Business
Outcome of Financial & Operational Review
Outcome of Financial & Operational Review.
About this update from Pinewood Technologies Group Plc
[{"type":"text","content":"\n \nRNS Number : 8870B Pendragon PLC 12 June 2019 \n\n \nPENDRAGON PLC - Outcome of Financial & Operational Review (Issued 12 June 2019)\n \nAs communicated in the Q1 Interim Management Statement released in April, the newly appointed management team has undertaken a business by business review to determine the expected underlying operating performance for the remainder of the current financial year. The market remains challenging, with SMMT reporting a decline in new car registrations of 3.1% YTD to May and the used car market seeing significant declines in used cars valuations.\n \nIn addition to the challenging market, FY19 performance is expected to be impacted further by certain internal operational challenges. As a result, the Board now expect Group underlying PBT for FY19 to be a small loss (pre the disposal of the US Motor group), with the first-half of FY19 expected to be significantly loss making ahead of returning to overall Group profitability for the second-half. \n \nThe review has analysed the expected performance of each individual component of the business across UK Motor, Car Store, Leasing, US Motor and Pinewood. Management have considered the expected performance of each business unit in the current financial year on an 'As Is' basis. \n \nThe change in expected performance versus FY18 is driven by five key factors:\n \n· Notwithstanding encouraging growth in unit volumes, Car Store losses have accelerated in FY19 as detailed later;\n· A significant increase in used car stock at the end of FY18 (£458m FY18 vs £372m FY17) resulted in an excess of stock held across the business. An accelerated programme during the second quarter will significantly reduce the level of aged, pre-reg and ex demonstrator stock (38% of used stock units as at 1/4/19);\n· A number of one-off releases of provisions from the balance sheet in FY18 which will not be repeated during FY19;\n· Lower than anticipated new car margins in order to achieve volume targets with lower levels of tactical registrations; and\n· Increases in costs, particularly in aftersales.\n \nManagement have a preliminary action plan in place t...