25 April
2024
Pinewood Technologies Group PLC
Results for the 13 month period ended 31
January 2024
·
Pinewood reports maiden results as a pure-play,
Software-as-a-Service (SaaS) Group
·
Strong double-digit growth in revenue and
profit
·
Continued global expansion of customer base and high levels of
customer retention
Pinewood Technologies Group PLC ("Pinewood" or
the "Group", LSE: PINE), a leading pure-play SaaS business
providing innovative automotive retail solutions to the automotive
industry, today announces its audited financial results for the 13
months ended 31 January 2024.
Group Financial Summary
|
13m period ended 31 January
2024 (FY23)
|
Year ended 31 December 2022 (FY22)
|
£m
|
Continuing
operations
|
Discontinued operations
|
Total
|
Continuing
operations
|
Discontinued operations
|
Total
|
Revenue
|
24.5
|
4,318.0
|
4,342.5
|
19.1
|
3,600.9
|
3,620.0
|
Gross Profit
|
21.8
|
485.4
|
507.2
|
17.1
|
440.1
|
457.2
|
Operating Profit before other
income
|
10.0
|
105.8
|
115.8
|
7.0
|
86.3
|
93.3
|
Other income - profit on the sale of
businesses and property, plant and equipment
|
-
|
41.8
|
41.8
|
-
|
7.7
|
7.7
|
Operating Profit
|
10.0
|
147.6
|
157.6
|
7.0
|
94.0
|
101.0
|
Interest
|
(0.1)
|
(65.7)
|
(65.8)
|
-
|
(43.8)
|
(43.8)
|
Profit Before Tax
|
9.9
|
81.9
|
91.8
|
7.0
|
50.2
|
57.2
|
The breakdown of continuing operations operating
profit is as follows:
£m
|
13m period ended 31 January 2024
(FY23)
|
Year ended 31
December 2022 (FY22)
|
Pinewood Core Business1
|
13.8
|
11.0
|
PLC Costs
|
(2.8)
|
(2.5)
|
Legacy US Motor Business
|
(1.0)
|
(1.5)
|
Group
Total
|
10.0
|
7.0
|
1 Previously reported as Pinewood segment
Pro-forma Comparative Information - Continuing
Operations
£m, unless
stated
|
13m period ended 31
January 2024 (FY23)
|
13m period ended 31
January 2023
|
% Change
|
Revenue, including intercompany
revenue1
|
32.0
|
27.7
|
15.5%
|
EBITDA2
|
15.6
|
12.4
|
25.8%
|
EBITDA Margin
(%)2
|
48.8%
|
44.8%
|
4.0%
|
Profit Before Tax
|
9.9
|
7.7
|
28.6%
|
1 Revenue includes intercompany amounts
2 This is an Alternative Performance Measure (APM) - see note
8
Ian Filby, Chairman of Pinewood Technologies Group PLC,
said:
"We are very pleased to be reporting the first
set of financial results for Pinewood following the successful sale
of Pendragon's UK Motor and Leasing divisions to Lithia Motors.
Pinewood is a leading provider of cloud-based Dealer Management
Software and we have made positive progress during the year to
build on this market position. We have continued to expand our
customer base while sustaining high levels of customer retention,
which is reflected in a net user churn rate of c.2%. This
contributed to strong growth in revenue and profit in the
period.
"We are excited by the opportunity that lies
ahead for Pinewood as a standalone business. Following the
transaction with Lithia, the business is in a robust financial
position and is well positioned for growth through product
innovation, user growth in existing territories and accessing the
North American market in partnership with Lithia through a joint
venture agreement. We are confident in the quality of our products
and our market proposition, and we are looking forward to making
further progress in the year ahead."
Note: Following the announcement
on 30 June 2023 of Ian Filby's decision to stand down as
non-executive chairman, the Board has not yet appointed a
successor, primarily due to the process of disposing of the UK
Motor and leasing divisions, which took priority in the second half
of 2023 and in early 2024 and hence Ian has continued as
Chairman.
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 profit up 25.5% to £13.8m (FY22: £11.0m).
Operational Highlights
· Total users
increased by 4% to 33,100.
· Strong global
expansion continuing:
o Record high
international users at c.7,000, up 9%.
o New
implementations in Denmark and Luxembourg.
o 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-play Software-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.
1 This is an Alternative Performance Measure (APM) - see note
8
Conference
call and presentation
A presentation for sell-side analysts will be
held at 9.00am (UK time) today and this will be followed by a
Q&A session with the management team. Please use the following
link to register and to join the livestream of the
presentation:
https://brrmedia.news/PINE_FY.
A webcast replay of the presentation will be
made available on Pinewood's website later in the day. The webcast
will be published on: https://investor.pinewoodtech.com/results-centre
For further
enquiries please contact:
Headland
Henry Wallers
Jack Gault
|
Tel: 07876 562436
Tel: 07799 089357
|
Chief Executive's
Review
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
Chief Executive
25 April 2024
Business Review
The business was historically organised into 3
segments, analysed as follows:
o Software -Software as a Service provision to global automotive
business users
o UK
Motor - Discontinued segment
o Leasing - Discontinued segment
Software - Pinewood
Described above as 'Pinewood Core
Business'.
Revenue and gross profit include intercompany
amounts.
£m
|
H1 FY23
|
H2 FY23
|
FY23
|
|
H1 2022
|
H2 2022
|
FY22
|
|
Change
%
|
Revenue
including intercompany
amounts1
|
14.5
|
17.5
|
32.0
|
|
12.4
|
13.0
|
25.4
|
|
26.0%
|
Gross Profit
including intercompany
amounts1
|
12.9
|
15.6
|
28.5
|
|
11.1
|
11.6
|
22.7
|
|
25.6%
|
Gross margin
rate
|
89.0%
|
89.1%
|
89.1%
|
|
89.5%
|
89.2%
|
89.4%
|
|
-0.3%
|
Core Business Operating Expenses
|
(6.4)
|
(8.3)
|
(14.7)
|
|
(5.6)
|
(6.1)
|
(11.7)
|
|
25.6%
|
Core Business
Operating Profit1
|
6.5
|
7.3
|
13.8
|
|
5.5
|
5.5
|
11.0
|
|
25.5%
|
Operating
margin rate
|
44.8%
|
41.7%
|
43.1%
|
|
44.4%
|
42.3%
|
43.3%
|
|
-0.2%
|
1 This is an Alternative Performance Measure (APM) - see note
8
Note: FY23 is a 13 month period ended
31 January 2024 and FY22 is the year ended 31 December
2022
A more detailed breakdown of the
Pinewood Core Business financials for FY23 can be seen
below:
£m
|
Contribution from
Pendragon
|
Contribution from external
customers
|
Pinewood PLC standalone result
|
Share of Pendragon Group
Overheads
|
Pinewood segment as a reported in Pinewood Group
accounts
|
Revenue including intercompany
amounts1
|
7.5
|
24.5
|
32.0
|
-
|
32.0
|
Gross Profit including intercompany
amounts1
|
6.7
|
21.8
|
28.5
|
-
|
28.5
|
Core Business Operating
Expenses
|
(2.4)
|
(12.0)
|
(14.4)
|
(0.3)
|
(14.7)
|
Core Business Operating
Profit1
|
4.3
|
9.8
|
14.1
|
(0.3)
|
13.8
|
1 This is an Alternative Performance Measure (APM) - see note
8
A more detailed breakdown of the
Pinewood Core Business financials for FY22 can be seen
below:
£m
|
Contribution from
Pendragon
|
Contribution from external
customers
|
Pinewood PLC standalone result
|
Share of Pendragon Group
Overheads
|
Pinewood segment as a reported in Pinewood Group
accounts
|
Revenue including intercompany
amounts1
|
6.3
|
19.1
|
25.4
|
-
|
25.4
|
Gross Profit including intercompany
amounts1
|
5.6
|
17.1
|
22.7
|
-
|
22.7
|
Core Business Operating
Expenses
|
(2.1)
|
(9.3)
|
(11.4)
|
(0.3)
|
(11.7)
|
Core Business Operating
Profit1
|
3.5
|
7.8
|
11.3
|
(0.3)
|
11.0
|
1 This is an Alternative Performance Measure (APM) - see note
8
· As
part of the transaction with Lithia Motors, Inc., Lithia UK have
signed a contract to install the Pinewood system.
· The
contract is for an initial three year period, which then goes onto
a rolling 12 month basis.
· Strong
international growth driven by expansion of the direct sales model
and new implementations in Europe.
· Strong
partnerships with strategic OEMs.
Strategy delivery - Grow and diversify
Pinewood
As part of its historic Group
strategy presentation, Pendragon announced its plan to 'grow and
diversify Pinewood'. This included the key objectives
of:
· Growing the international user base by 80% and the total user
base by 10%; and,
· Further product extension enabling turn-key digital automotive
retail solutions.
In FY23 Pinewood continued to focus
on both elements of the 'grow and diversify' strategy.
· Grow:
strong international growth continued in FY23 with new
implementations in Denmark and Luxembourg as well as an expansion
of the direct sales model in Asia Pacific. The UK and Ireland
market continued to grow both in terms of users and
revenues.
· Diversify: development of the core product continues. New
products designed to support digital automotive retail are being
developed to benefit both Lithia UK / Pendragon and the wider
customer base. Moreover, Pinewood's strategic partnership with
Lithia is expected to unlock significant opportunities in the North
American Market.
Operating Review
Pinewood is a software business that
provides Software as a Service ("SaaS") in the UK and in a number
of countries worldwide.
The automotive retail system market
for Franchised Motor Dealers is estimated to be worth over £100
million in the UK. Two providers dominate the UK
market. The global automotive retail system market which is
highly fragmented, is estimated to be worth approximately £3.8bn,
with over 50 different providers within Europe alone.
Pinewood's unique approach to the
market is characterised by:
· a
single product capable of global deployment, which simplifies
future developments to the system and reduces operating
costs;
· a
feature-rich cloud-based solution, with no need for costly
third-party add-ons;
· focus
on strong manufacturer partnerships and supporting dealer
profitability; and
· commitment to using the latest technology to reshape motor
retail
Pinewood was an early adopter of the
SaaS business model and has focused on developing recurring revenue
streams. Today, c.85% of Pinewood's revenues are on a recurring
basis. Whilst the former Pendragon dealers (now part of Lithia UK)
remain important customers to Pinewood, as Pinewood has grown,
Pendragon's proportion of the Pinewood total user base has been
diluted to c. 15% with intra-group charging maintained at a
competitive market rate.
During FY23, overall user numbers
increased by 4% to c.33,100 with the expansion delivered both
internationally as well as in the UK and Ireland. Across Pinewood's
international markets there was a 9% net increase in user numbers
to a record high of c.7,000 users. International user growth in
FY23 was particularly strong in Europe with Pinewood benefiting
from new implementations in Denmark and Luxembourg.
In addition, Pinewood has further
growth aspirations in the Asia Pacific region and has incorporated
a subsidiary in Japan and begun to recruit a local Japanese
team. This team are involved in the current implementations
taking place in the Porsche dealerships in Japan.
Pinewood's growth benefits not just
from sales to new customers but also from the expansion of its
existing customer base. In FY23 net user churn in the UK and
Ireland (excluding Pendragon) was less than 2%, as the rate at
which existing customers grew users was nearly sufficient to fully
offset gross churn.
In FY23 Pinewood increased its
investment in the platform as development capex rose to £6.8m with
81% of development costs being capitalised (FY22 82%). New system
functionality has been developed for new markets as Pinewood
expands in Europe and Asia Pacific. Substantial investments have
also been made in platform architecture and security.
There has also been good further
progress in terms of OEM support at an international level.
Pinewood continues to build a strong partnership with Volkswagen AG
and Porsche, which has enabled constructive dialogue and, in some
cases, initial user implementations with large international dealer
groups in both the European and the Asia Pacific market.
Financial
Review
Total revenues including
intercompany revenue increased by 26.0% to £32.0m compared to
FY22.
Gross profit including intercompany
gross profit increased by 25.6% to £28.5m. The gross margin was
broadly flat compared to the prior period, following the one-off
transition to more extensive use of Microsoft Azure at the end of
FY21.
Core Business operating expenses
increased by £3.0m or 25.6% compared to FY22. In FY23 the
amortisation charge of £5.2m made up over a third of operating
costs. Alongside rising personnel costs, the higher amortisation
charge drove the operating cost increase, both reflecting increased
investment in the development of the platform and Pinewood's
operational capabilities.
As a result of these movements, Core Business
operating profit was £13.8m, an increase of 25.5% compared to
FY22.
UK Motor
Following the sale of the UK Motor division to Lithia Motors, Inc on 31
January 2024, the UK Motor segment is now a discontinued
operation.
Leasing - Pendragon Vehicle Management
Following the sale of the Leasing division to Lithia Motors, Inc on 31
January 2024, the Leasing segment is now a discontinued
operation.
Disposal of UK Motor and Leasing segments
On 31 January 2024, the UK Motor and Leasing
segments, together with related central support functions, were
disposed of to Lithia Motors, Inc. for £377.5m. As a result,
these segments have been presented as discontinued operations. The
revenue and gross profit from discontinued operations in the period
was £4,318.0m (FY22: £3,600.9m) and £485.4m (FY22: £440.1m)
respectively. The operating profit from discontinued operations,
which included the profit on disposal of businesses and property,
plant and equipment, was £147.6m (FY22: £94.0m).
The UK Motor and
Leasing segments that were disposed of, were trading broadly in
line with management expectations for the 13 month period prior to
the sale to Lithia Motors, Inc.
The sale to Lithia Motors, Inc. resulted in a
profit on disposal of £40.7m. Consideration was received in cash on
1 February 2024. As announced on 5 April 2024, the Group
proposes to pay a special dividend to shareholders of 24.5p per
share on 7 May 2024.
Pension
Following the sale of the UK Motor and Leasing divisions to Lithia
Motors, Inc on 31 January 2024, all of the Group's pension
obligations and liabilities have been assumed by Lithia.
Revolving Credit Facility (RCF)
The Group has a £10m RCF which
matures in February 2027. This facility was arranged post
period end in February 2024.
CONSOLIDATED INCOME STATEMENT
FOR THE 13 MONTH PERIOD ENDED 31 JANUARY 2024
|
|
13m period ended
31 Jan 2024
|
Year ended
31 Dec 2022
|
|
Note
|
£m
|
£m
|
Continuing operations
|
|
|
|
Revenue
|
|
24.5
|
19.1
|
Cost of sales
|
|
(2.7)
|
(2.0)
|
Gross profit
|
|
21.8
|
17.1
|
Operating expenses
|
|
(11.8)
|
(10.1)
|
Operating profit
|
|
10.0
|
7.0
|
|
|
|
|
Finance expense
|
|
(0.1)
|
-
|
Finance income
|
|
-
|
-
|
Net finance
costs
|
|
(0.1)
|
-
|
|
|
|
|
Profit before
taxation
|
|
9.9
|
7.0
|
Income tax
expense
|
|
(1.6)
|
(1.3)
|
Profit for the
period/year from continuing operations
|
|
8.3
|
5.7
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
|
|
|
Profit for the
period/year from discontinued operations, net of tax
*
|
|
73.4
|
39.8
|
Profit for the
period/year
|
|
81.7
|
45.5
|
|
|
|
|
Earnings per share
|
|
|
|
Basic earnings per share
|
2
|
117.0p **
|
65.4p
|
Diluted earnings per share
|
2
|
117.0p **
|
63.0p
|
|
|
|
|
Earnings per share - continuing
operations
|
|
|
|
Basic earnings per share
|
2
|
11.9p **
|
8.2p
|
Diluted earnings per
share
|
2
|
11.9p **
|
7.9p
|
* The
discontinued operations in the 13m period to 31 January 2024 and
the year ended 31 December 2022 are in respect of the Group's motor
and leasing businesses.
**
The Basic earnings per share and diluted earnings per share measure
for the current period/year apply to continuing and total
operations.
On 5 April 2024, the Company
announced that it would undertake a capital reorganisation whereby
1 new Ordinary Share of 100 pence each will be issued for every 20
existing Ordinary Shares of 5 pence each. This is an adjusting post
balance sheet event and therefore the earnings per share
calculations for the current period and prior period financial
statements have been presented reflecting the revised number of
shares post the capital reorganisation.
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE 13 MONTH PERIOD ENDED 31 JANUARY 2024
|
|
13m period ended
31 Jan 2024
£m
|
Year ended
31 Dec 2022
£m
|
Profit for the period/year
|
|
81.7
|
45.5
|
Other comprehensive income/(expense)
|
|
|
|
Items that will never be reclassified
to profit and loss:
|
|
|
|
Defined benefit plan remeasurement
(losses)/gains
|
|
(11.3)
|
8.2
|
Income tax relating to defined benefit plan
remeasurement gains / (losses)
|
|
2.3
|
(1.6)
|
|
|
(9.0)
|
6.6
|
Items that are or may be reclassified to profit
and loss:
|
|
|
|
Foreign currency translation differences of
foreign operations
|
|
(0.1)
|
0.5
|
|
|
(0.1)
|
0.5
|
Other comprehensive (expense)/income for the
period/year, net of tax
|
|
(9.1)
|
7.1
|
Total comprehensive income for the
period/year
|
|
72.6
|
52.6
|
|
|
|
|
Total comprehensive income for the
period attributable to equity shareholders of the Group arises
from:
|
|
|
|
Continuing operations
|
|
8.2
|
6.2
|
Discontinued operations
|
|
64.4
|
46.4
|
|
|
72.6
|
52.6
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 13 MONTH PERIOD ENDED 31 JANUARY 2024
|
|
Share
capital
£m
|
Share
premium
£m
|
Capital redemption
reserve
£m
|
Other
reserves
£m
|
Translation reserve
£m
|
Retained earnings
£m
|
Total
£m
|
Balance at 1
January 2023
|
|
69.9
|
56.8
|
5.6
|
12.6
|
0.5
|
135.6
|
281.0
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for 13m period ended 31 January
2024
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
-
|
-
|
-
|
-
|
-
|
81.7
|
81.7
|
Other comprehensive expense for the period, net
of tax
|
|
-
|
-
|
-
|
-
|
(0.1)
|
(9.0)
|
(9.1)
|
Total
comprehensive income for the period
|
|
-
|
-
|
-
|
-
|
(0.1)
|
72.7
|
72.6
|
|
|
|
|
|
|
|
|
|
Issue of ordinary shares
|
|
3.3
|
-
|
-
|
-
|
-
|
(3.3)
|
-
|
Share based payments
|
|
-
|
-
|
-
|
-
|
-
|
5.9
|
5.9
|
Reserve realised due to
re-organisation
|
|
-
|
-
|
-
|
(12.6)
|
-
|
12.6
|
-
|
Income tax relating to
share based payments
|
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
(0.1)
|
EBT consideration on
repurchased shares
|
|
-
|
-
|
-
|
-
|
-
|
1.0
|
1.0
|
Balance at 31
January 2024
|
|
73.2
|
56.8
|
5.6
|
-
|
0.4
|
224.4
|
360.4
|
|
|
|
|
|
|
|
|
|
Balance at 1
January 2022
|
|
69.9
|
56.8
|
5.6
|
12.6
|
-
|
80.7
|
225.6
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income for 2022
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
-
|
45.5
|
45.5
|
Other comprehensive income for the year, net of
tax
|
|
-
|
-
|
-
|
-
|
0.5
|
6.6
|
7.1
|
Total
comprehensive income for the year
|
|
-
|
-
|
-
|
-
|
0.5
|
52.1
|
52.6
|
|
|
|
|
|
|
|
|
|
Share based payments
|
|
-
|
-
|
-
|
-
|
-
|
3.3
|
3.3
|
Income tax relating to share based
payments
|
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
(0.1)
|
Own shares issued by EBT
|
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
Own shares purchased
by EBT
|
|
-
|
-
|
-
|
-
|
-
|
(0.5)
|
(0.5)
|
Balance at 31
December 2022
|
|
69.9
|
56.8
|
5.6
|
12.6
|
0.5
|
135.6
|
281.0
|
CONSOLIDATED BALANCE SHEET
AT 31 JANUARY 2024
|
Note
|
31 Jan 2024
£m
|
31 Dec 2022
£m
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
|
1.1
|
515.9
|
Goodwill
|
|
0.3
|
144.6
|
Other intangible assets
|
|
13.8
|
12.4
|
Finance lease receivables
|
|
-
|
14.8
|
Deferred tax assets
|
|
-
|
11.6
|
Total non-current assets
|
|
15.2
|
699.3
|
Current assets
|
|
|
|
Inventories
|
|
-
|
620.3
|
Trade and other
receivables
|
|
420.8
|
115.7
|
Finance lease receivables
|
|
-
|
2.4
|
Current tax assets
|
|
0.3
|
3.3
|
Cash and cash equivalents
|
3
|
47.4
|
171.9
|
Assets classified as held for
sale
|
|
-
|
6.1
|
Total current assets
|
|
468.5
|
919.7
|
Total assets
|
|
483.7
|
1,619.0
|
Current liabilities
|
|
|
|
Bank overdraft
|
|
-
|
(102.5)
|
Interest bearing loans and
borrowings
|
4
|
(93.0)
|
(1.7)
|
Lease liabilities
|
4
|
(0.4)
|
(20.0)
|
Trade and other payables
|
|
(22.0)
|
(812.0)
|
Deferred income
|
|
(6.5)
|
(38.2)
|
Total current liabilities
|
|
(121.9)
|
(974.4)
|
Non-current liabilities
|
|
|
|
Interest bearing loans and
borrowings
|
4
|
(0.2)
|
(91.0)
|
Lease liabilities
|
4
|
(0.6)
|
(197.9)
|
Trade and other
payables
|
|
-
|
(35.7)
|
Deferred
income
|
|
-
|
(36.4)
|
Deferred tax
|
|
(0.6)
|
-
|
Retirement benefit
obligations
|
5
|
-
|
(2.6)
|
Total non-current liabilities
|
|
(1.4)
|
(363.6)
|
Total liabilities
|
|
(123.3)
|
(1,338.0)
|
Net assets
|
|
360.4
|
281.0
|
|
|
|
|
Capital and reserves
|
|
|
|
Called up share capital
|
|
73.2
|
69.9
|
Share premium account
|
|
56.8
|
56.8
|
Capital redemption
reserve
|
|
5.6
|
5.6
|
Other reserves
|
|
-
|
12.6
|
Translation reserve
|
|
0.4
|
0.5
|
Retained earnings
|
|
224.4
|
135.6
|
Total equity attributable to equity
shareholders of the Company
|
|
360.4
|
281.0
|
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 13 MONTH PERIOD ENDED 31 JANUARY 2024
|
Note
|
13m period ended
31 Jan 2024
£m
|
Year ended
31 Dec 2022
£m
|
Cash flows from operating activities
|
|
|
|
Profit for the period/year
|
|
81.7
|
45.5
|
Adjustment for taxation
|
|
10.1
|
11.7
|
Adjustment for net financing expense
|
|
65.8
|
43.8
|
|
|
157.6
|
101.0
|
Depreciation and amortisation
|
|
30.7
|
33.5
|
Share based payments
|
|
5.9
|
3.3
|
Profit on disposal of own shares by
EBT
|
|
0.5
|
-
|
Profit on sale of business and property, plant
and equipment
|
|
(41.8)
|
(7.7)
|
Impairment of goodwill
|
|
-
|
3.6
|
Impairment of property, plant and
equipment
|
|
-
|
1.2
|
Contribution into defined benefit pension
scheme
|
|
(14.2)
|
(13.1)
|
Changes in inventories
|
|
38.5
|
(119.8)
|
Changes in trade and other
receivables
|
|
(44.9)
|
(15.2)
|
Changes in trade and other payables
|
|
38.7
|
150.8
|
Movement in contract hire vehicle
balances
|
|
(57.3)
|
(20.9)
|
Cash generated from operations
|
|
113.7
|
116.7
|
Taxation paid
|
|
(6.6)
|
(1.4)
|
Bank and stocking interest paid
|
|
(45.4)
|
(25.5)
|
Bank interest received
|
|
1.9
|
-
|
Lease interest paid
|
|
(16.2)
|
(14.7)
|
Finance lease interest received
|
|
1.0
|
1.0
|
Net cash from operating activities
|
|
48.4
|
76.1
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Proceeds from sale of business net of fees
paid
|
|
1.3
|
3.9
|
Fees paid in advance of business completion on
business disposal to Lithia
|
|
(6.6)
|
-
|
Cash disposed as part of business
disposal
|
|
(15.3)
|
-
|
Purchase of property, plant, equipment and
intangible assets
|
|
(40.2)
|
(44.3)
|
Proceeds from sale of property, plant, equipment
and intangible assets
|
|
11.0
|
13.3
|
Receipt of lease receivables
|
|
2.4
|
2.0
|
Net cash used in investing activities
|
|
(47.4)
|
(25.1)
|
Cash flows from financing activities
|
|
|
|
Payment of lease liabilities
|
|
(19.0)
|
(22.2)
|
Repayment of loans
|
|
(4.0)
|
(90.5)
|
Proceeds from issue of loans (net of directly
attributable transaction costs)
|
|
-
|
93.8
|
Disposal of shares by EBT
|
|
-
|
0.1
|
Purchase of shares by EBT
|
|
-
|
(0.5)
|
Net cash outflow from financing
activities
|
|
(23.0)
|
(19.3)
|
|
|
|
|
Net
(decrease)/increase in cash and cash equivalents
|
|
(22.0)
|
31.7
|
Cash and cash equivalents at 1
January
|
|
69.4
|
37.6
|
Effects of exchange rate changes on cash
held
|
|
-
|
0.1
|
Cash and cash equivalents at 31 January 2024 /
31 December 2022
|
3
|
47.4
|
69.4
|
NOTES
1. Basis of Preparation
Pinewood Technologies Group PLC (the 'Group')
is domiciled in England. The address of the Group's registered
office is Loxley House, 2 Oakwood Court, Little Oak Drive,
Annesley, Nottinghamshire, NG15 0DR. These condensed consolidated
financial statements of the Group as at and for the period ended 31
January 2024 consist of the consolidation of the financial
statements of the Group and its subsidiaries and the Group's
interest in jointly controlled and associated entities.
These condensed consolidated financial
statements have been prepared in accordance with UK adopted
International Accounting Standards (IAS). They do not include all
the information required for full annual statements and should be
read in conjunction with the 2023 Annual Report.
The Board of Directors approved the condensed
consolidated financial statements on 25 April 2024. They are not
statutory accounts within the meaning of section 435 of the
Companies Act 2006.
The Group's financial statements for the period
ended 31 January 2024 were approved by the Board on 25 April 2024.
They have been reported on by the Group's auditors and will be
delivered to the registrar of companies in due course. The report
of the auditors was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498(2) or (3) of the Companies
Act 2006.
The comparative figures for the financial year
ended 31 December 2022 have been extracted from the statutory
accounts for that financial year. Those accounts have been reported
on by the Group's auditor. The report of the auditor (i) was
unqualified and (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report.
In presenting continuing and discontinuing
operations, it was necessary to reconsider the allocation of
expenses to the segments that are now classified as a discontinued
operation. Only those expenses which will cease to be incurred on
disposal of the discontinued operations are presented within
discontinuing operations i.e. corporate overhead expenses will
continue to be incurred and are therefore recognised within
continuing operations within the Consolidated Statement of
Comprehensive Income. The full costs associated with the
crystallisation of long-term incentive plans (LTIPs) have been
included within discontinued operations given that the sale was the
trigger for the LTIPs ending earlier than scheduled. As disclosed
in the directors' remuneration report, the Group will discuss with
shareholders the design and costs associated with any future
LTIPs.
Going
concern
The Directors are, at the time of approving the
financial statements, satisfied that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Thus, they continue to adopt the going concern basis
of accounting in preparing the financial statements. The
Directors have considered the potential impact of a 10% reduction
in revenue. Given the Group's activity is Software as a Service
(SaaS), with net customer 'churn' of c.2%, as well as annual price
increases for all customers that are out of their initial three
year contract, this is a severe but plausible downside
scenario. When the 10% revenue reduction was applied in FY24,
the Group was still forecast to generate £2.9m of cash in the
year.
The Group meets its day-to-day working capital
requirements from operating in a net cash position and being a
highly cash generative business. As at 31 January 2024, the
Group had cash of £47.4m and debt of £93.2m. Following
receipt of the proceeds from the sale of the UK Motor and Leasing
business and repayment of the debt on 1 February 2024, the group
had net cash of £372.3m. This will be used to pay a special
dividend of £358.4m on 7 May 2024. The Group is forecasting a
cash inflow of £5.9m in FY24. The Group also has access to a
£10m RCF, which expires in February 2027 and is not forecast to be
utilised in the forecast period.
In the context of the above, the directors have
prepared cash flow forecasts for the period to 30 April 2025 which
indicate that, taking account of reasonably possible downsides, the
Group will have sufficient funds to meet its liabilities as they
fall due for that period. The Directors have modelled scenarios as
follows:
1. A base cash flow forecast. The 2024
figures in this forecast are based on the Group's FY24 budget,
which reflect current run-rates and expected strategic
improvements. The 2024 figures in the base cash flow forecast
are based on the 2024 budget.
2. A severe, but plausible downside
scenario. The directors have also prepared a sensitised
forecast which considers the impact of a 10% reduction in revenue
when compared to the base case. In this scenario, the Group
would remain cash generative.
The Directors are mindful of the potential
impacts to macro-economic conditions but after assessing the risks
do not believe there to be a material risk to going
concern.
Based on the above, the directors are confident
that the Group and Company will have sufficient funds to continue
to meet its liabilities as they fall due for at least 12 months
from the date of approval of the financial statements, and
therefore the directors believe it remains appropriate to prepare
the financial statements on a going concern basis.
Adoption of
new and revised standards
In 2023 the following amendments had been
endorsed by the UK became effective and therefore were adopted by
the Group.
· IFRS 17 Insurance
Contracts - this has not had a significant impact on the Group's
consolidated financial statements.
Other standards
A number of new standards, amended standards
and interpretations are effective for annual periods beginning
after 1 January 2024 and earlier application is permitted; however,
the Group has not early adopted the new or amended standards in
preparing these consolidated financial statements. The following
new standards, amended standards and interpretations are not
expected to have a significant impact on the Group's consolidated
financial statements.
· Amendment to IFRS
16 - Leases on sale and leaseback.
· Amendment to IAS
1 - Non-current liabilities with covenants.
· Amendment to IAS
7 and IFRS 7 - Supplier finance agreement
· Amendments to IAS
21 - Lack of Exchangeability
2. Earnings per share
|
13 month period ended
31 Jan 2024
|
13 month period ended
31 Jan 2024
|
Year ended
31 Dec 2022
|
Year ended
31 Dec 2022
|
|
Earnings per
share
Pence
|
Earnings total
£m
|
Earnings per share
Pence
|
Earnings total
£m
|
Basic earnings per share from continuing
operations
|
11.9
|
8.3
|
8.2
|
5.7
|
Basic earnings per share from discontinued
operations
|
105.1
|
73.4
|
57.2
|
39.8
|
Basic earnings per share
|
117.0
|
81.7
|
65.4
|
45.5
|
|
|
|
|
|
Diluted earnings per share from
continuing operations
|
11.9
|
8.3
|
7.9
|
5.7
|
Diluted earnings per share from
discontinued operations
|
105.1
|
73.4
|
55.1
|
39.8
|
Diluted earnings per
share
|
117.0
|
81.7
|
63.0
|
45.5
|
The calculation of basic, adjusted and diluted
earnings per share is based on the following number of shares in
issue (millions):
|
|
13 month period ended
31 Jan 2024
Number
|
|
Year ended
31 Dec 2022
Number
|
Weighted average number of ordinary shares in
issue
|
|
69.8
|
|
69.6
|
Weighted average number of dilutive shares
under option
|
|
-
|
|
2.6
|
Weighted average number of shares in issue
taking account of applicable outstanding share options
|
|
69.8
|
|
72.2
|
Non-dilutive shares under option
|
|
-
|
|
1.0
|
On 5 April 2024, the Company announced that it
would undertake a capital reorganisation whereby 1 new Ordinary
Share of 100 pence each will be issued for every 20 existing
Ordinary Shares of 5 pence each. This is an adjusting post balance
sheet event and therefore the earnings per share calculations for
the current period and prior period financial statements have been
presented reflecting the revised number of shares post the capital
reorganisation.
3. Cash and cash equivalents
|
|
Carrying value & fair value
31 Jan 2024
£m
|
Carrying value & fair value
31 Dec 2022
£m
|
Bank balances and cash equivalents
|
|
47.4
|
69.4
|
|
|
|
|
Cash and cash equivalents in the Balance
Sheet
|
|
47.4
|
171.9
|
Bank overdrafts repayable on demand and used
for cash management in the Balance Sheet
|
|
-
|
(102.5)
|
Cash and cash equivalents in the
statement of cash flows
|
|
47.4
|
69.4
|
Bank overdrafts
reflect the aggregated overdrawn balances of Group companies (even
if those companies have other positive cash balances).
4. Summary of borrowings
|
|
Carrying value & fair value
31 Jan 2024
£m
|
Carrying value & fair value
31 Dec 2022
£m
|
Non-current:
|
|
|
|
Senior Finance Agreement (SFA)
|
|
-
|
90.8
|
Other loan notes
|
|
0.2
|
0.2
|
Lease liabilities
|
|
0.6
|
197.9
|
Total non-current
|
|
0.8
|
288.9
|
Current:
|
|
|
|
Senior Finance Agreement (SFA)
|
|
93.0
|
1.7
|
Bank overdraft
|
|
-
|
102.5
|
Lease liabilities
|
|
0.4
|
20.0
|
Total current
|
|
93.4
|
124.2
|
Total borrowings
|
|
94.2
|
413.1
|
5. Business disposals
On 31 January 2024 the Group disposed of its
entire motor retail and leasing business together with related
central support functions, to Lithia UK Holding Limited for a
consideration of £377.5m, resulting in a profit on disposal of
£40.7m. Consideration was received in cash on 1 February
2024.
Net assets at the date of disposal
|
Total net book
value
£m
|
Assets held for sale
|
305.4
|
Bank balances and cash in hand
|
15.3
|
|
320.7
|
Profit on sale of businesses
|
40.7
|
Total proceeds
|
361.4
|
Proceeds on sale comprise
|
|
Proceeds on sale satisfied by cash and cash
equivalents - received 1 February 2024
|
377.5
|
Transaction fees
|
(16.1)
|
|
361.4
|
On 2 October 2023, the Boards of Directors of
Pendragon and of Lithia Motors, Inc. announced that they had agreed
the terms of a proposed sale by Pendragon Group Holdings Limited of
the entire issued share capital of Pendragon NewCo 2 Limited which
will hold, either directly or indirectly through its wholly-owned
subsidiaries, the Company's entire UK motor business and leasing
business, to Lithia UK Holding Limited, a wholly-owned subsidiary
of Lithia Motors, Inc. for a gross aggregate consideration of
£397m, subject to certain financial adjustments including
settlement the Group's net debt (borrowings less cash in hand and
at bank), settlement of any intercompany balances and provision for
a working capital facility for the remaining group, as of 31
January 2024 and a subscription for new ordinary shares in Pinewood
Technologies Group Plc totalling £30.0m.
Consideration
analysis
|
|
Total consideration
|
397.0
|
Share subscription in Pinewood Technologies
Group Plc by Lithia UK Holding Limited
|
(30.0)
|
Base consideration
|
367.0
|
Adjustment for settlement of net
debt
|
37.8
|
Settlement of inter group balance
|
(28.0)
|
Working capital adjustment
|
0.7
|
Proceeds recognised on sale
|
377.5
|
During the earlier part of the 13m period
ending 31 January 2024 the Group disposed of a single motor vehicle
dealership business for net proceeds of £1.3m which resulted in a
loss on disposal of £0.1m. During the previous year the Group
disposed of its DAF businesses of £3.2m and realising a profit of
£0.3m on disposal and received a further £0.7m in the form of
deferred consideration relating to the sale of the US businesses in
2021.
6. Pension funds
The Group operated a number of defined benefit
and defined contribution plans during the period. At the balance
sheet date, the Group had disposed of its defined benefit plan, and
its obligations under any defined contribution arrangements in
respect of the majority of its employees were similarly disposed of
with the departure of those Group employees on the sale of the
Group's interests in the motor and leasing divisions. The Group
also operated a Group Personal Pension Plan which is a defined
contribution plan where the assets are held by the insurance Group
under a contract with each individual.
7. Alternative performance measures
The Group uses a number of key performance
measures ('KPI's') which are non-IFRS measures to monitor the
performance of its operations. The Group believes these KPIs
provide useful historical financial information to
help investors and other stakeholders evaluate the performance of
the business and are measures commonly used by certain investors
for evaluating the performance of the Group. In particular,
the Group uses KPIs which reflect the performance on the basis that
this provides a more relevant focus on the core business
performance of the Group. As a result of the
disposal, the group is now a pure play SaaS business and as such
the alternative performance measures used have changed, with
comparatives also provided. The
Group has been using the following KPIs on a consistent basis
and they are defined and reconciled as follows:
Revenue
including intercompany revenue - is reconciled
in the annual accounts to the nearest GAAP measure.
13 month
period ended 31 January 2024
|
Continuing operations
£m
|
Revenue including intercompany
amounts
|
32.0
|
Inter-segment revenue
|
(7.5)
|
Revenue from external customers
|
24.5
|
|
|
Operating profit
|
10.0
|
Finance expense
|
(0.1)
|
Finance income
|
-
|
Segmental profit before tax
|
9.9
|
Year ended 31
December 2022
|
Continuing operations
£m
|
Revenue including intercompany
amounts
|
25.4
|
Inter-segment revenue
|
(6.3)
|
Revenue from external customers
|
19.1
|
|
|
Operating profit
|
7.0
|
Finance expense
|
-
|
Finance income
|
-
|
Segmental profit before tax
|
7.0
|
Gross profit
including intercompany gross profit - is
reconciled in the annual accounts to the nearest GAAP
measure.
Core business
operating profit - is reconciled in the annual
accounts to the nearest GAAP measure.
Core business
operating expenses - is reconciled in the
annual accounts to the nearest GAAP measure.
Continuing
operations EBITDA - Continuing operations
earnings before Interest, Tax, Depreciation and
Amortisation.
EBITDA Margin
(%) - Continuing operations EBITDA divided by
Revenue, including intercompany revenue
8. Post balance sheet events
The sale of the Motor and Leasing
business to Lithia UK Holding Limited was concluded on 31 January
2024. The consideration for the sale of £377.5m was received
on 1 February 2024. At the same time the Senior Term Finance
Agreement, with an outstanding principal balance of £93m was repaid
and the existing Revolving Credit Facility of £75m was cancelled. A
new £10m RCF was agreed on 14 February 2024 expiring February
2027. On 1 February 2024 a further 279,388,880 were
issued to Lithia Motors, Inc. for a consideration of 10.7377 pence
per share, totalling £30.0m pursuant to the business disposal
agreement. Also on 1 February 2024 the Group, through its
Pendragon North America Automotive, Inc. subsidiary, made a £10m
investment into a joint venture agreement with PNA Holding LLC (a
subsidiary of Lithia Motors Inc.) in Pinewood North America
LLC.