Slide 1: 2018 Half Year Results
2018 Half Year Results THE LEADING AUTOMOTIVE ONLINE RETAILER Pendragon PLC 2018 1
Slide 2: Strategic progress: used cars, US Motor, premium franchises, software
Double used car revenue by 2021 Appointed an experienced Used Car Director to manage the operation and roll out of used Car Stores Opened full scale Car Stores in Norwich, Shrewsbury and Ipswich Opened two dedicated used car refurbishment facilities to industrialise this process. We intend t
Slide 3: Half year highlights
Group Revenue -0.9% L4L (+0.2% total) – Small decline in UK Motor offset by growth in Pinewood (Software) and Leasing Used Revenue -0.9% L4L (+1.2% total) – Used vehicle revenue, excluding nearly new vehicles, grew by 3.1%. Gross profit down 16.1%, driven primarily by margin pressure in the near
Slide 4: Financial Summary
Financial Summary THE LEADING AUTOMOTIVE ONLINE RETAILER Pendragon PLC 2018 4
Slide 5: Financial Summary — Year Summary
Financial Summary — 3 Year Summary Underlying Profit Before Tax Underlying Operating Profit +9.7% +2.2% -28.8% 41.4% £42.7m £28.4m H1 2016 H1 2017 H1 2018 H1 2016 H1 2017 H1 2018 Underlying Earnings Per Share Net Debt and Underlying EBITDA Ratio +13.0% 0.9 08 38.5% 0.3 +200.6% 23.9% 1.6p £106.6m H1
Slide 6: Underlying Results Summary
Underlying Results (£m)* Summary H1 2018 H1 2017 % Change • 0.9% (L4L) fall in revenue Revenue 2,476.2 2,472.0 +0.2% due to small decline in UK motor offset by growth in Gross Profit 283.1 301.1 -6.0% Pinewood (Software) and Gross Margin % 11.4% 12.2% -0.8% Leasing Operating Costs (SG&A) (240.4) (24
Slide 7: Summary Cashflow
Summary Cashflow (£m) Summary H1 2018 H1 2017 Underlying Operating Profit Before Other Income 42.4 60.0 Depreciation and Amortisation 13.3 14.9 • Strong operating cashflow of Share Based Payments 0.6 1.0 £70.3m in the period versus Working Capital and Other Operating Cashflows 14.0 (45.5) £30.4m due
Slide 8: Balance Sheet
Summary • Strong balance sheet and low debt level will allow the Balance Sheet (£m) Group to continue to grow Jun-18 Dec-17 Jun-17 Property 228.2 261.2 224.4 • Cash and undrawn bank Plant & Equipment 226.0 218.7 221.5 facilities of £195.0m and undrawn used stocking Goodwill & Intangibles 362.5 368.7
Slide 9: Summary: capital release and US sale
Summary • Strategic decision announced in December 2017 to: • Release £100m of capital over 3 years through a reduction in premium brand franchise locations • Sell the USA segment with proceeds anticipated being in excess of £100m before tax • The Group is still trading below our target range of 1.0
Slide 10: Operating Profit (£m)
Operating Profit (£m) H1 2018 H1 2017 % Change % Change L4L UK Motor 25.4 46.5 -45.4% -38.7% Software 5.6 5.5 +1.8% +1.8% Leasing 6.1 3.0 +103.3% +103.3% US Motor 5.6 5.0 +12.0% +14.0% TOTAL 42.7 60.0 -28.8% -23.4% Pendragon PLC 2018 10
Slide 11: 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 11
Slide 12: Sector Profit Bridge
Sector Profit Bridge —m £60.0 £50.00 4 £40.0 + £30.0 + £48.5 » ey 2 ° Underlying (£0.4) (£17) gad f£05— ike A£2.8)_ E30 9.9 £28.4 112017 Used Volume UsedMargin Aftersales New Volume New Margin Software Leasing © USMotor —Direct_— indirect Costs Interest. =: H1.2018 LL GP Lal GP LAL 6p lal GP LaL 6p
Slide 13: UK Motor Strategy and Business Review
UK Motor Strategy and Business Review Pendragon PLC 2018 13
Slide 14: UK Motor Strategy
UK Motor (£m) Strategy % Change H1 2018 H1 2017 % Change L4L Revenue 2,195.0 2,229.0 -1.5% -1.6% • Continue to invest in the transformation of our business model Gross Profit 237.4 262.5 -9.6% -8.9% to deliver a market leading share in Operating Costs (212.0) (216.0) -1.9% -2.4% the used vehicle and
Slide 15: Online visits summary
* Source of Online traffic split from FY17 figures Summary • Online visits to Evanshalshaw.com and Stratstone.com increased by 6.5% in the 12 month period to 27.7m visits • We continue to invest in online infrastructure, growing brand awareness and enhancing our online proposition Pendragon PLC 2018
Slide 16: Aftersales summary
Summary • Aftersales revenue down 3.5% and gross profit down 3.9% (L4L) • Retail labour sales up 2.3% (L4L) • Investment into dedicated refurbishment facilities allows local operations to focus on retail opportunities and expands our used vehicle refurbishment capacity Pendragon PLC 2018 16
Slide 17: New Vehicle Registrations
New Vehicle Registrations UK Rolling 6 month New Cars Registrations Market Avg./Natural Level Summary • New revenue fell by 2.5% (L4L) against a market fall of 6.3% (national vehicle registrations) • Gross profit fell by 6.9% (L4L) • UK market is returning to more natural levels in 2018 with a modes
Slide 18: Software Strategy and Business Review
Software Strategy and Business Review Pendragon PLC 2018 18
Slide 19: Software Strategy
Software (£m) Strategy % Change H1 2018 H1 2017 % Change L4L Revenue 8.4 7.8 +7.7% +7.7% • Pinewood, our software business, is core to our strategic plan to Gross Profit 7.4 6.8 +8.8% +8.8% transform the business Operating Costs (1.8) (1.3) +38.5% +38.5% • We have an objective to achieve at Operatin
Slide 20: Leasing Strategy and Business Review
Leasing Strategy and Business Review Pendragon PLC 2018 20
Slide 21: Leasing Strategy
Leasing (£m) Strategy % Change H1 2018 H1 2017 % Change L4L Revenue 40.8 30.2 +35.1% +35.1% • Retain low capital base and high return on investment from the Gross Profit 8.2 5.0 +64.0% +64.0% Leasing business Operating Costs (2.1) (2.0) +5.0% +5.0% Operating Profit 6.1 3.0 +103.3% +103.3% • Maintain
Slide 22: US Motor Strategy and Business Review
US Motor Strategy and Business Review Pendragon PLC 2018 22
Slide 23: US Motor Strategy
US Motor (£m) Strategy % Change H1 2018 H1 2017 % Change L4L Revenue 232.0 205.0 +13.2% +0.7% • We are selling the US Motor Group, as we have concluded that it is Gross Profit 30.1 26.8 +12.3% +0.4% economically right to realise its value. Operating Costs (24.5) (21.8) +12.4% -2.8% We are expecting
Slide 24: Strategic progress summary
Double used car revenue by 2021 Appointed an experienced Used Car Director to manage the operation and roll out of used Car Stores Opened full scale Car Stores in Norwich, Shrewsbury and Ipswich Opened two dedicated used car refurbishment facilities to industrialise this process. We intend t
Slide 25: APPENDIX – Pendragon 2018 Half Year Results
APPENDIX – Pendragon 2018 Half Year Results Pendragon PLC 2018 25
Slide 26: UK Motor summary
UK Motor (£m) Summary % Change H1 2018 H1 2017 % Change L4L • Used revenue -0.5% (L4L) Used 1,128.2 1,118.1 +0.9% -0.5% • Excluding nearly new vehicles, used Aftersales 171.6 179.3 -4.3% -3.5% revenue +3.1% (L4L) New 895.2 931.6 -3.9% -2.5% • Aftersales revenue -3.5% (L4L) Revenue 2,195.0 2,229.0 -1
Slide 27: Used car market summary
Summary • The latest available market data is for Q1 2018, which showed that the UK used market decreased by 5.0% in Q1 2018 • The used car market is forecast to be 7.6 million units in 2018, a decrease of 2.0% on 2017 • UK Motor grew used revenue by 0.9% in H1 2018 (-0.5% L4L) Pendragon PLC 2018 27
Slide 28: Used (£m)
Used (£m) Summary % Last % Last H1 2018 H1 2017 Year Year L4L • Used revenue down by 0.5% (L4L) Revenue 1,128.2 1,118.1 +0.9% -0.5% • Use revenue ,excluding nearly new Gross Profit 76.5 90.2 -15.2% -15.9% vehicles,+3.1% against record comparatives Gross Margin % 6.8% 8.1% -1.3% -1.3% • Margin impact
Slide 29: Car parc forecast summary
Summary • 3.4% reduction in 0-3 year car parc forecast in 2018 • 8.1% growth in 4-6 year car parc forecast in 2018 • 4-6 year car parc forecast to continue growing until 2020 Pendragon PLC 2018 29
Slide 30: Aftersales (£m)
Aftersales (£m) Summary % Last % Last H1 2018 H1 2017 Year Year L4L • Aftersales contributes 40.6% of the gross Revenue 171.6 179.3 -4.3% -3.5% profit of UK Motor and delivered a gross margin of 56.2% Gross Profit 96.4 101.8 -5.3% -3.9% • Aftersales revenue down by 3.5% (L4L) partly Gross Margin % 5
Slide 31: UK new car market summary
2.63 2.69 2.48 2.54 2.41 2.37 2.27 Summary • The UK new car market was down 6.3% in H1 2018 • In H1 2018 the retail market was down 4.9% and the fleet market was down 7.3% • Revised forecast of 5.0% fall in new car market in 2018 (previously forecast at 6.6% fall in 2018) Pendragon PLC 2018 31
Slide 32: New (£m)
New (£m) Summary % Last % Last H1 2018 H1 2017 Year Year L4L • New revenue fell by 2.5% (L4L) against a Revenue 895.2 931.6 -3.9% -2.5% market fall of 6.3% (national vehicle registrations) Gross Profit 64.5 70.5 -8.5% -6.9% • Gross profit fell by 6.9% (L4L) Gross Margin % 7.2% 7.6% -0.4% -0.3% Pendr
Slide 33: US Motor (£m)
US Motor (£m) Summary % Change H1 2018 H1 2017 % Change L4L • Strong revenue growth across aftersales Used 47.3 43.0 +10.0% -12.1% and new departments (L4L) Aftersales 21.6 18.5 +16.8% +8.1% • Aftersales revenue up 8.1% and gross profit up 9.3% (L4L) New 163.1 143.5 +13.7% +3.6% Revenue 232.0 205.0
Slide 34: Underlying Results (£m)
Underlying Results (£m) Continuing Discontinued 2018 Continuing Discontinued 2017 Revenue 2,224.2 232.0 2,476.2 2,267.0 205.0 2,472.0 Gross Profit 253.0 30.1 283.1 274.3 26.8 301.1 Gross Margin % 11.3% 13.0% 11.4% 12.1% 13.1% 12.2% Operating Costs (SG&A) (215.9) (24.5) (240.4) (219.3) (21.8) (241.1)