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 2011 to 15 March 2012.
The restructuring of the UK business continues to progress in line with our expectations, further improving operational efficiency, against a background of a difficult economic environment.
Vehicle utilisation in the four months to 29 February has averaged 88% compared to 90% in the six months ended 31 October 2011. Actions are being taken which we anticipate will result in utilisation returning to 90%. Vehicles on hire have fallen from 51,600 at 31 October 2011 to 47,700 at 29 February 2012. The fleet size has decreased by 2,900 since 31 October 2011 to 54,000 at 29 February 2012.
The reduction in vehicles on hire largely occurred towards the end of December and was due partly to the reduction in the level of our customers' business activities as a direct consequence of the economic conditions. During the period we have had approximately 1,000 vehicles returned due to reductions in energy tariffs and grants.
In response to the reduction in vehicles on hire in the four months to 29 February 2012, 2,100 more vehicles were sold than in the four months to 28 February 2011. The used vehicle market continues to remain strong, with improved residual values per vehicle compared to the same period in the previous financial year.
Underlying hire revenue per rented vehicle continues to improve, with an underlying increase of 3% since the beginning of the financial year.
Vehicle utilisation in the four months to 29 February has averaged 88% compared to 91% in the six months ended 31 October 2011. Since 29 February, utilisation has improved and we anticipate a return to our target level of 90%. Vehicles on hire have fallen from 38,600 at 31 October 2011 to 33,400 at 29 February 2012 due to the continued reduction in economic activity across the country. The fleet size has been reduced by 4,300 vehicles since 31 October 2011 to 38,600 at 29 February 2012.
In the four months to 29 February 2012, 1,000 fewer vehicles were sold than in the four months to 28 February 2011. However, the used vehicle market in Spain continues to remain strong, with improved residual values per vehicle compared to the previous financial year.
Underlying hire revenue per rented vehicle has decreased by 1% since the beginning of the financial year, but has been stable since 31 October 2011.
On debtor management, the bad debt charge for the four months to 29 February was €0.8m, a €0.1m improvement compared to €0.9m in the same period last year.
The reduction in size of the vehicle fleet combined with the steps taken to rationalise the cost base have, as expected, continued to generate significant cash. Overall, therefore, net debt has reduced by £115m from £530m1 at 30 April 2011 to £415m1 as at 29 February 2012. We have reduced the level of our available facilities accordingly.
During the period we have concluded discussions with HM Revenue & Customs on an outstanding tax matter. The income statement for the year ending 30 April 2012 will consequently include a non-recurring tax credit of £12m.
The tough economic conditions continue to affect both our UK and Spanish markets, and we expect this to continue into the next financial year. As a result of these conditions the business is currently trading towards the lower end of the range of market expectations and management is taking a cautious view for 2013.
We remain focussed on maintaining utilisation levels above 90% and improving the Group's return on capital employed. We have continued to reduce our net debt and we anticipate strong cash generation in the final two months of the current financial year.
1 Net debt taking into account swapped exchange rates for US loan notes and proportion of M&G loan swapped into Euro being retranslated to Sterling at closing exchange rates.
For further information, please contact:
Bob Contreras, Chief Executive
Chris Muir, Group Finance Director
020 3128 8753
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. Their NORFLEX product gives businesses access to a flexible method to obtain as many commercial vehicles as they require.
Further information regarding Northgate plc can be found on the Company's website: