Interim Results
06/12/2023 07:00
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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').
Half Year results Reported Underlying(1)
6 months ended 31 October H1 2024 H1 2023 Change H1 2024 H1 2023 Change
£m £m % £m £m %
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
£m £m %
Net debt 755.0 661.3 14.2%
£1.23bn £1.09bn 12.8%
Fleet assets
1.6x 1.6x n/a
Leverage
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 £34.7m (H1 2023: £24.7m), 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 £97.4m (H1 2023: £101.9m) including
depreciation adjustment of £7.6m (H1 2023: £28.2m); underlying PBT up 18.3%
to £99.1m due to strong operational performance and disposal profits,
partially offset by higher interest costs
· EBITDA grew 10.7% to £220.0m (H1 2023: £198.8m) due to strong
operational performance; uses of cash included £103m of replacement capex, of
which c.£25m 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 £1.23bn (H1 2023: £1.09bn) and over
£236m of facility headroom
· Shareholder returns: 10.7% increase in interim dividend to 8.3p;
£30m share buyback programme running since August, £10m 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 £1.2m 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 (http://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 (http://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 (http://www.reddenorthgate.com) .
GAAP reconciliation tables
Consolidated income statement reconciliation
Six month period ending Foot 31.10.2023 31.10.2023 31.10.2023 31.10.2022 31.10.2022 31.10.2022
(Unaudited) note Statutory Adjustments Underlying Statutory Adjustments Underlying
(below) 2023 2023 2023 2022 2022 2022
£m £m £m £m £m £m
Revenue (a) 911.3 (177.5) 733.8 696.3 (68.7) 627.6
Cost of sales (b + 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 (0.4) 3.2
and tax rate change on acquired intangible assets
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 £1.23bn compared to
net debt of £755m 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 León 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 £10m and are being held in treasury.
FINANCIAL REVIEW
Group Revenue and EBIT
Six months ended 31 October H1 2024 H1 2023 Change Change
£m £m £m %
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 £911.3m was 30.9% higher
than prior period while revenue excluding vehicle sales of £733.8m (H1 2023:
£627.6m), 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 £72.1m 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 £115.0m 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 £7.6m credit (H1 2023: £28.2m) for adjustments to depreciation
rates and £9.3m (H1 2023: £10.1m) amortisation on acquired intangible
assets.
Rental profit increased 10.6% to £59.6m (H1 2023: £53.8m) with a £2.6m
increase in Northgate UK&I and an £3.1m increase in Northgate Spain.
Redde saw volume growth across its product offerings, resulting in a £5.9m
increase in underlying EBIT, including income from associates, to £26.3m (H1
2023: £20.4m).
Total disposal profits for the period of £34.7m 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) £m £m %
Revenue - vehicle hire 4 (#_ftn2) 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 (#_ftn3) 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 £132.4m 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 £31.4m (H1 2023: £28.8m)
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 £132.4m (H1 2023: £50.3m) 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
£1,600 (H1 2023: £3,800). Disposal profits remained strong at £18.2m
compared to £18.8m 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 £49.6m (H1 2023:
£47.5m).
Rental business
Vehicle hire revenue in Northgate UK&I was £192.3m (H1 2023: £184.1m),
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 £18.2m (H1 2023:
£18.8m) were broadly in line with the prior period. The underlying LCV PPU
was £3,500 compared to £3,800 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) £m £m %
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 (#_ftn4) 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 £1.2m 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 £44.7m, an
increase of £13.7m 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 £135.2m (H1 2023: £122.7m), 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 £28.1m (H1 2023: £25.1m).
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 £16.5m (H1 2023: £5.9m) increased 178% due to the
increase volume of sales and an increase in PPU to £2,300 (H1 2023: £2,100)
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) £m £m %
Revenue - claims and services 7 (#_ftn5) 416.6 331.4 25.7%
Revenue - vehicle sales 8 (#_ftn6) 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 (#_ftn7) 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 £58.8m 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 £26.3m, 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 £416.6m
(H1 2023: £331.4m) 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 £26.3m (H1 2023: £20.4m) 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
£m £m £m %
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 £7.6m credit (H1
2023: £28.2m) 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: £nil).
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 £9.3m (H1 2023: £10.1m).
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 £7.6m comprising £23.6m reduced depreciation offset by £15.9m
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 £15.9m (H1 2023: £9.7m) 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 £15.1m (H1 2023:
£8.6m).
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 £60.5m. The Group announced a further share
buyback programme commencing in August 2023 for up to a maximum aggregate
consideration of £30m.
During the period to 31 October 2023, 2,537,500 shares were purchased for a
total consideration of £8.2m.
Business combinations
In May 2023 the Group acquired 100% of the equity capital of FridgeXpress (UK)
Limited for provisional consideration of £5.0m. The provisional fair value of
net assets acquired was £2.9m resulting in the recognition of £2.1m of
goodwill.
Group cash flow
Six months ended 31 October H1 2024 H1 2023 Change
£m £m £m
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 (#_ftn8) (103.5) (53.1) (50.4)
Lease principal payments 11 (#_ftn9) (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 (#_ftn10) 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 £81.4m (H1 2023: £121.2m),
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 £17.0m to £104.8m (H1 2023: £121.8m)
due to a £50.4m increase in net replacement capex(10) and a £67.4m decrease
in growth capex(10).
Net replacement capex was £103.5m (H1 2023: £53.1m), £50.4m 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.£25m of capex
in order to reduce the age of the fleet during the period.
Growth capex(10) of £1.3m (H1 2023: £68.7m) included £35.9m outflow to grow
the fleet size in Spain and £34.6m 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 £35.1m (H1 2023: £24.6m) increased by £10.5m
due to a larger leased fleet size and final payments on legacy hire purchase
contracts.
Free cash flow
Free cash flow decreased by £9.4m to an outflow of £7.3m (H1 2023: £2.1m
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 £103.5m, capex lease payments of £35.2m, growth capex
of £1.3m, the acquisition of FridgeXpress of £4.1m (net of cash acquired),
the share buyback programme of £8.2m and working capital in Redde.
Net cash consumed
Net cash consumed of £17.7m (H1 2023: £48.8m), excluding principal lease
payments of £35.1m (H1 2023: £24.6m), comprises free cash flow, £37.3m of
dividends paid (H1 2023: £35.0m) and £8.2m (H1 2023: £40.5m) 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
£m £m
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 £60.6m higher than opening net debt, driven by net cash
consumption of £17.7m and other non-cash items of £44.8m, consisting
primarily of new leases acquired. The foreign exchange impact on net debt was
a £1.9m decrease. The net book value of fleet on the balance sheet at 31
October 2023 was £1.23bn (H1 2023: £1.09bn).
Borrowing facilities
As at 31 October 2023 the Group had headroom on facilities of £236m, with
£596m drawn (net of available cash balances) against total facilities of
£832m as detailed below:
Facility Drawn Headroom Maturity Borrowing
£m £m £m Cost
UK bank facilities 490 260 230 Nov-26 6.4%
Loan notes 328 328 - Nov 27 - Nov 31 1.3%
Other loans 14 8 6 Nov 24 2.8%
832 596 236 3.5%
The other loans consist of £13.1m of borrowings located in Spain and £0.5m
of preference shares.
The above drawn amounts reconcile to net debt as follows:
Drawn
£m
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 £138m (EBIT) 13.9x
Loan to value 70% 44% £367m (net debt) 44%
Debt leverage 3x 1.6x £184m (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 £1,024.9m (H1 2023: £959.0m), equivalent
to net assets per share of 452p (H1 2023: 413p). Net tangible assets at 31
October 2023 were £789.1m (H1 2023: £693.9m), 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
£ : € £ : € £ : €
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 (http://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
£m £m
Underlying EBIT 115.0 93.4
Add back:
Depreciation of property, plant and equipment (excluding depreciation 107.0 104.1
adjustment)
(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 and equipment (0.2) -
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 UK&I Northgate Group
6 months to 31.10.23 Spain Sub-total
£000 6 months to 31.10.23 6 months to 31.10.23
£000 £000
Underlying operating profit(1) 49,600 44,655 94,255
Exclude:
Adjustments to underlying depreciation charge in relation to vehicles sold in (18,184) (16,514) (34,698)
the period and profit on sale of directly acquired vehicles
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 UK&I Northgate Group
6 months to 31.10.22 Spain Sub-total
£000 6 months to 31.10.22 6 months to 31.10.22
£000 £000
Underlying operating profit(1) 47,542 30,992 78,534
Exclude:
Adjustments to underlying depreciation charge in relation to vehicles sold in (18,767) (5,931) (24,698)
the period and profit on sale of directly acquired vehicles
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 £1,024.9m (H1 2023: £959.0m) excluding net debt of £755.0m
(H1 2023: £661.3m), goodwill of £115.9m (H1 2023: £118.8m), acquired
intangible assets of £116.0m (H1 2023: £142.7m) and the cumulative impact of
certain adjustments to depreciation of £43.2m (H1 2023: £22.6m)
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 £832m less net borrowings of £596m.
Net borrowings represent net debt of £755m excluding lease liabilities of
£165m and unamortised arrangement fees of £6m and are stated after the
deduction of £4m 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 capex Net capital expenditure other than that defined 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 generation Underlying EBITDA less net replacement capex and 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 £000 £000 £000
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 4 32.9p 34.4p 60.3p
Diluted 4 32.0p 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)
£000 £000 £000
Amounts attributable to owners of the Company
Profit attributable to owners 74,562 81,995 139,238
(3,474) 12,476 23,689
Other comprehensive (expense) income
Foreign exchange differences on retranslation of net assets of subsidiary
undertakings
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 £000 £000 £000
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 £000 £000 £000
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 premium Translation reserve Other reserves Retained earnings Total
Treasury shares Own shares
£000 £000 £000 £000 £000 £000 £000
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 £239,523,000 (30 April 2023:
£240,595,000). A 3% difference between the carrying amount of claims in the
balance sheet and the amounts finally settled would lead to a £7.2m 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 £236m. This compares to headroom of £290m 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.
Six months Impact of Six months
to 31.10.22 reclassification to 31.10.22
(Unaudited) (Unaudited)
Statutory Statutory
Actual Restated
£000 £000 £000
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 Redde Corporate Group
UK&I Spain Six months to 31.10.23 (Unaudited) Six months to 31.10.23 (Unaudited) Group eliminations total
Six months to 31.10.23 (Unaudited) Six months to 31.10.23 (Unaudited) £000 £000 Six months to 31.10.23 (Unaudited) Six months to 31.10.23 (Unaudited)
£000 £000 £000 £000
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 Redde Corporate Group
UK&I Spain Six months to 31.10.22 (Unaudited) Six months to 31.10.22 (Unaudited) Group eliminations total
Six months to 31.10.22 (Unaudited) Six months to 31.10.22 (Unaudited) £000 £000 Six months to 31.10.22 (Unaudited) Six months to 31.10.22 (Unaudited)
£000 £000 £000 £000
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 Redde Corporate Group eliminations Group
UK&I Spain Year to 30.04.23 Year to 30.04.23 Year to 30.04.23 total
Year to 30.04.23 Year to 30.04.23 (Audited) (Audited) (Audited) Year to 30.04.23
(Audited) (Audited) £000 £000 £000 (Audited)
£000 £000 £000
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 £000 £000 £000
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 74,562 81,995 139,238
profit attributable to owners of the Company
Number of shares
Weighted average number of Ordinary shares for the purpose of basic earnings 226,741,545 238,687,578 230,778,502
per share
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 232,996,534 244,456,851 237,068,777
per share
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 £37,343,000 was paid (31
October 2022: £34,984,000) 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
£000 £000 £000 £000 £000 £000
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)
£000 £000 £000
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 for hire Other property, plant & equipment Total
£000 £000 £000
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 £160,665,000 (30 April 2023:
£157,703,000).
8. Interest in associates
£000
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)
£000 £000 £000
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 £000 £000 £000
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 135,322 156,173 354,095
disposal of vehicles for hire
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 to 31.10.23 Six months to 31.10.22 Year to
30.04.23
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
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 £5,009,000 and £8,482,000, 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 £000
Total cash consideration 4,990
The provisional assets and liabilities recognised as a result of the
acquisition are as follows:
£000
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 £82,000 have been charged to
the income statement as administrative expenses.
FridgeXpress' contribution to the Group results
FridgeXpress' contribution to underlying operating profit was a £253,000
profit for the period from 2 May 2023 to 31 October 2023. Revenue during this
period was £4,226,000.
Prior period
On 2 July 2022 the Group acquired 100% of the equity interests of Blakedale
Limited for a consideration of £10,145,000. A provisional purchase price
allocation exercise was undertaken in accordance with IFRS 3 'Business
Combinations', which identified net assets acquired of £6,189,000, resulting
in goodwill of £3,956,000 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 £4.6m (H1 2023: £4.1m)
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 £5.6m (H1 2023: £6.5m)
8 Including intersegment revenue of £58.4m (H1 2023: £nil)
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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