FY23 ANNUAL REPORT

Technologies Group PLC

2

Pinewood Technologies Group PLC Annual Report FY23

IN THIS REPORT

3

Pinewood Technologies Group PLC Annual Report FY23

4

Pinewood Technologies Group PLC Annual Report FY23

CHAIRMAN'S STATEMENT

Ian Filby, Chairman

"

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.

"

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 in his role as Chairman

5

Pinewood Technologies Group PLC Annual Report FY23

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

CEO

25 April 2024

CEO'S REVIEW

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Pinewood Technologies Group PLC Annual Report FY23

(£m)

Continuing

operations

Discontinued

operations

13m period

ended 31

January

2024

Continuing

operations

Discontinued

operations

Year

ended 31

December

2022

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:

Pro-forma Comparative Information - Continuing Operations

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.

(£m)

13m period ended 31 January 2024

Year ended 31 December 2022

Pinewood Core Business

1

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

GROUP FINANCIAL SUMMARY

(£m)

13m period ended 31

January 2024 (FY23)

13m period ended 31

January 2023

% Change

Revenue, including intercompany

revenue

1

32.0

27.7

15.5%

EBITDA

2

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 section 1 of financial statements

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Pinewood Technologies Group PLC Annual Report FY23

1

This is an Alternative Performance Measure. See page 15 and note 2.3 in the financial statements.

8

Pinewood Technologies Group PLC Annual Report FY23

HOW

WE ENGAGE

WHY

WE ENGAGE

WHAT MATTERS

TO THIS GROUP

WHAT DID WE DO

AS A RESULT

CUSTOMERS

We continue to engage with our customers

in a variety of ways, including:-

Seeking continual feedback from both new

and existing customers

Listening to any suggested enhancements

to the Pinewood system

Our purpose is to deliver

a market-leading Dealer

Management System to all

of our customers

• Uninterrupted access to

our system

•

Use of a market leading

system

•

Having a relationship with

us where they are listened

to

• Improving the Pinewood

system by listening to

customers

• Ensuring that our

development team

updates the system on

a regular basis, often

several times a week

ASSOCIATES

We listen carefully to the views of all of

our employees through regular employee

surveys

We wish to continue to be a

responsible employer, both

in terms of continuing to

ensure the health, safety and

wellbeing of our employees

and also ensuring we

maintain a responsible

approach to the pay and

benefits our employees

receive.

• Fair employment

•

Fair pay and benefits

•

Tackling our gender pay

gap

• Diversity and inclusion

• Training, development and

career opportunities

• Health and safety

• Responsible use of

personal data

• We regularly review

associate pay and

conditions

•

We continue to enhance

the range of benefits

available to associates

SUPPLIERS

Regular meetings and updates with all key

suppliers with management

Supplier payment terms reported and

published

All our suppliers must be

able to demonstrate that

they take appropriate action

to prevent involvement in

modern slavery, corruption,

bribery and breaches of

competition law

•

Fair trading and payment

terms

• Anti-Bribery

• Anti-Modern Slavery

• Operational improvement

•

We surveyed all key

suppliers for adherence to

anti-slavery standards.

STATEMENT BY THE DIRECTORS IN PERFORMANCE OF THEIR STATUTORY

DUTIES IN ACCORDANCE WITH s172(1) COMPANIES ACT 2006

The board of directors of Pinewood Technologies Group PLC (formerly Pendragon PLC) confirm that during the period under review, it has acted

to promote the long term success of the Company for the benefit of all shareholders, whilst having regard to the matters set out in section

172(1)(a)-(f) of the Companies Act 2006 in the decisions taken during the period ended 31 January 2024, further detail of which is set out below

and which are incorporated into the Strategic Report.

s172 STATEMENT

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Pinewood Technologies Group PLC Annual Report FY23

HOW

WE ENGAGE

WHY

WE ENGAGE

WHAT MATTERS

TO THIS GROUP

WHAT DID WE DO

AS A RESULT

COMMUNITY

Regular involvement in charity appeals

We generate community

involvement through local

engagement, contributing

to local areas in a variety

of ways.

• Charitable donations and

support;

• Employment opportunities;

• Volunteering;

• Fair tax policy

•

We continued other charitable

activities where possible

ENVIRONMENT

Over the last 3 years, we have re-

evaluated seriously our responsibilities

to our customers, investors,

associates, suppliers and the public in

terms of how our activities impact the

natural environment.

We continue to regularly review our

environment policy.

We acknowledge the

responsibility we have to

protect the environment

and to minimise the

environmental impact of

our activities.

• Minimising atmospheric

emissions, commercial

and industrial waste

• Minimising energy

wastage

• Complying with statutory

requirements relating to

environmental matters

• Ensuring environmental

priorities are accounted for

appropriately in planning

and decision making

•

Operate an obsolete asset

disposal policy

•

Minimise and where possible,

eliminating pollution

•

We continue to reduce

incidences of energy wastage

wherever possible, as reported

in our Environment, Social and

Governance Report at page 30

of this Annual Report

SHAREHOLDERS AND POTENTIAL SHAREHOLDERS

Annual Report and Accounts

Corporate website

AGM

Results announcements and

presentation

Shareholder and analyst meeting with

management, followed by feedback

from brokers and financial PR

consultants

Engagement via the Directors and

Company Secretary

We work to ensure our

shareholders and their

representatives have a

good understanding of

our strategy and business

model

•

Long term value creation

•

Fair and equal treatment

• Growth opportunity

• Financial stability

• Transparency

•

To share in the success of

our business

• Dividends

•

The chief executive officer and

chief financal officer report

back to the Board after the

investor roadshows

•

The Group’s brokers and

financial advisors provide

detailed feedback after full and

half year announcements and

investor roadshows to inform

the Board about investor views

• The non-executive chairman

and senior independent

director are available to

shareholders and respond

on matters relating to their

responsibilities where

requested

•

We continue to consult with all

major shareholders in relation

to our remuneration policy

•

We will engage with

shareholders in the future

about when to resume

dividends

10

Pinewood Technologies Group PLC Annual Report FY23

“Our Dealer Management System is

split by role-type, collating common

tasks together to make dealerships

more efficient. With one central

database, all information is shared

throughout the system.”

Personalised video to customers

Online payments

Integrated website solution for online buying

Integrated website solution for service booking

BUSINESS OVERVIEW

SOFTWARE - PINEWOOD

Described above as 'Pinewood Core Business'. Licencing of Software as a Service to global automotive business users.

11

Pinewood Technologies Group PLC Annual Report FY23

Pinewood Apps

Our

apps

are

designed

to

streamline

processes and improve efficiency across the

whole dealership.

Our fully integrated suite of apps work

seamlessly with our Pinewood DMS.

Our apps are multi-platform and users can

choose their preferred tablet or mobile,

across iOS, Windows and Android devices.

Sales+ Efficiently manage the vehicle sales

process and provide a great customer

experience - the ultimate showroom app for

sales professionals.

Stock+ Respond to enquiries with

personalised videos, instantly update

stock information and store vehicle

documentation.

Parts+ Issue parts on-the-move, saving time

with our in-built barcode scanner.

Tech+ Improve the service and repair

experience, including video integration and

technician time management.

Host+ Integrated video processes including

360° tours of a used vehicle in stock, or

visually identifying work required following a

health check.

Integration with over 50 manufacturers

Cars:

Commercial Vehicles:

Motorbikes:

12

Pinewood Technologies Group PLC Annual Report FY23

UK MOTOR

Following the sale of the UK Motor segment 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 UK Motor segment to Lithia Motors, Inc on 31

January 2024, the Leasing segment is now a discontinued operation.

BUSINESS PROFILES

The Company aims to comply with the non-financial reporting requirements contained in sections 414CA and 414CB of the Companies Act

2006. The information set out below, together with signposts to other relevant sections of the Annual Report and Accounts is intended to assist

stakeholders in understanding the Company’s position and approach to the following key non-financial matters.

Reporting Requirement

Our policies, standards and guidance that govern our approach

Where to find it

Sustainability

•

Taskforce on Climate-related Financial Disclosures (TCFD) report

Page 29-36

Our People

•

Risk overview and management

•

We publish our gender pay gap report on our website

•

Social Report

•

Life at Pinewood

Page 20

Page 37

Page 37

Page 13

Cyber Security

•

Risk overview and management

•

We have an internal cyber security team called Infosec, with a range of policies that

are in place

•

We have an external cyber security system called Security Information & Event

Management (SIEM) which utilises Microsoft Defender, Microsoft Azure Sentinel,

Azure Monitor and Cloudflare

Page 20

Anti-bribery and corruption

•

S172 statement

•

Corporate governance report

•

Audit committee report

Page 8

Page 40

Page 47

NON-FINANCIAL AND SUSTAINABILITY

INFORMATION STATEMENT

13

Pinewood Technologies Group PLC Annual Report FY23

Our people are the life and soul of Pinewood, and what makes us

great. With a culture of collaboration, team members are collectively

responsible for the success of the business. Working together to find

the best solutions for our customers, leading the industry and helping

us grow. We aim to attract, retain, and develop the best and brightest

talent at Pinewood to deliver on our objective to be a world-leading

dealer system provider, transforming motor retail.

Long-term success relies on inspiring and nurturing a range of talent,

from all sectors and industries. We pride ourselves on seeing the

potential of our team members before they even join the business

and, then once they have, providing the support, encouragement and

skills needed to build a long and rewarding career. Together we are

unstoppable.

Our core values are at the heart of Pinewood and have been at the

foundation of our customer proposition. The values are tied into every

aspect of our business, whether it’s the development of the Pinewood

system, the support we provide to customers, or our approach to

talent management:

• Innovation touches everything we create at Pinewood, embracing

the latest technology with a personal responsibility to learn, adopt

and use the best tools available. We aim to implement smart

initiatives, encouraging learning from others and new ways of

thinking.

•

We are committed to keeping our customers profitable, providing

long-term reliable and consistent growth for stakeholders. We work

closely with OEMs to shape the future of automotive retail together,

providing only the best tools for automotive retailers worldwide.

• We believe that every business has a choice and we choose to

make things simple. By stripping out the complicated, we ensure

retailers and receiving an intuitive system that is easy to use, and a

team that is easy to do business with.

BEGINNING YOUR JOURNEY

We review our recruitment strategies to ensure we are attracting

and identifying a diverse range of talent to join and develop within

our business. We continually utilise modern attraction strategies to

ensure we are reaching a diverse range of candidates in a difficult

marketplace.

YOUR DEVELOPMENT

We continue to provide comprehensive training to all team members,

via our in-house learning and development. With specialised learning

programmes for new starters, in particular, our placement and

graduate schemes, providing dedicated mentoring, ensuring we

provide the best possible start for our recruits.

We remain committed to investing in early career programmes, with

29% of team members recruited specifically to join either one of the

graduate or early careers schemes, including Apprenticeships. During

an exciting period of growth, this expresses our commitment to invest

in those who are kick-starting their careers.

We maintain strong relationships with several educational institutions

across the Midlands to ensure we continue our commitment to

growing careers from within. Investment in career growth is a key

factor when it comes to retention, with 17% of team members either

being promoted or utilising their skills into a different team. This was

conducted via regular one-to-ones, ensuring team members have

guidance and support when it comes to progression. This is also a

key reason why team turnover decreased from 34% to 13% between

Dec-22 and Dec-23.

Our aim to expand internationally was demonstrated through the

establishment of Pinewood Japan whereby a team consisting of

experienced Projects Managers and Training and Implementation

Consultants are dedicated to delivering multiple projects from 2023

to 2025 in the East Asian market.

YOUR WORKPLACE & YOUR REWARD

Looking after our team members is essential and we continuously

review our benefits offering. Our ambition is to offer an industry-

competitive total reward package that values our team members and

enables us to be a responsible and attractive employer.

YOUR INCLUSION & YOUR INFLUENCE:

With over 22 nationalities across Pinewood and an above-industry

average representation of females company-wide, we are committed

to fostering a more diverse, inclusive, and unified culture that is

representative of our team members, our customers and the society

in which we live.

There are tremendous benefits to an environment where everyone

feels valued and included. We cannot underestimate the positive

impact that diversity and inclusion can have on how we understand

our customers, drive our innovation and, most importantly, engage

and inspire our people.

LIFE AT PINEWOOD

15

Business Review

17

Financial Review

18

Risk Overview and Management

27

Viability Statement

OPERATIONAL AND FINANCIAL REVIEW

15

Pinewood Technologies Group PLC Annual Report FY23

(£m)

Contribution from

Pendragon

Contribution

from external

customers

Pinewood PLC

standalone

result

Share of

Pinewood

Group

overheads

Pinewood

segment as

reported in

Pinewood

Revenue including intercompany

amounts

1

7.5

24.5

32.0

-

32.0

Gross Profit including intercompany

amounts

1

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 Profit

1

4.3

9.8

14.1

(0.3)

13.8

BUSINESS REVIEW

SOFTWARE (£m)

Described above as 'Pinewood Core Business'. Revenue and Gross Profit include intercompany amounts

H1 FY23

H2 FY23

FY23

H1 2022

H2 2022

FY22

Change (%)

Revenue including intercompany

amounts

1

14.5

17.5

32.0

12.4

13.0

25.4

26.0%

Gross Profit including intercompany

amounts

1

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 Profit

1

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%

A more detailed breakdown of the Pinewood Core Business financials for FY23 can be seen below:

The amounts below and the accompanying narrative relate to segmental results.

1

This is an Alternative Performance Measure. See note 2.3 in the financial statements.

Note: FY23 is a 13 month period ended 31 January 2024 and FY22 is the year ended 31 December 2022.

1

This is an Alternative Performance Measure. See note 2.3 in the financial statements.

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

Pinewood

Group

overheads

Pinewood

segment as

reported in

Pinewood

Revenue including intercompany

amounts

1

6.3

19.1

25.4

-

25.4

Gross Profit including intercompany

amounts

1

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 Profit

1

3.5

7.8

11.3

(0.3)

11.0

1

This is an Alternative Performance Measure. See note 2.3 in the financial statements.

• 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.

16

Pinewood Technologies Group PLC Annual Report FY23

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 DMS 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.

BUSINESS REVIEW

17

Pinewood Technologies Group PLC Annual Report FY23

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.

FINANCIAL REVIEW

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 sale to Lithia Motors, Inc. resulted in a profit on disposal of

£40.7m.

Consideration was received in cash on 1 February 2024.

The

Group intends to pay a special dividend to shareholders of 24.5p per

share in the second quarter of 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.

18

Pinewood Technologies Group PLC Annual Report FY23

RISK OVERVIEW AND MANAGEMENT

PRINCIPAL RISKS

Recognising that all businesses entail elements of risk, the Board

maintains a policy of continuous identification and review of risks

which may cause our actual future Group results to differ materially

from expected results. The Board continues to carry out robust

assessments of the Group’s emerging and principal risks in relation

to its strategy and overall business objectives. The table on pages 20

to 26 is an overview of the principal risks faced by the Group, with

corresponding controls and mitigating factors. The specific risks

are not intended to represent an exhaustive list of all potential risks

and uncertainties. Thorough risk reviews, involving company-wide

participation, have been completed in 2023 by the Risk Control Group.

Following the disposal of the UK Motor and Leasing divisions to Lithia

Motors, Inc., the Group now has a different set of principal risks which

can be seen below.

The risk factors outlined below should be considered in conjunction

with the Group’s system for managing risk, described below and in the

Corporate Governance Report on page 38.

19

Pinewood Technologies Group PLC Annual Report FY23

STRATEGIC RISKS

FINANCIAL RISKS

OPERATIONAL RISKS

COMPLIANCE RISKS

RISK MANAGEMENT AND INTERNAL CONTROLS

Accountability

The Board is responsible for risk management and internal control

within the context of achieving the Group’s objectives. The system of

control the Board has established covers both the Group’s financial

reporting and the mitigation of business and operational risks. The

system is designed to manage, rather than eliminate, the risk of failure

to achieve business objectives, and can provide only reasonable and

not absolute assurance against material misstatement or loss.

Financial Reporting

The executive directors oversee the preparation of the Group’s annual

corporate plan; the Board reviews and approves it and monitors actual

performance against it on a monthly basis. Where appropriate, during

the year, revised forecasts are prepared and presented for Board

review and approval. To ensure that information to be consolidated

into the Group’s financial statements is in compliance with relevant

accounting policies, internal reporting data is comprehensively

reviewed. Reviews of the appropriateness of Group accounting

policies take place at least twice a year, under the scrutiny of the Audit

Committee, which considers reports on this from the Group’s Auditor,

the application of IFRS and the reliability of the Group’s system of

control of financial information. Controls are designed to ensure that

the Group’s financial reporting presents a true and fair reflection of the

Group’s financial position.

Operational and Other Risks

Operational management is charged by the Board with responsibility

for identifying and evaluating risks faced by the Group’s businesses

on a day-to-day basis and is supported by the Risk Control Group

(RCG). Risks are reviewed as a top down and bottom up activity. The

content of the risk registers is considered and discussed regularly

through discussion with senior management and review within our

governance committees.

The approach to risk control and the work of the RCG are described

on page 40

The Group continues to follow the principles of the three lines

assurance

model

and

in

addition

to

the

responsibilities

of

management, the Group deploys specialist second line support and

oversight for certain principal risks through dedicated teams including

Finance & Insurance and Health & Safety.

20

Pinewood Technologies Group PLC Annual Report FY23

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

1

INFORMATION AND CYBER SECURITY

Failure to deliver or maintain robust

cyber security credentials throughout

our Dealership Management System

(DMS) services

Failure to protect our software

assets from security threats and

vulnerabilities

Failure of Third-Party Hosting Service

Failure to comply with legal or

regulatory requirements relating to

data security or data privacy in the

course of our business activities

•

This could lead to our customers being

unable to operate their dealerships

effectively, loss of information and

competitive advantage and potential

regulator action resulting in fines and

penalties

•

This could lead to theft of intellectual

property, system sabotage, data loss

or misuse, and have a significant effect

on our reputation. Fines and criminal

penalties could be imposed and disruption

to business operations and our ability to

serve customers. Financial results could

be adversely affected

•

The business monitors cyber security

threats and has systems and processes

in place to deal with incidents relating

to the services they provide. This is

demonstrated through the ISO27001

certification.

•

We have cyber liability insurance in

place, that includes Cyber Incident

Response Centre, providing access to

expertise to assist during a crisis.

2

PEOPLE

Failure to retain key personnel or

recruit the necessary additional talent

to deliver our strategic ambitions

•

This could lead to an inability to deliver our

business strategy at the required pace and

quality

•

We could miss our financial targets and

adversely affect our customers owing to

poor service, including development delays

•

Loss of key personnel would impact our

development pipeline, our product quality,

and relationships with customer and key

brand partners

•

Colleague engagement and wellbeing

deteriorates due to people resources being

stretched

•

Dedicated HR Team who continuously

monitor employee satisfaction through

both quantitative and qualitative

measures.

•

Talent Management & Recruitment

programme.

•

The Pinewood Academy ensures

skills are attained prior to joining

the company.

Pinewood Academy

graduates have a high employee

retention rate.

3

CUSTOMER AND SALES PARTNERS

Failure to deliver the service levels

we have agreed with customers and

sales partners

Failure to fulfil the ongoing

contractual agreements we enter

with our customer and sales partners

•

Loss of a key customer or sales partner

reducing profit and/or limiting growth

• Customer dissatisfaction, leading

to penalties or litigation, affecting

relationships, causing reputational

damage, and impacting our ability to meet

our strategic goals

•

Strain on colleagues due to the extra

work caused by any slippage in customer

service levels or planned implementation

dates

• Dedicated Business Account

Management team in place.

Each

major customer has an account

manager to provide support and advice

when needed.

Regular meeting with

customers aiming to identify any issues,

and enhance user experience with

demos of new features

•

Weekly review of Development Backlog

Priorities. Regular review of how realistic

agreed dates with customer are and

communication of expectations with

customers

•

Backups stored within different

geograpical locations within Azure

RISK OVERVIEW AND MANAGEMENT

21

Pinewood Technologies Group PLC Annual Report FY23

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

4

EXECUTION & SCALABILITY

Failure to implement our strategy

effectively through inability to deliver

product development or sales growth

in-line with the business plan

•

We miss our financial targets, alienate

key stakeholders, lose customers, and

are unable to invest adequately in our

business

•

Quality Assurance tests for each piece of

development work

•

Risk assessment in development process is

now mandatory part of process

5

TECHNOLOGY AND INFORMATION SYSTEMS

Failure to maintain current

technology, or identify and adapt to

new technological opportunities

•

This could lead to an inability to

operate effectively, loss of information

and competitive advantage and

potential regulator action resulting in

fines and penalties

•

This could limit growth and /or

increase operational threats

•

Multi level sign-off by Product Team;

pre-release functionality reviews with key

Stakeholders; in advance provision of

customer development release notes

•

Continous investment in Development

(approx. 20% of turnover)

•

Microsoft Partnership which drives the

business to use latest technology and tools

6

COMPETITION & MARKET CHANGES

Failure to meet competitive

challenges such as entry of a new

competitor, competitor consolidation,

or changes to the franchise dealer

networks or operating model

•

The relevance of our Dealership

Management System could be

compromised in the event our

customers’ needs change and we do

not adapt

•

Customers migrate to alternative

software providers

•

Revenues and profits could decrease

owing to competitor action, and or, a

change in the customer base

•

Adoption of agile development

methodology; continuous research into new

technologies; the fact that Pinewood is so

technologically advanced makes the DMS

market unattractive to new entrants

•

Awareness of likely entrants and emergence

of new technology; adoption of agile

development methodology; regular monthly

management reviews

7

MICRO-ECONOMIC, POLITICAL AND ENVIRONMENTAL

Global economic and business

conditions deteriorate, impacting

customers’ willingness or ability to

pay for our software or adopt a new

system

Failure to manage or mitigate

currency exchange rate fluctuations

•

Loss of a key customer reducing profit

and/or limiting growth

•

Amounts owed by customers are not

settled on time, or customer becomes

insolvent, adversely affecting cashflow

and liquidity

•

Financial results are adversely

impacted by loss on foreign exchange

rate exposure

•

There is effective management of Aged

Debts

•

Customer deposits are taken to mitigate

against customer insolvency

22

Pinewood Technologies Group PLC Annual Report FY23

RISK OVERVIEW AND MANAGEMENT

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

8

BUSINESS RESILIENCE & COMPLIANCE

Failure to comply with legal and

other requirements across multiple

territories and respond to changes

which could have a material effect

on our business model

Failure to manage the increased

demands and costs of operating

our organisation on a PLC basis

Failure to respond to changes in

legislation, such as in relation to

environmental, employment, and

governance, which could lead to

shareholder and other stakeholder

dissatisfaction

• Business disruption arising

from inadequate knowledge

of territory-specific regulatory

requirements, and or,

development of appropriate

operational/financial controls

•

This could lead to fines,

criminal penalties, litigation

and an adverse impact on our

reputation, financial results, and/

or our ability to do business

•

Resources are diverted to

address urgent remediation, as

well as taking proceedings or

defending legal or regulatory

action

•

Before we enter a new market, we carry out pre-

entry market evaluation, which includes seeking

legal advice and understanding national compliance

requirement

•

We also carry out proof of concept implementations

as well as reviewing other ERP systems in those

markets

The following risks related to the UK Motor and Leasing divisions which were disposed of to Lithia

Motors, Inc. on 31 January 2024. These risks no longer exist post disposal:

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

9

STRATEGY

Failure to adopt the right strategy,

or

Failure of our adopted strategy to

deliver the desired outcomes, or

Failure to implement our strategy

effectively

Delay to strategic delivery and

investment financial constraints

•

We miss our profit growth and/

or debt management target,

alienate key stakeholders and

are unable to invest adequately

in our business

•

We do not meet our customers’

needs by not achieving a

coherent, connected and

engaging customer journey,

leading to us to be less

competitive and losing market

share

•

Our strategy is informed by significant research and

market data

•

We communicate effectively our adopted strategy to

our stakeholders. Our strategic priorities were fully

refreshed during 2021 and refined further in 2022 and

full details are included on pages 25 to 31 of the 2022

Annual Report

•

We invest appropriately in the technological, physical

and human resources to deliver our strategy, closely

monitor performance against our objectives, and

adjust our actions to meet our strategic goals. Our

Director of Strategy and Transformation, together with

other dedicated resources, supports the delivery of our

strategic initiatives and provides robust governance,

including financial tracking

•

Our sophisticated management information identifies

threats to the success of our strategy both during the

planning and implementation phases, and informs

mitigating actions, both directionally and operationally

•

We ensure that we monitor our manufacturer and third

party customer service measures and take action in

the event of low scores

•

We focus strongly on efficient use of working capital

through embedded disciplines, especially in relation to

vehicle inventory

•

We review capital expenditure plans to ensure our ROI

objectives are achievable

•

Our business plan has been fully refreshed in 2022 and

has taken into account the latest economic predictions

23

Pinewood Technologies Group PLC Annual Report FY23

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

10

MANUFACTURER RELATIONSHIPS

Dependence on vehicle

manufacturers for the

success of our business

Failure to maintain

sustainable, mutually

rewarding relationships

with our manufacturers

•

Failure of, or weaknesses in our vehicle

manufacturers’ financial condition, reputation,

marketing, production and distribution capabilities

such as the shortage of semi-conductors

along with the current Ukraine invasion limiting

production of components, and other disruptions

to the supply chain; or the effectiveness of the

supply chain response to EU Trade Deal Rules of

Origin; or a lack of alignment with manufacturers’

reduced new vehicle supply due to lack of

components and manufacturing capability

•

Failure to adapt to the impact of lower new vehicle

registrations on future aftersales revenue streams

within our business

•

Failure to adapt to manufacturer reductions in sale

distribution point numbers as volumes fall, either

planned or by limits to production, along with the

removal of some product lines due to their inability

to build profitability

•

Failure of our vehicle manufacturers to develop

within required timelines to meet both regulatory

and consumer requirements around BEV and

hybrid emission vehicles

•

Introduction of new Chinese manufacturers into

Europe and UK providing competitively priced BEV

products in direct competition to our traditional

OEM partner products

•

Failure to maintain good relations with our

franchisors either through day to day activities

or our strategic decisions impairs our ability to

generate good quality earnings

•

Failure to positively adapt to OEM consolidation

such as the creation of multi brand operations and

network rationalisation

•

Failure to positively adapt to changes

manufacturers are introducing or may make to

their business models, including the introduction

of agency distribution models, ensuring agency

agreements are not infringing any regulatory

requirements, direct sales to customers, increased

involvement in the used vehicle market, and other

changes that may affect the traditional dealer

franchise model

•

Failure to positively adapt to changes in

Competition regulation, for example via the

outcome of the Aftersales block exemption review

due in May 2023 which could change current

protection impacting qualitative selective AR

agreements, or agency introduction

•

Our diverse franchise representation avoids

over reliance on any single manufacturer

•

Our close contact with our vehicle

manufacturers seeks to ensure our

respective goals and strategic decisions

are communicated, understood and

aligned, to deliver mutually acceptable

performance

•

To compensate lower volumes, margins

increased with greater demand than

availability

•

Our appropriately targeted investment in

franchise assets and our performance

maintains our reputation as a quality

representative for our brand manufacturers

•

Seeking multi brand representation

through single sites to mitigate lower

aftersales opportunities from lower new

vehicle volumes, and greater new volume

throughput per store

•

Build relationships with new OEM partners

repurposing current locations, offering

dual representation whilst the used and

aftersales market builds

•

Our investment in marketing initiatives

and our online presence supplement and

enhance our market presence and offering

over and above manufacturers’ marketing

efforts

•

Our diverse franchise representation

ensures new vehicle inventory is supplied

from a wide variety of sources

•

Our model of developing and maintaining

revenues from used vehicles, aftersales,

and our software and leasing segments

reduces our overall reliance on new vehicle

franchises

•

Our ongoing innovation and investment in

customer choice as to how they wish to

purchase a vehicle makes us an attractive

partner to OEMs

•

Our close contact with our vehicle

manufacturers ensures we are able

to identify potential supply issues and

collaborate to limit any impact on our

customers and our business performance

24

Pinewood Technologies Group PLC Annual Report FY23

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

11

COMPETITION

Failure to meet competitive

challenges to our business

model or sector

•

Customers migrate to alternative

providers

• Intermediary companies establish

a barrier between us and our

customers

•

New forms of competition would

have less barriers to competitors

entering the market

•

Revenues and profits could

decrease owing to competitor

action

• Consolidation of existing

competitors could provide

economies of scale, product range

and customer reach that makes our

customer offer less competitive

•

The market could become more

fragmented as on-line, click

and collect, home delivery and

subscription models become more

attractive ways of purchasing to

customers

• Emerging distributors activities

affect our ability to secure

sufficient used inventory

•

New OEM brands entering the

market with advanced BEV

technology

•

Our detailed market and sector monitoring systems

assist early identification and effective response to any

competitive or intermediary threats

•

Our scale, expertise and technological capabilities

enable rapid and flexible response to market

opportunities

•

Technical equipment costs and OEM connectivity

solutions for aftermarket repairs are likely to limit the

number of intermediary repairers creating greater

retention levels

•

Reducing dependency on intermediary companies within

the new vehicle space, by further investing within our

own website capability providing visibility of all new

vehicle unsold physical and pipeline inventory

•

Agency models reduce the risk of new vehicle supply

leaking out to intermediaries giving greater protection to

the brand distributor

•

Consolidating OEMs, along with the ability to multiband

key market facilities, help to represent more brands

through one rooftop, providing greater sales and

aftermarket volumes

•

Emerging specialism, such as battery repair factories

within densely represented market regions create future

aftermarket opportunities for national distributors such

as ourselves who have the ability to adapt facilities and

invest

•

Our well-developed customer relationship management

capabilities and ongoing innovation and investment

in our online platforms, customer offer and fulfilment

tools aim to drive industry-leading service and attract

customer loyalty

•

We continually seek to develop new methods of

customer interaction, particularly online. This enables

the business to anticipate changing customer needs

•

Expanding relationships with new emerging brands,

along with stronger OEM relationships allow for greater

market area representation and coverage for sales and

aftersales

RISK OVERVIEW AND MANAGEMENT

25

Pinewood Technologies Group PLC Annual Report FY23

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

12

ENVIRONMENTAL

Progression towards

greener technologies,

autonomous driving, and/

or pay-per-use, rather than

owning a vehicle

UK taxes change to penalise

road use, fuel type, vehicle

use and to increase VAT

Failure to adapt to the

changes arising as a result

of the Government’s future

ban on sale of petrol, diesel

and hybrid powered vehicles

OEMs restricting distribution

of certain vehicle models

in the UK in response to

emission targets

Failure to recognise and

minimise the environmental

impact of our business

activities

•

Customers choose greener vehicles

we cannot supply

•

Overall vehicle parc reduces

•

Increases in electricity costs

reduces customer demand causing

used BEV values to fall, impacting

negatively the overall cost of

ownership

•

Vehicle purchase and use declines,

adversely affecting revenue

opportunities

•

Lower demand for petrol, diesel and

hybrid vehicles and potential impact

on vehicle residual values

•

Government policy and consumer

sentiment in respect of petrol, diesel

and/or hybrid vehicles impacts the

sale of one or all types of these

vehicles

•

Reductions in sales volumes or

margins due to loss of certain

product lines and future aftersales

opportunities

•

Investment cost to adapt to a broad

range of BEV products by 2030 and

PHEV and MHEV by 2035 is not

adequately considered

•

We represent vehicle brands which are responding

effectively to the greener technology agenda and latest

Government timescales

•

Our represented OEM partners have the ability to grow

within the light commercial vehicle sector offering a

blend of hybrid and full electric BEV options to satisfy the

growing demand of home and business delivery

•

We identify trends in demand through our sophisticated

management information and analysis tools and tailor

our model accordingly

•

We monitor sales and demand of all vehicles by fuel type

whilst using our sophisticated management information

and analysis tools ensuring our inventory matches

consumer demand, and can target supply by territory

market depending on set emission rules

•

Our breadth of relationships with asset finance

companies and geographic footprint help us to provide

innovative mobility solutions for private and business

vehicle users, whatever their needs. These provisions

can be delivered through our national footprint locations,

or via online platforms

•

We maintain the right level of tax expertise to interpret

and assess proposed changes, respond with well-

informed advice and effectively assist our strategic

planning and the design and implementation of

appropriate mitigating actions

•

The Group’s Environment Policy has recently been

refreshed, in order to provide further specific oversight

and direction as to the impact of the Company’s

activities on climate change, nature loss, solid waste

(including single use plastics) and resource availability.

We continue to develop, enhance and monitor our

operational standards, ensuring that environmental

priorities are accounted for appropriately in planning and

decision making, and where possible, the impact of our

activities on the environment is reduced or minimised

•

We carefully monitor the future product offerings of our

current and future OEM partners, along with emerging

brands, ensuring we maintain and grow partnerships with

those producing relevant product meeting consumer

demands

26

Pinewood Technologies Group PLC Annual Report FY23

NO.

PRINCIPAL RISKS

IMPACT BEFORE MITIGATION

MITIGATION

13

REGULATORY AND COMPLIANCE

Failure to comply with legal

and other requirements and

respond to changes which

could have a material effect

on our business model,

for example, such as our

ability to provide Finance

& Insurance products to

our customers, or adverse

changes in trade tariffs

Failure to respond to

changes in legislation, in

particular in relation to

environmental, employment,

and governance, which could

lead to shareholder and other

stakeholder dissatisfaction

•

This could lead to fines, criminal

penalties, litigation and an adverse

impact on our reputation, financial

results, and/or our ability to do

business

•

We may be restricted from

continuing certain business

activities, such as those regulated

by the FCA

•

Resources are diverted to address

urgent remediation, as well as

taking proceedings or defending

legal or regulatory action

•

The ability to obtain appropriate

inventory is impeded and/or

purchase costs rise

•

We maintain appropriate expertise to interpret, assess

and respond to proposed changes in regulation, enabling

us to adapt our model and processes to comply with

changes in a seamless manner

•

Our culture focuses strongly on good compliance, with

emphasis on doing the right thing and delivering good

performance

•

We operate a Finance & Insurance Services Regulatory

Board with a supporting governance framework and

continue to review and invest in systems and processes

to minimise the risk of non-compliance to FCA

regulations

•

Our team of compliance specialists design, and we

communicate effectively, processes that support our

businesses to minimise the risk of non-compliance

across a range of areas

•

In the case of new vehicles, our diverse representation

mitigates the risk and for parts we maintain alternative

sources of supply where possible

•

In September 2021 we implemented a committee

to provide strategic direction and oversight to our

Environmental, Social and Governance agendas.

The work of the committee will be informed by our

self-assessment of ESG practices, which has been

completed using an independent benchmarking tool.

Further information can be found at page 29 within our

ESG Report

RISK OVERVIEW AND MANAGEMENT

27

Pinewood Technologies Group PLC Annual Report FY23

VIABILITY STATEMENT

VIABILITY STATEMENT

In accordance with provision 31 of the UK Corporate Governance

Code, published by the Financial Reporting Council in July 2018

(the ‘Code’), taking into account the company’s current position and

principal risks, the Directors have assessed the viability and prospects

of the company over the three-year period to 31 January 2027.

The

Directors believe this period to be appropriate as the Group’s strategic

planning encompasses this period.

Following the sale of the UK Motor and Leasing divisions to Lithia

Motors, Inc. and the payment of the special dividend of 24.5p per share

on 7th May 2024, the Group in forecasting to be in a net cash position.

The Group’s three-year review considers the Group’s profit and loss,

cash flows, debt and other key financial ratios over the period. During

this period, the three-year review forecasts indicate that the Group will

be highly cash generative.

These metrics are subject to a stress-test that has 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 has a £10m RCF facility that they

do not expect to utilise.

Based on the results of this analysis, the Directors have a reasonable

expectation that the company will be able to continue in operation

and meet its liabilities as they fall due over the three-year period of

their assessment. The Directors are mindful of the potential impact

of a macro-economic downturn but after assessing the risks do not

believe there to be a material risk to going concern.

In addition, further discussion of the principal risks affecting

Pinewood Technologies Group PLC can be found within the Annual

Report and Accounts on pages 18 to 26. The risk disclosures section

of the consolidated financial statements set out the principal risks the

Group is exposed to, including information and cyber security, people,

customers and sales partners, execution and scalability, technology

and information systems and competition & market changes.

The

Board considers risks during the year through the Risk Control Group

and annually at a Board meeting with ad hoc reporting as required.

The principal risks and the mitigation steps that the Board considered

as part of this viability statement were as follows:

• Faliure to deliver or maintain robust cyber security credentials

throughout our system.

We mitigate these risks by monitoring

cyber security threats and having systems and processes in place

to deal with incidents, which is demonstrated through the ISO

27001 certification. We also have cyber liability insurance in place,

that includes Cyber Incident Response Centre, providing access to

expertise to assist during a crisis.

•

The ability to retain key personnel or recruit the necessary additional

talent to deliver our strategic ambitions.

We mitigate these risks

through a dedicated HR team who monitor employee satisfaction

and a talent management & recruitment programme.

During FY23, the Board carried out a robust assessment of the

principal risks facing the Group, including those that would threaten

its business model, future performance, solvency or liquidity.

The

Directors believe that the Group is able to manage its business risks

successfully, having taken into account the current economic outlook

and the results of the severe but plausible downside scenario for the

three-year viability period. Accordingly, the Board believes that, taking

into account the Group’s current position, and subject to the principal

risks faced by the business, the Group will be able to continue in

operation and to meet its liabilities as they fall due for the period up

to 31 January 2027.

Approved by order of the Board

Ollie Mann

Chief Financial Officer

25 April 2024

28

Pinewood Technologies Group PLC Annual Report FY23

29

Environmental, Social and Governance Report

30

Environmental Report

37

Social Report

38

Corporate Governance Report

42

Board of Directors

44

Audit Committee Report

48

Nomination Committee Report

50

Remuneration Committee Report

51

Directors’ Remuneration Report

62

Directors’ Report

DIRECTORS’ REPORTS

29

Pinewood Technologies Group PLC Annual Report FY23

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

As set out in some detail at page 5 of this Annual Report, following

the successful completion of the sale of the Group’s motor retail and

leasing businesses to Lithia UK Holding Limited on 31 January 2024

(the “Disposal”) the Group is now a pure-play, independent Software

as a Service (“SaaS”) business, trading under the name of Pinewood

Technologies Group PLC.

As a result of the transaction described above, the Group now

considers it necessary to reassess and reset our approach in terms of

our environmental, social and governance (“ESG”) objectives, ensuring

they are appropriate to, and focused on the SaaS business the Group

has now become.

To this end, the Company’s ESG committee will

•

Establish cyber security and ESG engagement sessions to deliver

an effective ESG strategy and conduct a deep dive on Pinewood’s

climate strategy;

•

Set out where the Group aspires to be in the future, in terms of

future targets and plans to improve our ESG reporting and the

efficacy of the measures we implement;

•

Establish how the Group aims to achieve our targets, with

appropriately defined milestones achievable over the short term

(within 2 years), medium term (within 2-5 years) and long term

(over 5 years), against which we can monitor our progress, and

what action we intend to take where we identify our progress has

been behind target.

Clearly, the disposal of the Group’s motor retail and leasing businesses

changes the entire premise and emphasis of our ESG strategy and

implementation from that reported in the prior year; we anticipate that

investors will recognise this although we intend to ensure that our ESG

initiatives remain embedded into both our strategic objectives and

remuneration incentives going forward.

ENVIRONMENTAL REPORT

Pinewood continues to operate a formal Environment Policy; which

has been reviewed and updated, reflecting our position as a pure-play

SaaS business. We continue to recognise our responsibility to protect

the environment and minimise the environmental impact of our

activities. In partnership with our employees, customers and suppliers,

the Group aims to operate to high standards of environmental

protection appropriate to its business activities.

The Group’s Environment Policy includes specific oversight and

direction from the Board of directors as to the impact of the Group’s

activities on climate change and resource availability. We will

continue to develop, enhance and monitor our operational standards,

ensuring that environmental priorities are accounted for appropriately

in planning and decision making, and where possible, the impact of

our activities on the environment is reduced or minimised.

In accordance with Listing Rule 9.8.6R(8), we set out in the TCFD

overview table beginning on page 30 certain climate-related financial

disclosures aligned to the four recommendations and eleven

recommended disclosures contained within the TCFD additional

guidance (Implementing the Recommendations of the Task Force on

Climate Related Financial Disclosures (2021 TCFD Annex)).

The Group is also required to comply with the Companies (Strategic

Report) (Climate-related Financial Disclosure) Regulations 2022

amended sections 414C, 414CA, and 414CB of the Companies Act

2006, (UK Climate-related Financial Disclosures (CFD)).

Within the TCFD overview table, we have also included disclosures

by each of the recommended disclosures, identifying whether

we consider such disclosures to be either consistent with the

recommendations of the TCFD or, where disclosures have only been

partially made or omitted, a further description of any steps taken

or planned to ensure our disclosures are consistent in the future,

including relevant timeframes.

In particular, of the eleven TCFD recommended disclosures,

considering these as a pure-play SaaS business, the Company

considers that it is consistent with full disclosure for 9 items and

partially consistent with 2 disclosures : (i) Strategy B - financial impact

of climate related risks - due to the disposal, we have not been able

to assess the impact that climate related risks may have on the SaaS

business. This includes the impact climate related risks may have on

the group's financial planning process. We will continue to assess the

impact climate related risks may have on financial planning in the next

financial year. ii) Metrics and Targets B - Scope 3 emissions - Scope

3 emissions have been disclosed only for emissions from employee

commuting. This is due to the Group not currently having the ability to

capture the required additional data sets for the remaining scope 3

categories. We will look to enhance the collation of scope 3 emissions

data in the next financial year. As more specifically set out in the TCFD

Overview tables on pages 30 to 33.

30

Pinewood Technologies Group PLC Annual Report FY23

TCFD OVERVIEW

Disclosure Level:

Full

Partial

Omitted

Recommended

disclosures

Summary of Progress/ Measures planned to ensure future

consistency with the recommendation

Reference

Disclosure

Level

GOVERNANCE

Disclose the

organisation’s

governance

around

climate-related

risks and

opportunities

a) Describe the

Board’s oversight

of climate

related risks and

opportunities

The Board is responsible for our climate ambition and our

approach to climate related risks and opportunities, embodied

in our Environment Policy which is reviewed annually.

The

Board is ultimately responsible for setting the Group’s risk

appetite and for risk management and internal control

systems, delegating authority to the Audit Committee, ESG

Committee and Risk Control Group in setting the Group’s risk

appetite and implementing appropriate oversight of ESG risks.

Although the ESG Committee did not meet formally in 2023,

given the focus on the disposal, it will meet at least twice

annually, and reporting of ESG matters is a standing agenda

item at Board meetings.

ESG matters will also be considered

by the recently formed Strategy Working Group, which will

meet at least four times per annum, and more frequently

if required.

The ESG Committee will consider how climate

related risks and opportunities impacts on budgets, business

plans and will decide how climate-related strategies are

implemented, as well as monitoring progress.

FY 24 priorities

We will continue to consider the impact of climate related

risks at Board level, in the context of the consideration of

our strategy, including how climate related issues potentially

impact our strategy and financial performance. ESG

committee to meet formally.

Annual Report

Environmental,

social and

governance

report page 29

b) Describe

management’s role

in assessing and

managing climate

-related risks and

opportunities

The Board as a whole is ultimately accountable for the Group’s

climate strategy and approach to TCFD, however the Board

has established an Environmental, Social and Governance

(ESG) Committee to assist the Board.

The ESG Committee will meet at least twice a year and

comprises the Group Chief Executive Officer (CEO) and Group

Chief Financial Officer (CFO), a non-executive director from

the main Board and other members of the senior management

team as appropriate.

It will receive reports from senior

managers to ensure that progress is being made towards

meeting the Group’s specific Climate Risk (CR) KPIs and

ongoing CR commitments, including greenhouse gas (GHG)

emissions

reduction targets and plastics recycling initiatives.

Together with the Risk Control Group (RCG), the ESG

Committee exercises day to day oversight of climate risks.

The ESG Committee has a direct reporting line to the Audit

Committee and will provide suitable reports as to its progress.

The Audit Committee meets at least three times a year and

comprises all the independent Non-Executive Directors of the

Board. In line with the governance process used for financial

management, it considers the potential impact of climate

change on the financial statements, including the output of

the Group’s scenario analysis, the costs to achieve the Group’s

climate related and environmental targets and their impact on

the financial statements and related disclosures.

FY 24 priorities

Continue to consider appropriate ESG reporting, including

considering how climate-related issues are factored into

budgets, business plans, performance objectives, capital

expenditure and investment decisions. Climate will be further

considered in our energy and other supplier procurement

processes.

Annual Report

Environmental,

social and

governance

report page 29

ENVIRONMENTAL REPORT

31

Pinewood Technologies Group PLC Annual Report FY23

TCFD OVERVIEW

Disclosure Level:

Full

Partial

Omitted

Recommended

disclosures

Summary of Progress/ Measures planned to ensure future consist-

ency with the recommendation

Reference

Disclosure

Level

STRATEGY

Disclose the

actual and

potential

impacts of

climate-

relates

risks and

opportunities

on the

organisation’s

businesses,

strategy and

financial

planning

where such

information is

material

a) Describe

the climate-

related risks and

opportunities the

organisation has

identified in the

short, medium

and long term

The material climate related risks and opportunities were considered

for the pre-disposal group and are set in the table at page 34 of

this report. Given the Disposal, the

Group is now a pure-play SaaS

business leaving little residual climate risk in the remaining business.

The Group will explore the range of climate impacts that may have

the potential to present short term (meaning within 2 years which is

our budgeting period), medium term (meaning 4-5 years aligned to

the period of our strategic forecasting) and long term (greater than 5

years) risks and opportunities to Pinewood as documented at pages

20 to 22 of this report.

Medium term risks for Pinewood include

matters such as the increasing cost of energy, with longer term risks

including items such as the resilience of cloud hosting provision

depending on geographic location and potential exposure to extreme

weather phenomena. Further climate risk and opportunity screening

exercise will provide further analysis on the pure-play SaaS business

going forwards.

FY24 priorities

Given the disposal, the Group is now a pure-play SaaS business. We

will work towards reassessing the impact climate related risks may

have within the next financial year.

Annual

Report

Risk

Management,

page 25

Environmental,

social and

governance

report page 29

b) Describe the

impact of climate

related risks and

opportunities on

the organisation’s

businesses,

strategy and

financial planning

Given the disposal, the group is now a pure-play SaaS business with

two physical office locations and cloud based hosting. As such, the

group does not expect climate related factors to have a significant

impact on the products and services (dealer management system

software licenses) that it will offer going forwards.

FY24 priorities

The group is yet to assess the impact climate related factors will

have on the products and services offered. We expect to perform this

exercise in the next financial year.

Annual Report

Risk

Management,

page 25

Environmental,

social and

governance

report page 29

c) Describe the

resilience of the

organisation’s

strategy,

taking into

consideration

different climate

related scenarios,

including a 2

o

C or

lower scenario

The group has considered the impact climate related risks may have

on the SaaS business taking into consideration two climate related

scenarios:

•

below 2 degrees: As a pure play SaaS business, the group will be

providing software licenses in the future. As such, we do not expect

this climate related scenario to have a significant impact on the

products and services that the Group will offer.

•

above 3 degrees: We do not expect our products or services to be

significantly impacted under an increased physical risk scenario.

The Group leases two physical office locations which are located

in urban areas. These locations are not expected to be significantly

affected by climate risks and the group has contingency measures

for remote working for all employees. Servers are leased from third

party providers who have contingency plans in place to address any

physical risks to ensure continuity of services provided to the Group.

In line with the above, the Group considers itself to be resilient to

climate related physical risks.

FY24 priorities

32

Pinewood Technologies Group PLC Annual Report FY23

TCFD OVERVIEW

Disclosure Level:

Full

Partial

Omitted

Recommended

disclosures

Summary of Progress/ Measures planned to ensure future

consistency with the recommendation

Reference

Disclosure

Level

RISK MANAGEMENT

Disclose

how the

organisation

identifies,

assesses

and manages

climate related

risks

a) Describe the

organisation’s

processes for

identifying and

assessing climate-

related risks

Environmental is included as a principal risk as part of our

risk management overview processes. The ESG Committee

continue to review, assess and consider any climate related

risks which may impact upon our operations, and report to the

RCG, and ultimately the Audit Committee and Board where

necessary.

Our approach to the identification and assessment of climate-

related risks fits into our already established risk management

framework. These risks are identified, classified and assessed

alongside the other risks which the Group faces. See pages

18

to 26 on risk management in the Group. Climate change

risks and, where applicable, opportunities are reported to the

Executive Team and the Board. Climate-related risks have been

assessed in accordance with our Group risk framework and we

have continued to consider climate change as an emerging risk

to our business, rather than a principal risk.

FY24 priorities

The Group intends to further revise its Environmental Policy, in

the context of being a pure-play SaaS business, and ensuring

that a specific focus on climate related issues become

embedded in the Policy.

As detailed above, consideration of

climate related issues will become a standing agenda item of

the Board.

Annual Report

Risk

Management,

page 25

b) Describe the

organisation’s

processes for

managing climate

related risks.

The business is subject to regular risk identification,

assessment and review, which includes consideration of

environmental and climate related risk.

Climate risk is

considered a sub-risk to our main environmental risk. See

pages 18 to 26 on risk management in the Group.

FY24 priorities

We intend to use the outcome of our climate risk and

opportunity screening process to further inform and support

the monitoring of any climate related risks identified.

Annual Report

Risk

Management,

page 25

c) Describe

how processes

for identifying,

assessing and

managing climate

related risks are

integrated into

the organisation’s

overall risk

management

Environmental is included as a principal risk as part of our

risk management overview processes.

Climate change has

been considered as part of the environmental risk and is

not considered to be a standalone principal risk.

The ESG

Committee will continue to review, assess and consider any

climate related risks which may impact upon our operations

and report to the RCG, and, ultimately, the Audit Committee and

Board where necessary.

FY24 priorities

Develop a specific sub-risk designed to identify, manage and

assess climate related risks

Annual Report

Risk

Management,

page 25

ENVIRONMENTAL REPORT

33

Pinewood Technologies Group PLC Annual Report FY23

TCFD OVERVIEW

Disclosure Level:

Full

Partial

Omitted

Recommended

disclosures

Summary of Progress/ Measures planned to ensure future

consistency with the recommendation

Reference

Disclosure

Level

METRICS AND TARGETS

Disclose the

metrics and

targets used

to assess

and manage

relevant

climate-relates

risks and such

opportunities

where such

information is

material

a) Disclose the

metrics used by

the organisation

to assess climate-

related risks and

opportunities in line

with its strategy and

risk management

process

The Group has been reporting on energy and carbon emissions

since 2013. More information on the Group's carbon emissions

is provided on page 36.

FY24 priorities

Given the disposal transaction, we plan to revise our climate

related metrics and consider additional metrics relevant to the

new business in the next financial year.

Annual Report

Environmental,

social and

governance

report page 29

b) Disclose Scope

1, Scope 2 and, if

appropriate, Scope

3 (greenhouse gas

(GHG) emissions

and the related risks

The Group discloses scope 1, scope 2 and scope 3 emissions

in line with the GHG protocol. Further details on carbon

emissions is provided on page 36. The Group currently

discloses only scope 3 employee commuting carbon

emissions due to the inability to capture data for remaining

scope 3 categories. See disclosures at page 36 of this Annual

Report.

FY24 priorities

The group aims to enhance the data capture process for the

remaining scope 3 categories in the next financial year.

Annual Report

Environmental,

social and

governance

report page 29

c) Describe the

targets used by

the organisation to

manage climate-

related risks and

opportunities and

performance against

targets

The Group has currently set interim targets, namely:

• achieve an overall reduction in carbon emissions by 5% by

year end 2024; and

• reduce our use of single use plastics procured through the

Group's supply chain and increase the amount of single use

plastics recycled.

FY24 priorities

Due to the disposal, the group will look towards developing

additional targets relevant to the pure play

SaaS busines

Annual Report

Director’s

Remuneration

Report, page 55

Environmental,

social and

governance

report page 29

34

Pinewood Technologies Group PLC Annual Report FY23

Area

Risk

Time horizon

and scenario

Impact and

rating

Metric

Policy &

Legal

Increased reporting requirements and adverse energy

regulation due to climate change

The Pre-Disposal Group was already impacted by regulation

introduced to reduce energy use and emissions.

Given the

Disposal, however, the costs and resource required to ensure

the Group remains compliant with additional

motor vehicle

and climate change related reported will cease.

Medium term,

although

no longer

applicable

following the

Disposal

Minor

Annual cost (£) of

internal resources

used to monitor

climate legislation

and compliance:

will reduce

following the

Disposal.

Carbon pricing mechanisms

The potential introduction of a carbon tax in the UK for the

motor vehicle sector could increase vehicle manufacturing

and transportation costs.

However, given the Disposal and

the nature of the post-Disposal business, carbon emissions

will automatically decrease as the carbon footprint of

the Group decreases due to both its smaller size and the

nature of its operations as a pure play software as a service

business.

Medium term,

although

no longer

applicable

following the

Disposal

Minor

No relevant metric.

Market Risks

Changing consumer preferences (such as to BEVs) and

increased sensitivity to ESG

For the Pre-Disposal Group, a reduction in consumer

spending could have an adverse effect on revenue and

profitability. With environmental awareness growing in

importance, customers may have changed their preferences

to purchase more sustainable alternatives, including BEVs.

Given the Disposal, changing consumer preferences as they

applied to the pre-Disposal Group should not impact the post-

Disposal Group as the Group becomes a pure play software

as a service business.

Medium term,

although

no longer

applicable

following the

Disposal

Minor

The Pre-Disposal

Group recorded

the annual number

of BEVs and PEVs

sold; this will no

longer be a concern

for the post-

Disposal Group.

Increased costs of raw materials

Increases in raw material costs in supply chains could

adversely affect the profitability of the Pre-Disposal Group,

with climate change likely to result in increased raw material

costs, supply disruptions and delayed deliveries.

Increased

energy costs impacted the pre-Disposal Group.

However,

given the Disposal and the nature of the post-Disposal

business, which is significantly less dependent on raw

materials and supply chains for its operations, the impact will

be significantly reduced.

Longer Term,

although

no longer

applicable

following the

Disposal

Minor

Annual cost (£)

of material and

equipment supply.

Availability of raw materials

For the pre-Disposal Group, a reduced supply of vehicle

components could result in a supply of vehicles and parts not

meeting the pre-Disposal Group’s demand, leading to delays

and disruptions, impacting our revenue streams.

However,

given the Disposal and the nature of the post-Disposal

business, which is significantly less dependent on raw

material availability its supply chains for its operations, the

impact will be significantly reduced.

Longer Term,

although

no longer

applicable

following the

Disposal

Minor

Number of

suppliers who cite

delays relating to

the availability of

raw materials used

in manufacturing.

Percentage annual

increase in energy

prices.

Outlined below are the material climate related risks and opportunities as applicable to the pre-disposal combined group (“Pre-Disposal Group”)

for the 13 month period prior to the sale of the Group’s motor retail and vehicle leasing businesses to Lithia UK Holding Limited on 31 January

2024.

ENVIRONMENTAL REPORT

35

Pinewood Technologies Group PLC Annual Report FY23

Area

Risk

Time horizon

and scenario

Impact and

rating

Metric

Reputation

Risks

Cost of capital linked to sustainability criteria

With the increasing importance of ESG and sustainability,

stakeholder concern for developing our ESG programme is

likely to increase. Failing to proactively communicate how we

will reduce our environmental impact could result in the loss

of potential capital, whether debt or equity.

Short term,

although

unlikely to be

applicable

following the

Disposal

Moderate

Annually evaluating

sustainability

criteria on capital.

Loss of revenue linked to damaged reputation

Reputational damage from a customer perspective

could be material and significantly affect the business's

financial performance. Customers could switch to our

competitors, who are performing better in relation to ESG and

sustainability.

However, given the Disposal and the nature

of the post-Disposal business, which is less reliant on retail

customer/end user reputation and review, this risk will be will

be significantly reduced

Short term,

although

unlikely to be

applicable

following the

Disposal

Minor

We constantly

review press

reports and social

media commentary.

Technology

risks

The operational impact of the shift to lower emissions

alternatives & BEVs

For the pre-Disposal Group, shifting the product range to

more efficient and sustainable products would have been

a gradual process until 2035. The pre-Disposal Group

anticipated increasing demand for BEVs, in all timeframes,

and was ready for this change from a sales perspective.

However, equally, the pre-Disposal Group was aware of

the impact this would have on aftersales revenue. BEVs

have fewer parts, use fewer fluids, do not possess exhaust

systems and exhibit lower wear from use (for example,

regenerative braking decreases wear on brake pads). The

pre-Disposal Group expected total aftersales revenue

opportunities to decrease as demand for BEVs increases.

However, BEVs will still need to be serviced and repaired by

highly trained technicians, with similar servicing schedules

to ICE engines. The pre-Disposal Group planned to take

advantage of this BEV specialisation over its independent

competitors, who may need more preparation time to deal

with widespread BEV servicing demands (refer to opportunity

two).

Again, given the Disposal and the nature of the post-Disposal

business, there will be no operational impact of the shift to

lower emissions alternatives and BEVs going forward.

Short term,

although

unlikely to be

applicable

following the

Disposal

Minor

Annual revenue

(£) relating

to aftersales

servicing.

Costs to transition to lower emissions technology and BEVs

BEVs are already increasing their market share annually.

Newer sustainable technology will come onto the market

over the coming years. Adopting or deploying new practices

or processes would have come at a cost to the pre-Disposal

Group business. However, the pre-Disposal Group expected

changes to occur gradually over time, and as it aimed to

reduce its carbon emissions, it may have needed to invest in

lower-emission technology, including but not limited to the

transition to BEVs, resulting in increased costs.

Given the Disposal and the nature of the post-Disposal

business, there will be no costs of transitioning to lower

emissions technology going forward.

Short term,

although

unlikely to be

applicable

following the

Disposal

Minor

Annual cost (£)

associated with

training technicians

for BEV servicing.

Annual cost (£)

associated with

installing BEV

infrastructure, such

as charging points

36

Pinewood Technologies Group PLC Annual Report FY23

Area

Risk

Time horizon

and scenario

Impact and

rating

Metric

Resource

Efficiency

On-site renewable energy

Mitigating carbon pricing through investing in renewable

energy is an opportunity. By installing renewable solar PV

at pre-Disposal Group sites, energy costs can be further

reduced. The pre-Disposal Group total carbon footprint can

be reduced by procuring renewable energy for its sites for the

remainder of its energy use.

Following the Disposal, the property estate will be reduced to

office accommodation in Birmingham, and a small satellite

office in London, with limited opportunity to install renewable

energy sources.

Short term

Minor

Annual energy

generation potential

(KWh) from on-site

renewable energy

schemes

Energy efficiency in operations

Investment in resource efficiency across the pre-Disposal

Group will lower energy intensity and lead to cheaper and

more consistent operating costs, enhancing operational

efficiency. This will be accomplished by decreasing energy,

water, and waste across the pre-Disposal Group. The power

needed for the pre-Disposal Group’s workshops, heating,

ventilation, air conditioning, and lighting were its primary

energy users.

Following the Disposal, the post-Disposal Group will not

perform any material operations which could benefit from

resource efficiency investments.

Short term

Minor

Annual percentage

change in Scope 1

and 2 emissions

ENVIRONMENTAL REPORT

GLOBAL GREENHOUSE GAS EMISSIONS DATA

The current period is a 13 month period and the prior period is a 12 month period.

Methodology: (i) Scope 1 and Scope 2 emissions have been reported where the Group has operational control of a property or an asset. This includes emissions from driving activities as

detailed in note (ii).

(ii) CO2 emitted from driving activity comprising internal vehicle movements (scope 1) and employee commuting (scope 3) is the result of analysis of mileage, vehicle

and employee commute data over defined three year periods (2021-23 for 2023 data and 2020-2022 for 2022 data) to quantify the total mileage and C02 emissions across internal operations

(company cars, service loans, demonstrators, parts vans and employee commutes.

Vehicle sales are outside the scope of the review).

The mileage of vehicles was extracted from vehicle

stock and sales information.

A vehicle master list was provided from CAP HPI to provide carbon emissions data for each vehicle. Employee home and work postcode information was used to

calculate commuting distances, with an average C02 emissions per mile (based on the UK average) used to calculate total emissions (iii) Other than employee commuting, scope 3 emissions

are currently not included, as the business does not have the capability to capture the required additional data set. Following the completion of the divestment of the motor retail, leasing

and parts businesses on 31 January 2024, the Company is now a pure-play SaaS business: consequently, we have extrapolated the global greenhouse gas emissions data for the remaining

Pinewood only business in the table above. (iv) We use the latest UK Government GHG Conversion Factors for Company Reporting, published by DEFRA, to calculate our greenhouse gas

emissions.

Source

Tonnes of CO

2

e

31.12.23 to 31.01.24

01.01.22 – 31.12.22

Scope 1: Direct emissions from activities

for which the company own or control –

emissions generated by its internal fleet

operations (Scope 1/tCO

e)

3,634

2,630

Scope 2: Indirect emissions from the use

of purchased electricity and gas (Scope 2/

tCO

e)

13,373

12,169

Scope 3: emissions generated by employee

commuting (Scope 3/ tCO

e)

6,793

6,548

TOTAL GROSS SCOPE 1, 2 & 3

EMISSIONS:/ tCO

2

e

23,800

21,347

Energy consumption used to calculate

above emissions:/kWh (Scope 2)

69,931,129

65,517,250

Scope 1, 2 & 3 Intensity Ratio (tonnes of

CO2 per £m of revenue)

5.5

5.9

For the purpose of the above table, interms of impact and rating:- Minor shall mean the risk has relatively little , or non-material financial impact; Moderate shall mean the risk has a moderate

financial impact Major shall mean the risk has a major or material financial impact.

37

Pinewood Technologies Group PLC Annual Report FY23

Number of Group Employees by category

as at 31 January 2024

as at 31 December 2022

Male

Female

Total

Male

Female

Total

Director

8

2

10

7

1

8

Senior Manager

3

0

3

7

2

9

All employees

142

76

218

4,022

1,312

5,334

OUR PEOPLE

We aim to be a responsible employer through all that we do. The health,

safety and wellbeing of our associates are primary considerations in

the way we do business. We work to attract, develop and retain the

best talent, equipped with the right skills for the future.

OUR INCLUSION

We strongly believe that diversity, inclusion and equality of opportunity

for all our associates, no matter who they are, will be essential to our

future success. People are the heart of our business and we remain

committed to fostering a culture that is representative of the societies

in which we live. We aim to ensure that our associates can bring their

authentic selves to work and achieve their full potential and have

established four core diversity Employee Resource Groups centred

around; LGBT+, Gender Equality, Faith and Culture and Disability to

enable and give voice to the diverse membership of our associates.

Throughout all our attraction, recruitment, selection, employment and

internal promotion processes, all employment decisions are taken

without reference to irrelevant or discriminatory criteria.

We continue to make appointments at Board and immediately below

Board level in accordance with a formal, rigorous and transparent

procedure. Appointments are based on merit and objective criteria,

and within this context, we aim to promote diversity of gender, social

and ethnic backgrounds, alongside cognitive and personal strengths

in accordance with Principle J of the UK Corporate Governance Code

(Code).

GENDER BALANCE

We describe our approach to Board composition diversity in the

Nomination Committee’s report on page 48.

SOCIAL REPORT

GENDER PAY GAP REPORTING

The company’s annual report containing data on our gender pay gap

will be published in full on our website www.pinewoodplc.com in

accordance with the statutory timescale.

OUR REWARD

We regularly review our benefits offering and have robust practices in

place to ensure we offer an industry competitive total reward package.

We continue to invest in our market leading benefits platform which

enables our associates to see the full value of their package with us,

and also offers flexibility and choice with their benefits. The platform

also extends to everyday offers and discounts.

Pinewood continues to invest in pension scheme arrangements and

insured benefits to ensure our associates are protected in the event of

an unexpected change of circumstances relating to health.

OUR DEVELOPMENT

Training and development is tailored and targeted to roles or services

as part of a blended learning offering integrating online learning with

virtual and classroom training.

Training is systematically planned and delivered to ensure Pinewood

meets regulatory and statutory requirements and to ensure that both

our associates and customers are not exposed to any risks. Individual

and business development needs are identified in real time through

performance check-ins and skills sensing networks.

Prior to the disposal transaction on 31 January 2024 the Group had 5,548 employees and the table above reflects the number of employees post disposal as at 31 January 2024 and the

38

Pinewood Technologies Group PLC Annual Report FY23

The UK Corporate Governance Code (Code) applies to the Company

and is available on the FRC website at https://www.frc.org.uk. During

the period ended 31 January 2024, the Company complied with the

majority of the applicable provisions of the Code, with the exception

of the provisions detailed below in the 'Non-compliance with the

Code' section.

The corporate governance statement as required by

Disclosure Guidance and Transparency Rules 7.2.1 is set out below.

OUR BOARD

The Board sets our Company’s strategy and ensures we have in

place the financial and human resources to meet our objectives.

We take collective responsibility for Pinewood’s long term success.

The

executive

directors,

led

by

the

chief

executive

officer,

are

responsible for running the Company and our Group through the

executive committee comprising of the executive directors and

members of senior management to effect that strategy, including the

environmental, social and governance impacts of the same, and work

within prescribed delegated authority, such as capital expenditure

limits.

The executives direct and monitor business performance

through regular operational meetings with their respective leadership

teams and set and regularly review the effectiveness of key operating

controls, reporting to the Board on these and any variances.

The

Board as a whole reviews management performance.

Although the Board delegates to the chief executive and chief financial

officer responsibility for briefing key stakeholders, major shareholders

and the investor community, the non-executive chairman holds

himself available to engage with shareholders, together with the

Senior Independent Director, where appropriate.

Information from

engagement with shareholders is shared with the entire Board and

taken into account in financial planning and strategy.

The Board has three committees: Audit, Nomination and Remuneration,

each made up entirely of non-executive directors. The Risk Control

Group (RCG) is a committee of the executive directors, the company

secretary and Group head of internal audit.

Other members from the

senior management of the Group’s operating group functions are

co-opted onto the RCG as required from time to time.

In addition,

the Board has established an Environmental, Social and Governance

(ESG) Committee, which is mandated to assist the Board in: reviewing

the strategies, policies and performance of the Company in relation

to environmental, social and governance matters and proffering ways

to drive improvement in these areas as appropriate, understand the

Company’s impact on the environment, understanding the Company’s

social impact and ensure that the Board is aware of the processes and

mechanisms used by the Company to engage with key stakeholders

on sustainability matters.

Each committee operates within delegated

authority and terms of reference, set by the Board, reviewed annually

and available to view on the company’s website.

Details of each

committee’s work appear on the next few pages of this Report.

Executive Directors can attend Board committees at times, to assist

their business, but only with the committee’s prior agreement.

LEADERSHIP AND BOARD COMPOSITION

As at 25th April 2024, the Board comprises two executive directors,

five non-executive directors, including the non-executive chairman

and two directors nominated by Lithia Motors Inc.

The respective

responsibilities of the Board, the non-executive chairman and

the chief executive are clearly defined by the Board in formal

responsibilities documents, which the Board reviewed and readopted

in April 2023. The roles of chief executive officer and non-executive

chairman are fully segregated.

The Board remains committed to the

progressive refreshing of our membership, so as to maintain the right

balance of skills, experience, independence and knowledge of the

Company to enable us to continue to operate effectively.

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 was took priority in the second half of

2023 and in early 2024 and hence Ian has continued in his role as

Chairman.

Once this recruitment is complete, the Board considers

that an appropriate combination of executive and non-executive

directors will be in place in accordance with the Code.

As noted below, in accordance with the Code, all Directors will be

subject to annual re-election at the Annual General Meeting of the

company.

Details of the Directors offering themselves for election

in 2024, together with directors’ brief biographical details appear on

page 42, and gender balance details are on page 37.

NON-EXECUTIVE DIRECTORS AND INDEPENDENCE

The non-executive chairman (who, on appointment to that role,

fulfilled the requirement to be independent) has ensured that the

Board performs effectively through a well-functioning combination of

Board and Committee meetings and other appropriate channels for

strategic input and constructive challenge for non-executive directors.

The chairman has had meetings with the non-executive directors

without the executive directors present, where necessary, to assist

Board effectiveness, and, following the 2023 year end, conducted

individual meetings with each director to arrive at his and the Board’s

CORPORATE GOVERNANCE REPORT

PINEWOOD TECHNOLOGIES GROUP PLC BOARD

MAIN BOARD COMMITTEES

NOMINATION

COMMITTEE

REMUNERATION

COMMITTEE

AUDIT

COMMITTEE

EXECUTIVE

COMMITTEE

RISK CONTROL

GROUP

ESG

COMMITTEE

39

Pinewood Technologies Group PLC Annual Report FY23

40

Pinewood Technologies Group PLC Annual Report FY23

assessment of the director’s respective contributions, training needs

and independence.

Led by the senior independent director, the

directors have assessed the chairman’s effectiveness in his role.

The Board has routinely operated conflict management procedures

and has deemed these procedures effective.

Through these, and the

evaluations which are described below, we have concluded that:-

•

the Board’s collective skills, experience, knowledge of the

company and independence allow it and its committees to

discharge their respective duties properly;

•

the Board and each of its committees is of the right size and

balance to function effectively;

•

we have satisfactory plans for orderly succession to Board roles;

•

the non-executive chairman and respective committee chairmen

are performing their roles effectively;

•

all non-executive directors are independent in character and

judgment;

•

other than the Lithia appointed directors, which will be

managed through the conflict clearance process, no director

has any relationships or circumstances which could affect their

exercising independent judgement; and

•

the non- executive chairman and each of the non-executive

directors is devoting the amount of time required to attend to the

company’s affairs and their duties as a Board member.

During 2023, the Board received briefings from company executives

to familiarise directors with strategic developments and key aspects

of the Group’s business, and in particular, in relation to the proposed

and subsequent divestment of the Company’s motor retail, parts

distribution and leasing businesses.

BOARD EVALUATION

The Board and its committees conducted formal evaluations of

their effectiveness in 2023, addressing questions based closely on

the Code, applicable good governance topics and drawn from best

corporate practice. The results were reviewed by the non-executive

chairman, the Committee chairmen and the Board as a whole and the

non-executive chairman has factored suggested improvements into

our 2023 Board programme.

More details on the Board’s approach to

individual and Board evaluation are on the company’s website.

RE-ELECTION OF DIRECTORS

In accordance with the UK Corporate Governance Code, all current

Directors will be subject to annual re-election or election (in the case

of new Directors) at the AGM.

NON-COMPLIANCE WITH THE CODE

The Chairman of the Board, Ian Filby, was also Chairman of the

Remuneration Committee from 1 January 2023 to 10 July 2023,

at which point Jemima Bird became a director and Chair of the

Remuneration Committee. Following the decision of Mike Wright to

step down as a non-executive director and chair of the remuneration

committee to pursue other interests in June 2022, it was necessary

for Ian Filby to chair the committee on a temporary and interim basis

to ensure the effective continuation of the business of the committee,

until such time as an independent chair with recent and relevant

experience was appointed.This was not compliant with provision 32

of the Code.

On 31 January 2024, Oliver Mann was appointed as an executive

director and on 1 February 2024, Mark Willis stepped down as an

executive director.

Therefore, for one day, on 31 January 2024, there

was non-compliance with provision 11 of the Code, as at least 50% of

the board, excluding the chairman, were not independent.

INFORMATION AND SUPPORT

To ensure our decisions are fully informed and debated, the chairman

ensures that our Board’s business agenda is set timely to allow

appropriately detailed information to be circulated to all directors

before meetings.

The company secretary facilitates the flow of

information within the Board, attends all Board meetings and is

responsible for advising the Board and its Committees, through

their respective chairmen, on corporate governance and matters of

procedure.

All directors have access as appropriate to support on

matters of procedure, law and governance and in relation to their

own induction and professional development as Board members.

All

directors are entitled to take independent advice at the Company’s

expense, and to have the Company and other Board members provide

the information required to enable them to make informed judgements

and discharge their duties effectively.

HOW THE BOARD MANAGES RISK

The Board and our Committees each operate to a set meeting agenda

which ensures that all relevant risks are identified and addressed by

appropriate controls.

We review management information which

helps us to prescribe operating controls and monitor performance

against our strategy and business plans.

The non-executive

directors have particular responsibility for monitoring financial and

performance reporting, to ensure that progress is being made towards

our agreed goals.

The Board’s responsibilities also include assessing

the effectiveness of internal controls and management of risk.

To

manage risk within the Group, the Board have considered reports

produced by the internal audit team in the period and where material

issues have arised have sought to mitigate these issues. After these

mitigations were put in place, the Board has considered the control

environment to be effective.

WORK OF THE RISK CONTROL GROUP

The accountability framework described on page 19 is designed

to ensure comprehensive management of risk across the Group’s

businesses.

A revised, overarching Risk Management Policy

CORPORATE GOVERNANCE REPORT

41

Pinewood Technologies Group PLC Annual Report FY23

Current Directors

Board

Audit

Nomination

Remuneration

William Berman

(B)

10/10

3/3

N/A

N/A

Jemima Bird

1 (I) (R)

4/4

2/2

2/2

2/2

Martin Casha

2

8/9

N/A

N/A

N/A

Dietmar Exler

(I) (SID)

10/10

2/3

N/A

3/4

Ian Filby

3 (N)

9/10

N/A

3/4

3/4

Nikki Flanders

(I)

7/10

3/3

3/4

4/4

Brian Small

(I) (A)

9/10

3/3

4/4

4/4

Mark Willis

10/10

3/3

N/A

N/A

Oliver Mann

4

N/A

N/A

N/A

N/A

Chris Holzshu

4

N/A

N/A

N/A

N/A

George Hines

4

N/A

N/A

N/A

N/A

(I) Considered by the Board to be independent

(SID) Senior Independent Director

(A) Committee chairman

(N) Committee chairman

(R) Committee chairman

1. Joined the Board on 10 July 2023, consequently attendance reflects the period 10 July 2023 onwards.

2. Stepped down from the Company on 07 October 2023; consequently, attendance reflects the period 01 January 2023 to 07 October 2023.

3. Announced he was stepping down to pursue other interests on 30 June 2023.

Ian has continued in his role until a successor can be found.

4. Joined the Board on 31st January 2024, consequently there were no meetings held in the period which they were eligible to attend

BOARD ATTENDANCE

was introduced in October 2019, and reviewed and renewed in

October 2023, setting out the principles and approaches by which

we implement effective enterprise risk management.

The Risk

Management Policy remained appropriate in 2023.

The RCG, made

up of the chief operating officer, former chief financial officer and,

by invitation, other members of the Group’s senior operational and

financial management, meets regularly to consider the detailed work

on risk assessment performed by leaders and key business areas and

oversees the effective implementation of new measures designed to

mitigate or meet any specific risks or threats. The chair of the Audit

Committee, and a representative of the external auditors attend by

invitation.

The RCG reports to the Audit Committee on its work. The

Board and any of its committees is able to refer specific risks to the

RCG for evaluation and for controls to be designed or modified; this

occurs in consultation with executive management.

The executive

directors are responsible for communicating and implementing

mitigating controls and operating suitable systems of check.

The RCG

met three times in 2023.

In addition to reviewing and refining the Group’s corporate risk register

for Board review and adoption, the RCG continues to monitor and

review the Group’s anti-bribery controls, including the development

of e-learning, gifts and hospitality training, Modern Slavery Act 2015

awareness and further initiatives designed to reduce incidences of

theft and fraud.

The RCG ensures any internal control deficiencies

identified are swiftly remediated.

42

Pinewood Technologies Group PLC Annual Report FY23

BOARD OF DIRECTORS

Bill joined the company on 18 April 2019 as a Non-Executive Director,

and became Chief

Executive Officer on 19 February 2020.

Formerly the President and Chief Operating Officer

of AutoNation, the largest automotive retailer in America, Bill has executive experience in

the effective deployment of automotive technology management systems, enabling him to

provide effective leadership of Pinewood’s Board and advise in relation to the Company’s

future strategy.

Brian joined the company on 10 December 2019, following an extensive executive career in

the retail sector, where most recently he held the position of Chief Finance Officer at JD Sports

Fashion Plc between 2004 and 2018.

Brian is also non-executive director and chairman

of the Audit Committee of Mothercare Plc. Brian qualified as a chartered accountant with

Price Waterhouse in 1981, and with industry experience across a range of retailers, he brings

additional financial and strategic perspectives to the Board.

Nikki joined the company on 01 April 2020 and has over 25 years in-depth retail experience,

from physical to online, leading on growth and transformation strategies across multiple

goods and services categories, including digital services, energy and telco products.

She is

currently the Managing Director of the Customer division (UK and Ireland) at SSE plc. Her

previous roles include that of Chief Operating Officer at Drax plc, Managing Director for Digital

at Telefonica Plc and other senior leadership roles within Centrica Plc, Marks and Spencer plc

and WH Smith plc. Nikki is widely recognised as a leading advocate for Diversity & Inclusion

and in conjunction with her career experience brings deep commercial, customer and people

leadership experience with valuable insights.

Key to memberships, roles and re-election status

* Committee chairman

** Acting Committee chairman from 01 June 2022

(SID) Senior Independent Director

(A) Audit Committee

(N) Nomination Committee

(R) Remuneration Committee

(F) Audit committee member with recent and relevant financial

experience

More detailed professional biographies of the Directors are on the

Company’s website www.pinewoodtech.com

BILL BERMAN

Chief Executive Officer

BRIAN SMALL

Non-Executive Director

(A*) (N) (R) (F)

NIKKI FLANDERS

Non-Executive Director

(A) (N) (R)

Ian joined the company on 01 November 2021 as non-executive chairman, following a 40 year

career in retail, a large proportion of which was spent with Alliance Boots.

In his last executive

role, Ian was the chief executive officer of furniture retailer DFS, which significantly increased

its market leadership in both online and in physical stores during his tenure; Ian’s extensive

executive experience enables him to provide effective leadership of Pinewood’s Board and

advise in relation to the company’s future strategy.

IAN FILBY

Non-executive Chairman

(N*)

Ollie joined the company in December 2005.

He previously worked at Deloitte, where he

qualified as a chartered accountant. He has held a number of senior finance roles across the

then wider organisation including Group Financial Controller and Director of Group Finance.

Ollie had a key role in the disposal of the UK Motor and Leasing divisions of the Company

to Lithia Motors, Inc. Ollie’s accounting, financial and investor relations experience adds

significant value to the Board.

OLLIE MANN

Chief Financial Officer

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Pinewood Technologies Group PLC Annual Report FY23

Chris joined the Pinewood board on 31 January 2024 and currently serves as Executive Vice

President and Chief Operations Officer for Lithia & Driveway (LAD). Since joining LAD in 2003,

the organisation has experienced tremendous growth under his leadership, now exceeding

USD $35 billion in revenue and #145 on the Fortune 500.

LAD is the number one automotive

retailer in the North America, with continued expansion expected across the United States,

Canada and Western Europe. Over the past two decades, Chris’ leadership experience at LAD

also includes serving as a Chief Financial Officer and Chief People Officer which position him

to bring a unique operational and change management perspective to the Pinewood Board.

Jemima joined the company on 10 July 2023.

Jemima is the founder of Hello Finch Limited,

a strategic brand and marketing consultancy alongside being a Non-Executive Director and

chair of the Remuneration Committee for both Headlam Group PLC and Revolution Bars PLC,

where she is also the Senior Independent Director. Jemima beings three decades of retail

experience across multiple consumer sectors including food, fashion and leisure.

Company Secretary

Oliver Mann

Registered Office

Loxley House

2 Oakwood Court

Little Oak Drive

Annesley

Nottingham

NG15 0DR

Telephone 01623 725200

Registered in England and Wales

www.pinewoodtech.com

Registered number

2304195

CHRIS HOLZSHU

Director

JEMIMA BIRD

Non-Executive Director (A)

(N) (R)

Dietmar joined the company on 20 April 2020, following an extensive executive career including

experience in the automotive sector, banking and sports management.

Dietmar currently serves

as Chief Operating Officer of AMB Sports & Entertainment. Prior to that, he held the position

of President and Chief Executive Officer of Mercedes-Benz USA and Head of Region, NAFTA

Mercedes-Benz. His previous automotive sector specific executive experience, enables Dietmar

to contribute the industry perspective in relation to the deployment of dealer management

systems and is of significant value to the Board. Dietmar was appointed SID on 24 February 2021.

DIETMAR EXLER

Non-Executive Director

(SID) (A) (N) (R)

George joined the Pinewood board on 31 January 2024, and brings 30 years of software product

development and digital transformation leadership in retail, eCommerce, hospitality and live

event marketing to our Board. George currently serves as the Chief Innovation & Technology

Officer for Lithia & Driveway (LAD). In his role, he drives digital innovation, technology strategy

and execution for LAD’s 500+ automotive retail stores, eCommerce channel and automotive

finance company. Additionally, he brings a focus on human-centered design from customer

and employee experience transformations.

George’s international work experience in South

America and Europe will provide a global perspective on leveraging auto retail technology

platforms for the Pinewood Board.

GEORGE HINES

Director

44

Pinewood Technologies Group PLC Annual Report FY23

AUDIT COMMITTEE REPORT

The Audit Committee is a committee of the Board and has been

chaired by Brian Small since January 2020, made up entirely of independent

non-executive directors.

Their names and qualifications are on page 42 and

attendance at meetings in the table on page 41.

KEY RESPONSIBILITIES OF THE AUDIT COMMITTEE

•

monitors the integrity of the financial statements and formal

announcements

•

reviews and approves the Annual Report and Accounts for

adoption by the Board

•

recommends to the Board the selection of the external auditor

and its terms of appointment and monitors its effectiveness and

independence

•

governs policy for the allocation of non-audit work to the audit

firm

•

reviews internal controls and risk management

•

monitors the effectiveness of the internal audit function

•

reviews and monitors whistleblowing arrangements

Its terms of reference detail its key responsibilities and appear, with

relevant background information, on the company’s website www.

pinewoodtech.com.

THE COMMITTEE'S WORK THE PERIOD BEGINNING

1 JANUARY 2023

The Audit Committee met three times in the period and this report

describes its work and conclusions.

FINANCIAL STATEMENTS REVIEW

The

Committee

received

the

auditor’s

memorandum

on

the

company’s 2022 financial statements and the auditor’s memorandum

on the unaudited 2023 interim results.

In each case, it discussed the

auditor’s findings with the auditor, satisfied itself of the integrity of the

financial statements and recommended the financial statements for

approval by the Board. Key aspects of those discussions and relevant

considerations and conclusions are below:-

AUDIT RISK CONSIDERED BY THE COMMITTEE

The table on page 45 sets out the key audit risks and judgments

applied, for the 2023 year end results, which the Committee considered

and discussed with the auditor, and the Committee’s conclusions.

45

Pinewood Technologies Group PLC Annual Report FY23

These are the key risks considered by the committee.

Audit risk considered by the Committee

Evidence considered and conclusion reached

PRESENTATION OF DISCONTINUED OPERATIONS AND CALCULATION OF PROFIT AND LOSS ON DISPOSAL

(IN THE GROUP AND PARENT COMPANY)

The disposal group trading results to the disposal date (31

January 2024) are required to be presented as part of discontinued

operations, with comparative results restated on a consistent basis.

At the disposal date, assets and liabilities of the disposal group

were derecognised from the consolidated balance sheet, with the

difference between the value of net assets disposed of and the

proceeds from the disposal recognised in the consolidated income

statement as a gain on disposal.

The disposal was effected through the sale of a 100% owned

indirect subsidiary of the parent company.

Ahead of the disposal,

a restructuring exercise was undertaken which recognised an

impairment in subsidiaries and a dividend received, resulting in a

profit on disposal in the parent company.

The Audit Committee recognised the disposal of the UK Motor and

leasing business as a key accounting matter because of the size

of the disposal group as a proportion of the overall group and the

consequent disclosure requirements.

The committee considered an accounting paper produced by a

third party specialist that gave assurance that the Company had

sufficient distributable reserves to pay the special dividend of 24.5p

to shareholders

The Committee followed the steps set out in the accounting paper

prepared by the third party, and ensured that all conditions of the

Lithia disposal SPA were adhered to.

As a result, the committee were

comfortable that the correct profit on disposal had been calculated.

The disposal group was deemed to have met the criteria as an 'asset

held for sale' once the transaction with Lithia had been approved by

shareholders.

When considering the discontinued operations, the committee

determined that PLC costs and Legacy US Motor costs should be

included in continuing operations, as they will be incurred by the

Group going forward.

Audit risk considered by the Committee

Evidence considered and conclusion reached

CAPITALISATION OF SOFTWARE INTANGIBLE ASSETS

The Company has capitalised software development costs. There

is judgement in determining whether the Pinewood system is one

asset or whether it would be more appropriate to identify a number

of separate assets.

The Company consider the system to be one

asset.

The Committee consider the Pinewood system to be one asset

which is continuously developed.

The system is the same version

in all countries that the customers operate in.

The updates that are

done to the system, which can be several times a week, are rolled

out across all countries at the same time.

For this reason, the

Committee is comfortable with the conclusion that the Pinewood

system is one asset.

These are the other risks considered by the committee.

46

Pinewood Technologies Group PLC Annual Report FY23

EXTERNAL AUDITOR APPOINTMENT

AND PERFORMANCE EVALUATION

The Committee considered Auditor effectiveness and independence

of the audit, during the year.

The Committee arrived at its recommendation to the Board on the

auditor’s appointment by:

•

applying exclusively objective criteria;

•

evaluating the ability of the audit firm to demonstrate its

independence;

•

assessing the effectiveness of the audit firm in the performance

of its audit duties; and

•

assessing the audit firm’s adherence to applicable professional

standards.

The Committee chairman oversaw the company’s evaluation of the

auditor’s performance, and noted that the current auditor, KPMG had

issued to the company all requisite assurances of its independence.

The Committee reported its conclusions to the Board, namely, that

there are no existing or historical relationships or other matters which

adversely affect the independence of KPMG as the company’s auditor,

and no performance shortcomings or unresolved issues relating to

fee levels.

The lead audit partner, Craig Parkin, was appointed in early 2021.

POLICY ON AUDIT TENDERING

KPMG was appointed as auditor in September 1997. Under current

EU legislation on audit firm rotation, the current auditor cannot be

reappointed after 2023.

Consequently, the period ended 31 January

2024 will be the final period which KPMG will act as the company’s

auditor. Following the conclusion of a competitive tender process and

pending approval at the AGM, RSM UK Audit LLP will be appointed as

the Company’s auditor for 'the 11 month period ended 31 December

2024 onwards.. The Committee has concluded none of the directors’

independence in considering this matter is impaired in any way and

none has a potential or actual conflict of interest in relation to KPMG

or in the consideration of the appointment of an alternative auditor

pursuant to the tender process, whether in regard to

appointment,

fees, evaluation of performance or potential performance, any

decision as to competitive tender for audit services, or any other

matter.

REVIEW OF NON-AUDIT SERVICES

The Committee reviewed the company’s policy on its use of its audit

firm for non-audit work. Its main principles are that the auditor is

excluded from providing certain non-audit services the performance

of which is considered incompatible with its audit duties, but is

eligible to tender for other non-audit work on a competitive basis and

can properly be awarded such work if its fees and service represent

value for money. The policy can be viewed on the company’s website.

The Committee considered reports on the extent and nature of non-

audit work available, the allocation during the year of that work to

accountancy and audit firms, including KPMG LLP, and the associated

fees. Details of audit and non-audit work performed by KPMG and the

related fees appear annually in the notes to the company’s financial

statements.

A full statement of the fees paid to KPMG LLP for

work performed during the year is set out in note 2.5 to the financial

statements on page 93. Having satisfied itself on each item for its

review, the Committee reported to the Board that:-

•

the company’s existing policy continues to be appropriate, has

been adhered to throughout the year, and is operating effectively

to provide the necessary safeguards to independence of the

external auditor;

•

there are no facts or circumstances relating to the award or

performance of non-audit work that affect the independence of

KPMG LLP as auditor;

•

no contract for non-audit services has been awarded to KPMG

LLP in any circumstance of perceived or potential conflict of

interest or non-compliance with the company’s policy; and

•

the fees KPMG LLP have earned from non-audit services

provided during the year are not, either by reason of their amount

or otherwise, such as might impair its independence as auditor.

The ratio of non-audit to audit fees was 0.48:1 in FY23 (FY22:

0.13:1). Non-audit fees in the period relate to the half year interim

review, consistent with prior periods, and reporting accountant

procedures in relation to the disposal related circular work which

the Committee determined was most appropriately performed

by the Company’s auditor and were satisfied that this did not

impair their independence as auditor.

REVIEW OF INTERNAL AUDIT PERFORMANCE

The Committee chairman oversaw the Committee’s evaluation of

the internal auditor’s performance, using questionnaires covering

all aspects of the internal auditor work and relationship to the audit

and received the auditor’s view on that performance. He reviewed the

results with the Committee members and company management and

reported the Committee’s conclusions to the Board. The Committee

concluded that the scope and quality of the internal audit work done

reflects an effective, well-functioning team. The internal audit function

has moved to Lithia following the disposal of the UK Motor and

Leasing segments.

The committee is currently evaluating it's options

on replacing the internal audit function.

FRC CORPORATE REPORTING REVIEW

The FRC Corporate Reporting Review Team (“FRC”) asked the

company to clarify its approach to assessing the recoverable amount

of its directly-held subsidiaries, with particular reference to amounts

excluded from cash flow forecasting for cash generating units (CGUs)

AUDIT COMMITTEE REPORT

47

Pinewood Technologies Group PLC Annual Report FY23

and adjustments overlaid on value-in-use estimates, and an apparent

inconsistency relating to the extent of estimation uncertainty involved.

We responded to the FRC, who having confirmed they had received

a satisfactory response to our enquiries, encouraged the company

to enhance its explanation of the methodology applied, where that

differs from the assessment of CGUs for the consolidated accounts.

We also agreed to ensure that the key estimates disclosure relating

to assets and liabilities in the parent company’s balance sheet in the

FY23 annual report and accounts is reflective of any significant risk at

31 January 2024.

The FRC also invited the company to comment on their observations

on aspects of its compliance with the Taskforce for Climate-related

Financial Disclosures (TCFD) recommendations, as required by the

Listing Rules, principally in respect of climate-related effects on

strategy and relevant metrics and targets.

We agreed to enhance its TCFD disclosures by including in its FY23

annual report and accounts: an analysis of the key risks over defined

short-, medium- and long-term horizons; risks, impacts and mitigations

that are specific to its circumstances; further detail linking metrics to

material risks and opportunities; clarification of the nature of metrics

used to form views on likely trends in demand; and further details of

carbon reduction targets, with the related timeline.

The FRC review that lead to them asking the company about these

matters was based on our annual report and accounts for the year

ended 31 December 2022 and did not benefit from any detailed

knowledge of our business or an understanding of the underlying

transactions entered into.

This work by the FRC provides no assurance

that our report and accounts are correct in all material respects; the

FRC’s role is not to verify the information provided but to consider

compliance with reporting requirements.

REVIEW OF RISK MANAGEMENT AND INTERNAL CONTROLS

The Committee reviewed the effectiveness of the company’s system

of internal control and financial risk management. It received reports

from the internal auditor on each of these areas and from the RCG,

whose work is described on page 40 on the company’s risk register,

emerging risks and corresponding internal controls. It scrutinised

the key risks register, as revised by the RCG, and approved it for

adoption by the Board. Its work informed and supported the Board’s

assessments detailed under “How the Board manages risk” on page

40.

REVIEW OF ANTI-BRIBERY CONTROLS AND WHISTLEBLOWING

The Committee reviewed the company’s anti-bribery processes and

controls and evaluated and approved these and the company’s bribery

risk assessment. On its recommendation, the Board readopted the

company’s anti-bribery policy statements and associated controls.

The Committee considered reports on known instances of alleged

wrongdoing and matters reported on the company’s third party

operated confidential reporting line and their investigation, reviewed

the adequacy of whistleblowing procedures and commissioned

follow-up action and improvements in risk-related controls.

Our current anti-bribery value statements and our policies on the

control of fraud, theft and bribery risks appear on the company’s

website and are drawn to the attention of all parties seeking to

transact with the Group.

Our whistleblowing procedures are published

internally on our intranet and their existence is regularly reinforced in

our team member communications.

The policy is available at www.

pinewood.co.uk

There have been no incidents of actual corruption or bribery recorded

in our businesses in

FY23.

APPROVAL

This report was approved by the Committee and signed on it’s behalf

by:-

Brian Small

Chairman of the Audit Committee

25 April 2024

48

Pinewood Technologies Group PLC Annual Report FY23

NOMINATION COMMITTEE REPORT

The Nomination Committee is chaired by Ian Filby, who assumed the role

on his appointment as non-executive chairman following his

appointment

in November 2021.

Dietmar Exler, the Senior Independent Director,

chaired one meeting during the year in relation to matters concerning the

succession of the non-executive chairman. The Nomination Committee is

made up entirely of independent non-executive directors. Their names and

qualifications are on page 42 and attendance at meetings in the table at

page 41 above.

KEY RESPONSIBILITIES OF THE NOMINATION COMMITTEE

•

reviews the Board’s size, structure and composition and leads

recruitment to Board positions

•

undertakes annual Board performance evaluation

•

satisfies itself on the company’s refreshing of Board membership

and succession planning

Its terms of reference detail its key responsibilities and appear, with

relevant background information, on the company’s website www.

pinewoodtech.com.

THE COMMITTEE’S WORK IN 2023

The Nomination Committee met four times in 2023 and in early 2024

to conclude its ordinary year end business. This report describes its

work and conclusions.

REVIEW OF BOARD COMPOSITION AND BALANCE

In February 2023, the Committee completed its year end work

by reviewing

the structure of the Board, in relation to its size

composition and potential vacancies, the combination of executive

to non-executive directors and the balance of the Board, to ensure

that no one individual or group of individuals dominated discussion of

decision making.

Other than the requirement to recruit an additional

non-executive director to fulfil the role of Remuneration Committee

chair, the Committee concluded that the size and structure outlined

still remained appropriate for the Company, and considered that both

the size, structure and balance of the Board remained appropriate,

although the structure did not preclude the appointment of additional

directors, such as non-executive directors with specialist skills should

the Committee, and ultimately the Board, consider it necessary and

prudent to do so in line with the execution of the Company’s strategy.

The adequacy of time devoted by the non-executive directors to Board

business, and the independence of the non-executive directors was

also considered and the Committee concluded that all non-executive

directors were able to devote sufficient time to their roles, and all

remained independent.

In addition, the Committee further noted that

Ms Nikki Flanders and Mr Dietmar Exler should be recommended for

reappointment as non-executive directors on further one year terms

on conclusion of their current appointments in December 2023.

In July 2023, the Committee met to consider and recommend the

appointment of Jemima Bird as an additional non-executive director

and

chair

of

the

Company’s

Remuneration

Committee:

Jemima

was duly appointed to the Board on 10 July 2023.

The Committee

further considered the appropriateness of appointing additional

non-executive directors recommended by key shareholders of the

Company; the Committee concluded that it would be prudent to pause

the progression of any such appointments at that time on the basis

that the disposal of the Company’s UK Motor and leasing businesses

was in progress, and secondly, the appointment of a non-executive

chairman to succeed Mr Filby should ideally occur before any further

appointments to the Board are considered and concluded.

The Committee met twice in August 2023 to consider in detail the

Board and Committee structure of the Company post-completion

of the disposal of the Company’s UK Motor and leasing businesses,

including the size, composition and structure of the Board as well as

consideration of candidates for certain executive director positions.

The committee met in the last quarter of 2023 to consider the

appointment of the new Chief Financial Officer and the two Lithia

Motors, Inc. directors that all would be joining the board once the

Lithia transaction completed.

49

Pinewood Technologies Group PLC Annual Report FY23

EVALUATION

The annual evaluations of the Board and its members were conducted

by the Board and are described on page 40. As part of that process,

the Committee conducted an evaluation of its own performance.

DIVERSITY

All appointments made, including those of Board members, adhere

to the company’s diversity and equal opportunities policy, which

can be viewed on the company’s website. For non-executive director

appointments, where executive search consultants are instructed,

they are done so in a manner in a manner consistent with this policy.

The Committee is mindful of the proposals outlined in the FCA Policy

Paper: Diversity and Inclusion on Company Boards and Executive

Management, and will aim to consider how the company will aim

to comply the recommendations where they align with its overall

business strategy.

At present, the

company has not adopted a gender

balance target for its Board, although continues to make appointments

at Board and immediately below Board level in accordance with a

formal, rigorous and transparent procedure.

Appointments are based

on merit and objective criteria, and within this context, we aim to

promote diversity of gender, social and ethnic backgrounds, alongside

cognitive and personal strengths in accordance with Principle J of

the Code.

In order to further this objective, we continue to partner

with external recruitment agencies, and maintain our relationship

with agencies committed to reaching and providing access to diverse

talent pools to assist with these processes.

As required by the Disclosure Guidance and Transparency Rule

(“DTR”) the Board notes that at the end of the year, two of the ten

directors were female, representing 20% which is below the DTR target

of 40%. There is a further DTR target whereby at least one of the roles

of Chair, SID, CEO or CFO is held by a female, which the Company did

not meet due to the current make-up of the Board of directors. Finally,

the DTR has a target that at least one Director is from a minority ethnic

background, which the Company did not meet due to the current make-

up of the Board of directors. We would like to further strengthen the

Board’s diversity and enhance our sector experience. We are scanning

the market for suitable potential future candidates to recruit when the

time is right.

50

Pinewood Technologies Group PLC Annual Report FY23

The Remuneration Committee is a committee of the Board, and is

currently chaired by Jemima Bird. It is comprised entirely of independent

non-executive directors. Their names and qualifications are on pages 42

and 43 and attendance at meetings in the table on page 41.

KEY RESPONSIBILITIES OF THE COMMITTEE

•

has delegated responsibility for determining the policy for

Executive Director remuneration and setting remuneration for

the chairman, executive directors, the company secretary and

the immediately below board level of senior management;

•

reviews workforce remuneration and related policies and the

alignment of incentives and rewards with culture, taking these

into account when setting executive director remuneration;

•

ensures that executive directors are provided with appropriate

incentives which align their interests with those of shareholders,

and encourage enhanced performance in the short and medium

term, as well as achievement of the company’s longer term

strategic goals;

•

determines targets for any performance related pay schemes;

•

seeks shareholder approval for triannual renewal of remuneration

policy and any long-term incentive arrangements

The terms of reference of the Remuneration Committee are available

at www.pinewoodtech.com.

THE COMMITTEE’S WORK IN 2023

The Remuneration Committee met four times in 2023. The Directors’

Remuneration Report, beginning at page 51 describes its work and

conclusions.

REMUNERATION COMMITTEE REPORT

51

Pinewood Technologies Group PLC Annual Report FY23

REMUNERATION COMMITTEE CHAIRMAN’S LETTER TO SHAREHOLDERS

Dear Shareholder

On behalf of the Remuneration Committee, I am pleased to present the Directors’ Remuneration Report for the 13 month financial period ended 31 January

2024.

This report comprises two sections being this

Annual Statement

and the

Annual Report on Remuneration

which details the remuneration paid to Directors

for the 13 month period ended 31 January 2024 and how the remuneration policy will be operated for the year ending 31 December 2024.

The current directors’ remuneration policy, which was approved by a majority of shareholders at the 2023 AGM, is set out in the annual report and financial

statements 2022.

DIRECTORS’ REMUNERATION MAJOR DECISIONS & CHANGES:

2023 pay outcomes

Connected to the sale of the motor and leasing ssets, the remuneration committee was required to consider the treatment of the 2023 annual bonus and

outstanding LTIP awards in August 2023 for inclusion in the Sale & Purchase Agreement (SPA).

Annual Bonus:

Following a review of performance against the targets that were set at the start of 2023, the Committee assessed that the annual bonus was

tracking to pay out at the maximum.

As such, the Committee agreed that the bonus would be payable in full albeit on the normal payment timetable in 2024.

Lithia will make a transition bonus payment to Bill Berman for an amount of £1.1m subject to his continued employment for 12 months following Disposal

Completion, to ensure the smooth and continuous operation of the Company.

Lithia will also fund the cost of the related employer’s National Insurance

contribution on this transaction bonus.

LTIP:

Consistent with the advice received from the Company’s corporate lawyers, the sale of the motor and leasing assets was treated as a demerger for

the purposes of the LTIP rules, meaning that outstanding LTIP awards vested at completion, subject to the Committee’s assessment of performance and the

length of time the relevant awards had been held.

While the Committee did consider whether it would be appropriate to continue to vest the awards at the respective normal vesting dates, this was not

considered practicable given the significant number of senior employees transferring outside of the group (which triggered automatic vesting), and the fact

that the original Pendragon performance targets would no longer be relevant to Pinewood going forward.

As such, the Committee determined that all LTIP

award holders should be treated equally and the schemes would therefore vest on the same terms.

As a result, and as previously disclosed, the 2020 LTIPs vested on the normal 31 October 2023 vesting date at 91.6% of the maximum and, given that the

performance period had been completed, the 2021 LTIPs vested at 91.6% at completion.

In respect of the 2022 and 2023 LTIPs, the Committee assessed

the relevant performance targets and the length of time the relevant awards had been held and determined that 66.6% of maximum awards (i.e. on-target

performance) should vest at completion.

Implementation of the Policy for the period ended 31 December 2024

The current remuneration policy was approved by shareholders at the 2023 AGM.

While the Committee does not intend to make changes to fixed pay levels,

it does intend to review incentive provision (i.e. annual bonus and LTIP) to ensure that it is appropriately aligned to Pinewood’s strategy going forward, noting

that Pinewood will be a pure technology Software as a Service business.

As such, and to the extent required, major shareholders and the main shareholder

representatives will be consulted should a new remuneration policy be required to be submitted to the 2024 AGM.

Board changes

As part of the Transaction, Mark Willis stepped down as the CFO and Oliver Mann was appointed as his replacement. Reflecting that this is Oliver’s first CFO

role, the Committee set Oliver’s remuneration package below that of his predecessor, and below market levels, with the intention of increasing it over time

as his experience in the role grows.

Accordingly, the main elements of his remuneration package on appointment were a base salary of £200,000, an annual

bonus of up to 150% and an LTIP of up to 150%. His base salary will be subject to review during 2024 subject to individual and Company performance and

considering appropriate market data.

I hope we receive your support in respect of out Annual report, and any remuneration policy changes as appropriate, at the forthcoming AGM.

Yours sincerely

Jemima Bird

Chair of the Remuneration Committee

DIRECTORS’ REMUNERATION REPORT

52

Pinewood Technologies Group PLC Annual Report FY23

REMUNERATION DISCLOSURE

This report complies with the requirements of The Large and Medium-

sized Companies and Groups (Accounts and Reports) Regulations

2008, The Large and Medium-sized Companies and Groups (Accounts

and Reports) (Amendment) Regulations 2013, the Companies

(Miscellaneous Reporting) Regulations 2018 and The Companies

(Directors’ Remuneration Policy and Directors’ Remuneration Report)

Regulations 2019 (the Regulations) and has been prepared in

accordance with the UK Corporate Governance Code and the UKLA

Listing Rules. The parts of the report which have been audited in

accordance with the Regulations have been identified.

CURRENT REMUNERATION POLICY

The current remuneration policy was approved by shareholders at,

and took effect from, the AGM held on 30 June 2023.

The full policy

approved by shareholders at the 2023 AGM is presented in the annual

report and financial statements 2022. However, as outlined above, it

is the intention of the committee to review the Director’s Remuneration

Policy to ensure that it is fit for purpose and appropriately reflects

Pinewood's strategy going forwards, noting that Pinewood will be a

pure technology Software as a Service business.

The remuneration principles and overarching aim of our remuneration

policy continues to be framed in such a way as to provide and maintain

the link between executive pay and strategy, aiming to:

•

ensure remuneration arrangements are clear and transparent,

promoting effective engagement with shareholders and our

associates;

•

ensure remuneration structures avoid complexity, with an easy

to understand rationale and operation;

•

avoid reputational and other risks arising from excessive

rewards, and avoiding or otherwise mitigating behavioural risks

that may arise from target-based incentive plans;

•

clearly explain the range of possible values of rewards to

individual directors including any other limits or discretions;

•

provide proportionate awards linked to delivery of strategy and

long-term performance and ensuring poor performance is not

rewarded;

•

ensure incentive schemes drive behaviours consistent with

company purpose, values and strategy;

•

attract and retain directors of the calibre necessary to run the

business effectively with levels of remuneration that are arrived

at responsibly and also reflect their individual contribution to the

value of the company;

•

weight remuneration towards variable pay;

•

encourage

executives

to

build

significant

levels

of

share

ownership, through the retention of vested share awards.

DIRECTORS’ REMUNERATION REPORT

53

Pinewood Technologies Group PLC Annual Report FY23

NON-EXECUTIVE DIRECTORS’ APPOINTMENTS

THE COMMITTEE’S WORK IN 2023/2024

•

determined annual bonus awards in respect of 2022 & 2023

performance

•

set and revised the annual bonus plan terms for 2023

•

determined performance targets and granted LTIP awards in

July 2023

•

noted remuneration trends across the Group

•

considered the gender pay gap report

•

Appointed and onboarded a new Remuneration Committee

Chair

ADVISORS

During 2023, the Committee received external advice from PWC in the

first half of the year, who received fees of £117,690 in respect of the

same. In the second half of the year the committee received external

advice from FIT, who received fees of £62,526. PwC were engaged

part way through the year to support with the Lithia transaction, and

therefore there became a conflict of interest and the Remueration

Advisors were changed. The Group General Counsel and the Chief

People Officer also provided additional advice. The Group General

Counsel also acts as secretary to the Committee.

Name

Commencement

Expiry/cessation

Unexpired at date of report (months)

Brian Small

10.12.19

31.12.25

23

Nikki Flanders

13.03.20

31.12.24

11

Dietmar Exler

20.04.20

31.12.24

11

Ian Filby

01.11.21

31.12.24

11

Jemima Bird

10.07.23

31.12.26

34

HISTORY OF CHIEF EXECUTIVE REMUNERATION

In terms of the single total figure of remuneration for executive directors

in 2023/2024, shareholders should be aware that all outstanding long

term incentives vested at completion of the transaction.

For 2021, the

data in the LTIP column in the single total figure of remuneration for

executive directors table on page 54 for 2021 reflects the outcome

of the October 2020 and July 2021 LTIP awards at the equivalent of

base salary, and is included in the table as the applicable performance

period concluded at the end of the financial year 2021. The 2020 award

vested in October 2023 and the 2021 award vested on 31 January at

completion of the transaction as outlined in the letter to shareholders.

Chief Executive

2023

13 month

period

2022

2021

2020

2019

2

2018

2017

2016

2015

2014

Total Remuneration £k (single figure)

2,740

1,313

3,561

1

510

464

589

727

1,605

1,775

3,472

Annual bonus award (% of maximum

that could have been paid)

150%

2

73%

100%

100%

0%

0%

30%

87%

100%

100%

Percentage of LTIP

vesting

3

79.13%

3

0%

0%

0%

0%

0%

0%

100%

56%

100%

1. Of the single total remuneration figure attributable to 2021 of £3,561k, £2,016k is the cash equivalent as a percentage of salary for LTIPs awarded in October 2020

and July 2021, which do not vest until October 2023 and July 2024 respectively. The CEO did not receive a cash payment in 2021 of £3,561k: actual payment received

54

Pinewood Technologies Group PLC Annual Report FY23

Base Salary

£000

Taxable

benefits

1

£000

Pension

2

£000

Bonus

3

£000

LTIP

4

£000

Single total

figure

£000

Total Fixed

Remuneration

£000

Total Variable

Remuneration

£000

2023

5

2022

2023

5

2022

2023

2022

2023

2022

2023

2022 and

2023 vested

LTIPS

2022

2023

2022

2023

2022

2023

2022

Current Directors

William Berman

596

550

167

143

41

17

825

603

1,111

0

2,740

1,313

804

710

1,936

603

Martin Casha

*

297

320

8

8

16

48

0

351

0

0

291

727

291

376

0

351

Mark Willis

**

328

303

23

15

15

0

454

332

611

0

1,431

650

366

318

1,065

332

Ollie Mann

***

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

*Leaver 07/10/23. Data shown is from 01/01/23 to leave date

** Leaver 01.02.2024

*** Appointed on 31.01.2024, no values to display as no services provided in reporting period

1. Taxable Benefits include life assurance, private health cover in the UK (& abroad if applicable), professional subscriptions, the provision of tax support for expatriate associates and the

provision of up to two cars (at the Director’s election), one of which is fully expensed.

2. Salary supplement in lieu of pension contribution.

3. Bonus Award paid in 2024 equivalent to 150% of base (annual) salary based on 2023 performance achievement.

4. 2020 LTIP Vested in October 2023 at 91.6% performance. 2021 LTIP vested early on 31 January 24 at 91.6% performance.

2022 and 2023 LTIPs vested early at 66.6% performance. Early

vesting is a result disposal.

2023 figure includes 2022 and 2023 LTIP which vested at the point of transaction at 66.6%. The 2020 LTIP vested as normal in October 2023. The 2021 LTIP vested early at the point of transaction.

The value of the share gain for all awards is as follows. Share gain values for all plans are below.

5. 13 months of data has been reported as the statutory year-end was changed to 31 January 2024.

2020 LTIP

2021 LTIP

2022 LTIP

2023 LTIP

Current Directors

£'000

£'000

£'000

£'000

William Berman

2,852

1,439

842

1,122

Martin Casha

*

932

803

-

-

Mark Willis

**

1,569

791

463

617

Basic Fee

£000

Taxable

benefits

£000

SID/Committee

Chair Fee

£000

Single total figure

£000

2023

1

2022

2023

1

2022

2023

1

2022

2023

1

2022

Current Directors

Jemima Bird

2

28

0

-

-

-

31

0

54

50

-

-

58

54

Ian Filby

163

150

-

-

163

150

Nikki Flanders

54

50

-

-

54

50

Brian Small

5

54

50

-

-

65

60

Mike Wright

3

0

25

-

-

0

30

Chris Holzshu

4

0

0

-

-

0

0

George Hines

4

0

0

-

-

-

-

0

0

1) 13 months of data has been reported due to disposal of significant part of the business

2) Pro rated from start date 10.07.23

3) Leaver 01/06/22

4) Appointed on 31.01.2024, no values to display as no services provided in reporting period

5) Not included in the table above, Brian Small was additionally paid £15k of back pay

in 2024 for fees related to unpaid PFIS responsibility (£5k per annum over 3 years) which had not previously been reported

or paid.

The gains made by directors on the exercise of the individual LTIP arrangements are shown below, these gains were realised in the period ending

31 January 2024.

*Leaver 07/10/23. Data shown is from 01/01/23 to leave date

** Leaver

01.02.2024

55

Pinewood Technologies Group PLC Annual Report FY23

PENSIONS

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.

PERFORMANCE RELATED PAY FOR 2023: ANNUAL BONUS

Given their commercial sensitivity, we do not publish the details of

targets in advance. However, the Committee considered the targets to

be measurable and appropriately stretching at point of award. For 2023,

the maximum annual bonus opportunity was 150% of base salary, only

achievable for performance 25% in excess of the Company’s target

underlying profit based on the FY 2021 Corporate Plan. The 2023

bonus performance metric was set as underlying profit for the full

year, determined in accordance with a combination of the Company’s

2021 Corporate Plan and Broker Consensus, this was considered to

be both reflective of the continued uncertain trading background,

but also based on a realistic assessment of the Company’s trading

prospects for the full year at the time of the award. Due to the sale

of the UK motor and leasing business the remuneration committee

was asked to consider how the annual bonus would be treated.

The

committee determined that the annual bonus was tracking to pay out

at maximum.

As such, and as per the SPA documents, the bonus was

paid at maximum.

LONG TERM INCENTIVE PLAN AWARDS (“LTIP”)

AWARDED IN 2023

The Committee granted awards in the form of nil cost share options

pursuant to the Company’s LTIP to the executive directors in August

2023. Vesting of the Awards under the LTIP was subject to the

satisfaction of certain performance conditions. 70% was based on

achieving a defined earnings per share target. 5% was based on an

ESG metric to achieve a reduction in the Company’s overall Carbon

Emissions. 25% was based on Strategic Metrics aligned to the

Company’s Strategy.

LONG TERM INCENTIVES VESTING IN 2023

Consistent with the advice received from the Company’s corporate

lawyers, the transaction was treated as a demerger for the purposes

of the LTIP rules, meaning that the Committee determined in principle

the extent to which LTIP awards vested.

Account was taken of the

performance against the targets and the length of time the awards

had been held.

The committee considered whether it was appropriate to continue the

awards, however due to the significant number of senior employees

that would transfer outside of the group (triggering the automatic

vesting of LTIP awards), and the fact that most of the performance

targets would no longer be relevant the Committee agreed that all

LTIP award holders should be treated equally and the schemes would

therefore vest on the same terms.

As a result the 2020 LTIP scheme

vested in the normal way on October 31st at 91.6% of maximum

(previously disclosed in 2021 and 2022 Annual Report).

The performance period for the 2021 LTIP scheme due to vest in

2024 had also been completed and previously disclosed and so on

completion this also vested at 91.6% of maximum.

Outstanding

LTIP schemes dues to vest in 2025 & 2026 were reviewed and the

performance was assessed as 66.6% of maximum and these schemes

also vested on completion.

56

Pinewood Technologies Group PLC Annual Report FY23

IMPLEMENTATION OF THE REMUNERATION POLICY IN THE FINANCIAL PERIOD ENDING 31 DECEMBER 2024

The policy in respect of the executive directors will be applied as follows:

Element of Pay

Implementation of Policy

BASE SALARY

Other than potential adjustments to take account of market conditions and changes in role scope to reflect additional

responsibilities undertaken, base salary will continue to be set in accordance with the remuneration policy.

Base salaries for 2024:

•

Chief Executive Officer: £550,000

•

Chief Financial Officer: £200,000

BENEFITS

No changes are expected to be made to these elements of remuneration within the financial year ending 31 December

2024.

PENSION

No changes are expected to be made to the pension contributions, our Executive Directors will receive an equivalent pen-

sion contribution of 6%.

ANNUAL BONUS

It is the intention of the Committee to review the Director’s Remuneration Policy with respect to the Annual Bonus to ensure

that it is fit for purpose and reflects that Pinewood will be a pure technology Software as a Service business. The intention is

to consult with major shareholders prior to submitting a new policy at the forthcoming AGM for shareholder approval

LONG TERM INCENTIVE PLAN

It is the intention of the Committee to do a review of the Director’s Remuneration Policy with respect to the LTIP to ensure

that it is fit for purpose and reflects that Pinewood will be a pure technology Software as a Service business. The intention is

to consult with major shareholders prior to submitting a new policy at the forthcoming AGM for shareholder approval

SHAREHOLDING

GUIDELINES

The minimum shareholding requirement for the CEO is 200% of salary (100% for all other Executive Directors), to be built up

within 5 years of appointment to the board.

Until such time as the policy is met, Executive Directors will be required to hold any vested deferred bonus shares and LTIP

awards that vest (after sale of shares to cover associated personal tax liabilities).

MALUS AND CLAWBACK

Malus and clawback will continue to operate in prevailing respect of the annual bonus and long-term incentive plan, in

accordance with the parameters detailed in the remuneration policy.

DIRECTORS’ REMUNERATION REPORT

57

Pinewood Technologies Group PLC Annual Report FY23

POLICY ON NON-EXECUTIVE DIRECTORS’ REMUNERATION

The company’s policy on non-executive directors’ remuneration is

reviewed annually by the Board. Remuneration for non- executive

directors is confined to fees alone, without a performance related

element. Non-executive directors may elect to receive all or part

of their fees in the form of benefits in kind, typically the provision

of a motor vehicle for their use. The company considers that the

remuneration of the non-executive directors remains consistent with

the time commitments associated with individual positions and wider

market practice among companies of a comparable size.

Fee Type

Fee Level

Change in 2023

Chairman fee

£162,500

None

Basic fee:

£54,167

None

Supplementary fees:

Senior Independent Director

£4,333

None

Audit Committee Chairman

£10,833

None

Remuneration Committee Chairman

£5,417

None

Nomination Committee Chairman

Nil

None

*13 months of data has been reported due to disposal of significant part of the business resulting in a 13 month accounting period

Notes accompanying the future Remuneration Policy table:

1.

Malus and clawback – malus and clawback may operate in respect of the annual bonus and long term incentive plan. This approach applies to all executive directors and senior management immediately

below Board level. Malus will typically be an adjustment to the cash award or number of shares before an award has been made or released. Clawback requires the executive to make a cash repayment

to the company or the surrender of shares or other benefits provided by the company. The overall intention is that, in exceptional circumstances, malus will apply before awards are paid or vest. Clawback

will apply under the annual bonus scheme, for up to three years from when the cash payment is made, and malus will apply to any deferred shares (awarded at the same time as the cash payment) for

the three-year period of the deferral. Under the LTIP, clawback will continue to apply for up to two years following the three-year vesting period.

As a minimum, the events in which malus and clawback may apply are as follows:

•

Material misstatement of financial statements.

•

Gross misconduct/fraud of the participant.

•

Where there has been an error in the calculation of performance outcomes, the value of awards, or the number of shares under an award.

•

Participant has caused reputational damage to the Company.

•

Participant has wholly or in part caused the corporate failure of the Company.

Malus and clawback provisions are kept under review, in the light of prevailing Financial Reporting Council guidance.

2.

Due to the disposal, the company has become a pure technology and SAAS company. As a result the Remuneration Committee will be consulting on a new pay policy that is appropriate for this type of

business in the run up to the AGM. For the purposes of this report we have left the current pay policy references in place

3.

Salary – base salaries are set by reference to the criteria specified in the table above. If a salary is initially set below the market rate, a phased realignment may be made over time.

4.

Annual bonus – a target of underlying (adjusted) profit was selected as this measure directly correlates to Company’s overall business plan. The specific measures, targets and weightings may vary

from year to year in order to align with the Company’s strategy and the measures will be dependent on the Company’s goals over the year under review. Performance measures are determined by the

Remuneration Committee who seek external guidance on the appropriateness of any performance targets set relative to the market.

5.

Long term incentive plans – LTIP: under the Company’s current long term incentive plan, performance shares are awarded up to a maximum of 150% of salary if significantly chal- lenging performance

targets are attained.The Remuneration Committee has currently selected two performance metrics for the LTIP, each with an equal weighting (i) EPS: this remains the key internal measure of long

term financial performance, as well as being well understood by the executives and our investors as providing a clear incentive to deliver the Company’s long term growth prospects; and (ii) qualitative

strategic performance metrics aligned to the Company's strategic milestones. The vesting schedule outlines the vesting percentages in relation to both the EPS performance targets, which were set

after taking into account internal scenario analysis, current market expectations and the current trading environment, and delivery against the strategic milestones as detailed in the Group’s published

strategic plan.

6.

Pensions . Pension supplement in lieu of pension is set at a level in line with the wider workforce

7.

Benefits - benefit levels are set to be competitive relative to companies of a comparable size.

8.

Annual Bonus and LTIP Policy - Remuneration Committee Discretions:The Committee will operate the annual bonus plan and LTIP in accordance with their respective rules and in accordance with the

Listing Rules, where relevant. Consistent with market practice, the Committee retains discretion in a number of respects with regard to the operation and administration of these plans. These include the

following (albeit with quantum and performance targets restricted to the descriptions detailed in the future policy table above):-

•

who participates in the plans;

•

the timing of grant of award and/or payment;

•

the size of an award and/or payment;

•

the determination of vesting and/or meeting targets with the ability to override the formulaic outcome in light of overall business proposals

•

discretion required when dealing with a change of control (e.g. the timing of testing performance targets) or restructuring of the Group;

•

determination of good/bad leaver cases for incentive plan purposes based on the rules of each plan and the appropriate treatment chosen;

•

adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events, share buybacks and special dividends); and

•

the annual review of performance measures and weighting, and targets for the annual bonus plan and LTIP from year to year or on award.

The Committee also retains the ability to adjust the targets and/or set different measures and alter weightings for the annual bonus plan and to adjust targets for the LTIP if events occur (such as a material

divestment of a Group business) which cause it to determine that the conditions are no longer appropriate and the amendment is required so that the con- ditions achieve their original purpose and are not

materially less difficult to satisfy.

The company retains the authority to honour any commitments entered into with current of former directors that have been disclosed to shareholders in previous remuneration reports (e.g. all historic

awards that were granted under any LTIPs that remain outstanding, as detailed in the company’s latest Annual Report), and which remain eligible to vest based on their original award terms. Details of any

payments to former directors will be set out in the Annual Report on remuneration as they arise. With regard to any promotions to executive director positions, the company will retain the ability to honour

payments agreed prior to executives joining the Board, albeit any payments agreed in consideration of being promoted to the Board will be consistent with the policy on new appointments as an executive

director detailed in the Remuneration Policy at www.pendragonplc.com to executive director positions, the company will retain the ability to honour payments agreed prior to executives joining the Board,

albeit any payments agreed in consideration of being promoted to the Board will be consistent with the policy on new appointments as an executive director detailed in the Remuneration Policy at www.

pendragonplc.com

58

Pinewood Technologies Group PLC Annual Report FY23

300

250

200

150

100

50

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

PINEWOOD TECHNOLOGIES GROUP PLC - TOTAL RETURN INDEX

FTSE SMALL CAP EX INV. TRUSTS - TOTAL RETURN INDEX

PINEWOOD TECHNOLOGIES GROUP PLC T0 31 JANUARY 2024

1. This report is required, pursuant to the Large and Medium sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, regulation 18, Performance Graph.

2. Total Shareholder Return (“TSR”) is calculated over the ten years ended on 31 January 2024 and reflects the theoretical growth in the value of a shareholding over that period, assuming dividends (if any) are

reinvested in shares in the company. The price at which dividends are reinvested is assumed to be the amount equal to the closing price of the shares on the ex- dividend date plus the gross amount of annual

dividend. The calculation ignores tax and reinvestment charges. For each company in the index, the TSR statistics are normalised to a common start point, which gives the equivalent to investing the same

amount of money in each company at that time. The percentage growth in TSR is measured over the chosen period. To obtain TSR growth of the relevant index over the chosen period, the weighted average of

TSR for all the companies in the index is calculated. In this case, it is the FTSE Small Cap Index (excluding investment companies) as explained in Note 3. The weighting is by reference to the market capitalisation

of each company in the index in proportion to the total market capitalisation of all the companies in the index at the end of the chosen measurement period.

3. The FTSE Small CAP index has been selected as it represents the equity market in which the Company was a constituent member for the majority of the relevant ten year period ending 31 January 2024

detailed above.

TOTAL SHAREHOLDER RETURN

1

The graph below shows the total shareholder return (“TSR”)

2

on

the company’s shares in comparison to the FTSE Small Cap Index

(excluding investment companies)

3

. TSR has been calculated as the

percentage change, during the relevant period, in the market price of

the shares, assuming that any dividends paid are reinvested on the ex-

dividend date. The relevant period is the ten years ending 31 January

2024. The notes at the foot of the graph provide more detail of the

TSR calculation.

59

Pinewood Technologies Group PLC Annual Report FY23

DIRECTORS’ SHAREHOLDINGS (AUDITED)

DIRECTORS’ SHAREHOLDINGS (AUDITED)

The shareholdings of all Directors, including the shareholdings of their connected persons as at 31 January 2024, are set out below. The CEO has

a shareholding requirement of 200% of salary, with other Executive Directors having a shareholding requirement of 100% of salary. There is no

company policy on non-executive director share ownership. This was considered by the Remuneration Committee during 2022 and as our NEDs

actively look to purchase shares, we do not feel it is necessary to have a minimum shareholding requirement for non-executives at this time. We

will continue to monitor any evolutions in UK best practice to determine if this should change in future.

Number of shares

held outright

Awards over

nil-cost options

Shareholding

requirement

(% of base

salary)

Shareholding as at 31

January 2024 incl

shares not subject to

performance requirements

(% of base salary)

As at 31

January

2024

As at 31

December

2022

Vested on 31 October 2023

All remaining options vested

on completion on the

disposal to Lithia

Executive Directors

William Berman

1,462,114

1,462,114

4,739,668

9,360,425

200%

947%

Martin Casha

Nil

11,098,524

1,548,796

2,209,849

100%

Nil

Mark Willis

804,163

804,163

2,606,817

5,148,232

100%

947%

Ollie Mann

24,739

24,739

82,728

393,916

100%

91%

Non Executive Directors

Dietmar Exler

210,000

210,000

-

-

N/A

N/A

Nikki Flanders

Nil

N/A

-

-

N/A

N/A

Brian Small

400,000

400,000

-

-

N/A

N/A

Ian Filby

Nil

Nil

-

-

N/A

N/A

Jemima Bird

Nil

N/A

-

-

N/A

N/A

Chris Holzshu

Nil

N/A

-

-

N/A

N/A

George Hines

Nil

N/A

-

-

N/A

N/A

PERCENTAGE CHANGE IN CHIEF EXECUTIVE REMUNERATION

The table below illustrates the percentage change in the remuneration awarded to the Directors over the last 3 years and that of the group’s

employees across its entire UK business.

Salary/Fees

Benefits

Bonus (Including deferred amount)

(% of base salary)

2023 13

month period

2022

2021

2023 13

month period

2022

2021

2023 13

month period

2022

2021

Executive Directors

Chief Executive

8.4%

0.0%

7.8%

16.8%

-15.9%

-

36.8%

-26.9%

99.8%

Chief Operating Officer

-16.6%

4.2%

7.0%

0.0%

14.3%

-22.2%

-100.0%

-23.9%

103.1%

Chief Financial Officer

1

8.3%

0.0%

3.8%

53.3%

15.4%

30.0%

36.7%

-26.9%

101.8%

Chief Financial Officer

2

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Non Executive Directors

Ian Filby

8.7%

500.0%

100.0%

-

-

-

-

-

-

Dietmar Exler

8.0%

0.0%

42.9%

-

-

-

-

-

-

Nikki Flanders

8.0%

0.0%

38.9%

-

-

-

-

-

-

Brian Small

8.0%

0.0%

-3.8%

-

-

-

-

-

-

Jemima Bird

100.0%

-

-

-

-

-

-

-

-

Mike Wright

3

-

-

-

-

-

-

-

-

-

Chris Holzshu

4

-

-

-

-

-

-

-

-

-

George Hines

4

-

-

-

-

-

-

-

-

-

All Employees (average)

8.1%

8.7%

7.0%

6.5%

-27.0%

-33.3%

2.5%

12.1%

39.0%

1) Leaver 01.02.24

2) New CFO appointed on 31.01.24, no values to display as no services provided in the reporting period

3) Leaver 01/06/22

4) Appointed on 31.01.2024, no values to display as no services provided in reporting period

5) Brian Small paid £15k of back pay

in 2024 for fees related to unpaid PFIS responsibility (£5k per annum over 3 years) which had not previously been reported or paid.

60

Pinewood Technologies Group PLC Annual Report FY23

SHAREHOLDERS’ VOTES ON REMUNERATION AT THE 2023 AGM

In relation to the advisory vote on Directors’ Remuneration Report (the “Report”), 56.44% of our shareholders voted against this resolution at our

AGM in June 2023. In addition, at the AGM in June 2023, 56.44% of our shareholders voted against approving the 2022 Directors' Remuneration

Report, 41.82% voted against the re-election of Bill Berman, 40.14% voted against the re-election of Martin Casha, 42.26% voted against the

re-election of Dietmar Exler and 45.14% voted against the re-election of Ian Filby. Our analysis confirms that opposition to these matters was

restricted to a number of our main shareholders, who together at the time held approximately 40% of our issued share capital.

In relation to the above votes against the Directors' remuneration policy, we listened to the feedback and concerns raised by our shareholders in

terms of how the Policy was implemented for 2022 and made further adjustments to the remuneration policy in accordance with best practice

for the next cycle (which was approved at the June 2023 AGM).

In relation to the votes against the 2022 Directors' Remuneration Report and the

re-election of the four directors, we listened to shareholder feedback and conducted a strategic review of the group which resulted in the sale of

the UK Motor and Leasing divisions and a subsequent special dividend of 24.5p to shareholders.

2022 Directors’ Remuneration Report

Number

Proportion of votes cast

Votes cast in favour

440,159,402

43.56

Votes cast against

570,236,199

56.44

Total votes cast in favour or against

1,010,395,601

Votes withheld

9,631,600

2023 Remuneration Policy

Number

Proportion of votes cast

Votes cast in favour

586,637,790

58.06

Votes cast against

423,737,970

41.94

Total votes cast in favour or against

1,010,375,760

Votes withheld

9,642,396

RELATIVE IMPORTANCE OF SPEND ON PAY

The table below illustrates the year-on-year change in total team member pay (being the aggregate of staff costs as set out in note 2.4 to the

financial statements and distributions to shareholders (being declared dividends).

CHIEF EXECUTIVE OFFICER PAY RATIO

The table below shows our chief executive officer pay ratio at 25th, median and 75th percentiles of our UK associates. The ratios have been

calculated based on the single total figure of remuneration for the chief executive officer and the total pay for the associates based on our

gender pay gap data under Option B of The Companies (Miscellaneous Reporting) Regulations 2018. We have used Option B as the Company

has already completed comprehensive data collection and analysis for the purposes of gender pay gap reporting, and continues to do so on a

monthly basis. The gender pay gap data used was collated on 31 December 2023.

Financial year

Method

25th percentile pay ratio

(lower quartile)

Median pay ratio

(median)

75th percentile pay ratio

(upper quartile)

2023

Option B

28:1

23:1

17:1

2022

Option B

26:1

25:1

16:1

2021

Option B

30:1

25:1

19:1

1. Total pay for the percentile employees taken from our gender pay gap data includes the following pay elements: base salary, holiday pay, hourly pay, national minimum wage top ups, car allowance, acting

up allowance, monthly advances, team member vouchers subject to national insurance, benefit schemes, statutory sick pay, maternity pay and paternity pay. Associates w ho have not received pay (in terms

of salary and adjustments) but has still received other salary payments are excluded from our gender pay gap data.

Team member pay

Distribution to shareholders

13m period ended

31 January 2024

Year ended 31

December 2022

% change

13m period ended

31 January 2024

Year ended 31

December 2022

% change

£259.9m

£227.8m

14.1%

£358.4m

£0m

-

DIRECTORS’ REMUNERATION REPORT

61

Pinewood Technologies Group PLC Annual Report FY23

AREA

Implementation

CLARITY

The committee is committed to providing transparent disclosures to shareholders and the workforce about executive

remuneration arrangements. The director’s remuneration report sets out the detail of such ar- rangements in a clear and

transparent way. Our AGM allows shareholders to ask questions on remuneration arrangements

SIMPLICITY

Our remuneration arrangements for executive directors are simple in nature and understood by all partic- ipants, having

operated in a similar manner for a number of years. Executive directors receive fixed pay (salary, benefits, pension) and

participate in a single short term annual bonus and a single long-term incentive plan (LTIP)

PREDICATABILITY

Payouts under the annual bonus and LTIP schemes are dependent on Company performance over the short and long term

and are governed by achievement against set targets. These schemes have strict maximum opportunities, which are out-

lined in the directors remuneration report.

RISK

The committee has designed incentives that do not encourage inappropriate risk-taking. The committee retain discretion

in both the annual bonus and LTIP schemes to adjust payouts where the formulaic outcomes are not considered reflective

of underlying performance and individual contribution. Robust withholding and recovery provisions apply to variable incen-

tives.

PROPORTIONALITY

Payouts from variable incentive schemes require strong performance against challenging conditions over the short and

longer term. Performance conditions have been selected to support group strategy and consist of both financial and

non-financial metrics. The committee retains discretion to override formulaic outcomes in both schemes to ensure they are

appropriate and reflective of overall performance.

ALIGNMENT TO CULTURE

Performance measures used in our variable incentive schemes are selected to be consistent with the Company’s purpose,

values and strategy. The use of annual bonus deferral, LTIP holding periods and our shareholding requirement provide a

clear link to the ongoing performance of the group and ensures alignment with shareholders.

SHARE PRICE INFORMATION AND PERFORMANCE

Other than those detailed above, there are no share option or long term incentive schemes in which the directors are eligible to participate. The

middle market price of Pendragon ordinary shares at 31 January 2024 was 36.35 pence and the range during the year was 17.6 pence to 28.8

pence.

SHAREHOLDER APPROVED REMUNERATION POLICY

The following table summarises how our shareholder approved remuneration policy fulfills the factors set out in provision 40 of the 2018 UK

Corporate Governance Code.

APPROVAL

This report was approved by the Committee and signed on its behalf by:

Jemima Bird

Chair of the Remuneration Committee

25 April 2024

62

Pinewood Technologies Group PLC Annual Report FY23

STRATEGIC REVIEW AND PRESCRIBED REPORTING

Our Strategic Review on page 16 contains the information, prescribed

by the Companies Act 2006, required to present a fair review of

the company’s business, a description of the principal risks and

uncertainties it faces, and certain of the information on which reports

and statements are required by the UK Corporate Governance Code.

The Board approved the Strategic Review set out on page 7 and the

Viability Statement set out on page 27. Additional information on

which the directors are required by law to report is set out below and

in the following:-

•

Environmental, Social and Governance Report

•

Board of Directors

•

Audit Committee Report

•

Nomination Committee Report

•

Directors’ Remuneration Report

•

Directors’ Report

•

Directors’ Responsibility Statement

In the interests of increasing the relevance of the Report and reducing

the environmental impacts of over-lengthy printed reports, we have

placed on our website at certain background information on the

company the disclosure of which, in this Report, is not mandatory.

We monitor reaction to the publication of shareholder information on

our website, to help shape our shareholder communication and future

improvements.

RESULTS AND DIVIDENDS

The results of the Group for the year are set out in the financial

statements on pages 76 to 145. No interim dividend was paid during

the year, and the directors are proposing to pay a special dividend of

24.5p a share on 7 May 2024.

APPOINTMENT AND POWERS

OF THE COMPANY’S DIRECTORS

Appointment and removal of directors is governed by the company’s

articles of association (the Articles), the UK Corporate Governance

Code (the Code), the Companies Acts and related legislation. Subject

to the Articles (which shareholders may amend by special resolution),

relevant legislation and any directions given by special resolution,

the company and its group is managed by its board of directors. By

resolutions passed at company general meetings, the shareholders

have authorised the directors: (i) to allot and issue ordinary shares;

(ii) to offer and allot ordinary shares in lieu of some or all of the

dividends; and (iii) to make market purchases of the company’s

ordinary shares (in practice, exercised only if the directors expect it

to result in an increase in earnings per share). Details of movements

in the company’s share capital are given in note 4.4 to the financial

statements.

From time to time, Pinewood provides financial assistance to its

independent employee benefits trust to facilitate the market purchase

of ordinary shares in the company for use in connection with various

of the company’s employee incentive schemes. The company did not

purchase any shares in this way in 2023.

BUSINESS AT THE AGM

At the AGM, a separate shareholders’ resolution is proposed for each

substantive matter. We will issue to our shareholders the company’s

annual report and financial statements together with the notice of AGM,

giving not less than the requisite period of notice. The notice sets out

the resolutions the directors are proposing and has explanatory notes

for each. At the AGM, directors’ terms of appointment are available

for inspection and, as well as dealing with formal AGM business, the

Board takes the opportunity to give an update to shareholders on

the company’s trading position. The Chairman and each committee

chairman are available to answer questions put by shareholders

present.

DIRECTORS AND THEIR INTERESTS IN SHARES

Current directors are listed on pages 42 and 43. Details of the terms

of appointment and notice period of each of the current directors,

together with executives directors’ respective interests in shares

under the company’s long term incentive plan (non-executive directors

have none), appear in the Directors’ Remuneration Report on pages 51

to 61. Directors who served during 2023 and their respective interests

in the company’s issued ordinary share capital are shown in the table

below. All holdings shown are beneficial. None of the directors holds

options over company shares, other than nil paid options pursuant

to the LTIP as described on page 59 in the director’s remuneration

report. Executive directors will aim to fulfil the requirements of the

company’s share ownership policy applicable to them within five years

of appointment. There is no company policy requiring non-executive

directors to hold a minimum number of company shares.

DIRECTORS’ ROTATION

The UK Corporate Governance Code (July 2018) imposes an obligation

that all Directors should be subject to annual re- election.

DIRECTORS’ REPORT

63

Pinewood Technologies Group PLC Annual Report FY23

INDEMNITIES TO DIRECTORS

In line with market practice and the company’s Articles, each director

has the benefit of a deed of indemnity from the company, which

includes provisions in relation to duties as a director of the company

or an associated company, qualifying third party indemnity provisions

and protection against derivative actions.

Copies of these are

available for shareholders’ inspection at the AGM.

SHARE CAPITAL

As at 31 January 2024, Pinewood’s issued share capital comprised

a single class: ordinary shares of 5 pence each. The Articles permit

the creation of more than one class of share, but there is currently

none other than ordinary shares. Details of the company’ share capital

are set out in note 4.4 to the accounts.

All issued shares are fully

paid. The company issued 65,679,118 shares during the period under

review.

The rights and obligations attaching to the company’s ordinary

shares are set out in the Articles. The Company is currently authorised

to issue up to two-thirds of its current issued share capital pursuant to

a resolution passed at its 2023 AGM.

SIGNIFICANT DIRECT OR INDIRECT SHAREHOLDINGS

At 31 March 2024 the directors had been advised of the following

interests in the shares of the company:-

VOTING RIGHTS, RESTRICTIONS ON VOTING RIGHTS

AND DEADLINES FOR VOTING RIGHTS

Shareholders (other than any who, under the Articles or the terms of

the shares they hold, are not entitled to receive such notices) have the

right to receive notice of, and to attend and to vote at, all general and

(if any) applicable class meetings of the company. A resolution put

to the vote at any general or class meeting is decided on a show of

hands unless (before or on the declaration of the result of the show

of hands or on the withdrawal of any other demand for a poll) a poll

is properly demanded. At a general meeting, every member present

in person has, upon a show of hands, one vote, and on a poll, every

member has one vote for every 5 pence nominal amount of share

capital of which they are the holder.

In the case of joint holders of a

share, the vote of the member whose name stands first in the register

of members is accepted to the exclusion of any vote tendered by any

Directors’ shareholdings

Number at 31.01.24

Number at 31.12.22

William Berman

1,462,114

1,462,114

Oliver Mann

24,739

24,739

Martin Casha

nil

11,098,524

Dietmar Exler

210,000

210,000

Ian Filby

nil

nil

Nikki Flanders

nil

nil

Mark Willis

804,163

804,163

Brian Small

400,000

400,000

Jemima Bird

nil

nil

Chris Holzshu

nil

nil

George Hines

nil

nil

Shareholder

Number of shares

Percentage of voting rights

of the issued share capital

Lithia Motors Inc

345,953,559

19.86

Fidelity Management and Research

169,122,548

9.71

Newlyn Management

149,025,000

8.55

Schroders

147,326,631

8.46

Harwood Capital Management Group

125,400,000

7.20

UBS Group

57,802,010

3.32

Hosking Partners

57,407,362

3.29

Gumshoe Capital Management

46,751,382

2.68

Kestrel Investment Partners

45,133,033

2.59

Dimensional Fund Advisors

41,738,463

2.40

64

Pinewood Technologies Group PLC Annual Report FY23

By order of the Board

Oliver Mann

Company Secretary

25 April 2024

other joint holder.

Unless the Board decides otherwise, a shareholder

may not vote at any general or class meeting or exercise any rights in

relation to meetings whilst any amount of money relating to his shares

remains outstanding.

A member is entitled to appoint a proxy to exercise all or any of

their rights to attend and speak and vote on their behalf at a general

meeting.

Further details regarding voting can be found in the notes to

the notice of the AGM.

Details of the exercise of voting rights attached

to the ordinary shares held by the company’s Employee Benefit Trust

are set out below.

None of the ordinary shares, including those held

by the Employee Benefit Trust, carries any special voting rights with

regard to control of the company.

To be effective, electronic and paper proxy appointments and voting

instructions must be received by the company’s registrars not later

than 48 hours before a general meeting.

The Articles may be obtained from Companies House in the UK or upon

application to the company secretary. Other than those prescribed by

applicable law and the company’s procedures for ensuring compliance

with it, there are no specific restrictions on the size of a holding nor on

the transfer of shares, which are governed by the Articles and prevailing

legislation. The directors are not aware of any agreement between

holders of the company’s shares that may result in restrictions on the

transfer of securities or the exercise of voting rights. No person has

any special rights of control over the company’s share capital.

SHARES HELD BY THE PENDRAGON

EMPLOYEE BENEFIT TRUST

As at 31 January 2024, the company’s Employee Benefit Trust with

Accuro Trustees (Jersey) Limited (the Trustee) held 12,420,787 shares,

representing 0.71% of the total issued share capital at that date (2022:

1,541,801; 0.09%).

The Trustee has waived its voting rights attached

to these shares.

It holds these shares to enable it to satisfy entitlements under the

company’s share schemes. During the year, the EBT facilitated the

vesting of the company's LTIPs and share option schemes, following

the sale of the motor assets and leasing businesses to Lithia.

CONTRACTS

None of the directors had an interest in any contract with the Group

(other than their service agreement or appointment terms and routine

purchases of vehicles for their own use) at any time during 2023.

The

company and members of its group are party to agreements relating

to banking, properties, employee share plans and motor vehicle

franchises which alter or terminate if the company or group company

concerned undergoes a change of control. None is considered

significant in terms of its likely impact on the business of the Group

as a whole.

RESEARCH AND DEVELOPMENT ACTIVITIES

The Company undertakes both research and development activities

as part of the development of the Pinewood system.

The system is

being continually evolved and enhanced.

POLITICAL DONATIONS

The company and its group made no political donations (2022: £ nil).

AUDITOR

The directors who held office at the date of approval of this directors’

report confirm that: so far as they are each aware, there is no relevant

audit information of which the Group’s auditors are unaware; and each

director has taken all the steps that they ought to have taken as a

director to make themself aware of any relevant audit information and

to establish that the Group’s auditors are aware of that information.

DIRECTORS’ REPORT

65

Pinewood Technologies Group PLC Annual Report FY23

66

Statement of Directors’ Responsibilities in Respect

of the Annual Report and Financial Statements

67

Independent Auditor’s Report to the Members of

Pinewood Technologies Group PLC

76

Consolidated Income Statement

77

Consolidated Statement of Comprehensive Income

78

Consolidated Statement of Changes in Equity

79

Consolidated Balance Sheet

80

Consolidated Cash Flow Statement

81

Notes to the Financial Statements

146

Company Balance Sheet

147

Company Statement of Comprehensive Income

148

Company Statement of Changes in Equity

149

Notes to the Financial Statements of the Company

158

Advisors, Banks and Shareholder Information

FINANCIAL STATEMENTS

66

Pinewood Technologies Group PLC Annual Report FY23

The directors are responsible for preparing the Annual Report and the

Group and parent Company financial statements in accordance with

applicable law and regulations.

Company law requires the directors to prepare Group and parent

Company financial statements for each financial year.

Under that

law they are required to prepare the Group financial statements in

accordance with UK-adopted international accounting standards

and applicable law and have elected to prepare the parent Company

financial statements in accordance with UK accounting standards and

applicable law, including FRS 101 Reduced Disclosure Framework.

Under company law the directors must not approve the financial

statements unless they are satisfied that they give a true and fair view

of the state of affairs of the Group and parent Company and of the

Group’s profit or loss for that period. In preparing each of the Group

and parent Company financial statements, the directors are required

to:

•

select suitable accounting policies and then apply them

consistently;

•

make judgements and estimates that are reasonable, relevant,

and reliable and, in respect of the parent Company financial

statements only, prudent;

•

for the Group financial statements, state whether they have

been prepared in accordance with UK-adopted international

accounting standards;

•

for the parent Company financial statements, state whether

applicable UK accounting standards have been followed, subject

to any material departures disclosed and explained in the parent

Company financial statements;

•

assess the Group and parent Company’s ability to continue as a

going concern, disclosing, as applicable, matters related to going

concern; and

•

use the going concern basis of accounting unless they either

intend to liquidate the Group or the parent Company or to cease

operations, or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the parent Company’s

transactions and disclose with reasonable accuracy at any time the

financial position of the parent Company and enable them to ensure

that its financial statements comply with the Companies Act 2006.

They are responsible for such internal control as they determine is

necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error, and

have general responsibility for taking such steps as are reasonably

open to them to safeguard the assets of the Group and to prevent and

detect fraud and other irregularities.

Under applicable law and regulations, the directors are also

responsible for preparing a Strategic Report, Directors’ Report,

Directors’ Remuneration Report and Corporate Governance Statement

that complies with that law and those regulations.

The directors are responsible for the maintenance and integrity of

the corporate and financial information included on the company’s

website.

Legislation in the UK governing the preparation and

dissemination of financial statements may differ from legislation in

other jurisdictions.

In accordance with Disclosure Guidance and Transparency Rule

(“DTR”) 4.1.16R, the financial statements will form part of the annual

financial report prepared under DTR 4.1.17R and 4.1.18R. The auditor’s

report on these financial statements provides no assurance over

whether the annual financial report has been prepared in accordance

with those requirements.

Approved by order of the Board

Ollie Mann

Chief Financial Officer

25 April 2024

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE

ANNUAL REPORT AND THE FINANCIAL STATEMENTS

67

Pinewood Technologies Group PLC Annual Report FY23

1. Our opinion is unmodified

We have audited the financial statements of Pinewood Technologies Group PLC (“the Company”) (formerly Pendragon PLC) for the 13 month

period ended 31 January 2024 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the

Consolidated and Company Balance Sheets, the Consolidated and Company Statement of Changes in Equity, the Consolidated Cash Flow Statement,

and the related notes, including the accounting policies.

In our opinion:

•

the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 January 2024 and

of the Group’s profit for the period then ended;

•

the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;

•

the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101

Reduced Disclosure Framework; and

•

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.

Our responsibilities are

described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is

consistent with our report to the audit committee.

We were first appointed as auditor by the shareholders on 28 April 1997. The period of total uninterrupted engagement is for the 27 financial

years ended 31 January 2024. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with,

UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities.

No non-audit services prohibited by that

standard were provided.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PINEWOOD

TECHNOLOGIES GROUP PLC (FORMERLY PENDRAGON PLC)

Overview

Materiality:

Group financial

statements as a whole

£4.4m (2022: £3.45m)

1.2% of Group net assets (2022: 5%

of normalised Group profit before tax)

Coverage

100% of Group net assets (2022: 92% of Group profit before tax)

Key audit matters

Event driven

New:

Presentation of discontinued operations, calculation of profit on disposal and

assessment of availability of distributable reserves (Group and Parent Company Key

Audit Matter)

68

Pinewood Technologies Group PLC Annual Report FY23

2. Key audit matters: including our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and

include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had

the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We

summarise below the key audit matters in arriving at our audit opinion above, together with our key audit procedures to address those matters

and, as required for public interest entities, our results from those procedures.

These matters were addressed, and our results are based on

procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our

opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.

The risk

Our response

Presentation of

discontinued operations,

calculation of profit on

disposal and assessment

of availability of

distributable reserves

(Group and Parent

Company Key Audit

Matter)

(Group profit on disposal:

£40.7 million;

Parent Company profit on

disposal: £29.4 million)

Refer to page 45 (Audit

Committee Report), page

143 (accounting policy)

and pages 143-144 and

153 (financial disclosures).

Significant unusual transaction:

The disposal of the UK Motor and

Leasing business (the “disposal group”)

completed on 31 January 2024.

The disposal group trading results to

the date of disposal are required to be

presented as part of discontinued oper-

ations, with comparatives restated on a

consistent basis.

At the disposal date, assets and lia-

bilities have been derecognised from

the Consolidated Balance Sheet, with

the difference in value of net assets

disposed of and the proceeds from the

disposal recognised in the Consolidated

Income Statement as the Group profit on

disposal.

The Company carried out a number of

restructuring steps as part of the dis-

posal, recording dividends from certain

subsidiaries, impairing investments in

other subsidiaries and then recording a

profit on the final disposal.

We have identified the disposal of the

UK Motor and Leasing business as a key

audit matter because of the size of the

disposal group as a proportion of the

overall Group, the quantum of the profit

on disposal in the Group and Parent

Company financial statements and the

consequent disclosure requirements.

We performed the tests below rather than seeking to rely on

any of the Group's controls because the nature of the balance

is such that we would expect to obtain audit evidence primarily

through the detailed procedures described.

Our procedures included:

• Accounting analysis:

We inspected the share purchase agree-

ment and restructuring step plan for the disposal to assess the

appropriateness of key accounting entries;

• Test of details:

We reperformed the profit on disposal calcu

-

lations;

• Test of details:

With the assistance of our tax specialists, we

evaluated the tax impact of the disposal;

• Test of details:

We assessed whether the proposed special

dividend by the parent company is expected to be supported by

available distributable reserves;

• Assessing experience of external experts:

We evaluated the

competence and objectivity of external experts appointed by the

Group to determine the level of available distributable reserves;

• Test of details

: We evaluated the adequacy of the Group’s

allocation of costs between continuing and discontinued

operations in the Consolidated Income Statement;

• Assessing transparency

: We assessed the adequacy of the

Group’s presentation of the disposal group as a discontinued

operation in compliance with the relevant accounting standard;

and

• Assessing transparency

: We assessed the adequacy of the

Group’s disclosure of the judgements involved in allocating

costs between continuing and discontinued operations in the

Consolidated Income Statement.

Our results:

We found the presentation of discontinued opera-

tions and the profit on disposal calculations to be acceptable.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

69

Pinewood Technologies Group PLC Annual Report FY23

2. Key audit matters: including our assessment of risks of material misstatement

continued

We continue to perform procedures over carrying value of Parent Company’s investments in subsidiaries and debt due from Group entities.

However, following the disposal of the UK Motor and Leasing business on 31 January 2024, we have not assessed this as one of the most

significant risks in our current period audit and, therefore, it is not separately identified in our report this period. Used vehicle inventory provision

and Valuation of post retirement benefit obligation are no longer identified as key audit matters following the disposal of the UK Motor and

Leasing business on 31 January 2024.

3. Our application of materiality and an overview of the scope of our audit

Materiality for the Group financial statements as a whole was set at £4.4m (2022: £3.45m), determined with reference to a benchmark of Group

net assets (2022: normalised Group profit before tax) of which it represents 1.2% (2022: 5%).

Materiality for the parent Company financial statements as a whole was set at £1.7m (2022: £2.6m), determined with reference to a benchmark

of the parent Company total assets, of which it represents 0.3% (2022: 0.2%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold,

performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances

add up to a material amount across the financial statements as a whole.

Performance materiality was set at 75% (2022: 75%) of materiality for the financial statements as a whole, which equates to £3.3m (2022:

£2.6m) for the Group and £1.3m (2022: £2.0m) for the parent Company.

We applied this percentage in our determination of performance

materiality because we did not identify any factors indicating an elevated level of risk.

We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.22m (2022: £0.17m), in

addition to other identified misstatements that warranted reporting on qualitative grounds.

Of the Group’s 5 (2022: 35) reporting components, we subjected 4 (2022: 11) to full scope audits for group purposes and none (2022: 5) to

specified risk-focused audit procedures. The latter were not individually financially significant enough to require a full scope audit in 2022 for

group purposes, but did present specific individual risks that needed to be addressed.

The components within the scope of our work accounted for the percentages illustrated on the next page.

The remaining 0% (2022: 0%) of total Group revenue, 2% of Group profit before tax (2022: 8%) and 0% (2022: 1%) of total Group assets is

represented by 1 (2022: 19) reporting component, none of which individually represented more than 2% (2022: 3%) of any of total Group revenue,

Group profit before tax or total Group assets.

For this component, we performed analysis at an aggregated Group level to re- examine our

assessment that there were no significant risks of material misstatement within these.

The scope of the audit work performed was fully substantive as we did not rely upon the Group's internal control over financial reporting.

The Group audit team performed all of the audit work in relation to the 4 (2022: 16) components, including the audit of the parent Company.

Net assets

£360.4m

(Normalised Group

profit before tax 2022:

£69.8m)

Group materiality

£4.4m

(2022: £3.45m)

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

Group net assets

Group materiality

£4.4m

Whole financial statements materiality

(2022: £3.45m)

£3.3m

Whole financial statements performance

materiality (2022: £2.6m)

£4.2m

Range of materiality at 4 components (£1.3m to £4.2m)

(2022: 11 components; £0.7m to £2.6m)

£0.22m

Misstatements reported to the audit committee (2022: £0.17m)

70

Pinewood Technologies Group PLC Annual Report FY23

3. Our application of materiality and an overview of the scope of our audit

continued

Group revenue

Group profit before tax

Group total assets

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

Full scope for group audit purposes 2023

Specified risk-focused audit procedures 2023

Full scope for group audit purposes 2022

Specified risk-focused audit procedures 2022

Residual components

100%

(2022 100%)

100%

(2022 99%)

98%

(2022 92%)

4. Going concern

The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Group or the parent

Company or to cease their operations, and as they have concluded that the Group’s and the parent Company’s financial position means that this

is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue

as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).

We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its business model and

analysed how those risks might affect the Group’s and parent Company’s financial resources or ability to continue operations over the going

concern period. The risks that we considered most likely to adversely affect the Group’s and parent Company’s available financial resources over

this period were adverse macroeconomic conditions resulting in loss of key customers and increasing costs.

We considered whether these risks could plausibly affect the liquidity in the going concern period by comparing severe, but plausible downside

scenarios that could arise from these risks individually and collectively against the level of available financial resources indicated by the Group’s

financial forecasts.

We assessed the completeness of the going concern disclosure.

71

Pinewood Technologies Group PLC Annual Report FY23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

4. Going concern

continued

Our conclusions based on this work:

•

we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;

•

we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions

that, individually or collectively, may cast significant doubt on the Group’s or parent Company's ability to continue as a going concern for

the going concern period;

•

we have nothing material to add or draw attention to in relation to the directors’ statement in note 1 to the financial statements on the use of

the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and parent Company’s

use of that basis for the going concern period, and we found the going concern disclosure in note 1 to be acceptable; and

•

the related statement under the Listing Rules set out on page 81 is materially consistent with the financial statements and our audit

knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with

judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the parent Company

will continue in operation.

5. Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or

pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:

•

Enquiring of directors, the audit committee and internal audit and inspection of policy documentation as to the Group’s high- level policies

and procedures to prevent and detect fraud, including the internal audit function, and the Group’s channel for “whistleblowing”, as well as

whether they have knowledge of any actual, suspected or alleged fraud.

•

Reading Board, audit committee and Risk Control Group minutes.

•

Considering remuneration incentive schemes and performance targets for directors.

•

Using analytical procedures to identify any unusual or unexpected relationships.

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.

As required by auditing standards, we perform procedures to address the risk of management override of controls and the risk of fraudulent

revenue recognition, in particular:

•

the risk that Group and component management may be in a position to make inappropriate accounting entries; and

•

the risk that new and used vehicle revenue for the year that forms part of the discontinued operations is misstated as a result of revenue

being recorded in the wrong period.

We did not identify any additional fraud risks. We also performed procedures including:

•

Identifying journal entries to test for all full scope components based on risk criteria and comparing the identified entries to supporting

documentation.

These included those posted to unusual accounts.

•

Evaluated the business purpose of significant unusual transactions.

•

Assessing whether the judgements made in making accounting estimates are indicative of a potential bias.

72

Pinewood Technologies Group PLC Annual Report FY23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

5. Fraud and breaches of laws and regulations – ability to detect

continued

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our

general commercial and sector experience through discussion with the directors and other management (as required by auditing standards),

and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations.

As the Group is regulated, our assessment of risks involved gaining an understanding of the control environment including the entity’s procedures

for complying with regulatory requirements.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout

the audit.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including

related companies legislation), distributable profits legislation, and taxation legislation and we assessed the extent of compliance with these

laws and regulations as part of our procedures on the related financial statement items.

Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on

amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation.

We identified the following areas as those most likely to have such an effect: health and safety, anti-bribery, employment law and certain aspects of

company legislation recognising the financial and regulated nature of the Group’s activities.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other

management and inspection of regulatory and legal correspondence, if any.

Therefore if a breach of operational regulations is not disclosed to us or

evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial

statements, even though we have properly planned and performed our audit in accordance with auditing standards.

For example, the further removed

non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently

limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal controls.

Our audit procedures are designed to detect material misstatement.

We are not responsible

for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

73

Pinewood Technologies Group PLC Annual Report FY23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

6. We have nothing to report on the other information in the Annual Report

The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the

financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below,

any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information

therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified

material misstatements in the other information.

Strategic report and directors’ report

Based solely on our work on the other information:

•

we have not identified material misstatements in the strategic report and the directors’ report;

•

in our opinion the information given in those reports for the financial year is consistent with the financial statements; and

•

in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability

We are required to perform procedures to identify whether there is a material inconsistency between the directors’ disclosures in respect of emerging

and principal risks and the viability statement, and the financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or draw attention to in relation to:

•

the directors’ confirmation within the Viability Statement on page 27 that they have carried out a robust assessment of the emerging and

principal risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity;

•

the Principal Risk disclosures describing these risks and how emerging risks are identified, and explaining how they are being managed and

mitigated; and

•

the directors’ explanation in the Viability statement of how they have assessed the prospects of the Group, over what period they have done so

and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group

will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures

drawing attention to any necessary qualifications or assumptions.

We are also required to review the Viability statement, set out on page 27 under the Listing Rules.

Based on the above procedures, we have concluded

that the above disclosures are materially consistent with the financial statements and our audit knowledge.

74

Pinewood Technologies Group PLC Annual Report FY23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

6. We have nothing to report on the other information in the Annual Report

continued

Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot

predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable

at the time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and parent Company’s longer-

term viability.

Corporate governance disclosures

We are required to perform procedures to identify whether there is a material inconsistency between the directors’ corporate governance

disclosures and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements and our audit

knowledge:

•

the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and

understandable, and provides the information necessary for shareholders to assess the Group’s position and performance, business model

and strategy;

•

the section of the annual report describing the work of the Audit Committee, including the significant issues that the audit committee

considered in relation to the financial statements, and how these issues were addressed; and

•

the section of the annual report that describes the review of the effectiveness of the Group’s risk management and internal control systems.

We are required to review the part of the Corporate Governance Report relating to the Group’s compliance with the provisions of the UK Corporate

Governance Code specified by the Listing Rules for our review and to report to you if a corporate governance statement has not been prepared

by the Company.

We have nothing to report in these respects.

Based solely on our work on the other information described above:

•

with respect to the Corporate Governance Report disclosures about internal control and risk management systems in relation to financial

reporting processes and about share capital structures;

•

we have not identified material misstatements therein; and

•

the information therein is consistent with the financial statements; and

•

in our opinion, the Corporate Governance Statement has been prepared in accordance with relevant rules of the Disclosure Guidance and

Transparency Rules of the Financial Conduct Authority.

7. We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion;

•

adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from

branches not visited by us; or

•

the parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the

accounting records and returns; or

•

certain disclosures of directors’ remuneration specified by law are not made; or

•

we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

75

Pinewood Technologies Group PLC Annual Report FY23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS

OF PINEWOOD TECHNOLOGIES GROUP PLC

(CONTINUED)

8. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 66, the directors are responsible for: the preparation of the financial statements

including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of

financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting

unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue our opinion in an auditor’s report.

Reasonable assurance is a high level of assurance, but does not

guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can

arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements in an annual financial report prepared under Disclosure Guidance and Transparency

Rule 4.1.17R and 4.1.18R. This auditor’s report provides no assurance over whether the annual financial report has been prepared in accordance

with those requirements.

9.

The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Our audit

work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s

report and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Craig Parkin (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

One Snowhill

Snow Hill Queensway

Birmingham

B4 6GH

25 April 2024

76

Pinewood Technologies Group PLC Annual Report FY23

CONSOLIDATED INCOME STATEMENT

Period ended 31 January 2024

Notes

13m period ended

31 January

2024

£m

Year ended

31 December

2022

£m

Continuing operations

Revenue

2.1

24.5

19.1

Cost of sales

(2.7)

(2.0)

Gross profit

21.8

17.1

Operating expenses

2.2

(11.8)

(10.1)

Operating profit

10.0

7.0

Finance expense

4.3

(0.1)

-

Finance income

4.3

-

-

Net finance costs

(0.1)

-

Profit before taxation

9.9

7.0

Income tax expense

2.6

(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

81.7

45.5

Earnings per share

Basic earnings per share

2.7

117.0p

65.4p

Diluted earnings per share

2.7

117.0p

63.0p

Earnings per share - continuing operations

Basic earnings per share

2.7

11.9p

8.2p

Diluted earnings per share

2.7

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.

**

**

The notes on pages 81 to 145 form part of these financial statements

**

**

77

Pinewood Technologies Group PLC Annual Report FY23

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

13 month Period ended 31 January 2024

Notes

13m period ended

31 January

2024

£m

Year ended

31 December

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) and gains

5.1

(11.3)

8.2

Income tax relating to defined benefit plan remeasurement losses and (gains)

2.6

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 year, net of tax

(9.1)

7.1

Total comprehensive income for the year

72.6

52.6

Total comprehensive income for the period attributable to equity

shareholders of the company arises from:

Continuing operations

8.2

6.2

Discontinued operations - see note 3.3

64.4

46.4

72.6

52.6

The notes on pages 81 to 145 form part of these financial statements

78

Pinewood Technologies Group PLC Annual Report FY23

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

13 Month period ended 31 January 2024

Share

capital

£m

Share

premium

£m

Capital

reserve

£m

Other

reserves

£m

£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 the period

Profit for the period

-

-

-

-

-

81.7

81.7

Other comprehensive income for the year, 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

(see note 4.4)

-

-

-

(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 the year

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

The notes on pages 81 to 145 form part of these financial statements

79

Pinewood Technologies Group PLC Annual Report FY23

Chief Financial Officer

CONSOLIDATED BALANCE SHEET

At 31 January 2024

Notes

31 January

2024

£m

31 December

2022

£m

Non-current assets

Property, plant and equipment

3.2

1.1

515.9

Goodwill

3.1

0.3

144.6

Other intangible assets

3.1

13.8

12.4

Finance lease receivables

-

14.8

Deferred tax assets

2.6

-

11.6

Total non-current assets

15.2

699.3

Current assets

Inventories

3.4

-

620.3

Trade and other receivables

3.6

421.8

115.7

Finance lease receivables

-

2.4

Current tax assets

0.3

3.3

Cash and cash equivalents

4.2

47.4

171.9

Assets classified as held for sale

3.3

-

6.1

Total current assets

469.5

919.7

Total assets

484.7

1,619.0

Current liabilities

Bank overdraft

4.2

-

(102.5)

Interest bearing loans and borrowings

4.2

(93.0)

(1.7)

Lease liabilities

4.7

(0.4)

(20.0)

Trade and other payables

3.7

(23.0)

(812.0)

Deferred income

3.8

(6.5)

(38.2)

Total current liabilities

(122.9)

(974.4)

Non-current liabilities

Interest bearing loans and borrowings

4.2

(0.2)

(91.0)

Lease liabilities

4.7

(0.6)

(197.9)

Trade and other payables

3.7

-

(35.7)

Deferred income

3.8

-

(36.4)

Deferred tax

2.6

(0.6)

-

Retirement benefit obligations

5.1

-

(2.6)

Total non-current liabilities

(1.4)

(363.6)

Total liabilities

(124.3)

(1,338.0)

Net assets

360.4

281.0

Capital and reserves

Called up share capital

4.4

73.2

69.9

Share premium account

4.4

56.8

56.8

Capital redemption reserve

4.4

5.6

5.6

Other reserves

4.4

-

12.6

Translation reserve

4.4

0.4

0.5

Retained earnings

224.4

135.6

Total equity attributable to equity shareholders of the Company

360.4

281.0

The notes on pages 81 to 145 form part of these financial statements

Registered Company Number: 02304195

80

Pinewood Technologies Group PLC Annual Report FY23

CONSOLIDATED CASH FLOW STATEMENT

13 month Period ended 31 January 2024

Notes

13 m period ended

31 January

2024

£m

Year ended

31 December

2022

£m

Cash flows from operating activities

Profit for the period/year

81.7

45.5

Adjustment for taxation

2.6

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 businesses 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

3.4

38.5

(119.8)

Changes in trade and other receivables

(45.9)

(15.2)

Changes in trade and other payables

39.7

150.8

Movement in contract hire vehicle balances

3.5

(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 businesses net of fees paid

6.1

1.3

3.9

Fees paid in advance of completion on business disposal to Lithia

6.1

(6.6)

-

Cash disposed as part of business disposal

6.1

(15.3)

-

Purchase of property, plant, equipment and intangible assets

3.1, 3.2

(40.2)

(44.3)

Proceeds from sale of property, plant, equipment and intangible assets

3.1, 3.2

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

4.2

47.4

69.4

The notes on pages 81 to 145 form part of these financial statements

NOTES TO THE FINANCIAL STATEMENTS

Pinewood Technologies Group PLC Annual Report FY23

81