TIDMREDD
RNS Number : 1213U
Redde Northgate PLC
01 December 2021
1 December 2021
REDDE NORTHGATE PLC
("Redde Northgate" or the "Group" or the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 31 OCTOBER 2021
Strong performance across the Group; successfully leveraging our
scaled platform to drive growth
Redde Northgate (LSE:REDD), the leading integrated mobility
solutions platform providing services across the vehicle lifecycle,
is pleased to announce its Interim Results for the six months ended
31 October 2021 ('H1 2022' or the 'period').
Financial Highlights
Adjusted results
Six months ended 31 H1 2022 H1 2021 Change
October
GBPm GBPm %
------------------------ -------- -------- -----------------
Revenue (excluding
vehicle sales) 522.9 429.0 21.9%
Underlying[1] EBIT 87.3 48.7 79.2%
Underlying(1) Profit
before Tax 78.9 40.6 94.4%
Underlying(1) Earnings
per Share 26.1p 13.4p 94.7%
------------------------ -------- -------- -----------------
Statutory results
Total revenue 612.9 556.0 10.2%
EBIT 80.1 34.0 135.8%
Profit before Tax 71.7 25.9 177.4%
Earnings per Share 22.5p 8.6p 162.2%
------------------------ -------- -------- -----------------
Other measures
------------------------ -------- -------- -----------------
Net debt[2] 587.2 530.9 10.6%
Group net debt (exc
IFRS 16 leases)[3] 470.4 461.0 2.0%
Steady state cash
generation(1) 93.5 81.0 15.5%
Free cash flow (7.6) 58.6 (112.9%)
ROCE(1) 12.5% 8.1% 4.4ppts
Dividend per Share 6.0p 3.4p 76.5%
------------------------ -------- -------- -----------------
-- Trading for the first half was ahead of the Board's
expectations, with strong momentum across the Group
-- Revenue (excluding vehicle sales) grew 21.9% to GBP522.9m (H1 2021: GBP429.0m)
-- Total Group revenue, including vehicle sales, grew 10.2% to GBP612.9m (H1 2021: GBP556.0m)
-- Underlying EBIT grew 79.2%, underlying PBT grew 94.4% and underlying EPS grew 94.7%
-- ROCE increased to 12.5% (H1 2021: 8.1%) due to higher
profitability in the Group, strong disposals and a leaner cost base
following strategic actions as part of the Focus initiative
-- Significant rental margin progression in both Northgate
UK&I, 7.3 ppt increase and Northgate Spain, 2.7 ppt increase,
driven by underlying strength in the rental business and a leaner
cost base
-- Steady state cash generation improved 15.5% to GBP93.5m (H1
2021: GBP81.0m) and free cashflow reduced GBP66.1m to an outflow of
GBP7.6m (H1 2021: GBP58.6m) due to investment in the fleet to meet
demand
-- Group net debt, excluding IFRS 16 leases, stable at
GBP470.4m, 1.5x net debt to EBITDA (H1 2021: 1.6x) well within
target leverage range of 1.0x to 2.0x
-- Interim dividend of 6.0p (3.4p in prior period) declared,
representing 50% of prior year final dividend, reflecting the
Board's confidence in Group outlook
Business highlights
-- Significant new multi-year contract wins in the period
including wins with Tesco, Admiral and another major insurer with
lifetime contract revenues in excess of GBP200m leveraging the
Group's increased platform scale and full-service offering
-- Accident and incident volumes have continued to recover
reaching approximately 90% of pre-COVID-19 levels driving the
ongoing performance of Redde
-- High rental demand and reduced vehicle supply has lowered
volumes of vehicles for disposal, albeit at high sales price. This
trend is likely to remain for the rest of the financial year
-- Electric and hybrid vehicles in the fleet have increased 187%
to approximately 2% of the overall fleet and the Group has signed a
memorandum of understanding with an electric vehicle manufacturer
for the supply of 5,000 electric LCVs
-- Operational cost inflation is being effectively managed across the Group
-- The Group continues to assess bolt-on acquisitions to extend
products and services and to increase supply for the fleet
Refinancing
In November 2021, the Group completed a comprehensive
refinancing of its debt arrangements, to optimise its debt
portfolio and to support the next phase of the Group's
strategy.
The Group signed two new sources of debt, providing it with
GBP792m of facilities, an increase of GBP104m on the previous
position:
-- EUR375m of new debt Private Placements, with maturities
spread across 6, 8 and 10 years. These were achieved at a highly
competitive average interest rate of just 1.32%
-- GBP475m bank Revolving Credit Facility, with a four year
maturity to November 2025 and on improved terms compared with the
previous facility
The refinancing results in a c. 50bps reduction in the drawn
interest rate as at the date of the refinancing to 1.5%; a
significant lengthening of our maturities and a greater
diversification of our sources of debt. This creates great
flexibility and a solid financing platform to allow the Group to
invest in the business as well as take advantage of opportunities
in the market as they arise for inorganic growth.
Martin Ward, CEO of Redde Northgate, commented:
"We are pleased to have delivered a strong H1 performance driven
by high demand for our products and services and underlying margin
gains.
"The underlying margin improvements on our rental assets, both
in the UK&I and Spain, look sustainable given the cost
synergies extracted from the business and our focus on driving
value. ROCE continues to grow, up 4.4ppts from H1 2021, and input
costs inflation is being successfully managed. Given the
well-publicised new vehicle supply constraints our vehicle assets
are in demand for rental services and also through our sales
network, which is driving further value. In addition to our new van
supplies, over the next 12-18 months, we expect to supplement our
fleet stock through the selective acquisition of existing rental
assets in the market where this adds value.
"Redde volumes have continued to grow having now reached
approximately 90% of pre COVID-19 levels which is in line with our
expectations. Overall, there is good momentum in the business as we
enter H2 and our key strategic areas of Focus, Drive and Broaden
are delivering meaningful results.
"Strategically, we have made significant progress leveraging the
capabilities of our integrated mobility platform to secure
multi-year contract wins which will increase our market share. Our
combined product and services offering is unique and unrivalled in
terms of scale and infrastructure capabilities."
Outlook
The work undertaken since the Merger has built a strong platform
for further growth, with increasingly large contract wins
demonstrating the appeal of the integrated mobility services
offering and driving continued momentum across the business. We
expect underlying PBT to be at least in line with consensus[4] for
the full year.
The Board continues to look forward with significant optimism
for the future prospects of the Group.
Analyst Briefing
A remote presentation for sell-side analysts will be held at
9.30am today, 1 December 2021. If you are interested in attending,
please email Buchanan on reddenorthgate@buchanan.uk.com to request
the joining details.
This presentation will also be made available via a link on the
Company's website www.reddenorthgate.com .
For further information contact:
Buchanan
David Rydell/Jamie Hooper/Tilly Abraham/ Verity Parker +44 (0)
207 466 5000
Notes to Editors:
Redde Northgate is the leading integrated mobility solutions
platform providing services across the vehicle lifecycle. The
Company offers integrated mobility solutions to businesses, fleet
operators, insurers, OEMs and other customers across seven key
areas: vehicle rental, vehicle data, accident management, vehicle
repairs, fleet management, service and maintenance, vehicle
ancillary services and vehicle sales.
The Company's core purpose is to keep its customers mobile,
whether through meeting their regular mobility needs or by
servicing and supporting them when unforeseen events occur. With
its considerable scale and reach, Redde Northgate's mission is to
offer a market-leading customer proposition and drive enhanced
returns for shareholders by creating value through sustainable
compounding growth. The Group aims to achieve this through the
delivery of its strategic framework of Focus, Drive and
Broaden.
Redde Northgate services its customers through a network and
diversified fleet of over 120,000 owned and leased vehicles,
supporting over 600,000 managed vehicles, with more than 170
workshop, body shop and rental locations across the UK, Ireland and
Spain and a specialist team of over 6,000 automotive services
professionals.
Further information regarding Redde Northgate plc can be found
on the Company's website:
www.reddenorthgate.com
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.
OPERATING REVIEW
Group
The Group's performance in H1 has continued to strengthen as we
further execute our strategy of Focus, Drive and Broaden and
leverage our unique mobility solutions platform.
Focus, Drive and Broaden strategic progress
The expansion of the Group's products and services and the
development of our unique mobility solutions platform has enabled
the Group to secure significant new business wins in the period
with lifetime contract revenues in excess of GBP200m. Winning these
contracts is a direct result of the Group's increased platform
scale and full-service offering and will generate significant value
from FY 2023 onwards.
Our Electric Vehicle ('EV') proposition has continued to
strengthen with over 400 workshop technicians now fully trained on
EVs. As part of our commitment to electrify our fleet and our aim
to be at the forefront of the transition to EV, we have signed a
memorandum of understanding with an electric vehicle manufacturer
for the supply of 5,000 electric LCVs over a four year period
through to 2025 which supports our plans to drive positive changes
within our customer base. This will be one of many developments as
we broaden our relationships with existing and new vehicle
manufacturers across our rental fleet of over 120,000 vehicles and
is supported by our acquisition of Charged EV in July 2021 which
installs a wide range of commercial and domestic electric charging
points.
The Group has also continued to develop contract hire as a
source of fleet funding across the UK business. Total credit lines
of GBP115m have been utilised as at 31 October 2021 (30 April 2021:
GBP104m) funding 8,100 vehicles (30 April 2021: 5,500).
Trading
Revenue (excluding vehicle sales) was 21.9% higher than the
prior year. Northgate UK&I and Northgate Spain revenue
(excluding vehicle sales) was GBP170.8m (H1 2021: GBP147.0m) and
GBP107.7m (H1 2021: GBP102.4m) respectively. Redde revenue was
GBP251.9m (H1 2021: GBP181.3m) reflecting the increasing volumes of
accidents and incidents which have now reached approximately 90% of
pre COVID-19 levels.
Total Group revenue, including vehicle sales, was 10.2% higher.
Vehicle sales revenues were 29.2% lower reflecting the post
lockdown sale of a large number of FY 2020 year end stock of
vehicles in H1 last year and the reduced volumes available this
year due to restrictions in new vehicle supply.
UK&I has continued its trajectory of improvement reflecting
the permanent benefits of cost saving programmes, strong
utilisation at 92% and tight controls over customer pricing whilst
a constrained supply chain for new LCVs continues to operate.
UK&I rental margins improved to 17.6% in H1 (FY 2021:
12.7%).
Rental margins in Spain have improved to 17.1% (FY 2021: 15.0%)
as a result of new customer growth, high utilisation, low repair
costs due to fewer vehicle returns and low bad debts.
Total disposal profits of GBP27.0m in H1 were 47.6% higher than
the prior year with the restriction in vehicle supply continuing to
support high residual values. These high residual values are more
than offsetting the lower volumes of vehicles being disposed, which
at 10,100 is 33.5% lower than the prior year (H1 2021: 15,100).
The supply of new vehicles continues to be restricted, however
our strong relationships with vehicle suppliers along with bolt-on
acquisitions ensures we have adequate supply to meet our
expectations for growth.
Strategically, we have made significant progress leveraging the
unique capabilities of our integrated mobility platform, supporting
new and long-term relationships and have secured multi-year
business wins with Tesco Underwriting and a significant expansion
of new services with Admiral and another major insurer. These
developments underpin future growth rates for the business and our
ability to drive value from the Redde Northgate Merger strengthened
by the addition of approximately 70 Nationwide bodyshops acquired
in September 2020.
Underlying PBT of GBP78.9m (H1 2021: GBP40.6m) was ahead of
Board expectations driven by continued strengthening margins, high
utilisation, high disposal profits and a recovery of volumes in
Redde.
Underlying EPS was 26.1p (H1 2021: 13.4p), 94.7% higher than
prior year. Statutory EPS was 22.5p (H1 2021: 8.6p).
Statutory EBIT of GBP80.1m and statutory PBT of GBP71.7m were
135.8% and 177.4% higher than prior year respectively.
Free cash outflow of GBP7.6m was lower than the prior year (H1
2021: GBP58.6m inflow) as capex was significantly reduced in the
first half of 2021 whereas in the current period there has been
significant growth in the fleet of 7.1% to meet rental demand.
Net debt closed at GBP587.2m including IFRS 16, or GBP470.4m
excluding IFRS 16, resulting in headroom to bank facilities of
GBP272.9m at the end of October prior to the refinancing. Leverage
was 1.5x, in line with FY 2021 year-end leverage of 1.5x.
In light of the strong trading performance in the period and the
Board's confidence in the Group's outlook, the Board has declared
an interim dividend of 6.0p (3.4p in prior period), to be paid on
14 January 2022 to shareholders on the register on 10 December
2021. This reflects 50% of the FY 2021 final dividend, which is in
line with the Group's stated policy and demonstrates the Board's
continued confidence in the Group's future prospects.
ESG
During the course of 2021, we have continued to engage with our
customers and other stakeholders with regard to the environmental,
social and governance (ESG) areas that impact our business. As part
of our ongoing commitment to sustainable operations, we are
conducting a materiality assessment to provide further insight into
stakeholder perceptions regarding these ESG-related risks and
opportunities.
We have continued to strengthen our EV proposition bringing
further EVs onto the fleet, installing EV charging capabilities and
investing in solar panels in Spain. We are also working towards
developing a net zero strategy in line with the both the Government
and international community's requirement for companies to achieve
global climate change targets.
We very much look forward to updating stakeholders on our
sustainability initiatives throughout 2022; detailing how we plan
to mitigate our key risks as well as deliver on the identified
opportunities. To support this programme, we will also be
publishing our maiden Sustainability Report alongside our 2022 Full
Year Results.
Divisional Commentary
Northgate UK&I
Six months ended 31 October H1 2022 H1 2021 Change
KPI ('000) ('000) %
----------------------------- -------- -------- --------
Average VOH 50.2 45.2 10.9%
Closing VOH 50.9 47.4 7.5%
Average utilisation % 92% 90% 2ppt
Six months ended 31 October H1 2022 H1 2021 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------- -------- -------- --------
Revenue - Vehicle hire 170.8 147.0 16.2%
Revenue - Vehicle sales 61.9 94.1 (34.3%)
Total Revenue 232.7 241.1 (3.5%)
Rental profit 30.0 15.1 98.5%
Rental Margin % 17.6% 10.3% 7.3ppt
Disposal profit 22.9 17.0 35.0%
EBIT 52.9 32.1 64.9%
EBIT Margin %[5] 22.7% 13.3% 9.4ppt
ROCE % 17.4% 8.8% 8.6ppt
----------------------------- -------- -------- --------
Rental business
Hire revenue in the Northgate UK&I business increased 16.2%
compared to the prior period to GBP170.8m (H1 2021: GBP147.0m),
driven by average VOH which increased 10.9%, and the impact of
customer support packages in the prior year which were GBP2.4m.
Rate increases were applied in FY 2022 across our full range of
rental products and continued to be well planned, communicated and
executed.
Closing VOH increased 7.5% to 50,900 and was 3% above year-end
FY 2021.
At the half year, Northgate UK&I's minimum term proposition
accounted for around 36% (H1 2021: 33%) 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 progression has continued, reaching 17.6% in
the period compared to 10.3% in H1 2021. The restricted vehicle
supply has resulted in a tight control over rental pricing in the
period. We remain confident that the underlying margin will remain
at around 15%.
The net impact of the growth in hire revenue and higher rental
margin was a 98.5% increase in rental profits to GBP30.0m (H1 2021:
GBP15.1m).
Management of fleet and vehicle sales
The total Northgate UK&I period end rental fleet amounted to
55,900 vehicles, increased from 54,000 at year-end FY 2021. During
the period 6,600 vehicles were acquired (H1 2021: 5,700 vehicles)
and 4,700 vehicles were de-fleeted. The average age of the fleet at
the end of the period was two months higher than at the end of FY
2021. This was partly due to the impact of the fleet optimisation
policy and partly due to managing the fleet to mitigate impacts of
the restricted market supply reducing purchases.
A total of 5,700 vehicles were sold in Northgate UK&I during
the period, 39.9% lower than the prior period. As expected, this
reflects the fact that the prior year H1 period benefited from
additional used vehicle stock due to the impact of the COVID-19
lockdown at the end of FY 2020 and the restricted market supply of
new vehicles in the current period.
Disposal profits of GBP22.9m (H1 2021: GBP17.0m) increased 35%
versus the prior period. The reduction in the number of vehicles
sold was offset by the significant increases in sales values
resulting in a 126% improvement in the average profit per unit
(PPU) on disposals to GBP4,052 (H1 2021: GBP1,794) despite the
continuing impact of the unwind of depreciation rate changes.
Depreciation rates will remain under review as the longer term
impact on residual values becomes clearer.
EBIT and ROCE
Underlying EBIT of GBP52.9m grew 64.9% over the prior period (H1
2021: GBP32.1m) driven by both higher rental and disposal profits
as explained above.
The ROCE in Northgate UK&I was 17.4% (H1 2021: 8.8%)
reflecting the increase in EBIT.
Capex and cash flow
Six months ended 31 October H1 2022 H1 2021 Change
GBPm GBPm GBPm
----------------------------------- -------- -------- -------
Underlying EBITDA 93.7 75.4 18.3
Net Replacement Capex(7) (33.6) (25.9) (7.7)
Lease principal payments[6] (3.6) (2.1) (1.5)
Steady state cash generation 56.5 47.5 9.1
Growth Capex (incl. inorganic)(7) (13.2) 28.4 (41.6)
----------------------------------- -------- -------- -------
Underlying EBITDA increased 24.2% to GBP93.7m (H1 2021:
GBP75.4m).
Net replacement capex[7] in the period was GBP33.6m, GBP7.7m
higher than the prior period as a result of a reduction in vehicle
sales as explained above.
Steady state cash generation increased by GBP9.1m to GBP56.5m
(H1 2021: GBP47.5m) reflecting the higher underlying EBITDA and the
higher net replacement capex. Growth capex(7) was GBP13.2m
reflecting the growth in the owned fleet of 1,000 vehicles to meet
rental demand.
Northgate Spain
Six months ended 31 October H1 2022 H1 2021 Change
KPI ('000) ('000) %
----------------------------- -------- -------- --------
Average VOH 49.4 45.5 8.6%
Closing VOH 51.1 47.1 8.6%
Average utilisation % 93% 91% 2ppt
Six months ended 31 October H1 2022 H1 2021 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
----------------------------- -------- -------- --------
Revenue - Vehicle hire 107.7 102.4 5.1%
Revenue - Vehicle sales 28.1 32.9 (14.6%)
Total Revenue 135.8 135.3 0.3%
Rental profit 18.5 14.7 25.6%
Rental Margin % 17.1% 14.4% 2.7ppt
Disposal profit 4.1 1.3 214.3%
EBIT 22.6 16.0 41.0%
EBIT Margin %[8] 16.6% 11.8% 4.8ppt
ROCE % 8.7% 7.7% 1.0ppt
----------------------------- -------- -------- --------
Rental business
Hire revenue in the Northgate Spain business increased 5.1%
(11.5% in local currency) compared to the prior period to GBP107.7m
(H1 2021: GBP102.4m), driven by average VOH which increased
8.6%.
Closing VOH increased 8.6% to 51,100 and was 9.2% above year-end
FY 2021.
At the half year, Northgate Spain's minimum term proposition
accounted for around 35% (H1 2021: 35%) 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 2.7ppt higher at 17.1% with no COVID-19
customer support costs in the period, higher utilisation, fewer
repairs and fewer bad debts. We expect the rental margin in the
second half to be closer to 15% as we expect higher repairs due to
seasonal returns.
The impact of the higher hire revenue and rental margin was a
25.6% increase in rental profits to GBP18.5m (H1 2021:
GBP14.7m).
Management of fleet and vehicle sales
The total Northgate Spain period end rental fleet amounted to
55,900 vehicles increased from 51,800 at year-end FY 2021. During
the period 7,200 vehicles were purchased (H1 2021: 6,000) and 3,100
vehicles were de-fleeted. The average age of the fleet at the end
of the period was two 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
the restricted market supply reducing purchases.
A total of 4,400 vehicles were sold in Northgate Spain during
the period, 22.8% lower than prior period. As expected, this
reflects the fact that the prior year H1 period benefited from
additional used vehicle stock due to the impact of COVID-19
lockdown at the end of FY 2020 and the restricted market supply of
new vehicles in the current period.
Disposal profits of GBP4.1m (H1 2021: GBP1.3m) increased 214%.
The reduction in the number of vehicles sold was offset by the
significant increases in sales values resulting in a more than a
fourfold improvement in the average profit per unit (PPU) on
disposals to GBP924 (H1 2021: GBP227) despite the continuing impact
of the unwind of depreciation rate changes. Depreciation rates will
remain under review as the longer term impact on residual values
becomes clearer.
EBIT and ROCE
Underlying EBIT of GBP22.6m increased 41.0% over the prior
period (H1 2021: GBP16.0m) driven by both higher rental and
disposal profits as explained above.
The ROCE in Northgate Spain was 8.7% (H1 2021: 7.7%) reflecting
the increase in EBIT.
Capex and cash flow
Six months ended 31 October H1 2022 H1 2021 Change
GBPm GBPm GBPm
------------------------------------ -------- -------- -------
Underlying EBITDA 65.4 60.4 5.0
Net Replacement Capex(10) (34.4) (25.9) (8.5)
Lease principal payments[9] (1.3) (1.4) 0.1
Steady state cash generation 29.7 33.1 (3.3)
Growth Capex (incl. inorganic)(10) (33.5) (3.3) (30.2)
------------------------------------ -------- -------- -------
Underlying EBITDA increased GBP5.0m to GBP65.4m (H1 2021:
GBP60.4m).
Net replacement capex[10] in the period was GBP34.4m, GBP8.5m
higher than the prior period, as a result of the reduction in
vehicle sales revenue as explained above.
Steady state cash generation decreased by GBP3.3m to GBP29.7m
(H1 2021: GBP33.1m) reflecting higher EBITDA and higher net
replacement capex in the period. Growth capex(10) was GBP33.5m,
relating to the fleet growth of 2,800 vehicles.
Redde
Six months ended 31 October H1 2022 H1 2021 Change
PROFIT & LOSS (Underlying) GBPm GBPm %
------------------------------- -------- -------- --------
Revenue - Claims and Services 251.9 181.3 39.0%
Gross profit 60.5 25.9 134.0%
Gross margin % 24.0% 14.3% 9.8ppt
Operating profit 14.0 1.7 711.7%
Income from associates 2.1 2.4 (12.0%)
EBIT 16.1 4.1 290.1%
EBIT margin % ([11]) 6.4% 2.3% 4.1ppt
ROCE %[12] 11.6% 7.9% 3.7ppt
------------------------------- -------- -------- --------
Revenue and profit
Revenue for the period increased 39.0% to GBP251.9m (H1 2021:
GBP181.3m). The main drivers of revenue, traffic volumes and
thereby road traffic accidents, have been increasing since April
2021 and have now reached approximately 90% of pre-COVID-19
levels.
Gross margin of 24.0% has improved 9.8ppt (H1 2021: 14.3%) as
volumes have increased and the utilisation of the fleet has
improved to normal levels.
EBIT for the period increased 290.1% to GBP16.1m (H1 2021:
GBP4.1m). Since the volumes have been increasing month on month the
EBIT to date does not yet reflect a normalised level which would be
substantially higher. The prior period included an operating loss
in FMG RS of GBP3.0m and in this period FMG RS contributed a small
profit.
Management of fleet
The total fleet in Redde closed the period at 9,800 vehicles,
from 6,500 at 30 April 2021 with the latter reflecting a lower
fleet size due to the impact of COVID-19.
The average fleet age was 10 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 2022 H1 2021 Change
GBPm GBPm GBPm
------------------------------ --------- --------- --------
Underlying EBITDA 27.9 11.7 16.3
Net replacement capex
[13] (0.1) 5.7 (4.7)
Lease principal payments[14] (15.5) (13.4) (2.1)
Steady state cash generation 11.5 3.9 7.6
Growth capex(13) (5.0) 0.0 (5.0)
Debtor days 176 days 144 days 32 days
------------------------------ --------- --------- --------
Underlying EBITDA increased GBP16.3m to GBP27.9m (H1 2021:
GBP11.7m) reflecting the recovery of traffic volumes.
Net replacement capex(13) was a net outflow of GBP0.1m in the
period (H1 2021: GBP5.7m inflow) with the prior year being affected
by the disposal proceeds of vehicles funded by HP compared to the
timing of lease principal payments.
Steady state cash generation increased GBP7.6m to GBP11.5m (H1
2021: GBP3.9m).
Growth capex(13) increased to GBP5.0m (H1 2021: GBPnil)
reflecting a change from hire purchase to ownership for a
proportion of the fleet.
Debtor days were 176 days at the end of the period. 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 144 days at the end of H1 2021 due
to the calculation using a trailing 12 months whilst revenues are
growing and the continued disruption to claim collection from some
insurers still operating with staff working from home.
FINANCIAL REVIEW
Group Revenue and EBIT
Six months ended 31 October H1 2022 H1 2021 Change Change
GBPm GBPm GBPm %
------------------------------- -------- -------- ------- --------
Revenue - Vehicle hire 277.1 249.0 28.2 11.3%
Revenue - Vehicle sales 90.0 127.1 (37.1) (29.2%)
Revenue - Claims and services 245.8 180.0 65.8 36.6%
------------------------------- -------- -------- ------- --------
Total revenue 612.9 556.0 56.9 10.2%
Rental profit 48.5 29.8 18.7 62.6%
Disposal profit 27.0 18.3 8.7 47.6%
Claims and services profit 14.0 1.7 12.2 711.7%
Corporate costs (4.3) (3.5) (0.8) 21.5%
------------------------------- -------- -------- ------- --------
Underlying operating profit 85.2 46.3 38.9 83.9%
Income from associates 2.1 2.4 (0.3) (12.0%)
------------------------------- -------- -------- ------- --------
Underlying EBIT 87.3 48.7 38.6 79.2%
Underlying EBIT margin 14.2% 8.8% - 5.4ppt
Statutory EBIT 80.1 34.0 46.1 136%
------------------------------- -------- -------- ------- --------
-- Total Group revenue, including vehicle sales, of GBP612.9m
was 10.2% higher than prior year (11.4% at constant exchange
rates). Hire revenues were 11.3% higher due to higher VOH across
the Group. Vehicle sales revenues were 29.2% lower due to a 5,100
reduction in vehicle disposals from prior period but partially
offset by stronger market pricing
-- Revenue (excluding vehicle sales) of GBP522.9m (H1 2021:
GBP429.0m) was 21.9% higher (23.1% at constant exchange rates)
reflecting increase in vehicle hire revenue and 36.6% increase in
claims and services revenue driven by greater claims volumes
-- Underlying EBIT of GBP87.3m was 79.2% higher, reflecting the
strong performance in the Northgate businesses and improved profits
from the Redde business
-- Statutory EBIT of GBP80.1m was 136% higher, reflecting higher
underlying EBIT offset by GBP9.9m of amortisation of acquisition
intangibles and GBP2.4m of exceptional credits, and the gain on
bargain purchase credit of GBP0.3m in relation to the acquisition
of Nationwide in the prior year
Group PBT and EPS
Six months ended 31 October H1 2022 H1 2021 Change Change
GBPm GBPm GBPm %
------------------------------- -------- -------- ------- ---------
Underlying EBIT 87.3 48.7 38.6 79.2%
Net finance costs (8.4) (8.1) (0.2) 3.0%
------------------------------- -------- -------- ------- ---------
Underlying Profit before Tax 78.9 40.6 38.3 94.4%
Statutory Profit before Tax 71.7 25.9 45.9 177.4%
Underlying effective tax rate 18.7% 18.8% - (0.1ppt)
Underlying EPS 26.1p 13.4p 12.7p 94.7%
Statutory EPS 22.5p 8.6p 13.9p 162.2%
------------------------------- -------- -------- ------- ---------
-- Underlying PBT was 94.4% higher, reflecting the higher EBIT
as a result of the improved business performance and higher finance
costs, which were 3.0% higher
-- Statutory PBT was 177.4% higher, reflecting the higher
underlying PBT and GBP2.4m of exceptional credits compared to
GBP5.4m of exceptional costs in the prior period
-- The underlying effective tax rate of 18.7% was 0.1ppt lower than prior year
-- Underlying EPS of 26.1p was 94.7% higher, reflecting the increased profits in the year
-- Statutory EPS of 22.5p was 162.2% higher, reflecting the
movement in underlying EPS and the impact of higher exceptional
costs in the prior year
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 impacts of COVID-19
market closure as well as the well-publicised new vehicle supply
constraints increasing demand for our vehicle assets. This
disruption is not anticipated to continue into the medium term and
depreciation rates will remain under review as the longer term
impact on residual values becomes clearer. The full year-on-year
impact of previous depreciation rate changes in FY 2022 EBIT is
expected to be a headwind of GBP4.0m in Spain and GBP1.4m in
UK&I as previously outlined.
Dividend
The Board has declared an interim dividend of 6.0p per share (H1
2021: 3.4p) and will be paid on 14 January 2022 to shareholders on
the register as at close of business on 10 December 2021.
Group cash flow
Steady state cash generation
Six months ended 31 October H1 2022 H1 2021 Change
GBPm GBPm GBPm
------------------------------- -------- -------- -------
Underlying EBIT 87.3 48.7 38.6
Depreciation and amortisation 95.5 95.3 0.2
------------------------------- -------- -------- -------
Underlying EBITDA 182.8 144.0 38.8
Net replacement capex (68.8) (46.1) (22.7)
Lease principal payments [15] (20.4) (16.9) (3.5)
------------------------------- -------- -------- -------
Steady state cash generation 93.5 81.0 12.6
------------------------------- -------- -------- -------
-- Steady state cash generation remained strong at GBP93.5m (H1
2021: GBP81.0m), driven by strong underlying EBIT partially offset
by increased net replacement capex
-- Underlying EBITDA was GBP38.8m higher driven by higher
underlying EBIT as a result of stronger performance across the
business
-- Net replacement capex was GBP22.7m higher mainly due to the timing of payments to OEMs
Free cash flow
Six months ended 31 October H1 2022 H1 2021 Change
GBPm GBPm GBPm
--------------------------------------- -------- -------- -------
Steady state cash generation 93.5 81.0 12.6
Exceptional costs (excluding non-cash
items) (0.6) (1.1) 0.4
Working capital and non-cash items (33.0) (25.0) (8.0)
Growth capex (51.7) 25.1 (76.8)
Taxation (9.9) (5.6) (4.3)
--------------------------------------- -------- -------- -------
Net operating cash (1.8) 74.4 (76.1)
Distributions from associates 2.1 2.6 (0.4)
Interest and other financing (7.4) (7.5) 0.1
Acquisition of business (0.5) (10.8) 10.3
--------------------------------------- -------- -------- -------
Free cash flow (7.6) 58.6 (66.1)
Dividends paid (29.3) (0.0) (29.3)
Lease principal payments[16] 20.4 16.9 3.5
--------------------------------------- -------- -------- -------
Net cash (consumed) generated (16.5) 75.5 (92.0)
--------------------------------------- -------- -------- -------
-- Free cash outflow of GBP7.6m decreased by GBP66.1m from H1
2021, driven primarily by growth capex of GBP51.7m compared to a
contraction that resulted in an inflow of GBP25.1m in the prior
period
-- Growth capex of GBP51.7m reflects a net increase in owned
fleet over the period of 4,100 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
GBP44.8m (H1 2021: GBP33.5m)
-- Dividends paid increased during H1 2022 by GBP29.3m, with no
dividends being paid in the prior period as the final dividend for
FY 2020 of GBP16.7m was paid in November 2020, later than the
normal financial calendar
Net debt
Net debt reconciles as follows:
Six months ended 31 October H1 2022 H1 2021
GBPm GBPm
------------------------------ ------- -------
Opening net debt 530.3 575.9
Net cash consumed (generated) 16.5 (75.5)
Other non-cash items 50.7 16.4
Exchange differences (10.3) 14.1
------------------------------ ------- -------
Closing net debt 587.2 530.9
------------------------------ ------- -------
Closing net debt was GBP56.9m higher than opening net debt,
driven by net cash consumption of GBP16.5m. Other non-cash items
consists primarily of GBP50.1m of new leases acquired and the
overall foreign exchange impact on net debt was a GBP10.3m
reduction.
Borrowing facilities
As at 31 October 2021 the Group had headroom on facilities of
GBP273m, with GBP433m drawn (net of available cash balances)
against total facilities of GBP706m as detailed below:
Facility Drawn Headroom Maturity Borrowing
GBPm GBPm GBPm Cost
------------------- -------- ----- -------- -------- ---------
UK bank facilities 608 336 272 Nov-23 1.9%
Loan notes 85 85 - Aug-22 2.4%
Other loans 13 12 1 Nov-21 2.5%
------------------- -------- ----- -------- -------- ---------
706 433 273 2.1%
------------------- -------- ----- -------- -------- ---------
The other loans consist of GBP11.7m of local borrowings in Spain
which were renewed for a further year in November 2021 and GBP0.5m
of preference shares.
In November 2021, the Group completed a refinancing, repaying
the existing loan notes and replacing them with EUR375m of new loan
notes with maturities spread across 6, 8 and 10 years. The UK bank
facilities were replaced with GBP475m of new facilities maturing in
November 2025, resulting in an overall increase of GBP104m in
committed facilities.
The above drawn amounts reconcile to net debt as follows:
Drawn
GBPm
------------------------------------ -----
Borrowing facilities 433
Unamortised finance fees (4)
Leases arising following adoption
of IFRS 16 117
Leases arising under HP obligations 41
------------------------------------- -----
Net debt 587
------------------------------------- -----
There are three financial covenants under the Group's facilities
as follows:
Threshold H1 2022 Headroom H1 2021
--------------- ---------- ------- ---------------- -------
Interest cover 3x 11.6x GBP107m (EBIT) 5.6x
GBP298m (Net
Loan to value 70% 43% debt) 42%
Debt leverage 2.75x 1.5x GBP146m (EBITDA) 1.6x
--------------- ---------- ------- ---------------- -------
The covenant calculations have been prepared in accordance with
the requirements of the facilities to which they relate.
Following the refinancing in November 2021, the debt leverage
covenant improved to 3.0x, increasing headroom by a further GBP14m.
The other covenants remained unchanged.
Balance sheet
Net assets at 31 October 2021 were GBP932.7m (H1 2021:
GBP882.1m), equivalent to net assets per share of 379p (H1 2021:
358p). Net tangible assets at 31 October 2021 were GBP656.8m (H1
2021: GBP585.9m), equivalent to a net tangible asset value of 267p
per share (H1 2021: 238p per share).
Gearing at 31 October 2021 was 89.4% (H1 2021: 90.6%) and ROCE
was 12.5% (H1 2021: 8.1%).
Foreign exchange risk
The average and period end exchange rates used to translate the
Group's overseas operations were as follows:
October 2021 October 2020 April 2021
GBP : EUR GBP : EUR GBP : EUR
----------- ------------- ------------ ----------
Average 1.17 1.11 1.12
Period end 1.18 1.11 1.15
----------- ------------- ------------ ----------
Going concern
Having considered the Group's current trading, cash flow
generation and debt maturity including severe but plausible stress
testing scenarios (as updated for the refinancing in November 2021
and 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 2021 were set out in detail on pages 35 to 38 of the 2021
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
-- recovery of contract assets
-- access to capital
These principal risks have not changed since the last annual
report and continue to be those that could impact the Group during
the second half of the current financial year.
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 31.10.21 to 31.10.20
GBP000 GBP000
------------------------------------------------- ------------- -------------
Operating profit 77,687 31,310
Income from associates 2,111 2,400
Gain on bargain purchase 290 258
------------------------------------------------- ------------- -------------
EBIT 80,088 33,968
------------------------------------------------- ------------- -------------
Add back:
Exceptional operating expenses (2,374) 5,364
Amortisation on acquired intangible assets 9,869 9,639
Gain on bargain purchase (290) (258)
------------------------------------------------- ------------- -------------
Underlying EBIT 87,293 48,713
------------------------------------------------- ------------- -------------
Profit before tax 71,730 25,853
Add back:
Exceptional operating expenses (2,374) 5,364
Amortisation on acquired intangible assets 9,869 9,639
Gain on bargain purchase (290) (258)
Underlying profit before tax 78,935 40,598
------------------------------------------------- ------------- -------------
Profit for the period 55,489 21,121
Add back:
Exceptional operating expenses (2,374) 5,364
Amortisation on acquired intangible assets 9,869 9,639
Gain on bargain purchase (290) (258)
Tax on exceptional items, brand royalty charges
and intangible amortisation 1,504 (2,883)
------------------------------------------------- ------------- -------------
Underlying profit for the period 64,198 32,983
------------------------------------------------- ------------- -------------
Weighted average number of Ordinary shares 246,091,423 246,091,423
------------------------------------------------- ------------- -------------
Underlying basic earnings per share 26.1p 13.4p
------------------------------------------------- ------------- -------------
Six months Six months
to 31.10.21 to 31.10.20
GBP000 GBP000
------------------------------------------------ ------------- -------------
Underlying EBIT 87,293 48,713
Add Back
Depreciation: vehicles for hire and vehicles
for credit hire 83,879 86,378
Other depreciation 10,912 8,666
Loss (gain) on disposal of assets 241 (112)
Intangible amortisation included in underlying
operating profit 447 349
------------------------------------------------ ------------- -------------
Underlying EBITDA 182,772 143,994
------------------------------------------------ ------------- -------------
Net replacement capex (68,846) (46,102)
Lease principal payments (20,388) (16,936)
------------------------------------------------ ------------- -------------
Steady state cash generation 93,538 80,956
------------------------------------------------ ------------- -------------
Northgate Northgate Group
UK&I Spain Sub-total
6 months 6 months 6 months
to 31.10.21 to 31.10.21 to 31.10.21
GBP000 GBP000 GBP000
---------------------------------------- ------------- ------------- -------------
Underlying operating profit 52,928 22,554 75,482
Exclude:
Adjustments to depreciation charge
in relation to vehicles sold in
the period (22,917) (4,087) (27,004)
Rental profit 30,011 18,467 48,478
---------------------------------------- ------------- ------------- -------------
Divided by: Revenue: hire of vehicles* 170,840 107,683 278,523
---------------------------------------- ------------- ------------- -------------
Rental margin 17.6% 17.1% 17.4%
---------------------------------------- ------------- ------------- -------------
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* 146,977 102,426 249,403
---------------------------------------- ------------- ------------- -------------
Rental margin 10.3% 14.4% 12.0%
---------------------------------------- ------------- ------------- -------------
* Revenue: hire of vehicles including intersegment revenue.
Six months Six months
to 31.10.21 To 31.10.20
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------------------------------------- ------------ ------------
Net replacement capex 68,846 46,102
Growth capex 51,731 (25,064)
------------------------------------------------- ------------ ------------
Total net capex 120,577 21,038
------------------------------------------------- ------------ ------------
Lease principal payments 20,388 16,936
------------------------------------------------- ------------ ------------
Total net capex (including lease principal
payments) 140,965 37,974
------------------------------------------------- ------------ ------------
Purchase of vehicles for hire 188,787 137,859
Proceeds from disposal of vehicles for hire (75,859) (112,767)
Proceeds from disposal of vehicles for credit
hire and other property, plant and equipment (885) (7,954)
Purchases of other property, plant and equipment 8,066 3,136
Purchases of intangible assets 468 764
Lease principal payments 20,388 16,936
------------------------------------------------- ------------ ------------
Total net capex (including lease principal
payments) 140,965 37,974
------------------------------------------------- ------------ ------------
Glossary of terms
The following defined terms have been used throughout this
document:
Term Definition
Company Redde Northgate plc
----------------------------------------------------
Contract hire IFRS 16 (leases) relating to vehicles where
the funder retains the residual value risk
----------------------------------------------------
Disposal profit(s) This is a non-GAAP measure used to describe
the adjustment in the depreciation charge made
in the 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 Earnings per share. Underlying unless otherwise
stated
----------------------------------------------------
ESG Environmental, Social, and Corporate Governance
----------------------------------------------------
Facility headroom Calculated as facilities of GBP706m less net
borrowings of GBP433m. Net borrowings represent
net debt of GBP587m excluding lease liabilities
of GBP158m and unamortised arrangement fees
of GBP4m and are stated after the deduction
of GBP3m of net cash and overdraft balances
which are available to offset against borrowings
----------------------------------------------------
FMG RS FMG RS Limited the trading part of the Redde
business that acquired Nationwide
----------------------------------------------------
Free cash flow Net cash generated after principal lease payments
(included this year, comparative updated) and
before the payment of dividends
----------------------------------------------------
FY 2020 The year ended 30 April 2020
----------------------------------------------------
FY 2021 The year ended 30 April 2021
----------------------------------------------------
FY 2022 The year ending 30 April 2022
----------------------------------------------------
GAAP Generally Accepted Accounting Practice: meaning
compliance with IFRS
----------------------------------------------------
Gearing Calculated as net debt divided by net tangible
assets
----------------------------------------------------
Group The Company and its subsidiaries
----------------------------------------------------
Growth capex Growth capex represents the cash consumed in
order to grow the total owned rental fleet
or the cash generated if the fleet size is
reduced in periods of contraction
----------------------------------------------------
H1/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 UK and 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
----------------------------------------------------
Merger The acquisition by the Company of 100% of the
share capital of Redde plc on 21 February 2020
----------------------------------------------------
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
----------------------------------------------------
OEM Original Equipment Manufacturer: a reference
to our vehicle suppliers
----------------------------------------------------
PBT Profit before taxation. Underlying unless otherwise
stated
----------------------------------------------------
PPU Profit per unit/loss per unit - this is a non-GAAP
measure used to describe disposal profit (as
defined), divided by the number of vehicles
sold
----------------------------------------------------
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 (included this
year, comparative updated)
----------------------------------------------------
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
----------------------------------------------------
Condensed consolidated income statement
for the six months ended 31 October 2021
---------------------------------------------------------------------------------------------------------
Six months Six months Six months Six months Year to Year to
to 31.10.21 to 31.10.21 to 31.10.20 to 31.10.20 30.04.21 30.04.21
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
Underlying Statutory Underlying Statutory Underlying Statutory
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Revenue: hire of vehicles 2 277,145 277,145 248,971 248,971 515,566 515,566
Revenue: sale of vehicles 2 89,979 89,979 127,054 127,054 229,809 229,809
Revenue: claims and services 2 245,798 245,798 179,983 179,983 364,124 364,124
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Total revenue 2 612,922 612,922 556,008 556,008 1,109,499 1,109,499
Cost of sales (441,259) (441,259) (446,424) (446,424) (856,955) (856,955)
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Gross profit 171,663 171,663 109,584 109,584 252,544 252,544
Administrative expenses (excluding
exceptional items and
amortisation on acquired
intangible
assets) (86,481) (86,481) (63,271) (63,271) (147,092) (147,092)
Exceptional administrative
expenses: impairment of property,
plant and equipment 7,12 - - - (4,341) - (4,341)
Exceptional administrative
expenses: reversal of previous
impairment of property, plant and
equipment 7,12 - 2,999 - - - 1,304
Exceptional administrative
expenses: other costs 12 - (625) - (1,023) - (4,980)
Amortisation on acquired
intangible assets - (9,869) - (9,639) - (19,513)
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Total administrative expenses (86,481) (93,976) (63,271) (78,274) (147,092) (174,622)
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Operating profit 2 85,182 77,687 46,313 31,310 105,452 77,922
Income from associates 2,8 2,111 2,111 2,400 2,400 4,364 4,364
Gain on bargain purchase 12,13 - 290 - 258 - 1,489
EBIT 87,293 80,088 48,713 33,968 109,816 83,775
Interest income 16 16 15 15 164 164
Finance costs (8,374) (8,374) (8,130) (8,130) (16,760) (16,760)
Profit before taxation 78,935 71,730 40,598 25,853 93,220 67,179
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Taxation 3 (14,737) (16,241) (7,615) (4,732) (16,990) (1,613)
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
Profit for the period 64,198 55,489 32,983 21,121 76,230 65,566
---------------------------------- ----- ----------- ----------- ----------- ----------- ---------- ---------
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
12 as well as brand royalty charges, amortisation on acquired
intangible assets and the taxation thereon and exceptional tax
credits, in order to provide a better indication of the Group's
underlying business performance.
Earnings per share
Basic 426.1p 22.5p 13.4p 8.6p 31.0p 26.6p
------------------- ----- ----- ----- ---- ----- -----
Diluted 425.5p 22.0p 13.2p 8.4p 30.5p 26.2p
------------------- ----- ----- ----- ---- ----- -----
Condensed consolidated statement of comprehensive income
for the six months ended 31 October 2021
----------------------------------------------------------------------------- ----------- ----------- ----------
Six months Six months Year to
to 31.10.21 to 31.10.20 30.04.21
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------------------------------- ----------- ----------- ----------
Amounts attributable to owners of the Company
Profit attributable to owners 55,489 21,121 65,566
Other comprehensive (expense) income
Foreign exchange differences on retranslation of net assets of subsidiary
undertakings (13,134) 18,634 338
Foreign exchange differences on long term borrowings held as hedges 9,614 (13,432) (2,019)
Foreign exchange difference on revaluation reserve (31) 44 (1)
Net fair value gains on cash flow hedges - 184 184
Deferred tax charge recognised directly in equity relating to cash flow hedges - (35) (35)
Total other comprehensive (expense) income for the period (3,551) 5,395 (1,533)
------------------------------------------------------------------------------ ----------- ----------- ----------
Total comprehensive income for the period 51,938 26,516 64,033
------------------------------------------------------------------------------ ----------- ----------- ----------
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 2021
31.10.21 31.10.20 30.04.21
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
-------------------------------------------------------- ---- ----------- ----------- ---------
Non-current assets
Goodwill 6 114,903 116,105 114,503
Other intangible assets 6 161,018 180,068 170,830
Property, plant and equipment: vehicles for hire 7 919,036 908,507 893,342
Property, plant and equipment: vehicles for credit hire 7 62,987 42,179 43,998
Other property, plant and equipment 7 162,835 135,682 146,580
Total property, plant and equipment 7 1,144,858 1,086,368 1,083,920
--------------------------------------------------------- ---- ----------- ----------- ---------
Deferred tax assets 9,824 10,350 4,826
Interest in associates 8 6,032 5,834 6,047
Total non-current assets 1,436,635 1,398,725 1,380,126
--------------------------------------------------------- ---- ----------- ----------- ---------
Current assets
Inventories 11,731 16,397 21,545
Receivables and contract assets 335,941 328,903 302,349
Cash and bank balances 9 34,817 62,592 11,169
--------------------------------------------------------- ---- ----------- ----------- ---------
Total current assets 382,489 407,892 335,063
--------------------------------------------------------- ---- ----------- ----------- ---------
Total assets 1,819,124 1,806,617 1,715,189
--------------------------------------------------------- ---- ----------- ----------- ---------
Current liabilities
Trade and other payables 217,076 281,415 229,666
Provisions 10 - 49 -
Current tax liabilities 8,969 12,442 562
Lease liabilities 36,558 41,925 32,375
Short-term borrowings 127,665 41,537 12,159
--------------------------------------------------------- ---- ----------- ----------- ---------
Total current liabilities 390,268 377,368 274,762
--------------------------------------------------------- ---- ----------- ----------- ---------
Net current (liabilities) assets (7,779) 30,524 60,301
--------------------------------------------------------- ---- ----------- ----------- ---------
Non-current liabilities
Provisions 10 - 296 -
Trade and other payables 3,849 - 3,848
Lease liabilities 121,143 62,292 96,093
Long term borrowings 336,675 447,777 400,885
Deferred tax liabilities 34,450 36,814 31,472
Total non-current liabilities 496,117 547,179 532,298
--------------------------------------------------------- ---- ----------- ----------- ---------
Total liabilities 886,385 924,547 807,060
--------------------------------------------------------- ---- ----------- ----------- ---------
NET ASSETS 932,739 882,070 908,129
--------------------------------------------------------- ---- ----------- ----------- ---------
Equity
Share capital 123,046 123,046 123,046
Share premium account 113,510 113,510 113,510
Own shares reserve (6,145) (2,519) (6,460)
Translation reserve (7,710) 2,693 (4,190)
Other reserves 330,445 330,521 330,476
Retained earnings 379,593 314,819 351,747
--------------------------------------------------------- ---- ----------- ----------- ---------
TOTAL EQUITY 932,739 882,070 908,129
--------------------------------------------------------- ---- ----------- ----------- ---------
Total equity is wholly attributable to owners of the
Company.
Condensed consolidated cash flow statement
for the six months ended 31 October 2021
---------------------------------------------------------------- ----- ----------- ------------- ---------
Six months Six months Year to
to 31.10.21 to 31.10.20 30.04.21
(Unaudited) (Unaudited) (Audited)
as restated*
Note GBP000 GBP000 GBP000
---------------------------------------------------------------- ----- ----------- ------------- ---------
Net cash generated from operations 11 18,776 79,718 137,878
---------------------------------------------------------------- ----- ----------- ------------- ---------
Investing activities
Interest received 16 15 164
Distributions from associates 8 2,126 2,574 4,325
Acquisition of business (net of cash acquired)* (518) (10,823) (10,823)
Proceeds from disposal of vehicles for credit hire and other
property, plant and equipment 885 7,954 35,919
Purchases of other property, plant and equipment* (8,066) (3,135) (7,460)
Purchases of intangible assets* (468) (764) (1,834)
---------------------------------------------------------------- ----- ----------- ------------- ---------
Net cash (used in) generated from investing activities (6,025) (4,179) 20,291
---------------------------------------------------------------- ----- ----------- ------------- ---------
Financing activities
Dividends paid (29,295) - (24,928)
Receipt of bank loans and other borrowings 33,409 27,195 27,195
Repayment of bank loans and other borrowings - (74,371) (109,712)
Debt issue costs - (34) (520)
Principal element of lease payments under IFRS 16 (11,813) (7,147) (16,994)
Principal element of lease payments under HP obligations (8,575) (9,789) (37,814)
Net receipts (payments) to acquire own shares for share schemes 57 - (5,073)
Net cash (used in) generated from financing activities (16,217) (64,146) (167,846)
---------------------------------------------------------------- ----- ----------- ------------- ---------
Net (decrease) increase in cash and cash equivalents (3,466) 11,393 (9,677)
Cash and cash equivalents at beginning of the period 6,821 16,780 16,780
Effect of foreign exchange movements (31) 157 (282)
---------------------------------------------------------------- ----- ----------- ------------- ---------
Cash and cash equivalents at the end of the period 3,324 28,330 6,821
---------------------------------------------------------------- ----- ----------- ------------- ---------
Cash and cash equivalents consist of:
Cash and bank balances 9 34,817 62,592 11,169
Bank overdrafts 9(31,493) (34,262) (4,348)
-------------------------------------- -------- -------- -------
3,324 28,330 6,821
-------------------------------------- -------- -------- -------
* In the condensed consolidated interim financial statements for
the period ended 31 October 2020 purchases of other property, plant
and equipment included GBP7,273,000 and purchases of intangible
assets included GBP3,550,000 in relation to the acquisition of
business and assets of Nationwide. The total amount of
GBP10,823,000 has been restated and reclassified to acquisition of
business (net of cash acquired) in order to align the treatment
with the requirements of IFRS 3 "Business Combinations" consistent
with the audited financial statements for the year ended 30 April
2021
Condensed consolidated statement of changes in equity
for the six months ended 31 October 2021
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 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)
Dividends paid - - - - - (16,702) (16,702)
Transfer of shares
on vesting of share
options - 571 - - - - 571
Total comprehensive
income (expense) - - 149 5,202 44 21,121 26,516
Total equity at 1
November 2020 236,556 (2,519) - 2,693 330,521 314,819 882,070
Share options fair
value charge - - - - - 1,829 1,829
Share options exercised - - - - - (1,132) (1,132)
Dividends paid - - - - - (8,226) (8,226)
Net purchases of
shares - (5,073) - - - - (5,073)
Transfer of shares
on vesting of share
options - 1,132 - - - - 1,132
Deferred tax on share
based payments recognised
in equity - - - - - 12 12
Total comprehensive
income (expense) - - - (6,883) (45) 44,445 37,517
Total equity at 1
May 2021 236,556 (6,460) - (4,190) 330,476 351,747 908,129
Share options fair
value charge - - - - - 1,910 1,910
Share options exercised - 258 - - - (258) -
Dividends paid - - - - - (29,295) (29,295)
Net receipts (purchases)
of shares - 57 - - - - 57
Total comprehensive
income (expense) - - - (3,520) (31) 55,489 51,938
Total equity at 31
October 2021 236,556 (6,145) - (7,710) 330,445 379,593 932,739
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 2021 has been prepared in accordance
with UK-adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules sourcebook
of the United Kingdom's Financial Conduct Authority. 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 2021 and any public announcements made by the Group during
the interim reporting period.
The accounting policies adopted are consistent with those of the
previous financial year, except for the estimation of income tax
(see note 3).
The condensed financial statements are unaudited and were approved
by the Board of Directors on 1 December 2021. 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
2021, 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 2021. Depreciation charges reflect adjustments
made as a result of differences between expected and actual residual
values of used vehicles, taking into account the further directly
attributable costs to sell the vehicles.
The Directors apply judgement in determining the appropriate method
of depreciation (straight line) and are required to estimate the
future residual value of vehicles with due consideration of variables
including age, mileage and condition.
Residual values have increased in the period due to the impacts of
COVID-19 market closure as well as the well-publicised new vehicle
supply constraints increasing demand for our vehicle assets. This
disruption is not anticipated to continue into the medium term but
has increased the level of judgement in this area as it is more difficult
to estimate the future residual value of vehicles at the point they
are expected to be sold. Depreciation rates will remain under review
as the longer term impact on residual values becomes clearer.
The expected adjustment for settlement of claims due from insurance
companies and self-insuring organisations remains a critical area
of accounting judgement and estimation uncertainty. The approach
taken in the period remains consistent with that outlined in the
accounting policies for the year ended 30 April 2021. The carrying
value of contract assets for claims from insurance companies at 31
October 2021 was GBP170,001,000 (30 April 2021 GBP 144,738,000).
A 4% difference between the carrying amount of claims in the balance
sheet and the amounts finally settled would lead to a GBP6.8m charge
or credit to the income statement in subsequent periods.
Going concern assumption
The Directors have taken into account the following matters in concluding
whether or not it is appropriate to prepare the interim financial
statements on a going concern basis:
Assessment of prospects
The successful integration of the group following the Merger and
the acquisition of Nationwide in the prior year has allowed the Group
to further increase its service offering, rationalise the cost based
and provide a platform for future growth.
The Group is well established within the markets it operates and
has demonstrated resilience through the COVID-19 period as explained
further below and also throughout previous economic cycles.
The Group's prospects are assessed through its strategic planning
process. This process includes an annual review of the ongoing strategic
plan, led by the CEO, together with the involvement of business functions
in all territories. The Board engages closely with executive management
throughout this process and challenges delivery of the strategic
plan during regular Board meetings. Part of the Board's role is to
challenge the plan to ensure it is robust and makes due consideration
of the appropriate external environment.
Assessment of going concern
The strategy and associated principal risks underpin the Group's
three year strategic plan ("Plan"), which is updated annually. This
process considers the current and prospective macro-economic conditions
in the countries in which we operate and the competitive tension
that exists within the markets that we trade in.
The Plan also encompasses the projected cash flows, dividend cover
assuming operation of stated policy and headroom against borrowing
facilities and financial covenants under the Group's facilities (as
updated in November 2021) 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
banking facilities at 31 October 2021 was GBP273m. This compares
to headroom of GBP305m at 30 April 2021. Following a refinancing
in November 2021, a further GBP104m of headroom was provided through
those new facilities. At the date of signing these unaudited financial
statements, all of the Group's principal borrowing facilities have
maturity dates outside of the period under review, therefore the
Group's facilities provide sufficient headroom to fund the capital
expenditure and working capital requirements for at least 12 months
following the date of this report.
The Plan takes into account the impact of COVID-19 experienced to
date and the expected impact on subsequent trading. The Plan was
separately stress tested for a slower post COVID-19 recovery in insurance
claims volumes than expected, a reduction in vehicles on hire and
a larger reduction in residual values and a further slowdown in the
collection of historical insurance claims. After taking into account
the above variables, sufficient headroom remained against available
debt facilities and the covenants attached to those facilities.
In addition to the above scenario, the Directors have further considered
the resilience of the Group, considering its current position and
the principal risks facing the business. The Plan was stress tested
for severe but plausible scenarios over the planned period as follows:
* No further growth in vehicles on hire with rental
customers;
* No further increase in pricing of rental hire rates;
* A 1% increase in the incidence of bad debts as a
percentage of hire revenue;
* Reduction in the residual value of used vehicles to
pre-COVID levels;
* A 25% volume reduction in insurance claims and
services revenue in aggregate, either through lower
demand or through ending the commercial relationship
with a group of key insurance partners without
rationalising the indirect cost base; and
* A slow down in the time taken to settle outstanding
claims with insurers.
The above scenarios, took into account the effectiveness of mitigating
actions that would be reasonably taken, such as reducing variable
costs that are directly related to revenue, but did not take into
account further management actions that would likely be taken, such
as a change to the indirect cost base of the Group or a reduction
in capital expenditure and ageing out of the vehicle fleet, both
of which would generate cash and reduce debt.
After taking into account the above sensitivities and plausible mitigating
actions sufficient headroom remained against available debt facilities
and the covenants attached to those the Directors have a reasonable
expectation that the Group will continue to meet its obligations
as they fall due for at least 12 months from the date of this report.
Information extracted from 2021 annual report
The financial figures for the year ended 30 April 2021, 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 2021 were prepared
with International Financial Reporting Standards (IFRS), Interpretations
Committee (IFRS-IC) interpretations and the Companies Act 2006 applicable
to companies reporting under IFRS and were delivered to the Registrar
of Companies on 27 September 2021. 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 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21 to 31.10.21
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Revenue: hire of
vehicles 169,462 107,683 - - - 277,145
Revenue: sale of
vehicles 61,867 28,112 - - - 89,979
Revenue: claims
and services - - 245,798 - - 245,798
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
External revenue 231,329 135,795 245,798 - - 612,922
Intersegment revenue 1,378 - 6,133 - (7,511) -
Total revenue 232,707 135,795 251,931 - (7,511) 612,922
Timing of revenue
recognition:
At a point in time 61,867 28,112 90,528 - - 180,507
Over time 169,462 107,683 155,270 - - 432,415
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
External revenue 231,329 135,795 245,798 - - 612,922
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Underlying operating
profit (loss) 52,928 22,554 13,957 (4,257) - 85,182
Income from associates - - 2,111 - - 2,111
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Underlying EBIT* 52,928 22,554 16,068 (4,257) - 87,293
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Exceptional items
(Note 12) 2,374
Amortisation on
acquired
intangible assets (9,869)
Gain on bargain
purchase
(Note 13) 290
EBIT 80,088
Interest income 16
Finance costs (8,374)
Profit before taxation 71,730
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
* 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 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 146,545 102,426 129,986 - - 378,957
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
External revenue 240,679 135,346 179,983 - - 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 12) (5,364)
Amortisation on
acquired
intangible assets (9,639)
Gain on bargain
purchase
(Note 13) 258
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
EBIT 33,968
Interest income 15
Finance costs (8,130)
Profit before taxation 25,853
------------------------ ------------- ------------- ------------- ------------- -------------- --------------
Northgate Northgate Group
Group
UK&I Spain Redde Corporate eliminations total
Year to Year to Year to Year to Year to Year to
30.04.21 30.04.21 30.04.21 30.04.21 30.04.21 30.04.21
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
Revenue: hire of
vehicles 310,066 205,500 - - - 515,566
Revenue: sale of
vehicles 161,417 68,392 - - - 229,809
Revenue: claims and
services - - 364,124 - - 364,124
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
External revenue 471,483 273,892 364,124 - - 1,109,499
Intersegment revenue 1,530 - 7,604 - (9,134) -
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
Total revenue 473,013 273,892 371,728 - (9,134) 1,109,499
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
Timing of revenue
recognition:
At a point in time 161,417 68,392 140,266 - - 370,075
Over time 310,066 205,500 223,858 - - 739,424
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
External revenue 471,483 273,892 364,124 - - 1,109,499
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
Underlying operating
profit (loss) 76,800 33,700 3,358 (8,406) - 105,452
Income from associates - - 4,364 - - 4,364
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
Underlying EBIT* 76,800 33,700 7,722 (8,406) - 109,816
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
Exceptional items
(Note 12) (8,017)
Amortisation on acquired
intangible assets (19,513)
Gain on bargain purchase
(Note 13) 1,489
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
EBIT 83,775
Interest income 164
Finance costs (16,760)
Profit before taxation 67,179
-------------------------- ----------- ----------- ----------- ----------- -------------- -----------
3. Taxation
The charge for taxation for the six months to 31 October 2021 is
based on the estimated effective rate for the year ending 30 April
2022 of 22.6% (31 October 2020 - 18.3% and 30 April 2021 - 2.4%).
The April 2021 full year tax rate was impacted by tax credits of
GBP10,008,000 in relation to the release of uncertain tax
provisions.
4. Earnings per share
Six months Six months Six months Six months Year to Year to
to 31.10.21 to 31.10.21 to 31.10.20 to 31.10.20 30.04.21 30.04.21
(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 64,198 55,489 32,983 21,121 76,230 65,566
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Number of shares
Weighted average number of Ordinary
shares for the purpose of basic
earnings per share 246,091,423 246,091,423 246,091,423 246,091,423 246,091,423 246,091,423
Effect of dilutive potential Ordinary
shares - share options 5,574,749 5,574,749 3,998,211 3,998,211 4,081,514 4,081,514
Weighted average number of Ordinary
shares for the purpose of diluted
earnings per share 251,666,172 251,666,172 250,089,634 250,089,634 250,172,937 250,172,937
Basic earnings per share 26.1p 22.5p 13.4p 8.6p 31.0p 26.6p
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Diluted earnings per share 25.5p 22.0p 13.2p 8.4p 30.5p 26.2p
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
5. Dividends
In the six months to 31 October 2021, a dividend of
GBP29,295,000 was paid (2020 - GBPnil) representing the final
dividend for the year ended 30 April 2021. The Directors have
declared a dividend of 6.0p per share for the six months ended 31
October 2021 (2020 - 3.4p).
The final dividend of 12.0p in relation to the year ended 31
April 2021 was paid in September 2021. Trade and other payables at
31 October 2020 included GBP16,702,000 in relation to the final
dividend of 6.8p for the year ended 30 April 2020 that was approved
in October 2020 and paid in November 2020.
6. Intangible assets
Net book value Goodwill Customer Brand Other Total
relationships names software
GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------- -------- --------------- ------ ---------- ---------
At 1 May 2020 116,105 166,716 12,646 6,348 301,815
Asset acquisition - 1,000 450 2,100 3,550
Additions - - - 764 764
Disposals - - - (31) (31)
Amortisation - (8,662) (445) (881) (9,988)
Exchange differences - - - 63 63
At 1 November 2020 116,105 159,054 12,651 8,363 296,173
Additions - - - 1,070 1,070
Amortisation - (8,708) (495) (1,007) (10,210)
Remeasurement of
provisional fair
value of assets acquired (1,602) - - - (1,602)
Exchange differences - - - (98) (98)
--------------------------- -------- --------------- ------ ---------- ---------
At 1 May 2021 114,503 150,346 12,156 8,328 285,333
Asset acquisition 400 50 100 - 550
Additions - - - 510 510
Disposals - - - (75) (75)
Amortisation - (8,701) (537) (1,078) (10,316)
Exchange differences - - - (81) (81)
At 31 October 2021 114,903 141,695 11,719 7,604 275,921
--------------------------- -------- --------------- ------ ---------- ---------
At 31 October 2021
Cost or fair value 323,247
Accumulated amortisation
and impairment (47,326)
Net book value 275,921
------------------------------ ---------
Amortisation was included within the income statement as
follows:
31.10.21 31.10.20 30.04.21
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------------------------- ----------- ----------- ---------
Included within underlying operating profit as administrative expenses 447 349 685
Excluded from underlying operating profit* 9,869 9,639 19,513
10,316 9,988 20,198
----------------------------------------------------------------------- ----------- ----------- ---------
* Amortisation of intangible assets excluded from underlying
operating profit relates to intangible assets recognised on
business combinations.
7. Property, plant and equipment
Net book value Vehicles Vehicles for Other property, Total
for hire credit hire plant & equipment
GBP000 GBP000 GBP000 GBP000
---------------------- ---------- ------------ ------------------- ----------
At 1 May 2020 884,711 51,040 126,009 1,061,760
Acquisition - - 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 12) - - (4,341) (4,341)
Exchange differences 16,306 - 2,340 18,646
---------------------- ---------- ------------ ------------------- ----------
At 1 November 2020 908,507 42,179 135,682 1,086,368
Acquisition - - 1,327 1,327
Additions 161,482 34,977 24,372 220,831
Disposals (79,872) (26,708) (3,960) (110,540)
Transfers 13 - (13) -
Depreciation (80,317) (6,450) (9,798) (96,565)
Impairment reversal
(Note 12) - - 1,304 1,304
Exchange differences (16,471) - (2,334) (18,805)
---------------------- ---------- ------------ ------------------- ----------
At 1 May 2021 893,342 43,998 146,580 1,083,920
Acquisition - - 3 3
Additions 181,386 27,787 28,948 238,121
Disposals (66,674) (1,849) (3,171) (71,694)
Transfers 2 - (2) -
Depreciation (76,930) (6,949) (10,912) (94,791)
Impairment reversal
(Note 12) - - 2,999 2,999
Exchange differences (12,090) - (1,610) (13,700)
At 31 October 2021 919,036 62,987 162,835 1,144,858
---------------------- ---------- ------------ ------------------- ----------
At 31 October 2021
Cost or fair value 1,712,539
Accumulated depreciation (567,681)
Net book value 1,144,858
------------------------------------------- ----------
Included within property, plant and equipment above, are right
of use assets under HP and IFRS16 with net book value of
GBP153,287,000 (30 April 2021: GBP122,376,000).
8. Interest in associates
GBP000
----------------------------------- --------
At 1 May 2020 6,008
Group's share of:
Profit from continuing operations 2,400
Distributions from associates (2,574)
----------------------------------- --------
At 1 November 2020 5,834
Group's share of:
Profit from continuing operations 1,964
Distributions from associates (1,751)
----------------------------------- --------
At 1 May 2021 6,047
Group's share of:
Profit from continuing operations 2,111
Distributions from associates (2,126)
----------------------------------- --------
At 31 October 2021 6,032
----------------------------------- --------
9. Analysis of consolidated net debt
(Unaudited) (Unaudited) (Audited)
to 31.10.21 to 31.10.20 to 30.04.21
GBP000 GBP000 GBP000
------------------------------------ ----------- ----------- -----------
Cash and bank balances (34,817) (62,592) (11,169)
Bank overdrafts 31,493 34,262 4,348
Bank loans 347,759 364,173 320,991
Loan notes 84,490 90,143 86,817
Leases arising following adoption
of IFRS 16 116,793 69,927 92,469
Leases arising under HP obligations 40,908 34,290 35,999
Cumulative preference shares 500 500 500
Confirming facilities 98 236 388
Consolidated net debt 587,224 530,939 530,343
------------------------------------ ----------- ----------- -----------
10. Provisions
Onerous
contracts
GBP000
--------------------- -----------
At 1 May 2020 4,577
Provisions made -
Provisions utilised (4,232)
--------------------- -----------
At 1 November 2020 345
Provisions made -
Provisions utilised (345)
--------------------- -----------
At 1 May 2021 -
Provisions made -
Provisions utilised -
--------------------- -----------
At 31 October 2021 -
--------------------- -----------
11. Notes to the cash flow statement
Six months Six months Year to
to 31.10.21 to 31.10.20 30.04.21
(Unaudited) (Unaudited) (Audited)
Net cash generated from operations GBP000 GBP000 GBP000
------------------------------------------------------------------------------- ----------- ----------- -----------
Operating profit 77,687 31,310 77,922
Adjustments for:
Depreciation of property, plant and equipment 94,791 95,044 191,609
Net impairment of property, plant and equipment (2,999) 4,341 3,037
Amortisation of intangible assets 10,316 9,988 20,198
Loss (gain) on disposal of vehicles for credit hire and other property, plant
and equipment 241 (143) 195
Loss on disposal of intangible assets - 31 31
Share options fair value charge 1,910 689 2,518
------------------------------------------------------------------------------- ----------- ----------- -----------
Operating cash flows before movements in working capital 181,946 141,260 295,510
(Increase) decrease in non-vehicle inventories (463) 157 (1,407)
(Increase) decrease in receivables (26,469) (28,739) (69)
(Decrease) increase in payables (5,914) 9,491 (9,011)
Decrease in provisions - (4,233) (4,577)
------------------------------------------------------------------------------- ----------- ----------- -----------
Cash generated from operations 149,100 117,936 280,446
Income taxes paid, net (9,893) (5,606) (12,678)
Interest paid (7,503) (7,520) (14,945)
------------------------------------------------------------------------------- ----------- ----------- -----------
Net cash generated from operations before purchases of and proceeds from
disposal of vehicles
for hire 131,704 104,810 252,823
Purchases of vehicles for hire (188,787) (137,859) (303,537)
Proceeds from disposal of vehicles for hire 75,859 112,767 188,592
------------------------------------------------------------------------------- ----------- ----------- -----------
Net cash generated from operations 18,776 79,718 137,878
------------------------------------------------------------------------------- ----------- ----------- -----------
12. Exceptional items
During the period the Group recognised exceptional items in
the income statement as follows:
Six months Six months Year to
to 31.10.21 to 31.10.20 30.04.21
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
------------------------------------ ------------ ------------ ---------
Impairment of property, plant
and equipment - 4,341 4,341
Reversal of previous impairment
of property, plant and equipment (2,999) - (1,304)
Other costs 625 1,023 4,980
------------------------------------ ------------ ------------ ---------
Exceptional administrative expenses (2,374) 5,364 8,017
Restructuring (credit) costs (3,099) 2,754 2,754
Acquisition expenses - 710 1,088
FMG RS set up and integration
costs 725 1,900 5,728
Legal settlement - - (1,553)
Exceptional administrative expenses (2,374) 5,364 8,017
Gain on bargain purchase (Note
13) (290) (258) (1,489)
Total pre-tax exceptional items (2,664) 5,106 6,528
Tax charge (credit) on exceptional
items 506 (1,179) (1,286)
------------------------------------ ------------ ------------ ---------
Restructuring costs
The Group incurred total exceptional restructuring credits of
GBP3,099,000 of which GBP2,835,000 arose in Redde and, GBP264,000
arose in Northgate UK&I. 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 credits include GBP2,999,000 reversal of previous
property impairment (Note 7) in relation to underutilised property
being successfully sublet by the Group, and GBP100,000 of other
restructuring credits.
FMG RS set up and integration costs
The Group incurred costs of GBP725,000 in relation to the set up
of FMG RS and integration of the business.
13. Business combinations
Current period
On 30 June 2021 the Group acquired the equity instruments of
Charged Electric Vehicles Limited for a consideration of
GBP553,000. A provisional purchase price allocation exercise has
been undertaken in accordance with IFRS 3 'Business Combinations',
which has identified net assets acquired of GBP153,000, resulting
in goodwill of GBP400,000 being recognised in the balance sheet.
The acquisition has been included within the Northgate UK&I
segment.
Prior 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. A provisional purchase price
allocation exercise was undertaken in accordance with IFRS 3
'Business Combinations'. Details of this business combination were
disclosed in note 4 of the Group's annual financial statements for
the year ended 30 April 2021. The provisional purchase price
allocation resulted in a gain on bargain purchase of GBP258,000 as
at 31 October 2020 and a final gain on bargain purchase of
GBP1,489,000 for the full year ended 30 April 2021.
The contingent consideration arrangement required the Group to
pay the former owners of Nationwide up to 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 recognised was GBP290,000 at the date of the
acquisition. As the required volumes were not met the contingent
consideration has been released to the income statement in the
period ended 31 October 2021.
14. Related party transactions
Related party transactions of the Group are consistent with
those disclosed in note 34 of the Group's annual financial
statements for the year ended 30 April 2021. No new related party
transactions have been entered into during the period.
Interim announcement - Statement of the Directors
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with the UK-adopted International Accounting Standard
34;
-- the interim management report includes a fair review of the
information required by DTR 4.2.7 (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- the interim management report includes a 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
1 December 2021
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 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated balance sheet as at 31 October 2021;
-- the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- the condensed consolidated cash flow statement for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results
of Redde Northgate PLC have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
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
1 December 2021
[1] Refer to GAAP reconciliation and Glossary of terms note.
Underlying excludes exceptional items and amortisation on acquired
intangible assets.
[2] Net debt includes GBP116.8m (H1 2021: GBP69.9m) of IFRS 16
liabilities and is higher than H1 2021 due to the leases taken on
following the acquisition of certain business and assets of
Nationwide in September 2020.
[3] Excluding IFRS 16 (leases) as defined in the Glossary
[4] Current analyst consensus for FY 2022 of underlying PBT is
GBP119.4m. Further details on analyst consensus can be found on our
website at www.reddenorthgate.com .
[5] Calculated as underlying EBIT divided by total revenue
[6] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method.
[7] 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.
[8] Calculated as underlying EBIT divided by total revenue.
[9] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method.
[10] 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.
[11] Calculated as underlying EBIT divided by total revenue.
[12] Redde's H1 2021 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.
[13] Net replacement capex is total capex less growth capex.
Growth capex represents the cash consumed in order to grow the
owned fleet or the cash generated if the fleet size is reduced in
periods of contraction.
[14] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method.
[15] Lease principal payments are included so that steady state
cash generation includes all maintenance capex irrespective of
funding method.
[16] Lease principal payments are added back to reflect the
movement on net debt.
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END
IR LBLLXFFLLFBZ
(END) Dow Jones Newswires
December 01, 2021 02:00 ET (07:00 GMT)
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