Pendragon PLC, the UK's largest car retailer has announced results for the first half of 2008. Operating profit is down £20.9 million and profit attributable to shareholders down to £13.4 million from £32.7 million.
Results would have been much worse but for an extraordinary VAT refund of £14.9 million pounds from overpayment of VAT on demonstrator and similar vehicles. This is split into a £6.6 million refund and an £8.3 million interest credit. Without this the £2.478 billion pound turnover would have made Pendragon very busy but ultimately unprofitable in this period.
With economies of scale expected to improve once full integration of the Reg Vardy business is completed, 2009 figures should improve a little. But Chief Executive Trevor Finn's comments point to a tough close to the year.
“The UK motor retail sector has faced a challenging six months through weak demand and rising vehicle ownership costs. We have reacted quickly to the market changes, improving our competitiveness in used cars, cutting our cost base and reducing borrowings.
Our aftersales and support businesses will continue to underpin the profitability of the group and the experienced management team will guide the group successfully through what we expect to be difficult trading conditions for the remainder of this year and next.”
Revenue of £2,478 million (2007: £2,702 million)
• Operating profit £41.2 million (2007: £62.1 million)
• Profit before tax £21.1 million (2007: £33.5 million)
• Profit before tax & exceptionals £13.4 million (2007: £32.7 million)
• Basic earnings per share 2.0p (2007: 4.4p)
• Adjusted earnings per share 1.5p (2007: 3.5p)
• Dividend 0.5p (2007: 2.0p)
• Borrowings down £44.4 million since year end
Summary of Pendragon Operations
Pendragon PLC is the largest independent operator of franchised motor car dealerships in the UK, operating over 300 franchises. The motor car businesses operate under the brands of Stratstone for luxury vehicles and Evans Halshaw representing the volume brands. Chatfields is the commercial van and truck business, selling and servicing vehicles within a range of commercial vehicle brands. They also operate a motor car retail businesses in the USA.
Pendragon has a large contract hire business in the UK, operating under the brands of Pendragon Contracts, Bramall Contracts and Vardy Contract Motoring. They also have a substantial presence in the UK wholesale parts, sales & distribution with the Quickco business. Our software solutions business, Pinewood, provides software & services to dealers and fleet operators.