11:48 am, September 29, 2020
Pendragon CEO Bill Berman has told Car Dealer that the group’s delayed results were not due to any ‘going concern’ fears.
Announced to the Stock Market this morning, the half year results showed Pendragon made a £31m loss for the first half of the year.
However, they were delayed at the 11th hour on Thursday as the dealer group’s auditors requested ‘more time’ to go through the numbers.
The delay spooked investors with the share price falling 11 per cent and led to questions as to why they were pulled at the last minute.
One auditor told Car Dealer it could be down to ‘going concern’ worries.
Speaking exclusively to Car Dealer in a video interview you can watch above, Berman said this was absolutely not the case and instead down to ‘due diligence’ from the auditors.
‘I can see as an investor why people would feel that way,’ Berman admitted.
‘In the past we have had some challenges, some self inflicted wounds we have had to get through, but rest assured this is not one of those.
‘If it were not for the pandemic and some of the challenges that has bought there wouldn’t have been a delay in any shape or form.’
Berman added that there were ‘no going concern issues whatsoever’.
On the results, he said compared to last year, despite being shut down for 10 weeks by the crisis, the group still beat 2019 numbers.
‘Going into the lockdown we were trading at a very high level and exceeding our plan and outperforming our market – then the pandemic hit and everyone had to adjust,’ he said.
Berman praised his team for the way they dealt with the issues, helped cut costs and ‘right size’ the business and implement online sales solutions.
The latter has already accounted for 20 per cent of used car sales in September as buyers turn to digital purchasing.
‘I’m very proud we managed to build a full transactional website that is unlike anything I have seen from anyone else so far,’ added Berman.
‘Customers are engaging with us fully digitally and having their cars delivered to their house and I’m very happy with the performance.’
Berman said the digital transition would help the group achieve its ambitious target of generating £85-90m profit by 2025 – but it wasn’t the only solution.
‘There’s no one thing that will get us there – if it was that easy I would have retired 20 years ago,’ joked Berman.
‘Automotive retail hasn’t been truly transformed like you’ve seen in other industries. No other product has a new car smell and I know no VR that allows you to experience driving a new Porsche GT3.
‘It’s hard to spend 10-12-15 thousand pounds sight unseen, but the way we are looking at it is that there is a segment of the consumer base that wants to purchase completely digitally and we are going to be able to facilitate that.’
Berman explains that it was disappointing to be struck by Covid after the start of the year kicked off so well for the dealer group. It was £5.1m ahead of the same period last year in January and February.
He said that analysts had predicted the group would make a £20m profit this year, but he believes they would have ‘surpassed’ that figure.
‘We have managed to get our costs under control and I think we will actually come out of this better than we were going into it,’ added Berman.
And he added that it will ‘depend on the market’, but if things continue the way they are the group will be back on target ‘sooner than later’.
Compared to Marshall Motor Group, which clocked up a loss of £8.9m for the same period, Pendragon at roughly twice the size should have been on course to make around a £20m loss – so the £31m was ahead of where some thought the group would be.
Berman said this was because rivals like Marshall had been able to run ‘more efficiently’ prior to lockdown.
‘Right now we are catching up and in the future I expect them to be catching up to us,’ said Berman.
In our video interview, Berman also speaks about how the group will achieve the ambitious £85-90m profit target by 2025. You can watch it in full by clicking on the video at the top of this page.
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