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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Zigup Plc | LSE:ZIG | 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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.50 | 0.12% | 433.00 | 432.50 | 433.50 | 436.00 | 433.00 | 436.00 | 48,407 | 10:32:42 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Passenger Car Rental | 1.83B | 125.02M | 0.5514 | 778.93 | 980.66M |
TIDMREDD
RNS Number : 8278I
Redde Northgate PLC
07 December 2022
7 December 2022
This announcement contains inside information
REDDE NORTHGATE PLC
("Redde Northgate" or the "Group" or the "Company")
ANNOUNCEMENT OF RESULTS FOR THE HALF YEARED 31 OCTOBER 2022
Fleet growth and new contract wins supporting strong financial performance
Redde Northgate (LSE:REDD), the leading integrated mobility solutions platform providing services across the vehicle lifecycle, is pleased to announce its results for the half-year ended 31 October 2022.
Half Year results Reported Underlying(1) 6 months ended 31 H1 2023 H1 2022 Change H1 2023 H1 2022 Change October GBPm GBPm % GBPm GBPm % -------- -------- --------------- -------- -------- -------- Revenue 696.3 612.9 13.6% 627.6 522.9 20.0% -------- -------- --------------- -------- -------- -------- EBIT 111.6 80.1 39.3% 93.4 87.3 7.0% -------- -------- --------------- -------- -------- -------- Profit before Tax 101.9 71.7 42.1% 83.7 78.9 6.1% -------- -------- --------------- -------- -------- -------- Earnings per Share 34.4p 22.5p 52.3% 28.1p 26.1p 7.7% -------- -------- --------------- -------- -------- -------- (1) excludes vehicle sales revenue, exceptional items, amortisation of acquired intangible assets and adjustments to underlying depreciation. See GAAP reconciliation. Other measures H1 2023 H1 2022 Change GBPm GBPm % -------- -------- -------- Net debt 661.3 587.2 12.6% -------- -------- -------- Group net debt (excl. IFRS 16 leases) (2) 531.8 470.4 13.0% -------- -------- -------- Steady state cash generation 121.2 93.5 29.6% -------- -------- -------- Free cash flow 2.1 (7.6) n/a -------- -------- -------- ROCE 13.5% 12.5% 1.0ppts -------- -------- -------- Dividend per Share 7.5p 6.0p 25.0% -------- -------- -------- (2) excludes leases that would not have been recognised on the balance sheet prior to adoption of IFRS 16.
Martin Ward, CEO of Redde Northgate, commented:
"With the Group fleet up 8% to over 130,000 vehicles and new multi-year contracts going live in the period, we have achieved meaningful growth across all our revenue streams. Our strategy of building an integrated platform is serving us well, with customers increasingly accessing a broadening product set to support their mobility needs. The Blakedale acquisition at the start of the period has integrated well, enjoying both customer and fleet growth since joining the Group.
We have successfully delivered on our margin targets and implemented pricing increases across the business to help mitigate cost inflation. While mindful of the macro-economic backdrop, with a diverse and high-quality customer base well represented in resilient sectors, we are positioned to capitalise on growth opportunities across the business, in particular when LCV supply strengthens."
Key financial highlights
-- Group revenue growth up 14%, reflecting strong traffic and accident management volumes, fleet growth, pricing increases, and continued robust residual values
-- Reported PBT of GBP101.9m up 42%; underlying PBT up 6% to GBP83.7m due to strong operational performance, partially offset by lower disposal profits and higher interest
-- Steady state cash generation improved 30% to GBP121.2m; free cashflow reflects investments in fleet, working capital for new insurance contracts, and the Blakedale acquisition
-- Strong balance sheet with over GBP300m of facility headroom and bank facility extended out one year to 2026; 1.6x leverage (H1 2022: 1.5x) well within our stated target 1-2x range
-- Shareholder returns: 25% increase in interim dividend to 7.5p; GBP60m share buyback programme running since March, GBP56m spend in total by end-November
Depreciation rate change
-- H1 reported PBT benefitted from GBP28m of depreciation adjustment, in line with expectations at full year; no impact on H1 underlying results; and no impact on cash
Business highlights
-- Group fleet up 8% to over 130,000, driven by strong growth in Spain and replacement vehicles for insurance contracts; LCV scarcity in Northgate UK&I ongoing, supporting residual values
-- Two large insurance contracts went live in period, each customer now taking full range of claims and repair services; activity to grow through next 12 months
-- Growing take-up of value - added services, including cross sell of accident management services, with Northgate UK&I customer fleet under management up 75% ; good H2 pipeline for services
-- Launch of bundled e-LCV vehicle and charging solution to help fleet transitions; won 2 Spanish repair contracts, including from an existing large UK insurance customer
-- Recent acquisitions delivering on strategic goals: strong demand for FMG RS repair solutions; Blakedale proposition gaining traction with existing customers
-- Divisional margins maintained in line or above long-term target range through careful pricing actions to reflect cost inflation
Outlook
Demand for our services continues to be robust across geographies along with continuing strength in residual values. These factors underpin our confidence for the full year which is expected to be modestly above market expectations. While the Board is mindful of the ongoing macro-economic environment and current LCV supply, it remains confident that our integrated mobility solutions platform will continue to create sustainable shareholder value.
Analyst Briefing
A hybrid presentation for sell-side analysts and institutional investors will be held at 9.30am today, 7 December 2022. If you are interested in attending, please email Buchanan on reddenorthgate@buchanan.uk.com to request the joining details. This presentation will also be made available via a link on the Company's website www.reddenorthgate.com .
For further information contact:
Ross Hawley, Head of Investor Relations +44 (0) 204 566 7090
Buchanan
David Rydell/Jamie Hooper/Hannah Ratcliff/ Verity Parker +44 (0) 207 466 5000
This announcement is made on behalf of Redde Northgate plc by James Kerton, Company Secretary of Redde Northgate plc.
Notes to Editors:
Redde Northgate is the leading integrated mobility solutions platform providing services across the vehicle lifecycle. The Company offers integrated mobility solutions to businesses, fleet operators, insurers, OEMs and other customers across the following key areas: vehicle rental, vehicle data, accident management, vehicle repairs, fleet management, service and maintenance, vehicle ancillary services and vehicle sales.
The Company's core purpose is to keep its customers mobile, whether through meeting their regular mobility needs or by servicing and supporting them when unforeseen events occur. With its considerable scale and reach, Redde Northgate's mission is to offer a market-leading customer proposition and drive enhanced returns for shareholders by creating value through sustainable compounding growth. The Group aims to achieve this through the delivery of its strategic framework of Focus, Drive and Broaden.
Redde Northgate services its customers through a network and diversified fleet of over 130,000 owned and leased vehicles, supporting over 600,000 managed vehicles, with around 175 branches across the UK, Ireland and Spain and a specialist team of over 6,700 employees.
Further information regarding Redde Northgate plc can be found on the Company's website www.reddenorthgate.com .
GAAP reconciliation and glossary of terms
Throughout this document we refer to underlying results and measures; the underlying measures allow management and other stakeholders to better compare the performance of the Group between the current and prior period without the effects of one-off or non-operational items. Underlying measures exclude intangible amortisation from acquisitions and certain one-off items such as those arising from restructuring activities and the tax impact thereon. Specifically, we refer to disposal profit(s). This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the period for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs).
Adjustments have also been made to underlying results for depreciation rate changes made in the period in relation to an old cohort of vehicles impacted by the disruption in residual values over recent periods which could not have been envisaged at the time those vehicles were purchased. Further explanation of this impact is included within the Financial Review.
A reconciliation of GAAP to non-GAAP underlying financial performance is outlined below. A further explanation of alternative performance measures and a glossary of terms used in this document are outlined below the Financial Review.
GAAP reconciliation tables
Income statement reconciliation
Six month period Foot 31.10.2022 31.10.2022 31.10.2022 31.10.2021 31.10.2021 31.10.2021 ending note Statutory Adjustments Underlying Statutory Adjustments Underlying (Unaudited) (below) 2022 2022 2022 2021 2021 2021 GBPm GBPm GBPm GBPm GBPm GBPm ---------------------- --------- ----------- ------------- ------------ ----------- ------------- ------------- Revenue (a) 696.3 (68.7) 627.6 612.9 (90.0) 522.9 (b + Cost of sales c) (478.8) 40.5 (438.4) (441.3) 90.0 (351.3) ----------- ------------- ------------ ----------- ------------- ------------- Gross profit 217.5 (28.2) 189.2 171.7 - 171.7 Administrative expenses (d) (107.5) 10.1 (97.4) (94.0) 7.5 (86.5) ----------- ------------- ------------ ----------- ------------- ------------- Operating profit 110.0 (18.2) 91.8 77.7 7.5 85.2 Income from associates 1.6 - 1.6 2.1 - 2.1 Gain on bargain purchase (e) - - - 0.3 (0.3) - ----------- ------------- ------------ ----------- ------------- ------------- EBIT 111.6 (18.2) 93.4 80.1 7.2 87.3 Interest income - - - - - - Finance costs (9.7) - (9.7) (8.4) - (8.4) ----------- ------------- ------------ ----------- ------------- ------------- Profit before taxation 101.9 (18.2) 83.7 71.7 7.2 78.9 Taxation (f) (19.9) 3.2 (16.7) (16.2) 1.5 (14.7) ----------- ------------- ------------ ----------- ------------- ------------- Profit for the year 82.0 (15.0) 67.0 55.5 8.7 64.2 ----------- ------------- ------------ ----------- ------------- ------------- Shares for EPS calculation 238.7m 238.7m 246.1m 246.1m Basic EPS 34.4p 28.1p 22.5p 26.1p --------------------------------- ----------- ------------- ------------ ----------- ------------- ------------- Foot notes Adjustments comprise: Revenue: sale of vehicles (a) (68.7) (90.0) Cost of sales: revenue sale of vehicles net down (b) 68.7 90.0 Adjustments to underlying depreciation (see Financial Review) (c) (28.2) - ------------- ------------- Gross profit (28.2) - ------------- ------------- Exceptional items (Note 11) - (2.4) Amortisation of acquired intangible assets (Note 6) 10.1 9.9 ------------- ------------- Administrative expenses (d) 10.1 7.5 Gain on bargain purchase (e) - (0.3) ------------- ------------- Adjustments to EBIT (18.2) 7.2 Adjustments to PBT (18.2) 7.2 Tax on exceptional items (Note 11) - 0.5 Tax on brand royalty charges and amortisation of acquired intangible assets and tax rate change on acquired intangible assets 3.2 1.0 Tax adjustments (f) 3.2 1.5 ------------- ------------- Adjustments to profit (15.0) 8.7 ------------- -------------
OPERATING REVIEW
Group Overview
The first half of the year saw strong performances across our geographies and segments. We saw significant volume growth in our accident management businesses, and growth in vehicle rental revenues across geographies. These came through a combination of strong demand, careful pricing increases offsetting cost inflation, and successful management of fleet acquisitions and disposals. Together these helped support operating margins across the business units.
Operationally, our focus in the period has been on careful management and allocation of our resources, with continued scarce LCV supply, to best serve key customer demand and target sectors which are expected to have the greatest resilience through macro-economic stress and position us for future growth opportunities.
Growth drivers
Strong demand for vehicle provision continued across our end-markets during the period. In Redde, this was helped by increased traffic volumes, in addition to two of the previously announced multi-year large insurer contracts coming on stream. Supported by our other announced contracts, activity and volumes will continue to grow through the year. We have a healthy pipeline as corporates and insurance partners increasingly look for an outsourced solution across the Group's integrated mobility platform, looking to benefit from the cost and efficiency benefits our platform can offer.
Fleet growth of around 5,000 vehicles over the past 6 months reflects the success we have had in accessing pockets of supply, particularly for cars, to support our businesses and customer needs. In Northgate Spain a broader range of manufacturers supported strong fleet growth and in the UK our market position means that we get early visibility and have the financial firepower to quickly respond to supply opportunities when they come available. A combination of limiting disposals and optimising fleet recycling when vehicles come off rent also allowed the businesses to focus on satisfying areas of high-quality demand.
The acquisition of Blakedale, which specialises in traffic management vehicles, announced at the start of the period expanded our specialist services offering and has seen encouraging growth including a growing customer base and vehicle fleet since acquisition. The launch of our new rental solution, which combines an EV vehicle and e-charging point, reflects the ability to offer innovative solutions which address customer needs, and we continue to explore multiple inorganic opportunities to grow both our fleet and range of services.
Customer diversity
Our rental business benefits from a diverse customer base and we continue to target sectors and customers who are well positioned in the current economic climate. Actively managing customer vehicle returns and realloactions allows for a risk / opportunity focused approach and the result is a diverse end market customer profile.
In Northgate UK&I, no sector accounts for more than 15% of LCV rental VOH, and eight sectors each represent over 7% of VOH. Public sector and large corporate customers with fleets of over 40 LCVs account for over 50% of our fleet. Growth in areas such as facilities management and fibre installation position us well in areas viewed as more robust in the current economic downturn. We also have a diverse range of sector exposure and customers in Northgate Spain, again with around half the fleet being taken by government or large fleet customers.
Margin stability
The business has successfully protected its operating margins while experiencing cost inflation and vehicle supply constraints. Across all business segments, there has been a focus on cost management and mitigation of inflation pressures, while still ensuring customers see cost and efficiency benefits from using our services.
Pricing increases in both Northgate Spain and Northgate UK&I have been carefully managed in discussion with customers, including where targeted on issues such as energy cost levies within existing FMG RS contracts, or enhancing maintenance for extending the fleet life. Appetite for value-added ancillary services such as telematics and fleet management have also grown within the period, together with a 75% growth in vehicles covered by accident management services in Northgate UK&I, supporting rental margins and customer retention, as customers see benefits and efficiencies from leveraging our fleet expertise.
Supporting sustainability
Our Drive to Zero programme seeks to support fleet customers in identifying the right strategy and first steps in utilising EVs, or improving their fleet management and behaviour to reduce current emissions. We have helped an increasing number of customers better understand their options and timeframes for undertaking fleet transition, and our new bundled EV solution reflects feedback from customers on their barriers to faster transition.
Within our business, we have focused on targeted recruitment for areas of scarce resource, supported by the grant of shares to all employees this month to help ensure all colleagues are able to benefit from the long-term growth of the business. To help with cost-of-living pressures in the short term, we are making c.GBP250 one-off payments to over 4,500 colleagues (over 60% of total employees) across the Group, alongside making available discounts on a broad range of retail purchases and offering an excess holiday buyback scheme. Our new group intranet hub is already fostering greater sharing of Group values and culture, and our new corporate website was launched at the end of November.
Trading
Total Group revenue, including vehicle sales, was 13.6% higher than the prior period. Underlying Revenue (excluding vehicle sales) of GBP627.6m (H1 2022: GBP522.9m) was 20.0% higher (19.9% at constant exchange rates) reflecting an 9.2% increase in vehicle hire revenue and a 32.2% increase in claims and services revenue mainly driven by greater claims volumes.
Total fleet increased 8% since the prior period, up c.10,000 vehicles including those held on contract hire; since the year end it increased 4%. Vehicle sales revenues were 23.7% lower, reflecting lower disposal volumes, while purchases totalled 10,800 (H1 2022: 13,500).
Total disposal profits for the period of GBP24.7m were 9% lower than the prior period with 7,700 vehicles sold (H1 2022: 10,100). LCV supply constraints across the sector continued to support high residual values, partially offsetting the impact of 24% lower disposal volumes. Northgate UK&I closing VOH was 3.3% lower than at 31 October 2022, while Northgate Spain closing VOH was 5.2% higher reflecting greater availability of new vehicles.
Northgate UK&I rental margin of 15.6% compared to 17.6% in the prior period, in part reflecting the impact of lower margin contributions from recent acquisitions, and was close to the 15.3% margin for the full year FY 2022. Rental margins in Northgate Spain reached 20.4% (H1 2022: 17.1%), benefitting from higher VOH and pricing actions taken early in the calendar year. Redde saw volume and activity growth across its product offerings, resulting in a GBP4.3m increase in underlying EBIT to GBP20.4m (H1 2022: GBP16.1m).
Underlying PBT growth of 6.1% to GBP83.7m (H1 2022: GBP78.9m) reflects our strong operational performance, partially offset by higher interest and central costs. Statutory EBIT of GBP111.6m (up GBP31.5m) and statutory PBT of GBP101.9m (up GBP30.2m) included GBP28.2m adjustment to depreciation rates which is not included in our underlying results, in line with indications set out at the full year.
Underlying EPS was 28.1p (H1 2022: 26.1p), 7.7% higher than prior period with an average share count of 238.7m (H1 2022: 246.1m) reflecting the share buyback actions taken in the period. Statutory EPS rose to 34.4p (H1 2022: 22.5p).
Free cashflow of GBP2.1m was GBP9.7m higher than the prior period (H1 2022: GBP7.6m outflow) and included GBP68.7m of growth capex used to support growth in the fleet in Northgate Spain and Redde.
Group ROCE rose by 1ppt to 13.5% (H1 2022: 12.5%), reflecting the improved operational performance, partially offset by lower disposal profits and working capital in Redde.
Financial strength and Capital allocation
Our strong cashflows and balance sheet position supports our business growth, a progressive dividend as well as share buybacks.
This financial strength continues to provide a competitive advantage, both in fleet acquisition strategies and our ability to contemplate non-organic expansion. The extension in October of our RCF bank facility by an additional 12 months to 2026 gives us additional flexibility and duration to our borrowings.
The Board has declared an interim dividend of 7.5p per share (H1 2022: 6.0p) to be paid on 13 January 2023 to shareholders on the register as at close of business on 16 December 2022. The interim dividend represents 50% of the final dividend for the year ended 30 April 2022 in line with previous guidance.
While we focus our efforts on supporting business growth, we continue to view buybacks as a useful element within our capital allocation alongside a progressive dividend and will be kept under review. The share buyback programme has been underway since March and its extension in August reflected the attractive proposition of risk-free enhancement of shareholder returns. As at end-November, 16 million shares had been acquired at a cost of GBP56m and are being held in treasury.
Northgate UK&I
Six months ended 31 October H1 2023 H1 2022 Change KPI ('000) ('000) % ----------------------------- -------- -------- --------- Average VOH 49.2 50.2 (1.8%) Closing VOH 49.3 50.9 (3.3%) Average utilisation % 92% 92% 0ppt Six months ended 31 October H1 2023 H1 2022 Change PROFIT & LOSS (Underlying) GBPm GBPm % ----------------------------- -------- -------- --------- Revenue - Vehicle hire 184.1 170.8 7.8% Revenue - Vehicle sales 50.3 61.9 (18.7%) -------- -------- --------- Total Revenue 234.4 232.7 0.7% Rental profit 28.8 30.0 (4.2%) Rental Margin % 15.6% 17.6% (2.0ppt) Disposal profit 18.8 22.9 (18.1%) Underlying EBIT 47.5 52.9 (10.2%) EBIT Margin %[3] 20.3% 22.7% (2.4ppt) ROCE % 16.1% 17.4% (1.7ppt) ----------------------------- -------- -------- ---------
Rental revenue grew 8% in the period, with a very active focus on directing available inventory to selected market segments and key clients, helping to optimise utilisation and protecting margin, which was also supported by carefully targeted and communicated rate increases. Ageing of the fleet continues to support strong customer demand.
Average VOH at 49,200 was 1.8% lower, reflecting LCV registrations in the UK being 25% below pre-Covid levels and at their lowest level at this point in the year since 2013. This lack of supply has supported residual value levels, which stabilised from the middle of the calendar year, and remains substantially above pre-Covid levels.
The business saw improvements in take-up of ancillary vehicle and fleet services, such as a 75% increase in customer vehicles under accident management, increasing take up of telematics and a strong pipeline of customers interested in fleet management services. Customers looking to convert to electric vans were offered an innovative new electric vehicle and charger bundled rental product which was launched in November, helping to overcome a known barrier to EV transition. Lack of suitable vehicle product is however slowing the wider conversion to electric vans in the general user community.
The Group acquired specialist traffic management vehicle provider Blakedale early in the period and has focused on integration actions and seen early successes in customer introductions, with growth in fleet and customer contracts since acquisition.
Financial overview
Northgate UK&I underlying EBIT of GBP47.5m was 10.2% lower than the prior period (H1 2022: GBP52.9m) with average VOH reducing 1.8%, rental profit GBP1.2m lower at GBP28.8m and rental margins 2.0ppt lower at 15.6% (H1 2022: 17.6%), compared to FY 2022 full year margin of 15.3%. Disposal profits decreased GBP4.1m to GBP18.8m reflecting a 13.8% reduction in vehicle sales due to lower replacements.
Rental business
Hire revenue in the Northgate UK&I business increased 7.8% compared to the prior period to GBP184.1m (H1 2022: GBP170.8m), with a 1.8% reduction in average VOH being offset by an 8.0% increase in average revenue per vehicle. Rate increases were applied across our full range of rental products.
Closing VOH of 49,300 was 1,700 lower than the prior period (H1 2022: 50,900) and compares to 49,200 at 30 April 2022 year end which demonstrates that the shortage in supply of new vehicles has held back growth in the period.
Northgate UK&I's minimum term proposition accounted for 38% of average VOH (H1 2022: 35%). The average term of these contracts is approximately three years, providing both improved visibility of future rental revenue and earnings, as well as lower transactional costs.
Rental margin for the period was 15.6% compared to 17.6% in the prior period, 13.2% in H2 FY 2022 and 15.3% in the full year FY 2022. This was supported by pricing increases and partially offset by cost inflation and investment to grow Charged EV.
The net impact of the reduction in VOH and lower rental margin was a 4.2% decrease in rental profits to GBP28.8m (H1 2022: GBP30.0m).
Management of fleet and vehicle sales
The closing Northgate UK&I rental fleet was 53,800 compared to 54,200 at 30 April 2022. During the period, 2,900 vehicles were purchased (H1 2022: 6,300) and 3,700 vehicles were de-fleeted (H1 2022: 4,700). The leased fleet increased by 400 vehicles.
The average age of the fleet at the end of the period was 3.0 months higher than at 30 April 2022 and 5.1 months higher than at 31 October 2021. This was due to managing the fleet to mitigate impacts of the restricted market supply reducing both purchases and vehicles sold.
A total of 4,900 vehicles were sold in Northgate UK&I during the period, 13.8% lower than the prior period (H1 2022: 5,700 vehicles). Disposal profits of GBP18.8m (H1 2022: GBP22.9m) decreased 18.1% versus the prior period, reflecting the reduction in the number of vehicles sold. Average profit per unit (PPU) on disposals reduced 5.5% to GBP3,829 (H1 2022: GBP4,052).
EBIT and ROCE
Underlying EBIT of GBP47.5m was 10% lower than the prior period (H1 2022: GBP52.9m) driven by both rental and disposal profits as explained above.
The ROCE in Northgate UK&I was 16.1% (H1 2022: 17.4%) reflecting the decrease in EBIT mainly as a result of lower disposals.
Capex and cash flow
Six months ended 31 October H1 2023 H1 2022 Change GBPm GBPm GBPm ----------------------------------- -------- -------- ------- Underlying EBITDA 90.9 93.7 (2.8) Net Replacement Capex[4] (38.1) (33.6) (4.5) Lease principal payments[5] (5.5) (3.6) (1.9) -------- -------- ------- Steady state cash generation 47.3 56.5 (9.2) Growth Capex (incl. inorganic)(4) 15.1 (13.2) 28.3 ----------------------------------- -------- -------- -------
Underlying EBITDA decreased 3.0% to GBP90.9m (H1 2022: GBP93.7m).
Net replacement capex(4) was GBP38.1m, GBP4.5m higher than the prior period with a reduction in number of vehicles replaced being offset by the average cost of replacements being higher due to price inflation and the change in mix of vehicles replaced.
Steady state cash generation decreased by GBP9.2m to GBP47.3m (H1 2022: GBP56.5m) reflecting the lower underlying EBITDA and the higher net replacement capex. Growth capex(4) was GBP15.1m inflow reflecting a reduction in owned fleet due to the vehicle supply constraints experienced throughout the period.
Northgate Spain
Six months ended 31 October H1 2023 H1 2022 Change KPI ('000) ('000) % ----------------------------- -------- -------- -------- Average VOH 53.2 49.4 7.7% Closing VOH 53.8 51.1 5.2% Average utilisation % 92% 93% (1ppt) Six months ended 31 October H1 2023 H1 2022 Change PROFIT & LOSS (Underlying) GBPm GBPm % ----------------------------- -------- -------- -------- Revenue - Vehicle hire 122.7 107.7 13.9% Revenue - Vehicle sales 18.2 28.1 (35.3%) -------- -------- -------- Total Revenue 140.9 135.8 3.7% Rental profit 25.1 18.5 35.7% Rental Margin % 20.4% 17.1% 3.3ppt Disposal profit 5.9 4.1 45.1% Underlying EBIT 31.0 22.6 37.4% EBIT Margin %[6] 22.0% 16.6% 5.4ppt ROCE % 11.5% 8.7% 2.8ppt ----------------------------- -------- -------- --------
Rental revenue growth of 14% was achieved through a combination of increased VOH (up 8%), together with pricing increases which had been implemented at the start of the calendar year for both minimum term and flexible rental products. Demand remained strong throughout the period and the business focused on delivering vehicles to satisfy its key customers, notably within sectors including infrastructure, IT and telecoms.
Vehicle supply was assisted by a broadening of fleet vehicle suppliers, but remained below the prior period and the high levels of demand. The business also carefully managed its defleeting activities, with disposal volumes 11% lower than the prior period, in order to satisfy key customer needs. PPUs were up over 125% in the period, helping to support disposal profit levels. Fleet ageing increased 5 months since 31 October 2021, with related service costs reflected within the hire rate increases.
Rental margin at over 20% for the period is expected to have reached its peak. This was driven by pricing increases implemented before the start of the period, while inflation-driven costs and fleet growth, with its related depreciation, building through the period.
Northgate's workshops have been working at high capacity throughout the period, supported by the strategic action to make this service available to third parties. Two repair contracts were signed with insurance companies looking to secure workshop capacity, including a referral from a major UK insurance customer, and have the potential to grow to become meaningful customers.
Volumes through the online eAuction platform accounted for almost all of the trade sales in the period, making for highly cost-efficient disposals. The roll-out of solar panels moved into its 2(nd) phase, providing significant energy cost savings at a time where these are a growing burden for businesses, with a total of over 1 MW of generating capacity installed or planned for installation this financial year.
Financial overview
Northgate Spain had a strong period with EBIT increasing GBP8.4m or 37.4% driven by VOH growth of 7.7% and strong rental margins of 20.4% compared to 17.1% in the prior period.
Rental business
Hire revenue in the Northgate Spain business increased 13.9% (13.5% in local currency) to GBP122.7m (H1 2022: GBP107.7m), driven by average VOH which increased 7.7%. Closing VOH increased 5.2% to 53,800.
Northgate Spain's minimum term proposition accounted for around 35% (H1 2022: 35%) of average VOH. The average term of these contracts is approximately three years, providing both improved visibility of future rental revenue and earnings.
The rental margin was 3.3ppt higher than the prior period at 20.4% from pricing increases and lower overheads, with some cost inflation offsetting this.
The impact of increase in hire revenue and rental margin was a 35.7% increase in rental profits to GBP25.1m (H1 2022: GBP18.5m).
Management of fleet and vehicle sales
The closing Northgate Spain rental fleet amounted to 60,600 compared to 57,600 vehicles at 30 April 2022. During the period 5,700 vehicles were purchased (H1 2022: 7,200) and 2,700 vehicles were de-fleeted (H1 2022: 3,100 vehicles). The average age of the fleet at the end of the period was 5 months higher than at the same time last year. This was due to managing the fleet to mitigate impacts of the restricted market supply reducing purchases.
A total of 2,800 vehicles were sold in Northgate Spain during the period, 36.2% lower than prior period reflecting the restricted market supply of new vehicles in the period.
Disposal profits of GBP5.9m (H1 2022: GBP4.1m) increased 45.1%. The reduction in the number of vehicles sold was offset by continued strength in sales values resulting in an increase in average profit per unit (PPU) on disposals to GBP2,101 (H1 2022: GBP924).
EBIT and ROCE
Underlying EBIT of GBP31.0m increased 37.4% over the prior period (H1 2022: GBP22.6m) driven by both higher rental and disposal profits as explained above. The ROCE in Northgate Spain was 11.5% (H1 2022: 8.7%) reflecting the increase in rental margin and an older fleet.
Capex and cash flow
Six months ended 31 October H1 2023 H1 2022 Change GBPm GBPm GBPm ----------------------------------- -------- -------- ------- Underlying EBITDA 75.9 65.4 10.5 Net Replacement Capex[7] (13.7) (34.4) 20.7 Lease principal payments[8] (1.3) (1.3) - -------- -------- ------- Steady state cash generation 60.9 29.7 31.2 Growth Capex (incl. inorganic)(7) (41.0) (33.5) (7.5) ----------------------------------- -------- -------- -------
Underlying EBITDA increased GBP10.5m to GBP75.9m (H1 2022: GBP65.4m).
Net replacement capex(7) in the period was GBP13.7m, GBP20.7m lower than the prior period, as a result of the ageing of the fleet in response to the shortage of new vehicle supply.
Steady state cash generation increased by GBP31.2m to GBP60.9m (H1 2022: GBP29.7m) reflecting higher EBITDA and lower net replacement capex in the period. Growth capex(7) was GBP41.0m reflecting investment in the fleet to meet demand.
Redde
Six months ended 31 October H1 2023 H1 2022 Change PROFIT & LOSS (Underlying) GBPm GBPm % ------------------------------- -------- -------- --------- Revenue - Claims and Services 331.4 251.9 31.5% Revenue - Vehicle sales 0.3 - 100.0% -------- -------- --------- Total Revenue 331.7 251.9 31.7% Gross profit 70.4 60.5 16.4% Gross margin %(9) 21.2% 24.0% (2.8ppt) Operating profit 18.9 14.0 35.1% Income from associates 1.6 2.1 (26.1%) Underlying EBIT 20.4 16.1 27.1% EBIT margin %[9] 6.2% 6.4% (0.2ppt) ROCE % 15.4% 11.6% 3.8ppt ------------------------------- -------- -------- ---------
The Redde Group of businesses made a strong start to the financial year with revenues up 31.7% reflecting the growth in road traffic, increased volumes from new business wins which have launched in the past 12 months, and an industry-wide rise in chargeable costs reflecting inflation across the supply chain.
The operational focus was on the integration of two (previously reported) large insurance contracts, where we are now providing fault and non-fault claims services and vehicle repair management. Both contracts went 'live' in the first half and have seen strong volume growth from inception. All previously announced contracts are now live, and the pipeline of opportunities remains healthy. Current and prospective customers are attracted to the efficiency savings and customer service levels available from an integrated mobility solution from Redde.
EBIT margin was stable, reflecting a change in repair service mix together with the up-front cost of work in advance of major contract operational launches. Fleet and bodyshop resources remain constrained, although the supply of passenger cars improved slightly, allowing for fleet growth of 17% (since 30 April 2022) to be achieved according to plan. High energy usage within the bodyshops was mitigated by agreement with customers for an interim energy levy, maintaining margin on contracts which are already in existence.
There has been a strong focus on driver and bodyshop recruitment and efficiencies in order to deliver on strong customer demand, which included greater integration of FMG RS within the Redde organisation. A leading customer, Admiral, recently announced a consolidation of their vehicle repair supply chain and FMG RS were selected as an approved partner, further enhancing our overall relationship and delivering increased repair volume to FMG RS.
Financial overview
During the period EBIT has increased by 27.1% over the prior period to GBP20.4m, with the growth in volumes seen in H2 FY 2022 continuing throughout the period.
Revenue and profit
Revenue for the period (excluding disposals) increased 31.5% to GBP331.4m (H1 2022: GBP251.9m) reflecting the increase in traffic volumes seen in H2 FY 2022 and a continuing extension in hire length during the period due to the impact of macro challenges in supply chains for parts and labour.
Gross margin of 21.2% declined 2.8ppt (H1 2022: 24.0%) due to volume mix within the business.
EBIT for the period increased 27.1% to GBP20.4m (H1 2022: GBP16.1m) reflecting the increase in revenue.
Management of fleet
The total fleet in Redde closed the period at 16,900 vehicles, from 14,500 at 30 April 2022 with the fleet increase supporting the increase in volumes of credit hires.
The average fleet age was 15 months reflecting the lower fleet holding period than in the Northgate businesses due to the different usage of the vehicles and business economics.
The Redde fleet operates a hybrid solution of ownership, contract hire and, during peak periods, cross-hiring when needed.
Capex and cash flow
Six months ended 31 October H1 2023 H1 2022 Change GBPm GBPm GBPm ------------------------------ --------- --------- --------- Underlying EBITDA 37.5 27.9 9.6 Net replacement capex[10] (1.3) (0.1) (0.4) Lease principal payments[11] (17.7) (15.5) (2.2) --------- --------- --------- Steady state cash generation 18.5 11.5 7.0 Growth capex(10) (42.8) (5.0) (37.8) Debtor days 168 days 176 days (8 days) ------------------------------ --------- --------- ---------
Underlying EBITDA increased GBP9.6m to GBP37.5m (H1 2022: GBP27.9m) reflecting the recovery of traffic volumes.
Net replacement capex(10) was GBP1.3m in the period (H1 2022: GBP0.1m). Steady state cash generation increased GBP7.0m to GBP18.5m (H1 2022: GBP11.5m).
Growth capex(10) increased to GBP42.8m (H1 2022: GBP5.0m) reflecting a growth in the fleet to meet the increase in demand for our services.
Debtor days were 168 days at the end of the period, a decrease from 176 days in the prior period. This measure is based upon net trade receivables and contract assets, other receivables and accrued income as a proportion of the related underlying sales revenue for the past 12 months multiplied by 365 days.
FINANCIAL REVIEW
Group Revenue and EBIT
Six months ended 31 October H1 2023 H1 2022 Change Change GBPm GBPm GBPm % ------------------------------- -------- -------- ------- -------- Revenue - Vehicle hire 302.7 277.1 25.6 9.2% Revenue - Vehicle sales 68.7 90.0 (21.3) (23.7%) Revenue - Claims and services 324.9 245.8 79.1 32.2% ------------------------------- -------- -------- ------- -------- Total revenue 696.3 612.9 83.4 13.6% Rental profit 53.8 48.5 5.4 11.1% Disposal profit 24.7 27.0 (2.3) (8.5%) Claims and services profit 18.9 14.0 4.9 35.1% Corporate costs (5.5) (4.3) (1.3) (30.4%) ------------------------------- -------- -------- ------- -------- Underlying operating profit 91.8 85.2 6.7 7.8% Income from associates 1.6 2.1 (0.6) (26.1%) ------------------------------- -------- -------- ------- -------- Underlying EBIT 93.4 87.3 6.1 7.0% Underlying EBIT margin 13.4% 14.2% - 0.8ppt Statutory EBIT 111.6 80.1 31.5 39.3% ------------------------------- -------- -------- ------- --------
-- Total Group revenue, including vehicle sales, of GBP696.3m was 13.6% higher than prior period (13.5% at constant exchange rates). Hire revenues were 9.2% higher due to 2.9% higher VOH across the Group as well as increased hire rates. Vehicle sales revenues were 23.7% lower due to a 2,300 reduction in vehicle disposals compared to the prior period but partially offset by stronger residual values
-- Revenue (excluding vehicle sales) of GBP627.6m (H1 2022: GBP522.9m) was 20.0% higher (19.9% at constant exchange rates) reflecting an increase in vehicle hire revenue and 32.2% increase in claims and services revenue driven by greater claims volumes
-- Underlying EBIT of GBP93.4m was 7.0% higher, reflecting the strong performance across the business
-- Statutory EBIT of GBP111.6m was 39.3% higher, reflecting higher underlying EBIT as well as adjustments to underlying depreciation of GBP28.2m as outlined below
Group PBT and EPS
Six months ended 31 October H1 2023 H1 2022 Change Change GBPm GBPm GBPm % ------------------------------- -------- -------- ------- ------- Underlying EBIT 93.4 87.3 6.1 7.0% Net finance costs (9.7) (8.4) (1.3) 15.5% ------------------------------- -------- -------- ------- ------- Underlying Profit before Tax 83.7 78.9 4.8 6.1% Statutory Profit before Tax 101.9 71.7 30.2 42.1% Underlying effective tax rate 20.0% 18.7% - 1.3ppt Underlying EPS 28.1p 26.1p 2.0p 7.7% Statutory EPS 34.4p 22.5p 11.9p 52.3% ------------------------------- -------- -------- ------- -------
-- Underlying PBT was 6.1% higher, reflecting the higher EBIT as a result of the improved business performance partially offset by higher finance costs, which were 15.5% higher
-- Statutory PBT was 42.1% higher, reflecting the higher underlying PBT and adjustments to underlying depreciation in the year of GBP28.2m credit (H1 2022: GBPnil)
-- The underlying effective tax rate of 20.0% was 1.3ppt higher than prior period -- Underlying EPS of 28.1p was 7.7% higher, reflecting the increased profits in the period
-- Statutory EPS of 34.4p was 52.3% higher, reflecting the movement in underlying EPS and the impact of credits to underlying depreciation in the current period
Exceptional items
During the period, there were no items that were recognised as exceptional items (H1 2022: GBP2.7m).
Further detail on exceptional items is included in Note 11.
Amortisation of acquired intangibles and adjustments to underlying depreciation charges are not an exceptional item as it is recurring. However, it is excluded from underlying results in order to provide a better comparison of performance of the Group. The total amortisation of acquired intangibles charged in the period was GBP10.1m (H1 2022: GBP9.9m).
Depreciation rate changes
As explained at the year end, residual values have increased significantly over the previous two financial years due to the disruption of new vehicle supply which has increased demand for used vehicles. Up to April 2022, no changes had been made to depreciation rates on existing fleet vehicles as the extent and longevity of this buoyancy in residual values has been uncertain. However, it has continued for longer than anticipated and uncertainty remains over how long it will take for supply of new and used vehicles to return to a more normal level.
For this reason, there are a number of vehicles on our fleet where the depreciated book value is below or very close to the expected residual value at disposal. In line with the requirements of accounting standards, a decision was made to reduce depreciation rates from 1 May 2022 on certain vehicles remaining on the fleet which were purchased before FY 2021.
The impact on the statutory income statement over the remaining holding period of those vehicles (as outlined at the year end) is expected to be as follows:
GBPm FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Total Reduced depreciation 54.6 30.9 8.2 0.3 - 94.1 Reduced disposal profits (7.8) (40.4) (38.0) (7.0) (0.9) (94.1) Impact on statutory EBIT 46.8 (9.4) (29.8) (6.7) (0.9) - ---------------------- -------- -------- -------- -------- -------- -------
The total adjustment made to underlying depreciation in the period was a credit of GBP28.2m comprising GBP29.7m reduced depreciation offset by GBP1.5m reduced disposal profits. The adjustment has been impacted by the continued ageing of the fleet but remains materially in line with expectations.
Interest
Net underlying finance charges increased to GBP9.7m (H1 2022: GBP8.4m) due to the higher average debt compared to the prior period. The net cash interest charge for the period was GBP8.6m (H1 2022: GBP7.5m).
At 31 October 2022 66% of borrowings were held in fixed rate instruments.
Dividend
The Board has declared an interim dividend of 7.5p per share (H1 2022: 6.0p) to be paid on 13 January 2023 to shareholders on the register as at close of business on 16 December 2022.
The interim dividend represents 50% of the final dividend for the year ended 30 April 2022 in line with previous guidance.
Share buyback programme
As previously announced, during March 2022 the Group commenced a share buyback programme of the Company's ordinary shares for up to a maximum aggregate consideration of GBP60 million. As at 31 October 2022, 13,731,330 shares had been purchased for a total consideration of GBP49m; this had increased to 16 million shares at a cost of GBP56m by 30 November 2022 and these are being held in treasury.
Business combinations
In July 2022 the Group acquired 100% of the equity capital of Blakedale Limited for provisional consideration of GBP10.0m. The provisional fair value of net assets acquired was GBP6.2m resulting in the recognition of GBP3.9m of goodwill.
Group cash flow
Steady state cash generation
Six months ended 31 October H1 2023 H1 2022 Change GBPm GBPm GBPm ------------------------------------------ -------- -------- ------- Underlying EBIT 93.4 87.3 6.1 Underlying depreciation and amortisation 105.4 95.5 9.9 ------------------------------------------ -------- -------- ------- Underlying EBITDA 198.8 182.8 16.0 Net replacement capex[12] (53.1) (68.8) 15.7 Lease principal payments[13] (24.6) (20.4) (4.2) ------------------------------------------ -------- -------- ------- Steady state cash generation 121.2 93.5 27.7 ------------------------------------------ -------- -------- -------
-- Steady state cash generation remained strong at GBP121.2m (H1 2022: GBP93.5m), driven by higher EBITDA and lower replacement capex
-- Underlying EBITDA was GBP16.0m higher driven by stronger performance across the business
-- Net replacement capex was GBP15.7m lower due to constrained vehicle supply reducing the volume of replacements
Free cash flow
Six months ended 31 October H1 2023 H1 2022 Change GBPm GBPm GBPm --------------------------------------- -------- -------- ------- Steady state cash generation 121.2 93.5 27.7 Exceptional costs (excluding non-cash items) - (0.6) 0.6 Working capital and non-cash items (19.6) (33.0) 13.5 Growth capex(12) (68.7) (51.7) (17.0) Taxation (14.7) (9.9) (4.8) --------------------------------------- -------- -------- ------- Net operating cash 18.2 (1.8) 20.0 Distributions from associates 1.9 2.1 (0.3) Interest and other financing (8.1) (7.4) (0.6) Acquisition of business (9.9) (0.5) (9.4) --------------------------------------- -------- -------- ------- Free cash flow 2.1 (7.6) 9.7 Payments to acquire treasury shares (40.5) - (40.5) Dividends paid (35.0) (29.3) (5.7) Lease principal payments(13) 24.6 20.4 4.2 --------------------------------------- -------- -------- ------- Net cash consumed (48.8) (16.5) (32.3) --------------------------------------- -------- -------- -------
-- Free cash inflow of GBP2.1m increased by GBP9.7m compared to the prior period, driven primarily by higher steady state cash generation and a GBP13.5m lower working capital outflow partially offset by increases in growth capex of GBP17.0m and the GBP10m cash acquisition of Blakedale
-- Growth capex of GBP68.7m reflects a net increase in owned fleet over the period of 3,400 vehicles driven by fleet growth in Northgate Spain and Redde
-- If the impact of growth capex in the period is removed from free cash flow, the underlying free cash flow of the Group was GBP66.6m (H1 2022: GBP44.8m)
-- The share buyback programme which commenced in March 2022 resulted in an outflow of GBP40.5m in the period (H1 2022: GBPnil)
-- Dividends paid of GBP35.0m were GBP5.7m higher than the prior period, reflecting the final dividend of 15.0p declared relating to FY 2022 (FY 2021: 12.0p)
Net debt
Net debt reconciles as follows:
Six months ended 31 October H1 2023 H1 2022 GBPm GBPm ---------------------------- ------- -------- Opening net debt 582.5 530.3 Net cash consumed 48.8 16.5 Other non-cash items 20.2 50.7 Exchange differences 9.8 (10.3) ---------------------------- ------- -------- Closing net debt 661.3 587.2 ---------------------------- ------- --------
Closing net debt was GBP78.8m higher than opening net debt, driven by net cash consumption of GBP48.8m. Other non-cash items of GBP20.2m consists primarily of new leases acquired and the foreign exchange impact on net debt was a GBP9.8m increase.
Borrowing facilities
As at 31 October 2022 the Group had headroom on facilities of GBP308m, with GBP509m drawn (net of available cash balances) against total facilities of GBP817m as detailed below:
Facility Drawn Headroom Maturity Borrowing GBPm GBPm GBPm Cost ------------------- -------- ----- -------- ------------ --------- UK bank facilities 480 174 306 Nov-26 4.1% Nov 27 - Nov Loan notes 323 323 - 31 1.3% Other loans 14 12 2 Nov 23 2.7% ------------------- -------- ----- -------- ------------ --------- 817 509 308 2.7% ------------------- -------- ----- -------- ------------ ---------
During the period, the UK bank facilities were extended for a further year to November 2026.
The other loans consist of GBP12.7m of borrowings located in Spain which were renewed for a further year in November 2022 and GBP0.5m of preference shares.
The above drawn amounts reconcile to net debt as follows:
Drawn GBPm ------------------------------------ ----- Borrowing facilities 509 Unamortised finance fees (9) Leases arising following adoption of IFRS 16 130 Leases arising under HP obligations 31 ------------------------------------- ----- Net debt 661 ------------------------------------- -----
There are three financial covenants under the Group's facilities as follows:
Threshold Oct-22 Headroom Oct-21 --------------- ---------- ------ ---------------- ------- Interest cover 3x 13.9x GBP132m (EBIT) 11.6x GBP320m (Net Loan to value 70% 44% debt) 43% Debt leverage 3.0x 1.6x GBP166m (EBITDA) 1.5x --------------- ---------- ------ ---------------- -------
The covenant calculations have been prepared in accordance with the requirements of the facilities to which they relate.
Balance sheet
Net assets at 31 October 2022 were GBP959.0m (H1 2022: GBP932.7m), equivalent to net assets per share of 413p (H1 2022: 379p). Net tangible assets at 31 October 2022 were GBP693.9m (H1 2022: GBP656.8m), equivalent to a net tangible asset value of 299p per share (H1 2022: 267p per share).
Gearing at 31 October 2022 was 69.0% (H1 2022: 89.4%) and ROCE was 13.5% (H1 2022: 12.5%).
Foreign exchange risk
The average and period end exchange rates used to translate the Group's overseas operations were as follows:
October 2022 October 2021 April 2022 GBP : EUR GBP : EUR GBP : EUR ----------- ------------- ------------- ---------- Average 1.16 1.17 1.18 Period end 1.16 1.18 1.19 ----------- ------------- ------------- ----------
Going concern
Having considered the Group's current trading, cash flow generation and debt maturity, the Directors have concluded that it is appropriate to prepare the Group financial statements on a going concern basis.
Risks and uncertainties
The Board and the Group's management have clearly defined responsibility for identifying the major business risks facing the Group and for developing systems to mitigate and manage those risks.
The principal risks and uncertainties facing the Group at 30 April 2022 were set out in detail on pages 30 to 34 of the FY 2022 annual report, a copy of which is available at www.reddenorthgate.com , and were identified as:
-- economic environment -- market risk -- vehicle holding costs -- the employee environment -- legal and compliance -- IT systems -- recovery of contract assets -- access to capital
These principal risks have not changed since the last annual report and continue to be those that could impact the Group during the second half of the current financial year.
Alternative performance measures and glossary of terms
A reconciliation of statutory to underlying Group performance is outlined at the front of this document. A reconciliation of underlying cash flow measures and additional alternative performance measures used to assess performance of the Group is shown below.
Six months Six months to 31.10.22 to 31.10.21 GBPm GBPm ------------------------------------------------------ ------------- ------------- Underlying EBIT 93.4 87.3 Add back: Depreciation of property, plant and equipment 104.1 94.8 Loss on disposal of assets 0.7 0.2 Intangible amortisation included in underlying operating profit (Note 6) 0.6 0.4 ------------- ------------- Underlying EBITDA 198.8 182.8 Net replacement capex (53.1) (68.8) Lease principal payments (under IFRS 16 and HP) (24.6) (20.4) ------------- ------------- Steady state cash generation 121.2 93.5 Exceptional items (excluding non-cash items) (Note 6) - (0.6) Working capital and non-cash items (19.6) (33.0) Growth capex (68.7) (51.7) Taxation (14.7) (9.9) ------------- ------------- Net operating cash 18.2 (1.8) Distributions from associates 1.9 2.1 Interest and other financing costs (8.1) (7.4) Acquisition of business net of cash acquired (9.9) (0.5) ------------- ------------- Free cash flow 2.1 (7.6) Payments to acquire treasury shares (40.5) - Dividends paid (35.0) (29.3) Lease principal payments 24.6 20.4 ------------- ------------- Net cash consumed (48.8) (16.5) ------------- ------------- Reconciliation to cash flow statement: Net increase (decrease) in cash and cash equivalents 3.5 (3.5) Add back: Receipt of bank loans and other borrowings (76.8) (33.4) Repayments of bank loans and other borrowings - - Principal element of lease payments under IFRS 16 16.8 11.8 Principal element of lease payments under HP obligations 7.8 8.6 ------------- ------------- Net cash consumed (48.8) (16.5) ------------- ------------- Reconciliation of capital expenditure Purchases of vehicles for hire 177.0 188.8 Proceeds from disposals of vehicles for hire (58.9) (75.9) Proceeds from disposal of vehicles for credit hire and other property, plant and equipment - (0.9) Purchases of other property plant and equipment 3.0 8.1 Purchases of intangible assets 0.7 0.5 ------------- ------------- Net capital expenditure 121.8 120.6 ------------- ------------- Net replacement capex(1) 53.1 68.8 Growth capex(2) 68.7 51.7 ------------- ------------- Net capital expenditure 121.8 120.6 ------------- ------------- (1) Net capital expenditure other than that defined as growth capex (2) Growth capex represents the cash consumed in order to grow the total owned fleet or the cash generated if the owned fleet size is reduced in periods of contraction Northgate Northgate Group UK&I Spain Sub-total 6 months 6 months 6 months to 31.10.22 to 31.10.22 to 31.10.22 GBP000 GBP000 GBP000 ------------------------------------------ ------------- ------------- ------------- Underlying operating profit(1) 47,542 30,992 78,534 Exclude: Adjustments to underlying depreciation charge in relation to vehicles sold in the period (18,767) (5,931) (24,698) ------------- ------------- ------------- Rental profit 28,775 25,061 53,836 Divided by: Revenue: hire of vehicles(2) 184,136 122,685 306,821 Rental margin 15.6% 20.4% 17.5% Northgate Northgate Group UK&I Spain Sub-total 6 months 6 months 6 months to 31.10.21 to 31.10.21 to 31.10.21 GBP000 GBP000 GBP000 ------------------------------------------ ------------- ------------- ------------- Underlying operating profit(1) 52,928 22,554 75,482 Exclude: Adjustments to underlying depreciation charge in relation to vehicles sold in the period (22,917) (4,087) (27,004) ------------- ------------- ------------- Rental profit 30,011 18,467 48,478 Divided by: Revenue: hire of vehicles(2) 170,840 107,683 278,523 Rental margin 17.6% 17.1% 17.4%
(1) See Note 2 to the financial statements for reconciliation of segment underlying operating profit to Group underlying operating profit.
(2) Revenue: hire of vehicles including intersegment revenue (see Note 2 to the financial statements).
Glossary of terms
The following defined terms have been used throughout this document:
Term Definition Blakedale Blakedale Limited - A business acquired within the Northgate UK&I operating segment, providing specialist vehicle rental solutions ---------------------------------------------------- Charged EV A business within the Northgate UK&I operating segment, providing EV Charging infrastructure and solutions ---------------------------------------------------- Company Redde Northgate plc ---------------------------------------------------- Contract hire IFRS 16 (leases) relating to vehicles where the funder retains the residual value risk ----------------------------------------------------
Disposal profit(s) This is a non-GAAP measure used to describe the adjustment in the depreciation charge made in the period for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs) ---------------------------------------------------- EBIT Earnings before interest and taxation ---------------------------------------------------- EBITDA Earnings before interest, taxation, depreciation and amortisation ---------------------------------------------------- EPS Earnings per share. Underlying unless otherwise stated ---------------------------------------------------- EV(s) Electric vehicle(s) ---------------------------------------------------- Facility headroom Calculated as facilities of GBP817m less net borrowings of GBP509m. Net borrowings represent net debt of GBP661m excluding lease liabilities of GBP161m and unamortised arrangement fees of GBP9m and are stated after the deduction of GBP19m of cash balances which are available to offset against borrowings ---------------------------------------------------- FMG RS A business within the Redde operating segment, providing vehicle repair services ---------------------------------------------------- Free cash flow Net cash generated after principal lease payments and before share buybacks and the payment of dividends ---------------------------------------------------- FY 2022 The year ended 30 April 2022 ---------------------------------------------------- FY 2023 The year ending 30 April 2023 ---------------------------------------------------- GAAP Generally Accepted Accounting Practice: meaning compliance with IFRS ---------------------------------------------------- Gearing Calculated as net debt divided by net tangible assets ---------------------------------------------------- Group The Company and its subsidiaries ---------------------------------------------------- Growth capex Growth capex represents the cash consumed in order to grow the total owned rental fleet or the cash generated if the fleet size is reduced in periods of contraction ---------------------------------------------------- H1 2023 The six month period ended 31 October 2022 ---------------------------------------------------- H1 2022 The six month period ended 31 October 2021 ---------------------------------------------------- H1/H2 Half year period: H1 being the first half and H2 being the second half of the financial year ---------------------------------------------------- HP (leases) Leases recognised on the balance sheet that would previously have been classified as finance leases prior to the adoption of IFRS 16 ---------------------------------------------------- IFRS International Financial Reporting Standards ---------------------------------------------------- IFRS 16 (leases) Leases recognised on the balance sheet that would previously have been classified as operating leases prior to the adoption of IFRS 16 ---------------------------------------------------- LCV Light commercial vehicle: the official term used within the UK and European Union for a commercial carrier vehicle with a gross vehicle weight of not more than 3.5 tonnes ---------------------------------------------------- Lease principal Includes the total principal payment on leases payments including those recognised before and after adoption of IFRS 16 ---------------------------------------------------- Net replacement Net capital expenditure other than that defined capex as growth capex and lease principal payments. ---------------------------------------------------- Net tangible assets Net assets less goodwill and other intangible assets ---------------------------------------------------- PBT Profit before taxation. Underlying unless otherwise stated ---------------------------------------------------- PPU Profit per unit/loss per unit - this is a non-GAAP measure used to describe disposal profit (as defined), divided by the number of vehicles sold ---------------------------------------------------- Profit & loss Referring to the Income Statement ---------------------------------------------------- ROCE Underlying return on capital employed: calculated as underlying EBIT (see non-GAAP reconciliation) divided by average capital employed excluding acquired goodwill and intangible assets ---------------------------------------------------- Steady state cash Underlying EBITDA less net replacement capex generation and lease principal payments ---------------------------------------------------- The Group The Company and its subsidiaries ---------------------------------------------------- Underlying free Free cash flow excluding growth capex cash flow ---------------------------------------------------- Utilisation Calculated as the average number of vehicles on hire divided by average rentable fleet in any period ---------------------------------------------------- VOH Vehicles on hire. Average unless otherwise stated ---------------------------------------------------- Condensed consolidated income statement for the six months ended 31 October 2022 ---------------------------------------------------------------------------------------------------------------------- Six months Six months Year to to 31.10.22 to 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) Statutory Statutory Statutory Note GBP000 GBP000 GBP000 -------------------------------------------------------------------------- ----- ----------- ----------- --------- Revenue: hire of vehicles 2 302,717 277,145 563,288 Revenue: sale of vehicles 2 68,738 89,979 149,939 Revenue: claims and services 2 324,877 245,798 530,330 -------------------------------------------------------------------------- ----- ----------- ----------- --------- Total revenue 2 696,332 612,922 1,243,557 Cost of sales (478,846) (441,259) (897,349) -------------------------------------------------------------------------- ----- ----------- ----------- --------- Gross profit 217,486 171,663 346,208 Administrative expenses (excluding exceptional items and amortisation on acquired intangible assets) (97,397) (86,481) (182,204) Exceptional administrative expenses: reversal of previous impairment of property, plant and equipment 10,11 - 2,999 2,998 Exceptional administrative expenses: other costs 11 - (625) (690) Amortisation on acquired intangible assets (10,056) (9,869) (19,778) -------------------------------------------------------------------------- ----- ----------- ----------- --------- Total administrative expenses (107,453) (93,976) (199,674)
-------------------------------------------------------------------------- ----- ----------- ----------- --------- Operating profit 110,033 77,687 146,534 Income from associates 2,8 1,559 2,111 3,866 Gain on bargain purchase 11 - 290 355 EBIT 2 111,592 80,088 150,755 Interest income 24 16 34 Finance costs (9,681) (8,374) (18,100) Profit before taxation 101,935 71,730 132,689 -------------------------------------------------------------------------- ----- ----------- ----------- --------- Taxation 3 (19,940) (16,241) (31,144) -------------------------------------------------------------------------- ----- ----------- ----------- --------- Profit for the period 81,995 55,489 101,545 -------------------------------------------------------------------------- ----- ----------- ----------- ---------
Profit for the period is wholly attributable to owners of the Company. All results arise from continuing operations.
Earnings per share Basic 434.4p 22.5p 41.3p ------------------- ----- ----- ----- Diluted 433.5p 22.0p 40.4p ------------------- ----- ----- ----- Condensed consolidated statement of comprehensive income for the six months ended 31 October 2022 -------------------------------------------------------------------------------- ----------- ----------- ---------- Six months Six months Year to to 31.10.22 to 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) GBP000 GBP000 GBP000 -------------------------------------------------------------------------------- ----------- ----------- ---------- Amounts attributable to owners of the Company Profit attributable to owners 81,995 55,489 101,545 Other comprehensive income (expense) Foreign exchange differences on retranslation of net assets of subsidiary undertakings 12,476 (13,134) (16,347) Foreign exchange differences on long term borrowings held as hedges (9,635) 9,614 11,904 Foreign exchange difference on revaluation reserve 32 (31) (41) Total other comprehensive income (expense) for the period 2,873 (3,551) (4,484) -------------------------------------------------------------------------------- ----------- ----------- ---------- Total comprehensive income for the period 84,868 51,938 97,061 -------------------------------------------------------------------------------- ----------- ----------- ----------
All items will subsequently be reclassified to the consolidated income statement. Profit attributable to the owners of the Company includes amortisation of intangible assets.
Condensed consolidated balance sheet 31 October 2022 31.10.22 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) Note GBP000 GBP000 GBP000 --------------------------------- ---- ----------- ----------- --------- Non-current assets Goodwill 6 118,781 114,903 114,926 Other intangible assets 6 146,319 161,018 151,312 Property, plant and equipment 7 1,257,757 1,144,858 1,161,915 Deferred tax assets 3,061 9,824 3,175 Interest in associates 8 5,534 6,032 5,843 Total non-current assets 1,531,452 1,436,635 1,437,171 ---------------------------------- ---- ----------- ----------- --------- Current assets Inventories 15,555 11,731 18,696 Receivables and contract assets 420,821 335,941 359,053 Current tax assets 6,917 - 7,432 Cash and bank balances 9 18,956 34,817 24,561 ---------------------------------- ---- ----------- ----------- --------- Total current assets 462,249 382,489 409,742 ---------------------------------- ---- ----------- ----------- --------- Total assets 1,993,701 1,819,124 1,846,913 ---------------------------------- ---- ----------- ----------- --------- Current liabilities Trade and other payables 301,031 217,076 246,833 Current tax liabilities 5,351 8,969 3,327 Lease liabilities 56,889 36,558 52,524 Short-term borrowings 11,151 127,665 21,007 ---------------------------------- ---- ----------- ----------- --------- Total current liabilities 374,422 390,268 323,691 ---------------------------------- ---- ----------- ----------- --------- Net current assets (liabilities) 87,827 (7,779) 86,051 ---------------------------------- ---- ----------- ----------- --------- Non-current liabilities Trade and other payables 4,942 3,849 4,509 Lease liabilities 103,188 121,143 111,755 Long term borrowings 509,063 336,675 421,822 Deferred tax liabilities 43,062 34,450 38,375 Total non-current liabilities 660,255 496,117 576,461 ---------------------------------- ---- ----------- ----------- --------- Total liabilities 1,034,677 886,385 900,152 ---------------------------------- ---- ----------- ----------- --------- NET ASSETS 959,024 932,739 946,761 ---------------------------------- ---- ----------- ----------- --------- Equity Share capital 123,046 123,046 123,046 Share premium account 113,510 113,510 113,510 Treasury shares reserve (48,633) - (7,493) Own shares reserve (13,262) (6,145) (16,439) Translation reserve (5,792) (7,710) (8,633) Other reserves 330,467 330,445 330,435 Retained earnings 459,688 379,593 412,335 ---------------------------------- ---- ----------- ----------- --------- TOTAL EQUITY 959,024 932,739 946,761 ---------------------------------- ---- ----------- ----------- ---------
Total equity is wholly attributable to owners of the Company.
Condensed consolidated cash flow statement for the six months ended 31 October 2022 ---------------------------------------------------------------- ----- ----------- ----------- --------- Six months Six months Year to to 31.10.22 to 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) Note GBP000 GBP000 GBP000 ---------------------------------------------------------------- ----- ----------- ----------- --------- Net cash generated from operations 10 38,056 18,776 127,643 ---------------------------------------------------------------- ----- ----------- ----------- --------- Investing activities Interest received 24 16 34 Distributions from associates 8 1,868 2,126 4,070 Acquisition of business 12 (10,043) (554) (853) Cash acquired on acquisition 12 141 36 371 Proceeds from disposal of other property, plant and equipment 87 885 2,683 Purchases of other property, plant and equipment (3,035) (8,066) (52,369) Purchases of intangible assets (701) (468) (1,373) ---------------------------------------------------------------- ----- ----------- ----------- --------- Net cash used in investing activities (11,659) (6,025) (47,437)
---------------------------------------------------------------- ----- ----------- ----------- --------- Financing activities Dividends paid (34,984) (29,295) (43,897) Receipt of bank loans and other borrowings 76,849 33,409 318,056 Repayment of bank loans and other borrowings - - (277,617) Debt issue costs (950) - (5,428) Exceptional finance costs - - (1,435) Principal element of lease payments under IFRS 16 (16,754) (11,813) (27,959) Principal element of lease payments under HP obligations (7,827) (8,575) (15,700) Payments to acquire treasury shares (40,484) - (7,493) Net receipts (payments) to acquire own shares for share schemes 1,233 57 (9,933) Net cash used in financing activities (22,917) (16,217) (71,406) ---------------------------------------------------------------- ----- ----------- ----------- --------- Net increase (decrease) in cash and cash equivalents 3,480 (3,466) 8,800 Cash and cash equivalents at beginning of the period 15,769 6,821 6,821 Effect of foreign exchange movements (293) (31) 148 ---------------------------------------------------------------- ----- ----------- ----------- --------- Cash and cash equivalents at the end of the period 18,956 3,324 15,769 ---------------------------------------------------------------- ----- ----------- ----------- --------- Cash and cash equivalents consist of: Cash and bank balances 918,956 34,817 24,561 Bank overdrafts 9 - (31,493) (8,792) -------------------------------------- ------ -------- ------- 18,956 3,324 15,769 -------------------------------------- ------ -------- ------- Condensed consolidated statement of changes in equity for the six months ended 31 October 2022 Share capital and share Treasury Own Translation Other Retained premium shares shares reserve reserves earnings Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ----------------------- ----------- ---------- --------- ------------ ---------- ---------- --------- Total equity at 1 May 2021 236,556 - (6,460) (4,190) 330,476 351,747 908,129 Share options fair value charge - - - - - 1,910 1,910 Share options exercised - - 258 - - (258) - Dividends paid - - - - - (29,295) (29,295) Net receipts of shares - - 57 - - - 57 Total comprehensive (expense) income - - - (3,520) (31) 55,489 51,938 Total equity at 1 November 2021 236,556 - (6,145) (7,710) 330,445 379,593 932,739 Share options fair value charge - - - - - 1,785 1,785 Share options exercised - - (258) - - (330) (588) Dividends paid - - - - - (14,602) (14,602) Net purchases of shares - (7,493) (10,624) - - - (18,117) Transfer of shares on vesting of share options - - 588 - - - 588 Deferred tax on share based payments recognised in equity - - - - - (167) (167) Total comprehensive (expense) income - - - (923) (10) 46,056 45,123 Total equity at 1 May 2022 236,556 (7,493) (16,439) (8,633) 330,435 412,335 946,761 Share options fair value charge - - - - - 2,286 2,286 Share options exercised - - 1,944 - - (1,944) - Dividends paid - - - - - (34,984) (34,984) Net (purchases) receipts of shares - (41,140) 1,233 - - - (39,907) Total comprehensive income - - - 2,841 32 81,995 84,868 Total equity at 31 October 2022 236,556 (48,633) (13,262) (5,792) 330,467 459,688 959,024 Other reserves comprise the capital redemption reserve, revaluation reserve and merger reserve. Unaudited notes 1. Basis of preparation and accounting policies Redde Northgate plc is a company incorporated in England and Wales under the Companies Act 2006. This condensed consolidated interim financial report for the half-year reporting period ended 31 October 2022 has been prepared in accordance with the UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. The interim report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 April 2022, which has been prepared in accordance with UK-adopted international accounting standards and the requirements of the Companies Act 2006, and any public announcements made by the Group during the interim reporting period. The accounting policies adopted are consistent with those of the previous financial year, except for the estimation of income tax (see note 3). The condensed financial statements are unaudited and were approved by the Board of Directors on 7 December 2022. The condensed financial statements have been reviewed by the auditors and the independent review report is set out in this document. The interim financial information for the six months ended 31 October 2022, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts. There are no new accounting standards that have been adopted in the period. In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 30 April 2022. Depreciation charges reflect adjustments made as a result of differences between expected and actual residual values of used vehicles, taking into account the further directly attributable costs to sell the vehicles. The Directors apply judgement in determining the appropriate method of depreciation (straight line) and are required to estimate the future residual value of vehicles with due consideration of variables including age, mileage and condition. Residual values have increased recently due to the well-publicised new vehicle supply constraints increasing demand for our vehicle assets. This disruption is not anticipated to continue into the medium term but has increased the level of judgement in this area as it is more difficult to estimate the future residual value of vehicles at the point they are expected to be sold. Depreciation rates have been adjusted from 1 May 2022 with the adjustment presented outside of underlying results. Depreciation rates will remain under review as the longer term impact on residual values becomes clearer. The expected adjustment for settlement of claims due from insurance companies and self-insuring organisations remains a critical area of accounting judgement and estimation uncertainty. The approach taken in the period remains consistent with that outlined in the accounting policies for the year ended 30 April 2022. The carrying value of contract assets for claims from insurance companies at 31 October 2022 was GBP231,898,000 (30 April 2022 GBP193,834 ,000). A 3% difference between the carrying amount of claims in the balance sheet and the amounts finally settled would lead to a GBP7.0m charge or credit to the income statement in subsequent periods. Going concern assumption The Directors have taken into account the following matters in concluding whether or not it is appropriate to prepare the interim financial statements on a going concern basis: Assessment of prospects The Group is well established within the markets it operates and has demonstrated resilience through the Covid-19 period and beyond and also throughout previous economic cycles. The Group's prospects are assessed through its strategic planning
process. This process includes an annual review of the ongoing strategic plan, led by the CEO, together with the involvement of business functions in all territories. The Board engages closely with executive management throughout this process and challenges delivery of the strategic plan during regular Board meetings. Part of the Board's role is to challenge the plan to ensure it is robust and makes due consideration of the appropriate external environment. Assessment of going concern The strategy and associated principal risks underpin the Group's three year strategic plan ("Plan"), which is updated annually. This process considers the current and prospective macro-economic conditions in the countries in which we operate and the competitive tension that exists within the markets that we trade in. The Plan also encompasses the projected cash flows, dividend cover assuming operation of stated policy and headroom against borrowing facilities and financial covenants under the Group's facilities throughout the planned period. The Plan makes certain assumptions about the normal level of capital recycling likely to occur and therefore considers whether additional financing will be required. Headroom against the Group's existing banking facilities at 31 October 2022 was GBP308m. This compares to headroom of GBP382m at 30 April 2022. At the date of signing these unaudited financial statements, all of the Group's principal borrowing facilities have maturity dates outside of the period under review, therefore the Group's facilities provide sufficient headroom to fund the capital expenditure and working capital requirements for at least 12 months following the date of this report. Since preparing the plan, a reforecast has been performed which further takes into account developments in the macro-economic environment that have developed such as continued shortage in supply of new vehicles, inflationary pressures across the cost base and exposure to rises in interest rates. The reforecast has been prepared on a conservative basis and demonstrates that sufficient headroom remains against available debt facilities and the covenants attached to those. The Directors therefore have a reasonable expectation that the Group will continue to meet its obligations as they fall due for at least 12 months from the date of this report. Information extracted from 2022 annual report The financial figures for the year ended 30 April 2022, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year. The statutory accounts for the year ended 30 April 2022 were prepared with UK-adopted International Accounting Standards and the Companies Act 2006 applicable to companies reporting under IFRS and were delivered to the Registrar of Companies on 1 October 2022. The audit report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.
2. Segmental analysis
Management has determined the operating segments based upon the information provided to the Board of Directors, which is considered to be the chief operating decision maker. The Group is managed, and reports internally, on a basis consistent with its three main operating divisions, Northgate UK&I, Northgate Spain and Redde. The principal activities of these divisions are set out in the Operating review.
Northgate Northgate Group Group UK&I Spain Redde Corporate eliminations total Six months Six months Six months Six months Six months Six months to 31.10.22 to 31.10.22 to 31.10.22 to 31.10.22 to 31.10.22 to 31.10.22 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------------- ------------- ------------- ------------- ------------- --------------- -------------- Revenue: hire of vehicles 180,032 122,685 - - - 302,717 Revenue: sale of vehicles 50,305 18,178 255 - - 68,738 Revenue: claims and services - - 324,877 - - 324,877 ------------------------- ------------- ------------- ------------- ------------- --------------- -------------- External revenue 230,337 140,863 325,132 - - 696,332 Intersegment revenue 4,104 - 6,537 - (10,641) - Total revenue 234,441 140,863 331,669 - (10,641) 696,332 Timing of revenue recognition: At a point in time 50,305 18,178 128,440 - - 196,923 Over time 180,032 122,685 196,692 - - 499,409 ------------------------- ------------- ------------- ------------- ------------- --------------- -------------- External revenue 230,337 140,863 325,132 - - 696,332 ------------------------- ------------- ------------- ------------- ------------- --------------- -------------- Underlying operating profit (loss) 47,542 30,992 18,857 (5,550) - 91,841 Income from associates - - 1,559 - - 1,559 ------------------------- ------------- ------------- ------------- ------------- --------------- -------------- Underlying EBIT* 47,542 30,992 20,416 (5,550) - 93,400 ------------------------- ------------- ------------- ------------- ------------- --------------- -------------- Adjustments to underlying depreciation charge 28,248 Amortisation on acquired intangible assets (note 6) (10,056) EBIT 111,592 Interest income 24 Finance costs (9,681) Profit before taxation 101,935 ------------------------- ------------- ------------- ------------- ------------- --------------- --------------
* Underlying EBIT stated before amortisation on acquired intangible assets, adjustments to underlying depreciation charge and exceptional items is the measure used by the Board of Directors to assess segment performance.
Northgate Northgate Group Group UK&I Spain Redde Corporate eliminations total Six months Six months Six months Six months Six months Six months to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Revenue: hire of vehicles 169,462 107,683 - - - 277,145 Revenue: sale of vehicles 61,867 28,112 - - - 89,979 Revenue: claims and services - - 245,798 - - 245,798 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- External revenue 231,329 135,795 245,798 - - 612,922 Intersegment revenue 1,378 - 6,133 - (7,511) - Total revenue 232,707 135,795 251,931 - (7,511) 612,922 Timing of revenue recognition: At a point in time 61,867 28,112 90,528 - - 180,507 Over time 169,462 107,683 155,270 - - 432,415 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- External revenue 231,329 135,795 245,798 - - 612,922 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Underlying operating profit (loss) 52,928 22,554 13,957 (4,257) - 85,182
Income from associates - - 2,111 - - 2,111 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Underlying EBIT* 52,928 22,554 16,068 (4,257) - 87,293 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Exceptional items (Note 11) 2,374 Amortisation on acquired intangible assets (9,869) Gain on bargain purchase (Note 11) 290 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- EBIT 80,088 Interest income 16 Finance costs (8,374) Profit before taxation 71,730 ------------------------ ------------- ------------- ------------- ------------- -------------- -------------- Northgate Northgate Group Group UK&I Spain Redde Corporate eliminations total Year Year Year Year Year to Year to 30.04.22 to 30.04.22 to 30.04.22 to 30.04.22 30.04.22 to 30.04.22 (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Revenue: hire of vehicles 342,733 220,555 - - - 563,288 Revenue: sale of vehicles 111,802 38,137 - - - 149,939 Revenue: claims and services - - 530,330 - - 530,330 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- External revenue 454,535 258,692 530,330 - - 1,243,557 Intersegment revenue 3,886 - 13,354 - (17,240) - ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Total revenue 458,421 258,692 543,684 - (17,240) 1,243,557 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Timing of revenue recognition: At a point in time 111,802 38,137 178,896 - - 328,835 Over time 342,733 220,555 351,434 - - 914,722 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- External revenue 454,535 258,692 530,330 - - 1,243,557 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Underlying operating profit (loss) 97,957 43,888 31,769 (9,610) - 164,004 Income from associates - - 3,866 - - 3,866 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Underlying EBIT* 97,957 43,888 35,635 (9,610) - 167,870 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Exceptional items (Note 11) 2,308 Amortisation on acquired intangible assets (19,778) Gain on bargain purchase (Note 11) 355 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- EBIT 150,755 Interest income 34 Finance costs (18,100) Profit before taxation 132,689 ---------------------- -------------- -------------- -------------- -------------- -------------- --------------
3. Taxation
The charge for taxation for the six months to 31 October 2022 is based on the estimated effective rate for the year ending 30 April 2023 of 19.6% (31 October 2021 - 22.6% and 30 April 2022 - 23.5%). The April 2022 full year tax rate was impacted by tax rate change adjustments to deferred tax balances recognising an increase in UK statutory tax rates from 19% to 25% from April 2023.
4. Earnings per share Six months Six months Year to to 31.10.22 to 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) Statutory Statutory Statutory Basic and diluted earnings per share GBP000 GBP000 GBP000 ------------------------------------------------------------------------------- ----------- ----------- ----------- The calculation of basic and diluted earnings per share is based on the following data: Earnings Earnings for the purposes of basic and diluted earnings per share, being profit attributable to owners of the Company 81,995 55,489 101,545 ------------------------------------------------------------------------------- ----------- ----------- ----------- Number of shares Weighted average number of Ordinary shares for the purpose of basic earnings per share 238,687,578 246,091,423 245,997,303 Effect of dilutive potential Ordinary shares - share options 5,769,273 5,574,749 5,242,307 Weighted average number of Ordinary shares for the purpose of diluted earnings per share 244,456,851 251,666,172 251,239,610 Basic earnings per share 34.4p 22.5p 41.3p ------------------------------------------------------------------------------- ----------- ----------- ----------- Diluted earnings per share 33.5p 22.0p 40.4p ------------------------------------------------------------------------------- ----------- ----------- -----------
The calculated weighted average number of Ordinary shares for the purpose of basic earnings per share includes a reduction of 7,403,845 shares (31 October 2022: nil and 30 April 2022: 94,120) relating to treasury shares acquired.
5. Dividends
In the six months to 31 October 2022, a dividend of GBP34,984,000 was paid (2022 - GBP29,295,000) representing the final dividend for the year ended 30 April 2022. The Directors have declared an interim dividend of 7.5p per share for the six months ended 31 October 2022 (2022 - 6.0p).
The final dividend of 15.0p in relation to the year ended 30 April 2022 was paid in September 2022.
6. Intangible assets
Net book value Goodwill Other intangible assets Grand total --------------------------------------------- Customer Brand Other Total relationships names software GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ---------------------- -------- --------------- ------ ---------- -------- --------- At 1 May 2021 114,503 150,346 12,156 8,328 170,830 285,333 Acquisition 400 50 100 - 150 550 Additions - - - 510 510 510 Disposals - - - (75) (75) (75) Amortisation - (8,701) (537) (1,078) (10,316) (10,316) Exchange differences - - - (81) (81) (81) At 1 November 2021 114,903 141,695 11,719 7,604 161,018 275,921 Acquisition 23 - - - - 23 Additions - - - 863 863 863 Disposals - - - (92) (92) (92) Amortisation - (8,715) (481) (1,259) (10,455) (10,455) Exchange differences - - - (22) (22) (22) ---------------------- -------- --------------- ------ ---------- -------- --------- At 1 May 2022 114,926 132,980 11,238 7,094 151,312 266,238 Acquisition 3,855 4,500 400 - 4,900 8,755 Additions - - - 701 701 701 Amortisation - (8,846) (538) (1,289) (10,673) (10,673) Exchange differences - - - 79 79 79 At 31 October 2022 118,781 128,634 11,100 6,585 146,319 265,100 ---------------------- -------- --------------- ------ ---------- -------- --------- At 31 October 2022 Cost or fair value 333,448 Accumulated amortisation and impairment (68,348) Net book value 265,100 ------------------------------ ---------
Amortisation was included within the income statement as follows:
(Unaudited) (Unaudited) (Audited) to 31.10.22 to 31.10.21 to 30.04.22 GBP000 GBP000 GBP000 -------------------------------------------- ----------- ----------- ----------- Included within underlying operating profit as administrative expenses 617 447 993 Excluded from underlying operating profit* 10,056 9,869 19,778 10,673 10,316 20,771 -------------------------------------------- ----------- ----------- -----------
* Amortisation of intangible assets excluded from underlying operating profit relates to intangible assets recognised on business combinations.
7. Property, plant and equipment
Net book value Vehicles Other property, Total for hire and plant & equipment credit hire GBP000 GBP000 GBP000 ------------------------- ------------- ------------------- ---------- At 1 May 2021 937,340 146,580 1,083,920 Acquisition - 3 3 Additions 209,173 28,948 238,121 Disposals (1,849) (3,171) (5,020) Transfers 2 (2) - Transfer to inventories (66,674) - (66,674) Depreciation (83,879) (10,912) (94,791) Impairment reversal (Note 11) - 2,999 2,999 Exchange differences (12,090) (1,610) (13,700) -------------------------- ------------- ------------------- ---------- At 1 November 2021 982,023 162,835 1,144,858 Acquisition - - - Additions 169,350 15,647 184,997 Disposals (1,873) (1,511) (3,384) Transfers 89 (89) - Transfer to inventories (59,098) - (59,098) Depreciation (90,758) (11,613) (102,371) Impairment (Note 11) - (1) (1) Exchange differences (2,700) (386) (3,086) -------------------------- ------------- ------------------- ---------- At 1 May 2022 997,033 164,882 1,161,915 Acquisition 7,203 148 7,351 Additions 199,529 6,661 206,190 Disposals - (91) (91) Transfers 16 (16) - Transfer to inventories (53,230) - (53,230) Depreciation (67,161) (10,144) (77,305) Exchange differences 11,517 1,410 12,927 At 31 October 2022 1,094,907 162,850 1,257,757 -------------------------- ------------- ------------------- ---------- At 31 October 2022 Cost or fair value 1,936,260 Accumulated depreciation (678,503) Net book value 1,257,757 ----------------------------- ----------
Included within property, plant and equipment above, are right of use assets under HP and IFRS 16 (leases) with net book value of GBP166,044,000 (30 April 2022: GBP163,907,000).
Depreciation was included within the income statement as follows:
(Unaudited) (Unaudited) (Audited) to 31.10.22 to 31.10.21 to 30.04.22 GBP000 GBP000 GBP000 ------------------------------------- ----------- ----------- ----------- Included within underlying operating profit as cost of sales 104,090 94,791 197,162 Excluded from underlying operating profit* (28,248) - - 75,842 94,791 197,162 ------------------------------------- ----------- ----------- -----------
* see GAAP reconciliation on page 5.
8. Interest in associates
GBP000 ----------------------------------- -------- At 1 May 2021 6,047 Group's share of: Profit from continuing operations 2,111 Distributions from associates (2,126) ----------------------------------- -------- At 1 November 2021 6,032 Group's share of: Profit from continuing operations 1,755 Distributions from associates (1,944) ----------------------------------- -------- At 1 May 2022 5,843 Group's share of: Profit from continuing operations 1,559 Distributions from associates (1,868) ----------------------------------- -------- At 31 October 2022 5,534 ----------------------------------- --------
9. Analysis of consolidated net debt
(Unaudited) (Unaudited) (Audited) to 31.10.22 to 31.10.21 to 30.04.22 GBP000 GBP000 GBP000 ------------------------------------- ----------- ----------- ----------- Cash and bank balances (18,956) (34,817) (24,561) Bank overdrafts - 31,493 8,792 Bank loans 195,990 347,759 118,573 Loan notes 322,931 84,490 314,264 Leases arising following adoption of IFRS 16 129,520 116,793 130,444 Leases arising under HP obligations 30,557 40,908 33,835 Cumulative preference shares 500 500 500 Confirming facilities 793 98 700 Consolidated net debt 661,335 587,224 582,547 ------------------------------------- ----------- ----------- -----------
10. Notes to the cash flow statement
Six months Six months Year to to 31.10.22 to 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) Net cash generated from operations GBP000 GBP000 GBP000 ------------------------------------------------------------------------------- ----------- ----------- ----------- Operating profit 110,033 77,687 146,534 Adjustments for: Depreciation of property, plant and equipment 75,842 94,791 197,162 Net impairment of property, plant and equipment - (2,999) (2,998) Amortisation of intangible assets 10,673 10,316 20,771 Loss on disposal of vehicles for credit hire and other property, plant and equipment 705 241 581 Loss on disposal of intangible assets - - 34 Share options fair value charge 2,287 1,910 3,695 ------------------------------------------------------------------------------- ----------- ----------- ----------- Operating cash flows before movements in working capital 199,540 181,946 365,779 Increase in non-vehicle inventories (1,193) (463) (1,169) Increase in receivables (58,454) (26,469) (54,400) Increase (decrease) in payables 39,347 (5,914) 22,253 Cash generated from operations 179,240 149,100 332,463 Income taxes paid, net (14,689) (9,893) (27,382) Interest paid (8,378) (7,503) (13,275) ------------------------------------------------------------------------------- ----------- ----------- ----------- Net cash generated from operations before purchases of and proceeds from disposal of vehicles for hire 156,173 131,704 291,806 Purchases of vehicles for hire (176,993) (188,787) (292,935) Proceeds from disposal of vehicles for hire 58,876 75,859 128,772 ------------------------------------------------------------------------------- ----------- ----------- ----------- Net cash generated from operations 38,056 18,776 127,643 ------------------------------------------------------------------------------- ----------- ----------- -----------
11. Exceptional items
During the period the Group recognised exceptional items in the income statement as follows: Six months Six months Year to to 31.10.22 to 31.10.21 30.04.22 (Unaudited) (Unaudited) (Audited) GBP000 GBP000 GBP000 ---------------------------------- ------------ ------------ --------- Reversal of previous impairment of property, plant and equipment - (2,999) (2,998) Other costs - 625 690 ---------------------------------- ------------ ------------ --------- Exceptional administrative expenses - (2,374) (2,308) Restructuring credits - (3,099) (3,545) FMG RS set up and integration costs - 725 1,237 Exceptional administrative expenses - (2,374) (2,308) Gain on bargain purchase - (290) (355) Total exceptional items included within EBIT - (2,664) (2,663) Exceptional finance costs: refinancing expenses - - 1,463 Total pre-tax exceptional items - (2,664) (1,200) Tax charge on exceptional items - 506 228 ---------------------------------- ------------ ------------ ---------
During the period there were no items recognised as exceptional.
Restructuring costs
In the prior period, the Group incurred total exceptional restructuring credits of GBP3,099,000 of which GBP2,835,000 arose in Redde and GBP264,000 arose in Northgate UK&I. These costs were incurred in relation to restructuring activities that were undertaken during the period as part of the integration and reorganisation of the Combined Group. These credits include GBP2,999,000 reversal of previous property impairment (Note 7) in relation to underutilised property being successfully sublet by the Group, and GBP100,000 of other restructuring credits.
FMG RS set up and integration costs
In the prior period, the Group incurred costs of GBP725,000 in relation to the set-up of FMG RS and integration of the business.
12. Business combinations
On 2 July 2022 the Group acquired the equity interests of Blakedale Ltd "Blakedale". The acquisition is in line with the Group strategy and vision to become the leading integrated mobility solutions provider. The acquisition has been included within the Northgate UK&I segment. A provisional purchase price allocation exercise has been undertaken in accordance with IFRS 3 'Business Combinations'.
Details of this provisional purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration GBP000 -------------------------- -------- Total cash consideration 10,043 -------------------------- --------
The provisional assets and liabilities recognised as a result of the acquisition are as follows:
GBP000 ---------------------------------------- -------- Customer relationships (Note 6) 4,500 Brand names (Note 6) 400 Property, plant and equipment (Note 7) 7,351 Cash and bank balances 141 Stock 468 Trade and other receivables 2,293 Trade and other payables (6,885) Corporation tax (106) Deferred tax (1,974) Net identified assets acquired 6,188 ---------------------------------------- -------- Goodwill recognised on acquisition 3,855 ---------------------------------------- --------
Acquisition costs
Acquisition costs in relation to Blakedale Ltd of GBP372,000 have been charged to the income statement as administrative expenses.
Blakedale's contribution to the Group results
Blakedale's contribution to underlying operating profit was a GBP283,000 profit for the period from 2 July 2022 to 31 October 2022. Revenue during this period was GBP2,570,000.
Prior period
On 30 June 2021 the Group acquired the equity instruments of Charged Electric Vehicles Limited for a consideration of GBP553,000. A provisional purchase price allocation exercise was undertaken in accordance with IFRS 3 'Business Combinations', which identified net assets acquired of GBP153,000, resulting in goodwill of GBP400,000 recognised in the balance sheet. The acquisition was included within the Northgate UK&I segment.
13. Related party transactions
Related party transactions of the Group are consistent with those disclosed in Note 32 of the Group's annual financial statements for the year ended 30 April 2022. No new related party transactions have been entered into during the period.
Interim announcement - Statement of the Directors
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance with the UK-adopted International Accounting Standard 34;
-- the interim management report includes a fair review of the information required by DTR 4.2.7 (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
-- the interim management report includes a true and fair review of the information required by DTR 4.2.8 (disclosure of related party transactions and changes therein).
By order of the Board
Philip Vincent
Chief Financial Officer
7 December 2022
Independent review report to Redde Northgate plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Redde Northgate plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim results of Redde Northgate plc for the 6 month period ended 31 October 2022 (the "period"). Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed consolidated balance sheet as at 31 October 2022;
-- the Condensed consolidated income statement and Condensed consolidated statement of comprehensive income for the period then ended;
-- the Condensed consolidated cash flow statement for the period then ended; -- the Condensed consolidated statement of changes in equity for the period then ended; and -- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results of Redde Northgate plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE. However, future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the interim results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Newcastle upon Tyne
7 December 2022
[3] Calculated as underlying EBIT divided by total revenue
[4] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction
[5] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method
[6] Calculated as underlying EBIT divided by total revenue
[7] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction
[8] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method
[9] Gross profit margin calculated as underlying gross profit divided by total revenue. EBIT margin calculated as underlying EBIT divided by total revenue
[10] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction
[11] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method
[12] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction
[13] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method
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