FY23 Annual Report

A comprehensive strategic review was completed by the Board and its advisors during FY23 in order to unlock the potential in the Group's share price and to return value to the Group's shareholders and other stakeholders. This review resulted in the disposal of the UK Motor and Leasing segments, together with the debt and pension liabilities of the Group, which culminated in a fantastic deal for our shareholders. The transformation strategy which enables Pinewood to become a pure- play SaaS business, is an incredibly exciting prospect. Pinewood was bought by Pendragon in 1998 and, under our ownership, has steadily grown to become a profitable, high margin business and, importantly, we have developed a product that is market-leading, not just in the UK, but globally.

The fact that Pinewood has a genuine cloud-based automotive retail system sets it apart from the vast majority of its competitors and means that the work done by our development team can be continuously rolled out across our customer base in 21 countries, with no disruption to our customers. This has enabled rapid international expansion of our universal core product, providing the same solution whatever the location. Our levels of functionality are significantly higher than most of the current automotive retail system providers, both at an individual store level but also at a Group management level, enabling larger Groups to achieve additional control and efficiency savings.

Although Pinewood was established c.40 years ago, we are treating this next phase of Pinewood's expansion similar to that of a start-up. The removal of barriers to accessing large parts of the UK customer base that existed under Pendragon's ownership will facilitate rapid growth in the UK as well as accelerating our international expansion.

Our international growth has historically been driven by two main routes. Firstly, through our sales teams, who have enabled us to reach a significant number of new countries in the last few years. Secondly, through our manufacturer partners which we have very strong relationships with. In a number of countries, manufacturers have mandated Pinewood as the system of choice, where all retailers in a particular brand have to have the Pinewood system installed.

On top of this, we have an exciting new driver of growth through our strategic partnership with Lithia and we are looking forward to installing our system across their network in the US and UK. Initially, the key pieces of work relating to expanding in the US are focused on integrations with manufacturer systems and other third party 'layered apps' that are widely used in the US market. The development work will be done by our UK-based development team. Once we are in a position to test in the US, it is likely we will run the Pinewood system in parallel with current systems in pilot locations before starting a full rollout across Lithia's US stores. Given the relatively early stage of development, exact timings have not been confirmed, although we are aiming to be testing in pilot locations in H1 FY25.

Finally, the past and future success of the Group is strongly linked to the outstanding Pinewood team. The development team have built a world-class product that is continually evolving and enabling dealerships to thrive in an ever-changing auto retail landscape. In addition to this, the sales teams have worked tirelessly to expand the business while being supported by the back-office and admin teams. The low team turnover is testament to a dynamic environment and a world class product and we look forward to growing the team as we expand both in the UK and abroad.

Bill Berman

CEO

25 April 2024

Pro-forma Comparative Information - Continuing Operations

(£m)

2 This is an Alternative Performance Measure (APM), see section 1 of financial statements

% Change

15.5%

25.8%

4.0%

28.6%

CONTINUING OPERATIONS FINANCIAL HIGHLIGHTS (FY23 WAS A 13 MONTH PERIOD, FY22 WAS A 12 MONTH PERIOD)

• Statutory revenue up 28.3% to £24.5m (FY22: £19.1m).
• Revenue including intercompany revenue1 up 26.0% to £32.0m
  (FY22: £25.4m), driven by both inflation-linked price increases and an increase in international users.
• Statutory gross profit up 27.5% to £21.8m (FY22: £17.1m).
• Gross profit including intercompany gross profit1 up 25.6% to £28.5m (FY22: £22.7m).
• Core Business operating profit1 up 25.5% to £13.8m (FY22: £11.0m).

OPERATIONAL HIGHLIGHTS

• Total users increased by 4% to 33,100.
• Strong global expansion continuing:
• • Record high international users at c.7,000, up 9%.
  • New implementations in Denmark and Luxembourg.
  • Expansion of the direct sales model in Asia Pacific.
• Continued high levels of customer retention with net user churn of c.2%, as the rate at which existing customers increased users was nearly sufficient to offset gross churn.
• Pinewood continues to build a strong partnership with Volkswagen AG and Porsche, which led to initial user implementations with large international dealer groups in both the European and the Asia Pacific market.

STRATEGY

• Transformation into a pure-playSoftware-as-a-Service (SaaS) Group following the sale of the UK Motor and Leasing divisions
• Materially enhanced opportunity for growth following creation of standalone SaaS business
• Entered into a strategic partnership with Lithia Motors Inc, post period-end, creating access to the North American Market, through a £10m Joint Venture investment
• We are looking forward to rolling out our system across the Lithia network in both the UK and US
• Pinewood continued to demonstrate its growth potential, with further growth in both user numbers and expansion into new geographies
• Post period end, the Group announced a £358m return of capital to shareholders, by way of a special dividend of 24.5p.
• Pinewood will host a Capital Markets Day in October 2024, with more details to be provided in due course

OUTLOOK

• We have had a good start to FY24 and although the broader macro- economic environment remains challenging, particularly in the UK, we do not envisage these as having a material impact on trading
• Our order bank of new customers remains strong and we are in discussions with a number of potential new customers both in the UK and internationally
• Whilst it remains early into the new financial year, the Board is confident in the prospects for the Group and expects FY24 to be in line with current market expectations.

HOW

WE ENGAGE

CUSTOMERS

WHY

WE ENGAGE

WHAT MATTERS TO THIS GROUP

WHAT DID WE DO AS A RESULT

We continue to engage with our customers in a variety of ways, including:-

Seeking continual feedback from both new and existing customers

Listening to any suggested enhancements to the Pinewood system

Our purpose is to deliver a market-leading Dealer Management System to all of our customers

• Uninterrupted access to our system
• Use of a market leading system
• Having a relationship with us where they are listened to

• Improving the Pinewood system by listening to customers
• Ensuring that our development team updates the system on a regular basis, often several times a week

We listen carefully to the views of all of our employees through regular employee surveys

We wish to continue to be a responsible employer, both in terms of continuing to ensure the health, safety and wellbeing of our employees and also ensuring we maintain a responsible approach to the pay and benefits our employees receive.

• Fair employment
• Fair pay and benefits
• Tackling our gender pay gap
• Diversity and inclusion
• Training, development and career opportunities
• Health and safety
• Responsible use of personal data

• We regularly review associate pay and conditions
• We continue to enhance the range of benefits available to associates

Regular meetings and updates with all key suppliers with management

Supplier payment terms reported and published

All our suppliers must be able to demonstrate that they take appropriate action to prevent involvement in modern slavery, corruption, bribery and breaches of competition law

• Fair trading and payment terms
• Anti-Bribery
• Anti-ModernSlavery
• Operational improvement

• We surveyed all key suppliers for adherence to anti-slavery standards.

HOW

WE ENGAGE

WHY

WE ENGAGE

WHAT MATTERS TO THIS GROUP

WHAT DID WE DO AS A RESULT

Regular involvement in charity appeals

We generate community involvement through local engagement, contributing to local areas in a variety of ways.

• Charitable donations and support;
• Employment opportunities;
• Volunteering;
• Fair tax policy

• We continued other charitable activities where possible

Over the last 3 years, we have reevaluated seriously our responsibilities to our customers, investors, associates, suppliers and the public in terms of how our activities impact the natural environment.

We continue to regularly review our environment policy.

We acknowledge the responsibility we have to protect the environment and to minimise the environmental impact of our activities.

• Minimising atmospheric emissions, commercial and industrial waste
• Minimising energy wastage
• Complying with statutory requirements relating to environmental matters
• Ensuring environmental priorities are accounted for appropriately in planning and decision making

• Operate an obsolete asset disposal policy
• Minimise and where possible, eliminating pollution
• We continue to reduce incidences of energy wastage wherever possible, as reported in our Environment, Social and Governance Report at page 30 of this Annual Report

Annual Report and Accounts

Corporate website

AGM

Results announcements and presentation

Shareholder and analyst meeting with management, followed by feedback from brokers and financial PR consultants

Engagement via the Directors and Company Secretary

We work to ensure our shareholders and their representatives have a good understanding of our strategy and business model

• Long term value creation
• Fair and equal treatment
• Growth opportunity
• Financial stability
• Transparency
• To share in the success of our business
• Dividends

• The chief executive officer and chief financal officer report back to the Board after the investor roadshows
• The Group's brokers and financial advisors provide detailed feedback after full and half year announcements and investor roadshows to inform the Board about investor views
• The non-executive chairman and senior independent director are available to shareholders and respond on matters relating to their responsibilities where requested
• We continue to consult with all major shareholders in relation to our remuneration policy
• We will engage with shareholders in the future about when to resume dividends