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Pendragon begins review of operational and financial prospects

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Pendragon’s new leadership team is conducting review of the car retail group’s operational and financial prospects as an interim management statement revealed Q1 pre-tax losses.

Pendragon announced that it expected to deliver a 4.6% like-for-like increase in overall revenues (1.2% total) in the three months to March 31, 2019, with its revenues from new and used vehicles up by 6.3% and 2.9% (up 2.6% and down 0.2%), respectively, during the period.

Aftersales revenues have risen by 5.5% like-for-like and (2% total).

However, pre-tax profits were around £10 million below Pendragon's expectations.

In its statement, issued by the London Stock Exchange, the group said: “Challenging trading conditions during the period resulted in a reduction in margins in new, used and aftersales, leading to a 5.4% fall in the like-for-like new gross profit, a 1.6% fall in the like-for-like used gross profit and a 5.0% fall in the like-for-like aftersales gross profit.

“This performance, combined with both a higher level of operating costs and increased losses within Car Store, arising from the ongoing development and maturation of the business (FY19 Q1: 34 stores, FY18 Q1: 26 stores), resulted in an underlying loss before tax of £2.8m.

“This is around £10m lower than our expectations for the period, comprised of circa £7m from the net impact of higher revenue and lower margins, circa £2m of additional operating costs and circa £1m from the lower than expected Car Store performance.”

Pendragon said that, in light of this trading update and given the recent appointments to the business of both Mark Herbert as chief executive officer and Mark Willis as chief financial officer, “a review of the operational and financial prospects of the Group is currently being undertaken”. 

It added: “The results of this review will be communicated to the market during June. In addition, a strategic update will be provided with the Interim results.”

Mark Herbert, chief executive of PendragonFormer Jardine Motors Group boss Mark Herbert took over as chief executive of Pendragon from Trevor Finn on April 1.

Finn announced on December 14 last year his intention to retire, exiting the CEO seat after 30 years during which he grew Pendragon through major acquisitions into a dealer group with, at its peak, more than 300 outlets and with its own software business, Pinewood.

His announcement came a month after the group revealed finance director Tim Holden would also stand down in March 2019, to be replaced by Mark Willis, chief executive of Ten Entertainment Group.

Herbert joined the AM100’s former number one retail group by revenue following a 20-year executive career with Jardine Matheson Group across a diverse range of industries including the Jardine Motors Group UK where he held positions as group finance director and chief executive Officer for eight years.

Most recently, he was the chief executive of Cold Storage Singapore and chairman of DFI Lucky Cambodia consisting of 550 supermarket and convenience stores that formed part of Dairy Farm International Holdings, a pan Asian retailer and subsidiary of Jardine Matheson.

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