9th Feb 2006 07:01
Pendragon PLC09 February 2006 FOR IMMEDIATE RELEASE 9 February 2006 PRELIMINARY RESULTS TO 31 DECEMBER 2005 Pendragon PLC, the UK's largest car dealership group, today reports preliminaryresults for the twelve months to 31 December 2005. Highlights: • Turnover £3.3 billion (2004 £3.2 billion)• Operating margin pre exceptionals 3.0% (2004 2.8%)• Profit before tax and exceptional items up 11.7% to £59.3 million (2004 £53.1 million)• Adjusted earnings per share up 11.3% to 33.4p (2004 30.0p)• Dividend up 29.4% to 13.2p (2004 10.2p)• Gearing 70% (2004 112%)• Successful completion of the integration of CD Bramall Trevor Finn, Chief Executive, commented: "We have had a successful year in 2005, not only in respect of our goodfinancial results, but also in completing the integration of the CD Bramallbusiness ahead of schedule, creating partnerships with manufacturers previouslynot represented and strengthening our balance sheet. We are looking forward to a year of new challenges and believe that we can takethe business forward in 2006 and retain our position as the clear leader in theindustry." Enquiries: Pendragon PLC Trevor Finn, Chief Executive Tel: 01623 725114 David Forsyth, Finance Director Finsbury Rupert Younger Tel: 0207 2513801 Gordon Simpson Introduction We have had a successful year in 2005, not only in respect of our good financialresults, but also in completing the integration of the CD Bramall business aheadof schedule, creating partnerships with manufacturers previously not representedand strengthening our balance sheet. We added 50 franchises at 20 locations in2005, of which 25 of the franchises are on greenfield sites. The achievement ofour objectives, in a year when the new car market was down by five per cent,underlines the strength in depth of our management team and the robustness ofour business model. Results and dividend Group sales, for the year ended 31 December 2005, have risen to £3.3 billioncompared to £3.2 billion in 2004. Profit before tax and exceptionals is up by11.7 per cent to £59.3 million from £53.1 million in 2004. Earnings per share onthis basis increased 11.3 per cent to 33.4 pence. On a statutory basis,including exceptionals and goodwill impairment, pre tax profit was £63.8 millionand earnings per share were 34.8 pence. The proposed final dividend of 6.6 pence, together with the interim dividend of 6.6 pence, gives a full year dividend of 13.2 pence, an increase of 29.4 percent. The uplift in the dividend reflects both the confidence the board has inthe future prospects of the Group and the step up in the earnings capacity afterthe major acquisition made in 2004. We reduced net debt in the year by £69.8 million to £177.0 million whichrepresents gearing of 70 per cent. We have managed our cash well during the yearand at the same time taken advantage of investment opportunities in newbusinesses. We have clearly shown over the past two years that we have, as withprevious major acquisitions undertaken with debt, controlled the enlargedbusiness and generated the cash to reduce our debt quickly. Our strategy is to continue to grow with the manufacturers we currentlyrepresent and to introduce new brands where we believe this to be in line withour long term plans. We have an integrated business model, industry leadingmanagement information across each of our franchise focused groups andinnovative activities in our customer services centre, all of which aredelivering benefits to the business. Operational review The good results we have delivered this year are particularly pleasing against abackdrop of a less buoyant UK new car market. We also made excellent progresswith our new Pinnacle dealer management system with over 100 implementations inthe group during the year. The integration of CD Bramall was completed during the year and, the acquisitionfinance to buy the shares of approximately £230.0 million, which was put inplace at the beginning of 2004, has now been repaid in line with our plan. We have made a number of acquisitions and greenfield start ups in 2005, most ofwhich occurred in the second half. Although these have been dilutive overall,they have enabled us to build relationships with manufacturers not alreadyrepresented. Summary Financial Statement £m 2005 2004------------------------------------------------------------------------------Turnover 3,284.5 3,168.2Underlying operating profit 98.8 87.7Exceptional operating costs (2.9) (6.6)Operating profit before other income 95.9 81.1Other income - gain on sale of fixed assets 7.4 18.9Operating profit 103.3 100.0Finance costs / share of JV (39.5) (34.6)Profit before tax 63.8 65.4Earnings per share - basic 34.8p 37.1pEarnings per share - adjusted 33.4p 30.0pDividend per share 13.2p 10.2p------------------------------------------------------------------------------ Underlying operating profit of £98.8 million (2004: £87.7 million) less interestof £39.5 million (2004: £34.6 million) gives profit before tax and exceptionalsof £59.3 million (2004: £53.1 million), an increase of 11.7 per cent. Trading Environment The UK market experienced a five per cent fall in new car registrations with thetotal market standing at just above 2.4 million cars. The private retail marketsuffered the most, down 10 per cent, reflecting the weaker economy. Sales to thelower margin fleet and business sectors were down just 0.3 per cent. The strong demand seen in recent years for commercial vehicles also tailed offwith an overall reduction in units registered of one per cent. The reduction wasentirely in the light commercial van sector which accounts for over 80 per centof registrations in this market. Registrations of trucks rose 4.5 per centalthough this was mostly achieved in the first half of the year. Overall the US market remained stable with sales of cars and light trucks up by0.5 per cent to almost 17.0 million. New car sales were mixed in respect of therange of brands we currently represent in California; Land Rover, Mercury andSAAB improved, whilst Jaguar, Aston Martin and Lincoln sold fewer units. InGermany the market for the products we sell remained weak. Jaguar registrationsfell almost 20 per cent, Land Rover was broadly static year on year and AstonMartin increased albeit from a very small base. The principal activity of our business is the sale and servicing of motorvehicles. We also operate a number of commercial vehicle dealerships. Within thebusiness there are distinct areas of activity; new vehicle sales, used vehiclesales, aftersales and support services. In 2005 new vehicle sales accounted for30 per cent of gross profit, used car sales for 18 per cent, aftersales 43 percent and support services 9 per cent. Motor Vehicle Retail Business We have businesses in three of the largest car markets, UK, USA and Germany. Thebusiness in the UK accounted for 94.7 per cent of our underlying operatingprofits in 2005. UK We own and operate 275 franchised dealers from 219 sites in the UK. Thisincludes 25 commercial vehicle dealerships. We have a national network ofdealerships from Scotland to the south coast of England with a diverse portfolioof franchises consisting of specialist, luxury, volume and commercial vehicles. During the year we undertook a rebranding of the UK dealerships. Our volumedealerships have been branded as Evans Halshaw whilst the premium marques arenow trading under the name Stratstone. We believe that there are benefits interms of marketing and advertising in having two distinct brands, each of whichhas sufficient scale throughout the UK. This enables marketing and advertisingexpenditure to be more specifically targeted and facilitates the use of othermedia such as television which has previously not been cost effective. Our premium brands include Aston Martin, BMW, Ferrari, Jaguar, Land Rover,Maserati, Mercedes-Benz, Mini, Porsche, Saab and Volvo. In 2005 we have addedCadillac, Honda and Alfa Romeo franchises. In total, specialist and luxuryfranchises represent 47 per cent of our portfolio. The principal volume franchises are Ford and Vauxhall. We also representPeugeot, Citroen, Hyundai and Nissan. During the year we added Kia and Fiat tothe volume franchises we represent. Commercial vehicle franchises include DAF, Iveco, LDV and Mitsubishi. We alsohave five sites selling Harley-Davidson and Japanese motorcycles. Revenue Gross Profit Gross Margin Underlying Underlying£m % Operating Profit Operating Margin %-----------------------------------------------------------------------------------------------------Existing 2,832.0 377.9 13.3 81.7 2.9Acquired 58.2 8.1 13.9 (2.1) (3.7)Disposed 65.4 10.6 16.2 0.4 0.6Total 2005 2,955.6 396.6 13.4 80.0 2.7Total 2004 2,881.8 388.7 13.5 70.3 2.4----------------------------------------------------------------------------------------------------- Revenue has increased by £73.8 million. After eliminating the impact of theacquisitions and disposals we have made over the last 24 months, revenue on alike for like basis in the UK is down 2.7 per cent which is broadly in line withthe reduction in UK new car sales. The underlying operating margin on existing businesses has moved ahead to 2.9per cent compared to 2.7 percent in 2004. The underlying operating profitincludes an operating loss of £2.3 million versus a profit of £2.0 million for2004 in respect of our MG Rover business. Excluding the MG Rover losses ourexisting dealership underlying operating margin would have been 3.0 per cent.All our MG Rover sites have now either been closed, with a view to disposing ofthe property, or refranchised where we expect the contribution from these sitesto be positive in 2006. Of the premium brands Aston Martin, Jaguar and Porsche again had a good year. Weimproved results in our Mercedes-Benz group which had been disrupted in theprevious year due to a number of site relocations. Land Rover was up on theprevious year with the introduction of the Range Rover Sport which has proved tobe very popular in the 4x4 sector. We opened eight Cadillac sites during theyear. Although the volume of Cadillac sales has been low in 2005 we anticipatethat the new small Cadillac, which arrives this year, will help establish thebrand and move our Cadillac business towards break even by the end of the year.We now operate 12 sales points for the brand and anticipate this to grow to 18by the end of this year. Other premium brand franchise points acquired were AlfaRomeo, Honda, Jaguar, Lotus, SAAB and Volvo. Sales volumes in our Ford business were down year on year. In addition, marginshave been squeezed due to the lower demand and the over supply situation in thenational network for the majority of the year. Levels of stocks have now comedown and this we believe will help improve returns for us in this brand in 2006.During the year we disposed of Ford dealerships in Exeter and Torquay, whichlost £0.3 million in the first eight months of the year. Similar to Ford, thevolume of sales for Vauxhall declined year on year, although not to the sameextent. Margins in this business were also under pressure in the year. Of ourother volume brands we were pleased with the performance of our Peugeotdealerships which improved profits against the prior year. We opened or acquired 20 volume franchises in the year. These representedCitroen, Fiat, Hyundai, Kia and Vauxhall and in a number of cases have replacedthe MG Rover sales points. The new businesses, both premium and volume,contributed revenue of £58.2 million with an operating loss of £2.1 million. Theloss reflects the start up nature of many of the additions plus theypredominantly came on stream towards the end of the second half of the year whennew car sales are at their lowest. We remain one of the biggest commercial vehicle retailers in the UK and, againstthe background of another strong market, we saw the performance of this groupmove forward in the year with sales ahead of the previous year on a like forlike basis. In June we sold our Mercedes-Benz trucks business which prior tosale made operating profits of £1.4 million (2004: £2.3 million). Prior to disposal or closure Exeter and Torquay Ford, Mercedes Trucks and MGRover contributed revenue of £65.4 million and an operating profit of £0.4million. USA We have again moved the profitability of our US business forward compared to theprior year. In addition to the cost savings we made in 2004, we have had a moresuccessful year with Land Rover. Range Rover and Range Rover Sport modelscontinue to be very popular in the southern California market. Revenue Gross Profit Gross Margin % Underlying Underlying£m Operating Profit Operating Margin %--------------------------------------------------------------------------------------------Existing 196.2 31.3 15.9 7.7 3.9Acquired 21.3 2.3 10.8 (0.7) (3.3)Total 2005 217.6 33.6 15.4 7.0 3.2Total 2004 170.0 28.9 17.0 6.1 3.6 Revenue has increased £26.2 million at our existing dealers with Land Roversales in Los Angeles, Newport Beach and Mission Viejo making the biggestcontribution. Gross margins have fallen, mainly due to a number of large fleetdeals for Lincoln Mercury products which were dilutive and also due to weakerdemand for Jaguar products. The underlying operating margin has improved to 3.9per cent. Two SAAB dealerships were acquired in January 2005. These contributed revenue of£21.3 million and an operating loss of £0.7 million. We now operate twelvefranchises from nine locations in southern California. The portfolio of brandsconsists of Jaguar, Land Rover, Aston Martin, SAAB, Lincoln and Mercury. Whilstthe portfolio remains concentrated on a few brands, we are continuing with ourplan to introduce other franchises as we move the business forward. Germany The performance of our German businesses continues to be disappointing. In totalwe operate five sites in Munich and Frankfurt with ten franchises: five Jaguar,three Land Rover and two Aston Martin. In comparative terms it is a small part of the group contributing just over 1per cent of revenue and an underlying operating loss of £1.8 million (2004: lossof £2.1 million). Support Services We provide a broad range of support services to both the Pendragon group and tooutside customers. The services are provided by a number of specialistbusinesses, which principally comprise: • Contract hire and leasing• Computer software solutions• Wholesale parts distribution• Shared services (Loxley House) Revenue Gross Profit Gross Margin % Underlying Underlying£m Operating Profit Operating Margin %---------------------------------------------------------------------------------------------Total 2005 143.5 41.6 29.0 13.6 9.5Total 2004 144.9 36.3 25.0 13.4 9.2 Contract Hire and Leasing Our contract hire and leasing business made anoperating profit of £6.1 million (2004: £6.0 million). The total fleet size atthe year end was eleven thousand vehicles compared to twelve thousand at the endof 2004. We have combined the back office functions of Bramall Contracts andPendragon Contracts which will lead to improved efficiency in the operation ofour contract hire and leasing business. Pinewood TechnologiesPinewood is responsible for the computer and telecoms network for the group as well as providing services to third party customers. The focus of activity in the year for Pinewood has, like last year, been the development, sale and installation of the new dealer management system, Pinnacle. We now have 128 of our dealerships on the new Pinnacle system and plan to have a further 72 on the system by the end of this year. Demand from external customers has continued to grow. Also within Pinewood Technologies is CFC, which provides softwaresolutions for the management of small fleets, contract hire and workshops. Shared ServicesDuring the year we continued to expand the call centre activities. Customer prospecting services for our Citroen and SAAB businesses were introduced and wecentralised the warranty claims handling function for our BMW business. We started to incorporate our Mercedes-Benz businesses into the call centre model towards the end of the year and will complete this in the first half of 2006. International Financial Reporting Standards Up to December 2004 Pendragon reported its results under UK Generally AcceptedAccounting Principles (UK GAAP). Following adoption of Regulation 1606/2002 bythe European Parliament in July 2002 all EU listed companies are required toreport their consolidated financial statements under International FinancialReporting Standards (IFRS) for accounting periods beginning on or after 1January 2005. These accounts are the group's first annual report under IFRS andthe comparatives have been restated in line with the new policies. The changesarising with the adoption of IFRS to the income statement are relativelyinsignificant, whilst the net assets of the group increased by £34.7 million asat 1 January 2004 with a restatement in the value of property which is in partoffset by the pension fund deficit that has been recognised and an increase inthe deferred tax liability of the group. A full report detailing the changes toPendragon accounting policies and their financial effect was published on 22July 2005 and is available on the company's website(http://www.pendragonplc.com). The principal changes the group has made to its accounting policies on adoptionof IFRS to those presented in the financial statements for the year ended 31 December 2004 are as follows: a) Tangible fixed assets - land and buildings have been restated to fair value as at 1 January 2004.b) Employee share options - the fair value of the options granted to employees are expensed to the income statement.c) Goodwill - is no longer amortised but is tested instead for impairment at least once a year.d) Intangible assets - are recognised on acquisition if they can be separately identified and reliably measured.e) Dividends - final dividends recognised once approved at AGM or interim dividends when approved by directors.f) Deferred tax - provided in full including capital gains that have been rolled over.g) Leases - buildings are treated as fixed assets if they are long term and all the risks and rewards have substantially transferred to the group.h) Revenue recognition - contract hire vehicles remain on balance sheet as fixed assets if the group has a future repurchase commitment. Profit is spread over the period of the lease.i) Employee pensions - the full deficit on the pension schemes is recognised on balance sheet, and future costs will be calculated in accordance with the 'corridor' approach.j) Financial instruments - assets and liabilities of financial derivatives are recognised on balance sheet.k) Inventories - stocks held on the balance sheet has been restated to include all vehicles invoiced to the group including those that are on interest free stocking plans. Under the previous treatment interest free vehicles were not included in the balance sheet total. Outlook Last year we achieved our integration goals with CD Bramall and repaid the debtwe incurred to buy that business and dealt with the closure of MG Rover. The newcar market in the UK was less buoyant than the previous year and thereforeprofits more difficult to achieve. January 2006 new car registrations in the UK were down by 13.3 per cent comparedto 2005. Some of the January fall can be attributed to the higher than normalregistrations of diesel cars in December 2005. Industry forecasts are for a UKcar market down just under three per cent for the whole of this year and adecline of 5 per cent would be our current view. We are looking forward to a year of new challenges and believe that we can takethe business forward in 2006 and retain our position as the clear leader in theindustry. Consolidated Income Statement Year ended 31 December 2005 2005 2004 £m £m-------------------------------------------------------------------------------Revenue 3,284.5 3,168.2Cost of sales (2,816.8) (2,718.1)-------------------------------------------------------------------------------Gross profit 467.7 450.1Operating expenses (371.8) (369.0)-------------------------------------------------------------------------------Operating profit before other income 95.9 81.1-------------------------------------------------------------------------------Operating profit before other income, analysed as:Before exceptional items 98.8 87.7Goodwill impairment (1.1) (1.9)Closure and integration costs (1.8) (4.7)-------------------------------------------------------------------------------Operating profit before other income 95.9 81.1-------------------------------------------------------------------------------Other income - gains on the sale of businesses and property 7.4 18.9-------------------------------------------------------------------------------Operating profit 103.3 100.0Finance costs (54.9) (45.9)Finance income 15.3 11.3-------------------------------------------------------------------------------Net finance costs (39.6) (34.6)Share of post tax profit from joint venture 0.1 --------------------------------------------------------------------------------Profit before taxation 63.8 65.4Income tax expense (20.7) (19.7)-------------------------------------------------------------------------------Profit for the year attributable to equity shareholders 43.1 45.7------------------------------------------------------------------------------- Basic earnings per ordinary share 34.8p 37.1pDiluted earnings per ordinary share 33.9p 36.0p Consolidated Balance Sheet At 31 December 2005 2005 2004 £m £m-------------------------------------------------------------------------------Non-current assetsProperty, plant and equipment 394.0 471.8Goodwill 166.3 172.8Other intangible assets 1.2 1.6Derivative financial instruments 6.5 -Deferred tax assets 29.6 30.0Investment in joint venture 1.4 --------------------------------------------------------------------------------Total non-current assets 599.0 676.2------------------------------------------------------------------------------- Current assetsInventories 641.8 654.2Trade and other receivables 161.6 135.8Cash and cash equivalents 82.1 114.3Non current assets classified as held for sale 18.9 --------------------------------------------------------------------------------Total current assets 904.4 904.3-------------------------------------------------------------------------------Total assets 1,503.4 1,580.5------------------------------------------------------------------------------- Current liabilitiesBank overdrafts (4.7) -Interest bearing loans and borrowings (5.5) (72.4)Trade and other payables (855.5) (864.5)Current tax payable (19.1) (18.5)Provisions (0.7) (0.6)-------------------------------------------------------------------------------Total current liabilities (885.5) (956.0)------------------------------------------------------------------------------- Non-current liabilitiesInterest bearing loans and borrowings (255.4) (288.7)Deferred tax liabilities (37.3) (35.5)Retirement benefit obligations (71.4) (78.3)Provisions (1.2) (1.6)-------------------------------------------------------------------------------Total non-current liabilities (365.3) (404.1)-------------------------------------------------------------------------------Total liabilities (1,250.8) (1,360.1)-------------------------------------------------------------------------------Net assets 252.6 220.4------------------------------------------------------------------------------- Capital and reservesCalled up share capital 32.8 32.8Share premium account 56.8 56.8Capital redemption reserve 2.5 2.5Other reserves 12.6 12.6Translation reserve (0.1) (0.3)Retained earnings 148.0 116.0-------------------------------------------------------------------------------Total equity 252.6 220.4------------------------------------------------------------------------------- Consolidated Cash Flow Statement Year ended 31 December 2005 2005 2004 £m £m-------------------------------------------------------------------------------Cash flow from operating activitiesProfit after taxation 43.1 45.7Adjustment for income from joint venture (0.1) -Adjustment for taxation 20.7 19.7Adjustment for interest 39.6 34.6-------------------------------------------------------------------------------Operating profit 103.3 100.0Depreciation and amortisation 47.5 58.7Share based payments 0.4 0.3Profit on sale of businesses and property (7.4) (18.9)Goodwill impairment 1.1 1.9Changes in inventories (8.4) (9.8)Changes in trade and other receivables (28.4) 24.2Changes in trade and other payables 22.6 30.1Changes in provisions (0.3) 0.9-------------------------------------------------------------------------------Cash generated from operations 130.4 187.4Taxation paid (16.6) (19.3)Interest received 1.3 0.5Interest paid (44.5) (26.9)-------------------------------------------------------------------------------Net cash from operating activities 70.6 141.7--------------------------------------------------------------------------------------------------------------------------------------------------------------Cash flows from investing activitiesBusiness acquisitions (35.1) (232.5)Proceeds from sale of businesses 16.2 17.9Purchase of investment in joint venture (6.5) -Purchase of property, plant and equipment (154.4) (132.5)Proceeds from sale of property, plant and equipment 193.5 133.3Receipts from sales of own shares 0.3 0.8-------------------------------------------------------------------------------Net cash used in investing activities 14.0 (213.0)--------------------------------------------------------------------------------------------------------------------------------------------------------------Cash flows from financing activitiesPayment of capital element of finance lease rentals (1.0) (11.4)Repayment of unsecured bank loans (73.2) (92.2)Repayment of loan notes (32.7) (0.5)Proceeds from the issue of unsecured loans - 294.6Dividends paid to shareholders (15.6) (9.8)-------------------------------------------------------------------------------Net cash (outflow) / inflow from financing activities (122.5) 180.7-------------------------------------------------------------------------------Effects of exchange rate changes on cash held 1.0 (0.3)-------------------------------------------------------------------------------Net (decrease) / increase in cash and cash equivalents (36.9) 109.1Opening cash and cash equivalents 114.3 5.2-------------------------------------------------------------------------------Closing cash and cash equivalents 77.4 114.3------------------------------------------------------------------------------- Group Consolidated Statement of Changes in Equity Capital Share Share redemption Other Translation Retained Total capital premium reserve reserves reserve earnings £m £m £m £m £m £m £m---------------------------------------------------------------------------------------------------------------Balance at 1 January 2004 32.8 56.8 2.5 12.6 - 77.1 181.8---------------------------------------------------------------------------------------------------------------Currency translation differences - - - - (0.3) - (0.3)Share based payments - - - - - 2.2 2.2---------------------------------------------------------------------------------------------------------------Net expense recognised directly in equity - - - - (0.3) 2.2 1.9Profit attributable to equityshareholders - - - - - 45.7 45.7---------------------------------------------------------------------------------------------------------------Total recognised income and expensefor 2004 - - - - (0.3) 47.9 47.6---------------------------------------------------------------------------------------------------------------Dividends - - - - - (9.8) (9.8)Disposal of own shares in share trusts - - - - - 0.8 0.8--------------------------------------------------------------------------------------------------------------- - - - - - (9.0) (9.0)---------------------------------------------------------------------------------------------------------------Balance at 31 December 2004 32.8 56.8 2.5 12.6 (0.3) 116.0 220.4Adoption of IAS 39 - - - - - 0.4 0.4---------------------------------------------------------------------------------------------------------------Balance at 1 January 2005 32.8 56.8 2.5 12.6 (0.3) 116.4 220.8 Currency translation differences - - - - 0.2 - 0.2Share based payments - - - - - 3.8 3.8---------------------------------------------------------------------------------------------------------------Net expense recognised directly in equity - - - - 0.2 3.8 4.0Profit attributable to equityshareholders - - - - - 43.1 43.1---------------------------------------------------------------------------------------------------------------Total recognised income and expense for 2005 - - - - 0.2 46.9 47.1---------------------------------------------------------------------------------------------------------------Dividends - - - - - (15.6) (15.6)Disposal of own shares in share trusts - - - - - 0.3 0.3--------------------------------------------------------------------------------------------------------------- - - - - - (15.3) (15.3)---------------------------------------------------------------------------------------------------------------Balance at 31 December 2005 32.8 56.8 2.5 12.6 (0.1) 148.0 252.6--------------------------------------------------------------------------------------------------------------- Notes to the Preliminary Statements 1. Dividends Subject to final approval at the Annual General Meeting, the final dividend of 6.6p per share (2004 : 6.0p) will be paid on 2 May 2006 to shareholders appearing on the register at the close of business on 31 March 2006. An interim dividend of 6.6p per share (2004 : 4.2p) was paid in October 2005 which makes a total of 13.2p (2004 : 10.2p) for the financial year. 2. Earnings per share --------------------------------------------------------------------------- 2005 2005 2004 2004 Earnings per Total Earnings per Total share share pence £m pence £m --------------------------------------------------------------------------- Basic earnings per share 34.8 43.1 37.1 45.7 Adjusting items: Profit on business and (6.0) (7.4) (15.4) (18.9) property disposals Goodwill impairment 0.9 1.1 1.5 1.9 Operating exceptional 1.5 1.8 3.8 4.7 costs Tax effect of adjusting items 2.2 2.8 3.0 3.5 --------------------------------------------------------------------------- Adjusted earnings per share 33.4 41.4 30.0 36.9 --------------------------------------------------------------------------- Diluted earnings per share 33.9 43.1 36.0 45.7 --------------------------------------------------------------------------- The calculation of basic, adjusted and diluted earnings per share is based on the following number of shares in issue (millions) 2005 2004 number number --------------------------------------------------------------------------------------------- Weighted average number of ordinary shares in issue 123.9 123.0 Weighted average number of dilutive shares under option 3.4 3.9 --------------------------------------------------------------------------------------------- Weighted average number of shares in issue taking account of applicable outstanding share options 127.3 126.9 --------------------------------------------------------------------------------------------- The directors consider that the adjusted earnings per share figures provides a better measure of comparative performance. 3. Finance costs 2005 2004 £m £m -------------------------------------------------------------------------------- Interest payable on bank borrowings 11.1 13.2 Interest payable on loan notes 8.9 8.6 Vehicle stocking plan interest 18.6 9.4 Interest payable on finance leases 0.1 0.4 Unwinding of discounts in contract hire residual values 2.5 2.9 Interest on pension scheme obligations 13.8 11.6 -------------------------------------------------------------------------------- 55.0 46.1 Less : interest capitalised (0.1) (0.2) -------------------------------------------------------------------------------- 54.9 45.9 -------------------------------------------------------------------------------- 4. Finance income 2005 2004 £m £m -------------------------------------------------------------------------------- Fair value gains - interest rate swaps 0.4 - Interest receivable on bank deposits 0.8 0.5 Interest on pension scheme assets 13.6 10.8 Other interest receivable 0.5 - -------------------------------------------------------------------------------- 15.3 11.3 -------------------------------------------------------------------------------- 5. Cash and cash equivalents 2005 2004 £m £m -------------------------------------------------------------------------------- Bank balances and cash equivalents 82.1 114.3 Bank overdrafts (4.7) - -------------------------------------------------------------------------------- 77.4 114.3 -------------------------------------------------------------------------------- 6. Net debt 2005 2004 £m £m -------------------------------------------------------------------------------- Cash and cash equivalents (see note 5) 77.4 114.3 Current borrowings (4.0) (71.3) Non-current borrowings (253.4) (285.3) Derivative financial instruments held under fair value hedges of debt instruments 6.5 - Obligations under finance leases (3.5) (4.5) -------------------------------------------------------------------------------- (177.0) (246.8) -------------------------------------------------------------------------------- 7. Annual Report The above financial information does not constitute the company's statutory accounts for the years ended 31 December 2005 or 2004. Statutory accounts for 2004, which were prepared under UK GAAP, have been delivered to the registrar of companies, and those for 2005, prepared under International Financial Reporting standards as adopted by the EU, will be delivered in due course. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain statements under section 237 (2) or (3) of the Companies Act 1985. Full financial statements for the year ended 31 December 2005, will shortly be posted to shareholders, and after adoption at the Annual General Meeting on 28 April 2005 will be delivered to the registrar. Copies of this announcement are available from Pendragon PLC, Loxley House, 2 Oakwood Court, Little Oak Drive, Annesley, Nottinghamshire NG15 0DR. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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