Interim Results

Pendragon PLC
23 August 2001


                                PENDRAGON PLC


FOR IMMEDIATE RELEASE                                            23 August 2001



                       INTERIM RESULTS TO 30 JUNE 2001



Pendragon PLC, the UK's largest car dealership group, today reports interim
results for the six months to 30 June 2001.

Financial Highlights:

*   Profit before tax excluding exceptionals and goodwill up 60% to £14.7m
    (2000 £9.2m)
*   Profit before tax £13.3m (2000 £10.5m)
*   Basic earnings per share up 30% to 14.6p (11.2p)
*   Interim dividend up 8% to 5.3p (4.9p)


Business Summary:

*   Enriched franchise portfolio delivers improved margins
*   Expansion overseas continues with acquisitions in USA and Germany
*   Positive contribution from Customer Service Centre
*   Consumer confidence seen returning to the market


Trevor Finn, Chief Executive, commented:

'The performance of the Group in the first half clearly demonstrates the
effective application of Pendragon's strategy. We have grown the company by
becoming bigger with fewer manufacturers, an approach that is paying off as
customer confidence returns to the market. Superior returns are beginning to
flow through from our operations both in the UK and overseas and we expect
this to continue as the Group expands further.'



Enquiries:

Pendragon PLC Trevor Finn, Chief Executive          Tel:     [phone]
              David Forsyth, Finance Director

Finsbury      Rupert Younger                        Tel:     [phone]
              Charlotte Festing





                     CHIEF EXECUTIVE'S OPERATIONAL REVIEW

Introduction

Performance in the first half of the year has been very pleasing.
Profitability has improved significantly this year for a number of reasons.
Action we took last year to enrich our franchise portfolio has increased
margins and technology driven improvements to our business processes are
reducing costs. In addition, the disruption in the market last year caused by
issues surrounding new car prices has not continued into the current year.

Results and Dividend

The results for the half year to 30 June 2001 are summarised as follows:

                                                              2001      2000
                                                                £m        £m

Total Turnover - group and share of joint venture            878.8     880.2
Total Underlying Operating Profit                             23.3      16.2
Exceptional Costs                                                -      (0.8)
Goodwill Amortisation                                         (1.6)     (1.1)
Total Operating Profit                                        21.7      14.3
Business Disposals                                            (0.7)      0.1
Property Disposals                                             0.9       3.1
Profit on ordinary activities before interest                 21.9      17.5
Interest                                                      (8.6)     (7.0)
Profit on ordinary activities before tax                      13.3      10.5
Earnings per share                                            14.6p     11.2p
Dividend per share                                             5.3p      4.9p

Operating profit before exceptionals and goodwill amortisation increased by
44% to £23.3 million from £16.2 million last year. Turnover is maintained at
the same level. Overall our operating margin improved from 1.8% to 2.6%. The
principal reasons for this improvement in profitability are as follows:

*   Full six month contribution from businesses acquired during 2000 being
    principally the businesses acquired from Lex Service PLC on 31 March 2000
    and Bauer acquired on 1 July 2000;

*   Disposal during 2000 of poorly performing businesses; and

*   Like for like improvement in core businesses, in part from the economies
    being derived from our central processing operation at Loxley House.

The board has declared an interim dividend of 5.3p per ordinary share, an
increase of 8% over the interim dividend of 4.9p in 2000.

Motor Retail Business

UK

The results for the UK business, excluding our joint venture with Ford, are
summarised as follows:

         Turnover    Gross      Gross          Underlying          Underlying 
                    Profit   Margin %    Operating Profit   Operating Margin %
£m

Existing    690.3     89.8     13.0%                 24.2                 3.5%
Disposed     13.0      1.3     10.1%                    -                 -
Total 2001  703.3     91.1     12.9%                 24.2                 3.4%
Total 2000  736.0     88.5     12.0%                 17.7                 2.4%

Our motor retail activities principally centre on specialist and luxury cars,
with the exception of our Vauxhall dealerships and our joint venture Ford
dealerships. The Vauxhall business continues to make an acceptable return and
made an operating profit of £2.4 million on £82.5 million turnover. Margins
overall have improved due to this year's more buoyant retail market and the
actions we have taken in rationalising our franchise portfolio.

The first six months of 2001 has seen little change in our UK franchise
portfolio having closed or sold five underperforming businesses. In contrast,
2000 was a year of high business development activity with over 40 purchases
and 44 dealership disposals, mostly in the UK. This activity was in line with
our stated objective of becoming bigger with fewer manufacturers.

The five dealerships closed or sold in 2001 were:

*   SAAB - Birmingham and Dudley

*   Toyota/Suzuki - Northampton

*   Mazda - Wilmslow and Twickenham

These disposals complete our withdrawal from representing SAAB, Toyota, Suzuki
and Mazda.

In July 2001, following the half year, we opened five retail outlets for the
new Mini. Order take and sales have been extremely encouraging in the first
few weeks of trading.

Trading for all brands, with the exception of Jaguar, has improved with an
increase in contribution by each franchise group. Jaguar sales in the first
half were adversely affected by customers awaiting the arrival of the new X
type model which has now been launched in the UK.

Ford Dealerships Joint Venture

Our share of the loss on ordinary activities before tax of our joint venture
with Ford was £0.6 million compared to £0.7 million in 2000. Management has
been taking action to reduce the cost base of the business, and whilst we are
seeing a steady improvement we are not yet achieving a satisfactory return.
The actions to date have included closing a number of poorly performing or
surplus satellite sites including locations at Finchley, Newton Abbot and
Maidenhead, the costs of which have been expensed. We expect further progress
on changes to the configuration of the business during the second half of this
year.

USA

We have grown our USA business with the acquisition in April 2001 of Hornburg,
the Jaguar and Land Rover dealer in Hollywood and Santa Monica. The cash
consideration for the business was £9.0 million. Hornburg is the fourth
largest Jaguar dealer in the USA. In the financial year to 31 December 2000
the business made operating profits of £1.4 million on turnover of £65.6
million. Our first USA business, Bauer in Santa Ana, purchased in July 2000,
continues to perform well and in line with our original expectations.

The results of the USA business for the first half of 2001 are summarised as
follows:

         Turnover    Gross      Gross          Underlying            Underlying 
                    Profit   Margin %    Operating Profit    Operating Margin %
£m

Existing     24.0      3.4     14.3%                  1.0                 4.4%
Acquired     14.4      2.1     14.4%                  0.4                 2.9%
Total 2001   38.4      5.5     14.4%                  1.4                 3.7%

The USA results have been diluted in the first half due to the acquisition of
Hornburg which has higher levels of fixed costs than our other USA dealership.
We expect to be able to reduce these as we roll out best practice in this
newly acquired business. In addition, the launch of the new Jaguar in
September and the introduction of the Land Rover Freelander to the North
American market will improve the financial performance of the business.

We plan to open a new site, in an adjacent territory to Bauer, at San Juan
Capistrano. This site will become operational in October this year. We will
also add the Aston Martin franchise to the Bauer dealership from October.
These actions should further enhance our USA group performance.

Germany

Our business in Germany has grown significantly over the last twelve months.
In the second half of 2000 we acquired the Jaguar dealers in Munich and Anzing
in addition to introducing Land Rover to our showrooms in Frankfurt, Munich
and Wiesbaden towards the end of 2000. We acquired the Land Rover dealer in
Darmstadt, near Frankfurt, in March 2001 to which we have subsequently added
Jaguar. The cash consideration for the Darmstadt freehold property and
business was £2.1 million.

In total we now operate 6 sites with 12 franchises in Germany - 6 Jaguar, 4
Land Rover and 2 Aston Martin.

The results of the German business for the first half of 2001 are summarised
as follows:

         Turnover    Gross      Gross          Underlying           Underlying 
                    Profit   Margin %    Operating Profit   Operating Margin %
£m

Existing     13.8      2.2     15.5%                (0.2)                (1.1%)
Acquired      0.5        -       -                     -                   -
Total 2001   14.3      2.2      15.3%               (0.2)                (1.2%)
Total 2000    9.8      1.4     14.5%                 0.4                  4.2%

Performance has been adversely affected by start up costs and customers
delaying orders as they await the new X type Jaguar. In the first six months
of 2001 national registrations of Jaguars were 13% down on the previous year.
We expect to see an improvement in the second half as sales increase and our
new businesses are more fully integrated.

Support and Business Services Group

This group of businesses provides a broad range of technology based services.
These services are provided by a number of specialist businesses which
comprise:

*   Pinewood Computers (dealership management systems provider)

*   Pinewood Telecom (telecoms provider)

*   Pinewood Security (security monitoring)

*   C2k.co.uk (online contract hire)

*   tins.co.uk (online car sales)

*   Pendragon i (contract hire)

*   Loxley House (centralised services provider to dealerships)

Currently a majority of the services provided are to ourselves. However, more
opportunities are being pursued to provide these services to other dealer
groups and manufacturers. We expect this to continue to be a growth area
within the group. In the first half third party sales contributed £0.9 million
operating profit.

In March we started to provide the outsourced call centre and logistics
support to Microsoft's Carview.co.uk.

Mercedes

Mercedes-Benz has received considerable publicity with its plans to reorganise
its UK dealer network on a market area basis. The original one year franchise
termination letters issued have now been replaced by an agreement between
dealers and Mercedes-Benz setting out the reorganisation process for both
incoming and outgoing dealers and the level of payment for loss of business.
We now expect initial discussions to take place between the incoming and
outgoing dealers, regarding such matters as property, to ensure a smooth
handover is achieved.

We currently operate seven Mercedes passenger car dealerships. Mercedes-Benz
has offered us the Yorkshire market area which would require us to add to the
two dealerships we currently operate in that market area. The five other
dealerships are in areas that will transfer to either Mercedes themselves or
other dealer groups.

The agreement sets out a timetable for investment in new market areas and
divestment of existing sites. The earliest possible date is 31 December 2001
with the latest being eighteen months later on 30 June 2003. The decision as
to when the transfers take place rests with the outgoing dealer - the later
the transfer date the lower the payment for loss of business. We have not as
yet agreed to any transfer dates.

It is too early to quantify the financial effect these changes will have on
our group. However, we anticipate that there will be no significant impact on
group profitability.

Profit on Sale of Property and Share Buyback

In our 2000 annual report we stated that it was our intention to realise
shareholder value created as a result of holding freehold property by
utilising net profits from the disposal of surplus properties to repurchase
the company's ordinary shares. Subsequently, in March 2001 we acquired and
cancelled one million shares at a price of 226p each.

During the first half of 2001 surplus property disposals generated £5.0
million of proceeds and a net profit of £0.9 million. We currently have under
offer vacant properties with a market value in the region of £17 million. In
addition, as part of our active management in this area, we are evaluating
some other existing sites which could realise profits if put to alternative
uses.

Finance

Our borrowings at 30 June 2001 were £125.3 million, a reduction of £12.3
million since the beginning of the year. Gearing has fallen from 101% at 31
December 2000 to 89% at 30 June 2001.

The reduction in gearing has been achieved by a combination of factors.
Operating cash inflow was strong at £35.3 million, which includes a £7.5
million reduction in working capital. The cost of business acquisitions
totalling £11.1 million and the cost of share purchases was partly offset from
disposal proceeds of properties totalling £5.0 million.

In July we put in place new borrowing facilities of £80.0 million on a three
year basis, partly to refinance facilities maturing in September this year.

Current Trading and Prospects

We expect our good first half performance to continue into the second half and
improvements to be made in the profitability of our Jaguar businesses in the
UK, USA and Germany as the new Jaguar X type volume increases.

The performance of the group in the first half clearly demonstrates the
effective application of Pendragon's strategy. We have grown the company by
becoming bigger with fewer manufacturers. Superior returns are now beginning
to flow through and we expect this to continue as the group expands.



TREVOR FINN

Chief Executive

23 August 2001





                     Consolidated Profit and Loss Account

Interim Results for the six months ended 30 June 2001

                               Unaudited 6       Unaudited 6  Audited 12 Months
                                 Months to         Months to   to 31.12.00 £000
                              30.06.01 £000     30.06.00 £000

Total turnover - group             878,838           880,211         1,637,248
and share of joint
venture

Less: share of joint              (109,351)         (116,513)         (208,993)
venture turnover

Group turnover
Existing operations                754,645           763,698         1,428,255
Acquisitions                        14,842                 -                 -

                                   769,487           763,698         1,428,255

Gross profit                       104,078            94,868           185,705
Net operating expenses             (80,798)          (79,258)         (161,495)

Group operating profit before goodwill
amortisation

Existing operations                 22,892            15,610            24,210
Acquisitions                           388                 -                 -

                                    23,280            15,610            24,210

Goodwill amortisation               (1,601)           (1,074)           (2,592)
Group operating profit              21,679            14,536            21,618
Share of operating loss                (40)             (244)           (3,072)
in joint venture
Total operating profit              21,639            14,292            18,546
(Loss)/profit on disposal             (687)               86            (3,023)
of businesses
Profit on disposal of                  942             3,127             4,036
fixed assets

Profit on ordinary                  21,894            17,505            19,559
activities before interest

Net interest payable (Note 4)
Group                               (8,025)           (6,610)          (14,483)
Joint venture                         (569)             (443)             (939)

                                    (8,594)           (7,053)          (15,422)

Profit on ordinary                  13,300            10,452             4,137
activities before taxation

Taxation (Note 5)                   (4,455)           (3,631)           (1,568)
Profit on ordinary                   8,845             6,821             2,569
activities after taxation
Dividends (Note 6)                  (3,006)           (2,803)           (8,553)
Retained profit/(loss)               5,839             4,018            (5,984)
for the period
Earnings per ordinary                 14.6p             11.2p              4.2p
share (Note 7)
Diluted earnings per                  14.2p             11.1p              4.2p
ordinary share (Note 7)
Adjusted earnings per                 17.0p             10.2p             14.7p
ordinary share (Note 7)

All amounts relate to continuing operations



                          Consolidated Balance Sheet

                                        Unaudited      Unaudited       Audited
                                         30.06.01       30.06.00      31.12.00
                                             £000           £000          £000
Fixed assets
Intangible assets                         26,528         19,107        23,684
Tangible assets                          181,475        211,738       183,046
Share of gross assets in joint            64,132         88,540        70,854
venture
Share of gross liabilities in            (56,325)       (77,372)      (62,537)
joint venture
Share of net assets in joint               7,807         11,168         8,317
venture
Investments                                5,096          2,730         3,613
                                         220,906        244,743       218,660
Current assets
Stocks                                   133,151        107,965       110,186
Consignment vehicles                      39,897         27,679        50,408
Vehicles subject to repurchase            38,640         64,425        51,808
agreements
Debtors                                  120,758        101,131        78,943
Corporation tax                                -              -         1,371
Cash at bank                              17,891         17,871             -
                                         350,337        319,071       292,716

Creditors: amounts falling due within one year

Unsecured loans                          (74,018)       (26,000)      (57,000)
Bank loans and overdrafts                      -           (331)      (13,054)
Consignment vehicle liabilities          (39,897)       (27,679)      (50,408)
Repurchase commitments                   (23,442)       (30,419)      (31,076)
Trade and other creditors               (194,911)      (149,586)     (122,223)
Corporation tax                           (4,587)        (7,440)            -
Dividends payable                         (3,006)        (2,831)       (5,721)
Consideration payable to Lex                   -         (1,741)            -
Service PLC
                                        (339,861)      (246,027)     (279,482)
Net current assets                        10,476         73,044        13,234
Total assets less current                231,382        317,787       231,894
liabilities
Creditors: amounts falling due
after more than one year
Bank loans                               (69,167)      (134,361)      (67,503)
Repurchase commitments                   (18,098)       (34,006)      (24,232)
Other                                          -              -          (146)
                                         (87,265)      (168,367)      (91,881)
Provisions for liabilities and            (3,511)        (2,458)       (3,377)
charges
Net assets                               140,606        146,962       136,636
Capital and reserves
Called up share capital                   14,995         15,242        15,242
Share premium                             74,697         74,697        74,697
Other reserves                            15,067         15,222        14,798
Profit and loss account                   35,847         41,801        31,899
Equity shareholders' funds (Note         140,606        146,962       136,636
10)





                       Consolidated Cash Flow Statement


                               Unaudited 6       Unaudited 6  Audited 12 Months
                                 Months to         Months to        to 31.12.00
                                  30.06.01          30.06.00               £000
                                      £000              £000

Cash flow from operating            35,284            41,098            42,318
activities (Note 8)
Net interest paid                   (6,750)           (6,764)          (14,914)
Returns on investments              (6,750)           (6,764)          (14,914)
and servicing of finance
Taxation                             1,409              (821)           (4,515)
Payments to acquire                (11,945)           (8,648)          (35,833)
tangible fixed assets
Payments to acquire                 (1,483)           (1,230)           (2,113)
investments
Receipts from sales of              14,856             8,158            44,294
tangible fixed assets
Capital expenditure and              1,428            (1,720)            6,348
financial investment
Business acquisitions              (11,131)          (80,593)          (91,343)
Cash of acquired                         -                 -               974
businesses
Business disposals                       -            14,785            35,241
Acquisitions and                   (11,131)          (65,808)          (55,128)
disposals
Equity dividends paid               (5,721)           (5,258)           (8,118)
Net cash flow before                14,519           (39,273)          (34,009)
financing
Financing
Issue of ordinary share                 22                 -                 -
capital
Redemption of issued                (2,278)                -                 -
ordinary share capital
Repayment of unsecured              (3,276)                -            (6,000)
bank loans
Repayment of loan notes                (42)                -              (655)
Unsecured loans                     22,000            54,414            25,211
Net cash inflow from                16,426            54,414            18,556
financing
Movements in cash and               30,945            15,141           (15,453)
overdrafts
Reconciliation of net
cash flow to movement in
net debt
Movement in cash and                30,945            15,141           (15,453)
overdrafts
Cash inflow from increase          (18,682)          (54,414)          (18,556)
in debt financing
Movement in net debt in             12,263           (39,273)          (34,009)
the period
Opening net debt                  (137,557)         (103,548)         (103,548)
Closing net debt (Note 9)         (125,294)         (142,821)         (137,557)


Notes

1.  This interim report has been prepared on a basis consistent with the
    accounting policies stated in the financial statements for the year ended
    31 December 2000. Applicable accounting standards have been followed.

2.  The comparative results for the year ended 31 December 2000 are not the
    company's statutory accounts for that financial year. Those accounts have
    been reported on by the company's auditors and delivered to the registrar
    of companies. The report of the auditors was unqualified and did not
    contain a statement under s237 (2) or (3) of the Companies Act 1985.

3.  The interim report was approved by the board of directors on 20 August 2001
    and is unaudited.

4.  Interest Payable                        6 Months to 6 Months to   12 Months
                                               30.06.01    30.06.00 to 31.12.00
                                                   £000        £000        £000

    Bank loans and overdrafts                     5,881       4,842     10,896
    Manufacturer stocking loans                   2,144       1,768      4,298
    Interest capitalised                              -           -        (29)
    Other interest receivable                         -           -       (682)
                                                  8,025       6,610     14,483

5.  The effective tax rate for 2001 of 34.2% (2000 - 34.7%) is an estimate
    based upon the anticipated charge for the full year on profit on ordinary
    activities before taxation.

6.  A dividend of 5.3p (2000 - 4.9p) net per ordinary share will be paid on 26
    October 2001 to shareholders appearing on the register at the close of
    business on 28 September 2001.

7.  Earnings per share                         30.06.01    30.06.00    31.12.00
                                                  pence       pence       pence

    Basic earnings per share                       14.6       11.2          4.2
    Effect of non trading items                     2.4       (1.0)        10.5
    Adjusted earnings per share                    17.0       10.2         14.7
    Diluted earnings per ordinary share            14.2       11.1          4.2

    The calculation of basic, diluted and adjusted
    earnings per share is based on:

    Number of shares                           30.06.01    30.06.00    31.12.00
                                                 number      number      number

    Weighted average number of shares used   60,441,666  60,964,152  60,964,152
    in basic and adjusted earnings per
    share calculation
    Weighted average number of dilutive       1,816,336     330,292     542,974
    shares under option
    Diluted weighted average number of       62,258,002  61,294,444  61,507,126
    shares used in diluted earnings per
    share calculation

    Earnings                                   30.06.01    30.06.00    31.12.00
                                                   £000        £000        £000

    Earnings for basic and diluted earnings      8,845       6,821       2,569
    per share calculation
    Non trading items:
    Exceptional costs                                -         805       6,431
    Loss/(profit) on disposal of businesses        687         (86)      3,023
    Profit on disposal of fixed assets            (942)     (3,127)     (4,036)
    Goodwill amortisation                        1,601       1,074       2,592
    Tax effect of non trading items                 77         722      (1,625)
    Earnings for adjusted earnings per          10,268       6,209       8,954
    share calculation
    The directors consider that the adjusted earnings per share figures provide
    a better measure of comparative performance.

8.  Net cash inflow from operating          6 Months to 6 Months to   12 Months
    activities                                 30.06.01    30.06.00  to 31.12.00
                                                   £000        £000         £000

    Operating profit                            21,639      14,292      18,546
    Add share of joint venture's operating          40         244       3,072
    loss
    Loss on sale of fixed assets                     -           -          77
    Depreciation                                 4,478       6,118      10,929
    Goodwill amortisation                        1,601       1,074       2,592
    Movement in working capital                  7,526      19,370       7,102
                                                35,284      41,098      42,318

9.  Analysis of net debt                      30.06.01    30.06.00    31.12.00 
                                                  £000        £000        £000

    Cash at bank and in hand                    17,891      17,871           -
    Overdrafts and other borrowings                  -        (331)    (13,054)
                                                17,891      17,540     (13,054)
    Other borrowings due within one year       (74,018)    (26,000)    (57,000)
    Other borrowings due after one year        (69,167)   (134,361)    (67,503)
    Total                                     (125,294)   (142,821)   (137,557)
    Movement in period
    Cash at bank and in hand                    17,891      14,838      (3,033)
    Overdrafts and other borrowings             13,054         303     (12,420)
                                                30,945      15,141     (15,453)
    Other borrowings due within one year       (17,018)    (16,000)    (47,000)
    Other borrowings due after one year         (1,664)    (38,414)     28,444
    Total                                       12,263     (39,273)    (34,009)

10. Reconciliation of movements in            30.06.01    30.06.00    31.12.00
    shareholders' funds                           £000        £000        £000

    Opening shareholders' funds                136,636     142,494     142,494
    Retained earnings                            5,839       4,018      (5,984)
    Issue of ordinary share capital                 22           -           -
    Redemption of issued ordinary share         (2,278)          -           -
    capital
    Goodwill written back                            -         419         505
    Exchange adjustment                            387          31        (379)
    Closing shareholders' funds                140,606     146,962     136,636