11th Dec 2007 07:00
Northgate PLC11 December 2007 11 December 2007 NORTHGATE PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2007 Northgate plc ("Northgate", the "Company" or the "Group"), the UK and Spain'sleading specialist in light commercial vehicle hire, announces its interimresults for the half-year ended 31 October 2007. Highlights: •Group revenue up by 6.4% to £278.9m (2006 - £262.1m). •Profit before tax up 16% to £43.9m (2006 - £37.8m). •Underlying profit before tax* up by 13% to £44.2m (2006 - £39.1m). •Basic earnings per share up by 27% to 47.3p (2006 - 37.1p). •Interim dividend increased by 15% to 11.5p (2006 - 10p). •Fleet size of 65,800 vehicles (2006 - 65,300) in the UK and 59,500 vehicles (2006 - 51,000) in Spain. •Operating margin* increased to 22.6% (2006 - 21.2%) in the UK and to 22.9% (2006 - 21.2%) in Spain. •Utilisation of 91% in the UK and 90% in Spain. •New bank facility and further issuance of unsecured loan notes provides significant headroom for further expansion. * Stated before intangible amortisation of £1.8m (2006 - £1.9m) and non-recurring property profits of £1.5m (2006 - £0.6m). Philip Rogerson, Chairman, commented on current trading and profits: "Trading in both the UK and Spain is in line with our expectations and the Boardremains confident of a satisfactory outcome for the full financial year." Full statement and results attached. For further information, please contact: Northgate plc 01325 467558Steve Smith, Chief ExecutiveGerard Murray, Finance Director Hogarth Partnership Limited 020 7357 9477Andrew JaquesBarnaby FryAnthony Arthur Notes to Editors: Northgate plc rents light commercial vehicles and sells a range of fleetproducts to businesses via a network of hire companies. Their NORFLEX productgives businesses access to a flexible method to acquire as many commercialvehicles as they require. Further information regarding Northgate plc can be found on the Company'swebsite: http://www.northgateplc.com Chairman's Statement We are now half way through the first three years of the rolling strategic planannounced in January 2006, the overall aim of which is to continue to deliverannual double-digit earnings growth. This continues to be achieved with earningsper share growth of 27% for the six months, following a 24% increase in the lastfinancial year. This increase reflects growth in profit before tax of 16% and areduction in the Group's effective rate of corporation tax to 23% (2006 - 30%). In the UK, we have seen the benefits of the restructuring of the businesscarried out in the last financial year, along with a continued good level ofutilisation, a stable hire rate environment and a buoyant used vehicle market.The combination of these factors has enabled us to improve our UK rentaloperating margin to 22.6% (2006 - 21.2%). The purchase of 100% of the equity of Hampsons (Self Drive Hire) Limited("Hampsons") on 1 November 2007 for an estimated consideration of £9.8m plusacquired debt of £7.7m, is in line with our strategy of growth through selectiveacquisitions. Hampsons is based in Newark and operates a fleet of 1,600 vehiclesfrom nine locations. The Hampsons business is well managed with a goodreputation for service and will be retained as a separate brand within ourenlarged network. In Spain, the benefits of further fleet growth coupled with the economies ofscale, particularly in purchasing have improved the operating margin to 22.9%(2006 - 21.2%). On 18 July 2007, we made our first bolt-on acquisition in Spainwith the purchase of the trade and assets of Alquiservicios SA, a business basedin Orense with a fleet of 700 vehicles. The acquisition, which has been absorbedinto Record, gives us improved representation in the north-west of Spain alongwith one new location. It also helps to diversify the customer base. The Group's financial results for the six months to 31 October 2007 aresummarised as follows: o Vehicle rental and associated revenue up by 6% to £278.9m (2006 - £262.1m). o Underlying profit before tax* up by 13% to £44.2m (2006 - £39.1m). o Basic earnings per share up by 27% to 47.3p (2006 - 37.1p) reflecting the growth in profit before tax and a reduced tax rate. *Stated before intangible amortisation of £1.8m (2006 - £1.9m) and non- recurring property profits of £1.5m (2006 - £0.6m). Looking to the future the Group has renewed and extended its banking facilitiesand issued further unsecured loan notes in the Private Placement market in theUSA. The Group's facilities now total £1,080m and provide significant headroomto fund the Group's growth in the medium term. The cost of the new bankfacilities has been secured at a margin that is not materially different fromexisting debt facilities despite the current difficulties in the credit markets. On 26 September 2007, Andrew Allner joined the Board of the Company as aNon-executive Director. Andrew has a strong financial background and has assumedthe chairmanship of the Audit Committee from the date of his appointment. On 31 December 2007, Gerard Murray will leave the Company to take up theposition of Finance Director with The Vardy Group of Companies. The Board wisheshim well in his new role and thanks him for his significant contribution to thecontinued growth and development of the Group during the last five years. Thesearch for his replacement is well advanced and we hope to be able to announcehis successor soon. The Board has declared a 15% increase in the interim dividend to 11.5p per share(2006 - 10p), in line with its policy of progressive increases and signifyingcontinued confidence in the Group's future prospects. This dividend is payableon 31 January 2008 to shareholders on the register at the close of business on21 December 2007. Current outlook Trading in both the UK and Spain is in line with our expectations and the Boardremains confident of a satisfactory outcome for the full financial year. Results Revenue from the UK during the six months to 31 October 2007 was broadly flat onthe comparable period last year due to the average fleet size, utilisationlevels and hire rates remaining in line with those of the prior period. Asexplained in the operational review below, the fleet size at the end of November2007 is back in line with expectations and therefore revenues in the second halfare expected to grow accordingly. The UK Rental operating margin has improved to22.6% (2006 - 21.2%) due to the benefits arising from last year's businessrestructuring and the better residual values being achieved. Revenue from Spain during the period has increased by 20% reflecting fleetgrowth of 17% and some modest hire rate increases. The Spanish rental margin hasimproved to 22.9% (2006 - 21.2%) reflecting the economies of scale, particularlyin purchasing, which have more than offset a slight reduction in residualvalues. 2007 2006 £'000 £'000Revenue UK Rental 170,170 170,609UK Fleet Management 7,323 6,799Spain Rental 101,469 84,714 --------- --------- 278,962 262,122 --------- ---------Profit from operations UK Rental 38,435 36,194UK Fleet Management 305 370Spain Rental 23,276 17,944Non-recurring property profit 1,498 606Intangible amortisation (1,807) (1,969) --------- --------- 61,707 53,145Operating margins(excluding intangible amortisation andnon-recurring property profits)UK Rental 22.6% 21.2%UK Fleet Management 4.2% 5.4%Spain Rental 22.9% 21.2% There have been property disposals in both the UK and Spain that gave rise toprofits of £1.5m (2006 - £0.6m) which have been classified as non-recurring. The Group's profit before tax has been affected by the increasing cost of debtfinance, particularly in respect of the Euro debt, with the European CentralBank base rate increasing by 0.75% over the prior period. The impact on Sterlingdebt is not material as substantially all of our UK borrowings have been hedgedeffectively since December 2006. Despite the increase in the cost of debtfinance, interest cover remains healthy at 3.5 times (2006 - 3.5 times). We have increased the proportion of net debt at fixed rates from 53% on 1 May2007 to 66% at 31 October 2007. Sterling debt, which represents 28% of thetotal, is 100% fixed with an average fixed rate term of six years while theremaining debt, denominated in Euros, has 52% of its value fixed with an averagefixed rate term of two years. In order to ensure that we have sufficient funding to achieve both theanticipated growth levels in our existing business and to expand into newterritories, we issued, on 20 November 2007, a further $62m of unsecured loannotes in the Private Placement market in the USA. In addition on 10 December2007, we increased our bank facilities by entering into a series of three-yearbilateral facilities totalling £130m with our existing banks. Including these new bank facilities and the recent loan note issue, the Group'saggregate borrowing facilities now total £1,080m compared to net debt of £784mat 31 October 2007. The debt facilities have the following maturity profile: Maturing: Amount £m 2009 151 2010 604 2011 130 2012 30 2013 61 2016 104 ---------- 1,080 ---------- The Group's effective tax rate for the financial year is estimated to be 23% andthis has been applied to the six month period ended 31 October 2007. Thereduction of 7% in the tax rate compared to 31 October 2006 is substantially dueto a combination of deferred taxation adjustments in the UK, the standardcorporation tax rate applicable to the Spanish business being reduced to 32.5%(2006 - 35%) and the Spanish business continuing to benefit from specific taxconcessions based on vehicle purchase reliefs. Going forward, whilst the deferred taxation adjustments in the UK are notexpected to recur, the UK corporation tax rate will reduce from 30% to 28% on 1April 2008. In Spain, the main vehicle purchase relief will be phased outbetween now and 2011 but will be compensated in part by a further reduction inthe standard corporation tax rate to 30% in the next financial year. As a result of the above we anticipate our tax rate for future periods will beslightly higher than the 23% effective rate for this financial year. During the period the Company acquired and cancelled 800,000 of its own Ordinaryshares following volatility in the equity markets. The Board believe that theseopportunistic share buy backs will not affect the Group's ability to fund itsfuture expansion and they are earnings enhancing for remaining shareholders. Operational Review UK Following the successful integration of the Arriva Vehicle Rental ("AVR")acquisition and the restructuring of the UK business during 2006, the focus ofthe strategic plan moved to utilising the capacity of the Group's network andintroducing fleet management products. The objectives are to increase the fleet,both organically and by selective acquisitions, while improving margins throughfurther efficiencies. By 31 October 2007, the UK fleet had increased to 65,800, from 65,300 vehicleson 1 May 2007. While this is below our targeted level of 5% annual growth, theshortfall arose between 1 May and the middle of August, since when we haveachieved levels of growth in line with our expectations. By 30 November, thefleet had reached 68,500 vehicles, including 1,600 vehicles relating to theacquisition of Hampsons. Currently, the Group has 21 hire companies operating from a network of 89locations spread across the UK. The increase in locations since the start of thefinancial year is entirely due to the Hampsons acquisition. The only otherproperty changes were in Manchester where we closed one location and relocatedanother to larger premises. We have achieved an average utilisation rate of 91% (2006 - 91%) for the sixmonths, maintaining the improvement achieved in the previous financial year. Hire rates have remained stable throughout the period. In the six months under review, we disposed of 13,800 vehicles (2006 - 11,400)from a network of nine locations. We have also continued the development of ourretail and semi-retail channels to market, a process that has been assisted bythe supply of good quality, clean vehicles generated by the AVR business. Theproportion of vehicles being disposed of through these channels in the periodincreased to 19% (2006 - 16%), against our medium term target of 20%. The used vehicle market has remained buoyant, primarily driven by the continuedlimited availability of new vehicles restricting supply into the used market. Asa result, the higher profits on vehicle disposals are expected to continue inthe short term. In accordance with our accounting policies we continue to reviewanticipated net book values and changes in the expected disposal values. The combination of our improved vehicle sales performance and strong residualvalues gave rise to a reduction in the depreciation charge of £6.9m (2006 -£2.4m). Our UK fleet management business, Fleet Technique Limited, has achieved anoperating profit of £0.3m (2006 - £0.4m), in line with expectations. Inaddition, through Fleet Technique we have been able to perform service work oncustomers' own vehicles through our network of workshops, thereby helping toimprove net operating costs. With the aim of improving our operating margin byreducing our repair costs, on 31 August 2007 we acquired a bodyshop business,GPS, located in Warwick. While we have previously carried out body repairs toour vehicles from a select number of hire companies, this is the first time wehave owned a stand-alone centre, which will significantly increase our capacity.Subject to this move being successful we intend to extend our capability in thisarea in the medium term. Spain We continue to experience fleet growth in Spain in line with our expectations at8.2% for the six months to reach a fleet of 59,500 vehicles as at 31 October2007. Included in the growth of 4,500 vehicles are 700 arising from theacquisition of Alquiservicios SA referred to above. Utilisation levels are in line with the previous year at 90% (2006 - 90%) and wecontinue to achieve a modest improvement in hire rates of between 1% and 2%. During the period under review, we have disposed of 6,600 vehicles (2006 -6,300). As the used vehicle market has remained relatively stable, we havecontinued to achieve profits on disposal which, in accordance with ouraccounting policies, have been adjusted against vehicle depreciation. Thereduction in the depreciation charge for the period was £0.18m (2006 - £0.96m). The ability to continue to dispose of our used vehicles efficiently becomesincreasingly important as the fleet continues to grow. We are therefore in theprocess of putting in place a new structure for used vehicle disposals, with theaim of replicating our capability in the UK in the medium term. With the exception of the Alquiservicios SA location, the number of branches hasnot changed in the period. We have, however, extended the facilities at somebranches in order to allow for further expansion of their fleets. Included in the improvement in operating margins are the full benefits derivedfrom combining the purchasing power of the two businesses. The remainingintegration synergies will become available when the common IT platform isachieved at the end of this financial year. Since our first investment in Spain in July 2002 we have recognised the need toreduce our dependency on the construction sector and have actively pursuedbusiness in other sectors. The proportion of our customer base engaged inconstruction at 31 October 2007 is the same as at 30 April 2007 at 47% - thevast majority of which is related to infrastructure projects. Some of the largerconstruction companies are also engaged in other non-construction activitiessuch as facilities management. Other territories Our strategic plan envisaged expansion into a new territory by the end ofcalendar year 2008. We continue to hold discussions with a number of targetcompanies and potential partners and remain optimistic that we will be in aposition to move forward with one of these opportunities before the end of thecurrent financial year. The businesses currently being targeted are from both the more mature Europeanmarkets as well as from countries new to the European Union. As previouslyindicated, we expect the size of any transaction to be smaller than our initialinvestment in Spain. Risks and Uncertainties The operation of a public company involves a number of risks and uncertaintiesacross a range of commercial, operational and financial areas. The principalrisks and uncertainties that have been identified as being capable of impactingthe Group's performance over the next six months of this financial year are setout below: Vehicle Holding Costs We aim to minimise the whole life holding cost of the vehicles in our fleet. Anincrease in new pricing or a reduction in the disposal values of vehicles beingsold would increase our holding cost. Were we not able to recover any suchincreases from our customers, this would impact on our profitability. We managethe risk on new pricing by using our significant purchasing power to negotiate,before the end of the calendar year, fixed supply terms for the year ahead. Asregards disposal values our business model allows us flexibility over the periodwe hold a vehicle, and therefore, in the event of a decline in residual values,we would mitigate the impact by ageing out our fleet. Customers The Spanish business generates 47% of its revenues from customers participatingin construction. Whilst the vast majority of these customers are focused oninfrastructure projects funded by central government and EU funds withreasonable forward visibility, if there was a significant downturn in demand,vehicles could be returned. Our initial response to such an event would be toseek to place these vehicles with customers in other sectors. Were the downturnto be more widespread, we would look to maintain utilisation at 90% through acombination of a decrease, or cessation, of vehicle purchases and an increase invehicle disposals. Hire Rates The business model is operationally geared and any increase or decrease in hirerates will impact in full on the profit being achieved. In the UK the business has previously experienced pressure on hire ratesparticularly during 2005. Since the beginning of 2006 hire rates in the UK havebeen stable. Spanish hire rates have reflected a moderate increase year on year for the pastfew years, reflecting the inflationary nature of the Spanish economy. Condensed Consolidated Income Statementfor the six months ended 31 October 2007 Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) Notes £000 £000 £000 Revenue 2 278,962 262,122 526,465Cost of sales (186,428) (177,102) (345,450) ---------- ---------- ---------- Gross profit 92,534 85,020 181,015 ---------- ---------- ---------- Administrative expenses (excluding amortisation) (29,020) (29,906) (70,037)Amortisation (1,807) (1,969) (3,922) ---------- ---------- ---------- Total administrative expenses (30,827) (31,875) (73,959) ---------- ---------- ---------- Profit fromoperations 2 61,707 53,145 107,056 Investment income 2,079 1,072 3,764Finance costs (19,923) (16,443) (35,452) ---------- ---------- ---------- Profit before taxation 43,863 37,774 75,368 Taxation 3 (10,045) (11,200) (20,885) ---------- ---------- ---------- Profit for the period 33,818 26,574 54,483 ---------- ---------- ---------- Profit for the period is wholly attributable to equity holders of the parent Company.All results arise from continuing operations. Basic earnings per Ordinary share 4 47.3p 37.1p 76.1p Diluted earnings per Ordinary share 4 47.1p 37.0p 75.8p Condensed Consolidated Statement of Recognised Income and Expense for the six months ended 31 October 2007 Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000Amounts attributable to equity holders of the parent CompanyForeign exchange differences on retranslation of net assetsof subsidiary undertakings 4,115 (2,281) (1,756)Foreign exchange differences on revaluation reserve 24 (11) (11)Net foreign exchange differences on long term borrowingsheld as hedges (3,985) 1,875 1,425Other foreign exchange differences recognised directly in equity - - 628Net fair value (losses) gains on cash flow hedges (1,001) 435 4,471Share options fair value amount credited (charged)directly toequity 159 (202) (75)Net current tax credit recognised directly in equity - - 1,084Net deferred tax credit (charge) recognised directly in equity 300 (159) (2,616)Actuarial gains (losses) on defined benefit pension scheme 1 (112) 445 ---------- ---------- ---------- Net (expense) income recognised directly in equity (387) (455) 3,595 Profit attributable to equity holders 33,818 26,574 54,483 ---------- ---------- ---------- Total recognised income and expense for the period 33,431 26,119 58,078 ---------- ---------- ---------- Condensed Consolidated Balance Sheet31 October 2007 31.10.07 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000Non-current assetsGoodwill 76,647 72,247 75,120Other intangible assets 26,361 28,288 26,804 ---------- ---------- ---------- Property, plant and equipment: vehicles for hire 903,454 812,753 860,052Other property, plant and equipment 70,635 65,039 68,160 ---------- ---------- ---------- Total property, plant and equipment 974,089 877,792 928,212 ---------- ---------- ---------- 1,077,097 978,327 1,030,136 ---------- ---------- ---------- Current assets Inventories 9,369 8,065 8,709Trade and other receivables 197,723 164,144 176,760Cash and cash equivalents 46,627 12,231 35,039 ---------- ---------- ---------- 253,719 184,440 220,508 ---------- ---------- ---------- Non-current assets held for sale 25,694 18,110 21,941 ---------- ---------- ---------- TOTAL ASSETS 1,356,510 1,180,877 1,272,585 ---------- ---------- ---------- Current liabilities Trade and other payables 98,217 53,869 68,570Tax liabilities 11,684 21,324 11,973Short term borrowings 45,474 131,829 20,340 ---------- ---------- ---------- 155,375 207,022 100,883 ---------- ---------- ---------- Non-current liabilities Long term borrowings 785,679 606,496 770,022Deferred tax liabilities 41,583 28,034 38,694Retirement benefit obligation 452 1,429 555 ---------- ---------- ---------- 827,714 635,959 809,271 ---------- ---------- ---------- TOTAL LIABILITIES 983,089 842,981 910,154 ---------- ---------- ---------- NET ASSETS 373,421 337,896 362,431 ---------- ---------- ---------- EquityShare capital 3,525 3,555 3,560Share premium account 67,744 66,746 67,230Capital redemption reserve 40 - -Revaluation reserve 1,067 1,043 1,043Merger reserve 67,463 67,463 67,463Own shares reserve (8,294) (3,755) (4,572)Hedging reserve 4,498 3,391 5,199Translation reserve 2,054 1,221 1,924Retained earnings 235,324 198,232 220,584 ---------- ---------- ---------- TOTAL EQUITY 373,421 337,896 362,431 ---------- ---------- ---------- Total equity is wholly attributable to equity holders of the parent Company. Condensed Consolidated Cash Flow Statement for the six months ended 31 October 2007 Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) Notes £000 £000 £000 Net cash from operating activities 6(a) 129,380 104,582 224,765 ---------- ---------- ---------- Investing activitiesInterest received 2,112 744 3,145Proceeds from disposal of vehicles for hire 100,318 91,591 188,512Purchases of vehicles for hire (221,553) (205,433) (437,947)Proceeds from disposal of other property, plant and equipment 1,865 1,523 3,283Purchases of other property, plant and equipment (4,925) (5,348) (11,126)Purchases of intangible assets (525) (741) (1,281)Payment of deferred consideration - (10,290) (10,290)Payments in respect of business combinations 6(c) (5,413) (49,540) (49,340) ---------- ---------- ---------- Net cash used in investing activities (128,121) (177,494) (315,044) ---------- ---------- ---------- Financing activitiesDividends paid (11,019) (9,848) (16,946)Repayments of obligations under finance leases (12,456) (38,828) (63,740)Repayments of bank loans and other borrowings - - (175,579)Increase in bank loans and other borrowings 45,531 105,753 359,891Proceeds from issue of share capital 518 1,765 2,254Proceeds from sale of own shares 350 23 62Payments to acquire own shares (4,073) (447) (1,303)Payments to acquire own shares for cancellation (8,166) - - ---------- ---------- ---------- Net cash from financing activities 10,685 58,418 104,639 ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 11,944 (14,494) 14,360 Cash and cash equivalents at the beginningof the period 34,467 20,259 20,259 Effect of foreign exchange movements 154 (227) (152) ---------- ---------- ---------- Cash and cash equivalents at the end of theperiod 6(b) 46,565 5,538 34,467 ---------- ---------- ---------- Condensed Consolidated Statement of Changes in Equity for the six months ended 31 October 2007 Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000Amounts attributable to equity holders of the parentCompanyForeign exchange differences on retranslation of net assets of subsidiary undertakings 4,115 (2,281) (1,756)Foreign exchange differences on revaluation reserve 24 (11) (11)Net foreign exchange differences on long termborrowings held as hedges (3,985) 1,875 1,425Other foreign exchange differences recogniseddirectly in equity - - 628Net fair value (losses) gains on cash flow hedges (1,001) 435 4,471Share options fair value amount credited(charged)directly to equity 159 (202) (75)Actuarial gains (losses) on defined benefitpension scheme 1 (112) 445Net current tax credit recognised directly in equity - - 1,084Net deferred tax credit (charge)recognised directly in equity 300 (159) (2,616) ---------- ---------- ---------- Net (expense) income recognised directly in equity (387) (455) 3,595Profit attributable to equity holders 33,818 26,574 54,483 ---------- ---------- ---------- Total recognised income and expense for the period 33,431 26,119 58,078Dividends (11,072) (9,853) (16,949)Issue ofOrdinary share capital (net of expenses) 519 1,765 2,254Cancellation of Ordinary share capital (8,166) - -Net increase in own shares held (3,722) (424) (1,241) ---------- ---------- ---------- Net changes in total equity 10,990 17,607 42,142 ---------- ---------- ---------- Opening total equity 362,431 320,289 320,289 ---------- ---------- ---------- Closing total equity 373,421 337,896 362,431 ---------- ---------- ---------- Unaudited Notes 1. Basis of preparation and accounting policies The interim financial information for the six months ended 31 October 2007, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts and inaccordance with International Financial Reporting Standards ("IFRS"), including IAS 34, as issued by the International Accounting Standards Board and adopted by the European Union. The condensed financial statements are unaudited and were approved by the Board of Directors on 10 December 2007. The condensed financial statements have been reviewed by the auditors and the independent review report is set out in this document. The financial figures for the year ended 30 April 2007, as set out in this report, do not constitute statutory accounts for the purposes of Section 240 of the Companies Act 1985 but are derived from the statutory accounts for that financial year. The statutory accounts for the year ended 30 April 2007 were prepared under IFRS and have been filed with the Registrar of Companies. They contained an unqualified audit report and did not include a statement under Section 237 (2) or (3) of the Companies Act 1985. 2. Segmental analysis Business segmentsFor management purposes, the Group currently has two material business segments, which are the hire of vehicles and fleet management. As such, the Directors consider that these are the two business segments on which the Group should report. Geographical segmentsThe Group's operations are located in the United Kingdom, Republic of Ireland and Spain. The Directors consider the United Kingdom and Republic of Ireland to be a single geographical segment on the grounds that the results and net assets of operations in the Republic of Ireland are immaterial to the Group as a whole. Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000 UK Hire of vehicles 170,170 170,609 337,370UK Fleet management 7,323 6,799 13,738 ----------- ----------- -----------UK Revenue 177,493 177,408 351,108Spain Hire ofvehicles 101,469 84,714 175,357 ----------- ----------- -----------Total Revenue 278,962 262,122 526,465 ----------- ----------- ----------- UK Hire of vehicles 38,892 36,450 71,137UK Fleet management 305 370 576UK Amortisation (815) (1,029) (2,035) ----------- ----------- -----------UK Profit from operations 38,382 35,791 69,678 ----------- ----------- -----------Spain Hire of vehicles 24,317 18,294 39,265Spain Amortisation (992) (940) (1,887) ----------- ----------- -----------Spain Profit from operations 23,325 17,354 37,378 ----------- ----------- -----------Total Profit from operations 61,707 53,145 107,056 ----------- ----------- ----------- 3. Taxation The charge for taxation for the six months to 31 October 2007 is based on the estimated effective rate for the year. 4. Earnings per share Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited)(a) Basic and diluted earnings per shareThe calculation of basic and diluted earnings per share isbased on the following data: Earnings £000 £000 £000Earnings for the purposes of basic and diluted earningsper share, being net profit attributable to equity holders of the parent Company 33,818 26,574 54,483 ----------- ----------- ----------- Number of shares Number Number NumberWeighted average number of Ordinary sharesfor the purposes of basic earnings per share 71,442,468 71,631,826 71,584,744 Effect of dilutive potential Ordinary shares: - share options 396,185 242,103 250,032 ----------- ----------- -----------Weighted average number of Ordinary shares for the purposes of diluted earnings per share 71,838,653 71,873,929 71,834,776 ----------- ----------- ----------- Basic earnings per share 47.3p 37.1p 76.1pDiluted earningsper share 47.1p 37.0p 75.8p (b) Earnings per share before amortisation £000 £000 £000Earnings for the purposes of basic anddiluted earnings per share (above) 33,818 26,574 54,483Amortisation 1,807 1,427 3,922 ----------- ----------- -----------Earnings for the purposes of basic and diluted earnings per share before amortisation 35,625 28,001 58,405 ----------- ----------- ----------- Basic earnings per share before amortisation 49.9p 39.1p 81.6pDiluted earnings per share before amortisation 49.6p 39.0p 81.3p 5. Dividends The proposed interim dividend of 11.5p per Ordinary share was approved by the Board of Directors on 10 December 2007 and has not been included as a liability as at 31 October 2007. 6. Notes to the consolidated cash flow statement (a) Net cash from operating activities Six months Six months Year to to 31.10.07 to 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Profit from operations 61,707 53,145 107,056 Adjustments for: Depreciation of property, plant and equipment 101,475 98,022 193,885Exchange differences - - 366Amortisation of intangible assets 1,807 1,969 3,922Gain on disposal of property, plant and equipment (1,545) (695) (356)Defined benefit pension charge(credit) 4 (236) 8Share options fair value amount (charged)credited directly to equity 159 (202) (75) ----------- ----------- ----------- Operating cash flows before movements in working capital 163,607 152,003 304,806 (Increase)decrease in inventories (434) 3,592 460Increase in receivables (14,887) (10,401) (16,810)Increase (decrease) in payables 6,891 (13,093) (5,838) ----------- ----------- -----------Cash generated by operations 155,177 132,101 282,618 Income taxes paid (5,948) (11,282) (22,446)Interest paid (19,849) (16,237) (35,407) ----------- ----------- ----------- Net cash from operating activities 129,380 104,582 224,765 ----------- ----------- ----------- (b) Cash and cash equivalents Cash and cash equivalents consist of cash in hand and at bank, investments in money market instruments and bank overdrafts.Bank overdrafts are included within cash equivalents on the grounds that they are repayable on demand and form an integral part of the Group's cash management.Cash and cash equivalents, as described above, included in the cash flow statement comprise the following balance sheet amounts: 31.10.07 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Cash in hand and at bank 14,817 10,348 14,384Short term investments 31,810 1,883 20,655 ----------- ----------- -----------Gross cash and cash equivalents as reported 46,627 12,231 35,039Bank overdrafts (62) (6,693) (572) ----------- ----------- -----------Net cash and cash equivalents 46,565 5,538 34,467 ----------- ----------- ----------- (c) Business combinations On 18 July 2007, the Group purchased the trade and fixed assets of Alquiservicios SA for a cash consideration of €7,755,000.On 31 August 2007, the Group acquired the entire issued share capital of GPS BodyRepairs Limited for a total consideration of £288,000, including deferred consideration of £93,000. Included in the fair value of the net assets acquiredwas £15,000 of cash balances. 7. Analysis of consolidated net debt 31.10.07 31.10.06 30.4.07 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Cash at bank and in hand 14,817 10,348 14,384Short term investments 31,810 1,883 20,655Bank overdrafts (62) (6,693) (572) ------- ------- ------- 46,565 5,538 34,467 Bank loans (658,274) (685,759) (601,326)Loan notes (163,975) - (168,628)Vehicle related finance lease obligations (3,835) (40,539) (16,104)Deferred consideration (93) - -Preference shares (500) (500) (500)Property loans and other borrowings (4,414) (4,834) (3,232) ------- ------- ------- (784,526) (726,094) (755,323) ------- ------- ------- 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 4.2.7R (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 4.2.8R (disclosure of related party transactions and changes therein). By order of the Board S J Smith G T Murray Chief Executive Officer Finance Director 10 December 2007 INDEPENDENT REVIEW REPORT TO NORTHGATE PLC We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 31October 2007, which comprise the condensed consolidated income statement, thecondensed consolidated balance sheet, the condensed consolidated statements ofchanges in equity/recognised income and expense, the condensed consolidated cashflow statement and related Unaudited Notes 1 to 7. We have read the otherinformation contained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. This report is made solely to the Company in accordance with InternationalStandard on Review Engagements 2410 issued by the Auditing Practices Board. Ourwork has been undertaken so that we might state to the Company those matters weare required to state to them in an independent review report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company, for our review work, for thisreport, or for the conclusions we have formed. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the Directors. The Directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom Financial Services Authority. As disclosed in Note 1, the annual financial statements of the Group areprepared in accordance with IFRS as adopted by the European Union. The condensedset of financial statements included in this half-yearly financial report hasbeen prepared in accordance with International Accounting Standard 34, "InterimFinancial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 31 October 2007 is not prepared, in all materialrespects, in accordance with International Accounting Standard 34 as adopted bythe European Union and the Disclosure and Transparency Rules of the UnitedKingdom Financial Services Authority. Deloitte & Touche LLPChartered Accountants and Registered Auditor10 December 2007Leeds, United Kingdom This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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