Source - LSE Regulatory
RNS Number : 1213U
Redde Northgate PLC
01 December 2021
 

1 December 2021

REDDE NORTHGATE PLC

("Redde Northgate" or the "Group" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2021

Strong performance across the Group; successfully leveraging our scaled platform to drive growth

Redde Northgate (LSE:REDD), the leading integrated mobility solutions platform providing services across the vehicle lifecycle, is pleased to announce its Interim Results for the six months ended 31 October 2021 ('H1 2022' or the 'period').

Financial Highlights

Adjusted results

 

 

 

Six months ended 31 October

H1 2022

H1 2021

Change

 

£m

£m

%

Revenue (excluding vehicle sales)

522.9

429.0

21.9%

Underlying[1] EBIT

87.3

48.7

79.2%

Underlying1 Profit before Tax

78.9

40.6

94.4%

Underlying1 Earnings per Share

26.1p

13.4p

94.7%

Statutory results

 

 

 

Total revenue

612.9

556.0

10.2%

EBIT

80.1

34.0

135.8%

Profit before Tax

71.7

25.9

177.4%

Earnings per Share

22.5p

8.6p

           162.2%

Other measures

 

 

 

Net debt[2]

587.2

530.9

10.6%

Group net debt (exc IFRS 16 leases)[3]

470.4

461.0

2.0%

Steady state cash generation1

93.5

81.0

15.5%

Free cash flow

(7.6)

58.6

(112.9%)

ROCE1

12.5%

8.1%

4.4ppts

Dividend per Share

6.0p

3.4p

76.5%

 

·    Trading for the first half was ahead of the Board's expectations, with strong momentum across the Group

·    Revenue (excluding vehicle sales) grew 21.9% to £522.9m (H1 2021: £429.0m)

·    Total Group revenue, including vehicle sales, grew 10.2% to £612.9m (H1 2021: £556.0m)

·    Underlying EBIT grew 79.2%, underlying PBT grew 94.4% and underlying EPS grew 94.7%

·    ROCE increased to 12.5% (H1 2021: 8.1%) due to higher profitability in the Group, strong disposals and a leaner cost base following strategic actions as part of the Focus initiative

·    Significant rental margin progression in both Northgate UK&I, 7.3 ppt increase and Northgate Spain, 2.7 ppt increase, driven by underlying strength in the rental business and a leaner cost base

·    Steady state cash generation improved 15.5% to £93.5m (H1 2021: £81.0m) and free cashflow reduced £66.1m to an outflow of £7.6m (H1 2021: £58.6m) due to investment in the fleet to meet demand

·    Group net debt, excluding IFRS 16 leases, stable at £470.4m, 1.5x net debt to EBITDA (H1 2021: 1.6x) well within target leverage range of 1.0x to 2.0x

·    Interim dividend of 6.0p (3.4p in prior period) declared, representing 50% of prior year final dividend, reflecting the Board's confidence in Group outlook

Business highlights

·    Significant new multi-year contract wins in the period including wins with Tesco, Admiral and another major insurer with lifetime contract revenues in excess of £200m leveraging the Group's increased platform scale and full-service offering

·    Accident and incident volumes have continued to recover reaching approximately 90% of pre-COVID-19 levels driving the ongoing performance of Redde

·    High rental demand and reduced vehicle supply has lowered volumes of vehicles for disposal, albeit at high sales price.  This trend is likely to remain for the rest of the financial year

·    Electric and hybrid vehicles in the fleet have increased 187% to approximately 2% of the overall fleet and the Group has signed a memorandum of understanding with an electric vehicle manufacturer for the supply of 5,000 electric LCVs

·    Operational cost inflation is being effectively managed across the Group

·    The Group continues to assess bolt-on acquisitions to extend products and services and to increase supply for the fleet

Refinancing

In November 2021, the Group completed a comprehensive refinancing of its debt arrangements, to optimise its debt portfolio and to support the next phase of the Group's strategy. 

The Group signed two new sources of debt, providing it with £792m of facilities, an increase of £104m on the previous position: 

·    €375m of new debt Private Placements, with maturities spread across 6, 8 and 10 years.  These were achieved at a highly competitive average interest rate of just 1.32%

·    £475m bank Revolving Credit Facility, with a four year maturity to November 2025 and on improved terms compared with the previous facility

 

The refinancing results in a c. 50bps reduction in the drawn interest rate as at the date of the refinancing to 1.5%; a significant lengthening of our maturities and a greater diversification of our sources of debt. This creates great flexibility and a solid financing platform to allow the Group to invest in the business as well as take advantage of opportunities in the market as they arise for inorganic growth.

 

Martin Ward, CEO of Redde Northgate, commented:

"We are pleased to have delivered a strong H1 performance driven by high demand for our products and services and underlying margin gains. 

"The underlying margin improvements on our rental assets, both in the UK&I and Spain, look sustainable given the cost synergies extracted from the business and our focus on driving value. ROCE continues to grow, up 4.4ppts from H1 2021, and input costs inflation is being successfully managed. Given the well-publicised new vehicle supply constraints our vehicle assets are in demand for rental services and also through our sales network, which is driving further value. In addition to our new van supplies, over the next 12-18 months, we expect to supplement our fleet stock through the selective acquisition of existing rental assets in the market where this adds value.

"Redde volumes have continued to grow having now reached approximately 90% of pre COVID-19 levels which is in line with our expectations. Overall, there is good momentum in the business as we enter H2 and our key strategic areas of Focus, Drive and Broaden are delivering meaningful results.

"Strategically, we have made significant progress leveraging the capabilities of our integrated mobility platform to secure multi-year contract wins which will increase our market share. Our combined product and services offering is unique and unrivalled in terms of scale and infrastructure capabilities."

Outlook

The work undertaken since the Merger has built a strong platform for further growth, with increasingly large contract wins demonstrating the appeal of the integrated mobility services offering and driving continued momentum across the business. We expect underlying PBT to be at least in line with consensus[4] for the full year.

The Board continues to look forward with significant optimism for the future prospects of the Group.

Analyst Briefing

A remote presentation for sell-side analysts will be held at 9.30am today, 1 December 2021. If you are interested in attending, please email Buchanan on reddenorthgate@buchanan.uk.com to request the joining details.  

 

This presentation will also be made available via a link on the Company's website www.reddenorthgate.com.   

 

For further information contact:

Buchanan                                                                                           

David Rydell/Jamie Hooper/Tilly Abraham/ Verity Parker                              +44 (0) 207 466 5000

 

 

Notes to Editors:

Redde Northgate is the leading integrated mobility solutions platform providing services across the vehicle lifecycle. The Company offers integrated mobility solutions to businesses, fleet operators, insurers, OEMs and other customers across seven key areas: vehicle rental, vehicle data, accident management, vehicle repairs, fleet management, service and maintenance, vehicle ancillary services and vehicle sales.

The Company's core purpose is to keep its customers mobile, whether through meeting their regular mobility needs or by servicing and supporting them when unforeseen events occur. With its considerable scale and reach, Redde Northgate's mission is to offer a market-leading customer proposition and drive enhanced returns for shareholders by creating value through sustainable compounding growth.  The Group aims to achieve this through the delivery of its strategic framework of Focus, Drive and Broaden.

Redde Northgate services its customers through a network and diversified fleet of over 120,000 owned and leased vehicles, supporting over 600,000 managed vehicles, with more than 170 workshop, body shop and rental locations across the UK, Ireland and Spain and a specialist team of over 6,000 automotive services professionals.

Further information regarding Redde Northgate plc can be found on the Company's website:

www.reddenorthgate.com

 

GAAP reconciliation and glossary of terms

Throughout this document we refer to underlying results and measures; the underlying measures allow management and other stakeholders to better compare the performance of the Group between the current and prior period without the effects of one-off or non-operational items.  Underlying measures exclude intangible amortisation from acquisitions and certain one-off items such as those arising from restructuring activities. Specifically, we refer to disposal profit(s). This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs).

A reconciliation of GAAP to Non-GAAP underlying measures and a glossary of terms used in this document are outlined below the financial review.

 

 

OPERATING REVIEW

Group

The Group's performance in H1 has continued to strengthen as we further execute our strategy of Focus, Drive and Broaden and leverage our unique mobility solutions platform.

Focus, Drive and Broaden strategic progress

The expansion of the Group's products and services and the development of our unique mobility solutions platform has enabled the Group to secure significant new business wins in the period with lifetime contract revenues in excess of £200m.  Winning these contracts is a direct result of the Group's increased platform scale and full-service offering and will generate significant value from FY 2023 onwards.

Our Electric Vehicle ('EV') proposition has continued to strengthen with over 400 workshop technicians now fully trained on EVs.  As part of our commitment to electrify our fleet and our aim to be at the forefront of the transition to EV, we have signed a memorandum of understanding with an electric vehicle manufacturer for the supply of 5,000 electric LCVs over a four year period through to 2025 which supports our plans to drive positive changes within our customer base. This will be one of many developments as we broaden our relationships with existing and new vehicle manufacturers across our rental fleet of over 120,000 vehicles and is supported by our acquisition of Charged EV in July 2021 which installs a wide range of commercial and domestic electric charging points.

The Group has also continued to develop contract hire as a source of fleet funding across the UK business.  Total credit lines of £115m have been utilised as at 31 October 2021 (30 April 2021: £104m) funding 8,100 vehicles (30 April 2021: 5,500).

Trading

Revenue (excluding vehicle sales) was 21.9% higher than the prior year. Northgate UK&I and Northgate Spain revenue (excluding vehicle sales) was £170.8m (H1 2021: £147.0m) and £107.7m (H1 2021: £102.4m) respectively.  Redde revenue was £251.9m (H1 2021: £181.3m) reflecting the increasing volumes of accidents and incidents which have now reached approximately 90% of pre COVID-19 levels.

Total Group revenue, including vehicle sales, was 10.2% higher. Vehicle sales revenues were 29.2% lower reflecting the post lockdown sale of a large number of FY 2020 year end stock of vehicles in H1 last year and the reduced volumes available this year due to restrictions in new vehicle supply.

UK&I has continued its trajectory of improvement reflecting the permanent benefits of cost saving programmes, strong utilisation at 92% and tight controls over customer pricing whilst a constrained supply chain for new LCVs continues to operate.  UK&I rental margins improved to 17.6% in H1 (FY 2021: 12.7%).

Rental margins in Spain have improved to 17.1% (FY 2021: 15.0%) as a result of new customer growth, high utilisation, low repair costs due to fewer vehicle returns and low bad debts.

Total disposal profits of £27.0m in H1 were 47.6% higher than the prior year with the restriction in vehicle supply continuing to support high residual values.  These high residual values are more than offsetting the lower volumes of vehicles being disposed, which at 10,100 is 33.5% lower than the prior year (H1 2021: 15,100).

The supply of new vehicles continues to be restricted, however our strong relationships with vehicle suppliers along with bolt-on acquisitions ensures we have adequate supply to meet our expectations for growth.

Strategically, we have made significant progress leveraging the unique capabilities of our integrated mobility platform, supporting new and long-term relationships and have secured multi-year business wins with Tesco Underwriting and a significant expansion of new services with Admiral and another major insurer. These developments underpin future growth rates for the business and our ability to drive value from the Redde Northgate Merger strengthened by the addition of approximately 70 Nationwide bodyshops acquired in September 2020.

Underlying PBT of £78.9m (H1 2021: £40.6m) was ahead of Board expectations driven by continued strengthening margins, high utilisation, high disposal profits and a recovery of volumes in Redde.

Underlying EPS was 26.1p (H1 2021: 13.4p), 94.7% higher than prior year.  Statutory EPS was 22.5p (H1 2021: 8.6p).

Statutory EBIT of £80.1m and statutory PBT of £71.7m were 135.8% and 177.4% higher than prior year respectively.

Free cash outflow of £7.6m was lower than the prior year (H1 2021: £58.6m inflow) as capex was significantly reduced in the first half of 2021 whereas in the current period there has been significant growth in the fleet of 7.1% to meet rental demand.

Net debt closed at £587.2m including IFRS 16, or £470.4m excluding IFRS 16, resulting in headroom to bank facilities of £272.9m at the end of October prior to the refinancing.  Leverage was 1.5x, in line with FY 2021 year-end leverage of 1.5x.

In light of the strong trading performance in the period and the Board's confidence in the Group's outlook, the Board has declared an interim dividend of 6.0p (3.4p in prior period), to be paid on 14 January 2022 to shareholders on the register on 10 December 2021. This reflects 50% of the FY 2021 final dividend, which is in line with the Group's stated policy and demonstrates the Board's continued confidence in the Group's future prospects.  

ESG

During the course of 2021, we have continued to engage with our customers and other stakeholders with regard to the environmental, social and governance (ESG) areas that impact our business. As part of our ongoing commitment to sustainable operations, we are conducting a materiality assessment to provide further insight into stakeholder perceptions regarding these ESG-related risks and opportunities.

 

We have continued to strengthen our EV proposition bringing further EVs onto the fleet, installing EV charging capabilities and investing in solar panels in Spain.  We are also working towards developing a net zero strategy in line with the both the Government and international community's requirement for companies to achieve global climate change targets.

 

We very much look forward to updating stakeholders on our sustainability initiatives throughout 2022; detailing how we plan to mitigate our key risks as well as deliver on the identified opportunities. To support this programme, we will also be publishing our maiden Sustainability Report alongside our 2022 Full Year Results.

 

Divisional Commentary

Northgate UK&I

Six months ended 31 October

H1 2022

H1 2021

Change

KPI

('000)

('000)

%

Average VOH

50.2

45.2

10.9%

Closing VOH

50.9

47.4

7.5%

Average utilisation %

92%

90%

2ppt

Six months ended 31 October

H1 2022

H1 2021

Change

PROFIT & LOSS (Underlying)

£m

£m

%

Revenue - Vehicle hire

170.8

147.0

16.2%

Revenue - Vehicle sales

61.9

94.1

(34.3%)

Total Revenue

232.7

241.1

(3.5%)

Rental profit

30.0

15.1

98.5%

Rental Margin %

17.6%

10.3%

7.3ppt

Disposal profit

22.9

17.0

35.0%

EBIT

52.9

32.1

64.9%

EBIT Margin %[5]

22.7%

13.3%

9.4ppt

ROCE %

17.4%

8.8%

8.6ppt

 

Rental business

Hire revenue in the Northgate UK&I business increased 16.2% compared to the prior period to £170.8m (H1 2021: £147.0m), driven by average VOH which increased 10.9%, and the impact of customer support packages in the prior year which were £2.4m. Rate increases were applied in FY 2022 across our full range of rental products and continued to be well planned, communicated and executed.

Closing VOH increased 7.5% to 50,900 and was 3% above year-end FY 2021.

At the half year, Northgate UK&I's minimum term proposition accounted for around 36% (H1 2021: 33%) of average VOH. The average term of these contracts is approximately three years, providing both improved visibility of future rental revenue and earnings, as well as lower transactional costs.

The rental margin progression has continued, reaching 17.6% in the period compared to 10.3% in H1 2021.  The restricted vehicle supply has resulted in a tight control over rental pricing in the period. We remain confident that the underlying margin will remain at around 15%.

The net impact of the growth in hire revenue and higher rental margin was a 98.5% increase in rental profits to £30.0m (H1 2021: £15.1m).

Management of fleet and vehicle sales

The total Northgate UK&I period end rental fleet amounted to 55,900 vehicles, increased from 54,000 at year-end FY 2021. During the period 6,600 vehicles were acquired (H1 2021: 5,700 vehicles) and 4,700 vehicles were de-fleeted. The average age of the fleet at the end of the period was two months higher than at the end of FY 2021. This was partly due to the impact of the fleet optimisation policy and partly due to managing the fleet to mitigate impacts of the restricted market supply reducing purchases.

A total of 5,700 vehicles were sold in Northgate UK&I during the period, 39.9% lower than the prior period.  As expected, this reflects the fact that the prior year H1 period benefited from additional used vehicle stock due to the impact of the COVID-19 lockdown at the end of FY 2020 and the restricted market supply of new vehicles in the current period.

Disposal profits of £22.9m (H1 2021: £17.0m) increased 35% versus the prior period. The reduction in the number of vehicles sold was offset by the significant increases in sales values resulting in a 126% improvement in the average profit per unit (PPU) on disposals to £4,052 (H1 2021: £1,794) despite the continuing impact of the unwind of depreciation rate changes. Depreciation rates will remain under review as the longer term impact on residual values becomes clearer.

EBIT and ROCE

Underlying EBIT of £52.9m grew 64.9% over the prior period (H1 2021: £32.1m) driven by both higher rental and disposal profits as explained above.

The ROCE in Northgate UK&I was 17.4% (H1 2021: 8.8%) reflecting the increase in EBIT.

Capex and cash flow

Six months ended 31 October

H1 2022

H1 2021

Change

 

£m

£m

£m

Underlying EBITDA

93.7

75.4

18.3

Net Replacement Capex7

(33.6)

(25.9)

(7.7)

Lease principal payments[6]

(3.6)

(2.1)

(1.5)

Steady state cash generation

56.5

47.5

9.1

Growth Capex (incl. inorganic)7

(13.2)

28.4

(41.6)

 

Underlying EBITDA increased 24.2% to £93.7m (H1 2021: £75.4m).

Net replacement capex[7] in the period was £33.6m, £7.7m higher than the prior period as a result of a reduction in vehicle sales as explained above.

Steady state cash generation increased by £9.1m to £56.5m (H1 2021: £47.5m) reflecting the higher underlying EBITDA and the higher net replacement capex. Growth capex7 was £13.2m reflecting the growth in the owned fleet of 1,000 vehicles to meet rental demand.

 

Northgate Spain

Six months ended 31 October

H1 2022

H1 2021

Change

KPI

('000)

('000)

%

Average VOH

49.4

45.5

8.6%

Closing VOH

51.1

47.1

8.6%

Average utilisation %

93%

91%

2ppt

Six months ended 31 October

H1 2022

H1 2021

Change

PROFIT & LOSS (Underlying)

£m

£m

%

Revenue - Vehicle hire

107.7

102.4

5.1%

Revenue - Vehicle sales

28.1

32.9

(14.6%)

Total Revenue

135.8

135.3

0.3%

Rental profit

18.5

14.7

25.6%

Rental Margin %

17.1%

14.4%

2.7ppt

Disposal profit

4.1

1.3

214.3%

EBIT

22.6

16.0

41.0%

EBIT Margin %[8]

16.6%

11.8%

4.8ppt

ROCE %

8.7%

7.7%

1.0ppt

 

Rental business

Hire revenue in the Northgate Spain business increased 5.1% (11.5% in local currency) compared to the prior period to £107.7m (H1 2021: £102.4m), driven by average VOH which increased 8.6%.

Closing VOH increased 8.6% to 51,100 and was 9.2% above year-end FY 2021.

At the half year, Northgate Spain's minimum term proposition accounted for around 35% (H1 2021: 35%) of average VOH. The average term of these contracts is approximately three years, providing both improved visibility of future rental revenue and earnings.

The rental margin was 2.7ppt higher at 17.1% with no COVID-19 customer support costs in the period, higher utilisation, fewer repairs and fewer bad debts.  We expect the rental margin in the second half to be closer to 15% as we expect higher repairs due to seasonal returns.

The impact of the higher hire revenue and rental margin was a 25.6% increase in rental profits to £18.5m (H1 2021: £14.7m).

Management of fleet and vehicle sales

The total Northgate Spain period end rental fleet amounted to 55,900 vehicles increased from 51,800 at year-end FY 2021.  During the period 7,200 vehicles were purchased (H1 2021: 6,000) and 3,100 vehicles were de-fleeted. The average age of the fleet at the end of the period was two months higher than at the same time last year.  This was partly due to the impact of the fleet optimisation policy and partly due to managing the fleet to mitigate impacts of the restricted market supply reducing purchases.

A total of 4,400 vehicles were sold in Northgate Spain during the period, 22.8% lower than prior period. As expected, this reflects the fact that the prior year H1 period benefited from additional used vehicle stock due to the impact of COVID-19 lockdown at the end of FY 2020 and the restricted market supply of new vehicles in the current period.

Disposal profits of £4.1m (H1 2021: £1.3m) increased 214%. The reduction in the number of vehicles sold was offset by the significant increases in sales values resulting in a more than a fourfold improvement in the average profit per unit (PPU) on disposals to £924 (H1 2021: £227) despite the continuing impact of the unwind of depreciation rate changes. Depreciation rates will remain under review as the longer term impact on residual values becomes clearer.

EBIT and ROCE

Underlying EBIT of £22.6m increased 41.0% over the prior period (H1 2021: £16.0m) driven by both higher rental and disposal profits as explained above.

The ROCE in Northgate Spain was 8.7% (H1 2021: 7.7%) reflecting the increase in EBIT. 

Capex and cash flow

Six months ended 31 October

H1 2022

H1 2021

Change

 

£m

£m

£m

Underlying EBITDA

65.4

60.4

5.0

Net Replacement Capex10

(34.4)

(25.9)

(8.5)

Lease principal payments[9]

(1.3)

(1.4)

0.1

Steady state cash generation

29.7

33.1

(3.3)

Growth Capex (incl. inorganic)10

(33.5)

(3.3)

(30.2)

 

Underlying EBITDA increased £5.0m to £65.4m (H1 2021: £60.4m).

Net replacement capex[10] in the period was £34.4m, £8.5m higher than the prior period, as a result of the reduction in vehicle sales revenue as explained above.

Steady state cash generation decreased by £3.3m to £29.7m (H1 2021: £33.1m) reflecting higher EBITDA and higher net replacement capex in the period. Growth capex10 was £33.5m, relating to the fleet growth of 2,800 vehicles.

Redde

Six months ended 31 October

H1 2022

H1 2021

Change

PROFIT & LOSS (Underlying)

£m

£m

%

Revenue - Claims and Services

251.9

181.3

39.0%

Gross profit

60.5

25.9

134.0%

Gross margin %

24.0%

14.3%

9.8ppt

Operating profit

14.0

1.7

711.7%

Income from associates

2.1

2.4

(12.0%)

EBIT

16.1

4.1

290.1%

EBIT margin %[11]

6.4%

2.3%

4.1ppt

ROCE %[12]

11.6%

7.9%

3.7ppt

 

Revenue and profit

Revenue for the period increased 39.0% to £251.9m (H1 2021: £181.3m).  The main drivers of revenue, traffic volumes and thereby road traffic accidents, have been increasing since April 2021 and have now reached approximately 90% of pre-COVID-19 levels.

Gross margin of 24.0% has improved 9.8ppt (H1 2021: 14.3%) as volumes have increased and the utilisation of the fleet has improved to normal levels. 

EBIT for the period increased 290.1% to £16.1m (H1 2021: £4.1m).  Since the volumes have been increasing month on month the EBIT to date does not yet reflect a normalised level which would be substantially higher.  The prior period included an operating loss in FMG RS of £3.0m and in this period FMG RS contributed a small profit.

Management of fleet

The total fleet in Redde closed the period at 9,800 vehicles, from 6,500 at 30 April 2021 with the latter reflecting a lower fleet size due to the impact of COVID-19. 

The average fleet age was 10 months reflecting the lower fleet holding period than in the Northgate businesses due to the different usage of the vehicles and business economics.

The Redde fleet continues to operate through a hybrid solution of ownership, contract hire and, during peak periods, cross-hiring from daily rental companies. 

Capex and cash flow

Six months ended 31 October

H1 2022

H1 2021

Change

 

£m

£m

£m

Underlying EBITDA

27.9

11.7

16.3

Net replacement capex[13]

(0.1)

5.7

(4.7)

Lease principal payments[14]

(15.5)

(13.4)

(2.1)

Steady state cash generation

11.5

3.9

7.6

Growth capex13

(5.0)

0.0

(5.0)

Debtor days

176 days

144 days

32 days

 

Underlying EBITDA increased £16.3m to £27.9m (H1 2021: £11.7m) reflecting the recovery of traffic volumes.

Net replacement capex13 was a net outflow of £0.1m in the period (H1 2021: £5.7m inflow) with the prior year being affected by the disposal proceeds of vehicles funded by HP compared to the timing of lease principal payments.

Steady state cash generation increased £7.6m to £11.5m (H1 2021: £3.9m).

Growth capex13 increased to £5.0m (H1 2021: £nil) reflecting a change from hire purchase to ownership for a proportion of the fleet.

Debtor days were 176 days at the end of the period. This measure is based upon net trade receivables and contract assets, other receivables and accrued income as a proportion of the related underlying sales revenue for the past 12 months multiplied by 365 days.  Debtor days increased from 144 days at the end of H1 2021 due to the calculation using a trailing 12 months whilst revenues are growing and the continued disruption to claim collection from some insurers still operating with staff working from home.

 

 

FINANCIAL REVIEW

Group Revenue and EBIT

Six months ended 31 October

H1 2022

H1 2021

Change

Change

 

£m

£m

£m

%

Revenue - Vehicle hire

277.1

249.0

28.2

11.3%

Revenue - Vehicle sales

90.0

127.1

(37.1)

(29.2%)

Revenue - Claims and services

245.8

180.0

65.8

36.6%

Total revenue

612.9

556.0

56.9

10.2%

Rental profit

48.5

29.8

18.7

62.6%

Disposal profit

27.0

18.3

8.7

47.6%

Claims and services profit

14.0

1.7

12.2

711.7%

Corporate costs

(4.3)

(3.5)

(0.8)

21.5%

Underlying operating profit

85.2

46.3

38.9

83.9%

Income from associates

2.1

2.4

(0.3)

(12.0%)

Underlying EBIT

87.3

48.7

38.6

79.2%

Underlying EBIT margin

14.2%

8.8%

-

5.4ppt

Statutory EBIT

80.1

34.0

46.1

136%

 

·    Total Group revenue, including vehicle sales, of £612.9m was 10.2% higher than prior year (11.4% at constant exchange rates).  Hire revenues were 11.3% higher due to higher VOH across the Group. Vehicle sales revenues were 29.2% lower due to a 5,100 reduction in vehicle disposals from prior period but partially offset by stronger market pricing

·    Revenue (excluding vehicle sales) of £522.9m (H1 2021: £429.0m) was 21.9% higher (23.1% at constant exchange rates) reflecting increase in vehicle hire revenue and 36.6% increase in claims and services revenue driven by greater claims volumes

·    Underlying EBIT of £87.3m was 79.2% higher, reflecting the strong performance in the Northgate businesses and improved profits from the Redde business

·    Statutory EBIT of £80.1m was 136% higher, reflecting higher underlying EBIT offset by £9.9m of amortisation of acquisition intangibles and £2.4m of exceptional credits, and the gain on bargain purchase credit of £0.3m in relation to the acquisition of Nationwide in the prior year

 

 

Group PBT and EPS

Six months ended 31 October

H1 2022

H1 2021

Change

Change

 

£m

£m

£m

%

Underlying EBIT

87.3

48.7

38.6

79.2%

Net finance costs

(8.4)

(8.1)

(0.2)

3.0%

Underlying Profit before Tax

78.9

40.6

38.3

94.4%

Statutory Profit before Tax

71.7

25.9

45.9

177.4%

Underlying effective tax rate

18.7%

18.8%

-

(0.1ppt)

Underlying EPS

26.1p

13.4p

12.7p

94.7%

Statutory EPS

22.5p

8.6p

13.9p

162.2%

·    Underlying PBT was 94.4% higher, reflecting the higher EBIT as a result of the improved business performance and higher finance costs, which were 3.0% higher

·  Statutory PBT was 177.4% higher, reflecting the higher underlying PBT and £2.4m of exceptional credits compared to £5.4m of exceptional costs in the prior period

·    The underlying effective tax rate of 18.7% was 0.1ppt lower than prior year

·    Underlying EPS of 26.1p was 94.7% higher, reflecting the increased profits in the year

·   Statutory EPS of 22.5p was 162.2% higher, reflecting the movement in underlying EPS and the impact of higher exceptional costs in the prior year

 

Depreciation rate changes

Vehicle depreciation rates are regularly reviewed and changes are made if expectations of future residual values change. Residual values have increased in the period due to the impacts of COVID-19 market closure as well as the well-publicised new vehicle supply constraints increasing demand for our vehicle assets. This disruption is not anticipated to continue into the medium term and depreciation rates will remain under review as the longer term impact on residual values becomes clearer. The full year-on-year impact of previous depreciation rate changes in FY 2022 EBIT is expected to be a headwind of £4.0m in Spain and £1.4m in UK&I as previously outlined.

Dividend

The Board has declared an interim dividend of 6.0p per share (H1 2021: 3.4p) and will be paid on 14 January 2022 to shareholders on the register as at close of business on 10 December 2021.

 

Group cash flow

Steady state cash generation

Six months ended 31 October

H1 2022

H1 2021

Change

 

£m

£m

£m

Underlying EBIT

87.3

48.7

38.6

Depreciation and amortisation

95.5

95.3

0.2

Underlying EBITDA

182.8

144.0

38.8

Net replacement capex

(68.8)

(46.1)

(22.7)

Lease principal payments[15]

(20.4)

(16.9)

(3.5)

Steady state cash generation

93.5

81.0

12.6

 

·    Steady state cash generation remained strong at £93.5m (H1 2021: £81.0m), driven by strong underlying EBIT partially offset by increased net replacement capex

·    Underlying EBITDA was £38.8m higher driven by higher underlying EBIT as a result of stronger performance across the business

·    Net replacement capex was £22.7m higher mainly due to the timing of payments to OEMs

 

Free cash flow

Six months ended 31 October

H1 2022

H1 2021

Change

 

£m

£m

£m

Steady state cash generation

93.5

81.0

12.6

Exceptional costs (excluding non-cash items)

(0.6)

(1.1)

0.4

Working capital and non-cash items

(33.0)

(25.0)

(8.0)

Growth capex

(51.7)

25.1

(76.8)

Taxation

(9.9)

(5.6)

(4.3)

Net operating cash

(1.8)

74.4

(76.1)

Distributions from associates

2.1

2.6

(0.4)

Interest and other financing

(7.4)

(7.5)

0.1

Acquisition of business

(0.5)

(10.8)

10.3

Free cash flow

(7.6)

58.6

(66.1)

Dividends paid

(29.3)

(0.0)

(29.3)

Lease principal payments[16]

20.4

16.9

3.5

Net cash (consumed) generated

(16.5)

75.5

(92.0)

 

·    Free cash outflow of £7.6m decreased by £66.1m from H1 2021, driven primarily by growth capex of £51.7m compared to a contraction that resulted in an inflow of £25.1m in the prior period

·    Growth capex of £51.7m reflects a net increase in owned fleet over the period of 4,100 vehicles

·    If the impact of growth capex in the period is removed from free cash flow, the underlying free cash flow of the Group was £44.8m (H1 2021: £33.5m)

·    Dividends paid increased during H1 2022 by £29.3m, with no dividends being paid in the prior period as the final dividend for FY 2020 of £16.7m was paid in November 2020, later than the normal financial calendar

Net debt

Net debt reconciles as follows:

Six months ended 31 October

H1 2022

H1 2021

 

£m

£m

Opening net debt

530.3

575.9

Net cash consumed (generated)

16.5

(75.5)

Other non-cash items

50.7

16.4

Exchange differences

(10.3)

14.1

Closing net debt

587.2

530.9

Closing net debt was £56.9m higher than opening net debt, driven by net cash consumption of £16.5m. Other non-cash items consists primarily of £50.1m of new leases acquired and the overall foreign exchange impact on net debt was a £10.3m reduction.

Borrowing facilities

As at 31 October 2021 the Group had headroom on facilities of £273m, with £433m drawn (net of available cash balances) against total facilities of £706m as detailed below:

 

Facility

£m

Drawn

£m

Headroom

£m

Maturity

 

Borrowing

Cost

UK bank facilities

608

336

272

Nov-23

1.9%

Loan notes

85

85

-

Aug-22

2.4%

Other loans

13

12

1

Nov-21

2.5%

 

706

433

273

 

2.1%

The other loans consist of £11.7m of local borrowings in Spain which were renewed for a further year in November 2021 and £0.5m of preference shares.

In November 2021, the Group completed a refinancing, repaying the existing loan notes and replacing them with €375m of new loan notes with maturities spread across 6, 8 and 10 years.  The UK bank facilities were replaced with £475m of new facilities maturing in November 2025, resulting in an overall increase of £104m in committed facilities.  

The above drawn amounts reconcile to net debt as follows:

 

 

 

Drawn

£m

Borrowing facilities

 

433

Unamortised finance fees

 

(4)

Leases arising following adoption of IFRS 16

 

117

Leases arising under HP obligations

 

41

Net debt

 

587

 

There are three financial covenants under the Group's facilities as follows:

 

 Threshold

H1 2022

Headroom

H1 2021

Interest cover

3x

11.6x

£107m (EBIT)

5.6x

Loan to value

70%

43%

£298m (Net debt)

42%

Debt leverage

2.75x

1.5x

£146m (EBITDA)

1.6x

The covenant calculations have been prepared in accordance with the requirements of the facilities to which they relate.

Following the refinancing in November 2021, the debt leverage covenant improved to 3.0x, increasing headroom by a further £14m.  The other covenants remained unchanged.

Balance sheet

Net assets at 31 October 2021 were £932.7m (H1 2021: £882.1m), equivalent to net assets per share of 379p (H1 2021: 358p). Net tangible assets at 31 October 2021 were £656.8m (H1 2021: £585.9m), equivalent to a net tangible asset value of 267p per share (H1 2021: 238p per share).

Gearing at 31 October 2021 was 89.4% (H1 2021: 90.6%) and ROCE was 12.5% (H1 2021: 8.1%).

Foreign exchange risk

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

 

October 2021

£ : €

October 2020

£ : €

April 2021

£ : €

Average

1.17

1.11

1.12

Period end

1.18

1.11

1.15

Going concern

Having considered the Group's current trading, cash flow generation and debt maturity including severe but plausible stress testing scenarios (as updated for the refinancing in November 2021 and explained further in note 1 of the unaudited condensed financial statements), the Directors have concluded that it is appropriate to prepare the Group financial statements on a going concern basis.

Risks and uncertainties

The Board and the Group's management have clearly defined responsibility for identifying the major business risks facing the Group and for developing systems to mitigate and manage those risks.

The principal risks and uncertainties facing the Group at 30 April 2021 were set out in detail on pages 35 to 38 of the 2021 annual report, a copy of which is available at www.reddenorthgate.com, and were identified as:

·      economic environment

·      market risk

·      vehicle holding costs

·      the employee environment

·      legal and compliance

·      IT systems

·      recovery of contract assets

·      access to capital

These principal risks have not changed since the last annual report and continue to be those that could impact the Group during the second half of the current financial year.

 

Reconciliation of GAAP to non-GAAP measures

Throughout this report we refer to underlying results and measures. The underlying measures allow management and other stakeholders to better compare the performance of the Group between the current and prior period without the effects of one-off or non-operational items.

In particular we refer to disposals profit. This is a non-GAAP measure used to describe the adjustment in depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs). A reconciliation of GAAP to non-GAAP underlying measures is as follows:

 

Six months

to 31.10.21

£000

Six months

to 31.10.20

£000

Operating profit

77,687

31,310

Income from associates

2,111

2,400

Gain on bargain purchase

290

258

EBIT

80,088

33,968

Add back:

 

 

Exceptional operating expenses

(2,374)

5,364

Amortisation on acquired intangible assets

9,869

9,639

Gain on bargain purchase

(290)

(258)

Underlying EBIT

87,293

48,713

 

 

 

Profit before tax

71,730

25,853

Add back:

 

 

Exceptional operating expenses

(2,374)

5,364

Amortisation on acquired intangible assets

9,869

9,639

Gain on bargain purchase

(290)

(258)

Underlying profit before tax

78,935

40,598

 

 

 

Profit for the period

55,489

21,121

Add back:

 

 

Exceptional operating expenses

(2,374)

5,364

Amortisation on acquired intangible assets

9,869

9,639

Gain on bargain purchase

(290)

(258)

Tax on exceptional items, brand royalty charges and intangible amortisation

1,504

(2,883)

Underlying profit for the period

64,198

32,983

Weighted average number of Ordinary shares

246,091,423

246,091,423

Underlying basic earnings per share

26.1p

13.4p

 

 

 

 

 

 

Six months

to 31.10.21

£000

Six months

to 31.10.20

£000

Underlying EBIT

87,293

48,713

Add Back

 

 

Depreciation: vehicles for hire and vehicles for credit hire

83,879

86,378

Other depreciation

10,912

8,666

Loss (gain) on disposal of assets

241

(112)

Intangible amortisation included in underlying operating profit

447

349

Underlying EBITDA

182,772

143,994

Net replacement capex

(68,846)

(46,102)

Lease principal payments

(20,388)

(16,936)

Steady state cash generation

93,538

80,956

 

 

Northgate UK&I

6 months to 31.10.21

£000

Northgate

Spain

6 months to 31.10.21

£000

Group

Sub-total

6 months to 31.10.21

£000

 

 

 

 

Underlying operating profit

52,928

22,554

75,482

Exclude:

 

 

 

Adjustments to depreciation charge in relation to vehicles sold in the period

(22,917)

(4,087)

(27,004)

Rental profit

30,011

18,467

48,478

Divided by: Revenue: hire of vehicles*

170,840

107,683

278,523

Rental margin

17.6%

17.1%

17.4%

 

 

 

 

 

Northgate UK&I

6 months to 31.10.20

£000

Northgate

Spain

6 months to 31.10.20

£000

Group

Sub-total

6 months to 31.10.20

£000

 

 

 

 

Underlying operating profit

32,097

16,000

48,097

Exclude:

 

 

 

Adjustments to depreciation charge in relation to vehicles sold in the period

(16,978)

(1,301)

(18,279)

Rental profit

15,119

14,699

29,818

Divided by: Revenue: hire of vehicles*

146,977

102,426

249,403

Rental margin

10.3%

14.4%

12.0%

 

* Revenue: hire of vehicles including intersegment revenue.
 

 

Six months

Six months

 

to 31.10.21

To 31.10.20

 

(Unaudited)

(Unaudited)

 

£'000

£'000

Net replacement capex

68,846

46,102

Growth capex

51,731

(25,064)

Total net capex

120,577

21,038

Lease principal payments

20,388

16,936

Total net capex (including lease principal payments)

140,965

37,974

Purchase of vehicles for hire

188,787

137,859

Proceeds from disposal of vehicles for hire

(75,859)

(112,767)

Proceeds from disposal of vehicles for credit hire and other property, plant and equipment

(885)

(7,954)

Purchases of other property, plant and equipment

8,066

3,136

Purchases of intangible assets

468

764

Lease principal payments

20,388

16,936

Total net capex (including lease principal payments)

140,965

37,974

 

 

 

 

Glossary of terms

The following defined terms have been used throughout this document:

Term

Definition

Company

Redde Northgate plc

Contract hire

IFRS 16 (leases) relating to vehicles where the funder retains the residual value risk

Disposal profit(s)

This is a non-GAAP measure used to describe the adjustment in the depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs)

EBIT

Earnings before interest and taxation

EBITDA

Earnings before interest, taxation, depreciation and amortisation

EPS

Earnings per share. Underlying unless otherwise stated

ESG

Environmental, Social, and Corporate Governance

Facility headroom

Calculated as facilities of £706m less net borrowings of £433m. Net borrowings represent net debt of £587m excluding lease liabilities of £158m and unamortised arrangement fees of £4m and are stated after the deduction of £3m of net cash and overdraft balances which are available to offset against borrowings

FMG RS

FMG RS Limited the trading part of the Redde business that acquired Nationwide

Free cash flow

Net cash generated after principal lease payments (included this year, comparative updated) and before the payment of dividends

FY 2020

The year ended 30 April 2020

FY 2021

The year ended 30 April 2021

FY 2022

The year ending 30 April 2022

GAAP

Generally Accepted Accounting Practice: meaning compliance with IFRS

Gearing

Calculated as net debt divided by net tangible assets

Group

The Company and its subsidiaries

Growth capex

Growth capex represents the cash consumed in order to grow the total owned rental fleet or the cash generated if the fleet size is reduced in periods of contraction

H1/H2

Half year period: H1 being the first half and H2 being the second half of the financial year

HP (leases)

Leases recognised on the balance sheet that would previously have been classified as finance leases prior to the adoption of IFRS 16

IFRS

International Financial Reporting Standards

IFRS 16 (leases)

Leases recognised on the balance sheet that would previously have been classified as operating leases prior to the adoption of IFRS 16

LCV

Light commercial vehicle: the official term used within the UK and European Union for a commercial carrier vehicle with a gross vehicle weight of not more than 3.5 tonnes

Lease principal payments

Includes the total principal payment on leases including those recognised before and after adoption of IFRS 16

Merger

The acquisition by the Company of 100% of the share capital of Redde plc on 21 February 2020

Nationwide

Nationwide Accident Repair Services trade and assets acquired by the Group on 4 September 2020

Net replacement capex

Net capital expenditure other than that defined as growth capex and lease principal payments.

Net tangible assets

Net assets less goodwill and other intangible assets

OEM

Original Equipment Manufacturer: a reference to our vehicle suppliers

PBT

Profit before taxation. Underlying unless otherwise stated

PPU

Profit per unit/loss per unit - this is a non-GAAP measure used to describe disposal profit (as defined), divided by the number of vehicles sold

ROCE

Underlying return on capital employed: calculated as underlying EBIT (see non-GAAP reconciliation) divided by average capital employed excluding acquired goodwill and intangible assets

Steady state cash generation

Underlying EBITDA less net replacement capex and lease principal payments (included this year, comparative updated)

The Group

The Company and its subsidiaries

The Merger

The acquisition by the Company of 100% of the share capital of Redde plc on 21 February 2020

Underlying free cash flow

Free cash flow excluding growth capex

Utilisation

Calculated as the average number of vehicles on hire divided by average rentable fleet in any period

VOH

Vehicles on hire. Average unless otherwise stated

 

 

Condensed consolidated income statement 

 

 

for the six months ended 31 October 2021 

 

 

 

 

Six months

Six months

Six months

Six months

Year to

Year to

 

 

to 31.10.21

to 31.10.21

to 31.10.20

to 31.10.20

30.04.21

30.04.21

 

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)

 

 

Underlying

Statutory

Underlying

Statutory

Underlying

Statutory

 

Note

£000

£000

£000

£000

£000

£000

Revenue: hire of vehicles

2

277,145

277,145

248,971

248,971

515,566

515,566

Revenue: sale of vehicles

2

89,979

89,979

127,054

127,054

229,809

229,809

Revenue: claims and services

2

245,798

245,798

179,983

179,983

364,124

364,124

Total revenue

2

612,922

612,922

556,008

556,008

1,109,499

1,109,499

Cost of sales

 

(441,259)

(441,259)

(446,424)

(446,424)

(856,955)

(856,955)

Gross profit

 

171,663

171,663

109,584

109,584

252,544

252,544

Administrative expenses (excluding exceptional items and amortisation on acquired intangible assets)

 

(86,481)

(86,481)

(63,271)

(63,271)

(147,092)

(147,092)

Exceptional administrative expenses: impairment of property, plant and equipment

7,12

-

-

-

(4,341)

-

(4,341)

Exceptional administrative expenses: reversal of previous impairment of property, plant and equipment

7,12

-

2,999

-

-

-

1,304

Exceptional administrative expenses: other costs

12

-

(625)

-

(1,023)

-

(4,980)

Amortisation on acquired intangible assets

 

-

(9,869)

-

(9,639)

-

(19,513)

Total administrative expenses

 

(86,481)

(93,976)

(63,271)

(78,274)

(147,092)

(174,622)

Operating profit

2

85,182

77,687

46,313

31,310

105,452

77,922

Income from associates

2,8

2,111

2,111

2,400

2,400

4,364

4,364

Gain on bargain purchase

12,13

-

290

-

258

-

1,489

EBIT

 

87,293

80,088

48,713

33,968

109,816

83,775

Interest income

 

16

16

15

15

164

164

Finance costs

 

(8,374)

(8,374)

(8,130)

(8,130)

(16,760)

(16,760)

Profit before taxation

 

78,935

71,730

40,598

25,853

93,220

67,179

Taxation

3

(14,737)

(16,241)

(7,615)

(4,732)

(16,990)

(1,613)

Profit for the period

 

64,198

55,489

32,983

21,121

76,230

65,566

                 

Profit for the period is wholly attributable to owners of the Company. All results arise from continuing operations.

Underlying profit excludes exceptional items as set out in Note 12 as well as brand royalty charges, amortisation on acquired intangible assets and the taxation thereon and exceptional tax credits, in order to provide a better indication of the Group's underlying business performance.

Earnings per share

 

 

 

 

 

 

 

Basic

4

26.1p

22.5p

13.4p

8.6p

31.0p

26.6p

Diluted

4

25.5p

22.0p

13.2p

8.4p

30.5p

26.2p

 

 

Condensed consolidated statement of comprehensive income

 

 

 

 

for the six months ended 31 October 2021

 

 

 

 

 

 

Six months

Six months

Year to

 

 

to 31.10.21

to 31.10.20

30.04.21

 

 

(Unaudited)

(Unaudited)

 (Audited)

 

 

£000

£000

£000

Amounts attributable to owners of the Company

 

 

 

 

Profit attributable to owners

 

55,489

21,121

65,566

 

Other comprehensive (expense) income

Foreign exchange differences on retranslation of net assets of subsidiary undertakings

 

(13,134)

18,634

338

Foreign exchange differences on long term borrowings held as hedges

 

9,614

(13,432)

(2,019)

Foreign exchange difference on revaluation reserve

 

(31)

44

(1)

Net fair value gains on cash flow hedges

 

-

184

184

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

 

-

(35)

(35)

Total other comprehensive (expense) income for the period

 

(3,551)

5,395

(1,533)

Total comprehensive income for the period

 

51,938

26,516

64,033

 

All items will subsequently be reclassified to the consolidated income statement. Profit attributable to the owners of the Company includes amortisation of intangible assets.

 

 

Condensed consolidated balance sheet 

31 October 2021

 

 

 

31.10.21

31.10.20

30.04.21

 

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

Note

£000

£000

£000

Non-current assets

 

 

 

 

 

Goodwill

 

6

114,903

116,105

114,503

Other intangible assets

 

6

161,018

180,068

170,830

 

 

 

 

 

 

Property, plant and equipment: vehicles for hire

 

7

919,036

908,507

893,342

Property, plant and equipment: vehicles for credit hire

 

7

62,987

42,179

43,998

Other property, plant and equipment

 

7

162,835

135,682

146,580

Total property, plant and equipment

 

7

1,144,858

1,086,368

1,083,920

Deferred tax assets

 

 

9,824

10,350

4,826

Interest in associates

 

8

6,032

5,834

6,047

Total non-current assets

 

 

1,436,635

1,398,725

1,380,126

Current assets

 

 

 

 

 

Inventories

 

 

11,731

16,397

21,545

Receivables and contract assets

 

 

335,941

328,903

302,349

Cash and bank balances

 

9

34,817

62,592

11,169

Total current assets

 

 

382,489

407,892

335,063

Total assets

 

 

1,819,124

1,806,617

1,715,189

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

217,076

281,415

229,666

Provisions

 

10

-

49

-

Current tax liabilities

 

 

8,969

12,442

562

Lease liabilities

 

 

36,558

41,925

32,375

Short-term borrowings

 

 

127,665

41,537

12,159

Total current liabilities

 

 

390,268

377,368

274,762

Net current (liabilities) assets

 

 

(7,779)

30,524

60,301

Non-current liabilities

 

 

 

 

 

Provisions

 

10

-

296

-

Trade and other payables

 

 

3,849

-

3,848

Lease liabilities

 

 

121,143

62,292

96,093

Long term borrowings

 

 

336,675

447,777

400,885

Deferred tax liabilities

 

 

34,450

36,814

31,472

Total non-current liabilities

 

 

496,117

547,179

532,298

Total liabilities

 

 

886,385

924,547

807,060

NET ASSETS

 

 

932,739

882,070

908,129

Equity

 

 

 

 

 

Share capital

 

 

123,046

123,046

123,046

Share premium account

 

 

113,510

113,510

113,510

Own shares reserve

 

 

(6,145)

(2,519)

(6,460)

Translation reserve

 

 

(7,710)

2,693

(4,190)

Other reserves

 

 

330,445

330,521

330,476

Retained earnings

 

 

379,593

314,819

351,747

TOTAL EQUITY

 

 

932,739

882,070

908,129

 Total equity is wholly attributable to owners of the Company.
 

Condensed consolidated cash flow statement

  

for the six months ended 31 October 2021

 

 

 

 

 

 

Six months

Six months

Year to

 

 

to 31.10.21

to 31.10.20

30.04.21

 

 

(Unaudited)

(Unaudited)

as restated*

(Audited)

 

 Note

£000

£000

£000

Net cash generated from operations

11

18,776

79,718

137,878

Investing activities

 

 

 

 

Interest received

 

16

15

164

Distributions from associates

8

2,126

2,574

4,325

Acquisition of business (net of cash acquired)*

 

(518)

(10,823)

(10,823)

Proceeds from disposal of vehicles for credit hire and other

property, plant and equipment

885

7,954

35,919

Purchases of other property, plant and equipment*

(8,066)

(3,135)

(7,460)

Purchases of intangible assets*

 

(468)

(764)

(1,834)

Net cash (used in) generated from investing activities

 

(6,025)

(4,179)

20,291

Financing activities

 

 

 

 

Dividends paid

(29,295)

-

(24,928)

Receipt of bank loans and other borrowings

33,409

27,195

27,195

Repayment of bank loans and other borrowings

-

(74,371)

(109,712)

Debt issue costs

-

(34)

(520)

Principal element of lease payments under IFRS 16

(11,813)

(7,147)

(16,994)

Principal element of lease payments under HP obligations

(8,575)

(9,789)

(37,814)

Net receipts (payments) to acquire own shares for share schemes

 

57

-

(5,073)

Net cash (used in) generated from financing activities

(16,217)

(64,146)

(167,846)

Net (decrease) increase in cash and cash equivalents

 

(3,466)

11,393

(9,677)

Cash and cash equivalents at beginning of the period

 

6,821

16,780

16,780

Effect of foreign exchange movements

 

(31)

157

(282)

Cash and cash equivalents at the end of the period

 

3,324

28,330

6,821

Cash and cash equivalents consist of:

 

 

 

 

Cash and bank balances

9

34,817

62,592

11,169

Bank overdrafts

9

(31,493)

(34,262)

(4,348)

 

 

3,324

28,330

6,821

 

 

*In the condensed consolidated interim financial statements for the period ended 31 October 2020 purchases of other property, plant and equipment included £7,273,000 and purchases of intangible assets included £3,550,000 in relation to the acquisition of business and assets of Nationwide. The total amount of £10,823,000 has been restated and reclassified to acquisition of business (net of cash acquired) in order to align the treatment with the requirements of IFRS 3 "Business Combinations" consistent with the audited financial statements for the year ended 30 April 2021

 

 

 

Condensed consolidated statement of changes in equity

for the six months ended 31 October 2021

 

 

Share capital and share premium

 

 

Own shares

Hedging reserve

Translation reserve

Other reserves

Retained earnings

Total

 

£000

£000

£000

£000

£000

£000

£000

Total equity at 1 May 2020

236,556

(3,090)

(149)

(2,509)

330,477

310,282

871,567

Share options fair value charge

-

-

-

-

-

689

689

Share options exercised

-

-

-

-

-

(571)

(571)

Dividends paid

-

-

-

-

-

(16,702)

(16,702)

Transfer of shares on vesting of share options

-

571

-

-

-

-

571

Total comprehensive income (expense)

-

-

149

5,202

44

21,121

26,516

Total equity at 1 November 2020

236,556

(2,519)

-

2,693

330,521

314,819

882,070

Share options fair value charge

-

-

-

-

-

1,829

1,829

Share options exercised

-

-

-

-

-

(1,132)

(1,132)

Dividends paid

-

-

-

-

-

(8,226)

(8,226)

Net purchases of shares

-

(5,073)

-

-

-

-

(5,073)

Transfer of shares on vesting of share options

-

1,132

-

-

-

-

1,132

Deferred tax on share based payments recognised in equity

-

-

-

-

-

12

12

Total comprehensive income (expense)

-

-

-

(6,883)

(45)

44,445

37,517

Total equity at 1 May 2021

236,556

(6,460)

-

(4,190)

330,476

351,747

908,129

Share options fair value charge

-

-

-

-

-

1,910

1,910

Share options exercised

-

258

-

-

-

(258)

-

Dividends paid

-

-

-

-

-

(29,295)

(29,295)

Net receipts (purchases) of shares

-

57

-

-

-

-

57

Total comprehensive income (expense)

-

-

-

(3,520)

(31)

55,489

51,938

Total equity at 31 October 2021

236,556

(6,145)

-

(7,710)

330,445

379,593

932,739

 

 

 

 

 

 

 

 

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

 

 

 

Unaudited notes

 

 

 

 

 

 

 

 

 

 

1. Basis of preparation and accounting policies

 

 

 

 

 

 

 

 

 

Redde Northgate plc is a company incorporated in England and Wales under the Companies Act 2006.

The condensed consolidated interim financial report for the half-year reporting period ended 31 October 2021 has been prepared in accordance with UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 April 2021 and any public announcements made by the Group during the interim reporting period.

The accounting policies adopted are consistent with those of the previous financial year, except for the estimation of income tax (see note 3). 

The condensed financial statements are unaudited and were approved by the Board of Directors on 1 December 2021. The condensed financial statements have been reviewed by the auditors and the independent review report is set out in this document.

The interim financial information for the six months ended 31 October 2021, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts. There are no new accounting standards have been adopted in the period.

In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 30 April 2021.Depreciation charges reflect adjustments made as a result of differences between expected and actual residual values of used vehicles, taking into account the further directly attributable costs to sell the vehicles.

The Directors apply judgement in determining the appropriate method of depreciation (straight line) and are required to estimate the future residual value of vehicles with due consideration of variables including age, mileage and condition.

Residual values have increased in the period due to the impacts of COVID-19 market closure as well as the well-publicised new vehicle supply constraints increasing demand for our vehicle assets. This disruption is not anticipated to continue into the medium term but has increased the level of judgement in this area as it is more difficult to estimate the future residual value of vehicles at the point they are expected to be sold. Depreciation rates will remain under review as the longer term impact on residual values becomes clearer.

The expected adjustment for settlement of claims due from insurance companies and self-insuring organisations remains a critical area of accounting judgement and estimation uncertainty. The approach taken in the period remains consistent with that outlined in the accounting policies for the year ended 30 April 2021. The carrying value of contract assets for claims from insurance companies at 31 October 2021 was £170,001,000 (30 April 2021 £144,738,000). A 4% difference between the carrying amount of claims in the balance sheet and the amounts finally settled would lead to a £6.8m charge or credit to the income statement in subsequent periods. 

Going concern assumption

The Directors have taken into account the following matters in concluding whether or not it is appropriate to prepare the interim financial statements on a going concern basis:

Assessment of prospects

The successful integration of the group following the Merger and the acquisition of Nationwide in the prior year has allowed the Group to further increase its service offering, rationalise the cost based and provide a platform for future growth.

The Group is well established within the markets it operates and has demonstrated resilience through the COVID-19 period as explained further below and also throughout previous economic cycles.

The Group's prospects are assessed through its strategic planning process. This process includes an annual review of the ongoing strategic plan, led by the CEO, together with the involvement of business functions in all territories. The Board engages closely with executive management throughout this process and challenges delivery of the strategic plan during regular Board meetings. Part of the Board's role is to challenge the plan to ensure it is robust and makes due consideration of the appropriate external environment.

 

Assessment of going concern

The strategy and associated principal risks underpin the Group's three year strategic plan ("Plan"), which is updated annually. This process considers the current and prospective macro-economic conditions in the countries in which we operate and the competitive tension that exists within the markets that we trade in.

The Plan also encompasses the projected cash flows, dividend cover assuming operation of stated policy and headroom against borrowing facilities and financial covenants under the Group's facilities (as updated in November 2021) and the reasonable expectation of similar facilities being replaced if required throughout the planned period. The Plan makes certain assumptions about the normal level of capital recycling likely to occur and therefore considers whether additional financing will be required. Headroom against the Group's existing banking facilities at 31 October 2021 was £273m. This compares to headroom of £305m at 30 April 2021. Following a refinancing in November 2021, a further £104m of headroom was provided through those new facilities. At the date of signing these unaudited financial statements, all of the Group's principal borrowing facilities have maturity dates outside of the period under review, therefore the Group's facilities provide sufficient headroom to fund the capital expenditure and working capital requirements for at least 12 months following the date of this report.

The Plan takes into account the impact of COVID-19 experienced to date and the expected impact on subsequent trading. The Plan was separately stress tested for a slower post COVID-19 recovery in insurance claims volumes than expected, a reduction in vehicles on hire and a larger reduction in residual values and a further slowdown in the collection of historical insurance claims. After taking into account the above variables, sufficient headroom remained against available debt facilities and the covenants attached to those facilities.

In addition to the above scenario, the Directors have further considered the resilience of the Group, considering its current position and the principal risks facing the business. The Plan was stress tested for severe but plausible scenarios over the planned period as follows:

·      No further growth in vehicles on hire with rental customers;

·      No further increase in pricing of rental hire rates;

·      A 1% increase in the incidence of bad debts as a percentage of hire revenue;

·      Reduction in the residual value of used vehicles to pre-COVID levels;

·      A 25% volume reduction in insurance claims and services revenue in aggregate, either through lower demand or through ending the commercial relationship with a group of key insurance partners without rationalising the indirect cost base; and

·      A slow down in the time taken to settle outstanding claims with insurers.

The above scenarios, took into account the effectiveness of mitigating actions that would be reasonably taken, such as reducing variable costs that are directly related to revenue, but did not take into account further management actions that would likely be taken, such as a change to the indirect cost base of the Group or a reduction in capital expenditure and ageing out of the vehicle fleet, both of which would generate cash and reduce debt.

After taking into account the above sensitivities and plausible mitigating actions sufficient headroom remained against available debt facilities and the covenants attached to those the Directors have a reasonable expectation that the Group will continue to meet its obligations as they fall due for at least 12 months from the date of this report.

Information extracted from 2021 annual report

The financial figures for the year ended 30 April 2021, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year.

The statutory accounts for the year ended 30 April 2021 were prepared with International Financial Reporting Standards (IFRS), Interpretations Committee (IFRS-IC) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS and were delivered to the Registrar of Companies on 27 September 2021. The audit report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.

 

 

 

2. Segmental analysis

Management has determined the operating segments based upon the information provided to the Board of Directors, which is considered to be the chief operating decision maker. The Group is managed, and reports internally, on a basis consistent with its three main operating divisions, Northgate UK&I, Northgate Spain and Redde. The principal activities of these divisions are set out in the Chief Executive review.

 

 

Northgate

UK&I

Six months to 31.10.21 (Unaudited)

£000

Northgate

Spain

Six months to 31.10.21 (Unaudited)

£000

Redde

Six months to 31.10.21 (Unaudited)

£000

Corporate

Six months to 31.10.21 (Unaudited)

£000

Group eliminations

Six months to 31.10.21 (Unaudited)

£000

 Group

 total

Six months 

to 31.10.21 (Unaudited)

£000

Revenue: hire of vehicles

169,462

107,683

-

-

-

277,145

Revenue: sale of vehicles

61,867

28,112

-

-

-

89,979

Revenue: claims and services

-

-

245,798

-

-

245,798

External revenue

231,329

135,795

245,798

-

-

612,922

Intersegment revenue

1,378

-

6,133

-

(7,511)

-

Total revenue

232,707

135,795

251,931

-

(7,511)

612,922

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

At a point in time

61,867

28,112

90,528

-

-

180,507

Over time

169,462

107,683

155,270

-

-

432,415

External revenue

231,329

135,795

245,798

-

-

612,922

Underlying operating profit (loss)

52,928

22,554

13,957

(4,257)

-

85,182

Income from associates

-

-

2,111

-

-

2,111

Underlying EBIT*

52,928

22,554

16,068

(4,257)

-

87,293

Exceptional items (Note 12)

 

 

 

 

 

2,374

Amortisation on acquired intangible assets

 

 

 

 

 

(9,869)

Gain on bargain purchase (Note 13)

 

 

 

 

 

290

EBIT

 

 

 

 

 

80,088

Interest income

 

 

 

 

 

16

Finance costs

 

 

 

 

 

(8,374)

Profit before taxation

 

 

 

 

 

71,730

               

 

* Underlying EBIT stated before amortisation on acquired intangible assets and exceptional items is the measure used by the Board of Directors to assess segment performance.

 

 

 

Northgate

UK&I

Six months to 31.10.20 (Unaudited)

£000

Northgate

Spain

Six months to 31.10.20 (Unaudited)

£000

Redde

Six months to 31.10.20 (Unaudited)

£000

Corporate

Six months to 31.10.20 (Unaudited)

£000

Group eliminations

Six months to 31.10.20 (Unaudited)

£000

 Group

 total

Six months

to 31.10.20 (Unaudited)

£000

Revenue: hire of vehicles

146,545

102,426

-

-

-

248,971

Revenue: sale of vehicles

94,134

32,920

-

-

-

127,054

Revenue: claims and services

-

-

179,983

-

-

179,983

External revenue

240,679

135,346

179,983

-

-

556,008

Intersegment revenue

432

-

1,297

-

(1,729)

-

Total revenue

241,111

135,346

181,280

-

(1,729)

556,008

 

 

 

 

 

 

 

Timing of revenue recognition:

 

 

 

 

 

 

At a point in time

94,134

32,920

49,997

-

-

177,051

Over time

146,545

102,426

129,986

-

-

378,957

External revenue

240,679

135,346

179,983

-

-

556,008

Underlying operating profit (loss)

32,097

16,000

1,719

(3,503)

-

46,313

Income from associates

-

-

2,400

-

-

2,400

Underlying EBIT*

32,097

16,000

4,119

(3,503)

-

48,713

Exceptional items (Note 12)

 

 

 

 

 

(5,364)

Amortisation on acquired intangible assets

 

 

 

 

 

(9,639)

Gain on bargain purchase (Note 13)

 

 

 

 

 

258

EBIT

 

 

 

 

 

33,968

Interest income

 

 

 

 

 

15

Finance costs

 

 

 

 

 

(8,130)

Profit before taxation

 

 

 

 

 

25,853

               

 

 

 

 

 

Northgate

UK&I

Year to 30.04.21

(Audited)

£000

Northgate

Spain

Year to 30.04.21

(Audited)

£000

Redde

Year to 30.04.21

(Audited)

£000

Corporate

Year to 30.04.21

(Audited)

£000

Group eliminations

Year to 30.04.21

(Audited)

£000

Group

total

Year to 30.04.21

(Audited)

£000

Revenue: hire of vehicles

310,066

205,500

-

-

-

515,566

Revenue: sale of vehicles

161,417

68,392

-

-

-

229,809

Revenue: claims and services

-

-

364,124

-

-

364,124

External revenue

471,483

273,892

364,124

-

-

1,109,499

Intersegment revenue

1,530

-

7,604

-

(9,134)

-

Total revenue

473,013

273,892

371,728

-

(9,134)

1,109,499

Timing of revenue recognition:

 

 

 

 

 

 

At a point in time

161,417

68,392

140,266

-

-

370,075

Over time

310,066

205,500

223,858

-

-

739,424

External revenue

471,483

273,892

364,124

-

-

1,109,499

Underlying operating profit (loss)

76,800

33,700

3,358

(8,406)

-

105,452

Income from associates

-

-

4,364

-

-

4,364

Underlying EBIT*

76,800

33,700

7,722

(8,406)

-

109,816

Exceptional items (Note 12)

 

 

 

 

 

(8,017)

Amortisation on acquired intangible assets

 

 

 

 

 

(19,513)

Gain on bargain purchase (Note 13)

 

 

 

 

 

1,489

EBIT

 

 

 

 

 

83,775

Interest income

 

 

 

 

 

164

Finance costs

 

 

 

 

 

(16,760)

Profit before taxation

 

 

 

 

 

67,179

 

3. Taxation

The charge for taxation for the six months to 31 October 2021 is based on the estimated effective rate for the year ending 30 April 2022 of 22.6% (31 October 2020 - 18.3% and 30 April 2021 - 2.4%). The April 2021 full year tax rate was impacted by tax credits of £10,008,000 in relation to the release of uncertain tax provisions.

 

 

 

 

4. Earnings per share

 

 

 

 

 

 

 

 

Six months

Six months

Six months

Six months

Year to

Year to

 

to 31.10.21

to 31.10.21

to 31.10.20

to 31.10.20

30.04.21

30.04.21

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)

 

Underlying

Statutory

Underlying

Statutory

Underlying

Statutory

Basic and diluted earnings per share

 £000

 £000

 £000

 £000

 £000

 £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 profit attributable to owners of the Company

64,198

55,489

32,983

21,121

76,230

65,566

Number of shares

 

 

 

 

 

 

Weighted average number of Ordinary shares for the purpose of basic earnings per share

246,091,423

246,091,423

246,091,423

246,091,423

246,091,423

246,091,423

Effect of dilutive potential Ordinary shares - share options

5,574,749

5,574,749

3,998,211

3,998,211

4,081,514

4,081,514

Weighted average number of Ordinary shares for the purpose of diluted earnings per share

251,666,172

251,666,172

250,089,634

250,089,634

250,172,937

250,172,937

Basic earnings per share

26.1p

22.5p

13.4p

8.6p

31.0p

26.6p

Diluted earnings per share

25.5p

22.0p

13.2p

8.4p

30.5p

26.2p

 

5. Dividends

In the six months to 31 October 2021, a dividend of £29,295,000 was paid (2020 - £nil) representing the final dividend for the year ended 30 April 2021. The Directors have declared a dividend of 6.0p per share for the six months ended 31 October 2021 (2020 - 3.4p).

The final dividend of 12.0p in relation to the year ended 31 April 2021 was paid in September 2021. Trade and other payables at 31 October 2020 included £16,702,000 in relation to the final dividend of 6.8p for the year ended 30 April 2020 that was approved in October 2020 and paid in November 2020.

 

 

6. Intangible assets

Net book value

Goodwill

Customer
relationships

 

Brand
names

Other

software

Total

 

 

 

£000

£000

£000

£000

£000

At 1 May 2020

116,105

166,716

12,646

6,348

301,815

Asset acquisition

-

1,000

450

2,100

3,550

Additions

-

-

-

764

764

Disposals

-

-

-

(31)

(31)

Amortisation

-

(8,662)

(445)

(881)

(9,988)

Exchange differences

-

-

-

63

63

At 1 November 2020

116,105

159,054

12,651

8,363

296,173

Additions

-

-

-

1,070

1,070

Amortisation

-

(8,708)

(495)

(1,007)

(10,210)

Remeasurement of provisional fair value of assets acquired

(1,602)

-

-

-

(1,602)

Exchange differences

-

-

-

(98)

(98)

At 1 May 2021

114,503

150,346

12,156

8,328

285,333

Asset acquisition

400

50

100

-

550

Additions

-

-

-

510

510

Disposals

-

-

-

(75)

(75)

Amortisation

-

(8,701)

(537)

(1,078)

(10,316)

Exchange differences

-

-

-

(81)

(81)

At 31 October 2021

114,903

141,695

11,719

7,604

275,921

 

At 31 October 2021

 

 

 

 

 

Cost or fair value

 

 

 

 

323,247

Accumulated amortisation and impairment

 

 

 

 

(47,326)

Net book value

 

 

 

 

275,921

 

Amortisation was included within the income statement as follows:

 

31.10.21

31.10.20

30.04.21

 

(Unaudited)

(Unaudited)

(Audited)

 

£000

£000

£000

Included within underlying operating profit as administrative expenses

447

349

685

Excluded from underlying operating profit*

9,869

9,639

19,513

 

10,316

9,988

20,198

* Amortisation of intangible assets excluded from underlying operating profit relates to intangible assets recognised on business combinations.

 

 

7. Property, plant and equipment

Net book value

Vehicles for hire

 

 

Vehicles for credit hire

 

Other property, plant & equipment

 

Total

 

 

 

 

£000

£000

£000

£000

At 1 May 2020

884,711

51,040

126,009

1,061,760

Acquisition

-

-

8,618

8,618

Additions

167,895

4,006

13,106

185,007

Disposals

(79,627)

(7,419)

(1,232)

(88,278)

Transfers

152

-

(152)

-

Depreciation

(80,930)

(5,448)

(8,666)

(95,044)

Impairment (Note 12)

-

-

(4,341)

(4,341)

Exchange differences

16,306

-

2,340

18,646

At 1 November 2020

908,507

42,179

135,682

1,086,368

Acquisition

-

-

1,327

1,327

Additions

161,482

34,977

24,372

220,831

Disposals

(79,872)

(26,708)

(3,960)

(110,540)

Transfers

13

-

(13)

-

Depreciation

(80,317)

(6,450)

(9,798)

(96,565)

Impairment reversal (Note 12)

-

-

1,304

1,304

Exchange differences

(16,471)

-

(2,334)

(18,805)

At 1 May 2021

893,342

43,998

146,580

1,083,920

Acquisition

-

-

3

3

Additions

181,386

27,787

28,948

238,121

Disposals

(66,674)

(1,849)

(3,171)

(71,694)

Transfers

2

-

(2)

-

Depreciation

(76,930)

(6,949)

(10,912)

(94,791)

Impairment reversal (Note 12)

-

-

2,999

2,999

Exchange differences

(12,090)

-

(1,610)

(13,700)

At 31 October 2021

919,036

62,987

162,835

1,144,858

 

At 31 October 2021

 

 

 

 

Cost or fair value

 

 

 

1,712,539

Accumulated depreciation

 

 

 

(567,681)

Net book value

 

 

 

1,144,858

               

Included within property, plant and equipment above, are right of use assets under HP and IFRS16 with net book value of £153,287,000 (30 April 2021: £122,376,000).

 

8. Interest in associates

 


£000

At 1 May 2020

6,008

Group's share of:

 

Profit from continuing operations

2,400

Distributions from associates

(2,574)

At 1 November 2020

5,834

Group's share of:

 

Profit from continuing operations

1,964

Distributions from associates

(1,751)

At 1 May 2021

6,047

Group's share of:

 

Profit from continuing operations

2,111

Distributions from associates

(2,126)

At 31 October 2021

6,032

 

9. Analysis of consolidated net debt

 

(Unaudited)

(Unaudited)

(Audited)

 

to 31.10.21

to 31.10.20

to 30.04.21

 

£000

£000

£000

Cash and bank balances

(34,817)

(62,592)

(11,169)

Bank overdrafts

31,493

34,262

4,348

Bank loans

347,759

364,173

320,991

Loan notes

84,490

90,143

86,817

Leases arising following adoption of IFRS 16

116,793

69,927

92,469

Leases arising under HP obligations

40,908

34,290

35,999

Cumulative preference shares

500

500

500

Confirming facilities

98

236

388

Consolidated net debt

587,224

530,939

530,343

 

10. Provisions

 

Onerous

contracts
£000

At 1 May 2020

4,577

Provisions made

-

Provisions utilised

(4,232)

At 1 November 2020

345

Provisions made

-

Provisions utilised

(345)

At 1 May 2021

-

Provisions made

-

Provisions utilised

-

At 31 October 2021

-

 

11. Notes to the cash flow statement

 

Six months

Six months

Year to

 

to 31.10.21

to 31.10.20

30.04.21

 

(Unaudited)

(Unaudited)

(Audited)

Net cash generated from operations

£000

£000

£000

Operating profit

77,687

31,310

77,922

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

94,791

95,044

191,609

Net impairment of property, plant and equipment

(2,999)

4,341

3,037

Amortisation of intangible assets

10,316

9,988

20,198

Loss (gain) on disposal of vehicles for credit hire and other property, plant and equipment

241

(143)

195

Loss on disposal of intangible assets

-

31

31

Share options fair value charge

1,910

689

2,518

Operating cash flows before movements in working capital

181,946

141,260

295,510

(Increase) decrease in non-vehicle inventories

(463)

157

(1,407)

(Increase) decrease in receivables

(26,469)

(28,739)

(69)

(5,914)

9,491

(9,011)

Decrease in provisions

-

(4,233)

(4,577)

Cash generated from operations

149,100

117,936

280,446

Income taxes paid, net

(9,893)

(5,606)

(12,678)

Interest paid

(7,503)

(7,520)

(14,945)

Net cash generated from operations before purchases of and proceeds from disposal of vehicles for hire

131,704

104,810

252,823

Purchases of vehicles for hire

(188,787)

(137,859)

(303,537)

Proceeds from disposal of vehicles for hire

75,859

112,767

188,592

Net cash generated from operations

18,776

79,718

137,878

 

 

12. Exceptional items

During the period the Group recognised exceptional items in the income statement as follows:

 

Six months to 31.10.21

Six months to 31.10.20

Year to

 30.04.21

 

(Unaudited)

(Unaudited)

(Audited)

 

£000

£000

£000

Impairment of property, plant and equipment

-

4,341

4,341

Reversal of previous impairment of property, plant and equipment

(2,999)

-

(1,304)

Other costs

625

1,023

4,980

Exceptional administrative expenses

(2,374)

5,364

8,017

 

 

 

 

Restructuring (credit) costs

(3,099)

2,754

2,754

Acquisition expenses

-

710

1,088

FMG RS set up and integration costs

725

1,900

5,728

Legal settlement

-

-

(1,553)

Exceptional administrative expenses

(2,374)

5,364

8,017

Gain on bargain purchase (Note 13)

(290)

(258)

(1,489)

Total pre-tax exceptional items

(2,664)

5,106

6,528

Tax charge (credit) on exceptional items

506

(1,179)

(1,286)

Restructuring costs

The Group incurred total exceptional restructuring credits of £3,099,000 of which £2,835,000 arose in Redde and, £264,000 arose in Northgate UK&I. These costs were incurred in relation to restructuring activities that were undertaken during the period as part of the integration and reorganisation of the Combined Group. These credits include £2,999,000 reversal of previous property impairment (Note 7) in relation to underutilised property being successfully sublet by the Group, and £100,000 of other restructuring credits.

FMG RS set up and integration costs

The Group incurred costs of £725,000 in relation to the set up of FMG RS and integration of the business.

13. Business combinations

Current period

On 30 June 2021 the Group acquired the equity instruments of Charged Electric Vehicles Limited for a consideration of £553,000. A provisional purchase price allocation exercise has been undertaken in accordance with IFRS 3 'Business Combinations', which has identified net assets acquired of £153,000, resulting in goodwill of £400,000 being recognised in the balance sheet. The acquisition has been included within the Northgate UK&I segment.

Prior period

On 4 September 2020 the Group acquired certain businesses and assets of Nationwide Accident Repair Services ("Nationwide") by way of a purchase from administrators. A provisional purchase price allocation exercise was undertaken in accordance with IFRS 3 'Business Combinations'. Details of this business combination were disclosed in note 4 of the Group's annual financial statements for the year ended 30 April 2021. The provisional purchase price allocation resulted in a gain on bargain purchase of £258,000 as at 31 October 2020 and a final gain on bargain purchase of £1,489,000 for the full year ended 30 April 2021.

The contingent consideration arrangement required the Group to pay the former owners of Nationwide up to £5m dependant on volumes of repair cases with a former customer of Nationwide, in the year from date of acquisition. The fair value of the contingent consideration recognised was £290,000 at the date of the acquisition. As the required volumes were not met the contingent consideration has been released to the income statement in the period ended 31 October 2021.

14. Related party transactions

Related party transactions of the Group are consistent with those disclosed in note 34 of the Group's annual financial statements for the year ended 30 April 2021. No new related party transactions have been entered into during the period.

 

 

Interim announcement - Statement of the Directors

We confirm that to the best of our knowledge:

·      the condensed set of financial statements has been prepared in accordance with the UK-adopted International Accounting Standard 34;

·      the interim management report includes a fair review of the information required by DTR 4.2.7 (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

·      the interim management report includes a fair review of the information required by DTR 4.2.8 (disclosure of related party transactions and changes therein).

By order of the Board

                                                                                                               

 

Philip Vincent

Chief Financial Officer

1 December 2021

 

 

 

Independent review report of Redde Northgate plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Redde Northgate PLC's condensed consolidated interim financial statements (the "interim financial statements") in the Interim results of Redde Northgate PLC for the 6 month period ended 31 October 2021 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

·    the condensed consolidated balance sheet as at 31 October 2021;

·   the condensed consolidated income statement and condensed consolidated statement of comprehensive income for the period then ended;

·    the condensed consolidated cash flow statement for the period then ended;

·    the condensed consolidated statement of changes in equity for the period then ended; and

·    the explanatory notes to the interim financial statements.

 

The interim financial statements included in the Interim results of Redde Northgate PLC have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Interim results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Interim results based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 

 

We have read the other information contained in the Interim results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements. 

PricewaterhouseCoopers LLP

Chartered Accountants

Newcastle upon Tyne

 

1 December 2021


[1] Refer to GAAP reconciliation and Glossary of terms note. Underlying excludes exceptional items and amortisation on acquired intangible assets. 

[2] Net debt includes £116.8m (H1 2021: £69.9m) of IFRS 16 liabilities and is higher than H1 2021 due to the leases taken on following the acquisition of certain business and assets of Nationwide in September 2020.

[3] Excluding IFRS 16 (leases) as defined in the Glossary

[4] Current analyst consensus for FY 2022 of underlying PBT is £119.4m. Further details on analyst consensus can be found on our website at www.reddenorthgate.com.                

[5] Calculated as underlying EBIT divided by total revenue

[6] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[7] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction.

[8] Calculated as underlying EBIT divided by total revenue.

[9] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[10] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the fleet or the cash generated if the fleet size is reduced in periods of contraction.

[11] Calculated as underlying EBIT divided by total revenue.

[12] Redde's H1 2021 ROCE calculated using a 12 month pro rata of the eight months of EBIT since acquisition, divided by the average of the acquired opening and period end closing capital employed excluding goodwill and acquired intangibles.

[13] Net replacement capex is total capex less growth capex. Growth capex represents the cash consumed in order to grow the owned fleet or the cash generated if the fleet size is reduced in periods of contraction.

[14] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[15] Lease principal payments are included so that steady state cash generation includes all maintenance capex irrespective of funding method.

[16] Lease principal payments are added back to reflect the movement on net debt.

 

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