Lex Service to change name to RAC after reporting 19% surge in profits

Lex Service is to rename itself RAC plc three years after buying Britain's second largest car breakdown brand.

Lex, which also includes car leasing and the Auto Windscreens business, paid £437m for the RAC, which was previously owned by its members. Under Lex's ownership it has driven profits up from £9m at the time of the deal to £29m in the past year.

The company plans to retain the Lex name in its corporate vehicle business but, following a shareholder vote, will change the group name to RAC in September. "It seemed a pretty straightforward decision to change the name," said Andy Harrison, Lex's chief executive. "And we didn't use any consultants. We made the decision all on our own."

Mr Harrison said the name change completed the transformation of Lex Service, which used to be Britain's biggest car dealer. After buying the RAC it sold its car franchises for £90m in 2000 then added Auto Windscreens for £112m in 2001.

Lex said yesterday the RAC now has 2 million individual members, or 6.5 million in total if memberships sold with new or used cars are included. That compares with 12 million members of the Centrica-owned Automobile Association.

Mr Harrison said the power of the RAC name was underlined by the effect it had had on its Auto Windscreens business. "We have problems recruiting windscreen fitters. When it was called Auto Windscreens we'd get 50 responses to an advert. When we changed it to RAC Auto Windscreens we'd get 2,000."

Reporting a 19 per cent rise in full-year profits to £65m, Lex said all its businesses were performing strongly. Its long term order book now stands at £2.7bn, up from £2.5bn, and the group has recently won large contracts such as a £500m deal to supply the Ministry of Defence with 10,000 vehicles over the next 10 years.

The company's shares jumped 9 per cent to 501p after a positive current trading statement. The company said its momentum had continued into the early weeks of 2002 with the business performing in line with expectations.