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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.00 | 0.46% | 434.50 | 433.50 | 436.00 | 436.00 | 434.50 | 436.00 | 11,678 | 08:22:50 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Passenger Car Rental | 1.83B | 125.02M | 0.5514 | 778.93 | 980.66M |
From Jul 2023 to Jul 2024
TIDMREDD
RNS Number : 7909V
Redde Northgate PLC
06 December 2023
6 December 2023
This announcement contains inside information
REDDE NORTHGATE PLC
("Redde Northgate" or the "Group" or the "Company")
Strong underlying results with good momentum and pipeline
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 2023 (the 'period').
Hot Features
Premium
Half Year results Reported Underlying(1)
6 months ended 31 H1 2024 H1 2023 Change H1 2024 H1 2023 Change
October
GBPm GBPm % GBPm GBPm %
------------------ ----------------- ----------------- ---------- ---------- -------
Revenue 911.3 696.3 30.9% 733.8 627.6 16.9%
------------------ ----------------- ----------------- ---------- ---------- -------
EBIT 113.3 111.6 1.6% 115.0 93.4 23.1%
------------------ ----------------- ----------------- ---------- ---------- -------
Profit before Tax 97.4 101.9 (4.4%) 99.1 83.7 18.3%
------------------ ----------------- ----------------- ---------- ---------- -------
Earnings per Share 32.9p 34.4p (4.4%) 33.4p 28.1p 18.9%
------------------ ----------------- ----------------- ---------- ---------- -------
(1) excludes vehicle sales revenue, exceptional items, amortisation
of acquired intangible assets and adjustments to underlying
depreciation. See GAAP reconciliation on page 4.
Other measures H1 2024 H1 2023 Change
GBPm GBPm %
---------- ---------- -------
Net debt 755.0 661.3 14.2%
---------- ---------- -------
Fleet assets GBP1.23bn GBP1.09bn 12.8%
---------- ---------- -------
Leverage 1.6x 1.6x n/a
---------- ---------- -------
EBITDA 220.0 198.8 10.7%
---------- ---------- -------
ROCE 14.8% 13.5% 1.3ppt
---------- ---------- -------
Dividend per Share 8.3p 7.5p 10.7%
---------- ---------- -------
Martin Ward, CEO of Redde Northgate, commented:
This has been a strong trading period for the business and continues the progress we have seen since the launch of our integrated services platform.
Growth from new contract wins continues to support revenue and earnings momentum in the near term. With a strong prospect pipeline, and a large proportion of our revenues underpinned by multi-year service contracts, we see the quality of earnings being a standout feature of the business.
Cash generation has been good, allowing us to invest in developing our fleet assets, and supporting our expansion plans, with 9 new site openings in progress. Our borrowings leverage remains in the middle of our target range and the business has a strong balance sheet to support value generating opportunities.
With visibility of earnings underpinned, the Board is confident on the outlook for H2 and now expects to be delivering earnings modestly ahead of market consensus on a full year basis.
Key financial highlights
-- Total revenue growth up 30.9%; underlying revenue up 16.9% with strong claims and services revenue growth (up 25.7%) supported by increased volumes from recent contracts and higher fleet disposal activity
-- Vehicle hire revenue rose 6.7%; Spain up over 10% supported by VOH growth of 4.3%, UK&I up 4.4% with growth in ancillary products; plus careful pricing actions in both businesses
-- Disposal profits of GBP34.7m (H1 2023: GBP24.7m), from higher fleet sales volumes totalling 18,800; continued LCV residual value strength, replacement car fleet now sold through Van Monster channels
-- Stable margins for both vehicle rental and accident claims and repair businesses, Spain remains above mid-teens long term expected range, at 20.8% (H1 2023: 20.4%)
-- Reported PBT of GBP97.4m (H1 2023: GBP101.9m) including depreciation adjustment of GBP7.6m (H1 2023: GBP28.2m); underlying PBT up 18.3% to GBP99.1m due to strong operational performance and disposal profits, partially offset by higher interest costs
-- EBITDA grew 10.7% to GBP220.0m (H1 2023: GBP198.8m) due to strong operational performance; uses of cash included GBP103m of replacement capex, of which c.GBP25m of additional capex in order to address fleet ageing
-- Strong balance sheet with stable 1.6x leverage (H1 2023: 1.6x), supported by fleet assets of GBP1.23bn (H1 2023: GBP1.09bn) and over GBP236m of facility headroom
-- Shareholder returns: 10.7% increase in interim dividend to 8.3p; GBP30m share buyback programme running since August, GBP10m spend by end-November
H1 business highlights
-- Group fleet remains at c.130,000 vehicles, 1% lower than April 2023; with 3% growth in Spain where supply availability is good offsetting ongoing UK&I supply challenges, but pockets of availability appearing
-- Lex Autolease multi-service contract live in September and performing above expectations; further multi-year contract extensions agreed, including specialist customer segment for insurance partner
-- Specialist vehicles: FridgeXpress (acquired May 23) integration progressing, bringing additional customer opportunities; Blakedale (acquired July 22) strongly growing both customer base and revenues
-- Increasing capacity through investment in 7 new facilities opened or nearing completion:
2 new Spanish branches/ 1 workshop, 2 new FMG RS facilities (Bristol/ N London), 2 new Northgate branches (Inverness/ N London)
-- Supporting net zero transition: Spain awarded GBP1.2m EU grant supporting EV purchases; UK&I largest EV fleet order to date for 100 vehicles; 89 UK locations now have EV charging points
Outlook
Redde Northgate continues to deliver on its strategic goals and is enjoying strong demand as well as platform momentum and a healthy pipeline which gives the board confidence in the Group's prospects. With the continued momentum in the business we now expect earnings for the full year to be modestly ahead of market consensus .
Analyst Briefing and Investor Meet presentation
A hybrid presentation for sell-side analysts and institutional investors will be held at 9.30am today, 6 December 2023. 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 .
The Company will also provide a roadshow presentation via the Investor Meet Company platform on Monday 11th December 2023 at 1.30pm for institutional and retail investors. Click here to register: https://www.investormeetcompany.com/redde-northgate-plc/registerinvestor
Redde 'spotlight' session
A presentation providing greater insight into our Redde group of businesses is scheduled to take place at 12pm on Tuesday 16 January 2024 for sell-side analysts and institutional investors. If you are interested in attending, please email Buchanan on reddenorthgate@buchanan.uk.com to request the joining details. This presentation will subsequently be made available via a link on the Company's website www.reddenorthgate.com .
This announcement is made on behalf of Redde Northgate plc by James Kerton, Company Secretary of Redde Northgate plc.
For further information contact:
Ross Hawley, Head of Investor Relations +44 (0) 204 566 7090
Buchanan
David Rydell/Jamie Hooper/Verity Parker +44 (0) 207 466 5000
Notes to Editors:
Redde Northgate is the leading integrated mobility solutions platform providing services across the vehicle lifecycle. The Company offers integrated mobility solutions to businesses, fleet operators, insurers, OEMs and other customers across 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 approx. 130,000 owned and leased vehicles, supporting over 700,000 managed vehicles, with over 170 branches across the UK, Ireland and Spain and a specialist team of over 7,500 employees.
Further information regarding Redde Northgate plc can be found on the Company's website www.reddenorthgate.com .
GAAP reconciliation tables
Consolidated income statement reconciliation
Six month period Foot 31.10.2023 31.10.2023 31.10.2023 31.10.2022 31.10.2022 31.10.2022
ending note Statutory Adjustments Underlying Statutory Adjustments Underlying
(Unaudited)
(below) 2023 2023 2023 2022 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- --------- ----------- ------------- ------------ ----------- ------------- -------------
Revenue (a) 911.3 (177.5) 733.8 696.3 (68.7) 627.6
(b +
Cost of sales c) (685.3) 169.9 (515.4) (478.8) 40.5 (438.4)
----------- ------------- ------------ ----------- ------------- -------------
Gross profit 226.0 (7.6) 218.4 217.5 (28.2) 189.2
Administrative
expenses (d) (113.5) 9.3 (104.2) (107.5) 10.1 (97.4)
----------- ------------- ------------ ----------- ------------- -------------
Operating profit 112.5 1.7 114.2 110.0 (18.2) 91.8
Income from associates 0.8 - 0.8 1.6 - 1.6
EBIT 113.3 1.7 115.0 111.6 (18.2) 93.4
Finance income 0.2 - 0.2 - - -
Finance costs (16.1) - (16.1) (9.7) - (9.7)
----------- ------------- ------------ ----------- ------------- -------------
Profit before taxation 97.4 1.7 99.1 101.9 (18.2) 83.7
Taxation (e) (22.9) (0.4) (23.3) (19.9) 3.2 (16.7)
----------- ------------- ------------ ----------- ------------- -------------
Profit for the period 74.6 1.3 75.8 82.0 (15.0) 67.0
----------- ------------- ------------ ----------- ------------- -------------
Shares for EPS calculation
(Note 4) 226.7m 226.7m 238.7m 238.7m
Basic EPS 32.9p 33.4p 34.4p 28.1p
--------------------------------- ----------- ------------- ------------ ----------- ------------- -------------
Foot notes
Adjustments comprise:
Revenue: sale of
vehicles (a) (177.5) (68.7)
Cost of sales:
revenue
sale of vehicles net
down (b) 177.5 68.7
Adjustments to
underlying
depreciation (see
Financial
Review) (c) (7.6) (28.2)
------------- -------------
Gross profit (7.6) (28.2)
------------- -------------
Exceptional items
(Note
11) - -
Amortisation of acquired
intangible assets (Note
6) 9.3 10.1
------------- -------------
Administrative
expenses (d) 9.3 10.1
Adjustments to EBIT 1.7 (18.2)
Adjustments to PBT 1.7 (18.2)
Tax on exceptional
items
(Note 11) - -
Tax on brand royalty
charges and amortisation
of acquired intangible
assets and tax rate
change on acquired intangible
assets (0.4) 3.2
Tax adjustments (e) (0.4) 3.2
------------- -------------
Adjustments to profit 1.3 (15.0)
------------- -------------
GROUP OVERVIEW
Differentiated business model delivering continued growth
The first half of the year saw continued progress on our growth strategy and a strong financial performance, with notable growth within our Spanish rental business and for Redde in particular. While vehicle supply constrained the UK&I rental proposition, the business delivered rental revenue growth of over 4%, reflecting strong demand and growth in ancillary and specialist products and pricing actions.
Our business model focuses on leveraging our significant asset base and industry-leading expertise, delivering a differentiated product offering for customers who are attracted to the breadth and scale of services we can provide in integrated and tailored solutions. We offer a broad range of value-added services and analytics delivering smart mobility solutions for a diverse and growing range of customers.
We utilise prudent levels of leverage, well below that of vehicle rental peers, to acquire vehicles supporting both vehicle rental and incident management service solutions. Our owned vehicle fleet provides significant asset backing for our borrowings, with fleet assets of GBP1.23bn compared to net debt of GBP755m at the half year. As we are in a growth phase, we expect to consume cash, investing in tangible assets on which we seek to achieve a return significantly above our cost of capital, whilst maintaining leverage within our 1-2x target range.
Strength of demand
Across our businesses demand has continued to grow, significantly outstripping supply, from vehicle provision through to accident repair capacity. We have therefore carefully managed our offering and customer exposures, focusing on supporting key customers. Allocation of supply is to sectors where we see sustainable growth opportunities, attractive margins and minimising risk exposures; vehicle rental utilisation rates also remain high at 91-92%.
Within vehicle rental, the diversity of the customer base provides resilience and multiple sources of demand, with no sector accounting for more than 15% in Northgate UK&I. Our recent specialist vehicle acquisitions FridgeXpress and Blakedale both increased their customer base in the period. Spain grew across all product offerings, with 25% of new vehicles allocated to new customers, reflecting its growing market presence and improving vehicle supply.
Over 75% of Redde revenues were generated from multi-year contracts with more than 12 months to run and we renewed a number of contracts as well as adding a new specialist customer category to our coverage for a major insurance partner. Credit hire and repair counterparties now in claims protocol or in discussions for joining is increasing, reflecting the strength of the offering and advantages insurers see in working with a trusted partner and the benefits of a more streamlined and efficient claims process.
Vehicle supply constraints easing
Overall vehicle supply has been improving; however it remains both geographically and LCV category-specific and also at levels well below historic norms. Both cars and LCVs are more readily available in Spain, which benefits from being a left-hand drive market and able to tap into pan-European supply systems. Production volumes are still limited, and the business expanded its OEM range in order to service the strength of demand currently enjoyed.
The UK&I saw a slight easing of supply liquidity, principally within the replacement car fleet, together with increasing pockets of supply within certain LCV categories. However, there remained a lack of consistent availability, in particular to service the high demand for short wheel base vehicles. While the trend is positive, new LCV registrations remain at 10-year lows and continue to provide challenges for the UK&I business.
The consequence of limited supply is ongoing strength of LCV residual values in both countries, despite increasing levels of defleeting through our in-house sales channels of Van Monster which includes eAuction. The average age of the Spanish fleet reduced from its peak in H1 2023 and now stands at 31 months. The UK&I fleet age is now starting to moderate and this is expected to continue; both have been achieved while maintaining leverage in the midpoint of our range, at 1.6x (FY 2023: 1.6x).
Expanding growth opportunities
The Group continues to see attractive options both organically and inorganically and reviews a broad range of opportunities alongside its focus on fleet growth. We see a healthy pipeline of potential opportunities and attractive market adjacencies to further expand the potential of our integrated mobility platform. We have also sought to expand our capacity to better service both insurance partners and fleet customers, with initiatives and enhanced social media campaigns targeted at attracting technicians.
We opened a new FMG RS facility in Hoddesdon and the development of a further new facility in Bristol is nearing completion together with a new combined Northgate and Auxillis branch in London which adds both workshop and replacement vehicle capacity in a much-improved location. Together with increasing our independent repair network to over 500 body shops in the period, we are expanding and improving our estate to help deliver an ever more responsive and efficient service to customers.
We have also expanded capacity in Spain in response to strong market conditions, moving our largest workshop onto a two-shift working pattern and opened a new branch in November in the northwestern Le ó n province. An additional service workshop in an underrepresented region has improved capacity and customer service and a further branch opening in the northeast region is scheduled for H2 2024.
Supporting sustainability
While large-scale EV adoption will remain reliant on improving infrastructure, EV range and payload capability, there is growing demand for EVs and for our EV advisory and consulting services. The UK&I team is fulfilling its largest single order, for 100 e-LCVs for an energy sector client and in Spain, the business was awarded a Moves II Plan grant by the EU to support the purchase of 500 additional EVs and 3,000 telematics units. Within the business EV charging is now installed in 89 of our UK sites and in most of our Spanish urban sites.
The Group Sustainability Committee and working groups are looking at ways to further embed emissions reductions within the business, and within management performance targets, to help drive behavioural change. Our recent employee survey recorded an 8ppt increase in employees feeling valued. Industry awards are a good reflection of customer service perspectives, with Spain winning a prestigious Dirigentes customer award, Charged EV winning 'Best New Service', and the local council award for 'Contribution to the environment' for the Darlington-based volunteering team. We are shortlisted for a number of other UK awards due to be announced in the current awards season and were recently highly commended for our employee well-being programme at the 2023 FN50 awards.
Strong financial capacity and sustainable shareholder returns
Even after significant investment, leverage has remained at 1.6x and continues to have significant headroom on our committed banking facilities. The Board has declared an interim dividend of 8.3p per share (H1 2023: 7.5p) to be paid on 12 January 2024 to shareholders on the register as at close of business on 15 December 2023. The interim dividend represents 50% of the final dividend for the year ended 30 April 2023 in line with previous guidance.
The current share buyback programme has been underway since August 2023, reflecting the attractive proposition of risk-free enhancement of shareholder returns. As at the end of November 3 million shares had been acquired at a cost of GBP10m and are being held in treasury.
FINANCIAL REVIEW
Group Revenue and EBIT
Six months ended 31 October H1 2024 H1 2023 Change Change
GBPm GBPm GBPm %
------------------------------- -------- -------- ------- --------
Revenue - vehicle hire 322.9 302.7 20.2 6.7%
Revenue - vehicle sales 177.5 68.7 108.8 158.2%
Revenue - claims and services 410.9 324.9 86.0 26.5%
------------------------------- -------- -------- ------- --------
Total revenue 911.3 696.3 215.0 30.9%
Rental profit 59.6 53.8 5.8 10.6%
Disposal profit 34.7 24.7 10.0 40.5%
Claims and services profit 25.5 18.9 6.6 35.1%
Corporate costs (5.6) (5.5) (0.1) 0.2%
------------------------------- -------- -------- ------- --------
Underlying operating profit 114.2 91.8 22.4 24.3%
Income from associates 0.8 1.6 (0.8) (48.7%)
------------------------------- -------- -------- ------- --------
Underlying EBIT 115.0 93.4 21.6 23.1%
Underlying EBIT margin[3] 15.7% 14.9% - 0.8ppt
Statutory EBIT 113.3 111.6 1.7 1.6%
------------------------------- -------- -------- ------- --------
Revenue
Total Group revenue, including vehicle sales, of GBP911.3m was 30.9% higher than prior period while revenue excluding vehicle sales of GBP733.8m (H1 2023: GBP627.6m), was 16.9% higher than the prior period.
Hire revenues increased 6.7% mainly due to pricing actions to address cost inflation; Group VOH was 1.2% lower than the prior period, with continued LCV supply challenges constraining Northgate UK&I, while Northgate Spain was able to grow, reflecting greater availability of new vehicles. Claims and services revenue growth of 26.5% reflected higher activity including increased volumes from new business wins which have launched since the start of the previous financial year, and an industry-wide rise in chargeable costs reflecting inflation across the supply chain.
Group vehicle sales revenue increased by 158%. This includes GBP72.1m from sales of ex-Auxillis fleet cars and other non-fleet vehicles. Excluding those vehicles, there was a 53.2% increase in vehicle sales revenue with a 79.3% increase in the number of vehicles sold, reflecting a change in mix of vehicles sold and some expected softening of LCV residual values compared to the prior period.
EBIT
Statutory EBIT increased 1.6%, while underlying EBIT of GBP115.0m grew 23.1% compared to the prior period; reflecting an increase in disposal profits, strong rental performance, and higher volumes in Redde. The statutory EBIT includes a GBP7.6m credit (H1 2023: GBP28.2m) for adjustments to depreciation rates and GBP9.3m (H1 2023: GBP10.1m) amortisation on acquired intangible assets.
Rental profit increased 10.6% to GBP59.6m (H1 2023: GBP53.8m) with a GBP2.6m increase in Northgate UK&I and an GBP3.1m increase in Northgate Spain. Redde saw volume growth across its product offerings, resulting in a GBP5.9m increase in underlying EBIT, including income from associates, to GBP26.3m (H1 2023: GBP20.4m).
Total disposal profits for the period of GBP34.7m were 40.5% higher than the prior period with 18,800 vehicles sold (H1 2023: 7,600). This includes 4,900 sales of ex-Auxillis fleet cars and other non-fleet vehicles through the Northgate UK&I sales channels. As expected, underlying LCV residual values have softened slightly compared to the prior period but remain higher than historical pre-COVID-19 levels.
Northgate UK&I
Six months ended 31 October H1 2024 H1 2023 Change
KPI ('000) ('000) %
----------------------------- -------- -------- -------
Average VOH 45.9 49.2 (6.8%)
Closing VOH 45.1 49.3 (8.3%)
Average utilisation % 91% 92% (1ppt)
Six months ended 31 October H1 2024 H1 2023 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------- -------- -------- -------
Revenue - vehicle hire
[4] 192.3 184.1 4.4%
Revenue - vehicle sales 132.4 50.3 163.3%
-------- -------- -------
Total revenue 324.7 234.4 38.5%
Rental profit 31.4 28.8 9.2%
Rental margin % 16.3% 15.6% 0.7ppt
Disposal profit 18.2 18.8 (3.1%)
Underlying EBIT 49.6 47.5 4.3%
EBIT margin % [5] 25.8% 25.8% -ppt
ROCE % 16.1% 16.1% -ppt
----------------------------- -------- -------- -------
Rental revenue grew 4.4% in the period, with continued supply challenges for LCVs offset by growth in ancillary and specialist products alongside carefully managed pricing actions. The ongoing focus on supporting key clients, targeting the most robust sectors and protecting margin, helped mitigate much of the constraints from lack of fleet supply. Fleet ageing increased by 0.4 months during the period to 36.5 months, as we looked to support strong customer demand with many businesses keen to retain vehicles at end of current rental terms where replacements are not yet available.
Average VOH at 45,900 was 3,300 down on H1 2023 and the rental fleet was 49,100 at the end of October 2023 compared to 50,800 at the end of April 2023. Pockets of LCV supply have become increasingly available but supply generally remains well below historic levels for right-hand drive vehicles, reflecting the continued limited number of LCV registrations in the UK which are still running at the low point of the past decade. Vehicle sales increased to GBP132.4m as Van Monster have started to sell Auxillis cars once defleeted. Disposal profits were similar to the prior period, reflecting the combination of strong LCV residual values and softening car residual values.
Ancillary service revenues grew 22% over the prior period, including for accident management support and fleet management services. Seven EV customer experience days were held throughout calendar 2023 and the largest single EV order to date, for 100 vehicles, was received. There continues to be structural momentum for fleet transitions to EV, with the business initiating an increasing number of conversations held with corporate customers on supporting their first strategic actions.
Growth investment included the acquisition of FridgeXpress, a leading provider of temperature-controlled LCVs and trailers acquired at the start of the period which has been integrated into our wider sales infrastructure. The Inverness branch opened in May and will by the end of 2023 be joined by a relocated North London branch which adds new workshop and replacement vehicle capabilities, alongside an enlarged and refreshed vehicle rental facility.
Financial overview
Northgate UK&I rental profit increased 9.2% to GBP31.4m (H1 2023: GBP28.8m) with rental margins 0.7ppt higher at 16.3% (H1 2023: 15.6%). The FY 2023 full year margin was 15.1%.
Disposal revenues increased 163% to GBP132.4m (H1 2023: GBP50.3m) reflecting a 135% increase in vehicle sales, including sales of 4,900 Auxillis cars and other non-fleet vehicles and was reflected in the overall PPU outcome of GBP1,600 (H1 2023: GBP3,800). Disposal profits remained strong at GBP18.2m compared to GBP18.8m in the prior period.
The net impact of the reduction in VOH, higher rental margin and reduced disposal profits was a 4.3% increase in underlying EBIT to GBP49.6m (H1 2023: GBP47.5m).
Rental business
Vehicle hire revenue in Northgate UK&I was GBP192.3m (H1 2023: GBP184.1m), an increase of 4.4%. A 12.5% increase in average revenue per vehicle reflected fleet mix, applied rate increases, and were offset by a 6.8% reduction in average VOH.
Average VOH of 45,900 was 3,300 lower than the prior period (H1 2023: 49,200) and compares to 48,900 average for FY 2023 with the shortage in supply of new vehicles restricting growth in the period.
Northgate UK&I's minimum term proposition accounted for 41% of average VOH (H1 2023: 38%). 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 16.3% compared to 15.6% in the prior period, and 15.1% in the full year FY 2023. This was accomplished by increasing rates, partially offset by cost inflation and supported by the acquisition of FridgeXpress.
Management of fleet and vehicle sales
The closing Northgate UK&I rental fleet was 49,100 compared to 50,800 at 30 April 2023. During the period, 4,800 vehicles were purchased and acquired (H1 2023: 2,900) and 7,200 vehicles were de-fleeted (H1 2023: 3,700). The leased and contract hire fleet increased by 600 vehicles including those acquired with FridgeXpress.
The average age of the fleet at the end of the period was 0.4 months higher than at 30 April 2023 and 2.9 months higher than at 31 October 2022. The fleet composition continues to be actively managed throughout this period of restricted market supply.
A total of 11,600 vehicles were sold in Northgate UK&I during the period, 137% higher than the prior period (H1 2023: 4,900 vehicles) as Van Monster sold 4,900 cars and other non-fleet vehicles including those which had been defleeted from the Redde fleet. Disposal profits of GBP18.2m (H1 2023: GBP18.8m) were broadly in line with the prior period. The underlying LCV PPU was GBP3,500 compared to GBP3,800 in the prior period.
Northgate Spain
Six months ended 31 October H1 2024 H1 2023 Change
KPI ('000) ('000) %
----------------------------- -------- -------- -------
Average VOH 55.5 53.2 4.3%
Closing VOH 55.8 53.8 3.7%
Average utilisation % 91% 92% (1ppt)
Six months ended 31 October H1 2024 H1 2023 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------- -------- -------- -------
Revenue - vehicle hire 135.2 122.7 10.2%
Revenue - vehicle sales 44.6 18.2 145.2%
-------- -------- -------
Total revenue 179.8 140.9 27.6%
Rental profit 28.1 25.1 12.3%
Rental margin % 20.8% 20.4% 0.4ppt
Disposal profit 16.5 5.9 178.4%
Underlying EBIT 44.7 31.0 44.1%
EBIT margin % [6] 33.0% 25.3% 7.7ppt
ROCE % 14.5% 11.5% 3.0ppt
----------------------------- -------- -------- -------
Rental revenue growth of 10.2% was achieved through a combination of increased VOH up 4.3%, and rate increases in both flex and minimum term offerings to mitigate cost inflation. The business saw growth across its geographic regions and strong demand from all customer sectors, including for specialist vehicles (up 28%), ancillary services such as telematics and within its service network.
There was progressive improvement in the supply of new vehicles, helped by a broadening of OEM suppliers, which accounted for a quarter of the new vehicles purchased in the period. After two years of fleet ageing as a consequence of limited supply, the average age of the fleet at the end of October 2023 had reduced by 2 months to 31 months from its October 2022 peak, as the business was able to de-fleet many of its oldest vehicles. At the same time, PPUs remained strong and contributed to a significant increase in disposal profits.
Rental margin at over 20% remained close to historic highs and reflected the focus on operational efficiencies and managing high utilisation rates. Growth initiatives included moving the largest workshop to a two-shift programme and continued use of parts recovery for use within the repair workshops. An increase in workshop headcount and branch staff by over 60 employees reflected the strength of demand for the offering, with revenues from the initiative servicing third party vehicles up 38% on the prior year.
Investment in capacity expansion included the opening of both a service centre in the south of the country, and a new branch in November 2023 in the northern León province, with a further two branches in development. The focus on customer service excellence was recently recognised through three industry awards, including a prestigious Dirigentes Business Excellence Award.
Northgate Spain continues to be at the forefront of the low carbon transition, growing its EV and hybrid fleet by over 30% since October 2022. It was awarded a GBP1.2m grant by the EU (Moves flotas II) to support low carbon initiatives, which will include the purchase of over 500 EVs and telematics installation in over 3,000 vehicles.
Financial overview
Northgate Spain had a strong period with underlying EBIT of GBP44.7m, an increase of GBP13.7m or 44.1%, which was a result of 4.3% average VOH growth, strong rental margins of 20.8% compared to 20.4% in the prior period and higher disposal volumes with strong PPU's.
Rental business
Vehicle hire revenue in Northgate Spain was GBP135.2m (H1 2023: GBP122.7m), an increase of 10.2% (9.8% in local currency). Average VOH increased 4.3% and closing VOH increased 3.7% to 55,800.
Northgate Spain's minimum term proposition accounted for 35% (H1 2023: 35%) of average VOH. The average term of these contracts is approximately three years, providing visibility of future rental revenue and earnings.
The rental margin of 20.8% was 0.4ppt higher than the prior period from pricing increases and good management of direct costs.
The impact of the increase in hire revenue and rental margin resulted in rental profit increasing 12.3% to GBP28.1m (H1 2023: GBP25.1m).
Management of fleet and vehicle sales
The closing Northgate Spain rental fleet amounted to 63,300 compared to 61,400 vehicles at 30 April 2023. During the period 9,500 vehicles were purchased (H1 2023: 5,700) and 7,600 vehicles were de-fleeted (H1 2023: 2,700 vehicles). The average age of the fleet at the end of the period was 2.1 months lower than at the same time last year. This was due to replacement of older vehicles with improved market supply.
A total of 7,200 vehicles were sold in Northgate Spain during the period, 154% higher than prior period as the vehicle supply eased.
Disposal profits of GBP16.5m (H1 2023: GBP5.9m) increased 178% due to the increase volume of sales and an increase in PPU to GBP2,300 (H1 2023: GBP2,100) which resulted from a change in mix of vehicles sold and strong residual values.
Redde
Six months ended 31 October H1 2024 H1 2023 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------------- -------- -------- ---------
Revenue - claims and services [7] 416.6 331.4 25.7%
Revenue - vehicle sales [8] 58.8 0.3 n/a
-------- -------- ---------
Total revenue 475.4 331.7 43.3%
Gross profit 82.0 70.4 16.4%
Gross margin %(9) 19.7% 21.2% (1.5ppt)
Operating profit 25.5 18.9 35.1%
Income from associates 0.8 1.6 (48.7%)
Underlying EBIT 26.3 20.4 28.7%
EBIT margin % [9] 6.3% 6.2% 0.1ppt
ROCE % 16.6% 15.4% 1.2ppt
----------------------------------- -------- -------- ---------
Claims and services revenue increased 25.7%, with both increased volumes from existing customers together with contributions from new contracts launched since the start of the previous financial year, supported by a 12% increase in industry approved repair rates reflecting continued labour shortages. Vehicle sales of GBP58.8m reflect recycling of the car fleet, as vehicle supply improved, the majority of which is sold through Van Monster. EBIT margin of 6.3% was broadly in line with prior period.
Within the period, the business confirmed extensions to a number of multi-year contracts, expanded its service offering to one of its largest insurance partners with the addition of repair capacity support to a new specialist customer segment. It also managed the go-live process in September 2023 for a contract with one of the largest leasing companies, Lex Autolease, which outsourced its accident management requirements in a multi-service contract for the first time.
Externally owned fleet vehicles covered by our repair and claims management services increased in number to over 800,000, equally split between insurer and other fleets. There is a robust pipeline of opportunities and contract discussions across the business as existing and potential customers see the benefit of working with a trusted and expert partner who can demonstrate significant operational efficiency benefits at a time of high claims inflation.
Over 60% of credit hire and repair counterparties (by claims volume) now operate within protocol arrangements as they see the benefits of greater process efficiency with further significant partners in discussions; this will improve cash collection and working capital which will also be helped by the settlement of historic claims at the point insurers enter protocol arrangements.
The business continues to invest in its people with a number of initiatives and social media campaigns targeted on attracting technicians, alongside enhanced training and expansion of our apprentice scheme, where there are now over 135 apprentices within the business. Repair capacity was also expanded through the investment in FMG RS's first greenfield site in Hoddesdon, and a new Bristol facility commenced at the start of H2 2024. This investment reflects the strong customer demand for repair capacity and our appetite for supporting expansion whether through organic growth or acquisition.
Financial overview
During the period EBIT has increased by 28.7% to GBP26.3m, with growth in repair and claims management services and credit repair services in the period.
Revenue and profit
Revenue for the period (excluding vehicle sales) increased 25.7% to GBP416.6m (H1 2023: GBP331.4m) reflecting the full impact of recent contract wins and the volume mix in repair and claims management services. These favourable variances were offset by a reduction in credit hire length in comparison to the prior period. The prior period was affected by macro challenges in supply chains for parts and labour which has begun to return to normal.
Gross margin of 19.7% declined 1.5ppt (H1 2023: 21.2%) due to volume mix within the business.
EBIT for the period increased 28.7% to GBP26.3m (H1 2023: GBP20.4m) reflecting the increased revenues earnt through credit repair services and repair and claims management services.
Management of fleet
The total fleet in Redde closed the period at 16,900 vehicles, down from 18,500 at 30 April 2023 with the lower fleet holding reflecting eased demand from reduced credit hire lengths and seasonality.
The average fleet age at the end of the period was 14 months (FY 2023: 15 months) reflecting the lower fleet holding period than in the UK&I and Spain businesses due to the different composition of the fleet and usage of those vehicles.
The Redde fleet operates a hybrid financing approach including ownership, contract hire and, during peak periods, cross-hiring when needed.
Group PBT and EPS
Six months ended 31 October H1 2024 H1 2023 Change Change
GBPm GBPm GBPm %
----------------------------------- -------- -------- ------- -------
Underlying EBIT 115.0 93.4 21.6 23.1%
Net finance costs (15.9) (9.7) (6.2) 64.7%
----------------------------------- -------- -------- ------- -------
Underlying profit before taxation 99.1 83.7 15.4 18.3%
Statutory profit before taxation 97.4 101.9 (4.5) (4.4%)
Underlying effective tax rate 23.5% 20.0% - 3.5ppt
Underlying EPS 33.4p 28.1p 5.3p 18.9%
Statutory EPS 32.9p 34.4p (1.5p) (4.4%)
----------------------------------- -------- -------- ------- -------
Profit before taxation
Underlying PBT was 18.3% higher than prior period reflecting the higher EBIT across the Group. Statutory PBT was 4.4% lower including a GBP7.6m credit (H1 2023: GBP28.2m) relating to adjustments to depreciation rates on certain fleet as explained last year and further below.
Exceptional items
During the period, there were no items that were recognised as exceptional items (H1 2023: GBPnil).
Amortisation of acquired intangibles and adjustments to underlying depreciation charges are not exceptional items as they are recurring. However, these items are 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 GBP9.3m (H1 2023: GBP10.1m).
Depreciation rate changes
As explained at the FY 2023 year end, residual values have increased significantly over recent 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 remained uncertain. However, it 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 total adjustment made to underlying depreciation in the period was a credit of GBP7.6m comprising GBP23.6m reduced depreciation offset by GBP15.9m reduced disposal profits. The adjustment remains materially in line with expectations set out in the FY 2023 annual report.
Interest
Net finance charges increased to GBP15.9m (H1 2023: GBP9.7m) due to an increased average cost of borrowing and higher average debt compared to the prior period. The net cash interest charge for the period was GBP15.1m (H1 2023: GBP8.6m).
At 31 October 2023 56% of borrowings were held in fixed rate instruments.
Dividend
The Board has declared an interim dividend of 8.3p per share (H1 2023: 7.5p) to be paid on 12 January 2024 to shareholders on the register as at close of business on 15 December 2023.
The interim dividend represents 50% of the final dividend for the year ended 30 April 2023 in line with previous guidance.
Share buyback programme
As previously announced, the Group completed its share buyback programme in December 2022, where a total of 16,877,571 ordinary shares were purchased and held for a total consideration of GBP60.5m. The Group announced a further share buyback programme commencing in August 2023 for up to a maximum aggregate consideration of GBP30m.
During the period to 31 October 2023, 2,537,500 shares were purchased for a total consideration of GBP8.2m.
Business combinations
In May 2023 the Group acquired 100% of the equity capital of FridgeXpress (UK) Limited for provisional consideration of GBP5.0m. The provisional fair value of net assets acquired was GBP2.9m resulting in the recognition of GBP2.1m of goodwill.
Group cash flow
Six months ended 31 October H1 2024 H1 2023 Change
GBPm GBPm GBPm
Underlying EBIT 115.0 93.4 21.6
------------------------------------------ -------- -------- -------
Underlying depreciation and amortisation 105.0 105.4 (0.4)
------------------------------------------ -------- -------- -------
Underlying EBITDA 220.0 198.8 21.2
------------------------------------------ -------- -------- -------
Net replacement capex [10] (103.5) (53.1) (50.4)
------------------------------------------ -------- -------- -------
Lease principal payments [11] (35.1) (24.6) (10.5)
------------------------------------------ -------- -------- -------
Steady state cash generation 81.4 121.2 (39.8)
------------------------------------------ -------- -------- -------
Working capital and non-cash items (48.8) (19.6) (29.2)
------------------------------------------ -------- -------- -------
Growth capex(10) (1.3) (68.7) 67.4
------------------------------------------ -------- -------- -------
Taxation (21.2) (14.7) (6.5)
------------------------------------------ -------- -------- -------
Net operating cash 10.1 18.2 (8.1)
------------------------------------------ -------- -------- -------
Distributions from associates 1.2 1.9 (0.7)
------------------------------------------ -------- -------- -------
Interest and other financing (14.5) (8.1) (6.4)
------------------------------------------ -------- -------- -------
Acquisition of business (4.1) (9.9) 5.8
------------------------------------------ -------- -------- -------
Free cash flow (7.3) 2.1 (9.4)
------------------------------------------ -------- -------- -------
Dividends paid (37.3) (35.0) (2.3)
------------------------------------------ -------- -------- -------
Payments to acquire treasury shares (8.2) (40.5) 32.3
------------------------------------------ -------- -------- -------
Add back: lease principal payments
[12] 35.1 24.6 10.5
------------------------------------------ -------- -------- -------
Net cash consumed (17.7) (48.8) 31.1
------------------------------------------ -------- -------- -------
Steady state cash generation
Steady state cash generation remained strong at GBP81.4m (H1 2023: GBP121.2m), driven by underlying EBIT performance, offset by an increase in net replacement capex and principal lease payments as improvements in vehicle supply enabled replacement of some older fleet.
Net capital expenditure
Net capital expenditure decreased by GBP17.0m to GBP104.8m (H1 2023: GBP121.8m) due to a GBP50.4m increase in net replacement capex(10) and a GBP67.4m decrease in growth capex(10) .
Net replacement capex was GBP103.5m (H1 2023: GBP53.1m), GBP50.4m higher than the prior period as the fleet age was increasing in the prior period but has been reduced in the current period, mainly in Spain where there have been more vehicles available to do this. The current period includes c.GBP25m of capex in order to reduce the age of the fleet during the period.
Growth capex(10) of GBP1.3m (H1 2023: GBP68.7m) included GBP35.9m outflow to grow the fleet size in Spain and GBP34.6m inflow in Northgate UK&I and Redde where the fleet size was reduced due to short supply of vehicles and reduced credit hire lengths and seasonality.
Lease principal payments of GBP35.1m (H1 2023: GBP24.6m) increased by GBP10.5m due to a larger leased fleet size and final payments on legacy hire purchase contracts.
Free cash flow
Free cash flow decreased by GBP9.4m to an outflow of GBP7.3m (H1 2023: GBP2.1m inflow).
Free cash flow is stated after taking account of investments that have been made in the year which will return future cash flow at a sustainable rate of return ahead of our cost of capital. This includes investment in net replacement capex of GBP103.5m, capex lease payments of GBP35.2m, growth capex of GBP1.3m, the acquisition of FridgeXpress of GBP4.1m (net of cash acquired), the share buyback programme of GBP8.2m and working capital in Redde.
Net cash consumed
Net cash consumed of GBP17.7m (H1 2023: GBP48.8m), excluding principal lease payments of GBP35.1m (H1 2023: GBP24.6m), comprises free cash flow, GBP37.3m of dividends paid (H1 2023: GBP35.0m) and GBP8.2m (H1 2023: GBP40.5m) for treasury shares purchased as part of the previously announced buyback programme. Leverage has been maintained at 1.6x (H1 2023: 1.6x).
Net debt
Net debt reconciles as follows:
As at 31 October H1 2024 H1 2023
GBPm GBPm
--------------------- ------- --------
Opening net debt 694.4 582.5
Net cash consumed 17.7 48.8
Other non-cash items 44.8 20.2
Exchange differences (1.9) 9.8
--------------------- ------- --------
Closing net debt 755.0 661.3
--------------------- ------- --------
Closing net debt was GBP60.6m higher than opening net debt, driven by net cash consumption of GBP17.7m and other non-cash items of GBP44.8m, consisting primarily of new leases acquired. The foreign exchange impact on net debt was a GBP1.9m decrease. The net book value of fleet on the balance sheet at 31 October 2023 was GBP1.23bn (H1 2023: GBP1.09bn).
Borrowing facilities
As at 31 October 2023 the Group had headroom on facilities of GBP236m, with GBP596m drawn (net of available cash balances) against total facilities of GBP832m as detailed below:
Facility Drawn Headroom Maturity Borrowing
GBPm GBPm GBPm Cost
------------------- -------- ----- -------- ------------ ---------
UK bank facilities 490 260 230 Nov-26 6.4%
Nov 27 - Nov
Loan notes 328 328 - 31 1.3%
Other loans 14 8 6 Nov 24 2.8%
------------------- -------- ----- -------- ------------ ---------
832 596 236 3.5%
------------------- -------- ----- -------- ------------ ---------
The other loans consist of GBP13.1m of borrowings located in Spain and GBP0.5m of preference shares.
The above drawn amounts reconcile to net debt as follows:
Drawn
GBPm
------------------------- -----
Borrowing facilities 596
Unamortised finance fees (6)
Leases 165
Net debt 755
-------------------------- -----
There are three financial covenants under the Group's facilities as follows:
Threshold Oct-23 Headroom Oct-22
--------------- ---------- ------ ---------------- -------
Interest cover 3x 9.0x GBP138m (EBIT) 13.9x
GBP367m (net
Loan to value 70% 44% debt) 44%
Debt leverage 3x 1.6x GBP184m (EBITDA) 1.6x
--------------- ---------- ------ ---------------- -------
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 2023 were GBP1,024.9m (H1 2023: GBP959.0m), equivalent to net assets per share of 452p (H1 2023: 413p). Net tangible assets at 31 October 2023 were GBP789.1m (H1 2023: GBP693.9m), equivalent to a net tangible asset value of 348p per share (H1 2023: 299p per share).
Gearing at 31 October 2023 was 95.7% (H1 2023: 69.0%) and ROCE was 14.8% (H1 2023: 13.5%).
Foreign exchange risk
The average and period end exchange rates used to translate the Group's overseas operations were as follows:
H1 2024 H1 2023 FY 2023
GBP : EUR GBP : EUR GBP : EUR
----------- ----------- ----------- ----------
Average 1.16 1.16 1.15
Period end 1.14 1.16 1.14
----------- ----------- ----------- ----------
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 2023 were set out in detail on pages 44 to 49 of the FY 2023 annual report, a copy of which is available at www.reddenorthgate.com , and were identified as:
-- economic environment -- market risk -- vehicle supply -- 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 31.10.23 to 31.10.22
GBPm GBPm
------------------------------------------------------ ------------- -------------
Underlying EBIT 115.0 93.4
Add back:
Depreciation of property, plant and equipment
(excluding depreciation adjustment) 107.0 104.1
(Gain) loss on disposal of assets (2.6) 0.7
Intangible amortisation included in underlying
operating profit (Note 6) 0.6 0.6
------------- -------------
Underlying EBITDA 220.0 198.8
Net replacement capex(1) (103.5) (53.1)
Lease principal payments (35.1) (24.6)
------------- -------------
Steady state cash generation 81.4 121.2
Working capital and non-cash items (48.8) (19.6)
Growth capex(2) (1.3) (68.7)
Taxation (21.2) (14.7)
------------- -------------
Net operating cash 10.1 18.2
Distributions from associates 1.2 1.9
Interest and other financing costs (14.5) (8.1)
Acquisition of business net of cash acquired (4.1) (9.9)
------------- -------------
Free cash flow (7.3) 2.1
Payments to acquire treasury shares (8.2) (40.5)
Dividends paid (37.3) (35.0)
Add back: lease principal payments(3) 35.1 24.6
------------- -------------
Net cash consumed (17.7) (48.8)
------------- -------------
Reconciliation to cash flow statement:
Net increase (decrease) in cash and cash equivalents (7.0) 3.5
Add back:
Receipt of bank loans and other borrowings (46.2) (76.8)
Repayments of bank loans and other borrowings 0.4 -
Principal element of lease payments 35.1 24.6
Net cash consumed (17.7) (48.8)
------------- -------------
Reconciliation of capital expenditure
Purchases of vehicles for hire 265.3 177.0
Proceeds from disposals of vehicles for hire (167.4) (58.9)
Proceeds of disposal of other property, plant (0.2) -
and equipment
Purchases of other property plant and equipment 6.3 3.0
Purchases of intangible assets 0.8 0.7
------------- -------------
Net capital expenditure 104.8 121.8
------------- -------------
Net replacement capex(1) 103.5 53.1
Growth capex(2) 1.3 68.7
------------- -------------
Net capital expenditure 104.8 121.8
------------- -------------
(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
(3) Lease principal payments are added back to reflect the movement
on net debt
Northgate Northgate Group
UK&I Spain Sub-total
6 months 6 months 6 months
to 31.10.23 to 31.10.23 to 31.10.23
GBP000 GBP000 GBP000
------------------------------------------ ------------- ------------- -------------
Underlying operating profit(1) 49,600 44,655 94,255
Exclude:
Adjustments to underlying depreciation
charge in relation to vehicles
sold in the period and profit on
sale of directly acquired vehicles (18,184) (16,514) (34,698)
------------- ------------- -------------
Rental profit 31,416 28,141 59,557
Divided by: Revenue: hire of vehicles(2) 192,256 135,219 327,475
Rental margin 16.3% 20.8% 18.2%
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 and profit on
sale of directly acquired vehicles (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%
(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
Auxillis A trading name used by the Redde segment. A business
which generates revenue from insurance claims
and services
-----------------------------------------------------------
Blakedale Blakedale Limited. A business within the Northgate
UK&I operating segment, providing specialist traffic
management services
-----------------------------------------------------------
Capex Capital expenditure
-----------------------------------------------------------
Capital employed Net assets of GBP1,024.9m (H1 2023: GBP959.0m)
excluding net debt of GBP755.0m (H1 2023: GBP661.3m),
goodwill of GBP115.9m (H1 2023: GBP118.8m), acquired
intangible assets of GBP116.0m (H1 2023: GBP142.7m)
and the cumulative impact of certain adjustments
to depreciation of GBP43.2m (H1 2023: GBP22.6m)
-----------------------------------------------------------
Charged EV A business within the Northgate UK&I operating
segment, providing EV Charging infrastructure
and solutions
-----------------------------------------------------------
Company Redde Northgate plc
-----------------------------------------------------------
Contract hire 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)
-----------------------------------------------------------
eAuction The part of the Group which generates vehicle
sales revenue through the Group's online sales
platforms
-----------------------------------------------------------
EBIT Earnings before interest and taxation. Underlying
unless otherwise stated
-----------------------------------------------------------
EBIT margin Calculated as EBIT divided by revenue (excluding
vehicle sales)
-----------------------------------------------------------
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 borrowing facilities of GBP832m
less net borrowings of GBP596m. Net borrowings
represent net debt of GBP755m excluding lease
liabilities of GBP165m and unamortised arrangement
fees of GBP6m and are stated after the deduction
of GBP4m of net cash and overdraft balances which
are available to offset against borrowings
-----------------------------------------------------------
FMG RS A business within the Redde operating segment,
providing vehicle repair services
-----------------------------------------------------------
FN50 An industry body within the UK commercial vehicle
fleet sector
-----------------------------------------------------------
Free cash flow Net cash generated after principal lease payments
and before share buybacks and the payment of dividends
-----------------------------------------------------------
FridgeXpress FridgeXpress (UK) Limited. A business acquired
within the Northgate UK&I operating segment, providing
specialist vehicle rental solutions
-----------------------------------------------------------
FY 2021 The year ended 30 April 2021
-----------------------------------------------------------
FY 2022 The year ended 30 April 2022
-----------------------------------------------------------
FY 2023 The year ended 30 April 2023
-----------------------------------------------------------
FY 2024 The year ending 30 April 2024
-----------------------------------------------------------
GAAP Generally Accepted Accounting Principles: 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 2024 The six month period ended 31 October 2023
-----------------------------------------------------------
H2 2024 The six month period ending 30 April 2024
-----------------------------------------------------------
H1/H2 Half year period: H1 being the first half and
H2 being the second half of the financial year
-----------------------------------------------------------
IFRS International Financial Reporting Standards
-----------------------------------------------------------
Income from associates The Group's share of net profits of associates
accounted for using the equity method
-----------------------------------------------------------
LCV(s) Light commercial vehicle(s): 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
-----------------------------------------------------------
Leverage Net debt divided by rolling 12 month EBITDA, calculated
in accordance with the Group's debt facility arrangements
on a pre IFRS 16 basis
-----------------------------------------------------------
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
-----------------------------------------------------------
Northgate A trading name used by the Northgate UK&I segment
. The commercial vehicle hire part of the business
-----------------------------------------------------------
Northgate UK&I The Northgate UK&I operating segment representing
the commercial vehicle hire and sales part of
the Group located in the United Kingdom and Republic
of Ireland
-----------------------------------------------------------
Northgate Spain The Northgate Spain operating segment representing
the commercial vehicle hire and sales part of
the Group located in Spain
-----------------------------------------------------------
OEM(s) Original equipment manufacturer(s): a reference
to the Group's vehicle suppliers
-----------------------------------------------------------
PBT Profit before taxation. Underlying unless otherwise
stated
-----------------------------------------------------------
PPU Profit per unit/loss per unit - this is a non-GAAP
measure used to describe disposal profit (as defined),
divided by the number of vehicles sold
-----------------------------------------------------------
Profit & loss Referring to the Income Statement
-----------------------------------------------------------
Redde The Redde operating segment representing the insurance
claims and services part of the Group providing
a range of mobility solutions
-----------------------------------------------------------
Rental margin Calculated as rental profit divided by revenue
(excluding vehicle sales) within the Northgate
UK&I and Northgate Spain parts of the Group
-----------------------------------------------------------
Rental profit(s) EBIT excluding disposal profits within the Northgate
UK&I and Northgate Spain parts of the Group
-----------------------------------------------------------
ROCE Underlying return on capital employed: calculated
as underlying EBIT (see non-GAAP reconciliation)
divided by average capital employed
-----------------------------------------------------------
Spain/Spanish Referring to the Northgate Spain operating segment
-----------------------------------------------------------
Steady state cash Underlying EBITDA less net replacement capex and
generation lease principal payments
-----------------------------------------------------------
UK&I Referring to the Northgate UK&I operating segment
-----------------------------------------------------------
Utilisation Calculated as the average number of vehicles on
hire divided by average rentable fleet in any
period
-----------------------------------------------------------
Van Monster A trading name within the Northgate UK&I segment.
The part of the Northgate UK&I segment that manages
external vehicle sales
-----------------------------------------------------------
VOH Vehicles on hire. Average unless otherwise stated
-----------------------------------------------------------
Condensed consolidated income statement
for the six months ended 31 October 2023
-------------------------------------------------------------------------------------------------------------------
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
Restated
Notes GBP000 GBP000 GBP000
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Revenue: hire of vehicles 2 322,887 302,717 610,502
Revenue: sale of vehicles 2 177,470 68,738 152,894
Revenue: claims and services 2 410,939 324,877 726,350
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Total revenue 2 911,296 696,332 1,489,746
Cost of sales (685,307) (478,846) (1,054,173)
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Gross profit 225,989 217,486 435,573
Administrative expenses (excluding exceptional items) (109,483) (103,077) (213,658)
Net impairment of trade receivables (3,978) (4,376) (8,902)
Exceptional administrative expenses: impairment of goodwill 10,11 - - (5,009)
Exceptional administrative expenses: impairment of other intangibles 11 - - (8,482)
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Total administrative expenses (113,461) (107,453) (236,051)
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Operating profit 112,528 110,033 199,522
Income from associates 2,8 799 1,559 2,520
EBIT 2 113,327 111,592 202,042
Finance income 189 24 90
Finance costs (16,091) (9,681) (23,405)
Profit before taxation 97,425 101,935 178,727
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Taxation 3 (22,863) (19,940) (39,489)
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Profit for the period 74,562 81,995 139,238
--------------------------------------------------------------------- ----- ----------- ----------- -----------
Profit for the period is wholly attributable to owners of the Company. All results arise from continuing operations.
Earnings per share
Basic 432.9p 34.4p 60.3p
------------------- ----- ----- -----
Diluted 432.0p 33.5p 58.7p
------------------- ----- ----- -----
Condensed consolidated statement of comprehensive income
for the six months ended 31 October 2023
-------------------------------------------------------------------------------- ----------- ----------- ----------
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
-------------------------------------------------------------------------------- ----------- ----------- ----------
Amounts attributable to owners of the Company
Profit attributable to owners 74,562 81,995 139,238
Other comprehensive (expense) income
Foreign exchange differences on retranslation of net assets of subsidiary
undertakings (3,474) 12,476 23,689
Foreign exchange differences on long term borrowings held as hedges 2,032 (9,635) (17,741)
Foreign exchange difference on revaluation reserve (9) 32 54
Total other comprehensive (expense) income for the period (1,451) 2,873 6,002
-------------------------------------------------------------------------------- ----------- ----------- ----------
Total comprehensive income for the period 73,111 84,868 145,240
-------------------------------------------------------------------------------- ----------- ----------- ----------
All items will subsequently be reclassified to the consolidated income statement.
Condensed consolidated balance sheet
31 October 2023
31.10.23 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
-------------------------------- ---- ----------- ----------- ---------
Non-current assets
Goodwill 6 115,918 118,781 113,873
Other intangible assets 6 119,880 146,319 127,828
Property, plant and equipment 7 1,404,003 1,257,757 1,332,923
Deferred tax assets 2,122 3,061 2,061
Interest in associates 8 4,811 5,534 5,207
Total non-current assets 1,646,734 1,531,452 1,581,892
--------------------------------- ---- ----------- ----------- ---------
Current assets
Inventories 44,088 15,555 54,537
Receivables and contract assets 468,671 420,821 441,277
Current tax assets 18,724 6,917 14,951
Cash and bank balances 9 29,646 18,956 14,122
--------------------------------- ---- ----------- ----------- ---------
Total current assets 561,129 462,249 524,887
--------------------------------- ---- ----------- ----------- ---------
Total assets 2,207,863 1,993,701 2,106,779
--------------------------------- ---- ----------- ----------- ---------
Current liabilities
Trade and other payables 321,778 301,031 344,867
Provisions 3,513 - 822
Current tax liabilities 3,523 5,351 20
Lease liabilities 46,171 56,889 49,493
Borrowings 33,447 11,151 14,079
--------------------------------- ---- ----------- ----------- ---------
Total current liabilities 408,432 374,422 409,281
--------------------------------- ---- ----------- ----------- ---------
Net current assets 152,697 87,827 115,606
--------------------------------- ---- ----------- ----------- ---------
Non-current liabilities
Trade and other payables 4,373 4,942 -
Provisions 10,521 - 6,609
Lease liabilities 119,267 103,188 107,272
Borrowings 585,793 509,063 537,712
Deferred tax liabilities 54,613 43,062 51,310
Total non-current liabilities 774,567 660,255 702,903
--------------------------------- ---- ----------- ----------- ---------
Total liabilities 1,182,999 1,034,677 1,112,184
--------------------------------- ---- ----------- ----------- ---------
NET ASSETS 1,024,864 959,024 994,595
--------------------------------- ---- ----------- ----------- --------- Equity Share capital 123,046 123,046 123,046 Share premium account 113,510 113,510 113,510 Treasury shares reserve (58,071) (48,633) (60,420) Own shares reserve (8,469) (13,262) (9,615) Translation reserve (4,127) (5,792) (2,685) Other reserves 330,480 330,467 330,489 Retained earnings 528,495 459,688 500,270 --------------------------------- ---- ----------- ----------- --------- TOTAL EQUITY 1,024,864 959,024 994,595 --------------------------------- ---- ----------- ----------- ---------
Total equity is wholly attributable to owners of the Company.
Condensed consolidated cash flow statement
for the six months ended 31 October 2023
------------------------------------------------------------ ----- ----------- ----------- ---------
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
------------------------------------------------------------ ----- ----------- ----------- ---------
Net cash generated from operations 10 37,417 38,056 84,322
------------------------------------------------------------ ----- ----------- ----------- ---------
Investing activities
Interest received 189 24 90
Distributions from associates 8 1,195 1,868 3,156
Payment for acquisition of subsidiary, net of cash acquired 12 (4,051) (9,902) (10,004)
Proceeds from disposal of other property, plant and equipment 185 87 678
Purchases of other property, plant and equipment (6,321) (3,035) (7,362)
Purchases of other intangible assets (771) (701) (1,765)
------------------------------------------------------------ ----- ----------- ----------- ---------
Net cash used in investing activities (9,574) (11,659) (15,207)
------------------------------------------------------------ ----- ----------- ----------- ---------
Financing activities
Dividends paid (37,343) (34,984) (52,220)
Receipt of bank loans and other borrowings 46,202 76,849 96,807
Repayments of bank loans and other borrowings (391) - -
Debt issue costs - (950) (950)
Principal element of lease payments (35,150) (24,581) (65,110)
Payments to acquire treasury shares (8,193) (40,484) (52,927)
Proceeds from sale of own shares 25 1,233 1,414
Net cash used in financing activities (34,850) (22,917) (72,986)
------------------------------------------------------------ ----- ----------- ----------- ---------
Net (decrease) increase in cash and cash equivalents (7,007) 3,480 (3,871)
Cash and cash equivalents at the beginning of the period 11,681 15,769 15,769
Effect of foreign exchange movements (861) (293) (217)
------------------------------------------------------------ ----- ----------- ----------- ---------
Cash and cash equivalents at the end of the period 3,813 18,956 11,681
------------------------------------------------------------ ----- ----------- ----------- ---------
Cash and cash equivalents consist of:
Cash and bank balances 9 29,646 18,956 14,122
Bank overdrafts 9(25,833) - (2,441)
-------------------------------------- -------- ------ -------
3,813 18,956 11,681
-------------------------------------- -------- ------ -------
Condensed consolidated statement of changes in equity
for the six months ended 31 October 2023
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 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 (purchase)
receipts of
shares - (41,140) 1,233 - - - (39,907)
Total comprehensive
income - - - 2,841 32 81,995 84,868
Total equity
at 1 November
2022 236,556 (48,633) (13,262) (5,792) 330,467 459,688 959,024
Share options
fair value
charge - - - - - 2,361 2,361
Share options
exercised - - - - - (3,466) (3,466)
Dividends paid - - - - - (17,236) (17,236)
Net (purchase)
receipts of
shares - (11,787) 181 - - - (12,317)
Transfer of
shares on vesting
of share options - - 3,466 - - - 4,177
Deferred tax
on share based
payments recognised
in equity - - - - - 1,680 1,680
Total comprehensive
income - - - 3,107 22 57,243 60,372
Total equity
at 1 May 2023 236,556 (60,420) (9,615) (2,685) 330,489 500,270 994,595
Share options
fair value
charge - - - - - 2,837 2,837
Share options
exercised - - 11,831 - - (11,831) -
Dividends paid - - - - - (37,343) (37,343)
Net purchases
of shares - (8,361) 25 - - - (8,336)
Transfer of
shares - 10,710 (10,710) - - - -
Total comprehensive
(expense) income - - - (1,442) (9) 74,562 73,111
Total equity
at 31 October
2023 236,556 (58,071) (8,469) (4,127) 330,480 528,495 1,024,864
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 2023 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 2023, 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 6 December 2023. 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
2023, 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 2023. Depreciation charges reflect adjustments
made as a result of differences between expected and actual residual
values of used vehicles, taking into account the further directly
attributable costs to sell the vehicles.
The Directors apply judgement in determining the appropriate method
of depreciation (straight line) and are required to estimate the
future residual value of vehicles with due consideration of variables
including age, mileage and condition.
Residual values have increased in recent years 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 2023. The carrying
value of contract assets for claims from insurance companies at 31
October 2023 was GBP239,523,000 (30 April 2023: GBP240,595 ,000).
A 3% difference between the carrying amount of claims in the balance
sheet and the amounts finally settled would lead to a GBP7.2m 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 2023 was GBP236m.
This compares to headroom of GBP290m at 30 April 2023. 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 2023 annual report
The financial figures for the year ended 30 April 2023, 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 2023 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 27 October 2023. 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.
Prior period restatement
The Group has amended the presentation of the Consolidated income statement in order to comply with IAS 1: Presentation of Financial Statements by presenting the net impairment of trade receivables as a separate line item. The net impairment of trade receivables was previously presented within administrative expenses and was disclosed separately within the Consolidated income statement within the annual report for the year ended 30 April 2023. There is no change to profit or net assets as a result of this adjustment.
Amortisation on acquired intangible assets is now presented within administrative expenses in the Consolidated income statement, previously a separate line item. For further information on amortisation of intangible assets refer to Note 6. There is no change to profit or net assets as a result of this adjustment.
Impact
Six months of Six months
to 31.10.22 reclassification to 31.10.22
(Unaudited) (Unaudited)
Statutory Statutory
Actual Restated
GBP000 GBP000 GBP000
------------------------------------- ------------ ----------------- ------------
Revenue: hire of vehicles 302,717 - 302,717
Revenue: sale of vehicles 68,738 - 68,738
Revenue: claims and services 324,877 - 324,877
-------------------------------------- ------------ ----------------- ------------
Total revenue 696,332 - 696,332
Cost of sales (478,846) - (478,846)
-------------------------------------- ------------ ----------------- ------------
Gross profit 217,486 - 217,486
Administrative expenses (excluding
exceptional items) (97,397) (5,680) (103,077)
Net impairment of trade receivables - (4,376) (4,376)
Amortisation on acquired intangible
assets (10,056) 10,056 -
-------------------------------------- ------------ ----------------- ------------
Total administrative expenses (107,453) - (107,453)
-------------------------------------- ------------ ----------------- ------------
Operating profit 110,033 - 110,033
Income from associates 1,559 - 1,559
EBIT 111,592 - 111,592
Finance income 24 - 24
Finance costs (9,681) - (9,681)
-------------------------------------- ------------ ----------------- ------------
Profit before taxation 101,935 - 101,935
-------------------------------------- ------------ ----------------- ------------
Taxation (19,940) - (19,940)
-------------------------------------- ------------ ----------------- ------------
Profit for the period 81,995 - 81,995
-------------------------------------- ------------ ----------------- ------------
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 31.10.23 to 31.10.23 to 31.10.23 to 31.10.23 to 31.10.23 to 31.10.23
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Revenue: hire of
vehicles 187,668 135,219 - - - 322,887
Revenue: sale of
vehicles 132,439 44,566 465 - - 177,470
Revenue: claims
and services - - 410,939 - - 410,939
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
External revenue 320,107 179,785 411,404 - - 911,296
Intersegment revenue 4,588 - 64,034 - (68,622) -
Total revenue 324,695 179,785 475,438 - (68,622) 911,296
Timing of revenue
recognition:
At a point in time 132,439 44,566 201,433 - - 378,438
Over time 187,668 135,219 209,971 - - 532,858
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
External revenue 320,107 179,785 411,404 - - 911,296
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Underlying operating
profit (loss) 49,600 44,655 25,480 (5,560) - 114,175
Income from associates - - 799 - - 799
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Underlying EBIT* 49,600 44,655 26,279 (5,560) - 114,974
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Adjustments to
underlying
depreciation charge 7,660
Amortisation on
acquired intangible
assets (Note 6) (9,307)
EBIT 113,327
Finance income 189
Finance costs (16,091)
Profit before taxation 97,425
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
* 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 31.10.22 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
Finance income 24
Finance costs (9,681)
Profit before taxation 101,935
------------------------- ------------- ------------- ------------- ------------- --------------- --------------
Northgate Northgate Group
Group
UK&I Spain Redde Corporate eliminations total
Year Year Year Year Year to Year
to 30.04.23 to 30.04.23 to 30.04.23 to 30.04.23 30.04.23 to 30.04.23
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
Revenue: hire of
vehicles 357,811 252,691 - - - 610,502
Revenue: sale of
vehicles 104,945 47,280 669 - - 152,894
Revenue: claims and
services - - 726,350 - - 726,350
---------------------- -------------- -------------- -------------- -------------- -------------- --------------
External revenue 462,756 299,971 727,019 - - 1,489,746
Intersegment revenue 9,883 - 42,793 - (52,676) -
---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Total revenue 472,639 299,971 769,812 - (52,676) 1,489,746 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Timing of revenue recognition: At a point in time 104,945 47,280 291,996 - - 444,221 Over time 357,811 252,691 435,023 - - 1,045,525 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- External revenue 462,756 299,971 727,019 - - 1,489,746 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Underlying operating profit (loss) 93,382 60,440 44,521 (11,670) - 186,673 Income from associates - - 2,520 - - 2,520 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Underlying EBIT* 93,382 60,440 47,041 (11,670) - 189,193 ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- Exceptional items (Note 11) (13,491) Adjustments to underlying depreciation charge 46,546 Amortisation on acquired intangible assets (Note 6) (20,206) ---------------------- -------------- -------------- -------------- -------------- -------------- -------------- EBIT 202,042 Finance income 90 Finance costs (23,405) Profit before taxation 178,727 ---------------------- -------------- -------------- -------------- -------------- -------------- --------------
3. Taxation
The charge for taxation for the six months to 31 October 2023 is based on the estimated effective rate for the year ending 30 April 2024 of 23.5% (31 October 2022: 19.6% and 30 April 2023: 22.1%).
4. Earnings per share
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(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 74,562 81,995 139,238
------------------------------------------------------------------------------- ----------- ----------- -----------
Number of shares
Weighted average number of Ordinary shares for the purpose of basic earnings
per share 226,741,545 238,687,578 230,778,502
Effect of dilutive potential Ordinary shares - share options 6,254,989 5,769,273 6,290,275
Weighted average number of Ordinary shares for the purpose of diluted earnings
per share 232,996,534 244,456,851 237,068,777
Basic earnings per share 32.9p 34.4p 60.3p
------------------------------------------------------------------------------- ----------- ----------- -----------
Diluted earnings per share 32.0p 33.5p 58.7p
------------------------------------------------------------------------------- ----------- ----------- -----------
The calculated weighted average number of Ordinary shares for the purpose of basic earnings per share includes a reduction of 16,827,313 shares (31 October 2022: 7,403,845 and 30 April 2023: 15,312,921) relating to treasury shares and a reduction of 2,522,565 shares (31 October 2022: nil and 30 April 2023: 3,411,660) for shares held in employee trusts.
5. Dividends
In the six months to 31 October 2023, a dividend of GBP37,343,000 was paid (31 October 2022: GBP34,984,000) representing the final dividend for the year ended 30 April 2023. The Directors have declared an interim dividend of 8.3p per share for the six months ended 31 October 2023 (31 October 2022: 7.5p).
The final dividend of 16.5p in relation to the year ended 30 April 2023 was paid in September 2023.
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 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 1 November
2022 118,781 128,634 11,100 6,585 146,319 265,100
Acquisition 101 - - - - 101
Additions - - - 1,064 1,064 1,064
Impairment (5,009) (8,277) (205) - (8,482) (13,491)
Disposals - - - (402) (402) (402)
Amortisation - (8,914) (802) (1,019) (10,735) (10,735)
Exchange differences - - - 64 64 64
---------------------- -------- --------------- ------ ---------- -------- ---------
At 1 May 2023 113,873 111,443 10,093 6,292 127,828 241,701
Acquisition 2,045 1,100 150 - 1,250 3,295
Additions - - - 771 771 771
Amortisation - (8,100) (564) (1,282) (9,946) (9,946)
Exchange differences - - - (23) (23) (23)
At 31 October
2023 115,918 104,443 9,679 5,758 119,880 235,798
---------------------- -------- --------------- ------ ---------- -------- ---------
At 31 October 2023
Cost or fair value 338,351
Accumulated amortisation
and impairment (102,553)
Net book value 235,798
------------------------------ ----------
Amortisation was included within the income statement as follows:
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
-------------------------------------------- ----------- ----------- ---------
Included within underlying operating profit
as administrative expenses 639 617 1,202
Excluded from underlying operating profit* 9,307 10,056 20,206
9,946 10,673 21,408
-------------------------------------------- ----------- ----------- ---------
* 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 plant & equipment
GBP000 GBP000 GBP000
------------------------- --------- ------------------- ----------
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 1 November 2022 1,094,907 162,850 1,257,757
Additions 250,284 18,134 268,418
Disposals - (663) (663)
Transfers 17 (17) -
Transfer to inventories (106,961) - (106,961)
Depreciation (85,554) (12,207) (97,761)
Exchange differences 10,918 1,215 12,133
-------------------------- --------- ------------------- ----------
At 1 May 2023 1,163,611 169,312 1,332,923
Acquisition 14,815 811 15,626
Additions 297,151 16,777 313,928
Disposals - (283) (283)
Transfer to inventories (155,265) - (155,265)
Depreciation (86,960) (12,371) (99,331)
Exchange differences (3,161) (434) (3,595)
At 31 October 2023 1,230,191 173,812 1,404,003
-------------------------- --------- ------------------- ----------
At 31 October 2023
Cost or fair value 2,101,897
Accumulated depreciation (697,894)
Net book value 1,404,003
----------------------------- ----------
Included within property, plant and equipment above are right of use assets under leases with a net book value of GBP160,665,000 (30 April 2023: GBP157,703,000).
8. Interest in associates
GBP000
----------------------------------- --------
At 1 May 2022 5,843
Group's share of:
Profit from continuing operations 1,559
Distributions from associates (1,868)
----------------------------------- --------
At 1 November 2022 5,534
Group's share of:
Profit from continuing operations 961
Distributions from associates (1,288)
----------------------------------- --------
At 1 May 2023 5,207
Group's share of:
Profit from continuing operations 799
Distributions from associates (1,195)
----------------------------------- --------
At 31 October 2023 4,811
----------------------------------- --------
9. Analysis of consolidated net debt
At 31.10.23 At 31.10.22 At 30.04.23
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------- ----------- ----------- -----------
Cash and bank balances (29,646) (18,956) (14,122)
Bank overdrafts 25,833 - 2,441
Bank loans 265,200 195,990 218,403
Loan notes 327,623 322,931 329,854
Lease Liabilities 165,438 160,077 156,765
Cumulative preference shares 500 500 500
Confirming facilities 84 793 593
Consolidated net debt 755,032 661,335 694,434
----------------------------- ----------- ----------- -----------
10. Notes to the cash flow statement
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
Net cash generated from operations GBP000 GBP000 GBP000
------------------------------------------------------------------------------- ----------- ----------- -----------
Operating profit 112,528 110,033 199,522
Adjustments for:
Depreciation of property, plant and equipment 99,331 75,842 175,066
Net impairment of goodwill - - 5,009
Net impairment of other intangibles - - 8,482
Amortisation of intangible assets 9,946 10,673 21,408
(Gain) loss on disposal of other property, plant and equipment (2,614) 705 218
Share options fair value charge 2,837 2,287 4,647
------------------------------------------------------------------------------- ----------- ----------- -----------
Operating cash flows before movements in working capital 222,028 199,540 414,352
(Increase) decrease in non-vehicle inventories (1,377) (1,193) 273
Increase in receivables (22,836) (58,454) (81,981)
(Decrease) increase in payables (33,245) 39,347 71,810
Increase in provisions 6,603 - 7,431
Cash generated from operations 171,173 179,240 411,885
Income taxes paid, net (21,150) (14,689) (36,640)
Interest paid (14,701) (8,378) (21,150)
------------------------------------------------------------------------------- ----------- ----------- -----------
Net cash generated from operations before purchases of and proceeds from
disposal of vehicles
for hire 135,322 156,173 354,095
Purchases of vehicles for hire (265,325) (176,993) (398,187)
Proceeds from disposal of vehicles for hire 167,420 58,876 128,414
------------------------------------------------------------------------------- ----------- ----------- -----------
Net cash generated from operations 37,417 38,056 84,322
------------------------------------------------------------------------------- ----------- ----------- -----------
11. Exceptional items
During the period the Group recognised exceptional items in
the income statement as follows:
Six months Six months Year to
to 31.10.23 to 31.10.22 30.04.23
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
--------------------------------- ------------ ------------ ---------
Impairment of goodwill - - 5,009
Impairment of other intangibles - - 8,482
--------------------------------- ------------ ------------ ---------
Exceptional administrative
expenses - - 13,491
Impairment of NewLaw intangibles - - 13,491
Exceptional administrative
expenses - - 13,491
Total pre-tax exceptional items - - 13,491
Tax charge on exceptional items - - (2,065)
--------------------------------- ------------ ------------ ---------
During the period there were no items recognised as exceptional.
Impairment of the NewLaw business
Following a strategic business review, the carrying amount of assets relating to the NewLaw CGU was considered to be below its recoverable amount and therefore an impairment charge of GBP5,009,000 and GBP8,482,000, for goodwill and other intangibles respectively, was recognised as an exceptional item in the consolidated income statement (see Note 6). The Group also reassessed the useful lives of property, plant and equipment relating to the NewLaw CGU and determined that no change in the useful lives is required.
12. Business combinations
On 2 May 2023 the Group acquired 100% of the equity interests of FridgeXpress (UK) Ltd "FridgeXpress". 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 4,990 -------------------------- --------
The provisional assets and liabilities recognised as a result of the acquisition are as follows:
GBP000
---------------------------------------- ---------
Customer relationships (Note 6) 1,100
Brand names (Note 6) 150
Property, plant and equipment (Note 7) 15,626
Cash and bank balances 939
Stock 124
Trade and other receivables 1,678
Trade and other payables (1,096)
Deferred income (550)
Borrowings (391)
Leases (13,410)
Deferred tax (1,225)
Net identified assets acquired 2,945
---------------------------------------- ---------
Goodwill recognised on acquisition 2,045
---------------------------------------- ---------
Acquisition costs
Acquisition costs in relation to FridgeXpress of GBP82,000 have been charged to the income statement as administrative expenses.
FridgeXpress' contribution to the Group results
FridgeXpress' contribution to underlying operating profit was a GBP253,000 profit for the period from 2 May 2023 to 31 October 2023. Revenue during this period was GBP4,226,000.
Prior period
On 2 July 2022 the Group acquired 100% of the equity interests of Blakedale Limited for a consideration of GBP10,145,000. A provisional purchase price allocation exercise was undertaken in accordance with IFRS 3 'Business Combinations', which identified net assets acquired of GBP6,189,000, resulting in goodwill of GBP3,956,000 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 31 of the Group's annual financial statements for the year ended 30 April 2023. 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
6 December 2023
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 2023 (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 2023;
-- 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 ("ISRE (UK) 2410"). 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 ISRE (UK) 2410. 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
6 December 2023
[3] Calculated as underlying EBIT divided by total revenue (excluding vehicle sales)
[4] Including intersegment revenue of GBP4.6m (H1 2023: GBP4.1m)
[5] Calculated as underlying EBIT divided by total revenue (excluding vehicle sales)
[6] Calculated as underlying EBIT divided by total revenue (excluding vehicle sales)
[7] Including intersegment revenue of GBP5.6m (H1 2023: GBP6.5m)
[8] Including intersegment revenue of GBP58.4m (H1 2023: GBPnil)
[9] Gross profit margin calculated as underlying gross profit divided by total revenue (excluding vehicle sales). EBIT margin calculated as underlying EBIT divided by total revenue (excluding vehicle sales)
[10] Net replacement capex is total net 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] Lease principal payments are added back to reflect the movement on net debt
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END
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