Glossary

Actual currency This is the exchange rate prevailing at the time of the reported results.
Aftersales A term used to describe the ongoing relationship between the customer and Inchcape, when we render services to the customer throughout the product life cycle. This type of support typically includes servicing, repair, ancillary products (such as insurance) and the sale of parts.
AGM
(Annual General Meeting)
An Annual General Meeting is a compulsory part of a company’s corporate and financial calendar. It exists so that shareholders can elect the Board of Directors, get an update on previous or future activities, ask questions and carry out any other business that requires shareholder approval.
Australasia Australasia in relation to Inchcape refers to our operations in Australia and New Zealand.
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Bio Fuels Bio Fuels can be used in internal combustion engines to replace petrol or diesel, although an engine needs to be adapted to allow this to happen. Bio Fuel is derived from Biomass (plant/organic material). There is a wide range of Bio Fuels, including Bio ethanol and Bio diesel. Benefits include good power-to-weight ratio and lower than usual CO2 and particulate emissions.
Brand partner This term refers to Inchcape’s relationship with its original equipment manufacturer (OEM), for example, Toyota, Jaguar, Land Rover, BMW etc.
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Capital expenditure
(CAPEX)
These are funds used by a company to build, acquire or upgrade its physical assets such as property, buildings or equipment.
Car parc Car parc refers to the number of cars and other vehicles in a region or market. It is typically used to gauge the capacity within a market or region for aftersales.
Car penetration This term refers to the number of vehicles per capita in any given region or nation.
Cash generated from operations At Inchcape, we defined cash generated from operations as our trading profit adjusted for depreciation, amortisation and other non-cash items, plus the change in working capital and provisions.
Central costs For Inchcape, central costs represent those for corporate and regional functions, such as Executive Management, Finance, Business Development, Legal, Communications, Investor Relations, Human Resources & IT.
Channels to market This is the way we describe how a product (in Inchcape’s case a vehicle or aftersales and finance and insurance) reaches the motorist.
Close period This is the time between the preparation of a company’s balance sheet and its announcement to the public. For example, the close period for a UK-listed business is the preceding two months before the announcement of its annual financial results.
COE COE stands for The Certificate of Entitlement. It was instituted by the government of Singapore in May 1990, and is a programme designed to limit car ownership and the number of vehicles on the country’s roads. This system, in effect, requires residents of Singapore to bid for the right to buy a motor vehicle, and the number of certificates is deliberately restricted.

The COE allows holders to own a car for a period of 10 years, after which they must either scrap or export their car with financial incentives. They may also bid for another COE at the prevailing rate and then, if they wish, continue using their car for a further five or 10 years.
Constant currency To improve comparison of financial data from year to year, Inchcape presents selected financial results in a ‘constant currency’ to isolate the impact of exchange. The previous year’s results are restated for the new rates of exchange.
Consensus A consensus is a financial term used to describe the mean or average forecast by financial analysts of a company’s performance.
Covenant A covenant is a term used to describe the agreement and set of parameters established between a company and its lending bank on the terms of a debt facility or loan.
CR
(Corporate Responsibility)
CR refers to a form of corporate self-regulation that is entrenched in a business and its culture. CR policy is adopted to embrace responsibility for the impact of a company’s activities on the environment, its consumers, employees, communities and stakeholders.
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De‑registrations
(Singapore only)
This refers to those vehicles that are taken off the road and de-registered.
Developed markets
(mature markets)
Developed markets are those countries that are thought to be the most developed, both financially and politically. In the case of Inchcape’s operations, these include the UK, Hong Kong, Singapore, Australia, Belgium and Greece.
Distribution This is a term Inchcape uses to describe the process by which we take a product all the way from the factory to the marketplace. Inchcape is deeply involved in brand development and innovation with brand partners; we also develop the retail network’s marketing and sales strategies, pricing, finance products, servicing, parts and accessories. Inchcape is the distributor for brand partners in many of its key markets across the world.
Dividend Dividends are payments made by a Company to its Shareholders from its profits. In Inchcape’s case these are at the discretion of the Board to recommend and final dividends must be approved by Shareholders at the AGM.
Dividend cover This is the number of times that a company’s dividends to shareholders could be paid out of its annual profit after tax.
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EBITA Standing for ‘Earnings Before Interest, Tax and Amortisation’, this is a commonly used measure of the earning power of a company from its ongoing operations.
EBITDA This stands for ‘Earnings Before Interest, Tax, Depreciation and Amortisation’ and is a commonly used way of measuring profitability.
Economic profit This is the difference between the total revenue received by a company from its operations and the total cost of those operations.
Emerging markets Emerging markets are those markets in which Inchcape operates that have started to grow but have yet to reach a mature stage of development. This means they are in the growth phase of the development cycle. Inchcape’s emerging markets currently include the Balkans, the Baltics, Poland, Russia, China, Africa and South America.
EPS
(Earnings per share)
These are a company’s total earnings divided by the number of shares in issue. EPS is a key ratio used in share valuations. It shows how much of the company’s profit, after tax, each shareholder owns.
Equity This is a shareholder’s ownership interest in a company, usually in the form of ordinary shares.
Europe When Inchcape talks about Europe, it is referring to its operations in Finland, Luxembourg, Belgium and Greece.
EV
(electric vehicle)
This is a vehicle powered by an electric motor. The first electric vehicle was developed in 1899, but due to the poor power-to-weight ratio and long times to recharge the acid lead batteries, the internal combustion engine became the dominant power source. There was a small revival of electric vehicles in the 1970s due to the oil crisis of the time. However, in recent years there has been a significant increase in investment in this area of the automotive industry.
Exceptional item This is an unusual charge or cost that a company accrues in the ordinary course of its business.
Ex-dividend An ex-dividend is a security (a share in Inchcape’s case) that no longer has a right to a company’s most recently declared dividend. It can also mean the period of time between the announcement of the dividend and the payment.
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F&I
(Finance and Insurance)
For Inchcape, this refers to a revenue stream associated with sourcing and providing automotive finance and various kinds of insurance, both personal and supplementary.
Financial year This refers to a company’s financial period as opposed to calendar year. In Inchcape’s case, the financial year is the same as the calendar year and ends on 31 December.
Fleet This refers to Inchcape Fleet Solutions, which offers vehicle management and leasing services to corporate customers in the UK.
Franchise retail centre A franchise retail centre is a retail centre branded with an OEM brand partner’s logo, but that is owned and run by Inchcape.
Franchisee A franchisee runs a branded business on behalf of the brand owner. It is responsible for certain operational choices, but many other decisions (such as the look, name, and products) are already determined by the owner and must be kept the same by the franchisee. Part of Inchcape’s retail network is franchised.
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Gross margin The gross margin of a business is its turnover, or gross income, less the cost of sales and divided by its turnover.
It can also be expressed as a percentage.
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Hybrid A hybrid vehicle uses more than one source of power to move the vehicle. Generally the source of power for a hybrid vehicle comes from an internal combustion engine and an electric motor. There is a large range of hybrid vehicles from Start/Stop vehicles (mild hybrids) to plug-in hybrid and range extender vehicles. The benefits are a good power-to-weight ratio and lower emissions.
Hydrogen fuel cell vehicles Such a vehicle is powered by an electric motor that uses hydrogen to generate the electric current. Oxygen and hydrogen react on electrodes in the presence of a catalyst to produce electric energy and emit water. Since the 1990s, a number of automotive manufacturers have been testing this technology. However, expense and technological developments have hampered this technology from becoming mainstream.
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IFRS
(International Financial Reporting Standard)
IFRS is the set of international standard accounting principles which took over from UK GAAP in 2005.
Inchcape Advantage Inchcape Advantage is Inchcape’s strategic initiative designed to put the customer at the heart of the business. It includes the tracking of its own mystery shop performance, retail metrics and an innovative satisfaction measure of both buyers and non-buyers.

The technology solution has become an integral part of the Company’s day-to-day global operations and is paramount to Inchcape’s future success as we drive differentiation through outstanding customer service.
Interim results These are a company’s financial results for the half year period. In Inchcape’s case, they fall on 30 June.
Internal combustion engine
(ICE)
This is an engine which mixes oxygen and fossil fuels, usually, under controlled pressure to then be ignited intermittently and so generate power and exhaust emissions. The ICE has been successfully used in vehicles since the 19th century as it delivers an excellent power-to-weight ratio, with few disadvantages except emissions. The two most common fossil fuels used in the ICE are petrol and diesel.
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JV
(Joint Venture)
A JV is a legal entity formed between two parties to undertake an economic activity together. Each owner usually holds 50% with equal rights.
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Like-for-like This is a financial metric which excludes the impact of an acquisition from the date of acquisition until the 13th month of ownership. It also excludes any businesses that are sold or closed. It also removes the impact of retail centres that are relocated from the date of opening until the 13th month of trading in the new location. In Inchcape’s case, these are always presented in constant currency.
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Master franchisee A master franchisee manages a network of franchisees for the overall franchise owner. In Inchcape’s case, this refers to our relationship with an OEM brand partner (the franchisor) where we act as the master franchisee for a network of franchised retail centres.
Minority interests This is an accounting concept that refers to the portion of a subsidiary company’s stock that is not owned by the parent company. At the year end Inchcape’s minority interests principally comprised a 33% minority holding in UAB Vitvela in Lithuania, a 30% share in NBT Brunei and a 10% share of Subaru Australia.
Mystery shop This is a tool used by ‘Mystery Shopping Providers’ and market research companies to measure the quality of a retail service or to gather specific information about products and services.
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Nearly new cars This refers to previously owned and used vehicles which have a low mileage and superficial wear and tear. They command a premium price over that of an ordinary used car.
Net debt This is a standard financial metric for analysing the degree of debt held by a company minus the cash it holds. This takes into account not just the total amount of debt that a company owes, but also how much debt it has in relation to its assets.
Net promoter score
(NPS)
Net Promoter Score is a management tool we use to gauge the loyalty of our customer relationships. It serves as an alternative to traditional customer satisfaction research. NPS is a quantitative as well as a qualitative metric.
New cars New cars are brand new vehicles Inchcape receives from our OEM brand partners.
NMSC This stands for ‘national sales and marketing company’. This is a term used by Manufacturers when referring to partner companies (including their own subsidiaries) that handle product distribution, brand marketing and all or part of the retail network on their behalf in certain markets.
North Asia Inchcape’s North Asia region refers to our operations in Macau, Hong Kong, Guam and Saipan.
NSMC This stands for ’national sales and marketing company’.
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OEM OEM stands for ‘Original Equipment Manufacturer’ (‘OEM’). In Inchcape’s case it means the car manufacturers we work with, known as our ‘brand partners’ (such as Toyota, Jaguar Land Rover, BMW etc).
Operating cash flow generation This is the cash generated from a company’s operations, generally defined as revenues less all operating expenses. It is calculated through a series of adjustments to net income.
Operating profit This means a company’s profit after deducting operating costs from its gross profit.
Ordinary share An ordinary share is a unit of non-preferential equity ownership in a company. It entitles the owner to a vote in matters put before shareholders, in proportion to their percentage ownership in the company.
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Powertrain The term powertrain refers to the group of components that generate power and deliver it to the road surface. Much external market data monitor the use of different types of powertrain, such as Diesel engines, petrol engines, electric (EV) and hybrid drives.
Preliminary results Preliminary results refer to audited financial results for a company’s full year period. The results are so called because they are announced prior to the printing of the final results in the annual report.
Profit before tax and exceptional items For Inchcape, this represents the profit we make after operating and interest expenses, but before tax is charged and excluding the impact of exceptional items.
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Restructuring costs These are costs associated with restructuring a business, which can refer to operational and financial re-organisation.
Retail We use this term to describe how Inchcape sells its brand partners’ cars though the network of franchised and fully owned car retail centres. Inchcape builds scale relationships with core brand partners which provide real marketing efficiencies. We also operate a dedicated brand management structure to ensure focus, a better understanding of our partners’ brand values and the establishment of enduring relationships.

Our approach to retailing is totally customer-centric, aiming to create a differentiated customer experience through the Inchcape Advantage programme and by building on our manufacturer partners’ brand values to deliver a real competitive advantage. Our retail businesses benefit from multiple income streams from the sale of new and used vehicles, finance and insurance products, servicing, parts and accessories.
Retail network This refers to the network of automotives retail centres run by the Inchcape Group. It consists of wholly owned and franchised retail centres across Inchcape’s global operations.
Rights issue
(April 2009)
A rights issue is an offer made by a quoted company to its shareholders to enable them to buy new shares in the company. Existing shareholders are offered shares in proportion to their existing holding – their ‘rights’. In Inchcape’s case a 9 for 1 rights Issue to raise net proceeds of approximately £232 million, through the issue of 4,143,316,500 new ordinary shares, was completed in April 2009.

Historical actions
RNS
(Regulatory News Service)
RNS refers to the system by which regulatory company announcements are submitted to the London Stock Exchange for publication and official recognition.
RSS
(Really Simple Syndication)
RSS (most commonly expanded as really simple syndication) is a family of web feed formats used to publish frequently updated works such as blog entries, news headlines, audio and video in a standardised format.
Russia and Emerging Markets For Inchcape, Russia and Emerging Markets refers to our operations in China, Russia, Ethiopia, Chile, Peru, the Balkans (Macedonia, Bulgaria and Romania), the Baltics (Estonia, Lithuania and Latvia) and Poland.
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Sales/Revenue For Inchcape, sales/revenue is defined as the money we receive from the sale of goods and services. It is stated without rebates or any discounts, and excludes sales-related taxes.
Scrappage or ‘scrappage scheme’ This term refers to an incentive scheme introduced by a government to encourage its citizens to purchase vehicles and scrap an old one that they have owned for more than a certain period of time. In some cases there is a cash incentive, and other instances have included tax breaks.
Share capital This is the proportion of a company’s capital, sometimes called issued capital, which has been issued to shareholders in the form of ordinary shares.
Share consolidation
(2010)
This is the process by which a company changes the structure of its share capital by reducing the number of shares it has in issue and increasing the value of each individual share. No change to the shareholding percentage results from this action. In Inchcape’s case, in May 2010 the nominal value per share was increased from 1p to 10p, while the share capital was reduced to 460,000,000 ordinary shares.

Historical actions
Share split
(2006)
A share split increases the number of shares in a public company. The price is adjusted so that the before and after market capitalisation of the company remains the same and dilution of shareholding percentages does not occur. In Inchcape’s case, the company undertook a 6 for 1 share split in May 2006.

Historical actions
South Asia Inchcape’s South Asia region refers to our operations in Singapore and Brunei.
Stock A company’s stock or inventory means those items already available for sale or in the process of being made ready for sale.
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TIV
(Total Industry Volume)
TIV is a metric using external market data to record the total sales of new cars in a market or region. It is used to gauge a given car market’s performance.
Top five priorities Inchcape’s top five operational priorities are:
  • Reducing cost base
  • Managing working capital
  • Selective capital expenditure
  • Growing market share while protecting margins
  • Growing aftersales.
Trading margin Trading margin is a key performance indicator for Inchcape and is calculated by dividing our trading profit by sales.
Trading profit Trading profit is defined as operating profit excluding the impact of exceptional items and unallocated central costs.
Treasury shares This term refers to those shares which are bought back by the issuing company to reduce the quantity of outstanding shares in the open market.
TSR
(Total Shareholder Return)
TSR is a metric used to compare the performance of different companies’ stocks and shares over time. It is calculated using the share price growth plus re-invested dividends.
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US private placement A US private placement is a debt facility put in place with a US debt provider. For Inchcape, funds were raised via Private Placement in May 2007. See Debt Information facility summary for more details.
Used cars This term refers to previously owned and used vehicles.
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Value chain Value chain refers to every step a business goes through, from raw materials to the eventual end-user. The goal is to deliver maximum value for the least possible total cost. In Inchcape’s case, the value chain refers to the management of vehicles from our OEM brand partners right through to the end customer and on to include aftersales services.
Value driver A value driver is any activity that significantly affects the value of an organisation. In Inchcape’s case, our value drivers can be distinguished into two main areas: defensive value drivers – servicing and parts; and growth value drivers – vehicle sales and F&I.
Vehicle health check This is a product offered by all Inchcape retail and service centres free of charge. It provides a report from which the customer can decide what work should be carried out on their vehicle.
VIR
(Vertically Integrated Retail)
In certain markets, namely Hong Kong, Singapore, Bulgaria, Latvia and Lithuania, Inchcape operates a VIR or vertically integrated retail distribution model, where we are both the exclusive distributor and exclusive retailer for our brand partners, delivering higher margins through the seamless management of the complete value chain.
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Warranty For Inchcape, a warranty is an agreement between the customer and our brand partner, covering new and used cars, under which all repairs to the vehicle will be free when undertaken within the warranty life.
Working capital For Inchcape, working capital is defined as inventory, receivables, payables and supplier-related credit.