Northgate Changes Depreciation Rate Following New Fleet Strategy

22nd Mar 2018 11:02

LONDON (Alliance News) - Vehicle rental provider Northgate PLC said on Thursday it has reviewed its depreciation rates in line with accounting standards and has chosen to reduce them by 3.0% in Spain and Ireland and by 0.5% in the UK.

The rates reduction will be applied from May 1, and is expected to increase operating profit by GBP17.4 million for the year ending April 30, 2019, based on an indicative fleet size and assuming an equalised level of de-fleeting in each of the four years to 2023.

This follows Northgate's announcement in February of a new fleet optimisation strategy to extend the holding period of all vehicles.

The new strategy is expected to produce a more efficient capital base for the group as net book values are reduced with more moderate capital expenditure and funding needs in the short term, that will support increases in the return on capital employed.

Shares in Northgate were up 2.2% on 325.00 pence on Wednesday.

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