Q1: Now Mike, Marshall Motor Holdings delivered their interim results today, what are your thoughts on the results?
A1: The results were in line with our expectations, they were very frank during the trading statement last month and so headline metrics, they delivered PBT of over 30% growth year-on-year, the transformational acquisition of Ridgeway was a key driver to that but the underlying business continued to perform well in what remains a difficult market during Q2 of the year.
Q2: What were the key themes in the results?
A2: I think in terms of the key themes, the new car market had got a little bit more difficult but like-for-likes in the business remain fairly robust in the context of industry themes. Used cars, we did see a little bit of margin pressure but good volume growth and the aftersales business continued to progress well too. The leasing business did go backwards on what was an exceptional period last year but, again, delivered a satisfactory profitable outcome.
Q3: Being a solid set of results, has this affected your forecast in any way?
A3: No, we’d actually upgraded our forecast last month on the basis of a better than expected run-rate in the Ridgeway business rather than the underlying business and we’re not changing our forecast assumptions for the year on the results today.
Q4: What are your thoughts on the stock value at the moment for Marshall Motor Holdings?
A4: I think the entire sector is quite cheap at the moment and I think clearly people are looking at the earnings risk at the moment but if you look at the multiples, Marshall’s in particular is traded on a forward PE of 5 times which we think is certainly at a discount ??? what remains very undervalued. The dividend yield is 5% as well and if you look at the property assets of the business, that’s significantly underpinned the current market capitalisation of the business. So, I think on a number of metrics, the valuation looks compelling at the moment, as does the rest of the sector.