TIDMREDD
RNS Number : 8278I
Redde Northgate PLC
07 December 2022
7 December 2022
This announcement contains inside information
REDDE NORTHGATE PLC
("Redde Northgate" or the "Group" or the "Company")
ANNOUNCEMENT OF RESULTS FOR THE HALF YEARED 31 OCTOBER 2022
Fleet growth and new contract wins supporting strong financial
performance
Redde Northgate (LSE:REDD), the leading integrated mobility
solutions platform providing services across the vehicle lifecycle,
is pleased to announce its results for the half-year ended 31
October 2022.
Half Year results Reported Underlying(1)
6 months ended 31 H1 2023 H1 2022 Change H1 2023 H1 2022 Change
October
GBPm GBPm % GBPm GBPm %
-------- -------- --------------- -------- -------- --------
Revenue 696.3 612.9 13.6% 627.6 522.9 20.0%
-------- -------- --------------- -------- -------- --------
EBIT 111.6 80.1 39.3% 93.4 87.3 7.0%
-------- -------- --------------- -------- -------- --------
Profit before Tax 101.9 71.7 42.1% 83.7 78.9 6.1%
-------- -------- --------------- -------- -------- --------
Earnings per Share 34.4p 22.5p 52.3% 28.1p 26.1p 7.7%
-------- -------- --------------- -------- -------- --------
(1) excludes vehicle sales revenue, exceptional items, amortisation
of acquired intangible assets and adjustments to underlying
depreciation. See GAAP reconciliation.
Other measures H1 2023 H1 2022 Change
GBPm GBPm %
-------- -------- --------
Net debt 661.3 587.2 12.6%
-------- -------- --------
Group net debt (excl. IFRS 16 leases) (2) 531.8 470.4 13.0%
-------- -------- --------
Steady state cash generation 121.2 93.5 29.6%
-------- -------- --------
Free cash flow 2.1 (7.6) n/a
-------- -------- --------
ROCE 13.5% 12.5% 1.0ppts
-------- -------- --------
Dividend per Share 7.5p 6.0p 25.0%
-------- -------- --------
(2) excludes leases that would not have been recognised on
the balance sheet prior to adoption of IFRS 16.
Martin Ward, CEO of Redde Northgate, commented:
"With the Group fleet up 8% to over 130,000 vehicles and new
multi-year contracts going live in the period, we have achieved
meaningful growth across all our revenue streams. Our strategy of
building an integrated platform is serving us well, with customers
increasingly accessing a broadening product set to support their
mobility needs. The Blakedale acquisition at the start of the
period has integrated well, enjoying both customer and fleet growth
since joining the Group.
We have successfully delivered on our margin targets and
implemented pricing increases across the business to help mitigate
cost inflation. While mindful of the macro-economic backdrop, with
a diverse and high-quality customer base well represented in
resilient sectors, we are positioned to capitalise on growth
opportunities across the business, in particular when LCV supply
strengthens."
Key financial highlights
-- Group revenue growth up 14%, reflecting strong traffic and
accident management volumes, fleet growth, pricing increases, and
continued robust residual values
-- Reported PBT of GBP101.9m up 42%; underlying PBT up 6% to
GBP83.7m due to strong operational performance, partially offset by
lower disposal profits and higher interest
-- Steady state cash generation improved 30% to GBP121.2m; free
cashflow reflects investments in fleet, working capital for new
insurance contracts, and the Blakedale acquisition
-- Strong balance sheet with over GBP300m of facility headroom
and bank facility extended out one year to 2026; 1.6x leverage (H1
2022: 1.5x) well within our stated target 1-2x range
-- Shareholder returns: 25% increase in interim dividend to
7.5p; GBP60m share buyback programme running since March, GBP56m
spend in total by end-November
Depreciation rate change
-- H1 reported PBT benefitted from GBP28m of depreciation
adjustment, in line with expectations at full year; no impact on H1
underlying results; and no impact on cash
Business highlights
-- Group fleet up 8% to over 130,000, driven by strong growth in
Spain and replacement vehicles for insurance contracts; LCV
scarcity in Northgate UK&I ongoing, supporting residual
values
-- Two large insurance contracts went live in period, each
customer now taking full range of claims and repair services;
activity to grow through next 12 months
-- Growing take-up of value - added services, including cross
sell of accident management services, with Northgate UK&I
customer fleet under management up 75% ; good H2 pipeline for
services
-- Launch of bundled e-LCV vehicle and charging solution to help
fleet transitions; won 2 Spanish repair contracts, including from
an existing large UK insurance customer
-- Recent acquisitions delivering on strategic goals: strong
demand for FMG RS repair solutions; Blakedale proposition gaining
traction with existing customers
-- Divisional margins maintained in line or above long-term
target range through careful pricing actions to reflect cost
inflation
Outlook
Demand for our services continues to be robust across
geographies along with continuing strength in residual values.
These factors underpin our confidence for the full year which is
expected to be modestly above market expectations. While the Board
is mindful of the ongoing macro-economic environment and current
LCV supply, it remains confident that our integrated mobility
solutions platform will continue to create sustainable shareholder
value.
Analyst Briefing
A hybrid presentation for sell-side analysts and institutional
investors will be held at 9.30am today, 7 December 2022. If you are
interested in attending, please email Buchanan on
reddenorthgate@buchanan.uk.com to request the joining details. This
presentation will also be made available via a link on the
Company's website www.reddenorthgate.com .
For further information contact:
Ross Hawley, Head of Investor Relations +44 (0) 204 566 7090
Buchanan
David Rydell/Jamie Hooper/Hannah Ratcliff/ Verity Parker +44 (0)
207 466 5000
This announcement is made on behalf of Redde Northgate plc by
James Kerton, Company Secretary of Redde Northgate plc.
Notes to Editors:
Redde Northgate is the leading integrated mobility solutions
platform providing services across the vehicle lifecycle. The
Company offers integrated mobility solutions to businesses, fleet
operators, insurers, OEMs and other customers across the following
key areas: vehicle rental, vehicle data, accident management,
vehicle repairs, fleet management, service and maintenance, vehicle
ancillary services and vehicle sales.
The Company's core purpose is to keep its customers mobile,
whether through meeting their regular mobility needs or by
servicing and supporting them when unforeseen events occur. With
its considerable scale and reach, Redde Northgate's mission is to
offer a market-leading customer proposition and drive enhanced
returns for shareholders by creating value through sustainable
compounding growth. The Group aims to achieve this through the
delivery of its strategic framework of Focus, Drive and
Broaden.
Redde Northgate services its customers through a network and
diversified fleet of over 130,000 owned and leased vehicles,
supporting over 600,000 managed vehicles, with around 175 branches
across the UK, Ireland and Spain and a specialist team of over
6,700 employees.
Further information regarding Redde Northgate plc can be found
on the Company's website www.reddenorthgate.com .
GAAP reconciliation and glossary of terms
Throughout this document we refer to underlying results and
measures; the underlying measures allow management and other
stakeholders to better compare the performance of the Group between
the current and prior period without the effects of one-off or
non-operational items. Underlying measures exclude intangible
amortisation from acquisitions and certain one-off items such as
those arising from restructuring activities and the tax impact
thereon. Specifically, we refer to disposal profit(s). This is a
non-GAAP measure used to describe the adjustment in depreciation
charge made in the period for vehicles sold at an amount different
to their net book value at the date of sale (net of attributable
selling costs).
Adjustments have also been made to underlying results for
depreciation rate changes made in the period in relation to an old
cohort of vehicles impacted by the disruption in residual values
over recent periods which could not have been envisaged at the time
those vehicles were purchased. Further explanation of this impact
is included within the Financial Review.
A reconciliation of GAAP to non-GAAP underlying financial
performance is outlined below. A further explanation of alternative
performance measures and a glossary of terms used in this document
are outlined below the Financial Review.
GAAP reconciliation tables
Income statement reconciliation
Six month period Foot 31.10.2022 31.10.2022 31.10.2022 31.10.2021 31.10.2021 31.10.2021
ending note Statutory Adjustments Underlying Statutory Adjustments Underlying
(Unaudited)
(below) 2022 2022 2022 2021 2021 2021
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- ----------- ------------- ------------ ----------- ------------- -------------
Revenue (a) 696.3 (68.7) 627.6 612.9 (90.0) 522.9
(b +
Cost of sales c) (478.8) 40.5 (438.4) (441.3) 90.0 (351.3)
----------- ------------- ------------ ----------- ------------- -------------
Gross profit 217.5 (28.2) 189.2 171.7 - 171.7
Administrative
expenses (d) (107.5) 10.1 (97.4) (94.0) 7.5 (86.5)
----------- ------------- ------------ ----------- ------------- -------------
Operating profit 110.0 (18.2) 91.8 77.7 7.5 85.2
Income from associates 1.6 - 1.6 2.1 - 2.1
Gain on bargain
purchase (e) - - - 0.3 (0.3) -
----------- ------------- ------------ ----------- ------------- -------------
EBIT 111.6 (18.2) 93.4 80.1 7.2 87.3
Interest income - - - - - -
Finance costs (9.7) - (9.7) (8.4) - (8.4)
----------- ------------- ------------ ----------- ------------- -------------
Profit before taxation 101.9 (18.2) 83.7 71.7 7.2 78.9
Taxation (f) (19.9) 3.2 (16.7) (16.2) 1.5 (14.7)
----------- ------------- ------------ ----------- ------------- -------------
Profit for the year 82.0 (15.0) 67.0 55.5 8.7 64.2
----------- ------------- ------------ ----------- ------------- -------------
Shares for EPS calculation 238.7m 238.7m 246.1m 246.1m
Basic EPS 34.4p 28.1p 22.5p 26.1p
--------------------------------- ----------- ------------- ------------ ----------- ------------- -------------
Foot
notes
Adjustments comprise:
Revenue: sale of
vehicles (a) (68.7) (90.0)
Cost of sales:
revenue
sale of vehicles net
down (b) 68.7 90.0
Adjustments to
underlying
depreciation (see
Financial
Review) (c) (28.2) -
------------- -------------
Gross profit (28.2) -
------------- -------------
Exceptional items (Note
11) - (2.4)
Amortisation of acquired
intangible assets (Note
6) 10.1 9.9
------------- -------------
Administrative
expenses (d) 10.1 7.5
Gain on bargain
purchase (e) - (0.3)
------------- -------------
Adjustments to EBIT (18.2) 7.2
Adjustments to PBT (18.2) 7.2
Tax on exceptional items
(Note 11) - 0.5
Tax on brand royalty
charges and amortisation
of acquired intangible
assets and tax rate
change on acquired intangible
assets 3.2 1.0
Tax adjustments (f) 3.2 1.5
------------- -------------
Adjustments to profit (15.0) 8.7
------------- -------------
OPERATING REVIEW
Group Overview
The first half of the year saw strong performances across our
geographies and segments. We saw significant volume growth in our
accident management businesses, and growth in vehicle rental
revenues across geographies. These came through a combination of
strong demand, careful pricing increases offsetting cost inflation,
and successful management of fleet acquisitions and disposals.
Together these helped support operating margins across the business
units.
Operationally, our focus in the period has been on careful
management and allocation of our resources, with continued scarce
LCV supply, to best serve key customer demand and target sectors
which are expected to have the greatest resilience through
macro-economic stress and position us for future growth
opportunities.
Growth drivers
Strong demand for vehicle provision continued across our
end-markets during the period. In Redde, this was helped by
increased traffic volumes, in addition to two of the previously
announced multi-year large insurer contracts coming on stream.
Supported by our other announced contracts, activity and volumes
will continue to grow through the year. We have a healthy pipeline
as corporates and insurance partners increasingly look for an
outsourced solution across the Group's integrated mobility
platform, looking to benefit from the cost and efficiency benefits
our platform can offer.
Fleet growth of around 5,000 vehicles over the past 6 months
reflects the success we have had in accessing pockets of supply,
particularly for cars, to support our businesses and customer
needs. In Northgate Spain a broader range of manufacturers
supported strong fleet growth and in the UK our market position
means that we get early visibility and have the financial firepower
to quickly respond to supply opportunities when they come
available. A combination of limiting disposals and optimising fleet
recycling when vehicles come off rent also allowed the businesses
to focus on satisfying areas of high-quality demand.
The acquisition of Blakedale, which specialises in traffic
management vehicles, announced at the start of the period expanded
our specialist services offering and has seen encouraging growth
including a growing customer base and vehicle fleet since
acquisition. The launch of our new rental solution, which combines
an EV vehicle and e-charging point, reflects the ability to offer
innovative solutions which address customer needs, and we continue
to explore multiple inorganic opportunities to grow both our fleet
and range of services.
Customer diversity
Our rental business benefits from a diverse customer base and we
continue to target sectors and customers who are well positioned in
the current economic climate. Actively managing customer vehicle
returns and realloactions allows for a risk / opportunity focused
approach and the result is a diverse end market customer
profile.
In Northgate UK&I, no sector accounts for more than 15% of
LCV rental VOH, and eight sectors each represent over 7% of VOH.
Public sector and large corporate customers with fleets of over 40
LCVs account for over 50% of our fleet. Growth in areas such as
facilities management and fibre installation position us well in
areas viewed as more robust in the current economic downturn. We
also have a diverse range of sector exposure and customers in
Northgate Spain, again with around half the fleet being taken by
government or large fleet customers.
Margin stability
The business has successfully protected its operating margins
while experiencing cost inflation and vehicle supply constraints.
Across all business segments, there has been a focus on cost
management and mitigation of inflation pressures, while still
ensuring customers see cost and efficiency benefits from using our
services.
Pricing increases in both Northgate Spain and Northgate UK&I
have been carefully managed in discussion with customers, including
where targeted on issues such as energy cost levies within existing
FMG RS contracts, or enhancing maintenance for extending the fleet
life. Appetite for value-added ancillary services such as
telematics and fleet management have also grown within the period,
together with a 75% growth in vehicles covered by accident
management services in Northgate UK&I, supporting rental
margins and customer retention, as customers see benefits and
efficiencies from leveraging our fleet expertise.
Supporting sustainability
Our Drive to Zero programme seeks to support fleet customers in
identifying the right strategy and first steps in utilising EVs, or
improving their fleet management and behaviour to reduce current
emissions. We have helped an increasing number of customers better
understand their options and timeframes for undertaking fleet
transition, and our new bundled EV solution reflects feedback from
customers on their barriers to faster transition.
Within our business, we have focused on targeted recruitment for
areas of scarce resource, supported by the grant of shares to all
employees this month to help ensure all colleagues are able to
benefit from the long-term growth of the business. To help with
cost-of-living pressures in the short term, we are making c.GBP250
one-off payments to over 4,500 colleagues (over 60% of total
employees) across the Group, alongside making available discounts
on a broad range of retail purchases and offering an excess holiday
buyback scheme. Our new group intranet hub is already fostering
greater sharing of Group values and culture, and our new corporate
website was launched at the end of November.
Trading
Total Group revenue, including vehicle sales, was 13.6% higher
than the prior period. Underlying Revenue (excluding vehicle sales)
of GBP627.6m (H1 2022: GBP522.9m) was 20.0% higher (19.9% at
constant exchange rates) reflecting an 9.2% increase in vehicle
hire revenue and a 32.2% increase in claims and services revenue
mainly driven by greater claims volumes.
Total fleet increased 8% since the prior period, up c.10,000
vehicles including those held on contract hire; since the year end
it increased 4%. Vehicle sales revenues were 23.7% lower,
reflecting lower disposal volumes, while purchases totalled 10,800
(H1 2022: 13,500).
Total disposal profits for the period of GBP24.7m were 9% lower
than the prior period with 7,700 vehicles sold (H1 2022: 10,100).
LCV supply constraints across the sector continued to support high
residual values, partially offsetting the impact of 24% lower
disposal volumes. Northgate UK&I closing VOH was 3.3% lower
than at 31 October 2022, while Northgate Spain closing VOH was 5.2%
higher reflecting greater availability of new vehicles.
Northgate UK&I rental margin of 15.6% compared to 17.6% in
the prior period, in part reflecting the impact of lower margin
contributions from recent acquisitions, and was close to the 15.3%
margin for the full year FY 2022. Rental margins in Northgate Spain
reached 20.4% (H1 2022: 17.1%), benefitting from higher VOH and
pricing actions taken early in the calendar year. Redde saw volume
and activity growth across its product offerings, resulting in a
GBP4.3m increase in underlying EBIT to GBP20.4m (H1 2022:
GBP16.1m).
Underlying PBT growth of 6.1% to GBP83.7m (H1 2022: GBP78.9m)
reflects our strong operational performance, partially offset by
higher interest and central costs. Statutory EBIT of GBP111.6m (up
GBP31.5m) and statutory PBT of GBP101.9m (up GBP30.2m) included
GBP28.2m adjustment to depreciation rates which is not included in
our underlying results, in line with indications set out at the
full year.
Underlying EPS was 28.1p (H1 2022: 26.1p), 7.7% higher than
prior period with an average share count of 238.7m (H1 2022:
246.1m) reflecting the share buyback actions taken in the period.
Statutory EPS rose to 34.4p (H1 2022: 22.5p).
Free cashflow of GBP2.1m was GBP9.7m higher than the prior
period (H1 2022: GBP7.6m outflow) and included GBP68.7m of growth
capex used to support growth in the fleet in Northgate Spain and
Redde.
Group ROCE rose by 1ppt to 13.5% (H1 2022: 12.5%), reflecting
the improved operational performance, partially offset by lower
disposal profits and working capital in Redde.
Financial strength and Capital allocation
Our strong cashflows and balance sheet position supports our
business growth, a progressive dividend as well as share
buybacks.
This financial strength continues to provide a competitive
advantage, both in fleet acquisition strategies and our ability to
contemplate non-organic expansion. The extension in October of our
RCF bank facility by an additional 12 months to 2026 gives us
additional flexibility and duration to our borrowings.
The Board has declared an interim dividend of 7.5p per share (H1
2022: 6.0p) to be paid on 13 January 2023 to shareholders on the
register as at close of business on 16 December 2022. The interim
dividend represents 50% of the final dividend for the year ended 30
April 2022 in line with previous guidance.
While we focus our efforts on supporting business growth, we
continue to view buybacks as a useful element within our capital
allocation alongside a progressive dividend and will be kept under
review. The share buyback programme has been underway since March
and its extension in August reflected the attractive proposition of
risk-free enhancement of shareholder returns. As at end-November,
16 million shares had been acquired at a cost of GBP56m and are
being held in treasury.
Northgate UK&I
Six months ended 31 October H1 2023 H1 2022 Change
KPI ('000) ('000) %
----------------------------- -------- -------- ---------
Average VOH 49.2 50.2 (1.8%)
Closing VOH 49.3 50.9 (3.3%)
Average utilisation % 92% 92% 0ppt
Six months ended 31 October H1 2023 H1 2022 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------- -------- -------- ---------
Revenue - Vehicle hire 184.1 170.8 7.8%
Revenue - Vehicle sales 50.3 61.9 (18.7%)
-------- -------- ---------
Total Revenue 234.4 232.7 0.7%
Rental profit 28.8 30.0 (4.2%)
Rental Margin % 15.6% 17.6% (2.0ppt)
Disposal profit 18.8 22.9 (18.1%)
Underlying EBIT 47.5 52.9 (10.2%)
EBIT Margin %[3] 20.3% 22.7% (2.4ppt)
ROCE % 16.1% 17.4% (1.7ppt)
----------------------------- -------- -------- ---------
Rental revenue grew 8% in the period, with a very active focus
on directing available inventory to selected market segments and
key clients, helping to optimise utilisation and protecting margin,
which was also supported by carefully targeted and communicated
rate increases. Ageing of the fleet continues to support strong
customer demand.
Average VOH at 49,200 was 1.8% lower, reflecting LCV
registrations in the UK being 25% below pre-Covid levels and at
their lowest level at this point in the year since 2013. This lack
of supply has supported residual value levels, which stabilised
from the middle of the calendar year, and remains substantially
above pre-Covid levels.
The business saw improvements in take-up of ancillary vehicle
and fleet services, such as a 75% increase in customer vehicles
under accident management, increasing take up of telematics and a
strong pipeline of customers interested in fleet management
services. Customers looking to convert to electric vans were
offered an innovative new electric vehicle and charger bundled
rental product which was launched in November, helping to overcome
a known barrier to EV transition. Lack of suitable vehicle product
is however slowing the wider conversion to electric vans in the
general user community.
The Group acquired specialist traffic management vehicle
provider Blakedale early in the period and has focused on
integration actions and seen early successes in customer
introductions, with growth in fleet and customer contracts since
acquisition.
Financial overview
Northgate UK&I underlying EBIT of GBP47.5m was 10.2% lower
than the prior period (H1 2022: GBP52.9m) with average VOH reducing
1.8%, rental profit GBP1.2m lower at GBP28.8m and rental margins
2.0ppt lower at 15.6% (H1 2022: 17.6%), compared to FY 2022 full
year margin of 15.3%. Disposal profits decreased GBP4.1m to
GBP18.8m reflecting a 13.8% reduction in vehicle sales due to lower
replacements.
Rental business
Hire revenue in the Northgate UK&I business increased 7.8%
compared to the prior period to GBP184.1m (H1 2022: GBP170.8m),
with a 1.8% reduction in average VOH being offset by an 8.0%
increase in average revenue per vehicle. Rate increases were
applied across our full range of rental products.
Closing VOH of 49,300 was 1,700 lower than the prior period (H1
2022: 50,900) and compares to 49,200 at 30 April 2022 year end
which demonstrates that the shortage in supply of new vehicles has
held back growth in the period.
Northgate UK&I's minimum term proposition accounted for 38%
of average VOH (H1 2022: 35%). The average term of these contracts
is approximately three years, providing both improved visibility of
future rental revenue and earnings, as well as lower transactional
costs.
Rental margin for the period was 15.6% compared to 17.6% in the
prior period, 13.2% in H2 FY 2022 and 15.3% in the full year FY
2022. This was supported by pricing increases and partially offset
by cost inflation and investment to grow Charged EV.
The net impact of the reduction in VOH and lower rental margin
was a 4.2% decrease in rental profits to GBP28.8m (H1 2022:
GBP30.0m).
Management of fleet and vehicle sales
The closing Northgate UK&I rental fleet was 53,800 compared
to 54,200 at 30 April 2022. During the period, 2,900 vehicles were
purchased (H1 2022: 6,300) and 3,700 vehicles were de-fleeted (H1
2022: 4,700). The leased fleet increased by 400 vehicles.
The average age of the fleet at the end of the period was 3.0
months higher than at 30 April 2022 and 5.1 months higher than at
31 October 2021. This was due to managing the fleet to mitigate
impacts of the restricted market supply reducing both purchases and
vehicles sold.
A total of 4,900 vehicles were sold in Northgate UK&I during
the period, 13.8% lower than the prior period (H1 2022: 5,700
vehicles). Disposal profits of GBP18.8m (H1 2022: GBP22.9m)
decreased 18.1% versus the prior period, reflecting the reduction
in the number of vehicles sold. Average profit per unit (PPU) on
disposals reduced 5.5% to GBP3,829 (H1 2022: GBP4,052).
EBIT and ROCE
Underlying EBIT of GBP47.5m was 10% lower than the prior period
(H1 2022: GBP52.9m) driven by both rental and disposal profits as
explained above.
The ROCE in Northgate UK&I was 16.1% (H1 2022: 17.4%)
reflecting the decrease in EBIT mainly as a result of lower
disposals.
Capex and cash flow
Six months ended 31 October H1 2023 H1 2022 Change
GBPm GBPm GBPm
----------------------------------- -------- -------- -------
Underlying EBITDA 90.9 93.7 (2.8)
Net Replacement Capex[4] (38.1) (33.6) (4.5)
Lease principal payments[5] (5.5) (3.6) (1.9)
-------- -------- -------
Steady state cash generation 47.3 56.5 (9.2)
Growth Capex (incl. inorganic)(4) 15.1 (13.2) 28.3
----------------------------------- -------- -------- -------
Underlying EBITDA decreased 3.0% to GBP90.9m (H1 2022:
GBP93.7m).
Net replacement capex(4) was GBP38.1m, GBP4.5m higher than the
prior period with a reduction in number of vehicles replaced being
offset by the average cost of replacements being higher due to
price inflation and the change in mix of vehicles replaced.
Steady state cash generation decreased by GBP9.2m to GBP47.3m
(H1 2022: GBP56.5m) reflecting the lower underlying EBITDA and the
higher net replacement capex. Growth capex(4) was GBP15.1m inflow
reflecting a reduction in owned fleet due to the vehicle supply
constraints experienced throughout the period.
Northgate Spain
Six months ended 31 October H1 2023 H1 2022 Change
KPI ('000) ('000) %
----------------------------- -------- -------- --------
Average VOH 53.2 49.4 7.7%
Closing VOH 53.8 51.1 5.2%
Average utilisation % 92% 93% (1ppt)
Six months ended 31 October H1 2023 H1 2022 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------- -------- -------- --------
Revenue - Vehicle hire 122.7 107.7 13.9%
Revenue - Vehicle sales 18.2 28.1 (35.3%)
-------- -------- --------
Total Revenue 140.9 135.8 3.7%
Rental profit 25.1 18.5 35.7%
Rental Margin % 20.4% 17.1% 3.3ppt
Disposal profit 5.9 4.1 45.1%
Underlying EBIT 31.0 22.6 37.4%
EBIT Margin %[6] 22.0% 16.6% 5.4ppt
ROCE % 11.5% 8.7% 2.8ppt
----------------------------- -------- -------- --------
Rental revenue growth of 14% was achieved through a combination
of increased VOH (up 8%), together with pricing increases which had
been implemented at the start of the calendar year for both minimum
term and flexible rental products. Demand remained strong
throughout the period and the business focused on delivering
vehicles to satisfy its key customers, notably within sectors
including infrastructure, IT and telecoms.
Vehicle supply was assisted by a broadening of fleet vehicle
suppliers, but remained below the prior period and the high levels
of demand. The business also carefully managed its defleeting
activities, with disposal volumes 11% lower than the prior period,
in order to satisfy key customer needs. PPUs were up over 125% in
the period, helping to support disposal profit levels. Fleet ageing
increased 5 months since 31 October 2021, with related service
costs reflected within the hire rate increases.
Rental margin at over 20% for the period is expected to have
reached its peak. This was driven by pricing increases implemented
before the start of the period, while inflation-driven costs and
fleet growth, with its related depreciation, building through the
period.
Northgate's workshops have been working at high capacity
throughout the period, supported by the strategic action to make
this service available to third parties. Two repair contracts were
signed with insurance companies looking to secure workshop
capacity, including a referral from a major UK insurance customer,
and have the potential to grow to become meaningful customers.
Volumes through the online eAuction platform accounted for
almost all of the trade sales in the period, making for highly
cost-efficient disposals. The roll-out of solar panels moved into
its 2(nd) phase, providing significant energy cost savings at a
time where these are a growing burden for businesses, with a total
of over 1 MW of generating capacity installed or planned for
installation this financial year.
Financial overview
Northgate Spain had a strong period with EBIT increasing GBP8.4m
or 37.4% driven by VOH growth of 7.7% and strong rental margins of
20.4% compared to 17.1% in the prior period.
Rental business
Hire revenue in the Northgate Spain business increased 13.9%
(13.5% in local currency) to GBP122.7m (H1 2022: GBP107.7m), driven
by average VOH which increased 7.7%. Closing VOH increased 5.2% to
53,800.
Northgate Spain's minimum term proposition accounted for around
35% (H1 2022: 35%) of average VOH. The average term of these
contracts is approximately three years, providing both improved
visibility of future rental revenue and earnings.
The rental margin was 3.3ppt higher than the prior period at
20.4% from pricing increases and lower overheads, with some cost
inflation offsetting this.
The impact of increase in hire revenue and rental margin was a
35.7% increase in rental profits to GBP25.1m (H1 2022:
GBP18.5m).
Management of fleet and vehicle sales
The closing Northgate Spain rental fleet amounted to 60,600
compared to 57,600 vehicles at 30 April 2022. During the period
5,700 vehicles were purchased (H1 2022: 7,200) and 2,700 vehicles
were de-fleeted (H1 2022: 3,100 vehicles). The average age of the
fleet at the end of the period was 5 months higher than at the same
time last year. This was due to managing the fleet to mitigate
impacts of the restricted market supply reducing purchases.
A total of 2,800 vehicles were sold in Northgate Spain during
the period, 36.2% lower than prior period reflecting the restricted
market supply of new vehicles in the period.
Disposal profits of GBP5.9m (H1 2022: GBP4.1m) increased 45.1%.
The reduction in the number of vehicles sold was offset by
continued strength in sales values resulting in an increase in
average profit per unit (PPU) on disposals to GBP2,101 (H1 2022:
GBP924).
EBIT and ROCE
Underlying EBIT of GBP31.0m increased 37.4% over the prior
period (H1 2022: GBP22.6m) driven by both higher rental and
disposal profits as explained above. The ROCE in Northgate Spain
was 11.5% (H1 2022: 8.7%) reflecting the increase in rental margin
and an older fleet.
Capex and cash flow
Six months ended 31 October H1 2023 H1 2022 Change
GBPm GBPm GBPm
----------------------------------- -------- -------- -------
Underlying EBITDA 75.9 65.4 10.5
Net Replacement Capex[7] (13.7) (34.4) 20.7
Lease principal payments[8] (1.3) (1.3) -
-------- -------- -------
Steady state cash generation 60.9 29.7 31.2
Growth Capex (incl. inorganic)(7) (41.0) (33.5) (7.5)
----------------------------------- -------- -------- -------
Underlying EBITDA increased GBP10.5m to GBP75.9m (H1 2022:
GBP65.4m).
Net replacement capex(7) in the period was GBP13.7m, GBP20.7m
lower than the prior period, as a result of the ageing of the fleet
in response to the shortage of new vehicle supply.
Steady state cash generation increased by GBP31.2m to GBP60.9m
(H1 2022: GBP29.7m) reflecting higher EBITDA and lower net
replacement capex in the period. Growth capex(7) was GBP41.0m
reflecting investment in the fleet to meet demand.
Redde
Six months ended 31 October H1 2023 H1 2022 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
------------------------------- -------- -------- ---------
Revenue - Claims and Services 331.4 251.9 31.5%
Revenue - Vehicle sales 0.3 - 100.0%
-------- -------- ---------
Total Revenue 331.7 251.9 31.7%
Gross profit 70.4 60.5 16.4%
Gross margin %(9) 21.2% 24.0% (2.8ppt)
Operating profit 18.9 14.0 35.1%
Income from associates 1.6 2.1 (26.1%)
Underlying EBIT 20.4 16.1 27.1%
EBIT margin %[9] 6.2% 6.4% (0.2ppt)
ROCE % 15.4% 11.6% 3.8ppt
------------------------------- -------- -------- ---------
The Redde Group of businesses made a strong start to the
financial year with revenues up 31.7% reflecting the growth in road
traffic, increased volumes from new business wins which have
launched in the past 12 months, and an industry-wide rise in
chargeable costs reflecting inflation across the supply chain.
The operational focus was on the integration of two (previously
reported) large insurance contracts, where we are now providing
fault and non-fault claims services and vehicle repair management.
Both contracts went 'live' in the first half and have seen strong
volume growth from inception. All previously announced contracts
are now live, and the pipeline of opportunities remains healthy.
Current and prospective customers are attracted to the efficiency
savings and customer service levels available from an integrated
mobility solution from Redde.
EBIT margin was stable, reflecting a change in repair service
mix together with the up-front cost of work in advance of major
contract operational launches. Fleet and bodyshop resources remain
constrained, although the supply of passenger cars improved
slightly, allowing for fleet growth of 17% (since 30 April 2022) to
be achieved according to plan. High energy usage within the
bodyshops was mitigated by agreement with customers for an interim
energy levy, maintaining margin on contracts which are already in
existence.
There has been a strong focus on driver and bodyshop recruitment
and efficiencies in order to deliver on strong customer demand,
which included greater integration of FMG RS within the Redde
organisation. A leading customer, Admiral, recently announced a
consolidation of their vehicle repair supply chain and FMG RS were
selected as an approved partner, further enhancing our overall
relationship and delivering increased repair volume to FMG RS.
Financial overview
During the period EBIT has increased by 27.1% over the prior
period to GBP20.4m, with the growth in volumes seen in H2 FY 2022
continuing throughout the period.
Revenue and profit
Revenue for the period (excluding disposals) increased 31.5% to
GBP331.4m (H1 2022: GBP251.9m) reflecting the increase in traffic
volumes seen in H2 FY 2022 and a continuing extension in hire
length during the period due to the impact of macro challenges in
supply chains for parts and labour.
Gross margin of 21.2% declined 2.8ppt (H1 2022: 24.0%) due to
volume mix within the business.
EBIT for the period increased 27.1% to GBP20.4m (H1 2022:
GBP16.1m) reflecting the increase in revenue.
Management of fleet
The total fleet in Redde closed the period at 16,900 vehicles,
from 14,500 at 30 April 2022 with the fleet increase supporting the
increase in volumes of credit hires.
The average fleet age was 15 months reflecting the lower fleet
holding period than in the Northgate businesses due to the
different usage of the vehicles and business economics.
The Redde fleet operates a hybrid solution of ownership,
contract hire and, during peak periods, cross-hiring when
needed.
Capex and cash flow
Six months ended 31 October H1 2023 H1 2022 Change
GBPm GBPm GBPm
------------------------------ --------- --------- ---------
Underlying EBITDA 37.5 27.9 9.6
Net replacement capex[10] (1.3) (0.1) (0.4)
Lease principal payments[11] (17.7) (15.5) (2.2)
--------- --------- ---------
Steady state cash generation 18.5 11.5 7.0
Growth capex(10) (42.8) (5.0) (37.8)
Debtor days 168 days 176 days (8 days)
------------------------------ --------- --------- ---------
Underlying EBITDA increased GBP9.6m to GBP37.5m (H1 2022:
GBP27.9m) reflecting the recovery of traffic volumes.
Net replacement capex(10) was GBP1.3m in the period (H1 2022:
GBP0.1m). Steady state cash generation increased GBP7.0m to
GBP18.5m (H1 2022: GBP11.5m).
Growth capex(10) increased to GBP42.8m (H1 2022: GBP5.0m)
reflecting a growth in the fleet to meet the increase in demand for
our services.
Debtor days were 168 days at the end of the period, a decrease
from 176 days in the prior period. This measure is based upon net
trade receivables and contract assets, other receivables and
accrued income as a proportion of the related underlying sales
revenue for the past 12 months multiplied by 365 days.
FINANCIAL REVIEW
Group Revenue and EBIT
Six months ended 31 October H1 2023 H1 2022 Change Change
GBPm GBPm GBPm %
------------------------------- -------- -------- ------- --------
Revenue - Vehicle hire 302.7 277.1 25.6 9.2%
Revenue - Vehicle sales 68.7 90.0 (21.3) (23.7%)
Revenue - Claims and services 324.9 245.8 79.1 32.2%
------------------------------- -------- -------- ------- --------
Total revenue 696.3 612.9 83.4 13.6%
Rental profit 53.8 48.5 5.4 11.1%
Disposal profit 24.7 27.0 (2.3) (8.5%)
Claims and services profit 18.9 14.0 4.9 35.1%
Corporate costs (5.5) (4.3) (1.3) (30.4%)
------------------------------- -------- -------- ------- --------
Underlying operating profit 91.8 85.2 6.7 7.8%
Income from associates 1.6 2.1 (0.6) (26.1%)
------------------------------- -------- -------- ------- --------
Underlying EBIT 93.4 87.3 6.1 7.0%
Underlying EBIT margin 13.4% 14.2% - 0.8ppt
Statutory EBIT 111.6 80.1 31.5 39.3%
------------------------------- -------- -------- ------- --------
-- Total Group revenue, including vehicle sales, of GBP696.3m
was 13.6% higher than prior period (13.5% at constant exchange
rates). Hire revenues were 9.2% higher due to 2.9% higher VOH
across the Group as well as increased hire rates. Vehicle sales
revenues were 23.7% lower due to a 2,300 reduction in vehicle
disposals compared to the prior period but partially offset by
stronger residual values
-- Revenue (excluding vehicle sales) of GBP627.6m (H1 2022:
GBP522.9m) was 20.0% higher (19.9% at constant exchange rates)
reflecting an increase in vehicle hire revenue and 32.2% increase
in claims and services revenue driven by greater claims volumes
-- Underlying EBIT of GBP93.4m was 7.0% higher, reflecting the
strong performance across the business
-- Statutory EBIT of GBP111.6m was 39.3% higher, reflecting
higher underlying EBIT as well as adjustments to underlying
depreciation of GBP28.2m as outlined below
Group PBT and EPS
Six months ended 31 October H1 2023 H1 2022 Change Change
GBPm GBPm GBPm %
------------------------------- -------- -------- ------- -------
Underlying EBIT 93.4 87.3 6.1 7.0%
Net finance costs (9.7) (8.4) (1.3) 15.5%
------------------------------- -------- -------- ------- -------
Underlying Profit before Tax 83.7 78.9 4.8 6.1%
Statutory Profit before Tax 101.9 71.7 30.2 42.1%
Underlying effective tax rate 20.0% 18.7% - 1.3ppt
Underlying EPS 28.1p 26.1p 2.0p 7.7%
Statutory EPS 34.4p 22.5p 11.9p 52.3%
------------------------------- -------- -------- ------- -------
-- Underlying PBT was 6.1% higher, reflecting the higher EBIT as
a result of the improved business performance partially offset by
higher finance costs, which were 15.5% higher
-- Statutory PBT was 42.1% higher, reflecting the higher
underlying PBT and adjustments to underlying depreciation in the
year of GBP28.2m credit (H1 2022: GBPnil)
-- The underlying effective tax rate of 20.0% was 1.3ppt higher than prior period
-- Underlying EPS of 28.1p was 7.7% higher, reflecting the increased profits in the period
-- Statutory EPS of 34.4p was 52.3% higher, reflecting the
movement in underlying EPS and the impact of credits to underlying
depreciation in the current period
Exceptional items
During the period, there were no items that were recognised as
exceptional items (H1 2022: GBP2.7m).
Further detail on exceptional items is included in Note 11.
Amortisation of acquired intangibles and adjustments to
underlying depreciation charges are not an exceptional item as it
is recurring. However, it is excluded from underlying results in
order to provide a better comparison of performance of the Group.
The total amortisation of acquired intangibles charged in the
period was GBP10.1m (H1 2022: GBP9.9m).
Depreciation rate changes
As explained at the year end, residual values have increased
significantly over the previous two financial years due to the
disruption of new vehicle supply which has increased demand for
used vehicles. Up to April 2022, no changes had been made to
depreciation rates on existing fleet vehicles as the extent and
longevity of this buoyancy in residual values has been uncertain.
However, it has continued for longer than anticipated and
uncertainty remains over how long it will take for supply of new
and used vehicles to return to a more normal level.
For this reason, there are a number of vehicles on our fleet
where the depreciated book value is below or very close to the
expected residual value at disposal. In line with the requirements
of accounting standards, a decision was made to reduce depreciation
rates from 1 May 2022 on certain vehicles remaining on the fleet
which were purchased before FY 2021.
The impact on the statutory income statement over the remaining
holding period of those vehicles (as outlined at the year end) is
expected to be as follows:
GBPm FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total
Reduced depreciation 54.6 30.9 8.2 0.3 - 94.1
Reduced disposal
profits (7.8) (40.4) (38.0) (7.0) (0.9) (94.1)
Impact on statutory
EBIT 46.8 (9.4) (29.8) (6.7) (0.9) -
---------------------- -------- -------- -------- -------- -------- -------
The total adjustment made to underlying depreciation in the
period was a credit of GBP28.2m comprising GBP29.7m reduced
depreciation offset by GBP1.5m reduced disposal profits. The
adjustment has been impacted by the continued ageing of the fleet
but remains materially in line with expectations.
Interest
Net underlying finance charges increased to GBP9.7m (H1 2022:
GBP8.4m) due to the higher average debt compared to the prior
period. The net cash interest charge for the period was GBP8.6m (H1
2022: GBP7.5m).
At 31 October 2022 66% of borrowings were held in fixed rate
instruments.
Dividend
The Board has declared an interim dividend of 7.5p per share (H1
2022: 6.0p) to be paid on 13 January 2023 to shareholders on the
register as at close of business on 16 December 2022.
The interim dividend represents 50% of the final dividend for
the year ended 30 April 2022 in line with previous guidance.
Share buyback programme
As previously announced, during March 2022 the Group commenced a
share buyback programme of the Company's ordinary shares for up to
a maximum aggregate consideration of GBP60 million. As at 31
October 2022, 13,731,330 shares had been purchased for a total
consideration of GBP49m; this had increased to 16 million shares at
a cost of GBP56m by 30 November 2022 and these are being held in
treasury.
Business combinations
In July 2022 the Group acquired 100% of the equity capital of
Blakedale Limited for provisional consideration of GBP10.0m. The
provisional fair value of net assets acquired was GBP6.2m resulting
in the recognition of GBP3.9m of goodwill.
Group cash flow
Steady state cash generation
Six months ended 31 October H1 2023 H1 2022 Change
GBPm GBPm GBPm
------------------------------------------ -------- -------- -------
Underlying EBIT 93.4 87.3 6.1
Underlying depreciation and amortisation 105.4 95.5 9.9
------------------------------------------ -------- -------- -------
Underlying EBITDA 198.8 182.8 16.0
Net replacement capex[12] (53.1) (68.8) 15.7
Lease principal payments[13] (24.6) (20.4) (4.2)
------------------------------------------ -------- -------- -------
Steady state cash generation 121.2 93.5 27.7
------------------------------------------ -------- -------- -------
-- Steady state cash generation remained strong at GBP121.2m (H1
2022: GBP93.5m), driven by higher EBITDA and lower replacement
capex
-- Underlying EBITDA was GBP16.0m higher driven by stronger performance across the business
-- Net replacement capex was GBP15.7m lower due to constrained
vehicle supply reducing the volume of replacements
Free cash flow
Six months ended 31 October H1 2023 H1 2022 Change
GBPm GBPm GBPm
--------------------------------------- -------- -------- -------
Steady state cash generation 121.2 93.5 27.7
Exceptional costs (excluding non-cash
items) - (0.6) 0.6
Working capital and non-cash items (19.6) (33.0) 13.5
Growth capex(12) (68.7) (51.7) (17.0)
Taxation (14.7) (9.9) (4.8)
--------------------------------------- -------- -------- -------
Net operating cash 18.2 (1.8) 20.0
Distributions from associates 1.9 2.1 (0.3)
Interest and other financing (8.1) (7.4) (0.6)
Acquisition of business (9.9) (0.5) (9.4)
--------------------------------------- -------- -------- -------
Free cash flow 2.1 (7.6) 9.7
Payments to acquire treasury shares (40.5) - (40.5)
Dividends paid (35.0) (29.3) (5.7)
Lease principal payments(13) 24.6 20.4 4.2
--------------------------------------- -------- -------- -------
Net cash consumed (48.8) (16.5) (32.3)
--------------------------------------- -------- -------- -------
-- Free cash inflow of GBP2.1m increased by GBP9.7m compared to
the prior period, driven primarily by higher steady state cash
generation and a GBP13.5m lower working capital outflow partially
offset by increases in growth capex of GBP17.0m and the GBP10m cash
acquisition of Blakedale
-- Growth capex of GBP68.7m reflects a net increase in owned
fleet over the period of 3,400 vehicles driven by fleet growth in
Northgate Spain and Redde
-- If the impact of growth capex in the period is removed from
free cash flow, the underlying free cash flow of the Group was
GBP66.6m (H1 2022: GBP44.8m)
-- The share buyback programme which commenced in March 2022
resulted in an outflow of GBP40.5m in the period (H1 2022:
GBPnil)
-- Dividends paid of GBP35.0m were GBP5.7m higher than the prior
period, reflecting the final dividend of 15.0p declared relating to
FY 2022 (FY 2021: 12.0p)
Net debt
Net debt reconciles as follows:
Six months ended 31 October H1 2023 H1 2022
GBPm GBPm
---------------------------- ------- --------
Opening net debt 582.5 530.3
Net cash consumed 48.8 16.5
Other non-cash items 20.2 50.7
Exchange differences 9.8 (10.3)
---------------------------- ------- --------
Closing net debt 661.3 587.2
---------------------------- ------- --------
Closing net debt was GBP78.8m higher than opening net debt,
driven by net cash consumption of GBP48.8m. Other non-cash items of
GBP20.2m consists primarily of new leases acquired and the foreign
exchange impact on net debt was a GBP9.8m increase.
Borrowing facilities
As at 31 October 2022 the Group had headroom on facilities of
GBP308m, with GBP509m drawn (net of available cash balances)
against total facilities of GBP817m as detailed below:
Facility Drawn Headroom Maturity Borrowing
GBPm GBPm GBPm Cost
------------------- -------- ----- -------- ------------ ---------
UK bank facilities 480 174 306 Nov-26 4.1%
Nov 27 - Nov
Loan notes 323 323 - 31 1.3%
Other loans 14 12 2 Nov 23 2.7%
------------------- -------- ----- -------- ------------ ---------
817 509 308 2.7%
------------------- -------- ----- -------- ------------ ---------
During the period, the UK bank facilities were extended for a
further year to November 2026.
The other loans consist of GBP12.7m of borrowings located in
Spain which were renewed for a further year in November 2022 and
GBP0.5m of preference shares.
The above drawn amounts reconcile to net debt as follows:
Drawn
GBPm
------------------------------------ -----
Borrowing facilities 509
Unamortised finance fees (9)
Leases arising following adoption
of IFRS 16 130
Leases arising under HP obligations 31
------------------------------------- -----
Net debt 661
------------------------------------- -----
There are three financial covenants under the Group's facilities
as follows:
Threshold Oct-22 Headroom Oct-21
--------------- ---------- ------ ---------------- -------
Interest cover 3x 13.9x GBP132m (EBIT) 11.6x
GBP320m (Net
Loan to value 70% 44% debt) 43%
Debt leverage 3.0x 1.6x GBP166m (EBITDA) 1.5x
--------------- ---------- ------ ---------------- -------
The covenant calculations have been prepared in accordance with
the requirements of the facilities to which they relate.
Balance sheet
Net assets at 31 October 2022 were GBP959.0m (H1 2022:
GBP932.7m), equivalent to net assets per share of 413p (H1 2022:
379p). Net tangible assets at 31 October 2022 were GBP693.9m (H1
2022: GBP656.8m), equivalent to a net tangible asset value of 299p
per share (H1 2022: 267p per share).
Gearing at 31 October 2022 was 69.0% (H1 2022: 89.4%) and ROCE
was 13.5% (H1 2022: 12.5%).
Foreign exchange risk
The average and period end exchange rates used to translate the
Group's overseas operations were as follows:
October 2022 October 2021 April 2022
GBP : EUR GBP : EUR GBP : EUR
----------- ------------- ------------- ----------
Average 1.16 1.17 1.18
Period end 1.16 1.18 1.19
----------- ------------- ------------- ----------
Going concern
Having considered the Group's current trading, cash flow
generation and debt maturity, the Directors have concluded that it
is appropriate to prepare the Group financial statements on a going
concern basis.
Risks and uncertainties
The Board and the Group's management have clearly defined
responsibility for identifying the major business risks facing the
Group and for developing systems to mitigate and manage those
risks.
The principal risks and uncertainties facing the Group at 30
April 2022 were set out in detail on pages 30 to 34 of the FY 2022
annual report, a copy of which is available at
www.reddenorthgate.com , and were identified as:
-- economic environment
-- market risk
-- vehicle holding costs
-- the employee environment
-- legal and compliance
-- IT systems
-- recovery of contract assets
-- access to capital
These principal risks have not changed since the last annual
report and continue to be those that could impact the Group during
the second half of the current financial year.
Alternative performance measures and glossary of terms
A reconciliation of statutory to underlying Group performance is
outlined at the front of this document. A reconciliation of
underlying cash flow measures and additional alternative
performance measures used to assess performance of the Group is
shown below.
Six months Six months
to 31.10.22 to 31.10.21
GBPm GBPm
------------------------------------------------------ ------------- -------------
Underlying EBIT 93.4 87.3
Add back:
Depreciation of property, plant and equipment 104.1 94.8
Loss on disposal of assets 0.7 0.2
Intangible amortisation included in underlying
operating profit (Note 6) 0.6 0.4
------------- -------------
Underlying EBITDA 198.8 182.8
Net replacement capex (53.1) (68.8)
Lease principal payments (under IFRS 16 and
HP) (24.6) (20.4)
------------- -------------
Steady state cash generation 121.2 93.5
Exceptional items (excluding non-cash items)
(Note 6) - (0.6)
Working capital and non-cash items (19.6) (33.0)
Growth capex (68.7) (51.7)
Taxation (14.7) (9.9)
------------- -------------
Net operating cash 18.2 (1.8)
Distributions from associates 1.9 2.1
Interest and other financing costs (8.1) (7.4)
Acquisition of business net of cash acquired (9.9) (0.5)
------------- -------------
Free cash flow 2.1 (7.6)
Payments to acquire treasury shares (40.5) -
Dividends paid (35.0) (29.3)
Lease principal payments 24.6 20.4
------------- -------------
Net cash consumed (48.8) (16.5)
------------- -------------
Reconciliation to cash flow statement:
Net increase (decrease) in cash and cash equivalents 3.5 (3.5)
Add back:
Receipt of bank loans and other borrowings (76.8) (33.4)
Repayments of bank loans and other borrowings - -
Principal element of lease payments under
IFRS 16 16.8 11.8
Principal element of lease payments under
HP obligations 7.8 8.6
------------- -------------
Net cash consumed (48.8) (16.5)
------------- -------------
Reconciliation of capital expenditure
Purchases of vehicles for hire 177.0 188.8
Proceeds from disposals of vehicles for hire (58.9) (75.9)
Proceeds from disposal of vehicles for credit
hire and other property, plant and equipment - (0.9)
Purchases of other property plant and equipment 3.0 8.1
Purchases of intangible assets 0.7 0.5
------------- -------------
Net capital expenditure 121.8 120.6
------------- -------------
Net replacement capex(1) 53.1 68.8
Growth capex(2) 68.7 51.7
------------- -------------
Net capital expenditure 121.8 120.6
------------- -------------
(1) Net capital expenditure other than that defined as growth
capex
(2) Growth capex represents the cash consumed in order to grow
the total owned fleet or the cash generated if the owned fleet
size is reduced in periods of contraction
Northgate Northgate Group
UK&I Spain Sub-total
6 months 6 months 6 months
to 31.10.22 to 31.10.22 to 31.10.22
GBP000 GBP000 GBP000
------------------------------------------ ------------- ------------- -------------
Underlying operating profit(1) 47,542 30,992 78,534
Exclude:
Adjustments to underlying depreciation
charge in relation to vehicles
sold in the period (18,767) (5,931) (24,698)
------------- ------------- -------------
Rental profit 28,775 25,061 53,836
Divided by: Revenue: hire of vehicles(2) 184,136 122,685 306,821
Rental margin 15.6% 20.4% 17.5%
Northgate Northgate Group
UK&I Spain Sub-total
6 months 6 months 6 months
to 31.10.21 to 31.10.21 to 31.10.21
GBP000 GBP000 GBP000
------------------------------------------ ------------- ------------- -------------
Underlying operating profit(1) 52,928 22,554 75,482
Exclude:
Adjustments to underlying depreciation
charge in relation to vehicles
sold in the period (22,917) (4,087) (27,004)
------------- ------------- -------------
Rental profit 30,011 18,467 48,478
Divided by: Revenue: hire of vehicles(2) 170,840 107,683 278,523
Rental margin 17.6% 17.1% 17.4%
(1) See Note 2 to the financial statements for reconciliation of
segment underlying operating profit to Group underlying operating
profit.
(2) Revenue: hire of vehicles including intersegment revenue
(see Note 2 to the financial statements).
Glossary of terms
The following defined terms have been used throughout this
document:
Term Definition
Blakedale Blakedale Limited - A business acquired within
the Northgate UK&I operating segment, providing
specialist vehicle rental solutions
----------------------------------------------------
Charged EV A business within the Northgate UK&I operating
segment, providing EV Charging infrastructure
and solutions
----------------------------------------------------
Company Redde Northgate plc
----------------------------------------------------
Contract hire IFRS 16 (leases) relating to vehicles where
the funder retains the residual value risk
----------------------------------------------------
Disposal profit(s) This is a non-GAAP measure used to describe
the adjustment in the depreciation charge made
in the period for vehicles sold at an amount
different to their net book value at the date
of sale (net of attributable selling costs)
----------------------------------------------------
EBIT Earnings before interest and taxation
----------------------------------------------------
EBITDA Earnings before interest, taxation, depreciation
and amortisation
----------------------------------------------------
EPS Earnings per share. Underlying unless otherwise
stated
----------------------------------------------------
EV(s) Electric vehicle(s)
----------------------------------------------------
Facility headroom Calculated as facilities of GBP817m less net
borrowings of GBP509m. Net borrowings represent
net debt of GBP661m excluding lease liabilities
of GBP161m and unamortised arrangement fees
of GBP9m and are stated after the deduction
of GBP19m of cash balances which are available
to offset against borrowings
----------------------------------------------------
FMG RS A business within the Redde operating segment,
providing vehicle repair services
----------------------------------------------------
Free cash flow Net cash generated after principal lease payments
and before share buybacks and the payment of
dividends
----------------------------------------------------
FY 2022 The year ended 30 April 2022
----------------------------------------------------
FY 2023 The year ending 30 April 2023
----------------------------------------------------
GAAP Generally Accepted Accounting Practice: meaning
compliance with IFRS
----------------------------------------------------
Gearing Calculated as net debt divided by net tangible
assets
----------------------------------------------------
Group The Company and its subsidiaries
----------------------------------------------------
Growth capex Growth capex represents the cash consumed in
order to grow the total owned rental fleet
or the cash generated if the fleet size is
reduced in periods of contraction
----------------------------------------------------
H1 2023 The six month period ended 31 October 2022
----------------------------------------------------
H1 2022 The six month period ended 31 October 2021
----------------------------------------------------
H1/H2 Half year period: H1 being the first half and
H2 being the second half of the financial year
----------------------------------------------------
HP (leases) Leases recognised on the balance sheet that
would previously have been classified as finance
leases prior to the adoption of IFRS 16
----------------------------------------------------
IFRS International Financial Reporting Standards
----------------------------------------------------
IFRS 16 (leases) Leases recognised on the balance sheet that
would previously have been classified as operating
leases prior to the adoption of IFRS 16
----------------------------------------------------
LCV Light commercial vehicle: the official term
used within the UK and European Union for a
commercial carrier vehicle with a gross vehicle
weight of not more than 3.5 tonnes
----------------------------------------------------
Lease principal Includes the total principal payment on leases
payments including those recognised before and after
adoption of IFRS 16
----------------------------------------------------
Net replacement Net capital expenditure other than that defined
capex as growth capex and lease principal payments.
----------------------------------------------------
Net tangible assets Net assets less goodwill and other intangible
assets
----------------------------------------------------
PBT Profit before taxation. Underlying unless otherwise
stated
----------------------------------------------------
PPU Profit per unit/loss per unit - this is a non-GAAP
measure used to describe disposal profit (as
defined), divided by the number of vehicles
sold
----------------------------------------------------
Profit & loss Referring to the Income Statement
----------------------------------------------------
ROCE Underlying return on capital employed: calculated
as underlying EBIT (see non-GAAP reconciliation)
divided by average capital employed excluding
acquired goodwill and intangible assets
----------------------------------------------------
Steady state cash Underlying EBITDA less net replacement capex
generation and lease principal payments
----------------------------------------------------
The Group The Company and its subsidiaries
----------------------------------------------------
Underlying free Free cash flow excluding growth capex
cash flow
----------------------------------------------------
Utilisation Calculated as the average number of vehicles
on hire divided by average rentable fleet in
any period
----------------------------------------------------
VOH Vehicles on hire. Average unless otherwise
stated
----------------------------------------------------
Condensed consolidated income statement
for the six months ended 31 October 2022
----------------------------------------------------------------------------------------------------------------------
Six months Six months Year to
to 31.10.22 to 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
Statutory Statutory Statutory
Note GBP000 GBP000 GBP000
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Revenue: hire of vehicles 2 302,717 277,145 563,288
Revenue: sale of vehicles 2 68,738 89,979 149,939
Revenue: claims and services 2 324,877 245,798 530,330
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Total revenue 2 696,332 612,922 1,243,557
Cost of sales (478,846) (441,259) (897,349)
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Gross profit 217,486 171,663 346,208
Administrative expenses (excluding exceptional items and amortisation on
acquired intangible
assets) (97,397) (86,481) (182,204)
Exceptional administrative expenses: reversal of previous impairment of
property, plant and
equipment 10,11 - 2,999 2,998
Exceptional administrative expenses: other costs 11 - (625) (690)
Amortisation on acquired intangible assets (10,056) (9,869) (19,778)
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Total administrative expenses (107,453) (93,976) (199,674)
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Operating profit 110,033 77,687 146,534
Income from associates 2,8 1,559 2,111 3,866
Gain on bargain purchase 11 - 290 355
EBIT 2 111,592 80,088 150,755
Interest income 24 16 34
Finance costs (9,681) (8,374) (18,100)
Profit before taxation 101,935 71,730 132,689
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Taxation 3 (19,940) (16,241) (31,144)
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Profit for the period 81,995 55,489 101,545
-------------------------------------------------------------------------- ----- ----------- ----------- ---------
Profit for the period is wholly attributable to owners of the
Company. All results arise from continuing operations.
Earnings per share
Basic 434.4p 22.5p 41.3p
------------------- ----- ----- -----
Diluted 433.5p 22.0p 40.4p
------------------- ----- ----- -----
Condensed consolidated statement of comprehensive income
for the six months ended 31 October 2022
-------------------------------------------------------------------------------- ----------- ----------- ----------
Six months Six months Year to
to 31.10.22 to 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
-------------------------------------------------------------------------------- ----------- ----------- ----------
Amounts attributable to owners of the Company
Profit attributable to owners 81,995 55,489 101,545
Other comprehensive income (expense)
Foreign exchange differences on retranslation of net assets of subsidiary
undertakings 12,476 (13,134) (16,347)
Foreign exchange differences on long term borrowings held as hedges (9,635) 9,614 11,904
Foreign exchange difference on revaluation reserve 32 (31) (41)
Total other comprehensive income (expense) for the period 2,873 (3,551) (4,484)
-------------------------------------------------------------------------------- ----------- ----------- ----------
Total comprehensive income for the period 84,868 51,938 97,061
-------------------------------------------------------------------------------- ----------- ----------- ----------
All items will subsequently be reclassified to the consolidated
income statement. Profit attributable to the owners of the Company
includes amortisation of intangible assets.
Condensed consolidated balance sheet
31 October 2022
31.10.22 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
--------------------------------- ---- ----------- ----------- ---------
Non-current assets
Goodwill 6 118,781 114,903 114,926
Other intangible assets 6 146,319 161,018 151,312
Property, plant and equipment 7 1,257,757 1,144,858 1,161,915
Deferred tax assets 3,061 9,824 3,175
Interest in associates 8 5,534 6,032 5,843
Total non-current assets 1,531,452 1,436,635 1,437,171
---------------------------------- ---- ----------- ----------- ---------
Current assets
Inventories 15,555 11,731 18,696
Receivables and contract assets 420,821 335,941 359,053
Current tax assets 6,917 - 7,432
Cash and bank balances 9 18,956 34,817 24,561
---------------------------------- ---- ----------- ----------- ---------
Total current assets 462,249 382,489 409,742
---------------------------------- ---- ----------- ----------- ---------
Total assets 1,993,701 1,819,124 1,846,913
---------------------------------- ---- ----------- ----------- ---------
Current liabilities
Trade and other payables 301,031 217,076 246,833
Current tax liabilities 5,351 8,969 3,327
Lease liabilities 56,889 36,558 52,524
Short-term borrowings 11,151 127,665 21,007
---------------------------------- ---- ----------- ----------- ---------
Total current liabilities 374,422 390,268 323,691
---------------------------------- ---- ----------- ----------- ---------
Net current assets (liabilities) 87,827 (7,779) 86,051
---------------------------------- ---- ----------- ----------- ---------
Non-current liabilities
Trade and other payables 4,942 3,849 4,509
Lease liabilities 103,188 121,143 111,755
Long term borrowings 509,063 336,675 421,822
Deferred tax liabilities 43,062 34,450 38,375
Total non-current liabilities 660,255 496,117 576,461
---------------------------------- ---- ----------- ----------- ---------
Total liabilities 1,034,677 886,385 900,152
---------------------------------- ---- ----------- ----------- ---------
NET ASSETS 959,024 932,739 946,761
---------------------------------- ---- ----------- ----------- ---------
Equity
Share capital 123,046 123,046 123,046
Share premium account 113,510 113,510 113,510
Treasury shares reserve (48,633) - (7,493)
Own shares reserve (13,262) (6,145) (16,439)
Translation reserve (5,792) (7,710) (8,633)
Other reserves 330,467 330,445 330,435
Retained earnings 459,688 379,593 412,335
---------------------------------- ---- ----------- ----------- ---------
TOTAL EQUITY 959,024 932,739 946,761
---------------------------------- ---- ----------- ----------- ---------
Total equity is wholly attributable to owners of the
Company.
Condensed consolidated cash flow statement
for the six months ended 31 October 2022
---------------------------------------------------------------- ----- ----------- ----------- ---------
Six months Six months Year to
to 31.10.22 to 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
---------------------------------------------------------------- ----- ----------- ----------- ---------
Net cash generated from operations 10 38,056 18,776 127,643
---------------------------------------------------------------- ----- ----------- ----------- ---------
Investing activities
Interest received 24 16 34
Distributions from associates 8 1,868 2,126 4,070
Acquisition of business 12 (10,043) (554) (853)
Cash acquired on acquisition 12 141 36 371
Proceeds from disposal of other
property, plant and equipment 87 885 2,683
Purchases of other property, plant and equipment (3,035) (8,066) (52,369)
Purchases of intangible assets (701) (468) (1,373)
---------------------------------------------------------------- ----- ----------- ----------- ---------
Net cash used in investing activities (11,659) (6,025) (47,437)
---------------------------------------------------------------- ----- ----------- ----------- ---------
Financing activities
Dividends paid (34,984) (29,295) (43,897)
Receipt of bank loans and other borrowings 76,849 33,409 318,056
Repayment of bank loans and other borrowings - - (277,617)
Debt issue costs (950) - (5,428)
Exceptional finance costs - - (1,435)
Principal element of lease payments under IFRS 16 (16,754) (11,813) (27,959)
Principal element of lease payments under HP obligations (7,827) (8,575) (15,700)
Payments to acquire treasury shares (40,484) - (7,493)
Net receipts (payments) to acquire own shares for share schemes 1,233 57 (9,933)
Net cash used in financing activities (22,917) (16,217) (71,406)
---------------------------------------------------------------- ----- ----------- ----------- ---------
Net increase (decrease) in cash and cash equivalents 3,480 (3,466) 8,800
Cash and cash equivalents at beginning of the period 15,769 6,821 6,821
Effect of foreign exchange movements (293) (31) 148
---------------------------------------------------------------- ----- ----------- ----------- ---------
Cash and cash equivalents at the end of the period 18,956 3,324 15,769
---------------------------------------------------------------- ----- ----------- ----------- ---------
Cash and cash equivalents consist of:
Cash and bank balances 918,956 34,817 24,561
Bank overdrafts 9 - (31,493) (8,792)
-------------------------------------- ------ -------- -------
18,956 3,324 15,769
-------------------------------------- ------ -------- -------
Condensed consolidated statement of changes in equity
for the six months ended 31 October 2022
Share
capital
and share Treasury Own Translation Other Retained
premium shares shares reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ----------- ---------- --------- ------------ ---------- ---------- ---------
Total equity
at 1 May 2021 236,556 - (6,460) (4,190) 330,476 351,747 908,129
Share options
fair value
charge - - - - - 1,910 1,910
Share options
exercised - - 258 - - (258) -
Dividends paid - - - - - (29,295) (29,295)
Net receipts
of shares - - 57 - - - 57
Total comprehensive
(expense) income - - - (3,520) (31) 55,489 51,938
Total equity
at 1 November
2021 236,556 - (6,145) (7,710) 330,445 379,593 932,739
Share options
fair value
charge - - - - - 1,785 1,785
Share options
exercised - - (258) - - (330) (588)
Dividends paid - - - - - (14,602) (14,602)
Net purchases
of shares - (7,493) (10,624) - - - (18,117)
Transfer of
shares on vesting
of share options - - 588 - - - 588
Deferred tax
on share based
payments recognised
in equity - - - - - (167) (167)
Total comprehensive
(expense) income - - - (923) (10) 46,056 45,123
Total equity
at 1 May 2022 236,556 (7,493) (16,439) (8,633) 330,435 412,335 946,761
Share options
fair value
charge - - - - - 2,286 2,286
Share options
exercised - - 1,944 - - (1,944) -
Dividends paid - - - - - (34,984) (34,984)
Net (purchases)
receipts of
shares - (41,140) 1,233 - - - (39,907)
Total comprehensive
income - - - 2,841 32 81,995 84,868
Total equity
at 31 October
2022 236,556 (48,633) (13,262) (5,792) 330,467 459,688 959,024
Other reserves comprise the capital redemption reserve, revaluation
reserve and merger reserve.
Unaudited notes
1. Basis of preparation and accounting policies
Redde Northgate plc is a company incorporated in England and Wales
under the Companies Act 2006.
This condensed consolidated interim financial report for the half-year
reporting period ended 31 October 2022 has been prepared in accordance
with the UK-adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority.
The interim report does not include all of the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 30 April 2022, which has been prepared in accordance with
UK-adopted international accounting standards and the requirements
of the Companies Act 2006, and any public announcements made by the
Group during the interim reporting period.
The accounting policies adopted are consistent with those of the
previous financial year, except for the estimation of income tax
(see note 3).
The condensed financial statements are unaudited and were approved
by the Board of Directors on 7 December 2022. The condensed financial
statements have been reviewed by the auditors and the independent
review report is set out in this document.
The interim financial information for the six months ended 31 October
2022, including comparative financial information, has been prepared
on the basis of the accounting policies set out in the last annual
report and accounts. There are no new accounting standards that have
been adopted in the period.
In preparing the interim financial statements, the significant judgements
made by management in applying the Group's accounting policies and
key sources of estimation uncertainty were the same, in all material
respects, as those applied to the consolidated financial statements
for the year ended 30 April 2022. Depreciation charges reflect adjustments
made as a result of differences between expected and actual residual
values of used vehicles, taking into account the further directly
attributable costs to sell the vehicles.
The Directors apply judgement in determining the appropriate method
of depreciation (straight line) and are required to estimate the
future residual value of vehicles with due consideration of variables
including age, mileage and condition.
Residual values have increased recently due to the well-publicised
new vehicle supply constraints increasing demand for our vehicle
assets. This disruption is not anticipated to continue into the medium
term but has increased the level of judgement in this area as it
is more difficult to estimate the future residual value of vehicles
at the point they are expected to be sold. Depreciation rates have
been adjusted from 1 May 2022 with the adjustment presented outside
of underlying results. Depreciation rates will remain under review
as the longer term impact on residual values becomes clearer.
The expected adjustment for settlement of claims due from insurance
companies and self-insuring organisations remains a critical area
of accounting judgement and estimation uncertainty. The approach
taken in the period remains consistent with that outlined in the
accounting policies for the year ended 30 April 2022. The carrying
value of contract assets for claims from insurance companies at 31
October 2022 was GBP231,898,000 (30 April 2022 GBP193,834 ,000).
A 3% difference between the carrying amount of claims in the balance
sheet and the amounts finally settled would lead to a GBP7.0m charge
or credit to the income statement in subsequent periods.
Going concern assumption
The Directors have taken into account the following matters in concluding
whether or not it is appropriate to prepare the interim financial
statements on a going concern basis:
Assessment of prospects
The Group is well established within the markets it operates and
has demonstrated resilience through the Covid-19 period and beyond
and also throughout previous economic cycles.
The Group's prospects are assessed through its strategic planning
process. This process includes an annual review of the ongoing strategic
plan, led by the CEO, together with the involvement of business functions
in all territories. The Board engages closely with executive management
throughout this process and challenges delivery of the strategic
plan during regular Board meetings. Part of the Board's role is to
challenge the plan to ensure it is robust and makes due consideration
of the appropriate external environment.
Assessment of going concern
The strategy and associated principal risks underpin the Group's
three year strategic plan ("Plan"), which is updated annually. This
process considers the current and prospective macro-economic conditions
in the countries in which we operate and the competitive tension
that exists within the markets that we trade in.
The Plan also encompasses the projected cash flows, dividend cover
assuming operation of stated policy and headroom against borrowing
facilities and financial covenants under the Group's facilities throughout
the planned period. The Plan makes certain assumptions about the
normal level of capital recycling likely to occur and therefore considers
whether additional financing will be required. Headroom against the
Group's existing banking facilities at 31 October 2022 was GBP308m.
This compares to headroom of GBP382m at 30 April 2022. At the date
of signing these unaudited financial statements, all of the Group's
principal borrowing facilities have maturity dates outside of the
period under review, therefore the Group's facilities provide sufficient
headroom to fund the capital expenditure and working capital requirements
for at least 12 months following the date of this report.
Since preparing the plan, a reforecast has been performed which further
takes into account developments in the macro-economic environment
that have developed such as continued shortage in supply of new vehicles,
inflationary pressures across the cost base and exposure to rises
in interest rates. The reforecast has been prepared on a conservative
basis and demonstrates that sufficient headroom remains against available
debt facilities and the covenants attached to those. The Directors
therefore have a reasonable expectation that the Group will continue
to meet its obligations as they fall due for at least 12 months from
the date of this report.
Information extracted from 2022 annual report
The financial figures for the year ended 30 April 2022, as set out
in this report, do not constitute statutory accounts but are derived
from the statutory accounts for that financial year.
The statutory accounts for the year ended 30 April 2022 were prepared
with UK-adopted International Accounting Standards and the Companies
Act 2006 applicable to companies reporting under IFRS and were delivered
to the Registrar of Companies on 1 October 2022. The audit report
was unqualified, did not draw attention to any matters by way of
emphasis and did not include a statement under Section 498(2) or
498(3) of the Companies Act 2006.
2. Segmental analysis
Management has determined the operating segments based upon the
information provided to the Board of Directors, which is considered
to be the chief operating decision maker. The Group is managed, and
reports internally, on a basis consistent with its three main
operating divisions, Northgate UK&I, Northgate Spain and Redde.
The principal activities of these divisions are set out in the
Operating review.
Northgate Northgate Group Group
UK&I Spain Redde Corporate eliminations total
Six months Six months Six months Six months Six months Six months
to 31.10.22 to 31.10.22 to 31.10.22 to 31.10.22 to 31.10.22 to 31.10.22
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Revenue: hire of
vehicles 180,032 122,685 - - - 302,717
Revenue: sale of
vehicles 50,305 18,178 255 - - 68,738
Revenue: claims
and services - - 324,877 - - 324,877
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
External revenue 230,337 140,863 325,132 - - 696,332
Intersegment revenue 4,104 - 6,537 - (10,641) -
Total revenue 234,441 140,863 331,669 - (10,641) 696,332
Timing of revenue
recognition:
At a point in time 50,305 18,178 128,440 - - 196,923
Over time 180,032 122,685 196,692 - - 499,409
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
External revenue 230,337 140,863 325,132 - - 696,332
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Underlying operating
profit (loss) 47,542 30,992 18,857 (5,550) - 91,841
Income from associates - - 1,559 - - 1,559
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Underlying EBIT* 47,542 30,992 20,416 (5,550) - 93,400
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Adjustments to
underlying
depreciation charge 28,248
Amortisation on
acquired intangible
assets (note 6) (10,056)
EBIT 111,592
Interest income 24
Finance costs (9,681)
Profit before taxation 101,935
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
* Underlying EBIT stated before amortisation on acquired
intangible assets, adjustments to underlying depreciation charge
and exceptional items is the measure used by the Board of Directors
to assess segment performance.
Northgate Northgate Group Group
UK&I Spain Redde Corporate eliminations total
Six months Six months Six months Six months Six months Six months
to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Revenue: hire of
vehicles 169,462 107,683 - - - 277,145
Revenue: sale of
vehicles 61,867 28,112 - - - 89,979
Revenue: claims
and services - - 245,798 - - 245,798
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
External revenue 231,329 135,795 245,798 - - 612,922
Intersegment revenue 1,378 - 6,133 - (7,511) -
Total revenue 232,707 135,795 251,931 - (7,511) 612,922
Timing of revenue
recognition:
At a point in time 61,867 28,112 90,528 - - 180,507
Over time 169,462 107,683 155,270 - - 432,415
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
External revenue 231,329 135,795 245,798 - - 612,922
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Underlying operating
profit (loss) 52,928 22,554 13,957 (4,257) - 85,182
Income from associates - - 2,111 - - 2,111
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Underlying EBIT* 52,928 22,554 16,068 (4,257) - 87,293
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Exceptional items
(Note 11) 2,374
Amortisation on
acquired intangible
assets (9,869)
Gain on bargain
purchase (Note 11) 290
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
EBIT 80,088
Interest income 16
Finance costs (8,374)
Profit before taxation 71,730
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Northgate Northgate Group
Group
UK&I Spain Redde Corporate eliminations total
Year Year Year Year Year to Year
to 30.04.22 to 30.04.22 to 30.04.22 to 30.04.22 30.04.22 to 30.04.22
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Revenue: hire of
vehicles 342,733 220,555 - - - 563,288
Revenue: sale of
vehicles 111,802 38,137 - - - 149,939
Revenue: claims and
services - - 530,330 - - 530,330
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
External revenue 454,535 258,692 530,330 - - 1,243,557
Intersegment revenue 3,886 - 13,354 - (17,240) -
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Total revenue 458,421 258,692 543,684 - (17,240) 1,243,557
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Timing of revenue
recognition:
At a point in time 111,802 38,137 178,896 - - 328,835
Over time 342,733 220,555 351,434 - - 914,722
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
External revenue 454,535 258,692 530,330 - - 1,243,557
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Underlying operating
profit (loss) 97,957 43,888 31,769 (9,610) - 164,004
Income from
associates - - 3,866 - - 3,866
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Underlying EBIT* 97,957 43,888 35,635 (9,610) - 167,870
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Exceptional items
(Note 11) 2,308
Amortisation on
acquired
intangible assets (19,778)
Gain on bargain
purchase
(Note 11) 355
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
EBIT 150,755
Interest income 34
Finance costs (18,100)
Profit before
taxation 132,689
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
3. Taxation
The charge for taxation for the six months to 31 October 2022 is
based on the estimated effective rate for the year ending 30 April
2023 of 19.6% (31 October 2021 - 22.6% and 30 April 2022 - 23.5%).
The April 2022 full year tax rate was impacted by tax rate change
adjustments to deferred tax balances recognising an increase in UK
statutory tax rates from 19% to 25% from April 2023.
4. Earnings per share
Six months Six months Year to
to 31.10.22 to 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
Statutory Statutory Statutory
Basic and diluted earnings per share GBP000 GBP000 GBP000
------------------------------------------------------------------------------- ----------- ----------- -----------
The calculation of basic and diluted earnings per share is based on the
following data:
Earnings
Earnings for the purposes of basic and diluted earnings per share, being profit
attributable
to owners of the Company 81,995 55,489 101,545
------------------------------------------------------------------------------- ----------- ----------- -----------
Number of shares
Weighted average number of Ordinary shares for the purpose of basic earnings
per share 238,687,578 246,091,423 245,997,303
Effect of dilutive potential Ordinary shares - share options 5,769,273 5,574,749 5,242,307
Weighted average number of Ordinary shares for the purpose of diluted earnings
per share 244,456,851 251,666,172 251,239,610
Basic earnings per share 34.4p 22.5p 41.3p
------------------------------------------------------------------------------- ----------- ----------- -----------
Diluted earnings per share 33.5p 22.0p 40.4p
------------------------------------------------------------------------------- ----------- ----------- -----------
The calculated weighted average number of Ordinary shares for
the purpose of basic earnings per share includes a reduction of
7,403,845 shares (31 October 2022: nil and 30 April 2022: 94,120)
relating to treasury shares acquired.
5. Dividends
In the six months to 31 October 2022, a dividend of
GBP34,984,000 was paid (2022 - GBP29,295,000) representing the
final dividend for the year ended 30 April 2022. The Directors have
declared an interim dividend of 7.5p per share for the six months
ended 31 October 2022 (2022 - 6.0p).
The final dividend of 15.0p in relation to the year ended 30
April 2022 was paid in September 2022.
6. Intangible assets
Net book value Goodwill Other intangible assets Grand
total
---------------------------------------------
Customer Brand Other Total
relationships names software
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- -------- --------------- ------ ---------- -------- ---------
At 1 May 2021 114,503 150,346 12,156 8,328 170,830 285,333
Acquisition 400 50 100 - 150 550
Additions - - - 510 510 510
Disposals - - - (75) (75) (75)
Amortisation - (8,701) (537) (1,078) (10,316) (10,316)
Exchange differences - - - (81) (81) (81)
At 1 November
2021 114,903 141,695 11,719 7,604 161,018 275,921
Acquisition 23 - - - - 23
Additions - - - 863 863 863
Disposals - - - (92) (92) (92)
Amortisation - (8,715) (481) (1,259) (10,455) (10,455)
Exchange differences - - - (22) (22) (22)
---------------------- -------- --------------- ------ ---------- -------- ---------
At 1 May 2022 114,926 132,980 11,238 7,094 151,312 266,238
Acquisition 3,855 4,500 400 - 4,900 8,755
Additions - - - 701 701 701
Amortisation - (8,846) (538) (1,289) (10,673) (10,673)
Exchange differences - - - 79 79 79
At 31 October
2022 118,781 128,634 11,100 6,585 146,319 265,100
---------------------- -------- --------------- ------ ---------- -------- ---------
At 31 October 2022
Cost or fair value 333,448
Accumulated amortisation
and impairment (68,348)
Net book value 265,100
------------------------------ ---------
Amortisation was included within the income statement as
follows:
(Unaudited) (Unaudited) (Audited)
to 31.10.22 to 31.10.21 to 30.04.22
GBP000 GBP000 GBP000
-------------------------------------------- ----------- ----------- -----------
Included within underlying operating profit
as administrative expenses 617 447 993
Excluded from underlying operating profit* 10,056 9,869 19,778
10,673 10,316 20,771
-------------------------------------------- ----------- ----------- -----------
* Amortisation of intangible assets excluded from underlying
operating profit relates to intangible assets recognised on
business combinations.
7. Property, plant and equipment
Net book value Vehicles Other property, Total
for hire and plant & equipment
credit hire
GBP000 GBP000 GBP000
------------------------- ------------- ------------------- ----------
At 1 May 2021 937,340 146,580 1,083,920
Acquisition - 3 3
Additions 209,173 28,948 238,121
Disposals (1,849) (3,171) (5,020)
Transfers 2 (2) -
Transfer to inventories (66,674) - (66,674)
Depreciation (83,879) (10,912) (94,791)
Impairment reversal
(Note 11) - 2,999 2,999
Exchange differences (12,090) (1,610) (13,700)
-------------------------- ------------- ------------------- ----------
At 1 November 2021 982,023 162,835 1,144,858
Acquisition - - -
Additions 169,350 15,647 184,997
Disposals (1,873) (1,511) (3,384)
Transfers 89 (89) -
Transfer to inventories (59,098) - (59,098)
Depreciation (90,758) (11,613) (102,371)
Impairment (Note 11) - (1) (1)
Exchange differences (2,700) (386) (3,086)
-------------------------- ------------- ------------------- ----------
At 1 May 2022 997,033 164,882 1,161,915
Acquisition 7,203 148 7,351
Additions 199,529 6,661 206,190
Disposals - (91) (91)
Transfers 16 (16) -
Transfer to inventories (53,230) - (53,230)
Depreciation (67,161) (10,144) (77,305)
Exchange differences 11,517 1,410 12,927
At 31 October 2022 1,094,907 162,850 1,257,757
-------------------------- ------------- ------------------- ----------
At 31 October 2022
Cost or fair value 1,936,260
Accumulated depreciation (678,503)
Net book value 1,257,757
----------------------------- ----------
Included within property, plant and equipment above, are right
of use assets under HP and IFRS 16 (leases) with net book value of
GBP166,044,000 (30 April 2022: GBP163,907,000).
Depreciation was included within the income statement as
follows:
(Unaudited) (Unaudited) (Audited)
to 31.10.22 to 31.10.21 to 30.04.22
GBP000 GBP000 GBP000
------------------------------------- ----------- ----------- -----------
Included within underlying operating
profit as cost of sales 104,090 94,791 197,162
Excluded from underlying operating
profit* (28,248) - -
75,842 94,791 197,162
------------------------------------- ----------- ----------- -----------
* see GAAP reconciliation on page 5.
8. Interest in associates
GBP000
----------------------------------- --------
At 1 May 2021 6,047
Group's share of:
Profit from continuing operations 2,111
Distributions from associates (2,126)
----------------------------------- --------
At 1 November 2021 6,032
Group's share of:
Profit from continuing operations 1,755
Distributions from associates (1,944)
----------------------------------- --------
At 1 May 2022 5,843
Group's share of:
Profit from continuing operations 1,559
Distributions from associates (1,868)
----------------------------------- --------
At 31 October 2022 5,534
----------------------------------- --------
9. Analysis of consolidated net debt
(Unaudited) (Unaudited) (Audited)
to 31.10.22 to 31.10.21 to 30.04.22
GBP000 GBP000 GBP000
------------------------------------- ----------- ----------- -----------
Cash and bank balances (18,956) (34,817) (24,561)
Bank overdrafts - 31,493 8,792
Bank loans 195,990 347,759 118,573
Loan notes 322,931 84,490 314,264
Leases arising following adoption of
IFRS 16 129,520 116,793 130,444
Leases arising under HP obligations 30,557 40,908 33,835
Cumulative preference shares 500 500 500
Confirming facilities 793 98 700
Consolidated net debt 661,335 587,224 582,547
------------------------------------- ----------- ----------- -----------
10. Notes to the cash flow statement
Six months Six months Year to
to 31.10.22 to 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
Net cash generated from operations GBP000 GBP000 GBP000
------------------------------------------------------------------------------- ----------- ----------- -----------
Operating profit 110,033 77,687 146,534
Adjustments for:
Depreciation of property, plant and equipment 75,842 94,791 197,162
Net impairment of property, plant and equipment - (2,999) (2,998)
Amortisation of intangible assets 10,673 10,316 20,771
Loss on disposal of vehicles for credit hire and other property, plant and
equipment 705 241 581
Loss on disposal of intangible assets - - 34
Share options fair value charge 2,287 1,910 3,695
------------------------------------------------------------------------------- ----------- ----------- -----------
Operating cash flows before movements in working capital 199,540 181,946 365,779
Increase in non-vehicle inventories (1,193) (463) (1,169)
Increase in receivables (58,454) (26,469) (54,400)
Increase (decrease) in payables 39,347 (5,914) 22,253
Cash generated from operations 179,240 149,100 332,463
Income taxes paid, net (14,689) (9,893) (27,382)
Interest paid (8,378) (7,503) (13,275)
------------------------------------------------------------------------------- ----------- ----------- -----------
Net cash generated from operations before purchases of and proceeds from
disposal of vehicles
for hire 156,173 131,704 291,806
Purchases of vehicles for hire (176,993) (188,787) (292,935)
Proceeds from disposal of vehicles for hire 58,876 75,859 128,772
------------------------------------------------------------------------------- ----------- ----------- -----------
Net cash generated from operations 38,056 18,776 127,643
------------------------------------------------------------------------------- ----------- ----------- -----------
11. Exceptional items
During the period the Group recognised exceptional items in
the income statement as follows:
Six months Six months Year to
to 31.10.22 to 31.10.21 30.04.22
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------- ------------ ------------ ---------
Reversal of previous impairment
of property, plant and equipment - (2,999) (2,998)
Other costs - 625 690
---------------------------------- ------------ ------------ ---------
Exceptional administrative
expenses - (2,374) (2,308)
Restructuring credits - (3,099) (3,545)
FMG RS set up and integration
costs - 725 1,237
Exceptional administrative
expenses - (2,374) (2,308)
Gain on bargain purchase - (290) (355)
Total exceptional items included
within EBIT - (2,664) (2,663)
Exceptional finance costs:
refinancing expenses - - 1,463
Total pre-tax exceptional items - (2,664) (1,200)
Tax charge on exceptional items - 506 228
---------------------------------- ------------ ------------ ---------
During the period there were no items recognised as
exceptional.
Restructuring costs
In the prior period, the Group incurred total exceptional
restructuring credits of GBP3,099,000 of which GBP2,835,000 arose
in Redde and GBP264,000 arose in Northgate UK&I. These costs
were incurred in relation to restructuring activities that were
undertaken during the period as part of the integration and
reorganisation of the Combined Group. These credits include
GBP2,999,000 reversal of previous property impairment (Note 7) in
relation to underutilised property being successfully sublet by the
Group, and GBP100,000 of other restructuring credits.
FMG RS set up and integration costs
In the prior period, the Group incurred costs of GBP725,000 in
relation to the set-up of FMG RS and integration of the
business.
12. Business combinations
On 2 July 2022 the Group acquired the equity interests of
Blakedale Ltd "Blakedale". The acquisition is in line with the
Group strategy and vision to become the leading integrated mobility
solutions provider. The acquisition has been included within the
Northgate UK&I segment. A provisional purchase price allocation
exercise has been undertaken in accordance with IFRS 3 'Business
Combinations'.
Details of this provisional purchase consideration, the net
assets acquired and goodwill are as follows:
Purchase consideration GBP000
-------------------------- --------
Total cash consideration 10,043
-------------------------- --------
The provisional assets and liabilities recognised as a result of
the acquisition are as follows:
GBP000
---------------------------------------- --------
Customer relationships (Note 6) 4,500
Brand names (Note 6) 400
Property, plant and equipment (Note 7) 7,351
Cash and bank balances 141
Stock 468
Trade and other receivables 2,293
Trade and other payables (6,885)
Corporation tax (106)
Deferred tax (1,974)
Net identified assets acquired 6,188
---------------------------------------- --------
Goodwill recognised on acquisition 3,855
---------------------------------------- --------
Acquisition costs
Acquisition costs in relation to Blakedale Ltd of GBP372,000
have been charged to the income statement as administrative
expenses.
Blakedale's contribution to the Group results
Blakedale's contribution to underlying operating profit was a
GBP283,000 profit for the period from 2 July 2022 to 31 October
2022. Revenue during this period was GBP2,570,000.
Prior period
On 30 June 2021 the Group acquired the equity instruments of
Charged Electric Vehicles Limited for a consideration of
GBP553,000. A provisional purchase price allocation exercise was
undertaken in accordance with IFRS 3 'Business Combinations', which
identified net assets acquired of GBP153,000, resulting in goodwill
of GBP400,000 recognised in the balance sheet. The acquisition was
included within the Northgate UK&I segment.
13. Related party transactions
Related party transactions of the Group are consistent with
those disclosed in Note 32 of the Group's annual financial
statements for the year ended 30 April 2022. No new related party
transactions have been entered into during the period.
Interim announcement - Statement of the Directors
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with the UK-adopted International Accounting Standard
34;
-- the interim management report includes a fair review of the
information required by DTR 4.2.7 (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- the interim management report includes a true and fair review
of the information required by DTR 4.2.8 (disclosure of related
party transactions and changes therein).
By order of the Board
Philip Vincent
Chief Financial Officer
7 December 2022
Independent review report to Redde Northgate plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Redde Northgate plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the interim results of Redde Northgate plc for the 6 month
period ended 31 October 2022 (the "period"). Based on our review,
nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material
respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed consolidated balance sheet as at 31 October 2022;
-- the Condensed consolidated income statement and Condensed
consolidated statement of comprehensive income for the period then
ended;
-- the Condensed consolidated cash flow statement for the period then ended;
-- the Condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results
of Redde Northgate plc have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with this ISRE.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the interim results in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the interim results, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Newcastle upon Tyne
7 December 2022
[3] Calculated as underlying EBIT divided by total revenue
[4] Net replacement capex is total capex less growth capex.
Growth capex represents the cash consumed in order to grow the
fleet or the cash generated if the fleet size is reduced in periods
of contraction
[5] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method
[6] Calculated as underlying EBIT divided by total revenue
[7] Net replacement capex is total capex less growth capex.
Growth capex represents the cash consumed in order to grow the
fleet or the cash generated if the fleet size is reduced in periods
of contraction
[8] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method
[9] Gross profit margin calculated as underlying gross profit
divided by total revenue. EBIT margin calculated as underlying EBIT
divided by total revenue
[10] Net replacement capex is total capex less growth capex.
Growth capex represents the cash consumed in order to grow the
fleet or the cash generated if the fleet size is reduced in periods
of contraction
[11] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method
[12] Net replacement capex is total capex less growth capex.
Growth capex represents the cash consumed in order to grow the
fleet or the cash generated if the fleet size is reduced in periods
of contraction
[13] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method
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END
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December 07, 2022 02:00 ET (07:00 GMT)
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