Chastened Pendragon drives profits up 30%

By PETER RANSCOMBE
Published on 07/08/2012 19:19

CAR dealership operator Pendragon was hauled over the coals by the UK’s accounts watchdog on Tuesday for the way it presented its cash flow.

The group – which owns the Chatfields, Evans Halshaw and Stratstone chains – was criticised by the Financial Reporting Council (FRC) for the way it reported on cash flows from its contract hire vehicle operations.

The FRC said: “Cash inflow from operating activities originally reported as £83.9 million was overstated by £31.3m and net cash outflow from investing activities originally reported as £55.1m in the 2011 accounts.”

But the council pointed out that “there is no impact” on the company’s financial position as a result of the mistake.

News of the rap on the knuckles came as Pendragon posted a 30 per cent rise in pre-tax profits to £23.6m for the six months to 30 June.

Revenues motored ahead by 8 per cent to £1.9 billion thanks to a 13.9 per cent rise in like-for-like sales of new cars and a 7.5 per cent increase for used cars.

The firm said it had out-performed the British market for both new and used cars.

Chief executive Trevor Finn added: “Trading momentum in new and used is expected to continue into the second half of the year. In line with earlier statements, it remains the board’s intention that the company resumes paying dividends in relation to its 2012 financial year and onwards.”

Sanjay Vidyarthi, an analyst at Espirito Santo, said: “Pendragon may need earnings upgrades to come through for the shares to travel much further, given its high operational gearing. A discount to peers is warranted, given higher levels of debt.”

News of Pendragon’s surge in sales came a day after figures from the Society of Motor Manufacturers & Traders showed that new car registrations had risen by 3.5 per cent in the UK so far this year, with Scotland enjoying a 7.2 per cent jump.