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RNS
Northgate PLC  -  NTG   

Half Yearly Report

Released 07:00 04-Dec-2012

RNS Number : 6282S
Northgate PLC
04 December 2012
 



4 December 2012                              

 

NORTHGATE PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2012

Northgate plc ("Northgate", the "Company" or the "Group"), the UK and Spain's leading specialist in light commercial vehicle hire, announces its interim results for the half-year ended 31 October 2012.

 

Financial Highlights

 

·     Underlying profit before tax(1) £28.1m (2011 - £32.3m);

 

·     Profit before tax £24.6m (2011 - £26.9m);

 

·     Return on capital employed(2) 12.5% (2011 - 12.5%);

 

·     Underlying basic earnings per share(3) 15.1p (2011 - 17.4p);

 

·     Basic earnings per share 13.1p (2011 - 14.4p);

 

·     Net debt(4) reduced by £28.1m to £343.2m (April 2012 - £371.3m):

Gearing(5) improved to 94% (April 2012 - 105%)

 

·     Interim dividend of 1.3p per share (2011 - nil).

 

Operational Highlights

 

·     Continued implementation of UK commercial improvement programmes to drive growth;

 

·     Opening of four new sites in the UK on track for completion before the end of the financial year;

 

·     Underlying pricing stability in the UK with a 1% reduction in Spain since 30 April 2012;

 

·     Ongoing focus in Spain on actions to improve return on capital employed;

 

·     Average utilisation over the period of 89% in the UK (2011 - 90%) and 90% in Spain (2011 - 91%);

 

·      Closing fleet of 51,000 in the UK (April 2012 - 52,900) and 37,700 in Spain (April 2012 - 38,400).

 

 

Bob Mackenzie, Chairman, commented:

 

"Current trading is broadly in line with the Board's expectations.  The Group's market leading position, more efficient business model, strengthened balance sheet and ongoing investment in both our people and systems provides the Board with confidence that the Group continues to be well placed to deliver significant returns to shareholders."

 

Full statement and results attached.

 

There will be a presentation to analysts at 9.30am today at Jefferies, Vintners Place, 68 Upper Thames Street, London EC4V 3BJ. 

 

For further information, please contact:

 

Northgate plc                                                   

01325 467558

Bob Contreras, Chief Executive

Chris Muir, Group Finance Director


 

MHP Communications                                 

020 3128 8753

Andrew Jaques


Barnaby Fry


Simon Hockridge


Rosa Smith


 

 

Notes to Editors:

 

Northgate plc rents light commercial vehicles and sells a range of fleet products to businesses via a network of locations in the UK, Republic of Ireland and Spain.  Their product gives businesses access to a flexible method to obtain as many commercial vehicles as they require. 

 

Further information regarding Northgate plc can be found on the Company's website:

 

www.northgateplc.com

 

 

Business Review

 

Overview

 

Decisive actions taken since the summer of 2010 have enabled the Group to meet its targets of increasing operational efficiency, improving customer service levels, strengthening the Group's balance sheet and increasing return on capital employed. 

 

Whilst progress to date against these targets has been pleasing, trading conditions remain challenging in the markets in which we operate, leading to Group underlying results for the six months to 31 October 2012 as follows:

 

·     Operating profit(1) of £47.6m (2011 - £56.0m);

·     Profit before tax(1) of £28.1m (2011 - £32.3m);

·     Basic earnings per share(3) of 15.1p (2011 - 17.4p);

·     Return on capital employed(2) of 12.5% (2011 - 12.5%).

 

Over the period the Group's net debt(4) position has improved, falling from £371.3m at 30 April 2012 to £343.2m at 31 October 2012.  Gearing(5) has reduced further to 94% (105% at 30 April 2012).

 

Looking forward, the Board continues to seek ways to drive growth where an appropriate level of return exists, as this is key to delivering significant returns to shareholders. Both businesses in the UK and Spain have therefore continued to implement a number of commercial improvement programmes and further actions are being implemented in Spain with the aim of increasing return on capital employed in the medium term. 

 

Following the re-introduction of a 3.0p full year dividend for the year ended 30 April 2012, the Board has decided to pay a 1.3p interim dividend in recognition of the strong cash generation and our confidence in the long term prospects of the Group.

 

As previously proposed we would expect to pay approximately one-third of the total dividend at the interim stage and two-thirds as a final dividend.

 

 UK

 

Against the backdrop of a fragile economy, trading in the UK remains challenging.  Despite this, our underlying operating margin(6) increased to 24.4%, compared to 24.0% in 2011, with a reduction in operating costs being managed against a reduced number of vehicles on hire.

 

Hire rates and vehicles on hire

 

Average hire revenue per rented vehicle has remained stable since the beginning of the financial year.

 

Vehicles on hire reduced by 1,400 in the period compared to a decline of 2,200 in the same period last year and 5,200 in the second half of the last financial year. 

 

As previously outlined, we are implementing a number of improvement programmes in the commercial area of the business with the main focus being on increasing the skills, resource and support within the sales team. Progress has been made in all of these areas, and we expect that the full benefit of this will be reflected in the next financial year.

 

The initial focus of these programmes has been within our regional business, which represents two-thirds of our vehicles on hire.  We will continue to invest here to generate further growth and the sales resource will have increased by over 50% since 1 May 2012 by the end of this calendar year. Despite the majority of this recruitment being in the final quarter, we are pleased to see that these actions have stabilised this area of the business, with vehicles on hire growing by 200 in the six months to 31 October 2012.

 

Our improvement programmes are not as advanced in our national business, which manages customers renting a larger number of vehicles. This area of the business has seen a reduction of 1,600 vehicles on hire, with five customers accounting for 1,100 of this fall.  Within these customers there was a continuation of the reduction experienced last year. These customers have mostly moved to contract hire, which in the short term provides a cheaper headline rental without the flexibility and high service levels of our product.  However, we have already identified opportunities with potential new national customers to grow this business.

 

Network

 

Our branch network exists primarily to service local businesses and provides national coverage for our larger customers.  Our analysis shows that a branch needs to be approximately 20 minutes from local businesses to meet their requirements.  Analysing the UK population and GDP has identified gaps in our network where we do not currently address many potential customers' needs, which are met by small local or regional rental operators. 

 

Our strategy going forward will address this opportunity by expanding our network and we are on schedule to open four new sites before the end of the financial year.  The success of these new sites will allow the Group to validate its current expansion plans and accelerate them where appropriate.

 

Additionally, market penetration in our existing network indicates that we have a growth opportunity within our 62 branches which will be targeted through the investment we have made in the commercial team.

 

Asset Management

 

In response to the fall in vehicles on hire the UK fleet size was managed down from 52,900 at 30 April 2012 to 51,000 at 31 October 2012.  This enabled our industry leading utilisation levels to be sustained with utilisation for the period of 89%, consistent with the year ended 30 April 2012. Vehicle purchases in the six months to 31 October 2012 totalled 9,600 (2011 - 10,100).  The average age of the rental fleet reduced to 20.4 months at 31 October 2012 compared to 21.4 months at 30 April 2012.

 

The used vehicle market remained strong. A total of 12,000 units were sold (2011 - 14,500) with residual values in line with those experienced in the year ended 30 April 2012.  Sales via our more profitable retail sales operation were 19% (2011 - 22%).

 

Spain

 

Spain continues to be a very difficult market in which to operate.  Underlying operating margin(7) fell to 16.8% in the period (2011 - 18.7%).  The reduction in vehicles on hire over the past 18 months has led to this decrease.

 

Underlying cash generation(8) in Spain was €22m in the six months to 31 October 2012 compared to €8m in the same period last year.

 

Spain has paid €23m of intra-group dividends to the UK in the six months to 31 October 2012.

 

Hire rates and vehicles on hire

 

Vehicles on hire have fallen by 1,300 vehicles in the period compared to a decline of 800 in the same period last year and 4,600 in the second half of the last financial year.  900 of this fall came from one customer operating in the holiday rental sector and was expected.

 

Continued efforts and additional resource deployment in the commercial area of the business have enabled the number of new customers to increase compared to the same period last year, especially amongst small enterprises.  Offsetting this has been a decline in the existing customer base.

 

Average hire revenue per rented vehicle has decreased by 1% since the beginning of the financial year.

 

Return on capital employed improvement programme

 

The Group recognises that lower returns are achieved in Spain than in the UK. We are implementing actions in the following areas with the aim of increasing returns over the medium term:

 

Pricing increases: pricing increases will be sought. This will not exclusively be in the form of headline rental rate increases, but through actions such as reinforcing procedures for the recharge of damage which is in excess of fair usage.

 

Vehicle ageing: an improved maintenance regime, coupled with the customer usage profile allows the Group to reduce the capital investment in the Spanish fleet. This results in lower vehicle purchases and an ageing of the vehicle fleet, leading to a reduction in the capital employed and strong cash generation. We do not anticipate any impact on customer service as we will still be running a young fleet in comparison to the rest of the market. 

 

Operational efficiency: similar to the initiative implemented in the UK over the past 18 months, we are implementing a workshop efficiency programme in Spain, which will enable improved management and reporting of our internal workshops leading to reduced operating costs.

 

Asset Management

 

Utilisation for the period was 90% (2011 - 91%).  The fleet size in our Spanish operation reduced from 38,400 at 30 April 2012 to 37,700 at 31 October 2012. In the six months to October 2012, 4,500 vehicles have been purchased compared to 8,000 in the same period last year. The rental fleet aged slightly to an average of 22.0 months (30 April 2012 - 21.8 months).

 

The used vehicle market remained strong.  A total of 5,600 units were sold (2011 - 8,300) with residual values in line with those experienced in the second half of the year ended 30 April 2012.  Good progress has been made in the past 12 months in embedding and expanding our used vehicle retail sales network.  In the six months to October 2012, 8% of vehicles sold have been via our retail channel, compared to 4% in the same period last year.

 

Current trading and outlook

 

Current trading is broadly in line with the Board's expectations.  The Group's market leading position, more efficient business model, strengthened balance sheet and ongoing investment in both our people and systems provides the Board with confidence that the Group continues to be well placed to deliver significant returns to shareholders.

 

 

Financial Review

 

Group

 

A summary of the Group's underlying financial performance for the six months to 31 October 2012 with a comparison to the prior year period is shown below:

 


6 months to

6 months to


31 Oct 2012

31 Oct 2011


£m

£m

Revenue

314.5

375.7

Operating profit(1)

47.6

56.0

Net interest expense

(19.5)

(23.7)

Profit before tax(1)

28.1

32.3

Profit after tax(3)

20.1

23.2

Basic earnings per share(3)

15.1p

17.4p

Return on capital employed(2)

12.5%

12.5%

Net underlying cash generation(8)

33.0

43.7

 

Group revenue in the six months to 31 October 2012 decreased by 16.3% to £314.5m (2011 - £375.7m) or 13.6% at constant exchange rates.

 

Net underlying cash generation(8) was £33.0m (2011 - £43.7m) after net capital expenditure of £73.8m (2011 - £96.6m) resulting in closing net debt(4) of £343.2m (April 2012 - £371.3m).

 

On a statutory basis, operating profit, stated after intangible amortisation and exceptional items, has decreased to £44.1m (2011 - £50.6m) with profit before tax decreasing to £24.6m (2011 - £26.9m). Basic earnings per share decreased to 13.1p (2011 - 14.4p).  Net cash from operations, including net capital expenditure on vehicles for hire, decreased by £8.8m to £37.1m (2011 - £45.9m), with net debt falling by £25.1m from £385.3m at 30 April 2012 to £360.2m at 31 October 2012.

 

UK

 


6 months to

6 months to


31 Oct 2012

31 Oct 2011


£m

£m

Revenue



Vehicle hire

149.1

165.5

Vehicle sales

69.3

76.3


218.4

241.8




Operating profit(9)

36.4

39.7




Operating margin(6)

24.4%

24.0%

 

Hire revenue decreased by 9.9% to £149.1m (2011 - £165.5m) mainly driven by a reduction in the average number of vehicles on hire of 12.9%, being partially offset by a 3.0% increase in revenue per vehicle.

 

The continuation of strong resale values has led to a £11.4m reduction in the depreciation charge (2011 - £11.4m).

 

The bad debt charge for the period was £0.7m lower than the same period last year with days sales outstanding of 38 days at 31 October 2012 compared to 42 days at 30 April 2012.

 

Spain

 


6 months to

6 months to


31 Oct 2012

31 Oct 2011


£m

£m

Revenue



Vehicle hire

75.9

99.3

Vehicle sales

20.3

34.6


96.1

133.9







Operating profit(10)

12.7

18.6

Operating margin(7)

16.8%

18.7%




 

 

A decrease in hire revenue of 23.6% (15.9% at constant exchange rates) was due to a 14.5% reduction in average vehicles on hire and a 1.4% reduction in average revenue per vehicle.

 

Vehicle hire revenue and profit from operations in 2012, expressed at constant exchange rates, would have been higher than reported by £7.7m and £1.3m respectively.

 

An improvement in used vehicle residual values resulted in a reduction of £2.1m to the depreciation charge (2011 - £1.0m).

 

Debtor management continues to be an area of focus given the economic backdrop in Spain.  Continued improvements in processes, coupled with recovery of previously provided aged debt, has led to a bad debt charge in the period of €0.2m, compared to a charge of €2.7m in the same period last year.

 

Days sales outstanding also continue to reduce due to improvements in customer profiling, controls and processes, falling from 71 days at 30 April 2012 to 66 days at 31 October 2012.

 

Corporate

 

Corporate costs(11) were £1.6m in the six months to 31 October 2012 compared to £2.3m in the same period last year.

 

Exceptional items

 

During the period £1.5m of restructuring costs were incurred, of which £0.8m related to the UK and £0.7m related to Spain. 

 

Interest

 

Net finance charges for the six months to 31 October 2012 were £19.5m (2011 - £23.7m). 

 

The charge includes £3.2m of non-cash interest, primarily from borrowing fees amortised in the year (2011 - £3.1m).

 

Net cash interest has decreased by £4.3m to £16.3m, which comprises a £3.1m reduction as a result of lower average net debt, a £0.2m decrease in borrowing rates and a £1.0m impact of exchange differences.

 

Taxation

 

The Group's underlying effective tax charge for its UK and overseas operations is 29% (2011 - 28%).

 

The underlying tax charge excludes the tax on intangible amortisation and exceptional items of £0.9m (2011 - £1.5m). 

 

Including these items, the Group's statutory effective tax charge is 29% (2011 - 29%).

 

Earnings per share

 

Basic earnings per share (EPS)(3), were 13.3% lower than the previous period at 15.1p (2011 - 17.4p).  Basic statutory earnings per share were 13.1p (2011 - 14.4p). 

 

Underlying earnings for the purposes of EPS(3) of £20.1m were 13.3% lower than the previous period (2011 - £23.2m).  The weighted average number of shares for the purposes of EPS was 133m (2011 - 133m).

 

Dividend

 

The Directors have decided to pay an interim dividend of 1.3p per share in relation to the Ordinary shares for the six months ended 31 October 2012 (2011 - nil). This represents a cash outflow to the Group of £1.7m.  The interim dividend will be paid on 11 January 2013 to shareholders on the register at the close of business on 14 December 2012.

 

Cash flow and net debt

 

Net underlying cash generation(8) was £33.0m (2011 - £43.7m) after net capital expenditure of £73.8m (2011 - £96.6m) resulting in closing net debt(4)  of £343.2m (April 2012 - £371.3m).

 

Net capital expenditure included purchases of vehicles of £149.3m (2011 - £191.9m) and proceeds from sales of vehicles of £79.8m (2011 - £98.4m). 

 

At 31 October 2012 there was headroom(12) of £302.9m against committed facilities of £663.5m. Scheduled repayments of £110m were subsequently made on 20 November 2012, reducing facilities and headroom by the same amount.

 

Balance sheet

 

Net tangible assets at 31 October 2012 were £364.5m (April 2012 - £353.0m), equivalent to a tangible net asset value of 273.6p per share (April 2012 - 264.9p per share). 

 

Gearing(5) at 31 October 2012 was 94% (April 2012 - 105%) reflecting a £28.1m reduction in net debt.

 

Return on capital employed

 

Group return on capital employed(2) was 12.5% compared to 12.5% in the equivalent six months last year and 13.1% in the year ended 30 April 2012.

 

Group return on equity, calculated as profit after tax (excluding intangible amortisation, exceptional administrative expenses and taxation thereon) divided by average shareholders' funds, was 10.7% (April 2012 - 11.9%).

 

Risks and uncertainties

 

The Board and the Group's management have clearly defined responsibility for identifying the major business risks facing the Group and for developing systems to mitigate and manage those risks.

 

The principal risks and uncertainties facing the Group at 30 April 2012 were set out in detail on pages 20 and 21 of the 2012 Annual Report, a copy of which is available at www.northgateplc.com, and were identified as:

 

·     Economic environment;

·     Eurozone;

·     Vehicle holding costs;

·     Competition and hire rates;

·     Access to capital;

·     IT systems; and

·     Change management.

 

These principal risks have not changed since the last Annual Report and continue to be those that could impact the Group during the second half of the current financial year.

 

In addition to the risks outlined above, the going concern assumption is considered in note 1 to the condensed financial statements for the six months ended 31 October 2012.

 

 

 (1)     Stated before intangible amortisation of £2.0m (2011 - £1.9m) and exceptional administrative expenses of £1.5m (2011 - £3.5m).

 (2)     Calculated as rolling 12 month operating profit (excluding intangible amortisation and exceptional administrative expenses) divided by average capital employed, being shareholders' funds plus net debt(4).

(3)      Stated before intangible amortisation of £2.0m (2011 - £1.9m), exceptional administrative expenses of £1.5m  (2011 - £3.5m) and tax on intangible amortisation and exceptional items of £0.9m (2011 - £1.5m).

(4)      Net debt taking into account swapped exchange rates for US loan notes and other loan swapped into Euro being retranslated to Sterling at closing exchange rates.

(5)      Calculated as net debt(4) divided by tangible net assets, with tangible net assets being net assets less goodwill and other intangible assets.

(6)    Calculated as operating profit(9) divided by revenue of £149.1m (2011 - £165.5m), excluding vehicle sales.

(7)    Calculated as operating profit(10) divided by revenue of £75.9m (2011 - £99.3m), excluding vehicle sales.

(8)    Net increase in cash and cash equivalents before financing activities. 

(9)    Excluding intangible amortisation of £1.7m (2011 - £1.5m) and exceptional administrative expenses of £0.8m (2011- £3.7m). 

(10)  Excluding intangible amortisation of £0.3m (2011 - £0.4m) and exceptional administrative expenses of £0.7m (2011 - £0.6m). 

(11)  Excluding exceptional administrative (credit) of £Nil (2011 - £(0.8)m). 

(12)  Headroom calculated as facilities of £663.5m less net borrowings of £360.6m.  Facilities and net borrowings stated taking into account the fixed swapped exchange rates for US loan notes and other loan swapped into Euro being retranslated to Sterling at closing exchange rates.  Net borrowings represent net debt of £343.2m gross of £17.4m of unamortised arrangement fees and are stated after the deduction of £39.3m of cash balances which are available to offset against borrowings. 

 

 

Condensed consolidated income statement 





for the six months ended 31 October 2012 




 



Six months

Six months

Six months

Six months

Year to

Year to

 



to 31.10.12

to 31.10.12

to 31.10.11

to 31.10.11

30.04.12

30.04.12

 



(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)

 



Underlying

Statutory

Underlying

Statutory

Underlying

Statutory

 


Note

£000

£000

£000

£000

£000

£000

 

Revenue: hire of vehicles

2

224,981

224,981

264,873

264,873

503,659

503,659

 

Revenue: sale of vehicles

2

89,562

89,562

110,831

110,831

203,039

203,039

 

Total revenue

2

314,543

314,543

375,704

375,704

706,698

706,698

 

Cost of sales


(238,597)

(238,597)

(287,825)

(287,825)

(540,915)

(540,915)

 

Gross profit


75,946

75,946

87,879

87,879

165,783

165,783

 

Administrative expenses (excluding exceptional items, and intangible amortisation)


(28,384)

(28,384)

(31,866)

(31,866)

(60,607)

(60,607)

 

Exceptional administrative expenses

8

-

(1,486)

-

(3,527)

-

(6,702)

 

Intangible amortisation


-

(2,014)

-

(1,900)

-

(3,996)

 

Total administrative expenses


(28,384)

(31,884)

(31,866)

(37,293)

(60,607)

(71,305)

 

Operating profit

2

47,562

44,062

56,013

50,586

105,176

94,478

 

Interest income


93

93

62

62

165

165

 

  








 

Finance costs (excluding exceptional items)


(19,593)

(19,593)

(23,779)

(23,779)

(45,610)

(45,610)

 

Exceptional finance costs

8

-

-

-

-

-

(3,046)

 

Total finance costs


(19,593)

(19,593)

(23,779)

(23,779)

(45,610)

(48,656)

 

Profit before taxation


28,062

24,562

32,296

26,869

59,731

45,987

 

Taxation

3

(7,998)

(7,094)

(9,143)

(7,692)

(17,803)

(5,519)

 

Profit for the year


20,064

17,468

23,153

19,177

41,928

40,468

 

 

Profit for the year is wholly attributable to owners of the Parent Company. All results arise from continuing operations.

Underlying profit excludes exceptional items as set out in Note 8, as well as intangible amortisation and the taxation thereon, in order to provide a better indication of the Group's underlying business performance.

Earnings per share








Basic

4

15.1p

13.1p

17.4p

14.4p

31.5p

30.4p

Diluted

4

14.6p

12.8p

17.0p

14.1p

30.8p

29.7p

 

 

 

Condensed consolidated statement of comprehensive income






for the six months ended 31 October 2012 







Six months

Six months

Year to



to 31.10.12

to 31.10.11

30.04.12



(Unaudited)

(Unaudited)

(Audited)



£000

£000

£000

Amounts attributable to owners of the Parent Company





Profit attributable to owners


17,468

19,177

40,468

 

Other comprehensive income

Foreign exchange differences on retranslation of net assets of subsidiary undertakings


(1,658)

(3,793)

(16,711)

Net foreign exchange differences on long term borrowings held as hedges


1,122

3,548

13,486

Deferred taxation on disposal of revalued property


-

-

5

Foreign exchange difference on revaluation reserve


(10)

(29)

(120)

Net fair value losses on cash flow hedges


(3,199)

(15,301)

(16,188)

Deferred tax credit recognised directly in equity relating to cash flow hedges


767

3,978

3,834

Actuarial gain (losses) on defined benefit pension scheme


71

-

(227)

Deferred tax (charge) credit recognised directly in equity relating to defined benefit pension scheme


(17)

-

60

Total other comprehensive income for the period


(2,924)

(11,597)

(15,861)

Total comprehensive income for the period


14,544

7,580

24,607

 

 

 

 

Condensed consolidated balance sheet

  




31 October 2012









31.10.12

31.10.11

30.04.12




(Unaudited)

(Unaudited)

(Audited)




£000

£000

£000

Non-current assets






Goodwill



3,589

3,589

3,589

Other intangible assets



8,478

10,655

9,591







Property, plant and equipment: vehicles for hire



617,147

701,606

623,103

Other property, plant and equipment



74,962

76,232

74,452

Total property, plant and equipment



692,109

777,838

697,555

Derivative financial instrument assets



11,230

4,512

11,249

Deferred tax assets



3,099

10,374

1,691

Total non-current assets



718,505

806,968

723,675

Current assets






Inventories



21,275

22,182

22,213

Trade and other receivables



87,052

123,200

97,278

Derivative financial instrument assets



3,528

-

-

Cash and cash equivalents



39,298

16,035

9,707

Total current assets



151,153

161,417

129,198

Total assets



869,658

968,385

852,873

Current liabilities






Trade and other payables



57,672

75,195

63,188

Derivative financial instrument liabilities



416

-

1,046

Current tax liabilities



12,939

18,781

4,150

Short term borrowings



108,649

7,120

135,558

Total current liabilities



179,676

101,096

203,942

Net current (liabilities) assets



(28,523)

60,321

(74,744)

Non-current liabilities






Derivative financial instrument liabilities



19,634

17,387

15,951

Long term borrowings



290,856

497,291

259,487

Deferred tax liabilities



2,922

4,075

7,357

Total non-current liabilities



313,412

518,753

282,795

Total liabilities



493,088

619,849

486,737

NET ASSETS



376,570

348,536

366,136







Equity






Share capital



66,616

66,616

66,616

Share premium account



113,508

113,508

113,508

Revaluation reserve



1,179

1,334

1,189

Own shares



(289)

(1,005)

(685)

Merger reserve



67,463

67,463

67,463

Hedging reserve



(16,679)

(13,216)

(14,247)

Translation reserve



(8,499)

(4,983)

(7,963)

Capital redemption reserve



40

40

40

Retained earnings



153,231

118,779

140,215

TOTAL EQUITY



376,570

348,536

366,136

 

Total equity is wholly attributable to owners of the Parent Company.

 

 

 






Condensed consolidated cash flow statement




for the six months ended 31 October 2012







Six months

Six months

Year to



to 31.10.12

to 31.10.11

30.04.12



(Unaudited)

(Unaudited)

(Audited)


 Note

£000

£000

£000

Net cash from operations

6

37,122

45,897

145,826

Investing activities





Interest received


93

62

165

Partial recovery of acquisition cost of subsidiary undertaking

-

775

775

Proceeds from disposal of other property, plant and equipment

827

831

1,876

Purchases of other property, plant and equipment

(4,179)

(2,810)

(7,705)

Purchases of intangible assets


(909)

(1,006)

(1,982)

Net cash used in investing activities


(4,168)

(2,148)

(6,871)

Financing activities





Receipts (repayments) of bank loans and other borrowings

1,640

(124,467)

(222,592)

Debt issue costs paid


-

(86)

(86)

Dividend paid

(3,984)

-

-

Payments to acquire own shares for share schemes

(1,018)

-

(293)

Termination of financial instruments


-

-

(3,046)

Net cash used in financing activities


(3,362)

(124,553)

(226,017)

Net increase (decrease) in cash and cash equivalents


29,592

(80,804)

(87,062)

Cash and cash equivalents at beginning of the period


9,707

96,885

96,885

Effect of foreign exchange movements


(1)

(46)

(116)

Cash and cash equivalents at the end of the period


39,298

16,035

9,707

 

 

 

Condensed consolidated statement of changes in equity

for the six months ended 31 October 2012


Share capital  and share premium

 

 

Own shares

Hedging reserve

Translation reserve

Other reserves

Retained earnings

Total


£000

£000

£000

£000

£000

£000

£000

Total equity at 1 May 2011

180,124

(1,630)

(1,893)

(4,738)

68,866

99,030

339,759

Share options fair value charge

-

-

-

-

-

1,197

1,197

Share options exercised

-

-

-

-

-

(625)

(625)

Profit attributable to owners of the Parent Company

-

-

-

-

-

19,177

19,177

Transfer of shares on vesting of share options

-

625

-

-

-

-

625

Other comprehensive income

-

-

(8,975)

(2,593)

(29)

-

(11,597)

Transfers between equity reserves

-

-

(2,348)

2,348

-

-

-

Total equity at 1 November 2011

180,124

(1,005)

(13,216)

(4,983)

68,837

118,779

348,536

Share options fair value charge

-

-

-

-

-

866

866

Share options exercised

-

-

-

-

-

(613)

(613)

Transfer on disposal of revalued property

-

-

-

-

(54)

54

-

Profit attributable to owners of the Parent Company

-

-

-

-

-

21,291

21,291

Purchase of own shares

-

(293)

-

-

-

-

(293)

Transfer of shares on vesting of share options

-

613

-

-

-

-

613

Other comprehensive income

-

-

7,497

(11,508)

(91)

(162)

(4,264)

Transfers between equity reserves

-

-

(8,528)

8,528

-

-

-

Total equity at 1 May 2012

180,124

(685)

(14,247)

(7,963)

68,692

140,215

366,136

Share options fair value charge

-

-

-

-

-

896

896

Share options exercised

-

-

-

-

-

(1,414)

(1,414)

Profit attributable to owners of the Parent Company

-

-

-

-

-

17,468

17,468

Dividend paid

-

-

-

-

-

(3,988)

(3,988)

Purchase of own shares

-

(1,018)

-

-

-

-

(1,018)

Transfer of shares on vesting of share options

-

1,414

-

-

-

-

1,414

Other comprehensive income

-

-

(1,510)

(1,458)

(10)

54

(2,924)

Transfers between equity reserves

-

-

(922)

922

-

-

-

Total equity at 31 October 2012

180,124

(289)

(16,679)

(8,499)

68,682

153,231

376,570









 Other reserves comprise the capital redemption reserve, revaluation reserve and merger reserve.


 

 

 

Unaudited Notes


1. Basis of preparation and accounting policies


 

Northgate plc is a Company incorporated in England and Wales under the Companies Act 2006.

 

The condensed financial statements are unaudited and were approved by the Board of Directors on 3 December 2012.


The condensed financial statements have been reviewed by the auditor and the independent review report is set out in this document.

 

The interim financial information for the six months ended 31 October 2012, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts, and in accordance with IAS 34 (Interim Financial Reporting), as issued by the International Accounting Standards Board and adopted by the European Union.

 
In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 30 April 2012.

 

Going concern assumption

The Group manages its cash requirements through a combination of operating cash flows and long term borrowings.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance including the uncertainty in the economic environment in the UK and Spain, show that the Group should be able to operate within the level of its current lending facilities.

Consequently, after making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

 

Information extracted from 2012 Annual Report

The financial figures for the year ended 30 April 2012, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year.

The statutory accounts for the year ended 30 April 2012 were prepared under IFRS and have been delivered to the Registrar of Companies. The auditor reported on those accounts.  The report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.

 

 

2. Segmental analysis

Management has determined the operating segments based upon the information provided to the executive Board of Directors which is considered to be the chief operating decision maker.  The Group is managed, and reports internally, on a basis consistent with its two main operating divisions, UK and Spain.  The UK division includes operations in the Republic of Ireland. The principal activities of these divisions are set out in the Business Review and Financial Review.

 



UK

Spain

Corporate

Total



Six months

Six months

Six months

Six months



to 31.10.12

to 31.10.12

to 31.10.12

to 31.10.12



(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)



£000

£000

£000

£000

Revenue: hire of vehicles


149,109

75,872

-

224,981

Revenue: sale of vehicles


69,294

20,268

-

89,562

Total revenue


218,403

96,140

-

314,543







Underlying operating profit (loss) *


36,435

12,714

(1,587)

47,562

Exceptional administrative expenses


(753)

(733)

-

(1,486)

Intangible amortisation


(1,678)

(336)

-

(2,014)

Operating profit (loss)


34,004

11,645

(1,587)

44,062

Interest income





93

Finance costs





(19,593)

Profit before taxation





24,562

 



UK

Spain

Corporate

Total



Six months

Six months

Six months

Six months



to 31.10.11

to 31.10.11

to 31.10.11

to 31.10.11



(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)



£000

£000

£000

£000

Revenue: hire of vehicles


165,540

99,333

-

264,873

Revenue: sale of vehicles


76,269

34,562

-

110,831

Total revenue


241,809

133,895

-

375,704







Underlying operating profit (loss) *


39,709

18,558

(2,254)

56,013

Exceptional administrative expenses


(3,688)

(614)

775

(3,527)

Intangible amortisation


(1,519)

(381)

-

(1,900)

Operating profit (loss)


34,502

17,563

(1,479)

50,586

Interest income





62

Finance costs





(23,779)

Profit before taxation





26,869

 



UK

Spain

Corporate

Total



Year to

Year to

Year to

Year to



30.04.12

30.04.12

30.04.12

30.04.12



(Audited)

(Audited)

(Audited)

(Audited)



£000

£000

£000

£000

Revenue: hire of vehicles


320,772

182,887

-

503,659

Revenue: sale of vehicles


136,312

66,727

-

203,039

Total revenue


457,084

249,614

-

706,698







Underlying operating profit (loss) *


74,402

34,989

(4,215)

105,176

Exceptional administrative expenses


(5,670)

(1,724)

692

(6,702)

Intangible amortisation


(3,135)

(861)

-

(3,996)

Operating profit (loss)


65,597

32,404

(3,523)

94,478

Interest income





165

Finance costs (excluding exceptional items)





(45,610)

Exceptional finance costs





(3,046)

Profit before taxation





45,987

* Underlying operating profit (loss) stated before amortisation and exceptional items is the measure used by the executive Board of Directors to assess segment performance.

 

3. Taxation

The charge for taxation for the six months to 31 October 2012 is based on the estimated effective rate for the year ending 30 April 2013.

 

 

 

 

4. Earnings per share








Six months

Six months

Six months

Six months

Year to

Year to


to 31.10.12

to 31.10.12

to 31.10.11

to 30.10.11

30.04.12

30.04.12


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)


Underlying

Statutory

Underlying

Statutory

Underlying

Statutory

Basic and diluted earnings per share

£000

£000

£000

£000

£000

£000








The calculation of basic and diluted earnings per share is based on the following data:







Earnings







Earnings for the purposes of basic and diluted earnings per share,







being net profit attributable to owners of the Parent Company

20,064

17,468

23,153

19,177

41,928

40,468






 

Number of shares

Number

Number

Number

Number

Number

Number

Weighted average number of Ordinary shares







for the purposes of basic earnings per share

133,232,518

133,232,518

133,232,518

133,232,518

133,232,518

133,232,518

Effect of dilutive potential Ordinary shares:







- share options

3,739,353

3,739,353

2,940,375

2,940,375

3,074,242

3,074,242

Weighted average number of Ordinary shares for the purposes







of diluted earnings per share

136,971,871

136,971,871

136,172,893

136,172,893

136,306,760

136,306,760

Basic earnings per share

15.1p

13.1p

17.4p

14.4p

31.5p

30.4p

Diluted earnings per share

14.6p

12.8p

17.0p

14.1p

30.8p

29.7p






 

 

5. Dividends

A dividend of £3,988,000 was paid in the year (2011 - £Nil). The Directors have declared a dividend of 1.3p per share for the six months ended 31 October 2012 (2011 - £Nil).

 

6. Notes to the cash flow statement






Six months

Six months

Year to


to 31.10.12

to 31.10.11

30.04.12


(Unaudited)

(Unaudited)

(Audited)

Net cash from operations

£000

£000

£000

Operating profit

44,062

50,586

94,478

Adjustments for:




Depreciation of property, plant and equipment

80,984

101,156

192,729

Exchange differences

(4)

(2)

25

Amortisation of intangible assets

2,014

1,900

3,996

Loss on disposal of property, plant and equipment

354

225

443

Share options fair value charge

896

1,197

2,063

Operating cash flows before movements in working capital

128,306

155,062

293,734

Decrease in non-vehicle inventories

152

383

229

Decrease in receivables

10,090

4,006

22,456

(Decrease) increase in payables

(12,096)

1,648

(3,538)

Cash generated from operations

126,452

161,099

312,881

Income taxes paid

(3,376)

(2,044)

(2,582)

Interest paid

(16,458)

(19,593)

(38,487)

Net cash generated from operations

106,618

139,462

271,812

Purchases of vehicles

(149,284)

(191,936)

(306,311)

Proceeds from disposal of vehicles

79,788

98,371

180,325

Net cash from operations

37,122

45,897

145,826

 

 

7. Analysis of consolidated net debt

 





31.10.12

31.10.11

30.04.12


(Unaudited)

(Unaudited)

(Audited)


£000

£000

£000

Cash at bank and in hand

(39,298)

(16,035)

(9,707)

Bank loans

132,139

230,565

129,282

Loan notes

164,553

168,051

161,002

Other loan

97,878

97,627

97,752

Cumulative preference shares

500

500

500

Property loans and other borrowings

4,435

7,668

6,509


360,207

488,376

385,338

 

Net borrowings at 31 October 2012, taking into account the fixed swapped exchange rates for the loan notes and the other loan swapped into Euro being retranslated to Sterling at closing exchange rates, are as follows:

 






31.10.12

31.10.11

30.04.12


(Unaudited)

(Unaudited)

(Audited)


£000

£000

£000

Cash at bank and in hand

(39,298)

(16,035)

(9,707)

Bank loans

132,139

230,565

129,282

Loan notes

156,224

162,391

154,902

Other loan

89,204

96,502

89,815

Cumulative preference shares

500

500

500

Property loans and other borrowings

4,435

7,668

6,509


343,204

481,591

371,301

 

 

 

8. Exceptional items





 



During the period, the Group recognised exceptional items in the income statement made up as follows:






Six months

Six months

Year to

 



to 31.10.12

to 31.10.11

30.04.12

 



(Unaudited)

(Unaudited)

(Audited)

 



£000

£000

£000

 

Restructuring costs


1,132

4,077

7,034

 

Partial recovery of acquisition cost of subsidiary undertaking


-

(775)

(775)

 

Net property losses


354

225

443

 

Exceptional administrative expenses


1,486

3,527

6,702

 

 





 

Termination of Euro interest rate swaps


-

-

3,046

 

Exceptional finance costs


-

-

3,046

 

 

Total pre-tax exceptional items


1,486

3,527

9,748

 

 





 

Tax credit on exceptional items


(415)

(1,451)

(2,591)

 

Exceptional tax credit relating to prior year items


-

-

(11,505)

 

Exceptional tax charge to recognise change in UK tax rate


-

-

2,880

 

Exceptional tax credit


(415)

(1,451)

(11,216)

 

 

Interim announcement - Statement of the Directors

 

We confirm that to the best of our knowledge:

 

·      the condensed set of financial statements has been prepared in accordance with IAS 34;

·      the interim management report includes a fair review of the information required by DTR 4.2.7 (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·      the interim management report includes a fair review of the information required by DTR 4.2.8 (disclosure of related party transactions and changes therein).

 

By order of the Board

 

 

                                                                                                               

 

C J R Muir

Group Finance Director

3 December 2012

 

 

 

Independent review report to Northgate plc

 

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2012 which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of comprehensive income, the condensed consolidated cash flow statement, the condensed consolidated statement of changes in equity  and related Notes 1 to 8.  We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

 

Directors' responsibilities

 

The half-yearly financial report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

 

Our responsibility

 

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

 

Scope of Review

 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 October 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

 

Deloitte LLP

Chartered Accountants and Statutory Auditor

Leeds, United Kingdom

3 December 2012


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