Redde Northgate Share Discussion Threads

[bearraider] 10/6/2008 11:00

the company does not deserve it but at the moment there does not appear to much support until you reach the 350p - 400p range where a long term side trend between about 350 and 550 existed for some years (and when the company made a fraction of the profits it does now).

However it could turn at any point and establish a new bottom (or receive a takeover bid) but as you say one to watch for now -

[woracle] 10/6/2008 09:31

I guess nothing to stop the black box trading taking this down to next support 400p ? before results now.. Interesting but a falling knife at the moment. Think will wait longer and re-asses post results.

[gohunk] 09/6/2008 15:31

bear, not a question of laziness i'm afraid, too many other balls i nthe air at present.
cheers tho

[bearraider] 09/6/2008 13:58

sorry i use level 1 .

The details of the euro loans are in the final 2007 and interim financials and the rns. Northgate do have a brill investors section on their website pdf of them all are there.

but have posted this part in case you are to lazy to look, at the interims debt was £81m lower.

Treasury

As at 29 February, net debt has increased to £865m principally due to the exchange rate movement on our euro debt. With facilities of £1,080m, we have significant headroom both to finance the needs of the existing business, and for future expansion.

The proportion of the Group's net debt with fixed interest rates at 29 February 2008 was 67%, similar to the position at 31 October 2007.

[gohunk] 09/6/2008 12:48

bear, you got level 2 ? can you see todays trades, can you check see if one showing for 4k at 5.10 each please ?

[gohunk] 09/6/2008 11:11

re the bit about money being borrowed in euros etc, how can you find this out ?? i have a feeling its not. also suspect we'll be in for a good set of figures in july....am seriously contemplating topping up, just seeing what i can jiggle around, wouldn't mind averaging down a tad.

[gohunk] 09/6/2008 11:08

oh great....lol....you're right, not exactly inspiring...what happened to the last chap, got the chop ?

[bearraider] 09/6/2008 09:46

Market probably realised the new Financial Director who started on the 2nd June has been director/CEO/FD of three companies that went bankrupt in the last couple of years! It does not inspire confidence!

Northgate plc ("Northgate", the "Company" or the "Group"), the UK and Spain's leading specialist in light commercial vehicle hire, announces the following Board appointment.

The Board is pleased to announce that Mr Robert Contreras has agreed to join the Board as Finance Director with effect from 2 June 2008. A chartered accountant, his most recent appointment was Managing Director of the Surgical Division of Mölnlycke Healthcare Group, a world-leading manufacturer of products and services for the professional health care sector, headquartered in Sweden with global operations. He was previously Chief Executive and Chief Financial Officer of private equity backed Damovo Group SA, and, prior to that, Group Finance Director of Azlan Group plc.

His wide knowledge and proven experience of the European markets will be a valuable asset to our future expansion plans.

Steve Smith, Chief Executive, commented:

"We are delighted to welcome Robert to Northgate and look forward to his contribution as the Company continues the execution of its strategic plan."

The following disclosure is made pursuant to paragraph 9.6.13 of the Listing Rules:

Mr Contreras was a Director of Damovo Group SA ("DG"), and its subsidiary, Damovo III SA ("DIII"), both registered in Luxembourg, from 22 February 2005 to 12 March 2008. In October 2006, DIII was unable to pay interest due on a series of notes, secured inter alia by a guarantee by DG, issued in 2005 as part of a restructuring of the Damovo Group's funding arrangements. On 25 April 2007, following registration at Companies House as foreign companies, and on the application of the Directors, Administration Orders under the Insolvency Act 1986 were granted for both companies. The Directors' Statement of Affairs showed total indebtedness of £566m, of which £304m of secured creditors was satisfied by the sale of assets. There were no other preferential or external creditors, all the remaining indebtedness being intra-group.

Mr Contreras was also a Director of Enterprise Digital Architects SpA, a company registered in Italy, from 16 January 2006 to 9 May 2007 which was declared bankrupt on 22 November 2007.

[bearraider] 07/6/2008 17:14

All Euro debt seems to be for Spain - uncertain if NTG has any operations in Eire (when NTG says UK and Ireland it seems to mean just means UK and N.Ireland - I always though UK incl N.Ireland anyway). It does call the UK division in the 2007 finals - UK and Republic of Ireland but no companies/hire sites show up for EIRE on it's site maps.
Not sure how the currency cost on the debt will affect how the profits figures come out.

NTG buys about 6,000 vehicles a month probably on a 3-4 month lead.

If it believed that utilisation was falling it could easily lower new vehicle orders (it did that in the first half of 2007 when a major competitor was undercutting with non sustainable pricing. NTG cut orders kept up fleet Utilisation and normal pricing - Returning to fleet growth once threat was over.

Demand fo 2nd hand vans normally goes UP in recession, so do prices (UK)

My concern is more for Spain where the fleet has been expanded more rapidly than the disposal network and residuals have fallen in both last two half years. NTG to address this perhaps with launch of private buyer system like the UK which handles 20% of UK disposals at a higher price than to trade or Export from Spain
(N.Africa?)

[pugugly] 07/6/2008 12:56

bearraider;> Thanks for your 11/13. imo Northgate are still very much exposed to a contraction in economic activity. The upside is that more will choose to hire than buy, the downside is that the reduction in demand (due to the slowdown) may be faster than they can sell off redundant units PLUS an overhang of vehicles for sale will reduce the selling price and hence profit.

Ah well we will have to see. Have a good weekend.

[bearraider] 06/6/2008 17:53

Done some checking about Road tax (VED) on vans as I own a motorhome built on a Fiat Ducato chassis I have more than a passing interest.

In the UK
all vans are classed as PLG they fall into two road Tax classes (VED classes)

12 month rates

below 1599cc tax £120
above 1599cc tax £185

these rates will rise by £ 10 and £15 in 2009

VED will therefore not affect van hire (some larger cars in fleet may be affected but doubtful If NTG have many in the UK fleet)

[bearraider] 06/6/2008 16:37

What happened at 4.15pm?
Are those two big buys really sells?

[bearraider] 06/6/2008 15:40

Pug

If you look at the last management statement the net debt has gone up to £865m
from £784m at the interim stage and they said the bulk of the difference was due to the move against sterling. (£81m change)

About £16m was used for the acquisition in the UK a few million for the small increase in UK fleet size (however these combined should be less than the cash/ profit generated in the period so probably little net effect on debt).
Profit may not also cover the increase in fleet size in Spain (12% increase for year)so may account for some of debt increase.

The euro debt was = £570m so a 15% move = £85.5m (1.43 Oct rate would go to 1.21 - Actual March rate was 1.29 April rate was 1.25) April was lowest Euro rate ever it was considered to be overvalued so has recovered a little ground since to 1.27 now - but who knows if it will continue?

From the size of the Spanish operation it would not account for that much debt so some of it must have been used in the UK operation (not sure if they operate in EIRE as opposed to Ireland as part of the UK ops?)

[pugugly] 06/6/2008 14:58

bearraider:.; not so much worried about a rip-off as why did we need a new thread !! Lets make this the main thread now.

Interesting re your Tech report - I have found (the hard way) that you need nerves of steel (plus finger protectors) to call a bounce !!

I worry that the main problem may not be the Spanish market but how much of the € debt has been used to purchase sterlig assets. If all used against € assets then may not be a problem and profit will be translated at an improved exchange rate. If however used to fund sterling assets then depending on the excahnge rate could be looking at a 15% plus capital loss. [The last €'s I bought were at €/£ 1.47 in July 07. I would be lucky to get €1.27 today.

[bearraider] 06/6/2008 11:51

Pugugly

Sorry you feel I ripped off your post on other thread, some of your thoughts there were relevant as were those of others which were all mentioned in various ways in the private technical analyst report that first drew my attention to this share (They also accurately picked the 530p point as a strong resistance / bounce point with instruction to short term buy into bounce and sell at 600p.
All of these sources helped me clarify my own thoughts and I wanted to express them clearly.

I have also included a link into the header that you pointed out in a post so thanks in advance.

Whilst I agree with you the jury is still out for NTG (my particular concern as you have also pointed out is the large dependence on the Spanish property market) I am not really concerned by the UK operations these are far better organised and able to react more quickly to changed environment. At some point these shares will become a good recovery play.

[bearraider] 06/6/2008 10:19

Go

Whilst not earth shattering there was a fair amount of trade buy and sell yesterday, so quess this share has a fair number of followers - just few posters on Advfn! Probably many are watching in the wings waiting for an entry point once the share price stops falling. Good Results on 1st July also may help raise the profile.

[pugugly] 06/6/2008 10:02

Ho Ho:- Gohunk- Thanks for pointing our to Bear my prior postings on the othe thread. !!! Jury still out..

[bearraider] 06/6/2008 09:31

Go

I normally follow a strategy of looking at shares where there has been a big fall in price. I dump all the ones that are falling for good cause, I then look for
a number of criteria.

these include

Real profits over several years at least(or certain real profits in the next half/full year a company may announce losses for a half/full year as a result of downsizing/dumping the loss centers leaving the profitable part.)

Pref growing profits from organic and earnings enhancing acquistions

Low PE or FPE for sector or against market. I also use a set of rolling PE calcs

Good NAV with Low intangabiles

Limited or no company debt (Finance for vans if well covered by residual value of stock I can live with.

Sound management with a track record for growing the business, profits, EPS and well covered dividends.

Northgate seems to tick all my boxes for a medium to long term recovery, price entry point the only question. I thought 530p was it as this was an incredible strong support point, now I have little idea the next really strong support is at around 375p. However as with other companies a turnaround can just happen when the market believes the share has become undervalued, this point then becomes a new support point.

For now I watch and wait but all the best with your investment.

[gohunk] 06/6/2008 08:56

lol...no worries mate...the silver fox to be...lol...
predictions then, where you thinking your in point is ?
Doesn't seem to be that much interest in these at present, but i'm confident all is not as first seems also.
regards

[bearraider] 06/6/2008 00:56

Gohunk

I am going slowly bald and grey (silver!)this is just meant to make me look more distinguished as well as handsome. I am certainly not ugly let alone pugugly! Nor do i copy other peoples ideas without giving the credit due.

My post is telling you why the market may be punishing the share not that I agree with that, or that I believe the share is a bad investment. I only go long in shares (I never short) so once I have found my price entry point if all is as I believe it to be I may well join you as a shareholder / investor. (funds permitting)

The current graph does not look good a bottom is needed to the fall.

[gohunk] 05/6/2008 22:18

lol bear...did you nick this off pugugly, or you one and the same, i thought i'd read this before, or similar, guess your version was a little more detailed.
I'm not sure of the detail, but i thought there were a couple more take overs lined up with funding secured, also had heard a very quiet whisper that someone was eyeing thes up for a take out.
Anyway, as you say they've slipped onto you 'one to watch' list, i've already polughed in....long.
cheers and good luck.

[bearraider] 05/6/2008 17:51

On the 6th June 2008 why does the graph look like Northgate is about to collapse?

Will the price continue to fall? from the look on the graph it looks like a recovery bounce after a long decline has only interrupted the decline.

On the 5th June the price fell past the pre bounce low ( and a possible support level)

At this point the market has several worries

1. Finance - NTG requires and carries a lot of debt and to fund vehicle purchase needs to do so on a continuing rolling basis. Much of this debt is in Euro's (about 70%) and the recent decline of the Euro v Sterling and current credit cruch fears leave room for doubt that NTG can obtain finance on advantage/profitable terms.

2. The coming recession will lower business use - particularly in Spain with the collapse of the property market perhaps giving rise to increasing bad debts.

3.Residual values of vans are very important to profitability, a market going into recession, may lead to a fall in residuals.

4. Rising fuel costs will lead firms to cut mileage - hence less vans hired

5. Without cash to fund takeovers and with the market contracting NTG will cease to grow.

[bearraider] 05/6/2008 17:49

Northgate is the biggest light van rental company in Europe with operations in the UK, Eire and Spain.It grows steadily both organically and by profit funded acquisition in it's two core markets.

It is also looking to take it's business model and grow in a fourth country in Europe.

Investors looking at NTG will find the following resource in explaining the business, model Growth plans very helpful.


Current Credit Crunch & Recession worries now seem to be prolonging the fall in the share price from £12 that began in Jan 2007 and turning it into a prolonged slump.

The company carries a lot of debt to fund vehicles/acqusitions, it seems to be well funded on fair terms (67% is fixed interest) however 70% is in Euros and is vunerable to the £ / Euro exchange rate which has declined from just above 1.40 e to the £ at 2007 yr end (similar at interims) to e1.24 to £ at yr end 2008 - This is the main factor in the increase of debt by £80m during the 2H year till end April 2008



Yr Ending Rev(£m).P-tax£m) EPS . P/E PEG Grth.. Div . Yld
30-Apr-03 a352.39 .a36.60 41.40p 10.0 0.6 +16% 16.00p 3.8%
30-Apr-04 a355.62 .a44.59 50.70p 12.3 0.6 +22% 17.60p 2.8%
30-Apr-05 .339.38 ..54.99 62.10p 13.1 0.6 +22% 20.00p 2.5%
30-Apr-06 .372.61 ..56.06 65.70p 16.7 2.8 +.6% 23.00p 2.1%
30-Apr-07 .526.47 ..75.37 81.60p 13.5 0.6 +24% 25.50p 2.3%

a. Based on UK GAAP presentation of accounts - includes discontinued activities

Northgate Forecasts

Yr Ending Rev(£m) P-tax(£m) EPS.. P/E PEG Grth..Div.. Yld
30-Apr-08 563.75 ...83.09 .90.56p 4.7 0.4 +11% 28.91p 6.6%
30-Apr-09 601.17 ...87.10 .90.33p 4.7 n/a -.0% 31.12p 7.0%
30-Apr-10 643.10 ...92.90 .94.98p 4.5 0.9 +.5% 31.95p 7.3%

Latest Broker recommendations

Date .......Broker name ..New. Price .. target Old ... New . Broker change

27-Jun-08 Altium Capital. Buy .368.00p ...830.00p. .450.00p. Reiteration
27-Jun-08 Panmure Gordon. Buy .368.00p ...807.00p. --------- Reiteration
04-Jun-08 Arden Partners. Buy .530.00p ----------- --------- Reiteration
29-May-08 Panmure Gordon. Buy .579.00p ...807.00p. --------- Reiteration
29-May-08 Citigroup...... Hold 579.00p ...870.00p. .640.00p. DownGrade
02-May-08 Arden Partners. Buy .613.50p ----------- --------- Reiteration
22-Apr-08 Panmure Gordon. Buy .565.00p ...807.00p. --------- Reiteration
02-Apr-08 Altium Capital. Buy .625.00p ...900.00p. .830.00p. Reiteration
02-Apr-08 Arden Partners. Buy .625.00p ----------- --------- Reiteration
19-Mar-08 Panmure Gordon. Buy .572.00p ...807.00p. --------- Reiteration
19-Mar-08 Evolution Sec.. Buy .572.00p ----------- .700.00p. Reiteration

2007/8 FINAL RESULTS are on 1st July 2008