Interim Management Statement

Pendragon PLC
25 April 2008

                          Interim Management statement

Pendragon PLC is holding its Annual General Meeting at 11:30 am today, where the
following statement relating to the period from 1 January 2008 will be made.

Highlights

• Uncertain retail trading conditions continue

• Management action on used car sales is yielding benefits

• Critical metrics of unit sales volumes and operating profits per unit
  are trending in a positive direction

• VAT repayment to Pendragon of £15 million agreed with HMRC


Overview

As anticipated, trading conditions have remained uncertain into 2008,
principally because of turmoil in financial markets. Despite this difficult
background our performance in the first three months of the year has been
encouraging. In 2007 the slowdown in our industry only really started to bite
from April onwards and so when we have compared our performance this year with
the same period last year we expected this year to be more difficult but to be
showing an improving trend, which has been the case.


 •  National UK new car registrations in the first quarter were down by 0.7%
    on the prior year which equates to about 5,000 vehicles. We believe pre
    registrations nationally in March this year have been distortive and that
    actual sales activity in the market has been poorer than the registration
    statistics imply. The Group's new car sales volumes are down by just over 4%
    against the first quarter last year. Our new car net profits per unit have
    been better in the first quarter than in any of the previous three quarters,
    which is encouraging.
 •  The Group's used car sales volumes are up year on year by 2% and used car
    net profits per unit have improved each month since October last year. Up to
    date statistics regarding the used car market are generally not available
    although our experience is that the used car market has been more stable
    over the past few months compared to last year.
 •  The market for trucks in the UK has continued to be strong as it catches
    up from shortage of supply last year and Chatfields results are ahead of our
    plan at the end of the first quarter.
 •  In California we have been affected by the economic slowdown there.
    However, our brand exposure to Jaguar's new XF should help mitigate the
    effects of this going forward this year.


Operational Review

The Group is structured into a number of operational divisions to reflect the
range of activities we undertake:


Stratstone

Stratstone is the UK's leading luxury car retailer with 159 retail points.


Nationally new car registrations in the first quarter for brands represented by
Stratstone were 143,400 units which was an increase of 2% over the same period
in 2007. Jaguar at 5,222 new car registrations was down 16% which we anticipated
in light of the launch of the new XF in March this year. The new XF has been
received well by the market and we have firm orders for the next six months for
this model.


Overall unit car sales in Stratstone were up on a like for like basis by 2%. We
have been able to increase used car volumes significantly year on year and the
profit trend in used car margins is improving and is ahead of last year's
average.


Evans Halshaw

Evans Halshaw is the UK's leading volume brand car retailer with 155 retail
points.


Nationally new car registrations in the first quarter for brands represented by
Evans Halshaw were 365,300 units which was a reduction of 2% over the same
period in 2007. Both Ford and Vauxhall were down about 2% each in line with the
overall market. Our new car sales volumes were down by just over 3% which we
believe reflects the true market.


Used car sales volumes in Evans Halshaw were down 3% year on year and margins,
whilst continuing to trend upwards, remain on average below those achieved last
year. This has in part been due to the roll out of our used car strategy which
in implementation phase tends to reduce margins as stock profile is changed. We
continue to roll out our strategy to target a wider age profile of used car
sales which will yield benefits in the remainder of the year.


Other activities

Chatfields, our trucks business is trading ahead of the first quarter last year
with strong order books for the remainder of the year. The contract hire,
technology and parts wholesale businesses overall have had a reasonable trading
performance in the first quarter.


Balance sheet and cash flow

We have continued to keep a tight rein on working capital investment and year on
year have reduced stocks of used and demonstrator cars by over 10%. At the end
of March our bank debt was in line with the 2007 year end figure and we are now
past the peak borrowing requirement for this year. We remain focused on bringing
our gearing ratio down towards 70% by the year end.


VAT

We said in our 2007 Annual Report that, in common with other companies in our
industry, we were in discussion with HMRC on a number of issues arising from
developments in recent case law for which we had claimed repayments, the
treatment of partial exemption in our finance and insurance operations and the
VAT treatment on sales of vehicles to certain disabled customers. At the time we
said that although potentially significant it was not possible at that time to
quantify either the potential payments or potential receipts.


In terms of receipts we are now able to report that with regard to repayments of
VAT we have received £8.5 million and agreed a further repayment of £1.5 million
which we expect to be paid shortly. We now believe that in addition to these two
amounts approximately £5 million should be received this financial year in
respect of interest, bringing the total repayment to around £15 million.


With regard to the potentially significant payments of VAT referred to above and
in the 2007 Annual Report, whilst we have received assessments from HMRC which
we have appealed, we are still at this time unable to quantify the outcome,
which may take a number of years to resolve.


Dividend

We said in last year's statement that we would give guidance on the level of
dividends. Based on what we believe profits and cash flows will be this year, it
is our intention to maintain dividends at last year's level.


Outlook

It is still unclear how large an impact credit tightening and house price falls
will have on retail markets for the remainder of the year. However, the critical
metrics of unit sales volumes and operating profits per unit are trending in a
positive direction and the group is confident of a satisfactory outcome to the
year at the upper end of expectations.


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

Finsbury       Rollo Head/Gordon Simpson              Tel:    [phone]




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