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ANNUAL REPORT AND
ACCOUNTS 2022
STRONG FINANCIAL PERFORMANCE
IN A TRANSFORMATIONAL YEAR
18
Acquisition
and disposals
12
Chief Executive’s review
INCHCAPE BRINGS TOGETHER
ITSPEOPLE AND TECHNOLOGY
TOACCELERATE THE AMBITIONS
OFMOBILITY COMPANIES
Through our unique expertise, our technology,
our data and our advanced analytics, we
provide the platform to help the world’s
leading mobility companies grow.
Our plug-and-play distribution platform
connect the products of mobility brands
withend-consumers. Our capabilities span
product planning and pricing, import and
logistics, brand and marketing to operating
digital sales and aermarket channels.
STRATEGIC REPORT
2 Our business model
5 Our strategy
8 Investment case
10 Chairman’s welcome
12 Chief Executive’s review
16 Facing into the future
18 Acquisitions and disposals
20 Stakeholder engagement
26 Key performance indicators
28 Operating and financial review
37 Responsible Business
44 Task Force on Climate-related
Financial Disclosures
56 Non-financial information statement
59 Risk management
CORPORATE GOVERNANCE REPORT
70 Chairman’s statement
76 Governance at a glance
78 Board of Directors
85 Nomination Committee Report
88 Audit Committee Report
94 CSR Committee Report
96 Directors’ Report on Remuneration
1 17 Directors’ Report
FINANCIAL STATEMENTS
124 Independent auditor’s report
to themembers of Inchcape plc
136 Consolidated income statement
137 Consolidated statement
ofcomprehensive income
138 Consolidated statement
offinancialposition
139 Consolidated statement
ofchangesin equity
140 Consolidated statement
ofcashflows
141 Accounting policies
150 Notes to the financial statements
206 Alternative performance
measures
209 Five year record
210 Company statement
offinancialposition
211 Company statement
ofchangesinequity
212 Accounting policies
215 Notes to the Company
financial statements
OTHER INFORMATION
228 Shareholder information
Our financial metrics
Metric £m Use of metric
Gross Profit 1,325.3 Direct profit contribution
from Value Drivers (e.g.
Vehicles and Aersales)
Less: Segment operating
expenses
(914.5)
Adjusted operating profit¹ 410.8 Profit generated
by the Group
Less: adjusting items in
netoperating expenses
(10.5)
Operating Profit 400.3 Statutory measure
ofOperating Profit
Less: Net Finance
Costs and JV losses
(67. 2)
Profit before tax 333.1 Statutory measure of profit
aer the costs of financing
the Group
Add back: adjusting items
in net operating expenses
Add back: adjusting items
in net finance costs
10.5
29.6
Adjusted profit Before Tax¹ 373.2
1. APM (alternative performance measure), see page 206.
2. Restated, see page 142.
3. Includes the Group Executive Team and its direct reports, see page 121.
76
Governance
12
Chief Executive’s review
28
Operating and
financial review
HIGHLIGHTS
Financial KPIs Non-financial KPIs
Revenue
£ 8.1b n
2021: £6.9bn
BEVs sold
1.8%
2021: 1.2%
Adjusted operating
margin
1
5.1%
2021: 4.1%
2
Reduction in Scope 1 and
Scope 2 GHG emissions
24%
Profit before tax and
adjusting items
1
£373m
2021: £249m
2
Reputation.com
score
671
2021: 642
Free cash flow
1
£380m
2021: £274m
2
Women in Senior
Leadership positions³
22%
2021: 18%
Return on capital
employed
!
41%
2021: 28%
37
Responsible
business
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 1
1. Total as at 31 December 2022, including
~4,500 Derco employees
“BRINGING MOBILITY TO THE
WORLD’S COMMUNITIES 
FOR TODAY, FOR TOMORROW
AND FOR THE BETTER”
OUR DISTRIBUTION
VALUE CHAIN
Inchcape’s value chain
comprises six key elements
which provide fullspectrum
‘Dierentiated Distribution’
services for ouroriginal
equipment manufacturer
(OEM) partners.
Our value chain is dierentiated
from others by our investments
indigital customer experience,
indata analytics, our global
connected platform – which
enables us to deploy our
processes consistently
worldwide– and deep
localmarket expertise.
Inchcape is the world’s leading independent automotive distributor,
operating in over 40 markets and geographies across Asia, Australasia
and the Pacific; the Americas; Africa; Europe and the UK
1. Product planning
Using our local market
expertise to inform
certification and vehicle
ordering decisions (model
types and specifications).
2. Logistics
Operating comprehensive
post-factory connections
todeliver vehicles and parts
inour markets.
3. Brand and marketing
Proposition development, brand
positioning (including price
setting) and national marketing,
aimed at maximising market
share for our partners.
6. Aermarket services
Distribution of parts, and
customer and vehicle lifecycle
management including
aersales services via the
omni-channel retail network.
4. Channel management
Defining and building the optimal
channels to reach consumers
andbusinesses covering network
management, digital, and omni-
channel. This also includes selection
and training of independent
dealers, and ongoing performance
management.
5. Retail services
Bringing our omni-channel
platform to customers to
deliver world-class, digital-
first experiences across our
OEM and market portfolio.
OUR BUSINESS MODEL: DIFFERENTIATED DISTRIBUTION
£ 8.1b n
Revenue
50+
Brand partners
175+
Years of successful
international trade
1 9,000
¹
Employees
AT A GLANCE
2 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
RETAIL EUROPE & AFRICA
ASIA PACIFIC APACAMERICAS
OUR GLOBAL REACH
6
Continents
40+
Countries and geographies worldwide
£1. 5 b n £2.3bn
£2.0bn £2.3bn
3
markets
12
markets
Retail
Europe & Africa
Americas
Asia Pacific (APAC)
REVENUE SPLIT BY REGION
Argentina
Barbados
Bolivia
Chile
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Panama
Peru
Uruguay
Australia
Poland
UK
14
markets
Belgium
Bulgaria
Estonia
Finland
Greece
Latvia
Lithuania
Luxembourg
North Macedonia
Poland
Romania
Djibouti
Ethiopia
Kenya
10
markets
Brunei
Guam
Hong Kong
Indonesia
Macau
Saipan
Singapore
Thailand
Australia
New Zealand
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 3
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
OUR LONGSTANDING
PARTNER RELATIONSHIPS
Among Inchcape’s competitive advantages are the duration
and strength of our relationships with mobility companies.
OUR BUSINESS MODEL: OEM PARTNERSHIPS
55
Toyota
46
Suzuki
52
Jaguar
Land Rover
35
Mercedes-Benz
30
Subaru
Corporation
34
Volkswagen
Group
33
BMW Group
Seven automotive groups and
brands comprise our longest-standing
partnerships*, in years of relationship:
We can trace our involvement with the automotive industry almost as far back
as its inception, but our direct OEM partnerships began in the 1960s when we
started working with Toyota. Since then we have fostered and maintained
close relationships with some of the world’s leading automotive manufacturers,
adding new brands as we have expanded, and bringing further long-standing
relationships into our portfolio through acquisitions. A recent example of this is
the acquisition of Ditec in Chile in 2022 which brought with it a partnership
withVolvo extending to over 60 years.
* You can read more about these brand
relationships in highlight pages throughout
this report
Brand partnerships
page online:
www.inchcape.
com/our-
approach/
brand-partners/
OUR BRAND RELATIONSHIPS:
4 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
VEHICLE LIFECYCLE SERVICESDISTRIBUTION EXCELLENCE
ACCELERATING
OUR AMBITION
Transforming Inchcape to accelerate our growth through
Distribution Excellence and Vehicle Lifecycle Services.
OUR ENABLERS:
Our world, our industry and
ourbusiness are experiencing
unprecedented change.
Thischange represents a
significant opportunity for
Inchcape to grow in
threeways.
1. Generating more value from existing
markets and customers through route
to market transformation. Success in
providing OEMs with an omni-channel
route to market will mean we sell more
goods and services to consumers
while reducing the cost of taking a
vehicle to market for our partners.
2. Using our core capabilities and market
presence to expand and grow in new
markets and with new partners.
Manufacturers are now looking for
partners in the markets they choose
not to serve themselves, who have the
scale to be able to exploit technology
and data to deliver the omni-channel
solution consumers are demanding.
3. Expanding into new and adjacent
areas, capturing more value from our
vehicles as well as others’. This provides
opportunities for Inchcape to create
new solutions or take proven solutions
from other markets to capture a
greater part of the vehicle value chain.
OUR STRATEGY
OUR GROWTH DRIVERS:
Ecient Scale OperationsDigital, Data & Analytics
Culture and Capabilities
Responsible Business
To realise these opportunities,
we have identified two
strategic growth drivers,
Distribution Excellence and
Vehicle Lifecycle Services
(see next page) supported
bythree critical enablers:
1. Develop the Culture and Capabilities
we need to build on ourcore strengths
of executional excellence and
automotive knowledge, blending
these with thedigital, technological
and process capabilities needed to
succeed in thefuture.
2. Use Digital, Data and Analytics to:
create the consumer experience
relevant to each market based
ondata driven insights; make the
business critical decisions that support
ecient and eective execution using
data; and ensure all of this data is
totally secure.
3. Develop Ecient Scale Operations
to standardise our back oce and
core processes, and apply ‘one best
way’ to make us more ecient and
more successful.
This is underpinned by our Responsible
Business plan, ‘Driving What Matters’
which you can read about in detail
onpages 37 to 42.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 5
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Retail
Services
Aermarket
Services
Product
Planning
Channel Management
Logistics
Brand &
Marketing
Digital Customer
Experience
Local
Market
Expertise
Data
Analytics
Connected
Global
Platforms
I
N
C
H
C
A
P
E
D
I
F
F
E
R
E
N
T
I
A
T
E
D
D
I
S
T
R
I
B
U
T
I
O
N
Inchcape has long been a leading automotive
distribution partner to many of the world’s
bestknown and most trusted automotive
manufacturers. The traditional routes to market,
however, have seen significant disruption in recent
years with far more of the customer journey and
experience moving online. Additionally, the
sector’s supporting functions and capabilities
arebecoming digitalised at pace. However,
farfrom seeing this evolution as a threat, we
seeitas being in line with our ambition.
To realise the scale of our ambition we have
accelerated the speed of our transformation.
Wehave developed a global platform of
connected systems and capabilities combined
with the exceptional talent of our people
worldwide that together comprise our proposition
of Distribution Excellence.
The key to this lies in our globally connected
platform of digitalised processes and capability,
combining the strength and resilience of a global
business with tailored local market oering and
expertise. DXP (Digital eXperience Platform) is
nowactive in 36 OEM markets (including multiple
OEM partners in single markets), with more in the
pipeline. DAP (Digital Analytics Platform) provides
advanced analytics and machine learning,
leveraging ourdata and driving smarter, faster
and better business decisions. You can read more
on page17.
DISTRIBUTION EXCELLENCE:
OUR STRATEGY CONTINUED
Global Distribution Opportunity:
17million vehicles are sold in markets
best suited to Inchcape – oen
smaller, more complex and harder
toreach. Whilst Inchcape is the global
leader, it only has a 2% share of the
global distribution market. Inchcape
has significantly expanded its footprint
in recent years, but there is still a huge
opportunity to capture a greater
share of the industry.
Organic growth: Inchcape is exposed
to higher growth markets with low
motorisation rates. Inchcape has a
strong record of driving market share
gains for automotive brands, and is
expected to continue following its
investment in digital and data
capabilities.
Inorganic growth: The combination
ofInchcape’s strong financial position,
extensive OEM relationships and
broad geographic footprint makes
itthe obvious distribution partner for
ambitious automotive brands, with
significant opportunities to drive
further industry consolidation.
Annual new car volume (units)
1. Defined as those markets with annual new car volumes of less than 1m units 2. Number of vehicles per capita
Global
90m
Typical distribution
markets
1
17m
Large markets
typically
insourced by
OEMs, e.g.,
China, US, UK,
Brazil, Mexico
Expansion
opportunities
in markets
best suited to
Inchcape
Inchcape
markets
wordlwide
Inchcape volumes
17m
OUR STRATEGIC
GROWTH OPPORTUNITIES
6 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
%
25%
3x
75%
Our second growth driver is Vehicle Lifecycle
Services (VLS) which focuses on how we expand
the role we play in the value chain through new
and complementary products and services.
Wesee significantly more value to be unlocked
from the second and third phase of a vehicle’s
lifecycle as from the first, and our existing assets,
relationships and expertise provide us the
platformto capture more of this value.
The most significant near-term opportunity
comesfrom the creation of a new global model
for stand-alone omni-channel used car retail.
Including our branded used concept, bravoauto,
the global used car excellence platform (UCX)
isnow live and rolled out in 30 locations in eight
markets worldwide.
bravoauto uses proprietary best practices and
standardised technology, which plugs into our
advanced data analytics platform to deliver
anindustry-leading customer experience.
There is further value to be created and captured
from the total Car Parc aermarket by leveraging
our distribution and technological expertise in the
parts segment. The opportunity we have identified
is to modernise the distribution of parts by
creatinga Digital Parts Platform to connect parts
distributors with workshops, which is planned
forlaunch in 2023.
VEHICLE LIFECYCLE SERVICES:
2nd sale
Finance &
Insurance
3rd sale
1st sale
Lifetime
profits
New vehicle
import
75%
25%
Trade-in
Currently underserved by Inchcape
Aermarket
New Opportunities
The initial user phase, where Inchcape
has strong presence, accounts for
25%of the total profit pool for each
vehicle’s life. 75% of the profit turns
upfrom year 4 onwards, and this
segment is currently underserved
byInchcape. This is the focus of
theVehicle Lifecycle Services
growthdriver.
Vehicle lifecycle value profit split
3
3: Analysis shows the split of profit attainable over an average vehicle’s life, and assumes four dierent owners during that period.
The analysis captures the vehicle sales, finance & insurance commission and the aersales services (including independent aermarket)
Initial user
(0-4 years)
Subsequent
users
(4+ years)
Total profit
pool
Currently
underserved
by Inchcape
Initial
user
phase
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 7
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
ATTRACTIVE
SHAREHOLDER RETURNS
CONSOLIDATION
OPPORTUNITIES
MARGIN
EXPANSION
STRONG
ORGANIC GROWTH
Dividend payout: 40%
Track record of share
buybacks
Exposure to high-growth
markets
History of market
outperformance
Leverage our global scale
to improve profitability
Actively pursuing higher
margin activities
We are a leader with a
c.2% share of global
distribution
Market consolidation
expected to accelerate
MEDIUM TERM
FINANCIAL OUTLOOK
1
Distribution Excellence:
Mid-to-high single digit profit CAGR plus M&A
Vehicle Lifecycle Services:
>£50m incremental profit contribution
2
1. Based on constant exchange rates as at November 2021 (>90% profits derived outside of the UK).
2. Per annum, within five years.
DIGITAL & DATA LEADER
36
markets now live with DXP (Digital
eXperience Platform)
Our digital and datacapability is a
significantcompetitive advantage
• Created a leading digital
and analytical platform
• Global scale, and internal
capability a key dierentiator
• Our technological progress
is impressing OEM brands
INVESTMENT PROPOSITION:
DELIVERING SUSTAINABLE GROWTH AND CASH RETURNS
INVESTMENT CASE
SUSTAINABLE GROWTH
AND RETURNS
We have set ambitious targets to grow our business, responsibly,
seeking to create significant value for all of our stakeholders.
WHY INVEST?
INCHCAPE IS THE GLOBAL LEADER, WITH AN AMBITION TO CONTINUOUSLY GROW
GLOBAL MARKET LEADER
>40
markets covering
six continents
The leading automotive distributor
in a highly fragmented global
market
• Presence across >40 markets;
covering six continents
• We are the leader with c.2%
share of the global distribution
market
• Market consolidation is
expected to accelerate
A RESPONSIBLE BUSINESS
50.3%
sites switched to
renewable energy supply
Growth ambition underpinned
byour ESGstrategy: Responsible
Business
• Responsible Business is integral
to our Accelerate strategy
• Established four priority areas:
Planet, People, Places, Practices
• Due consideration for all
stakeholders
8 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
STRONG BALANCE SHEET NET DEBT TO EBITDA OF MAX 1x PRE IFRS16
£450m capex spend
(<1% of sales)
£560m of dividends £1.9bn of distribution
acquisitions
£440m of share
buybacks
1
INVEST IN THE
BUSINESS
Capex for organic
growth and
technological
investment
2
DIVIDENDS
Policy: 40% annual
payout of basic
adjusted EPS (pre
adjusted)
3
VALUE
ACCRETIVE M&A
Disciplined
approach to
valuation
4
SHARE
BUYBACKS
Consider
appropriateness
ofshare buybacks
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:
HIGHLY ATTRACTIVE AND DISCIPLINED
ATTRACTIVE FINANCIALS
C.25%
ROCE
Deliver value through organic
growth, consolidation and
cashreturns
• Distribution markets have higher
growth prospects than average
• Leveraging our global scale
to improve profitability
• Highly attractive returns (c.25%
ROCE) and capital allocation
GROWING BRAND PRESENCE
>50
OEM brands in our portfolio
Expanding the reach ofour
plug-and-play global distribution
platform
• Well invested operating model
a catalyst for further expansion
• Existing portfolio of >40 OEM
brands; continuing to add
newpartners
• Constantly sharing expertise
across the Group
NEW OPPORTUNITIES
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
our existing footprint
Cumulative
2016 to 2022
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 9
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CHAIRMAN’S WELCOME
DEAR SHAREHOLDERS
ANDSTAKEHOLDERS
This has been another good year for
Inchcape. Not only reporting a strong
financial performance, but making
impressive progress against the Company’s
Accelerate strategy. On Shareholders’
behalf I would like to thank all Inchcape
colleagues around the world for their hard
work in achieving this. We are building
an even stronger Inchcape for the future.
NIGEL STEIN
CHAIRMAN
A YEAR
OF IMPRESSIVE
STRATEGIC
PROGRESS
10 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Performance
The impressive financial performance,
which exceeded the level expected
at the start of the year, was achieved
without the contribution of our
business in Russia, previously a
sizeable part of the Group. Following
the invasion ofUkraine in February
2022, management took decisive
action toexit the Russian market,
selling our business to the local
Inchcape management team in April.
Performance across most of the
Groups’ markets was strong, with the
business in the Americas particularly
so. Due to good margin management
significantly increased profits were
achieved in spite of strong inflationary
headwinds, particularly inEurope.
Acquisitions
As the year ended, we completed
theacquisition of Derco, the largest
independent automotive distributor
inLatin America which will significantly
enhance our presence in the region.
It also brings additional fast growing
Chinese brands into the Inchcape
portfolio. This has long been a key
strategic goal as we expect to see
Chinese OEMs increasing their
marketshare globally.
Our expansion in Latin America,
which as a region is expected to
showabove average future growth
invehicle sales, also achieves a
long-term goal of rebalancing our
historic profit reliance on Asia, in
particular Singapore and Hong Kong.
That said, Asia remains a very
important market and we were
pleased to announce the acquisition
of CATS in the Philippines in early
January 2023.
Distribution Excellence
Distribution Excellence is another
keypillar of the Accelerate strategy.
The progress on improving our digital
oering to give customers the best
possible experience has been truly
remarkable, with our two digital
delivery centres inColombia and the
Philippines contributing strongly. We
are rapidly deploying these systems
across our major markets and expect
to see the benefits flowing in the
nearfuture.
Vehicle Lifecycle Services
We are also increasing our business
inVehicle Lifecycle Services, retaining
vehicles and owners in our network
aer the typical historic period of three
years from sale. During the year, the
Group has seen significant expansion
in used vehicle sales under the new
bravoauto brand, with a number
ofbranches opened inselected
Inchcape markets using Group
best-in-class systems, processes
andskills.
Automotive trends
The automotive market globally is
recovering, with 2023 expected to
show increased supply from most
OEMs. In many markets, electric
vehicles, both battery electric and
hybrid, are in strong demand and we
expect to see growth accelerate. In
choosing our partners and acquisition
targets, Inchcape looks to represent
winning OEMs in the new “electrified”
world as well as aligning our customer
and service oerings around digital
and connected vehicles.
ESG and Responsible Business
Electrification is particularly important
in enabling the automotive industry
toachieve its carbon neutral goals.
Under the Planet pillar of our
Responsible Business agenda,
Inchcape has been working hard
todefine our plans for achieving this
to oer our OEM partners the lowest
carbon route to market.
Our own Scope 1 and 2 goals have
been set, which include substantial
short- and long-term reductions.
Scope 3, which relates almost entirely
to the vehicles we sell, is taking time
topin down as several OEMs have yet
to publish substantive information on
their own plans. We continue to keep
this under close review.
Board changes
The Board had increased
engagement throughout 2022,
witheight additional meetings held
toconsider the Derco acquisition
andthe disposal of the Group’s
operationsin Russia. I am grateful
tomy colleagues for their
contributionof additional time
andfortheir expertise generally.
We are delighted that Byron Grote
joined the Board from 3 January 2023
bringing a wealth of experience
gained at several major international
businesses. We are also very pleased
that, as part of the Derco transaction,
Juan Pablo Del Río joined the Board
bringing his substantial experience of
both the Latin American automotive
market and business generally in
theregion. These are two areas of
expertise we had previously identified
as desirable when planning our future
Board membership.
Gijsbert de Zoeten resigned from
theBoard in November 2022. We
thank him for the contribution he has
made over the last three years. Adrian
Lewis, Group Financial Controller, was
appointed as Acting Chief Financial
Ocer following Gijsbert’s departure.
John Langston, who has served on
the Board for nine years will step down
at the 2023 Annual General Meeting
(AGM). We are most grateful to John
for his enormous contribution to the
Board over those years, including
acting as a very eective Audit Chair
and providing wise counsel generally
to both Executives and Non-Executive
Directors. Sarah Kuijlaars will assume
the role of Audit Chair from the end
ofthe May AGM.
Dividend
Based on the strong performance in
the year, the Board is recommending
that the Company maintains its policy
of paying a dividend of 40% of annual
basic adjusted EPS. This would result
ina overall dividend payment for
theyear of 21.3p.
In light of the Derco acquisition,
theBoard has no short term plans to
restart its share buyback programme,
instead concentrating on paying
down debt and freeing capacity
forfurther expansion.
Looking forward
Inchcape looks very well positioned
tocontinue its success. We are
confident that whilst the economic
environment in some markets remains
uncertain, the strength of our business
model, the geographic spread of
global operations, combined with
thehard work of Inchcape colleagues
across the Group, and some added
momentum from acquisitions will
support the Group’s future progress.
NIGEL STEIN
CHAIRMAN
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 11
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
GROUP CHIEF EXECUTIVE’S REVIEW
I’m pleased to report the Group delivered
a strong performance during 2022 and
made substantial progress with our two
strategic growth priorities: Distribution
Excellence and Vehicle Lifecycle
Services. In 2022 we completed the
transformational acquisition of Derco,
extending our leadership in automotive
distribution in the highly attractive and
fast-growing Americas region, and
providing a platform for us to capture
more of a vehicle’s lifetime value.
DUNCAN TAIT
GROUP CEO
STRONG
FINANCIAL
PERFORMANCE IN A
TRANSFORMATIONAL
YEAR
12 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
We also saw developments during the
year that contributed to a challenging
environment – the war in Ukraine, a
return to inflation, rising interest rates,
and continuing supply constraints
across the globe.
Set against this backdrop, I’m
delighted at how the Group
maintained the momentum we gained
in 2021, with our teams delivering both
our commercial objectives and our
purpose of bringing mobility to the
world’s communities – for today, for
tomorrow and for the better.
Performance
Inchcape delivered another strong
set of results in 2022, with double-digit
growth across all regions. Continued
strong consumer demand, following a
prolonged period of supply shortages,
and fantastic operational execution
from our teams has driven growth in
revenue, profit and cash.
Group revenue for the year was
£8.1bn, an increase of 18% on 2021.
We delivered adjusted profit before
tax of £373m, an increase of 50% on
2021 driven by top line growth and
improved operating margins. We also
reported free cash flow of £380m, up
39% on last year, further strengthening
our cash position.
I believe our success over the past
year demonstrates the strength of
ourstrategy and platform which is
powered by the unique expertise of
our people, our suite of cutting-edge
technology products, and our
advanced data analytics approach.
Strategic development
In last year’s report, I described
howwe had been rolling out our
Accelerate strategy across the Group.
At the time of our last capital markets
day in November 2021 we had just
over a one per cent share of our
target market of 17 million vehicles.
Aswe set out to be the undisputed
number one distribution company
inour industry, we have, through
organic growth, the addition of
newOEM partners, and market
consolidation, positioned ourselves to
achieve market share of two per cent.
We’ve continued to develop and
rollout our omni-channel platform
(known as DXP for Digital eXperience
Platform). This provides customers
witha seamless customer experience
however they choose to interact with
us, and is rolling out to more markets,
with more mobility company partners
all the time.
Our Digital Analytics Platform (DAP)
provides advanced analytics and
machine learning, leveraging our
data and driving smarter, faster and
better business decisions. DAP is now
capable of optimising 70% of our
revenue streams around the world,
contributing to a better experience
for our customers and improved
financial performance for the Group
and our OEM partners.
Another important part of our
technological transformation is our
digital delivery centres (DDCs). Over
the year, we’ve doubled the number
of ‘Inchcapers’ working in our DDCs
inColombia and the Philippines. Now,
some 1,000 people are providing
24/7services and solutions, further
enhancing our digital delivery
capability.
Vehicle Lifecycle Services is about
maximising the profitability of a
vehicle in the stages of its life aer
itsfirst sale, through used resale,
servicing, parts and finance and
insurance products. During 2022,
we’ve taken some big strides towards
our VLS ambitions, especially in used
vehicles through our global Used Car
Excellence (UCX) programme and
inbuilding our bravoauto brand.
I’mpleased with the progress we’re
making with bravoauto, which is now
live in nine markets across Europe,
APAC and the Americas. It’s a
digital-first proposition in which we
arebuilding momentum in volumes
adding great value for our customers
and revenues for the Group.
We’ve also made good progress
withour digital parts platform, which
is planned for launch in 2023.
The Group’s digital transformation is
fundamental to our future success,
given the changing nature of our
industry – not only in the rise of electric
vehicles (EVs), but in the changing
expectations of customers.
People want more of a digital
experience, both in terms of buying
and ownership of vehicles. We see this
wherever we deploy DXP, for example,
resulting in a rise in customer
satisfaction scores. Similarly, OEMs
know digital is vital for the future of
ourindustry and want to partner
withbusinesses that are making
theright investments.
Equally, I believe there’s nobody
better placed than Inchcape to help
OEMs introduce new technology to
our markets. We’re helping brands
tooperate in new markets where
there’svery little public charging
infrastructure, such as in Chile with
Porsche and Volvo. With others we are
helping accelerate their EV ambitions
through investing in servicing
capacity and supporting customers
to install home-charging facilities.
Business development
We continue to focus on markets
thathave high growth potential; and
during 2022 we further expanded our
distribution footprint. We agreed deals
that increase our existing geographic
and brand footprint, while giving us
access to new markets and brand
partners.
At the end of 2022, we completed
ourtransformational acquisition of
Derco. The combination of our two
businesses has created the number
one independent distributor in the
Americas, bringing together two
companies with complementary
portfolios of OEM partners and
aligned cultures.
It’s an important step in our ambitious
growth journey. The enlarged business
will provide exciting opportunities for
our colleagues, OEM partners, dealers
and customers. You can read about
the acquisition in detail on pages
24to 25.
We also acquired a 70% stake in
Ditec, the distributor of Porsche, Volvo
and Jaguar Land Rover in Chile. This
has broadened our growing footprint
in the Americas and added Porsche
and Volvo – two leading premium
brands – to our list of OEM partners.
During the year we acquired the
ITCGroup, owner of Interamericana
Trading Corporation (ITC) and
Simpson Motors from the Simpson
Group. The acquisition gives us entry
into the Caribbean, further building
on our presence in the Americas.
Italso strengthens our geographic
reach with Suzuki, Mercedes-Benz
and Subaru, while broadening our
OEM relationships, with the addition
of Chrysler and other Stellantis brands.
We have further pursued growth with
EV-first brands, enhancing our oering
in established markets. In Hong Kong
and Macau, we have partnered with
Great Wall Motor’s ORA brand of
EV-only cars and in Belgium and
Luxembourg we were awarded the
exclusive sales contract for BYD.
In February 2022 we announced the
disposal of our remaining retail-only
business in Russia, selling to our
management team in the market.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 13
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
GROUP CHIEF EXECUTIVE’S REVIEW
CONTINUED
Responsible business
In last year’s report, I described how
we had developed our Responsible
Business plan. It focuses on our ‘4Ps’ of
responsible business – Planet, People,
Places and Practices – and reaches
into those areas of our operations
where we can make a positive
dierence for our stakeholders.
Over the past year, we’ve focused
onbedding in our plan. Much to my
delight, it’s been embraced positively
by our people and our partners,
which has been evident wherever
I’vetravelled to meet our teams.
Our work to make a dierence for the
planet includes reducing our Scope 1
and 2 CO
2
emissions. I’m pleased to
report that we’re ahead of our
targets, and you can read more
about this in our TCFD report on
pages44 to 54.
If we’re going to fully realise our
Accelerate ambitions, we need
brilliant people inside our company –
and we know that brilliant people
want to work for leading responsible
businesses. This is why the People
aspect of our Responsible Business
plan is an important factor in how
successful we are in attracting and
retaining talent at Inchcape. We have
continued our Women into Leadership
programme with further cohorts in
2022 and ran Inclusive Leadership for
all our senior leadership population
(the Group Executive Team and
itsdirect reports). We will have
completed this for the next level
ofmanagement by the end of
Q1thisyear.
Our Places agenda is all about being
a good company where we operate.
It’s been hugely rewarding to see
what we’re doing – for example, in
some of the markets we operate in
we’re working with local communities
to provide disabled people with
prosthetic limbs. Our safe driving
programme is another example
ofhow we’re contributing to
communities around the world.
The Practices aspect of our
Responsible Business Plan is critical
forus in topics such as our Codes
ofConduct, bribery and corruption,
andmoney laundering, all of which
enables us to protect our people,
ourbusiness and our partners’ brand
equity. Equally, I believe OEMs want
toknow they’re working with partners
who are committed to their own
responsibility agenda, such as having
health and safety programmes that
look aer both employees and
customers. We continue to perform
well in this regard; for example, by
achieving ISO 45001 at the end of
2022 for our own global health and
safety systems.
Overall, I’m pleased at the progress
we’re making as a responsible
business. As ever though, it’s work in
progress – there’s much more for us to
do, so we can make even more of a
positive dierence within the markets
in which we operate. You can read
more about our progress in these
areas in our Responsible Business
report on pages 37 to 42.
Our people
As I described earlier, having brilliant
people inside our company is
fundamental to making Accelerate
asuccess. There’s absolutely no doubt
the Inchcape team hasdelivered for
our OEM partners, shareholders and
other stakeholders during 2022.
I would like to thank all our colleagues
for the contributions they’ve made
during the year, both as individuals
and within the teams that have
collectively helped us achieve
another strong performance.
I would also like to thank my
colleagues on the Executive team
fortheir leadership and teamwork
during the last year. I am delighted
towelcome Liz Brown to the Group
Executive Team in the new position of
Chief Strategy Ocer. Liz joined us in
February 2023 with a remit to lead the
future development of our strategy,
aswell as leading our strategic OEM
relationships. You can read more
about Liz on page 81.
Looking ahead
Inchcape has a diverse portfolio
andrevenue streams, strong balance
sheet and disciplined approach to
investment; in the face of a global
cost-of-living crisis and rising interest
rates, these provide the foundation
ofour resilience and long-term
sustainability.
In this context, and that of a
transitioning mobility industry, I’m more
certain than ever that Accelerate is
the right strategy for the Group. It’s
evident in how our OEM partners are
supportive of our consolidation
activities. It’s evident in how consumers
are responding to what we’re doing
with DXP and bravoauto.
The year ahead will see us working
hard on integrating Derco into
Inchcape in the Americas. We’ve
made a strong start, but we must
make sure we deliver on our
commitments to Derco, our partners,
our people and our shareholders.
14 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
EXPANDING OUR CAPABILITIES
DERCO ACQUISITION
Extending Inchcape’s global leadership in automotive distribution
“ We are delighted to welcome the Derco team to
Inchcape. The combination with Derco is a transformative
and unique opportunity to accelerate our global
distribution business. In addition to delivering substantial
shareholder value, the acquisition will provide exciting
opportunities for our colleagues, OEM partners, dealers
and consumers, and is another great example of
Inchcape’s Accelerate strategy in action.”
DUNCAN TAIT
Group CEO
As outlined in our Accelerate st rategy (see pages 5 to 7), the global automotive market pres ents significant
opportunitie s for Inchcape to consolidate in the di stribution market. Despite bei ng the biggest independ ent
automotive distributo r, we had been tracking at around 1% of the 17 million vehicle volume add ressable
market. Accelerating acquis itions in this fragmented market is a key par t of our growth strategy.
The Group announced its pro posed acquisition of Derco in Ju ly 2022. Prior to Inchcape‘s acquisitio n, Derco,
afamily-founded and pr ivately owned company, was the largest indepe ndent automotive distributor i n Latin
America with revenue in 2022 of £2.2b n. Following shareholder an d market regulatory approval, the deal
completed on 31 December 2022, and the co re focus for 2023 is on integrating our operati ons in the Americas.
A STRATEGIC AND ACCRETIVE
ACQUI SITION
SIGNIFICANT SHAREHOLDER
VALUE CREATION
• I ncreases exposu re to higher
growth markets
• Leve rage combined scal e
tocapture more vehicle
lifetime value
• T he transaction is exp ected
to accelerate growth and
be margin accretive
• D erco is margin accretive
forthe Group
• Significant opportunity
forsynergies
• 15%+ EPS a ccretion in 2023;
20%+ accretive in 2024
• U p to £60m of one-o ca sh
costof delivering synergies
(overtwo years)
• Significantly increases
Inchcape’s distribution scale
• Global automotive distribution
remains highly f ragmented
• R OIC expected to exceed
project cost of capital i n third
full year following co mpletion
• Leve rage broader network
• Leverage partnerships with
financers and GFV
1
product
knowledge
• Leve rage Inchcape’s Digital
andData capabili ties
GUATEMA LA
COSTA RICA
PANAMA
COLOMBIA
ECUADOR
PERU
BOLIVIA
URUGUAY
BARBADOS
EL SALVADOR
CHILE
ARGENTINA
OUR LOCATIONS
Inchcape
Argentina
Barbados
Chile (headquarters)
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Panama
Peru
Uruguay
Derco
Bolivia
Chile (headquarters)
Colombia
Peru
Derco brands
• Changan
• Chev rolet
• Cit roen
• DS Automo biles
• Great Wal l
• Hava l
• Jac Motor s
• Joylong
• Mazda
• Renau lt
• Suzuki
The acquisition of De rco
extends our global lea dership
in auto distributio n and makes
Inchcape the largest
independent distributor in
Latin America. It also al most
doubles Inchcape’s share
ofthe 17 million addressabl e
market to around 2%.
EXISTING PORTFOLIO:
KEY FACTS
Financial
profile
Strong
topline growth
prospects
Margin
upside
Distribution
consolidation
Value
creation
Earnings
impact
£2.2bn
revenue (2022)
~4,500
colleagues
4
markets
1
11
OEM brands
150k
new vehicles
distributed
329
locations
~30% operated by Derco
1. Bolivi a, Chile, Colom bia and Peru
1. GFV = guaran teed future valu e (also commonly ref erred to as “PCP”)
New
opportunities
FIND OUT MORE
Scan to view the 2022
Interim Results we bcast
and presentatio n
24 INCH CAPE ANNUAL REPORT AND ACCO UNTS 2022 INCHCAPE ANNUAL REPO RT AND ACCOUNTS 2022 25
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
ATTRACTIVE
SHAREHOLDER RETURNS
CONSOLIDATION
OPPORTUNITIES
MARGIN
EXPANSION
STRONG
ORGANIC GROWTH
Dividend payout: 40 %
Track record of share
buybacks
Exposure to high- growth
markets
History of market
outperformance
Leverage our global scal e
to improve profitability
Actively pursuing h igher
margin activities
We are a leader with a
c.2% share of global
distribution
Market consolidation
expected to accelerate
MEDIUM TERM
FINANCIAL OUTLOOK
1
Distribution Excellence:
Mid-to-hig h single digit profit CAGR plus M& A
Vehicle Lifecycle Services:
>£50m incremental profit contribution
2
1. Based on co nstant exchang e rates as at Novembe r 2021 (>90% profits deri ved outside of th e UK).
2. Per annum, wit hin five years.
STRONG BALANCE SH EET NET DEBT TO EBITDA OF MA X 1x PRE IFRS16
£450m capex spe nd
(<1% of sales)
£560m of divide nds £1.9bn of distribution
acquisitions
£440m of share
buybacks
1
INVEST IN THE
BUSINESS
Capex for organic
growth and
technological
investment
2
DIVIDENDS
Policy: 40% annual
payout of basic
adjusted EPS (pre
adjusted)
3
VALUE
ACCRETIVE M&A
Disciplined
approach to
valuation
4
SHARE
BUYBACKS
Consider
appropriateness
ofshare buybacks
DIGITAL & DATA LEADER
36
markets now live with DXP (Dig ital
eXperience Platform)
Our digital and dataca pability is a
significantcom petitive advantage
• Created a le ading digital
and analytica l platform
• Glob al scale, and internal
capability a key die rentiator
• Our tec hnological progres s
is impressing OEM b rands
INVESTMENT PROPOSITION:
DELIVERING SUSTAINABLE GROWTH AND CASH RETURNS
INVESTMENT CASE
SUSTAINABLE GROWTH
AND RETURNS
We have set ambitious targets to grow our business , responsibly,
seeking to create significant value for all of our stakeholders.
WHY INVEST?
INCHCAPE IS THE GLOBAL LEADER, WITH AN AMBITION TO CONTINUOUSLY GROW
GLOBAL MARKET LEADER
>40
markets covering
six continents
The leading automot ive distributor
in a highly fragmented g lobal
market
• Presence across >40 markets;
covering six continent s
• We are the leader with c.2%
share of the global di stribution
market
• Market consolidation is
expected to accelerate
A RESPONSIBLE BU SINESS
50.3%
sites switched to
renewable energy supply
Growth ambition un derpinned
byour ESGstrategy: Respon sible
Business
• Resp onsible Busi ness is integral
to our Accelerate strategy
• Estab lished four priori ty areas:
Planet, People, Places , Practices
• Due co nsideration for all
stakeholders
In addition to our growth ambitions, the business is asset-l ight with a long history of
disciplined capital allocation and deliveri ng highly attractive returns to shareholders.
CAPITAL ALLOCATION POLICY:
HIGHLY ATTRACTIVE AND DISCIPLINED
ATTRACTIVE FINANCIALS
C.25%
ROCE
Deliver value throug h organic
growth, consolidation and
cashreturns
• Dis tribution markets ha ve higher
growth prospects tha n average
• Leveragi ng our global scale
to improve profitability
• Hig hly attractive returns (c.25%
ROCE) and capital al location
GROWING BRAND PRESE NCE
>50
OEM brands in our por tfolio
Expanding the reac h ofour
plug-and-play global distribution
platform
• Well inves ted operating model
a catalyst for furthe r expansion
• Exi sting portfoli o of >40 OEM
brands; continuin g to add
newpartners
• Cons tantly sharing exper tise
across the Group
NEW OPPORTUNITIES
75%
of a vehicle’s lifetim e value
in higher margin act ivities
Uniquely posit ioned tocapture
more of a vehicle’s lifetime value
• Hig her margin activiti es;
accounts for 75% of the profit-
pool of a vehicle’s life
• Curre ntly significantly
underserved by Inc hcape
• Clea r opportunity to leve rage
our existing footpri nt
Cumulative
2016 to 2022
8 INCHCAPE AN NUAL REPORT AND ACCOUNT S 2022 INCHCAPE ANNUAL REPORT AN D ACCOUNTS 2022 9
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
KEY
READING
Another important task for 2023 will
beto further bring our VLS initiatives
tolife. This will include operational
improvements and growth in
bravoauto, for example, and focusing
on the continued development and
launch of our digital parts platform.
We continue to focus on the medium-
term outlook outlined at our capital
markets day:
• Distribution Excellence:
mid-to-high single digit profit
CAGR plus M&A
• Vehicle Lifecycle Services:
>£50m of incremental profit
Inchcape is a business with great
momentum and an exciting future.
With a clear strategy, we are well-
positioned to capitalise on further
opportunities for organic growth
andmarket consolidation, and I am
confident we will continue to deliver
sustainable long-term value for all
ourstakeholders.
Directors’ approval of the
Strategic Report
The 2022 Strategic Report, from
pages 2 to 67, were reviewed and
approved by the Board of Directors
on 22 March 2023
DUNCAN TAIT
GROUP CEO
Investment case
P8
Derco acquisition
P24
OPERATING AND FINANCIA L REVIEW
ADRIAN LEWIS
ACTING CHIEF FINAN CIAL OFFICER
I am pleased to present the Operating and
Financial Review for 2022, a year in which the
Group has continued to make substantial
strategic, operational and financial progress.
2022 was a transformational year for the Group
as we made great strides with our strategy,
further shiing our portfol io towards distribution
and developing our vehicle lifecycle services
oering.
Fantastic operational execution from all our
teams drove growth in revenue and profit,
andanother year of excellent cash flow.
GREAT
STRATEGIC,
FINANCIAL AND
OPERATIONAL
PROGRESS
The combination of t he Group’s
distribution expertise, digital and data
capabilities , and strong financia l
position makes us th e consolidator
ofchoice in the highl y fragmented
automotive distribution industry. In
2022 we continued to expan d our
distributio n business throug h bolt-on
acquisition s in the Americas, fur ther
contract wins and the excit ing
acquisition of De rco, an important
milestone in the execut ion of our
Accelerate strategy. The pipel ine
forfuture M&A remain s healthy.
In addition to a strong revenu e and
profit outturn, the Gro up’s resolute
focus on cash resulted i n a record
level of free cash flow of £380 m,
versus the previous reco rd of £314m
in2017. As we look ahead, the
acquisition of De rco will provide
opportuniti es for us to deploy our
ownpractices and proces ses to
driveworking capita l eciencies
andadditiona l cash-flow generatio n.
Following the compl etion of the
acquisition of De rco in December
2022, the Group’s net debt positi on
was £378m. Given the pipeli ne of
M&A opportuni ties and our current
leverage position, we ha ve paused
share buybacks, bu t will continue
toreview the appropriaten ess in line
withour capital all ocation policy. The
Group’s proposed dividen d in relation
to 2022 is 28.8p, up from 22.5p in 20 21.
The Group launched Acce lerate in
2021, and we have made fantastic
progress agains t our ambitions to
extend our leaders hip in automotive
distributio n, and to capture more of
avehicle’s lifetime value. Whi le we
are excited about our progres s so far,
we will maintain our cap ital allocation
discipline, an d remain focused on
delivering benefi ts to all stakeholders.
ADRIAN LEWIS
ACTING CHIEF FINA NCIAL OFFICER
The Group delivered a great s et
ofresults in 2022, wit h all regions
contributing positively and driving
growth across our key finan cial
andnon-financial metrics.
During the year, consu mer
demandremained rob ust against
thebackdrop of vehicle s upply
constraints, whi ch supported our
performance dur ing the year. We
sawa gradual improveme nt in supply
through the year, which he lped an
acceleration of our revenu e growth.
During the period of s upply-demand
imbalance, we experi enced elevated
levels of vehicle profitabi lity (new and
used), although this normalised during
the second half of theyear.
Underpinnin g this is the qualit y of
ourpeople and the st rength of our
business mode l. This enabled the
Group to accelerate perfo rmance
together with increas ed geographic
diversificatio n, which will continu e
todrive resilience am id economic
uncertainties.
KEY PERFORMANCE INDICATORS
Our results are stated at act ual exchange rates. However, to enhan ce
comparabilit y we also present year-on- year changes in sales a nd adjusted
operating profit in cons tant currency, thereby isolati ng the impact of
translationa l exchange rate eects. Unles s otherwise stated, ch anges are
expressed in consta nt currency and figures are stated b efore adjusting items .
2022 2021
1
% change
reported
% change
constant
FX
2
% change
organic
3
Key financials (continuing operations)
Revenue £ 8,133m £6,9 01m +18% +16% +15%
Adjusted Operati ng Profit
1
£411m £281m +46% +41%
Adjusted Operati ng Margin
1
5.1% 4.1 % +100 bp s +9 0bps
Adjusted Profit Before Tax
1
£373m £249m +50%
Adjusted Basic EP S
1
72.0p 46.3p +56%
Dividend Per Sha re 28.8p 22.5p +28%
Free Cash Flow
1
£380m £ 274m +39%
Statutory financials
Operating Profit (continuing operations) £400m £181m
Profit Before Tax (continuing op erations) £333m £149m
Total (loss)/profit for the year £(6) m £122m
Basic EPS (continui ng operations) 61.1p 20.3p
1. Restated to adjust for the dis posal of the rema ining busi ness in Russ ia which has bee n reported as
adiscontinued o peration, se e page 142
2. These measu res are Alternat ive Performan ce Measures, s ee pages 206 to 207
3. Organic growth i s defined as revenue g rowth in operat ions that have be en open for at leas t a year
atconstant foreig n exchange rates
HIGHLIGHTS
Revenue
£ 8.1bn
2021: £6.9bn
Adjusted operat ing margin
2
£5.1%
2021: 4.1%
Profit before tax and adju sting items
1
£373 m
2021: £249m
Free cash flow
2
£380m
2021: £274m
Return on capital em ployed
1
41%
2021: 28%
Dividend per share
28.8p
2021: 22.5p
28 INCH CAPE ANNUAL REPORT AN D ACCOUNTS 2022 INCHCAPE ANNUAL REPO RT AND ACCOUNTS 2022 29
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Operating
and financial
review
P28
PLANETPRACT ICESPEOPLE PLACE S
RESPONSIBLE BUSINESS
DRIVING WHAT MATTERS
Developing our appro ach to responsible bu siness is central
to our future plans at Inc hcape. We know it will provide
measurable ben efits to Inchcape, bringi ng us closer to
our customers and pa rtners: it will make In chcape a more
rewarding and safer plac e to work; it will help us recruit,
engage and retain the bes t talent; and it will ensu re we
remain a trusted par tner to the OEMs with whom we work.
These elements are fu ndamental to the succes sful delivery
of our Accelerate strategy and to ensurin g Inchcape’s
sustainabil ity for the long-term.
We are united with the interest s of all our stakeholders i n
the need to play our role in mak ing a positive contrib ution
to the communities in w hich we operate, for our people,
for society and for the pl anet. For Inchcape though , being
a responsible bu siness extends into oth er key areas of our
operations where we can ma ke a positive dierence to
our stakeholders: by im proving inclusio n and diversity in
our organisatio n, as well as full acces sibility for our
customers; by ensur ing the safety and supp orting the
health and wellbei ng of our employees; and in su pporting
mobility and eco nomic development in the co mmunities
in which we operate.
To deliver this requires u s to have a plan that is suppor ted
with a robust framework. Ou r ‘Driving What Matte rs’ plan
has been designe d collaboratively wit h our markets, for
ownership and del ivery by our teams, local ly. The plan
concentrates on our 4Ps (or pill ars) of Responsible Bu siness
– Planet, People, Places , and Practices.
Mindful of the need to reflect t he dierent laws, regula tions,
and cultures where we ope rate, we have designed a
global framework wit h workstream charters t hat local
markets use to respond to wha t is important to meet
the needs of their loca l stakeholders.
Being a responsible business is reflective of our purpose and a fundamental
part of our strategy, mapping the way Inchcape creates sustainable value
forall our stakeholders.
• M apping the risk s and
opportunit ies of climate
change
• S etting GHG targets
• Re ducing waste
• I nclusion and Di versity
• Safety and Wellbeing
• Tal ent and Skills
• Strengthening our
governance policies
• Re flecting our posit ion
asaninternation al plc
• S afe mobility
• Incl usive mobility
• Socia l mobility
People pillar: R U OK Da y, September 2022
Inchcape Austra lia
Places pillar: Movilizando Corazones prosthetics donation programme,
Inchcape Colom bia
We have a partnership with Suzuk i now
extending to 46 years, signi ficantly expanding
this relationship i n 2018, and adding to our
established Sout h America platform with
ourfirst move into Central America and then
the Caribbean. In 2022 we completed t he
acquisition of Derco, addin g Suzuki to our
operations in Chile, Colombi a and Peru,
andadding Boliva to the portfo lio.
Locations
Distribution:
Argentina, Barbados
+
, Bolivia,
Chile, Colombia, Co sta Rica,
Panama, Peru, Singa pore
SUZUKI
INCHCAPE ANNUAL REPO RT AND ACCOUNTS 2022 37
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
36 INC HCAPE ANNUAL REPORT AN D ACCOUNTS 2022
Responsible
Business
P37
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 15
STRATEGIC REPORT
FACING INTO THE FUTURE
EMBRACING CHANGES
TOOURINDUSTRY
CHANGING
MACRO
TRENDS
CHANGING
AUTOMOTIVE
INDUSTRY
CHANGING
CONSUMER
DYNAMICS
FOCUS ON
ENVIRONMENT
&SOCIETY
Geopolitical
uncertainties
Supporting regulatory
changes; managing
through varying economic
conditions
CASE trends
Growing EV penetration;
rise of mobility as a service
Consumer habits
Catering to dierent
vehicle ownership models
and buying decision
criteria
Emissions
Low emission vehicles and
corporate greenhouse gas
reductions expected
Supply chain disruption
Shortages of products due
to geopolitical tensions,
dierent restrictions, or
other reasons
Supply shortages
Semi-conductors, battery
raw materials, and other
shortages dierentiating
between OEMs
Retail trends
Expectations for a
personalised digitally
integrated experience
through omni-channel
platforms
Circular economy
Resource scarcity and
waste prevention key
considerations
Risk of inflation and/
or recession
Consumer spending
erosion, interest rates
changes, increasing cost
of goods
Route to market
Helping OEMs get even
closer to customers and
new markets
Consumer confidence
Higher interest rates and
lower disposal income
impacts discretionary
spend
Employee expectations
Workforce looking for
purpose-driven employers
How is Inchcape responding?
Strong business model and
a diversified OEM portfolio
has proven resilient in
turbulent times
We provide OEMs 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 macroeconomic
climate
We continue to manage
our inventory through
planning processes,
leveraging data analytics
Our expertise supports
customers throughout the
buying journey and their
ownership lifecycle
We are a forward-thinking
purpose-driven employer,
leveraging our global scale
develop talent
Our purpose is to bring
mobility to the world’s
communities…
for today… for tomorrow… and for the better.
16 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
DIGITAL AND DATA:
INTEGRAL TO INCHCAPE’S
GROWTH AMBITIONS
Inchcape’s proposition, both for mobility company partners and customers, is underpinned by our suite
of cutting-edge technology solutions and our advanced data analytics approach. These are the building
blocks from which we design customer experiences for the markets in which we and our partners want to
succeed. The bespoke solutions on our platform seamlessly connect the products of mobility companies
to digital and physical sales channels, service specialists and very importantly, customers.
Digital Experience Platform (DXP) is our digital touchpoint with customers. It
provides a fully functional digital showroom and links with dealerships to deliver
aseamless omni-channel experience, which customers tell us is a priority for
them. It has been built on a platform that has the ability to scale quickly into
newmarkets and add new OEM brands.
Data Analytics Platform (DAP) is all about predictive analytics and business
intelligence – combining this with DXP gives us significant advantages over our
distribution competitors. The team has now built algorithms and analytics tools
to support both vehicle and parts sales and operational planning (S&OP),
aersales churn prediction and lead scoring to focus sales teams on genuine
‘hot’ leads.
Data and digital are integral to
Inchcape’s growth ambitions and
akey enabler of the Accelerate
strategy.
Central capability to
drivebetter local and
global decisions
Using predictive analytics
to facilitate business
intelligence
Globally integrated data
repository, addressing the
entire value chain
DIGITAL
EXPERIENCE
PLATFORM
OMNICHANNEL
DATA
ANALYTICS
PLATFORM
DATA ANALYTICS
Providing consumers with
afully functioning digital
showroom
Built on a platform with
theability to scale, quickly,
to new markets
Enables the capture of
significant customer and
vehicle data
HIGHER
GROWTH
>1%
outperformance
Outperformance:
New vehicle volume
growth versus the market
IMPROVED
EFFICIENCIES
+15%
sales conversion
Sales conversion:
Proportion of marketable
customers translating into
a vehicle order
MORE
CUSTOMERS
+26%
service bookings
Aersales churn-
prediction algorithm
HIGHER
GROWTH
+10%
parts revenue
Parts S&OP predictive
analytics
IMPROVED
EFFICIENCIES
+30%
time spent on
genuine hot leads
Lead scoring algorithm
FIND OUT MORE
Scan to view the
Spotlight on Digital
&Data webinar
MORE CUSTOMERS
IMPROVED
EFFICIENCIES
HIGHER GROWTH
MORE
CUSTOMERS
+24%
marketable
customers
Marketable customers:
Digital customers opting
into marketing comms
DISTRIBUTION
EXCELLENCE
• 1%+ outperformance
ofnew car volumes
• Mid to high single digit
profit CAGR
• Further consolidation
and expansion
VEHICLE LIFECYCLE
SERVICES
• At least double used
carvolumes
• Digital Parts Platform:
operational and
profitable
• >£50m incremental
profitcontribution
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 17
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Number of
distribution deals
Distribution
revenue added
1
Haval Bolivia
ORA
Porsche
Renault
Volvo
Joylong
DS
Chile
Peru
Belgium
Luxembourg
Colombia
Ecuador
JAC
Jaguar Land Rover
Suzuki
Mazda
Geely
Chevrolet
Changan
BYD
1. Shows revenue reported in the last full financial year prior to Inchcape’s ownership (e.g. Derco acquired on 31 December 2022, and ‘revenue added’ is the
£2.2bn generated in the year ending December 2022)
OPTIMISING OUR PORTFOLIO
Inchcape’s focus on building and maintaining close and long-standing
OEM 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 developed a ‘plug and
play’ distribution platform which has
resulted both in scale acquisitions and
important bolt-on deals, adding new
OEM 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.
OUR M&A FRAMEWORK:
A NUMBER OF EXCITING CONTRACT ADDITIONS IN 2022
New
Existing
Financial
• Focus on markets with higher
growth prospects
• Take a considered approach
to valuing targets
• ROIC > project WACC targeted
in years 2-4
Organisational
• Focus on retaining and nurturing
talent
• ‘Responsible Business’
programme
• Opportunity to professionalise
processes
Strategic
• Additive to existing brand footprint
• Broadens geographic reach
• Enhanced by Inchcape’s
distribution platform
OEMs Markets
+£2.3bn
Revenue
ACQUISITIONS AND DISPOSALS
£400m £100m £250m £150m £200m £200m £2.3bn £3.6bn
2016 2017 2018 2019 2020 2021 2022 Today
REBALANCING OUR PORTFOLIO IN FAVOUR OF DISTRIBUTION SINCE 2016
2 2 3 3 5 5 5 25
Retail revenue
disposed
(£70m) (£80m) (£90m) (£600m) (£570m) (£300m) (£730m) (£2.4bn)
Total
18 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Locations
Distribution:
Belgium, Brunei, Bulgaria, Djibouti,
Ethiopia, Greece, Guam, Hong
Kong, Luxembourg, Macau, North
Macedonia, Saipan, Romania,
Singapore, Chile and Colombia
Retail:
UK
TOYOTA MOTOR
CORPORATION
TMC
Our partnership with Toyota is the longest in
ourportfolio, with 55 years of representation
asa distributor in geographies that reach from
South East Asia to East Africa and from Europe
to the Americas. This long-standing partnership
extends to both passenger and commercial
vehicles, a segment that we have expanded
more recently in South America.
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 19
STAKEHOLDER ORIGINAL EQUIPMENT
MANUFACTURERS OEMS
CUSTOMERS EMPLOYEES SHAREHOLDERS COMMUNITIES
HOW WE
CREATE VALUE
We provide our OEM brand partners
with professional and ecient 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
for customers in our industry globally.
We aim to enable every colleague
to achieve their personal goals at
each stage of the employee journey;
to recognise and develop talent; and
to foster a socially conscious culture
based on inclusion, empowerment and
optimised potential through learning.
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 buyback.
We have a balanced approach to
engagement with the communities
in which we operate, empowering
ownership at local level with structural
support from Group.
INTERESTS
• Strategy
• Long-term commercial sustainability
and business viability
• Trusted partnerships
• Brand protection
• Health and safety
• Environment, social, and
governance(ESG).
• Access to vehicle products and services
• World renowned automotive brands
• Specialist product and service
knowledge
• Customer service
• Aersales
• Safe facilities
• Tailored experiences, both on-
and oine
• Business viability (for long-term
contracts, e.g. fleet management).
• Strategy
• Reward, training and development,
diversity and inclusion
• Strong approach to health and
safety– duty of care
• Company purpose and values
• Long-term commercial sustainability
• Security of employment stemming
from business viability
• Responsible employer
• 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
• Health and safety, including local
environmental concerns, e.g. waste
disposal
• Community activities, e.g. support
oflocal charities
• Road safety campaigns in some
markets
• Responsible approach to local law
and regulations
HOW WE ENGAGE
Management
• Regular top-to-top executive
management meetings
• Market level operational meetings
• Pan-market brand development.
Board
• Major brand partner deep dive
reviewannually
• Regular feedback from Group CEO.
Management
• Daily reporting of customer feedback
on reputation.com
• Analysis of sales force customer
journey management platform
• Ongoing surveys at market level
• Provide advice and knowledge on
aday to day basis.
Board
• Update on the customer satisfaction
analytics from reputation.com at
each meeting.
Management
• Launch of new Codes of Conduct
• Employee engagement survey
• One Inchcape performance
management framework
• Employee intranet
• Employee engagement forums
Board
• Employee engagement surveys
and action plans
• Designated Non-Executive Director
• Annual Board visit
Management
• Regular dialogue with institutional
investors (roadshows and
conferences)
• Capital Markets Day, investor
webinars, and financial results
• Annual Report and plc website
Board
• AGM and Derco acquisition EGM
• Chairman’s periodic one-to-one
meetings
• Committee member interaction
Management
• Market-specific activity co-ordinated
at local level
• Group-level support for extraordinary
events aecting our market
communities
Board
• Updates on community activities
included in regional market updates
from CEOs
OUTCOMES
AND PROGRESS
• New strategic partnership with Great
Wall Motor Company Limited, and
BYD, a leading EV manufacturer
• Expansion of distribution network
inthe Americas, adding Porsche,
Volvoand Jaguar Land Rover.
• Customer omni-channel platform
rolled out to 36 markets with 13 OEMs
• Reputation.com: Total reviews in 2022:
85,200 up 22% on 2021. Average rating
was 4.8/5 up from 4.7/5 in 2021.
• Consultation with employees on the
2022 Remuneration Policy
• Held four employee forums in 2022
• Employee engagement event in
Santiago facilitated by the
designated Non-Executive Director
• Three day leadership strategy event
held in November in Austin, Texas
• Held over 200 investor meetings
during 2022
• Consultation with shareholders on
the2022 Remuneration Policy
• 99.9% votes in favour for Derco
acquisition at EGM
• Launched the ‘In the Driving Seat’
investor webinar series
• Around 19,000 people employed in
over 40 countries and geographies
• Strong levels of local community
involvement including road safety
campaigns and inclusive mobility
STAKEHOLDER ENGAGEMENT
FORGING STRONG
RELATIONSHIPS
20 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
STAKEHOLDER ORIGINAL EQUIPMENT
MANUFACTURERS OEMS
CUSTOMERS EMPLOYEES SHAREHOLDERS COMMUNITIES
HOW WE
CREATE VALUE
We provide our OEM brand partners
with professional and ecient 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
for customers in our industry globally.
We aim to enable every colleague
to achieve their personal goals at
each stage of the employee journey;
to recognise and develop talent; and
to foster a socially conscious culture
based on inclusion, empowerment and
optimised potential through learning.
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 buyback.
We have a balanced approach to
engagement with the communities
in which we operate, empowering
ownership at local level with structural
support from Group.
INTERESTS
• Strategy
• Long-term commercial sustainability
and business viability
• Trusted partnerships
• Brand protection
• Health and safety
• Environment, social, and
governance(ESG).
• Access to vehicle products and services
• World renowned automotive brands
• Specialist product and service
knowledge
• Customer service
• Aersales
• Safe facilities
• Tailored experiences, both on-
and oine
• Business viability (for long-term
contracts, e.g. fleet management).
• Strategy
• Reward, training and development,
diversity and inclusion
• Strong approach to health and
safety– duty of care
• Company purpose and values
• Long-term commercial sustainability
• Security of employment stemming
from business viability
• Responsible employer
• 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
• Health and safety, including local
environmental concerns, e.g. waste
disposal
• Community activities, e.g. support
oflocal charities
• Road safety campaigns in some
markets
• Responsible approach to local law
and regulations
HOW WE ENGAGE
Management
• Regular top-to-top executive
management meetings
• Market level operational meetings
• Pan-market brand development.
Board
• Major brand partner deep dive
reviewannually
• Regular feedback from Group CEO.
Management
• Daily reporting of customer feedback
on reputation.com
• Analysis of sales force customer
journey management platform
• Ongoing surveys at market level
• Provide advice and knowledge on
aday to day basis.
Board
• Update on the customer satisfaction
analytics from reputation.com at
each meeting.
Management
• Launch of new Codes of Conduct
• Employee engagement survey
• One Inchcape performance
management framework
• Employee intranet
• Employee engagement forums
Board
• Employee engagement surveys
and action plans
• Designated Non-Executive Director
• Annual Board visit
Management
• Regular dialogue with institutional
investors (roadshows and
conferences)
• Capital Markets Day, investor
webinars, and financial results
• Annual Report and plc website
Board
• AGM and Derco acquisition EGM
• Chairman’s periodic one-to-one
meetings
• Committee member interaction
Management
• Market-specific activity co-ordinated
at local level
• Group-level support for extraordinary
events aecting our market
communities
Board
• Updates on community activities
included in regional market updates
from CEOs
OUTCOMES
AND PROGRESS
• New strategic partnership with Great
Wall Motor Company Limited, and
BYD, a leading EV manufacturer
• Expansion of distribution network
inthe Americas, adding Porsche,
Volvoand Jaguar Land Rover.
• Customer omni-channel platform
rolled out to 36 markets with 13 OEMs
• Reputation.com: Total reviews in 2022:
85,200 up 22% on 2021. Average rating
was 4.8/5 up from 4.7/5 in 2021.
• Consultation with employees on the
2022 Remuneration Policy
• Held four employee forums in 2022
• Employee engagement event in
Santiago facilitated by the
designated Non-Executive Director
• Three day leadership strategy event
held in November in Austin, Texas
• Held over 200 investor meetings
during 2022
• Consultation with shareholders on
the2022 Remuneration Policy
• 99.9% votes in favour for Derco
acquisition at EGM
• Launched the ‘In the Driving Seat’
investor webinar series
• Around 19,000 people employed in
over 40 countries and geographies
• Strong levels of local community
involvement including road safety
campaigns and inclusive mobility
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
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 21
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
STAKEHOLDER ENGAGEMENT CONTINUED
BMW*
BMW Motorrad*
BYD
Changan
Chrysler
Diechi
DFSK
Doosan
Freightliner
Fuso
Geely
Hino
Jac Motors
Jaguar
Jeep
Land Rover
Mack
Mercedes-Benz
Mini
Porsche
Rolls Royce
Subaru
Suzuki
Volvo
Western Star
Our global tech capability
Inchcape Digital Architecture:
a single common global
technology stack
Digital Delivery Centres:
our internal digital delivery
capability
Digital experience
platform
Omni-channel
• Providing consumers with
afully functioning digital
showroom
• Built on a platform with the
ability to scale, quickly, to
new markets
• Enables the capture
ofsignificant customer
andvehicle data
Data analytics platform
Predictive analytics and
business intelligence
• Central capability to drive
better local and global
decision
• Using predictive analytics
to facilitate business
intelligence
• Globally integrated data
repository, addressing
theentire value chain
SHAREHOLDER ENGAGEMENT CYCLE
Area Shareholder engagement cycle 2022 Matters raised Subsequent feedback/engagement
Q1 Trading
• FY21 results presentation with Q&A and
Annual Report & Accounts
• FY21 investor roadshow
• Investor conferences
• 2021 performance and 2021 final dividend
• Further insight into key areas of our
business that form part of our “Accelerate”
strategy
• Key areas of focus: Russia exposure,
strategic progress including Digital and
Data, OEM relationships, inflation and M&A
Russia
• Intention to exit from Russia announced
on15March 2022
• Impact of the disposal of Russian
operations
• Pleased to see the Board act decisively
with consideration for various stakeholders
Q2
Trading
• Q1 trading update with Q&A
• Investor conferences
• Performance during the first quarter of
2022 and completion of exit from Russia
• Appreciation for swi and clean exit from
Russia
AGM
• 2022 AGM held on 19 May 2022 • No issues were raised by shareholders • All resolutions passed with over 90% of
votes in favour
Webinar
• Launched first webinar for our “In the
Driving Seat” series with a “Spotlight on
theAmericas”
• Focus on the Group’s fastest growing
region, and the growth prospects going
forward within Distribution Excellence
andVehicle Lifecycle Services.
• Positive engagement from investors and
analysts; appreciated the deep-dive on
the region showing its evolution/growth
Q3
Trading
• Interim results and presentation with Q&A
• Investor roadshow and conferences
• 2022 interim performance and dividend • Key area of focus was the Derco
acquisition which was well received
Remuneration
• Consultation with shareholders on
proposed 2023 Remuneration Policy
• ESG metrics, pension alignment and
continued use of two long term
incentiveplans
• Positive feedback that policy is working
well. Caution advised on the use of ESG
metrics. Further information on page 99
Derco
• Derco acquisition announced on 28 July
2022
• Proposal of the Derco acquisition • Further information on page 21
Q4
Trading
• Q3 trading update with Q&A
• Investor roadshow
• Performance during the third quarter
of2022
• Update to our FY22 outlook
• Key areas of focus were inflationary
headwinds, vehicle supply, interest rates,
and demand trends across our markets
Webinar
• Hosted our second webinar for our “In the
Driving Seat” series with a “Spotlight on
Digital & Data”
• Progress the Group has made on its digital
and data journey and how it is integral
tothe Group’s growth ambitions
• Positive engagement from investors and
analysts; appreciated insights on how
integral digital and data is to the business
Derco
• Derco acquisition circular sent to
shareholders. EGM held on 16 December
2022
• No matters were raised by shareholders • The resolution passed with 99.99% of
votesin favour. Transaction completed
on31 December 2023
INCHCAPE AMERICAS HAS GROWN
SIGNIFICANTLY SINCE 2016
A GLOBAL DIGITAL INFRASTRUCTURE,
DRIVING SMARTER DECISIONS
Revenue 2021
1
(pre-Derco)
£1.2bn
2016: £160m
OEM brands
25
Markets
12
Argentina
Barbados (+)*
Chile*
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Panama
Peru*
Uruguay
1. 2021 revenue pro forma for acquisitions announced up until 30 June 2022 pre-Derco
+ Indicates the base of the core distribution operations which also serves as other neighbouring islands
* part of the Inchcape business in 2016
FIND OUT MORE
Scan to view the Inchcape
Americas webinar
FIND OUT MORE
Scan to view the Spotlight on
Digital & Data webinar
• In response to investor feedback on understanding further key areas of our business, we launched our “In the Driving Seat” series.
We hosted our first webinar in Q2 on “Spotlight on Americas”, and in Q4 our second one in the series “Spotlight on Digital & Data”.
22 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Consequences of long-term decisions
Many of the decisions the Board makes today will aect the
success of the Group in the longer term. When making such
decisions, the Board considers what value will be created
forshareholders, if the appropriate resources are available,
howcurrent and future employees will be aected and what
impacts these decisions will have on communities and the
environment in which Inchcape operates. Consideration is
also given to the ‘what ifs’ as long-term decisions, by their
nature, contain a degree of uncertainty about what may
happen in the future.
The Board’s risk management procedures identify the
potential consequences of decisions in the short, medium
and long term so that mitigation plans can be put in place to
prevent, reduce or eliminate risks to the business and wider
stakeholders. Please see pages 59 to 66 for further details.
Further information on the significant decisions taken by
theBoard during the year are given in the Corporate
Governance Report on page 82.
The Responsible Business framework: Driving What Matters,
which is owned and delivered by our colleagues around
theGroup, sets out what responsible business means for
Inchcape under four pillars, People, Places, Practices and
Planet. Please see pages 37 to 42 for further information.
The pillars focus on the issues that are important to our
employees, our communities, ensuring ethical business
conduct, and the environment. The data points give the
Board context for what the potential consequences of
long-term decisions will be.
Interests of employees
A major transaction such as the Derco acquisition will bring
uncertainty for employees in both businesses, as there is a
likelihood that some roles are duplicated and/or become
redundant. The Board took these impacts into consideration
during the decision making process and, while it is always
adicult decision to remove roles, the Board agreed
becoming part of a larger global organisation will also oer
career development opportunities for Derco employees.
Acomprehensive change management and
communications plan was put in place including a series
oftownhalls to explain the acquisition process, start the
on-boarding programme, and to provide an opportunity
foremployees toexpress their views.
Further information on engagement with employees, any
outcomes where applicable, and decisions which have
aected employees, are given throughout this report.
Fostering business relationships
Our OEM 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 which are
fundamental to achieve the Group’s purpose of bringing
mobility to the world’s communities – for today, for
tomorrow and for the better the Board considers whether
the combination of Inchcape and the OEM will be a good
strategic and cultural fit.
The Derco acquisition brought five new OEM brands to
theInchcape Group. When reaching its decision on the
acquisition, the Board considered the OEM brand portfolio
as a whole, agreeing a programme of engagement with
both current and new OEM brand partners to ensure
strategies and expectations are aligned.
Impact of communities and the environment
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 Scope 1,2 and 3
emissions. During the year, the Board considered whether it
was appropriate to set emissions reduction targets for Scope
3, which account for 99.97% of the Groups’ total footprint.
Ultimately the Board decided not to set science-based
Scope 3 targets due to the complexities of achieving targets
where we have limited control. However, this will be reviewed
on a regular basis by the Board who are committed to
tackling the impacts of climate change. Please see pages
44 to 54 for further information.
High standards of business conduct
It is important to the Board to maintain a reputation for high
standards of business conduct. This is taken into account by
the Board when making material decisions, i.e. acquisitions,
joint ventures and remuneration outcomes.
During the decision-making process for the Derco acquisition
the Board reviewed the due diligence findings, management
and external advisor reports, and its reputation locally. The
Derco business is well respected, with a strong culture that is
similar to Inchcape’s. However, there are always integration
and business plan risks associated with acquisitions.
Therefore, the Board approved a set of 11key controls which
can be implemented from day one tomitigate those risks.
Shareholders
Engagement is a key tool for taking into account the views
ofshareholders. During 2022, the Remuneration Committee
Chair and the Chairman carried out a shareholder
consultation on the proposed remuneration policy which
willbe put to shareholder vote at the Annual General
Meeting in May 2023. The feedback received from investors
provided valuable input for the Committee, especially
around introducing a carbon reduction related ESG target
into the long-term incentive plans. Further details are given
on page 99.
The Board approved a range of activities designed to
enhance shareholder value, including dividend policy,
sharebuyback programme and the acquisition of Derco,
which was overwhelmingly approved by shareholders at
theEGM in December 2022 with 99.99% of votes in favour.
Further information on how the Derco acquisition will create
shareholder value is given on pages 24 to 25.
All shareholders are invited to attend the Annual General
Meeting and have the opportunity to speak or ask questions
to the Board members.
S172 STATEMENT
The Directors have exercised their duties under the Companies Act 2006
throughout the year, including under Section 172, 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.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 23
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
EXPANDING OUR CAPABILITIES
DERCO ACQUISITION
Extending Inchcape’s global leadership in automotive distribution
As outlined in our Accelerate strategy (see pages 5 to 7), the global automotive market presents significant
opportunities for Inchcape to consolidate in the distribution market. Despite being the biggest independent
automotive distributor, we had been tracking at around 1% of the 17 million vehicle volume addressable
market. Accelerating acquisitions in this fragmented market is a key part of our growth strategy.
The Group announced its proposed acquisition of Derco in July 2022. Prior to Inchcape‘s acquisition, Derco,
afamily-founded and privately owned company, was the largest independent automotive distributor in Latin
America with revenue in 2022 of £2.2bn. Following shareholder and market regulatory approval, the deal
completed on 31 December 2022, and the core focus for 2023 is on integrating our operations in the Americas.
A STRATEGIC AND ACCRETIVE
ACQUISITION
SIGNIFICANT SHAREHOLDER
VALUE CREATION
• Increases exposure to higher
growth markets
• Leverage combined scale
tocapture more vehicle
lifetime value
• The transaction is expected
to accelerate growth and
be margin accretive
• Derco is margin accretive
forthe Group
• Significant opportunity
forsynergies
• 15%+ EPS accretion in 2023;
20%+ accretive in 2024
• Up to £60m of one-o cash
costof delivering synergies
(overtwo years)
• Significantly increases
Inchcape’s distribution scale
• Global automotive distribution
remains highly fragmented
• ROIC expected to exceed
project cost of capital in third
full year following completion
• Leverage broader network
• Leverage partnerships with
financers and GFV
1
product
knowledge
• Leverage Inchcape’s Digital
andData capabilities
EXISTING PORTFOLIO:
KEY FACTS
Financial
profile
Strong
topline growth
prospects
Margin
upside
Distribution
consolidation
Value
creation
Earnings
impact
£2.2bn
revenue (2022)
~4,500
colleagues
4
markets
1
11
OEM brands
150k
new vehicles
distributed
329
locations
~30% operated by Derco
1. Bolivia, Chile, Colombia and Peru
1. GFV = guaranteed future value (also commonly referred to as “PCP”)
New
opportunities
FIND OUT MORE
Scan to view the 2022
Interim Results webcast
and presentation
24 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
“ We are delighted to welcome the Derco team to
Inchcape. The combination with Derco is a transformative
and unique opportunity to accelerate our global
distribution business. In addition to delivering substantial
shareholder value, the acquisition will provide exciting
opportunities for our colleagues, OEM partners, dealers
and consumers, and is another great example of
Inchcape’s Accelerate strategy in action.”
DUNCAN TAIT
Group CEO
GUATEMALA
COSTA RICA
PANAMA
COLOMBIA
ECUADOR
PERU
BOLIVIA
URUGUAY
BARBADOS
EL SALVADOR
CHILE
ARGENTINA
OUR LOCATIONS
Inchcape
Argentina
Barbados
Chile (headquarters)
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Panama
Peru
Uruguay
Derco
Bolivia
Chile (headquarters)
Colombia
Peru
Derco brands
• Changan
• Chevrolet
• Citroen
• DS Automobiles
• Great Wall
• Haval
• Jac Motors
• Joylong
• Mazda
• Renault
• Suzuki
The acquisition of Derco
extends our global leadership
in auto distribution and makes
Inchcape the largest
independent distributor in
Latin America. It also almost
doubles Inchcape’s share
ofthe 17 million addressable
market to around 2%.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 25
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
KEY PERFORMANCE INDICATORS
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 206 to 207 provides definitions of KPIs and other alternative
performancemeasures.
FINANCIAL KPIS
Revenue
£8.1b n
2021: £6.9bn
2022
£9.3bn
2021
£9.4bn
2020 £6.8bn
2019
£6.9bn
2018
£8.1bn
Definition
Consideration receivable from the sale of goods
and services. It is stated net of rebates and any
discounts, and excludes sales related taxes.
Why we measure
Top-line growth is a key financial measure
ofsuccess.
2022 performance
The Group has delivered £8.1bn, up 15%
organically (excluding currency eects and
net M&A) and up 18% reported versus prior
year. This has been driven by robust consumer
demand following a prolonged period of
supply shortages.
Adjusted
operating
margin
1
5.1%
2021: 4.1%
2022
4.3%
2021
2020
4.0%
2019
2.4%
2018
5.1%
4.1%
Definition
Operating profit from continuing operations
(before adjusting items) divided by sales.
Why we measure
A key metric of operational eciency, ensuring
we are leveraging our scale to translate sales
growth into profit.
2022 performance
Operating margin is 5.1%, up 100bps versus
2021. This is owing to a combination of higher
vehicle gross margins, driven largely by the
combination of robust consumer demand
andsupply shortages.
Profit before tax
and adjusting
items
1
£373m
2021: £249m
2022
£351m
2021
2020
£249m
2019
2018
£128m
£326m
£373m
Definition
Represents the profit made aer operating
andinterest expense excluding the impact
ofadjusting items and before tax is charged.
Why we measure
A key driver of delivering sustainable growth
and growing earnings to shareholders.
2022 performance
In 2022 this increased 50% to £373m, reflecting
the strong improvement in revenue and
operating profit.
Free cash flow
1
£380m
2021: £274m
2022
£279m
2021
2020
2019 £213m
2018
£177m
£380m
£289m
£274m
Definition
Net cash flows from operating activities, before
adjusting cash flows, less net capital expenditure
and dividends paid to non-controlling interests.
Why we measure
A key driver of the Group’s ability to fund
inorganic growth and to make distributions
toshareholders.
2022 performance
The Group delivered free cash flow (FCF)
of£380m, an increase of 39% on 2021 and
representing a conversion of operating profit
of92%, exceeding the long-term average
of60-70%.
Return on capital
employed
1
41%
2021: 28%
2022
2021
2020
2019
2018
12%
41%
22%
22%
28%
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
ROCE is a measure of the Group’s ability to
drive better returns for investors on the capital
we invest.
2022 performance
ROCE for the period was 41%, compared to
28%for the equivalent period last year. This
increase was primarily driven by the recovery
in Group profits.
1. Alternative performance measure, see page 206.
2. Restated, page 142.
Link to Strategy
Remuneration
– see pages 69
to116 for
performance
measures
MEASURING PROGRESS
26 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Over the year we have introduced a number of new 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.
NONFINANCIAL KPIS
BEV’s sold
1. 8%
2021: 1.2%
2018 [XX]%
[XX]%
0.8%
1.2%
1.8%
2019
2022
2021
2020
Definition
% of battery electric vehicles (BEV)
sold. BEV’s are fully battery powered
and run on electric power.
Why we measure
This is a new KPI in 2022. A core element of our strategy is
the deployment of Battery Electric Vehicles (BEV’s), which
underpins our core business model and is fundamental
tothe long-term sustainability of the business.
2022 performance
We continue to make progress on increasing the number
ofBEV’s sold. As part of our Responsible Business Plan we
willcontinue to see growth in this trend, particularly in our
developed markets.
Reduction in
Scope 1 and
Scope 2 GHG
emissions
24%
2018 £XXbn
£XXbn
£XXbn
£XXbn
24%
2019
2020
2021
2022
Definition
Aggregate Scope 1 and Scope 2
GHG emissions in 2022 vs 2019 base.*
For further information on TCFD see
pages 44 to 54
* 2019 figures have been restated to reflect
relevant disposals, acquisitions and data
rectification
Why we measure
This is a new KPI 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.
2022 Performance
Scope 1 and 2 emissions were reduced by 9,800 tonnes
measured on a market basis and by 8,700 tonnes on
alocation basis against the 2019 revised baseline. This is
included in the strategic element ofthe CEO bonus –
please see pages 96 to 116 for further details.
Reputation.com
Score
671
2021: 642
2022
475
522
566
642
671
2021
2020
2019
2018
Definition
A measure of the end customer
experience in our dealerships (both
distribution and retail), using Google
Business Profiles star ratings among
other metrics. Score up to 1000.
Why we measure
Customer reputation score is a measure we introduced
in2018 which provides a commercially relevant customer
experience measure using Google Business Profiles and
monitors customer sentiment.
2022 Performance
Adoption of Reputation.com is at an all-time high and
wesee this through our strong increase in 2022. We have
been focusing on improving the things within our control,
ensuring data accuracy, and helpful, timely responses
tocustomer input, whilst oering a high level of service
inourdealerships around the world.
Women in
Senior Leadership
positions
22%
2021: 18%
22%
18%
2022
2021
Definition
Percentage of women in top three
bands, which includes the Group
Executive Team and its direct
reports.
Please see page 121 for more
information, including a complete
breakdown of the gender diversity
within the Group.
Why we measure
This is a new KPI in 2022. The Women into Leadership
programme aims to target no less than 90% progression
toa new role (at the same level or promoted) within 24
months of programme completion and to increase the
proportion ofwomen in senior positions from 18% to 30%
bythe end of2025.
2022 Performance
Since the programme inception, six cohorts have
launchedcovering all geographic regions, with 45 women
completing the pilot programme in 2021 and a further 45
women completing the 2022 programme. Mentoring was
also added to the 2022 programme.
Link to Strategy
Distribution
People
Planet
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 27
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
ADRIAN LEWIS
ACTING CHIEF FINANCIAL OFFICER
I am pleased to present the Operating and
Financial Review for 2022, a year in which the
Group has continued to make substantial
strategic, operational and financial progress.
2022 was a transformational year for the Group
as we made great strides with our strategy,
further shiing our portfolio towards distribution
and developing our vehicle lifecycle services
oering.
Fantastic operational execution from all our
teams drove growth in revenue and profit,
andanother year of excellent cash flow.
GREAT
STRATEGIC,
FINANCIAL AND
OPERATIONAL
PROGRESS
28 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
The combination of the Group’s
distribution expertise, digital and data
capabilities, and strong financial
position makes us the consolidator
ofchoice in the highly fragmented
automotive distribution industry. In
2022 we continued to expand our
distribution business through bolt-on
acquisitions in the Americas, further
contract wins and the exciting
acquisition of Derco, an important
milestone in the execution of our
Accelerate strategy. The pipeline
forfuture M&A remains healthy.
In addition to a strong revenue and
profit outturn, the Group’s resolute
focus on cash resulted in a record
level of free cash flow of £380m,
versus the previous record of £314m
in2017. As we look ahead, the
acquisition of Derco will provide
opportunities for us to deploy our
ownpractices and processes to
driveworking capital eciencies
andadditional cash-flow generation.
Following the completion of the
acquisition of Derco in December
2022, the Group’s net debt position
was £378m. Given the pipeline of
M&A opportunities and our current
leverage position, we have paused
share buybacks, but will continue
toreview the appropriateness in line
withour capital allocation policy. The
Group’s proposed dividend in relation
to 2022 is 28.8p, up from 22.5p in 2021.
The Group launched Accelerate in
2021, and we have made fantastic
progress against our ambitions to
extend our leadership in automotive
distribution, and to capture more of
avehicle’s lifetime value. While we
are excited about our progress so far,
we will maintain our capital allocation
discipline, and remain focused on
delivering benefits to all stakeholders.
ADRIAN LEWIS
ACTING CHIEF FINANCIAL OFFICER
The Group delivered a great set
ofresults in 2022, with all regions
contributing positively and driving
growth across our key financial
andnon-financial metrics.
During the year, consumer
demandremained robust against
thebackdrop of vehicle supply
constraints, which supported our
performance during the year. We
sawa gradual improvement in supply
through the year, which helped an
acceleration of our revenue growth.
During the period of supply-demand
imbalance, we experienced elevated
levels of vehicle profitability (new and
used), although this normalised during
the second half of theyear.
Underpinning this is the quality of
ourpeople and the strength of our
business model. This enabled the
Group to accelerate performance
together with increased geographic
diversification, which will continue
todrive resilience amid economic
uncertainties.
KEY PERFORMANCE INDICATORS
Our results are stated at actual exchange rates. However, to enhance
comparability we also present year-on-year changes in sales and adjusted
operating profit in constant currency, thereby isolating the impact of
translational exchange rate eects. Unless otherwise stated, changes are
expressed in constant currency and figures are stated before adjusting items.
2022 2021
1
% change
reported
% change
constant
FX
2
% change
organic
3
Key financials (continuing operations)
Revenue £8,133m £6,901m +18% +16% +15%
Adjusted Operating Profit
1
£411m £281m +46% +41%
Adjusted Operating Margin
1
5.1% 4.1% +100 bps +90bps
Adjusted Profit Before Tax
1
£373m £249m +50%
Adjusted Basic EPS
1
72.0p 46.3p +56%
Dividend Per Share 28.8p 22.5p +28%
Free Cash Flow
1
£380m £274m +39%
Statutory financials
Operating Profit (continuing operations) £400m £181m
Profit Before Tax (continuing operations) £333m £149m
Total (loss)/profit for the year £(6)m £122m
Basic EPS (continuing operations) 61.1p 20.3p
1. Restated to adjust for the disposal of the remaining business in Russia which has been reported as
adiscontinued operation, see page 142
2. These measures are Alternative Performance Measures, see pages 206 to 207
3. Organic growth is defined as revenue growth in operations that have been open for at least a year
atconstant foreign exchange rates
HIGHLIGHTS
Revenue
£ 8 .1bn
2021: £6.9bn
Adjusted operating margin
2
£5.1%
2021: 4.1%
Profit before tax and adjusting items
1
£373m
2021: £249m
Free cash flow
2
£380m
2021: £274m
Return on capital employed
1
41%
2021: 28%
Dividend per share
28.8p
2021: 22.5p
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 29
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
CONTINUED
PERFORMANCE REVIEW
Performance review: full year 2022
The Group delivered another great
setof results in 2022, driven by growth
across both Distribution and Retail
segments. Our performance was
driven by growth of new vehicles,
underpinned by robust consumer
demand and price-mix tailwinds
against a backdrop of supply
shortages, and a solid contribution
from used vehicles, which benefited
from unprecedented pricing-levels
and our roll-out of bravoauto. While
revenue growth was skewed towards
the second-half, as we lapped the
trough for supply, profit was split more
evenly due to a combination of
margin normalisation, with improving
vehicle supply, set-up costs related
tonew OEM relationships and an
increase in investment in VLS in the
second-half.
Over the course of the year, the
Group generated revenue of £8.1bn,
adjusted operating profit of £411m
and free cash flow of £380m.
Group revenue of £8.1bn rose 18%
year-on-year reported and 16% in
constant currency. The growth rate
issupported by the addition of
newdistribution businesses in the
Americasand in APAC. There was
nocontribution from Derco to our
FY22 financial performance. It is
worthnoting that the comparative
period includes the results of our
St.Petersburg operation which was
disposed towards the end of 1H21.
On an organic basis, excluding
currency eects and net M&A,
revenue increased by 15%, driven by
a combination of continued volume
recovery and price-mix tailwinds.
The Group delivered an adjusted
operating profit of £411m, up 46%
year-on-year reported and 41% in
constant currency. The profit growth
reflects the topline increase and
theyear-on-year operating margin
improvement.
Adjusted profit before tax (PBT)
of£373m (2021: £249m) reflects
theimprovement in revenue and
operating profit. The net interest
expense of £37m (2021: £33m) rose
versus the prior year due to higher
cost of financing.
During the reporting period adjusting
items amounted to an expense of
£40m (2021: £100m). This was primarily
driven by one-o costs related to
acquisitions and the disposal of
Russia(£28m) and non-cash, non-
operational losses arising from the
adoption of hyperinflation accounting
(Ethiopia; £30m), partially oset by
other operating items (£18m).
The highly cash-generative nature of
our business model was evident with
record free cash flow generation of
£380m (2021: £274m) – this represents
a conversion of adjusted operating
profit of 92% (2021: 97%), exceeding
the long-term average of 60-70%. In
2022 we saw a net working capital
inflow of £75m primarily as a result
ofarebound in the level of inventory
financing, which more than oset the
rise in inventory levels (following last
year’s trough reached in Q4) and
anexpected increase in receivables.
Aswe look ahead the Group’s free
cash flow conversion is expected
tonormalise towards its historic
rangeof 60-70%.
Other notable elements of the cash
flow bridge include: net acquisitions
and disposals, which amounted to
anoutflow of £412m (primarily relating
to the acquisition of Derco, as well
asother acquisitions in the Americas:
Ditec and Simpson Motors, and
includes the first tranche of cash
received in relation to our Russia
disposal), dividend payments of
£89mand an outflow of £70m related
to our share buyback programmes.
The Group closed the reporting
period in an adjusted net debt
position of £378m (excluding lease
liabilities), which compares to
adjusted net cash of £379m at the
end of December 2021, and £439m
as at 30 June 2022.
The movement primarily relates to
theacquisition of Derco (cash-out
and net debt acquired). On an IFRS 16
basis (including lease liabilities), we
ended the period with net debt of
£877m (December 2021: net funds of
£55m). Adjusted Return on capital
employed over the period was 41%,
compared to 28% for the equivalent
period last year. The increase was
driven by the growth in Group profits
on stable capital employed. Following
the dilutionary eect of acquisitions
we expect this will normalise to c.25%.
Fourth quarter 2022
Group revenue for the fourth quarter
was £2.1bn, up 32% reported. On an
organic basis revenue increased
22%, compared to +16% in Q3 – the
step-up in growth was primarily owing
to lapping the trough for supply which
impacted the fourth quarter of 2021.
In Distribution, the fourth quarter
wasthe strongest quarter of the year,
underpinned by organic growth
andsome contribution from M&A
(Americas and Asia). On an organic
basis revenue increased 25%,
following an 18% increase in Q3. The
sequential step-up in organic growth
was driven by the improvement
invehicle supply that was most
prominent in Australasia.
In Retail, revenue increased 14%
organically, following a 11% increase
in Q3. The improvement in revenue
growth was owing to a higher volume
of new (due to better vehicle supply)
and used vehicles (bravoauto), while
Aersales performance continued
tobe solid.
Derco acquisition
The Group completed the £1.3bn
acquisition of Derco on 31 December
2022, funded by £400m cash and
£600m of new debt. The transaction
increased Group leverage 0.6x Net
Debt/EBITDA (pre IFRS 16), with
deleveraging supported by the
highlycash generative nature of the
business. Derco did not contribute
tothe Groups financial performance
in 2022. Revenue was £2.2bn (2021:
£1.9bn) with an adjusted operating
profit of £192m (2021: £237m). We
expect Derco will generate an
operating margin towards the
top-end of the range of a typical
automotive distribution business
(5-7%), before recurring synergies.
Thetransaction is expected to deliver
annualised recurring synergies of
atleast £40m, with the significant
majority delivered by the end of
2024.There are opportunities to
drivesignificant revenue synergies,
which are as yet unquantified. These
will require one-o cash costs of up
to£60m over two years.
30 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
DISTRIBUTION
rising 28%. In Asia, the improvement
versus the prior year was due to the
positive contribution from our smaller,
newer and more developing markets
(e.g. Guam, Saipan, Brunei,
Indonesia). In the case of Hong Kong,
pandemic related restrictions
weighed on our first-half results, but
performance in the second-half
improved markedly and at the
beginning of 2023 the border with
China was reopened, which may
signal the trough of the market. In
Singapore our performance
continues to be impacted by lower
availability of vehicle licences (with
volumes 70% below the peak in 2017).
Our current expectation is that
licence availability will begin to
improve in late-2023. The trends across
the rest of Asia continued be solid,
with revenue and profit above both
the prior year and the first-half of 2022.
In terms of our newest distribution
businesses (JLR in Indonesia, and
commercial vehicles and machinery
in Micronesia), the performance of
both has exceeded our expectations.
In Australasia, our performance
washelped by a gradually improving
supply situation (vehicle supply was
atits highest in Q4) and favourable
price-mix. Volumes, revenue and
profit reached a three year high in the
fourth quarter, supported by broad-
based performance (across New,
Used and Aermarket) and the
benefits of our cost-restructuring.
Europe & Africa revenue was up 28%
year-on-year with adjusted operating
profit
1
rising 44%. In Europe, growth
was driven by the improvement in
vehicle supply (>20% increase in new
vehicle volume) coupled with robust
demand. This resulted in us gaining
share in each of our largest markets
(i.e. Belgium, Greece, Romania).
While vehicle supply continued to
improve towards the end of the year,
order banks remain at record levels
and will provide an underpin in
2023as we navigate a changeable
economic backdrop. Performance
across the halves was broadly
consistent in terms of revenue,
although some strategic investments
(e.g. bravoauto) in the second-half
resulted in slightly lower margins. In
Africa, revenue and profit improved
in the second-half, supported by
higher vehicle volumes and
Aermarket resilience.
Americas revenue grew 60% year-on-
year (with new businesses contributing
more than 20% to growth), driving
adjusted operating profit up 98%.
TheAmericas delivered excellent
performance across all major
markets, notably in Chile, Columbia
and Peru. This was driven by a
combination of robust consumer
demand and a shortage of vehicle
supply which supported pricing and
margins, particularly in the first-half.
Inthe second-half, we saw a step-up
in revenue owing to higher new and
used vehicle volumes. While margins
returned to a more normal level
(6-6.5%), in line with the improvement
in vehicle volumes, overall profitability
was broadly evenly split. During the
first-half we acquired two distribution
businesses (Simpson Motors and
Ditec), which we indicated would add
an aggregate c.£250m of annualised
revenue, and both businesses have
contributed meaningfully in 2022.
Atthe end of the fourth quarter we
purchased Derco, the largest
distributor in Latam, which will provide
a step-change to our presence in
theregion. For more information on
the region please visit our website
where you can watch a replay of our
webinar: ‘In the driving seat: Spotlight
on Americas’, outlining our growth
todate, strategic priorities and our
confidence in the region’s growth
prospects over the medium and
longterm.
REGIONAL BREAKDOWN
Revenue Adjusted operating profit
1
Adjusted
operating margin
1
4,671.7
5,868.8
2022
2021
246.0
363.3
2022
2021
6.2%
5.3%
APAC Europe & Africa Americas
The Distribution segment
reported revenue of £5.9bn
increasing 26% year-on-year,
with all regions growing
versus the prior year.
The combination of an excellent
topline performance and higher
margins drove adjusted operating
profit¹ of £363m (2021: £246m).
Adjusted operating margin¹ rose
90bps to 6.2%.
Our regional disclosure has been
aligned with the Group’s
Management responsibilities and
reporting structure. In the second
halfof 2022, in preparation for our
acquisition of Derco, the Americas
moved to be managed as a single
region (under Romeo Lacerda), and
Africa was combined with the Europe
region (under Glafkos Persianis).
APAC, which includes both Asia
andAustralasia, continues to be
managed by Ruslan Kinebas.
APAC revenue was up 9% year-on-
year with adjusted operating profit
1. Operating profit and operating margin stated pre adjusting items.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 31
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
RETAIL
OPERATING AND FINANCIAL REVIEW
CONTINUED
Following a proactive
disposal programme, the
Retail segment only includes
the results of the UK and
Poland franchise dealerships
and our bravoauto business
in these markets.
Retail delivered organic revenue
growth of 10% and adjusted
operating profit
1
rose 34%, resulting
inan operating margin of 2.1%. While
vehicle supply improved gradually
throughout the year (we saw
sequentially higher new vehicle
volumes every quarter) this lagged
demand, which remained solid.
Wecontinued to invest in and
expandour bravoauto business,
which is performing as per our plan.
As anticipated, our Used car business
has started to see profitability
normalise, consistent with the
reduction in used car prices. We
reported an operating margin of
1.5%in the second-half, with the
reduction owing to normalising
vehicle profitability and our
investment in bravoauto.
From the start of 2023, in the UK
certain manufacturers will change
the way they sell new vehicles
(choosing to sell directly to consumers
via dealer groups), and as such
Inchcape will only recognise a
handling-fee (not the selling price of
the vehicle). The estimated impact of
this change on Inchcape’s reported
Retail revenue is a c.£200m reduction.
The impact on operating profit is
expected to be negligible.
1. Operating profit and operating margin stated
pre adjusting items
REGIONAL BREAKDOWN
Revenue Adjusted operating profit
1
Adjusted
operating margin
1
2,229.2
2,263.9
2022
2021
35.4
47.5
2022
2021
2.1%
1.6%
Total Retail (UK & Poland)
1. Operating profit and operating margin stated pre adjusting items.
32 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
VALUE DRIVERS
Vehicles Aersales
682.8
883.5
2022
2021
375.2
441.8
2022
2021
Other financial items
Adjusting items: In 2022, we have
reported a pre-tax charge of £40m
(2021: charge of £100m) in respect of
adjusting items. This includes benefits
of £20m, following the change from
RPI to CPI for pension increases, and
£13m in respect of disposal proceeds
from Russia. This was oset by £42m
relating to acquisition related costs,
primarily in relation to the acquisition
of the Derco group and a net
monetary loss of £30m upon
application of hyperinflationary
accounting in Ethiopia. Further details
can be found in note 2 of the financial
statements.
Net financing costs: Reported net
finance costs were £67m (2021: £33m).
This includes the net monetary loss
onadoption of hyperinflationary
accounting in Ethiopia of £30m, noted
above as an adjusting item. Adjusted
net finance costs were £37m (2021:
£33m) with the increase versus the
prior year due to higher cost of
financing. The interest charge is stated
on an IFRS 16 basis and excluding
interest relating to leases our Reported
net finance costs were £57m (2021:
£23m). In 2023 the Group anticipates
net finance costs of c.£110m, based
on prevailing interest rates, with the
step-up versus 2022 reflecting higher
rates and financing of Derco.
Tax: The eective tax rate for the
yearis 29.5% (2021: 43.4%), and the
underlying eective tax rate on
adjusted profit before tax is 26.1%
(2021: 25.4%). The increase in the
underlying eective tax rate includes
the impact of a change in the
Group’s profit mix resulting in more
profit arising in markets with higher
corporate tax rates. Following the
acquisition of Derco, and reflecting
the greater profit contribution from
markets with higher corporate tax
rates, the Group’s underlying eective
tax rate is expected to be between
27% and 28%.
Non-controlling interests: Profits
attributable to our non-controlling
interests were £5m (2021: £5m). The
Group’s non-controlling interests
comprise a 40% holding in PT JLM
Auto Indonesia, a 33% share in UAB
Vitvela in Lithuania, a 30% share in NBT
Brunei, a 30% share in Inchcape JLR
Europe, a 30% share in Ditec in Chile,
a 10% share of Subaru Australia and
6% of the Motor Engineering
Company of Ethiopia.
Dividend: The Board has declared
afinal ordinary dividend of 21.3p per
ordinary share which is subject to the
approval of shareholders at the 2023
Annual General Meeting, and if
approved will be paid in June 2023.
This follows an interim dividend of
7.5p,and takes the total dividend in
respect of FY22 to 28.8p. The Dividend
Reinvestment Plan is available to
ordinary shareholders and the final
date for receipt of elections to
participate is 26 May 2023.
Capital expenditure: During 2022,
the Group incurred net capital
expenditure of £59m (2021: £40m),
consisting of £69m of capital
expenditure (2021: £65m) and £10m
ofproceeds from the sale of property
(2021: £25m). 2022 net capital
expenditure includes £2m related
toRussia, incurred prior to its disposal.
In 2023, we continue to expect net
capital expenditure of less than 1%
ofGroup sales.
Financing: As at 31 December 2022,
the committed funding facilities of
theGroup comprised a syndicated
revolving credit facility of £700m (2021:
£700m), sterling Private Placement
loan notes totalling £210m (2021:
£210m), a bridge facility of £350m
(2021: £nil) and a term facility of
£250m (2021: £nil). As at 31 December
2022, the bridge and term facilities
were fully drawn and the syndicated
revolving credit facility was undrawn
(2021: undrawn).
Pensions: As at 31 December 2022, the
IAS 19 net post-retirement surplus was
£93m (2021: £82m), with the increase
driven largely by movements in
corporate bond yields over the period
aecting the discount rate assumption
used to determine the value of
scheme liabilities and the pension
indexation gain treated as an adjusting
item, partially oset by lower than
expected returns on scheme assets.
In line with the funding programme
agreed with the Trustees, the Group
made additional cash contributions
to the UK pension schemes amounting
to £2m (2021: £6m).
Acquisitions: In 2022 the Group
continued to further expand its
distribution footprint, completing six
deals during the year. This includes
the acquisitions of Ditec and Simpson
Motors in the Americas region during
the second quarter, and several new
contract wins over the course of the
year (Geely in Ecuador, ORA in Hong
Kong and Macau, BYD in BeLux). The
Group completed its acquisition of
Derco on 31 December 2022, resulting
in a cash-outflow of £407m and the
assumption of Derco’s closing net
debt (£522m) – which reflects the
closing position of the balance sheet
upon completion. The purchase price
included the issuance of 39 million new
Inchcape shares (valued at c.£280m
inJuly 2022 when the transaction
terms were agreed). In light of the
deal-timing, it was agreed that the
pre-completion dividend owed to
theDel Río family and the acquisition
of minority shareholdings (£270m in
total) would occur during 2023.
Discontinued operations: During
theyear, the Group agreed the sale
of its remaining retail-only operations
in Russia. In 2022, the operations
generated revenue of £237m and
operating profit of £21m. This has
beenclassified within discontinued
operations. The total loss reported
was£241m, where we realised £99m
of accumulated foreign exchange
losses upon disposal.
We provide disclosure on the value drivers behind the Groups 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 Aersales: Service and Parts
We operate across the automotive value chain, and during the year we generated 33% of gross profit through Aersales
(2021: 35%). In 2019 Aersales accounted for 39% of Group gross profit. The reduction since 2019 reflects the greater gross
profit contribution from vehicles as volumes improved and the benefit from higher vehicle gross margins.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 33
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
OPERATING AND FINANCIAL REVIEW
CONTINUED
REGIONAL BUSINESS MODELS
DISTRIBUTION
Americas
Country Brands
Argentina Subaru, Suzuki
Barbados
1
Chrysler, Daimler Trucks, Dodge, Freightliner, Fuso, Isuzu, JCB, Jeep, John Deere, Mercedes-Benz, Mitsubishi, Subaru,
Suzuki, Western Star
Bolivia Changan, Chevrolet, JAC Motors, Joylong, Renault, Mazda, Suzuki
Chile BMW, BMW Motorrad, DFSK, Changan, Geely, Great Wall, Haval, Hino, JAC Motors, Jaguar, Land Rover, Mazda,
MINI, Porsche, Renault, Rolls Royce, Subaru, Suzuki, Volvo
Colombia Citroen, DFSK, Dieci, Doosan, DS Automobiles, Hino, Jaguar, Land Rover, Mack, Mercedes-Benz, Subaru, Suzuki
Costa Rica Changan, JAC Motors, Suzuki
Ecuador Freightliner, Geely, Mercedes-Benz, Western Star
El Salvador Freightliner, Mercedes-Benz, Western Star
Guatemala Freightliner, Geely, Mercedes-Benz, Western Star
Panama Suzuki
Peru BMW, BMW Motorrad, BYD, Changan, Citroen, DFSK, Great Wall, Haval, Hino, Mazda, MINI, Renault, Subaru, Suzuki
Uruguay Freightliner, Fuso, Mercedes-Benz
1. Distribution agreements for these brands across a range of Caribbean islands, centred on Barbados
APAC
Country Brands
Brunei Lexus, Toyota
Guam
2
BMW, Chevrolet, Freightliner, Hyundai Construction, Kohler, Lexus, New Holland, Toyota, Western Star
Hong Kong Daihatsu, Hino, Jaguar, Land Rover, Lexus, Maxus, ORA, Toyota
Indonesia Jaguar, Land Rover
Macau Daihatsu, Hino, Jaguar, Land Rover, Lexus, ORA, Toyota
Saipan Toyota
Singapore Hino, Lexus, Suzuki, Toyota
Thailand Jaguar, Land Rover
Australia Citroen, Peugeot, Subaru
New Zealand Subaru
2. Distribution agreements for these brands across a range of Pacific islands, centred on Guam
Europe & Africa
Country Brands
Belgium BYD, Lexus, Toyota
Bulgaria Lexus, Toyota
Estonia BMW, BMW Motorrad, Ford, Jaguar, Land Rover, Mazda, MINI
Finland Jaguar, Land Rover, Mazda
Greece Lexus, Toyota
Latvia BMW, BMW Motorrad, Ford, Jaguar, Land Rover, Mazda, MINI
Lithuania BMW, BMW Motorrad, Ford, Jaguar, Land Rover, Mazda, MINI, Rolls Royce
Luxembourg BYD, Lexus, Toyota
North Macedonia Lexus, Toyota
Poland Jaguar, Land Rover
Romania Lexus, Toyota
Djibouti BMW, Komatsu, Toyota
Ethiopia BMW, Hino, Komatsu, New Holland, Suzuki, Toyota
Kenya BMW, BMW Motorrad, Jaguar, Land Rover
RETAIL
Country Brands
Australia Isuzu Ute, Jeep, Kia, Mitsubishi, Volkswagen
Poland BMW, BMW Motorrad, MINI
UK Audi, BMW, Jaguar, Land Rover, Lexus, Mercedes-Benz, MINI, Porsche, Smart, Toyota, Volkswagen
3. Following scale disposal of retail businesses in Australia, retail is no longer reported as a separate segment in APAC.
34 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Locations
Distribution:
Colombia, Estonia, Finland,
Hong Kong, Indonesia, Latvia,
Lithuania, Kenya, Macau, Poland,
Thailand
Retail:
UK
JAGUAR
LAND ROVER
Inchcape and Jaguar Land Rover’s partnership
is one of long standing, reaching back over
50years in total. We have continued our JLR
growth story right up to the present day, with
distribution contracts awarded for Thailand,
Colombia, Kenya and Poland in recent years,
with the addition of Indonesia in 2021. We
nowrepresent Jaguar and Land Rover in
12markets onfour continents.
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 35
We have a partnership with Suzuki now
extending to 46 years, significantly expanding
this relationship in 2018, and adding to our
established South America platform with
ourfirst move into Central America and then
the Caribbean. In 2022 we completed the
acquisition of Derco, adding Suzuki to our
operations in Chile, Colombia and Peru,
andadding Boliva to the portfolio.
Locations
Distribution:
Argentina, Barbados
+
, Bolivia,
Chile, Colombia, Costa Rica,
Panama, Peru, Singapore
SUZUKI
36 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
PLANETPRACTICESPEOPLE PLACES
RESPONSIBLE BUSINESS
DRIVING WHAT MATTERS
Developing our approach to responsible business is central
to our future plans at Inchcape. We know it will provide
measurable benefits to Inchcape, bringing us closer to
our customers and partners: it will make Inchcape a more
rewarding and safer place to work; it will help us recruit,
engage and retain the best talent; and it will ensure we
remain a trusted partner to the OEMs with whom we work.
These elements are fundamental to the successful delivery
of our Accelerate strategy and to ensuring Inchcape’s
sustainability for the long-term.
We are united with the interests of all our stakeholders in
the need to play our role in making a positive contribution
to the communities in which we operate, for our people,
for society and for the planet. For Inchcape though, being
a responsible business extends into other key areas of our
operations where we can make a positive dierence to
our stakeholders: by improving inclusion and diversity in
our organisation, as well as full accessibility for our
customers; by ensuring the safety and supporting the
health and wellbeing of our employees; and in supporting
mobility and economic development in the communities
in which we operate.
To deliver this requires us to have a plan that is supported
with a robust framework. 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 4Ps (or pillars) of Responsible Business
– Planet, People, Places, and Practices.
Mindful of the need to reflect the dierent 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.
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.
• Mapping the risks and
opportunities of climate
change
• Setting GHG targets
• Reducing waste
• Inclusion and Diversity
• Safety and Wellbeing
• Talent and Skills
• Strengthening our
governance policies
• Reflecting our position
asaninternational plc
• Safe mobility
• Inclusive mobility
• Social mobility
People pillar: R U OK Day, September 2022
Inchcape Australia
Places pillar: Movilizando Corazones prosthetics donation programme,
Inchcape Colombia
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 37
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
RESPONSIBLE BUSINESS
CONTINUED
PEOPLE
Progress highlights in our People pillar during 2022
1.
Inclusion
& Diversity
• Defined and executed our Global
Inclusion & Diversity Framework
• Delivery of our bespoke Inclusive
Leadership Programme to all senior
leaders globally
• Implemented a global senior
recruitment supplier reset on
inclusion and diversity
• Provided opportunities for
colleagues to share their
experiences and learn through
ourglobal Inclusion & Diversity
awareness days
2.
Safety and
Wellbeing
• Launched, promoted and
embedded Lifeworks EAP
Programme
• Progressed our approach to flexible
working across our regions
3.
Talent and
Skills
• Launched and embedded our
Global Women into Leadership
Programme
• All regions provided opportunities
for early careers, including
graduate, internship,
apprenticeship and work
experience programmes
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.
Over the past year we have built
thefoundations we need to create
aculture where people of all
backgrounds and experiences can
be themselves in a safe environment
and become equipped with the skills
for today and tomorrow. To do this,
we’ve rolled out programmes, built
communities and created
opportunities for our colleagues to
come together to learn, progress
andfeel a sense of belonging at
Inchcape. Every action that has been
taken is linked to a key milestone for
our business to ensure our pillar has
ameaningful impact for our people.
Colin Christie
MD Australasia and
People pillarleader
READ MORE see page 121
for a breakdown of the
Group’s gender diversity.
38 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
SPOTLIGHT FOR 2023
INCLUSIVE LEADERSHIP
At the start of 2022 we began
ourglobal Inclusive Leadership
Programme for all our leadership
populations.
The programme has been delivered
to our Global Executive Team and
top 600 leaders across the business.
The programme is designed to
enable our leaders to learn more
about inclusion and diversity, build
trust and psychological safety,
involve and integrate diverse
perspectives and make
demonstrable commitments to
grow an inclusive culture within
theirteams and beyond.
The programme consists of a series
of workshops and coaching pods
which are supplemented with pre
and post session learning and
actions. Learning was measured
before and aer the programme
toevaluate its impact and found:
• 76% of leaders reported they now
have the tools to check bias and
ensure it does not play a role in
the decisions they make (increase
from 52% pre-programme)
• 92% of leaders reported they now
have the skills to encourage team
members to discuss inclusion and
exclusion experiences (increase
from 70% pre-programme)
LIFEWORKS
Over the past year we have
embedded our employee
assistance programme, LifeWorks,
across all our markets to ensure our
colleagues have access to support
for mental, physical, social and
financial wellbeing. Our global
celebration of World Mental Health
Day 2022 provided an opportunity
to further promote LifeWorks and
raise awareness, advocate against
stigma and take steps to support
better mental health for everyone.
All colleagues were invited to
aseries of LifeWorks webinars
showcasing how colleagues and
their families can use the platform
to better support their lives.
Thewebinars were hosted by senior
leaders who openly shared their
experience of mental health and
wellbeing and engaged over
1,150colleagues across all regions.
Team leaders were provided with
toolkits to share more about
LifeWorks and an opportunity to
check-in and talk with their teams
about overall wellbeing. A total
of360 talks took place involving
approximately 12,000 colleagues.
WOMEN INTO
LEADERSHIP
The Women into Leadership
Programme was developed in 2021
to provide continuous opportunity
for professional and personal
growth of Inchcape’s female talent.
This global programme is sponsored
at an executive level by Ruslan
Kinebas (CEO, APAC). Since the
programme inception, six cohorts
have launched covering all
geographic regions, with 45 women
completing the pilot programme
in2021 and a further 45 women
completing the 2022 programme.
20% of our 2021 Women into
Leadership cohorts have been
promoted since their programme
completion in March 2022.
Guest speakers are a key feature
ofthe programme and include
women from our two most senior
leadership levels. Also incorporated
into the 2022 Programme is an
introduction to Inchcape’s female
Plc Board Non-Executive Directors
who share their life and career
experiences and top tips.
Mentoring was also added to
the2022 programme, following
feedback from the previous cohorts
about the desire to ‘pay it forward’
and the value that mentoring can
bring. The 2021 pilot cohorts have
now become mentors to current
programme participants.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 39
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
PRACTICES
RESPONSIBLE BUSINESS
CONTINUED
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.
We operate in over 40 markets
worldwide, most of which have their
own regulations, dierent tax regimes
and varying levels of corporate
governance. Our aim is to respect
allthe national jurisdictions in which
we operate while, of course, applying
our own controls and the rules that
govern Inchcape globally as a
UK-based multi-national plc. The
Practices pillar seeks to strengthen
ourpolicies and codes of conduct
sothey reflect our position as an
organisation with world-class
standards. At the same time, we seek
to guide and protect our people to
ensure they know how to do business
ethically and responsibly, whatever
role they play in Inchcape’s success.
Rodrigo Schmidt
Legal & Regulatory Compliance
Director, Inchcape Americas and
Practices pillar leader
Progress highlights in our Practices pillar during 2022
1.
Codes of
Conduct
• We have refreshed and translated
the employee Code of Conduct,
and retrained all our people
• A Supplier Code of Conduct was
introduced, communicated
internally and to our suppliers,
andhosted on inchcape.com
2.
Framework
forReporting
• We have updated external
reporting statements on Anti-Money
Laundering, Anti-Bribery & Corruption
and Anti-Trust/ Competition policies
on inchcape.com, in the Annual
Report and onour employee
intranet
3.
Whistleblowing
• We refreshed the communication
of our whistleblowing contact
channel, Speak Up!
• We are committed to completing
all investigations and communicate
the results within three months,
reporting the number of cases
quarterly to our regional leadership
4.
Policies
• Group policies have been
translated into local languages
andmade available on the intranet
• Policy Principles established to
support consistency in creation
ofboth global and local policies
40 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
PLACES
At Inchcape we want to make a positive contribution to the communities in which we
operate, and the Places pillar focuses on improving mobility and quality of life in the
communities in which we operate by working in three areas.
In Safe Mobility, Inchcape promotes
the safe use of roads with the
objective of becoming a strong and
visible advocate for reduced road
accidents and deaths across all
markets in which we operate. In
inclusive mobility, we support people
with disabilities to access appropriate
mobility solutions to improve their
quality of life. And, in social mobility,
we develop local projects and
initiatives that support and enable
equality of opportunity for young
people; for example through
internship, apprenticeship, technical
education and female education.
Our responsible business plan would
not be complete without considering
our contribution to our communities.
Julian Martini
Head of Group HR and
Placespillarleader
Progress highlights in our Places pillar during 2022
1.
Safe
Mobility
Group-wide safe driving awareness
and training initiatives have been
introduced for employees, alongside
market-level road safety agency
partnerships targeting employees,
customers and public on safe use
ofroads. These include
• BMW Driving Academy in Europe
and the Americas
• Primary student education on road
safety in Greece
• Partnerships with government
institutions to deliver driver training
in Colombia
• Partnerships with Singapore Road
Safety Council and Australian Road
Safety Foundation
2.
Inclusive
Mobility
We are supporting and sponsoring
initiatives in several markets to enable
physical mobility and better access
for people living with disabilities,
including
• Partnerships with prosthetic limb
solutions for amputees in Europe
with Prosfit, and the Americas with
the Fundafe Foundation
• In Australia, sponsors of the Lifeline
Mobile Cafe for mental health
services and crisis support
• Supply of retrofitted transport
solution for the disabled with
TOUCH Community Services
3.
Social
Mobility
We provide local NGOs with
sponsorship of transport for families
and communities in need, and build
partnerships with educational
institutions to support underprivileged
and underrepresented groups
• Focus on women technician
training programme in Colombia
• UK and Hong Kong programmes to
support food banks and ‘meals on
wheels’ for underprivileged families
during cost of living crisis
INCHCAPE TALENT
HOTBED
Colombia’s Digital Delivery
Center’s Outreach Initiative
Inchcape’s Digital Delivery Center
Colombia established a programme
to provide opportunities for women
and people with disabilities, as
under-represented groups in
digitaland tech roles, to access
technological training. The six
weekprogramme isdedicated
toproviding free soware
development training, financial
aidand the opportunity tojoin the
business aer completion. The aim
of the programme is to contribute
tothe academic and professional
development in Colombia, partner
with foundations focused on
women and people with disabilities
and create a sustainable approach
to attracting diverse communities
into the business.
Throughout 2022, 27 people have
graduated from the programme,
22of which were women (with one
cohort solely focused on female
talent). 22 participants have been
recruited back into the business
full-time and 16 of these people
arewomen.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 41
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
PLANET
As a company, we are aware both of the impact our industry has upon the environment
andalso the likely impact of climate change upon our business. Within the planet pillar,
weare working on both of those areas.
When we think about the Planet pillar,
we are mostly thinking about climate
change. This is by far the most urgent
and important environmental
challenge that we face both as
abusiness and as a society.
Understanding climate change risks
and opportunities means that we can
be well prepared for them and this
gives confidence to our stakeholders
that we can rise to the challenges
presented by climate change. Our
journey to become a Responsible
Business is well underway, and the
Planet pillar is key to our strategy.
Mike Bowers
Group General Counsel and
Chief Sustainability Ocer
Progress highlights in our Planet pillar during 2022
1.
Understanding,
reporting and acting
upon climate
change risks and
opportunities
• We have undertaken a Group-wide
exercise to understand our climate
change risks and opportunities
• We quantified the potential impacts
of our most important risks to
incorporate into our financial
planning
• We are now reporting in line with
requirements of the Task Force on
Climate Related Financial
Disclosure (TCFD) in our Annual
Report (see pages 44 to 54)
2.
Scope 1 and 2
greenhouse
gasemissions
• We have set science-based targets
for scopes one and two with the
aim of halving emissions by 2030
and achieving net zero by 2040
• We have switched to renewable
sources of electricity in UK, Australia
and most of Europe
• We have reduced our scope one
and two emissions by 19,996 tCO
2
e
against our 2019 baseline
(unrevised)
3.
Addressing our
valuechain
GHGemissions
• We have completed mapping
ourvalue chain emissions which
provides the baseline for us to
address our scope three emissions
and use our influence, where we
can, to help to reduce them
RESPONSIBLE BUSINESS
CONTINUED
42 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
MERCEDESBENZ
Since signing our first distribution contracts
withMercedes-Benz in 2019 in Uruguay and
Ecuador, in January 2020 we became the
distributor for Mercedes-Benz passenger
vehicles in Colombia. We have since
continuedour consolidation and are now
Mercedes’ number one distribution partner
inLatin America.
Locations
Distribution:
Barbados+, Colombia, Ecuador,
El Salvador, Guam+, Guatemala,
Uruguay
Retail:
UK
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 43
TASK FORCE ON CLIMATERELATED FINANCIAL DISCLOSURES
We recognise that climate change is seriously aecting our planet. As the planet continues
towarm it will have consequences for how, and where, we do business. As we take actions
tocombat the most serious eects of climate change, we will encounter new risks and
opportunities as a result. In this section, we set out how we are responding to the urgent
andimportant issue of climate change.
Our response to climate change comprises three pillars:
• understanding, reporting and acting upon our climate
change risks and opportunities (CROs);
• reducing our Scope 1 and Scope 2 greenhouse
gasemissions; and
• addressing our value chain (Scope 3) greenhouse
gasemissions.
Understanding, reporting and acting upon our CROs
Our stakeholders depend upon us to understand how
man-made climate change, and the eorts of society
tolimit the eects of that climate change, will aect our
business. In 2021, we undertook a comprehensive exercise
to identify our most important CROs under a range of
dierent scenarios. This year, we have built upon that work
and sought to quantify the potential impacts of our five
most significant CROs under a 1.5°C warming and 4°C
warming scenario. The results of that analysis are set out
onpages 50 to 51. We have embedded the outputs from
thatanalysis into our strategic planning and financial
forecasting and identified a series of mitigation
andadaptation measures to address each CRO.
Reducing our Scope 1 and Scope 2 greenhouse gas
emissions
We have set a target to reduce our Scope 1 and Scope 2
emissions by 46% by 2030 with 2019 as the baseline year.
Thisis consistent with a 1.5°C warming world under the
Science Based Targets initiative. Our aim, consistent with
our Accelerate strategy, is to be the lowest carbon route
tomarket for our OEM partners.
During the year, we have made good progress in reducing
our Scope 1 and Scope 2 emissions by switching to
renewable sources of electricity, investing in on-site
renewables and reducing our energy usage. We provide
more details on page 53.
Addressing our value chain (Scope 3) greenhouse gas
emissions
In 2022, we established our Scope 3 GHG footprint. This
hasenabled us to understand the principal sources of
ourScope 3 emissions and, therefore, what we can do to
reduce those emissions. We believe that no-one is better
placed than Inchcape to help our OEM partners make
thetransition to a low carbon future and we will take
threesets of actions:
• reduce those emissions within our direct control as
quickly as possible;
• seize opportunities to partner with OEMs that are able
tooer our customers lower emissions vehicles; and
• support our customers, teams and OEM partners in
making the transition.
In line with the UK Listing Rules, we confirm that the
disclosures included in the 2022 Annual Report and
Accounts are consistent with the recommendations of the
Task Force on Climate Related Financial Disclosures (TCFD).
This section contains the relevant disclosures or otherwise
provides cross-references where the disclosures are located
elsewhere in the report.
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 54. We have also not quantified
the potential financial impact for Risk 4 and Opportunities
1& 2 in this disclosure because the data is not yet
suciently robust enough. 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
GOVERNANCE
Board’s oversight of climate related risks and opportunities
This year, the Board has specifically considered two areas
of focus. First, it has considered the work undertaken to
quantify the Group’s principal CROs. The Board will further
consider this analysis in the context of its strategy
discussions in 2023. Second, the Board has reviewed the
assessment of the Group’s Scope 3 footprint and the
actions that we can take to reduce that footprint. In each
case, the Board has been supported by external specialists
with appropriate levels of experience and expertise.
Further, as climate change becomes ever more relevant,
itpermeates an increasing number of Board conversations.
For example, when considering a new OEM partnership,
oran acquisition opportunity, the Board will consider how
the OEM or business in question is equipped to manage
thetransition to a low carbon economy.
Other climate-related issues considered by the Board
during the year include the:
• EV response strategy which has been developed for
theAPAC region. This will inform the development of
aGroup-wide EV response strategy;
• EV safety impact requirements which have been
developed to build on industry and OEM advice; and
• material climate-related risks and opportunities which
are incorporated into the list of principal risks and the
emerging climate related risks.
Role of the Committees in assessing climate
changeimpacts
The Board delegates the oversight of certain aspects of
climate change to its Committees. Where climate-related
issues have been considered at Committee level, updates
are given to the full Board following each meeting.
MOBILISING OUR BUSINESS IN
RESPONSE TO CLIMATE CHANGE
44 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
The CSR Committee considers climate change at each
meeting, usually three each year, as part of its oversight
ofthe Planet workstream. Please see pages 94 to 95
forfurther details.
The Audit Committee reviews the impact of climate
change when considering significant accounting
judgements, the viability of the Group, and during its
assessment of the Group’s significant and emerging risks.
Please see pages 88 to 93 for further details. The Board
andthe Committees delegate responsibility for assessing
and monitoring climate-related risks to the Group Executive
Team (GET), which is chaired by the Group CEO.
Management’s role in assessing and managing
risks and opportunities
The GET analysed the CRO quantification and Scope 3
footprint prior to the findings being presented to the CSR
Committee and Board, in addition, the GET also considered
climate-related issues as part of the following discussions:
• design of strategy – considering our 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 planning – impact of climate on future cash
flows and impairment;
• business development – assessment of current and future
OEM partners’ new energy vehicle line up and market
infrastructure;
• customers – considering the changing consumers
preferences and needs both for product and
purchasingprocess;
GOVERNANCE FRAMEWORK
FINANCE STRATEGY
CSR
COMMITTEE
GROUP
EXECUTIVE
TEAM
AUDIT
COMMITTEE
RISK LEGAL
BOARD
The Board has ultimate responsibility for overseeing strategic climate-related matters; however,
it delegates certain areas to its committees
Key activities:
• Engaged with the
finance teams in
relation to both the
KPIs and risk
evaluation work so
that each element
was understood in
their proper
context
• Led the
quantification of
CROs agreeing the
CRO shortlist,
climate scenario
options and
approach to the
quantification of
transition and
physical risks
TCFD WORKING GROUP
Defining actions, reporting, disclosure
Key Activities:
• Agreed Scope 1 & 2
reporting framework
• Quantification of
CRO impacts on
impairment models
• Established our
Scope 3 footprint.
Key Activities:
• Developed our EV
response plan, EV
operating model
and EV playbook
• Monitor the
changing EV
environment.
Key Activities:
• Integrated climate
risks into the Group’s
ERM framework
• Escalate and
monitor principal
and emerging
climate risks.
Key Activities:
• Developed KPIs for
Scope 1,2 and 3 with
the regional Planet
teams.
• Developed strategic
climate reporting for
the annual report.
Oversight, monitoring, targets, KPIs
Embedding processes to identify, monitor and mitigate CROs
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 45
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATERELATED FINANCIAL DISCLOSURES
CONTINUED
• legal/regulatory framework – assessment of governments
making commitments to reduce carbon emissions in
markets where we operate; and
• investor relations – consideration of climate change
impacts on access to capital.
The GET monitors the Group’s approach to climate through
each of these areas and reviews progress against any
targets set such as carbon emissions reduction. All updates
are discussed and considered by the GET to enable them
to develop understanding of the issues and provide input
before papers are submitted to the Board and its
committees for their review.
Duncan Tait, Group Chief Executive, is the Board Director
with ultimate responsibility for climate change related
issues, with support from the GET. Mike Bowers, Group
General Counsel and Planet Workstream lead has been
appointed Chief Sustainability Ocer and is the GET
member responsible for climate change related issues.
The TCFD Working Group (TCFD Group) meets on a
quarterly basis and comprises the Group General Counsel,
Group Company Secretary, Group Financial Controller,
Head of Internal Audit and Risk Manager. Its remit is to
monitor governance around CROs, continuing
identification and verification of CROs, and ensuring the
CROs are considered in context of strategy and financial
performance. The TCFD Group agrees action plans to
improve disclosure under each of the recommended
areaswith progress tracked at each meeting.
STRATEGY AND RISK MANAGEMENT
Strategy introduction
Climate-related risks and opportunities are an integral
consideration when developing and setting our strategic
direction. We recognise that there are risks and
opportunities from a low carbon transition that feed into
our strategic planning and understand that climate
change has a very real impact on the communities and
livelihoods of our customers. Therefore, we are using our
position to enable and deliver on a low carbon transition,
which will build resilience in our business and protect our
planet. A core element of our strategy is the deployment
ofElectric Vehicles (EVs), which underpins our core business
model and is fundamental to the long-term sustainability
ofthe business.
Identification of CROs aecting the Accelerate strategy
In 2021 we undertook a full value chain analysis at a
business unit level and in 2022 our markets completed a
riskquestionnaire every six months, which considers new
legislation, OEM ambitions, competitor capabilities and
themarket EV status. Key exposures are reviewed by
conducting workshops and interviews with a range
ofstakeholders across strategy, finance and risk
management.
IDENTIFICATION AND ASSESSMENT OF CLIMATERELATED RISKS AND OPPORTUNITIES
Identification
In 2021 we undertook a CRO exercise
consisting of a top-down by group,and
bottom-up by each business unit, exercise
toidentify potential climate risks in our
business and value chain.
Assessment
We assessed our long list of CROs to develop
a shortlist to focus on and explore through
scenario analysis. Each risk and opportunity
is qualitatively rated for likelihood, velocity
and potential impact.
Prioritisation
Using the outputs of our assessment we
shortlisted our CROs for quantified scenario
analysis. This process concluded that some
CROs have a low financial impact and other
can be combined with adjacent risks.
Quantified financial impact
Explored through scenario analysis.
Find out more
on page 50
192
potential CROs
identified
10
CROs
continued
5
CROs
shortlisted
1
2
3
4
46 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
We have evaluated the implications of climate risks
andopportunities across the following time periods:
• Short term (up to 2025): 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): up to 2030 is chosen to align
with our interim climate-related targets.
• Long term (2030-2050): aligns with our long-term climate-
related targets.
Transition risks are viewed as 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 eects of climate change.
Transition risks are the most material climate-related issue
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
aect 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dierent acute hazards against our assets out to 2050.
We screened our site for insured value, stock value and
exposure to physical hazards using climate models.
Summary of Inchcape’s CROs
The table on pages 50 to 51 sets out the five prioritised
CROsaecting the Accelerate strategy.
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.
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 current policies.
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.
Risks
1. Misalignment 4. Margin pressure
2. Aersales 5.Physical risks
3.Carbon tax
LIKELIHOOD SCORE
VELOCITY SCORE
1
4
2
5
3
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 47
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATERELATED FINANCIAL DISCLOSURES
CONTINUED
Risk management process
Our organisation manages and monitors 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 achieve this, they provide their strategic response
for mitigation and adaptation to each 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 aect 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 our risk appetites as risk-averse, risk tolerant and risk seeking. The appetite for each specific risk is decided
by the Group. For more detail see page 61.
To monitor and manage risks, each risk is assigned a risk owner and action owners. The risk owner is accountable for the
riskand holds action owners to account for progressing actions that move the risk to its target level. For further information
please see the Risk Management report on pages 59 to 66.
SCENARIO ANALYSIS
We employ climate scenario analysis to help 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
1.5ªC aligned
• Higher transition risk
• Lower physical risks
• Strong government
intervention.
1.5ªC aligned
• Additionally to RCP 2.6,
includes a granular
accelerated EV
transition.
1.5ªC aligned
• Additionally to RCP 2.6,
includes a disorderly and
orderly carbon price
assumptions.
4ªC 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
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.
48 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Climate risk Level of granularity Markets included
Misalignment Market-level (>10% of operating profit
by market coverage in scope)
Australia, Belgium, Chile, Hong Kong,
Luxembourg, Singapore, and UK
Aersales Global-level A shi from conventional ICE to BEV
could potentially develop new
aersales 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
BEV (Battery Electric Vehicles)
ICE (Internal Combution Engine)
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 to 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.
SINGAPORE
Surface water
flooding
ECUADOR
Extreme heat
CHILE
Riverine
flooding
PERU
Extreme heat
GUAM
Extreme heat
DOCKLANDS
AUSTRALIA
Riverine flooding
CLYDE GESSEL PLACE
AUSTRALIA
Surface water flooding
ETHIOPIA
Extreme heat
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 49
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATERELATED FINANCIAL DISCLOSURES
CONTINUED
RISKS
Risk
Description
Summary Scenario Financial impact Strategic response and resiliency Measurement
Short Med Long
1
Misalignment
between
OEM and
markets on
BEVs leads to
market share
decline
Misalignment between
the speed at which our
OEM 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.
IEA NZE
1.5°C
Med High N/A As part of our broader strategy, our ambition is
to form new partnerships with pure EV entrants
to expand our OEM portfolio. We have taken
proactive steps in 2022 to achieve this by
partnering with OEMs such as BYD and Ora.
This will help oset 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;
• 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
4°C Low Low
2
Reduction
in aersales
revenue for
BEVs
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
aersales services we oer
around repair, maintenance
and replacement of parts.
Our analysis indicated
this may aect our retail
businesses more than our
distribution businesses.
IEA NZE
1.5°C
Low Low N/A 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 aect
us in the long term as global BEV volumes
increase. Therefore, we are considering an
expansion of our proposition for aersales
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 oset any potential impact to revenue
reduction from aersales services.
Metric:
% of AFS
revenue
attributable
toNEV
Sensitivity:
% Revenue
CAGR
% Gross margin
% Long-term
growth rate
4°C Low Low
3
Carbon tax
costs
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 aect
all markets. We analysed
this risk across our Scope 1
and 2 emissions.
NGFS
1.5°C
orderly
Low Med High Our analysis considers our targets and presents
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. 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.
Metric:
Scope 1 & 2
absolute
Sensitivity:
% Revenue
CAGR
% Gross margin
NGFS
1.5°C
dis-
orderly
Med High High
4°C Low Low Low
4
Transition to
BEVs leads
to pressure
on distributor
margins
An accelerated EV
transition could aect
certain cost drivers for
our OEM 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
IEA NZE
1.5°C
N/A N/A N/A Our analysis indicates that the impacts of
margin pressure may be oset 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 oering to our OEM 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 suciently robust, and therefore we
concluded that such analysis would not lead
to better informed decision making.
Metric:
Gross margin
Sensitivity:
% Average
gross margin
4°C N/A N/A N/A
5
Physical
risk – direct
impact to
property and
inventories
from extreme
weather
events
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.
RCP 2.6
1.5°C
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
4°C Low Low Low
50 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
OPPORTUNITIES
Opportunity
Description
Summary Scenario Financial impact Strategic response and resiliency Measurements
Short Med Long
1
Alignment
between OEM
and markets
on EVs leads to
market share
increase
In markets where there
is a rapid shi towards
EVs, there is potential
tocapture market share
where supply of EVs from
our OEM 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 dierent levels
of EV supply from OEMs
isgreatest.
IEA NZE
1.5°C
N/A N/A N/A As part of our broader strategy, our ambition
is to consider forming new partnerships with
pure EV entrants to add to our OEM 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 OEM partnerships 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
4°C N/A N/A
2
Increase in
aersales
revenue for BEV
A shi from conventional
ICE to BEV could
potentially develop
new aersales 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.
IEA NZE
1.5°C
N/A N/A N/A We are facilitating the choice of a BEV among
consumers in our retail business by increasing
consumer knowledge of the benefits of BEVs
and expanding our aersales 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 aersales
market could evolve. However work is ongoing
to consider how we can expand our aersales
proposition with new BEV-specific services
and we will continue to monitor changes to
aersales market dynamics.
Metric:
% of AFS
revenue
attributable
toNEV
Sensitivity:
% Revenue
CAGR
% Gross margin
% Long-term
growth rate
4°C N/A N/A
The sensitivities applicable to each of the risks and opportunities can be found on page 169 (note 11) of this report
Key: Financial impact key:
Distribution Excellence Low impact: impact to revenue <£100m
Vehicle Lifecycle Services Medium impact: impact to revenue £100m – £200m
High impact: impact to revenue >£200m
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 forwards, 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
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 51
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
TASK FORCE ON CLIMATERELATED FINANCIAL DISCLOSURES
CONTINUED
ACCELERATING CHANGE: OUR PLAN TO TRANSITION
The TCFD recommends that companies design and
disclose a transition plan that sets out the key steps to
deliver on their targets. Throughout the year we have
deepened our understanding of the climate risks and
opportunities that aect our business and we recognise
theneed to act now. During 2022, we have built a plan
toreduce GHG emissions supported by short, medium,
andlong-term actions.
Our transition plan is commensurate with our Accelerate
Strategy and describes how we will transition and continue
to grow a sustainable and climate resilient business.
OurAccelerate strategy relies upon two strategic growth
drivers; Distribution Excellence, and Vehicle Lifecycle
Services. Within Distribution Excellence, our OEM partners
recognise the need to transition and are looking for
partners to support them on their journey. Our plan:
• targets decarbonisation of our operations to become
ourOEM partners’ lowest carbon route to market; and
• looks for ways to help our OEM partners achieve a faster
and more robust transition to lower emission vehicles.
Our approach to our dierent sources of emissions
Our emissions are split across Scopes 1, 2 and 3, which can
be further divided into direct (within our control) or indirect
(limited control). Initially, we are prioritising those areas over
which we have direct control, and those areas in which
wecan partner with our industry to drive decarbonisation.
Direct control over Inchcape’s emissions
We have direct control across our Scope 1, 2 and a small
portion of our Scope 3 emission categories, e.g. waste and
business travel. For these areas we are taking direct action
to reduce our emissions so that we can facilitate a faster
transition and be our OEMs’ lowest carbon route to market.
We have set targets across our Scope 1 and 2 GHG
emissions using the SBTi methodology. We are committed to
a 46% reduction in absolute scope one and two emissions
from our 2019 footprint (adjusted for disposals) by 2030 and
to achieve Net Zero by 2040. This is aligned with a 1.5° C
temperature pathway scenario.
We are going to achieve these targets through meeting
recently developed executive level objectives related to
our climate strategy. For example, our regional CEOs have
been assigned energy intensity reduction targets of 5% year
on year. We have taken steps to reduce our Scope 1 and 2
emissions footprint which has decreased by 24% from the
2019 revised baseline. Our case studies and Planet section
outline a selection of our emission reduction initiatives, such
as producing our own power and switching to
renewable energy sources. In 2023, in the Americas, we
are rolling out 15 projects related to Scope 1 and 2
emissions including solar panel installations, replacement
of vehicle fleets to PHEVs/BEVs, and controlling our fossil fuel
consumption. For Scope 3, theAmericas are also initiating
three projects related to waste, recycling, and water
reduction consumption.
Indirect control – transitioning with partners
A significant portion of our emissions come from the use
ofthe products we sell and the goods and services we
purchase – these emissions require collaboration with
ourOEM partners. This year we mapped our indicative
emissions trajectory to 2030 using OEM partner targets
(based on currently published OEM plans) to understand
expected changes in our emissions profile over time. We
have considered this trajectory in the context of science-
based target requirements. The results suggested that OEM
decarbonisation activities are not expected to yield the
necessary emissions reductions required to meet our
potential science-based targets on either an absolute or
intensity basis. The key challenges identified in our emissions
profile to 2030 can be summarised as follows:
• absolute emissions for passenger vehicles are expected
to remain relatively stable post 2023, with organic vehicle
volumes growth largely osetting emissions intensity
improvements from BEV uptake and grid
decarbonisation;
• our HGV sales are a significant driver of emissions, and
ofgrowth in emissions; and
• the methodology used by the Science Based Targets
initiative to set targets for our OEM partners, who are
categorised as part of the transport category, diers from
that applied to Inchcape which falls under the
consumer-retail category.
We plan to further our work with various stakeholders to
develop potential frameworks fortarget setting and will
review our plans on an ongoing basis. However the Board
has agreed onthe following actions for 2023:
• Develop and grow our BEV vehicle oerings within
ourportfolio: ICE vehicles have been central to road
transport for many years. However, new technology
isneeded to decarbonise the sector. BEVs provide an
alternative means of power that is not contingent on
burning fossil fuels, but dependent on the supply of
electricity. The emissions intensity of BEV vehicles will also
fall as economies and power grids decarbonise. So, while
BEVs are not a perfect solution for low carbon transport
today, they do oer an alternative form of transport that
can be decarbonised in line with national energy supply.
By embracing the BEV transition, and increasing our
revenue from BEVs, we also reduce our portfolio average
emissions intensity per unit sold – as compared with our
portfolio today. We will also continue to monitor our OEM
targets and achievements of those targets over time. We
will measure progress of our BEV transition by tracking the
percentage of NEVs sold (refer to the table on page 54).
• Support our customers, teams and OEM partners on
the transition: As our sector undergoes unprecedented
disruption from the EV transition, we are developing new
solutions for our customers. One of our short-term
objectives is to support customers and our sales teams to
overcome obstacles in BEV adoption, such as charging
solutions, range anxiety, aordability and lack of
familiarity with the product. We are educating our sales
teams and customers so that we can oer a BEV product
when it is right for the customer. When our local sales
teams engage with customers, we are seeing positive
outcomes for the customer and our business – see
educating customers about electric vehicle alternatives
on page 53. To address short-term aordability concerns,
we will seek to develop financing solutions for customers
purchasing BEVs that are competitive with the purchase
of ICE vehicles.
• Understand what would be required for us to set an
SBT: Investigate the identified methodology disparities
tosetting Scope 3 science based targets.
52 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
HOW WE ARE DRIVING
ACTION TO REDUCE
EMISSIONS
EDUCATING
CUSTOMERS
ABOUT
ELECTRIC
VEHICLE
ALTERNATIVES
At the beginning of 2021 our BMW Poland stores launched
aninitiative to oer an EV alternative to each customer who
comes to the dealership to view new vehicles. The initiative
was instigated to access new profit pools in line with OEM
priorities and to reduce the impact on the planet. Upskilling
and educating our teams has been advantageous in
positioning our brand and helping employees understand
the benefits of EVs. Customers to whom we show a new
perspective appreciate one key thing: they see that we
arelooking for solutions and oer products that they have
not thought about before.
A SWITCH TO
RENEWABLE
ENERGY
SOURCES
As of 2022, our electricity supply has been sourced through
100% renewable contracts for our sites across Australia and
the UK, and most of Europe, saving as much as 9,000 tonnes
of CO
2
e emissions each year. We have switched 50.3% of our
sites to renewable suppliers; our long-term goal is to switch
torenewable energy in as many regions where options allow.
In regions where switching to renewable energy is limited we
are investing in increasing energy eciency through
installation of LED lighting and switching company fleets to
low emission vehicles.
PRODUCING
OUR OWN
POWER
We are actively investing to reduce our Scope 2 emissions
through on-site renewable generation and have begun to
roll out solar photovoltaic (PV) systems across our sites. We
trialled the installation of PV systems across three of our UK
sites and experienced significant savings in grid energy
usage. We now have 24 sites across the UK with rooop
solarPV systems that have the ability to generate 4.5 MWh
ofpower and save around 35% o our energy bills. We
anticipate higher cost savings because of higher energy
prices. A small example to show how we are building a
resilient business for the future while doing some good
fortheplanet.
PARTNERSHIPS
TO DRIVE
EMOBILITY
Borneo Motors Singapore (BMS) has announced a
partnership with Singapore Power Group (SP) to develop
anelectric vehicle (EV) sharing programme in the upcoming
Tengah New Town. The programme is expected to begin
inJuly 2023. BMS will supply vehicles to the scheme while
SPplans to install charging points in 10% of all parking
spaces. Both BMS and SP will use the programme to collect
and analyse data on a range of factors such as driving
patterns, electrified vehicle consumption patterns and
electrified vehicle preferences. This will enable us to better
understand user behaviour and anticipate evolving
demands to optimise future e-mobility programmes.
50.3%
sites switched
to renewable
suppliers
24
sites across the UK
with rooop solar
PVsystems
10%
of all parking
spaces to have
charging points
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 53
STRATEGIC REPORT
METRICS AND TARGETS
In 2021 we established our GHG reduction target, to reduce our Scope 1 and 2 emissions by 46% by 2030. This year we have
made substantial progress to improve the maturity of our climate data and have undertaken detailed analysis to understand
our exposure to CROs, which informed the development of our strategic response. When developing our response, we have
identified the metrics to measure our progress; with these metrics we can determine the time frames that are achievable
forour business and then identify appropriate targets. Improving the quality of our data and quantifying our CROs has
enabled us to assess possible transition pathways that will support us to set targets and outline the time frame to deliver
onour response. We aim to disclose this in our next reporting year.
Our direction of travel is clear in our strategy and the Group uses a variety of metrics to measure the current and potential
impact of our climate related risks and opportunities, including GHG emissions and business specific metrics. Our metrics
are laid out across the seven cross-industry metric categories defined by the TCFD and 2022 is the first year of reporting.
During 2023 we will be exploring options for a physical risk metric and internal carbon pricing.
Table identifying key metrics, targets and dates used to measure progress against the transition plan
Metric category Status Metric FY22 actual Objective
GHG emissions Total emissions (tCO
2
e) 218,517 To track the reduction in our
emissions, improvements in our
energy eciency and generation
of our own renewable power
% of sites at 100%
renewable electricity
50.3%
Energy intensity by
revenue (tCO
2
e/£m)
26.9
Physical risk We do not have physical risk metric in place
Capital deployment % of capex towards
climate initiatives
10.8% To demonstrate the level of
investment we are committing
towards climate to achieve our
strategy
Remuneration Scope 1 and 2
emissions (tCO
2
e)
30,805 Incentivising leadership to deliver
emissions reductions
Transition risk % of NEV sold 1.8% -% of NEV sold
Opportunities % of NEV sold 1.8% -% 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.
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. Please see pages 119 to 120 for our Streamline Energy and Carbon Emission reporting
(SECR). We report our GHG emissions according to the Greenhouse Gas Protocol, published by the WBCSD and the WRI.
We also disclose our energy intensity per square foot. This metric measures our energy eciency and will track the impact
ofour energy saving initiatives. We chose to do this as we recognise that until the grid consists of 100% low carbon energy
supply, the renewable energy we purchase reduces the renewable energy remaining on the grid for other users and may
not have the decarbonisation eect at an economy level.
TASK FORCE ON CLIMATERELATED FINANCIAL DISCLOSURES
CONTINUED
REDUCTION TARGETS FOR SCOPE 1 AND 2
Year Scope 1 and 2 emissions (tCO
2
e)
2019 (baseline) 50,801
2019 (revised baseline*) 40,598
2021 32,949
2022 30,805
Target 27,331
* reflects relevant disposals and data rectification All data is market-based.
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 OEM partners activities and account for
99.97% of our total emissions footprint at a total of 18.7m
tCO
2
e.
54 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Locations
Distribution:
Chile, Estonia, Guam, Kenya,
Latvia, Lithuania, Peru
Retail:
Poland, UK
BMW GROUP
Our partnership with BMW Group is over
30years strong and has been a key focus for
consolidated growth, especially in the Baltic
region where we now represent the brand
inallthree countries: Estonia, Latvia and
Lithuania. In 2020 we were awarded the
Distribution contracts for MINI in Chile and
forMINI and BMW Motorrad (the brand’s
motorcycle division) in Peru, consolidating
ourposition in those markets. As well as
holdingDistribution contracts in South America,
we also have significant retail operations of
BMW Group’s brands in UK and Poland.
STRATEGIC REPORT FINANCIAL STATEMENTSGOVERNANCE
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 55
STRATEGIC REPORT
Environmental matters are considered
as part of the Planet pillar of the
Driving What Matters plan.
• Our Health and Safety (H&S)
framework is designed to ensure
employees comply with relevant
environmental legislation.
• The Group has set science based
targets for Scope 1 and 2 emissions.
Each region has developed its own
policies in order to achieve these
targets.
• Energy eciency policies are also
implemented at local level.
The Planet Charter is set out on page
42 and manages climate-related
issues, carbon performance metrics
and responsible resource use. Our
policies are designed to help us
pursue activities that influence us
andour suppliers to reduce their
carbon footprints.
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.
• Our I&D framework demonstrates
our commitment to helping address
the barriers preventing full
participation for marginalised
groups.
• Our H&S framework is designed
toprotect the health and safety
ofemployees.
• Our Code of Conduct provides
guidance on the ethical behaviour
we expect from all employees.
• Our Whistleblowing Policy provides
guidance to employees to raise
concerns without fear of reprisal.
Our People Charter is stated on page
38 focusing on health and safety,
training, culture, reward, and I&D.
Allemployee related policies were
reviewed and updated where
necessary during 2022.
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.
• Employment policies are
implemented at local level and are
designed to protect employees’
human rights.
• 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 is rolled out to
those employees whose roles and
remit require additional focus in this
area.
Our Modern Slavery statement is
available at www.inchcape.com
reinforcing an ethical business culture.
Policy implementation
To ensure eective implementation of
our policies we communicate clearly
through employee induction, the
Group-wide intranet, updates and
briefings and via the Practices pillar
ofour Driving What Matters plan.
The Board and Group Executive Team
review certain policies on an annual
basis, such as our Tax Strategy Policy,
Risk Policy, and Delegated Authorities
Policy. Other polices are overseen
atregional and local level by the
subsidiary management teams.
NONFINANCIAL INFORMATIONSTATEMENT
NONFINANCIAL
INFORMATION STATEMENT
ENVIRONMENTAL
MATTERS
EMPLOYEES HUMAN RIGHTS
56 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Non-financial information
People Practices Places Planet
Where to find more information
Responsible Business
framework – pages 38 to 39
CSR Committee Report
– pages94 to 95
Directors’ Report
– pages 118 to 121
Responsible Business
framework – page 40
Risk Management Report
– pages59 to 67
Audit Committee Report
– pages 88 to 93
Responsible Business
framework– page 41
Responsible Business
framework– page 42
TCFD – pages 44 to 54
Risk Management Report
– pages59 to 66
Directors’ Report
– pages 119 to120
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 2 to 4. The Group’s KPIs are stated on pages 26 and 27. Principal risks are given on pages 61 to 66.
Code of Conduct
The Group’s Code of Conduct
reflects our Accelerate strategy
and Driving What Matters plan
bysetting out the behaviours
andconduct expected from all
employees and contains ethical
decision-making guidance
highlighted through ‘Live It’
examples.
It is available in 18 languages
andis accompanied by an online
training module. All employees
are expected to complete the
training every two years, in
addition to an annual re-
attestation confirming they are
aware of and fully understand the
Code. New joiners are expected
to complete the Code of
Conduct training within four
weeks of joining the business.
Where employees do not have
access to a computer, they are
made aware of the Code through
various non-digital means.
It is important to the Board to
maintain a reputation for high
standards of business conduct
and a separate Supplier Code of
Conduct sets out the behaviours
we expect from our suppliers. The
Supplier Code of Conduct aligns
with the Group’s policy statements
on anti-bribery and corruption
and modern slavery, providing
astrong governance framework
in which to do business.
READ MORE Both Codes of
Conduct are available at
www.inchcape.com.
Social matters cover a vast range of
potential issues including responsible
business 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.
• 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
41 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.
Employees and supply chain partners
are made aware of the Group’s
strategy and how their behaviours
aect 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
employees and supply chain:
• Anti-bribery and corruption.
• 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.
Code of Conduct training is rolled out
to all employees, and bespoke
training, such as anti-bribery and
corruption, anti-tax evasion facilitation,
and modern slavery is delivered to
those employees whose roles and
remit require additional focus and
expertise in these areas.
The Internal Audit function monitors
policy implementation. Our
whistleblowing helpline, Speak Up!,
enables employees to raise concerns
confidentially and without fear of
reprisal, including non-compliance
with policies and procedures.
SOCIAL MATTERS ANTIBRIBERY AND
CORRUPTION
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 57
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
SUBARU
Inchcape’s distribution partnership with Subaru
is one of the most important in our portfolio
and an example of the close collaboration
between the Group and our brand partners.
We distribute and operate the brand in
Australia, maintaining Subaru’s highest
shareglobally in that market. Subaru was
theOEM brand central to our first significant
expansion in South America in 2016 which
hashelped to create a platform for further
growth in the region.
Locations
Distribution:
Argentina, Australia, Chile,
Colombia, New Zealand, Peru
58 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
RISK MANAGEMENT
In the last year, the Group’s risk landscape has continued
tobe challenged by a number of issues including declining
macro-economic conditions, geo-political unrest,
continued supply chain disruption and electric vehicle (EV)
supply and demand issues. Throughout these challenges,
we remained focused on the delivery of our business
transformation agenda and managing the associated
riskswhile continuing to successfully embed, enhance
andmature the overall risk management framework into
the wider business.
In delivering our Accelerate strategy we have made
several significant investments in new businesses during
2022, our most recent and significant to date being the
acquisition of Derco. The combination of our two
businesses brings the opportunity to create better value
and more ecient routes to market within the Americas
forour OEM partners and drive revenue and customer
satisfaction. The enlarged business will also expose the
Group to new risk factors. 2023 will see harmonisation of
riskmanagement practices for the expanded Americas
region to ensure we remain focused on the risks that
matterin delivering our integration plans and synergies
while ensuring a fit-for-future operational framework to
deliver thepriorities for the region.
APPROACH TO RISK MANAGEMENT AND INTERNAL CONTROL
Our approach to risk management is clearly integrated
within our decision making. It has been designed to ensure
we assess the risks we need to take in order to remain
successful and to grow, and we use the available evidence
to manage those risks as eectively as possible. Eective
risk management is therefore essential to executing our
Accelerate strategy and achieving sustainable
shareholdervalue.
We believe that eective 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 aect our current or future
performance, and/or our reputation. Our risk management
eorts 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
undertakes 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 eectiveness of the
riskmanagement and internal control systems are reviewed
at least annually by the AuditCommittee.
ACCELERATING
RISK MANAGEMENT
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 employees and the stock of choice for our investors.
CLIMATE CHANGE RISKS AND OPPORTUNITIES
Critical success factors for our business are becoming the
lowest carbon route to market for our OEM partners and
forour stakeholders to have confidence we are here for
thelong term. Understanding, reporting, and acting
responsibly upon our climate related risks and opportunities
is our goal to ensuring the environmental sustainability
ofour operations and to manage any potential climate
change impacts on our business and performance.
The Group’s responsible business agenda is fully aligned
tothe above and requires the eective identification and
management of our climate related risks and opportunities
(CROs). 2022 saw our CRO management strengthen, and
we have integrated the identification of CROs into our risk
management programme and will continue to embed
andmature the methodology going forward. Through
thisprocess we have armed that our key CROs are
appropriately linked to several of our principal risks.
‘EV transition’ (see Risk L) remains a moderate risk to the
Group as we continue to seek alignment between the
supply of electric vehicles and changing market
conditions. The changing market conditions combined
withour OEMs’ transition to electrified drivetrains are putting
pressure on margins. This ‘margin pressure’ (see Risk G)
could lead to new routes to market or new business models
with lower margins.
The Group’s Accelerate strategy has been designed to
address these issues. However, potential new and external
emerging risk factors relating to the availability,
sustainability and ethical sourcing of rare earth materials
used in the production of EV batteries remain and, in some
cases, have been exacerbated by the macro events of
2022. High energy costs, the ability for electrical grids to
answer spikes in demand, and the high costs at charging
points might make other powertrains more cost-eective.
These emerging risks form part of our ‘watch list’.
Climate change is also increasing potential physical risks,
such as intense flooding, severe storms and heat stress.
AGroup-wide business continuity strategy has been
designed to address these should they eventuate.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 59
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
During 2022, the Board, Audit Committee and Group Executive Team reviewed the following topics relating to the Group’s
principal risks:
Board Audit Committee Group Executive Team
Q1 Cyber;
Legal and regulatory risks; and
Viability: financial impacts of
distribution agreements
Internal controls (financial
reporting, fraud, technology
systems risks)
M&A integration;
People (talent review) and culture;
Principal and emerging risks; and
Strategy: M&A, Distribution
Excellence, Vehicle Lifecycle
Services
Q2 Strategy: disruptive trends and
EVtransition
Cyber security; and
Internal controls (financial
reporting, fraud, technology
systems risks)
Digital and Global Business
Services programme;
Finance and insurance;
People (talent review) and culture;
Planet;
Principal and emerging risks; and
Regulatory compliance
Q3 Financial forecasts: supply chain
disruption; and
Health, safety and environment
Internal controls (financial
reporting, fraud, technology
systems risks)
Cyber security;
Health, safety and environment;
People (talent review) and culture;
Principal and emerging risks; and
Strategy: agency, EV, OEMs, and
route to market
Q4 CROs quantification and Scope 3
footprint;
Principal and emerging risks;
Risk appetite; and
Strategy: M&A programme
delivery
Cyber security;
Internal controls (financial
reporting, fraud, technology
systems risks); and
Risk management eectiveness
CRO quantification and Scope 3
footprint;
Principal and emerging risks; and
Risk appetite
RISK MANAGEMENT FRAMEWORK
RISK, CONTROL AND
ASSURANCE DATA
BOARD, AUDIT COMMITTEE AND
GROUP EXECUTIVE TEAM
1ST LINE
• Front line business operations.
• Implements strategy, policies,
procedures and controls.
• Primary responsibility for risk
identification and assessment.
• Manages risks on a day-to-day
basis.
2ND LINE
• Corporate functions.
• Sets policies and procedures.
• Monitors risks and controls.
• Oversees risk improvement
programmes.
3RD LINE
• Independent assurance.
• Tests the design and
eectiveness of policies,
procedures and controls
implemented by the 1st and
2nd lines.
Sets strategy; sets risk appetite; reviews principal and
emerging risks twice per year; reviews system of risk
management and internal control.
60 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Key:
No new or additional action;
risk accepted at current level
New or additional action
required and started
Increasing Decreasing
Movement to next category
Climate
Impact
CriticalMajorModerateMinorMinimal
Rare Unlikely Possible Likely Almost
certain
Likelihood
HEATMAP OF PRINCIPAL RISKS
Risk appetite
Risk appetite is the level of risk
Inchcape is willing to accept in pursuit
of achieving its objectives. 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.
The Board has considered its risk
appetite in relation to the Group’s
principal risks in July and November
2022. Risks were allocated to one of
three acceptable levels of exposure
(aligned to the risk heatmap),
indicating tolerable levels of risk:
Higher appetite for risk
We are prepared to (or may have to)
accept elevated levels of risk exposure
(even aer mitigation is applied). We will
tolerate these risks being in the upper dark
blue area of the heatmap.
A – Cyber security incident
B – Supply chain disruption
C – Covid-19
M – Acquisition ROI
Medium appetite for risk
We are prepared to accept moderate
levels of risk in this area (aer mitigation is
applied). We aim to keep these risks in the
mid-blue area of the heatmap. We will
take action to reduce risk levels if they are
above the mid-grey area of the heatmap.
D – People: engagement, retention
E – Political risk/social unrest
G – Margin pressure
H – OEM: loss of distribution contract
I – Change delivery
J – People: future skills
K – New market entrants: new business
models or technology
L – EV transition risks
N – Loss of technology systems
P – Foreign exchange volatility
R – Macro-economic conditions
Low appetite for risk
We have little appetite for risk exposure in
these areas. We aim to keep these risks no
higher that the lower light-grey area of the
heatmap. We will take action to reduce risk
levels if they are above the light-grey area.
F – HSE: health, safety or environmental
incident
O – Financial reporting, fraud
Q – Legal and regulatory compliance
PRINCIPAL RISKS
The Group’s principal risks are summarised in the heatmap below. Increases or decreases are based on business
assessments of risk trends, rather than direct comparisons to previous risk scores. Risks are shown on a ‘net’ basis, taking
intoaccount existing mitigation measures. No risks were removed from the list of principal risks during 2022. One new risk
wasadded during 2022 relating to macro-economic conditions (cost inflation and economic slowdown).
H F A
O J
L
I
N D
E B
M
Q
P
R
C
K
G
RISKS TO OPERATIONAL EXCELLENCE
A Cyber security incident
B Supply chain disruption
C Covid-19
E Political risk/social unrest
F
HSE: health, safety or
environmental incident
O Financial reporting, fraud
N Loss of technology systems
Q Legal and regulatory compliance
P Foreign exchange volatility
R Macro-economic conditions: (cost
inflation, economic slowdown)
RISKS TO STRATEGIC GROWTH
D People: engagement, retention
G
Margin pressure (changing route
to market, incentives)
H OEM: loss of distribution contract
I Change delivery (benefits on time,
to budget)
J People: future skills
K New market entrants: new
business models or technology
L
EV transition risks
M Acquisition ROI
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 61
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
B SUPPLY CHAIN
DISRUPTION
F HSE: HEALTH, SAFETY
OR ENVIRONMENTAL
INCIDENT
A CYBER SECURITY
INCIDENT
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, 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
• Multi-year security improvement
programme underway as an integral
component of Accelerate.
• Existing cyber security measures,
including policy, asset management,
risk assessment, access control,
protective technologies, DR plans.
Disruption to product availability
hascontinued across the business
throughout 2022 and has primarily
beendriven by the lack of timely, cost
eective, sustainable and successful
procurement of essential components
and rare earth minerals required in
thevehicle manufacturing process.
Theimpacts of these shortages include
reduction in distribution volumes, a
shortage of vehicles for sale as well
asdelays or cancellations of customer
orders. This risk is expected to continue
well into 2023 and beyond and is being
mitigated by sales and operations
planning, inventory optimisation and
eective margin management.
Mitigating actions
• Close management and monitoring
of margins.
• OEM portfolio management and
close liaison with our OEM partners.
• Sales and operation planning
procedures.
• Inventory management and planning
processes.
The business includes the operation of
vehicles, machinery and other manual
activities, resulting in a risk of serious
injury or fatality to our colleagues.
Additionally, the use and disposal
ofharmful substances and chemicals
poses a risk to the environment and
colleagues. The Group is aware of
theimpacts that remote working,
transformation project pressures and
organisational restructuring could have
on the mental and physical wellbeing
ofour colleagues. The Group has
implemented a wide variety of
mitigations to reduce harm to our
colleagues and the environment
through initiatives that provide
appropriate support and training
tocolleagues.
Mitigating actions
• Ongoing implementation of HSE
programmes.
• Monitoring of HSE function, including
tracking of KPIs and action plans
• Roll-out of executive due diligence
programme.
• Mandatory Annual HSE training.
• Regular review of performance by
GET and Board.
• Evaluation and remediation of risks
related to EVs underway.
Overall HSE business performance is on
track with a variety of Group-wide and
regional specific action plans in place
to further enhance the procedures
andculture throughout Inchcape.
PRINCIPAL RISKS
Of the principal risks assessed, the following have the highest relative impact or likelihood
scores and are assessed as the most significant ‘net’ risks, aer mitigation has been applied.
Risk level with current mitigation
Impact:
Major
Likelihood:
Likely
Trend:
Risk level with current mitigation
Impact:
Moderate
Likelihood:
Almost
certain
Trend:
Risk level with current mitigation
Impact:
Major
Likelihood:
Possible
Trend:
RISK MANAGEMENT
CONTINUED
62 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
G MARGIN PRESSURE R MACROECONOMIC
CONDITIONS
Our OEM partners continue to innovate
and develop new ranges of EVs in
response to climate change. Currently,
EVs carry increased R&D and production
costs and thus may oer decreased
margins comparative to internal
combustion engines (ICE). However,
theGroup’s view is that over time, as the
technology and production capability
and capacity relating to EVs matures,
margins in the medium-term will
normalise.
Mitigating actions
The Group’s refreshed strategy,
Accelerate, is designed to address this
risk in three ways:
• through a compelling oering to our
OEM 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 oering;
• through Vehicle Lifecycle Services –
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
• through expanded M&A, enabling
our growth into new, margin-accretive
markets and with potentially new
OEMpartners.
Geopolitical uncertainties, supply
chaindisruption, risk of high inflation,
and risk of recession, are likely to lead
toa global economic slowdown and
reduced consumer confidence and
demand. Additionally, increasing
interest rates might make financing
fornew cars less aordable and slow
down sales.
Mitigating actions
• Management and monitoring of
costbase.
• Financial budgeting and forecasting.
• Cash flow and margin management.
• Review potential cost base
eciencies.
• Maintaining and increasing our
geographic diversification as well
asour diversified OEM portfolio
(OEMorigin, segments, positioning
and more).
Risk level with current mitigation
Impact:
Major
Likelihood:
Possible
Trend:
Risk level with current mitigation
Impact:
Moderate
Likelihood:
Almost
certain
Trend:
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 63
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
OTHER PRINCIPAL RISKS
Ref # Risk title Description and impact Trend Key mitigating actions
C Covid-19
pandemic
DRE,
VLS,
M&A
The materiality of this risk has reduced
significantly as markets continue to li
restrictions. The risk remains on the profile due to
China’s recent rapid liing of its restrictions which
have resulted in a surge of infections that could
aect global supply chains. The re-emergence
of the new variants in markets is unpredictable,
and may lead to a subsequent delayed
economic recovery. Although restrictions are
being lied across the globe, a worsening
situation may again aect the Group’s global
trading performance and cash flows. It may
lead to increased pressure on margins; reduced
capital availability for both the Company
and for our customers; and supply chain
interruptions.
The range of local market measures that
were introduced at the start of the pandemic
remain ready and available for use in the event
of changing levels of infection and trading
restrictions. This includes but is not limited to:
• The formation of dedicated pandemic
response teams;
• Measures at all sites to reduce infection risk;
• Working from home rules;
• A wellbeing programme to support colleagues
through the pandemic and increased
frequency of employee surveys and customer
communications;
• Enhanced monitoring of working capital;
• Delayed discretionary spend where needed
toreflect market conditions; and
• Accelerated roll out of digital trading
capabilities.
D People:
engagement
and retention
DRE,
VLS,
M&A
Following the global pandemic and the business
transformation underway, there is a risk of
increased wellbeing issues (driven by workload
and working arrangements) and of ‘change
fatigue’. As economies return to growth, there
will be increased competition for key skills.
Key skills are increasingly in demand as
economies return to growth.
• Employee experience surveys followed
by analysis and action planning at senior
management level.
• Employee wellbeing frameworks, programmes
and support.
• Enhanced career development programmes
and talent reviews.
• Reformed change management and
retention initiatives.
• Pay and reward reviews and benchmarking.
E Political risk/
social unrest
DRE,
VLS,
M&A
The Group operates in markets where there may
be greater volatility in the political, economic
and social environment, for example in, and
adjacent, to: Ethiopia, Hong Kong, and Latin
America. This may threaten the safety of our
employees and disrupt business operations.
• Close monitoring of political situation in higher-
risk markets.
• Business continuity planning.
• Collaboration with OEM partners on stock
allocation flexibility.
• Expansion of digital trading capabilities.
H Loss of
Distribution
Contract
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.
The Group’s current strategy, Accelerate, is
designed to mitigate this risk in the following
ways:
• through a compelling oering to our OEM
partners known as Distribution Excellence;
• through Vehicle Lifecycle Services 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 OEM portfolio (OEM origin,
segments, positioning).
I Change
delivery
DRE,
VLS,
M&A
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.
• Oversight by the Group’s Transformation
Committee, supported by Portfolio
Management tool to track status.
• Ongoing reviews and reprioritisation of
initiatives to ensure focus on strategic
imperatives.
• Risk and issue management.
• Oversight by Steering Committees and
reporting to senior management.
J People:
future skills
DRE,
VLS,
M&A
As we continue our business transformation
journey, we will require appropriate new
skills and capabilities. These new skills and
capabilities relate particularly to change
management, leadership skills, used car
retailing, digital marketing, M&A and data
analytics. The demand for these skills is high
across many industries thus impacting our
abilityrecruit and retain talent.
• Development of in-house capability (Digital
Delivery Centres).
• Strategic resource planning and recruitment.
• Training and development programmes,
e.g.digital academies.
• Salary benchmarking.
• Company profile and branding.
The following principal risks were also identified:
64 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Ref # Risk title Description and impact Trend Key mitigating actions
K New market
entrants
DRE 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. Examples include the growth of
direct online retail, subscription/rental models,
mobility solutions or combined EV and charging
packages.
• Existing value proposition: digitilisation
andenhanced omni-channel oering.
• Monitoring of competitor activity.
• Brand profile and service levels.
• Diversification of brand relationships,
geographies and revenue streams.
L EV transition
DRE There is a risk of lost market share due to
misalignment between market uptake of EVs
driven by new or changing legislation or tax
incentives and OEM EV supply. Risk that we do
not develop optimum operating models relating
to EV demand and supply in various markets
as not achieving optimum ROI on EV related
investments.
• Monitoring of emerging EV-related legislation
in each market.
• Close liaison with OEMs to understand their
ambitions and feedback on the EV readiness
of individual markets.
• Brand diversification – contracts with new
OEMpartners.
• Market-level risk assessment of EV
infrastructure, legislative plans; OEM partner
and competitive capability.
• Strong relationship and regular
communication to ensure optimal EV
allocation from our OEM partners.
• Reposition the brand in the market to
mitigaterisk.
M Acquisition
ROI
M&A 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
eective integration of new acquisitions into the
Group.
• Pipeline of opportunities.
• Experienced M&A teams at Group and in
Regions.
• M&A playbook.
• Integration playbook.
• Post-merger reviews and audits.
• Board review of larger transactions.
N Loss of
technology
systems
(non–cyber)
DRE,
VLS,
M&A
The Group is dependent on a range of complex
and diverse technology systems. There is a risk
that we do not have timely or reliable access to
such business-critical information or information
systems. This could be due to issues such as
systems outages, soware glitches, hardware
failure, system complexity and capacity or
ineective change management.
• Consolidation of existing systems into SaaS
with availability service level agreements
continues.
• 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.
O Financial
reporting
andfraud
DRE,
VLS,
M&A
The Group may be subjected to the risk of
inaccurate or delayed financial reporting,
or fraud. This risk may be exacerbated
through new ways of working following the
reorganisation of some aspects and functions
as the transition completes and matures.
• Group Code of Conduct and relevant training.
• Established financial control framework.
• Defined programme of work to document
controls and owners through the transition.
• Monthly monitoring of control performance.
• Change management and sta retention
arrangements to enable a smooth transition.
• Established Group and regional shared service
governance including stage gate sign o;
Internal Audit assurance reviews; Group and
regional controls oversight.
P Foreign
exchange
DRE,
VLS,
M&A
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. The Group’s
results and asset values are translated back to
GBP from local market currencies for reporting
consolidation, which can result in year-on-year
fluctuations in asset values.
• Treasury policy and hedging strategies.
• Central treasury function and regional treasury
centres (in relevant regions).
• Monthly monitoring of foreign exchange
impacts and hedging positions.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 65
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
RISK MANAGEMENT
CONTINUED
Ref # Risk title Description and impact Trend Key mitigating actions
Q Legal,
regulatory
compliance
DRE,
VLS,
M&A
The Group operates in diverse markets across
the globe. This risk relates to our ability to meet
the requirements of local laws and regulations
and contracts in those diverse markets.
Anti-bribery and corruption, data protection,
competition, anti-money laundering and the
distribution and sale of finance and insurance
remain key legal and regulatory obligations
forthe Group.
Other areas of risk pertain to the terms of
our distribution and retail contracts and
contractual risks assumed during acquisitions.
• Group-wide Code of Conduct, with
associated training.
• Market-level policies and procedures,
supported by Group-wide policies for higher
risk areas.
• Nominated legal representative and/or
retained counsel in major markets to monitor
existing and emerging legislation.
• Online training for specific regulations.
Emerging risks
The identification of emerging risks is achieved through several ways which include: the strategic replanning process;
external publication analysis (including peer reviews and OEM risk disclosures); review of risk studies and publications;
theregular cadence of risk committees and Board meetings and risk-related discussions and analysis (which all form part
ofthe revised risk management framework implemented last year). Through regular consideration and monitoring of these
emerging risks early on, we can eectively respond to potential threats by preparing contingency plans, implementing
mitigants or adjusting our operations and Group strategy as required.
Climate change-related Macro-economic Technological Other
Reporting regulation
compliance
Liquidity of smaller OEMs – post
Covid-19
Growth of connected/autonomous
vehicles and risk of cyber attacks
Developing and growing new
OEM relationships
Vehicle-related legislation European energy crisis Growth of shared mobility New pandemic
Rare-earth materials and
battery supply shortages
Potential increases in labour costs
may impact profitability
Changing technology vendor landscape Regional conflicts disrupt
semiconductor supply
Government car restrictions Retrenchment of consumer credit Growth and volatility of Bitcoin and market
uptake
Ukraine conflict expands into
Inchcape markets
Extreme weather patterns International tax reforms Hybrid and remote working
impacting company culture
Changing consumer trends relating
to vehicle purchase
OTHER PRINCIPAL RISKS CONTINUED
66 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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 4), strategy (pages 5 to 7)
and the principal risks and mitigating factors (pages 61 to
66). The Group’s continued viability is dependent upon the
continuation of its relationships with OEMs with many OEM
contracts having terms of less than three years; three years
is a key timeline for new car changeover in mature retail
markets with good personal finance penetration; and the
number of Units in Operation (UIO) up to three years old is a
key driver of our aersales business. However, as illustrated
in the diagram below, a variety of other time horizons is
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 it strikes a balance between the dierent
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 (AOP) for the next financial year (2023),
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 2025. 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, including TCFD risk considerations, unlikely
but realistic worse-case scenarios are created and their
impact projected onto the three-year projections. These
risks are (i) loss of a material Distribution contract, (ii) a
major cyber incident, (ii) digital disruption to our markets
and pricing, (iv) supply chain disruption and (v) further
Covid-19 restrictions. 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, supply chain
risks and Covid-19 restrictions); a material degradation
inmargins (digital disruption) 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 23 to the financial statements on pages 185 to 186.
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, including
any supply chain shortages, and the Group’s response
tothese;
• the prevailing economic climate and global economy,
and changing customer behaviours;
• the inclusion of known acquisitions; 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 122.
1 Year
Currency hedging
Viability
(3 years)
5 years
10 years
Succession planning
Target Setting for Long Term Incentive plans
New vehicle replacement in
mature markets
Impairment
modelling
Strategic planning
Financing considerations
Average remaining lease life
Investment planning
Pension obligations
+
Detailed financial
forecasts
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 67
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Locations
Distribution: Chile
Retail: UK
VOLKSWAGEN
GROUP
Inchcape has had a 30+ year
partnership with VW Group, representing
the core VW brands as well as the
performance marque Porsche in the UK.
In 2022 we secured our first distribution
market with Porsche in Chile.
68 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
GOVERNANCE
70 Chairman’s Statement
76 Governance at a glance
78 Board of Directors
85 Nomination Committee Report
88 Audit Committee Report
94 CSR Committee Report
96 Directors’ Report on Remuneration
117 Directors ’ Report
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 69
DEAR SHAREHOLDERS AND
STAKEHOLDERS
I am pleased to present the Corporate
Governance Report for the year ended
31December 2022. 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.
Board changes
As noted last year, Till Vestring le the Board in May 2022
aer 10 years’ service. John Langston, who has been with
the Board since July 2013, will retire from the Board ahead
of the Annual General Meeting in May 2023. I would like
tothank Till and John for their strong contribution and the
sound advice provided to the Board over the years and
Iwish John a long and happy retirement. As announced
inJanuary 2023, Sarah Kuijlaars will assume the role of
AuditCommittee Chair in May 2023.
I am delighted that Byron Grote and Juan Pablo Del Río
joined the Board as Non-Executive Directors at the start
of2023. Byron has extensive corporate experience across
arange of leading international businesses. Having
previously been Chief Financial Ocer 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 N.V.
Juan Pablo has been appointed to the Board as part of
theDerco acquisition. Juan Pablo is currently a member
ofthe board of directors of Cruzados S.A.D.P. (a company
with shares listed on the Santiago Stock Exchange) and
ischairman of Sodimac S.A., a position he has held
since1986.
Gijsbert de Zoeten resigned from the Board in November
2022. Adrian Lewis, Group Financial Controller, has been
appointed as Acting Chief Financial Ocer and the
recruitment process has commenced.
Derco acquisition
The Board spent a significant amount of time discussing the
Derco acquisition during the year. Details of the acquisition
are given throughout this report and the Board believes the
acquisition presents a unique opportunity to accelerate
our global distribution business and deliver substantial
shareholder value.
Climate change
The impact of climate change continues to dominate
theagenda for both businesses and governments around
the world. We are continuing on our journey to reduce our
impact and during the year the focus was on performing
quantified scenario analysis for the most material climate
related risks and opportunities.
Progress has been made on the Scope 1 and 2 emissions
targets set last year, with a reduction of over 19,000 tonnes
through a variety of initiatives. At the beginning of this year,
the Board reviewed the Group’s Scope 3 footprint which has
enabled us to understand the principal source of our Scope
3 emissions. To reduce these emissions the Board agreed to
the actions detailed below but concluded that it was not
appropriate to set reduction targets for Scope 3 emissions
at the current time. This position will be reviewed annually.
• Reduce those emissions within our direct control as
quickly as possible;
• Seize opportunities to partner with OEMs that are able
tooer customers lower emissions vehicles; and
• Support our customers, colleagues and OEM partners
inmaking the transition to a low carbon future.
Employee engagement
I am delighted that the Board was able to visit our business
in Chile in October 2022. The event gave my fellow Directors
the opportunity to see our operations first hand and to
meet our overseas colleagues face to face. An excellent
employee engagement session was held by Alex Jensen,
Chair of the CSR Committee, further details of which can
be found on page 95.
Jane Kingston, Chair of the Remuneration Committee, also
held two employee forums during the year, one covering
reward principles and one to consult on our proposed
remuneration policy. Further details are given on page 97.
Governance landscape
The Board, and the Audit Committee, will keep updated
ofthe developments expected under the proposed audit
and governance reforms and will report as appropriate
innext years’ Annual Report and Accounts.
Looking forward
I would like to take this opportunity to thank all our
Inchcape colleagues for their hard work during the year
which has contributed to our great performance against
the backdrop of continued uncertainty. I thank you for
yoursupport in 2022 and look forward to the coming year.
NIGEL STEIN
CHAIRMAN
NIGEL STEIN
CHAIR
CHAIRMAN’S STATEMENT
CORPORATE GOVERNANCE REPORT
70 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Compliance with the UK Corporate GovernanceCode
The 2022 Annual Report and Accounts is prepared with reference to the 2018 UK Corporate Governance Code (Code)
which is published by the Financial Reporting Council (FRC) and available at www.frc.org.uk. The Corporate Governance
Report on pages 70 to 122, 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.
We have complied with all Code provisions throughout the year ended 31 December 2022 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. Since the last Remuneration Policy was introduced in 2020, the UK pension oering has been simplified in
astandardised defined contribution plan (from a mix of defined benefit and defined contribution arrangements). As such
the contribution rate is now estimated to be approx. 7% to 7.5%. Our Group Chief Executive (CEO) received a pension
allowance of 10% of salary which was set at his appointment in 2020 and was in line with the blended rate applicable
toother UK employees at the time.
Under the proposed Remuneration Policy, to be put to shareholders at the AGM in May, newly appointed Executive
Directors will receive a pension contribution rate of 7% of salary, in line with UK employees. For the incumbent CEO,
hispension allowance will be frozen at the current value, as an interim step, and reduce to 7% aer 31 December 2023.
Board leadership and Company purpose
Board’s role
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.
The Directors use their judgement and objectivity, supported by a structured governance
framework, which enables the Board to operate eectively, 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would be recorded in the Board minutes. No such concerns arose during 2022.
FURTHER READING
Strategy
– pages 5 to 7
Director biographies
– pages 78 to 79
Matters reserved
forthe Board
– www.inchcape.com
Purpose, values and culture
The Group’s purpose is underpinned by the Accelerate strategy and Responsible Business
Plan. In order to operate eectively, 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 targets
throughout the year;
• Employee engagement survey; and
• Delegated authorities.
FURTHER READING
Strategy
– pages 5 to 7
Employee
engagement
– page 21
Responsible Business
– pages 37 to 42
THE ONE INCHCAPE VALUES & BEHAVIOURS
We deliver great experiences through fresh thinking and working better together
We
deliver
Great
experiences
Fresh
thinking
Better
together
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 71
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Board leadership and Company purpose continued
Resources and controls
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.
FURTHER READING
Principal risks
– pages 62 to 66
Internal controls
– pages 91 to 92
Engagement
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.
FURTHER READING
Stakeholder
engagement
– pages 20 to 22
Workforce policies
The Code of Conduct, among other policies, sets out the behaviours expected of our
employees and ensures policies remain aligned to culture and support long-term success.
Other policies include health and safety, anti-bribery and corruption, inclusion and 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 employees having
the facilities to raise matters of concern, via the whistleblowing hotline. Any whistleblowing
claims are integrated with case management soware to support ecient and eective
investigation, remediation and reporting.
FURTHER READING
Responsible Business
– pages 37 to 42
Non-financial
information
statement
– pages56to 57
Division of responsibilities
The role of the Chairman
The Chairman 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. He oversees that all Directors receive
accurate, timely, and clear information. The Chairman is considered independent.
FURTHER READING
Board evaluation
– page83
Composition of the Board
As at 31 December 2022, the Board comprised of the Chairman, one Executive Director,
andsix Non-Executive Directors. 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. The Senior Independent Director leads the annual
appraisal of the Chairman’s performance with the other Non-Executive Directors.
FURTHER READING
Director biographies
– pages 78 to 79
Committee terms
of reference
– www.inchcape.com
72 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Role of the Non-Executive Directors
The Non-Executive Directors 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 Non-Executive Directors are required to allocate sucient time to the Company to
discharge their responsibilities. Board dates are agreed two years in advance and time
commitment expected is reviewed annually to ensure Directors are able to plan their time
accordingly. Directors must obtain prior approval from the Board before taking on another
directorship to avoid over-boarding.
FURTHER READING
Board skills
– page 77
Director biographies
– pages 78 to 79
Company Secretary
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 eectively.
FURTHER READING
Matters reserved
for the Board
– www.inchcape.com
Composition, succession and evaluation
Appointments to the Board and succession planning
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
o the Board, and the strategic objectives of the Group in the longer term.
The Nomination Committee engages external search consultancies when searching for Board
position candidates.
FURTHER READING
Board skills
– page 77
Nomination
Committee
– pages 85 to 87
Skills, experience and knowledge of the Board
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 Committee considers breadth of perspective on the Board can only be achieved by
appointing Directors from a diverse range of backgrounds and takes into account gender,
ethnicity and professional experience when considering suitable candidates.
FURTHER READING
Board skills
– page 77
Nomination
Committee
– pages 85 to 87
Board evaluation
The Directors provide feedback on how the Board operates, its culture and eectiveness
during the evaluation process. During 2022, the Board carried out an internal evaluation. 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 Notice
of Annual General Meeting.
FURTHER READING
Board evaluation
– page83
Notice of Meeting
– www.inchcape.com
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 73
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Audit, risk and internal control
Internal and external audit
The Chair of the Audit Committee reports to the Board on the independence and
eectiveness 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. John Langston, Chair of the Audit Committee,
also meets with the Chief Financial Ocer and Head of Internal Audit in one-to-one meetings
which enable him to fully understand the key issues ahead of Committee meetings.
FURTHER READING
Audit Committee
Report – pages 88
to93
Non-Audit Services
– pages 93
Fair, balanced and understandable
The Board reviews the Annual Report and Accounts, the interim financial statements, and
thetrading updates prior to publication to ensure that they provide a fair, balanced and
understandable assessment of the Group’s position 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.
FURTHER READING
Audit Committee
Report – pages 88
to93
Risk management and internal controls
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 eectiveness 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 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.
FURTHER READING
Risk Management
– pages 59 to 67
Audit Committee
Report – pages 88
to93
74 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Remuneration
Policies and practices
The Chair of the Remuneration Committee reports to the Board on its oversight of the
remuneration policy, practices and processes throughout the year. The Remuneration
Committee ensures the remuneration policy is designed to support the successful delivery
ofthe Accelerate strategy, and is aligned to the Group’s purpose and values.
The 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 PSP 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.
FURTHER READING
Directors’ Report on
Remuneration
– pages 96 to 116
Procedure for developing remuneration
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.
FURTHER READING
Directors’ Report on
Remuneration
– pages 96 to 116
Exercising independent judgement
The Remuneration Committee is made up of 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 longer term impacts.
No Executive Director is involved in deciding their own remuneration or in determining
remuneration outcomes.
FURTHER READING
Directors’ Report on
Remuneration
pages 96 to 116
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 75
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Group Risk
Committee
Investment
Committee
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
Delegated authorities:
• 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
COMMITTEE
REPORT
on pages 88 to 93
COMMITTEE
REPORT
on pages 96 to 116
COMMITTEE
REPORT
on pages 85 to 87
COMMITTEE
REPORT
on pages 94 to 95
Delegated
authorities:
Risk oversight
InControl
Standards
Delegated
authorities:
Oversight of
Group capital
expenditure
GOVERNANCE
AT A GLANCE
BOARD ATTENDANCE
The table below shows the Board and Committee meetings held during the year.
Board
Audit
Committee
CSR
Committee
Nomination
Committee
Remuneration
Committee
Scheduled Ad hoc Scheduled Ad hoc Scheduled Scheduled Ad hoc Scheduled Ad hoc
Nayantara Bali* 7/7 7/8 3/3 2/2 2/2
Jerry Buhlmann 7/7 8/8 4/4 0/2 3/3 2/2 2/2 3/3 2/2
Gijsbert de Zoeten* 6/6 7/7
Alex Jensen 7/7 8/8 3/3 2/2 2/2 1/1 2/2
Jane Kingston 7/7 8/8 2/2 2/2 2/2 3/3 2/2
Sarah Kuijlaars* 6/6 8/8 4/4 2/2 2/2 1/1
John Langston 7/7 8/8 4/4 2/2 2/2 2/2
Nigel Stein 7/7 8/8 3/3 2/2 2/2 3/3 2/2
Duncan Tait 7/7 8/8 3/3
Till Vestring* 3/3 4/4 1/2 1/1 1/1 2/2
* Sarah Kuijlaars joined the Board on 21 January 2022, Till Vestring le the Board on 19 May 2022, and Gijsbert de Zoeten resigned from the Board in
November2022. Nayantara Bali was unable to join one additional Board meeting due to a prior engagement.
76 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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. These skills will be enhanced in 2023 following the appointments
of Byron Grote and Juan Pablo Del Río to the Board.
KEY ACTIVITIES AND DECISIONS OF THE BOARD
Ad hoc meetings were held in March, April, and June to discuss the Derco acquisition and the disposal of the Group’s
operations in Russia, and in November to consider the resignation of the Chief Financial Ocer.
What we bring
• Automotive
• Digital
• Emerging markets
• Finance
• Remuneration
• Retail
• Technology
Skills being enhanced
in 2023
• Automotive
• Diversity
• Emerging markets
• Multinational business
• Regulatory
• Sustainability
Future succession priorities
• Automotive
• Finance
• Environmental, social, and
corporate governance
• Technology
July
February
September
Strategy
Day
October
May
November
January
• 2022 Annual
Operating Plan
• M&A strategy
• Regional update:
Americas & Africa
• Board evaluation
feedback
• Investor Relations
• Final dividend and
Annual Report
• Insurance review
• Tax strategy
• Risk Policy
• NED remuneration
• Derco acquisition
• Global economic
review
• Strategic progress
• Distribution Excellence
• EV Response Plan
• OEM route to market
• M&A pipeline
• Annual General
Meeting
• 3 + 9 forecast
• Treasury Policy
review
• Pension update
• Investor Relations
• Propose interim
dividend
• Half year risk review
• Regional update: UK
• Conflict of interest
• Derco acquisition
announcement
• Environment, Health,
and Safety
• Regional update:
APAC
• Digital strategy
• Overseas Board
visitTo Chile
• M&A pipeline
• Regional update:
Americas
• Investor Relations
• 3 + 9 forecast, 2023 Operating Plan
• Regional update: Europe & Africa
• Strategy review
• Succession planning
• Full year risk review
• Derco acquisition documents
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 77
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Jerry Buhlmann
SENIOR INDEPENDENT DIRECTOR
Appointed – March 2017
Skills and experience – Jerry has over 40
years’ experience in the media and
advertising industries. He was formerly CEO
of Dentsu Aegis Network and Aegis Group
plc. Jerry is currently Chairman of Dept,
Croud Limited, 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.
Nigel Stein
CHAIRMAN
Appointed – October 2015
Skills and experience – Nigel was Chief
Executive of GKN plc until his retirement in
December 2017. He has a wide range of
international, general management, and
finance experience gained in various roles
at GKN plc and also has experience in the
automotive and manufacturing sectors.
Nigel is also a Non-Executive Director
ofJames Hardie Industries plc and is
achartered accountant.
Committee membership – Chair of the
Nomination Committee and member of
the CSR and Remuneration Committees.
Duncan Tait
GROUP CHIEF EXECUTIVE
Appointed – July 2020
Skills and experience – Duncan was on the
Board of Fujitsu Ltd, a global technology
services company with responsibility for
EMEIA & Americas, a business with $10bn
turnover and 35,000 people. He has
significant international experience,
holding senior roles at Unisys, Hewlett
Packard, and Compaq in a technology
focused career of over 30 years. Duncan
isalso a Non-Executive Director at Agilisys.
Committee membership – CSR Committee.
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.
CORPORATE GOVERNANCE REPORT
CONTINUED
BOARD OF
DIRECTORS
Alex Jensen
NONEXECUTIVE DIRECTOR
Appointed – January 2020
Skills and experience – Alex was regional
CEO Mobility and Convenience at bp plc.
She led the region’s fleet, retail and
convenience food business across 14
countries. Alex joined bp plc in 1991 and
held roles based in the UK and China.
Shegraduated from Oxford University
witha degree in Chinese, holds a Masters
from Stanford and is on the Board of the
charity Mind.
Committee membership – Chair of
theCSRCommittee and member of
theNomination and Remuneration
Committees.
Jane Kingston
NONEXECUTIVE DIRECTOR
Appointed – July 2018
Skills and experience – Jane served as
Group Human Resources Director for
Compass Group plc from 2006 until her
retirement in 2016. Jane also held senior
positions at Enodis plc, Blue Circle plc (now
Lafarge SA) and Coats Viyella plc. Jane
has significant remuneration experience
and is Remuneration Committee Chair
ofSpirax-Sarco Engineering plc.
Committee membership – Chair of
Remuneration Committee and member
ofthe Nomination Committee.
Nayantara Bali
NONEXECUTIVE DIRECTOR
Appointed – May 2021
Skills and experience – Nayantara is
director and co-owner of ANV Consulting
Pte. She previously held several senior
management positions in Procter &
Gamble. Nayantara holds a Bachelor of
Arts in Economics and a Post Graduate
Diploma in Business Management from
theIndian Institute of Management
(Ahmedabad). Nayantara is also an
independent director of Torrent Pharma,
and a Non-Executive Director of Starhub.
Committee membership – CSR and
Nomination Committees.
78 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
John Langston
NONEXECUTIVE DIRECTOR
Appointed – August 2013
Skills and experience – John has corporate
finance, accounting and international
experience acquired in senior financial
roles in the engineering sector. John is
achartered accountant and is an
experienced Non-Executive Director who
has a strong governance background and
was the Audit Committee Chair of Rexam
plc until its sale to Ball Group in 2016.
Committee membership – Chair of Audit
Committee and member of the
Nomination Committee.
BOARD MEMBERS
The Directors recognise the benefits of
diversity and the value that this brings
to the organisation in terms of skills,
knowledge, and experience.
GENDER
Female
Male
4
6
GENDER
GENDER
Female
Male
4
6
LENGTH OF SERVICE
0 to 3 years
3 to 6 years
6 to 9 years
9+ years
6
2
1
1
LENGTH OF SERVICE
LENGTH OF SERVICE
0 to 3 years
3 to 6 years
6 to 9 years
9+ years
4
2
1
1
NATIONALITY
British
Chilean
Singaporean
8
1
1
NATIONALITY
NATIONALITY
British
Chilean
Singaporean
8
1
1
ETHNICITY
Asian
White
1
9
ETHNICITY
ETHNICITY
Asian
White
1
9
Sarah Kuijlaars
NONEXECUTIVE DIRECTOR
Appointed – January 2022
Skills and experience – Sarah is currently
Chief Financial Ocer of De Beers plc.
Sarah was previously CFO of Arcadis NV
and prior to this, she was 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 – Audit and
Nomination Committees.
Juan Pablo Del Río Goudie
NONEXECUTIVE DIRECTOR
Appointed – January 2023
Skills and experience – Juan Pablo served
on the board of the Derco group until its
acquisition by Inchcape in 2022. He 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, a position he has held
since 1986. He was a member of the board
of directors ofFalabella S.A., a company
with shares listed on the Santiago Stock
Exchange, between 2015 and 2020 and
has held a number of senior leadership
roles across a range of companies within
the automotive, retail and real estate
sectors in Latin America.
Committee membership – Nomination
Committee.
Byron Grote
NONEXECUTIVE DIRECTOR
Appointed – January 2023
Skills and experience – Byron has extensive
experience across a range of leading
international businesses at Board level.
Having previously been Chief Financial
Ocer 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 N.V.
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.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 79
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Duncan Tait
GROUP CHIEF EXECUTIVE
Appointed – July 2020
Duncan joined the Group in 2020, bringing
with him a wealth of digital and data
experience which is 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, from first search and
comparison through to aersales care, and
DAP, a range of data analytics designed
todeliver competitive advantage.
Since his appointment, the Group has also
entered into strategic partnerships with
Great Wall Motors, BYD and Geely,
manufacturers which will bring exciting
EVranges, aligning with the Group’s
Responsible Business agenda.
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 2021 George was also
appointed Chief Transformation Ocer
with responsibility for overseeing the
implementation of the Accelerate strategy
and business transformation. George le
the Asia region in 2021 and was appointed
as CEO UK. His extensive distribution and
retail experience is beneficial in leading this
crucial business. He also continues to lead
both the global Used Car strategy and the
OEM relationship strategy. George is the
executive lead for Inchcape Enabled,
which focuses on building a disability
confident business by removing barriers
and increasing accessibility.
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 Rudleman, Indumotora,
ITC, and Simpsons Motors, which significantly
reshaped the business over the last seven
years. Mike is also instrumental in
reinforcing and strengthening legal and
regulatory compliance across the Group.
Mike was appointed Chief Sustainability
Ocer 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 OEM partners.
Helen Cunningham
CHIEF HUMAN RESOURCES OFFICER
Appointed – September 2020
Helen joined the Group in 2016 and has
held various positions as HR Director in the
UK, Emerging Markets, and Americas &
Africa. Helen was appointed as Chief HR
Ocer in 2020 bringing a combination
ofdeep functional expertise and strong
operational leadership to this key central
role. She has developed significant M&A
capability within the business over several
step-change acquisitions, working directly
with our OEM partners, eectively
onboarding new teams and leaders,
andintegrating businesses. She is also the
Executive leader for the People workstream
of the Driving What Matters plan with
responsibility for inclusion and diversity,
safety and wellbeing, and talent.
Ruslan Kinebas
CEO APAC
Appointed – October 2015
Ruslan Kinebas joined Inchcape in 2015 as
CEO Emerging Markets before becoming
CEO Americas & Africa in 2019. During his
tenure, Ruslan oversaw the acquisition of
multiple distribution businesses including
Mercedes-Benz distribution in Uruguay,
Ecuador and Colombia. Ruslan also
oversaw expansion in the African region
with the addition of Jaguar Land Rover
distribution in Kenya. In 2021, Ruslan was
appointed CEO APAC, where he also has
responsibilty for the Digital Parts Strategy
under Distribution Excellence. Ruslan is
Executive sponsor for the Women into
Leadership programme, which develops
female colleagues throughout the
organisation and into leadership roles.
Mark Dearnley
CHIEF DIGITAL OFFICER
Appointed – October 2020
Mark Dearnley joined Inchcape as Chief
Digital Ocer in 2020 with responsibility
fordigital transformation which is critical
tothesuccess of the Accelerate strategy.
Tosupport the digital strategy, Mark
hasbeen instrumental in establishing
InchcapeDigital, which focuses to deliver
the Distribution Excellence and VLS
programmes supported by the newly
formed Digital Delivery Centres based in
Colombia and the Philippines. Inchcape
Digital rolled out DXP and DAP globally,
supports GBS and SAP, and is introducing
new solutions including Digital Parts
Platform and bravoauto.
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, management
services, utilities and finance.
CORPORATE GOVERNANCE REPORT
CONTINUED
GROUP
EXECUTIVE
TEAM
80 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Glafkos Persianis
CEO EUROPE & AFRICA
Appointed – April 2020
Glafkos joined Inchcape in 2020 asCEO
Europe with responsibility for Continental
and Northern Europe and Russia (prior
toInchcape exiting the region in 2022).
Glafkos was instrumental in the
appointment of Inchcape as BYD’s sales
and aersales partner in Belgium and
Luxembourg. BYD is the world’s leading
manufacturer of New Energy Vehicles
(NEVs) and power batteries and will
provide an online and oine network for
both sales and aersales services. Also
in2022, Glafkos assumed responsibility
foroperations in Africa, a strategically
important region for the Group oering
long-term sustainable growth in the
markets of Ethiopia, Djibouti and Kenya.
Romeo Lacerda
CEO AMERICAS
Appointed – September 2021
Romeo joined Inchcape in 2021 as CEO
Americas & Africa. Since joining the Group,
Romeo has overseen theacquisition of
Ditec, ITC, and Simpson Motors which have
strengthened the Group’s geographic
reach and broadens its OEM relationships,
with the addition ofChrysler to its list of
brand partners. In addition, the Group has
acquired Derco, the largest automotive
distributor in Latin America, increasing
scale in the Americas with a footprint on
over 30 OEM brands in 12markets creating
a significant region inonegeography.
Adrian Lewis
ACTING CHIEF FINANCIAL OFFICER
Appointed – November 2022
Adrian joined Inchcape in 2015, initially
asCFO for the Emerging Markets region
wherehe played a leading role, with the
Indumotora acquisition and integration,
atthe time Inchcape’s most significant
acquisition formany years. Adrian
subsequently moved toSingapore as CFO
for Asia Pacific, Inchcape’s most profitable
region. In October 2020, Adrian returned
tothe UKto lead the finance function
asGroup Financial Controller. Prior to
Inchcape Adrian held various senior
finance roles atTesco.
Adrian is a CIMA qualified chartered
accountant.
GENDER BALANCE IN
SENIOR MANAGEMENT
Improving Inclusion and Diversity
(I&D) at senior leadership level is
a key focus of the GET and the
Board, with a target to increase
the proportion of women leaders
to at least 30% by the end of
2025. To help achieve this target,
the Women into Leadership
Programme was developed in
2021 to provide professional and
personal growth for Inchcape’s
female high potential talent and
to strengthen our succession
pipelines. Please see page 39
forfurther details.
In 2022, an external recruitment
supplier reset took place for
Executive hires, to identify the
best-fit providers and solutions
who could contribute actively
toour I&D agenda and our
continued drive for a broader
diverse mix of colleagues. During
this process, providers were asked
to provide:
• Their company policy and
approach on commitment
toI&D.
• Details of the I&D training that
their teams have gone through.
• What diversity information is
collected from candidates.
• Demonstrable evidence of the
method and process of sourcing
a diverse range of candidates.
In 2023, we will follow-up with an
annual review to measure the
impact of our decisions and the
supplier’s contribution to our
I&Dgoals.
The appointment of Liz Brown as
Chief Strategy Ocer in February
2023 is a key senior appointment
for the Group and demonstrates
the ongoing commitment to
improving diversity. Liz joined
theGET on appointment.
Liz Brown
CHIEF STRATEGY OFFICER
Appointed – February 2023
Liz has over twenty years’ experience
inconsulting, investment, telecoms and
FMCG and joined Inchcape 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.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 81
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
PRINCIPAL DECISIONS IN 2022
Derco acquisition
In addition to the scheduled Board meetings, eight ad hoc Board meetings were held during the year to consider the
acquisition of Derco. The meetings were structured to allow the Board members to consider all aspects of the transaction
covering:
• Introduction and overview of the Derco business and its shareholders.
• Valuation, transaction terms and structure: investor perspectives, business plan review, synergy analysis, valuation, impact
on leverage.
• Geopolitical analysis, industry and OEM brand portfolio.
• Class 1 transaction: general duties of Directors, obligations for Directors of a listed company, UK Corporate Governance
Code 2018 and risk mitigation.
• Transaction process, financial projections, synergy assessment.
• Valuation/financing and impact on the Group and key transaction terms.
• Board approval of the transaction.
The meetings were attended by the Group’s external advisors who provided guidance and independent advice throughout
the process. Aer announcing the intention to acquire Derco, members of the Board held meetings with shareholders
accounting for 60% of our share register. Investor reaction to the deal has been very supportive, with Derco viewed as
agood strategic fit. Further details of the Derco business can be found in the Strategic Report on pages 24 and 25.
Russia disposal
As announced in 2022, the Group decided to exit its Russian operations due to the conflict with Ukraine. Working in
conjunction with our OEM partners the Board agreed to transition our Russian business in full compliance with international
and local regulations and with the aim of safeguarding the continuing employment of our colleagues. The Company’s
operations in Russia was a Retail-only operation, and during 2021 it disposed of its St. Petersburg operations.
The GET engaged with both Toyota and BMW, the largest OEM partners in the region, before agreeing to the transaction.
Following the start of the conflict, all OEMs eventually ceased production and shipments to Russia, and the lack of new
vehicles entering the country would lead to a gradual unwinding of the business as supply diminishes. The management
team in Russia remained extremely professional during the transaction which also aected our other Northern European
regions such as Poland, the Baltics and Romania. The Group Chief Executive held townhall meetings with our European
markets on the decision to make the sale.
The Board discussed the situation in detail noting the need to have regard for employees in both the Russian business
andneighbouring countries and how the decisions made will aect them, the expectation of investors and OEM brands
partners, and the risk of setting a precedent as historically the Group operates in markets with potential political uncertainty.
The Board also discussed the sale of the St. Petersburg business in 2021, noting the strategic intent had been to sell the entire
Russian operations if an appropriate buyer had been identified. The Board considered the financial impact noting early
2022 trading was strong; however, with no new inventory the business would likely be sustainable for three to six months
without any cash injection or working capital facilities. There were inevitably losses with selling the Russian operation due
toFX and impairment. The exit scenarios were considered in detail with an exit from Russia ultimately resulting in transferring
ownership or ceasing to trade. The Board agreed that whatever the outcome the fair treatment of employees remains
paramount, taking into account the investor and market view, and guidance from the UK Government.
Pension
In May 2022, the Board approved a package of measures to be made to a UK subsidiary pension scheme. Historically
thisscheme was made up of four sections which were operated on an individual sectionalised basis, was a mixture of
finalsalary and cash balance schemes and was aligned with a mixture of RPI and CPI. It was agreed to:
• Merge three of the individual sections of the scheme.
• Align the inflation index used in the scheme to be CPI across all inflation-linked benefits.
• Enhance the security provided to scheme members by giving access to the covenant of the subsidiary in the form
ofaguarantee.
This package of measures was to the benefit of both the scheme members and the Company as it improves the funding
position of the scheme overall, reduces investment risk, enhances scheme members’ security, and reduces the time period
within which the scheme will become fully funded on a solvency basis.
In order to formalise the Company’s approach to pensions decision-making, in line with the requirements of the Pension
Schemes Act 2021, terms of reference were incorporated for the Group’s Pension Committee along with a Governance
manual to document day-to-day operational responsibilities. A DC Governance Committee was also set up to ensure
theDC Schemes are appropriately governed, including a focus on matters such as delivering best member outcomes
andESGmatters.
CORPORATE GOVERNANCE REPORT
CONTINUED
82 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Culture and engagement
The Board monitors and assesses the indicators of culture throughout the Group by:
• Regular meetings with management as part of the Board’s annual agenda and one-to-ones with key senior leaders;
• Reviewing the outcomes of the employee engagement survey;
• Reviewing People and Capability metrics including voluntary turnover, leadership development programmes, employee
assistance programmes, Code of Conduct compliance, and health and safety statistics;
• Whistleblowing reports and follow up actions; and
• Independent assurance via external advisors.
A broad range of workforce engagement mechanisms are in place with a feedback loop to ensure the Board is able
toassess the culture of the organisation. The Chair of the CSR Committee is the designated Non-Executive Director with
responsibility for workforce engagement and further details of the engagement session carried out in 2022 is given on
page95.
The Board has delegated oversight of the Company’s whistleblowing arrangements to the Audit Committee but retains
overall responsibility and receives updates on cases as appropriate.
The Company has a framework of values and behaviours that underpin the Group’s purpose to ensure that the strategy
and culture of the Company are aligned. The new One Inchcape Values and Behaviours Framework was rolled out across
the Group in January 2022. The framework supports the successful delivery of the Accelerate strategy by improving the way
we do things to drive business performance.
BOARD EVALUATION
2021 Board Evaluation outcomes
Board All Board members received training on TCFD, response to electric vehicle developments, market
supply shortages and global inflation aecting pricing. This has helped enhance the Board’s
knowledge on recent industry and regulatory movements.
CSR Committee The Board enhanced its understanding of ESG issues during the year through external updates on
where ESG is heading, why it matters and key trends. From 2023, all Committee Chairs will attend one
CSR Committee annually to improve ESG synergy and transparency when making decisions at Board
level.
Nomination
Committee
The Nomination Committee reviewed its succession criteria to enable more focused assessment of
candidates. Sarah Kuijlaars and Byron Grote, come from financial positions at public companies to
help steer the Audit Committee when John Langston retires in May 2023. The Board acquired further
representation of global operations and regional markets through the appointment of Juan Pablo Del
Río, whose first-hand knowledge of the automotive industry and South American markets strengthens
the Board’s understanding of operations.
2022 Board Evaluation
An internal evaluation of the Board was conducted by
theChairman in 2022 which involved all Board members
completing an anonymous questionnaire covering areas
such as strategy, knowledge, succession, risk, culture,
andeectiveness. The results of the questionnaire were
considered by the Board to agree actions for 2023.
The evaluation showed that Board members feel their
experiences and contributions are valued, and any
challenges made are constructive. Communication
between Board members and senior management is
openwith strong working relationships resulting in an
optimal collaborative environment enabling timely
resolution of issues.
When considering the knowledge, skills and experience
ofthe Board, the appointments of Byron Grote and Juan
Pablo Del Río in 2023 will add new perspectives which will
enhance the Board’s expertise and knowledge of finance
and Latin American markets however with the departure
ofJohn Langston in May 2023, automotive experience
willbe a key area for future appointments. In addition,
given the Company’s focus on digital and technology,
theprimary expertise in this area is seen at GET level rather
thanon theBoard itself, which will also be a consideration
for Board appointees.
The Board believes there is the right level of focus on
succession and diversity, with good progress made on
identifying and developing future talent overall however
continued focus on improving representation of minority
groups on the Board and at executive level will be key
in2023.
The assessment shows that the Board continues to operate
eectively; however, there is still a strive for continuous
improvement.
Areas of improvement for 2023 include:
• Improved Board training on industry and regulatory
environments;
• Increased ESG knowledge and considerations when
making decisions;
• More representation of automotive experience; and
• Continue focus on succession planning for Board,
GETand senior leaders to meet diversity requirements.
The 2023 Board review process will be externally facilitated,
with details of the evaluation being reported in next year’s
annual report and accounts.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 83
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
WOMEN INTO
LEADERSHIP
“ I advised women to build the
confidence to move out of their
comfort zone and to do so
deliberately in order to create
broader opportunities.”
“ If our people feel they are valued
for who they are, they are more
likely to feel at home and will stay
with us and make great
contributions.”
“ To transform the future of mobility
we need to have the best of all
genders working with us.”
Q. How will greater gender diversity
benefit Inchcape?
AJ. You get better outcomes with
more diverse teams, because
you recruited from 100% of the
talent pool to find the best
candidate and because team
decisions are tested with a wider
range of views. Leaders that are
willing to slow down to challenge
biases, are willing to listen to
dierent views that might
challenge their own, willing to
work hard to align the team. By
focusing on diversity, Inchcape
will emerge stronger and better.
Q. What role does the Women into
Leadership programme have
within Inchcape?
AJ. Women can be under-
represented at certain levels and
job types. This may be because
of biases in ourselves, in others,
inprocesses and structures, and
in society. I think programmes like
this create awareness of these
hidden biases and empower
women to take charge of their
own careers, build confidence
and networks. It is about ensuring
that individuals can flourish so
that Inchcape can flourish.
Q. Why did you want to speak at
the programme?
AJ. I wanted to play a part in sharing
my own experiences and insights
about how to navigate some of
the trickier career moments.
Q. Why did you want to speak at
the Women into Leadership
programme?
JK. It was a great opportunity to
connect with colleagues across
all parts of the Group. Having
learnt and seen a lot of change
over a long career, I wanted to
share my thoughts and insights
with colleagues as they develop
their own careers. I am always
pleased to talk about the
transition into NED roles and
explain how the Board works
andthe role it fulfils.
Q. What role does Women into
Leadership play in Inchcape?
JK. I am delighted to observe the
way Inclusion and Diversity is
really valued as of core
importance to how we operate
and what we do. I think we are
going the extra mile to make this
a core living value and that all
comes down to leadership.
Q. What advice did you give the
participants of the programme?
JK. Be brave and build yourself a
broad platform to have choices
in the long-term. When you need
it, ask for support – that is a
strength.
Q. Why did you want to speak
atthe Women into Leadership
programme?
NB. It is always useful to hear from
people who have shared
challenges and opportunities.
Listening to other women talk
about how they navigated these
can inspire new possibilities.
Q. What role does Women into
Leadership play in Inchcape?
NB. All leadership programmes are
important within businesses – and
when there are emerging
diversity groups looking to forge
their own path which may be
dierent from previously
established leadership models,
itis important to give women
thetools and encouragement
todevelop their own path.
Q. What advice did you give the
participants of the programme?
NB. To be ambitious and not be shy
to express that ambition. Also to
never stop learning.
Q. How will greater gender diversity
benefit Inchcape?
NB. If we are to access the best
talent available then to transform
the future of mobility we need
tohave the best of all genders
working with us.
Alex Jensen
NONEXECUTIVE DIRECTOR
Jane Kingston
NONEXECUTIVE DIRECTOR
Nayantara Bali
NONEXECUTIVE DIRECTOR
84 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
NOMINATION COMMITTEE REPORT
DEAR SHAREHOLDER
I am pleased to present the report of
the Nomination Committee for the year
ended 31December 2022. The aim of this
report is to provide an overview of how the
Committee has discharged its responsibilities
during the year.
Board composition and succession planning continues
tobe the main focus of the Committee with two new
Directors recruited during 2022. Sarah Kuijlaars joined in
January 2022 and Byron Grote who joined in January 2023.
In addition, Juan Pablo Del Río joined the Board following
the successful acquisition of Derco. John Langston will retire
from the Board in May 2023 and Iwould like to thank John
for his contribution and wise counsel during his time with
Inchcape and to welcome ournew Board members.
In recruiting Sarah and Byron, the Committee reviewed the
mix of skills and experience of the current Board members
taking into account any gaps which would arise following
the departure of John. As such, the Committee agreed
that strong financial and UK listed company experience
was essential.
Sarah is currently Chief Financial Ocer and Executive
Director of De Beers plc and was previously a Non-
Executive Director at Aggreko plc. Sarah was also
previously CFO of Arcadis NV, 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 will assume the role of Audit Committee
Chair following John Langston’s retirement.
Byron was previously Chief Financial Ocer at BP plc
between 2002 to 2011 and is currently Audit Committee
Chair at Tesco PLC and Akzo Nobel N.V. and a Non-
Executive Director at InterContinental Hotels Group plc.
Hehas also served as Non-Executive Director of Standard
Chartered plc, Anglo American plc and Unilever plc.
Sarahand Byron’s extensive financial and international
experience have strengthened the existing Board’s skill set
as well as providing experienced voices as part of the
AuditCommittee.
Juan Pablo Del Río was appointed to the Board in January
2023 following the successful acquisition of Derco. Prior to
this Juan Pablo served on the Board of Derco and brings
awealth of knowledge and experience of the business
andLatin American markets to the Board.
Following Sarah, Byron and Juan Pablo’s appointments,
theNomination Committee believes the current
composition is a good fit for the Board to optimally perform
for the benefit of its members and ensures that the Board
and its Committees remain well equipped with the skills
and capabilities needed to drive the future success at
Inchcape. The Nomination Committee continues to
consider suitable candidates should any vacancies arise
unexpectedly or where it could be deemed that another
Non-Executive Director would enhance the performance
and experience of the Board.
Gijsbert de Zoeten resigned from the Board in November
2022. The recruitment process for a new ChiefFinancial
Ocer has commenced.
NIGEL STEIN
CHAIR
Membership
Number of
meetings held/
attendance
Ad hoc
meetings held/
attendance
Nigel Stein (Chair) 2/2 2/2
Nayantara Bali 2/2 2/2
Jerry Buhlmann 2/2 2/2
Alex Jensen 2/2 2/2
Jane Kingston 2/2 2/2
Sarah Kuijlaars* 2/2 1/1
John Langston 2/2 2/2
Till Vestring** 1/1 1/1
* Sarah Kuijlaars joined the Committee on 21 January 2022.
** Till Vestring le the Board on 19 May 2022.
The Committee’s terms of reference can be found at
www.inchcape.com/responsibility/governance.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 85
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Looking ahead, the Committee is focused on the long-term
succession of the Board and the need to integrate more
diversity at executive level.
The recruitment consultants used for Board appointments
are aware that gender and ethnic diversity are key factors
when recruiting Board members and the Group is putting
inplace various initiatives and programmes to reach the
leadership goals.
This includes programmes such as the Women into
Leadership programme and the graduate programme.
Further information can be found in the Responsible
Business Report on pages 37 to 42.
NIGEL STEIN
CHAIR OF THE NOMINATION COMMITTEE
PRINCIPAL DECISIONS IN 2022
Skills, experience,
anddiversity
The Committee reviews the Board Skills Matrix throughout the year. The matrix sets out the
skills and experience of each Board member which the Committee reviews in the context
ofthe Accelerate strategic aims in the medium and longer term.
The Committee has discussed gender diversity at the Board and Group Executive Team
level, noting diversity is an increasingly important area of focus for investors and a clear plan
is needed to address this area. Several initiatives are in place for the Company to work
towards improving gender diversity in leadership roles, including the Women into Leadership
programme which has a target of no less than 90% progression to a new role (at the same
level or promoted) with 24 months of programme completion, and to increase the
proportion of women in senior positions from 18% to 30% by the end of 2025.
Succession planning The Committee reviews length of service and recommends to the Board the appointment
ofNon-Executive Directors (NEDs) for a further three-year term as and when they arise. It is
usual for Board members toserve nine years on the Board and length of service is a key
factor when looking at succession planning. However, 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 performance of the Group Executive Team is considered by the Board as a whole during
the annual organisational health check and the Non-Executive Directors discuss succession
planning for senior leadership during the year without the presence of executive
management.
Independence The Committee assesses the Non-Executive Directors’ independence on appointment and
throughout the year. Non-Executive Directors 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.
Over half of the Board, excluding the Chairman, are Non-Executive Directors who are
considered to be independent under the Code. Under Code provision 10, the criteria for
Director independence states a tenure over nine years could impair a Director’s
independence. During 2022, John Langston served his tenth year with Inchcape; however,
the Board is satisfied that despite having over nine years’ service, John continues to
demonstrate independent character, judgement and objectivity, and this continued
service has not impaired his independence. John will step down from the Board prior to
theAGM in May 2023.
Juan Pablo Del Río is not considered independent due to his close family relationship with
the Derco business and the family shareholding. Please see page 87 for further details.
Election or re-election by
shareholders at the AGM
In line with the UK Corporate Governance Code, all Board Directors will be subject to
election or re-election annually at the Company’s Annual General Meeting. The Company
has agreed, subject tocertain terms and conditions including the family owners maintaining
at least a 7% shareholding in the Company, that a Derco family Director will continue to be
nominated forreappointment until and including at the Company’s Annual General
Meeting in 2026.
Time commitment and
policy on multiple Board
appointments
Non-Executive Directors must have the time necessary to devote to the role. The Committee
reviews the expected time commitment on a regular basis and also implements a policy
onmultiple Board appointments to limit the possibility of a Director being ‘over-boarded’.
CORPORATE GOVERNANCE REPORT
CONTINUED
86 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Director independence
The Board includes an appropriate combination of
Executive Directors and Non-Executive Directors, with over
half the Board considered independent. No one individual
or small group of individuals dominates the Board’s
decision making.
Provision 10 of the Code sets outs circumstances “which
arelikely to impair, or could appear to impair” a Director’s
independence. We set out in the 2021 Annual Report
andAccounts, the Board’s view as to why it considered
TillVestring to be independent prior to his departure in
May2022.
John Langston completed nine years’ service in August
2022 and will step down from the Board prior to the AGM in
2023. John agreed to stay on the Board while we recruited
two new Non-Executive Directors, Sarah and Byron, who
both joined the Audit Committee upon appointment.
Johnhas been instrumental in their induction to the Audit
Committee and the Board felt that his continued service
allowed a smooth transition for these important roles.
Juan Pablo Del Río is not considered independent as he
has a significant shareholding in the Company, and has
close family ties with some of the Company’s senior
employees. The Company acknowledges that Juan Pablo
Del Río is not independent but the rationale behind the
Derco acquisition, as stated in pages 24 and 25, are of
tremendous benefit to the Company with the acquisition
dramatically increasing our scale in the fast growth
Americas region, bolstering our presence in several existing
markets, and will secure Bolivia as a new Inchcape
distribution market. Derco also brings a fantastic set of
highly complementary OEM relationships, including
deepening our decades-long relationship with Suzuki, and
broadens our brand footprint in the markets, with Mazda,
Changan, JAC, Renault, Great Wall, and Haval. As a result
of this Juan Pablo will have no voting authority when it
comes to making decisions about the Derco subsidiaries.
Appointment process
An external recruitment consultant is appointed to assist
with the recruitment of Directors. The Chairman will develop
an appropriate job specification, and set out any other
desirable attributes, and agree a longlist of potential
candidates with the consultant. From this, 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.
Odgers Berndtson were appointed to assist with the
recruitment of Sarah Kuijlaars and Lygon Group were
appointed to assist with the recruitment of Byron Grote.
Odgers Berndtson and Lygon Group are signatories of the
Voluntary Code of Conduct for Executive Search Firms and
neither firm has any other connection to the Company or
any individual Director.
Diversity policy statement
We value diversity in the broadest sense including,
butnot limited to, age, gender, ethnicity, sexual
orientation, disability, 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.
The Board’s policy on diversity is a verbally agreed
principles-based policy and applies to the Board and
its committees. 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 importance of Board diversity is clearly understood
by our recruitment consultants and is built into the
process of succession planning and recruiting
Executive and Non-Executive Directors. The Board
remains dedicated to achieving gender parity and
greater representation of diverse ethnic backgrounds
and considers all aspects of diversity to be relevant
when considering appointments to the Board or its
committees.
The Board’s philosophy on diversity is also reflected
throughout Inchcape and the business has continued
to strive for increased diversity of all identities,
backgrounds and experiences across its workforce
and is building a more inclusive environment where
everyone believes they can belong, be themselves
and succeed.
As at 31 December 2022, at least 40% of the Board are
female and at least one member of the Board is from
aminority ethnic background. However, the target to
have a female Chair, CEO, SID or CFO by the end of
2025 as recommended under LR.9.8.6 (ii) has not yet
been met. This requirement is and will be factored into
any Board recruitment process.
The data on Board and Executive diversity is given
inthe Directors’ Report on page 121.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 87
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
AUDIT COMMITTEE REPORT
DEAR SHAREHOLDER
I am pleased to present the Audit Committee
Report for the year ended 31 December
2022. 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.
Mergers and acquisitions (M&A)
M&A continues to be a cornerstone of the Group’s
Accelerate strategy with the Group acquiring the ITC
Group and Ditec in the Americas and Morrico in Guam, in
addition to several distribution wins. Such expansion has led
the Committee to review procedures over the initial IFRS 3
provisional accounting for new acquisitions, challenging
management where appropriate and seeking the opinion
of the auditor on the accounting judgements.
The acquisition of Derco is a transformative and unique
opportunity to accelerate our global distribution business
and deliver shareholder value. As such the Committee
considered the financial information contained in the
circular to shareholders in detail, including the historical
financial information, principal accounting judgements
and synergies prior to the General Meeting. Commencing
with Derco, integration of new businesses to the InControl
Standards Framework (ICS) will be a key focus for 2023 and
the Committee will monitor the implementation of the
control environment.
Exit of Russian operations
Exiting the Group’s Russian operations was also a key
consideration for the Committee during the year. The
Committee considered this a significant issue and further
information on the Committee’s judgements in relation
tothis matter is given on page 90.
Global Business Solutions
The implementation of the Global Business Services
organisation (GBS), which began in 2021, continued during
the year. Following a GBS Programme Assurance review
carried out by the Internal Audit team, the Committee
spent time assessing the action plans developed to
address control gaps and continue to monitor progress
against plans to ensure that appropriate resources and
governance processes are in place to manage the risks.
Climate change
As part of our TCFD work and general planning work,
climate change considerations have been factored
intofinancial forecasting and the associated impairment
assessment. Climate change will manifest in many
waysand we have considered the key risks, such as:
misalignment (EV demand vs EV availability in the relevant
markets), carbon tax, physical risks and margin pressures.
Further details are given in the TCFD Report on pages 44
to54 and in the Financial Statements on page 143.
Financial Reporting Council (FRC) letter
A letter was received from the FRC, following a review of
the 2021 Annual Report and Accounts, where a specific
question was raised in relation to the accounting treatment
of share buybacks, alongside a number of additional
points noted in an appendix. The FRC review is based on
our Annual Report and Accounts and does not benefit from
detailed knowledge of our business or an understanding
ofthe underlying transactions entered into. However, it is
conducted by sta of the FRC who have an understanding
of the relevant legal and accounting framework.
The FRC supports continuous improvement in the quality
ofcorporate reporting and recognises that those with more
detailed knowledge of our business, including the Audit
Committee and auditors, may have recommendations
forfuture improvement, consideration of which we would
encourage.
JOHN LANGSTON
CHAIR
Membership
Number of
meetings held/
attendance
Ad hoc
meetings held/
attendance
John Langston (Chair) 4/4 2/2
Jerry Buhlmann* 4/4 0/2
Jane Kingston* 2/2
Sarah Kuijlaars 4/4 2/2
* Jane Kingston le the Committee in May 2022. Jerry Buhlmann was unable
to join the additional meetings due to prior engagements.
The Committee’s terms of reference can be found at
www.inchcape.com/responsibility/governance.
88 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
The Company responded to explain the accounting
treatment used and to confirm the points raised would be
addressed in the 2022 Annual Report and Accounts. The
FRC noted the repurchase agreement and closed the
enquiry aer we explained that, as of 31 December 2021,
we had a contractual right to terminate the arrangement
without giving notice and without any penalty.
Cyber security
The current cyber threat landscape increased significantly
during the year, influenced by political turmoil and the
conflict in Ukraine. The Committee spent time reviewing the
Group’s response plan to tighten global cyber security
controls in order to protect the business from these risks.
I am also pleased to report that following the approval
ofathree-year cyber security plan last year to improve
theGroup’s National Institute of Standards and Technology
(NIST) cyber security benchmarking assessment, Inchcape
reached the proposed 2.2 NIST target, globally and in
allregions.
JOHN LANGSTON
CHAIR OF THE AUDIT COMMITTEE
PRINCIPAL DECISIONS IN 2022
Financial reporting The Committee’s work focused on checking the appropriate accounting treatment for, and
disclosures of, the issues considered. The Committee carried out its work using information
supplied by management, the external auditor and other advisors as appropriate. The
Committee members bring their experience and knowledge to the deliberations which
results in the collective view being expressed to the Board.
The Committee approved the move away from the columnar format of presentation to
asimple two column approach that presents the income statement on an IFRS basis with
areconciliation between IFRS and non-GAAP measures of performance shown below
theincome statement.
Fair, balanced, and
understandable
The Committee considered key audit issues, accounting treatment and judgements in
relation to the financial statements. Management was challenged on the assumptions
used and the judgements that have been applied, with assurances given from both
external and internal sources. The Committee assessed whether this Annual Report
andAccounts was fair, balanced and understandable.
Risk management The Committee reviewed the principal and emerging risks, assessing the appropriateness
ofthe risk management framework and carrying out a robust assessment of principal risks.
Emerging risks and the process used to identify them were monitored. The Committee
reviewed the risk profile, any changes to the risks, major whistleblowing reports, and any
mitigating plans implemented by management. Further details of the Group’s approach
torisk management and its Principal Risks is given on pages 59 to 67.
Internal controls The Committee undertook a deep dive into the Group’s reconciliation processes to ensure
expected controls had been designed and were operating eectively. Where required,
management worked with the GBS team to provide further analysis on transactions to
ensure processes were strengthened across the Group and management aligned to the
control standards.
The new platform to host the InControl Standards was rolled out enabling the ICS entity
hierarchies and structures to be refreshed to fully align with local structures, business types,
systems and locations following completion of recent M&A activities. Markets refreshed
their ICS compliance self-assessment and the Committee monitored compliance rates.
TheCommittee reviewed the progress of the roll out throughout the year and self-assessed
compliance scores.
The Committee received regular reports from the Group Internal Controls (GIC) on the
process for mapping the Groups IT General Controls (ITGCs) to our new global digital
platforms which commenced in the second half of the year. GIC is working with the Cyber
Security Team to ensure the new ITGC accountability structure rollout also aligns with NIST
standards and requirements adopted by the Group.
Whistleblowing The Committee received updates on cases reported during the year, reviewing themes
and trends of reported cases. 127 whistleblowing reports were received from the Speak Up!
hotline, in addition to 175 separate cases being reported to regional HR teams, which shows
that there is awareness of the process. Most cases are originating from Latin America, and
are employee related.
Material cases were reviewed in detail with the Committee monitoring follow-up action
plans and resolution.
Internal audit The Committee reviewed, approved and monitored:
• the 2022 Internal Audit plan;
• progress against the plan;
• the status of open audit issues; and
• mitigation plans for any internal control failings.
Auditor eectiveness The Committee reviewed the report from the external auditors, assessing the auditor’s
approach to, and findings in relation to, the audit to assess independence and objectivity.
Materiality, scope and fees for the annual audit plan were agreed. Updates on upcoming
corporate reform and other regulatory topics were regularly received throughout the year.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 89
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Significant issues considered by the Committee during the year
Impairment – see notes 11 to 13 on pages 169 to 176
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 supplied by external sources, and with appropriate
challenge from the external auditor. The Committee focused on the following aspects of the impairment:
• 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 aersales;
• The Committee assessed the reliability of data provided by external advisors and independent specialists used in key
assumptions; and
• The Committee also discussed the appropriateness of the disclosures to be made in the Annual Report to satisfy itself
that they provided users of the financial statements with sucient information to understand the judgements made
bythe Group.
Aer considering all available information and reviewing the findings, the Audit Committee concluded that
management’s impairment reviews of non-financial assets were appropriate and that a net reversal impairment of £7.2m
relating to property, plant and equipment, and right-of-use assets, in Australia and the UK should be recognised for the
financial year ending 31 December 2022.
Disposal of Russian operations – see note 29 on pages 202 to 203
As a consequence of the Ukraine conflict, the Group agreed to dispose of its operations in Russia to the local
management team. The sale price of c£63m has been deferred over five years and certain rights have been put in place
designed to protect the Group’s ability to receive the deferred consideration. Four key judgements were required in
relation to the accounting and reporting of the disposal relating to: the recognition of the transaction as a disposal;
reporting of the business disposed of as a discontinued operation; the date on which the Russian Group was
deconsolidated; and the amount recognised in relation to the disposal proceeds.
The Committee focused on the following issues:
• whether the Group had control over the operations and the date in which control had passed to the local
management team;
• whether the business was considered to be a discontinued operation; and
• the significant estimation uncertainty in relation to the valuation of the deferred consideration given the ability
toreceive funds from Russia.
To determine the amount to be recognised the Committee took into consideration:
• application of discounting to provide present value at the date of disposal;
• the ability of the local management team to meet the payments which is dependent on the future performance
oftheRussian Group; and
• the Group’s ability to receive the proceeds due to restrictions in place.
The Committee concluded that the disposal constituted a transfer of control under IFRS10 and the disposal represented
adiscontinued operation. The Committee also concluded that the fair value of the deferred consideration to be nil given
the uncertainty.
Adjusting items – see note 2 on pages 155 and 156
In response to guidance issued by the FRC, and following challenge from the external auditor, management undertook
areview of items referred to as exceptional items in the financial statements. The Group has historically presented
separately certain items of profit or loss and other comprehensive income, which it considers relevant to understanding
the Group financial performance, as additional lines to the minimum lines required to be set out in the income statement.
These have been referred to as ‘exceptional items’ and measures of profit before exceptional items are considered to be
key measures of reported performance and disclosed as Alternative Performance Measures (APMs) in the Annual Report
and Accounts.
The Committee reviewed various options in relation to future reporting of items which are excluded from the Group’s APM,
debating the advantages and disadvantages of each consideration. The Committee concluded that it would be
appropriate to amend the description applied to such items and that they be amended. The Committee believes a
description such as ‘adjusting items’ had the ability to provide a broader measure of alternative performance over time,
where items may be excluded across multiple periods in order to provide investors with a more meaningful measure of
the underlying performance of the Group. The Committee also approved the Group’s policy on adjusting items to reflect
the changes in terminology.
90 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Structure of the Committee
John Langston is a qualified chartered accountant and
Sarah Kuijlaars is a Fellow of the Chartered Institute of
Management Accountants. Both are considered to have
recent and relevant financial experience. In addition,
theCommittee as a whole has competence in the sector
inwhich the Company operates.
Jane Kingston stepped down from the Committee in
May2022 following the successful appointment of Sarah
Kuijlaars to the Board.
Only members of the Committee are entitled to attend
Committee meetings. Other regular attendees at the
invitation of the Committee include the Chairman, Group
Chief Executive, Chief Financial Ocer, Group Financial
Controller, Group Head of Internal Audit, Group General
Counsel, Group Tax Director, and representatives from
theexternal auditor.
Financial reporting
The Committee reviews with both management and
theexternal auditor the appropriateness of 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 providing assurance to
support the long-term viability statement.
Fair, balanced and understandable
The Audit Committee also carries out its own assessment
ofthe financial statements, and the Annual Report 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 7, a statement of the Directors’ responsibilities is
set out on pages 121 to 122 which includes the going
concern statement.
Risk management
The Audit Committee has delegated responsibility for
ensuring that:
• there is an appropriate mechanism in place to identify
the risks the Group faces;
• management teams have the correct focus on those
risks and the action plans in place to mitigate or respond
to those risks;
• a compliance programme is in place in all markets
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
eectively; 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.
Reports are provided at each meeting, detailing the risk
environment to allow the Committee to monitor and assess
the eectiveness of the Group’s risk management
approach.
Internal control
The Internal Control framework encompasses controls
relating to financial reporting processes, preparation
ofconsolidated Group accounts, operational and
compliance controls and risk management processes.
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
Group risks, in response to emerging internal audit issues,
and following any investigation activity.
The standards form part of the broader control environment
consisting of:
• culture and behaviours;
• Code of Conduct;
• Group, regional and local policies and procedures,
including legal and regulatory compliance;
• delegation of authorities;
• risk management process; and
• roles and responsibilities.
The ICS has been designed to mitigate the most significant
risks across the Group providing robust governance and
asound controls framework to ensure:
• reliability of financial reporting;
• eectiveness and eciency of operations; and
• compliance with applicable laws and regulations.
They are also there to help protect us from:
• fraud and misappropriation of cash and assets; and
• material error in the financial statements.
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
which in turn enables management to monitor the
eectiveness of controls in the business and to implement
actions plans where improvement is required. 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 easy to follow.
Monitoring the eectiveness of the risk management
and internal control systems
The Audit Committee considers reports from the Group
Head of Internal Audit at each meeting covering Internal
Audit, Internal Controls and Risk Management functions.
The reports provide:
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 91
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
• update on the control framework;
• management’s self assessment of controls and risk
management;
• self-assessment compliance scores;
• identified control gaps and status of management
actions;
• assurance from management on the eectiveness
oftherisk management and internal control system
andcompliance with policies; and
• whistleblowing and other incidents
A report on open ICS actions is provided in addition to
thestatus of actions arising from the External Auditors
Management Letter which are monitored to closure by
theregional controls teams.
There was a significant increase in self assessed controls
compliance across all regions over the last year with ICS
being implemented for new businesses and functions –
Indonesia, Inchcape Digital and the Digital Delivery
Centres. Over 1,200 control gaps were closed by the
business with the majority of reported outstanding ICS gaps
in newer markets within Europe and the Americas. Overall
ICS compliance scores remain consistent at 88%, with good
progress being made across most regions.
This information enables the Committee to assess the
eectiveness of internal controls on an ongoing basis. The
external auditor also provides an annual report on control
improvement recommendations and other observations
which allows the Committee to assess eectiveness
annually.
The reports are available to all Board members to ensure
they are aware of the risk management and control
environment. Board members are also able to attend
Committee meetings should they wish and the Audit
Committee Chair also provides an update on the control
and risk environment to the full Board following each
Committee meeting.
Any significant control failings or weaknesses are reported
to the Board, 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 2022 and to the date of this
report. The Board is satisfied that the control environment
was materially eective during the course of the year.
Whistleblowing
The Group Head of Internal Audit reports to the Committee
at each meeting on fraud and whistleblowing claims that
have been received since the last Audit Committee
meeting, and significant currently open issues. The new
andopen cases which are reported to the Committee
arethose of sucient significance to warrant attention;
however, a list of all reports is also provided to the
Committee along with a breakdown by market, report
typeand source.
The Audit Committee Chair reports to the Board on any
significant issues or resolutions made by the Committee
following each meeting. All Directors have full access to the
whistleblowing reports and other Audit Committee papers.
Management responded positively creating additional
governance and oversight however a proactive review of
all operational and financial areas by the regional internal
controls team, recommunication of the code of conduct
and additional deep dives by the compliance ocer into
themes arising is required. The Group’s whistleblowing
process aligns with the EU Whistleblowing Directive.
Internal Audit
The aim of the Internal Audit function is to provide
independent and objective risk-based assurance for the
Group by bringing a systematic and disciplined approach
to evaluate the eectiveness of risk management,
governance and control. An annual programme of audit
activity is approved by the Audit Committee; this is flexed
ifrequired throughout the year in accordance with the
riskprofile of the organisation and any subsequent
amendments are discussed in detail and agreed by
theCommittee.
The function carries out audits across a selection of Group
businesses, functions and programmes which include the
management of risks and controls over financial,
operational, IT and other compliance areas, such as GDPR
and anti-bribery and corruption.
The Internal Audit function, led by the Group Head of
Internal Audit, consists of appropriately qualified and
experienced employees with an in-depth understanding
ofthe business culture, systems, and processes. The Group
Head of Internal Audit reports to the Audit Committee and
has direct access to, and has regular meetings with, the
Audit Committee Chair, prepares formal reports for Audit
Committee meetings on the activities and key findings of
the function and reports on progress against mitigation
plans. The purpose, authority and responsibility of Internal
Audit are defined in the Internal Audit Charter, which the
Committee reviews annually.
The Audit Committee and a selection of senior employees
carried out an eectiveness review on the internal audit
function in 2022 through an anonymous questionnaire. The
feedback had been broadly positive with no overarching
issues to report. Areas of focus for improvement were
relayed to the Head of Internal Audit and an appropriate
action plan has been agreed to implement these.
External audit
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. Anna Marks was the lead audit partner
for this year’s audit and will now rotate aer serving five
years. Dave Grin will become the lead audit partner
for2023.
The Company confirms that it complied with The Statutory
Audit Services for Large Companies Market Investigation
(Mandatory Use of Competitive Tender Processes and Audit
Committee Responsibilities) Order 2014 for the financial
year under review.
Auditor eectiveness, independence and objectivity
Ensuring that the external audit process provides a high
quality audit is a key activity of the Audit Committee as
ahigh quality audit provides stakeholders with assurance
that the financial statements give a true and fair view.
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 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 when it feels
more information is needed. The Committee also looks at
CORPORATE GOVERNANCE REPORT
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92 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
how management responds to requests from the auditor
and carefully reviews the auditor’s findings and
recommendations.
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.
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 eectiveness
of the audit.
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 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.
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.
Deloitte continually monitors its independence and ensures
that appropriate safeguards are in place including but not
limited to the rotation of senior partners and sta and the
involvement of other partners and sta to carry out reviews
of the work performed and to otherwise advise if necessary.
Aer considering all of the above elements, the conclusion
of the Committee is that the auditor carried out its audit
eectively and that the auditor is independent and
objective.
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 have an understanding of the
Group’s business can be a benefit and the Committee will
consider non-audit services supplied on an ongoing basis.
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 UK 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. The following non-audit fees incurred with
Deloitte were:
2022
£’000
2021
£’000
Regulatory services 5,421 –
Permitted non-audit services 819 123
The Group incurred fees of £5.4m relating to the audit
ofthe historical financial information for the acquisition
ofDerco, with the associated public opinion that was
included in the circular to shareholders.
There were total costs of £0.8m in respect of permitted
non-audit services, which included £0.6m in connection
with Derco, namely the provision of a private comfort
package to the Board and sponsors in relation to profit
forecasts. This increased the ratio of permitted non-audit
services to audit fees to 0.23:1 for the Group and 0.59:1 for
the UK for 31 December 2022. Full details are shown in Note
3d of the notes to the financial statements on page 157.
TheGroup remained within the Audit Committee approved
ratio of audit to non-audit fees throughout 2022.
Audit fees paid to the auditor
Fees paid for services provided by Deloitte (three-year
average) were:
2022
£’000
2021
£’000
Audit fees 3,524 3,365
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 93
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Membership
Number of
meetings held/
attendance
Alex Jensen (Chair) 3/3
Nayantara Bali 3/3
Jerry Buhlmann 3/3
Nigel Stein 3/3
Duncan Tait 3/3
Till Vestring* 1/2
* Till Vestring le the Board on 19 May 2022. Till missed one CSR Committee
meeting due to illness.
The Committee’s terms of reference can be found at
www.inchcape.com/responsibility/governance.
ALEX JENSEN
CHAIR
DEAR SHAREHOLDER
I am pleased to present the report of the CSR
Committee for the year ended 31 December
2022. 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 37 to 42 and
theTCFD Report on pages 44 to 54.
Driving What Matters plan (Plan)
2022 has been another busy year for the Group as it
continues to embed the Plan which underpins the
Accelerate strategy. The Plan tackles the ESG risks and
opportunities facing the Group and was developed
alongside the Accelerate strategy. It underpins the Group’s
purpose under four pillars: People, Places, Planet, and
Practices. The focus of each strategic pillar creates a
stronger Company, supporting sustainable growth and
performance in the future. Further information on each
pillar isgiven in the Responsible Business Report.
ESG landscape
The Committee took steps to increase its knowledge of the
ESG landscape during the year with a detailed session from
external advisors, which was also attended by the Audit
Committee and Remuneration Committee chairs. This
included a review of the ESG landscape and where it is
heading, the impact of ESG on key stakeholders, legal
andregulatory trends, an overview of a transition strategy,
and ESG and executive remuneration.
Planet pillar and the Group’s approach to climate
change
As with most businesses, climate continues to be an
important area of focus and the Group set ambitious
Scope 1 and 2 targets in 2021 of 46% reduction in emissions
by 2030. The Committee reviewed the initiatives being
carried out globally noting that any measures put in place
will take time to show in GHG emissions figures; however,
measuring inputs will give confidence that the right actions
are being taken by the Group.
In addition, a Group-wide project to ascertain total Scope
3 emissions was completed during the year in conjunction
with the Carbon Trust. The project team consisted of
employees from across the Group who provided data
onthe Group’s upstream and downstream activities to
ascertain the size of the Group’s overall emissions
landscape. The Board as a whole reviewed the findings
and agreed the following actions:
• reduce those emissions within our direct control as
quickly as possible;
• seize opportunities to partner with OEMs that are able
tooer our customers lower emissions vehicles; and
• support our customers, colleagues and OEM partners
inmaking the transition to a low carbon future.
People pillar and the Group’s approach to Inclusion
&Diversity (I&D)
I am also pleased to report that good progress has been
made on I&D with programmes and initiatives on Inclusive
Leadership, Women into Leadership and the Employee
Assistance Programme. Further details are given in the
Responsible Business Report.
Health, safety, and the environment (HSE) is also of
paramount importance to the Group and the Committee
reviews management’s progress against agreed HSE
priorities during the year. The Committee also reviewed
theprocesses in place in the event of a serious incident
CSR COMMITTEE REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
94 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
toensure that HSE culture and practices are cascaded
through the organisation as appropriate and that the
HSEculture and practices are well understood.
Workforce engagement
We have built upon our first employee forum on culture
from 2021 and I was delighted to be able to hold an
in-person employee session in Santiago during the Board’s
overseas board visit.
The level of openness and engagement from the
attendees and the continued passion and motivation
demonstrated is a testament to the healthy corporate
culture within the organisation. Feedback from the forum
was provided to the Board so they could hear the views
ofthe Group’s employees.
ALEX JENSEN
CHAIR OF THE CSR COMMITTEE
PRINCIPAL ACTIVITIES IN 2022
Driving What Matters plan The Committee reviewed the global framework and priorities, and assessed performance
against targets for each of the key pillars: People, Planet, Places and Practices. In addition,
the Committee also considered the global communications plan for 2022 designed to foster
employee engagement on a wide range of key issues via global and regional townhalls,
leadership meetings, colleague events and regular mailings. The Committee reviewed the
initiatives, and achievement of key performance indicators, under each of the Responsible
Business pillars:
People • Percentage of employees participating in the Inclusive Leadership Programme.
• Action plans in place to increase colleague experience scores of a positive work
environment, wellbeing and ways of working.
• Percentage of diverse shortlists submitted for senior recruitment.
• Percentage of progression into new roles (sideways or promotion) with 24 months of
completion of Women into Leadership programme.
• Percentage of interns benefitting from Early Careers programme.
Places • Number of partnerships with local road safety agencies to reduce employee accidents.
• Sponsorship of one programme to advance mobility for those living with disability per
market.
• Engagement with local non-governmental organisations to provide transport for
underprivileged families and communities.
Practices • Percentage of employees completing Code of Conduct training.
• Publication of external policy statements for anti-bribery and corruption, anti-money
laundering and counter terrorist financing, anti-trust, and data privacy.
Planet • Monitor reduction in Scope 1 and Scope 2 emissions.
• Review and assess Scope 3 footprint.
• Assess the climate change risks and opportunities and approve the TCFD disclosures.
Further information on the initiatives rolled out during the year, and the achievement
oftargets, can be found in the Responsible Business Report on pages 37 to 42.
Workforce engagement An employee engagement session was attended by colleagues from a wide range of roles
within the business, including several employees who joined the Group via the Ditec
acquisition. The session began with an overview of the regional pulse survey results which
showed that career development and support received high scores, whereas pay and skills
scored lower.
A general discussion followed and several key themes emerged including evolution
ofstrategy, data & digital and diversity. There was a detailed discussion on the Derco
integration plan which will impact many employees in the region during 2023.
Feedback to the Board included:
• improvement in the cascading of important messages from the top down;
• greater clarity of the Group’s digital strategy; and
• keep up the momentum of the I&D initiatives.
In addition, the Remuneration Committee Chair, Jane Kingston held two remuneration-
focused forums for employees including a consultation on the proposed remuneration
policy. Further details can be found on page 97.
Health, Safety, and
Environment (HSE)
The Committee reviews progress against six HSE priorities at each meeting covering:
• HSE risk profile reviews;
• EV safety procedures;
• cultural HSE survey;
• HSE due diligence programme;
• HSE contract management system; and
• mandatory HSE training.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 95
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
DIRECTORS’ REPORT ON
REMUNERATION
DEAR SHAREHOLDER
On behalf of the Board, I am pleased
to present the Directors’ Report on
Remuneration (DRR) for the year ended
31December 2022. 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.
I would like to welcome Alex Jensen who joined the
Committee in May and to thank Till Vestring for his valued
contribution over the years. Alex is also Chair of the CSR
Committee and her knowledge and guidance will be
ofparticular importance as we begin to consider the
introduction of stretching ESG targets into our reward
structure.
PROPOSED REMUNERATION POLICY POLICY
The Committee undertook a review of the current
remuneration policy, and its implementation, to ensure
thatit continues to support the business, the Accelerate
strategy, and meets the expectations of shareholders and
other stakeholders. During the review, the Committee
alsoconsidered recent developments in market practice,
the applicability of alternative long-term incentive
arrangements, and the range of performance measures
available to Inchcape.
Our current policy has operated broadly unchanged
since2011. The policy has received strong support from
shareholders over this period, reinforced the evolution
ofour Ignite and Accelerate strategies and has delivered
reward outcomes aligned with the performance of the
business and the returns received by shareholders. We
believe that the current policy continues to meet these
objectives; as such we are proposing only minor changes
to the policy and its implementation at this time.
The main components of the policy are base salary, pension
and benefits, annual bonus, Performance Share Plan (PSP),
Co-Investment Plan (CIP), and Save As You Earn (SAYE), and
in-post and post-exit shareholding requirements.
Shareholder consultation
During the course of the remuneration policy review we
consulted with 20 of our largest shareholders, representing
over two-thirds of our issued share capital, as well as proxy
advisors. We met with or received feedback from 13
investors representing c.48% of our issued share capital
aswell as the proxy advisors. We also consulted with
employees to explain the remuneration policy and input
their views into this process. Please see page 99 for
furtherinformation.
In general, shareholders gave us positive feedback that
ourremuneration policy is fit for purpose and pay is well
aligned with performance. Reviewing the overall
remuneration structure, including the continued use of
bothPSP and CIP; the Committee continues to believe
itsupports the Accelerate strategy, encouraging senior
leaders to buy the Group’s shares, demonstrating their
long-term confidence (nearly two thirds of variable pay
opportunity is based on long-term performance). The
aggregate long-term opportunity (CIP and PSP) of 280% is
within market range for comparable-sized companies and
is supported by the setting of stretching targets which have
demonstrated a good track record of aligning pay with
performance.
We were also able to take feedback on our evolving
approach to ESG metrics in our incentive framework,
together with an emerging nuance to pensions alignment
both of which are detailed in this report.
I would like to thank all our shareholders who responded
fortheir constructive advice and suggestions, and support
for the Group and its management.
CORPORATE GOVERNANCE REPORT
CONTINUED
Membership
Number of
meetings held/
attendance
Ad hoc
meetings held/
attendance
Jane Kingston (Chair) 3/3 2/2
Jerry Buhlmann 3/3 2/2
Alex Jensen* 1/1 2/2
Nigel Stein 3/3 2/2
Till Vestring* 2/2 n/a
*Alex Jensen joined the Committee in May 2022, following
Till Vestring’s retirement from the Board.
The Group Chief Executive Ocer, Chief Financial Ocer,
Chief HR Ocer, Group Reward and Pensions Director, and
the remuneration advisors, Ellason LLP, also attend the
Remuneration Committee meetings as required.
JANE KINGSTON
CHAIR
96 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Alignment of pension rates
Since the policy was last approved in 2020, the UK pension
oering has been simplified and is now a standardised
defined contribution plan (from a mix of defined benefit
and defined contribution arrangements). As such, the
contribution rate for UK employees is now estimated to
beapprox. 7% – 7.5% of salary. Our Group Chief Executive
(CEO) receives a cash allowance in lieu of pension of
10%of salary. This was set on appointment in 2020 and
wasin line with the blended rate applicable to other UK
employees at the time.
As part of the policy review we explained the position
above to our shareholders and asked for their feedback.
Those shareholders we spoke to appreciated our situation,
and our desire not to reduce the CEO’s contribution rate
before the UK average has been determined. However,
they indicated that they would like a plan to achieve
alignment over time. Consequently, the Committee agreed
that under the new remuneration policy, new Executive
Directors will be oered a maximum pension contribution
rate of 7% of salary. Our incumbent CEO, Duncan Tait
volunteered to freeze his allowance at the current £ value
as an interim step, and bring the pension contribution rate
down to 7% of salary aer 31 December 2023.
Reflecting our ESG priorities in our incentive framework
Our current remuneration policy provides flexibility (within
certain bounds) around the choice of performance
measures to be used for our incentive arrangements. In
flight PSP/CIP awards are currently based 40% on ROCE;
40% on cumulative EPS and 20% on cash conversion.
A core part of our Accelerate strategy is our Responsible
Business framework; “Driving What Matters”, which focuses
on four key pillars of Planet, People, Places and Practices.
Under the Planet pillar we set science-based targets to
reduce Scope 1 and 2 emissions last year, and this year
wehave been embedding these targets within the
business. Accountability for delivering on this is currently
reflected in the strategic objective element of the annual
bonus. See page 110.
As part of its review of ESG metrics, the Committee
considered whether carbon reduction targets should be
introduced into the PSP and CIP in 2023, given the Group’s
focus on reducing its Scope 1 and 2 emissions, and we
spoke with shareholders about this during the policy review.
Whilst shareholders were broadly supportive of carbon
reduction metrics, they cautioned the need to ensure
thatany targets set are stretching, robust and reliable.
Reflecting on this feedback, and mindful that our
approach and ambition on carbon reduction is likely to
evolve further, we have decided to keep the carbon
reduction target within the annual bonus for 2023. This will
enable us to set robust carbon reduction targets at a later
date based on the latest available data, to continue to
drive performance improvements in this area, which we
see as a key area of value for the business and a
dierentiator in our proposition to the OEMs. However,
aswith the current policy, we will retain flexibility to allow
usto use ESG metrics for future PSP and CIP cycles.
ENGAGEMENT WITH THE WORKFORCE
In 2022, I chaired an employee forum focusing on
Executiveand employee reward at Inchcape. The APAC
forum consisted of a range of employees from the business
and focused on the reward principles, incentive schemes
measures, reward structures for Executive Directors,
seniorleaders, management, and employees, and
whythese dier.
Alongside shareholder consultation, I also consulted on
theproposed remuneration policy with colleagues from
across the Group, as many features of the short and long
term arrangements for Executive Directors flow down the
organisation. Our colleagues gave us helpful feedback
particularly on the implementation of our long term
incentives, including the need for improved communications
on progress vs three year PSP targets, and expressed interest
in the development of a relevant carbon metric (and
whether this should be relative to the market/competitors
orabsolute), and in our shareholders views onthe
proposedpolicy.
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 rewards.
The Committee received regular updates and is pleased
tosupport management on the approach being taken to
workforce reward in a challenging economic environment.
We operate in many countries where inflation has been
high during 2022 and careful consideration has been given
to inflationary forecasts and local market conditions when
conducting the annual salary review process. In addition,
the UK recognised that the current inflationary environment
has had a greater impact on certain colleagues so a
one-o payment of £300 was paid in August 2022 to all
UKcolleagues below a certain band or with a salary
below£50,000.
BUSINESS PERFORMANCE AND REMUNERATION
OUTCOMES FOR 2022
As detailed in the Strategic Report and Operating and
Financial Review on pages 2 to 34, The Group delivered
revenue of £8.1bn, adjusted profit before tax of £373m,
EPSof 72p (basic adjusted), and adjusted ROCE of 41%.
M&A adjustments to performance targets
Following the disposal of the Russian business and the
acquisition of Derco in 2022, performance targets were
adjusted for the 2022 bonus and 2020 PSP/CIP as well as the
2021 and 2022 PSP/CIP. This is consistent with the approach
the Committee has used previously for M&A activity. The
adjusted targets can be found on pages 111 to 112.
2022 bonus
The 2022 bonus was based on a matrix of PBT and revenue,
with outcomes exceeding the stretch targets resulting in a
payout at the maximum level for the financial elements of
the bonus. Strong progress was also made on the strategic
objectives which account for 20% of the annual bonus
opportunity. As a result, Duncan Tait received a bonus
of150% of salary. Please see pages 109 and 110 for
furtherdetails.
2020 PSP/CIP
Due to the volatility in the share price in early 2020, the
Committee reviewed the number of shares to be awarded
at the time of grant to ensure it would not result in a
considerably higher number of shares being granted
compared to the previous year (which would potentially
result in windfall gains on vesting). To mitigate this, a 10%
reduction was applied to the number of shares granted
toExecutive Directors, Group Executive Team (GET), and
other senior managers toensure that the awards better
reflected the shareholder experience.
The Committee also considered whether the outcome
atvesting was appropriate in the context of underlying
business performance, including the amount attributable
to share price appreciation over the period. The
Committee concluded that share price performance has
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 97
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
£4,087
£914
Fixed remuneration
Annual bonus
Long-term incentives (CIP and PSP)
2022 actual pay out-turn
Minimum
On-target Maximum Maximum
+ 50% share
price increase
2022
actual pay
out-turn
£4,470
100% 43%
29%
27%
28%
52%
22%
62%
20%
16%
£2,113
£5,628
CEO total remuneration (£’000s)
CORPORATE GOVERNANCE REPORT
CONTINUED
PAY SCENARIOS AND OUTTURN
FOR 2022
REMUNERATION
AT A GLANCE
SUMMARY OF GROUP FINANCIAL
PERFORMANCE IN 2022
£8.1bn
Revenue
£373m
Adjusted Profit Before Tax
41%
Adjusted ROCE
72p
EPS (basic adjusted)
been supported by strong absolute and relative
financial performance and is satisfied that given
the upfront reduction to the number of shares at
the time ofgrant, the Executive Directors will not
benefit from windfall gains on vesting.
The 2020 awards will vest based on EPS, ROCE
and cash performance over the three years
ending 31 December 2022. The three-year
cumulative EPS (40% of award) was 150p, the
three year average ROCE (40% of award) was
26% and the three year average cash
conversion (20% of award) was 97%, resulting
inthe 2020 LTIPs vesting at 60% of maximum.
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 oered to the
UKworkforce. The Chairman and the non-
executive directors received a fee increase
of4% per annum.
DEPARTURE OF CHIEF FINANCIAL OFFICER
Gijsbert de Zoeten resigned from the Group
inNovember 2022. He will not receive a bonus
for 2022 and all long-term incentive awards
granted to him will lapse in accordance with
the plan rules. The Chief Financial Ocer role
iscurrently being filled on an interim basis by
amember of our Group Executive Team who
isnot a main Board Director. Further details
aregiven on page 116.
OVERALL REMUNERATION
The Committee is satisfied that the total
remuneration received by the Executive
Directors in 2022 appropriately reflects the
Company’s performance over the year and,
assuch, no discretion was exercised by the
Committee to adjust the bonus or long-term
incentive outcomes.
LOOKING FORWARD
The Committee is committed to ensuring
remuneration arrangements continue to
support the Accelerate strategy, and align
paywith performance and the interests of
stakeholders. Our priorities in 2023 will be to:
• further evolve ESG priorities in the incentive
framework;
• implement CEO pension alignment;
• agree new CFO remuneration package; and
• support as necessary the successful
integration of Derco into the Group.
We hope to have your support at the
upcomingAGM.
JANE KINGSTON
CHAIR OF THE REMUNERATION COMMITTEE
98 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Actual
£8.0b
Target
£7.1b
Threshold
£6.7b
Stretch
£7.7b
Actual
£362.7m
Target
£274m
Threshold
£246m
Stretch
£301m
2022 BONUS
Revenue*
Adjusted PBT*
REMUNERATION POLICY SNAPSHOT
SHAREHOLDER CONSULTATION
The views of our shareholders are very important to
usand feedback and guidance are key inputs in
formulating the remuneration policy.
At the start of the policy review process interviews were
held with Board members and senior executives to get
their views on the current structure. This feedback was
reported to the Committee who formulated the revised
remuneration policy. A summary of the policy changes
was sent to our largest shareholders who were invited
tomeet with the Chair of the Remuneration Committee
to give their views.
Responses were received from investors who were
generally supportive of the proposed policy and
meetings were held with several shareholders to
discusstheir views.
Outcomes from investor feedback included:
• comfort with both the PSP and CIP as it was felt that
they align with strategy and appropriately reward
Executive Directors for performance;
• acknowledgement of the pension misalignment
whichhas arisen since pensions were aligned at the
last policy review, with a preference that a clear plan
to align with the workforce be put in place; and
• caution recommended when setting carbon reduction
targets to ensure they are robust, meaningful and
appropriately stretching.
These comments were considered by the Committee
and incorporated into the final remuneration policy
asdescribed in this report.
Base salary
– attract, retain and motivate talent
Bonus
– reward achievement of strategic goals
Pension
– to help plan for the future
In-post shareholding
– align executive and shareholder
experience
PSP
– provide reward for long-term success
CIP
– reinforce long-term success and
facilitate share ownership
SAYE
– encourage share ownership
Post-exit shareholding
– reinforce long-term alignment of
executive and shareholder experience
* Targets and performance shown at constant currency rates during the year
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 99
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
PART 1 
DIRECTORS’
REMUNERATION POLICY
This section of the report sets out the remuneration policy that the Committee will put to
shareholders for approval at the Annual General Meeting to be held on 18 May 2023 and,
ifapproved, will be eective from that date.
The policy is fundamentally the same as the existing policy approved by shareholders at the 2020 AGM, with only minor
changes to the wording used to describe the policy to provide greater clarity around its implementation. This includes
therevised approach on executive pensions and clarity on the approach to benefit provision. In considering the shape
ofthe policy, the Committee considered how remuneration can best be structured to reinforce the Company’s short-
andlong-term goals, consulted major shareholders and took into account developments in market practices and investor
guidance since the last policy was adopted in 2020.
Alignment of the remuneration policy
This Committee has considered the remuneration policy in the context of provision 40 of the UK Corporate Governance
Code. See page 75 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 104.
• 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
Element
Objective and
link to strategy Operation and performance metrics Opportunity
Base Salary 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.
Salaries are normally reviewed annually and any increases typically
take eect 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.
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.
Annual Bonus To motivate and
reward for the
achievement of
the Company’s
strategic annual
objectives.
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.
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.
Performance
Share Plan (PSP)
To provide a
meaningful
reward to senior
executives linked
to the long-term
success of the
business.
PSP awards normally vest aer 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.
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.
CORPORATE GOVERNANCE REPORT
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100 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Element
Objective and
link to strategy Operation and performance metrics Opportunity
Co-investment
Plan (CIP)
To encourage
Executive share
ownership and
reinforce long-
term success.
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 aer 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.
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.
Save As You Earn
(SAYE)
To encourage
share ownership.
UK employees are able to make monthly savings, in accordance
with the terms of the 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.
Participation limits are
those set by the UK tax
authorities from time to
time.
Pension To provide
market
competitive
pension benefits
where it is cost-
eective and
tax-ecient to
do so.
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 are
entitled to an employer
contribution or allowance
aligned to the rate
applicable to employees
in the country in which they
are based. For UK based
Executive Directors, this is
currently 7% of salary.
The incumbent CEO’s
pension will be capped at
£82,748, until 31 December
2023 aer which his rate will
be 7% of salary.
Other benefits To provide
market
competitive
benefits where it
is cost-eective
and tax-ecient
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.
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)
In-post
shareholding
guidelines
To encourage
share ownership
and alignment of
executive interest
with those of
shareholders.
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
Post-exit
shareholding
guidelines
To reinforce long-
term alignment
of executive
interests with
those of
shareholders
post-termination.
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 2022 101
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
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 remuneration 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 111 to 112
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 dicult to set a relevant and robust
comparator group for assessing relative TSR performance and there would be some diculty 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 ecacy as an LTIP 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. Dierent 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 eective 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.
CORPORATE GOVERNANCE REPORT
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102 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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 UK 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
dierent populations within the Group. The Group has calculated the average equivalent pension contribution across UK
employees currently to be 7% to 7.5% of salary. At the time of appointment of the current CEO the workforce pension was
assessed to be 10% of salary. As set out on page 101, 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 CEO to the current
rate available UK employees aer 31 December 2023.
Remuneration policy for Non-Executive Directors
Objective and link to
strategy Operation and performance metrics Opportunity
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 eective 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.
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 27 May 2021 One month
Jerry Buhlmann 1 March 2017 One month
Alex Jensen 29 January 2020 One month
Jane Kingston 25 July 2018 One month
Sarah Kuijlaars 21 January 2022 One month
John Langston 1 August 2013 One month
Nigel Stein 8 October 2015 Six months
Consideration of conditions elsewhere in theGroup
The Committee reviews and approves all remuneration arrangements for the Group Executive Team and the Group
Company Secretary. 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, and a consultation on the revised remuneration policy during 2022. Further details are given on page 97.
The remuneration 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.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 103
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
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 remuneration
policy and arrangements. During 2022, the Company carried out a shareholder consultation in respect of the revised
remuneration policy. Further information is given on page 99.
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 CEO 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. The CFO resigned in November 2022, and the recruitment process for a new executive is underway. Therefore
performance scenarios for this role are not given.
Fixed remuneration
Annual bonus
Long-term incentives (PSP and CIP)
£4,692
£956
100% 43%
29%
27%
20%
28%
16%
22%
52%
62%
£2,216
£5,908
Duncan Tait – Group Chief Executive
Total remuneration (£’000s)
Minimum On-target Maximum Maximum
with share
price growth
Notes on the performance scenarios:
Element Assumptions
Fixed
remuneration
• Total remuneration comprises base salary, benefits and pensions
• Base salary – eective from 1 April 2023
• Benefits– as provided in the single figure table on page 108
• Pension– £82,748 in lieu of pension
Minimum On-target Maximum
Maximum with share price
growth
Variable pay
Annual bonus No payout Target payout (50% of
maximum)
Maximum payout
CIP No vesting Assumes full voluntary
investment
Threshold match of 0.5:1 Maximum vesting Maximum vesting + 50% share price
growth
PSP No vesting Threshold vesting (25% of
maximum)
Maximum vesting Maximum vesting + 50% share price
growth
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104 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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 Approach
Maximum annual
grant value
Base salary 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.
n/a
Pension 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.
n/a
Benefits 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.
n/a
Annual bonus 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 dierent
performance measures, taking into account the responsibilities of
the individual, and the point in the financial year that they joined
the Company.
150% of salary
PSP 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 The combined
maximum is
intended not to
exceed 400% of
salary
CIP New appointees will be granted awards on the same terms as other
Executive Directors as described in the policy table.
100% of salary
Other 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 103. 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.
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 on page 106 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.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 105
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Component Circumstance Treatment
Payment/vesting date
(ifrelevant)
Annual bonus Resignation. Bonus will lapse. Not applicable.
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).
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.
At the normal time
unless the Committee
determines otherwise.
Change of control. 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.
At the normal time
unless the Committee
determines otherwise.
PSP and CIP Resignation. 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.
Not applicable.
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).
Any unvested awards will be assessed for performance, and
unless the Committee determines otherwise, time pro-rated.
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 UK 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 Date of contract Notice period Unexpired term
Duncan Tait 1 June 2020 12 months 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 oce.
CORPORATE GOVERNANCE REPORT
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106 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
PART 2 
ANNUAL REPORT
ONREMUNERATION
The following section provides details of how the Company’s remuneration policy was
implemented during the financial year to 31 December 2022 and how it will be implemented
in the financial year to 31 December 2023.
PRINCIPAL DECISIONS MADE BY THE COMMITTEE
Proposed
remunerationpolicy
The Committee agreed the new remuneration policy to be put to shareholders at the 2023
AGM taking into account the views of shareholders, governance advisors, senior executives
and employees. The Committee gave careful consideration to the continued use of the
CIP, agreeing to retain the plan alongside the PSP as it believes the plans are well
understood in the business. The aggregate award opportunity is unchanged, is within
market range and is supported by stretching performance targets, and the purchase of
shares by executives under the CIP demonstrates confidence in our long-term strategy and
aligns their interests with those of shareholders.
Long-term
incentivetargets
The Committee considered the performance targets of the PSP and CIP, agreeing the
same targets should be used for both the PSP and CIP as this aligns participants around
thecore strategic objectives, ensures consistent behaviours and avoids unnecessary
complexity. During the year, the Committee:
• agreed the performance targets for the 2022 PSP/CIP;
• assessed and approved the achievement of performance targets for the 2020 PSP/CIP;
taking into account whether there were any windfall gains;
• monitored the targets for the in-flight PSP/CIP; and
• agreed the performance targets for the 2023 PSP/CIP.
Please see pages 111 to 112 for details.
M&A adjustments Following the disposal of the Russian business and the acquisition of Derco in 2022,
performance targets were adjusted for the 2022 bonus, 2020 PSP/CIP as well as the 2021
and 2022 PSP/CIP. This is consistent with the approach the Committee has used previously
for M&A activity. The adjusted targets can be found on pages 111 to 112.
2022 bonus The Committee approved the achievement of the performance targets for the 2022 bonus
plan not only against the formulaic outcome but taking into account the wider business
context. Please see pages 109 to 110 for details of the performance achieved in 2022 and
the resulting bonus outcomes.
2023 salary review The Committee took into consideration inflationary forecasts and local market conditions
when assessing the annual salary review process, noting that the current inflationary
environment has more impact on lower paid employees. Aer assessing the relative
impacts carefully, and taking into account the additional payment being given to
UKemployees, the Committee agreed a 5% increase for the CEO, with the average
UKincrease being 6%, in addition to a one-o cost of living payment.
GET Remuneration The Committee reviewed, and approved, the remuneration packages for members of the
GET taking into account pay for employees across the Group and in the relevant regional
markets, and benchmarking carried out by its remuneration advisors.
Pension Following a review of the UK pension oering, the Committee assessed the pension
contributions for Executive Directors. Please see page 97 for further details of alignment
ofpension rates.
Wider workforce
remuneration
The Committee considered the reward landscape for the wider workforce including total
bonus outcomes, the achievement of regional financial targets, and the distribution of
performance outcomes for personal objectives.
Chairman’s fees The Committee approved a 4% fee increase for the Chairman.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 107
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Single total figure of remuneration (audited)
The table below sets out the total remuneration received by the Directors for the year ended 31 December 2022:
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 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Current Executive Directors
Duncan Tait 820 795 4 4 1,241 1,176 1,940 – 82 79 4,087 2,054 906 878 3,181 1,176
Current Non-Executive Directors*
Nigel Stein 343 333 4 3 – – – – – – 347 336 347 336 – –
Nayantara Bali 65 38 – – – – – – – – 65 38 65 38 – –
Jerry Buhlmann 85 83 – – – – – – – – 85 83 85 83 – –
Alex Jensen 79 75 – – – – – – – – 79 75 79 75 – –
Jane Kingston 82 78 – – – – – – – – 82 78 82 78 – –
Sarah Kuijlaars 62 – – – – – – – – – 62 – 62 – – –
John Langston 82 78 – – – – – – – – 82 78 82 78 – –
Former Directors**
Gijsbert de
Zoeten 487 514 21 21 – 778 – – 49 51 557 1,364 557 586 778
Till Vestring 25 63 – – – – – – – – 25 63 25 63 – –
Total 2,130 2,057 29 28 1,241 1,954 1,940 – 131 130 5,471 4,169 2,290 2,215 3,181 1,954
* Sarah Kuijlaars joined in January 2022.
** Till Vestring le in May 2022 and Gijsbert de Zoeten resigned in November 2022.
a. Base salary/fees.
b. Taxable benefits comprise car allowance, medical cover and mileage allowance.
c. Payment for performance under the annual bonus, including amounts paid in shares.
d. The 2022 figure for the CEO includes the 2020 PSP and CIP which will vest 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 figures have been valued
using the three-month average share price from 1 October 2022 to 31 December 2022 of 789p. Actual performance against targets is given on page 111.
Thevalue includes a movement of £665,321, which was due to an increase in share price over the period, and £88,712 in respect of dividend shares accrued
over the performance period. The figure will be revised in next year’s DRR to reflect the share price on the date of vesting.
e. Duncan Tait and Gijsbert de Zoeten received a pension allowance of 10% of salary. See page 112 for further details.
The Committee is mindful that the CEO’s single figure emoluments for FY22 is high relative to the prior two years, but this
reflects the first vesting under the PSP and CIP since his appointment three years ago, combined with strong underlying
performance warranting a maximum bonus payout.
Base salary
Salaries are reviewed annually and typically take eect 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 took into account the remuneration arrangements for the wider workforce and, in particular, the salary
increases for other UK employees. Given the current inflationary environment and the increased variable opportunity
available to the senior executives, the Committee felt that it was appropriate to award a lower level of increase to the
ChiefExecutive Ocer for 2023 than the average UK workforce rate.
The salaries for 2021, 2022 and 2023 are set out below:
Name
01-Apr-21
(or date of
appointment
iflater) 01-Apr-22 01-Apr-23
% increase
in 2023
Duncan Tait £799,500 £827,483 £868,900 5%
UK average workforce increase – – – 6%
Chairman and Non-Executive Directors’ fees
Role 01-Apr-21 01-Apr-22 01-Apr-23 % increase
Chairman £334,560 £346,270 £360,120 4%
Senior Independent Director £83,025 £85,930 £89,367 4%
Non-Executive Director £63,550 £65,774 £68,405 4%
The Chairman and the Non-Executive Directors received a fee increase of 4% per annum. When considering the fee
increase, benchmarking and the current inflationary environment were taken into account. There is no change to the
additional fees 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.
108 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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.
2022 bonus
For 2022, 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 the matrix anchor points shown below.
Revenue
Stretch £7.7bn
20% 60% 100%
Target £7.1bn
13% 50% 80%
Threshold £6.7bn
10% 30% 60%
£246m £274m £301m
Threshold Target Stretch
Profit before tax
Achievement of financial targets (80% of total bonus or 120% of salary)
In 2022, revenue performance was £8bn and adjusted profit before tax was £362.7m. 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
Targets
Actual
performance
Matrix outcome
% of maximum
Matrix outcome
% of total bonusThreshold Target Stretch
Revenue £6.7bn £7.1b n £7.7bn £8.0bn
100% 80%
Adjusted profit before tax £246m £274m £301m £362.7m
Adjustments made during the year
The revenue and profit before tax targets for 2022 were adjusted to take into account strategic acquisitions and disposals
during the year, to ensure target and performance outcomes were assessed on a like-for-like basis. Following the disposal
ofthe Russian business in 2022, which aected both revenue and PBT, the performance targets were adjusted to remove
the contribution from the Russian operations to allow like for like comparison. This is consistent with the approach the
Committee has used previously for M&A activity.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 109
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
Achievement of strategic targets (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 2022
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 Outcome
Outcome % of
salary
Digital Leadership
10%
Successfully deploy
Digital Dealer soware to
50independent dealers
across three OEMs
Digital Dealer Soware was deployed to 56 Independent
dealers in 2022. Six OEMs were covered.
15%
Develop and deploy DXP
direct to one market.
The Digital Direct (DXP) Solution was deployed to one
major market in December 2022. Test scripts were
validated and aligned to the intended solution.
Build Vehicle
Lifecycle strategy
5%
Open 15 new bravoauto
stores in five markets
22 bravoauto stores were opened in 2022 taking the
cumulative total to 30 stores as of 31 December 2022.
Of the 22 stores – five were opened in H1 and 17 in H2.
Thestores were opened in eight markets – Australia,
Belgium, Colombia, Estonia, Poland, Romania, Thailand,
and the UK.
7.5%
Bring Planet
commitments
to life
5%
Scope 1 and 2 reduced by
at least 9,000 tonnes
A formal GHG Climate Reporting Process and
Methodology is used to calculate annual carbon
savings based on an agreed model including various
data sources including emissions, energy, natural gas,
company vehicles, purchased electricity and travel
indicators. The data confirmed the Group’s 2022 carbon
saving ambition had been met with a 9,800-tonne
adjusted outturn.
7.5%
Agree plan for Scope 3
with Board
The Group Scope 3 footprint was calculated during the
year and the findings used by the Board to develop its
approach to setting Scope 3 reduction targets.
Overall 2022 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 2022 bonus as follows:
Financial
targets
outcome (% of
salary)
Strategic
targets
outcome (% of
salary)
Total
outcome (% of
salary)
Total
bonus
£
Duncan Tait 120% 30% 150% £1,241,224
Any bonus earned above 100% of salary is deferred and invested into the CIP, and as a result one third of the total 2022
bonus for Duncan Tait will be subject to mandatory deferral into the CIP.
Annual bonus for 2023
The maximum annual bonus opportunity in 2023 will remain unchanged from previous years at 150% of salary.
For the Executive Directors, 80% of the bonus will be based on a financial performance matrix, linked to revenue and profit
before tax, and 20% of the bonus 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. 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 2023 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.
CORPORATE GOVERNANCE REPORT
CONTINUED
110 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
PSP and CIP awards vesting in respect of the year
In 2020, awards were granted under the PSP and CIP schemes which vested dependent on certain performance targets
measured over three years to 31 December 2022. These awards are also subject to an additional post-vest two-year
holding period. The performance targets were set prior to the outbreak of the Covid-19 pandemic and no adjustments were
made for this. Consistent with the Committee’s previous approach for material M&A activity, the EPS targets were adjusted
for the disposal of the Russian business in 2022. No adjustment was made for the ROCE or cash conversion targets as the
impact was immaterial.
2020 PSP/CIP performance targets
Three-year EPS cumulative growth p.a. (40% weighting)* Vesting % Three-year average ROCE (40% weighting) Unexpired term
Less than 162p 0% Less than 16.5% 0%
162p 25% 16.5% 25%
184p 100% 20.5% 100%
Between 162p and 184p Straight line basis Between 16.5% and 20.5% Straight line basis
Cash conversion (20% weighting) Vesting %
Less than 55% 0%
55% to 70% 25%
70% 100%
Between 55% and 70% Straight line basis
* the pre-adjusted EPS targets were 169p – 191p.
Vesting of 2020 PSP/CIP awards
Over the 2020-2022 performance period, cumulative EPS of 150p, three-year average ROCE of 26% and cash conversation
of 97% were achieved, which resulted in the following vesting outcomes:
Award Performance measure Wtg. Vesting outcome (% of element)
PSP EPS 40% 0%
ROCE 40% 100%
Cash conversion 20% 100%
Total (overall vesting outcome
ofPSP) 60%
Award
Performance measure Wtg. Vesting outcome (% of element)
CIP EPS 40% 0%
ROCE 40% 100%
Cash conversion 20% 100%
Total (overall vesting outcome
ofCIP) 60% vesting
The Remuneration Committee considered the outcome in the context overall business performance. The Committee did
not exercise any discretion. As a result, the following awards will vest:
Grant date
Number of
shares/options
under award
Number of
shares/options
vesting
Number of
shares/options
lapsing Vesting date
Estimated
value of awards
vesting*
Duncan Tait
PSP 2 June 2020 251,342 150,805 100,537 2 June 2023 £1,189,853
CIP 26 June 2020 139,682 83,809 55,873 26 June 2023 £661,254
*Estimated value calculated using the three-month share price average from 1 October 2022 to 31 December 2022 of 789p.
As noted on page 97, the number of shares under award was reduced by 10% at the time of grant to reflect the volatility
inthe share price at the time. The Committee reviewed the vesting outcome, taking into account the financial and share
price performance of the business over the period and was satisfied that given the upfront reduction in the award level,
nofurther adjustment was required at vesting.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 111
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
PSP and CIP awards granted during the year
During 2022, PSP awards were granted at 180% of salary and under the CIP, the Executive Directors invested 50% of salary
(including mandatory bonus deferral) and were granted a matching award of 100% of salary respectively. All awards
granted to Gijsbert de Zoeten during the year lapsed on his date of resignation. The performance targets for the PSP/CIP
aredetailed below. The targets have been adjusted to reflect the impact of the acquisition of Derco and the disposal
oftheRussian business.
2022 PSP/CIP*
Three-year cumulative EPS (40% weighting) Vesting % Three-year average ROCE (40% weighting) Unexpired term
Less than 197p 0% Less than 21% 0%
197p 25% 21% 25%
217p 100% 26% 100%
Between 197p and 217p Straight line basis Between 21% and 26% Straight line basis
Cash conversion (20% vesting) Vesting %
Less than 50% 0%
50% 25%
65% 100%
Between 50% and 65% Straight line basis
* The pre-adjusted targets were EPS 184p – 208p and ROCE 23% – 28%.
Threshold level performance will result in 25% of the 2022 PSP and CIP awards vesting.
Date of grant
Share
price
(p)
1
Number of
shares/options
awarded
Face value
at grant
2
Performance period Exercise period
3
Duncan Tait
PSP 8 April 2022 650.00p 222,342 £1,445,223 Jan 2022 – Dec 2024 Apr 2025 – Apr 2026
CIP 6 May 2022 706.00p 116,711 £823,980 Jan 2022 – Dec 2024 May 2025 – Nov 2025
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 fih
anniversary of grant).
Long-term incentives for 2023
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 reflect current performance expectations over the next three years.
Three-year cumulative EPS (40% weighting) Vesting % Three-year average ROCE (40% weighting) Unexpired term
Less than 250p 0% Less than 21% 0%
250p 25% 21% 25%
290p 100% 26% 100%
Between 250p and 290p Straight line basis Between 21% and 26% Straight line basis
Cash conversion (20% vesting) Vesting %
Less than 60% 0%
60% 25%
70% 100%
Between 60% and 70% Straight line basis
Pension
Duncan Tait received a pension contribution of 10% of salary during 2022. Since the policy was last approved in 2020, the
UKpension oering has been simplified and is now a standardised defined contribution plan (from a mix of defined benefit
and defined contribution arrangements). As such the contribution rate for UK employees is now estimated to be approx.
7%- 7.5% of salary. Consequently, the Committee agreed that under the new remuneration policy, new Executive Directors
will be oered a maximum pension contribution rate of 7% of salary. Duncan Tait volunteered to freeze his allowance at
thecurrent £ value as an interim step, and bring the pension contribution rate down to 7% aer 31 December 2023.
CORPORATE GOVERNANCE REPORT
CONTINUED
112 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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 2022 or at the
date of leaving if earlier.
Share awards held Options held
Shares held at
31December
2022
Subject to
performance
conditions
Subject to
deferral
Subject to
performance
targets
Subject to
deferral
Vested
but notyet
exercised Guideline met
Duncan Tait 114,845 1,013,515 0 0 4,774 0 No
Gijsbert de Zoeten* 106,934 0 0 0 0 0 n/a
Nigel Stein 66,834 n/a n/a n/a n/a n/a n/a
Jerry Buhlmann 15,233 n/a n/a n/a n/a n/a n/a
Nayantara Bali 0 n/a n/a n/a n/a n/a n/a
Alex Jensen 1,034 n/a n/a n/a n/a n/a n/a
Jane Kingston 3,500 n/a n/a n/a n/a n/a n/a
Sarah Kuijlaars* 8,000 n/a n/a n/a n/a n/a n/a
John Langston 10,397 n/a n/a n/a n/a n/a n/a
Till Vestring* 48,480 n/a n/a n/a n/a n/a n/a
* Sarah Kuijlaars joined on 20 January 2022, Till Vestring le on 19 May 2022, Gijsbert de Zoeten resigned on 27 November 2022 and all unvested awards lapsed at
that date.
There have been no changes to the number of shares held by the Directors between 31 December 2022 and 22 March 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. Duncan Tait held 114% of salary as at 31 December 2022, using the
average share price from 1 October 2022 to 31 December 2022 of 789p. His date of appointment was June 2020.
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 is required to
hold 19,493 shares for two years from 27 November 2022, his date of resignation. These shares were subject to mandatory
deferral into the CIP from his 2021 bonus.
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.
% change for 2020 % change for 2021 % change for 2022
Salary Benefits Bonus Salary Benefits Bonus Salary Benefits Bonus
Executive Directors
Duncan Tait n/a n/a n/a 2.5% 0% 100% 3.5% 0% 5.5%
Gijsbert de Zoeten 3% 0% - 10 0% 3.8% -90% 100% 3.5% 0% -100%
Non-Executive
Directors
Nigel Stein 2% 0% n/a 2.5% 0% n/a 3.5% 0% n/a
Jerry Buhlmann 0% n/a n/a 2.5% n/a n/a 3.5% n/a n/a
Alex Jensen 0% n/a n/a 2.5% n/a n/a 3.5% n/a n/a
Jane Kingston 0% n/a n/a 2.5% n/a n/a 3.5% n/a n/a
John Langston 0% n/a n/a 2.5% n/a n/a 3.5% n/a n/a
Till Vestring 0% n/a n/a 2.5% n/a n/a 3.5% n/a n/a
Nayantara Bali n/a n/a n/a 0% n/a n/a 3.5% n/a n/a
Sarah Kuijlaars n/a n/a n/a n/a n/a n/a 3.5% n/a n/a
Average pay
based on
seniormanagement 3.16% 0% - 82.91% 3.28% 0% 73.2% 5.78% 0% 9.5%
As Inchcape plc has no direct employees, employees 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 employees also participate in bonus schemes of a similar nature to the Executive Directors and
therefore remuneration will be similarly influenced by Company performance.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 113
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
CEO pay ratio
The CEO pay ratio is based on comparing the CEO’s pay to that of Inchcape’s UK-based employee population, a large
proportion of whom are in customer-facing roles in retail outlets 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 employee pay variability will be primarily driven by UK market
conditions.
The ratios have increased year-on-year due to the increase in the reportable remuneration for the CEO. Strong business
performance in 2022 is reflected in the pay-out under the annual bonus. The reportable remuneration also includes the
vesting of PSP and CIP awards at 60% of maximum, which are the first awards capable of vesting to the CEO since he joined
in 2020.
Financial year
Calculation
methodology
P25 (Lower
quartile) P50 (median)
P75 (Upper
quartile)
2022 C 154:1 109:1 74:1
2021 C 75:1 55:1 38:1
2020 C 40:1 28:1 19:1
2019 C 67:1 48:1 32:1
Consistent with previous years, calculation methodology C was used.
Full-time equivalent remuneration was calculated for all UK employees as at 31 December 2022 using the single total
figurevaluation methodology, with two amendments: using 2021 bonus outcomes as a proxy for 2022 bonus outcomes
andexcluding SAYE grants. The employees at the 25th, 50th and 75th percentile (P25, P50, P75) were identified. The total
remuneration for 2022 of the three employees identified was updated aer 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 employees
are representative.
The table below sets out the remuneration details for the individuals identified:
Year Salary CEO P25 P50 P75
2022 Basic salary (£’000) £820 £23 £16 £41
Total remuneration (£’000) £4,087 £26 £38 £55
2021 Basic salary (£’000) £799 £22 £26 £21
Total remuneration (£’000) £2,054 £28 £37 £54
2020 Basic salary (£’000) £759 £23 £32 £34
Total remuneration (£’000) £939 £24 £33 £49
2019 Basic salary (£’000) £757 £15 £28 £28
Total remuneration (£’000) £1,639 £24 £34 £52
For 2022, the employee at P50 is a Sales Representative who has a high variable pay mix. During the year, the pay mix for Sales
Representatives was reviewed with pay in 2023 rebalanced towards fixed pay. The Committee is satisfied that the overall
picture presented by the 2022 pay ratios is consistent with the reward policies for Inchcape’s UK employees. The Committee
takes into account 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.
114 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Relative importance of spend on pay
The chart shows the percentage change in total employee pay expenditure and shareholder distributions (i.e. dividends
and share buybacks) from 2021 to 2022.
Relative importance of spend on pay (£m)
2021 2022
£485.5
£69.5
£88.7
£475.1
£80.5
£52.2
Dividend Share buyback
(+2%)
(-14%)
(+70%)
Employee remuneration*
from continuing operations
* The 2021 comparative figure has been restated due to an error in classification.
The Directors are proposing a final dividend for 2022 of 21.3p per share (2021: 22.5p).
Pay for performance
The graph below shows the Total Shareholder Return (TSR) of the Company over the 10-year period to 31 December 2022.
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 2022.
Value of £100 invested at 31 December 2012
2012
300
250
200
150
100
50
0
2013 2014
Inchcape PLC FTSE 250
2015 2016 2017 2018 2019 2020 2021
2022
Value (£)
Group Chief
Executive 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
CEO single figure
of remuneration
(£’000)
André Lacroix 4,400 5,265 294
1
n/a n/a n/a n/a n/a n/a n/a
Stefan Bomhard n/a n/a 2,906 1,403 3,006 2,430 1,522 471
2
n/a n/a
Duncan Tait n/a n/a n/a n/a n/a n/a n/a 468 2,054 4,087
Annual bonus
outcome
(% of maximum) 48% 100% 56.8% 40.3% 67.6% 38.5% n/a
6
0% 100% 100%
LTI vesting
3
outcome
(% of maximum) 66% 68% n/a
4
n/a
5
79.6% 58% 40% n/a
7
n/a
8
60
%
1. The amount for André Lacroix reflects remuneration received until he le the Group in March 2015.
2. The amount for Stefan Bomhard reflects remuneration received until he le 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 2022 115
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
CONTINUED
Shareholder context
The table below shows the advisory vote on the Remuneration Report at the 2022 AGM:
Total number
of votes
% of
votes cast
For (including discretionary) 330,127,731 98.71%
Against 4,322,329 1.29%
Total votes cast (excluding votes withheld) 334,450,060 100%
Votes withheld 10,553
(Total votes cast including votes withheld) 334,460,613
The table below shows the binding vote on the remuneration policy at the 2020 AGM:
Total
of votes
% of
votes cast
For (including discretionary) 323,620,872 94.50%
Against 18,822,513 5.50%
Total votes cast (excluding votes withheld) 342,443,385 100%
Votes withheld 4,359,434
(Total votes cast including votes withheld) 346,802,819
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
Gijsbert de Zoeten resigned on 27 November 2022. In line with policy he did not receive a bonus for 2022 and all unvested
CIP and PSP awards lapsed. He will receive payment of salary and benefits in accordance with the terms of his contract
ofemployment, this being 12 months salary with the amount payable based on an annual salary of £536,682, an annual
private medical contribution of £2,012, an annual car allowance of £14,520 (plus annual petrol allowance of £1,500), and
anannual pension contribution of £53,668. These payments are made on a monthly basis.
Payments to past Directors
No payments were made to past Directors in 2022.
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 2022.
Advisors to the Committee
Ellason LLP was appointed as the independent remuneration advisor to the Committee eective 1 January 2021 following
a tender process. Ellason LLP was paid a fee of £99,080 for its services relating to directors’ remuneration during 2022. 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 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
116 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
DIRECTORS’ REPORT
The Directors’ Report for the year ended 31 December 2022 comprises pages 117 to 122 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 57; principal risks and uncertainties on pages 59 to 67; a description ofthe
Board’s activities and the structure of its Committees is given on page 76; and, a description of the Group’s internal control
framework is given on pages 91 to 93;
Corporate governance statement
The statement of compliance with the UK Corporate Governance Code 2018 (Code) is given on page 71. 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 70 to 116.
Board of Directors
The Directors of the Company below were in oce during the year and up to the date of signing the financial statements:
Nayantara Bali Byron Grote (joined January 2023) John Langston
Jerry Buhlmann Alexandra Jensen NIgel Stein
Juan Pablo Del Río (joined January 2023) Jane Kingston Duncan Tait
Gijsbert de Zoeten (resigned November 2022) Sarah Kuijlaars (joined January 2022) Till Vestring (le May 2022)
In accordance with the Code, all current Directors except for John Langston will stand for election or re-election at the
Annual General Meeting (AGM) on 18 May 2023. The Chairman has reviewed the performance of each Director and is
satisfied that each continues to be eective 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 65% of the business, shareholder consultations, such as the remuneration policy, are
carried out with this group. Extending the consultation to all shareholders would not be cost eective, 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, judgment is given against the Director.
The indemnity has been in force for the year ended 31 December 2022 and until the date of approval of this report.
Results and dividends
The Group’s audited consolidated financial statements for the year ended 31 December 2022 are shown on pages 124 to 228.
The level of distributable reserves is sucient to pay a dividend.
The Board recommends a final ordinary dividend of 21.3p per ordinary share. If approved at the 2023 AGM, the final
ordinary dividend will be paid on 19 June 2023 to shareholders registered in the books of the Company at the close of
business on 12 May 2023.
DIRECTORS’ REPORT
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 117
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
DIRECTORS’ REPORT
CONTINUED
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.
Share capital
As at 31 December 2022, the Company’s issued share capital of £37,449,403 comprised 374,494,030 ordinary shares of 10p.
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. Following the allotment of these shares, the issued share capital of the Company stood
at 413,007,132 ordinary shares.
Holders of ordinary shares are entitled to receive the Company’s 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 19 May 2022, the Company was authorised to make market purchases of up to 38,166,226
ordinary shares (representing approximately 10% of its issued share capital).
In the year ended 31 December 2022, the Company purchased for cancellation, 9,357,908 ordinary shares of 10p each
atacost of £69.5m, representing 2.5% of the issued share capital as at that date.
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 2022 As at 22 March 2023
Shareholder
Number of voting rights
held
Percentage of voting
rights held
Number
of voting rights held
Percentage of
voting rights
held
abrdn plc Not disclosable <5% Not disclosable <5%
Cerro Mayo SpA* 0 0% 12,837,70 0 3.11%
DT Huillinco SpA* 0 0% 12,837,70 0 3.11%
Peñuelas Corp SpA* 0 0% 12,837,702 3.11%
JPMorgan Asset Management Holdings Inc 16,563,569 4.42% Not disclosable <5%
Polaris Capital Management LLC 15,693,793 4.02% 15,762,376 3.82%
BlackRock Inc 18,780,708 5.01% Not disclosable <5%
The Capital Group Companies Inc 19,200,206 5.03% 20,597,812 4.99%
* 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.
Restrictions on voting rights
There are no restrictions on voting rights.
Employee benefit trust
The Executive Directors of the Company, together with other employees 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 2022, the Trust’s shareholding totalled 344,009 ordinary shares.
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 2022 is shown in the Directors’ Report on Remuneration on page 113. There have been
no changes to the interests or number of shares held by each Director between 31 December 2022 and 22 March 2023.
118 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
Change of control
The Company is not party to any significant agreements that would take eect, 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 23 to the financial statements on page 185.
The Group’s relationships with its OEM brand 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 of the contracts may
terminate on a change of control of the local contracting company.
The Company does not have agreements with any Director or employee providing compensation for loss of oce 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 employees 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 2022, or was entered into during the year for any
Director and/or connected person (2021: none).
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 Page
1 Interest capitalised Not material to theGroup
2 Publication of unaudited financialinformation 115 (Historical TSR performance)
4 Details of long-term incentive schemes 112
5 Waiver of emoluments byadirector Not applicable
6 Waiver of future emoluments by a director Not applicable
7 Non pre-emptive issues of equity for cash Not applicable
8 Non pre-emptive issue by a major subsidiary undertaking Not applicable
9 Parent participation in a placing by a listed subsidiary Not applicable
10 Contracts of significance Not applicable
11 Provision of services by a controlling shareholder Not applicable
12 Shareholder waiver ofdividends 118
13 Shareholder waiver of futuredividends 118
14 Agreements with controlling shareholders Not applicable
Business relationships
Having positive relationships with our OEM brand partners, our main suppliers, and our customers is imperative for the
long-term success of the Company. Our OEM brand partner relationships are key to every part of our value chain and
thelength of these relationships, which are given on page 4, 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.
Principal financial risk factors
These risks are shown on pages 61 to 66.
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 24 to the financial statements on pages187 to 195.
Branches outside the UK
The Company does not have any branches outside the UK.
Events aer the reporting period
None.
Political donations
The Company did not make any political donations in 2022 and does not intend to make any political donations in 2023.
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 three key performance indicators – Scope 1 – our use of gas and fuel in vehicles
we own, Scope 2 – our global energy usage, and Scope 3 – other indirect emissions.
Data collection and reporting period
Data has been collected for all markets from 1 January 2022 to 31 December 2022. 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.
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 119
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
DIRECTORS’ REPORT
CONTINUED
Intensity ratio
The Group’s intensity ratio is revenue per tonne of CO
2
e. This allows for a fair comparison over time of CO
2
e 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 UK entities is given on
pages 219 to 228.
2022 2021
UK & Oshore Global UK & Oshore Global
Total Energy Consumption (Scope 1 and 2 emissions, and Scope
3 vehicle combustion, kWh) 31,548,424 263,707,725 42,956,543 115,639,761
Scope 1 Emissions (tCO
2
e) 3,617 17,0 0 2 2,486 9,752
Scope 1 Emissions (Fugitive, tCO
2
e) 216 2,791 – –
Scope 2 Emissions (Location-based, tCO
2
e) 2,886 22,223 3,689 27,277
Scope 3 Emissions (Business Travel & Upstream Transport, tCO
2
e) 2,975 187,713 9,221 82,068
Total Scope 1 & 2 Emissions (Location-based, tCO
2
e) 6,503 39,225 6,175 37,028
Total Scope 1 & 2 Emissions (Market-based, tCO
2
e) 3,624 30,805 2,486 32,949
Total Scope 1, 2 & 3 Emissions (Location-based, tCO
2
e) 9,477 226,937 15,395 119,0 97
Total Scope 1, 2 & 3 Emissions (Market-based, tCO
2
e) 6,599 218,517 11,706 115,018
Revenue (£m) 2,029 8,133 1,894 6,787
Intensity ratio: Scope 1 and 2 Emissions (Location-based,
tCO
2
e/£m) 3.2 4.8 3.3 7.0
Intensity ratio: Scope 1 and 2 Emissions (Market-based,
tCO
2
e/£m) 1.8 3.8 1.3 6.4
Intensity ratio: Scope 1,2, and 3 Emissions (Location-based,
tCO
2
e/£m) 4.7 27.9 8.1 19.1
Intensity ratio: Scope 1,2, and 3 Emissions (Market-based,
tCO
2
e/£m) 3.3 26.9 6.2 18.5
Methodologies used in calculation of disclosures
GHG Protocol Corporate Accounting and Reporting Standard
GHG Protocol Corporate Value Chain Accounting and Reporting Standard
GHG Protocol Scope 2 Guidance
Energy eciency measures
The Group’s energy management programme involves monitoring and targeted reporting of energy consumption on a
daily basis. All of our markets set action plans at the start of the year to identify and address any consumption issues as and
when they arise, allowing opportunities to eliminate unnecessary energy waste. All markets have energy saving measures
implemented which cover the installation of LED lighting where available, HVAC eciency and thermostatic regulation.
Energy eciency measures introduced in 2021 included:
• The installation of solar panels at three UK sites, saving around 160 tonnes in CO2 per year.
• Feasibility study and lighting plan to identify opportunities for the roll-out of LED lighting to all UK sites.
• Three UK sites became ‘gas free’ with alternatives to heating, such as air and ground source heat pumps.
• Replacing older heating, ventilation, and air conditioning control units with newer programmable controls to allow
reduction of temperature swings and to set auto-o times to avoid units running out of hours. This included PIR and LUX
sensors on lighting so they only turn on as and when someone is present, and light is needed.
These energy eciency measures were developed further in 2022, which involved:
• Australia and all but one of our European markets have now switched to renewable electricity taris.
• The installation of solar panels and LED lightning across all of our UK sites.
• Installation of solar panels has started across Australia, Singapore and Thailand.
• Colombia and Peru have increased the number of electric and hybrid vehicles available in their fleets.
• Our markets in Greater China and Singapore have converted their fleets to include 70% and 30% low emission vehicles
respectively, and will continue this until the fleet only contains low emission vehicles.
Emissions reductions targets
During 2022, the Group set emissions reduction targets for Scope 1 and Scope 2. Further details are given in the Responsible
Business Report on page 42.
Employees and employee 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 employees, 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.
120 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022
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 eective
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 employee 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. UK employees are eligible to join the SAYE scheme, which is oered annually. Further details can be found
inthe Directors’ Report on Remuneration on pages96 to 116.
Employee 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 employees with information on the Group’s performance and an opportunity
for consulting employees on new initiatives or other matters that concern them. The Group’s global intranet, iConnect,
alsoprovides a means of communicating important issues to employees.
The employee experience survey is the primary tool for obtaining the views of employees 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 employees 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 employee experience is perceived and what
actions can be taken to enhance this experience so employees feel challenged, excited, engaged and supported in
theirroles. Further details can be found in the CSR Committee Report on page 95.
Diversity
As required under LR9.8.6, the breakdown of the gender identity and ethnic background of those who were Directors of the
Company and executive management, as well as the gender identity of employees of the Company, as at 31 December
2022 is as follows:
Gender identity
or sex as at 31
December 2022
Number
of Board
members
Percentage
of the Board
Number
of senior
positions on
the Board*
Number in
executive
management
Percentage
of executive
management
Number of all
employees
Percentage
of all
employees
Men 4 50% 4 62 78% 10,675 73%
Women 4 50% 0 17 22% 3,932 27%
Not specified/prefer
not to say 0 0% 0 0 0% 3 <1%
Ethnic background as at 31 December 2022
Number
of Board
members
Percentage
of the Board
Number of
senior
positions on
the Board*
Number in
executive
management
Percentage
of executive
management
White British or other White 7 87.5% 4 34 43%
Mixed/Multiple Ethnic Groups 0 0% 0 0 0%
Asian/Asian British 1 12.5% 0 7 9%
Black/African/Caribbean/Black British 0 0% 0 0 0%
Other ethnic group, including Arab 0 0% 0 3 4%
Not specified/prefer not to say 0 0% 0 35 44%
* includes CEO, CFO, SID and Chair
The Board did not have at least one woman in the position of Chair, Chief Executive, Chief Financial Ocer or Senior
Independent Director as at that date. The Nomination Committee is responsible for succession planning on the Board
andas such considers these targets during the recruitment process.
In 2022, we launched our first global HR system enabling our colleagues to self-identify their diversity information. This
involved a global review to assess what diversity questions are legally possible, culturally sensitive, and safe to include. The
review found that 24% of our markets can ask and collect ethnicity information from employees. The system was launched
in November 2022 with a series of communications encouraging colleagues to check and complete their profiles (including
ethnicity information) and each year we will roll-out communications and campaigns to encourage full disclosure in
markets where we can ask and collect ethnicity data.
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).
INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022 121
GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT
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 aairs 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 sucient 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’ Remuneration Report 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 dier 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 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 67,
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 oce. A resolution to reappoint Deloitte as auditor will
be proposed at the AGM. So 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 18 May 2023 at the Institute of Directors, 116 Pall Mall, London SW1Y 5ED.
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
DIRECTORS’ REPORT
CONTINUED
122 INCHCAPE ANNUAL REPORT AND ACCOUNTS 2022