TIDMREDD

RNS Number : 8408H

Redde Northgate PLC

08 December 2020

REDDE NORTHGATE PLC

("Redde Northgate" or the "Group" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHSED 31 OCTOBER 2020

Encouraging momentum in the Group

 
 Adjusted results 
 Six months ended 31 October        H1 2021   H1 2020    Change 
                                       GBPm      GBPm         % 
---------------------------------  --------  --------  -------- 
 Revenue (excluding vehicle 
  sales)                              429.0     265.9     61.3% 
 Underlying [1] EBIT                   48.7      35.1     38.7% 
 Underlying(1) Profit 
  before Tax                           40.6      27.6     47.2% 
 Underlying(1) Earnings 
  per Share                           13.4p     17.6p   (24.1%) 
---------------------------------  --------  --------  -------- 
 Statutory results 
 Total revenue                        556.0     357.8     55.4% 
 EBIT                                  34.0      32.9      3.3% 
 Profit before Tax                     25.9      24.8      4.3% 
 Earnings per Share                    8.6p     16.1p   (46.8%) 
---------------------------------  --------  --------  -------- 
 Other measures 
---------------------------------  --------  --------  -------- 
 Net debt [2]                         530.9     504.6    (5.2%) 
 Steady state cash generation(1)       80.4      59.2     35.7% 
 Free cash flow(1)                     58.6    (12.8)      557% 
 ROCE(1)                               8.1%      7.1%    100bps 
 Dividend per Share                    3.4p      6.3p   (46.0%) 
---------------------------------  --------  --------  -------- 
 

Key highlights

-- Encouraging momentum in the Group. Against the backdrop of COVID-19, Northgate UK&I and Northgate Spain performed ahead of expectations in the first half of FY2021, with a full recovery in VOH to slightly above pre-COVID levels and with strong used vehicle prices and disposal profits above expectations, whilst Redde was impacted by a slower recovery in volumes due to continuing regional and national lockdowns.

-- Continued excellent progress under the strategic framework of Focus, Drive and Broaden, with a further increase in Merger integration synergies and additional permanent cost savings achieved to GBP11.7m and GBP4.2m annualised run rates respectively, in context of the original year 2 Merger integration synergy target of GBP10m, giving a total of GBP15.9m of run rate savings to date. Further progress in revenue synergies with the launch of a new accident and incident management product to Northgate customers in October.

-- Accelerated integration of FMG Repair Services ("FMG RS"), the trading name for the Nationwide Accident Repair Services business and assets acquired on 4 September 2020, including the securing of external and internal repair volumes and supply chains.

-- Continued development of contract hire as a source of vehicle funding with substantial new contract hire credit lines approved by several lenders in the period thus expanding provision to LCVs in the Northgate fleet. GBP6m of these credit lines has already been utilised.

-- The November lockdown in the UK did not have a discernible impact on UK VOH and VOH in both UK&I and Spain are ahead of expectations but Redde volumes were lower than October.

-- Overall, the Board is pleased with the performance in the first half of the year and, whilst significant uncertainties remain given the current economic environment and the risk of future more severe lockdowns, the Board is confident of the vision and strategy of the Group and the opportunities created by the Merger and remains confident in meeting market expectations for FY2021.

-- An interim dividend of 3.4p per share (2020: 6.3p) has been declared, in line with dividend policy, as stated at the time of the Merger, to pay an interim dividend that is half of the prior final dividend.

Martin Ward, CEO of Redde Northgate, commented:

"Since our preliminary year end results announcement on 16 September 2020 we have continued to make excellent progress in delivering on our strategy to become the leading integrated mobility solutions provider. Our integration plan has now delivered synergies and permanent cost savings of GBP15.9m run rate savings to date and we fully expect to reach the increased targets we set out of GBP19m in year 2.

"We have also commenced the integration of FMG RS which broadens our service proposition and capabilities in repairs and, in October, building on Redde's expertise, we launched our accident and incident management product to Northgate customers. We have had a good early response to this and are confident it will be a source of revenue growth for the Group.

"I have been immensely proud of the way the team has stepped up to ensure we can operate as effectively as possible and deliver our services during these difficult times. COVID-19 continues to impact us all and we remain primarily focussed on ensuring a safe and effective work environment for our employees and safe contact with our customers who require our services. We can clearly see the impact of COVID-19 in this set of results, particularly in Redde where accident volumes were depressed in the first quarter. However, these have significant potential to increase when road traffic volumes and incidents revert back closer to historic norms. Meanwhile, the buoyancy in used vehicle markets, particularly in the UK, has led to higher disposal profits, and the Northgate businesses have also both benefitted from an increase in VOH since year-end such that VOH is now above pre-COVID levels. Recent regional lockdowns and the second national lockdown in the UK have highlighted the need for agility and we continue to keep cost and cash controls in place in order to monitor and manage the business closely. We currently do not expect the impact of these new lockdowns to be as severe as the original national lockdowns in April and May. We are confident on performance in FY2021 and our views on FY2022 will be determined by the exit run rate we see at the end of FY2021.

"Our cash position has remained strong in the first half with continued good steady state cash generation and free cash flow. We have made good progress with our new capital model for funding vehicles and now have over five hundred vans on contract hire, with substantial LCV contract hire credit lines agreed with lenders and now in place.

"I am confident that the actions and measures we are taking are already creating value which will be further enhanced as we continue to deliver on our strategic priorities."

Half year results summary

-- Total revenue was 55.4% higher than the prior period, including GBP181.3m of revenues from Redde. Revenue from the Northgate businesses was GBP376.5m, 5.2% higher than H1 2020, and comprised hire revenues which were 6.2% lower due to the impact of both off-hires and customer support packages during the first lockdowns and vehicle sales revenues which were 38.2% higher due to higher volumes (mainly from reducing stock impacted by April lockdown) and strong market pricing in the UK.

-- Revenue (excluding vehicle sales) was 61.3% higher than the prior period with the increase attributable to Redde, which is included in revenue following the Merger on 21 February 2020.

-- Underlying EBIT and underlying PBT were 38.7% and 47.2% higher respectively, reflecting the strong performance in the Northgate UK&I business, a resilient performance in the Northgate Spain business and the profits from the Redde business.

-- Statutory EBIT and statutory PBT are stated after GBP9.6m of amortisation of acquisition intangibles [3] and GBP5.4m of exceptional costs, of which GBP2.6m related to restructuring and GBP2.6m related to FMG RS.

-- Underlying EPS of 13.4p was 24.1% lower, reflecting the lower profits from the Redde business in the period driven primarily by lower volumes due to COVID-19, particularly in the first quarter.

-- Statutory EPS of 8.6p was 46.8% lower, reflecting the trading of the Redde business and the impact of amortisation and exceptional items.

-- There were strong net cash inflows with free cash inflow of GBP58.6m (2020: GBP12.8m outflow) benefitting from lower total net capex [4] of GBP48.8m (2020: GBP127.0m) driven by lower purchases and higher disposal proceeds. Steady state cash generation also remained strong at GBP80.4m (2020: GBP59.2m).

-- Net debt (inc. IFRS 16) closed at GBP530.9m, 5.2% higher than H1 2020 due to the net debt acquired from Redde in H2 2020 of GBP84.1m, partially offset by the cash generated in the year.

Trading and COVID-19 impact

-- The Board and management continued with decisive actions put in place at the end of FY2020 to protect employees and customers and to mitigate the financial impact of COVID-19 on the Group. These proactive measures included new guidelines and controls to enable social distancing, furloughing employees, limiting new fleet capex, voluntary pay reductions across Board and senior leadership positions and cost control measures including freezing of recruitment and pay reviews.

-- In the first six months of FY2021 performance indicators across the Group have fully recovered or substantially improved, including:

-- Customer support packages, which were a core part of measures to support customers during the first national lockdowns and totalled GBP3.4m in the period, reduced to nil monthly cost at the end of September. We are currently not expecting to need to provide material customer support packages for subsequent lockdowns;

-- VOH has now recovered to above pre-COVID levels with closing VOH at the end of October 2020 9% higher than April 2020 in both Northgate UK&I and Northgate Spain. There has been no discernible impact of the November lockdown on VOH in the UK;

-- Vehicle disposal channels re-opened over the course of May such that they were fully operational from June, with significant improvement in residual values compared to prior year in the UK driven by strong market pricing, which has been approximately 15% above expected levels. Retail disposal channels closed again in November in the UK but vehicles have continued to be sold via other channels such that this impact of the November lockdown has been managed. We expect the strength of market pricing to reduce over H2 2021;

-- Post the first national lockdown accident and incident volumes started to increase as traffic volumes picked up but remained below expectations and as a result there exists significant opportunity for Redde profits to rise back to historic levels in the future. Having recovered to approximately 20% below normal volumes in September, the volumes in October were approximately 30% below normal volumes and in November were lower than this due to the lockdown and we continue to review our cost base accordingly.

Focus, Drive and Broaden strategy

-- To achieve the Group's vision, the Board and management team, who together have a proven track record of delivering strategic initiatives, plan to evolve the strategy of the enlarged Group through three phases: Focus, Drive and Broaden.

   --    In the Focus phase, during FY2021, the Group is completing: 

-- the Merger integration alongside initiation of the delivery of the anticipated cost synergies, as detailed further below;

-- developing the enlarged Group's products and services, as exemplified by the new accident and incident management product detailed further below; and

-- starting to leverage the platform to enable revenue growth based on the broader offering, for which we have had good traction with our customers and will update on further in due course.

Merger integration and synergies

-- Excellent progress continues to be made in integrating Redde and Northgate and annual run rate cost synergies achieved to date have increased to GBP11.7m, with implementation costs of GBP3.9m. Our synergy targets remain at GBP12m by end of FY2021 and GBP15m by end of FY2022, an increase from the original targets at the time of the Merger of GBP7m and GBP10m respectively.

-- Together with GBP4.2m of permanent annual costs savings [5] , GBP0.4m higher than previously announced, a total annual run rate of GBP15.9m of cost synergies and permanent cost savings have been achieved to the end of October since the Merger in February.

-- The Group has also continued to make good progress in developing its plans for the enlarged Group's products and services, which have included Northgate recently launching a new accident and incident management product, which has already had several customers sign up with several hundred managed vehicles, and a good pipeline of several thousand more managed vehicles.

FMG RS integration

-- The integration of FMG RS into Redde and the Group was a key focus in the last two months of the period following the acquisition of Nationwide Accident Repair Services at the beginning of September, both in terms of securing the supply chain and in managing volumes between external insurer customers and internal work referred from other Redde businesses and the Board is pleased with progress to date.

-- Initial trading has, as expected, been loss-making whilst the integration is completed and the 90 day plan executed. We have now secured over 95% of the supply chain and are continuing discussions with many prior and future customers to maximise external revenues.

-- The Group remains confident that the acquisition will be earnings enhancing in the first full financial year of ownership.

ESG

-- Following the Merger, the Group has been developing its ESG positioning, and enhancing and formalising its strategy for the future.

-- From an environmental perspective the Group has already outlined the main measures it uses to assess its environmental impact and is in the process of developing its wider carbon strategy as well as its EV strategy. It is progressively aligning its fleet policy with changing market dynamics to be at the forefront of electric vehicles.

-- From a social perspective, during COVID-19 the Group has supported employees and stakeholders in a variety of different ways which included increased flexible working, customer support packages (waivers, discounts and deferrals) and other initiatives including an NHS and key worker replacement vehicle scheme and the provision of vehicles to the Red Cross in Spain and British Heart Foundation in the UK at significant discounts.

-- The Group will update further on its detailed ESG plans and targets in the next reporting period.

GAAP reconciliation and glossary of terms

Throughout this document 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 intangible amortisation from acquisitions and certain one-off items such as those arising from restructuring activities. Specifically, we refer to disposal profit(s). This is a non-GAAP measure used to describe the adjustment in 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).

A reconciliation of GAAP to Non-GAAP underlying measures and a glossary of terms used in this document are outlined below the financial review.

Analyst Briefing

There will be a remote presentation for sell-side analysts at 9.30 a.m. today. If you are interested in attending, please email Buchanan on reddenorthgate@buchanan.uk.com.

This presentation will also be made available later today via a link on the Company's website www.reddenorthgate.com

For further information contact:

Buchanan

   David Rydell/Jamie Hooper/Tilly Abraham                            +44 (0) 207 466 5000 

Notes to Editors:

Redde Northgate plc is a leading integrated mobility solutions platform formed in February 2020 following the all-share Merger of light commercial hire business Northgate plc and Redde plc, the provider of incident and accident management, legal and other mobility-related services.

The Group provides mobility solutions and automotive services to a wide range of businesses and customers spanning the vehicle life cycle across vehicle supply, service, maintenance, repair, recovery, accident and incident management and disposal through sale or salvage.

With an extensive network and diversified fleet of over 110,000 owned vehicles and over 500,000 managed vehicles supported by more than 170 branches across the UK, Ireland and Spain, the Group aims to utilise its scale, reach and comprehensive suite of integrated services to offer a market-leading customer proposition and drive enhanced returns for shareholders.

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

www.reddenorthgate.com

OPERATING REVIEW

Northgate UK&I

 
 Six months ended 31 October    H1 2021   H1 2020   Change 
 KPI                             ('000)    ('000)        % 
-----------------------------  --------  --------  ------- 
 Average VOH                       45.2      46.9   (3.6%) 
 Closing VOH                       47.4      47.2     0.4% 
 Average utilisation %              90%       89%     1ppt 
 Six months ended 31 October    H1 2021   H1 2020   Change 
 PROFIT & LOSS (Underlying)        GBPm      GBPm        % 
-----------------------------  --------  --------  ------- 
 Revenue - Vehicle hire           147.0     158.9   (7.5%) 
 Revenue - Vehicle sales           94.1      68.9    36.7% 
 Total Revenue                    241.1     227.7     5.9% 
 Rental profit                     15.1      15.6   (3.4%) 
 Rental Margin %                  10.3%      9.8%   0.5ppt 
 Disposal profit                   17.0       3.8   350.9% 
 EBIT                              32.1      19.4    65.4% 
 EBIT Margin % [6]                13.3%      8.5%   4.8ppt 
 ROCE %                            8.8%      6.6%   2.2ppt 
-----------------------------  --------  --------  ------- 
 

Rental business

Hire revenue in the Northgate UK&I business declined 7.5% compared to the prior period to GBP147.0m (2020: GBP158.9m), driven by average VOH which declined 3.6%, the impact of customer support packages which were GBP2.4m (equivalent to 1.5%) and the impact of vehicle and product mix, partially offset by the impact of pricing increases achieved. Regular rate increases were introduced in FY2019 and rates were again increased in FY2020 and FY2021 across our full range of rental products and continued to be well planned, communicated and executed.

Closing VOH increased 0.4% to 47,400 and was 9% above year-end FY2020 and 2% above pre-COVID levels.

At the half year, Northgate's minimum term proposition accounted for around 33% (2020: 28%) of average VOH. The average term of these contracts is approximately three years, providing both improved visibility of future rental revenue and earnings, as well as lower transactional costs.

The rental margin has continued to grow since H2 2018 with steady improvements now for the past five half year periods, increasing from 6.0% in H2 2018, to 7.1% in H1 2019 to 8.5% in H2 2019, to 9.8% in H1 2020, 10.0% in H2 2020 and 10.3% in H1 2021. This continued improvement reflects the execution of the strategic priorities and cost synergies and savings, despite the impact of COVID-19.

The net impact of the lower hire revenue and higher rental margin was a 3.4% reduction in rental profits to GBP15.1m (2020: GBP15.6m).

Management of fleet and vehicle sales

The total Northgate UK&I period end rental fleet of 51,900 vehicles increased from 51,400 at year-end FY2020. 5,700 vehicles were purchased during the period (2020: 8,100 vehicles) and 5,200 vehicles were de-fleeted. The average age of the fleet at the end of the period was three months higher than at the same time last year. This was partly due to the impact of the fleet optimisation policy and partly due to managing the fleet to mitigate impacts of COVID-19 by reducing purchases, particularly in the first quarter of the year.

A total of 9,500 vehicles were sold in Northgate UK&I during the period, 5% higher than the prior period. The sales in May were impacted by COVID-19 and the temporary closure of disposal markets but sales in subsequent months were higher due to the sale of those vehicles held since lockdown and from reducing stock levels to a substantially lower level.

Disposal profits of GBP17.0m (2020: GBP3.8m) increased 351% versus the prior period, driven by the increased sales volumes and, more significantly, a 330% improvement in the average profit per unit (PPU) on disposals to GBP1,794 (2020: GBP417) due to strong market pricing in the period, which has been approximately 15% above expected levels, together with cost savings taken in the disposals cost base, despite the continuing impact of the unwind of depreciation rate changes. No changes to depreciation rates have been made in the period, and this will remain under review as the longer term impact on residual values becomes clearer.

EBIT and ROCE

Underlying EBIT of GBP32.1m grew 65.4% over the prior period (2020: GBP19.4m) driven by higher disposal profits, partially offset by lower rental profits as explained above.

The ROCE in Northgate UK&I was 8.8% (2020: 6.6%) reflecting the increase in EBIT together with lower capital employed resulting from lower rental fleet.

Capex and cash flow

 
 Six months ended 31 October          H1 2021   H1 2020   Change 
                                         GBPm      GBPm     GBPm 
-----------------------------------  --------  --------  ------- 
 Underlying EBITDA                       75.3      78.7    (3.4) 
 Net Replacement Capex(8)              (25.9)    (54.3)     28.4 
 Lease principal payments 
  [7]                                   (2.1)     (1.6)    (0.5) 
 Steady state cash generation            47.4      22.8     24.6 
 Growth Capex (incl. inorganic)(8)       28.4    (10.6)     38.9 
-----------------------------------  --------  --------  ------- 
 

Underlying EBITDA remained strong at GBP75.3m (2020: GBP78.7m)

Net replacement capex [8] in the period was GBP25.9m, GBP28.4m lower than prior period, driven mainly by higher disposal prices and a lower volume of fleet rotation during the period due to COVID-19.

Steady state cash generation increased by GBP24.6m to GBP47.4m (2020: GBP22.8m) reflecting lower net replacement capex in the year. Growth capex was a contraction of GBP28.4m, relating to the reduction in total fleet of 3,200 vehicles in the period, driven by lower stock levels.

Northgate Spain

 
 Six months ended 31 October    H1 2021   H1 2020     Change 
 KPI                             ('000)    ('000)          % 
-----------------------------  --------  --------  --------- 
 Average VOH                       45.5      47.1     (3.4%) 
 Closing VOH                       47.1      47.4     (0.6%) 
 Average utilisation %              91%       92%     (1ppt) 
 Six months ended 31 October    H1 2021   H1 2020     Change 
 PROFIT & LOSS (Underlying)        GBPm      GBPm          % 
-----------------------------  --------  --------  --------- 
 Revenue - Vehicle hire           102.4     107.0     (4.3%) 
 Revenue - Vehicle sales           32.9      23.0      42.8% 
 Total Revenue                    135.3     130.1       4.1% 
 Rental profit                     14.7      18.1    (18.9%) 
 Rental Margin %                  14.4%     16.9%   (2.5ppt) 
 Disposal profit                    1.3       1.4     (5.8%) 
 EBIT                              16.0      19.5    (17.9%) 
 EBIT Margin % [9]                11.8%     15.0%   (3.2ppt) 
 ROCE %                            7.7%      9.1%   (1.4ppt) 
-----------------------------  --------  --------  --------- 
 

Rental business

Hire revenue in the Northgate Spain business declined 4.3% compared to the prior period to GBP102.4m (2020: GBP107.0m), driven by average VOH which declined 3.4% due to COVID-19 and the impact of customer support packages which were GBP1.0m (equivalent to 0.9%). Price increases put through in the period were offset by lower excess mileage charges due to COVID-19 and vehicle product mix.

Closing VOH decreased 0.6% to 47,100 and was 9% above year-end FY2020 and 2% above pre-COVID levels.

At the half year, Northgate's minimum term proposition accounted for around 35% (2020: 33%) of average VOH. The average term of these contracts is approximately three years, providing both improved visibility of future rental revenue and earnings.

The rental margin was 2.5ppt lower at 14.4% including the impact of customer support on hire rate of 0.9%, and the impact of higher costs in the period, of which 1.0% relates to higher bad debts.

The impact of the lower hire revenue and lower rental margin was a 18.9% reduction in rental profits to GBP14.7m (2020: GBP18.1m).

Management of fleet and vehicle sales

The total Northgate Spain period end rental fleet of 52,700 vehicles increased from 51,500 at year-end FY2020. 6,000 vehicles were purchased during the period (2020: 6,900) and 4,800 vehicles were de-fleeted. The average age of the fleet at the end of the period was four months higher than at the same time last year. This was partly due to the impact of the fleet optimisation policy and partly due to managing the fleet to mitigate impacts of COVID-19 by reducing purchases, particularly in the first quarter of the year.

A total of 5,600 vehicles were sold in Northgate Spain during the period, 45% higher than prior period. The sales in May were impacted by COVID-19 and the temporary closure of disposal markets but sales in subsequent months were higher and stock levels have now been reduced to a lower level.

Disposal profits of GBP1.3m (2020: GBP1.4m) reduced 5.8% versus the prior year, as a result of the increased sales volumes offset by a 35% reduction in the average profit per unit (PPU) on disposals to GBP227 (2020: GBP350) due to the continuing impact of the unwind of depreciation rate changes, offset by some higher market pricing, some mix impacts and some improvements in the operations implemented in the year.

EBIT and ROCE

Underlying EBIT of GBP16.0m reduced 17.9% over the prior period (2020: GBP19.5m) driven by lower rental profits including impacts of COVID-19 as explained above.

The ROCE in Northgate Spain was 7.7% (2020: 9.1%) reflecting the reduction in EBIT.

Capex and cash flow

 
 Six months ended 31 October           H1 2021   H1 2020   Change 
                                          GBPm      GBPm     GBPm 
------------------------------------  --------  --------  ------- 
 Underlying EBITDA                        60.2      63.7    (3.5) 
 Net Replacement Capex(11)              (25.9)    (22.2)    (3.7) 
 Lease principal payments 
  [10]                                   (1.4)     (1.3)    (0.1) 
 Steady state cash generation             32.9      40.2    (7.3) 
 Growth Capex (incl. inorganic)(11)      (3.3)    (37.0)     33.7 
------------------------------------  --------  --------  ------- 
 

Underlying EBITDA remained strong at GBP60.2m (2020: GBP63.7m)

Net replacement capex [11] in the period was GBP25.9m, GBP3.7m higher than prior period, driven mainly by a higher volume of fleet replacements compared to the prior period due to timing of the fleet rotation cycle.

Steady state cash generation decreased by GBP7.3m to GBP32.9m (2020: GBP40.2m) reflecting lower EBITDA and higher net replacement capex in the period. Growth capex(11) was GBP3.3m, relating to the fleet growth of 300 vehicles.

Redde

The Merger completed on 21 February 2020 therefore the tables below have no prior period comparators.

 
 Six months ended 31 October      H1 2021 
 PROFIT & LOSS (Underlying)          GBPm 
-------------------------------  -------- 
 Revenue - Claims and Services      181.3 
 Gross profit                        25.9 
 Gross margin %                     14.3% 
 Operating profit                     1.7 
 Income from associates               2.4 
 EBIT                                 4.1 
 EBIT margin % ([12])                2.3% 
 ROCE % [13]                         7.9% 
-------------------------------  -------- 
 

Revenue and profit

Revenue for the period was GBP181.3m, of which GBP18.2m related to FMG RS external revenues. The main drivers of revenue, traffic volumes and thereby road traffic accidents, were materially reduced in the period. Initially the volume reduction was significant versus pre-COVID levels [14] as the first lockdown, with schools and many workplaces closed, led to a material reduction in traffic, and then, with sequential monthly improvements volume increased in the second quarter to approximately 20%-30% below pre COVID-19 levels. Lower volumes particularly impacted credit hire and credit repair revenues, but also to a lesser extent fleet management and legal services revenues.

Gross margin remained broadly in line with expectations at 14.3%, although it was impacted by COVID-19 from reduced fleet utilisation particularly in the first quarter, and thus gross profit was GBP25.9m. Gross profit was below expectations due primarily to the slower recovery in volumes above.

EBIT for the period was GBP4.1m. This was made up of an operating loss in FMG RS of GBP3.0m, in line with Board expectations, an operating profit in the other Redde businesses of GBP4.7m, and income from associates of GBP2.4m.

The GBP7.1m of EBIT in the other Redde businesses was below expectations mainly due to the slower recovery in volumes, and whilst the cost base was closely managed and reduced where possible, most overheads are fixed or semi-variable, thus reducing EBIT margins to 2.3%. A normalised EBIT margin of this business is substantially higher and would deliver a materially higher profit and ROCE than in the current period.

Management of fleet

The total fleet in Redde closed the period at 6,500 vehicles, reduced from the level at 30 April 2020 of 9,000 vehicles due to the impact of COVID-19 as fleet size was reduced to reflect reduced volumes.

The average fleet age was 18 months reflecting the lower fleet holding period than in the Northgate businesses due to the different usage of the vehicles and business economics.

The Redde fleet continues to operate through a hybrid solution of ownership, contract hire and, during peak periods, cross-hiring from daily rental companies.

Capex and cash flow

 
 Six months ended 31 October       H1 2021 
                                      GBPm 
-------------------------------  --------- 
 Underlying EBITDA                    11.9 
 Net replacement capex [15]            5.2 
 Lease principal payments [16]      (13.4) 
 Steady state cash generation          3.7 
 Growth capex                       (10.3) 
 Debtor days                      144 days 
-------------------------------  --------- 
 

Underlying EBITDA was GBP11.9m in the period, which was below expectations mainly due to the slower recovery in volumes.

Net replacement capex was a net inflow of GBP5.2m in the period due to the disposal proceeds of vehicles funded by HP compared to the timing of lease principal payments.

Steady state cash generation was GBP3.7m and included lease principal payments of GBP13.4m.

Growth capex was GBP10.3m and reflects payments for the FMG RS fixed assets acquired.

Debtor days were 144 days at 31 October 2020. This measure is based upon net trade receivables and contract assets, other receivables and accrued income as a proportion of the related underlying sales revenue for the past 12 months multiplied by 365 days. Debtor days increased from 123 days at year-end FY2020 due to the significant drop in revenues in the last eight months.

FINANCIAL REVIEW

Group Revenue and EBIT

 
 Six months ended 31 October      H1 2021   H1 2020     Change 
                                     GBPm      GBPm          % 
-------------------------------  --------  --------  --------- 
 Revenue - Vehicle hire             249.0     265.9     (6.4%) 
 Revenue - Vehicle sales            127.1      91.9      38.2% 
 Revenue - Claims and services      180.0         -        n/a 
                                 --------  --------  --------- 
 Total revenue                      556.0     357.8      55.4% 
 
 Rental profit                       29.8      33.8    (11.7%) 
 Disposal profit                     18.3       5.1     255.2% 
 Claims and services profit           1.7         -        n/a 
                                 --------  --------  --------- 
 Underlying operating profit         46.3      35.1      31.9% 
 Income from associates               2.4         -        n/a 
                                 --------  --------  --------- 
 Underlying EBIT                     48.7      35.1      38.7% 
 Underlying EBIT margin              8.8%      9.8%   (1.0ppt) 
 Statutory EBIT                      34.0      32.9       3.3% 
-------------------------------  --------  --------  --------- 
 

-- Total Group revenue, including vehicle sales, of GBP556.0m was 55.4% higher (54.8% at constant exchange rates). Hire revenues were 6.4% lower due to the impact of both off-hires and customer support packages during the first lockdowns and vehicle sales revenues were 38.2% higher due to higher volumes (mainly from reducing stock impacted by April lockdown) and strong market pricing in the UK.

-- Revenue (excluding vehicle sales) of GBP429.0m was 61.3% higher (60.8% at constant exchange rates) than the prior period with the increase attributable to Redde, which is included in revenue following the Merger on 21 February 2020.

-- Underlying EBIT of GBP48.7m was 38.7% higher, reflecting the strong performance in the Northgate UK&I business, a resilient performance in the Northgate Spain business and the profits from the Redde business.

-- Statutory EBIT of GBP34.0m was 3.3% higher, reflecting higher underlying EBIT offset by GBP9.6m of amortisation of acquisition intangibles [17] and GBP5.4m of exceptional costs, of which GBP2.6m related to restructuring and GBP2.6m related to FMG RS.

Group PBT and EPS

 
 Six months ended 31 October    H1 2021   H1 2020    Change 
                                   GBPm      GBPm         % 
-----------------------------  --------  --------  -------- 
 Underlying EBIT                   48.7      35.1     38.7% 
 Net finance costs                (8.1)     (7.5)    (7.6%) 
                               --------  --------  -------- 
 Underlying Profit before 
  Tax                              40.6      27.6     47.2% 
 Statutory Profit before 
  Tax                              25.9      24.8      4.3% 
 
 Underlying effective tax 
  rate                            18.8%     14.7%    4.1ppt 
 Underlying EPS                   13.4p     17.6p   (24.1%) 
 Statutory EPS                     8.6p     16.1p   (46.8%) 
-----------------------------  --------  --------  -------- 
 

-- Underlying PBT was 47.2% higher, reflecting the higher EBIT and higher finance costs, which were 7.6% higher including Redde finance costs.

-- Statutory PBT was 4.3% higher, reflecting the higher underlying PBT offset by GBP9.6m of amortisation of acquisition intangibles [18] and GBP5.4m of exceptional costs, of which GBP2.6m related to restructuring and GBP2.6m related to FMG RS.

-- The underlying effective tax rate was 18.8%, which was 4.1ppt higher than prior year due primarily to one-offs in H1 FY2020, as highlighted at the time, from settlement of prior year tax positions.

-- Underlying EPS of 13.4p was 24.1% lower, reflecting the lower profits from the Redde business in the period driven primarily by lower volumes due to COVID-19, particularly in the first quarter, as well as the higher tax rate.

-- Statutory EPS of 8.6p was 46.8% lower, reflecting the movement in underlying EPS and the impact of exceptional costs and amortisation of acquisition intangibles(1) .

Business combinations

The Group acquired certain businesses and certain assets of Nationwide Accident Repair Services on 4 September 2020 by way of a purchase from administrators, for an initial cash consideration of GBP10.6m, plus a deferred consideration of up to GBP5m conditional on retention of certain trade business on satisfactory terms. The provisional fair value of consideration is estimated to be GBP10.9m. A provisional purchase price allocation exercise has been undertaken in order to identify and recognise intangible assets with finite useful lives amounting to GBP3.6m and other net assets of GBP7.6m, resulting in negative goodwill of GBP0.3m which has been recognised in the income statement in the period.

Depreciation rate changes

Vehicle depreciation rates are regularly reviewed and changes are made, if expectations of future residual values change. Residual values have increased in the period due to the short term closure and re-opening of used vehicle markets as a result of COVID-19. This disruption is not anticipated to continue into the medium term, therefore there have been no changes to depreciation rate estimates in the period. The full year-on-year impact of previous depreciation rate changes in FY2021 EBIT is expected to be GBP4.0m in Spain and GBP1.4m in UK&I as previously outlined.

Dividend

The Board has declared an interim dividend of 3.4p per share (2020: 6.3p) and will be paid on 29 January 2021 to shareholders on the register as at close of business on 18 December 2020.

Group cash flow

Steady state cash generation

 
 Six months ended 31 October      H1 2021   H1 2020   Change 
                                     GBPm      GBPm     GBPm 
-------------------------------  --------  --------  ------- 
 Underlying EBIT                     48.7      35.1     13.6 
 Depreciation and amortisation       95.3     103.5    (8.3) 
 Underlying EBITDA                  144.0     138.7      5.3 
 Net replacement capex             (46.7)    (76.6)     29.9 
 Lease principal payments 
  [19]                             (16.9)     (2.9)   (14.1) 
                                 --------  --------  ------- 
 Steady state cash generation        80.4      59.2     21.2 
-------------------------------  --------  --------  ------- 
 

-- Steady state cash generation remained strong at GBP80.4m and was GBP21.2m higher than H1 2020, driven by strong EBIT and lower net replacement capex.

-- Underlying EBITDA was GBP5.3m higher driven by higher underlying EBIT partially offset by lower depreciation due to reduced rental fleet size.

-- Net replacement capex was GBP29.9m lower reflecting lower purchases including the impact of contract hire purchases and the higher number of disposals and strong used vehicle prices in the period.

Free cash flow

 
 Six months ended 31 October      H1 2021   H1 2020   Change 
                                     GBPm      GBPm     GBPm 
-------------------------------  --------  --------  ------- 
 Steady state cash generation        80.4      59.2     21.2 
 Exceptional costs                  (5.4)     (2.2)    (3.1) 
 Working capital and non-cash 
  items                            (20.7)     (6.0)   (14.6) 
 Growth capex                        14.8    (47.5)     62.3 
 Tax                                (5.6)     (4.7)    (0.9) 
                                 --------  --------  ------- 
 Net operating cash                  63.5     (1.2)     64.8 
 Distributions from associates        2.6         -      2.6 
 Interest and other financing       (7.5)    (11.5)      4.0 
                                 --------  --------  ------- 
 Free cash flow                      58.6    (12.8)     71.4 
 Dividends paid                         -    (16.0)     16.0 
 Lease principal payments 
  [20]                               16.9       2.9     14.1 
                                 --------  --------  ------- 
 Net cash generated (consumed)       75.5    (25.9)    101.5 
-------------------------------  --------  --------  ------- 
 

-- Free cash flow remained strong at GBP58.6m driven by strong net operating cash, distributions from associates and lower interest and other financing costs than H1 2020.

-- Exceptional costs were GBP5.4m and included GBP2.6m restructuring costs to delivery synergies and cost savings, and GBP2.6m costs relating to FMG RS.

-- Working capital outflow of GBP20.7m included GBP9m relating to timing differences of payments and receipts over the COVID-19 period, and GBP7m relating to FMG RS as initial working capital positions were built.

-- Growth capex of GBP14.8m inflow reflects a net reduction in fleet over the period of 3,000 vehicles.

-- If the impact of growth capex in the period is removed from free cash flow, the underlying free cash flow of the Group was GBP43.8m (2020: GBP34.7m).

-- No dividends were paid in the period as the final dividend of GBP16.7m was paid in November, later than the normal financial calendar due to the timing of the preliminary results announcement.

Net debt

Net debt reconciles as follows:

 
Six months ended 31 October     H1 2021  H1 2020 
                                   GBPm     GBPm 
------------------------------  -------  ------- 
Opening net debt                  575.9    436.9 
IFRS 16 transition                    -     48.5 
Net cash (generated) consumed    (75.5)     26.0 
Non-cash movement on leases        16.4        - 
Other non-cash items                  -    (3.6) 
Exchange differences               14.1    (3.2) 
------------------------------  -------  ------- 
Closing net debt                  530.9    504.6 
------------------------------  -------  ------- 
 

Closing net debt was GBP45.0m lower than opening net debt, driven by net cash generation of GBP75.5m. New leases acquired were GBP16.4m, and the overall foreign exchange impact on net debt was GBP14.1m.

Borrowing facilities

As at 31 October 2020 the Group had headroom on facilities of GBP281m, with GBP432m drawn (net of available cash balances) against total committed facilities of GBP713m as detailed below:

 
                     Facility  Drawn  Headroom            Borrowing 
                         GBPm   GBPm      GBPm  Maturity       Cost 
-------------------  --------  -----  --------  --------  --------- 
UK bank facilities        608    334       274    Nov-23       2.0% 
Loan notes                 90     90         -    Aug-22       2.4% 
Other loans                15      8         7    Nov-21       1.0% 
                          713    432       281                 2.1% 
-------------------  --------  -----  --------  --------  --------- 
 

The other loans consist of GBP7m of local borrowings in Spain and GBP0.5m of preference shares.

During the period, the previous Redde GBP50m bank facility was cancelled and at the same time the existing bank facility commitment was increased by the same amount, thus simplifying the bank financing structure.

The above drawn amounts reconcile to net debt as follows:

 
                                       Drawn 
                                        GBPm 
------------------------------------   ----- 
Borrowing facilities                     432 
Unamortised finance fees                 (5) 
Leases arising following adoption 
 of IFRS 16                               70 
Leases arising under HP obligations       34 
Net debt                                 531 
-------------------------------------  ----- 
 

The overall cost of borrowings at 31 October 2020 is 2.1% (2020: 2.5%). There are three financial covenants under the Group's facilities as follows:

 
                  Threshold  H1 2021          Headroom  H1 2020 
---------------  ----------  -------  ----------------  ------- 
Interest cover           3x     5.6x     GBP34m (EBIT)     5.5x 
                                          GBP305m (Net 
Loan to value           70%      42%             debt)      44% 
Debt leverage         2.75x     1.6x  GBP126m (EBITDA)     1.7x 
---------------  ----------  -------  ----------------  ------- 
 

The covenant calculations have been prepared in accordance with the requirements of the facilities that they relate to.

Balance sheet

Net assets at 31 October 2020 were GBP882.1m (2020: GBP571.7m), equivalent to net assets per share of 358p (2020: 429p). Net tangible assets at 31 October 2020 were GBP585.9m (2020: GBP551.5m), equivalent to a net tangible asset value of 238p per share (2020: 414p per share).

On acquisition of Redde, net assets of GBP318.4m were recognised on the balance sheet, including GBP112.5m of goodwill, GBP186.6m other intangible assets and GBP19.3m of other net tangible assets.

Foreign exchange risk

The average and period end exchange rates used to translate the Group's overseas operations were as follows:

 
              October 2020  October 2019  April 2020 
                 GBP : EUR     GBP : EUR   GBP : EUR 
-----------  -------------  ------------  ---------- 
Average               1.11          1.12        1.14 
Period end            1.11          1.16        1.15 
-----------  -------------  ------------  ---------- 
 

Going concern

Having considered the Group's current trading, cash flow generation and debt maturity including severe but plausible stress testing scenarios including the impacts of COVID-19 (as explained further in note 1 of the unaudited condensed financial statements), the Directors have concluded that it is appropriate to prepare the Group financial statements on a going concern basis.

Risks and uncertainties

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

The principal risks and uncertainties facing the Group at 30 April 2020 were set out in detail on pages 33 to 36 of the 2020 annual report, a copy of which is available at www.reddenorthgate.com, and were identified as:

   --      economic environment; 
   --      market risk; 
   --      vehicle holding costs; 
   --      the employee environment; 
   --      legal and compliance; 
   --      IT systems; 
   --      access to capital; 
   --      COVID-19 pandemic; and 
   --      recovery of contracts assets. 

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.

Impact of the UK leaving the European Union without a new free trade agreement

The Group has planned for the potential impact on its business of the UK leaving the European Union without a new free trade agreement in place. The greatest risks identified would be a disruption to the supply of new vehicles and vehicle components imported into the UK from the EU, including additional import costs which may be imposed:

o Around 90% of vehicles purchased or leased by the Group from UK OEMs are imported from the EU. Assurances have been sought from these OEMs, who are confident that there will be no material long-term disruption. Any potential short-term supply disruption can also be mitigated by the Group itself, by slowing the rate of vehicle de-fleets in order to maintain vehicle availability for customers as has been seen in the response to COVID-19.

o Components for vehicles manufactured in the UK are also imported from the EU. However, normal OEM stock levels are considered to be sufficient to address any potential short-term supply issues and we are in active discussions with FMG RS suppliers to ensure continuing supply.

o The introduction of import costs could potentially create some margin pressure in the short-term. However, the Company believes that in the medium-term, it will be able to pass through to end-users any significant additional costs that might be imposed on imported vehicles.

A potential upside for Northgate in the event of supply disruptions or higher purchase costs, would be the likely increase in rental demand and stronger residual values that could result.

Glossary of terms

The following defined terms have been used throughout this document:

 
 Term                 Definition 
 Disposal profit(s)   This is a non-GAAP measure used to describe 
                       the adjustment in the depreciation charge made 
                       in the year for vehicles sold at an amount 
                       different to their net book value at the date 
                       of sale (net of attributable selling costs) 
                     ------------------------------------------------------- 
 EBIT                 Earnings before interest and taxation 
                     ------------------------------------------------------- 
 EBITDA               Earnings before interest, taxation, depreciation 
                       and amortisation 
                     ------------------------------------------------------- 
 EPS                  Basic earnings per share 
                     ------------------------------------------------------- 
 Facility headroom    Calculated as facilities of GBP713m less net 
                       borrowings of GBP432m. Net borrowings represent 
                       net debt of GBP531m excluding lease liabilities 
                       of GBP104m and unamortised arrangement fees 
                       of GBP5m and are stated after the deduction 
                       of GBP28m of net cash and overdraft balances 
                       which are available to offset against borrowings 
                     ------------------------------------------------------- 
 Free cash flow       Net cash generated after principal lease payments 
                       and before the payment of dividends 
                     ------------------------------------------------------- 
 FY2020               The year ended 30 April 2020 
                     ------------------------------------------------------- 
 FY2021               The year ending 30 April 2021 
                     ------------------------------------------------------- 
 FY2022               The year ending 30 April 2022 
                     ------------------------------------------------------- 
 GAAP                 Generally Accepted Accounting Practice: meaning 
                       compliance with IFRS 
                     ------------------------------------------------------- 
 Growth capex         Growth capex represents the cash consumed in 
                       order to grow the total rental fleet or the 
                       cash generated if the fleet size is reduced 
                       in periods of contraction and includes fixed 
                       assets acquired as part of the Nationwide acquisition 
                     ------------------------------------------------------- 
 H1/H2                Half year period: H1 being the first half and 
                       H2 being the second half of the financial year 
                     ------------------------------------------------------- 
 HP (leases)          Leases recognised on the balance sheet that 
                       would previously have been classified as finance 
                       leases prior to the adoption of IFRS 16 
                     ------------------------------------------------------- 
 IFRS                 International Financial Reporting Standards 
                     ------------------------------------------------------- 
 IFRS 16 (leases)     Leases recognised on the balance sheet that 
                       would previously have been classified as operating 
                       leases prior to the adoption of IFRS 16 
                     ------------------------------------------------------- 
 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 
                     ------------------------------------------------------- 
 Lease principal      Includes the total principal payment on leases 
  payments             including those recognised before and after 
                       adoption of IFRS 16 
                     ------------------------------------------------------- 
 Nationwide           Nationwide Accident Repair Services trade and 
                       assets acquired by the Group on 4 September 
                       2020 
                     ------------------------------------------------------- 
 Net replacement      Net capital expenditure other than that defined 
  capex                as growth capex and lease principal payments. 
                     ------------------------------------------------------- 
 Net tangible         Net assets less goodwill and other intangible 
  assets               assets 
                     ------------------------------------------------------- 
 Northgate            The Company and its subsidiaries prior to the 
                       Merger or that part of the business following 
                       the Merger 
                     ------------------------------------------------------- 
 Northgate Spain      The Northgate Spain operating segment representing 
                       the commercial vehicle hire part of the Group 
                       located in Spain 
                     ------------------------------------------------------- 
 Northgate UK&I       The Northgate UK&I operating segment representing 
                       the commercial vehicle hire part of the Group 
                       located in the United Kingdom and the Republic 
                       of Ireland 
                     ------------------------------------------------------- 
 OEM                  Original Equipment Manufacturer: a reference 
                       to our vehicle suppliers 
                     ------------------------------------------------------- 
 PBT                  Profit before taxation 
                     ------------------------------------------------------- 
 PPU                  Profit per unit/loss per unit - this is a non-GAAP 
                       measure used to describe disposal profit (as 
                       defined), divided by the number of vehicles 
                       sold 
                     ------------------------------------------------------- 
 Redde                The Redde operating segment representing the 
                       insurance claims and services part of the group 
                       or the Redde plc company and its subsidiaries 
                       prior to the Merger 
                     ------------------------------------------------------- 
 ROCE                 Underlying return on capital employed: calculated 
                       as underlying EBIT (see non-GAAP reconciliation) 
                       divided by average capital employed excluding 
                       acquired goodwill and intangible assets 
                     ------------------------------------------------------- 
 Steady state         Underlying EBITDA less net replacement capex 
  cash generation      and lease principal payments 
                     ------------------------------------------------------- 
 The Combined         The Company and its subsidiaries following 
  Group                the Merger and acquisition of the trade and 
                       assets of Nationwide 
                     ------------------------------------------------------- 
 The Company          Redde Northgate plc 
                     ------------------------------------------------------- 
 The Group            The Company and its subsidiaries 
                     ------------------------------------------------------- 
 The Merger           The acquisition by the Company of 100% of the 
                       share capital of Redde plc on 21 February 2020 
                     ------------------------------------------------------- 
 Underlying free      Free cash flow excluding growth capex 
  cash flow 
                     ------------------------------------------------------- 
 Utilisation          Calculated as the average number of vehicles 
                       on hire divided by average rentable fleet in 
                       any period 
                     ------------------------------------------------------- 
 VOH                  Vehicles on hire. Average unless otherwise 
                       stated 
                     ------------------------------------------------------- 
 

Reconciliation of GAAP to non-GAAP measures

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.

In particular we refer to disposals profit. This is a non-GAAP measure used to describe the adjustment in 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). A reconciliation of GAAP to non-GAAP underlying measures is as follows:

 
                                                      Six months     Six months 
                                                     to 31.10.20    to 31.10.19 
                                                          GBP000         GBP000 
 Operating profit                                         31,310         32,890 
 Income from associates                                    2,400              - 
 Gain on bargain purchase                                    258              - 
 EBIT                                                     33,968         32,890 
 Add back: 
 Gain on bargain purchase                                  (258)              - 
 Restructuring costs                                       5,364          2,221 
 Amortisation on acquired intangible assets                9,639              6 
-------------------------------------------------  -------------  ------------- 
 Underlying EBIT                                          48,713         35,117 
-------------------------------------------------  -------------  ------------- 
 
 Profit before tax                                        25,853         24,785 
 Add back: 
 Exceptional operating expenses                            5,364          2,221 
 Amortisation on acquired intangible assets                9,639              6 
 Gain on bargain purchase                                  (258)              - 
 Exceptional finance costs                                     -            565 
 Underlying profit before tax                             40,598         27,577 
-------------------------------------------------  -------------  ------------- 
 
 Profit for the period                                    21,121         21,490 
 Add back: 
 Exceptional operating expenses                            5,364          2,221 
 Amortisation on acquired intangible assets                9,639              6 
 Gain on bargain purchase                                  (258)              - 
 Exceptional finance costs                                     -            565 
 Tax on exceptional items, brand royalty charges 
  and intangible amortisation                            (2,883)          (772) 
-------------------------------------------------  -------------  ------------- 
 Underlying profit for the year                           32,983         23,510 
-------------------------------------------------  -------------  ------------- 
 Weighted average number of Ordinary shares          246,091,423    133,232,518 
-------------------------------------------------  -------------  ------------- 
 Underlying basic earnings per share                       13.4p          17.6p 
-------------------------------------------------  -------------  ------------- 
 
                                                      Six months     Six months 
                                                     to 31.10.20    to 31.10.19 
                                                          GBP000         GBP000 
-------------------------------------------------  -------------  ------------- 
 Underlying EBIT                                          48,713         35,117 
 Add Back 
 Depreciation: vehicles for hire and vehicles 
  for credit hire                                         86,378         96,773 
 Other depreciation                                        8,666          6,265 
 (Gain) loss on disposal of assets                         (112)             97 
 Intangible amortisation included in underlying 
  operating profit                                           349            413 
-------------------------------------------------  -------------  ------------- 
 Underlying EBITDA                                       143,994        138,665 
 Net replacement capex                                  (46,651)       (76,552) 
 Lease principal payments                               (16,936)        (2,876) 
-------------------------------------------------  -------------  ------------- 
 Steady state cash generation                             80,407         59,237 
-------------------------------------------------  -------------  ------------- 
 
 
                                             Northgate      Northgate          Group 
                                                  UK&I          Spain      Sub-total 
                                              6 months       6 months       6 months 
                                           to 31.10.20    to 31.10.20    to 31.10.20 
                                                GBP000         GBP000         GBP000 
---------------------------------------  -------------  -------------  ------------- 
 
 Underlying operating profit                    32,097         16,000         48,097 
 Exclude: 
 Adjustments to depreciation charge 
  in relation to vehicles sold in 
  the period                                  (16,978)        (1,301)       (18,279) 
 Rental profit                                  15,119         14,699         29,818 
---------------------------------------  -------------  -------------  ------------- 
 Divided by: Revenue: hire of vehicles         146,545        102,426        248,971 
---------------------------------------  -------------  -------------  ------------- 
 Rental margin                                   10.3%          14.4%          12.0% 
---------------------------------------  -------------  -------------  ------------- 
 
                                             Northgate      Northgate          Group 
                                                  UK&I          Spain      Sub-total 
                                              6 months       6 months       6 months 
                                           to 31.10.19    to 31.10.19    to 31.10.19 
                                                GBP000         GBP000         GBP000 
---------------------------------------  -------------  -------------  ------------- 
 
 Underlying operating profit                    19,409         19,500         38,909 
 Exclude: 
 Adjustments to depreciation charge 
  in relation to vehicles sold in 
  the period                                   (3,765)        (1,381)        (5,146) 
 Rental profit                                  15,644         18,119         33,763 
---------------------------------------  -------------  -------------  ------------- 
 Divided by: Revenue: hire of vehicles         158,870        107,006        265,876 
---------------------------------------  -------------  -------------  ------------- 
 Rental margin                                    9.8%          16.9%          12.7% 
---------------------------------------  -------------  -------------  ------------- 
 
 
                                                     Six months    Six months 
                                                    to 31.10.20   To 31.10.19 
                                                    (Unaudited)   (Unaudited) 
                                                        GBP'000       GBP'000 
-------------------------------------------------  ------------  ------------ 
 Net replacement capex                                   46,651        76,552 
 Lease principal payments                                16,936         2,876 
 Growth capex                                          (14,791)        47,543 
-------------------------------------------------  ------------  ------------ 
 Total net capex                                         48,796       126,971 
-------------------------------------------------  ------------  ------------ 
 Purchase of vehicles                                   137,859       185,539 
 Proceeds from disposal of vehicles                   (112,767)      (68,758) 
 Other property, plant and equipment expenditure 
  net of disposal proceeds                                6,768         7,314 
 Lease principal payments                                16,936         2,876 
-------------------------------------------------  ------------  ------------ 
 Total net capex                                         48,796       126,971 
-------------------------------------------------  ------------  ------------ 
 
 
 
Condensed consolidated income statement 
for the six months ended 31 October 2020 
---------------------------------------------------------------------------------------------------------------------- 
                                              Six months   Six months   Six months   Six months     Year to    Year to 
                                             to 31.10.20  to 31.10.20  to 31.10.19  to 31.10.19    30.04.20   30.04.20 
                                             (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)   (Audited)  (Audited) 
                                              Underlying    Statutory   Underlying    Statutory  Underlying  Statutory 
                                       Note       GBP000       GBP000       GBP000       GBP000      GBP000     GBP000 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Revenue: hire of vehicles                 2      248,971      248,971      265,876      265,876     518,157    518,157 
Revenue: sale of vehicles                 2      127,054      127,054       91,910       91,910     193,795    193,795 
Revenue: claims and services              2      179,983      179,983            -            -      67,397     67,397 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Total revenue                             2      556,008      556,008      357,786      357,786     779,349    779,349 
Cost of sales                                  (446,424)    (446,424)    (280,082)    (280,082)   (621,446)  (621,446) 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Gross profit                                     109,584      109,584       77,704       77,704     157,903    157,903 
Administrative expenses (excluding 
 exceptional items and amortisation 
 on acquired intangible 
 assets)                                        (63,271)     (63,271)     (42,587)     (42,587)    (84,034)   (84,034) 
Exceptional administrative expenses      13            -      (5,364)            -      (2,221)           -   (41,775) 
Amortisation on acquired intangible 
 assets                                                -      (9,639)            -          (6)           -    (3,178) 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Total administrative expenses                   (63,271)     (78,274)     (42,587)     (44,814)    (84,034)  (128,987) 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Operating profit                          2       46,313       31,310       35,117       32,890      73,869     28,916 
Income from associates                    8        2,400        2,400            -            -         952        952 
Gain on bargain purchase                 14            -          258            -            -           -          - 
EBIT                                              48,713       33,968       35,117       32,890      74,821     29,868 
Interest income                                       15           15           42           42         122        122 
Finance costs (excluding exceptional 
 items)                                          (8,130)      (8,130)      (7,582)      (7,582)    (15,945)   (15,945) 
Exceptional finance costs                13            -            -            -        (565)           -      (566) 
Profit before taxation                            40,598       25,853       27,577       24,785      58,998     13,479 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Taxation                                  3      (7,615)      (4,732)      (4,067)      (3,295)    (11,479)    (5,803) 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
Profit for the period                             32,983       21,121       23,510       21,490      47,519      7,676 
-------------------------------------  ----  -----------  -----------  -----------  -----------  ----------  --------- 
 

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

Underlying profit excludes exceptional items as set out in Note 13 as well as brand royalty charges, amortisation on acquired intangible assets and the taxation thereon, in order to provide a better indication of the Group's underlying business performance.

 
Earnings per share 
Basic                413.4p  8.6p  17.6p  16.1p  30.8p  5.0p 
-------------------   -----  ----  -----  -----  -----  ---- 
Diluted              413.2p  8.4p  17.2p  15.7p  30.5p  4.9p 
-------------------   -----  ----  -----  -----  -----  ---- 
 
 
Condensed consolidated statement of comprehensive income 
for the six months ended 31 October 2020 
-----------------------------------------------------------------------------   -----------  -----------  ---------- 
                                                                                 Six months   Six months     Year to 
                                                                                to 31.10.20  to 31.10.19    30.04.20 
                                                                                (Unaudited)  (Unaudited)   (Audited) 
                                                                                     GBP000       GBP000      GBP000 
-----------------------------------------------------------------------------   -----------  -----------  ---------- 
Amounts attributable to owners of the Company 
Profit attributable to owners                                                        21,121       21,490       7,676 
 
  Other comprehensive income (expense) 
  Foreign exchange differences on retranslation of net assets of subsidiary 
  undertakings                                                                       18,634      (1,222)       3,998 
Net foreign exchange differences on long term borrowings held as hedges            (13,432)        2,278     (1,682) 
Foreign exchange difference on revaluation reserve                                       44          (1)           9 
Net fair value gains on cash flow hedges                                                184          335         807 
Deferred tax charge recognised directly in equity relating to cash flow hedges         (35)         (64)       (153) 
Total other comprehensive income for the period                                       5,395        1,326       2,979 
------------------------------------------------------------------------------  -----------  -----------  ---------- 
Total comprehensive income for the period                                            26,516       22,816      10,655 
------------------------------------------------------------------------------  -----------  -----------  ---------- 
 

All items will subsequently be reclassified to the consolidated income statement. Profit attributable to the owners of the Company includes amortisation of intangible assets.

 
Condensed consolidated balance sheet 
31 October 2020 
                                                                    31.10.20     31.10.19   30.04.20 
                                                                 (Unaudited)  (Unaudited)  (Audited) 
                                                           Note       GBP000       GBP000     GBP000 
--------------------------------------------------------   ----  -----------  -----------  --------- 
Non-current assets 
Goodwill                                                      6      116,105        3,589    116,105 
Other intangible assets                                       6      180,068       16,661    185,710 
 
Property, plant and equipment: vehicles for hire              7      908,507      939,671    884,711 
Property, plant and equipment: vehicles for credit hire       7       42,179            -     51,040 
Other property, plant and equipment                           7      135,682      112,376    126,009 
Total property, plant and equipment                           7    1,086,368    1,052,047  1,061,760 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Deferred tax assets                                                   10,350        5,589     10,133 
Interest in associates                                        8        5,834            -      6,008 
Total non-current assets                                           1,398,725    1,077,886  1,379,716 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Current assets 
Inventories                                                           16,397       33,820     48,762 
Receivables and contract assets                                      328,903       75,833    295,765 
Cash and bank balances                                        9       62,592       46,632     67,843 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Total current assets                                                 407,892      156,285    412,370 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Total assets                                                       1,806,617    1,234,171  1,792,086 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Current liabilities 
Trade and other payables                                             281,415       94,361    222,342 
Provisions                                                   10           49            -      3,369 
Derivative financial instrument liabilities                  11            -          656        184 
Current tax liabilities                                               12,442       10,884     12,393 
Lease liabilities                                                     41,925        6,333     33,691 
Short-term borrowings                                                 41,537       44,424     54,684 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Total current liabilities                                            377,368      156,658    326,663 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Net current assets (liabilities)                                      30,524        (373)     85,707 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Non-current liabilities 
Provisions                                                   10          296            -      1,208 
Lease liabilities                                                     62,292       38,969     70,261 
Long term borrowings                                                 447,777      461,509    485,073 
Deferred tax liabilities                                              36,814        5,306     37,314 
Total non-current liabilities                                        547,179      505,784    593,856 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Total liabilities                                                    924,547      662,442    920,519 
---------------------------------------------------------  ----  -----------  -----------  --------- 
NET ASSETS                                                           882,070      571,729    871,567 
---------------------------------------------------------  ----  -----------  -----------  --------- 
Equity 
Share capital                                                        123,046       66,616    123,046 
Share premium account                                                113,510      113,508    113,510 
Own shares reserve                                                   (2,519)      (2,273)    (3,090) 
Hedging reserve                                                            -        (532)      (149) 
Translation reserve                                                    2,693      (3,769)    (2,509) 
Other reserves                                                       330,521       68,636    330,477 
Retained earnings                                                    314,819      329,543    310,282 
---------------------------------------------------------  ----  -----------  -----------  --------- 
TOTAL EQUITY                                                         882,070      571,729    871,567 
---------------------------------------------------------  ----  -----------  -----------  --------- 
 

Total equity is wholly attributable to owners of the Company.

 
Condensed consolidated cash flow statement 
for the six months ended 31 October 2020 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
                                                                                    Six months   Six months    Year to 
                                                                                   to 31.10.20  to 31.10.19   30.04.20 
                                                                                   (Unaudited)  (Unaudited)  (Audited) 
                                                                             Note       GBP000       GBP000     GBP000 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
Net cash generated from operations                                             12       79,718        1,827     33,699 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
Investing activities 
Interest received                                                                           15           42        122 
Distributions from associates                                                   8        2,574            -        590 
Cash acquired on acquisition                                                                 -            -      8,036 
Proceeds from disposal of vehicles for credit hire and other property, plant and 
 equipment                                                                               7,954          772      3,823 
Purchases of other property, plant and equipment                                      (10,408)      (2,496)    (5,250) 
Purchases of intangible assets                                                         (4,314)      (5,590)    (6,509) 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
Net cash (used in) generated from investing activities                                 (4,179)      (7,272)        812 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
Financing activities 
Issue of shares                                                                              -            -          2 
Dividends paid                                                                               -     (15,997)   (24,333) 
Receipt of bank loans and other borrowings                                              27,195      150,246    137,257 
Repayments of bank loans and other borrowings                                         (74,371)    (110,289)  (114,289) 
Debt issue costs                                                                          (34)      (4,509)    (4,878) 
Principal element of lease payments under IFRS 16                                      (7,147)      (2,876)    (8,034) 
Principal element of HP payments                                                       (9,789)            -    (3,490) 
Net payments to acquire own shares for share schemes                                         -            4          - 
Net cash (used in) generated from financing activities                                (64,146)       16,579   (17,765) 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
Net increase in cash and cash equivalents                                               11,393       11,134     16,746 
Cash and cash equivalents at beginning of the period                                    16,780          805        805 
Effect of foreign exchange movements                                                       157        (281)      (771) 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
Cash and cash equivalents at the end of the period                                      28,330       11,658     16,780 
------------------------------------------------------------------------  -------  -----------  -----------  --------- 
 
 
Cash and cash equivalents consist of: 
Cash and bank balances                  9  62,592    46,632    67,843 
Bank overdrafts                         9(34,262)  (34,974)  (51,063) 
--------------------------------------   --------  --------  -------- 
                                           28,330    11,658    16,780 
--------------------------------------   --------  --------  -------- 
 
 
 Condensed consolidated statement of changes in equity 
  for the six months ended 31 October 2020 
                                    Share 
                                  capital 
                                and share                   Hedging   Translation       Other    Retained 
                                  premium     Own shares    reserve       reserve    reserves    earnings      Total 
                                   GBP000         GBP000     GBP000        GBP000      GBP000      GBP000     GBP000 
----------------------------  -----------  -------------  ---------  ------------  ----------  ----------  --------- 
 Total equity at 1 
  May 2019                        180,124        (3,359)      (803)       (4,825)      68,637     323,842    563,616 
 Share options fair 
  value charge                          -              -          -             -           -       1,290      1,290 
 Share options exercised                -              -          -             -           -     (1,082)    (1,082) 
 Profit attributable 
  to owners of the 
  Company                               -              -          -             -           -      21,490     21,490 
 Dividends paid                         -              -          -             -           -    (15,997)   (15,997) 
 Net purchase of own 
  shares                                -              4          -             -           -           -          4 
 Transfer of shares 
  on vesting of share 
  options                               -          1,082          -             -           -           -      1,082 
 Other comprehensive 
  income (expense)                      -              -        271         1,056         (1)           -      1,326 
 Total equity at 1 
  November 2019                   180,124        (2,273)      (532)       (3,769)      68,636     329,543    571,729 
 Share options fair 
  value charge                          -              -          -             -           -       2,913      2,913 
 Share options exercised                -              -          -             -           -       1,101      1,101 
 Loss attributable 
  to owners of the 
  Company                               -              -          -             -           -    (13,814)   (13,814) 
 Dividends paid                         -              -          -             -           -     (8,336)    (8,336) 
 Issue of share capital            56,432              -          -             -     261,831           -    318,263 
 Transfer of shares 
  on vesting of share 
  options                               -          (817)          -             -           -           -      (817) 
 Deferred tax on share 
  based payments recognised 
  in equity                             -              -          -             -           -     (1,125)    (1,125) 
 Other comprehensive 
  income                                -              -        383         1,260          10           -      1,653 
 Total equity at 1 
  May 2020                        236,556        (3,090)      (149)       (2,509)     330,477     310,282    871,567 
 Share options fair 
  value charge                          -              -          -             -           -         689        689 
 Share options exercised                -              -          -             -           -       (571)      (571) 
 Profit attributable 
  to owners of the 
  Company                               -              -          -             -           -      21,121     21,121 
 Dividends payable                      -              -          -             -           -    (16,702)   (16,702) 
 Transfer of shares 
  on vesting of share 
  options                               -            571          -             -           -           -        571 
 Other comprehensive 
  income                                -              -        149         5,202          44           -      5,395 
 Total equity at 31 
  October 2020                    236,556        (2,519)          -         2,693     330,521     314,819    882,070 
 
 Other reserves comprise the capital redemption reserve, revaluation 
  reserve and merger reserve. 
 
 
Unaudited notes 
1. Basis of preparation and accounting policies 
      Redde Northgate plc is a Company incorporated in England and Wales 
       under the Companies Act 2006. 
       The condensed consolidated interim financial report for the half-year 
       reporting period ended 31 October 2020 has been prepared in accordance 
       with Accounting Standard IAS 34 'Interim Financial Reporting'. The 
       interim report does not include all the notes of the type normally 
       included in an annual financial report. Accordingly, this report 
       is to be read in conjunction with the annual report for the year 
       ended 30 April 2020 and any public announcements made by the Group 
       during the interim reporting period. 
       The accounting policies adopted are consistent with those of the 
       previous financial year and corresponding interim reporting period, 
       except for the estimation of income tax (see note 3). 
       The condensed financial statements are unaudited and were approved 
       by the Board of Directors on 8 December 2020. The condensed financial 
       statements have been reviewed by the auditors and the independent 
       review report is set out in this document. 
       The interim financial information for the six months ended 31 October 
       2020, including comparative financial information, has been prepared 
       on the basis of the accounting policies set out in the last annual 
       report and accounts. There are no new accounting standards have been 
       adopted in the period. 
       In preparing the interim financial statements, the significant judgements 
       made by management in applying the Group's accounting policies and 
       key sources of estimation uncertainty were the same, in all material 
       respects, as those applied to the consolidated financial statements 
       for the year ended 30 April 2020. 
       In particular, the expected adjustment for settlement of claims due 
       from insurance companies and self-insuring organisations remains 
       a critical area of accounting judgement and estimation uncertainty. 
       The approach taken in the period remains consistent with that outlined 
       in the accounting policies for the year ended 30 April 2020. The 
       carrying value of contract assets for claims from insurance companies 
       at 31 October 2020 was GBP157,137,000 (30 April 2020 GBP162,271,000). 
       A 3% difference between the carrying amount of claims in the balance 
       sheet and the amounts finally settled would lead to a GBP4.7m charge 
       or credit to the income statement in subsequent periods. 
       Significant changes in the current reporting period 
       The financial position and performance of the group was particularly 
       affected by the following events and transactions during the six 
       months to 31 October 2020: 
        *    On 4 September 2020 the Group acquired certain 
             businesses and assets of Nationwide Accident Repair 
             Services ("Nationwide") by way of a purchase from 
             administrators. Further details are included in Note 
             14. 
 
 
        *    Exceptional operating costs of GBP5,364,000 were 
             incurred in the period as explained in Note 13. 
 
 
       Going concern assumption 
       The Directors have taken into account the following matters in concluding 
       whether or not it is appropriate to prepare the interim financial 
       statements on a going concern basis: 
       Assessment of prospects 
       The Merger has allowed the Group to further increase the service 
       offering and widen our customer base. The Northgate business continues 
       to maintain its position as a market leader in its core market of 
       flexible commercial vehicle hire and has distinct competitive advantages 
       in the minimum term rental and used vehicle sales markets. The Redde 
       business is a leading provider of incident and accident management, 
       legal and other mobility-related services. The integration of both 
       businesses will deliver cost synergies and provide a platform for 
       new revenue opportunities as the commercial proposition matures. 
       The Combined Group is well established within the markets it operates 
       and has demonstrated resilience through previous economic cycles. 
       Impact of the UK leaving the European Union without a new free trade 
       agreement 
       The Group has planned for the potential impact on its business of 
       the UK leaving the European Union without a new free trade agreement 
       in place. The greatest risks identified would be a disruption to 
       the supply of new vehicles and vehicle components imported into the 
       UK from the EU , including additional import costs which may be imposed: 
       o Around 90% of vehicles purchased or leased by the Group from UK 
       OEMs are imported from the EU. Assurances have been sought from these 
       OEMs, who are confident that there will be no material long-term 
       disruption. Any potential short-term supply disruption can also be 
       mitigated by the Group itself, by slowing the rate of vehicle de-fleets 
       in order to maintain vehicle availability for customers as has been 
       seen in the response to COVID-19. 
       o Components for vehicles manufactured in the UK are also imported 
       from the EU. However, normal OEM stock levels are considered to be 
       sufficient to address any potential short-term supply issues and 
       we are in active discussions with FMG RS suppliers to ensure continuing 
       supply. 
       o The introduction of import costs could potentially create some 
       margin pressure in the short-term. However, the Company believes 
       that in the medium-term, it will be able to pass through to end-users 
       any significant additional costs that might be imposed on imported 
       vehicles. 
       A potential upside for Northgate in the event of supply disruptions 
       or higher purchase costs, would be the likely increase in rental 
       demand and stronger residual values that could result. 
       Given that the short term impact of the UK leaving the EU can be 
       reasonably mitigated through management actions, no matters have 
       been identified which would lead the Directors to conclude that the 
       Group would not continue to be a going concern for at least 12 months 
       from the date of this report in relation to this situation. 
       Impact of COVID-19 
       The COVID-19 pandemic and ensuing government counter measures have 
       significantly reduced business activity across all areas of the Group, 
       impacting trading in the period. A decrease in revenue has resulted 
       from a reduction in vehicles on hire, temporary closure of vehicle 
       sales operations within the rental business of the Group and a lower 
       volume of accidents and incidents handled through the insurance claims 
       and services business of the Group. Since the first lockdown in March-April 
       2020, most of the key operational performance indicators have recovered 
       or substantially improved, including removal of customer support 
       packages, increases in vehicles on hire, the re-opening of vehicle 
       sales operations and an increase in volumes of accidents and incidents 
       managed through the Redde business. 
       Significant actions were also taken by management in order to conserve 
       cash and manage the liquidity of the Group throughout the COVID-19 
       period. Overall, this resulted in an increase of headroom against 
       committed facilities of GBP81m from GBP200m at 29 February 2020 to 
       GBP281m at 31 October 2020. Headroom against related debt covenants 
       also remained adequate as outlined in the Financial Review which 
       included GBP39m EBIT headroom against the interest cover covenant. 
       This demonstrates the resilience of the Group's balance sheet and 
       business model, and its ability to preserve liquidity throughout 
       periods of uncertainty. 
       Assessment of going concern 
       The strategy and associated principal risks underpin the Group's 
       three year strategic planning process (the Plan), which is updated 
       annually. This process considers the current and prospective macro-economic 
       conditions in the countries in which we operate and the competitive 
       tension that exists within the markets that we trade in. The Plan 
       was risk adjusted for the expected impact of COVID-19. 
       The Plan also encompasses the projected cash flows, dividend cover 
       assuming operation of stated policy at the time of the Merger and 
       headroom against borrowing facilities and financial covenants under 
       the Group's existing facilities and the reasonable expectation of 
       similar facilities being replaced if required throughout the planned 
       period. The Plan makes certain assumptions about the normal level 
       of capital recycling likely to occur and therefore considers whether 
       additional financing will be required. Headroom against the Group's 
       existing facilities at 31 October 2020 was GBP281m as detailed in 
       the Financial Review. This compares to headroom of GBP234m at 30 
       April 2020. All of the Group's principal borrowing facilities have 
       maturity dates outside of the period under review, therefore the 
       Group's facilities provide sufficient headroom to fund the capital 
       expenditure and working capital requirements for at least 12 months 
       following the date of this report. 
       The Plan has been subsequently adjusted to include the impact of 
       the acquisition of the trade and assets of Nationwide Repair Services 
       and has been stress tested based on the trading performance in the 
       current period, and by factoring in a severe but plausible downside 
       scenario which assumes that government restrictions relating to COVID-19 
       will be more prolonged than envisaged in the Plan or that macro-economic 
       conditions will be adversely affected following the end of restrictions. 
       The downside scenario includes the revenue impact of a reduction 
       in vehicles on hire, closure of vehicle sales operations, and a prolonged 
       reduction in insurance related accident and repair claims handled. 
       Costs were assumed to be mitigated to the extent that they are directly 
       related to revenue, with an assumption being made that there would 
       be no further reduction in the indirect cost base of the Group and 
       no further government support schemes would be available to access. 
       Capital expenditure was only deferred to the extent of the reduction 
       in demand and a working capital impact of reduced insurance claims 
       collections was also included. 
       The downside scenario took into account the effectiveness of mitigating 
       actions that would be reasonably taken, such as reducing variable 
       costs that are directly related to revenue, but did not take into 
       account further management actions that would likely be taken, such 
       as a change to the indirect cost base of the Group or a reduction 
       in capital expenditure and ageing of the vehicle fleet, both of which 
       would improve cash generation and reduce debt. 
       After taking into account the above sensitivities and reasonable 
       mitigating actions, sufficient headroom remained against available 
       debt facilities and the covenants attached to those and the Directors 
       have a reasonable expectation that the Group will continue to be 
       meet its obligations as they fall due for at least 12 months from 
       the date of this report. 
       Information extracted from 2020 annual report 
       The financial figures for the year ended 30 April 2020, 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 2020 were prepared 
       under IFRS and were delivered to the Registrar of Companies on 5 
       November 2020. The audit report was unqualified, did not draw attention 
       to any matters by way of emphasis and did not include a statement 
       under Section 498(2) or 498(3) of the Companies Act 2006. 
 

2. Segmental analysis

Management has determined the operating segments based upon the information provided to the Board of Directors, which is considered to be the chief operating decision maker. The Group is managed, and reports internally, on a basis consistent with its three main operating divisions, Northgate UK&I, Northgate Spain and Redde. The principal activities of these divisions are set out in the Chief Executive review.

 
                              Northgate      Northgate                                         Group           Group 
                                   UK&I          Spain          Redde      Corporate    eliminations           Total 
                             Six months     Six months     Six months     Six months      Six months      Six months 
                            to 31.10.20    to 31.10.20    to 31.10.20    to 31.10.20     to 31.10.20     to 31.10.20 
                            (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)     (Unaudited)     (Unaudited) 
                                 GBP000         GBP000         GBP000         GBP000          GBP000          GBP000 
------------------------  -------------  -------------  -------------  -------------  --------------  -------------- 
 Revenue: hire of 
  vehicles                      146,545        102,426              -              -               -         248,971 
 Revenue: sale of 
  vehicles                       94,134         32,920              -              -               -         127,054 
 Revenue: claims 
  and services                        -              -        179,983              -               -         179,983 
------------------------  -------------  -------------  -------------  -------------  --------------  -------------- 
 External revenue               240,679        135,346        179,983              -               -         556,008 
 Intersegment revenue               432              -          1,297              -         (1,729)               - 
 Total revenue                  241,111        135,346        181,280              -         (1,729)         556,008 
 
 Timing of revenue 
  recognition: 
 At a point in time              94,134         32,920         49,997              -               -         177,051 
 Over time                      146,977        102,426        131,283              -         (1,729)         378,957 
                                241,111        135,346        181,280              -         (1,729)         556,008 
------------------------  -------------  -------------  -------------  -------------  --------------  -------------- 
 Underlying operating 
  profit (loss)                  32,097         16,000          1,719        (3,503)               -          46,313 
 Income from associates               -              -          2,400              -               -           2,400 
------------------------  -------------  -------------  -------------  -------------  --------------  -------------- 
 Underlying EBIT*                32,097         16,000          4,119        (3,503)               -          48,713 
 Exceptional items 
  (Note 13)                                                                                                  (5,364) 
 Amortisation on 
  acquired 
  intangible assets                                                                                          (9,639) 
 Gain on bargain 
  purchase 
  (Note 14)                                                                                                      258 
 EBIT                                                                                                         33,968 
 Interest income                                                                                                  15 
 Finance costs                                                                                               (8,130) 
 Profit before taxation                                                                                       25,853 
------------------------  -------------  -------------  -------------  -------------  --------------  -------------- 
 
 

* Underlying EBIT stated before amortisation on acquired intangible assets and exceptional items is the measure used by the Board of Directors to assess segment performance.

 
                                                 Northgate    Northgate                     Group 
                                                      UK&I        Spain    Corporate        Total 
                                                Six months   Six months   Six months   Six months 
                                               to 31.10.19  to 31.10.19  to 31.10.19  to 31.10.19 
                                               (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited) 
                                                    GBP000       GBP000       GBP000       GBP000 
Revenue: hire of vehicles                          158,870      107,006            -      265,876 
Revenue: sale of vehicles                           68,864       23,046            -       91,910 
Total revenue                                      227,734      130,052            -      357,786 
Timing of revenue recognition: 
At a point in time                                  68,864       23,046            -       91,910 
Over time                                          158,870      107,006            -      265,876 
                                                   227,734      130,052            -      357,786 
Underlying operating profit (loss)/EBIT *           19,409       19,500      (3,792)       35,117 
Exceptional costs (Note 13)                                                               (2,221) 
Amortisation on acquired intangible assets                                                    (6) 
EBIT                                                                                       32,890 
Interest income                                                                                42 
Finance costs (excluding exceptional items)                                               (7,582) 
Exceptional finance costs (Note 13)                                                         (565) 
Profit before taxation                                                                     24,785 
---------------------------------------------  -----------  -----------  -----------  ----------- 
 
 
                                    Northgate    Northgate 
                                         UK&I        Spain        Redde    Corporate        Total 
                                      Year to      Year to      Year to      Year to      Year to 
                                     30.04.20     30.04.20     30.04.20     30.04.20     30.04.20 
                                    (Audited)    (Audited)    (Audited)    (Audited)    (Audited) 
                                       GBP000       GBP000       GBP000       GBP000       GBP000 
--------------------------------  -----------  -----------  -----------  -----------  ----------- 
 Revenue: hire of vehicles            313,922      204,235            -            -      518,157 
 Revenue: sale of vehicles            137,124       56,671            -            -      193,795 
 Revenue: claims and services               -            -       67,397            -       67,397 
--------------------------------  -----------  -----------  -----------  -----------  ----------- 
 Total revenue                        451,046      260,906       67,397            -      779,349 
 Timing of revenue recognition: 
 At a point in time                   137,124       56,671       14,379            -      208,174 
 Over time                            313,922      204,235       53,018            -      571,175 
                                      451,046      260,906       67,397            -      779,349 
--------------------------------  -----------  -----------  -----------  -----------  ----------- 
 Underlying operating profit 
  (loss)                               37,899       39,731        2,352      (6,113)       73,869 
 Income from associates                     -            -          952            -          952 
 Underlying EBIT*                      37,899       39,731        3,304      (6,113)       74,821 
 Exceptional items (Note 
  13)                                                                                    (41,775) 
 Amortisation on acquired 
  intangible assets                                                                       (3,178) 
 EBIT                                                                                      29,868 
 Interest income                                                                              122 
 Finance costs (excluding 
  exceptional items)                                                                     (15,945) 
 Exceptional finance costs 
  (Note 13)                                                                                 (566) 
 Profit before taxation                                                                    13,479 
--------------------------------  -----------  -----------  -----------  -----------  ----------- 
 

3. Taxation

The charge for taxation for the six months to 31 October 2020 is based on the estimated effective rate for the year ending 30 April 2021 of 18.3% (October 2019 - 13.1% and April 2020 - 43.1%). The April 2020 full year tax rate was impacted by one off non-deductible expenses relating to the Merger.

 
4. Earnings per share 
                                           Six months   Six months   Six months   Six months      Year to      Year to 
                                          to 31.10.20  to 31.10.20  to 31.10.19  to 31.10.19     30.04.20     30.04.20 
                                          (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)    (Audited)    (Audited) 
                                           Underlying    Statutory   Underlying    Statutory   Underlying    Statutory 
Basic and diluted earnings per share 
                                               GBP000       GBP000       GBP000       GBP000       GBP000       GBP000 
----------------------------------------  -----------  -----------  -----------  -----------  -----------  ----------- 
The calculation of basic and diluted 
earnings per share is based on the 
following data: 
Earnings 
Earnings for the purposes of basic and 
 diluted earnings per share, being 
 profit attributable 
 to owners of the Company                      32,983       21,121       23,510       21,490       47,519        7,676 
----------------------------------------  -----------  -----------  -----------  -----------  -----------  ----------- 
Number of shares 
Weighted average number of Ordinary 
 shares for the purpose of basic 
 earnings per share                       246,091,423  246,091,423  133,232,518  133,232,518  154,509,197  154,509,197 
Effect of dilutive potential Ordinary 
 shares - share options                     3,998,211    3,998,211    3,733,760    3,733,760    1,048,391    1,048,391 
Weighted average number of Ordinary 
 shares for the purpose of diluted 
 earnings per share                       250,089,634  250,089,634  136,966,278  136,966,278  155,557,588  155,557,588 
Basic earnings per share                        13.4p         8.6p        17.6p        16.1p        30.8p         5.0p 
----------------------------------------  -----------  -----------  -----------  -----------  -----------  ----------- 
Diluted earnings per share                      13.2p         8.4p        17.2p        15.7p        30.5p         4.9p 
----------------------------------------  -----------  -----------  -----------  -----------  -----------  ----------- 
 

5. Dividends

In the six months to 31 October 2020, a dividend of GBPnil was paid (2019 - GBP15,997,000). The Directors have declared a dividend of 3.4p per share for the six months ended 31 October 2020 (2019 - 6.3p).

Trade and other payables at 31 October 2020 include GBP16,702,000 (2019 - GBPnil) in relation to the final dividend of 6.8p for the year ended 30 April 2020 that was approved in October 2020. The dividend was paid in November 2020.

6. Intangible assets

 
 Net book value 
                                            Customer   Brand       Other 
                          Goodwill     relationships   names    software      Total 
                            GBP000            GBP000  GBP000      GBP000     GBP000 
----------------------  ----------  ----------------  ------  ----------  --------- 
 At 1 May 2019               3,589                 6       -      11,489     15,084 
 Additions                       -                 -       -       5,590      5,590 
 Disposals                       -                 -       -           -          - 
 Amortisation                    -                 -       -       (419)      (419) 
 Exchange differences            -                 -       -         (5)        (5) 
----------------------  ----------  ----------------  ------  ----------  --------- 
 At 1 November 2019          3,589                 6       -      16,655     20,250 
 Acquisition               112,516           169,600  12,800       4,200    299,116 
 Additions                       -                 -       -         919        919 
 Disposals                       -               (6)       -         (3)        (9) 
 Amortisation                    -           (2,884)   (154)       (530)    (3,568) 
 Impairment                      -                 -       -    (14,910)   (14,910) 
 Exchange differences            -                 -       -          17         17 
----------------------  ----------  ----------------  ------  ----------  --------- 
 At 1 May 2020             116,105           166,716  12,646       6,348    301,815 
 Asset acquisition 
  (Note 14)                      -             1,000     450       2,100      3,550 
 Additions                       -                 -       -         764        764 
 Disposals                       -                 -       -        (31)       (31) 
 Transfers                       -                 -       -           -          - 
 Amortisation                    -           (8,662)   (445)       (881)    (9,988) 
 Exchange differences            -                 -       -          63         63 
 At 31 October 2020        116,105           159,054  12,651       8,363    296,173 
----------------------  ----------  ----------------  ------  ----------  --------- 
 
 
 At 31 October 2020 
 Cost or fair value         116,105    170,600  13,250     38,682    338,637 
 Accumulated amortisation 
  and impairment                  -   (11,546)   (599)   (30,319)   (42,464) 
 Net book value             116,105    159,054  12,651      8,363    296,173 
--------------------------  -------  ---------  ------  ---------  --------- 
 

Amortisation was included within the income statement as follows:

 
                                                                            31.10.20     31.10.19   30.04.20 
                                                                         (Unaudited)  (Unaudited)  (Audited) 
                                                                              GBP000       GBP000     GBP000 
-----------------------------------------------------------------------  -----------  -----------  --------- 
Included within underlying operating profit as administrative expenses           349            6        809 
Excluded from underlying operating profit*                                     9,639          413      3,178 
                                                                               9,988          419      3,987 
-----------------------------------------------------------------------  -----------  -----------  --------- 
 

* Amortisation excluded from underlying operating profit relates to intangible assets acquired on acquisitions.

7. Property, plant and equipment

 
                                                                  Other 
                                  Vehicles      Vehicles      property,       Total 
                                  for hire    for credit          plant 
 Net book value                                     hire    & equipment 
                                    GBP000        GBP000         GBP000      GBP000 
-----------------------------  -----------  ------------  -------------  ---------- 
 At 1 May 2019                     900,335             -         68,843     969,178 
 Recognised on transition to 
  IFRS 16                                -             -         47,845      47,845 
 Additions                         208,338             -          2,969     211,307 
 Disposals                        (70,896)             -          (869)    (71,765) 
 Transfers                            (47)             -             47           - 
 Depreciation                     (96,773)             -        (6,265)   (103,038) 
 Exchange differences              (1,286)             -          (194)     (1,480) 
-----------------------------  -----------  ------------  -------------  ---------- 
 At 1 November 2019                939,671             -        112,376   1,052,047 
 Acquisition                             -        52,475         17,515      69,990 
 Additions                         137,608         3,718          4,844     146,170 
 Disposals                       (101,456)       (2,758)        (1,241)   (105,455) 
 Transfers                            (80)             -             80           - 
 Depreciation                     (95,688)       (2,395)        (6,954)   (105,037) 
 Impairment                              -             -        (1,304)     (1,304) 
 Exchange differences                4,656             -            693       5,349 
-----------------------------  -----------  ------------  -------------  ---------- 
 At 1 May 2020                     884,711        51,040        126,009   1,061,760 
 Asset acquisition (Note 14)             -             -          8,618       8,618 
 Additions                         167,895         4,006         13,106     185,007 
 Disposals                        (79,627)       (7,419)        (1,232)    (88,278) 
 Transfers                             152             -          (152)           - 
 Depreciation                     (80,930)       (5,448)        (8,666)    (95,044) 
 Impairment (Note 13)                    -             -        (4,341)     (4,341) 
 Exchange differences               16,306             -          2,340      18,646 
 At 31 October 2020                908,507        42,179        135,682   1,086,368 
-----------------------------  -----------  ------------  -------------  ---------- 
 
 
 At 31 October 2020 
 Cost or fair value          1,323,287   45,671    213,745   1,582,703 
 Accumulated depreciation    (414,780)  (3,492)   (78,063)   (496,335) 
 Net book value                908,507   42,179    135,682   1,086,368 
--------------------------  ----------  -------  ---------  ---------- 
 

Included within property, plant and equipment above, are right of use assets under HP and IFRS16 with net book value of GBP101,008,000 (30 April 20: GBP105,298,000).

8. Interest in associates

 
 
                                       GBP000 
-----------------------------------  -------- 
 At 31 October 2019                         - 
 Acquisition                            5,646 
 Group's share of: 
 Profit from continuing operations        952 
 Distributions from associates          (590) 
-----------------------------------  -------- 
 At 30 April 2020                       6,008 
 Group's share of: 
 Profit from continuing operations      2,400 
 Distributions from associates        (2,574) 
-----------------------------------  -------- 
 At 31 October 2020                     5,834 
-----------------------------------  -------- 
 

9. Analysis of consolidated net debt

 
                                      (Unaudited)  (Unaudited)    (Audited) 
                                      to 31.10.20  to 31.10.19  to 30.04.20 
                                           GBP000       GBP000       GBP000 
Cash and bank balances                   (62,592)     (46,632)     (67,843) 
Bank overdrafts                            34,262       34,974       51,063 
Bank loans                                364,173      384,242      400,847 
Loan notes                                 90,143       86,088       86,868 
Leases arising following adoption 
 of IFRS 16                                69,927       45,302       62,999 
Leases arising under HP obligations        34,290            -       40,953 
Cumulative preference shares                  500          500          500 
Confirming facilities                         236          129          479 
Consolidated net debt                     530,939      504,603      575,866 
------------------------------------  -----------  -----------  ----------- 
 

10. Provisions

 
                                     Onerous 
                                   contracts 
                                      GBP000 
-------------------------------  ----------- 
 At 31 October 2019                        - 
 Acquisition                           4,616 
 Provisions made                         369 
 Provisions utilised                   (408) 
-------------------------------  ----------- 
 At 30 April 2020                      4,577 
 Provisions made                           - 
 Provisions utilised (Note 13)       (4,232) 
-------------------------------  ----------- 
 At 31 October 2020                      345 
-------------------------------  ----------- 
 

11. Derivative financial instruments

At the balance sheet date, the Group held the following financial instruments at fair value:

 
                               31.10.20     31.10.19   30.04.20 
                            (Unaudited)  (Unaudited)  (Audited) 
                                 GBP000       GBP000     GBP000 
--------------------------  -----------  -----------  --------- 
Interest rate derivatives             -        (656)      (184) 
                                      -        (656)      (184) 
--------------------------  -----------  -----------  --------- 
 

The derivative financial instruments above all have fair values which are calculated by reference to observable inputs (i.e. classified as level 2 in the fair value hierarchy). They are valued using the discounted cash flow technique with an appropriate adjustment for counterparty credit risk. The valuations incorporate the following inputs:

   --       interest rates and yield curves observable at commonly quoted intervals; 
   --       commonly quoted spot and forward foreign exchange rates; and 
   --       observable credit spreads. 

The carrying value of financial assets and liabilities recorded at amortised cost in the financial statements are approximately equal to their fair value.

12. Notes to the cash flow statement

 
                                                            Six months   Six months      Year to 
                                                           to 31.10.20  to 31.10.19     30.04.20 
                                                           (Unaudited)  (Unaudited)    (Audited) 
Net cash generated from operations                              GBP000       GBP000       GBP000 
---------------------------------------------------------  -----------  -----------  ----------- 
Operating profit                                                31,310       32,890       28,916 
Adjustments for: 
Depreciation of property, plant and equipment                   95,044      103,038      208,075 
Impairment of property, plant and equipment                      4,341            -        1,304 
Amortisation of intangible assets                                9,988          419        3,987 
Impairment of intangible assets                                      -            -       14,910 
(Gain) loss on disposal of property, plant and equipment         (143)           97          135 
Loss on disposal of intangible assets                               31            -            9 
Share options fair value charge                                    689        1,290        4,203 
---------------------------------------------------------  -----------  -----------  ----------- 
Operating cash flows before movements in working capital       141,260      137,734      261,539 
Decrease (increase) in non-vehicle inventories                     157           50         (36) 
(Increase) decrease in receivables                            (28,739)      (6,428)        4,250 
Increase (decrease) in payables                                  9,491        (960)      (1,355) 
Decrease in provisions                                         (4,233)            -         (39) 
---------------------------------------------------------  -----------  -----------  ----------- 
Cash generated from operations                                 117,936      130,396      264,359 
Income taxes paid, net                                         (5,606)      (4,718)     (10,165) 
Interest paid                                                  (7,520)      (7,070)     (14,774) 
---------------------------------------------------------  -----------  -----------  ----------- 
Net cash generated from operations before net capex            104,810      118,608      239,420 
Purchases of vehicles for hire                               (137,859)    (185,539)    (362,011) 
Proceeds from disposal of vehicles for hire                    112,767       68,758      156,290 
---------------------------------------------------------  -----------  -----------  ----------- 
Net cash generated from operations                              79,718        1,827       33,699 
---------------------------------------------------------  -----------  -----------  ----------- 
 

13. Exceptional items

 
During the period the Group recognised exceptional items in 
 the income statement as follows: 
                                        Six months    Six months    Year to 
                                       to 31.10.20   to 31.10.19   30.04.20 
                                       (Unaudited)   (Unaudited)  (Audited) 
                                            GBP000        GBP000     GBP000 
------------------------------------  ------------  ------------  --------- 
Restructuring costs                          2,645         2,221      8,609 
Acquisition expenses                           710             -     18,256 
FMG RS set up and integration 
 costs                                       1,900             -          - 
Property - provisions utilised             (4,232)             -          - 
Property - impairment                        4,341             -          - 
Intangible impairment                            -             -     14,910 
Exceptional administrative expenses          5,364         2,221     41,775 
Finance costs                                    -           565        566 
Exceptional finance costs                        -           565        566 
Total pre-tax exceptional items              5,364         2,786     42,341 
Tax charge on exceptional items            (1,179)         (769)    (4,661) 
------------------------------------  ------------  ------------  --------- 
 

Restructuring costs

The Group incurred total exceptional restructuring costs of GBP2,645,000 of which GBP1,057,000 arose in Redde, GBP1,261,000 arose in Northgate UK&I, GBP304,000 in Northgate Spain and GBP23,000 Corporate. These costs were incurred in relation to restructuring activities that were undertaken during the period as part of the integration and reorganisation of the Combined Group. These costs primarily related to expenses associated with reduction in headcount totalling GBP1,338,000 and costs incurred in relation to the closure and reorganisation of sites of GBP1,284,000.

Acquisition expenses

The Group incurred acquisition expenses of GBP710,000. These related to professional services expenses directly attributable to the acquisition of the trade and assets of Nationwide.

FMG RS set up and integration costs

The Group incurred costs of GBP1,900,000 in relation to the set up of FMG RS and integration of the business.

Property

Following the acquisition of Redde the Group acquired onerous contracts in relation to properties no longer occupied. During the period GBP4,232,000 relating to these provisions has been utilised and at the same time a property impairment of GBP3,260,000 has been recognised in relation to the same assets to which they relate. A further impairment of GBP1,081,000 has been recognised during the period for certain IFRS 16 land and building assets in relation to the closure and reorganisation of sites following the Merger.

14. Business combinations

14(a) Current period

On 4 September 2020 the Group acquired certain businesses and assets of Nationwide Accident Repair Services ("Nationwide") by way of a purchase from administrators. The acquisition is in line with Group strategy and vision to become the leading integrated mobility solutions provider. The acquisition has been included within the Redde segment. A provisional purchase price allocation exercise has been undertaken in accordance with IFRS 3 'Business Combinations'.

Details of this provisional purchase consideration, the net assets acquired and goodwill are as follows:

 
 
 Purchase consideration           GBP000 
------------------------------  -------- 
 Cash payable                     10,600 
 Contingent consideration            290 
 Total purchase consideration     10,890 
------------------------------  -------- 
 

The provisional assets and liabilities recognised as a result of the acquisition are as follows:

 
 
                                                       GBP000 
---------------------------------------------------  -------- 
 Customer relationships (Note 6)                        1,000 
 Brand (Note 6)                                           450 
 Other software (Note 6)                                2,100 
 Property, plant and equipment (Note 7)                 8,618 
 Stock and work in progress                             4,163 
 Other payables                                       (4,993) 
 Deferred tax                                           (190) 
 Net identified assets acquired                        11,148 
---------------------------------------------------  -------- 
 
 Gain on bargain purchase recognised in the income 
  statement                                               258 
---------------------------------------------------  -------- 
 

Acquisition costs

Acquisition related costs in relation to Nationwide of GBP710,000 have been charged to the income statement as exceptional administrative expenses (Note 13).

Contingent consideration

The contingent consideration arrangement requires the Group to pay the former owners of Nationwide either GBPnil, GBP2.5m or GBP5m dependant on volumes of repair cases with a former customer of Nationwide, in the year from date of acquisition.

The fair value of the contingent consideration arrangement of GBP290,000 was estimated using the scenario-based method. The estimates are based on probability adjusted likelihood of certain repair case volumes being achieved. The liability is presented within trade and other payables in the balance sheet.

Nationwide's contribution to the group results

Nationwide's contribution to underlying operating profit was a GBP3,000,000 loss for the period from 4 September 2020 to 31 October 2020. Revenue during this period was GBP18,200,000.

14(b) Prior period

On 21 February 2020, the Group acquired 100% of the equity interests of Redde plc, thereby obtaining control. The acquisition was made to enhance the Group's position in the market and create a leading integrated mobility solutions platform. Details of this business combination were disclosed in note 4 of the Group's annual financial statements for the year ended 30 April 2020. No hindsight adjustments have been required in the period in relation to the fair values of assets acquired.

15. Contingent liabilities

The Group is currently in legal dispute with a provider of certain IT and software development services over the failure to deliver agreed software and services to the Group. Both parties are claiming against each other. However, the Group has disclaimed liability and is defending the action. No provision in relation to the claim has been recognised in the financial statements as legal advice indicates that on the balance of probabilities significant liability will not arise.

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

Philip Vincent

Chief Financial Officer

8 December 2020

Independent review report of Redde Northgate plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Redde Northgate plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim results of Redde Northgate plc for the 6 month period ended 31 October 2020 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

   --    the condensed consolidated balance sheet as at 31 October 2020; 

-- the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;

   --    the condensed consolidated cash flow statement for the period then ended; 
   --    the condensed consolidated statement of changes in equity for the period then ended; and 
   --    the explanatory notes to the interim financial statements. 

The interim financial statements included in the interim results of Redde Northgate plc have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

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 enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

Newcastle upon Tyne

8 December 2020

[1] Refer to GAAP reconciliation and Glossary of terms note. Underlying excludes exceptional costs and amortisation on acquired intangible assets.

[2] Net debt includes GBP69.9m (2020: GBP45.0m) of IFRS 16 liabilities and is higher than H1 2020 due to the net debt acquired from Redde in H2 2020 of GBP84.1m, partially offset by the cash generated in the year.

[3] Acquisition intangibles include customer relationships, brand names and other software and are estimated to have useful lives ranging from five to fifteen years.

[4] Total net capex includes net replacement capex, lease principal payments and growth capex.

[5] Permanent annual costs savings are not classed as synergies because they are not contingent on the Merger having happened and could have been achieved independently and include the closure of six Van Monster sites.

[6] Calculated as underlying EBIT divided by total revenue

[7] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[8] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction.

[9] Calculated as underlying EBIT divided by total revenue.

[10] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[11] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction.

[12] Calculated as underlying EBIT divided by total revenue.

[13] Redde's ROCE calculated using a 12 month pro rata of the eight months of EBIT since acquisition, divided by the average of the acquired opening and period end closing capital employed excluding goodwill and acquired intangibles.

[14] Pre-COVID levels calculated as the normalised volumes of hires and repairs from the month prior to COVID-19.

[15] Redde net replacement capex is total capex less growth capex. Redde growth capex represents the Nationwide assets acquired only.

[16] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[17] Acquisition intangibles include customer relationships, brand names and other software and are estimated to have useful lives ranging from five to fifteen years.

[18] Acquisition intangibles include customer relationships, brand names and other software and are estimated to have useful lives ranging from five to fifteen years.

[19] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[20] Lease principal payments are added back to reflect the movement on net debt.

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END

IR FFFELFALDIII

(END) Dow Jones Newswires

December 08, 2020 02:00 ET (07:00 GMT)

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