Slide 1: 2018 Full Year Results
2018 Full Year Results Pendragon PLC 2018 1
Slide 2: Operational highlights: used cars, US disposal, software, board changes
Double used car revenue - by 2021 Invested in and launched carstore.com website in December 2018. Recruited a Used Car Director to manage the operation and roll out of used Car Stores. Opened 3 purpose built Car Stores and converted 4 former new car franchised dealerships to Car Stores. Op
Slide 3: Financial highlights by revenue line
Group Revenue -1.3% L4L (-2.4% total) – Primarily the impact of a decline in premium new car sales Used Revenue -0.3% L4L (-0.9% total) – Used vehicle revenue, excluding nearly new vehicles, grew by 2.9% against a used car market that fell 2.2%. L4L used gross profit up 4.9%. Used gross profit i
Slide 4: Financial Summary
Financial Summary THE LEADING AUTOMOTIVE ONLINE RETAILER Pendragon PLC 2018 4
Slide 5: Year Summary
Financial Summary — 3 Year Summary Underlying Profit Before Tax Underlying Operating Profit -19.9% 17.2% -20.9% -9.1% 2016 2017 2018 2016 2017 2018 . . Net Debt and EBITDA Ratio Underlying Earnings Per Share 0.9 0.9 -15.4% 0.6 -15.2% +35.3% +2.8% a |") _ 2016 2017 2018 2016 2017 2018 Pendragon PLC 2
Slide 6: Underlying Results
Underlying Results (£m) Summary 2018 2017 % Change • Underlying gross profit Revenue 4,739.1 slightly back on prior year 4,627.0 -2.4% Gross Profit 550.5 552.9 -0.4% • Uplift in used gross profit offset by reduction in new Gross Margin % 11.9% 11.7% 0.2% and aftersales gross profit Operating Costs (
Slide 7: Non-underlying Items
Summary • £88.8m goodwill impairment Non-underlying Items (£m) and £7.0m of other impairments following 2018 2017 assessments of the asset Settlement of Historic VAT Issues - 7.7 carrying values. Calculated Impairment of goodwill, property, plant & by taking into account (95.8) - trading and market
Slide 8: Summary Cashflow
Summary Cashflow (£m) Summary 2018 2017 Underlying Operating Profit Before Other Income 76.2 83.8 Depreciation and Amortisation 27.4 28.5 • £6.8m investment on Car Share Based Payments 0.7 (1.7) Store roll-out in the period Working Capital (16.2) 18.3 Operating Cashflow 128.9 88.1 • Net reduction of
Slide 9: Capital Expenditure 2017 to FY 2019
Capital Expenditure 2017 to FY 2019 (£m) 2017 2018 H1 2019 H2 2019 FY 2019 Car Store 17.5 6.8 5.6 - 5.6 Franchise 25.5 12.6 27.6 9.8 37.4 Underlying Replacement 13.8 30.6 7.0 7.0 14.0 Business Acquisitions 17.8 - - - - Property 24.6 6.5 - - - Business and property disposals (2.5) (30.2) (3.5) (4.5)
Slide 10: Balance Sheet
Summary • Goodwill impairment of £88.8m in the year Balance Sheet (£m) 2018 2017 • Cash and undrawn bank Property 240.5 261.2 facilities of £174m at year end and undrawn used stocking Plant & Equipment 223.4 218.7 facility of £22m at year end Goodwill & Intangibles 274.1 368.7 • Stable balance sheet
Slide 11: Capital release and leverage
Summary • We are expecting proceeds in excess of £100m from our US business disposal • We plan to release £100m of capital over 3 years through a reduction in premium brand franchise locations (£46.7m released so far) • The Group is still trading below our target range of 1.0-1.5:1 for the net debt
Slide 12: Operating Profit
Operating Profit (£m) 2018 2017 % Change % Change L4L UK Motor 41.1 52.3 -21.4% -21.0% Software 11.7 10.9 +7.3% +7.3% Leasing 14.8 9.8 +51.0% +51.0% US Motor 8.6 10.8 -20.4% -20.4% TOTAL 76.2 83.8 -9.1% -9.3% Pendragon PLC 2018 12
Slide 13: Business Strategy and Review: Businesses
Business Strategy and Review Businesses UK Motor Sale/Servicing of vehicles in the UK Software SaaS solutions for retailers Leasing Vehicle leasing and fleet in the UK US Motor Sale/Servicing of vehicles in the US Pendragon PLC 2018 13
Slide 14: Sector Profit Bridge
Sector Profit Bridge £m £80.0 £70.0 eso0 feu; Wildy EB pt) 5.0, (624) (tS 2), MEZD —¢9-9— ——— £50.0 AES.0). £40.0 FEE) £60.4 £20.0 £10.0 2017 Used Used Margin Aftersales New New Margin Software Leasing US Motor Direct Indirect Interest 2018 Underlying Volume L4LGP L4LGP Volume LALGP (Volume) Costs &
Slide 15: UK Motor Strategy and Business Review
UK Motor Strategy and Business Review Pendragon PLC 2018 15
Slide 16: UK Motor Strategy
UK Motor (£m) Strategy % Change 2018 2017 % Change L4L Revenue 4,074.4 4,243.6 -4.0% -2.8% • Continue to invest in the Gross Profit 456.7 471.0 -3.0% -2.0% transformation of our business model Operating Costs (415.6) (418.7) -0.7% +0.7% Operating Profit 41.1 52.3 -21.4% -21.0% • To deliver a market
Slide 17: Online visits and carstore.com launch
Summary • Online visits to Evanshalshaw.com and Stratstone.com increased by 5.1% in the period to 28.7m visits. • During late 2018 we launched the new carstore.com website which offers a uniquely differentiated customer proposition, including the ability for a customer to fully transact online, eith
Slide 18: Car Store results
• Revenue grew by £83.6m, an increase of 38.5% • Gross profit was up 42.2% • Operating loss of £11.9m (2017 : £6.9m loss) Summary • Investment in Car Stores to expand our network in the UK continues • Opened four dedicated used car refurbishment factories in the year • Three new purpose built Car St
Slide 19: Aftersales summary
Summary • Aftersales revenue down 2.3% and gross profit down 3.3% like for like • Retail aftersales revenue grew by 2.1% • Margin impacted by labour cost inflation for skilled technicians Pendragon PLC 2018 19
Slide 20: New Vehicle Registrations
New Vehicle Registrations Market Avg./Natural Level Source: SMMT Summary • The new retail market was down by 6.4% in 2018 and the new fleet market was down 7.2% • The retail market represented 44% of the UK new market in 2018 • A small decline in the UK new market is forecast in 2019 Pendragon PLC 2
Slide 21: Software Strategy and Business Review
Software Strategy and Business Review Pendragon PLC 2018 21
Slide 22: Software Strategy
Software (£m) Strategy % Change 2018 2017 % Change L4L Revenue 16.9 15.8 +7.0% +7.0% • Achieve at least double digit Gross Profit 14.9 13.8 +8.0% +8.0% growth in revenue Operating Costs (3.2) (2.9) +10.3% +10.3% • Expansion globally Operating Profit 11.7 10.9 +7.3% +7.3% Gross Margin % 88.2% 87.3% +
Slide 23: Leasing Strategy and Business Review
Leasing Strategy and Business Review Pendragon PLC 2018 23
Slide 24: Leasing Strategy
Leasing (£m) Strategy % Change 2018 2017 % Change L4L Revenue 57.3 64.9 (11.7%) (11.7%) • Retain low capital base and high Gross Profit 18.8 13.9 35.3% 35.3% return on investment from the leasing business Operating Costs (4.0) (4.1) (2.4%) (2.4%) Operating Profit 14.8 9.8 51.0% 51.0% • Maintain at l
Slide 25: US Motor Strategy and Business Review
US Motor Strategy and Business Review Pendragon PLC 2018 25
Slide 26: US Motor Strategy
US Motor (£m) Strategy % Change 2018 2017 % Change L4L Revenue 478.4 414.8 +15.3% +15.3% • Selling the US Motor business in Gross Profit 60.1 54.2 +10.9% +10.9% 2019 Operating Costs (51.5) (43.4) +18.7% +18.7% • Proceeds expected in excess of Operating Profit 8.6 10.8 -20.4% -20.4% £100m before tax
Slide 27: APPENDIX – Pendragon 2018 Full Year Results
APPENDIX – Pendragon 2018 Full Year Results Pendragon PLC 2018 27
Slide 28: UK Motor summary
UK Motor (£m) Summary % Change 2018 2017 % Change L4L • Used gross profit up 4.7% like for like Used 2,092.4 2,125.5 -1.6% -1.0% • Aftersales gross profit down 3.3% like Aftersales 337.4 350.6 -3.8% -2.3% for like New 1,644.6 1,767.5 -7.0% -5.2% • New gross profit back 8.3% like for like largely as
Slide 29: UK used vehicle market
Summary • The latest available market data is for Q4 2018, which showed that the UK used market decreased by 0.6% in Q4 2018 • In 2018, the used vehicle market decreased by 2.2% to 7.6 million units, falling by 2.8% in H1 2018 and falling by 1.5% in H2 2018 Pendragon PLC 2018 29
Slide 30: Used results
Used (£m) Summary Last % Last % Last Actual Year Year Year L4L • Used revenue fell by 1.0% on a like for like Revenue 2,092.4 2,125.5 basis against a very strong comparative -1.6% -1.0% Gross Profit 164.2 156.3 +5.1% +4.7% • Excluding nearly new vehicles, used vehicle revenue grew by 2.9% Gross Marg
Slide 31: Car parc forecast
Summary • 5.0% reduction in 0-3 year car parc forecast in 2019 • 5.8% growth in 4-6 year car parc forecast in 2019 • 4-6 year car parc forecast to continue growing until 2020 Pendragon PLC 2018 31
Slide 32: Aftersales results
Aftersales (£m) Summary Last % Last % Last Actual Year Year Year L4L • Aftersales contributes 39.7% of the gross Revenue 337.4 350.6 -3.8% -2.3% profit of UK Motor and delivered a gross margin of 53.8% Gross Profit 181.5 191.2 -5.1% -3.3% • Retail service revenue increased by 2.1% Gross Margin % 53.
Slide 33: UK new car market
2.63 2.69 2.48 2.54 2.37 2.31 2.29 Summary • The UK new car market was down 6.8% in 2018 • The retail market fell by 6.4% and the fleet market fell by 7.2% in 2018 • Forecast of 2.3% fall in new car market in 2019 Pendragon PLC 2018 33
Slide 34: New vehicle results
New (£m) Summary Last % Last % Last Actual Year Year Year L4L • New revenue fell by 5.2% in the period on a Revenue 1,644.6 1,767.5 -7.0% -5.2% like for like basis Gross Profit 111.0 123.5 -10.1% -8.3% • Gross profit fell by 8.3% in the period on a like for like basis following continuing margin Gro
Slide 35: US Motor summary
US Motor (£m) Summary % Change 2018 2017 % Change L4L • Strong revenue growth across all Used 97.9 85.7 +14.2% +14.2% departments Aftersales 43.2 37.0 +16.8% +16.8% • Strong performance in aftersales with revenue up 16.8% and gross profit up New 337.3 292.1 +15.5% +15.5% 15.8% like for like Revenue