Slide 1: 2017 Full Year Results
2017 Full Year Results THE LEADING AUTOMOTIVE ONLINE RETAILER Pendragon PLC 2018 1
Slide 2: Software and Online Technologies - Online and technology at the heart of our business
Software and Online Technologies - Online and technology at the heart of our business transformation, providing the online platform for our customers and team members. Software global opportunity with deployment in Europe, Africa and Asia Pacific. Reshaping of the Business – Acceleration of the
Slide 3: Used Revenue Up 15.3% (L4L) – Further strong growth
Used Revenue Up 15.3% (L4L) – Further strong growth against a backdrop of a challenging economic environment and lower consumer confidence. Aftersales Revenue Up 6.9% (L4L) – Continuing growth due to own initiatives and favourable market conditions. New Revenue Down 4.9% (L4L) – Reduction in n
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 +7.6% +0.7% -19.9% -17.2% 2015 2016 2017 2015 2016 2017 Underlying Earnings Per Share Net Debt and EBITDA Ratio +5.4% “15.4% Si iain ng 05 0.6 35P +35.3% +15.2% on 2015 2016 2017 2015 2016 2017 Pendragon PLC
Slide 6: Underlying Results (£m) Summary
Underlying Results (£m) Summary 2017 2016 % Change • Underlying revenue Revenue 4,739.1 4,537.0 +4.5% increased by 4.5% in the period and by 5.1% on a like Gross Profit 552.9 559.6 -1.2% for like basis due to increased levels of used and Gross Margin % 11.7% 12.3% -0.6% aftersales activity Operating
Slide 7: Summary Cashflow (£m)
Summary Cashflow (£m) Summary 2017 2016 Underlying Operating Profit Before Other Income 83.8 101.2 Depreciation and Amortisation 28.5 29.9 • £17.5m investment on 40 site Share Based Payments (1.7) 2.2 roll-out in the period Working Capital 18.3 (30.7) Operating Cashflow 128.9 102.6 • Property spend
Slide 8: Capital Expenditure 2016 to FY 2018 (£m)
Capital Expenditure 2016 to FY 2018 (£m) 2016 2017 H1 2018 H2 2018 FY 2018 40 Site Roll-Out 7.0 17.5 4.3 8.4 12.7 Franchise 16.2 25.5 5.0 7.5 12.8 Underlying Replacement 26.2 13.8 7.0 7.0 14.0 Business Acquisitions 2.6 17.8 - - - Property 8.8 24.6 - - 0^ Business and property disposals (17.0) (2.5)
Slide 9: Balance Sheet (£m)
Summary • Strong balance sheet and low debt level will allow the Group Balance Sheet (£m) to continue to grow 2017 2016 Property 261.2 199.3 • Cash and undrawn bank facilities of £177.6m and Plant & Equipment 218.7 206.0 undrawn used stocking facility of £85m at year end Goodwill & Intangibles 368.7
Slide 10: Strategic decision announced in December 2017
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 11: Operating Profit (£m)
Operating Profit (£m) 2017 2016 % Change % Change L4L UK Motor 52.3 74.0 -29.3% -27.3% Software 10.9 10.0 +9.0% +9.0% Leasing 9.8 5.0 +96.0% +96.0% US Motor* 10.8* 12.2 -11.5%* -13.9%* TOTAL 83.8 101.2 -17.2% -16.1% Pendragon PLC 2018 11
Slide 12: Business Strategy and Review: Businesses
Business Strategy and Review Businesses UK Motor Sale/Serving of vehicles in the UK Software Software solutions for retailers Leasing Vehicle leasing and fleet in the UK US Motor Sale/Servicing of vehicles in the US Pendragon PLC 2018 12
Slide 13: Quarter Splits and Volume / Premium
Quarter Splits (£1.5) Volume / Premium (£1.5) Q1,2 & 4 = £7.6 Q3 = (£9.1) Evans Halshaw = £7.2 Stratstone = (£8.7) Volume Margin Volume Margin Volume Margin Volume Margin (£14.2) (£9.0) £21.4 £16.6 £8.0 £4.4 (£17.1) (£13.1) Used = (£1.5) Pendragon PLC 2018 13
Slide 14: UK Motor Strategy and Business Review
UK Motor Strategy and Business Review Pendragon PLC 2018 14
Slide 15: UK Motor (£m) Strategy
UK Motor (£m) Strategy % Change 2017 2016 % Change L4L Revenue 4,243.6 4,177.9 +3.1% +4.0% • Transform the business to deliver Gross Profit 471.0 490.7 -4.0% -3.4% market leading shares in used vehicle and aftersales activity Operating Costs (418.7) (416.7) +0.5% +1.0% Operating Profit 52.3 74.0 -29
Slide 16: UK Motor Strategy — Doubling Used Revenue and Progress
UK Motor Strategy — Doubling Used Revenue and Progress Used Revenue Target and Progress to Date (£m) £4,500.0m £4,000.0m £3,500.0m £3,000.0m £3,690.6m £2,500.0m £2,000.0m £1,845.3m £1,500.0m 2016 Revenue Organic 40 Sites London 2021 Revenue Pendragon PLC 2018 16
Slide 17: Q3 used margin impacted by unusual market conditions
2017 Q1, Q2 & Q4 Average Used Margin of 8.0% Q3 used margin 2.4% behind average Summary • Q3 used margin impacted by unusual market conditions which included unprecedented high levels of pre-registration activity • In Q3, the used margin of 5.6% was 2.4% behind the 8.0% average used margin for the o
Slide 18: Online visits increased by 20.3%
Summary • Online visits to Evanshalshaw.com and Stratstone.com increased by 20.3% in the period to 27.3m visits • We continue to grow the brand awareness and online proposition and we are investing in online Pendragon PLC 2018 18
Slide 19: Aftersales revenue up 6.5% like for like
Summary • Aftersales revenue up 6.5% and gross profit up 1.1% like for like • Retail labour sales up 3.4% on a like for like basis • Investment in capacity in place for used vehicle preparation (the value added to acquired vehicles for retailing) Pendragon PLC 2018 19
Slide 20: New Vehicle Registrations % Finance Penetration on New Cars
New Vehicle Registrations % Finance Penetration on New Cars Market Avg./Natural Level Summary • UK market should return to more natural levels in 2018 with a modest reduction in 2019 • Market average / natural level of market achieved by late 2018/2019 • Finance penetration on new cars plateauing wh
Slide 21: Q3 new margin impacted by unusual market conditions
2017 Q1, Q2 & Q4 Average New Margin of 7.3% Q3 new margin 1.2% behind average Summary • Q3 new margin impacted by unusual market conditions • In Q3, the new margin of 6.1% was 1.2% behind the 7.3% average new margin for the other quarters of 2017 • If a 7.3% new margin had been achieved in Q3, this
Slide 22: Software Strategy and Business Review
Software Strategy and Business Review Pendragon PLC 2018 22
Slide 23: Software (£m) Strategy
Software (£m) Strategy % Change 2017 2016 % Change L4L Revenue 15.8 14.4 +9.7% +9.7% • Achieve at least double digit Gross Profit 13.8 12.3 +12.2% +12.2% growth in revenue • Expansion globally Operating Costs (2.9) (2.3) +26.1% +26.1% Operating Profit 10.9 10.0 +9.0% +9.0% Gross Margin % 87.3% 85.4%
Slide 24: Leasing Strategy and Business Review
Leasing Strategy and Business Review Pendragon PLC 2018 24
Slide 25: Leasing (£m) Strategy
Leasing (£m) Strategy % Change 2017 2016 % Change L4L Revenue 64.9 46.7 +39.0% +39.0% • Maintain at least double digit Gross Profit 13.9 9.0 +54.4% +54.4% growth in revenue and gross profit Operating Costs (4.1) (4.0) +2.5% +2.5% Operating Profit 9.8 5.0 +96.0% +96.0% • Provide a used vehicle supply
Slide 26: US Motor Strategy and Business Review
US Motor Strategy and Business Review Pendragon PLC 2018 26
Slide 27: US Motor (£m) Strategy
US Motor (£m) Strategy % Change 2017 2016 % Change L4L Revenue 414.8 358.0 +15.9% +12.4% • Selling the US Motor business in Gross Profit 54.2 47.6 +13.9% +9.9% 2018 • Proceeds expected in excess of Operating Costs (43.2) (35.4) +22.6% +18.1% Operating Profit 10.8 12.2 -11.5% -13.9% £100m before tax
Slide 28: Software and Online Technologies - Online and technology at the heart of our business
Software and Online Technologies - Online and technology at the heart of our business transformation, providing the online platform for our customers and team members. Software global opportunity with deployment in Europe, Africa and Asia Pacific. Reshaping of the Business – Acceleration of the
Slide 29: APPENDIX – Pendragon 2017 Full Year Results
APPENDIX – Pendragon 2017 Full Year Results Pendragon PLC 2018 29
Slide 30: UK Motor (£m) Summary
UK Motor (£m) Summary Significant performance from Used % Change 2017 2016 % Change L4L • Used 2,125.5 1,845.3 +15.2% +15.8% revenue up 15.8% like for like Aftersales 350.6 333.2 +5.2% +6.5% • Aftersales revenue up 6.5% like for like New 1,767.5 1,939.4 -8.9% -7.5% • New revenue back 7.5% like for l
Slide 31: UK used vehicle market in 2017
Summary • The latest available market data is for Q4 2017, which showed that the UK used market decreased by 5.4% in Q4 2017 • In 2017, the used vehicle market decreased by 1.2% to 7.8 million units, growing by 1.1% in H1 2017 and decreasing by 3.7% in H2 2017 • UK Motor grew used revenue by 15.2% i
Slide 32: Used (£m) Summary
Used (£m) Summary • Used revenue up by 15.8% on a like for like Last % Last % Last Actual Year Year Year L4L Revenue 2,125.5 1,845.3 +15.2% +15.8% basis Gross Profit 156.3 157.6 -0.8% -1.0% • Growth significantly ahead of our double digit growth target Gross Margin % 7.4% 8.5% -1.1% -1.3% • Signific
Slide 33: Car parc forecast
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 33
Slide 34: Aftersales (£m) Summary
Aftersales (£m) Summary • Aftersales contributes 40.6% of the gross Last % Last % Last Actual Year Year Year L4L Revenue 350.6 333.2 +5.2% +6.5% profit of UK Motor and delivered a gross margin of 54.5% Gross Profit 191.2 190.8 +0.2% +1.1% • Opportunities to grow in markets that we Gross Margin % 54.
Slide 35: UK new car market in 2017
2.63 2.69 2.48 2.54 2.38 2.33 2.27 Summary • The UK new car market was down 5.6% in 2017 • In H1 2017 the retail market was down 4.8% and the fleet market was up 1.6% and in H2 2017 the retail market was down 9.2% and the fleet market was down 11.5% • Forecast of 6.6% fall in new car market in 2018
Slide 36: % PCP of New and Used UK Cars Financed
% PCP of New UK Cars Financed % PCP of Used UK Cars Financed Summary • The percentage PCP on new cars financed has begun to plateau which helps new market dynamics • The percentage PCP on used cars that are financed has been rising and is provides a strong recycle flow for used revenue Pendragon PLC
Slide 37: New (£m) Summary
New (£m) Summary • New revenue fell by 7.5% in the period on a Last % Last % Last Actual Year Year Year L4L Revenue 1,767.5 1,939.4 -8.9% -7.5% like for like basis Gross Profit 123.5 142.3 -13.2% -12.3% • Gross profit fell by 12.3% in the period on a like for like basis Gross Margin % 7.0% 7.3% -0.3
Slide 38: US Motor (£m) Summary
US Motor (£m) Summary • Strong revenue growth across all % Change 2017 2016 % Change L4L Used 85.7 78.3 +9.5% +5.0% departments Aftersales 37.0 32.6 +13.5% +11.0% • Really strong performance in aftersales with revenue up 11.0% and gross profit up New 292.1 247.1 +18.2% +15.0% 11.7% like for like Rev