25th Jun 2014 09:11
(An Item published at 0923 BST incorrectly stated total revenue. The correct version follows.)
LONDON (Alliance News) - Vehicle rental company Northgate PLC Wednesday said it swung to profit in the full year, as it reaped the cost benefits of a refinancing.
FTSE 250-listed Northgate, which operates in the UK and Spain, posted pretax profit of GBP51.2 million for the year ended April 30, compared with a GBP11.4 million loss a year earlier.
Northgate said pretax profit for the recent year benefited from a GBP24.5 million reduction in interest following the group's refinancing in April 2013. In the previous year, the company's results were affected by GBP53.9 million in finance costs including the cost of exiting the group's legacy debt and hedging.
Revenue, which incorporate vehicle and hire sales, dropped to GBP571.5 million from GBP609.9 million.
Vehicle sales revenue fell to GBP129.2 million from GBP167.9 million a year earlier, while hire revenue rose to GBP442.3 million from GBP441.9 million.
Darlington-headquartered Northgate said its strong performance was partly driven by the opening of four new sites in the UK which increased customer coverage.
However, despite the improvements achieved in pricing and used vehicle residual values, the reduction in the number of vehicles sold and the investment made in the UK business led to a decrease in operating margin to 17.4% from 22.1%. Northgate said the number of vehicles being disposed of was reduced in response to the increasing demand for rental.
During the year, vehicles on hire in the UK increased to 47,600 from 43,100 an increase of 4,500 compared with a decline of 3,300 a year earlier.
Northgate said its Spanish arm also made progress during the year with improved operational efficiencies and residual values in the country increasing operating margin to 17.1% from 16.7%. Vehicle hire in Spain increased to 32,700 from 32,100 a year earlier, an increase of 2,600 compared with a decline of 1,900 a year earlier.
Looking ahead, Northgate said it has good momentum in both businesses as a result of investment and changes to the commercial and operational teams.
"Whilst we remain committed to investing in future growth, we believe that the strength of our balance sheet will allow us to further enhance shareholder returns through a continuation of our progressive dividend policy," the company said.
On the back of its performance, the company increased its final dividend to 6.8 pence from 6.0 pence, making a total dividend of 10.0 pence compared with 7.3 pence a year earlier.
Northgate shares were quoted up 2.6% at 514.50 pence, making it the third biggest gainer on the FTSE 250.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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