REG - ZIGUP PLC - Preliminary Results
10/07/2024 07:00
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RNS Number : 7661V ZIGUP PLC 10 July 2024
10 July 2024
This announcement contains inside information
ZIGUP PLC
("ZIGUP" or the "Group" or the "Company")
Strong underlying results with positive pipeline, improving vehicle supply and
growing footprint
ZIGUP plc (LSE:ZIG), the leading integrated mobility solutions platform
providing services across the vehicle lifecycle, is pleased to announce its
results for the full year ended 30 April 2024.
Full Year results Reported Underlying(1)
12 months ended 30 April 2024 2023 Change 2024 2023 Change
£m £m £m £m
Revenue 1,833.1 1,489.7 23.0% 1,520.6 1,336.9 13.7%
EBIT 195.1 202.0 (3.4%) 213.7 189.2 13.0%
Profit before tax 162.1 178.7 (9.3%) 180.7 165.9 8.9%
Earnings per share 55.2p 60.3p (8.5%) 61.4p 55.6p 10.4%
(1) excludes vehicle sales revenue, exceptional items, amortisation of
acquired intangible assets and adjustments to underlying depreciation. See
GAAP reconciliation.
Other measures 2024 2023 Change
£m £m
Net debt 742.2 694.4 6.9%
Fleet assets(2) £1.30bn £1.16bn 11.8%
Leverage 1.5x 1.5x n/a
EBITDA 446.3 412.2 £34.1m
ROCE 14.5% 14.1% +0.4ppt
Dividend per Share 25.8p 24.0p 1.8p
(2) referring to the net book value of vehicles for hire.
Martin Ward, CEO of ZIGUP, commented:
"The business has continued to deliver on the strategy we set out back in 2020
and I am delighted to be reporting another year of record performance, with
strong underlying growth. We have stepped up investment in our people and
locations over the past year, which will increase our capacity and we have
seen continued strong demand for our integrated mobility solutions from
existing and new partners, which provides future quality revenues.
We refreshed our core purpose to 'Keeping our customers moving, smarter' and
our broadening capabilities has generated more opportunities to cross sell our
platform services. Vehicle supply is normalising, as expected, and we are well
placed to fulfil demand into selected growth sectors. We expect to invest
further in renewing our fleet over the next 24 months which supports our
balance sheet value and produces strong levels of future cash generation."
Key financial highlights
· Total revenue growth up 23.0%; underlying revenue up 13.7%
supported by both annualisation of FY2023 contracts and increased activity
within recent Claims & Services contracts (revenues up 20%)
· Vehicle hire revenue rose 6.4%; Spain up 8.4% supported by VOH
growth of 4.1%, UK&I up 4.6% with growth in specialist vehicles and
ancillary products; plus careful pricing actions to mitigate cost inflation
· Disposal profits of £61.9m (2023: £51.5m); higher total sales
volumes of 36,800 (2023: 18,200): LCV residual values moderating in line with
our expectations, 7,000 cars and other non-fleet vehicles disposed at minimal
PPUs
· Spain rental margin at 18.2% (2023: 18.5%), UK&I rental
margin up 0.4ppts to 15.5% (2023: 15.1%); Claims & Services EBIT margin of
6.0% (2023: 6.4%) reflects business mix on strong revenue growth
· Reported PBT of £162.1m (2023: £178.7m); underlying PBT up 8.9%
through growth in Claims & Services profit and in rental profit (+7.2%);
contributions from higher disposal profits and lower corporate costs partially
offset by £9.7m additional net finance costs
· EBITDA grew 8.3% to £446.3m (2023: £412.2m) due to strong
operational performance; net capex steady at £281.9m, principally replacement
capex where UK&I fleet age reduced by 1.7 months and Spain fleet 2.6
months with vehicle supply improving
· Strong balance sheet with stable 1.5x leverage (2023: 1.5x),
supported by fleet assets of £1.30bn
(2023: £1.16bn) and over £240m of facility headroom
· Shareholder returns: 7.5% increase in full year dividend to
25.8p; third £30m share buyback programme concluded in June 2024, which will
achieve a 4% increase in EPS when fully reflected
Business highlights
· Group fleet stable at over 128,000 vehicles (H1 2024: 129,300),
with Spain up 3,700 where supply availability offset UK&I supply
challenges. Improving access to supply in calendar year 2024, expected
beneficiary of recent Zero Emission Vehicles mandate
· Broadening of rental and ancillary services offerings: including
specialist vehicle support, growth in B2C sales channels, enhanced e-auction
solutions. Good pipeline of corporate fleet opportunities
· Claims & Services business enjoyed continued growth and
strong pipeline: Lex Autolease multi-service contract live in September;
further multi-year contract extensions agreed. Investment in productivity and
improving customer support including greater automation
· Investment in increasing capacity and efficiency through
investment in nine new facilities opened or nearing completion across UK&I
and Spain. Initiatives focused on bringing businesses closer together to
provide a more seamless and digital customer experience progressing well
· Supporting net zero transition: introduction of micro-mobility
rental solution and solar/battery installation services; growing use of green
parts in bodyshop repairs. Increasing customer demand for advisory support
and fleet emissions data. e-LCVs on hire up 133%.
Post year-end event
· Corporate rebranding launched in May 2024, including renaming to
ZIGUP plc with stock market ticker LSE:ZIG; new strategic framework reflecting
growth aspirations and forward-looking purpose, focused on keeping customers
mobile, smarter
Outlook
We have a healthy prospect pipeline across our businesses and demand for our
services remains robust. LCV residual values have performed well as we had
anticipated over the last few years and we expect they will moderate over the
short term but remain elevated. We are confident that our proposition will
continue to offer sustainable returns and that we will benefit from our
differentiated position in the market, enabling the business to drive positive
growth in underlying revenues, profitability and cashflow.
Analyst Briefing and Investor Meet presentation
A hybrid presentation for sell-side analysts and institutional investors will
be held at 9.30am today, 10 July 2024. If you are interested in attending,
please email Buchanan on zigup@buchanan.uk.com (mailto:zigup@buchanan.uk.com)
to request the joining details. This presentation will also be made
available via a link on the Company's website www.zigup.com.
The Company will also provide a roadshow presentation via the Investor Meet
Company platform on Monday 15th July 2024 at 2.30pm for institutional and
retail investors. Click here to register:
https://www.investormeetcompany.com/zigup-plc/register
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investormeetcompany.com%2Fzigup-plc%2Fregister&data=05%7C02%7CRichard.Podmore%40northgateplc.com%7Ca88355ff85774439ada708dc9b6b86ce%7C38ef2495404a410f9ec8cbb8885ba22d%7C1%7C0%7C638556133328340919%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=M%2Fi6w0w8md4n%2BVJGcxW0BreLWrYcA0Ogz1wk7HeBJvM%3D&reserved=0)
Spanish 'spotlight' session: Northgate Spain
A site visit providing greater insight into our Spanish operations is planned
for Thursday 26 September. Spaces are limited but expressions of interest
should be directed to investor@zigup.com (mailto:investor@zigup.com) .
Relevant presentations will subsequently be made available via a link on the
Company's website www.zigup.com (http://www.zigup.com) .
This announcement is made on behalf of ZIGUP plc by Philip Vincent, Chief
Financial Officer of ZIGUP 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:
ZIGUP is the leading integrated mobility solutions provider, with a platform
providing services across the vehicle lifecycle to help people keep on the
move, smarter. The Group offers mobility solutions to businesses, fleet
operators, insurers, OEMs and other customers across a broad range of areas
from vehicle rental and fleet management to accident management, vehicle
repairs, service and maintenance.
The mobility landscape is changing, becoming ever more connected and ZIGUP
uses its knowledge and expertise to guide customers through the
transformation, whether that is more digitally connected solutions or
supporting the transition to lower carbon mobility through providing EVs,
charging solutions and consultancy.
The Group's core purpose is to keep its customers mobile, smarter - through
meeting their regular mobility needs or by servicing and supporting them when
unforeseen events occur. With our considerable scale and reach, ZIGUP's
mission is to offer an imaginative, market-leading customer proposition and
drive enhanced returns for shareholders by creating value through sustainable
compounding growth. The Group seeks to achieve this through the delivery of
its new strategic framework of Enable, Deliver and Grow.
ZIGUP supports its customers through a network and diversified fleet of
approximately 130,000 owned and leased vehicles, supporting over 900,000
managed vehicles, with over 180 branches across the UK, Ireland and Spain and
a specialist team of over 7,500 employees. We are a trusted partner to many of
the leading insurance and leasing companies, blue chip corporates and a broad
range of businesses across a diverse range of sectors. Our strength comes not
only from our breadth of our award-winning solutions, but from our extensive
network reach, our wealth of experience and continual focus on delivering an
exceptional customer experience. Further information regarding ZIGUP plc can
be found on the Company's website: www.zigup.com (http://www.zigup.com)
Appendix: GAAP reconciliation
Consolidated income statement reconciliation
Year ended 30 April Footnote Statutory Adjustments Underlying Statutory Adjustments Underlying
(below) 2024 2024 2024 2023 2023 2023
£m £m £m £m £m £m
Revenue (a) 1,833.1 (312.5) 1,520.6 1,489.7 (152.8) 1,336.9
Cost of sales (b) (1,400.2) 312.5 (1,087.7) (1,054.1) 106.3 (947.8)
Gross profit 432.9 - 432.9 435.6 (46.5) 389.1
Administrative expenses (c) (239.1) 18.6 (220.5) (236.1) 33.7 (202.4)
Operating profit 193.8 18.6 212.4 199.5 (12.8) 186.7
Income from associates 1.3 - 1.3 2.5 - 2.5
EBIT 195.1 18.6 213.7 202.0 (12.8) 189.2
Finance income 0.6 - 0.6 0.1 - 0.1
Finance costs (33.6) - (33.6) (23.4) - (23.4)
Profit before taxation 162.1 18.6 180.7 178.7 (12.8) 165.9
Taxation (d) (37.1) (4.5) (41.6) (39.5) 1.9 (37.6)
Profit for the year 125.0 14.1 139.1 139.2 (10.9) 128.3
Shares for EPS calculation 226.3m 226.3m 230.8m 230.8m
Basic EPS 55.2p 61.4p 60.3p 55.6p
Adjustments comprise: Footnotes
Revenue: sale of vehicles (a) (312.5) (152.8)
Cost of sales: revenue sale of vehicles net down (a) 312.5 152.8
Depreciation adjustment (Note 6) - (46.5)
Cost of sales (b) 312.5 106.3
Gross profit (a)+(b) - (46.5)
Exceptional items (Note 6) - 13.5
Amortisation of acquired intangible assets (Note 6) 18.6 20.2
Administrative expenses (c) 18.6 33.7
Adjustments to EBIT 18.6 (12.8)
Adjustments to PBT 18.6 (12.8)
Tax on exceptional items (Note 6) (4.5) (2.1)
Other tax adjustments - 4.0
Tax adjustments (d) (4.5) 1.9
Adjustments to profit 14.1 (10.9)
OPERATING REVIEW
Group overview
The importance of customer experience remains at the heart of the Group's
commercial proposition and has been a key driver of the Group's performance in
recent years. Our strategic and operational actions this year have focused on
continuing to enhance our delivery of a differentiated and market-leading
suite of end-to-end mobility services for our customers. This commitment
to the client proposition has driven strong growth in underlying profit before
tax of 8.9%.
Continued volume growth in our Claims & Services business and in rental
revenue in both UK&I and Spain together reflect the ongoing strong demand
across our geographies and the attractiveness of our integrated mobility
platform. This is underpinned by the structural trends of growth in
outsourcing, and increasing connectedness within the mobility environment and
also in vehicles themselves. This connectedness enhances the benefits for
customers taking multiple services from us, reducing operational friction, and
the potential for greater cost efficiencies from further growth of the
platform.
We have also introduced greater process automation and are developing further
digital tools to expand the customer proposition and streamline our
organisational structure, delivering simplified customer relationships and
focused account management priorities.
Vehicle supply dynamics improved throughout FY2024, enabling greater fleet
replacement. This is where our strong balance sheet gives us a competitive
advantage and flexibility in quickly responding to fleet opportunities. The
shortfall in industry supply continues to impact parts availability and
supports long-term residual values.
Alongside fleet, we have made significant investments into our locations,
people and processes which are designed to grow capacity, build efficiencies
and improve the customer journey. We are very mindful of the importance of
long-term customer retention through providing high quality value-added
services. We have sought to mitigate cost inflation through procurement
activity and changes to processes within branches; these have been supported
by careful pricing increases.
Our new strategic framework and brand refresh was launched in May 2024
including the new corporate name, ZIGUP plc. It reflects our growth
aspirations and forward-looking purpose, focused on keeping our customers
mobile, smarter.
Vehicle supply
A continued rebound in automotive production has supported greater vehicle
supply availability and improved future visibility. As a result, average UK
lead times from order to delivery reduced from over 150 days in early 2023 to
below 50 days by the end of the financial year, closer to historic
levels. While list prices have continued to rise, the frequency and scale of
increases has reduced, along with greater manufacturer incentives to support
high volume purchases. Spain has seen a similar trend and a return to
2019-lead times for most vehicles.
In both markets, residual values have softened as expected over the course of
the year, but there remains a shortfall of vehicles in the used market in the
short term. We expect residual markets to remain strong due to this
shortfall in used supply combined with higher pricing of new vehicles and also
potentially more limited volumes of traditional LCVs as manufacturers move
away from ICE production.
Model availability also improved in the second half of the year with an
increase in the supply of smaller vans into the UK which are in high demand,
increasing to a quarter of new vehicle supply. With the implementation of
the ZEV mandate in the UK in early 2024 designed to support vehicle
decarbonisation, there is greater emphasis from OEMs on selling EVs.
As a result, these are becoming more commonly bundled with petrol and diesel
(ICE) vehicles for volume sales. This has created attractive opportunities
for purchasers of our scale and we expect to benefit from access to greater
bundled volumes and support on internal combustion engine vehicles from OEMs
impacted by limitations from the ZEV mandate.
Strategic progress
Since 2020, our corporate strategy has been focused on delivering the benefits
of our end-to-end range of products and services, which together offer
differentiated mobility solutions across the vehicle lifecycle, through an
integrated platform and which has achieved substantial underlying revenue
growth over this period.
In early 2024 we put in place a simplified reporting structure and established
an Executive Committee in order to better assess and capitalise on the breadth
of opportunities before us. Alongside the rebranding exercise we also
introduced a refreshed strategic framework under three new pillars, with
progress under these described below: -
Enable: Joined up, sustainable smarter mobility solutions
This encompasses developing sustainable products, services and operational
capabilities that embrace technologies which enable increasingly connected
mobility within our customer proposition.
Within UK&I Rental we have been focused on improving workshop and branch
productivity and connectivity, with customer-focused digital apps
and providing more data insights and emissions data to fleet customers to
support their fleet management and reporting requirements. In Spain Rental we
are preparing for the launch of an enhanced e-auction platform for fleet
disposals to improve the experience for prospective used vehicle purchasers,
and we have migrated our telematics offering to a next-gen provider to
maximise the use of data intelligence.
Investment within our Claims & Services business has included further
deployment of robotics within claims process management, connected analytics
within the bodyshops, along with tooling such as plastic bumper welding to
reduce the cost to repair and level of waste.
Deliver: A differentiated & responsible customer experience
Deliver is centred around being trusted by our customers to provide expert
advice and service that exceeds expectations, delivering industry-leading
responsiveness and operational efficiencies.
Throughout all businesses we have been reinforcing our 'customer first'
culture with enhanced training and tools to support the customer experience.
Against the backdrop of constrained vehicle availability, the rental
businesses have worked tirelessly and customers have understood the challenges
facing the sector. Our strong feedback routes have reflected the significant
efforts made to keep our customers mobile, with Auxillis NPS at over 65% and
'Excellent' UK&I rental Trustpilot scores significantly above industry
levels.
Further enhancements include simplifying access to the full range of products
and ancillary services and streamlining and digitalising processes and
customer channels, such as a direct hire booking app.
We believe these actions will help grow our share of wallet from existing
customers as we provide a broader range of services through a single
touchpoint and with a more holistic view of a customer's total needs. This has
already been seen at Blakedale where the top three customers each grew their
fleets over 30% with us and we broadened the range of vehicles provided. Spain
has invested in a new CRM system to better monitor and respond to customer
requirements, and expanded to two-shift workshop patterns to increase
capacity.
Grow: Broadening customers & markets, and an expanded product offering
We are continually exploring opportunities to responsibly grow the business's
breadth, size and capabilities, including into both complementary and new
products and geographies.
During the year we opened nine new facilities across the UK and Spain,
expanding the footprint and increasing capacity in a number of key locations.
We will add further locations in the coming year and continue to explore
inorganic opportunities to grow the business, focused on achieving long term
earnings growth and sustainable shareholder value.
Claims & Services added further specialist segments to its customer base
and continued to expand the number of customers taking more than one service
from us on multi-year contracts. Our product offering was further expanded
through the acquisition of FridgeXpress at the start of the year adding
refrigerated solutions to the UK rental proposition.
This was enhanced both by the launch of a corporate-focused car rental
solution and the introduction of a broad range of micro-mobility rental
solutions offering light electric vehicles suitable for urban and
pedestrian-focused areas such as waste management and parks, where a number of
our customers have contracts. Our pipeline across the business remains very
strong.
Supporting sustainability
For customers, our Drive to Zero programme supports fleet owners in
identifying the right strategy and first steps in utilising EVs, or improving
their fleet management and driver behaviour to reduce emissions. Over the
year, we held 10 open days and driving courses with over 300 customers
attending with the opportunity to test out new vehicles.
In the UK&I, e-LCVs on hire more than doubled in the year to c.1,000 units
with a number of fleets renting EVs at scale; the largest now has over 100 EVs
and continues to grow with more orders after the year end. In Spain, the
business won EU grants to support the purchase of 500 additional EVs and 3,000
telematics units. The business is also preparing a fleet software tool to
allow managers to continually assess the potential to migrate vehicles on
their fleet to EVs. Our ChargedEV business added solar and battery solutions
to its product portfolio, and we have developed a range of key partnerships
with energy providers to offer bundled solutions for domestic and commercial
customers.
Within our business, we have also made clear progress in meeting our
sustainability ambitions. Over 90% of our company cars will be EV or hybrid
vehicles by the end of the current year, we diverted 99% of our waste from
landfill, switched to a more sustainable paint supply and introduced a new
waste and resource efficiency policy to promote the greater use of circular
economy principles. EV charging is now installed in 75% of our UK sites and in
most of our Spanish urban sites, and over a third of all employees have
undertaken EV awareness learning modules.
Our people
Our people are critical to our continued growth, and we invest in their
training and career journeys as we know these are key elements in maximising
retention in a challenging labour market. One third of roles filled in the
year were sourced internally, with the majority achieved through promotion.
Our key people-engagement metric rose again, up 1ppt to 75% on a strong 83%
engagement.
Notably, there was a 13ppt increase to 75% in those stating they understood
the Group's success criteria and their role in it, and over 80% felt the Group
was well positioned for growth. The number of industry awards won across the
business is testament to the talent and commitment of our people.
Our apprentice schemes are a key route for us to develop new technical talent,
and there are now over 400 apprentices and trainers working in the Group.
Over the past year, the retention rate for apprentices exceeded 90%,
reflecting the importance we placed on providing clarity and support for a
career with ZIGUP from the start. Over 2,000 days of technical training were
undertaken across the Group, as we ensured all of our workshop and bodyshop
teams were properly equipped to manage what is an increasingly technical and
connected automotive environment.
Strong financial capacity and sustainable shareholder returns
We adopt a conservative and long-term value-oriented approach to capital
allocation, which is appropriate for the industry in which we operate and
where leverage is a natural part of the business model. We have a strong
balance sheet which provides the business with the ability to be both
long-term in our organic investment approach and highly responsive to the
increasing range of fleet acquisition opportunities as well as agile in our
approach to M&A opportunities.
EBITDA of £446m for the year delivered substantial cashflow to support
business growth, progressive dividends and share buybacks. Our balance sheet
and business model is attractive to lenders, with a diverse customer base and
an asset-backed profile supported by £1.3bn of vehicle fleet compared to net
debt of £742m. Leverage remained well within our 1-2x target range,
finishing the year at 1.5x, in line with the prior year while also enabling
substantial investment in the fleet and returns to shareholders.
Given our continued confidence in the outlook for the business, subject to
shareholder approval, the Board has proposed a final dividend of 17.5p per
share (2023: 16.5p) to be paid on 27 September 2024 to shareholders on the
register as at close of business on 30 August 2024, bringing the total
dividend to 25.8p (2023: 24.0p), a 7.5% increase on the prior year.
The Board continues to view share buybacks as a useful element within our
capital allocation framework alongside a progressive dividend and will keep
further share repurchase activities under review. The third £30m tranche of
our buyback programme was completed in June 2024 and in total across all three
programmes has acquired 25.3m shares since 2022, equating to 10% of ordinary
share capital as a risk-free enhancement of shareholder returns.
Financial review
Group revenue and EBIT
Year ended 30 April 2024 2023 Change Change
£m £m £m
Revenue - Vehicle hire 649.3 610.5 38.8 6.4%
Revenue - Vehicle sales 312.5 152.9 159.6 104.4%
Revenue - Claims and services 871.4 726.3 145.0 20.0%
Total revenue 1,833.1 1,489.7 343.4 23.0%
Rental profit 109.7 102.3 7.4 7.2%
Disposal profit 61.9 51.5 10.4 20.2%
Claims and services profit 51.4 44.5 6.9 15.4%
Corporate costs (10.6) (11.6) 1.1 (9.4%)
Underlying operating profit 212.4 186.7 25.7 13.8%
Income from associates 1.3 2.5 (1.2) (48.6%)
Underlying EBIT 213.7 189.2 24.5 13.0%
Underlying EBIT margin 1 (#_ftn1) 14.1% 14.2% (0.1ppt)
Statutory EBIT 195.1 202.0 (6.9) (3.4%)
Revenue
Total Group revenue, including vehicle sales, of £1,833.1m was 23.0% higher
than prior year while revenue excluding vehicle sales of £1,520.6m (2023:
£1,336.9m), was 13.7% higher than the prior year.
Hire revenues increased 6.4% mainly due to pricing actions to address cost
inflation; average rental VOH was 1.6% lower than the prior year. Spain was
able to grow VOH due to wider availability of new vehicles, whereas the UK
reduced the rentable fleet as the oldest vehicles were defleeted with less
vehicles being available to replace them. Claims and services revenue growth
of 20.0% reflected increased volumes from new business wins.
Vehicle sales revenue increased by 104.4% driven by a 102.2% increase in
vehicles sold as we defleeted our oldest cohort of vehicles.
EBIT
Statutory EBIT reduced by 3.4%, while underlying EBIT of £213.7m increased
13.0% compared to the prior year; reflecting higher disposal profits and
volume growth in Claims & Services. Statutory EBIT included a credit of
£46.5m in the prior year for adjustments to depreciation rates which was
£nil in the current year, amortisation on acquired intangible assets of
£18.6m (2023: £20.2m) and other exceptional items of £nil (2023: £13.5m).
Rental profit increased £7.4m to £109.7m (2023: £102.3m) with a £4.1m
increase in UK&I and an £3.2m increase in Spain. Claims & Services
saw volume growth particularly in fleet management services, coupled with
efficiencies in repair services resulting in an £5.7m increase in underlying
EBIT, including income from associates, to £52.7m (2023: £47.0m).
Total disposal profits for the year of £61.9m were 20.2% higher than the
prior year with 36,800 vehicles sold (2023: 18,200) with residual values
softening in the UK as expected, whilst continuing to be strong in Spain and
remaining higher than pre-COVID-19 levels in both businesses.
UK&I Rental
Year ended 30 April 2024 2023 Change
Underlying financial results £m £m
Revenue - Vehicle hire 2 (#_ftn2) 384.4 367.7 4.6%
Revenue - Vehicle sales 226.9 104.9 116.2%
Total revenue 611.4 472.6 29.4%
Rental profit 59.8 55.6 7.4%
Rental margin % 15.5% 15.1% 0.4ppt
Disposal profit 34.0 37.8 (9.9%)
Underlying EBIT 93.8 93.4 0.4%
EBIT margin % 3 (#_ftn3) 24.4% 25.4% (1.0ppt)
ROCE % 15.1% 16.3% (1.2ppt)
Year ended 30 April 2024 2023 Change
KPIs ('000) ('000)
Average VOH 45.1 48.9 (7.7%)
Closing VOH 43.8 46.5 (5.8%)
Average utilisation % 91% 93% (2ppt)
Highlights
Rental revenue rose 4.6% compared to the prior year, including strong growth
in specialist vehicle operations and ancillary revenues. Together with
carefully managed pricing actions this more than offset headwinds from limited
LCV supply. With demand remaining robust across all customer sectors, the
business worked to maximise availability to deliver on customer requirements,
including growing customer interest in e-LCVs where vehicles on rent more than
doubled.
The acquisition of FridgeXpress added refrigerated vehicle solutions to the
overall customer proposition, which is increasingly offered to rental
customers through more unified relationship management. Ancillary revenues
grew 15% with continued take-up of telematics and Blakedale grew its
specialist fleet by over 35% to 600 vehicles. These combined efforts coupled
with a strong focus on cost discipline contributed to rental margins rising
0.4ppt across the year.
Rental fleet totalled 46,600 at the end of April 2024, 8% lower than the prior
year as we chose to defleet vehicles, but with much greater supply visibility
developing through the year. Vehicle supply improved in the second half of the
year, allowing for greater fleet replacement activity with over 10,000 new
vehicles purchased and a reduction in closing fleet age (excluding leased
fleet) from a peak of 36.7 to 34.0 months at the end of the year. Our
financial capacity has delivered opportunities to acquire vehicles at scale,
including supporting OEMs operating under the new ZEV mandate.
LCV residual values softened but continue to be well above historic levels,
reflecting both increased list prices for new vehicles and continued
undersupply. Disposal profits were £34.0m (2023: £37.8m) with increased
volumes of LCV sales offset by lower PPUs including defleeting of Auxillis
cars (these have more predictable depreciation with minimal PPUs) through
expanding the lower cost Van Monster online platform.
The business has also invested in its locations, processes and people with a
clear focus on delivering an improved customer experience and maximising
vehicle and workshop availability. Trustpilot scores have improved
significantly to 4.7, well above industry averages of 3.3 in the van
rental category. Two new locations were opened alongside a refocus of Van
Monster branch operations.
A car rental initiative targeting a new customer channel was launched in the
year. The business also launched a micro-mobility solution and widened
ancillary services offered in Ireland. ChargedEV added solar and battery
installation solutions and saw a 50% increase in domestic and a 150% increase
in commercial installations, helped by new key energy sector and facilities
management partnerships.
Rental business
Vehicle hire revenue in UK&I was £384.4m (2023: £367.7m), an increase of
4.6%. A 13.3% increase in average revenue per vehicle reflected fleet mix,
rate increases, and was partially offset by a 7.7% reduction in average VOH.
Average VOH of 45,100 was 3,800 lower than the prior year reflecting the
continued shortage in supply of new LCVs.
UK&I's minimum term proposition accounted for 42% of average VOH (2023:
37%). 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 was 15.5% compared to 15.1% in the prior year. Margin reflects
the change in business mix and was maintained through operating efficiencies
and increasing hire rates to offset cost inflation.
Management of fleet and vehicle sales
The closing UK&I rental fleet was 46,600 compared to 50,800 at 30 April
2023. During the year, 10,900 vehicles were purchased (2023: 4,800) and 15,900
vehicles were defleeted (2023: 8,600). The leased fleet increased by 500
vehicles.
The average age of the fleet (excluding leased vehicles) was 34.0 months at
the end of the year which was a 1.7 month decrease from 30 April 2023 as we
have begun to recycle the older cohorts of the fleet upon supply availability
improving in early 2024.
A total of 22,200 vehicles were sold in UK&I during the year which was
118% higher than the prior year (2023: 10,200) including 7,000 cars and other
non-fleet vehicles (2023: 300) including those which had been defleeted from
the Claims & Services fleet and sold via Van Monster.
Disposal profits of £34.0m (2023: £37.8m) decreased 9.9% compared to prior
year with an expected reduction in residual values being partially offset by
increases in sales volumes.
Spain Rental
Year ended 30 April 2024 2023 Change
Underlying financial results £m £m
Revenue - Vehicle hire 274.0 252.7 8.4%
Revenue - Vehicle sales 84.5 47.3 78.8%
Total revenue 358.5 300.0 19.5%
Rental profit 50.0 46.7 6.9%
Rental margin % 18.2% 18.5% (0.3ppt)
Disposal profit 27.8 13.7 102.7%
Underlying EBIT 77.8 60.4 28.7%
EBIT margin % 4 (#_ftn4) 28.4% 23.9% 4.5ppt
ROCE % 14.2% 12.9% 1.3ppt
Year ended 30 April 2024 2023 Change
KPIs ('000) ('000)
Average VOH 55.7 53.6 4.1%
Closing VOH 57.6 54.7 5.2%
Average utilisation % 91% 92% (1ppt)
Highlights
Continued positive market conditions helped Spain Rental achieve rental
revenue growth of 8.4% with total revenues up 19.5%. Our differentiated rental
proposition, focused on the customer experience, encouraged strong demand for
the flexible rental solution in what is a higher interest rate environment for
customers. Revenue growth was supported by much improved access to vehicle
supply and rate increases achieved for both flex and minimum term offerings
which helped to mitigate cost inflation.
Recent new business lines have continued to develop, with rental fleet
supplied through our B2C digital offering up over 110% and revenues from third
party servicing in our workshops rising over 50%. The telematics service was
consolidated through a partnership with a market leading provider, with 11,400
vehicles (+46%) equipped by the end of the year.
Rental margin of 18.2% remained close to the prior year record of 18.5%. This
followed the normal seasonal profile where a higher volume of repair costs are
typically booked within the second half. Margins were supported by a clear
focus on mitigating cost inflation through hire rates, whilst optimising
utilisation levels and strong cost discipline, including a greater saving from
using green recycled parts in repairs.
The vehicle supply market was relatively stable throughout the year, allowing
17,600 fleet purchases from a broad range of OEMs. Closing VOH was up over
5% and the average age of the fleet fell to 30.1 months in April 2024, down
2.8 months from the peak in November 2022. The increase in disposal profits
to £27.8m (2023: £13.7m) was principally due to vehicle sales volumes of
14,500, 84% higher than in the prior year, together with continuing strength
in residual values. This was reflected in disposal PPUs rising 10% to
£1,900.
Investment in new locations saw the León branch open in the first half,
followed by a new branch in Barcelona and the relocation and expansion of the
Cadiz branch. This capacity growth was also supported by a recruitment drive
for workshop technicians in a tight labour market.
EV and hybrid vehicles within the fleet increased 65% over the year, as part
of a range of low carbon initiatives. This included a partnership with
Iberdrola to provide an end-to-end vehicle and green energy infrastructure
offering. The business also won grants (EU funds programme) to support
buying EVs and installing telematics in fleet vehicles to help optimise fuel
efficiency.
Rental business
Hire revenue in Spain increased 8.4% to £274.0m (2023: £252.7m), driven by
the increase in average VOH and managed increases in pricing. Closing VOH
increased 5.2% to 57,600.
Spain's minimum term proposition accounted for 36.6% (2023: 35%) of average
VOH. The average term of these contracts is approximately three years,
providing greater certainty of future generated revenues.
The rental margin was 0.3ppt lower than the prior year at 18.2%, with pricing
increases partially offsetting cost inflation.
The increase in hire revenue resulted in a 6.9% increase in rental profits to
£50.0m (2023: £46.7m).
Management of fleet and vehicle sales
The closing Spain rental fleet was 65,100 compared to 61,400 vehicles at 30
April 2023. During the year 17,600 vehicles were purchased (2023: 13,200) and
13,900 vehicles were de-fleeted (2023: 9,400 vehicles).
The average age of the fleet at the end of the year was 30.1 months, 2.6
months lower than at the same time last year, as vehicle availability has
improved and we replaced the oldest of our fleet.
A total of 14,500 (2023: 7,900) vehicles were sold in Spain during the year,
83.5% higher than the prior year reflecting a higher rotation of the fleet
with new vehicles being more readily available.
Disposal profits of £27.8m (2023: £13.7m) increased 102.7% due to the
increased number of vehicles sold and continued strength in residual values,
resulting in an increase in PPU on disposals to £1,900 (2023: £1,700).
Claims & Services
Year ended 30 April 2024 2023 Change
Underlying financial results £m £m
Revenue - Claims and services 5 (#_ftn5) 882.3 738.9 19.4%
Revenue - Vehicle sales 6 (#_ftn6) 77.9 31.0 151.7%
Total revenue 960.3 769.8 24.7%
Gross profit 171.0 151.5 12.9%
Gross margin %(7) 19.4% 20.5% (1.1ppt)
Operating profit 51.4 44.5 15.5%
Income from associates 1.3 2.5 (48.6%)
Underlying EBIT 52.7 47.0 12.1%
EBIT margin % 7 (#_ftn7) 6.0% 6.4% (0.4ppt)
ROCE % 17.6% 15.9% 1.7ppt
Highlights
Claims and services revenue increased 19.4% on the prior year, with increased
volumes from existing customers together with new contracts going live early
in the financial year. These included full-service contracts for Abacai
insurance and Lex Autolease which quickly reached expected activity levels.
Externally owned fleet vehicles covered by our repair and claims management
services now total over 900,000, broadly equally split between insurer and
other fleets.
One of our key insurance partners extended their credit and direct hire
multi-year contracts out to 2026, and other renewals included a blue-light
incident management contract, reflecting the breadth of our offering and
customer base. In the first half, the business also expanded its product
offering to one of its largest insurance partners, adding repair capacity
support to a new specialist customer segment. Vehicle sales of £77.9m reflect
recycling of the car fleet, the majority of which was sold through Van
Monster.
The business has worked hard to manage cost inflation, making progress in
productivity metrics, including in our repair centres. Improving timeframes
within parts supply chains helped reduce repair lead times, also resulting in
average replacement hire lengths moderating closer to historic levels.
Our key customer partners appreciate the challenges presented by cost
inflation and labour shortages, with agreements on price increases in place.
This was also reflected in industry guide to retail charges noting a 12%
increase in repair labour rates in the first half. EBIT grew over 12% while
EBIT margin of 6.0% was 0.4 ppts lower than the prior year. This principally
reflects greater direct hire and repair, and fleet management services within
the product mix rather than cost inflation, as the business worked hard to
achieve supply chain cost efficiencies, such as for paint and vehicle parts.
There remains a pipeline of contract opportunities in active discussion across
the product and margin range, as existing and potential customers see the
benefit of working with a trusted, multi-service and expert partner.
The business has invested in its processes and people, introducing a greater
use of robotics and new client facing apps and client digital interfaces to
further digitalise and automate highly process-driven activities within claims
management. At the same time the business continues to support its people with
enhanced training and expansion of our apprentice scheme, where there are now
over 135 apprentices within the business. Repair capacity was also expanded
through investment in three new bodyshop repair facilities as well as workshop
tools supporting higher productivity and parts reuse.
Revenue and profit
Revenue for the year (excluding vehicle sales) increased 19.4% to £882.3m
(2023: £738.9m) reflecting the full impact of recent contract wins. These
favourable variances were offset by a reduction in credit hire length in
comparison to the prior year. The prior year was affected by macro challenges
in supply chains for parts and labour with those conditions seeing improvement
in the current year.
Gross margin of 19.4% declined 1.1ppt (2023: 20.5%) due to volume mix across
each business within the segment.
EBIT increased 12.1% to £52.7m reflecting both growth in repairs services
driven by parts and paints margins coupled with technician efficiency and
fleet management services with full year impacts of recent contract wins. EBIT
margin lowered slightly to 6.0% vs. 6.4% in the prior year due to volume mix.
Management of fleet
The total fleet in Claims & Services was 16,500 vehicles at the end of the
year (2023: 18,500) and the average fleet age (including leased vehicles) was
16 months (2023: 15 months). This reflects the lower fleet holding period than
in the rental businesses due to the different usage of vehicles and the
optimal holding period of this vehicle mix.
Group PBT and EPS
Year ended 30 April 2024 2023 Change Change
£m £m £m
Underlying EBIT 213.7 189.2 24.5 13.0%
Net underlying finance costs (33.0) (23.3) (9.7) 41.7%
Underlying profit before taxation 180.7 165.9 14.8 8.9%
Statutory profit before taxation 162.1 178.7 (16.6) (9.3%)
Underlying effective tax rate 23.0% 22.6% - 0.4ppt
Underlying EPS 61.4p 55.6p 5.8p 10.4%
Statutory EPS 55.2p 60.3p (5.1)p (8.5%)
Profit before taxation
Underlying PBT was 8.9% higher than prior year reflecting the higher EBIT
across the Group. Statutory PBT was 9.3% lower than the prior year, with £nil
net adjustment for changes to depreciation rates on the older fleet compared
to £46.5m credit in the prior year.
Exceptional items
During the year, there were no items that were recognised as exceptional
items. Exceptional costs in the prior year of £13.5m arose from the
impairment of goodwill and other intangibles of NewLaw.
Amortisation of acquired intangibles is not an exceptional item as it is
recurring. However, it is excluded from underlying results in order to provide
a better comparison of performance of the Group. The total charge for the year
was £18.6m (2023: £20.2m). Depreciation rate adjustments of £nil (2023:
£46.5m credit) on vehicles purchased before FY2021 have been excluded from
underlying results in order to better compare results over time as explained
further below.
Depreciation rate changes
When a vehicle is acquired, it is recognised as a fixed asset at its cost net
of any discount or rebate received. The cost is then depreciated evenly over
its rental life, matching its pattern of usage down to the expected future
residual value at the point at which the vehicle is expected to be sold net of
directly attributable selling costs.
Accounting standards require a review of residual values during a vehicle's
useful economic life at least annually, with changes to depreciation rates
being required if the expectation of future values changes significantly.
Matching of future market values of vehicles to net book value (NBV) on the
estimated disposal date requires significant judgement for the following
reasons:
• Used vehicle prices are subject to short term volatility
which makes it challenging to estimate future residual values;
• The exact disposal age is not known at the point at which
rates are set and therefore the book value at disposal date is not certain;
and
• Mileage and condition are the key factors in influencing the
market value of a vehicle. These can vary significantly through a vehicle's
life depending upon how the vehicle is used.
Due to the above uncertainties, a difference normally arises between the NBV
of a vehicle and its actual market value at the date of disposal. Where these
differences are within an acceptable range they are adjusted against the
depreciation charge in the income statement. Where these differences are
outside of the acceptable range, changes must be made to depreciation rate
estimates to better reflect market conditions and the usage of vehicles.
Residual values have increased significantly in recent years due to the
disruption of new vehicle supply that has increased demand for used vehicles.
Uncertainty to the extent and longevity of this buoyancy in residual values
meant that there were a number of vehicles on our fleet where the depreciated
book value was below or very close to the expected residual value at disposal.
In line with the requirements of accounting standards and as previously
disclosed, a decision was made to reduce depreciation rates from 1 May 2022 on
certain vehicles remaining on the fleet which were purchased before FY2021.
The actual phasing of the adjustment will change if these vehicles are held
for a longer or shorter period than anticipated. The depreciation rate change
is expected to impact the statutory income statement over the remaining
holding period of those vehicles as follows:
£m FY2023 FY2024 FY2025 FY2026 FY2027 Total
Reduced depreciation 55.1 38.3 15.7 4.1 - 113.2
Reduced disposal profits (8.5) (38.3) (40.5) (22.3) (3.6) (113.2)
Updated expected impact on statutory EBIT 46.6 - (24.8) (18.2) (3.6) -
Previously expected impact on statutory EBIT 46.5 12.7 (28.3) (26.4) (4.5) -
No further depreciation rate changes have been made on the existing fleet
since the impact on EBIT was outlined last year. The updated phasing of the
adjustment relates to an updated expectation of refreshing the older fleet
more quickly than originally envisaged. This has been the case in the current
year due to better availability of new vehicles than previously expected.
The impact of the changing depreciation rates on this component of the fleet
will re-phase statutory EBIT over this five-year period but will have no
impact on underlying results, no overall impact on statutory profit over the
life of the fleet and does not impact cash.
Depreciation rates on vehicles purchased in FY2025 will be set based on
management's best estimates of future residual values when those vehicles are
sold, with holding periods ranging from 12 to 60 months.
Interest
Net underlying finance charges increased to £33.0m (2023: £23.3m) due to
higher average debt and the increase in floating interest rates over the year.
Interest rates are significantly sheltered due to holding approximately 65% of
borrowing as fixed rate debt.
Taxation
The Group's underlying tax charge was £41.6m (2023: £37.6m) and the
underlying effective tax rate was 23.0% (2023: 22.6%). The statutory effective
tax rate was 22.9% (2023: 22.1%).
Earnings per share
Underlying EPS of 61.4p was 5.8p higher than prior year, reflecting increased
profits in the year and a 1.5p in year impact of the share buyback programme.
Statutory EPS of 55.2p was 5.1p lower, reflecting the movement in underlying
EPS being offset by the movement in exceptional items and credits recognised
in the prior year with respect to deprecation rates adjustments which are not
included within the underlying results.
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.
Share buyback programme
The Group completed its initial £60m share buyback programme in December
2022. A further £30m share buyback programme commenced in August 2023 and was
completed in June 2024. During the year to 30 April 2024, 7,104,291 shares
were purchased for a total consideration of £24.9m.
Group balance sheet
Net assets at 30 April 2024 were £1,043.4m (2023: £994.6m), equivalent to
net assets per share of 459p (2023: 434p). Net tangible assets at 30 April
2024 were £816.4m (2023: £752.9m), equivalent to a net tangible asset value
of 359p per share (2023: 328p per share).
The calculations above are based on the number of shares in issue at 30 April
2024 of 246,091,423 (2023: 246,091,423) less treasury shares of 18,981,862
(2023: 16,877,571).
Gearing at 30 April 2024 was 90.9% (2023: 92.2%) and ROCE was 14.5% (2023:
14.1%).
Group cash generation
Year ended 30 April 2024 2023 Change
£m £m £m
Underlying EBIT 213.7 189.2 24.5
Depreciation and amortisation 8 (#_ftn8) 232.6 223.0 9.6
EBITDA 446.3 412.2 34.1
Net replacement capex 9 (#_ftn9) (280.2) (155.6) (124.6)
Lease principal payments 10 (#_ftn10) (65.0) (65.1) 0.1
Steady state cash generation 101.1 191.5 (90.4)
Working capital and non-cash items (5.6) (0.3) (5.3)
Growth capex(9) (1.7) (122.6) 120.9
Taxation (33.4) (36.6) 3.2
Net operating cash 60.4 32.0 28.4
Distributions from associates 2.0 3.1 (1.1)
Interest and other financing cash flows (28.0) (20.6) (7.4)
Acquisition of business (4.1) (10.0) 5.9
Free cash flow 30.3 4.5 25.8
Dividends paid (56.2) (52.2) (4.0)
Payments to acquire treasury shares (24.9) (53.0) 28.1
Add back: Lease principal payments 11 (#_ftn11) 65.0 65.1 (0.1)
Net cash generated (consumed) 14.2 (35.6) 49.8
Steady state cash generation
Steady state cash generation reduced to £101.1m compared to prior year (2023:
£191.5m). Increases in underlying EBIT have been offset by increases in net
replacement capex as we recycle the fleet.
Net capital expenditure
Net capital expenditure increased by £3.7m at £281.9m reflecting a differing
mix between net replacement capex and growth capex as detailed below.
Net replacement capex was £280.2m, which was £124.6m higher than in the
prior year. This was due to both volume increases as well as increases in
average replacement cost due to change in mix of vehicles and the impact of
price inflation. Net replacement capex was £77.4m higher in UK&I, £81.3m
higher in Spain and £34.1m lower in Claims & Services.
Growth capex of £1.7m (2023: £122.6m) included £48.5m to grow the fleet
size in Spain offset by a £46.8m inflow in UK&I and Claims & Services
where the fleet size was reduced.
Free cash flow
Free cash flow increased by £25.8m to £30.3m (2023: £4.5m) with growth in
underlying EBITDA and a reduction in financing of acquisitions offset by
movements in net capital expenditure as explained above, increases in working
capital and increases in interest and other financing due to higher interest
rates throughout the year.
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 £280.2m, lease payments of £65.0m, growth capex of
£1.7m, the acquisition of FridgeXpress of £4.1m and working capital in
Claims & Services.
Removing the impact of growth capex in the year, the underlying free cash flow
of the Group was £32.0m compared to £127.1m in the previous year due to the
increase in net replacement capex.
Net cash generation
Net cash generated of £14.2m (2023: £35.6m consumed) includes £56.2m of
dividends paid (2023: £52.2m) and £24.9m (2023: £52.9m) for treasury shares
purchased under the share buyback programme. Leverage has been maintained at
1.5x (2023: 1.5x).
Net debt
Net debt reconciles as follows:
As at 30 April 2024 2023
£m £m
Opening net debt 694.4 582.5
Net cash (generated) consumed (14.2) 35.6
Other non-cash items 75.1 57.8
Exchange differences (13.1) 18.5
Closing net debt 742.2 694.4
Closing net debt increased by £47.8m in the year driven by net cash consumed,
non-cash items and exchange differences. Other non-cash items consist of
£73.3m of new leases acquired and £1.8m of other items. Foreign exchange
movements reduced net debt by £13.1m.
Borrowing facilities
As at 30 April 2024 the Group had headroom on facilities of £244m (2023:
£290m), with £582m drawn (net of available cash balances) against total
facilities of £826m as detailed below:
Facility Drawn Headroom Maturity Borrowing
£m £m £m cost
UK bank facilities 493 251 242 Nov 26 6.1%
Loan notes 320 320 - Nov 27-Nov 31 1.3%
Other loans 13 11 2 Nov 24 4.9%
826 582 244 3.5%
The other loans drawn consist of £10m of local borrowings in Spain which were
renewed for a further year in November 2023 and £0.5m of preference shares.
The above drawn amounts reconcile to net debt as follows:
Drawn
£m
Borrowings 582
Unamortised finance fees (5)
Leases 165
Net debt 742
The overall cost of borrowings at 30 April 2024 is 3.5% (2023: 3.1%).
The margin charged on bank debt is dependent upon the Group's net debt to
EBITDA ratio, ranging from a minimum of 1.45% to a maximum of 3.25%. The net
debt to EBITDA ratio at 30 April 2024 corresponded to a margin of 1.95% (2023:
1.95%).
The split of net debt by currency was as follows:
As at 30 April 2024 2023
£m £m
Euro 522.2 388.0
Sterling 224.9 313.2
Borrowings and lease obligations before unamortised arrangement fees 747.1 701.2
Unamortised finance fees (4.9) (6.8)
Net debt 742.2 694.4
There are three financial covenants under the Group's facilities as follows:
As at 30 April Threshold 2024 Headroom 2023
Interest cover 3x 8.3x £132m (EBIT) 10.6x
Loan to value 70% 41% £429m (Net debt) 42%
Debt leverage 3x 1.5x £195m (EBITDA) 1.5x
The covenant calculations have been prepared in accordance with the
requirements of the facilities to which they relate.
Dividend and capital allocation
Subject to approval, the final dividend proposed of 17.5p per share (2023:
16.5p) will be paid on 27 September 2024 to shareholders on the register as at
close of business on 30 August 2024.
Including the interim dividend paid of 8.3p (2023: 7.5p), the total dividend
relating to the year would be 25.8p (2023: 24.0p). The dividend is covered
2.4x by underlying earnings.
The Group's objective is to employ a disciplined approach to investment,
returns and capital efficiency to deliver sustainable compounding growth.
Capital will be allocated within the business in accordance with the framework
outlined below:
• Funding organic growth
• Sustainable and growing dividend
• Inorganic growth
• Returning excess cash to shareholders
The Group plans to maintain a balance sheet within a target leverage range of
1.0x to 2.0x net debt to EBITDA, and during periods of significant growth net
debt would be expected to be towards the higher end of this range. This is
consistent with the Group's objective of maintaining a balance sheet that is
efficient in terms of providing long term returns to shareholders and
safeguards the Group's financial position through economic cycles.
Treasury
The function of the Group's treasury operations is to mitigate financial risk,
to ensure sufficient liquidity is available to meet foreseeable requirements,
to secure finance at minimum cost and to invest cash assets securely and
profitably. Treasury operations manage the Group's funding, liquidity and
exposure to interest rate risks within a framework of policies and guidelines
authorised by the Board of Directors.
The Group uses derivative financial instruments for risk management purposes
only. Consistent with Group policy, Group Treasury does not engage in
speculative activity and it is Group policy to avoid using more complex
financial instruments.
Credit risk
The policy followed in managing credit risk permits only minimal exposures
with banks and other institutions meeting required standards as assessed
normally by reference to major credit agencies. Group credit exposure for
material deposits is limited to banks which maintain an A rating. Individual
aggregate credit exposures are also limited accordingly.
Liquidity and funding
The Group has sufficient funding facilities to meet its normal funding
requirements in the medium term as outlined in the borrowing facilities
section above. Covenants attached to those facilities as outlined above are
not restrictive to the Group's operations.
Capital management
The Group's objective is to maintain a balance sheet structure that is
efficient in terms of providing long term returns to shareholders and
safeguards the Group's financial position through economic cycles.
Operating subsidiaries are financed by a combination of retained earnings and
borrowings.
The Group can choose to adjust its capital structure by varying the amount of
dividends paid to shareholders, by issuing new shares or by adjusting the
level of capital expenditure.
Interest rate management
The Group's bank facilities, other loan agreements and lease obligations
incorporate variable interest rates. The Group seeks to ensure that the
exposure to future changes in interest rates is managed to an acceptable level
by having in place an appropriate balance of fixed rate and floating rate
financial instruments at any time. The proportion of gross borrowings
(including leases arising under HP obligations) held in fixed rates was 65% at
30 April 2024 (2023: 62%).
Foreign exchange risk
The Group's reporting currency is Sterling and 80% of its revenue was
generated in Sterling during the year (2023: 78%). The Group's principal
currency translation exposure is to the Euro, as the results of operations,
assets and liabilities of its Spanish and Irish businesses are translated into
Sterling to produce the Group's consolidated financial statements.
The average and year end exchange rates used to translate the Group's overseas
operations were as follows:
2024 2023
£:€ £:€
Average 1.16 1.15
Year end 1.17 1.14
Going concern
Having considered the Group's current trading, cash flow generation and debt
maturity including severe but plausible stress testing scenarios (as detailed
further in the notes to the financial statements) the Directors have concluded
that it is appropriate to prepare the Group financial statements on a going
concern basis.
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.
Cash Flow Reconciliation 2024 2023
Year ended 30 April
£m £m
Underlying EBIT 213.7 189.2
Add back:
Depreciation of property, plant and equipment 231.3 175.1
Depreciation adjustment not included in underlying EBIT - 46.5
Loss on disposal of assets (0.1) 0.2
Intangible amortisation included in underlying operating profit (Note 6) 1.4 1.2
EBITDA 446.3 412.2
Net replacement capex (280.2) (155.6)
Lease principal payments (65.0) (65.1)
Steady state cash generation 101.1 191.5
Working capital and non-cash items (5.6) (0.3)
Growth capex (1.7) (122.6)
Taxation (33.4) (36.6)
Net operating cash 60.4 32.0
Distributions from associates 2.0 3.1
Interest and other financing costs (28.0) (20.6)
Acquisition of business net of cash acquired (4.1) (10.0)
Free cash flow 30.3 4.5
Dividends paid (56.2) (52.2)
Purchase of treasury shares (24.9) (53.0)
Add back: Lease principal payments 65.0 65.1
Net cash generated (consumed) 14.2 (35.6)
Reconciliation to cash flow statement:
Net decrease in cash and cash equivalents (17.7) (3.9)
Add back:
Receipt of bank loans and other borrowings (33.1) (96.8)
Principal element of lease payments 65.0 65.1
Net cash generated (consumed) 14.2 (35.6)
Cash Flow Reconciliation 2024 2023
Year ended 30 April
£m £m
Reconciliation of capital expenditure
Purchases of vehicles for hire 553.6 398.2
Proceeds from disposals of vehicles for hire (288.0) (128.4)
Proceeds from disposal of other property, plant and equipment (1.4) (0.7)
Purchases of other property, plant and equipment 15.7 7.4
Purchases of intangible assets 2.0 1.8
Net capital expenditure 281.9 278.2
Net replacement capex 280.2 155.6
Growth capex 1.7 122.6
Net capital expenditure 281.9 278.2
UK&I Spain Group
Rental Rental sub-total
2024 2024 2024
£000 £000 £000
Underlying operating profit(12) 93,788 77,789 171,577
Exclude:
Vehicle disposal profits (34,017) (27,834) (61,851)
Rental profit 59,771 49,955 109,726
Divided by: Revenue: hire of vehicles(13) 384,448 274,016 658,464
Rental margin 15.5% 18.2% 16.9%
UK&I Spain Group
Rental Rental sub-total
2023 2023 2023
£000 £000 £000
Underlying operating profit(12) 93,382 60,440 153,822
Exclude:
Vehicle disposal profits (37,746) (13,730) (51,476)
Rental profit 55,636 46,710 102,346
Divided by: Revenue: hire of vehicles(13) 367,694 252,691 620,385
Rental margin 15.1% 18.5% 16.5%
(12) See Note 1 of the financial statements for reconciliation of segment
underlying operating profit to Group underlying operating profit.
(13) Revenue: hire of vehicles including intersegment revenue (see Note 1
of the financial statements).
The following defined terms have been used throughout this document:
Term Definition
Average capital employed A two-point average of capital employed at last day of the current and
previous financial years
Auxillis A business within the Claims & Services operating segment providing fault
and non-fault accident management assistance and related services
B2C Consumer related business activity
Blakedale A business within the UK&I Rental operating segment providing specialist
traffic management services
Capex Capital expenditure
Capital employed Net assets excluding net debt, acquired goodwill and acquired intangible
assets, and the adjustment to net book values for changes to depreciation
rates which have not been reflected in underlying results
CEO Chief Executive Officer
ChargedEV A business within the UK&I Rental operating segment providing EV charging
and solar infrastructure and solutions
Claims & Services The Claims & Services operating segment providing a range of mobility
solutions (previously called Redde)
Disposal profit(s) This is a non-GAAP measure used to describe the adjustment in the depreciation
charge made in the year for vehicles sold at an amount different to their net
book value at the date of sale (net of attributable selling costs)
e-auction The part of the Group which generates vehicles sales revenue through the
Group's online sales platforms
EBIT Earnings before interest and taxation
EBITDA Earnings before interest, taxation, depreciation and amortisation
e-LCV(s) Electrically powered LCV(s)
EPS Earnings per share. Underlying unless otherwise stated
EV(s) Electrically powered vehicle(s)
Facility headroom Calculated as facilities of £826m less net borrowings of £582m. Net
borrowings represent net debt of £742m excluding lease liabilities of £165m
and unamortised arrangement fees of £5m and are stated after the deduction of
£40m of cash balances which are available to offset against borrowings
Free cash flow Net cash generated after principal lease payments and before the payment of
dividends and payments to acquire treasury shares
FridgeXpress A business within the UK&I Rental operating segment providing specialised
temperature controlled vehicle services, introduced into the Group following
the acquisition of Fridgexpress (UK) Limited
FY2021 The year ended 30 April 2021
FY2022 The year ended 30 April 2022
FY2023 The year ended 30 April 2023
FY2024 The year ended 30 April 2024
FY2025 The year ending 30 April 2025
FY2026 The year ending 30 April 2026
FY2027 The year ending 30 April 2027
GAAP Generally Accepted Accounting Practice: meaning compliance with IFRS
Gearing Calculated as net debt divided by net tangible assets
Growth capex Growth capex represents the cash consumed in order to grow the total owned
rental fleet or the cash generated if the fleet size is reduced in periods of
contraction
H1/H2 Half year period. H1 being the first half and H2 being the second half of the
financial year
ICE vehicles Vehicles powered by an internal combustion engine
IFRS International Financial Reporting Standards
Income from associates The Group's share of net profit of associates accounted for using the equity
method
LCV Light commercial vehicle: the official term used within the UK and European
Union for a commercial carrier vehicle with a gross vehicle weight of not more
than 3.5 tonnes
Lease principal payments Principal payment on leases recognised under IFRS 16 (Leases)
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
NewLaw A business within the Claims & Services operating segment providing legal
services
Non-GAAP A financial metric used which is not defined under GAAP
Non-ICE vehicles Vehicles not powered by an internal combustion engine
NPS Net promoter score: a measure used to gauge customer satisfaction
OEM(s) Original Equipment Manufacturer(s): a reference to our vehicle suppliers
PBT Profit before taxation. Underlying unless otherwise stated
PPU Profit per unit/loss per unit - this is a non-GAAP measure used to describe
disposal profit (as defined), divided by the number of vehicles sold
Rental margin Calculated as rental profit divided by revenue (excluding vehicle sales)
Rental profits EBIT excluding disposal profits
ROCE Underlying return on capital employed: calculated as underlying EBIT (see
non-GAAP reconciliation) divided by average capital employed
Spain Referring to the Spain Rental operating segment
Spain Rental The Northgate Spain operating segment located in Spain and providing
commercial vehicle hire and ancillary services (previously called Northgate
Spain)
Steady state cash generation EBITDA less net replacement capex and lease principal payments
The Company ZIGUP plc (formerly Redde Northgate plc)
The Group The Company and its subsidiaries
UK&I Referring to the UK&I Rental operating segment
UK&I Rental The UK&I Rental operating segment located in the United Kingdom and the
Republic of Ireland providing commercial vehicle hire and ancillary services
(previously called Northgate UK&I)
Underlying free cash flow Free cash flow excluding growth capex
Utilisation Calculated as the average number of vehicles on hire divided by average
rentable fleet in any period
Van Monster A trading name used within the UK&I Rental operating business, when
selling used vehicles to business and retail customers
VOH Vehicles on hire. Average unless otherwise stated
ZEV mandate The Zero Emissions Vehicle mandate: a legal framework introduced by the UK
government to increase the proportion of zero emission vehicles sold in the UK
Principal risks and uncertainties
The world we live in
Risk description
The successful delivery of our strategy is influenced by the world we live in,
and we need to adapt to a changing global environment. Changes in both
economic and environmental conditions in the countries that the Group operates
in or are linked to through our supply chain could affect how we deliver our
services or change the cost base of the business.
Influencing factors
· Changes in economic conditions including economic growth forecasts,
exchange rates, interest rates and inflationary pressures
· Influences of global conflicts on global supply chains
· The impact that environmental conditions such as extreme weather
could have on our operations as well as our impact on the environments in
which we operate
Controls and mitigating activities
• The Group's business model and balance sheet strength provides
resilience to economic downturns, with the flexibility of our offer being
attractive in times of uncertainty
• In the event of a downturn, the Group can manage its fleet flexibly,
generating cash and reducing debt by reducing vehicle purchases or
accelerating disposals
• The cost base related to management of insurance claims and services
is flexible and can be scaled back in response to a downturn in revenue
• Pricing structures remain under review in context of cost inflation
with minimum return thresholds protecting margins
• Credit risk of new and existing customers is continually assessed,
and the Group has a diversified customer base without overreliance on an
individual or group of customers across any sector
• The Group maintains close relationships with key suppliers to ensure
continuity of supply and diversifies the supplier base in periods when supply
becomes restricted
• Foreign exchange exposure is minimised through sourcing supplies in
the same currency as the revenue is generated. Translation risk is managed
through holding a proportion of borrowings in Euro in order to hedge against
the investment in Euro net assets
Our markets and customers
Risk description
We operate in markets undergoing significant transformations both through
changing business models and customer expectations for smarter and
increasingly sustainable mobility. If the Group does not respond to
behavioural, structural, legal, or technological changes in our markets there
is a risk that demand for our services will reduce. Changes to the insurance
market or loss of a key insurance referral partner could adversely impact the
Group's revenues.
Influencing factors
• Structural changes to the rental and insurance and legal services
markets such as consolidation, digitalisation or vertical integration could
impact on the viability of the business model if we are not agile enough to
respond to those trends
• Changes to regulations for operation of ICE vehicles and widening of
low emission zones will change the way in which mobility services will need to
be delivered
• Price competition for an equivalent service, could impact our
ability to attract and retain customers at appropriate rates of return
• Increases in insurance referral rates or cost increases which cannot
be passed on through claims could impact viability of returns
• Loss of a major customer or insurance referral partner could diminish
returns if the cost base is not managed appropriately
Controls and mitigating activities
• Our strong reputation for trusted and expert advice and customer
service improves retention of existing customers and attractiveness to new
customers by differentiating our offer from other market participants
• Continued evolution of the fleet towards non-ICE vehicles with
development of supplier relationships and investments in supporting
infrastructure
• Continual benchmarking of pricing and service offer compared to
competitors and other market participants. Pricing controls over target levels
of returns and discount authorities protect margins
• Minimising the concentration of business customers and maintaining long
term relationships with insurance partners with a large proportion of revenue
coming from contracts with customers, greater than one year in length
Fleet availability
Risk description
Failure to secure sufficient access to fleet at appropriate pricing would
impact on our ability to meet operational and customer service delivery,
overall returns and our ability to grow organically.
An increase in fleet holding costs either through higher new vehicle pricing
or lower residual values, if not recovered through pricing increases or
operational efficiencies, would adversely affect returns.
Influencing factors
• Over recent years, global vehicle supply has been restricted
following COVID-19 and geo-political conflict which has shortened the
availability of vehicles and influenced vehicle pricing. Whilst supply has
improved, it still remains below pre-COVID levels
• Residual values continue to be affected by the vehicle supply
interruption and are influenced by other economic conditions
Controls and mitigating activities
• Flexibility over asset management means that in the short term the
Group can mitigate the shortage of supply of new vehicles by ageing out the
fleet
• The business model supports high levels of utilisation and vehicles
returned from customers are redeployed within the fleet
• The Group maintains close relationships with key suppliers to ensure
continuity of supply and has diversified the supplier base in order to broaden
access to new vehicles
• The Group minimises vehicle holding costs by flexibly managing the
fleet so that vehicles can be defleeted at the optimal point in their
lifecycle through our own sales channels. We manage vehicle sales through our
own retail sales network and online sales channels.
Our people
Risk description
We rely on the expertise and experience of our people in order to stay at the
forefront of changes to our markets and to maintain and deliver high levels of
customer service. Failure to attract, retain, develop and motivate this
talent would impact the Group's ability to meet its strategic objectives.
We also understand our responsibility to keep our people safe through
appropriate health and safety risk management to maintain trust with our
employees and reputation across all stakeholders.
Influencing factors
• External pressures in the labour market creates issues in attracting
and retaining talent and therefore delivery of the operating model and
commercial proposition
• The diverse operations of a Group growing organically and
inorganically across a wide geographical area increases the challenge of
fostering a shared culture in line with strategic objectives
• Not safeguarding employees' health and welfare and failure to invest
in our workforce will lead to high levels of staff turnover, which will affect
customer service, operational efficiency and overall delivery of the Group's
strategy
Controls and mitigating activities
• Employee engagement with Group management through the Employee
Engagement Forum and employee surveys
• Internal communications establish values which are aligned to Group
strategy and we undertake regular communication of the strategic progress
through various platforms including the launch of the new brand and strategy
and how that best serves our people
• Ongoing benchmarking of reward and benefits against the comparable
employment market
• Regular performance reviews including personal development and
tailored training as well as introduction of a mentoring programme
• Regular engagement with employees and access to health and wellbeing
initiatives
• Widening of rewards and benefits including share ownership,
financial wellbeing initiatives and improved annual and family
• Group health and safety team develops policy and processes to ensure
safe working practices and monitors compliance with those policies
• Continual development of Group health and safety initiatives to
promote an ongoing safe working environment
Regulatory environment
Risk description
The Group must comply with all laws and regulations and certain activities
within the Group are regulated, therefore ongoing compliance with regulations
is required to ensure continuity of business.
Legal cases relating to the provision of credit hire and insurance related
services have provided a precedent framework which has remained stable for
several years. Legal challenges or changes in legislation could undermine this
framework with consequences for the markets in which the Group operates.
Influencing factors
• Changes to the legislation or regulatory environment in any of the
Group's markets could impact revenue and profitability, particularly within
the credit hire, insurance and legal services businesses
• Inadequate operation of systems to monitor and ensure compliance
with regulation could expose the Group to fines and penalties or operating
licences could be suspended and also adversely impact our reputation across
all stakeholder groups
Controls and mitigating activities
• In-house legal and compliance team continuously monitoring
regulatory and legal compliance
• Horizon scanning and monitoring of legal and regulatory developments
• Policies and procedures and compliance monitoring programmes
• Training in relation to relevant legislation, regulatory
responsibilities and Company policies and procedures
• External advisors are retained where necessary
Technology and digitalisation
Risk description
The Group relies on technology to ensure the safe continuity of business
operations and advances in technology offer opportunities to leverage
efficiencies in processes and enhanced service delivery with stakeholders
continuing to seek deeper digital engagement. Failure of existing systems,
lack of development in new systems or poor integration of new systems, could
result in a loss of commercial agility and/or harm the efficiency and
continuity of our operations.
The global treat of cyber-attacks is continuing to increase in frequency and
sophistication therefore unsuccessfully defending against data theft or
cyber-attacks, could cause significant business interruption and reputational
harm across all stakeholders.
Influencing factors
• Inadequate IT systems can be at risk from failed processes, systems or
infrastructure and from error, fraud or cyber-crime
• The Group's business is dependent on the safe and efficient processing
of a large number of complex transactions and stakeholder interactions. The
effective performance and availability of core systems is central to the
operation of the business
• Growth through inorganic acquisitions increases the complexity and
diversity of operations, IT systems and infrastructure
• Cyber attacks are becoming increasingly frequent and sophisticated.
The Group remains vigilant to changes in the cyber threat landscape and
continues to review the technology deployed to defend against these threats
Controls and mitigating activities
• Investments in key IT platforms and systems to ensure continued
operational performance and delivery
• Changes to key IT systems are considered as part of wider Group change
programmes and are implemented in phases where possible with appropriate
governance structures put in place to oversee progress against project
objectives
• Ongoing monitoring of the continuity of IT systems with access to
support where required
• Back-up and recovery procedures for key systems including disaster
recovery plans
• Operation of information security and data protection protocols to ensure
that data is held securely, and is adequately protected from cyber-attacks or
other unauthorised access
Recovery of contract assets
Risk description
Our credit hire and repair business involves the provision of goods and
services on credit. The Group receives payment for the goods and services it
has provided after a claim has been pursued against the party at fault (and
the relevant third party insurer). This process can require a long period of
time before claims are agreed and settled.
Influencing factors
• Recovery of insurance claims requires the orderly running of
insurance markets with claims being settled on commonly agreed terms
• Due to the relative strength of insurance companies, they could
influence the speed of settlement of claims in order to secure better terms
• Settlement of claims is normally reached through mutual agreement.
Settlement through court arbitrations can be lengthy and relies on efficient
operation of the court process
Controls and mitigating activities
• Services are only provided to customers after a full risk assessment
process to ensure that the claim will be legally recoverable from a third
party
• The Group manages collection risk by standardising terms with third
party insurers (protocol agreements) where possible, which reduces collection
risk under shorter payment terms. The proportion of claims under protocol
terms has increased in the year to c.70%
• Other claims are managed through specialist teams in order to settle
claims or manage through a court arbitration process
Access to capital
Risk description
The Group needs access to sufficient capital to maintain and grow the fleet
and fund working capital requirements.
Investors increasingly require businesses to demonstrate that they act in a
responsible and sustainable manner prior to granting access to financing
facilities.
Influencing factors
• Debt markets can be volatile in terms of liquidity and pricing
• Failure to maintain or extend access to credit and fleet finance
facilities or non-compliance with debt covenants could affect the Group's
ability to achieve its strategic objectives or continue as a going concern
Controls and mitigating activities
• Debt facilities are diversified across a range of lenders and close
relationships are maintained with key funders of the Group to ensure
continuity of funding
• Debt facilities have been put in place to provide adequate headroom
and maturities in order to support the strategy of the Group
• The Group continually monitors cash flow forecasts to ensure
adequate headroom on facilities and ongoing compliance with debt covenants
• The Group maintains leverage within stated policy and the business
model allows cash to be generated through economic cycles
• The impact of access to capital on the Group's viability is
considered in the viability statement .
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 APRIL 2024
2024 2023
Note £000 £000
Revenue: hire of vehicles 1 649,271 610,502
Revenue: sale of vehicles 1 312,469 152,894
Revenue: claims and services 1 871,387 726,350
Total revenue 1 1,833,127 1,489,746
Cost of sales (1,400,236) (1,054,173)
Gross profit 432,891 435,573
Administrative expenses (excluding exceptional items) (229,270) (213,658)
Net impairment of trade receivables (9,782) (8,902)
Exceptional administrative expenses: impairment of goodwill 6 - (5,009)
Exceptional administrative expenses: impairment of other intangibles 6 - (8,482)
Total administrative expenses (239,052) (236,051)
Operating profit 193,839 199,522
Share of net profit of associates accounted for using the equity method 1,296 2,520
EBIT 1 195,135 202,042
Finance income 596 90
Finance costs (33,628) (23,405)
Profit before taxation 162,103 178,727
Taxation (37,085) (39,489)
Profit for the year 125,018 139,238
Profit for the year is wholly attributable to owners of the Parent Company.
All results arise from continuing operations.
Earnings per share 2024 2023
Basic 2 55.2p 60.3p
Diluted 2 54.0p 58.7p
See GAAP reconciliation at the front of this report for a reconciliation
between reported results as shown above and underlying measures used to
explain performance throughout this report.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2024
2024 2023
£000 £000
Amounts attributable to owners of the Parent Company
Profit attributable to the owners 125,018 139,238
(15,326) 23,689
Other comprehensive (expense) income
Foreign exchange differences on retranslation of net assets of subsidiary
undertakings
Net foreign exchange differences on long term borrowings held as hedges 11,252 (17,741)
Foreign exchange difference on revaluation reserve (33) 54
Net fair value gain on cash flow hedges 104 -
Deferred tax charge recognised directly in equity relating to cash flow hedges (26) -
Total other comprehensive (expense) income (4,029) 6,002
Total comprehensive income for the year 120,989 145,240
All items will subsequently be reclassified to the consolidated income
statement.
CONSOLIDATED BALANCE SHEET 2024 2023
AS AT 30 APRIL 2024 £000 £000
Non-current assets
Goodwill 115,918 113,873
Other intangible assets 111,054 127,828
Property, plant and equipment 1,483,344 1,332,923
Deferred tax assets 1,878 2,061
Interest in associates 4,502 5,207
Total non-current assets 1,716,696 1,581,892
Current assets
Inventories 38,261 54,537
Receivables and contract assets 421,032 441,277
Derivative financial instrument assets 104 -
Current tax assets 9,271 14,951
Cash and bank balances 39,802 14,122
Total current assets 508,470 524,887
Total assets 2,225,166 2,106,779
Current liabilities
Trade and other payables 335,597 344,867
Provisions 4,170 822
Current tax liabilities 29 20
Lease liabilities 51,442 49,493
Borrowings 57,542 14,079
Total current liabilities 448,780 409,281
Net current assets 59,690 115,606
Non-current liabilities
Provisions 10,336 6,609
Lease liabilities 113,082 107,272
Borrowings 559,964 537,712
Deferred tax liabilities 49,607 51,310
Total non-current liabilities 732,989 702,903
Total liabilities 1,181,769 1,112,184
Net assets 1,043,397 994,595
Equity
Share capital 123,046 123,046
Share premium account 113,510 113,510
Treasury shares reserve (67,488) (60,420)
Own shares reserve (9,694) (9,615)
Translation reserve (6,759) (2,685)
Other reserves 330,534 330,489
Retained earnings 560,248 500,270
Total equity 1,043,397 994,595
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 APRIL 2024
Note 2024 2023
£000 £000
Net cash generated from operations 4 110,260 84,322
Investing activities
Finance income 596 90
Distributions from associates 2,001 3,156
Payment for acquisition of subsidiary, net of cash acquired (4,051) (10,004)
Proceeds from disposal of other property, plant and equipment 1,432 678
Purchases of other property, plant and equipment (15,757) (7,362)
Purchases of intangible assets (2,019) (1,765)
Net cash used in investing activities (17,798) (15,207)
Financing activities
Dividends paid (56,178) (52,220)
Receipt of bank loans and other borrowings 33,078 96,807
Debt issue costs paid - (950)
Principal element of lease payments (65,047) (65,110)
Payments to acquire treasury shares (24,878) (52,927)
Proceeds from sale of own shares 2,829 1,414
Net cash used in financing activities (110,196) (72,986)
Net decrease in cash and cash equivalents (17,734) (3,871)
Cash and cash equivalents at 1 May 11,681 15,769
Effect of foreign exchange movements (765) (217)
Cash and cash equivalents at 30 April (a) (6,818) 11,681
(a) Cash and cash equivalents comprise:
Cash and bank balances 39,802 14,122
Bank overdrafts (46,620) (2,441)
Cash and cash equivalents (6,818) 11,681
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2024
Share capital and share premium Treasury shares reserve Own shares reserve Translation reserve Other Retained earnings Total
£000 £000 £000 £000 reserves £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 - - - - - 4,647 4,647
Share options exercised - - - - - (5,410) (5,410)
Dividends paid - - - - - (52,220) (52,220)
Purchase of shares net of proceeds received on exercise of share options - (52,927) 1,414 - - - (51,513)
Transfer of shares on vesting of share options - - 5,410 - - - 5,410
Deferred tax on share based payments recognised in equity - - - - - 1,680 1,680
Total comprehensive income (expense) - - - 5,948 54 139,238 145,240
Total equity at 30 April 2023 and 1 May 2023 236,556 (60,420) (9,615) (2,685) 330,489 500,270 994,595
Share options fair value charge - - - - - 5,239 5,239
Share options exercised - - - - - (14,902) (14,902)
Dividends paid - - - - - (56,178) (56,178)
Purchase of shares net of proceeds received on exercise of share options - (24,878) 2,829 - - - (22,049)
Transfer of treasury shares to own shares reserve - 17,810 (17,810) - - - -
Transfer of shares on vesting of share options - - 14,902 - - - 14,902
Deferred tax on share based payments recognised in equity - - - - - 801 801
Total comprehensive income - - - (4,074) 45 125,018 120,989
Total equity at 30 April 2024 236,556 (67,488) (9,694) (6,759) 330,534 560,248 1,043,397
Other reserves comprise the other reserve, capital redemption reserve,
revaluation reserve and merger reserve.
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 APRIL 2024
1. SEGMENTAL ANALYSIS
UK&I Rental Spain Rental Claims & Services Corporate Eliminations Total
2024 2024 2024 2024 2024 2024
£000 £000 £000 £000 £000 £000
Revenue: hire of vehicles 375,255 274,016 - - - 649,271
Revenue: sale of vehicles 226,936 84,531 1,002 - - 312,469
Revenue: claims and services - - 871,387 - - 871,387
External revenue 602,191 358,547 872,389 - - 1,833,127
Intersegment revenue 9,193 - 87,865 - (97,058) -
Total revenue 611,384 358,547 960,254 - (97,058) 1,833,127
Timing of revenue recognition:
At a point in time 226,936 84,531 442,360 - - 753,827
Over time 375,255 274,016 430,029 - - 1,079,300
External revenue 602,191 358,547 872,389 - - 1,833,127
Underlying operating profit (loss) 93,788 77,789 51,419 (10,577) - 212,419
Share of net profit of associates accounted for using the equity method - - 1,296 - - 1,296
Underlying EBIT* 93,788 77,789 52,715 (10,577) - 213,715
Amortisation on acquired intangible assets (18,563)
Depreciation adjustment (Note 6) (17)
EBIT 195,135
Finance income 596
Finance costs (33,628)
Profit before taxation 162,103
1. SEGMENTAL ANALYSIS (Continued)
UK&I Rental Spain Rental Claims & Services Corporate Eliminations Total
2023 2023 2023 2023 2023 2023
£000 £000 £000 £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
Share of net profit of associates accounted for using the equity method - - 2,520 - - 2,520
Underlying EBIT* 93,382 60,440 47,041 (11,670) - 189,193
Exceptional items (Note 6) (13,491)
Amortisation on acquired intangible assets (20,206)
Gain on bargain purchase (Note 6) 46,546
EBIT 202,042
Finance income 90
Finance costs (23,405)
Profit before taxation 178,727
*Underlying EBIT stated before amortisation on acquired intangible assets and
exceptional items is the measure used by the Board of Directors to assess
segment performance.
The operating segments have been renamed in the year but have the same
composition and remain unchanged. See glossary for reference to previous
names.
2. EARNINGS PER SHARE
2024 2023
£000 £000
Basic and diluted earnings per share
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 125,018 139,238
profit for the year attributable to the owners of the Parent Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 226,332,009 230,778,502
per share
Effect of dilutive potential ordinary shares - share options 5,023,528 6,290,275
Weighted average number of ordinary shares for the purposes of diluted 231,355,537 237,068,777
earnings per share
Basic earnings per share 55.2p 60.3p
Diluted earnings per share 54.0p 58.7p
The calculated weighted average number of ordinary shares for the purposes of
basic earnings per share includes a reduction of 19,759,414 shares (2023:
15,312,921) relating to treasury shares and shares held in employee trusts.
3. DIVIDENDS
An interim dividend of 8.3p per ordinary share was paid in January 2024 (2023:
7.5p). The Directors propose a final dividend for the year ended 30 April 2024
of 17.5p per ordinary share (2023: 16.5p), which is subject to approval at the
AGM and has not been included as a liability as at 30 April 2024. Based upon
the shares in issue at 30 April 2024 and excluding treasury shares and shares
in employee trust where dividends are waived, this equates to a final dividend
payment of £39m (2023: £37m). No dividends have been paid between 30 April
2024 and the date of signing the financial statements.
4. NOTES TO THE CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 APRIL 2024
2024 2023
Net cash generated from operations £000 £000
Operating profit 193,839 199,522
Adjustments for:
Depreciation of property, plant and equipment 231,293 175,066
Impairment of goodwill - 5,009
Impairment of other intangibles - 8,482
Amortisation of intangible assets 19,961 21,408
(Gain) loss on disposal of other property, plant and equipment (76) 218
Share options fair value charge 5,239 4,647
Operating cash flows before movements in working capital 450,256 414,352
(Decrease) increase in non-vehicle inventories (2,788) 273
Decrease (increase) in receivables 26,049 (81,981)
(Increase) decrease in payables (39,630) 71,810
Increase in provisions 6,784 7,431
Cash generated from operations 440,671 411,885
Income taxes paid, net (33,371) (36,640)
Interest paid (31,486) (21,150)
Net cash generated from operations before purchases of and proceeds from 375,814 354,095
disposal of vehicles for hire
Purchases of vehicles for hire (553,537) (398,187)
Proceeds from disposals of vehicles for hire 287,983 128,414
Net cash generated from operations 110,260 84,322
5. ANALYSIS OF CONSOLIDATED NET DEBT
2024 2023
£000 £000
Cash and bank balances (39,802) (14,122)
Bank overdrafts 46,620 2,441
Bank loans 250,052 218,403
Loan notes 320,267 329,854
Lease liabilities 164,524 156,765
Cumulative preference shares 500 500
Confirming facilities 67 593
Consolidated net debt 742,228 694,434
6. EXCEPTIONAL ITEMS
Details of exceptional items recognised in the income statement are as
follows:
2024 2023
£000 £000
Impairment of goodwill - 5,009
Impairment of other intangibles - 8,482
Exceptional administrative expenses - 13,491
Total exceptional items included within EBIT - 13,491
Total pre-tax exceptional items - 13,491
Tax credits relating to exceptional items - (2,065)
Cash expenses - -
Non-cash expenses - 13,491
Total pre-tax exceptional items - 13,491
Impairment of NewLaw
In the prior year, 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. 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. In
the current year, it was concluded that there were no indicators of additional
impairment or reversal of impairment of other non-current assets previously
charged
Details of other items which are not classified as exceptional items but are
not included within underlying profit in the income statement are as follows:
Amortisation on acquired intangible assets
Amortisation on acquired intangible assets of £18,563,000 (2023:
£20,206,000) is not classified as an exceptional item as it is recurring.
However, it is excluded from underlying results in order to provide a better
comparison of results between periods as the Group grows through a combination
of organic and inorganic growth. The revenue and operating costs of these
acquisitions are included within underlying results. Amortisation of
intangible assets of £1,398,000 (2023: £1,202,000) which does not relate to
acquisitions is included within underlying profit.
Depreciation rate changes
The Group has adjusted the depreciation rates from 1 May 2022 on vehicles
remaining on the fleet which were purchased before FY2021. This adjustment is
explained further in the Financial Review. The depreciation adjustment is a
debit to the consolidated income statement of £17,000 (2023: credit of
£46,546,000). This adjustment is not classified as an exceptional item,
however, it is excluded from underlying results in order to provide a better
comparison of results between periods.
7. BASIS OF PREPARATION
These financial statements have been prepared in accordance with United
Kingdom adopted international accounting standards ('IFRS') and with those
parts of the Companies Act 2006 applicable to companies reporting under IFRS.
ZIGUP plc ("the Company") has adopted all IFRS in issue and effective for the
year.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
IFRS, this announcement does not itself contain sufficient information to
comply with IFRS. The Company expects to publish full financial statements
that comply with IFRS in July 2024.
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 April 2024 or 2023 but is derived
from those accounts. Statutory accounts for 2023 have been delivered to the
Registrar of Companies and those for 2024 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those
accounts: their reports were unqualified, did not draw attention to any
matters by way of emphasis and did not contain statements under s498 (2) or
(3) of the Companies Act 2006.
The financial information presented in respect of the year ended 30 April 2024
has been prepared on a basis consistent with that presented in the annual
report for the year ended 30 April 2023.
Having considered the Group's current trading, cash flow generation and debt
maturity including severe but plausible stress testing scenarios, the
Directors have concluded that it is appropriate to prepare the Group financial
statements on a going concern basis as explained further below.
Assessment of prospects
In the year, the Group launched a new corporate brand and name, with ZIGUP
encompassing the strength and depth of the enlarged Group. To better reflect
the future of the Group, a new purpose was developed underpinning a refreshed
strategic framework, subject to the ongoing monitoring and development
described below. The Group is well established within the markets it operates
in and has proven resilience through difficult economic conditions in recent
years and strong momentum has continued throughout the year ended 30 April
2024.
In the year, the Board retired the previous strategic framework and introduced
'Enable, Deliver, Grow' as the next phase of our strategy. The Board maintains
a measured approach to strategic risk whilst continuing to explore growth
opportunities intended to add long term value to the Group, both organically
and inorganically. The Board continually assesses the changes in the risk
profile and emerging risks to the Group. The Group pursues only those
activities which are acceptable in the context of the risk appetite of the
Group as a whole.
Assessment of viability
To assess the Group's viability, the three year strategic plan was stress
tested against various scenarios and other sensitivities.
Sensitivity analysis of our strategy
A detailed three year strategic review was conducted which considers the
Group's cash flows, dividend cover assuming operation of stated policy, and
headroom against borrowing facilities and financial covenants under the
Group's existing facilities. These metrics were subjected to sensitivity
analysis to assess the Group's ability to deliver its strategic objectives.
Financial position
The Group's principal banking facilities mature in November 2026. Private
placement loan notes of €375m give a longer profile of maturities spread
across 6, 8 and 10 years. Headroom against the Group's existing banking
facilities at 30 April 2024 was £244m. This compares with headroom of £290m
at 30 April 2023 and reflects the ongoing investment in fleet. Given the
financial strength of the Group, we do not anticipate any material
deterioration in the credit status of the Group or access to credit markets
that would contradict this assumption.
Taking this into account, the Group's facilities provide sufficient headroom
to fund the capital expenditure and working capital requirements during the
planned period.
The Directors have further considered the resilience of the Group, considering
its current position and the principal risks facing the business. The plan was
stress tested for severe but plausible scenarios over the planned period as
follows:
• No further growth in vehicles on hire with rental customers
• A 1% reduction in pricing of rental hire rates
• A 2% increase above plan assumptions in the purchase cost of vehicles
and other operating expenses not passed on to customers
• A 5% reduction to assumptions in the plan for the residual value of used
vehicles
• A 10% reduction in insurance claims and services revenue in aggregate,
either through lower demand or through ending the commercial relationship with
a group of key insurance partners
• A prudent working capital view reflecting the impact of a slow-down in
collections of historic insurance claims
The above scenarios took into account the effectiveness of mitigating actions
that would be reasonably taken, such as reducing variable costs that are
directly related to revenue, but did not take into account further management
actions that would likely be taken, such as a change to the indirect cost base
of the Group or a reduction in capital expenditure and ageing out of the
vehicle fleet, both of which would generate cash and reduce debt.
Conclusions relating to viability and going concern
After considering the above sensitivities and reasonable mitigating actions,
sufficient headroom remained against available debt facilities and the
covenants attached to those facilities. The Directors have a reasonable
expectation that the Group will continue to be able to meet its obligations as
they fall due and continue to be viable over the period to 30 April 2027. The
Directors also considered it appropriate to prepare the financial statements
on the going concern basis.
(( 1 (#_ftnref1) )) Calculated as underlying EBIT divided by revenue
(excluding vehicle sales)
2 (#_ftnref2) Including intersegment revenue of £9.2m (2023: £9.9m)
3 (#_ftnref3) Calculated as underlying EBIT divided by revenue (excluding
vehicle sales)
4 (#_ftnref4) Calculated as underlying EBIT divided by revenue (excluding
vehicle sales)
5 (#_ftnref5) Including intersegment revenue of £10.9m (2023: £12.5m)
6 (#_ftnref6) Including intersegment revenue of £76.9m (2023: £30.3m)
7 (#_ftnref7) Gross profit margin calculated as underlying gross profit
divided by total revenue. EBIT margin calculated as underlying EBIT divided by
total revenue excluding vehicle sales
8 (#_ftnref8) Depreciation and amortisation excludes £nil (2023: £46.5m)
of depreciation adjustment credits and £18.6m (2023: £20.2m) of amortisation
of acquired intangibles both excluded from underlying results
9 (#_ftnref9) Net replacement capex is total capex less growth capex. Growth
capex represents the cash consumed in order to grow the fleet or the cash that
is generated if the fleet size is reduced in periods of contraction (excluding
leased fleet)
10 (#_ftnref10) Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of funding method
11 (#_ftnref11) Lease principal payments are added back to reflect the
movement on net debt
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