Inchcape : 2020 Annual Report and Accounts

Strategic report

Highlights

• 2 Chairman's welcome

• 4 Chief Executive's review

  Revenue

• 6 Group Executive Committee

• 8 Strategy

  £6.8bn

• 10 OEM partnerships

  2019: £9.4bn

• 12 Our business model

• 12 How we generate value

• 12 Our routes to market

  Free cash flow1

• 13 Our value chain

• 17 Where we operate

  £177m

• 18 Stakeholder engagement

  2019: £213m

• 21 Our investment proposition

• 23 Capital allocation framework

• 25 Key performance indicators

  Return on capital employed1

• 26 Operating and financial review

• 34 Corporate social responsibility

  12%

• 41 Risk management

2019: 22%

Governance

52 Chairman's statement

Dividend per share1

54 Board of Directors

56 Corporate Governance Report

6.9p

74 Directors' Report on Remuneration

96 Directors' Report

2019: 8.9p

Financial statements

1. APM (alternative performance measure), see page 176-177

• 102 Independent auditor's report to the members of Inchcape plc

• 112 Consolidated income statement

• 113 Consolidated statement of comprehensive income

• 114 Consolidated statement of financial position

• 115 Consolidated statement of changes in equity

• 116 Consolidated statement of cash flows

• 117 Accounting policies

• 127 Notes to the financial statements

• 176 Alternative performance measures

  VISIT OUR WEBSITE FOR ADDITIONAL INFORMATION AND INTERACTIVE FEATURES INCHCAPE.COM

• 178 Five year record

• 179 Company statement of financial position

• 180 Company statement of changes in equity

• 181 Company accounting policies

• 184 Notes to the Company financial statements

Cover image: Andrei Ionut-Alin, Technician from our Toyota and Lexus retail and service centre in Voluntari, Romania

Other information

197 Shareholder information

Clarifying our financial metrics

The following table shows the key profit measures that we use throughout this report to most accurately describe operating performance and how they relate to statutory measures.

1. APM (alternative performance measure), see page 176-177

Metric	£m	Use of metric
Gross Profit	877.8	Direct profit contribution from Value Drivers
(e.g. Vehicles and Aftersales)
Add back: exceptional items charged to
gross profit	11.6
Gross Profit (pre exceptional items)1	889.4
Less: segment operating expenses	(723.9)
Operating Profit (pre-exceptional items)1	165.5	Profit generated by the Group
Less: exceptional items	(257.1)
Operating Loss	(91.6)	Statutory measure of Operating Profit
Less: Net Finance Costs and JV profit	(36.6)
Loss before tax	(128.2)	Statutory measure of profit after the costs of financing the Group
Add back: exceptional items	257.1
Profit before tax and exceptional items1	128.9

Bringing mobility to the world's communities - for today, for tomorrow and for the better.

As an independent, multi-brand automotive distributor and retailer, we bring the best loved brands to customers throughout the world.

This is brought to life by our talented people through a combination of long-standing partner relationships, a growing global footprint, a unique business model and a long-term strategy.

Chairman's welcome

Prioritising safety, managing risk and continuing to serve in a challenging year

Dear Shareholders and all of our stakeholders,

When writing last year, I referred to the impact coronavirus was having on our business in Asia. Its subsequent evolution into a global pandemic dramatically increased that impact with most of Inchcape's businesses around the world experiencing periods of compulsory shutdown and restricted operations. The prompt actions taken across the Group, prioritising the safety of employees and customers, maintaining high levels of customer service, reducing costs and maximising cash flow, proved very successful in taking us through the crisis and are a tribute to the hard work of the whole Inchcape team. I congratulate them and thank them greatly for their enormous efforts in 2020.

Performance

Against the background of sharply reduced automotive markets, the Group's financial performance for the year was very satisfactory, with profit before tax (before exceptionals)1 of £129m and free cash flow1 of £177m. Almost all of this came from the performance in the second half of the year, once the initial shockwave of COVID-19 had subsided. During the early, highly uncertain period, when many operations were completely closed, the Group took short-term protective actions to reduce costs and secure liquidity, including utilising to a degree various government sponsored furlough schemes in the UK, Australia and Singapore and securing a temporary borrowing facility under the UK CCFF programme. The Board of Directors and senior management all agreed to a voluntary 20% reduction in their fees or salaries.

1. APM (alternative performance measure), see page 176-177.

Shareholders were also impacted by the withdrawal of the recommended dividend payable in June 2020 and cancellation of the £150m share buyback programme then underway as precautionary moves to protect the Group's liquidity.

By the end of June, as the first wave subsided, the Group quickly established a 'new normal' way of operating, with no further utilisation of government support schemes. Staff temporarily laid off due to their business being closed were from then on entirely at Inchcape's cost. And where lower levels of demand unfortunately made it necessary, a number of permanent headcount reductions were made. The precautionary £100m drawn down under the CCFF scheme was repaid; other suspended activities resumed with Executive Directors' and management salaries reverting to former levels.

Strategic progress

In spite of the pandemic, the Group took some important steps forward with its strategy. This included the acquisition of the Daimler Distribution businesses in Colombia and El Salvador which help build our relationship with that important OEM. We also added to our MINI and Jaguar Land Rover distributorships as well as selling a number of dealerships in the UK as part of building a better, stronger UK business.

As announced last May, Duncan Tait took over as CEO in July 2020, bringing considerable experience of the Technology sector, which is of increasing importance to Inchcape's future. His report, which follows this, gives more details of our strategic evolution.

The Board keeps a close eye on the major disruptive trends affecting the global automotive industry and has considered what impact the pandemic may have on them. Shared ownership, autonomous vehicles and fully connected cars still lie some way ahead, but electrification of the drivetrain has accelerated. The pace of electrification is still significantly driven by government legislation, incentives and support for investment in the necessary charging infrastructure. Many countries are now bringing forward their target dates for achieving the milestones on the path to zero emissions as a direct response to climate change and recent changes in US government policy will undoubtedly provide a further boost towards electrification globally.

S172 statement

Inchcape is confident that our partnership with advanced technology OEMs puts us in a good position to both respond to and take advantage of the accelerating pace of electrification. We continue to watch developments closely and shape our strategy accordingly.

Board

As mentioned above, we were delighted to appoint Duncan Tait as our new CEO from

1 July 2020 succeeding Stefan Bomhard, who left Inchcape to take up a position elsewhere. Alex Jensen was appointed in January 2020 as stated in last year's Annual Report and Rachel Empey recently announced her intention to stand down in April 2021 due to other commitments. Rachel has made a strong contribution to our Board over the last five years for which we thank her. We have commenced a process to seek a suitable replacement.

Till Vestring has completed nine years on the Board and ordinarily would stand down at the forthcoming AGM. We highly value having a Board member based in Asia, our largest market, and are actively seeking an Asia-based replacement. With the current COVID travel restrictions, Till has kindly agreed to extend his tenure until we have successfully appointed and inducted his replacement onto the Board.

The various unexpected activities of 2020 made for a busy year for the Board. I would like to express my gratitude to all my fellow Board members for their commitment and support over the last 12 months.

Dividends and returns to shareholders The Board decided as a precautionary measure not to pay dividends during 2020 and to cancel the share buyback programme already underway. The subsequent financial performance and in particular the excellent work on liquidity led by our CFO, Gijsbert de Zoeten, have left our already strong balance sheet in an even better position. Having carefully considered the situation from a range of stakeholder perspectives, the Board has decided on this occasion to recommend a dividend of 6.9 pence per share payable in June 2021 (2020 £Nil).

Looking ahead

At the time of writing, it seems likely that COVID-19 will be with us for some considerable time longer, with all that implies. But we remain highly confident in the Group's ability to maintain its strong operating capability through the months ahead, whilst also maintaining focus on our strategic progress.

The Directors have exercised their duties under the Companies Act 2006 throughout the year, including under Section 172, the duty to promote the success of the Company whilst having regard for the factors in 172(1)(a) to (f). These and other factors are taken into consideration by the Directors when making decisions in their role as the Board of Inchcape plc.

The factors listed under S172 are integral to most of the significant decisions taken during the year. The Board is satisfied that the information provided by management and others via reporting, performance updates, key performance measures, independent advice and industry and economic updates is of appropriate quality to allow the Board to have due regard for each of the factors.

Case studies demonstrating how the Directors have discharged their duties under S172 are given on page 60. Stakeholder engagement is given on pages 18 to 19. Additional information on areas which impact stakeholders can be found on:

S172 factor

Consequences of decisions in the long termStrategy 8-9

Capital allocation 23

Risk 41-50

Additional informationPage

Interest of Company's Stakeholder engagement 18-19

employeesFoster Company's business relationships with suppliers,

CSR Report 34-36

Directors' Report 98-99

Stakeholder engagement 18-19

Strategic Report 10-11

Business model and 12-19

customers and others value chainImpact of operations on community and the environmentStakeholder engagement 18-19

CSR Report 37

Non-financial information 38-39 statement

High standards of business conduct Acting fairly between members

Directors' ReportNon-financial information statement

I would end by again thanking the whole Inchcape team across the 34 countries in which we operate for their extraordinary efforts in this extremely difficult year. You should be extremely proud of what you accomplished. Thank you!

Nigel Stein

38-39 96

Chairman

Chief Executive's review

An outstanding business with an exciting future ahead

I am delighted to present my first review since succeeding to the Group CEO role in July 2020. My tenure began in the midst of the global COVID-19 pandemic, a time of significant challenge for the Group, our industry and the world at large, but I am pleased to confirm that I inherited a strong and sustainable business. This is reflected in our full-year results which, despite dynamic market conditions, were ahead of our recently revised expectations.

Before reviewing our performance in 2020 and setting out my thinking for the future direction of the business, I want to first pay tribute to my colleagues. Our performance in extremely testing times is down to their dedication and efforts. I could not be prouder to work with such talented people, who ensured that the business navigated the complexities of the global pandemic. As well as looking after our business, colleagues have delivered for their local communities, contributing crisis support by offering expertise and deploying resources at the peak of the pandemic.

The characteristics that attracted me to join Inchcape earlier in the year have only been reinforced by what I have seen. Our underlying strength is borne of a combination of factors including the diversity of our global markets, long-standing partnerships with many of the world's leading automotive manufacturers, unique business model, investment proposition and diverse and talented people.

These factors have enabled the business to deliver what I think is an outstanding result despite the challenges we faced. If we can perform like this under such challenging circumstances, we should be excited about what we can do in a more stable environment.

Performance

Clearly, the COVID-19 pandemic had a material impact on trading for a substantial period of the year, as markets experienced government mandated lockdowns. Despite the initial disruption however, we saw an improving trend towardsthe end of the second quarter when some markets were able to partially reopen. The dynamism of the situation meant there was a balance of exposure to restrictions: whereas several of our operations in Latin America, for example, saw the most severe lockdowns, markets in Europe were able to remain partially open for servicing, and Hong Kong remained open and trading throughout the period.

From the beginning of the pandemic, we had a dedicated 'taskforce' to manage the risks we faced and report on our response. Business continuity measures were introduced and robust health and safety protocols put in place to ensure the protection of our customers and our people. Social distancing measures and PPE provision have helped to minimise the risk of exposure.

The situation was dynamic throughout 2020, and has continued to cause some disruption at the start of 2021 but I believe we are well prepared both from operational and liquidity standpoints.

I am delighted with the way in which our teams worked to find solutions to maintain a route to market for our OEMs, adapting practices to enable us to continue to serve our customers notably through accelerating rollout of 'click and collect', online and omni-channel services.

Revenues of £6.8bn for the year compare to £9.4bn in 2019, while we delivered profit before tax and exceptional items of £129m (vs £326m in 2019), the majority of which was generated in the second half. Cash management was exceptional throughout the year, but particularly shone through in the second half, clearly demonstrating the highly cash-generative nature of our business model.

The headline numbers mask the significant progress the Group made in 2020 including the successful execution of the largest cost-saving programme in our history, and a further rationalising of our retail footprint through selective divestment.

While 2020 will always be associated with COVID-19, a number of our markets were also significantly impacted by social unrest. For those within Inchcape it will be remembered as a year our business showcased its resilience, and took prompt, but tough, actions to make our platform leaner and fit for Distribution-focused growth.

Business development

I am pleased to report that, despite the considerable challenges presented by the pandemic, the Group continued to make good strategic progress on several fronts: expanding our portfolio representation for key OEM partners; rationalising our retail footprint in non-Distribution markets; further implementing new digital capability; and introducing business optimisation processes in sales and operations planning.

We expanded our representation of Daimler in the Americas during the year, completing the acquisition of Daimler Colombia and becoming, within the space of a few months, the second largest Daimler distributor in Latin America.

This important build to the Daimler platform was then further enhanced with the addition of the contract for El Salvador later in the year. Towards the end of 2020, we also secured the distribution rights for MINI in Chile and both MINI and BMW Motorrad in Peru which we began operating in December. Central and South America has been the key focus for our

growth strategy and since 2016 we have progressed from representing one brand in two markets to our position at the end of 2020 in nine markets and a strong portfolio of premium, volume, commercial and electric vehicle (EV) focused brands.

We have also developed our position in Europe, agreeing a Distribution joint venture with Jaguar Land Rover in Poland, one of the largest available markets in the region. This consolidates our representation of the brand across territories in northern Europe, including all three Baltic states, and brings Poland into the Distribution segment where previously we had a Retail-only position in the market.

I am pleased to report that several key initiatives have seen significant developments over the year, particularly as we seek to build the most efficient and cost-effective Distribution platform for our automotive partners, one that will respond to the changing priorities of consumers and the challenges and opportunities presented by climate change.

Our focus is on optimising our business, creating an environment in which data-driven decision-making streamlines our processes and empowers our people by reducing laborious administrative tasks. Automating processes in Sales and Operations Planning (S&OP) enables more accurate stock forecasting so that we can manage our inventory much more efficiently. This is a model which combines faster, digitalised processes with human experience and expertise to create optimal stock levels and therefore also positively affecting working capital management, inventory obsolescence, storage costs and supporting gross margins.

Similarly, our Customer Lifecycle Management (CLM) programme combines the skills and capabilities of our people with integrated digital support platforms to provide our customers with an improved experience. With customer interactions increasingly taking place online further into the purchase process (even as far as 'click and collect'), our omni-channel platform allows customers to build the vehicle access experience that they want. Having initiated the programme in Melbourne, Australia, in the past year we have begun rolling out to our operations in South America, with staggered implementation planned in other markets.

Strategic priorities

The Ignite strategy has laid strong foundations for the Group and catalysed a shift towards the more attractive Distribution segment. As we embark on the next phase of the Group's journey, Distribution remains at the core of the business. In setting the future direction we have reflected on the structural changes taking place across the automotive industry, and how these provide opportunity across our core competencies as a distributor of mobility services in fast-growing markets.

We concluded that an ambitious Inchcape could benefit significantly from and thrive in this new world, one where we can both leverage our existing Distribution infrastructure and drive expansion across new markets and competencies.

Our new strategy will focus on two key growth pillars:

• 1. Distribution Excellence; and

• 2. Vehicle Lifecycle Services

In 'Distribution Excellence' we see an opportunity to take our core Distribution business, and make it both better and bigger. In 'Vehicle Lifecycle Services' we believe there is significantuntapped potential, across all of our markets, that the business has not fully realised in the past. In summary, we are putting more emphasis on capturing the lifetime value of both customers and vehicles. We will approach our growth in a prudent and structured manner, in close collaboration with our OEM partners.

We have identified three key enablers that will play an integral role in making our strategy a success:

• - People, Culture and Capabilities: attracting, developing and retaining talent to enable a high performance innovation culture

• - Digital, Data and Analytics: integrate data and analytics to drive decision-making, and digitalise customer journeys

• - Efficient Scale Operations: standardisation of processes regionally and globally

We are confident this will drive growth within our current footprint and even faster expansion in new markets, with both existing and new partners.

As we look to define the future strategic direction of the business, so we have reviewed the role Inchcape plays in society and in this light we have defined our purpose:

"Bringing mobility to the world's communities - for today, for tomorrow and for the better"

In conjunction with the development of our mid-term plan, we are building a responsible business plan that is deeply connected to our strategy and to all of our stakeholders.

Inchcape is a strong business, with significant unrealised potential. With our strategy we are striving to create an excellent business, with meaningful growth opportunities to deliver shareholder value through organic growth, consolidation and cash returns.

READ MORE ABOUT OUR EVOLVING STRATEGY AND NEW PURPOSE ON PAGES 8-9

Our people

I would like to underscore how impressed I have been by our people, and to thank them for their dedication during a very challenging year. Our better than expected performance is credit in no small part to our people's spirit and can-do attitude.

Inchcape employs a diverse talent pool that will be a major asset in the context of our evolving strategy. This is a business that strongly believes in supporting people to grow in their careers, just as they contribute to the growth of the business. This approach will continue to drive how we attract, develop and retain talented individuals as we look to support the further development and implementation of the strategy.

Sector reclassification

Given the shift of the business towards Distribution, the London Stock Exchange reconsidered the appropriateness of Inchcape's sector classification. As of 19 June 2020, the Group has been classified within 'Business Support Services' (previously 'Speciality Retail').

Duncan Tait

Chief Executive's review continued

Capital allocation

Our capital allocation policy remains unchanged and, in order, our priorities are: to invest in the business to position it strongly for the future; to make dividend payments; to conduct value-accretive M&A; and, in the absence of appropriate inorganic opportunities, consider share buyback programmes.

With a considerably strengthened financial position and renewed confidence in the future, the Board, having taken into account the extraordinary circumstances that the business endured during the year and a broad stakeholder perspective, believes it is the right time to resume dividends and has proposed a payment of 6.9p for FY2020.

Investment proposition

Distribution is at the core of Inchcape. Given our geographic footprint, with exposure to high growth markets and our diversified revenue streams, the Group aims to deliver global GDP-plus organic growth. The highly fragmented nature of Distribution also provides significant scope for inorganic expansion.

As the largest independent automotive distributor, we have a unique opportunity to leverage our scale and efficiencies, which we are doing today with our digital developments. In addition to its attractive growth prospects, the business is asset-light with a history of delivering a strong cash-conversion. Combined with a disciplined approach to capital allocation, we believe these should enable the Group to maintain its long track record of delivering attractive shareholder value.

Looking ahead

We are excited to be entering the next phase of the Group's Distribution focused growth strategy, with an emphasis on greater use of technology to improve our business for the benefit of our consumers, our OEMs and our people.

As of today, the COVID-19 situation remains dynamic. While we saw good momentum in the business in the second half, volatility and unpredictability are likely to continue throughout 2021. Our operations are better equipped to continue in this rapidly changing environment and we have materially reduced our cost base. Absent any severe restrictions in 2021, we expect material growth in profits and an improved operating margin. This takes account of a c.£15m translational currency headwind to Group profits based on prevailing rates.

Looking beyond the short term, our vision is to both strengthen and further broaden our OEM relationships and to continue to expand our geographic reach - enabling us to bring mobility to the world's communities.

Group Chief Executive

Our Group Executive Committee

The Executive leadership is a global team of business leaders that combines a strong focus on operational excellence with a wealth of experience in automotive and a wide range of other industries, including FMCG, management services, utilities and finance. The Executive Team drives the strategic vision and operational direction of the Company on behalf of the Board.

Duncan Tait

Gijsbert de Zoeten

Group Chief Executive

Chief Financial Officer

George Ashford

Mike Bowers

CEO APAC

Group General Counsel

James Brearley

Helen Cunningham

CEO UK

Chief Human Resources Officer

Ruslan Kinebas

Mark Dearnley

CEO Americas & Africa

Chief Digital Officer

Glafkos Persianis

CEO Europe

During 2020 we welcomed four new Executive Officers to Inchcape, in addition to the appointment of our new Group CEO. This change has been driven by several factors including the reorganisation of our operational regions and the acceleration of our focus on digitalising the systems and processes that support the business.

Glafkos joined Inchcape in April 2020 from Vodafone Group plc, where he most recently held the post of Commercial Director for the UK and was responsible for 9,000 colleagues and a turnover of €3.3bn.

Q: What is Inchcape doing to improve its use of analytics and how will this enable the business to maximise value in the customer and vehicle lifecycles?

A: Improving our data analytics capability at Inchcape will help drive better decision-making across our organisation, with the aim of improving our overall customer satisfaction, revenue and profitability. We're doing this through a pragmatic 'test and learn' approach where we apply advanced analytics and data science to specific 'use cases', which are prioritised based on the value they can bring to our markets and their ease of execution. Once deployed, use cases can easily be adapted and transferred across to other markets. Advanced analytics use cases touch all the steps of a customer's vehicle ownership lifecycle: driving more customer traffic to our web sites; better converting this website traffic into leads and sales; and improving the retention and value of our customers in aftersales and potential to purchase again. To enable this, we are establishing a global cloud-based advanced analytics and data management platform. And we are building central capability in data strategy, architecture, engineering and governance which is supported by local in-market resources for analytics deployment and operation.

Formerly of Bain & Co, HMRC and the telecomms companies Vodafone Group plc and Cable & Wireless plc, Mark joined Inchcape in September 2020 to lead Inchcape's data and digital transformation.

Q: The business has signalled the importance of accelerating its digital capability - can you summarise what this means to Inchcape in practice?

A: Our customers expect a fully omni-channel experience from Inchcape and our retail partners. We are focused on developing and continually optimising the digital platforms that support customers, and making internal processes as efficient as possible. Advanced analytics are increasingly used to improve the customer experience and business performance, and cyber protections ensure everything remains safe.

This agenda means we can offer fantastic digital, analytics, technology and cyber careers in Inchcape. I'm passionate about developing our talent across the world, and really excited to have joined Inchcape to be part of this digitised future!

Helen Cunningham

Chief HR OfficerHaving held executive HR and operational roles in multiple sectors, Helen joined Inchcape in 2016, initially in the UK and subsequently in the high-growth potential and M&A focused Emerging Markets and Americas & Africa regions before being appointed to the Executive team in October 2020.

Q: How will the refreshed strategy support Inchcape's continuing inorganic growth agenda, something with which you have been heavily involved in recent years?

A: The strategy refresh we are undertaking will underscore our commitment to developing a differentiated and market-leading Distribution business. Underpinning this will be world-class solutions in omni-channel customer experience and operational practice enabled by highly capable people. With this capability and by improving the economics of Distribution, we'll have the ability to win more business with both current and new OEM partners, and to buy more Distribution rights from competitors. Ultimately, we will be able to increase the size of our addressable market and the share of that market. Crucial to our long-term growth will be integrating acquired talent and attracting new talent to further enhance our capabilities, becoming a respected employer of choice in all our markets.

Mike joined Inchcape in 2015 as Group General Counsel, with responsibility for company secretarial, regulatory and compliance and the delivery of legal services across the Group. He is a UK qualified solicitor and legal professional with significant prior experience of in-house corporate legal roles.

Q: Inchcape is addressing its responsibility to society in a newly defined purpose. What lies behind this and how does responsible business enhance your investment proposition?

A: It is no longer enough for corporates to consider only the narrow, short-term interests of their shareholders; they need to think about those things that are important to each of their stakeholders including the communities of which they are a part. Society, through government, is increasingly asking corporates to act in ways that are responsible, and demonstrably sustainable, and to show how they are taking these matters into account in their strategy and their operating model. Our newly created purpose lays down a marker for the Company that we want to be in the future, provides a guiding light for our teams and will help our stakeholders better understand who we are: 'bringing mobility to the world's communities - for today, for tomorrow and for the better'.

Our strategy

Accelerating and evolving our business

Over the past five years, we have pursued a successful growth strategy under Ignite, one which has seen the Group grow from 26 to 34 markets and add new OEM partners to its Distribution portfolio. Our opportunity moving forward is to make our operating model genuinely scalable. Scalable in our core business of automotive Distribution. Scalable to capture more of the vehicle lifecycle.

In that time, we have developed new ways of reaching our customers and for them to access our services, via on- and offline channels and in combinations of both. We have initiated collaborations with key partners and moved quickly into testing how we can participate in new areas of private, shared and public mobility. We have developed playbooks of best practice to begin establishing a 'one Inchcape' way of doing things, from integrating acquisitions to implementing back-end platforms for our support functions. And we have participated in the consolidation of our industry through selective value-accretive M&A in both new and established markets with both new and established partners.

The successes we have seen with this strategy have come from a pursuit of growth and forward momentum. Now, with much of this growth-driving activity firmly embedded in the business, we are reviewing and refreshing our strategy to prepare for the next stage of our journey.

We start this journey in a good place with strong foundations in place to support our future goals. Our new strategic priorities will be delivered through a scalable, standardised and digital operating model driven by centres of excellence, while retaining our proximity to market. By embracing a one Inchcape way of working, and by building on our strong foundations through technological and data-led solutions, we have the opportunity to transform Inchcape into a business that is ready to maximise the opportunities in front of us now and to underpin our long-term sustainability.

Change is driving opportunity

Our world, our industry and our business are experiencing unprecedented change. This change represents an imperative in our existing markets, but also a once-in-a-generation opportunity for Inchcape to grow. This growth will come from three opportunities:

1. Generating more value from existing markets and customers through route to market transformation

Success in providing OEMs with an omni-channel route to market will mean we sell more goods and services to consumers while reducing the cost of taking a car to market for our partners.

2. Expanding into new and adjacent areas, capturing more value from our vehicles as well as others

Adjacent markets like Used cars and parts are being disrupted. This provides opportunities for Inchcape to create new solutions or take proven solutions from other markets to capture a greater part of the vehicle value chain.

3. Using our core capabilities and market presence to expand and grow in new markets and with new partners

Manufacturers are now looking for partners in the markets they choose not to serve themselves, who have the scale to be able to exploit technology and data to deliver the omni-channel solution consumers are demanding.

We must accelerate and evolve.

To realise these opportunities, we have identified two strategic priorities, supported by three enabling actions.

Priority #1: Transform our core business through Distribution Excellence

The urgent need to change our route to market model is well understood and already underway. We need to accelerate the speed and scale of our ambition to ensure we offer our OEM partners the omni-channel solution that serves the customer more effectively than they or a competitor can. The only way to do this is through a step-change in our digital capabilities, use of data and through the standardisation and relentless optimisation of our core processes.

This will provide the opportunity to expand our market presence and broaden our OEM partnerships.

Priority #2: Expand into new and adjacent Vehicle Lifecycle Services

The rise of digital business models in adjacent areas presents an opportunity for Inchcape to capture elements of the vehicle value chain currently under-exploited or not addressed. Digitalisation is removing barriers to entry and enabling competitors to create and scale businesses quickly. Inchcape's local market knowledge, access to digital capability and exposure to proven disruptive models in existing markets means that Inchcape has the right to play in these adjacencies, creating new revenue streams.

Enabler #1: Develop the People, Culture, and Capabilities we need to build on our core strengths of executional excellence and automotive knowledge and blend these with the digital, technological and process capabilities needed to succeed in the future.

Enabler #2: Use Digital, Data and Analytics to create the consumer experience relevant to each market based on data driven insights; make the business critical decisions that support efficient and effective execution using data; and ensure all of this data is totally secure.

Enabler #3: Develop Efficient Scale Operations to standardise our back office and core processes and apply 'one best way' to make us more efficient and more successful.

We have clarified our purpose

Inchcape has a long and successful history of international trade based on a pioneering approach and spirit of innovation.

As a trading company, we have a strong track-record of successful expansion - developing new businesses in markets we know well and entering new geographies with familiar businesses.

Combined with considerable local freedom to innovate and pursue opportunities, these traits have grown Inchcape from its origins as a merchant trading company over two centuries ago to the international automotive services group we are today.

While the goods and services Inchcape provides have changed, our purpose retains this same pioneering spirit and ambitious global outlook:

Bringing mobility to the world's communities - for today, for tomorrow and for the better

Our purpose in more detail

Inchcape brings the mobility solutions provided by our automotive partners by providing the routes to market and access to customers through our Distribution and Retail expertise.

We enable access to a broad range of vehicles from passenger vehicles and motorbikes through to heavy trucks, commercial and municipal transport and we facilitate their continued use through Aftersales services. These products and services will evolve over time but our role and motivation to improve mobility for the customers and communities we work with will remain unchanged.

The brands we represent, the markets in which we operate and the customers we serve have unique characteristics. Borne of our heritage of trading throughout the world and embracing global diversity, Inchcape's ability to identify, understand and service the needs of our communities is one of our key strengths.

Our viability as an organisation is founded on how we perform today and how we embrace change and adapt to ensure our continued performance in the future. Inchcape has a rich history of surviving and thriving in our past; we aim to push into tomorrow with a continual focus on excellence and innovation.

For better has three meanings for Inchcape: capturing our pursuit of continuous improvement; reflecting our aspiration to be the trusted partner to OEMs; and outlining an ambition to achieve our goals while acting responsibly and sustainably for the benefit of all our stakeholders.

Our business model: OEM partnerships

Long-standing partner relationships

Inchcape has long-standing partnerships with the world's leading automotive groups, with a core focus on manufacturers of premium and volume passenger vehicles. In select markets we also represent commercial and agricultural vehicles and machinery as well as emergent passenger vehicle brands.

Seven core partnerships

We have long-standing relationships with each of our seven core OEM partners, the majority of which are built around exclusive Distribution contracts in multiple markets.

Toyota

Jaguar Land Rover

Suzuki

Mercedes-Benz

Volkswagen

BMW

Subaru

Passenger vehicle partners

Commercial vehicle partners

The OEMs (original equipment manufacturers) with which Inchcape partners are some of the foremost drivers of technological innovation in the automotive industry, from advances in hybrid and battery electric drivetrains to future mobility solutions.

STRATEGIC REPORT

GOVERNANCE

53 yrs

50 yrs

43 yrs

33 yrs

32 yrs

31 yrs

FINANCIAL STATEMENTS

28 yrs

Our business model

How we generate value

Our business model is unique in our industry, with our distinct routes to market and global footprint leveraged across the full Distribution value chain to deliver sustainable value to our stakeholders and superior returns to our shareholders. In the following pages, we explore our business model to demonstrate how we bring the best loved automotive brands to the world.

Our OEM	Our routes	Our value	Our global	Delivering
partnerships	to market	chain	footprint	for our
stakeholders
SEE PAGE 10	SEE PAGE 12	SEE PAGE 13	SEE PAGE 17	SEE PAGE 18

Our routes to market

Inchcape's organisational strength comes from a combination of parts that forms our business model: diversified revenue streams, our global portfolio of operations, our value chain, our stakeholders and how we engage them, our long-standing and deeply embedded brand partner relationships and our operating strategy.

Distinct routes to market

The Inchcape value chain spans both Distribution and Retail competencies, with a weighting towards higher margin Distribution contracts.

Diversified revenue streams

We have a balanced approach to revenue generation, maximising opportunities at all points in the value chain.

Our business model: where we operate

A growing global footprint

An independent, multi-brand automotive Distributor and Retailer with operations that span countries on five continents. A balanced and diverse portfolio of both mature and emerging markets to provide access and in-country expertise for some of the world's leading automotive manufacturers.

STRATEGIC REPORT STRATEGIC REPORT

GOVERNANCE GOVERNANCE

FINANCIAL STATEMENTS FINANCIAL STATEMENTS

APAC

Europe

Brunei, Hong Kong, Guam, Macau, Saipan, Singapore, Thailand

Australia, New Zealand

Belgium, Bulgaria, Estonia, Finland, Greece, Latvia, Lithuania, Luxembourg, North Macedonia, Poland, Romania, Russia

Americas & Africa

United Kingdom

Our business is segmented in four regions along geographical lines:

Argentina, Chile, Colombia, Costa Rica, Ecuador,

63 retail centres

Asia Pacific (APAC)

El Salvador, Panama, Peru, Uruguay

Americas & Africa Europe

Djibouti, Ethiopia, Kenya

United Kingdom

17

Our business model: our value chain

Full spectrum Distribution

We have a unique and sustainable business model, providing full-spectrum Distribution capability for our OEM partners, operating throughout the value chain.

Acting as custodians of some of the world's most recognisable brands, we provide automotive manufacturers with a highly effective route to market and a vital link between the brand and the customer.

Product planning

Our brand partners call upon our local market insights to inform the planning and design of new models, tailoring designs, specifications and sales volumes to the exacting needs of each market.

With specialist understanding of the markets in which we operate, we are ideally placed to develop brand propositions that will resonate with local consumers, maximising brand penetration and market share positions on behalf of our partners.

Brand positioning

Import & logistics

Overseeing global transport and operating comprehensive port or border to showroom connections means that we are able to remove all logistical burdens from our partners.

13

National marketing

We develop and refine marketing plans on behalf of our partners from pricing and promotion to customer communications, based on extensive research of consumers and competitors as well as our specialist insight of local market dynamics and macro-economic trends.

4

5

Parts distribution

With strong brand relationships, specialist Distribution capabilities and Retail networks, Inchcape is a trusted supplier of original equipment manufacturer parts and accessories throughout any given market.

Network management

As an OEM Distribution partner, we choose where we wish to run Retail stores directly, and where we select and appoint the independent dealer network, training and managing them, and optimising the Retail footprint across each geography.

6

New & Used vehicle sales

We want to provide the world's best automotive purchasing experience for New and Used cars throughout the managed network and our own Retail operations. Whether online or in person our aim is to make each stage of the vehicle ownership journey easy, effective and enjoyable, and to build lifetime relationships with our customers.

Aftersales and servicing

With long-term investments in state-of-the-art facilities, expert technicians and first-class customer care, our objective is to create life-long Inchcape customers for all their Aftersales needs, from routine servicing to accident repair.

8

STRATEGIC REPORT

GOVERNANCEFINANCIAL STATEMENTS

9

Finance & Insurance

We partner with financial institutions

around the world to help our customers

purchase and care for their vehicles with

a wide range of transparent financing

product options available to support

their ownership lifestyle.

Inchcape Annual Report and Accounts 2020

16

Our stakeholders

Stakeholder engagement

Inchcape's success is dependent on the continued trust and support of all its stakeholders; strong relationships that allow us to work with our key stakeholders are therefore fundamental to the long-term success of the Group.

Stakeholder

How we create value

Interests

- Strategy

Original Equipment Manufacturers (OEMs)

We provide our OEM brand partners with professional and efficient routes to market for the post-factory automotive chain

• - Long-term commercial sustainability and business viability

• - Trusted partnerships

• - Health and safety

• - Responsibility

- Access to vehicle products and services

Customers

We provide access to automotive ownership and support services throughout the customer journey and aim to deliver the best experiences for customers in our industry globally

-

World renowned automotive brands

• - Specialist product and service knowledge

• - Customer service

• - Aftersales

• - Safe facilities

• - Tailored experiences, both on- and offline

• - Business viability (for long term contracts)

- Reward, training and development, diversity

Employees

We aim to enable every colleague to achieve their personal goals at each stage of the employee journey; to recognise and develop talent; and to foster a socially conscious culture based on inclusion, empowerment and optimised potential through learning

and inclusion

• - Strong approach to health and safety - duty of care

• - Strategy

• - Company purpose

• - Long-term commercial sustainability

• - Security of employment stemming from business viability

• - Responsible employer

- Strategy

Shareholders

Our objective is to deliver outstanding returns on long-term investment based on a sustainable platform for growth, disciplined approach to capital allocation and cash returns through dividends and share buyback

• - Long-term commercial sustainability and business viability

• - Company purpose

• - Capital allocation

• - Financial returns and strength of balance sheet

-

Investment in responsible business

- Local employment

Communities

We have a balanced approach to engagementwith the communities in which we operate, empowering ownership at local level with structural support from Group

• - Health and safety, including local environmental concerns e.g. waste disposal

• - Support of local communities

• - Responsible approach to local law and regulations

In order to fully understand the interests of key stakeholders, the Board will engage either directly, for example a shareholder consultation on the Remuneration Policy, or indirectly, for example by considering the results of an employee consultation carried out by management.

How we engage

Management

• - Regular top to top executive management meetings

• - Market level operational meetings

• - Pan-market brand development

Board - Brand partner deep dive review annually - Presentations from OEM management at

Strategy Day

Board

- Update on the customer satisfaction analytics from reputation.com at each meeting

Outcomes and progress

New distribution agreement with JLR in Poland, the first such contract for Inchcape in this market

Distribution agreements with Daimler in Colombia and El Salvador, enhancing the new contracts with the OEM established in the Americas in 2019

Partnerships with Toyota in Singapore and Belgium to offer financial products to customers

New Distribution contracts for MINI in Chile and for MINI and BMW Motorrad in Peru

Management

• - Daily reporting of customer feedback on reputation.com

• - Analysis of Salesforce customer journey management platform

• - Ongoing surveys at market level

Customer omni-channel platform rolled out to all Subaru markets in South America Reputation.com:

Total reviews in 2020: 35,748

• - 89% of reviews positive

• - 3% of reviews neutral

• - 8% of reviews negative 71% of reviews included customer comments

- Total employee experience increased from 59% to 64%

Management

- Management visits to sites - Pulse survey carried out against backdrop of

COVID-19 and its impact on the business covering: - Impact on individual and their wellbeing - Communication - Leadership and management - Ways of working

-

Performance management framework (DRIVE5)

- Employee intranet and Hive Learning collaborative platform provide two-way communications capability Group-wide

Board

• - Reviews outcomes of engagement surveys and action plans prepared by management

• - UK pension consultation

Board

• - AGM

• - Shareholder consultation

• - Chairman one to one meetings

Management

• - Regular dialogue with institutional investors

• - Webcasts

• - Annual Report and plc website

• - Capital Markets Day

• - Overall satisfaction increased from 61% to 70%

• - 74% of employees think the Company has acted responsibly

• - 85% would recommend working at Inchcape

• - An 8% decrease in response rate which may be attributed to number of employees on furlough

• - 23 countries completed roll out of minimum three Risk Management Programmes

• - Health, Safety & Environment (HSE) system rolled out in 17 languages

• - Measurement of attrition

Colleague communications frequency and content enhanced to drive better engagement during period of extreme challenge for individuals 'Together in Spirit' colleague video campaign emphasising a united global community

Leadership communications framework established to improve top-down visibility including management townhalls and regular videos from Group CEO

New UK pension scheme introduced, See page 60 for further details

During the year a mixture of virtual and physical meetings were held with shareholders representing approx. 60% of issued share capital

Votes from shareholders representing 88% of share capital at the 2020 AGM Upon the announcement of a new CEO, the Chairman contacted shareholders to discuss the appointment

During his first few weeks with the Group, Duncan Tait met with a number of key shareholders representing 35% of share capital

Management

Market-specific activity co-ordinated at local level Group-level support for extraordinary events affecting our market communities

Board

Updates on community activities included in regional market updates from CEOs

Around 15,000 people employed in 34 countries

Strong levels of local community involvement reinforced during pandemic with support initiatives. See page 39 for further details

Toyota Motor Corporation

Our partnership with Toyota is the longest in our portfolio, with 53 years of representation as a distributor in geographies that reach from South East Asia to East Africa and from Europe to the Americas. Our partnership with TMC includes all variations of our business model - Distribution with exclusive Retail, such as in Hong Kong and Singapore; Distribution with a managed Retail network, such as Greece; and Retail only, such as our operations in the UK. The partnership also extends to both passenger and commercial vehicles, with which segment we have expanded more recently in South America.

Locations

Distribution

Belgium, Brunei, Bulgaria, Djibouti, Ethiopia, Greece, Guam, Hong Kong, Luxembourg, Macau, North Macedonia, Romania, Saipan, Singapore

Chile & Colombia (Hino only)

Retail

Russia, UK

Our investment proposition

Growth and cash returns

Well positioned to deliver shareholder value through organic growth, consolidation and cash returns.

StrategyContinued consolidation in a fragmented market will create valueSustainable business model

• - Growth of existing Distribution markets expected to exceed global new car volumes

  -

  Highly fragmented industry

  - Inchcape is the largest global independent distributor

  • - Strong, long-term partnerships with OEMs

  • - Strong track record of value creation

• - Driving innovation and optimising our processes to create the best conditions for growth in new markets

-

Inchcape has a 1% share of the addressable market of Distribution-led regions (c.14m TIV, 20% of global total) and envisages significant opportunity

• - Investing for the future and to be the best

Subaru Corporation

Inchcape's Distribution partnership with Subaru is one of the most important in our portfolio and an example of the close collaboration between the Group and our brand partners. We distribute and operate the brand in Australia, maintaining Subaru's highest share globally in that market. Subaru was the OEM brand central to our first significant expansion in South America in 2016 which has helped to create a platform for further growth in the region.

Locations

Distribution

Argentina, Australia, Chile, Colombia, New Zealand, Peru

Capital allocation framework

A strong position to grow the business

Inchcape has a disciplined capital allocation policy. We have a strong balance sheet and a highly cash generative business model. This results in excess free cash post investment in organic capex and payment of dividends. We look to utilise this strong position to grow the business inorganically, investing in value accretive acquisitions that will ensure longer-term growth of the business and value for shareholders. Beyond this we will look to return any excess cash to shareholders through share buybacks.

Cash utilisation priorities

- Strong balance sheet.

- Targeted 60-70% FCF conversion.

Cumulative cash returns to shareholders

Acquisition spend since 2016

2011£47m £47m

£596.1m

2012£146m £146m

• 2013 £222m£50m

  £271m2

• 2014 £303m

£150m £453m

£326.8m

£209.0m

£60.3m

2015£635m

£394m

£241m

2016£834m

£485m

£349m

South American acquisition1

Central American acquisition1

201720182019

£702m

£399m

£587m

£399m

£813m

£499m

£987m2 £1,102m2 £1,312m1

Other acquisition1

Total spend

1. Including acquired debt

2020£1,344m

£813m

£531m

Dividends (cumulative)Share buyback (cumulative)

• 1. In response to COVID-19, the Board cancelled the 2019 final dividend (£70m), and share buyback programme (£31m complete, £119m remaining).

• 2. Dividends and share buyback rounded to nearest £m.

Dividend strategy - Target 40% annual payout ratio of basic adjusted EPS

- Interim dividend set at 1/3 of the prior year's total DPS.

(pre exceptionals).

BMW Group

Our partnership with BMW Group is over 30 years strong and has been a key focus for consolidated growth, especially in the Baltic region where we now represent the brand in all three countries: Estonia, Latvia and Lithuania. In 2020 we were awarded the Distribution contracts for MINI in Chile and for MINI and BMW Motorrad (the brand's motorcycle division) in Peru, consolidating our position in those markets. As well as holding Distribution contracts in South America, we also have significant operations of BMW Group's brands in our Retail-only markets: UK, Poland and Russia.

Locations

Distribution

Chile, Estonia, Guam, Kenya, Latvia, Lithuania, Peru

Retail

Poland, Russia, UK

Key performance indicators

Measuring progress

KPIs provide insight into how the Board and Executive Committee monitor the Group's strategic and financial performance, as well as directly linking to the key measures for Executive remuneration. KPIs are stated in actual rates of exchange and pages 176-177 provide definitions of key performance indicators and other alternative performance measures.

Revenue

Definition

Why we measure

2020 performance

£6.8bn

2019: £9.4bn

Consideration receivable from the sale of goods and services. It is stated net of

Top-line growth is a key financial measure of success.

20162017201820192020

• £7.8bn rebates and any discounts,

• £9.0bn and excludes sales

• £9.3bn related taxes.

£9.4bn £6.8bn

The Group has delivered £6.8bn, down 19% organically and down 27% reported versus prior year. The decline reflects the impact of COVID-19, and a strategic reduction of our Retail exposure.

Profit before tax and exceptional items2

Definition

Why we measure

2020 performance

£129m

2019: £326m

Represents the profit made after operating and interest expense excluding the

20162017

• £349m impact of exceptional items

  A key driver of delivering sustainable and growing earnings to shareholders.

• £382m and before tax is charged.

2018£357m1

In 2020 this decreased 61% to £129m, as profits were weighed down by the material impact of COVID-19 on the Group's performance.

2018£351m1

20192020

£326m £129m

Free cash flow2

Definition

Why we measure

2020 performance

£177m

2019: £213m

20162017

£191m £314m

2018£281m1

Net cash flows from operating activities, before exceptional cash flows, less net capital expenditure and dividends paid to non-controlling interests.

A key driver of the Group's ability to fund inorganic growth and to make distributions to shareholders.

2018£279m1

20192020

£213m £177m

The Group delivered free cash flow (FCF) of £177m, a 17% decrease on 2019. FCF resilience is testament to the effective management of our working capital, and the inherently cash generative nature of our business model.

Return on capital employed2

Definition

Why we measure

2020 performance

12%

Operating profit (before

ROCE is a measure ofexceptional items) divided by the Group's ability to

2019: 22%

the average of opening and

2016

• 30% closing capital employed,

  2017

• 30% where capital employed isdrive better returns for investors on the capital we invest.

The Group's ROCE dropped to 12%, reflecting the deterioration of our profitability.

2018

• 28%1 defined as net assets add net

  2018

• 22%1 debt/less net funds.

20192020

22% 12%

• 1. 2018 and 2019 are not comparable with prior years due to adoption of IFRS 16.

• 2. Alternative performance measure, see pages 176-177.

Operating and financial review

Resilience evidenced through turbulent times, business well-placed for the opportunities ahead

I am pleased to present the Group's Operating and Financial Review for 2020, a year of unprecedented challenge but one which also demonstrated the defensive qualities of the business.

We delivered a robust performance in the face of the challenges resulting from the COVID-19 pandemic. This time last year, nobody could have predicted the duration or scale of the pandemic, still less the impact it would have on business activity across all 34 markets where we operate. It is a testimony to the resilience of our diverse business, and all of our people, that we finished the year with results ahead of recently upgraded expectations. Our performance was underpinned by our ability to meet the resilient demand for both Vehicles and Aftersales services across our markets, in particular during the second half.

Key performance indicators

This was supported by our ability to continue delivering vehicles, provide a click-and-collect service, and to continue to perform Aftersales services in affected markets. We also implemented a cost-restructuring programme, targeting £90m of overheads reduction which is now substantially complete. These cost-mitigation measures have helped not only to support profitability during the year but created a leaner and stronger overhead base for 2021.

In spite of the operational challenges, our absolute focus on cash management contributed to the strong FCF result. We worked in collaboration with our OEM partners, managing our inventory levels and financing terms, and maintained a heightened level of working capital discipline across all markets. Supported by our highly cash generative business model, our overall financial position has strengthened further, and we closed the year in a net cash position of £266m. Against the backdrop of an improving trading performance and strong cash generation, we have announced our intention to recommence dividend payments and the Board has recommended a final dividend of 6.9p for 2020.

As we enter the next phase of the Group's growth strategy, our robust financial position and disciplined approach to capital allocation will ensure that the business is well-placed to leverage the many opportunities that lie ahead. It is an exciting journey that we are embarking on and one which will deliver benefits to all our stakeholders.

Gijsbert de Zoeten

CONTINUES ON PAGE 28

Our results are stated at actual rates of exchange. However, to enhance comparability we also present year-on-year changes in sales and operating profit in constant currency, thereby isolating the impact of translational exchange rate effects. Unless otherwise stated, changes are expressed in constant currency and figures are stated before exceptional items.

2020

Key financials

Revenue

Operating profit (pre exceptionals)1 Operating margin1

Profit before tax (pre exceptionals)1 Basic EPS (pre exceptionals)1 Dividend per share

Free cash flow1

Statutory financials

Operating (loss) / profit (Loss) / Profit before tax Basic EPS

• 1. These measures are alternative performance measures, see pages 176-177.

  £6,838m £9,380m £166m £373m

  2019

  % change reported

  (27)% (25)%

  (56)% (54)%

  2.4% 4.0% (160)bps (150)bps

  £129m £326m (61)%

  23.6p 59.9p (61)%

  6.9p 8.9p (22)%

  £177m £213m (17)%

  £(92)m £449m £(128)m £402m (35.6)p 79.0p

• 2. Organic growth is defined as sales growth in operations that have been open for at least a year at constant foreign exchange rates.

% change constant FX1

% change organic2

(19)%

(59)%

Jaguar Land Rover

Inchcape and Jaguar Land Rover's partnership is one of very long standing, reaching back around 50 years in total. We have continued our JLR growth story right up to the present day, with Distribution contracts awarded for Thailand in 2016, Colombia and Kenya in 2018, and in 2020 we were awarded our first Distribution contract in Poland with JLR. We now represent Jaguar and Land Rover as either a distributor or retailer in 12 markets on three continents.

Locations

Distribution

Colombia, Estonia, Finland, Hong Kong, Latvia, Lithuania, Kenya, Macau, Poland, Thailand

Retail Russia, UK

Performance review

2020 was a year with three distinct periods. We made an encouraging start to the year but our operations were then materially impacted in Q2 by COVID-19. While several markets faced disruption in the second half, overall we observed an improving trend across our New, Used and Aftersales revenue streams. The trends we saw reflected to a certain extent pent-up demand, but also less stringent lockdown conditions - with Aftersales allowed to remain open, our ability to deliver vehicles to customers, and the offer of click-and-collect services.

Over the course of the year, the Group generated revenue of £6.8bn, operating profit pre-exceptionals of £166m and free cash flow of £177m.

Group revenue of £6.8bn was down 27% year-on-year reported and 25% in constant currency. During the period we disposed of several retail businesses, which further reduced our Retail revenue exposure. We completed four Distribution deals, most notably the acquisition of Daimler's Distribution business in Colombia, and the addition of the JLR Distribution contract in Poland.

On an organic basis revenue declined 19% in 2020, as most of our markets were weighed down by COVID-19. While the spread of the virus continued to cause disruption, our organic performance improved in the second half, falling 9% compared to the 29% decline in the first half.

The Group delivered an operating profit before exceptional items of £166m, down 56% year-on-year reported and 54% in constant currency. The decline reflects the profits lost as COVID-19 caused disruption to our operations across the globe. This was evident in the 120bps contraction of Group gross margins in the first half. In the second half, while our operations continued to be impacted, albeit to a lesser extent, gross margins remained stable. As a direct response to COVID-19, the Group took prompt action to reduce discretionary costs (e.g. marketing, office, travel), the Board / senior management took a 20% reduction in fees / salary in the second quarter and we accessed government support schemes in the first half in some markets (predominantly the UK). Subsequently, at the start of the third quarter we implemented a cost-restructuring programme - targeting £90m of overheads reduction - which is now substantially complete. These cost-mitigation measures have helped support profitability during the year and created a leaner overhead base for 2021. During the second half, the Board took the decision not to claim further government support in respect of the period from July onwards.

Profit before tax and exceptional items of £129m is down 61% year-on-year reported and 59% in constant currency. The decline in absolute terms is slightly below that observed at the operating profit level, owing to a lower (£10m) interest charge versus the prior year. This is a result of a combination of lower interest rates and strict inventory discipline, which reduced the related interest expenses.

During the period we booked exceptional charges of £257m, largely non-cash and primarily due to the impact of COVID-19. The majority (£223m) of this relates to goodwill and site impairments. As a result, the reported loss before tax was £128m, compared to a profit before tax of £402m in 2019 - which was supported by gains on disposal of our Retail assets.

In spite of the operational challenges our free cash flow (FCF) generation remained extremely resilient, with £177m (2019: £213m) generated over the 12 month period - this represents a conversion of 107% (57% in 2019), significantly higher than the long-term average of 60-70%. While operating profit pre-exceptionals was significantly lower, we mitigated this by a number of measures resulting in a meaningful improvement in the Group's working capital position, a more disciplined approach to capital expenditure programmes, and reduced tax and interest payments.

Other notable elements of the cash flow bridge include: net acquisitions and disposals, which amounted to an inflow of £40m (acquisition of Daimler Colombia offset by proceeds from Retail disposals), share buybacks (£31m of the £150m was completed prior to termination) and the cancellation of the 2019 final dividend in response to COVID-19.

The Group closed the reporting period in a net cash position of £266m (excluding lease liabilities), which compares to £103m at the end of December 2019, and £89m as at 30 June 2020. On an IFRS 16 basis (including lease liabilities), we ended the period with net debt of £67m (2019: £250m).

Return on capital employed over the period was 12%, compared to 22% for the equivalent period last year. The decline was driven by the steep reduction in profits.

Fourth quarter 2020

Group revenue for the fourth quarter was £1.9bn, down 16% reported. On an organic basis, revenue fell 9%, compared to a decline of 10% in Q3.

In Distribution, revenue contracted 13%, organically, following a 21% decline in Q3. Topline performance improved sequentially across most regions, with Asia, Australasia and the Americas all posting their highest quarterly growth rate since Q1. Revenue in Europe was held back by further COVID-19 related restrictions in Belgium, Greece and Romania, while Africa was solid in the context of a high prior year comparator.

In Retail, revenue contracted 2% organically (Q3: +5%; supported by the bounce-back) as a second lockdown in the UK weighed on sales. While the restrictions impacted performance, the deterioration was less pronounced than we experienced during the first lockdown, as we were able to continue delivering vehicles and permitted to perform Aftersales services.

Distribution

The Distribution segment saw revenue down 21% year-on-year, with performance significantly impacted by the spread of COVID-19 from March onwards. While the topline trend improved in the second half, with fewer and less severe closures, several markets continued to face disruption. In addition to our operational improvements, our cost-mitigation measures supported the overall result, particularly in the second half, culminating in an operating profit of £140m (2019: £333m). The operating margin fell 310bps to 3.7%.

2020	2019	% change	% change	% change
£m	£m	reported	constant FX	organic
Revenue
Asia	1,026.6	1,522.5	(33)%	(32)%	(32)%
Australasia	876.0	1,070.9	(18)%	(17)%	(17)%
APAC	1,902.6	2,593.4	(27)%	(26)%	(26)%
Europe	1,120.2	1,329.6	(16)%	(17)%	(17)%
Americas & Africa	797.1	993.5	(20)%	(13)%	(24)%
4,916.5	(22)%	(21)%	(23)%
168.7	(53)%	(53)%
58.0	(98)%	(98)%
226.7	(65)%	(64)%
41.7	(39)%	(40)%
65.0	(47)%	(42)%
333.4	(58)%	(57)%

Total Distribution 3,819.9

Operating profit1

Asia 78.8

Australasia 1.2

APAC 80.0

Europe 25.3

Americas & Africa 34.4

Total Distribution

Operating margin

Asia

Australasia

APAC Europe Americas & Africa

Total Distribution

139.7

• 7.7% 11.1% (340)bps (340)bps

• 0.1% 5.4% (530)bps (530)bps

• 4.2% 8.7% (450)bps (450)bps

• 2.3% 3.1% (80)bps (80)bps

• 4.3% 6.5% (220)bps (210)bps

3.7%

6.8% (310)bps (310)bps

1. Operating profit stated pre-exceptionals.

• - Asia revenue contracted 32%, and operating profit1 was down 53%. We expected 2020 would be a challenging year in Asia prior to COVID-19, forecasting volumes in both Singapore and Hong Kong would decline 25% and 20%, respectively. The spread of the virus exacerbated this decline, weighing on performance in all markets. Singapore endured a prolonged closure from early April to mid-June (resulting in the suspension of vehicle licence auctions), and upon reopening the government announced it would phase missed licences over a 12 month period - as such the number of vehicle licences available in 2021 is expected to exceed 2020. While our operations in Hong Kong remained open, demand was clearly subdued, albeit we observed an improving trend in the second half. In spite of the challenges, we retained our triple crown status (for being the number one in passenger cars, commercial vehicles and in the market as a whole) in both Singapore and Hong Kong.

• - Australasia revenue contracted 17%, and operating profit1 was down 98%. It was the only region to see a weaker revenue trend and margin result in the second half compared to the first half. Having remained open throughout the first half, COVID-19 related restrictions impacted the Australian operations in the third quarter. Profitability was substantially lower as gross margins came under pressure owing to lower volumes and competitive pressures, but also unfavourable currency effects. The transactional currency (AUD:JPY) headwind in the period was c.£15m. The launch of the new Outback (one of Subaru's most popular models) in the first quarter of this year should support the brand's market share performance in 2021.

• - Europe revenue contracted 17%, and operating profit1 was down 40%. It was the first of our regions to face widespread COVID-19 enforced market closures, starting in mid-March

and peaking in April. All impacted markets had reopened in May, although several markets did face subsequent restrictions following a second wave of the virus in the fourth quarter. While the environment was competitive, we gained market share across a number of markets in the second half. The launch of the new Toyota Yaris, an extremely popular model in several of our European markets, should drive further outperformance in 2021.

- Americas & Africa revenue contracted 13%, and operating profit1 was down 42%. Geographic diversification meant that there were some pockets of good performance that helped offset challenges elsewhere. The Americas was hardest hit in terms of number of our markets forced to close, as governments tried to control the spread of the virus. This weighed heavily during the first half, but as markets began to reopen we noticed a meaningful improvement. In Africa, our operations remained open throughout the year with limited impact from COVID-19 and consequently made a significant contribution to the segment's operating profit. All markets remained open throughout the fourth quarter, and it was the strongest quarter for the region. Looking ahead, given the low penetration of vehicles per capita in the Americas & Africa region, we are optimistic about the growth prospects over the medium and long term.

Retail

The Retail segment saw revenue down 30% year-on-year, or down 14% on an organic basis (adjusting for the Retail disposals over the period). Prolonged shutdowns in both UK and Russia in the first half weighed heavily on sales, although demand proved to be more resilient in the second half. Operating profit1 in the second half was supported by gross margin improvement and our cost-mitigation measures, resulting in a profit of £26m for the year compared to £40m in 2019. The operating margin improved in the second half, finishing the year flat overall.

Revenue

Asia

Australasia

APAC

UK & Europe

Total Retail

- 9.4 9.4 3,008.5

3,017.9

Operating profit1

Asia

Australasia

APAC

UK & Europe

Total Retail

Operating margin

Asia

Australasia APAC

UK & Europe

Total Retail

2020 £m

2019 £m

159.5 272.0 431.5

4,031.7 (25)% (23)% (15)%

4,463.2

- 0.4 0.4 25.4

• 8.7 (100)%

• (1.2) nmf2

7.5 32.2

25.8

39.7

-

• 5.4% n/a

  4.3% 4.3% 0.8%

• (0.4%) nmf2 nmf2

  1.7%

• 0.8% 0bps

0.9%

0.9%

• 1. Operating profit stated pre-exceptionals.

• 2. nmf = not meaningful.

% change

% change % changereported constant FX

(100)% (100)% (97)% (96)% (98)% (98)%

(32)%

(30)% (14)%

(100)% nmf2

• (94)% (95)%

• (21)% (15)%

(35)%

(31)%n/a

nmf2 nmf2

organic

0bps

(0)bps

(0)bps

• - UK & Europe is home to the Group's remaining Retail operations in the UK, Russia and Poland. Revenue for the region was down 23% year-on-year (down 15% on an organic basis), as closures from late-March weighed on the performance of both the UK and Russia businesses. We experienced a step-up in the second half, with solid demand for New and Used Vehicles, as well as Aftersales services. During the first half, the UK business received £23m of government support (employment and business rates), but was nevertheless still heavily loss-making. We have not accessed any such support in the second half. Performance improved in the second half as we experienced higher Vehicle gross margins and the benefit from our cost-restructuring efforts. We finished the year with operating profit1 of £25m (vs £32m in the prior period, which included profits from businesses disposed in December 2019, including Inchcape Fleet Solutions), and slightly higher margins than 2019.

• - Asia: the China Retail business (disposed in December 2019) was reclassified from Distribution-Asia to Retail-Asia, and did not provide any contribution to the region's performance in 2020.

• - Australasia: the majority of the Retail business in Australia was sold during 2019. Two additional sites were sold in 2020, and their contribution until the date of disposal has been included. The comparative includes these two sites, and the rest of the Australian Retail business that was sold in 2019. Following the disposals, there will be no further contribution to this segment.

Value drivers

We provide disclosure on the value drivers behind our gross profit (pre-exceptional). This includes:

• - Gross profit attributable to Vehicles - New Vehicles, Used Vehicles and the associated F&I (Finance & Insurance) income; and

• - Gross profit attributable to Aftersales - Service and Parts.

2020	2019	% change	% change in
£m	£m	reported	constant FX
Group
Vehicles	516.9	772.3	(33)%	(31)%
Aftersales	372.5	499.8	(25)%	(23)%
Total Retail	889.4	1,272.1	(30)%	(28)%

Weighed down by the effects of market closures caused by the spread of COVID-19, over the reporting period we saw a 31% decrease in Vehicles gross profit, while Aftersales gross profit was more resilient, decreasing 23%.

We operate across the automotive value chain and during 2020, we generated 42% of gross profit through Aftersales, compared to 39% in the prior year.

1. Operating profit stated pre-exceptionals.

Other financial items

Government support schemes

The Group has recognised an amount of £30m as a credit against employee costs and £3m as a credit against other operating expenses. These have been presented net within operating costs before exceptional items and the majority (£23m) was received by the UK Retail business. In some cases salaries were paid in excess of the amount received under the government support schemes, and these schemes were utilised instead of other cost reduction measures that would have adversely impacted employees (e.g. redundancies). During the second half of the year, the Board took the decision not to claim further government support. Due to the nature of the government support schemes, amounts claimed prior to the Board decision totalling £11m from governments in Australia and the UK have been recognised as a liability as at 31 December 2020 as they have not yet been repaid. The Group has also benefited from the deferral of tax payments due to governments amounting to £7m as at 31 December 2020.

Exceptional items

Exceptional charges in 2020 amounted to £257m, arising primarily as a result of COVID-19. Goodwill and site impairments totalled £223m, with the majority attributable to the Retail segment and booked in the first half. With the pandemic continuing to cause disruption in the second half, the impairment review resulted in a c.£37m write-off of intangible assets related to our acquisition of Grupo Rudelman (in 2018). Management remain confident about the attractiveness of the business in the medium term. In July we announced £70m of future restructuring costs linked to our cost-restructuring programme, of which c.£40m has been incurred in 2020, with the balance falling into 2021. We also incurred a £10m charge relating to the write down of inventory, and a net cost of £2m relating to acquisitions and disposals. We benefited from an £8m gain, primarily relating to the recycling of foreign exchange gains previously recognised in other comprehensive income, following the liquidation of a subsidiary. In 2019, the Group benefited from a £76m exceptional operating gain which reflected a £109m gain largely relating to the disposal of our UK fleet and China Retail businesses, offset by some restructuring costs and asset impairments relating to those disposals, as well as acquisition costs. Further details in note 3 to the consolidated financial statements on pages 133-134.

Net finance costs

Net finance costs were £37m (2019: £47m). The decrease is largely due to a reduction in the cost of financing inventory following the Retail disposals in Australia, the UK and China in 2019, further disposals in 2020 and the overall reduction in inventory and associated inventory financing in response to the COVID-19 pandemic. The interest charge is stated on an IFRS 16 basis, and excluding interest relating to leases, our net finance charge was £23m compared to £28m in 2019. We expect net financing costs in 2021 will amount to c.£40m.

Tax

The Group's effective tax rate for the year is 26% before exceptional items (2019: 23%). The increase compared to the prior year primarily arose because the Group was not able to recognise the tax benefit associated with losses in certain markets. This impact was partially offset by the release of a provision associated with the European Commission State Aid issue. We believe an effective tax rate of c.25% is appropriate for the mid-term.

Non-controlling interests

Profits attributable to our non-controlling interests were £3m (2019: £6m). The Group's non-controlling interests comprise a 33% minority holding in UAB Vitvela in Lithuania, a 30% share in NBT Brunei, a 10% share of Subaru Australia and 6% of the Motor Engineering Company of Ethiopia.

Dividend

The Board recommends a final ordinary dividend of 6.9p per ordinary share which is subject to the approval of shareholders at the 2021 Annual General Meeting. In reaching its decision, the Board has taken into account the extraordinary circumstances that the business endured during the year and a broad range of stakeholder perspectives. If approved, the dividend will be paid on 21 June 2021 to all shareholders on the register on 14 May 2021.

Cash flow and net debt

The Group generated free cash flow of £177m (2019: £213m) driven primarily by an improvement in the level of working capital. After the acquisition of four Distribution businesses, as well as the proceeds received from our Retail disposals, and £32m of share buybacks, the Group had net cash excluding lease liabilities of £266m (2019: £103m). Including lease liabilities (IFRS 16), our net debt stood at £67m (2019: £250m).

Capital expenditure

During 2020, the Group incurred net capital expenditure of £41m compared to £54m in 2019. The year-on-year reduction reflects lower investment in tangible assets in response to the economic uncertainty following the outbreak of the COVID-19 pandemic partially offset by lower disposal proceeds. Key 2020 projects included investments around our development of an omni-channel proposition and capacity investments in Ethiopia. In 2021 we expect net capital expenditure of c.£70m.

Reconciliation of free cash flow1

Financing

During the year, the Group was confirmed as an eligible issuer under the UK Government's COVID Corporate Financing Facility (CCFF). £100m was issued under this facility in May 2020 and repaid on 17 July 2020. As at 31 December 2020, the committed funding facilities of the Group comprised a syndicated revolving credit facility of £700m (2019: £700m) and sterling Private Placement loan notes totalling £210m (2019: £210m). As at 31 December 2020, none of the £700m syndicated revolving credit facility was drawn (2019: £60m).

Pensions

At the end of 2020, the IAS 19 net post-retirement surplus was £20m (2019: £10m), with the increase driven largely by a higher value of plan assets and changes in demographic assumptions which were partially offset by changes in financial assumptions. In line with the funding programme agreed with the Trustees, the Group made additional cash contributions to the UK pension schemes amounting to £4m (2019: £3m). Discussions with the Trustees of the Inchcape Motors Pension Scheme in respect of the actuarial valuation as at 5 April 2019 have been finalised and the Group has agreed to contribute an additional £3m per annum to the scheme over the next seven years.

Acquisitions and disposals

During 2020, the Group acquired the Mercedes-Benz passenger car and private vans distribution operations in Colombia from Daimler Colombia S.A. The business was acquired to strengthen the Group's partnership with Daimler-Mercedes-Benz in South America. In the second half of 2020, the Group acquired the Daimler distribution business in El Salvador, the MINI distribution business in Chile and the MINI and Motorrad distribution businesses in Peru. The aggregate cash consideration for these businesses was £32m.

During the year, the Group has continued to optimise its Retail portfolio and has disposed of 13 retail sites in the UK and two retail sites in Australia generating aggregate net disposal proceeds of £64m. The Group has also received £8m of deferred consideration relating to the disposal of retail operations in China in 2019.

Net cash generated from operating activities

Add back: Payments in respect of exceptional items

Net cash generated from operating activities, before exceptional items Purchase of property, plant and equipment

2020 £m

Purchase of intangible assets

(27.4) (20.1)

Proceeds from disposal of property, plant and equipment Net capital expenditure

6.7

(40.8) (53.9)

2020 £m

2019 £m

254.8 24.3 279.1

2019 £m

327.2 10.5 337.7

(44.9)

(24.7)

15.7

Net payment in relation to leases Dividends paid to non-controlling interests Free cash flow

177.3

Included within free cash flow are movements in restricted cash balances described on page 156.

APM (alternative performance measure), see pages 176-177

(56.7) (65.1)

(4.3) (5.8)

212.9

Regional business models

Asia Pacific (APAC)

At the heart of the Asia region, we are the distributor and exclusive retailer for Toyota, Lexus, Hino and Suzuki and operate Distribution and exclusive Retail for Jaguar Land Rover in Hong Kong with additional Distribution and Retail franchises across the region. In Australasia we are the distributor for Subaru.

Country	Business model	Brands
Hong Kong	Distribution & Exclusive Retail	Toyota, Lexus, Hino, Jaguar, Land Rover, Maxus
Macau
Singapore	Distribution & Exclusive Retail	Toyota, Lexus, Hino, Suzuki
Brunei	Distribution & Exclusive Retail	Toyota, Lexus
Guam	Distribution & Exclusive Retail	Toyota, Lexus, BMW, Chevrolet
Saipan	Distribution & Exclusive Retail	Toyota
Thailand	Distribution & Exclusive Retail	Jaguar, Land Rover
Country	Business model	Brands
Australia	Distribution & Retail	Subaru, Peugeot, Citroen
Retail	VW, Isuzu, Kia, Mitsubishi, Jeep
New Zealand	Distribution	Subaru
UK & Europe

We have scale Retail operations across the UK focused on premium and luxury brands. Our European operations are centred on Toyota and Lexus Distribution and Retail in Belgium, Greece and the Balkans, and both Distribution and Retail businesses across Northern Europe focused on BMW, Jaguar Land Rover and other brands.

Country

Business model

Brands

UK

Belgium Luxembourg Greece Romania BulgariaDistribution & Retail

Retail

N. Macedonia Finland Estonia Latvia Lithuania Poland Russia

Distribution & Retail Distribution & Retail Distribution & Retail Distribution & Retail Distribution & Retail Retail

Americas & Africa

Toyota, Lexus, Audi, BMW, MINI, Jaguar, Land Rover, Mercedes-Benz, VW, Porsche, Smart

Toyota, LexusJaguar, Land Rover, Mazda

Jaguar, Land Rover, Mazda, BMW, MINI, BMW, MINI, Ford, Jaguar, Land Rover, Mazda,

Jaguar, Land Rover, Mazda, Ford, Hyundai, BMW, MINI, Rolls-Royce BMW, MINI, Jaguar, Land Rover

Toyota, Audi, BMW, MINI, Jaguar, Land Rover, Lexus, Rolls-Royce, Volvo

In South America, we have BMW Distribution and Retail businesses in Chile and Peru as well as Subaru operations across these markets, Colombia and Argentina. We also hold the Distribution contracts and operate Retail for Daimler across four markets in the region, and Suzuki in Costa Rica, Panama and Argentina. Our business in Ethiopia is centred on Distribution and exclusive Retail for Toyota, while in Kenya we are the distributor and retailer for premium marques Jaguar Land Rover and BMW.

Country	Business model	Brands
Ethiopia	Distribution & Exclusive Retail	Toyota, Suzuki, Komatsu, New Holland, Hino, BMW
Djibouti	Distribution	Toyota, BMW, Komatsu
Kenya	Distribution & Retail	Jaguar, Land Rover, BMW, BMW Motorrad
Chile	Distribution & Retail	BMW, BMW Motorrad, MINI, Subaru, Rolls-Royce, Hino, DFSK,
Peru	Distribution & Retail	BMW, BMW Motorrad, MINI, Subaru, DFSK, BYD
Colombia	Distribution & Retail	Subaru, Hino, Jaguar, Land Rover, Mercedes-Benz, DFSK, Mack, Doosan, Dieci,
Argentina	Distribution & Retail	Subaru, Suzuki
Costa Rica	Distribution & Retail	Suzuki, JAC, Changan, Kubota
Panama	Distribution & Retail	Suzuki
Uruguay	Distribution & Retail	Mercedes-Benz, Freightliner, Fuso
Ecuador	Distribution & Retail	Mercedes-Benz
El Salvador	Distribution & Retail	Mercedes-Benz

Daimler

In 2019 we signed our first ever Distribution contracts with Daimler for both passenger and commercial vehicles in Uruguay and Ecuador, followed swiftly by a further agreement in January 2020 to become the distributor for Mercedes-Benz passenger vehicles in Colombia. During 2020 we continued this consolidation of representation with expansion with the brand into El Salvador.

Locations

Distribution

Colombia, Ecuador, El Salvador, Uruguay

Retail

UK

Corporate social responsibility

Our business, our people, our future

Inchcape has long prided itself on a pioneering spirit of innovation, transformation and expansion which has been at the core of our success as a trading company.

The business that we are now looks very different from that which was founded in the nineteenth century, but it is our adaptability that will enable us to capitalise on the opportunities we find to enhance and grow our business in the future. While the goods and services that Inchcape provides have changed, our purpose retains the same pioneering spirit, motivating us to bring mobility to the world's communities, for today, for tomorrow and for the better.

Our refreshed strategy has not only redefined our purpose as a business, but it also elevates the necessity to do business responsibly. The Company is embarking upon a journey that will help to support global efforts towards a sustainable and responsible automotive industry and create positive impacts on the societies and environment in which we operate.

This is not a short-term initiative, but a lifetime commitment. We will continue to update our shareholders on our plans and progress regularly while we develop our position as a business known for taking its responsibility to all stakeholders seriously.

Our current CSR approach comprises three pillars: our people; health and safety; and the environment. For 2020, we continue to report in this format.

Key findings saw an uplift in overall employee experience as well as a significant improvement in satisfaction with the frequency and content of communications.

Satisfaction

Our employee experience, satisfaction and perception of Inchcape as a business has improved since the last full survey

+15%

Intent to recommend

Intent to recommend Inchcape as a place to work is very high and increasing - our people are happy to work for Inchcape

+6%

Communications

Significant improvement in satisfaction with communication, both content and frequency, vs. the last survey

+57%

Our people

Fundamental to achieving our objectives, whether commercial or strategic, is Inchcape's most important asset: its people. We aim, both at Group and market levels, to ensure that our people's value is recognised and rewarded; that talent is developed through learning and progression; that our people are engaged and communicated with effectively; and that all employees are empowered to achieve their personal goals at each stage of their career with Inchcape.

We are focused on creating a socially conscious culture based on inclusivity and learning.

• - We believe that the business is strengthened by embracing diversity in the workplace and this is underpinned by market relevant policies and practices.

• - We foster a learning culture to enable people to optimise their performance in role and truly realise their potential.

• - We aim to empower our people to collaborate in communities of practice; to share and work together, knowing that their contribution is truly valued.

The approach we take to engaging and developing our employees is designed to proactively defend the business against Key risk L, see page 47.

Communication and engagement

Engaging with our community of colleagues is always important, and a responsibility to which we give continual focus, but during a year of unprecedented challenge for the business and its people, talking to and hearing from our employees was of greater significance than ever.

From the start of the year, with the COVID-19 crisis becoming apparent in Hong Kong, we increased the frequency of top-down communications from the Group CEO, also putting in place a 'cascade' framework to support local leadership communications. Regional, market and business unit communications via video, 'townhall' and face-to-face briefings were increased in regularity to ensure that managers, teams and individuals had the most up to date information and guidance throughout the period.

We adapted our usual Employee Experience Survey (EES) to a shorter pulse-check questionnaire of employees in July and August. The objective was to understand the employee experience in a more focused data set around the topics of Leadership, Communications and Wellbeing. Specifically, we wanted to know how the pandemic and its pressure had impacted people and how the business had performed to mitigate its effects and support the workforce.

Most of our employees were severely affected by lockdowns at some point during the year, leading to prolonged periods of working remotely for office-based workers or with a skeleton staff in our sales and service centres. Recognising an opportunity to build virtual connections between distanced teams and reinforce the notion of a united global business, we invited people to submit pictures or video clips of themselves sending greetings to their colleagues which we compiled in montages as 'Together in Spirit'. This engagement campaign spanned a week with a new montage sent to all colleagues via intranet communications channels on five consecutive days. Over 1,000 people participated, and we ran a similar campaign at the end of the year, again with many hundreds of employees contributing.

Leadership, talent and organisational design

Our Global Talent Review is conducted over a two-year cycle, alternating a deep dive review with organisational health checks to track progress, cement existing priorities, identify new or changed priorities and to further inform the longer-term Talent and Organisational Design Strategy. This is reviewed by the Board on an annual basis.

Informing this process with accurate data is crucial to the continued development of our long-term people strategy. Our People Dashboard was developed to improve the quality and availability of data, and this is now in use throughout the business, updated on a monthly basis. The dashboard provides insight that helps us to target improvements in diversity, retention of talent and identification of high-potential individuals as part of our succession strategy.

This succession strategy is designed to attract, develop and retain critical talent and to build a diverse bench of 'next-gen' leadership. With a matrix of levers at our disposal, from resourcing practice to facilitated learning and employee networking, we address critical skills and capability development to answer the requirements of our business strategy.

We continue to leverage the learning capabilities of our online development portal, hive, which gives a significant proportion of our employees access to thought leadership, and leading-edge industry and commercial insight relevant to our growth strategy.

Corporate social responsibility continued

Health and safety

The health and safety of all those who use our facilities, whether employees or customers, is of the utmost importance to us. We are committed to providing environments that can be trusted as spaces in which to work, that are clean, safe and promote a healthy work-life balance.

Our aim is to eliminate the occurrence of incidents and accidents by continually challenging ourselves, sharing best practices and investing in the systems and structure to support our objectives.

This commitment is underpinned by the creation of a pan-market Group HSE Community of Practice, whose primary function is to embed a deep understanding of the importance of a rigorous and supportive health and safety culture throughout our business.

In year one of our programme of global HSE integration we have made significant progress:

• 1. Inducted and trained regional and market level HSE team members to the management and rollout of health and safety standards

• 2. Implemented technology resource in all business units to digitalise safety monitoring and management

• 3. Approx. 13,000 employees trained on system use, and provided with access to safety processes and practice standards

• 4. Established regional and market level safety metrics

• 5. 130 Policies, Procedures, Safety Talk topics & work instructions translated into 17 languages, improving accessibility

• 6. Rolled out agreed Risk Management programmes for 2020

COVID-19 H&S response

In 2020, we were faced with an unprecedented challenge to the health and safety of our people and our customers as we worked hard to continue operating under very difficult circumstances. As soon as the impact of the pandemic to our business started to become clear, business continuity plans were implemented which included a pandemic plan to manage operations under strict compliance controls. Inchcape's global COVID-19 management control plans created strong disciplines for the protection of both employees and customers in line with local legislation. This, coupled with swift responses to changes in the legislation, targeted reducing the risk of exposure to infection at our sites and minimising a risk of extended business interruptions due to localised outbreaks.

Strict distancing measures and the provision of PPE materials were introduced across all operational sites and remained in place at the end of the year, continuing into 2021. Many support office functions across the global business switched to remote working which is still in place, including for the plc head office, in all cases following local government essential travel and commuting guidelines.

Main activities

How we have progressed in 2020

Group Risk Management programmes (RMP)

• - Completed a review of risk management compliance

• - Five core Risk Management programmes rolled out through the year

  • - Hoist Management

  • - Consultation

  • - Incident & Investigation

  • - Hazard Reporting - COVID impacted rollout

  • - Site Management Reviews - COVID impacted rollout

• - A planned audit of site behaviour and practices to be undertaken post lifting of COVID-19 travel restrictions

Providing expert support

-

- Rollout of a diploma in health and safety targeting site operational managers to up-skill in

HSE knowledge

-

HSE Data Reporting capability

-

- Reporting functionality being developed with Power BI tools to provide all areas of the business with HSE reporting functionality

Managing Communities of Practice

-

- Have now identified all Diploma training requirements and developed 60% of the training topicsManagement training in responsibility for HSE underwayTimeframe for completion end: Q2 2021

Improving HSE reporting capability at both local and global levels is critical to internal monitoring of progress to identify and make improvements

We set out to develop an internal 'Diploma in Operational Health & Safety'

Environment

There is increasing focus on climate-related issues from governments, investors, OEM brand partners and customers. Climate change has been considered by the Board in a broader context when looking at future trends impacting the industry such as electrification of the drivetrain. These trends can present both risks and opportunities for the Group and further information can be found in the Risk Management Report on pages 41-50.

To date consideration of the impacts has been carried out using best estimates, therefore in order to fully understand the impacts, the Board has appointed The Carbon Trust to assist the Group in analysing the transition and physical risks and improving the Group's climate-related disclosures as recommended under the Task Force on Climate-related Financial Disclosures ("TCFD"). The outcome of the assessment will be reported in next year's Annual Report and Accounts.

The Board will consider the broad landscape of climate-related topics, forward looking exploration of business model vulnerabilities and resilience, looking at financial impacts on the Group from climate change and to identify climate-related risks and opportunities and how they are managed.

In addition, the Board has updated its Matters Reserved for the Board to ensure that oversight of climate-related issues is at Board level.

The TCFD journey will cover the following aspects:

• - Internal engagement workshops to enable senior management to assess potential climate challenges faced by the Group

• - Interviews with key stakeholders to assess current climate-related activity

• - Review of business model and strategy from a climate-change perspective

• - Review of risks and opportunities not previously considered

• - Review of climate-related risk processes and procedures

• - Scenario analysis to understand impact on business model

• - Disclose in line with the recommendations of the TCFD in the 2021 Annual Report & Accounts

It is anticipated that the outcomes of the TCFD project will assist in determining the appropriate emissions reduction targets for the Group.

Emissions measurement

We continue to monitor our energy and emissions usage and details of scope 1 and 2 emissions are given on page 98 of the Directors' Report. As many of our operations were closed due to the pandemic, this has reduced significantly. However, it is anticipated that business will return to more normal levels in 2021, and with it an increase in energy used.

Initiatives to reduce energy usage are implemented at local level, with businesses focusing on energy efficiency measures such as managing showroom lighting outside of business hours and assessing heating and cooling timers to ensure optimum efficiency.

CDP submission

During 2020, the Group participated in the CDP (formerly the Carbon Disclosure Project). Our overall score of C is in the awareness band indicating the Group has knowledge of impacts on, and of, climate issues. This is the same as the Europe regional average, and same as the Trading, wholesale, distribution, rental & leasing sector average.

The report highlighted the following areas for improvement which will be a focus for 2021:

• - Governance

• - Reduction initiatives

• - Business strategy and financial planning

We will continue to participate in CDP with the ambition to improve our score as our businesses improve awareness around the impacts of climate change. The work being carried out as part of the TCFD project should enable us to improve considerably in all of these areas.

Non-financial information statement

The table sets out the non-financial information as required under the Non-Financial Reporting Directive.

The Group's business model, including the value chain, is on pages 10-19. Engagement with key stakeholders is set out on pages 18-19.

Principal risks are given on pages 44-49.

The Code of Conduct is available atwww.inchcape.com

Code of Conduct

The Group's Code of Conduct was launched in 2018 with training rolled out to all markets in 18 languages. Within the first three months of joining the Group, all new employees undertake training on the Code of Conduct as part of their induction process. Where employees do not have access to a computer, we have ensured that they are made aware of the Code and what is required of them through various non-digital means.

efficiency and to develop alternative powertrains, such as electric and hybrid. We ensure that our business model and the infrastructure are in place to support the changing industry and to be able to deliver cleaner technologies to our customers as their preferences change.

The purpose of the Code is to provide a guide to ethical business conduct. It is approved by the Board and is an important reference point for employees. It sets out the minimum standards of behaviour expected of employees, helps them to make ethical decisions and shows how they can identify potential misconduct. The Code aims to keep employees safe and protect the Group's reputation among customers, OEMs and other suppliers and shareholders.

As an automotive distributor and retailer, we do not have a manufacturing footprint to manage, however, we use energy in our dealerships, transport cars and parts globally and have an impact from business travel. We measure and report our greenhouse gas emissions which are given on page 98. Further information on the Board's commitment to the Task Force on Climate-related Financial Disclosures can be found on page 37.

Whilst we do not have a global environmental policy, each business is committed to monitoring its energy usage and to managing energy in the most efficient way and the Code of Conduct sets out the expectation that employees:

The Code covers:

• - Ethical decision-making

  • - Seek all opportunities to reduce waste and energy usage, to recycle where possible and to switch off appliances when not in use;

• - Speakup! - the whistleblowing hotline

• - Equal opportunities including diversity and inclusion

  • - Favour the use of environmentally supplies and materials; and

• - Anti-harassment

  • - Look for opportunities to reduce business travel where possible.

• - Health & Safety

• - Business reputation

  Employees

• - Anti-bribery

• - Gifts & hospitality

• - Conflicts of interest

• - Competition, anti-trust, trade laws

• - Personal data

• - Customer relations

• - Commitment to OEM brand partners and suppliers

• - Commitment to shareholders and stakeholders

• - Commitment to community

  Our employees are integral to the delivery of the Group's strategy. Failure to attract, retain and develop our people is a principal risk for the Group and the description, impact and mitigating actions taken by the Group are given on page 47. As the industry experiences a period of significant change, we continually review the skills of our employees to ensure we can deliver for customers and OEM brand partners. Training and development programmes are carried out within each business and include various initiatives such as technician programmes, apprenticeships and leadership development programmes.

• - Protecting assets and financial integrity

Environmental matters

Each of our OEM brand partners have developed comprehensive sustainability programmes and the automotive industry in general has made significant progress in reducing vehicle emissions. We work with OEM brand partners who are at the forefront of technological advances to improve fuel

An Employee Experience Survey is carried out globally to ensure that we understand the views of our employees. Further information is on page 35. The outcomes of the survey are reviewed by the CSR Committee which monitors action plans implemented by management to address any issues which arise. The Chair of the CSR Committee reports on this engagement process to the Board.

Reporting requirement	Relevant policy	Where to read more	Page
Environmental matters	Code of Conduct	CSR Report	37
Local Policies
Employees	Code of Conduct	CSR Report	34-35
Directors' Report	98-100
Social matters	Code of Conduct	See below
Human rights	Code of Conduct	See below
Modern Slavery Statement
Anti-bribery and corruption	Code of Conduct	Code of Conduct
Gifts and Hospitality policy
Business model	n/a	Our business model	10-19

We are making improvements on how we collate and manage the data on our people and have created a 'People Dashboard' which will enable us to track the employee journey. This data will allow us to monitor people KPIs to gain an understanding of where improvements can be made. Employee-related policies are implemented at a local level and include policies on pay and rewards, flexible working, and maternity and paternity policies.

Human rights

We embrace, support and respect the human rights of everyone we work with and we comply with appropriate human rights legislation in the countries in which we operate.

We did not receive any reports of human rights abuses during 2020. We do not use or accept forced, bonded, involuntary or child labour. We only employ people who choose to work freely and respect their rights to equal opportunities and freedom of association.

Social matters

We believe in supporting the different cultures and communities in which we operate, often through sponsorship and support for local charities or local people. All our colleagues can be involved in such initiatives and can expect to be supported by Inchcape in their efforts to help local communities. We do not have a global policy covering specific social matters and any initiatives are governed by the local business.

Many of our local operations recognised an urgent need for logistical support and the role they could play as the COVID-19 pandemic took hold in communities across the world. Ranging from temporary donation of unused test-drive and courtesy vehicles to delivery services for hard-to-reach geographical areas, our people contributed time and the Company's temporarily under-utilised resources to help those in need.

Initiatives across the Group include:

Market EuropeCommunity activity

In Greece, Toyota Hellas and our dealer network provided municipalities across the market with 150 vehicles, facilitating transport for medics to reach the elderly, unwell and people with reduced mobility as part of the government's 'Help at Home' scheme. In Finland, our teams have donated Land Rover vehicles to the Finnish Red Cross to help access vulnerable people in remote or hard-to-reach areas; and in Lithuania the JLR teams have given similar support to food bank initiatives to help with deliveries to the elderly.

APAC

In Brunei, our marketing team at the flagship showroom and head office used advertising hoardings to display health awareness information, helping to protect customers and staff. The prominent display also targeted passing commuters and road users, prompting recognition by several government ministers who expressed their appreciation to Inchcape Brunei's management. Malaysian workers opted to remain in Singapore after the borders between the two countries were closed, to enable operations to continue supporting local community needs at as close to normal levels as possible.

Americas & Africa

In Chile, the Subaru team donated eight vehicles for three months to health authorities in Santiago, allowing them to deliver medicines and food to 1,600 families including visits to elderly and isolated people. Far from being a temporary partnership, this is a continuation of a partnership between Subaru Chile and the municipality that has been in place for seven years. In Ethiopia, MOENCO donated Land Cruiser ambulances to the Ethiopian Federal and Regional Governments to support the fight against COVID-19. In Uruguay, our Mercedes-Benz business provided specialist technicians to the health service to help keep the ambulance network on the road.

Anti-bribery and corruption

We have a global policy which is available to all Group employees via iConnect, the Group's global intranet. The policy states our zero-tolerance stance to bribery and corruption and mandated procedures. In 2021, some employees will be required to complete an online training module. This will also be included in the induction programme for new employees whose role and remit require additional focus in this area. Programme compliance is monitored via reports to Speak Up!, the external whistleblowing channel, and adherence to other relevant policies such as the gifts and hospitality policy.

Reports to Speak Up! are monitored by an independent third party. Reports on anti-bribery and corruption matters are escalated to the Risk Committee and, if significant in nature, are reported to the Audit Committee. The Risk and Audit Committees monitor management's response to any issues and the implementation of any action plans deemed necessary.

As part of our monitoring and assurance procedures in 2020, the Internal Audit team carried out anti-money laundering audits across the Americas. The objective of these reviews was to assess the effectiveness of the Anti- Money Laundering ("AML") programme and specific compliance with local regulations. The audit also covered adequacy of AML Policies and Procedures; monitoring, supervision and compliance; and due diligence and knowledge of employees, customers, suppliers and training programmes in place. The review confirmed strong alignment to local regulations with opportunities to further strengthen the local framework, particularly in relation to reporting frequencies.

Suzuki

We have a long-standing partnership with Suzuki of over 40 years, the majority of that time being in Singapore. We significantly expanded this relationship in 2018 through acquisition and the awarding of Distribution contracts in Costa Rica and Panama. This expansion added to our established South America platform with our first move into Central America and the addition of two brand new markets to our global portfolio.

Locations

Distribution

Argentina, Costa Rica, Panama, Singapore

Risk management

Resilience in a dynamic environment

Last year, the Chairman highlighted a resilient underlying performance in the face of short-term challenges. 2020 has presented a different set of risks and the resilience of our global business was again tested.

2020 marked the start of a decade in which the automotive industry will undergo a period of rapid change and disruption, driven by new technology and a changing climate. A decade in which flexibility and resilience will be key. It has begun with the arrival of the COVID-19 pandemic, which impacted our people and our operations worldwide and tested the resilience of our business. Risk levels in many areas - including cyber and health and safety - have increased and will remain elevated. We responded quickly to minimise the impact of the virus on our people, our operations and our financial performance. We reduced our cost base and deployed new ways to trade. We are encouraged that our results have exceeded expectations, but are mindful that the situation remains dynamic. Put in context, COVID-19 is just one of a number of material risks which all businesses in our sector must successfully navigate. Our approach to risk management and internal control will continue to evolve to meet these challenges.

We seek to identify and address our most material risks through our systems of risk management and internal control. In this section of the report, we summarise how this system works, along with management's assessment of our Principal Risks. We comment on our response to COVID-19 specifically, as well as our plans to evaluate and address longer-term, climate-related risks. In the Viability Statement, we consider the financial viability of the Company, should one or more of these risks materialise in a catastrophic manner.

Our response to COVID-19

Inchcape's systems of risk management and internal control

Throughout the year, the Group has maintained and improved its systems of risk management and internal control, which are designed around an established 'three lines of defence' model (see page 42). This model engages management teams, corporate functions and independent assurance to manage risk, overseen by the Board and its Committees.

These three 'lines of defence' implement, oversee and test the Company's system of risk management and internal control. This system is made up of a number of inter-connected activities and processes, including: our strategy and operating plans; budgeting and planning activities; our framework of policies and procedures; performance monitoring; internal controls (such as those over financial reporting or IT security, for example); our framework for managing enterprise-wide risks; our legal and regulatory compliance programmes; and our internal audit programme. Together, these and other activities identify, prioritise, manage and monitor key risks to our business. Our enterprise risk framework brings all of this information together to provide management with a single view of risk and control, allowing resources to be allocated efficiently to the areas of greatest risk.

In 2020, we improved our approach to internal financial controls, strengthening the Group's defences against risks of fraud and financial mis-statement.

As we approach a period of rapid change in our industry, the Group will continue to review and improve the effectiveness of its system of risk management and internal control each year.

COVID-19 began impacting our business at the start of the year, initially in Asia, before rapidly spreading to all markets. In the short term, the virus threatened the health and safety of our employees and our customers, forcing the closure of our operations and disrupting our OEM partners and our supply chain. In the longer term, the pandemic has the potential to continually disrupt operations through health exposures to employees and customers, to suppress demand, to reduce the availability of credit and to possibly delay the launch of new vehicles and models. It may accelerate the introduction of disruptive business models and it may trigger consolidation in our market place.

The Company responded quickly to address the immediate challenges, introducing a set of safe operating practices in all markets and auditing compliance. Employee wellbeing programmes were introduced and more frequent employee surveys were conducted. Website and other digital trading capabilities were upgraded during the year. We liaised with our OEM partners to optimise the allocation of vehicles and prevent the accumulation of excess stock. The Company accessed various government-sponsored 'furlough' schemes in the UK, Australia and Singapore and it secured a temporary £100m borrowing facility under the UK CCFF programme. This borrowing was repaid in full. The Board of Directors and senior management agreed to a temporary 20% reduction in their remuneration. Dividend payments and the share buyback scheme were suspended. The Group undertook a cost-reduction programme, which delivered over £90m in savings. These and other factors, such as our geographic diversity, enabled us to deliver resilient results for shareholders.

Looking further ahead, the Company began a review of its strategy to assess its continued relevance in light of current industry trends, many of which have been accelerated by the pandemic. The Company will also be reviewing its contingency planning arrangements in 2021.

Despite these measures, the impact of the virus remains material and will be closely monitored through 2021.

Our approach to risk management and internal control

Inchcape deploys 'three lines of defence' to manage risk, overseen by the Board and its Committees.

Risk management in 2020

Risk activity in 2020 was dominated by COVID-19 and its impact on the Group's risk profile. A dedicated taskforce was assembled early in the year to monitor and respond to the impacts of COVID-19. In addition to the immediate risks presented by the pandemic and managed by front line teams (1st line), elevated risks were identified by second line functions in relation to cyber risks, IT systems and health and safety. A series of internal audits (3rd line) were launched to test the effectiveness of key controls in light of COVID

- especially those requiring a physical presence. As part of the routine risk management cycle, leadership teams in all markets and regions met twice during the year to reassess significant risks of all types; to review current mitigation and, if necessary, to initiate action plans. Reports were submitted to the Group Risk team, highlighting the most important risks and the measures being taken to address them. The Group Executive Team met in June and again in November to review the reports from each region and to reassess the Group's principal risks. An enhanced cyber security programme was initiated following updated risk assessments. In November, the Audit Committee met to review the overall effectiveness of the Company's system of risk management and internal control. The Board met to consider the Group's principal risks and review the Group's risk appetite.

Risk appetite: where are we willing to take risk?

A cornerstone of the Group's approach to risk management is the Board's determination of its risk appetite. This definition provides direction to all three lines of defence on acceptable levels of risk. The Board considered its risk appetite in relation to each of the Group's principal risks, using three broad categories to define the nature and extent of risks it is willing, or required, to accept.

Strategic risks

Risks directly addressed

by our strategy

Appetite Principal risksModerate to high

• - Acquisition ROI

  -

  Availability of credit

  • - Cyber incident, data breach

• - Portfolio optimisation

• - Digitisation

  • - OEM brand damage / supply chain disruption

    • - IT systems failure

    • - Health and safety

• - Loss of OEM contract

  • - Foreign exchange

• - Mobility solutions

  • - Political risks

    • - Legal and regulatory compliance

• - Electrification

• - Legal and regulatory change

  • - Fraud

• - Pandemic (COVID-19)

  • - People

• - 'Brexit'

Board, Audit Committee and Executive Committee Sets strategy; sets risk appetite; reviews principal and emerging risks twice per year; reviews system of risk management and internal control

Risk, control and

assurance reports.

Inherent risks	Managed risks
External risks where our	Risks where we can exert
influence is limited	significant influence
Moderate to high	Low to moderate

Principal risks to the achievement of our strategy

Changes this year

New

Risk has increased

No change

The COVID-19 pandemic and 'Brexit' were added to the heatmap of principal risks during the year under review. The potential for a material cyber incident or data breach (risk 'D') has increased, as the volume of cyber attacks increased during the pandemic. A major programme of work is underway to address recently-identified gaps in our cyber security capability. As a result, the related risk of IT systems failure or interruption (risk 'K') has also increased, particularly relating to some of our legacy technology systems and infrastructure. Health, safety and environment-related risks increased (risk 'N') as new ways of working were introduced and certain checks and controls operated less effectively during the pandemic. Health, safety and environmental risks were reassessed in more detail in 2020 and their rating has been increased as a result.

The risk heatmap below shows the Group's principal risks before mitigating measures are applied.

Low

CriticalHigh

Severity

MediumLowMedium

High

Likelihood

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 chart shows management's assessment of material risks before mitigation. Various strategies are employed to reduce these inherent risks to an acceptable level. These are summarised in the tables on the following pages. The effectiveness of these mitigation strategies can change over time, for example with the acquisition or disposal of businesses. Some of these risks remain beyond the direct control of management. The Risk Management programme, including risk assessments, can therefore only provide reasonable but not absolute assurance that risks are managed to an acceptable level.

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, natural catastrophe and business interruption risks and certain financial risks. A summary of financial risks and their management is provided in note 24 on pages 161-168.

Risk

• A Loss of Distribution contract

• B Digitisation

• C COVID-19

• D Cyber incident, data breach

  E

  OEM brand damage / supply chain interruption

  F

  Acquisition ROI

• G Political risk, social unrest

• H Legal / regulatory compliance

  I

  Legal / regulatory change

• J Foreign exchange

• K IT systems failure / interruption

  L

  People: retention & development

• M Credit retrenchment

• N Health, safety, environment incident

• O Disruption: go-to-market model

• P Fraud, financial mis-statement

• Q 'Brexit'

• R Electrification of the drivetrain

• S Portfolio optimisation

Risks and opportunities presented by climate change

As a distributor and retailer of petrol and diesel vehicles, climate change and the transition to a low-carbon economy present inherent risks and opportunities for Inchcape plc. Some of these are already Principal Risks for the Company, including the increasing electrification of vehicle drivetrains or future legislation banning the sale of petrol or diesel vehicles. These risks will materialise in some markets quicker than others and could impact the business model in various ways in the medium and longer term. To date the impacts of climate change have been best estimates. During 2021, the Company is undertaking an assessment of climate-related transition and physical risks as proposed by the Task Force on Climate-related Financial Disclosures and will report on those findings next year.

The following pages provide further information on each of our principal risks - what they are, how they have changed and how they are managed.

TROPER CIGETARTS

ECNANREVOGSTNEMETATS LAICNANIF

The Group's principal risks

A - Loss of Distribution contract	Risk level before mitigation:
Severity: Critical	Likelihood: Low

Description and impact

The Group has individual Distribution contracts, many of which are long-standing. The loss of such contracts would have a significant impact on revenue and profit, as well as future growth opportunities. The cancellation of a number of smaller contracts at the same time could have a similar impact.

The underlying factors which could contribute to this risk may include:

• - Unattractive value proposition for OEM partners;

• - Failure to meet OEM standards;

• - Non-compliance with the terms of Distribution agreements;

• - Failure to deliver growth strategy;

• - New competitors;

• - Major fraud, bribery, data security or other operational failure.

Commentary for 2020

During the year, the Group won new Distribution contracts in South America and Europe. This further diversifies our contract base. During the pandemic, we have strengthened ties with many of our key OEM partners, who have worked closely alongside us to jointly address the challenges presented this year.

Mitigating actions

• - OEM relationships held at all management levels.

• - Regular performance reviews of OEM standards and targets.

• - Partner Development Teams to solve common global issues.

• - Executive 'deep-dives' into core brand partners.

• - Dedicated training programmes on OEM criteria and expectations.

• - Employee reward linked to delivery of OEM standards.

• - Investments to improve customer experience and to efficiently deliver to volume expectations.

• - Targeted M&A.

• - Legal and regulatory compliance programmes.

• - Compliance and internal audit reviews to monitor adherence to OEM standards.

B - Digitisation	Risk level before mitigation:
Severity: High Likelihood: High

Description and impact

The digitisation of the customer journey and growth of online customer platforms present the opportunity to improve the customer offering and grow market share.

At the same time, digital platforms may enable our OEM partners, or new competitors with new business models, to directly access our customer base. These trends might change the nature of both vehicle distribution and retail.

If we fail to keep pace with the digital solutions offered by our competitors and others, we may lose market share, our OEM relationships may be weakened and our position in the value chain may be threatened.

Commentary for 2020

COVID-19 has accelerated the need to transact digitally, with less physical interaction.

Our OEM partners and new competitors continue to pilot and develop direct sales capabilities based on digital sales platforms. This may change the role of our Retail business in the sales process, or may make it redundant. It may change the way in which we stock and distribute vehicles.

Mitigating actions

• - Strategy review to ensure our plans for the future of the business reflect the latest market dynamics.

• - Execution of omni-channel experience, through development of digital capability: including enhanced data analytics, marketing capabilities, online service bookings, digital walk-around checks and e-commerce capabilities for parts and accessories.

• - Group and market level monitoring and management of social media sentiment.

• - Proactive engagement with our OEM partners to understand their 'Connected Vehicle' strategies.

C - COVID-19 pandemic	Risk level before mitigation:
Severity: High Likelihood: High

Description and impact

This risk relates to the possibility of continued or more severe incidences of COVID-19, along with continued restrictions on movement and commercial trading. These restrictions may stretch through H1 2021 with a subsequent delayed economic recovery beyond that period. A continuation or worsening of the pandemic could threaten the health and wellbeing of our colleagues and our customers. It would impact the Group's global trading performance and cash flows. It may lead to increased pressure on margins from OEMs; reduced capital availability for both the Company and for our customers; and supply chain interruptions. There is the potential for political and social unrest.

In the longer term, it may accelerate trends such as digitisation and introduce new business models or new ways of working, to which the Group must successfully adapt (see risk 'B').

Commentary for 2020

Following the initial impact of the virus in Q2, business performance has been resilient. The business saw an improving trend in New, Used and Aftersales revenue streams. The Group outperformed market volumes and cash flow generation was positive.

Although regulatory approval for a vaccine has arrived in many markets, the virus continues to mutate and the situation remains dynamic and unpredictable. The long-term macro-economic impact of the pandemic is yet to be determined.

Mitigating actions

Trend

• - Measures at all sites to reduce infection risk.

• - Non-customer-facing staff working at home.

  TrendTrend NEW

• - Pandemic plans established, along with other health and safety measures and guidance for colleagues; a wellbeing programme to support colleagues through the pandemic and increased frequency of Employee surveys.

• - Frequent customer communications by email and on our websites.

• - Cost-reduction programmes; enhanced monitoring of working capital and delaying discretionary spend.

• - Accelerated roll-out of digital trading capabilities.

• - Optimising inventory levels and liaising with OEM partners to allocate supply.

• - Use of government-sponsored 'furlough' schemes in the UK, Australia and Singapore.

• - Temporary £100m borrowing facility under the UK CCFF programme, repaid in full.

D - Cyber incident / data breach	Risk level before mitigation:
Severity: High Likelihood: High

Description and impact

As we invest in our digital capability, gather and hold more data and rely ever more heavily on technology and mobile devices, we open up new opportunities for cyber attacks, many of which are well-funded and well-organised. Attacks can be aimed at accessing confidential data, extracting money, or causing business interruption.

The Group operates many websites and IT systems across its markets, some of which have been operating for many years. Some of these systems are provided by our OEM partners and are not under Inchcape's direct control. During the year, businesses in some markets experienced attacks, which interrupted business operations. While not material to the Group, these successful attacks indicate the challenges present in fully protecting our systems and data from an ever-changing threat.

Commentary for 2020

A combination of factors drove an increase in the Group's exposure to cyber risks in 2020. There has been a general increase in the frequency and intensity of cyber attacks during the pandemic.

As the Group grows its digital capabilities, it becomes more reliant on fewer IT systems and the data they hold.

During the year, an assessment of the Group's IT security landscape was completed and a programme of work launched to address gaps identified. We appointed a new Chief Digital Officer in October and refreshed and strengthened our framework of IT security controls.

Mitigating actions

• - Data management policy and approach.

• - Dedicated Information Security resources.

• - IT security policy, setting out the standards and controls expected of each business.

• - Audits and other reviews to monitor compliance with those standards.

• - Mandatory cyber security training.

• - Global, standardised anti-virus and web-proxy solutions.

• - Programme of investment to address weaknesses identified.

• - Security assessments of third party vendors, which is vetted by the Group's Information Security Officer.

• - Incident response and disaster recovery plans.

E - OEM brand damage / supply chain disruption	Risk level before mitigation:
Severity: High	Likelihood: Medium

Description and impact

As a distributor and retailer, our performance is intrinsically linked with that of our OEM partners. Our partners may be exposed to risks such as adverse publicity, product recalls or supply chain interruptions. Such events may adversely affect our customer experience and demand for the vehicles we offer. It may lead to reputational damage for our brand or may lead us to be involved in product recalls.

While we work closely with our OEM partners to foresee and address issues, we may have limited control over the prevention and management of these risks.

Commentary for 2020

COVID-19 has caused production backlogs at a number of our OEM partners, as manufacturing sites have been required to close or operate at reduced capacity. This has affected some brands in some markets, but has been managed and it has not materialised in a way that is significant to the Group. There remains the potential for short-term supply chain disruptions between the UK and EU member states as new trading arrangements become operational.

Mitigating actions

• - Brand and geographic diversity.

• - Close engagement and dialogue with our key OEM partners.

• - Business continuity planning.

• - Inventory management and monitoring procedures.

• - Customer communication.

F - Acquisition Return on Investment (ROI)	Risk level before mitigation:
Severity: High	Likelihood: Medium

Description and impact

This risk relates to a failure to achieve sufficient return on investment from our acquisition strategy. This in turn would lead to higher leverage, reduced EPS and/or deterioration of relationships with OEM partners.

Inorganic growth through selected acquisitions forms an active part of the Group's current strategy. Management will continue to actively pursue opportunities as they arise. Many of those opportunities are in developing markets or in markets that are new to us. Such acquisitions may comprise smaller operations with less sophisticated systems and processes.

Failure to identify appropriate targets, acquire them on optimal terms, or to efficiently integrate new businesses into our operation will adversely impact our ability to deliver the benefits expected from those acquisitions.

Commentary for 2020

Impairments were recorded in 2020 for previous acquisitions made. The Company continues to pursue inorganic growth opportunities and this risk remains relevant. In 2020, the Company completed new deals with Daimler in Colombia and El Salvador, MINI in Chile and Peru, BMW Motorrad in Peru and with JLR in Poland.

Mitigating actions

TrendTrendTrend

• - Regionally-driven integration strategy, supported by Group specialist functions.

• - M&A Committee and Board oversight of process.

• - Top-down and bottom-up approach to target identification.

• - Dedicated business development team to project manage M&A.

• - Partnering with OEM where appropriate to align expectations and requirements.

• - Valuation and due diligence processes, supported by specialist advisors.

• - Additional performance focus for newly acquired businesses.

• - Implementation of Group policies, procedures and control framework in each new business.

• - Internal Audit focus within six months of acquisition.

Climate change-related risk

G - Political risk, social unrest	Risk level before mitigation:
Severity: High	Likelihood: Medium

Description and impact

There is a risk that political and social instability in one or more of our markets leads to economic uncertainty, market interruption and/or threats to the safety of our employees.

The Group operates in emerging markets where there may be greater volatility in the political, economic and social environment.

We accept that there is a risk of social and political instability globally and that certain political and social issues could have a destabilising effect on the global economy. Rising eco-activism could impact the automotive industry.

Commentary for 2020

There was political and social unrest in some markets, including in Chile, Africa and Hong Kong during the year, which caused the temporary closure of some of our dealerships. There is the potential for further social unrest and political change as governments in all markets (including mature democracies) impose restrictions on individual freedoms in an effort to tackle COVID-19.

Mitigating actions

• - Close monitoring of political situation in higher-risk markets.

• - Business continuity planning.

• - Collaboration with OEM partners on stock allocation flexibility.

• - Greater emphasis on digital marketing and sales initiatives.

• - Where appropriate, industry-wide collaboration in response to political or social unrest.

H - Legal / regulatory compliance	Risk level before mitigation:
Severity: High	Likelihood: Medium

Description and impact

The Group, and its businesses, are subject to a wide range of existing laws and regulations across a range of markets, from those where regulatory frameworks are still developing to mature, highly-regulated markets. The consequences of a failure to comply with those laws and regulations can vary from small fines, and orders to take remedial actions, to significant financial consequences, reputational damage and imprisonment of directors and officers. Regulation to which the Group is subject includes, for example, anti-bribery and corruption, data protection, health and safety and anti-money laundering regulation or rules relating to the distribution and sale of finance and insurance products.

Commentary for 2020

Restrictions on travel arising from the current pandemic have impacted aspects of our compliance monitoring programme, e.g. the ability to physically inspect sites or conduct certain audits to monitor compliance with health and safety legislation. We do not believe these constraints have had a material impact on our ability to meet our legal and regulatory compliance obligations.

Mitigating actions

• - Group-wide Code of Conduct, with associated training.

• - Nominated legal representative and/or retained counsel in major markets to monitor existing and emerging legislation.

• - Online training relating to specific laws and regulations.

• - Market-level policies and procedures, supported by Group-wide policies for higher risk areas.

I - Legal / regulatory change	Risk level before mitigation:
Severity: Medium	Likelihood: High

Description and impact

This risk relates to changes in legislation or the way that legislation is applied. These changes may directly affect customer demand for certain vehicle types or our ability to generate income from Aftersales.

The most significant changes relate to proposed restrictions on vehicle emissions or restrictions on the sale of new petrol or diesel cars.

Commentary for 2020

In response to a changing climate, governments in some markets have this year proposed legislation to further curb vehicle emissions or to ban sales of petrol and diesel vehicles beyond a certain date (e.g. UK - 2030). Other markets, such as Singapore and the EU, have also signalled their intention to introduce similar legislation.

Mitigating actions

• - Review of current strategy in light of changing market trends.

• - Nominated legal representative in major markets to monitor emerging legislation.

• - Close liaison with OEM partners on product development.

• - Natural hedge provided by working with a range of OEM partners in a range of markets.

J - Foreign exchange	Risk level before mitigation:
Severity: High	Likelihood: Low

Description and impact

This risk relates to fluctuations in exchange rates with negative impact on financial performance. We operate in many different countries with different functional currencies. In doing so we accept the risk that, outside of normal hedged transactions, we are exposed to currency fluctuations. These can be both positive and negative.

Commentary for 2020

Currency markets have been significantly impacted by the COVID-19 pandemic in 2020.

Mitigating actions

TrendTrendTrendTrend

• - Natural hedging from geographical diversity.

• - Local billing arrangements with brand partners in most markets (excl. certain brands in Australia and Americas).

• - Use of forward currency exchange contracts to hedge transactional exposures (e.g. Yen and AUD).

• - Analysis / stress testing of Group sensitivity to foreign exchange exposures.

K - IT systems failure / interruption	Risk level before mitigation:
Severity: MediumLikelihood: Medium

Description and impact

Our business performance and our ability to service our customers and OEM partners depends upon the ability of our systems to meet expected levels of operational reliability.

We have a diverse and complex IT landscape with multiple potential points of failure. Some of our legacy IT systems have been operating for many years. We operate in emerging markets where technology infrastructures, such as the internet, may be unstable.

Many of our core services are held on, or reliant on, cloud-based services provided by third parties.

Commentary for 2020

We have continued our programme to standardise the core applications, processes and controls, which support our business.

We appointed a new Chief Digital Officer in October.

We refreshed our IT General Controls and our IT Security Controls. These changes are being implemented. They include for example, the increased use of two-factor authentication and the consistent deployment of anti-virus solutions.

Mitigating actions

• - Back-ups and built in resilience for all major systems.

  Trend

• - Resilience testing for all new implementations prior to go-live.

• - Incident management, disaster recovery and continuity plans.

• - IT General Controls in place and audited.

• - Availability criteria built into SLAs with third-party hosts.

• - Service providers all appropriately accredited.

• - Third-party providers are security risk-assessed.

• - Physical and logical security in place with active monitoring for core systems.

L - People retention and development	Risk level before mitigation:
Severity: MediumLikelihood: Medium

Description and impact

The fragmented nature of the automotive sector, coupled with remuneration strategies which typically reward short-term performance, mean that the industry is characterised by inherently high turnover rates, especially in retail businesses. Our strategy, as well as the impact of disruptive trends and emerging technologies in the automotive industry, mean that the skills and capabilities needed to succeed are constantly changing. Not having the right talent succession plans, and diversity at all levels, may compromise our ability to deliver our strategy.

Commentary for 2020

COVID-19 has impacted our people in many ways. We have new operational procedures at our sites around the world and many colleagues are working from home. In response to COVID-19, we implemented a cost-reduction programme and parts of our business have undergone organisational restructures. All of these factors may adversely affect the motivation and engagement levels of our employees.

Mitigating actions

• - Employee survey and measurement in all markets.

• - 'Together in Spirit' programme.

• - Global Talent Strategy to ensure resources are aligned to strategy.

• - Annual talent review of leadership and management teams in all markets and functions.

• - Organisational Health, Talent and Succession review with Executive team.

• - Recruitment, induction and continuous development policies in all markets.

• - Drive5 performance drivers (behaviours) underpin development process.

• - Performance-related pay structure calibrated to incentivise and drive talent retention.

• - Restructuring where necessary to right-skill the business.

M - Credit retrenchment impacts demand	Risk level before mitigation:
Severity: MediumLikelihood: Medium

Description and impact

Global economic uncertainty may ultimately lead to a reduction in readily-available, affordable credit. This is fundamental to our customers' ability to buy, and to our, and our dealers' ability to operate. Whilst we have various local initiatives in place to help our customers and dealers access appropriate finance, we are also reliant on our banking and OEM partners to provide suitably attractive options.

Commentary for 2020

This risk did not materialise in 2020 in a way that has materially impacted our business.

The longer-term impacts of COVID-19 are as yet unclear. Material macro-economic impacts, including a reduction in available credit, may materialise.

Mitigating actions - Monitoring of credit availability.

-

TrendTrend

If required, the Company would take appropriate cost-reduction or other measures to respond to a downturn in economic activity.

Climate change-related risk

N - Health, safety, environmental incident	Risk level before mitigation:
Severity: MediumLikelihood: Medium

Description and impact

The Group's activities include manual activities and the operation of machinery and vehicles, sometimes in confined spaces. These activities expose our colleagues to the risk of serious or fatal injury. The use of and disposal of chemicals and other substances risks harm to the environment.

Our colleagues' mental and physical wellbeing could be harmed as a result of workload, organisational restructuring or as a result of external factors (such as the current pandemic).

Commentary for 2020

We changed a number of our operating procedures in response to COVID-19. This, combined with reduced staffing levels in some locations, has restricted our ability to undertake certain physical checks and inspections and may temporarily increase health and safety exposures. We also reviewed and reassessed health and safety risks across the Group and continue to implement a new framework for managing health and safety risks. Employee uncertainty increased during the year as we faced the impact of COVID-19 and business cost reduction.

Mitigating actions

• - HSE strategic plans developed in all markets.

• - Risk assessments updated.

• - Inchcape Global Standards of Safety continue to be implemented in local markets.

• - Targeted risk management programmes being rolled out to address key exposures.

• - Single H&S system and reporting tool implemented across 34 territories and 17 languages.

• - HSE Director has undertaken a global audit of H&S practices and standards.

• - Global Community of Practice implemented.

• - Global and Local Health & Safety policy rollout compliant with local legislation.

• - Qualified Health & Safety practitioners in major markets.

• - First responders appointed and trained in most markets.

• - Leading and lagging KPIs.

O - Disruption: go-to-market model	Risk level before mitigation:
Severity: MediumLikelihood: Medium

Description and impact

Technological advances have enabled the rapid growth of on-demand and shared mobility through the likes of Uber, Grab and Lyft.

The impact of these services will vary by market, but provide both opportunity and threat to existing business models and to the way vehicles are distributed, retailed and used, particularly in major cities and advanced city states.

A rapid growth in shared mobility, for example, could reduce demand for new and used vehicles. It could change the way vehicles are distributed and purchased, potentially moving from the current business-to-consumer model, to more business-to-business transactions.

These changes may enable new entrants to enter our markets with new business models.

Commentary for 2020

The pandemic has resulted in fewer people choosing to use shared modes of transportation, temporarily halting the growth of shared mobility solutions.

It is yet to be determined if this change will be reversed once the pandemic is addressed.

Mitigating actions - Review of strategy in light of changing market trends and alternative business models.

-

Partnerships and pilot programmes with OEMs and emerging mobility-service businesses to better understand requirements and propositions.

P - Fraud, financial mis-statement	Risk level before mitigation:
Severity: MediumLikelihood: Medium

Description and impact

The Group may be subject to fraud or its financial performance may be misstated, either in error or deliberately.

These risks may be heightened during the acquisition of new contracts in new markets; in periods of organisational restructuring or economic downturns; or when parts of the business are under-performing against targets.

Commentary for 2020

The effectiveness of some of our financial controls (e.g. physical stocktakes) were compromised during 2020 due to the pandemic. During the year, the Group refreshed its system of internal financial controls, realigning controls to the areas of greatest risk of fraud or mis-statement.

Mitigating actions

• - Code of Conduct.

  TrendTrendTrend

• - 'InControl' framework of internal financial controls, assessed quarterly and monitored by management and the Audit Committee.

• - Fraud Management and Whistleblowing policies.

• - Delegation of Authorities policy.

• - Cyber security programme.

• - Whistleblowing hotline available in all countries.

• - Internal Audit monitoring.

Q - 'Brexit'	Risk level before mitigation:
Severity: Low	Likelihood: Medium

Description and impact

A change in the trading arrangements between the UK and the European Union has the potential to disrupt our business. This risk would be most acutely felt had both sides failed to reach an agreement on future trading arrangements. Our exposure to this risk is in our UK Retail business and our Northern Europe operation.

In the short term, the principal impact on the Company relates to disruptions in the supply of new vehicles and parts. The medium-term macro-economic impact on the UK economy also remains uncertain. A slowdown in economic activity or a retrenchment of credit availability in the UK would impact revenues and operating margins in our UK Retail business (see Risk 'M').

Commentary for 2020

In December 2020, the UK agreed the basis for its future trading arrangements with the EU. At that point, the Group's exposure to 'Brexit' risks reduced significantly. Contingency plans had been actioned in 2020 in anticipation of any disruption. The Board is actively monitoring developments and will take further action as required. Our analysis of the possible impacts was reviewed throughout the year. Action plans were implemented and updated as negotiations progressed.

Mitigating actions

Key

Climate change-related risk

• - Close liaison with OEMs to anticipate and prepare for supply chain disruptions.

• - Optimisation of inventory levels.

• - In the UK and other markets, communicating potential impacts to customers (e.g. delivery delays and potential price rises).

• - Close monitoring of the macro-economic situation in the UK.

R - Electrification of the drivetrain	Risk level before mitigation:
Severity: Medium	Likelihood: Low

Description and impact

In response to a changing climate, governments around the world are increasingly committing to phasing out fossil-fuel powered vehicles. This will happen at different speeds in different markets. A greater penetration of electric vehicles ("EVs") may reduce margins available through the value chain, as OEMs, distributors and retailers make additional investments in infrastructure.

We have long-standing relationships with our OEM partners and rely on them to successfully bring new EV models to market. Some of these OEMs could fail to retain their current market share if they offer an unattractive range of EV products, impacting our performance.

Commentary for 2020

The growth in EV sales has continued in many markets in 2020, in spite of the pandemic.

Governments continue to signal their intentions to phase out petrol and diesel vehicles. The UK government, for example, has brought forward its ban on new sales of those vehicles to 2030.

We continued to bring market insights to our OEM partners to inform the planning, design and production volumes for new models, to support brand positioning and marketing.

Mitigating actions

• - Review of our strategy in light of changing market dynamics and new legislation.

• - Ongoing collaboration with OEMs regarding product design and planning, brand positioning and marketing in the light of local market requirements and characteristics.

• - Preparation of Aftersales business in line with OEM EV requirements.

S - Portfolio optimisation	Risk level before mitigation:
Severity: Medium	Likelihood: Low

Description and impact

As a global retailer we hold a significant portfolio of operational Retail assets. We acknowledge that the risk inherent in holding Retail-only assets is increasing. Our ongoing portfolio strategy is therefore focused on more attractive and less capital-intensive Distribution operations. Failure to dispose of Retail assets when maximum value creation has been achieved, or before anticipated internal or external factors lead to a sustained underperformance, may lead to inefficiency and impact on profit.

Commentary for 2020

We have continued to expand our Distribution footprint in 2020, acquiring contracts in South America and Europe. We continue to dispose of Retail assets when maximum value can be achieved.

Mitigating actions

Trend NEWTrendTrend

• - Continual monitoring of portfolio and disposal of assets where necessary.

• - Regular impairment reviews undertaken.

• - Disposal of non-strategic, higher risk Retail assets in progress.

Viability of Inchcape plc

Three-year assessment period

The Directors have assessed the viability of the Group over a three-year period to December 2023, taking account of the Group's current financial position and the potential impact of our most material principal risks (or a combination of them). The Directors have determined three years to be the most appropriate period for the viability assessment. Our continued viability is dependent upon the continuation of our relationships with OEMs and many of our OEM contracts have terms of less than three years; three years is a key timeline for new car changeover in mature retail markets with good personal finance penetration; and the number of Units in Operation (UIO) up to three years old is a key driver of our Aftersales business.

Process and scenarios considered

Our financial planning process incorporates an Annual Operating Plan ("AOP") for the next financial year (2021), together with financial forecasts for the remaining years covered by the Viability Assessment. These financial forecasts consider the Group's profitability, gearing, cash flows and other key financial metrics over the period to December 2023. These metrics are subjected to sensitivity analysis, in which a number of the main underlying assumptions are adjusted and tested to consider alternative risk-based scenarios. Using the Group's four most significant risks, unlikely but realistic worst-case scenarios are created and their impact projected onto the three-year projections. These risks are (i) loss of a material Distribution contract, (ii) continued and more severe incidence of the current pandemic, (iii) a major cyber incident and (iv) digital disruption to our markets and pricing. These risks have been modelled individually and concurrently, i.e. assuming all four materialise during the three-year period. Modelling these risks tests the Group's ability to withstand a material reduction in revenue (Distribution contract and COVID risks); a material degradation in margins (digital disruption); and the impact of an unexpected operational expense (cyber attack).

The models assume that a portion of our uncommitted facilities (inventory financing) are withdrawn. The testing recognises that some mitigating actions would remain available to management to partially mitigate the impact of these risks, including reductions in operational and capital expenditure.

In the most severe scenario modelled, the test indicates that the Company would not breach the single financial (interest) covenant on its committed facilities. Details of the Company's financing arrangements can be found in note 23 to the financial statements on pages 159-160.

Viability statement

Based on the outcomes of the scenarios and considering the Group's financial position and principal risks, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. The Directors' statement regarding the adoption of the going concern basis for the preparation of the financial statements can be found on page 100.

UK trading arrangements with the European Union ('Brexit')

In late December 2020, the UK agreed the basis for its future trading arrangements with the European Union. At that point, the Group's exposure to 'Brexit' risks reduced significantly. The risk is still displayed on the heatmap of principal risks, as it had remained a material risk up to 23 December - the date on which an agreement was announced.

Any remaining exposure is not considered material and relates principally to our UK Retail business, where we are the retailer for major German brands. We also import certain Toyota and JLR models from the UK into Europe. In the short term, any impact on the Company relates to disruptions in the supply of new vehicles and parts, which we believe is manageable. Given the nature of our business, we are reliant upon theactions taken by our OEM partners in response to any disruption and we continue to work closely with them. The medium-term macro-economic impact on the UK economy also remains uncertain. A slowdown in economic activity or a retrenchment of credit availability in the UK would impact our UK Retail business.

Contingency plans were implemented in 2020 and in 2021 in anticipation of any disruption. The Board is actively monitoring developments and will take further action as required.

Directors' approval of the Strategic Report

Our 2020 Strategic Report, from pages 1-51, has been reviewed and approved by the Board of Directors on 24 February 2021.

Duncan Tait

Group Chief Executive

VW Group

Inchcape has a retail-only partnership with VW Group and represents the core VW and Audi brands as well as the performance marque Porsche. Our VW Group relationship extends to over 30 years and we are present today as a Retail operator in the UK and Russia.

Locations

Retail

UK, Russia

Chairman's statement

A governance culture

Dear Shareholder

I am pleased to present the Corporate Governance Report for the year ended 31 December 2020. The next few sections explain how the Board and its Committees have discharged their duties throughout the year and I hope you find it informative.

COVID-19 began impacting the Group at the beginning of 2020, forcing the closure of businesses in several markets.

The Board met regularly during March, April and May to assess the quickly evolving situation. The immediate focus was on the health and safety of our employees and customers and to protect the strength of the balance sheet. Further information on the Board's decisions as a response to COVID-19 are given on page 53.

The management teams adapted quickly, creating a global COVID-19 taskforce, holding weekly business review calls, and implementing stock management key controls and a set of safe-operating practices for all markets which remained open. Regular meetings with OEM brand partners were held to ensure optimal vehicle allocation to support both their businesses and our own during this challenging time. Employee wellbeing programmes were put in place and more frequent communication processes were implemented to ensure that our employees remained updated at all times.

The Board also needed to change the way it carried out meetings which were all held virtually from March onwards. More meetings were held to monitor the situation and agendas were considered carefully to ensure that there was sufficient time to deal with all the issues as they arose. The Board members have given their time generously during the year and I would like to thank them for their support.

Both the Board and the CSR Committee regularly monitored the number of COVID-19 cases impacting our employees, all of which we believe were contracted outside the workplace,

which sadly resulted in five deaths during 2020. Our sincere condolences go to their families and the Group has offered every support to assist them at this very difficult time.

Board changes

Duncan Tait joined the Group as Chief Executive Officer in June 2020 and I am confident that he has the necessary skills and experience to lead the Group into the future. Please see Duncan's review on pages 4 to 6. As mentioned last year, Alex Jensen joined the Board as a Non-Executive Director in January 2020 and was appointed as the Chair of the CSR Committee with effect from 1 January 2021 and I am sure her experience at bp plc will add insight to the Committee's discussion.

Till Vestring completed nine years on the Board during 2020 and had planned to stand down at the AGM in May however, Till has agreed to extend his tenure until we have successfully appointed and inducted a new Non-Executive Director onto the Board. See page 56 for statement of code compliance.

It is also with regret that Rachel Empey will leave the Board in April 2021 due to other commitments. I would like to thank Rachel for her strong contribution and the sound advice she has provided since she joined in May 2016 and I wish her all the best for the future.

Climate change

As an automotive distributor and retailer, climate change will impact the business in the future and is considered within the broader discussions on strategy, risks and opportunities. As noted in my letter on pages 2 and 3, the Board reviews the major disruptive trends affecting the global automotive industry which includes those emerging as a result of climate change. Climate-related issues are considered under some of our principal risks and our best estimates are made on the impacts to the business; further details can be found on pages 42 to 49.

The Financial Reporting Council published a climate thematic in November 2020 noting that UK businesses needed to improve reporting in this area and with the introduction of mandatory reporting in line with the Task Force on Climate-related Financial Disclosures ("TCFD"), the Board has appointed The Carbon Trust to assist the Group in improving its disclosures in line with the recommendations as set out in the TCFD, during 2021.

Brexit

The Group's exposure to Brexit is principally in our UK Retail business where we are retailer for major German brands and also where we manufacture in the UK for export to EU countries. Engagement with our OEM brand partners is key to working closely with them to mitigate disruption. In the medium term, contingency plans have been implemented and the Board will monitor developments and take further action as required throughout 2021. Further details are given in the Risk Report on page 50.

Looking forward 2020 was a challenging year, and I would like to once again thank our people for their resilience throughout such difficult times. The Board and I look forward to our continuing recovery and success in 2021 and beyond as we move forward with our strategy for growth.

COVID-19

The Board had to make several difficult decisions to support the business as the pandemic took hold around the world. The Board had regard for the interests of the Group's stakeholders during the decision-making process and weighed up the adverse impacts of some of those decisions with the continued success of the business during such unprecedented times. At the beginning of the pandemic the focus was on liquidity and short-term cost savings and as the year progressed the Board's focus was on preparing the business for returning to structural profitability and for further potential disruption.

The Board announced a £150m share buyback in February 2020, £30m of which was completed by March. As soon as it became apparent that businesses would be forced to close the Board made the decision to cancel the buyback to preserve cash in the short term. A final dividend had also been proposed which would have been payable in June 2020. The Board closely monitored the rapidly evolving situation but it soon become clear that the closures would last longer than anyone had hoped. The Board decided to withdraw the dividend in April 2020 to further preserve cash. Further details can be found on page 60.

As markets shut under government lockdowns approx. 60% of the workforce were placed on furlough and a further 40% were working remotely. In order to support employees who were unable to work during this time, the Group utilised government sponsored furlough schemes in the UK, Australia and Singapore. Where government support was not available or was provided at a low-level, salaries of furloughed staff were topped up to an average of 50% of salary, which was necessary in a number of markets to prevent redundancy situations. The situation was monitored on a market-by-market basis to ensure the solutions were fair, competitive and affordable against a continually evolving landscape. In addition, the following cost-saving measures were introduced:

• - a 20% reduction in salary for senior executives;

• - a 20% reduction in fees for Board members;

• - a salary freeze for some employees.

I thank you for your support during 2020 and look forward to the coming year.

Nigel Stein

ChairmanIn April, the Board decided to apply for temporary borrowing under the UK Covid Credit Financing Facility programme as the duration of the global lockdowns was still uncertain at that time. Of the funding secured by the Group £100m was drawn down in May, but as the financial impacts became clearer the Group was able to repay the funding in July.

The regional management teams engaged with our OEM brand partners to materially cut production orders and negotiate extended payment terms. These actions together with supplier related credit extensions secured with the Group's financial partners further strengthened the Group's position. The successful outcomes were driven by the constructive partnership approach the management teams and our OEM partners have taken during this time.

Despite the actions above, the continued COVID crisis impacted the business significantly during the first half of 2020 and the outlook was uncertain. In planning for the future of the Group, the Board approved a cost restructuring programme to ensure the Group was able to remain agile in the medium and longer term. Reflecting how material employee costs are on the business, and the expected lower demand in 2021, the Board made the difficult decision to approve redundancies of circa 10% of employees across the Group. In addition, the reduction of the Retail footprint was accelerated to reduce overheads further. The restructuring programme was significant and the Board considered detailed plans orchestrated by the regions and Group Executive Team when making its decisions. Key to achieving the desired outcomes was continuing the strong relationships built up with local unions and consultation groups, and with our OEM partners who have remained fully supportive throughout the process. Overall the cost restructuring programme is expected to deliver a cost benefit of £90m of which 50% will be retained when revenue recovers.

Corporate governance report - Board leadership and company purpose

Board of Directors

The Board is collectively responsible for agreeing, developing, and continually reviewing the strategy to ensure that it delivers long-term sustainable success. The Board is also responsible for ensuring that the appropriate people are employed to deliver the strategic objectives and that they have adequate financial resources in order to do so. Underpinning this, the Board must ensure that there is the right development and training in place to support the strategy, along with the necessary controls, processes and procedures to drive a strong ethical culture to facilitate the delivery of the strategic goals.

FULL BIOGRAPHIES, INCLUDING PAST EMPLOYMENT HISTORY, CAN BE FOUND ON WWW.INCHCAPE.COM

Nigel Stein Chairman

Appointed

October 2015

Skills and experience

Nigel was Chief Executive of GKN plc until his retirement in December 2017. He has a wide range of international, general management and finance experience gained in various roles at GKN plc and also has experience in the automotive and manufacturing sectors.

Nigel is a chartered accountant.

Committee membership

Chair of the Nomination Committee and member of the Remuneration and CSR Committees.

Duncan Tait

Chief Executive Officer

Appointed

July 2020

Skills and experience

Duncan was on the Board of Fijitsu Ltd, a global technology services company with responsibility for EMEIA & Americas, a business with $10bn turnover and 35,000 people. He has significant international experience, holding senior roles at Unisys, Hewlett Packard and Compaq in a technology focused career of over 30 years.

Other appointments

Duncan is also non-executive director at Agilisys.

Gijsbert de Zoeten Chief Financial Officer

Appointed

August 2019

Skills and experience

Gijsbert was CFO at LeasePlan Corporation NV, the international fleet management and mobility services company.

Previously, Gijsbert has held a range of senior financial and operational roles at Unilever plc over 27 years, including his six-year position as the CFO of Unilever Europe.

Other appointments

Gijsbert is also a member of the supervisory board of Technical University Delft.

Jerry Buhlmann Non-Executive Director

Appointed

March 2017

Skills and experience

Jerry has over 30 years' experience in the media and advertising industries. He was CEO of Dentsu Aegis Network from 2013 until 2018. Prior to its acquisition by Dentsu Inc, Jerry was the CEO of Aegis Group PLC.

Jerry is also Non-Executive Chairman of Croud, a director of Tulchan Limited and Senior Advisor for OC&C's TMT Practice.

Committee membership

Audit, Remuneration, CSR and Nomination Committees.

Rachel Empey Non-Executive Director

Appointed

May 2016

Skills and experience

Rachel was appointed Chief Financial Officer of Fresenius SE & Co. KGaA, a top healthcare company listed on the DAX index, in August 2017.

Previously Rachel was Chief Financial and Strategy Officer of Telefónica Deutschland Holding AG.

Rachel is a chartered accountant.

Committee membership

Audit and Nomination Committees.

Jane Kingston Non-Executive Director

Appointed

July 2018

Skills and experience

Jane served as Group Human Resources Director for Compass Group PLC from 2006 until her retirement in 2016. Jane also held senior positions at Enodis PLC, Blue Circle PLC (now Lafarge SA) and Coats Viyella PLC. Jane has significant remuneration experience and is Remuneration Committee Chair of Spirax-Sarco Engineering plc.

Committee membership

Chair of Remuneration Committee and member of Nomination Committee.

John Langston Non-Executive Director

Appointed

August 2013

Skills and experience

John has corporate finance, accounting and international experience acquired in senior financial roles in the engineering sector. He is an experienced Non-Executive Director who has a strong governance background and was the Audit Committee Chair of Rexam PLC until its sale to

Ball Group in 2016.

John is a chartered accountant.

Committee membership

Chair of Audit Committee and member of Nomination Committee.

Till Vestring Non-Executive Director

Appointed

September 2011

Skills and experience

Till is an Advisory Partner with

Bain & Co, based in Singapore. He has extensive experience advising multinationals on growth strategy across Asia and leading Asian companies on strategy, M&A and organisation.

Till is also a Non-Executive Director of Keppel Corporation.

Committee membership

Chair of CSR Committee and member of Remuneration and Nomination Committees.

Alex Jensen Non-Executive Director

Appointed

January 2020

Skills and experience

Alex is currently CEO Mobility and Convenience, Europe and Southern Africa at bp plc. She leads the region's fleet, retail and convenience food business across 14 countries.

Alex joined bp plc in 1991 and held roles based in the UK and China. She graduated from Oxford University with a degree in Chinese, holds a Masters from Stanford and is on the Board of the charity Mind.

Committee membership

Nomination and CSR Committees.

Compliance with the 2018 UK Corporate Governance Code

The 2020 report has been structured in accordance with the 2018 UK Corporate Governance Code and details how we have applied the principles accordingly:

Board leadership and company purpose

• 54 Board of Directors

• 56 Purpose and strategy

• 58 Governance structure

• 59 Board activities

• 18 Engagement with stakeholders

Division of responsibilities

61 Roles of the Board

Composition, succession and evaluation

• 62 Nomination Committee Report

• 64 Board evaluation

Audit, risk and internal control

65 Audit Committee Report

Remuneration

• 74 Directors' Report on Remuneration

• 77 Remuneration at a glance

• 78 Directors' remuneration policy

• 85 Annual Report on Remuneration

Statement of Code compliance

The Company complied with the provisions of the 2018 UK Corporate Governance Code throughout the year.

Under Code provision 5, the Company has appointed the CSR Committee chair as the designated non-executive director with responsibility for engagement with the workforce. Unfortunately, some of the planned engagement was not able to be carried out in 2020 due to travel restrictions however a programme of engagement has been planned for 2021. Further details are on page 73.

Under Code provision 10, the criteria for independence is set out. Till Vestring has been on the Board for over nine years which is considered a circumstance which could impair independence. However the Board is satisfied that Till continues to have independent character and judgement despite the length of time served.

THE CODE CAN BE FOUND ON THE FRC'S WEBSITE WWW.FRC.ORG.UK

THE INFORMATION REQUIRED UNDER DTR 7 IS GIVEN ON PAGES 52 TO 100 AND FORMS PART OF THIS REPORT

Purpose and strategy

On joining in June 2020, Duncan Tait reviewed the strategicdirection as the Group embarks on the next phase of its journey. Working with Duncan and the Group Executive Team, the Board sought to establish a clear articulation of what drives Inchcape and reflects our stakeholder commitments. The Group's purpose 'Bringing mobility to the world's communities - for today, for tomorrow and for the better', encompasses who we are, what shapes our decisions and the future direction of the business.

The strategy is designed to create long-term sustainable success for all our stakeholders by delivering financial returns to shareholders, a robust route to market for our OEM brand partners, fulfilling careers for our people, trusted vehicles sales and aftersales for our customers and contribute to wider society by offering valued employment opportunities, an established distribution network and an ethical business. The process of implementation planning and developing commercial objectives under the refreshed strategy will continue during 2021.

The Group's purpose, strategy and business model are set out on pages 8 to 16 of the Strategic Report. The principal risks and uncertainties which could impact the delivery of the Group's strategy and therefore the long-term success are given on pages 41 to 50.

System of risk management and internal control

The Group has a solid controls platform from which to manage the business in an effective and efficient way, with a control environment which can help identify and address emerging risks as they arise. Further details of the refreshed InControls framework is given on page 69 The Board believes it addresses the requirements of the current UK Corporate Governance Code through the maintenance and continuous improvement of the Group's risk management framework. This includes:

• - established planning, budgeting and forecasting cycles, including the approval of the Strategic Plan by the Board;

• - Board consideration of the principal risks relating to that Strategic Plan;

• - reviews by the Group Executive Team of the Group's principal risks and agreement as to their management (incorporating risks identified by the Board);

• - reviews by the Audit Committee of the management of principal risks;

• - an annual effectiveness review by the Audit Committee of the Group's system of risk management and internal control;

• - ownership of the risk management programme by the Group Executive, facilitated by the Chief Financial Officer;

• - dedicated resource: a Group Head of Internal Audit and Group Risk Manager to lead and continuously improve risk management;

• - a network of risk champions across the Group's regions and markets;

• - a Group risk management policy, along with other Group-wide policies and procedures to address selected key risks;

• - definition of the level of risk the Company is willing to take ('risk appetite') through the use of structured risk rating scales and qualitative statements;

• - a six-monthly risk assessment, action planning and reporting cycle;

• - a standardised, mandatory control framework (InControl) to address key areas of operational risk;

• - periodic self-certifications of compliance with Group policies;

• - reviews of operating companies' risk mitigation actions by the Group Risk Manager and other Group functions;

• - periodic reports to senior management of the status of individual risks and their mitigation;

• - an Internal Audit function, which is independent of business unit management and whose audit plans are informed by the Group's principal risks.The Board carries out a robust assessment of principal and emerging risks, which include those that would threaten the business model, future performance, solvency and liquidity, and is responsible for reviewing and agreeing the Group's principal risks and for considering its risk appetite in relation to those risks. Each risk is considered in the context of the strategy with a focus on:

  • - The description of the risk;

  • - The current risk footprint showing gross risk, net risk and the target position;

  • - Background information that underpins the risk;

  • - Key mitigation actions; and

  • - The risk appetite statement for each of the risks.

The risk management and internal controls processes are designed to manage rather than eliminate the risk of failure to achieve business objectives. In establishing and reviewing the system of internal control, the Directors have regard to the nature and extent of the relevant risks, the likelihood of loss being incurred and the costs of control. The system can only provide a reasonable but not absolute assurance against any material mis-statement or loss and cannot eliminate business risk.

The Board has determined that there were no significant failings or weaknesses identified during the review of the risk management and internal control processes during the year and further confirms that these systems were in place during 2020 and up to the date of this report. The Directors are satisfied that the Group's risk management and internal control systems accord with the FRC's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. Further information is given in the Audit Committee Report on pages 65 to 71 and the Risk Report on pages 41 to 50.

Culture

In order to operate effectively, it is important that the appropriate culture is embedded throughout the business and this is approached in several ways:

-

The Code of Conduct outlines the behaviours expected of employees. All new employees receive training on the Code of Conduct within the first month of joining the business.

• - The whistleblowing line enables employees to report anything that they feel is inappropriate and the Audit Committee reviews reports made to the line at each meeting.

• - Remuneration policies and practices are designed to promote the right behaviour. The work of the Remuneration Committee looks at all elements of the remuneration structure to ensure that this ethos is being carried out across the Group and focus is given to appropriate target setting and performance achievement. Further information can be found on pages 74 to 95.

• - Setting an appropriate AOP and monitoring performance against targets throughout the year to ensure that undue pressure is not being placed on employees to behave in inappropriate ways to achieve results.

• - Employee survey carried out regularly to understand the thoughts and views of employees.

• - Delegated authorities at Group and local level sets out the responsibilities of management in decision making.

• - Policies, practices and controls designed to drive the right behaviours.

Concerns on Board operations

If a Director has a concern about the running of the Company which cannot be resolved, it would be recorded in the Board minutes. No such concerns arose in 2020.

Meetings held during 2020

The table below shows the Board and Committee meetings held during the year. The Board held an additional four ad hoc meetings during 2020. Further details on ad hoc Committee meetings held are given in the committee reports.

Stefan Bomhard* Jerry Buhlmann Gijsbert de Zoeten Rachel Empey Alex Jensen Jane Kingston John Langston Nigel Stein Duncan Tait* Till Vestring

Board

Scheduled/Attended

3/3

7/7

7/7

7/7

7/7

7/7

7/7

7/7

4/4

7/7

Audit Committee Scheduled/Attended

4/4 4/4

4/4

Remuneration Committee

Scheduled/Attended

* Duncan Tait joined the Group on 1 June 2020 and Stefan Bomhard left the Group on 30 June 2020.

Governance structure

Nomination Committee

Scheduled/Attended

2/2

CSR Committee Scheduled/Attended

1/1

2/2 2/1 2/2

2/2

2/2

1/1

2/2

2/2

2/2

2/2

2/2

2/2 1/1

2/2

2/2

The Board of Inchcape plc

Collectively responsible for the long-term success of the Company

Audit Committee

Remuneration Committee

Group Executive Team

Nomination Committee

CSR Committee

Delegated authorities:

Financial Reporting Risk Management Internal Control

Delegated authorities:

Remuneration Policy

Incentive Plans Performance Targets

Delegated authorities:

Group Strategy

Operational Management

Delegated authorities:

Board Composition

Diversity Succession Planning

Delegated authorities:

CSR Strategy

Workforce Engagement

COMMITTEE REPORT PAGE 65

Delegated authorities:

Risk oversight Minimum Control

Framework

COMMITTEE REPORT PAGE 74

COMMITTEE REPORT PAGE 62

COMMITTEE REPORT PAGE 72

Risk CommitteeInvestment Committee

Delegated authorities:

Oversight of Group capital expenditure

The Chairman ensures that there is a culture of openness and transparency on the Board to facilitate constructive debate on all matters considered during the year. The Directors provide feedback on how the Board operates, its culture and effectiveness during the evaluation process. The formal schedule of Matters Reserved for the Board can be found atwww.inchcape.com/governance.

Objective in 2020

What we achieved

Focus for 2021

Response to COVID-19

The Board held several ad hoc meetings to monitor the impact of COVID-19 on the Group's businesses. The Board spent time assessing:

The Board will continue to monitor the impact of the pandemic throughout 2021

• - Health & safety of employees and customers

• - OEM brand partners and supply issues

• - CCFF and government support programmes

• - Dividend and share buyback

• - Financial scenarios and liquidity

• - Cost restructuring programme

Strategy

Regional updates were given throughout the year covering the UK, Europe, Australasia, the Americas and Africa

Approval of refreshed strategy Global industry and marketExpanded representation of Daimler in the Americas, secured trendsdistribution rights for MINI in Chile and MINI and BMW Motorrad in Peru, agreed a distribution JV with JLR in PolandDisruptive and future trends

Successful disposal of a number of UK dealerships as part of the Retail optimisation programme

Impact of climate change on business model and value chain

Risk

The Board undertook a review of its risks this year and identified two new emerging risks: change programmes and margin pressure

Annual review of principal risks and mitigating actions

Annual review of risk appetite

The Board also considered the impact of climate change and Brexit. Further details are given in the Risk Management Report on pages 41 to 50

Review of climate-related risks and opportunities

Financial reporting and business performance

The Board held a number of ad hoc meetings to consider the Approval of annual operating impact of COVID-19 on the Group's trading performance and plan

to assess whether the Group had sufficient financial resources to navigate the disruption

Review of delegated authorities policy and capital expenditureThe Board spent additional time assessing whether the Group processes would be able to report its financial results within the usual timescales given the continued disruption and the challenges presented by remote working

Leadership

The Board reviewed the Organisational Health Check for 2020 to assess the global talent review, performance and potential, succession planning, diversity and leadership development

The Board successfully appointed a new Chief Executive Officer, Non-Executive Director and approved the appointment of four new members of the Group Executive Team during 2020

Review of action plans to drive performance, transform diversity, realise potential and retain critical talent

Governance and culture

An external Board evaluation was carried out in 2020. Further details can be found on page 64

The Board received a governance update from external advisors during the year which focused on developments in the Corporate Governance landscape including sustainability and climate-related matters, listing regime update, diversity and audit reform

Compliance with the recommendations of the Task Force on Climate-related Financial Disclosures

The Board carried out a review of the Group's Environment, Health & Safety programmes during the year with additional focus on the measures in place to protect employees and customers during the pandemic. Further information can be found on page 36

Section 172 case studies

Cancellation of dividend

The Board closely monitored the rapidly evolving COVID-19 situation in its markets with the safety of our employees and customers of paramount importance during this time. Swift action was taken to protect the balance sheet in such uncertain times including immediate cancellation of the buyback, reducing costs, 20% salary/fee reduction for senior management and the Board, temporary salary increase freeze, utilising government support, reducing stock and extending credit terms.

It was in this context of cash preservation in the short term that the Board made the decision to withdraw the recommendation to pay the final dividend for the year ended 31 December 2019. The Board had regard to the impact this would have on shareholders, many of whom rely on income from company dividends. However it was felt that it was the correct decision during such unprecedented times. The Board also had regard for some shareholders' views on paying a bonus to employees whilst cancelling a dividend. The bonus had already been paid to employees by this time and the Remuneration Committee did not feel it would be appropriate to operate clawback, with the high likelihood that employees would not receive a bonus for 2020, and the Board's intention was to resume the payment of dividends as soon as possible ensuring the impact to shareholders was short term. Details of the proposed dividend for the year ended 31 December 2020 are given on page 96.

Change in pension scheme

The Board was required to consider and make a decision on the current UK pension scheme. As part of the decision making process the Board compared the pension arrangements of its competitors, OEM brand partners and other UK listed companies. The Company undertook a comprehensive consultation process and due to COVID-19, additional steps were taken to ensure all affected employees could fully engage in the process. The consultation process included the following measures:

• - Consultation with pension trustees

• - A consultation email inbox was set up, through which employees provided feedback

• - An informal group of employee representatives, the Employee Feedback Group ("EFG") was assembled to give affected employees another way in which they could engage in the consultation process

• - A detailed briefing session was held for the members of the EFG to address their questions on the proposed changes

• - A series of 10 online information sessions during the consultation period which were open to all affected employees

A total of 68 points were raised for consideration by the Company and approx. 150 employees joined the online briefing sessions. All questions raised were addressed at a mid-consultation update. This engagement ensured that the Board understood the views of the UK pension members and other relevant stakeholders when making its decision. The Board concluded that the new arrangement would be a benefit to the Company by reducing volatility and costs and would be simpler to understand and give increased flexibility to employees. After considering all the factors, the Board decided to close the previous pension scheme with effect from 31 December 2020 and the new scheme was introduced with effect from 1 January 2021. Ensuring that employees are able to save sufficiently towards their income in retirement and that the new pension offering was fair were key factors in the Board's decision making.

Climate change and TCFD

The impact of climate change on the Group is considered in general terms as it is intrinsically linked to various risks and opportunities impacting the automotive industry and therefore the Group's business model and value chain and to date our best estimates have been used to judge those impacts. Further information is given in the Risk Management Report on page 43 and in the Financial Statements on pages 125 and 146. During the year investors have begun asking companies how they are considering climate change and this interest, along with guidance from the proxy advisors and the publication of the Financial Reporting Council's climate-related thematic issued in November 2020, the Board will consider the risks and opportunities in further detail. The Board agreed that the impacts of climate change will affect all of the Group's stakeholders in the longer term therefore it is imperative that the Board fully understands the impact of climate change to the Group. The Board's decisions include:

• - Ensuring the Group's strategy fully encompasses the risks and opportunities presented by climate change

• - Update the Matters Reserved for the Board to ensure oversight of climate-related matters is considered at Board level

• - Appoint The Carbon Trust to assist the Company with its disclosures under the recommendation set out under the Task Force on Climate-related Financial Disclosures.

Corporate governance report - Division of responsibilities

Roles of the Board

As Chairman, Nigel Stein sets the Board's strategic agenda which covers routine items, strategic priorities and ad hoc matters as they arise. Most Board meetings in 2020 were held via video conference, and at the beginning of the year many were called on short notice. A key priority has been ensuring the meetings are focused on the decisions which need to be taken, that each Board member has opportunity to express their views, that the supporting papers contain the detail required for effective decision making and that the Directors are aware of their responsibilities. Time is set aside for the Chairman and Board members to communicate outside of the Boardroom.

Nigel Stein was considered independent upon appointment.

Non-Executive Directors

As Senior Independent Director ("SID"), Jerry Buhlmann acts as a sounding board for the Chairman, to serve as an intermediary to other members of the Board and is available to shareholders if they do not want to speak to the Chairman or the Group Chief Executive Officer. Jerry leads the annual Non-Executive Director only meeting during which they appraise the performance of the Chairman.

During the year, Jerry and Nigel worked together to ensure a seamless transition of CEO and to support Duncan in his new role.

Duncan Tait, as Group Chief Executive Officer, is responsible for developing the Group's strategy, running the day-to-day operations, reporting to the Board on performance, implementation of strategy and any significant developments, leading the Group Executive Team including managing risk and internal control and engaging with shareholders.

The Non-Executive Directors are appointed to offer a wide range of skills and experience which enable them to advise, support and constructively challenge management, and to provide strategic guidance and independent judgement on the Board's discussions. Explanatory notes on their contribution to the business are given in the Notice of Meeting for the 2020 Annual General Meeting ("AGM") to accompany the resolution to re-appoint each Director. All Non-Executive Directors are considered independent in accordance with the UK Corporate Governance Code. None of the Directors or their connected persons have, or have had, a material relationship with the Company and its subsidiaries. Non-Executive Directors receive a fee only and do not participate in share award schemes or the pension scheme. There are no cross directorships. The Non-Executive Directors' letters of appointment are available for inspection at the Company's registered office and at the AGM.

Till Vestring joined the Board in September 2011 and has been a member of the Board for just over nine years. Due to the challenges of recruiting Non-Executive Directors during the pandemic, Till has agreed to remain with the Board to assist with the recruitment and induction of two new Non-Executive Directors during 2021. His experience on the Board and knowledge of the Asia region have been of invaluable assistance to both Duncan Tait and Alex Jensen who joined during 2020 and will support the new Directors when they join the Board.

The Non-Executive Directors are required to allocate sufficient time to the Company to discharge their responsibilities and Board dates are agreed two years in advance to ensure that Directors are able to plan accordingly and for other commitments to be taken into account. Non-Executive Directors are informed of the time commitment expected from them upon appointment and this is reviewed annually to ensure that the time expected is still relevant in light of the Company's strategic agenda. The Board's policy on multi-board appointments requires Directors to obtain prior approval from the Nomination Committee and the Board before taking on another directorship.

Executive Directors

The Board understands that the Executive Directors can gain valuable business experience as a Non-Executive Director of another company. The Board's policy is to limit non-executive directorships within a FTSE 100 company to one appointment only. The policy requires Directors to obtain prior approval from the Nomination Committee and the Board before taking on another directorship.

The Group Company Secretary supports the Board by providing advice, including access to independent advice, and ensuring that the Board has the appropriate policies, information, time and resources in order to function effectively.

Corporate governance report - Composition, succession and evaluation

Nomination Committee report

Dear Shareholder

I am pleased to present the report of the Nomination Committee for the year ended 31 December 2020.

During the first few months of 2020, the Committee's focus was on the recruitment of a new Group Chief Executive and I am delighted that Duncan Tait joined the business on 1 June.

Committee members and attendance at meetings

Scheduled / attended	Ad hoc meetings
Nigel Stein - Chair	2/2	4/4
Jerry Buhlmann	2/2	4/4
Rachel Empey*	2/1	4/4
Alex Jensen	2/2	4/4
Jane Kingston	2/2	4/4
John Langston	2/2	4/4
Till Vestring	2/2	4/4

* Rachel Empey was unable to attend the meeting in November due to a prior commitment.

Allocation of time spent

Succession planningBoard compositionCorporate governance

As noted last year, Alex Jensen joined as a Non-Executive Director in January 2020 and was appointed as Chair of the CSR Committee in January 2021. Her experience as a senior executive at bp plc adds insight and knowledge to the Committee's discussions as the Group continues its ESG journey.

Duncan and Alex both faced the additional challenge of having remote inductions due to lockdown restrictions, with face to face meetings and site visits severely restricted. During 2020, Duncan was able to visit the Group's operations in the UK, Belgium and Greece, making sure that all government guidelines relating to COVID-19 and travel were adhered to.

When appointing new Directors, the Committee considers the longer-term strategy and the skills needed to help deliver this successfully. In addition, the Committee considers breadth of perspective on the Board which is achieved by appointing Directors from a diverse range of backgrounds, with knowledge and skills relevant to the Group's strategic direction in the longer term. The appointment of a CEO is crucial for an organisation and the Board spent time considering what skill set would be appropriate for the business during times of unprecedented changes in the automotive industry and, as noted in previous Annual Reports, with digital expertise as a key priority. We believe that Duncan's digital experience with Fujitsu will be invaluable in the delivering the future strategy of Inchcape. When recruiting for a pivotal role such as CEO, it is also important that personal attributes are taken into consideration and the Board believes that Duncan possesses traits which strongly support our values and will allow him to make a positive contribution to the business.

As noted on page 61, Till Vestring completed nine years' service in 2020. The Committee felt that it is important to maintain continuity in what has been a year of significant change and Till has kindly agreed to stay on the Board to assist with the recruitment and induction of new Non-Executive Directors during the year. The Committee is satisfied that despite having over nine years on the Board, Till remains independent as he meets the remaining independence criteria as set out in the UK Corporate Governance Code and continues to demonstrate independent character, judgement and objectivity.

In February 2021, it was announced that Rachel Empey has also decided to step down from the Board and will leave in April 2021. The focus for the Committee in early 2021 will be the appointment of two new Non-Executive Directors to fill the vacancies which will be left by Till and Rachel, and to assist in the process two recruitment consultants have been appointed. Having two consultancy firms will assist the Committee in ensuring that a diverse candidate pool can be considered.

Succession planning below Board level, with a focus on developing a diverse executive pipeline, is also considered by the Board on an annual basis. Diversity will be a key area of focus for 2021 with a Women in Leadership programme being launched in early 2021 and a review of all aspects of recruitment being undertaken to analyse how we attract and recruit diverse candidates. The Committee will review the outcomes of these initiatives during the year.

Nigel Stein

Chairman

Our 2020 objectives	What we achieved	Priorities for 2021
Board appointments and	Appointment of Duncan Tait as Group Chief Executive Officer	Appointment of two Non-
succession planning	Appointment of Alex Jensen as Non-Executive Director	Executive Directors
Board composition	Review of skills, experience and diversity in the context of the	Strategy refresh and likely skills
requirements of the Ignite strategy, taking into account length	gap in the next five years
of service
Governance	Review of policy on multiple board appointments, time	Monitor other commitments of
commitments and assessment of Non-Executive Director	Board members to avoid
independence	overboarding and lack of time
Committee evaluation	An external evaluation carried out in 2020. See page 64 for	Review of people metrics to be
further details	considered by the Committee
and reported to the Board

Skills, experience and diversity

The review of skills, experience and diversity is carried out by the Committee annually by way of an assessment completed by the Board members. Of the skills, knowledge and experience considered necessary for the Board members, digital remains key as this is a rapidly evolving area for the automotive industry and as such is a key consideration for succession planning. The Board has been strengthened in this area by the appointment of Duncan Tait and Alex Jensen and the digital capabilities below Board level have been enhanced with the appointment of a new Chief Information Officer to the Group Executive Team.

The experience of the Board members covers a wide range of sectors and industries and in addition we also have several Board members from outside the traditional UK plc background and this diversity of thought adds to our decision making. However, we recognise that this is a constantly evolving environment and ensuring that we have the right mix of individuals to support and challenge management, to avoid group think and to make the right decisions to facilitate the long-term success of the Group remains paramount. This assessment assists with the search for suitable candidates and forms part of the recruitment process.

Succession planning

The Committee's continual succession assessment looks at length of service in addition to the review of skills in the context of the Group's strategy over the longer term to ensure that vacancies are filled as they arise. There are cases when a Director's resignation is unplanned and therefore a list of potential candidates is kept up to date for these circumstances. A search is currently underway for a Non-Executive based in the Asia region and for an additional Non-Executive Director with strong financial experience to replace Rachel Empey. Till Vestring, who is resident in Singapore, is assisting with the succession plan for the role which has been invaluable due to current travel restrictions. The appointment of two further recruitment consultants will provide the Board with a diverse candidate pool to assist in meeting the recommendations set out in the Parker Review.

Appointment process

Despite the challenges posed by the global lockdown, the recruitment process for a new CEO ran smoothly. The Lygon Group were appointed to assist in the recruitment and after an appropriate job specification was agreed, a long-list of candidates was considered. From this, the short-list was agreed consisting of internal candidates identified during the succession planning process, and external candidates identified by the recruitment consultant. Potential candidates met with the Chairman, the outgoing CEO, and other Board members after which the Committee made its recommendation to the Board for approval. During the recruitment process a comprehensive assessment was carried out to evaluate each candidate's capability, strengths, potential and personal attributes needed to drive the business.

The Lygon Group is a signatory to the Voluntary Code of Conduct for Executive Search Firms and does not have any other connection to the Company or any individual Director.

Corporate governance report - Composition, succession and evaluation continued

DIVERSITY POLICY STATEMENT

The Committee recognises the benefits of having a diverse Board and sees this as an essential element in delivering the Group's strategic objectives. We value diversity of skills and industry experience as well as background, race, age, gender, educational and professional background as we believe this adds fresh perspectives which enrich our decision making and the aim of the policy is to reflect this ethos.

The Board's policy on diversity is a verbally agreed principles-based policy. It is clearly understood by our recruitment consultants and is taken into account when considering succession planning and external hires. The Board considers all aspects of diversity to be relevant and all Board appointments are made on merit and in the context of the skills and experience needed for the Board to be effective, however its minimum target is to achieve the recommendations set out in the Hampton-Alexander and Parker Reviews. With the appointment of Alex Jensen in January 2020, the Board has 33.33% female representation therefore has reached its minimum diversity requirement.

The Board philosophy on diversity is also reflected throughout Inchcape where we employ a diverse workforce across 34 countries. We value the unique contribution that each person brings to Inchcape and we aim to employ people who reflect the diverse nature of society, regardless of age, sex, disability, sexual orientation, race, colour, religion, ethnic origin and political belief.

The Committee's terms of reference can be found at www. inchcape.com.

Group Executive Team and its direct reports:

Group Executive Team Direct reports

Male

Female

8 37

1 19

Diversity throughout the organisation, including on the Group Executive Team, will be a key area of focus for the newly formed Responsible Business group. Further details are on page 72.

Board evaluation

In line with the Code, an external Board evaluation was carried out in 2020 by Lisa Thomas of Independent Board Evaluation ("IBE"). IBE has no other connection to the Company or any individual Director and this disclosure has been approved by IBE. The Chairman spent time agreeing a detailed brief with Lisa prior to the commencement of the review.

The process of review consisted of one to one interviews with the members of the Board and several non-Board contributors ("NBCs") including members of the Group Executive Team, the external auditor and remuneration consultants. Board and Committee meetings were also observed with supporting materials provided to support the evaluation. The findings covered feedback from the Board and NBCs, benchmarking data, and IBE's recommendations of Board effectiveness. Feedback was also given to each Committee chair on the performance of each of the Committees.

Jerry Buhlmann, the Senior Independent Director, received feedback on the performance of the Chairman. Board members gave positive feedback on the Chairman, particularly his approach to mentoring new members and steering the Board through its agenda during a time of crisis.

The feedback confirmed that the culture on the Board is inclusive, engaged and supportive, but challenging when necessary. The review showed that the Board works well together and there are already strong relationships between new Board members. The Board has engaged well with senior management and spent time understanding the issues presented by COVID-19.

The feedback highlighted the following:

Strengths	Areas to progress
Board focus	Board composition
Risk management	Strategy
Relationship with senior management	CSR Committee
Decision making	Nomination Committee
Board meetings	Data metrics
Audit and Remuneration Committees
Areas of focus for 2021

IBE made a number of recommendations, which the Board discussed at a meeting with Lisa present. It was agreed that the main areas of focus for 2021 would be as follows:

Board

• - Ensure sufficient focus on refreshed strategy and oversight of purpose

• - Oversight of climate-related reporting and the broader ESG agenda

CSR Committee

• - Determine scope and remit beyond current terms of reference

• - Interplay with the refreshed strategy, and how it can enhance the main Board agenda on ESG

• - Workforce engagement

• - Climate change reporting

Nomination Committee

• - Board composition - planning for the departure of two long-standing Board members and on-boarding their replacements

• - Diversity at Board level and throughout the organisation

• - Identify appropriate people metrics and KPIs

• - Review of culture alignment with refreshed strategy and purpose

Please see the Committee Reports for further details on each Committee's evaluation.

Update from 2019 internal evaluation actions

The actions arising from the internal evaluation in 2019 were:

Further management engagement - the travel restrictions as a result of COVID-19 meant the Board was unable to meet senior executives in person however regular dialogue took place throughout the year, with the new Group Executive Team members invited to present at Board meetings in 2020.

Diversity - the newly formed Responsible Business group will focus on diversity and how this is reviewed and monitored at Board level remains an action for 2021.

Wider reward landscape - the Remuneration Committee received reports during the year on the reward landscape throughout the organisation.

Stakeholder engagement - the Board will continue to assess stakeholder engagement during 2021.

Corporate governance report - Audit, risk and internal controls

Audit Committee report

Dear Shareholder

I am pleased to present the report of the Audit Committee for the year ended

31 December 2020.

Committee members and attendance at meetings

Jerry Buhlmann Rachel Empey

John Langston - Chair

Scheduled / attended	Ad hoc meetings
4/4	1/1
4/4	1/1
4/4	1/1

Allocation of time spent

Financial reporting

Internal audit, internal controls, risk

External auditCyber securityCorporate governance

The aim of the report is to provide an overview of how the Committee has discharged its responsibilities during the year, and to highlight the significant issues considered by the Committee. The Committee considers also whether the Annual Report and Accounts, when taken as a whole, is considered fair, balanced and understandable and provides the necessary information for shareholders to assess the Company's position and performance, business model and strategy. Further details can be found on pages 4 to 50.

The viability statement is given on page 50. The Committee considered the length of time used to assess the Company's viability and is of the view that three years remains appropriate given the nature of the business.

COVID-19

As mentioned throughout the 2020 Annual Report, the COVID-19 pandemic brought unprecedented uncertainty. During these times, it is of paramount importance to ensure that the processes and procedures in place are working effectively as disruptions such as these can derail usual management and governance processes. The Committee has focused on the control environment and cyber security to ensure that the right procedures are in place to protect the business and its assets.

Additional focus was also placed on the accounting judgements and disclosures relating to the impact of COVID-19 on the Group's businesses. This included government support, tax deferral initiatives, liquidity and the impact on financial covenants, the cost-restructuring programme and impairment of site and intangible assets. The Committee also spent time monitoring the financial reporting timetable to ensure that the appropriate resources and robust processes were in place in light of the additional challenges from working remotely and to ensure the deadlines were achievable.

Internal controls

The Group had planned to introduce a new control framework during the year, and I am pleased to report that this was achieved successfully despite the challenges of 2020. The feedback from the businesses has been overwhelmingly positive and is a testament to the strong governance culture within the Group. Further information on the new InControl Standards is given on page 69.

In April, the Internal Controls team issued COVID-19 key control guidance to ensure continued compliance with key controls and processes especially where these relate to areas of heightened fraud risk or the health and wellbeing of employees.

Cyber security

COVID-19 also impacted security risks faced by the business as IT activity moved to remote working. The Committee reviewed the additional security measures put in place as part of the COVID response including cyber security training for all finance teams, communications to employees on examples of criminal cyber activity, enhanced monitoring of malware and other alerts on the business and a review of data held by third parties. During the year, the Group experienced a cyber attack which interrupted operations briefly but was not material and did not result in the loss of any customer data. The Group's principal risks have been updated to reflect the increased exposure in this area. See page 43 for further details.

Financial Reporting Council ("FRC") letter

In 2020, we received a letter from the Conduct Committee of the FRC following a review of the cash flow and liquidity disclosures in last year's Annual Report and Accounts. The FRC stated it would be incorporating some of our cash flow disclosures, as examples of better disclosures, in their thematic review of cash flow and liquidity disclosures which was published in November 2020.

John Langston

Chair of the Audit Committee

Our 2020

objectives Annual Report and Accounts including financial statements and accounting judgements

The Committee considered all key audit issues, accounting treatment and judgements in relation to the financial statements. This includes challenging management on the assumptions used and the judgements that have been applied, with assurances given from both external and internal sources. The Committee carried out an assessment of whether the Annual Report and Accounts were fair, balanced and understandable. See page 68 for further details.

The timetable for interim reporting was monitored closely to ensure that it was achievable in light of the challenges presented by remote working for the management teams and the external auditor.

Key disclosures include the viability statement on page 50, going concern, which can be found on page 100, and goodwill, which can be found on page 145.

Decisions made in respect of 2020

Review of key assumptions used by management on key accounting standards

Deloitte independence and objectivity

The Committee considered the report from the auditor in relation to the financial statements and the 2019 Annual Report and Accounts as a whole and assessed the auditor's approach to, and findings in relation to, the audit to assess independence and objectivity.

Deloitte 2020 audit plan Internal Audit Report

The Committee reviewed and monitored:

• - progress against the 2020 plan throughout the year;

• - the status of open audit issues;

• - any internal control failings; and

• - the appropriateness of mitigation actions put in place by management.

The Committee approved the re-prioritised IA plan which was updated to reflect business risks arising from COVID-19.

The Committee also reconfirmed the Internal Audit Strategy and the Internal Audit Charter and approved the 2020 Internal Audit Plan.

The Committee reviewed the COVID-19 key controls guidance issued during the year designed to ensure continued compliance with controls and processes especially in areas with a heightened risk of fraud.

The Committee discussed the audit plan and agreed materiality, scope and fees. Review of the effectiveness

Risk Management ReportNon-Audit Services Policy and review of non-audit services

The Committee reviewed the non-audit services supplied by the external auditor to ensure that they are in line with the Group's Non-Audit Services Policy and best practice guidelines. Further details can be found on page 71.

Tax update and litigation updateCyber security

The Committee reviewed the increased security processes and measures put in place as part of the COVID response plan, the short-term strategy focusing on core security hygiene items and areas of current exposure and risk. The Committee also considered the principal cyber risks and mitigating actions. See page 43 for further details.

The Committee consider the risk management environment, major whistleblowing Review of the Enterprisereports and any mitigating plans implemented by management throughout the year. Progress against plans is monitored closely and management are challenged appropriately on areas where a satisfactory outcome is not evident. Further details can be found on pages 41 to 50.

The Committee reviewed the Group's tax costs, tax risks, efficiency andReview of non-audit services supplied

Application of the Non-Audit Services PolicyMonitor the tax strategieseffectiveness of tax policies along with updates on tax audits. It also reviewed any within markets and atsignificant litigation issues.

Committee evaluation

A external evaluation was carried out in 2020. See page 68 for further details.

A review of the Group's cyber security risks, mitigation plans, and incidents will be carried out annually

An internal review will be carried out in 2021

Priorities for 2021

Continuous assessment of audit quality and effectiveness

of the external audit Monitor progress against 2021 plan, resolving open issues and improvement plans in relation to identified internal control gaps

Risk Management system

Review of climate-related risks

Group level

Monitor the level, frequency and type of litigation within the Group

Significant issues considered by the Committee during the year

Impairment - see notes 11, 12 and 13 on pages 145-152

Impairment reviews are carried out annually in respect of goodwill and indefinite life assets, and if there is an indicator of impairment, reviews are carried out on a more frequent basis. In addition, other intangible assets, property, plant and equipment and right-of-use assets are reviewed for impairment if events or circumstances indicate that the carrying value may not be recoverable. This is a judgemental process which requires estimating future cash flows based on future business prospects, determining long-term growth rates and discount rates. It is the Committee's view that management's approach to impairment is robust, based on reliable supporting data supplied by external sources, and with appropriate challenge from the external auditor.

The Committee focused on the following aspects of the impairment:

• - The Committee debated the cash flow projections used to calculate the value in use, considering whether these reflect a reasonable expectation of future performance;

• - The Committee considered how management had determined the discount rates and long-term growth rates;

• - The Committee discussed the impact of climate change, including electrification on impairment and the impact of electric vehicles on aftersales;

• - The Committee reviewed the approach to scenario analysis in light of the uncertainty arising from COVID-19 and the range of possible outcomes and the appropriateness of basing this on market recovery rather than improved business performance;

• - The Committee assessed the reliability of data provided by external advisors and independent specialists used in key assumptions; and

• - The Committee also discussed the appropriateness of the disclosures to be made in the Annual Report to satisfy itself that they provided users of the financial statements with sufficient information to understand the judgements made by the Group.

After considering all available information and reviewing the findings and supporting evidence from Deloitte LLP, the Committee concluded that management's impairment reviews of non-financial assets were appropriate and that an impairment charge of £222.5m relating to goodwill, indefinite life assets, property, plant and equipment and right-of-use assets should be recognised for the financial year ending 31 December 2020. The Committee and management continue to closely monitor the impact of COVID-19 on the business during 2021 and the implications for cash flow forecasts.

Acquisitions - see note 29 on page 172-173

Part of the Group's strategy is to invest to accelerate growth and the acquisition of Autolider, a distributor of Mercedes-Benz passenger and commercial vehicles in Uruguay and Ecuador in late 2019, and the acquisition of Mercedes-Benz car and private van distribution operations in Colombia in March 2020, typify this approach. Accounting for acquisitions requires judgement to be exercised in assessing the fair value of assets and liabilities acquired including the identification of intangible assets and the allocation of acquired businesses to cash generating units. Overall, it is the Committee's view that the Group's approach to acquisition accounting is appropriate.

The Committee focused on the following aspects of acquisition accounting:

• - The Committee considered whether the calculation of the fair value of assets and liabilities and the adjustments made were appropriate;

• - The Committee debated the assessment of the identification of distribution agreements as an indefinite life asset;

• - The Committee discussed the robustness of the information provided by the external advisors to support the approach taken by management and the proportion of the purchase price that was allocated to the value of distribution agreements acquired; and

• - The Committee reviewed the allocation of the business to a cash generating unit representing the totality of the Group's Daimler business operations.

The Committee concluded that it was satisfied with management's valuations of these assets and liabilities including the degree to which such valuations are supported by professional advice from external advisors and that the acquisitions had been accounted for appropriately.

Inventory and receivable provisioning - see notes 16 and 18 on pages 154-155 and 156

The Committee considered that the impact of the COVID-19 pandemic on the markets in which we operate and the implications for the business of deteriorating credit and increased inventory levels, may result in increased probability of customer default and a need to reduce selling prices to stimulate demand. In response to this, the Committee reviewed management's approach to inventory and receivable provisioning in 2020.

The Committee's review focused on:

• - Consideration of the net realisable value of inventory and the assumptions used to establish the estimated selling price and the expected impact of COVID-19 closures resulting in obsolescence and slow-moving stock;

• - Assessment of the pandemic's impact on lifetime credit losses including a review of historic credit loss experience and the adjustments made to those historic loss rates in arriving at expected credit losses; and

• - The appropriate disclosure of the provisions / losses incurred as a direct consequence of COVID-19.

After considering all available information and reviewing the findings and supporting evidence from Deloitte LLP the Committee concluded that the application of the accounting principles was appropriate throughout 2020 and the provisions recognised for inventory of £54.4m and for trade receivables of £10.4m are appropriate.

Exceptional items - see note 2 on page 132-133

Exceptional items and alternative performance measures have been an area of focus and challenge by regulators, which has been heightened in response to the way that companies have reported on the impact of COVID-19.

The Committee's overall assessment is that the Group's Exceptional Items Policy adheres to the key principles as set out in guidance issued by the Financial Reporting Council and the European Securities and Markets Authority during 2020.

In line with the acquisition strategy, the Committee debated whether the business development costs incurred in identifying, exploring and researching opportunities to participate in industry consolidation should be treated as exceptional, given that such costs are recurring in nature due to the Group's M&A activity. The Committee concluded that the reporting of such costs as exceptional should only occur where they are material and relate to acquisitions that have completed as at the reporting date.

The Audit Committee consists of three independent Non-Executive Directors. John Langston and Rachel Empey are qualified chartered accountants and are considered to have recent and relevant financial experience. In addition, the Committee as a whole has competence in the sector in which the Company operates.

The Committee met four times during the year to coincide with the financial calendar and held an additional meeting to review key developments.

Only members of the Committee are entitled to attend Committee meetings. However, the Chairman, Group Chief Executive Officer, Chief Financial Officer, Group Financial Controller and Group Head of Internal Audit attend the Committee meetings along with the external auditor. Other senior executives, such as the Group Tax Director and Group General Counsel, attend during the year to present to the Committee.

The Committee regularly meets with the auditor without the presence of management to discuss any areas of concern they might have. John Langston also meets with the Chief Financial Officer and Head of Internal Audit at one-to-one meetings which enable him to fully understand the key issues ahead of Committee meetings.

The Committee reviews its terms of reference annually. The terms can be found onwww.inchcape.com.

Committee evaluation

An external evaluation was carried out in 2020 noting the Committee is functioning well with good processes in place to give appropriate oversight by the Committee. Committee members believe there is good input from all and challenge is forthright when needed. The Group Head of Internal Audit hasbrought renewed focus to Internal Audit and Risk and will be supporting further strengthening of the control environment in 2021. To date the balance of the agenda between Audit and Risk has been appropriate, but it is anticipated that more time will be spent on the Risk agenda in 2021 to consider risks in light of the refreshed strategy. A further meeting in January will be scheduled to allow further consideration of the accounting judgements and estimates prior to approval of the year end financial statements.

Financial reporting

The role of the Committee in relation to financial reporting is to review with both management and the external auditor the appropriateness of the half year and annual financial statements, taking into account:

• - The quality and acceptability of accounting policies and practices;

• - Material areas in which significant judgements have been applied or where significant issues have been discussed with the external auditor;

• - The clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements including the Code;

• - Any correspondence from regulators in relation to the Group's financial reporting; and

• - Reviewing assumptions and providing assurance to support the long-term viability statement.

Fair, balanced and understandable

The Board is responsible for presenting a fair, balanced and understandable assessment of the Group's position and prospects in the Annual Report and Accounts, the interim

financial statements and the trading updates. The Board considers the weight given to published information to ensure that it is of equal weight and there are no omissions. The Board also ensures that narrative reporting is consistent with the financial statements.

The Audit Committee also carries out its own assessment of the financial statements, and the Annual Report as a whole, and is satisfied that it provides the necessary information for shareholders. The Committee considered whether the information given in the financial statements is a true reflection of the narrative reporting throughout the Annual Report and Accounts, whether the key performance indicators give a true indication of the health of the business and if the issues considered of significant risk by both the external auditor and the Committee are aligned.

The processes and procedures in place to satisfy the Board of the integrity of the financial and narrative statements include a robust disclosure verification process, monthly financial performance updates, and meetings with the internal and external audit functions without the presence of management.

A statement of the Directors' responsibilities is set out on pages 99 to 100. The going concern statement is set out on page 100 and the strategy and business model are set out on pages 2 to 24.

Risk management

The Audit Committee has delegated responsibility for ensuring that:

• - There is an appropriate mechanism in place to identify the risks the Group faces;

• - Management teams have the correct focus on those risks and the action plans in place to mitigate or respond to those risks;

• - A compliance programme is in place in all markets that meets or exceeds external benchmarks and is appropriate in terms of legal requirements, content, sector, cost and resources;

• - Internal controls are appropriate, well designed and operating consistently across the Group to manage risk effectively; and

• - The Group's whistleblowing programme is appropriately managed to reduce the risk of fraud or respond quickly and decisively in the event the Group falls victim to fraud.

Internal control

The Internal Control framework encompasses all controls including those relating to financial reporting processes, preparation of consolidated Group accounts, operational and compliance controls and risk management processes.

InControl Standards

InControl Standards ("ICS") is the newly implemented internal control replacing the Group's Minimum Control Framework ("MCF"). The key theme being the enhanced simplification and standardisation of our control framework in line with a risk-based approach covering financial, operational and IT processes. The ICS were approved by the Committee and rolled out across the Group in 2020. ICS has been designed to enable management to establish, assess and enhance strong and consistent risk and control governance. The framework is regularly reviewed and updated in line with emerging Group risks, in response to emerging internal audit issues and also following any investigation activity.

The standards form part of the broader control environment consisting of:

• - Culture and behaviours

• - Code of Conduct

• - Group, regional and local policies and procedures, including legal and regulatory compliance

• - Delegation of authorities

• - Risk management process

• - Roles and responsibilities

The ICS has been designed to mitigate the most significant risks across the Group providing robust governance and a sound controls framework to ensure:

• - Reliability of financial reporting

• - Effectiveness and efficiency of operations

• - Compliance with applicable laws and regulations

They are also there to help protect us from:

- Fraud and misappropriation of cash and assets - Material error in the financial statements

The central and regional Internal Controls teams support the business by providing the framework, tools and training and ongoing support to embed the ICS across the business which in turn enables management to monitor the effectiveness of controls in the business and to implement actions plans where improvement is required. The Internal Control function is separate from the Internal Audit function and works with management teams to design controls that are proportionate to the level of risk, supported by systems and easy to follow.

The Audit Committee receives regular reports from the Group Head of Internal Audit covering Internal Audit, Internal Controls and Risk Management. The reports provide an update on the Internal Audit activities including an overall opinion on the control environment for the period; the Internal Control environment, with particular focus on the status of compliance with the Group's InControl Standards for both Business Controls, IT general controls and the Risk Management programme including the risk process, assessment and mitigating activities. The reports are available to all Board members to allow them to keep informed, and other Board members are also able to attend any Committee meetings should they wish. However, the Audit Committee also provides an update on the control and risk environment to the full Board following each Committee meeting.

Whistleblowing

Speak Up!, the Group's externally hosted whistleblowing line, is a compliance and ethics reporting solution which allows both hotline and web reporting capabilities in multiple languages, integrated with case management software to support efficient and effective investigation, remediation and reporting. The Group Head of Internal Audit reports to the Committee at each meeting on fraud and whistleblowing claims that have been received since the last Audit Committee meeting, and significant currently open issues. The new and open cases which are reported to the Committee are those of sufficient significance to warrant attention, however a list of all reports is also provided to the Committee along with a breakdown by market, report type and source.

The Audit Committee chair reports to the Board on any significant issues following each meeting. All Directors have full access to the whistleblowing reports and other Audit Committee papers.

The aim of the Internal Audit function is to provide independent and objective risk-based assurance for the Group by bringing a systematic and disciplined approach to evaluate the effectiveness of risk management, governance and control. An annual programme of audit activity is approved by the Audit Committee; this is flexed if required throughout the year in accordance with the risk profile of the organisation and any subsequent amendments are discussed in detail and agreed by the Committee.

Internal Audit

The function carries out audits across a selection of Group businesses, functions and programmes which include the management of risks and controls over financial, operational, IT and other compliance areas such as GDPR and anti-bribery and corruption.

The Internal Audit function, led by the Group Head of Internal Audit, consists of appropriately qualified and experienced employees with an in-depth understanding of the business culture, systems, and processes. The Group Head of Internal Audit reports to the Audit Committee and has direct access to, and has regular meetings with, the Audit Committee Chair, prepares formal reports for Audit Committee meetings on the activities and key findings of the function and reports on progress against mitigation plans. The purpose, authority and responsibility of Internal Audit are defined in the Internal Audit Charter, which the Committee reviews annually.

Due to the impact of the COVID-19 pandemic, the Internal Audit function re-prioritised their plan during the year with additional focus on ensuring that key controls to mitigate the heightened fraud and operational risk in a COVID-19 environment were in place. The COVID-19 Key Control reviews assessed a selection of markets with particular focus on treasury, payroll, master data management, segregation of duties, IT security and key control account reconciliations.

During the year the Internal Audit function carried out 64 audits which included reviews of the key business and IT controls in the UK, Europe, Asia, Australia and across Central and South America. The team also carried out a number of risk based reviews across the Group including Data Privacy, Business Continuity and Anti Money Laundering. In addition to undertaking a full programme of audit activities, the function also provided a number of advisory engagements (where risk and control systems and processes have recently been introduced) and participated in investigation activities where appropriate.

Internal Audit effectiveness review

The Internal Audit function continually assesses its effectiveness by measuring performance against key performance indicators, results of feedback from satisfaction surveys following each audit, self-evaluation of compliance against the Internal Audit Charter and Global Internal Audit methodology and regular monitoring of its plans, performance and outputs by the Audit Committee.

In addition, the Company Secretary facilitated an independent review of the effectiveness of Internal Audit and reported the findings to the Audit Committee in February 2021. The review consisted of an online questionnaire completed by the members of the Audit Committee, the Group Chief Executive, the Group Finance Director, the Group Financial Controller, theexternal audit lead partner, and the regional CFO for Australasia, UK, Emerging Markets and Europe. The aim of the independent review is to enable Internal Audit to develop an action plan to address any areas where improvement is required.

The review is split into five areas covering independence, skills and experience, assurance and business improvement, improvement of the IA function, communication and performance.

The review concluded that the IA function is objective and independent and has evolved to become more aligned with the key issues of concern for the Audit Committee. The team responded quickly to the COVID crisis demonstrating their ability to deal with key business issues well. Progress on the control agenda has been exemplary during a challenging year however the focus for 2021 should be on the evolution towards a more risk-based approach.

External audit

Following an audit tender process during 2017, Deloitte LLP was appointed as the Group's auditor. Deloitte assumed responsibilities from PwC in May 2018 following shareholder support for the appointment at the Annual General Meeting. Anna Marks is the lead audit partner and has been in position since the appointment of Deloitte LLP.

The Company confirms that it complied with the provisions of the Competition and Markets Authority's Order for the financial year under review.

Auditor effectiveness, independence and objectivity

Ensuring that the external auditor provides a high quality audit is a key activity of the Audit Committee as a high quality audit provides stakeholders with assurance that the financial statements give a true and fair view. The Committee carries out its assessment on an ongoing basis by considering its interactions with the auditor, its observations of the auditor and the relationship between the Audit Committee, the auditor and management.

The Committee encourages a culture of open communication and debate and the Committee believes that it is able to ask questions on key issues and to challenge when it feels more information is needed. The Committee also looks at how management responds to requests from the auditor and carefully reviews the auditor's findings and recommendations.

When the auditor supports management's approach, the Committee considers the evidence supplied by the auditor to support its decision to ensure that the auditor is not compromised and remains objective.

The auditor also meets with the Committee without the presence of management on a regular basis, usually following each meeting. This gives the auditor an opportunity to confirm its view that management are addressing any issues raised appropriately or to raise any concerns they may have.

External evidence of the quality of the audit is also vital in assisting the Committee in its review of the effectiveness of the audit.

When evaluating the quality of the external audit the Committee considers:

• - Mindset and culture - the ethical and professional principles adhered to by the auditor; whether the auditor has any personal or commercial interests in the Group; and how they have demonstrated high standards of independence, integrity, objectivity and challenge throughout the year.

• - Skills, character and knowledge - the auditing skills of the audit team; level of knowledge of the automotive distribution and retail industry possessed by the audit team; the auditor's understanding of its obligations to users of the financial statements; and ability to challenge where appropriate whilst maintaining strong relationships.

• - Quality control - the processes the auditor has in place to identify and address risks to the audit.

• - Feedback from business - the Committee received feedback from management on the quality of the auditor's delivery, communication and interaction with the various finance teams across the Group.

The above attributes support the auditor in making reliable and objective judgements and the Committee continually seeks to assure itself that they are in place.

The auditors' report to the Committee sets out the audit plan, materiality, scoping, the risk assessment process, significant risks, other areas of focus, the purpose of the report and responsibility statement. The Committee reviews at each stage of the audit to ensure that it is satisfied that the audit plan is appropriate, if the auditor is meeting its obligations, and to agree any changes to the audit if they arise.

Deloitte continually monitor their independence and ensure that appropriate safeguards are in place including but not limited to the rotation of senior partners and staff and the involvement of other partners and staff to carry out reviews of the work performed and to otherwise advise if necessary.

After considering all of the above elements, the conclusion of the Committee is that the auditor carried out their audit effectively and that the auditor is independent and objective.

Non-audit services

Implementing a Non-Audit Services Policy (the "Policy") is also key to ensuring the independence of the external auditor. The Policy for non-audit services sets out the permitted and non-permitted non-audit services as well as the approval levels required by the Audit Committee and is designed to ensure that the external auditor's objectivity is not compromised by earning a disproportionate level of fees for non-audit services or by performing work that, by its nature, may compromise the auditor's independence. However, using advisors who have an understanding of the Group's business can be a benefit and the Committee will consider non-audit services supplied on an ongoing basis. The Policy was updated in line with the revised version of the Ethical Standard for auditors issued by the Financial Reporting Council in December 2019.

The Group's Policy on non-audit services to be provided by the Group's auditor defines two types of non-audit services that may be performed:

• - Regulatory services, which are services undertaken as auditor or reporting accountant which are outside the scope of the statutory audit but which are consistent with the role of statutory auditor; and

• - Permitted non-audit services, which are services that the auditor may be permitted to undertake subject to the appropriate level of approval.

The aggregate fees incurred for permitted non-audit services relative to the audit fee should not exceed 70% of the average audit fee over the previous three years, with such cap applicable to both Group and UK audit fees.

The provision of permitted non-audit services will only be approved by the Audit Committee if:

• - Engagement of the auditor to provide the services does not impair the independence or objectivity of the external auditor;

• - The skills and experience of the external auditor make it the most suitable supplier of the non-audit service;

• - The auditor does not have a conflict of interest due to a relationship with another entity; and

• - The aggregate fees incurred for permitted non-audit services relative to the audit fee do not exceed 70% of the average audit fee over the previous three years.

Permitted non-audit services above a certain level are approved on a case-by-case basis by the Audit Committee.

In 2020, the fees for permitted non-audit services largely relate to dealer benchmarking services provided by Deloitte in Australia and the Group remains within the Audit Committee approved ratio of audit to non-audit fees.

The following non-audit fees incurred with Deloitte were:Regulatory services Permitted non-audit services

2020 £'000

25 349

The ratio for audit/non-audit work for the year ended

2019 £'000

11 281

31 December 2020 is 0.01:1. Full details are shown in note 3d of the notes to the financial statements.

Audit fees paid to the auditor

Fees paid for services provided by Deloitte (three year average) were:

Audit fees

2020	2019
£'000	£'000
3,365	3,149

CSR committee report

CSR Committee report

Dear Shareholder

I am pleased to present the report of the CSR Committee for the year ended 31 December 2020.

During the year, the Committee's focus has been on the health and safety of our employees and the businesses around the world have worked incredibly hard to keep each other, and our customers, safe throughout the global crisis.

Till Vestring - chair Jerry Buhlmann Alex Jensen* Duncan Tait* Nigel Stein

Scheduled / attended

2/2

2/2

1/1

1/1

2/2

* Alex Jensen joined the Committee in November 2020. Duncan Tait joined the Group in June 2020.

As I have been on the Board for over nine years I am pleased to announce that I will hand over the role of Chair of the CSR Committee and designated non-executive director ("DNED") to Alex Jensen with effect from 1 January 2021. It has been a pleasure to be involved in Inchcape's emerging CSR journey and I am delighted that I will stay on as a member of the Committee until I step down from the Board to support Alex as the CSR journey moves forward.

We had planned to hold an employee townhall in Singapore in early 2020 but that was put on hold as COVID-19 spread. We had hoped the pandemic would be over quickly but following the initial global lockdown, the markets experienced local closures for the remainder of the year. As a result it was decided to postpone the DNED townhall event until 2021. Alex joined Duncan at the first virtual employee townhall event held in February 2021 and the outcomes from the workforce engagement programme will be disclosed in the 2021 CSR

Allocation of time spent

Health & Safety

Workforce engagement

CSR strategy

Corporate governance

Committee Report. At the current time, these events will be held virtually however the Committee will keep the situation under review with a view to holding physical events when possible.

In order to obtain the views of the workforce in such a challenging year, management carried out a pulse survey covering specific areas due to the pandemic: impacts on the individual and their wellbeing; communication; leadership and management; and ways of working. Detailed action plans are generated on a market by market basis. These are created and owned by management with HR support and facilitation. Global and regional outcomes, themes and trends are considered by the Group Executive Team in a session led by the Chief Human Resources Officer with each market CEO presenting their action plan. Actions are closely monitored, with short Pulse Survey questions aligned to areas of focus measuring progress/improvement. The results from the survey are discussed by the Committee and any issues arising are communicated to the Board as a whole following each update. Further details can be found on pages 34 and 35.

During the year Duncan also rolled out a new Responsible Business ("RB") working group to move the CSR strategy to its next stage with a fully holistic approach that includes our benefit to society, and to all groups of stakeholders, which is woven into our business strategy. The RB group is made up of over 22 colleagues from around the world covering all areas of the business. This remit of the RB strategy will be developed alongside the Group strategy to ensure close alignment of vision and purpose. Further information can be found on pages 8 and 9.

The Committee reviewed the global health and safety programme during the year, monitoring progress against action plans which included a single HSE system and an

HSE reporting tool to track compliance implemented globally. These tools will give the Committee further transparency into the health and safety culture within the organisation with reports against KPIs being provided at each meeting.

In addition, the Committee monitored the COVID-19 HSE response, including monthly and year to date cases within the Group, health and safety processes in all businesses and the risk assessment and flexible work assessments created for home working risk assessments. Further information can be found on page 36.

Till Vesting

Chair of the CSR Committee

Evaluation

The external evaluation of the Committee carried out during the year highlighted the need for the remit of the CSR Committee to evolve to align with the refreshed Group strategy. During 2021, the Committee will focus on defining its role so that it supports the Group's strategic agenda and working with the other committees to report into the Board to enable full oversight of all aspects of environmental, social and governance matters. To date it has focused on elements of the social agenda, and we anticipate that this will broaden out during the course of 2021.

Environment

The Group continued to monitor its GHG emissions during the year and details of the energy used are given on page 98. The impact of climate change will be a key focus for the Committee and the Board with its commitment to reporting in line with the recommendations under the Task Force on Climate-related Financial Disclosures ("TCFD"). To date the best estimates have been used to judge the impact of climate change however the analysis to be carried out under TCFD will improve those estimates and allow fuller disclosure next year. The Committee will monitor progress throughout 2021.

COVID-19

The pandemic presented opportunities for management to re-focus how they communicate more proactively with employees with greater focus on regular cadence with senior leaders being more visible and a leadership communications platform launched in the second half of 2020. The Committee also spent time reviewing the many community projects throughout the year, as the regions provided support by providing resource and expertise to hospitals, charities and people in need throughout the year such as in the Americas where they provided vehicles to transport key workers to and from work at local hospitals and produced videos to explain social distancing and hygiene measures in place and donations of personal protective equipment; in Northern Europe the donation of demo vehicles for Red Cross use and the delivery of food and supplies to isolated and vulnerable people; and in Brunei where the team carried out a public awareness campaign early in the pandemic.

Workforce engagement mechanism - role of the DNED

The Board agreed that the CSR Chair would also take the role of the designated non-executive director with responsibility for obtaining the views of the workforce. This is primarily done through reviewing the outcomes of the employee survey which are discussed with management in detail, with attention given to those areas with lower scores or indicating areas for improvement. Following each meeting, the DNED updates the Board on the findings and any action plans. During 2021, the DNED will attend the quarterly townhalls and the Committee will focus on building the engagement plan during the year.

Our 2020 objectives	What we achieved	Priorities for 2021
CSR strategy	Establishment of Responsible Business working group to develop	Develop communication
approach alongside the refreshed strategy to ensure alignment of	strategy to ensure effective
vision and purpose	stakeholder engagement
Set Responsible Business vision
and build action plan
Measure and report impact
and success
Modern Slavery	Review training rolled out to procurement teams to enable them to	Carry out analysis to identify
Statement	recognise key risks to the Company, and action needed to manage	high risks suppliers and agree
the risks	due diligence processes to
mitigate risks associated with
those suppliers
Employee Experience	Pulse survey completed in 2020 on the impact of COVID-19 on	DNED to join quarterly virtual
Survey	employees, focusing on key areas:	townhall to run a Director-only
session for employees
- Impact on individual and their wellbeing
- Communication
- Leadership and management
- Ways of working
Committee	An external evaluation carried out in 2020, noting that the feedback	An internal evaluation will be
evaluation	on the CSR Committee focused on determining the scope and remit	carried out in 2021
of the Committee

Corporate governance report - Remuneration

Directors' Report on Remuneration

Dear Shareholder

On behalf of the Board, I am pleased to present the Directors' Report on Remuneration ("DRR") for the year ended 31 December 2020. During the year, the Remuneration Committee focused on the policy renewal, change of our CEO, together with managing and mitigating the impact of COVID-19.

As discussed throughout the Annual Report and Accounts, COVID-19 impacted the business in all of our markets. Throughout, our primary concern has been to ensure the health, safety and wellbeing of our employees across the world. The Committee, together with the Board, would like to thank all of our colleagues who have demonstrated incredible courage and resilience throughout this extraordinary year.

Membership

Number of meetings	Ad hoc meetings
held/attendance	held/attendance
Jane Kingston - Chair	2/2	3/3
Jerry Buhlmann	2/2	3/3
Nigel Stein	2/2	3/3
Till Vestring	2/2	3/3

Allocation of time

Executive remunerationIncentives

Corporate governance

2020 Remuneration policy

During the early part of 2020, the Committee focused on finalising our revised 2020 remuneration policy which we set out in last year's Annual Report. I would like to thank shareholders for their advice and support, and we were pleased that the remuneration policy received a significant vote in favour, at 94.5%, at the Annual General Meeting on 21 May 2020. Our renewed policy ensures we meet important governance standards and addresses both incumbent and new Directors' pension arrangements.

In this DRR we explain in detail what actions were taken by the Committee during the year as a result of the pandemic and how we propose to implement the policy going forward.

COVID-19's impact on remuneration

The actions taken in response to the pandemic are given on page 60. The Committee continually monitored remuneration decisions taken across the Group and considered all decisions on executive and senior management pay during 2020 in this context, together with the impact on our other stakeholders including shareholders and the wider societies within which we operate. The Committee was mindful of how remuneration decisions contribute to wider cost saving initiatives aimed at mitigating the impact of the pandemic on our business and our colleagues. As a result, the following actions were taken:

-

Salary increases were postponed for some employees in 2020, including the planned 3% increase for Gijsbert de Zoeten, the Chief Financial Officer.

• - Given the timing of the lockdowns, the 2019 bonus payment had already been paid and the Committee made the decision not to claw this back. There will be no bonus payments for 2020 for the Executive Directors, Group Executive Team ("GET") and across most businesses within the Group.

• - The revision in the new remuneration policy around the increase in bonus pay-out at target performance (from 40% to 50% of max) was not applied to the 2020 bonus.

• - Members of the GET and the Board agreed to take a 20% salary or fee cut, applied for three months for the GET and nine months for Non-Executive Directors. Also, senior managers below the GET agreed to take temporary salary cuts between 10% to 15% depending on grade.

• - Duncan Tait, who joined as Group Chief Executive Officer in June, also volunteered a salary reduction of 20% for his first three months of service.

Business performance in 2020

Shareholders will be aware that, in addition to the challenges of COVID-19, the global automotive industry is undergoing a period of significant change and disruption, and against this backdrop we are pleased with the Group's financial performance, reliably delivering results that, whilst below the original goals that we set ourselves for 2020 before the pandemic, exceed mid-year expectations.

The Group delivered revenue of £6.8bn, profit before tax of £129m, EPS of 23.6p (basic adjusted) and ROCE of 12.3%. Furthermore, we are delighted with the significant strategic progress which continues to be made through the implementation of the Group's strategy, and the focus on our Distribution business.

Remuneration outcomes for 2020

2020 Targets

Notwithstanding the severe affect the pandemic has had on our business and the financial implications for employees at all levels, no changes have been made to the targets which were determined pre-COVID-19 for either the annual bonus or the 2018 PSP/CIP awards.

2020 Bonus

As the financial targets for the 2020 bonus were not achieved, this, coupled with the experience of shareholders and other stakeholders, has resulted in the decision to make no payments to Executive Directors, members of the GET and most management participants (not withstanding that good progress has been made versus strategic goals).

2018 PSP/CIP

Achievement of the 2018 PSP/CIP performance targets was significantly impacted by the detrimental effects of COVID-19, and will vest at an overall rate of 28.5% with only the ROCE target being within range.

2020 PSP/CIP award

Long-term incentive awards are usually granted immediately following the AGM at which a policy is approved by shareholders. Mindful of two newly-appointed executives and the need to provide long-term motivation for the wider PSP population (of approximately 300 employees), the Committee agreed it would be important to continue to grant the 2020 PSP/CIP with the targets which had been determined before the global pandemic and which had already been disclosed in the 2019 DRR. However, the Committee considered the share price to be used to calculate the 2020 awards, to ensure that any awards granted in 2020 would not result in considerably higher numbers of shares, compared to 2019, due to fluctuations in share price as a result of COVID-19. As a result, a 10% reduction was applied to the number of shares granted to the Executive Directors, GET and other senior managers to ensure that the awards reflect shareholder experience and alignment with other stakeholders.

Plans and targets for 2021

As already noted, the Committee considered the implementation of the approved 2020 remuneration policy in light of these challenges and agreed the planned increase in bonus pay-out at target (from 40% to 50% of max) would not be implemented until the 2021 bonus cycle.

2021 Bonus

The matrix style bonus, combining revenue and profit, will continue to apply to executives and senior managers for the 2021 performance year. Performances ranges have been widened compared to those used in 2020, to take account of the uncertain trading conditions in all of our markets. Furthermore, assumptions around the impact of the continuing COVID-19 pandemic on our ability to trade in our geographic markets fundamentally influence these performance ranges, and the Committee will review the pre-defined external market assumptions that underpin the annual bonus plan to ensure they continue to be relevant.

2021 LTIPs

At the time of writing, the Committee intends that the 2021 LTIP targets will continue to be three-year average ROCE, cash conversion and three-year cumulative EPS. However, given the significant and continuing COVID disruption to trading, the Committee was not able to finalise and therefore disclose targets at the time of writing. We hope to be in a position to do so over the coming months and will disclose these targets as soon as we are able.

CEO appointment

Duncan Tait joined as CEO on 1 June 2020 with a base salary of £780,000, a pension contribution of 10% of salary and incentives and benefits consistent with the remuneration policy. He did not receive any amounts in lieu of awards forfeited at his previous employer. We are delighted that Duncan immediately demonstrated his commitment to the Group by purchasing 11,502 shares.

Stefan Bomhard, former CEO, left the Group on 30 June 2020. In line with the remuneration policy, and his leaving status, Stefan Bomhard did not receive a bonus for 2020 and all his outstanding PSP and CIP awards (i.e. those granted in 2018 and 2019) lapsed in full. Stefan did not receive any exit payments. Prior to leaving the Group, Stefan was entitled to receive shares due under the 2017 PSP and CIP award in May and June 2020 respectively. These shares are held in a nominee account for the required two-year post vesting holding period.

Resulting performance outcomes

The Committee is satisfied that the total remuneration received by Executive Directors in 2020 appropriately reflects the Company's performance over the year, is in line with policy and is consistent with the approach taken for other employees. The Committee is also satisfied that the approach to setting remuneration for 2021 underpins the effective and proper management of risk by rewarding fairly for sustainable profit growth and long-term returns for shareholders.

On behalf of the Committee, and together with the Chairman, I had the opportunity to speak with a number of our key shareholders whose advice was reflected in the renewal of the remuneration policy. Their input guided the Committee's decisions around appropriate phased pension payment reductions for the former Executive Directors, post-termination shareholding guidelines and maintaining the co-investment plan as an effective mechanism through which to encourage alignment with shareholders.

Shareholder consultation

As soon as it became apparent that the pandemic was impacting operations globally, the Committee wrote to shareholders to inform them of the immediate remuneration decisions being made so that shareholders had the opportunity to give their feedback.

Committee evaluation

In line with the UK Corporate Governance Code, an external Board evaluation was carried out in 2020. As part of that evaluation, a review of the Committee was undertaken which covered membership, meetings, the performance of the chair, clarity of objectives and terms of reference and quality of external advice. The Committee was satisfied with the performance of the Committee and discussed some minor changes for improvement.

Looking forward 2020 has undoubtedly been the most challenging year for us in living memory. The Executive Directors, our Group Executive Team, along with all of our employees across the world, have worked tirelessly to ensure the business remains strong and stable, and that customers, and each other, have been able to stay safe throughout. The Committee is committed to ensuring the remuneration arrangements continue to support the efforts of the workforce and the objectives of the strategy, whilst aligning pay with strong performance, and the interests of executives and senior management with those of shareholders and good corporate governance.

Having reviewed the year end results, management proposed to reinstate the 2020 pay review planned for April 2020 and which was subsequently deferred. This was applied with effect from January 2021. There will be no back-dating of this award to those who receive it. The Committee decided that the same principle should apply to Gijsbert de Zoeten and members of the GET, but not to Duncan Tait who joined subsequently.

The Committee also approved the global average workforce annual salary review of 3.28% and the average workforce annual salary review for Group employees of 2.5%. Duncan Tait will receive an increase of 2.5% in line with this average. Gijsbert de Zoeten has been awarded an increase of 3.8% which is above this average as the Committee believes this is in recognition of significant additional responsibilities he now has following the departure of the Group Strategy Director, and his performance and contribution to the business to date.

The Committee is mindful of the fact that our two recently-recruited Executives received no long-term incentive awards to compensate them for forfeited awards from their prior employment and now, as a result of the pandemic, have a significantly reduced opportunity to build shareholding via the 2020 long-term incentives. This situation will be kept under review.

During 2020, under Duncan's leadership, the Group renewed its focus on our Responsible Business agenda incorporating ESG initiatives. In 2021, the Committee will be mindful of the need to reflect this strategic thrust in our remuneration framework at an appropriate point in the future.

We hope to have your support at the upcoming AGM.

Jane Kingston

Chair of the Remuneration Committee

Executive Directors' remuneration in 2020

What Executive Directors earned during 2020 (£'000)

Duncan Tait

416 3

46

• 3 £468

  Gijsbert de Zoeten

  461

  194

  49

• 3 £707

Base salaryBenefitsPensionsOther

DETAILS OF ACTUAL PERFORMANCE ACHIEVED ARE GIVEN ON PAGES 87 TO 91

How we performed in 2020

Despite the challenges of COVID-19, the Group's performance reliably delivered results that, whilst below the targets set before the pandemic, are in line with revised expectations.

Furthermore, we are delighted with the significant strategic progress which continues to be made through the implementation of the Group's strategy, and the focus on our Distribution business.

Measures used for annual bonus

Measures used for long-term incentive plans

Profit before taxRevenueObjectives

EPSROCE

Revenue

EPS (Earnings per share)

Actual* £7,036.4m

23.6p

Profit before tax

ROCE (Return on capital employed)

12.3%

FURTHER INFORMATION ON ANNUAL BONUS AND LONG-TERM INCENTIVE PLANS CAN BE FOUND ON PAGES 88 TO 91

* Actual performance for determining bonus outcomes has been calculated using the same currency rates as used to set the bonus targets, and both targets and performance have been determined on an IFRS 16 basis. This approach helps ensure that the bonus is linked to underlying financial performance.

Part 1 -

Directors' remuneration policy

This section of the report sets out the policy that was approved by shareholders at the 2020 Annual General Meeting held on 21 May 2020.

Alignment of the remuneration policy

This section outlines how clarity, simplicity, risk, predictability, proportionality and alignment to culture were addressed when reviewing the remuneration policy and its implementation as required under provision 40 of the UK Corporate Governance Code.

• - The Committee believes that the disclosure of the design of remuneration arrangements is transparent with clear rationale provided on maintenance and changes to policy. The Committee remains committed to consulting with shareholders on the policy and its implementation

• - The Committee believes the performance measures used in the long-term incentive plans, along with those in the bonus, also aid simplicity due to the clear alignment to Inchcape's strategy, and are familiar to all stakeholders

• - The Committee has ensured that remuneration arrangements do not encourage and reward excessive risk taking by setting targets to be stretching and achievable, with discretion to adjust formulaic bonus and PSP outcomes and expanding the circumstances in which malus and clawback can be applied

• - The link to strategy of the performance measures used and the setting of targets balances predictability and proportionality by ensuring outcomes do not award poor performance in the short and long term. The policy is consistent with Inchcape's culture as well as strategy, therefore driving behaviours which promote the long-term success of Inchcape

Remuneration policy for Executive Directors

Element Base salary

Objective and link to strategy To pay a competitive salary which attracts, retains and motivates talent to make decisions which drive the Company's strategy and create value for stakeholders.

Annual bonusPerformance Share Plan (PSP)

• - Increases awarded across the Group as a whole, and conditions elsewhere in the Group;

  Operation and performance metrics Salaries are reviewed annually and any increases typically take effect from 1 April of each year. Adjustments to salary will take account of:

• - Experience and performance of the individual;

• - Pay levels at organisations of a similar size, complexity and type; and

• - Changes in responsibilities or scope of the role.

To motivate and reward for the achievement of the Company's strategic annual objectives.

Based at least 70% on annual financial performance. Financial measures may include (but are not limited to) revenue and profit. Non-financial measures may include strategic measures directly linked to the Company's priorities.

Any annual bonus earned above 100% of salary is paid in shares which are automatically invested in the CIP.

Bonus payouts are subject to malus and clawback provisions.

To provide a meaningful reward to senior executives linked to the long-term success of the business.

The use of performance shares enables the delivery of median pay for median performance and upper quartile pay for upper quartile performance.

Vesting of the PSP awards is based on performance measures linked to the Group's strategic priorities and may vary year-on-year.

Vested awards will be subject to an additional two-year holding period.

Any dividends paid would accrue over the vesting period and would be paid only on those shares that vest. Dividends can be paid in cash or shares. Current practice is for dividends to be paid as shares.

PSP awards are subject to malus and clawback provisions.

Opportunity

Increases are not expected to exceed the average increase for senior management, unless a change in scope or complexity of role applies.

150% of salary maximum payable for achieving stretch performance against all measures.

75% of salary payable for target performance. 15% of salary payable for entry level performance.

Normal PSP opportunities will be 180% of salary.

Award levels are subject to an individual limit of 300% of salary.

Threshold level performance will result in 25% vesting of the PSP award.

Remuneration policy for Executive Directors continued

Objective and

Element Co-Investment Plan (CIP)

link to strategy

Save As You Earn (SAYE)Pension

To encourage executive Any bonus earned over 100% of salary will be paid in shares whichshare ownership and reinforce long-term success.

A voluntary investment opportunity in return for a performance-based match.

Any annual bonus earned over 100% of salary will be paid in shares which will be automatically invested in the plan. Further voluntary investments may be made up to the investment limit. To encourage share ownership.

UK employees are able to make monthly savings, over a three-year period. At the end of the savings period, the funds are used to purchase shares under option. As this is an all-employee scheme and Executive Directors participate on the same terms as other employees, the acquisition of shares is not subject to the satisfaction of a performance target.

To provide market competitive pension benefits where it is cost-effective and tax-efficient to do so.

Other benefits To provide market competitive benefits where it is cost-effective and tax-efficient to do so.

In-post shareholding guidelinesPost-exit shareholding guidelines

To encourage share ownership and alignment of executive interest with those of shareholders.

To reinforce long-term alignment of executive interests with those of shareholders post-termination.

Notes to the policy

Payments from existing awards

Operation and performance metrics

will be automatically invested in the plan. Further voluntary investments may be made up to the investment limit.

Invested shares can be withdrawn at any time but the entitlement to a match would be lost if the invested shares are withdrawn before the end of the relevant three-year vesting period. Vesting of the CIP awards is based on performance measures linked to the Group's strategic priorities and may vary year-on-year. For awards granted to the Executive Directors, vested awards will be subject to an additional two-year holding period.

Any dividends paid would accrue over the vesting period and would be paid only on those shares that vest. Dividends can be paid in cash or shares. Current practice is for dividends to be paid as shares.

CIP awards granted are subject to malus and clawback provisions.

Participation limits are those set by the UK tax authorities from time to time.

Receive a salary supplement in lieu of pension contributions.

In addition and in line with other UK-based employees, Executive Directors are also entitled to participate in the Group's pension scheme, Cash+, which is a cash balance retirement scheme which accrues 16% of earnings (capped at £250,000 p.a.) paid as a lump sum at the age of 65. In this scheme, members are required to contribute 7% of pensionable salary. The scheme closed on 31 December 2020.

Benefits currently include (but are not limited to): Company cars;

Medical care; and

Life assurance premiums.

Executive Directors are required to accumulate, over a maximum period of five years from date of appointment, a number of shares equivalent to a shareholding worth 200% of base salary.

A departing Executive Director is required to maintain a shareholding for two years post-termination, set at the lower of the actual shareholding on exit and the in-post shareholding guideline. Enforcement of this guideline will be facilitated through a holding requirement for Executive Directors applied to share-based incentives awards from 2020 onwards.

The application of this requirement will be at the Committee's discretion (which will be applied only in exceptional circumstances).

Executive Directors are eligible to receive payment from any award made prior to the approval and implementation of the remuneration policy detailed in this report. Such awards include vested but unexercised options.

Selection of performance measures and target setting

As part of the remuneration policy review, the Committee reviewed the appropriateness of performance measures used by the Group and determined the following:

Opportunity

Executive Directors may invest up to an overall maximum of 50% of salary. Maximum match of 2:1, threshold of 0.5:1. Maximum matching award is therefore 100% of salary in any year, and threshold matching award is 25% of salary.

Executive Directors are entitled to a cash supplement of up to 10% of salary.

Executive Directors who were appointed prior to 2019 were entitled to a pension contribution of up to 30% of salary.

It is not anticipated that the costs of benefits provided will materially exceed 5% of salary for existing Executive Directors. The Committee retains the discretion to approve a higher cost in exceptional circumstances (e.g. relocation).

n/an/a

• - The annual bonus measures have been selected to incentivise sustainable growth in profits. The matrix structure continues to provide a balanced focus between commercial and cash initiatives. A mix of strategic measures will continue to be selected each year to reinforce the Group's strategic objectives.

• - The Committee believes that EPS and ROCE continue to be suitable measures of long-term performance for the Group. EPS is consistent with the Group's long-term strategy focusing on sustainable growth while ROCE supports the Group's cash

initiatives of controlling working capital and capital expenditure. When ROCE is used in combination with EPS, it ensures there is a balance between growth and returns. The new cash conversion measure reflects the criticality of cash generation for Inchcape, which is required to support its continued evolution.

-

Performance targets are set to be stretching and achievable, taking into account the Company's strategic priorities and the economic environment in which the Company operates.

• - The Committee has considered the use of other performance measures to reinforce the Company's long-term objectives, including relative TSR. However, given the diversity of the Group's operations, it would be difficult to set a relevant and robust comparator group for assessing relative TSR performance and there would be some difficulty in cascading appropriately down the organisation.

• - Targets are set taking into account a range of reference points including the strategy and broker forecasts for the Group. The Committee believes that the performance targets set are appropriately stretching, set to reward for outperformance of the market and that the maximum will only be achievable for truly outstanding performance. Please see pages 88 to 91 for further details on the target ranges.

• - The Committee retains discretion to adjust the annual bonus outcome up or down to ensure that it is a fair reflection of the Group's underlying performance. The Committee also has the ability to adjust the number of shares vesting under thePSP to ensure it is a fair reflection of underlying performance during the performance period.

-

The Committee also has the discretion to adjust the performance conditions for long-term incentive plans in exceptional circumstances, provided the new conditions are no tougher or easier than the original conditions.

- Any discretion exercised by the Committee in the adjustment of performance conditions will be fully explained to shareholders in the relevant Annual Report on Remuneration. If the discretion is material and upwards, the Committee will consult with major shareholders in advance.

Malus and clawback

These provisions allow the Committee in certain circumstances (such as gross misconduct or a material misstatement of the Group financial statements, reputational damage or corporate failure) the discretion to:

• - reduce bonus, PSP and/or CIP;

• - cancel entitlement of bonus;

• - prevent vesting of the PSP and/or CIP; or

• - allow the Company within two years of payment/vesting of award to claim back up to 100% of the award.

Participants are informed about the malus and clawback conditions on their bonus at the start of each year and are required to confirm acceptance of malus and clawback provisions on their PSP and CIP awards upon grant.

Composition of remuneration arrangements

A significant proportion of Executive Directors' pay is variable, long term and remains 'at risk' (i.e. subject to malus and clawback provisions). Charts are based on maximum payout scenarios for Executive Directors.

Fixed vs. variable (%)

Fixed: base salary, benefits and pension

Variable: annual bonus, PSP and CIP

Short-term vs. long-term (%)

Short-term: fixed plus annual bonus paid as cash

Long-term: PSP, CIP and annual bonus deferred into CIP

21

79

37

63

Remuneration policy for other employees

Our approach to salary reviews is consistent across the Group with consideration given to the level of responsibility, experience, individual performance, salary levels in comparable companies (using remuneration surveys, where appropriate) and the Company's ability to pay.

Senior employees participate in an annual bonus scheme which has similar performance targets to those of the Executive Directors. Below this level, local incentive schemes are in place for management and non-management employees. Opportunities and performance conditions vary by country and organisational level, with business unit-specific metrics incorporated where appropriate. Commission-based arrangements are also operated for certain roles.

Senior managers also receive PSP awards while participation in the CIP is limited to Executive Directors, Group Executive Team members and the next level of executives (c. 20 individuals). Performance conditions are consistent for all participants while award sizes vary by organisational level. In-post share ownership guidelines apply to Executive Directors.

Remuneration policy for Non-Executive Directors

Objective and link to strategy

To provide fair remuneration, reflecting the time commitment and responsibilities of the role.

Non-Executive Directors receive a fixed fee and do not participate in any incentive schemes or receive any other benefits, except the Chairman who receives medical cover.

Fee levels are reviewed regularly, with any adjustments effective immediately after the review is approved.

Additional fees are payable for acting as Senior Independent Director and as Chair of any of the Board's Committees (excluding the Nomination Committee).

The Chairman's fee is determined by the Remuneration Committee and the fees for other Non-Executive Directors are determined by the Executive Directors.

Non-Executive Directors may elect to receive up to 20% of their net fees p.a. as Company shares.

All UK employees are eligible to participate in the SAYE scheme on the same terms.

Pension and benefits arrangements are tailored to local market conditions, and so various arrangements are in place for different populations within the Group. The Group has calculated the average equivalent pension contribution across UK employees to be 10% of salary.

Operation and performance metrics

Opportunity

Appropriate adjustments may be made to fee levels, taking account of:

• - increases awarded across the Group as a whole and conditions elsewhere in the Group;

• - fee levels within organisations of a similar size, complexity and type; and

• - changes in complexity, responsibility or time commitment required for the role.

Fees paid to Non-Executive Directors are within the limits approved by shareholders. This limit, currently at an aggregate of £1,000,000, was last approved by shareholders at the 2015 AGM.

Non-Executive Directors' term of appointment

The Non-Executive Directors are appointed for an initial three-year term which can be terminated by either party on one month's notice (six months for the Chairman).

Jerry Buhlmann	01 March 2017	One month
Rachel Empey	26 May 2016	One month
Alex Jensen	29 January 2020	One month
Jane Kingston	25 July 2018	One month
John Langston	01 August 2013	One month
Nigel Stein	08 October 2015	Six months
Till Vestring	01 September 2011	One month

Consideration of conditions elsewhere in the Group The Committee reviews and approves all remuneration arrangements for the Group Executive Team and the Company Secretary. The Committee also reviews the pay budgets and benefit structures across the general population which are considered when determining remuneration for Executive Directors and the Group Executive Team.

The Company has a diverse international spread of businesses as well as a wide variety of roles from petrol pump attendants and valeters through to Chief Executives of our individual businesses and therefore pay levels and structures vary to reflect local market conditions. Although the Company has not carried out a formal employee consultation regarding executive remuneration, it does comply with local regulations and practices regarding employee consultation more broadly. This includes the Employee Experience Survey conducted in 2020, more detail of which is provided in the CSR Report on page 72.

The remuneration policy is published in the Annual Report and Accounts and is available to all employees for their review. The Remuneration Committee is available to answer any questions employees may have about the policy or to provide clarification on any remuneration matters. Elements of the policy are cascaded down the organisation such as bonus and long-term incentive plans. The new policy also aligns the pension contribution for newly appointed Executive Directors with the UK employee average which is currently 10% of salary.

Consideration of shareholder views

When determining remuneration, the Committee takes into account the guidelines of representative investor bodies and proxy advisors and shareholder views.

The Committee is always open to feedback from shareholders on remuneration policy and arrangements. We are committed to undertaking shareholder consultation in advance of any proposed changes to remuneration policy, as evidenced by our recent consultation with shareholders representing 70% ofthe Company's issued share capital. The Committee will continue to monitor trends and developments in corporate governance and market practice to ensure the structure of executive remuneration remains appropriate.

Performance scenarios

The charts below show the remuneration that Executive Directors could expect to obtain based on varying performance scenarios. These illustrations are intended to provide further information to shareholders regarding the pay-for-performance relationship. However, actual pay delivered will be influenced by actual changes in share price and the vesting periods of awards. The charts have been updated for their 2021 salary.

Duncan Tait - Group Chief Executive Total remuneration (£'000s)

Gijsbert de Zoeten - Chief Financial Officer Total remuneration (£'000s)

On-target

52% £3,546

Minimum

MaximumMaximum with share price growth

Minimum

On-target

100% 44%

MaximumMaximum with share price growth

Fixed remunerationAnnual bonusFixed remuneration Annual bonus

Long-term incentives (PSP and CIP)

Long-term incentives (PSP and CIP)

Notes on the performance scenarios:

Element	Assumptions
Fixed	- Total remuneration comprises base salary, benefits and pensions
remuneration	- Base salary - effective from 1 April 2021
- Benefits - as provided in the single figure table on page 87
- Pension - 10% cash in lieu of pension

MinimumOn-target

MaximumMaximum with share price growth

Variable pay	Annual bonusNo payoutTarget payout (50% of maximum)Maximum payout
CIP No vestingAssumes full voluntary investment Threshold match of 0.5:1 Maximum vestingMaximum vesting + 50% share price growth
PSP No vestingThreshold vesting (25% of maximum) Maximum vestingMaximum vesting + 50% share price growth

Approach to recruitment remuneration

External appointments

When appointing a new Executive Director, the Committee may make use of any of the existing components of remuneration, as follows:

Component Base salary

Approach

The base salaries of new appointees will be determined by reference to the scope of the role, experience of the individual, pay levels at organisations of a similar size, complexity and type, pay and conditions elsewhere in the Group, implications for total remuneration, internal relativities and the candidate's current base salary.

Maximum annual grant value n/a

Pension

New appointees will be eligible to participate in the Group's pension plan and receive a cash supplement on similar terms to Executive Directors appointed after 2019.

n/a

Benefits

New appointees will be eligible to receive normal benefits available to senior management, including (but not limited to) company cars, medical care, life assurance and relocation allowance.

n/a

Annual bonus

The annual bonus described in the policy table will apply to new appointees with the relevant maximum being pro-rated to reflect the proportion of employment over the year.

150% of salary

PSP

New appointees will be granted awards on the same terms as other Executive Directors as described in the policy table.

CIP

New appointees will be granted awards on the same terms as other Executive Directors as described in the policy table.

Other

The Committee will consider on a case-by-case basis if all or some of the incentives forfeited on leaving a previous employer will be 'bought-out'.

300% of salary	The combined
maximum is not
100% of salary	intended to exceed
400% of salary
n/a

If the Committee decides to buy-out forfeited awards, the award will be structured on a comparable basis, taking into account any performance conditions attached, time to vesting and share price at the time of buy-out.

The Committee retains the discretion to make use of the relevant Listing Rule to facilitate such a buy-out.

Notes to recruitment remuneration policy

In determining the appropriate remuneration for a new Executive Director, the Committee will take into consideration all relevant factors to ensure that arrangements are in the best interests of the Group and its shareholders.

Internal appointments

In cases of internal promotions to the Board, the Committee will determine remuneration in line with the policy for external appointees as detailed above. Where an individual has contractual commitments made prior to their promotion to Executive Director level, the Company will continue to honour these arrangements. Incentive opportunities for employees below Board level are typically no higher than for Executive Directors.

Non-Executive Directors

In recruiting a new Non-Executive Director, the Committee will use the policy as set out in the table on page 81. A base fee in line with the prevailing fee schedule would be payable for Board membership, with additional fees payable for acting as Senior Independent Director or as Chair of the Audit, Remuneration and CSR Committees as appropriate.

Exit payment policy, service contracts and change of control

The Company's policy is to limit severance payments on termination to pre-established contractual arrangements.

In addition, the Company retains discretion to settle any other amount reasonably due to the Executive Director, for example, to meet legal fees incurred by the Executive Director in connection with the termination of employment, where the Company wishes to enter into a settlement agreement and the individual must seek independent legal advice.

In the event that the employment of an Executive Director is terminated, any compensation payable will be determined in accordance with the terms of the service contract between the Company and the employee as well as the rules of any incentive plans. When considering exit payments, the Committee reviews all potential incentive outcomes to ensure they are fair to both shareholders and participants.

The table below summarises how the awards under the annual bonus, PSP and CIP are typically treated in specific circumstances, with the final treatment remaining subject to the rules of the relevant plans (subject to any Committee discretion):

Payment/vesting date

Component	Circumstance	Treatment	(if relevant)
Annual bonus	Resignation.	Bonus will lapse unless the date of leaving is after	Either the end of the
the year end and the individual is not serving their	performance period or at the
notice period. The bonus will only be paid to the	Committee's discretion.
extent the targets set at the beginning of the year
have been achieved.
Death, ill-health,	The bonus will only be paid to the extent the	Either the end of the
redundancy, retirement or	targets set at the beginning of the year have	performance period or at the
any other reason which the	been achieved.	Committee's discretion.
Committee may, in its
absolute discretion, permit.
Change of control.	Any bonus payment will be pro-rated for time	Either the end of the
served during the year.	performance period or at the
Committee's discretion.
PSP and CIP	Resignation.	Unvested awards will lapse on date of leaving.	At the normal release date
Any vested awards can be exercised.	(save where the Committee
Death, ill-health,	Any unvested awards will be pro-rated for time	has discretion to determine
redundancy, retirement	and performance.	otherwise or the rules provide
(CIP only) or any other	otherwise).
reason which the
Committee may, in its
absolute discretion, permit.
Change of control.	Any unvested awards will be pro-rated for time	At the time of change of
and performance.	control.
Service contracts

The Company's policy is for Executive Directors' service contract notice periods to be no longer than 12 months, except in exceptional circumstances. All current contracts contain notice periods of 12 months.

Name	Date of contract	Notice period	Unexpired term
Duncan Tait	1 June 2020	12 months	To retirement
Gijsbert de Zoeten	27 August 2019	12 months	To retirement

The Company may terminate an Executive Director's contract by paying a sum equal to base salary and, in certain circumstances, benefits including pension and life assurance, company car and entitlement to holiday pay for the 12-month period. Executive Directors' service contracts are available to view at the Company's registered office.

Part 2 -

Annual report on remuneration

The following section provides details of how the Company's remuneration policy was implemented during the financial year to 31 December 2020 and how it will be implemented in the financial year to 31 December 2021.

The Remuneration Committee consists of three independent Non-Executive Directors and the Chairman, who was independent on appointment. The Committee invites other individuals such as the Group Chief Executive, Chief Human Resources Officer and external consultants to attend its meetings. No Director takes any part in any decision affecting his or her own remuneration.

The Committee reviews its terms of reference on an annual basis. The terms can be found atwww.inchcape.com.

The table below details the decisions the Committee made in 2020 and its focus for 2021.

Focus area Bonus scheme

Long-term incentives

Executive Directors'

remunerationGroup Executive Team remunerationWider remunerationChairman's fee

Decisions made in respect of 2020

The Committee reviewed the outcome of the 2019 bonus scheme and set targets for the 2020 bonus scheme.

The Committee agreed to delay the on-target increase from 40% to 50% of maximum as part of the Group's COVID-19 response. Further details are given on page 88.

As the financial performance targets were not achieved no bonus will be paid to the Executive Directors for 2020.

The Committee reviewed the outcome of the 2017 PSP and CIP awards and agreed the grants for 2020. Details are on pages 90 to 91.

A third measure was introduced into the PSP and CIP based on cash. The weighting is 40% on each of EPS and ROCE, and 20% on cash. See page 91 for further details.

The Committee considered the approach to the grant of the 2020 long-term incentive awards taking into account shareholder expectations as a result of COVID-19. Further details are given on page 91.

The Committee approved the overall 2020 remuneration for the Executive Directors.

As part of the Group COVID-19 response, the Committee approved a 20% salary reduction for Executive Directors from 1 April 2020 to 30 June 2020 with the new CEO taking a salary reduction on his first three months of service from 1 June 2020 to 31 August 2020.

The 3% salary increase approved by the Committee for the CFO was postponed from April 2020 to January 2021.

The Committee reviewed the remuneration for senior executives taking into account pay for employees across the Group.

As part of the Group COVID-19 response, the Committee approved a 20% salary reduction for the Group Executive Team from 1 April 2020 to 30 June 2020. Salary increases previously approved by the Committee were postponed to January 2021. The Committee considered the reward landscape for the wider workforce including total bonus outcomes for all senior management, regional financial element and the distribution of performance outcomes for personal objectives.

The Committee also reviewed data on the 2020 salary review across the whole organisation. As part of the Group COVID-19 response, approximately 60% of the workforce were unable to work. Further details are given on page 53.

The Committee reviewed the Chairman's fee in November 2020 and agreed an increase of 2.5% with effect from 1 April 2021.

Priorities for 2021

The Committee will review the bonus measures and targets applicable for the 2021 bonus within the framework of the remuneration policy

The Committee will review the 2018 PSP and CIP outcomes and agree the grants for 2021 within the framework of the remuneration policy

The Committee will set targets for performance-related remuneration and consider appropriate salary levels and other benefits

The Committee will set targets for performance-related remuneration and consider salary levels and other benefits

The Committee will continue to review executive remuneration in the context of wider workforce remuneration

Review benchmarking criteria to ensure the Chairman fee is in line with the market

Focus area Share plans

UK pension arrangementsGender pay gap report

CEO pay ratioCommittee evaluation Executive Director and GET appointmentsGovernance

Decisions made in respect of 2020

The Committee approved an update to the share plan rules to include reputational damage and corporate failure as circumstances in which malus and clawback provisions could be applied.

Following the Board's decision to close the Cash+ scheme, the Committee reviewed the progress made on the closure of the Cash+ scheme and the establishment of a new DC scheme, the Inchcape Retirement Savings Plan ("IRSP").

Further details on the decisions are given in the S172 case study on page 60.

The Committee reviewed the gender pay gap results and the initiatives being introduced to close the gap.

The report can be found onwww.inchcape.co.uk.

The Committee approved the methodology and assumptions made in the calculation of the CEO pay ratio and approved the statement made in last year's DRR.

The Committee analysed the results of the 2020 CEO pay ratio and approved the statement made on page 93.

An external Board evaluation was carried out in 2020. Please see pages 64 and 76 for further details.

The Committee approved the remuneration package for:

• - Group Chief Executive Officer

• - CEO Europe

• - Chief Human Resources Officer

• - Chief Information Officer.

The external advisors updated the Committee on governance and remuneration trends.

The Committee reviewed and approved the disclosures for the pay scenarios and impact of share price appreciation.

Priorities for 2021

The share plans have been in place for 10 years therefore the updated plan rules will be put to shareholders for approval at the Annual General Meeting in 2021

Full details of the plan rules can be found in the annex to the Notice of Meeting and will be available for inspection at the Company's registered office

The IRSP will be operational from 1 January 2021

The Committee will review the impact of the initiatives and the results of the 2021 gender pay analysis

The Committee will continue to monitor the results of the CEO pay ratio calculations

The Committee will focus on wider workforce policies

New appointments and changes to the Group Executive Team will be reviewed and approved by the Committee

The Committee will continue to monitor investor views on the remuneration landscape

The appropriateness of any ESG metrics will be considered by the Committee during 2021

Single total figure of remuneration (audited)

The table below sets out the total remuneration received by the Directors for the year ended 31 December 2020:

Base salary	Taxable	Single-year	Multiple-year	Total	Total
/fees(a)	benefits(b)	variable(c)	variable(d)	Pension(e)	Other(f)	Total	Fixed(a+b+e+f)	variable(c+d)
£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

Current Non-Executive Directors

Nigel Stein Jerry Buhlmann Rachel Empey Jane Kingston John Langston Till Vestring Alex Jensen*

Former Executive Directors

Stefan Bomhard*

Total

Name	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019	2019	2020	2019	2020	2019
Current Executive
Directors
Duncan Tait*	416	-	3	-	0	-	0	-	46	-	3	-	-	468	-	0	-
Gijsbert de Zoeten	461	169	194	100	0	115	0	-	49	17	3	0	401	707	286	0	115
321	2	1	-	-	-	-	-	-	-	-	322	279	322	-	-
73	-	-	-	-	-	-	-	-	-	-	73	70	73	-	-
60	-	-	-	-	-	-	-	-	-	-	60	55	60	-	-
67	-	-	-	-	-	-	-	-	-	-	67	67	67	-	-
77	-	-	-	-	-	-	-	-	-	-	77	65	77	-	-
74	-	-	-	-	-	-	-	-	-	-	74	63	74	-	-
-	-	-	-	-	-	-	-	-	-	-	-	48	-	-	-
757	10	18	0	0	0	520	114	227	4	0	471	1,522	471	1,002	0	520
1,598	209	119	0	115	0	520	209	244	10	0	2,293	2,596	2,293	1,961	0	635

2020

468 707

277

279

70

70

55

55

67

67

65

65

63

63

48

48

343 1,865

• * Stefan Bomhard left on 30 June 2020. Alex Jensen joined on 29 January 2020 and Duncan Tait joined on 1 June 2020.

• a. Base salary/fees include the voluntary 20% pay cut taken by the Directors during the year.

• b. Taxable benefits comprise car allowance, medical cover and mileage allowance. Gijsbert de Zoeten received a relocation allowance of £173,904 during 2020. As disclosed in last year's report, Gijsbert was eligible for a relocation allowance to facilitate moving his family to the UK. The allowance was payable for a 12 month period only.

• c. Payment for performance under the annual bonus, including amounts paid in shares.

• d. The 2019 figure for Stefan Bomhard has been revised from last year's report to reflect the share price on the date of vesting (valued using the market price at the date of vesting of 491p and 489p for the 2017 PSP and CIP awards respectively) and includes a dividend equivalent of £43,366. The 2019 value includes a movement of --£312,168 which was due to a reduction in share price over the period. Full details of the awards exercised in 2020 are given on page 92.

• e. During the year Stefan Bomhard received a cash pension supplement of 30% of base salary prior to 21 May 2020, and 23.3% thereafter until date of leaving. Gijsbert de Zoeten and Duncan Tait received a pension supplement of 10% of salary.

• f. The 2020 figure for both Duncan Tait and Gijsbert de Zoeten includes the value of the 2020 SAYE and is based on the embedded value at date of grant. In 2020, Stefan Bomhard received a one-off payment of £4,391.10 in lieu of holiday entitlement at time of leaving.

The fees of the Chairman, Non-Executive Directors and the Senior Independent Director are given on page 88.

Base salary

Salaries are reviewed annually and typically take effect from 1 April each year. The Committee agreed to postpone the 2020 salary increases as part of the Group COVID-19 response. Additionally, Board members agreed to take a 20% salary or fee cut, applied for three months for the Executive Directors and nine months for Non-Executive Directors.

The quantum of total executive remuneration was reviewed against four comparator groups: retailers, distributors, companies of a similar market cap, and companies with similar revenues.

The salaries for 2019, 2020 and 2021 are set out below, together with the average increases across the Group.

1 April 2020
Name	1 April 2019	1 April 2021
Duncan Tait	-	£780,000	£799,500
Gijsbert de Zoeten*	£485,000	£499,550	£518,533
Average increase across Group	2.43%	3.18%	3.28%

(or date of appointment, if later)

* Gijsbert de Zoeten was awarded a salary increase of 3% in April 2020 but implementation was delayed until January 2021. He was awarded a salary increase of 3.8% with effect from 1 April 2021. Further details are on page 76.

Chairman and Non-Executive Directors' fees

The Remuneration Committee agreed an increase of 2.5% p.a. for the Chairman's fee with effect from 1 April 2021. The Chairman's fee will be £334,560 p.a. from that date.

The Board agreed a fee increase of 2.5% p.a. for the Senior Independent Director and Non-Executive Directors with effect from 1 April 2021. The revised fees will be £83,025 for the SID, and £63,500 for the NEDs. The additional fee of £15,000 p.a. for the chair of the Audit and Remuneration Committees, and £12,000 for the chair of the CSR Committee remain the same.

Annual bonus

The annual bonus is based on annual financial measures and strategic objectives. The measures are selected to incentivise sustainable growth and the financial matrix is designed to provide a balanced focus between commercial and cash initiatives. The strategic objectives are selected each year to reinforce the Group's strategic priorities and may include personal objectives linked to the delivery of the Ignite strategy.

The principles for setting the framework are such that it:

• - Drives the desired behaviours underpinned by our performance drivers

• - May be easily cascaded through the organisation to reinforce alignment of our collective goals

• - Has clear measures and targets

2020 bonus

For 2020, 80% of the bonus was based on financial performance via a matrix of revenue and profit before tax with the remaining 20% of the bonus based on strategic objectives, therefore linking an individual's bonus outcome to their contribution to the Ignite strategy.

The maximum opportunity was 150% of salary which is payable for achieving stretch performance against all measures.

The structure of the 2020 bonus

Up to 80% of total bonus or 120% of salary is earned according to the following matrix of financial measures (% are of salary):

Revenue

Profit before tax

Stretch	24%	72%	120%
Target	16%	48%	96%
Threshold	12%	36%	72%
Threshold	Target	Stretch

Up to 20% of the total bonus, or 30% of salary, is earned for the achievement of strategic objectives linked to the Ignite strategy.

Actual performance against bonus targets

Achievement of financial targets (80% of total bonus or 120% of salary)

In 2020, revenue performance and profit before tax was below threshold. The table below provides further detail on the revenue and profit before tax targets.

Actual performance for determining bonus outcomes has been calculated using the same currency rates as used to set the bonus targets, and both targets and performance have been determined on an IFRS 16 basis. This approach helps ensure that the bonus is linked to underlying financial performance.

TargetsMeasure

Threshold

Target

StretchActual performanceOutcome for element of bonus % of salary

Revenue

Profit before tax

£8,065.0m £273.9m

£8,489.5m £304.3m

£8,914.0m £334.7m

£7,036.4m £135.7m

0%

Adjustments made during the year

The revenue and profit before tax targets for 2020 were adjusted to take into account strategic acquisitions and disposals during the year, to ensure target and performance outcomes were assessed on a like-for-like basis.

Achievement of strategic targets (20% of total bonus, or 30% of salary)

Below we provide as much detail as commercially appropriate on the objectives linked to the strategic part of the 2020 bonus and the resulting outcomes. As the financial performance targets were not achieved there is no bonus payable for the year ended 31 December 2020, however, the Executive Directors achieved the strategic objectives as detailed below.

WeightedExecutive Director Duncan TaitObjectiveWeighting (%)

Strategy

10%

Further details on objectives - Defined the new strategic direction of the Group focusing on two key growth pillars:

outcomes (%)

n/a

Distribution Excellence; and

Vehicle Lifecycle Services

-

Successfully maintained strategic progress during COVID-19 pandemic

Digital capability

10%

- Successful roll out of omni-channel platform in Argentina,

n/a

Colombia and Chile with staggered implementation plan agreed for other markets.

Gijsbert de Zoeten

Improve management information flow

10%

- Improvement in executive information resulting in: a) highly effective navigation through COVID-19 crisis; and

n/a

b) increased quality of information on business performance between regions and central functions including frequency, improvement in forward looking data and market detail.

Finance and IT 10% transformation

- A comprehensive transformation plan of the Finance function was created, and the first milestones have been achieved despite the challenges presented by COVID-19. Significant improvement of Finance IT tools globally and initiation of shared services project.

n/a

-

Substantial progress on the Cyber Security action plan.

Annual bonus for 2021

The maximum annual bonus opportunity in 2021 will remain unchanged from previous years and will be 150% of salary. For the Executive Directors, 80% of the bonus will be based on a financial performance matrix, linked to revenue and profit before tax, and 20% of the bonus will be based on a basket of specific, measurable objectives that relate to the Group's strategy. For target performance, the payout will be 50% of the maximum bonus opportunity.

The structure of the 2021 bonus

Up to 80% of total bonus or 120% of salary is earned according to the following matrix of financial measures (% are of salary)

Revenue

Profit before tax

Stretch	24%	72%	120%
Target	16%	60%	96%
Threshold	12%	36%	72%
Threshold	Target	Stretch

Given the close link between performance targets, the longer-term strategy, and the advantage this may give competitors, the 2021 targets for the Executive Directors are not disclosed in this report because of their commercial sensitivity. The Committee intends to publish the financial targets and provide more details of the strategic measures in next year's DRR.

PSP and CIP awards vesting in respect of the year

In 2018, awards were granted under the PSP and CIP schemes which vested dependent on certain performance targets measured over three years to 31 December 2020. These awards are also subject to an additional post-vest two-year holding period.

2018 PSP/CIP performance targets

Three-year EPS growth p.a. (60% weighting)	Vesting %	Three-year average ROCE* (40% weighting)	Unexpired term
Less than 4%	0%	Less than 16.5%	0%
4%	25%	16.5%	25%
12%	100%	20.5%	100%
Between 4% and 12%	Straight line basis	Between 16.5% and 20.5%	Straight line basis
* Targets have been adjusted for IFRS 16.
Vesting of 2018 PSP/CIP awards

Over the 2018-2020 performance period an EPS growth of -63% and three-year average ROCE of 19% were achieved, which resulted in the following vesting outcomes:

Award	Performance measure	Wtg.	Vesting outcome (% of element)
PSP	EPS	60%	0%
ROCE	40%	71.3%
Total (overall vesting outcome of PSP)	28.5%
Award	Performance measure	Wtg.	Vesting outcome (% of element)
CIP	EPS	60%	0%
ROCE	40%	71.3%
Total (overall vesting outcome of CIP)	28.5% = 0.57:1 match

Due to their relatively recent appointments, neither of the Executive Directors were participants in the 2018 PSP/CIP award cycle. The awards granted in 2018 to Stefan Bomhard and Richard Howes (former Directors) lapsed on their cessation of employment with the Group.

PSP and CIP awards granted during the year

During 2020, PSP and CIP awards were granted to Duncan Tait and Gijsbert de Zoeten. PSP awards were granted at 180% and 230% of salary respectively and under the CIP, Duncan Tait and Gijsbert de Zoeten invested 50% of salary and were granted a matching award of 100% of salary. As disclosed in last year's report, it was agreed that Gijsbert's PSP awards would be enhanced to 230% of salary for 2020 only (versus a regular award of 180%), reflecting that no PSP award was granted to him in 2019.

Due to the share price decline, a 10% reduction was applied to the actual number of shares granted to ensure that the awards reflected the shareholder experience and alignment with other stakeholders.

The performance targets for the 2020 PSP/CIP grants are as follows:

2020 PSP/CIP

PSP

CIP

Three-year cumulative EPS (40% weighting)	Vesting %	Three-year average ROCE (40% weighting)	Unexpired term
Less than 169p	0%	Less than 16.5%	0%
169p	25%	16.5%	25%
191p	100%	20.5%	100%
Between 169p and 191p	Straight line basis	Between 16.5% and 20.5%	Straight line basis
Cash conversion (20% vesting)
Less than 55%	0%
55%	25%
70%	100%
Between 55% and 70%	Straight line basis
Exercise period
Jun 2023 - Jun 2024
Jun 2023 - Dec 2023
Jun 2023 - Jun 2024
Jun 2023 - Dec 2023

Vesting %

Threshold level performance will result in 25% of the 2020 PSP and CIP awards vesting.

ShareNumber ofprice shares/optionsDate of grant

(p)1

awardedFace value at grant2

Performance period

Duncan Tait

2 June 2020 26 June 2020

514.5p 488.8p

251,342 139,682

£1,293,155 £682,766

Jan 2020 - Dec 2022

Jan 2020 - Dec 2022

Gijsbert de Zoeten

PSP

CIP

2 June 2020 26 June 2020

514.5p 488.8p

199,695 86,841

£1,027,431 £424,479

Jan 2020 - Dec 2022

Jan 2020 - Dec 2022

• 1. Mid-market share price on date of grant.

• 2. Face value has been calculated using the share price at date of grant.

Long-term incentives for 2021

Given the current uncertainty in our core markets as a result of recent local and national lockdowns, the Committee has delayed setting the targets for the 2021 awards. The current intention is to make the awards in May and the specific targets applying to the awards will be disclosed to shareholders in an RNS at the time of grant.

Pension

During 2020, the outgoing CEO, Stefan Bomhard, received a cash supplement of 30% of base salary to 21 May 2020. He then received a cash supplement of 23.3% of salary until he left the Group on 30 June 2020. Duncan Tait and Gijsbert de Zoeten receive a pension contribution of 10% of salary which is aligned to the UK employee average.

Executive share ownership and Directors' interests (audited)

The table below shows the total number of shares, options and awards held by each Director at 31 December 2020.

Shares held at	Vested but
31 December	performance	Subject to	performance	Subject to	not yet
2020	conditions	deferral	targets	deferral	exercised	Guideline met
Duncan Tait	55,055	391,024	0	0	4,774	0	No
Gijsbert de Zoeten	68,156	286,536	0	0	4,774	0	No
Nigel Stein	66,834	n/a	n/a	n/a	n/a	n/a	n/a
Jerry Buhlmann	15,000	n/a	n/a	n/a	n/a	n/a	n/a
Rachel Empey	6,760	n/a	n/a	n/a	n/a	n/a	n/a
Jane Kingston	3,500	n/a	n/a	n/a	n/a	n/a	n/a
John Langston	8,303	n/a	n/a	n/a	n/a	n/a	n/a
Till Vestring*	46,547	n/a	n/a	n/a	n/a	n/a	n/a
Alex Jensen	0	n/a	n/a	n/a	n/a	n/a	n/a
Stefan Bomhard**	485,507	n/a	n/a	n/a	0	40,252	n/a

Share awards held Subject to

Options held Not subject to

* Till Vestring's shares were mis-stated last year, shares held at 31 December 2019 were 44,308. ** Shares and awards held by Stefan Bomhard on his date of leaving 30 June 2020.

There have been no changes to the number of shares held by the Directors between 31 December 2020 and 24 February 2021.

Share ownership policies

The Executive Directors are required to hold a fixed number of shares equivalent to 200% of base salary. They have five years from the date of appointment to reach this shareholding.

Duncan Tait and Gijsbert de Zoeten held 49% and 97% of salary respectively as at 31 December 2020, using the share price as at 31 December 2020 of 643.5p.

Awards exercised during 2020

Stefan Bomhard exercised the award granted to him under the 2017 Performance Share Plan on 27 May 2020. He sold sufficient shares to cover costs and tax and retained the remaining shares.

Plan	Shares exercised	Dividend shares	Share price	Shares sold	Shares retained
PSP	60,393	5,491	499.9p	31,028	34,856

Percentage change in Board remuneration

The table shows the percentage change in Board remuneration from 2019 to 2020 compared with the average percentage change in remuneration for senior management. For the purposes of this disclosure, remuneration comprises salary, benefits (excluding pension) and annual bonus only.

Salary	Benefits	Annual Bonus
Duncan Tait	n/a	n/a	n/a
Gijsbert de Zoeten	3%1,2	0%3	- 100%4
Nigel Stein	2%1,2	0%	n/a
Jerry Buhlmann	0%2	n/a	n/a
Rachel Empey	0%2	n/a	n/a
Jane Kingston	0%2	n/a	n/a
John Langston	0%2	n/a	n/a
Till Vestring	0%2	n/a	n/a
Alex Jensen	0%2	n/a	n/a
Average pay based on senior management	3.16%1,2	0%	- 82.91%5

• 1. Change in salaries and fees are shown as difference between position at April 2019 against April 2020 when scheduled annual reviews take place.

• 2. As noted on page 87, the implementation of April 2020 salary increases was deferred to January 2021. Additionally, the Board and the majority of the management took voluntary reductions to their fees/salaries.

• 3. Gijsbert de Zoeten's relocation allowance provided on appointment for a defined period ceased in 2020.

• 4. Gijsbert de Zoeten received a prorated bonus for time spent in service in FY2019 and nil bonus for FY2020.

• 5. In line with performance outcomes for FY2020, limited bonus payments were made for this year.

As Inchcape plc has no direct employees, employees representing the most senior executives have been selected as this group is large enough to provide a robust comparison, whilst also providing data that is readily available on a matched sample basis. These employees also participate in bonus schemes of a similar nature to Executive Directors and therefore remuneration will be similarly influenced by Company performance.

CEO pay ratio

The CEO pay ratio is based on comparing the CEO's pay to that of Inchcape's UK-based employee population, a large proportion of whom are in customer-facing roles in retail outlets with remuneration which is commission-driven. The Committee anticipates that the ratios are likely to be volatile over time, largely driven by the CEO's incentive outcomes which are dependent on Group-wide results whereas employee pay variability will be primarily driven by UK market conditions.

Financial year	Calculation methodology	P25 (Lower quartile)	P50 (median)	P75 (Upper quartile)
2020	C	40:1	28:1	19:1
2019	C	67:1	48:1	32:1

The ratio has declined year-on-year due to the reduction in the reportable remuneration for the role of Chief Executive Officer in 2020; the figure reflects the part-year earnings for Stefan Bomhard and Duncan Tait, neither of whom received any variable pay for 2020.

As a substantial proportion of the CEO's total remuneration opportunity is derived from variable pay, the Committee expects the ratio is likely to increase over time as full-year earnings are reported for the CEO and performance merits pay-outs under the bonus and PSP/CIP.

Consistent with 2019, calculation methodology C was used. Full-time equivalent remuneration was calculated for all UK employees using the single total figure valuation methodology with two amendments: using 2019 bonus outcomes as a proxy for 2020 bonus outcomes and excluding SAYE grants. The employees at the 25th, 50th and 75th percentile (P25, P50, P75) were identified. The total remuneration for 2020 of the three employees identified was then updated after the year-end to include any annual bonus and SAYE values (if applicable). This method was chosen as it is in line as much as possible with methodology A which is the government's preferred approach whilst taking account of operational constraints. The Committee is satisfied that the selected employees are representative.

The table below sets out the remuneration details for the individuals identified:

Year	Salary	CEO	P25	P50	P75
2020	Basic salary (£'000)	£759	£23	£32	£34
Total remuneration1 (£'000)	£939	£24	£33	£49
2019	Basic salary (£'000)	£757	£15	£28	£28
Total remuneration1 (£'000)	£1,639	£24	£34	£52

1. Reflects part-year earnings for Stefan Bomhard and Duncan Tait.

The Committee is satisfied that the overall picture presented by the 2020 pay ratios is consistent with the reward policies for Inchcape's UK employees. The Committee takes into account these ratios when making decisions around the Executive Director pay packages, and Inchcape takes seriously the need to ensure competitive pay packages across the organisation.

Relative importance of spend on pay

The chart shows the percentage change in total employee pay expenditure and shareholder distributions (i.e. dividends and share buybacks) from 2019 to 2020.

Relative importance of spend on pay (£M)

(-19.7%)

Dividend2020

Share buybackEmployee remuneration

2019

The Directors are proposing a final dividend for 2020 of 6.9p per share. (Due to the effects of COVID-19, the Directors decided to preserve cash and rescinded the recommendation for the payment of a final dividend for the year ended

31 December 2019.)

Dilution limits

During the year, options and awards granted under the Group's incentive plans were satisfied on exercise by market purchase shares. Dilution limits are monitored throughout the year by the Committee and the Company complies with the limits set by the Investment Association.

Issued share capital as at 31 December 2020 All schemes - 10% over 10-year rolling period Remaining headroom for all schemes

Executive schemes - 5% over a 10-year rolling period Remaining headroom for executive schemes

393m 39m

20m 20m 6m

Pay for performance

The graph below shows the Total Shareholder Return (TSR) of the Company over the 10-year period to 31 December 2020.

The FTSE mid 250 excluding investment trusts has been chosen as the most suitable comparator group as it is the general market index in which the Company appears. The table below details the Group Chief Executive's single figure remuneration and actual variable pay outcomes over the same period.

Historical TSR performance

Growth in the value of a hypothetical £100 holding over the 10 years to 31 December 2020.

Value of £100 invested at 31 December 2010

350

300

250

200

150

100

50

2010

2011

2012

2013

2014

Inchcape

FTSE mid 250 excluding investment trusts

Group Chief Executive

2011

2012

CEO single figure of remuneration (£'000)

André Lacroix Stefan Bomhard Duncan Tait

2,993 n/a n/a

2,165 n/a n/a

4,400 n/a n/a

Annual bonus outcome (% of maximum)

LTI vesting3 outcome (% of maximum)

52% 100%

68% 100%

48% 66%

2015	2016	2017	2018	2020
2013	2015	2016	2017	2018	2019	2020
2941	n/a	n/a	n/a	n/a	n/a
2,906	1,403	3,006	2,430	1,522	4712
b/a	n/a	n/a	n/a	n/a	468
56.8%	40.3%	67.6%	38.5%	n/a6	0%
n/a4	58%	40%	n/a7

2014

2019

5,265 n/a n/a

100% 68%

n/a5 79.6%

• 1. The amount for André Lacroix reflects remuneration received until he left the Group in March 2015.

• 2. The amount for Stefan Bomhard reflects remuneration received until he left the Group in June 2020.

• 3. LTI includes CIP, 'normal' PSP, 'enhanced' PSP and options prior to 2013.

• 4. Neither André Lacroix nor Stefan Bomhard received a vested award under the 2013 PSP or CIP. However, for those participants who did receive an award, 65.5% of the 2013 normal PSP vested and there was a 1.31 match for each share invested into the 2013 CIP.

• 5. Stefan Bomhard did not receive an award under the 2014 PSP or CIP. However, for those participants who did receive an award, 86.5% of the normal PSP vested and there was a 1.73:1 match for each share invested into the CIP.

• 6. Stefan Bomhard did not receive a bonus in 2019.

• 7. Neither Stefan Bomhard nor Duncan Tait received a vested award under the 2018 PSP or CIP. However, for those participants who did receive an award, 28.5% of the 2018 PSP vested and there was a 0.57:1 match for each share invested into the 2018 CIP.

Total number of votes	votes cast
For (including discretionary)	277,213,236	84.10%
Against	52,429,638	15.90%
Total votes cast (excluding votes
withheld)	329,642,874	100%
Votes withheld1	17,159,945
(Total votes cast including votes
withheld)	346,802,819

Shareholder context

The table below shows the advisory vote on the Remuneration Report at the 2020 AGM:

% of

The Committee recognises the vote on the Remuneration Report at the 2020 AGM was lower than in previous years and has considered the reasons why shareholders voted against the Remuneration Report.

Reasons for voting against include the level of disclosure in the Report. This year, the Committee has reviewed all its disclosures in detail to ensure they meet the standards required by shareholders. The Committee will continue to keep an open dialogue with shareholders to help ensure support for remuneration decisions is strong.

The table below shows the binding vote on the remuneration policy at the 2020 AGM:

% of
Total of votes	votes cast
For (including discretionary)	323,620,872	94.50%
Against	18,822,513	5.50%
Total votes cast (excluding votes
withheld)	342,443,385	100%
Votes withheld1	4,359,434
(Total votes cast including votes
withheld)	346,802,819

1. Withheld votes are not included in the final proxy figures as they are not recognised as a vote in law.

Exit payments during the year

No exit payments were made to Directors during the year.

Stefan Bomhard left the Group on 30 June 2020 after serving five months of his 12 month notice period. He received no further payments upon leaving, he did not receive a bonus for 2020 and all his outstanding PSP and CIP awards (i.e. those granted in 2018 and 2019) lapsed in full.

Payments to past Directors

No payments were made to past Directors in 2020.

Other directorships

The Executive Directors are generally permitted to take one non-executive directorship as long as it does not lead to conflicts of interest or undue time commitment and is approved in advance by the Nomination Committee and the Board.

Gijsbert de Zoeten is a member of the supervisory board of Technical University Delft, for which he received a fee of €17,000 during 2020.

Duncan Tait currently serves as a non-executive director on the board of Agilisys Ltd for which he received a fee of £25,000 during 2020.

Advisors to the Committee

Mercer|Kepler, a brand of Mercer (and part of the MMC group), acted as the independent remuneration advisor to the Committee until 31 December 2020. Mercer|Kepler was appointed by the Committee in 2010 after a comprehensive tendering process carried out by the Committee. Mercer|Kepler was paid fees of £76,804 for its services during the year, excluding expenses and VAT. Mercer also supplied unrelated services to the Group in relation to IAS 19. Following the lead advisor moving to Ellason LLP, Ellason LLP was appointed as the independent remuneration advisor to the Committee effective 1 January 2021.

Mercer and Ellason are both signatories to the Remuneration Consultant Group's Code of Conduct which sets out guidelines to ensure that any advice is independent and free of undue influence (which can be found atwww.remunerationconsultantsgroup.com). None of the individual Directors have a personal connection with Mercer or Ellason. The Committee is satisfied that the advice it receives is objective and independent and confirms that neither Mercer|Kepler nor Ellason have any connection with the Company that may impair their independence. The Committee's advisors attend Committee meetings as required and provide advice on remuneration for executives, analysis of the remuneration policy and regular market and best practice updates. The advisors report directly to the Committee Chair. Fees are charged at an hourly rate in accordance with the terms and conditions set out in the relevant engagement letter.

The Directors' Report on Remuneration was approved by the Board and has been signed by Jane Kingston on its behalf.

Jane Kingston

Chair of the Remuneration Committee

Directors' Report

Directors' Report

The Directors' Report for the year ended 31 December 2020 comprises pages 96 to 100 of this report (together with sections incorporated by reference). Information required in the Management Report under DTR 4.1.8R can be found in the following sections: a review of the business and future developments on pages 2 to 32; principal risks and uncertainties on pages 41 to 50; a description of the Group's internal control framework is given on pages 56 and 57; a description of the Board's activities and the structure of its Committees is given on pages 52 to 95.

Corporate governance statement

The statement of compliance with the 2018 UK Corporate Governance Code is given on page 56. The Code is published on the Financial Reporting Council's websitewww.frc.org.uk. Information required under DTR 7 is given in the Corporate Governance Report on pages 52 to 95.

Board of Directors

The Directors of the Company who were in office during the year and up to the date of signing the financial statements were:

Stefan Bomhard - left 30 June 2020

Jerry Buhlmann

Gijsbert de Zoeten Rachel Empey

Alexandra Jensen - joined 29 January 2020 Jane Kingston

John Langston Nigel Stein

Duncan Tait - joined 1 June 2020 Till Vestring

In accordance with the 2018 UK Corporate Governance Code, all Directors will stand for election or re-election at the Annual General Meeting (AGM) on 27 May 2021. The Chairman has reviewed the performance of each Director and is satisfied that each continues to be effective and demonstrates commitment to the role. The appointment and replacement of Directors is governed by the Company's Articles of Association (the Articles), the UK Corporate Governance Code, the Companies Act 2006 and related legislation.

Subject to the Articles, the UK Corporate Governance Code and relevant legislation, the business of the Company is managed by the Board which may exercise all the powers of the Company.

Shareholders

Engaging with our shareholders is important to the Company so that we are able to understand their views on the business and the key issues of importance to them. Any updates regarding the business, including presentations by the CEO, are available on the Group's website so that all shareholders have access to the same Company information at the same time.

As the top 20 shareholders own over 70% of the business, shareholder consultations, such as the remuneration policy approved in 2020, are carried out with this group. Extending the consultation to all shareholders would not be cost effective, and shareholders not involved in the consultation process are encouraged to use the AGM forum to express their views either by asking questions or voting on the relevant resolutions.

During 2020, shareholders were unable to attend the AGM in person due to the ongoing COVID-19 restrictions. A dedicated email was set up to allow shareholders to contact the Board

members with any questions. This resource will remain in place to allow all shareholders to engage with the Company on any matters of interest to them.

Webcasts are held with the CEO and CFO following the release of any financial results with analysts and investors invited to attend. Details of how to join will be available on the Company's website prior to the event.

Conflicts of interest

The Articles of Association permit the Board to authorise any matter which would otherwise involve a Director breaching his duty under the Companies Act 2006 to avoid conflicts of interest. When authorising a conflict of interest, the Board must do so without the conflicted Director counting as part of the quorum. In the event that the Board considers it appropriate, the conflicted Director may be permitted to participate in the debate but will be permitted neither to vote nor count in the quorum when the decision is being agreed. The Directors are aware that it is their responsibility to inform the Board of any potential conflicts as soon as possible and procedures are in place to facilitate disclosure.

Directors' indemnity

A qualifying third-party indemnity (QTPI), as permitted by the Company's Articles of Association and sections 232 and 234 of the Companies Act 2006, has been granted by the Company to each of the Directors of the Company. Under the provisions of the QTPI the Company undertakes to indemnify each Director against liability to third parties (excluding criminal and regulatory penalties) and to pay Directors' costs as incurred, provided that they are reimbursed to the Company if the Director is found guilty or, in an action brought by the Company, judgment is given against the Director. The indemnity has been in force for the financial year ended 31 December 2020 and until the date of approval of this report.

Results and dividends

The Group's audited consolidated financial statements for the year ended 31 December 2020 are shown on pages 112 to 187. The level of distributable reserves is sufficient to pay a dividend.

The Board recommends a final ordinary dividend of 6.9p per ordinary share. If approved at the 2021 AGM, the final ordinary dividend will be paid on 21 June 2021 to shareholders registered in the books of the Company at the close of business on 14 May 2021.

The Company may, by ordinary resolution, declare a dividend not exceeding the amount recommended by the Board. Subject to the Companies Act 2006, the Board may pay interim dividends when the financial position of the Company, in the opinion of the Board, justifies its payment. See page 23 for more information on the dividend policy.

Share capital

As at 31 December 2020, the Company's issued share capital of £39,327,439 comprised 393,274,393 ordinary shares of 10.0p. Holders of ordinary shares are entitled to receive the Company's Report and Accounts, to attend and speak at General Meetings and to appoint proxies and exercise voting rights. The shares do not carry any special rights with regard to control of the Company. The rights are set out in the Articles of Association of the Company.

Restrictions on transfer of securities

There are no restrictions or limitations on the holding of ordinary shares and no requirements for prior approval of any transfers. There are no known arrangements under which financial rights are held by a person other than the holder of the shares. Shares acquired through the Company share schemes rank pari passu with the shares in issue and have no special rights.

Authority to purchase shares

At the Company's AGM on 21 May 2020, the Company was authorised to make market purchases of up to 39,860,597 ordinary shares (representing approximately 10.0% of its issued share capital).

In the year ended 31 December 2020, the Company purchased for cancellation, 5,858,343 ordinary shares of 10.0p each at a cost of £31.4m, representing 1.5% of the issued share capital as at that date as part of the share buyback programme announced in February 2020. The programme was cancelled in March 2020 due to COVID-19.

The Directors have authority to issue and allot ordinary shares pursuant to article 9 of the Articles of Association and shareholder authority is requested at each AGM. The Directors have authority to make market purchases for ordinary shares and this authority is also renewed annually at the AGM.

Interests in voting rights

During the year, the Company had been notified of the following interests pursuant to the Financial Conduct Authority's Disclosure and Transparency Rules. The information below was correct at the date of notification. It should be noted that these holdings are likely to have changed since notified to the Company. However, further notification of any change is not required until the next threshold is crossed.

Number of	Date	Percentage
Shareholder	shares	notified	notified
George Horesh	25,842,484	11/01/2021	6.57%
Standard Life
Aberdeen plc	36,807,638	23/11/2020	9.36%
Norges Bank	11,751,536	26/08/2020	2.99%

Source TR-1 notifications. These are updated on the Company's website.

Restrictions on voting rights

There are no restrictions on voting rights.

Employee benefit trust

The Executive Directors of the Company, together with other employees of the Group, are potential beneficiaries of the Inchcape Employee Trust (the "Trust") and, as such, are deemed to be interested in any ordinary shares held by the Trust. At 31 December 2020, the Trust's shareholding totalled 167,312 ordinary shares.

In respect of LR 9.8.4R(12) and (13), the trustee of the Trust agrees to waive dividends payable on the shares it holds for satisfying awards under the various share plans.

Directors' interests

The table showing the beneficial interests, including family interests, in the ordinary shares of the Company of the persons who were Directors at 31 December 2020 is shown in the Directors' Report on Remuneration on page 92.

There have been no changes to the number of shares held by Directors between 31 December 2020 and 24 February 2021.

Change of control

The Company is not party to any significant agreements that would take effect, alter or terminate upon a change of control of the Company following a takeover bid apart from certain of the Group's third-party funding arrangements which would terminate upon a change of control of the Company, such as the Group's revolving credit facility agreement. Further details are given in note 23 of the financial statements on page 159.

The Group's relationships with its OEM brand partners are managed at Group level, but the relevant contracts are entered into at a local level with day-to-day management being led by each operating business. Certain of the contracts may terminate on a change of control of the local contracting company.

The Company does not have agreements with any Director or employee providing compensation for loss of office or employment that occurs because of a takeover bid, except for provisions in the rules of the Company's share schemes which may result in options or awards granted to employees to vest on a takeover.

Transactions with Directors

No transaction, arrangement or agreement, other than remuneration, required to be disclosed in terms of the Companies Act 2006 and IAS 24, 'Related Parties' was outstanding at 31 December 2020, or was entered into during the year for any Director and/or connected person (2019: none).

Other information - Listing Rules

For the purposes of LR 9.8.4 R, the information required to be disclosed by LR 9.8.4 R can be found on the pages set out below:

SectionInformation

• 1 Interest capitalised

  Not material to the Group

• 2 Publication of unaudited financial information

  94 (TSR graph)

• 4 Details of long-term incentive schemes

  90 - 91

• 5 Waiver of emoluments by a director

  Not applicable

  Page

• 6 Waiver of future emoluments by a director Not applicable

• 7 Non pre-emptive issues of equity for cash

• 8 Non pre-emptive issue by a major subsidiary undertaking

• 9 Parent participation in a placing by a listed subsidiary

  Not applicable Not applicableNot applicable

• 10 Contracts of significance

• 11 Provision of services by a controlling shareholder

• 12 Shareholder waiver of dividends

  Not applicable Not applicable

• 13 Shareholder waiver of future dividends

  97 97

• 14 Agreements with controlling shareholders Not applicable

Directors' Report continued

Greenhouse gas emissions

As a distributor and retailer Inchcape has no manufacturing footprint to minimise, however we collect data for all material emissions for which we deem ourselves to be responsible and look for ways in which to minimise our footprint. Data is collected for three key performance indicators:

• - Energy - our global gas and electricity usage.

• - Transport - the movement of cars and parts from the point of ownership (which means legal and contractual ownership) to the point we cease to have legal ownership.

• - Travel - the movement of our people.

Methodology

The methodology used to calculate the Group's greenhouse gas emissions is based on the GHG Protocol Corporate Accounting and Reporting Standard, and Mandatory Greenhouse Gas Reporting in line with HM Government guidance. The methodology uses conversion factors as published by the Department for Business, Energy and Industrial Strategy in 2020 and international electricity emission factors as published in the International Energy Agency's 'CO2 Emissions from Fuel Combustion (2020 edition)'.

Data collection and reporting period

Data has been collected for all markets from 1 January 2020 to 31 December 2020. The level at which we report is by business unit for each market. This covers our Retail operations, Distribution operations and business service operations, which fall within our operational control boundary.

Intensity ratio

The Group's intensity ratio is revenue per tonne of CO2e. This allows for a fair comparison over time of CO2e emissions given thegrowth trajectory envisaged for the Group and cyclical variations in business activity.

Total greenhouse gas emissions in 2020

Total emissions (tonnes CO2e)

Year ended	Year ended	Change in
Scope 1 and 2 emissions	31 Dec 2020	31 Dec 2019	emissions
Scope 1 (Direct emissions from combustion of fuels and operation of facilities)	8,780	10,744	-18%
Scope 2 (Electricity, heat, steam and cooling purchased for own use)	41,179	46,629	-12%
Total Scope 1 and 2 emissions	49,959	57,374	-13%
Operational emissions intensity
Intensity metric - total revenue (£m)	7,033	9,391	-25%
Total Scope 1 and 2 emissions (tonnes CO2e)	49,959	57,374	-13%
Scope 1 and 2 emissions per £m (tCO2e/£m)	7.1	6.1	16%

COVID-19

Due to the impact of COVID-19 during 2020, many of our businesses were required to close. This has resulted in a dramatic reduction in the energy used in the year and as markets return to more normalised operating activities the energy used is likely to increase.

Streamlined Energy and Carbon Reporting Regulations ("SECR")

As required under the SECR regulations the following information relates to the energy consumed in our UK operations.

UK energy use (kWh)

Associated GHG emissions (tCO2e) Emissions from activities which the company own or control including combustion of fuel & operation of facilities (scope 1) (tCO2e) Emissions from the purchase of electricity, heat, steam, cooling purchased for own use (scope 2 - location-based) (tCO2e)

Year ended 31 Dec 2020

42,598,398.63 8,780

41,179

49,959

Total energy used to calculated above emissions (kWh)

Intensity ratio: tCO2e (gross scope 1+2)/ intensity metric

142,111,220.52

Methodology

Our carbon footprint is calculated by gathering monthly and quarterly energy consumption data. Emission factors used are a combination of BEIS 2020 emission factors and IEA grid mix factors for specific markets.

Energy efficiency measures

During the reporting period, no new energy efficiency actions have been taken however our energy management programme is ongoing, including monitoring and targeted reporting of energy consumption on a daily basis at the majority of sites. Through the service provided by our energy consultants, the energy management programme we run enables us to identify and address any consumption issues as and when they arise, allowing us to eliminate unnecessary energy waste.

Employees and employee involvement

The Company is committed to a policy of treating all its colleagues and job applicants equally. We are committed to the employment of people with disabilities and will interview those candidates who meet the minimum selection criteria.

7.1

We provide training and career development for our employees, tailored where appropriate to their specific needs, to ensure they achieve their potential. If an individual becomes disabled while in our employment, we will do our best to ensure continued development in their role, including consulting them about their requirements, making appropriate adjustments and providing suitable alternative positions.