Earnings Release • Dec 1, 2015
Earnings Release
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RNS Number : 4711H
Northgate PLC
01 December 2015
1 December 2015
NORTHGATE PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2015
Overall trading in line with expectations and increase in dividend
Northgate plc ("Northgate", the "Company" or the "Group"), the UK and Spain's leading specialist in light commercial vehicle hire, announces its interim results for the half year ended 31 October 2015.
Financial Highlights
· Underlying profit before tax(1) £45.9m (2014 - £47.8m):
o £2.4m adverse impact from the change in vehicle depreciation rates;
o £1.9m adverse effect of the weakening Euro;
· Profit before tax £42.8m (2014 - £46.7m);
· Underlying basic earnings per share(2) 27.1p (2014 - 28.6p);
· Basic earnings per share 25.4p (2014 - 27.9p);
· Increase in interim dividend to 5.1p per share (2014 - 4.3p);
· Net debt £338.7m (April 2015 - £337.8m);
· Return on capital employed(3) 12.0% (April 2015 - 13.0%);
· Successful refinancing of debt facilities completed during the period.
Operational Highlights
The Group continues to target growth with small and medium sized enterprises (SMEs). Our focus on delivering attractive returns to shareholders has increased our efforts on this profitable market segment.
· UK:
o Strengthening of the UK management team with the recruitment of a Managing Director, a Sales Director and a Marketing Director;
o Average vehicles on hire 0.6% lower than in the same period in the prior year;
o Average revenue per vehicle increase of 3% compared to the same period in the prior year;
o Vehicles on hire of 47,600 (April 2015 - 48,600), a reduction of 1,000, as follows:
§ 800 vehicle on hire growth with SMEs;
§ 600 reduction driven by a downturn in the energy efficiency industry;
§ 700 planned reduction with National customers; and
§ 500 targeted reduction in short term consumer hires as the business focuses on business customers.
o Closing fleet of 55,200 in the UK (April 2015 - 56,100) and average utilisation of 88% (2014 - 89%);
o 16 new sites opened since February 2013 contributing 1,000 additional vehicles on hire since 30 April 2015. Five sites opened in the previous 12 months.
· Spain:
o Average vehicles on hire 1.4% lower than the same period in the prior year;
o Average revenue per vehicle increase of 1% compared to the same period in the prior year;
o Vehicles on hire growth of 100 since 30 April 2015, with 1,200 vehicles on hire growth with SMEs and a planned 1,100 reduction with National customers;
o Closing fleet of 39,700 in Spain (April 2015 - 39,400) and average utilisation of 91% (2014 - 92%).
Bob Contreras, Chief Executive, commented:
"Overall the Group is trading in line with our expectations, despite a mixed trading backdrop in the first six months of the year, with some weakness in UK vehicles on hire being offset by a strong performance in Spain.
In all territories, we have continued to target small and medium sized enterprises (SMEs), where we see the most opportunities for profitable growth and attractive returns.
The Group continues to strengthen the UK management team and has appointed a Managing Director for the UK business as well as a new Sales Director and a Marketing Director. We are well positioned to maximise future growth opportunities.
Our Spanish business continues to execute its market strategy well; leading to improved profitability and returns. We anticipate this continuing against the backdrop of an improving Spanish economy.
There are opportunities for growth in the countries in which we operate and the Group remains well positioned to deliver attractive returns to shareholders. There is no change in our expectations for the full year."
For further information, please contact:
| Northgate plc | 01325 467558 |
| Bob Contreras, Chief Executive Chris Muir, Group Finance Director |
| MHP Communications | 020 3128 8100 |
| Andrew Jaques | |
| Barnaby Fry | |
| Simon Hockridge |
Notes to Editors:
Northgate plc is the leading light commercial vehicle hire business in the UK, Ireland and Spain by fleet size and has been operating in the sector since 1981.
Northgate's core business is the hire of light commercial vehicles to businesses on a flexible basis, giving customers the ability to manage their vehicle fleet requirements in a way which can adapt to changing business needs without the requirement to enter into a long term commitment.
Further information regarding Northgate plc can be found on the Company's website:
Business Review
Overview
The Group remains committed to exploiting opportunities to drive growth, where an appropriate level of return exists and to deliver significant returns to shareholders.
The total market size as defined by the number of light commercial vehicles (LCVs) on the road is estimated at 3.7m vehicles in the UK and 2.2m in Spain. The Group is the largest flexible rental provider in all territories in which it operates, however, the propensity of users to rent vehicles rather than own remains low and provides an excellent growth opportunity. We believe that the flexible rental of LCVs continues to be the best sourcing method for the majority of businesses.
Our strategy remains as follows:
· In the UK, the primary focus is on growing the business through our existing network and by adding new sites to increase our customer coverage;
· In Spain, we are targeting growth through our existing network, with the potential to add one or two new sites;
· We are particularly targeting profitable growth with small and medium sized enterprises (SMEs).
A summary of the Group's underlying financial results for the six months ended 31 October 2015 are as follows:
· Revenue of £313.1m (2014 - £305.0m);
· Operating profit(4) of £51.6m (2014 - £54.1m);
· Profit before tax(1) of £45.9m (2014 - £47.8m);
· Basic earnings per share(2) of 27.1p (2014 - 28.6p);
· Return on capital employed(3) of 12.0% (April 2015 - 13.0%);
· Dividend increased to 5.1p (October 2014 - 4.3p).
The Group's revenue and profit before tax for the period was adversely impacted by the weakening Euro. On a constant currency basis, revenue and profit before tax(1) would have been £10.4m and £1.9m higher respectively.
The largest cost to the business is the holding cost of the vehicle rental fleet. This is the difference between the purchase price and the residual value achieved at the end of the vehicle's rental life. The Group continues to develop and improve its vehicle sales channels, which has helped both to reduce the holding costs and improve returns. Following the strength of residual values of the vehicle hire fleet, our depreciation rates were reduced on 1 May 2012 and 1 May 2014 in the UK and on 1 May 2014 and 1 May 2015 in Spain. The first year benefit of each reduction in depreciation rates reverses over the rental life of the vehicles, with the net book value at disposal increasing over time, reducing the required end of life adjustment to depreciation. The net year on year impact of these changes on Group operating profit was a decrease of £2.4m, being a decrease of £3.6m in the UK and an increase of £1.2m in Spain.
Borrowing facilities
During the period the Group announced a refinancing of its debt facilities. The Group issued a €100m, 2.38% seven year debt private placement to an institutional investor. The Group's principal bank facility was accordingly reduced from £499m to £424m. In addition, the principal bank facility was renegotiated at a lower margin and the maturity extended by a further two years to June 2020. The flexibility of the borrowing terms have been improved and all of the Group's financing were moved from a secured to an unsecured basis. The key covenants remained the same.
The Group's net debt at 31 October 2015 was £338.7m (30 April 2015 - £337.8m). Gearing(5) at 31 October 2015 was 78% (81% at 30 April 2015) and the balance sheet remains strong. Debt leverage cover at 31 October 2015 was 1.46x, in line with our stated intention of cover between 1.25x and 2.00x.
Dividend
The Group continues to recognise the importance of the dividend to investors and sets its annual dividend after taking into account the desire to have a progressive dividend, with the intention to keep dividend cover in the range of 3.75x - 2.50x.
Following the 14.5p dividend for the year ended 30 April 2015, the Board has decided to pay a 5.1p (2014 - 4.3p) interim dividend in recognition of our confidence in the long term prospects of the Group. As previously proposed we would expect to pay approximately one-third of the total dividend at the interim stage and two-thirds as a final dividend.
UK
Operating profit(6) in the six months to 31 October 2015 was £33.4m (2014 - £38.7m) with an operating margin(7) of 21.3% (2014 - 25.2%) and ROCE of 12.1% (April 2015 - 14.1%). The reduction has been caused by higher vehicle running and holding costs, including the £3.6m adverse impact of the previous changes in vehicle depreciation rates.
The UK market provides an opportunity for significant profitable growth and in order to support this we have strengthened our management team with three senior appointments. We have appointed a Managing Director, Sales Director and a Marketing Director. Eddie Aston joins as the Managing Director following senior management roles with DHL and G4S and will report directly to Bob Contreras. Ruth Spratt will join as Sales Director from Easyjet and Karen Whittingham will join as Marketing Director from Honeywell. This mirrors the structure that has proven successful in our Spanish operation.
Vehicles on hire and hire rates
As we have previously stated we are particularly targeting growth through small and medium sized customers where we achieve better returns.
The average number of vehicles on hire for the period was 47,800, a 0.6% decrease on the 48,000 achieved in the same period in the prior year.
Vehicles on hire decreased from 48,600 at 30 April 2015 to 47,600 at 31 October 2015, a decrease of 1,000 compared to an increase of 1,800 in the prior year.
Our business split over the past six months was as follows:
| Closing vehicles on hire | 31 October 2015 | 30 April 2015 | Change | |
| Regional | 33,400 | 33,200 | 200 | |
| National | 14,100 | 14,800 | (700) | |
| Consumer | 100 | 600 | (500) | |
| 47,600 | 48,600 | (1,000) |
Regional vehicles on hire have increased by 200 in the period. Looking at this split by geography shows that the south of the country grew by 500 vehicles (4.2%), Ireland grew by 400 vehicles (9.9%) and the north declined by 700 vehicles (4.2%). The Regional reduction in the north was impacted by a 600 reduction in vehicles on hire from businesses in the renewable energy sector, with over 400 from Mark Group, which entered into administration.
National business remains highly competitive, however we believe there are profitable opportunities with existing and new customers. There have been a number of successful tenders which should benefit FY16 and FY17.
Consumer hires have fallen following the decision taken to significantly increase pricing. These short term customers added complexity to our operational model and provided low returns when taking into account the costs to serve. As a result of this simplification we have and continue to refocus and adjust the operational resource to maximise service levels to our business customers.
Average hire revenue per vehicle in the six months to 31 October 2015 has increased by 3% when compared to the same period last year.
Network
Since our network expansion programme commenced in February 2013 we have opened 16 sites in total. These new sites begin to address large areas of the country where significant numbers of potential customers are not presently serviced by an accessible Northgate site and extend the services we are able to offer to current customers. 15 of these were opened by 31 October 2015 with Oldbury opening in November 2015.
We estimate that each new site will, on average, operate a fleet of 600 vehicles by the end of year three, with vehicles on hire being approximately 240 after 12 months, 410 after 24 months and 540 at the end of year three. Trading to date shows the following as at 31 October 2015:
| No. of sites | Ave. age (months) | Ave. on hire | ||
| 0-6 months | 1 | 6 | 130 | |
| 7-12 months | 3 | 9 | 300 | |
| 13-18 months | 4 | 16 | 300 | |
| 19-24 months | 2 | 21 | 200 | |
| 25+ months | 5 | 29 | 460 |
As noted above the overall progress of the new sites has been encouraging. The 16 sites opened since February 2013 have 4,900 vehicles on hire, of which 1,000 have been generated in the six months to 31 October 2015.
The impact of the 16 sites opened since February 2013 (including the new sites project team costs and pre-opening costs for Oldbury) was an operating profit of £1.7m in the period. This compares to a £0.2m operating profit for the year ended 30 April 2015. It is estimated that each of these new sites will become profitable on a trading to date basis after two years with ROCE exceeding 16% in year four as the sites reach maturity.
Expansion of the UK network to increase customer coverage remains a strategic focus and we will continue to judiciously open new sites where we believe an appropriate return exists. We anticipate opening a further 10 to 14 sites.
Asset Management
Utilisation for the period was 88% (2014 - 89%). The fleet size in our UK business decreased from 56,100 at 30 April 2015 to 55,200 at 31 October 2015.
Purchases totalled 8,900 in the six months to 31 October 2015 compared to 11,700 in the same period last year. The average age of the rental fleet was 20.5 months at 31 October 2015, compared to 21.1 months at 30 April 2015.
In response to the reduction in vehicles on hire, a total of 10,700 vehicles were sold. This compares to 8,600 in the six months to 31 October 2014.
Continued strong residual values led to a reduction in the depreciation charge in the six months to 31 October 2015 of £10.8m (2014 - £14.1m). On a per vehicle sold basis this reduction has fallen from £1,636 in the six months to October 2014 to £1,012 in the same period this year. The reduction has been caused by three main factors:
· The impact of previous depreciation rate changes (£339 per vehicle);
· The increased volume of units being sold, meaning a larger discount on trade units; and
· A softer market as supply expands due to historic new vehicle registrations increase.
There are three main disposal channels in the UK: retail, trade and auction. Retail sales are where we sell our end of rental life fleet direct to the end user. Residuals are at a premium where the vehicle is sold via this channel.
The percentage sold via the more profitable retail channel was 31% in the six months to October 2015 compared to 29% in the same period last year. The absolute number of vehicles sold via the more profitable retail channel has increased from 2,500 in the six months ended 31 October 2014 to 3,300 in the period to 31 October 2015, an increase of 32%.
Encouragingly and in line with our intention to target increased sales via the retail channel, quarter one sales to retail were 29%, with quarter two increasing to 33%.
Spain
Our Spanish business is well positioned to take advantage of the improving Spanish economy and we are pleased with the progress we have seen in the first half of the financial year. Improved asset management, continued operational efficiency and the reduction in vehicle depreciation rates increased the operating profit(8) in the six months to 31 October 2015 to £20.3m (2014 - £17.4m) with an operating margin(9) of 29.6% (2014 - 22.9%) and ROCE of 13.5% (April 2015 - 12.8%).
The net effect of changes in vehicle depreciation rates was to increase the current period operating profit by £1.2m. Adjusting for this impact would reduce the current year operating margin to 27.9%.
Vehicles on hire and hire rates
The average number of vehicles on hire for the period was 35,700, a 1.4% decrease on the 36,200 achieved during the same period in the prior year.
Vehicles on hire have increased by 100 in the six months to 31 October 2015 compared to an increase of 1,300 in the same period last year.
Overall growth has been more modest in this period as our Spanish business is targeting an increase in SME business (Regional) and being selective about renewing or defending seasonal contracts and larger business (National) as we continue to focus on improving returns. The focus is on the SME sector where we have seen a wider recognition and acceptance of our product proposition through an increased sales force and greater marketing focus. As set out below this had led to a 6% increase in our Regional business.
The decision not to operate the lower margin seasonal business means the business will not see the high level of vehicle returns it saw in November 2014. As at 31 October 2014, vehicles on hire growth was 1,300, however, the business saw 1,000 vehicles returned in November 2014.
Looking at our business split over the period shows the following:
| Closing vehicles on hire | 31 October 2015 | 30 April 2015 | Change | |
| Regional | 21,100 | 19,900 | 1,200 | |
| National | 14,600 | 15,700 | (1,100) | |
| 35,700 | 35,600 | 100 |
Average hire revenue per vehicle has increased by 1% compared to the same period last year.
Asset Management
Utilisation for the period was 91% (2014 - 92%). The fleet size in our Spanish operation increased from 39,400 at 30 April 2015 to 39,700 at 31 October 2015. In the six months to 31 October 2015, 5,900 vehicles have been purchased compared to 7,100 in the same period last year. The average age of the rental fleet was 22.7 months at 31 October 2015, compared to 23.7 months at 30 April 2015.
A total of 5,300 vehicles were sold compared to 4,100 in the six months to 31 October 2014.
There are four main disposal channels in Spain: retail, export, trade and auction. As in the UK, retail sales attract higher residual values.
We continue to see progress in our plans to dispose of more vans via our retail channel with 19% being sold, compared to 17% in the same period last year. In absolute terms the number sold via the retail channel has increased from 700 in the six months to 31 October 2014 to 1,000 in the six months to 31 October 2015.
Improving residual values led to a reduction in depreciation charge in the six months to 31 October 2015 of £8.5m (2014 - £4.9m). In euros, this reduction has increased from €1,517 per vehicle sold in the six months to October 2014 to €2,211 in the same period this year. The increase has been caused by the following factors:
· Improved asset management, targeting older vehicles, with lower net book values for defleet first. The average age of vehicles sold in the period was 48 months, compared to 44 months in the same period in the prior year;
· Greater demand for used vehicles as the economy improves and the supply of vehicles remains restricted due to the limited increase in new vehicle registrations to date;
· Increased sales via the more profitable retail disposal channel; offset by
· A net adverse year on year impact of previous depreciation rate changes (€115 per vehicle).
Outlook
Overall the Group is trading in line with our expectations, despite a mixed trading backdrop in the first six months of the year, with some weakness in UK vehicles on hire being offset by a strong performance in Spain.
In all territories, we have continued to target small and medium sized enterprises (SMEs), where we see the most opportunities for profitable growth and attractive returns.
The Group continues to strengthen the UK management team and has appointed a Managing Director for the UK business as well as a new Sales Director and a Marketing Director. We are well positioned to maximise future growth opportunities.
Our Spanish business continues to execute its market strategy well; leading to improved profitability and returns. We anticipate this continuing against the backdrop of an improving Spanish economy.
There are opportunities for growth in the countries in which we operate and the Group remains well positioned to deliver attractive returns to shareholders. There is no change in our expectations for the full year.
Financial Review
Group
A summary of the Group's underlying financial performance for the six months to 31 October 2015 with a comparison to the prior year period is shown below:
| 6 months to | 6 months to | |
| 31 Oct 2015 | 31 Oct 2014 | |
| £m | £m | |
| Revenue | 313.1 | 305.0 |
| Operating profit(4) | 51.6 | 54.1 |
| Net interest expense(10) | (5.7) | (6.3) |
| Profit before tax(1) | 45.9 | 47.8 |
| Profit after tax(2) | 36.1 | 38.1 |
| Basic earnings per share(2) | 27.1p | 28.6p |
| Return on capital employed(3) | 12.0% | 11.4% |
Group revenue in the six months to 31 October 2015 increased by 3% to £313.1m (2014 - £305.0m) or 6% at constant exchange rates. Hire revenue was £225.7m (2014 - £230.0m) including a £7.9m adverse impact of exchange rates.
Profit before tax(1) and operating profit(4) for the six months to 31 October 2015 was adversely impacted by the weakening Euro. On a constant currency basis the profit before tax(1) would have been £1.9m higher and operating profit(4) £2.2m higher.
The impact of previous depreciation rate changes on Group operating profit for the period was a net decrease of £2.4m, being a decrease of £3.6m in the UK and an increase of £1.2m in Spain.
On a statutory basis operating profit decreased to £50.1m (2014 - £53.0m) with profit before tax decreasing to £42.8m (2014 - £46.7m). Basic earnings per share decreased to 25.4p (2014 - 27.9p). Net cash from operations, including net capital expenditure on vehicles for hire, was an inflow of £17.7m (2014 - £39.6m outflow).
Return on capital employed
Group return on capital employed(3) was 12.0% compared to 11.4% in the equivalent six months last year and 13.0% in the year ended 30 April 2015.
Group return on equity, calculated as profit after tax (excluding intangible amortisation, exceptional administrative expenses, exceptional finance costs and taxation thereon) divided by average shareholders' funds, was 15.1% (April 2015 - 16.6%).
Borrowing facilities
Taken together with other loans of the Group, £341.7m was drawn against total committed facilities of £516.4m as at 31 October 2015, giving headroom(11) of £174.7m as detailed below:
| Facility | Drawn | Headroom | Maturity | |
| £m | £m | £m | ||
| UK bank facility | 426.5 | 257.4 | 169.1 | Jun-20 |
| Loan notes | 71.8 | 71.8 | - | Aug-22 |
| Other loans | 18.1 | 12.5 | 5.6 | Nov-15 |
| 516.4 | 341.7 | 174.7 |
The margin charged on bank debt is dependent upon the Group's net debt to EBITDA ratio, ranging from a maximum of 2.25% to a minimum of 1.50%. The net debt to EBITDA ratio at 31 October 2015 corresponds to a bank margin of 1.75%.
The proportion of fixed gross borrowings, including hedging arrangements, was 82% (April 2015 - 73%). This gives an overall cost of the Group's borrowings at 31 October 2015 of 2.2%, compared to an overall rate of 2.8% at 30 April 2015.
The maturity of other loans has subsequently been extended to November 2016.
There are three financial covenants under the Group's facilities which remain unchanged and are as follows:
| Threshold | October 2015 | Headroom | April 2015 | |
| Interest cover | 3.00x | 8.05x | £59m (EBIT) | 7.75x |
| Loan to value | 70% | 43% | £216m (Net debt) | 44% |
| Debt leverage | 2.00x | 1.46x | £64m (EBITDA) | 1.41x |
UK
| 6 months to | 6 months to | |
| 31 Oct 2015 | 31 Oct 2014 | |
| £m | £m | |
| Revenue | ||
| Vehicle hire | 157.1 | 154.0 |
| Vehicle sales | 64.5 | 57.7 |
| 221.6 | 211.7 | |
| Operating profit(6) | 33.4 | 38.7 |
| Operating margin(7) | 21.3% | 25.2% |
An increase in total hire revenue of 2.0% (2.5% increase at constant exchange rates) was mainly driven by an increase in average revenue per vehicle of 3.5%, being partially offset by a 0.6% decrease in average vehicles on hire.
The impact of previous depreciation rate changes on the UK operating profit for the period was an adverse impact of £3.6m as follows:
| £m | |
| Operating profit(6) | 33.4 |
| Adverse impact of depreciation rate changes | 3.6 |
| Operating profit before change in depreciation rates | 37.0 |
| Six months ended October 2014 operating profit | 38.7 |
The first year benefit of each reduction in depreciation rates reverses over the rental life of the vehicles, with the net book value at disposal increasing over time, reducing the required end of life adjustment to depreciation. Assuming the UK sells the same number of vehicles as it sold in the year ended 30 April 2015 the following table estimates the cumulative profit impact on the current and future periods:
| Net book value | Operating profit | |
| increase per vehicle | impact | |
| £ | £m | |
| FY16 | 338 | (5.9) |
| FY17 | 586 | (10.3) |
| FY18 | 737 | (13.0) |
The impact of previous changes in depreciation rates, coupled with a reduction in resale values achieved was partially offset by an increased volume of vehicles sold, leading to a £10.8m reduction in the depreciation charge (2014 - £14.1m).
Days sales outstanding were 39 days, in line with that at 30 April 2015. As a percentage of revenue the bad debt charge for the period was 0.8%.
Spain
| 6 months to | 6 months to | |
| 31 Oct 2015 | 31 Oct 2014 | |
| £m | £m | |
| Revenue | ||
| Vehicle hire | 68.6 | 76.0 |
| Vehicle sales | 22.9 | 17.3 |
| 91.5 | 93.3 | |
| Operating profit(8) | 20.3 | 17.4 |
| Operating margin(9) | 29.6% | 22.9% |
A decrease in hire revenue of 9.7% (0.4% decrease at constant exchange rates) was due to a 1.4% decrease in average vehicles on hire as a result of deciding not to operate lower margin seasonal business offset by a 1.1% increase in average hire revenue per vehicle.
Vehicle hire revenue and operating profit(8) in the period, expressed at constant exchange rates, would have been higher than reported by £7.1m and £2.1m respectively.
The impact of depreciation rate changes on the operating profit for the period was a net increase of £1.2m or €1.6m as follows:
| €m | |
| Operating profit(8) | 28.3 |
| Favourable impact of depreciation rate change | (1.6) |
| Operating profit before change in depreciation rates | 26.7 |
| Six months ended October 2014 operating profit | 21.9 |
The first year benefit of each reduction in depreciation rates reverses over the life of the rental vehicles, with the net book value at disposal increasing over time, reducing the required end of life adjustment to depreciation. Assuming Spain has an average vehicle holding period of 42 months, the following table estimates the cumulative impact on current and future periods:
| Net book value | Operating profit | |
| increase per vehicle | impact | |
| € | €m | |
| FY16 | 150 | (1.7) |
| FY17 | 371 | (4.2) |
| FY18 | 586 | (6.6) |
| FY19 | 715 | (8.0) |
An improvement in used vehicle residual values together with the increased number of vehicles sold resulted in a decrease of £8.5m to the depreciation charge (2014 - £4.9m).
Days sales outstanding have reduced from 44 days at 30 April 2015 to 43 days at 31 October 2015. As a percentage of revenue the bad debt charge for the period was 0.5%.
Corporate
Corporate costs(12) were £2.2m in the six months to 31 October 2015 compared to £2.0m in the same period last year.
Exceptional items
During the period £0.5m of exceptional operating costs were incurred relating to restructuring costs in the UK. Exceptional finance costs of £1.6m relate to the cancellation of interest rate swaps upon refinancing the Group's borrowing facilities in the period.
Interest
Net finance charges(10) for the six months to 31 October 2015 were £5.7m (2014 - £6.3m).
The charge has decreased due to decreased levels of debt, lower rates and favourable exchange rates partially offset by increased non-utilisation fees and debt fee amortisation.
Taxation
The Group's underlying effective tax charge was 21% (2014 - 20%).
The underlying tax charge excludes the tax on intangible amortisation, exceptional items and brand royalty charges of £0.8m (2014 - £0.2m). Including these items the Group's effective tax rate remains unchanged.
Earnings per share
Basic underlying earnings per share (2), were 5% lower than the previous period at 27.1p (2014 - 28.6p).
Basic statutory earnings per share were 25.4p (2014 - 27.9p).
The weighted average number of shares for the purposes of earnings per share was 133m (2014 - 133m).
Dividend
The Directors have decided to pay an interim dividend of 5.1p per share in relation to the Ordinary shares for the six months ended 31 October 2015 (2014 - 4.3p). This represents a cash outflow to the Group of £6.8m. The interim dividend will be paid on 11 January 2016 to shareholders on the register at the close of business on 11 December 2015.
Cash flow and net debt
Net cash generated(13) was £14.1m (2014 - £40.3m used) after net capital expenditure of £92.7m (2014 - £142.7m), resulting in closing net debt of £338.7m (April 2015 - £337.8m).
Net capital expenditure included purchases of vehicles of £164.5m (2014 - £206.1m) and proceeds from sales of vehicles of £75.4m (2014 - £64.1m).
In addition, £13.4m of dividend payments (2014 - £9.0m), £2.8m of net payments to acquire own shares for share option schemes (2014 - £10.6m) and £1.6m of payments to terminate financial instruments (2014 - £Nil) were made. The impact of exchange rate movements since 30 April 2015 reduced net debt by £2.8m.
Debt leverage cover at 31 October 2015 was 1.46x, in line with our stated intention of cover between 1.25x and 2.00x.
Balance sheet
Net tangible assets at 31 October 2015 were £437.0m (April 2015 - £418.4m), equivalent to a tangible net asset value of 328.0p per share (April 2015 - 314.0p per share).
Gearing(5) at 31 October 2015 was 78% (April 2015 - 81%).
Foreign exchange
The average and period end exchange rates used to translate the Group's overseas operations were as follows:
| October 2015 | October 2014 | |
| £ : € | £ : € | |
| Average | 1.39 | 1.26 |
| Half year | 1.39 | 1.28 |
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 2015 were set out in detail on pages 34 and 35 of the 2015 Annual Report, a copy of which is available at www.northgateplc.com, and were identified as:
· Economic environment;
· Competition and hire rates;
· Vehicle holding costs;
· Employees and the working environment;
· IT systems; and
· 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.
In addition to the risks outlined above, the going concern assumption is considered in Note 1 to the condensed financial statements for the six months ended 31 October 2015.
(1) Stated before intangible amortisation of £1.0m (2014 - £1.1m), exceptional administrative expenses of £0.5m (2014 - £Nil) and exceptional finance costs of £1.6m (2014 - £Nil).
(2) Stated before intangible amortisation of £1.0m (2014 - £1.1m), exceptional administrative expenses of £0.5m (2014 - £Nil), exceptional finance costs of £1.6m (2014 - £Nil) and tax credits on intangible amortisation, brand royalty charges and exceptional items of £0.8m (2014 - £0.2m).
(3) Calculated as rolling 12 month operating profit (excluding intangible amortisation and exceptional administrative expenses) divided by average capital employed, being shareholders' funds plus net debt.
(4) Stated before intangible amortisation of £1.0m (2014 - £1.1m) and exceptional administrative expenses of £0.5m (2014 - £Nil).
(5) Calculated as net debt divided by tangible net assets, with tangible net assets being net assets less goodwill and other intangible assets.
(6) Excluding intangible amortisation of £1.0m (2014 - £1.0m), exceptional administrative expenses of £0.5m (2014 - £Nil) and a brand royalty charge of £0.3m (2014 - £Nil).
(7) Calculated as operating profit(6) divided by revenue of £157.1m (2014 - £154.0m), excluding vehicle sales.
(8) Excluding a brand royalty charge of £2.3m (2014 - £2.5m).
(9) Calculated as operating profit(8) divided by revenue of £68.6m (2014 - £76.0m), excluding vehicle sales.
(10) Stated before exceptional finance costs of £1.6m (2014 - £Nil).
(11) Headroom calculated as facilities of £516.4m less net borrowings of £341.7m. Net borrowings represent net debt of £338.7m gross of £3.0m of unamortised arrangement fees and are stated after the deduction of £3.0m of cash balances which are available to offset against borrowings.
(12) Excluding a brand royalty credit of £2.6m (2014 - £2.5m).
(13) Net (decrease) increase in cash and cash equivalents before financing activities.
| Condensed consolidated income statement | ||||||||
| for the six months ended 31 October 2015 | ||||||||
| Six months | Six months | Six months | Six months | Year to | Year to | |||
| to 31.10.15 | to 31.10.15 | to 31.10.14 | to 31.10.14 | 30.04.15 | 30.04.15 | |||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | (Audited) | |||
| Underlying | Statutory | Underlying | Statutory | Underlying | Statutory | |||
| Note | £000 | £000 | £000 | £000 | £000 | £000 | ||
| Revenue: hire of vehicles | 2 | 225,688 | 225,688 | 229,996 | 229,996 | 456,818 | 456,818 | |
| Revenue: sale of vehicles | 2 | 87,459 | 87,459 | 74,956 | 74,956 | 157,442 | 157,442 | |
| Total revenue | 2 | 313,147 | 313,147 | 304,952 | 304,952 | 614,260 | 614,260 | |
| Cost of sales | (230,637) | (230,637) | (218,185) | (218,185) | (445,221) | (445,221) | ||
| Gross profit | 82,510 | 82,510 | 86,767 | 86,767 | 169,039 | 169,039 | ||
| Administrative expenses (excluding exceptional items and intangible amortisation) | (30,952) | (30,952) | (32,668) | (32,668) | (71,267) | (71,267) | ||
| Exceptional administrative expenses | 8 | - | (493) | - | - | - | - | |
| Intangible amortisation | - | (1,003) | - | (1,059) | - | (2,010) | ||
| Total administrative expenses | (30,952) | (32,448) | (32,668) | (33,727) | (71,267) | (73,277) | ||
| Operating profit | 2 | 51,558 | 50,062 | 54,099 | 53,040 | 97,772 | 95,762 | |
| Interest income | 1 | 1 | 1 | 1 | 9 | 9 | ||
| Finance costs (excluding exceptional items) | (5,670) | (5,670) | (6,348) | (6,348) | (12,808) | (12,808) | ||
| Exceptional finance costs | 8 | - | (1,561) | - | - | - | - | |
| Profit before taxation | 45,889 | 42,832 | 47,752 | 46,693 | 84,973 | 82,963 | ||
| Taxation | 3 | (9,812) | (8,967) | (9,695) | (9,471) | (17,029) | (16,161) | |
| Profit for the period | 36,077 | 33,865 | 38,057 | 37,222 | 67,944 | 66,802 | ||
Profit for the period 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 8, as well as brand royalty charges, intangible amortisation and the taxation thereon, in order to provide a better indication of the Group's underlying business performance.
| Earnings per share | |||||||
| Basic | 4 | 27.1p | 25.4p | 28.6p | 27.9p | 51.0p | 50.1p |
| Diluted | 4 | 26.7p | 25.0p | 28.0p | 27.4p | 50.0p | 49.2p |
| Condensed consolidated statement of comprehensive income | ||||
| for the six months ended 31 October 2015 | ||||
| Six months | Six months | Year to | ||
| to 31.10.15 | to 31.10.14 | 30.04.15 | ||
| (Unaudited) | (Unaudited) | (Audited) | ||
| £000 | £000 | £000 | ||
| Amounts attributable to owners of the Parent Company | ||||
| Profit attributable to owners | 33,865 | 37,222 | 66,802 | |
| Other comprehensive income (expense) Foreign exchange differences on retranslation of net assets of subsidiary undertakings |
(3,353) | (6,427) | (28,526) | |
| Net foreign exchange differences on long term borrowings held as hedges | 2,943 | 3,449 | 21,885 | |
| Foreign exchange difference on revaluation reserve | (11) | (51) | (126) | |
| Net fair value gains (losses) on cash flow hedges | 1,399 | (1,417) | (1,772) | |
| Deferred tax (charge) credit recognised directly in equity relating to cash flow hedges | (297) | 298 | 355 | |
| Total other comprehensive income (expense) for the period | 681 | (4,148) | (8,184) | |
| Total comprehensive income for the period | 34,546 | 33,074 | 58,618 |
All items will subsequently be reclassified to the consolidated income statement.
| Condensed consolidated balance sheet | |||||
| 31 October 2015 | |||||
| 31.10.15 | 31.10.14 | 30.04.15 | |||
| (Unaudited) | (Unaudited) | (Audited) | |||
| Note | £000 | £000 | £000 | ||
| Non-current assets | |||||
| Goodwill | 3,589 | 3,589 | 3,589 | ||
| Other intangible assets | 4,985 | 4,774 | 4,341 | ||
| Property, plant and equipment: vehicles for hire | 676,461 | 673,229 | 660,160 | ||
| Other property, plant and equipment | 64,711 | 68,921 | 66,248 | ||
| Total property, plant and equipment | 741,172 | 742,150 | 726,408 | ||
| Derivative financial instrument assets | 9 | - | 325 | 57 | |
| Deferred tax assets | 14,042 | 5,922 | 14,784 | ||
| Total non-current assets | 763,788 | 756,760 | 749,179 | ||
| Current assets | |||||
| Inventories | 22,306 | 22,018 | 21,673 | ||
| Trade and other receivables | 71,515 | 83,986 | 71,817 | ||
| Cash and cash equivalents | 2,985 | 32,623 | 9,676 | ||
| Total current assets | 96,806 | 138,627 | 103,166 | ||
| Total assets | 860,594 | 895,387 | 852,345 | ||
| Current liabilities | |||||
| Trade and other payables | 52,323 | 52,566 | 62,273 | ||
| Current tax liabilities | 16,727 | 6,513 | 9,956 | ||
| Short term borrowings | 12,028 | 10,045 | 12,081 | ||
| Total current liabilities | 81,078 | 69,124 | 84,310 | ||
| Net current assets | 15,728 | 69,503 | 18,856 | ||
| Non-current liabilities | |||||
| Derivative financial instrument liabilities | 9 | 325 | 1,694 | 1,780 | |
| Long term borrowings | 329,641 | 419,532 | 335,375 | ||
| Deferred tax liabilities | 4,011 | - | 4,524 | ||
| Total non-current liabilities | 333,977 | 421,226 | 341,679 | ||
| Total liabilities | 415,055 | 490,350 | 425,989 | ||
| NET ASSETS | 445,539 | 405,037 | 426,356 | ||
| Equity | |||||
| Share capital | 66,616 | 66,616 | 66,616 | ||
| Share premium account | 113,508 | 113,508 | 113,508 | ||
| Revaluation reserve | 945 | 1,031 | 956 | ||
| Own shares | (9,568) | (10,017) | (8,812) | ||
| Merger reserve | 67,463 | 67,463 | 67,463 | ||
| Hedging reserve | (926) | (1,730) | (2,028) | ||
| Translation reserve | (14,238) | (10,165) | (13,828) | ||
| Capital redemption reserve | 40 | 40 | 40 | ||
| Retained earnings | 221,699 | 178,291 | 202,441 | ||
| TOTAL EQUITY | 445,539 | 405,037 | 426,356 |
Total equity is wholly attributable to owners of the Parent Company.
| Condensed consolidated cash flow statement | |||||
| for the six months ended 31 October 2015 | |||||
| Six months | Six months | Year to | |||
| to 31.10.15 | to 31.10.14 | 30.04.15 | |||
| (Unaudited) | (Unaudited) | (Audited) | |||
| Note | £000 | £000 | £000 | ||
| Net cash generated from (used in) operations | 6 | 17,721 | (39,647) | 8,532 | |
| Investing activities | |||||
| Interest received | 1 | 1 | 9 | ||
| Proceeds from disposal of other property, plant and equipment | 307 | 1,897 | 2,371 | ||
| Purchases of other property, plant and equipment | (2,241) | (2,195) | (5,659) | ||
| Purchases of intangible assets | (1,648) | (366) | (889) | ||
| Net cash used in investing activities | (3,581) | (663) | (4,168) | ||
| Financing activities | |||||
| Receipt of bank loans and other borrowings | 70,410 | 75,488 | 14,317 | ||
| Repayments of bank loans and other borrowings | (71,448) | - | - | ||
| Debt issue costs paid | (1,675) | (2,042) | (2,042) | ||
| Dividend paid | (13,389) | (8,968) | (14,607) | ||
| Net payments to acquire own shares for share schemes | (2,825) | (10,573) | (10,068) | ||
| Termination of financial instruments | (1,561) | - | - | ||
| Net cash (used in) generated from financing activities | (20,488) | 53,905 | (12,400) | ||
| Net (decrease) increase in cash and cash equivalents | (6,348) | 13,595 | (8,036) | ||
| Cash and cash equivalents at beginning of the period | 9,676 | 19,056 | 19,056 | ||
| Effect of foreign exchange movements | (343) | (28) | (1,344) | ||
| Cash and cash equivalents at the end of the period | 2,985 | 32,623 | 9,676 | ||
| Condensed consolidated statement of changes in equity for the six months ended 31 October 2015 |
|||||||
| 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 2014 | 180,124 | (653) | (611) | (7,187) | 68,585 | 150,475 | 390,733 |
| Share options fair value charge | - | - | - | - | - | 771 | 771 |
| Share options exercised | - | - | - | - | - | (1,209) | (1,209) |
| Profit attributable to owners of the Parent Company | - | - | - | - | - | 37,222 | 37,222 |
| Dividend paid | - | - | - | - | - | (8,968) | (8,968) |
| Net purchase of own shares | - | (10,573) | - | - | - | - | (10,573) |
| Transfer of shares on vesting of share options | - | 1,209 | - | - | - | - | 1,209 |
| Other comprehensive expense | - | - | (1,119) | (2,978) | (51) | - | (4,148) |
| Total equity at 1 November 2014 | 180,124 | (10,017) | (1,730) | (10,165) | 68,534 | 178,291 | 405,037 |
| Share options fair value charge | - | - | - | - | - | 909 | 909 |
| Share options exercised | - | - | - | - | - | (700) | (700) |
| Profit attributable to owners of the Parent Company | - | - | - | - | - | 29,580 | 29,580 |
| Dividend paid | - | - | - | - | - | (5,639) | (5,639) |
| Net purchase of own shares | - | 505 | - | - | - | - | 505 |
| Transfer of shares on vesting of share options | - | 700 | - | - | - | - | 700 |
| Other comprehensive expense | - | - | (298) | (3,663) | (75) | - | (4,036) |
| Total equity at 1 May 2015 | 180,124 | (8,812) | (2,028) | (13,828) | 68,459 | 202,441 | 426,356 |
| Share options fair value charge | - | - | - | - | - | 851 | 851 |
| Share options exercised | - | - | - | - | - | (2,069) | (2,069) |
| Profit attributable to owners of the Parent Company | - | - | - | - | - | 33,865 | 33,865 |
| Dividend paid | - | - | - | - | - | (13,389) | (13,389) |
| Net purchase of own shares | - | (2,825) | - | - | - | - | (2,825) |
| Transfer of shares on vesting of share options | - | 2,069 | - | - | - | - | 2,069 |
| Other comprehensive income (expense) | - | - | 1,102 | (410) | (11) | - | 681 |
| Total equity at 31 October 2015 | 180,124 | (9,568) | (926) | (14,238) | 68,448 | 221,699 | 445,539 |
| Other reserves comprise the capital redemption reserve, revaluation reserve and merger reserve. |
| #### Unaudited Notes | ||||||||||||
| 1. Basis of preparation and accounting policies | ||||||||||||
| Northgate plc is a Company incorporated in England and Wales under the Companies Act 2006. The condensed financial statements are unaudited and were approved by the Board of Directors on 30 November 2015. The condensed financial statements have been reviewed by the auditor and the independent review report is set out in this document. The interim financial information for the six months ended 31 October 2015, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts, except for income taxes which are accrued using the tax rate that is expected to be applicable for the full year, and in accordance with IAS 34 'Interim Financial Reporting', as issued by the International Accounting Standards Board and adopted by the European Union. Various new accounting standards and amendments came into force and others were issued during the period, none of which have had or are expected to have any significant impact on the Group and effects will principally relate to amendment and extension of current disclosures. 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 2015. Going concern assumption The Group manages its cash requirements through a combination of operating cash flows and long term borrowings. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current lending facilities. Having reassessed the principal risks, the directors consider it appropriate to adopt the going concern basis of accounting in preparing the interim financial statements. Information extracted from 2015 Annual Report The financial figures for the year ended 30 April 2015, 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 2015 were prepared under IFRS and have been delivered to the Registrar of Companies. 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 executive 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 two main operating divisions, UK and Spain. The UK division includes operations in the Republic of Ireland. The principal activities of these divisions are set out in the Business Review and Financial Review.
| UK | Spain | Corporate | Total | ||
| Six months | Six months | Six months | Six months | ||
| to 31.10.15 | to 31.10.15 | to 31.10.15 | to 31.10.15 | ||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| £000 | £000 | £000 | £000 | ||
| Revenue: hire of vehicles | 157,064 | 68,624 | - | 225,688 | |
| Revenue: sale of vehicles | 64,534 | 22,925 | - | 87,459 | |
| Total revenue | 221,598 | 91,549 | - | 313,147 | |
| Underlying operating profit (loss) * | 33,395 | 20,334 | (2,171) | 51,558 | |
| Exceptional administrative expenses | (493) | - | - | (493) | |
| Brand royalty charges | (260) | (2,306) | 2,566 | - | |
| Intangible amortisation | (958) | (30) | (15) | (1,003) | |
| Operating profit | 31,684 | 17,998 | 380 | 50,062 | |
| Interest income | 1 | ||||
| Finance costs (excluding exceptional items) | (5,670) | ||||
| Exceptional finance costs | (1,561) | ||||
| Profit before taxation | 42,832 |
| UK | Spain | Corporate | Total | ||
| Six months | Six months | Six months | Six months | ||
| to 31.10.14 | to 31.10.14 | to 31.10.14 | to 31.10.14 | ||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| £000 | £000 | £000 | £000 | ||
| Revenue: hire of vehicles | 154,012 | 75,984 | - | 229,996 | |
| Revenue: sale of vehicles | 57,690 | 17,266 | - | 74,956 | |
| Total revenue | 211,702 | 93,250 | - | 304,952 | |
| Underlying operating profit (loss) * | 38,742 | 17,370 | (2,013) | 54,099 | |
| Brand royalty charge | - | (2,548) | 2,548 | - | |
| Intangible amortisation | (1,022) | (22) | (15) | (1,059) | |
| Operating profit | 37,720 | 14,800 | 520 | 53,040 | |
| Interest income | 1 | ||||
| Finance costs | (6,348) | ||||
| Profit before taxation | 46,693 |
2. Segmental analysis (continued)
| UK | Spain | Corporate | Total | ||
| Year to | Year to | Year to | Year to | ||
| 30.04.15 | 30.04.15 | 30.04.15 | 30.04.15 | ||
| (Audited) | (Audited) | (Audited) | (Audited) | ||
| £000 | £000 | £000 | £000 | ||
| Revenue: hire of vehicles | 311,282 | 145,536 | - | 456,818 | |
| Revenue: sale of vehicles | 115,058 | 42,384 | - | 157,442 | |
| Total revenue | 426,340 | 187,920 | - | 614,260 | |
| Underlying operating profit (loss) * | 69,032 | 33,260 | (4,520) | 97,772 | |
| Brand royalty charges | (442) | (4,881) | 5,323 | - | |
| Intangible amortisation | (1,928) | (51) | (31) | (2,010) | |
| Operating profit | 66,662 | 28,328 | 772 | 95,762 | |
| Interest income | 9 | ||||
| Finance costs | (12,808) | ||||
| Profit before taxation | 82,963 |
* Underlying operating profit (loss) stated before royalty charges, amortisation and exceptional items is the measure used by the executive Board of Directors to assess segment performance.
3. Taxation
The charge for taxation for the six months to 31 October 2015 is based on the estimated effective rate for the year ending 30 April 2016.
| 4. Earnings per share | ||||||
| Six months | Six months | Six months | Six months | Year to | Year to | |
| to 31.10.15 | to 31.10.15 | to 31.10.14 | to 31.10.14 | 30.04.15 | 30.04.15 | |
| (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 net profit attributable to owners of the Parent Company | 36,077 | 33,865 | 38,057 | 37,222 | 67,944 | 66,802 |
| Number of shares | Number | Number | Number | Number | Number | Number |
| Weighted average number of Ordinary shares for the purpose | ||||||
| of basic earnings per share | 133,232,518 | 133,232,518 | 133,232,518 | 133,232,518 | 133,232,518 | 133,232,518 |
| Effect of dilutive potential Ordinary shares: | ||||||
| - share options | 2,066,430 | 2,066,430 | 2,808,474 | 2,808,474 | 2,649,060 | 2,649,060 |
| Weighted average number of Ordinary shares for the purpose | ||||||
| of diluted earnings per share | 135,298,948 | 135,298,948 | 136,040,992 | 136,040,992 | 135,881,578 | 135,881,578 |
| Basic earnings per share | 27.1p | 25.4p | 28.6p | 27.9p | 51.0p | 50.1p |
| Diluted earnings per share | 26.7p | 25.0p | 28.0p | 27.4p | 50.0p | 49.2p |
5. Dividends
In the six months to 31 October 2015, a dividend of £13,389,000 was paid (2014 - £8,968,000). The Directors have declared a dividend of 5.1p per share for the six months ended 31 October 2015 (2014 - 4.3p).
6. Notes to the cash flow statement
| Six months | Six months | Year to | |
| to 31.10.15 | to 31.10.14 | 30.04.15 | |
| (Unaudited) | (Unaudited) | (Audited) | |
| Net cash generated from (used in) operations | £000 | £000 | £000 |
| Operating profit | 50,062 | 53,040 | 95,762 |
| Adjustments for: | |||
| Depreciation of property, plant and equipment | 69,781 | 72,777 | 144,455 |
| Exchange differences | - | (50) | - |
| Amortisation of intangible assets | 1,003 | 1,059 | 2,010 |
| Loss on disposal of property, plant and equipment | 35 | - | 50 |
| Share options fair value charge | 851 | 771 | 1,680 |
| Operating cash flows before movements in working capital | 121,732 | 127,597 | 243,957 |
| Decrease (increase) in non-vehicle inventories | 523 | (240) | 105 |
| Decrease (increase) in receivables | 1,271 | (5,863) | 2,833 |
| (Decrease) increase in payables | (9,021) | (4,609) | 4,672 |
| Cash generated from operations | 114,505 | 116,885 | 251,567 |
| Income taxes paid | (2,315) | (8,400) | (16,524) |
| Interest paid | (5,381) | (6,123) | (12,302) |
| Net cash generated from operations | 106,809 | 102,362 | 222,741 |
| Purchases of vehicles | (164,464) | (206,095) | (350,085) |
| Proceeds from disposal of vehicles | 75,376 | 64,086 | 135,876 |
| Net cash generated from (used in) operations | 17,721 | (39,647) | 8,532 |
| 7. Analysis of consolidated net debt | ||||
| 31.10.15 | 31.10.14 | 30.04.15 | ||
| (Unaudited) | (Unaudited) | (Audited) | ||
| £000 | £000 | £000 | ||
| Cash at bank and in hand | (2,985) | (32,623) | (9,676) | |
| Bank loans | 269,101 | 426,629 | 346,415 | |
| Loan notes | 71,718 | - | - | |
| Cumulative preference shares | 500 | 500 | 500 | |
| Confirming facilities | 350 | 2,448 | 541 | |
| 338,684 | 396,954 | 337,780 |
| 8. Exceptional items | |||||||||||
| During the period the Group recognised exceptional items in the income statement made up as follows: | |||||||||||
| Six months | Six months | Year to | |||||||||
| to 31.10.15 | to 31.10.14 | 30.04.15 | |||||||||
| (Unaudited) | (Unaudited) | (Audited) | |||||||||
| £000 | £000 | £000 | |||||||||
| Restructuring costs | 493 | - | - | ||||||||
| Exceptional administrative expenses | 493 | - | - | ||||||||
| Termination of interest rate swaps | 1,561 | - | - | ||||||||
| Exceptional finance costs | 1,561 | - | - | ||||||||
| Total pre-tax exceptional items | 2,054 | - | - | ||||||||
| Tax credit on exceptional items | 641 | - | - | ||||||||
Restructuring costs
Restructuring costs were incurred in the UK following a strategic decision to reduce the level of consumer hires in the business.
Termination of interest rate swaps
The costs arising on the termination of interest rate swaps arose on refinancing of the Group's borrowing facilities in the period.
| 9. Derivative financial instruments | |||||||||||
| At the balance sheet date, the Group held the following financial instruments at fair value: | |||||||||||
| 31.10.15 | 31.10.14 | 30.04.15 | |||||||||
| (Unaudited) | (Unaudited) | (Audited) | |||||||||
| £000 | £000 | £000 | |||||||||
| Non-current derivative financial instrument assets | - | 325 | 57 | ||||||||
| Non-current derivative financial instrument liabilities | (325) | (1,694) | (1,780) | ||||||||
| (325) | (1,369) | (1,723) | |||||||||
The derivative financial instruments above all have fair values which are calculated by reference to observable inputs (i.e. classified as level 2 in the fair value hierarchy). They are valued using the discounted cash flow technique with an appropriate adjustment for counterparty credit risk. The valuations incorporate the following inputs:
· interest rates and yield curves observable at commonly quoted intervals;
· commonly quoted spot and forward foreign exchange rates; and
· observable credit spreads.
The carrying value of financial assets and liabilities recorded at amortised cost in the financial statements are approximately equal to their fair value.
10. Post balance sheet events
Following a strategic decision to reduce the number of consumer hires in the period, on 3 November 2015 the UK business announced a further restructuring of its operations to adjust operational resource accordingly. The restructuring costs are expected to be of a similar magnitude as those incurred in the year to date.
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 IAS 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
C J R Muir
Group Finance Director
30 November 2015
Independent review report to Northgate plc
Report on the consolidated interim financial statements
We have reviewed Northgate plc's consolidated interim financial statements (the "interim financial statements") in the half-yearly report of Northgate plc for the 6 month period ended 31 October 2015. 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 International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
· the condensed consolidated interim balance sheet as at 31 October 2015;
· the condensed consolidated interim income statement and condensed consolidated statement of comprehensive income for the period then ended;
· the condensed consolidated interim statement of cash flows for the period then ended;
· the condensed consolidated interim 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 half-yearly report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in Note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
The half-yearly report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the half-yearly report 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 Rules and Transparency Rules 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.
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 Ireland) 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 half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Leeds
30 November 2015
This information is provided by RNS
The company news service from the London Stock Exchange
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