2019 proved to be a positive year for MCH, with good progress seen post-restructuring of the MADG business, including new contracts secured which broaden the scope of the business. The property division achieved significant milestones during the year. MMH delivered revenue growth ahead of the broader market (yet again) and the restructuring of MFS began to bear fruit. Also, most recently, a covenant reset was agreed with the Group’s banks.
Group revenues rose by 6.2%, driven by strong performances at the Aerospace and Defence Group (MADG) and Fleet Solutions (MFS), plus sector beating growth at MMH. The one minor fly-in-the-ointment was the modest decline in revenues from the Group’s Property division, albeit this reflects the sale and development of two large parcels of land.
The first phase of the Marleigh development site, which includes 239 dwellings (out of a total 1,300 homes) was granted detailed planning permission during 2019. A sales office opened, with reservations since made. Outline planning permission on the Land North of Cherry Hinton site (LNCH, 1,200 dwellings) was also granted recently.
The COVID-19 related lockdown has significantly disrupted MMH: apart from 62 workshops, all dealerships were closed in late March, and 80% of employees initially placed on furlough. Longer-term, we think that the trends witnessed during H2 2019, including contract wins and a broadening of the work secured augurs well for MADG, and that MMH is likely to take advantage of the weaker automotive markets and add further franchises during 2020 and beyond.
The unlocking of value within the Group’s property base, coupled with the restructuring of MADG feeding through, encourages us to retain our long-term fair value / NVPO of 532p.
