The strong distribution of Inchcape plc offsets the decline in retail sales

Inchcape plc (LON: INCH), today announces half-yearly results for the six months ended June 30, 2018

FIRST HIGHLIGHTS:
· Encouraging revenue growth of 6.8 % in constant currency and growth of 3.8% in real money

· Pre-exceptional profit before tax growth of 2% excluding real estate income1 at constant exchange rate, strong distribution dynamics offsetting Retail challenges

· Profit pre-tax of £ 161.2m, down 15.6%

· Guidance for the full year confirmed. Continue to expect solid earnings growth in constant currencies, with broadly anticipated H1 global performance

· Strong performance in core distribution businesses, with commercial profit up 21%, sustained in Asia

pressure on the vehicle margin, as expected, down 61% in constant currency. The subfunds fall in the second half of the year 19659004 New distribution contracts for Suzuki in Central America, Jaguar Land Rover in Colombia and BMW in Guam announced since the beginning of the year

a new contract with Jaguar Land Rover in Kenya today – significant strategic development for our African business

· Interim Dividend Per Action + 13%

KEY FINANCES (UNAUDITED)

			Actual Currency		Constant currency
Actual rates	H1 2018	H1 2017 5		Year	Year
Income	£ 4.6 billion	£ 4.4bn		] + 3.8%	+ 6.8%
Pre-Exceptional Operating Profit 2.3	£ 193.2m	£ 207.4m		6.9)%	(1,2)%
Pre-exceptional 2.4 profit before tax	£ 179.5 million [19659027] £ 196.2 million	(8.5%)	(2.9%)
Pre-Exceptional 1, 2.4 pro pretax adjustment, at the Excluding profit from property	£ 179.5 million	£ 186.9 million		(4.0)%	+ 2.0%
Profit before tax [19659031] 161,2m	191,1 m		(15.6)%
Basic EPS reported	26.9p	32.8p		(18.0)%
SPS adjusted basic	31.3p [19659055] 33.9p	(7.7)%
Dividend per share	8.9p	7.9p		+ 12.7%
Gross profit from vehicles	£ 402.4m	] £ 381.7m		+ 5.4%	+ 9.3%
Gross profit after sales	£ 237.2m	£ 232.7 m		+ 1.9%	+ 7.0%
Commercial Distribution Profit	£ 180.9 million	£ 160.6 million		+ 12.6%	+ 20.8% [19659070] Retail Profit [19659084] £ 23.0m	£ 60.2m		(61.8)%	(61.3)%
	]
			[Not available]

^{1 [1 9659094] Excluding real estate earnings of Australia of £ 9.3m in H1 2017.}

² The exceptional operating cost of H1 2018 is £ 4.4m, for costs incurred for the acquisition and integration of Grupo Rudelman in Central America. The result published in the first half of 2017 includes a one-off charge of £ 5.1m related to the 2016 fixed cost review and transaction costs for the South American acquisition in December 2016. See note 3. [19659075] 3 Our Acquisition in Central America Outstanding operating profit of £ 5.3m in the first half of 2018

⁴ Extraordinary finance costs of £ 13.9m in the first half of 2018 related to the fair value measurement of the Group's US dollar banknotes. See Note 5

⁵ IFRS 15 was implemented for the year ended December 31, 2018. We have adopted a retrospective approach to the transition, with all the comparatives restated in this statement [19659083] Stefan Bomhard, CEO of Inchcape PLC, commented:
"We have made good progress in Distribution, the highest margin core business, in the first half of 2018, offsetting the expected challenges in our retail markets. The good performance of the Group's profit in the first half of the year is broadly in line with the gradual implementation of our forecasts for the entire year and we reiterate our expectation of a solid earnings performance for the year. Together with the comparisons in the second half of the year in Retail and our goal of optimizing performance in the face of difficult market dynamics, we intend to improve the second half performance

"As we emphasized during our Financial Markets Day on June 6, excellent growth opportunities, both organic and inorganic, for Inchcape. Today, we announce our eighth win of the distribution business over the past 24 months, a new Jaguar Land Rover contract in Kenya: a small business today, but a key milestone for the development of our African footprint. It's our first victory in Africa in 50 years and means we've done additional business in every region of the world we focus on as part of our Ignite strategy.

"The case of Inchcape investment is multi-layered history of growth, with our global distribution business generating and attractive cash at the heart of our business. We believe that through our business optimization initiatives, mergers and acquisitions are focused on future industry trends and that we are well positioned to grow our shareholders through organic growth, industry consolidation and returns. "

IGNITE [19659002] INNOVATION STRATEGY

Lead in Customer Experience
We will invest to maintain our leading position in customer service innovation in automotive and automotive distribution. distribution, with digital as a priority

Choice
We will build and strengthen our working relationship with our OEM partners by investing time in understanding their needs, seeking greater opportunities for collaboration in goal of becoming a strategic partner of choice.

Revenue Stream
We will increase our focus on our used vehicle and aftermarket business at all levels of the United States. Organizing, Improving Capitalizing on their Global Status in the Enterprise and Further Deepening Relationships and Analyzes

Leveraging Our Global Scale
We will leverage the unique diversity and size of the Group to create a true competitive advantage for Inchcape ] We have a clear plan to work more actively with our OEM partners to identify opportunities for distribution and acquisition of detail that fit their strategic agendas and create mutual value.

IGNITE UPDATE

We have progressed in the five elements of our Ignite strategy during the first half of the year 2018. As we pointed out at our recent Day of Financial markets, Ignite has been the main driver of our differentiation in all major operating areas. provide a solid base from which to grow both organically and by M & A.

More importantly, we continued our expansion into high growth potential markets with acqui in March, Grupo Rudelman and Suzuki distribution contracts for Costa Rica and Panama. This was our second acquisition in Latin America in 18 months and also included the right to distribute several Chinese car brands, underscoring our commitment to build growth platforms for the future.

During this period, Jaguar Land Rover awarded Inchcape Colombia and, as announced today, awarded Inchcape the distribution contract for Kenya. From January, we also started to operate as a distributor for BMW in Guam.

Feeding OEM partnerships that we have built for many years and building relationships with new partners is a key facet of Ignite. "Partner of choice" OEM. We have dedicated and cross-functional teams spanning multiple markets sharing ideas and best practices to realize the potential of our partnerships; staying close to OEMs and maintaining regular and meaningful contacts at all levels allows us to participate when new opportunities arise.

Staying on the theme of operating our scale, we continued to grow through the continued delivery of our Inchcape Global Diversification, the focus on distribution markets higher margin and the distribution of revenue sources all reduce the Group's exposure to the cyclical trends of new cars. Our focus on Ignite is to realize the full potential of all our revenue streams through Operational Improvement Programs for Used Vehicles, After Sales Services and Finance and Insurance (M & I).

building and integrating our digital capabilities and data to the extent, automating processes, search engine optimization and online listings and reviews. Having laid the foundation for the Inchcape experience to enhance our customer interaction, we are now working to empower our local marketing teams to further enhance the customer experience, especially online. Our digital development will also play a key role in our plans to create profitable growth opportunities from the trends shaping the future of the automotive industry.

We initially set out our Ignite strategy in 2016 to get on the path to growth. We deliver against this program, both organically and by consolidating our fragmented industry, and we are confident that we will continue to maximize the potential of Inchcape through Ignite.

OPERATIONAL REVIEW

REVIEW OF PERFORMANCE

Our performance in the first half of 2018 was broadly in line with the timing of our fiscal year forecast and reflected good growth in commercial profit on a number of our markets. Our core distribution business continued to perform strongly, however, the challenging trading conditions in the UK and Australia. Retail markets generated a steady change in the pre-tax exchange rate compared to the prior year . not repeated and excluding our recent acquisition in Central America. The acquisition in Central America increases by 2%.

The turnover of £ 4.6 billion in the first half of 2018 is up 3.8% at actual rates compared with the previous year and 6.8% at full year rate. constant change. our Emerging Markets business, with 45.5% growth at constant exchange rates in our Russian business, driven by our outperformance of a recovering market. Our new business in Central America, centered on Suzuki in Costa Rica and Panama, has generated a turnover of £ 55.8 million since its acquisition in March. Excluding acquisition revenues, they rose 5.5% at constant currency.

In the first half of 2018, we achieved a pre-exceptional operating profit of £ 193.2 million, down 1.2% at constant currency. Our operating margin decreased by 50 basis points to 4.2%, reflecting the challenging business environment in the UK and Australia and the property profit of the previous year, partially offset by a solid performance of our Asian operations. New activity in Central America generated operating profit of 5.3 million pounds for the six-month period, in line with our expectations and a 9.5% mark-up. Excluding operating income, pre-exceptional operating income fell by 4.0% at constant exchange rates.

In the first half of 2018, the operating profit of £ 180.9 million from our Retail segment increased by 12.6% in real terms and increased by 20.8% at constant exchange rates. the currency, with a strong performance in our Asian operations, thanks to market share gains in our key Singapore and Hong Kong markets, and a welcome improvement in new-car profitability in Singapore, supported by a strong model . Our Distribution performance also benefited from a strong increase in profitability in Europe, driven by Greece, Belgium and the Balkans, and Australia with Yen transactional currency movements that provide annual profit [19659107]. down 61.8% in real terms and 61.3% at constant currency, continuing the trend from the second half of 2017 and reflecting very difficult conditions for vehicles in our retail United Kingdom and Australia. The first half of 2017 also included a £ 9.3 million real estate profit on our Australian retail market. Our activity in Russia has been a strong point in the first half, allowing us to improve trading on our value drivers and leverage the Ignite strategy to drive strong growth in our second-hand business. Russian commercial profit improved, from a loss of 1.2 million pounds the previous year to 5.0 million pounds in the first half of 2018.

Earnings before extraordinary tax before decline of 2.9% over the period at constant exchange rate Australia operating income increased by 2.0%

Operating cash flow, excluding cash costs of operations exceptional items, was £ 200.8m in the first half (H1 2017: £ 252.0m), with a conversion of 104% (2017 H1: 122%) reflecting good working capital control, but against a low base in December 2017 and resulting in a capital outflow for the period. Free cash flow amounted to £ 69.2m in the first half (H1 2017: £ 149.8m), with a 36% conversion (H1 2017: 72%). This reflects a more normal level of net working capital and a higher proportion of capital expenditures expected for the full year in the first half compared to 2017. Capital expenditures were largely supported by planned investments in the United Kingdom. During the period, we spent £ 137.6 million (net of proceeds) on acquisitions, mainly related to the acquisition of Central America in March 2018. We completed the first half with net debt of £ 163.7m (net debt: £ 0.1m, 2017 net funds: £ 80.2m)

DIVIDEND
In accordance with our dividend policy, and given the strength of our balance sheet, the Board declared an interim dividend of 8.9p (2017 H1: 7.9p). This represents an increase of 12.7% from one year to the next. Inchcape sets its interim dividend at one-third of the previous year's total dividend (2017 fiscal year: 26.8 percentage points). The interim dividend will be paid on September 5, 2018 to the shareholders of record at the close of business on August 3, 2018. The dividend reinvestment plan is available to common shareholders and the closing date for receipt of the elections is set for August 14, 2018. [19659002] BREAKDOWN OF CAPITAL
The Board seeks a capital structure that will give Inchcape the opportunity to invest in organic growth and realize other value-creating acquisitions. Avoiding sustained excess net cash balances. With this stated goal, and following the acquisition in Central America in March, Inchcape announced that it would no longer pursue the share buyback program announced in February.

PEOPLE
Strong in-depth experience in the automotive field at the Group level, a strong spirit of operational discipline and a keen concern Constant to offer unparalleled customer service, Inchcape employees are vital to our success. . Management would like to express its sincere thanks to colleagues around the world for their commitment and dedication during the first half of the year.

OUTLOOK
Our forecast for the year 2018 is unchanged, the performance reflecting the trends in the first half of the year was marked by continued growth in our distribution business, which offset difficult trading conditions in some of our retail markets. We expect a strong constant currency performance in 2018. With second-half comparisons in Retail, we expect to improve second half performance.