Full Year Results to 31st December 2020

24th Mar 2021

Pendragon delivered a strong second-half result both operationally and financially, with the Group’s performance in the period more than offsetting the losses incurred in the first-half driven by the disruption of the COVID-19 pandemic. As a result, the Group reported a full-year underlying profit before tax of £8.2m (FY19: underlying loss before tax of £16.4m).

The Group responded well to the changing trading dynamic over the year, supported by an incredible response from its people through a period of unprecedented disruption and change. During the first-half, the Group focused on protecting both its people and the financial health of the business. In the second half, and following on from work started before the pandemic, the Group took rapid and decisive action to realise material efficiency gains resulting in a significantly lower cost base. The Group also accelerated the development of its underlying digital capabilities improving the ability to trade across both physical and digital channels.

The Group has made great strides with the new strategy to "transform automotive retail through digital innovation and operational excellence”.

The strategy includes financial targets intended to restore the Group to sustainable profit growth and deliver attractive returns for stakeholders, targeting underlying profit before tax of £85-90m by FY25. The strategy comprises three pillars:

  • Unlock value in the franchised UK motor division,
  • Grow and diversify Pinewood and
  • Disrupt standalone used cars.

January & February Trading Update

  • Whilst performance has undoubtedly been impacted by the ongoing third national lock-down, the improvements made to the Group’s digital proposition have enabled it to trade with a high level of resilience, with over 20,000 vehicles delivered to customers in the first two months of the year.
  • Group like-for-like new car volumes are 24.3% lower year on year to the end of February, vs the SMMT reported market reduction of 38.1%, and used car volumes are down 32.8%. Aftersales has been more resilient, with gross profit down 13.1% vs last year. Overall, we are pleased with this performance against the challenging conditions of trading in lock-down.
  • Sales declines have been more than offset by improved gross margins combined with the benefit of a lower cost base, resulting in an underlying loss before tax of £4.8m, an improvement of £3.4m against the same period in FY20 (FY20: Loss of £8.2m).

Group Financial Highlights

 

H1 FY20 £m’s

H2 FY20 £m’s

FY20 £m’s

H1 FY19 £m’s

H2 FY19 £m’s

FY19 £m’s

Total change %

Like-for-like change %

Group Revenue

1,218.3

1,706.3

2,924.6

2,455.6

2,050.5

4,506.1

-35.1%

-25.5%

Underlying (Loss) / Profit before tax

(31.0)

39.2

8.2

(32.2)

15.8

(16.4)

150.0%

 

Non-Underlying charge

(21.0)

(16.8)

(37.8)

(102.4)

4.7

(97.7)

61.3%

 

(Loss) / Profit after tax

(41.4)

16.7

(24.7)

(129.6)

12.2

(117.4)

79.0%

 

 

 

H1 FY20 £m’s

H2 FY20 £m’s

H1 FY19 £m’s

H2 FY19 £m’s

Change vs FY19

Net Debt

(46.0)

(100.4)

(104.3)

(119.7)

16.1%

Like-for-like (LFL) results only include trading businesses which have been trading for 12 consecutive months. Reconciliations of the like-for-like figures to the total reported figures can see seen in Note 1 – Alternative Performance Measures.

Operating Highlights

Group Highlights

  • Underlying losses before tax of £31.0m in H1 offset by underlying profit before tax of £39.2m in H2, resulting in FY underlying profit before tax of £8.2m.
  • Group Revenue is down 35.1% to £2,924.6m (FY19: £4,506.1m).
  • After non-underlying items the Group reported loss before tax of £29.6m (FY19: £114.1m).
  • New strategy launched and strong early progress made, including enhanced digital. capabilities and developments to vehicle acquisition processes.
  • Organisation structure review completed, delivering annual equivalent benefit of c.£35m.
  • Estate review completed and 15 stores closed, delivering an annual equivalent benefit of c.£2m.
  • Digital capabilities accelerated rapidly. Fully transactional platforms enabled, offering both click and collect and home delivery propositions for customers.

Franchised UK Motor

  • Underlying operating profit up 42.3% to £18.5m (FY19 : £13.0m).
  • H1 reported underlying operating loss of £18.1m (H1 FY19 : loss of £7.7m) driven by the impact of the COVID-19 pandemic, strong recovery delivered H2 underlying operating profit of £36.6m (H2 FY19 : £20.7m).
  • Revenue and margins recovered against H1 across used, aftersales and new in H2 FY20.
  • Revenue is down 30.5% to £2,591.8m (FY19: £3,730.8m).
  • Reported operating losses after non-underlying items was £10.6m (FY19: operating losses of £96.4m).
  • Used car gross margins rose from 7.1% in H1 to 9.7% in H2, aftersales margins rose from 46.4% in H1 to 51.2% in H2 and new margins rose from 5.9% in H1 to 6.9% in H2.
  • FY Used vehicle gross profit per unit increased by £422 to £1,200 (FY19: £778).
  • LFL cost reduction of 20.9%, underpinned by Government support programmes, and the review of the store estate and organisational structures.
  • Total new car registrations down 29.4% in FY20, Pendragon new units sold down 29.5% on a like-for-like basis (down 32.9% total reported).

Software - Pinewood

  • Operating profit down 9.7% to £12.1m (FY19: £13.4m).
  • Profitability impacted during FY20 by a combination of discounts to support customers, and lower training and implementation revenue as a result of the pandemic.
  • Pinewood continued to invest in product development to support its future geographic and product expansion.
  • Developments made to software, enabling new functionality to be introduced, initially within Pendragon.
  • Revenue is down 4.7% to £22.3m (FY19: £23.4m).

Car Store

  • Underlying operating loss of £1.2m compared to an underlying loss of £25.2m in FY19.
  • Revenue is down 67.3% to £88.5m (FY19: £270.3m).
  • Further progress with performance during the second half resulted in an underlying operating profit of £0.5m in H2 FY20. (H2 FY19: underlying loss of £6.1m).
  • Profitable second-half leaves Car Store well-positioned for future growth ambition.
  • Improvement in both gross margins and operating expenses following the estate restructuring exercise in H2 FY19. Gross margin of 8.2% in FY20, up from 4.0% in FY19.
  • Gross profit per unit at £865 (FY19: £391).
  • Reported operating losses after non-underlying items was £1.3m (FY19: operating losses of £46.6m).

Leasing – Pendragon Vehicle Management

  • Operating profit up 3.9% to £13.3m (FY19 : £12.8m).
  • Strong H2 with operating profit of £8.6m (H2 FY19 : £6.5m) due to strong market conditions and pent-up release of de-fleeted vehicle disposals.
  • Revenue is down 1.6% to £86.3m (FY19: £87.7m).

US Motor Group

  • Los Angeles disposal was completed on 29 January 2021 for consideration of £16.3m.
  • Total current proceeds from all of the US Motor sites disposals since 2018 of £95.1m.
  • Entered agreement to sell the one remaining US Motor site, Santa Monica for £11.8m. (subject to completion adjustments), which was announced on 15 December 2020 and is expected to complete H1 2021.

Bill Berman, Chief Executive Officer:

“It has been a difficult year for many people and I’d like to thank all of our team who have worked exceptionally hard throughout the COVID-19 pandemic. Their resilience and dedication meant we were able to deliver a solid performance in what has been a particularly challenging period for the car retail industry.

We took early and decisive action to ensure the safety of our associates and our customers and protect the Group’s financial position. We also accelerated the development of our digital capabilities and introduced both click and collect and home delivery options for our customers. These actions, coupled with the positive progress made against our new strategy, provide us with a strong platform for the future and the results for this period show there is good momentum in the business, despite the external pressures. We are confident the improvements made to our business model over the past year leave us well positioned to navigate this period and accelerate our strategy during the course of the year and beyond.”

Conference call and presentation

A presentation for analysts and investors on Pendragon’s full-year results will be available to view from 7.00am today. The webcast can be found at:

https://webcasting.brrmedia.co.uk/broadcast/60523b0ecbd99d5cefbc108e

Bill Berman and Mark Willis will hold a Q&A conference call for analysts and investors at 9.30am.

Please contact pendragon@headlandconsultancy.com to register for the event.

Contacts

Name

Title

Responsibility

Contact

Bill Berman

Chief Executive

Pendragon PLC

01623 725200

Mark Willis

Chief Financial Officer

Pendragon PLC

01623 725200

Howard Lee

Partner

Headland

07836 785993

Henry Wallers

Director

Headland

07876 562436