Half-year Report

RNS Number : 3556Y
Northgate PLC
05 December 2017
 

5 December 2017

NORTHGATE PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2017

Strong growth in Spain and slowing decline in UK of vehicles on hire with good progress against strategic initiatives.

Northgate plc ("Northgate", the "Company" or the "Group"), the UK, Spain and Ireland's leading specialist in light commercial vehicle hire, announces its interim results for the half year ended 31 October 2017.

We have made good progress in H1 on each of our strategic initiatives and remain on track to deliver targeted FY18 KPIs as announced at our Capital Markets Event on 4 October 2017. We are encouraged by the early stages of our turnaround in the UK, evidenced by 2.8% growth in closing vehicles on hire. This progress is in line with management expectations. We expect increased momentum as the initial investment that has been undertaken this period takes effect.

 

Financial highlights

·     Revenue increased 10.4% to £349.7m (2016 - £316.7m);

·     Underlying profit before tax of £33.8m (2016 - £40.4m), impacted by:

Expected decline in PPU on disposals including £3.1m adverse impact from previous changes in vehicle depreciation rates; and

£1.0m positive effect of the strengthened Euro.

·     Profit before tax £31.0m (2016 - £40.0m);

·     Underlying basic earnings per share 20.7p (2016 - 25.8p);

·     Basic earnings per share 19.1p (2016 - 25.5p);

·     7.0% increase in interim dividend to 6.1p per share (2016 - 5.7p) along with updated dividend policy with dividend cover range of 2.0x-3.0x underlying basic earnings per share;

·     Investment to support higher growth in Spain together with the effects of adverse foreign exchange impacts on Euro debt (£10.3m) drove net debt higher to £421.0m (April 2017 - £309.9m) and ROCE to 8.7% (2016 - 10.7%)

Operational highlights & strategic progress

 

Early signs of operational progress are coming through in the UK, while Spain continues to perform strongly.

 

Flexible and Minimum term business

·     Group average vehicles on hire (VOH) in Q2 grew 1.9% vs Q2 prior year;

·     Group closing VOH grew 5.7% since April 2017 driven by outstanding growth in Spain (up 9.3%) and growth in UK (up 2.8%, but underlying decline of 0.8% once seasonal hires are excluded); and

·     Minimum term proposition growing strongly following a relaunch in the UK and continued momentum in Spain, with gains from competitors and converting customers from vehicle ownership to rental.

Group rental margin of 14.7% compared to 15.2% in the same period last year with operational leverage improvement in Spain offset by more competitive pricing stance and other factors in UK and Ireland.

 

Vehicle sales

·     Total vehicle sales increased by 16.6% to 17,600 compared with 15,100 in the same period last year;

·     Average PPU declined by 44.1% to £600 (2016 - £1,073) as a result of depreciation unwind and selling younger fleet. No evidence of market residual values softening; and

·     Strong progress in the implementation of the UK Van Monster strategy including 18.8% increase in retail sales and 5 new sites opened since 30 April 2017.

UK self help actions

·     Measures to arrest decline in UK VOH gradually beginning to take effect;

·     UK executive strengthened, sales and marketing capability significantly enhanced, commercial hub established, IT migration path agreed and new system contract signed.

·     Focus remains on implementing self help actions to turn around performance including improving VOH trajectory in second half of the year.

Strategic progress

Kevin Bradshaw, Chief Executive Officer, commented:

"This has been a period of reset as we lay the foundations to enable Northgate to deliver our strategy and the targets that we set out at the Capital Markets Event on 4 October 2017.

There are already signs of the strategy working with 6% growth in closing VOH, 60% of which has been driven by minimum term products.

Our self help agenda in the UK remains firmly underway and Spain continues to outperform in its rental business justifying further investment as it accelerates its next phase of minimum term roll out.

We continue to expect our profit this year to be skewed towards the second half, with various cost savings and benefits from the implementation of our strategy starting to have an impact.

I am confident we will see further benefits of the strategy and investment coming through in subsequent reporting periods, which will generate strong growth in value for our shareholders."

 

There will be a presentation to analysts at 9.30am today at Numis, 5th floor, London Stock Exchange building, 10 Paternoster Square, London EC4M 7LT. If you have not already registered for attendance then please contact MHP Communications on the number below. A live webcast of the presentation will be available to view via a link on the Company's website: www.northgateplc.com

 

For further information, please contact:

Northgate plc

01325 467558

Kevin Bradshaw, Chief Executive Officer

David Tilston, Interim Chief Financial Officer

 

MHP Communications

020 3128 8100

Andrew Jaques

 

Barnaby Fry

 

Simon Hockridge

Ollie Hoare

 

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 or term 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:

www.northgateplc.com

GAAP reconciliation and glossary of terms

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

Underlying measures exclude certain one-off items such as those arising from restructuring activities and recurring non-operational items, including certain intangible amortisation. A reconciliation of GAAP to non-GAAP underlying measures and a glossary of terms used in this document is outlined beneath the Financial review.

 

 

Business review

Overview

Group revenue was £349.7m (2016 - £316.7m) with revenue from the hire of vehicles increasing 2.1% to £234.5m (2016 - £229.6m) (0.3% decline on a constant currency basis) and revenue from the disposal of vehicles increasing 32.3% to £115.2m (2016 - £87.1m) (30.4% increase on a constant currency basis). Foreign exchange impact accounted for £7.6m of the increase.

Spain has grown flexible VOH by 2,100 and growth in minimum term VOH has been 1,400 net of 700 legacy returns.

UK closing VOH has increased by 1,100 (including 1,400 seasonal hires) compared to an increase of 100 in the same period last year (including 1,200 seasonal hires). The minimum term hire product was re-launched in September and progress has been encouraging with 1,300 closing VOH at the end of the period.

The effects of previous depreciation rate changes impacted profit before tax adversely by £3.1m but this was offset by foreign currency gains of £1.0m.

Underlying operating profit was £39.1m compared to £45.0m in the prior period and underlying earnings per share were 20.7p compared to 25.8p in the prior period.

Cash generated from operations before net vehicle capex in the period of £95.3m (2016 - £103.7m), stated before £175.5m (2016 - £93.7m) of net vehicle capex (after disposal proceeds) in the period. Debt levels since the year end were impacted by a £10.3m foreign currency revaluation. However, Euro assets shelter the balance sheet against this movement and Group facilities and debt covenants continue to show comfortable headroom.

Dividend

An interim dividend of 6.1p has been declared, which represents an increase of 7.0% on last year and reflects our confidence in delivering against the strategic objectives we have set for the business.

The interim dividend will be paid on 26 January 2018 to shareholders on the register at the close of business on 14 December 2017.

The Board understands the importance of dividends to our shareholders. In order to reflect this and the confidence in the Company's ability to deliver the strategy set out at the recent Capital Markets Event the Board is today updating its dividend policy such that underlying basic earnings per share will cover the total annual dividend within a range of 2.0x-3.0x (previously 2.5x-3.75x).

Board changes

As announced on 26 September 2017, David Tilston has been appointed Interim Chief Financial Officer.

Outlook

In the second half, we anticipate that our business in Spain will continue to trade strongly with the combined minimum term and flexible rental propositions being well received by customers. It is encouraging to see 30% of Spanish minimum term growth substituting vehicle ownership, as the potential for further growth in this segment is significant.

There are indications that the measures to arrest the decline in vehicles on hire in the UK are gradually beginning to take effect. We remain focused on implementing self help actions to turn around performance including improving the VOH trajectory during the second half. 

We continue to expect our profit this year to be skewed towards the second half, with various cost savings and benefits from the implementation of our strategy due to impact in the period, albeit with a degree of caution around the level of disposal profits.

 

 

Strategic review

A summary of our vehicles on hire in the first half of the year is as follows:

 

 

 

6 months to Oct-17

Year ended Apr-17

6 months to Oct-16

H1 FY 18 growth

H1 FY 17 growth

Closing VOH

UK

40,600

39,500

42,500

1,100

100

Spain

41,200

37,700

36,200

3,500

500

Ireland

3,400

3,400

3,500

-

300

Group

85,200

80,600

82,200

4,600

900

 

 

 

3 months to Oct-17

3 months to Apr-17

3 months to Oct-16

Average VOH

UK

39,300

39,600

41,700

Spain

40,200

36,400

36,000

Ireland

3,300

3,500

3,500

Group

82,800

79,500

81,200

           

Group

Our Group KPIs are explained in more detail in the divisional commentaries below and were as follows for the first half of the year:

 

6 months to 31 Oct 2017

6 months to 31 Oct 2016

Average VOH growth (Q2 vs Q2)*

+1.9%

-2.1%

Rental margin

14.7%

15.2%

Disposals - units sold

17,600

15,100

PPU (£)

600

1,073

Corporate overhead/sales

1%

1%

Group ROCE

8.7%

10.7%

 

 

*Average VOH growth in 3 months to 31 October 2017 compared to average VOH growth in 3 months to 31 October 2016.
 

UK

A summary of the UK KPIs for the first half of the year are as follows:

 

6 months to 31 Oct 2017

6 months to 31 Oct 2016

Average VoH growth (Q2 vs Q2) *

-5.9%

-6.2%

Rental margin

13.8%

15.2%

Disposals - units sold

10,800

9,000

PPU (£)

326

738

 

 

*Average VOH growth in 3 months to 31 October 2017 compared to average VOH growth in 3 months to 31 October 2016

 

Rental business

UK closing VOH has grown by 1,100 (2.8%) since April 2017 with an underlying decline of 0.8% after taking account of seasonal business (1,400 vehicles). This compares to a growth of 100 in the same period last year.

Our new minimum term product continues to gain traction following its relaunch in September with growth of 1,000 VOH in the period. The product is competing well on the basis of an attractive total cost of ownership, industry leading early termination terms and the flexibility to swap a vehicle within the life of the contract all of which are aspects that are highly differentiated selling points in the industry.

We also see continued appetite on behalf of customers to trade in existing owned fleets and adopt the minimum term product in order to benefit from our customer service package and the economic benefits and flexibility afforded by our offering. To date, approximately one third of the minimum term volume signed has been from new customers. The majority of gains arose by taking share from other rental providers and by converting owners to the rental model. We have had some significant wins as a result of being able to offer a mix of minimum term and flexible hire vehicles. This has allowed us to secure sole supplier agreements with some existing customers.

Flexible rental business has declined by 1,300 (excluding seasonal hires) including returns from 4 major customers who have either taken fleet in-house or reduced fleet sizes to reflect changes in the structure of their businesses.               

We expect to see continued growth from the minimum term product and ultimately a reversal of flexible rental decline with the continued application of self help measures.

Rental margin declined to 13.8% (2016 - 15.2%) due to more competitive pricing decisions and a reduction in VOH, partly offset by cost reductions achieved from site closures and other restructuring.

Disposals

Total disposals in the period were 10,800 units compared to 9,000 units in the same period last year. This represents absolute growth of 20% in units sold compared to the prior year. A total of 41% of disposals were sold via our retail channel. This growth has been supported by greater sales capacity in the Van Monster network and an improvement in defleet criteria, which has enabled more vehicles to be sold through the more profitable retail channel.

 

Net PPU reduced by £412 in the period. Of this, £191 is attributable to the unwind of previous depreciation rate changes and the balance is attributable to other factors including mix and condition of vehicles. We continue to review our defleet criteria to support disposal profitability.

Implementation of the Van Monster retail network expansion strategy has moved swiftly forwards. During the period five new sites have been opened and five rental sites have been closed and converted to Van Monster locations since April. These ten new sites have increased total selling capacity by 56% since the beginning of the financial year.

Self help initiatives

The UK leadership team has been strengthened with the appointment of a Managing Director, Sales Director and Marketing Director. A Fleet Director is expected to join prior to the financial year end.

Sales and marketing capabilities have been enhanced with significant progress being made with regard to the sales team, where both account implementation and sales support functions have been improved, new regional sales leaders have been appointed and talent throughout the salesforce is being upgraded. In the marketing department, investment in customer data has delivered significant improvements and this has supported more effective telesales and direct marketing campaigns. Leads generated have grown by 4.5% versus the prior year.

Since the period end, we have contracted to migrate our legacy asset management systems to a cloud based system. The system will provide significant benefits particularly in enabling us to improve both customer service and operational efficiencies. The implementation costs are anticipated to amount to approximately £10m and the system is expected to become operational during FY20.

Spain

 

6 months to 31 Oct 2017

6 months to 31 Oct 2016

Average VOH growth (Q2 vs Q2) *

11.5%

1.6%

Rental margin

16.6%

15.6%

Disposals - units sold

6,200

5,700

PPU (€)

1,109

1,815

 

*Average VOH growth in 3 months to 31 October 2017 compared to average VOH growth in 3 months to 31 October 2016

 

Rental Business

Our minimum term and flexible rental business in Spain has grown strongly in the period supported by a stronger economy, a highly competitive product and effective sales and marketing activities.

Closing VOH in Spain has grown by 9.3% (3,500 vehicles); 3.8% (1,400 vehicles) from minimum term and 5.5% (2,100 vehicles) from flexible rental.

This minimum term growth is net of 700 legacy returns and includes both competitive displacement (1,000 units) and substituting previously owned vehicles (800 units). Additionally, it is clear that the minimum term offer is helping to on-hire greater volumes of flexible rental vehicles. Since launch we have seen approximately one quarter of new minimum term customers go on to add an equivalent number of flexible rental vehicles placing their first order, on average, after a tenure of three months with Northgate on minimum term.

We continue to monitor political developments in the Catalonia region but have not yet detected any material changes to trading patterns in that region.

We expect to see continued strong growth in the second half of the year.

Rental margins increased to 16.6% (2016 - 15.6%) as the division experienced the benefits of operational leverage as a result of increased VOH.

Disposals

Total disposals during the period were 6,200 units compared to 5,700 units in the prior period.

This growth has been supported by development and training of the rental sales team to sell used vehicles to potential rental customers who wish to remain as vehicle owners.

As expected, net PPU reduced by €706 in the period. Of this, €187 relates to the unwind of previous changes to depreciation rates and €519 is attributable to other factors including mix and condition of vehicles.

Continued review is underway of the decision criteria applied to defleeting vehicles in determining the most profitable sales process for them. We expect the increase in retail sales capability and continued review of defleet criteria to support disposal profitability.

Ireland

Rental Business

Overall, closing VOH has remained flat at 3,400 in the period. A successful initiative was undertaken to reduce the number of accounts with a short hire period that were disproportionately costly to serve.

Minimum term products are gaining traction in the market with 300 units on hire at the end of October 2017. Overall VOH is has stabilised and we expect to see momentum in the second half.

Disposals

Total disposals in the period were 600 units compared with 400 units in the prior period with an adjustment to depreciation for vehicles sold of £1.0m compared to £0.9m in the same period last year.

Capital management

ROCE was 8.7% during the period (October 2016 - 10.7%). The decline was split evenly between UK and Spain. Key contributors to this included significant capital expenditure in Spain to support growth and lower PPU on vehicle disposals across the Group.

We continue to keep under review how we can manage our growth whilst maintaining marginal ROCE substantially ahead of our weighted average cost of capital.

 

 

Financial review

Group

A summary of the Group's underlying financial performance for the six months to 31 October 2017 with a comparison to the prior period is shown below:

 

6 months to

6 months to

 

 

31 Oct 2017

31 Oct 2016

Change

 

£m

£m

 

Revenue: hire of vehicles

234.5

229.6

+2.1%

Revenue: sale of vehicles

115.2

87.1

+32.2%

Operating profit

39.1

45.0

-13.0%

Net interest expense

(5.3)

(4.6)

+15.5%

Profit before tax

33.8

40.4

-16.2%

Profit after tax

27.6

34.3

-19.6%

Basic earnings per share

20.7p

25.8p

-19.8%

Return on capital employed

8.7%

10.8%

-2.0%

At constant exchange rates revenue from the hire of vehicles was 0.3% lower than the prior period.

Profit before tax was positively impacted by £1.0m due to the impact of foreign exchange gains. The impact of previous changes to depreciation rates adversely affected profit before tax by £3.1m.

UK

The underlying results of the UK business were as follows:

 

6 months to

6 months to

 

 

31 Oct 2017

31 Oct 2016

Change

 

£m

£m

 

Revenue: hire of vehicles

131.8

138.4

-4.8%

Revenue: sale of vehicles

76.7

59.0

+30.0%

Operating profit

18.0

23.9

-24.6%

Operating margin

13.7%

17.3%

-3.6%

 

 

 

 

Average vehicles on hire

39,400

42,000

-6.2%

Average utilisation

87.3%

87.7%

-0.4%

Vehicle disposal units

10,800

9,000

+20.0%

 

 

 

 

Average VOH has reduced by 2,600 (6.2%) in the period this is mainly due to the starting position in the year being 3,000 vehicles lower than in the previous year.

Underlying operating profit was £5.9m lower than the previous year of which £2.8m related to the rental profit including a £1.2m impact of the lower vehicles on hire starting position. A total of £2.0m related to the unwind of previous depreciation rate changes and the remaining £1.1m was due to other factors including mix and condition of vehicles sold.

 

 

 

Spain

The underlying results in Spain were as follows:

 

6 months to

6 months to

 

 

31 Oct 2017

31 Oct 2016

Change

 

£m

£m

 

Revenue: hire of vehicles

92.9

81.2

+14.3%

Revenue: sale of vehicles

35.0

26.1

+34.1%

Operating profit

21.3

21.3

+0.2%

Operating margin

23.0%

26.2%

-3.9%

 

 

 

 

Average vehicles on hire

39,400

35,900

+9.7%

Average utilisation

91.0%

90.6%

+0.4%

Vehicle disposal units

6,200

5,700

+8.8%

 

 

 

 

Adjusting for the impacts of foreign currency gains, hire revenue was 14.4% higher than in the prior period and underlying operating profit was flat. Foreign currency gains favourably impacted underlying operating profit by £1.1m.

Average vehicles on hire increased by 3,500 in the period compared to an increase of 200 in the prior period

The adjustment to deprecation charge for vehicles sold in the period reduced operating profit by £3.1m this includes the adverse impact of previous depreciation rate changes of £1.0m. However this was offset by the favourable impact of rental operations of £2.0m.

Reported PPU has declined, as expected, to €1,109 from €1,815 in the period due to the unwind of previous depreciation rate changes and other factors including mix and condition of vehicles sold.

Ireland

The underlying results in Ireland are as follows:

 

6 months to

6 months to

 

 

31 Oct 2017

31 Oct 2016

Change

 

£m

£m

 

Revenue: hire of vehicles

10.3

10.5

-1.9%

Revenue: sale of vehicles

3.5

2.0

+75.0%

Operating profit

1.4

1.7

-17.6%

Operating margin

14.0%

16.1%

-2.1%

 

 

 

 

Average vehicles on hire

3,300

3,400

-2.9%

Average utilisation

85.8%

89.3%

-3.5%

Vehicle disposal units

600

400

+50.0%

 

 

 

 

After adjusting for the impact of foreign currency gains, hire revenue was £0.4m (4%) higher than in the same period last year and operating profit was £0.1m lower.

Interest and taxation

Net underlying finance charges for the six months to 31 October 2017 were £5.3m (2016 - £4.6m).

The impact of foreign currency adversely affected net finance charges by £0.2m. Excluding the effects of foreign currency, an increase in higher average debt has increased net finance charges by £0.5m.

The Group's underlying effective tax rate was 18.4% (2016 - 15.0%).

After taking account of intangible amortisation and exceptional items, the effective tax rate was 17.8% (2016 - 14.9%).

Exceptional items

During the period £1.9m of exceptional operating costs were incurred relating to restructuring costs in the UK and Ireland. Restructuring costs relate to the establishment of a commercial hub in Reading, rationalisation of the network, and associated headcount changes.               

Cash flow and net debt

Net cash outflow was £100.7m (2016 - £6.7m) after net capital expenditure of £178.8m (2016 - £95.5m) mostly in our vehicle fleet to support growth. Before taking account of the payment of dividends, cash outflow was £85.4m compared to a free cash flow generation of £7.6m in the same period last year.

Closing net debt of £421.0m increased by £111.1m since April 2017, which included a £10.3m increase in debt due to the impact of changes in foreign currency rates. This increase reflects the fact that 80% of the Group's debt is denominated in Euros. However, this debt is held against Euro assets of the Group, sheltering the balance sheet from exchange rate movements.

Debt leverage cover at 31 October 2017 was 1.75 times net debt to EBITDA, up from 1.31 times as at 30 April 2017 and 1.49 times as at 31 October 2016, with comfortable levels of headroom remaining against all of our debt covenant ratios.

Facility headroom at 31 October 2017 was £159.7m.

Balance sheet

Group return on capital employed was 8.7% compared to 10.7% in the same period last year and 10.5% in the year ended 30 April 2017.

Net tangible assets at 31 October 2017 were £523.1m (April 2017 - £509.7m), equivalent to a tangible net asset value of 393p per share (April 2017 - 383p per share).

Gearing at 31 October 2017 was 81% (April 2017 - 61%).

Foreign exchange

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

 

October 2017

October 2016

 

£ : €

£ : €

Average

1.13

1.19

Closing

1.14

1.11

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 2017 were set out in detail on pages 28 to 33 of the 2017 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 interim financial statements for the six months ended 31 October 2017.

Glossary of terms

The following defined terms have been used throughout this document:

Term

Definition

Facility headroom

Calculated as facilities of £582.4m less net borrowings of £422.7m. Net borrowings represent net debt of £421.0m excluding unamortised arrangement fees of £1.7m and are stated after the deduction of £8.4m of cash balances which are available to offset against borrowings.

Gearing

Calculated as net debt divided by net tangible assets (as defined below).

LCV

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

Net tangible assets

Net assets less goodwill and other intangible assets.

PPU

Profit per unit/loss per unit - this is a non-GAAP measure used to describe the adjustment in the depreciation charge made in the year for vehicles sold at an amount different to their net book value at the date of sale (net of attributable selling costs), divided by the number of vehicles sold.

ROCE

Return on capital employed: calculated as underlying operating profit divided by average capital employed. Capital employed being net assets excluding net debt.

 

 

 

Reconciliation of GAAP to non-GAAP measures

A reconciliation of GAAP to non-GAAP underlying measures is as follows:

 

Six months

to 31.10.17

£000

Six months

to 31.10.16

£000

 

 

 

Profit before tax

31,026

39,997

Add back:

 

 

Exceptional operating expenses (credit)

1,926

(198)

Intangible amortisation

896

948

Exceptional finance credit

-

(336)

Underlying profit before tax

33,848

40,411

 

 

 

 

 

 

 

 

 

Profit for the year

 

 

 

25,492

34,020

Add back:

 

 

 

 

 

Exceptional operating expenses (credit)

 

 

 

1,926

(198)

Intangible amortisation

 

 

 

896

948

Exceptional finance credit

 

 

 

-

(336)

Tax on exceptional items, brand royalty charges and intangible amortisation

 

 

 

(702)

(99)

Underlying profit for the year

 

 

 

27,612

34,335

Weighted average number of Ordinary shares

 

 

133,232,518

133,232,518

Underlying basic earnings per share

 

 

 

20.7p

25.8p

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(11,455)

(12,554)

Add back:

 

 

 

Receipt of bank loans and other borrowings

 

 

 

(89,246)

-

Repayments of bank loans and other borrowings

 

 

-

5,837

Net cash outflow

 

 

 

(100,701)

(6,717)

Add back: Dividends paid

 

 

 

15,326

14,347

Free cash flow

 

 

 

(85,375)

7,630

 

 

 

UK

Six months

to 31.10.17      £000

Spain

Six months to 31.10.17

£000

Corporate

Six months to

31.10.17

£000

Eliminations

Six months to

31.10.17

£000

Group

Six months to

31.10.17

£000

Operating profit

15,236

18,175

1,798

-

36,286

Add back:

 

 

 

 

 

Restructuring costs

1,904

-

-

-

1,926

Brand royalty charges

-

3,113

(3,459)

-

-

Intangible amortisation

856

40

-

-

-

896

Underlying operating profit (loss)

17,996

21,328

1,445

(1,661)

-

39,108

Exclude:

 

 

 

 

 

 

Corporate costs

-

-

1,661

-

1,661

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

(3,514)

(6,111)

(909)

-

-

(10,534)

Rental profit

14,482

15,217

536

-

-

30,235

 

 

 

 

 

 

 

Underlying operating profit (loss)

17,996

21,328

(1,661)

-

39,108

Divided by: Revenue: hire of vehicles

131,752

92,869

10,320

-

(432)

234,509

Underlying operating margin

13.7%

23.0%

14.0%

 

 

16.7%

 

 

 

 

 

 

 

Rental profit

14,482

15,217

-

-

30,235

Divided by: Revenue: hire of vehicles excluding ancilliary income

105,040

91,610

9,373

-

(432)

205,591

Rental margin

13.8%

16.6%

5.7%

 

 

14.7%

 

 

 

 

 

 

 

                       
 

 

 

UK

Six months

to   31.10.16      £000

Spain

Six months to

31.10.16

£000

Ireland

Six months to

31.10.16

£000

Corporate

Six months to

31.10.16

£000

Eliminations

Six months to

31.10.16

£000

Group

Six months to

31.10.16

£000

Operating profit

22,275

19,411

1,305

1,224

-

44,215

Add back:

 

 

 

 

 

 

Restructuring costs

688

-

-

-

-

688

Spain tax settlement

-

(886)

-

-

-

(886)

Brand royalty charges

-

2,725

352

(3,077)

-

-

Intangible amortisation

912

36

-

-

-

948

Underlying operating profit (loss)

23,875

21,286

1,657

(1,853)

-

44,965

 

 

 

 

 

 

 

Exclude:

 

 

 

 

 

 

Corporate costs

-

-

-

1,853

-

1,853

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

(6,612)

(8,714)

(797)

-

-

(16,123)

Rental profit

17,263

12,572

860

-

-

30,695

 

 

 

 

 

 

 

Underlying operating profit (loss)

23,875

21,286

1,657

(1,853)

-

44,965

Divided by: Revenue: hire of vehicles

138,372

81,223

10,524

-

(480)

229,639

Underlying operating margin

17.3%

26.2%

15.7%

 

 

19.6%

 

 

 

 

 

 

 

Rental profit

17,263

12,572

860

-

-

30,695

Divided by: Revenue: hire of vehicles excluding ancilliary income

113,357

80,285

9,302

-

(480)

202,464

Rental margin

15.2%

15.7%

9.2%

 

 

15.2%

 

 

 

 

 

 

 

               
 

 

 

Condensed consolidated income statement 

 

 

 

 

for the six months ended 31 October 2017 

 

 

 

 

 

 

Six months

Six months

Six months

Six months

Year to

Year to

 

 

to 31.10.17

to 31.10.17

to 31.10.16

to 31.10.16

30.04.17

30.04.17

 

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)

 

 

Underlying

Statutory

Underlying

Statutory

Underlying

Statutory

 

Note

£000

£000

£000

£000

£000

£000

Revenue: hire of vehicles

2

234,509

234,509

229,639

229,639

456,120

456,120

Revenue: sale of vehicles

2

115,169

115,169

87,077

87,077

211,309

211,309

Total revenue

2

349,678

349,678

316,716

316,716

667,429

667,429

Cost of sales

 

(277,610)

(277,610)

(237,726)

(237,726)

(514,446)

(514,446)

Gross profit

 

72,068

72,068

78,990

78,990

152,983

152,983

Administrative expenses (excluding exceptional items and intangible amortisation)

 

(32,960)

(32,960)

(34,025)

(34,025)

(68,378)

(68,378)

Exceptional administrative (expenses) credit

9

-

(1,926)

-

198

-

(1,293)

Intangible amortisation

 

-

(896)

-

(948)

-

(1,830)

Total administrative expenses

 

(32,960)

(35,782)

(34,025)

(34,775)

(68,378)

(71,501)

Operating profit

2

39,108

36,286

44,965

44,215

84,605

81,482

Interest income

 

1

1

1

1

2

2

Finance costs (excluding exceptional items)

 

(5,261)

(5,261)

(4,555)

(4,555)

(9,601)

(9,601)

Exceptional finance credit

9

-

-

-

336

-

339

Profit before taxation

 

33,848

31,026

40,411

39,997

75,006

72,222

Taxation

3

(6,236)

(5,534)

(6,076)

(5,977)

(12,007)

(11,321)

Profit for the period

 

27,612

25,492

34,335

34,020

62,999

60,901

                               

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 9, as well as brand royalty charges, certain 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

20.7p

19.1p

25.8p

25.5p

47.3p

45.7p

Diluted

4

20.5p

18.9p

25.4p

25.1p

46.7p

45.1p

 

 

Condensed consolidated statement of comprehensive income

 

 

 

 

for the six months ended 31 October 2017

 

 

 

 

 

 

Six months

Six months

Year to

 

 

to 31.10.17

to 31.10.16

30.04.17

 

 

(Unaudited)

(Unaudited)

 (Audited)

 

 

£000

£000

£000

Amounts attributable to owners of the Parent Company

 

 

 

 

Profit attributable to owners

 

25,492

34,020

60,901

 

Other comprehensive income (expense)

Foreign exchange differences on retranslation of net assets of subsidiary undertakings

 

14,964

50,171

25,952

Net foreign exchange differences on long term borrowings held as hedges

 

(11,006)

(40,326)

(21,793)

Foreign exchange difference on revaluation reserve

 

44

157

85

Net fair value gains (losses) on cash flow hedges

 

537

(795)

659

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

 

(102)

159

(157)

Total other comprehensive income for the period

 

4,437

9,366

4,746

Total comprehensive income for the period

 

29,929

43,386

65,647

 

All items will subsequently be reclassified to the consolidated income statement.

 

 

 

Condensed consolidated balance sheet

 

 

 

 

31 October 2017

 

 

 

 

 

 

 

 

 

31.10.17

 

31.10.16

Restated

30.04.17

Restated

 

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

Note

£000

£000

£000

Non-current assets

 

 

 

 

 

Goodwill

 

 

3,589

3,589

3,589

Other intangible assets

 

 

3,325

3,250

3,309

 

 

 

 

 

 

Property, plant and equipment: vehicles for hire

 

6

829,503

756,648

731,657

Other property, plant and equipment

 

6

66,034

68,998

65,262

Total property, plant and equipment

 

6

895,537

825,646

796,919

Deferred tax assets

 

 

16,381

16,381

13,730

Total non-current assets

 

 

918,832

848,866

817,547

Current assets

 

 

 

 

 

Inventories

 

 

37,952

26,904

33,666

Trade and other receivables

 

 

79,702

68,049

62,656

Derivative financial instrument assets

 

10

-

-

213

Cash and bank balances

 

8

28,024

42,829

41,166

Total current assets

 

 

145,678

137,782

137,701

Total assets

 

 

1,064,510

986,648

955,248

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

62,700

60,971

64,913

Current tax liabilities

 

 

17,208

22,016

18,568

Short term borrowings

 

 

28,415

41,000

32,585

Total current liabilities

 

 

108,323

123,987

116,066

Net current assets

 

 

37,355

13,795

21,635

Non-current liabilities

 

 

 

 

 

Derivative financial instrument liabilities

 

10

1,957

3,947

2,706

Long term borrowings

 

 

420,626

356,807

318,439

Deferred tax liabilities

 

 

3,559

1,585

1,420

Total non-current liabilities

 

 

426,142

362,339

322,565

Total liabilities

 

 

534,465

486,326

438,631

NET ASSETS

 

 

530,045

500,322

516,617

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

 

 

66,616

66,616

66,616

Share premium account

 

 

113,508

113,508

113,508

Revaluation reserve

 

 

1,155

1,183

1,111

Own shares

 

 

(3,427)

(6,087)

(1,659)

Merger reserve

 

 

67,463

67,463

67,463

Hedging reserve

 

 

(1,585)

(3,157)

(2,020)

Translation reserve

 

 

(1,283)

444

(5,241)

Capital redemption reserve

 

 

40

40

40

Retained earnings

 

 

287,558

260,312

276,799

TOTAL EQUITY

 

 

530,045

500,322

516,617

               

 

Total equity is wholly attributable to owners of the Parent Company.

 

 

 

 

 

 

 

 

Condensed consolidated cash flow statement

 

 

 

 

for the six months ended 31 October 2017

 

 

 

 

 

 

 

Six months

Six months

Year to

 

 

to 31.10.17

to 31.10.16

30.04.17

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 Note

£000

£000

£000

Net cash (used in) generated from operations

7

(80,141)

10,027

47,818

Investing activities

 

 

 

 

Interest received

 

1

1

2

Proceeds from disposal of other property, plant and equipment

2,215

284

1,222

Purchases of other property, plant and equipment

(4,432)

(1,938)

(4,878)

Purchases of intangible assets

 

(1,059)

(127)

(1,133)

Net cash used in investing activities

 

(3,275)

(1,780)

(4,787)

Financing activities

 

 

 

 

Receipt of bank loans and other borrowings

89,246

-

-

Repayments of bank loans and other borrowings

-

(5,837)

(21,369)

Dividend paid

(15,326)

(14,347)

(21,875)

Net payments to acquire own shares for share schemes

 

(1,959)

(617)

(114)

Net cash generated from (used in) financing activities

 

71,961

(20,801)

(43,358)

Net decrease in cash and cash equivalents

 

(11,455)

(12,554)

(327)

Cash and cash equivalents at beginning of the period

 

19,637

18,748

18,748

Effect of foreign exchange movements

 

254

1,362

1,216

Cash and cash equivalents at the end of the period

 

8,436

7,556

19,637

                 

 

Cash and cash equivalents consist of:

 

 

 

 

Cash and bank balances

8

28,024

42,829

41,166

Bank overdrafts

8

(19,588)

(35,273)

(21,529)

 

 

8,436

7,556

19,637

 

 

Condensed consolidated statement of changes in equity

for the six months ended 31 October 2017

 

 

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 2016

180,124

(8,157)

(2,522)

(9,400)

68,529

242,451

471,025

Share options fair value charge

-

-

-

-

-

875

875

Share options exercised

-

      -

-

-

-

(2,687)

(2,687)

Profit attributable to owners of the Parent Company

-

-

-

-

-

34,020

34,020

Dividend paid

-

-

-

-

-

(14,347)

(14,347)

Net purchase of own shares

-

(617)

-

-

-

-

(617)

Transfer of shares on vesting of share options

-

2,687

-

-

-

-

2,687

Other comprehensive (expense) income

-

-

(635)

9,844

157

-

9,366

Total equity at 1 November 2016

180,124

(6,087)

(3,157)

444

68,686

260,312

500,322

Share options fair value charge

-

-

-

-

-

1,059

1,059

Share options exercised

-

-

-

-

-

(3,925)

(3,925)

Profit attributable to owners of the Parent Company

-

-

-

-

-

26,881

26,881

Dividend paid

-

-

-

-

-

(7,528)

(7,528)

Net purchase of own shares

-

503

-

-

-

-

503

Transfer of shares on vesting of share options

-

3,925

-

-

-

-

3,925

Other comprehensive income (expense)

-

-

1,137

(5,685)

(72)

-

(4,620)

Total equity at 1 May 2017

180,124

(1,659)

(2,020)

(5,241)

68,614

276,799

516,617

Share options fair value charge

-

-

-

-

-

784

784

Share options exercised

-

 

-

-

-

(191)

(191)

Profit attributable to owners of the Parent Company

-

-

-

-

-

25,492

25,492

Dividend paid

-

-

-

-

-

(15,326)

(15,326)

Net purchase of own shares

-

(1,959)

-

-

-

-

(1,959)

Transfer of shares on vesting of share options

-

191

-

-

-

-

191

Other comprehensive income

-

-

435

3,958

44

-

4,437

Total equity at 31 October 2017

180,124

(3,427)

(1,585)

(1,283)

68,658

287,558

530,045

 

 

 

 

 

 

 

 

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 29 November 2017.

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 2017, 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.

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 2017.

Going concern assumption

Having reassessed the principal risks and the other matters discussed in connection with the viability statement in the 2017 annual report and accounts the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the interim financial statements.

Information extracted from 2017 annual report

The financial figures for the year ended 30 April 2017, 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 2017 were prepared under IFRS and were delivered to the Registrar of Companies on 22 August 2017. The audit report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.

 

 

 

                         
 

 

2. Segmental analysis

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

 

 

UK

Spain

Ireland

Corporate

Eliminations

Total

 

 

Six months

Six months

Six months

Six months

Six months

Six months

 

 

to 31.10.17

to 31.10.17

to 31.10.17

to 31.10.17

to 31.10.17

to 31.10.17

 

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 

 

£000

£000

£000

£000

£000

£000

Revenue: hire of vehicles

 

131,752

92,869

10,320

-

(432)

234,509

Revenue: sale of vehicles

 

76,720

34,973

3,476

-

-

115,169

Total revenue

 

208,472

127,842

13,796

-

(432)

349,678

 

 

 

 

 

 

 

 

Underlying operating profit (loss) *

 

17,996

21,328

1,445

(1,661)

-

39,108

Exceptional administrative expenses

 

 

 

 

 

 

(1,926)

Intangible amortisation

 

 

 

 

 

 

(896)

Operating profit

 

 

 

 

 

 

36,286

Interest income

 

 

 

 

 

 

1

Finance costs

 

 

 

 

 

 

(5,261)

Profit before taxation

 

 

 

 

 

 

31,026

 

 

UK

Spain

Ireland

Corporate

Eliminations

Total

 

 

 

Six months

Six months

Six months

Six months

Six months

Six months

 

 

 

to 31.10.16

to 31.10.16

to 31.10.16

to 31.10.16

to 31.10.16

to 31.10.16

 

 

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

 

 

 

£000

£000

£000

£000

£000

£000

 

Revenue: hire of vehicles

 

138,372

81,223

10,524

-

(480)

229,639

 

Revenue: sale of vehicles

 

59,020

26,071

1,986

-

-

87,077

 

Total revenue

 

197,392

107,294

12,510

-

(480)

316,716

 

 

 

 

 

 

 

 

 

 

Underlying operating profit (loss) *

 

23,875

21,286

1,657

(1,853)

-

44,965

 

Exceptional administrative expenses

 

 

 

 

 

 

198

 

Intangible amortisation

 

 

 

 

 

 

(948)

 

Operating profit

 

 

 

 

 

 

44,215

 

Interest income

 

 

 

 

 

 

1

 

Finance costs (excluding exceptional items)

 

 

 

 

 

 

(4,555)

 

Exceptional finance credit

 

 

 

 

 

 

336

 

Profit before taxation

 

 

 

 

 

 

39,997

 

                           
 

 

2. Segmental analysis (continued)

 

 

UK

Spain

Ireland

Corporate

Eliminations

 Total

 

 

Year to

Year to

Year to

Year to

Year to

 Year to

 

 

30.04.17

30.04.17

30.04.17

30.04.17

30.04.17

 30.04.17

 

 

(Audited)

(Audited)

(Audited)

(Audited)

(Audited)

 (Audited)

 

 

£000

£000

£000

£000

£000

 £000

Revenue: hire of vehicles

 

272,168

163,419

21,528

-

(995)

456,120

Revenue: sale of vehicles

 

144,043

63,241

4,025

-

-

211,309

Total revenue

 

416,211

226,660

25,553

-

(995)

667,429

 

 

 

 

 

 

 

 

Underlying operating profit (loss) *

 

43,886

42,607

3,233

(5,121)

-

84,605

Restructuring costs

 

 

 

 

 

 

(1,293)

Intangible amortisation

 

 

 

 

 

 

(1,830)

Operating profit

 

 

 

 

 

 

Interest income

 

 

 

 

 

 

2

Finance costs (excluding exceptional items)

 

 

 

 

 

 

(9,601)

Exceptional finance credit

 

 

 

 

 

 

339

Profit before taxation

 

 

 

 

 

 

* Underlying operating profit (loss) stated before royalty charges, amortisation and exceptional items is the measure used by the Board of Directors to assess segment performance.

3. Taxation

The charge for taxation for the six months to 31 October 2017 is based on the estimated effective rate for the year ending 30 April 2018 of 17.8% (October 2016 - 14.9%).

 

 

4. Earnings per share

 

 

 

 

 

 

 

 

Six months

Six months

Six months

Six months

Year to

Year to

 

to 31.10.17

to 31.10.17

to 31.10.16

to 31.10.16

30.04.17

30.04.17

 

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)

 

Underlying

Statutory

Underlying

Statutory

Underlying

Statutory

Basic and diluted earnings per share

 

£000

 

£000

 

£000

 

£000

 

£000

 

£000

 

 

 

 

 

 

 

The calculation of basic and diluted earnings per share is based on the following data:

 

 

 

 

 

 

Earnings

 

 

 

 

 

 

Earnings for the purposes of basic and diluted earnings per share,

 

 

 

 

 

 

being profit attributable to owners of the Parent Company

27,612

25,492

34,335

34,020

62,999

60,901

 

 

 

 

 

 

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

1,422,769

1,422,769

2,195,780

2,195,780

1,700,849

1,700,849

Weighted average number of Ordinary shares for the purpose

 

 

 

 

 

 

of diluted earnings per share

134,655,287

134,655,287

135,428,298

135,428,298

134,933,367

134,933,367

Basic earnings per share

20.7p

19.1p

25.8p

25.5p

47.3p

45.7p

Diluted earnings per share

20.5p

18.9p

25.4p

25.1p

46.7p

45.1p

 

 

 

 

 

 

5. Dividends

In the six months to 31 October 2017, a dividend of £15,326,000 was paid (2016 - £14,347,000). The Directors have declared a dividend of 6.1p per share for the six months ended 31 October 2017 (2016 - 5.7p).

 

 

 

6. Property Plant and Equipment

 

 

Six months

Six months

Six months

 

Six months

Six months

Six months

 

 

to 31.10.17

to 31.10.17

to 31.10.17

 

to 31.10.16

to 31.10.16

to 31.10.16

 

 

(Unaudited)

(Unaudited)

(Unaudited)

 

(Unaudited)

(Unaudited)

(Unaudited)

 

 

£000

£000

£000

 

£000

£000

£000

 

 

Vehicles for hire

Other property, plant & equipment

Total

 

Vehicles for hire

Other property, plant & equipment

Total

Net Book Value

 

 

 

 

 

 

 

 

At 1 May

 

731,657

65,262

796,919

 

684,499

     65,765

    750,264

Additions

 

265,780

4,432

277,528

 

182,787

      1,938

184,725

Disposals

 

(95,279)

(2,334)

(104,929)

 

(78,181)

(353)

(78,534)

Depreciation

 

(85,234)

(2,644)

(87,878)

 

(74,388)

(3,320)

    (77,708)

Exchange differences

 

12,579

1,318

13,897

 

41,931

      4,968

      46,899

At 31 October

 

829,503

     66,034

895,537

 

756,648

68,998

825,646

 

7. Notes to the cash flow statement

 

 

 

 

 

Six months

Six months

Year to

 

to 31.10.17

to 31.10.16

30.04.17

 

(Unaudited)

(Unaudited)

(Audited)

Net cash (used in) generated from operations

£000

£000

£000

Operating profit

36,287

44,215

81,482

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

87,878

77,708

156,291

Net impairment of property, plant and equipment

-

-

131

Amortisation of intangible assets

1,034

955

1,891

Loss on disposal of property, plant and equipment

143

70

199

Share options fair value charge

784

875

1,934

Operating cash flows before movements in working capital

126,126

123,823

241,928

(Increase) decrease in non-vehicle inventories

(512)

281

525

(Increase) decrease in receivables

(10,895)

1,430

4,801

Decrease in payables

(6,953)

(11,953)

(8,952)

Cash generated from operations

107,766

113,581

238,302

Income taxes paid, net

(7,499)

(6,054)

(12,602)

Interest paid

(4,929)

(3,782)

(8,552)

Net cash generated from operations before net capex

95,338

103,745

217,148

Purchases of vehicles

(268,352)

(168,155)

(346,305)

Proceeds from disposal of vehicles

92,873

74,437

176,975

Net cash (used in) generated from operations

(80,141)

10,027

47,818

 

 

8. Analysis of consolidated net debt

 

 

 

 

 

 

31.10.17

31.10.16

30.04.17

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

£000

£000

£000

 

Cash and bank balances

(28,024)

(42,829)

(41,166)

 

Bank overdrafts

19,588

35,273

21,529

 

Bank loans

340,910

271,761

244,236

 

Loan notes

87,781

89,963

84,393

 

Cumulative preference shares

500

500

500

 

Confirming facilities

262

310

366

 

 

421,017

354,978

309,858

 

9. Exceptional items

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Six months

Six months

Year to

 

 

 

to 31.10.17

to 31.10.16

30.04.17

 

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

£000

£000

£000

 

Restructuring costs

 

1,926

688

2,189

 

Spain tax settlement

 

-

(886)

(896)

 

Exceptional administrative expenses (credit)

 

1,926

(198)

1,293

 

 

 

 

 

 

 

Interest refunded in relation to Spain tax settlement

 

-

(336)

(339)

 

Exceptional finance credit

 

-

(336)

(339)

 

Total pre-tax exceptional items

 

1,926

(534)

954

 

Tax (charge) credit on exceptional items

 

(383)

(92)

95

 

                               
 

 

10. Derivative financial instruments

 

 

 

 

 

 

 

At the balance sheet date, the Group held the following financial instruments at fair value:

 

 

 

 

 

31.10.17

31.10.16

30.04.17

 

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

£000

£000

£000

 

Interest rate derivatives

 

(1,957)

(3,947)

(2,706)

 

Cross-currency derivatives

 

-

-

213

 

 

 

(1,957)

(3,947)

(2,493)

 

                       

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.

 

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                                                                                                    

 

David Tilston

Interim Chief Financial Officer

4 December 2017

 

Independent review report to Northgate plc

Report on the consolidated interim financial statements

Our conclusion

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 2017. 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 Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

• The condensed consolidated statement of financial position as at 31 October 2017;

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

• The condensed consolidated statement of cash flows for the period then ended;

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

• The explanatory notes to the interim financial statements.

The interim financial statements included in the 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 Guidance and Transparency Rules sourcebook 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 (IFRSs) as adopted by the European Union.

 

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the directors

 

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

 

 

What a review of interim financial statements involves

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

of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain

assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. We have read the other information contained in the 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

5 December 2017

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR EAPALEFXXFFF

Companies

Zigup (ZIG)
UK 100

Latest directors dealings