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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Redde Northgate Plc | LSE:REDD | London | Ordinary Share | GB00B41H7391 | ORD 50P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.00 | 0.51% | 396.50 | 396.50 | 398.00 | 398.50 | 394.00 | 398.00 | 381,452 | 16:35:02 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Passenger Car Rental | 1.49B | 139.24M | 0.6141 | 6.47 | 901.3M |
TIDMREDD
RNS Number : 1213U
Redde Northgate PLC
01 December 2021
1 December 2021
REDDE NORTHGATE PLC
("Redde Northgate" or the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 31 OCTOBER 2021
Strong performance across the Group; successfully leveraging our scaled platform to drive growth
Redde Northgate (LSE:REDD), the leading integrated mobility solutions platform providing services across the vehicle lifecycle, is pleased to announce its Interim Results for the six months ended 31 October 2021 ('H1 2022' or the 'period').
Financial Highlights
Adjusted results Six months ended 31 H1 2022 H1 2021 Change October GBPm GBPm % ------------------------ -------- -------- ----------------- Revenue (excluding vehicle sales) 522.9 429.0 21.9% Underlying[1] EBIT 87.3 48.7 79.2% Underlying(1) Profit before Tax 78.9 40.6 94.4% Underlying(1) Earnings per Share 26.1p 13.4p 94.7% ------------------------ -------- -------- ----------------- Statutory results Total revenue 612.9 556.0 10.2% EBIT 80.1 34.0 135.8% Profit before Tax 71.7 25.9 177.4% Earnings per Share 22.5p 8.6p 162.2% ------------------------ -------- -------- ----------------- Other measures ------------------------ -------- -------- ----------------- Net debt[2] 587.2 530.9 10.6% Group net debt (exc IFRS 16 leases)[3] 470.4 461.0 2.0% Steady state cash generation(1) 93.5 81.0 15.5% Free cash flow (7.6) 58.6 (112.9%) ROCE(1) 12.5% 8.1% 4.4ppts Dividend per Share 6.0p 3.4p 76.5% ------------------------ -------- -------- -----------------
-- Trading for the first half was ahead of the Board's expectations, with strong momentum across the Group
-- Revenue (excluding vehicle sales) grew 21.9% to GBP522.9m (H1 2021: GBP429.0m) -- Total Group revenue, including vehicle sales, grew 10.2% to GBP612.9m (H1 2021: GBP556.0m) -- Underlying EBIT grew 79.2%, underlying PBT grew 94.4% and underlying EPS grew 94.7%
-- ROCE increased to 12.5% (H1 2021: 8.1%) due to higher profitability in the Group, strong disposals and a leaner cost base following strategic actions as part of the Focus initiative
-- Significant rental margin progression in both Northgate UK&I, 7.3 ppt increase and Northgate Spain, 2.7 ppt increase, driven by underlying strength in the rental business and a leaner cost base
-- Steady state cash generation improved 15.5% to GBP93.5m (H1 2021: GBP81.0m) and free cashflow reduced GBP66.1m to an outflow of GBP7.6m (H1 2021: GBP58.6m) due to investment in the fleet to meet demand
-- Group net debt, excluding IFRS 16 leases, stable at GBP470.4m, 1.5x net debt to EBITDA (H1 2021: 1.6x) well within target leverage range of 1.0x to 2.0x
-- Interim dividend of 6.0p (3.4p in prior period) declared, representing 50% of prior year final dividend, reflecting the Board's confidence in Group outlook
Business highlights
-- Significant new multi-year contract wins in the period including wins with Tesco, Admiral and another major insurer with lifetime contract revenues in excess of GBP200m leveraging the Group's increased platform scale and full-service offering
-- Accident and incident volumes have continued to recover reaching approximately 90% of pre-COVID-19 levels driving the ongoing performance of Redde
-- High rental demand and reduced vehicle supply has lowered volumes of vehicles for disposal, albeit at high sales price. This trend is likely to remain for the rest of the financial year
-- Electric and hybrid vehicles in the fleet have increased 187% to approximately 2% of the overall fleet and the Group has signed a memorandum of understanding with an electric vehicle manufacturer for the supply of 5,000 electric LCVs
-- Operational cost inflation is being effectively managed across the Group
-- The Group continues to assess bolt-on acquisitions to extend products and services and to increase supply for the fleet
Refinancing
In November 2021, the Group completed a comprehensive refinancing of its debt arrangements, to optimise its debt portfolio and to support the next phase of the Group's strategy.
The Group signed two new sources of debt, providing it with GBP792m of facilities, an increase of GBP104m on the previous position:
-- EUR375m of new debt Private Placements, with maturities spread across 6, 8 and 10 years. These were achieved at a highly competitive average interest rate of just 1.32%
-- GBP475m bank Revolving Credit Facility, with a four year maturity to November 2025 and on improved terms compared with the previous facility
The refinancing results in a c. 50bps reduction in the drawn interest rate as at the date of the refinancing to 1.5%; a significant lengthening of our maturities and a greater diversification of our sources of debt. This creates great flexibility and a solid financing platform to allow the Group to invest in the business as well as take advantage of opportunities in the market as they arise for inorganic growth.
Martin Ward, CEO of Redde Northgate, commented:
"We are pleased to have delivered a strong H1 performance driven by high demand for our products and services and underlying margin gains.
"The underlying margin improvements on our rental assets, both in the UK&I and Spain, look sustainable given the cost synergies extracted from the business and our focus on driving value. ROCE continues to grow, up 4.4ppts from H1 2021, and input costs inflation is being successfully managed. Given the well-publicised new vehicle supply constraints our vehicle assets are in demand for rental services and also through our sales network, which is driving further value. In addition to our new van supplies, over the next 12-18 months, we expect to supplement our fleet stock through the selective acquisition of existing rental assets in the market where this adds value.
"Redde volumes have continued to grow having now reached approximately 90% of pre COVID-19 levels which is in line with our expectations. Overall, there is good momentum in the business as we enter H2 and our key strategic areas of Focus, Drive and Broaden are delivering meaningful results.
"Strategically, we have made significant progress leveraging the capabilities of our integrated mobility platform to secure multi-year contract wins which will increase our market share. Our combined product and services offering is unique and unrivalled in terms of scale and infrastructure capabilities."
Outlook
The work undertaken since the Merger has built a strong platform for further growth, with increasingly large contract wins demonstrating the appeal of the integrated mobility services offering and driving continued momentum across the business. We expect underlying PBT to be at least in line with consensus[4] for the full year.
The Board continues to look forward with significant optimism for the future prospects of the Group.
Analyst Briefing
A remote presentation for sell-side analysts will be held at 9.30am today, 1 December 2021. 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:
Buchanan
David Rydell/Jamie Hooper/Tilly Abraham/ Verity Parker +44 (0) 207 466 5000
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 seven 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 120,000 owned and leased vehicles, supporting over 600,000 managed vehicles, with more than 170 workshop, body shop and rental locations across the UK, Ireland and Spain and a specialist team of over 6,000 automotive services professionals.
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. Specifically, we refer to disposal profit(s). This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs).
A reconciliation of GAAP to Non-GAAP underlying measures and a glossary of terms used in this document are outlined below the financial review.
OPERATING REVIEW
Group
The Group's performance in H1 has continued to strengthen as we further execute our strategy of Focus, Drive and Broaden and leverage our unique mobility solutions platform.
Focus, Drive and Broaden strategic progress
The expansion of the Group's products and services and the development of our unique mobility solutions platform has enabled the Group to secure significant new business wins in the period with lifetime contract revenues in excess of GBP200m. Winning these contracts is a direct result of the Group's increased platform scale and full-service offering and will generate significant value from FY 2023 onwards.
Our Electric Vehicle ('EV') proposition has continued to strengthen with over 400 workshop technicians now fully trained on EVs. As part of our commitment to electrify our fleet and our aim to be at the forefront of the transition to EV, we have signed a memorandum of understanding with an electric vehicle manufacturer for the supply of 5,000 electric LCVs over a four year period through to 2025 which supports our plans to drive positive changes within our customer base. This will be one of many developments as we broaden our relationships with existing and new vehicle manufacturers across our rental fleet of over 120,000 vehicles and is supported by our acquisition of Charged EV in July 2021 which installs a wide range of commercial and domestic electric charging points.
The Group has also continued to develop contract hire as a source of fleet funding across the UK business. Total credit lines of GBP115m have been utilised as at 31 October 2021 (30 April 2021: GBP104m) funding 8,100 vehicles (30 April 2021: 5,500).
Trading
Revenue (excluding vehicle sales) was 21.9% higher than the prior year. Northgate UK&I and Northgate Spain revenue (excluding vehicle sales) was GBP170.8m (H1 2021: GBP147.0m) and GBP107.7m (H1 2021: GBP102.4m) respectively. Redde revenue was GBP251.9m (H1 2021: GBP181.3m) reflecting the increasing volumes of accidents and incidents which have now reached approximately 90% of pre COVID-19 levels.
Total Group revenue, including vehicle sales, was 10.2% higher. Vehicle sales revenues were 29.2% lower reflecting the post lockdown sale of a large number of FY 2020 year end stock of vehicles in H1 last year and the reduced volumes available this year due to restrictions in new vehicle supply.
UK&I has continued its trajectory of improvement reflecting the permanent benefits of cost saving programmes, strong utilisation at 92% and tight controls over customer pricing whilst a constrained supply chain for new LCVs continues to operate. UK&I rental margins improved to 17.6% in H1 (FY 2021: 12.7%).
Rental margins in Spain have improved to 17.1% (FY 2021: 15.0%) as a result of new customer growth, high utilisation, low repair costs due to fewer vehicle returns and low bad debts.
Total disposal profits of GBP27.0m in H1 were 47.6% higher than the prior year with the restriction in vehicle supply continuing to support high residual values. These high residual values are more than offsetting the lower volumes of vehicles being disposed, which at 10,100 is 33.5% lower than the prior year (H1 2021: 15,100).
The supply of new vehicles continues to be restricted, however our strong relationships with vehicle suppliers along with bolt-on acquisitions ensures we have adequate supply to meet our expectations for growth.
Strategically, we have made significant progress leveraging the unique capabilities of our integrated mobility platform, supporting new and long-term relationships and have secured multi-year business wins with Tesco Underwriting and a significant expansion of new services with Admiral and another major insurer. These developments underpin future growth rates for the business and our ability to drive value from the Redde Northgate Merger strengthened by the addition of approximately 70 Nationwide bodyshops acquired in September 2020.
Underlying PBT of GBP78.9m (H1 2021: GBP40.6m) was ahead of Board expectations driven by continued strengthening margins, high utilisation, high disposal profits and a recovery of volumes in Redde.
Underlying EPS was 26.1p (H1 2021: 13.4p), 94.7% higher than prior year. Statutory EPS was 22.5p (H1 2021: 8.6p).
Statutory EBIT of GBP80.1m and statutory PBT of GBP71.7m were 135.8% and 177.4% higher than prior year respectively.
Free cash outflow of GBP7.6m was lower than the prior year (H1 2021: GBP58.6m inflow) as capex was significantly reduced in the first half of 2021 whereas in the current period there has been significant growth in the fleet of 7.1% to meet rental demand.
Net debt closed at GBP587.2m including IFRS 16, or GBP470.4m excluding IFRS 16, resulting in headroom to bank facilities of GBP272.9m at the end of October prior to the refinancing. Leverage was 1.5x, in line with FY 2021 year-end leverage of 1.5x.
In light of the strong trading performance in the period and the Board's confidence in the Group's outlook, the Board has declared an interim dividend of 6.0p (3.4p in prior period), to be paid on 14 January 2022 to shareholders on the register on 10 December 2021. This reflects 50% of the FY 2021 final dividend, which is in line with the Group's stated policy and demonstrates the Board's continued confidence in the Group's future prospects.
ESG
During the course of 2021, we have continued to engage with our customers and other stakeholders with regard to the environmental, social and governance (ESG) areas that impact our business. As part of our ongoing commitment to sustainable operations, we are conducting a materiality assessment to provide further insight into stakeholder perceptions regarding these ESG-related risks and opportunities.
We have continued to strengthen our EV proposition bringing further EVs onto the fleet, installing EV charging capabilities and investing in solar panels in Spain. We are also working towards developing a net zero strategy in line with the both the Government and international community's requirement for companies to achieve global climate change targets.
We very much look forward to updating stakeholders on our sustainability initiatives throughout 2022; detailing how we plan to mitigate our key risks as well as deliver on the identified opportunities. To support this programme, we will also be publishing our maiden Sustainability Report alongside our 2022 Full Year Results.
Divisional Commentary
Northgate UK&I
Six months ended 31 October H1 2022 H1 2021 Change KPI ('000) ('000) % ----------------------------- -------- -------- -------- Average VOH 50.2 45.2 10.9% Closing VOH 50.9 47.4 7.5% Average utilisation % 92% 90% 2ppt Six months ended 31 October H1 2022 H1 2021 Change PROFIT & LOSS (Underlying) GBPm GBPm % ----------------------------- -------- -------- -------- Revenue - Vehicle hire 170.8 147.0 16.2% Revenue - Vehicle sales 61.9 94.1 (34.3%) Total Revenue 232.7 241.1 (3.5%) Rental profit 30.0 15.1 98.5% Rental Margin % 17.6% 10.3% 7.3ppt Disposal profit 22.9 17.0 35.0% EBIT 52.9 32.1 64.9% EBIT Margin %[5] 22.7% 13.3% 9.4ppt ROCE % 17.4% 8.8% 8.6ppt ----------------------------- -------- -------- --------
Rental business
Hire revenue in the Northgate UK&I business increased 16.2% compared to the prior period to GBP170.8m (H1 2021: GBP147.0m), driven by average VOH which increased 10.9%, and the impact of customer support packages in the prior year which were GBP2.4m. Rate increases were applied in FY 2022 across our full range of rental products and continued to be well planned, communicated and executed.
Closing VOH increased 7.5% to 50,900 and was 3% above year-end FY 2021.
At the half year, Northgate UK&I's minimum term proposition accounted for around 36% (H1 2021: 33%) of average VOH. 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.
The rental margin progression has continued, reaching 17.6% in the period compared to 10.3% in H1 2021. The restricted vehicle supply has resulted in a tight control over rental pricing in the period. We remain confident that the underlying margin will remain at around 15%.
The net impact of the growth in hire revenue and higher rental margin was a 98.5% increase in rental profits to GBP30.0m (H1 2021: GBP15.1m).
Management of fleet and vehicle sales
The total Northgate UK&I period end rental fleet amounted to 55,900 vehicles, increased from 54,000 at year-end FY 2021. During the period 6,600 vehicles were acquired (H1 2021: 5,700 vehicles) and 4,700 vehicles were de-fleeted. The average age of the fleet at the end of the period was two months higher than at the end of FY 2021. This was partly due to the impact of the fleet optimisation policy and partly due to managing the fleet to mitigate impacts of the restricted market supply reducing purchases.
A total of 5,700 vehicles were sold in Northgate UK&I during the period, 39.9% lower than the prior period. As expected, this reflects the fact that the prior year H1 period benefited from additional used vehicle stock due to the impact of the COVID-19 lockdown at the end of FY 2020 and the restricted market supply of new vehicles in the current period.
Disposal profits of GBP22.9m (H1 2021: GBP17.0m) increased 35% versus the prior period. The reduction in the number of vehicles sold was offset by the significant increases in sales values resulting in a 126% improvement in the average profit per unit (PPU) on disposals to GBP4,052 (H1 2021: GBP1,794) despite the continuing impact of the unwind of depreciation rate changes. Depreciation rates will remain under review as the longer term impact on residual values becomes clearer.
EBIT and ROCE
Underlying EBIT of GBP52.9m grew 64.9% over the prior period (H1 2021: GBP32.1m) driven by both higher rental and disposal profits as explained above.
The ROCE in Northgate UK&I was 17.4% (H1 2021: 8.8%) reflecting the increase in EBIT.
Capex and cash flow
Six months ended 31 October H1 2022 H1 2021 Change GBPm GBPm GBPm ----------------------------------- -------- -------- ------- Underlying EBITDA 93.7 75.4 18.3 Net Replacement Capex(7) (33.6) (25.9) (7.7) Lease principal payments[6] (3.6) (2.1) (1.5) Steady state cash generation 56.5 47.5 9.1 Growth Capex (incl. inorganic)(7) (13.2) 28.4 (41.6) ----------------------------------- -------- -------- -------
Underlying EBITDA increased 24.2% to GBP93.7m (H1 2021: GBP75.4m).
Net replacement capex[7] in the period was GBP33.6m, GBP7.7m higher than the prior period as a result of a reduction in vehicle sales as explained above.
Steady state cash generation increased by GBP9.1m to GBP56.5m (H1 2021: GBP47.5m) reflecting the higher underlying EBITDA and the higher net replacement capex. Growth capex(7) was GBP13.2m reflecting the growth in the owned fleet of 1,000 vehicles to meet rental demand.
Northgate Spain
Six months ended 31 October H1 2022 H1 2021 Change KPI ('000) ('000) % ----------------------------- -------- -------- -------- Average VOH 49.4 45.5 8.6% Closing VOH 51.1 47.1 8.6% Average utilisation % 93% 91% 2ppt Six months ended 31 October H1 2022 H1 2021 Change PROFIT & LOSS (Underlying) GBPm GBPm % ----------------------------- -------- -------- -------- Revenue - Vehicle hire 107.7 102.4 5.1% Revenue - Vehicle sales 28.1 32.9 (14.6%) Total Revenue 135.8 135.3 0.3% Rental profit 18.5 14.7 25.6% Rental Margin % 17.1% 14.4% 2.7ppt Disposal profit 4.1 1.3 214.3% EBIT 22.6 16.0 41.0% EBIT Margin %[8] 16.6% 11.8% 4.8ppt ROCE % 8.7% 7.7% 1.0ppt ----------------------------- -------- -------- --------
Rental business
Hire revenue in the Northgate Spain business increased 5.1% (11.5% in local currency) compared to the prior period to GBP107.7m (H1 2021: GBP102.4m), driven by average VOH which increased 8.6%.
Closing VOH increased 8.6% to 51,100 and was 9.2% above year-end FY 2021.
At the half year, Northgate Spain's minimum term proposition accounted for around 35% (H1 2021: 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 2.7ppt higher at 17.1% with no COVID-19 customer support costs in the period, higher utilisation, fewer repairs and fewer bad debts. We expect the rental margin in the second half to be closer to 15% as we expect higher repairs due to seasonal returns.
The impact of the higher hire revenue and rental margin was a 25.6% increase in rental profits to GBP18.5m (H1 2021: GBP14.7m).
Management of fleet and vehicle sales
The total Northgate Spain period end rental fleet amounted to 55,900 vehicles increased from 51,800 at year-end FY 2021. During the period 7,200 vehicles were purchased (H1 2021: 6,000) and 3,100 vehicles were de-fleeted. The average age of the fleet at the end of the period was two months higher than at the same time last year. This was partly due to the impact of the fleet optimisation policy and partly due to managing the fleet to mitigate impacts of the restricted market supply reducing purchases.
A total of 4,400 vehicles were sold in Northgate Spain during the period, 22.8% lower than prior period. As expected, this reflects the fact that the prior year H1 period benefited from additional used vehicle stock due to the impact of COVID-19 lockdown at the end of FY 2020 and the restricted market supply of new vehicles in the current period.
Disposal profits of GBP4.1m (H1 2021: GBP1.3m) increased 214%. The reduction in the number of vehicles sold was offset by the significant increases in sales values resulting in a more than a fourfold improvement in the average profit per unit (PPU) on disposals to GBP924 (H1 2021: GBP227) despite the continuing impact of the unwind of depreciation rate changes. Depreciation rates will remain under review as the longer term impact on residual values becomes clearer.
EBIT and ROCE
Underlying EBIT of GBP22.6m increased 41.0% over the prior period (H1 2021: GBP16.0m) driven by both higher rental and disposal profits as explained above.
The ROCE in Northgate Spain was 8.7% (H1 2021: 7.7%) reflecting the increase in EBIT.
Capex and cash flow
Six months ended 31 October H1 2022 H1 2021 Change GBPm GBPm GBPm ------------------------------------ -------- -------- ------- Underlying EBITDA 65.4 60.4 5.0 Net Replacement Capex(10) (34.4) (25.9) (8.5) Lease principal payments[9] (1.3) (1.4) 0.1 Steady state cash generation 29.7 33.1 (3.3) Growth Capex (incl. inorganic)(10) (33.5) (3.3) (30.2) ------------------------------------ -------- -------- -------
Underlying EBITDA increased GBP5.0m to GBP65.4m (H1 2021: GBP60.4m).
Net replacement capex[10] in the period was GBP34.4m, GBP8.5m higher than the prior period, as a result of the reduction in vehicle sales revenue as explained above.
Steady state cash generation decreased by GBP3.3m to GBP29.7m (H1 2021: GBP33.1m) reflecting higher EBITDA and higher net replacement capex in the period. Growth capex(10) was GBP33.5m, relating to the fleet growth of 2,800 vehicles.
Redde
Six months ended 31 October H1 2022 H1 2021 Change PROFIT & LOSS (Underlying) GBPm GBPm % ------------------------------- -------- -------- -------- Revenue - Claims and Services 251.9 181.3 39.0% Gross profit 60.5 25.9 134.0% Gross margin % 24.0% 14.3% 9.8ppt Operating profit 14.0 1.7 711.7% Income from associates 2.1 2.4 (12.0%) EBIT 16.1 4.1 290.1% EBIT margin % ([11]) 6.4% 2.3% 4.1ppt ROCE %[12] 11.6% 7.9% 3.7ppt ------------------------------- -------- -------- --------
Revenue and profit
Revenue for the period increased 39.0% to GBP251.9m (H1 2021: GBP181.3m). The main drivers of revenue, traffic volumes and thereby road traffic accidents, have been increasing since April 2021 and have now reached approximately 90% of pre-COVID-19 levels.
Gross margin of 24.0% has improved 9.8ppt (H1 2021: 14.3%) as volumes have increased and the utilisation of the fleet has improved to normal levels.
EBIT for the period increased 290.1% to GBP16.1m (H1 2021: GBP4.1m). Since the volumes have been increasing month on month the EBIT to date does not yet reflect a normalised level which would be substantially higher. The prior period included an operating loss in FMG RS of GBP3.0m and in this period FMG RS contributed a small profit.
Management of fleet
The total fleet in Redde closed the period at 9,800 vehicles, from 6,500 at 30 April 2021 with the latter reflecting a lower fleet size due to the impact of COVID-19.
The average fleet age was 10 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 continues to operate through a hybrid solution of ownership, contract hire and, during peak periods, cross-hiring from daily rental companies.
Capex and cash flow
Six months ended 31 October H1 2022 H1 2021 Change GBPm GBPm GBPm ------------------------------ --------- --------- -------- Underlying EBITDA 27.9 11.7 16.3 Net replacement capex [13] (0.1) 5.7 (4.7) Lease principal payments[14] (15.5) (13.4) (2.1) Steady state cash generation 11.5 3.9 7.6 Growth capex(13) (5.0) 0.0 (5.0) Debtor days 176 days 144 days 32 days ------------------------------ --------- --------- --------
Underlying EBITDA increased GBP16.3m to GBP27.9m (H1 2021: GBP11.7m) reflecting the recovery of traffic volumes.
Net replacement capex(13) was a net outflow of GBP0.1m in the period (H1 2021: GBP5.7m inflow) with the prior year being affected by the disposal proceeds of vehicles funded by HP compared to the timing of lease principal payments.
Steady state cash generation increased GBP7.6m to GBP11.5m (H1 2021: GBP3.9m).
Growth capex(13) increased to GBP5.0m (H1 2021: GBPnil) reflecting a change from hire purchase to ownership for a proportion of the fleet.
Debtor days were 176 days at the end of the 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. Debtor days increased from 144 days at the end of H1 2021 due to the calculation using a trailing 12 months whilst revenues are growing and the continued disruption to claim collection from some insurers still operating with staff working from home.
FINANCIAL REVIEW
Group Revenue and EBIT
Six months ended 31 October H1 2022 H1 2021 Change Change GBPm GBPm GBPm % ------------------------------- -------- -------- ------- -------- Revenue - Vehicle hire 277.1 249.0 28.2 11.3% Revenue - Vehicle sales 90.0 127.1 (37.1) (29.2%) Revenue - Claims and services 245.8 180.0 65.8 36.6% ------------------------------- -------- -------- ------- -------- Total revenue 612.9 556.0 56.9 10.2% Rental profit 48.5 29.8 18.7 62.6% Disposal profit 27.0 18.3 8.7 47.6% Claims and services profit 14.0 1.7 12.2 711.7% Corporate costs (4.3) (3.5) (0.8) 21.5% ------------------------------- -------- -------- ------- -------- Underlying operating profit 85.2 46.3 38.9 83.9% Income from associates 2.1 2.4 (0.3) (12.0%) ------------------------------- -------- -------- ------- -------- Underlying EBIT 87.3 48.7 38.6 79.2% Underlying EBIT margin 14.2% 8.8% - 5.4ppt Statutory EBIT 80.1 34.0 46.1 136% ------------------------------- -------- -------- ------- --------
-- Total Group revenue, including vehicle sales, of GBP612.9m was 10.2% higher than prior year (11.4% at constant exchange rates). Hire revenues were 11.3% higher due to higher VOH across the Group. Vehicle sales revenues were 29.2% lower due to a 5,100 reduction in vehicle disposals from prior period but partially offset by stronger market pricing
-- Revenue (excluding vehicle sales) of GBP522.9m (H1 2021: GBP429.0m) was 21.9% higher (23.1% at constant exchange rates) reflecting increase in vehicle hire revenue and 36.6% increase in claims and services revenue driven by greater claims volumes
-- Underlying EBIT of GBP87.3m was 79.2% higher, reflecting the strong performance in the Northgate businesses and improved profits from the Redde business
-- Statutory EBIT of GBP80.1m was 136% higher, reflecting higher underlying EBIT offset by GBP9.9m of amortisation of acquisition intangibles and GBP2.4m of exceptional credits, and the gain on bargain purchase credit of GBP0.3m in relation to the acquisition of Nationwide in the prior year
Group PBT and EPS
Six months ended 31 October H1 2022 H1 2021 Change Change GBPm GBPm GBPm % ------------------------------- -------- -------- ------- --------- Underlying EBIT 87.3 48.7 38.6 79.2% Net finance costs (8.4) (8.1) (0.2) 3.0% ------------------------------- -------- -------- ------- --------- Underlying Profit before Tax 78.9 40.6 38.3 94.4% Statutory Profit before Tax 71.7 25.9 45.9 177.4% Underlying effective tax rate 18.7% 18.8% - (0.1ppt) Underlying EPS 26.1p 13.4p 12.7p 94.7% Statutory EPS 22.5p 8.6p 13.9p 162.2% ------------------------------- -------- -------- ------- ---------
-- Underlying PBT was 94.4% higher, reflecting the higher EBIT as a result of the improved business performance and higher finance costs, which were 3.0% higher
-- Statutory PBT was 177.4% higher, reflecting the higher underlying PBT and GBP2.4m of exceptional credits compared to GBP5.4m of exceptional costs in the prior period
-- The underlying effective tax rate of 18.7% was 0.1ppt lower than prior year -- Underlying EPS of 26.1p was 94.7% higher, reflecting the increased profits in the year
-- Statutory EPS of 22.5p was 162.2% higher, reflecting the movement in underlying EPS and the impact of higher exceptional costs in the prior year
Depreciation rate changes
Vehicle depreciation rates are regularly reviewed and changes are made if expectations of future residual values change. Residual values have increased in the period due to the impacts of COVID-19 market closure as well as the well-publicised new vehicle supply constraints increasing demand for our vehicle assets. This disruption is not anticipated to continue into the medium term and depreciation rates will remain under review as the longer term impact on residual values becomes clearer. The full year-on-year impact of previous depreciation rate changes in FY 2022 EBIT is expected to be a headwind of GBP4.0m in Spain and GBP1.4m in UK&I as previously outlined.
Dividend
The Board has declared an interim dividend of 6.0p per share (H1 2021: 3.4p) and will be paid on 14 January 2022 to shareholders on the register as at close of business on 10 December 2021.
Group cash flow
Steady state cash generation
Six months ended 31 October H1 2022 H1 2021 Change GBPm GBPm GBPm ------------------------------- -------- -------- ------- Underlying EBIT 87.3 48.7 38.6 Depreciation and amortisation 95.5 95.3 0.2 ------------------------------- -------- -------- ------- Underlying EBITDA 182.8 144.0 38.8 Net replacement capex (68.8) (46.1) (22.7) Lease principal payments [15] (20.4) (16.9) (3.5) ------------------------------- -------- -------- ------- Steady state cash generation 93.5 81.0 12.6 ------------------------------- -------- -------- -------
-- Steady state cash generation remained strong at GBP93.5m (H1 2021: GBP81.0m), driven by strong underlying EBIT partially offset by increased net replacement capex
-- Underlying EBITDA was GBP38.8m higher driven by higher underlying EBIT as a result of stronger performance across the business
-- Net replacement capex was GBP22.7m higher mainly due to the timing of payments to OEMs
Free cash flow
Six months ended 31 October H1 2022 H1 2021 Change GBPm GBPm GBPm --------------------------------------- -------- -------- ------- Steady state cash generation 93.5 81.0 12.6 Exceptional costs (excluding non-cash items) (0.6) (1.1) 0.4 Working capital and non-cash items (33.0) (25.0) (8.0) Growth capex (51.7) 25.1 (76.8) Taxation (9.9) (5.6) (4.3) --------------------------------------- -------- -------- ------- Net operating cash (1.8) 74.4 (76.1) Distributions from associates 2.1 2.6 (0.4) Interest and other financing (7.4) (7.5) 0.1 Acquisition of business (0.5) (10.8) 10.3 --------------------------------------- -------- -------- ------- Free cash flow (7.6) 58.6 (66.1) Dividends paid (29.3) (0.0) (29.3) Lease principal payments[16] 20.4 16.9 3.5 --------------------------------------- -------- -------- ------- Net cash (consumed) generated (16.5) 75.5 (92.0) --------------------------------------- -------- -------- -------
-- Free cash outflow of GBP7.6m decreased by GBP66.1m from H1 2021, driven primarily by growth capex of GBP51.7m compared to a contraction that resulted in an inflow of GBP25.1m in the prior period
-- Growth capex of GBP51.7m reflects a net increase in owned fleet over the period of 4,100 vehicles
-- If the impact of growth capex in the period is removed from free cash flow, the underlying free cash flow of the Group was GBP44.8m (H1 2021: GBP33.5m)
-- Dividends paid increased during H1 2022 by GBP29.3m, with no dividends being paid in the prior period as the final dividend for FY 2020 of GBP16.7m was paid in November 2020, later than the normal financial calendar
Net debt
Net debt reconciles as follows:
Six months ended 31 October H1 2022 H1 2021 GBPm GBPm ------------------------------ ------- ------- Opening net debt 530.3 575.9 Net cash consumed (generated) 16.5 (75.5) Other non-cash items 50.7 16.4 Exchange differences (10.3) 14.1 ------------------------------ ------- ------- Closing net debt 587.2 530.9 ------------------------------ ------- -------
Closing net debt was GBP56.9m higher than opening net debt, driven by net cash consumption of GBP16.5m. Other non-cash items consists primarily of GBP50.1m of new leases acquired and the overall foreign exchange impact on net debt was a GBP10.3m reduction.
Borrowing facilities
As at 31 October 2021 the Group had headroom on facilities of GBP273m, with GBP433m drawn (net of available cash balances) against total facilities of GBP706m as detailed below:
Facility Drawn Headroom Maturity Borrowing GBPm GBPm GBPm Cost ------------------- -------- ----- -------- -------- --------- UK bank facilities 608 336 272 Nov-23 1.9% Loan notes 85 85 - Aug-22 2.4% Other loans 13 12 1 Nov-21 2.5% ------------------- -------- ----- -------- -------- --------- 706 433 273 2.1% ------------------- -------- ----- -------- -------- ---------
The other loans consist of GBP11.7m of local borrowings in Spain which were renewed for a further year in November 2021 and GBP0.5m of preference shares.
In November 2021, the Group completed a refinancing, repaying the existing loan notes and replacing them with EUR375m of new loan notes with maturities spread across 6, 8 and 10 years. The UK bank facilities were replaced with GBP475m of new facilities maturing in November 2025, resulting in an overall increase of GBP104m in committed facilities.
The above drawn amounts reconcile to net debt as follows:
Drawn GBPm ------------------------------------ ----- Borrowing facilities 433 Unamortised finance fees (4) Leases arising following adoption of IFRS 16 117 Leases arising under HP obligations 41 ------------------------------------- ----- Net debt 587 ------------------------------------- -----
There are three financial covenants under the Group's facilities as follows:
Threshold H1 2022 Headroom H1 2021 --------------- ---------- ------- ---------------- ------- Interest cover 3x 11.6x GBP107m (EBIT) 5.6x GBP298m (Net Loan to value 70% 43% debt) 42% Debt leverage 2.75x 1.5x GBP146m (EBITDA) 1.6x --------------- ---------- ------- ---------------- -------
The covenant calculations have been prepared in accordance with the requirements of the facilities to which they relate.
Following the refinancing in November 2021, the debt leverage covenant improved to 3.0x, increasing headroom by a further GBP14m. The other covenants remained unchanged.
Balance sheet
Net assets at 31 October 2021 were GBP932.7m (H1 2021: GBP882.1m), equivalent to net assets per share of 379p (H1 2021: 358p). Net tangible assets at 31 October 2021 were GBP656.8m (H1 2021: GBP585.9m), equivalent to a net tangible asset value of 267p per share (H1 2021: 238p per share).
Gearing at 31 October 2021 was 89.4% (H1 2021: 90.6%) and ROCE was 12.5% (H1 2021: 8.1%).
Foreign exchange risk
The average and period end exchange rates used to translate the Group's overseas operations were as follows:
October 2021 October 2020 April 2021 GBP : EUR GBP : EUR GBP : EUR ----------- ------------- ------------ ---------- Average 1.17 1.11 1.12 Period end 1.18 1.11 1.15 ----------- ------------- ------------ ----------
Going concern
Having considered the Group's current trading, cash flow generation and debt maturity including severe but plausible stress testing scenarios (as updated for the refinancing in November 2021 and explained further in note 1 of the unaudited condensed financial statements), 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 2021 were set out in detail on pages 35 to 38 of the 2021 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.
Reconciliation of GAAP to non-GAAP measures
Throughout this report 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.
In particular we refer to disposals profit. This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs). A reconciliation of GAAP to non-GAAP underlying measures is as follows:
Six months Six months to 31.10.21 to 31.10.20 GBP000 GBP000 ------------------------------------------------- ------------- ------------- Operating profit 77,687 31,310 Income from associates 2,111 2,400 Gain on bargain purchase 290 258 ------------------------------------------------- ------------- ------------- EBIT 80,088 33,968 ------------------------------------------------- ------------- ------------- Add back: Exceptional operating expenses (2,374) 5,364 Amortisation on acquired intangible assets 9,869 9,639 Gain on bargain purchase (290) (258) ------------------------------------------------- ------------- ------------- Underlying EBIT 87,293 48,713 ------------------------------------------------- ------------- ------------- Profit before tax 71,730 25,853 Add back: Exceptional operating expenses (2,374) 5,364 Amortisation on acquired intangible assets 9,869 9,639 Gain on bargain purchase (290) (258) Underlying profit before tax 78,935 40,598 ------------------------------------------------- ------------- ------------- Profit for the period 55,489 21,121 Add back: Exceptional operating expenses (2,374) 5,364 Amortisation on acquired intangible assets 9,869 9,639 Gain on bargain purchase (290) (258) Tax on exceptional items, brand royalty charges and intangible amortisation 1,504 (2,883) ------------------------------------------------- ------------- ------------- Underlying profit for the period 64,198 32,983 ------------------------------------------------- ------------- ------------- Weighted average number of Ordinary shares 246,091,423 246,091,423 ------------------------------------------------- ------------- ------------- Underlying basic earnings per share 26.1p 13.4p ------------------------------------------------- ------------- ------------- Six months Six months to 31.10.21 to 31.10.20 GBP000 GBP000 ------------------------------------------------ ------------- ------------- Underlying EBIT 87,293 48,713 Add Back Depreciation: vehicles for hire and vehicles for credit hire 83,879 86,378 Other depreciation 10,912 8,666 Loss (gain) on disposal of assets 241 (112) Intangible amortisation included in underlying operating profit 447 349 ------------------------------------------------ ------------- ------------- Underlying EBITDA 182,772 143,994
------------------------------------------------ ------------- ------------- Net replacement capex (68,846) (46,102) Lease principal payments (20,388) (16,936) ------------------------------------------------ ------------- ------------- Steady state cash generation 93,538 80,956 ------------------------------------------------ ------------- ------------- 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 52,928 22,554 75,482 Exclude: Adjustments to 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* 170,840 107,683 278,523 ---------------------------------------- ------------- ------------- ------------- Rental margin 17.6% 17.1% 17.4% ---------------------------------------- ------------- ------------- ------------- Northgate Northgate Group UK&I Spain Sub-total 6 months 6 months 6 months to 31.10.20 to 31.10.20 to 31.10.20 GBP000 GBP000 GBP000 ---------------------------------------- ------------- ------------- ------------- Underlying operating profit 32,097 16,000 48,097 Exclude: Adjustments to depreciation charge in relation to vehicles sold in the period (16,978) (1,301) (18,279) Rental profit 15,119 14,699 29,818 ---------------------------------------- ------------- ------------- ------------- Divided by: Revenue: hire of vehicles* 146,977 102,426 249,403 ---------------------------------------- ------------- ------------- ------------- Rental margin 10.3% 14.4% 12.0% ---------------------------------------- ------------- ------------- -------------
* Revenue: hire of vehicles including intersegment revenue.
Six months Six months to 31.10.21 To 31.10.20 (Unaudited) (Unaudited) GBP'000 GBP'000 ------------------------------------------------- ------------ ------------ Net replacement capex 68,846 46,102 Growth capex 51,731 (25,064) ------------------------------------------------- ------------ ------------ Total net capex 120,577 21,038 ------------------------------------------------- ------------ ------------ Lease principal payments 20,388 16,936 ------------------------------------------------- ------------ ------------ Total net capex (including lease principal payments) 140,965 37,974 ------------------------------------------------- ------------ ------------ Purchase of vehicles for hire 188,787 137,859 Proceeds from disposal of vehicles for hire (75,859) (112,767) Proceeds from disposal of vehicles for credit hire and other property, plant and equipment (885) (7,954) Purchases of other property, plant and equipment 8,066 3,136 Purchases of intangible assets 468 764 Lease principal payments 20,388 16,936 ------------------------------------------------- ------------ ------------ Total net capex (including lease principal payments) 140,965 37,974 ------------------------------------------------- ------------ ------------
Glossary of terms
The following defined terms have been used throughout this document:
Term Definition 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 year 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 ---------------------------------------------------- ESG Environmental, Social, and Corporate Governance ---------------------------------------------------- Facility headroom Calculated as facilities of GBP706m less net borrowings of GBP433m. Net borrowings represent net debt of GBP587m excluding lease liabilities of GBP158m and unamortised arrangement fees of GBP4m and are stated after the deduction of GBP3m of net cash and overdraft balances which are available to offset against borrowings ---------------------------------------------------- FMG RS FMG RS Limited the trading part of the Redde business that acquired Nationwide ---------------------------------------------------- Free cash flow Net cash generated after principal lease payments (included this year, comparative updated) and before the payment of dividends ---------------------------------------------------- FY 2020 The year ended 30 April 2020 ---------------------------------------------------- FY 2021 The year ended 30 April 2021 ---------------------------------------------------- FY 2022 The year ending 30 April 2022 ---------------------------------------------------- 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/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 ---------------------------------------------------- Merger The acquisition by the Company of 100% of the share capital of Redde plc on 21 February 2020 ---------------------------------------------------- Nationwide Nationwide Accident Repair Services trade and assets acquired by the Group on 4 September 2020 ---------------------------------------------------- Net replacement Net capital expenditure other than that defined capex as growth capex and lease principal payments. ---------------------------------------------------- Net tangible Net assets less goodwill and other intangible assets assets ---------------------------------------------------- OEM Original Equipment Manufacturer: a reference to our vehicle suppliers ---------------------------------------------------- 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 ---------------------------------------------------- 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 Underlying EBITDA less net replacement capex cash generation and lease principal payments (included this year, comparative updated) ---------------------------------------------------- The Group The Company and its subsidiaries ---------------------------------------------------- The Merger The acquisition by the Company of 100% of the share capital of Redde plc on 21 February 2020 ---------------------------------------------------- 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 2021 --------------------------------------------------------------------------------------------------------- Six months Six months Six months Six months Year to Year to to 31.10.21 to 31.10.21 to 31.10.20 to 31.10.20 30.04.21 30.04.21 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) Underlying Statutory Underlying Statutory Underlying Statutory Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Revenue: hire of vehicles 2 277,145 277,145 248,971 248,971 515,566 515,566 Revenue: sale of vehicles 2 89,979 89,979 127,054 127,054 229,809 229,809 Revenue: claims and services 2 245,798 245,798 179,983 179,983 364,124 364,124 ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Total revenue 2 612,922 612,922 556,008 556,008 1,109,499 1,109,499 Cost of sales (441,259) (441,259) (446,424) (446,424) (856,955) (856,955) ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Gross profit 171,663 171,663 109,584 109,584 252,544 252,544 Administrative expenses (excluding exceptional items and amortisation on acquired intangible assets) (86,481) (86,481) (63,271) (63,271) (147,092) (147,092) Exceptional administrative expenses: impairment of property, plant and equipment 7,12 - - - (4,341) - (4,341) Exceptional administrative expenses: reversal of previous impairment of property, plant and equipment 7,12 - 2,999 - - - 1,304 Exceptional administrative expenses: other costs 12 - (625) - (1,023) - (4,980) Amortisation on acquired intangible assets - (9,869) - (9,639) - (19,513) ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Total administrative expenses (86,481) (93,976) (63,271) (78,274) (147,092) (174,622) ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Operating profit 2 85,182 77,687 46,313 31,310 105,452 77,922 Income from associates 2,8 2,111 2,111 2,400 2,400 4,364 4,364 Gain on bargain purchase 12,13 - 290 - 258 - 1,489 EBIT 87,293 80,088 48,713 33,968 109,816 83,775 Interest income 16 16 15 15 164 164 Finance costs (8,374) (8,374) (8,130) (8,130) (16,760) (16,760) Profit before taxation 78,935 71,730 40,598 25,853 93,220 67,179 ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Taxation 3 (14,737) (16,241) (7,615) (4,732) (16,990) (1,613) ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- --------- Profit for the period 64,198 55,489 32,983 21,121 76,230 65,566 ---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Profit for the period is wholly attributable to owners of the Company. All results arise from continuing operations.
Underlying profit excludes exceptional items as set out in Note 12 as well as brand royalty charges, amortisation on acquired intangible assets and the taxation thereon and exceptional tax credits, in order to provide a better indication of the Group's underlying business performance.
Earnings per share Basic 426.1p 22.5p 13.4p 8.6p 31.0p 26.6p ------------------- ----- ----- ----- ---- ----- ----- Diluted 425.5p 22.0p 13.2p 8.4p 30.5p 26.2p ------------------- ----- ----- ----- ---- ----- ----- Condensed consolidated statement of comprehensive income for the six months ended 31 October 2021 ----------------------------------------------------------------------------- ----------- ----------- ---------- Six months Six months Year to to 31.10.21 to 31.10.20 30.04.21 (Unaudited) (Unaudited) (Audited) GBP000 GBP000 GBP000 ----------------------------------------------------------------------------- ----------- ----------- ---------- Amounts attributable to owners of the Company Profit attributable to owners 55,489 21,121 65,566 Other comprehensive (expense) income Foreign exchange differences on retranslation of net assets of subsidiary undertakings (13,134) 18,634 338 Foreign exchange differences on long term borrowings held as hedges 9,614 (13,432) (2,019) Foreign exchange difference on revaluation reserve (31) 44 (1) Net fair value gains on cash flow hedges - 184 184
Deferred tax charge recognised directly in equity relating to cash flow hedges - (35) (35) Total other comprehensive (expense) income for the period (3,551) 5,395 (1,533) ------------------------------------------------------------------------------ ----------- ----------- ---------- Total comprehensive income for the period 51,938 26,516 64,033 ------------------------------------------------------------------------------ ----------- ----------- ----------
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 2021 31.10.21 31.10.20 30.04.21 (Unaudited) (Unaudited) (Audited) Note GBP000 GBP000 GBP000 -------------------------------------------------------- ---- ----------- ----------- --------- Non-current assets Goodwill 6 114,903 116,105 114,503 Other intangible assets 6 161,018 180,068 170,830 Property, plant and equipment: vehicles for hire 7 919,036 908,507 893,342 Property, plant and equipment: vehicles for credit hire 7 62,987 42,179 43,998 Other property, plant and equipment 7 162,835 135,682 146,580 Total property, plant and equipment 7 1,144,858 1,086,368 1,083,920 --------------------------------------------------------- ---- ----------- ----------- --------- Deferred tax assets 9,824 10,350 4,826 Interest in associates 8 6,032 5,834 6,047 Total non-current assets 1,436,635 1,398,725 1,380,126 --------------------------------------------------------- ---- ----------- ----------- --------- Current assets Inventories 11,731 16,397 21,545 Receivables and contract assets 335,941 328,903 302,349 Cash and bank balances 9 34,817 62,592 11,169 --------------------------------------------------------- ---- ----------- ----------- --------- Total current assets 382,489 407,892 335,063 --------------------------------------------------------- ---- ----------- ----------- --------- Total assets 1,819,124 1,806,617 1,715,189 --------------------------------------------------------- ---- ----------- ----------- --------- Current liabilities Trade and other payables 217,076 281,415 229,666 Provisions 10 - 49 - Current tax liabilities 8,969 12,442 562 Lease liabilities 36,558 41,925 32,375 Short-term borrowings 127,665 41,537 12,159 --------------------------------------------------------- ---- ----------- ----------- --------- Total current liabilities 390,268 377,368 274,762 --------------------------------------------------------- ---- ----------- ----------- --------- Net current (liabilities) assets (7,779) 30,524 60,301 --------------------------------------------------------- ---- ----------- ----------- --------- Non-current liabilities Provisions 10 - 296 - Trade and other payables 3,849 - 3,848 Lease liabilities 121,143 62,292 96,093 Long term borrowings 336,675 447,777 400,885 Deferred tax liabilities 34,450 36,814 31,472 Total non-current liabilities 496,117 547,179 532,298 --------------------------------------------------------- ---- ----------- ----------- --------- Total liabilities 886,385 924,547 807,060 --------------------------------------------------------- ---- ----------- ----------- --------- NET ASSETS 932,739 882,070 908,129 --------------------------------------------------------- ---- ----------- ----------- --------- Equity Share capital 123,046 123,046 123,046 Share premium account 113,510 113,510 113,510 Own shares reserve (6,145) (2,519) (6,460) Translation reserve (7,710) 2,693 (4,190) Other reserves 330,445 330,521 330,476 Retained earnings 379,593 314,819 351,747 --------------------------------------------------------- ---- ----------- ----------- --------- TOTAL EQUITY 932,739 882,070 908,129 --------------------------------------------------------- ---- ----------- ----------- ---------
Total equity is wholly attributable to owners of the Company.
Condensed consolidated cash flow statement for the six months ended 31 October 2021 ---------------------------------------------------------------- ----- ----------- ------------- --------- Six months Six months Year to to 31.10.21 to 31.10.20 30.04.21 (Unaudited) (Unaudited) (Audited) as restated* Note GBP000 GBP000 GBP000 ---------------------------------------------------------------- ----- ----------- ------------- --------- Net cash generated from operations 11 18,776 79,718 137,878 ---------------------------------------------------------------- ----- ----------- ------------- --------- Investing activities Interest received 16 15 164 Distributions from associates 8 2,126 2,574 4,325 Acquisition of business (net of cash acquired)* (518) (10,823) (10,823) Proceeds from disposal of vehicles for credit hire and other property, plant and equipment 885 7,954 35,919 Purchases of other property, plant and equipment* (8,066) (3,135) (7,460) Purchases of intangible assets* (468) (764) (1,834) ---------------------------------------------------------------- ----- ----------- ------------- --------- Net cash (used in) generated from investing activities (6,025) (4,179) 20,291 ---------------------------------------------------------------- ----- ----------- ------------- --------- Financing activities Dividends paid (29,295) - (24,928) Receipt of bank loans and other borrowings 33,409 27,195 27,195 Repayment of bank loans and other borrowings - (74,371) (109,712) Debt issue costs - (34) (520) Principal element of lease payments under IFRS 16 (11,813) (7,147) (16,994) Principal element of lease payments under HP obligations (8,575) (9,789) (37,814) Net receipts (payments) to acquire own shares for share schemes 57 - (5,073) Net cash (used in) generated from financing activities (16,217) (64,146) (167,846) ---------------------------------------------------------------- ----- ----------- ------------- --------- Net (decrease) increase in cash and cash equivalents (3,466) 11,393 (9,677) Cash and cash equivalents at beginning of the period 6,821 16,780 16,780 Effect of foreign exchange movements (31) 157 (282) ---------------------------------------------------------------- ----- ----------- ------------- --------- Cash and cash equivalents at the end of the period 3,324 28,330 6,821
---------------------------------------------------------------- ----- ----------- ------------- --------- Cash and cash equivalents consist of: Cash and bank balances 9 34,817 62,592 11,169 Bank overdrafts 9(31,493) (34,262) (4,348) -------------------------------------- -------- -------- ------- 3,324 28,330 6,821 -------------------------------------- -------- -------- -------
* In the condensed consolidated interim financial statements for the period ended 31 October 2020 purchases of other property, plant and equipment included GBP7,273,000 and purchases of intangible assets included GBP3,550,000 in relation to the acquisition of business and assets of Nationwide. The total amount of GBP10,823,000 has been restated and reclassified to acquisition of business (net of cash acquired) in order to align the treatment with the requirements of IFRS 3 "Business Combinations" consistent with the audited financial statements for the year ended 30 April 2021
Condensed consolidated statement of changes in equity for the six months ended 31 October 2021 Share capital and share Hedging Translation Other Retained premium Own shares reserve reserve reserves earnings Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ---------------------------- ----------- ------------- --------- ------------ ---------- ---------- --------- Total equity at 1 May 2020 236,556 (3,090) (149) (2,509) 330,477 310,282 871,567 Share options fair value charge - - - - - 689 689 Share options exercised - - - - - (571) (571) Dividends paid - - - - - (16,702) (16,702) Transfer of shares on vesting of share options - 571 - - - - 571 Total comprehensive income (expense) - - 149 5,202 44 21,121 26,516 Total equity at 1 November 2020 236,556 (2,519) - 2,693 330,521 314,819 882,070 Share options fair value charge - - - - - 1,829 1,829 Share options exercised - - - - - (1,132) (1,132) Dividends paid - - - - - (8,226) (8,226) Net purchases of shares - (5,073) - - - - (5,073) Transfer of shares on vesting of share options - 1,132 - - - - 1,132 Deferred tax on share based payments recognised in equity - - - - - 12 12 Total comprehensive income (expense) - - - (6,883) (45) 44,445 37,517 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 (purchases) of shares - 57 - - - - 57 Total comprehensive income (expense) - - - (3,520) (31) 55,489 51,938 Total equity at 31 October 2021 236,556 (6,145) - (7,710) 330,445 379,593 932,739 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. The condensed consolidated interim financial report for the half-year reporting period ended 31 October 2021 has 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. The interim report does not include all 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 2021 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 1 December 2021. 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 2021, 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 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 2021. 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 in the period due to the impacts of COVID-19 market closure as well as 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 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 2021. The carrying value of contract assets for claims from insurance companies at 31 October 2021 was GBP170,001,000 (30 April 2021 GBP 144,738,000). A 4% difference between the carrying amount of claims in the balance sheet and the amounts finally settled would lead to a GBP6.8m 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 successful integration of the group following the Merger and the acquisition of Nationwide in the prior year has allowed the Group to further increase its service offering, rationalise the cost based and provide a platform for future growth. The Group is well established within the markets it operates and has demonstrated resilience through the COVID-19 period as explained further below 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 (as updated in November 2021) and the reasonable expectation of similar facilities being replaced if required 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 2021 was GBP273m. This compares to headroom of GBP305m at 30 April 2021. Following a refinancing in November 2021, a further GBP104m of headroom was provided through those new facilities. 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. The Plan takes into account the impact of COVID-19 experienced to date and the expected impact on subsequent trading. The Plan was separately stress tested for a slower post COVID-19 recovery in insurance claims volumes than expected, a reduction in vehicles on hire and a larger reduction in residual values and a further slowdown in the collection of historical insurance claims. After taking into account the above variables, sufficient headroom remained against available debt facilities and the covenants attached to those facilities. In addition to the above scenario, the Directors have further considered the resilience of the Group, considering its current position and the principal risks facing the business. The Plan was stress tested for severe but plausible scenarios over the planned period as follows: * No further growth in vehicles on hire with rental customers; * No further increase in pricing of rental hire rates; * A 1% increase in the incidence of bad debts as a percentage of hire revenue; * Reduction in the residual value of used vehicles to pre-COVID levels; * A 25% volume reduction in insurance claims and services revenue in aggregate, either through lower demand or through ending the commercial relationship with a group of key insurance partners without rationalising the indirect cost base; and * A slow down in the time taken to settle outstanding claims with insurers. The above scenarios, took into account the effectiveness of mitigating actions that would be reasonably taken, such as reducing variable costs that are directly related to revenue, but did not take into account further management actions that would likely be taken, such as a change to the indirect cost base of the Group or a reduction in capital expenditure and ageing out of the vehicle fleet, both of which would generate cash and reduce debt. After taking into account the above sensitivities and plausible mitigating actions sufficient headroom remained against available debt facilities and the covenants attached to those the Directors 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 2021 annual report The financial figures for the year ended 30 April 2021, 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 2021 were prepared with International Financial Reporting Standards (IFRS), Interpretations Committee (IFRS-IC) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS and were delivered to the Registrar of Companies on 27 September 2021. 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 Chief Executive 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 31.10.21 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 12) 2,374 Amortisation on acquired intangible assets (9,869) Gain on bargain purchase (Note 13) 290 EBIT 80,088 Interest income 16 Finance costs (8,374) Profit before taxation 71,730 ------------------------ ------------- ------------- ------------- ------------- -------------- --------------
* Underlying EBIT stated before amortisation on acquired intangible assets 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 31.10.20 to 31.10.20 to 31.10.20 to 31.10.20 to 31.10.20 to 31.10.20 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Revenue: hire of vehicles 146,545 102,426 - - - 248,971 Revenue: sale of vehicles 94,134 32,920 - - - 127,054 Revenue: claims and services - - 179,983 - - 179,983 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- External revenue 240,679 135,346 179,983 - - 556,008 Intersegment revenue 432 - 1,297 - (1,729) - Total revenue 241,111 135,346 181,280 - (1,729) 556,008 Timing of revenue recognition: At a point in time 94,134 32,920 49,997 - - 177,051 Over time 146,545 102,426 129,986 - - 378,957 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- External revenue 240,679 135,346 179,983 - - 556,008 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Underlying operating profit (loss) 32,097 16,000 1,719 (3,503) - 46,313 Income from associates - - 2,400 - - 2,400 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Underlying EBIT* 32,097 16,000 4,119 (3,503) - 48,713 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Exceptional items (Note 12) (5,364) Amortisation on acquired intangible assets (9,639) Gain on bargain purchase (Note 13) 258 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- EBIT 33,968 Interest income 15 Finance costs (8,130) Profit before taxation 25,853 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Northgate Northgate Group Group UK&I Spain Redde Corporate eliminations total Year to Year to Year to Year to Year to Year to 30.04.21 30.04.21 30.04.21 30.04.21 30.04.21 30.04.21 (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- Revenue: hire of vehicles 310,066 205,500 - - - 515,566 Revenue: sale of vehicles 161,417 68,392 - - - 229,809 Revenue: claims and services - - 364,124 - - 364,124 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- External revenue 471,483 273,892 364,124 - - 1,109,499 Intersegment revenue 1,530 - 7,604 - (9,134) - -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- Total revenue 473,013 273,892 371,728 - (9,134) 1,109,499 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- Timing of revenue recognition: At a point in time 161,417 68,392 140,266 - - 370,075 Over time 310,066 205,500 223,858 - - 739,424 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- External revenue 471,483 273,892 364,124 - - 1,109,499 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- Underlying operating profit (loss) 76,800 33,700 3,358 (8,406) - 105,452 Income from associates - - 4,364 - - 4,364 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- Underlying EBIT* 76,800 33,700 7,722 (8,406) - 109,816 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- Exceptional items (Note 12) (8,017) Amortisation on acquired intangible assets (19,513) Gain on bargain purchase (Note 13) 1,489 -------------------------- ----------- ----------- ----------- ----------- -------------- ----------- EBIT 83,775 Interest income 164 Finance costs (16,760) Profit before taxation 67,179 -------------------------- ----------- ----------- ----------- ----------- -------------- -----------
3. Taxation
The charge for taxation for the six months to 31 October 2021 is based on the estimated effective rate for the year ending 30 April 2022 of 22.6% (31 October 2020 - 18.3% and 30 April 2021 - 2.4%). The April 2021 full year tax rate was impacted by tax credits of GBP10,008,000 in relation to the release of uncertain tax provisions.
4. Earnings per share Six months Six months Six months Six months Year to Year to to 31.10.21 to 31.10.21 to 31.10.20 to 31.10.20 30.04.21 30.04.21 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) Underlying Statutory Underlying Statutory Underlying Statutory Basic and diluted earnings per share GBP000 GBP000 GBP000 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 64,198 55,489 32,983 21,121 76,230 65,566 ---------------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- Number of shares Weighted average number of Ordinary shares for the purpose of basic earnings per share 246,091,423 246,091,423 246,091,423 246,091,423 246,091,423 246,091,423 Effect of dilutive potential Ordinary
shares - share options 5,574,749 5,574,749 3,998,211 3,998,211 4,081,514 4,081,514 Weighted average number of Ordinary shares for the purpose of diluted earnings per share 251,666,172 251,666,172 250,089,634 250,089,634 250,172,937 250,172,937 Basic earnings per share 26.1p 22.5p 13.4p 8.6p 31.0p 26.6p ---------------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- Diluted earnings per share 25.5p 22.0p 13.2p 8.4p 30.5p 26.2p ---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
5. Dividends
In the six months to 31 October 2021, a dividend of GBP29,295,000 was paid (2020 - GBPnil) representing the final dividend for the year ended 30 April 2021. The Directors have declared a dividend of 6.0p per share for the six months ended 31 October 2021 (2020 - 3.4p).
The final dividend of 12.0p in relation to the year ended 31 April 2021 was paid in September 2021. Trade and other payables at 31 October 2020 included GBP16,702,000 in relation to the final dividend of 6.8p for the year ended 30 April 2020 that was approved in October 2020 and paid in November 2020.
6. Intangible assets
Net book value Goodwill Customer Brand Other Total relationships names software GBP000 GBP000 GBP000 GBP000 GBP000 --------------------------- -------- --------------- ------ ---------- --------- At 1 May 2020 116,105 166,716 12,646 6,348 301,815 Asset acquisition - 1,000 450 2,100 3,550 Additions - - - 764 764 Disposals - - - (31) (31) Amortisation - (8,662) (445) (881) (9,988) Exchange differences - - - 63 63 At 1 November 2020 116,105 159,054 12,651 8,363 296,173 Additions - - - 1,070 1,070 Amortisation - (8,708) (495) (1,007) (10,210) Remeasurement of provisional fair value of assets acquired (1,602) - - - (1,602) Exchange differences - - - (98) (98) --------------------------- -------- --------------- ------ ---------- --------- At 1 May 2021 114,503 150,346 12,156 8,328 285,333 Asset acquisition 400 50 100 - 550 Additions - - - 510 510 Disposals - - - (75) (75) Amortisation - (8,701) (537) (1,078) (10,316) Exchange differences - - - (81) (81) At 31 October 2021 114,903 141,695 11,719 7,604 275,921 --------------------------- -------- --------------- ------ ---------- --------- At 31 October 2021 Cost or fair value 323,247 Accumulated amortisation and impairment (47,326) Net book value 275,921 ------------------------------ ---------
Amortisation was included within the income statement as follows:
31.10.21 31.10.20 30.04.21 (Unaudited) (Unaudited) (Audited) GBP000 GBP000 GBP000 ----------------------------------------------------------------------- ----------- ----------- --------- Included within underlying operating profit as administrative expenses 447 349 685 Excluded from underlying operating profit* 9,869 9,639 19,513 10,316 9,988 20,198 ----------------------------------------------------------------------- ----------- ----------- ---------
* 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 Vehicles for Other property, Total for hire credit hire plant & equipment GBP000 GBP000 GBP000 GBP000 ---------------------- ---------- ------------ ------------------- ---------- At 1 May 2020 884,711 51,040 126,009 1,061,760 Acquisition - - 8,618 8,618 Additions 167,895 4,006 13,106 185,007 Disposals (79,627) (7,419) (1,232) (88,278) Transfers 152 - (152) - Depreciation (80,930) (5,448) (8,666) (95,044) Impairment (Note 12) - - (4,341) (4,341) Exchange differences 16,306 - 2,340 18,646 ---------------------- ---------- ------------ ------------------- ---------- At 1 November 2020 908,507 42,179 135,682 1,086,368 Acquisition - - 1,327 1,327 Additions 161,482 34,977 24,372 220,831 Disposals (79,872) (26,708) (3,960) (110,540) Transfers 13 - (13) - Depreciation (80,317) (6,450) (9,798) (96,565) Impairment reversal (Note 12) - - 1,304 1,304 Exchange differences (16,471) - (2,334) (18,805) ---------------------- ---------- ------------ ------------------- ---------- At 1 May 2021 893,342 43,998 146,580 1,083,920 Acquisition - - 3 3 Additions 181,386 27,787 28,948 238,121 Disposals (66,674) (1,849) (3,171) (71,694) Transfers 2 - (2) - Depreciation (76,930) (6,949) (10,912) (94,791) Impairment reversal (Note 12) - - 2,999 2,999 Exchange differences (12,090) - (1,610) (13,700) At 31 October 2021 919,036 62,987 162,835 1,144,858 ---------------------- ---------- ------------ ------------------- ---------- At 31 October 2021 Cost or fair value 1,712,539 Accumulated depreciation (567,681) Net book value 1,144,858 ------------------------------------------- ----------
Included within property, plant and equipment above, are right of use assets under HP and IFRS16 with net book value of GBP153,287,000 (30 April 2021: GBP122,376,000).
8. Interest in associates
GBP000 ----------------------------------- -------- At 1 May 2020 6,008 Group's share of: Profit from continuing operations 2,400 Distributions from associates (2,574) ----------------------------------- -------- At 1 November 2020 5,834 Group's share of: Profit from continuing operations 1,964 Distributions from associates (1,751) ----------------------------------- -------- At 1 May 2021 6,047 Group's share of: Profit from continuing operations 2,111 Distributions from associates (2,126) ----------------------------------- -------- At 31 October 2021 6,032 ----------------------------------- --------
9. Analysis of consolidated net debt
(Unaudited) (Unaudited) (Audited) to 31.10.21 to 31.10.20 to 30.04.21 GBP000 GBP000 GBP000 ------------------------------------ ----------- ----------- ----------- Cash and bank balances (34,817) (62,592) (11,169) Bank overdrafts 31,493 34,262 4,348 Bank loans 347,759 364,173 320,991 Loan notes 84,490 90,143 86,817 Leases arising following adoption of IFRS 16 116,793 69,927 92,469 Leases arising under HP obligations 40,908 34,290 35,999 Cumulative preference shares 500 500 500 Confirming facilities 98 236 388 Consolidated net debt 587,224 530,939 530,343 ------------------------------------ ----------- ----------- -----------
10. Provisions
Onerous contracts GBP000 --------------------- ----------- At 1 May 2020 4,577 Provisions made - Provisions utilised (4,232) --------------------- ----------- At 1 November 2020 345 Provisions made - Provisions utilised (345) --------------------- ----------- At 1 May 2021 - Provisions made - Provisions utilised - --------------------- ----------- At 31 October 2021 - --------------------- -----------
11. Notes to the cash flow statement
Six months Six months Year to to 31.10.21 to 31.10.20 30.04.21 (Unaudited) (Unaudited) (Audited) Net cash generated from operations GBP000 GBP000 GBP000 ------------------------------------------------------------------------------- ----------- ----------- ----------- Operating profit 77,687 31,310 77,922 Adjustments for: Depreciation of property, plant and equipment 94,791 95,044 191,609 Net impairment of property, plant and equipment (2,999) 4,341 3,037 Amortisation of intangible assets 10,316 9,988 20,198 Loss (gain) on disposal of vehicles for credit hire and other property, plant and equipment 241 (143) 195 Loss on disposal of intangible assets - 31 31 Share options fair value charge 1,910 689 2,518 ------------------------------------------------------------------------------- ----------- ----------- ----------- Operating cash flows before movements in working capital 181,946 141,260 295,510 (Increase) decrease in non-vehicle inventories (463) 157 (1,407) (Increase) decrease in receivables (26,469) (28,739) (69) (Decrease) increase in payables (5,914) 9,491 (9,011) Decrease in provisions - (4,233) (4,577) ------------------------------------------------------------------------------- ----------- ----------- ----------- Cash generated from operations 149,100 117,936 280,446 Income taxes paid, net (9,893) (5,606) (12,678) Interest paid (7,503) (7,520) (14,945) ------------------------------------------------------------------------------- ----------- ----------- ----------- Net cash generated from operations before purchases of and proceeds from disposal of vehicles for hire 131,704 104,810 252,823 Purchases of vehicles for hire (188,787) (137,859) (303,537) Proceeds from disposal of vehicles for hire 75,859 112,767 188,592 ------------------------------------------------------------------------------- ----------- ----------- ----------- Net cash generated from operations 18,776 79,718 137,878 ------------------------------------------------------------------------------- ----------- ----------- -----------
12. Exceptional items
During the period the Group recognised exceptional items in the income statement as follows: Six months Six months Year to to 31.10.21 to 31.10.20 30.04.21 (Unaudited) (Unaudited) (Audited) GBP000 GBP000 GBP000 ------------------------------------ ------------ ------------ --------- Impairment of property, plant and equipment - 4,341 4,341 Reversal of previous impairment of property, plant and equipment (2,999) - (1,304) Other costs 625 1,023 4,980 ------------------------------------ ------------ ------------ --------- Exceptional administrative expenses (2,374) 5,364 8,017 Restructuring (credit) costs (3,099) 2,754 2,754 Acquisition expenses - 710 1,088 FMG RS set up and integration costs 725 1,900 5,728 Legal settlement - - (1,553) Exceptional administrative expenses (2,374) 5,364 8,017 Gain on bargain purchase (Note 13) (290) (258) (1,489) Total pre-tax exceptional items (2,664) 5,106 6,528 Tax charge (credit) on exceptional items 506 (1,179) (1,286) ------------------------------------ ------------ ------------ ---------
Restructuring costs
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
The Group incurred costs of GBP725,000 in relation to the set up of FMG RS and integration of the business.
13. Business combinations
Current 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 has been undertaken in accordance with IFRS 3 'Business Combinations', which has identified net assets acquired of GBP153,000, resulting in goodwill of GBP400,000 being recognised in the balance sheet. The acquisition has been included within the Northgate UK&I segment.
Prior period
On 4 September 2020 the Group acquired certain businesses and assets of Nationwide Accident Repair Services ("Nationwide") by way of a purchase from administrators. A provisional purchase price allocation exercise was undertaken in accordance with IFRS 3 'Business Combinations'. Details of this business combination were disclosed in note 4 of the Group's annual financial statements for the year ended 30 April 2021. The provisional purchase price allocation resulted in a gain on bargain purchase of GBP258,000 as at 31 October 2020 and a final gain on bargain purchase of GBP1,489,000 for the full year ended 30 April 2021.
The contingent consideration arrangement required the Group to pay the former owners of Nationwide up to GBP5m dependant on volumes of repair cases with a former customer of Nationwide, in the year from date of acquisition. The fair value of the contingent consideration recognised was GBP290,000 at the date of the acquisition. As the required volumes were not met the contingent consideration has been released to the income statement in the period ended 31 October 2021.
14. Related party transactions
Related party transactions of the Group are consistent with those disclosed in note 34 of the Group's annual financial statements for the year ended 30 April 2021. 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 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
1 December 2021
Independent review report of 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 2021 (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.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated balance sheet as at 31 October 2021;
-- 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.
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.
Our responsibility is to express a conclusion on the interim financial statements in the Interim results based on our review. 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.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board 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.
PricewaterhouseCoopers LLP
Chartered Accountants
Newcastle upon Tyne
1 December 2021
[1] Refer to GAAP reconciliation and Glossary of terms note. Underlying excludes exceptional items and amortisation on acquired intangible assets.
[2] Net debt includes GBP116.8m (H1 2021: GBP69.9m) of IFRS 16 liabilities and is higher than H1 2021 due to the leases taken on following the acquisition of certain business and assets of Nationwide in September 2020.
[3] Excluding IFRS 16 (leases) as defined in the Glossary
[4] Current analyst consensus for FY 2022 of underlying PBT is GBP119.4m. Further details on analyst consensus can be found on our website at www.reddenorthgate.com .
[5] Calculated as underlying EBIT divided by total revenue
[6] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.
[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] Calculated as underlying EBIT divided by total revenue.
[9] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.
[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] Calculated as underlying EBIT divided by total revenue.
[12] Redde's H1 2021 ROCE calculated using a 12 month pro rata of the eight months of EBIT since acquisition, divided by the average of the acquired opening and period end closing capital employed excluding goodwill and acquired intangibles.
[13] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the owned fleet or the cash generated if the fleet size is reduced in periods of contraction.
[14] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.
[15] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.
[16] Lease principal payments are added back to reflect the movement on net debt.
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