17 March 2010
INTERIM MANAGEMENT STATEMENT
Northgate plc ("Northgate", the "Company" or the "Group"), the UK and Spain's leading specialist in light commercial vehicle hire, today publishes its Interim Management Statement covering the period 1 November 2009 to 17 March 2010.
Utilisation rates have continued to be our focus and we have achieved an average 91% for the four months to 28 February 2010, a 5% improvement on the 86% average achieved for the same period last year. As planned, the fleet has decreased since 31 October 2009 from 61,000 to 60,000 at the end of February 2010, with vehicles on hire down by 500 in line with seasonality.
Hire revenue per rented vehicle has continued to improve, increasing by around 3% in the quarter to February 2010 compared to the quarter to April 2009. We continue to target further progress in this area.
The used vehicle market remains strong and we have maintained the improvement in residual values that we achieved towards the end of the first half of this financial year. We expect these market conditions to remain favourable for the remainder of our financial year.
In Spain utilisation rates averaged 86% for the four months to 28 February 2010, a 6% improvement on the 80% average achieved for the same period last year. We expect to reach close to our targeted 90% level by April 2010. To accommodate both the return of the vacational rental vehicles and ongoing returns from other customers, we have reduced the fleet from 55,200 vehicles at 31 October 2009 to 49,700 at the end of February 2010. It is therefore likely that we will end the year at a fleet size of around 48,000 vehicles.
Underlying hire revenue per rented vehicle in Spain has remained relatively stable for the four months to 28 February 2010.
Following the improvements made to our internal structure and the increased number of sales channels we have developed, we disposed of 15,500 used vehicles in the first ten months of the financial year, ahead of our target levels and up 55% on the same period in the prior year. The residual values being achieved are better than planned.
In the first six months of the year to October 2009 the incidence of bad debt increased in Spain and as a result the bad debt charge was €5.8m. We committed to improve our performance in this area and, whilst the economic environment remains tough, there has been a moderate improvement in the trend with bad debts of €2.8m provided for in the four months to February.
Net debt at 31 October 2009 was £706m. Assuming the same exchange rates as at 31 October (£/€1.12) we are currently forecasting net debt of below £650m at 30 April 2010; which would be a reduction of over £236m in net debt since 30 April 2009.
As expected, the macroeconomic conditions continue to adversely affect the Group's markets; with the outlook for the UK remaining uncertain and Spain continuing to be very difficult. Our focus therefore remains on hire rate improvement, efficient fleet management, further cost reductions and cash generation. Although the need to be cautious remains, we expect the outcome for the full year to be in line with management's expectations at the time of the interim results announcement in December 2009.
For further information, please contact:
Steve Smith, Chief Executive
Bob Contreras, Finance Director
Paul Tallentire, Deputy Chief Executive
020 7357 9477
Notes to Editors:
Northgate plc rents light commercial vehicles and sells a range of fleet products to businesses via a network of hire companies in the UK, Republic of Ireland and Spain. Its NORFLEXÒ product gives businesses access to a flexible method to acquire as many commercial vehicles as they need, without tying up capital or entering a fixed term contract.
Further information regarding Northgate plc can be found on the Company's website: http://www.northgateplc.com