accord with the FRC’s guidance
on Risk Management, Internal Control and Related Financial
and Business Reporting.
Risk management – pages 56 to 64
Audit Committee Report – pages 82 to 89
Non-audit services – page 89
Remuneration
The Remuneration Committee Chair reports to the Board on its
oversight of the Directors’ Remuneration Policy, practices, and
processes throughout the year. The Remuneration Committee
ensures the Directors’ Remuneration Policy is designed to
support the successful delivery of the Accelerate strategy
and is aligned to the Group’s purpose and values.
The Remuneration Committee believes that the disclosure
of the remuneration arrangements is transparent with clear
rationale provided on implementation and changes to
policy. The Committee remains committed to consulting
with shareholders and other key stakeholders on the policy
and its application.
The Committee believes the performance measures used in
the long-term incentive plans, along with those in the bonus
scheme, also aid simplicity due to the clear alignment to
Inchcape’s strategy and are familiar to all stakeholders.
The Committee has ensured that remuneration arrangements
do not encourage and reward excessive risk taking by setting
targets which are stretching yet realistic, with discretion to
adjust formulaic bonus and outcomes, and expanding the
circumstances in which malus and clawback can be applied.
Linking strategy to the performance measures used balances
predictability and proportionality by ensuring outcomes do not
reward poor performance in the short and long-term. The
Directors’ Remuneration Policy is consistent with Inchcape’s
culture therefore driving behaviours which promote the
long-term success of Inchcape.
The Remuneration Committee has delegated responsibility
for setting the Executive Directors’ remuneration under the
shareholder-approved Directors’ Remuneration Policy. This
policy is reviewed every three years to ensure it remains fit
for purpose, aligns with stakeholder expectations, and
promotes appropriate behaviours.
The Committee is supported by external advisors to provide
guidance on best practice. The Committee consults with
shareholders prior to the policy being put to shareholder vote
to ensure their interests are supported. No Director is able
to determine their own remuneration outcome.
The Remuneration Committee is made up of only independent
Non-Executive Directors. When agreeing Executive
remuneration outcomes, the Committee uses its independent
judgement to reach decisions taking into account financial
performance, personal objectives, wider business context,
and the long-term impacts.
Directors’ Report on Remuneration – pages 92 to 114
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
69
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
GOVERNANCE
AT A GLANCE
GOVERNANCE STRUCTURE
The Board of Inchcape plc
Collectively responsible for the long-term success of the Company
Audit
Committee
Remuneration
Committee
Group Executive
Team
Nomination
Committee
CSR
Committee
• Financial reporting
• Risk management
• Internal control
• Remuneration Policy
• Incentive plans
• Performance targets
• Group strategy
• Operational
management
• Board composition
• Diversity
• Succession planning
• Responsible Business
• Engagement
• Climate oversight
Delegated authorities:
COMMITTEE
REPORT
– pages 82 to 89
COMMITTEE
REPORT
– pages 92 to 114
COMMITTEE
REPORT
– pages 78 to 81
COMMITTEE
REPORT
– pages 90 to 91
Delegated
authorities:
Risk oversight
InControl
Standards
Group Risk
Committee
Investment
Committee
Delegated
authorities:
Oversight of
Group capital
expenditure
BOARD ATTENDANCE
The table below shows the Board and Committee meetings held during the year.
Board
Audit
Committee
Scheduled
Scheduled
CSR
Committee
Scheduled
Remuneration
Committee
Nomination
Committee
Scheduled
Scheduled
Ad hoc
Nayantara Bali
Jerry Buhlmann*
Juan Pablo Del Río*
Byron Grote
Alex Jensen
Jane Kingston
Sarah Kuijlaars
John Langston**
Adrian Lewis**
Stuart Rowley**
Nigel Stein
Duncan Tait
8/8
8/8
7/8
8/8
8/8
8/8
8/8
4/4
4/4
4/4
8/8
8/8
5/5
5/5
5/5
2/2
2/2
3/3
2/3
3/3
3/3
3/3
3/3
4/4
4/4
4/4
4/4
4/4
2/2
2/2
2/2
2/2
2/2
2/2
2/2
1/1
1/1
2/2
3/3
3/3
3/3
3/3
3/3
3/3
3/3
2/2
3/3
* Juan Pablo Del Río was unable to attend the February Board meeting due to a prior commitment, and Jerry Buhlmann was unable to attend
the November CSR Committee meeting due to exceptional reasons, respectively.
** John Langston left the Board on 18 May 2023, Adrian Lewis joined the Board on 24 May 2023, and Stuart Rowley joined the Board on 17 July 2023.
70
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
KEY ACTIVITIES AND DECISIONS OF THE BOARD
January
February
March
Strategy
Day
May
• 2022 closing
• 2023 Annual
Operating Plan
• Carbon emission
quantification
• Scope 3 carbon
emission targets
• Mercedes-Benz,
Indonesia
acquisition
• Mercedes-Benz,
• Capital structure
• Macro and
Indonesia
acquisition
• Corporate
governance update
• Insurance review
• Tax strategy
• Risk Policy
• NED fees
review
• 2022 Annual Report
and Accounts
• 2022 final dividend
• 2022 internal
Board evaluation
outcomes
industry trends
• EV and industry
decarbonisation
• Distribution
Excellence and
route to market
• Vehicle Lifecycle
• Modern Slavery
Services
Statement
• Portfolio choices
in the context of
climate change
• M&A and mobility
company partner
relationships
• Capital structure
• Defence strategy
• AGM
• 3 + 9 forecast
• Company bond
• Treasury Policy
review
• Pension update
• Appointment of
Adrian Lewis as
Group Chief
Financial Officer
• Great Lake Motor
Distributors, New
Zealand acquisition
July
September
October
November
• Appointment of Stuart
• Regional update:
• Board visit to Hong
Rowley as NED
Americas
• Key takeaways from
• Half-year results
investors feedback
• Cybersecurity
update
Kong and the
Philippines
• Regional update:
Asia-Pacific
• Digital strategy
• Responsible Business
update
update
• Health, safety &
environment review
the Strategy Day
• Half-year results
• Investor relations update
• Half-year risk review
• Regional Update: UK
• Ditec post-investment
review
• Conflicts of Interest Policy
• Investor relations update
• 2023 outlook & 2024 operating plan
• Regional update: Europe & Africa
• Tax strategy
• Full year risk review
• Accelerate strategy interim review
• Succession planning
• Board expenses review
BOARD SKILLS
The Board recognises the importance of the right mix of skills, experience, and diversity to deliver the Group’s strategic
objectives and contribute towards long-term success. Skills were enhanced in 2023 from new Board appointments
coming from different industry backgrounds, and from Board members receiving external training on particular topics.
What we bring
• Automotive
• Digital
• Emerging markets
• Finance
• Remuneration
• Retail
• Technology
Skills enhanced
in 2023
Future succession
considerations
• Automotive
• Emerging markets
• Environmental, social, and
corporate governance
• Finance
• Multinational business
• Digital/Technology
• Environmental, social, and
corporate governance
• Remuneration
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
71
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
BOARD OF
DIRECTORS
The Board is collectively responsible for agreeing and
continually reviewing the Accelerate strategy to ensure
it delivers long-term sustainable success. The Board is
also responsible for ensuring the appropriate resources
are in place to deliver the strategic objectives.
Nigel Stein
CHAIRMAN
Duncan Tait
GROUP CHIEF EXECUTIVE
Adrian Lewis
GROUP CHIEF FINANCIAL OFFICER
Appointed – October 2015
Appointed – July 2020
Appointed – May 2023
Skills and experience – Nigel has a
wide range of international, general
management, and finance experience,
as well as having extensive knowledge in
the global automotive and manufacturing
sectors. Nigel joined Inchcape in 2015
as Non-Executive Director before being
appointed as Chairman in 2018. Nigel was
formerly chief executive of GKN plc and
is presently a non-executive director of
James Hardie Industries plc. Nigel is also
a chartered accountant.
Committee membership – Chair of the
Nomination Committee and member of
the CSR and Remuneration Committees.
Skills and experience – Duncan brings
significant international experience and
a wealth of digital and data experience,
a key enabler of the Accelerate strategy.
Duncan was previously on the board of
Fujitsu, a global technology services
company with $10bn turnover and
35,000 people. Duncan has also held
senior roles at Unisys, Hewlett Packard,
and Compaq in a technology focused
career of over 30 years. Duncan is currently
a non-executive director at Agilisys.
Committee membership – CSR Committee.
Skills and experience – Adrian has financial
experience in the automotive, consumer,
digital, and retail industries, and has been
instrumental in the acquisition and
integration of the Derco and Indumotora
businesses. Adrian joined Inchcape in 2015
as CFO for the Emerging Markets region
and then became CFO for Asia Pacific.
In 2020, Adrian returned to the United
Kingdom to lead the finance function
as Group Financial Controller, before
becoming Chief Financial Officer in 2023.
Prior to Inchcape, Adrian held various
senior finance roles at Tesco plc. Adrian
is a chartered accountant.
Committee membership – None.
Jerry Buhlmann
SENIOR INDEPENDENT DIRECTOR
Appointed – March 2017
Skills and experience – Jerry has over
40 years’ experience in the advertising and
media industries. Jerry joined Inchcape
as Non-Executive Director in 2017, before
becoming Senior Independent Director in
2019. He was formerly CEO of Dentsu Aegis
Network and Aegis Group plc. Jerry is
currently chairman of three private equity
backed digital marketing agencies: Croud
Limited, Dept, and Hybrid. Jerry is also
a member of the supervisory board of
Serviceplan GmbH, and a senior advisor
to management consultants OC&C.
Committee membership – Audit, CSR,
Nomination, and Remuneration
Committees.
Jane Kingston
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Sarah Kuijlaars
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed – July 2018
Appointed – January 2022
Skills and experience – Jane has significant
international and remuneration
experience, and is non-executive
director and remuneration committee
chair of Spirax-Sarco Engineering plc.
Jane was formerly group human resources
director for Compass Group plc, and has
held senior positions at Enodis plc, Blue
Circle plc (now Lafarge S.A.) and Coats
Viyella plc.
Committee membership – Chair of
Remuneration Committee and member
of the Nomination Committee.
Skills and experience – Sarah is an
experienced international finance leader,
having previously been chief financial
officer at De Beers Group and Arcadis NV.
She was also formally deputy CFO at
Rolls-Royce Holdings plc and has held a
number of senior financial leadership roles
during a 25-year career at Royal Dutch
Shell plc. Sarah was previously a non-
executive director at Aggreko plc. Sarah
has a Mathematics degree from Oxford
University and is a Fellow of the Chartered
Institute of Management Accountants.
Committee membership – Chair of the
Audit Committee and member of the
Nomination Committee.
72
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
AS AT 31 DECEMBER 2023
GENDER
LENGTH OF SERVICE
NATIONALITY
ETHNICITY
4
7
Female
Male
2
3
6
1
1
9
0 to 3 years
6 to 9 years
3 to 6 years
British
Chilean
Singaporean
1
10
Asian
White
Nayantara Bali
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Alex Jensen
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Stuart Rowley
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed – May 2021
Appointed – January 2020
Appointed – July 2023
Skills and experience – Nayantara
previously held various senior management
positions in Procter & Gamble over a
25-year period. Nayantara is director and
co-owner of ANV Consulting Pte, and also
an independent director on the boards
of Torrent Pharma, Starhub, and Marico.
Nayantara holds an Economics degree
and a Post Graduate Diploma in Business
Management from the Indian Institute
of Management.
Committee membership – CSR and
Nomination Committees.
Skills and experience – Alex is the
designated Non-Executive Director
responsible for workforce engagement.
She has considerable experience in
transforming and growing customer-facing
businesses. Alex is the CEO of National
Express UK, Ireland, and Germany, and also
serves on the board of the charity Mind.
Alex was formerly regional CEO of mobility
and convenience at BP plc. Alex holds an
MA degree in Chinese Studies from Oxford
University, and a Masters from Stanford
University School of Business.
Committee membership – CSR Committee
Chair and member of the Nomination and
Remuneration Committees.
Skills and experience – Stuart has a deep
understanding of the global automotive
industry and has extensive international
experience. Stuart recently departed Ford
after more than 30 years’ service, starting
from a finance leader before transitioning
to president and chair of Ford Europe,
and chief transformation & quality officer.
Stuart was formally a non-executive board
member of the European Automobile
Manufacturers’ Association, a lobbying
group representing Europe’s major car
manufacturers, which includes many of our
mobility company partners. Stuart holds a
Master’s degree in Business Administration.
Committee membership – Audit and
Nomination Committees.
Juan Pablo Del Río
NON-EXECUTIVE DIRECTOR
Appointed – January 2023
Skills and experience – Juan Pablo has held
a number of senior leadership roles across
a range of companies within the
automotive, real estate, and retail sectors.
He served on the board of the Derco
group, the largest multi-brand automotive
distributor in Latin America, until its
acquisition by Inchcape in 2022. Juan
Pablo is currently on the board of Cruzados
S.A.D.P. (a company with shares listed
on the Santiago Stock Exchange) and
is chairman of Sodimac S.A. He was
formerly a board member of Falabella S.A.,
a company with shares listed on the
Santiago Stock Exchange.
Committee membership – Nomination
Committee.
Byron Grote
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Alison Platt
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointed – January 2023
Appointed – January 2024
Skills and experience – Byron has extensive
experience across a range of leading
international businesses at board level,
bringing strategic focus and financial
expertise to the Board. Having previously
been chief financial officer at BP plc
between 2002 to 2011, Byron is currently
senior independent director at Tesco plc,
non-executive director at InterContinental
Hotels Group plc, and deputy chairman of
the supervisory board at Akzo Nobel NV
Byron has previously served on the boards
of Anglo-American plc, Standard
Chartered plc, and Unilever plc.
Committee membership – Audit, CSR,
Nomination, and Remuneration
Committees.
Alison has significant business and
international commercial experience from
working for high-profile consumer-facing
companies across the healthcare,
insurance, and property sectors. Her former
membership of the steering group of the
Hampton-Alexander Review provides
strategic insights on inclusion and diversity.
Alison serves as chair for Hargreaves
Lansdown plc and Ageas UK. Alison is also
a non-executive director and chair of the
Remuneration Committee for Tesco plc.
Committee membership – Audit, CSR,
Nomination, and Remuneration
Committees.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
73
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
GROUP
EXECUTIVE
TEAM
The Group Executive Team (GET) drives the Accelerate
strategy and is responsible for the day-to-day operations
of the Group. It is a global team of business leaders that
combines a strong focus on operational excellence with
a wealth of experience in a wide range of industries,
including automotive, fast-moving consumer goods
(FMCG), finance and management services.
1 | Duncan Tait
GROUP CHIEF EXECUTIVE
Appointed – July 2020
Duncan brings significant international
experience and a wealth of digital and
data experience, a key enabler of
the Accelerate strategy. Duncan has
overseen the implementation of DXP,
the omni-channel customer and dealer
platform, which provides access to a full
range of products and services, and DAP,
a range of data analytics designed to
deliver competitive advantage. Duncan
has led the Group entering strategic
partnerships with BYD, Geely, and Great
Wall Motors, which bring exciting EV
ranges, aligning with the Group’s
Responsible Business agenda.
2 | Adrian Lewis
GROUP CHIEF FINANCIAL OFFICER
Appointed – November 2022
Adrian has financial experience in the
automotive, consumer, digital, and retail
industries, and has been instrumental in the
acquisition and integration of the Derco
and Indumotora businesses. Adrian joined
Inchcape in 2015 as CFO for the Emerging
Markets region and then became CFO
for Asia Pacific. In 2020, Adrian returned
to the United Kingdom to lead the finance
function as Group Financial Controller,
before becoming Chief Financial Officer
in 2023. Prior to Inchcape, Adrian held
various senior finance roles at Tesco plc.
Adrian is a chartered accountant.
3 | George Ashford
CEO UK
Appointed – October 2006
George joined the Group in 2006 and
since that time has held several senior
positions including CEO Toyota Belgium
and CEO APAC. In 2020, George was also
appointed Chief Transformation Officer
with responsibility for the development
and implementation of the Accelerate
strategy and business transformation.
In 2022, George was then appointed as
CEO UK. His extensive distribution and retail
experience is beneficial in leading this
crucial business. He also continues to lead
the global used car strategy. George is the
executive lead for Inchcape Enabled,
which focuses on building a disability
confident business by removing barriers
and increasing accessibility.
1
3
2
4
5
4 | Helen Cunningham
CHIEF PEOPLE OFFICER
Appointed – September 2020
Helen joined the Group in 2016 and has
held various positions as Regional HR
Director in the UK, Emerging Markets, and
Americas & Africa, before being promoted
to Chief People Officer in 2020, bringing a
combination of deep functional expertise
and strong operational leadership to this
key global role. She has significant M&A
capability within the business over several
step-change acquisitions effectively
onboarding new teams and leaders and
integrating businesses. She is also the
Executive leader for the People workstream
of the Responsible Business ‘Driving What
Matters’ plan.
5 | Mike Bowers
GROUP GENERAL COUNSEL AND
CHIEF SUSTAINABILITY OFFICER
Appointed – October 2015
Mike joined the Group in 2015 as Group
General Counsel. He is a leading
contributor to the Group’s M&A strategy
playing a significant role in the acquisitions
of Derco, Grupo Rudelman, Indumotora,
ITC, and Simpson Motors, which significantly
reshaped the business over the last
decade. Mike is also instrumental in
reinforcing and strengthening legal and
regulatory compliance across the Group.
Mike was appointed Chief Sustainability
Officer in 2023 and leads the Group’s
response to climate change, helping us to
deliver on our aim to be the lowest carbon
route to market for our mobility partners.
74
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
8 | Mark Dearnley
CHIEF DIGITAL OFFICER
Appointed – October 2020
Mark joined Inchcape as Chief Digital
Officer in 2020 with responsibility for digital
transformation and Distribution Excellence
which are critical to the success of the
Accelerate strategy. Mark has been
instrumental in establishing Inchcape
Digital, the home of the recently formed
Digital Delivery Centres based in Colombia
and the Philippines. Inchcape Digital leads
the development and roll out of DXP and
DAP globally, supports enterprise resource
planning and all of Inchcape’s global
technology infrastructure, manages
cybersecurity, and is introducing new
solutions including the Digital Parts
Platform and used car analytics.
9 | Glafkos Persianis
CEO EUROPE & AFRICA
Appointed – April 2020
Glafkos joined Inchcape in 2020 as CEO
Europe with responsibility for Continental
and Northern Europe. Glafkos was
instrumental in the appointment of
Inchcape as BYD’s sales and aftersales
partner in Belgium and Luxembourg. BYD
is the world’s leading manufacturer of
new energy vehicles and power batteries,
and will provide an online and offline
network for both sales and aftersales
services. Also in 2022, Glafkos assumed
responsibility for operations in Africa,
a strategically important region for the
Group offering long-term sustainable
growth in the markets of Ethiopia, Djibouti,
and Kenya.
10 | Liz Brown
CHIEF STRATEGY OFFICER
Appointed – February 2023
Liz has over 20 years’ experience
in consulting, consumer goods, private
equity, and retail. She joined Inchcape
in 2023 from Diageo, the global drinks
manufacturer and distributor, where she
held the role of group strategy director
and global head of business development.
Liz also had overall responsibility for
Diageo’s start up acceleration business,
Distill Ventures, developing a portfolio of
successful new businesses which resulted in
several successful acquisitions into Diageo.
Prior to Diageo, Liz held strategic and
senior roles at Currys plc, Royal Bank of
Scotland Group plc, and LEK Consulting LLC.
11 | Phil Jenkins
CHIEF M&A OFFICER
Appointed – October 2023
Phil has over 25 years’ business
development and finance experience
in global organisations across both the
automotive and FMCG sectors. Phil joined
Inchcape initially as Chief Financial Officer
for our Americas & Africa region and has
led our global M&A team since 2021. Under
his leadership, the M&A team has helped
secure multiple deals, including the
acquisition of Derco, Inchcape’s biggest
M&A transaction in more than 50 years.
9
6
7
8
10
11
6 | Ruslan Kinebas
CEO APAC
7 | Romeo Lacerda
CEO AMERICAS
Appointed – October 2015
Appointed – September 2021
Ruslan has led key acquisitions with
mobility company partners including
Changan, GWM, Jaguar Land Rover,
Mercedes-Benz, and Tata Motors, and has
overseen the development of our global
Digital Parts Platform. In 2023, he presided
over successful market entries into
Philippines and Indonesia which further
grew Inchcape’s distribution businesses
in the region. In his eight-year tenure at
Inchcape, he held strategic roles such as
CEO Emerging Markets, and CEO Americas
& Africa. A firm believer of Inclusion &
Diversity, he is the Executive sponsor of
the Inchcape Women into Leadership
programme, helping to uplift and develop
female colleagues into leadership roles.
Romeo joined Inchcape in 2021 as CEO
Americas & Africa. Since joining the Group,
Romeo has overseen the acquisition of
Ditec, Interamericana Trading Corporation
(ITC), and Simpson Motors, which have
strengthened the Group’s geographic
reach and broadened its relationships
with mobility company partners. Romeo
was influential in the acquisition and has
led the integration of Derco, the largest
automotive distributor in Latin America,
increasing Inchcape’s scale in the
Americas with a footprint of over 30
mobility company partner brands
across 13 markets.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
75
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
PRINCIPAL DECISIONS IN 2023
Issuance of a Bond
In June 2023, it was announced that the Company had issued a £350m bond facility, which was approved by the Board.
The bonds mature in June 2028 and offers a coupon of 6.5%.
Stakeholders
considered
Decision made
Outcome
Partners
Customers
Colleagues
Shareholders
The Board considered that the bond offering ensures the Group can maintain a stable,
long-term capital structure to support future investment in growth and ensuring an
appropriate balance of capital allocation priorities.
The Board also considered the strong M&A pipeline and the optimal capital structure
and funding mix to allow the Group to grow to achieve its strategic aims.
After consideration of the interests of the relevant stakeholders, the Board approved the issuance
of the bond which was successfully launched, priced, and settled in June 2023. The bond was
assigned a public investment grade rating by Moody’s of Baa2, or stable. The issuance of the
bond allowed the Group to repay its existing bridge facility which helped fund the acquisition
of Derco, the initial term for which expires at the end of 2023.
The high level of interest shown by investors emphasised their confidence in the Group’s
differentiated market position, strong financial profile, and exciting growth prospects,
which will benefit shareholders, customers, mobility company partners, and colleagues
in the longer-term.
Acquisitions made during the year
The joint venture acquisitions with CATS in the Philippines and Mercedes-Benz in Indonesia, and the acquisition of
Great Lake Motors Distributors Group in New Zealand.
Stakeholders
considered
Decision made
Partners
Customers
Colleagues
Shareholders
The acquisitions involved the consideration of the interests of colleagues, mobility company
partners, customers, and shareholders in carrying out the growth objectives under the
Group’s Accelerate strategy. The Board considered key aspects of each acquisition including
entering into new markets, mobility company partnerships, government policy requirements,
and EV transition.
Outcome
The acquisitions expanded the footprint in APAC, strengthening the Group’s geographic
reach in the region.
CATS, Philippines
The joint venture strengthens Inchcape’s partnerships with key global mobility company
partner brands: Chrysler, Dodge, Jaguar, Jeep, Land Rover, Mercedes-Benz, and Ram,
as well as Harley-Davidson and Mazda. The newly formed Inchcape Philippines will bring
global market knowledge and processes, leadership in digital and data, and EV expertise
to the fast growing and dynamic market.
Mercedes-Benz, Indonesia
The acquisition provides the opportunity to strengthen the relationship with Mercedes-Benz
globally with the addition of a ninth distribution market and enables Inchcape to move into local
assembly which is increasingly becoming an important government policy requirement in many
of the emerging markets. It provides an attractive portfolio, with a compelling EV line-up, for
an Indonesia marketplace that is positioning itself to be a leading EV production and battery
manufacturing hub. The acquisition will provide the potential to add other mobility company
partner mainstream brands to create further scale and synergy in Indonesia.
Great Lake Motors, New Zealand
A new mobility company partnership was formed with a strong brand – SAIC – providing
access to commercial vehicle BEV product in a market where EV penetration is increasing
with pace. The acquisition provides scale and synergy in New Zealand, helping Inchcape
achieve market share.
76
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
BOARD EVALUATION
2022 Board evaluation outcomes
Board training
The Board broadened the scope of regulatory training for directors to keep abreast of
the evolving governance landscape. Updates to the Board in 2023, included disclosure
obligations under the Listing Rules and Market Abuse Regulation, the restructuring
of the United Kingdom listing regime, and the Secondary Capital Raising Review
recommendations. The Board also received updates from external advisors on macro
and industry trends as well as risk management.
Environmental, social,
and governance (ESG)
knowledge and experience
It was agreed that the Board would have an increased focus on ESG-related matters
particularly as investor interest evolves in this area. All Board members received external
updates on climate scenario analysis and scope 3 emissions. All Committee Chairs
now attend one CSR Committee meeting annually to improve ESG synergy when making
decisions at Board level.
Skills and diversity
The Board acquired further automotive experience through the appointments of Juan Pablo
Del Río and Stuart Rowley, strengthening the Board’s understanding of the automotive
industry. Continued focus on diversity when considering Board and GET appointments.
2023 Board evaluation process
The 2023 Board evaluation was conducted by an independent external advisor in accordance with the UK Corporate
Governance Code 2018. Following a review process, Gould Consulting (Gould) were appointed to carry out the evaluation.
Gould provides no other services to the Company and has no prior connection with the individual directors of the
Company. The external review process was conducted in the format outlined below.
STAGE 1
STAGE 2
STAGE 3
STAGE 4
Tender and approval of provider
The Board agreed the 2023
evaluation would be facilitated
by an external provider, in line
with the provisions of the UK
Corporate Governance Code
and conducted a review to select
an independent provider.
Agree process and timetable
Gould met with the Chairman
and Group Company Secretary to
discuss objectives and agree the
timetable and approach.
Document review
A document review was
carried out whereby various
relevant materials such as Board
and Committee papers, forward
agendas, Terms of Reference, and
the Annual Report and Accounts
were reviewed by Gould.
Board observation
Observations of a Board meeting
was conducted by Gould. This
provided an overview of the
practical arrangements and
meeting dynamics.
STAGE 5
STAGE 6
STAGE 7
STAGE 8
Surveys
All members of the Board and
Group Executive Team, as well
as the Group Company
Secretary, completed a
confidential survey.
Interviews
Gould held one-to-one meetings
with each member of the Board,
the Group Company Secretary,
and members of the Group
Executive Team.
Reporting
A focused report was provided
to the Chairman explaining
how the Board was working
and where certain changes
may provide improvements.
A specific list of recommendations
was then provided.
Feedback
A meeting was held with the
Chairman to discuss the draft
report. Once finalised, the report
was presented to the whole Board
for discussion and actions arising
from the recommendations
were agreed.
2023 Board evaluation outcome
Overall, the Board has been found to be functioning
effectively with a strong dynamic, with positive and
constructive engagement between the Non-Executive
Directors and management across many aspects of
the business.
The recommendations made by Gould were practical
changes designed to improve engagement, contribution,
and governance effectiveness, and fall into three
broad areas:
1) M&A and strategy execution – developing a sharper
narrative around M&A’s role in strategy implementation,
and bringing lessons learned to the Board by including
more non-financial information in post-investment
review papers;
2) Strategic discussion and debate – changing the
emphasis of updates to enable more concise and
focused discussion; and
3) Board and Committee interactions – reviewing the remit
of the CSR Committee.
Following review of the recommendations, the
Board approved:
• improvements in M&A reporting on mobility company
partners, segment, and geographic priorities;
• greater focus in post-investment reviews on organisation,
integration synergies, culture, and risk mitigations;
• increasing the time allowed for discussion on front
of mind issues outside of the agenda to allow
Board members to give their thoughts which may
shape discussions;
• Committee Chairs to report on the significant issues
discussed with additional focus on matters requiring
full Board consideration;
• a review of the remit of the CSR Committee; and
• increasing focus on emerging risks.
An update on progress against these actions will be given
in next year’s Annual Report and Accounts.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
77
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
NOMINATION
COMMITTEE
REPORT
NIGEL STEIN
CHAIR
DEAR SHAREHOLDER
I am pleased to present the report of the
Nomination Committee for the year ended
31 December 2023. The aim of this report is to
provide an overview of how the Committee
has discharged its responsibilities during the
year and I hope you find it useful.
The Committee held two scheduled meetings and three
ad hoc meetings during the year, discussing its key areas
of responsibility: board composition and appointments
to the Board, succession planning, time commitments,
and diversity. All Non-Executive Directors are members
of the Committee.
Chair of the Board
As outlined earlier, I will retire from the Board at the
conclusion of the AGM in May 2024. I have been on the
Board since October 2015, becoming Chairman in 2018.
I have thoroughly enjoyed my years at Inchcape,
especially working with so many talented colleagues
both on the Board and in the business.
Byron Grote ran the Chair succession process, during which
he met with all members of the Board to consider the skills
and experience required to lead the Board, and also took
external advice from Lygon Group. I am delighted that
the Board approved the appointment of Jerry Buhlmann
as Chair following my departure. Jerry joined the Board
in 2017, becoming Senior Independent Director in 2019.
The Board was unanimous in its support for the succession
of Jerry and it was agreed that an external search would
not be necessary. His appointment will ensure seamless
continuity of Board leadership to support the Group, as
it continues to deliver on its Accelerate strategy.
78
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Membership
Nigel Stein (Chair)
Nayantara Bali
Jerry Buhlmann
Juan Pablo Del Río
Byron Grote
Alex Jensen
Jane Kingston
Sarah Kuijlaars
John Langston
Stuart Rowley
Number of
meetings held/
attendance
Number
of ad hoc
meetings held/
attendance
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
1/1
1/1
3/3
3/3
3/3
3/3
3/3
3/3
3/3
3/3
2/2
0/0
The Committee’s terms of reference can be found at
www.inchcape.com/responsibility/governance.
Board composition and succession planning
Board composition and succession planning continues
to be the main focus of the Committee with four new
Directors joining the Board in 2023. Byron Grote and Juan
Pablo Del Río joined the Board as Non-Executive Directors
in January 2023. Adrian Lewis was promoted to the Group
Chief Financial Officer in May 2023, and Stuart Rowley
joined the Board in July 2023 as Non-Executive Director.
The assessment of skills, experience, and knowledge is
a key element when determining Board composition and
carrying out succession planning. Last year, the Committee
determined the list of skills which would enhance the
Board composition with automotive experience being
a key requirement for future appointees, along with
a strengthening of multinational and regulatory experience
following the departure of John Langston during the year.
The appointments made to the Board during 2023 have
enhanced these areas considerably, with Juan Pablo Del
Río and Stuart Rowley bringing extensive automotive
expertise, and Byron Grote bringing a wealth of finance,
governance, and international experience gained from
a variety of executive and non-executive roles.
I am also delighted that Adrian Lewis was appointed as
Group Chief Financial Officer in May 2023. The appointment
represents internal succession, as he moves from the role of
Group Financial Controller. Following rigorous assessment,
it was agreed that he brings the individual and technical
attributes required of Group Chief Financial Officer and
deemed a highly capable successor possessing
substantive financial and automotive experience. Adrian
was integral to overseeing many of Inchcape’s M&A,
in addition to leading teams and working across financial
control, corporate finance, treasury, reporting, and
operational finance. Adrian had been Interim Chief
Financial Officer since November 2022.
I am also pleased that Alison Platt joined the Board in
January 2024. Alison brings a wealth of experience across
a variety of industries, and I know she will be a valuable
member of the Board.
It is usual for Board members to serve a maximum of nine
years on the Board, and length of service is a key factor
when looking at succession planning. The Committee
reviews length of service on an annual basis and
recommends to the Board the appointment of NEDs for
a further three-year term as and when they arise. However,
there may be occasions when a Director may resign before
they have completed nine years’ service. In these
circumstances, a longlist of potential candidates is
continually kept up to date so the appointment process
can begin immediately to fill vacancies as they arise.
The Nomination Committee continues to consider suitable
candidates should any vacancies arise unexpectedly
or where it could be deemed that another NED would
enhance the performance and experience of the Board.
The Committee believes the composition enables the
Board to optimally perform for the benefit of shareholders
and ensures that the Board and its Committees are well
equipped with the skills and capabilities needed to drive
the future success at Inchcape.
Director independence
The Committee assesses the NEDs’ independence on
appointment and throughout the year. NEDs are required
to inform the Committee of any situation which could
impair their independence and report on any potential
conflicts of interest at each meeting.
Juan Pablo Del Río is not considered independent as
he has a significant shareholding in the Company and
has close ties with the Derco business acquired in 2023.
The Company acknowledges that Juan Pablo Del Río
is not independent but the rationale behind the Derco
acquisition, as stated in the 2022 Annual Report and
Accounts, is of tremendous benefit to the Company
in growing the Americas region and bringing highly
complementary mobility company partner relationships,
As he is not considered independent, Juan Pablo has no
voting authority when it comes to making decisions about
the Derco subsidiaries.
Appointments to the Board and induction process
As part of the Board composition and succession planning
process, the future skills, experience, and knowledge
required by Directors is continually kept under review.
When planning to fill future vacancies, an appropriate job
specification is developed, along with specification of any
other desirable attributes required. A longlist of candidates
will be considered after which a shortlist is agreed, and the
interview process begins.
Potential candidates meet with the Chairman, Senior
Independent Director, and other Board members. Once
a preferred candidate has been identified, the Committee
makes its recommendation to the Board for approval.
During the recruitment process a comprehensive assessment
is carried out to evaluate each candidate’s capability,
strengths and personal attributes needed to complement
and enhance the skills, experience, and knowledge of the
Board members. Lygon Group were appointed to assist with
the recruitment of Byron Grote and Stuart Rowley. Lygon
Group are signatories of the standard voluntary code of
conduct for executive search firms and has no other
connection to the Company or any individual Director.
Induction of Non-Executive Directors
The induction process is designed to provide new
Directors with a detailed understanding of the business
and the Group’s future strategic ambitions to enable
them to carry out their duties as Directors of the Company.
This includes meetings with the Group Executive Team,
key management, and the Group’s principal advisors.
With Inchcape being Juan Pablo Del Río and Stuart
Rowley’s first United Kingdom listed Board appointments,
they received detailed briefings from our external legal
advisors on their legal duties as directors of a UK listed
company. All Board members are provided with
a comprehensive pack of documents setting out key
information about the Company, including broker
reports on the Company and industry sector.
As part of their induction, Juan Pablo and Byron attended
a site visit at our Mercedes-Benz dealership in Oxford,
which was led by George Ashford, CEO UK. They also
attended site visits in Hong Kong and the Philippines as
part of the overseas Board visit. For new Board members,
visiting sites and meeting colleagues helps provide an
overview of our operations as well as Inchcape’s ways
of working, culture, and values.
Diversity
The Committee considers gender diversity both at the
Board and Group Executive Team level, and the Group
is committed to improving diversity throughout the
organisation. There are several initiatives in place
to support the achievement of diversity targets and
further information can be found in the Responsible
Business Report on page 35.
As at 31 December 2023, one member of the Board is from
a minority ethnic background, however the Company
did not satisfy the other diversity criteria under LR 9.8.6(9ai)
and (9aii). In January 2024, Alison Platt joined the Board
as Non-Executive Director, which resulted in over 40% of the
Board being women, and in May 2024 it is intended that
Alison will replace Jerry Buhlmann as Senior Independent
Director. These changes would result in the Company
meeting all diversity targets under LR 9.8.6 from May 2024.
Please see page 81 for the Board’s Policy on Diversity.
Focus for 2024
Next year the Committee will focus on:
• onboarding of new Directors;
• succession planning; and
• skills matrix to support delivery of the Accelerate strategy.
An update on the Committee’s activities will be given
in next year’s Annual Report and Accounts.
NIGEL STEIN
CHAIR OF THE NOMINATION COMMITTEE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
79
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Key activities
What we did
Outcome
Board composition and succession planning
Used the skills matrix to assess the skills, experience, and
knowledge on the Board of the current directors.
Used the skills matrix to agree the skills, experience and
knowledge required for future appointments taking into
account departing Directors’ skill set, diversity, and the
strategic direction of the Group.
Met with potential Non-Executive and Executive candidates
to fill vacancies on the Board.
Recommended preferred candidates to the Board for
approval to be appointed to the Board.
Reviewed the latest diversity data published by the Parker
Review and agreed to submit diversity data for the Board
and senior leadership of the Group for the year ended
31 December 2023.
Director independence
The Board assessed the independence of directors in
accordance with the UK Corporate Governance Code 2018,
taking into account:
• length of service;
• close family ties;
• current or former employment by the Company;
• material business relationships;
• cross directorships;
• significant shareholdings; and
• additional remuneration.
Election and tenure of directors
The skills matrix was updated to identify future succession
priorities of automotive/retail, digital/technology, and
remuneration.
Recommended the appointment of the Directors below
to the Board:
• Byron Grote
• Adrian Lewis
• Stuart Rowley
• Alison Platt
Recommended the appointment of Jerry Buhlmann as
Chairman and Alison Platt as Senior Independent Director
following the Annual General Meeting in May 2024.
The Board has achieved the Parker Review target of having
one director from an ethnic minority background.
Over half the Board consists of independent Non-Executive
Directors.
Juan Pablo Del Río is not considered independent due
to his family shareholding and close ties to the Derco
business acquired in 2023.
Reviewed the contribution of each Director throughout
the year.
Shareholders voted to appoint or re-appoint all directors
with each resolution receiving over 95% in favour.
Recommended the re-appointment of all Directors to
be put to shareholder vote at the 2023 AGM.
Recommended the re-appointment of Alex Jensen for
a further three-year term.
Reviewed the performance of Alex Jensen following
the completion of three years on the Board.
Recommended the appointment of Sarah Kuijlaars as
Chair of the Audit Committee.
Reviewed Committee membership following the departure
of John Langston, and the appointment of three new
Non-Executive Directors during the year.
Time commitment and other appointments
Reviewed the policy on multiple board appointments taking
into account the guidance of investors and proxy advisors
on overboarding.
Assessed external commitments to ensure directors have the
necessary time available to fulfil their duties:
The policy on multiple Board appointments was approved
for a further 12 months.
The Committee agreed that as this was for a limited
time it would not hinder his ability to carry out his duties
to Inchcape.
• Byron Grote took on the role of chairman of a FTSE 100
company on a temporary basis during 2023.
80
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Diversity within Inchcape
We are passionately committed to promoting inclusion, diversity, and equality in the workplace and it is inextricably
linked to our strategy. We value diversity in the broadest sense including, but not limited to age, disability, ethnicity,
gender, sexual orientation, or educational, professional, and socio-economic backgrounds. The objective of ensuring
a diverse Board is to provide fresh perspectives which enrich our decision making and the aim of the policy statement
is to reflect this ethos.
We reported that last year’s Board evaluation raised the need to accelerate the continued focus on succession
planning. 2023 saw women in executive management increase from 22% to 28%, including the appointment of
Liz Brown to the GET. The Group has a target of at least 30% of senior leaders to be women by the end of 2025.
The Board and its Committees are subject to the Group’s Global Inclusion & Diversity Policy, which is reviewed annually
and is available on the Company’s website at www.inchcape.com. The policy is implemented during the nomination
process where all aspects of diversity are valued along with the range of skills, experience, and knowledge needed
to enable the Board to make the right decisions to achieve the objectives of the Accelerate strategy and to create
long-term sustainable success.
The breakdown of the ethnic and gender identity of Company colleagues as at 31 December 2023 is as follows:
Gender identity
Men
Women
Other
Not specified/prefer not to say
Number of
colleagues
Percentage
of colleagues
Number
of Board
members
Percentage of
the Board
Number of
senior positions
on the Board*
Number in
executive
management
Percentage
of executive
management
15,460
5,978
2
2
72%
28%
0%
0%
7
4
0
0
64%
36%
0%
0%
4
0
0
0
58
23
0
0
72%
28%
0%
0%
Ethnic background
White British or other White
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say
Number
of Board
members
Percentage of
the Board
Number of
senior positions
on the Board*
Number in
executive
management
Percentage
of executive
management
10
0
1
0
0
0
91%
0%
9%
0%
0%
0%
4
0
0
0
0
0
59
3
10
1
3
5
73%
4%
12%
1%
4%
6%
* Includes Chair, Group Chief Executive, Senior Independent Director, or Group Chief Financial Officer.
The Company satisfied the Parker Review recommendation of at least one Director from a minority ethnic background
following the appointment of Nayantara Bali in 2021. The Group has set an ethnic minority percentage target of 23%
for the senior management team to be maintained and achieved by 2027. Our goal is to maintain or improve the
representation of ethnic minorities in senior management, as well as to improve the proportional representation of
ethnic minorities within the ethnic minority categories to better reflect the global communities in which we operate.
One of our core themes for our Inclusion & Diversity strategy in 2024 is ethnicity & culture which aims to cultivate an
environment that celebrates diverse cultural backgrounds and ethnicities, foster cross-cultural understanding, and
explore the nuances of ethnicity within our global community.
As at 31 December 2023, the Board comprised of 36% women with all Committees comprising of at least 40% women.
Alison Platt joined the Board on 2 January 2024 as Non-Executive Director and at the publication date of this report, the
Board now comprises of over 40% women on the Board. It is intended that Alison will replace Jerry Buhlmann as Senior
Independent Director following the AGM in May 2024. If her election is approved by shareholders, this will result in the
Company meeting all diversity targets under LR 9.8.6 from May 2024.
Diversity data is collected through our global HR system which enables self-identification through a multiple-choice
dropdown with the same definitions as used under LR 9 Annex 2. Colleagues are also invited to submit their disability
information, sexual orientation, and religion through the system. We roll out communications and campaigns annually
to encourage full disclosure in markets where we can ask and collect data. All Board directors are asked directly
to confirm their background information on an annual basis so to complete the above tables.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
81
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
AUDIT COMMITTEE
REPORT
SARAH KUIJLAARS
CHAIR
Membership
Sarah Kuijlaars (Chair)
Jerry Buhlmann
Byron Grote
Stuart Rowley
John Langston
Number of
meetings held/
attendance
5/5
5/5
5/5
2/2
2/2
The Committee’s terms of reference can be found at
www.inchcape.com/responsibility/governance.
DEAR SHAREHOLDER
I am pleased to present the Audit
Committee Report for the year ended
31 December 2023. The aim of this report is to
provide an overview of how the Committee
has discharged its responsibilities during the
year and to highlight the significant issues
considered by the Committee.
The Committee plays an important role in the Group’s
governance framework providing independent challenge
and oversight across financial reporting and internal control
procedures. The Committee members use their skills,
knowledge, and experience to bring an independent
mind-set to the deliberations which results in the collective
view being expressed to the Board.
The Committee held five scheduled meetings throughout
the year discussing its key areas of responsibility: financial
reporting, internal control and risk management,
compliance, whistleblowing, and fraud in addition
to internal and external audit. The Committee consists
solely of independent Non-Executive Directors, with the
Chairman, Executive Directors, and members of the
management team in attendance.
Changes to the Committee
I was delighted to be appointed as Chair of the Audit
Committee following John Langston’s retirement in May
2023. John’s advice and guidance has been invaluable,
and he leaves a strong Committee with a clear purpose,
and I would like to thank him for his contribution over the
last nine years.
I am also pleased to welcome Stuart Rowley, who joined
the Board in July 2023, to the Committee. As detailed
on page 73 of the Corporate Governance Report, Stuart
has over 30 years’ experience with Ford in a variety of
finance and senior leadership roles and his insight into
the automotive sector will be a valuable contribution
to our discussions.
With regards to recent and relevant experience on the
Committee, I have held several senior finance roles, most
recently as chief financial officer of De Beers and I am
a Fellow of the Chartered Institute of Management
Accountants. Of the other Committee members, both
Byron Grote and Stuart Rowley have a wealth of financial
knowledge and experience gained in large multinational
organisations in various sectors. Byron Grote also serves as
the audit committee chair of InterContinental Hotels Group
plc and Tesco plc.
External auditor
In line with the Financial Reporting Council’s (FRC) Ethical
Standard, Anna Marks of Deloitte LLP stepped down
as lead audit partner after five years and was replaced
by David Griffin. The handover process was managed
seamlessly, by both the management and Deloitte teams,
with no disruption to the audit process. I would like to thank
Anna for her guidance and counsel during her tenure.
During the year, the Audit Quality Review (AQR) team
of the FRC selected Deloitte’s 2022 audit for an AQR
inspection and gave a rating of ‘Limited improvements
required’. The Committee reviewed the FRC’s findings
and discussed the outcome and associated actions of
the inspection with the external auditor. Further information
is given on page 88.
Financial reporting
The significant issues in relation to the financial statements
considered by the Committee are given on page 85.
The Derco acquisition was a key consideration for the
Committee during the year, with the Committee assessing
the approach taken by management to determine the
fair value of identifiable assets and liabilities acquired,
key issues and adjustments, reviewing the completion
accounts process, and assessing the progress being made
on aligning the Derco accounting policies with the Group’s
accounting policies.
82
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
The Committee also considered the accounting in relation
to the acquisitions in Indonesia, New Zealand, and the
Philippines, and are satisfied with the assessment that
no further adjustments need to be made.
The Committee also spent time reviewing the forecasts,
projections and assumptions used in determining whether
the Group is able to adopt the going concern basis of
accounting in preparing the financial statements.
Internal control and risk management
Following the acquisition of Derco, the integration was
also a key consideration for the Committee when reviewing
internal control and risk management processes. The
Committee received regular updates on the integration
plan which was rolled out in a phased approach with
phase one key controls designed and implemented soon
after completion and phase two key controls embedded
by June 2023. In addition, a newly formed controls function
was put in place, a Head of Controls appointed, and an
Internal Control Academy established to induct and train
the new team.
During the year, the Committee also received reports
on planned and delivered enhancements to the Internal
Control framework. These included revised business control
self-assessments, refreshed IT general controls aligned
to the National Institute of Standards and Technology
(NIST) security framework and digital organisation, and
strengthened controls assurance provided by the regional
Internal Controls team. The Committee assessed the
internal control framework to ensure the controls were
appropriately designed to mitigate risks, and reviewed
progress throughout the year, taking care to consider
if appropriate resources and time was available for
management to execute the plan given the significant
Derco integration project.
During the year, the Committee reviewed the principal
and emerging risks, as well as the appropriateness of the
risk management framework and risk assessment process.
Further details can be found on pages 86 to 87 and in
the Risk Management Report on pages 56 to 64.
Internal Audit
A primary source of assurance for the Committee is through
the delivery of the Internal Audit plan (IA Plan) which is
structured to align with the Group’s strategic priorities. The
audit strategy is updated on an annual basis to ensure that
it is aligned to the changing risk profile of the Group, the
external environment, and the needs of both management
and the Audit Committee.
The 2024 IA Plan was prepared and approved by the
Committee in November 2023. When approving the IA
Plan, the Committee assessed the alignment to the
Accelerate strategy and principal risk profile, proposed
audits, and audit coverage.
Focus will be on assurance over integration of newly
acquired businesses including Derco synergies, Responsible
Business (including ESG and climate reporting), digital
platforms & programme assurance, and legal and
regulatory compliance.
Cybersecurity
Cybersecurity continues to remain one of the most
significant risks, and the Chief Information Security Officer,
and the Chief Digital Officer provide an update on
cybersecurity twice a year, with ad hoc updates as
needed. These reports provide the Committee with
information on NIST progress, cyber monitoring, and any
notable incidents. The Committee also considered the
cybersecurity approach to M&A, and the processes and
controls in place to integrate new businesses into the
Group’s systems, which included the plan to integrate
the Derco businesses.
Excellent progress has been made on the Group’s
cybersecurity programme and during the year PwC
carried out a Group Cyber Internal Audit review looking
at the design, implementation, and operating effectiveness
of the cyber remediation solution against the target NIST
maturity and the target net risk level of the Cyber principal
risk. I am pleased to report that the cyber maturity score is
above the 2.6 target and the NIST maturity journey remains
on track.
Following several years of positive improvement, a
cybersecurity strategy review has been developed,
and the Committee will review progress against the
priorities during 2024 which include threat intelligence
led prioritisation, API data governance, Zero Trust access,
and ‘self-healing’ platforms.
Audit and governance reforms
Following the Governments’ decision to withdraw the
proposed audit and governance reforms, the Committee
agreed to continue the assessment of the control
environment which was already at an advanced stage.
The Committee received a gap analysis of the internal
control and risk management framework as compared to
the internal control framework Committee of Sponsoring
Organisations (COSO). The Group Internal Control team
assessed entity level controls which were mapped against
the COSO principles. Further details are given on page 87.
Focus for 2024
Next year the Committee will focus on:
• M&A integration;
• ESG impacts on activities, planning, and disclosure; and
• acquisition accounting.
I look forward to updating you on the progress made in
next year’s Annual Report and Accounts.
SARAH KUIJLAARS
CHAIR OF THE AUDIT COMMITTEE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
83
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Key activities
What we did
Financial reporting
Review of the statutory financial statements and interim results
ahead of recommendation to the Board for approval.
Consideration of key accounting and reporting judgements
including disposal of Russian business, impairment,
hyperinflation, adjusting items, and acquisition accounting.
Assessment of the Annual Report and Accounts as a whole to
determine whether it is fair, balanced, and understandable.
Review of upcoming corporate reform and other regulatory
topics.
Internal Control
The Committee reviewed reports provided by management
and the external auditor including:
• progress InControl Standards (ICS) self-assessed compliance;
• outcomes of the regular controls testing programme;
• ICS gaps and closure;
• new business controls and compliance integration;
• the external auditor’s control improvement; and
• recommendations and other observations from the audit
of the Group for the year ended 31 December 2022.
Risk management
The Committee reviewed the Enterprise Risk Management
(ERM) priorities.
Considered new risks relating to the integration of Derco and
business interuption (pandemic and natural hazards).
Reviewed refreshed framework for business resilience and
identification of climate change risks and opportunities.
Reviewed the effectiveness of the Company’s ERM activities.
Considered management’s assessment of internal control and
risk management systems as compared to the Sarbanes-Oxley
Act and COSO framework.
Internal Audit
The Committee reviewed:
• the 2023 IA Plan;
• progress against the IA Plan;
• the status of open audit issues;
• mitigation plans for any internal control failings;
• newly reported and open whistleblowing cases and action
plans to resolve;
• the Americas Internal Audit plan; and
• process and results of the Internal Audit effectiveness review.
Outcomes
Approval of the interim financial statements, and Annual
Report and Accounts.
Consideration of the impact of climate change on
financial planning including impairment – please see
note 10 on page 165 of the financial statements and
the TCFD Report on pages 40 to 53 for further details.
Assessment of the Group’s viability and approval of the
going concern statement – please see page 64 and
page 118 for further details.
2023 ICS business control self-assessments complete,
gaps highlighted are tracked and monitored to
completion.
New controls relating to data privacy introduced and IT
general controls refreshed, including NIST cyber controls.
Phase 1 Derco controls integration plan complete for
2023. Phase 2 in progress and tracking to plan.
Controls integration plans established and on track for
all remaining 2023 acquisitions.
All external auditor control improvement
recommendation points tested and closed as planned.
Climate risk and opportunities refreshed for 2023 and
embedded into ERM processes. Analysis for EV
misalignment risk complete.
Reviewed and discussed the COSO assessment and
principles on which implementation will be based.
The Committee will monitor management’s development
of the framework.
Following approval by the Committee, the 2023 plan was
delivered in full with 43 reports delivered in the period.
The Americas Internal Audit plan was finalised and
adopted in full, and the Internal Audit team fully
integrated into the business.
363 whistleblowing cases were received during 2023.
210 cases have been investigated and closed.
The remaining cases are either awaiting additional
information or are in progress.
The Internal Audit effectiveness review found that Internal
Audit was effective with good ratings across all measures.
Recommended actions have been incorporated into
the function’s continuous improvement plans.
Audit of shared service provider completed.
External auditor
The Committee reviewed the report from the external auditor,
assessing the auditor’s approach to, and findings in relation to,
the audit to assess independence and objectivity. Updates on
upcoming corporate reform and other regulatory topics were
regularly received throughout the year.
The Committee also received a report from the external
auditor on the control findings highlighted in their report
and confirmed that it is satisfied there are no material
misstatements and that relevant actions are being taken
to resolve and control matters raised.
84
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Significant issues considered by the Committee during the year
Significant issue
How this was addressed
Impairment – see notes 10 to 12 on pages
163 to 170
Impairment reviews are carried out
annually in respect of goodwill and
indefinite life assets, and if there is an
indicator of impairment, reviews are
implemented more frequently. In addition,
other intangible assets, property, plant
and equipment, and right-of-use assets
are reviewed for impairment if events or
circumstances indicate that the carrying
value may not be recoverable. This is a
judgemental process which requires
estimating future cash flows based on
future business prospects, determining
long-term growth rates and discount rates.
It is the Committee’s view that
management’s approach to impairment
is robust, based on reliable supporting
data from external sources where relevant,
and with appropriate challenge from the
external auditor.
Acquisition accounting – see note 28 on
pages 192 to 197
Part of the Group’s strategy is to invest
to accelerate growth. Accounting for
acquisitions requires judgement to be
exercised in assessing the fair value of
assets and liabilities acquired including
the identification of intangible assets
and the allocation of acquired businesses
to cash generating units.
During the year, the Committee
considered the acquisition accounting for
Derco, CATS, Mercedes-Benz in Indonesia,
and Great Lake Motors in New Zealand.
• The Committee considered the appropriateness of the cash
generating units (CGUs) or groups of CGUs used for impairment
and the allocation of assets thereto.
• The Committee debated the cash flow projections used to calculate
the value in use, considering whether these reflect a reasonable
expectation of future performance.
• The Committee considered how management had determined
the discount rates and long-term growth rates.
• The Committee discussed the impact of climate change, including
electrification on impairment and the impact of electric vehicles
on aftersales.
• The Committee assessed the reliability of data provided by external
advisors and independent specialists used in key assumptions.
• The Committee also discussed the appropriateness of the disclosures
to be made in the Annual Report and Accounts to satisfy itself that
they provided users of the financial statements with sufficient
information to understand the judgements made by the Group.
After considering all available information and reviewing the findings,
the Committee concluded that management’s impairment reviews
of non-financial assets were appropriate.
• The Committee considered whether the judgements relating to the
fair value of assets and liabilities and the adjustments made were
appropriate, including the nature of the intangible assets identified
and the useful lives assigned thereto.
• The Committee discussed the level of assistance provided by external
advisors to support the approach taken by management as well
as management’s oversight of those advisors.
• The Committee reviewed the allocation of the acquired assets and
liabilities to CGUs and the allocation of goodwill to the relevant group
of CGUs.
The Committee concluded that it was satisfied with management’s
valuations of the assets and liabilities, including the degree to
which such valuations are supported by professional advice from
external advisors and that the acquisitions had been accounted
for appropriately.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
85
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Financial reporting
The Committee provided oversight by reviewing the
half-year and annual financial statements, taking
into account:
• the quality and acceptability of accounting policies
and practices;
• material areas in which significant judgements have
been applied or discussed with the external auditor;
• the clarity of the disclosures and compliance with
financial reporting standards and relevant financial and
governance reporting requirements including the Code;
• any correspondence from regulators in relation to the
Group’s financial reporting; and
• reviewing assumptions and assurance to support the
long-term viability statement.
The Committee carried out its work using information
supplied by management, the external auditor, and other
advisors as appropriate. During the year, the Committee
received reports from the Group Chief Financial Officer
and the Group Head of Reporting on impairment,
adjusting items, acquisition accounting, and pension
scheme liabilities.
Regular updates are also received from the Group Tax
Director during which the Committee reviewed the
Group’s effective tax rate, deferred tax, and tax audits
and settlements. In addition, the Committee also received
an update on the OECD’s Pillar Two framework, how this
will impact the Group in the short and long-term, and the
processes being developed by the cross functional working
group to manage the implementation.
Risk management and internal control
The Board has overall responsibility for the Group’s
risk management and internal control framework
including ensuring:
• there is an appropriate mechanism in place to identify
the risks the Group faces;
• management teams focus on those risks and action
plans are in place to mitigate or respond to those risks;
• a compliance programme is in place that meets or
exceeds external benchmarks and is appropriate in
terms of legal requirements, content, sector, cost,
and resources;
• internal controls are appropriate, well designed and
operating consistently across the Group to manage
risk effectively; and
• the Group’s whistleblowing programme is appropriately
managed to reduce the risk of fraud or respond quickly
and decisively in the event the Group falls victim to fraud.
The Committee receives a report on ERM framework at
each meeting from the Group Head of Internal Audit.
During the year, the Committee monitored the ERM
priorities for 2023, reviewed the assessment of the principal
risks including the new risk relating to the Derco integration
and assessed the framework in place for business
resilience and identification of climate change risks
and opportunities.
Further details on how the Group manages risk is given
in the Risk Management Report on pages 56 to 64.
InControl Standards
InControl Standards (ICS), are designed to enable
management to establish, assess, and enhance strong and
consistent risk and control governance. The framework is
regularly reviewed and updated in line with emerging
86
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Group risks, in response to emerging Internal Audit issues,
and following any investigation activity. The ICS has been
designed to mitigate the most significant risks across the
Group providing robust governance and sound controls.
The central and regional Internal Controls teams support
the business by providing the framework, tools, and
training, and ongoing support to embed the ICS across
the business. The Internal Control function is separate from
the Internal Audit function and works with management
teams to design controls that are proportionate to the level
of risk, supported by systems, and are easy to follow.
During the year the Committee considered the
self-assessment scores for each market, control gaps
identified and remedial action plans, the implementation
of key controls in Derco, the bank reconciliation process
review, controls automation plans, and new business
controls integration.
Main features of the internal control and risks
management systems in relation to financial reporting
The key features of the Group’s internal control and risk
management systems that underpin the accuracy and
reliability of financial reporting include: clearly defined lines
of accountability and delegation of authority; the Group’s
Code of Conduct; policies and procedures that cover
financial planning and reporting; preparing consolidated
financial accounts; capital expenditure; project
governance; and information security. Processes
and systems in place include:
• annual approval of the Group’s budget by the Board
with regular updates on actual performance against
plan, regional breakdowns, and analysis of variances;
• a comprehensive system of key control and oversight
processes, including regular reconciliations;
• updates for the Committee on accounting
developments, including draft and new accounting
standards and legislation;
• reports from Internal Audit on matters relevant to the
financial reporting process, including periodic
assessments of internal controls, processes, and fraud risk;
• independent updates and reports from the external
auditor on accounting developments, application of
accounting standards, key accounting judgements,
and observations on systems and controls;
• appointment of experienced and professional
colleagues with requisite knowledge and skills to perform
their duties; and
• appropriate Board oversight of external reporting.
In addition, the Group has established a dedicated
Financial Controls team at Group and regional levels
supported by controls testing on a quarterly basis,
with progress reported to management and the Audit
Committee at regular intervals during the year, including
implementation of management actions to remediate
issues identified and make improvements.
Monitoring the effectiveness of the risk management
and internal control systems
The Board, through delegated authority to the Audit
Committee, has ultimate responsibility for the effective
management of risk across the Group and for monitoring
how each business area implements appropriate
internal controls.
The Group’s risk management systems are designed to
support the business in actively managing risk to achieve
business objectives and can only provide reasonable, but
not absolute, assurance against material misstatement
or loss. These systems are also designed to be sufficiently
agile to respond to changes in circumstances such as the
consequences of new acquisitions, changes triggered
by new legislation and significant external events.
The Committee monitors the effectiveness of the internal
control and risk management systems through various
sources of assurance including reports from the Group
Head of Internal Audit on the ICS framework, the ERM
framework, and the status of internal audits.
When reviewing the effectiveness of the ERM framework,
the Committee considered the design of the ERM process,
whether it had been applied to all material areas of the
business, whether the process had identified the most
material risks to the Group, and any new or additional
mitigation actions to address the principal risks. The
Audit Committee also receives reports on principal risk
descriptions and risk footprint, as well as receiving
regular updates on the status of the Group’s principal
and emerging risks. This year, these reviews have covered
areas including cybersecurity and IT resilience.
When assessing the effectiveness of the internal control
framework, the Committee considers the independent
assessment of the effectiveness of risk management and
internal control systems provided by the Group Head of
Internal Audit. The Audit Committee also receives regular
reports on the status of the controls assurance plan which
covers controls in each market and function, and monitors
compliance with and effective operation of the ICS
framework. The Committee also considered the actions
taken to enhance controls design and effectiveness, testing
results and trends analysis derived from the Group’s
integrated risk management system.
In addition, the Committee reviews the report presented
by Deloitte during the year on control improvement
recommendations and other observations made on
the control environment during the audit.
Any significant control failings or weaknesses are reported
to the Board, along with a detailed review of the findings
and mitigation plans being put in place. The Board
monitors progress against plans until it is satisfied that such
matters are resolved appropriately.
The Board has determined that there were no significant
failings or weaknesses identified during the review of risk
management and internal control processes during the
year and further confirms that these systems were in place
during 2023 and to the date of this report. The Board
is satisfied that the control environment was materially
effective during the course of the year.
Sources of assurance
Internal Audit
The Group Head of Internal Audit presents the IA Plan to
the Committee for review and approval on an annual
basis. The Committee assesses the IA Plan to ensure that
it is fully aligned with the Group’s Accelerate strategy
and principal risks.
The outcomes of Internal Audit assignments are reviewed
by the Committee throughout the year providing details
of overall ratings, reasons for the rating, and actions to
be taken within a specific timeframe. During the year,
the Committee considered the findings of a number of
audits including new market integration and synergy
achievement, and ERP system and programme assurance
in addition to market and functional audits.
The Audit Committee assesses the effectiveness of Internal
Audit by reviewing its annual IA Plan at the start of the
financial year, monitoring its ongoing quality throughout
the year, and assessing completion rates and feedback
provided following completion of the annual IA Plan.
Having carried out this assessment, the Audit Committee
is of the view that the quality, experience, and expertise
of Internal Audit is appropriate for the business.
Functional assurance
A broad range of assurance activities have been designed
and established across the business to target key risk areas,
such as finance, legal and regulatory, digital, cyber, and
health, safety & environment (HSE). While reporting lines
for these activities are directly to the respective business
areas, the processes and controls of these functions are
periodically tested by Internal Audit and discussed with the
Audit Committee. The Chief Information Security Officer
and Group Tax Director provide regular reports to the Audit
Committee on their areas of expertise.
Operational oversight
Senior management forums and committees provide
oversight and challenge on key risk areas within individual
businesses, cross-business programmes, or activities, such
as transformation programmes, acquisitions, Responsible
Business, Digital, People, HSE, Cyber and other areas of
change. The output from these discussions forms part of
the updates provided to the Audit Committee or assured
through the Internal Audit and ICS programme.
Audit and governance reforms
During the year, management reviewed its approach
to assurance in preparation for the proposed audit and
governance reforms, and updated UK Corporate
Governance Code. A number of the proposed reforms
were withdrawn by the Government in late 2023, however
the control analysis work had already been completed by
that time. A gap analysis of the internal control and risk
management framework was compared to the COSO and
the findings from this assessment were reported to the Audit
Committee to inform their assessment on the effectiveness
of risk management and internal control systems and the
ability to meet the expectations of the current and revised
UK Corporate Governance Code.
Whistleblowing
Colleagues and third-party business partners are
encouraged to raise concerns about potential breaches
of the Code of Conduct or other policies, either to their
line managers, Legal, People, Internal Audit and Risk
colleagues, or to Speak Up, a confidential whistleblowing
mechanism. Speak Up is a global service administered by
an independent provider, accessible online, by QR code
or by telephone. Independent Inchcape teams investigate
allegations, with progress being monitored by Internal
Audit. When allegations are substantiated, appropriate
disciplinary and corrective actions are taken.
The Head of Internal Audit provides an update on fraud
and whistleblowing cases at each meeting which includes
new reports made throughout the year and open cases still
under investigation. The cases which are reported to the
Audit Committee are those of sufficient significance to
warrant attention; however, a list of all reports is also
provided to the Audit Committee for its review along with
a breakdown by market, report type, and source. The Audit
Committee Chair reports to the Board on any significant
whistleblowing cases, and remediation plans, as they arise.
There were no significant whistleblowing cases reported
to the Board during the year.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
87
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
External audit
The Committee has complied with the FRC’s guidance,
issued in May 2023, on Audit Committees and the External
Audit: Minimum Standard. The activities undertaken by the
Committee to meet the requirements of the Standard are
given on pages 82 to 89 of this report.
Audit tender
Following an audit tender process during 2017, Deloitte LLP
was appointed as the Group’s auditor with shareholder
support for the appointment given at the 2018 Annual
General Meeting. David Griffin is the lead Audit Partner
and has been in position since July 2023.
The Company is in compliance with the requirements of
the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender
Processes and Audit Responsibilities) Order 2014, which
relates to the frequency and governance of external audit
tenders and the setting of a policy on the provision of
non-audit services. The Committee reviews and makes
a recommendation to the Board with regard to the
reappointment of the current external auditor. In making
this recommendation, the Committee monitored and
assessed their effectiveness, objectivity, independence,
lead partner rotation, and any other factors that may
impact the Committee’s judgement regarding the
external auditor.
The Committee has concluded that it remains satisfied
with the effectiveness and quality of the audit work. The
Committee also remains satisfied with the capabilities of
Deloitte, its knowledge of the business, and its relationship
with Inchcape. The Committee believes that it is in the
best interests of shareholders to continue to recommend
Deloitte as the external auditor and it is not currently
anticipated that a tender process is immediately required.
In line with regulation, the Committee plans to initiate a
competitive tender of the external audit contract in 2026.
Auditor effectiveness, independence, and objectivity
A high-quality audit provides stakeholders with assurance
that the financial statements give a true and fair view of
the business. Assessing whether the external audit process
provides this is a key activity of the Audit Committee during
the year.
The Committee carries out its assessment on an ongoing
basis by considering its interactions with the auditor, its
observations of the auditor, and the relationship between
the Audit Committee, the auditor, and management.
The Committee also considers interactions with the Head
of Internal Audit and external regulators, such as the FRC.
The auditor’s report to the Committee sets out the audit
plan, materiality, scoping, the risk assessment process,
significant risks, other areas of focus, the purpose of the
report, and responsibility statement. The Committee reviews
at each stage of the audit to ensure whether it is satisfied
that the audit plan is appropriate, if the auditor is meeting
its obligations, and to agree any changes to the audit
if they arise.
The Committee encourages a culture of open
communication and debate, and the Committee
believes that it is able to ask questions on key issues and
to challenge it when it feels more information is needed.
The Committee also looks at how management responds
to requests from the auditor and carefully reviews the
auditor’s findings and recommendations at each meeting.
88
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
When the auditor supports management’s approach,
the Committee considers the evidence supplied by the
auditor to support its decision to ensure that the auditor
is not compromised and remains objective. Where the
auditor has challenged management the Committee
considers the feedback from management, whether the
issues are addressed satisfactorily, and whether agreed
positions are appropriate.
The auditor also meets with the Committee without the
presence of management on a regular basis, usually
following each meeting. This gives the auditor an
opportunity to confirm its view that management are
addressing any issues raised appropriately or to raise
any concerns they may have.
External evidence of the quality of the audit is also vital
in assisting the Committee in its review of the effectiveness
of the audit, with the audit quality inspection reports being
a key source of external evidence of audit quality.
Audit Quality Inspection and Supervision report
During the year, the 2022 audit file was selected by the
FRC for an AQR inspection and received a rating of ‘Limited
improvements required’. The findings raised by the AQR
and the audit team actions for the 2023 audit were
presented to the Committee for its consideration.
The AQR report noted good practice over Deloitte’s
oversight of the Derco acquisition and the relevant findings
and learnings from the AQR inspection with Deloitte’s
component teams, as deemed appropriate.
Further, in July 2023 the FRC issued reports on Audit Quality
Inspection and Supervision, providing a summary of the
findings of its Audit Quality Review team for the 2022/23
cycle of reviews.
The Committee discussed the summary of findings with
Deloitte and considered the auditors response and action
plan which include incorporating firm-wide learnings into
the audit plan, where relevant.
Factors considered to assess quality of the external audit
Mindset and culture
The ethical and professional principles adhered to by
the auditor; whether the auditor has any personal or
commercial interests in the Group; and how they have
demonstrated high standards of independence, integrity,
objectivity, and challenge throughout the year.
Skills, character, and knowledge
The auditing skills of the audit team; level of knowledge of
the automotive distribution and retail industry possessed by
the audit team; the auditor’s understanding of its
obligations to users of the financial statements; and an
ability to challenge where appropriate whilst maintaining
strong relationships.
Quality control
The processes the auditor has in place to identify and
address risks to the audit and assessing the steps taken
to complete the annual audit plan.
Feedback from business
The Committee receives feedback from management
on the quality of the auditor’s delivery, communication,
and interaction with the various finance teams across
the Group, which is communicated back to the
external auditor.
Auditor independence
Deloitte continually monitors its independence and ensures
that appropriate safeguards are in place including, but not
limited to, the rotation of senior partners and staff and the
involvement of other partners and staff to carry out reviews
of the work performed and to otherwise advise if necessary.
Non-audit services
Implementing a Non-Audit Services Policy (Policy) is also
key to ensuring the independence of the external auditor.
The Policy for non-audit services sets out the permitted and
non-permitted non-audit services as well as the approval
levels required by the Audit Committee and is designed
to ensure that the external auditor’s objectivity is not
compromised by earning a disproportionate level of fees
for non-audit services or by performing work that, by its
nature, may compromise the auditor’s independence.
However, using advisors who understand the Group’s
business can be a benefit and the Committee will consider
non-audit services supplied on an ongoing basis.
The Audit Committee review the non-audit services
provided by the external auditor twice a year.
The Group’s Policy on non-audit services to be provided by
the Group’s auditor defines two types of non-audit services
that may be performed:
• regulatory services, which are services undertaken as
auditor or reporting accountant which are outside the
scope of the statutory audit, but which are consistent
with the role of statutory auditor; and
• permitted non-audit services, which are services that
the auditor may be permitted to undertake subject to
the appropriate level of approval.
The aggregate fees incurred for permitted non-audit
services relative to the audit fee should not exceed 70% of
the average audit fee over the previous three years, with
such cap applicable to both Group and United Kingdom
audit fees.
The provision of permitted non-audit services will only
be approved by the Audit Committee if:
• engagement of the auditor to provide the services does
not impair the independence or objectivity of the
external auditor;
• the skills and experience of the external auditor make
it the most suitable supplier of the non-audit service;
• the auditor does not have a conflict of interest due to
a relationship with another entity; and
• the aggregate fees incurred for permitted non-audit
services relative to the audit fee do not exceed 70% of
the average audit fee over the previous three years.
Permitted non-audit services above a certain level
are approved on a case-by-case basis by the Audit
Committee.
Permitted non-audit services carried out during the year
Deloitte acted as reporting accountants for the £350m
bond issuance, providing an opinion on the Pro Forma
Financial Information that was included in the Offering
Circular and comfort letters on Significant Change and
data extracted from the Group’s Annual Report and
Accounts. The work performed in relation to the comfort
letters and financial extraction are considered permitted
non-audit services.
The following non-audit fees incurred with Deloitte were:
Regulatory services
Permitted non-audit services
2023
£’000
120
279
2022
£’000
5,421
819
The ratio of permitted non-audit services to audit fees for
the year ended 31 December 2023 was 0.06:1. Full details
are shown in Note 3d of the notes to the financial
statements on page 152.
The Group remained within the Audit Committee approved
ratio of audit to non-audit fees throughout 2023. The
non-audit fees were significantly higher in 2022 due to the
services provided by Deloitte in respect of the acquisition
of Derco.
Audit fees paid to the auditor
Fees paid for services provided by Deloitte (three-year
average) were:
Audit fees
2023
£’000
4,899
2022
£’000
3,524
After considering all of the elements detailed in this report,
the conclusion of the Committee is that the auditor carried
out its audit effectively and that the auditor is independent
and objective.
Fair, balanced, and understandable
The Audit Committee carried out its own assessment of the
financial statements, and the Annual Report and Accounts
as a whole, and is satisfied that it provides the necessary
information for shareholders.
The Committee considered whether the information given
in the financial statements is a true reflection of the
narrative reporting throughout the Annual Report and
Accounts, whether the key performance indicators give a
true indication of the health of the business and if the issues
considered of significant risk by both the external auditor
and the Committee are aligned.
The processes and procedures in place to satisfy the Board
of the integrity of the financial and narrative statements
include a robust disclosure verification process, monthly
financial performance updates, and meetings with the
internal and external audit functions without the presence
of management.
The Company’s business model and strategy are set out
on pages 2 to 9 and a statement of the Directors’
responsibilities is set out on pages 115 to 118 which includes
the going concern statement.
During the year, the Committee:
• considered key audit issues, accounting treatment and
judgements in relation to the financial statements;
• where risks were identified, either in relation to processes,
key transactions, or colleagues, undertook a deeper
review of matters, challenging management to improve
the control environment and tighten processes;
• challenged management on the assumptions used and
the judgements that have been applied, with assurances
given from both external and internal sources; and
• assessed whether the Annual Report and Accounts are
fair, balanced, and understandable.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
89
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
CSR COMMITTEE
REPORT
ALEX JENSEN
CHAIR
Membership
Alex Jensen (Chair)
Nayantara Bali
Jerry Buhlmann
Byron Grote
Nigel Stein
Duncan Tait
Number of
meetings held/
attendance
3/3
3/3
2/3
3/3
3/3
3/3
The Committee’s terms of reference can be found at
www.inchcape.com/responsibility/governance.
DEAR SHAREHOLDER
I am pleased to present the report of the CSR
Committee for the year ended 31 December
2023. The aim of this report is to provide
an overview of how the Committee has
discharged its responsibilities and should
be read in conjunction with the Responsible
Business Report on pages 33 to 39, and
the TCFD Report on pages 40 to 53.
The Committee held three meetings throughout the year
covering its key areas of responsibility: Responsible Business
framework (People, Places, Planet, and Practices), health,
safety & environment, and workforce engagement.
The Committee consists of four Non-Executive Directors,
the Chairman, and the Group Chief Executive.
Responsible Business
The ‘Driving What Matters’ plan (Plan), our Responsible
Business framework, continues to mature as initiatives and
action plans are embedded within the organisation under
each of the four pillars: People, Places, Planet, and
Practices. The Committee received regular updates
on each of the pillars. Further information on the initiatives
can be found in the Responsible Business Report on
pages 33 to 39.
Materiality assessment and new Sustainability Report
During the year, the Group completed a sustainability
materiality assessment of the business to improve
our understanding of the sustainability priorities of
our stakeholders.
The purpose of obtaining the views of stakeholders both
external and internal is to gain insight into their perceptions
of the Plan, use the findings to further evolve the
Responsible Business framework to reflect stakeholder
expectations, and to assess our ability to influence change
in those areas most important to our stakeholders globally.
The double materiality assessment consisted of:
• best practice assessment using the standards of the
Global Reporting Initiative; and
• assessment of sustainability risks and opportunities,
as well as positive and negative outward impacts.
The Committee debated the issues and outcomes from
the materiality assessment workshop which provided four
key themes: doing more of what Inchcape does well;
keeping pace with the accelerating mobility transition;
bolstering internal knowledge of Responsible Business;
and addressing areas of direct control.
The assessment provided context for strategic positioning
which will be considered as part of the annual Strategy
Day in May 2024, and provided input into the Group’s first
standalone Sustainability Report which will be published
in 2024 and will be available at www.inchcape.com.
Further information is given on pages 33 to 34.
Health, safety & environment (HSE)
The Committee received HSE updates at each meeting,
with approval of HSE objectives reviewed by the Board
annually. In addition to monitoring progress against plans,
the Committee considered the HSE assessments carried
out for the recent Derco acquisition in the Americas which
was conducted across all 241 sites. The assessment
identified what control measures are required, immediate
preventive actions and a long-term risk mitigation plan.
Workforce engagement
This year, the annual workforce engagement session was
facilitated by Nayantara Bali, who is a member of the CSR
Committee, and Jane Kingston, Chair of the Remuneration
Committee, as I was unable to attend the overseas Board
visit in person.
The session took place in Hong Kong and was attended by
colleagues from a wide range of roles within the business.
Colleagues were invited to ask questions on any topic they
felt was of importance and the subjects ranged from the
regional strategy in the context of electric vehicle
90
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
transition, how the Board balance environmental, social,
and governance (ESG) matters and profit when making
decisions, and how the Board approaches Inclusion
& Diversity with questions on the approach to equal
pay globally.
greater emphasis on quantification; and action focused
disclosure. The Committee considered what emerging
regulations mean for the Group, the Group’s ambitions
in this fast-moving market and what the ultimate role
of the Committee and the wider Board is.
Feedback was given to the Board and management
following the session with management agreeing action
plans to respond to the questions raised. These include
improved communication on the approach to fair pay
structuring, how diversity targets will be cascaded
down the organisation, and whether an ESG target
will be included in long-term incentive plans.
Jane Kingston also held a virtual reward engagement
session and further details are given in the Directors’
Report on Remuneration on page 93.
ESG landscape
One of the areas of improvement identified in the 2022
Board evaluation was to increase ESG knowledge on
the Board and to support this, the Committee invited
external consultants to present in-depth reviews on two
ESG topics: the ESG regulatory landscape and ESG from
an investor lens.
The ESG regulatory landscape is complex and continues
to evolve with companies required to make increasingly
detailed ESG disclosures. During the review of the
regulatory environment the Committee focused on three
main themes: broadening disclosure beyond climate;
KEY ACTIVITIES
What we did
Responsible Business
For each of the four Responsible Business pillars,
the Committee reviewed and assessed:
• the global framework and priorities; and
• performance against targets.
The Committee reviewed and approved the
disclosures made in:
• the Responsible Business Report; and
• the Task Force on Climate-related Financial Disclosures.
Workforce engagement
The Board engagement session took place in Hong Kong
during the overseas Board visit.
The Committee also reviewed progress against the issues
raised at the previous year’s engagement session.
Alex Jensen and Nayantara Bali presented at Women
into Leadership sessions.
Health, safety & environment
The Committee also spent time considering ESG from
an investor lens to gain a deeper understanding of the
interests of this group of stakeholders. The Committee spent
time considering how ESG regulation is impacting both
investors and lenders and whether the Group’s ESG
strategy will meet their principles and criteria in the
short, medium, and long-term.
These knowledge sessions have been invaluable to the
Committee members and have enriched the broader
Board discussions as the Responsible Business framework
underpins the Accelerate strategy.
Focus for 2024
Next year the Committee will focus on:
• scope 1 and 2 greenhouse gas emission targets;
• ESG metric in long-term incentives; and
• initiatives to achieve diversity targets.
ALEX JENSEN
CHAIR OF THE CSR COMMITTEE
Outcomes
The Committee undertook a deep dive on female
leadership recruitment to assess the appropriateness
of the target of 30% female leadership by 2025.
Scope 1 and 2 emissions reduced by over 21,000 tCO2
market-based against the revised 2019 baseline.
The Committee recommended the outcomes of the
materiality assessment to the Board for approval.
Feedback to the Board for the 2023 session included
the approach to pay structuring, and how the process
for ensuring this is fair, should be made clear to colleagues,
along with any decisions on implementing ESG metrics
into the long-term incentive schemes.
The Committee reviews progress against six HSE priorities:
M&A assessments completed for all new businesses.
• HSE risk profile reviews;
• electric vehicle safety procedures;
• cultural HSE survey;
• HSE due diligence programme;
• HSE contract management system; and
• mandatory HSE training.
Executive due diligence programme rolled out.
Cultural HSE survey and psychological safety
survey completed.
Contract Management System implemented globally.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
91
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
DIRECTORS’ REPORT
ON REMUNERATION
JANE KINGSTON
CHAIR
Membership
Jane Kingston (Chair)
Jerry Buhlmann
Byron Grote
Alex Jensen
Nigel Stein
Number of
meetings held/
attendance
4/4
4/4
4/4
4/4
4/4
The Group Chief Executive, Group Chief Financial Officer,
Chief People Officer, Group Reward and Pensions Director,
and the remuneration advisors Ellason LLP, also attend the
Remuneration Committee meetings as required.
DEAR SHAREHOLDER
On behalf of the Board, I am pleased
to present the Directors’ Report on
Remuneration for the year ended
31 December 2023. The aim of this report
is to demonstrate how the Committee
has discharged its duties during the year
and I hope you find it informative.
Changes to the Committee
As announced in January 2024, I will step down from the
Board in May 2024, after nearly six years’ service. It has
been a privilege to serve the Company, and I am delighted
to confirm that Byron Grote will assume the role of Chair
following my departure. I am also pleased that Alison Platt
joined the Committee at the beginning of 2024, bringing
a wealth of remuneration experience gained during
her career.
Remuneration policy
Following a comprehensive policy review and shareholder
consultation in 2022, I am delighted that shareholders
overwhelmingly voted in favour of the Directors’
Remuneration Policy at the Annual General Meeting in
May 2023. The feedback received from shareholders has
helped inform the Committee’s discussion on several key
areas including ESG targets and pension allowance.
Details of the Directors’ Remuneration Policy are given
on pages 98 to 104.
Reflecting our ESG priorities in our incentive framework
The feedback from shareholders on the introduction of an
ESG metric inputted to the Committee’s discussion on the
most appropriate approach. As a result, it was agreed
to delay introducing an ESG target into the long-term
incentives schemes for 2023, keeping the metrics within the
bonus strategic objectives. Further details of the ESG targets
for the Group Chief Executive and Group Chief Financial
Officer are given on pages 107 to 108.
The Committee more recently reviewed the position again
in respect of the 2024 incentives, agreeing that further
consideration was required before setting ESG targets for
the long-term incentive awards. In 2024, ESG targets will
remain in the annual bonus. This position will be reviewed
on an annual basis.
Alignment of pension rates
As disclosed last year, following the standardisation of the
defined contribution plan there was a misalignment
between the United Kingdom workforce pension
contribution and the Group Chief Executive cash
allowance. As a result, Duncan Tait volunteered to freeze
his allowance as an interim step during 2023 and, from
2024, receives a pension allowance of 7% of salary, in-line
with the UK workforce pension rate.
Chief financial officer
Following a thorough recruitment process, I am delighted
that Adrian Lewis was appointed as the Chief Financial
Officer in May 2023. As part of the appointment process the
Committee considered and approved his remuneration
package in line with the Directors’ Remuneration Policy.
To assist in the decision-making process, the Committee
considered external benchmarking for base salary and
total remuneration.
92
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
The package included a salary of £480,000 per annum
and benefit entitlements to car scheme, life assurance,
and medical plans. His pension contribution is 7% of salary,
in-line with the United Kingdom workforce.
Adrian is eligible for a target bonus of 75% of salary and
a maximum bonus of 150% of salary. His 2023 bonus will be
pro-rated for his time spent as Group Chief Financial Officer
during the year. He will also be eligible to participate in the
Performance Share Plan (PSP), the Co-investment Plan
(CIP), and the Save-As-You-Earn scheme, in-line with the
Directors’ Remuneration Policy. A minimum shareholding
requirement of 200% of base salary will apply during
employment and for a period of two years from departure.
Business performance and remuneration
Outcomes for 2023
As detailed in the Strategic Report and Operating and
Financial Review on pages 2 to 31, the Group delivered
revenue of £11.4bn, adjusted profit before tax of £502m,
EPS of 84.8p (basic adjusted), and adjusted ROCE of 26%.
2023 bonus
The 2023 bonus was based on a matrix of profit before tax
and revenue. The Group delivered robust financial results,
and strong progress was also made on the strategic
objectives. As a result, Duncan Tait received a bonus of
99.66% of salary, and Adrian Lewis received a bonus of
94.33%. Please see pages 106 to 108 for further details.
2021 PSP/CIP
The 2021 awards will vest based on EPS, ROCE, and cash
performance over the three years ending 31 December
2023. The cumulative EPS (40% of award) was 217p, the
average ROCE (40% of award) was 32% and the average
cash conversion (20% of award) was 75%, resulting in the
2021 awards vesting at 100% of maximum.
The Committee is satisfied that no windfall gains are likely
to arise from the vesting of this award. Please see page 109
for further details.
2023 salary increases
The Committee reviewed the CEO’s salary in early 2023 and
approved an increase of 5%, consistent with that approved
for other members of the senior leadership team and below
the 6% increase offered to the United Kingdom workforce.
The Chairman and the Non-Executive Directors received
a fee increase of 4%.
The Committee received regular updates and was pleased
to support management’s approach to the cost-of-living
challenges experienced in many markets most acutely
affected in 2022 and 2023. Careful consideration was given
to inflation forecasts and local market conditions when
conducting the annual salary review in April 2023. This
included additional one-off payments in some markets,
including the UK.
Overall remuneration
The Committee is satisfied that the total remuneration
received by the Executive Directors in 2023 appropriately
reflects the Company’s underlying business performance
over the year and three-year PSP/CIP performance period
and, as such, no discretion was exercised by the Committee
to adjust the bonus or long-term incentive outcomes.
The Committee believes that the Policy has operated
as intended.
Engagement with the workforce
In 2023, I chaired a colleague forum focusing on Executive
and colleague reward at Inchcape which consisted of
a range of colleagues from the Europe & Africa region.
The forum focused on reward principles, incentive scheme
measures, reward structures for Executive Directors, senior
leaders, management, and colleagues, and why these
differ. In addition, I also attended the annual colleague
engagement session during the Board’s overseas visit to
Hong Kong in October.
Similar themes arose from both engagement sessions with
topics discussed including equal pay, Inclusion & Diversity,
and sustainability. No concerns were raised by colleagues
during the sessions. However, I gave feedback to the Board
and management on the themes discussed, agreeing
actions to improve colleague communication on how
reward is reviewed and managed, how salaries are defined
based on role and responsibilities, and how the flexible
benefits programme has been defined. It was also clear
that colleagues are very interested in how an ESG metric
may be incorporated into reward and detailed
communication on this will be required in the future.
Wider workforce remuneration
The Group continues to strengthen its processes to provide
internal governance and support to our businesses
to ensure a fair and consistent approach to pay and
reward at all levels and in all markets. During the year,
the Committee reviewed new processes introduced to
review pay and conditions across the Group and support
the Group’s Fair Reward Principles. We also supported
the introduction of Regional Remuneration Committees
to review and approve reward initiatives for the wider
workforce in our regions.
The Committee receives regular updates on the above
and is pleased to support management on the approach
being taken in a challenging economic environment.
As context for Executive reward decisions, the Committee
reviewed the reward landscape for the senior leadership,
together with the wider colleague experience of pay
and incentives (bonus, PSP, CIP, and commission). Our
approach ensures that the whole organisation is treated
in accordance with the same principle of fairness.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
93
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Looking forward
2024 salary increases
The Committee reviewed the CEO’s salary in early 2024
and approved an increase of 2.5% effective from 1 April
2024, below the average United Kingdom workforce
2.8% increase.
Following a strong performance in his new role and to
better align with market rate, the Group Chief Financial
Officer was awarded a 3% salary increase for 2024.
The Chairman and the Non-Executive Directors received
a fee increase of 2.5% with effect from 1 April 2024.
2024 performance targets
Bonus
The 2024 bonus will include an additional metric to
reinforce disciplined management of working capital
throughout the year, to underpin the Accelerate strategy,
our continued growth by acquisition and ensure our ability
to invest in line with our capital allocation policy. The
working capital metric will apply to all markets and all
appropriate levels of the organisation, given the
importance of financial discipline. This metric is subject
to meeting the threshold for revenue and profit before tax.
The matrix of revenue and profit before tax will continue
to account for the majority of the bonus, weighted at 60%,
with average working capital weighted at 20% (subject to
the revenue and profit before tax thresholds being met)
maintaining an overall 80% weighting on financial metrics;
strategic objectives will be weighted at 20%, consistent
with FY23.
94
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Long Term incentives
The 2024 PSP and CIP performance measures will continue
to be based on EPS (40% of the award%), ROCE (40% of the
award) and cash conversion (20% of the award).
Awards will be granted at 180% of salary under the PSP and
a matching award up to 100% of salary for the CIP. Please
see page 110 for further details.
Focus for 2024
In 2024, the Committee will focus on:
• ESG metrics in the incentive framework;
• continuing to monitor best practice; and
• reviewing wider workforce remuneration.
We hope to have your support at the upcoming AGM.
JANE KINGSTON
CHAIR OF THE REMUNERATION COMMITTEE
Index
Committee activities – page 95
Remuneration at a glance – page 96 and 97
Directors’ Remuneration Policy – page 98 to 104
Single total figure of remuneration – page 105
Annual bonus – page 106 to 108
Long-term incentives – page 108 to 110
Directors’ shareholdings – page 111
CEO pay ratio – page 112
Total shareholder return – page 113
KEY ACTIVITIES DURING 2023
What we did
Outcomes
Directors’ Remuneration Policy
During the year, the Committee finalised the Remuneration
Policy which was approved by shareholders at the 2023
AGM. The Committee:
• Considered the feedback from proxy advisors
and shareholders
• Approved the Policy
• Recommended to the Board the Policy be put
to shareholder vote at the AGM
Bonus and long-term incentives
The Committee assessed the outcome of the short and
long-term incentive plans and agreed the targets for the
coming year. The Committee approved:
The Directors’ Remuneration Policy can be found on
pages 98 to 104.
Shareholders voted 96.07% in favour of the Directors’
Remuneration Policy.
• The achievement of the financial targets and strategic
objectives for the 2022 bonus payable in 2023
Please see pages 106 to 109 for details of the 2023 bonus
outcome and 2021 PSP/CIP achievement.
• The achievement of targets under the 2021 PSP and
CIP award
• Financial targets for the 2023 long-term incentive plans
• Financial and personal targets for the 2023 bonus plan
• The malus and clawback policy.
When considering the achievement of targets the
Committee takes into account not only the formulaic
outcome but also the wider business context.
Executive reward and structures
The Committee approved the salary, bonus and long-term
incentive plan awards for the Executive Directors, the GET,
Company Secretary and Head of Internal Audit. The
Committee approved:
• The 2023 CEO and GET reward
• The new CFO appointed in May 2023
• Two new GET members appointed in 2023
• The 2023 Chairman’s fees
When considering the remuneration for Executive Directors
and the GET, the Committee takes into account inflationary
forecasts, local market conditions, benchmarking and the
wider workforce experience.
Pension
The Committee undertook a review of the pension
allowance during the Policy review process.
Please see page 110 for the PSP/CIP targets.
Please see page 100 for the malus and clawback policy.
Details of the remuneration package for the CFO is given
on pages 92 and 93.
The CEO was awarded a salary increase of 5% of salary.
The Chairman’s fee was increased by 4%.
The Executive Directors pension contribution is 7% of salary,
which is in line with the United Kingdom workforce.
Remuneration trends update
The remuneration consultants provided an update
on remuneration trends, best practice, governance
and regulation.
The Committee uses the information provided by the
external advisors to inform and guide their deliberations
on reward by taking into account the views of shareholders
and other stakeholders.
Workforce remuneration outcomes
• Gender pay gap
• CEO pay ratio
• Wider workforce remuneration.
The gender pay gap information can be found at
www.inchcape.co.uk.
The CEO pay ratio is given on page 112.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
95
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
REMUNERATION
AT A GLANCE
SUMMARY OF GROUP FINANCIAL PERFORMANCE IN 2023
£11.4bn
Revenue
£502m
Adjusted Profit Before Tax
26%
Adjusted ROCE
84.8p
EPS (basic adjusted)
PAY SCENARIOS AND OUT-TURN FOR 2023
CEO total remuneration (£’000s)
CFO total remuneration (£’000s)
£6,029
62%
£4,783
52%
£3,888
28%
22%
£2,247
28%
30%
£956
100%
43%
20%
16%
£2,013
37%
£1,766
28%
42%
37%
£1,040
£1,025
12%
36%
52%
30%
26%
£531
100%
Minimum
On-target Maximum Maximum
+ 50% share
price increase
2023
actual pay
out-turn
Minimum
On-target Maximum Maximum
+ 50% share
price increase
2023
actual pay
out-turn
Fixed remuneration
Annual bonus
Long-term incentives (CIP and PSP)
2023 actual pay out-turn
96
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
2023 BONUS ACHIEVEMENT
Revenue (40%)
Adjusted profit before tax (40%)
Individual performance (20%)
2021 PSP ACHIEVEMENT
Three year cumulative EPS (40%)
Three year average ROCE (40%)
Cash conversion (20%)
16.5%
Duncan Tait
24%
Adrian Lewis
100%
100%
100%
100%
100%
DIRECTORS’ REMUNERATION POLICY SNAPSHOT
Base salary
– attract, retain, and motivate talent
PSP
– provide reward for long-term success
Pension
– to help plan for the future
Bonus
– reward achievement of strategic goals
CIP
– reinforce long-term success and facilitate
share ownership
SAYE
– encourage share ownership
In-post shareholding
– align executive and shareholder experience
Post-exit shareholding
– reinforce long-term alignment of executive
and shareholder experience
ALIGNMENT WITH BROADER COLLEAGUE REWARDS
c.5,700
colleagues eligible for bonus
c.3,600
eligible for SAYE
c.10,000
eligible for pension
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
97
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
PART 1 —
DIRECTORS’
REMUNERATION POLICY
We set out below the current Directors’ Remuneration Policy (Policy), updated where
appropriate to reflect the current composition of the Board and how the Policy will be applied
for the forthcoming financial year in the scenario charts. A copy of the Policy as approved by
shareholders (at the 2023 Annual General Meeting) is set out in the 2022 Annual Report and
Accounts available on the investor relations section of our website www.inchcape.com.
Alignment of the Policy
The Committee has considered the Policy in the context of provision 40 of the UK Corporate Governance Code.
See page 69 for further details.
• Clarity – The Committee regularly engages with shareholders, Executives, governance advisors, and employees,
to explain the approach to remuneration.
• Simplicity – The objective of the remuneration elements, and link to strategy, are laid out in the table below.
• Risk – There is a mix of fixed and variable pay, and long and short-term measures to mitigate risk. Incentive awards
are also subject to malus and clawback provisions.
• Predictability – The vesting of bonus and long-term incentives is based on targets linked to the business strategy.
The possible pay outcomes under various scenarios are given on page 102.
• Proportionality – The Committee assesses performance at the end of each period taking into account internal
and external context to ensure payouts are appropriate and to help avoid payment for poor performance.
• Alignment to culture – There is an appropriate mix of financial and non-financial measures to reinforce the
Company’s purpose and values.
Remuneration policy for Executive Directors
Operation and performance metrics
Opportunity
Objective and
link to strategy
To pay a
competitive
salary which
attracts, retains,
and motivates
talent to make
decisions
which drive the
Company’s
strategy and
create value for
stakeholders.
To motivate and
reward for the
achievement of
the Company’s
strategic annual
objectives.
Element
Base Salary
Annual Bonus
Performance
Share Plan (PSP)
Salaries are normally reviewed annually, and any increases typically
take effect from 1 April of each year.
Adjustments to salary will take account of:
• increases awarded across the Group as a whole, and conditions
elsewhere in the Group;
• experience and performance of the individual;
• pay levels at organisations of a similar size, complexity, and type; and
• changes in responsibilities or scope of the role.
Based at least 70% on annual financial performance. Financial
measures may include (but are not limited to) revenue and profit. Non-
financial measures may include strategic measures directly linked
to the Company’s priorities.
Any annual bonus earned above 100% of salary is paid in shares
which are automatically invested in the CIP.
Bonus payouts are subject to malus and clawback provisions.
To provide a
meaningful
reward to senior
executives linked
to the long-term
success of
the business.
PSP awards normally vest after three years subject to meeting
performance measures linked to the Group’s strategic priorities,
which may vary year-on-year and continued employment.
Vested awards will be subject to an additional two-year
holding period.
Any dividends paid would accrue over the vesting period and would
be paid only on those shares that vest. Dividends can be paid in cash
or shares. Current practice is for dividends to be paid as shares.
PSP awards are subject to malus and clawback provisions.
There is no prescribed
maximum salary level or
salary increase. Salary
increases are not expected
to exceed the average
increase for colleagues in
the country in which the
Executive is based, unless:
• a change in scope or
complexity of role applies
• or in other exceptional
circumstances.
150% of salary maximum
payable for achieving
stretch performance
against all measures.
50% of maximum payable
for target performance.
10% of maximum payable
for entry level performance.
Normal PSP opportunities will
be 180% of salary.
Award levels are subject to
a maximum individual limit
of 300% of salary.
Threshold level performance
will result in 25% vesting of
the PSP award.
98
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Operation and performance metrics
Opportunity
Element
Co-investment
Plan (CIP)
Objective and
link to strategy
To encourage
Executive share
ownership and
reinforce long-
term success.
Save As You Earn
(SAYE)
To encourage
share ownership.
Pension
To provide
market
competitive
pension benefits
where it is cost-
effective and
tax-efficient
to do so.
Any bonus earned over 100% of salary will be paid in shares which will
be automatically invested in the CIP. These shares can be withdrawn
before the end of the three-year holding period only in very limited
circumstances at the discretion of the Remuneration Committee.
Further voluntary investments may be made up to the investment limit.
Matching shares are granted for each invested share whether
automatic or voluntary, voluntary investment shares can be
withdrawn at any time but the entitlement to a match would be lost
if the invested shares are withdrawn before the end of the relevant
three-year vesting period.
CIP awards normally vest after three years subject to meeting
performance measures linked to the Group’s strategic priorities,
which may vary year-on-year, and continued employment.
For awards granted to the Executive Directors, vested awards will
be subject to an additional two-year holding period.
Any dividends paid would accrue over the vesting period and would
be paid only on those shares that vest. Dividends can be paid in cash
or shares. Current practice is for dividends to be paid as shares.
CIP awards granted are subject to malus and clawback provisions.
United Kingdom employees are able to make monthly savings, in
accordance with the terms of the HM Revenue and Customs (HMRC)
approved plan. At the end of the savings period, the funds are used to
purchase shares under option. As this is an all-employee scheme and
Executive Directors participate on the same terms as other employees,
the acquisition of shares is not subject to the satisfaction
of a performance target.
Executive Directors are eligible to receive employer contributions to
the Company’s pension plan (which is a defined contribution plan)
or allowance in lieu of pension benefits.
The policy is for the Executive Directors’ pensions on appointment to
be aligned with that of the workforce.
Executive Directors may
invest up to an overall
maximum of 50% of salary.
Maximum match of 2:1,
threshold of 0.5:1.
Maximum matching award
is therefore 100% of salary
in any year, and threshold
matching award is 25%
of salary.
Participation limits are
those set by the United
Kingdom tax authorities
from time to time.
Executive Directors are
entitled to an employer
contribution or allowance
aligned to the rate
applicable to employees
in the country in which
they are based. For United
Kingdom based Executive
Directors, this is currently 7%
of salary. The incumbent
Group Chief Executive’s
pension allowance was
capped at £82,748 as
an interim step, and
now receives a pension
allowance of 7% of salary
(from 31 December 2023)
in-line with policy.
There is no formal
maximum prescribed value
for benefits. It is anticipated
that the cost of benefits will
not normally exceed 5%
of salary.
However, the Committee
retains the discretion to
approve a higher cost in
exceptional circumstances
(e.g., relocation).
Other benefits
To provide
market
competitive
benefits where it
is cost-effective
and tax-efficient
to do so.
Benefits currently include (but are not limited to):
• company cars;
• medical care; and
• life assurance premiums.
Executive Directors may become eligible for other benefits in the future
where the Committee deems it appropriate. Where additional benefits
are introduced for the wider workforce the Executive Director may
participate on broadly similar terms.
Executive Directors may be reimbursed for all reasonable expenses
and the Company may settle any tax incurred in relation to these.
Where an Executive Director is required to relocate to perform their
role, they may be provided with reasonable benefits as determined by
the Committee in connection with this relocation.
In-post
shareholding
guidelines
Post-exit
shareholding
guidelines
To encourage
share ownership
and alignment of
executive interest
with those of
shareholders.
To reinforce long-
term alignment
of executive
interests with
those of
shareholders
post-termination.
Executive Directors are required to accumulate shares equivalent to a
shareholding worth 200% of base salary. This is expected to be normally
achieved within five years from the date of appointment.
n/a
A departing Executive Director is required to maintain a shareholding
for two years post-termination, set at the lower of the actual
shareholding on exit and the in-post shareholding guideline.
The post exit holding requirement applies to share-based incentive
awards granted to the Executive Directors (shares purchased through
own funds are excluded).
Enforcement is facilitated through the vesting of share-based incentive
awards into nominee accounts.
n/a
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
99
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Notes to the Policy
Payments from existing awards
Executive Directors are eligible to receive payment from any award made prior to appointment to the Board or the
approval and implementation of the Policy detailed in this report.
Selection of performance measures and target setting
The annual bonus measures have been selected to incentivise sustainable growth in profits. The matrix structure continues
to provide a balanced focus between commercial and financial objectives. A mix of strategic measures will continue to be
selected each year to reinforce the Group’s strategic objectives.
The Committee believes that EPS and ROCE continue to be suitable measures of long-term performance for the Group. EPS
is consistent with the Group’s long-term strategy focusing on sustainable growth while ROCE supports the control of working
capital and capital expenditure. When ROCE is used in combination with EPS, it ensures there is a balance between growth
and returns. The cash conversion measure reflects the criticality of cash generation for Inchcape, which is required to
support its continued evolution.
Targets are set taking into account a range of reference points including the strategy and broker forecasts for the Group.
The Committee believes that the performance targets set are appropriately stretching, set to reward for outperformance of
the market and that the maximum will be achievable only for truly outstanding performance. Please see pages 109 to 110
for further details on the target ranges.
The Committee has considered the use of other performance measures to reinforce the Company’s long-term objectives,
including relative TSR. However, given the diversity of the Group’s operations, it would be difficult to set a relevant and robust
comparator group for assessing relative TSR performance and there would be some difficulty in cascading appropriately
down the organisation. Furthermore, TSR is considered too sensitive to external market factors when measured over only
a three-year performance period, which would reduce its efficacy as a PSP/CIP measure; the use of internal financial and
non-financial metrics is preferred, given their more direct reinforcement of Inchcape’s strategy and culture. However,
flexibility is provided in the policy to enable the Committee to review annually the performance metrics used for the annual
bonus and PSP/CIP to ensure they remain fit for purpose and continue to support the strategy and meet the expectations
of shareholders. Different performance measures may apply for future award cycles
Malus and clawback
These provisions allow the Committee in certain circumstances (such as gross misconduct or a material misstatement
of the Group financial statements, reputational damage, or corporate failure) the discretion to:
• reduce bonus, PSP and/or CIP;
• cancel entitlement of bonus;
• prevent vesting of the PSP and/or CIP; or
• allow the Company within two years of payment/vesting of award to claim back up to 100% of the award.
Participants are informed about the malus and clawback conditions on their bonus at the start of each year and are
required to confirm acceptance of malus and clawback provisions on their PSP and CIP awards upon grant.
Committee discretions
The Committee operates the Group’s various incentive plans in accordance with the relevant plan rules, the Listing Rules
and applicable legislation where relevant. To ensure effective operation of the plans, the Committee retains a number
of discretions which are consistent with standard market practice, and include (but are not limited to) the following:
• selecting the participants in the incentive plans;
• determining the timing of grant of incentives;
• determining the size of grants and/or payments of incentives (within the limits set out in the Policy and rules of each plan);
• selecting performance measures and their weightings, and setting of targets for the discretionary incentive plans from
year to year;
• determining the extent of incentive vesting based on the assessment of performance;
• overriding formulaic annual bonus outcomes, and PSP/CIP vesting outcomes, taking account of overall or underlying
Company performance;
• determining the ‘good leaver’ status for leavers and where relevant, the extent of vesting in the case of share-based
plans and the application of any post-vesting holding period;
• determining whether malus and clawback shall be applied to any award in the relevant circumstances and, if so,
the extent to which they shall be applied;
• determining the treatment of incentives in exceptional circumstances such as a change of control, in which the
Committee would act in the best interests of the Group and its shareholders;
• making appropriate adjustments required in certain circumstances (e.g., rights issues, corporate restructuring
events, variation of capital and special dividends); and
• application and enforcement of the in-post and post-exit shareholding guidelines.
The Committee also has the discretion to adjust the performance conditions in exceptional circumstances, provided the
new conditions are no tougher or easier than the original conditions. Any discretion exercised by the Committee in the
adjustment of performance conditions would be fully explained to shareholders in the relevant Annual Report on
Remuneration. If the discretion is material and upwards, the Committee would consult with major shareholders in advance.
100
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Remuneration policy for other employees
Our approach to salary reviews is consistent across the Group, with consideration given to the level of responsibility,
experience, individual performance, salary levels in comparable companies (using remuneration surveys, where
appropriate) and the Company’s ability to pay.
Senior employees participate in an annual bonus scheme which has similar performance targets to those of the Executive
Directors. Below this level, local incentive schemes are in place for management and non-management employees.
Opportunities and performance conditions vary by country and organisational level, with business unit-specific metrics
incorporated where appropriate. Commission-based arrangements are also operated for certain roles.
Senior managers also receive PSP awards while participation in the CIP is limited to Executive Directors, Group Executive
Team members and the next level of Executives (c. 20 individuals). Performance conditions are consistent for all participants
while award sizes vary by organisational level. Explicit in-post and post-employment shareholding guidelines apply to
Executive Directors only, although share ownership is encouraged at lower levels.
All United Kingdom employees are eligible to participate in the SAYE scheme on the same terms.
Pension and benefits arrangements are tailored to local market conditions, and so various arrangements are in place for
different populations within the Group. The Group has calculated the average equivalent pension contribution across
United Kingdom employees currently to be 7% to 7.5% of salary. At the time of appointment of the current Group Chief
Executive the workforce pension was assessed to be 10% of salary. As set out on page 99, future executive appointments
to the Board will be provided with a pension allowance in line with the workforce rate and transitional arrangements are in
place to align the Group Chief Executive to the current rate available to United Kingdom employees after 31 December 2023.
Remuneration policy for Non-Executive Directors
Objective and
link to strategy Operation and performance metrics
To provide fair
remuneration,
reflecting
the time
commitment
and
responsibilities
of the role.
Non-Executive Directors receive a fixed fee and do not participate in any
incentive schemes or receive any other benefits, except the Chairman who
receives medical cover. Non-Executive Directors may be reimbursed for all
reasonable business-related expenses and the Company may settle any tax
incurred in relation to these.
Fee levels are normally reviewed annually, with any adjustments typically
effective from 1 April each year.
Additional fees are payable for acting as Senior Independent Director and as
Chair of any of the Board’s Committees (excluding the Nomination Committee),
or similar, or where a material additional time commitment is required.
The Chairman’s fee is determined by the Remuneration Committee and the
fees for other Non-Executive Directors are determined by the Chairman and
the Executive Directors.
Non-Executive Directors may elect to receive up to 20% of their net fees as
Company shares.
Opportunity
Appropriate adjustments may be made
to fee levels, taking account of:
• increases awarded across the Group
as a whole and conditions elsewhere
in the Group;
• fee levels within organisations of a
similar size, complexity, and type; and
• changes in complexity, responsibility or
time commitment required for the role.
Fees paid to Non-Executive Directors are within the limits approved by shareholders. This limit, currently at an aggregate
of £1,200,000, was last approved by shareholders at the 2021 AGM.
Non-Executive Directors’ term of appointment
The Non-Executive Directors are appointed for an initial three-year term which can be terminated by either party on one
month’s notice (six months for the Chairman).
Nayantara Bali
Jerry Buhlmann
Juan Pablo Del Río
Byron Grote
Alex Jensen
Jane Kingston
Sarah Kuijlaars
Alison Platt
Stuart Rowley
Nigel Stein
27 May 2021
1 March 2017
4 January 2023
3 January 2023
29 January 2020
25 July 2018
21 January 2022
2 January 2024
17 July 2023
8 October 2015
One month
One month
One month
One month
One month
One month
One month
One month
One month
Six months
Consideration of conditions elsewhere in the Group
The Committee reviews and approves all remuneration arrangements for the Group Executive Team, Group Company
Secretary and Head of Internal Audit. The Committee also reviews the pay budgets and benefit structures across the
general population which are considered when determining remuneration for Executive Directors and the Group
Executive Team.
The Company has a diverse, international spread of businesses as well as a wide variety of roles, from petrol pump
attendants and valeters through to Chief Executives of our individual businesses. Pay levels and structures therefore vary
to reflect local market conditions. The Chair of the Remuneration Committee facilitated an employee forum on Executive
remuneration during 2023. Further details are given on page 93.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
101
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
The Policy is published in the Annual Report and Accounts and is available to all employees to review. The Remuneration
Committee is available to answer any questions employees may have about the policy or to provide clarification on any
remuneration matters via the employee forum, HR team or Company Secretary. Elements of the policy such as bonus and
long-term incentive plans are cascaded as appropriate through the organisation.
Consideration of shareholder views
When determining remuneration, the Committee takes into account the guidelines of representative investor bodies and
proxy advisors and shareholder views. The Committee is always open to feedback from shareholders on the Policy and
arrangements. During 2022 and 2023, the Company carried out a shareholder consultation in respect of the revised Policy,
details of which were given in last year’s Annual Report and Accounts.
The Committee will continue to monitor trends and developments in corporate governance and market practice to ensure
the structure of executive remuneration remains appropriate.
Performance scenarios
The chart below shows the remuneration that the Group Chief Executive and Group Chief Financial Officer could expect
to obtain based on varying performance scenarios. These illustrations are intended to provide further information to
shareholders regarding the pay-for-performance relationship. However, actual pay delivered will be influenced by actual
changes in share price and the vesting periods of awards.
Duncan Tait – Group Chief Executive
Total remuneration (£’000s)
Adrian Lewis – Chief Financial Officer
Total remuneration (£’000s)
£6,029
62%
£4,783
52%
£2,247
28%
30%
28%
22%
£956
100%
43%
20%
16%
£2,013
37%
£1,766
28%
42%
37%
£1,025
12%
36%
52%
30%
26%
£531
100%
Minimum On-target Maximum Maximum
with share
price growth
Minimum On-target Maximum Maximum
with share
price growth
Fixed remuneration
Annual bonus
Long-term incentives (PSP and CIP)
Notes on the performance scenarios:
Element
Assumptions
Fixed
remuneration
• Fixed remuneration comprises base salary, benefits, and pensions
• Base salary – effective from 1 April 2024
• Benefits – as provided in the single figure table on page 105
• Pension – Duncan Tait received £82,748 in lieu of pension
Minimum
On-target
Maximum
Maximum with share price growth
Variable pay Annual bonus No payout
CIP
No vesting
Target payout (50% of
maximum)
Assumes full voluntary
investment
Maximum payout
PSP
No vesting
Threshold vesting (25% of
maximum)
Maximum vesting Maximum vesting + 50% share price growth
Threshold match of 0.5:1 Maximum vesting Maximum vesting + 50% share price growth
102
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Approach to recruitment remuneration
External appointments
When appointing a new Executive Director, the Committee may make use of any of the existing components of
remuneration, as follows:
Component
Base salary
Pension
Benefits
Annual bonus
PSP
CIP
Other
Approach
The base salaries of new appointees will be determined by
reference to the scope of the role, experience of the individual,
pay levels at organisations of a similar size, complexity, and type,
pay and conditions elsewhere in the Group, implications for total
remuneration, internal relativities, and the candidate’s current
base salary.
New appointees will be eligible to receive employer contributions
to the Company’s pension plan (which is a defined contribution
plan) or a cash allowance in lieu of pension benefits; contribution
rates (as a % of salary) to be aligned to those available at the time
of appointment to the majority of colleagues in the country in
which the Executive Director is based.
New appointees will be eligible to receive normal
benefits available to senior management, including
(but not limited to) company cars, medical care, life
assurance and relocation allowance.
The annual bonus described in the policy table will apply
to new appointees with the relevant maximum being pro-rated
to reflect the proportion of employment over the year. In the year
of appointment, the Committee retains the discretion to set
different performance measures, taking into account the
responsibilities of the individual, and the point in the financial
year that they joined the Company.
Maximum annual
grant value
n/a
n/a
n/a
150% of salary
New appointees will be granted awards on the same terms
as other Executive Directors as described in the policy table.
up to 300% of salary
New appointees will be granted awards on the same terms
as other Executive Directors as described in the policy table.
100% of salary
The combined
maximum is
intended not to
exceed 400%
of salary.
The Committee will consider on a case by case basis if all or
some of the variable remuneration forfeited on leaving a previous
employer will be ‘bought out’.
If the Committee decides to provide a ‘buyout’, the award will be
structured on a comparable basis, taking into account the method
of payment, any performance conditions attached, time to vesting
and, if applicable, the share price at the time of buyout.
The Committee retains the discretion to make use of the relevant
Listing Rule to facilitate the use of a share-based award.
n/a
Notes to recruitment remuneration policy
In determining the appropriate remuneration for a new Executive Director, the Committee will take into consideration
all relevant factors to ensure that arrangements are in the best interests of the Group and its shareholders.
Internal appointments
In cases of internal promotions to the Board, the Committee will determine remuneration in line with the policy for external
appointees as detailed above. Where an individual has contractual commitments made prior to their promotion to
Executive Director level, the Company will continue to honour these arrangements. Incentive opportunities for employees
below Board level are typically no higher than for Executive Directors.
Non-Executive Directors
In recruiting a new Non-Executive Director, the Committee will use the policy as set out in the table on page 101. A base fee
in line with the prevailing fee schedule would be payable for Board membership, with additional fees payable for acting as
Senior Independent Director or as Chair of the Audit, Remuneration and CSR Committees as appropriate.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
103
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Exit payment policy, service contracts, and change of control
The Company’s policy is to limit severance payments on termination to pre-established contractual arrangements.
However, the Company retains discretion to make other reasonable payments. For example, to settle reasonable legal fees
incurred by the Executive Director in connection with the termination of employment (where the Company wishes to enter
into a settlement agreement and the individual must seek independent legal advice), to provide outplacement services
or, in the case of departure due to ill health, to extend medical benefits for a period post-employment.
In the event that the employment of an Executive Director is terminated, any compensation payable will be determined
in accordance with the terms of the service contract between the Company and the employee as well as the rules of any
incentive plans. When considering exit payments, the Committee reviews all potential incentive outcomes to ensure they
are fair to both shareholders and participants.
The table below summarises how the awards under the annual bonus, PSP and CIP are typically treated in specific
circumstances, with the final treatment remaining subject to the rules of the relevant plans.
Component
Circumstance
Treatment
Annual bonus
Resignation.
Bonus will lapse.
The bonus will only be paid to the extent the targets set at
the beginning of the year have been achieved.
Unless the Committee determines otherwise, any bonus
payment will be pro-rated for time served during the year.
At the discretion of the Committee, payments may be made
in cash only with no deferral.
The bonus will be paid only to the extent the targets set
at the beginning of the year have been achieved.
Any bonus payment will be pro-rated for time served
during the year.
Payment will usually be made in cash only with no deferral.
Unvested awards will lapse on date of leaving or such earlier
date as the Committee may determine following the giving
of notice. Any vested awards can be exercised.
Any unvested awards will be assessed for performance, and
unless the Committee determines otherwise, time pro-rated.
Death, ill-health,
redundancy, sale
of the employer or
business out of the
group or any other
reason which the
Committee may,
in its absolute
discretion permit
(e.g., retirement).
Change of control.
PSP and CIP
Resignation.
Death, ill-health,
redundancy, sale
of the employer or
business out of the
group or any other
reason which the
Committee may,
in its absolute
discretion permit
(e.g., retirement).
Payment/vesting date
(if relevant)
Not applicable.
At the normal time
unless the Committee
determines otherwise.
At the normal time
unless the Committee
determines otherwise.
Not applicable.
At the normal release
date (save where
the Committee has
discretion to determine
otherwise, or the rules
provide otherwise).
The two-year holding
period will remain
in force, unless the
Committee, in its
absolute discretion,
determines otherwise.
Change of control.
Any unvested awards will be assessed for performance, and
unless the Committee determines otherwise, time pro-rated.
At the time of change
of control.
In relation to the Save As You Earn (SAYE) plan, as a United Kingdom tax-advantaged plan, where an Executive Director
leaves or a change of control occurs, the treatment of any outstanding options will be in line with the plan rules and
HMRC guidance.
Service contracts
The Company’s policy is for Executive Directors’ service contract notice periods to be no longer than 12 months, except
in exceptional circumstances. All current contracts contain notice periods of 12 months.
Name
Duncan Tait
Adrian Lewis
Date of contract
Notice period
1 June 2020
24 May 2023
12 months
12 months
Unexpired term
To retirement
To retirement
The Company may, at its discretion, and in certain circumstances, pay a sum equal to the outstanding notice period.
Service contracts are available to view at the Company’s registered office.
104
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
PART 2 —
ANNUAL REPORT
ON REMUNERATION
The following section provides details of how the Company’s Directors’ Remuneration
Policy was implemented during the financial year to 31 December 2023 and how
it will be implemented in the financial year to 31 December 2024.
Single total figure of remuneration (audited)
The table below sets out the total remuneration received by the Directors for the year ended 31 December 2023:
Base salary/
fees(a)
£’000
Taxable
benefits(b)
£’000
Single-year
variable(c)
£’000
Multiple-year
variable(d)
£’000
Pension(e)
£’000
Total
£’000
Total Fixed(a+b+e)
£’000
Total
variable(c+d)
£’000
Name
2023
2022 2023
2022
2023
2022 2023
2022 2023
2022
2023
2022
2023
2022
2023
2022
Current Executive Directors*
Duncan Tait
Adrian Lewis
859
290
820
–
Current Non-Executive Directors**
Nigel Stein
357
343
Jerry Buhlmann
Jane Kingston
Alex Jensen
Juan P. Del Río
Sarah Kuijlaars
Nayantara Bali
Byron Grote
Stuart Rowley
89
85
82
67
73
68
67
31
85
82
79
–
62
65
–
–
Former Directors***
John Langston
32
82
4
2
4
–
–
–
15
–
5
–
–
–
4
–
4
–
–
–
–
–
–
–
–
–
866 1,241 2,076 1,951
453
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
283
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
83
12
82 3,888 4,098
– 1,040
–
946
304
906 2,942 3,192
–
736
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
361
347
361
347
89
85
82
82
73
73
67
31
85
82
79
–
62
65
–
–
89
85
82
82
73
73
67
31
85
82
79
–
62
65
–
–
32
82
32
82
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
2,100 1,618
30
8 1,319 1,241 2,359 1,951
95
82 5,903 4,900 2,225 1,708 3,678 3,192
*
Adrian Lewis’ base salary, taxable benefits, bonus, and pension contributions have been calculated pro rata starting from his appointment to the Board on
24 May 2023.
** Byron Grote joined on 3 January 2023, Juan Pablo Del Río joined on 4 January 2023, Sarah Kuijlaars became Audit Committee Chair on 18 May 2023, and
Stuart Rowley joined on 17 July 2023.
*** John Langston retired on 18 May 2023.
Notes to the single total figure of remuneration
a. Base salary/fees.
b. Taxable benefits for the Executive Directors comprise car allowance, medical cover, mileage allowance. For the
Non-Executive Directors taxable benefits include accommodation, subsistence, and travel in connection with
the attendance of Board and Committee meetings, which are deemed taxable by HMRC. The Group meets
the associated tax costs. Non-taxable expense reimbursements have not been included.
c. Payment for performance under the annual bonus, including amounts paid in shares.
d. The 2023 figure incudes to 2021 PSP and CIP which will vest in June 2024 based on performance over a three-year period
from 1 January 2021 to 31 December 2023. These awards are subject to a two-year holding period and will therefore
be released in 2026. The figures have been valued using the three-month average share price from 1 October 2023
to 31 December 2023 of 679p. Actual performance against targets is given on page 109. The value for the Group Chief
Executive includes a movement of -£314,616 due to a decrease in the share price over the period and £151,668 in respect
of dividend shares accrued over the performance period. The value for the Group Chief Financial Officer includes
a movement of -£42,932 due to a decrease in the share price over the period and £20,662 in respect of dividend
shares accrued over the performance period.
The 2022 figure for the Group Chief Executive includes the 2020 PSP and CIP which vested in June 2023 based
on performance over a three-year period from 1 January 2020 to 31 December 2022. These awards are subject
to an additional two-year holding period and therefore will be released in 2025. The figure has been restated using
the actual share price on date of vesting of 751p. The value includes a movement of £576,402, due to an increase
in the share price over the period and £137,147 in respect of dividend shares accrued over the performance period.
e. Duncan Tait received a pension allowance of £82,748 during 2023. Adrian Lewis is a member of the Company’s
defined contribution scheme and received a pension contribution of 7% of salary. See page 102 for further details.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
105
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Base salary
Salaries are reviewed annually and typically take effect from 1 April each year. The quantum of total Executive
remuneration was reviewed against relevant size and sector peers.
In considering the level of increase to be awarded, the Committee also considered the remuneration arrangements
for the wider workforce and, in particular, the salary increases for other United Kingdom colleagues.
The salaries for 2022, 2023, and 2024 are set out below:
Name
Duncan Tait
Adrian Lewis
United Kingdom average workforce increase
Chairman and Non-Executive Directors’ fees
Role
Chairman
Senior Independent Director
Non-Executive Director
01-Apr-23
(or date of
appointment
if later)
01-Apr-22
01-Apr-24
% increase
in 2024
£827,483
£868,900
£890,623
–
–
£480,000
£494,400
–
–
2.5%
3%
2.8%
01-Apr-22
01-Apr-23
01-Apr-24
£346,270
£360,120
£369,123
£85,930
£65,774
£89,367
£68,405
£91,601
£70,115
% increase in
2024
2.5%
2.5%
2.5%
When considering the fee increase, benchmarking and the current inflationary environment were considered. Additional
fees are paid for chairing a committee, which are £17,000 for the Chair of the Audit and Remuneration Committees and
£14,000 for the Chair of the CSR Committee.
Annual bonus
The annual bonus is based on annual financial measures and strategic objectives. The measures are selected to incentivise
sustainable growth and the financial measures, based on a matrix of revenue and profit before tax, are designed to provide
a balanced approach. The strategic objectives are selected each year to reinforce the Group’s strategic priorities and
include personal objectives linked to the delivery of the strategy.
The principles for setting the bonus framework are such that it:
• drives the desired behaviours underpinned by our performance drivers;
• may be easily cascaded through the organisation to reinforce alignment of our collective goals; and
• has clear measures and targets.
2023 bonus
For 2023, 80% of the bonus was based on financial performance via a matrix of revenue and profit before tax with the
remaining 20% of the bonus based on strategic objectives, therefore linking an individual’s bonus outcome to their
contribution to the Accelerate strategy. The maximum opportunity for the Executive Directors was 150% of salary, which
is payable for achieving stretch performance against all measures. Any bonus earned above 100% of salary is deferred
and invested into the CIP.
Financials (80% of total bonus)
Revenue and profit before tax are structured as a matrix such that failure to deliver threshold in either metric leads to no
bonus being achievable in the other.
• 10% of maximum for this element is payable for threshold performance.
• 50% of maximum is payable where both metrics achieve target performance.
• To achieve the maximum award, stretch performance would be required against both metrics.
• Intervening points are calculated using matrix anchor points as shown on the next page.
106
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Matrix of revenue and profit before tax
Stretch
£11.6bn
e
u
n
e
v
e
R
Target
£10.8bn
Threshold
£10.0bn
20%
13%
10%
60%
50%
30%
100%
80%
60%
£438m
£487m
£536m
Threshold
Target
Stretch
Profit before tax
Achievement of financial targets (80% of total bonus or 120% of salary)
In 2023, revenue performance was £11.4bn and adjusted profit before tax was £502m. Actual performance for determining
bonus outcomes has been calculated using constant currency rates during the year, the same that are used to set the
bonus targets. This approach helps ensure that the bonus is linked to underlying financial performance.
Measure
Revenue
Adjusted profit before tax
Threshold
£10bn
£438m
Targets
Target
£10.8bn
£487m
Stretch
Weighting
Duncan Tait
Adrian Lewis
£11.6bn
£536m
40%
40%
83.16%
83.16%
Adjustments made during the year
The revenue and profit before tax targets for 2023 were adjusted to consider strategic acquisitions and disposals during the
year, to ensure target and performance outcomes were assessed on a like for like basis. This is consistent with the approach
the Committee has used previously for M&A activity.
Achievement of strategic objectives (20% of total bonus, or 30% of salary)
We provide as much detail below as commercially appropriate on the objectives linked to the strategic element of the 2023
bonus and the resulting outcomes, which have been independently verified by the Head of Internal Audit.
Duncan Tait
Strategic
objective and
% weighting
of bonus
Objective details
Successfully
execute
the Derco
integration.
To deliver the cost-related synergy
benefits and overall business plan in
year one and to retain all new mobility
company partners.
10%
Ensure VLS is
on track with
our external
commitments.
To deliver at least £50m incremental
profit per annum and an additional
80k used cars sales per annum towards
the end of the planning period.
5%
Bring
Inchcape’s
Planet
commitments
to life.
Ensure the Group is on track to
achieve the CO2 scope 1 and 2
reduction targets:
• CO2 emissions by 2,000 tCO2
in 2023
5%
• Develop plan to reduce scope 1 and 2
emissions in Derco
Develop a climate transition plan
consistent with TCFD requirements.
Outcome
Synergy benefits were delivered ahead of plan at £21m. Operating
margins were delivered in line with expectations against a backdrop
of challenging conditions in certain markets.
All new mobility company partners were retained following the
acquisition, with a further eight contract wins in the Americas
during the year.
Outcome
% of
salary
9%
Excellent progress has been made on the VLS ambitions however
a significant reset was required in 2023 resulting in the reduction of
retail operations in a number of markets.
0%
Carbon emissions were reduced by over 3,000 tCO2 market-based in
2023, this being a 6.6% reduction when compared with 2022.
7.5%
The Group’s plan to transition is given on pages 50 to 51.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
107
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Adrian Lewis
Strategic
objective and
% weighting
of bonus
Objective details
Optimising
group
cashflow.
10%
To define the Group’s funding strategy
and put in place controls, measures,
and processes to ensure the Group
delivers a sustainable liquidity structure
and improved leverage through
the year.
Outcome
Group funding strategy approved by the Board.
Clear goals and processes for subsidiary funding.
Closing Liquidity <0.9x.
Outcome
% of
salary
9%
Establish a robust reporting
framework that underpins our
ESG reporting requirements.
A robust set of KPI’s was developed and implemented against scopes
1, 2, and 3. Reporting framework in place across the Group to allow
continuous monitoring of progress against reduction targets.
15%
Develop GHG
emissions
reporting
framework.
10%
Overall 2023 bonus outcome
The Committee concluded that the overall bonus outcome was reflective of the Company’s strong financial and
operational performance and therefore did not make any discretionary adjustments. As a result, the Committee
approved the overall 2023 bonus as follows:
Duncan Tait
Adrian Lewis*
2023 base
salary
£868,900
£480,000
Max bonus
opportunity
(% of salary)
Bonus
outcome
(% of salary)
150%
150%
99.66%
94.33%
Bonus
amount £
£865,946
£452,792
Deferred
into CIP
n/a
n/a
* The bonus paid to Adrian Lewis has been pro-rated from date of appointment to Group Chief Financial Officer.
Any bonus earned above 100% of salary is deferred and invested into the CIP.
Annual bonus for 2024
The maximum annual bonus opportunity in 2024 will remain unchanged from previous years at 150% of salary. For the
Executive Directors, 60% of the bonus will be based on a financial performance matrix, linked to revenue and profit before
tax, 20% will be based on working capital, and 20% will be based on specific, measurable objectives that relate to the
Group’s strategy, including a stretching carbon reduction target linked to the Group’s responsible business framework.
Any payments of the working capital and strategic objectives is subject to the revenue and profit before tax thresholds
being met. See page 94 for further details.
For target performance, the payout will be 50% of the maximum bonus opportunity.
Given the close link between performance targets, the longer-term strategy, and the advantage this may give competitors,
the 2024 targets are not disclosed in this report because of their commercial sensitivity. The Committee intends to publish
the financial targets and provide more details of the strategic measures in next year’s Directors’ Remuneration Report.
PSP and CIP awards exercised during the year
Duncan Tait exercised his 2020 PSP and CIP awards on 8 September 2023. He sold sufficient shares to cover costs and tax
and retained the remaining shares in line with policy.
Duncan Tait
* Share sale price.
Plan
PSP
CIP
Awards
exercised
150,805
83,809
Dividend
shares
11,408
6,329
Share
price*
7.61
7.61
Shares
sold
76,394
42,450
Shares
retained
85,819
47,688
PSP and CIP awards vesting in respect of the year
In 2021, awards were granted under the PSP and CIP schemes which vested dependent on certain performance targets
measured over three years to 31 December 2023. These awards are also subject to an additional post-vest two-year
holding period.
Consistent with the Committee’s previous approach for material M&A activity, the Committee considered adjustments to
the targets to take account of the disposal of the Russian business in 2022 and the acquisition of the Derco group in 2023.
The cumulative impact of the two transactions on the targets set for the 2021 LTIP cycle was negligible and therefore no
adjustment was made to the targets for 2021 LTIP award.
108
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
2021 PSP/CIP performance targets
Three-year EPS cumulative growth p.a. (40% weighting)
Vesting %
Three-year average ROCE (40% weighting)
Vesting %
Less than 133p
133p
150p
0%
25%
100%
Less than 19%
19%
23%
0%
25%
100%
Between 133p and 150p
Straight line basis
Between 19% and 23%
Straight line basis
Cash conversion (20% weighting)
Less than 55%
55% to 70%
70%
Vesting %
0%
25%
100%
Between 55% and 70%
Straight line basis
Vesting of 2021 PSP/CIP awards
Over the 2021–2023 performance period, cumulative EPS1 of 217p, three-year average ROCE of 32%, and cash conversion of
75% were achieved, which resulted in the following vesting outcomes:
Award
PSP/CIP
Total (overall vesting outcome)
Performance measure
Wtg.
Vesting outcome (% of element)
EPS1
ROCE
Cash conversion2
40%
40%
20%
40%
40%
20%
100%
1. Consistent with the Committee’s policy, cumulative EPS has been adjusted to take into account the difference between actual share buy-back activity
during the performance period and that envisaged when the targets were originally set to ensure the assessment is conducted on a like-for-like basis.
2. The Committee reviewed the cash conversion to ensure target was achieved without the one off benefit of Derco inventory reduction.
The Remuneration Committee considered the outcome in the context of overall business performance. The Committee
did not exercise any discretion. As a result, the following awards will vest:
Duncan Tait
PSP
CIP
Adrian Lewis**
PSP
CIP
Grant date
Number of
awards granted
Number of
awards vesting
Number of
awards lapsing
Vesting date
Estimated
value of awards
vesting*
7 June 2021
7 June 2021
7 June 2021
7 June 2021
182,210
101,228
26,778
11,900
182,210
101,228
26,778
11,900
0
0
0
0
7 June 2024
£1,238,044
7 June 2024
£687,804
7 June 2024
7 June 2024
£181,946
£80,856
*
Estimated value calculated using the three-month share price average from 1 October 2023 to 31 December 2023 of 679.46p. The average share price is below
the prevailing share price at the time the 2021 awards were granted (790p). As such, the Committee is satisfied that no windfall gains are likely to arise from the
vesting of the 2021 PSP/CIP awards.
** Adrian Lewis was granted his 2021 awards before his appointment as Group Chief Financial Officer.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
109
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
PSP and CIP awards granted during the year
During 2023, PSP awards were granted to the Group Chief Executive at 180% of salary. Under the CIP, the Group Chief
Executive invested 50% of salary (including mandatory bonus deferral) and was granted a matching award of 100%
of salary. The performance targets for the PSP/CIP are detailed below.
2023 PSP/CIP
Three-year cumulative EPS (40% weighting)
Vesting %
Three-year average ROCE (40% weighting)
Vesting %
Less than 250p
250p
290p
0%
25%
100%
Less than 21%
21%
26%
0%
25%
100%
Between 250p and 290p
Straight line basis
Between 21% and 26%
Straight line basis
Cash conversion (20% vesting)
Less than 60%
60%
70%
Vesting %
0%
25%
100%
Between 60% and 70%
Straight line basis
Threshold level performance will result in 25% of the 2023 PSP and CIP awards vesting.
Date of grant
(p)1 Awards granted
Share
price
Face value
at grant2
Performance period
Exercise period3
Duncan Tait
PSP
CIP
Adrian Lewis4
PSP
CIP
11 Apr 2023
11 Apr 2023
11 Apr 2023
11 Apr 2023
751p
751p
751p
751p
206,880
£1,553,669 Jan 2023 – Dec 2025 Apr 2026 – Apr 2027
114,934
£863,154 Jan 2023 – Dec 2025 Apr 2026 – Oct 2026
76,190
26,087
£572,187 Jan 2023 – Dec 2025 Apr 2026 – Apr 2027
£195,913 Jan 2023 – Dec 2025 Apr 2026 – Oct 2026
1. Mid-market share price on date of grant.
2. Face value has been calculated using the share price at date of grant.
3. The awards are structured as a nil-cost option. Any shares vesting and exercised under the PSP and CIP (net of tax) are required to be held (until the fifth
anniversary of grant).
4. Awards granted to Adrian Lewis before his appointment as Group Chief Financial Officer.
Long-term incentives for 2024
The Committee reviewed the performance measures for PSP and CIP agreeing that targets will be based on EPS (40%),
ROCE (40%) and cash conversion (20%). The ranges were determined based on a range of inputs, including internal
forecasts, market consensus, historical growth, and peer performance.
Three-year cumulative EPS (40% weighting)
Vesting %
Three-year average ROCE (40% weighting)
Vesting %
Less than 264p
264p
295p
0%
25%
100%
Less than 20%
20%
27%
0%
25%
100%
Between 264p and 295p
Straight line basis
Between 20% and 27%
Straight line basis
Cash conversion (20% vesting)
Less than 60%
60%
70%
Vesting %
0%
25%
100%
Between 60% and 70%
Straight line basis
The target assumes no share buy backs and is on a constant currency basis. Adjustments to targets will be made for the impact of currency movements
and share buy backs.
Pension
Due to the mis-alignment of pension rates as reported in last year’s Directors’ Remuneration Report, Duncan Tait
volunteered to freeze his allowance at £82,748 in 2023 and now receives a pension allowance of 7% of salary (from
31 December 2023) in-line with policy. Adrian Lewis is a member of the Company’s defined contribution scheme
and receives contributions of 7% of salary, in line with the wider United Kingdom workforce.
110
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Executive share ownership and Directors’ interests (audited)
The table below shows the total number of shares, options, and awards held by each Director at 31 December 2023 or
at the date of leaving if earlier. There have been no changes to this between 31 December 2023 and 4 March 2024.
PSP/CIP awards held
SAYE options held
Shares held at
31 December
2023
Subject to
performance
conditions
Subject to
deferral
Subject to
performance
targets
Duncan Tait
Adrian Lewis
Nigel Stein
Jerry Buhlmann
280,238
32,841
77,834
15,233
Juan Pablo Del Río*
12,837,702
Byron Grote
Sarah Kuijlaars
Jane Kingston
Stuart Rowley
Alex Jensen
Nayantara Bali
John Langston**
50,000
8,000
3,500
2,400
1,034
0
10,397
944,305
187,353
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
0
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Subject to
deferral
0
2,731
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Vested
but not yet
exercised
4,774
0
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Guideline met
Yes
No
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
* Juan Pablo Del Río was appointed to the Board following the Derco acquisition in January 2023. As part of the agreement, the Del Río family acquired 38,513,102
shares of which Juan Pablo Del Río is the beneficial owner of 12,837,702.
** John Langston retired from the Board on 17 May 2023.
Share ownership policies
The Executive Directors are required to hold a fixed number of shares equivalent to 200% of base salary. They have five years
from the date of appointment to reach this shareholding. As at 31 December 2023, using the average share price from
1 October 2023 to 31 December 2023 of 679p, Duncan Tait held 219% of salary (his date of appointment was June 2020)
and Adrian Lewis held 46% of salary (his date of appointment was May 2023).
A departing Executive Director is required to maintain a shareholding for two years post-termination, set at the lower of the
actual shareholding on exit and the in-post shareholding guideline. Enforcement of this is facilitated through a holding
requirement for Executive Directors applied to share-based incentives awards. The application of this requirement will
be at the Committee’s discretion (which will be waived only in exceptional circumstances). Gijsbert de Zoeten resigned
from the Group on 27 November 2022 and is required to hold 19,493 shares until 7 May 2025. These shares were subject
to mandatory deferral into the CIP from his 2021 bonus and, as such, are required to be held until the normal vesting date
of the linked CIP award which lapsed on the date of his resignation.
Percentage change in Board remuneration
The table shows the percentage change in Board remuneration, compared with the average percentage change
in remuneration for senior management. For the purposes of this disclosure, remuneration comprises salary, benefits
(excluding pension), and annual bonus only. The increase for Non-Executive Directors relates to base fees only, not
additional fees for chairing a committee.
Executive Directors
Duncan Tait
Adrian Lewis
Non-Executive Directors
Nigel Stein
Jerry Buhlmann
Alex Jensen
Jane Kingston
John Langston
Nayantara Bali
Sarah Kuijlaars
Juan P. Del Río
Byron Grote
Stuart Rowley
% change for 2020
% change for 2021
% change for 2022
% change for 2023
Salary Benefits
Bonus
Salary Benefits Bonus
Salary Benefits Bonus
Salary Benefits
Bonus
n/a
n/a
n/a
2.5%
0% 100% 3.5%
0% 5.5%
–
–
–
–
–
–
–
–
–
5%
n/a
0% (30)%
n/a
n/a
2%
0%
0%
0%
0%
n/a
–
–
–
–
0%
n/a
n/a
n/a
n/a
n/a
–
–
–
–
n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
–
2.5%
2.5%
2.5%
2.5%
2.5%
0%
–
–
–
–
0% n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
–
n/a
n/a
n/a
n/a
n/a
–
–
–
–
3.5%
3.5%
3.5%
3.5%
3.5%
3.5%
3.5%
–
–
–
0% n/a
n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
n/a
n/a
n/a
n/a
n/a
n/a
–
–
–
4%
4%
4%
4%
4%
4%
4%
4%
4%
0%
0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Average senior manager pay
3.2%
0% 82.9% 3.3%
0% 73.2% 5.8%
0% 9.5% 7.7%
0% (35.2)%
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
111
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
As Inchcape plc has no direct employees, colleagues representing the most senior Executives have been selected as this
group is large enough to provide a robust comparison, while also providing data that is readily available on a matched
sample basis. These colleagues also participate in bonus schemes of a similar nature to the Executive Directors and
therefore remuneration will be similarly influenced by Company performance.
CEO pay ratio
The CEO pay ratio is based on comparing the CEO’s pay to that of Inchcape’s UK-based colleague population, a large
proportion of whom are in customer-facing roles in retail centres with remuneration which is commission-driven. The
Committee anticipates that the ratios are likely to be volatile over time, largely driven by the CEO’s incentive outcomes
which are dependent on Group-wide results whereas colleague pay variability will be primarily driven by United Kingdom
market conditions.
The ratios have decreased due to the decrease in share price (used for valuing PSP and CIP awards) and bonus performance.
Financial year
2023
2022
2021
2020
2019
Calculation
methodology
P25 (Lower
quartile)
P50 (median)
P75 (Upper
quartile)
C
C
C
C
C
128:1
154:1
75:1
40:1
67:1
95:1
109:1
55:1
28:1
48:1
70:1
74:1
38:1
19:1
32:1
Consistent with previous years, calculation methodology C was used.
Full-time equivalent remuneration was calculated for all United Kingdom colleagues as at 31 December 2023 using the
single total figure valuation methodology, with two amendments: using 2022 bonus outcomes as a proxy for 2023 bonus
outcomes and excluding SAYE grants. The colleagues at the 25th, 50th and 75th percentile (P25, P50, P75) were identified.
The total remuneration for 2023 of the three colleagues identified was updated after the year-end to include any annual
bonus and SAYE values (if applicable).
This method was chosen as it is in line as much as possible with methodology A, which is the Government’s preferred
approach while taking account of operational constraints. The Committee is satisfied that the selected colleagues
are representative.
The table below sets out the remuneration details for the individuals identified:
Year
2023
2022
2021
2020
2019
Salary
Basic salary (£’000)
Total remuneration (£’000)
Basic salary (£’000)
Total remuneration (£’000)
Basic salary (£’000)
Total remuneration (£’000)
Basic salary (£’000)
Total remuneration (£’000)
Basic salary (£’000)
Total remuneration (£’000)
CEO
£859
£3,888
£820
£4,098
£799
£2,054
£759
£939
£757
£1,639
P25
£28
£30
£23
£26
£22
£28
£23
£24
£15
£24
P50
£31
£41
£16
£38
£26
£37
£32
£33
£28
£34
P75
£32
£55
£41
£55
£21
£54
£34
£49
£28
£52
For 2023, the colleague at P50 is a Level 3 Service Advisor which typically has a lower variable earning opportunity.
The Committee is satisfied that the overall picture presented by the 2023 pay ratios is consistent with the reward policies
for Inchcape’s United Kingdom colleagues. The Committee considers these ratios when making decisions around the
Executive Director pay packages, and Inchcape takes seriously the need to ensure competitive pay packages across
the organisation.
112
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Relative importance of spend on pay
The chart shows the percentage change in total colleague pay expenditure and shareholder distributions (i.e., dividends
and share buybacks) from 2022 to 2023.
Relative importance of spend on pay (£m)
(+39%)
£677
£486
(+44%)
£128
£89
Dividend
2022
2023
£70
(-100%)
£0
Share buyback
Employee remuneration
from continuing operations
The Directors are proposing a final dividend for 2023 of 24.3p per share (2022: 21.3p).
Pay for performance
The graph below shows the total shareholder return (TSR) of the Company over the 10-year period to 31 December 2023.
The FTSE 250 Excluding Investment Trust Index has been chosen as the most suitable comparator group as it is the general
market index in which the Company appears. The table below details the Group Chief Executive’s single figure
remuneration and actual variable pay outcomes over the same period.
Historical TSR performance
Growth in the value of a hypothetical £100 holding over the 10 years to 31 December 2023.
Value of £100 invested at 31 December 2013
Value (£)
200
160
120
80
40
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Inchcape PLC
FTSE 250
Group Chief
Executive
CEO single figure
of remuneration
(£’000)
André Lacroix
Stefan Bomhard
Duncan Tait
2014
5,265
n/a
n/a
2015
2941
2016
n/a
2017
n/a
2018
n/a
2019
n/a
2,906
1,403
3,006
2,430
1,522
2020
n/a
4712
2021
n/a
n/a
2022
n/a
n/a
2023
n/a
n/a
n/a
n/a
n/a
n/a
n/a
468
2,054
4,098
3,888
Annual bonus
outcome
(% of maximum)
LTI vesting3
outcome
(% of maximum)
100% 56.8% 40.3%
67.6% 38.5%
n/a6
0%
98%
100%
99%
68%
n/a4
n/a5
79.6%
58%
40%
n/a7
n/a8
60%
100%
1. The amount for André Lacroix reflects remuneration received until he left the Group in March 2015.
2. The amount for Stefan Bomhard reflects remuneration received until he left the Group in June 2020.
3. LTI includes CIP, ‘normal’ PSP and ‘enhanced’ PSP.
4. Neither André Lacroix nor Stefan Bomhard received a vested award under the 2013 PSP or CIP. However, for those participants who did receive an award, 65.5%
of the 2013 normal PSP vested and there was a 1.31 match for each share invested into the 2013 CIP.
5. Stefan Bomhard did not receive an award under the 2014 PSP or CIP. However, for those participants who did receive an award, 86.5% of the normal PSP vested
and there was a 1.73:1 match for each share invested into the CIP.
6. Stefan Bomhard did not receive a bonus in 2019.
7. Neither Stefan Bomhard nor Duncan Tait received a vested award under the 2018 PSP or CIP. However, for those participants who did receive an award, 28.5%
of the 2018 PSP vested and there was a 0.57:1 match for each share invested into the 2018 CIP.
8. Duncan Tait did not receive an award under the 2019 PSP or CIP. However, for those participants who did receive an award, 40% of the PSP vested and there
was a 0.8:1 match for each share invested into the 2019 CIP.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
113
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Shareholder context
The table below shows the advisory vote on the Directors’ Remuneration Report at the 2023 AGM:
For (including discretionary)
Against
Total votes cast (excluding votes withheld)
Votes withheld
Total votes cast including votes withheld
The table below shows the binding vote on the Directors’ Remuneration Policy at the 2023 AGM:
For (including discretionary)
Against
Total votes cast (excluding votes withheld)
Votes withheld
Total votes cast including votes withheld
Total number
% of
of votes
votes cast
359,565,195
98.89%
4,031,486
363,596,681
194,832
363,791,513
1.11%
100%
Total
of votes
% of
votes cast
96.07%
3.93%
100%
349,306,482
14,288,011
363,594,493
197,020
363,791,513
Withheld votes are not included in the final proxy figures as they are not recognised as a vote in law.
Exit payments during the year
As disclosed in last year’s report, Gijsbert de Zoeten received payment of salary and benefits in accordance with the terms
of his contract until 27 November 2023. These payments were made on a monthly basis.
Payments to past Directors
No payments were made to past Directors in 2023.
Other directorships
The Executive Directors are generally permitted to take one non-executive directorship as long as it does not lead to
conflicts of interest or undue time commitment and is approved in advance by the Nomination Committee and the Board.
Duncan Tait currently serves as a non-executive director on the board of Agilisys Ltd for which he received a fee of £25,000
during 2023.
Advisors to the Committee
Ellason LLP was appointed as the independent remuneration advisor to the Committee effective 1 January 2021 following
a tender process. Ellason LLP was paid a fee of £82,540 for its services relating to directors’ remuneration during 2023. Ellason
LLP did not provide advice or services to the Company on any others matters.
Ellason LLP is a signatory to the Remuneration Consultant Group’s Code of Conduct which sets out guidelines to ensure that
any advice is independent and free of undue influence (this can be found at www.remunerationconsultantsgroup.com).
None of the individual Directors has a personal connection with Ellason LLP.
The Committee is satisfied that the advice it receives is objective and independent and confirms that Ellason LLP does
not have any connection with the Company that may impair their independence. The Committee’s advisors attend
Committee meetings as required and provide advice on remuneration for Executives, analysis of the Directors’
Remuneration Policy and regular market and best practice updates. The advisors report directly to the Committee Chair.
Fees are charged at an hourly rate in accordance with the terms and conditions set out in the relevant engagement letter.
The Directors’ Report on Remuneration was approved by the Board and has been signed by Jane Kingston on its behalf.
JANE KINGSTON
CHAIR OF THE REMUNERATION COMMITTEE
114
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors’ Report for the year ended 31 December 2023
comprises pages 115 to 118 of this report (together with
sections incorporated by reference).
Information required in the Management Report under DTR
4.1.8R can be found in the following sections: a review of
the business and future developments on pages 2 to 55;
principal risks and uncertainties on pages 56 to 64; a
description of the Board’s activities and the structure of
its Committees is given on pages 70 to 71; and a description
of the Group’s internal control framework is given on pages
86 to 88.
Corporate governance statement
The statement of compliance with the UK Corporate
Governance Code 2018 (Code) is given on pages 67 to 69.
The Code is published on the Financial Reporting Council’s
website www.frc.org.uk. Information required under DTR 7
is given in the Corporate Governance Report on pages
66 to 118.
Board of Directors
The Directors of the Company below were in office
during the year and up to the date of signing the
financial statements:
• Nayantara Bali
• Jerry Buhlmann
• Juan Pablo Del Río (joined January 2023)
• Byron Grote (joined January 2023)
• Alex Jensen
• Jane Kingston
• Sarah Kuijlaars
• John Langston (left May 2023)
• Adrian Lewis (joined May 2023)
• Alison Platt (joined January 2024)
• Stuart Rowley (joined July 2023)
• Nigel Stein
• Duncan Tait
In accordance with the Code, all current Directors except
for Nigel Stein and Jane Kingston will stand for election or
re-election at the Annual General Meeting (AGM) on
9 May 2024. The Chairman has reviewed the performance
of each Director and is satisfied that each continues to be
effective and demonstrates commitment to the role. The
appointment and replacement of Directors is governed
by the Company’s Articles of Association (Articles), the
Code, the Companies Act 2006, and related legislation.
The Articles are available on the Company’s website.
The Articles were not amended during the year.
Subject to the Articles, the Code, and relevant legislation,
the business of the Company is managed by the Board
which may exercise all the powers of the Company.
Shareholders
Engagement with shareholders is important to the
Company so that we are able to understand the key
issues of importance to them and get their views on the
business. Any updates regarding the business, including
presentations by the Group Chief Executive, are available
on the Group’s website so that all shareholders have
access to the same Company information at the same
time. Further information on stakeholder engagement
can be found on pages 20 to 22.
As our 20 largest shareholders own over 66% of the
business, shareholder consultations, such as the Directors’
Remuneration Policy, are carried out with this group.
Extending the consultation to all shareholders would not
be cost effective, and shareholders not involved in the
consultation process are encouraged to use the AGM
forum to express their views either by asking questions
or voting on the relevant resolutions.
Conflicts of interest
The Articles permit the Board to authorise any matter which
would otherwise involve a Director breaching their duty
under the Companies Act 2006 to avoid conflicts of interest.
When authorising a conflict of interest, the Board must
do so without the conflicted Director counting as part
of the quorum. In the event that the Board considers it
appropriate, the conflicted Director may be permitted
to participate in the debate but will be permitted neither
to vote nor count in the quorum when the decision is being
agreed. The Directors are aware that it is their responsibility
to inform the Board of any potential conflicts as soon as
possible and procedures are in place to facilitate disclosure.
Directors’ indemnity
A qualifying third-party indemnity (QTPI), as permitted by
the Articles and sections 232 and 234 of the Companies Act
2006, has been granted by the Company to each of the
Directors of the Company.
Under the provisions of the QTPI, the Company undertakes
to indemnify each Director against liability to third parties
(excluding criminal and regulatory penalties) and to pay
Directors’ costs as incurred, provided that they are
reimbursed to the Company if the Director is found guilty
or, in an action brought by the Company, judgement is
given against the Director. The indemnity has been in force
for the year ended 31 December 2023 and until the date
of approval of this report. The indemnity also covers the
statutory directors of the Group’s subsidiaries.
Results and dividends
The Group’s audited consolidated financial statements for
the year ended 31 December 2023 are shown on pages
120 to 220. The level of distributable reserves is sufficient
to pay a dividend.
The Board recommends a final ordinary dividend of 24.3p
per ordinary share. If approved at the 2024 AGM, the
final ordinary dividend will be paid on 17 June 2024 to
shareholders registered in the books of the Company at
the close of business on 3 May 2024.
The Company may, by ordinary resolution, declare a
dividend not exceeding the amount recommended by the
Board. Subject to the Companies Act 2006, the Board may
pay interim dividends when the financial position of the
Company, in the opinion of the Board, justifies its payment.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
115
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
DIRECTORS’ REPORT
CONTINUED
Share capital
As at 31 December 2023, the Company’s issued share
capital of £41,300,713 comprised 413,007,132 ordinary shares
of 10p. Holders of ordinary shares are entitled to receive the
Company’s Annual Report and Accounts, to attend and
speak at General Meetings and to appoint proxies and
exercise voting rights. The shares do not carry any special
rights with regard to control of the Company. The rights are
set out in the Articles.
Restrictions on transfer of securities
There are no restrictions or limitations on the holding of
ordinary shares and no requirements for prior approval
of any transfers. There are no known arrangements under
which financial rights are held by a person other than
the holder of the shares. Shares acquired through the
Company share schemes rank pari passu with the shares
in issue and have no special rights.
Authority to purchase shares
At the Company’s AGM on 18 May 2023, the Company was
authorised to make market purchases of up to 41,300,713
ordinary shares (representing approximately 10% of its
issued share capital).
In the year ended 31 December 2023, the Company did
not purchase any shares for cancellation.
The Directors have authority to issue and allot ordinary
shares pursuant to article 9 of the Articles and shareholder
authority is requested at each AGM. The Directors have
authority to make market purchases for ordinary shares
and this authority is also renewed annually at the AGM.
Interests in voting rights
Notifications received by the Company in accordance with
DTR 5 are published on a Regulatory Information Service
and are available on the Company’s website. During the
year, the Company had been notified of the following
interests amounting to more than 3% of the Company’s
issued share capital pursuant to the Financial Conduct
Authority’s Disclosure and Transparency Rules.
As at 31 December 2023
As at 4 March 2024
Number of
voting
rights held
Percentage
of voting
rights held
Number
of voting
rights held
Percentage
of voting
rights held
12,837,700
3.11% 12,837,700
3.11%
12,837,700
3.11% 12,837,700
3.11%
12,837,702
3.11% 12,837,702
3.11%
Not
disclosable
Not
disclosable
<5%
<5%
15,762,376
3.82% 15,762,376
3.82%
Not
disclosable
Not
disclosable
<5%
<5%
Shareholder
Cerro Mayo
SpA*
DT Huillinco
SpA*
Peñuelas
Corp SpA*
JPMorgan
Asset
Management
Holdings Inc
Polaris Capital
Management
LLC
BlackRock Inc
The Capital
Group
Companies
Inc
*
Under the Derco acquisition, the Derco family owners received newly
issued ordinary shares, resulting in them owning over 9.3% of the Company’s
share capital.
116
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Restrictions on voting rights
There are no restrictions on voting rights.
Employee benefit trust
The Executive Directors of the Company, together with
other colleagues of the Group, are potential beneficiaries
of the Inchcape Employee Trust (Trust) and, as such, are
deemed to be interested in any ordinary shares held by the
Trust. At 31 December 2023, the Trust’s shareholding totalled
1,008,058 ordinary shares.
All authorised requests to exercise shares are processed
by the Trust on behalf of the relevant employees.
In respect of LR 9.8.4R(12) and (13), the trustee of the Trust
agrees to waive dividends payable on the shares it holds
for satisfying awards under the various share plans.
Directors’ interests
The table showing the beneficial interests, including family
interests, in the ordinary shares of the Company of the
persons who were Directors at 31 December 2023 is shown
in the Directors’ Report on Remuneration on page 111.
There have been no changes to the interests or number of
shares held by each Director between 31 December 2023
and 4 March 2024.
Change of control
The Company is not party to any significant agreements
that would take effect, alter, or terminate upon a change
of control of the Company following a takeover bid
apart from certain of the Group’s third-party funding
arrangements which would terminate upon a change
of control of the Company, such as the Group’s revolving
credit facility agreement. Further details are given in note
22 to the financial statements on pages 179 to 180.
The Group’s relationships with its mobility company partners
are managed at Group level, but the relevant contracts
are entered into at a local level with day-to-day
management being led by each operating business.
Certain contracts may terminate on a change of control
of the local contracting company.
The Company does not have agreements with any Director
or colleague providing compensation for loss of office
or employment that occurs because of a takeover bid,
except for provisions in the rules of the Company’s share
schemes which may result in options or awards granted
to colleagues to vest on a takeover.
Transactions with Directors
No transaction, arrangement, or agreement, other than
remuneration, required to be disclosed in terms of the
Companies Act 2006 and IAS 24, ‘Related Parties’ was
outstanding at 31 December 2023, or was entered into
during the year for any Director and/or connected person
other than lease payments of £7m (2022: £nil) which were
made to companies connected with Juan Pablo Del Río.
Streamlined Energy and Carbon Reporting Regulations
The annual quantity of emissions of carbon dioxide
equivalent from activities for which the Company is
responsible, and the methodologies and ratios used
to calculate this, are shown on page 53.
20,597,812
4.99% 20,597,812
4.99%
Principal financial risk factors
These risks are shown on pages 56 to 64.
Other information – Listing Rules
The information required to be disclosed by LR 9.8.4R can be found on the pages set out below:
Section Information
1
2
4
5
6
7
8
9
10
11
12
13
14
Interest capitalised
Publication of unaudited financial information
Details of long-term incentive schemes
Waiver of emoluments by a director
Waiver of future emoluments by a director
Non pre-emptive issues of equity for cash
Non pre-emptive issue by a major subsidiary undertaking
Parent participation in a placing by a listed subsidiary
Contracts of significance
Provision of services by a controlling shareholder
Shareholder waiver of dividends
Shareholder waiver of future dividends
Agreements with controlling shareholders
Page
Not material to the Group
113 (historical TSR performance)
108 to 110
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
116
116
Not applicable
Financial instruments
The information required under Schedule 7 of the Large
and Medium-sized Companies and Groups (Accounts
and Reports) Regulations 2008 in respect of financial
instruments is given in note 23 to the financial statements
on pages 181 to 188.
Branches outside the UK
The Company does not have any branches outside the UK.
Events after the reporting period
None.
Business relationships
Having positive relationships with our mobility company
partners, our main suppliers, and our customers is
imperative for the long-term success of the Company.
Our mobility company partner relationships are key to
every part of our value chain and the length of these
relationships, which are given on page 7, is testament
to this strength.
We provide access to automotive ownership and support
services throughout the customer journey and aim to
deliver the best experiences for customers in our industry
globally. The Board and management engage with
customers through:
• receiving daily reporting of customer feedback on
www.reputation.com;
• analysing sales force customer journey management
platform; and
• ongoing surveys at market level.
Political donations
The Company did not make any political donations in
2023 and does not intend to make any political donations
in 2024.
Colleagues and colleague involvement
The Company is committed to a policy of treating all its
colleagues and job applicants equally. We are committed
to the employment of people with disabilities and will
interview those candidates who meet the minimum
selection criteria.
We provide training and career development for our
colleagues, tailored where appropriate to their specific
needs, to ensure they achieve their potential. If an
individual becomes disabled while in our employment, we
will do our best to ensure continued development in their
role, including consulting them about their requirements,
making appropriate adjustments and providing suitable
alternative positions if required.
Successfully delivering the Accelerate strategy requires
us to evolve both what we do and how we do things. This
includes continuing to build the winning culture we need to
help deliver on our ambitions, a culture that is built through
effective teamwork, fresh thinking, a focus on delivery, and
putting our customers at the centre of everything we do.
In support of this, our performance framework, called
One Inchcape Values & Behaviours, sets out the values
and behaviours we all need to live by at Inchcape. The
Company also has various colleague policies in place
covering a wide range of issues, such as family friendly
policies, employment rights and equal opportunities.
Policies are implemented at a local level and comply
with any relevant legislation in that market. All policies
are available on the Group’s intranet and compliance
is monitored at local level.
The Group’s bonus and long-term incentive schemes are
designed to encourage involvement in the Company’s
performance. United Kingdom colleagues are eligible
to join the SAYE scheme, which is offered annually. Further
details can be found in the Directors’ Report on
Remuneration on pages 92 to 114.
Colleague communication
Townhall meetings are held in each region on a regular
basis and also following the release of any financial
updates by the Company. The townhall meetings provide
colleagues with information on the Group’s performance
and an opportunity for consulting colleagues on new
initiatives or other matters that concern them. The Group’s
global intranet also provides a means of communicating
important issues to colleagues.
The colleague experience survey is the primary tool for
obtaining the views of colleagues and the results of the
survey are reported to the CSR Committee on an annual
basis. The Chair of the CSR Committee is the designated
Director for communicating the views of colleagues to the
Board and she reports the findings to the Board following
each meeting.
The consultation enables the Board to gain an
understanding of how the colleague experience is
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
117
GOVERNANCEFINANCIAL STATEMENTSSTRATEGIC REPORT
DIRECTORS’ REPORT
CONTINUED
perceived and what actions can be taken to enhance
this experience so colleagues feel challenged, excited,
engaged, and supported in their roles. Further details can
be found in the CSR Committee Report on pages 90 to 91.
Directors’ responsibilities
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance
with applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Group financial statements have been properly prepared
in accordance with United Kingdom adopted international
accounting standards and International Financial
Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board (IASB) and parent company
financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 ‘Reduced
Disclosure Framework’, and applicable law).
Under company law the Directors must not approve the
financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Group and
parent company and of the profit or loss of the Group and
parent company for that period. In preparing the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable United Kingdom Accounting
Standards have been followed, subject to any material
departures disclosed and explained in the financial
statements; and
• make judgements and accounting estimates that are
reasonable and prudent; and prepare the financial
statements on the going concern basis unless it is
inappropriate to presume that the Group and parent
company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group and parent company’s transactions. The
Directors are also responsible for disclosing with reasonable
accuracy at any time the financial position of the Group
and parent company, and enabling them to ensure that
the financial statements and the Directors’ Report on
Remuneration comply with the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of the
IAS Regulation. The Directors are also responsible for
safeguarding the assets of the Group and parent company
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors
are responsible for the maintenance and integrity of
the parent company’s website. Legislation in the United
Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
The Directors consider that the Annual Report and
Accounts, taken as a whole, is fair, balanced, and
understandable and provides the information necessary
for shareholders to assess the Group and parent company’s
performance, business model and strategy. Each of
the Directors, whose names and functions are listed in
the Board of Directors, confirm that, to the best
of their knowledge:
• the parent company financial statements, which have
been prepared in accordance with United Kingdom
118
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101
‘Reduced Disclosure Framework’, and applicable law),
give a true and fair view of the assets, liabilities, financial
position, and loss of the Company;
• the Group financial statements, which have been
properly prepared in accordance with United Kingdom
adopted international accounting standards and
International Financial Reporting Standards (IFRSs) as
issued by the International Accounting Standards Board
(IASB), give a true and fair view of the assets, liabilities,
financial position, and profit of the Group; and
• the Directors’ Report includes a fair review of the
development and performance of the business and the
position of the Group and parent company, together
with a description of the principal risks and uncertainties
that it faces.
The Directors considered the key messages contained
in the Strategic Report along with the disclosures made
throughout to ensure that they are consistent, transparent
and a true reflection of the business. The Directors also
reviewed supporting documentation which addresses
specific statements made in the report and the evidence
to support those statements. Following this review, the
Directors consider, when taken as a whole, that the
Annual Report and Accounts is fair, balanced, and
understandable and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy.
Going concern
Having assessed the principal risks and the other matters
discussed in connection with the viability statement on
page 64, the Directors consider it appropriate to adopt
the going concern basis of accounting in the financial
statements for the next 12 months.
Auditor and disclosure of information to the auditor
The auditor, Deloitte LLP, has indicated its willingness to
continue in office. A resolution to reappoint Deloitte as
auditor will be proposed at the AGM. As far as the Directors
are aware there is no relevant audit information of which
the Company’s auditor is unaware. The Directors have
taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any
relevant audit information and to establish that the
Company’s auditor is aware of that information. This
confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the
Companies Act 2006.
Annual General Meeting
The AGM will be held at 11.00 a.m. on Thursday 9 May 2024
at the Royal Automobile Club, 89 Pall Mall, London SW1Y
5HS. The notice convening the meeting and the resolutions
to be put to the meeting, together with the explanatory
notes, are given in the Circular to all shareholders.
The Directors’ Report was approved by the Board and
has been signed by the Group Company Secretary of
the Company.
TAMSIN WATERHOUSE
GROUP COMPANY SECRETARY
FINANCIAL
STATEMENTS
120 Independent auditor’s report to the members
of Inchcape plc
132 Consolidated income statement
133 Consolidated statement of comprehensive income
134 Consolidated statement of financial position
135 Consolidated statement of changes in equity
136 Consolidated statement of cash flows
137 Accounting policies
147 Notes to the financial statements
200 Alternative performance measures
203 Five year record
204 Company statement of financial position
205 Company statement of changes in equity
206 Company accounting policies
208 Notes to the Company financial statements
OTHER INFORMATION
221 Shareholder information
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
119
119
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCHCAPE PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
1. OPINION
In our opinion:
• the financial statements of Inchcape plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) give a true and fair
view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s profit
for the year then ended;
• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and Parent Company statements of financial position;
• the consolidated and Parent Company statements of changes in equity;
• the consolidated statement of cash flows;
• the accounting policies; and
• the related Notes 1 to 33 to the consolidated financial statements and the related notes 1 to 12 to the Parent Company
financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable
law and United Kingdom adopted international accounting standards. The financial reporting framework that has been
applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting
Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard
as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services provided to the Group and Parent Company for the year are disclosed in Note 3 to
the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical
Standard to the Group or the Parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
120
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
3. SUMMARY OF OUR AUDIT APPROACH
Key audit matters
The key audit matters that we identified in the current year were:
• UK used vehicle inventory valuation
• The integration of the Derco Group
Both key audit matters were newly identified in the year.
Materiality
Scoping
Significant changes
in our approach
The materiality that we used for the Group financial statements was £25.0m (2022: £26.8m), which was
determined on the basis of profit before tax from continuing operations adjusted for adjusting items
as defined in note 2 (“adjusted profit before tax”). This represented 5.0% of adjusted profit before tax
from continuing operations.
Components in scope for full scope or specified account balance procedures in the current
period comprised 86% (2022: 76%) of Group revenue, 87% (2022: 76%) of Group profit before tax
from continuing operations and 84% (2022: 80%) of Group net assets.
Significant changes to our approach include:
• Identification of UK used vehicle inventory valuation as a new key audit matter due to price
volatility in used vehicle values in the UK market.
• Amending the key audit matter surrounding the Derco acquisition in 2022 to focus on the
integration of the Derco business. In the prior period this key audit matter focussed on the
acquisition of the Derco Group.
• Removal of Central America indefinite-life asset impairment and disposal of the Group’s operations
in Russia as key audit matters. These matters primarily related to the change in scale and scope
of the Group’s operations in 2022 and the impact that these changes had on performance
in the year.
• The materiality benchmark was changed from using net assets in the prior year to adjusted profit
before tax from continuing operations in the current year. The use of net assets in the prior period
was due to the acquisition of the Derco Group on 31 December 2022, which impacted the Group’s
balance sheet only.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
121
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCHCAPE PLC
CONTINUED
4. CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the going
concern basis of accounting included:
• Understanding the Group’s process and related controls in the assessment of going concern;
• Assessing the Group’s available committed financing facilities including the nature of facilities, repayment terms
and covenants;
• Assessing the impact of short-term fluctuations in local market trading conditions, the impact of Electric Vehicle (EV)
transition, inflation and political uncertainties on the forecast cashflows;
• Evaluating the reasonableness of assumptions used in the forecasts;
• Assessing the appropriateness of the sensitivities performed by management, including performing additional sensitivities
as part of our challenge thereon;
• Performing consistency and accuracy checks over the going concern model including checking the mathematical
and clerical accuracy;
• Testing the consistency of the forecast cash flows with the forecasts prepared for the impairment models; and
• Assessing the disclosures relating to going concern in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant
sections of this report.
122
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
5. KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) that we identified. These matters included those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1. UK used vehicle inventory valuation
Key audit matter
description
Account Balances: Inventory. Refer to the Inventory policy in the Accounting Policies section on
page 142 and Note 17 on page 176.
The Group recorded total finished goods and merchandise inventory of £2,594m as at 31 December
2023 (2022: £2,294m) with an associated inventory provision recognised of £99m (2022: £58m).
A material proportion of this inventory relates to used vehicles in the Group’s UK business. Local market
volatility has seen used vehicle residual values fall during 2023 in the UK, predominantly within the
electric vehicle category.
IAS 2 Inventories states inventories should be recognised at the lower of cost and net realisable value.
Management estimation is required to determine the appropriate level of provisioning against the
valuation of used vehicles, and accordingly we have identified a key audit matter in relation to the
judgements applied by management in the valuation of used vehicles within Inchcape’s UK business.
The provision recognised against the used vehicles is based on the associated ageing and expecting
selling price of the inventory.
Our procedures in response to the key audit matter included:
• obtaining an understanding of the relevant controls used by the Group in determining the
appropriate level of inventory provisioning;
• challenging the Group’s inventory provision policy with reference to incurred losses experienced,
relevant industry knowledge and external forecasts;
• performing analytical procedures to assess the period over period movement in inventory provision
by brand within the UK business with reference to current market dynamics;
• validating the ageing profile of inventory, which is used to determine inventory provisions;
• recalculation of the provision in local markets using location-specific external data and
industry knowledge;
• testing the valuation of inventory with reference to vehicle valuations and post year-end sales;
• assessing the appropriateness of the disclosures within Note 17 of the financial statements.
How the scope
of our audit
responded to the
key audit matter
Key observations
Based on our procedures we are satisfied that the valuation of used inventory in the UK
is appropriate.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
123
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCHCAPE PLC
CONTINUED
5.2. The integration of the Derco Group
Key audit matter
description
Account Balances: impacting all financial statement accounts. Refer to the Audit Committee
report page 85, Adjusting items note 2 on page 150 and Acquisitions and disposals note 28b
on page 195
How the scope
of our audit
responded to the
key audit matter
The acquisition and integration of the Derco Group has led to a significant increase in the size and
scale of the Group’s operations in South America (within the Americas operating segment).
We identified the integration of Derco as a key audit matter in the current year due to the level
of audit effort associated with assessing the consequences on financial statements including:
• Adjustments to the opening balance sheet in accordance with IFRS 3 Business Combinations
including the recording of measurement period fair value adjustments;
• Consideration of the balance sheet classification of new supplier financing arrangements (as either
trade and other payables or borrowings);
• The first-time presentation and consolidation of the Derco performance within the Group
financial statements;
• Concluding on the identification of cash generating units (“CGUs”) within the acquired business for
the purposes of undertaking the annual impairment review of the acquired indefinite-life assets;
• The reassessment of the Group’s operating and reportable segments in accordance with IFRS 8
Operating Segments; and
• The presentation and reporting of integration costs as adjusting items.
Our procedures in response to the key audit matter included:
• obtaining an understanding of relevant controls in the Derco business within key processes
including completeness of revenue, valuation of inventory and consolidation in respect of
the Group;
• validating the completeness and appropriateness of measurement period closeout adjustments
posted in 2023 in relation to the acquisition of the Derco businesses;
• assessing the classification of supplier financing arrangements through review of agreements with
suppliers and providers of finance;
• assessing the adjustments recognised on consolidation of the Derco business in the Group financial
statements including: IFRS 3 measurement period adjustments, the unwinding of fair value
adjustments in the period, and consolidation journals;
• assessing the level at which impairment is assessed with reference to IAS 36;
• evaluating the determination of operating and reportable segments;
• evaluating the appropriateness of items identified as adjusting for the purposes of calculating
adjusted performance measures presented as KPIs; and
• evaluating the appropriateness of judgements and decisions made by management in making
accounting estimates; including performing a retrospective analysis of management judgements
and assumptions related to significant accounting estimates reflected in the financial statements of
the prior year.
Key observations
We are satisfied with the results of our audit procedures in respect of the integration of the
Derco business.
124
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
6. OUR APPLICATION OF MATERIALITY
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in
planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for
determining
materiality
Group financial statements
£25.0 million (2022: £26.8 million)
Materiality was determined on the basis of adjusted profit
before tax from continuing operations. This represented 5.0%
of adjusted profit before tax from continuing operations
(2022: 1.7% of net assets).
We have changed the benchmark in the year. In the prior
period net assets were used due to the acquisition of the Derco
Group on 31 December 2022, which had an impact on the
balance sheet only. In the current year the impact of this
acquisition is seen in both the balance sheet position and
performance of the business and therefore we have
concluded a profit-based metric is more appropriate in the
current year.
Parent Company financial statements
£9.4 million (2022: £11.9 million)
Parent Company materiality
equated to 1.0% of net assets
(2022: 1.0% of net assets).
Rationale for
the benchmark
applied
Adjusted profit before tax is one of the key metrics
communicated by management in the Group’s results
announcements and therefore is considered to be
an appropriate benchmark.
Refer to Note 2 Adjusting Items for further details of adjusting
items and management’s reconciliation of this alternative
performance measure to the Group’s statutory measure.
As the Parent Company is non-
trading, operates primarily as a
holding company for the Group’s
trading entities, and is not profit
orientated, we consider the net
asset position to be the most
appropriate benchmark to use.
Adjusted PBT
£502m
Adjusted PBT
Group materiality
Group materiality £25m
Component materiality
range £7m to £10m
Audit Committee
reporting threshold £1.3m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
65% (2022: 65%) of Group materiality
In determining performance materiality, we considered
the following factors:
• our cumulative experience from prior year audits,
and management’s willingness to correct
misstatements identified;
• our risk assessment, including our understanding of the entity
and its environment;
• our risk assessment arising from the first-time consolidation of
the income statement of the Derco Group in the Group
financial statements; and
• our assessment of the Group’s and Parent Company’s
control environment.
Parent Company financial statements
70% (2022: 70%) of Parent Company
materiality
In determining performance
materiality, we considered the
following factors:
• our cumulative experience from
prior year audits, including the
low value of misstatements
identified in prior periods and
management’s willingness to
correct misstatements identified;
• our risk assessment, including our
understanding of the entity, its
environment; and
• our assessment of the
Parent Company’s overall
control environment.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
125
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCHCAPE PLC
CONTINUED
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £1.3m (2022:
£1.3 million, with a lower threshold of £0.9 million used in 2022 for the legacy Inchcape Group), as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the financial statements.
7. AN OVERVIEW OF THE SCOPE OF OUR AUDIT
7.1. Identification and scoping of components
In selecting the components which are in scope for audit procedures to be performed as part of the Group audit,
we consider:
• the inherent risk in each of the markets that the Group operates;
• the Group’s control environment;
• the significance of identified risks in each of the components;
• the financial significance of the component to the Group’s revenue, profit and net assets; and
• the nature of any acquisitions and disposals within the year.
The components which were subject to full audit procedures were in:
• Australia
• Belgium
• Bolivia
• Chile
• Colombia
• Costa Rica
• Ethiopia
• Greece
• Hong Kong
• Peru
• Poland
• Romania
• Singapore
• United Kingdom
These components were selected due to their significance to the financial statements either due to scale or risk.
To introduce variability and unpredictability into our audit procedures component auditors also performed audits of
specific account balances in Barbados and Brunei.
In addition to the work performed at a component level, the Group audit team performed audit procedures on the Parent
Company and consolidated financial statements, corporate activities such as treasury and pensions, goodwill and
indefinite-life intangible asset impairment, litigation provisions, the Group consolidation, going concern assessment and
financial statement disclosures. The Group audit team also performed analytical procedures in respect of components
that were not in scope for full audit procedures.
The range of component materialities applied was £7m to £10m (2022: £2 million to £14 million). The components in scope
for full or specified balance procedures accounted for:
• 86% (2022: 76%) of the Group revenue;
• 87% (2022: 74%) of Profit before tax; and
• 84% (2022: 80%) of Group net assets.
REVENUE
1%
14%
2%
13%
8%
8%
PROFIT BEFORE TAX
NET ASSETS
16%
12%
85%
85%
84%
Full audit scope
Specified audit procedures
Residual scope
Full audit scope
Specified audit procedures
Review at group level
Full audit scope
Residual scope
126
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
7.2. Our consideration of the control environment
We have considered the control environment of the Group, which is also discussed within the Audit Committee Report on
page 86, and encompasses controls relating to the financial reporting process, preparation of consolidated Group
accounts, operational and compliance controls and risk management processes.
We have also considered the key Information Technology (IT) controls in place designed to address the IT risks faced by the
Group and how these relate to the entity’s financial reporting processes. Management have continued to consolidate and
centralise key IT systems and support functions across the Group. We have reflected this in our centralised testing approach
of IT controls where practicable.
This year represented the third year of the Group’s implementation of the Global Business Services organisation. We
considered the ongoing impact of this on our audit, with our Group and component teams assessing the impact on
the financial process and control environment.
We have not taken a controls reliance approach across the Group. However, some components have been able to take
reliance over specific controls over certain balances by evaluating the operating effectiveness of relevant controls at the
component level.
7.3. Our consideration of climate-related risks
The Group is exposed to the impacts of climate change on its business and operations as highlighted in the Task Force
on Climate-Related Financial Disclosures (TCFD) report on page 40, viability statement on page 64, the principal risks
on page 57, and in Accounting Policies (Key Sources of Estimation Uncertainty) on page 145.
We have obtained management’s climate-related risk assessment and held discussions with management to understand
the process of identifying and quantifying climate-related risks, the determination of mitigating actions and the impact on
the Group’s financial statements. We have engaged our climate specialists in our assessment to consider broader industry
and market-wide practice.
We completed an independent climate-based risk assessment to consider the potential impact of climate change on the
Group’s financial statements, incorporating both business specific knowledge and wider industry awareness, including the
extent to which climate change considerations have been included in the Group’s forecast financial information. We used
this to assess the completeness of the Group’s identified risks and to develop audit procedures to respond to these risks,
in particular as part of our work in relation to impairment and long-term viability, as well as considering climate-related
risks throughout our risk assessments on each financial statement account balance.
In considering the disclosures presented as part of the Strategic Report, we engaged our climate specialists to review
the TCFD disclosures in the financial statements and recommendations made by both the Task Force and FRC as set out
in their thematic reviews. We have also assessed whether these disclosures reflect our understanding of the Group’s
approach to climate.
7.4. Working with other auditors
We engaged component auditors from Deloitte member firms to perform procedures at the components under our
direction and supervision. We issued detailed instructions to the component auditors and held planning meetings, interim
update meetings and year end close meetings with each component team.
We have continued our component visits on a risk focused and rotational basis to oversee the work performed by our
component auditors. The component audit teams visited in their location in the current period were: Chile, Costa Rica,
Hong Kong, Singapore, Belgium and the UK. Teams from Bolivia, Peru and Colombia were met in person at the year.
In conjunction with the on-site visits, frequent calls were held between the Group and component teams throughout the
year and remote access to relevant documents was provided. Senior members of the Group audit team were focused on
overseeing the role of the component audit teams, so that a consistent audit approach is applied to the operations in the
Group’s UK and international businesses.
Prior to the commencement of our detailed audit work we held virtual planning meetings with our component teams on
a regional basis, led by the Group audit team. The purpose of these planning meetings was to ensure a good level of
understanding of the Group’s businesses, its core strategy and a discussion of the significant risks and workshops on our
planned audit approach.
The audit visits and other communications by the Group audit team were timed to enable us to be involved during the
planning and risk assessment process in addition to the execution of detailed audit procedures. During our visits we
attended key meetings with component management and auditors, reviewed and challenged component auditor
working papers in the underlying audit files and component reporting. In addition, we attended component audit closing
calls and other key meetings with management throughout the 2023 audit process.
As the Group has diversified geographically the Group audit team has enhanced the activities performed to direct and
supervise component audit teams by:
• identifying components of greater risk and increasing the seniority of the audit team and oversight at the
component level correspondingly including having a dedicated senior team member performing oversight
of the America’s segment;
• holding ‘Audit Academy’ sessions to refresh component audit teams on key areas of focus and extended component
visits by the Group audit team at components where greater risk exists;
• providing additional guidance provided to all component audit teams to identify areas of judgement and improve
the quality and consistency of the audit procedures performed; and
• onboarding Spanish-speaking team members to the Group engagement team to perform oversight over component
teams based in the America’s.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
127
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCHCAPE PLC
CONTINUED
8. OTHER INFORMATION
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears
to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going
concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
10. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
128
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
11. EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance including the design of the
Group’s remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
• the results of our enquiries of management, internal audit, in house legal counsel the Directors and the audit committee
about their own identification and assessment of the risks of irregularities, including those that are specific to the
automotive sector;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures
relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances
of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected
or alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
• the matters discussed among the audit engagement team including significant component audit teams and relevant
internal specialists, regarding how and where fraud might occur in the financial statements and any potential indicators
of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for
fraud and identified the greatest potential for fraud in judgements relating to UK used vehicle inventory valuation. In
common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of
management override of controls.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on
provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures
in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act,
Listing Rules, pensions legislation, environmental and vehicle legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the
financial statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid
a material penalty.
11.2. Audit response to risks identified
As a result of performing the above, we identified UK used vehicle inventory valuation as a key audit matter related
to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also
describes the specific procedures we performed in response to these key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance
with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential
litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with tax authorities; and
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries
and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of
a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and significant component audit teams and remained alert to any indications of fraud or
non-compliance with laws and regulations throughout the audit.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
129
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INCHCAPE PLC
CONTINUED
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
12. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the part of the Directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in
the course of the audit, we have not identified any material misstatements in the strategic report or the Directors’ report.
13. CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the group’s compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained
during the audit:
• the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified set out on page 118;
• the Directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and
why the period is appropriate set out on page 64;
• the Directors’ statement on fair, balanced and understandable set out on page 89;
• the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out
on page 56;
• the section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 86; and
• the section describing the work of the audit committee set out on page 82.
14. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration
have not been made or the part of the Directors’ remuneration report to be audited is not in agreement with the
accounting records and returns.
We have nothing to report in respect of these matters.
130
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
15. OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS
15.1. Auditor tenure
Following the recommendation of the audit committee, we were appointed by members on 25 May 2018 to audit the
financial statements for the year ending 31 December 2018 and subsequent financial periods. The period of total
uninterrupted engagement including previous renewals and reappointments of the firm is 6 years, covering the years
ending 31 December 2018 to 31 December 2023.
15.2. Consistency of the audit report with the additional report to the audit committee
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance
with ISAs (UK).
16. USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as
a body, for our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R,
these financial statements will form part of the Electronic Format Annual Financial Report filed on the National Storage
Mechanism of the FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over
whether the Electronic Format Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
DAVID GRIFFIN FCA
SENIOR STATUTORY AUDITOR
For and on behalf of Deloitte LLP
Statutory Auditor
London, UK
4 March 2024
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
131
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
Continuing operations
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Share of profit after tax of joint ventures and associates
Profit before finance and tax
Finance income
Finance costs
Profit before tax from continuing operations
Tax
Profit for the year from continuing operations
Loss from discontinued operations
Total profit/(loss) for the year
Profit/(loss) attributable to:
Owners of the parent
Non-controlling interests
Earnings per share from continuing operations attributable to the owners
of the parent
Basic earnings per share (pence)
Diluted earnings per share (pence)
Earnings/(loss) per share attributable to the owners of the parent
Basic earnings/(loss) per share (pence)
Diluted earnings/(loss) per share (pence)
Alternative performance measures:
Operating profit from continuing operations
Adjusting items within net operating expenses:
Acquisition and integration costs
Disposal of businesses
Accelerated amortisation and net impairment reversals
Gain on pension indexation
Adjusted operating profit from continuing operations
Share of profit after tax of joint ventures and associates
Adjusted profit before finance costs and tax from continuing operations
Net finance costs
Adjusting items within net finance costs:
Net monetary loss on hyperinflation
Interest on dividend payments to former shareholders of Derco
Adjusted profit before tax from continuing operations
Tax on adjusted profit
Adjusted profit after tax from continuing operations
Adjusted earnings per share from continuing operations
Basic adjusted earnings per share
Diluted adjusted earnings per share
2023
£m
11,447
(9,508)
1,939
(1,320)
619
1
620
52
(259)
413
(130)
283
–
283
270
13
283
65.6p
64.8p
65.6p
64.8p
619
50
50
–
–
–
669
1
670
(207)
39
29
10
502
(140)
362
Notes
1,3
3
13
6
6
7
28(c)
8
8
2
2
8
2022
£m
8,133
(6,808)
1,325
(925)
400
–
400
21
(88)
333
(98)
235
(241)
(6)
(11)
5
(6)
61.1p
54.6p
(2.9)p
(2.5)p
400
11
42
(14)
3
(20)
411
–
411
(67)
29
29
–
373
(97)
276
84.8p
83.7p
72.0p
64.4p
The notes on pages 137 to 199 are an integral part of these consolidated financial statements.
132
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
Profit/(loss) for the year
Other comprehensive income/(loss):
Items that will not be reclassified to the consolidated income statement
Retirement benefit schemes:
– net actuarial losses
– deferred tax on actuarial losses
Items that may be or have been reclassified subsequently to the consolidated
income statement
Cash flow hedges:
– net fair value (losses)/gains
– tax on cash flow hedges1
Investments held at fair value:
– net fair value losses
Deferred tax on taxation losses
Foreign currency translation:
– exchange differences on translation of foreign operations
– exchange differences on translation of discontinued operations
– recycling of foreign currency reserve
Adjustments for hyperinflation
Other comprehensive (loss)/income for the year
Total comprehensive income for the year
Total comprehensive income attributable to:
– Owners of the parent
– Non-controlling interests
Total comprehensive income/(loss) arising from:
– Continuing operations
– Discontinued operations
Notes
5
16
25
16
14
16
25
25,28(b)
25
25
2023
£m
283
(20)
–
(20)
(48)
17
(3)
(1)
(133)
–
(1)
36
(133)
(153)
130
120
10
130
130
–
2022
£m
(6)
(12)
–
(12)
9
(7)
(2)
–
133
19
99
49
300
288
282
271
11
282
405
(123)
1. Taxation in other comprehensive income in respect of cashflow hedges is comprised of a deferred tax credit of £18m (2022: charge of £9m) offset by a current
tax charge of £1m (2022: credit of £2m).
The notes on pages 137 to 199 are an integral part of these consolidated financial statements.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
133
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in joint ventures and associates
Financial assets at fair value through other comprehensive income
Derivative financial instruments
Trade and other receivables
Deferred tax assets
Retirement benefit asset
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Current tax assets
Cash and cash equivalents
Assets held for sale
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Provisions
Lease liabilities
Borrowings
Non-current liabilities
Trade and other payables
Provisions
Derivative financial instruments
Deferred tax liabilities
Lease liabilities
Borrowings
Retirement benefit liability
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Merger reserve
Other reserves
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Notes
10
11
12
13
14
23
15
16
5
17
15
23
18
19
20
23
21
12
22
20
21
23
16
12
22
5
24
25
25
26
2023
£m
1,271
893
364
21
1
1
49
105
84
2,789
2,718
835
38
56
689
14
4,350
7,139
(3,150)
(88)
(81)
(69)
(81)
(652)
(4,121)
(69)
(39)
(9)
(267)
(359)
(638)
(17)
(1,398)
(5,519)
1,620
42
147
143
312
(63)
940
1,521
99
1,620
2022
£m
1,174
737
419
22
3
17
54
80
104
2,610
2,376
817
37
41
1,064
19
4,354
6,964
(2,898)
(39)
(88)
(57)
(83)
(546)
(3,711)
(60)
(47)
(1)
(255)
(416)
(896)
(11)
(1,686)
(5,397)
1,567
38
147
143
316
69
820
1,533
34
1,567
The notes on pages 137 to 199 are an integral part of these consolidated financial statements. The consolidated financial
statements on pages 132 to 136 were approved by the Board of Directors on 4 March 2024 and were signed on its behalf by:
DUNCAN TAIT
GROUP CHIEF EXECUTIVE
ADRIAN LEWIS
GROUP CHIEF FINANCIAL OFFICER
134
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Share
capital
£m
39
Share
Premium
£m
147
Capital
redemption
reserve
£m
142
Notes
Merger
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
equity
attributable
to owners of
the parent
£m
24
(1)
At 1 January 2022
(Loss)/profit for the year
Other comprehensive
income/(loss) for the year
Total comprehensive
income/(loss) for the year
Hedging gains and losses
transferred to inventory
Written put option
Shares to be issued
Non-controlling interests
on acquisition of
subsidiaries
Share-based payments,
net of tax
4,16
Share buyback
programme
Purchase of own shares
by the Inchcape
Employee Trust
Dividends:
– Owners of the parent
9
– Non-controlling
interests
At 1 January 2023
Profit for the year
Other comprehensive
(loss)/income for the year
Total comprehensive
income/(loss) for the year
Hedging gains and losses
transferred to inventory
Written put option
Shares issued
Acquisition of non-
controlling interests
Non-controlling interests
on acquisition of
subsidiaries
Share-based payments,
net of tax
Purchase of own shares
by the Inchcape
Employee Trust
Dividends:
28(b)
24,25
28(b)
28(a)
4,16
– Owners of the parent
9
– Non-controlling
interests
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
316
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
38
147
143
316
–
–
–
–
–
4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(4)
–
–
–
–
–
–
(228)
1,009
1,109
–
(11)
(11)
294
(12)
282
294
(23)
271
3
–
–
–
–
–
–
–
–
69
–
–
(13)
–
–
10
3
(13)
316
–
10
(70)
(70)
(4)
(4)
(89)
(89)
–
820
270
–
1,533
270
(130)
(20)
(150)
(130)
250
120
(2)
–
–
–
–
–
–
–
–
–
(1)
–
3
–
(2)
(1)
–
3
–
15
15
(19)
(19)
(128)
(128)
–
–
Non-
controlling
interests
Total
shareholders’
equity
£m
22
5
6
11
–
–
–
5
–
–
–
–
(4)
34
13
(3)
10
–
–
–
(3)
64
–
–
–
(6)
99
£m
1,131
(6)
288
282
3
(13)
316
5
10
(70)
(4)
(89)
(4)
1,567
283
(153)
130
(2)
(1)
–
–
64
15
(19)
(128)
(6)
1,620
At 31 December 2023
42
147
143
312
(63)
940
1,521
The notes on pages 137 to 199 are an integral part of these consolidated financial statements. Share-based payments
include a net tax credit of £nil (2022: net tax credit of £nil).
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
135
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash generated from operating activities
Cash generated from operations
Tax paid
Interest received
Interest paid
Net cash generated from operating activities
Cash flows from investing activities
Notes
27(a)
2023
£m
900
(156)
46
(197)
593
Acquisition of businesses, net of cash and overdrafts acquired
28(a)
(137)
Net cash inflow/(outflow) from sale of businesses
Proceeds from disposal of investments in joint ventures and associates
Purchase of investments in joint ventures and associates
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of property, plant and equipment
Dividends received from joint ventures and associates
Payments made before the commencement date of a lease
Receipt from finance sub-lease receivables
Net cash used in investing activities
Cash flows from financing activities
Share buyback programme
Purchase of own shares by the Inchcape Employee Trust
Cash (outflow)/inflow from acquisition financing bridge facility
Cash inflow from revolving credit facility
Cash inflow from bond issuance
Cash outflow from other borrowings
Payment of capital element of lease liabilities
Payments to former shareholders of Derco group
Equity dividends paid
Acquisition of non-controlling interests
Dividends paid to non-controlling interests
Net cash (used in)/generated from financing activities
24(b)
22
22
9
Net (decrease)/increase in cash and cash equivalents
27(b)
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
Cash and cash equivalents consist of:
– Cash at bank and cash equivalents
– Short-term deposits
– Bank overdrafts
18
18
22
The notes on pages 137 to 199 are an integral part of these consolidated financial statements.
136
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
2022
£m
619
(95)
17
(47)
494
(395)
(17)
–
(6)
(64)
(4)
10
–
(1)
2
1
2
(3)
(88)
(5)
31
1
–
3
(195)
(475)
–
(19)
(350)
150
348
(560)
(87)
(267)
(128)
(15)
(6)
(934)
(536)
1,050
(74)
440
610
79
(249)
440
(70)
(4)
600
–
–
(4)
(63)
–
(89)
–
(4)
366
385
589
76
1,050
641
423
(14)
1,050
ACCOUNTING POLICIES
GENERAL INFORMATION
Inchcape plc is a public company limited by shares,
domiciled and incorporated in the UK, and registered
in England and Wales. The address of the registered office
is 22a St James’s Square, London, SW1Y 5LP. The nature of
the Group’s operations and principal activities are set out
in note 1 and on pages 1 to 64.
The Group consolidated financial statements have been
prepared in accordance with UK-adopted International
Financial Reporting Standards (IFRS) and the Companies
Act 2006 applicable to companies reporting under IFRS.
Accounting convention
The consolidated financial statements have been
prepared under the historical cost convention, except for
financial assets at fair value through other comprehensive
income, and those financial assets and financial liabilities
(including derivative instruments) held at fair value through
profit or loss, which are measured at fair value.
Going concern
Based on the Group’s cash flow forecasts and projections,
the Board is satisfied that the Group will operate within the
level of its committed facilities for the foreseeable future.
For this reason, the Board continues to adopt the going
concern basis in preparing its financial statements. In
making this assessment, the Group has considered
available liquidity in relation to net debt and committed
facilities, the Group’s latest forecasts for 2024 and 2025
cash flows, together with adjusted scenarios.
Committed bank facilities and Private Placement
borrowings amount to £1,360m, of which £610m was drawn
at 31 December 2023. In June 2023, the Group issued a
£350m bond offering with a coupon of 6.5%, due to mature
in June 2028 and in December 2023, the Group’s Revolving
Credit Facility was amended, increasing the facility
limit to £900m and extending the maturity date to
December 2028.
The Private Placement Loan Notes (of which £70m is due
to mature in May 2024) and the Term Loan (due to mature
in December 2024) are subject to the same interest cover
covenant based on an adjusted EBITA measure to interest
on consolidated borrowings measured on a trailing
12-month basis at June and December.
The latest Group forecasts for 2024 and 2025 indicate that
the Group is expected to be compliant with this covenant
throughout the forecast period and have sufficient liquidity
to continue operating throughout that period.
A range of sensitivities has been applied to the forecasts
to assess the Group’s compliance with its covenant
requirements over the forecast period. These sensitivities
included:
• a 12-month reduction in New and Used revenue from July
2024, resulting from decreasing consumer demand in
response to fiscal tightening and resulting economic
downturns;
• a reduction in reported GBP earnings from July to
December 2024 resulting from the strengthening
of sterling relative to other currencies;
• a general liquidity reduction impacting working capital
from January 2025;
• with no mitigating actions applied in relation to the
sensitivities described above.
In a scenario where all of the above sensitivities occur at
the same time, with the interest cover covenant measured
on a trailing 12-month basis, the sensitised forecasts
indicate that the Group is not expected to breach any
covenants and would be compliant with the interest cover
requirements throughout the forecast period. Additionally,
under these circumstances, the Group expects to have
sufficient funds to meet cash flow requirements.
A reverse stress test scenario analysis concluded that
a set of circumstances in which the Group would breach
its covenant or have insufficient funds to meet cash flow
requirements are considered to be remote, relative to the
sensitivities referred to above.
Therefore, the Board concluded that the Group will
be able to operate within the level of its committed
facilities for the foreseeable future. The Directors consider
it appropriate to adopt the going concern basis of
accounting in preparing the financial statements for
the year ending 31 December 2023.
NEWLY ADOPTED ACCOUNTING STANDARDS
From 1 January 2023, the following standards become
effective in the Group’s consolidated financial statements:
• IFRS 17 Insurance Contracts;
• Amendments to IFRS 17 Insurance Contracts: Initial
Application of IFRS 17 and IFRS 9 Comparative
Information;
• Amendments to IAS 12 relating to Deferred tax related
to assets and liabilities arising from a single transaction;
• Amendments to IFRS 4 when applying IFRS 9 Financial
Instruments;
• Amendments to IAS 1 Presentation of Financial
Instruments, classification of liabilities as current or
non-current; and
• Amendments to IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors: Definition of
Accounting Estimates.
The adoption of the standards and interpretations listed
above has not led to any material impact on the financial
position or performance of the Group.
The Group has not early adopted other standards,
amendments to standards or interpretations that have
been issued but are not yet effective.
STANDARDS NOT EFFECTIVE AT THE BALANCE SHEET DATE
The following standards were in issue but were not yet
effective at the balance sheet date. These standards
have not yet been early adopted by the Group, and will
be applied for the Group’s financial years commencing
on or after 1 January 2024:
• Amendments to IAS 1: Non-current liabilities
with covenants;
• Amendments to IFRS 16: Leases on sale and leaseback;
• Amendments to IAS 7 and IFRS 7: Supplier finance; and
• Amendments due to Finance (No. 2) Act 2023 for Pillar
Two income inclusion (IIR).
Management are currently reviewing the new standards
to assess the impact that they may have on the Group’s
reported position and performance. Management do
not expect that the adoption of the standards listed above
will have a material impact on the financial statements
of the Group.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
137
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ACCOUNTING POLICIES CONTINUED
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the
financial statements of the parent company (Inchcape
plc) and all of its subsidiary undertakings (defined as those
where the Group has control), together with the Group’s
share of the results of its joint ventures (defined as those
where the Group has joint control) and associates (defined
as those where the Group has significant influence but not
control). The results of subsidiaries are consolidated and the
Group’s share of results of its joint ventures and associates
is equity accounted for as of the same reporting date as
the parent company, using consistent accounting policies.
The results of newly acquired subsidiaries are consolidated
using the acquisition method of accounting from the date
on which control of the net assets and operations of the
acquired company are effectively transferred to the Group.
Similarly, the results of subsidiaries disposed of cease to be
consolidated from the date on which control of the net
assets and operations is transferred out of the Group.
The Group treats transactions with non-controlling interests
as transactions with equity owners of the Group. For
purchases from non-controlling interests, the difference
between any consideration paid and the relevant share
acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals
to non-controlling interests are also recorded in equity.
Investments in joint ventures and associates are accounted
for using the equity method, whereby the Group’s share
of post-acquisition profits or losses is recognised in the
consolidated income statement, and its share of post-
acquisition movements in shareholders’ equity is
recognised in shareholders’ equity. If the Group’s share
of losses in a joint venture or associate equals or exceeds
its investment in the joint venture or associate, the Group
does not recognise further losses, unless it has contractual
obligations or made payments on behalf of the joint
venture or associate.
Intercompany balances and transactions and any
unrealised profits arising from intercompany transactions
are eliminated in preparing the consolidated financial
statements.
In accordance with IAS 1 Presentation of Financial
Statements, the Group Consolidated Income Statement
for the year ended 31 December 2023 has been changed
to present the results of the Group on a continuing
operations basis, with a single amount reported for the total
results for discontinued operations. The total for discontinued
operations comprises the post-tax profit or loss of
discontinued operations and the post-tax loss on
disposal (see note 28).
FOREIGN CURRENCY TRANSLATION
Transactions included in the results of each of the Group’s
entities are measured using the currency of the primary
economic environment in which the entity operates
(the functional currency). The consolidated financial
statements are presented in sterling, which is the functional
currency of the parent company, Inchcape plc, and the
presentation currency of the Group.
statement, except those exchange differences arising
on long-term foreign currency borrowings that form
part of a net investment in a foreign investment,
which on consolidation are taken directly to other
comprehensive income.
The assets and liabilities of foreign operations are translated
into sterling at the rate of exchange ruling at the end of the
reporting period. The income statements and cash flows
of foreign operations are translated into sterling at the
average rates of exchange for the period, except for
subsidiaries in hyperinflationary economies that are
translated at the closing rate of exchange at the end of the
period. Exchange differences arising from 1 January 2004
are recognised as a separate component of shareholders’
equity. On disposal of a foreign operation, any cumulative
exchange differences held in shareholders’ equity are
transferred to the consolidated income statement.
PRESENTATION OF COMPARATIVE AMOUNTS
Comparative amounts presented in the consolidated
income statement, the consolidated statement of
comprehensive income and relevant notes reflect the
classification of the Russian business as a discontinued
operation in 2022.
DESIGNATION OF ETHIOPIA AS A HYPERINFLATIONARY
ECONOMY
The Group financial statements include adjustments for
hyperinflation, following the application of IAS 29 Financial
Reporting in Hyperinflationary Economies in relation
to the Group’s operations with a functional currency
of Ethiopian Birr.
The Group’s consolidated financial statements include
the results and financial position of its Ethiopian operations
restated to the purchasing power or inflationary measuring
unit current at the end of the year, leading to a
hyperinflationary loss in respect of monetary items being
reported in finance costs, and treated as an adjusting item.
The results of the Group’s Ethiopian operations have been
translated at the closing exchange rate, as required by
IAS 21 The Effects of Changes in Foreign Exchange Rates
for hyperinflationary foreign operations.
Whilst IAS 29 Financial Reporting in Hyperinflationary
Economies is applied in individual financial statements
as though the relevant economy was always
hyperinflationary, comparative amounts are not restated
in consolidated amounts already presented in a stable
currency. The resulting difference in the opening Ethiopian
net assets has been presented as a translation adjustment
in other comprehensive income.
The inflationary factors used by the Group are the official
price indices published by the Central Statistical Agency
of Ethiopia. Hyperinflationary adjustments have been
calculated using the price index prevailing at 31 December
2023, which was a CPI index of 425.1 (31 December 2022:
CPI index 328.9). The adjusted results and financial position
of Ethiopia were translated at the year-end closing rate
before being included in the Group’s consolidated
financial statements.
In the individual entities, transactions in foreign currencies
are translated into the functional currency at the rates of
exchange prevailing at the dates of the individual
transactions. Monetary assets and liabilities denominated
in foreign currencies are subsequently retranslated at the
rate of exchange ruling at the end of the reporting period.
All differences are taken to the consolidated income
CLIMATE CHANGE
In preparing the Group’s financial statements consideration
has been given to the impact of both physical and
transition climate-related risks, as described in the Task
Force on Climate-related Financial Disclosures (TCFD)
section on page 40. Based on the TCFD recommendations,
in 2022, the Group performed an assessment of the five
138
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
most critical climate related risks and opportunities that
were considered to have a potential financial impact
on the financial statements.
Climate scenario analysis was used as a tool to identify
and assess a potential range of future outcomes, by
capturing different assumptions about policies and
physical climate conditions. Scenario analysis was applied
to the five most material risks and opportunities, being the
transition risk of misalignment, increased carbon tax,
aftersales revenues, margin pressure risk, and physical risks
(due to the direct impacts to property and inventories from
extreme weather conditions). There is inherent uncertainty
over the assumptions used within these scenarios and
how they will impact the Group’s operations, cash flows
and profit projections.
The policy, technology, and market changes in response
to climate change are still developing, and consequently
the financial statements cannot capture all possible future
outcomes as these are not yet known.
The climate-related estimates and assumptions were
applied primarily to going concern, impairment of non-
financial assets, property, plant and equipment, indefinite
life intangible assets and provisions.
REVENUE AND OTHER INCOME
Revenue is measured at the fair value of consideration
receivable, net of any discounts, rebates, trade
allowances, incentives, or amounts collected on behalf
of third parties. It is recognised to the extent that the
transfer of promised goods or services to a customer has
been satisfied and the revenue can be reliably measured.
Revenue excludes sales-related taxes and intra-group
transactions. In practice this means that:
Revenue from sale of goods
Revenue from the sale of goods is recognised when
the obligation to transfer the goods to the customer has
been satisfied and the revenue can reliably be measured.
The obligation to transfer goods to the customer is
considered to have been satisfied when the vehicles or
parts are invoiced and physically dispatched or collected.
Consideration received in advance of transfer of goods
is recognised as deferred revenue on the balance sheet
and is subsequently recognised as revenue when the
transfer of goods occurs.
Revenue from rendering of services
Revenue from the rendering of services to the customer
is considered to have been satisfied when the service has
been undertaken.
Group acts as an agent
Where the Group acts as an agent on behalf of a principal
in relation to finance, insurance, and similar products,
the associated commission income is recognised within
revenue in the period in which the related finance or
insurance product is sold and receipt of payment can
be assured.
Sales with a repurchase commitment
Where a vehicle is sold to a customer subject to a
repurchase commitment and the possibility of the buyback
being exercised by the customer is highly likely, the
transaction is recognised as a lease transaction with the
Group acting as a lessor. Consequently, such vehicles are
recognised within ‘property, plant and equipment’ in the
consolidated statement of financial position at cost and
are depreciated to their residual value over the period of
the repurchase commitment. The difference between the
initial amounts received from the customer and the
repurchase commitment is recognised as deferred
income in the consolidated statement of financial position
and is released to the consolidated income statement
on a straight-line basis over the life of the arrangement.
The repurchase commitment, which reflects the price
at which the vehicle will be bought back, is held within
‘trade and other payables’, according to the date
of the commitment.
Where a vehicle is sold to a customer subject to a
repurchase commitment and the possibility of the buyback
being exercised by the customer is not highly likely, revenue
is recognised in full when the vehicle is sold, less the
expected value of the buyback payments to be made
which is recorded as a liability in the consolidated
statement of financial position. Similarly, an estimate
of the value of the vehicles to be returned is deducted
from cost of sales and recognised as an asset in the
consolidated statement of financial position.
Sale of additional services
Where additional services are included in the sale
of a vehicle to a customer as part of the total vehicle
package (e.g. extended warranty, free servicing, roadside
assistance, fuel coupons etc) and the Group is acting as
a principal in the fulfilment of the service, the value of the
additional services is separately identified, deducted from
consideration receivable, recognised as deferred revenue
on the balance sheet and subsequently recognised
as revenue when the service is provided, or recognised
on an input basis with reference to the amount of time
elapsed under the contract to which the service relates.
These balances are considered to be contract liabilities.
The consideration allocated to additional services is based
on the relative stand-alone selling price of the additional
services within the contract. The value assigned to the
additional service is set equal to the value of the additional
service being provided, being the expected cost to the
entity plus an appropriate profit margin.
Accrued income
Amounts relating to accrued income are balances
primarily due from manufacturers in relation to volume/
target related bonuses or commissions or warranty related
where the work has been completed prior to being
invoiced. Any amount previously recognised as accrued
income is reclassified to trade receivables.
Dividend income
Dividend income is recognised when the right to receive
payment is established.
COST OF SALES
Cost of sales includes the expense relating to the estimated
cost of self-insured product warranties offered to customers.
These warranties form part of the package of goods and
services provided to the customer when purchasing a
vehicle and are not a separable product.
The Group receives income in the form of various incentives
which are determined by our brand partners. The amount
we receive is generally based on achieving specific
objectives, such as a specified sales volume, as well
as other objectives including maintaining brand partner
standards which may include, but are not limited to,
retail centre image and design requirements, customer
satisfaction survey results and training standards. Where
incentives are based on a specific sales volume or number
of registrations, the related income is recognised as
a reduction in cost of sales when it is reasonably certain
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
139
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ACCOUNTING POLICIES CONTINUED
that the income has been earned. This is generally the later
of the date the related vehicles are sold or registered
or when it is reasonably certain that the related target will
be met. Where incentives are linked to retail centre image
and design requirements, customer satisfaction survey
results or training standards, they are recognised as a
reduction in cost of sales when it is reasonably certain that
the incentive will be received for the relevant period.
GOVERNMENT GRANTS AND ASSISTANCE
Grants received from governments are recognised when
there is reasonable assurance that the conditions
associated with the grants have been complied with and
the grants will be received. Grants for the reimbursement
of operating expenditure are deducted from the related
category of costs in the income statement. Once a
government grant is recognised, any related deferred
income is treated in accordance with IAS 20 Accounting
for Government Grants and Disclosure of Government
Assistance.
SHARE-BASED PAYMENTS
The Group operates various share-based award schemes.
The fair value at the date at which the share-based awards
are granted is recognised in the consolidated income
statement (together with a corresponding credit in
shareholders’ equity) on a straight-line basis over the
vesting period, based on an estimate of the number of
shares that will eventually vest. At the end of each reporting
period, the Group revises its estimates of the number of
awards that are expected to vest. The impact of any
revision is recognised in the consolidated income
statement with a corresponding adjustment to equity.
For equity-settled share-based awards, the services
received from employees are measured by reference to
the fair value of the awards granted. With the exception
of the Group Save As You Earn scheme, the vesting of all
share-based awards under all schemes is solely reliant
upon non-market conditions, therefore no expense is
recognised for awards that do not ultimately vest. Where
an employee or the Company cancels an award, the
charge for that award is recognised as an expense
immediately, even though the award does not vest.
FINANCE INCOME
Finance income is recognised when it is probable that the
economic benefits will flow to the Group and the amount
of income can be measured reliably. It is accrued on a
time basis by reference to the principal outstanding and
at the effective interest rate applicable.
FINANCE COSTS
Borrowing costs which are directly attributable to the
acquisition, construction or production of a qualifying
asset are capitalised as part of the cost of that asset
from the first date on which the expenditure is incurred for
the asset and until such time as the asset is ready for its
intended use. A Group capitalisation rate is used to
determine the magnitude of borrowing costs capitalised
on each qualifying asset. This rate is the weighted average
of Group borrowing costs, excluding those borrowings
made specifically for the purpose of obtaining a qualifying
asset. All other borrowing costs are recognised as an
expense in the period in which they are incurred.
INCOME TAX
The charge for current income tax is based on the results for
the period as adjusted for items which are not taxed or are
140
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
disallowed. It is calculated using tax rates that have been
enacted or substantively enacted by the end of the
reporting period.
The accounting standard covering uncertain tax positions,
IFRIC 23 Uncertainty over Income Tax Treatments, was
adopted by the Group from 1 January 2019. The Group
recognises provisions for uncertain tax positions when it is
not probable that a tax authority will accept an uncertain
tax treatment used, or proposed to be used, in its income
tax filings. Uncertain tax positions are assessed and
measured using management’s estimate of the most likely
outcome including an assessment of whether uncertain tax
positions should be considered separately or as a group.
The Group recognises interest on late paid taxes as part
of financing costs, and recognises any penalties within
income tax expense or other operating expenses
depending on whether the penalty is considered an
income tax or not.
Deferred income tax is accounted for using the liability
method in respect of temporary differences arising from
differences between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial
statements.
Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible
temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference
is due to goodwill arising on a business combination, or to
an asset or liability, the initial recognition of which does not
affect either taxable or accounting income.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, joint
ventures, and associates, except where the Group is able
to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax is calculated at the tax rates that are
expected to apply to the period when the asset is realised
or the liability is settled using rates enacted or substantively
enacted at the end of the reporting period. Deferred tax
is charged or credited in the consolidated income
statement, except when it relates to items credited or
charged directly to shareholders’ equity, in which case
the deferred tax is also dealt with in shareholders’ equity.
Deferred tax assets and liabilities are only offset where
there is a legally enforceable right of offset and there is
an intention to settle balances net.
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the
manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount
of its assets and liabilities.
ADJUSTING ITEMS
The Group makes certain adjustments to the statutory
profit measures in order to derive certain alternative
performance measures. Certain items which are material
are presented as adjusting items within their relevant
consolidated income statement category. The separate
reporting of adjusting items helps provide additional useful
information regarding the Group’s business performance
and is used by management to facilitate internal
performance analysis.
Management applies an adjusting items policy that is
regularly discussed and approved by the Audit Committee.
The policy applied in identifying adjusting items is
balanced when assessing gains and losses, clearly
disclosed, and applied consistently from one year to
the next.
Adjusting items are deemed to be those items that, in the
judgement of the Group, need to be disclosed separately
by virtue of their nature, size or incidence. In determining
the facts and circumstances, management considers key
factors such as:
• where the same category of items recurs each year
and in similar amounts (for example, restructuring costs),
consideration is given as to whether such amounts should
be included as part of underlying profit;
• where significant items are likely to be finalised over more
than one year, the effect of such items is applied
uniformly; and
• ensuring the treatment of favourable and unfavourable
transactions are treated consistently.
Items that may be considered adjusting in nature could
include gains or losses on the disposal of businesses,
restructuring of businesses, acquisition and integration
costs, asset impairments, recognition of monetary gains or
losses on hyperinflation and the tax effects of these items.
Any reversal of an amount previously recognised as an
adjusting item would also be recognised as an adjusting
item in a subsequent period.
BUSINESS COMBINATIONS AND GOODWILL
The acquisition of subsidiaries is accounted for using the
acquisition method (at the point the Group gains control
over a business as defined by IFRS 3 Business Combinations).
The cost of the acquisition is measured as the cash paid
and the aggregate of the fair values, at the date of
exchange, of other assets transferred, liabilities incurred or
assumed, and equity instruments issued by the Group in
exchange for control of the acquiree. The consideration
transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement
at the acquisition date.
Acquisition-related costs are expensed as incurred.
The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under
IFRS 3 Business Combinations are recognised at their fair
value at the acquisition date. The Group recognises
any non-controlling interests in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at
the non-controlling interests’ proportionate share of the
recognised amounts of acquiree’s identifiable net assets.
Goodwill represents the excess of the cost of acquisition
of a business combination over the Group’s share of the
fair value of identifiable net assets of the business acquired
at the date of acquisition. Goodwill is initially recognised at
cost and is held in the functional currency of the acquired
entity and revalued at the closing exchange rate at the
end of each reporting period.
After initial recognition, goodwill is measured at cost less
any accumulated impairment losses. At the date of
acquisition, the goodwill is allocated to cash generating
units for the purpose of impairment testing and is tested
at least annually for impairment.
Gains and losses on disposal of a business include the
carrying amount of goodwill relating to the business sold
except for goodwill arising on business combinations
on or before 31 December 1997 which has been deducted
from shareholders’ equity and remains indefinitely in
shareholders’ equity.
OTHER INTANGIBLE ASSETS
Intangible assets, when acquired separately from a
business (including computer software), are carried at
cost less accumulated amortisation and impairment losses.
Cost comprises the purchase price from third parties as well
as internally generated development costs where relevant.
Amortisation is provided on a straight-line basis to allocate
the cost of the asset over its estimated useful life, which
in the case of computer software is three to eight years.
Amortisation is recognised in the consolidated income
statement within ‘net operating expenses’. Software
customisation and configuration costs relating to software
not controlled by the Group are expensed over the period
such services are received.
Intangible assets acquired as part of a business
combination are capitalised separately from goodwill
if the benefit of the intangible asset is obtained through
contractual or other legal rights and the fair value can
be measured reliably on initial recognition. The principal
intangible assets are agreements with manufacturers for
the distribution of new vehicles and parts, which represent
the estimated value of distribution rights acquired in
business combinations. Such agreements have varying
terms and periods of renewal and have historically been
renewed without substantial cost. The Group therefore
expects these agreements to be renewed on a regular
basis and accordingly no amortisation is charged on these
assets. The Group assesses these distribution rights for
impairment on an annual basis.
Other intangible assets acquired in a business combination
may include order banks and customer contracts. These
intangible assets are amortised on a straight-line basis
over their estimated useful life, which is between one
and ten years.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less
accumulated depreciation and impairment losses.
Cost comprises the purchase price and directly
attributable costs of the asset and includes, where relevant,
capitalised borrowing costs. Depreciation is based on
cost less estimated residual value and is included within
‘net operating expenses’ in the consolidated income
statement, with the exception of depreciation on ‘leased
vehicles, rental machinery and equipment’ which is
charged to ‘cost of sales’. It is provided on a straight-line
basis over the estimated useful life of the asset, except
for freehold land which is not depreciated. For the following
categories, the annual rates used are:
Freehold buildings and
long leasehold buildings 2.0%
Short leasehold buildings shorter of lease term or useful life
Plant, machinery and
equipment
Leased vehicles, rental
machinery and
equipment
5.0% – 33.3%
over the lease term
The residual values and useful lives of all assets are reviewed
at least at the end of each reporting period and adjusted
if necessary.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
141
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ACCOUNTING POLICIES CONTINUED
LEASES
The Group assesses whether a contract is, or contains
a lease at inception of the contract. A lease conveys
the right to direct the use and obtain substantially all
of the economic benefits of an identified asset for
a period of time in exchange for consideration.
THE GROUP AS A LESSEE
Lease liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of the following lease payments:
• fixed payments (including in-substance fixed payments),
less any lease incentives receivable;
• variable lease payment that are based on an index or
a rate, initially measured using the index or rate as at the
commencement date;
• amounts expected to be payable by the Group under
residual value guarantees;
• the exercise price of a purchase option if the Group
is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the
lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain
extension options are also included in the measurement
of the liability.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the
Group, the lessee’s incremental borrowing rate is used,
being the rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic
environment with similar terms, security, and conditions.
To determine the incremental borrowing rate, the Group:
• uses a build-up approach that starts with a risk-free
interest rate by market and currency;
• applies a credit risk, based on yields of comparable
entities, to the determined risk-free interest rate by
market; and
• where applicable, makes adjustments specific to the
lease, e.g. country, currency, security, and term.
Lease liabilities are remeasured when there is a change in
future lease payments as a result of an index or rate
change, or if there is a change in the estimate of the
amount expected to be payable under a residual value
guarantee, or if there is a change in the assessment of
whether a purchase, lease-term extension or termination
option will be exercised. An additional liability is also
recognised where there is a potential change in variable
payment during the term of the lease and lastly, where new
leases have been committed to but not yet commenced.
When lease liabilities are remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right-of-use asset or recorded in profit or loss if the
carrying amount of the right-of-use asset has been
reduced to zero.
Lease payments are allocated between principal and
finance cost. The finance cost is charged to profit or loss
over the lease period to produce a constant periodic
rate of interest on the remaining balance of the liability
for each period.
142
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Right-of-use assets are recognised at the commencement
date of the lease. Right-of-use assets comprising mainly
land and buildings are measured at cost less accumulated
depreciation and impairment losses. The costs include the
amount of the initial measurement of the lease liability, any
lease payments made at or before the commencement
date less lease incentives received, any direct costs and
an estimate of dismantling costs. The carrying amount
is further adjusted for any remeasurement of the lease
liability. Depreciation is expensed to the income statement
on a straight-line basis over the lease term. The lease term
includes the noncancellable period of lease together with
any extension or termination options that are reasonably
certain to be exercised.
Payments associated with short-term leases and all leases
of low-value assets (under £5,000) are recognised on a
straight-line basis as an expense in profit or loss. Short-term
leases are leases with a lease term of 12 months or less.
Low-value assets comprise largely small items of office
equipment.
THE GROUP AS A LESSOR
Leases are classified as finance leases whenever the terms
of the lease transfer substantially all the risk and rewards
of ownership to the lessee. All other leases are classified
as operating leases. Where the Group is an intermediate
lessor, the sublease classification is assessed with reference
to the head lease right-of-use asset. Amounts due from
lessees under finance leases are recorded as receivables
at the amount of the Group’s net investment in the lease.
Finance lease income is allocated to accounting periods
so as to reflect a constant periodic rate of return on the
Group’s net investment in the lease. Rental income from
operating leases is recognised on a straight-line basis over
the lease term.
IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that are subject to amortisation or depreciation are
reviewed for impairment whenever events or circumstances
indicate that the carrying amount may not be recoverable.
Any impairment losses are included within ‘net operating
expenses’ in the consolidated income statement.
In addition, goodwill is not subject to amortisation but is
tested at least annually for impairment. An impairment loss
is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount, the latter being
the higher of the asset’s fair value less costs to sell and
value in use. Value in use calculations are performed using
cash flow projections, discounted at a pre-tax rate which
reflects the asset specific risks and the time value of money.
Impairment losses are recognised on goodwill within the
cash generating unit.
Non-financial assets, other than goodwill, which have
previously been impaired, are reviewed for possible reversal
of the impairment at each reporting date. Impairment
of inventories are considered separately. Impairment
losses are recognised against goodwill within the cash
generating units before non-financial assets are impaired.
INVENTORIES
Inventories are stated at the lower of cost and net
realisable value. Cost comprises expenditure incurred in
bringing inventories to their present location and condition.
Net realisable value represents the estimated selling price
less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution. Used vehicles
are carried at the lower of cost or fair value less costs to sell,
generally based on external market data available for
used vehicles. Parts inventory is valued at weighted
average cost.
Vehicles held on consignment are included within
inventories as the Group is considered to have the risks
and rewards of ownership. The corresponding liability is
included within ‘trade and other payables’.
Inventory can be held on deferred payment terms. All costs
associated with this deferral are expensed to finance costs
in the period in which they are incurred.
An inventory provision is recognised in situations where
net realisable value is likely to be less than cost (such as
obsolescence, deterioration, fall in selling price). When
calculating the provision, management considers the
nature and condition of the inventory, as well as applying
assumptions around anticipated saleability, determined
on conditions that exist at the end of the reporting period.
With the exception of parts, generally net realisable value
adjustments are applied on an item-by-item basis.
TRADE RECEIVABLES
Trade receivables are amounts due from customers for
goods sold or services performed in the ordinary course
of business. These are recognised as current assets if
collection is due in one year or less. If collection is due
in over a year, they are presented as non-current assets.
Trade receivables are recognised initially at fair value
and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
A provision for impairment is established based on an
expected credit loss model under IFRS 9 Financial
Instruments. The amount of the provision is the difference
between the asset’s carrying amount and the expected
value of the amounts to be received.
The provision for impairment of receivables is based on
lifetime expected credit losses. Lifetime expected credit
losses are calculated by assessing historic credit loss
experience, adjusted for factors specific to the receivable
and company. The amount of the loss is recognised in the
consolidated income statement within ‘net operating
expenses’. When a trade receivable is not collectible,
it is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts previously
written off are credited against ‘net operating expenses’
in the consolidated income statement.
TRADE PAYABLES
Trade payables are obligations to pay for goods or services
that have been acquired in the ordinary course of business.
These are classified as current liabilities if payment is due in
one year or less. If payment is due at a later date, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method.
Trade payables include the liability for vehicles held on
consignment, with the corresponding asset included
within inventories.
BORROWINGS
Borrowings are recognised initially at fair value, net of
transaction costs incurred, and are subsequently stated
at amortised cost. Any difference between the proceeds
(net of transaction costs) and the redemption value is
recognised in the consolidated income statement
over the period of the borrowings, using the effective
interest method.
PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Group operates a number of retirement benefit schemes.
The major schemes are defined benefit pension funds
with assets held separately from the Group. The cost of
providing benefits under the plans is determined separately
for each plan using the projected unit credit actuarial
valuation method.
The current service cost and gains and losses on
settlements and curtailments are included in ‘cost of sales’
or ‘net operating expenses’ in the consolidated income
statement. Past service costs are similarly recognised in the
consolidated income statement. Administrative scheme
expenses associated with the plans are recorded within
‘net operating expenses’ when incurred, in line with IAS 19
Employee Benefits (revised). Net interest income or interest
cost relating to the funded defined benefit pension plans
is included within ‘finance income’ or ‘finance costs’,
as relevant, in the consolidated income statement.
Changes in the retirement benefit obligation or asset due
to experience and changes in actuarial assumptions are
included in the consolidated statement of comprehensive
income, as actuarial gains and losses, in full in the period
in which they arise.
Where scheme assets exceed the defined benefit
obligation, a net asset is only recognised to the extent
that an economic benefit is available to the Group,
in accordance with the terms of the scheme and,
where relevant, statutory requirements.
The Group’s contributions to defined contribution plans
are charged to the consolidated income statement in
the period to which the contributions relate.
The Group also has a liability in respect of past employees
under post-retirement healthcare schemes which have
been closed to new entrants. These schemes are accounted
for on a similar basis to that for defined benefit pension
plans in accordance with the advice of independent
qualified actuaries.
Following the scheme merger which is now referred to
as the ‘Combined section’, and sits alongside the Group
section, a change was made to the trustees deeds
whereby it was stipulated, in the event of a wind-up any
pension surplus belonging to the Group section would be
returned to the Combined section in the first instance
instead of being directly returned to the principal employer.
The Group takes the view that any surplus in the Combined
section ultimately belongs to the Principal employer,
therefore judgement has been taken to recognise the
pension surplus for the scheme in full.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
143
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ACCOUNTING POLICIES CONTINUED
PROVISIONS
Provisions are recognised when the Group has a present
obligation in respect of a past event, when it is more likely
than not that an outflow of resources will be required to
settle the obligation and where the amount can be reliably
estimated. Provisions are discounted when the time value
of money is considered to be material, using an
appropriate risk-free rate on government bonds.
PRODUCT WARRANTY PROVISION
A product warranty provision corresponds to warranties
provided as part of the sale of a vehicle and provide
assurance to the customer that the product will work
as sold. Provision is made for the expected cost of labour
and parts based on historical claims experience and
expected future trends.
LEASEHOLD PROPERTY PROVISION
A leasehold property provision is recognised when the
Group is committed to certain leasehold premises for which
it no longer has a commercial use. It is made to the extent
of the estimated future net cost, excluding the lease liability
already recognised under IFRS 16 Leases. A leasehold
property provision is also recognised when there is future
obligation relating to the maintenance of leasehold
properties. The provision is based on management’s
best estimate of the obligation which forms part of the
Group’s unavoidable cost of meeting its obligations under
the lease contracts.
LITIGATION PROVISION
A litigation provision is recognised when a litigation case
is outstanding at the end of the reporting period and there
is a likelihood that the legal claim will be settled.
RESTRUCTURING PROVISION
A restructuring provision is recognised when a detailed
formal plan for the restructuring has been developed and
a valid expectation has been raised in those affected that
it will carry out the restructuring by starting to implement
the plan or announcing its main features to those affected
by it. The measurement of a restructuring provision includes
only the direct expenditures arising from the restructuring,
which are those amounts that are both necessarily entailed
by the restructuring and not associated with ongoing
activities of the Group.
DISPOSAL GROUP AND ASSETS HELD FOR SALE
Where the Group is committed to a plan to sell and is
actively marketing a business and disposal is expected
within one year of the date of classification as held for sale,
the assets and liabilities of the associated businesses are
separately disclosed in the consolidated statement of
financial position as a disposal group. Assets and liabilities
are classified as assets held for sale if their carrying amount
is to be recovered principally through a sale transaction
rather than through continuing use. Both disposal groups
and assets and liabilities held for sale are stated at the
lower of their carrying amount and fair value less costs
to sell.
SEGMENTAL REPORTING
Segment information is reported in accordance with IFRS 8
Operating Segments, which requires segmental reporting
to be presented on the same basis as the internal
management reporting. The Group’s operating segments
are groups of countries and the market channels,
144
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Distribution and Retail. These operating segments are then
aggregated into reporting segments to combine those
with similar characteristics. The accounting policies of
the reportable segments are the same as the Group’s
accounting policies described in this note. Comparative
amounts have been reclassified as explained in note 1.
FINANCIAL INSTRUMENTS
The Group classifies its financial assets in the following
categories: measured at amortised cost; measured at fair
value through profit and loss; and measured at fair value
through other comprehensive income. Classification and
subsequent remeasurement depends on the Group’s
business model for managing the financial asset and its
cash flow characteristics. Assets that are held for collection
of contractual cash flows, where those cash flows represent
solely payments of principal and interest, are measured
at amortised cost.
Measured at amortised cost includes non-derivative
financial assets and liabilities with fixed or determinable
payments that are not quoted in an active market.
Financial assets are included in current assets, except
where the maturity date is more than 12 months after the
end of the reporting period. They are initially recorded at
fair value and subsequently recorded at amortised cost.
Financial liabilities are included in current liabilities, except
where the maturity date is more than 12 months after the
end of the reporting period.
Measured at fair value through profit and loss includes
derivative financial assets and liabilities, which are further
explained below. They are classified according to maturity
date, within current and non-current assets and liabilities
respectively.
Measured at fair value through other comprehensive
income includes certain financial assets at fair value such
as bonds and equity investments. These financial assets
are included in current assets, except where the maturity
date is more than 12 months after the end of the reporting
period. Financial assets at fair value through other
comprehensive income are classified as non-current
assets unless management intends to dispose of them
within 12 months of the end of the reporting period and
are held at fair value.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents in the consolidated statement
of financial position comprise cash at bank and in hand,
short-term bank deposits and cash and cash equivalents
included in disposal groups held for sale.
Short-term bank deposits have a maturity of less than three
months from the date at which the investment is acquired.
In the consolidated statement of cash flows, cash and
cash equivalents comprise cash and cash equivalents,
as defined above, net of bank overdrafts.
OFFSETTING
Netting in the consolidated statement of financial position
only occurs to the extent that there is the legal ability
and intention to settle net. As such, bank overdrafts are
presented in current liabilities to the extent that there is
no intention to offset with the cash balance.
DERIVATIVE FINANCIAL INSTRUMENTS
An outline of the objectives, policies and strategies pursued
by the Group in relation to its financial instruments is set out
in note 23 to the consolidated financial statements.
Derivatives are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently
re-measured at their fair value. The method of recognising
the resulting gain or loss depends on whether the derivative
is designated as a hedging instrument, and if so, the nature
of the item being hedged. The Group designates certain
derivatives as:
• hedges of the fair value of recognised assets or liabilities
or a firm commitment (fair value hedge); or
• hedges of a particular risk associated with a recognised
asset or liability or a highly probable forecast transaction
(cash flow hedge).
FAIR VALUE HEDGE
Changes in the fair value of derivatives that are designated
and qualify as fair value hedges are recorded in the
consolidated income statement, together with any
changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk. The Group only
applies fair value hedge accounting for hedging fixed
interest risk on borrowings and future fixed amount currency
liabilities (on its cross-currency interest rate swaps). The gain
or loss relating to the effective portion of interest rate swaps
hedging fixed rate borrowings and changes in the fair
value of those borrowings is recognised in the consolidated
income statement within ‘finance costs’. The gain or loss
relating to the ineffective portion is also recognised in the
consolidated income statement within ‘finance costs’.
CASH FLOW HEDGE
For cash flow hedges that meet the conditions for hedge
accounting, the portion of the gains or losses on the
hedging instrument that is determined to be an effective
hedge is recognised directly in other comprehensive
income and the ineffective portion is recognised within
‘net operating expenses’ in the consolidated income
statement. When the hedged forecast transaction results
in the recognition of a non-financial asset or liability
then, at the time the asset or liability is recognised, the
associated gains or losses that had previously been
recognised in other comprehensive income are included
in the initial measurement of the acquisition cost or other
carrying amount of the asset or liability.
For all other cash flow hedges, the gains or losses that are
recognised in other comprehensive income are transferred
to the consolidated income statement in the same period
in which the hedged forecast transaction affects the
consolidated income statement.
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
Financial assets at fair value through other comprehensive
income are primarily equity instruments that the Group has
elected to recognise the changes in fair value of in other
comprehensive income. They are recognised initially at fair
value and are re-measured subsequently at fair value
with gains and losses arising from changes in fair value
recognised directly in equity and presented in the Group
statement of comprehensive income. Cumulative gains
and losses on equity instruments at fair value through other
comprehensive income are not recycled to the Group
income statement.
SHARE CAPITAL
Ordinary shares are classified as equity. Where the Group
purchases the Group’s equity share capital (treasury
shares), the consideration paid is deducted from
shareholders’ equity until the shares are cancelled,
reissued, or disposed of. Where such shares are
subsequently sold or reissued, any consideration received
is included in shareholders’ equity.
DIVIDENDS
Final dividends proposed by the Board of Directors and
unpaid at the year-end are not recognised in the
consolidated financial statements until they have been
approved by the shareholders at the Annual General
Meeting. Interim dividends are recognised when they
are paid.
CRITICAL ACCOUNTING JUDGEMENTS AND SOURCES
OF ESTIMATION UNCERTAINTY
The preparation of financial statements in accordance
with generally accepted accounting principles requires the
use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and
expenses during the reporting period. Although these
estimates are based on management’s best knowledge,
actual results may ultimately differ from those estimates.
The estimates and underlying assumptions are reviewed
on an ongoing basis. The Directors have made a number
of estimates and assumptions regarding the future, and
made some significant judgements in applying the Group’s
accounting policies. These are discussed below:
SOURCES OF ESTIMATION UNCERTAINTY
The key assumptions about the future, and other key
sources of estimation uncertainties at the reporting period
end that may have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities
within the next period are discussed below:
IMPAIRMENT OF GOODWILL AND INDEFINITE LIFE
INTANGIBLE ASSETS
Goodwill and other indefinite life intangible assets are
tested at least annually for impairment. When an
impairment review is carried out, the recoverable value
is determined based on value in use calculations which
require the use of estimates, including projected future
cash flows (see note 10).
The value in use calculations mainly use cash flow
projections based on three-year financial forecasts
prepared by management. The key assumptions for these
forecasts are those relating to volumes, revenue, gross
margins, the level of working capital required to support
trading, discount rates, long-term growth rate and capital
expenditure. For all CGU groups, cash flows after the
three-year period are extrapolated for a further seven years
using declining growth rates which reduces the year three
growth rate down to the long-term growth rate appropriate
for each CGU or CGU group, to better reflect the medium-
term growth expectations for those markets. A terminal
value calculation is used to estimate the cash flows after
year 10 using these long-term growth rates.
The assumptions used in the value in use calculations are
based on past experience, recent trading, and forecasts
of operational performance in the relevant markets. They
also reflect expectations about continuing relationships
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
145
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ADJUSTING ITEMS
The Directors believe that adjusted profit and earnings per
share measures provide additional useful information
to shareholders on the performance of the business.
These measures are consistent with how business
performance is measured internally by the Board and
Executive Committee. The operating profit before adjusting
items and profit before tax and adjusting items measures
are not recognised profit measures under IFRS and may
not be directly comparable with such profit measures used
by other companies. The classification of adjusting items
requires significant management judgement after
considering the nature and intentions of a transaction.
The Group’s definitions of adjusting items are outlined within
the Group accounting policies and note 2 provides further
details on current year adjusting items and their adherence
to Group policy.
CLASSIFICATION OF VEHICLE FUNDING ARRANGEMENTS
The Group finances the purchase of vehicles using vehicle
funding facilities provided by various lenders including the
captive finance companies associated with mobility
partners. In assessing whether the liabilities arising under
these arrangements should be classified within trade and
other payables rather than as an additional component
of the Group’s net debt within borrowings, the Group
considers a number of factors including whether the
arrangement is a requirement of the relationship with the
mobility company partner, in relation to specific, separately
identifiable vehicles held as inventory and whether
payment terms are consistent with the normal working
capital cycle or until the specific vehicle being funded is
sold to the end customer. Each agreement entered into has
its own terms and conditions and determining whether
a new or renewed arrangement should be classified within
trade and other payables requires significant management
judgement. See also note 20.
ASSIGNMENT OF AN INDEFINITE USEFUL LIFE TO
DISTRIBUTION AGREEMENTS
The Group’s principal intangible assets relate to
relationships with manufacturers for the distribution
of new vehicles and parts. These distribution agreements
are assigned an indefinite useful life as though these
agreements have limited terms, they have historically
been renewed by the Group without substantial cost
and the Group’s history shows that mobility company
partners have not terminated our distribution agreements.
Additionally, there are no known changes or events that
would impact the vehicle distribution environments in
which the Group has such assets recognised. The Group
therefore expects these agreements to be renewed
indefinitely and accordingly no amortisation is charged
on these assets. Refer to note 10 for details of indefinite-life
intangible assets.
ACCOUNTING POLICIES CONTINUED
with key mobility partners and the impact climate change
may have on its operations. Whilst at this stage there is
significant uncertainty regarding what the long-term
impact of climate change initiatives may be on the
markets in which we operate, the forecasts reflect our best
estimate. Key assumptions and sensitivities are disclosed
in note 10.
PENSIONS AND OTHER POST-RETIREMENT BENEFITS –
ASSUMPTIONS
Pension and other post-retirement benefit liabilities are
determined based on the actuarial assumptions detailed
in note 5. A number of these assumptions require estimates
to be made, including the rate of inflation and expected
mortality rates. These assumptions are subject to a review
on an annual basis and are determined in conjunction
with an external actuary. The use of different assumptions
could have a material effect on the value of the relevant
liabilities and could result in a material change to
amounts recognised in the income statement over time.
Key assumptions and sensitivities for post-employment
benefit obligations are disclosed in note 5.
PENSIONS – DISCOUNT RATE
The Group’s defined benefit obligations are discounted
at a rate set by reference to market yields at the end
of the reporting period on high quality corporate bonds.
Significant judgement is required when setting the criteria
for bonds to be included in the population from which
the yield curve is derived. The most significant criteria
considered for the selection of bonds include the issue
size of the corporate bonds, quality of the bonds and
the identification of outliers which are excluded. Key
assumptions and sensitivities for post-employment
benefit obligations are disclosed in note 5.
CRITICAL ACCOUNTING JUDGEMENTS
RIGHT-OF-USE ASSETS AND LEASE LIABILITIES – EXTENSION
AND TERMINATION OPTIONS
In determining the lease term, management considers
all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise
a termination option. Extension options (or periods
after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or
not terminated).
The Group has several retail, distribution and office property
lease contracts that include extension and termination
options. The Group applies judgement in evaluating
whether it is reasonably certain whether or not to exercise
the option to renew or terminate the lease. All relevant
factors are considered that create an economic incentive
for it to exercise either the renewal or termination,
including: whether there are significant penalties to
terminate (or not extend); whether any leasehold
improvements are expected to have a significant
remaining value; historical lease durations; the importance
of the underlying asset to the Group’s operations; and
the costs and business disruption required to replace
the leased asset.
The assessment is reviewed if a significant event or a
significant change in circumstances occurs which affects
this assessment and that is within the control of the lessee.
Refer to note 12 for additional disclosures relating to leases.
146
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS
1 SEGMENTAL ANALYSIS
The Group has four reportable segments which have been identified based on the operating segments of the Group that
are regularly reviewed by the chief operating decision-maker, which has been determined to be the Executive Committee,
in order to assess performance and allocate resources. A reassessment of the Group’s operating segments was conducted
following the acquisition of the Derco group in 2022. The Group’s operating segments are now represented by groups of
countries which comprise the UK, Asia, Australasia, Europe, Africa, and the Americas, and the market channels, Distribution
and Retail. Operating segments are then aggregated into reporting segments to combine those with similar economic
characteristics. The reassessment of the Group’s operating segments did not result in a change to the reporting segments.
The Group reports the performance of its reporting segments after the allocation of central costs. These represent costs
of Group functions.
The following summary describes the operations of each of the Group’s reportable segments:
Distribution
APAC
Europe & Africa
Americas
Retail
Exclusive distribution, sales and marketing activities of New Vehicles and Parts.
Sale of New and Used Vehicles together with logistics services where the Group
may also be the exclusive distributor, alongside associated Aftersales activities
of service, body shop repairs and parts sales.
Sale of New and Used Vehicles, together with associated Aftersales activities
of service, body shop repairs and parts sales in the UK and Europe.
2023
Revenue
Total revenue
Results
Adjusted operating profit
Operating adjusting items
Operating profit from continuing operations
Share of profit after tax of joint ventures and associates
Profit before finance and tax
Finance income
Finance costs
Profit before tax from continuing operations
Tax
Profit for the year from continuing operations
Distribution
APAC
£m
Europe &
Africa
£m
Americas
£m
Total
Distribution
£m
Retail
£m
Total
£m
2,826
2,521
3,746
9,093
2,354
11,447
235
132
262
629
40
669
(50)
619
1
620
52
(259)
413
(130)
283
The Group’s reported segments are based on the location of the Group’s assets. Revenue earned from sales is disclosed
by origin and is not materially different from revenue by destination. Revenue is further analysed as follows:
2023
UK
Chile
Australia
Rest of the world
Group
£m
2,065
1,773
1,310
6,299
11,447
The Group’s non-current assets by location comprise intangible assets, property, plant and equipment, right-of-use assets,
investments in joint ventures and associates, and are analysed as follows:
2023
UK
Rest of the world
Group
£m
297
2,252
2,549
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
147
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 SEGMENTAL ANALYSIS CONTINUED
2023
Segment assets and liabilities
Segment assets
Other current assets
Other non-current assets
Segment liabilities
Other liabilities
Total net assets
Distribution
APAC
£m
Europe &
Africa
£m
Americas
£m
Total
Distribution
£m
Retail
£m
Total
£m
915
748
1,454
3,117
485
3,602
795
2,742
(1,269)
(741)
(830)
(2,840)
(495)
(3,335)
(2,184)
1,620
Segment assets include net inventory, receivables, and derivative assets. Segment liabilities include payables, provisions,
and derivative liabilities.
2023 from continuing operations
Other segment items
Capital expenditure:
– Property, plant and equipment
– Leased vehicles, rental machinery and equipment
– Right-of-use assets
– Intangible assets
Depreciation and impairment:
– Property, plant and equipment
– Leased vehicles, rental machinery and equipment
– Right-of-use assets
Amortisation of intangible assets
Net provisions charged to the consolidated income
statement
Distribution
APAC
£m
Europe &
Africa
£m
Americas
£m
Total
Distribution
£m
Retail
£m
Total
£m
27
20
12
1
11
6
30
2
8
13
26
7
1
7
1
8
1
7
27
15
14
2
20
13
35
7
67
61
33
4
38
20
73
10
31
46
21
23
3
1
23
–
8
1
2
88
84
36
5
61
20
81
11
48
Net provisions include inventory, trade receivables impairment and other liability provisions.
148
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
1 SEGMENTAL ANALYSIS CONTINUED
2022
Revenue
Total revenue
Results
Adjusted operating profit
Operating adjusting items
Operating profit from continuing operations
Share of profit after tax of joint ventures and associates
Profit before finance and tax
Finance income
Finance costs
Profit before tax from continuing operations
Tax
Profit for the year from continuing operations
Distribution
APAC
£m
Europe &
Africa
£m
Americas
£m
Total
Distribution
£m
Retail
£m
Total
£m
2,341
2,048
1,480
5,869
2,264
8,133
163
90
110
363
48
411
(11)
400
–
400
21
(88)
333
(98)
235
The Group’s reported segments are based on the location of the Group’s assets. Revenue earned from sales is disclosed
by origin and is not materially different from revenue by destination. Revenue is further analysed as follows:
2022
UK
Australia
Rest of the world
Group
£m
2,029
1,136
4,968
8,133
The Group’s non-current assets by location comprise intangible assets, property, plant and equipment, right-of-use assets,
joint ventures and associates, and are analysed as follows:
2022
UK
Rest of the world
Group
2022 (Represented)
Segment assets and liabilities
Segment assets
Other current assets
Other non-current assets
Segment liabilities
Other liabilities
Total net assets
£m
299
2,053
2,352
Distribution
APAC
£m
Europe &
Africa
£m
Americas1
£m
Total
Distribution
£m
Retail
£m
Total
£m
620
477
1,799
2,896
440
3,336
917
2,711
(921)
(483)
(1,199)
(2,603)
(453)
(3,056)
(2,341)
1,567
Segment assets include net inventory, receivables, and derivative assets. Segment liabilities include payables, provisions,
and derivative liabilities.
1. Segment assets and liabilities in the Americas include a reclassification of derivative assets and liabilities.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
149
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
61
13
34
4
24
8
57
23
59
2022
£m
10
1
(42)
(13)
13
20
(11)
–
(29)
(40)
(1)
(41)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1 SEGMENTAL ANALYSIS CONTINUED
2022 from continuing operations
Other segment items
Capital expenditure:
– Property, plant and equipment
– Leased vehicles, rental machinery and equipment
– Right-of-use assets
– Intangible assets
Depreciation and impairment:
– Property, plant and equipment
– Leased vehicles, rental machinery and equipment
– Right-of-use assets
Amortisation of intangible assets
Net provisions charged to the consolidated income
statement
Distribution
APAC
£m
Europe &
Africa
£m
Americas
£m
Total
Distribution
£m
Retail
£m
Total
£m
14
9
10
1
7
4
30
8
22
13
12
4
8
1
7
4
6
6
21
–
9
1
9
–
13
7
10
39
13
27
3
23
8
49
21
53
22
–
7
1
1
–
8
2
6
Net provisions include inventory, trade receivables impairment and other liability provisions.
2 ADJUSTING ITEMS
From continuing operations
Other asset impairment reversals (see notes 11 and 12)
Disposal of businesses (see note 28)
Acquisition and integration costs
Accelerated amortisation (SaaS)
Other income
Gain on pension indexation
Total adjusting items in operating profit
Adjusting items in finance costs:
Interest on dividend payments to former shareholders of Derco
Net monetary loss on hyperinflation
Total adjusting items before tax
Tax on adjusting items (see note 7)
Total adjusting items
2023
£m
–
–
(50)
–
–
–
(50)
(10)
(29)
(89)
10
(79)
During the year, the Group incurred costs of £50m (2022: £42m) in relation to acquisition and integration of businesses.
Acquisition costs relate to the acquisitions of new businesses and integration costs were incurred primarily in relation
to the integration of the Derco business. For more details on acquisitions made during the year, please refer to note 28.
These costs have been reported as adjusting items to better reflect the underlying performance of the business.
At 31 December 2022, a liability was acquired, as part of the Derco acquisition, for the payment of a pre-completion
dividend to former shareholders. The payment of this dividend was agreed to be made in four tranches, throughout 2023,
with interest accruing on the outstanding amounts. At 31 December 2023, all of the tranches have been paid and interest
expense of £10m has been recognised within finance costs and reported as an adjusting item.
During 2022, Ethiopia was designated as a hyperinflationary economy as its three-year cumulative inflation rate exceeded
100%. As a result, IAS 29 Financial Reporting for Hyperinflationary Economies became effective for the year ended
31 December 2022. The results and financial position of Ethiopia are therefore restated to include the effect of indexation
and the resulting £29m net monetary loss on hyperinflation (2022: £29m net monetary loss) has been recognised within net
finance costs and reported as an adjusting item.
In 2022, other asset impairment reversals of £10m primarily related to property, plant & equipment and right-of-use
assets in the UK and Australia. These were reported as an adjusting item, consistent with the reporting of the original
impairment charge.
150
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
2 ADJUSTING ITEMS CONTINUED
In 2021, the Group started to migrate the Group’s existing ERP applications to a cloud-based solution. This was a strategic
decision to consolidate and upgrade the systems, improve speed and performance, and facilitate centralised support
following the transformation of the Information Technology organisational structure. The new solution was determined
to be Software as a Service (SaaS) and therefore the existing software assets were no longer treated as an asset under
IAS 38 Intangible Assets once the migration to the new solution had occurred. Consequently, the useful life of the existing
assets was reassessed and the impact accounted for prospectively as a change in an estimate. This change resulted in
a significant increase in the amortisation recognised for software costs and the incremental amortisation of £13m in 2022
was disclosed as an adjusting item.
In the first half of 2022, the Group disposed of its remaining operations in Russia and, at the time, management concluded
that the value of the expected proceeds from disposal was £nil. In the second half of 2022, the Group received proceeds
of £13m which were reported as other income within continuing operations as the subsequent receipt did not alter the initial
(and reassessed) conclusion that no consideration was expected. Given the magnitude and nature of the item, the impact
on the income statement was reported as an adjusting item.
With effect from 1 April 2022, the Trustee of the Inchcape Motors Pension Scheme now uses the Consumer Prices Index (CPI)
instead of Retail Prices Index (RPI) for those elements of pensions from the Group, Motors and Normand sections that
are increased in line with RPI. Management concluded that the change in indexation represented a plan amendment
and the impact of the change in benefits payable of £20m was recognised in the income statement as a past
service cost. Considering the magnitude and nature of the item, the impact on the income statement was reported
as an adjusting item.
3 REVENUE AND EXPENSES
a. Revenue
An analysis of the Group’s revenue for the year is as follows:
From continuing operations
Sale of goods
Provision of services
2023
£m
2022
£m
(represented)
10,878
569
11,447
7,687
446
8,133
Sale of goods includes the sale of new and used vehicles and the sale of parts where they are sold directly to the customer.
Provision of services includes financial services, as well as labour and parts provided in servicing vehicles.
b. Analysis of net operating expenses
From continuing operations
Distribution costs
Administrative expenses
Other operating (income)/expenses
Net operating
expenses
before
adjusting items
2023
£m
623
664
(17)
1,270
Adjusting
items
2023
£m
Net operating
expenses
2023
£m
–
50
–
50
623
714
(17)
1,320
Net operating
expenses
before
adjusting items
2022
£m
385
512
17
914
Adjusting
items
2022
£m
–
43
(32)
11
Net operating
expenses
2022
£m
385
555
(15)
925
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
151
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3 REVENUE AND EXPENSES CONTINUED
c. Profit/(loss) before tax is stated after the following charges/(credits):
From continuing operations
Depreciation and impairment of tangible fixed assets:
– Property, plant and equipment
– Leased vehicles, rental machinery and equipment
– Right-of-use assets
Amortisation of intangible assets
Impairment of trade receivables
Profit on sale of property, plant and equipment and intangibles
2023
£m
2022
£m
61
20
81
11
7
(16)
24
8
57
23
6
(2)
Profit on the sale of property, plant and equipment in 2023 mainly relates to the sale of surplus assets in APAC (2022: profit
on sale of property, plant and equipment of surplus assets in APAC).
d. Auditor’s remuneration
During the year the Group (including its overseas subsidiaries) obtained the following services from the Group’s auditor
at costs as detailed below:
Fees payable to the Company’s auditor and its associates for the audit of the parent
company and the consolidated financial statements
Fees payable to the Company’s auditor and its associates for other services:
– The audit of the Company’s subsidiaries
– Audit related assurance services
– All other services
Total fees payable to the Company’s auditor
e. Staff costs
From continuing operations
Wages and salaries
Social security costs
Other pension costs (see note 5)
Share-based payment charge (see note 4)
2023
£m
2022
£m
3
5
–
–
8
2023
£m
597
48
17
15
677
3
5
5
1
14
2022
£m
446
35
(5)
10
486
Other pension costs correspond to the current and past service cost and contributions to the defined contribution schemes
(see note 5). In 2022, included in other pension costs is a £20m past service credit as a result of changing the basis of
indexation for the Inchcape Motors Pension Scheme from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI).
Information on Directors’ emoluments and interests which forms part of these audited consolidated financial statements
is given in the Directors’ Report on Remuneration which can be found on pages 92 to 114 of this document. Information
on compensation of key management personnel is set out in note 31b.
f. Average monthly number of employees
APAC
Europe & Africa
Americas
Total Distribution
Retail
Central & Digital
152
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Total
2023
Number
2022
Number
3,815
2,799
8,549
15,163
4,320
1,379
20,862
3,402
1,566
3,972
8,940
3,662
896
13,498
4 SHARE-BASED PAYMENTS
The terms and conditions of the Group’s share-based payment plans are detailed in the Directors’ Report on Remuneration.
The charge arising from awards granted under share-based payment plans was £15m (2022: £10m), all of which was
equity-settled.
The Other Share Plan’s disclosures below include other share-based incentive plans for senior executives and employees.
The following table sets out the movements in the number of share options and awards during the year:
2023
Outstanding at 1 January
Granted
Exercised
Lapsed
Outstanding at 31 December
Exercisable at 31 December
2022
Outstanding at 1 January
Granted
Exercised
Lapsed
Outstanding at 31 December
Exercisable at 31 December
Weighted
average
exercise price*
£4.92
£6.11
£3.81
£6.05
£5.78
£3.77
Weighted
average
exercise price*
£4.53
£6.00
£4.62
£5.17
£4.92
£4.59
Performance
Share Plan
Save As You
Earn Plan
Other
Share Plans
5,107,941
2,056,778
1,370,709
2,237,809
923,833
705,070
(979,410)
(786,587)
(353,282)
(869,253)
(346,502)
(122,661)
5,497,087
1,847,522
1,599,836
245,726
322,449
95,835
Performance
Share Plan
Save As You
Earn Plan
Other
Share Plans
4,967,050
2,068,892
1,130,883
1,975,716
685,472
766,006
(473,051)
(435,285)
(198,516)
(1,361,774)
(262,301)
(327,664)
5,107,941
2,056,778
1,370,709
166,168
45,291
11,895
*The weighted average exercise price excludes nil cost awards made under the Performance Share Plan and Other Share Plans.
The weighted average share price at the date of exercise of options exercised during the year ended 31 December 2023 was £7.76 (2022 – £7.21).
The weighted average remaining contractual life for the awards outstanding at 31 December 2023 is 1.4 years (2022:
1.4 years).
The range of exercise prices for options outstanding at the end of the year was £3.77 to £7.31 (2022: £3.77 to £7.31). See note
24 for further details.
The fair value of options granted under the Save As You Earn Plan and Other Share Plans is estimated as at the date of grant
using a Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were
granted. The fair value of nil cost awards granted under the Performance Share Plan and Other Share Plans is the market
value of the related shares at the time of grant. The following table lists the main inputs to the model for awards granted
during the years ended 31 December 2023 and 31 December 2022:
Performance Share Plan
Save As You Earn Plan
Other Share Plans
2023
2022
2023
2022
2023
2022
Weighted average share price at
grant date
Weighted average exercise price*
£7.53
n/a
£6.52
n/a
£7.64
£6.11
£7.06
£6.00
£7.54
n/a
£6.13
n/a
Vesting period
Expected volatility
3.0 years
3.0 years
3.0 years
3.0 years
2.3 years
2.7 years
n/a
n/a
31.0%
33.9%
n/a
n/a
Expected life of award
3.0 years
3.0 years
3.2 years
3.2 years
2.3 years
2.7 years
Weighted average risk-free rate
Expected dividend yield
Weighted average fair value per
option
n/a
n/a
n/a
n/a
4.5%
4.3%
£7.53
£6.52
£2.06
4.4%
3.5%
£1.78
n/a
n/a
n/a
n/a
£7.54
£6.13
* The weighted average exercise price excludes nil cost awards made under the Performance Share Plan and Other Share Plans.
No options were granted under the Executive Share Option Plan in 2023 or 2022.
The expected life and volatility of the options are based upon historical data.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
153
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
5 PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Group operates a number of pension and post-retirement benefit schemes for its employees in a number of its
businesses, primarily in the UK.
a. UK schemes: benefits, governance, cash flow obligations and investments
The Inchcape Motors Pension Scheme (IMPS) in the UK is the Group’s main defined benefit pension scheme. It is comprised
of the Group and Combined sections. In the first half of 2022, IMPS completed a partial scheme merger and implemented
a change to the indexation of benefits. Following the partial scheme merger, the assets and liabilities of the former Cash+,
Motors, and Normand sections were pooled (now referred to as the Combined Section). It is expected that this pooling of
risks will reduce volatility.
From 1 April 2022, the Trustee of IMPS uses the Consumer Prices Index (CPI) instead of Retail Prices Index (RPI) for those
elements of pensions from the Group, Motors and Normand sections that were historically increased in line with RPI. The
change in indexation represented a plan amendment and the impact of the change in benefits payable of £20m was
recognised in the income statement as a past service credit in 2022. Considering the magnitude and nature of the item,
the impact on the income statement was reported as an adjusting item.
The Group also operates the Inchcape Overseas Pension Scheme which is non-UK registered.
Benefit structure
The Group and Combined sections, which provide benefits linked to the final salary of members, are closed to
new members and closed to future benefit accrual. Final salary schemes provide benefits to members in the form of
a guaranteed level of pension payable for life. The level of benefits provided depends on final salary at retirement
(or leaving date, if earlier) and length of service. The Group bears risks in relation to its final salary schemes, notably
relating to investment performance, interest rates, inflation, and members’ life expectancies. There is potential for these
risks to harm the funding position of the schemes. If the schemes were to be in deficit, then additional contributions may
be required from the Group. A number of exercises have been undertaken to mitigate these key funding risks.
The Combined section also includes a defined benefit cash balance scheme. Cash balance schemes allow members
to accrue a percentage of their earnings each year which then grows to provide a lump sum payment on retirement.
Members have accrued benefits under this scheme with effect from 1 January 2013 up to 31 December 2020. The Group
underwrites the investment and interest rate risk to normal retirement age (65). Inflation and mortality risks associated with
benefits are borne solely by the members. Following a consultation process with relevant employees this section closed
to future benefit accrual on 31 December 2020. From 1 January 2021, UK employees were offered membership of the
Inchcape Retirement Savings Plan, a defined contribution workplace personal pension scheme, which is designed
to comply with auto enrolment legislation.
Defined contribution schemes like the Inchcape Retirement Savings Plan, which commenced on 1 January 2021,
see members’ individual accounts credited with employee and employer contributions which are then invested
to provide a pension pot on retirement. The Group does not underwrite investment, or other risks for this plan.
Governance
Our UK schemes are registered with HM Revenue and Customs (HMRC) and comply fully with the regulatory framework
published by the UK Pensions Regulator.
IMPS is established under trust law and has a trustee board that runs the scheme in accordance with the Trust Deed and
Rules and relevant legislation. The trustee board comprises an independent sole trustee company appointed by the Group.
As part of good governance, the Group reviewed the provision of trustee services to IMPS and after a formal tender process
it was decided to move to a Sole Trustee model from June 2021. The Trustee is required to act in the best interest of the
members and have responsibility for the scheme’s governance. The Trustee consults with the Group over decisions relating
to matters such as funding and investments.
The Inchcape Retirement Savings Plan has an external pension provider with its own governance committee.
The Group also has some minor unfunded arrangements relating to post-retirement health and medical plans in respect
of past employees.
Scheme specific cash obligation/investment detail
Inchcape Motors Pension Scheme
Group and Combined sections (closed sections)
The Group considers two measures of the pension deficit. The accounting position is shown on the Group’s balance sheet.
The funding position, calculated at the triennial actuarial valuation, is used to agree contributions made to IMPS. The last
completed actuarial valuations for the Group and Combined sections were carried out as at 5 April 2022 on a market-
related basis.
For the Group and Combined sections, the value of accrued liabilities determined in accordance with the advice of the
Scheme Actuary was based on the defined accrued benefit method. The actuarial valuation determined that the duration
of the liabilities was approximately 14 years and that an aggregate surplus of £40m existed. As a consequence, the Group
and the Trustee agreed that contributions to IMPS would cease with effect from April 2022.
The Group is aware of a case involving Virgin Media Limited and NTL Pension Trustees II Limited relating to the validity
of certain historical pension changes which could potentially lead to additional liabilities for some pension schemes
and sponsors. The Group notes that the ruling is subject to appeal and is assessing whether there is any potential impact
on the Group, although currently no conclusion has been reached and therefore no quantification of any potential impact
has been determined.
154
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 5 PENSIONS AND OTHER POST-RETIREMENT BENEFITS CONTINUED
Inchcape Overseas Pension Scheme (closed section)
This scheme is managed from Guernsey and is subject to regulations similar to the UK. It is therefore reported under the
United Kingdom in this note. The latest triennial actuarial valuation for this scheme was carried out at 31 March 2021 and
based on the defined accrued benefit method. The actuarial valuation determined that the duration of the liabilities was
approximately 12 years and that the scheme was approximately 80% funded on a prudent funding basis. To make good the
funding deficit of £13m, it has been agreed that deficit contributions of £1.5m p.a. would be paid by means of an annual
lump sum, ending with the payment due in July 2028. The first payment at this new level was paid on 1 July 2020. Additional
contributions in respect of expenses of £0.2m per annum will also be made.
b. Overseas schemes
There are a number of smaller defined benefit schemes overseas, the significant schemes being the Inchcape Motors
Limited Retirement Scheme in Hong Kong and the acquired defined benefit scheme in Indonesia. In general, these
schemes offer a lump sum on retirement with no further obligation to the employee and assets are held in trust in separately
administered funds. These schemes are typically subject to triennial valuations. The overseas defined contribution schemes
are principally linked to local statutory arrangements.
c. Defined contribution plans
The total expense recognised in the consolidated income statement is £15m (2022: £13m). There are no outstanding
contributions at 31 December 2023 (2022: nil).
d. Defined benefit plans
As the Group’s principal defined benefit schemes are in the UK, these have been reported separately from the overseas
schemes. For the purposes of reporting, actuarial updates have been obtained for the Group’s material schemes and these
updates are reflected in the amounts reported in the following tables.
e. Recognition of Pension Surplus ‘IFRIC 14’
The Group is not required to recognise any additional liabilities in relation to funding plans, or limit the recognition of any
surpluses, as the Group retains an unconditional right to any future economic benefits available by way of future refunds
or reduction in contributions.
The principal weighted average assumptions used by the actuaries were:
Rate of increase in salaries
Rate of increase in pensions
Discount rate
Rate of inflation:
– Retail price index
– Consumer price index
United Kingdom
2023
%
n/a
2.6
4.5
3.2
2.6
2022
%
n/a
2.5
4.8
3.3
2.6
Overseas
2023
%
3.4
3.7
3.1
2.0
n/a
2022
%
3.4
3.6
1.8
2.4
n/a
Assumptions regarding future mortality experience are set based on published statistics and experience. For the UK
schemes, the average life expectancy of a pensioner retiring at age 65 is 21.5 years (2022: 22.7 years) for current pensioners
and 22.8 years (2022: 24.0 years) for current non pensioners. Most of the overseas schemes only offer a lump sum on
retirement and therefore mortality assumptions are not applicable.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
155
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
5 PENSIONS AND OTHER POST-RETIREMENT BENEFITS CONTINUED
The asset/(liability) recognised in the consolidated statement of financial position is determined as follows:
Present value of funded
obligations
Fair value of plan assets
Net surplus/(deficit) in funded
obligations
Present value of unfunded
obligations
The net pension asset is analysed
as follows:
Schemes in surplus
Schemes in deficit
United Kingdom
2023
£m
(576)
655
79
–
79
84
(5)
79
2022
£m
(572)
668
96
–
96
104
(8)
96
Overseas
2023
£m
(31)
30
(1)
(11)
(12)
–
(12)
(12)
2022
£m
(35)
33
(2)
(1)
(3)
–
(3)
(3)
Total
2023
£m
(607)
685
78
(11)
67
84
(17)
67
The amounts recognised in the consolidated income statement are as follows:
Current service cost
Past service cost
Scheme expenses
Interest expense on plan liabilities
Interest income on plan assets
United Kingdom
Overseas
Total
2023
£m
–
–
(1)
(27)
31
3
2022
£m
–
20
(2)
(19)
22
21
2023
£m
(2)
–
–
(1)
1
(2)
2022
£m
(2)
–
–
(1)
1
(2)
2023
£m
(2)
–
(1)
(28)
32
1
The amounts recognised in the consolidated statement of comprehensive income are as follows:
Actuarial (losses)/gains on
liabilities:
– Experience (losses)/gains
– Changes in demographic
assumptions
– Changes in financial
assumptions
Actuarial (losses)/gains on assets:
– Experience (losses)/gains
United Kingdom
2023
£m
2022
£m
Overseas
2023
£m
2022
£m
Total
2023
£m
(6)
22
(23)
(15)
(22)
(20)
–
312
(302)
(10)
1
–
1
–
2
2
–
2
(6)
(2)
(5)
22
(22)
(15)
(20)
2022
£m
(607)
701
94
(1)
93
104
(11)
93
2022
£m
(2)
20
(2)
(20)
23
19
2022
£m
(18)
–
314
(308)
(12)
156
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5 PENSIONS AND OTHER POST-RETIREMENT BENEFITS CONTINUED
Analysis of the movement in the net asset/(liability):
At 1 January
Business acquisitions (note 28(a))
Amount recognised in the
consolidated income statement
Contributions by employer
Actuarial (losses)/gains recognised
in the year
Effect of foreign exchange rates
At 31 December
United Kingdom
Overseas
Total
2023
£m
96
–
3
2
(22)
–
79
2022
£m
82
–
21
3
(10)
–
96
2023
£m
(3)
(11)
(2)
1
2
1
(12)
2022
£m
–
–
(2)
1
(2)
–
(3)
2023
£m
93
(11)
1
3
(20)
1
67
Changes in the present value of the defined benefit obligation are as follows:
United Kingdom
Overseas
Total
At 1 January
Business acquisitions (note 28(a))
Current service cost
Past service cost
Interest expense on plan liabilities
Actuarial (losses)/gains:
– Experience (losses)/gains
– Changes in demographic
assumptions
– Changes in financial
assumptions
Benefits paid
Effect of foreign exchange rate
changes
At 31 December
2023
£m
(572)
–
–
–
(27)
(6)
22
(23)
30
–
(576)
2022
£m
(898)
–
–
20
(19)
(20)
–
312
33
–
(572)
2023
£m
(36)
(11)
(2)
–
(1)
1
–
1
3
3
(42)
2022
£m
(38)
–
(2)
–
(1)
2
–
2
5
(4)
(36)
2023
£m
(608)
(11)
(2)
–
(28)
(5)
22
(22)
33
3
(618)
Changes in the fair value of the defined benefit asset are as follows:
At 1 January
Interest income on plan assets
Scheme expenses
Actuarial (losses)/gains:
– Experience (losses)/gains
Contributions by employer
Benefits paid
Effect of foreign exchange rate
changes
At 31 December
United Kingdom
Overseas
Total
2023
£m
668
31
(1)
(15)
2
(30)
–
655
2022
£m
980
22
(2)
(302)
3
(33)
–
668
2023
£m
33
1
–
–
1
(3)
(2)
30
2022
£m
38
1
–
(6)
1
(5)
4
33
2023
£m
701
32
(1)
(15)
3
(33)
(2)
685
2022
£m
82
–
19
4
(12)
–
93
2022
£m
(936)
–
(2)
20
(20)
(18)
–
314
38
(4)
(608)
2022
£m
1,018
23
(2)
(308)
4
(38)
4
701
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
157
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
5 PENSIONS AND OTHER POST-RETIREMENT BENEFITS CONTINUED
At the end of the reporting period, the percentages of the plan assets by category were as follows:
Equities
Bonds
Liability driven investment
Long lease property
Other
United Kingdom
Overseas
Total
2023
2022
(represented)
2023
2022
2023
2022
(represented)
5.2%
32.1%
55.6%
7.1%
–
100%
5.1%
6.6%
75.0%
12.1%
1.2%
100%
50.0%
43.3%
–
–
6.7%
100%
50.2%
42.6%
–
–
7.2%
100%
7.2%
32.6%
53.1%
6.9%
0.2%
100%
7.2%
8.3%
71.4%
11.5%
1.6%
100%
The majority of investments shown as equities and bonds are held through funds where the underlying investments of the
fund are quoted. Liability driven investment is a strategy commonly used by defined benefit pension schemes to reduce
interest rate and inflation risk. It includes government bonds, derivative instruments, and cash. Virtually all the equities and
bonds held within the investment funds have prices in active markets. Derivatives, property, and liability driven investment
can be classified as level 2 instruments.
The schemes had no directly held employer related investment during the reporting period. The schemes’ investment
managers may potentially hold a small investment in Inchcape plc either through index weightings or stock selection
(less than 0.5% of their respective fund values).
The following disclosures relate to the Group’s defined benefit plans only.
f. Risk management
Asset volatility
Scheme liabilities are calculated on a discounted basis using a discount rate which is set with reference to corporate
bond yields. If scheme assets underperform this yield, then this will create a deficit. The combined schemes hold assets as
defensive assets (liability driven investment solutions, absolute return bonds and annuity policies) which mitigate significant
changes in yields, and active monitoring plans are in place to identify opportunities to increase the proportion of such
assets further when economically possible.
As the schemes mature and the funding positions improve, the Trustees reduce investment risk by increasing the allocation
to defensive assets, which are designed to better match scheme liabilities. The investment strategies have been reviewed
by the Trustees to address the long-term objective of the schemes.
Inflation risk
The majority of the Group’s defined benefit obligations are linked to inflation. Higher inflation will lead to higher liabilities,
although in the majority of cases there are caps on the level of inflationary increases to be applied to pension obligations.
The Group’s investment strategy across the schemes is to mitigate inflation risk through holding inflation-linked assets.
Life expectancy
Where relevant, the plans’ obligations are to provide a pension for the life of the member, so realised increases in life
expectancy will result in an increase in the plans’ benefit payments. Future mortality rates cannot be predicted with
certainty. All of the schemes conduct scheme-specific mortality investigations annually, to ensure the Group has
a clear understanding of any potential increase in liability due to pensioners living for longer than assumed.
g. Sensitivity analysis
The disclosures above are dependent on the assumptions used. The table below demonstrates the sensitivity of the defined
benefit obligation to changes in the assumptions used for the UK schemes. Changes in assumptions have an immaterial
effect on the overseas schemes.
Impact on the defined benefit obligation
Discount rate -1%
Discount rate +1%
CPI Inflation -0.25%
CPI Inflation +0.25%
Life expectancy +1 year
United Kingdom
2023
£m
+75
-61
-9
+9
+23
2022
£m
+81
-66
-9
+10
+25
The above analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this
is unlikely to occur, and changes in some of the assumptions may be correlated. The above variances have been used
as they are believed to be reasonably possible changes in assumptions by reference to recent trends and experiences.
158
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 5 PENSIONS AND OTHER POST-RETIREMENT BENEFITS CONTINUED
h. Expected future cash flows
The Group paid approximately £2m (2022: £2m) to its UK defined benefit plans in 2023 under the prevailing Schedules
of Contributions (following the 5 April 2022 actuarial valuations for the Group and Combined sections of the Inchcape
Motors Pension Scheme and 31 March 2021 valuation for the Inchcape Overseas Pension Scheme).
From 1 January 2021 (following the closure of the defined benefit cash balance scheme to future benefit accrual on
31 December 2020) the Group pays ongoing employer pension contributions into the Inchcape Retirement Savings Plan
(a defined contribution plan).
The defined benefit obligations are based on the current value of expected benefit payment cash flows to members
over the next several decades. The average duration of the liabilities is approximately 13 years for the UK schemes.
6 NET FINANCE COSTS
From continuing operations
Interest expense on bank and other borrowings
Finance costs on lease liabilities (note 12(b))
Stock holding interest (note 20)
Net monetary loss on hyperinflation
Interest on deferred dividend payment
Other finance costs
Finance costs
Bank and other interest income
Net interest income on post-retirement plan assets and liabilities
Other finance income
Finance income
Net finance costs
Analysed as:
Net finance costs excluding adjusting finance costs
Finance costs reported as adjusting items
Net finance costs
2023
£m
124
22
50
29
10
24
259
(47)
(4)
(1)
(52)
207
168
39
207
2022
£m
27
10
19
29
–
3
88
(17)
(3)
(1)
(21)
67
38
29
67
Other finance costs include fees, commissions and foreign exchange gains and losses.
Since 2022, in accordance with IAS 29 Financial Reporting in Hyperinflationary Economies, the results and financial position
of the Group’s operations in Ethiopia have been restated to the purchasing power or inflationary measuring unit current
at the end of the reporting period. Therefore, finance costs include the loss on hyperinflation in respect of monetary items,
which is also treated as an adjusting item.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
159
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
7 TAX
This note only provides information about corporate income taxes under IFRS. The Group operates in over 40 markets
and territories across the world. The Group pays and collects many different taxes in addition to corporate income taxes
including: payroll taxes, value added and sales taxes, property taxes, product-specific taxes, and environmental taxes.
Such taxes borne by the Group are included in profit before tax.
From continuing operations
Current tax:
– Overseas tax
Adjustments to prior year liabilities:
– Overseas tax
Current tax
Deferred tax (note 16):
Origination and reversal of temporary differences
Deferred tax
Total tax charge
The total tax charge is analysed as follows:
– Tax charge on adjusted profit before tax
– Tax (credit)/charge on adjusting items
Total tax charge
2023
£m
146
(6)
140
(10)
(10)
130
140
(10)
130
2022
£m
111
(6)
105
(7)
(7)
98
97
1
98
Details of the adjusting items for the year can be found in note 2. Not all of the adjusting items will be taxable or deductible
for tax purposes. Therefore, the tax charge on adjusting items represents the total of the current and deferred tax on only
those elements that are assessed as taxable or deductible.
a. Factors affecting the tax expense for the year
The effective tax rate for the year is 31.5% (2022: 29.4%). The effective tax rate on adjusted profit before tax is 27.9% (2022:
26.0%). The weighted average tax rate is 22.4% (2022: 22.7%). The weighted average tax rate comprises the average
statutory rates across the Group, weighted in proportion to accounting profits and losses before tax. The table below
explains the differences between the expected tax charge at the weighted average tax rate and the Group’s total
tax charge.
From continuing operations
Profit before tax
Profit before tax multiplied by the weighted average tax rate of 22.4% (2022: 22.7%)
– Permanent differences
– Non-taxable income
– Prior year items
– Derecognition/(recognition) of deferred tax assets
– Overseas tax audits and settlements
– Taxes on undistributed earnings
– Acquisition of businesses
– Adjustments for hyperinflation
Total tax charge
2023
£m
413
93
4
(4)
(4)
27
1
2
2
9
130
2022
£m
333
75
10
(4)
(1)
(2)
2
2
4
12
98
The major component of recognition and derecognition of deferred tax assets in the table above is the non-recognition
of deferred tax assets associated with tax losses and UK corporate interest restrictions arising in the current year.
b. Factors affecting the tax expense of future years
The Group’s future tax charge, and effective tax rate, could be affected by several factors including; the resolution of audits
and disputes, changes in tax laws or tax rates, repatriation of cash from overseas markets to the UK, the ability to utilise
brought forward losses, the impact of UK corporate interest restrictions and business acquisitions and disposals. In addition,
a change in profit mix between low and high taxed jurisdictions will impact the Group’s future tax charge.
The utilisation of brought forward tax losses or reactivation of previously disallowed interest deductions under the UK
corporate interest restriction regulations and the recognition of deferred tax assets associated with them may also give rise
to tax charges or credits. The recognition of deferred tax assets, particularly in respect of tax losses, is based upon an
assessment of whether it is probable that there will be sufficient and suitable taxable profits in the relevant legal entity or tax
group against which to utilise the assets in the future. Judgement is required when determining probable future taxable
profits. In the event that actual taxable profits are different to those forecast, the Group’s future tax expense and effective
tax rate could be affected. Information about the Group’s tax losses and deferred tax assets can be found in note 16.
160
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 7 TAX CONTINUED
The Group is within the scope of the OECD Pillar Two model rules, the relevant legislation has been enacted in the United
Kingdom, the jurisdiction in which Inchcape plc is incorporated, and is effective from 1 January 2024. Since the Pillar Two
legislation was not effective at the reporting date, the Group has no related current tax liability. Under the legislation,
the Group is liable to pay a top-up tax for the difference between its Pillar Two effective tax rate per jurisdiction and the
15% minimum rate. The Group expects to be subject to the top-up tax in relation to its operations in several countries and
the average effective tax rate (before considering Pillar Two) of those operations expected to be in scope is:
Accounting profit for the year ending 31 December 2023
Tax charge for year ending 31 December 2023
2023 Average effective tax rate
£m
43
3
6%
The Group is in the process of assessing its exposure to the Pillar Two legislation and is implementing processes to comply
with the regulations. Although the average effective tax rate disclosed above is below 15%, the Group might not be
exposed to paying Pillar Two income taxes in relation to these jurisdictions. This is due to the impact of specific adjustments
envisaged in the Pillar Two legislation which give rise to different effective tax rates compared to those calculated in
accordance with IAS 12. Due to the complexities in applying the legislation, the quantitative impact of the legislation
is not yet reasonably estimable. Therefore, even for those jurisdictions with an accounting effective tax rate above 15%,
there may still be Pillar Two tax implications.
The Group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related
to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
The Group has published its approach to tax on www.inchcape.com covering its tax strategy and governance framework
in accordance with Schedule 19 Finance Act 2016.
8 EARNINGS PER SHARE
Profit/(loss) for the year
Non-controlling interests
Basic earnings
Loss for the year from discontinued operations
Basic earnings from continuing operations attributable to owners of the parent
Adjusting items
Adjusted earnings from continuing operations
Basic earnings/(loss) per share:
Basic earnings per share from continuing operations
Basic loss per share from discontinued operations
Total basic earnings/(loss) per share
Diluted earnings/(loss) per share:
Diluted earnings per share from continuing operations
Diluted loss per share from discontinued operations
Total diluted earnings/(loss) per share
Adjusted earnings per share from continuing operations:
Basic Adjusted earnings per share from continuing operations
Diluted Adjusted earnings per share from continuing operations
2023
£m
283
(13)
270
–
270
79
349
65.6p
–
65.6p
64.8p
–
64.8p
84.8p
83.7p
2022
£m
(6)
(5)
(11)
241
230
41
271
61.1p
(64.0)p
(2.9)p
54.6p
(57.1)p
(2.5)p
72.0p
64.4p
2023
number
2022
number
Weighted average number of fully paid ordinary shares in issue during the year
412,689,716
377,146,960
Weighted average number of fully paid ordinary shares in issue during the year:
– Held by the Inchcape Employee Trust
(1,131,983)
(749,751)
Weighted average number of fully paid ordinary shares for the purposes of basic EPS
411,557,733
376,397,209
Dilutive effect of potential ordinary shares
5,408,280
44,733,701
Adjusted weighted average number of fully paid ordinary shares in issue during the year for
the purposes of diluted EPS
416,966,013
421,130,910
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
161
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
8 EARNINGS PER SHARE CONTINUED
Basic earnings/(loss) per share is calculated by dividing the Basic earnings/(loss) for the year by the weighted average
number of fully paid ordinary shares in issue during the year, less those shares held by the Inchcape Employee Trust and
repurchased as part of the share buyback programme.
Diluted earnings/(loss) per share is calculated on the same basis as Basic earnings/(loss) per share with a further adjustment
to the weighted average number of fully paid ordinary shares to reflect the effect of all dilutive potential ordinary shares.
Dilutive potential ordinary shares comprise share options and other share-based awards. In 2022, dilutive potential ordinary
shares also include the shares to be issued in connection with the acquisition of the Derco group (see notes 24 and 28).
Basic Adjusted earnings (which excludes adjusting items) is adopted to assist the reader in providing an additional
performance measure of the Group. Basic Adjusted earnings per share is calculated by dividing the Adjusted earnings
for the year by the weighted average number of fully paid ordinary shares in issue during the year, less those shares held
by the Inchcape Employee Trust and repurchased as part of the share buyback programme.
Diluted Adjusted earnings per share is calculated on the same basis as the Basic Adjusted earnings per share with a further
adjustment to the weighted average number of fully paid ordinary shares to reflect the effect of all dilutive potential
ordinary shares. Information presented for diluted and diluted adjusted earnings per ordinary share uses the weighted
average number of shares as adjusted for potentially dilutive ordinary shares as the denominator.
9 DIVIDENDS
The following dividends were paid by the Group:
Interim dividend for the six months ended 30 June 2023 of 9.6p per share
(30 June 2022: 7.5p per share)
Final dividend for the year ended 31 December 2022 of 21.3p per share
(31 December 2021: 16.1p per share)
2023
£m
40
88
128
2022
£m
28
61
89
A final proposed dividend for the year ended 31 December 2023 of 24.3p per share is subject to approval by shareholders
at the Annual General Meeting and has not been included as a liability as at 31 December 2023. The Group has sufficient
distributable reserves to pay dividends to its ultimate shareholders. Distributable reserves are calculated on an individual
legal entity basis and the ultimate parent company, Inchcape plc, currently has adequate levels of realised profits within
its retained earnings to support dividend payments. At 31 December 2023, Inchcape plc’s company-only distributable
reserves were £276m. On an annual basis, the distributable reserve levels of the Group’s subsidiary undertakings are
reviewed and dividends paid up to Inchcape plc where it is appropriate to do so.
162
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 10 INTANGIBLE ASSETS
Cost
At 1 January 2022
Businesses acquired
Business sold
Additions
Disposals
Retirements
Effect of foreign exchange rate changes
At 1 January 2023
Businesses acquired (see note 28(a))
Period adjustments (see note 28(b))
Additions
Effect of foreign exchange rate changes
At 31 December 2023
Accumulated amortisation and impairment
At 1 January 2022
Amortisation charge for the year
Business sold
Disposals
Retirements
Effect of foreign exchange rate changes
At 1 January 2023
Amortisation charge for the year (note 3)
Effect of foreign exchange rate changes
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Indefinite-life
intangible
assets1
£m
Computer
software &
Other2
£m
Goodwill
£m
552
140
(84)
–
–
–
40
648
39
5
–
(15)
677
257
593
–
–
–
–
28
878
113
–
–
(43)
948
(436)
(18)
–
84
–
–
(26)
(378)
–
3
(375)
302
270
–
–
–
–
(2)
(20)
–
1
(19)
929
858
217
26
(29)
4
(1)
(95)
10
132
–
–
5
(3)
134
(178)
(23)
28
1
95
(9)
(86)
(11)
3
(94)
40
46
Total
£m
1,026
759
(113)
4
(1)
(95)
78
1,658
152
5
5
(61)
1,759
(632)
(23)
112
1
95
(37)
(484)
(11)
7
(488)
1,271
1,174
1. Indefinite-life intangible assets comprise distribution agreements and acquired brands for which there is no foreseeable limit to the period over which they are
expected to generate net cash inflows.
2. Included in computer software and other is acquired customer relationships.
There were no impairment charges or reversals during the year (2022: £nil). At 31 December 2023, computer software under
development was £4m (2022: £6m).
Goodwill and indefinite-life intangible assets
Goodwill acquired in a business combination has been allocated to the cash generating units (CGUs) or group of CGUs
(hereafter collectively referred to as ‘CGU groups’) that are expected to benefit from the synergies associated with that
business combination. Following the acquisition of the Derco group in December 2022, the Group’s operating segments
were reassessed (see note 1). The CGUs for goodwill testing are now structured around the revised operating segments,
Asia, Australasia, Europe, Africa, Americas, and the UK, which represent the CGU groups that are expected to benefit
from the synergies of the business combination in which the goodwill arose and which represent the lowest level at which
information about goodwill is available and monitored for internal management purposes.
Indefinite-life intangible assets, principally distribution agreements acquired in a business combination, are also allocated
to the CGU groups that are expected to benefit from the cash flows associated with the relevant agreements.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
163
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
10 INTANGIBLE ASSETS CONTINUED
The carrying amount of goodwill and indefinite-life intangible assets has been allocated to CGU groups within the following
reporting segments:
Goodwill
Americas
Asia
Other
Indefinite-life intangible assets
Europe
Americas – Derco
Americas – Other
APAC
2023
£m
207
79
16
302
2023
£m
28
506
281
114
929
2022
£m
212
48
10
270
2022
£m
29
536
293
–
858
In accordance with the Group’s accounting policies, goodwill and other indefinite-life intangible assets are tested
at least annually for impairment and whenever events or circumstances indicate that the carrying amount may not
be recoverable. Impairment tests were performed for all CGU groups during the year ended 31 December 2023.
The recoverable amount of the CGU groups acquired in the current period were determined based on fair value less
cost of disposal.
The recoverable amounts of all CGU groups were determined based on the higher of the fair value less costs to sell and
value in use calculations. The recoverable amount is determined firstly through value in use calculations. Where this is
insufficient to cover the carrying value of the relevant asset being tested, fair value less costs to sell is also determined.
Site-based assets (property, plant and equipment and right-of-use assets) are first tested for impairment individually before
being included in the aforementioned impairment tests as a component of the carrying value of a CGU group. If the
carrying amount of a CGU group exceeds its recoverable amount, an impairment loss is recognised and allocated
between the assets of the CGU group to reduce the carrying amount. This allocation is initially applied to the carrying
amount of any goodwill allocated to the CGU group. If a further impairment charge still remains, then this is allocated
to other assets in the CGU group on a pro-rata basis.
The value in use calculations mainly use cash flow projections based on three-year financial projections prepared by
management. The key assumptions for these projections are those relating to volumes, revenue, gross margins, overheads,
the level of working capital required to support trading and capital expenditure.
Forecast revenue is based on past experience and expectations for near-term growth in the relevant markets. Key
assumptions used to determine revenue are expectations of market size, represented by Total Industry Volume (TIV) and
Units in Operation (UIO), estimates of product availability from mobility partners and market share, based on external
sources where appropriate. Operating profits are forecast based on historical experience of gross and operating margins,
adjusted for the impact of changes to product mix and cost-saving initiatives that had been implemented at the reporting
date. Cash flows are forecast based on operating profit adjusted for the level of working capital required to support trading
and capital expenditure. The assumptions used in the value in use calculations are based on past experience, recent
trading, and forecasts of operational performance in the relevant markets including expectations about continuing
relationships with key mobility partners.
164
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 10 INTANGIBLE ASSETS CONTINUED
The impact of climate change and EV penetration has been considered by management in forecasting the future
cashflows. The Group scenario analysis performed as part of the Task Force Climate-Related Financial Disclosures (TCFD)
report identified five prioritised risks and opportunities in a 1.5°C and a 4°C scenario and factored into the impairment
assessment where reasonably quantifiable. Further details on the climate change risks and opportunities can be found
on pages 40 to 53.
For all CGU groups, cash flows after the three-year period are extrapolated for a further seven years using declining growth
rates which reduces the year three growth rate down to the long-term growth rate appropriate for each CGU group,
to better reflect the medium-term growth expectations for those markets. A terminal value calculation is used to estimate
the cash flows after year 10 using these long-term growth rates.
Cash flows are discounted back to present value using a discount rate specific to each CGU group. The discount rates used
are calculated using the capital asset pricing model to derive a cost of equity which is then weighted with an estimated
cost of debt and lease liabilities based on an optimal market gearing structure. The Group uses several inputs to calculate
a range for each discount rate from which an absolute measure is determined for use in the value in use calculations.
Key inputs include benchmark risk-free rates, inflation differentials, equity risk premium, country risk premium and a risk
adjustment (beta) calculated by reference to comparable companies with similar retail and distribution operations.
The Group applies post-tax discount rates to post-tax cash flows as the valuation calculated using this method closely
approximates to applying pre-tax discount rates to pre-tax cash flows.
Key assumptions used
Pre-tax discount rates and long-term discount rates used in the value in use calculations for each of the Group’s significant
CGU groups are shown below:
Goodwill:
20231
Pre-tax discount rate (%)
Long-term growth rate (%)
1. Based on the revised CGUs for goodwill testing.
20222
Pre-tax discount rate (%)
Long-term growth rate (%)
2. Based on the CGUs presented in the 2022 Annual Report and Accounts.
Indefinite-life intangible assets:
2023
Pre-tax discount rate (%)
Long-term growth rate (%)
2022
Pre-tax discount rate (%)
Long-term growth rate (%)
Americas
12.6
2.8
Asia
9.3
2.2
Baltics
8.1
1.9
Americas –
Daimler
Americas – Hino/
Subaru/JLR/
Volvo/Porsche
Central America
– Suzuki
15.8
3.2
12.2
2.9
14.1
2.6
Americas –
Hino
14.3
2.7
Americas –
Hino
13.4
3.1
Central
America –
Suzuki
12.6
2.9
Central
America –
Suzuki
14.1
2.6
Derco
12.5
2.9
Derco
–
–
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
165
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
10 INTANGIBLE ASSETS CONTINUED
Central America – Suzuki
As at 31 December 2023, the Central America – Suzuki distribution agreement had a carrying value of £70m (2022: £74m).
The recoverable amount of the Central America – Suzuki CGU group was £170m. The recoverable value of the CGU group
was determined based on value in use calculations, consistent with the approach used as at 31 December 2022. Cash
flows were discounted back to present value using a pre-tax discount rate of 12.6% (2022: 14.1%).
The cash flows used within the impairment models are based on assumptions which are sources of estimation uncertainty
and small movements in these assumptions could lead to a further impairment. Management have performed sensitivity
analysis on the key assumptions in the indefinite-life intangible asset impairment model for Central America – Suzuki using
reasonably possible changes in these key assumptions. The sensitivities have been selected based on the inherent business
volatility and the metrics that closely align to the consequences of climate change risks and opportunities detailed on
pages 40 to 53.
Revenue CAGR (%)
Average gross margin (%)
Pre-tax discount rate (%)
Long-term growth rate (%)
Increase/(decrease) in
assumption
Decrease in
value in use
£m
Increase in
value in use
£m
(1.0%)/1.0%
(0.5%)/0.5%
1.0%/(1.0%)
(0.5%)/0.5%
(16)
(9)
(19)
(6)
18
9
25
7
Other CGUs
As at 31 December 2023, the Americas – Hino distribution agreement had a carrying value of £41m (2022: £44m). The
Group’s value in use calculations are sensitive to a change in the key assumptions used. However, with the exception of the
Group’s Hino business in South America, a reasonably possible change, based on historical experience, in a key assumption
will not cause a material impairment of indefinite-life intangible assets. The value in use calculations for the Hino distribution
agreement in South America currently exceed the carrying value by 24%. A 1.4% increase in the discount rate, a 3.1%
reduction in the long-term growth rate, or an 18% reduction in volumes in the forecast period, while holding all other
assumptions constant, would eliminate this headroom.
166
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 11 PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 January 2022
Opening balance hyperinflation adjustment
Businesses acquired
Businesses sold
Additions
Disposals
Transferred from/(to) inventory
Retirement of fully depreciated assets
Transferred from/(to) assets held for sale
Effect of foreign exchange rate changes
At 1 January 2023
Opening balance hyperinflation adjustment
Businesses acquired (see note 28(a))
Additions
Disposals
Transferred from/(to) inventory
Other¹
Transferred from/(to) assets held for sale
Effect of foreign exchange rate changes
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2022
Opening balance hyperinflation adjustment
Businesses sold
Depreciation charge for the year
Impairment reversal for the year
Disposals
Transferred to/(from) inventory
Retirement of fully depreciated assets
Transferred to/(from) assets held for sale
Effect of foreign exchange rate changes
At 1 January 2023
Opening balance hyperinflation adjustment
Depreciation charge for the year
Impairment charge for the year
Disposals
Transferred to/(from) inventory
Other¹
Transferred to/(from) assets held for sale
Effect of foreign exchange rate changes
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Plant,
machinery and
equipment
Leased
vehicles, rental
machinery and
equipment
Subtotal
£m
254
14
34
(43)
47
(25)
–
(3)
(3)
24
299
9
16
43
(8)
(1)
(1)
(1)
(12)
344
(192)
(8)
12
(20)
1
25
–
3
1
(13)
(191)
(4)
(28)
(2)
6
1
1
1
9
(207)
137
107
£m
929
34
117
(106)
64
(34)
–
(3)
(22)
65
1,044
18
95
88
(18)
(1)
3
(7)
(36)
1,186
(396)
(11)
41
(34)
9
27
–
3
7
(28)
(382)
(5)
(50)
(11)
12
1
(3)
3
14
(421)
765
662
£m
22
–
60
–
13
–
(10)
–
–
3
88
–
3
84
–
(21)
1
–
(4)
151
(7)
–
–
(8)
–
–
4
–
–
(2)
(13)
–
(20)
–
–
10
(1)
–
1
(23)
128
75
Land and
buildings
£m
675
20
83
(63)
17
(9)
–
–
(19)
41
745
9
79
45
(10)
–
4
(6)
(24)
842
(204)
(3)
29
(14)
8
2
–
–
6
(15)
(191)
(1)
(22)
(9)
6
–
(4)
2
5
(214)
628
554
Total
£m
951
34
177
(106)
77
(34)
(10)
(3)
(22)
68
1,132
18
98
172
(18)
(22)
4
(7)
(40)
1,337
(403)
(11)
41
(42)
9
27
4
3
7
(30)
(395)
(5)
(70)
(11)
12
11
(4)
3
15
(444)
893
737
1. This represents a correction of a historic adjustment to cost and accumulated depreciation on acquired property, plant, machinery and equipment. It has no
net impact on net book value at any balance sheet date presented.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
167
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
11 PROPERTY, PLANT AND EQUIPMENT CONTINUED
Where a vehicle is sold to a customer subject to a repurchase commitment and the possibility of the buyback being
exercised by the customer is highly likely, the transaction is recognised as a lease transaction with the Group acting as a
lessor. Consequently, such vehicles are included in ‘leased vehicles, rental machinery and equipment’ in the table above.
The book value of land and buildings is analysed between:
Freehold
Leasehold with over fifty years unexpired
Short leasehold
Assets under construction
2023
£m
469
58
87
14
628
2022
£m
392
61
96
5
554
At 31 December 2023, land and buildings include properties with a net book value of £4m (2022: £5m) that are let to third
parties on a short-term basis.
Property, plant, machinery and equipment includes assets under construction with a net book value of £14m (2022: £5m).
Impairment of computer software, property, plant and equipment and right-of-use assets
Computer software, property, plant and equipment and right-of-use assets are reviewed for impairment if events or
circumstances indicate that the carrying value may not be recoverable. When an impairment review is carried out, the
recoverable value is determined based on the higher of value in use calculations, which require estimates to be made
of future cash flows, or fair value less costs of disposal. Impairment triggers were identified in a limited number of markets
and tests for impairment were carried out, where appropriate. As part of the assessment, the Group also assessed whether
there was any indication that previously recognised impairment losses for an asset no longer exist or may have decreased
which would result in an impairment reversal being recognised.
The approach to test computer software, property, plant and equipment and right-of-use assets for impairment was
consistent with the approach used to test goodwill and other indefinite-life intangible assets. The value in use calculations
use cash flow projections based on five-year financial forecasts prepared by management. The key assumptions for these
forecasts are those relating to volumes, revenue, gross margins, overheads, the level of working capital required to support
trading and capital expenditure. Where the value in use calculations did not support the carrying value of an asset, an
estimate for fair value less costs of disposal was determined by obtaining property valuations for the relevant locations.
The results of the testing indicated that net impairment charges amounting to £11m were required against site and other
assets in the UK, including £9m in relation to assets damaged due to fire and floods (2022: £7m net impairment reversals
in the UK and Australia). See note 15 for details of related insurance receivables.
Property, plant and equipment
Right-of-use assets
At 31 December
2023
£m
11
–
11
2022
£m
(9)
2
(7)
The presence of potential physical risks arising from climate change to the Group’s key operational sites in the short to
medium term has been reviewed and no assets have been impaired as a result of this exercise.
168
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
The Group leases various retail dealerships, distribution, and office properties, primarily in the UK, Australia, Hong Kong,
and South America. Rental contracts are typically made for fixed periods of 2 to 25 years and may have extension options
as described in the accounting policies note. Lease terms are negotiated on an individual basis and contain a wide range
of different terms and conditions.
a. Amounts recognised on the consolidated statement of financial position
Cost
At 1 January 2022
Opening balance hyperinflation adjustment
Businesses acquired
Business sold
Additions
Derecognition
Remeasurement
Effect of foreign exchange rate changes
At 1 January 2023
Opening balance hyperinflation adjustment
Businesses acquired (see note 28(a))
Period adjustments (see note 28(b))
Additions
Derecognition
Remeasurement
Reclassified to assets held for sale
Effect of foreign exchange rate changes
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2022
Business sold
Depreciation charge for the year
Derecognition
Impairment charge for the year
Effect of foreign exchange rate changes
At 1 January 2023
Depreciation charge for the year
Derecognition
Remeasurement
Effect of foreign exchange rate changes
At 31 December 2023
Net book value at 31 December 2023
Net book value at 31 December 2022
Land and
buildings
£m
596
1
149
(25)
33
(22)
25
43
800
1
11
(7)
35
(38)
7
(2)
(32)
775
(336)
13
(55)
22
(2)
(25)
(383)
(80)
33
3
14
(413)
362
417
Other
£m
3
–
–
–
1
(1)
–
–
3
–
–
–
1
(1)
–
–
–
3
(1)
–
(1)
1
–
–
(1)
(1)
1
–
–
(1)
2
2
Total
£m
599
1
149
(25)
34
(23)
25
43
803
1
11
(7)
36
(39)
7
(2)
(32)
778
(337)
13
(56)
23
(2)
(25)
(384)
(81)
34
3
14
(414)
364
419
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
169
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
12 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES CONTINUED
Asset impairment charges amount to £nil (2022: impairment charge of £2m). Further details on the impairment of right-of-
use assets are disclosed in note 11.
Remeasurements of £9m were made to leases during the year, primarily in the UK, South America, and APAC, due to either
a change in the lease term or a change in an index or rate applicable to the underlying lease (2022: £25m, primarily in the
UK and APAC). Lease liabilities are also remeasured if there is a change in the assessment of whether a purchase, lease-
term extension or termination option will be exercised, exposure to potential variable lease payments during the life of
the lease together with any additional liability being present as a result of entering new lease commitments which have
not commenced as at the balance sheet date.
Lease liabilities
Current
Non-current
At 31 December
b. Amounts recognised in the consolidated income statement
Depreciation of right-of-use assets
Impairment charge for right-of-use assets
Finance costs on lease liabilities (included in finance costs)
Lease rentals – short-term leases
Lease rentals – variable lease payments
Sub-lease finance income (included in other finance income)
Sub-lease income from right-of-use assets
c. Amounts recognised in the consolidated statement of cash flows
Lease interest paid
Payment of capital element of lease liabilities
2023
£m
81
359
440
2023
£m
81
–
22
7
1
(1)
(2)
2023
£m
21
87
13 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
Details of the interests held by the Group in joint ventures and associates can be found in note 12 to the Inchcape plc
Company financial statements on pages 212 to 220.
Amounts recognised in the statement of financial position in respect of joint ventures and associates are as follows:
At 1 January
Businesses acquired (see note 28)
Additions
Share of profit after tax of joint ventures and associates
Return of investment following liquidation of joint venture
Share of other comprehensive income of joint ventures and associates
Dividends received
Effect of foreign exchange rate changes
At 31 December
2023
£m
22
–
3
1
(2)
–
(1)
(2)
21
2022
£m
83
416
499
2022
£m
56
2
10
6
2
(1)
(2)
2022
£m
10
63
2022
£m
5
11
5
–
–
1
–
–
22
170
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 13 INVESTMENTS IN JOINT VENTURES AND ASSOCIATES CONTINUED
Net assets of joint ventures and associates:
Cash and cash equivalents
Other current assets
Non-current assets
Total assets
Current financial liabilities
Other current liabilities
Non-current financial liabilities
Total liabilities
Net assets
Results of joint ventures and associates:
Revenue
Depreciation and amortisation
Interest expense
Other expenses
Profit/(loss) before tax
Tax
Profit/(loss) after tax of joint ventures and associates
Summarised financial information of joint ventures and associates:
Opening net assets at 1 January
Profit/(loss) for the year
Businesses acquired
Additions
Return of investment following liquidation of joint venture
Other comprehensive (expense)/income for the year
Effect of foreign exchange rates
Closing net assets at 31 December
Carrying value of interest in joint ventures and associates
2023
£m
14
41
222
277
(46)
(5)
(184)
(235)
42
2023
£m
61
(1)
(6)
(51)
3
(1)
2
2023
£m
44
2
–
5
(4)
(1)
(4)
42
21
2022
£m
represented
12
43
129
185
(28)
(8)
(106)
(141)
44
2022
£m
–
–
–
(2)
(2)
1
(1)
2022
£m
10
(1)
22
12
–
1
–
44
22
During the year, the Group invested £3m in Inchcape Financial Services Australia Pty Ltd, a captive finance company, and
liquidated its share in the joint venture in Tefin SA in Greece.
As at 31 December 2023, no guarantees were provided in respect of joint ventures and associates’ borrowings (2022: £nil).
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
171
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
14 FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
At 1 January
Net fair value losses recognised in other comprehensive income
Effect of foreign exchange rate changes
At 31 December
Analysed as:
Current
Non-current
Assets held are analysed as follows:
Equity securities
Other
2023
£m
3
(2)
–
1
2023
£m
–
1
1
2023
£m
1
–
1
2022
£m
5
(2)
–
3
2022
£m
–
3
3
2022
£m
3
–
3
Financial assets held at fair value through other comprehensive income relate to a 15% equity interest in Hino Motors
Manufacturing Company SAS.
172
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 15 TRADE AND OTHER RECEIVABLES
Trade receivables
Less: allowance for expected credit losses
Net trade receivables
Prepayments
Accrued income
Other taxation and social security
Other receivables
Current
2023
£m
455
(17)
438
148
36
84
129
835
2022
£m
443
(17)
426
205
20
97
69
817
Non-current
2023
£m
2022
£m
17
–
17
10
1
–
21
49
14
–
14
8
1
–
31
54
Other receivables include buyback and indemnity assets, interest, sublease and sundry receivables, which include
amounts receivable from insurance companies in respect of insurance claims, and rental and utilities deposits. A net
insurance receivable of £15m is included in other receivables in relation to the fire and floods in the UK (see note 11).
The breakdown of other receivables is as follows:
Buyback assets
Indemnity assets
Interest receivable
Sublease receivables
Other
Current
2023
£m
2
16
2
3
106
129
2022
£m
12
9
1
2
45
69
7
–
–
7
7
21
Non-current
2023
£m
2022
£m
Trade receivables representing amounts due from customers, including finance houses, mobility company partners,
third-party dealers, and insurance companies are split by reporting segment as follows:
APAC
Europe & Africa
Americas
Retail
Less: allowance for expected credit losses
At 31 December, the analysis of trade receivables is as follows:
2023
£m
21
203
211
37
472
(17)
455
8
–
–
14
9
31
2022
£m
84
110
225
38
457
(17)
440
2023
Gross trade receivables
Expected credit loss allowance
Net carrying amount
2022
Gross trade receivables
Expected credit loss allowance
Net carrying amount
Total
£m
472
(17)
455
Total
£m
457
(17)
440
Current
£m
250
(4)
246
Current
£m
254
(2)
252
0 – 30 days
30 – 90 days
> 90 days
£m
105
–
105
£m
66
–
66
£m
51
(13)
38
0 – 30 days
30 – 90 days
> 90 days
£m
110
(1)
109
£m
53
(1)
52
£m
40
(13)
27
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
173
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
15 TRADE AND OTHER RECEIVABLES CONTINUED
Movements in the allowance for expected credit losses were as follows:
At 1 January
Charge for the year
Amounts written off
Business sold
Unused amounts reversed
Effect of foreign exchange rate changes
At 31 December
2023
£m
(17)
(9)
3
–
6
–
(17)
2022
£m
(12)
(6)
1
1
–
(1)
(17)
The expected credit loss for accrued income and other receivables is not significant.
Trade receivables are non-interest bearing and are generally on credit terms of 30 to 60 days. Trade receivables are
only written off where there is no reasonable expectation of recovery.
The concentration of credit risk with respect to trade receivables is very limited due to the Group’s broad customer base
across a number of geographic regions and the default loss percentage incurred by the Group has customarily been low
even if there have been significant changes in economic conditions experienced in markets in which the Group operates.
Trade receivables include amounts due from a number of finance houses in respect of vehicles sold to customers on finance.
As a consequence, the risk associated with trade receivable balances past due but not impaired is not expected
to be significant and as such does not contribute to a significant allowance for expected credit losses of receivables
being recognised.
The allowance for expected credit losses for trade receivables and accrued income is based on an expected credit loss
model that calculates the expected loss applicable to the receivable balance over its lifetime. For the Group, the simplified
approach under IFRS 9 Financial Instruments is applied to all trade receivables and accrued income. Under this approach,
the provision required against receivables is calculated by considering the cash shortfall that would be incurred in various
default scenarios for prescribed future periods. Default rates are calculated initially by considering historical loss experience
and applied to trade receivables within a provision matrix. The matrix approach allows application of different default rates
to different groups of customers with similar characteristics. These groups will be determined by a number of factors
including: the nature of the customer, the payment method selected and, where relevant, the sector in which they
operate. The characteristics used to determine the groupings of receivables are the factors that have the greatest
impact on the likelihood of default. The rate of default increases once the balance is 30 days past due and subsequently
in 30-day increments.
Management considers the carrying amount of trade and other receivables to approximate to their fair value. Long-term
receivables have been discounted where the time value of money is considered to be material.
174
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED Pension
and other
post-
retirement
benefits
£m
Cash flow
hedges
£m
Share-
based
payments
£m
16 DEFERRED TAX
Net deferred tax (liability)/asset
At 1 January 2022
Adjustments for
hyperinflation
(Charged)/credited to
the consolidated income
statement (continuing
operations)
(Charged)/credited to
the consolidated income
statement (discontinued
operations)
Credited/(charged) to equity
and other comprehensive
income
Businesses acquired
Business disposed
Effect of foreign exchange
rate changes
(24)
–
(4)
–
–
–
–
–
1
–
–
–
(9)
–
–
–
At 1 January 2023
(28)
(8)
(Charged)/credited to
the consolidated income
statement (continuing
operations)
Credited/(charged) to equity
and other comprehensive
income
Businesses acquired
(note 28(a))
Period adjustments
(note 28(b))
Effect of foreign exchange
rate changes
–
–
2
–
–
2
18
–
–
–
At 31 December 2023
(26)
12
Analysed as:
Deferred tax assets
Deferred tax liabilities
5
–
1
–
–
–
–
–
6
1
–
–
–
–
7
Accelerated
tax
depreciation
£m
Provisions
and other
timing
differences
£m
Indefinite-life
intangible
assets
£m
19
(4)
26
–
(4)
12
–
–
(20)
–
–
1
–
9
2
3
(62)
–
–
–
–
(157)
–
(7)
Leases
£m
16
–
2
–
–
(1)
–
–
Total
£m
(1)
(4)
7
1
(9)
(167)
1
(3)
(9)
53
(226)
17
(175)
Tax
losses
£m
18
–
–
–
–
2
(1)
1
20
2
(7)
15
(1)
(2)
10
(1)
–
–
1
22
(5)
(16)
–
1
(36)
3
14
2
(3)
84
–
(29)
–
16
–
–
–
–
15
(29)
2
15
(240)
15
(162)
2023
£m
105
(267)
(162)
2022
£m
80
(255)
(175)
Measured at relevant local statutory rates, the Group has an unrecognised deferred tax asset of £59m (2022: £45m) relating
to tax relief on trading losses. The unrecognised asset represents £229m (2022: £174m) of losses which exist within legal
entities where forecast taxable profits are not probable in the foreseeable future. Unrecognised tax losses totalling £8m
(2022: £7m) will expire within five years and £4m (2022: £4m) will expire in more than five years.
The Group has unrecognised deferred tax assets of £45m (2022: £44m) relating to capital losses. The asset represents
£179m (2022: £177m) of losses at the standard local rate. The territory holding the losses is primarily the UK.
The Group has unrecognised deferred tax assets of £28m (2022: £20m) relating to other deductible temporary differences,
including £23m (2022: £9m) of disallowed interest under the UK corporate interest restriction regulations. The deferred
tax asset on tax trading losses of £22m (2022: £20m) relates to territories and entities where future taxable profits are
considered probable.
The net deferred tax asset relating to the UK group of companies remains unrecognised as at 31 December 2023. Therefore,
no deferred tax charges or credits are recorded in the consolidated income statement or consolidated statement of other
comprehensive income in relation to temporary differences arising in the period for these companies (2022: no deferred tax
charges or credits recorded in relation to temporary differences).
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
175
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
16 DEFERRED TAX CONTINUED
The net deferred tax asset on provisions and other timing differences is principally made up of a deferred tax liability on
non-qualifying property £7m (2022: £10m) offset by deferred tax assets on trade related accounting provisions and other
items in the Group’s operating companies £91m (2022: £63m).
The deferred tax liability of £240m (2022: £226m) on indefinite life intangible assets, comprising distribution agreements and
acquired brands, has been recorded as a result of the business acquisitions in the current and prior periods (see note 28).
Relevant tax laws largely exempt receipt of dividends from tax. A tax liability is more likely to arise in respect of withholding
taxes levied by overseas jurisdictions. No deferred tax liability has been recognised in respect of £304m (2022: £188m)
of post-acquisition unremitted earnings of subsidiaries because the Group controls the timing of the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in the next 12 months. Deferred tax
is provided when there is an intention to distribute earnings and a tax liability arises. It is not practicable to estimate the
amount of unrecognised deferred tax liabilities in respect of these unremitted earnings.
17 INVENTORIES
Raw materials and work in progress
Finished goods and merchandise
2023
£m
124
2,594
2,718
2022
£m
82
2,294
2,376
Vehicles held on consignment which are in substance assets of the Group amount to £65m (2022: £60m). These have been
included in ‘finished goods and merchandise’ with the corresponding liability included within ‘trade and other payables’.
Payment becomes due when title passes to the Group, which is generally the earlier of a period of up to six months from
delivery or the date of sale.
An amount of £99m (2022: £58m) has been provided against the gross cost of inventory at the year end. The cost of
inventories recognised as an expense in the year is £9,565m (2022: £6,846m). The net write-down of inventory to net
realisable value recognised as an expense during the year was £31m (2022: expense of £2m). All of these items have
been included within ‘cost of sales’ in the consolidated income statement.
18 CASH AND CASH EQUIVALENTS
Cash at bank
Short-term deposits
2023
£m
610
79
689
2022
£m
641
423
1,064
Cash and cash equivalents are generally subject to floating interest rates determined by reference to short-term
benchmark rates applicable in the relevant currency or market (primarily SONIA or the local equivalent). At 31 December
2023, the weighted average floating rate was 3.6% (2022: 3.0%).
£95m (2022: £91m) of cash and cash equivalents is held in Ethiopia where prior approval is required to transfer funds abroad
and currency may not be available locally to effect such transfers.
At 31 December 2023, short-term deposits have a weighted average period to maturity of 24 days (2022: 5 days).
19 ASSETS HELD FOR SALE
Assets classified as held for sale
2023
£m
14
2022
£m
19
Assets held for sale relate to surplus properties in the United Kingdom which are actively marketed with a view to sale.
176
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 20 TRADE AND OTHER PAYABLES
Trade payables
Payments received on account
Vehicle funding agreements
Other taxation and social security payable
Accruals
Deferred income
Other payables
Current
2023
£m
358
120
2022
£m
418
105
1,877
1,423
97
467
144
87
66
396
156
334
3,150
2,898
Non-current
2023
£m
2022
£m
–
8
–
–
1
53
7
69
–
1
–
–
2
35
22
60
In 2022, other payables included a dividend liability of £207m due to the former owners of the Derco group which
represented the amount due in respect of a pre-completion dividend that remained unpaid at the balance sheet date
and was paid in four instalments during 2023. Other payables also included a liability of £60m which represented a
contractual liability to minority shareholders in Derco group companies that was settled in early January 2023.
The Group finances the purchase of new vehicles for sale and a portion of used vehicle inventories using vehicle funding
facilities provided by various lenders including the captive finance companies associated with brand partners. Such
arrangements generally are uncommitted facilities, have a maturity of 180 days or less and the Group repays the amounts
outstanding either in line with the normal working capital cycle or on the earlier of the sale of the vehicles that have been
funded under the facilities or the stated maturity date, depending on the facility. Some arrangements may also provide
the lender with a security interest in the inventory until the amount drawn under the arrangement has been repaid. Related
cash flows are reported within cash flows from operating activities within the consolidated statement of cash flows.
Vehicle funding facilities are subject to SONIA-based (or similar) interest rates. The interest incurred under these
arrangements is included within finance costs and classified as stock holding interest (see note 6). At 31 December 2023,
amounts outstanding under vehicle funding facilities and on which interest was payable were subject to a weighted
average interest rate of 4.7% (2022: 3.7%).
Management considers the carrying amount of trade and other payables to approximate to their fair value. Long-term
payables have been discounted where the time value of money is considered to be material.
Included within deferred income are the following balances:
Extended warranties
Service packages
Other services
2023
£m
42
78
77
197
2022
£m
45
58
88
191
Revenue recognised in 2023 that was included in deferred revenue at the beginning of the year was £124m (2022: £77m).
Extended warranties
Certain Group companies provide extended warranties to customers over and above those provided by the manufacturer
and act as the principal in the supply of the warranty service. The periods covered are up to six years and/or specific
mileage limits. A proportion of revenue is allocated to the extended warranty obligation and deferred to the balance
sheet. The revenue is subsequently recognised over time along with the costs incurred in fulfilling any warranty obligations.
Service packages
Certain Group companies provide service packages to customers as part of the total vehicle package. Where the Group
acts as principal, the value of the additional services is separately identified, deducted from revenue, and recognised
as deferred income on the balance sheet. It is subsequently recognised as revenue when the service is provided or the
package expires.
Other services
Certain Group companies provide other services as part of the total vehicle package (e.g. roadside assistance, fuel
coupons etc). Where the Group acts as principal, the value of the additional services is separately identified, deducted
from revenue, and recognised as deferred income on the balance sheet. It is subsequently recognised as revenue over
the period to which the service relates.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
177
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
21 PROVISIONS
At 1 January 2023
Businesses acquired (see note 28(a))
Period adjustments (see note 28(b))
Charged to the consolidated income statement
Released to the consolidated income statement
Utilised during the year
Effect of foreign exchange rate changes
At 31 December 2023
Product
warranty
Leasehold
Litigation
£m
51
4
–
6
(2)
(6)
(3)
50
£m
9
–
–
1
(1)
(1)
–
8
£m
6
–
–
1
(2)
(2)
–
3
Other
£m
38
1
4
16
(5)
(6)
(1)
47
Inflation and expected future movements in prices have been considered in calculating provisions where relevant.
Analysed as:
Current
Non-current
2023
£m
69
39
108
Total
£m
104
5
4
24
(10)
(15)
(4)
108
2022
£m
57
47
104
Product warranty
Certain Group companies provide assurance warranties as part of the sale of a vehicle. These are not separable products.
The warranty periods covered are up to five years and/or specific mileage limits. Provision is made for the expected cost
of labour and parts based on historical claims experience and expected future trends. These assumptions are reviewed
regularly.
Leasehold
The Group is committed to certain leasehold premises for which it no longer has a commercial use. These are principally
located in the UK, Australia, and Hong Kong. Provision has been made to the extent of the estimated future net cost,
excluding the lease liability recognised under IFRS 16 Leases. This includes taking into account existing subtenant
arrangements. The category also includes the future obligation relating to dilapidations of certain premises. The expected
utilisation period of these provisions is generally over the next 10 years.
Litigation
This includes a number of litigation provisions in respect of claims that have been brought against various Group
companies. The claims are generally expected to be concluded within the next three years.
Other
This category principally includes provisions relating to uncertain non-income taxes. It also includes provisions relating
to restructuring activities of £2m (2022: £3m). Acquisition and disposal related provisions amount to £5m (2022: £6m),
of which there is an offsetting indemnity asset recognised in trade and other receivables. Other provisions also includes
long-service provisions of £8m. These provisions are expected to be utilised within three years except for those relating
to long-service provisions.
Climate change
The Group has reviewed its provisions and concluded that no adjustments need to be made for climate change risks,
nor that any new provisions need to be recognised for climate-related matters.
178
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 22 BORROWINGS
2023
Current
Bank overdrafts
Bank loans
Private Placement
Non-current
Bank loans
Private Placement
Total borrowings
Floating rate
Fixed rate
Weighted
average
effective
interest rate
%
5.9%
6.2%
–
6.1%
5.5%
–
5.5%
5.9%
£m
249
298
–
547
150
–
150
697
Weighted
average
effective
interest rate
%
–
7.8%
3.0%
4.6%
6.5%
3.0%
5.5%
5.4%
£m
–
35
70
105
348
140
488
593
Total interest
bearing
£m
249
333
70
652
498
140
638
2023
Total
£m
249
333
70
652
498
140
638
1,290
1,290
Bank overdrafts include £245m (2022: £14m) held in cash pooling arrangements which have not been offset in the
consolidated statement of financial position (see note 23(b)).
Floating rate
Fixed rate
2022
Current
Bank overdrafts
Bank loans
Non-current
Bank loans
Private Placement
Total borrowings
Weighted
average
effective
interest rate
%
3.8%
6.1%
5.6%
4.0%
–
4.0%
4.2%
£m
14
63
77
625
–
625
702
Weighted
average
effective
interest rate
%
–
8.9%
8.9%
13.0%
3.0%
5.2%
7.5%
£m
–
469
469
61
210
271
740
Total interest
bearing
£m
14
532
546
686
210
896
2022
Total
£m
14
532
546
686
210
896
1,442
1,442
Interest payments on floating rate financial liabilities are determined by reference to short-term benchmark rates applicable
in the relevant currency or market (primarily SONIA or the local equivalent).
As at 31 December 2023, the funding structure of the Group was comprised of a committed syndicated revolving credit
facility of £900m (2022: £700m), sterling Private Placement Loan Notes totalling £210m (2022: £210m), a five-year bond of
£350m, at a fixed coupon of 6.5%, replacing the bridge facility of £350m (2022: £350m), a term facility of £250m (2022:
£250m) and debt acquired from acquisitions (including prior year acquisitions) of £80m (2022: £617m). As at 31 December
2023, £150m of the syndicated revolving credit facility was drawn (2022: undrawn).
In June 2023, the Group successfully issued a £350m public bond, with 6.5% coupon and a five-year maturity. The proceeds
from the bond were used to re-finance the bridge facility put in place to fund the acquisition of Derco, the initial term for
which was due to expire at the end of 2023. The £350m public bond is held at amortised cost and had a fair value of £365m
as at 31 December 2023 based on observable market data.
In December 2023, the Group’s syndicated revolving credit facility was amended, increasing the facility to £900m and
extending the maturity to December 2028.
In July 2022, the Group entered into a facilities agreement with two banks comprising a £350m bridge facility and a £250m
term loan facility. The bridge facility had an initial term of 12 months commencing from 29 December 2022, but the term
was extendable at the Group’s option by up to 12 months. The term loan had a term of two years commencing from
29 December 2022. The term and bridge facilities were fully drawn as at 31 December 2022 and were disclosed as
non-current borrowings.
The Group’s bank loans are not secured by any term deposits placed under a standby letter of credit and related facility
arrangements (2022: £nil secured). The Group’s bank overdrafts are secured by related offsetting cash balances held under
pooling arrangements. The Group’s remaining borrowings are unsecured.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
179
STRATEGIC REPORTGOVERNANCESTRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
22 BORROWINGS CONTINUED
In December 2016, the Group concluded a Private Placement transaction raising £210m to refinance existing US dollar
Private Placement borrowings which matured in May 2017. The amounts drawn under these facilities are as follows:
Maturity date
Amount drawn
Fixed rate coupon
May 2024
May 2027
May 2027
May 2029
£70m
2.85%
£30m
3.02%
£70m
3.12%
£40m
3.10%
The £210m sterling Private Placement loan notes are held at amortised cost. They have a fair value of £201m (2022: £205m)
calculated from discounted cash flow techniques obtained using discount rates from observable market data, which is
a level 2 valuation technique. The fair values of the Group’s other borrowings are not considered to be materially different
from their book value.
The table below sets out the maturity profile of the Group’s existing borrowings that are exposed to interest rate risk.
2023
Fixed rate
Bank Overdrafts
Bank loans
Private Placement
Floating rate
Bank overdrafts
Bank loans
2022
Fixed rate
Bank loans
Private Placement
Floating rate
Bank overdrafts
Bank loans
Less than 1
year
£m
Between 1 and
2 years
£m
Between 2 and
3 years
£m
Between 3 and
4 years
£m
Between 4 and
5 years
£m
Greater than 5
years
£m
Total interest
bearing
£m
–
35
70
105
249
298
547
Less than 1
year
£m
469
–
469
14
63
77
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
100
–
–
–
–
348
–
348
–
150
150
–
–
40
40
–
–
–
–
383
210
593
249
448
697
Between 1 and
2 years
£m
Between 2 and
3 years
£m
Between 3 and
4 years
£m
Between 4 and
5 years
£m
Greater than 5
years
£m
Total interest
bearing
£m
59
70
129
–
625
625
–
–
–
–
–
–
–
–
–
–
–
–
1
100
101
–
–
–
1
40
41
–
–
–
530
210
740
14
688
702
180
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 23 FINANCIAL INSTRUMENTS
The Group’s financial liabilities, other than derivatives, comprise borrowings, trade and other payables and lease liabilities.
The main purpose of these instruments is to raise finance for the Group’s operations. The Group also has various financial
assets such as trade and other receivables, cash and short-term deposits which arise from its trading operations.
The Group’s primary derivative transactions include forward and swap currency contracts. The purpose is to manage the
currency and interest rate risks arising from the Group’s trading operations and its sources of finance. Group policy is that
there is no trading or speculation in derivatives. Cash flow hedge ineffectiveness can arise from changes to the timing and
amounts of forecasted cashflows of hedged items. Fair value hedge ineffectiveness can arise from different yield curves
linked to the hedged item and hedging instrument as well as changes to the counterparties credit risk.
The main risks arising from the Group’s financial instruments are interest rate risk, currency risk, credit risk and liquidity risk.
The Group does not hedge for inflation risk and has not hedged for cross-currency interest rates risk in recent years.
a. Classification of financial instruments
2023
Financial assets
Financial assets at fair value through other
comprehensive income
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade and other payables
Derivative financial instruments
Lease liabilities
Borrowings
Total financial liabilities
2022
Financial assets
Financial assets at fair value through other
comprehensive income
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total financial assets
Financial liabilities
Trade and other payables
Derivative financial instruments
Lease liabilities
Borrowings
Total financial liabilities
Measured
at fair value
through other
comprehensive
income
£m
Measured at
amortised
cost
£m
–
613
–
689
1,302
(2,754)
1
–
4
–
5
–
–
(58)
(440)
(1,290)
(4,484)
(3,182)
–
–
(58)
(53)
Measured
at fair value
through profit
or loss
£m
–
–
35
–
35
–
(39)
–
–
(39)
(4)
Measured
at fair value
through other
comprehensive
income
£m
Measured
at fair value
through profit
or loss
£m
Measured at
amortised
cost
£m
–
521
–
1,064
1,585
(2,581)
–
(499)
(1,442)
(4,522)
(2,937)
3
–
24
–
27
–
(15)
–
–
(15)
12
–
–
30
–
30
–
(25)
–
–
(25)
5
Total
£m
1
613
39
689
1,342
(2,754)
(97)
(440)
(1,290)
(4,581)
(3,239)
Total
£m
3
521
54
1,064
1,642
(2,581)
(40)
(499)
(1,442)
(4,562)
(2,920)
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
181
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
23 FINANCIAL INSTRUMENTS CONTINUED
b. Offsetting financial assets and financial liabilities
The following financial assets are subject to offsetting, enforceable netting arrangements and similar agreements:
Gross amounts
of financial
liabilities
set off in the
statement
of financial
position
£m
Gross amounts
of financial
assets
£m
39
689
728
54
1,064
1,118
–
–
–
–
–
–
Net amounts of
financial assets
presented in
the statement
of financial
position
£m
39
689
728
54
1,064
1,118
Related amounts not set
off in the statement of
financial position
Financial
instruments
£m
Cash
collateral
received
£m
(24)
(245)
(269)
(19)
(14)
(33)
–
–
–
–
–
–
Gross amounts
of financial
assets set off in
the statement
of financial
position
£m
Net amounts
of financial
liabilities
presented in
the statement
of financial
position
£m
Related amounts not set
off in the statement of
financial position
Financial
instruments
£m
Cash
collateral
paid
£m
Gross amounts
of financial
liabilities
£m
(97)
(249)
(346)
(40)
(14)
(54)
–
–
–
–
–
–
(97)
(249)
(346)
(40)
(14)
(54)
24
245
269
19
14
33
–
–
–
–
–
–
Net
amount
£m
15
444
459
35
1,050
1,085
Net
amount
£m
(73)
(4)
(77)
(21)
–
(21)
As at 31 December 2023
Derivative financial assets
Cash and cash equivalents
As at 31 December 2022
Derivative financial assets
Cash and cash equivalents
As at 31 December 2023
Derivative financial liabilities
Bank overdrafts
As at 31 December 2022
Derivative financial liabilities
Bank overdrafts
For the financial assets and liabilities subject to enforceable netting arrangements or similar agreements above, each
agreement between the Group and the counterparty allows for net settlement of the relevant financial assets and
liabilities. If the parties subject to the agreement do not elect to settle on a net basis, financial assets and liabilities will
be settled on a gross basis. However, each party to the netting agreement will have the option to settle all such amounts
on a net basis in the event of a default of the other party.
c. Market risk and sensitivity analysis
Financial instruments affected by market risk include borrowings, deposits, and derivative financial instruments. The Group
is not exposed to commodity price risk. The following analysis, required by IFRS 7 Financial Instruments: Disclosures, is
intended to illustrate the sensitivity to changes in market variables, being primarily UK interest rates and the Australian
dollar to Japanese yen exchange rate.
The following assumptions were made in calculating the sensitivity analysis:
• changes in the carrying value of derivative financial instruments designated as cash flow hedges from movements
in interest rates are assumed to be recorded fully in equity;
• changes in the carrying value of derivative financial instruments designated as fair value hedges from movements
in interest rates have an immaterial effect on the consolidated income statement and equity due to compensating
adjustments in the carrying value of debt;
• changes in the carrying value of financial instruments designated as net investment hedges from movements in the
US dollar to sterling exchange rate are recorded directly in equity;
• changes in the carrying value of financial instruments not in hedging relationships only affect the consolidated income
statement; and
• all other changes in the carrying value of derivative financial instruments designated as hedges are fully effective with
no impact on the consolidated income statement.
182
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 23 FINANCIAL INSTRUMENTS CONTINUED
d. Interest rate risk and sensitivity analysis
The Group’s interest rate policy has the objective of minimising net interest expense and protecting the Group from material
adverse movements in interest rates.
Instruments approved for the purpose of hedging interest rate risk include interest rate swaps, forward rate agreements
and options. The Group’s exposure to the risk of changes in market interest rates arises primarily from the floating rate interest
payable on the Group’s bank borrowings, supplier-related finance, and the returns available on surplus cash.
Interest rate risk table
The following table demonstrates the sensitivity of the Group’s profit before tax to a reasonably possible change, based on
recent experience, in interest rates on bank borrowings, supplier-related finance and cash balances as at 31 December
2023, with all other variables held constant.
2023
Sterling
Euro
Chilean peso
Australian dollar
US dollar
2022
Sterling
Euro
Chilean peso
Australian dollar
US dollar
Increase
in basis
points
Effect on profit
before tax
£m
100
100
250
100
100
100
100
250
100
100
(11)
(2)
(2)
1
(3)
(10)
–
(3)
1
1
e. Foreign currency risk
The Group publishes its consolidated financial statements in sterling and faces currency risk on the translation of its earnings
and net assets, a significant proportion of which are in currencies other than sterling.
Transaction exposure hedging
The Group has transactional currency exposures, where sales or purchases by an operating unit are in currencies other
than in that unit’s reporting currency. For a significant proportion of the Group these exposures are removed as trading
is denominated in the relevant local currency. In particular, local billing arrangements are in place for many of our
businesses with our brand partners. The principal exception is for our business in Australia which purchases vehicles in
Japanese yen and our South and Central American businesses which purchase vehicles in Japanese yen and US dollars.
In this instance, the Group seeks to hedge forecast transactional foreign exchange rate risk using forward foreign currency
exchange contracts. The effective portion of the gain or loss on the hedge is initially recognised in the consolidated
statement of comprehensive income to the extent it is effective. When the hedged forecast transaction results in the
recognition of a non-financial asset or liability then, at the time the asset or liability is recognised, the associated gains
or losses that had previously been recognised in other comprehensive income are included in the initial measurement
of the acquisition cost or other carrying amount of the asset or liability.
For all other cash flow hedges, the gains or losses that are recognised in other comprehensive income are transferred to
the consolidated income statement in the same period in which the hedged forecast transaction affects the consolidated
income statement. Under IFRS 9 Financial Instruments, hedges are documented and tested for the hedge effectiveness on
an ongoing basis.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
183
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
23 FINANCIAL INSTRUMENTS CONTINUED
Foreign currency risk table
The following table shows the Group sensitivity to a reasonably possible change in foreign exchange rates on its Japanese
yen financial instruments. In this table, financial instruments are only considered sensitive to foreign exchange rates when
they are not in the functional currency of the entity that holds them.
2023
Yen
Yen
2022
Yen
Yen
Increase/
(decrease) in
exchange
rate
Effect on
equity
£m
+10%
-10%
+10%
-10%
3
3
3
4
f. Credit risk
The amount due from counterparties arising from cash deposits and the use of financial instruments creates credit risk.
The Group monitors its credit exposure to its counterparties via their credit ratings (where applicable) and through its policy
of limiting its exposure to any one party to ensure that they are within Board approved limits and that there are no
significant concentrations of credit risk.
Group policy is to deposit cash and use financial instruments with counterparties with a long-term credit rating of A or
better, where available. The notional amounts of financial instruments used in interest rate and foreign exchange
management do not represent the credit risk arising through the use of these instruments. The immediate credit risk of these
instruments is generally estimated by the fair value of contracts with a positive value. Credit limits are reviewed regularly.
The table below analyses the Group’s derivative assets, cash at bank and short-term deposits by credit exposure:
Credit rating of counterparty
2023
Derivative
assets
£m
Cash
at bank
£m
Short-term
deposits
£m
Derivative
assets
£m
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB-
No rating*
1
8
7
9
8
2
–
–
–
4
39
198
33
170
21
35
6
5
3
14
125
610
–
–
–
–
–
–
1
–
–
78
79
12
2
11
15
6
1
1
2
–
4
54
2022
Cash
at bank
£m
343
56
33
83
11
8
6
–
14
87
641
Short-term
deposits
£m
–
40
102
134
–
–
73
–
–
74
423
* Counterparties in certain markets in which the Group operates do not have a credit rating.
For those counterparties which do not have a credit rating, where possible the Group works with partner banks with a local
presence to provide additional assurance. Additionally, the Group proactively repatriates cash through cash-pooling
arrangements, loans between Group companies and dividends as well as regularly monitoring the spread of counterparties
in-country, notably in Ethiopia.
No credit limits were exceeded during the reporting period and management does not expect any losses from non-
performance by these counterparties.
The maximum exposure to credit risk for cash at bank, receivables and other financial assets is represented by their
carrying amount.
Total cash at bank of £610m (2022: £641m) includes cash in the Group’s regional pooling arrangements which are offset
against borrowings for interest purposes. Netting of cash and overdraft balances in the consolidated statement of financial
position only occurs to the extent that there is the legal ability and intention to settle net. As such, overdrafts are presented
in current liabilities to the extent that there is no intention to offset with the cash balance.
Trade receivables include amounts due from a number of finance houses in respect of vehicles sold to customers on
finance arranged through the Group. An independent credit rating agency is used to assess the credit standing of
each finance house. Limits for the maximum outstanding with each finance house are set accordingly.
184
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 23 FINANCIAL INSTRUMENTS CONTINUED
g. Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the
dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed
credit lines available.
The table below summarises the maturity profile of the Group’s financial assets and liabilities at 31 December 2023 based
on contractual expected undiscounted cash flows:
2023
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through other
comprehensive income
Derivative financial instruments
Financial liabilities
Interest bearing loans and borrowings
Lease liabilities
Trade and other payables
Derivative financial instruments
Net outflows
2022
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through other
comprehensive income
Derivative financial instruments
Financial liabilities
Interest bearing loans and borrowings
Lease liabilities
Trade and other payables
Derivative financial instruments
Net outflows
Less than
3 months
£m
Between
3 to 12
months
£m
Between
1 to 5
years
£m
Greater than
5 years
£m
689
428
–
2,720
3,837
(444)
(27)
(2,178)
(2,739)
(5,388)
(1,551)
Less than
3 months
£m
1,059
444
–
1,216
2,719
(172)
(23)
(1,992)
(1,211)
(3,398)
(679)
–
156
–
1,288
1,444
(398)
(74)
(565)
(1,347)
(2,384)
(940)
Between
3 to 12
months
£m
5
43
–
912
960
(448)
(67)
(562)
(941)
(2,018)
(1,058)
–
25
–
264
289
(545)
(253)
(10)
(285)
(1,093)
(804)
Between
1 to 5
years
£m
–
28
–
352
380
(912)
(246)
(27)
(349)
(1,534)
(1,154)
–
4
1
–
5
(41)
(205)
(2)
–
(248)
(243)
Greater than
5 years
£m
–
6
3
–
9
(43)
(214)
–
–
(257)
(248)
Total
£m
689
613
1
4,272
5,575
(1,428)
(559)
(2,755)
(4,371)
(9,113)
(3,538)
Total
£m
1,064
521
3
2,480
4,068
(1,575)
(550)
(2,581)
(2,501)
(7,207)
(3,139)
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
185
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
23 FINANCIAL INSTRUMENTS CONTINUED
h. Fair value measurement
In accordance with IFRS 13 Fair Value Measurement, disclosure is required for financial instruments that are measured in
the consolidated statement of financial position at fair value. This requires disclosure of fair value measurements by level
for the following fair value measurement hierarchy:
• quoted prices in active markets (level 1);
• inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly (level 2); or
• inputs for the asset or liability that are not based on observable market data (level 3).
The following table presents the Group’s assets and liabilities that are measured at fair value:
2023
2022
Level 1
Level 2
Level 3
Assets
Derivatives used for hedging
Financial assets at fair value
through other comprehensive
income
Liabilities
Derivatives used for hedging
£m
–
–
–
–
£m
39
–
39
£m
–
1
1
Total
£m
39
1
40
(97)
–
(97)
Level 1
Level 2
Level 3
£m
–
1
1
–
£m
54
–
54
(40)
£m
–
2
2
–
Total
£m
54
3
57
(40)
Level 1 represents the fair value of financial instruments that are traded in active markets and is based on quoted markets
price at the end of the reporting period.
The fair value of financial instruments that are not traded in an active market (level 2) is determined by using valuation
techniques which include the present value of estimated future cash flows. These valuation techniques maximise the use
of observable market data where it is available and rely as little as possible on entity specific estimates.
Level 3 primarily represents the Group’s equity interest in Hino Motors Manufacturing Company SAS (see note 14). Fair value
is based on discounted free cash flows, using the projection of annual income and expenses mainly based on historical
financial figures.
Derivative financial instruments are carried at their fair values. The fair value of forward foreign exchange contracts and
foreign exchange swaps represents the difference between the value of the outstanding contracts at their contracted rates
and a valuation calculated using the spot rates of exchange prevailing at 31 December 2023.
The Group’s derivative financial instruments comprise the following:
Cross currency interest rate swaps
Forward foreign exchange contracts
Assets
2023
£m
–
39
39
2022
£m
4
50
54
Liabilities
2023
£m
–
(97)
(97)
2022
£m
–
(40)
(40)
186
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 23 FINANCIAL INSTRUMENTS CONTINUED
The ineffective portion recognised in the consolidated income statement that arises from fair value hedges amounts to £nil
(2022: £nil). The ineffective portion recognised in the consolidated income statement that arises from cash flow hedges
amounts to £nil (2022: £nil).
Derivative financial instruments
The Group principally uses forward foreign exchange contracts to hedge purchases in a non-functional currency against
movements in exchange rates. The cash flows relating to these contracts are generally expected to occur within 12 months
(2022: 12 months) of the end of the reporting period.
Net fair value gains and losses recognised in the hedging reserve in shareholders’ equity (see note 25) on forward foreign
exchange contracts as at 31 December 2023 are expected to be released to the consolidated income statement within
12 months of the end of the reporting period (2022: 12 months).
The below table illustrates the effects of hedge accounting on the consolidated statement of financial position and
consolidated income statement through detailing separately by risk category and each type of hedge the details of the
associated hedging instrument and hedged item.
2023
Hedging risk strategy
Notional/currency legs (£m)
Carrying amount net liabilities (£m)
Maturity date
Hedge ratio
Description of hedged item
Current
Current
Non-current
Cash flow
hedges
2,422
(39)
Fair value
hedges
1,585
(10)
Cash flow
hedges
264
(9)
to Dec 2024
to Dec 2024
to Mar 2026
1:1
1:1
1:1
Highly probable
FX exposures
FX exposure on
balance sheet
Highly probable
FX exposures
Change in fair value of outstanding hedging instruments since
1 January (£m)
Change in fair value of hedging item used to determine hedge
effectiveness (£m)
Weighted average hedge rate of outstanding deals (AUD/JPY)
Amounts recognised within net finance costs (£m)
Cash flow hedge reserve (net of tax) at 31 December (£m)
(22)
22
89.06
–
34
(26)
26
n/a
(26)
–
(25)
25
–
–
–
2022
Hedging risk strategy
Notional/currency legs (£m)
Carrying amount net (liabilities)/assets (£m)
Maturity date
Hedge ratio
Description of hedged item
Change in fair value of outstanding hedging instruments since
1 January (£m)
Change in fair value of hedging item used to determine hedge
effectiveness (£m)
Weighted average hedge rate of outstanding deals (AUD/JPY)
Amounts recognised within net finance costs (£m)
Cash flow hedge reserve (net of tax) at 31 December (£m)
Current
Current
Non-current
Cash flow
hedges
1,347*
(17)
Fair value
hedges
781*
16
Cash flow
hedges
352*
16
to Dec 2023
to Dec 2023
to Mar 2026
1:1
1:1
1:1
Highly probable
FX exposures
FX exposure on
balance sheet
Highly probable
FX exposures
(20)2
20
85.671
–
3
26
(26)
n/a
26
–
132
(13)
90.20
–
–
represented
*
1. Outstanding deals predominantly relate to our business in Australia which purchases vehicles in Japanese yen.
2. Includes hedging derivatives for both actual and highly probable forecasted purchases. The movement presented in other comprehensive income only covers
hedging derivatives relating to highly probable forecasted purchases.
As at 31 December 2023, the accumulated balance of the cash flow hedge reserve was a loss of £34m (2022: loss of £3m).
The above changes in fair value of hedging instruments will include hedge positions taken up for future foreign currency
exposures and will also include amounts that would have been reclassified from the hedge reserve to the balance sheet
as at 31 December 2023.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
187
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
23 FINANCIAL INSTRUMENTS CONTINUED
i. Capital management
The Group’s capital structure consists of equity and debt. Equity represents funds raised from shareholders and debt
represents funds raised from banks and other financial institutions. The primary objective of the Group’s management
of debt and equity is to ensure that it maintains a strong credit rating and healthy capital ratios in order to finance the
Group’s activities, both now and in the future, and to maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital
to shareholders or issue new shares. The Directors consider the Group’s capital structure and dividend policy at least twice
a year prior to the announcement of results, taking into account the Group’s ability to continue as a going concern and
the requirements of its business plan.
The Group uses return on capital employed (ROCE) as a measure of its ability to drive better returns on the capital invested
in the Group’s operations. See alternative performance measures on page 200.
Adjusted return on capital employed
2023
26.2%
2022
40.6%
The committed bank facilities and Private Placement borrowings are subject to the same interest cover covenant based on
an adjusted EBITA measure to interest on consolidated borrowings. The Group is required to maintain a ratio of not less than
three to one and was compliant with this covenant throughout the year.
The Group monitors Group leverage by reference to three tests: Adjusted EBITA interest cover, the ratio of adjusted net debt
to EBITDA and the ratio of net debt to market capitalisation. The leverage tests are measured excluding the impact of IFRS
16 Leases.
Adjusted EBITA interest cover (times)*
Adjusted net debt to EBITDA (times)**
Net debt/market capitalisation (percentage)***
2023
7.9
0.8
35.2%
2022
459.3
n/a
28.6%
* Calculated as Adjusted EBITA/interest on consolidated borrowings.
** Calculated as adjusted net debt/adjusted earnings before interest, tax, depreciation, and amortisation.
*** Calculated as net debt/market capitalisation as at 31 December.
Net debt as at 31 December 2022 included debt used to acquire the Derco group together with acquired debt. As the
acquisition completed on 31 December 2022 and did not contribute to EBITDA in the year, then the ratio was reported as
not applicable.
24 SHARE CAPITAL
a. Allotted, and fully paid share capital
Issued and fully paid ordinary shares
(nominal value of 10.0p each)
At 1 January
Shares issued
Cancelled under share buyback
At 31 December
2023
Number
2022
Number
2023
£m
2022
£m
374,494,030
383,851,938
38,513,102
–
(9,357,908)
413,007,132
374,494,030
38
4
–
42
39
–
(1)
38
The Company’s ordinary shares are fully paid and no further contribution of capital may be required by the Company from
the shareholders.
b. Share buyback programme
In 2023, no shares were repurchased under the Company’s share buyback programme. In 2022, 9,357,908 shares were
purchased on the London Stock Exchange at a cost of £70m and were cancelled, with none held within treasury shares at
the end of the reporting period. An amount of £1m, equivalent to the nominal value of the cancelled shares, was
transferred to the capital redemption reserve. Costs of £1m associated with the transfer to the Company of the repurchased
shares and their subsequent cancellation were charged to the retained earnings reserve.
c. Substantial shareholdings
Details of substantial interests in the Company’s issued ordinary share capital received by the Company at 4 March 2024
under the provisions of the Companies Act 2006 have been disclosed in the significant shareholdings section of the
Corporate Governance Report.
188
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 24 SHARE CAPITAL CONTINUED
d. Share options
At 31 December 2023, options to acquire ordinary shares of 10.0p each in the Company up to the following numbers under
the schemes below were outstanding as follows:
Number of ordinary shares of 10.0p each
Exercisable until
The Inchcape SAYE Share Option Scheme – approved
322,449
165,261
501,444
858,368
1 May 2024
1 May 2025
1 May 2026
1 May 2027
Option price
(£)
3.77
7.31
6.00
6.11
Included within the retained earnings reserve are 1,008,058 ordinary shares (2022: 344,009 ordinary shares) in the Company
held by the Inchcape Employee Trust, a general discretionary trust whose beneficiaries include current and former
employees of the Group and their dependants. The book value of these shares at 31 December 2023 was £7m (2022: £3m).
The market value of these shares at both 31 December 2023 and 4 March 2024 was £7m (31 December 2022 and 22 March
2023: £3m).
e. Issue of Derco shares
On 4 January 2023, 38,513,102 ordinary shares of 10p each in the capital of the Company were issued in connection with
the acquisition of the Derco group. As at 31 December 2022, the acquisition had completed and, as at that date, the
shares that were issued on 4 January 2023 represented a liability to issue a fixed number of shares in exchange for fixed
financial assets. As such, they were accounted for as an equity instrument.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
189
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
25 OTHER RESERVES
At 1 January 2022
Comprehensive income/(loss)
Cash flow hedges:
– net fair value gains
– tax on cash flow hedges
Investments held at fair value:
– net fair value losses
Exchange differences on translation of foreign
operations
Exchange differences on translation of
discontinued operations
Recycling of foreign currency reserve
Adjustments in respect of hyperinflation
Other changes in equity
Shares to be issued
Cash flow hedges reclassified and reported in
inventories
At 1 January 2023
Comprehensive income/(loss)
Cash flow hedges:
– net fair value losses
– tax on cash flow hedges
Investments held at fair value:
– net fair value losses
Deferred tax on taxation losses
Exchange differences on translation of foreign
operations
Recycling of foreign currency reserve
Adjustments in respect of hyperinflation
Other changes in equity
Shares issued
Cash flow hedges reclassified and reported in
inventories
At 31 December 2023
Merger
reserve
£m
–
–
–
–
–
–
–
–
316
–
316
–
–
–
–
–
–
–
(4)
–
312
Fair value
through OCI
reserve
£m
–
–
–
(2)
–
–
–
–
–
–
(2)
–
–
(3)
–
–
–
–
–
–
Translation
reserve
£m
(221)
Hedging
reserve
£m
(6)
Total other
reserves
£m
(227)
–
–
–
131
19
99
46
–
–
74
–
–
–
–
(131)
(1)
34
–
–
7
(7)
–
–
–
–
–
–
3
(3)
(45)
17
–
(1)
–
–
–
–
(2)
(34)
7
(7)
(2)
131
19
99
46
316
3
385
(45)
17
(3)
(1)
(131)
(1)
34
(4)
(2)
249
(5)
(24)
Fair value through OCI reserve
For investments in equity instruments that are measured at fair value through other comprehensive income, changes
in fair value are recognised through other comprehensive income. Fair value movements are never recycled to the income
statement, even if the underlying asset is sold, impaired or otherwise derecognised.
Translation reserve
The translation reserve is used to record foreign exchange rate changes relating to the translation of the results of foreign
subsidiaries arising after 1 January 2004. It is also used to record foreign exchange differences arising on long-term foreign
currency borrowings used to finance or hedge foreign currency investments. The effect of foreign exchange rate changes
includes a gain of £1m (2022: loss of £99m) on the sale and liquidation of overseas subsidiaries that has been reclassified to
the consolidated income statement in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. The
adjustments in respect of hyperinflation relate to the application of IAS 29 Financial Reporting in Hyperinflationary
Economies to the Group’s operations in Ethiopia. The indexation impact to opening share capital and retained earnings
of £34m (2022: £46m) has been included in translation reserves above.
Hedging reserve
For cash flow hedges that meet the conditions for hedge accounting, the portion of the gains or losses on the hedging
instrument that are determined to be an effective hedge are recognised directly in shareholders’ equity. When the
hedged firm commitment results in the recognition of a non-financial asset or liability then, at the time the asset or liability
is recognised, the associated gains or losses that had previously been recognised in shareholders’ equity are included
in the initial measurement of the acquisition cost or other carrying amount of the asset or liability.
190
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 25 OTHER RESERVES CONTINUED
Merger reserve
As at 31 December 2022, the acquisition of the Derco group had completed and, as at that date, the consideration shares
that were issued on 4 January 2023 represented a liability to issue a fixed number of shares in exchange for fixed financial
assets. As such, these were accounted for as an equity instrument and recognised in merger reserves (see also note 24). On
4 January 2023, 38,513,102 ordinary shares of 10p each in the capital of the Company were issued in connection with the
acquisition of the Derco group.
26 RETAINED EARNINGS
At 1 January
Comprehensive income/(loss)
– Profit/(loss) for the year
– Actuarial losses on defined pension benefits (see note 5)
Total comprehensive income/(loss) attributable to owners of the parent
Other changes in equity
Written put option
Acquisition of non-controlling interests
Share-based payments, net of tax
Share buyback programme
Purchase of own shares by Inchcape Employee Trust
Dividends paid (see note 9)
At 31 December
27 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
a. Reconciliation of cash generated from operations
Cash flows from operating activities
Operating profit – continuing operations
Operating profit – discontinued operations
Adjusting items (see note 2)
Amortisation of intangible assets (including non-adjusting impairment charges)
Depreciation of property, plant and equipment (including non-adjusting impairment charges)
Depreciation of right-of-use assets (including non-adjusting impairment charges)
Profit on disposal of property, plant and equipment and intangibles
Gain on disposal of right-of-use assets
Gain on disposal of businesses
Share-based payments charge
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
(Decrease)/increase in provisions
Pension contributions more than pension charge for the year
Increase in leased vehicles, rental machinery and equipment
Payments in respect of operating adjusting items
Other non-cash items
Cash generated from operations
2023
£m
820
270
(20)
250
(1)
3
15
–
(19)
(128)
940
2022
£m
1,009
(11)
(12)
(23)
(13)
–
10
(70)
(4)
(89)
820
2023
£m
2022
£m
619
400
–
50
11
61
81
(16)
–
–
15
(251)
(9)
415
(1)
(1)
(18)
(57)
1
900
21
11
10
32
58
(2)
(1)
(3)
10
(396)
(141)
618
30
(2)
–
(28)
2
619
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
191
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
27 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS CONTINUED
b. Net debt reconciliation
Liabilities from financing activities
Assets
Sub-total
Cash/bank
overdrafts
Total
net debt
Net funds at 1 January 2022
Cash flows
Acquisitions
Disposals
New lease liabilities
Foreign exchange adjustments
Net debt at 1 January 2023
Cash flows
Acquisitions (see note 28(a))
Period adjustments (see note 28(b))
Disposals
New lease liabilities
Foreign exchange adjustments
Other non-cash movements
Borrowings
£m
(210)
(596)
(622)
–
–
–
Leases
£m
(324)
64
(174)
13
(58)
(20)
£m
(534)
(532)
(796)
13
(58)
(20)
(1,428)
(499)
(1,927)
412
(23)
(7)
–
–
11
(6)
87
(11)
(1)
–
(37)
21
–
499
(34)
(8)
–
(37)
32
(6)
Net debt at 31 December 2023
(1,041)
(440)
(1,481)
Net funds/(debt) is analysed as follows:
Cash and cash equivalents as per the statement of financial position
Borrowings – disclosed as current liabilities
Add back: amounts treated as debt financing
Cash and cash equivalents as per the statement of cash flows
Debt financing
Amounts to be treated as debt financing
Borrowings – disclosed as non-current liabilities
Lease liabilities
Debt financing
Net debt
Add back: lease liabilities
Adjusted net debt
£m
589
797
(395)
(17)
–
76
1,050
(400)
(146)
9
1
–
(74)
–
440
2023
£m
689
(652)
403
440
(403)
(638)
(440)
(1,481)
(1,041)
440
(601)
£m
55
265
(1,191)
(4)
(58)
56
(877)
99
(180)
1
1
(37)
(42)
(6)
(1,041)
2022
£m
1,064
(546)
532
1,050
(532)
(896)
(499)
(1,927)
(877)
499
(378)
28 ACQUISITIONS AND DISPOSALS
a. 2023 Acquisitions
CATS
On 2 August 2023, the Group acquired 60% of the share capital of the CATS Group of Companies (CATS) for cash
consideration of £54m. The deal expands the Group’s global distribution footprint as it enters the Philippines, further building
on its well-established presence in the APAC region. It also strengthens the Group’s geographic reach and partnerships
with Mercedes-Benz, Chrysler, Jeep, Dodge, Jaguar and Land Rover, and broaden its relationships, adding RAM to its list
of mobility partners. Non-controlling interests of £30m have been recognised, calculated as the proportionate share of
acquired net identifiable assets. Provisional goodwill of £12m arose on the acquisition and is not expected to be deductible
for tax purposes.
A distribution agreement intangible asset of £77m has been recorded, valued using the multi period excess earnings
(MEEM) approach.
Mercedes-Benz Indonesia
On 29 September 2023, the Group acquired 70% of the share capital of Mercedes-Benz’s Indonesian distribution business for
cash consideration of £86m. Deferred consideration represents payments to be made to the seller on settlement of certain
acquired receivables. The deal expands the Group’s existing footprint in Indonesia and, like the CATS acquisition, continues
to build its presence in the APAC region. It also strengthens the Group’s relationship with Mercedes-Benz. Land and buildings
of £78m were acquired as part of the business combination, for which value was included in the agreed purchase price.
Non-controlling interests of £34m have been recognised, calculated as the proportionate share of acquired net identifiable
assets. Provisional goodwill of £17m arose on the acquisition and is not expected to be deductible for tax purposes.
A distribution agreement intangible asset of £29m has been recognised, valued using the multi period excess earnings
(MEEM) approach.
192
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 28 ACQUISITIONS AND DISPOSALS CONTINUED
Other acquisitions
On 2 August 2023 the Group acquired the SAIC Maxus distribution business in New Zealand for cash consideration of £29m.
Provisional goodwill of £6m arose on the acquisition. The Group also acquired certain assets and liabilities and the ongoing
operations of Auto Insure Ptd. Ltd. in the period for cash consideration of £4m to expand its aftersales capacity in Singapore.
Assets and liabilities acquired, at provisional values1
Mercedes-Benz
Indonesia
£m
CATS
£m
Other
£m
Total
£m
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Current liabilities
Trade and other payables
Provisions
Borrowings
Non-current liabilities
Deferred tax liabilities
Lease liabilities
Retirement benefit liability
Net identifiable assets acquired
Less: Non-controlling interests
Goodwill
Net assets acquired
Consideration comprises:
Deferred consideration
Cash consideration
Total consideration
77
2
7
–
42
8
–
15
(52)
–
–
(19)
(7)
(1)
72
(30)
12
54
–
54
54
29
91
–
7
97
27
7
12
(105)
(4)
(23)
(16)
–
(10)
112
(34)
17
95
9
86
95
7
5
4
–
17
1
–
–
(5)
(1)
–
(1)
(4)
–
23
–
10
33
–
33
33
113
98
11
7
156
36
7
27
(162)
(5)
(23)
(36)
(11)
(11)
207
(64)
39
182
9
173
182
1. The fair values of assets and liabilities acquired, as stated above, are provisional values.
The gross contractual amount receivable for trade receivables was £26m and the best estimate at the acquisition date of
the contractual cash flows not expected to be collected was £2m.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
193
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
28 ACQUISITIONS AND DISPOSALS CONTINUED
Acquisition and integration costs of £50m were recognised in net operating expenses in the period, relating to current and
prior year acquisitions (see note 2).
Cash outflow to acquire businesses, net of cash and overdrafts acquired
Current year acquisitions
CATS
Mercedes-Benz Indonesia
Other
Prior year acquisitions including deferred and contingent payments
Derco
Ditec
ITC Group
Other
Net cash outflow
2023
£m
39
74
33
(9)
–
–
–
137
2022
£m
–
–
–
312
8
57
18
395
b. 2022 Acquisitions
Acquisition of the Derco Group
On 31 December 2022, the Group acquired 100% of the share capital of Dercorp CL and merged a subsidiary company
with Dercorp Ex (together with Dercorp CL, “Derco”). Derco is a multi-brand automotive distributor, and was the largest
independent distributor by volume in Latin America, with a strong track record of profitable growth. Derco has significant
presence across four attractive markets of Bolivia, Chile, Colombia, and Peru, and with long-standing partnerships with
global mobility partners such as Suzuki, Mazda, Chevrolet, Changan, JAC, Renault, Great Wall, and Haval. The transaction
was accounted for as a business combination and significantly expanded the Group’s position in highly attractive and
fast growth markets within Latin America and is expected to deliver significant value creation through enhanced growth
prospects and the delivery of meaningful recurring synergies.
Goodwill of £136m arose on the acquisition and is attributable to the anticipated future cash flows of the acquired business
and synergies expected to arise following integration with the Group’s existing businesses in South America. Specifically, the
goodwill represents the premium paid to expand the Group’s presence in this important market and to create a scale
Distribution platform across South America with attractive growth prospects. This provides a platform to deliver growth and
improved returns far quicker than would have been achievable through organic expansion. None of the goodwill is
expected to be deductible for tax purposes.
Intangible assets (not including goodwill) with fair values of £559m were recognised at the date of acquisition, including
distribution agreements (£517m), brands (£19m) and customer relationships (£13m). The distribution agreement and
customer relationship intangible assets were valued using the multi period excess earnings (MEEM) approach, while the
brands were valued using the relief from royalty approach.
The consideration to acquire the share capital, initially valued at £723m, was satisfied by the issue of 38.5m new shares in the
Inchcape group and by £407m in cash. Final consideration was reduced by £9m after the conclusion of the completion
accounts process. The fair value of the shares issued was based on the Inchcape plc closing share price at 30 December
2022 of 820p per share. Given completion occurred on a non-business day, the shares were not registered until 4 January
2023 and so the amounts relating to shares to be issued were classified within other reserves in the consolidated statement
of financial position at 31 December 2022. The issuing of shares qualified for merger relief.
The cash consideration for the acquisition was partly financed through the draw down, in December 2022, of a £350m
bridge facility and a £250m term loan facility.
Acquisition-related costs of £34m incurred in connection with the acquisition of Derco were recorded within net operating
expenses, and recognised as adjusting items in the consolidated income statement in the year ended 31 December 2022.
194
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 28 ACQUISITIONS AND DISPOSALS CONTINUED
The accounting standards allow a period of up to a year to finalise the accounting for an acquisition. Details of the fair
values of the identifiable assets and liabilities, after adjustments made within the period, are set out below:
2022
£m
Period
Adjustments1
£m
2023
£m
Assets and liabilities acquired, at provisional values
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in joint ventures and associates
Trade and other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Current tax assets
Cash and cash equivalents
Current liabilities
Trade and other payables
Current tax liabilities
Provisions
Lease liabilities
Borrowings
Non-current liabilities
Provisions
Deferred tax liabilities
Lease liabilities
Borrowings
Net identifiable assets
Goodwill
Net assets acquired
Consideration comprises:
Shares issued
Cash consideration
Total consideration
559
161
124
11
3
10
796
316
5
34
95
(563)
(21)
(6)
(19)
(532)
(4)
(174)
(118)
(85)
592
131
723
316
407
723
1. Due to the period adjustments not being material, the prior year statement of financial position has not been restated.
Cash outflow to acquire businesses, net of cash and overdrafts acquired
Cash consideration
Less: Cash acquired
Net cash (inflow)/outflow
–
–
(7)
–
–
1
4
–
–
(9)
–
–
7
–
–
–
(4)
2
(1)
(7)
(14)
5
(9)
–
(9)
(9)
2023
£m
(9)
–
(9)
559
161
117
11
3
11
800
316
5
25
95
(563)
(14)
(6)
(19)
(532)
(8)
(172)
(119)
(92)
578
136
714
316
398
714
2022
£m
407
(95)
312
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
195
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
28 ACQUISITIONS AND DISPOSALS CONTINUED
Other acquisitions
On 28 March 2022, to expand its distribution footprint in the Americas, the Group acquired 70% of Comercializadora Ditec
Automoviles S.A., acquiring the distribution rights to Porsche, Volvo, and Jaguar Land Rover in Chile, for total consideration
of £15m. Distribution agreements with a fair value of £28m were recognised. Goodwill of £3m arose on the acquisition. None
of the goodwill is expected to be deductible for tax purposes. In September 2023 the Group finalised the purchase of the
remaining 30% stake in Ditec. This stake was previously subject to a written put option, resulting in a liability on the Group’s
statement of financial position, which has now been extinguished.
On 29 April 2022, the Group acquired the entire share capital of ITC Group, a distributor of Suzuki, Mercedes-Benz, Subaru,
and Chrysler brands in the Caribbean, from the Simpson Group. The total cash consideration paid was £61m. Distribution
agreements with a fair value of £29m were recognised. Goodwill of £nil arose on the acquisition. These businesses were
acquired to further expand the Group’s footprint with both existing and new mobility company partners and using our
distribution business as a platform to capture more of a vehicle’s lifecycle value.
During 2022, the Group also acquired businesses in Guam and the UK. The total cost of these acquisitions was £18m and
goodwill of £7m was recognised.
c. 2022 Disposals and discontinued operations
In the first half of 2022, the Group agreed the sale of its remaining retail operations in Russia to management. The business
represented the Group’s remaining operation in Russia following the disposal of its St Petersburg business during 2021. The
Russian operation was reported in the prior period as a discontinued operation. Financial information relating to the
discontinued operation for the period to the date of disposal is set out below.
The price agreed for the sale of the Russian business was €76m (c£63m), to be satisfied over a period of five years in annual
instalments. Significant uncertainty exists with regards to the amount that will ultimately be recoverable given the precarious
outlook for the Russian economy and the uncertainty regarding the continued supply of vehicles and parts by the mobility
partners. In estimating the amount to be recognised at the time of the disposal, management developed a number of
scenarios for the possible performance of the business. Probabilities were applied to these scenarios which indicated
that some of the receivable would be received over time. However, given the difficulties in remitting the proceeds and
uncertainty over whether this would change in the future, management concluded that the disposal proceeds should be
recognised at £nil.
In the second half of 2022, the Group received the first annual instalment from the sale of the Russian business of €15m
(£12.8m). This was recorded as other income within the operating profit from continuing operations and was reported as
an adjusting item. Management have subsequently reassessed the amount at which the remaining receivable should be
recorded as at 31 December 2023. The outlook for the Russian economy remains precarious and there is continued
uncertainty with regards to the supply of vehicle and parts and the ability of the purchaser to remit the instalments.
Management therefore concluded that the value of the remaining instalments should be recognised at £nil at
31 December 2023.
Financial performance and cash flow information
The financial performance and cash flow information presented below is for the five months ended 31 May 2022.
Revenue
Expenses
Operating profit
Finance (costs)/income
Profit before tax
Tax
Profit after tax of discontinued operation
Loss on disposal
(Loss)/profit from discontinued operation
Exchange differences on translation of discontinued operation
Other comprehensive (loss)/income from discontinued operation
2022
£m
237
(216)
21
(1)
20
(5)
15
(256)
(241)
118
(123)
196
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 28 ACQUISITIONS AND DISPOSALS CONTINUED
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net increase in cash generated from discontinued operation
Disposal proceeds, net of disposal costs
Net assets disposed of
(Loss)/gain on disposal before reclassification of foreign currency translation
reserve
Recycling of foreign currency translation reserve
(Loss)/gain on disposal
Consideration received, net of disposal costs paid
Cash & cash equivalents disposed of
Net cash (outflow)/inflow on disposal of business
Russia
UK Retail
£m
(3)
(155)
(158)
(99)
(257)
£m
6
(3)
3
–
3
Russia
UK Retail
£m
10
(33)
(23)
£m
6
–
6
2022
£m
21
(2)
(2)
17
Total
£m
3
(158)
(155)
(99)
(254)
Total
£m
16
(33)
(17)
During 2022, the Group also disposed of a retail site in the UK for £6m and received £0.2m of deferred proceeds from sites
disposed of in 2021. None of these disposals were material enough to be shown as discontinued operations on the face of
the consolidated income statement as they did not represent a major line of business or geographical area of operations.
29 GUARANTEES AND CONTINGENCIES
Guarantees
Letters of credit
Contingent liabilities
2023
£m
73
24
9
106
2022
£m
121
21
11
153
Letters of credit act as a guarantee, from one of the Group’s banking relationships to another bank, for payments made
by the Group to a specified third party. The Group also has, in the ordinary course of business, commitments under foreign
exchange instruments relating to the hedging of transactional exposures (see note 23).
Franked Investment Income Group Litigation Order
Inchcape is a participant in an action in the United Kingdom against HMRC in the Franked Investment Income Group
Litigation Order (FII GLO). As at 31 December 2023, there were 17 corporate groups in the FII GLO. The action concerns
the treatment for UK corporation tax purposes of profits earned overseas and distributed to the UK. The Supreme Court
returned the test case to the High Court to establish when the claimant in the test case could have reasonably discovered
its mistake about the UK tax treatment of such profits. The case was heard by the High Court in November 2023 and the
judgement was handed down on 5 February 2024. The High Court held that claims for a refund of the unlawfully paid tax
must have been issued before 6 June 2006. Inchcape issued a claim on 25 November 2003 and so the application of the
High Court’s judgement means that its claim was filed in time. However, it is expected that HMRC will appeal against the
High Court’s judgement. In view of the likelihood of an appeal and the significant uncertainty about the eventual outcome
of the appeals process, Inchcape has not recognised any amount in respect of its claim to a refund of this tax.
FCA review of Motor Finance commission
Prior to 2021 the Group, along with other automotive dealers, brokered financing for UK customers under which the Group
received a variable level of commission from lenders. Following recent decisions by the Financial Ombudsman relating to
complaints raised by consumers regarding such commission arrangements, the Financial Conduct Authority (FCA) has
initiated a review into motor finance commission arrangements and sales across several lending firms. If the FCA finds that
there has been widespread misconduct, and that consumers have lost out, it will identify how best to ensure that such
consumers are appropriately compensated. The FCA’s review is due to conclude later this year. Given the inherent
uncertainties regarding the outcome of the review and, if applicable, the nature, scope, timing of and responsibility
for any compensation arrangements, it is not practicable to estimate the timing and extent, if any, of the potential
financial impact on the Group.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
197
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
30 COMMITMENTS
a. Capital commitments
Contracts placed for future capital expenditure at the balance sheet date but not yet incurred are as follows:
Property, plant and equipment
2023
£m
19
b. Lease commitments
Operating lease commitments – Group as lessee
Future minimum lease payments for short-term leases under non-cancellable operating leases are as follows:
Within one year
2023
£m
3
2022
£m
3
2022
£m
4
Operating leases – Group as lessor
The Group has entered into non-cancellable operating leases on a number of its vehicles and certain properties. These
leases have varying terms, escalation clauses and renewal rights and are not individually significant to the Group.
Future minimum lease payments receivable under non-cancellable operating leases are as follows:
Within one year
Between one and five years
Total
2023
£m
4
5
9
2022
£m
4
4
8
Sub-lease receivables – Group as lessor
The Group has entered into sub-leases for a number of properties and other assets. As the lease term represents a major
proportion of the underlying asset’s useful life, the associated right-of-use asset has been derecognised and replaced with
a sub-lease receivable. Future minimum lease payments receivable under sub-leases, together with the present value of
the net minimum lease payments receivable (included within trade and other receivables), are as follows:
Minimum lease payments receivable:
– Within one year
– Between one and five years
– After five years
Total minimum lease payments receivable
Less: Unearned finance income
Present value of sub-lease receivables
2023
£m
2022
£m
3
5
2
10
–
10
2
7
10
19
(4)
15
c. Repurchase commitments
The Group has entered into agreements with certain customers to repurchase vehicles for a specified value at a
predetermined date as follows:
Vehicles subject to repurchase commitments
2023
£m
151
2022
£m
98
Repurchase commitments represent the total repurchase liability on all vehicles where the Group has a repurchase
commitment. These commitments are largely expected to be settled over the next three years. £42m (2022: £20m)
of the above repurchase commitments are included within ‘trade and other payables’ in the consolidated statement
of financial position.
198
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 31 RELATED PARTY DISCLOSURES
a. Trading transactions
Intra-group transactions have been eliminated on consolidation and are not disclosed in this note. Details of transactions
between the Group and other related parties are disclosed below:
Other income paid to related parties
Lease payments made to related parties
Other income received from joint ventures
Transactions
Amounts outstanding
2023
£m
(1)
(7)
18
2022
£m
(1)
–
–
2023
£m
–
(46)1
2
2022
£m
(represented)
–
(53)1
2
1. Amounts outstanding in respect of lease payments to related parties include all undiscounted future payment commitments.
All of the transactions arise in the ordinary course of business and are on an arm’s length basis. The amounts outstanding
are unsecured and will be settled in cash. There have been no guarantees provided or received for any related party
receivables. The Group has not raised any provision for doubtful debts relating to amounts owed by related parties (2022: £nil).
In 2023, £217m was paid to the former shareholders of the Derco group (see note 20) in respect of deferred dividends and
related interest.
b. Compensation of key management personnel
The remuneration of the Board of Directors and the Executive Committee was as follows:
Wages and salaries
Share-based payments
2023
£m
9
6
15
2022
£m
9
4
13
The remuneration of the Directors and other key management is determined by the Remuneration Committee having
regard to the performance of individuals and market trends. Further details of emoluments paid to the Directors are
included in the Directors’ Report on Remuneration.
32 FOREIGN CURRENCY TRANSLATION
The main exchange rates used for translation purposes are as follows:
Australian dollar
Chilean peso
Ethiopian birr1
Euro
Hong Kong dollar
Russian rouble2
Singapore dollar
US dollar
Average rates
Closing rates*
2023
1.88
2022
1.78
2023
1.87
2022
1.77
1,044.74
1,073.09
1,130.41
1,028.42
71.84
1.15
9.75
n/a
1.67
1.25
64.72
1.17
9.70
106.85
1.71
1.24
71.84
1.15
9.98
n/a
1.68
1.28
64.72
1.13
9.44
78.92
1.62
1.21
* At 31 December.
1. In 2023, the results for Ethiopia are translated at the closing rate as required by IAS 21 The Effects of Changes in Foreign Exchange Rates for hyperinflationary
foreign operations.
2. Average rates for the Russian rouble represent the average rates for the 5-month period ending 31 May 2022, and the closing rates for the Russian rouble are as
at the date of disposal of Russian operations.
33 EVENTS AFTER THE REPORTING PERIOD
On 29 January 2024, following approaches from a number of interested parties, the Group announced that it was reviewing
strategic options for the UK Retail business, which could potentially include a sale. At the reporting date, the strategic review
was in initial stages and as there is no certainty that a transaction would result, the Group has concluded that the UK Retail
business did not meet the criteria to be classified as an asset held for sale as at 31 December 2023.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
199
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ALTERNATIVE PERFORMANCE MEASURES
ALTERNATIVE PERFORMANCE MEASURES (APMs)
The Group assesses its performance using a variety of alternative performance measures which are not defined under
International Financial Reporting Standards. These provide insight into how the Board and Executive Committee monitor
the Group’s strategic and financial performance, and provide useful information on the trends, performance, and position
of the Group.
The Group’s income statement and segmental analysis identify separately adjusted measures and adjusting items.
These adjusted measures reflect adjustments to IFRS measures. The Directors consider these adjusted measures to
be an informative additional measure of the ongoing trading performance of the Group. Adjusted results are stated
before adjusting items and on a continuing operations basis.
Adjusting items can include gains or losses on the disposal of businesses, restructuring of businesses, acquisition costs, asset
impairments and the tax effects of these items. Adjusting items excluded from adjusted results can evolve from one financial
period to the next depending on the nature of adjusting items or one-off activities.
Constant currency
Some comparative performance measures are translated at constant exchange rates, called ‘constant currency’
measures. This restates the prior period results at a common exchange rate to the current period and therefore excludes
the impact of changes in exchange rates used for translation.
Performance measure
Definition
Why we measure it
Adjusted gross profit
Gross profit before adjusting items.
Refer to the consolidated income statement.
A key metric of the direct profit contribution
from the Group’s revenue streams (e.g. Vehicles
and Aftersales).
Adjusted operating
profit
Operating profit before adjusting items.
Refer to the consolidated income statement.
A key metric of the Group’s business
performance.
Operating margin
Adjusted operating profit divided by revenue.
A key metric of operational efficiency, ensuring
that we are leveraging global scale to translate
sales growth into profit.
A key driver of delivering sustainable and
growing earnings to shareholders.
Represents the profit made after operating and
interest expense excluding the impact of adjusting
items and before tax is charged.
Refer to consolidated income statement.
Represents the earnings before interest expense,
taxation, depreciation and amortisation expenses,
and excluding the impact of adjusting items.
One of the key measures used in monitoring the
Group’s leverage and capital allocation. Refer
to note 23.
Adjusted profit
before tax
Adjusted earnings
before interest, tax,
depreciation and
amortisation
Adjusting items
Items that are charged or credited in the consolidated
income statement which are material and non-
recurring in nature.
Refer to note 2.
The separate reporting of adjusting items
helps provide additional useful information
regarding the Group’s business performance
and is consistent with the way that financial
performance is measured by the Board and
the Executive Committee.
A measure useful to shareholders and investors
to understand the earnings attributable
to shareholders without the impact of
adjusting items.
A measure of the net amount invested
in operational facilities in the period.
A key driver of the Group’s ability to ‘Invest to
Accelerate Growth’ and to make distributions
to shareholders.
ROCE is a measure of the Group’s ability to
drive better returns for investors on the capital
we invest.
Adjusted ROCE is a measure of the Group’s
underlying ability to drive better returns for
investors on the capital we invest.
A measure of the Group’s net indebtedness
that provides an indicator of the overall
balance sheet strength.
Adjusted earnings
per share
Represents earnings per share excluding the impact
of adjusting items.
Refer to note 8.
Net capital expenditure Cash outflows from the purchase of property, plant
Free cash flow
Return on capital
employed (ROCE)
Adjusted return on
capital employed
(ROCE)*
Net (debt)/funds
and equipment and intangible assets less the proceeds
from the disposal of property, plant and equipment
and intangible assets.
Net cash flows from operating activities, before
adjusting cash flows, less normalised net capital
expenditure and dividends paid to non-controlling
interests.
Operating profit (before adjusting items) divided by the
average of opening and closing capital employed,
where capital employed is defined as net assets add
net debt/less net funds.
Operating profit (before adjusting items) divided by the
average of opening and closing capital employed,
where capital employed is defined as net assets add
net debt/less net funds, less the capital employed of
Derco, which was acquired on the last day of 2022
and therefore did not contribute to operating profit
during the year.
Cash and cash equivalents less borrowings and lease
liabilities adjusted for the fair value of derivatives that
hedge interest rate or currency risk on borrowings.
Refer to note 27.
200
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Performance measure
Definition
Why we measure it
Adjusted (net debt)/net
cash
Cash and cash equivalents less borrowings adjusted for
the fair value of derivatives that hedge interest rate or
currency risk on borrowings and before the incremental
impact of IFRS 16 lease liabilities.
Refer to note 27.
A measure of the Group’s net indebtedness
that provides an indicator of the overall
balance sheet strength and is widely used
by external parties.
Constant currency %
change
Presentation of reported results compared to prior
period translated using constant rates of exchange.
A measure of business performance which
excludes the impact of changes in exchange
rates used for translation.
Organic growth
Organic growth is defined as sales growth in operations
that have been open for at least a year at constant
foreign exchange rate.
A measure of underlying business performance
which excludes the impact of acquisition and
disposals in the period.
* Adjusted ROCE is only relevant for 2022.
APM – Adjusted profit before tax (from continuing operations)
Gross Profit
Less: Segment operating expenses
Adjusted Operating Profit
Less: Adjusting items in net operating expenses
Operating Profit
Less: Net finance costs and JV profits
Profit Before Tax
Add back: Adjusting Items in net operating expenses
Add back: Adjusting items in net finance costs
Adjusted profit before tax
APM – Free cash flow (from continuing operations)
Net cash generated from operating activities
Add back: Payments in respect of adjusting items
Net cash generated from operating activities, before
adjusting items
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of property, plant and equipment
Net capital expenditure
Net payment in relation to leases
Dividends paid to non-controlling interests
Free cash flow
Less: Free cash flow from discontinued operations
Free cash flow from continuing operations
2023
£m
1,939
(1,270)
669
(50)
619
(206)
413
50
39
502
2022
£m
(64)
(4)
10
2022
£m
1,325
(914)
411
(11)
400
(67)
333
11
29
373
2022
£m
494
28
522
(58)
(63)
(4)
397
(17)
380
2023
£m
(88)
(5)
31
2023
£m
593
57
650
(62)
(84)
(6)
498
–
498
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
201
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ALTERNATIVE PERFORMANCE MEASURES CONTINUED
APM – Return on capital employed (from continuing operations)
Operating profit
Adjusting items in net operating expenses
Adjusted operating profit
Net assets
Add net debt
Capital employed
Effect of averaging
Average capital employed
Return on capital employed
APM – Adjusted return on capital employed (from continuing operations)
Capital employed – continuing operations
Less: Derco capital employed
Adjusted capital employed – continuing operations
Effect of averaging
Average adjusted capital employed
Adjusted return on capital employed
2023
£m
619
50
669
1,620
1,041
2,661
(108)
2,553
26.2%
2,661
n/a*
2,661
(108)
2,553
26.2%
* Capital employed for Derco was removed from prior year as the acquisition completed at the end of 2022, hence the ratio was adjusted for this.
APM – Adjusted net debt
Net debt
Add back: lease liabilities
Adjusted net debt
APM – Adjusted earnings per share (from continuing operations)
Operating profit
Add: adjusting items in net operating expenses
Adjusted operating profit
Share of profit after tax of joint ventures and associates
Adjusted profit before finance and tax
Net finance costs
Add: adjusting items in net finance costs
Adjusted profit before tax
Tax on adjusted profit
Adjusted profit after tax
Less: non-controlling interests
Adjusted earnings
Weighted average number of shares (m)
Dilutive effect (m)
Basic adjusted earnings per share
Diluted adjusted earnings per share
202
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
2022
£m
400
11
411
1,567
877
2,444
(741)
1,703
24.1%
2,444
(1,383)
1,061
(49)
1,012
40.6%
2022
£m
(877)
499
(378)
2022
£m
400
11
411
–
411
(67)
29
373
(97)
276
(5)
271
376
45
2023
£m
(1,041)
440
(601)
2023
£m
619
50
669
1
670
(207)
39
502
(140)
362
(13)
349
412
5
84.8p
83.7p
72.0p
64.4p
FIVE YEAR RECORD
The information presented in the table below is prepared in accordance with IFRS, as in issue and effective at that year
end date.
Consolidated income statement
Revenue
2023
£m
11,447
2022
£m
8,133
Adjusted operating profit
Operating adjusting items
Operating profit/(loss)
Share of profit after tax of joint ventures and
associates
Profit/(loss) before finance and tax
Net finance costs before adjusting items
Adjusting finance costs
Profit/(loss) before tax
Tax on profit before adjusting items
Tax on adjusting items
Profit/(loss) after tax
(Loss)/profit from discontinued operations
Non-controlling interests
Profit/(loss) for the year attributable to
owners of the parent
Basic:
– Profit/(loss) for the year attributable to owners
of the parent
– Earnings/(loss) per share (pence)
Adjusted (before adjusting items):
– Adjusted profit from continuing operations
– Adjusted earnings per share (pence)
Dividends per share – interim paid and final
proposed (pence)
Consolidated statement of financial position
669
(50)
619
1
620
(168)
(39)
413
(140)
10
283
–
(13)
270
270
65.6p
349
84.8p
33.9p
2021
£m
6,901
281
(100)
181
–
181
(32)
–
149
(63)
(2)
84
38
(5)
117
117
30.0p
181
46.3p
2020
£m
6,838
2019
£m
9,380
164
(257)
(93)
–
(93)
(37)
–
(130)
(33)
24
(139)
–
(3)
(142)
373
76
449
–
449
(47)
–
402
(76)
3
329
–
(6)
323
(130)
(36.0)p
128
23.1p
402
79.0p
326
59.9p
411
(11)
400
–
400
(38)
(29)
333
(97)
(1)
235
(241)
(5)
(11)
(11)
(2.9)p
271
72.0p
28.8p
22.5p
6.9p
26.8p
Non-current assets
2,799
2,610
1,464
1,480
1,773
Other assets less (liabilities) excluding net
(debt)/funds
Capital employed
Net (debt)/funds
Net assets
Equity attributable to owners of the parent
Non-controlling interests
Total equity
(138)
2,661
(1,041)
1,620
1,521
99
1,620
(166)
2,444
(877)
1,567
1,533
34
1,567
(388)
1,076
55
1,131
1,109
22
1,131
(352)
1,128
(67)
1,061
1,042
19
1,061
(224)
1,549
(250)
1,299
1,279
20
1,299
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
203
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
Non-current assets
Investment in subsidiaries
Deferred tax assets
Trade and other receivables
Current assets
Current tax assets
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Borrowings
Non-current liabilities
Trade and other payables
Borrowings
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Merger reserve
Retained earnings
Total shareholders’ funds
Notes
2023
£m
2022
£m
3
8
4
4
5
6
7
6
7
10
2,586
10
140
2,736
17
81
1
99
2,347
10
210
2,567
10
7
4
21
2,835
2,588
(22)
(320)
(342)
(1,085)
(488)
(1,573)
(1,915)
920
42
147
143
312
276
920
(52)
–
(52)
(562)
(810)
(1,372)
(1,424)
1,164
38
147
143
316
520
1,164
The Company reported a loss for the financial year ended 31 December 2023 of £112m (2022: profit of £365m). The financial
statements on pages 204 to 220 were approved by the Board of Directors on 4 March 2024 and were signed on its behalf by:
DUNCAN TAIT
GROUP CHIEF EXECUTIVE
ADRIAN LEWIS
GROUP CHIEF FINANCIAL OFFICER
Registered Number: 609782
Inchcape plc
204
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
Notes
11
10
At 1 January 2022
Profit for the year
Total comprehensive income for
the year
Dividends
Share buyback programme
Net purchase of own shares by
the Inchcape Employee Trust
Share-based payments, net of
tax
Shares to be issued
At 1 January 2023
Loss for the year
Total comprehensive expense
for the year
Dividends
11
Net purchase of own shares by
the Inchcape Employee Trust
Share-based payments, net of
tax
Shares issued
At 31 December 2023
Share
capital
Share
premium
£m
39
£m
147
Capital
redemption
reserve
£m
142
–
–
–
(1)
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
–
38
147
143
–
–
–
–
–
4
–
–
–
–
–
–
–
–
–
–
–
–
42
147
143
Share-based payments include a net tax charge of £nil (2022: £nil).
Merger
reserve
£m
Retained
earnings
£m
Total
£m
636
365
365
(89)
(70)
(4)
10
316
1,164
308
365
365
(89)
(70)
(4)
10
–
520
(112)
(112)
(112)
(112)
(128)
(128)
(19)
(19)
15
–
276
15
–
920
–
–
–
–
–
–
–
316
316
–
–
–
–
–
(4)
312
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
205
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
ACCOUNTING POLICIES
GENERAL INFORMATION
These financial statements are prepared for Inchcape plc
(the Company) for the year ended 31 December 2023.
The Company is the ultimate parent entity of the Inchcape
Group (the Group) and acts as the holding company of the
Group. The parent company financial statements present
information about the Company as a separate entity and
not about the Group.
BASIS OF PREPARATION
These financial statements were prepared in accordance
with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101).
The financial statements are prepared under the historical
cost convention in accordance with the Companies Act
2006. As permitted by Section 408 of the Companies Act
2006, no separate profit and loss account or statement
of comprehensive income is presented for the Company.
The Company does not have any critical accounting
judgements. The valuation of the Company’s investments
is a key source of estimation uncertainty. The Company’s
net assets were lower than its market capitalisation on
31 December 2023 and the estimates of the recoverable
amounts of the individual investments were in excess of
their carrying values. As a result, no impairment has been
reflected. Other sources of estimation uncertainty most
applicable to the Company do not give rise to a significant
risk of material adjustment to the carrying value of the
Company’s assets and liabilities.
The Directors of Inchcape plc manage the Group’s risks
at a group level rather than an individual business unit
or company level. Further information on these risks and
uncertainties, in the context of the Group as a whole, are
included within the Group disclosures on pages 59 to 66.
In preparing these financial statements, the Company
applies the recognition, measurement, and disclosure
requirements of international accounting standards in
conformity with the requirements of the Companies Act
2006, but makes amendments where necessary in order
to comply with Companies Act 2006 and has set out below
where advantage of the FRS 101 disclosure has been taken:
• Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based
payment’ (details of the number and weighted average
exercise price of share options, and how the fair value
of goods and services received was determined);
• IFRS 7, ‘Financial Instruments: Disclosures’;
• Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’
(disclosure of valuation techniques and inputs used for
fair value measurement of assets and liabilities);
• Paragraph 38 of IAS 1, ‘Presentation of financial
statements’ comparative information requirements
in respect of:
– paragraph 73(e) of IAS 16, ‘Property, plant and
equipment’;
– paragraph 118(e) of IAS 38, ‘Intangible assets’
(reconciliations between the carrying amount at the
beginning and end of the period);
• The following paragraphs of IAS 1, ‘Presentation of
financial statements’:
– 10(d) (statement of cash flows),
– 10(f) (a statement of financial position as at the
beginning of the preceding period when an entity
applies an accounting policy retrospectively or
makes a retrospective restatement of items in its
financial statements, or when it reclassifies items
in its financial statements),
206
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
– 16 (statement of compliance with all IFRS),
– 38A (requirement for minimum of two primary
statements, including cash flow statements),
– 38B-D (additional comparative information),
– 40A-D (requirements for a third statement of
financial position),
– 111 (cash flow statement information), and
– 134–136 (capital management disclosures)
• IAS 7, ‘Statement of cash flows’;
• Paragraph 30 and 31 of IAS 8, ‘Accounting policies,
changes in accounting estimates and errors’
(requirement for the disclosure of information when
an entity has not applied a new IFRS that has been
issued but is not yet effective);
• Paragraph 17 of IAS 24, ‘Related party disclosures’
(key management compensation); and
• The requirements in IAS 24, ‘Related party disclosures’
to disclose related party transactions entered into
between two or more members of a group.
GOING CONCERN
Having assessed the principal risks and the other matters
discussed in connection with the viability statement, the
Directors have considered it appropriate to adopt the
going concern basis of accounting in preparing the
financial statements, as described in the Directors’ Report
of the consolidated Group Financial Statements.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated into the
functional currency at the rates of exchange prevailing
at the dates of the individual transactions. Monetary assets
and liabilities in foreign currencies are translated into
sterling at closing rates of exchange and differences are
taken to the income statement. Non-monetary assets and
liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate
at the date of the transaction. Non-monetary assets and
liabilities denominated in foreign currencies that are stated
at fair value are retranslated to the functional currency
at foreign exchange rates ruling at the dates the fair value
was determined. Foreign exchange differences arising on
translation are recognised in the profit and loss account.
FINANCE COSTS
Finance costs consist of interest payable on the Private
Placement borrowing. Costs are recognised as an expense,
calculated using the effective interest rate method, in the
period in which they are incurred.
INVESTMENTS
Investments in subsidiaries are stated at cost, less provisions
for impairment.
IMPAIRMENT
The Company’s accounting policies in respect of
impairment of property, plant and equipment, intangible
assets and financial assets are consistent with those of the
Group. The carrying values of investments in subsidiary
undertakings are reviewed at each reporting date to
determine whether there is any indication of impairment.
If any such indication exists, then the asset’s recoverable
amount is estimated.
The Company’s impairment policies in relation to financial
assets are consistent with those of the Group, with
additional consideration given to amounts owed by Group
undertakings. Any provision for impairment of receivables is
based on lifetime expected credit losses. Lifetime expected
credit losses are calculated by assessing historical credit
loss experience, adjusted for factors specific to the
receivable and company.
OTHER INTANGIBLE ASSETS
Intangible assets, when acquired separately from a
business (including computer software), are carried at cost
less accumulated amortisation and impairment losses.
Costs comprise purchase price from third parties as well as
internally generated development costs where relevant.
Amortisation is provided on a straight-line basis to allocate
the cost of the asset over its estimated useful life, which in
the case of computer software is between five and eight
years. Software customisation and configuration costs
relating to software not controlled by the Group are
expensed over the period such services are received.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less
accumulated depreciation and impairment losses. Cost
comprises the purchase price and directly attributable
costs of the asset and includes, where relevant, capitalised
borrowing costs. Depreciation is provided on a straight-line
basis to allocate the cost of the asset over its estimated
useful life, which in the case of computer hardware is
five years.
DEFERRED TAX
Deferred income tax is accounted for using the liability
method in respect of temporary differences arising from
differences between the tax bases of assets and liabilities
and their carrying amounts in the financial statements.
Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible
temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference is
due to goodwill arising on a business combination, or to an
asset or liability, the initial recognition of which does not
affect either taxable or accounting income.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except
where the Company is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax is calculated at the tax rates that are
expected to apply to the period when the asset is realised
or the liability is settled using rates enacted or substantively
enacted at the end of the reporting period. Deferred tax
is charged or credited in the income statement, except
when it relates to items credited or charged directly to
shareholders’ equity, in which case the deferred tax is also
dealt with in shareholders’ equity.
Deferred tax assets and liabilities are only offset where
there is a legally enforceable right of offset and there
is an intention to settle balances net.
SHARE CAPITAL
Ordinary shares are classified as equity.
Where the Company purchases its own equity share
capital (treasury shares), the consideration paid is
deducted from shareholders’ funds until the shares are
cancelled, reissued, or disposed of. Where such shares are
subsequently sold or reissued, any consideration received
is included in shareholders’ funds.
DIVIDENDS
Final dividends proposed by the Board of Directors and
unpaid at the year-end are not recognised in the financial
statements until they have been approved by the
shareholders at the Annual General Meeting. Interim
dividends are recognised when they are paid.
SHARE-BASED PAYMENTS
The Company operates various share-based award
schemes. The fair value at the date at which the share-
based awards are granted is recognised in the income
statement (together with a corresponding credit in
shareholders’ equity) on a straight-line basis over the
vesting period, based on an estimate of the number of
shares that will eventually vest. At the end of each reporting
period, the Company revises its estimates of the number
of awards that are expected to vest. The impact of any
revision is recognised in the income statement with a
corresponding adjustment to equity.
For equity-settled share-based awards, the services
received from employees are measured by reference to
the fair value of the awards granted. With the exception of
the Save As You Earn scheme, the vesting of all share-
based awards under all schemes is solely reliant upon
non-market conditions, therefore, no expense is recognised
for awards that do not ultimately vest. Where an employee
cancels a Save As You Earn award, the charge for that
award is recognised as an expense immediately, even
though the award does not vest.
The issue of shares by the Company to employees
of its subsidiaries represents additional capital
contributions. When these costs are recharged to
the subsidiary undertaking, the investment balance
is reduced accordingly.
FINANCIAL INSTRUMENTS
The Company’s policies on the recognition, measurement,
and presentation of financial instruments under IFRS 7
are the same as those set out in the Group’s accounting
policies on pages 137 to 146.
FINANCIAL GUARANTEES
Where the Company enters into financial guarantee
contracts to guarantee the indebtedness of other
companies within its Group, the Company considers these
to be insurance arrangements and accounts for them
as such. In this respect, the Company treats the guarantee
contract as a contingent liability until such time as it
becomes probable that the Company will be required
to make a payment under the guarantee.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
207
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
1 AUDITOR’S REMUNERATION
The Company incurred £0.1m (2022: £0.1m) in relation to UK statutory audit fees for the year ended 31 December 2023.
2 DIRECTORS’ REMUNERATION
Wages and salaries
Social security costs
2023
£m
3
1
4
2022
£m
3
1
4
Further information on Executive Directors’ emoluments and interests is given in the Directors’ Report on Remuneration
which can be found on pages 96 to 116.
3 INVESTMENT IN SUBSIDIARIES
Cost
At 1 January
Additions
Dissolution
At 31 December
Provisions
At 1 January
Dissolution
At 31 December
Net book value
2023
£m
2,402
239
–
2,641
(55)
–
(55)
2,586
2022
£m
1,696
782
(76)
2,402
(131)
76
(55)
2,347
The Directors believe that the carrying value of the individual investments is supported by their underlying net assets.
During 2023, the Company increased its investment in Inchcape International Holdings Limited and St James’s
Insurance Limited.
Inchcape Finance (Ireland) Limited, a subsidiary of the Company, was dissolved on 10 January 2022. During 2022, as part
of the acquisition of the Derco group, the Company increased its investment in Inchcape International Holdings Limited
and Indigo Chile Holdings SpA.
4 TRADE AND OTHER RECEIVABLES
Amounts due within one year
Amounts owed by Group undertakings
Other debtors
Amounts due after more than one year
Amounts owed by Group undertakings
2023
£m
79
2
81
140
140
2022
£m
4
3
7
210
210
Amounts owed by Group undertakings that are due within one year consist of current account balances that are interest free
and repayable on demand, as well as intercompany loans that bear interest at rates linked to source currency base rates.
Amounts owed by Group undertakings that are due after more than one year bear interest at rates linked to source
currency base rates.
5 CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2023
£m
1
2022
£m
4
208
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
6 TRADE AND OTHER PAYABLES
Amounts due within one year
Amounts owed to Group undertakings
Other creditors
Amounts due after more than one year
Amounts owed to Group undertakings
2023
£m
14
8
22
2023
£m
1,085
1,085
2022
£m
47
5
52
2022
£m
562
562
Current amounts owed to Group undertakings are interest free and repayable on demand. Non-current amounts are
repayable between one and five years and bear interest at rates linked to source currency base rates.
7 BORROWINGS
Amounts due within one year
Private placement
Borrowings
Amounts due after more than one year
Private placement
Borrowings
2023
£m
2022
£m
70
250
320
140
348
488
–
–
–
210
600
810
In December 2016, the Group concluded a Private Placement transaction raising £210m to refinance existing US dollar
Private Placement borrowings which matured in May 2017. The amounts drawn under these facilities are as follows:
Maturity date
Amount drawn
Fixed rate coupon
May 2024
May 2027
May 2027
May 2029
£70m
2.85%
£30m
3.02%
£70m
3.12%
£40m
3.10%
In July 2022, the Group entered into a facilities agreement with two banks comprising a £350m bridge facility and a £250m
term loan facility. The bridge facility had an initial term of 12 months commencing from the 29 December 2022, but the
term was extendable at Inchcape’s option by up to 12 months. The term loan had a term of two years commencing from
29 December 2022. The term and bridge facilities were fully drawn as at 31 December 2022 and were disclosed as
non-current borrowings.
In June 2023, the Group successfully issued a £350m public bond, with 6.5% coupon and a five-year maturity. The proceeds
from the bond were used to re-finance the bridge facility put in place to fund the acquisition of Derco, the initial term for
which was due to expire at the end of 2023. The £350m public bond is held at amortised cost and had a fair value of £365m
as at 31 December 2023 based on observable market data.
8 DEFERRED TAX
Net deferred tax asset/(liabilities)
At 1 January 2022
Credited to the income statement
At 1 January 2023
Credited to the income statement
At 31 December 2023
Tax losses
£m
9
1
10
–
10
Deferred tax assets recognised are supported by those future taxable profits of the UK tax group, headed by the Company,
which are associated with the reversal of taxable temporary differences.
9 GUARANTEES
The Company is party to composite cross guarantees between banks and its subsidiaries. The Company’s exposure under
these guarantees at 31 December 2023 was £1m (2022: £4m), equal to the carrying value of its cash and cash equivalents
at the end of the period (see note 5). In addition, the Company has given performance guarantees in the normal course
of business in respect of the obligations of Group undertakings amounting to £170m (2022: £147m).
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
209
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
10 SHARE CAPITAL
a. Allotted, called up and fully paid up
Issued and fully paid ordinary shares (nominal value of
10.0p each)
2023
Number
2022
Number
2023
£m
2022
£m
At 1 January
Shares Issued
Cancelled under share buyback
At 31 December
374,494,030
383,851,938
38,513,102
–
–
(9,357,908)
413,007,132
374,494,030
38
4
–
42
39
(1)
38
b. Share buyback programme
In 2023, no shares were repurchased under the Company’s share buyback programme. In 2022, 9,357,908 shares were
purchased on the London Stock Exchange at a cost of £70m and were cancelled, with none held within treasury shares
at the end of the reporting period. An amount of £1m, equivalent to the nominal value of the cancelled shares, was
transferred to the capital redemption reserve. Costs of £1m associated with the transfer to the Company of the repurchased
shares and their subsequent cancellation were charged to the retained earnings reserve.
c. Substantial shareholdings
Details of substantial interests in the Company’s issued ordinary share capital received by the Company at 4 March 2024
under the provisions of the Companies Act 2006 have been disclosed in the significant shareholdings section of the
Corporate Governance Report.
d. Share options
At 31 December 2023, options to acquire ordinary shares of 10.0p each in the Company up to the following numbers under
the schemes below were outstanding as follows:
Number of ordinary shares of 10.0p each
Exercisable until
The Inchcape SAYE Share Option Scheme – approved
322,449
165,261
501,444
858,368
1 May 2024
1 May 2025
1 May 2026
1 May 2027
Option price
(£)
3.77
7.31
6.00
6.11
Included within the retained earnings reserve are 1,008,058 ordinary shares (2022: 344,009 ordinary shares) in the Company
held by the Inchcape Employee Trust, a general discretionary trust whose beneficiaries include current and former
employees of the Group and their dependants. The book value of these shares at 31 December 2023 was £7m (2022: £3m).
The market value of these shares at both 31 December 2023 and 4 March 2024 was £7m (31 December 2022 and 22 March
2023: £3m).
e. Issue of Derco shares
On 4 January 2023, 38,513,102 ordinary shares of 10p each in the capital of the Company were issued in connection with
the acquisition of the Derco group. As at 31 December 2022, the acquisition had completed and, as at that date, the
shares that were issued on 4 January 2023 represented a liability to issue a fixed number of shares in exchange for fixed
financial assets. As such, they were accounted for as an equity instrument.
f. Share-based remuneration
During the year, Inchcape plc had two employees, the Group Chief Executive, and the Group Chief Financial Officer.
The terms and conditions of the Company’s share-based payment plans are detailed in the Directors’ Report
on Remuneration.
The charge arising from share-based transactions during the year was £2m (2022: charge of £1m), all of which
is equity-settled.
The weighted average exercise price of shares exercised during the period was £7.61 (2022: £nil).
The weighted average remaining contractual life for the share options outstanding at 31 December 2023 is 1.4 years (2022:
1.3 years) and the weighted average exercise price for options outstanding at the end of the year was £5.17 (2022: £4.79).
210
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
11 DIVIDENDS
The following dividends were paid by the Company:
Interim dividend for the six months ended 30 June 2023 of 9.6p per share
(30 June 2022: 7.5p per share)
Final dividend for the year ended 31 December 2022 of 21.3p per share
(31 December 2021: 16.1p per share)
2023
£m
40
88
128
2022
£m
28
61
89
A final proposed dividend for the year ended 31 December 2023 of 24.3p per share is subject to approval by shareholders
at the Annual General Meeting and has not been included as a liability as at 31 December 2023.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
211
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 RELATED UNDERTAKINGS
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, associates, and joint ventures as at
31 December 2023 is shown below:
Subsidiaries
Name and registered address
Argentina
Torre Catalinas Plaza, Av. Eduardo Madero 900 Piso 17, Buenos Aires
Distribuidora Automotriz Argentina S.A.
Inchcape Argentina S.A.
Australia
Level 2, 4 Burbank Place, Baulkham Hills, NSW 2153
AutoNexus Pty Ltd
Bespoke Automotive Australia Pty Ltd
Inchcape Australia Ltd
Trivett Automotive Retail Pty Ltd
Inchcape European Automotive Pty Ltd
SMLB Pty Ltd
Subaru (Aust) Pty Ltd
TCH Unit Trust
Trivett Automotive Group Pty Ltd
Trivett Bespoke Automotive Pty Ltd
Trivett Classic Garage Pty Ltd
Trivett Classic Holdings Pty Ltd
Trivett Classic Pty Ltd
Trivett Motorcycles Pty Ltd (dissolved June 2023)
Trivett Pty Ltd
Trivett Tyres Pty Ltd
Inchcape Finance Australia Pty Limited
Inchcape Corporate Services Australia Pty Limited
PartsLane Pty Limited
Barbados
International Trading Centre, Warrens, St. Michael, Barbados, BB22026
Inchcape Caribbean Inc
Inchcape (Barbados) Inc
Belgium
Leuvensesteenweg 369, 1932 Sint-Stevens-Woluwe
Autoproducts NV
Car Security NV
Toyota Belgium NV/SA
Boulevard Industriel 198, 1070 Anderlecht
Garage Francorchamps SA
Inchcape Retail Belgium
Bolivia
Avenue Cristobal de Mendoza No. 164 UV:14 Mzno:5 Bldg. Imcruz, Santa Cruz
Imcruz Comercial S.A.
Corporación de Inversiones Imcruz Corp. S.A.
Inversiones Piraí S.R.L.
Imcruz Corredores de Seguros S.R.L.
212
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
(i)
(ii)
(iii)
(iv)
Percentage
owned
100%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Brunei
KM3.6, Jalan Gadong, Bandar Seri Begawan
Champion Motors (Brunei) Sdn Bhd
NBT (Brunei) Sdn Bhd
NBT Services Sdn Bhd
Bulgaria
163 Tsarigradsko Shosse Str, Sofia
Inchcape Brokerage Bulgaria EOOD
TM Auto EOOD
Toyota Balkans EOOD
Cayman Islands
c/o JTC (Cayman) Limited P.O. Box 30745, 94 Solaris Avenue, 2nd Floor, Camana Bay, Grand Cayman,
KY1-1203
Interamericana Trading Corp.
Chile
Av. La Dehesa 265, Ciudad Santiago comuna Lo Barnechea Región Metropolitana
Universal Motors SpA
Williamson Balfour Motors S.A.
Williamson Balfour S.A.
Inchcape Digital Delivery Centre Santiago SpA
Ruta 5 Norte #19100 Ciudad Santiago comuna Lampa Región Metropolitana
Hino Chile S.A.
Inchcape Camiones y Buses Chile S.A.
Avda. Las Condes 11774, Vitacura, Santiago
Inchcape Latam Internacional S.A.
Inchcape Automotriz Chile S.A.
Indigo Chile Holdings SpA
Av. Vitacura #5410, Vitacura, Santiago
Inchcape Commercial Chile S.A.
Av. Raul Labbe #12981, comuna Lo Barnechea Región Metropolitana
Comercializadora Ditec Automoviles S.A.
Comercial Automoviles Raul Labbe S.A.
Alonso de Córdova 4125, office 403, Vitacura, Santiago
Dercorp CL SpA
Av. Americo Vespucio 1842, Quilicura, Santiago
Promac SpA
Importadora y Distribuidora Alameda SpA
Dercomaq SpA
Comesa S.A.
Inversiones Derco Internacional SpA
Derco Inversiones SpA
Dercolatina SpA
Percentage
owned
70%
70%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
213
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Chile continued
Sociedad Corredora de Seguros Derco SpA
Derco Chile Repuestos SpA
Dercocenter SpA
Derco SpA
Sociedad Inmobiliaria SCR SpA
Servicios Operacionales Comerciales y Administrativos SpA
Sociedad Comercializadora de Repuestos SpA
Colombia
Calle 99 N° 69c – 41 Bogotá
Inchcape Digital Delivery Centre Colombia S.A.S
Matrase S.A.S
Inchcape Colombia S.A.S
Inmobiliaria Inchcape Colombia S.A.S
BravoAuto S.A.S
Vuelta Grande a 150 metros de la Glorieta de Siberia via Cota-Chia CLIS BG34
Distribuidora Hino de Colombia S.A.S.
Chía, Cundinamarca, Colombia
Derco Colombia S.A.S.
Derco Agencia de Seguros LTDA
Cook Islands
First Floor, BCI House, Avarua, Rarotonga
IB Enterprises Ltd
Costa Rica
La Uruca, de la Pozuelo 200 metros oeste, frente al Hospital Mexico
Arienda Express S.A.
Inchcape Protection Express Sociedad Agencia de Seguros S.A.
Vehiculos de Trabajo S.A.
Vistas de Guanacaste Orquideas S.A.
Djibouti
Route de Venise – Djibouti Free Zone – PO Box 2645
Red Sea Automotive FZCO
Inchcape Djibouti Automotive Sarl
Ecuador
Av. 10 de Agosto N36-226 y Naciones Unidas, Quito, 170507
Autolider Ecuador S.A.S
El Salvador
Boulevard Luis Poma y Calle Llama del Bosque Pte. #1, Urb. Madreselva, Antiguo Cuscatlán, La Libertad
Inchcape El Salvador, S.A. de C.V.
Estonia
Läike tee 38, Peetri küla, Rae vald, Harjumaa 75312
Inchcape Motors Estonia OÜ
214
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Percentage
owned
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
98%
100%
100%
100%
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Ethiopia
Bole Sub City, Kebele 03, H.Nr. 2441, Addis Ababa
The Motor & Engineering Company Of Ethiopia (Moenco) S.C.
Finland
Ansatie 6 a C, 01740 Vantaa, Kotipaikka, Helsinki
Inchcape Motors Finland Oy
Inchcape JLR Finland Oy
Greece
48 Ethnikis Antistaseos Street, Halandri 15231
British Providence SA
Eurolease Fleet Services SA
Toyota Hellas SA
Polis Inchcape Athens SA
Guam
443 South Marine Corps Drive, Tamuning, Guam 96913
Atkins Kroll Inc
197 Ypao Road, Tamuning , Guam 96913
Morrico Holdings, Inc
Morrico Equipment LLC
Guatemala
20 Calle 10–91, Zona 10, Guatemala, Guatemala
Inchcape Guatemala S.A.
Honduras
Penthouse Edificio Torre Mayab, Colonia Loas del Mayab, Avenida Republica de Costa Rica,
Tegucigalpa
Inchcape Honduras S.A.
Hong Kong
11/F, Tower B, Manulife Financial Centre, 223–231 Wai Yip Street, Kwun Tong, Kowloon, HK
British Motors Ltd
Crown Motors Ltd
Future Motors Ltd
Inchcape Finance (HK) Ltd
Inchcape Hong Kong Ltd
Inchcape Mobility Limited
Inchcape Motor Services Ltd
Mega EV Ltd
Nova Motors Ltd
Indonesia
Indomobil Tower, 19th Floor, JI. Mt Haryono no 11, Bidara Cina, Jakarta, Timur
PT JLM Auto Indonesia
Percentage
owned
94%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
215
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Indonesia continued
Sequis Tower, 7th Floor, JI. Jendral Sudirman Kav. 71, South Jakarta 12190
PT Inchcape Automotive Indonesia
PT Inchcape Indomobil Distribution Indonesia
PT Inchcape Indomobil Energi Baru
Wanaherang, Gunung Putri, Bogor, West Java
PT Inchcape Indomobil Manufacturing Indonesia
Ivory Coast
01 BP 3893, Abidjan O1
Distribution Services Cote d’Ivoire SA
Toyota Services Afrique SA
Kenya
LR 1870/X/126, Ground Floor, Oracle Towers, Waiyaki Way, P.O. Box 2231–00606, Nairobi
Inchcape Kenya Ltd
Latvia
4a Skanstes Street, Riga, LV–1013
Inchcape Insurance Services SIA
Inchcape Motors Latvia SIA
Inchcape JLR Baltics SIA
Lithuania
Laisves av. 137, Vilnius, LT–06118
UAB Autovista
UAB Inchcape Motors
Ozo str. 10A, Vilnius, LT–08200
UAB Krasta Auto
Macau
Avenida do Coronel Mesquita, No 48–48D, Edf. Industrial Man Kei R/C, Macau
Future Motors (Macao) Ltd
Yat Fung Motors Ltd
Netherlands
Gustav Mahlerlaan 1212, 1081 LA Amsterdam, the Netherlands
Inchcape International Group BV
New Zealand
Bell Gully, Level 22, Vero Centre, 48 Shortland Street, Auckland, 1010, New Zealand
Inchcape Motors New Zealand Ltd
Inchcape Automotive Distribution (NZ) Ltd
Inchcape Automotive Retail (NZ) Ltd
Inchcape New Zealand Ltd
North Macedonia
21 8th September Boulevard, 1000 Skopje
Toyota Auto Center DOOEL
216
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Percentage
owned
100%
70%
70%
70%
100%
100%
100%
100%
100%
70%
67%
67%
100%
100%
100%
(i)
100%
100%
100%
100%
100%
100%
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Panama
Vía General Nicanor A. de Obarrio (Street 50), Plaza Bancomer
lIaother S.A.
Ilachile S.A.
Ciudad de Panamá, Vía Cincuentenario Andrés Mojica, Ave. 6ta B., Lote X 5B, Corregimiento
de San Francisco, Distrito de Panamá, Provincia de Panamá
Arrendadora Automotriz S.A.
Motores Japoneses S.A.
Sun Motors S.A.
Lopez, Lopez & Associates, 53rd street Marbella, World Trade Center, 5th floor, suite 502,
Panama City
Isthmus Exchange S.A.
Peru
Av. El Polo Nro. 1117, Santiago de Surco, Lima
Inchcape Motors Peru S.A.
Av. Republica de Panama Nro. 3330, San Isidro, Lima
IMP Distribuidora S.A.
Av. Morro Solar 812, Santiago de Surco, Lima
Autocar del Peru S.A.
Distribuidora Automotriz del Peru S.A.
Inchcape Latam Peru S.A.
Rentas e Inmobiliaria Sur Andina S.A.
Av. Manuel Olguin 325, Santiago de Surco, Lima
Derco Perú S.A.
Dercocenter S.A.C.
Corporación Andina de Negocios S.A.
Philippines
28F Robinsons Cyberscape Gamma, Topaz and Ruby Roads, Ortigas Center, San Antonio,
Pasig Cit, Second District, NCR, 1605
Inchcape Digital Delivery Center Philippines Inc.
Block 8, Lot 2, 5th Avenue corner 24th Street, Bonifacio Global City, Fort Bonifacio,
Taguig City 1630
IC Automotive Inc
IC Land Automotive Inc
IC Star Automotive Inc
E. Rogriguez Jr. Avenue corner Carlo J. Caparas, Ugong, Pasig City 1604
ICATS Asian Motors Inc
Percentage
owned
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%
60%
60%
60%
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
217
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Philippines continued
1008 EDSA Greenhills, Second District, City of San Juan, NCR, 1502
ICATS British Motors Inc
ICATS Motorcycles Inc
ICATS Motors Inc
Poland
Al. Prymasa Tysiąclecia 64, 01–424 Warszawa
Inchcape Motors Polska Sp z.o.o
Al. Karkonoska 61, 53–015 Wroclaw
Interim Cars Sp z.o.o
Ul. Lopuzanska 38 B, 02–232 Warszawa
Inchcape JLR Poland Sp. Z.o.o
Puerto Rico
Sabana Gardens Industrial Park Calle B Lotes 6 al 9a, Carolina, PR 00983 and PO Box 29718, San
Juan, PR 00924–0092
Millenium Sales and Services, Inc.
K.I. Investments Inc.
Inchcape Puerto Rico, Inc
Romania
Pipera Boulevard No 1, Voluntari, Ilfov, 077190
Inchcape Motors Srl
Toyota Romania Srl
Inchcape Broker de Asigurare Srl
Inchcape Bravoauto Srl
Saipan
San Jose Village, 1 Chalan Monsignor Guerrero, Saipan, 96950, Northern Mariana Islands
Atkins Kroll (Saipan) Inc
Singapore
2 Pandan Crescent, Inchcape Centre, Singapore 128462
Borneo Motors (Singapore) Pte Ltd
Century Motors (Singapore) Pte Ltd
Champion Motors (1975) Pte Ltd
Inchcape Automotive Services Pte Ltd
Inchcape Motors Private Ltd
Inchcape+ Pte Ltd
Spain
C. De Don Ramon de la Cruz, 38, 28001 Madrid
Inchcape Inversiones España S.L.
Tanzania
AFED Business Park, JK Nyerere Rd, PO.Box 21885, Dar Es Salaam
Inchcape Automotive Limited
Thailand
No. 4332 Rama IV Road, Prakhanong Sub-District, Klongtoey District, Bangkok
Inchcape (Thailand) Company Ltd
No. 2133 New Petchburi Road, Bangkapi Sub-District, Huaykwang District, Bangkok 10310
Inchcape Services (Thailand) Co Ltd
218
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
Percentage
owned
60%
60%
60%
100%
100%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Turks and Caicos Islands
Market Place, Providenciales
Nagoya Marine & General Insurance Ltd
United Kingdom
Inchcape Retail, First Floor, Unit 3140 Park Square, Solihull Parkway, Birmingham B37 7YN
Armstrong Massey (York) Limited
Autobytel Limited
Chapelgate Motors Limited
Ferrari Concessionaires Limited
Gerard Mann Limited
Inchcape Estates Limited
Inchcape Motors International Limited
Inchcape North West Limited
Inchcape Retail Limited
Inchcape Trade Parts Limited
Inchcape Transition Limited
Inchcape UK Corporate Management Limited
Inchcape KMG Limited
Mann Egerton & Co Limited
Nexus Corporation Limited
Notneeded No. 144 Limited
The Cooper Group Limited
Tozer International Holdings Limited
Tozer Kemsley and Millbourn Automotive Limited
22a St James’s Square, London, SW1Y 5LP
Inchcape Digital Limited
Inchcape (Belgium) Limited
Inchcape Corporate Services Limited
Inchcape Finance plc
Inchcape Investments (No.1) Limited (dissolved 2 January 2024)
Inchcape International Holdings Limited
Inchcape JLR Europe Limited
Inchcape Management (Services) Limited
Inchcape Overseas Limited
Inchcape (Singapore) Limited
St Mary Axe Securities Limited
PO Box 33, Dorey Court, Admiral Park, St Peter Port, GUERNSEY GY1 4AT
St James’s Insurance Limited
4th Floor 115 George Street, Edinburgh EH2 4JN
Inchcape Investments and Asset Management Limited
(v)
(vi)
Percentage
owned
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
100%
100%
100%
100%
100%
100%
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
219
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12 RELATED UNDERTAKINGS CONTINUED
Name and registered address
Uruguay
Rambla Baltasar Brum 3028, Montevideo
Autolider Uruguay S.A.
United States of America
The Corporation Company, 30600 Telegraph Road Bingham Farms, MI 48025
Baltic Motors Corporation
Joint ventures
Name and registered address
Australia
Level 6, 15 Talavera Road, Macquarie Park, NSW, 2113
IFSA Pty Ltd
Chile
Av. Americo Vespucio 1842, Quilicura, Santiago
Sociedad Comercial e Inmobiliaria Autoshopping S.A.
Sociedad Comercial Ecovalor S.A.
Av. Las Condes #11000, Oficina 301–A, Vitacura, Santiago
Sociedad de Creditos Automotrices S.A.
Peru
Av. Manuel Olguin 325, Santiago de Surco, Lima
Sociedad de Creditos Automotrices Peru S.A.C.
Unless stated below, all holdings have one type of ordinary share capital:
(i) Ordinary A and Ordinary B shares
(ii) Ordinary shares, B Class shares, J Class shares and L Class shares
(iii) Ordinary shares and E Class shares
(iv) Ordinary shares, A Class shares, C Class shares, D Class shares and E Class shares
(v) Ordinary shares, Ordinary A shares and 8% non-cumulative redeemable preference shares
(vi) Ordinary shares and redeemable cumulative preference shares
Percentage
owned
100%
100%
Percentage
owned
50%
50%
50%
50%
50%
Subsidiary audit exemptions
The following UK subsidiary undertakings will take advantage of the audit exemption set out within section 479A of the
Companies Act 2006 for the year ended 31 December 2023.
Name
Inchcape (Belgium) Limited
Inchcape (Singapore) Limited
Inchcape Corporate Services Limited
Inchcape International Holdings Limited
Inchcape Investments and Asset Management Limited
Inchcape Motors International Limited
Inchcape Overseas Limited
Tozer Kemsley and Millbourn Automotive Limited
Company number
06006735
06257211
01235709
03580629
SC113224
00453390
00783712
00893104
The Company will guarantee the outstanding liabilities of the above UK subsidiary undertakings as at 31 December 2023,
in accordance with section 479C of the Companies Act 2006.
220
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023
SHAREHOLDER INFORMATION
REGISTERED OFFICE
Inchcape plc
22a St James’s Square
London SW1Y 5LP
Tel: +44 (0) 20 7546 0022
Fax: +44 (0) 20 7546 0010
Registered number: 609782
Registered in England and Wales
ADVISORS
Independent Auditor
Deloitte LLP
Chartered Accountants and
Statutory Auditor
SHARE REGISTRARS
Computershare Investor Services PLC
Registrar’s Department, The Pavilions
Bridgwater Road
Bristol BS99 7NH
Tel: +44 (0) 370 707 1076
SOLICITORS
Herbert Smith Freehills
CORPORATE BROKERS
Jefferies Hoare Govett
JP Morgan Cazenove
INCHCAPE ISA
Inchcape has established a Corporate Individual
Savings Account (ISA). This is managed by Equiniti Financial
Services Limited, Aspect House, Spencer Road, Lancing,
West Sussex BN99 6DA
Tel: 0870 300 0430
International callers:
Tel: +44 121 441 7560
More information is available at www.shareview.com
FINANCIAL CALENDAR
Annual General Meeting
9 May 2024
Announcement of 2024 Interim Results
30 July 2024
This Report is printed on Essential Silk and Essential Offset
both of which are derived from sustainable sources.
The manufacturing paper mill and printer are registered to
the Environmental Management System ISO 14001 and are
Forest Stewardship Council (FSC) chain-of-custody certified.
The inks used are all vegetable oil based.
Design and production
P
O
W
E
R
I
N
G
B
E
T
T
E
R
M
O
B
I
L
I
T
Y
/
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
3
VEHICLE DETAILS
27,000
SPECIFICATION
INTERIOR
EXTERIOR
SAFETY
Annual Report
TECHNOLOGY
2023
Inchcape plc
22a St James’s Square
London SW1Y 5LP
T +44 (0) 20 7546 0022
www.inchcape.com
Registered Number 609782
4
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2023