TIDMNTG
RNS Number : 3556Y
Northgate PLC
05 December 2017
5 December 2017
NORTHGATE PLC
INTERIM RESULTS FOR THE SIX MONTHSED 31 OCTOBER 2017
Strong growth in Spain and slowing decline in UK of vehicles on
hire with good progress against strategic initiatives.
Northgate plc ("Northgate", the "Company" or the "Group"), the
UK, Spain and Ireland's leading specialist in light commercial
vehicle hire, announces its interim results for the half year ended
31 October 2017.
We have made good progress in H1 on each of our strategic
initiatives and remain on track to deliver targeted FY18 KPIs as
announced at our Capital Markets Event on 4 October 2017. We are
encouraged by the early stages of our turnaround in the UK,
evidenced by 2.8% growth in closing vehicles on hire. This progress
is in line with management expectations. We expect increased
momentum as the initial investment that has been undertaken this
period takes effect.
Financial highlights
-- Revenue increased 10.4% to GBP349.7m (2016 - GBP316.7m);
-- Underlying profit before tax of GBP33.8m (2016 - GBP40.4m), impacted by:
o Expected decline in PPU on disposals including GBP3.1m adverse
impact from previous changes in vehicle depreciation rates; and
o GBP1.0m positive effect of the strengthened Euro.
-- Profit before tax GBP31.0m (2016 - GBP40.0m);
-- Underlying basic earnings per share 20.7p (2016 - 25.8p);
-- Basic earnings per share 19.1p (2016 - 25.5p);
-- 7.0% increase in interim dividend to 6.1p per share (2016 -
5.7p) along with updated dividend policy with dividend cover range
of 2.0x-3.0x underlying basic earnings per share;
-- Investment to support higher growth in Spain together with
the effects of adverse foreign exchange impacts on Euro debt
(GBP10.3m) drove net debt higher to GBP421.0m (April 2017 -
GBP309.9m) and ROCE to 8.7% (2016 - 10.7%)
Operational highlights & strategic progress
Early signs of operational progress are coming through in the
UK, while Spain continues to perform strongly.
Flexible and Minimum term business
-- Group average vehicles on hire (VOH) in Q2 grew 1.9% vs Q2 prior year;
-- Group closing VOH grew 5.7% since April 2017 driven by
outstanding growth in Spain (up 9.3%) and growth in UK (up 2.8%,
but underlying decline of 0.8% once seasonal hires are excluded);
and
-- Minimum term proposition growing strongly following a
relaunch in the UK and continued momentum in Spain, with gains from
competitors and converting customers from vehicle ownership to
rental.
Group rental margin of 14.7% compared to 15.2% in the same
period last year with operational leverage improvement in Spain
offset by more competitive pricing stance and other factors in UK
and Ireland.
Vehicle sales
-- Total vehicle sales increased by 16.6% to 17,600 compared
with 15,100 in the same period last year;
-- Average PPU declined by 44.1% to GBP600 (2016 - GBP1,073) as
a result of depreciation unwind and selling younger fleet. No
evidence of market residual values softening; and
-- Strong progress in the implementation of the UK Van Monster
strategy including 18.8% increase in retail sales and 5 new sites
opened since 30 April 2017.
UK self help actions
-- Measures to arrest decline in UK VOH gradually beginning to take effect;
-- UK executive strengthened, sales and marketing capability
significantly enhanced, commercial hub established, IT migration
path agreed and new system contract signed.
-- Focus remains on implementing self help actions to turn
around performance including improving VOH trajectory in second
half of the year.
Strategic progress
Kevin Bradshaw, Chief Executive Officer, commented:
"This has been a period of reset as we lay the foundations to
enable Northgate to deliver our strategy and the targets that we
set out at the Capital Markets Event on 4 October 2017.
There are already signs of the strategy working with 6% growth
in closing VOH, 60% of which has been driven by minimum term
products.
Our self help agenda in the UK remains firmly underway and Spain
continues to outperform in its rental business justifying further
investment as it accelerates its next phase of minimum term roll
out.
We continue to expect our profit this year to be skewed towards
the second half, with various cost savings and benefits from the
implementation of our strategy starting to have an impact.
I am confident we will see further benefits of the strategy and
investment coming through in subsequent reporting periods, which
will generate strong growth in value for our shareholders."
There will be a presentation to analysts at 9.30am today at
Numis, 5th floor, London Stock Exchange building, 10 Paternoster
Square, London EC4M 7LT. If you have not already registered for
attendance then please contact MHP Communications on the number
below. A live webcast of the presentation will be available to view
via a link on the Company's website: www.northgateplc.com
For further information, please contact:
Northgate plc 01325 467558
Kevin Bradshaw, Chief Executive
Officer
David Tilston, Interim
Chief Financial Officer
MHP Communications 020 3128 8100
Andrew Jaques
Barnaby Fry
Simon Hockridge
Ollie Hoare
Notes to Editors:
Northgate plc is the leading light commercial vehicle hire
business in the UK, Ireland and Spain by fleet size and has been
operating in the sector since 1981.
Northgate's core business is the hire of light commercial
vehicles to businesses on a flexible or term basis, giving
customers the ability to manage their vehicle fleet requirements in
a way which can adapt to changing business needs without the
requirement to enter into a long term commitment.
Further information regarding Northgate plc can be found on the
Company's website:
www.northgateplc.com
GAAP reconciliation and glossary of terms
Throughout this report we refer to underlying results and
measures. The underlying measures allow management and other
stakeholders to better compare the performance of the Group between
the current and prior period, without the effects of one-off or
non-operational items.
Underlying measures exclude certain one-off items such as those
arising from restructuring activities and recurring non-operational
items, including certain intangible amortisation. A reconciliation
of GAAP to non-GAAP underlying measures and a glossary of terms
used in this document is outlined beneath the Financial review.
Business review
Overview
Group revenue was GBP349.7m (2016 - GBP316.7m) with revenue from
the hire of vehicles increasing 2.1% to GBP234.5m (2016 -
GBP229.6m) (0.3% decline on a constant currency basis) and revenue
from the disposal of vehicles increasing 32.3% to GBP115.2m (2016 -
GBP87.1m) (30.4% increase on a constant currency basis). Foreign
exchange impact accounted for GBP7.6m of the increase.
Spain has grown flexible VOH by 2,100 and growth in minimum term
VOH has been 1,400 net of 700 legacy returns.
UK closing VOH has increased by 1,100 (including 1,400 seasonal
hires) compared to an increase of 100 in the same period last year
(including 1,200 seasonal hires). The minimum term hire product was
re-launched in September and progress has been encouraging with
1,300 closing VOH at the end of the period.
The effects of previous depreciation rate changes impacted
profit before tax adversely by GBP3.1m but this was offset by
foreign currency gains of GBP1.0m.
Underlying operating profit was GBP39.1m compared to GBP45.0m in
the prior period and underlying earnings per share were 20.7p
compared to 25.8p in the prior period.
Cash generated from operations before net vehicle capex in the
period of GBP95.3m (2016 - GBP103.7m), stated before GBP175.5m
(2016 - GBP93.7m) of net vehicle capex (after disposal proceeds) in
the period. Debt levels since the year end were impacted by a
GBP10.3m foreign currency revaluation. However, Euro assets shelter
the balance sheet against this movement and Group facilities and
debt covenants continue to show comfortable headroom.
Dividend
An interim dividend of 6.1p has been declared, which represents
an increase of 7.0% on last year and reflects our confidence in
delivering against the strategic objectives we have set for the
business.
The interim dividend will be paid on 26 January 2018 to
shareholders on the register at the close of business on 14
December 2017.
The Board understands the importance of dividends to our
shareholders. In order to reflect this and the confidence in the
Company's ability to deliver the strategy set out at the recent
Capital Markets Event the Board is today updating its dividend
policy such that underlying basic earnings per share will cover the
total annual dividend within a range of 2.0x-3.0x (previously
2.5x-3.75x).
Board changes
As announced on 26 September 2017, David Tilston has been
appointed Interim Chief Financial Officer.
Outlook
In the second half, we anticipate that our business in Spain
will continue to trade strongly with the combined minimum term and
flexible rental propositions being well received by customers. It
is encouraging to see 30% of Spanish minimum term growth
substituting vehicle ownership, as the potential for further growth
in this segment is significant.
There are indications that the measures to arrest the decline in
vehicles on hire in the UK are gradually beginning to take effect.
We remain focused on implementing self help actions to turn around
performance including improving the VOH trajectory during the
second half.
We continue to expect our profit this year to be skewed towards
the second half, with various cost savings and benefits from the
implementation of our strategy due to impact in the period, albeit
with a degree of caution around the level of disposal profits.
Strategic review
A summary of our vehicles on hire in the first half of the year
is as follows:
Year
6 months ended 6 months H1 FY H1 FY
to Oct-17 Apr-17 to Oct-16 18 growth 17 growth
--------- --------- ----------- -------- ----------- ----------- -----------
Closing
VOH UK 40,600 39,500 42,500 1,100 100
Spain 41,200 37,700 36,200 3,500 500
Ireland 3,400 3,400 3,500 - 300
Group 85,200 80,600 82,200 4,600 900
3 months 3 months 3 months
to Oct-17 to Apr-17 to Oct-16
--------- --------- ----------- ----------- -----------
Average
VOH UK 39,300 39,600 41,700
Spain 40,200 36,400 36,000
Ireland 3,300 3,500 3,500
Group 82,800 79,500 81,200
Group
Our Group KPIs are explained in more detail in the divisional
commentaries below and were as follows for the first half of the
year:
6 months 6 months
to 31 to 31
Oct 2017 Oct 2016
-------------------------- ---------- ----------
Average VOH growth (Q2
vs Q2)(*) +1.9% -2.1%
Rental margin 14.7% 15.2%
Disposals - units sold 17,600 15,100
PPU (GBP) 600 1,073
Corporate overhead/sales 1% 1%
Group ROCE 8.7% 10.7%
(*) Average VOH growth in 3 months to 31 October 2017 compared
to average VOH growth in 3 months to 31 October 2016.
UK
A summary of the UK KPIs for the first half of the year are as
follows:
6 months 6 months
to 31 to 31
Oct 2017 Oct 2016
------------------------ ---------- ----------
Average VoH growth (Q2
vs Q2) (*) -5.9% -6.2%
Rental margin 13.8% 15.2%
Disposals - units sold 10,800 9,000
PPU (GBP) 326 738
(*) Average VOH growth in 3 months to 31 October 2017 compared
to average VOH growth in 3 months to 31 October 2016
Rental business
UK closing VOH has grown by 1,100 (2.8%) since April 2017 with
an underlying decline of 0.8% after taking account of seasonal
business (1,400 vehicles). This compares to a growth of 100 in the
same period last year.
Our new minimum term product continues to gain traction
following its relaunch in September with growth of 1,000 VOH in the
period. The product is competing well on the basis of an attractive
total cost of ownership, industry leading early termination terms
and the flexibility to swap a vehicle within the life of the
contract all of which are aspects that are highly differentiated
selling points in the industry.
We also see continued appetite on behalf of customers to trade
in existing owned fleets and adopt the minimum term product in
order to benefit from our customer service package and the economic
benefits and flexibility afforded by our offering. To date,
approximately one third of the minimum term volume signed has been
from new customers. The majority of gains arose by taking share
from other rental providers and by converting owners to the rental
model. We have had some significant wins as a result of being able
to offer a mix of minimum term and flexible hire vehicles. This has
allowed us to secure sole supplier agreements with some existing
customers.
Flexible rental business has declined by 1,300 (excluding
seasonal hires) including returns from 4 major customers who have
either taken fleet in-house or reduced fleet sizes to reflect
changes in the structure of their businesses.
We expect to see continued growth from the minimum term product
and ultimately a reversal of flexible rental decline with the
continued application of self help measures.
Rental margin declined to 13.8% (2016 - 15.2%) due to more
competitive pricing decisions and a reduction in VOH, partly offset
by cost reductions achieved from site closures and other
restructuring.
Disposals
Total disposals in the period were 10,800 units compared to
9,000 units in the same period last year. This represents absolute
growth of 20% in units sold compared to the prior year. A total of
41% of disposals were sold via our retail channel. This growth has
been supported by greater sales capacity in the Van Monster network
and an improvement in defleet criteria, which has enabled more
vehicles to be sold through the more profitable retail channel.
Net PPU reduced by GBP412 in the period. Of this, GBP191 is
attributable to the unwind of previous depreciation rate changes
and the balance is attributable to other factors including mix and
condition of vehicles. We continue to review our defleet criteria
to support disposal profitability.
Implementation of the Van Monster retail network expansion
strategy has moved swiftly forwards. During the period five new
sites have been opened and five rental sites have been closed and
converted to Van Monster locations since April. These ten new sites
have increased total selling capacity by 56% since the beginning of
the financial year.
Self help initiatives
The UK leadership team has been strengthened with the
appointment of a Managing Director, Sales Director and Marketing
Director. A Fleet Director is expected to join prior to the
financial year end.
Sales and marketing capabilities have been enhanced with
significant progress being made with regard to the sales team,
where both account implementation and sales support functions have
been improved, new regional sales leaders have been appointed and
talent throughout the salesforce is being upgraded. In the
marketing department, investment in customer data has delivered
significant improvements and this has supported more effective
telesales and direct marketing campaigns. Leads generated have
grown by 4.5% versus the prior year.
Since the period end, we have contracted to migrate our legacy
asset management systems to a cloud based system. The system will
provide significant benefits particularly in enabling us to improve
both customer service and operational efficiencies. The
implementation costs are anticipated to amount to approximately
GBP10m and the system is expected to become operational during
FY20.
Spain
6 months 6 months
to 31 to 31
Oct 2017 Oct 2016
------------------------ ---------- ----------
Average VOH growth (Q2
vs Q2) (*) 11.5% 1.6%
Rental margin 16.6% 15.6%
Disposals - units sold 6,200 5,700
PPU (EUR) 1,109 1,815
(*) Average VOH growth in 3 months to 31 October 2017 compared
to average VOH growth in 3 months to 31 October 2016
Rental Business
Our minimum term and flexible rental business in Spain has grown
strongly in the period supported by a stronger economy, a highly
competitive product and effective sales and marketing
activities.
Closing VOH in Spain has grown by 9.3% (3,500 vehicles); 3.8%
(1,400 vehicles) from minimum term and 5.5% (2,100 vehicles) from
flexible rental.
This minimum term growth is net of 700 legacy returns and
includes both competitive displacement (1,000 units) and
substituting previously owned vehicles (800 units). Additionally,
it is clear that the minimum term offer is helping to on-hire
greater volumes of flexible rental vehicles. Since launch we have
seen approximately one quarter of new minimum term customers go on
to add an equivalent number of flexible rental vehicles placing
their first order, on average, after a tenure of three months with
Northgate on minimum term.
We continue to monitor political developments in the Catalonia
region but have not yet detected any material changes to trading
patterns in that region.
We expect to see continued strong growth in the second half of
the year.
Rental margins increased to 16.6% (2016 - 15.6%) as the division
experienced the benefits of operational leverage as a result of
increased VOH.
Disposals
Total disposals during the period were 6,200 units compared to
5,700 units in the prior period.
This growth has been supported by development and training of
the rental sales team to sell used vehicles to potential rental
customers who wish to remain as vehicle owners.
As expected, net PPU reduced by EUR706 in the period. Of this,
EUR187 relates to the unwind of previous changes to depreciation
rates and EUR519 is attributable to other factors including mix and
condition of vehicles.
Continued review is underway of the decision criteria applied to
defleeting vehicles in determining the most profitable sales
process for them. We expect the increase in retail sales capability
and continued review of defleet criteria to support disposal
profitability.
Ireland
Rental Business
Overall, closing VOH has remained flat at 3,400 in the period. A
successful initiative was undertaken to reduce the number of
accounts with a short hire period that were disproportionately
costly to serve.
Minimum term products are gaining traction in the market with
300 units on hire at the end of October 2017. Overall VOH is has
stabilised and we expect to see momentum in the second half.
Disposals
Total disposals in the period were 600 units compared with 400
units in the prior period with an adjustment to depreciation for
vehicles sold of GBP1.0m compared to GBP0.9m in the same period
last year.
Capital management
ROCE was 8.7% during the period (October 2016 - 10.7%). The
decline was split evenly between UK and Spain. Key contributors to
this included significant capital expenditure in Spain to support
growth and lower PPU on vehicle disposals across the Group.
We continue to keep under review how we can manage our growth
whilst maintaining marginal ROCE substantially ahead of our
weighted average cost of capital.
Financial review
Group
A summary of the Group's underlying financial performance for
the six months to 31 October 2017 with a comparison to the prior
period is shown below:
6 months to 6 months to
31 Oct 2017 31 Oct 2016 Change
GBPm GBPm
--------------------------- ----------- ----------- ------
Revenue: hire of vehicles 234.5 229.6 +2.1%
Revenue: sale of vehicles 115.2 87.1 +32.2%
Operating profit 39.1 45.0 -13.0%
Net interest expense (5.3) (4.6) +15.5%
Profit before tax 33.8 40.4 -16.2%
Profit after tax 27.6 34.3 -19.6%
Basic earnings per share 20.7p 25.8p -19.8%
Return on capital employed 8.7% 10.8% -2.0%
--------------------------- ----------- ----------- ------
At constant exchange rates revenue from the hire of vehicles was
0.3% lower than the prior period.
Profit before tax was positively impacted by GBP1.0m due to the
impact of foreign exchange gains. The impact of previous changes to
depreciation rates adversely affected profit before tax by
GBP3.1m.
UK
The underlying results of the UK business were as follows:
6 months to 6 months to
31 Oct 2017 31 Oct 2016 Change
GBPm GBPm
-------------------------- ----------- ----------- ------
Revenue: hire of vehicles 131.8 138.4 -4.8%
Revenue: sale of vehicles 76.7 59.0 +30.0%
Operating profit 18.0 23.9 -24.6%
Operating margin 13.7% 17.3% -3.6%
Average vehicles on hire 39,400 42,000 -6.2%
Average utilisation 87.3% 87.7% -0.4%
Vehicle disposal units 10,800 9,000 +20.0%
Average VOH has reduced by 2,600 (6.2%) in the period this is
mainly due to the starting position in the year being 3,000
vehicles lower than in the previous year.
Underlying operating profit was GBP5.9m lower than the previous
year of which GBP2.8m related to the rental profit including a
GBP1.2m impact of the lower vehicles on hire starting position. A
total of GBP2.0m related to the unwind of previous depreciation
rate changes and the remaining GBP1.1m was due to other factors
including mix and condition of vehicles sold.
Spain
The underlying results in Spain were as follows:
6 months to 6 months to
31 Oct 2017 31 Oct 2016 Change
GBPm GBPm
-------------------------- ----------- ----------- ------
Revenue: hire of vehicles 92.9 81.2 +14.3%
Revenue: sale of vehicles 35.0 26.1 +34.1%
Operating profit 21.3 21.3 +0.2%
Operating margin 23.0% 26.2% -3.9%
Average vehicles on hire 39,400 35,900 +9.7%
Average utilisation 91.0% 90.6% +0.4%
Vehicle disposal units 6,200 5,700 +8.8%
Adjusting for the impacts of foreign currency gains, hire
revenue was 14.4% higher than in the prior period and underlying
operating profit was flat. Foreign currency gains favourably
impacted underlying operating profit by GBP1.1m.
Average vehicles on hire increased by 3,500 in the period
compared to an increase of 200 in the prior period
The adjustment to deprecation charge for vehicles sold in the
period reduced operating profit by GBP3.1m this includes the
adverse impact of previous depreciation rate changes of GBP1.0m.
However this was offset by the favourable impact of rental
operations of GBP2.0m.
Reported PPU has declined, as expected, to EUR1,109 from
EUR1,815 in the period due to the unwind of previous depreciation
rate changes and other factors including mix and condition of
vehicles sold.
Ireland
The underlying results in Ireland are as follows:
6 months to 6 months to
31 Oct 2017 31 Oct 2016 Change
GBPm GBPm
-------------------------- ----------- ----------- ------
Revenue: hire of vehicles 10.3 10.5 -1.9%
Revenue: sale of vehicles 3.5 2.0 +75.0%
Operating profit 1.4 1.7 -17.6%
Operating margin 14.0% 16.1% -2.1%
Average vehicles on hire 3,300 3,400 -2.9%
Average utilisation 85.8% 89.3% -3.5%
Vehicle disposal units 600 400 +50.0%
After adjusting for the impact of foreign currency gains, hire
revenue was GBP0.4m (4%) higher than in the same period last year
and operating profit was GBP0.1m lower.
Interest and taxation
Net underlying finance charges for the six months to 31 October
2017 were GBP5.3m (2016 - GBP4.6m).
The impact of foreign currency adversely affected net finance
charges by GBP0.2m. Excluding the effects of foreign currency, an
increase in higher average debt has increased net finance charges
by GBP0.5m.
The Group's underlying effective tax rate was 18.4% (2016 -
15.0%).
After taking account of intangible amortisation and exceptional
items, the effective tax rate was 17.8% (2016 - 14.9%).
Exceptional items
During the period GBP1.9m of exceptional operating costs were
incurred relating to restructuring costs in the UK and Ireland.
Restructuring costs relate to the establishment of a commercial hub
in Reading, rationalisation of the network, and associated
headcount changes.
Cash flow and net debt
Net cash outflow was GBP100.7m (2016 - GBP6.7m) after net
capital expenditure of GBP178.8m (2016 - GBP95.5m) mostly in our
vehicle fleet to support growth. Before taking account of the
payment of dividends, cash outflow was GBP85.4m compared to a free
cash flow generation of GBP7.6m in the same period last year.
Closing net debt of GBP421.0m increased by GBP111.1m since April
2017, which included a GBP10.3m increase in debt due to the impact
of changes in foreign currency rates. This increase reflects the
fact that 80% of the Group's debt is denominated in Euros. However,
this debt is held against Euro assets of the Group, sheltering the
balance sheet from exchange rate movements.
Debt leverage cover at 31 October 2017 was 1.75 times net debt
to EBITDA, up from 1.31 times as at 30 April 2017 and 1.49 times as
at 31 October 2016, with comfortable levels of headroom remaining
against all of our debt covenant ratios.
Facility headroom at 31 October 2017 was GBP159.7m.
Balance sheet
Group return on capital employed was 8.7% compared to 10.7% in
the same period last year and 10.5% in the year ended 30 April
2017.
Net tangible assets at 31 October 2017 were GBP523.1m (April
2017 - GBP509.7m), equivalent to a tangible net asset value of 393p
per share (April 2017 - 383p per share).
Gearing at 31 October 2017 was 81% (April 2017 - 61%).
Foreign exchange
The average and period end exchange rates used to translate the
Group's overseas operations were as follows:
October 2017 October 2016
GBP : EUR GBP : EUR
-------- ------------ ------------
Average 1.13 1.19
Closing 1.14 1.11
-------- ------------ ------------
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 2017 were set out in detail on pages 28 to 33 of the 2017
annual report, a copy of which is available at
www.northgateplc.com, and were identified as:
-- economic environment;
-- competition and hire rates;
-- vehicle holding costs;
-- employees and the working environment;
-- IT systems; and
-- 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.
In addition to the risks outlined above, the going concern
assumption is considered in Note 1 to the condensed interim
financial statements for the six months ended 31 October 2017.
Glossary of terms
The following defined terms have been used throughout this
document:
Term Definition
------------------ ------------------------------------------
Facility headroom Calculated as facilities of GBP582.4m
less net borrowings of GBP422.7m.
Net borrowings represent net debt
of GBP421.0m excluding unamortised
arrangement fees of GBP1.7m and
are stated after the deduction of
GBP8.4m of cash balances which are
available to offset against borrowings.
------------------ ------------------------------------------
Gearing Calculated as net debt divided by
net tangible assets (as defined
below).
------------------ ------------------------------------------
LCV Light commercial vehicle: the official
term used within the European Union
for a commercial vehicle with a
gross vehicle weight of not more
than 3.5 tonnes.
------------------ ------------------------------------------
Net tangible Net assets less goodwill and other
assets intangible assets.
------------------ ------------------------------------------
PPU Profit per unit/loss per unit -
this is a non-GAAP measure used
to describe the adjustment in the
depreciation charge made in the
year for vehicles sold at an amount
different to their net book value
at the date of sale (net of attributable
selling costs), divided by the number
of vehicles sold.
------------------ ------------------------------------------
ROCE Return on capital employed: calculated
as underlying operating profit divided
by average capital employed. Capital
employed being net assets excluding
net debt.
------------------ ------------------------------------------
Reconciliation of GAAP to non-GAAP measures
A reconciliation of GAAP to non-GAAP underlying measures is as
follows:
Six months Six months
to 31.10.17 to 31.10.16
GBP000 GBP000
Profit before tax 31,026 39,997
Add back:
Exceptional operating expenses
(credit) 1,926 (198)
Intangible amortisation 896 948
Exceptional finance credit - (336)
----------------------------------- ------------- -------------
Underlying profit before tax 33,848 40,411
----------------------------------- ------------- -------------
Profit for the year 25,492 34,020
Add back:
Exceptional operating
expenses (credit) 1,926 (198)
Intangible amortisation 896 948
Exceptional finance
credit - (336)
Tax on exceptional
items, brand royalty
charges and intangible
amortisation (702) (99)
----------------------------------- ------------- -------------
Underlying profit
for the year 27,612 34,335
----------------------------------- ------------- -------------
Weighted average number
of Ordinary shares 133,232,518 133,232,518
--------------------------------- ------------- -------------
Underlying basic
earnings per share 20.7p 25.8p
----------------------------------- ------------- -------------
Net decrease in cash and cash
equivalents (11,455) (12,554)
Add back:
Receipt of bank
loans and other
borrowings (89,246) -
Repayments of bank loans
and other borrowings - 5,837
--------------------------------- ------------- -------------
Net cash outflow (100,701) (6,717)
----------------------------------- ------------- -------------
Add back: Dividends
paid 15,326 14,347
----------------------------------- ------------- -------------
Free cash flow (85,375) 7,630
----------------------------------- ------------- -------------
UK Spain Ireland Corporate Eliminations Group
Six Six Six Six Six months Six
months months months months to months
to 31.10.17 to 31.10.17 to to 31.10.17 to
GBP000 GBP000 31.10.17 31.10.17 GBP000 31.10.17
GBP000 GBP000 GBP000
Operating profit 15,236 18,175 1,077 1,798 - 36,286
Add back:
Restructuring
costs 1,904 - 22 - - 1,926
Brand royalty
charges - 3,113 346 (3,459) - -
Intangible
amortisation 856 40 - - - 896
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Underlying
operating profit
(loss) 17,996 21,328 1,445 (1,661) - 39,108
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Exclude:
Corporate costs - - - 1,661 - 1,661
Adjustments
to depreciation
charge in relation
to vehicles
sold in the
period (3,514) (6,111) (909) - - (10,534)
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Rental profit 14,482 15,217 536 - - 30,235
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Underlying
operating profit
(loss) 17,996 21,328 1,445 (1,661) - 39,108
Divided by:
Revenue: hire
of vehicles 131,752 92,869 10,320 - (432) 234,509
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Underlying
operating margin 13.7% 23.0% 14.0% 16.7%
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Rental profit 14,482 15,217 536 - - 30,235
Divided by:
Revenue: hire
of vehicles
excluding ancilliary
income 105,040 91,610 9,373 - (432) 205,591
------------------------ -------- ------------- ---------- ---------- ------------- ----------
Rental margin 13.8% 16.6% 5.7% 14.7%
------------------------ -------- ------------- ---------- ---------- ------------- ----------
UK Spain Ireland Corporate Eliminations Group
Six months Six Six Six Six months Six
to 31.10.16 months months months to months
GBP000 to to to 31.10.16 to
31.10.16 31.10.16 31.10.16 GBP000 31.10.16
GBP000 GBP000 GBP000 GBP000
Operating profit 22,275 19,411 1,305 1,224 - 44,215
Add back:
Restructuring
costs 688 - - - - 688
Spain tax settlement - (886) - - - (886)
Brand royalty
charges - 2,725 352 (3,077) - -
Intangible
amortisation 912 36 - - - 948
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Underlying
operating profit
(loss) 23,875 21,286 1,657 (1,853) - 44,965
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Exclude:
Corporate costs - - - 1,853 - 1,853
Adjustments
to depreciation
charge in relation
to vehicles
sold in the
period (6,612) (8,714) (797) - - (16,123)
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Rental profit 17,263 12,572 860 - - 30,695
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Underlying
operating profit
(loss) 23,875 21,286 1,657 (1,853) - 44,965
Divided by:
Revenue: hire
of vehicles 138,372 81,223 10,524 - (480) 229,639
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Underlying
operating margin 17.3% 26.2% 15.7% 19.6%
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Rental profit 17,263 12,572 860 - - 30,695
Divided by:
Revenue: hire
of vehicles
excluding ancilliary
income 113,357 80,285 9,302 - (480) 202,464
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Rental margin 15.2% 15.7% 9.2% 15.2%
----------------------- ------------- ---------- ---------- ---------- ------------- ----------
Condensed consolidated income statement
for the six months ended 31 October 2017
------------------------------------------------------- ----------- ----------- ----------
Six months Six months Six months Six months Year to Year to
to 31.10.17 to 31.10.17 to 31.10.16 to 31.10.16 30.04.17 30.04.17
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
Underlying Statutory Underlying Statutory Underlying Statutory
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Revenue: hire of
vehicles 2 234,509 234,509 229,639 229,639 456,120 456,120
Revenue: sale of
vehicles 2 115,169 115,169 87,077 87,077 211,309 211,309
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Total revenue 2 349,678 349,678 316,716 316,716 667,429 667,429
Cost of sales (277,610) (277,610) (237,726) (237,726) (514,446) (514,446)
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Gross profit 72,068 72,068 78,990 78,990 152,983 152,983
Administrative expenses
(excluding exceptional
items and intangible
amortisation) (32,960) (32,960) (34,025) (34,025) (68,378) (68,378)
Exceptional
administrative
(expenses) credit 9 - (1,926) - 198 - (1,293)
Intangible amortisation - (896) - (948) - (1,830)
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Total administrative
expenses (32,960) (35,782) (34,025) (34,775) (68,378) (71,501)
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Operating profit 2 39,108 36,286 44,965 44,215 84,605 81,482
Interest income 1 1 1 1 2 2
Finance costs
(excluding exceptional
items) (5,261) (5,261) (4,555) (4,555) (9,601) (9,601)
Exceptional finance
credit 9 - - - 336 - 339
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Profit before taxation 33,848 31,026 40,411 39,997 75,006 72,222
Taxation 3 (6,236) (5,534) (6,076) (5,977) (12,007) (11,321)
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Profit for the period 27,612 25,492 34,335 34,020 62,999 60,901
----------------------- ---- ----------- ----------- ----------- ----------- ---------- ---------
Profit for the period is wholly attributable to owners of the
Parent Company. All results arise from continuing operations.
Underlying profit excludes exceptional items as set out in Note
9, as well as brand royalty charges, certain intangible
amortisation and the taxation thereon, in order to provide a better
indication of the Group's underlying business performance.
Earnings per share
Basic 420.7p 19.1p 25.8p 25.5p 47.3p 45.7p
------------------- ----- ----- ----- ----- ----- -----
Diluted 420.5p 18.9p 25.4p 25.1p 46.7p 45.1p
------------------- ----- ----- ----- ----- ----- -----
Condensed consolidated statement of comprehensive income
for the six months ended 31 October 2017
----------------------------------------------------------------------------- ----------- ----------- ----------
Six months Six months Year to
to 31.10.17 to 31.10.16 30.04.17
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------------------------------- ----------- ----------- ----------
Amounts attributable to owners of the Parent Company
Profit attributable to owners 25,492 34,020 60,901
Other comprehensive income (expense)
Foreign exchange differences on retranslation of net assets of subsidiary
undertakings 14,964 50,171 25,952
Net foreign exchange differences on long term borrowings held as hedges (11,006) (40,326) (21,793)
Foreign exchange difference on revaluation reserve 44 157 85
Net fair value gains (losses) on cash flow hedges 537 (795) 659
Deferred tax (charge) credit recognised directly in equity relating to cash
flow hedges (102) 159 (157)
Total other comprehensive income for the period 4,437 9,366 4,746
------------------------------------------------------------------------------ ----------- ----------- ----------
Total comprehensive income for the period 29,929 43,386 65,647
------------------------------------------------------------------------------ ----------- ----------- ----------
All items will subsequently be reclassified to the consolidated
income statement.
Condensed consolidated balance sheet
31 October 2017
---------
31.10.16 30.04.17
31.10.17 Restated Restated
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
------------------------------------------------- ---- ----------- ----------- ---------
Non-current assets
Goodwill 3,589 3,589 3,589
Other intangible assets 3,325 3,250 3,309
Property, plant and equipment: vehicles for hire 6 829,503 756,648 731,657
Other property, plant and equipment 6 66,034 68,998 65,262
Total property, plant and equipment 6 895,537 825,646 796,919
-------------------------------------------------- ---- ----------- ----------- ---------
Deferred tax assets 16,381 16,381 13,730
-------------------------------------------------- ---- ----------- ----------- ---------
Total non-current assets 918,832 848,866 817,547
-------------------------------------------------- ---- ----------- ----------- ---------
Current assets
Inventories 37,952 26,904 33,666
Trade and other receivables 79,702 68,049 62,656
Derivative financial instrument assets 10 - - 213
Cash and bank balances 8 28,024 42,829 41,166
-------------------------------------------------- ---- ----------- ----------- ---------
Total current assets 145,678 137,782 137,701
-------------------------------------------------- ---- ----------- ----------- ---------
Total assets 1,064,510 986,648 955,248
-------------------------------------------------- ---- ----------- ----------- ---------
Current liabilities
Trade and other payables 62,700 60,971 64,913
Current tax liabilities 17,208 22,016 18,568
Short term borrowings 28,415 41,000 32,585
-------------------------------------------------- ---- ----------- ----------- ---------
Total current liabilities 108,323 123,987 116,066
-------------------------------------------------- ---- ----------- ----------- ---------
Net current assets 37,355 13,795 21,635
-------------------------------------------------- ---- ----------- ----------- ---------
Non-current liabilities
Derivative financial instrument liabilities 10 1,957 3,947 2,706
Long term borrowings 420,626 356,807 318,439
Deferred tax liabilities 3,559 1,585 1,420
Total non-current liabilities 426,142 362,339 322,565
-------------------------------------------------- ---- ----------- ----------- ---------
Total liabilities 534,465 486,326 438,631
-------------------------------------------------- ---- ----------- ----------- ---------
NET ASSETS 530,045 500,322 516,617
-------------------------------------------------- ---- ----------- ----------- ---------
Equity
Share capital 66,616 66,616 66,616
Share premium account 113,508 113,508 113,508
Revaluation reserve 1,155 1,183 1,111
Own shares (3,427) (6,087) (1,659)
Merger reserve 67,463 67,463 67,463
Hedging reserve (1,585) (3,157) (2,020)
Translation reserve (1,283) 444 (5,241)
Capital redemption reserve 40 40 40
Retained earnings 287,558 260,312 276,799
-------------------------------------------------- ---- ----------- ----------- ---------
TOTAL EQUITY 530,045 500,322 516,617
-------------------------------------------------- ---- ----------- ----------- ---------
Total equity is wholly attributable to owners of the Parent
Company.
Condensed consolidated cash flow statement
for the six months ended 31 October 2017
-------------------------------------------------------------- ----- ----------- -----------
Six months Six months Year to
to 31.10.17 to 31.10.16 30.04.17
(Unaudited) (Unaudited) (Audited)
Note GBP000 GBP000 GBP000
-------------------------------------------------------------- ----- ----------- ----------- ---------
Net cash (used in) generated from operations 7 (80,141) 10,027 47,818
-------------------------------------------------------------- ----- ----------- ----------- ---------
Investing activities
Interest received 1 1 2
Proceeds from disposal of other property, plant and equipment 2,215 284 1,222
Purchases of other property, plant and equipment (4,432) (1,938) (4,878)
Purchases of intangible assets (1,059) (127) (1,133)
-------------------------------------------------------------- ----- ----------- ----------- ---------
Net cash used in investing activities (3,275) (1,780) (4,787)
-------------------------------------------------------------- ----- ----------- ----------- ---------
Financing activities
Receipt of bank loans and other borrowings 89,246 - -
Repayments of bank loans and other borrowings - (5,837) (21,369)
Dividend paid (15,326) (14,347) (21,875)
Net payments to acquire own shares for share schemes (1,959) (617) (114)
Net cash generated from (used in) financing activities 71,961 (20,801) (43,358)
-------------------------------------------------------------- ----- ----------- ----------- ---------
Net decrease in cash and cash equivalents (11,455) (12,554) (327)
Cash and cash equivalents at beginning of the period 19,637 18,748 18,748
Effect of foreign exchange movements 254 1,362 1,216
-------------------------------------------------------------- ----- ----------- ----------- ---------
Cash and cash equivalents at the end of the period 8,436 7,556 19,637
-------------------------------------------------------------- ----- ----------- ----------- ---------
Cash and cash equivalents consist of:
Cash and bank balances 8 28,024 42,829 41,166
Bank overdrafts 8(19,588) (35,273) (21,529)
-------------------------------------- -------- -------- --------
8,436 7,556 19,637
-------------------------------------- -------- -------- --------
Condensed consolidated statement of changes in
equity
for the six months ended 31 October 2017
Share
capital
and
share Own Hedging Translation Other Retained
premium shares reserve reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- --------- --------- ------------ ---------- ---------- ---------
Total equity at
1 May 2016 180,124 (8,157) (2,522) (9,400) 68,529 242,451 471,025
Share options
fair value charge - - - - - 875 875
Share options
exercised - - - - - (2,687) (2,687)
Profit attributable
to owners of the
Parent Company - - - - - 34,020 34,020
Dividend paid - - - - - (14,347) (14,347)
Net purchase of
own shares - (617) - - - - (617)
Transfer of shares
on vesting of
share options - 2,687 - - - - 2,687
Other comprehensive
(expense) income - - (635) 9,844 157 - 9,366
Total equity at
1 November 2016 180,124 (6,087) (3,157) 444 68,686 260,312 500,322
Share options
fair value charge - - - - - 1,059 1,059
Share options
exercised - - - - - (3,925) (3,925)
Profit attributable
to owners of the
Parent Company - - - - - 26,881 26,881
Dividend paid - - - - - (7,528) (7,528)
Net purchase of
own shares - 503 - - - - 503
Transfer of shares
on vesting of
share options - 3,925 - - - - 3,925
Other comprehensive
income (expense) - - 1,137 (5,685) (72) - (4,620)
Total equity at
1 May 2017 180,124 (1,659) (2,020) (5,241) 68,614 276,799 516,617
Share options
fair value charge - - - - - 784 784
Share options
exercised - - - - (191) (191)
Profit attributable
to owners of the
Parent Company - - - - - 25,492 25,492
Dividend paid - - - - - (15,326) (15,326)
Net purchase of
own shares - (1,959) - - - - (1,959)
Transfer of shares
on vesting of
share options - 191 - - - - 191
Other comprehensive
income - - 435 3,958 44 - 4,437
Total equity at
31 October 2017 180,124 (3,427) (1,585) (1,283) 68,658 287,558 530,045
Other reserves comprise the capital redemption
reserve, revaluation reserve and merger reserve.
Unaudited Notes
1. Basis of preparation
and accounting policies
Northgate plc is a Company incorporated in England
and Wales under the Companies Act 2006.
The condensed financial statements are unaudited
and were approved by the Board of Directors
on 29 November 2017.
The condensed financial statements have been
reviewed by the auditor and the independent
review report is set out in this document.
The interim financial information for the six
months ended 31 October 2017, including comparative
financial information, has been prepared on
the basis of the accounting policies set out
in the last annual report and accounts, except
for income taxes, which are accrued using the
tax rate that is expected to be applicable for
the full year, and in accordance with IAS 34
'Interim Financial Reporting', as issued by
the International Accounting Standards Board
and adopted by the European Union.
In preparing the interim financial statements,
the significant judgements made by management
in applying the Group's accounting policies
and key sources of estimation uncertainty were
the same, in all material respects, as those
applied to the consolidated financial statements
for the year ended 30 April 2017.
Going concern assumption
Having reassessed the principal risks and the
other matters discussed in connection with the
viability statement in the 2017 annual report
and accounts the Directors considered it appropriate
to adopt the going concern basis of accounting
in preparing the interim financial statements.
Information extracted from 2017 annual report
The financial figures for the year ended 30
April 2017, 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 2017 were prepared under IFRS and were
delivered to the Registrar of Companies on 22
August 2017. 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, UK, Spain and Ireland.. The principal
activities of these divisions are set out in the Business review,
Strategic review and Financial review.
UK Spain Ireland Corporate Eliminations Total
Six months Six months Six months Six months Six months Six months
to 31.10.17 to 31.10.17 to 31.10.17 to 31.10.17 to 31.10.17 to 31.10.17
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue: hire of vehicles 131,752 92,869 10,320 - (432) 234,509
Revenue: sale of vehicles 76,720 34,973 3,476 - - 115,169
Total revenue 208,472 127,842 13,796 - (432) 349,678
Underlying operating
profit (loss) * 17,996 21,328 1,445 (1,661) - 39,108
Exceptional
administrative expenses (1,926)
Intangible amortisation (896)
Operating profit 36,286
------------------------- ----------- ----------- ----------- ----------- ------------ -------------
Interest income 1
Finance costs (5,261)
Profit before taxation 31,026
------------------------- ----------- ----------- ----------- ----------- ------------ -------------
UK Spain Ireland Corporate Eliminations Total
Six months Six months Six months Six months Six months Six months
to 31.10.16 to 31.10.16 to 31.10.16 to 31.10.16 to 31.10.16 to 31.10.16
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue: hire of vehicles 138,372 81,223 10,524 - (480) 229,639
Revenue: sale of vehicles 59,020 26,071 1,986 - - 87,077
Total revenue 197,392 107,294 12,510 - (480) 316,716
Underlying operating
profit (loss) * 23,875 21,286 1,657 (1,853) - 44,965
Exceptional
administrative expenses 198
Intangible amortisation (948)
Operating profit 44,215
------------------------- ----------- ----------- ----------- ----------- ------------ -----------
Interest income 1
Finance costs (excluding
exceptional items) (4,555)
Exceptional finance
credit 336
Profit before taxation 39,997
------------------------- ----------- ----------- ----------- ----------- ------------ -----------
2. Segmental analysis (continued)
UK Spain Ireland Corporate Eliminations Total
Year to Year to Year to Year to Year to Year to
30.04.17 30.04.17 30.04.17 30.04.17 30.04.17 30.04.17
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue: hire of vehicles 272,168 163,419 21,528 - (995) 456,120
Revenue: sale of vehicles 144,043 63,241 4,025 - - 211,309
Total revenue 416,211 226,660 25,553 - (995) 667,429
Underlying operating profit (loss) * 43,886 42,607 3,233 (5,121) - 84,605
Restructuring costs (1,293)
Intangible amortisation (1,830)
Operating profit 81,482
--------------------------------------------- --------- --------- --------- --------- ------------ ----------
Interest income 2
Finance costs (excluding exceptional items) (9,601)
Exceptional finance credit 339
Profit before taxation 72,222
--------------------------------------------- --------- --------- --------- --------- ------------ ----------
* Underlying operating profit (loss) stated before royalty
charges, amortisation and exceptional items is the measure used by
the Board of Directors to assess segment performance.
3. Taxation
The charge for taxation for the six months to 31 October 2017 is
based on the estimated effective rate for the year ending 30 April
2018 of 17.8% (October 2016 - 14.9%).
4. Earnings per share
Six months Six months Six months Six months Year to Year to
to 31.10.17 to 31.10.17 to 31.10.16 to 31.10.16 30.04.17 30.04.17
(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 Parent Company 27,612 25,492 34,335 34,020 62,999 60,901
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Number of shares Number Number Number Number Number Number
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Weighted average number of Ordinary
shares for the purpose
of basic earnings per share 133,232,518 133,232,518 133,232,518 133,232,518 133,232,518 133,232,518
Effect of dilutive potential Ordinary
shares:
- share options 1,422,769 1,422,769 2,195,780 2,195,780 1,700,849 1,700,849
Weighted average number of Ordinary
shares for the purpose
of diluted earnings per share 134,655,287 134,655,287 135,428,298 135,428,298 134,933,367 134,933,367
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Basic earnings per share 20.7p 19.1p 25.8p 25.5p 47.3p 45.7p
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Diluted earnings per share 20.5p 18.9p 25.4p 25.1p 46.7p 45.1p
---------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
5. Dividends
In the six months to 31 October 2017, a dividend of
GBP15,326,000 was paid (2016 - GBP14,347,000). The Directors have
declared a dividend of 6.1p per share for the six months ended 31
October 2017 (2016 - 5.7p).
6. Property Plant and Equipment
Six Six Six Six
months Six months months months months Six months
to 31.10.17 to 31.10.17 to 31.10.17 to 31.10.16 to 31.10.16 to 31.10.16
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Other Other
Vehicles property, Vehicles property,
for plant for plant
hire & equipment Total hire & equipment Total
Net Book
Value
--------------- ------------ ------------- ------------ ------------ ------------- ------------
At 1 May 731,657 65,262 796,919 684,499 65,765 750,264
Additions 265,780 4,432 277,528 182,787 1,938 184,725
Disposals (95,279) (2,334) (104,929) (78,181) (353) (78,534)
Depreciation (85,234) (2,644) (87,878) (74,388) (3,320) (77,708)
Exchange
differences 12,579 1,318 13,897 41,931 4,968 46,899
---------------- ------------ ------------- ------------ ------------ ------------- ------------
At 31 October 829,503 66,034 895,537 756,648 68,998 825,646
---------------- ------------ ------------- ------------ ------------ ------------- ------------
7. Notes to the cash flow statement
Six months Six months Year to
to 31.10.17 to 31.10.16 30.04.17
(Unaudited) (Unaudited) (Audited)
Net cash (used in) generated from operations GBP000 GBP000 GBP000
--------------------------------------------------------- ----------- ----------- ---------
Operating profit 36,287 44,215 81,482
Adjustments for:
Depreciation of property, plant and equipment 87,878 77,708 156,291
Net impairment of property, plant and equipment - - 131
Amortisation of intangible assets 1,034 955 1,891
Loss on disposal of property, plant and equipment 143 70 199
Share options fair value charge 784 875 1,934
--------------------------------------------------------- ----------- ----------- ---------
Operating cash flows before movements in working capital 126,126 123,823 241,928
(Increase) decrease in non-vehicle inventories (512) 281 525
(Increase) decrease in receivables (10,895) 1,430 4,801
Decrease in payables (6,953) (11,953) (8,952)
--------------------------------------------------------- ----------- ----------- ---------
Cash generated from operations 107,766 113,581 238,302
Income taxes paid, net (7,499) (6,054) (12,602)
Interest paid (4,929) (3,782) (8,552)
--------------------------------------------------------- ----------- ----------- ---------
Net cash generated from operations before net capex 95,338 103,745 217,148
Purchases of vehicles (268,352) (168,155) (346,305)
Proceeds from disposal of vehicles 92,873 74,437 176,975
--------------------------------------------------------- ----------- ----------- ---------
Net cash (used in) generated from operations (80,141) 10,027 47,818
--------------------------------------------------------- ----------- ----------- ---------
8. Analysis of consolidated
net debt
----------------------------------------------------- ------------ ----------- ---------
31.10.17 31.10.16 30.04.17
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
----------------------------------------------------- ------------ ----------- ---------
Cash and bank balances (28,024) (42,829) (41,166)
Bank overdrafts 19,588 35,273 21,529
Bank loans 340,910 271,761 244,236
Loan notes 87,781 89,963 84,393
Cumulative preference shares 500 500 500
Confirming facilities 262 310 366
----------------------------------------------------- ------------ ----------- ---------
421,017 354,978 309,858
----------------------------------------------------- ------------ ----------- ---------
9. Exceptional items
During the period the Group recognised exceptional
items in the income statement as follows:
Year
Six months Six months to
to 31.10.17 to 31.10.16 30.04.17
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------------------------- ----------- ----------- ---------
Restructuring costs 1,926 688 2,189
Spain tax settlement - (886) (896)
Exceptional administrative
expenses (credit) 1,926 (198) 1,293
Interest refunded in relation
to Spain tax settlement - (336) (339)
Exceptional finance credit - (336) (339)
---------------------------------------------------- ----------- ----------- ---------
Total pre-tax exceptional
items 1,926 (534) 954
---------------------------------------------------- ----------- ----------- ---------
Tax (charge) credit on exceptional
items (383) (92) 95
---------------------------------------------------- ----------- ----------- ---------
10. Derivative financial instruments
At the balance sheet date, the Group held the following financial instruments at fair value:
31.10.17 31.10.16 30.04.17
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
---------------------------------------------------------------- ----------- ----------- ---------
Interest rate derivatives (1,957) (3,947) (2,706)
Cross-currency derivatives - - 213
(1,957) (3,947) (2,493)
---------------------------------------------------------------- ----------- ----------- ---------
The derivative financial instruments above all have fair values
which are calculated by reference to observable inputs (i.e.
classified as level 2 in the fair value hierarchy). They are valued
using the discounted cash flow technique with an appropriate
adjustment for counterparty credit risk. The valuations incorporate
the following inputs:
-- interest rates and yield curves observable at commonly quoted intervals;
-- commonly quoted spot and forward foreign exchange rates; and
-- observable credit spreads.
The carrying value of financial assets and liabilities recorded
at amortised cost in the financial statements are approximately
equal to their fair value.
Interim announcement - Statement of the Directors
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34;
-- the interim management report includes a fair review of the
information required by DTR 4.2.7 (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
-- the interim management report includes a fair review of the
information required by DTR 4.2.8 (disclosure of related party
transactions and changes therein).
By order of the Board
David Tilston
Interim Chief Financial Officer
4 December 2017
Independent review report to Northgate plc
Report on the consolidated interim financial statements
Our conclusion
We have reviewed Northgate Plc's consolidated interim financial
statements (the "interim financial statements") in the half-yearly
report of Northgate Plc for the 6 month period ended 31 October
2017. Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- The condensed consolidated statement of financial position as
at 31 October 2017;
-- The condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- The condensed consolidated statement of cash flows 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 half-yearly
report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half-yearly report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the
half-yearly report 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 half-yearly report 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 half-yearly report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds
5 December 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
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