Questor share tip: Pendragon a hold after sales drive Yesterday's numbers were good, with debt in particular falling by more than analysts expected. In the six months to June, net debt fell by a third to £147.3m. This is pleasing as Pendragon was one of the most geared plays in the car retail sector. Revenues in the first half rose 5pc to £2.015bn. Pre-tax profits fell 23pc to 16.7m, but this was mostly down to charges associated with its refinancing. When this effect is stripped out, profits rose 24pc to £23.6m. The financing that caused this fall is the completion of a secured seven-year £175m bond and a four-year £145m revolving credit facility. The company has been focusing on the used car market, with its internet offering boosting this part of the business significantly. Visitors to its website rose 23pc to 6.9m in the period, with the rolling 12-month visitors now reaching 12.2m. Aftersales, which encompasses the service, maintenance and repair of vehicles, saw sales rise to £164.4m from £154.8m. This is the most profitable area of the business, with a gross margin of 62.8pc. The group has been selling an increasing number of warranty packages with its used cars, which has helped to boost this part of the business. Obviously, demand for servicing and repair activity is less impacted by economic conditions than other sectors, as motor vehicles require regular maintenance and repair for safety, economy and performance reasons. The company did not raise full-year guidance, which did disappoint some sector watchers. However, this may prove to be management conservatism. The shares are now trading on a 2013 earning multiple of 13.6, falling to 12 and yielding 1pc. With interest payments now likely to be lower, there is plenty of scope for this to be increased. Questor thinks the shares are now a hold.