TIDMNTG
RNS Number : 0238B
Northgate PLC
18 September 2018
NORTHGATE PLC
First Quarter and AGM Trading Update
"Continuing strong VOH growth in the UK and Spain; margins in
line with expectations"
Ahead of its Annual General Meeting to be held later today,
Northgate plc ("Northgate", the "Company" or the "Group"), the
leading specialist in light commercial vehicle hire in the UK,
Spain and Ireland, provides a trading update for the period from 1
May 2018 to 31 August 2018, and Vehicle-on-Hire data for the three
months ended 31 July 2018.
Group
During the period the Group performed in line with management's
expectations, and growth in Vehicles on Hire (VOH) and rental
margins in both the UK & Ireland and Spain remain on track to
meet guidance for the full-year.
Average Vehicles FY'18 FY'18 FY'18 FY'18 FY'19
on Hire (VOH) Q1 Q2 Q3 Q4 Q1
------------------ ------- ------- ------- ------ ------
UK & Ireland
('000) 42.9 42.5 44.3 44.2 48.0
y-o-y % growth (6.1%) (5.8%) (2.2%) 2.6% 12.0%
Spain ('000) 38.7 40.2 41.0 41.5 44.2
y-o-y % growth 8.1% 11.5% 14.2% 14.1% 14.3%
Group ('000) 81.6 82.7 85.3 85.7 92.2
y-o-y % growth 0.2% 1.9% 5.0% 7.8% 13.1%
------------------ ------- ------- ------- ------ ------
UK & Ireland
VOH growth accelerated sharply during the period, with the
momentum in the UK in the second half of last year continuing into
the current year, reinforced by the VOH impact of the ex-TOM
vehicles acquired just before the start of the year. Flat VOH in
Ireland had a small negative impact on the total UK&I growth
rate.
Closing VOH at the end of the first quarter was 48,400, 2,000
higher than at the start of the quarter and indicative of
Northgate's continuing strength in the market. Closing VOH included
1,600 former TOM vehicles, slightly lower than previously guided,
due to agreement not being reached with several ex-TOM customers
regarding their transition to Northgate tariffs, and their vehicles
consequently coming off hire. The majority of the remaining ex-TOM
vehicles acquired were sold during the period, realising an
attractive profit per vehicle.
VOH growth is expected to remain strong but the rate of growth
year-on-year is expected to moderate gradually during the course of
the year, reflecting the stronger growth in the second half of last
year, driven in particular by the success of the minimum term
product in the UK during that period. Ireland is expected to remain
a slight drag on VOH growth. Full year average VOH growth
expectations for the UK & Ireland remain high single-digit %,
as previously guided.
Rental margins remained subdued during the period, as expected,
with the positive impact of lower depreciation rates and the price
rise across the majority of the flexible rental base at the start
of the period offset by OEM price inflation, the higher proportion
of minimum term customers in the VOH base, along with lower
utilisation and some one-off costs in the period both caused by the
integration of the ex-TOM vehicles into the rental fleet. Margins
in Ireland were lower than the UK, as in the prior year.
Rental margins are expected to increase gradually during the
course of the rest of the year, as the integration of the ex-TOM
vehicles is completed, opportunities to increase minimum term hire
rates are realised, utilisation improves in both the UK and
Ireland, and increasing UK scale delivers operational leverage.
Full year expectations are for the rental margin in the UK &
Ireland to be broadly flat year-on-year, as previously guided.
Spain
The strong VOH growth seen during the second half of last year
was sustained into the current period, driven by the continued
success of Northgate's full range of flexible, minimum-term and
bundled rental solutions. Closing VOH at the end of the quarter was
44,800, 2,100 higher than at the start of the quarter. Full year
average VOH growth expectations for Spain remain double-digit %, as
previously guided.
Rental margins stepped up in the period, as expected, mainly due
to the impact of the depreciation rate change at the start of the
year. Margins also reflected the operational leverage of higher
VOH, offset by OEM price inflation and higher fixed costs due to
the expansion of the business. These trends are in line with
previous guidance, and expectations for significant expansion of
full year rental margins in Spain, mainly due to the lower
depreciation rates, remain unchanged.
Debt facilities
Shortly after the end of the quarter the Group agreed a GBP50
million extension of its Revolving Credit Facility, to increase
financial headroom.
Next results
Northgate will announce its Interim Results for the six months
ended 31 October 2018 on Tuesday 4 December 2018.
Contact details
For further information please contact:
Northgate plc +44 1325 467558
Kevin Bradshaw, Chief Executive Officer
Philip Vincent, Chief Financial Officer
David Boyd, Investor Relations +44 7841 629823
MHP +44 203 128 8100
Andrew Jaques, Barnaby Fry
Simon Hockridge, Ollie Hoare
Notes to Editors:
Northgate plc is the leading light commercial hire business in
the UK, Spain and Ireland 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 arrangement.
Further information regarding Northgate plc can be found on the
company's website:
www.northgateplc.com
ENDS
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END
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