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RNS
Northgate PLC  -  NTG   

Final Results

Released 07:00 27-Jun-2017

RNS Number : 2189J
Northgate PLC
27 June 2017
 



27 June 2017                          

NORTHGATE PLC

PRELIMINARY REPORT FOR THE YEAR ENDED 30 APRIL 2017

Mixed performance - weaker than expected in the UK, continued growth in Spain;

Increase in dividend

 

Northgate plc ("Northgate", the "Company" or the "Group"), the UK, Spain and Ireland's leading specialist in light commercial vehicle hire, announces its results for the year ended 30 April 2017.

 

Financial highlights

 

·     Underlying profit before tax £75.0m (2016 - £82.9m):

Impacted by lower number of vehicles on hire in the UK;

£5.7m adverse impact from the previous changes in vehicle depreciation rates;

£5.2m benefit of foreign exchange across the year;

 

·     Profit before tax £72.2m (2016 - £77.6m);

 

·     Underlying basic earnings per share 47.3p (2016 - 49.0p);

 

·     Basic earnings per share 45.7p (2016 - 46.1p);

 

·     Net debt remained at £309.9m including:

£21.0m net cash generation post dividends;

£20.5m adverse effect of the strengthened Euro at the balance sheet date;

 

·     8% increase in proposed full year dividend per share to 17.3p (2016 - 16.0p):

Final dividend proposed 11.6p (2016 - 10.9p).

 

Operational highlights

 

UK

·    Closing vehicles on hire of 39,500 (April 2016 - 42,400) as a result of a weak second half following the seasonal peak;

·    Average utilisation of 88% (April 2016 - 87%)

·    Continued focus on maximising the value of Van Monster, the Group's vehicle disposal operation:

Proportion of vehicles sold through retail channels 36% (2016 - 33%).

 

Spain

·    Strong commercial performance despite a challenging market and political landscape:

Closing vehicles on hire of 37,700 (April 2016 - 35,700);

Growth in fixed term vehicles on hire of 3,100 following new product launch in the year;

Return of 1,900 vehicles from legacy fixed term contracts;

·    Average utilisation of 91% (April 2016 - 91%)

 

Ireland

·    Continued growth in the year:

Closing vehicles on hire of 3,500 (April 2016 - 3,300);

·    Average utilisation of 89% (April 2016 - 90%)

 

Strategic update

 

Following a reappraisal of the market opportunities available to the Group, the strategy is now focused around four key areas:

 

1.    Defend and grow share of flexible rental markets;

2.    Gain share in fixed term markets;

3.    Converting ownership model to fixed term rental; and

4.    Consolidating a fragmented UK used LCV resale market.

 

Early progress made in the following key areas:

 

·     Initiated self-help measures to support sales lead generation and conversion in the UK:

Restructuring of UK leadership team;

Re-direction of marketing spend towards more efficient digital channels, improvements in product proposition and replacement of core IT systems underway;

Introducing enhanced pricing flexibility and investing in lead generation through telesales and digital channels;

·     Investing further in sales and marketing in Spain through digital channels to support growth;

·     Optimising infrastructure to support Ireland growth opportunity and profitability.

 

All investments made will be self-funded through the delivery of business wide efficiencies and improved agility to drive growth. 

 

Kevin Bradshaw, Chief Executive Officer, commented:

 

"Since joining the Group in January, I have been impressed with the strength of the Northgate business model and the opportunities within all territories to enhance our market position.

The performance of the UK business was, however, disappointing with profits impacted by a reduction in vehicles on hire over the second half of the year.  A full appraisal has been undertaken and several corrective actions have been implemented. I am confident that these actions, combined with continued management focus, will drive a significant improvement in performance, particularly in the areas of sales lead generation and conversion.

Encouragingly, our businesses in Spain and Ireland continue to show good levels of growth.

I am particularly pleased with the early success of our fixed term offering with over 4,100 vehicles under contract, Group-wide, by the year end. We have also seen further growth from Van Monster, our retail vehicle disposal channel.

I have completed an initial strategic review and this has identified four exciting growth opportunities for the Group in the medium term.  Further detail behind these opportunities, our progress against them and key targets will be given at an investor day in October. Our proposed increase in dividend this year reflects my strong conviction that the Group is well positioned to capitalise on these attractive growth opportunities moving forwards."

Full statement and results attached.

There will be a presentation to analysts at 9.30am today at Numis, 5th floor, London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT.  If you have not already registered for attendance then please contact MHP Communications on the number below.  A live webcast of the presentation will be available to view via a link on the Company's website www.northgateplc.com

 

For further information, please contact:

 

Northgate plc                                                    01325 467558

Kevin Bradshaw, Chief Executive Officer

Paddy Gallagher, Chief Financial Officer

 

MHP Communications                                  020 3128 8100 / northgate@mhpc.com

Andrew Jaques

Barnaby Fry

Simon Hockridge

Ollie Hoare

 

Notes to Editors:

Northgate plc is the leading light commercial vehicle hire business in the UK, Ireland and Spain by fleet size and has been operating in the sector since 1981.

Northgate's core business is the hire of light commercial vehicles to businesses on a flexible or term basis, giving customers the ability to manage their vehicle fleet requirements in a way which can adapt to changing business needs without the requirement to enter into a long term commitment. Further information regarding Northgate plc can be found on the Company's website: www.northgateplc.com

 

GAAP reconciliation

Throughout this report we refer to underlying results and measures.  The underlying measures allow management and other stakeholders to better compare the performance of the Group between the current and prior period without the effects of one-off or non-operational items.

Underlying measures exclude certain one-off items such as those arising from restructuring activities and recurring non-operational items, namely certain intangible amortisation. A reconciliation of GAAP to non-GAAP underlying measures and a glossary of terms used in this document is outlined beneath the Financial Review.

Chairman's statement

2017 has proved a challenging year for Northgate with a number of factors impacting the Group's performance.  During the year it became increasingly clear that, notwithstanding the competitive environment within which Northgate operates, there are significant opportunities for our business which need to be developed in a consistent and focused manner.

Performance

The Group's underlying profit before tax was £75m which represented a 10% decline on the previous year's £83m.  The performance of our UK business was disappointing with underlying operating profits declining by £11.5m which represented a fall of 21% on the prior year.  We have taken a number of actions to address this and these are set out in detail in the CEO's report.  Our Spanish and Irish businesses performed well and continue to make excellent progress with good growth in vehicles on hire ("VOH") and with the potential for further growth in VOH, revenues and profits.  VOH grew by 2,200 in Spain and Ireland; in the UK there was a decline of 2,900 which was particularly disappointing as we had anticipated a steadily improving pick up during the second half of the year. 

Cash generation was strong with free cash flow of £43m.  This provides good scope to further expand our business, including our move into term hire, and also to return cash to our shareholders in the form of increasing dividends.

Dividend

The Group remains in a strong financial position, with healthy cash generation and a robust balance sheet.  This underpins our progressive dividend policy and the Board's continued confidence in the outlook for the Group means we are proposing a full year dividend of 17.3p, an increase of 8% compared to the 2016 full year dividend of 16.0p.  This means a final proposed dividend of 11.6p (2016 - 10.9p). 

This gives a full year dividend cover of 2.7x on underlying earnings, in line with our intention to keep cover in the range of 3.75x to 2.5x. 

Board changes

During the year we appointed Kevin Bradshaw as our Group CEO.  Kevin has a background in both B2B and B2C organisations and he has a strong track record of developing businesses through clear strategic direction with a focus on consistent execution.  He previously led Avis UK and, more recently, was CEO of Wyevale Garden Centres, with both businesses enjoying strong profitable growth under his leadership.

The way forward

Our core objective is to grow shareholder value and we will do this by developing a business capable of delivering long term, sustainable and growing cash flows, achieved through a disciplined approach to deployment of capital and a rigorous focus on execution.  Our touchstones will be cash flow and returns on investment.

There is significant potential for Northgate with opportunities to develop the business and grow revenues and profits.  In several areas of our business we need to do better, with consistent and effective day to day execution.  There is good demand for our product and services and we intend to harness this effectively through marketing clear customer propositions and ensuring we meet or exceed our customers' expectations.  There are also previously untapped market segments which we have the infrastructure and skill set to service and I am pleased to report that we are already starting to gain good traction in the term hire segment.  Under Kevin's leadership, we anticipate a significant uptick in pace, sharper focus on consistent execution and improved strategic direction.  There is much to do at Northgate and significant opportunity to grow our businesses in the UK, Spain and Ireland.

Our people

I would like to record the Board's thanks to all of our 2,900 team members throughout Northgate.  They are the people who, day in and day out, make sure that our customers receive a superb service and we are most grateful to them. 

Outlook

Northgate is, fundamentally, a very good business with a superb group of people and an infrastructure capable of supporting significant growth.  With strong leadership, clear strategic direction and a clear sense of purpose I believe that much can be achieved.  The current year has started encouragingly, with some exciting prospects in the pipeline, and our team will be working hard to deliver an improved performance.

Andrew Page, Chairman

 

 

Chief Executive Officer's Review

Group

Since joining Northgate in January 2017 I have been impressed by the professionalism and hardworking attitude of all our team members. Northgate's business model and market position is robust and we are well positioned to take advantage of significant growth opportunities that exist.

I have undertaken an initial strategic review of the Group and it is clear that there is scope for significant growth within both our current and adjacent markets. 

Today, we operate in territories with eight million LCVs that are supplied to customers via three fulfilment models: 'ownership' where the vehicle is purchased; 'contract hire' where the vehicle is hired for a committed term, typically of several years and 'rental' where the vehicle is hired and can be returned at will.

 

Market revenue

£bn

Growth 2013-2016

% CAGR

Ownership - bought from used

7.4

1.9%

Ownership - bought from new

5.0

0.8%

Contract hire

2.0

8.1%

Rental

1.1

5.8%

Total

15.5

1.7%

 

 

 

UK

10.3

 

Spain

4.6

 

Ireland

0.6

 

Total

15.5

 

Based on research conducted by OC&C using data from MSI, BVRLA, DFT, SIMI. Used vehicle transactions reflect primary transactions only. Market defined as LCV only.

The LCV purchase, contract hire and rental markets together generate annual revenues of c.£16bn across our three territories. Today, we participate in c.£11bn of this spanning rental, contract hire and second hand LCV trading.

Growth in the contract hire and rental markets has been particularly strong and is driven by three factors.

·     First, by a cultural shift away from asset ownership, as customers feel less need to own vehicles outright;

·     Second, through the attraction of a low initial deposit followed by certainty in ongoing cash flows afforded by contract hire and rental models versus a high initial cash outlay coupled with uncertainty around the residual value associated with outright purchase; and

·     Third, by the attraction of lower 'whole life costs' as third party provision of vehicles and the management of them results in lower overall costs for the customer than direct ownership.

We believe that these factors are driving a structural trend in the market that will underpin strong growth for the contract hire and rental sectors in the coming years.

Blending this market analysis with a review of our relative competitive advantage in each segment has identified four attractive growth opportunities in areas where we have the ability to win.

 

1.    Defend and grow share of flexible rental markets

 

We have prioritised defence and growth of our position in flexible rental. In a £1bn market with volumes growing at 6% per annum and with an overall volume share of 31%, we see continued opportunity to build on our leadership position here and deliver further strong profitable growth.

 

2.    Gain share in fixed term markets

 

We see a significant opportunity to grow our share of the contract hire market. At £2bn in market revenue, with volumes growing at 8% per annum and both EBIT margins and return on capital similar to that of flexible rental, we see an outstanding opportunity to grow from a position of low market share today. We see this as a natural adjacency requiring limited variations in our operating model to serve it and with substantial opportunities to cross sell within our existing customer base.

 

3.    Converting ownership model to fixed term rental

 

We see large untapped potential in converting customer fulfilment from 'ownership' to 'contract hire' instead. With c.£12bn in sales from 1.2m annual transactions in new and second hand LCV trading in our territories, we believe that attractive EBIT margins are achievable from sales volumes that are converted to term hire. Each year, 450,000 of these sales transactions are financed at the point of sale and present a priority to target with a term hire alternative. We see significant tailwinds supporting this conversion as a result of the structural market trends identified.

 

4.    Consolidating a fragmented UK used LCV resale market

 

We see a substantial opportunity to consolidate the highly fragmented second hand LCV trading market in the UK. In a £5bn market, Northgate has just 2.5% market share through Van Monster. We believe Van Monster has significant potential and is currently under exploited. We see several opportunities to increase the supply of stock to Van Monster, and to drive significant digital and network expansion of the business. While this market currently operates on thinner EBIT margins, very high asset turn ensures that strong returns on capital are delivered.

 

UK

Underlying operating profit for the year was £43.9m compared to £55.4m in the prior year.  This was mainly attributable to 6% lower average vehicles on hire.  Closing vehicles on hire were 39,500, a reduction of 2,900 since April 2016. 

Closing vehicles on hire growth (reduction)

H1

H2

Total

Year ended 30 April 2017

100

(3,000)

(2,900)

Year ended 30 April 2016

(1,300)

(2,000)

(3,300)

 

This marks a disappointing second half performance in the UK following growth in the first six months of the year.  Whilst the first half peak reflected some seasonal business, we expected the recovery in the final quarter to be stronger than was experienced.

 

Some key weaknesses have persisted which have contributed to this performance, namely:

·     Leadership: aligning business priorities to the changing dynamics of the market;

·     Marketing: insufficient lead generation, digital innovation and customer data acquisition;

·     Sales: insufficient time in front of customers, price inflexibility and conversion of opportunities;

·     Talent: fragmented leadership and insufficient access to strong commercial talent; and 

·     IT:  legacy systems are inflexible, not supporting required changes.

A number of self-help actions have already been taken to fix these weaknesses:

·     New leadership appointments in the UK executive team to Managing Director, Sales Director and Marketing Director roles;

·     Tactical changes in sales and marketing, introducing enhanced pricing flexibility and                    re-directing spend in lead generation through telesales and digital channels;

·     Formation of a small commercial centre in Reading in order to access a wider talent pool and work collaboratively; and

·     Replacement of core IT systems is underway.

These changes will start to have an impact in the new financial year and are crucial to the future success of the business; they will continue to form the foundation of the Group's strategic priorities.

All investments made will be self-funded through the delivery of business wide efficiencies and improved agility to drive growth. 

Spain

Underlying operating profit for the year was £42.6m compared to £41.3m in the prior year.  On a constant currency basis, operating profit decreased by £4.2m compared to the prior year.  This included a £1.6m impact of depreciation rate changes, a £1.2m increase in bad debts due to trading difficulties of three large customers and a £0.7m increase in fleet insurance due to legislative changes.  The remaining difference was due to managing a younger fleet and dealing with a higher level of transactional churn within flexible rental.     

Closing vehicles on hire growth

H1

H2

Total

Year ended 30 April 2017

500

1,500

2,000

Year ended 30 April 2016

100

-

100

 

The net growth in closing vehicles on hire of 2,000 vehicles includes a 1,900 reduction from the run out of legacy fixed term contracts.  Of the underlying growth, 800 related to flexible contracts and 3,100 related to vehicles put on new fixed term contracts since the product was launched earlier in the year.

The growth in flexible rental was held back by the ongoing uncertainties in the political arena as the Central Government budget approval was deferred.  The successful launch of our fixed term offer is very encouraging and this momentum has been carried through into the new financial year.  

 

Ireland

Underlying operating profit for the year was £3.2m compared to £2.8m in the prior year.  On a constant currency basis operating profit was £0.1m higher than the prior year.

Closing vehicles on hire growth (reduction)

H1

H2

Total

Year ended 30 April 2017

300

(100)

200

Year ended 30 April 2016

300

-

300

 

The growth in average vehicles on hire of 11% did not drop through to the bottom line due to the challenge of operating a national fleet from our Dublin hub.  Ireland has experienced significant growth in the last five years but this has been partly achieved in regional areas which are not currently supported by internal workshops and other operations. Investments will now be made in the infrastructure of the business to provide a platform for future profitable growth.

Fixed term rental

Since the launch of the new fixed term offer in the year 3,500 vehicles have been put on hire as follows:

 

Contracts signed (VOH)

VOH at 30 April 2017

New customers

Existing customers

Average VOH per customer

Average contract length

Spain

3,847

3,130

928

537

2

31 months

UK

269

269

17

16

8

22 months

Ireland

62

62

11

30

2

13 months

 

The fixed term offer was fully launched in Spain, following a successful trial in the first half of the year.  Trials in the UK and Ireland in the second half were also successful and a full product launch will now take place.

Group Outlook

I have confidence in the measures that have been taken to arrest the decline in vehicles on hire in the UK. Our Spanish business continues to trade well and, consequently, I expect the Group to grow vehicles on hire over the course of this current financial year.

On the basis of an initial strategic review, we have identified four clear growth priorities in markets that are attractive and where we believe we have the ability to win. The fixed term opportunity is particularly exciting and we will build on our good progress this year which saw over 4,100 vehicle contracts signed.

As we further develop the strategies and implementation plans for these priorities, I have significant confidence in the prospects for Northgate over the coming years.

Kevin Bradshaw, Chief Executive Officer

 

 

Financial Review

Group

Summary

A summary of the Group's financial performance for 2017, with a comparison to 2016, is shown below:

 

2017
£m

2016
£m

Change
£m

Change
%

Revenue

667.4

618.3

49.1

7.9

Underlying operating profit

                84.6

                94.3

(9.7)

(10.3)

Underlying profit before tax

75.0

82.9

(7.9)

(9.6)

Underlying EPS

47.3p

49.0p

(1.7)p

(3.5)

Dividend per share

17.3p

16.0p

1.3p

8.1

Underlying free cash flow

44.0

48.4

(4.4)

(9.0)

 

On a statutory basis, operating profit was £81.5m (2016 - £90.6m) and profit before tax was £72.2m (2016 - £77.6m). Basic earnings per share were 45.7p (2016 - 46.1p). Net cash generated from operations, including net capital expenditure on vehicles for hire, was £47.8m (2016 - £73.7m).

Group revenue increased by 7.9% to £667.4m or 2.7% at constant exchange rates.

The weakened Sterling across the year increased profit before tax by £5.2m compared to the prior year.

The impact of previous changes to depreciation rates decreased underlying profit before tax by £5.7m compared to the prior year.

Excluding both of these impacts underlying profit before tax was £7.4m lower than the prior year.

The accounting requirements to adjust depreciation rates due to changes in expectations of residual values of used vehicles make it more difficult to identify the underlying profit trends in our business. 

The impact on operating profit since changes were first made in the year ended 30 April 2013, including the estimated impact on future periods is as follows:

 

Cumulative impact

Year-on-year impact

 

Group

Group

 

UK and Ireland

Spain

Year:

£m

£m

 

£m

£m

30 April 2013

5.3

5.3

 

5.3

-

30 April 2014

4.3

(1.0)

 

(1.0)

-

30 April 2015

15.7

11.4

 

8.4

3.0

30 April 2016

12.0

(3.7)

 

(5.9)

2.2

30 April 2017

6.3

(5.7)

 

(4.1)

(1.6)

30 April 2018*

2.1

(4.2)

 

(2.7)

(1.5)

30 April 2019*

-

(2.1)

 

-

(2.1)

* management estimate

Free cash flow was £42.9m (2016 - £62.9m) after net capital expenditure of £174.1m (2016 - £155.5m).  If the impact of increasing or reducing the fleet size in the year is removed from net capital expenditure in each year, the underlying free cash flow of the Group was £44.0m (2016 - £48.4m).

Net cash generation was £21.0m (2016 - £42.8m).  After an adverse exchange rate impact of £20.5m (2016 - £16.1m), closing net debt was £309.9m (2016 - £309.9m) and gearing was 61% (2016 - 67%).

UK

The composition of the UK revenue and operating profit is set out below:

 

2017
£m

2016
£m

Change
£m

Change
%

Revenue

 

 

 

 

Vehicle hire

272.2

290.7

(18.5)

(6.4)

Vehicle sales

144.0

123.4

20.6

16.7

 

416.2

414.1

2.1

0.5

 

 

 

 

 

Operating profit

43.9

55.4

(11.5)

(20.8)

Operating margin

16.1%

19.1%

 

 

 

A decrease in hire revenue of 6.4% was primarily driven by a decrease in the average number of vehicles on hire of 6.3%.

The impact of previous changes to depreciation rates decreased operating profit by £3.8m compared to the prior year. 

The increased volume of vehicles sold was offset by a higher net book value per vehicle sold as a result of previous depreciation rate changes. The total impact was a £4.8m decrease in operating profit compared to the prior year. This equates to a PPU of £703 compared to £979 in the prior year.

Spain

The revenue and operating profit generated in Spain is shown below:

 

2017
£m

2016
£m

Change
£m

Change
%

Revenue

 

 

 

 

Vehicle hire

163.4

140.8

22.6

16.1

Vehicle sales

63.2

44.1

19.1

43.4

 

226.6

184.9

41.7

22.6

 

 

 

 

 

Operating profit

42.6

41.3

1.3

3.2

Operating margin

26.1%

29.3%

 

 

 

The increase in hire revenue of 16.1% benefitted from weaker Sterling across the year.  At constant exchange rates hire revenue grew by 1.2% as average vehicles on hire were 1.3% higher compared to the previous year.

Weaker Sterling across the year benefitted operating profit by £5.5m. The impact of previous changes to depreciation rates decreased operating profit by £1.6m compared to the prior year.

An increased volume of vehicles sold was offset by the impact of depreciation rate changes and a higher net book value of selling younger vehicles, contributing £1.0m to the decrease in operating profit compared to the prior year. In Euros this equates to a PPU of €1,589 compared to €2,102 in the prior year.

Corporate

Underlying corporate costs were £5.1m (2016 - £5.1m).

Interest

Net underlying finance charges for the year were £9.6m (2016 - £11.4m).

The net cash interest charge for the year was £9.0m (2016 - £10.1m) benefitting by £1.3m from lower levels of net borrowings, £0.6m in relation to the tax settlement in Spain partially offset by £0.1m of higher pricing and £0.7m of adverse movements in foreign exchange rates.

Non-cash interest reduced by £0.7m to £0.6m (2016 - £1.3m).

Taxation

The Group's underlying and statutory effective tax rate was 16% (2016 - 21%).

Earnings per share

Underlying EPS was 47.3p compared to 49.0p in the prior year.

Underlying earnings for the purpose of calculating EPS were £63.0m (2016 - £65.4m).  The weighted average number of shares for the purposes of calculating EPS was 133.2m, in line with the prior year.

Exceptional items

During the year £1.0m of exceptional net costs were incurred (2016 - £3.3m) of which £2.2m related to restructuring costs and a £1.2m credit related to the settlement of an historic tax case in Spain.

Dividend and capital allocation

Subject to approval, the final dividend proposed of 11.6p per share (2016 - 10.9p) will be paid on 23 September 2017 to shareholders on the register as at close of business on 11 August 2017.

Including the interim dividend paid of 5.7p (2016 - 5.1p), the total dividend relating to the year would be 17.3p (2016 - 16.0p).  The dividend is covered 2.7x by underlying earnings.

Our objective is to build shareholder value by generating returns above our cost of capital. We will allocate capital within our business in accordance with the framework outlined below, with our first priority being to allocate capital to support our growth ambitions:

1.      Investment for growth in existing network

2.      Investment in new sites

3.      Provide regular returns to shareholders

4.      Acquisitions

5.      Return of surplus cash

We will continue to maintain our balance sheet within the target leverage range of 1.25 to 1.85 times net debt to EBITDA, although we are prepared to move temporarily outside of this range if circumstances warrant it. This is consistent with our 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.

Cash flow

A summary of the Group's cash flows is shown below:

 

2017

2016

 

 

£m

£m

Underlying operational cash generation

238.3

242.8

Net capital expenditure

(174.1)

(155.5)

Net taxation and interest payments

(21.2)

(18.8)

Share purchases and refinancing costs

(0.1)

(5.6)

Free cash flow

42.9

62.9

Dividends

(21.9)

(20.1)

Net cash generated

21.0

42.8

 

A total of £346.3m was invested in new vehicles compared to £296.2m in the prior year.  The Group's new vehicle capital expenditure was partially funded by £177.0m generated from the sale of used vehicles (2016 - £145.9m).  Other net capital expenditure amounted to £4.8m (2016 - £5.2m).

All vehicles required for the Group's operations are paid for in cash up-front.  The cash flow generation of the Group in any year is therefore influenced by the capital expenditure to grow the business or cash generated by adjusting the fleet size downwards if vehicles on hire reduce.  If the impact of increasing or reducing the fleet size in the year is removed from net capital expenditure, the underlying free cash generation of the Group was as follows:

 

2017

2016

 

£m

£m

Free cash flow

42.9

62.9

Add back: Adjustment to net capital expenditure for growth (contraction) in fleet size

1.1

(14.5)

Underlying free cash flow

44.0

48.4

 

Net debt reconciles as follows:

  

2017

2016

 

£m

£m

Opening net debt

309.9

337.8

Net cash generated

(21.0)

(42.8)

Other non-cash items

 0.5

 (1.2)

Exchange differences

20.5

16.1

Closing net debt

309.9

309.9

 

Excluding the £20.5m impact of foreign exchange net debt reduced by £20.5m.

Borrowing facilities

As at 30 April 2017 the Group had £312m drawn against total committed facilities of £572m, giving headroom of £260m, as detailed below:

 

Facility

Drawn

Headroom

Maturity

Borrowing cost

 

£m

£m

£m

 

 

UK bank facility

451

216

235

Jun-20

2.33%

Loan notes

84

84

-

Aug-22

2.38%

Other loans

37

12

25

May-17 to Nov-17

0.93%

 

572

312

260

 

2.17%

 

The overall cost of borrowings at 30 April 2017 is 2.17% (2016 - 2.14%).

The margin charged on bank debt is dependent upon the Group's net debt to EBITDA ratio, ranging from a minimum of 1.50% to a maximum of 2.25%.  The net debt to EBITDA ratio at 30 April 2017 corresponds to a margin of 1.75%.

Interest rate swap contracts have been taken out which fix a proportion of bank debt at 2.16% (2016 - 2.23%) giving an overall cost of bank borrowings (gross of cash balances) at 30 April 2017 of 2.16% (2016 - 2.12%). 

The other loans consist of £11.5m of local borrowings in Spain and £0.5m of preference shares.

The split of borrowings (gross of cash balances and excluding overdrafts) by currency is as follows:

 

 

 

2017

2016

 

 

 

£m

£m

Euro

 

 

256

257

Sterling

 

 

76

75

Borrowings before unamortised arrangement fees

332

332

Unamortised arrangement fees

(2)

(3)

Borrowings (excluding cash and overdrafts)

330

329

 

There are three financial covenants under the Group's facilities which remain unchanged and are as follows:

 

Threshold

April 2017

Headroom

April 2016

Interest cover

3x

9.23x

£56m (EBIT)

9.13x

Loan to value

70%

37%

£289m (Net debt)

39%

Debt leverage

2x

1.31x

£84m (EBITDA)

1.33x

 

 

Balance sheet

Net tangible assets at 30 April 2017 were £509.7m (2016 - £463.4m), equivalent to a net tangible asset value of 383p per share (2016 - 348p per share). 

Gearing at 30 April 2017 was 61% (2016 - 67%).

Return on capital employed was 10.5% (2016 - 12.2%).

Treasury

The function of Group Treasury 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 our 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.  Our credit exposure 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 discussed 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 and other loan agreements incorporate variable interest rates.  The Group seeks to manage the risks associated with fluctuating interest rates by having in place a number of financial instruments covering at least 50% of its borrowings at any time. The proportion of gross borrowings hedged into fixed rates was 97% at 30 April 2017 (2016 - 91%).

 

Foreign exchange risk

The Group's reporting currency is, and the majority of its revenue (62%) is generated in, Sterling. 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 must be 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:

 

2017

2016

 

£ : €

£ : €

Average

1.18

1.35

Year end

1.18

1.28

 

The Group manages its exposure to currency fluctuations on retranslation of the balance sheets of those subsidiaries whose functional currency is in Euro by maintaining a proportion of its borrowings in the same currency.  The exchange differences arising on these borrowings have been recognised directly within equity along with the exchange differences on retranslation of the net assets of the Euro subsidiaries. At 30 April 2017 70% of Euro net assets were hedged against Euro borrowings (2016 - 78%). 

Going concern

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.

Paddy Gallagher, Chief Financial Officer

 

 

Principal risks and uncertainties

Economic environment

The demand for our products and services could be affected by a downturn in economic activity in the countries in which the Group operates.

The high level of operational gearing in our business model means that changes in demand can lead to higher levels of variability in profits.

An adverse change in macroeconomic conditions could also increase the risk of customer failure and therefore incidences of bad debts.

Demand for our products and the cost of our supplies may be impacted by the
UK's decision to leave the EU.

Should there be a significant economic downturn the flexible nature of the Group's business model allows any vehicles returned to be placed with different customers. Alternatively, utilisation can be maintained through purchasing fewer vehicles, increasing disposals or a combination of the two. Although this may affect short term profitability it generates cash and reduces debt.

No individual customer contributes more than 5% of total revenue generated, and ongoing credit analysis is performed on new and existing customers to assess credit risk.

With regards to the UK's decision to leave the EU the Group's current hedging arrangements protect it from material foreign exchange risks and the Group has in place sufficient borrowing facilities to fund its activities with maturities up to five years. Any impact on demand or the cost of supplies is not yet known.

Competition and hire rates

The markets in which the Group operates are fragmented and competitive meaning that price competition is high.

There is a risk that the Group fails to attract and retain customers on the basis of pricing.  This could either be as a result of pricing too highly or not adequately communicating the value of service provided which underpins our pricing.

If our pricing is perceived to be higher than our competition for the same level of service, then we will either lose market share or be forced to reduce prices to remain competitive.  Without any adjustment to the cost base, this will result in an erosion of returns.

Core pricing is based upon target levels of return with discount authority levels allowing flexibility to ensure that we remain competitive on pricing.

Further investment will be made in marketing to ensure that the value proposition underpinning pricing is well communicated and received.

 

Vehicle holding costs

The profitability of the Group is dependent upon minimising vehicle holding costs, which are affected by the pricing levels of new vehicles purchased and the disposal value of vehicles sold.

An increase in holding costs, if not recovered through hire rate increases, would adversely affect profitability, shareholder returns and cash generation.

Pricing is negotiated with manufacturers on an annual basis in advance of purchases being made. Variable supply terms allow us flexibility to make purchases as required throughout the year.

Whilst the Group is exposed to fluctuations in the used vehicle market, we have sought to optimise the sales route for each vehicle. Should the market experience a short term decline in residual values, we can age our existing fleet until such time as the market improves.

Employees and the working environment

Failure to attract, develop and retain individuals with the appropriate skills will inhibit the successful delivery of our strategy.

Inadequate maintenance of our vehicles and a working environment where individuals do not receive appropriate training and support could place employees and customers' employees at
risk from failures in health and safety.

Failure to invest in our workforce and high levels of staff turnover will impact upon customer service and delivery of the Group's strategic objectives.

Our recruitment processes seek to attract individuals who will exemplify our core values. Each new joiner receives an introduction to the Group's culture as well as our processes.

Failures in health and safety would put the reputation of the business at risk, both in terms of attracting and retaining talent and maintaining customer relationships.

Personal development plans and tailored training are conducted for all employees. Salaries are benchmarked against the market and a range of incentives are provided to attract and retain staff. Succession plans are in place for executive positions.

Regular communication and engagement with everyone across the business is vital to our success.

The Group Health, Safety and Environment and Group Internal Audit functions are responsible for delivering health and safety best practice and reporting any non-compliance to the Board.

IT systems

The Group's business involves a high number of operational and financial transactions across numerous sites which rely on the continuous operation of our IT systems.

If IT systems are not invested in appropriately there is a risk that the operations of the business will become less efficient and this in turn could impact upon customer service delivery.

Should IT systems not be invested in adequately or fail, whether the cause is accidental or malicious, this could have an adverse impact on the recording and processing of financial information, efficiency of operations and customer service delivery.

The Group has an appropriate business continuity plan in the event of disruption arising from an IT systems failure.

Before any material system changes are implemented a project plan is approved by the Board. A member of the executive team will then sponsor the project and an ongoing implementation review will be performed by external consultants. The objective is always to minimise the risk of business disruption that could result from changes.

Access to capital

The Group requires capital to replace vehicles at the end of their rental life and for any growth in the fleet. The Group therefore requires continued access to adequate credit facilities and to remain in compliance with its financial covenants.

Failure to maintain or extend access to credit facilities could impact on the Group's ability to continue as a going concern.

The Group's main facilities mature in 2020 and 2022 and the Group believes that these facilities provide adequate resources for present requirements.

The Group reviews its compliance with covenants on a monthly basis in conjunction with cash flow forecasts to ensure ongoing compliance.

 

GLOSSARY OF TERMS

The following defined terms have been used throughout this document:

Term

Definition

CAGR

Constant annual growth rate

EPS

Basic earnings per share

Facility headroom

Calculated as facilities of £571.9m less net borrowings of £311.9m. Net borrowings represent net debt of £309.9m excluding unamortised arrangement fees of £2.0m and are stated after the deduction of £41.2m of cash balances which are available to offset against borrowings

GAAP

Generally Accepted Accounting Practice: meaning compliance with International Financial Reporting Standards

Gearing

Calculated as net debt divided by net tangible assets (as defined below)

LCV

Light commercial vehicle: the official term used within the European Union for a commercial carrier vehicle with a gross vehicle weight of not more than 3.5 tonnes

Net tangible assets

Net assets less goodwill and other intangible assets

PPU

Profit per unit/loss per unit - 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), divided by the number of vehicles sold

SME

Small and medium sized enterprise

 

GAAP RECONCILIATION

 

A reconciliation of GAAP to non-GAAP underlying measures is as follows:


Group

2017

£000

Group

2016

£000




Profit before tax

72,222

77,632

Add back:



Restructuring costs

2,189

1,777

Intangible amortisation

1,830

1,979

Spain tax settlement

(1,235)

-

Refinancing costs

-

1,561

Underlying profit before tax

75,006

82,949




 

 





Group

2017

£000

Group

2016

£000







Profit for the year




60,901

61,479

Add back:






Restructuring costs




2,189

1,777

Intangible amortisation




1,830

1,979

Spain tax settlement




(1,235)

-

Refinancing costs




-

1,561

Tax on exceptional items and intangible amortisation




(686)

(1,446)

Underlying profit for the year




62,999

65,350

Weighted average number of Ordinary shares



133,232,518

133,232,518

Underlying basic earnings per share




47.3p

49.0p







 


Group

2017

£000

Group

2016

£000




Operating profit

81,482

90,563

Add back:



Restructuring costs

2,189

1,777

Intangible amortisation

1,830

1,979

Spain tax settlement

(896)

-

Underlying operating profit

84,605

94,319

 

 


UK

2017

£000

Spain

2017

£000

Ireland

2017

£000

Corporate

2017

£000

Eliminations

2017

£000

Group

2017

£000








Underlying operating profit (loss)

43,886

42,607

3,233

(5,121)

-

84,605

Divided by: Revenue: hire of vehicles

272,168

163,419

21,528

-

(995)

456,120

Underlying operating margin

16.1%

26.1%

15.0%

-

-

18.5%

 


UK

2016

£000

Spain

2016

£000

Ireland

2016

£000

Corporate

2016

£000

Eliminations

2016

£000

Group

2016

£000








Underlying operating profit (loss)

55,392

41,267

2,759

(5,099)

-

94,319

Divided by: Revenue: hire of vehicles

290,714

140,781

16,691

-

(1,052)

447,134

Underlying operating margin

19.1%

29.3%

16.5%

-

-

21.1%

 

 

 





Group

2017

£000

Group

2016

£000







Net (decrease) increase in cash and cash equivalents


(327)

5,586

Add back:




Receipt of bank loans and other borrowings




-

(70,410)

Repayments of bank loans and other borrowings



21,369

107,653

Net cash generated




21,042

42,829

Add back: Dividends paid




21,875

20,114

Free cash flow




42,917

62,943

Add back: Adjustment to net capital expenditure for growth (contraction) in fleet size

1,127

(14,545)

Underlying free cash flow




44,044

48,398

 

 

 

CONSOLIDATED INCOME STATEMENT





 

FOR THE YEAR ENDED 30 APRIL 2017








Underlying

Statutory

Underlying

Statutory

 



2017

2017

2016

2016

 


Note

£000

£000

£000

£000

 

Revenue: hire of vehicles

456,120

456,120

447,134

447,134

 

Revenue: sale of vehicles

211,309

211,309

171,154

171,154

 

Total revenue

1

667,429

667,429

618,288

618,288

 

Cost of sales

(514,446)

(514,446)

(459,286)

(459,286)

 

Gross profit


152,983

152,983

159,002

159,002

 

Administrative expenses (excluding exceptional items and intangible amortisation)


 

(68,378)

 

(68,378)

 

(64,683)

 

(64,683)

 

Exceptional administrative expenses

6

-

(1,293)

-

(1,777)

 

Intangible amortisation

-

(1,830)

-

(1,979)

 

Total administrative expenses

(68,378)

(71,501)

(64,683)

(68,439)

 

Operating profit

1

84,605

81,482

94,319

90,563

 

Interest income

2

2

3

3

 

Finance costs (excluding exceptional items)


(9,601)

(9,601)

(11,373)

(11,373)

 

Exceptional finance credit (costs)

6

-

339

-

(1,561)

 

Profit before taxation

75,006

72,222

82,949

77,632

 

Taxation

(12,007)

(11,321)

(17,599)

(16,153)

 

Profit for the year

62,999

60,901

65,350

61,479

 

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 6, as well as certain intangible amortisation and the taxation thereon, in order to provide a better indication of the Group's underlying business performance.

Earnings per share






Basic

2

47.3p

45.7p

49.0p

46.1p

Diluted

2

46.7p

45.1p

48.3p

45.5p

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2017






2017

2016



£000

£000

Amounts attributable to owners of the Parent Company




Profit attributable to the owners


60,901

61,479

 

Other comprehensive income (expense)

Foreign exchange differences on retranslation of net assets of subsidiary undertakings


 

 

25,952

 

 

22,775

Net foreign exchange differences on long term borrowings held as hedges


(21,793)

(18,347)

Foreign exchange difference on revaluation reserve


85

70

Recycling of hedging reserve items


-

649

Net fair value gains (losses) on cash flow hedges


659

(1,428)

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


(157)

285

Total other comprehensive income for the year


4,746

Total comprehensive income for the year


65,647

65,483

 

All items will subsequently be reclassified to the consolidated income statement.

 

CONSOLIDATED BALANCE SHEET





AS AT 30 APRIL 2017









Restated




2017

2016




£000

£000

Non-current assets





Goodwill



3,589

3,589

Other intangible assets



3,309

4,054






Property, plant and equipment: vehicles for hire



731,657

684,499

Other property, plant and equipment



65,262

65,765

Total property, plant and equipment



796,919

750,264

Deferred tax assets



13,730

15,256

Total non-current assets



817,547

773,163

Current assets





Inventories



33,666

23,109

Trade and other receivables



62,656

63,499

Derivative financial instrument assets



213

-

Cash and bank balances



41,166

55,248

Total current assets



137,701

141,856

Total assets



955,248

915,019

Current liabilities





Trade and other payables



64,913

53,183

Current tax liabilities



18,568

19,350

Short term borrowings



32,585

46,515

Total current liabilities



116,066

119,048

Net current assets



21,635

22,808

Non-current liabilities





Derivative financial instrument liabilities



2,706

3,152

Long term borrowings



318,439

318,610

Deferred tax liabilities



1,420

3,184

Total non-current liabilities



322,565

324,946

Total liabilities



438,631

443,994

NET ASSETS



516,617

471,025






Equity





Share capital



66,616

66,616

Share premium account



113,508

113,508

Own shares reserve



(1,659)

(8,157)

Hedging reserve



(2,020)

(2,522)

Translation reserve



(5,241)

(9,400)

Other reserves



68,614

68,529

Retained earnings



276,799

242,451

TOTAL EQUITY



516,617

471,025

 

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

CONSOLIDATED CASH FLOW STATEMENT



FOR THE YEAR ENDED 30 APRIL 2017







Restated


  Note

2017

£000

2016

£000

Net cash generated from operations

4

47,818

73,726

Investing activities




Interest received


2

3

Proceeds from disposal of other property, plant and equipment

1,222

1,001

Purchases of other property, plant and equipment

(4,878)

(4,503)

Purchases of intangible assets


(1,133)

(1,682)

Net cash used in investing activities


(4,787)

(5,181)

Financing activities




Dividends paid

(21,875)

(20,114)

Receipt of bank loans and other borrowings


-

70,410

Repayments of bank loans and other borrowings

(21,369)

(107,653)

Debt issue costs paid


-

(1,675)

Net payments to acquire own shares for share schemes

(114)

(2,366)

Termination of financial instruments

-

(1,561)

Net cash used in financing activities


(43,358)

(62,959)

Net (decrease) increase in cash and cash equivalents


(327)

5,586

Cash and cash equivalents at 1 May


18,748

9,676

Effect of foreign exchange movements


1,216

3,486

Cash and cash equivalents at 30 April


19,637

18,748





Cash and cash equivalents consist of:




Cash and bank balances


41,166

55,248

Bank overdrafts


(21,529)

(36,500)



19,637

18,748

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 APRIL 2017


Share capital  and share premium

 

 

Own shares reserve

Hedging reserve

Translation reserve

Other reserves

Retained earnings

Total


£000

£000

£000

£000

£000

£000

£000

Total equity at 1 May 2015

180,124

(8,812)

(2,028)

(13,828)

68,459

202,441

426,356

Share options fair value charge

-

-

-

-

-

1,666

1,666

Share options exercised

-

-

-

-

-

(3,021)

(3,021)

Profit attributable to owners of the Parent Company

-

-

-

-

-

61,479

61,479

Dividends paid

-

-

-

-

-

(20,114)

(20,114)

Net purchase of own shares

-

(2,366)

-

-

-

-

(2,366)

Transfer of shares on vesting of share options

-

3,021

-

-

-

-

3,021

Other comprehensive (expense) income

-

-

(494)

4,428

70

-

4,004

Total equity at 1 May 2016

180,124

(8,157)

(2,522)

(9,400)

68,529

242,451

471,025

Share options fair value charge

-

-

-

-

-

1,934

1,934

Share options exercised

-

-

-

-

-

(6,612)

(6,612)

Profit attributable to owners of the Parent Company

-

-

-

-

-

60,901

60,901

Dividends paid

-

-

-

-

-

(21,875)

(21,875)

Net purchase of own shares

-

(114)

-

-

-

-

(114)

Transfer of shares on vesting of share options

-

6,612

-

-

-

-

6,612

Other comprehensive income

-

-

502

4,159

85

-

4,746

Total equity at 30 April 2017

180,124

(1,659)

(2,020)

(5,241)

68,614

276,799

516,617

 

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

 

NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 APRIL 2017

1. SEGMENTAL ANALYSIS



UK

Spain

Ireland

Corporate

Eliminations

Total



2017

2017

2017

2017

2017

2017



£000

£000

£000

£000

£000

£000

Revenue: hire of vehicles


272,168

163,419

21,528

-

(995)

456,120

Revenue: sale of vehicles


144,043

63,241

4,025

-

-

211,309

Total revenue


416,211

226,660

25,553

-

(995)

667,429









Underlying operating profit (loss) *


43,886

42,607

3,233

(5,121)

-

84,605

Restructuring costs







(2,189)

Spain tax settlement







896

Intangible amortisation







(1,830)

Operating profit







81,482

 



Restated

Restated

Restated

Restated

Restated

Restated



UK

Spain

Ireland

Corporate

Eliminations

Total



2016

2016

2016

2016

2016

2016



£000

£000

£000

£000

£000

£000

Revenue: hire of vehicles


290,714

140,781

16,691

-

(1,052)

447,134

Revenue: sale of vehicles


123,401

44,110

3,643

-

-

171,154

Total revenue


414,115

184,891

20,334

-

(1,052)

618,288









Underlying operating profit (loss) *


55,392

41,267

2,759

(5,099)

-

94,319

Restructuring costs







(1,777)

Intangible amortisation







(1,979)

Operating profit







90,563

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

Ireland was previously reported as part of the UK segment.

2. EARNINGS PER SHARE






Underlying

Statutory

Underlying

Statutory

Basic and diluted earnings per share

2017

£000

2017

£000

2016

£000

2016

£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 profit for the year attributable to owners of the Parent Company

62,999

60,901

65,350

61,479




 


Number

Number

Number

Number

Number of shares





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

Effect of dilutive potential Ordinary shares:





- share options

1,700,849

1,700,849

1,990,249

1,990,249

Weighted average number of Ordinary shares for the purposes





of diluted earnings per share

134,933,367

134,933,367

135,222,767

135,222,767

Basic earnings per share

47.3p

45.7p

49.0p

46.1p

Diluted earnings per share

46.7p

45.1p

48.3p

45.5p

3. DIVIDENDS

Dividends paid in the year were £21,875,000 (2016 - £20,114,000).

An interim dividend of 5.7p per Ordinary share was paid in January 2017 (2016 - 5.1p).  The Directors propose a final dividend of 11.6p per share for the year ended 30 April 2017 (2016 - 10.9p), which is subject to approval at the Annual General Meeting and has not been included as a liability as at 30 April 2017.

4. NOTES TO THE CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 APRIL 2017 

 




2017

2016

Net cash generated from operations

£000

£000

Operating profit

81,482

90,563

Adjustments for:



Net impairment

131

-

Depreciation of property, plant and equipment

156,291

144,272

Amortisation of intangible assets

1,891

1,979

Loss on disposal of property, plant and equipment

199

122

Share options fair value charge

1,934

1,666

Operating cash flows before movements in working capital

241,928

238,602

Decrease in non-vehicle inventories

525

866

Decrease in receivables

4,801

10,157

Decrease in payables

(8,952)

(6,825)

Cash generated from operations

238,302

242,800

Income taxes paid, net

(12,602)

(8,259)

Interest paid

(8,552)

(10,527)

Net cash generated from operations

217,148

224,014

Purchase of vehicles

(346,305)

(296,165)

Proceeds from disposal of vehicles

176,975

145,877

Net cash generated from operations

47,818

73,726

 

 

5. ANALYSIS OF CONSOLIDATED NET DEBT

 



 


Restated


2017

2016


£000

£000

Cash and bank balances

(41,166)

(55,248)

Bank overdrafts

21,529

36,500

Bank loans

244, 236

249,742

Loan notes

84,393

77,930

Cumulative preference shares

500

500

Confirming facilities

366

453

Consolidated net debt

309,858

309,877

 

6. EXCEPTIONAL ITEMS




 


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

 

 



2017

2016



£000

£000

Restructuring costs


2,189

1,777

Spain tax settlement


(896)

-

Exceptional administrative expenses


1,293

1,777

Interest refunded in relation to Spain tax settlement


(339)

-

Termination of interest rate swaps


-

1,561

Exceptional finance (credit) costs


(339)

1,561

Total pre-tax exceptional items


954

3,338

Tax credit relating to exceptional items


(95)

(688)

 

Exceptional administrative expenses

All of the restructuring costs arose in the UK.  The Spain tax settlement followed the resolution of an historic tax case with the Spanish tax authorities.

Exceptional finance credit

This relates to interest refunded by the Spanish tax authorities on the settlement of the case disclosed above.

7. BASIS OF PREPARATION 

The results for the year ended 30 April 2017, including comparative financial information, have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and their interpretations adopted by the European Union.

 

Northgate 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 2017.

 

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 April 2017 or 2016, but is derived from those accounts. Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 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 2017 has been prepared on a basis consistent with that presented in the annual report for the year ended 30 April 2016, other than a restatement of cash and bank balances and bank overdrafts. As a result of the clarification of an accounting standard, cash and cash equivalents and bank overdrafts are now shown gross, even where accounts have a right of offset within the same banking facility.  The comparatives have been restated by £36,500,000.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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