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Pendragon's profits before tax reach £13m in first six months

Pendragon PLC has revealed its interim results for the six months to 30 June 2010.

The results show a positive performance, with pre-tax profits for the first six months of the year hitting £13.3 million.

The number one dealer group in the AM100 saw revenue increase to £1,833m, up from £1,586.4m over the same period in 2009.

The groups said the improved financial results reflect its success in reducing costs, driving operating efficiencies and improving its balance sheet, as well as the recovery in the market.

This has led to an increase of 48.1% in underlying profit over the prior period to £15.7 million with strong recovery in Stratstone and improvement in the Evans Halshaw division.

In the UK, the group operates 257 franchised points of which 112 are prestige, branded as Stratstone, 127 are Evans Halshaw volume dealerships and 18 are truck dealerships trading under the Chatfields brand.

Pendragon sold or closed 11 franchise points in the first half, which resulted in total closure costs of £1.4 million (2009: £6.1 million).

Aftersales activities were credited as being the most profitable area for the group.

Aftersales gross profit in the UK increased by 0.6% on a like for like basis over the prior period.

Despite falling used car prices, the group outperformed the market with first half used car volume increasing by 15.9% over the prior period.

During the period to June 2010 UK new car registrations grew by 19.9% with retail car registrations increasing by 24.6%.

Excluding the additional volume generated by the scrappage scheme, retail registrations would have increased by 12.9%.

Pendragon's new retail sales volumes again outperformed the market, increasing by 14.1% excluding the scrappage scheme.

Operating profits also rose by £5.6m to £39m, which took adjusted earnings per share to 1.6p, compared to 0.9p in 2009.

Net borrowings however were up considerably at £346.7 million (2009: £317.7 million).

This is almost all due to increases in new vehicle stock related to new product launches.

The cash impact of this additional stock requirement was approximately £35 million. Pendragon says it expects this will have reversed by the year end.

"I am pleased to announce a significant improvement in the group’s performance in the first half of 2010 as we continue to benefit from the business initiatives undertaken by management and the recovery in the market," said chief executive Trevor Finn.

"The group has a core business well positioned to move forward. In particular, we continue to see growth opportunities from our aftersales and used car operations, the most profitable parts of our business, and are reassured by their strong performance during the period.

"Assuming economic and market conditions remain stable, Pendragon is well placed to build on its strong start to 2010.”

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