21 February 2012

The UK’s largest auto retail group, Pendragon, has announced full year 2011 pre-tax profits of £24.0 million, an increase of £13.0 million over 2010.

The increased profit has been achieved on reduced turnover, down to £3.47m from £3.57m, and is largely down to reduced finance costs – at the operating level, profits are slightly down, to £74.4m for the full year.

Analysts said the results were broadly in line with expectations but highlighted continuing high debt levels (partly due to holding high stock for January) and adjustments in the exceptional costs as concerns.

Chief executive, Trevor Finn, said the group is focussed on continuing to enhance earnings through its used car initiatives and reported like for like used vehicle volume growth of 14.4% in 2011. Pendragon now operates 14 dedicated used car locations, including seven Quicks sites, alongside its 235 worldwide franchise points.

Underlying revenue from new cars sales was down by £50m in the Stratstone division and by £120.2m at Evans Halshaw. Gross margins have increased slightly at Stratstone to 9.4% and reduced slightly, to 6.5%, at Evans Halshaw.

Mr Finn said: “The group has been right-sizing the business in the last three years as a result of the changing economic environment and has reduced the number of franchise points by 10 in 2011.”

Pendragon strengthened its financial position during the second half of the year with a rights issue and refinancing which has generated reduced interest costs as a result of lower average debt and improved terms.

Mr Finn said: “The group has delivered a full year underlying profit before tax position of £30.8 million, a 22% improvement on 2010. This has been achieved by interest savings and by the group maintaining its position in difficult trading conditions.”

Underlying financing costs were £43.6 million which compares to £49.9 million in the prior year. Net borrowings were £246.8 million at 31 December 2011, which is a £78.7 million reduction versus December 2010.

Mr Finn said: “The year ahead is set to be challenging, but given our recapitalised balance sheet, healthy cash generation, clear strategic goals and robust operational management we expect to maintain our momentum into 2012.”

Tags: Evans Halshaw, financial results 2011, Pendragon, Stratstone, Trevor Finn