Sale of Pendragon dealerships brought £41m profit for Pinewood

Pendragon PLC's sale of all its Evans Halshaw and Stratstone dealerships and vehicle leasing businesses to Lithia netted a £40.7 million for the remainder of the business, which now continues as Pinewood Technologies PLC.

In Pinewood's maiden results announcement to the London Stock Exchange it reports that the discontinued operations generated £4.3 billion revenue in a 13-month period to January 31st 2024, compared with the £3.6 billion revenue generated in 2022.

The disposed businesses, sold for £377.5m, had also increased operating profit to £105.8m from £86.3m the prior year, and profit before tax rose to £81.9m from £50.2m.

The software company, which produces the Pinnacle dealer management system, grew revenues from £19.1m to £24.5m in the 13 month period, and its operating profit climbed from £7m to £10m. PBT rose to £9.9m from £7m.

Pinewood Technologies chief executive Bill Berman said the disposal of the motor and leasing operations, together with the debt and pension liabilities of the group, was "a fantastic deal for our shareholders" and added that the transformation strategy for Pinewood to become a pure-play software-as-a-service (Saas) business "is an incredibly exciting prospect".

Berman (pictured) added: "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."

Berman believes Pinewood will achieve rapid growth in the UK dealer market, as well as overseas, now that it is not part of a business that competed with other dealer groups. 

The next phase will be approached similarly to that of a tech start-up, he said. And with Pinewood's strategic partnership with Lithia, work will focus on integrations with OEM systems and third-party apps that are widely used in the USA to facilitate Pinewood's expansion in North America, with a full rollout in Lithia's US dealerships coming after pilots during early 2025.

Pinewood estimates that the UK's franchised dealership systems market is worth more than £100 million, and dominated by two providers - Keyloop and Pinewood.