Overall trading in line with expectations and increase in dividend

Northgate plc (“Northgate”, the “Company” or the “Group”), the UK and Spain’s leading specialist in light commercial vehicle hire, announces its interim results for the half year ended 31 October 2015.

Financial Highlights 

  •  Underlying profit before tax(1) £45.9m (2014 – £47.8m):

            o £2.4m adverse impact from the change in vehicle depreciation rates;
            o £1.9m adverse effect of the weakening Euro;

  •  Profit before tax £42.8m (2014 – £46.7m);
  •  Underlying basic earnings per share(2) 27.1p (2014 – 28.6p);
  •  Basic earnings per share 25.4p (2014 – 27.9p);
  •  Increase in interim dividend to 5.1p per share (2014 – 4.3p);
  •  Net debt £338.7m (April 2015 – £337.8m);
  •  Return on capital employed(3) 12.0% (April 2015 – 13.0%);
  •  Successful refinancing of debt facilities completed during the period.

Operational Highlights

The Group continues to target growth with small and medium sized enterprises (SMEs). Our focus on delivering attractive returns to shareholders has increased our efforts on this profitable market segment. 

  •  UK:

           o Strengthening of the UK management team with the recruitment of a Managing Director, a Sales Director and a Marketing Director;
           o Average vehicles on hire 0.6% lower than in the same period in the prior year;
           o Average revenue per vehicle increase of 3% compared to the same period in the prior year;
           o Vehicles on hire of 47,600 (April 2015 – 48,600), a reduction of 1,000, as follows;

              - 800 vehicle on hire growth with SMEs;

              -  600 reduction driven by a downturn in the energy efficiency industry;

              - 700 planned reduction with National customers; and
              - 500 targeted reduction in short term consumer hires as the business focuses on business customers.

           o Closing fleet of 55,200 in the UK (April 2015 – 56,100) and average utilisation of 88% (2014 – 89%);
           o 16 new sites opened since February 2013 contributing 1,000 additional vehicles on hire since 30 April 2015. Five sites opened in the previous 12 months. 

  •  Spain:

           o Average vehicles on hire 1.4% lower than the same period in the prior year;
           o Average revenue per vehicle increase of 1% compared to the same period in the prior year;
           o Vehicles on hire growth of 100 since 30 April 2015, with 1,200 vehicles on hire growth with SMEs and a planned 1,100 reduction with National customers;
           o Closing fleet of 39,700 in Spain (April 2015 – 39,400) and average utilisation of 91% (2014 – 92%).

Bob Contreras, Chief Executive, commented:

“Overall the Group is trading in line with our expectations, despite a mixed trading backdrop in the first six months of the year, with some weakness in UK vehicles on hire being offset by a strong performance in Spain.
In all territories, we have continued to target small and medium sized enterprises (SMEs), where we see the most opportunities for profitable growth and attractive returns.

The Group continues to strengthen the UK management team and has appointed a Managing Director for the UK business as well as a new Sales Director and a Marketing Director. We are well positioned to maximise future growth opportunities.

Our Spanish business continues to execute its market strategy well; leading to improved profitability and returns. We anticipate this continuing against the backdrop of an improving Spanish economy.

There are opportunities for growth in the countries in which we operate and the Group remains well positioned to deliver attractive returns to shareholders. There is no change in our expectations for the full year.”

See full statement and results.