446.50p0.45%

Preliminary results for the year ended 30 April 2017

Northgate plc (“Northgate”, the “Company” or the “Group”), the UK, Spain and Ireland’s leading specialist in light commercial vehicle hire, announces its results for the year ended 30 April 2017.

 

Financial highlights

 

  • Underlying profit before tax £75.0m (2016 – £82.9m):
    • Impacted by lower number of vehicles on hire in the UK;
    • £5.7m adverse impact from the previous changes in vehicle depreciation rates;
    • £5.2m benefit of foreign exchange across the year;

 

  • Profit before tax £72.2m (2016 – £77.6m);

 

  • Underlying basic earnings per share 47.3p (2016 – 49.0p);

 

  • Basic earnings per share 45.7p (2016 – 46.1p);

 

  • Net debt remained at £309.9m including:
    • £21.0m net cash generation post dividends;
    • £20.5m adverse effect of the strengthened Euro at the balance sheet date;

 

  •  8% increase in proposed full year dividend per share to 17.3p (2016 – 16.0p):
    • Final dividend proposed 11.6p (2016 – 10.9p).

 

Operational highlights

 

UK

  • Closing vehicles on hire of 39,500 (April 2016 – 42,400) as a result of a weak second half following the seasonal peak;
  • Average utilisation of 88% (April 2016 – 87%)
  • Continued focus on maximising the value of Van Monster, the Group’s vehicle disposal operation:
    • Proportion of vehicles sold through retail channels 36% (2016 – 33%).

 

Spain

  • Strong commercial performance despite a challenging market and political landscape:
    • Closing vehicles on hire of 37,700 (April 2016 – 35,700);
    • Growth in fixed term vehicles on hire of 3,100 following new product launch in the year;
    • Return of 1,900 vehicles from legacy fixed term contracts;
  • Average utilisation of 91% (April 2016 – 91%)

 

Ireland

  • Continued growth in the year:
    • Closing vehicles on hire of 3,500 (April 2016 – 3,300);
  • Average utilisation of 89% (April 2016 – 90%)

 

Strategic update

 

Following a reappraisal of the market opportunities available to the Group, the strategy is now focused around four key areas:

 

  1. Defend and grow share of flexible rental markets;
  2. Gain share in fixed term markets;
  3. Converting ownership model to fixed term rental; and
  4. Consolidating a fragmented UK used LCV resale market.

 

Early progress made in the following key areas:

 

  • Initiated self-help measures to support sales lead generation and conversion in the UK:
    • Restructuring of UK leadership team;
    • Re-direction of marketing spend towards more efficient digital channels, improvements in product proposition and replacement of core IT systems underway;
    • Introducing enhanced pricing flexibility and investing in lead generation through telesales and digital channels;
  • Investing further in sales and marketing in Spain through digital channels to support growth;
  • Optimising infrastructure to support Ireland growth opportunity and profitability.

 

All investments made will be self-funded through the delivery of business wide efficiencies and improved agility to drive growth. 

 

Kevin Bradshaw, Chief Executive Officer, commented:

 

“Since joining the Group in January, I have been impressed with the strength of the Northgate business model and the opportunities within all territories to enhance our market position.

The performance of the UK business was, however, disappointing with profits impacted by a reduction in vehicles on hire over the second half of the year.  A full appraisal has been undertaken and several corrective actions have been implemented. I am confident that these actions, combined with continued management focus, will drive a significant improvement in performance, particularly in the areas of sales lead generation and conversion.

Encouragingly, our businesses in Spain and Ireland continue to show good levels of growth.

I am particularly pleased with the early success of our fixed term offering with over 4,100 vehicles under contract, Group-wide, by the year end. We have also seen further growth from Van Monster, our retail vehicle disposal channel.

I have completed an initial strategic review and this has identified four exciting growth opportunities for the Group in the medium term.  Further detail behind these opportunities, our progress against them and key targets will be given at an investor day in October. Our proposed increase in dividend this year reflects my strong conviction that the Group is well positioned to capitalise on these attractive growth opportunities moving forwards.”

Full statement and results attached.

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, Chief Financial Officer

 

MHP Communications                                  020 3128 8100 / northgate@mhpc.com

Andrew Jaques

Barnaby Fry

Simon Hockridge

Ollie Hoare