RNS Number : 7492H
Northgate PLC
25 June 2013
 



25 June 2013

 

NORTHGATE PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 APRIL 2013

Results in line with Board's expectations, restructuring exercise complete, significant increase in dividend, well-positioned to target growth

 

Northgate plc ("Northgate", the "Company" or the "Group") announces its preliminary results for the year ended 30 April 2013.

 

Financial Highlights

 

·     Refinancing successfully completed, leading to significant reduction in interest charges going forward and increased operational and financial flexibility;

 

·     Net underlying cash generation(1) of £92.6m (2012 - £138.2m) with closing net debt(2) of £362.7m (2012 - £371.3m) after a net cash outflow of £39.1m relating to the April 2013 refinancing;

 

·     Final dividend proposed of 6.0p per share giving a 7.3p dividend in respect of the full year (2012 - 3.0p), representing a 143% increase on the prior year;

 

·     Return on capital employed(3)  11.8% (2012 - 13.1%);

 

·     Underlying profit before taxation(4)  £49.5m (2012 - £59.7m);

 

·     Loss before taxation £11.4m after incurring £54.0m of exceptional financing costs (2012 - profit of £46.0m);

 

·     Underlying basic earnings per share(5) 29.2p (2012 - 31.5p);

 

·     Basic earnings per share (5.5)p (2012 - 30.4p).

 

 

Operational Highlights

 

·     Commercial restructuring completed in the UK;

 

·     UK branch expansion plan commenced with three new sites opened in the year;

 

·     Underlying pricing improvement of 2% in the UK and reduction of 1% in Spain;

 

·     Average utilisation of 88% in the UK (2012 - 89%) and 90% in Spain (2012 - 90%);

 

·     Closing fleet of 49,900 in the UK (2012 - 52,900) and 35,100 in Spain (2012 - 38,400);

 

·     Continued strong used vehicle markets in both the UK and Spain.

 

Bob Mackenzie, Chairman, commented:

"Improvements implemented over the past four years have established a strong financial and operational foundation for the Group. Whilst we will maintain our focus on key disciplines of asset management, cash generation and cost control, we aim to maximise returns in both countries and will target growth in the UK where the appropriate return exists. 

 

The Group has begun the new financial year in line with the Board's expectations and we are confident that it is well placed to deliver significant value to shareholders."

 

Full statement and results attached.

 

There will be a presentation to analysts at 9.30am today at Numis, 5th floor, LSE building, 10 Paternoster Square, London EC4M 7LT. 

 

For further information, please contact:

 

Northgate plc                                                    01325 467558

Bob Contreras, Chief Executive

Chris Muir, Group Finance Director

 

MHP Communications                                  020 3128 8753

Andrew Jaques

Barnaby Fry

Simon Hockridge

Rosa Smith

 

Notes to Editors:

 

Northgate plc rents light commercial vehicles and sells a range of fleet products to businesses via a network of locations 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:

www.northgateplc.com

 

Chairman's Statement

 

 

The successful refinancing completed in April 2013 marks an important milestone in the Group's improvement programme.  Over the past four years, the Group has focused on increasing the strength and resilience of the Group's balance sheet, whilst improving return on capital employed ("ROCE").  Key financial improvements over the four years include:

 

·     Profit before tax(4) of £49.5m, an increase of £22.0m compared to £27.5m in the year ended 30 April 2009;

·     ROCE(3) of 11.8%, more than double the 5.8% achieved in the year ended 30 April 2009;

·     Net debt(2) of £363m, reduced by £523m from £886m at 30 April 2009;

·     Gearing(6) of 102%, a substantial reduction compared to 571% at 30 April 2009;

·     Re-introduction of a dividend.

 

Operational highlights include:

 

·     Restructuring of our UK and Spanish operations;

·     Rebranding of both the UK and Spanish businesses;

·     Implementation of improved IT systems.

 

Looking forward, the Group strategy is clear.  In the UK, the primary focus will be on growing the business through our existing network and by adding new sites, where opportunities exist at our target levels of return.  In Spain, the Group will continue to maximise cash generation and target improved returns in order to reduce our exposure to the troubled Spanish economy.

 

The Group's ROCE(3) was 11.8% (2012 - 13.1%).  This compares to the Group's year end weighted average cost of capital ("WACC") of 7.9%.   Individual country ROCE levels were 14.8% in the UK and 8.4% in Spain.

 

Net underlying cash generation(1) was £92.6m (2012 - £138.2m).  This continued strong cash generation reduced gearing(6) from 105% to 102%.   Headroom(11) on our committed debt facilities of £443m was £80m at 30 April 2013.

 

Our balance sheet now allows the Company to move towards a more normal dividend policy whilst supporting ongoing investment in the Group's organic growth initiatives.

 

UK

 

In a continuing difficult trading environment, vehicles on hire declined by 3,300 vehicles in the year to 43,100. As a result, our operating margin(7) decreased to 22.1% in the year, compared to 23.2% in 2012. Whilst the on hire decline is lower than the 7,400 reduction in the previous year, it was still disappointing and in hindsight was compounded by poor operational control within our depots which reduced the level of vans available for rental. We have now changed the management structure and organisation of our operations and have seen immediate improvement in these areas which we had allowed to fall below our own standards. 

 

A number of changes have been made to our Commercial Sales operation, increasing the skills, resources and support within the sales team.  This was initially focused on the Regional Sales area of the business and took place in the second half of the financial year.  Changes to the National Sales function have been completed since the year end. 

 

We are encouraged by the initial impact of these changes with vehicles on hire for our sub 100 vehicle customers (mainly managed by our Regional teams) stabilising during the year compared to a 13% fall noted in the same customer segment in the previous year.  With the changes now completed we expect to see growth in the sub 100 vehicle sector in the current financial year.

 

During the year we have identified large areas of the country where significant numbers of potential customers are not effectively serviced by an accessible Northgate site. To address this, we have commenced our branch expansion plans, with three new sites opened in the year ended 30 April 2013.  We anticipate opening up to 20 new sites over the next three years. We expect the majority of sites to be on short term leases with moderate levels of capital expenditure. The financial impact of these new sites is estimated at break even in year one and is targeted to exceed the current UK ROCE in year three as the sites reach maturity.

 

Spain

 

Whilst our Spanish business now operates at a ROCE above the Group's WACC, the focus remains on increasing returns and generating cash.  However, the economic backdrop continues to present very difficult trading conditions. Vehicles on hire declined by 1,900 vehicles in the year ended 30 April 2013 to 32,100, compared to a decline of 5,400 in the year ended 30 April 2012. As a result, our operating margin(8) reduced to 16.7% in the year (2012 - 19.1%).

 

Cash generation continues to be a primary focus in Spain and underlying cash generation was €64m in the year ended 30 April 2013.

 

Over the last four years capital employed has been reduced from €829m to €333m with net debt, before any inter group dividend payments, falling from €556m to €102m. 

 

Capital investment continues to fall with vehicle purchases decreasing 39% from 11,900 in the year ended 30 April 2012 to 7,300 in the year ended 30 April 2013.

 

We have also implemented a new commercial structure which has increased new business wins across a range of sectors, partially offsetting declines seen in our traditional construction markets which now represent 31% of our business compared to 57% in 2009.


Refinancing

 

During the year the Group successfully replaced its legacy high-coupon private placements, institutional loan and multi bank facility with a £428m single new committed multi bank facility maturing in June 2017. 

 

The revised facility will lead to a significant reduction in future interest payments.  The revised covenant package also gives the Group increased operational and financial flexibility.

 

Dividend

 

In recognition of the improvements noted in the Group's performance a dividend was re-introduced in the year ended 30 April 2012. The refinancing, balance sheet strength and our confidence in the business outlook allow the Group to move towards a more normal dividend policy. The Board proposes a final dividend in respect of the year ended 30 April 2013 of 6.0p, giving a total dividend for the year of 7.3p (2012 - 3.0p). This represents a 4x cover on underlying earnings(5) and a 143% increase on the dividend paid in respect of the year ended 30 April 2012. 

 

It continues to be the Board's intention to pay out a percentage of earnings having established over time the underlying profitability, cash generation and cash requirements of the Group taking into consideration the long term growth prospects of our restructured business.

 

The Board considers the balance sheet of the Group to be appropriately geared and there to be scope to invest organically to strengthen and grow returns over the medium term whilst establishing a long term dividend policy.

 

Board changes

 

I am delighted to report that Jill Caseberry was appointed to the Board as a non-executive Director in December 2012.  Jill has extensive sales, marketing and general management experience across a number of blue chip companies including Mars, PepsiCo and Premier Foods. She currently runs her own sales and marketing consultancy and is CEO of a food/beverage start up business. Jill's experience is proving invaluable as we continue to build on our platform for growth.

 

Current trading and outlook

 

Improvements implemented over the past four years have established a strong financial and operational foundation for the Group. Whilst we will maintain our focus on key disciplines of asset management, cash generation and cost control, we aim to maximise returns in both countries and will target growth in the UK where the appropriate return exists. 

 

The Group has begun the new financial year in line with the Board's expectations and we are confident that it is well placed to deliver significant value to shareholders.



Operational Review

 

Group

 

Given the difficult economies in which we operate, improving the resilience and strength of the Group's balance sheet has been critical.  This has been achieved in parallel with improving the operating platforms in both the UK and Spain.

 

The Group now has a solid financial and operational foundation. We will now target increasing returns by growing the business with customers who have a flexible vehicle hire requirement. Our view is that for many businesses rental of light commercial vehicles ("LCV") is the best sourcing method. It allows them to flex their requirements in line with their business needs. In both countries in which we operate, we aim to be the first choice for LCV rental, providing all our customers' vehicle needs and allowing them to concentrate on better service to their customers.

 

UK

 

Despite the improvements achieved in pricing, operational efficiencies and used vehicle residuals, the reduction in the number of vehicles on hire has led to a decrease in operating margin(7) from 23.2% to 22.1%.

 

Vehicle fleet and utilisation

 

In the year the fleet size reduced by 3,000 to 49,900 vehicles (2012 - 52,900 vehicles). 

 

Average utilisation rates for the year ended 30 April 2013 were 88% (2012 - 89%).  Whilst vehicle utilisation remains a priority and the target is to return to 2012 levels or above, the UK is also focused on ensuring that each branch has the right range of vehicles available for hire at all times.

 

Vehicle purchases remained constant at 16,500 for the year ended 30 April 2013.

 

The average fleet age remained at 21.4 months, reflecting the Group's commitment to run a fleet with a suitable ageing profile, efficiency and reliability.

 

Hire rates and vehicles on hire

 

In the year ended 30 April 2013, vehicle hire revenue per rented vehicle (excluding fleet management income) was 1% higher than the prior year. Adjusted for the change in fleet mix, the increase was 2%.

 

Year on year closing vehicles on hire fell by 3,300 (2012 - 7,400). 

 

During the year we have made key changes to our Commercial Sales operations including:

·     Appointment of a new Sales and Marketing Director (September 2012);

·    Increase in sales resource and overhaul of the recruitment and the training and development process for sales people.  By April 2013 the number of sales people had increased by 20% over the year and of the 118 sales people 58 had been here less than a year, the majority being recruited in the second half of the financial year.

Our commercial operations cover both regional and national customers.  Our 4,800 regional customers, who have an average of six vehicles on hire, operate close to our branch network and accounted for 63% of the vehicles on hire at 30 April 2013.

 

Due to its relative size, the initial changes were prioritised in Regional Sales and were completed in the final quarter of the financial year.  Planned changes in National Sales have taken place since the year end.

 

Typically our regional customers have less than 100 vehicles on hire.  The changes made in Regional Sales have started to make an impact.  For these customers there was a reduction year on year of 300 (1%) vehicles on hire compared to a 4,000 (13%) reduction in the prior year.  Additionally, the total number of regional customers increased by 9% over the year compared to a 12% fall experienced in the prior year.  Addressing the needs of this large local customer base underpins our growth strategy.

 

Vehicles on hire to customers with more than 100 vehicles, typically national, declined by 3,000 (15%) in the year compared to a fall of 3,400 (15%) in the year ended 30 April 2012.  This decline is predominantly the result of short term price pressures originating in the current economic environment. We believe that opportunities still exist for growth with larger customers who would benefit from our flexible offering. We are seeking to address these opportunities more successfully through the changes made in our National Sales function.

 

Depot network

 

During the year we completed an analysis of the existing branch locations across the UK. We concluded that there were significant gaps in our ability to attract potential customers, particularly in the South of England.

 

Based upon industry standard drive times, our national coverage is c.60%, highlighting that there are potentially over 20 locations that could successfully support a Northgate branch, allowing access to a wider customer base.

 

In response to this opportunity, the final quarter saw the opening of three sites, taking the number of hire locations at 30 April 2013 to 65.  The new sites are performing in line with our plans, however, we are cognisant that they are in their infancy.

 

During the next financial year we will focus on establishing an enhanced branch network within the London area which provides the largest commercial opportunity.  Subject to availability of property, we plan to open six to eight sites within the London area over the next 12 months. We estimate that the sites will take three years to reach maturity and at this point will operate a fleet of approximately 500 vehicles per site.

 

Each new site will have an initial set up cost of c.£0.2m, covering property, personnel and marketing costs. If the new sites perform in line with our expectations, they should break even in year one and by year three have a ROCE in excess of 16%.

 

The Group will look to accelerate opportunities to invest in the network where there is an economic benefit in doing so.

 

Used vehicle sales

 

Vehicle sales continue to perform strongly with 20,700 vehicles (2012 - 25,200 vehicles) sold during the year at increased values. Disposal volumes fell year on year due to a reduction in the number of vehicles taken off the hire fleet in response to lower on hire decline levels.  We expect used vehicle sales volume to continue to fall as we target growth in vehicles on hire, whilst maintaining strict control over new vehicle purchase volumes.

 

Higher margin retail and semi retail channels accounted for 22% (2012 - 19%) of disposals.  Plans are being implemented to continue to grow the proportion of vehicles being disposed via the retail and semi retail channels.

 

The reduced number of vehicles disposed of, partially offset by the improvement in the values achieved, resulted in a decrease of £20.8m (2012 - £22.5m) in the depreciation charge.

 

 

Spain

 

Trading conditions in Spain remain extremely difficult. Improved cost control, debtor management, vehicle residuals and continued strong fleet management helped to partially mitigate the impact from the fall in revenue.   Despite this, the operating margin(8) fell to 16.7% (2012 - 19.1%).

 

Vehicle fleet and utilisation

 

The fleet size reduced from 38,400 vehicles as at 30 April 2012 to 35,100 as at 30 April 2013.  The average utilisation for the year was 90% (2012 - 90%).

 

In line with the target of cash generation and reducing the capital employed in Spain, vehicles purchased fell 4,600 to 7,300 (2012 - 11,900). The ageing profile remains highly competitive compared to the industry average with the average age of the fleet being 22.9 months at 30 April 2013, an increase from 21.8 months at 30 April 2012.

 

Hire rates and vehicles on hire

 

Average hire revenue per rented vehicle in the year ended 30 April 2013 was 2% lower than the prior year.  The mix of vehicles on hire has been impacted by customer demand moving towards smaller vehicles. Adjusting for this mix impact, revenue per vehicle was 1% lower than the prior year.

 

Revenue per vehicle has also been impacted by a change in customer profile. On average, our customers are now cleaner users of our vehicles and are driving lower mileages.  Average miles at point of disposal, adjusting for disposal age, are 3% lower than that experienced in the year ended 30 April 2012 and 6% lower than in the year ended 30 April 2011. This is evidenced by lower maintenance costs and the continued increase in the resale values of vehicles.

 

Vehicles on hire fell 1,900 in the year ended 30 April 2013, from 34,000 vehicles at 30 April 2012. This compares to a decline of 5,400 in the prior year.  As in the UK, investment has been made in the commercial area in Spain. 

 

The primary focus of this investment has been to grow the SME business with the aim of offsetting the decline experienced in Spain's construction markets.  Whilst the number of vehicles on hire continued to fall in the year to 30 April 2013, the number of customers increased by 300 to 4,400, reversing the reduction of 300 customers experienced in the year ended 30 April 2012.  Increasing commercial activity, coupled with targeted marketing initiatives, provides encouragement that this trend will continue to improve.

 

Depot network

 

Existing sites are continually reviewed for suitability, with consideration given to location, size and functionality.  Having re-evaluated the current footprint, no changes to the network infrastructure were made in the year.  Based on the current fleet size, the 23 locations provide the appropriate level of operational efficiency and geographical coverage.

 

Used vehicle sales

 

A total of 11,200 vehicles were disposed of in the year (2012 - 16,800 vehicles).  The reduced volume year on year is a direct consequence of the reduced level of vehicles purchased in the year combined with a lower level of vehicles being removed from the rental fleet in response to the reducing rate of on hire decline.

 

Sales to the higher margin retail market improved, with 9% of total vehicles sold through these channels compared to 5% in the prior year. The improved resale values achieved were partially offset by the reduced number of vehicles being disposed of, resulting in a reduction in the depreciation charge of €6.1m compared to a €4.9m reduction in the prior year.



Financial Review

 

Financial reporting

 

Group

 

A summary of the Group's underlying financial performance for 2013, with a comparison to 2012, is shown below:

 


2013

2012


£m

£m

Revenue

609.9

706.7

Operating profit(9)

86.4

105.2

Net interest expense(10)

(36.9)

(45.4)

Profit before tax(4)

49.5

59.7

Profit after tax(5)

38.8

41.9

Basic earnings per share(5)

29.2p

31.5p

Return on capital employed(3)

11.8%

13.1%

 

Group revenue in 2013 decreased by 13.7% to £609.9m (2012 - £706.7m) or 12.4% at constant exchange rates.

 

Net underlying cash generation(1) was £92.6m (2012 - £138.2m) after net capital expenditure of £117.7m (2012 - £133.8m) resulting in closing net debt(2) of £362.7m (2012 - £371.3m). Gearing(6) improved to 102% (2012 - 105%).

 

On a statutory basis, operating profit was £79.5m (2012 - £94.5m) and loss before tax was £11.4m (2012 - profit of £46.0m). Basic earnings per share were (5.5)p (2012 - 30.4p).  Net cash from operations, including net capital expenditure on vehicles for hire was £100.9m (2012 - £145.8m), with net debt falling by £22.6m from £385.3m at 30 April 2012 to £362.7m at 30 April 2013.  Gearing improved to 102% (2012 - 109%).

 

Return on capital employed

 

Group return on capital employed(3) was 11.8% compared to 13.1% in the prior year.  This represents a substantial improvement on the levels achieved in 2009 of 5.8% when restructuring of the Group commenced.

 

Group return on equity, calculated as profit after tax (excluding intangible amortisation and exceptional items) divided by average shareholders' funds, was 10.6% (2012 - 11.9%). 

 

Borrowing facilities

 

In April 2013 the Group successfully replaced its legacy high-coupon private placements, institutional loan and multi-currency bank facility with a single new committed bank facility maturing in June 2017.

 

Taken together with other loans of the Group, £362.7m was drawn against total committed facilities of £443.1m giving headroom(11) of £80.4m as detailed below:

 


Facility

Drawn

Headroom

Maturity


£m

£m

£m


UK bank facility

428.0

354.9

73.1

June-17

Other loans

15.1

7.8

7.3

Up to Nov-13


443.1

362.7

80.4


 

A one off charge of £54.0m was incurred as a consequence of extinguishing previous facilities and cancelling hedging arrangements.  The net cash outflow relating to the refinancing was £39.1m.

 

The Group estimates that had the new facility been in place at 1 May 2012, the cash interest savings would have been in excess of £15m for the year ended 30 April 2013.

 

The margin charged on bank debt is dependent upon the Group's net debt to EBITDA ratio, and ranges from a maximum of 2.875% to a minimum of 2.125%. The net debt to EBITDA ratio at 30 April 2013 corresponds to a bank margin of 2.375%.

 

Following the completion of the refinancing on 29 April 2013, interest rate swap contracts were taken out on 2 May 2013 in order to fix a proportion of bank debt at 2.9% giving an overall cost of the Group's borrowings of 2.8%. This compares to an overall rate of 7.1% at 30 April 2012.

 

The Group made total borrowing repayments of £410.1m in the year.  Scheduled total bank repayments on the new bank facilities of £25.9m commencing in November 2015 are due before they mature in June 2017.

 

The revised financing arrangements allow the Group increased operational and financial flexibility with a new set of financial covenants(12) in place as follows:

 

1.  Interest cover ratio

 

A minimum ratio of earnings before interest and taxation ("EBIT") to net interest costs tested quarterly on a rolling historic 12-month basis.  The covenant ratio to be exceeded ranges between 2.0x and 3.0x, reflecting the reduced interest charges associated with the new financing arrangements.

 

Interest cover at 30 April 2013 was 2.7x (2012 - 2.4x) with EBIT headroom, all else being equal, of £22m.

 

2.  Loan to value

 

A maximum ratio of total consolidated net borrowings to the book value of vehicles for hire, vehicles held for resale, trade receivables and freehold property, tested quarterly.  The covenant ratio which must not be exceeded is 70%. 

 

Loan to value at 30 April 2013 was 50% (2012 - 53%) giving net debt headroom, all else being equal, of £149m.

 

3.  Debt leverage cover ratio

 

A maximum ratio of net debt to earnings before interest, tax, depreciation and amortisation ("EBITDA"), tested quarterly on a rolling historic 12-month basis.  The covenant ratio which must not be exceeded is 2.0x.

 

Debt leverage cover at 30 April 2013 was 1.5x (2012 - 1.3x) with EBITDA headroom, all else being equal, of £66m.

 

Dividend

 

The Directors recommend the payment of a final dividend of 6.0p per share in relation to the Ordinary shares for the year ended 30 April 2013 (2012 - 3.0p).  Subject to approval by shareholders, the dividend will be paid on 21 September 2013 to ordinary shareholders on the register as at close of business on 16 August 2013.

 

Including the interim dividend paid of 1.3p (2012 - £Nil), the total dividend relating to the year would be 7.3p (2012 - 3.0p). The dividend is covered four times by underlying earnings. Going forward it is the intention of the Board to pay an interim dividend and a final dividend split in line with normal practice.

 

UK

The composition of the Group's UK revenue and operating profit is set out below:

 


2013

2012


£m

£m

Revenue



Vehicle hire

291.1

320.8

Vehicle sales

124.6

136.3


415.7

457.1




Operating profit(13)

64.2

74.4

 

Hire revenue reduced by 9% to £291.1m (2012 - £320.8m) driven by an 11% reduction in the average number of vehicles on hire, partially offset by a 2% increase in revenue per vehicle. 

 

An improvement in residual values was offset by a reduction in volume of used vehicles sold, which contributed to £1.7m of the decrease in operating profit.

 

The UK operating margin was as follows:

 


2013

2012




Operating margin(7)

22.1%

23.2%

 

The UK operating profit margin(7) has decreased to 22.1% (2012 - 23.2%) as a result of the decrease in vehicles on hire in the year.



 

 Spain

 

The revenue and operating profit generated by our Spanish operations are set out below:

 


2013

2012


£m

£m

Revenue



Vehicle hire

150.8

182.9

Vehicle sales

43.4

66.7


194.2

249.6







Operating profit(14)

25.2

35.0

 

Hire revenue reduced by 18%.  The reduction was 14% at constant exchange rates, of which 12% related to the reduction in vehicles on hire and 2% related to a reduction in revenue per vehicle.

 

An improvement in used vehicle residual values has contributed £5.0m to operating profit in the year with 11,200 vehicles sold (2012 - 16,800).

 

The Spanish operating margin was as follows:

 


2013

2012




Operating margin(8)

16.7%

19.1%

 

 

Vehicle hire revenue and operating profit(14) in 2013, expressed at constant exchange rates, would have been higher than reported by £7.1m and £1.2m respectively.

 

Adjusting for the change in mix of the fleet, revenue per rented vehicle reduced by 1%, demonstrating continued pricing discipline in a difficult trading environment.

 

The incidence of bad debt was £Nil compared to £2.7m in the prior year, with the reduction being driven by the collection of previously provided debt. Days sales outstanding continued to reduce from 71 days at 30 April 2012 to 64 days at 30 April 2013 due to the continued improvements in controls and processes.

 

Corporate

 

Corporate costs(15) were £3.0m compared to £4.2m in the prior year.

 

Exceptional items

 

During the year £2.9m of restructuring costs and £0.4m of property disposal losses were incurred, of which £2.0m related to the UK and £1.3m related to Spain.

 

Financing costs of £54.0m were incurred during the year which includes the costs of exiting the Group's legacy debt and hedging.  The related cash impact of these costs and of cancelling previous hedging arrangements was £39.1m.

 

Interest

 

Net finance charges for the year before exceptional items were £36.9m (2012 - £45.4m). 

 

The charge includes £6.5m of non-cash interest, primarily from borrowing fees amortised in the year (2012 - £6.6m).

 

The net cash interest charge has reduced by £8.4m to £30.4m, with a £7.2m saving as a result of the reduction in average net debt throughout the year, a £0.2m saving due to lower borrowing rates of the Group in the year and a £1.0m decrease due to the impact of exchange rates.

Taxation

 

The Group's underlying effective tax charge for its UK and overseas operations was 22% (2012 - 30%). 

 

The underlying tax charge excludes the tax on intangible amortisation and exceptional items. 

 

The prior year underlying tax charge also excludes an £11.5m credit following settlement with the UK tax authorities on an outstanding tax matter and a charge of £2.9m to reflect the change in UK tax rates.

 

Including these items the Group's statutory effective tax charge was 35% (2012 - 12%).

 

Earnings per share

 

Basic earnings per share ("EPS")(5), were 29.2p (2012 - 31.5p).  Basic statutory earnings per share were (5.5)p (2012 - 30.4p). 

 

Underlying earnings for the purposes of calculating EPS(5) were £38.8m (2012 - £41.9m).  The weighted average number of shares for the purposes of calculating EPS was 133.2m, in line with the previous year.

 

Balance sheet

 

Net tangible assets at 30 April 2013 were £355.6m (2012 - £353.0m), equivalent to a tangible net asset value of 266.9p per share (2012 - 264.9p per share). 

 

Gearing(6) at 30 April 2013 was 102% (2012 - 105%) reflecting an £8.6m reduction in net debt(2). This demonstrates significant progress in strengthening the balance sheet over the previous four years from a gearing level of 571% at 30 April 2009.



Cash flow

 

A summary of the Group's cash flows is shown below:

 


2013

2012

 


£m

£m

Underlying operational cash generation

258.4

312.9

Net capital expenditure

(117.7)

(133.8)

Net taxation and interest payments

(48.1)

(40.9)

Net underlying cash generation(1)

92.6

138.2

Net refinancing payments (April 2013 refinancing)

(39.1)

-

Dividends

(5.7)

-

Other

(2.3)

(2.7)

Net cash generated

45.5

135.5

 



Opening net debt(2)

371.3

529.9

Net cash generated

(45.5)

(135.5)

Other non-cash items

17.1

6.8

Exchange differences

19.8

(29.9)

Closing net debt(2)

362.7

371.3

 

Underlying cash generation(1) was £92.6m compared to £138.2m in the previous year.

 

A total of £255.2m was invested in new vehicles in order to replace fleet compared to £306.3m in the prior year.  The Group's new vehicle outlay was partially funded by £145.9m of cash generated from the sale of used vehicles. Other net capital expenditure amounted to £8.4m.

 

After capital expenditure, payments of interest and tax of £48.1m, net payments of £39.1m in relation to the refinancing in the year, dividends of £5.7m and other items of £2.3m, net cash generation (as defined in the table above) was £45.5m, compared to £135.5m in the previous year. Excluding net refinancing payments relating the April 2013 refinancing, net cash generation was £84.6m.



Treasury

 

The function of Group Treasury is to mitigate financial risk, to ensure sufficient liquidity is available to meet foreseeable requirements, to secure finance at minimum cost and to invest cash assets securely and profitably.  Treasury operations manage the Group's funding, liquidity and exposure to interest rate risks within a framework of policies and guidelines authorised by the Board of Directors.

 

The Group uses derivative financial instruments for risk management purposes only.  Consistent with Group policy, Group Treasury does not engage in speculative activity and it is policy to avoid using more complex financial instruments.

 

Credit risk

 

The policy followed in managing credit risk permits only minimal exposures, with banks and other institutions meeting required standards as assessed normally by reference to major credit agencies.  Our credit exposure is limited to banks which maintain an A rating.  Individual aggregate credit exposures are also limited accordingly.

 

Liquidity and funding

 

The Group has sufficient funding facilities to meet its normal funding requirements in the medium term as discussed above.  Covenants attached to those facilities as discussed above are not restrictive to the Group's operations.

 

Capital management

 

The Group's objective is to maintain a balance sheet structure that is efficient in terms of providing long term returns to shareholders and safeguards the Group's financial position through economic cycles.

 

Operating subsidiary undertakings are financed by a combination of retained earnings and bank borrowings.

 

The Group can choose to adjust its capital structure by varying the amount of dividends paid to shareholders, by issuing new shares or by adjusting the level of capital expenditure.  As discussed above, gearing(6) at 30 April 2013 was 102% compared to 105% at 30 April 2012.



Interest rate management

 

The Group's bank facilities and other loan agreements incorporate variable interest rates.  The Group seeks to manage the risks associated with fluctuating interest rates by having in place a number of financial instruments covering at least 50% of its borrowings at any time.  The Group's borrowing facilities were refinanced on 29 April 2013.  All existing interest rate swaps were cancelled at that time and new instruments were put in place on 2 May 2013 which hedged 64% of gross borrowings into fixed rates (30 April 2012 - 96%).

 

Foreign exchange risk

 

The Group's reporting currency is, and the majority of its revenue (67%) is generated in pounds Sterling.  The Group's principal currency translation exposure is to the Euro, as the results of operations, assets and liabilities of its Spanish and Irish businesses must be translated into Sterling to produce the Group's consolidated financial statements.

 

The average and year end exchange rates used to translate the Group's overseas operations were as follows:

 


2013

2012


£ : €

£ : €

Average

1.22

1.17

Year end

1.18

1.23

 

 

The Group manages its exposure to currency fluctuations on retranslation of the balance sheets of those subsidiary undertakings whose functional currency is in Euro by maintaining a proportion of its borrowings in the same currency.  The exchange differences arising on these borrowings have been recognised directly within equity along with the exchange differences on retranslation of the net assets of the Euro subsidiaries.



Going concern 

 

In determining whether the Group's 2013 accounts should be prepared on a going concern basis the Directors considered all factors likely to affect its future development, performance and its financial position, including cash flows, liquidity position and borrowings facilities and the risks and uncertainties relating to its business activities in the current economic climate.

 

The principal risks and uncertainties of the Group are outlined below.  Measures taken by the Directors in order to mitigate those risks are also outlined.

 

The Directors have reviewed trading and cash flow forecasts as part of their going concern assessment, including reasonably possible downside sensitivities, which take into account the uncertainties in the current operating environment.

 

The Group has sufficient headroom compared to its committed borrowing facilities and against all covenants as detailed in this report.

 

Having considered all the factors above impacting the Group's businesses, including reasonably possible downside sensitivities, the Directors are satisfied that the Group will be able to operate within the terms and conditions of the Group's financing facilities for the foreseeable future.

 

The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.  Accordingly, they continue to adopt the going concern basis in preparing the Group's 2013 accounts.

 

Principal risks and uncertainties

 

The operation of a public company involves a number of risks and uncertainties across a full range of commercial, operational and financial areas.  The principal risks and uncertainties that have been identified as being capable of impacting the Group's performance over the next financial year are set out below.

 

Economic environment

 

There is a link in our business between the demand for our products and services and the levels of economic activity in the countries in which the Group operates.  The high level of operational gearing in our business model means that changes in demand can lead to higher levels of variation in profitability.

 

The Group operates in Spain, where austerity measures have been implemented. These measures could impact on future trading volumes. The underlying macro-economic conditions have also increased the risk of customer failure, particularly in Spain, which may lead to the occurrence of increased bad debt charges.

 

The construction industry in Spain and other key markets of the Group have been particularly sensitive to the downturn in the economic climate which has led to a decline in the number of vehicles rented in recent years.

 

The Spanish business generates a large proportion of revenue from customers in the construction industry but is seeking to diversify its customer base across a range of market segments.

 

Should there be a further significant economic downturn the flexible nature of the Group's business model enables vehicles to be placed with other customers.  Alternatively, utilisation can be maintained through a combination of a decrease in vehicle purchases and increase in disposals, which although affecting short term profitability, generates cash and reduces debt levels.

 

No individual customer contributes more than five per cent of total revenue generated, and ongoing credit analysis is performed on new and existing customers to assess credit risk.

 

Eurozone

 

The Group operates in and generates 32% of its revenue in Spain, where the functional currency is the Euro. The risks of trading in this country are assessed in the "Economic Environment" risk.  Of the Group's net assets, £273m (2012 - £294m) are located in Spain, against which the Group holds £234m (2012 - £240m) of Euro denominated borrowings providing a net investment hedge.

 

There is a possibility that Spain may leave the Euro. If this occurred and Spain were to reintroduce its own national currency, the Group could be materially affected by a weakening of this currency and higher volatility on trading results when translated into Sterling. Local net assets could depreciate while the Group's Euro debt located in the UK could appreciate.

 

The Board has conducted a detailed review of the impact of possible scenarios that may arise from the Eurozone crisis and the risks are being continually monitored. In order to minimise the Group's net exposure to the Spanish currency, regular dividend payments of cash flow generated from the Spanish business have been implemented, and the Board has the ability to increase the level of funding to the Spanish business from locally denominated borrowings.

 

Vehicle holding costs

 

The overall holding cost of a vehicle is affected by the pricing levels of new vehicles and the disposal value of vehicles sold.

 

The Group purchases substantially all of its fleet from suppliers with no agreement for the repurchase of a vehicle at the end of its hire life cycle.  The Group is therefore exposed to fluctuations in residual values in the used vehicle market.

 

An increase in the holding cost of vehicles, if not recovered through hire rate increases, would affect profitability, shareholder returns and cash generation.

 

Risk is managed on new pricing by negotiating fixed pricing terms with manufacturers a year in advance.  Flexibility is maintained to make purchases throughout the year under variable supply terms.

 

Flexibility in our business model allows us to determine the period over which we hold a vehicle and therefore in the event of a decline in residual values we would attempt to mitigate the impact by ageing out our existing fleet.

 

Competition and hire rates

 

The Group operates in highly competitive markets with competitors often pursuing aggressive pricing actions to increase hire volumes.  The market is also fragmented with numerous competitors at a local and national level.

 

As our business is highly operationally geared, any increase or decrease in hire rates will impact profit and shareholder returns to a greater effect.

 

As the Group is focused on maximising return on capital, all hire rates must exceed certain hurdle rates.

 

Our current pricing strategy is focused on charging the correct price for the service provided and all ancillary services offered which will attract customers for whom flexible rental is the most appropriate solution but not necessarily the cheapest.  This means that the Group will be better positioned against solely price led competition going forward.

 

Access to capital

 

The Group requires capital to both replace vehicles that have reached the end of their useful life and for growth in the fleet.  Additionally, due to the level of the Group's indebtedness, a proportion of the Group's cash flow is required to service its debt obligations.  In order to continue to access its credit facilities the Group needs to remain in compliance with its financial covenants throughout the term of its facilities.  Current bank facilities are due to mature in June 2017.  There is a risk that the Group cannot successfully extend its facilities past this date.  Failure to access sufficient financing or meet financial covenants could potentially adversely affect the prospects of the Group. 

 

Financial covenants are reviewed on a monthly basis in conjunction with cash flow forecasts to ensure ongoing compliance.  If there is a shortfall in cash generated from operations and/or available under its credit facilities the Group would reduce its capital requirements.

 

The Group believes that its existing facilities provide adequate resources for present requirements.

 

The impact of access to capital on the wider risk of going concern is considered above.

 

IT systems

 

The Group's business involves a high volume of transactions and the need to track assets which are located at numerous sites. 

 

Reliance is placed upon the proper functioning of IT systems for the effective running of operations.  Any interruption to the Group's IT systems could have a materially adverse affect on its business.

 

Prior to any material systems changes being implemented the Board approves a project plan.  The project is then led by a member of the executive team, with an ongoing implementation review being carried out by internal audit and external consultants where appropriate.  The objective is always to minimise the risk that business interruption could occur as a result of the system changes.

 

Additionally, the Group has an appropriate business continuity plan in the event of interruption arising from an IT systems failure.

 

 

 (1)      Net increase in cash and cash equivalents before financing activities and partial recovery of acquisition cost of subsidiary undertaking. 

(2)          Net debt taking into account swapped exchange rates for US loan notes and other loan swapped into Euro being retranslated to Sterling at closing exchange rates.

(3)          Calculated as operating profit(9) divided by average capital employed, being shareholders funds plus net debt(2).

(4)          Stated before intangible amortisation of £3.6m (2012 - £4.0m, 2009 - £5.3m), exceptional administrative expenses of £3.3m (2012 - £6.7m, 2009 - £3.1m), impairment of assets of £Nil (2012 -£Nil, 2009 - £180.9m) and exceptional finance costs of £54.0m (2012 - £3.0m, 2009 - £33.8m).

(5)          Stated before intangible amortisation of £3.6m (2012 - £4.0m), exceptional administrative expenses of £3.3m(2012 - £6.7m), exceptional finance costs of £54.0m (2012 - £3.0m) and tax on intangible amortisation, exceptional items and exceptional tax credit of £14.7m (2012 - £12.3m).

(6)          Calculated as net debt(2) divided by tangible net assets with tangible net assets being net assets less goodwill and other intangible assets.

(7)       Calculated as operating profit(13) divided by revenue of £291.1m (2012 - £320.8m), excluding vehicle sales.

(8)       Calculated as operating profit(14) divided by revenue of £150.8m (2012  -  £182.9m), excluding vehicle sales.

(9)          Stated before intangible amortisation of £3.6m (2012 - £4.0m, 2009 - £5.3m), exceptional administrative expenses of £3.3m (2012 - £6.7m, 2009 - £3.1m) and impairment of assets of £Nil (2012 - £Nil, 2009 - £180.9m).

(10)        Stated before exceptional finance costs of £54.0m (2012 - £3.0m).

(11)     Headroom calculated as facilities of £443.1m less net borrowings of £362.7m.  Net borrowings represent net debt of £362.7m stated after the deduction of £15.0m of cash balances, which are available to offset against borrowings.

(12)        Calculated in accordance with covenant requirements of the Group's financing arrangements.

(13)     Excluding amortisation of intangible assets of £2.9m (2012 - £3.1m) and exceptional administrative expenses of £2.1m (2012 - £5.7m).

(14)     Excluding amortisation of intangible assets of £0.7m (2012 - £0.9m) and exceptional administrative expenses of £1.3m (2012 - £1.7m).

(15)     Excluding exceptional administrative expenses of £Nil (2012 - £(0.7)m).

CONSOLIDATED INCOME STATEMENT





 

FOR THE YEAR ENDED 30 APRIL 2013







Underlying

Statutory

Underlying

Statutory

 



2013

2013

2012

2012

 


Note

£000

£000

£000

£000

 

Revenue: hire of vehicles


441,944

441,944

503,659

503,659

 

Revenue: sale of vehicles


167,936

167,936

203,039

203,039

 

Total revenue

1

609,880

609,880

706,698

706,698

 

Cost of sales


(466,405)

(466,405)

(540,915)

(540,915)

 

Gross profit


143,475

143,475

165,783

165,783

 

Administrative expenses (excluding exceptional items and intangible amortisation)


(57,071)

(57,071)

(60,607)

(60,607)

 

Exceptional administrative expenses

6

-

(3,337)

-

(6,702)

 

Intangible amortisation


-

(3,589)

-

(3,996)

 

Total administrative expenses


(57,071)

(63,997)

(60,607)

(71,305)

 

Operating profit

1

86,404

79,478

105,176

94,478

 

Interest income


123

123

165

165

 

  






 

Finance costs (excluding exceptional items)


(37,029)

(37,029)

(45,610)

(45,610)

 

Exceptional finance costs

6

-

(53,954)

-

(3,046)

 

Total finance costs


(37,029)

(90,983)

(45,610)

(48,656)

 

Profit (loss) before taxation


49,498

(11,382)

59,731

45,987

 

Taxation


(10,657)

4,025

(17,803)

(5,519)

 

Profit (loss) for the year


38,841

(7,357)

41,928

40,468

 

 

Profit (loss) for the year 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 6, as well as intangible amortisation and the taxation thereon, in order to provide a better indication of the Group's underlying business performance.

Earnings per share






Basic

2

29.2p

(5.5)p

31.5p

30.4p

Diluted

2

28.3p

(5.5)p

30.8p

29.7p

 

 





CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2013






2013

2012



£000

£000

Amounts attributable to owners of the Parent Company




(Loss) profit attributable to the owners


(7,357)

40,468

 

Other comprehensive income

Foreign exchange differences on retranslation of net assets of subsidiary undertakings


6,725

(16,711)

Net foreign exchange differences on long term borrowings held as hedges


(4,132)

13,486

Deferred taxation on disposal of revalued property


-

5

Foreign exchange difference on revaluation reserve


46

(120)

Net fair value gains (losses) on cash flow hedges


16,115

(16,188)

Deferred tax (charge) credit recognised directly in equity relating to cash flow hedges


(4,301)

3,834

Actuarial losses/derecognition of assets on defined benefit pension scheme


(493)

(227)

Deferred tax credit recognised directly in equity relating to defined benefit pension scheme


118

60

Total other comprehensive income for the year


14,078

(15,861)

Total comprehensive income for the year


6,721

24,607

 

 

CONSOLIDATED BALANCE SHEET





AS AT 30 APRIL 2013








2013

2012




£000

£000

Non-current assets





Goodwill



3,589

3,589

Other intangible assets



7,431

9,591






Property, plant and equipment: vehicles for hire



589,161

623,103

Other property, plant and equipment



78,321

74,452

Total property, plant and equipment



667,482

697,555

Derivative financial instrument assets



-

11,249

Deferred tax assets



4,688

1,691

Total non-current assets



683,190

723,675

Current assets





Inventories



19,192

22,213

Trade and other receivables



77,417

97,278

Current tax assets



5,862

-

Cash and bank balances



14,962

9,707

Total current assets



117,433

129,198

Total assets



 800,623

852,873

Current liabilities





Trade and other payables



52,592

63,188

Derivative financial instrument liabilities



-

1,046

Current tax liabilities



1,090

4,150

Short term borrowings



7,314

135,558

Total current liabilities



60,996

203,942

Net current assets (liabilities)



56,437

(74,744)

Non-current liabilities





Derivative financial instrument liabilities



-

15,951

Long term borrowings



370,371

259,487

Deferred tax liabilities



2,604

7,357

Total non-current liabilities



372,975

282,795

Total liabilities



433,971

486,737

NET ASSETS



366,652

366,136






Equity





Share capital



66,616

66,616

Share premium account



113,508

113,508

Revaluation reserve



1,235

1,189

Own shares



(303)

(685)

Merger reserve



67,463

67,463

Hedging reserve



(649)

(14,247)

Translation reserve



(5,370)

(7,963)

Capital redemption reserve



40

40

Retained earnings



124,112

140,215

TOTAL EQUITY



366,652

366,136

 

Total equity is wholly attributable to owners of the Parent Company.

 





CONSOLIDATED CASH FLOW STATEMENT



FOR THE YEAR ENDED 30 APRIL 2013






2013

2012


 Note

£000

£000

Net cash from operations

4

100,850

145,826

Investing activities




Interest received


123

165

Partial recovery of acquisition cost of subsidiary undertaking

-

775

Proceeds from disposal of other property, plant and equipment

1,760

1,876

Purchases of other property, plant and equipment

(8,744)

(7,705)

Purchases of intangible assets


(1,396)

(1,982)

Net cash used in investing activities


(8,257)

(6,871)

Financing activities




Dividends paid

(5,719)

-

Receipt of bank loans


369,871

-

Repayments of bank loans and other borrowings

(410,140)

(222,592)

Debt issue costs paid relating to previous facilities


(3,354)

(86)

Costs paid for extinguishment of previous facilities


(23,202)

-

Payments to acquire own shares for share schemes

(1,988)

(293)

Termination of financial instruments


(12,830)

(3,046)

Net cash used in financing activities


(87,362)

(226,017)

Net increase (decrease) in cash and cash equivalents


5,231

(87,062)

Cash and cash equivalents at 1 May


9,707

96,885

Effect of foreign exchange movements


24

(116)

Cash and cash equivalents at 30 April


14,962

9,707

 

Cash and cash equivalents comprise cash and bank balances.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 APRIL 2013


Share capital  and share premium

 

 

Own shares reserve

Hedging reserve

Translation reserve

Other reserves

Retained earnings

Total


£000

£000

£000

£000

£000

£000

£000

Total equity at 1 May 2011

180,124

(1,630)

(1,893)

(4,738)

68,866

99,030

339,759

Share options fair value charge

-

-

-

-

-

2,063

2,063

Share options exercised

-

-

-

-

-

(1,238)

(1,238)

Transfer on disposal of revalued property

-

-

-

-

(54)

54

-

Profit attributable to owners of the Parent Company

-

-

-

-

-

40,468

40,468

Purchase of own shares

-

(293)

-

-

-

-

(293)

Transfer of shares on vesting of share options

-

1,238

-

-

-

-

1,238

Other comprehensive income

-

-

(1,478)

(14,101)

(120)

(162)

(15,861)

Transfers between equity reserves

-

-

(10,876)

10,876

-

-

-

Total equity at 1 May 2012

180,124

(685)

(14,247)

(7,963)

68,692

140,215

366,136

Share options fair value charge

-

-

-

-

-

1,502

1,502

Share options exercised

-

-

-

-

-

(2,370)

(2,370)

Loss attributable to owners of the Parent Company

-

-

-

-

-

(7,357)

(7,357)

Dividends paid

-

-

-

-

-

(5,719)

(5,719)

Purchase of own shares

-

(1,988)

-

-

-

-

(1,988)

Transfer of shares on vesting of share options

-

2,370

-

-

-

-

2,370

Other comprehensive income

-

-

8,295

6,112

46

(375)

14,078

Transfers between equity reserves

-

-

5,303

(3,519)

-

(1,784)

-

Total equity at 30 April 2013

180,124

(303)

(649)

(5,370)

68,738

124,112

366,652









 Other reserves comprise the capital redemption reserve, revaluation reserve and merger reserve.


 

NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 APRIL 2013

1. SEGMENTAL ANALYSIS



UK

Spain

Corporate

Total



2013

2013

2013

2013



£000

£000

£000

£000

Revenue: hire of vehicles


291,104

150,840

-

441,944

Revenue: sale of vehicles


124,583

43,353

-

167,936

Total revenue


415,687

194,193

-

609,880







Underlying operating profit (loss) *


64,241

25,189

(3,026)

86,404

Exceptional administrative expenses


(2,051)

(1,286)

-

(3,337)

Intangible amortisation


(2,886)

(690)

(13)

(3,589)

Operating profit (loss)


59,304

23,213

(3,039)

79,478









UK

Spain

Corporate

Total



2012

2012

2012

2012



£000

£000

£000

£000

Revenue: hire of vehicles


320,772

182,887

-

503,659

Revenue: sale of vehicles


136,312

66,727

-

203,039

Total revenue


457,084

249,614

-

706,698







Underlying operating profit (loss) *


74,402

34,989

(4,215)

105,176

Exceptional administrative expenses


(5,670)

(1,724)

692

(6,702)

Intangible amortisation


(3,135)

(861)

-

(3,996)

Operating profit (loss)


65,597

32,404

(3,523)

94,478

* Underlying operating profit (loss) stated before amortisation and exceptional items is the measure used by the executive Board of Directors to assess segment performance.

 

2. EARNINGS PER SHARE






Underlying

Statutory

Underlying

Statutory

Basic and diluted earnings per share

2013

£000

2013

£000

2012

£000

2012

£000






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 net profit (loss) attributable to owners of the Parent Company

38,841

(7,357)

41,928

40,468




 


Number

Number

Number

Number

Number of shares





Weighted average number of Ordinary shares





for the purposes of basic earnings per share

133,232,518

133,232,518

133,232,518

133,232,518

Effect of dilutive potential Ordinary shares:





- share options

4,223,706

-

3,074,242

3,074,242

Weighted average number of Ordinary shares for the purposes





of diluted earnings per share

137,456,224

133,232,518

136,306,760

136,306,760

Basic earnings (loss) per share

29.2p

(5.5)p

31.5p

30.4p

Diluted earnings (loss) per share

28.3p

(5.5)p

30.8p

29.7p

3. DIVIDENDS

Dividends were paid in the year of £5,719,000 (2012 - £Nil). The Directors propose a dividend of 6.0p per share for the year ended 30 April 2013 (2012 - 3.0p), which is subject to approval at the Annual General Meeting and has not been included as a liability as at 30 April 2013.

4. NOTES TO THE CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 APRIL 2013 




2013

2012


£000

£000

Net cash from operations



Operating profit

79,478

94,478

Adjustments for:



Depreciation of property, plant and equipment

163,313

192,729

Exchange differences

(5)

25

Amortisation of intangible assets

3,589

3,996

Loss on disposal of property, plant and equipment

445

443

Share options fair value charge

1,502

2,063

Operating cash flows before movements in working capital

248,322

293,734

(Increase) decrease in non-vehicle inventories

(166)

229

Decrease in receivables

20,185

22,456

Decrease in payables

(9,911)

(3,538)

Cash generated from operations

258,430

312,881

Income taxes paid

(16,828)

(2,582)

Interest paid

(31,448)

(38,487)

Net cash generated from operations

210,154

271,812

Purchases of vehicles

(255,193)

(306,311)

Proceeds from disposal of vehicles

145,889

180,325

Net cash from operations

100,850

145,826

 

5. ANALYSIS OF CONSOLIDATED NET DEBT

 




2013

2012


£000

£000

Cash at bank and in hand

(14,962)

(9,707)

Bank loans

375,549

129,282

Loan notes

-

161,002

Other loan

-

97,752

Cumulative preference shares

500

500

Property loans and other borrowings

1,636

6,509


362,723

385,338

 

There are no cross-currency swaps in place at 30 April 2013.  Net borrowings at 30 April 2012, taking into account the fixed swapped exchange rates for the loan notes and the proportion of the other loan swapped into Euro being retranslated to Sterling at closing exchange rates, are as follows:

 


2013

2012


£000

£000

Cash at bank and in hand

(14,962)

(9,707)

Bank loans

375,549

129,282

Loan notes

-

154,902

Other loan

-

89,815

Cumulative preference shares

500

500

Property loans and other borrowings

1,636

6,509


362,723

371,301

 



 

6. EXCEPTIONAL ITEMS

 


During the year, the Group recognised exceptional items in the income statement made up as follows:




2013

2012

 



£000

£000

 

Restructuring costs


2,892

7,034

 

Partial recovery of acquisition cost of subsidiary undertaking


-

(775)

 

Net property losses


445

443

 

Exceptional administrative expenses


3,337

6,702

 

 




 

Cost associated with April 2013 refinancing


53,954

-

 

Termination of Euro interest rate swaps


-

3,046

 

Exceptional finance costs


53,954

3,046

 

 

Total pre-tax exceptional items


57,291

9,748

 

 




 

Tax credit on exceptional items


(13,783)

(2,591)

 

Exceptional tax credit relating to prior year items


-

(11,505)

 

Exceptional tax charge to recognise change in UK tax rate


-

2,880

 

Exceptional tax credit


(13,783)

(11,216)

 



7. BASIS OF PREPARATION 

The results for the year ended 30 April 2013, including comparative financial information, have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and their interpretations adopted by the European Union.

 

Northgate plc ("the Company") has adopted all IFRS in issue and effective for the year.

 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS in July 2013.

 

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 April 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts: their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498 (2) or (3) of the Companies Act 2006.

 

The financial information presented in respect of the year ended 30 April 2013 has been prepared on a basis consistent with that presented in the annual report for the year ended 30 April 2012.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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