Climate Change Data

Environmental Metrics

ESG Focus Areas

• Health and safety
• Environment
• Community
• Diversity and Equal Opportunities

Environmental Achievements

• Continued to be registered with and complied with obligations under the Department of the Environment’s carbon reduction commitment scheme.

Social Achievements

• Awarded Investors in People accreditation, renewed in 2009.
• 1,840 team members (20.16%) participated in ownership of shares and/or schemes linked to the Company’s share performance.
• Increased the breadth and variety of incentive programmes aligned to its business objectives and experienced increased team member engagement with these programmes.
• Individual team members and the Group’s local businesses organise charity events to support local schools, hospitals and a wide variety of charities as well as Comic Relief and the BBC’s Children in Need Appeal.

Governance Achievements

• Maintained compliance with the applicable corporate governance provisions: the Combined Code on Corporate Governance.

Climate Goals & Targets

Environmental Challenges

• Adverse economic conditions, including changes in consumer confidence and credit availability.
• Level of new vehicle production.
• Vehicle manufacturer dependencies.
• Changes to manufacturers’ incentive programmes.
• Declines in used vehicle prices.
• Franchise agreements.
• Liquidity and financing.
• Regulatory compliance risk.
• Competition.
• Reliance on certain members of management and staff.
• Failure of information systems.
• Reliance on significant estimates.
• Legislative changes in relation to the distribution and sales of vehicles.

Mitigation Strategies

• Right-sized the business and is well positioned for 2011 with a refined portfolio of franchises.
• Making good progress on a number of initiatives in the aftersales sector.
• Growing its used vehicle volumes through further used car supermarket start-ups under the ‘Quicks’ brand and further progressing its used car processes and initiatives across the Group.
• Cost management focus to ensure further leverage is achieved.
• Roll-out of Vehicle Health Check programme, additional capacity to undertake MOT work and the increased deployment of service packages.
• Assessing and accrediting our used car processes.
• Maintaining facilities appropriate to the working capital requirements of the Group whilst reducing debt towards a long-term Debt:underlying EBITDA target of 2.0:1.0.
• Preliminary discussions on the renewal of banking facilities.

Supply Chain Management

Responsible Procurement

• Providing long term, profitable partnerships in return for quality service and competitive pricing

Climate-Related Risks & Opportunities

Awards & Recognition

• Investors in People

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Community Investment
• Responsible Sourcing
• Environment and Greenhouse Gas Emissions

Environmental Achievements

• Continued to assess and monitor energy use and implement measures to reduce environmental impact; undertook mandatory energy assessments of sites in accordance with the ESOS Regulations 2014; installed LED lights, limited lighting duration out of hours, kept external doors closed, and fitted insulators to limit heat escape; sought to limit paper consumption and waste.

Social Achievements

• Monthly fundraising events supported national charities; Academy and retail businesses generated community involvement through local engagement; supported and encouraged charity events supporting schools, hospitals, and local children’s and medical charities; operated in strict compliance with all applicable labour relations laws; adopted an Anti-Slavery and Human Trafficking Policy.

Governance Achievements

• Complied with the UK Corporate Governance Code (except for an eight-month period); Board committed to refreshing membership; Risk Control Group met three times in 2016, reviewing anti-bribery controls, developing e-learning, gifts and hospitality training, Consumer Rights Act 2015 training, Modern Slavery Act 2015 awareness, and initiatives to reduce theft and fraud; Board concluded that all appropriate controls were in place and functioning effectively.

Climate Goals & Targets

Environmental Challenges

• The ability to adopt and implement an appropriate strategy; the availability of debt funding; the ability to adapt to changing environments outside our direct control such as macro-economic, political and environmental factors, regulation changes, manufacturer and competitor behaviour; vehicle manufacturers oversupply into UK market or alterations to supply terms; fewer purchasers of vehicles; lower demand for vehicle servicing; changes in regulation; European economic instability; UK or USA economic and business conditions deteriorate; UK Governmental spending constraints; customers migrate to alternative providers; intermediary companies establish a barrier between us and our customers; revenues and profits fall owing to competitor action; inability to meet debt obligations; unsustainable demand of funding occupational pension schemes; data loss; website interruptions; system failure; cyber attack; significant litigation; regulator action; reliance on significant estimates; poor decision making; lack of innovation; loss of custom owing to poor quality customer experience; illness and injury.

Mitigation Strategies

• Sophisticated management information identifies threats to the success of our strategy; monitor manufacturer and third party customer service measures; focus strongly on efficient use of working capital; review capital expenditure plans; diverse franchise representation; close contact with vehicle manufacturers; investment in marketing initiatives and online presence; strategy to develop revenues from used vehicles and aftersales; carefully control new vehicle inventory; business model derives revenues from every stage of the vehicle’s life-cycle; customer retention initiatives; represent vehicle brands responding to greener technology; identify trends in demand; breadth of relationships with asset finance companies; maintain the right level of tax expertise; detailed market and sector monitoring systems; scale, expertise and technological capabilities; customer relationship management capabilities; robust business continuity measures; geographic diversity; monitor cyber security threats; maintain the right level of legal expertise; culture focuses strongly on good compliance; team of compliance specialists; assess actual outturns of previous estimates; invest in online means of attraction and recruitment; set clear competencies and career goals; review and adapt employment terms, salaries and performance related pay; responsive succession plans; leverage scale to afford training opportunities; work to the Health & Safety Executive’s framework; allocate clear responsibilities; monitor site conditions; measure and review performance against benchmarks; allocate local accountability; provide specialist support; monitor site conditions and drive corrective action through audit follow-up.

Supply Chain Management

Responsible Procurement

• Work with vehicle manufacturers and other suppliers who manage their supply chains responsibly, free from labour exploitation.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UK Corporate Governance Code

Environmental Metrics

ESG Focus Areas

• Community Investment
• Health and Safety
• Responsible Sourcing
• Environmental Impact (Greenhouse Gas Emissions)
• Diversity and Equality of Opportunity

Environmental Achievements

• Continued assessment and monitoring of energy use and implementation of measures to reduce environmental impact; registered with and complied with obligations under DEFRA's carbon reduction commitment scheme; installation of LED lights, limited lighting duration out of hours, closed external doors, and heat insulators; limited paper consumption and waste through paperless communications and systems.

Social Achievements

• Monthly fundraising events supporting national charities; community involvement through local engagement; charity events supporting schools, hospitals, and local children's and medical charities; adherence to equal opportunity employer policy; reduction in RIDDOR reported accidents to 31 in 2017 (2016: 23).

Governance Achievements

• Full compliance with the April 2016 UK Corporate Governance Code; effective Board and committee meetings; robust risk assessment and control; readoption of anti-bribery policy statements and associated controls; review of whistleblowing procedures.

Climate Goals & Targets

Environmental Challenges

• Reduction in new vehicle activity, particularly in the third quarter of 2017, leading to lower than expected volumes and margins from new vehicles; knock-on impact on the value of premium used vehicles, impacting used margin in quarter three; downturn in new vehicle activity.
• Potential VAT liability of £6.8m

Mitigation Strategies

• Careful control of new vehicle inventory; monitoring and evaluation of alternative recruitment, training, and apprenticeship methods; business model deriving revenues from every stage of the vehicle life cycle; customer retention initiatives; monitoring diesel sales; representing vehicle brands responding to greener technology; adapting to changing environments; diverse revenue generation and wide range of franchise representation; regular monitoring to identify changes quickly; maintaining adequate committed, diversified funding sources; robust assessment of principal risks; share buyback program.

Supply Chain Management

Responsible Procurement

• Work with vehicle manufacturers and other suppliers who manage their supply chains responsibly, free from labour exploitation; no presence in areas with risk of exploitation of men, women, or children.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Companies Act 2006, UK Corporate Governance Code, FRS 101, IFRSs as adopted by the EU, IAS 19, IAS 17, IAS 39

Third-party Assurance: KPMG LLP