Slide 1: Half Year Results
2017 Half Year Results THE LEADING AUTOMOTIVE ONLINE RETAILER Pendragon PLC 2017 1
Slide 2: Businesses Sectors
Businesses Sectors UK Motor Used Aftersales New Sale/Servicing of vehicles in the UK Servicing US Motor Sale/Servicing of vehicles in the US Service, Selling of all Selling of new maintenance non‐new vehicles (1st and repair of vehicles registration) vehicles Software Software solutions for retailer
Slide 3: Growth objectives by business
UK US Software Leasing Motor Motor Double used vehicle revenue Grow aftersales by selling more vehicles and retaining more customers Grow US Motor from selective franchise acquisition to grow used, new and aftersales Grow our Software business via growth in new markets in Europe and Asia/Pacif
Slide 4: Financial Summary
Financial Summary THE LEADING AUTOMOTIVE ONLINE RETAILER Pendragon PLC 2017 4
Slide 5: Financial Summary — Year Summary
Financial Summary — 3 Year Summary Underlying Profit Before Tax Underlying Operating Profit +4,3% +2.2% 19.7% +9.7% 2015 2016 2017 2015 2016 2017 Underlying Earnings Per Share Net Debt and EBITDA Ratio +13,0% +9.5% Op 09 0.4 0.3 +200.6% £140.1m “12.2% 2015 2016 2017 2015 2016 2017 Pendragon PLC 2017
Slide 6: Underlying Results (£m)
Underlying Results (£m) Summary Last % Last Actual Year Year • Underlying revenue increased by 6.3% in the Revenue 2,472.0 2,325.2 +6.3% period and by 7.3% on a like Gross Profit 301.1 288.2 +4.5% for like basis due to increased levels of used and Gross Margin % 12.2% 12.4% -0.2% aftersales activity
Slide 7: Non-Underlying (£m)
Non-Underlying (£m) Summary Jun-17 Jun-16 • No non-underlying Loss on Disposals of Businesses and operating profit or loss in the - (0.6) Property first half of 2017 Impairment of Assets Held For Sale - (1.0) • Interest on pensions was Operating Loss - (1.6) £1.4m in the period (£0.8m : 2016) Intere
Slide 8: Summary Cashflow (£m)
Summary Cashflow (£m) Summary Actual Last Year • Working capital outflow due Underlying Operating Profit Before Other Income 60.0 58.7 to re-allocation of used Depreciation and Amortisation 14.9 14.1 vehicle funding which Share Based Payments 1.0 1.2 assisted in interest savings of Working Capital (
Slide 9: Balance Sheet (£m)
Balance Sheet (£m) Summary Jun-17 Dec-16 Jun-16 • Strong balance sheet and Property 224.4 199.3 187.2 low debt level will allow the Plant & Equipment 221.5 206.0 188.1 group to continue to grow Goodwill & Intangibles 362.5 362.2 363.2 • Increased used vehicle stock Stock 980.5 846.2 933.9 enabled gr
Slide 10: Summary: leverage and capital allocation
Summary • The Group is still trading below our target range of 1.0-1.5:1 for the net debt to underlying EBITDA ratio • The Board is actively considering the Group’s capital structure and capital allocation priorities with a view to reinvest for growth • Expectation of continued strong cashflows to f
Slide 11: Sector View
Sector View Pendragon PLC 2017 11
Slide 12: Sector View Summary
Summary • Significant growth in used profitability driven by 20.9% increase in like for like used revenue • Aftersales growth aligned with the strong market dynamics • Strong contribution from our Software and Leasing businesses Pendragon PLC 2017 12
Slide 13: Used Cars
Sector Focus Used Cars Selling of all non-new vehicles Pendragon PLC 2017 13
Slide 14: Double Used Revenue by 2021
Car Store Coventry – opened June 2017 Double Used Revenue by 2021 Summary • We set out our objective in our 2016 full year results to double our used revenue by 2021 • Our objective in the short term, was to achieve at least double digit growth in 2017 • We have a clear organic and acquisition plan
Slide 15: Used vehicle market summary
Summary • The latest available market data is for Q1 2017, which confirmed the market increased by 3.2% • Pendragon PLC grew used revenue by 20.3% in H1 2017 (20.9% L4L) • We are expecting the used vehicle market to grow by 1.9% in 2017 to 8.0 million units Pendragon PLC 2017 15
Slide 16: Used (£m)
Used (£m) Summary Last % Last % Last Actual Year Year Year L4L • Used revenue up by 20.9% on a like for like Revenue 1,161.1 964.8 20.3% 20.9% basis Gross Profit 92.6 82.1 12.8% 12.5% • Growth significantly ahead of our double digit growth target Gross Margin % 8.0% 8.5% -0.5% -0.6% Car Store Glouce
Slide 17: Website visits summary
Summary • Evanshalshaw.com and Stratstone.com generated over 26 million visits on 12 month rolling basis • Growth of 27.7% in the first half, 15.0 million visitors • 66% of visitors are self generated • Continued investment in web platform and interfaces being under taken Pendragon PLC 2017 17
Slide 18: Aftersales
Sector Focus Aftersales Service, maintenance and repair of vehicles Pendragon PLC 2017 18
Slide 19: Grow aftersales by selling more vehicles and retaining customers
Grow aftersales by selling more vehicles, retaining more customers and outperforming the market Summary • Grow aftersales by selling more vehicles, retaining more customers and outperforming the market • Utilise our Software advantages to improve our experience for customers and drive efficiencies •
Slide 20: Car parc forecast summary
Summary • 2.4% growth in 0-3 year car parc forecast in 2017 • 9.8% growth in 4-6 year car parc forecast in 2017 • 4-6 year car parc forecast to continue growing until 2020 Pendragon PLC 2017 20
Slide 21: Aftersales (£m)
Aftersales (£m) Summary Last % Last % Last Actual Year Year Year L4L • Aftersales contributes 37.0% of the gross Revenue 197.8 187.3 +5.6% +6.0% profit of the group and delivered a gross margin of 56.4% Gross Profit 111.5 106.2 +5.0% +4.8% • Opportunities to grow in markets that we Gross Margin % 56
Slide 22: New Cars
Sector Focus New Cars Selling of new vehicles (1st registration) Pendragon PLC 2017 22
Slide 23: Maintain a balanced portfolio of franchise representation
Maintain a balanced portfolio of franchise representation Summary • Continue to invest in profitable franchises • Continue to develop our long-term relationships with our manufacturer partners • Deliver expectations for our customers Pendragon PLC 2017 23
Slide 24: New car market summary
Summary • The UK new car market was down 1.3% in H1 2017 • In H1 2017 the retail market was down 4.8% and the fleet market was up 1.6% • Forecast of 3.5% fall in new car market in 2017 and a 2.5% fall in 2018, SMMT predicting a 2.6% fall in 2017 in April 2017 (previously forecasting a 5% reduction)
Slide 25: New (£m)
New (£m) Summary Last % Last % Last Actual Year Year Year L4L • New profitability has decreased in some Revenue 1,075.1 1,140.9 -5.8% -4.3% areas, however we have seen stronger performance in some key brands during the Gross Profit 85.2 90.6 -6.0% -5.2% period Gross Margin % 7.9% 7.9% - - • Our over
Slide 26: Business View
Business View Pendragon PLC 2017 26
Slide 27: Business View Summary
Summary • UK Motor profitability strong from used and aftersales, declined in new • US Motor continues to perform strongly and consistently • Continued strong contribution from our Software and Leasing businesses Pendragon PLC 2017 27
Slide 28: Revenue and Gross Profit by business
Revenue (£m) Gross Profit (£m) Last % Last % Last Last % Last % Last Actual Actual Year Year Year L4L Year Year Year L4L UK Motor 2,229.0 2,135.1 +4.4% +5.4% UK Motor 262.5 256.8 +2.2% +2.3% US Motor 205.0 157.9 +29.8% +29.8% US Motor 26.8 22.1 +21.3% +21.3% Software 7.8 7.0 +11.4% +11.4% Software 6
Slide 29: Operating Profit and Margin by business
Operating Profit (£m) Operating Margin % Last % Last % Last Last % Last % Last Actual Actual Year Year Year L4L Year Year Year L4L UK Motor 46.5 47.8 -2.7% -1.6% UK Motor 2.1% 2.2% -0.1% -0.2% US Motor 5.0 4.7 6.4% 6.4% US Motor 2.4% 3.0% -0.6% -0.6% Software 5.5 4.8 +14.6% +14.6% Software 70.5% 68.
Slide 30: Growth priorities by business
UK Motor Software • Double used revenue by 2021 • Expand in new markets • Aftersales growth through selling more vehicles and increasing vehicle retention US Motor Leasing • Maintain performance in new • Grow our vehicle fleet and vehicles provide a used vehicle supply • Grow representation points P
Slide 31: Clear growth path across our business segments
• Clear growth path across each of our 4 business segments: UK Motor, US Motor, Software and Leasing • Evanshalshaw.com and Stratstone.com websites with the UK Motor business continue to grow and generated nearly 26 million visits for the 12 months to June 2017 – 66% organic visitors. Visits up 27.7
Slide 32: Our Strategic Pillars
Our Strategic Pillars focus on Choice, Value, Customer Service and Convenience. Our Systems and Intellectual Property provides a superior advantage over our peers and is a key enabler for our strategic pillars. Pendragon PLC 2017 32