Inchcape plc, the leading
global automotive distributor, announces its interim results for
the six months to 30 June 2024
Inchcape becomes a pureplay
automotive Distributor -
resilient performance,
outlook reiterated, share buyback increased to
£150m
• Major strategic inflection
point for Inchcape, as the Group becomes a pureplay automotive
Distribution business:
o Divestment of UK Retail business to Group 1 Automotive for
cash consideration of £346m
§ Expected to complete during Q3 2024
o Four Distribution contracts won in H1 2024, further
highlighting our differentiated Distribution proposition
• Resilient financial
performance - with revenue and profit growth:
o Solid revenue growth of 8% in constant currency, 4% on a
reported basis, to £4.7bn
§ Organic
revenue growth1 of 4%, and 4% growth from
acquisitions
o Robust profit delivery, with adjusted operating
profit2 up 7% in constant currency to £299m, and
operating margins2 of 6.3%
§ Adjusted PBT2 up 7% in constant currency, up 1% on
a reported basis, statutory PBT up 10%
§ Adjusted basic EPS2 down (3)% to 34.7p due to a
higher effective tax rate. Reported basic EPS up 9% to
27.9p
• Robust operational
performance against mixed market trends, supported by continued
focus on cost management:
o Resilient market share in the Americas, against lower
industry volumes, with key markets stabilising
o On-going positive momentum in APAC, supported by strong
organic growth and contribution from acquisitions
o Continued outperformance in Europe, with order bank unwind
continuing, supported by new Distribution contracts gaining
momentum
o On-going focus on cost management across the Group
• Strong balance sheet, driven
by excellent organic cash flow performance:
o Free cash flow2 of £226m (H1 2023: £189m) and free
cash flow conversion of 76%
o Adjusted net debt2 reduced to £524m (FY 2023:
£601m) and leverage reduced to 0.7x
o Strong ROCE2 of 28% (H1 2023: 32%), highlighting
benefits of becoming a pureplay automotive Distributor
• Disciplined approach to
capital allocation, with share buyback increased to £150m on an
accelerated timetable:
o Increased share buyback reflects excellent free cash flow
performance and strong balance sheet
§ Buyback
to commence on 1st August 2024 and expected to complete during Q1
2025
o Healthy pipeline of bolt-on acquisitions
o Interim dividend per share of 11.3p
• Outlook reiterated,
supported by continued strategic execution:
o Maintaining our expectations for moderated growth, at
constant currency, in FY 2024
o Higher levels of growth expected over the medium to long term
- driven by:
§ Anticipated recovery across a number of markets and recent
Distribution contract wins
§ On-going development of technology capabilities and continued
focus on cost management
Duncan Tait, Group CEO, commented:
"With the disposal of our UK
Retail business, Inchcape will become a pureplay operator, focused
on Automotive Distribution, which is capital light, highly cash
generative, higher margin and higher returns than pure Retail
businesses. This represents a significant strategic step in our
journey to becoming the leading global distribution partner for our
OEM partners. We are pleased to announce an increased buyback
programme of £150m, with an accelerated timeline starting
immediately. This increase is a demonstration of our disciplined
capital allocation policy in action, and reflects the Group's
strong financial position, following an excellent free cash flow
performance in H1 2024.
"Inchcape delivered a resilient
performance in H1 2024, with a strengthening balance sheet,
reflecting our scaled and diversified growth portfolio. We
delivered strong organic revenue and profit growth, with further
high levels of cash generation and returns.
"Our success in winning new
Distribution contracts continued during the first half, with four
contracts awarded in the period. These contracts, along with our
investment in acquisitions, will continue to support the business
as we grow in existing markets by building market share, expand
into new markets and develop our OEM partner portfolio to
drive growth. With our global market leadership position and our
differentiated digital and data capabilities to support our OEM
partners, our Distribution platform is well positioned for the
future. To that end, we reiterate our growth expectations for FY
2024 and remain confident about the medium to long-term outlook for
the Group."
|
H1 2024
|
H1
2023
|
%
change
reported
|
% change
constant FX2
|
% change
organic1
|
Key financials (continuing operations)
|
|
|
|
|
|
Revenue
|
£4,725m
|
£4,563m
|
+4 %
|
+8 %
|
+4 %
|
Adjusted Operating
Profit2
|
£299m
|
£295m
|
+1 %
|
+7 %
|
|
Adjusted Operating
Margin2
|
6.3
%
|
6.5
%
|
(20)bps
|
(10)bps
|
|
Adjusted Profit Before
Tax2
|
£226m
|
£223m
|
+1 %
|
+7 %
|
|
Adjusted Basic
EPS2
|
34.7p
|
35.9p
|
(3) %
|
|
|
Dividend Per Share
|
11.3p
|
9.6p
|
+18
%
|
|
|
Free Cash
Flow2
|
£226m
|
£189m
|
+20
%
|
|
|
Reported financials
|
|
|
|
|
|
Operating Profit (continuing
operations)
|
£276m
|
£274m
|
+1 %
|
|
|
Profit Before Tax (continuing
operations)
|
£195m
|
£178m
|
+10
%
|
|
|
Total profit for the
period
|
£129m
|
£139m
|
(7) %
|
|
|
Basic EPS (continuing
operations)
|
27.9p
|
25.7p
|
+9 %
|
|
|
Net cash generated from operating
activities
|
£283m
|
£265m
|
+7 %
|
|
|
1. Organic growth is
defined as revenue growth in operations that have been open for at
least a year at constant foreign exchange rates. See Note 14
APMs
2. These measures are
Alternative Performance Measures, see Note 14
Market abuse regulation statement
This announcement contains inside
information.
Results presentations
A presentation for analysts and
investors will be held today, Tuesday 30th July 2024, at
08:30 BST. The presentation will be held at the London Stock
Exchange, 10 Paternoster Square, London EC4M 7LS. To register for
the webcast of the event please follow
this link, or to register for
conference call access please follow this
link. A replay of the analyst
presentation will be available via the Company's website,
www.inchcape.com later
today.
Management will also be hosting an
online presentation for investors via Investor Meet Company on
31st July 2024, 12:30 BST. Questions can be submitted
pre-event via your Investor Meet Company dashboard up until 30th
July 2024, 09:00 BST or during the live presentation. To register
for the conference call please follow
this link. Investors who already
follow Inchcape on the Investor Meet Company platform will
automatically be invited.
Financial calendar
|
|
Ex-dividend date for 2024 interim
dividend
|
8th August 2024
|
Record date
|
9th August 2024
|
Last election date
|
15th August 2024
|
Payment date
|
6th September 2024
|
Q3 trading update
|
24th October 2024
|
In the Driving Seat investor
seminar
|
14th November 2024
|
Contacts
Inchcape plc (investor enquiries):
|
|
|
|
Rob Gurner
|
|
+44 (0)7825 189 088
|
investors@inchcape.com
|
Krishma Arora
|
|
|
|
|
|
|
|
DGA Group (media enquiries):
|
|
|
|
James Melville Ross
|
|
+44 (0)20 7038 7419
|
inchcape@dgagroup.com
|
James Styles
|
|
|
|
Leah Dudley
|
|
|
|
About Inchcape
Inchcape is the leading global
automotive distributor, with operations across six continents.
Inchcape works with our mobility company partners in smaller, more
complex and harder-to-reach markets, which tend to be higher growth
with low motorisation rates. By combining our in-market expertise
with our unique technology and advanced data analytics, we create
innovative customer experiences that deliver outstanding
performance for our partners - building stronger automotive brands
and creating sustainable growth.
Our distribution platform connects
the products of mobility company partners with customers, and our
responsibilities span product planning and pricing, import and
logistics, brand and marketing to operating digital sales, managing
physical sales and aftermarket service channels. Delivering for our
partners, our customers and our people - so they can realise their
ambitions in the new world of mobility. The Group is headquartered
in London and employs over 18,000 people
globally.
Earlier this year, Inchcape hosted
an "In the Driving Seat"
webinar to provide investors and analysts with further
understanding of the dynamics of the Group's Distribution
commercial model. A recording is available on the Inchcape
website:
https://www.inchcape.com/investors/results-reports-presentations/
www.inchcape.com
Our results are stated at actual
exchange rates. However, to enhance comparability we also present
year-on-year changes in revenue and adjusted operating profit in
constant currency, thereby isolating the impact of translational
exchange rate effects. Following the proposed disposal of our UK
Retail business, all figures quoted in the 'Operational' and
'Operating and financial' reviews are on a 'continuing operations'
basis and therefore exclude any contribution from UK Retail in the
current and comparative years.
Operational review
Key performance indicators
Key financials (continuing operations)
|
H1 2024
|
H1
2023
|
%
change
reported
|
% change
constant FX2
|
% change
organic1
|
Revenue
|
£4,725m
|
£4,563m
|
+4 %
|
+8 %
|
+4 %
|
Adjusted Operating
Profit2
|
£299m
|
£295m
|
+1 %
|
+7 %
|
|
Adjusted Operating
Margin2
|
6.3
%
|
6.5
%
|
(20)bps
|
(10)bps
|
|
Adjusted Profit Before
Tax2
|
£226m
|
£223m
|
+1 %
|
+7 %
|
|
Free Cash
Flow2
|
£226m
|
£189m
|
+20
%
|
|
|
Return on Capital
Employed2
|
28 %
|
32 %
|
(400)bps
|
|
|
1. Organic growth is defined
as revenue growth in operations that have been open for at least a
year at constant foreign exchange rates, see Note 14
APMs
2. These measures are
Alternative Performance Measures, see Note 14
H1 2024 results - performance review
The Group delivered a resilient
financial performance in H1 2024, driven by strong top line growth,
with robust margins supported by operating leverage.
Group revenue of £4.7bn rose
4% year-on-year on a reported basis and 8% in constant currency,
supported by organic growth of 4% and acquisitions which
contributed a further 4%, partly offset by currency headwinds of
(4)%.
The Group delivered an
adjusted operating profit
of £299m, up 7% in constant currency, offset by (6)% impact from
currency, with reported growth of 1%. Robust adjusted operating margins of 6.3%
reflected organic revenue growth in certain regions, operating
leverage and a focus on cost management across the Group. We
reduced overheads despite the increased scale of the business, with
the ratio of adjusted net operating expenses to revenue improving
during the period to 10.9% (H1 2023:
11.4%).
Adjusted net
finance costs amounted
to £74m (H1 2023:
£73m), with an alignment of supplier terms
related to inventory financing at acquired businesses, resulting in
an expense of £26m (H1 2023: £16m). The positive impact
of a reduction in average debt on net interest costs was partly
offset by some short term cash-funded inventory flows during the
period.
Adjusted profit before tax grew 7% on a constant currency basis, offset by (6)% currency
headwinds with reported PBT of £226m (H1
2023: £223m). Adjusted
basic EPS was down (3)% to 34.7p, due to a higher effective
tax rate.
During the period pre-tax
adjusting items amounted to
an expense of £31m (H1 2023: £45m). This
was primarily driven by one-off costs related to acquisition and
integration costs (£23m, H1 2023: £21m),
and non-cash, non-operational losses arising from hyperinflation
accounting relating to Ethiopia (£8m, H1
2023: £14m). After adjusting items, the reported profit
before tax was £195m (H1 2023:
£178m).
The highly cash-generative nature
of our business model was again in evidence during the first half,
with free cash flow
generation of £226m (H1 2023:
£189m), representing a conversion of adjusted operating profit of
76% (H1 2023: 64%). This was supported by
a net working capital inflow of £82m (H1
2023: inflow £39m) driven by strong inventory management and
a continued alignment of supplier terms at acquired businesses.
Inventory fell to £2,011m (FY 2023: £2,718m) due to an improvement
in inventory efficiency across the Group and UK Retail inventory of
£262m, which is treated as part of the discontinued operation. Net
interest payments in the period increased to £64m (H1 2023: £57m), excluding payment for leases and
currency in both periods, for the reasons outlined
above.
As at 30 June
2024, Group adjusted net debt amounted to £524m (FY
2023: £601m) (excluding lease liabilities), with a strong free cash
flow performance partly offset by ordinary dividend payments of
£100m. Including lease liabilities, the Group ended the period with
net debt of £891m (FY 2023: net debt of £1,041m). Group leverage on
a proforma basis1 was approximately 0.7x at 30 June
2024, down from 0.8x at the end of FY 2023, and is expected
to continue to reduce in the future.
Return on capital employed during the period was 28%, down from H1
2023 when it was 32%, due to higher average capital employed
during H1 2024, as a result of acquisitions, but higher than the
reported FY 2023 ROCE of 26%. This highlights the benefits of
becoming a pureplay automotive Distribution business.
Q2 2024 performance
Q2 2024 Group revenue was £2.4bn,
up 2% on a reported basis, reflecting the contribution of
acquisitions and organic
growth of 2%, offset by currency headwinds. Q2 2024 Group
revenue, particularly in APAC and the Americas, was higher than Q1
2024. The level of organic revenue growth in Q2 2024 slowed from Q1
2024, due to more challenging comparators, although the quarterly
organic growth rate in the Americas improved
sequentially.
Strategic overview - Inchcape becomes a pureplay automotive
Distributor
Inchcape is the global leader in automotive
Distribution, with a highly compelling offering for over 60
OEM partners, based on a differentiated, scaled and diversified
business model, which is asset-light and digitally-enabled. From
2016 to 2023, supported by the Group's on-going investment in
growth opportunities, in particular through organic investment and
acquisitions, Inchcape has delivered revenue CAGR of 6%, adjusted operating profit CAGR of 9%, an
adjusted earnings per share CAGR of 5% and strong free cash flow
generation of between 60% to 70%. In addition, from 2016 to H1 2024
the Group has returned £790m to shareholders through
dividends.
Following the divestment of the Group's UK Retail
business to Group 1 Automotive, which is expected to
complete during Q3 2024, Inchcape becomes a pureplay operator in
automotive Distribution. Proceeds from the disposal will provide
additional balance sheet capacity for the Group to invest in future
growth and to support Inchcape's capital allocation
policy.
As a pureplay Distribution
business, Inchcape will further focus on enhancing its Distribution
platform in small to medium-sized, more complex markets, which are
higher growth with low motorisation rates, particularly in existing
Inchcape markets. Evidence that this enhanced focus is already
being achieved is the award of a number of Distribution contracts with OEMs during
H1 2024. These contract wins are a key growth driver for Inchcape,
giving us exclusive responsibility for a brand in a market. In H1
2024, we were awarded four Distribution contracts, with existing
OEM partners including Ford in Estonia, JAC Trucks in Colombia and
Changan in the Caribbean, as well as with a new partner, Forland,
in Ecuador.
We also continued to enhance our
Distribution platform through the development of our proprietary
digital and data analytics
capabilities, which help to drive superior performance for
Inchcape and for our OEM partners. During the period, we continued
to expand the breadth of coverage of our core artificial
intelligence (AI) solutions in new vehicles, aftersales service and
parts, including in our recently acquired businesses. We also
developed and deployed new market-leading AI solutions during the
period, including AI-based quotations for repair
services.
Our Distribution platform is
supplemented by a range of Value-Added Services. These services
include our role as the exclusive distributor of relatively high
margin OEM-certified parts in our markets, which we are scaling
through the on-going roll-out of a Digital Parts Platform across our APAC
region. In addition, we run a number of global strategic
partnerships on Finance and
Insurance with key finance houses, which are delivered on a
local basis. We are at an early stage for value-added services
relating to New Energy
Vehicles, including Electric Vehicles, although Inchcape is
already offering some capabilities in this area in certain markets,
such as battery-related services. Our approach on used vehicles is to leverage our
distribution platform through our third party independent retail
network.
Inchcape will hold an "In the Driving Seat" investor seminar
on 14 November 2024, focusing on our APAC region, in the context of
a refreshed Accelerate strategy.
Our Sustainability approach
Developing our approach to
Responsible Business is central to our future plans, bringing us
closer to our OEM partners and helping us to recruit, engage and
retain the best talent, and thereby ensuring Inchcape continues to
play a key role in the mobility transition in our markets. Our
Sustainability approach, "Driving What Matters", has four focus
areas: Planet, People, Places and Practices. We made good progress
in each of these areas in H1 2024. On Planet, we continued to
improve disclosure and external stakeholder engagement on key
Planet-related areas through the launch of our first Sustainability
Report, supplemented by an ESG investor roadshow. On People, we
rolled out our global inclusive hiring training programme and
launched our first global safety culture survey. On Places, we
showcased our 'Mobilising
Hearts' initiative in Colombia and our
'Liter
of Light' contribution in the
Philippines. Finally, on Practices, we piloted an 'Open Door'
Policy in the Americas to encourage an open and trust-based
reporting culture where colleagues feel comfortable voicing their
questions, concerns and feedback to management.
Capital allocation
Supported by a strong balance
sheet, our capital allocation
policy remains unchanged and is focused on: 1) organic
investment; 2) dividend payments at 40% of adjusted EPS and with
the interim dividend set at one-third of the preceding year's
dividend, the Board is declaring an interim dividend of
11.3p (H1 2023:
9.6p); 3) value-accretive acquisitions,
with a healthy pipeline of bolt-on acquisitions at the current
time; and 4) share buybacks, the viability for which will continue
to be assessed by the Board. This policy continues to be conducted
within the Group's self-mandated leverage limit of 1x adjusted
net debt: adjusted EBITDA.
Taking into account the excellent
underlying free cash flow performance in H1 2024, and the Group's strong
balance sheet, in line with the Group's capital allocation policy,
the Board has taken the decision to accelerate the timetable of its
share buyback and increase
the amount from £100m to £150m. This share buyback programme will
commence on 1st August 2024, and is expected to complete during Q1
2025.
Outlook
We maintain our expectations for
moderated growth in FY 2024, at
constant currency. Over the
medium to long term, the Group is expecting to return to higher
levels of growth, compared to FY 2024, driven by an
anticipated recovery across a number of markets, the contribution
from Distribution contract wins achieved in recent years, bolt-on
acquisitions and supported by the on-going development of
Inchcape's technology capabilities and the Group's continued focus
on cost management.
Operating and financial review
The Group reported revenue of
£4.7bn from continuing operations, increasing 4% year-on-year on a
reported basis, with organic growth of 4% and a 4% contribution
from M&A, offset by currency headwinds of (4)%. Adjusted
operating profit1 of £299m (H1 2023: £295m) was up 7% in
constant currency and adjusted operating margin1
decreased slightly to 6.3%.
|
H1 2024
|
H1
2023
|
%
change
reported
|
%
change
constant
FX
|
%
change
organic2
|
|
£m
|
£m
|
Revenue
|
|
|
|
|
|
APAC
|
1,495
|
1,255
|
19 %
|
24 %
|
9
%
|
Europe & Africa
|
1,622
|
1,397
|
16 %
|
18 %
|
18 %
|
Americas
|
1,608
|
1,911
|
(16)
%
|
(10)
%
|
(9) %
|
Total
|
4,725
|
4,563
|
4
%
|
8
%
|
4
%
|
Adjusted operating profit1
|
|
|
|
|
|
APAC
|
116
|
86
|
35 %
|
41 %
|
|
Europe & Africa
|
85
|
70
|
21 %
|
25 %
|
|
Americas
|
98
|
139
|
(29)
%
|
(24)
%
|
|
Total
|
299
|
295
|
1
%
|
7
%
|
|
Adjusted operating margin1
|
|
|
|
|
|
APAC
|
7.8 %
|
6.9
%
|
90bps
|
90bps
|
|
Europe & Africa
|
5.2 %
|
5.0
%
|
20bps
|
30bps
|
|
Americas
|
6.1 %
|
7.3
%
|
(120)bps
|
(110)bps
|
|
Total
|
6.3 %
|
6.5 %
|
(20)bps
|
(10)bps
|
|
Segments have been redefined
following the UK Retail business being classified as an asset held
for sale and as a discontinued operation. See Note 2 for segmental
definitions.
APAC (32% of revenue and 39% of adjusted operating
profit)
Revenue grew 24% in constant currency, including organic
revenue growth of 9%, supported by market
share gains in key markets, and a contribution from acquisitions,
with new brands in early stages of development. Adjusted operating profit1 was up 41%, with
adjusted operating
margins1 up 90bps to 7.8%, driven by
operating leverage and the mix effect of faster-growing, higher
margin businesses. For H2
2024, continued growth is anticipated in many markets, with
margin growth expected to be partially offset by contract
wins.
Europe & Africa (34% of revenue and 28%
of adjusted
operating profit)
Revenue grew 18% in constant
currency, with outperformance against the market in Europe, a
continuation of order bank normalisation, market share growth and
new contract wins growing quickly. Performance in Africa remained
resilient. Adjusted
operating profit1 was up 25%, with continued elevated
adjusted operating
margins1 of 5.2%, despite some dilution of
accelerating contract wins. For H2
2024, growth is expected to be supported by some improvement
in order intake, which will partly offset the effect of order bank
normalisation over the last 18 months, with operating margins in
Europe expected to moderate towards historic levels.
Americas (34% of revenue and 33% of adjusted operating
profit)
Revenue fell (9)%
in constant currency. Our
market share across the region remained resilient, with key
markets stabilising and Central America performing well. There were
lower industry volumes across the region, with many markets at
historic lows, and some consequent pricing pressure. Derco
continues to be transformative for our business in the region, and
has helped to scale our business in the Americas, highlighted by
three Distribution contracts won in the Americas during
H1 2024, with the cost
synergy programme on track. Adjusted operating profit1 was down (24)%,
with adjusted operating
margins1 down
(110)bps from H1 2023, but only
(30)bps lower than H2 2023, to
6.1%. The cost synergies achieved
following the Derco acquisition have improved operating efficiency
across the region, and this has mostly mitigated the deleveraging
effect of reducing market volumes. For H2 2024, we have prudent expectations
for volume recovery, but margins are expected to improve,
reflecting an improved margin exit rate at the end of H1
2024.
For financial performance, cash
flow information and balance sheet information on our UK Retail business, classified as an
asset held for sale and discontinued operation, see note 9
Acquisitions and Disposals, in this report.
1. Operating profit
and operating margin stated before adjusting items at constant
currency rates
2. Organic growth is defined as revenue growth in operations that
have been open for at least a year at constant foreign exchange
rates. Note 14 APMs
Gross profit drivers
We provide disclosure on the
drivers of our gross profit, including:
• Gross profit
attributable to Vehicles: New Vehicles, Used Vehicles and the
associated income from finance and insurance products;
and
• Gross profit
attributable to Aftersales: Service and Parts
|
H1 2024
|
H1
2023
|
%
change
reported
|
%
change
constant
FX
|
|
£m
|
£m
|
Gross Profit
|
|
|
|
|
Vehicles
|
566
|
555
|
2
%
|
7
%
|
Aftersales
|
248
|
262
|
(5) %
|
- %
|
Total
|
814
|
817
|
-
%
|
5
%
|
During
the half year period, we generated 30% of gross profit through Aftersales (H1 2023:
32%).
Other financial items
Adjusting items: a pre-tax
expense of £31m (H1 2023: £45m) was reported in respect of
adjusting items for H1 2024. This was primarily driven by costs
related to acquisition and integration costs (£23m), and non-cash,
non-operational losses arising from hyperinflation accounting
relating to Ethiopia (£8m). Further details can be found in note 3
of the interim financial statements.
Net financing costs: Adjusted
net finance costs increased to £74m (H1 2023: £73m), driven by an
alignment of supplier terms, related to inventory financing
arrangements, at acquired businesses. The positive impact of a
reduction in average debt on net interest costs was partly offset
by some short term cash-funded inventory flows during the period.
Reported net finance costs were £82m (H1 2023: £97m). This includes
£8m of adjusting items relating to non cash, non-operational losses
arising from hyperinflationary accounting in Ethiopia.
Tax: The effective tax rate
on adjusted profit is 32.7% (H1 2023: 30.5%), and on a statutory
basis is 36.4% (H1 2023: 36.5%). The increase in the effective tax
rate on adjusted profit includes the impact of mix and the Group's
Pillar 2 tax liability from H1 2024. The effective tax rate is
expected to decline over time.
Non-controlling interests: Profits attributable to our non-controlling interests
increased to £9m (H1 2023: £7m). The Group's non-controlling
interests comprise a 40% interest in the Group's distribution
operations in the Philippines and a 30% holding in the
Mercedes-Benz distribution business in Indonesia. Other significant
non-controlling interests include a 30% share in NBT Brunei and a
10% share of Subaru Australia.
Dividend: The Board has
declared an interim dividend of 11.3p per ordinary share which will
be paid on 6th September 2024 to shareholders on the register at
close of business on 9th August 2024. The Dividend Reinvestment
Plan is available to ordinary shareholders and the final date for
receipt of elections to participate is 15th August 2024.
Capital expenditure: During
the first half of 2024, the Group incurred net capital expenditure
of £23m (H1 2023: £24m), consisting of £25m gross capital
expenditure (H1 2023: £25m) and £2m of proceeds from the sale of
property (H1 2023: £1m). In 2024, we continue to expect net capital
expenditure of less than 1% of Group sales.
Financing: As at 30 June
2024, the funding structure of the Group is comprised of a
committed syndicated revolving credit facility of £900m (FY 2023:
£900m), sterling Private Placement Loan Notes totalling £140m (FY
2023: £210m), a 5 year bond of £350m, at a fixed coupon of 6.5%, a
term facility of £250m (FY 2023: £250m) and debt remaining
outstanding from acquisitions £28m (FY 2023: £80m). As at 30 June
2024 the syndicated revolving credit facility was drawn £130m (FY
2023: £150m). Excluding our Revolving Credit Facility, 66% of the
Group's corporate debt is at fixed rates and is not due to be
repaid for at least 3 years. The Group remains well within its debt
covenants.
Pensions: As at 30 June 2024,
the IAS 19 net post-retirement surplus was £63m (2023: £67m), with
the decrease driven largely by lower than expected returns on
scheme assets partially offset by movements in corporate bond
yields affecting the discount rate assumption used to determine the
value of scheme liabilities. In line with the funding programme
agreed with the Trustees, the Group did not make any additional
cash contributions to the UK pension schemes (2023:
£2m).
RISKS
PRINCIPAL BUSINESS RISKS
The Board has reassessed the
principal business risks which could impact the performance of the
Group. These include:
Tier 1:
•
Cybersecurity incident;
• EV
transition risks;
•
Margin pressure (changing route to market, incentives);
•
Macro-economic conditions (cost inflation, economic
slowdown);
•
HSE: Health, safety or environmental incident; and
•
Political risks/social unrest;
Tier 2:
•
Acquisition ROI;
•
Business interruption (pandemic, natural hazards);
•
Financial reporting, fraud;
•
Foreign exchange volatility;
•
Legal/regulatory compliance;
•
Loss of Distribution contract;
•
Loss of technology systems (non-cyber);
•
People engagement and retention;
•
People future skills;
•
Supply chain disruption; and
•
Strategy delivery and transformation (digital).
The materialisation of these risks
could have an adverse effect on the Group's results or financial
condition. If more than one of these risks occur, the combined
overall effect of such events may be compounded. The Group faces
many other risks which, although important and subject to regular
review, have been assessed as less significant and are not listed
here. These include, for example, business interruption risks and
certain financial risks.
The Group has defined and
implemented systems of risk management and internal control
designed to address these risks. These systems can offer
reasonable, but not absolute assurance, regarding the management of
these risks to an acceptable level. In particular, the
effectiveness of these systems may change over time, for example
with acquisitions or disposals or as the business implements major
change programmes. The effectiveness of these systems are reviewed
annually by the Audit Committee and improvements are made as
required.
In H1 2024, 'New market entrants:
business models or technology' was removed from our Tier 2 risks.
This risk was originally identified in 2020 as new players arrived
with new technology offerings, primarily in the UK retail market.
In light of the UK Retail disposal, the Group's exposure to this
competition is no longer applicable.
APPENDIX - REGIONAL BUSINESS MODELS
Americas
|
|
Country
|
Brands
|
Argentina
|
Subaru, Suzuki
|
Barbados1
|
Changan, Chrysler, Daimler Trucks,
Dodge, Freightliner, FUSO, Isuzu, JCB, Jeep, John Deere,
Mercedes-Benz, Mitsubishi, Subaru, Suzuki, Western Star
|
Bolivia
|
Changan, Chevrolet, JAC Motors,
Joylong, Komatsu, Mazda, Renault, Subaru, Suzuki
|
Chile
|
BMW, BMW Motorrad, DFSK, Changan,
Geely, Great Wall, Hangcha, Haval, Hino, JAC Motors, Jaguar, JCB,
Komatsu, Land Rover, Landini, Massey Ferguson, Mazda, MINI,
Porsche, Renault, Rolls Royce, Still, Subaru, Suzuki,
Volvo
|
Colombia
|
Citroen, Develon, DFSK, Dieci,
Doosan, DS Automobiles, Hangcha, Hino, JAC Trucks, Jaguar, Komatsu,
Land Rover, Liebher, Linde, Mack, Mercedes-Benz, Still, Subaru,
Suzuki, XCMG
|
Costa Rica
|
Changan, JAC, Suzuki
|
Ecuador
|
Freightliner, Forland, Geely,
Mercedes-Benz, Subaru, Western Star
|
El Salvador
|
Freightliner, Geely,
Mercedes-Benz, Western Star
|
Guatemala
|
Freightliner, Geely,
Mercedes-Benz, Western Star
|
Honduras
|
Freightliner, Geely,
Mercedes-Benz, Western Star
|
Panama
|
Suzuki
|
Peru
|
BMW, BMW Motorrad, Changan,
Citroen, DFSK, Great Wall, Haval, Hino, JAC Motors, Komatsu, Mazda,
MINI, Renault, Still, Subaru, Suzuki, XCMG
|
Uruguay
|
Freightliner, Fuso,
Mercedes-Benz
|
1.Distribution agreements for these
brands across a range of Caribbean islands, centred in
Barbados
APAC
|
|
Country
|
Brands
|
Brunei
|
Lexus, Toyota
|
Guam2
|
BMW, Chevrolet, Lexus, Toyota,
Morrico heavy equipment3
|
Hong Kong
|
Hino, Jaguar, Land Rover, Lexus,
Maxus, ORA, Toyota
|
Indonesia
|
Great Wall, Harley Davidson,
Jaguar, Land Rover, Mercedes-Benz
|
Macau
|
Hino, Jaguar, Land Rover, Lexus,
ORA, Toyota
|
Saipan
|
Toyota, Lexus
|
Singapore
|
BYD Commercial Vehicles, Hino,
Lexus, Suzuki, Toyota
|
Philippines
|
Changan, Harley Davidson, Jaguar,
Land Rover, Mazda, Mercedes-Benz, Ram
|
Thailand
|
Jaguar, Land Rover, Tata
Motors
|
Australia
|
Distribution: Citroen, Peugeot,
Subaru
Retail only: Isuzu Ute, Jeep, Kia,
Mitsubishi, Volkswagen
|
New Zealand
|
Maxus, Subaru
|
2. Distribution agreements for
these brands across a range of Pacific islands, centred in
Guam
3. Morrico heavy equipment - Bomag,
CNHI International SA, Cummins, Daimler, Detroit Diesel
International Direct, Dieci, DTNA , EL Industries, Fuso, Haulotte,
Hyundai, Kohler, Load King, New Holland, Rosenbauer, Schwarze,
Sullivan Palatek, Vac Con, WanCo
Europe & Africa
|
|
Country
|
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
|
Luxembourg
|
BYD, Lexus, Toyota
|
North Macedonia
|
Lexus, Toyota
|
Poland
|
Distribution: Jaguar, Land
Rover
Retail only: BMW, BMW Motorrad,
MINI
|
Romania
|
Lexus, Toyota
|
Djibouti
|
BMW, Changan, Komatsu,
Toyota
|
Ethiopia
|
Hino, Komatsu, New Holland,
Suzuki, Toyota
|
Kenya4
|
BMW, BMW Motorrad, Changan,
Jaguar, Land Rover
|
4. Distribution agreement for
Changan also distributed to Tanzania, centred in Kenya and
distribution agreement for Jaguar, Land Rover also distributed to
Uganda, centred in Kenya
|
Continuing operations
|
|
Six months
to
30 Jun
2024
|
|
Six
months to
30 Jun
2023
|
Notes
|
£m
|
|
£m
|
|
Revenue
|
2
|
4,725
|
|
4,563
|
|
Cost of sales
|
|
(3,911)
|
|
(3,746)
|
|
Gross profit
|
|
814
|
|
817
|
|
Net operating expenses
|
|
(538)
|
|
(543)
|
|
Operating profit
|
2
|
276
|
|
274
|
|
Share of profit after tax of joint
ventures and associates
|
|
1
|
|
1
|
|
Profit before finance and tax
|
|
277
|
|
275
|
|
Finance income
|
4
|
22
|
|
24
|
|
Finance costs
|
4
|
(104)
|
|
(121)
|
|
Profit before tax from continuing
operations
|
|
195
|
|
178
|
|
Tax
|
5
|
(71)
|
|
(65)
|
|
Profit for the period from continuing
operations
|
|
124
|
|
113
|
|
Profit from discontinued
operations
|
|
5
|
|
26
|
|
Total profit for the period
|
|
129
|
|
139
|
|
|
|
|
|
|
|
Profit attributable to:
|
|
|
|
|
|
- Owners of the parent
|
|
120
|
|
132
|
|
- Non-controlling
interests
|
|
9
|
|
7
|
|
|
|
129
|
|
139
|
|
|
|
|
|
|
|
Earnings per share from continuing
operations attributable to the owners of the parent
|
|
|
|
|
Basic earnings per share
(pence)
|
6
|
27.9p
|
|
25.7p
|
|
Diluted earnings per share
(pence)
|
6
|
27.5p
|
|
25.4p
|
|
|
|
|
|
|
|
Earnings per share attributable to
the owners of the parent
|
|
|
|
|
|
Basic earnings per share
(pence)
|
6
|
29.1p
|
|
32.0p
|
|
Diluted earnings per share
(pence)
|
6
|
28.7p
|
|
31.6p
|
|
|
|
|
|
|
|
Alternative performance measures
|
|
|
|
|
|
Operating profit from continuing operations
|
|
276
|
|
274
|
|
Adjusting items within net
operating expenses:
|
3
|
23
|
|
21
|
|
Acquisition and integration
costs
|
|
23
|
|
21
|
|
Adjusted operating profit from continuing
operations
|
|
299
|
|
295
|
|
Share of profit after tax of joint
ventures and associates
|
|
1
|
|
1
|
|
Adjusted profit before finance and tax from continuing
operations
|
|
300
|
|
296
|
|
Net finance costs
|
|
(82)
|
|
(97)
|
|
Adjusting items within net finance
costs:
|
3
|
8
|
|
24
|
|
Net monetary loss on
hyperinflation
|
|
8
|
|
14
|
|
Interest on deferred dividend
payment
|
|
-
|
|
10
|
|
Adjusted profit before tax from continuing
operations
|
|
226
|
|
223
|
|
Tax on adjusted profit
|
|
(74)
|
|
(68)
|
|
Adjusted profit after tax from continuing
operations
|
|
152
|
|
155
|
|
|
|
|
|
|
|
Adjusted earnings per share from
continuing operations
|
|
|
|
|
|
Basic adjusted earnings per
share
|
6
|
34.7p
|
|
35.9p
|
|
Diluted adjusted earnings per
share
|
6
|
34.2p
|
|
35.4p
|
See note 14 on page
36 for further details
of alternative performance measures.
The notes on pages 17 to 38 are
an integral part of these condensed consolidated interim financial
statements.
|
Six months
to
30 Jun
2024
|
Six
months to
30 Jun
2023
|
|
£m
|
£m
|
Profit for the period
|
129
|
139
|
Other comprehensive income/(expense):
|
|
|
Items that will not be reclassified to the consolidated
income statement
|
|
|
Retirement benefit
schemes
|
|
|
- net actuarial losses
|
(5)
|
(18)
|
|
(5)
|
(18)
|
Items that may be or have been reclassified subsequently to
the consolidated income statement
|
|
|
Cash flow hedges
|
|
|
- net fair value losses
|
(40)
|
(62)
|
- tax on cash flow
hedges
|
9
|
16
|
Deferred tax on taxation
losses
|
-
|
1
|
Foreign currency
translation
|
|
|
Exchange differences on
translation of foreign operations
|
(117)
|
(49)
|
Adjustments for
hyperinflation
|
10
|
21
|
Taxation on hyperinflation
adjustments
|
(1)
|
(2)
|
|
(139)
|
(75)
|
Other comprehensive expense for
the period
|
(144)
|
(93)
|
Total comprehensive (expense)/income for the
period
|
(15)
|
46
|
|
|
|
Total comprehensive (expense)/income for the
period
|
|
|
- Owners of the parent
|
(19)
|
42
|
- Non-controlling
interests
|
4
|
4
|
|
(15)
|
46
|
Total comprehensive (expense)/income attributable to owners
of Inchcape plc arising from:
|
|
|
- Continuing operations
|
(24)
|
16
|
- Discontinued
operations
|
5
|
26
|
The notes on pages
17 to
38 are an integral part
of these condensed consolidated interim financial
statements.
|
|
As at
30 Jun
2024
|
As
at
31 Dec
2023
|
|
Notes
|
£m
|
£m
|
Non-current assets
|
|
|
|
Intangible assets
|
|
1,199
|
1,271
|
Property, plant and
equipment
|
|
641
|
893
|
Right-of-use assets
|
|
313
|
364
|
Investments in joint ventures and
associates
|
|
21
|
21
|
Financial assets at fair value
through other comprehensive income
|
10g
|
1
|
1
|
Derivative financial
instruments
|
10g
|
1
|
1
|
Trade and other
receivables
|
|
37
|
49
|
Deferred tax assets
|
|
113
|
105
|
Retirement benefit
asset
|
|
81
|
84
|
|
|
2,407
|
2,789
|
Current assets
|
|
|
|
Inventories
|
|
2,011
|
2,718
|
Trade and other
receivables
|
|
810
|
835
|
Financial assets at fair value
through other comprehensive income
|
10g
|
-
|
-
|
Derivative financial
instruments
|
10g
|
39
|
38
|
Current tax assets
|
|
61
|
56
|
Cash at bank and short term
deposits
|
8b
|
647
|
689
|
Assets held for sale and disposal
group
|
9b
|
710
|
14
|
|
|
4,278
|
4,350
|
Total assets
|
|
6,685
|
7,139
|
Current liabilities
|
|
|
|
Trade and other
payables
|
|
(2,495)
|
(3,150)
|
Derivative financial
instruments
|
10g
|
(153)
|
(88)
|
Current tax liabilities
|
|
(75)
|
(81)
|
Provisions
|
|
(65)
|
(69)
|
Lease liabilities
|
8b
|
(72)
|
(81)
|
Borrowings
|
8b
|
(559)
|
(652)
|
Liabilities directly associated
with the disposal group
|
9b
|
(470)
|
-
|
|
|
(3,889)
|
(4,121)
|
Non-current liabilities
|
|
|
|
Trade and other
payables
|
|
(69)
|
(69)
|
Provisions
|
|
(37)
|
(39)
|
Derivative financial
instruments
|
10g
|
-
|
(9)
|
Deferred tax
liabilities
|
|
(256)
|
(267)
|
Lease liabilities
|
8b
|
(295)
|
(359)
|
Borrowings
|
8b
|
(618)
|
(638)
|
Retirement benefit
liability
|
|
(18)
|
(17)
|
|
|
(1,293)
|
(1,398)
|
Total liabilities
|
|
(5,182)
|
(5,519)
|
Net assets
|
|
1,503
|
1,620
|
Equity
|
|
|
|
Share capital
|
7
|
42
|
42
|
Share premium
|
|
147
|
147
|
Capital redemption
reserve
|
7
|
143
|
143
|
Merger reserve
|
7
|
312
|
312
|
Other reserves
|
|
(191)
|
(63)
|
Retained earnings
|
|
957
|
940
|
Equity attributable to owners of the parent
|
|
1,410
|
1,521
|
Non-controlling
interests
|
|
93
|
99
|
Total equity
|
|
1,503
|
1,620
|
The notes on pages
17 to
38 are an integral part
of these condensed consolidated interim financial
statements.
|
Notes
|
Share
capital
£m
|
Share
Premium
£m
|
Capital
redemption reserve
£m
|
Merger
reserve
£m
|
Other
reserves
£m
|
Retained
earnings
£m
|
Total
equity attributable to owners of the parent
£m
|
Non-controlling interests
£m
|
Total
shareholders' equity
£m
|
At 1 January 2023
|
|
38
|
147
|
143
|
316
|
69
|
820
|
1,533
|
34
|
1,567
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
132
|
132
|
7
|
139
|
Other comprehensive expense
for
the period
|
|
-
|
-
|
-
|
-
|
(72)
|
(18)
|
(90)
|
(3)
|
(93)
|
Total comprehensive
(expense)/income for
the period
|
|
-
|
-
|
-
|
-
|
(72)
|
114
|
42
|
4
|
46
|
Hedging gains and losses
transferred to inventory
|
|
-
|
-
|
-
|
-
|
(3)
|
-
|
(3)
|
-
|
(3)
|
Written put option
|
|
-
|
-
|
-
|
-
|
-
|
(1)
|
(1)
|
-
|
(1)
|
Shares issued
|
|
4
|
-
|
-
|
(4)
|
-
|
-
|
-
|
-
|
-
|
Share-based payments, net of
tax
|
|
-
|
-
|
-
|
-
|
-
|
7
|
7
|
-
|
7
|
Purchase of own shares by the
Inchcape Employee Trust
|
|
-
|
-
|
-
|
-
|
-
|
(12)
|
(12)
|
-
|
(12)
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
- Owners of the parent
|
7b
|
-
|
-
|
-
|
-
|
-
|
(88)
|
(88)
|
-
|
(88)
|
- Non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(4)
|
(4)
|
At 30 June 2023
|
|
42
|
147
|
143
|
312
|
(6)
|
840
|
1,478
|
34
|
1,512
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
138
|
138
|
6
|
144
|
Other comprehensive
income/(expense) for
the period
|
|
-
|
-
|
-
|
-
|
(58)
|
(2)
|
(60)
|
-
|
(60)
|
Total comprehensive income for the
period
|
|
-
|
-
|
-
|
-
|
(58)
|
136
|
78
|
6
|
84
|
Hedging gains and losses
transferred to inventory
|
|
-
|
-
|
-
|
-
|
1
|
-
|
1
|
-
|
1
|
Acquisition of non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
3
|
3
|
(3)
|
-
|
Non-controlling interests on
acquisition of subsidiaries
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
64
|
64
|
Share-based payments, net of
tax
|
|
-
|
-
|
-
|
-
|
-
|
8
|
8
|
-
|
8
|
Purchase of own shares by the
Inchcape Employee Trust
|
|
-
|
-
|
-
|
-
|
-
|
(7)
|
(7)
|
-
|
(7)
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
- Owners of the parent
|
7b
|
-
|
-
|
-
|
-
|
-
|
(40)
|
(40)
|
-
|
(40)
|
- Non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(2)
|
(2)
|
At 31 December 2023
|
|
42
|
147
|
143
|
312
|
(63)
|
940
|
1,521
|
99
|
1,620
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2024
|
|
42
|
147
|
143
|
312
|
(63)
|
940
|
1,521
|
99
|
1,620
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
120
|
120
|
9
|
129
|
Other comprehensive
(expense)/income for the period
|
|
-
|
-
|
-
|
-
|
(134)
|
(5)
|
(139)
|
(5)
|
(144)
|
Total comprehensive
(expense)/income for the period
|
|
-
|
-
|
-
|
-
|
(134)
|
115
|
(19)
|
4
|
(15)
|
Hedging gains and losses
transferred to inventory
|
|
-
|
-
|
-
|
-
|
6
|
-
|
6
|
-
|
6
|
Share-based payments,
net of tax
|
|
-
|
-
|
-
|
-
|
-
|
9
|
9
|
-
|
9
|
Purchase of own shares by the
Inchcape Employee Trust
|
|
-
|
-
|
-
|
-
|
-
|
(7)
|
(7)
|
-
|
(7)
|
Non-controlling interests on
acquisition of subsidiaries
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
(1)
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
- Owners of the parent
|
7b
|
-
|
-
|
-
|
-
|
-
|
(100)
|
(100)
|
-
|
(100)
|
- Non-controlling
interests
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(9)
|
(9)
|
At 30 June 2024
|
|
42
|
147
|
143
|
312
|
(191)
|
957
|
1,410
|
93
|
1,503
|
The notes on pages
17 to
38 are an integral part
of these condensed consolidated interim financial
statements.
|
|
Six months
to
30 Jun 2024
|
Six
months to
30 Jun
2023
|
|
Notes
|
£m
|
£m
|
Cash generated from operating activities
|
|
|
|
Cash generated from
operations
|
8a
|
443
|
424
|
Tax paid
|
|
(80)
|
(89)
|
Interest received
|
|
20
|
22
|
Interest paid
|
|
(100)
|
(92)
|
Net cash generated from operating
activities
|
|
283
|
265
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Acquisition of businesses, net of
cash and overdrafts acquired
|
9a
|
-
|
(4)
|
Net cash inflow from sale of
businesses
|
|
-
|
2
|
Purchase of investments in joint
ventures and associates
|
|
-
|
(1)
|
Purchase of property, plant and
equipment
|
|
(34)
|
(32)
|
Purchase of intangible
assets
|
|
(2)
|
(3)
|
Proceeds from disposal of
property, plant and equipment
|
|
4
|
1
|
Dividends received from joint
ventures and associates
|
|
1
|
-
|
Receipt from finance sub-lease
receivables
|
|
1
|
1
|
Net cash used in investing activities
|
|
(30)
|
(36)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Purchase of own shares by the
Inchcape Employee Trust
|
|
(7)
|
(12)
|
Repayment of other
borrowings
|
8b
|
(110)
|
(550)
|
Cash inflow from bond
issuance
|
8b
|
-
|
348
|
Cash (outflow)/inflow from
revolving credit facility
|
8b
|
(20)
|
120
|
Repayment of acquisition financing
bridge facility
|
8b
|
-
|
(350)
|
Payments to former shareholders of
Derco group
|
|
-
|
(212)
|
Payment of capital element of
lease liabilities
|
8b
|
(43)
|
(46)
|
Equity dividends paid
|
7b
|
(100)
|
(88)
|
Dividends paid to non-controlling
interests
|
|
(9)
|
(4)
|
Net cash used in financing activities
|
|
(289)
|
(794)
|
|
|
|
|
Net decrease in cash and cash equivalents
|
8b
|
(36)
|
(565)
|
Cash and cash equivalents at
beginning of the period
|
|
440
|
1,050
|
Effect of foreign exchange rate
changes
|
|
(18)
|
(35)
|
Cash and cash equivalents at end of the
period
|
|
386
|
450
|
|
|
|
|
Cash and cash equivalents consist of:
|
|
|
|
Cash at bank
|
|
560
|
496
|
Short-term deposits
|
|
87
|
75
|
Bank overdrafts
|
|
(267)
|
(121)
|
Cash and cash equivalents included
in disposal groups held for sale
|
9b
|
6
|
-
|
|
|
386
|
450
|
The notes on pages
17 to
38 are an integral part
of these condensed consolidated interim financial
statements.
Basis of preparation
The condensed consolidated interim
financial statements for the period ended 30 June 2024 have been
prepared on a going concern basis in accordance with UK-adopted
International Accounting Standard 34 'Interim Financial Reporting'
and the Disclosure and Transparency Rules of the Financial Conduct
Authority. These condensed consolidated interim financial
statements should be read in conjunction with the Annual Report and
Accounts 2023, which have been prepared in accordance with
UK-adopted International Financial Reporting Standards (IFRS) and
the Companies Act 2006 applicable to companies reporting under
IFRS.
These condensed consolidated
interim financial statements are unaudited but have been reviewed
by the external auditors. The condensed consolidated interim
financial statements in the Interim Report do not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The Group's published consolidated financial
statements for the year ended 31 December 2023 were approved by the
Board of Directors on 4 March 2024 and delivered to the Registrar
of Companies.
The report of the auditors on
those accounts was unqualified and did not contain an emphasis of
matter paragraph or a statement under section 498 of the Companies
Act 2006. The condensed consolidated interim financial statements
on pages 10 to 40
were approved by the Board of Directors on 29
July 2024.
Going concern
Based on the Group's cash flow
forecasts and projections, the Board is satisfied that the Group
will be able to operate within the level of its committed
facilities for the foreseeable future. For this reason, the Board
continues to adopt the going concern basis in preparing its
financial statements. In making this assessment the Group has
considered available liquidity in relation to net debt and
committed facilities, the Group's latest forecasts for 2024
and 2025 cash flows together with appropriate
sensitivities.
Committed bank facilities and
Private Placement borrowings amount to £1,290m, of which £520m was
drawn at 30 June 2024. In addition, the Group issued a £350m bond
in June 2023 with a coupon of 6.5% which is due to mature in June
2028.
The Private Placement Loan notes
and the Term Loan (due to mature in December 2024) are subject to
the same interest cover covenant based on an adjusted EBITA measure
to interest on consolidated borrowings measured on a trailing
12-month basis at June and December.
The latest Group forecasts for
2024 and 2025 indicate that the Group is expected to be compliant
with this covenant throughout the forecast period and to have
sufficient liquidity to continue operating throughout that
period.
A range of sensitivities has been
applied to the forecasts to assess the Group's compliance with its
covenant requirements over the forecast period. These sensitivities
included:
• a
reduction in New and Used vehicle revenue and margins in 2025
resulting from a decreasing consumer demand in response to fiscal
tightening and resulting economic downturns;
• a
reduction in reported GBP earnings resulting from the strengthening
of sterling relative to other currencies;
• a
general liquidity reduction impacting working capital from
2025; with no mitigating actions applied in relation to the
sensitivities described above.
In scenarios where all of the
above sensitivities occur at the same time, the Group has modelled
the possibility of the interest cover covenant being breached in
2024 and 2025. With the interest cover covenant measured on a
trailing 12-month basis, the sensitised forecasts indicate that the
Group is not expected to breach any covenants and would be
compliant with the interest cover requirements throughout the
forecast period. Additionally, under these circumstances, the Group
expects to have sufficient funds to meet cash flow
requirements.
A reverse stress test scenario
analysis, concluded that a set of circumstances in which the Group
would breach its covenant or have insufficient funds to meet cash
flow requirements are considered to be remote, relative to the
sensitivities referred to above.
The Board therefore concluded that
the Group will be able to operate within the level of its committed
facilities for the foreseeable future and the Directors consider it
appropriate to adopt the going concern basis of accounting in
preparing the condensed consolidated interim financial
statements.
Accounting policies
The condensed set of consolidated
financial information has been prepared using accounting policies
consistent with those in the Group's Annual Report and Accounts
2023 with the exception of the following standards, amendments and
interpretations which have been newly adopted from 1 January
2024:
Newly adopted accounting standards
From 1 January 2024, the following
standards became effective for the Group's consolidated financial
statements:
Amendments to IAS 1 - Non-current
liabilities with covenants
Amendments to IAS 1 -
Classification of Liabilities as Current or Non-current
Amendments to IFRS 16 - Leases on
sale and leaseback
Amendments to IAS 7 and IFRS 7 -
Supplier finance
Amendments due to Finance (No. 2)
Act 2023 for Pillar Two income inclusion (IIR)
The adoption of the standards and
interpretations listed above has not led to any material impact on
the financial position or performance of the Group.
The Group will apply the
amendments to IAS7 and IFRS 7 for the first time in the current
year. The amendments add a disclosure objective to IAS 7 stating
that an entity is required to disclose information about its
supplier finance arrangements that enables users of financial
statements to assess the effects of those arrangements on the
entity's liabilities and cash flows. In addition, IFRS 7 is amended
to add supplier finance arrangements as an example within the
requirements to disclose information about an entity's exposure to
concentration of liquidity risk. The Group has entered into
vehicle funding arrangements to fund the purchase of vehicles (see
note 10f) and will provide the required disclosures in its annual
financial statements.
The Group has not early adopted
other standards, amendments to standards or interpretations that
have been issued but are not yet effective.
Standards not yet effective
The following standards were in
issue but were not yet effective at the balance sheet date. These
standards have not
yet been early adopted by the Group, and will be applied for the
Group's financial years commencing on or after
1 January 2025:
Amendments to IAS 21 - Lack of
exchangeability
IFRS 18 - Presentation and
Disclosure in Financial Statements
Management are currently reviewing
the new standards to assess the impact that they may have on the
Group's reported position and performance. Management do not expect
that the adoption of the standards listed above will have a
material impact on the financial statements of the
Group.
Designation of Ethiopia as a hyperinflationary
economy
The Group financial statements
include adjustments for hyperinflation, following the application
of IAS 29 Financial Reporting in Hyperinflationary Economies in
relation to the Group's operations with a functional currency of
Ethiopian Birr.
The Group's consolidated financial
statements include the results and financial position of its
Ethiopian operations restated to the purchasing power or
inflationary measuring unit current at the end of the period,
leading to a hyperinflationary loss in respect of monetary items
being reported in finance costs, and treated as an adjusting item.
The results of the Group's Ethiopian operations have been
translated at the closing exchange rate, as required by IAS 21 The
Effects of Change in Foreign Exchange Rates for hyperinflationary
foreign operations.
Whilst IAS 29 Financial Reporting
in Hyperinflationary Economies is applied in individual financial
statements as though the relevant economy was always
hyperinflationary, comparative amounts are not restated in
consolidated amounts already presented in a stable currency. The
resulting difference in the opening Ethiopian net assets has been
presented as a translation adjustment in other comprehensive
income.
The inflationary factors used by
the Group are the official price indices published by the Central
Statistical Agency of Ethiopia. Hyperinflationary adjustments have
been calculated using the price index prevailing at 30 June 2024,
which was a CPI index of 455.9 (31 December 2023: CPI index 425.1).
The adjusted results and financial position of Ethiopia were
translated at the period-end closing rate before being included in
the Group's consolidated financial statements.
Critical accounting judgements and key sources of estimation
uncertainty
The preparation of these condensed
consolidated interim financial statements in accordance with
generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge, actual results may ultimately differ from those
estimates. The estimates and underlying assumptions are reviewed on
an ongoing basis.
The Directors have made a number
of estimates and assumptions regarding the future and made some
significant judgements in applying the Group's accounting policies.
The critical accounting judgements and key sources of estimation
uncertainty remain consistent with those presented in the
accounting policies note within the Group's 2023 Annual Report and
Accounts. Those that are new or significant to the preparation of
the interim financial statements are presented below.
Impairment of goodwill and other indefinite life intangible
assets
The carrying amount of goodwill
and other indefinite life intangible assets is shown
below:
|
As at 30 Jun
2024
|
|
As at
31 Dec 2023
|
Goodwill
£m
|
Indefinite-
life intangible
assets
£m
|
Total
£m
|
|
Goodwill
£m
|
Indefinite-
life intangible
assets
£m
|
Total
£m
|
At 1 January
|
302
|
929
|
1,231
|
|
270
|
858
|
1,128
|
Businesses acquired
|
-
|
-
|
-
|
|
39
|
113
|
152
|
Period adjustments (see note
9a)
|
5
|
-
|
5
|
|
5
|
-
|
5
|
Reclassified to assets held for
sale
|
(2)
|
-
|
(2)
|
|
-
|
-
|
-
|
Effect of foreign exchange
rates
|
(15)
|
(57)
|
(72)
|
|
(12)
|
(42)
|
(54)
|
At 30 June/31 December
|
290
|
872
|
1,162
|
|
302
|
929
|
1,231
|
Goodwill acquired in a business
combination is allocated to the cash generating units (CGUs) or
group of CGUs (hereafter collectively referred to as 'CGU groups')
that are expected to benefit from the synergies associated with
that business combination. Indefinite-life intangible assets,
principally distribution agreements acquired in a business
combination,
are also allocated to the CGUs or CGU groups that are expected to
benefit from the cash flows associated with the
relevant agreements.
Indicators of impairment in goodwill and other
indefinite-life intangible assets
In accordance with the Group's
accounting policy, goodwill and other indefinite-life intangible
assets are tested at least annually for impairment and whenever
events or circumstances indicate that the carrying amount may not
be recoverable.
In the first half of 2024 , the
Group carried out an assessment as to whether any impairment
testing is required to be performed for the six months to 30 June
2024. As set out in IAS 36 Impairment of Assets, the assessment
involved the Group reviewing potential indicators of impairment to
determine if any of the Group's assets should be tested.
The review included examining data
trends on asset valuations, reviewing latest macro-economic data
including global economic forecasts, reviewing latest industry data
including forecasts of industry volumes and comparing the Group's
results against cash flows used in previously prepared impairment
models and latest forecasts. The conclusion reached from the review
performed was that there was no requirement to test any assets or
cash generating units for impairment for the six-month period to 30
June 2024.
At 31 December 2023, the Group's
value in use calculations prepared for the cash generating units
represented by Central America - Suzuki business in the Americas
were sensitive to a change in the key assumptions used. The
recoverable amount calculated for the Central America CGU
was £170m. Cash
flows were discounted back to present value using a pre-tax
discount rate of 12.6%.
The cash flows used within the
impairment model were based on assumptions which are sources of
estimation uncertainty and small movements in these assumptions
could lead to a further impairment. Management performed
sensitivity analysis on the key assumptions in the indefinite-life
intangible asset impairment model for Central America - Suzuki
using reasonably possible changes in these key assumptions. The
sensitivities were selected based on the inherent business
volatility and the metrics that closely align to the consequences
of climate change risks and opportunities detailed on pages 44 to
49 of the 2023 Annual Report and Accounts.
|
Increase/
(decrease) in assumption
|
Impairment charge
£m
|
Impairment credit
£m
|
Revenue CAGR (%)
|
(1.0%)/1.0%
|
(16)
|
18
|
Average gross margin (%)
|
(0.5%)/0.5%
|
(9)
|
9
|
Pre-tax discount rate
(%)
|
1.0%/(1.0%)
|
(19)
|
25
|
Long-term growth rate
(%)
|
(0.5%)/0.5%
|
(6)
|
7
|
Other CGUs
The Group's value in use
calculations are sensitive to a change in the key assumptions used.
However, with the exception
of the Group's Hino business in South America, a reasonably
possible change in a key assumption would not cause a material
impairment of goodwill or indefinite-life intangible assets in any
of the other CGU groups. The value in use calculations for the Hino
distribution agreement in South America exceeded the carrying value
by 24% as at 31 December 2023. A 1.4% increase in the discount
rate, a 3.1% reduction in the long-term growth rate, or an 18%
reduction in volumes in the forecast period, while holding all
other assumptions constant, would eliminate this
headroom.
Classification of vehicle funding
arrangements
The Group finances the purchase of
vehicles using vehicle funding facilities provided by various
lenders including the captive finance companies associated with
brand partners. In assessing whether the liabilities arising under
these arrangements should be classified within trade and other
payables rather than as an additional component of the Group's net
debt within borrowings, the Group considers a number of factors
including whether the arrangement is a requirement of the
relationship with the OEM, in relation to specific, separately
identifiable vehicles held as inventory and the duration of the
finance. Each agreement entered into has its own terms and
conditions and determining whether a new or renewed arrangement
should be classified within trade and other payables requires
significant management judgement (see note 10f).
Adjusting items
The Directors believe that
adjusted profit and earnings per share measures provide additional
useful information to shareholders on the performance of the
business. These measures are consistent with how business
performance is measured internally by the Board and Executive
Committee. The operating profit before adjusting items and profit
before tax and adjusting items measures are not recognised profit
measures under IFRS and may not be directly comparable with such
profit measures used by other companies. The classification of
adjusting items requires significant management judgement after
considering the nature and intentions of a transaction. The Group's
definitions of adjusting items are outlined within the Group
accounting policies and note 3 provides further details on current
year adjusting items and their adherence to Group
policy.
In the period, the Group has
reported an aggregate pre-tax adjusting items expense of £31m (see
note 3). The separate reporting of adjusting items helps provide
additional useful information regarding the Group's underlying
business performance and is used by management to facilitate
internal performance analysis. Items that may be considered as
adjusting items include gains or losses on the disposal of
businesses, restructuring of businesses, acquisition and
integration costs, asset impairments and the tax effects of these
items. Any reversal of an amount previously recognised as an
adjusting item would also be recognised as an adjusting item in a
subsequent period.
Alternative performance measures (APMs)
The consolidated income statement
presents only IFRS measures which is in line with the basis of
preparation disclosed in this note. The alternative performance
measures used by the Group are included in note 14. This includes
further information on the definitions, purpose and reconciliation
to IFRS measures.
The Group has three reportable
segments which have been identified based on the operating segments
of the Group that are regularly reviewed by the chief operating
decision-maker, which has been determined to be the Executive
Committee, in order to assess performance and allocate resources.
Operating segments are then aggregated into reporting segments to
combine those with similar economic characteristics. Following the
classification in the current period of the Group's retail
operations in the UK as a discontinued operation, the Group's
internal reporting has been updated to no longer distinguish
between 'Distribution' and 'Retail'. As a result the Group's
remaining retail operation in Europe has been combined with the
Europe & Africa distribution business to form a single
reportable segment.
The Group reports the performance
of its reporting segments after the allocation of central costs.
These represent costs of Group functions. Reporting segment
performance for 2023 has been restated for the re-allocation of
central costs following the classification of the UK retail
operations as a discontinued operation.
The following summary describes the
operations of each of the Group's reportable segments:
APAC
Europe & Africa
Americas
|
Exclusive distribution, sales and
marketing activities of New Vehicles and Parts.
Sale of New and Used vehicles
together with logistics services where the Group may also be the
exclusive distributor, alongside associated Aftersales activities
of service, bodyshop repairs and parts sales.
|
|
APAC
|
Europe &
Africa
|
Americas
|
Total
|
Six months to 30 June 2024
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
|
|
|
|
Total revenue
|
1,495
|
1,622
|
1,608
|
4,725
|
Results
|
|
|
|
|
Adjusted operating profit from
continuing operations
|
116
|
85
|
98
|
299
|
Operating adjusting
items
|
|
|
|
(23)
|
Operating profit from continuing
operations
|
|
|
|
276
|
Share of profits after tax of
joint ventures and associates
|
|
|
|
1
|
Profit before finance and
tax
|
|
|
|
277
|
Finance income
|
|
|
|
22
|
Finance costs
|
|
|
|
(104)
|
Profit before tax from continuing
operations
|
|
|
|
195
|
Tax
|
|
|
|
(71)
|
Profit for the period from
continuing operations
|
|
|
|
124
|
The Group's reported segments are
based on the location of the Group's assets. Revenue earned from
sales is disclosed by origin and is not materially different from
revenue by destination. Revenue is further analysed as
follows:
Six months to 30 June 2024
|
£m
|
Chile
|
738
|
Australia
|
595
|
Rest of the world
|
3,392
|
Group
|
4,725
|
|
APAC
|
Europe
& Africa
|
Americas
|
Total
|
Six months to 30 June 2023
(restated)
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
|
|
|
|
Total revenue
|
1,255
|
1,397
|
1,911
|
4,563
|
Results
|
|
|
|
|
Adjusted operating profit from
continuing operations
|
86
|
70
|
139
|
295
|
Operating adjusting
items
|
|
|
|
(21)
|
Operating profit from continuing
operations
|
|
|
|
274
|
Share of losses after tax of joint
ventures and associates
|
|
|
|
1
|
Profit before finance and
tax
|
|
|
|
275
|
Finance income
|
|
|
|
24
|
Finance costs
|
|
|
|
(121)
|
Profit before tax from continuing
operations
|
|
|
|
178
|
Tax
|
|
|
|
(65)
|
Profit for the period from
continuing operations
|
|
|
|
113
|
The Group's reported segments are
based on the location of the Group's assets. Revenue earned from
sales is disclosed by origin and is not materially different from
revenue by destination. Revenue is further analysed as
follows:
Six months to 30 June
2023
|
£m
|
Chile
|
897
|
Australia
|
662
|
Rest of the world
|
3,004
|
Group
|
4,563
|
|
Six months
to
30 Jun
2024
|
Six
months to
30 Jun 2023
|
From continuing
operations
|
£m
|
£m
|
Acquisition and integration
costs
|
(23)
|
(21)
|
Total adjusting items in operating
profit
|
(23)
|
(21)
|
Adjusting items in finance
costs:
|
|
|
Net monetary loss on
hyperinflation
|
(8)
|
(14)
|
Interest costs on deferred
dividend payment
|
-
|
(10)
|
Total adjusting items before
tax
|
(31)
|
(45)
|
Tax on adjusting items (note
5)
|
3
|
3
|
Total adjusting items
|
(28)
|
(42)
|
During the period, operating costs
of £23m (2023: £21m) have been incurred in connection with
the acquisition and integration of businesses. These costs have
been reported as adjusting items to better reflect the underlying
performance of the business. These primarily relate to the
acquisition and integration of the Derco group. For more details on
acquisitions, please refer to note 9.
At 31 December 2022 a liability
was acquired, as part of the Derco acquisition, for the payment of
a pre-completion dividend to former shareholders. The payment of
this dividend was agreed to be made in four tranches, throughout
2023, with interest accruing on the outstanding amounts. At 30 June
2023, three of the tranches had been paid and interest of £10m had
been recognised. This interest expense was recognised within
finance costs and reported as an adjusting item.
During 2022, Ethiopia was
designated as a hyperinflationary economy as its three-year
cumulative inflation rate exceeded 100%. The Group financial
statements include adjustments for hyperinflation, following the
application of IAS 29 Financial
Reporting in Hyperinflationary Economies in relation to the Group's
operations with a functional currency of Ethiopian Birr. The
results and financial position of Ethiopia for the six months ended
30 June 2024 have been restated to include the effect of indexation
and the resulting £8m net monetary loss on hyperinflation (2023:
net monetary loss of £14m) has been recognised within net finance
costs and reported as an adjusting item.
|
As at
30 Jun 2024
|
As
at
30 Jun
2023
|
From continuing
operations
|
£m
|
£m
|
Interest payable on bank
borrowings
|
30
|
42
|
Interest payable on other
borrowings
|
22
|
17
|
Lease finance costs
|
9
|
9
|
Interest on inventory
financing
|
26
|
16
|
Net monetary loss on
hyperinflation (note 3)
|
8
|
14
|
Interest on deferred dividend
payment
|
-
|
10
|
Other finance costs
|
9
|
13
|
Finance costs
|
104
|
121
|
Bank and other interest
receivable
|
(18)
|
(20)
|
Net interest income on
post-retirement plan assets and liabilities
|
(2)
|
(2)
|
Other finance income
|
(2)
|
(2)
|
Finance income
|
(22)
|
(24)
|
Net finance costs
|
82
|
97
|
Analysed as:
|
|
|
Net finance costs excluding
adjusting finance costs
|
74
|
73
|
Finance costs reported as
adjusting items
|
8
|
24
|
Net finance costs
|
82
|
97
|
|
|
Six months
to
30 Jun 2024
|
Six
months to
30 Jun
2023
|
From continuing
operations
|
|
£m
|
£m
|
Current tax
|
- United Kingdom tax
|
1
|
-
|
|
- Overseas tax
|
67
|
84
|
Adjustments to prior year
liabilities
|
- United Kingdom tax
|
-
|
-
|
|
- Overseas tax
|
-
|
(3)
|
Current tax
|
|
68
|
81
|
Deferred tax
|
|
3
|
(16)
|
Total tax charge
|
|
71
|
65
|
|
|
|
|
|
- Tax charge on profit before
adjusting items
|
74
|
68
|
|
- Tax credit on adjusting
items
|
(3)
|
(3)
|
Total tax charge
|
|
71
|
65
|
The tax charge for the 6 months
ended 30 June 2024 has been calculated by applying the estimated
average annual effective income tax rate for each jurisdiction in
which Inchcape operates to the interim period pre-tax income of
each jurisdiction as required by IAS 34 'Interim Financial
Reporting'. Tax credited on adjusting items has been separately
calculated and is disclosed above. Details of the adjusting items
for the period can be found in note 3.
The effective tax rate for the
period to 30 June 2024 is 36.4% compared to 36.5% for the same
period last year. The effective tax rate on adjusted profit for the
period is 32.7% compared to 30.5% for the same period last
year.
From 1 January 2024, the Group is
required to record a current tax expense in relation to the OECD
Pillar Two model rules. Included within the total tax expense for
the period to 30 June is a current tax expense in relation to
Pillar Two of £2m, split between United Kingdom Pillar Two tax of
£1m and Overseas Pillar Two tax of £1m. The Overseas Pillar Two tax
expense element relates to markets where local domestic top-up tax
legislation has been enacted. The United Kingdom Pillar Two tax
expense element relates to overseas markets where local domestic
top-up tax legislation has not been enacted, meaning the top-up tax
is accrued and payable by Inchcape plc.
The total tax charge in the period
includes the impact of IAS 29 Financial Reporting for
Hyperinflationary Economies in relation to the financial position
of Ethiopia (see note 3).
Factors affecting current and future tax
charges
The Group's future tax charge, and
effective tax rate, could be affected by several factors including;
the resolution of audits and disputes, changes in tax laws or tax
rates, repatriation of cash from overseas markets to the UK, the
ability to utilise brought forward losses, the impact of UK
corporate interest restrictions and business acquisitions and
disposals. In addition, a change in profit mix between low and high
taxed jurisdictions will impact the Group's future tax
charge.
The utilisation of brought forward
tax losses or the recognition of deferred tax assets associated
with such losses may also give rise to tax charges or credits. The
recognition of deferred tax assets, particularly in respect of tax
losses, is based upon an assessment of whether it is probable that
there will be sufficient and suitable taxable profits in the
relevant legal entity or tax group against which to utilise the
assets in the future. Judgement is required when determining
probable future taxable profits. In the event that actual taxable
profits are different to those forecast, the Group's future tax
expense and effective tax rate could be affected.
The Group has published its
approach to tax on www.inchcape.com covering its tax strategy and governance
framework.
|
Six months
to
30 Jun 2024
|
Six
months to
30 Jun
2023
|
|
£m
|
£m
|
Profit for the period
|
129
|
139
|
Non-controlling
interests
|
(9)
|
(7)
|
Basic earnings
|
120
|
132
|
Profit for the period from
discontinued operations
|
(5)
|
(26)
|
Basic earnings from continuing operations attributable to
owners of the parent
|
115
|
106
|
Adjusting items
|
28
|
42
|
Adjusted earnings from continuing operations attributable to
owners of the parent
|
143
|
148
|
|
|
|
Basic earnings per share
|
|
|
Basic earnings per share from
continuing operations
|
27.9p
|
25.7p
|
Basic earnings per share from
discontinued operations
|
1.2
|
6.3p
|
Total basic earnings per
share
|
29.1p
|
32.0p
|
Diluted earnings per share
|
|
|
Diluted earnings per share from
continuing operations1
|
27.5p
|
25.4p
|
Diluted earnings per share from
discontinued operations
|
1.2p
|
6.2p
|
Total diluted earnings per
share
|
28.7p
|
31.6p
|
Adjusted earnings per share from continuing
operations
|
|
|
Basic Adjusted earnings per share
from continuing operations
|
34.7p
|
35.9p
|
Diluted Adjusted earnings per
share from continuing operations
|
34.2p
|
35.4p
|
1. Due to the impact of
dilutive ordinary shares having the effect of decreasing both the
loss attributable to discontinued operations and the loss
attributable to total operations, the basic earnings per share
calculated has been shown.
|
Six months
to
30 Jun 2024
|
Six
months to
30 Jun
2023
|
|
number
|
number
|
Weighted average number of fully
paid ordinary shares in issue during the period
|
413,007,132
|
412,365,247
|
Weighted average number of fully
paid ordinary shares in issue during the period:
|
|
|
- Held by the Inchcape Employee
Trust
|
(974,210)
|
(487,899)
|
Weighted average number of fully
paid ordinary shares for the purposes of basic EPS
|
412,032,922
|
411,877,348
|
Dilutive effect of potential
ordinary shares
|
6,044,221
|
6,152,343
|
Adjusted weighted average number
of fully paid ordinary shares in issue during the period for the
purposes of diluted EPS
|
418,077,143
|
418,029,691
|
Basic earnings/(loss) per share is
calculated by dividing the Basic earnings/(loss) for the period by
the weighted average number of fully paid ordinary shares in issue
during the period, less those shares held by the Inchcape Employee
Trust and repurchased as part of the share buyback
programme.
Diluted earnings/(loss) per share
is calculated on the same basis as the Basic earnings/(loss) per
share with a further adjustment to the weighted average number of
fully paid ordinary shares to reflect the effect of all dilutive
potential ordinary shares. Dilutive potential ordinary shares
comprise share options and other share-based awards.
Basic Adjusted earnings (which
excludes adjusting items) is adopted to assist the reader in
understanding the underlying performance of the Group. Adjusted
earnings per share is calculated by dividing the Adjusted earnings
for the period by the weighted average number of fully paid
ordinary shares in issue during the period, less those shares held
by the Inchcape Employee Trust and repurchased as part of the share
buyback programme.
Diluted Adjusted earnings per
share is calculated on the same basis as the Basic Adjusted
earnings per share with a further adjustment to the weighted
average number of fully paid ordinary shares to reflect the effect
of all dilutive potential ordinary shares. Dilutive potential
ordinary shares comprise share options and other share-based
awards.
Information presented for diluted
and diluted adjusted earnings per ordinary share uses the weighted
average number of shares as adjusted for potentially dilutive
ordinary shares as the denominator, unless it has the effect of
increasing the profit or decreasing the loss attributable to each
share.
7
SHAREHOLDERS' EQUITY
A. Issue of ordinary shares
As at 30 June 2024, the
issued share capital of the Company was 413,007,132 shares (June
and December 2023: 413,007,132 shares). During the first half of
2023, the Company issued 38,513,102 ordinary shares of 10p each in
connection with the acquisition of the Derco group.
During the period, the Group
issued £nil (June 2023 - £nil, December 2023 - £nil) of ordinary
shares exercised under the Group's share option schemes.
Share buyback programme
During the six months ended 30
June 2024, the Company repurchased none of its own shares (June
2023: none; December 2023: none).
B. Dividends
The following dividends were paid
to equity holders of the parent:
|
Six months
to
30 Jun 2024
|
Six
months to
30 Jun
2023
|
Year
to
31 Dec
2023
|
|
£m
|
£m
|
£m
|
Final dividend for the year ended
31 December 2023 of 24.3p per share (2022: 21.3p per
share)
|
100
|
88
|
88
|
Interim dividend for the six
months ended 30 June 2023 of 9.6p per share (2022: 7.5p per
share)
|
-
|
-
|
40
|
|
100
|
88
|
128
|
An interim dividend of 11.3p per
share for the period ending 30 June 2024 was approved by the Board
on 29 July 2024 and will be paid on 6 September 2024 to
shareholders who are on the register at close of business on 9
August 2024. The Dividend Reinvestment Plan (DRIP) is available to
ordinary shareholders and the final date for receipt of elections
to participate in the DRIP is 15 August 2024.
A. Reconciliation of cash generated from
operations
|
Six months
to
30 Jun
2024
|
Six
months to
30 Jun 2023
|
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
Operating profit - continuing
operations
|
276
|
274
|
Operating profit - discontinued
operations
|
7
|
32
|
Adjusting items
|
23
|
21
|
Amortisation including
non-adjusting impairment charges
|
5
|
6
|
Depreciation of property, plant
and equipment including non-adjusting impairment charges
|
25
|
24
|
Depreciation of right-of-use
assets
|
40
|
40
|
Share-based payments
charge
|
9
|
7
|
Decrease/(increase) in
inventories
|
330
|
(196)
|
Increase in trade and other
receivables
|
(99)
|
(43)
|
(Decrease)/increase in trade and
other payables
|
(142)
|
274
|
(Decrease)/increase in
provisions
|
(6)
|
7
|
Pension contributions more than
pension charge for the period1
|
-
|
-
|
Increase in interest in leased
vehicles
|
(4)
|
(1)
|
Payments in respect of operating
adjusting items
|
(21)
|
(21)
|
Cash generated from operations
|
443
|
424
|
1. Includes additional
payments of £nil (30 June 2023: - £nil).
B. Net debt reconciliation
|
Liabilities from financing
activities
|
|
Assets
|
|
Borrowings
£m
|
Leases
£m
|
Sub-total
£m
|
|
Cash/bank
overdrafts
£m
|
Total
net debt
£m
|
Net (debt)/funds at 1 January 2023
|
(1,428)
|
(499)
|
(1,927)
|
|
1,050
|
(877)
|
Cash flows
|
432
|
46
|
478
|
|
(561)
|
(83)
|
Period adjustments
|
(7)
|
-
|
(7)
|
|
(4)
|
(11)
|
New lease liabilities
|
-
|
(34)
|
(34)
|
|
-
|
(34)
|
Other non-cash
movements
|
(3)
|
(2)
|
(5)
|
|
-
|
(5)
|
Foreign exchange
adjustments
|
(8)
|
9
|
1
|
|
(35)
|
(34)
|
Net (debt)/funds at 30 June 2023
|
(1,014)
|
(480)
|
(1,494)
|
|
450
|
(1,044)
|
Cash flows
|
(20)
|
41
|
21
|
|
161
|
182
|
Acquisitions
|
(23)
|
(11)
|
(34)
|
|
(146)
|
(180)
|
Period adjustments
|
-
|
(1)
|
(1)
|
|
13
|
12
|
Disposals
|
-
|
-
|
-
|
|
1
|
1
|
New lease liabilities
|
-
|
(3)
|
(3)
|
|
-
|
(3)
|
Other non-cash
movements
|
(3)
|
2
|
(1)
|
|
-
|
(1)
|
Foreign exchange
adjustments
|
19
|
12
|
31
|
|
(39)
|
(8)
|
Net (debt)/funds at 1 January 2024
|
(1,041)
|
(440)
|
(1,481)
|
|
440
|
(1,041)
|
Cash flows
|
130
|
43
|
173
|
|
(36)
|
137
|
New lease liabilities
|
-
|
(40)
|
(40)
|
|
-
|
(40)
|
Transferred to assets/liabilities
held for sale
|
-
|
60
|
60
|
|
-
|
60
|
Other non-cash
movements
|
(3)
|
(1)
|
(4)
|
|
-
|
(4)
|
Foreign exchange
adjustments
|
4
|
11
|
15
|
|
(18)
|
(3)
|
Net (debt)/funds at 30 June 2024
|
(910)
|
(367)
|
(1,277)
|
|
386
|
(891)
|
Net debt is analysed as
follows:
|
As at
30 Jun 2024
|
As
at
31 Dec
2023
|
As
at
30 Jun
2023
|
|
£m
|
£m
|
£m
|
Cash at bank and short term
deposits as per the statement of financial position
|
647
|
689
|
571
|
Cash and cash equivalents included
in disposal groups held for sale
|
6
|
-
|
-
|
Borrowings - disclosed as current
liabilities
|
(559)
|
(652)
|
(251)
|
Add back: amounts treated as debt
financing (see below)
|
292
|
403
|
130
|
Cash and cash equivalents as per the statement of cash
flows
|
386
|
440
|
450
|
Debt financing
|
|
|
|
Borrowings - disclosed as current
liabilities and treated as debt financing (see above)
|
(292)
|
(403)
|
(130)
|
Borrowings - disclosed as
non-current liabilities
|
(618)
|
(638)
|
(884)
|
Lease liabilities
|
(367)
|
(440)
|
(480)
|
Debt financing
|
(1,277)
|
(1,481)
|
(1,494)
|
Net debt
|
(891)
|
(1,041)
|
(1,044)
|
Add back: lease
liabilities
|
367
|
440
|
480
|
Adjusted net debt
|
(524)
|
(601)
|
(564)
|
Borrowings disclosed as current
liabilities include the £250m Term Loan due in December 2024
and bank overdrafts held in cash pooling arrangements which have
not been offset in the consolidated statement of financial
position. Bank overdrafts are included within cash and cash
equivalents in the consolidated statement of cash flows.
|
As at
30 Jun 2024
|
As
at
31 Dec
2023
|
As
at
30 Jun
2023
|
|
£m
|
£m
|
£m
|
Cash at bank
|
560
|
610
|
496
|
Short-term deposits
|
87
|
79
|
75
|
Bank overdrafts
|
(267)
|
(249)
|
(121)
|
Cash and cash equivalents included
in disposal groups held for sale
|
6
|
-
|
-
|
|
386
|
440
|
450
|
£94m (31
December 2023: £95m; 30 June 2023: £94m) of cash and cash equivalents
is held in Ethiopia where prior approval is required to transfer
funds abroad, and currency may not be available locally to effect
such transfers.
a. Acquisitions
During the period, measurement
period adjustments were made in respect of acquisitions which
completed in the second half of 2023 which resulted in an increase
in goodwill of £5m.
Disposals and discontinued operations
During the period the Group
announced that, following a review of strategic options announced
in January 2024, it had agreed to sell its UK Retail operations to
Group 1 Automotive UK Limited, a wholly-owned subsidiary of Group 1
Automotive, Inc. for a cash consideration of approximately £346m.
The sale is expected to complete in Q3 2024. The UK Retail
operation is reported in the current period as a discontinued
operation. Financial information relating to the discontinued
operation for the period to the date of disposal is set out
below.
Financial performance and cash flow
information
The financial performance and cash
flow information presented are for the six months ended 30 June
2024 and for the six months to 30 June 2023.
|
Six months
to
30 Jun
2024
|
Six
months to
30 Jun 2023
|
|
£m
|
£m
|
Revenue
|
1,032
|
1,065
|
Expenses1
|
(1,025)
|
(1,033)
|
Operating profit
|
7
|
32
|
Finance costs
|
(8)
|
(6)
|
Profit before tax
|
(1)
|
26
|
Tax
|
6
|
-
|
Profit after tax of discontinued operations
|
5
|
26
|
|
|
|
Net cash inflow from operating
activities
|
7
|
28
|
Net cash outflow from investing
activities
|
(9)
|
(10)
|
Net cash outflow from financing
activities
|
(3)
|
(4)
|
Net (decrease)/increase from cash generated from discontinued
operations
|
(5)
|
14
|
1. Transaction and
separation costs of £10m were incurred in the period in relation to
the planned disposal of the UK Retail business. The costs relate to
legal fees, bankers' fees and other professional fees.
Assets and liabilities of disposal groups classified as held
for sale
The disposal groups relate to the
assets and liabilities attributable to the agreed disposal of the
UK Retail business.
|
Total
30 June
2024
|
|
£m
|
Intangible assets
|
2
|
Property, plant &
equipment
|
262
|
Right of use assets
|
54
|
Deferred tax assets
|
7
|
Inventories
|
296
|
Trade and other
receivables
|
83
|
Cash and cash
equivalents
|
6
|
Total assets of disposal groups held for
sale
|
710
|
Trade and other
payables
|
(408)
|
Provisions
|
(2)
|
Lease Liabilities
|
(60)
|
Total liabilities of disposal groups held for
sale
|
(470)
|
Assets classified as held for sale
|
31 December
2023
|
|
£m
|
Assets classified as held for
sale
|
14
|
Assets held for sale related to
surplus properties in the United Kingdom which were actively
marketed with a view to sale.
10 FINANCIAL RISK MANAGEMENT
a. Financial risk factors
Exposure to financial risks
comprising market risks (currency risk and interest rate risk),
funding and liquidity risk and counterparty risk arises in the
normal course of the Group's business.
During the six months to 30 June
2024, the Group has continued to apply the financial risk
management process and policies as detailed in the Group's
principal risks and risk management process included in the Annual
Report and Accounts 2023.
The condensed consolidated interim financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements and further details can
be found in note 23 of the Annual Report and
Accounts 2023.
b. Foreign currency risk
The Group publishes its
consolidated interim financial statements in sterling and faces
currency risk on the translation of its earnings and net assets, a
significant proportion of which are in currencies other than
sterling.
Transaction exposure hedging
The Group has transactional
currency exposures, where sales or purchases by an operating unit
are in currencies other than in that unit's reporting currency. For
a significant proportion of the Group these exposures are removed
as trading is denominated in the relevant local currency. In
particular, local billing arrangements are in place for many of our
businesses with our brand partners. The principal exception is for
our business in Australia which purchases vehicles in Japanese yen
and our South and Central American businesses which purchase
vehicles in Japanese yen, US dollars, Euros and Chinese
yuan.
In this instance, the Group seeks
to hedge forecast transactional foreign exchange rate risk using
forward foreign currency exchange contracts. The effective portion
of the gain or loss on the hedge is initially recognised in the
consolidated statement of comprehensive income to the extent it is
effective. When the hedged forecast transaction results in the
recognition of a non-financial asset or liability then, at the time
the asset or liability is recognised, the associated gains or
losses that had previously been recognised in other comprehensive
income are included in the initial measurement of the acquisition
cost or other carrying amount of the asset or liability.
For all other cash flow hedges,
the gains or losses that are recognised in other comprehensive
income are transferred to the consolidated income statement in the
same period in which the hedged forecast transaction affects the
consolidated income statement. Under IFRS 9 Financial Instruments,
hedges are documented and tested for the hedge effectiveness
on
an ongoing basis.
c. Interest rate risk
The Group's interest rate policy
has the objective of minimising net interest expense and protecting
the Group from material adverse movements in interest rates. The
Group's exposure to the risk of changes in market interest rates
arises primarily from the floating rate interest payable on the
Group's bank borrowings, supplier-related finance and the returns
available on surplus cash. Excluding the Revolving Credit Facility,
66% of the Group's corporate debt is at fixed rates of interest and
is not due to be repaid for at least three years.
d. Credit risk
Credit risk represents the risk
that a counterparty will not meet its obligations leading to a
financial loss for the Group. Credit risk arises from cash and cash
equivalents, trade receivables and other financial assets. The
Group monitors its credit exposure to its counterparties via their
credit ratings (where applicable) and through its policy of
limiting its exposure to any one party to ensure that they are
within Board approved limits and that there are no significant
concentrations of credit risk. Group policy is to deposit cash and
use financial instruments with counterparties with a long-term
credit rating of A or better, where available. The concentration of
credit risk with respect to trade receivables is very limited due
to the Group's broad customer base across a number of geographic
regions and the historically low default loss percentage incurred
by the Group.
e. Liquidity risk
As at 30 June 2024, the committed
funding facilities of the Group comprised a syndicated revolving
credit facility of £900m (31 December 2023: £900m), sterling
Private Placement Loan Notes totalling £140m (31 December 2023:
£210m), a five-year bond of £350m (31 December 2023: £350m), and a
term loan facility of £250m due to mature in December 2024 (31
December 2023: £250m). As at 30 June 2024, £130m of the £900m
syndicated revolving credit facility was drawn (31 December 2023:
£150m).
In June 2023, the Group issued
£350m Guaranteed Notes ("the Notes") due 2028 with a coupon rate of
6.5%. The proceeds from the issue of the Notes were used to repay
the £350m Bridge Facility entered into as part of the acquisition
of the Derco group in 2022. The £350m public bond is held at
amortised cost.
In December 2023, the Group's
syndicated revolving credit facility was amended, increasing the
facility to £900m and extending the maturity to December
2028.
Private Placement Loan Notes of
£70m were repaid in May 2024, reducing the total from £210m to
£140m.
The Term Loan and Private
Placement borrowings are subject to the same interest cover
covenant based on an adjusted EBITA measure to interest on
consolidated borrowings measured on a trailing 12-month basis at
June and December. The Group is required to maintain a ratio of not
less than three to one and was compliant with this covenant as at
30 June 2024
f. Vehicle funding arrangements
The Group finances the purchase of
new vehicles for sale and a portion of used vehicle inventories
using vehicle funding facilities provided by various lenders
including the captive finance companies associated with brand
partners. Such arrangements generally are uncommitted facilities
and have a maturity of 180 days or less. Amounts due under these
vehicle funding arrangements are included within trade and other
payables in the consolidated statement of financial position.
Related cash flows are reported within cash flows from operating
activities in the consolidated statement of cash flows. As at 30
June 2024, the total amount outstanding under such arrangements was
£1,434m (31 December 2023: £1,877m).
Vehicle funding facilities are
subject to SONIA (or similar) interest rates. The interest incurred
under these arrangements is included within finance costs in the
consolidated income statement and reported as interest on inventory
financing (see note 4). Related cash flows are reported as interest
paid in the consolidated statement of cash flows.
g. Fair value measurements
In accordance with IFRS 13,
disclosure is required for financial instruments that are measured
in the consolidated statement of financial position at fair value.
This requires disclosure of fair value measurements by level for
the following fair value measurement hierarchy:
• quoted prices in active
markets (level 1);
• inputs other than quoted
prices that are observable for the asset or liability, either
directly or indirectly (level 2); or
• inputs for the asset or
liability that are not based on observable market data (level
3).
The following table presents the
Group's assets and liabilities that are measured at fair
value:
|
As at 30 June
2024
|
As at 31
December 2023
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level
1
|
Level
2
|
Level
3
|
Total
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
|
|
|
|
|
|
|
Derivatives used for
hedging
|
-
|
40
|
-
|
40
|
-
|
39
|
-
|
39
|
Financial assets at fair value
through other comprehensive income
|
-
|
-
|
1
|
1
|
-
|
-
|
1
|
1
|
|
-
|
40
|
1
|
41
|
-
|
39
|
1
|
40
|
Liabilities
|
|
|
|
|
|
|
|
|
Derivatives used for
hedging
|
-
|
(153)
|
-
|
(153)
|
-
|
(97)
|
-
|
(97)
|
|
-
|
(153)
|
-
|
(153)
|
-
|
(97)
|
-
|
(97)
|
Level 1 represents the fair value
of financial instruments that are traded in active markets and is
based on quoted market prices at the end of the reporting
period.
The fair value of financial
instruments that are not traded in an active market (level 2) is
determined by using valuation techniques which include the present
value of estimated future cash flows. These valuation techniques
maximise the use of observable market data where it is available
and rely as little as possible on entity specific
estimates.
Level 3 primarily represents the
Group's equity interest in Hino Motors Manufacturing Company SAS.
Fair value is based on discounted free cash flows, using the
projection of annual income and expenses mainly based on historical
financial figures.
Derivative financial instruments
are carried at their fair values. The fair value of forward foreign
exchange contracts and foreign exchange swaps represents the
difference between the value of the outstanding contracts at their
contracted rates and a valuation calculated using the spot rates of
exchange and prevailing forward interest rates at 30 June
2024.
The Group's derivative financial
instruments comprise the following:
|
Assets
|
Liabilities
|
As at
30 Jun 2024
|
As
at
31 Dec
2023
|
As at
30 Jun 2024
|
As
at
31 Dec
2023
|
|
£m
|
£m
|
£m
|
£m
|
Forward foreign exchange
contracts
|
40
|
39
|
(153)
|
(97)
|
|
40
|
39
|
(153)
|
(97)
|
11 OTHER DISCLOSURES
a. Related Parties
There have been no material
changes to the principal subsidiaries and joint ventures as listed
in the Annual Report and Accounts for the year ended 31 December
2023.
All related party transactions
arise during the ordinary course of business and are on an arm's
length basis.
There were no material
transactions or balances between the Group and its key management
personnel during the six months to 30 June 2024.
b. Contingencies
Franked Investment Income Group
Litigation Order
Inchcape is a participant in an
action in the United Kingdom against HMRC in the Franked Investment
Income Group Litigation Order ("FII GLO"). As at 30 June 2024,
there were 16 corporate groups in the FII GLO. As previously
reported, the High Court held in February 2024, that for claims for
a refund of the unlawfully paid tax to cover the entire period of
claims they must have been submitted before 6 June 2006. Inchcape
submitted a claim on 25 November 2003 and the High Court's judgment
means that Inchcape's claim is within time to cover the entire
period of its claim. However, the Court of Appeal has granted HMRC
leave to appeal the High Court's decision and a date for this
hearing is being scheduled.
In view of the significant
uncertainty about the eventual outcome of the appeals process,
Inchcape has not recognised any amount in respect of its claim to a
refund of this tax.
FCA review of Motor Finance
commission
Prior to 2021 the Group, along
with other automotive dealers, brokered financing for UK customers
under which the Group received a variable level of commission from
lenders. Following recent decisions by the Financial Ombudsman
relating to complaints raised by consumers regarding such
commission arrangements, the Financial Conduct Authority (FCA) has
initiated a review into motor finance commission arrangements and
sales across several lending firms. If the FCA finds that there has
been widespread misconduct, and that consumers have lost out, it
will identify how best to ensure that such consumers are
appropriately compensated. The FCA's review is due to conclude
later this year. Given the inherent uncertainties regarding the
outcome of the review and, if applicable, the nature, scope, timing
of and responsibility for any compensation arrangements, it is not
practicable to estimate the timing and extent, if any, of the
potential financial impact on the Group.
The exchange rates used for
translation purposes are as follows:
|
Average
rates
|
|
Period
end rates
|
30 Jun
2024
|
30 Jun
2023
|
31 Dec
2023
|
|
30 Jun
2024
|
30 Jun
2023
|
31 Dec
2023
|
Australian dollar
|
1.92
|
1.84
|
1.88
|
|
1.89
|
1.91
|
1.87
|
Chilean peso
|
1,196.99
|
1,000.41
|
1,044.70
|
|
1,193.29
|
1,016.96
|
1,130.41
|
Ethiopian
birr1
|
72.81
|
69.60
|
71.84
|
|
72.81
|
69.60
|
71.84
|
Euro
|
1.17
|
1.14
|
1.15
|
|
1.18
|
1.16
|
1.15
|
Hong Kong dollar
|
9.91
|
9.68
|
9.75
|
|
9.87
|
9.95
|
9.98
|
Singapore dollar
|
1.71
|
1.65
|
1.67
|
|
1.71
|
1.72
|
1.68
|
US dollar
|
1.27
|
1.23
|
1.25
|
|
1.26
|
1.27
|
1.28
|
1. The results for Ethiopia
are translated at the closing rate, rather than the average rate,
as required by IAS 21 The Effects of Changes for Foreign Exchange
Rates for hyperinflationary foreign operations.
13 EVENTS AFTER THE REPORTING
PERIOD
The Group notes that on 25 July
2024, the Court of Appeal upheld the decision in the case involving
Virgin Media Limited and NTL Pension Trustees II Limited relating
to the validity of certain historical pension changes which could
potentially lead to additional liabilities for some pension schemes
and sponsors. The Group is assessing whether there is any potential
impact on the Group. Although there is currently no cause to
conclude that there will be any additional liabilities in the
Group's defined benefit pension scheme, no conclusion has been
reached and therefore no quantification of the potential financial
impact, if any, has been determined.
On 28 July 2024, the Ethiopian
government announced that its currency, the Ethiopian Birr, would
transition from a managed floating to a floating exchange rate
system. This change could have a significant impact on the official
Birr exchange rate. A future change in the official Birr exchange
rate will impact the reported net assets and profits of our
Ethiopian subsidiary, when translated into the Group's
presentational currency of sterling, in future periods. As at 30
June 2024, the Group's consolidated net assets included £155m in
relation to the Ethiopian subsidiary.
On 29 July 2024, the Board approved
a £150m share buyback programme which will commence on 1 August
2024 and is expected to complete during Q1 2025. On 29 July 2024,
the FCA gave its approval of the sale of the Group's UK Retail
operations to Group 1 Automotive UK Limited and the transaction is
expected to complete on 1 August 2024.
The Group assesses its performance
using a variety of alternative performance measures which are not
defined under International Financial Reporting Standards. These
provide insight into how the Board and Executive Committee monitor
the Group's strategic and financial performance, and provide useful
information on the underlying trends, performance and position of
the Group.
The Group's income statement and
segmental analysis identify separately adjusted items. These
adjusted measures reflect adjustments to IFRS measures. The
directors consider these 'adjusted' measures to be an informative
additional measure of the ongoing trading performance of the Group.
Adjusted results are stated before adjusting items.
Adjusting items can include gains
or losses on the disposal of businesses, restructuring of
businesses, acquisition costs, asset impairments and the tax
effects of these items. Adjusting items excluded from adjusted
results can evolve from one financial period to the next depending
on the nature of adjusting items or one-off type
activities.
Constant currency
Some comparative performance
measures are translated at constant exchange rates, called
'constant currency' measures. This restates the prior period
results at a common exchange rate to the current period and
therefore excludes the impact of changes in exchange rates used for
translation.
Performance Measure
|
Definition
|
Why we measure it
|
Adjusted gross profit
|
Gross profit before adjusting
items.
|
A key metric of the direct profit
contribution from the Group's revenue streams (e.g. Vehicles and
Aftersales)
|
Adjusted operating profit
|
Operating profit before adjusting
items.
|
A key metric of the Group's
underlying business performance.
|
Operating margin
|
Adjusted operating profit divided
by revenue.
|
A key metric of operational
efficiency, ensuring that we are leveraging global scale to
translate sales growth to profit.
|
Ratio of adjusted overheads to revenue
|
Adjusted net operating expenses
divided by revenue.
|
A measure of the operational
efficiency of the Group.
|
Adjusted profit before tax
|
Represents the profit made after
operating and interest expense excluding the impact of adjusting
items and before tax is charged.
|
A key driver of delivering
sustainable and growing earnings to shareholders.
|
Adjusted earnings before interest, tax, depreciation and
amortisation
|
Represents the earnings before
interest expense, taxation, depreciation and amortisation expenses,
and excluding the impact of adjusting items.
|
One of the key measures used in
monitoring the Group's leverage and capital allocation.
|
Adjusting items
|
Items that are charged or credited
in the consolidated income statement which are material and/or
non-recurring in nature. Refer to note 3.
|
The separate reporting of
adjusting items helps provide additional useful information
regarding the Group's underlying business performance and is
consistent with the way that financial performance is measured by
the Board and the Executive Committee.
|
Adjusted earnings per share
|
Represents earnings per share
excluding the impact of adjusting items.
|
A measure useful to shareholders
and investors to understand the earnings attributable to
shareholders excluding the impact of adjusting items.
|
Net capital expenditure
|
Cash outflows from the purchase of
property, plant, equipment and intangible assets less the proceeds
from the disposal of property, plant, equipment and intangible
assets. Refer to page 36.
|
A measure of the net amount
invested in operational facilities in the period.
|
Free cash flow
|
Net cash flows from operating
activities, before adjusting cash flows, less normalised net
capital expenditure and dividends paid to non-controlling
interests. Refer to page 38.
|
A key driver of the Group's
ability to 'Invest to Accelerate Growth' and to make distributions
to shareholders.
|
Return on capital employed (ROCE)
|
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. Refer to page 36.
|
ROCE is a measure of the Group's
ability to drive better returns for investors on the capital we
invest.
|
Net (debt)/funds
|
Cash and cash equivalents less
borrowings and lease liabilities adjusted for the fair value of
derivatives that hedge interest rate or currency risk on
borrowings. Refer to note 8b.
|
A measure of the Group's net
indebtedness that provides an indicator of the overall balance
sheet strength.
|
Adjusted (net debt)/net cash
|
Cash and cash equivalents less
borrowings adjusted for the fair value of derivatives that hedge
interest rate or currency risk on borrowings. Refer to note
8b.
|
A measure of the Group's net
indebtedness that provides an indicator of the overall balance
sheet strength and is widely used by external parties.
|
Constant currency percentage change
|
Presentation of reported results
compared to prior period translated using current year constant
rates of exchange.
|
A measure of underlying business
performance which excludes the impact of changes in exchange rates
used for translation.
|
Organic growth
|
Organic growth is defined as sales
growth in operations that have been open for at least a year at
constant foreign exchange rate.
|
A measure of underlying business
performance which excludes the impact of acquisition and disposals
in the period.
|
APMs: Reconciliation of statement of comprehensive income
measures
|
As at
30 Jun
2024
|
As
at
30 Jun 2023
|
Continuing operations
|
£m
|
£m
|
Gross Profit
|
814
|
817
|
Add back: Adjusting items charged to gross
profit
|
-
|
-
|
Adjusted Gross Profit from continuing
operations
|
814
|
817
|
Less: Segment operating expenses
|
(515)
|
(522)
|
Adjusted Operating Profit from continuing
operations
|
299
|
295
|
(Less)/add: Adjusting items in operating
expenses
|
(23)
|
(21)
|
Operating Profit
|
276
|
274
|
Less: Net Finance Costs and JV
profits/losses
|
(81)
|
(96)
|
Profit Before Tax
|
195
|
178
|
Add/(less): Total adjusting Items
|
31
|
45
|
Adjusted profit before tax from continuing
operations
|
226
|
223
|
|
|
|
Revenue
|
4,725
|
4,563
|
Adjusted net operating
expenses
|
515
|
522
|
Ratio of adjusted net operating expenses to
revenue
|
10.9
%
|
11.4 %
|
APMs: Reconciliation of statement of cash flows
measures
|
As at
30 Jun
2024
|
As at
30 Jun
2024
|
As
at
30 Jun 2023
|
As
at
30 Jun 2023
|
|
£m
|
£m
|
£m
|
£m
|
Net cash generated from total
operating activities
|
|
283
|
|
265
|
Add back: Payments in respect of
adjusting items
|
|
21
|
|
21
|
Net cash generated from operating activities, before
adjusting items
|
|
304
|
|
286
|
Purchase of property, plant and
equipment
|
(34)
|
|
(32)
|
|
Purchase of intangible
assets
|
(2)
|
|
(3)
|
|
Proceeds from disposal of
property, plant and equipment
|
4
|
|
1
|
|
Net capital expenditure
|
|
(32)
|
|
(34)
|
Net payment in relation to
leases
|
|
(42)
|
|
(45)
|
Dividends paid to non-controlling
interests
|
|
(9)
|
|
(4)
|
Free cash flow
|
|
221
|
|
203
|
Less: Free cash flow from
discontinued operations
|
|
5
|
|
(14)
|
Free cash flow from continuing operations
|
|
226
|
|
189
|
APMs: Reconciliation of statement of financial position
measures
|
As at
30 Jun
2024
|
As
at
30 Jun 2023
|
|
£m
|
£m
|
Adjusted operating
profit
|
299
|
295
|
Adjusted operating profit for the
previous 6 month period
|
325
|
180
|
Adjusted operating profit on a 12 month
basis
|
624
|
475
|
Net assets
|
1,503
|
1,512
|
Less: Net assets from discontinued
operations
|
(240)
|
(220)
|
Net assets from continuing operations
|
1,263
|
1,292
|
Add: net debt/less (net
funds)
|
891
|
1,044
|
Add: net funds/(net debt) from
discontinued operations
|
6
|
(65)
|
Capital employed - continuing operations
|
2,160
|
2,271
|
Effect of averaging
|
56
|
(761)
|
Average capital employed
|
2,216
|
1,510
|
Return on capital employed
|
28.2
%
|
31.5 %
|
|
As at
30 Jun
2024
|
As
at
31 Dec 2023
|
|
£m
|
£m
|
Net debt
|
(891)
|
(1,041)
|
Add back: lease
liabilities
|
367
|
440
|
Adjusted net debt
|
(524)
|
(601)
|
Conclusion
We have been engaged by the
company to review the condensed set of financial statements in the
half-yearly financial report for the six months to 30 June 2024
which comprises the income statement, the balance sheet, the
statement of changes in equity, the cash flow statement and related
notes 1 to 13.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months to 30 June 2024 is not prepared, in all material
respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410 "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual
financial statements of the group are prepared in accordance with
United Kingdom adopted international accounting standards. The
condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim
Financial Reporting".
Conclusion Relating to Going Concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors
have inappropriately adopted the going concern basis of accounting
or that the directors have identified material uncertainties
relating to going concern that are not appropriately
disclosed.
This Conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410;
however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing as
applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly
financial report, we are responsible for expressing to the company
a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the
company in accordance with ISRE (UK) 2410. Our work has been
undertaken so that we might state to the company those matters we
are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company,
for our review work, for this report, or for the conclusions we
have formed.
Deloitte LLP
Statutory Auditor
London, England
29 July 2024
The Directors confirm that the
condensed consolidated interim financial statements in the Interim
Report have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and that the Interim Report includes a fair review of the
information required by Disclosure and Transparency Rules 4.2.7R
and 4.2.8R, namely:
• an indication
of important events that have occurred during the first six months
and their impact on the condensed consolidated interim financial
statements;
• a description
of the principal risks and uncertainties for the remaining six
months of the financial year; and
• material
related party transactions in the first six months and any material
changes in the related party transactions described in the last
Annual Report.
The Directors and positions held
during the period were as published in the Annual Report and
Accounts 2023. A list of current Directors is maintained on the
Inchcape plc website (www.inchcape.com).
On behalf of the Board
Duncan Tait
GROUP CHIEF EXECUTIVE
29 July 2024