Interim Results

European Motor Hldgs PLC 26 October 2005 EUROPEAN MOTOR HOLDINGS plc Interim results for the six months ended 31 August 2005 Key points: • Profit before exceptional items and tax £8.1 million • Profit before exceptional items, tax and the effect of the acquisition of SKF up by 5.4% to £8.5 million • Earnings per share before exceptional items 10.4 pence, up 2.0% • Interim dividend increased by 8% to 4.0 pence per share • Net assets up to 152.0 pence per share compared to 150.3 pence per share at 28 February 2005 • Significant expansion through acquisition with the Group's chosen key manufacturer partners adding 20 franchised dealerships to the Group in the period • Recent acquisitions performing in line with expectations and integration progressing well • Second half started well Commenting on these results, Chief Executive Richard Palmer said: "Our results represent an excellent performance in challenging conditions. There are significant benefits to come from our acquisition of SKF and our franchise portfolio continues to outperform the market. Our September performance has been very strong with record profits for any month in the history of EMH. We look forward to a satisfactory conclusion to the financial year." Enquiries: Richard Palmer Chief Executive European Motor Holdings plc Ann Wilson Finance Director European Motor Holdings plc Morning: Biddick Associates 020 7448 1000 Afternoon: European Motor Holdings plc 01491 413399 Interim results for the six months ended 31 August 2005 Chief Executive's statement We are pleased to announce an excellent first half performance which is summarised below. 2005 2004 £'000 £'000 Profit before taxation, exceptional items and the effect of Smith Knight Fay ("SKF") 8,512 8,073 Loss before taxation of SKF since acquisition (166) - Additional Group interest on SKF consideration (239) - -------- ------- 8,107 8,073 Exceptional items (952) 13,428 -------- ------- Profit before taxation 7,155 21,501 -------- ------- The above results represent an excellent performance in challenging conditions. The result from SKF is in line with expectations for the last two months of the period, a traditionally weak trading period for motor retail, in which sales are generally deferred pending the new registration plate month of September. The exceptional charge in the period of £952,000 relates to the closure costs and losses from the two MG Rover franchises that we held at the time of the manufacturer's collapse earlier this year. In the prior period there were exceptional profits of £13.4 million, relating mainly to a VAT refund and associated interest. Earnings per share before exceptional items rose to 10.4 pence from 10.2 pence last year. As a result of our first half performance and the strong start to the second half, we have decided to increase the interim dividend to 4.0 pence per share from 3.7 pence in the corresponding period last year. We have adopted International Financial Reporting Standards ("IFRS") and have restated the comparative figures to reflect the changes made to our accounting policies. The impact of this change is dealt with more fully in the notes to this interim statement. Background In the first eight months of this calendar year registrations of new cars in the UK were 6% lower than the previous year. However, registrations for the franchises which we have held throughout the period under review increased marginally, thereby significantly outperforming the market, and once again vindicating our declared policy of concentrating on a small number of premium franchises. These figures demonstrate, as we have stated in the past, that a significant feature of the UK market in recent years has been the migration from 'volume' cars to the premium sector. The performance of our businesses has been and will continue to be protected in a difficult market because of the consequent growth in aftersales and increased used vehicle opportunities resulting from the growing parc which our brands have experienced in recent years. Acquisitions On 1 July 2005 we acquired the SKF group in the North West of England for a consideration of £30.5 million. The SKF group comprises eighteen dealerships, two bodyshops and a pre delivery inspection centre. We have gained eight more Volkswagen passenger car businesses as a result of the acquisition and now hold every Volkswagen passenger car franchise for the Greater Manchester area plus the Volkswagen light commercial vehicle franchise for Manchester. We also gained Audi franchises in Bolton, Macclesfield and Stockport as a result of the acquisition and the Chester Audi business which we sold to SKF last October also rejoined the Group. SKF operates three Toyota franchises in Stockport, Denton and Macclesfield and the Lexus franchise in Stockport. In our circular to shareholders dated 15 June 2005 concerning the proposed acquisition of SKF we stated that procedures had commenced to assess the Group's candidacy for these franchises and that approval had been given for SKF to continue to operate its existing businesses in the intervening period. We are continuing to review and discuss the ongoing position with Toyota and Lexus. The SKF acquisition also brought the Mazda franchise for the Stockport area to the Group. The SKF acquisition fulfilled one of the Board's strategic objectives in both geographical and franchise terms and has considerably re-shaped the Group. We now operate 56 franchised businesses of which 48 are based in the North of England. In the past the majority of our businesses have been based in Yorkshire and the North East of England. The SKF acquisition has effectively balanced our businesses in the North with 25 now operating in the North West, 23 operating in Yorkshire and the North East and a further 8 operating predominantly in the South. On 1 March 2005 we acquired two additional Bentley businesses in Leicester and Norwich. It has been a primary objective of EMH to achieve critical mass in the North of England but, as the Bentley acquisition confirms, for the right franchise opportunity we are willing to look at opportunities outside of that area. Having completed these acquisitions we are now implementing our integration plans for the newly acquired businesses. MG Rover The demise of MG Rover was costly to us. The exceptional charge in the period was almost £1 million and we believe it would have been much more had we not taken early action prior to the MG Rover administration to reduce our exposure to the manufacturer. We also closed both of these MG Rover businesses quickly in order to keep our losses to a minimum. Wherever possible staff were redeployed within the Group. Trading Motor Retail Division Our Motor Retail Division's profit before interest and tax for the period under review rose from £9.2 million to £9.5 million including a £0.2 million contribution from the newly acquired SKF businesses in the traditionally difficult months of July and August. Revenue in the period for the Motor Retail Division rose by 21%. Our BMW and Mini dealerships have had another outstanding trading period. We opened our fifth BMW and Mini operation in Durham in June and whilst this greenfield operation made a small loss in the period, this was in line with expectations and we are very encouraged by its performance to date. We have completed the separation of our BMW and Mini businesses in Stockton during the period and are in the planning stage of separation at both our Malton and Sunderland dealerships in line with the requirements of BMW. Within the BMW/Mini businesses our BMW registrations for the half year grew by 14% and our Mini registrations grew by 5%. The return on sales of these businesses, whilst still significantly ahead of the national average, reduced to 5.2% from 5.6% mainly as a result of the high level of investment we made in new facilities in the period. At the end of September the M6 Coupe was launched and the M6 Convertible is expected to become available in 2006. The 3 Series Touring, which was also launched in September, will become more widely available during the coming months and other derivatives of the new 3 Series will be added during 2006. With the future expansion of the ranges of vehicles for both franchises we are confident of continued growth in sales and profitability. The first half of the year for our Premier Automotive Group dealerships was a testing period but we performed well in spite of the market conditions for these brands. Our Jaguar businesses faced intense competition and, as a result, their return on sales reduced to 2.7% from 3.6%. The performance of our Jaguar businesses remains significantly ahead of the national average and we look forward to the stimulus that new models will bring to the brand next year when the XK Coupe and Convertible are launched. Our Land Rover businesses performed very well in the period with profitability at a similar level to the comparative period last year. The launch of the new Range Rover Sport was extremely beneficial to our businesses and when the new Freelander is launched next year we will have the most extensive and up to date range of 4x4 vehicles available to retail in the UK market. Our Volvo businesses performed well during a period of consolidation for the brand. The credible result that we achieved in the North East was a testament to the management and the systems that we have developed in our market area. Volvo will launch a new model offensive in 2006 which I am sure will refresh the brand with products which will expand its market opportunities. Within the Volkswagen group, our existing Bentley business in Newcastle performed extremely well and following the acquisition of the Michael Powles Bentley businesses in Leicester and Norwich we now represent 14% of Bentley sales in the UK. The stunning Continental Flying Spur was launched in the period but due to the later than expected availability of the cars the main benefit of sales of this vehicle will not be seen until the second half of the financial year and beyond. Notwithstanding the supply delays, our return on sales moved forward to 2.1%. Our existing Audi centres in Swindon and Tetbury both performed well in the period and were joined by our four newly acquired SKF Audi centres in the North West. The Audi brand has shown impressive growth in recent years and stands second only to BMW in vehicle registrations in the premium market place for the calendar year to date. The return on sales for our existing businesses was marginally down at 3.1% year on year from 3.3%, due mainly to intense discounting in a challenging market. We are confident that the growth of this marque will continue in the future and will be particularly helped in 2006 with the launch of the Q7, a luxury seven seater 4x4 car, and the introduction of the new TT range of sports cars. The return on sales on our existing Volkswagen businesses reduced slightly from 1.5% to 1.4%. The performance was hampered during the period by the lack of availability at launch of the new Polo and new Passat. High volumes of the 'old' Polo were sold prior to the vital retail selling month of March and restricted supply of the new Polo at its launch meant that it was not possible to capitalise fully on the market opportunity. I am pleased to say that the new Polo is now fully available and generating the sales it unquestionably justifies. The launch of the new Passat was a huge success with almost universal praise for the new car. We are already beginning to see demand for the new Passat that was not evident from the outgoing model. We can expect further stimulus to our Volkswagen operations when the Fox, Passat Estate, Jetta and Eos are launched in the coming months, particularly as both the Fox and Eos are complementary products which will take Volkswagen into new market sectors. In the last two years Volkswagen has launched or announced plans to launch a totally new range of cars. Its products, which are positioned at the premium end of the volume market, stand out as outstanding cars with low cost of ownership when compared to their pure volume competitors. We are in a unique position to capitalise on this new Volkswagen model line up with the size and location of our businesses. The sheer size of our Volkswagen businesses also generates other income opportunities for the Group by giving us bulk buying opportunities with our ancillary suppliers. The other new franchises which joined the Group as part of the SKF acquisition ( Toyota, Lexus and Mazda) performed in line with expectations in the two month period to 31 August. Our motor auctions in Telford and Queensferry once again improved their performance with profit before tax increasing by 12%. The intelligence that this business gives us is particularly useful when valuing competitors' products which come into the business as part exchanges. We are currently proceeding with the development of another auction operation in an area which has a good geographical fit with our existing operations. Motor Services Division Wilcomatic, the principal operating subsidiary of our Motor Services Division, had an excellent first half year with profit before tax rising by 39% to £0.8 million. Once again our service contract numbers grew and now stand at 1,939, an increase of 6% over the prior period. A major contributor to the profit increase was the award of a major new supply contract which has not only added to our profit in the short term but will provide additional service opportunities in the future. Wilcomatic continues to develop new ideas and systems fulfilling the needs of its customer base. We remain confident that its progress will continue for the remainder of this year. Financial review As stated above, the Group's profit before tax for the six months ended 31 August 2005 was £7.2 million compared to £21.5 million in the corresponding period last year. This year's results include exceptional losses of just under £1 million made in our former MG Rover dealerships representing the trading losses and closure costs incurred since the date of our decision to close the dealerships on 22 April. Last year's result includes a number of exceptional items, totalling a net £13.4 million, mainly relating to a VAT refund and associated interest of £12.3 million. Excluding the exceptional items referred to above, the profit before taxation for the period was just over £8.1 million, including a £0.2 million loss from SKF, compared to just under £8.1 million for the same period last year, an increase of 0.4%. The tax charge for the period under review is based on the estimated effective tax rate for the full financial year of 31%. Last year's tax charge was distorted by the exceptional items referred to above; after adjusting for these, the effective rate was 32.3%. The reduction is largely due to the tax relief available to the Group in relation to share options exercised by directors and employees in the period. Earnings per share for the period were 9.2 pence compared to 28.0 pence last year. Excluding exceptional items, the figure for this year is 10.4 pence compared to 10.2 pence last year, an increase of 2%. The Board has declared an interim dividend of 4.0 pence per share, representing an increase of 8% on last year. Dividend cover excluding exceptional items for the period is 2.6 times, compared to 2.8 times last year. The net effect on revenue of dealerships acquired, opened, sold and closed since last year is an increase of £39 million. Within our continuing Motor Retail businesses, higher vehicle sales volumes and higher average prices of new vehicles sold have increased revenue by a further £16 million. There have also been increases in the revenue of Motor Retail aftersales and Motor Services. As a result of all these factors, there has been a net increase of £57 million in overall Group revenue compared to the first half of last financial year. Profit from operations excluding exceptional items was 2.6% of revenue compared to 3.0% last year. This year's ratio is distorted by the acquisition of SKF as the Group's ownership of those businesses only covered the difficult trading months of July and August and excluded the very important month of March with its peak level of sales and profitability. If the results of SKF are excluded, the ratio is 2.9%, showing that the Group continues to be one of the most profitable in the industry. The acquisition of SKF has had a significant effect on the Group's gearing position. In addition to the purchase consideration paid of £30.5 million, the Group inherited SKF's net borrowings of £37.5 million as at the completion date of 1 July. Those net borrowings had been reduced to £30.2 million at 31 August. The net interest charge of the SKF businesses during the Group's period of ownership amounted to £0.4 million and EMH incurred interest costs of a further £0.2 million on the purchase consideration. Excluding the effects of the SKF acquisition and the exceptional interest received last year, the underlying interest charge, including vehicle stocking interest, is £0.1 million, compared to £0.3 million last year. As evidenced by the balance sheet, the Group continues to be in a very strong financial position. Shareholders' equity has increased by £2.4 million in the period to £82.6 million at 31 August 2005. During the period we have invested £4.6 million in capital expenditure and received £0.2 million in respect of the disposal of fixed assets. The total net cash outflow in the period in respect of the acquisition of SKF and the Michael Powles Bentley businesses, including the net overdrafts acquired, amounted to £49.3 million. During the period the Company issued 395,000 shares in respect of the exercise of options and a further 603,378 shares subscribed for by the vendor of SKF, which resulted in a cash inflow of £1.8 million. We have continued to manage our working capital efficiently and achieved a reduction of £1.2 million in the period. Tax paid in the period amounted to £4.9 million and there has been a net outflow of £2.0 million in respect of loans, finance leases and letters of credit. The net effect of these cash flows and of the £9.6 million profit from operations (after adding back depreciation and other non cash items) and the total interest paid in the period of £0.8 million is a net cash outflow of £48.8 million. The Group had net borrowings of £36.2 million at 31 August 2005, giving a gearing ratio of 44% at that date. The Group's net borrowings position at 31 August is not representative of the year as a whole because, immediately prior to a month with a registration plate change, used vehicle stocks and vehicle debtors are lower than at other times of the year and we are in receipt of deposits on cars being prepared for sale. Additionally, the timing of dividend payments is such that all dividends are paid in the second half of the financial year. The peak net funds level during the period of £29.6 million occurred at the beginning of the financial year, whilst the highest net borrowings level of £59.2 million occurred just after the acquisition of SKF. At 31 August 2005 our net assets per share were 152.0 pence compared to 150.3 pence at 28 February 2005. Outlook UK vehicle registrations for the month of September 2005 were 3% lower than last year. However, registrations for the franchises we represent grew by 5%. The rising market share for our brands and the contribution from our newly acquired businesses ensured a record profit for any month in the history of EMH. We expect that our performance in the second half will show continued growth and look forward to another satisfactory full year performance. Richard Palmer Chief Executive 26 October 2005 CONSOLIDATED INCOME STATEMENT Notes 6 months 6 months Year ended ended ended 31 31 28 August August February 2005 2004 2005 £'000 £'000 £'000 Revenue 2 338,275 281,164 528,838 --------- --------- --------- Exceptional VAT claim - 6,194 6,272 Exceptional MG Rover writedowns - - (588) Other cost of sales (291,910) (241,457) (452,328) --------- --------- --------- Cost of sales (291,910) (235,263) (446,644) --------- --------- --------- Gross profit 46,365 45,901 82,194 Distribution costs (22,676) (18,484) (35,553) Administrative expenses (15,821) (12,830) (25,186) --------- --------- --------- Profit from operations before other income 7,868 14,587 21,455 --------------------------- ----- --------- --------- --------- Profit from operations before other income analysed as: Before exceptional items 8,768 8,393 15,771 Exceptional costs re MG Rover (900) - (588) Exceptional VAT refund - 6,194 6,272 --------- --------- --------- 7,868 14,587 21,455 --------------------------- ----- --------- --------- --------- Profit on disposal of businesses - 852 2,580 Profit on disposal of properties - 277 277 --------- --------- --------- Profit from operations 3 7,868 15,716 24,312 Investment income 470 407 1,242 Finance costs (1,183) (727) (1,353) Exceptional interest on VAT claim - 6,105 6,279 --------- --------- --------- Profit before tax 7,155 21,501 30,480 --------------------------- ----- --------- --------- --------- Profit before tax analysed as: Before exceptional items 8,107 8,073 15,660 Exceptional costs re MG R (952) - (588) Exceptional VAT refund and interest - 12,299 12,551 Profit on disposal of businesses and properties - 1,129 2,857 --------- --------- --------- 7,155 21,501 30,480 --------------------------- ----- --------- --------- --------- Tax 4 (2,223) (6,508) (9,320) --------- --------- --------- Profit for the period 4,932 14,993 21,160 --------- --------- --------- Earnings per share (basic) 6 9.2p 28.0p 39.6p --------- --------- --------- Earnings per share (diluted) 6 9.0p 27.4p 38.8p --------- --------- --------- Dividend per share 5 4.0p 3.7p 9.5p --------- --------- --------- CONSOLIDATED BALANCE SHEET 31 August 31 August 28 February 2005 2004 2005 £'000 £'000 £'000 Non-current assets Goodwill 28,196 4,588 4,662 Property, plant and equipment 63,237 34,084 31,914 Trade and other receivables 1,741 1,311 1,300 ---------- --------- --------- 93,174 39,983 37,876 ---------- --------- --------- Current assets Inventories 142,621 85,275 88,893 Trade and other receivables 27,190 18,618 15,545 Cash and cash equivalents 2,769 36,608 43,977 ---------- --------- --------- 172,580 140,501 148,415 ---------- --------- --------- Total assets 265,754 180,484 186,291 ---------- --------- --------- Current liabilities Trade and other payables (163,975) (92,917) (96,137) Tax liabilities (1,087) (6,304) (4,289) ---------- --------- --------- (165,062) (99,221) (100,426) ---------- --------- --------- Non-current liabilities Trade and other payables (11,634) (389) (309) Retirement benefit obligation (4,591) (2,709) (2,739) Deferred tax liabilities (1,774) (2,468) (2,605) Long-term provisions (138) (158) (97) ---------- --------- --------- (18,137) (5,724) (5,750) ---------- --------- --------- Total liabilities (183,199) (104,945) (106,176) ---------- --------- --------- Net assets 82,555 75,539 80,115 ---------- --------- --------- Share capital 21,719 21,261 21,319 Share premium account 28,836 27,325 27,392 Capital redemption reserve 926 926 926 Retained earnings 31,074 26,027 30,478 ---------- --------- --------- Total shareholders' equity 82,555 75,539 80,115 ---------- --------- --------- Net (debt)/funds (36,201) 26,348 36,573 ---------- --------- --------- Net assets per share 152.0p 142.1p 150.3p ---------- --------- --------- CONSOLIDATED CASH FLOW STATEMENT 6 months 6 months Year ended ended ended 31 31 28 August August February 2005 2004 2005 £'000 £'000 £'000 Operating activities Profit from operations 7,868 15,716 24,312 Adjustments for: Depreciation of property, plant and equipment 1,628 1,426 3,350 Share option expense 54 41 94 Expense for defined benefit retirement obligation 66 93 148 Payments made for defined benefit retirement obligations (33) - (55) Gain on disposal of property, plant and equipment (19) (5) (23) Profit on disposal of businesses - (852) (2,580) Profit on disposal of properties - (277) (277) --------- --------- --------- Operating cash flows before movements in 9,564 16,142 24,969 (Increase)/decrease in inventories (6,585) 4,309 (1,517) Decrease in receivables 4,779 444 2,992 Increase/(decrease) in payables 2,971 (9,373) 123 (Decrease)/increase in demonstrator funding (1,468) 303 (2,781) --------- --------- --------- Cash generated by operations 9,261 11,825 23,786 Income taxes paid (4,867) (2,362) (6,669) Interest paid (1,183) (657) (1,353) --------- --------- --------- Net cash from operating activities 3,211 8,806 15,764 --------- --------- --------- Investing activities Interest received 392 407 1,162 Exceptional interest received - 5,655 6,279 Disposal of businesses - 2,672 7,985 Proceeds on disposal of property,plant and equipment 230 383 430 Purchases of property, plant and equipment (4,621) (361) (2,487) Acquisition of businesses (49,336) (1,414) (1,380) --------- --------- --------- Net cash (used in)/from investing activities (53,335) 7,342 11,989 --------- --------- --------- Financing activities Dividends paid - - (4,705) Repayments of borrowings (426) (487) (643) Repayments of obligations under finance leases (100) (758) (259) Proceeds on issue of share capital 1,844 29 155 Purchase of own shares 0 (877) (877) --------- --------- --------- Net cash from/(used in) financing activities 1,318 (2,093) (6,329) --------- --------- --------- Net(decrease)/increase in cash and cash equivalents (48,806) 14,055 21,424 Cash and cash equivalents at beginning of period 43,977 22,553 22,553 --------- --------- --------- Cash and cash equivalents at end of period (4,829) 36,608 43,977 --------- --------- --------- Analysis of changes in net (debt)/ funds At 1 March Cash flow Other non At 31 August 2005 cash changes 2005 £'000 £'000 £'000 £'000 Cash at bank and in hand 43,977 (41,208) - 2,769 Bank overdrafts - (7,598) - (7,598) -------- -------- --------- --------- 43,977 (48,806) - (4,829) Debt due within one year (3,030) - (3,828) (6,858) Debt due after more than one year (57) 426 (11,347) (10,978) Finance leases (demonstrato (3,938) 15,470 (23,719) (12,187) Finance leases (other) (379) 100 (1,070) (1,349) -------- 15,996 -------- -------- --------- --------- Total 36,573 (32,810) (39,964) (36,201) -------- -------- --------- --------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 6 months 6 months Year ended ended ended 31 31 28 August August February 2005 2004 2005 £'000 £'000 £'000 Actuarial loss on defined benefit pension scheme (1,897) - (180) Tax on items recognised directly in equity 656 72 455 Profit for the period 4,932 14,993 21,160 -------- --------- -------- -------- --------- -------- Total recognised income and expense for the period 3,691 15,065 21,435 -------- --------- -------- NOTES TO THE INTERIM STATEMENT 1. Basis of preparation Prior to 2005 the Group has reported its results under UK Generally Accepted Accounting Practice ("UK GAAP"). All listed companies in the European Union now have to report their consolidated financial statements under International Financial Reporting Standards ("IFRS") for accounting periods commencing on or after 1 January 2005. This interim report has been prepared on a basis consistent with anticipated IFRS accounting policies based on those IFRS which are or are expected to be endorsed by the European Commission by the time the Group prepares its first set of consolidated financial statements at 28 February 2006. There is a requirement to include at least one year of comparative information in the financial statements for the year ended 28 February 2006 and therefore the transition date to IFRS for the Group is 1 March 2004. The results for the six months ended 31 August 2004 and for the year ended 28 February 2005 in this interim statement have been restated in accordance with IFRS. On 18 October 2005 the Group published a report explaining the impact of IFRS and this is available on the company's website at www.emhplc.com/IFRS.pdf. This document details the key differences between UK GAAP and IFRS that impact the Group. The document also includes reconciliations of the balance sheet as at 1 March 2004, 31 August 2004 and 28 February 2005, and of the income statement for the six months ended 31 August 2004 and the year ended 28 February 2005. The impact on the Group's results for the year ended 28 February 2005 and its net assets at that date is broadly neutral. The report referred to above sets out the Group's principal accounting policies as they have been modified to comply with IFRS. The principal differences which impact the Group are summarised below: i Goodwill - amortisation of goodwill is no longer permitted, it is instead tested at least annually for impairment. Goodwill previously written off to reserves is no longer required to be adjusted through the income statement on disposal of a business. ii Share options - the fair value of share options granted is charged to the income statement over the vesting period of the options. iii Pensions - the deficit in the pension scheme is incorporated in the balance sheet, operating and financing costs are charged to the income statement and actuarial gains and losses are taken directly to equity. iv Deferred tax - deferred tax is recognised on revaluations of property, on gains on assets rolled over, and on employee share options where tax relief is available on exercise. v Leases - leased land and buildings are considered as separate assets for the purpose of classification. Where capitalised long leasehold land is considered to be an operating lease under IFRS, the premium paid is treated as a long term prepayment and amortised over the period of the lease. vi Dividends - the recognition of dividends is on a declared rather than a proposed basis. The application of IFRS also changes the terminology and presentation of the financial statements as reflected in this interim statement. This interim statement has been prepared on the basis of the accounting policies which the Group expects to adopt in its financial statements for the year ending 28 February 2006. IFRS comprise a significant amount of accounting and financial reporting regulation, much of which has been originated or revised very recently. Interpretation of this regulation is expected to be refined throughout the financial community, both in the UK and the rest of the European Union, as IFRS are implemented for the first time by many listed companies. 2. Analysis of revenue 6 months 6 months Year ended ended ended 31 31 28 August August February 2005 2004 2005 £'000 £'000 £'000 Motor Retail Division 328,189 271,527 510,041 Motor Services Division 8,112 7,566 14,765 Other Businesses 1,974 2,071 4,032 ---------- --------- -------- 338,275 281,164 528,838 ---------- --------- -------- 3. Analysis of profit from operations 6 months 6 months Year ended ended ended 31 31 28 August August February 2005 2004 2005 £'000 £'000 £'000 Motor Retail Division 9,533 9,228 17,941 Motor Services Division 797 504 1,085 Other Businesses 90 41 65 Central costs (1,652) (1,380) (3,320) Exceptional VAT claim - 6,194 6,272 Exceptional MG Rover losses and costs (900) - (588) Profit from disposal of businesses - 852 2,580 Profit from disposal of properties - 277 277 ---------- --------- --------- 7,868 15,716 24,312 ---------- --------- --------- 4. The charge for taxation is based on the estimated effective rate for the financial year. 5. An interim dividend of 4.0p (2004, 3.7p) per share will be paid on 6 December 2005 to shareholders on the register at 4 November 2005. 6. The calculation of earnings per share for the six months ended 31 August 2005 is based on the profit for the financial period of £4,932,000 (2004, £14,993,000) and on 53,627,973 (2004, 53,525,150) ordinary shares, being the weighted average number of shares in issue during the period. The number of dilutive potential ordinary shares arising from share options, as calculated in accordance with IAS 33: Earnings per Share, is 1,252,706 (2004, 1,120,736). Therefore, the calculation of diluted earnings per share is based on the profit for the financial period of £4,932,000 (2004, £14,993,000) and on 54,880,679 (2004, 54,645,886) ordinary shares. Earnings per share before exceptional items has been calculated on profits for the year of £5,598,000 (2004, £5,464,000) as detailed below: 6 months 6 months ended ended 31 31 August August 2005 2004 £'000 £'000 Profit after taxation 4,932 14,993 Exceptional MG Rover losses 952 - (Profit) on disposal of businesses - (852) (Profit) on disposal of properties - (277) Exceptional VAT refund and associated interest - (12,299) Tax on above exceptional items (286) 3,899 --------- --------- 5,598 5,464 ========= ========= 7. This interim statement was approved by the Board of Directors on 26 October 2005. The foregoing financial information does not represent full accounts within the meaning of Section 240 of the Companies Act 1985 and has been neither reviewed nor audited by the auditors nor delivered to the Registrar of Companies. The statutory accounts for the year ended 28 February 2005, which received an unqualified auditors' report, have been delivered to the Registrar of Companies. This information is provided by RNS The company news service from the London Stock Exchange BDDFKB

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